Kenneth Allison Ltd and Others v A E Limehouse & Company

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Bridge of Harwich,Lord Templeman,Lord Goff of Chieveley,Lord Jauncey of Tullichettle,Lord Lowry
Judgment Date17 October 1991
Judgment citation (vLex)[1991] UKHL J1017-1
Date17 October 1991

[1991] UKHL J1017-1

House of Lords

Lord Bridge of Harwich

Lord Templeman

Lord Goff of Chieveley

Lord Jauncey of Tullichettle

Lord Lowry

Kenneth Allison Limited (In Liquidation) and Others
(Appellants)
and
A. E. Limehouse & Co. (A Firm)
(Respondents)
Lord Bridge of Harwich

My Lords,

1

The defendants are a firm of chartered accountants. On 5 October 1987 the plaintiffs issued a writ against them claiming damages for negligence in carrying out an audit in or about November 1981. On 4 October 1988, the last day of the currency of the writ, a Mr. Swann, on the instructions of the plaintiffs' solicitors, attended at the offices of the defendant firm in order to serve the writ. The receptionist called Mrs. Morgan, the personal assistant to the senior partner, to the reception area. Mr. Swann showed Mrs. Morgan the writ. She told him that she would have to refer the matter to a partner before the writ could be accepted. She left Mr. Swann in the reception area and went to speak to Mr. Hall, a partner in the defendant firm. Mr. Hall told Mrs. Morgan that she might accept the writ. Mrs. Morgan then returned to the reception area, told Mr. Swann that she had been authorised to accept the writ and received from Mr. Swann a sealed copy of the writ and a form of acknowledgment of service. These facts are as recounted in the affidavit of Mrs. Morgan filed by the defendants and are undisputed.

2

In due time the defendants applied by summons for an order setting aside service of the writ or declaring that it had not been duly served. The application was dismissed by Mr. District Registrar Rutherford, but allowed on appeal by McCullough J., who declared that the writ had not been duly served on the defendants. The plaintiffs' appeal was dismissed by a majority of the Court of Appeal (Russell and Farquharson L.JJ., Lord Donaldson of Lymington M.R. dissenting) [1990] 2 Q.B. 527. The plaintiffs now appeal by leave of your Lordships' House.

3

The important question which lies at the heart of the appeal is whether the provisions of the Rules of the Supreme Court which relate to the service of originating process constitute an exclusive code by which alone such service may be effected, as McCullough J. and the majority of the Court of Appeal held, or whether, if parties agree between themselves on a mode of service outside the ambit of the rules, service in that mode ("consensual service," as Lord Donaldson aptly called it) will, as he held, be effective.

Order 10, rule 1(1) provides that:

"A writ must be served personally on each defendant by the plaintiff or his agent."

4

Sub-rules (2) and (3) provide for service by post or through a letter box at the defendant's usual or last known address. Sub-rule (4) provides that:

"Where a defendant's solicitor indorses on the writ a statement that he accepts service of the writ on behalf of that defendant, the writ shall be deemed to have been duly served on that defendant and to have been so served on the date on which the indorsement was made."

5

Order 65, rule 2 provides that:

"Personal service of a document is effected by leaving a copy of the document with the person to be served."

6

Where, as here, partners are sued in the name of a firm, Order 81, rule 3 provides that the writ may be served on any one or more of the partners. The rule also provides for service at the principal place of business of the partnership either by post or on any person having control or management of the partnership business there.

7

Mr. Vallance's first submission in support of the appeal is that, in the circumstances deposed to by Mrs. Morgan in her affidavit, the writ was served personally on Mr. Hall. I cannot accept this. There is abundant authority for the proposition that personal service requires that the document be handed to the person to be served or, if he will not accept it, that he be told what the document contains and the document be left with or near him. It follows that Mr. Vallance cannot rely on any provision in the rules to validate the service and must rely on Mr. Hall's express authorisation of Mrs. Morgan to accept service on his behalf which was communicated to and acted on by Mr. Swann when he handed the writ to Mrs. Morgan. Do the rules operate to prevent such an ad hoc agreement having effect? This question is not free of authority, but the relevant decisions were made in relation to the Rules of the Supreme Court 1883 which provided by Order IX, rules 1 and 2 as follows:

"1. No service of writ shall be required when the defendant, by his solicitor, undertakes in writing to accept service and enters an appearance.

2. When service is required the writ shall, wherever it is practicable, be served in the manner in which personal service is now made, but if it be made to appear to the Court or a Judge that the plaintiff is from any cause unable to effect prompt personal service, the Court or Judge may make such order for substituted or other service, or for the substitution for service of notice, by advertisement or otherwise, as may be just."

8

In Tharsis Sulphur and Copper Co. v. Société Industrielle et Commerciale des Métaux (1889) 60 L.T. 924 an English company and a French company, which had no place of business in England, had entered into a contract to be governed by English law whereby the French company submitted to the jurisdiction of the High Court of Justice in England and appointed an agent in London "on whom any writ or other legal process in respect of any matter arising out of this contract may be served." The English company duly served a writ on the appointed agent, but the French company applied to set the service aside as not being in accordance with the rules. Delivering the first judgment in the Divisional Court, which dismissed the application, Field J. said:

"Now, it is clearly not a service in the manner provided for in the rules, but then is it to be competent to anybody to contract himself out of the rules, at all events to agree to a particular mode of service, and, not only that, but to appoint a particular person to accept service for him? … it is quite clear, on principle, that a person may for consideration appoint another as agent to accept service, and may contract with someone else that that person shall be the person, until revocation, to accept service."

9

I refer next to British Wagon Co. Ltd. v. Gray [1896] 1 Q.B. 35. This was concerned with service out of the jurisdiction under Order XI but is relevant to any understanding of the subsequent development of the Rules of the Supreme Court with reference to contractual service of process. The plaintiff was an English company which had contracted with a person resident in Scotland. By its terms the contract was to be governed by English law and the Scottish resident submitted to the jurisdiction of the High Court of Justice in England. By Order XI, rule 1( e) service out of the jurisdiction was to be allowed where:

"The action is founded on any breach or alleged breach within the jurisdiction of any contract wherever made, which, according to the terms thereof, ought to be performed within the jurisdiction, unless the defendant is domiciled or ordinarily resident in Scotland or Ireland."

10

The English company's application for leave to serve the writ in Scotland was refused by the judge in chambers. Lord Esher M.R. delivering the first judgment in the Court of Appeal, which dismissed an appeal against the refusal, said in reference to Order XI, rule 1( e):

"The rule would permit the Court to make the Order but for the last clause, which expressly excepts such a case as this. The question whether such an order can be made is a question of jurisdiction, and therefore, by the very terms of the rule, the Court has no jurisdiction in such a case as this."

11

Referring to the case of Tharsis, Lord Esher said:

"… all that was decided was that a person without the jurisdiction may appoint a person in this country to accept service, and that acceptance by a person so appointed is a proper acceptance. That is not a question of the jurisdiction of the court to make an order as to service."

12

Montgomery, Jones & Co. v. Liebenthal & Co. [1898] 1 Q.B. 487 was another case between an English company and a Scottish company. Their contract provided that, for the purpose of any legal proceedings arising out of the contract, service of proceedings on the Scottish company should be effected by "leaving the same at the office of the London Corn Trade Association" and posting a copy to the company in Scotland. The English company issued a writ to enforce an arbitration award in their favour by the London Corn Trade Association and served it in the manner provided by the contract. The Scottish company's application to set aside the service of the writ was refused by the judge in chambers and the Court of Appeal dismissed their appeal. Counsel for the appellants argued:

"Service must be effected according to the rules, and no service is valid unless it is so effected. It is not competent to the parties to contract that a different mode of service shall be adopted: British Wagon Co. v. Gray."

13

A. L. Smith L.J. said, at p. 491:

"The question arises whether that agreement as to service is or is not a valid agreement. The writ, as I have said, has been served in the manner in which the parties agreed that it should be served. The defendants, nevertheless, say that there has been no effective personal service upon them, because the agreement as to service is invalid. To my mind that point is not tenable. I can see nothing in the rules to prevent the parties from agreeing to such a course of proceedings, and I can find no case in the books which shews that such an agreement as that made in this case is invalid."

14

Chitty L.J. said, at pp. 493-494:

"There remains the question, which is the main question in the case,...

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