Deemed Service of Claim Forms

FACTS

In the case of Ward Solicitors v Hendawi [2018] EWHC 1907 (Ch) the claimant had, in December 2005, mistakenly made a payment to the defendant in the sum of £177,000. The defendant had repaid £143,975 of that sum. The balance remained unpaid however.

The claimant issued proceedings and the claim form was served by the court by first class post on the defendant at the address the claimant considered to be the defendant's last known residence. However the defendant was no longer resident at that address and the claim form was returned in its envelope, as undelivered, to the court. A judgment in default was made against the defendant on 8 January 2007 in the sum of £35,884.75 (and £530 costs). On 16 January 2007 the court informed the claimant that the judgment envelope had been returned marked 'gone away'.

On 4 August 2017 the claimant issued a statutory demand under the Insolvency Act 1986 against the defendant, sent to the same address as ten years previously. The demand was not satisfied and a petition was presented for the defendant's bankruptcy, claiming interest on the original judgment debt for six years.

LAW

The defendant applied to set aside the original judgment in default. The issues for the Court were:

(1) Whether there had been good service of the claim form.

Service on the defendant had had to be effected by post and, at that date, the Civil Procedure Rules allowed service on an individual at his 'usual or last known residence’. The CPR version in force in 2006 did not contain the equivalent of the current requirement that the claimant must take extra steps if it has a 'reason to believe' that the defendant no longer resides at their last known address.

It followed that the claim form had been properly served on the defendant at his last known residence.

(2) Whether the court should exercise its discretion under CPR 13.3 to set aside the judgment in default. The question was whether there was a real prospect of the defendant succeeding in defending this claim if the default judgment was set aside.

On the facts, there was no arguable defence. Although the fact that the defendant had never received the claim form was a relevant factor in deciding whether, as a matter of discretion, to set aside a default judgment, on its own it was not enough.

CONCLUSION

The Judgment seems fairly benign given that it was clear on the facts that the defendant owed the money. However ‘deemed service’ by the Court (being the ability for the court to ‘deem’ a document received, even if not actually received) can occasionally lead to controversial decisions. Looking at the alternative however – a world in which defendants can simply assert that they never received various documents as a means of frustrating the system – and it is clear the rules must remain.

At least the modern rules require the claimant to take extra steps toward identification if it has a reason to believe that the defendant no longer resides at their last known address.

Oliver Kew

Published on 28/09/2018