Are you being served?
Posted: Tuesday 20 July 2010
Notice provisions. Contracts are full of them these days. Usually they don’t attract too much in the way of attention. Well, that is until problems arise.
Just like every other term in a building contract, provisions involving the serving of notices really need to be followed to the letter. Provisions can govern the exact person and address a notice needs to be served to, through to the time scale you have to do it in. Don’t follow the rules and you can easily land yourself in some pretty hot water.
An example that I heard about recently involved the serving of a notice for the withholding of payment. These provisions can be found in many a building contract and the standard drafting in place doesn’t really need any sort of revision. With the aid of a calendar and a bit of arithmetic you can work out the exact dates that certain information has to be lodged by to ensure you don’t fall foul of the rules. In this example, a notice was served two days late. The other side were pretty quick to pick up on this point. The notice was invalid. The claim for withholding appeared to have a solid base and was for a substantial sum, but erring on this important point on time was potentially disastrous. A lesson was no doubt learned here.
The recent English case of Anglian Water (“AW”) v Laing O’Rourke Utilities (“LOU”) [2010] EWHC 1529 looked at the importance of serving notices to the correct people at the correct address and the principles discussed in the case have relevance here north of the border.
The case involved the serving of a notice by AW stating dissatisfaction with a decision following adjudication.The contract incorporated the terms of the 2nd Ed.(1995) NEC Engineering and Construction Contract. Clause 13.2 of the NEC core conditions state that a communication has effect when it is received at the “last address notified by the recipient for receiving communications or, if none is notified, at the address ...stated in the Contract Data”. The contract contained the addresses for communcation at AW and LOU. AW sent the notice to LOU’s solicitors and not the address in the contract. LOU’s solcitors acknowledged receipt and passed the notice to the relevant person at LOU.
Questions arose as to the validity of the service. Compliance with the mode of delivery specified in clause 13.2 was the only means of effective delivery of a communication under the contract. However, an email was sent from AW’s solicitors asking LOU’s solicitors to confirm that they would accept service of the notice and “any other documentation relevant to the adjudication”. LOU’s solicitors confirmed that they would. This was deemed to be sufficient notification that LOU’s solicitors would be the address for service of communications relevant to the adjudication, and not LOU’s office.
As a second point, as the notice was passed by the solicitor to the relevant person at LOU, rather than by direct service from AW, clause 13.2 had not been complied with. The judge did consider that even on this failure, the necessary people at LOU were in receipt of notice within the required timescale. Overall, there was good reason that the notice was not served on LOU direct and it was therefore considered unjust to hold AW to the exact terms of clause 13.2.
Parties have to make sure that notices get to the correct people through the correct channels within the specified timescale. Failure to follow the rules may result in what would have been a perfectly valid notice being invalidated.
Elaine Sims, Solicitor
