Civil procedure – Service of documents – Effective service – Claimant seeking account of investment monies concerning building project – Claimants purporting to serve claim on defendant at two addresses in UK – Defendant applying to set aside service of proceedings – Whether delivery of documents constituting effective service – Whether claimants entitled to rely on section 1140 of the Companies Act 2006 dealing with service of documents on directors – Application dismissed
The claimants were special purpose vehicles (SPVs) set up to attract investment for particular building projects involving student accommodation and/or hotels. Until he resigned in 2013, under a sale and purchase agreement (SPA) whereby another company acquired the entire issued share capital of the claimants, the defendant had been the sole director of each of the claimants. The claimants said that, after the SPA, they discovered that the defendant had diverted a substantial proportion of the investment funds, amounting to at least £20 million, for his own benefit and that those funds had been transferred to an account under his control. Therefore the claimants brought proceedings seeking an account from the defendant of the investment monies received, delivery up of books and records and ancillary relief.
The claimants said that they had served the claim on the defendant by delivering the claim form, the particulars of claim and a response pack to a residential address in Romford and business premises in Barking. The defendant disputed that effective service had taken place and issued an application seeking, amongst other things, an order setting aside purported service of the claim form, a declaration that the two addresses were not his usual or last known residence and a declaration that the claim form had not been served on him.
The claimants raised a novel point concerning service. They argued that they were entitled to rely upon section 1140 of the Companies Act 2006, which dealt with service of documents on directors etc; and that by virtue of that section alone, disregarding the provisions of the CPR, service had been effected. The defendant submitted that the effect of section 1140, taking into account subsection (8) and its proper construction overall, was that it did not abrogate the general rule of conflicts law that a person might not be served at a time when he was not resident within the jurisdiction unless that absence was temporary.
Held: The application was dismissed.
Section 1140(8) limited to scope of section 1140 overall by preventing section 1140 permitting service of proceedings on a director who had provided a service address outside the UK. In such a case, it was necessary to comply with the provisions of CPR, part 6 and to obtain permission to serve out of the jurisdiction. Section 1140 provided a basis for serving a director which was entirely outside the provisions for service in the CPR. It was a parallel code. It was inherently unlikely that in passing section 1140, Parliament could have intended what was clearly designed to be a new manner in which company directors could be served should be subject to a common law principle which was directly contrary to the clear terms of the section: City and Country Properties Ltd v Kamali [2007] 1 WLR 1219 applied; Rolph v Zolan [1993] 1 WLR 1308, Chellaram v Chellaram (No 2) [2002] EWHC 632 (Ch); [2002] 3 All ER 17 and SSL International plc v TTK LIG Ltd [2012] 1 WLR 1842 considered.
Nothing in section 1140 suggested that its provisions were limited such as to prevent service upon a director who was not resident within the jurisdiction. A new regime for service of documents on directors was introduced and was intended to have a wide effect. It was not prima facie unfair that a director of an English company who resided abroad, but who gave an address for service in England, should be vulnerable to being served at that address as a choice, or deemed choice, had been made. Section 1140(8) was explicable because a director might opt to provide a service address which was outside the jurisdiction. The provision was designed to make clear that by providing a foreign address, a director was not agreeing that the English court would have jurisdiction to deal with any dispute concerning him. The general rule relating to permission for service outside the jurisdiction would still apply. Parliament plainly intended to institute a revised system that placed some importance on the service address being kept up-to-date which was the responsibility of the director himself. If he failed to make an adjustment to his address at a time when he claimed to have changed residence from England to the UAE, he had no one to blame but himself. In all the circumstances, service had been properly effected on the defendant.
Edward Cumming (instructed by Reynolds Porter Chamberlain LLP) appeared for the claimants; Tim Penny (instructed by Shulmans LLP) appeared for the defendant.
Eileen O’Grady, barrister