A matter of personality
Companies are not like you and me. They cannot prepare drafts or sign documents – to do such things, they must act through human agents. While detailed rules exist to allow companies lawfully to take some of the same actions as humans, the interaction between the separate legal personalities of the company and the individuals behind it can cause difficulties. This is one feature of an appeal court decision late last year, in Ndole Assets Ltd vs Designer M&E Services UK Ltd  EWCA Civ 2865.
A main contractor engaged the defendant, Designer, to carry out design and installation work for the M&E elements of a development in Hackney. Several contractual disputes and one adjudication later, the main contractor assigned the claims it considered it had to the claimant, Ndole – a company incorporated in the British Virgin Islands – which then issued proceedings against Designer in the Technology and Construction Court. Having asked the court not to serve the claim form itself, Ndole engaged a firm of claims consultants to serve the proceedings with the particulars of claim on Designer.
While detailed rules exist to allow companies lawfully to take some of the same actions as humans, the interaction between the separate legal personalities of the company and the individual behind it can cause difficulties
Three months after the claim form was issued, the consultants duly tried to serve at Designer’s registered office, having started correspondence with Designer’s solicitors. After the four-month validity of the form would have expired, had it not been validly served, Designer’s solicitors acknowledged service but indicated their intention to contest the court’s jurisdiction on the basis that – by serving proceedings – the claims consultants had been conducting litigation. As a reserved legal activity under the Courts and Legal Services Act 2007, Designer argued before Mr Justice Coulson that the consultants had committed an offence and that their actions had rendered the service of proceedings invalid.
The interesting point is this. The relevant part of the 2007 act excluded certain persons from the requirement to be authorised in order to conduct litigation, among whom were litigants in person. By definition, litigants in person do not have legal representatives acting for them so must necessarily serve proceedings themselves. Because no one contended the consultants were solicitors, it was agreed for the purposes of the appeal that Ndole was in the same position as a litigant in person under the 2007 act. Among the conceptual issues for Lord Justice Davis (with whom Lords Justice McCombe and Jackson agreed) was how to square this agreement with the reality that Ndole, as a company, was incapable of doing anything itself. It could only act if someone was prepared to do something for it.
Lord Justice Davis was prepared to accept that, if Ndole’s sole shareholder had himself served proceedings on Designer, there could be no invalidity. Acts carried out by all the shareholders (or all the directors) can in law be attributed to the company itself without much difficulty. But here the service of proceedings had not been delegated to a shareholder, a director, or even an employee of Ndole – the firm of claims consultants was a third party that had presumably been engaged on a purely commercial basis. As Lord Justice Davis noted, the Civil Procedure Rules were not much help here: CPR 39.6 referred only to the representation at trial of companies by employees (and with the court’s permission).
Ultimately, the parties’ agreement that Ndole was in the position of a litigant in person made it unnecessary for the appeal court to decide the precise manner in which the actions of those third parties engaged by the company could be attributed to it (to that extent the point remains open as a matter of company law). The point left for the court was the extent to which a human agent, not being an authorised person under the 2007 act, could assist the company in its capacity as a litigant in person. On the one hand, the court noted it could not be right that a company was precluded from delegating any of the functions a litigant in person would have had. If that was right, the Royal Mail could not lawfully deliver a claim form to a defendant on a litigant’s behalf. On the other hand, if there was a power to delegate those functions to the world at large, the statutory purpose of authorising categories of persons under the 2007 act would be reduced to an absurdity.
Lord Justice Davis reached what he called “the pragmatic solution”. This was to distinguish between those performing “an administrative or mechanical function in connection with the service of documents” and those “who undertake, or have assumed, legal responsibility with regard to service as prescribed by the rules”. Ultimately, the appeal court held that the claims consultants were on the wrong side of this distinction. They had gone beyond a mere mechanical function and – in particular by the signing of the certificate of service on behalf of Ndole – had effectively assumed legal responsibility for service.
That left only the issue of the effect of unlawful service for a party in Ndole’s position. The court was clear that the conduct of the consultants did not itself render service of proceedings invalid and it saw no reason to set service aside. Instead, the proper sanction for those conducting litigation without authorisation was that prescribed by the 2007 act, namely its criminal penalties and the possibility of a contempt application.