Ashley & Ors v Tesco Stores & Ors

The Court of Appeal held that service of a claim form on a company registered in Scotland by leaving it at or sending it to the company's registered office pursuant to section 1139 of the Companies Act 2006 is a method "permitted by Section II" of Part 6 of the Civil Procedure Rules and therefore counts as service "out of the jurisdiction" for the purposes of CPR 7.5(2). Consequently the six-month period for service under CPR 7.5(2) applied rather than the four-month period for service within the jurisdiction. The court interpreted Rule 6.40(2) together with Rule 6.3(2)(b) as incorporating the Companies Act method of service into Part 6 and rejected the respondent's submission that specific avenues in Section II (such as Rules 6.7 or 6.9) had to be exhausted first.

The court emphasised that section 1139 gives unqualified permission to use that statutory method, that the wording of Rule 6.40(2) supports incorporation by reference, and that requiring claimants to use domestic Part II routes in preference would introduce practical difficulties, satellite litigation and frustrate the overriding objective of the CPR.

Background and parties: The appeal was brought by the claimants (Ashley and others) against Tesco Stores and others, including a defendant company (Santon) registered in Scotland with a registered office in Edinburgh. The appeal was from an order of Mrs Justice Patterson dated 15 April 2014. The procedural question was one of practice and interpretation of rules on service of process.

Nature of the application: The appellants relied on service effected at the Scottish registered office under section 1139 of the Companies Act 2006 and contended that such service was "in accordance with Section IV of Part 6" and therefore should be treated as service out of the jurisdiction so as to attract the six-month service period in CPR 7.5(2). The respondents contended that, for service on a company within the United Kingdom, the claimant must use methods specified in Section II of Part 6 (for example Rules 6.7 or 6.9) and therefore the four-month limit for service within the jurisdiction applied.

Issues framed by the court:

• Whether service under Companies Act 2006 section 1139(1) is a method "permitted by Section II" of Part 6 and thus incorporated into the CPR procedure for service on a party in Scotland; and
• Whether service by section 1139 should be treated as service within the jurisdiction (four-month limit) or as service out of the jurisdiction for the purposes of CPR 7.5(2) (six-month limit).

Court's reasoning and decision: The court analysed Rule 6.40(2) (service on a party in Scotland or Northern Ireland) and Rule 6.3(2), and concluded that Rule 6.3(2)(b) expressly permits a company to be served "by any of the methods of service permitted under the Companies Act 2006". That incorporation means that section 1139 is a method "permitted by Section II" of Part 6. The court rejected the respondent's argument that the claimant must first use routes specified in Section II such as Rules 6.7 or 6.9, because that would read an implicit qualification into primary legislation and produce impractical consequences contrary to the CPR's overriding objective. The practical and policy considerations (avoidance of satellite litigation, administrative burdens and uncertainty) supported the interpretation that service under section 1139 is governed by CPR 7.5(2)'s six-month period.

Wider implications: The court described this as an important practice point on the applicable time limit for service where a company registered in Scotland is served at its registered office under the Companies Act 2006. The decision clarifies that statutory methods of service under the Companies Act can be treated as methods permitted by Part 6 and that service at a Scottish registered office under section 1139 attracts the six-month service window in CPR 7.5(2).

This is an appellate decision: the appeal was allowed. The Court of Appeal held that service of a claim form on a company registered in Scotland at its registered office under section 1139 of the Companies Act 2006 is a method permitted by Section II of Part 6 of the Civil Procedure Rules and therefore falls within CPR 7.5(2), giving a six-month period in which to serve the claim form. The court rejected the argument that domestic Part II routes (for example Rules 6.7 or 6.9) must be used first and emphasised statutory language, Rule 6.40(2), Rule 6.3(2)(b) and practical considerations supporting incorporation of Companies Act methods into Part 6.

Appeal from the High Court of Justice, Queen's Bench Division (Mrs Justice Patterson), order dated 15 April 2014. Court of Appeal (Civil Division) judgment [2015] EWCA Civ 414 (Case No A3/2014/1423).