News & Updates

Have you Noticed Covid 19?

14th April 2020

Have you Noticed Covid 19?

As Field-Marshal Lord Kitchener’s “Your Country Needs You”, John F. Kennedy’s “…ask not what your country can do for you; ask what you can do for your country; and Robert Oppenheimer’s “We cannot forget our dependence on our fellow men…”, now perhaps we have Boris Johnson’s “stay at home, protect our NHS and save lives”.

The World Health Organisation tells us that Covid-19 is part of “a large family of viruses which may cause illness in animals or humans. In humans, several coronaviruses are known to cause respiratory infections ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The most recently discovered coronavirus causes coronavirus disease COVID-19.”

Covid-19 is petrifying the world, cognate to the Black Death. The World Trade Organisation expects international trade to “fall by between 13% and 32% in 2020, as the COVID-19 pandemic disrupts normal economic activity and life around the world.”

To defeat the virus we need to stay at home. The UK and Scottish governments have legislated for this. In Scotland, the Health Protection (Coronavirus) (Restrictions) (Scotland) Regulations 2020 require us to do so, unless we have reasonable excuse. One excuse is travel for the purposes of work, where it is not reasonably possible to work from home.

The Scottish Government has advised that all business premises, sites and attractions must be closed unless:
• essential to the health and welfare of the country during this crisis; or
• supporting (or being repurposed to support) essential services; or
• wider public health, health and safety or other considerations apply and require a facility or service to continue to operate for a specific period of time for a safe shutdown process to be completed; and
• apart from in exceptional circumstances critical to lives and safety, capable of working in a way which is fully consistent with established social distancing advice.

Interpretation of the Rules by reference to the Guidance is likely to prevent business owners from attending at the office to collect the post.

Instead, electronic communication has been encouraged. For example, the Coronovirus (Scotland) Act 2020 provides that court and other important documents, which required physical delivery before, may now be signed and served electronically.

However, service by post has not been outlawed. And that causes a monumental problem for businesses.

This is because commercial contracts regularly provide that service by post has a special status. They say, for example, that:
“…the notice or other communication shall be treated as effectively given or served if addressed and sent by pre-paid post to the recipient’s last known principal place of business or (where a body corporate) its registered or principal office.”

Indeed, in Construction Contracts, this special status has statutory backing. The Housing Grants Construction and Regeneration Act 1996 (as amended) states that the parties are free to agree on the manner of service; but if they do not the term about service will have effect.

Contracts provide for the service of notices for a number of reasons: to mark a stage in performance of the contract; to establish rights, or to terminate them.

The courts have upheld terms that postal service is deemed service. Technical points as to service have not in the past been successful. Moreover, the courts cannot refuse to enforce a statutory provision, merely because it considers the consequences repugnant. It must uphold the will of the people, exercised through the supremacy of parliament to legislate.

The approach of the Courts has been aimed at upholding a perceived fair allocation of risk of failure in communication, and to avoid the payer claiming as a matter of fact, that it did not receive the notice, in order to avoid the consequences. Whilst fairness in the current circumstances may dictate the opposite approach, precedent has been set. The court’s hands may now be tied. To evade deeming provisions about postal service now, may be to obfuscate the effect of other deeming provisions, which are virtuous to the Covid-19 battle.

Yet this is not a technical concern. Right now, businesses fear that the unscrupulous counterparts to their contracts may seek to take unfair advantage, by serving notice by post, knowing that will not be discovered until it is too late - unless business owners attend at their offices daily to check mail, probably in breach of rules and guidance, and putting the NHS and lives at risk.

This is brought into sharp focus, when again we look at Construction Contracts. Briefly, the 1996 Act furnishes the contract with a regime for payment, which demands the service of notices. Subject to the terms of the contract, the payee may issue a notice to the payer, which creates a notified sum. The payer has five days from generation of the notified sum to issue the pay less notice. If it does not, the payer must pay the notified sum. It cannot challenge the amount before doing so, even if the amount is wrong, or not due at all. There is no cap on the amount that can form the notified sum, as long as the payee genuinely considers it to be due.

The courts have acknowledged the “draconian” consequences of this regime. Those have been justified by one of the policies of the Act, which is to promote cashflow. Interpretation of the term about service of notices must be aimed at that purpose.

However, the foresight of parliament and contract drafters alike, of the “lockdown” caused by Covid-19 is far-fetched. Improving cashflow may be a noble aim, but depriving the payer of any opportunity to challenge the payee’s view of the amount due, before payment, can never have been intended. Were it, the regime would not be equipped with the pay less notice.

If postal service has the special status of deemed service, yet the business owner cannot attend at his registered office or place of business to collect his post, deprivation of an opportunity to challenge is the exactly the result. That is not merely draconian, it is totalitarian. That must never have been the intention.

The obvious solution may be for parliament (UK or Scottish) to further legislate to address the issue, having not done so in the 2020 Act. That is unlikely and will certainly not be immediate.

Mail redirection is unlikely to provide a practical fix. It is not always available. It to set up requires attendance at the post office with identification. The process takes time to set up. Redirected mail may arrive (fatally) late.

So what’s the alternative?

In civil litigation: “Every issue must be raised, every argument advanced and every question asked in order to advance the client’s case…”. But returning to the words of Robert F Kennedy: “Lawyers have their duties as citizens, but they also have special duties as lawyers. Their obligations go far deeper than earning a living as specialists in corporation or tax law. They have a continuing responsibility to uphold the fundamental principles of justice from which the law cannot depart.”

It must surely be unjust, to advance a claim on the basis of a right established by a notice, deemed to be served by post during the current crisis.

The answers to the conflict between contractual terms, which deem that postal service is effective, and the requirement to stay at home are these:

Parties must desist from sending notices by post. They ought to also seek to agree, now, that provisions deeming postal service effective will not be relied upon during Lockdown.

And lawyers must refuse to advance claims which are based upon terms, contractual or statutory, which deem service by post effective.

Only that way can business trust that, staying home, protecting our NHS and saving lives, will not result in their own ruin.

Following the wisdom of Queen Elizabeth II in her address to the nations on 5 April 2020: “I hope in the years to come everyone will be able to take pride in how they responded to this challenge.”


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