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February, 2021
John Riches

You can reach me by railway
You can reach me by trailway
You can reach me on an airplane
You can reach me with your mind

The first few lines of a popular song by Oleta Adams. That was 1990, so it is questionable as to whether it remains a popular song.

With the various lists getting there in this song there is telepathy but no mention of email. But that was 30 years ago and as far as I can remember the email was not that popular then.

With the commercial world being bombarded with smaller more efficient electronic devices it is probably fair to say that contact or transmission of almost anything is by email. In the bundles of documents that I receive most days much of what has been transmitted is by email, often unintelligible in terms of the substance. I have also seen text messages, received recorded telephone messages and that’s without the realms of Facebook, Instagram and WhatsApp.

Email is second nature, (for some it is first nature, it avoids talking to anyone) without a second thought straight into email for everything.

But what are the flaws and foibles of these superheated means of communication? What are the legal statues of an email, what are the rules on service, is there some sort of deeming saviour such as the postal rule? We only think about what we are doing when it goes wrong.

There is nothing with email in principle that makes it fall foul of the law. In Bernuth Lines Ltd v High Seas Shipping Ltd [2005] EWHC 3020 (Comm) (21 December 2005) (yes email was being used in 2005) an important notice, an Arbitration Notice, the anvil notice to commence an arbitration was issued by email.

There are some interesting twists in this case on use of email. What features is one of those info@xxx email addresses which many firms advertise and shows if nothing else they exist in the electronic world. 

One of the criticisms of the means of communication in the case said;

"..it appears that email notices may have been sent to our client's department for cargo bookings for liner service and would have been ignored by the clerical staff in receipt of such messages. Our client is perplexed that the other channel of communication established through your client's Miami lawyers appears to have been by passed."

So wrong means of communication and to the wrong place. In terms of wrong means and wrong place the Judge would have none of it.

Most contracts and (as was the case here) the Arbitration Act 1996, contain some sort of provision that deals with service. 

Service by any ‘effective means’ is one of the features of such provisions. The Court held that service by email and to the ‘info’ email address was effective service in this instance.

Some helpful guidance is given in the Brnuth Lines case on parameters to consider when using emails to serve important documents. 

29. That is not to say that clicking on the “send” icon automatically amounts to good service. The e-mail must, of course, be despatched to what is, in fact, the e-mail address of the intended recipient. It must not be rejected by the system. If the sender does not require confirmation of receipt he may not be able to show that receipt has occurred. There may be circumstances where, for instance, there are several e-mail addresses for a number of different divisions of the same company, possibly in different countries, where despatch to a particular e-mail address is not effective service.

So as with all things think about what you are doing and what your contract says. Email has become a commonplace method of service of Applications for Payment, Payment Notices and the like.

Look at our two cases, yes, this time two cases. Both deal with Applications for Payment by email.

The first case is Drive (Edgware) Ltd v S & T (UK) Ltd [2019] EWHC 3139 (TCC) (09 January 2019).

What was before the Court was a Part 7 Application to enforce an adjudicator’s decision and a Part 8 claim which dealt with whether or not the Application for Payment was invalid. 

Drive had left site on or before 29 October 2017. They made a series of applications relating to the works where Drive contended the sums claimed were for works carried out but not paid for before it left site.

Drive made an Application for Payment by email to S & T on 20 July 2018. There was no Pay Less Notice and it ought to be a straightforward matter that the sums claimed were the sums due under the payment mechanism to Drive. S & T argued in the adjudication that the payment application of itself was not valid.

The application was sent by email to a Mr Harris who was the project surveyor for S & T to his email address. Mr Harris had left in May, prior to the date of the payment application made by Drive.

The suggestion from S & T was that this was tainted by fraud because Drive was fully aware that Mr Harris was no longer employed by S & T and had deliberately taken advantage of an Application which was bound to slip through the net and S & T would not be in a position to deal with that in the normal course of a payment cycle.

S & T also argued in the adjudication that the sums claimed should not be awarded to Drive because that would leave Drive with a significant overpayment and a windfall. The Adjudicator rejected S & T’s arguments and awarded Drive the sums claimed.

A subsequent argument which came before the courts was that Drive had sent the Application to the wrong email address, there had been a contractually binding change through an email sent on 26 January 2018 giving a new email address for Applications for Payment.

These are fairly typical problems with use of email. Something needs to be put in place from the outset and updated subsequently when an address for service is no longer active.

There have been a number of project surveyors during the currency of the works and at one stage Drive was requested to send the Application for Payment to a new person at S & T.That new person was the new project surveyor and the latest surveyor in the chain. That surveyor was identified as Mr Harris.

S & T relied on an email dated 26 January 2018 claiming that was an instruction on where all future Applications should be sent. They were to be sent to Messrs Tobin and Whelan, but the email included Mr Harris on its circulation list.

There was some argument as to whether this email which S & T claimed was a direction under the sub-contract was actually ever sent. If it had been sent what it means.

From January 2018 Drive continued to send Applications to Mr Harris. There was one in January before the alleged instruction, and a further one in February both addressed to Mr Harris both of which attracted a response by way of a Pay Less Notice. 

There was therefore a question as to whether this alleged instruction was working at all or indeed whether it had ever been sent. The court rejected the arguments of change of email addresses and therefore invalidity of the Application in question.

The court rejected all of S & T’s arguments and enforced. There was no acceptance of the points that Drive knew that Mr Harris had left by the time it sent its Application.

If use of email is permitted under the Contract the provisions need to deal with what happens when somebody leaves. Importantly if somebody does leave there needs to be clear action and instruction on a new email address. It is unarguable that where there is no definite place to serve an Application that because of that the Application becomes invalid.

The second case is RGB Plastering Ltd v TAWE Drylining and Plastering Ltd [2020] EWHC 3028 (TCC) (13 November 2020). 

Not surprisingly given the email theme, the resistance to enforcement involves email and an invalid Application. 

The contract includes a payment schedule in tabular format setting out the relevant dates for each payment. The April 2019 payment cycle required an Application to be issued on 28 April the due date was 3 May.

Dates for May 2019 were the 29 May and 2 June respectively.

Applications for work to be submitted on or before the actual Application date back to value work up to the valuation date. Applications were to be submitted electronically and there was a single email address dedicated to Applications only.

Any Applications received after 28th of each month would not be considered and would be administered with the following month’s payment unless there had been a formal agreement with the Commercial Manager.

Tawe made its Application properly by email but messed up on both the email address and on the dates. Based on the schedule in the contract they had simply not complied with anything.

Out come all the cases on what constitutes a proper process in terms of Applications and how they might fail. In this particular case despite an argument concerning estoppel the Application was declared invalid.

This case is worth a read from the point of view of all the case law on what constitutes form substance and intent.

What does not seem to have been considered in this case is whether or not there might have been a payment obligation for RGB to value Tawe’s work, issue a Payment Notice and to pay them in any event.

Given that the whole purpose of the legislation was to improve cash flow, particularly at Sub-Contract level this case is a good example of why it has all become far too complicated.

Legislation is supposed to help Plasterers and Dryliners who are not Lawyers and do not have Lawyers in their armpit every time they make an Application for Payment.

The criticism of the legislation being draconian in Caledonian and Mar is entirely correct. It was meant to be draconian in order to ensure that there was cash flow.

If the industry continues to find wheezes and angles not to pay something every month through the current position in law, maybe we have reached the point with a payment legislation that is not fit for purpose and we shall start again.

John Riches, Henry Cooper Consultants Limited

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