Piety Constructions Pty Ltd v Hville FCP Pty Ltd

1. [1]

   The question in this case is whether the defendant, Hville FCP Pty Ltd (“the Developer”), provided the plaintiff, Piety Constructions Pty Ltd (“the Builder”), a Payment Schedule within the 10 business day period specified in s 14(4)(b)(ii) [1] of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”).

2. [2]

   If the Developer did not provide its Payment Schedule within that period, it is common ground that, pursuant to s 15(2)(a)(i) of the Act, the Builder is entitled, as is claimed in the Summons, to judgment against the Developer in the sum of $10,179,961.84.

3. [3]

   My conclusion is that the Developer did provide its Payment Schedule within 10 business days of service of the Builder’s Payment Claim and that, accordingly, the Builder is not entitled to the judgment it seeks.

4. [4]

   The Builder served on the Developer a Payment Claim for $16,544,044.97 (inclusive of GST) pursuant to s 13 of the Act at 2.10pm on 2 May 2022 using an electronic information exchange system called “Procore”.

5. [5]

   There is no dispute that the Payment Claim was effectively served. Clause 16.19 of the “Principal’s Project Requirements” in the building contract obliged the parties to make “all project communications and transmittals” by email or Procore.

6. [6]

   At 6.30pm on 16 May 2022, the Builder’s Senior Project Officer, Mr Russell Gasseling, was sent an email from Procore (“the Procore Notification”) which contained a link to the Payment Schedule. That document scheduled an amount of $5,733,553.73. It is common ground that the Developer has since paid the Builder the amount of $6,364,083.13. [2]

7. [7]

   Between 6.30pm and 8.10pm on 16 May 2022, Mr Gasseling:

8. [8]

   There is no dispute that Mr Gasseling had the Builder’s authority to deal with the Payment Schedule and was the person to be served with the Payment Schedule.

9. [9]

   Clause 7.12 of the building contract provided, relevantly:

10. [10]

    It is common ground that the Procore system was an “approved electronic information exchange system” for the purposes of that provision in the building contract.

Was the Payment Schedule “provided” by the Developer to the Builder on 16 May 2022 or 17 May 2022?

1. [11]

   It is the Builder’s case that despite, by Mr Gasseling, actually knowing of and reading the Payment Schedule on 16 May 2022, and thus then actually being provided with the Payment Schedule, the Payment Schedule was, by reason of the deeming provision in cl 7.12 of the building contract, nonetheless not “provided” to it by the Developer until the following morning, at 9.30am on 17 May 2022.

2. [12]

   Thus, Mr Weinberger, who appeared for the Builder, submitted:

3. [13]

   Section 14 of the Act provides, relevantly:

4. [14]

   To avoid the liability to pay the amount claimed by the Builder in the Payment Claim, it was necessary that the Developer “provide” its Payment Schedule to the Builder within 10 business days “after the payment claim was served”; [5] that is, at any time during 16 May 2022. [6]

5. [15]

   The Act does not define when or how a document is “provided” for the purposes of s 14.

6. [16]

   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 one of the means specified in s 31, including “in the manner that may be provided under the construction contract”.

7. [17]

   As I have set out above, the building contract provided that “all project communications and transmittals” were to be done by email or by the Procore system and that a document “delivered electronically” using an “approved electronic information exchange system” such as Procore would, if delivered after 4.30pm on a business day, be “deemed to be given at 9.30am on the next Business Day”.

8. [18]

   In other contexts, it has been held that, as a matter of contract, such a deeming provision prevails even if the deemed state of affairs did not in fact occur.

9. [19]

   Thus, in APN Funds Management Limited v Australian Property Investment Strategic Pty Ltd [7] the Victorian Court of Appeal held that a clause in a Unit Subscription and Put Option Deed, stating that a notice sent by prepaid post would be deemed to be received three business days after that posting, prevailed and bound the parties, despite the fact that the notice in question was in fact received, and was acknowledged to have been received, on the first business day after it was posted. [8] That case did not involve consideration of the Victorian equivalent of the Act.

10. [20]

    In BCS Infrastructure Support Pty Ltd v Jones Lang Lasalle (NSW) Pty Ltd [9] Stynes J was called upon to decide when a payment claim under the Victorian equivalent of the Act had been served. Service was purportedly effected using an electronic system known as Corrigo. The payment claim was available to be retrieved on the Corrigo system on 16 January 2020 but was not actually opened until 11 February 2020. [10] Her Honour held that service of the payment claim was not effective until it was “identified and read” by the recipient and was thus not served until 11 February 2020. [11] There was a provision in the relevant building contract that, in certain circumstances, a notice given in electronic form was deemed received when it came “to the attention of the recipient”. Her Honour considered whether the “common law position” was displaced by the provision but found, on the facts, that it was not. Her Honour evidently proceeded on the basis that if the relevant provision was engaged, it would have the effect of displacing the “common law position”. [12]

11. [21]

    On the other hand, in Pacific General Securities Ltd & Anor v Soliman & Sons Pty Ltd & Ors [13] McDougall J considered a provision in a building contract that a notice sent by facsimile transmission was deemed received “the same day as it was faxed” in circumstances where the evidence was that the facsimile transmission [14] was not in fact received on the day it was faxed. His Honour concluded that the deeming provision “appears to conflict with the evident policy of the Act … that, to start time running, there must be actual receipt”. [15]

12. [22]

    A consistent conclusion, albeit in an admittedly different context, was reached by the Court of Appeal in All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd. [16] In that case, the Court held that a provision deeming a progress claim made prior to a reference date to have been made on the reference date did not have the effect that a progress claim in fact served prior to the relevant reference date engaged the provisions of the Act. [17]

13. [23]

    In Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [18] the Court of Appeal considered when a payment schedule was served under the Act. The question was whether service had occurred in accordance with s 109X of the Corporations Act 2001 (Cth).

14. [24]

    The Court held:

15. [25]

    It is true, as Mr Weinberger pointed out, the “facultative regime” to which the Court referred was s 109X of the Corporations Act, there being no deeming provision in the relevant building contract equivalent to cl 7.12 in this case. However, as I read the Court’s words, they are intended to emphasise that, so far as is possible, regard must be had to the realities of what has occurred so as to avoid coming to a legal conclusion which is divorced from what actually happened.

16. [26]

    In QC Communications NSW Pty Ltd v CivComm Pty Ltd, [20] Ball J, citing the Court of Appeal’s decision in Falgat, said:

17. [27]

    It is true, again as Mr Weinberger pointed out, that the contract that Ball J was considering in QC Communications did not contain a deeming provision such as cl 7.12. However, his Honour’s observations are again consistent with the Court having a “real world” view of the facts before it.

18. [28]

    In those circumstances, the better view in my opinion is that despite the parties’ agreement in cl 7.12 of the building contract that documents delivered electronically after 4.30pm are “deemed to be given” at 9.30am the following business day, 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 that day for the purposes of s 14 of the Act.

19. [29]

    That is what happened here.

20. [30]

    To hold otherwise in this case would be to desert reality and impose on the Developer a wholly artificial result with enormous financial consequences. I see my view as being consistent with that of McDougall J in Pacific General Securities and of the Court of Appeal in All Seasons Air. [22]

21. [31]

    I regard the Victorian Court of Appeal’s decision in APN Funds Management as distinguishable, as it was not a decision made in the context of the Victorian equivalent to the Act, and thus did not take into account the Victorian equivalent to s 14 of the Act. I would also respectfully suggest that such disposition as Stynes J had in BCS Infrastructure to hold that a deeming provision in the building contract could displace the effect of the Act was obiter, and to distinguish her Honour’s decision on the basis that in that case, as her Honour held, the electronic transmission serving the payment claim was not in fact identified and read on the relevant day.

22. [32]

    Mr Weinberger placed great emphasis on the provisions of s 13A of the Electronic Transactions Act 2000 (NSW) which is in the following terms:

23. [33]

    In my opinion, this provision takes matters no further. First, s 13A is not engaged because, by reason of cl 7.12, the parties here did “otherwise agree”. Second, had s 13A been applicable its effect would have been that the Payment Claim was received at 6.30pm on 16 May 2022 as it by then had become “capable of being retrieved”. Third, and perhaps most importantly, the section is otherwise neutral on the critical question of the effect of the deeming provision in cl 7.12, in circumstances where the electronic communication was in fact “retrieved” between 6.30pm and 8.10pm on 16 May 2022.

24. [34]

    Mr Weinberger submitted that my conclusion would mean that:

25. [35]

    That may be so. However, as Mr Sheldon who appeared for the Developer responded, a recipient of a document required to be served under the Act who actually opens and peruses a copy provided electronically ought not be encouraged to contend, as the Builder did here, that although it was factually provided, it was not legally provided.

26. [36]

    In any event, if I am wrong in reaching this conclusion, the Builder’s position is not advanced.

27. [37]

    That is because if cl 7.12 was to be read in the manner proposed by the Builder, its effect would be to restrict, or otherwise modify, for the purposes of s 34 of the Act, the meaning of “provide” within the Act to exclude actual provision where a payment schedule is served electronically; and would to that extent be void. Although s 14(4)(b)(i) contemplates that the building contract may require an earlier time by which provision of the Payment Schedule must occur, it could not, by reason of s 34 of the Act, restrict the means by which provision of the Payment Schedule was effective by excluding actual provision.

Conclusion

1. [38]

   On either basis, the Builder’s case fails, and the Summons must be dismissed.