Service of an unsealed claim form - is it valid service?

In the recent case of Ideal Shopping Direct Ltd & Ors v Mastercard Incorporated & Ors judges (available here), the Court of Appeal upheld a High Court decision that service of unsealed amended claim forms did not constitute valid service of proceedings.

Background

The Claimant issued (but did not serve) 16 claims against Visa and MasterCard alleging breaches of competition law. A similar set of proceedings,Sainsbury's Supermarkets Ltd v Visa Europe Services LLC, was already taking place and was eventually subject to appeal in the Supreme Court. The parties to the Ideal Shopping litigation decided to hold off serving the claim forms pending the outcome of the Sainsbury’s litigation. The Claimants’ solicitors therefore sent copies of the sealed claim forms to the Defendants’ respective solicitors for information only and not by way of service. Extensions of time for service of the claim forms were agreed, the last of which ran until 17 July 2020. This deadline fell right at the end of the limitation period for certain parts of the claims.

The Supreme Court judgment in the Sainsbury’s litigation was handed down on 17 June 2020. The Claimants’ solicitors had one month, until 17 July 2020, to amend the claim, if needed, have it approved by the Court and serve it. They left it until the last day to file the amended claim forms with the Court which they did using the Court’s electronic “CE-File” portal. A claim form filed on the CE-file is not sealed until the document is accepted by the Court, which might not be the same day it is filed on CE-file. They did not receive the sealed documents from the Court in time so the Claimants’ solicitors served the unsealed amended claim forms on the Defendant on 17 July 2020.

The sealed amended claim forms were not served until 24 and 29 July 2020. 

The Defendants applied for an order that the claim forms had not been served in time and so the claims could not continue. The Claimants sought an order that service of the unsealed claim forms amounted to valid service or for relief under CPR 3.10, 6.15 or 6.16 because they had made a procedural error.

Decision and comment

Proper service of a claim form is vital to enabling a client to pursue their claim. Litigators are often viewed as pedantic for sticking to the rules and jumping through procedural hoops, but this case shows that even the most senior of lawyers can get it wrong. In the Court of Appeal there were 3 QCs and four other barristers as well as the solicitors teams arguing out the point as to whether sending an unsealed claim form was good service. There was a lot at stake.

The Court of Appeal upheld the High Court decision that there was no good reason to treat service of an unsealed claim form as good service, so the claim could not continue.

The lesson: you have to serve the sealed claim form for proper service, even if the seal is applied electronically by the Court. As we have often said, do not leave it until the last minute to issue or serve a claim – that’s when problems arise.

Sir Julian Flaux, Chancellor of the High Court, who gave the leading Judgment, noted that there were at least five things the Claimants and their solicitors could and should have done which would have avoided the problem which they encountered:

1. They should have filed the amended claim forms for sealing earlier than the last day of the period for service as extended (to account for the time lag between the filing of a claim form and its acceptance and sealing);
2. If for whatever reason it was not possible to file the amended claim forms any earlier, the Claimants’ solicitors could have sought a further extension of time for service of the amended claim forms from the Defendants’ solicitors;
3. If agreement to an extension was not obtained, the Claimants’ solicitors could have served the original claim forms on 17 July 2020, then served the amended claim forms when they had been sealed;
4. When the amended claim forms were filed electronically, the Claimants’ solicitors could have asked the court staff to expedite the processing so as to ensure they were sealed and ready for service before the expiry of the deadline; and
5. If all else failed, the Claimants’ solicitors could have issued an application for an extension of time under CPR 7.6(2) before the expiry of the deadline for service. In all probability, the Court would have granted a short extension.

Sir Julian Flaux held that, as the Claimants’ solicitors failed to take any of the steps above, “the Court should be reluctant to grant them the indulgence of an Order under rule 3.10 remedying the defect in service”. He went on to emphasise that CPR 3.10 could not be relied upon to “bypass” the requirements of service.

Similarly, the Judge held that the Claimants could not satisfy the “good reason” or “exceptional circumstances” criteria under CPR 6.15 (service by an alternative method) or CPR 6.16 (power to dispense with service of the claim form).