Case No: HC03C02683
Neutral Citation Number: [2006] EWHC 96 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 31/01/2006

Before :

Mr. JUSTICE EVANS-LOMBE
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Between :

	FAIRMAYS
(formerly Palmer Cowen) (A Firm)	
Claimant	
	
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	MICHAEL JAMES PALMER	Defendant	

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Tim Penny (instructed by Cartier & Co) for the Claimant
Robert Foote (instructed by TLT Solicitors) for the Defendant

Hearing date: 18 January 2006
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Judgment
Mr. Justice Evans-Lombe : 
1.	On the 21st May 2004 Master Bowman dismissed the application of the defendant in these proceedings, Michael James Palmer, to set aside the judgment obtained against him by the claimant, a firm of solicitors of which he was formerly a partner, in default of acknowledgement of service, on the 31st October 2003.  The Master gave permission to appeal from his order.  The application to set aside was made pursuant to CPR 13.2 which, materially, provides as follows:-
“13.2	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 acknowledgement of service any of the conditions of Rule 12.3(1) and 12.3(3) was not satisfied;…”
CPR 12.3(1) provides:-
“12.3(1)The claimant may obtain judgment in default of an acknowledgement of service only if –
(a)	the defendant has not filed an acknowledgement of service or a defence to the claim (or any part of the claim); and
(b)	the relevant time for doing has expired;…”
CPR 10.3 under the heading “the period for filing an acknowledgement of service”, provides:-
“10.3(1) The general rule is that the period for filing an acknowledgement of service is –
(a)	where the defendant is served with a claim form which states that the particulars of claim are to follow, 14 days after service of the particulars of claim; and
(b)	in any other case 14 days after service of the claim form.
(2)	The general rule is subject to the following rules-
(a)	Rule 6.22 (which specifies how the period for filing an acknowledgement of service is calculated where the claim form is served out of the jurisdiction);… ”
It follows from these provisions of the CPR, as is obvious, that judgment cannot be obtained in default of acknowledgment of service unless the proceedings have been properly served in accordance with the Rules.
2.	CPR 6.5 provides:-
“6.5(1)	Except as provided by section iii of this part (service out of the jurisdiction) a document must be served within the jurisdiction….
(6)	Where –
(a) no solicitor is acting for the party to be served; and
(b) the party has not given an address for service,
The document must be sent or transmitted to, or left at, the place shown in the following table….”
That table shows that, in respect of an individual, the place of service within the jurisdiction at which service is to be effected is the “usual or last known residence”.  The exception to that rule, as provided for in CPR 6.5(1) is where service is to be effected outside the jurisdiction in which case the provisions of Part iii of rule 6 apply.  It is not necessary for me to set out the relevant rules in Part iii because it is common ground that the provisions of Part iii and in particular CPR 6.24 have not been complied with.
3.	Under the heading “deemed service” CPR 6.7 provides:-
“6.7(1)	A document which is served in accordance with these rules or any relevant practice direction shall be deemed to be served on the day shown in the following table … ”
That table shows that where the method of service is by 1st Class post the deemed day of service is “the second day after it was posted.”
4.	At an earlier, adjourned, hearing of the application to set aside Master Bowman had requested that the parties provide a notice of agreed facts.  This was done.  Since the notice of agreed facts conveniently gives the background history of the case I will set it out in full although the facts relevant to the decision of the appeal are few in number.
“AGREED STATEMENT OF FACTS PURSUANT TO THE ORDER OF MASTER BOWMAN
1.	The Claimant previously carried on business as a firm of solicitors.  it was known previously as “Palmer Cowen”. Until a date in or around July 1997 (the precise date is in dispute, and the resolution of this issue may have consequences as regards limitation issues), the Defendant was a partner in the firm of Palmer Cowen.  In or around July 1997 the Defendant left the partnership.  There is disagreement as to the terms of his leaving.
2. Prior to the Defendant’s retirement from the firm, it carried on 2 businesses: a solicitors’ partnership in London and a solicitors’ partnership in Bahrain. The Claimant alleges that the Partnership “Deed” annexed to the Particulars of Claim governed both the UK and Bahrain partnerships (currently there is a dispute as to whether this document was executed as a deed or whether it was a simple contract between the partners, and the resolution of this question may have limitation consequences). The Claimant alleges that the Partnership “Deed” governed both businesses, whereas the Defendant accepts that the document governed the terms of the English partnership but denies that it governed the terms of the Bahrain partnership. The document contains an arbitration clause.
3. Certain discussions and communications have taken place between the Claimant and the Defendant regarding the parties’ alleged liabilities to each other arising from the partnership, but no agreement has been reached.
4. Prior to 16 May 2003, the Defendant’s home address was Lower Farm House, Longborough, Moreton-in-Marsh, GL56 OQC (“the English Property”). [i.e. The Defendant was until the 16th May 2003 “resident” at this address for the purposes of CPR 6.5 (6).]
5. On 16 May 2003, the Defendant went to live in Addis Ababa, Ethiopia, on a 3 year consultancy contract. Thereafter, he retained ownership of the English Property, but at all material times after 16 May 2003 he was not resident at the English Property. Insofar as it is relevant, the Claimant does not admit that the Defendant had at that stage abandoned his UK domicile.  [I will assume that the Claimant is correct about this.] 
6. By letter dated 21 June 2003, the Claimant’s partner Mr Langford wrote to the Defendant by letter sent to the English Property. The Defendant responded by letter dated 4 July 2003, in which he stated (inter alia) “I am currently working abroad and will be for some years” and he continued “I am no longer resident at [the English Property] but write as from that address. I left the UK on 16 May”.
7. 24 July 2003 the Claim Form was issued giving the English Property as the address for service. The Claim Form was not issued for service outside the jurisdiction.
8.	On Friday 25 July 2003, the Claimant's solicitor Mr Blundy purported to serve the Claim Form, Particulars and Response Pack by posting these documents by first class post to the English Property, Mr Blundy has stated in evidence that the letter was not returned as undelivered. [I will assume Mr Blundy is right]
9. The Claimant contends that the date for deemed service under the CPR was 29 July 2003. The Defendant contends that the date for deemed service would be 27 July 2003. Either way, it is common ground that the Defendant was not within the jurisdiction as at the date of deemed service.
10. On 1 August 2003, the Defendant arrived in the UK for a holiday, and returned to Addis Ababa on 10 August 2003.  During his stay in England he stayed at the English Property but did not receive the documents purportedly served by post on 25 July 2003.  [It is common ground that at the material time the Defendant’s mail was being redirected by the Post Office to his address in Ethiopia.]
11. On 19 September 2003, the Claimant issued an application for Judgment in default of acknowledgement of service, and Mr Lang-ford made a witness statement in support of that application.
12. On 24 September 2003, the Claimant’s solicitors purported to serve the application notice, notice of hearing and witness statement of Mr Langford and exhibit by post to the English Property.
13. On the same date, the Claimant’s solicitors tried to serve the documents on the Defendant by e-mail. The Defendant could read only part of the documentation sent to him and on 7 October 2003 the Defendant sent a letter to the Claimant’s solicitors explaining that he was unaware of the Claim and the application that had been made. On 7 October 2003, the Defendant supplied the Claimant with details of his P.O Box address in Addis Ababa, Ethiopia.
14. On, 9 October 2003, the Defendant received the hard copy of the letter of 24 September 2003, and informed the Claimant’s solicitors by an email that he believed that proceedings had not been validly served.
15. From 13 October 2003, there was an exchange of emails between the Claimant’s solicitors and the Defendant. The Claimant’s solicitors refused to adjourn the forthcoming hearing. The Defendant continued to complain to the Claimant’s solicitors about their failure to comply with the rules as to service.
16. By letter dated 17 October 2003 to the Master, the Defendant explained (inter alia) that he was resident in Ethiopia and invited the Court to order that the Claim Form should be served in accordance with the rules relating to service outside the jurisdiction.
17. On 31 October 2003, Master Bowman heard the Claimant’s Application Notice and gave judgment against the Defendant in default of acknowledgement of service.  He considered the issue of service, the case of Smith v Hughes and concluded that he was satisfied that proper service had been effected at the English Property as it was the Defendant’s last known address.  The Master was not referred by the Claimant’s solicitor to any principles of law or case law regarding service upon defendants who are outside the jurisdiction at the date of service.
18. Around 17 November 2003, the Defendant learned of the Judgment against him and contacted solicitors, Cartier & Co.  [The Claimant has subsequently taken proceedings to secure the judgment debt by means of a charging order.] 
19. The 4 month period for service of the Claim Form under CPR Rule 7.5(2) expired on 24 November 2003.
20. On 16 December 2003, the Defendant issued and served an application to set aside Judgment (inter alia) on the basis that the Claim Form had not been validly served on the Defendant.
21. The six month period for service of the Claim Form outside the jurisdiction under CPR Rule 7.5(3) expired on 24 January 2004.”
5.	It follows that before the Master it was common ground that:-
i)	The proceedings were not issued for service abroad but for service within the jurisdiction and no attempt has been made to serve the proceedings in compliance with Part iii of CPR 6.
ii)	The proceedings were served by post under CPR 6 addressed to the last known residence of the defendant within the jurisdiction.
iii)	At the time that service was deemed to take place pursuant to CPR 6.7 the defendant was outside the jurisdiction.  The proceedings were never brought to his attention at any material time at which the defendant was present in the jurisdiction.
6.	In his submissions to the Master counsel for the defendant primarily relied on two authorities.  The first authority was the decision of the House of Lords in Barclays Bank Swaziland Ltd v Hahn [1989] 1 WLR 506.  In that case the House was considering a question of the validity of service of proceedings where proceedings were served by means of “letterbox service” at a moment when the defendant was en-route to this country but was not within the jurisdiction.  Later that day he arrived within the jurisdiction and was warned by his servant of the delivery of a package, which plainly contained proceedings being sought to be served on him, to his flat in London.  He did not, therefore, go to the flat but sent his wife to confirm what his servant had told him.  He stayed that night in a hotel and left the jurisdiction the following day.  The case was governed by Order 10 Rule 1 of the Rules of the Supreme Court which provided at sub-rule (3) that where proceedings were served by “letterbox service”, “the date of service shall, unless the contrary is shown, be deemed to be the 7th day…after the date on which the copy was sent to or, as the case may be, inserted through the letterbox for the address in question.”  The House of Lords concluded that there had been good service because the proceedings were drawn to his attention at a time when he was within the jurisdiction, namely, when his servant and his wife drew his attention to the package which had been delivered to the flat before he left the country on the second day.  The leading speech in the House of Lords was given by Lord Brightman.  The following passage from his speech appears in the report at page 509 H:-
“The bank contended that although a writ can be served on a defendant personally only if he is then physically present within the jurisdiction, nevertheless it does not follow that physical presence within the jurisdiction is necessary for the validity of the alternative means of service provided by Order 10, namely, postal or letter box service. In support of this argument it was contended that in the opening words of paragraph (2) “A writ for service on a defendant within the jurisdiction may . . . be served” by post or through the letter box, the words “within the jurisdiction” are not descriptive of “a defendant” but of the nature of “a writ for service,” namely, a writ which is in the form of a writ for service within the jurisdiction as distinct from a writ which is in the form of a writ for service outside the jurisdiction. The former type of writ can properly be served on a defendant who is outside the jurisdiction provided that the requirements of the order are fulfilled, that is to say, in the case of letter box service, the letter box must be located at the usual address of the defendant, or at his last known address and the plaintiff must be in a position to depose when he seeks to prove service that in his opinion the copy writ will have come to the knowledge of the defendant within seven days after such insertion.”
7.	Then later on page 410 H Lord Brightman is recorded as continuing:-
“My Lords, I accept the appellant’s proposition that the defendant must be within the jurisdiction at the time when the writ is served, and I do not find it possible to agree the Court of Appeal’s approach. [namely that service of proceedings issued for service within the jurisdiction can properly be served at the last known address of the defendant within the jurisdiction notwithstanding that, at the time of service, the defendant is abroad] This approach would mean that a writ could validly be served under Order 10 on a defendant who had once had an address in England but had permanently left this country and settled elsewhere, by inserting the copy writ through the letter box of his last address, provided that the plaintiff was able within seven days to communicate to the defendant the existence of the copy writ; for in such circumstances the plaintiff could properly depose that the copy writ would have come to the knowledge of the defendant within seven days after it was left in the letter box of his last known address. [a requirement of the rules of the Supreme Court not reproduced in the CPR] This appears to me to outflank Order 11 (relating to service of process outside the jurisdiction) in every case where the defendant was formerly resident in this country and is capable of being contacted abroad within seven days. I feel no doubt that the words “within the jurisdiction” apply to the defendant, and not to the writ for service.”
8.	The second authority on which counsel for the defendant relied before the Master was the decision of Mr Justice Lawrence Collins in Chellaram v Chellaram reported at [2002] 3 All ER p 17.  That was a case with complicated facts and many defendants which it is not necessary, for the purpose of this judgment, to summarise.  Mr Justice Collins found that one of the proposed defendants had not been properly served by posting the proceedings to an address at which he stayed on his very occasional visits to London, the proceedings not having been issued for the purposes of service abroad, because at the time of deemed service under CPR 6 he was not physically within the jurisdiction.  Mr Justice Collins gave two reasons for finding that the proceedings had not been properly served on the particular defendant the second of which is relevant to this case and was cited by the Master in his judgment under appeal. Mr Justice Collins said this at paragraph 47 of his judgment:-
“Secondly, it has always been, and remains, a fundamental rule of English procedure and jurisdiction that a defendant may be served with originating process within the jurisdiction only if he is present in the jurisdiction at the time of service, or deemed service. The Barclays Bank case is simply an illustration of this principle (as is another case, not cited in argument, Cadogan Properties Ltd v Mount Eden Land Ltd [2000] IL Pr 722, in which the Court of Appeal held that if the defendant is outside England, an order for substituted service in England could not be obtained unless permission to serve proceedings out of the jurisdiction had been obtained). CPR Pt 6 contains general rules about service of documents and does not only apply to service of a claim form…but I do not consider that CPR 6.5 has swept away the general principle so far as it relates to service of the claim form.”
9.	For a time, I considered that the decision of the Court of Appeal in Rolph v Zolan [1993] 1 WLR 1305 might offer a route to save the proceedings.  That was a case were the Court of Appeal found, in respect of proceedings in the County Court that by reason of the particular wording of Order 7 Rule 20 of the County Court Rules 1981 then in force, postal service of County Court proceedings on an address within the jurisdiction could be good service notwithstanding that the defendant was physically outside the jurisdiction at the time of such service.  Having cited the provisions of RSC Order 10 Rule 1, still in force at the time of the judgment, Lord Justice Dillon is recorded as saying at page 1312 of the report:-
“Thus it is expressly provided that postal service of process in the High Court can only be effected on a defendant within the jurisdiction. The words “within the jurisdiction” refer to the physical presence of the defendant at the time of service not to where the writ is or the premises to which it is posted are: see Barclays Bank of Swaziland Ltd. v. Hahn…per Lord Brightman. The crucial question is therefore whether a similar limitation has to be read into Ord. 7, r. 1 and 10 of the County Court Rules in order to limit postal service to service on defendants who at the time of actual or deemed service are physically within the jurisdiction. If such limitation does have to be read in, then it cannot help the plaintiff that Mr. Palmer, the defendant's agent who collected the summons and any other mail from 13A, Sparsholt Road, was within the jurisdiction when he collected it, because the defendant himself was not within the jurisdiction at that time. There are of course separate provisions in R.S.C., Ord. 11 and Order 8 of the County Court Rules 1981 which provide for service of process out of the jurisdiction. They have no relevance to this case, since, although service on a defendant resident in Spain can be effected without leave of the court, the summons in this case does not satisfy the requirements of Order 8 as to the form of a summons to be served out of the jurisdiction under the European Convention. The receipt of the summons by the defendant in Spain cannot be regarded as constituting service in Spain under Order 8.”
10.	Later in his judgment at page 1313 Lord Justice Dillon continues, having described the history of the relevant High Court and County Court Rules then in force:-
“Against that history of the rules, I find it impossible by any process of mere construction to limit the scope of the present Ord. 7, rules 1 and 10 to service only on a defendant "within the jurisdiction, by analogy to R.S.C., Order 10, rule 1… For my part, I regard the limitation in R.S.C., Ord. 10, r. 1, as interpreted in Barclays Bank of Swaziland Ltd. v. Hahn…to postal service on defendants who are within the jurisdiction to the time of service as a very specific limitation, and not a general principle of practice in the High Court within the meaning of section 76 of the Act of 1984. Postal service itself is a matter of specific rules, and not a matter of general principles of practice.”
11.	I respectfully agree with Mr Justice Collins’ conclusion in the Chellaram case that the arrival of CPR 6 does not require the earlier authorities and, in particular, the Barclays Bank of Swaziland case to be swept away.  It should be noted that notwithstanding that Lord Justice Dillon’s judgment in Rolph’s case appears inconsistent with the “fundamental rule” suggested by Mr Justice Collins in  Chellaram, the principle that service of proceedings, issued for service within the jurisdiction, can only be effectively served when the defendant is physically present within the jurisdiction, is one which the Court of Appeal applied in  Cadogan Properties Ltd v Mount Eden Land Ltd after the coming into force of the CPR as cited by Mr Justice Collins.  I also respectfully accept Mr Justice Collins’ conclusion at paragraph 46 of his judgment in Chellaram that Rolph’s case can be distinguished as passing under the particular provisions of the County Court Rules which governed it, which provisions are to be contrasted with the provisions of the RSC then in force, which contrast was highlighted by Lord Justice Dillon, and with the provisions of CPR 6.5(1)
12.	The material passage in the Master’s judgment, dismissing the application to set aside the judgment, is contained at paragraphs 24 and 25 as follows:-
“24.	Plainly it would be a brave step on my part to ignore House of Lords authority and a statement of principle by a member of the judiciary who is acknowledged as expert in this field.  Nevertheless, I have reached the conclusion that, while accepting the fundamental principle enunciated in the two authorities to which I have referred, I must nevertheless apply the primary provision of the CPR which provides for service at the usual or last known address.
25.	At the time of service of these proceedings the usual or last known address was the Gloucestershire address.  The claimant had no means of obtaining the defendant’s present address.  In those circumstances I have reached the conclusion that it was entirely proper, as I indicated before, that they should serve the proceedings at that address.  The address was one within the jurisdiction.  In those circumstance no permission to serve out of the jurisdiction was required.  I remain of the view, as I was on 31 October 2003, that service of this claim form was properly effected. ”
13.	It appears that the possible inconsistency of the decision in Rolph’s case with the judgment of Mr Justice Collins in the Chellaram case was not drawn to the attention of the Master.  In any event he does not advert to it and I have concluded that it has no binding effect in the present case.  However in the light of the authorities I cannot accept the Master’s conclusion.  
14.	Once it is accepted that the decision in the Chellaram case “as a matter of broad principle” is correct, as the Master does at paragraph 22 of his judgment, and that in consequence the decision of the House of Lords in Barclays Bank of Swaziland  remains good law,  it is not open to a court, in the light of the provisions of CPR 6.5(1), to conclude that proceedings issued for service within the jurisdiction can properly be served when, at the time of deemed service the defendant was physically out of the jurisdiction.  
15.	The Master correctly concluded that the domicile of the defendant was irrelevant to the issue.  There are passages in his judgment (paragraph 20) where it seems that he may have been influenced by a view that at the time of service the defendant was still resident in the jurisdiction because he still maintained a place of residence here.  If such were the case, in my judgment, the Master was wrong to do so.  “Residence” is only material for the purpose of CPR 6.5(6).
16.	At paragraph 23 of his judgment the Master drew attention to the difficulties of claimants seeking to serve proceedings on a defendant for whom they did not have an accepted address for service but who they suspect may be absent abroad or become so.  It seems to me that this difficulty can be met by the issue of concurrent proceedings for service abroad in respect of which an order for alternative service on the last known address of the defendant within the jurisdiction can be obtained.
17.	For these reasons it seems to me that the appeal must be allowed.  It gives me no satisfaction to arrive at this conclusion.  I was not informed of any material period of limitation having been passed.  It is conceded, however, that the effect of my conclusion that the proceedings in this case have never been properly served is to render nugatory the steps thus far taken in them and the costs incurred wasted, since the Liquidator can restart his claim by fresh proceedings for which permission to serve abroad can be applied for.