It was wrong to punish a litigant in person who used an unregulated business to serve a claim, even though this was the unlawful conduct of litigation, the Court of Appeal has ruled.
It found that the Legal Services Act 2007 provided sanctions for the person who conducted a reserved legal activity without authorisation, and not for the client.
In Ndole Assets v Designer M&E Services UK  EWCA Civ 2865, a contractual dispute arose over work done by the defendant on a building in East London.
Following a series of transactions, the cause of action of the main contractor vested in Ndole Assets, a company incorporated in the British Virgin Islands.
Ndloe issued proceedings in the High Court as a litigant in person, seeking around £600,000 in damages for breach of contract.
CSD Legal then wrote to the defendant on Ndloe’s behalf, including draft particulars of claim and an expert report, and later served the claim.
CSD is a firm of claims consultants specialising in construction disputes. Its sole director is unregistered (ie, non-practising) barrister Alexander Dain.
The argument at first instance was whether CSD, in serving the claim form, engaged in the conduct of litigation within the ambit of the 2007 Act.
If so, as they were neither authorised nor exempt under the Act, they engaged in a reserved legal activity and committed an offence. It was argued that this meant the service of the claim form was effected by unlawful means, was invalid and could not stand.
Mr Justice Coulson (as he then was) ruled that, in the same way that solicitors delegated the service of proceedings to process-servers, a litigant in person like Ndole could delegate service to CSD.
Giving the unanimous ruling of the Court of Appeal, Davis LJ said it was difficult to see how this approach “could not and would not potentially apply to all types of conduct of litigation. Moreover, it is difficult to see why such approach then prospectively should not apply to rights of audience as well”.
He pointed to the Court of Appeal’s 2003 ruling in Gregory v Turner, in which it said that to extend the entitlement of a litigant person to an agent would “drive a coach and horses” through the statutory purpose of the Act’s predecessor, which was “to impose effective control on rights of audience and conduct of litigation”.
This meant Coulson J’s decision could not stand.
The 2007 Act defines the ‘conduct of litigation’ as including “the issuing of proceedings”, “the commencement, prosecution and defence of such proceedings”, and “the performance of any ancillary functions in relation to such proceedings”.
Davis LJ ruled that this included service of the claim form: “It must have been intended that ‘ancillary functions’ would be formal steps required in the conduct of litigation. Service of the claim form is unquestionably, in my opinion, of such a kind.”
He continued: “How, then, does one get over the apparent problem that the same might be said… of process-servers or postal employees?
“And what if the litigant in person, if an individual, asks a family member to deliver the claim form or, if a company, asks an employee to do so: is the conclusion compelled that such a family member or employee is to be adjudged to have committed an offence?
“Such a conclusion is, as is agreed all round, unacceptable.”
Davis LJ said substance had to prevail over form and this meant there was a distinction between “those who merely perform an administrative or mechanical function in connection with service of documents and those who undertake, or who have assumed, legal responsibility with regard to service as prescribed by the rules”.
This was why process-servers and the like were not within the statutory prohibition.
However, on the evidence, CSD acted in a way “that went significantly beyond performing simply an administrative function or a mechanical activity and shows that they were taking the responsibility for service of the claim form under the rules”, the judge continued, meaning they were conducting a reserved legal activity and service was unlawfully effected.
But the judge said the 2007 Act did not stipulate the “consequence (in terms of validity) for an act of conduct of litigation being performed by a person neither authorised nor exempted”.
He said: “In my view, nullity is not to be taken as the statutorily intended consequence… There is no reason why so draconian a consequence should be intended to be visited on the client or principal, who ordinarily will have been entirely ignorant of the point.”
There were, however, criminal sanctions for the person who has actually engaged in the unlawful conduct of litigation – up to two years’ imprisonment and a fine.
“It follows that service in this present case is to be taken as valid unless the court were to decide to set it aside. I can see no reason whatsoever for so ordering. To do so could appeal to no sense of the merits.
“The claimant and CSD acted in good faith. They positively thought that they were complying with the law. There was nothing inherently unlawful, of course, in serving legal process: the unlawfulness arose solely from the involvement of CSD for this purpose.”
Further, in this case, to set aside service would mean the claimant would face a limitation problem, conferring “an uncovenanted advantage on the defendant in circumstances of (in the present case) adventitious technicality”.
As a result, the court dismissed the appeal, albeit not for the reasons given by Coulson J.
The Law Society put in a submission on the issues raised by the case at the invitation of the Court of Appeal, but the Bar Council did not.