Tim Reid explains what happened in the case of Ener-G Holdings plc v Hommell 2012
It should go without saying that when it comes to serving notices in accordance with the terms of a contract, the notice must be served at the right time, in the right way, and on the right person. The contract itself will commonly describe acceptable forms of service whether explicitly or by reference to statutory provisions, such as section 196 of the Law of Property Act 1925.
What happens, though, when notice is received by the right recipient but not in the manner described in the contract? If the method of service is simply not permitted by the contract, the notice will be treated, at law, as never having been received. However, as in the case of Ener-G Holdings plc v Hommell 3, the wording of the contract may suggest that the methods of service described are not the only methods permitted.
Under the terms of a share purchase agreement, Ener-G had to give notice to Hommell of any breach of warranty, but the claim would be treated as having lapsed unless they served a claim on Hommell within 12 months of the notice. The Court of Appeal was faced with the rather unusual circumstances of the recipient (Hommell) arguing that he had received the notice on the day it arrived on his doorstep, notwithstanding that it was not received in the manner described in the contract.
The contract said that any such notice “may be served by delivering it personally or by sending it by … recorded delivery …” and then went on to say that notice by personal service would be deemed served when delivered, and notice served by recorded delivery would be deemed delivered two days after posting.
The notice was left on a table in the front porch of Mr Hommell’s home on 30 March 2010 and he read it on the same day. That was not, however, personal service, as personal service requires that the document be handed to the person being served (Kenneth Allison Ltd v AE Limehouse & Co)4. The notice was sent by recorded delivery but was deemed under the contract to have been received on 1 April 2010.
Had Ener-G not waited until the very end of the 12 month period to make a claim, the question of service would not have arisen. However, they did not serve a claim on Hommell until 31 March 2011, and so had to argue that the notice of breach had been deemed served by recorded delivery on 1 April 2010, and the earlier personal delivery did not constitute valid service.
The Court of Appeal decided that whilst the first notice had not been served personally, the two methods of service described in the contract were non-exclusive. Accordingly, actual service on 30 March 2010 constituted valid service, and the claim was time-barred.
The Court of Appeal had to decide whether the means of service listed in the contract were exclusive. The Court decided they were not as the contract said notice “may” be served rather than “shall”. The Court said that “clear words” would be required to convey an unequivocal intention by the parties that serving a notice by a method not specified in the contract would be treated as non-service so that a party who actually received a notice in time should be treated as not having received it at all.
The facts may be new, but the lessons are familiar. Close examination of the actual words of a contract, in their context, will usually give an indication as to the parties’ intended contractual positions. Above all, always allow enough time to properly meet contractual deadlines and avoid the need to rely on fine analysis of the language, and on the courts, to ascertain whether, and when your notices were validly served!