Is an email valid notice under a contract?

1 September 2019


Businesses are increasingly relying on email as a form of communication. But is an email a valid method of serving notice under a contract? A recent decision by the Supreme Court of New South Wales has considered this issue.

Facts

The case of Kegran Pty Ltd v Warrik Pty Ltd [2018] NSWSC 1357 involved the exercise of an option to renew a commercial lease. Under the terms of the lease, the landlord granted the tenant a lease for an initial 5 year term with an option of renewal for a further 5 years. The exercise of the option was subject to the tenant giving notice of exercise to the landlord at least 6 months before expiration of the initial term.

The lease also contained provisions relating to the service of notices. In particular, the lease provided that any notice to the landlord must be addressed to the landlord at the address stated in the lease or, if another address is later nominated by the landlord, then at that address, and would be “sufficiently served” if it was:

  • served personally;

  • sent to the landlord’s facsimile number; or

  • sent by prepaid post.

Approximately 7 months before expiration of the lease, the tenant purported to exercise the option of renewal by sending an email to the sole director of the landlord. The landlord accepted the email was sent but denied that the option was validly exercised on the basis that, among other things, the contract did not allow notices to be served via email.

The tenant commenced legal proceedings seeking a declaration that it had duly exercised the option, and an order for specific performance of the agreement to grant a new lease.

Issue

The tenant submitted that service of the notice was valid on the basis that the email address to which the notice was sent was an email address used by the landlord’s director at the time. The tenant adduced evidence from a forensic technology expert who conducted a forensic analysis of the mailbox on the director’s laptop computer. Based on that analysis, the expert expressed various opinions in his report, including that:

  • the email had been successfully sent from the tenant’s email account;

  • the email was received by the email server associated with the email account of the landlord’s director; and

  • the email was downloaded to the email client program of any computer which accessed the email account of the landlord’s director.

The landlord did not contend that the terms of the email itself were insufficient to constitute a valid notice of exercise of the option. Rather, the landlord submitted that the email did not constitute valid notice because the notice provisions in the lease required the notice to be addressed to the landlord’s address in Port Macquarie, and the email was not so addressed.

The issue for the Court to decide was whether the tenant validly exercised its option to renew the lease by way of a notice sent by email.

Decision

The Court found that the words used in the notice provisions were ‘facultative’ rather than ‘mandatory’, and therefore did not prescribe an exhaustive list of the available methods for the service of notices. On this basis, the Court held that an email was a valid method of service in the circumstances.

The Court was also satisfied on the evidence, in particular that of the expert witness, that the notice was received by the email server of the landlord’s director, then downloaded and likely opened and read by the landlord’s director.

The Court concluded that the tenant validly exercised the option to renew by serving written notice, in the form of the tenant’s email, as required under the lease. As a result, the tenant was entitled to the grant of a new lease.

Key takeaway

This case illustrates the importance of considering contracts as a whole when serving notices relating to the exercise of a party’s rights under the contract.

With businesses increasingly relying on email and other forms of technology to communicate, it is imperative that notice provisions in a contract be carefully considered before a notice is issued to ensure that the method of service is valid.

If you have any questions or concerns regarding your rights under a lease or any other contract, get in touch to arrange a free consultation.