Time Is Up - Contractual Notice Provisions

Author:Mr John O'Connor, Yvonne Cunnane and Andreas Carney
Profession:Matheson Ormsby Prentice

The UK Commercial Court examined the notice provisions in a share purchase agreement ("SPA") between the parties in the case of Ener-G Holdings plc v Hormell1. In a surprising decision, the court found that while the plaintiff's claim was time-barred due to the Court's construction of the notice provisions, the methods of service set out in the SPA were not deemed to be exhaustive. Background The SPA required that proceedings in respect of a claim to be issued and served on the vendor within 12 months of the notice of claim. The SPA also contained provisions in relation to service and deemed service. It was the construction and interpretation of these provisions that led to the preliminary hearing. The SPA provided that notices "may" be served personally or by pre-paid recorded post. It also provided that documents required to start legal proceedings could also be served in any other manner permitted by law. The first issue concerned the service of the notice of claim. A process server, on behalf of the plaintiff, left the notice in the front porch on 30 March 2010, where it was found and opened by the defendant later that day. The second issue concerned the service of the proceedings, which were posted by the process server through a letter box on the defendant's premises on 29 March 2011. The defendant did not receive the documents until 2 April 2011. The Court was required to determine whether:

Service of the notice of claim on 30 March 2010 was effective, notwithstanding that it was not delivered "personally" on the defendant; and Service of the proceedings on 29 March 2011 was effective and if so, the date of deemed service. Decision The Court ruled that if there were two possible constructions of a document, it was entitled to prefer the construction which was consistent with business common sense. Although, the SPA required notices to be delivered either personally or by recorded post, the Court found that the methods of service were not exhaustive. The Court noted that it would be contrary to common sense to find that the...

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