Kuwait Oil Tanker Co SAK v Al Bader

Under Order 11, rule 1(1)(c), leave to serve a defendant out of the jurisdiction requires that another defendant has already been duly served, whether within or outside the jurisdiction. The requirement must be satisfied before leave is granted. Rule 4 confirms that construction by requiring a real issue between the claimant and a person already served.

An invalid service out may nevertheless be retrospectively validated under Order 2, rule 1(2). The discretion requires great care and caution. The appropriate standard is good cause or good reason, rather than exceptional circumstances. Material considerations include prejudice from the irregularity, the nature of the error, the parties’ knowledge of the proceedings, whether the error could have been cured, and whether separate proceedings would be undesirable.

The claimants obtained, on 21 July 1994, a worldwide restraint injunction and leave to serve the second and third defendants out of the jurisdiction. The first defendant was served in England later that day. The third defendant, Mr Stafford, was served in Australia and applied to set aside service.

Judge Diamond QC held that Order 11, rule 1(1)(c) required prior service on another defendant before leave could be granted. He nevertheless retrospectively validated service under Order 2, rule 1(2). Mr Stafford appealed. By respondents’ notice, the claimants challenged the judge’s construction of Order 11, rule 1(1)(c).

The central issues were whether prior service was a condition of leave and, if so, whether the irregular service should be validated retrospectively.

1. Appeal dismissed unanimously. Lord Justice Staughton gave the judgment, with which Lord Justice Waite and Lord Justice Aldous agreed. The court upheld Judge Diamond QC’s construction of Order 11, rule 1(1)(c), but dismissed the respondents’ notice. The rule requires a defendant to have been duly served before leave may be granted to serve a necessary or proper party out of the jurisdiction.

2. Leave must precede service. Before it is granted, the case must satisfy one of the gateways in Order 11, rule 1(1). In a rule 1(1)(c) case, actual prior service on another defendant is a condition of leave. Order 11, rule 4 reinforced that conclusion because it required an affidavit showing a real issue between the claimant and a person upon whom a writ has been served. The court followed the longstanding construction of the former rule reflected in (1884) 54 LJ Ch 81, [1894] 3 Ch 228 and [1892] 1 QB 321.

3. The court did not accept that later service could satisfy the condition at the time service out was effected. Practical inconvenience, including the risk of alerting an unrestrained defendant, could not alter the rules’ construction. The discussion in [1996] AC 284 showed, at most, that the point had been left as a possibility; it did not displace the court’s conclusion.

4. The service on Mr Stafford was therefore irregular. Retrospective validation was nonetheless available under Order 2, rule 1(2). The discretion called for great care and caution in service-out cases. The court adopted good cause or good reason, rather than exceptional circumstances, as the appropriate standard, consistently with [1987] 1 AC 597.

5. The judge had properly exercised that discretion. Mr Stafford suffered no prejudice, promptly instructed English solicitors, and knew of the proceedings. The claimants had given notice of their intention to cure the error while a cure remained possible. The claim was otherwise suitable for service out, and trying all defendants in one jurisdiction was desirable. The court found no error of law, principle or fact, no reliance on irrelevant matters, and no conclusion outside the permissible ambit of discretion. The appeal and respondents’ notice were dismissed with costs; leave to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) — Dismissed Mr Stafford’s appeal and dismissed the claimants’ respondents’ notice. It upheld the retrospective validation of service.

• High Court, Queen’s Bench Division, Commercial Court (Judge Diamond QC) — Held that Order 11, rule 1(1)(c) required prior service on another defendant before leave was granted, but retrospectively validated the service on Mr Stafford.