2020-02-17
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Giving notice under construction contracts by email

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Posted by Philip Harris on 01 November 2016

Philip Harris - Construction Solicitor
Philip Harris Partner & Solicitor-Advocate

Email is an extremely popular means of global communication.  However, it is not without problems.

The problems of email communication become important when notices are being served under construction contracts.

Solicitors and adjudicators regularly encounter the problem of whether a contract notice has or has not been properly served by email.

There seem to be at least three prevalent problems: -

Delivery failure

All email users are familiar with the message recording that an email has not been delivered. The warning may appear promptly or may be delayed. Exceptionally, there is no message recording a delivery failure but the intended recipient denies ever receiving the email. This can be so significant that both parties are obliged to instruct an IT expert. This is not just a problem under construction contracts. In one party wall case where a vital notice sent between two surveyors was not received, the IT expert for the sender investigated and swore that the email had been sent. The IT expert for the intended recipient investigated and swore that the email had not been received. The evidence being inconclusive, the parties had to reach a compromise. 

Routeing

In one major case an email had been received days late. The matter was investigated and the conclusion was that the email had been “routed via Oslo”. Since the matter was exclusively dealt with in England, this made little sense. One might come to the conclusion, with some confidence, that the error was the fault of the sender but where the parties have agreed to email each other and the sender has no reason to be aware of the potential for a routeing digression, this need not necessarily be so. 

Filtering emails 

In one case involving the service of payment notices, a payment notice was sent to three individuals at a contractor. None of the three individuals received the email on their screens and none of them knew it had been sent until more than a week later. The recipient contractor consulted his external IT provider who confirmed that the email had, in all three cases been received but due to a filter had not arrived at the screen of any of the three individuals intended to receive it. It is easy to say that the email was sent and received and that the fault lies with the filtering system of the recipient company. However, if the parties have agreed to send notices to one another by email, they may be deemed to know the risk of this kind of filtration. It is not entirely clear where that risk should lie. 

Notices under the Housing Grants, Construction and Regeneration Act 1996 (“the Construction Act”)

Under the Construction Act 1996 as amended by the LDEDC Act 2009, service of notices is dealt with in Section 115.

Section 115(1) says that the parties are free to agree on the manner of service of any notice to be served in pursuance of the construction contract.

It is only if or to the extent that there is no such agreement that Section 115(3) provides that notice may be served by any effective means.

Section 115(4) goes on to say that if a notice is addressed, pre-paid and delivered by post to certain prescribed addresses, it shall be treated as effectively served.

If the parties are free to agree on the manner of service and they agree upon email service, to what extent do they agree upon the risks associated with email service? Is service by email deemed to be effective service where it is the agreed method of service? Or is it deemed to be effective unless it can be shown that the service in fact failed? Should the burden always fall on the intended recipient to show that service failed?

For the purposes of the Construction Act if there is no agreed method of service, notice can be served by any “effective means”. Is the term “means” meant generically to refer to a means such as recorded or hand delivery? Or does “effective means” refer literally to effective service in each case?

It is only in the case of pre-paid postal delivery that the Construction Act treats or deems delivery to a prescribed address as effective service and even then it is clear that the documents must be addressed to that address, sent by pre-paid post “and delivered by post” to that address. So service is only effective on delivery to the particular address.

There is no corresponding provision in the Act that says that if an email is addressed and delivered to a certain address it is effectively served. So perhaps it is capable of argument that although an email was dispatched to an email address and actually received by a company, it was not effectively served on the intended recipient, perhaps due to overly keen filtering.

Cash flow

Given the strict requirements for payment and pay less notices to be promptly served under the Construction Act, the ability to claim money quickly through adjudication if notices are not properly served and the refusal of the Courts to allow Adjudicator’s Decisions ordering interim payments due to lack of the proper notice to be defeated by merit-based adjudications over interim valuations, it is of crucial importance to know whether emails have been validly served. As Lord Denning famously said “cash flow is the lifeblood of the construction industry”. The issue of whether an email has been correctly served or not can be a matter of life and death for construction companies.  

About the author

Philip Harris

Partner & Solicitor-Advocate

Philip has 30 years’ experience as a construction solicitor and advises on all aspects of construction law.

Philip Harris

Philip has 30 years’ experience as a construction solicitor and advises on all aspects of construction law.

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