Jersey Unreported Judgments

[2008]JRC074

royal court

(Samedi Division)

15^th May 2008

Before     :

M.C. St. J. Birt, Esq., Deputy Bailiff (sitting alone).

 

 

Advocate M. C. Goulborn for the Plaintiff.

Advocate A. P. Begg for the Fourth Defendant.

judgment

the deputy bailiff:

1.        Although the summons issued by the fourth defendant raises a number of matters, it has been agreed that this application should for the moment be limited to whether the proceedings have been validly served on the fourth defendant and/or whether such service should be set aside.  The summons raises an issue upon which there appears to be no previous authority in Jersey.

The background

2.        The plaintiff has issued an order of justice against all four defendants.  Her claim relates to monies advanced for the purchase of property in the United States.  Four main transactions, whereby particular sums were advanced, are referred to.  She seeks to have the transactions set aside and her monies repaid on the grounds of undue influence, breach of fiduciary duty and misrepresentation.  The first two defendants are individuals resident in Jersey, the third defendant is a Jersey company and the fourth defendant is a BVI company.  The plaintiff's claim against the fourth defendant relates only to the fourth of the transactions ("the fourth transaction").

3.        Advocate Goulborn acts for the plaintiff.  He issued the order of justice on 10th January 2008.  It was served through the Viscount on the first, second and third defendants on 17th January 2008 and convened them to appear before the Royal Court on Friday 8th February at 2.30 p.m.  Later the same day, the Viscount served a further copy of the order of justice upon the first and second defendants.

4.        Advocate Begg is instructed by all four defendants.  On 18th January he e-mailed Advocate Goulborn querying the fact that a second copy of the Order of Justice had been served on the first and second defendants the previous day.  Advocate Goulborn replied the same day to the effect that the order of justice had been served on them in their capacities as directors of the fourth defendant.  The next day, Advocate Begg e-mailed a response in which he questioned whether service on the first and/or second defendant constituted effective service on the fourth defendant and stated that the fourth defendant reserved all its rights, including the right to contest the jurisdiction.  On 21st January Advocate Goulborn replied to the effect that it was his understanding that the first and second defendants were both directors of the fourth defendant and that accordingly under Rule 5/8 of the Royal Court Rules, service on a director was good service on the company.  Advocate Begg replied the same date pointing out that Rule 5/8 allowed service ".... where provision is not otherwise made by an enactment...." and indicating that he had not yet had an opportunity to review the relevant Companies Act of the BVI, but he believed that it might provide for service on the registered office.

5.        The parties appear then to have entered into negotiations in the hope of avoiding the need for proceedings and I have not been referred to any further exchanges between them until just before midday on Thursday 7th February, which was of course the time by which Advocate Goulborn had to table the proceedings if they were to be listed for the return date of Friday 8th February.  Advocate Begg was clearly anxious that the proceedings should not be tabled because of the possible adverse publicity which might result.  He therefore e-mailed Advocate Goulborn at 11.46 on 7th February.  Because of the importance of this e-mail I set out the relevant passages in full:

".... For that reason, I urge that the billet should be 'pulled' before midday today, on the basis that you would let me have promissory notes as soon as you are able.  If, per chance, it wasn't possible to conclude something by (say) close of business next Wednesday, then I would be willing to give you an undertaking (as I hereby do) that I would accept short service of the proceedings on behalf of all four defendants by attending at the Viscount's Department myself on (say) half an hour's notice, thereby enabling you to table the action in time for midday next week to bring the matter before court next Friday 15th February.

I trust the above undertaking meets with your requirements.  ......

I look forward to hearing from you as a matter of urgency (and as briefly as you wish) with confirmation that you have 'pulled' the billet on the basis of the above undertaking. ..."

6.        I have not been referred to any acknowledgement but it is accepted that, in reliance upon the undertaking, Advocate Goulborn did not table the proceedings that Thursday. 

7.        It would appear that negotiations continued but, in anticipation that they might not succeed, Advocate Goulborn e-mailed Advocate Begg at 18.40 on Wednesday 13th February asking him to indicate a convenient time the next day for him to attend at the Viscount's Department to accept service on behalf of his clients as per his e-mail of 7th February.  Advocate Begg replied at 19.07 indicating that he would be generally available between 9.30 and midday the next day.

8.        At 10.23 on 14th February, Advocate Goulborn e-mailed to say that the latest proposals were not acceptable to the plaintiff and to inform Advocate Begg that a member of the Viscount's Department would attend his office within the hour to serve the order of justice on him on behalf of all four defendants.   Advocate Begg replied at 10.54 confirming that he would be available to see the Viscount but adding this:-

"For the avoidance of doubt, my acceptance of service on behalf of [the fourth defendant] will be under protest, since, as you will be aware, inter alia, from previous correspondence, it is a BVI company and therefore not amenable to the jurisdiction of the Jersey courts.  On that basis, I invite you not to purport to serve [the fourth defendant] in this way but to adopt the correct procedure by applying for leave to serve the company out of the jurisdiction.  If you don't do that, I put you on notice that it is likely that I will be following the procedure prescribed by Rule 6/7 of the Royal Court Rules 2004 (as amended), which, of course, will be wasteful in terms of costs.  ....."

Shortly afterwards the Viscount served the order of justice on Advocate Begg and recorded that he accepted service on behalf of all four defendants.  However the record of service noted that Advocate Begg gave notice that he was accepting service on behalf of the fourth defendant under protest since it was a BVI company and, as far as he was aware, the appropriate application had not been made for substituted service and/or service out of the jurisdiction.  The next day Advocate Goulborn replied to Advocate Begg and said the following:-

"You gave an unequivocal and unreserved undertaking in writing to accept service on behalf of all four defendants, including [the fourth defendant].  The question of service out does not therefore arise, as you agreed to accept service within the jurisdiction.  ..."

Advocate Begg replied the same day to the effect that the sole purpose of his giving the undertaking to accept service was to ensure that Advocate Goulborn's client was in no worse position as a result of allowing without prejudice negotiations to continue.  Advocate Goulborn and the plaintiff needed to know that the order of justice could be tabled at short notice; there was no intention that the plaintiff should be placed in a better position than she was when the order of justice was originally served.  If, as he contended, the court had no jurisdiction over the fourth defendant, his agreeing to accept service for that limited purpose could not have the effect of conferring jurisdiction.

9.        Following those various exchanges, the fourth defendant issued the summons to which I referred earlier.

The submissions

10.      Advocate Goulborn contended that, under Rule 5/8 service on the fourth defendant could be validly effected by service on a director and that, if the director happened to be in Jersey at the time of the service, there was no need to seek leave to serve out of the jurisdiction pursuant to the Service of Process (Jersey) Rules 1994 ("the 1994 Rules").  However, he accepted that he was not able to rely on this particular act of service on this occasion because the action had not been tabled for the return date of 8th February (see Virani v Virani [2000] JLR 203).  He relied therefore upon the service on Advocate Begg on 14th February pursuant to Advocate Begg's undertaking of 7th February.  He submitted that an advocate must be entitled to rely upon the professional undertaking of another advocate and that such an undertaking must bind the other advocate's client.  Furthermore, his client had acted to her detriment in reliance upon the undertaking because he had refrained from tabling the action for 8th February only because of receipt of Advocate Begg's undertaking that he could serve on Advocate Begg and therefore table the matter the following week if negotiations broke down.  The undertaking had been unqualified.  There had been no mention in the undertaking of the fourth defendant reserving its right to challenge the jurisdiction.  In any event, service upon Advocate Begg had been effected within the jurisdiction, so that no question arose of seeking leave to serve the proceedings out of the jurisdiction.

11.      Advocate Begg did not accept that service within the jurisdiction upon the first defendant as a director of the fourth defendant would have been effective service upon the fourth defendant and would have avoided the need for the plaintiff to seek leave to serve out of the jurisdiction.  He had made this clear in his e-mail of 19th January when saying that the fourth defendant was reserving all his rights in this respect.  He acknowledged the importance of advocates being able to rely upon the professional undertakings of other advocates and he did not seek to resile from his undertaking.  However, that undertaking had to be read in the context in which it was provided.  By giving the undertaking, he intended merely to put the plaintiff back into the position in which she would have been if the undertaking had not been given and the action had been tabled on 8th February i.e. that the fourth defendant would have been able to challenge whether service on the first defendant as one of its directors amounted to valid and effective service and to argue that the plaintiff had to obtain leave to serve out of the jurisdiction.  The latter point, he submitted, was particularly significant.  The fourth transaction was alleged by the plaintiff to have taken place in 2005 or 2006 whereas he had recently ascertained that the fourth defendant was only incorporated on 4th January 2007.  It followed that the fourth defendant could not possibly have been involved in the fourth transaction.  It would therefore not be possible for anyone on behalf of the plaintiff to swear an affidavit (as required by the 1994 Rules) to the effect that it was believed that the plaintiff had a good cause of action against the fourth defendant.  There would therefore be real prejudice to the fourth defendant if service upon him (Advocate Begg) was treated as being effective and as preventing any challenge to the jurisdiction of this court.

Discussion

12.      The principle upon which this court exercises jurisdiction is similar to that of the English High Court and is conveniently summarised at 11/0/2 and 11/0/3 of the White Book (1999 Edition).  The court's jurisdiction is essentially procedural and territorial.  Any person who is served within the jurisdiction is amenable to the court's jurisdiction.  Thus, if a person who has no connection with Jersey and is resident and domiciled elsewhere is served with an order of justice while merely passing through Jersey Airport, that gives the court jurisdiction to deal with the action against him even if the action has nothing to do with Jersey.

13.      There are two consequences of this basis of jurisdiction.  First, through service on a defendant within the jurisdiction, the court may have conferred upon it jurisdiction in a case which is inappropriate for trial in Jersey (for example when neither the parties nor the facts of the case have any connection with the island and the law to be applied is foreign law).  The inconvenience and unfairness of this consequence can be avoided in an appropriate case by the court's exercise of the discretionary power to stay proceedings on the basis of forum non conveniens.  Secondly, the inability of the plaintiff to effect service on the defendant because the defendant is not present within the jurisdiction may deny the court jurisdiction in cases which are appropriate for trial here.  The inconvenience and unfairness of this second consequence is mitigated by the provisions which enable the court to grant a plaintiff leave to serve proceedings on a defendant out of the jurisdiction in the various circumstances set out in the 1994 Rules.

14.      Counsel are not agreed on whether service in Jersey on a director of an overseas company amounts to good service within the jurisdiction pursuant to Rule 5/8 so as to avoid the need to seek leave to serve out of the jurisdiction under the 1994 Rules.  However, as Mr Goulborn conceded, the court does not need to resolve that issue as the plaintiff cannot rely upon the original purported service on the fourth defendant on 17th January because the proceedings were not tabled for the original return date.

15.      Mr Goulborn relies instead upon service upon Advocate Begg on 14th February pursuant to his undertaking.  Under Rule 5/4(a) an order of justice has to be served personally and this means through the Viscount's Department (see Rule 5/5).  Rules 5/7 and 5/8 deal with how personal service is effected.  In the case of an individual the Viscount must leave a copy of the order of justice with the person to be served and, if so requested by the person to be served at the time when it is left, show him the original.  In the case of a body corporate (which includes a company) personal service may be effected by serving it in accordance with Rule 5/7 on any director, manager, secretary or other similar officer of the company or by leaving it at or delivering it to the registered office of the body.  It follows that personal service upon an advocate who has agreed to accept service on behalf  of a defendant is not covered by Rule 5/7 or 5/8.  Indeed the only reference to an advocate agreeing to accept service is in the context of ordinary service at Rule 5/6(2)(a) and 5/6(4)(c).

16.      However, I am quite satisfied that service of an order of justice upon an advocate who has undertaken to accept such service amounts to proper and effective service.  I would summarise my reasons for so concluding as follows:-

(i)        It is always open to a party to agree to accept service in a manner which falls outside the Rules.  Such a person should be held to his agreement and there are no policy arguments for allowing him to renege on what he has agreed.

(ii)       A similar principle appears to have been applied by the English courts (see John Russell & Co Ltd v Cayzwe, Irvine & Co Ltd [1916-17] All ER Rep 630 per Viscount Haldane at 631).

(iii)      Both counsel agreed that it is common practice for advocates to agree to accept service on behalf of their clients of documents, such as an order of justice, which the Rules technically require to be served personally.  That is also the court's experience.  Such service may be effected through the Viscount but sometimes the advocates are happy that the order of justice simply be posted or delivered to them by the plaintiff.  Similarly, it is quite common in the Samedi Court on a Friday afternoon for an advocate to stand up on behalf of a potential defendant and agree to accept service of the proceedings there and then by receiving the papers from the plaintiff's advocate.  Such practices save costs, prejudice no one and are generally to be welcomed.  I can think of no policy or other grounds which should lead the court to allow a defendant whose advocate has agreed to accept service in one of these manners to renege on what has been agreed and insist upon service strictly in accordance with the Rules.  The Rules are there to serve the administration of justice, not to act as an impediment. 

(iv)      It is important for the administration of justice that an advocate should be able to rely absolutely upon the undertaking of another advocate.  Undertakings are often used as a means of enabling progress to be made in a speedy and cost effective manner.  There is a strong public interest in enforcing such undertakings strictly.

17.      The question then arises as to whether this principle is equally applicable where the proposed defendant is outside the jurisdiction so that, in the absence of an undertaking from an advocate to accept service, leave to serve out of the jurisdiction would be required and the plaintiff would need to bring himself within one of the grounds for service out laid down in the 1994 Rules.  Furthermore, if service is effective, can the defendant nevertheless then object to the jurisdiction of this court on the basis that the plaintiff cannot bring himself in one of the grounds set out in the 1994 Rules.

18.      A similar issue arose in England in the case of Manta Line Inc v Seraphim Sofianites and Midland Bank plc [1984] 1 Lloyds' Rep 14.  Although that case was not produced to the court by either counsel, the paragraph in the White Book in which it is mentioned was referred to in argument.  In that case a non-resident plaintiff wished to sue a non-resident defendant in England.  The plaintiff obtained a freezing injunction and leave to serve out of the jurisdiction.  However, before this was effected, solicitors were instructed by the defendant and they agreed orally to accept service of the writ on behalf of the defendant.  They were accordingly served but returned an acknowledgement of service to the effect that service was accepted without prejudice to the defendant's right to dispute the jurisdiction of the English court.  The defendant sought to set aside service of the writ and succeeded before the judge but failed before the Court of Appeal.

19.       In his judgment (with which Ackner and Fox LJJ agreed) Sir John Donaldson MR made it clear that it was open to parties to agree a method of service outside the Rules and that they would be held to any such agreement.  The defendant, through his solicitors, had agreed to accept service within the jurisdiction.  Having done so, he could no longer challenge the jurisdiction because service had been effected within the jurisdiction.  I would refer to the following two passages of the judgment in particular:-

"What [counsel for the plaintiff] says is that [the defendant's solicitors] accepted service.  They were the defendant's agents, so the defendant accepted service, and he accepted service in this country.  If you once accept service in this country, that is the end of the story.  Had he accepted service personally or by an agent abroad, that would have been an entirely different matter.  For my part, I can see no answer to that.

.....................

It is the acceptance of service within the jurisdiction which has put him in a category in which he had no rights at any time under O.12,r.8.  In the same way he would have had no right to set service aside if, prior to O.12, he had been served within the jurisdiction either personally or by an agent.  There would be no question then of his applying to set the writ aside whether the appearance he subsequently entered was unconditional or conditional, because those who are served within the jurisdiction, personally or through an agent, have no right to challenge the jurisdiction."

20.      I respectfully agree with the reasoning of the Court of Appeal in that case and consider it to be equally applicable in Jersey.  If, either personally or through an agent such as an advocate, a defendant has been served within the jurisdiction, no question of any application for leave to serve outside the jurisdiction arises even if the defendant is normally to be found outside the jurisdiction; the Court has jurisdiction by reason of service within the jurisdiction.  This is entirely consistent with the wording of the 1994 Rules themselves.  Thus, Rule 5 does not speak of any restriction on serving a person who is normally to be found outside the island; it provides merely that no summons shall be served outside the island without the leave of the Court.  If, as already described, service on the advocate for the defendant has taken place within the island, there is no need to serve a summons outside the island and accordingly the 1994 Rules simply have no relevance. 

21.      For these reasons, I hold that, where an advocate has undertaken to accept service of proceedings of behalf of a client in respect of whom leave would otherwise be required to serve out of the jurisdiction, and service is effected on the advocate within the jurisdiction pursuant to such undertaking, such service is effective service upon the client and the client has no right to challenge the jurisdiction of the court.  It does not matter that the proceedings do not fall within any of the circumstances described in the 1994 Rules so that leave to serve out of the jurisdiction would not have been granted. 

22.      There is however one qualification of what I have just said.  It assumes an unconditional undertaking on the part of the advocate to accept service.  As Donaldson, MR made clear in the Manta Line case, it is of course open to the parties to agree to a conditional acceptance of service.  He summarised the position as follows:-

"Mr Gross really advances two arguments in opposition to the appellant's case.  He says that if you look at the circumstances in which this agreement to accept service was concluded, and in particular take full account of the rush in which it was concluded, the true view is that this was a conditional agreement.  It was an agreement to accept service in England with a view to avoiding the expense of service in Greece, and all that [the defendants solicitors] were doing was saying "Serve the documents on us, and you will be in the same position, and so will our client, as if the document had been served in Greece". 

I entirely accept that you could make such an agreement, and if it were made it would be open to the defendant to challenge the jurisdiction in the ordinary way; but I cannot find any trace in the evidence - and the learned judge found no trace in the evidence - of any such agreement having been made.  The furthest the evidence goes is that Mr Moore - Mr Thompson's principal - had slight anxieties on the question of jurisdiction, which he may to some extent or other have communicated to Mr Thompson, who did the talking, and Mr Thompson was told to be circumspect. 

Mr Thompson was not circumspect; he gave an unqualified agreement to accept service.  An uncommunicated intention, whether or not accompanied by circumspection, cannot affect the rights of the other parties to the contract."

23.      If, for example, an advocate for an overseas defendant undertakes to accept service conditionally upon the defendant being able to argue that the court has no jurisdiction and the plaintiff proceeds to serve the advocate on that basis, both parties must be held to the agreement which they have reached.  The plaintiff cannot be allowed to disavow the condition but rely upon the agreement to accept service.

24.      The question therefore arises as to whether in this case Advocate Begg's undertaking should be regarded as being conditional.  Advocate Begg makes much the same argument as was made by Mr Gross in the Manta Line case.  He does not seek to resile from his undertaking and accepts the importance of such undertakings; but he says that the undertaking must be read in context.  He says that all he was seeking to do was to preserve the position of both parties so that they would be in the same position as if the matter had been tabled on the previous Friday.  If that had happened, the fourth defendant would have been entitled to seek to argue that service on the fourth defendant, by means of service on the first defendant as one of its directors, was invalid and that leave to serve outside the jurisdiction should be obtained.  I accept that Advocate Begg's intention in giving the undertaking was as he says.  The difficulty is that Advocate Begg did not say any of this when giving the undertaking.  It is true that he had alluded to this point in e-mail exchanges some two weeks earlier but the terms of his undertaking do not refer to it and are unqualified.  An uncommunicated intention to make an undertaking conditional cannot be effective to impose such a condition on the recipient of the undertaking.  Advocate Goulborn was entitled to rely upon the fact that it was unqualified.  It is true also that, moments before service on him by the Viscount on 14^th February, Advocate Begg sought to reserve the defendant's position; but that was too late.  It was the undertaking which governed the position and it was not open to Advocate Begg to seek to change the terms of his undertaking at a later stage. 

25.      In the circumstances the undertaking was not conditional.  It did not reserve the right to challenge the jurisdiction.  It follows that service has been validly effected within the jurisdiction upon the fourth defendant and the fourth defendant has no right to dispute the jurisdiction of the court. 

26.      I should of course add that this does not mean that the fourth defendant has no possible remedy.  In the first place it is always open to the fourth defendant, if so advised, to argue that Jersey is not the appropriate forum on the grounds of forum non conveniens.  Alternatively, if the real concern of the fourth defendant is that there is simply no valid claim against it because it was not incorporated until after the events in question, it is open to it to seek to strike out the proceedings on one or more of the grounds set out in Rule 6/13 e.g. that they are frivolous, vexatious etc.

Authorities

Service of Process (Jersey) Rules 1994.

Virani v Virani [2000] JLR 203.

John Russell & Co Ltd v Cayzwe, Irvine & Co Ltd [1916-17] All ER Rep 630.

Manta Line Inc v Seraphim Sofianites and Midland Bank plc [1984] 1 Lloyds' Rep 14.