Service of a claim form on an agent - was it valid?
22 June 2017
In a recent case the High Court considered as a preliminary issue whether a claimant had validly served a claim form on what they considered was the agent of the claimant. The rules of service require that the defendant must be served at the place within the jurisdiction where it conducts business, or where it carries on its activities and which has a real connection with the claim. Therefore the question here was whether the agent’s office was a place at which the defendant conducted its business, or where it carried on its activities?
Background
In Noble Caledonia Limited v Air Niugini Limited 2017 EWHC 1095 (QB) the claimant company, a tour operator called Noble Caledonia (“Noble”), arranged flights for its customers through the defendant company, Air Niugini Limited’s (“ANG”) sales agent, Flight Directors Scheduled Services Limited (the “Agent”), who are based in England. The customers were due to go on a cruise around Indonesia immediately after the flight. ANG is the national airline of Papua New Guinea and, as such, was incorporated there.
The flight was delayed and Noble’s customers missed the cruise, resulting in Noble reimbursing its customers for the cost of the missed cruise. Noble sought to recover these costs from ANG. Noble’s solicitors tried to effect valid service of the claim form on ANG by personally delivering it to the Agent’s general manager at their office near Gatwick.
Decision
Mr Justice Gilbart concluded that the Agent acted as no more than ANG’s sales agent and did not carry out ANG’s activities in the UK, nor did its office near Gatwick amount to a place of business for ANG. The claim form had not been properly served. Therefore, in order to validly serve the claim form on ANG, Noble would have to serve the claim form in Papua New Guinea.
Gilbart J considered a number of factual points in reaching his decision. The Agent’s lack of autonomy over the sales, including the fact that its employees required ANG’s permission to vary any prices of the sales made on its behalf. Noble was aware that ANG made the decisions and the Agent had no independent authority. The Agent was also only paid commission and did not receive any contributions to the running costs of their business and acted in the same capacity for other airlines. Such a pattern of working is widely accepted across the travel industry. Finally, no part of the Agent’s office, nor any of its employees were dedicated solely to ANG’s business.
Comment
This is the first time that the High Court has considered the meaning of “carrying on its activities”. Gilbart J stressed that an important factor was whether there was an employee of the principal in the office of the agent as this could amount to a determining factor.
The court also considered the Court of Appeal decision in Adams v Cape Industries [1990], which involved an English subsidiary of an American company and considered what constitutes presence in the jurisdiction for a foreign entity. Whilst that case was clearly important, it was notable that the judge in this case commented that care must be taken when considering that judgment, as it was given in the very early days of the internet and prior to the use of Facebook, both of which were used as key promotional tools in this case.