A recent High Court ruling highlights how serving notices by email can go wrong – what can you do to avoid this?
Notices under construction contracts can be tricky to get right, and are a regular cause of disputes. Service by email adds a new layer of uncertainty to issues such as whether a notice has been served on time, in the correct form, by the right method, on the right person, and so on.
Now common practice, ironically the ease of this method of service is what makes it so prone to problems, as can been seen in Drive (Edgware) Ltd vs S&T (UK) Ltd (dated 9 January 2019, but which has only recently been published).
Drive was appointed by S&T as subcontractor to supply enabling, demolition and substructure works. The contract provided for notices, including monthly applications for payment, to be issued “via email to the S&T project surveyor”.
Drive applied for payment by email each month. S&T, having decided that Drive was not entitled to the sum applied for, submitted equivalent monthly pay less notices. One month S&T failed to serve its pay less notice, and Drive commenced a “smash and grab” adjudication, claiming that the sum in its payment application was due.
If an email is to constitute a notice, it should look like a notice and be addressed directly to the recipient
On this occasion, S&T failed to serve its pay less notice because it did not see Drive’s payment application. Drive sent the application to the email address of a project surveyor who had left S&T. Drive was apparently unaware of the personnel change, because it had left site (being an early works contractor).
S&T argued that the payment application was invalid, but the adjudicator found in Drive’s favour. The matter then found itself before Mr Justice Waksman in the Technology and Construction Court. Drive applied for enforcement of the favourable adjudicator’s decision. S&T challenged the decision via Part 8 proceedings, arguing a new point on the deficiency of Drive’s payment application, which had not been raised before the adjudicator. This shows how parties can try to challenge an unfavourable adjudicator’s decision via Part 8 proceedings, if the matter to be referred is suitable for the Part 8 process.
S&T had found an email that was issued several months before Drive’s application. An S&T project administrator sent the email, with no one in the “to” field, but copying several S&T project surveyors (including the one responsible for Drive’s project), and blind-copying several subcontractors with which S&T worked, including two directors of Drive. The email went straight into the junk email folder of the Drive directors, because they didn’t know the sender.
The fact that S&T had blind-copied the email to Drive meant that it could not be viewed as an instruction to Drive itself
The email directed the S&T project surveyors to issue an instruction to all subcontractors. The wording of the instruction then followed, and instructed recipients to issue all future applications for payment to a specific mailbox within S&T. The meaning of the email was the central point in the Part 8 proceedings.
S&T argued that this email (which was only discovered after the adjudication, so had not been put to the adjudicator) was in effect an instruction to Drive (by its being blind-copied to the email) to direct applications to the specific mailbox. Because Drive failed to do so, the application was invalid and so the adjudicator’s decision was unenforceable.
Mr Justice Waksman disagreed and enforced the adjudicator’s decision. Key points from the judgment were that if an email is to constitute a notice, it should look like a notice and be addressed directly to the recipient. The fact that S&T had blind-copied the email to Drive meant that it could not be viewed as an instruction to Drive itself. The email only gave Drive advance notice that change was coming but not notice of the change itself. Interestingly, the judge observed that if the email had been a valid notice then although it had not been read by the recipient and ended up in junk mail, it would still be a valid notice.
What can we learn from this ruling?
Practical takeaways from the decision include:
- Check what your contract stipulates as to how notices are to be served, including deemed notice provisions.
- A notice should be clear on its face, and from its content, that it is a notice, and what it is notifying.
- Although this is not strictly required, if you want to notify something pursuant to a particular contract clause, you should refer expressly to that clause in your notice.
- If the parties want to serve notices by email, it is best to provide expressly for it in the contract.
- If emailing a notice, make sure you address the notice to the correct email address, rather than cc-ing (or, even worse, bcc-ing) your intended recipient.
- To avoid any doubt over whether the recipient has received the email, phone and check (and take a note of that call).
- The case shows that although email is now by far the most common means of communication, it is important to take care with emails, especially for notices.
Philip Hancock is an associate in the international arbitration and construction disputes team at Bryan Cave Leighton Paisner