In a decision at the end of last year in Amalgamated Metal Trading Ltd & Others v Alain Baron1, Chambers J had to decide whether service of proceedings in Peru by the three claimants was good service. He decided it was not, for reasons summarised below, but the judge then went further to consider the effect of provisions in the CPR regarding alternative methods of service of a claim form overseas. The claimants’ conduct may also have been material in leading to the ruling against them.
Mr Baron, the defendant, allegedly made fraudulent representations in the period 2007/8 regarding the solvency of a company called BHL Resources Limited Inc. The claimants, all metal brokers, had then provided metal trading facilities on the London market to BHL and claimed to have suffered losses in excess of $5m on BHL’s insolvency.
The issue was the validity of service of the proceedings. There had been an attempt to serve the claim form on the defendant at his apartment in Lima in April 2010 but there was a dispute as to precisely what had occurred. The claimants said that their process server had entered the defendant’s apartment via a service lift and had handed the papers personally to the defendant. The defendant, on the other hand, reported that his maid brought him in the documents from the process server, who waited in the corridor by the lift; he said that he did not see the process server at all. He reviewed the documents cursorily and instructed the maid to return them. She did so, but later in the day she discovered the package of documents in the laundry basket by the lift.
As to the facts, for various reasons the judge decided that he preferred the defendant’s account of what had occurred that day, not least because the mention of the laundry basket struck him as credible. He then had to decide whether the purported service was good service.
The judge considered the CPR. He stated: “The right to effect service overseas has always been a creature of express procedural rule as opposed to procedural custom. It is the rules that decide what is good service and the rule in question is CPR Rule 6.40(3)(c)”.
This is the rule which provides for service of a claim form out of the jurisdiction “by any other method permitted by the law of the country in which it is to be served”. The claimants argued that the word “permitted” meant the obverse of “contrary to the law of the country where the claim form … is to be served” (which appears in the following provision 60.40(4)). In other words, if the method of service was not expressly forbidden then it was acceptable. This argument was roundly rejected.
Chambers J held that CPR 6.40(4) is of much wider application and he referred to the case of Habib2, which he distinguished, as the issue there was solely in relation to the equivalent of rule 6.40(4). He also distinguished Shiblaq v Sadikoglo3 as it was a case concerning what was in fact permitted under Turkish law rather than considering a gap between what Turkish law had pronounced and what a server could freely do in the absence of any express prohibition.
The judge stated: “It seems to me that while it is always open to a claimant to lead evidence to the effect that the state in which service is said to have been effected permits such service by conduct that is not express, a claimant cannot say that where a state expressly provides for a method or methods within its jurisdiction but does not expressly provide that service by other means is illegal then it is to be inferred that service by other means is permitted for the purposes of CPR 60.40(3)(c)”.
Having decided that the purported service was bad, the judge had to decide what to do next. Must he force the claimants to begin again and serve the claim form through judicial channels in a prescribed form (this was the defendant’s evidence of what was permitted in Peru, which was not contested by the claimants) which may take up to 12 months or should he allow them to serve by some alternative means? This led to consideration of the provisions for alternative service which came into force in October 2008, allowing service of the claim form by an alternative method or at an alternative place.
The judge found that on a strict construction of the rules the reference to methods of alternative service should only apply to service of claim forms within the jurisdiction but the learned judge considered that the rule committee could not have intended this. He concluded “I find it impossible to contemplate the operation of a regime for service out of the jurisdiction without the power to order service by alternative means in appropriate cases”. He decided, therefore, that he did have power under the rules to order service by alternative means by reason of CPR rule 6.37(5)(b)(i); the question then was whether he should use it.
In reaching his final decision whether to exercise his discretion in favour of the claimants, the judge found that the failure of the defendant to accept service of documents in his apartment was not an indication of intent to evade service, even when there was a serious issue of fraud to be tried. He said “I do not see why a defendant should give a warm welcome to the unheralded arrival within his home of a process server who is attempting to effect service in a way that the defendant would have no reason to suppose is permitted, not least because it was not permitted”. He also gave no weight to the claimants’ argument that service through the proper channels would take 12 months, given that they could have embarked upon this course of action at various stages, including within a reasonable period after the defendant’s solicitors refused to accept service.
The judge made it clear that the claimants’ solicitors were a well-respected firm with the resources at their disposal to find out in advance of service (or at various stages thereafter when the defendant took a point on service) what was the appropriate method of effecting service of foreign proceedings in Peru. In refusing permission to serve by alternative means, he concluded “if I do as the claimants ask I can see no reason why any claimant who, after no consideration, has attempted an impermissible method of service in a state where service takes a long time should not be allowed to serve those proceedings upon English solicitors acting for the defendant”.