Latest news & updates.

Good Service – The Key Principles


Good Service – The Key Principles

Professional process servers and solicitors will be familiar with dealing with debtors and respondents attempting to evade or refuse personal service of legal proceedings. However, there now seems to be a growing practice amongst respondents making legal challenges wherever possible concerning any unusual circumstances surrounding service. A lack of clear direction detailing what constitutes good personal service for the purposes of insolvency proceedings left much to interpretation and uncertainty.

A recent judgment of Deputy Judge Edward Murray following an appeal in the High Court has now provided important clarity for insolvency practioners, solicitors and process servers to observe when effecting personal service of papers on a potentially hostile and or evasive debtor or respondent.

Case background

The case surrounds the service of a bankruptcy petition on Mr Gary Morby by Tremark Associates on the instruction of the solicitors for the creditor, Gate Gourmet.

Mr Morby agreed to meet Tremark’s process server Gary Beecham at Heathrow airport to accept service of the petition, before flying out of the jurisdiction. It is agreed by all, that the meeting took place and that Mr Morby attended with a friend, Mr Malik.

Tremark’s process server’s account is that on meeting Mr Morby, he handed the Bankruptcy Petition to him, and Mr Morby immediately gave the papers to Mr Malik. Mr Morby’s account differs, in that he claimed that the process server handed the papers directly to Mr Malik and that Mr Malik read the contents of the petition to him.

Mr Morby alleged that there was an error with his address on the bankruptcy petition and that Mr Malik advised the process server that Mr Morby would not accept service of the documents as they were incorrect. Mr Malik then attempted to return the papers to the process server who refused to take the documents back. Mr Malik then threw the documents in a bin.

After being advised of the events by Tremark, the petitioning creditor’s solicitors emailed a copy of the bankruptcy petition to Mr Morby.

Mr Morby challenged the petition on the grounds of (i) lack of jurisdiction and (ii) lack of effective service. Mr Registrar Briggs rejected Mr Morby’s challenges and found that personal service had been effected on him and a bankruptcy order was made. Soon after, Mr Morby sought permission to appeal in relation to the service of the petition. Mrs Justice Proudman granted permission.

The appeal

The appeal was heard before Deputy Judge Edward Murray of the Chancery Division at the Royal Courts of Justice. In his grounds for appeal Mr Morby argued that the Registrar at first instance had made an erroneous findings of fact that he has been properly served with the petition because it had been handed to Mr Malik and not to him personally

Rule 6.14 (1) of Chapter 2 of part 6 of the Insolvency rules 1986 deals with personal service of a bankruptcy petition.

“6.14, – Service of a petition

(1) Subject as follows, the petition shall be served personally on the debtor by an officer of the court, or by the petitioning creditor or his solicitor, or by a person instructed by the creditor or his solicitor for that purpose; and service shall be effected by delivering to him a sealed copy of the petition.”

The two stage test 

In the absence of clear guidance in the Insolvency Rules 1986 as to what constitutes personal service in the practice directions, DJ E Murray’s attention was drawn to the recent decision of Mr Justice Philips in the commercial court Tseitline v Mikhelson (2015) in which Phillips J considered personal service of a claim form under CPR 6.5(3) also Kenneth Allison Ltd v AE Limehouse and Co (1992) 2 AC 105 where the House of Lords considered what is meant by ‘leaving a document with a person to be served’.

During the Kenneth Allison case, both Lord Bridge of Harwich and Lord Goff of Cheiveley set out the following two-stage test where a person refuses to accept service:

(1) the person should be told what the document contains; and

(2) the document should be left with or near him.

“There is abundant authority for the proposition that personal service requires that the document be handed to the person to be served or, if he will not accept it, that he be told what the document contains and the document be left with or near him” 

(Lord Bridge at p 113E)

DJ E Murray concluded that whilst the Kenneth Allison two stage test concerned the personal service of a claim form, he could see no basis in authority or general principle to support the appellant’s suggestions that a stricter standard should apply for the personal service of a bankruptcy petition.

Step one: the person must be told what the document contains

The primary purpose of rules as to service is to ensure that a party has proper notice of the proceedings and a fair opportunity to deal with them.

In Re a debtor (1939) CH251 the Court of Appeal held that delivery of a bankruptcy petition in a sealed envelope to a debtor without any indication of it’s contents was not valid service. In that case Sir Wilfred Green MR was concerned with the importance of the requirement that the nature of the documents being served be “Brought to (the) ‘mind’ of the person being served. Otherwise, the ‘gravest injustice’ could occur.”

This point was also considered by Lord Justice Hoffman in the Court of Appeal case of Walters v Whitelock (19 August 1994):

“With what degree of particularity does the rule require that the person served should be told what the documents contain? In my judgment, one must look at this in a practical way. I think it is sufficient if it is brought to his attention that it is a legal document which requires his attention in connection with proceedings. The purpose of the requirement that he be told is that he should not be able to say that he ignored the document on the grounds that is was simply junk mail or something which did not necessarily require his attention at all.”

Step two: the document should be left with or near him 

The step requires that the document is left with or near the intended recipient such that he is given a sufficient opportunity to take possession of the document.  It does not matter that this is only for a brief period of time.  For example, in the Tseitline case, Phillips J found that the personal service had been effected on Mr Mikhelson even though Mr Mikhelson did not accept the document, the document had been placed on Mr Mikhelson’s upper body and then fell or was thrown by him to the ground by his feet.

Good Service 1

In the present case and in considering, the two stage test DJ E Murray had agreed with Registrar Briggs original findings that: “1) Mr Morby flew in to Heathrow for the purpose of receiving the petition (2) he knew that he was to be met at terminal 3 by the process server (3) he knew that the process server would serve him with a bankruptcy petition (4) he directed his friend Mr Malik to take the papers from the process server (5) Mr Morby was present when the petition was handed to his friend (6) his friend received and read the petition and spoke to Mr Morby about the contents, enabling Mr Morby to comment on it (7) the process server engaged Mr Morby about its content.” In his conclusions DJ E Murray found that “Mr Morby was in no doubt about the nature of the document that Mr Beecham brought to the meeting at Heathrow’’ and in turning his attention to whether the document was left with or near Mr Morby adds “It is a reasonable conclusion and most natural one, based on Mr Morby’s evidence, that the petition was left ‘near’ Mr Morby. It could even be said to have been left ‘with’ him.” 

“In my view, the registrar clearly reached the correct decision at this point, and accordingly the appeal is dismissed”.

Key points

Peter Reynolds of Fladgate LLP solicitor for the Respondents said following the decision “A person should not be able to simply refuse to accept personal service in order to defeat the jurisdiction of the court. This would subvert the effective administration of civil justice.”

The case clearly highlights the relevance and importance of process servers ensuring that personal service is carried out in accordance with the Kenneth Allison two-limbed test. Where the subject will not accept service of the document, it is imperative that the subject is verbally told what the document contains, in addition to the document being left with or near them.

“A difficult situation arises when a person attempts to evade service by refusing to accept the papers. This decision provides a useful two-step process which must be followed to effect valid personal service in such circumstances.”

A copy of the full judgment can be viewed by clicking here.

 


About The Author

Mark Hodgson

Mark Hodgson is the Managing Director of Tremark Associates, one of the UK’s leading providers of investigative services. Mark has 30 years experience in private Investigations and the commercial debt recovery industries. He is Vice President of the Association of British Investigators, a member of the World Association of Detectives, The Institute of Credit Management and an associate member of R3 -The Association of Business Recovery Profession.


,