The defenders argued that service of the notice had been deficient in three respects. First, Hoe sent it by DX and email. Secondly, it was not marked for the attention of a specified individual. Thirdly, the envelope did not give the full postal address of the sellers' solicitors. All three things were expressly required by the agreement and it was admitted by the pursuers that the requirements had not been followed.
The pursuers argued that the court should not adopt a formalistic approach. Essentially, substance mattered more than form. They relied on an English decision - J M Hill & Sons Ltd v London Borough of Camden (1982) 18 BLR 31 in which the Court of Appeal had held (on the basis of very similar facts) that service had been effected and rejected the "blatantly formalistic" approach taken by the defenders. They argued that a sensible commercial person would think that service by means of DX was sufficient. It did not matter whether Hoe had used DX or Royal Mail because the result would be the same and the envelope containing the letter of claim would be placed on the sellers' solicitors reception desk. So, not only had Hoe told the sellers about the claim, they had clearly received and understood it.
The court did not agree. It referred to various Scottish authorities in which the courts had consistently held that, if strict compliance with a particular condition is called for, then strict compliance will be enforced. Parties were free to determine how permissive or obligatory the notice requirements were to be in their agreement and they had decided, in this case, to provide very carefully for how notice should be given. They must have thought that service of the notice was an important point because the clause in question specifies exactly what constitutes a valid notice. Moreover, the parties had expressly excluded email as a means of service so it was obvious that they had applied their minds to it and decided that the mode of service outlined in the agreement was the right one.
Lord Woolman finished his decision with the words of Lord Reed in Siemens Hearing Instruments Ltd v Friends Life Ltd [2014] EWCA Civ 382 where he said "The clear moral is: if you want to avoid expensive litigation, and the possible loss of a valuable right to break, you must pay close attention to all the requirements of the clause, including the formal requirements, and follow them precisely". The result in Hoe may seem harsh on the pursuers but ultimately it is based on the normal principles of contractual construction set out most recently by the Supreme Court in Arnold v Britton. Where the words of a contract are clear, they should be followed and so care should always be taken when both drafting contractual notice clauses and serving notices under them.
