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Commercial & ChanceryBulletin - January 2010

Agriculture & Rural Affairs

Alternative Dispute Resolution

Banking, Finance & Creditand Financial Services

Commercial Litigation

Company & Partnership

Construction & Engineering

Costs & Litigation Funding

Estates, Trusts & Tax

Insolvency

Insurance

Intellectual Property &Information Technology

International Arbitration & Trade

Professional Negligence

Property

Specialising in the following areas:

News / New arrivalPage 2

Declaratory relief inrelation toadjudicationproceedingsOmar EnsafPage 4

Court of ProtectionNicola Preston& David MitchellPage 6

Are you being served?Peter Tyers-SmithPage 10

If you would like to receivefurther copies of this bulletin,please [email protected] bulletin is also available inpdf format on our website atwww.No5.com

As an ongoing endeavour toprovide our clients with the bestpossible service, we welcomeyour feedback and comments onthis publication. Please [email protected]

In this issue

Hopefully the worst of the financial crisishas eased, although there are certainlymixed messages in the media and thesame is borne out anecdotally. For thoseof us who experienced the last recessionin its full blown glory, it is an earnesthope that we do not have another in ourpractising lifetimes. For those who didnot, it is a sad fact that the cyclical natureof events will ensure there will be anotherin your practising lifetimes!

In part reflecting the economic situation,the Commercial and Chancery Group hada very busy 2009, and we are grateful toall of our clients for continuing to instructus in a wide range of matters, some

complex, some less so. We hope that wecontinue to supply a quality professionalservice to you.

We are very happy to welcome our latestrecruit, Louise Corfield, who, after asuccessful pupillage with David Mitchell,joined us in October.

May I conclude byoffering you all bestwishes and hoping youhave a happy andsuccessful 2010.

HappyNewYear!2009 sped by alarmingly quickly and formost of us it was something of a mixed year.

Richard Jones QCHead of Group

Commercial & Chancery Bulletin - January 2010 2

News January 2010

Peter Collie has been invited by the Presidentof FIDIC to become one of only 47 worldwidemembers of their President's List of Adjudicatorsand Dispute Adjudication Board.

FIDIC, the International Federation of Consulting Engineers, produce a suiteof construction contracts for use worldwide, all of which specify the use ofDispute Boards. The President's Panel is limited to people with internationalexperience of construction dispute resolution and selection is made by arigorous assessment process and both the World Bank and the EuropeanBank for Reconstruction specify that projects funded by them must beprocured using the FIDIC suite of contracts.

Peter has also been invited to become a Fellow of the Dispute BoardFederation based in Geneva in recognition of his experience in internationalconstruction dispute resolution work. The DBF are also a nominating body forDispute Board members.

We are delighted that Peter has achieved the recognition he deserves on theinternational construction stage proving that Peter is not only a veryexperienced construction lawyer, but that he also has the skills to operate onlive projects as a member of a Dispute Board. This appointment can onlyimprove the profile of our Construction & Engineering and InternationalArbitration teams.

This year's top 10 Stars at the Bar are basedon Legal Week research, canvassing theopinion of over 60 people within the Bar -both regional and city sets - as well asinstructing solicitors. In order to beconsidered, all candidates had to be 10 years'and under called and a member of theCommercial or Chancery Bar.

Glenn has built up a faithful following, withfirms such as Hammonds, HBJ GatelyWareing, Cobbetts and FBC Manby Bowdlerregularly instructing him. One solicitor at atop 30 firm said: "He is very good at readingjudges as well as being practical and user-friendly with clients. He knows how to readany situation."

NewArrivalThe group are extremelypleased to announce thearrival of Louise Corfieldto the Commercial &Chancery Group followingthe successful completionof her pupillage.

Prior to being called to thebar, Louise studied the BVCat the Inns of Court School ofLaw, in London, andJurisprudence at TrinityCollege, Oxford.

Peter Collie invitedonto FIDIC Presidents

Worldwide List ofAdjudicators

LouiseCorfield

Glenn Willetts named as 'Star at the Bar'Glenn Willetts is one of ten barristers to be named in Legal Weeks' 'Stars at the Bar'

3 Commercial & Chancery Bulletin - January 2010

Along with Tony McDaid No5’s PracticeDirector, our International Arbitration andConstruction teams were represented bySarita Patil Woolhouse, David Holloway,Peter Collie, Derek Pye and KevinBarrett. Our collective objective was todemonstrate the depth of knowledge andwealth of experience that No5 Chamberscan bring to bear on internationalarbitration and construction issues. Withthis in mind Sarita and David led aseminar on international arbitrationunder the invaluable chairmanship of DrVinod Aggrawal, a former secretary to theIndian Government. Sarita started theseminar with a paper entitled 'DraftingInternational Arbitration Clauses', inwhich the pitfalls of inelegant draftingwere made plain - as were theadvantages of getting the drafting right.David, in his paper entitled 'Arbitration:Essentials' looked at the advantages anddisadvantages of arbitration, withperhaps the most important advantageamply illustrated by his map of the worldshowing the countries that are not

signatories to the New York Conventionon the enforcement of arbitration awards- not many. It is clear that for India/UKcommerce arbitration has realadvantages over the court system ofeither country, something that was widelyaccepted by the audience.

Peter, Derek and Kevin on the other handled a seminar on construction relatedissues and were fortunate to have theirsession chaired by Sachin Sangir, thedelightful Managing Director of the RICSin India - and a man with intimateknowledge of the workings of theproperty and construction sectors of theIndian economy.

The session started with a presentationbased on a paper prepared by Kevinentitled 'The FIDIC Red Book - A suitablecontract?' which examined the suitabilityof the FIDIC Red Book for use in the fastexpanding Indian construction industryeither as a model form for use in its ownright or, at least, as a basis for thedevelopment of home grown modelconditions for use in the Indian marketplace. This led on to Peter's paper on'Dispute Boards and Adjudication underthe FIDIC Contracts'. This was timely notonly because there is growing interest inthe use of dispute boards in India butalso because Peter's talk coincided withhis admission to the FIDIC adjudicationpanel, an accolade that recognises hisexceptional experience of disputeresolution techniques in general but alsohis unique knowledge and experience ofthe FIDIC contracts and their disputeresolution procedures. Last, but not least,Derek brought to bear his unrivalledexperience of dispute resolution in the UK

construction industry when presentinghis paper on 'Techniques for the EfficientResolution of Construction Disputes'.

The questions from the audienceindicated that the Indian constructionindustry faces much the same challengesas does the UK construction industry interms of risk allocation, the prevalence ofdisputes and the need for effectiveprocedures and techniques for disputeresolution.

It was soon apparent that the challengefor India is how to benefit from the hardlearned lessons of the UK arbitration andconstruction industries - something thatNo5 Chambers is well placed to assistwith. We are confident that our audienceappreciated the wealth of experience thatmembers of chambers have gained overmany years of experience of advising thecommerce and the construction industryin the UK and internationally.

Birmingham, the West Midlands and No5Chambers all made their mark in India,but it also made its mark on them. Apartfrom making many new friends in theIndian business and legal communitiessome of us managed a little time for playwith visits to Old Delhi's crowded streetsand markets, its Red Fort and themagnificent Jama Rasjid Mosque, as wellas the magical tranquillity of Humayun'sTomb and the Taj Mahal.

‘India, Gateway to the Future’Conference

At the end of October members of the No5 Commercial & Chancery Group participated in the‘India, Gateway To The Future’ conference in New Delhi, India. The object of the mission wasto showcase the professional services that are available in the West Midlands for the benefitof inward investors into the UK and those that are available for export to India.


A recent case dealt with by Her HonourJudge Kirkham in the Technology andConstruction Court in Birminghamgives further clarification of the TCC’sjurisdiction when dealing with option(4) above i.e. when a party to anadjudication makes a Part 8 claimduring the course of the adjudicationfor declaratory relief. The case is calledAceramais Holding Limited v HadleighPartnerships Limited [2009] EWHC1664 (TCC)2. The facts of that case aregiven further below. However, thebackground to the TCC’s jurisdiction inrespect of declaratory relief isaddressed first.

Paragraph 9.4 of the TCC Guide makesplain that the TCC will consider claimsfor declaratory relief in respect of adisputed adjudication. The Guide alsomakes plain that such an applicationwill need to be dealt with and resolvedswiftly. This is for obvious reasons.Adjudication is a quick process.Accordingly, if the court is being askedto make a declaration in respect of anadjudication – it needs to be dealt withswiftly and during the course of theadjudication.

The case of Dorchester Hotel Ltd vVivid Interiors Ltd [2009] BLR 135,gives further clarification in respect ofthe TCC’s jurisdiction on the matter.Coulson J stated this in the judgment:

“ …the TCC does have the jurisdictionto consider the application for adeclaration in this case. But I make itclear, as I hope I made clear inargument, that such a jurisdictionwill be exercised very sparingly. It willonly be appropriate in rare cases forthe TCC to intervene in an ongoing

adjudication. It is important that,wherever possible, the adjudicationprocess is allowed to operate freefrom the intervention of the Court.Applications of this sort will be verymuch the exception rather than therule. They will only be granted inclear-cut cases…”

Returning to the Aceramais case, thefacts were these: Aceramais was a BVIcompany. It was the owner of, andemployer on, a “prestige” residentialdevelopment on a square inCheltenham. Hadleighs was thecontractor on the project. Therelationship between the parties brokedown and Hadleighs was (on its case)forced off site.

Accordingly, Hadleighs commenced anadjudication seeking an award of£800,000 odd. Aceramais decided to

take no part in the adjudication andmade this clear to Hadleighs and theadjudicator. Instead, Aceramais issueda Part 8 claim seeking a declarationthat there was not a contract in writingbetween the parties – which meant (asfar as they were concerned) that theadjudicator did not have jurisdiction.

Declaratory reliefin relation toadjudication proceedings

1 So that it will not be estopped from relying on such arguments at any enforcement hearing at the TCC should the adjudicator’s award be against it.2 The writer was counsel for the successful defendant in the Part 8 proceedings which was the referring party in the adjudication.

When a responding party is faced with anadjudication in the building / constructioncontext which it disputes, in essence, it has fouroptions. It can (1) take part in the adjudicationwithout reserving its position on theadjudicator’s jurisdiction; (2) take part in theadjudication while reserving its position on anyissue as to the adjudicator’s jurisdiction1; (3)simply not take part in the adjudication; or (4)

do (1), (2) or (3) and during the course of theadjudication issue a Part 8 claim for declaratoryrelief in respect of the ongoing adjudication. Itwould seek the declaratory relief to establish,for example, that there was no contract betweenthe parties to the adjudication and so, theargument follows, the adjudicator would haveno jurisdiction – thus making any adjudicator’saward a nullity.

“ It is important that, wherever possible, theadjudication process is allowed to operate freefrom the intervention of the Court.”


There were two sub-arguments withinthis assertion by Aceramais; firstly,that there was no contract at allbetween the parties to the adjudicationand secondly, that even if there was, itdid not satisfy the statutoryrequirements of a written contractunder section 107 of the HousingGrants, Construction and RegenerationAct 1996.

Having issued its Part 8 Claim fordeclaratory relief, Aceramais thensought to obtain an injunction to stopthe adjudication. This injunction wasrefused by HHJ Kirkham. However, thecourt did set down directions for aspeedy trial of the Part 8 Claim (as perthe guidance in the TCC Guide). Theissues to be determined at trial were(1) were the adjudicating parties theparties to the contract and (2) wasthere a contract in writing? If either ofthose questions was answered in thenegative, then plainly the adjudicatordid not have jurisdiction. As far as theadjudication was concerned (rememberthe Part 8 claim was issued while theadjudication was ongoing), this was tocontinue, but it was ordered that noenforcement proceedings in respect ofany adjudication award could becommenced until the outcome of thePart 8 proceedings.

Now naturally, because of thedirections (notwithstanding they weremade for the purposes of a speedytrial), the net effect of them was that(a) if the adjudicator made an award infavour of Hadleighs, then (b) Hadleighswould not be able to enforce that awarduntil (c) the outcome of the Part 8Claim which would mean (d) thatHadleighs (even though it would have

an adjudication award in its favour)would not be able to enforce it asquickly as it would otherwise havebeen able to do so had the Part 8 claimnot been issued.

At trial HHJ Kirkham rejectedAceramais’ arguments on jurisdiction.There was a contract between theadjudicating parties and it was inwriting. However, the writer also ran asecondary argument. That secondary

argument was that in any event thecourt should not exercise itsdiscretionary jurisdiction to make thedeclaration sought.

HHJ Kirkham accepted this argument.And it is this part of the judgment (atparagraphs 40 to 52) where furtherclarification is provided in respect ofthe TCC’s jurisdiction to grantdeclaratory relief. In summary HHJKirkham makes plain that the TCC’sjurisdiction would be exercised only:

� Where the case is clear cut so thatthe court can act quickly, so as to, ineffect, stop the adjudication. If it isnot clear cut (for instance it willnecessitate disclosure and a trial)then the court cannot act quickly andso the jurisdiction will not beexercised;

� In rare cases. Arguments as towhether there is a contract in writing(i.e the argument relied upon byAceramais) are common at theenforcement stage and not rare;

� Where it was proportionate to do so.Aceramais’ approach wasdisproportionate. A great deal ofexpense was spent on the trial, whenthe arguments could have beentaken up at the enforcement stage.3

Accordingly, HHJ Kirkham dismissedAceramais’ claim with costs. At theenforcement of the adjudicator’s awardin Hadleigh’s favour there was noopposition from Aceramais; andconsequently, Hadleigh ended up witha judgment in its favour in excess of£800 000.4

The key point to note from the above isthis. It is only in very rarecircumstances should a party considerissuing a claim for declaratory relief inrespect of a live adjudication. If theissue in dispute (e.g. as to jurisdiction)could only be determined by way of atrial within the declaratory reliefproceedings, then it seems unlikelythat the court would consider, let alonegrant, the sought declaratory relief. Atrial would (by definition because of thedelay it causes) undermine theadjudication process, which is intendedto be a speedy procedure free frominterference by the courts.

Omar Ensaf

3 Of course one of the ironies of the whole case is that had Aceramais simply waited for enforcement of the award, then it may well have been successful at such ahearing. This is because all it would have had to have shown (so as to resist summary judgment of the award) was a real prospect of succeeding in saying there wasno contract in writing. However, by going down the declaratory relief route and issuing the Part 8 claim, the burden they imposed upon themselves was far higher i.e.proving on a balance of probabilities that there was no contract in writing. A tactical error of significant degree.

4 In fact, Aceramais is now also subject to a freezing injunction until “settlement of the judgment sum”.

Aceramais’ approach was disproportionate.A great deal of expense was spent on thetrial, when the arguments could have beentaken up at the enforcement stage.

It is only in very rarecircumstances shoulda party considerissuing a claim fordeclaratory relief inrespect of a liveadjudication.



The central office and registry of theCourt of Protection is situate at Archwayin London. Under the Mental CapacityAct 2005, however, courts outside ofLondon may be designated as additionalregistries. Those so designated (asRegional Hearing Centres) areBirmingham, Bristol, Cardiff,Manchester, Preston and Newcastle.

All cases and matters must be issued inLondon. Thereafter, however, they canbe transferred to one of the regionalcentres for future conduct and anyhearings. At the time of writing, there isstill some delay in getting the casestransferred but it is hoped that this willlessen with time.

Once cases have been transferredoutside of London, progress is madequickly. It is not uncommon, forexample, for the court to make directcontact with one or more of the partiesin advance of any hearing, in an attemptto expedite matters and/or to encouragethem to focus on particular issues andso on.

The scope of the work of the Court ofProtection has expanded significantlysince the Mental Capacity Act came into

force. It is now a superior court ofrecord (rather than an office of the HighCourt, which was its previous status)and has all the powers, rights,privileges and authority of the HighCourt. Its rules echo those of the CPRand they are supported by severalPractice Directions, the form of whichwill be familiar to all those engaged incivil litigation.

There are two main facets to itsjurisdiction: financial and welfare.Obviously there is some overlapbetween the two. In either case,however, the jurisdiction of the courtmay be invoked only where the personconcerned (P) lacks capacity. The MCAemphasises that the question ofcapacity is issue specific and providesthat a person is unable to make adecision for himself –

“if he is unable –

a to understand the informationrelevant to the decision,

b to retain that information,

c to use or weigh that information aspart of the process of making thedecision, or

d to communicate his decision(whether by talking, using signlanguage or any other means)”.

If, or when, it is determined that Pdoes lack capacity, then any decisionmade that affects or relates to hisaffairs or welfare must be made in his“best interests”. Those decisions maybe made by P’s attorney appointedunder a Lasting Power of Attorney, or

by his deputy, appointed by the Court ofProtection. An LPA may be appointed todeal with P’s welfare issues as well ashis property and affairs, but in the caseof the former, the power may not beused until after P has lost capacity. Inthe case of P’s property and affairs,however, P has a choice when creatingthe power to specify whether it may beused immediately or only after he haslost capacity.

In respect of matters relating to P’sproperty and affairs, many of theapplications that are made to the Courtof Protection are concerned withfinancial abuse. Para 7.70 Code ofPractice sets out indicators of abuse,as follows:

� stopping relatives or friendscontacting the donor – for example,the attorney may prevent contact orthe donor may suddenly refuse visitsor telephone calls from family andfriends for no reason

� sudden unexplained changes inliving arrangements (for example,someone moves in to care for adonor they’ve had little contact with)

� not allowing healthcare or socialcare staff to see the donor

� taking the donor out of hospitalagainst medical advice, while thedonor is having necessary medicaltreatment

� unpaid bills (for example, residentialcare or nursing home fees)

� an attorney opening a credit cardaccount for the donor

Court of Protection

Now that the Court of Protection has beenestablished in the regions, including Birmingham,for some time, it seems apposite to review itsjurisdiction and effectiveness.

continued on page 8

The Court of Protectionis now a superior courtof record and has all thepowers, rights,privileges and authorityof the High Court.


� spending money on things that arenot obviously related to the donor’sneeds

� the attorney spending money in anunusual or extravagant way

� transferring financial assets toanother country.

When the Court of Protection isconsidering any question relating to Pit may require a report to be made to itby the Public Guardian or a Visitor, whomay be whatever type of person theCourt deems most appropriate to visitand interview P, the attorney or deputy,as the case may be.

Attorneys and deputies are required toco-operate with the Visitors and if theydo not, the Court of Protection cancancel their appointment where itconsiders they have not acted in P’sbest interests (section 22). Thissanction may be invoked where theattorney has behaved, or is behaving, ina way that contravenes his authority oris not in P's best interests, or heproposes to behave in a way that wouldcontravene his authority or would notbe in P's best interests. In effect, so faras possible, the Visitor acts as the eyesand ears of the Court by speakingdirectly with P and/or those who arearound him on a daily basis, and thenpreparing a report for the court.

So far as the welfare of P is concerned,carers (both professional and familymembers) may carry out certain acts inrelation to his personal care. A (non-exhaustive) list of examples is providedin the Code of Practice and theseinclude matters such as personalhygiene and mobility. The purpose ofthis provision is to protect the decisionmakers from liability.

In relation to more serious acts

relating to medical treatment orwelfare, for example, a change ofresidence or major decisions aboutmedical treatment, the position isdifferent. The Code of Practice providesdetailed guidance to assist in makingdecisions that are in the person’s bestinterests (paragraphs 6.7 – 6.19).Where there is no family or friend to beconsulted or speak up on the person’sbehalf, the MCA 2005 provides for anIndependent Mental Capacity Advocateto support and represent the person(ss35 – 41). Where there isdisagreement, the matter will beresolved by the Court of Protectionwhich will make a decision as to whichalternative (medical treatment or placeof residence and so on) is in the bestinterests of P. In serious cases, theCourt will make a declaration (forexample a decision about withholding

life-sustaining treatment or non-therapeutic sterilisation).

Where the decisions are made by P’sattorney under an LPA extending towelfare, the attorney must, as afar aspossible, take into account P’s viewsand, again if possible, consult with him.If P is capable of making the decisionin question, however, then the attorneycannot act. Further, the attorney is

bound by a valid consent to act orconsent to a particular treatmentwhich is entered into after the creationof the LPA.

Where there is no LPA, the Court ofProtection can be asked to make adecision in respect of mattersconcerning a person’s personal welfare(see s16(1)(a) MCA 2005). The Court ofProtection can either make a decisionin respect of a decision that needs tobe made or it can appoint a deputy tomake decisions on a person’s behalf.Importantly, section 16(4) provides that:

When deciding whether it is in P'sbest interests to appoint a deputy,the court must have regard (inaddition to the matters mentioned insection 4) to the principles that–

a a decision by the court is to bepreferred to the appointment of adeputy to make a decision, and

b the powers conferred on a deputyshould be as limited in scope andduration as is reasonably practicablein the circumstances.

Following from that, it is rare thatwelfare only deputies are appointedand the relevant decisions relating toP’s welfare are commonly made by theCourt of Protection.

Where a deputy is appointed, however,he will have the following powers (s17):

a deciding where P is to live;

b deciding what contact, if any, P is tohave with any specified persons;

c making an order prohibiting a namedperson from having contact with P;

d giving or refusing consent to thecarrying out or continuation of atreatment by a person providinghealth care for P;

Court of Protection continued

continued from page 7

Where there is no LPA,the Court of Protectioncan be asked to makea decision in respect ofmatters concerning aperson’s personalwelfare

So far as the welfare of P is concerned, carers may carry outcertain acts in relation to his personal care. A (non-exhaustive)list of examples is provided in the Code of Practice and theseinclude matters such as personal hygiene and mobility.


Tai Ping Carpets UK Ltdv Arora Heathrow T5 Ltd[2009] EWHC 2305 (TCC)Before Coulson J

The Court heard an application, byDefendants to a claim for a sum due andowing, to transfer the proceedings whichhad been issued in the BirminghamDistrict Registry of the Technology andConstruction Court, to the TCC in London(under CPR 30.3(2)).

The Judge reminded himself that he had to consider thebalance of convenience to the parties, together with anyneed for the case to be managed by a High Court Judge.As is so often the case, each side were local to one of theproposed locations and in the circumstances the Judgefound that most of their arguments as to conveniencecancelled each other out.

The Judge therefore based his decision on three otherfactors. The first was that where the competing factorscancelled each other out he took the view thatprecedence should be given to the Claimant’s preference,as it is the Claimant who has “gone to the expense ofstarting the proceedings, and…runs the costs risk to theextent that it may ultimately be unsuccessful”. WhilstClaimant’s costs are usually higher, there are manycases when it must be doubtful that they ‘run the costsrisk’ to the exclusion of consideration of the Defendantsown costs risks.

The second factor the Judge decided that the court canand should have regard to, was that “proceedings whichare case managed and tried in London will be moreexpensive than if they were case managed and tried inone of the regional centres”, and the third factor wasthat the case was suitable for trial before a senior CircuitJudge (rather than a High Court Judge), and it could bemanaged by the same Judge, which would assist inkeeping costs down. Accordingly, it would be sensible tokeep the proceedings in Birmingham. It can only be apositive thing for regional practitioners, regional courtcentres, and indeed clients who will eventually foot thebill for proceedings, that Courts feel that they shouldtake into account the additional costs of conductingproceedings in London. Coulson J was right to welcomethe resources, and abilities of senior circuit Judges, thatare available to litigation conducted regionally.

e giving a direction that a personresponsible for P's health care allowa different person to take over thatresponsibility.

These powers are finite and the Deputydoes not have the power, for example,to prohibit a named person from havingcontact with P or to direct a personresponsible for P’s health care to allowa different person to take over thatresponsibility. Thus in respect of thesematters, any decision must be made bythe Court of Protection.

Similarly, neither a deputy nor anattorney can refuse to the carrying outor continuation of life-sustainingtreatment in relation to P.

The Court of Protection in Birmingham(at least) is very busy and experiencehas shown that the all matters aredealt with expeditiously and effectively.The Court of Protection Judges inBirmingham are very enthusiasticabout their new jurisdiction. It is awelcome addition to the ambit ofmatters that can be dealt with outsideof London, especially by those whoseek the intervention of that court.

(This article is based on seminars deliveredto the Birmingham Law Society).

Nicola Preston David Mitchell

The Court of Protectionis a welcome additionto the ambit of mattersthat can be dealt withoutside of London.


Since the inception of the Woolfreforms in 1999, it is improbable thatthere is any other provision of the CivilProcedure Rules which has caused asmuch mischief as CPR 6. As Dyson LJsaid in Collier v Williams (and otherappeals) [2006] EWCA Civ 20: -

“ these rules have generated aninordinate amount of jurisprudencewhich is to be greatly regretted. TheCPR was intended to be simple andstraightforward and not susceptibleto frequent satellite litigation. In thisarea that intention has not beenfulfilled and the explicit aims of theWoolf reforms (to reduce costs,complexity and delay) have beenfrustrated.”

The landmark judgments on CPR 6 asit subsisted, until 1 October 2008,enunciated principles such as theability validly to effect service on aSaturday or Sunday (Anderton v ClywdCounty Council [2002] EWCA Civ 933);the invalidity of service on theDefendant personally where a solicitoris nominated (Nanglegan v Royal FreeNHS Trust [2001] All ER 147); and,perhaps most , the ability validly toeffect service at an address at whichthe Claimant knew the Defendant nolonger resided or carried on business(Smith v Hughes & MIB [2003] EWCACiv 656 at [90]).

These decisions, with others thatfollowed, were intended to give effect toCPR 6 in such manner that promotedfairness and procedural certainty.

The new regime came into force on 1October 2008 and represents nothingless than a substantive overhaul to theformer procedural code and, indeed, incertain respects, a complete reversal ofpreviously settled principles.

The amended CPR 6 introducesdiscrete regimes for the service of the‘claim form’ (which includes anypetition or pre-action application andthe particulars of claim unless servedseparately from the claim form) andthe service of all other documents.

In Anderton v Clywd County Council,the Court of Appeal held that deemedservice could validly occur on aSaturday or Sunday and had that notbeen the intended effect then theseparticular days would have beenexpressly excluded from the applicationof the former CPR 6.7. The amendedCPR 6.14 now provides that thedeemed day of service shall be thesecond ‘business day’ after completionof the ‘relevant step’ under CPR 7.5(1)and the definition of business dayexpressly excludes Saturdays andSundays (CPR 6.2). The object of thenew regime is to reconcile the complexassimilation required by the former

CPR 6.7 so that deemed service will bethe same with all methods of servingthe claim form, more specifically, thesecond business day after the relevantstep has been taken. The ‘relevantstep’ is embellished by CPR 7.5(1)which prescribes each of therecognised methods of service.

In Smith v Hughes & MIB the Court ofAppeal held that there were twopreconditions for serving at thedefendant’s last known address even ifhe was no longer residing or carrying

on business at that address. Thepreconditions were that there was nosolicitor acting and the defendant hadnot given an address for service. Theeffect of this decision meant that theClaimant could validly serveproceedings on a Defendant at anaddress he knew was defunct and thiswas acceptable because the objectiveof the rules of service was to achieveprocedural certainty and there was noobligation upon the Claimant to ensurethat the Defendant physically receivedthe claim form. The approach in Smithwas adopted in Akram v Adam [2004]EWCA Civ 1601.

In practice this approach inevitably ledto the Defendant having to apply to setaside default judgment once theexistence of the proceedings wereeventually brought to his notice duringthe enforcement process and becausethe Claimant was able to say thatdefault judgment was ‘regular’ as an

axiom of ‘good service,’ then thegeneral outcome was that theDefendant would pay the costs of theapplication and any costs thrown awayin the enforcement process eventhough he was able to surmount thelow threshold prescribed by CPR13.3(1)(a).

In essence the new regime broadlyadopts the approach of the judge atfirst instance in Smith, who held that ifa Claimant had reason to believe thatthe Defendant was no longer resident

Are you being served?49th Update to the CPR overhaulsthe service regime

The new regime came into force on 1 October 2008 andrepresents nothing less than a substantive overhaul to theformer procedural code and, indeed, in certain respects, acomplete reversal of previously settled principles.


Forcelux Ltd vMartyn Ewan Binne[2009] EWCA Civ 1077Before Ward LJ, Jacob LJ,and Warren JIn this case, the Landlord sought it costsin possession proceedings, raising theargument for the first time before theCourt of Appeal, that it was entitled to itscosts by virtue of a term in the lease. Inthe proceedings below, the DJ had made asplit order as to costs and the Circuitjudge had ordered the landlord to pay thecosts of the appeal.

The Landlord accepted that the court hada discretion to make an order departingfrom the contractual position, but arguedthat the contractual provision should be avery important factor in the exercise of theCourt’s discretion.

The Court of Appeal found that the generalprinciple is that the Court’s discretionshould be exercised in line with thecontract (considering inter alia GombaHoldings (UK Ltd v Minories Finance LtdNo2 [1993] CH 171). However, Warren J inthe leading Judgment held that thisgeneral principle was not a rule of law,and thought that there would be cases,even classes of cases, in which the court’sdiscretion should be exercised to overridethe contractual right.

One such class of cases is where a lessorhad a contractual right to costs, but wenton to appeal a decision and lost theappeal. In those circumstances Warren Jsuggested that it was not obvious that thediscretion should be exercised in line withthe contractual right. In the instant case,the landlord had appealed and lost.Accordingly, the Court of Appeal declinedto follow the provisions for the landlord’scosts in the lease.

Despite the fact that the contractualargument had not been raised below, theCourt of Appeal held that the same resultshould have been reached even if it had.This was because to allow the provision ofthe lease to take effect would cause aninjustice to the tenant. By choosing tochallenge lower courts’ decisions, thelandlord had done so “at its own risk as tocosts”. The lesson to be learned,therefore, is a decision to appeal shouldbe even more carefully considered if thegeneral principle that the costs will followthe contractual provisions between theparties may be disapplied.

or carrying on business at the lastknown address then reasonable stepsshould be taken to ascertain hiswhereabouts. The amended CPR 6.9(3)now prescribes a mandatory set ofconditions that must be met beforeserving at the defunct last knownaddress.

If the Claimant has reason to believethat the Defendant no longer resides orcarries on business at the last knownaddress then ‘reasonable steps’ mustbe taken to ascertain his currentaddress. The expression ‘reasonablesteps’ is not embellished by the rulesand will no doubt require a fact-sensitive approach. It is doubted,however, that a Claimant wishing toserve proceedings will be expected toincur the expense of an inquiry agent inevery case.

What is reasonably clear is that thesteps taken by a Claimant who haselected to wait until the last moment ofthe 6 year and 4 month period whichhe has to serve proceedings will becarefully scrutinised when ascertainingwhether those steps are reasonable. InMersey Docks Property Holdings Ltd vKilgour [2004] EWHC 1638 (TCC) theClaimant left it virtually the full 6 yearsand 4 months before taking any stepsto ascertain the whereabouts of theDefendant knowing that he had ceasedpractising from the relevant last knownaddress. The Claimant’s solicitorsearched an online telephone directoryand the RIBA practice directory. TheCourt held, however, that thesesearches did not amount to reasonablesteps and enquiries should have beenmade of the RIBA Registration Boardand/or the regional Yellow Pages.

In addition to the requirement to takereasonable steps to ascertain the

whereabouts of the Defendant, ifhaving taken those steps the Defendantis still untraced, the Claimant mustthen consider service at an alternativeplace or by an alternative method: ifthere is an alternative place or methodthe Claimant must make applicationunder CPR 6.15 for an order permittingsuch alternative service.

It is only when the Claimant hassatisfied all of the foregoing conditionsthat he may safely serve at the defunctlast known address.

No doubt the new regime is aimed atremedying the inequities that weresymptomatic of the old. There is littledoubt, however, that the new wave ofchallenges to the validity of serviceunder the new CPR 6 will graduallyswell but whether it will develop intothe extensive body of jurisprudencewhich accrued under the formerprocedural code remains to be seen.

Peter Tyers-Smith

In essence the new regime broadly adopts theapproach of the judge at first instance in Smith,who held that if a Claimant had reason to believethat the Defendant was no longer resident orcarrying on business at the last known addressthen reasonable steps should be taken toascertain his whereabouts.

No doubt the new regimeis aimed at remedying theinequities that weresymptomatic of the old.

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The deed of 18th July 2008 had re-defined the “vesting day” as being 20years from the death of the lastsurvivor of the issue of King George Vliving on 20th May 1940. That personwas Princess Alexandra, who was aged72 at the time of the hearing. AsGeorge was only 26, it is likely that thevesting day would occur during hislifetime.

The effect of George becomingabsolutely entitled was twofold: itwould mean that future issue would

not benefit from the trust and also itwould trigger a large tax liability (in theregion of £3m), which could be raisedonly by the sale of a large part of thetrust property, consisting of ancestrallands.

One part of the arrangementconcerned an alteration in the vestingday. The arrangement was for thebenefit of the unborns but the issuearose as to whether the alteration ofthe vesting day was an arrangementwhich the court could authorise under

the VoTA 1958, or whether it was a re-settlement, which it could not.

Blackburne J held that there is no“bright-line test” for determiningwhether a variation is simply avariation or in fact a resettlement.However, taking guidance fromMegarry J in Re Balls SettlementTrusts [1968] 1 WLR 899, where hehad said:

“ If an arrangement, while leaving thesubstratum effectuates the purposeof the original trusts by other means,it may still be possible to regard thatarrangement as merely varying theoriginal trusts, even though themeans employed are wholly differentand even though the form iscompletely changed”

he was able to conclude that there was“no doubt” that this was a variation ofthe original trusts and not a re-settlement.

The Honourable GeorgeRonan Valentine Wyndham vThe Right Honourable PamelaDoweger Baroness Egremont, et al[2009] EWHC 2076 (Ch) Blackburne J

The Court was invited to approve an arrangementvariation, under the Variation of Trusts Act 1958 s 1(1),in respect of trusts concerning the estates of twobaronies. The original trusts were set out in a numberof deeds, ending with one dated 18th July 2008. Underthe terms of the trust, George, who was the only livingbeneficiary, had a life interest but that would becomeabsolute if he was living on the vesting day.

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