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OUTER HOUSE, COURT OF SESSION
[2008] CSOH 139
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OPINION OF LORD HODGE
in the cause
CARMARTHEN
DEVELOPMENTS LIMITED
Pursuer;
against
SAMUEL JAMES
PENNINGTON
Defender:
ญญญญญญญญญญญญญญญญญ________________
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Pursuers: Sandison, Advocate; Brodies
LLP
Defenders: Cowie, Advocate; Lindsays WS
24 September 2008
[1] This
case concerns two contracts for the sale of land. Each of the contracts contained suspensive
conditions. The issue in this case is
whether the pursuers exercised their right to intimate that the conditions were
satisfied and so made the contracts unconditional before the defender
effectually resiled from the contracts.
That issue in turn raises a question as to the scope of the postal
acceptance rule in the law of contract and a question as to what amounts to
effective service of a notice under the contracts.
The contracts
[2] In October 2005
the pursuers entered into missives with the defender for the purchase of two
plots of land amounting respectively to 0.355 hectares and 0.896 hectares. The plots of land formed part of the
defender's land at West Reston Mains, Reston, Berwickshire. The missives in each contract comprised an
offer document on behalf of the pursuers dated 18 October 2005 which contained all of the
operative terms of the contract and an unqualified acceptance on behalf of the
defender dated 19 October 2005. The contracts (clause 12 in each
contract) contained a suspensive condition in the following terms:
"12.1 It is an essential condition of this Offer
and the Missives which the Purchaser may at its sole option waive in whole or
in part, that the Purchaser:
12.1.1 obtains a satisfactory report following a
geotechnical survey of the Subjects;
12.1.2 obtains outline planning permission for
residential development ... and
12.1.3 being satisfied with the servicing detail of
the Subjects ... .
12.2 It shall be at the complete discretion of
the Purchaser as to whether the matters specified in Condition 12.1 above
are satisfactory."
[3] The
pursuers had the unilateral right to waive the suspensive conditions or to
declare them to be purified as clause 12.6 was in the following terms:
"Condition 12.1
above shall be purified or waived only by our expressly intimating the same in
writing to the Seller or to the Seller's solicitors. Failing such intimations:-
....
12.6.2 as regards Condition 12.1.2 within the
two years following the date of conclusion of the Missives ...; or
12.6.3 as regards Condition 12.1.3 within two
years following the date of conclusion of the Missives ...;
then each of the
Purchaser and the Seller shall be entitled at any time thereafter, but prior to
such relevant purification or waiver, as the case may be, to resile from the
Missives."
If the pursuers
had wished to waive any of those conditions they required to give the defender three
months' prior notice under clause 12.7 of the missives.
[4] It
can be seen from those clauses that the pursuers required timeously to intimate
the purification or waiver of the conditions if they were to exclude the
defender's right to resile from the contracts.
[5] The
contracts also contained notice provisions (clauses 26 and 24
respectively) in the following terms:
"1 Any notice to be served under
the Missives must be in writing and served on the Seller or the Purchaser, as
the case may be, at their address as specified in the Missives or on their
respective solicitors.
2 Any such notice shall be
sufficiently served if sent by recorded delivery post or delivered by hand or
sent by facsimile.
3 Any notice sent by recorded
delivery post shall be deemed to have been duly served upon the expiry of two
working days after the date of posting and in proving service it shall be
sufficient to prove that the envelope containing the notice was duly addressed
to the Seller or the Purchaser or their respective solicitors as the case may
be and was posted to the place to which it was so addressed. Any such notice sent by facsimile shall be
deemed to be served on the day of transmission, if transmitted fully between
the hours of 9am and 5pm on a working day and which failing on the next working
day, and in proving service it shall be sufficient to exhibit the transmission
slip and the date and time of transmission on it."
The notice provisions applied to
several clauses in the contracts which required or allowed parties to
communicate with each other as well as the intimation provisions in clause 12.
[6] At
the end of the offer document in each of the contracts the pursuers excluded
the postal acceptance rule in relation to the creation of the contract by
providing:
"This Offer,
unless sooner withdrawn, is open for acceptance by formal letter
to reach us not
later than 5pm on 21 October 2005 failing
which it will be deemed to be withdrawn."
The
events giving rise to the dispute
[7] After concluding the contracts
the pursuers applied for and obtained planning permission for residential
development on the plots of land. The
defender was annoyed that the pursuers did not then make the contracts
unconditional and pay him the sums due under the contracts but instead waited
until the two-year long-stop date at which he would obtain a right to
resile. He had understood from
pre-contractual discussions with the pursuers that the deal, into which he had
entered, gave him a right to payment shortly after a suitable permission was
obtained and the other suspensive conditions were purified and that the
pursuers would wait until the long-stop date only if those conditions had not
been purified. He therefore decided that
he would resile from the contracts as soon as the long-stop date arrived. He obtained legal advice from his solicitor,
Mr David Soeder of Messrs Turnbull, Simson & Sturrock,
Jedburgh. Mr Soeder advised him
that he should wait until Saturday 20 October 2007
before intimating withdrawal and warned him that he expected that the pursuers
would purify the suspensive conditions before he obtained the right to
resile. The defender and Mr Soeder agreed
that Mr Soeder should go into his office on the Saturday morning and fax
letters resiling from the contracts. Mr Soeder
drafted the letters on Friday 19 October and, as instructed, returned to
his office on the morning of 20 October to send the fax message including
the two letters of withdrawal from the contracts. Before doing so, Mr Soeder, in
accordance with the normal practice of his firm, collected mail addressed to
the firm from the sorting office of the Post Office in Jedburgh. He brought a bag containing the mail to his
firm's office and deposited it there. I
discuss the events of the Saturday morning in more detail in paragraphs 23
- 28 below as they were the main issue of factual dispute. For now it suffices to say that he sent the
fax which he had prepared on the previous day.
Because the fax was sent on a day which was not a working day,
intimation of withdrawal could not take effect under the contracts (see clauses 26.3
and 24.3 respectively) until 9am on Monday 22 October 2007.
[8] While
the defender was preparing to withdraw from the contracts, Dickson Minto,
the pursuers' solicitors, took steps to purify the conditions and thereby
prevent the defender from resiling. Mr Robert Forman,
an assistant in Dickson Minto, had been instructed by the pursuers to send
letters on 19 October 2007
purifying the conditions. He prepared
the letters on Thursday 18 October and on the morning of 19 October
arranged for a partner to sign them before giving them and a fax cover sheet to
his secretary to fax and then post. As a
result of an oversight the letters were not sent by fax. The envelope was franked for first class
delivery and was picked up from Dickson Minto by the Royal Mail at 5.55pm.
Intimation of purification therefore depended on the first class
post.
[9] On
the morning of Monday, 22 October 2007,
Mr Soeder, as was his normal practice, travelled by car with his two
daughters from his home to the centre of Jedburgh, where he picked up the
firm's mail bag from the sorting office of the Post Office at about 8.50am. Normally he deposited the mail bag in the
firm's office nearby before driving for about five minutes to deliver his
daughters to their school on the outskirts of Jedburgh just before 9am. On
this occasion, however, his eldest daughter was anxious to arrive at school
slightly earlier than normal. So Mr Soeder
placed the firm's mail bag in his car and drove to the school before returning
to the centre of Jedburgh, parking his car and entering his firm's office at
about 9.03am. After depositing the mail bag and going to
his office to take off his coat, he re-sent the fax resiling from the contracts
at 9.08am.
Parties'
submissions
[10] Mr Sandison for the
pursuers submitted that they had purified the suspensive conditions in clause 12
of the two contracts before the defender's notices of withdrawal took effect at
9am on Monday 22 October 2007.
He advanced three separate reasons for that contention. First, he submitted that the well- known
postal acceptance rule had the effect that the pursuers' notices of purification
took effect on Friday 19 October 2007
when they were posted by first class mail.
Secondly, he invited the court to hold that, on balance of
probabilities, the notices of purification reached Jedburgh on the Saturday
morning and were within the mail bag which Mr Soeder picked up that
morning. Thirdly, he submitted that, in
any event, the notices were served on the defender's solicitors at the latest
at 8.50am on the Monday morning when Mr Soeder
picked up the Monday mail bag at the Post Office before he took his daughters
to school. I consider each submission in
turn.
The
postal acceptance rule
[11] In an elegant submission Mr Sandison
argued that because the notification of purification of the suspensive
conditions, by converting a contract containing unilateral obligations on the
part of the seller into a bilateral or synallagmatic contract in which the
purchaser also had obligations, performed a function which was substantially
the same as an acceptance of an offer, the postal acceptance rule applied as a
default rule. The missives, he
submitted, had not contracted out of that default rule. He referred to Thomson v James (1855) 18 D
1, Jacobsen, Sons & Co v Underwood (1894) 21 R 654, United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1
WLR 74, McBryde on Contract (3rd ed.) paras 6.109 and 6.114 and
Chitty on Contracts (29th ed.) paras 2.046 and
2.050-2.054. Mr Cowie for the
defender submitted that the postal acceptance rule applied only when on an
objective examination of the circumstances the court could conclude that the
parties had authorised that the contract could be completed by acceptance
before the offeror had been notified of that acceptance. He referred to Thomson v James (above),
Holwell Securities Ltd v Hughes [1974] 1 WLR 155, Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997]
AC 749 and Scrabster Harbour Trust v Mowlem plc 2006 SC 469.
[12] The postal acceptance rule is an established part of the law of
contract in both Scots law and English law.
But it is an exception to the general rule that the acceptance of a
contractual offer has no effect until it is communicated to the offeror. See McBryde, para 6.109 and Chitty, para 2.043. The postal acceptance rule has its place in
both legal systems as the court in those systems ascertains objectively when
parties have reached consensus in idem
and thereby entered into a contract.
This ascertainment occurs in the context that once the offeror has made
his offer he may withdraw the offer only by communicating that withdrawal to
the offeree. The offer may also fall
through the lapse of a reasonable time or a time limit in the offer. Until the occurrence of one of those events
the offeree may accept the offer. Where
an offeror by his actions is taken to have contemplated that the offeree might
use the post to send his letter of acceptance, the posting of that letter
brings the contract into existence before the offeror is aware that his offer
has been accepted. This is clear from
the opinion of the Lord President (McNeill) in Thomson v James as at p 11
he stated:
"By putting the
letter of acceptance into the post office, the offeree did just what he had
been invited to do, and all that it was incumbent on him or possible for him to
do by way of acceptance, by the mode of communication which he was authorised,
if not invited by the offeror to adopt."
Lord Deas approached the
matter similarly at p 25 in that case.
[13] Counsel were not able to point to any authority in Scots law in
which the postal acceptance rule had been applied to communications other than
the acceptance of a contractual offer.
In England the courts have applied the rule to the exercise of an option
to purchase in Bruner v Moore [1904] 1 Ch 305 and
have considered the application of the rule in that context in Holwell Securities v Hughes (above). In each of
those cases the seller granted a option in return for the payment of a sum of
money. The option contract gave the
grantee the right to require the grantor to sell if the grantee exercised the
option within the stipulated period. In Bruner v Moore Farwell J held that the parties must have contemplated
that the post might be used as a means of communicating the exercise of the
option and that therefore the option was exercised when the grantee sent a
telegram to that effect addressed to the grantor. In Holwell
Securities Ltd v Hughes Templeman J
at first instance ([1973] 1 WLR 757) and the Court of Appeal
thereafter held that the contract which provided that an option was to be
exercised "by notice in writing to" the grantor within the stipulated time
meant that the exercise of the option was effective only when it was
communicated to the grantor.
[14] I am not persuaded that there is any rule in Scots law that the
posting of a letter exercising an option falls to be treated as the acceptance
of an offer. While an option contract is
very similar in effect to a unilateral promise to keep an offer open for
acceptance for a specified period, the exercise of an option is not the
acceptance of an offer but the exercise of a contractual right conferred by the
option agreement. In both Thomson v James and Jacobsen, Sons
& Co v Underwood the court
referred to Bell's Commentaries for
a statement of the postal acceptance rule.
That statement, now in McLaren's ed. I. 344, is as follows:
"It is the act
of acceptance that binds the bargain, and in the common case it is not
necessary that the acceptance shall have reached the person who makes the
offer. An offer to sell goods is a
consent provisionally to a bargain, if it shall be accepted within a certain
time fixed by the offer or by the law.
Until the expiration of that time, the consent to the sale is held to
subsist on the part of the offerer, provided he continues alive and capable of
consent at the time of acceptance. From
the moment of acceptance there is between the parties in idem placitum concursus et conventio, which constitutes the
contract of sale. To this, however, an
exception may be made by the offerer limiting it so that the arrival of the
acceptance only shall bind the bargain."
See also Dunlop v Higgins (1848) 6 Bell's App. 195
in which the House of Lords also referred to Bell's
statement. It does not appear to me that
the exercise of an option is the acceptance of an offer as Bell
discussed it.
[15] There
may be disagreement as to the correct legal characterisation of an option in
Scots law, namely whether it is a unilateral promise by the grantor, a
conditional contract of sale or sui
generis (for the various characterisations in English law see Chitty
para 3.170, fn 870). Different
forms of option agreement may lend themselves more readily to one or other
characterisation. Indeed, some
agreements which have been described as options may amount only to an offer to
sell and not constitute an option agreement (viz. Lord Ross in Stone and Another v MacDonald 1979 SLT 288, at p 291 where he discusses
Hamilton v Lochrane (1899) 1 F 478). Whatever the particular characterisation,
most arrangements which are described as options have certain effects. First, until the party to whom the option has
been granted intimates his intention to exercise the option, he is under no
obligation to purchase the option subjects.
Secondly, once a contract or unilateral promise has created the option,
the exercise of that option is the exercise of the right conferred by that
contract or promise and not the acceptance of an offer. Thirdly, when the party in whose favour the
option has been given intimates the exercise of that right he becomes bound to
complete the contract by purchasing the subjects. Thus while the exercise of the option by the
grantee brings into being bilateral obligations, that effect does not make the
exercise of the option the acceptance of an offer. It would therefore be a significant extension
of the postal acceptance rule to hold that an option was exercised on the
posting of a letter rather than on the communication of the exercise of the
option by the grantor's receipt of the letter.
[16] Similarly,
in my opinion the postal acceptance rule is not a default rule to be applied
where a party to a conditional sale agreement is required to intimate the
purification or waiver of suspensive conditions within a stipulated
period. The contracts in this case are
in form and substance conditional contracts of sale. While one cannot exclude the possibility that
parties might contract in a particular case to allow the exercise of an option
or the deemed intimation of purification or waiver of a condition by one party
to take effect before the other party was notified, I would expect clear
evidence of such an intention in their contract.
[17] In any event, I am satisfied that the terms of the contracts in
this case are eloquent that the parties did not envisage that the suspensive
conditions were to be treated as purified before the defender or his solicitors
had been notified. First, it is clear
from the final clause in each of the offer documents which I have quoted in
paragraph 6 above that the parties contracted out of the postal acceptance
rule in relation to the formation of the initial contracts. That of itself makes it unlikely that the
parties contemplated that a party's decisions in relation to the operation of
the contracts would have legal effect without the other party being
notified. Secondly, clause 12.6
(quoted in paragraph 3 above) stipulated that the pursuers had to intimate
in writing the purification or waiver of the suspensive conditions. The use of the word "intimate" is in my
opinion inconsistent with the mere posting of a letter of intimation being
sufficient to exclude the seller's right to resile. Like the expressions "give notice" or "serve
notice" it requires that the pursuers make their decision known (or capable of
being known) to the defender or his solicitors by delivery of the letter or
letters. Thirdly, clause 26.1 in
one contract and clause 24.1 in the other (which I have quoted in
paragraph 5 above) required the pursuers in this context to serve notices
in writing on the seller at his address specified in the missives or on his
solicitors. In this regard I find the
reasoning of Templeman J and the Court of Appeal in Holwell Securities Ltd v
Hughes to be very persuasive. The
use in this clause of the language of "notice", which involves making something
known, and of "serving notice" clearly indicates that the parties envisaged
that the notices had to reach the intended recipients. Serving notice without notification is a
contradiction.
[18] It is true, as Mr Sandison submitted, that clauses 26.3
and 24.3 of the respective contracts deemed notices to be served in the
circumstances specified in those clauses.
But there was deemed service only if the notice was sent by recorded
delivery post or by fax as envisaged in clauses 26.2 and 24.2, which, as
Mr Sandison and Mr Cowie were agreed, were permitted and not
mandatory methods of service. See Prudential Assurance Co Ltd v Smiths Foods 1995 SLT 369 and Yates Building Co Ltd v R J Pulleyn & Sons (York) Ltd (1975) 237 EG 183. In other circumstances the requirement in
clauses 26.1 and 24.1 that the notice reached its recipient remained in
full force. In any event the deeming
provision in relation to recorded delivery post, namely that the notice was
served two days after the date of posting, was inconsistent with an intention
that the notice given by that method should take effect on posting.
[19] For all of these reasons I am satisfied that the postal
acceptance rule has no application in the circumstances of this case.
What
was in the Saturday morning mailbag?
[20] The second basis on which Mr Sandison
sought to establish that the pursuers had timeously purified the suspensive
conditions was that Dickson Minto's letters had been collected by Mr Soeder
on the morning of Saturday, 20 October 2007. Mr Cowie did not dispute that, if the
letters had arrived then, the defender's attempt to resile from the contracts
would fail. The issue therefore is one
of fact: were the letters within the bag of mail which Mr Soeder uplifted
on the Saturday morning and deposited in the boardroom of his firm's office?
[21] In support of his contention that the letters had arrived on
the Saturday morning Mr Sandison founded principally on two matters. First, the parties had agreed the evidence of
Mr David Bentley, an official of the Royal Mail in London,
who is a statistician and is Head of Service Measurement. In his affidavit Mr Bentley explained
that in the three month period which included October 2007 81.5% of first
class mail sent within the United Kingdom to addresses in the TD post
code area (which includes addresses in Jedburgh) was delivered on the next
working day (which includes Saturday) after being posted. He also explained however that just before
the period from 8 October to 4 November 2007
the Royal Mail had been subjected to industrial action for four days. It took the Royal Mail several days to
recover from delays in the delivery of mail with the result that in that period
the equivalent statistic was 62.7%. He
also expressed the view that a letter posted first class in Edinburgh
to an address in Jedburgh was more likely to arrive on the next working day
than the general figure for the United Kingdom.
[22] Secondly, Mr Sandison submitted that it would need
credible and reliable evidence to displace the inference to which these statistics
gave rise. He submitted that Mr Soeder's
evidence was not of sufficient quality to do so. Mr Soeder accepted in his evidence in
court that on 1 April 2008
he had been precognosced by Mr Stephen Goldie, a partner in Brodies LLP,
in relation to this case and that the draft statement which Mr Goldie
prepared was an accurate record of what he had told him. In that statement Mr Goldie recorded
among other things that Mr Soeder had said that on the Saturday morning he
had picked up the firm's mail from the Post Office and left the bag in his
firm's office. He then recorded Mr Soeder's
account of events on the Monday morning which was consistent with his evidence
in court which I accept and have summarised in paragraph 9 above. But Mr Soeder also told Mr Goldie
that, when he and his colleagues were opening the mail on the Monday morning,
they had the two mail bags from the Saturday and the Monday collections and,
importantly, that he did not know from which bag the Dickson Minto
envelope had come.
[23] In his evidence in court, however, Mr Soeder stated that
on the Saturday morning before sending the fax to resile from the contracts he
had checked for the arrival of a fax from Dickson Minto and also had
looked through the envelopes in the mail bag to see if there was a letter from
Dickson Minto. He explained that he
could recognise their correspondence from their address labels which displayed
their distinctive logo. Observing that
there was no letter and no fax, he then sent the intimation of the defender's
withdrawal from the contracts. He
telephoned the defender and confirmed that he had not heard from Dickson Minto
and so had sent the fax as agreed.
[24] I accept Mr Soeder's evidence on this matter and on the
other matters to which he spoke. He struck
me as an honest and reliable witness who took care to be accurate in his
testimony and who frankly accepted criticisms of his conduct. He explained that he had initially thought
that the defender could not win his dispute with the pursuers as he believed
the letters notifying purification of the conditions would have taken effect
from the moment they were posted. That
was why he had kept Dickson Minto's envelope which had contained the
notices. Once there was a prospect of
litigation he had explained to the defender that he could not discuss the case
with him as he was likely to be a witness, but he had later learnt that the
defender had taken counsel's advice which was contrary to his initial view and
which had caused the defender's solicitors to inquire into the events of the
Monday morning. He had then concentrated
on that issue and, as he had told Mr Goldie on precognition and as he
stated in his evidence in court, he had retraced his steps and timed how long
he would have been in the firm's office on the Monday morning before he re-sent
the fax resiling from the contracts at 9.08am. That had caused him to estimate that he
entered the office at 9.03am.
[25] When Mr Goldie interviewed him on 1 April Mr Soeder
had been concentrating on the events of the Monday morning and had not
addressed his mind to his precise acts on the Saturday morning. His account is supported to some extent by
the draft statement which dealt with events on Saturday morning very
briefly. It recorded only that he had
come into the office on the Saturday to deal with the defender's business, that
he was in the office for about ten minutes, that he had picked up the mail bag
from the Post Office and had not opened the mail and that he had phoned the
defender to tell him that he had sent the faxes to Dickson Minto.
[26] By letter dated 9 April 2008
Mr Goldie sent Mr Soeder the draft statement to approve or, if
thought appropriate, revise. Mr Soeder
did not look at the statement in any detail and did not respond to the invitation
until July 2008. In about June 2008
Mr Soeder reconsidered his evidence and remembered that he had looked
through the mail bag on the Saturday morning to see if there was an envelope
from Dickson Minto as well as checking the fax machine for a fax from
them. He recalled that it was on looking
at the envelope from Dickson Minto in June 2008 that he remembered what he
had done on the Saturday. He accepted
that thereafter he had delayed telling Brodies or the defender's solicitors
until July. He disarmingly stated that
that was because he was very embarrassed that he had failed to remember that
earlier. While the cause of his more
detailed consideration of what he had done on the Saturday morning was not
explored in the evidence, it may be that he was prompted to attempt to recall
his actions on the Saturday morning after the pursuers' counsel adjusted their
pleadings in mid May 2008. In
those adjustments the pursuers referred to the Royal Mail statistics and
thereby suggested that the Dickson Minto letters had arrived on the
Saturday.
[27] I accept Mr Soeder's explanation of the conflict between
what he told Mr Goldie and what he said in his evidence. As I have said, I formed the view that he was
an honest and careful witness. He had no
reason to seek to mislead the court. His
evidence was supported by the defender who stated that Mr Soeder had
phoned him on the Saturday morning and had confirmed that he had checked for
correspondence from Dickson Minto before faxing the notices resiling from
the contracts. He said that he
remembered that Mr Soeder had said that "he had nothing from them". At one point in his examination in chief the
defender said that he remembered that Mr Soeder said that he had checked
the post and that he had nothing from them. He confirmed this on cross-examination. I accept that the defender was seeking to
tell the truth in his evidence. I accept
that Mr Soeder told him that he had checked to see if anything had arrived
from Dickson Minto before sending the faxes. I have doubt whether Mr Soeder referred
specifically to the post and consider that that may have been the defender's
understanding of Mr Soeder's meaning rather than Mr Soeder's actual
words. I am persuaded that Mr Soeder's
evidence - that what he would have said was that he had not heard from the
pursuers' solicitors - is more likely to be accurate. Notwithstanding that, the defender's evidence
supports Mr Soeder's evidence that he checked for communications from
Dickson Minto on the Saturday morning.
I accept Mr Soeder's evidence that he checked both the fax machine
and also the envelopes in the mail bag.
[28] Accordingly I am satisfied that the Dickson Minto letter
did not arrive in Jedburgh on the Saturday morning but was in the mail bag
which Mr Soeder uplifted on the Monday morning.
Service
of the notice on Monday morning
[29] In contrast with the
Saturday's events, there was no dispute of fact as to what occurred on the
Monday morning. See paragraph 9
above. The issue is whether as a matter
of law the notices purifying the suspensive conditions were served (a) when Mr Soeder uplifted the mail bag from
the sorting office of Jedburgh Post Office at 8.50am, before the defender's
withdrawal from the contracts could take effect at 9am, or (b) when he entered his firm's offices at about
9.03am having delivered his daughters to their school.
[30] Counsel agreed that the proper approach was to have regard to
the intention of the parties shown in the notice clauses of the contracts
(Clause 26.1 and 24.1 respectively) and also to sound business practice. Mr Sandison contended that service of the
notices was effected once the mail bag came into the possession of Mr Soeder. Mr Cowie submitted that delivery of the
mail bag into the firm's office was the moment of service in a context in which
parties had envisaged postal delivery.
[31] What was required was service of the notice. What amounted to communication depends in the
first place on the contract. Where, as
here, the contract did not exclude ordinary postal delivery (viz. Prudential Assurance Co Ltd v Smiths
Foods and Yates Building Co Ltd v R J Pulleyn & Sons (York) Ltd above)
the delivery by a postman of the letters to the solicitors' office by pushing
the envelope containing them through the letter box would have amounted to
service of notice whether or not the lawyers promptly opened the envelope. The defender's solicitors would then have had
possession of the notices. It is the
task of the recipients of mail to arrange for its prompt handling and the
sender of a notice cannot be prejudiced by internal delays in so doing (viz. Brinkibon Ltd v Stahag Stahl GmbH [1983] 2 AC 34, Lord Fraser of
Tullybelton at 43G). Thus it appears to
me that the contract envisaged that service would be effected as soon as the
mail arrived in the solicitors' office.
Mr Cowie's submission, by concentrating on the time Mr Soeder
entered the office with the unopened mail bag, implicitly accepted this
proposition.
[32] In the present case the postman did not have an opportunity to
deliver the mail to the offices of the defender's solicitors because it was the
practice of Mr Soeder and his colleagues to uplift the mail from the Post
Office at Jedburgh. In my opinion that
practice placed the defender's solicitors in a similar position before the mail
bag arrived at their office to that which they would have been in had the
envelope fallen through their letter box.
I do not consider that the fact that the Dickson Minto envelope was
in a zipped mail bag with other letters prevented Mr Soeder from taking
possession of the notices when he uplifted the mail on the Monday morning. He would have known that the mail bag
contained letters.
[33] In Brinkibon (above)
Lord Wilberforce (at p.42C-D) spoke of resolving questions of when messages
were communicated by having regard to the intention of the parties, sound
business practice and in some cases by a judgment of where the risks should
lie. The contracts in this case provided
for service on the solicitors and parties would in all probability have
expected postal service to be effected by a postman delivering the letters to
the solicitors' offices. There is no
suggestion that parties addressed their minds to the question of when service
would be effected if a partner uplifted the firm's mail from the Post
Office. I am satisfied that
considerations both of sound business practice and also of the attribution of
risk once the letters were in Mr Soeder's control point to service of the
notices occurring when he uplifted the mail bag. It appears to me that Steuart v Ree (1885) 12 R 563
is analogous. In that case the court opined
that there had been citation on a defender who had received a registered letter
which an employee had uplifted at the Post Office although it had not been served,
as the statute required, at his residence or place of business. Common sense points towards this answer. I recognise that different considerations
might apply if at the weekend a member of staff of the defender's solicitors
happened to be in the Post Office and chose to pick up a mail bag and leave it
in the firm's office for consideration on the next working day, but those are
not the circumstances of this case.
[34] I am therefore satisfied that the notices purifying the
contracts came into the possession of the defender's solicitors in accordance
with their regular practice of picking up their mail from the Post Office at
about 8.50am on Monday 22 October 2007, and were thus served on them
before the defender's notices resiling from the contracts were capable of
taking effect.
Disposal
[35] I therefore sustain the
first and second pleas in law for the pursuers and repel the first plea in law
for the defender. I grant decree of
declarator as first concluded for and decree of implement in terms of the first
part of the second conclusion.
