Piety Constructions Pty Ltd v Hville FCP Pty Ltd

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

1. 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. Thus, Mr Weinberger, who appeared for the Builder, submitted: "So it was physically, if you like, provided, but legally, which is what we are concerned with, it was legally by contract and by statute provided the following day."
3. Section 14 of the Act provides, relevantly: "14 Payment schedules (1) A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant. …. (4) If - (a) a claimant serves a payment claim on a respondent, and (b) the respondent does not provide a payment schedule to the claimant - (i) within the time required by the relevant construction contract, or (ii) within 10 business days after the payment claim is served, whichever time expires earlier, the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates." (Emphasis in original.)
4. 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. The Act does not define when or how a document is "provided" for the purposes of s 14.
6. 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. 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. 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. 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. 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. 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. 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. 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. The Court held: "… it is not strictly necessary to express a view as to fine questions of construction under the [Corporations] Act. However, it is in my opinion appropriate to express views about this, because of the importance of clarity on this matter. … it is clear that if a document has actually been received and come to the attention of a person to be served or provided with the document, or of a person with authority to deal with such a document on behalf of a person or corporation to be served or provided with the document, it does not matter whether or not any facultative regime has been complied with … In such a case, there has been service, provision and receipt." [19]
15. 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. In QC Communications NSW Pty Ltd v CivComm Pty Ltd, [20] Ball J, citing the Court of Appeal's decision in Falgat, said: "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 …" [21]
17. 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. 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. That is what happened here.
20. 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. 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. Mr Weinberger placed great emphasis on the provisions of s 13A of the Electronic Transactions Act 2000 (NSW) which is in the following terms: "13A Time of receipt (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, or (b) the time of receipt of the electronic communication at another electronic address of the addressee is the time when both - (i) the electronic communication has become capable of being retrieved by the addressee at that address, and (ii) the addressee has become aware that the electronic communication has been sent to that address. (2) For the purposes of subsection (1), unless otherwise agreed between the originator and the addressee of the electronic communication, it is to be assumed that the electronic communication is capable of being retrieved by the addressee when it reaches the addressee's electronic address. (3) Subsection (1) applies even though the place where the information system supporting an electronic address is located may be different from the place where the electronic communication is taken to have been received under section 13B." (Emphasis in original.)
23. 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. Mr Weinberger submitted that my conclusion would mean that: "… if a payment claim (or any document) is served electronically, one never knows the operative date of service absent an investigation as to whether or not it was opened prior to midnight."
25. 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. In any event, if I am wrong in reaching this conclusion, the Builder's position is not advanced.
27. 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. On either basis, the Builder's case fails, and the Summons must be dismissed.

Endnotes

1. There being no earlier time specified in the building contract pursuant to s 14(4)(b)(i).
2. Hence the amount payable by the Developer, assuming the Payment Schedule was not provided timeously, is the figure at [2].
3. Particulars provided on behalf of the Builder on 7 July 2022.
4. On 12 January 2021 the Developer notified the Builder that "all future correspondence" should be addressed to Mr Gasseling.
5. Section 14(4)(b)(ii) of the Act.
6. "Business day" is defined in the Act to be "any day other than" a Saturday, Sunday, public holiday or specified days shortly after Christmas; 16 May 2022 was a Monday. An indistinguishable provision appears in the building contract.
7. [2013] VSCA 239 (Nettle JA, with whom Redlich JA and Hargrave AJA agreed).
8. At [12] and [30].
9. [2020] VSC 739.
10. At [119]-[122].
11. At [6(b)] and [121]-[122].
12. At [124]-[133].
13. [2005] NSWSC 378.
14. Attaching the adjudicator's notice of acceptance under s 19 of the Act.
15. At [39].
16. [2017] NSWCA 289.
17. At [41] (Leeming and Payne JJA, White JA agreeing).
18. [2006] NSWCA 259.
19. At [57]-[58] (Hodgson JA, with whom Handley JA and Hunt AJA agreed).
20. [2016] NSWSC 1095.
21. At [27].
22. See [21]-[22] above. 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: 29 September 2022