14
Mar
22
Articles, Travel & Cross Border Claims
The Weekly Roundup: The 100th Edition

This is a very special edition of the Weekly Roundup; it marks 100 bulletins. In that time we’ve seen the effects of Brexit and of Covid, we’ve witnessed litigators’ fortunes wax and wane, and we’ve all weathered the various vicissitudes of the past couple of years together. No doubt there will be more to come, but we at 1CL will be right there with you amongst the victories and losses. As Alan Saggerson so wisely used to say, ‘if you’re not losing any cases, you’re not fighting enough of them’.

 

SMO v TikTok: the Perils of Attempting to Serve Proceedings at the Last Moment

The 31st December 2020 is a date etched in many travel lawyers minds. As the Brexit transition period ended, copious proceedings were issued prematurely to secure the jurisdiction of the English and Welsh courts. SMO v TikTok Inc (and Ors) [2022] EWHC 489 (QB) is one such case. It provides a useful reminder of the issues that can arise in respect of service out of the jurisdiction, as well as the perilous consequences of leaving service to the last minute.

Factual background

The Claimant brought proceedings against six Defendants for invasion of her privacy and misuse of her private information. Prior to proceedings being issued, the Claimant made an ex parte application shortly after 4pm on Sunday 20th December 2020, seeking her anonymisation. The Claimant stressed that the urgency of the application stemmed from the fact that the Brexit transition period ended on 31st December 2020, which brought about changes to the law relevant to the claim. A hearing was held on 30th December 2020 and the application was granted, although the Judge was critical of the last-minute nature of the application.

The Claim Form was issued on 30th December 2020. Six Defendants were named, of which only the Second Defendant was domiciled within the jurisdiction of the court. Permission was required to serve the claim form on the First, Fourth, Fifth and Sixth Defendants. However, no application was made seeking permission to serve the claim form out of the jurisdiction. In a Letter of Claim dated 31st December 2020, the Claimant’s solicitors invited the non-English companies to accept service without the need for the Claimant to obtain permission to serve out of the jurisdiction, and said it was not appropriate to serve proceedings as the Supreme Court was due to hear the appeal in Lloyd v Google. As such, the Claimant’s solicitors invited the Defendants to agree a stay until that judgment had been handed down.

On 5th February 2021, Hogan Lovells responded on behalf of all of the Defendants, agreeing to the proposed stay. However, they specifically stated that the Defendants’ positions regarding service of the claim form was reserved and the agreement to a stay was “expressly on the basis that it is without prejudice to their right to contest the jurisdiction of the Court and/or to oppose any application by your client for permission to serve out, if so advised… For the avoidance of doubt, we do not have instructions to accept service on behalf of any of our clients. This letter does not constitute submission to the jurisdiction by any of our clients…

A consent order was thereafter filed by the parties, leading to an order by Master Gidden for proceedings to be stayed. Notably, the order recited that the Defendants had expressly reserved their position on whether the English Court had jurisdiction and in respect of any potential application by the Claimant for permission to serve the Claim Form out of the jurisdiction.

The Claimant had six months to serve the Claim Form from 30th December 2020. Over three months of this period had elapsed before the order of Master Gidden was made. The Supreme Court later gave its judgment in Lloyd v Google on 10th November 2021, and the stay was lifted pursuant to Master Gidden’s order on 8th December 2021. The Claimant’s solicitors attempted to agree a further stay with the Defendants, however this was rejected. Despite this, no application was made for permission to serve out of the jurisdiction.

On 31st December 2021, the Claim Form and Particulars of Claim were served on the Second Defendant. On 4th January 2022, the Claimant’s solicitors contacted the Foreign Process Service of HMCTS, enquiring as to the time it would take to effect service on a defendant domiciled in China. They were informed by a FPS representative on 6th January 2022 that it could take over a year. Despite this, no applications were filed at court by the Claimant until 22nd February 2022, when the deadline for service was the 3rd March 2022.

The three applications made by the Claimant came before Nicklin J. The Claimant specifically sought the following:

  1. permission to serve the Claim Form on the Defendants who were domiciled outside England and Wales, in respect of whom permission to serve out was required;
  2. an extension of the period within which to serve the Claim Form on the Defendants who had not yet been served;
  3. permission to serve the Claim Form by alternative means on the First, Fourth, Fifth and Sixth Defendants by service on solicitors who had acted for the Defendants but who had confirmed that they were not authorised to accept service of the Claim Form.

Prior to the hearing, the Claimant’s skeleton argument raised for the first time that the deadline for service did not actually expire until 6th April 2022.

The Judgment

Nicklin J granted permission for the Claimant to serve the Claim Form on the First, Fourth, Fifth and Sixth Defendants out of the jurisdiction. He considered that there was a serious issue to be tried and that England and Wales was the most appropriate jurisdiction.

However, the application to extend the period of time for serving the Claim Form on the remaining Defendants was refused. Nicklin J noted that the reason the Claimant needed an extension of time was because “she failed to take the necessary steps to serve the claim form within the time for doing so until practically the last minute”. Nicklin J did not consider there was any good reason for that failure, particularly as this came about because of the Claimant’s own tactical decision to issue pre-Brexit. Further, Nicklin J was not persuaded that the Claimant demonstrated a good reason for authorising service of the Claim Form by the alternative means of service upon Hogan Lovalls.

Comment

This judgment serves as a warning as to why service should never be left until the last minute. It also emphasises why lawyers should turn their minds to the mechanics of service at the earliest stage of litigation, particularly as service via the Foreign Process Service is likely to take a significant period of time in certain cases.

About the author

Ranked by the Legal 500 2021 and 2022 as a Rising Star, Dominique Smith was called in 2016 and has a busy practice in travel law. She undertakes work for both Claimants and Defendants in package travel claims, contractual disputes, and other related claims. Dominique has a particular interest in cross-border clinical negligence claims and regularly appears in the Coroners’ Courts.

 

Kyla Shipping Co Ltd and others v Freight Trading Limited and others: Litigation Privilege and Pre-Action Correspondence

In Kyla Shipping Co Ltd and others v Freight Trading Limited and others [2022] EWHC 376 (Comm)[1], Charles Hollander QC considered the circumstances in which correspondence between a party and an expert will attract litigation privilege.

Background

The Claimant and the Defendants had entered into a series of forward freight agreements (“FFAs”). The Claimant alleged that the FFAs were fraudulently mispriced and void for lack of authority.

Meanwhile, the Claimant had been involved in an increasingly acrimonious, but substantially unrelated, dispute with one of its shareholders, YPA, relating to an insurance payment resulting from the loss of a ship.

In around October 2018, the Claimant anticipated that YPA would serve a letter before action expressly threatening proceedings, but this had not, yet, occurred. At this point, an accountant was commissioned to review historical transactions entered into by the Claimant.

This was done for two reasons – first, to identify and make good any legitimate grievance that YPA might have; and second, in order to “provide ballast” (i.e. to be able to respond in detail) to any letter before action.

Among the transactions reviewed by the accountant were the FFAs. As a result of that investigation, the mispricing claim was identified, and the dispute leading to the instant proceedings crystallised.

The Claimant asserted in its disclosure statement that it considered that disclosure of the “documents relating to the investigations of the FFAs” was withheld on grounds of litigation privilege. Was it entitled to do so?

Litigation Privilege

The court provided a helpful, if at times critical, review of the caselaw. That is a particularly forceful review, as the judge is author of one of the leading textbooks on privilege. Per the judgment:

“18 In order to make good a claim for litigation privilege it must be shown by the party asserting a claim for privilege that the document in question was created for the dominant purpose of conducting litigation in reasonable prospect.”

Dominant purpose in that context means for any degree of purpose which exceeds 50% (i.e. it is not sufficient for it to be done for two equal reasons, one of which is litigation and the other is not) – Waugh v British Railways Board [1979] UKHL 2[2].

Reasonable prospect (of litigation), by contrast, means more than a mere possibility but not necessarily greater than a 50% probability – Westminster International BV & Ors v Dornoch Ltd & Ors [2009] EWCA Civ 1323[3].

The longstanding test in Starbev GP Ltd v Interbrew Central European Holding BV [2013] EWHC 4038 (Comm)[4], however, “that it is necessary to subject the evidence “to “anxious scrutiny” in particular because of the difficulties in going behind that evidence”, was criticised as adopting a term better suited to administrative law and of little relevance.

As such, there was no dispute that documents created primarily for the YPA dispute attracted litigation privilege, or, of course, documents created for these proceedings. The question was in relation to the FFA documents. Were they created for the dominant purpose of litigation in reasonable prospect?

The Defendants “criticised the limited information provided by Mr Buss in support of the claim for privilege”; a forceful point given the lack of information relating exactly what was contained in the FFA documents. They argued that the documents have been created for the purposes of a dispute which was, at that stage, wholly unrelated to the FFAs and litigation relating to the FFAs was not in reasonable prospect in October 2018. The purpose was to see if there was any legitimate grievance by YPA in respect of the FFAs.

The Claimants maintained that no more information could have been provided without waiver of privilege. In any case, litigation of some kind was clearly in reasonable prospect at that stage, as against YPA, and the purpose of the instruction of the accountant was, at least in part, to provide evidence in support of the Claimant’s case – particularly a potential counterclaim – should that dispute become litigious.

Held:

The instructions to the accountant were not created for the dominant purpose of litigation in reasonable prospect, because:

  1. There was no suggestion in correspondence with YPA that a counterclaim was envisaged as a result of the accountant’s investigation, so the dominant purpose seems to have been to investigate the merits of any potential grievance by YPA, rather than litigation as such.
  2. The dispute with YPA would, in any case, have involved different parties.
  3. The reference to the purpose of the instruction being for “ballast in the correspondence” are “difficult to square with a claim for litigation privilege”.
  4. All in all, so far as one can judge from the relatively limited explanation provided, the instruction of an expert appears to have been for the purpose of trying to provide backing for the mismanagement claim, albeit that the parties to such a claim would have been different, but it does not seem to have reached a stage where it was possible to say that litigation in relation to the mismanagement claim was in reasonable prospect.

The court did not consider the Defendants’ other submissions persuasive. It was also something of a pyrrhic victory for the Defendants:

I will order that the Claimants reconsider the claim for litigation privilege on the basis that litigation privilege may not be claimed for the mismanagement dispute but may be claimed when litigation was in reasonable contemplation in respect of the mispricing claim. The Claimants should serve a further list supported by a confirmatory witness statement from [the Claimant’s solicitor] or another appropriate individual.

Certainly no specific disclosure, or directions in relation to any particular class of documents, were obtained.

Waiver of Privilege

The court also went on to consider whether the disclosure of the manner in which the FFA dispute had been discovered had, in itself, waived any privilege relating to the FFA documents. The court firmly rejected this, holding that there was a need for candour about the facts of the discovery as primary limitation had long expired (because the date of discovery of concealment or fraud renewed the limitation period) and because any disclosure had been, as described above, only in the most general terms.

In Summary

The current position stands – litigation privilege will apply where the document is created for the dominant (greater than 50%) purpose of litigation which is in “reasonable prospect” (something more than a mere possibility).

That does not include documents produced for an unrelated dispute, particularly where steps were being taken to resolve (or at least answer) a complaint, rather than in anticipation of litigation as such. The terms of the order perhaps reflect a degree of concern that the finding in this case might have been a little over-generous to the party seeking disclosure.

Meanwhile, litigation privilege will not be waived by disclosing the manner of discovery where that is relevant to a potential limitation defence; though it is wise to make such disclosure in fairly general, rather than specific, terms.

About the Author

Robert Parkin was called in 2009. He has a mixed civil practice, including in the area of travel and cross-border claims. He was junior drafting counsel in Barclay-Watts & Others v Alpha Paraneti & Others [2019] HQ11X02379, a substantial cross border dispute involving mis-selling of holiday lets in Cyprus.

 

…And Finally…

The approach of the American judiciary continues to give us all food for thought. We were interested to read of the recent case management order of a Senior District Judge, who provided that representatives should argue their objections to the admission of evidence in 25 words or less, and that each party would have no longer than 30 minutes to open their case. We at 1CL enjoy a challenge, and this takes us back to the Good Old Days when a judge at Mayor’s and City would use an egg timer to limit time spent cross examining, and another at Clerkenwell would throw staplers at representatives who got on his nerves. We like to think that judges are a little more forgiving now; some more than others, perhaps…

[1] https://www.bailii.org/ew/cases/EWHC/Comm/2022/376.html

[2] https://www.bailii.org/uk/cases/UKHL/1979/2.html

[3] https://www.bailii.org/ew/cases/EWCA/Civ/2009/1323.html

[4] https://www.bailii.org/ew/cases/EWHC/Comm/2013/4038.html

Written by or involving: Robert Parkin, Dominique Smith

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