YA II PN Ltd v Frontera Resources Corporation
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 26 May 2021 |
| Neutral Citation | [2021] EWHC 1380 (Comm) |
| Docket Number | Case No: CL-2020-000010 |
| Date | 26 May 2021 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 1380 (Comm)
Mr Justice Butcher
Case No: CL-2020-000010
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Paul Lowenstein QC (instructed by Memery Crystal LLP) for the Claimant
Laurence Emmett QC (instructed by Haynes and Boone CDG, LLP) for the Defendant
Hearing date: 11 May 2021
Approved Judgment
THE HONOURABLE Mr Justice Butcher
An application is made by the Defendant, Frontera Resources Corporation (‘Frontera’) to set aside a default judgment obtained by the Claimant, YA II PN Ltd (‘YA II’) dated 20 April 2020 on the basis that the Claim Form was not validly served on it. YA II has made a cross-application that the court should grant retrospective permission, pursuant to CPR 6.15, to serve the Claim Form by way of personal service on 2 March 2020, alternatively for an order dispensing with service of the Claim Form pursuant to CPR 6.16, or alternatively extending time for service of the Claim Form.
Factual Background
The underlying claim in this action is one made by YA II for a principal sum of US$2,785,200 which it contends is owed by Frontera under a settlement deed dated 18 October 2018.
YA II issued the Claim Form on 7 January 2020, and made an application for permission to serve it out of the jurisdiction.
I considered that application on the papers. By order dated 15 January 2020, I gave permission to serve Frontera out of the jurisdiction. The Order which I made, which was in the terms sought by YA II, was as follows:
“1. The Claimant has permission to serve the Claim Form, Particulars of Claim and any other document in these proceedings on the Defendant at its business address at 3040 Post Oak Boulevard, Suite 110, Houston TX 77056, USA (the “ USA Address”) and its registered address at Maples Corporate Services Limited, P.O. Box 309, Ugland House, South Church Street, George Town, Cayman Islands (the “ Caymans Address”).
2. In respect of the USA Address, the Defendant has (1) 22 days after the service of the Particulars of Claim to file an acknowledgment of service under CPR Part 10 and/or an admission under CPR Part 14; or (2) 22 days after service of the Particulars of Claim to file a Defence or 36 days after service of the Particulars of Claim to file a Defence, where the Defendant has filed an acknowledgment of service.
3. In respect of the Caymans Address, the Defendant has: (3) 31 days after service of the Particulars of Claim to file an acknowledgment of service under CPR Part 10 and/or an admission under CPR Part 14; or (4) 31 days after service of the Particulars of Claim to file a Defence or 45 days after service of the Particulars of Claim to file a Defence, where the Defendant has filed an acknowledgment of service.”
The evidence before me indicates that a number of steps were taken to seek to effect service. Specifically:
(1) On 6 February 2020 an authorised process server attempted to serve Frontera at the Texas Address stated in my order of 15 January 2020. When the process server arrived, the doors were locked and there was a notice on the door saying that the landlord had changed the locks as the tenant had not paid the rent.
(2) Following that, YA II's US counsel obtained Frontera's public filings, which stated that Mr Zaza Mamulaishvili was Frontera's CEO and Mr Gerard Bono was Frontera's Vice President. In reliance on those filings, an authorised process server attempted to serve Mr Mamulaishvili at 355 Tynebridge Lane, Houston, Texas, USA, on 17 February 2020. The process server was told that Mr Mamulaishvili did not reside there. On 19 February 2020, an authorised process server sought to serve Mr Mamulaishvili at 3102 Newcastle Drive, Houston, Texas. The process server was told that though Mr Mamulaishvili owned the house, he did not reside there and was rarely present.
(3) On 2 March 2020, an authorised process server personally served the Claim Form on Mr Gerard Bono at 10819 Cranbrook Road, Houston, Texas, USA. Mr Bono was not by that time an officer of Frontera but its public filings had not been kept up to date. It is not in issue that on 2 March 2020, Mr Bono received a pack of documents, nor that, on 6 March 2020 Mr Bono informed Mr Steve Nicandros, CEO of Frontera, as to what had happened. On that latter date, Mr Bono sent Mr Nicandros a text saying “Steve, i was served documents related to the attached last week. I am almost sure you have this but just in case in a slim chance you dont i wanted you to be aware of this. There is a deadline to respond.” The “attached” was a photo of the cover-page, which said it was a “Citation”. The “Citation” is headed with the title to the English proceedings, in a format that falls somewhere between the traditional English and US styles of heading. It then said that it was “Directed To”:
“Frontera Resources Corporation
Steve C. Nicandros
Non-Executive Chairman and
Registered Agent
3040 Post Oak Blvd., Suite 1100
Houston, Texas, 77056”
This was followed by the following text:
“YOU HAVE BEEN SUED. YOU MAY EMPLOY AN ATTORNEY. IF YOU OR YOUR ATTORNEY DO NOT FILE A WRITTEN ANSWER BEFORE MR JUSTICE BETCHER WITHIN 22 DAYS AFTER SERVICE OF THE PARTICULARS OF CLAIM TO FILE AN ACKNOWLEDGEMENT OF SERVICE UNER CPR PART 10, AND/OR AN ADMISSION UNDER CPR PART 14, OR 22 DAYS OF SERVICE OF THE PARTICULARS OF THE CLAIM TO FILE A DEFENCE OR 36 DAYS AFTER SERVICE OF THE PARTICULARS OF CLAIM TO FILE A DEFENSE WHERE THE DEFENDANT HAS FILE AN ACKNOWLEDGMENT OF SERVICE.” (sic)
Mr Nicandros responded, “Jerry…Thanks for sending this. I had not seen/received it. Sorry it darkened your doorstep. When did you receive?”
(4) In the evening of 2 March 2020, YA II's process server in the USA produced a “Return of Service”. It stated that:
“ON Monday, March 2, 2020 AT 6:30 PM, I, Jayme Chacon, PERSONALLY DELIVERED THE ABOVE-NAMED DOCUMENTS TO: FRONTERA RESOUCES CORPORATION C/O GERARD BONO, 10819 CRANKBROOK RD, HOUSTON, HARRIS COUNTY, TX 77042.” (sic)
On 20 March 2020, YA II lodged with the court a Certificate of Service. It identified the address where service had been effected as “Frontera Resources Corporation c/o Gerard Bono, 10819 Crankbrook Road, Houston, Harris County Texas TX 77042” (sic). It further stated that service had been effected “by other means permitted by the court”, and specified:
“In accordance with the Order of Mr Justice Butcher dated 15 January 2020 and pursuant to Sec 5.251 of the Texas Business Organizations Code permitting service of a corporation via any of its vice presidents, the documents were personally served on Gerard Bono. Return of Service is attached.”
On 16 April 2020, YA II filed with the court a Request for judgment and reply to admission (specified amount), which certified that Frontera had not filed an admission or defence, and on 20 April 2020 judgment in default of an Acknowledgement of Service or a Defence was entered in the amount of £2,286,202.87 (inclusive of costs).
On 5 June 2020 YA II filed a petition in the Harris County District Court in Texas to enforce the default judgment of 20 April 2020. Frontera was represented by attorneys in relation to those proceedings from 3 August 2020.
Applications made
On 28 October 2020, Frontera issued its application in this court to set aside the judgment in default dated 20 April 2020. The grounds were said to be that the conditions in CPR 12.3(1) were not satisfied prior to the default judgment being obtained, and that “the validity of service is challenged on the basis that there had been non-compliance with the order of Mr Justice Butcher of 15 January 2020 giving permission to serve out of the jurisdiction and the requirements in CPR 6.40.”
On 9 December 2020, YA II responded to Frontera's application to set aside, advancing its primary argument that there had been effective service and issuing its cross application to validate the purported service if it was found that there was any defect therein.
CPR rule 12.3 provides in part:
“(1) The claimant may obtain judgment in default of an acknowledgment of service only if at the date on which the judgment is entered –
(a) The defendant has not filed an acknowledgment of service or a defence to the claim (or any part of the claim); and
(b) The relevant time for doing so has expired. …”
CPR rule 13.2 provides:
“The court must set aside a judgment entered under Part 12 if judgment was wrongly entered because –
(a) In the case of a judgment in default of an acknowledgment of service, any of the conditions in rule 12.3(1) and 12.3(3) was not satisfied …”
Frontera's case was that the condition in rule 12.3(1) had not been satisfied because the time for acknowledgment of service had not expired at the time judgment was entered. This was because, Frontera contended, there had been no valid service of the Claim Form at that time.
In this regard, Frontera submitted, YA II did not dispute, and I accept, that, as was decided in Shiblaq v Sadikoglu [2004] EWHC 1890 (Comm), [2005] 2 CLC 380, first judgment paragraphs 20–24, if there was no valid service, there will have been no obligation on the defendant to serve an Acknowledgment of Service, and no default in failing to do so, and a judgment in default entered in such circumstances must be set aside, subject only to the possible effect of an order retrospectively validating such service (an issue to which I come below).
Was there valid service?
Frontera's case was that there had not been valid service for either or both of two reasons:
(1) That the order of 15 January 2020 only gave permission to serve at specified addresses. Service was not effected, and is not said to have been effected, at...
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...accordance with CPR 7.8(1)(b), as found by the learned judge, was not service in compliance with the Service Out Order. YA II PN Ltd v Frontera Resources Corporation [2021] EWHC 1380 (Comm) distinguished. 5. CPR 7.10 provides that service through the judicial authorities of another state m......
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Flavio Maluf v Durant International Corporation
...accordance with CPR 7.8(1)(b), as found by the learned judge, was not service in compliance with the Service Out Order. YA II PN Ltd v Frontera Resources Corporation [2021] EWHC 1380 (Comm) distinguished. 5. CPR 7.10 provides that service through the judicial authorities of another state m......
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...in CPR 12.3 (1) (a) and (b) has not been satisfied and the Court must set aside judgment”. v. In the recent case of YA II PN Ltd v Frontera Resources Corporation [2021] EWHC 1380 (Comm), 2021 WL 02118218, the foreign defendant similarly made an Application to set aside a default judgment o......