In our March newsletter, we reported on the case of Ener-G Holdings PLC v Philip Hormell ( EWHC 3290) (click here to see a copy of that article). The case raised some interesting points in relation to contractual notice provisions, but, as we noted, was due to be appealed. On 4 July, judgment was handed down by the Court of Appeal (EWCA Civ 1059) which upheld, by a majority of two to one, the first instance decision.
By re-affirming the first instance decision, the case:
- clarifies what is required when personal service is specified; and
- provides further precedent on the interpretation of contracts.
In common with many agreements, the contract in question provided that notices could be delivered either in person or by recorded mail. When serving notice, it was decided, not unusually, to adopt a belt and braces approach by delivering the notice using both methods. In respect of the personal delivery method, there was no-one available to take delivery and so the document was simply left at the stipulated address. Despite persuasive arguments that personal delivery is intended to distinguish a form of delivery where the document in question is entrusted to a specific person (such as an employee, process server, or courier) as opposed to using a generic delivery service, such as the Royal mail, it was held that personal delivery means the document must be delivered to a person. As personal service can often be thought to effect a speedy, usually same-day, delivery, the decision raises a potential flaw in this logic. For, if delivery is not personally accepted, delivery will be ineffective. Hence, where timing is tight, personal delivery may not be the saviour it is hoped it will be.
In the case of individuals, where there is no-one present at the property in question to effectively take delivery, this will result in the document not being delivered. For corporates, the position may be better, in that, provided the document can be left with someone who is authorised to take delivery on behalf of the entity in question, delivery will be effective. By contrast, where a contract deems that a document sent by a particular method, such as recorded delivery, is deemed received, delivery will be effective regardless of whether anyone is available to receive it, or, indeed, irrespective of whether the document is ever actually delivered.
The case, therefore, underscores the fact that, whilst seeming to be a safer option, personal delivery may, in fact, be a less reliable method of ensuring delivery than relying on the services of a generic delivery service. Above all, the case illustrates that when contemplating the service of a document, this should be undertaken in sufficient time to ensure effective delivery. In the original judgment the Judge commented that such matters should not be "left to the last minute", whilst on Appeal it was suggested that "by leaving service until so late in the day, the Appellant [was] the author of its own misfortune".
When stating that, as noted above, notices could be served either personally or by recorded delivery, the contract specified that notices "may" be served in either of those ways. In addition, the contract contained other provisions which the Court of Appeal found, when read in conjunction with the notices clause, did not dovetail neatly. For example, the interpretation provisions provided that "in writing" included faxes (but not e-mail), and, whilst the notices provision specified that notices had to be "in writing", the clause itself did not specify any rules or outcomes of using such a means of service (for example, when delivery of a fax would be deemed to have occurred etc). For these reasons, it was suggested that the notices clause could not have been intended to limit the methods for delivery to just the two methods specified.
Persuasive arguments were put to counter this interpretation including that;
- the use of the word "may" referred only to a choice between the two specified methods; and
- the inclusion of detailed provisions in respect of just two delivery methods made it illogical for the parties to have contemplated that other methods would also be available.
It was this issue of interpretation that gave rise to the most difficulty for the Court of Appeal in making its decision, with both the Master of the Rolls and Lord Justice Lomgmore commenting that they had not found the point easy. However, it was found (by a decision of two to one) that, when considering the contract as a whole, it was not possible to construe the notices clause as restrictive and, therefore, notice could be given by other methods. The Court of Appeal, therefore, upheld the first instance decision.
The decision further illustrates the ways in which the Court will interpret the drafting of contracts and, in particular, its reluctance to effectively re-write the terms of a contract where those terms provide for a feasible (if not desirable) outcome.