On 10 November 2020, the Supreme Court of Victoria handed down its decision in BCS Infrastructure Support Pty Ltd v Jones Lang Lasalle (NSW) Pty Ltd [2020] VSC 739, finding that a payment claim under the Building and Construction Industry Security of Payment Act 2002 (the Act) was not effective when delivered via a cloud-based information system until it was received and read by the respondent.
Background
On around 9 October 2010, the plaintiff, BCS Infrastructure Support Pty Ltd (BCS) and Qantas Airways Ltd (Qantas) entered into a construction contract, pursuant to which BCS performed works for Qantas at a number of airports around Australia. On around 1 May 2017, Qantas novated the construction contract to the defendant, Jones Lang Lasalle (NSW) Pty Ltd (JLL).
In June 2017, JLL requested that BCS connect to Corrigo, a cloud-based facilities management platform that, among other things, facilitates the issuing of work orders and the service of invoices. JLL also informed BCS that invoicing for services rendered would no longer be in the form of a traditional PDF invoice submitted to an email address, but would be entered directly into Corrigo and managed via that portal.
Corrigo operates by allowing:
- JLL to raise and track work orders for tasks to be performed by BCS. JLL created different types of work orders, each recording the pricing of the work order and logs inputs such as communications between the parties; and
- BCS to check in to the raised work order and create an electronic invoice for the amount of the work order by entering invoice details directly into Corrigo.
The Payment Claim
On 1 December 2019, JLL created a work order on Corrigo named ‘DUMMY1000600’.
On 16 January 2020, BCS manually entered into Corrigo, in relation to ‘DUMMY1000600’, invoice details for the sum of $3,447.13.
At the same time, BCS also uploaded to Corrigo, in relation to ‘DUMMY1000600’, a number of separate documents which included a tax invoice endorsed under the Act in the amount of $616,517.64 (the Payment Claim). Despite being uploaded to ‘DUMMY1000600’, the Payment Claim was not related to the work order.
While the Payment Claim was available to JLL to access, download and read from 16 January, the Payment Claim was not opened and read by JLL until 11 February 2020.
Service of a payment claim on a respondent has serious consequences under the Act. If the respondent fails to serve a payment schedule within time, the respondent will become liable to pay the claimed amount, the claimant will be able to recover the unpaid portion of the claimed amount as a debt due, and the claimant may serve a notice of intention to suspend works under the construction contract.
The Payment Schedule
In this case, the Supreme Court made important findings regarding what constitutes a valid payment schedule for the purposes of the Act. For the sake of brevity, a summary these findings will be covered in a separate article to follow in the coming weeks.
Supreme Court’s findings
The Honourable Justice Stynes found the requirement that the Payment Claim be served was not satisfied by the Payment Claim being uploaded to Corrigo on 16 January 2020, even though it may have been available for JLL to retrieve from that date.
In the decision, Her Honour noted that what is required for there to be service is that the defendant receive the Payment Claim.
In this instance, a number of steps were required before it could be said that JLL had received the Payment Claim. Specifically, JLL would have had to:
- log on to Corrigo;
- open a work order unrelated to the Payment Claim; and
- open the relevant attachment.
As the attachment was not opened by JLL until 11 February 2020, Her Honour found this to be the date of service of the payment claim. Her Honour also noted that this was not unreasonable, but rather a consequence of the manner in which BCS chose to deliver the Payment Claim.
Lessons learnt
Delivery of payment claims via cloud-based information systems is risky for both parties as the payment claim may not be effective until it has been received and read.
This may pose a significant challenge to claimants trying to calculate the due date for an adjudication application (which will be dependent on when the payment schedule was due).
The difficulty posed by modern delivery methods may be overcome by carefully drafted provisions of the construction contract.
More information
To learn more about the decision, or for advice, please contact Darren Cain, Principal Lawyer, on (03) 8600 8835 or dcain@kcllaw.com.au, or Dominic Brown, Associate, on (03) 8600 8851 or djbrown@kcllaw.com.au.
Author
This Construction and Infrastructure update was authored by Dominic Brown, Associate.
Note: This update is a guide only and is not intended to constitute legal advice.