Planetree Nominees Ltd & Anor v Howard Kennedy LLP

On 18^th March 2016 the claimants issued a claim form against Howard Kennedy (a firm). The issues I have to determine this morning arise from two applications. The first is an application made by the defendant for a declaration that the claim form has not been validly served and, therefore, the court has no jurisdiction to proceed with the claim. Secondly, an application made by the claimant for a declaration that the claim has been validly served or, in the alternative, for an order under CPR 6.15 for retrospective validation of service by an alternative method or at an alternative place.

Mr. George Spalton has appeared on behalf of the claimant and Mr. Carl Troman for the defendant and I am grateful to them both for their assistance.

The background to the claim is that the defendant firm of solicitors, then a partnership, provided legal services to the claimants under a retainer entered into in January 2010. The claimants say that the defendant firm was negligent in the provision of legal services and wishes to pursue a claim in negligence. The detail of the claim is of no relevance for immediate purposes, save to remark that the claim is denied by the defendant.

The claim first came to light when a letter of claim was sent by Shepherd and Wedderburn LLP on 11^th December 2015. The letter was sent by them to Howard Kennedy LLP and asserted that there was a claim against Howard Kennedy LLP. For convenience in this judgment I will distinguish between Howard Kennedy, the firm, and Howard Kennedy LLP by referring to the former as “Howard Kennedy” and the latter as “the LLP”.

The undisputed facts are that Howard Kennedy ceased trading as a partnership in 2011 and, upon it having ceased to trade as a partnership, the practice of Howard Kennedy was transferred to the LLP; such is, of course, an extremely common event amongst law firms. The second relevant matter is that the LLP moved from an address at 19 Cavendish Square, London W1 to an address at No. 1 London Bridge in 2014.

The letter of claim received a response initially from the Director of Risk and Compliance at the LLP, Ms. Rebecca Atkinson. She pointed out that, as she put it, "the correct entity" is Howard Kennedy and not the LLP. The parties agreed to enter into a standstill agreement while the letter of claim was being considered. The initial draft sent by the claimants’ solicitors described the defendant as the LLP, but that was corrected and on 7^th January 2016 a standstill agreement was entered into between the claimants and Howard Kennedy. The standstill agreement was subject to termination by notice and such notice was automatically given in the event of proceedings being issued in connection with "the dispute", a term defined in the agreement.

The notice provisions in the standstill agreement at clause 10 required notice under the agreement to be given at the address provided for in the agreement. In the case of Howard Kennedy, that was No. 1 London Bridge, London SE1 9BG. However, clause 10.4 of the standstill agreement provided:

“This clause shall not apply to the service of any proceedings or other documents in any legal action”.

I note that that clause does not refer to the defined term “the dispute”, but it appears to me that the drafting of clause 10.4 is in rather wider terms and by not referring to the defined term it seems to me the intention was to make it clear that the notice clause and its machinery had no application to legal proceedings. Indeed, it is likely that the provisions of clause 10 could not in any event affect the manner in which the CPR operates.

On 16^th February 2016 RPC LLP responded to the letter of claim. This had been forecast by Ms. Atkinson who confirmed that RPC was instructed. Her email dated 20^th January 2016 stated:

“Our insurers are QBE. We have appointed. RPC LLP to act and respond to the letter”.

In passing, it is pertinent to note, and the court can take judicial knowledge of the fact, that in these circumstances, plainly, the LLP was the successor practice to Howard Kennedy and, professional indemnity insurance being on a 'claims made' basis, the relevant policy engaged was that of the LLP at the date of notification of the claim. It was, therefore, accurate for Ms. Atkinson to say that the LLP’s insurers were QBE and the LLP had appointed RPC LLP. Nevertheless, there was an overlap between the partners and the members of the LLP and the signatory to the standstill agreement was Mr. Steven Morris. He sent the standstill agreement on 30^th December 2015 duly executed on behalf of Howard Kennedy. The email was sent from his email address at the LLP and referred to him being a partner in Howard Kennedy LLP, no doubt meaning that in fact he was a member of the LLP.

The letter from RPC rejected the claim and gave notice to the claimants to terminate the standstill agreement. The claim was issued on 18^th March, but immediately prior to that date the claimants’ solicitors asked RPC whether they had instructions to accept service on behalf of Howard Kennedy. There was no response to that email and no subsequent chasing request to RPC.

The next relevant event is nearly four months later namely 14^th July 2016. A letter was sent by the claimants’ solicitors addressed to Howard Kennedy at the LLP's address and enclosing, purportedly by way of service, the claim form which had been issued nearly four months previously. The defendant a few days later disputed that the claim had been sent to the correct address and that is how the issue I am asked to decide arises.

It is important to bear in mind that a claim against a partnership is a claim against individuals, it being trite law that a partnership has no legal personality. In considering the relevant provisions of the CPR, to my mind the right starting point is to consider the Practice Direction 7A, para.5A and 5B. Paragraph 5A.3 says:

“Where that partnership has a name, unless it is inappropriate to do so, claims must be brought in or against the name under which that partnership carried on business at the time the cause of action accrued”.

This provision is a convenient device in relation to partnerships which obviates the need for the claimant to bring the claim in the name of the individuals who were partners in the firm at the date that the cause of action accrued. It is a convenience, because there may be circumstances in which the claimant has difficulty establishing the identity of the relevant partners. That difficulty, however, should in most, if not all, cases be capable of being overcome by the provisions of para.5B of Practice Direction 7A. A party, whether or not a claim has been issued, is entitled to make a request for a "partnership membership statement" and there is a requirement placed on the receiving party to respond to that request within 14 days. The party making the request must specify the date when the relevant cause of action arose. The response to the partnership membership statement must include the names and last known places of residence of all the persons who were partners in the partnership at the time the cause of action accrued. The obvious purpose behind para.5B is to enable a putative claimant to establish who needs to be served with the claim form if individual service is required.

Curiously in this case, the request for a partnership membership statement was only made by the claimants’ solicitors after service had, as it is asserted by them, taken place and after the four month period had expired. The request was made on 24^th August 2016 and on 1^st September 2016 RPC responded with the statement naming a number of individuals and providing their addresses. It is relevant to note that all those individuals have residential addresses either in London or in the South East of England. It follows that there would have been no difficulty serving one, some or all of those partners at those respective addresses.

The main provision in relation to service is at CPR 6.9, and it is common ground that for the purposes of this claim 6.9(2) was applicable with the provision at box 3 being engaged. So an individual being sued in the business name of the partnership, as here, the relevant place for service is the: "Usual or last known residence of the individual; or principal or last known place of business of the partnership". The remaining provisions of CPR 6.9 which are applicable are. Sub-rules (3) (4) and (5):

“(3)

Where a claimant has reason to believe that the address of the defendant referred to in entries 1, 2 or 3 in the table in paragraph (2) is an address at which the defendant no longer resides or carries on business, the claimant must take reasonable steps to ascertain the address of the defendant’s current residence or place of business ("current address").

(4)

Where, having taken the reasonable steps required by paragraph (3), the claimant –

(a)

ascertains the defendant’s current address, the claim form must be served at that address; or

(b)

is unable to ascertain the defendant’s current address, the claimant must consider whether there is –

(i)

an alternative place where; or

(ii)

an alternative method by which,

service may be effected.

(5)

If, under paragraph (4)(b),there is such a place where or a method by which service may be effected, the claimant must make an application under rule 6.15.

Rule 6.15 makes provision for service of the claim form by an alternative method or at an alternative place and sub-rule (2) provides:

“On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service”.

The first question I have to consider is whether the claim form has been served. If it has been served in accordance with the CPR then there is no need to consider CPR 6.15. I have been provided with witness statements on behalf of both parties, but essentially the facts are common. It is, as I have said, not in dispute that Howard Kennedy was dissolved and its practice transferred to the LLP and that the LLP moved from the address in Cavendish Square to London Bridge in 2014. As a starting point it seems to me there is very real doubt about whether a partnership which has dissolved is capable of having a "place of business". Plainly, it is possible to see here that the Cavendish Square address was the last known place of business of the partnership, but what is much less clear is whether it is possible under any circumstances that a dissolved partnership is capable, for the purposes of sub-rule (3), of having a current place of business. In any event, I have very real doubt about whether that can be so here, given that upon dissolution of the partnership, the business was transferred to the LLP. There was no business of Howard Kennedy left to conduct save, perhaps, for internal issues relating to the financial affairs of the partners as between themselves. The position might be different if a partnership is dissolved but continues to trade as part of the process of winding up but there is no evidence of that here.

Nevertheless, and on the assumption that my conclusion about the absence of a place of business may be wrong, it is necessary to examine what happened here. The initial letter of claim was addressed to the LLP. That was, of course, not correct. The LLP, as the successor practice, received the claim and pointed out that the cause of action was against Howard Kennedy and Ms. Atkinson in dealing with the claimants’ solicitors did so as the Director of Risk and Compliance of the LLP. The standstill agreement provides an address for the partnership of No. 1 London Bridge and Mr. Morris in providing the signed agreement sent an email from No. 1 London Bridge. Those facts come nowhere near to providing evidence that Howard Kennedy had a current place of business at No. 1 London Bridge. It is also right to point to clause 10.4 of the standstill agreement which expressly provided that the service of notice provisions were relevant only to the standstill agreement and did not have wider application. It seems to me there was a clear statement being made in clause 10.4 that proceedings could not be served at the London Bridge address and certainly not served relying on anything in the Standstill agreement.

The requirement of CPR 6.9(3) is for the claimant to take reasonable steps to ascertain the current address. Some evidence of steps is contained in Mr. Wells’s witness statement made on behalf of the claimants. These steps were not, as far as it is possible to discern, matters which were looked into after the claim form was issued. In any event, what is absolutely clear is that no step was taken under Practice Direction 7A para.5B to request a partnership membership statement. It seems to me that it is not possible for a claimant to say that it has taken reasonable steps to ascertain the current address of the individual defendants, the partners, or a place of business without serving such a request. Sub-rule (4) applies only where the claimant has taken reasonable steps. To my mind, that provision does not need to be considered here. It seems to me, in the circumstances of a partnership having ceased to carry on a business, and that was something the claimants knew, it was a requirement for the claimants to make a request for a partnership membership statement.

In answer to the first question, it is not possible for the claimants to contend that the claim was served at the current place of business of Howard Kennedy, either because Howard Kennedy was not capable of having a current place of business or, if it was, it was not, on the evidence, the address at London Bridge.

I turn, therefore, to consider whether this is a case in which the court should deal with the position under CPR 6.15(2). The sub-rule itself does not make any reference, unlike sub-rule (1), to the need for there to be a good reason to authorise service by an alternative method or at an alternative place. It is, however, common ground that such a requirement is needed. A helpful summary of the relevant principles following Abela v Baadarni [2013] UKSC 44 is provided in the judgment of Floyd LJ in Barton v Wright Hassall LLP [2016] CP REP 29. The summary he provided is as follows:

“i)

In deciding whether steps should be validated under the rule the court should simply ask itself whether there is ‘good reason’ to do so: (Abela [35]).

ii)

A critical factor in deciding whether to validate service under the rule is that the document has come to the attention of the party intended to be served: (Abela [36]). That is the whole purpose of service: (Abela [37], [38]).

iii)

However it is not by itself sufficient that the document was brought to the attention of the opposite party: something more must be present before there is a ‘good reason’: (Abela [36]).

iv)

In deciding whether there is a ‘good reason’, there will inevitably be a focus on the reason why the claim form cannot or could not be served within the period of its validity, although this is by no means the only area of inquiry: (Abela [48], Kaki [33]).

v)

The conduct of the claimant and of the defendant is relevant: (Kaki [33]). It is not necessary, however, for the claimant to show that he has taken all the steps he could have reasonably taken to effect service by the proper method: (Power [39]).

vi)

The mere fact that one party is a litigant in person cannot on its own amount to a good reason, although it may have some relevance at the margins: (Hysaj [44]-[45]; Nata Lee [53]).

vii)

If one party or the other is playing technical games, this will count against him: (Abela [38]).

viii)

An appellate court will only interfere with the judge’s evaluation of the various factors in the assessment of whether there is a good reason if he has erred in principle or was wrong in reaching the conclusion which he did: (Abela [23]).

Without attempting to deconstruct those principles, I note it is of particular importance that, as here, the claim form has come to the attention of the defendant. It is accepted that the partners in Howard Kennedy at the time the cause of action arose became aware of the claim by virtue of it having been sent to the LLP, but the authorities make clear that something more must be present for there to be a good reason. It is also of note that although the focus is not exclusively upon the reason why the claim form cannot or could not be served within the period of validity, this is an important matter.

Mr. Spalton who appears for the claimants seeks to characterise the defendant’s application as one based on a technicality. It seems to me that may well be an accurate description of the application, but it is not in itself a relevant factor. The rules relating to service of claim forms are technical, but they must be complied with. The court has no freestanding discretion to validate service of a claim form. Where an error may have occurred the court must apply the provisions of the CPR and so when considering the application under CPR 6.15(2) there must be a good reason and principally that reason must be related to the difficulties experienced in serving the claim. To my mind, one of the main difficulties for the claimants on their application is the complete absence of any explanation about what was happening between the period starting with the issue of the claim form and the letter to the LLP nearly four months later. The claimants were aware at the date of issue of the claim that RPC had not said in response to the email of 16^th March 2016 whether it would accept service and the claimants were aware that there was no response subsequently. No attempt was made to follow up that email. It is wholly unclear why the first step in relation to service of the claim form took place on 14^th July 2016 and I can only assume that the claimants have chosen not to provide the court with that information, asserting, as it is entitled, a right of privilege, enabling it to cast a veil over that period of time.

It does seem to me, as I have said, that the absence of such an explanation creates a very real difficulty for the claimants, because there is no explanation about why the claim form could not be served within the period of its validity. To my mind, that in this case, on its particular facts, is fatal to the claimants’ application. The claimants have simply not provided any reason, let alone a good reason, why the court should exercise its discretion under CPR 6.15(2).

The focus of the claimants' application has been on events which took place prior to the issue of the claim. The claimants have drawn attention to the dealings with the asserted claim by the LLP and by the appointment of RPC by the LLP. However, there is nothing in those events, to my mind, that comes close to providing a good reason for the court to exercise its power and I decline to do so.

I would just add that during the course of argument there was some implicit criticism of RPC for not responding to the email request made on 16^th March 2016. I do not think that such a criticism can properly be made, given that there is no obligation on behalf of a party to appoint solicitors to accept service of proceedings and, in particular, the absence of a chasing request for a response to that email, leaves the absence of a response as an entirely neutral matter and not a matter of criticism.

I will, therefore, grant the defendant’s request for a declaration that service has not taken place, the precise terms of which can be discussed with counsel, and dismiss the claimants’ application.