Integral Petroleum SA v SCU-Finanz AG

Under CPR 3.10, a procedural step may be treated as valid despite defective compliance with a rule or practice direction where the attempted step falls within the rule and its practical purpose has been fulfilled. The rule has particularly wide application to service of documents after proceedings have begun, provided the document reached the opposing party or its chosen representative and no material prejudice resulted. A default judgment is not automatically set aside under CPR 13.2 merely because service was technically defective. The court must then consider CPR 13.3, including the merits of the defence, promptness, prejudice, and the overriding objective.

Integral claimed damages from SCU-Finanz for failing to supply petroleum products under a contract governed by English law and subject to the exclusive jurisdiction of the English High Court. Integral served the particulars of claim late and by e-mail to the e-mail address of SCU-Finanz’s nominated European lawyer, without satisfying the formal requirements of Practice Direction 6A. Judgment in default was subsequently entered.

SCU-Finanz applied to set aside the judgment under CPR 13.2 and, alternatively, CPR 13.3. It relied on defective service, the absence of a second signature required under Swiss law, failure to open a letter of credit, and defects in the damages claim.

1. CPR 13.2. The defective e-mail service and the delay in serving the particulars of claim were procedural errors within CPR 3.10. The particulars of claim had reached SCU-Finanz’s chosen lawyer and constituted purported service, so CPR 3.10(a) treated the step as valid for the purpose of starting time for the defence. The default judgment was therefore not wrongly entered within CPR 13.2.
2. Scope of CPR 3.10. The rule is beneficial and should be given wide effect where the substantive purpose of the procedural step has been achieved without material prejudice. A distinction exists between originating process, which establishes jurisdiction, and subsequent documents, whose principal function is to bring their contents and procedural consequences to the other party’s attention. The latter category justifies an especially broad approach. The rule does not, however, automatically validate every purported method of service or provide a routine substitute for an order permitting alternative service of originating process.
3. Defence on contractual authority. The question whether one of two jointly authorised Swiss prokurists could bind the company was a question of corporate attribution and capacity, governed by the law of the company’s constitution. Swiss law applied. Article 460 of the Swiss Code of Obligations required joint signatures, so the contract was, on the evidence, unenforceable against SCU-Finanz. This gave SCU-Finanz a complete defence with a real prospect of success.
4. Other defences. The letter-of-credit argument failed because the contractual particulars needed to open a letter of credit had never been agreed, so the time for opening one had not arisen. The pleaded damages also raised serious issues concerning the available-market measure, the relevance of an onward sale, and the contractual exclusion of indirect or consequential loss.
5. Discretion. The application was not made promptly: SCU-Finanz waited about twelve weeks after learning of the judgment before instructing solicitors and seeking consent. That delay was outweighed by the complete defence, the claimant’s culpable non-compliance in obtaining judgment, and the claimant’s own delay in serving the particulars and drawing the judgment to SCU-Finanz’s attention. The balance of justice favoured relief. The default judgment was set aside under CPR 13.3.

First-instance decision. The judgment itself does not state any appeal from this decision.