Newland Shipping & Forwarding Ltd v Toba Trading FZC & Ors

Permission to serve a foreign defendant out of the jurisdiction requires a serious issue to be tried, a good arguable case within an applicable jurisdictional gateway, and England and Wales to be the proper forum. The necessary and proper party gateway presupposes a live issue between the claimant and an anchor defendant. Evidence must address the relevant period and cannot establish a merits threshold by showing only a later connection with the company. In a retrospective application for an extension of time to challenge jurisdiction, Denton applies. The court must assess the whole delay, its explanation, and all the circumstances, including proportionality. Relief may be justified where refusing it would leave a defendant subject to a judgment pronounced without jurisdiction and cause no material litigation prejudice.

The claimant sued in connection with the alleged misappropriation of a cargo of gasoil. The fifth defendant was added to claims in conspiracy and conversion and was served out of the jurisdiction by an alternative method. Default judgment was later entered against him.

He said that he had not learned of the proceedings until October 2016. In January 2017 he acknowledged service and sought a retrospective extension of time under CPR 3.9, together with permission to dispute jurisdiction under CPR 11. The central issues were whether the service-out requirements had been met and, if not, whether relief from sanctions should nevertheless be granted.

1. Jurisdiction. The court granted the fifth defendant’s jurisdictional challenge. Under CPR 6.37 and paragraph 3.1 of Practice Direction 6B, the claimant had to establish a serious issue to be tried, a good arguable case that the claim fell within a gateway, and that England and Wales was the proper forum. The relevant common-law requirements were stated in AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2012] 1 W.L.R. 1804.
2. The necessary and proper party gateway required a real issue between the claimant and an anchor defendant. By the time permission to serve out was sought, judgment had been entered against the first defendant and no effective anchor issue had been identified. The gateway therefore could not be accessed. The forum requirement consequently also failed.
3. The merits threshold independently failed. The claimant’s evidence concerned the fifth defendant’s alleged ownership or involvement in 2013, not his status or conduct during the 2011 events. It provided no evidential basis for imposing liability by piercing the corporate veil. Cross-examination would not have cured that deficiency.
4. Relief from sanctions. The retrospective extension was governed by the three-stage test in Denton v TH White Ltd [2014] EWCA Civ 906. The breach was serious and significant. The fifth defendant had a good reason for the delay before October 2016 because the documents had been misaddressed and knowledge held by others could not be attributed to him. He had no good reason for the subsequent period of nearly four months before acknowledging service.
5. At the third stage, compliance and efficient litigation remained important, but the sanction would have been disproportionate. The case had caused no material litigation prejudice, was not deliberate flouting of the rules, and the underlying jurisdictional case was baseless. Refusing relief would have left the defendant subject to a substantial default judgment in proceedings over which the court had no jurisdiction. Relief was therefore granted, together with the jurisdictional challenge.