The Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) provides that a person on whom a payment claim is served may reply to the claim by ‘providing’ a payment schedule to the claimant, however, the Act does not define when or how a document is ’provided’.
The Supreme Court of New South Wales was recently required to examine what it means to provide a payment schedule in the case of Piety Constructions Pty Ltd v Hville FCP Pty Ltd [2022] NSWSC 1318.
Background
In this case, the relevant construction contract provided that ’all project communications and transmittals’ were to be transmitted by email or an electronic information exchange system called ’Procore’.
At 2:10 pm on 2 May 2022, the builder served on the developer a payment claim under the Act (Payment Claim) using Procore.
In reply to the Payment Claim, the developer sent to the builder a payment schedule (Payment Schedule) through the Procore system at 6:30 pm on 16 May 2022. The builder accessed the Payment Schedule between 6:30 pm and 8:10 pm on 16 May 2022.
The contract provided that a notice ’delivered electronically using an approved electronic information exchange system at or before 4:30 pm on a Business Day, shall be deemed to be a notice in writing given on the day of transmission, or in any other case of notice by the approved electronic information exchange system, shall be deemed to be given at 9:30 am on the next Business Day following the day of transmission’.
Issue to be determined
Section 14(4) of the Act provides that for the developer to avoid liability to pay the amount claimed by the builder in the Payment Claim, the developer needed to ‘provide’ the Payment Schedule to the builder within 10 business days after the payment claim was served.
It was the builder’s case that despite the developer actually knowing of and reading the Payment Schedule on 16 May 2022, and thus then actually being provided with the Payment Schedule, the builder was, by reason of the deeming provision of the contract for service of notices, nonetheless not ’provided’ with the Payment Schedule by the developer until the following morning, at 9.30am on 17 May 2022. On this basis it was contended that the developer was liable for the amount claimed by the builder in the Payment Claim.
The Court’s decision
The Court held (at [28]) that, despite the deeming provision of the contract for the service of notices, if, as a matter of fact, a document delivered electronically is actually accessed and viewed on the day it is in fact sent, it should be seen as being ’provided’ on the day for the purposes of section 14 of the Act. To hold otherwise, the Court said, would be to desert reality and impose on the developer a wholly artificial result with enormous financial consequences.
Take home points
- A deeming provision of a contract may be rendered redundant by contrary facts and regard must be had to the realities of what has occurred so as to avoid coming to a legal conclusion that is divorced from what actually happened.
- If a payment claim (or any document) is served electronically, one may never know the operative date, absent an investigation as to whether it was opened prior to midnight.
- When sending payment claims, payment schedules and other documents, parties should get into the habit of requesting ‘read receipts’, unless the electronic information exchange system provides that information automatically.
More information
For information about this case or for advice, please contact:
Darren Cain, Principal Lawyer and
Head of Construction and Infrastructure
(03) 8600 0701 or dcain@kcllaw.com.au
Dominic Brown, Senior Associate
(03) 8600 8851 or djbrown@kcllaw.com.au
Author
This Construction and Infrastructure case note was authored by Dominic Brown, Senior Associate.
Note: This update is a guide only and is not intended to constitute legal advice.