Commercial Court bypasses Mitchell in treating service of particulars as valid despite errors of procedure

In what may be seen as a surprising decision, the Commercial Court has treated service of particulars of claim on the defendant's lawyer by e-mail as valid service, despite the fact that the lawyer had not agreed to accept service by e-mail and in any event the purported service was five days late. The court held that the case fell within CPR 3.10, which provides that an error of procedure does not invalidate any step in the proceedings unless the court so orders: Integral Petroleum SA v SCU-Finanz AG [2014] EWHC 702 (Comm).

This decision contrasts with the court's approach in other recent decisions, where cases have been struck out or severe sanctions imposed for breaches of rules or court orders following the Court of Appeal's decision in Mitchell (outlined here). For example in Associated Electrical Industries Limited v Alstom UK [2014] EWHC 430 (Comm) (see post) the Commercial Court struck out a claim on the basis that the claimant was 20 days late in serving particulars of claim, saying it was driven to that conclusion by the reasoning in Mitchell.

Although Mitchell related to an application for relief from sanctions under CPR 3.9, which was not in issue here, it is widely interpreted as requiring a stricter approach to procedural compliance more generally. In the present decision, there was no reference to Mitchell at all except in the context of considering the defendant's delay in applying to set aside default judgment. Given the uncertainties, it would be risky to assume that parties can simply rely on CPR 3.10 to cure procedural defects.

Background

Where judgment in default has been entered for failure to serve a defence, the court must set aside the judgment under CPR 13.2 if it was wrongly entered, in essence because the time for filing a defence had not expired. Otherwise the court has a discretion to set aside under CPR 13.3 if the defendant has a real prospect of successfully defending the claim or there is some other good reason to do so.

In the present case, on 14 May 2013 (the day after the time for serving particulars of claim had expired) the claimant's solicitors sent an e-mail to the defendant's legal representative (a French Avocat whose business address in Paris had been nominated as the defendant's address for service in its acknowledgement of service) saying that their client had suddenly and unexpectedly been taken ill and therefore there would be a delay in serving the particulars. They requested and obtained agreement to an extension up to close of business on 6 June 2013.

In fact the particulars of claim were sent to that same e-mail address at 18.41 on 10 June 2013 (which would mean deemed service on 11 June, as it was after 4.30 pm). No defence was served and on 17 July judgment in default was entered for US$1,078,547.

The defendant became aware of the judgment in default on 13 September and, in late December, applied to set it aside. The defendant argued that it was entitled to set aside as of right under CPR 13.2, as the particulars of claim had not been validly served and therefore time had not started running for service of the defence. In particular, the defendant said, e-mail was not a permitted method of service (as the rules require written indication of a party's willingness to accept service by e-mail) and in any event the particulars were five days late. (There does not appear to have been argument regarding the appropriate method of service given that the address for service was outside the jurisdiction.)

The claimant submitted that these two failures to comply did not prevent the particulars of claim having been validly served, relying in particular on CPR 3.10.

Decision

The court (Popplewell J) held that service of the particulars of claim could be treated as valid under CPR 3.10. That meant that the defendant had been out of time to file the defence and could not rely on CPR 13.2 to set aside default judgment as of right. In reaching that conclusion he took into account the following:

• The House of Lords decision in Phillips v Symes [2008] UKHL 1 established that CPR 3.10 was to be "construed as of wide effect so as to be available to be used beneficially wherever the defect has had no prejudicial effect on the other party".
• Here the e-mail was sufficient to bring the particulars of claim to the attention of the defendant's lawyer appointed for that purpose. He ought reasonably to have known that particulars of claim must be answered by a defence, and that in default judgment might be entered.
• It was significant that this case was not concerned with service of originating process, as in Phillips v Symes, but service of particulars of claim. The effect to be given to CPR 3.10 is even wider when concerned with documents which are not originating process.
• That was particularly so given the possibility of setting aside default judgment under CPR 13.3, which ensured a defendant would not be prejudiced by the validation of such service where he had a defence with a real prospect of success.
• Those reasons applied with even greater force to the applicability of CPR 3.10 to the other deficiency relied on in relation to service of the Particulars of Claim, namely that it was 5 days out of time.

However, the court exercised its discretion to set aside the judgment under CPR 13.3 as the defendant had arguable defences concerning the existence or validity of the underlying contract.