Notice provisions in commercial contracts

26 February, 2013

Ener-G Holdings Plc v Philip Hormell1 is an interesting case which highlights the way in which courts interpret notice provisions in commercial contracts.

 

The Facts

Ener-G Holdings Plc (Ener-G) wanted to pursue a claim against Mr Hormell. An agreement they were party to stated that to make such a claim, a notice had to be served on Mr Hormell by 2 April 2010, with a claim form to be served no more than a year after the notice.  Documents could be served by personal delivery or recorded delivery.

On 30 March 2010 Ener-G sent someone to deliver the notice to Mr Hormell. They left the notice on the porch table and it was picked up by Mr Hormell later that day. The claim form was also sent by an individual on 29 March 2011, who posted the form through Mr Hormell’s letter box.

Mr Hormell argued the notice had been validly delivered on 30 March 2010 and, accordingly, the claim form had been served too late as it was deemed served (under both the terms of the contract and the Civil Procedure Rules) on 31 March 2011, two business days after it was posted through the letter box.

 

Court of Appeal Decision

The Court of Appeal held that personal delivery means a document must be delivered to a person not by a person, therefore, both documents were not delivered personally. However, this did not mean delivery failed as the Court decided the contract allowed for any method of service to be used.  The key words were service “may” be by personal delivery or recorded delivery, not “must” be by those methods.

The Court of Appeal held it would be contrary to common-sense to say the notice was not delivered to Mr Hormell, on 30 March 2010, given that he had read it and had taken instructions from his solicitors that day. The claim form posted through Mr Hormell’s letter box, on 29 March 2011, was deemed delivered on 31 March 2011 and, therefore, was served outside the 12 month time limit. Ener-G’s claim was time barred.

 

Lessons to be learnt

This decision uproots ideas that personal service is a fail-safe method of delivery. Personal delivery may be ineffective if the document is not actually received by the recipient. When compared with recorded delivery, which is deemed to be delivered two days after posting, whether or not the document is actually received by the recipient, the latter option appears increasingly attractive.

Notice clauses often comprise of standard wording and can be overlooked when negotiating seemingly more important clauses. This case, however, acts as a stark reminder that contract terms, including standard notice provisions, need to clearly reflect the parties’ intentions. If the parties only want two methods of service to apply, clear wording to that effect should be drafted.

Needless to say, the most important message is to serve all notices well within specified time limits as Ener-G was, to an extent, the author of their own misfortune in leaving the service of both documents to the last minute.

 

1Link to judgment:  Ener-G Holdings Plc v Philip Hormell

 

Reviewed in 2015