Under a share purchase agreement, the limit for bringing claims alleging breach of warranty was 2 April 2010. Where notice of a claim had been given, the claim was deemed to have been withdrawn unless proceedings were issued and served on the vendor no later than 12 months after date of the notice of the claim. The notices clause was in fairly standard form:
"any such notice may be served by delivering it
personally or by sending it by prepaid recorded delivery post to
each party... at or to the address referred to in the
agreement..."
"any notice delivered personally shall be deemed to be
received when delivered....., any notice sent by prepaid recorded
delivery shall be deemed to be received two Business Days after
posting."
A process server delivered notice of warranty claim to the vendor's home address as set out in the agreement and left it in the front porch on 30 March 2010. It was found and opened by the vendor on the same day. A notice was also sent by recorded delivery to the vendor's home, which was deemed received on 1 April 2010 by virtue of the notices clause.
Moving forward a year, on 29 March 2011, a process server posted a notice of proceedings through the letterbox of the house. The vendor was away and did not receive the documents until 2 April 2011. The issue arose as to whether the proceedings were time barred. The vendor argued that a notice of warranty claim was served on 30 March 2010 – although it was not good service under the agreement, the methods in the agreement were non-exclusive and the notice was actually received. That meant that any notice of claim had to be served by 30 March 2011. This did not happen because the notice left at his house was not "personal service" as the claim form was not delivered to him personally. Therefore, under the deeming provisions under the CPR, it was only deemed served two days later, i.e. on 31 March which was too late. The purchaser argued that if posting notice of a claim through the letterbox in 2011 was not good service, then neither was leaving the letter in the porch in 2010. That being the case, the notice of warranty claim was only received two deemed days later, i.e. 1 April 2010, in which case the deemed service of notice of proceedings was served in time.
The High Court, Burton J, held that the proceedings were served out of time, so the claims had lapsed. He found as follows:
- The Judge agreed that the provisions of the notices clause were not intended to be exclusive for method of service of notices – in particular "any such notice may be served" was permissive. The clause offered procedural certainty for the parties, but that did not mean that they were not permitted to take a risk and use other methods of giving notice.
- It would be contrary to common sense to deny that the vendor received the notice left in the porch on 30 March 2010 . He had clearly received it (and had indeed discussed it with his solicitors on the same day). That was therefore good service, albeit not personal service under the terms of the contract, but a form of service not covered by the notices clause.
- For the service of proceedings, that would only have been valid if served on 29 March 2011, which would require posting the claim through the letter box to be valid personal delivery within the meaning of the notices clause – deemed delivery under the CPR was too late. The Judge rejected the argument that personal delivery meant delivery "by a person" rather than "to a person". To comply with the clause, notice had to be delivered personally to the other party at the address specified in the agreement. Posting the notice through the letterbox was not sufficient. He accepted that certainty was necessary and that his construction might lead to uncertainty. However there were other methods of giving notice and the parties will have had up to two years (in the case of claims) and a further one year (in the case of proceedings) to give the notice.
The decision is being appealed. In particular, note that "personal" service in a notices clause requires not just delivery to an individual's address, but delivery to into the hands of that particular individual – which is the case in the CPR. The issue does not arise in relation to service on companies, as long as the person accepting delivery at the company is authorised to do so (and receptionists are normally so authorised).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
