Ashraf Mengrani v Ilyas Mohamed & Anor

The court addressed two applications by the defendants: (1) a jurisdictional challenge that service of the claim form at 17 Haslemere Gardens was invalid because it was not their usual or last known residence; and (2) an application for an immediate stay to permit non-court dispute resolution.

The court applied CPR r.6.3, r.6.5 and r.6.9 and the authorities on "usual or last known residence" and the claimant's duty to take reasonable steps under r.6.9(3). The judge found that the claimant had a good arguable case that 17 Haslemere Gardens was a proper address for service and, alternatively, that the claimant’s solicitors had taken reasonable steps to ascertain the defendants’ current address prior to service. The court also considered section 1140 of the Companies Act 2006 and concluded it did not apply because the defendants were sued in their capacity as trustees, not as company directors. The defendants’ waiver argument was rejected on the basis that their subsequent case management steps did not amount to an unequivocal renunciation of a jurisdictional challenge.

On the stay application the court held the dispute was suitable for non-court based dispute resolution but declined to grant an immediate stay. Instead the court ordered a directions hearing so the court can determine outstanding disclosure and narrow the issues; a stay for mediation could be imposed after those directions have been given if appropriate.

Background and parties:

• The claimant is a member and trustee of a small, self-administered defined contribution occupational pension scheme (the Jamal Retirement and Death Benefit scheme) established by a family company, S & I Electronics Limited. The defendants are the claimant's brother and sister-in-law and are also trustees and beneficiaries. Scheme assets are approximately 3.5 million held in property, shares and cash.
• Relations between the parties broke down in 2013; there have been disputes over the use of scheme assets (notably Jamal House) and alleged lack of up-to-date accounts and information. The claimant issued proceedings seeking an account of the Scheme on 5 October 2023.

Procedural posture and relief sought:

• Defendants applied (i) to challenge the court's jurisdiction on the basis that service was invalid because they did not reside at the address used for service (jurisdiction application), and (ii) in the alternative, for a stay to allow non-court resolution and certain preparatory steps (stay application). The claimant opposed both applications.

Issues for decision:

1. Whether the claim form had been validly served at the defendants' "usual or last known residence" under CPR r.6.9 (or alternatively whether reasonable steps had been taken under r.6.9(3)).
2. Whether section 1140 Companies Act 2006 (service on a director at a registered address) applied.
3. Whether the defendants had waived their jurisdictional challenge by subsequent conduct.
4. Whether an immediate stay for non-court dispute resolution should be granted.

Court's reasoning:

• On service the court applied the guidance in Relfo Ltd v Varsani and related authorities: the correct test is fact specific and assesses the pattern and quality of occupation, the claimant's state of knowledge at the date of service and whether he took reasonable steps where r.6.9(3) is engaged. The burden is on the claimant to show a good arguable case that the address was the usual or last known residence.
• The judge found evidence indicating the defendants continued to have meaningful connections with 17 Haslemere Gardens: Land Registry entries, Companies House addresses connected to the defendants and the Scheme's property holdings. The defendants elected not to file direct evidence and relied instead on a solicitor's statement and partial documentary material which did not satisfactorily demonstrate sole residence in Pakistan. On that basis the claimant had the better argument that 17 Haslemere Gardens was a proper address for service. Alternatively, if r.6.9(3) were engaged, the claimant's solicitor had taken reasonable steps (Land Registry and Companies House enquiries and consideration of business connections) prior to service.
• Section 1140 was considered but held not to apply because the defendants were sued in their capacity as trustees of the Scheme rather than as directors; therefore the Companies Act provision was inapt.
• The defendants had not unequivocally renounced their jurisdictional challenge by their later conduct; the high threshold for "common law waiver" was not met.
• The court observed that the dispute was a suitable candidate for non-court dispute resolution; however, because of disagreements about the adequacy of information disclosed, the court declined an immediate stay and directed that a directions hearing be listed to resolve outstanding disclosure and to narrow issues. After that hearing, a stay to facilitate ADR could be imposed if appropriate.

Outcome: the jurisdiction challenge was dismissed (service treated as valid or alternatively reasonable steps had been taken) and an immediate stay was refused; directions were ordered to manage disclosure and issues, with provision to stay for ADR thereafter.

This is a first instance disposal. The defendants' jurisdiction challenge to the validity of service is dismissed: the claimant established a good arguable case that 17 Haslemere Gardens was a proper address for service and, alternatively, the claimant's solicitors had taken reasonable steps under CPR r.6.9(3). Section 1140 Companies Act 2006 was inapplicable because the defendants were sued as trustees, not as company directors. The defendants did not waive their jurisdictional challenge. The application for an immediate stay for ADR is refused; the court ordered a directions hearing to determine outstanding disclosure and issues and indicated that a stay to facilitate ADR may be imposed following those directions.