Case Note: Piety Constructions Pty Ltd v Hville FCP Pty Ltd  NSWSC 1318
This case is an important reminder for persons issuing payment schedules of the importance of understanding the provisions regarding service of documents in the Building and Construction Industry Security of Payment Act 1999 (NSW) (‘the Act’) and the construction contract to ensure they are validly serving payment schedules within the time allowed by the Act (usually 10 business days from receipt of a payment claim).
The consequences of failing to serve a payment schedule within time is that the claimant is entitled to commence proceedings for Judgment for the full amount of the claim.
In this case Hville FCP Pty Ltd (‘the Developer’) engaged Piety Constructions Pty Ltd (‘the Builder’) to perform works for it.
The Builder served on the Developer a Payment Claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (‘the Act’) for $16,544,044.97 (inclusive of GST) on 2 May 2022 using an electronic information exchange system called “Procore”. As such, the strict time frames of the Act required the Developer to serve its Payment Schedule within 10 Business Days after being served the Payment Claim, being 16 May 2022.
At 6.30pm on 16 May 2022, the Developer served the Payment Schedule by Procure. The representative for the Builder received an email notification from Procure, which contained a link to the Payment Schedule, scheduling an amount of $5,733,553.73. The Builder’s representative proceeded to open and retrieve the Payment Schedule on 16 May 2022.
The issue in question is whether the Payment Schedule was validly served on the Builder, where service was done so at 6.30pm, given the terms of the Contract.
Relevantly, clause 7.12 of the Contract stated that:
A Notice … delivered electronically using an approved electronic information exchange system at or before 4.30pm 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 9.30am on the next Business Day following the day of transmission
As such, the Builder argued that whilst, they received, knew of and read the Payment Schedule on 16 May 2022, by law the Payment Schedule is deemed to have been provided the following morning at 9.30am on 17 May 2022, as the Developer served the Payment Schedule after 4:30pm on 16 May 2022.
If deemed to have been served on 17 May 2022, the Payment Schedule would be invalid under the Act due to being served outside the 10-business day requirement within Section 14 of the Act. Such a result would see the Developer liable to pay the full amount claimed within the Payment Claim.
The Court commenced by stating that the Act does not define when or how a document is ‘provided’ for the purposes of Section 14. Furthermore, Section 31 of the Act provides that any document required by the Act ‘to be served on a person’ may be served on the person by a means specified in Section 31, which includes by ‘a manner that may be provided under the Construction Contract’.
The Court noted that in other contexts, contractual deeming provisions, such as Clause 7.12 of the Contract, have been held to prevail. The Court referred to the decision in QC Communications NSW Pty Ltd v CivComm Pty Ltd (‘the QC Case’), which when considering the Act stated:
‘A document will be served in accordance with the requirements of the Act if it actually comes to the attention of the person to be served. It is not necessary that it be served in accordance with s 31.’
Whilst the contract within the QC Case did not contain a deeming provision such as Clause 7.12 of the Contract, the Court preferred an approach of having a “real world” view of the facts before it.
As such, the Court came to the sensible conclusion that despite the parties’ agreement with Clause 7.12 of the Contract, if, as a matter of fact a document delivered electronically is actually accessed and viewed on the day it is sent, it should be seen as being ‘provided’ on that day for the purposes of Section 14 of the Act.
- It is important persons in charge of issuing Payment Schedules understand the service provisions in the Act and the relevant construction Contract. This case would have been different if the Builder’s representative did not access the email and retrieve the payment schedule.
- Actual service will prevail over any deeming mechanism for the purposes of the Act