Service of notices

In Vaughan v Von Essen Hotels 5 Ltd, the claimant, Von Essen, had entered into an agreement with Mr & Mrs Vaughan for the purchase of a chain of hotels. Von Essen subsequently needed to make a claim against the Vaughans for breach of a warranty given in the agreement. Claims had to be made before a certain date.

The notices clause in the agreement provided that notices may be served on the Vaughans at their home address, with a copy to their solicitors, marked for the attention of a particular individual. The firm of solicitors to be served was named in the agreement.

By the time Von Essen made its claim, the Vaughans had instructed another firm of solicitors to act for them in connection with other matters relating to the agreement. Von Essen therefore served notice of its claim to the Vaughans at their home address, and copied it to the new firm of solicitors.

The court found that the new firm of solicitors was not authorised to receive service. Therefore Von Essen could not rely on the copy of the notice sent to the new solicitors.

The Vaughans never received the notice addressed to them. Although the agreement contained the usual provisions deeming a notice to be served two business days after posting, these did not apply to the notice sent to the Vaughans' home address. This was because the earlier part of the notices clause, requiring a copy to be sent to the original solicitors, had not been complied with. No valid notice had therefore been served prior to the claims period expiring.

Things to consider

Boilerplate clauses are easily overlooked. However, this case shows that their provisions cannot afford to be ignored. Failure to follow the correct procedure can result in one party losing its rights. We have a specialist team on hand to assist with the drafting and service of notices. Please contact us if you need advice.

This analysis was written by Sarah Allen, associate in Wragge & Co's Real Estate group.

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