22
Nov
21
Articles, Travel & Cross Border Claims
The Weekly Roundup: the Alliterative Edition

Busy practitioners will be delighted to hear that the courts have issued fresh guidance on the compilation of e-bundles, to be found here: Electronic Bundles-nte. This new guidance is very like the previous incarnation, containing as it does the usual exhortations to align the pagination with that of the PDF document and to ensure that the bundle ends up in a size and format able to breach the court service’s security systems. In the team’s recent experience, however, even the most meticulously prepared bundles are regularly finding themselves lost in the system, with judges seemingly presented at the last minute with a smorgasbord of documents from various case files, and often not very happy as a result. Really, it makes us quite nostalgic for the days when the court only lost paper bundles. This week’s Roundup, brought to you in handily electronic form, features cases considering the forum conveniens contractual gateway, Covid-19 and holiday refunds, and the pitfalls of e-filing at the last moment (or possibly thereafter).

Ditto v Drive-Thru Dispute

In Ditto Ltd v Drive-Thru Records LLC & War Road Music Inc [2021] EWHC 2035 (Ch), Deputy Master Francis was asked to consider an application by the Defendants under CPR 11(1) to set aside an order permitting service on them out of the jurisdiction. This note focuses, in particular, on the court’s analysis of the contractual gateway in CPR PD6B para 3.1 and the issue of forum non conveniens.

Background

Ditto Limited (“Ditto”) is a limited company incorporated in England. It is one of a number of corporate entities which operate under the Ditto Music brand worldwide, including Ditto Inc., a Tennessee registered company. The exact relation between the companies was unclear, but what was clear was that Ditto Music operated as a global operation. Drive-Thru Records LLC (“Drive-Thru”) is a limited partnership registered in California and War Road Music Inc. (“War Road”) is a Californian corporation, both of which were owned and managed by the same persons.

So far as the underlying claim is concerned, it suffices for present purposes to say that the claim concerns alleged breaches of contract and/or misrepresentations. On 11th August 2020 Ditto issued the present claim in London, without notifying the Defendants of that action. Quite separately Drive-Thru and War Roads prepared a draft complaint against Ditto and a Mr Mooney, the Head of Operations of Ditto’s sister company, which was to be filed in New York.  A copy of this complaint was provided to Ditto on 8th September 2020. Ditto then provided the Defendants with a copy of the issued claim in London after an unsuccessful mediation. Four days later the Defendant filed their complaint in the Supreme Court of the State of New York rather than (as had originally been suggested) the United States District Court. There was a dispute as to whether Ditto had been successfully served with the New York claim – specifically, whether personal service on Mr Mooney was sufficient for service on Ditto. Ditto asserted that it had no idea that service had even been attempted on it until it was notified on 15th January 2021 of a motion for default judgment against it.

On 3rd December 2020, Ditto was granted permission pursuant to CPR r6.36 to serve a claim on the Defendants out of the jurisdiction. The Defendant subsequently applied to set aside that order under CPR r11(1). Deputy Master Francis’ judgment was handed down on 17th November 2021.

Judgment

It was common ground between the parties that in determining whether the order for permission should be set aside, Ditto would need to satisfy the Court that (in brief) a) there was a serious issue to be tried; b) there was a good arguable case that the case falls within the jurisdictional gateways; c) and England was the appropriate forum for the trial in the dispute.

Deputy Master Francis found that there was a serious issue to be tried on the face of the pleadings. So far as the jurisdictional gateways were concerned, Ditto’s principal submission was that both of the relevant agreements were made within England via email exchange, thus meeting the gateway requirement at CPR PD6B para 3.1(6)(a). The competing submissions were as follows:

  • Ditto submitted the contracts had been sent to the Defendant’s owners by email on 13th June 2019; the Defendant’s owner signed the offer and returned them to Ditto by email on 14th June 2019; and then acceptance took place upon receipt of the email in England, when the documents were countersigned. In other words, the contract was made in England.
  • The Defendants argued, in turn, that the relevant agreements would only be complete after the person with the requisite authority for each party had signified their acceptance, so the agreements were only included when the countersigned documents were remitted back to the Defendant’s owner in California on 17th June 2019.

Deputy Master Francis found it “disconcerting” that the question whether the claim gets through the contractual gateway might depend upon the arbitrary order in which the agreements were signed. The Master’s comments reflected Lord Sumption’s (obiter) complaints at para 16 in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80. Much like Roth J in Conductive Inkjet Technology Ltd v Uni-Pixel Displays Inc [2013] EWHC 2968 (Ch), Deputy Master Francis held that “it would be wholly artificial in this case to determine the place the contract was made upon the happenstance of the order of signing.” Ditto only needed to show that it had a good arguable case that the contract was made in England and Deputy Master Francis concluded (“with some hesitation”) that “Ditto does cross that threshold in respect of the contractual gateway on the basis that the two agreements were made in both England and California”: [54]. Ditto also successfully argued that it sustained damage in England for the purposes of the tort gateway: see [65]-[71].

Deputy Master Francis nevertheless found that England was not the appropriate forum to hear the dispute and that the appropriate forum was the State of California. The relevant points were that a) the Defendants are based, and carried on business, in California; b) the disputes which are the subject of the London claim centred on the conduct of the Defendants; c) the claims against Ditto in the New York proceedings could not be said to involve Ditto’s conduct in England – “in the largely digital world in which Ditto operates there is nothing which clearly ties their performance to England”; d) the Defendant’s alleged losses were closely connected with their place of business in California, whereas it was less clear that Ditto’s losses (being a global business) had a close connection to England; and e) the governing law of the agreements is likely to be that of the State of California.

Non-disclosure

The Defendants further submitted that, even if those grounds were made out, the order should be set aside in any event on grounds of non-disclosure on the part of Ditto, specifically:-

  1. The failure by Ditto to inform the Master that the New York proceedings had been served prior to the hearing of the service out application;
  2. The failure by Ditto to inform the Master that Ditto had been provided with a draft of the New York proceedings by Drive Thru and War Road before they knew of the London claim, thus fostering the false impression that the New York proceedings were purely responsive to the London claim.

Whilst the issue did not technically fall to be considered, Deputy Master Francis considered that there may have been breaches on Ditto’s part but that those breaches were not so substantial or serious so as to justify setting aside the court order.

Conclusion

Deputy Master Francis’ decision contains an instructive analysis of the jurisdictional gateways in CPR PD6B para 3.1. It is also yet another case involving a contract made by instantaneous communication where the mechanics of the contractual gateway have been criticised. In the words of Lord Sumption in Brownlie, it may well be that “the whole question could profitably be re-examined by the Rules Committee”.

About the Author

Henk Soede was called to the Bar in 2019. Since April 2020, he has been instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims. He is eager to build on his experience in these areas​, but accepts briefs in all chambers’ areas of work.

 

A Clutch of Covid Cases

Some two years after the Covid-19 virus was first identified in Wuhan Province, and over 18 months since the first UK lockdown, the courts are starting to handle significant numbers of claims relating to the pandemic and the measures taken to contain it. Naturally practitioners in travel law are at the forefront of legal developments, and recent months have seen a number of claims relating to the operation of both the Package Travel and Linked Travel Arrangements Regulations 2018 and the Denied Boarding Regulations (Regulation (EU) No.261/2004) insofar as they concern travellers’ rights to refunds upon cancellation of holidays and flights.

Readers will recall that pursuant to Regulation 12 of the Package Travel Regulations:

“(7) …in the event of unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and which significantly affect—

(a)the performance of the package, or

(b)the carriage of passengers to the destination,

the traveller may terminate the package travel contract before the start of the package without paying any termination fee.

(8) Where the package travel contract is terminated under paragraph (7), the traveller is entitled to a full refund of any payments made for the package but is not entitled to additional compensation.”

We recently brought to your attention a decision in a small claim in which a court found that advice against travel emanating from the Foreign, Commonwealth & Development Office could fall within the Regulation, and thus entitle the would-be holidaymaker to a refund upon cancellation. Our friend at Loveholidays, Lewis Solomon, has got in touch to inform us of a number of other interesting cases concerning Covid-related refunds.

In Dennison v Loveholidays, unreported, Lincoln County Court, 15th October 2021, Her Honour Judge Fine allowed the tour operator’s appeal and dismissed the traveller’s claim for a refund, holding that the UK government’s imposition of quarantine on returning holidaymakers did not fall within the Regulation. The holiday could have gone ahead, so the Appellant argued, and the fact that the Claimant would have had to self-isolate on her return was neither here nor here so far as the Regulations were concerned. In Bowen v Loveholidays, unreported, Telford County Court, 2nd November 2021, the party of holidaymakers cancelled because they were isolating with Covid; their claim for a refund failed. And in Mitchell v Loveholidays, unreported, Portsmouth County Court, 12th November 2021, the destination hotel in Crete was closed due to Covid, but the holiday could continue with the substitution of a ‘like-for-like’ hotel, and the court held that Regulation 12 was not engaged.

These cases are representative of the kind of claims now being brought by disappointed holidaymakers in County Courts up and down the country. The variable results in an infinite range of factual contexts illustrate the need for some higher court guidance on Regulation 12, preferably sooner rather than later, and it is to be hoped that some of the higher value claims now being issued will provide the opportunity for more senior judges to examine and decide upon the limits of the operation of the provision.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury, and she has recently completed work for the UNWTO on an International Code for the Protection of Tourists. She is a member of the Admiralty Court Users’ Committee. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.

 

Trainee in Time Trouble

Most lawyers who have, at some point, caused proceedings to be issued (quite possibly including the author) will have learned the bitter lesson, early in their practice, that Murphy’s law dictates that a minor procedural error with service, postage, or the court fee is disproportionately likely to occur where the step in question is being taken on the last permitted day. That is to say, things generally only go wrong when the consequences are catastrophic.

The thought of being in the position of the unfortunate trainee solicitor in Citysprint UK Ltd v Barts Health NHS Trust [2021] EWHC 2618 (TCC)¹who inadvertently, and entirely innocently, came close to collapsing a substantial procurement claim by a commercial supplier against an NHS Trust through precisely such a mistake- will no doubt send a shiver down the spine for many practitioners.

The real lesson, of course, is that nothing important should ever be done at the 11th hour. However, Citysprint does provide some reassurance and guidance to practitioners in that unfortunate situation of greater comfort than simply “there but for the grace of God go I”.

This judgment is detailed and technical and nothing but a similarly technical analysis will do it justice. However, the conclusions are fairly straightforward and are suggested below.

Background

The Claimant was the incumbent provider of certain transport and logistic services to the Defendant NHS trust. That contract was due to expire. The Defendant organised a tender for the future supply of those services organised under the Public Contracts Regulations 2015. The Claimant tendered but was unsuccessful, its contract being awarded instead to a rival.

The Claimant sought to challenge that decision under the 2015 Regulations, which impose notoriously tight time limits for the issue of such claims. Time expired, following an agreed extension between the parties, on 27th July 2021. After this date, accordingly, no claim could have been issued.

The particular time limit in question, therefore, is narrow and specific and unlikely to be encountered except by practitioners in the field of procurement; but the principles are just as relevant- and are much more likely to be encountered- in the context of proceedings issued at the cusp of limitation or close to the expiry of a Claim Form; or the later deadline for service of Particulars, or, for example, on the date of expiry of an unless order.

The Claim Form was filed by E-Filing at 15:32 on 27th July 2021, the date the extension expired, with payment of a £10,000 court fee and sent unsealed by email at 17:27. However, as both a monetary and non-monetary remedy was sought, the correct court fee should, in fact, have been £10,528. The fault for this error was squarely on the part of the E-Filing system. The amount of the fee was calculated automatically; and neither took into account the possibility of a non-monetary claim, nor could it be manually altered. This is far from the first time the author has encountered similar inadequacies with this software.

The Claimant’s solicitors were notified of the error by the court at 15:17 the following day, 28th July 2021. Payment of the balance was promptly supplied. This caused the claim to be electronically stamped as “approved” on 29th July 2021, two days after the extension had expired, and the balance of the fee actually cashed by cheque the following day. After this, the Claim Form was electronically sealed as “issued” on “27th July 2021”.

The Claimant’s solicitors then made a second mistake. Both the Claim Form and Particulars should, under reg.94(1) of the 2015 Regulations, have been served within 7 days of the date of issue, which, if 27th July 2021, was by 3rd August 2021. As a result of the delay described above, however, this was miscalculated at 5th August 2021. Actual service of the sealed claim form was, therefore, not attempted until 5th August 2021.

A third mistake then arose. Service was attempted by email, to the correct address, but without compliance with any of requirements imposed by CPR PD6A paras. 4.1 and 4.2; such as, for example, seeking prior written confirmation that electronic service is accepted. CPR 6.3(1)(d) does permit electronic service, but only where those requirements are complied with; so, the Defendant argued, no good service was in fact attempted.

The Issues

Thus, the Claimant had two main procedural problems. The first was that the Claim was either issued or served out of time:

  1. As a result of the court fee mistake, the Claim Form not approved until on 29th July 2021, so beyond the time period permitted by the extension, which required issue no later than 27th July 2021.
  2. If the date of issue could, instead, be interpreted as 27th July 2021, service was late, having been attempted on 5th August 2021, 9 days after 27th July 2021, and so outside the 7 days permitted.

There was no possible interpretation of events which meant that the Claimant had met both requirements. One or both was out of time.

Secondly, of course, the Claim Form was served incorrectly, by email in a manner which was not compliant with the Practice Direction.

The Claimant sought relief from sanctions on 11th August 2021, creating a third issue for the court to determine. The Defendant made a cross application of a kind which is not entirely explicit in the written judgment, but must have been for an order striking out the claim under CPR 3.4.

Limitation

The court found that the date of issue could be nothing other than 27th July 2021- the date on which the Claim Form was stamped as issued. That is because:

  1. CPR 7.2(2) provides that the date of issue is the date stamped on the claim form by the court. This starting point is essentially determinative in non-electronic cases.
  2. CPR 7.12(3) provides that the Practice Direction may make procedural amendments for claims issued electronically.
  3. CPR PD51O does make such alterations. Paragraph 5.4(2) provides that the date of issue is the date and time of payment of the court fee. One might think, therefore, that issue was not achieved until the actual date of payment of the full sum of the court fee.
  4. Not so, because paragraph 5.3(1) creates a process referred to as “Acceptance”, whereby an electronically filed Claim Form is reviewed following submission.
  5. Paragraph 5.4(5) explains the effect of acceptance on the date of issue. The date of filing is not to be delayed by acceptance save on grounds of a filing error is more serious than an error of procedure, or if the Court orders that it has failed Acceptance for some other reason.
  6. What had occurred on 27th July 2021 was “Issue”; subject, retrospectively, to the completion of “Acceptance” later on 29th July 2021. If Acceptance was successfully completed, Issue was retrospectively compliant, at least, in so far as any error was a procedural one. The court found that the underpayment of £528 was “clearly an error of procedure (and a minor one at that)” and so found that there was no proper basis for departure from the starting point described in CPR 7.2(2).
  7. The court was influenced, in part, by a policy decision, considering that the potential for a minor error in payment to invalidate otherwise proper claim forms would cause “potential chaos”.

In short, where there is a modest error in payment of the court fee following electronic issue, that can be corrected prior to Acceptance without delay of issue. So, in that regard, the Claimant had done enough to avoid breach in respect of limitation.

Late Service

So far so good, but the court found that the Claimant clearly could not have it both ways. If the date of issue was 27th July 2021, the date of attempted service- 5th August 2021- was two days late.

The Claimant sought to avoid this conclusion by arguing, relying in Heron Bros Ltd v Central Bedfordshire Council [2015] EWHC 604 (TCC) in relation to the 2006 version of the Regulations, that the service of the unsealed Claim Form on 27th July 2021 was sufficient. This argument was, unsurprisingly, firmly rejected. The Regulations required service in accordance with the CPR, and it is, as always, the sealed Claim Form which must be served under CPR PD7. The court, therefore, found robustly that there had been non-compliance in the form of late (attempted) service. It did, however, consider whether relief ought to be granted as discussed below.

Incorrect Method of Service

Similarly, the court found without much difficulty that CPR PD6A paragraphs 4.1 and 4.2 had not been complied with. There may or may not have been a good excuse for doing so, but if so, that went to the question of relief rather than the fact of a breach. There had, accordingly, been no good service.

Relief

Having established at length that relief was required, the court granted that relief. The Claimant successfully argued that the sending of the unsealed claim form after the date of issue (albeit by two hours) amounted to a procedural error under CPR 3.10(a) and, therefore, one which could be corrected by an order under CPR 3.10(b). Interestingly, this would not have been the case had service been before issue, R (the Good Law Project) v Secretary of State for Health and Social Care and (“Pharmaceuticals Direct”) [2021] EWHC 1782 (TCC)), as there would, in that case, have been no “proceedings” in which an error could arise. Further authority for the distinction can be derived from Dory Acquisitions Designated Activity Company v Ionnis Frangos [2020] EWHC 240 (Comm).

The court was willing to grant that relief because, in part, the errors were minor in effect and caused little prejudice to the Defendant. Deprivation of a limitation defence can amount to prejudice- see LSREF 3 Tiger Falkirk v Paragon [2021] EWHC 2063 (TCC)- but not to a sufficient degree to warrant refusal of permission. Submission that certain additional prejudice was caused specific to the 2015 Regulations (and of little wider relevance) was similarly rejected.

There was then a problem- the court could not extend the time for service of the Claim Form under CPR 3.10(b) because that requirement was imposed statutorily under the 2015 Regulations- see Mucelli v Albania [2009] 1 WLR 276. The court, accordingly, did not do so, but instead corrected the error by treating the service of the unsealed Claim Form by email (not, again, complying with CPR PD6A) as proper service. It also found that it could, and did, extend time for the service of Particulars of Claim. For the sake of completeness, the court found that the approximately seven day delay between the Defendant challenging effective service (4th August 2021) and the application for relief (11th August 2021) was prompt, contrary to the Defendant’s submissions.

Perhaps surprisingly, the court made no express reference to Denton v TH White Ltd [2014] EWCA Civ 906 and takes, at best, a rather cursory approach to the well-established three limb test. The author is driven to question whether this was simply an oversight, or a conclusion that a different test applies to CPR 3.10. The latter would, to put it mildly, be a rather radical conclusion given the range of situations in which Denton principles have been found to apply and the first conclusion- an oversight- is the most likely explanation. This would, however, be a very surprising oversight.

But a word of caution- special rules apply to the service of a Claim Form under CPR 7.4 (as opposed to, for example, the 2015 Regulations). These are considered in Barton v Wright Hassall LLP [2018] UKSC 12. Such an application is markedly more difficult, as it involves the engagement of the court’s originating jurisdiction. An application- under CPR 6.15- can be made, and, while the threshold is high, the considerations are very similar:

The main relevant factors are likely to be: (a) whether the claimant has taken reasonable steps to effect service in accordance with the rules; (b) whether the defendant or its solicitor was aware of the contents of the claim form within the prescribed time limit for service; and (c) whether the defendant would suffer prejudice by retrospective validation of a non-compliant service of the claim form.

The court found that had it been dealing with such a case on these facts, it would have granted relief.

Finally, the court ended on a second word of caution- the parties were told that these were unusual circumstances (implying, perhaps, that relief would not always be granted) and that parties were, in future, to properly familiarise themselves with CPR PD6A. Sound advice.

Principles

It seems to me that the following principles can be derived from this finding:

  1. For electronic issue, an error in respect of the court fee can be corrected between the date of Issue, and the date of Acceptance, without delay of the date of Issue for the purposes of (for example) limitation. This principle may not apply to a more serious error.
  2. The date of Acceptance, however, is of no significance for calculating the date of service. The period for service for the purposes of CPR 7.5, for example, runs from the retrospective date of Issue.
  3. The requirement to comply with CPR PD6A paragraphs 4.1 and 4.2 is mandatory and indispensable, and failure is not good service even if there is a reasonable excuse. The requirements are, frankly, dated and obtuse and, in the current form of the rules, electronic service should be avoided if at all possible. If it is to be attempted, the rules are set out as an annex to this article below. The reminder to the parties to familiarise themselves with the requirements is timely.
  4. An application under CPR 3.10 can, generally, allow a court to correct late or defective service, or by logical extension similar errors of a similar nature, provided that this error occurs after issue of the Claim Form.
  5. If it occurs beforehand, the court has no such jurisdiction. However, this is a discretionary remedy, and will not be granted absent a reasonably good excuse; and, of course, granting of relief is likely to expose the party in breach to an adverse costs order.
  6. That relief cannot be correct a breach of a statutory time limit or other requirement, though some compliant work around may perhaps be found.
  7. If the breach in question relates to the service of the Claim Form under CPR 7.4 (and not, for example, under some collateral statutory proceedings), the special status of that breach error is emphasised, not for the first time. Relief may be sought under CPR 6.15, and the principles- which are not dissimilar- are as described in Barton.
  8. Though fact sensitive, an application for relief made within a week is generally prompt. Greater delay is, however, likely to jeopardise an application for relief.

Annex: Requirements for Electronic Service

4.1  Subject to the provisions of rule 6.23(5) and (6), where a document is to be served by fax or other electronic means –

(1) the party who is to be served or the solicitor acting for that party must previously have indicated in writing to the party serving –

(a) that the party to be served or the solicitor is willing to accept service by fax or other electronic means; and

(b) the fax number, e-mail address or other electronic identification to which it must be sent; and

(2) the following are to be taken as sufficient written indications for the purposes of paragraph 4.1(1) –

(a) a fax number set out on the writing paper of the solicitor acting for the party to be served;

(b) an e-mail address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the e-mail address may be used for service; or

(c) a fax number, e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the court.

4.2  Where a party intends to serve a document by electronic means (other than by fax) that party must first ask the party who is to be served whether there are any limitations to the recipient’s agreement to accept service by such means (for example, the format in which documents are to be sent and the maximum size of attachments that may be received).

4.3  Where a document is served by electronic means, the party serving the document need not in addition send or deliver a hard copy.

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…

You can imagine our thoughts when we read the headline, ‘‘Ryanair flew us to Greece instead of Spain – and now won’t say sorry’ (msn.com)’ – how? why? and what do the Denied Boarding Regulations have to say about it? The couple in question, who managed to negotiate their way through the wrong boarding gate, onto the wrong aircraft, into the wrong seats, through disembarkation and baggage control, and out of the wrong airport before realising they were in Zakynthos instead of Seville, were flown back four days later, but provided by the airline with only one night’s accommodation locally, having to pay for the other three nights themselves. They have been left indignant and out of pocket. To add insult to injury, Ryanair seems to have conveyed the impression that the couple themselves may have contributed in some small way to this outrage. But will Regulation (EC) No.261/2004 provide them with any form of redress? We fear not; the flight for which they had purchased tickets was not cancelled or delayed, and they were not denied boarding (quite the reverse, in fact). Perhaps the Montreal Convention might come to their rescue? Alas, the lack of physical injury would appear to render the Convention route to compensation impossible to negotiate. Any common law cause of action would seem likely to provoke a robust defence of volenti non fit injuria, although it might be thought that the couple did not volunteer to go to Zakynthos but rather to get on an (unspecified) aircraft. We await further news of the couple’s quest for redress with interest; and will of course pass it on to readers as it breaks.

1 https://www.bailii.org/ew/cases/EWHC/TCC/2021/2618.html

Written by or involving: Sarah Prager, Robert Parkin, Henk Soede

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