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Claimants' solicitors ordered to pay wasted costs following successful jurisdiction challenge

Jovicic & Ors v The Serbian Orthodox Church-Serbian Patriarchy
High Court (QBD)
13 August 2020

On 13 August 2020, the High Court handed down a judgment on a wasted costs application in the case of Jovicic & Ors v Serbian Orthodox Church – Serbian Patriarchy (2020). This followed a judgment earlier this year in which Master Cook held that service of proceedings had been defective and declined to exercise jurisdiction, noting that the English courts do not recognise any principle of universal jurisdiction or "forum of necessity".

DWF's Paul Donnelly and Samantha Chambers acted for the successful defendant - in collaboration with Petar Grozdanović of the Belgrade office of Kinstellar, DWF Advocacy Ltd, DWF Costs Ltd and leading counsel, Michael McParland QC. In this legal update they discuss a number of important procedural and substantive issues which are of universal application, particularly its warning of the importance of procedural compliance.

Background

DWF were instructed to act on behalf of both the Serbian Orthodox Church of St Sava, London ("the London Parish") and the Serbian Orthodox Church – the Serbian Patriarchy based in Belgrade ("the Patriarchy") after English solicitors, intimated a series of claims in the English High Court against the Serbian Orthodox Church. The claims involved alleged abuse by clergymen in Serbia, Bosnia-Herzegovina and Croatia. None of the claimants had a personal connection with England and Wales, nor were they present or resident within the jurisdiction, nor could any of the alleged loss or damage be said to have occurred in the jurisdiction.

Jurisdiction

During 17 months of pre-litigation correspondence, the claimants' solicitors were repeatedly told that (a) the English courts did not have jurisdiction; (b) "the Serbian Orthodox Church" did not have the necessary legal persona capable of being sued; (c) the London Parish could not be vicariously liable for the actions of the clergymen against whom the claimants' allegations were made. Those clergymen were not only connected to different parishes in different countries but also different eparchies (dioceses).

Furthermore, the claimants' solicitors were informed that service on the London Parish would not be good service on "the Serbian Orthodox Church" or on the Patriarchy - the most senior legal entity/body of the Serbian Orthodox Church (with whom the claimants' solicitors had also been corresponding about their intention to bring proceedings in England). To bring a claim against the Patriarchy in the English courts, the claimants would need to apply to the court for permission to serve proceedings out of the jurisdiction, in order to effect valid service.

Indeed, as early as 2 months after receipt of the first letter of claim DWF warned the claimant's solicitors that a wasted costs order would be sought against them if proceedings were issued and served without addressing these points.

Service of the claim forms

On 8 January 2019, the claimants' solicitors issued several claim forms against "The Serbian Orthodox Church" in the High Court. Having learned about the issued claims through an article in the Serbian press, DWF again asked the claimants' solicitors to clarify their position with respect to both jurisdiction and service of proceedings. This included emails in April and May 2019 highlighting that the claim forms were nearing expiry, and again warning the claimants' solicitors against their plan to serve the proceedings on the London Parish's address.  

On 7 May 2019, the claimants' solicitors purported to email applications to the court to extend the four-month period of validity of the claim forms; however the applications were not received by the court until hard copies were filed on 29 May 2019. Despite four further emails from DWF, the claimants' solicitors did not respond until they sought to serve the proceedings on 2 July 2019 at the London Parish address (with several of the Claim Forms being photocopies). In respect of jurisdiction, the Particulars of Claim stated:

"The claimants will rely on the House of Lords decision in Connelly v RTZ Group (No. 2) [1998] AC 854 as authority for the proposition that a claim may be brought in the UK where it is in the interests of justice to do so."

In response, DWF filed applications pursuant to CPR 11 disputing the court's jurisdiction and seeking to have the claim forms set aside. The application also sought a wasted costs order against the claimants' solicitors.

In the meantime, the court had listed the claimants' application for an extension of time for service of the claim forms for hearing on 12 July 2019. However, the claimant's solicitor unilaterally suggested to the court clerk that the hearing could be vacated, despite knowing that the four-month life of the claim forms had expired prior to purported service. The hearing remained in the list but the claimants' solicitor did not attend, and no subsequent attempts were made to revive or relist the applications.

Jurisdiction judgment

Service

 On the issue of service, Master Cook:

  1. "formed the very clear view that the claim forms in each of these actions expired before their purported service. I have also come to the clear view that there is no extant application on foot to extend time for the service of those claim forms"; and
  2. found that "in complete disregard of the Civil Procedure Rules" the claimants' solicitor attempted to effect service on the London Parish which was not the defendant. In order to bring proceedings in this jurisdiction, the claimants should have sought the court's permission to serve outside the jurisdiction.

With respect to the claimants' solicitor's email exchanges regarding the listing of the applications for an extension of time for service of the claim forms, Master Cook remarked:

"I find the contents of this correspondence incredible. No competent solicitor, it seems to me, could have come to the conclusion that the application would not be required… The position, it seems to me, is totally clear and should be well understood; those who attempt to achieve service at or near the end of the life of the claim form do so at their own peril. Here, the claimants' solicitor appears to have had no proper understanding of Rule 7.5, or indeed any of the difficulty presented by Rule 7.6.3."

Master Cook therefore made a declaration that the purported service of the claim forms within the jurisdiction was invalid.

Jurisdiction

Following articles in the foreign press and correspondence which suggested that further claims were likely to be brought Master Cook also went on to deal with the issue of jurisdiction.

Master Cook rejected the claimants' submission that a doctrine of "forum of necessity" exists in English law stating: "That is not the case and it is simply wrong to assert that any such jurisdiction exists."  He also found that the claimant's reliance on Connelly v RTZ Corp was "wholly misplaced" noting that in Connelly the defendants were companies based in the jurisdiction of England and Wales, which was not the case here.

Therefore, Master Cook came to the "very clear conclusion" that the courts of England and Wales should not exercise jurisdiction to hear the claims. He made a declaration that the court had no jurisdiction to try the claims and ordered the claim forms to be set aside. 

Costs

In view of his findings that there had been a "wholesale failure by the claimants' solicitors to comply with the provisions of the Civil Procedure Rules", including failure to engage with the issues raised by DWF during pre-action correspondence and "complete misunderstanding" of the CPR provisions on service, Master Cook ordered that the defendant should be awarded its costs on the indemnity basis.

Also considering that the threshold for the making of a wasted costs order pursuant to CPR 46.8 may have been crossed, Master Cook set down appropriate directions for the claimants' solicitors to show cause why they should not pay the defendant's costs.

Wasted costs judgment

The show cause hearing in respect of wasted costs proceeded remotely on 20 May 2020.  Master Cook noted that:

"… there were two core grounds underpinning the wasted costs application. First, that the claim forms had been permitted to expire before service with the result that the costs of the application to challenge the court’s jurisdiction were wasted. Second, that the court could never have had jurisdiction to try these claims on the grounds advanced by [the claimant's solicitor] before and at the hearing on 17 January 2020 with the result that defendant incurred the costs of the application to challenge the court’s jurisdiction unnecessarily."

The legal test to be applied when a wasted costs order is contemplated is set out in the notes to the White Book (46.8.3):

Stage 1 - Had the legal representative of whom complaint is made acted improperly unreasonably or negligently?

Stage 2 - If so did such conduct cause the applicant to incur unnecessary costs?

Stage 3 - If so, was it, in all the circumstances, just to order the legal representative to compensate the applicant for the whole or part of the relevant costs?

In his judgment, Master Cook applied this three-stage test in respect of the two grounds – service of the claim forms and jurisdiction.

Stage 1 of the wasted costs test

The claimants' solicitor's position regarding service of the claim forms was that he reasonably believed he had made the applications to extend the life of the claim forms in time, and that these applications had not been listed for hearing at the time of the January 2020 hearing. Further, the expiry of the claim forms had not caused costs to be wasted as the claimants' solicitors were entitled to, and would have, simply issued new proceedings.

Master Cook noted a number of difficulties with this position:

"On any view the expiry of the claim form was an important issue. [The claimant's solicitor] chose to do nothing about this until the day before notwithstanding that his attention had been drawn to the very point by DWF in correspondence, the last occasion being in the letter of 5th April 2019. [The claimant's solicitor] did not seek an urgent listing of his application, which he could have done by attending the daily urgent and short applications list before the Queen’s Bench Masters. Instead he marked the application notice “to be considered without a hearing” which would not be appropriate unless the parties were agreed…"

Master Cook went on to remark that by the time of the exchange with his clerk on 3 July 2019:

"… it must have been blindingly obvious to any competent solicitor that proceedings had been served without an extension of time for service having been granted and that regularising the situation was a matter of the upmost urgency… there is no explanation for his failure to contact the court or make any arrangements for these applications to be listed…"

Considering the failure of the claimants' solicitor to take any active steps to correct the position with respect to the expired claim forms before the strike out hearing in January 2020, Master Cook stated:

"… I do not see this as a mere negligent failure to serve the claim within the required period. [The claimant's solicitor's] conduct goes beyond that and continued down to the date of the strike out hearing. [The claimant's solicitor] could not have reasonably believed that he had done all that was necessary in this regard… [The claimant's solicitor's] conduct in failing to serve the claim forms within the required period and then taking no effective steps to attempt to remedy the position before the strike out application was heard permits of no reasonable explanation."

Turning to the issue of jurisdiction, the claimants' solicitor asserted that he had relied upon the advice of counsel in respect of jurisdiction at all material times and that he had followed that advice. He was unable to disclose the advice he received from counsel or the instructions received from his clients as the claimants had not waived privilege (but he did provide a summary of the dates of advice and the issues on which counsel's input was sought). It was submitted on behalf of the claimant's solicitor, and accepted by Master Cook, that the court must therefore "proceed with extreme care and must be satisfied that the decision to bring proceedings in this jurisdiction was quite plainly unjustifiable".

Master Cook noted that it was clear to the claimants' solicitor from the outset that jurisdiction and the identity of the defendant were potential issues, as was made clear to him in the pre-litigation correspondence with DWF. The claimants' case on jurisdiction was set out in the first letter of claim sent in February 2018, "many months before taking any advice from counsel" and was maintained thereafter.

The claimants had not (and could not have) served proceedings on the Serbian domiciled defendant in accordance with CPR 6.9(2). The claimants also did not seek permission to serve the claim forms outside of the jurisdiction, and such an application would have in any event failed "because (at the very least) none of the claimants have a good arguable case that their claims fall within any of the jurisdictional gateways in paragraph 3.1 of PD 6B."

The claimants' case throughout, that the English court had jurisdiction as a "forum of necessity" was misconceived:

"I remain of the view, that the principle of “forum of necessity” does not exist in English law, and, unlike the position in some civil jurisdictions, there is no provision in English law for the exercise of “universal jurisdiction” by the English courts. The absence of both those concepts in English law was highlighted in the judgments of the European Court of Human Rights in the case of Nait-Liman v Switzerland…"

With respect to the statement in the particulars of claim that the claim had been served on the eparchy (diocese), Master Cook accepted the defendant's submission "that any reasonably competent solicitor should have realised that such a case was nonsensical" – the claimants were not suing the eparchy; no application was made to amend the claim forms; and the eparchy is domiciled in Sweden, not London. "If this did represent counsel’s advice then it was not advice which [the claimant's solicitor] was entitled to blindly follow." Counsel's involvement in resisting the defendant's Part 11 application was limited to the skeleton argument and attendance at the January 2020 hearing.

Master Cook therefore concluded:

"… that making full allowance for anything that might have been said to [the claimant's solicitors] by their clients or in the advices from counsel it was wholly unreasonable and negligent to issue these claims in this jurisdiction. DWF did all that was in their power to alert [the claimant's solicitor] to the correct jurisdictional position, however in my judgment he chose to proceed with a wholly unarguable position through to the hearing of the strike out application."

Stage 2 of the Wasted Costs Test

Master Cook found that the answer to the second stage of the test (did the improper, unreasonable or negligent conduct cause the applicant to incur unnecessary costs?):

"… must be yes… I reject Mr Friston’s submission that the fact the claim forms were served without having obtained an extension did not cause costs or any significant costs to be wasted or incurred as the solicitors would have simply issued new proceedings as they were entitled to do. These costs would still have been incurred even if new proceedings were issued as [the claimant's solicitor] continued to resist the application… in my view all costs incurred after 27 December 2018 when the defendant instructed DWF were caused by the negligent and unreasonable conduct of [the claimant's solicitors]"

Stage 3 of the Wasted Costs Test

Turning to whether it was just in all the circumstances for the claimants' solicitors to compensate the defendant for all or part of the relevant costs (stage 3 of the test), Master Cook concluded that:

"The defendant has been forced to come to this jurisdiction to deal with issues that I have taken the view no responsible solicitor could have continued to pursue… it is clear that the defendant has no realistic prospect of recovering its costs from any other party.

In the circumstances, this being in my view a clear and obvious case, I consider that it is just in all the circumstances for [the claimant's solicitors] to pay the entirety of the costs incurred by the defendant on the indemnity basis from 27 December 2018."

Comment

The Jovicic judgment is a stark reminder of the importance of getting the basics right, and that the fundamental decisions taken at the start of proceedings (and indeed in pre-issue correspondence) can have important consequences later down the line.  

The key practical considerations are:-

  • This case was an example of attempted forum shopping of the highest order. There was simply no connection to this jurisdiction and unlike in some other jurisdictions, there is no principle of 'forum of necessity' or 'universal jurisdiction' in English law.
  • In any event, if valid service of proceedings on a defendant within the jurisdiction is not possible, an application for permission to serve out of the jurisdiction is required, for which there must be a good arguable case that the claim falls within one of the jurisdictional gateways in paragraph 3.1 of PD 6B.
  • The sending of an application to the court is not sufficient to protect a party's position with respect to extending time for service of proceedings and the onus is on the solicitor to ensure that any such application is dealt with urgently, so that the position is regularised as soon as possible.
  • Whilst it remains unclear what advice the claimant's solicitors received from counsel, a solicitor is not entitled to blindly follow counsel's advice, particularly when the position adopted is clearly "nonsensical". Whilst requiring the court to proceed with extreme care, the non-waiver of privilege will not deter the court from making a wasted costs order in a clear and obvious case.

The courts have wide reaching powers to penalise solicitors who act unreasonably in litigation and cause opponents to incur costs which they have "no realistic prospect of recovering… from any other party". This case is fact sensitive and novel, but it carries a heavy warning - those who fail to heed constructive attempts from opponents to engage in dialogue on important issues and/or who fail to treat compliance with the Civil Procedure Rules as anything other than an absolute necessity and of paramount importance do so at their own peril.

Contact

For further information please contact:

Paul Donnelly, Partner on +44 7798 700459 or at paul.donnelly@dwf.law, or Samantha Chambers, Associate on +44 121 200 0450 or at samantha.chambers@dwf.law

By Paul Donnelly & Samantha Chambers

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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