29 October 2022
Piety Constructions Pty Ltd v Hville FCP Pty Ltd [2022] NSWSC 1318
Case: https://www.caselaw.nsw.gov.au/decision/183835db63a6ebbc206872ca
SOPA: https://legislation.nsw.gov.au/view/html/inforce/current/act-1999-046
On 29 September 2022, his Honour Justice Stevenson handed down a decision in this matter relating to the service of documents under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA).
It is common knowledge that you must serve a payment schedule within 10 business days of receiving a payment claim (see section 14 SOPA). The issue considered by the Court here was the means by which service took place and the time restraints imposed.
Facts and Background
The Contract between the Builder and the Developer obliged the parties to make all “project communications and transmittals” via email or via an electronic information exchange software known as “Procore”. Furthermore, the Contract provided that any electronic transmission made after 4:30PM was deemed to have been delivered at 9:30AM the following day.
The Builder served a payment claim upon the Developer via Procore on 2 May 2022. There was no dispute as to the validity of the payment claim.
At 6:30PM on 16 May 2022 (10 business days after service of the payment claim), the Builder’s Senior Project Officer, Mr Gasseling, was sent an email notification from Procore that the payment schedule had been uploaded. Between 6:30PM and 8:30PM that same night, Mr Gasseling opened and perused the payment schedule.
The issue for the Court to determine was whether the payment schedule was served within 10 business days, with special regard to the Contract’s terms regarding time of delivery.
The Builder argued that, although physically delivered on 16 May, legally and pursuant to the Contract it was delivered on 17 May and so it was late.
Relevant Legislation and Case Law
SOPA
Section 14(4) of SOPA states:
(4) If—
(a) a claimant serves a payment claim on a respondent, and
(b) the respondent does not provide a payment schedule to the claimant—
(i) within the time required by the relevant construction contract, or
(ii) within 10 business days after the payment claim is served, whichever time expires earlier, the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.
(emphasis added)
Section 31 of SOPA provides that the document can be served upon the other person “in the manner that may be provided under the construction contract”.
Case Law considered by the Court
In Pacific General Securities Ltd & Anor v Solimon & Sons Pty Ltd & Ors [2005] NSWSC 378 a provision in the building contract stated that notice sent via facsimile was deemed to have been received the same day as transmission. Evidence was adduced that demonstrated that the facsimile was in fact not received the same day as transmission. The Supreme Court determined that the provision allowing for a fictitious characterisation of receipt was in conflict with the “evident policy” of SOPA; “that to start time running, there must be actual read receipt”.
In All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289, the Supreme Court had to consider a contract provision which deemed a progress claim made prior to a reference date as having been made on the reference date as dictated by the contract, regardless of its early submission. The Court held that such a provision could not render an early progress claim as valid and so it did not engage the provisions of SOPA.
In Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [2006] NSWCA 259, the issue was whether a payment schedule was served in accordance with the Corporations Act 2001 (Cth), specifically section 109X which includes hand delivery and/or post to a registered business address as valid methods of service. In this matter, the payment schedule was delivered and posted to Falgat’s registered business office on the due date. The respondent tried to argue that they had not received the payment schedule due to their move the next day. The Court ruled that service had been effected, stating that,
“…if a document has actually been received and come to the attention of a person to be served or provided with the document, or of a person with authority to deal with such a document on behalf of a person or corporation to be served or provided with the document, it does not matter whether or not any facultative regime has been complied with … In such a case, there has been service, provision and receipt”
[emphasis added]
Finally, the Court in QC Communications NSW Pty Ltd v CivComm Pty Ltd [2016] NSWSC 1095 took a “real world” approach, with Ball J stating that:
“A document will be served in accordance with the requirements of [SOPA] if it actually comes to the attention of the person to be served.”
[emphasis added]
There is a common theme throughout the above matters, being that the Court will take into account what actually occurred when determining the issue of service.
Conclusion
The Court in this matter adopted the “real world” approach as demonstrated in the matters above and ruled that, despite the provisions in the Contract, service was in fact effected on 16 May 2022 and therefore the payment schedule was valid.
The Court went on to reason that, to take Builder’s argument and to follow the provisions of the Contract, being that the payment schedule was delivered the following day, when in reality it was delivered on the 16th of May, would impose a “wholly artificial result with enormous financial consequences” on the Developer.
The Court concluded their judgement by stating that, even if their ruling was incorrect, to exclude actual provision of the payment schedule from the meaning of “provide” in SOPA, section 34 would resolve it in favour of SOPA and so that reading could not be valid.
Key Takeaways
For further information, please do not hesitate to contact Gretel Wathen, Lawyer on (02) 8239 6500.
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