Outlook 2013 not sending when selecting from contacts

Ok ... I have a strange issue, basically when sending through Outlook emails send fine if the contact is typed in and not linked to a contact, if the person is in the contacts and gets linked to an existing contact (by either entering an email address or selecting someone to send to through contacts) the email sending fails.

By fails I mean it does not error on sending (infact it says Sending complete), but never actually sends, instead it goes to Outbox and then retries sending again in a few mins.

My setup is Exchange Server 2013, Outlook 2013, the configured account type in Outlook is: "Outlook.com or Exchange ActiveSync" compatible service.

Any ideas?

Thanks,
Kris