The ‘May’ Trap
Steeles Law Head of Real Estate Michael Fahy and Trainee Solicitor Laura Tanguay consider the Court of Appeal decision of Ener-G Holdings plc v Hormell [2012] EWCA Civ 1059 (31 July 2012) on personal service and ‘permissive’ drafting.
In this case, the Court of Appeal considered an appeal by Ener-G Holdings Plc (“Ener-G”) of the decision of the court of first instance which found that Ener-G’s £2 million claim for breach of warranty was time barred.
Key clauses
The two key clauses in the agreement between the two parties stated:
1. Ener-G must give written notice of any breach of warranty claim to Mr Hormell (the Respondent) by ‘the second anniversary of completion’ (i.e. by 2 April 2010);
2. Proceedings in respect of that claim must be issued and served not later than twelve months after the date of that notice; and
3. Any such notice ‘may be served by delivering it personally or by sending it by pre-paid recorded delivery’.
The facts
Ener-G served its notice for breach of warranty on Mr Hormell in two different ways. First, a process server attended Mr Hormell’s home address on 30 March 2010 to personally serve the notice. Because no one was home at the time, the process server left the envelope in the front porch on a table. Later that afternoon, Mr Hormell found the envelope, opened it, and read the notice. Later that day, a second notice was sent to Mr Hormell by recorded delivery which was deemed received on 1 April 2010.
Ener-G commenced court proceedings in respect of the claim on 29 March 2011. The claim was served by means of personal service and was deemed served on 31 March 2011. Therefore, if the notice delivered by the process server on 30 March 2010 was found to be properly served, Ener-G’s claim was time barred as it would not have been served on Mr Hormell within 12 months of the notice. If, on the other hand, the notice delivered by the process service was found not to be properly served, then the clock for serving the claim would not have started running until 1 April 2010 – meaning that Ener-G’s claim was not time barred.
‘Delivering it personally’
Ener-G argued that ‘delivering it personally’ required that the notice be handed personally to the intended recipient. As this did not happen, the notice delivered by the process server and left on the table was invalid. Mr Hormell contended that it was enough for the notice to have been left at the property (albeit not handed to him in person) and so the notice should be upheld as valid. The Court of Appeal upheld the decision of the court of first instance and ruled that ‘delivering it personally’ required the notice to be handed to Mr Hormell personally, and the actions of the process server did not satisfy this requirement.
Permissive rather than exclusive
However, the wording of the clause in this agreement stated that the parties ‘may’ serve the notice by delivering it personally or by sending it by pre-paid recorded delivery. This wording was permissive rather than exclusive, referring to “may” rather than “must” or “shall”, and therefore Ener-G were free to use any method of service and were not limited to the two methods specified. Accordingly, the actions of the process server did in fact constitute good service for the purposes of the agreement and consequently Ener-G’s claim was time barred. The decision of the Court was split 2:1, with Lord Justice Longmore’s dissenting view “that it is counter-intuitive to conclude, when the parties have taken the trouble to spell out [how a notice can be served] that a notice can be served … in any other way the deliverer of the notices chooses.”
Practical guidance
1. Do not leave the service of important documents to the last minute where time is of the essence. Lord Justice Gross commented by saying, “I fear that by leaving service until so late in the day, the Appellant has been the author of its own misfortune.”
2. Be aware that ‘personal service/delivery’ means service to the addressee in person and not just delivery to the addressee’s premises.
3. Avoid using permissive words such as ‘may’ in an agreement if what is really intended is that the parties shall or must do something.
If you require advice on any issues raised in this article please contact Michael Fahy on 020 7421 1720 or [email protected].