What amounts to effective service of a notice

Notices - Zayo Group International Ltd v Ainger and others [2017] EWHC 2542

The facts

In 2014, Zayo bought all of the shares in Ego Holdings Limited, which until then had been owned by Ego’s management team and a private equity house. The SPA contained a standard provision requiring Zayo to give the management sellers notice of any potential warranty claim within 18 months of completion.

The SPA stated that a notice was served if it was delivered by hand or sent by special delivery to the address of the relevant party set out in the SPA. If notice was served after 17:00. on a business day, it would be deemed served at 09:00. on the next business day. The SPA also had a clause allowing each party to notify the other of a change of address.

Zayo’s lawyers instructed a courier to serve the notice of claim on the seven management sellers on Friday, 13 November 2015 (the final day under the SPA for serving the notice). The courier was able to serve the notice by hand on all but one of the management sellers. The last seller (Ms Jaggard) had relocated and she had not notified the other parties of this. Ms Jaggard later became aware of the claim notice when the new occupant informed her of it.

The management sellers applied to strike out Zayo’s claim on the basis that Zayo had not effectively served notice on Ms Jaggard within the time limited specified in the agreement. Also, as the wording of the agreement stated that Zayo needed to serve notice on all of the management sellers, failure to serve on Ms Jaggard meant the claim was invalidated against all sellers.

The decision

The Court held that notice was not validly served. The notice clause was clear and unambiguous; there was nothing uncommercial about its construction. The key points were:

• the wording of the SPA was unambiguous; it clearly stated that notice was to be served by leaving it at the address listed in the agreement, not by delivering it to a person. Zayo did not accomplish this by the deadline
• the SPA did not contain any wording stating that Ms Jaggard had to notify a change of address. Therefore she had not breached the SPA and Zayo could not rely on this argument
• there was no mention of “attempting to deliver” in the SPA. The Court would need to imply terms into the SPA in order for this to operate correctly, which would only add to the uncertainty, rather than remove an issue.

Why is this important?

The decision underlines the importance of a well drafted and practical notices clause. It also highlights the need strict compliance the notice requirements, even if the intended recipient would not in fact have received the notice.

Any practical tips?

Make sure that your notice clauses are clear and workable. Seek to avoid having notices that are only effective if all parties are served; the notice should be effective as against each party served.

When serving notices, always follow the notice requirements strictly, even if you also send a further copy to where a recipient will in fact receive it. This may include leaving notices at the specified addresses even if they are historic/no longer occupied.