Company officers may find themselves unwittingly subject to the jurisdiction of the English courts simply through failing to update company records.
Directors and company secretaries, particularly those based overseas, would be mindful to check the correspondence address that they provided on Companies House following a recent decision in Idemia France SAS v Decatur Europe Limited & others in the Commercial Court.
Idemia has reaffirmed the position in Key Homes Bradford Ltd and others v Patel that, where a company officer lists their correspondence address at Companies House as an address in England and Wales, that company officer can be served with legal proceedings at that address, regardless of that individual’s physical presence, residence, or domicile within the jurisdiction.
The general rule under the Civil Procedure Rules remains that, in absence of an agreement to the contrary or a court order, defendants who are individuals can only be served at their usual or last known residence. In practice, where a defendant is resident outside the jurisdiction this can involve carrying out searches and making applications to court for service out, both of which can be costly and delay matters.
A little-known exception
However, the introduction of section 1140 of the Companies Act 2006 brought in a little-known exception to the rule that permits legal proceedings to be served on a director or company secretary at the address they registered for correspondence at Companies House.
Mr Rahman, the third defendant in Idemia, was a director of the first defendant, and allegedly controlled and owned both the first and second defendant. Mr Rahman was included as a third defendant on the basis that he procured breaches of contracts between the claimant and the first and second defendants.
In January 2018, Mr Rahman left London and returned to live in Bangladesh.
In June 2018, the claimant attempted to serve legal proceedings on Mr Rahman at two separate addresses: (i) York Way, an address in London that the claimant argued was his “last known residence”, and (ii) Morris Place, an address in London provided by Mr Rahman at Companies House.
For various reasons, the court determined that the claimant had sufficient reason to know that Mr Rahman no longer lived at York Way, and they could not therefore rely on service at that address.
However, in reliance on section 1140, the court accepted service of proceedings on Mr Rahman at the Morris Place address, and the claimant succeeded in establishing that the English court had jurisdiction over Mr Rahman, despite Mr Rahman not being present in the jurisdiction at the time of service and having been resident and domiciled in Bangladesh for several months prior.
The service of legal proceedings with no connection to the position as a company officer
In Idemia, the proceedings served on Mr Rahman arguably were connected to his role as director of at least one of the other defendants. However, the effect of section 1140 applies “whatever the purpose of the document in question”, and notably “is not restricted to service for purposes arising out of or in connection with the appointment or position [as company officer]”. Section 1140 therefore extends to service of legal proceedings that have no connection to the defendant’s position as a company officer, including personal claims against the company officer.
Overseas individuals should ensure that any appointments at Companies House are up to date
The upshot of the decision in Idemia is that company officers may find themselves inadvertently subject to the jurisdiction of the English courts simply through failing to update company records. To avoid getting caught by section 1140, individuals who have recently moved overseas may want to ensure that any appointments at Companies House are up to date and, where necessary and appropriate, change their correspondence address to a local address in their country of residence.
A useful tool for litigators
On the other hand, section 1140 can provide claimants with a way to a validly circumvent the normal procedures for service outside the jurisdiction, which can reduce the costs and time spent on effective service and remains a useful tool for litigators.
This paper is intended to be a brief note for clients and other interested parties. The information is believed to be correct at the date of publication but should not be relied upon as a substitute for professional advice. Please speak to a member of our team.