The courts insist parties abide by the
terms of their contract and will be strict about deadlines, says
Greg Standing
Most contracts,
including lease finance agreements, will provide for how and when
notices relating to the agreement are to be served. Failure to
serve in accordance with the contract may well result in any
potential claim being lost.
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This was the position in Ener-G Holdings
PLC v Hormell (2012) in which the contract provided that
notice of any claim had to be given within two years of completion
of the contract (by 2 April 2010) and any proceedings had to be
issued and served within 12 months thereafter or they would be
time-barred. The notice provisions provided that “any such notice
may be served by delivering it personally or by sending it by
prepaid recorded delivery post to each party”. Any notice delivered
personally would be deemed received when delivered, if it was
delivered between 9am and 5pm. If it was delivered after that
time, it would be deemed as recieved on the next business day. Any
notice sent by prepaid recorded delivery would be deemed served two
business days after posting. Legal proceedings could be served in
accordance with the contract or in any manner allowed by law.
Notice of a claim was delivered to the
defendant’s home address by process server on 30 March 2010 where
it was found and opened by the defendant before 5pm that day. The
claimant also sent a notice of claim by recorded delivery which was
deemed received in accordance with the contractual terms on 1 April
2010. On 29 March 2011 at 4.20pm, a claim form was posted through
the defendant’s letter box by a process server. It did not come to
the defendant’s attention until 2 April 2011. The issues were when
had the notice been served and were the proceedings thereafter
served in time?
The court found that the notice of claim had
been served on 30 March 2010. The wording of the service provisions
meant they were not exclusive and other methods of service could be
used. As the defendant had actually received and dealt with the
notice on 30 March, it would be contrary to common sense to hold
that it had not been served on him on that date (albeit not in
accordance with the contractual provisions). The claim form had not
been delivered to the defendant ‘personally’ but posted through his
letter box. The contractual service provisions had not been
complied with, so the service provisions of the Civil Procedure
Rules (CPR) came into play. CPR 6.14 provides that a claim form
left at premises would be deemed to be served two business days
later. Here that meant on 31 March 2011. The claim form was not
therefore served within the 12-month period stipulated in the
contract and the claim could not be brought.
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By GlobalDataThe decision highlights the need for
contracting parties to abide by the terms of their contract.
Contractual service provisions should be adhered to strictly.
Parties can expect no sympathy from the court which will construe
deadlines strictly.
Greg Standing is a partner in
Wragge & Co’s finance litigation team
