Civil practice and procedure update
Civil practice and procedure update:
what is deemed effective service?
Amanda Wootton reports on the latest judgment to consider what is deemed effective service of a bankruptcy petition and provide some clarity as to what this constitutes.
About the author
Amanda Wootton is a Chartered Legal Executive at Gateley plc.
In Morby v (1) Gate Gourmet Luxembourg IV SARL (2) Specialist Airport Services Ltd [2016] EWHC 74 (Ch), Morby was served with a bankruptcy petition by Gate Gourmet (the creditor). Morby had agreed to meet with the creditor’s process server at Heathrow to accept service of the proceedings before flying out; he was accompanied by his friend, Mr Malik.
The process server claimed that on meeting Morby, he handed the petition to him and Morby immediately passed it to Malik. Morby claimed that the papers were handed directly to Malik, and that Malik read the contents of the petition to him. Morby stated that he would not accept service of the petition because his address was incorrect. Malik then attempted to return the papers to the process server, who refused to take them back, and so Malik put them in a bin. Following receipt of the process server’s report, the creditor e-mailed a copy of the petition to Morby.
Morby opposed the creditors’ application for a bankruptcy petition on the grounds of lack of jurisdiction and lack of effective service. The registrar rejected Morby’s challenge and granted a petition. Morby then sought permission to appeal, arguing that the registrar at first instance had made erroneous findings of fact and he had not been properly served with the petition.
There will, no doubt, be further cases on this issue in the future ... however, for now, [Morby] will suffice
In considering the case at hand, it is noted that the Insolvency Rules 1986 SI No 1925 rule 6.14 states: ‘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’ .
In the case of Kenneth Allison Ltd v AE Limehouse & Co [1992] 2 AC 105, the House of Lords considered what is meant by ‘leaving a document with the person to be served’ [emphasis in the original], and stated: ‘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’ (Morby, para 29). This sets out a two-limbed test where an individual refuses to accept service and requires:
- the individual being informed what the document contains; and
- the document being left with or near them.
In Re a Debtor [1939] Ch 251, it was stated that delivering a bankruptcy petition in a sealed envelope to a debtor, without any indication of its contents, was not valid service. However, in Walters v Whitelock (1994) 19 August (unreported), it was considered:
With what degree of particularity does the rule require that the person served 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 it was simply junk mail or something which did not necessarily require his attention at all (Morby, para 34).
Edward Murray (sitting as a deputy judge of the Chancery Division) noted from the appellant’s own evidence that he had flown into Heathrow to accept service of the petition. The appellant had been under no illusion about what document was being served on him.
As to the second stage of the test above, the original findings by Registrar Briggs stated:
… (1) Mr Morby flew into Heathrow for the purpose of receiving the petition (2) he knew that he would be met at terminal 3 by a process server (3) he knew that the process server would serve the petition (4) he directed, on his own evidence[,] that the petition be handed to his friend [Mr Malik] (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 its contents which were seemingly read out to him or partly read out to him enabling him to comment on it and (7) the process server engaged Mr Morby about its content (Morby, para 17).
In considering stage two of the test, Deputy Judge Edward Murray noted the case of Tseitline v (1) Mikhelson (2) SWGI Growth Fund (Cyprus) Ltd (3) Eldon Ventures Ltd (in liquidation) (4) Intertrust Trustees (UK) Ltd [2015] EWHC 3065 (Comm), whereby Phillips J found that personal service had been effected on the debtor even though he did not accept service of the document. The document had been placed on the debtor’s upper body and then fell, or was thrown by him, to the ground by his feet (Morby, para 42).
As to whether the document was left near the appellant, the judge added that:
… 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’ (para 44).
Deputy Judge Edward Murray concluded that the original findings by Registrar Briggs were correct, and accordingly the appellant’s appeal was dismissed. The appellant had not been deprived of the opportunity to deal with the bankruptcy petition, misled into ignoring it or unable to deal with the subsequent proceedings.
As evidenced in the two-limbed test in Kenneth Allison Ltd above, creditors facing difficulty serving documents need only to show that the debtor is informed of the nature of the document and that the document is left with or near them. There will, no doubt, be further cases on this issue in the future as debtors try to establish other ways to evade service; however, for now, the above will suffice .