Downer EDI Works Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd

Court of Appeal (NSW)|2011-04-01|Before: Giles JA, Hodgson JA, Hammerschlag J

Judgment 1GILES JA : The appellant and the respondent were parties to a construction contract within the meaning of the Building and Construction Industry Security of Payment Act 1999 ("the Act"), under which the respondent was to provide design consultancy services in relation to the upgrade of a passenger rolling stock production facility at Glendale, New South Wales ("the Glendale project"). 2On 1 April 2010 the respondent sent to the appellant by facsimile a payment claim under the Act for $1,389,362.07. One facsimile was sent to the appellant's Melbourne office, the other to an office of the appellant at Broadmeadow in New South Wales. The respondent's employee had previously telephoned the appellant at the number given in the construction contract and asked "what fax should I use for Downer EDI Works", and the receptionist gave him the Melbourne facsimile number; the employee asked for the facsimile number for Frank de Vitis, who was the project manager for the Glendale project, and the receptionist said that "the best number for Frank is the Cardiff/Broadmeadow office on [number]". The payment claim was sent by facsimile transmission to those numbers. 3The appellant did not provide a payment schedule to the respondent until about 15 May 2010. It was common ground that, if the sending of the payment claim by facsimile had been service on the appellant as required by s 13(1) of the Act, the appellant had become liable to pay the claimed amount to the respondent and the respondent could recover it as a debt due from the appellant pursuant to ss 14(4) and 15(2)(a). 4The issue at trial was whether there had been service of the payment claim in accordance with s 31(1)(c) of the Act. The respondent did not rely on any other basis for service of the payment claim on the appellant. 5Section 31 of the Act provides - " 31 Service of notices (1) Any notice that by or under this Act is authorised or required to be served on a person may be served on the person: (a) by delivering it to the person personally, or (b) by lodging it during normal office hours at the person's ordinary place of business, or (c) by sending it by post or facsimile addressed to the person's ordinary place of business, or (d) in such other manner as may be prescribed by the regulations for the purposes of this section, or (e) in such other manner as may be provided under the construction contract concerned. (2) Service of a notice that is sent to a person's ordinary place of business, as referred to in subsection (1) (c), is taken to have been effected when the notice is received at that place. (3) The provisions of this section are in addition to, and do not limit or exclude, the provisions of any other law with respect to the service of notices." 6A payment claim is a notice within s 31, see Taylor Projects Group Pty Ltd v Brick Dept Pty Ltd [2005] NSWSC 439 at [16] and Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 at [59]. The specific issue was whether one or other of the Melbourne and Broadmeadow offices to which the facsimile transmissions were sent was the appellant's ordinary place of business within s 31(1)(c). 7The trial judge, Hammerschlag J, found that on 1 April 2010 the Melbourne office was the appellant's ordinary place of business, and as to the Broadmeadow office "that it too would qualify": Parsons Brinckerhoff Australia Pty Ltd v Downer EDI Works Pty Ltd [2010] NSWSC 1295 at [20], [21]. His Honour gave judgment for the respondent for $1,389,362.07 plus interest.

Facts 8The appellant conducted business operations Australia-wide, described as loosely divided into road surfacing (including asphalt production), rail infrastructure management, and civil works (including drainage and kerbing). 9The Melbourne office was the appellant's registered office. It was the office from which there were performed the business functions in relation to its national operations of management and support services, including the office of its Chief Executive Officer; finance support services, including the office of its Chief Financial Officer; safety and environment management; and human resources. 10The appellant also had a number of regional divisional offices, each of which was responsible for the conduct of normal business operations within its regional division. The divisions included Western Australia, Central Region (South Australia), New South Wales, Queensland, the Northern Territory and Tasmania. 11The Broadmeadow office was an office maintained by the appellant for administering and undertaking rail related projects, mainly track works in the Hunter Valley and Sydney. It was one of the depots or maintenance facilities of the appellant's rail infrastructure business operation. The Glendale project was not one of these rail related projects. 12The appellant established site offices specific to particular projects for the duration of the projects. The Glendale project was administered on a day to day basis from a site office maintained by the appellant at Glendale. 13Most communications between the appellant and the respondent in relation to the Glendale project were by e-mail. Of the letters, most letters from the appellant to the respondent did not have an address or telephone or facsimile number, only its name and corporate logo. An unspecified number of letters, of which an example dated 18 September 2009 was in evidence, gave the address of the Melbourne office and facsimile and telephone numbers. The facsimile number was the number to which the payment claim was sent. According to the evidence, one letter from the respondent addressed to Mr de Vitis at the Broadmeadow office was sent by facsimile as well as sent by e-mail, and another was sent by post as well as by e-mail, while Mr de Vitis sent six letters to the respondent by facsimile from the Glendale site office. 14The respondent submitted ten progress claims to the appellant after commencement of the works. The first seven were addressed and sent to a postal address for the appellant's Rosehill office, being the appellant's primary administrative office for New South Wales where invoices relating to the Glendale project and other projects were authorised and processed, and were there processed and paid. Two further progress claims were addressed to the Glendale site office but it seems that they were processed at the Rosehill office. The remaining progress claim accompanied the relevant payment claim, and it and the payment claim were addressed to the Glendale site office but sent by facsimile as earlier described. 15The appellant's payment schedule dated 12 May 2009 was sent to the respondent by facsimile from the Melbourne office.

The trial judge's reasons 16The trial judge did not accept the appellant's submission that s 31(1)(c) of the Act required there to be a direct connection between the transaction the subject of the claim and the place which was the appellant's ordinary place of business. His Honour considered that "ordinary" connoted "usual", and that the ordinary place of a person's business "includes any place at or from which the person usually engages in activities which form a not insignificant part of the person's business" (at [16]). 17The trial judge found that the Melbourne office was the appellant's ordinary place of business for the purposes of the Act, describing it as "a nerve centre and what might be described as the head office of the [appellant's] national business" (at [18]) and noting that by the letter of 18 September 2009 the appellant had communicated with the respondent in connection with the Glendale project from the Melbourne office. 18The trial judge had earlier noted the appellant's acceptance that it could have more than one ordinary place of business. His Honour considered that the Broadmeadow office would qualify as the appellant's ordinary place of business for the purposes of the Act because the appellant administered and undertook from that office projects "which are clearly not an insignificant part of its ordinary business" (at [21]).

Consideration 19The appellant repeated on appeal its submission that s 31(1)(c) required a connection between the transaction the subject of the payment claim and the place which was the person's ordinary place of business, namely that the place of business be that having the closest connection to the works the subject of the relevant construction contract. It maintained the acceptance that a person could have more than one ordinary place of business, but said that s 31(1)(c) had to be read down so as to refer to one only of possibly multiple ordinary places of business, being that with the closest connection abovementioned. It submitted that the word "ordinary" or the equivalent "usual" taken by the trial judge could only be given content for the purpose of the Act by reference to the transaction between the parties giving rise to the entitlement to serve a payment claim. 20The appellant submitted that the trial judge had failed to have regard to the use of the definite article "the" in the expression, derived by the appellant from s 31(1)(c), "the ordinary place of business", and had erroneously equated that expression with "any place of business". It submitted that a person may have more than one business, whereby the need for a direct connection with the relevant works undertaken as part of the relevant business was all the more clear. It said that, on the construction of s 31(1)(c) for which it contended, the Glendale site office or perhaps the Rosehill office was its ordinary place of business for service of the progress claim relating to the Glendale project, but that on the evidence neither the Melbourne nor the Broadmeadow office had the requisite connection with the Glendale project. 21These submissions suffered from erroneous reliance on the expression "the ordinary place of business" and its definite article. That expression is not found in s 31(1)(c). The definite article as relevantly used in s 31(1) of the Act attaches to the word "person's", with corresponding reference to "a person's ordinary place of business" in s 31(2). The person may have more than one ordinary place of business. Reading down as submitted by the appellant is another matter. 22There is an initial difficulty in s 31(1)(c). It provides for two means of service, one sending by post and the other sending by facsimile, in each case "addressed to the person's ordinary place of business". A notice sent by post is sent as a postal article to a location at which it is physically delivered. Addressing the postal article containing the notice to the intended recipient's ordinary place of business makes sense; it is addressed to a location. That is not so when a notice is sent by facsimile. 23Although there was no evidence on the matter, the Court can take judicial notice that sending by facsimile is a form of electronic transmission. There is no equivalent to a notice as a postal article physically delivered at a location; rather, a facsimile of the notice is generated at whatever location the equipment receiving the transmission happens to be. When a notice is sent by facsimile, although the notice may bear an address there is no equivalent sending addressed to a location, and the addressing is no more than dialling the facsimile number. The facsimile number does not have a location. How then is sense to be given to sending by facsimile addressed to a person's ordinary place of business? 24For the present I pass this by, and consider a person's ordinary place of business assuming a notice is sent by post. 25The appellant submitted that s 31(1)(c) should be read down in conformity with the intent of the Act, for which it referred in Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd [2003] NSWSC 903 particularly at [38] for the importance of compliance with time limitations. It said that the reading down was necessary so that a payment claim was received at a place where someone would have knowledge of the relevant works and could take action to provide a payment schedule, and that it was contrary to the intent of the Act that there could be receipt at a remote location which was otherwise the recipient's ordinary place of business. For reading down words of general application, the appellant referred to R v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681 and Taylor v Centennial Newstan Pty Ltd [2009] NSWCA 276; (2010) NSWLR 379, and also to Hall v Jones (1942) SR (NSW) 203 and the reliance on it in Tokyo Mart Pty Ltd v Campbell (1982) 15 NSWLR 275. 26Words of general application may be read down, but in my opinion s 31(1)(c) should not be read down in the manner submitted by the appellant. 27It should not be overlooked that s 31 is concerned with service of notices beyond service of a payment claim (or a payment schedule: Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd at [59]-[61]). The Act provides for giving notice in many other circumstances, not always in terms of service of notice, see -

s 15(2)(b), service of notice of intention to suspend;
s 16(2)(b), ibid;
s 17(2)(a), notification of intention to apply for adjudication;
s 19(1), service by adjudicator of notice of acceptance of an adjudication application;
s 23(1)(a), service of adjudicator's determination;
s 24(1)(b), service of notice of intention to suspend;
s 26A(2), service on principal contractor of a payment withholding request;
26A(5), notification whether a person is a principal contractor;
s 26B(3)(c), service of a notice of claim under the Contractors Debts Act 1997;
s 26B(5), service of adjudicator's determination on principal contractor;
s 26D(3), giving notice to principal contractor of withdrawal of an adjudication application. 28It is not necessary to decide whether all of these fall within service of notice in s 31. Some authorised or required service of a notice does not involve the "time of the essence" approach of which Emag Constructions Pty Ltd v Highrise Concrete Contractors (Aust) Pty Ltd spoke, for example service of notice of intention to suspend. There is no single intent of the Act calling for reading s 31(1)(c) down. Further, the adjudicator does not necessarily have knowledge from which the place of business with the closest connection with the relevant works could be safely determined; nor might the principal contractor; nor might the claimant have knowledge from which the place of business of the principal contractor with the closest connection with the relevant works could be safely determined. A superadded closest connection is not appropriate when the potential breadth of application of s 31(1)(c) is appreciated. 29Further again, the saving in s 31(3) permits service by leaving at or posting to a company's registered office: Corporations Act 2001 (C'th), s 109X(1)(a). A registered office is often an address maintained for the purpose, not at the company's place of business. The legislature has seen as acceptable service by leaving a notice at or posting it to a registered office where no one may have knowledge of the relevant works, and which may be at a remote location. It is difficult, then, to see necessity to read down s 31(1)(c) in order to avoid that possible situation. 30In my opinion, there is no warrant for confining the person's ordinary place of business to which the postal article is addressed to the place of business with the closest connection with the relevant works. Nothing in s 31(1)(c) so provides, or makes the ordinary place of business turn on whether the intended recipient of the notice has a site office for the relevant works, administers the works from one location, or administers the works from another location. The provision requires a location which satisfies the ordinary language of a place of business which is the person's ordinary place of business. The intrusion of a closest connection would bring greater uncertainty to what should be reasonably determinable. It is not to be expected that the person serving the notice should have to determine which of a number of places of business of the intended recipient is the one with the closest connection with the relevant works - a quite different test from one which is an ordinary place of business - at risk of failure in service if the determination is contestable. 31The Act has taken an expression not infrequently found, sometimes with "usual" in place of "ordinary", in such disparate places as the Bankruptcy Act 1966 (C'th) (s 40: act of bankruptcy if depart usual place of business in order to defeat or delay creditors); the Retirement Villages Act 1999 (s 201(2): service of notice or document on operator of a retirement village by sending by post to the operator's usual place of business); and the Criminal Procedure Act 2009 (Vic) (s 391: service on an accused's lawyer by leaving at the lawyer's ordinary place of business). The broad concept is found in different words in, for example, the UCP Rules providing for service by posting a document to "the person's business or residential address" (r 10.5(1)(b)(ii)). 32It has been left to the recipient of a notice at its ordinary place of business to make arrangements for appropriate attention to the notice if, within that person's organisation, the attention is to come from some other location. Indeed, s 31(2) of the Act provides that service is taken to have been effected when the notice is received at the person's ordinary place of business. There is service although it may not in fact come to anyone's attention at that location until a time dependent on arrangements within the organisation. 33Turning then to service by sending by facsimile, sense is made of s 31(1)(c) if the facsimile number is a number for facsimile transmissions which will be received at the person's ordinary place of business and there is addressing to the person's ordinary place of business if the facsimile is sent, by dialling the facsimile number, to the facsimile number. There was no dispute that the relevant facsimiles were received at the Melbourne and Broadmeadow offices. 34It may be that s 31(1)(c) is to be read down by a *requirement that the place of business have at least some relationship with the construction contract. For example, if the business operations of the intended recipient of the notice include construction work and retail sales of clothes, and the operations for each are conducted at different places, it may well be that its ordinary place of business for the purposes of the Act is one at or from which it conducts the former business operations. 35However, that does not arise and need not be decided. Section 31(1)(c) is not to be read down as the appellant submitted. It is difficult to deny that a head office answers the description of an ordinary place of business, and for the reasons given by the trial judge, the Melbourne office was the appellant's ordinary place of business. Accordingly, the payment claim was properly served.

Orders 36The appeal should be dismissed with costs. 37HODGSON JA : I agree with the order proposed by Giles JA and with his reasons. 38I am inclined to think that s 31(1)(c) of the Act proceeds on an unstated assumption that the business of a person who has undertaken construction work or the supply of related goods and services is a business that includes the carrying out of the particular construction contract in respect of which a notice is given. On that basis, I am inclined to think that this person's "ordinary place of business" within s 31(1)(c) may be limited to the place or places where the person ordinarily carries on that business; and thus, as suggested by Giles JA in par [34], may not extend to every place where the person carries on any kind of business. 39On that approach, "the person's ordinary place of business" in s 31(1)(c) would include a head office in which business is ordinarily carried on in relation to the whole of the person's business, as well as a branch office in which business is carried on in relation to the particular construction contract. Thus in this case, service by facsimile to the appellant's head office was sufficient. 40SACKVILLE AJA : I agree with Giles JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 April 2011

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