It is common ground, that a respondent must “provide” a payment schedule in response to a payment claim within 10 business days under s 14 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act). If, after 10 business days of being served with a payment claim, the respondent fails to provide a payment schedule, the respondent becomes liable to pay the full claimed amount pursuant to section 15(2)(a)(i) of the SOP Act.
There has been uncertainty regarding when or how a document is “provided” for the purposes of s 14 of the SOP Act. In Piety Constructions Pty Ltd v Hville FCP Pty Ltd [2022] NSWSC 1318, Justice Stevenson held that if a document is electronically served, it is taken to have been “provided” on the day it is accessed and viewed.
Facts:
On 2 May 2022 at 2:10pm, the builder, Piety Constructions Pty Ltd (Piety), electronically served a payment claim on the developer, Hville FCP Pty Ltd (Hville). Ten business days later, being 16 May 2022, at 6:30pm Hville responded by issuing a payment schedule via an email link. On the same day, between 6:30pm and 8:10pm, a senior project officer from Piety opened and reviewed the payment schedule. Piety commenced proceedings against Hville upon finding that Hville proposed to only pay approximately one third of the claimed amount.
Importantly, a provision in the construction contract provided that where a notice is delivered electronically at or before 4:30pm on a business day, it shall deemed to be given at 9:30am on the next business day following the day of transmission. Piety sought to rely on this contractual deeming provision to claim the full amount since the payment schedule was not “provided” until the following morning, being 17 May 2022 at 9:30am.
Judgment:
Justice Stevenson rejected Piety’s argument and found that the payment schedule was submitted on time under s 14 of the SOP Act. His Honour adopted a “real world” view of the facts and held that if a document is delivered electronically and accessed and viewed on the day it is sent, then it will be considered to have been “provided” on that day. To construe otherwise, would impose enormous financial consequences on Hville that is divorced from reality.
Even if Justice Stevenson was wrong in reaching this conclusion, his Honour held that the deeming provision must be read in light of s 34 of the SOP Act. The effect of the provision would purportedly modify or restrict the meaning of “provide” under s 14, and to that extent be void.
Implications:
The decision brings to light some key takeaways for parties involved in the construction sphere and deal with the SOP Act, namely:
- The importance of ensuring that a construction contract does not restrict, or attempt to restrict, the operation of a provision with the SOP Act. That is, the contract should not in any way alter the operation of the SOP Act, and
- The strict time periods for serving payment claims and payment schedules.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
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Authors: Maysaa Parrino, Matt Armota & Ericka Pham
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