Paragon Group Ltd v Burnell
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LLOYD,LORD JUSTICE NOURSE,LORD JUSTICE RALPH GIBSON |
| Judgment Date | 04 December 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J1204-6 |
| Docket Number | 90/1133 |
| Court | Court of Appeal (Civil Division) |
| Date | 04 December 1990 |
[1990] EWCA Civ J1204-6
Lord Justice Lloyd
Lord Justice Nourse
Lord Justice Ralph Gibson
90/1133
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR. JUSTICE HARMAN)
Royal Courts of Justice.
MR. ROBERT WEBB Q.C. and MR. RICHARD SHELDON (instructed by Messrs. Linklaters & Paines) appeared on behalf of the (Plaintiffs) Appellants.
MR. ANTHONY COLMAN Q.C. and MR. RICHARD JACOBS (instructed by Messrs. Travers Smith Braithwaite) appeared on behalf of the (Defendants) Respondents.
In this case we are concerned with an order for substituted service. The underlying dispute between the parties arises out of a contract dated 21st May 1987 whereby the plaintiffs agreed to buy the whole of the issued share capital of AAA Industries Limited (now known as Airoil-Flaregas Holdings Limited). Clause 4 of the contract incorporated the representations, warranties and undertakings set out in the fifth schedule. Clause 4.5 provides:
"The Vendors shall not be liable in respect of any claim by the Purchaser arising out of a breach of any of the said representations, warranties and undertakings unless:—
(a) the Purchaser has given notice in writing to the Vendors as soon as is reasonably practicable following the Purchaser becoming aware of the breach or claim in question…and
(b) the Purchaser has given such notice in writing to the Vendors on or before…31st July, 1988 provided that any claim so notified…shall be unconditionally waived by the Purchaser on the last day of the sixth calendar month immediately following such…date if proceedings in respect thereof shall not by then have been commenced and served upon the Vendors."
Notice of a claim was given to the defendants on 27th July 1988, so the six months for commencing and serving proceedings expired on 31st January 1989. On 17th January 1989 Messrs. Linklaters & Paines, the solicitors for the plaintiffs, wrote to Messrs. Travers Smith Braithwaite asking if they were instructed to accept service. On Friday, 27th January, Messrs. Travers Smith Braithwaite replied by facsimile that they had no such instructions.
The writ was issued at 4.20 p.m. on Monday, 30th January. Process servers were standing by, but they were unable to effect personal service on any of the three defendants in the case on 31st January. Accordingly at 7.15 p.m. that day the plaintiffs made an application ex parte by telephone for an order for substituted service. The application was refused by Mr. Justice Leggatt. The application was renewed by telephone at 8.30 p.m. The Master of the Rolls, having consulted Lord Justice Parker and Lord Justice Glidewell on the telephone, made the order with liberty to apply to discharge.
On 23rd October 1989 the defendants issued a summons to set aside the order made by the Court of Appeal. It came before Mr. Justice Harman on a preliminary issue. I shall set out the terms of the preliminary issue at the end of this judgment. The essential question is whether in exercising the discretion under Order 65, rule 4, the court should have regard to the time limit imposed by clause 4.5 of the contract. Mr. Justice Harman answered that question in the negative. There is now an appeal to this court.
Order 65, rule 4, provides as follows:
"(1) If, in the case of any document which by virtue of any provision of these rules is required to be served peronally, or a document to which Order 10, rule 1, applies, it appears to the Court that it is impracticable for any reason to serve that document in the manner prescribed, the Court may make an order for substituted service of that document."
I need not read Order 65, rule 4, paragraphs 2 or 3.
Mr. Webb, on behalf of the appellants, submits that the court should have regard to the commercial consequences of making or not making an order for substituted service. If the effect of service in the prescribed manner under Order 10, rule 1, is to render the action futile, that is a matter which, if not determinative, may at least be taken into account in deciding whether an order for substituted service should be made. In support of that submission he emphasises the width of the language used in Order 65, rule 4. He also relies on certain passages in the dissenting judgment of Lord Donaldson M.R. in the case of Kenneth Allison Ltd. (in Liquidation) v. A.E. Limehouse & Co. [1990] 3 W.L.R. 216.
I find myself unable to accept Mr. Webb's argument. The question for decision is very short and very simple. Was it or was it not impracticable for any reason to serve the document in the manner prescribed? If it was practicable, we are not concerned with the consequences. If it was not practicable, then there was a discretion to order substituted service.
The judge put it well when he said in the course of his judgment at page 12:
"The width of the word 'practicable' does not alter the question of what it is one must judge is practicable or not practicable…"
However wide a meaning one gives to "practicable", the question remains whether it was practicable to serve by one of the prescribed methods. If it was, then the condition set out in Order 65, rule 4, has not been satisfied. Service is practicable for the purpose of the rule, if, judged practically, service could be effected by one of the prescribed methods, even though such service served no useful purpose, having regard to the terms of the contract.
The facts of the present case illustrate the difficulty of any other conclusion. We were told that the writ covers claims under three different heads. Only one of the three heads of claim is caught by clause 4.5 of the contract. Is it to be said that service was impracticable for one purpose but not the other purposes? Then again there will be cases where the time limit is imposed, not by contract but by statute or by the rules of court. Under Order 6, rule 8, a writ must be served within four months of the date of issue. If the plaintiff leaves it too late to serve the writ within the four months, can he seek an order for substituted service and bypass thereby the provisions for extending the validity of the writ under Order 6, rule 8(2) to (4)?
These illustrations convince me that in determining whether to exercise the discretion under Order 65, rule 4, the court is concerned and concerned solely with whether it is practicable to serve the writ and not with the consequences whatever they may be. Putting it another way, the question is whether it is practicable to serve the writ, not whether it is practicable to serve the writ in time. Mr. Webb invites us in effect to write those words into Order 65, rule 4. I can see no justification for doing so.
Mr. Webb relied strongly on the decision of Mr. Justice Goulding in the case of Re Conan Doyle's Will Trusts [1971] 1 Ch. 982. I need not recount the facts of that case. The learned judge was persuaded on an ex parte application to make an order for substituted service. In doing so, he said that he had regard to the relief claimed in the writ. It may be that the conclusion was justified on the facts of the case. But the decision is not fully reasoned. One could hardly expect a fully reasoned decision on an ex parte application. In so far as the reasoning may be contrary to the reasons which I have expressed, I would respectfully regard the case as having been wrongly decided. I need not refer to the other cases Mr. Webb cited in the course of his argument.
The issue is stated in the following terms:
"whether on the proper construction of Order 65 Rule 4 it is material for the Court to take into account for the purpose of deciding whether to make an Order for Substituted Service, Clause 4.5 of the Agreement dated 21st May 1987 which provided that any claim in respect of any of the matters therein referred to would be unconditionally waived on the last day of the sixth calendar month immediately following the applicable date if proceedings in respect thereof should not by then have been commenced and served upon the Defendants."
Mr. Justice Harman answered that question in the negative. I...
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