Quick updates on procedural issues for those dealing with disputes - Winter 2020/21
Read the full articles by clicking on the drop downs below.
- "SIGNED FOR 1ST CLASS" POSTAL SERVICE IS DEEMED SERVICE UNDER CPR 6.26 - COURT OF APPEAL
THE COURT OF APPEAL HAS HELD THAT ROYAL MAIL "SIGNED FOR 1ST CLASS" POSTAL SERVICE, FALLS WITHIN THE DEFINITION OF "FIRST CLASS POST (OR OTHER SERVICE WHICH PROVIDES FOR DELIVERY ON THE NEXT BUSINESS DAY)" FOR THE PURPOSES OF THE DEEMED SERVICE PROVISIONS UNDER CPR 6.26
The claimant (C) brought a personal injury claim after being involved in a road traffic accident. Under an Unless Order, C was required to serve a Reply by 16.00 on 4 April 2018. C served his Reply by Royal Mail's "Signed For 1st Class" service at 17.36 on 4 April 2018. It was not delivered and signed for until 9 April 2018. It was accepted by C that he had served the Reply late, so he applied for relief from sanctions (two months later).
The district judge had to consider the length of the default, whether Signed For 1st Class service fell within CPR 6.26 and whether service was deemed to have taken place on the second day after posting. If C could rely on the deemed service provisions, the Reply would have been deemed served on 6 April, whereas if it was deemed delivered on the day of receipt, it would have been served on 9 April.
The district judge held that CPR 6.26 did not apply as the requirement of a signature before delivery in Signed For 1st Class meant the delivery was not equivalent to 1st class post, falling outside the deemed service provisions.
On first appeal, HHJ Latham upheld the decision to dismiss the application for relief. C appealed to the Court of Appeal, arguing the provision of signature for first-class post proved actual delivery and therefore the deemed service provisions did not apply. The Court of Appeal dismissed the appeal but held that the district judge had reached the wrong conclusion in holding that Signed For 1st Class did not fall within CPR 6.26.
KEY LEGAL POINTS
In its decision, the Court of Appeal noted the following key points:
- Signed For 1st Class is a type of First class post. Lord Justice Coulson found that the intention of Royal Mail was for the services to be considered the same, given the identical wording used (the only difference being one provided proof of receipt);
- Even if this was not the case, Signed For 1st Class would still be deemed another service providing for delivery on the next business day within the provisions of CPR 6.26;
- An attempt to distinguish Signed For 1st Class on the basis of a signature would be wrong in principle as the basis and rationale of the deemed service regime is to provide certainty so the actual circumstances of delivery and receipt are irrelevant;
- CPR 6.26 does not specifically refer to documents being ‘signed for’. There is only a distinction between first-class post or similar service, and delivery by personally delivering a document (actual delivery); and
- Excluding such services could provide a loophole to the deemed service provision, allowing a recipient to evade service by refusing to sign for a document - this was not, and could not be, the intention of CPR 6.26.
Lord Justice Coulson identified in his decision that solicitors should be aware that once something is placed in first-class post, the provisions of CPR 6.26 are triggered. It would "make no sense" for those using Signed For 1st Class to be unable to rely on the certainty of the deemed service provisions.
This is an important case as it clarifies the deemed services provisions under CPR 6.26 and, in particular, that Signed For 1st Class delivery is deemed served on the second day after posting, irrespective of the date it was actually signed for and received. It is welcomed for solicitors and their clients as it confirms that by using the Signed For 1st Class service, a claimant or its solicitor should not be in a worse position than if they had used ordinary 1st class post.
- HOW TO JUDGE WRONGDOING FOR NORWICH PHARMACAL RELIEF
Having a strong enough case as regards wrongdoing, as one of the factors to justify Norwich Pharmacal relief, requires the essential elements of a cause of action to be present.
The Claimant (C) alleged that a painting had been stolen from her by a fine art dealer acting as her agent (S) and then sold on by him to an unknown party without her knowledge or consent, although the Defendants (Ds) contended it had been lawfully purchased. C wanted to retrieve it from the buyer. D2, a company, was the agent of the buyer of the painting and D1 was founding director of that company.
C sought a Norwich Pharmacal order (NPO) to ascertain what had happened to the painting and to identify parties against whom she could bring a claim in conversion. S had been made bankrupt in 2017, and in 2019 was imprisoned in New York, having pleaded guilty to 15 counts of grand larceny and fraud.
KEY LEGAL POINTS
NPOs require the disclosure of documents or information to the applicant. Although the factual context may sometimes be unclear, an application for a NPO must not be speculative. It must enable the bringing of a claim. The court should see a clear purpose which makes the order necessary in the circumstances. NPOs should not be 'fishing expeditions' to gather evidence.
There are several criteria which must be satisfied before an NPO will be granted. There must be a good arguable case that there has been wrongdoing against the applicant. This must be the basis for the application, rather than the application being used to establish whether or not there has been any wrongdoing.
The judge here noted that to establish a good arguable case there must at least be a basis for essential elements of a cause of action. Here, the fraudulent and dishonest dealings of S were strong grounds for a conversion claim against a subsequent buyer. They meant that C could not have known what had happened to the painting, to which she may have good title.
Relief was therefore granted on the basis that it was limited to information within Ds' knowledge and subject to a confidentiality undertaking and restricted the purpose for which the information could be used. The judge decided, however, that the order should be made against D2 only, not D1 – as he, as the director of D2, was not involved in the wrongdoing to any greater extent than D2.
This decision explores how one of the primary conditions for granting a NPO – an 'arguable wrong' – may be satisfied. The type of wrong alleged does not necessarily need to be identified, and indeed may not be discernible without the disclosure sought, but the essential elements of wrongdoing which are likely to amount to a viable cause of action should be evident – and arguable.
It is worth noting, however, that whilst the judge held that there was a good arguable case in the tort of conversion, she found that the NPO would not have been justified if the only planned causes of action had been bailment or unjust enrichment, as the information sought by the NPO would not be sufficient to establish those causes of action.
C's submissions clearly showed that missing information, which only Ds would have, would be key to any subsequent proceedings. Each case will turn on its own facts, but this decision assists those considering an application for a NPO.
- CROSS-EXAMINATION ON NORWICH PHARMACAL AFFIDAVIT ONLY IN "EXCEPTIONAL CIRCUMSTANCES"
WHERE AN AFFIDAVIT IS SWORN PRIOR TO LEGAL PROCEEDINGS IN ORDER TO IDENTIFY A WRONGDOER (KNOWN AS THE NORWICH PHARMACAL PROCEDURE), CROSS EXAMINATION BASED ON THAT AFFIDAVIT WILL ONLY BE ALLOWED IN "EXCEPTIONAL CIRCUMSTANCES".
The Claimant (C) alleged that Mr Robinson had obtained, or attempted to obtain, C's confidential information. In order to identify the person who had instructed him to obtain this information, Mr Robinson swore an affidavit identifying Mr Grayson, a private investigator – who in turn gave an affidavit denying that he had instructed Mr Robinson.
Both affidavits were sworn in support of a Norwich Pharmacal application, requesting disclosure before a claim is commenced in order to identify the ultimate wrongdoer against whom the claim should be brought. C applied to cross-examine both Mr Grayson and Mr Robinson on the evidence they had sworn in support of the application.
KEY LEGAL POINTS
The overarching test for whether cross-examination on an affidavit should be allowed is whether it would be "just and convenient" to do so. The Court applied this test. concluding that in neither case would it be "just and convenient" to allow cross-examination on the affidavit evidence.
The first application was rejected on grounds that the justification was strained and that C appeared to be embarking upon a "fishing expedition" (for evidence).
The second application was rejected on the basis that Mr Grayson was a party to similar proceedings issued by C, so allowing cross-examination at an early stage would have been pre-emptive of the trial in that claim. The judge also said it was "highly relevant" that the option to request further information from Mr Grayson under CPR 18 was in any event available to C.
In his judgment, William Davis J accepted that cross-examination on an affidavit "can and will be ordered in the appropriate case", and that there is jurisdiction for doing so in asset disclosure cases. However, he noted it to be "common ground that cross-examination in an asset disclosure case should be the exception rather than the rule".
Similarly, where the sole purpose of cross-examination on an affidavit is to identifying an ultimate wrongdoer, the court should only permit it "exceptional circumstances".
- "COVID UNDERTAKINGS" REQUIRED FOR SEARCH ORDERS
The High Court has ordered a supervising solicitor to undertake to observe specific social distancing requirements during a search order carried out during the Covid-19 pandemic.
The applicant supplied branded cylinders of liquefied petroleum gas to the first respondent retailer, subject to an agreement that the first respondent would return the empty cylinders to the applicant for refilling, to ensure compliance with health and safety regulations imposed on the applicant.
The second and third respondents were a married couple who were, respectively, the current and former directors and shareholders of the first respondent (together, "Respondents"). Following a tip-off and having conducted surveillance, the applicant alleged that the Respondents were using their own equipment to refill the cylinders using gas supplied by a third party, before selling the refilled cylinders on to their customers.
The applicant made a without notice application for a search order of the Respondents' business and domestic premises in order to preserve evidence of the refilling operation, as well as recover the unreturned cylinders.
KEY LEGAL POINTS
- Granting the search order ("Order"), Fordham J found that the five tests needed to be met for a search order had been satisfied. In particular, the Order was deemed to be proportionate as, during the search, the applicant would be limited to examining and photographing the refilling equipment used by the Respondents and recovering the unreturned cylinders, which were the applicant's property.
- The Order imposed four "Covid-19 Undertakings" on the Supervising Solicitor in carrying out the search. The Solicitor must undertake to:
i. carry out temperature tests on all members of the search party before entering either premises and not permit access to either premises if a search party member has a temperature above 38 degrees;
ii. inquire as to whether anyone currently on either premises is considered to be clinically vulnerable to Covid-19 or shielding during the pandemic. If any such individual is identified, the search must be postponed while they make arrangements to leave the premises or the part of the premises subject to the search;
iii. maintain a distance of 2 metres between any persons on the premises, wherever practicable to allow for social distancing; and
iv. ensure that every member of the search party wears plastic gloves and facemasks and carries hand sanitising gel at all times. This equipment must be offered to the respondent and any other persons identified at the premises.
This is useful guidance on the additional requirements to be imposed on those carrying out search orders in the midst of the Covid-19 outbreak. The undertakings require strict adherence to social distancing guidelines and thereby safeguard anyone present at a respondent's premises.
Our summary of another recent judgment, TBD (Owen Holland) Ltd v Simons and others  EWCA Civ 1182], on the use and purpose of search orders, can be found here.
- Retrospective permission for the collateral use of documents disclosed in litigation
The High Court grants retrospective permission for collateral use of documents, despite breaches of CPR 31.22.
In 2008, Lakatamia Shipping Co Ltd ("A") entered into a number of freight forwarding agreements with Su ("R"), which R breached causing A substantial losses. In 2011, A was granted a worldwide freezing order, and in 2014-15, A obtained judgement against R, which it was still attempting to enforce in2020 ("Enforcement Proceedings").
A then discovered that R had owned and sold two properties and contended that amounted to a breach of the freezing order. R's response was that the proceeds of the sale had been received by his mother ("M"). As a result, A issued new proceedings ("Morimoto Proceedings") concerning the dissipation arising from the sale of the properties and to which M was a respondent.
In June 2020, A secured a search order in the Enforcement Proceedings, which contained the standard undertaking that A would not, without the court's permission, use any documents obtained except for the purpose of those Proceedings.
In September 2020, A then made this application to use the documents obtained from the search order granted during the Enforcement Proceedings in the Morimoto Proceedings. However, prior to the hearing in October 2020 A's lawyers:
- Asked independent reviewing lawyers to apply search terms pertaining to the Morimoto Proceedings to the documents received.
- Wrote to M's lawyers on the basis of the results of said searches; and
- Openly deployed the material obtained from the search order.
KEY LEGAL PRINCIPLES
Pursuant to CPR 31.22 (Subsequent use of disclosed documents), the default position is that collateral use of document disclosed in civil proceedings is not permitted. There are three exceptions to the default position: a) the document has been read by the court in a public hearing, b) the court gives permission, or c) the parties agree.
In accordance with Tchenguiz v Serious Fraud Office  EWCA Civ 1409, the court will only grant permission under CPR 31.22(1)(b) if there are special circumstances which constitute a cogent reason for permitting collateral use. And the burden is on the party making the application to establish cogent and persuasive reasons for permitting the use.
The court does have a jurisdiction retrospectively to permit collateral use of documents, but only in very special circumstances.
Counsel for A argued that the wording in the standard form undertaking, given pursuant to the search order, contained implied permission for A to deploy any the documents and information obtained in pre-existing proceedings. Cockerill J rejected this argument, stating that it would "drive a coach and horses through the scheme of CPR 31.22".
Cockerill J did, however, consider that A had substantially and seriously breached CPR 31.22.
In spite of A's breaches she granted retrospective permission for collateral use because to refuse would have imposed on A a disproportionate penalty for non-deliberate breaches by its legal team, and the granting of retrospective permission did not prejudice R. She ordered that the costs should be borne by A on an indemnity basis.
Cockerill J did not consider CPR 31.22 to have been very clearly drafted. In view of that it is always sensible to seek permission (a) to review the documents as soon as possible and (b) to deploy them. But, if no specific use is originally envisaged, asking for (b) at a later date.
Making collateral use of documents prior to the applications for (a) and (b) not only puts at risk the success of those applications but also risks adverse costs orders.