Ener-g Holdings Plc v Philip Hormell
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BURTON |
| Judgment Date | 14 December 2011 |
| Neutral Citation | [2011] EWHC 3290 (Comm) |
| Docket Number | Case No: 2011 Folio 374 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 14 December 2011 |
[2011] EWHC 3290 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Burton
Case No: 2011 Folio 374
MR GEORGE BOMPAS QC and MR ADAM KRAMER (instructed by Stevens & Bolton LLP) for the Claimant
MR PETER McMASTER QC (instructed by BRM Solicitors) for the Defendant
Approved Judgment
Hearing dates: 5 December 2011
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This has been the hearing of a trial of a preliminary issue ordered by Blair J on 7 July 2011, arising out of an Agreement dated 2 April 2008 between the Claimant ENER-G Holdings plc and the Defendant Philip Hormell. The Agreement concerned the purchase by the Claimant from the Defendant of shares in a company for a price of several million pounds. Completion of the share sale was on 2 April 2008, and the parties specifically agreed that, although there was a number of representations and warranties in the Agreement, there would be a strict limitation period for the bringing of any claims based upon alleged breaches. This hearing and the preliminary issues relate to the proper construction of the provisions governing the imposition of such limitation. The significance is that the Claimant has brought proceedings alleging breach, and the Defendant has alleged that the Claimant is time-barred by reference to the contractual provisions, and so before the parties embark upon the substantial expenditure to be incurred by bringing and defending such claims, it has been agreed that the Court resolve whether the claims may be brought at all.
There were two hurdles, or triggers, for the bringing of such claims. The first, by Clause 6.3.3(b), was that the Claimant, as Buyer, must have given written notice of any such claim to the Defendant as Seller by the second anniversary of completion (on the facts here, 2 April 2010). The second requirement was, by Clause 6.3.7(a) that, where such notice had been given in respect of any claim, that claim should be deemed to have been irrevocably withdrawn and lapsed unless "proceedings in respect of that claim have been issued and served on the seller not later than the expiry of the period of twelve months after the date of that notice."
The dispute before me has revolved around the construction and interpretation of the following clauses of the Agreement:
"13. NOTICES
13.1 Notice in writing
"Any notice or other communication under this Agreement shall be in writing and signed by or on behalf of the party giving it."
13.2 Service
"Any such notice may be served by delivering it personally or by sending it by pre-paid recorded delivery post to each party (in the case of the Buyer, marked "for the attention of directors") at or to the address referred in the Agreement or any other address in England and Wales which he or it may from time to time notify in writing to the other party."
13.3. Deemed service
"Any notice delivered personally shall be deemed to be received when delivered (or if delivered otherwise than between 9.00am and 5.00pm on a Business Day, at 9.00am on the next business Day), any notice sent by pre-paid recorded delivery post shall be deemed to be received two Business Days after posting and in proving the time of despatch it shall be sufficient to show that the envelope containing such notice was properly addressed, stamped and posted."
14. GOVERNING LAW AND JURISDICTION
…
14.2 Proceedings
"The parties agree that the documents which start any legal proceedings relating to a dispute ("Proceedings") and any other documents required to be served in relation to those Proceedings may be served on any party in accordance with this Agreement. These documents may, however, be served in any other manner allowed by law. This clause applies to all Proceedings wherever started."
The major dispute has revolved around the date, and consequent validity or invalidity, of the service of these proceedings, i.e. with regard to the satisfaction of the second hurdle. There is a subsidiary dispute about the effect of the first hurdle, which (though for different reasons) both parties accept was satisfied/surmounted. I shall not at this stage set out the Preliminary Issues as ordered.
The Facts
The material facts were not in dispute. They were the subject of witness statements by those on the Claimant's side, including a process server, responsible for the delivery of the Notice and of the proceedings, and by the Defendant and members of his family, but the evidence in chief contained in such witness statements was not challenged, and the witnesses were not called.
The Claimant arranged for a process server to deliver the relevant Notice within Clause 6.3.3, in writing, in accordance with Clause 13.1, addressed to the Defendant, to his home address, being the address referred to in the Agreement, no other address having been notified pursuant to Clause 13.2, namely Ringerlane Farm, Elmton, Worksop, Nottinghamshire. No one was at home when the process server attended on the afternoon of 30 March 2010, and he was at that stage unable to enter as far as the farmhouse where the Defendant and his family lived, which is within the cartilage of the farm. He was unable to obtain a reply, so he left the letter in the front porch on a table. Before 5pm that afternoon, the Defendant found the letter and opened it (and indeed communicated with his solicitors about it). On this basis, the Claimant asserts that there was due service of the Notice in accordance with Clause 13.2, because it was "delivered personally…at the address referred [to] in the Agreement". Mr McMaster QC, for the Defendant, does not accept that this amounted to good service within Clause 13.2 (for reasons which will appear), but does accept that there was in any event good service of the Notice, since, on his case, Clause 13.2 is not the exclusive method for giving notice under the Agreement, and that, by virtue of the Defendant's having received the Notice prior to 5pm, notice was given on that day, 30 March. For the avoidance of doubt, Mr Bompas QC relies in the alternative, as will appear, upon the fact that, on the same day, the same letter was sent by Recorded Delivery to the Defendant at Ringerlane Farm, which was deemed received, by virtue of Clause 13.3, on 1 April 2010. If notice was not validly given on 30 March, then, as a fall back, the Claimant would rely on that given on 1 April 2010.
On the basis that the relevant Notice was that given on 30 March 2010, then the time limit under Clause 6.3.7(a) expired on 30 March 2011. The Claimant asserts that that deadline was complied with, as I shall describe, by virtue of the leaving of the proceedings at the premises in the Defendant's designated letterbox on 29 March 2011. If, however, that service is deemed invalid within Clause 13.2, then it would in any event constitute valid service of the proceedings within the CPR, and would lead to deemed service pursuant to CPR Part 6.14 two days later, namely on 31 March 2010. The consequence would be that if the 2010 service was on 30 March, this would be out of time. If the service of the Notice on 30 March was invalid and the Claimant could only rely on the registered post service on 1 April 2010, then the CPR service in 2011 would be valid.
On 29 March 2011, the Claim Form, with the necessary Response Pack, was taken by a process server to Ringerlane Farm. By this time there had been changes at the Farm, and there was no longer access to the front door, where the process server had left the Notice the previous year. There was now a stone wall with locked access gates and CCTV cameras. At the gated entrance on the wall there was a letter box (but no doorbell or intercom). The process server, unable to enter—in any event it seems nobody was in—posted the documents into the post box (after making extensive efforts to find someone in the neighbourhood) at 4.20pm. The Defendant was away from home, and the documents were not in fact received by him until 2 April, when he emptied the letter box. The documents thus remained in the letter box from 29 March until 2 April. If it was sufficient to have delivered the documents to the letter box at Ringerlane Farm in order to comply with Clause 13 of the Agreement, then the proceedings were served on 29 March 2011, in time within Clause 6.3.7, being before the expiry of the period of twelve months from the service of the Notice on 30 March 2010. If, however, it was necessary for there to be service upon, and receipt by, the Defendant in person, then the Claimant was out of time.
Authorities
I am required to resolve the disputed construction of Clause 13. It is common ground that there are three significant canons of construction or interpretation for me to take into account, and that they may conflict in this case:
i) As recently reiterated by the Supreme Court in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, particularly at paragraph 21, per Lord Clarke, if there are two possible constructions of a document, the Court is entitled to prefer the construction which is consistent with business common sense and to reject the other (see also paragraphs 25, 29 and 30).
ii) As enunciated by Robert Goff LJ in The Scaptrade [1983] QB 529 at 540–1 CA, it is of the utmost importance in commercial transactions that there is a need for certainty, so that parties can know where they stand and act accordingly.
iii) That tight time deadlines, where time is of the essence, are not antipathetic to, but entirely appropriate in, commercial transactions, and where there are such deadlines, they should be...
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Commercial Contracts
...and may not have even materialised into a contract at all. Notices The recent case of Ener-G Holdings PLC v Philip Hormell [2011] EWHC 3290 (Comm) raises some interesting points in relation to notice provisions. It serves as a reminder of the care and attention to detail that is required wh......