Case Note: Martinus Rail Pty Ltd v Co-operative Bulk Handling Ltd [2025] WASC 373

Key takeaways

Where a payment claim is served via email or electronic communication, it is taken to be received at the time stated on that email or electronic communication. The next business day will be ‘day 1’ for the timeframe for a payment schedule response. This is despite the existence of any clause in a construction contract that attempts to deem a payment claim being served on ‘the next business day’.

Such deeming clauses have been found to be void as they are contrary to the SOP Act.

Proper processes should be put in place to ensure that payment claims received are assessed early and, if the payment claim is going to be disputed, ensure that careful consideration is given to properly setting out detailed reasons for withholding payment and ensuring compliance with the statutory time frames for service of a payment schedule.

Introduction

Martinus Rail Pty Ltd v Co-operative Bulk Handling Ltd [2025] WASC 373 (‘Martinus’) is a decision that provides important clarification on the issue on when payment claim is considered to have been effectively served for the purpose of the Building and Construction (Security of Payment) Act 2021 (WA) (SOP Act). This decision deals with whether a payment claim served on a Saturday is taken to be effectively ‘served’ to start the statutory clock for a payment schedule to be served in 15-business day under the SOP Act.

This decision is a reminder of the strict deadlines for service of payment claims under SOP Act and parties cannot contract out of statutory time limits under construction contracts. This decision has the effect of starting ‘day 1’ of the 15 business day period to provide a payment schedule being the next business day where a payment claim is served on a weekend rather than deeming the claim to be served on the next business day which would be taken to be business day 0.

Relevant Facts

Martinus Pty Ltd (‘Martinus’) and Co-operative Bulk Handling Ltd (‘Co-operative’) entered a construction contract (‘Contract’) to construct a rail sliding and associated infrastructure. Martinus submitted its payment claim via email in the amount of $22,646,617.21 (excl. GST)(‘Claimed Amount’) to Co-operative on Saturday, 31 August 2024. The payment claim reached Co-operative’s email address and was capable of being retrieved on 31 August 2024 at 4.36 pm (AWST).

Co-operative opened and read the payment claim at 6.42 am (AWST) on Monday 2 September 2024. Co-operative responded with a payment schedule certifying the amount of $5,425,550.66 (excl. GST)(‘Scheduled Amount’) via email at 4.32pm on 24 September 2024.

Under the SOP Act, the party responding to the payment claim is required to give a payment schedule within 15 business days of receiving the claim. Importantly, clause 47.4 of the Contract provided that if communications are received on a non-business day, they are taken to be received at 9:00 am on the next business day.

Issue before the Court

A main issue was the drafting of clause 47.4 under the Contract that dealt with notices/communications received on a non-business day, were taken to be received at 9.00am on the next business day.

Martinus argued that clause 47 was irrelevant for the purposes of the SOP Act, contending that the SOP Act, along with the SOP regulations and s 14 of the Electronic Transactions Act 2011 (WA)(‘Electronic Transactions Act’) had the effect that the 15 business days for the purpose of the SOP Act was to be calculated from the Saturday.

Co-operative disputed this, contending that the SOP regulations and the Electronic Transactions Act provided that the parties can agree when a payment claim was taken to be given for the purposes of the SOP Act and should therefore was taken to be given on the next business day i.e. Monday.

Relevant Legislation

Section 25(1) of the SOP A provides that the respondent may respond to a payment claim by giving a schedule (defined as a payment schedule) to the claimant before the earlier of the following:

(a)        the time required by the construction contract; and

(b)        15 business days after the payment claim is made.

By operation of section 26 of the SOP Act, the consequence of a responded failing to respond to a payment claim within the statutory timeframe is that the responded becomes liable for the claimed amount.

Service under the SOP Act

The Supreme Court first looked to section 113 of the SOP Act which deals with service of documents and the manner for service, including service by email under section 113 (2)(d).

Section 113(4) of the SOP Act provides:

“The regulations may make provision for or in relation to the time at which a document that is given in a particular manner is taken to have been given.”

Regulation 23(d) of the SOP Regulations provides:

“In the case of a document sent to a person by email or any other form of electronic communication — when the electronic communication is taken to be received by the person in accordance with the Electronic Transactions Act 2011 section 14”

Thus, the Court looked at section 14 of the Electronic Transactions Act which states (own emphasis added):

“(1) For the purposes of a law of this jurisdiction, unless otherwise agreed between the originator and the addressee of an electronic communication —

 (a) the time of receipt of the electronic communication is the time when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the                       addressee”

Supreme Court’s Reasoning

The Supreme Court found that the proper interpretation of the SOP regulations and s 14 of the Electronic Transactions Act:

(a) had the effect that the 15 business days for the purposes of the Act was to be calculated from the Saturday (as it was capable of being retrieved then); and

(b)the Act does not provide that the parties to a contract may agree when a payment claim is given under the Act.

Looking at the definition of ‘accordance’ to mean ‘agreement; conformity; harmony’, the Court took the view that the meaning of the words used in regulation 23(d) are that when an email or electronic communication is ‘taken to be received’ is to be determined in ‘conformity’ with when it is ‘taken to be given’ under section 14 of the Electronic Transactions Act. Therefore, the provision applies the relevant parts of section 14 but does not incorporate it into the SOP Act.

The Court held that because the wording of regulation 23(d) differed from that of section 14 of the Electronic Transactions Act that they were not to be read as one. This was made evident to the Court as regulation 23(d) applies when an email or electronic communication is ‘taken to be given’ by section 14, whereas section 14 is concerned with when an electronic communication is received.

The Court held that the wording of section 14(1) of the Electronic Transactions Act, namely:

(1) For the purposes of a law of this jurisdiction, unless otherwise agreed between the originator and the addressee of an electronic communication —

Contrasted to the wording of subsections 14 (1)(a) and 14(1)(b) which expressly provides for: ‘the time of receipt of an electronic communication’. The words in s 14(1) does not expressly provide for the time of receipt of an electronic communication nor does it expressly provide in similar terms to s 14(1)(a) and s 14(1)(b) that a communication is received when the parties have agreed it is taken to be received.

Similarly, the Court also outlined that the wording of s 14(1) contrasts to the wording of regulation 23(d) which expressly applies the relevant part of section 14.

The Court also importantly noted that if section 14 of the Electronic Transactions Act gave statutory force to agreements so that they would take precedence over statute, it could permit parties to agree to avoid otherwise compulsory statutory time periods which the Court held is unlikely to have been what was intended.

Looking at the objects and purpose of the SOP Act, the Court determined that the policy of the Act is to ensure expedition by strictly limiting the time for a response to those time limits set out in the Act. Thus, the Court’s construction of regulation 23(d) and section 14 of the Electronic Transactions Act is consistent with the policy for expedition as it leaves the time limits in the Act undisturbed.

Finally, the Court held that even if its construction of those Acts was incorrect, Section 111(2) of the Act provides that:

“A provision of any contract, agreement or other arrangement is void to the extent that it:

                   (a) is inconsistent with this Act; or

                   (b) purports to exclude, modify or restrict the operation of this Act or has the effect of excluding,

                        modifying or restricting the operation of this Act; or(c) 

                   (c) …..”

Because the Contract was inconsistent with and attempted to change the operation of the Act, clause 47.4 would have been deemed void.

Therefore, Martinus was entitled to recover the unpaid portion of the Claimed Amount as Co-operative’s payment schedule was sent outside of the 15 business day period permitted under the SOP Act for a response. This is because the service of payment claim was taken to be given when it is capable of being retrieved under section 14 of the Electronic Transactions Act without any influence from Contract, thus being 31 August.