Claim time-barred under contractual service provisions

Court of Appeal rules that claim time-barred under contractual service provisions

In the case of Ener-G Holdings plc v Hommell [2012] EWCA Civ 1059, the Court of Appeal considered whether the proceedings were validly served by the Claimant on the Defendant pursuant to what had been agreed in their agreement.

The most important clause that the Court had to consider was the notice provisions in the agreement.  Clause 13 was entitled “Notices”, and provided the following:

  • 13.1 Notice in writing – Any notice or other communication under this Agreement shall be in writing and signed by or on behalf of the party giving it.
  • 13.2 Service – Any such notice may be served by delivering it personally or by sending it by pre-paid recorded delivery post to each party (in the case of the Buyer, marked ‘for the attention of the directors’) at or to the address referred in the Agreement or any other address in England and Wales, which he or it may from time to time notify in writing to the other party.
  • 13.3. Deemed service – Any notice delivered personally shall be deemed to be received when delivered (or if delivered otherwise than between 9.00 am and 5.00 pm on a Business Day, at 9.00 am on the next Business Day), any notice sent by pre-paid recorded delivery post shall be deemed to be received two Business Days after posting and in proving the time of dispatch it shall be sufficient to show that the envelope containing such notice was properly addressed, stamped and posted.

The Claimant arranged for notice of breach of warranty to be served on the Defendant by a process server. The process server delivered the first notice on 30th March 2010 to the Defendant’s home address and left it on the porch as the Defendant was not at home.  An identical second notice was also sent by Recorded Delivery to the Defendant’s home address.

Delivery of the Notice The Court looked at clause 13.2 and what constituted “delivering the notice personally” and whether the procedures specified for service of notices under clause 13 were exclusive. The Judges held the view that the law and common sense both supported the notion that if “personal” service or delivery of a document is required, it should be handed to the intended recipient personally and not by a person. The Judge said that “the concept of “personal service” is well understood to mean service on the recipient personally, not service by the server (or anyone else) personally”.

Looking at the procedure for service in clause 13.2, the Judges were of the view that it was intended to be permissive rather than exclusive. Gross LJ stated that, had the parties intended clause 13.2 methods of service to be exclusive, they would have used “shall” or “must” rather than “may”. Gross LJ was unable to read “may” as meaning “must”, unless persuaded by the agreement as a whole or the commercial context.

Some important issues to take away from this Judgment when drafting commercial agreements is for parties to specify their intentions for certain methods of contractual service to the exclusion of other methods and to use language that makes it crystal clear about their intentions.