In the recent case of Ageas (UK) Ltd v Kwik-Fit (GB) Ltd (2013), the High Court considered the meaning of the word "serving" in relation to a claim for breach of warranty under a share purchase agreement.
In August 2010, Ageas (UK) Ltd ("Ageas") acquired the entire issued share capital of Kwik-Fit (GB) Ltd ("Kwik-Fit"). The share purchase agreement ("SPA") contained various warranties including a number which related to the preparation and accuracy of Kwik-Fit's accounts. Following completion of the acquisition, Ageas alleged that Kwik-Fit had erroneously accounted for certain sums in its profit and loss accounts and brought a claim against Kwik-Fit for breach of warranty.
The SPA contained various limitations of Kwik-Fit's liability for breach of warranty, including a requirement that any claim for breach of warranty be made within one year of the date of completion. There was a further requirement, set out in Schedule 4(3) of the SPA, that the claimant must commence and serve legal proceedings within six months of a claim being made. In this instance, Ageas sent written notice of its warranty claim to Kwik-Fit on 28 July 2011 and so was required to serve legal proceedings by 28 January 2012. Ageas proceeded to issue a claim form on 18 January 2012 which was sent to the defendant's solicitors by fax, email and DX on 26 January 2012, two days before the expiry of the 6 month period.
However, Kwik-Fit argued that the claim form had, nevertheless, been served late. The SPA referred to validly issuing and serving legal proceedings and Kwik-Fit argued that this meant that Rule 6.14 of the Civil Procedure Rules ("CPR") should be applied in determining whether the contractual deadline for service had been met. Pursuant to the service rules under CPR 6.14, the deemed date of service was 30 January 2012, being two days outside of the time period specified in the SPA.
The Court disagreed with Kwik-Fit and held that Ageas had complied with the service requirements in the SPA. In the absence of any express provisions to the contrary, in this context the word "serving" should be given its ordinary and natural meaning. A reasonable person considering the word "serving" in the context of the SPA would treat that phrase as meaning actual delivery. Accordingly, by serving the claim form on 26 January, Ageas had done so in time under the terms of the SPA.
The Court also considered which rule of the CPR was applicable in this instance and determined that if the CPR had been imported into the SPA then the appropriate rule would have been CPR 7.5 and not CPR 6.14 as alleged by Kwik-Fit. The Court's reasoning was that the purpose of both CPR 7.5 (and Schedule 4(3)) was to set out the steps which needed to be taken when despatching the claim form. In contrast, the purpose of CPR 6.14 was to set out the regime for calculating the date of deemed service of a claim following despatch.
This judgment indicates the importance of stipulating how legal claims are to be served for contractual purposes. If a party does not specifically state in a contract how legal claims are to be served, this judgment suggests that the Courts will apply the ordinary meaning of the word 'served' and a claim form served by fax, email and DX will be validly served pursuant to the contract. If there is an intention that the provisions of the CPR will apply, then it is prudent to replicate those sections within the agreement to avoid any uncertainty arising.