Piety Constructions Pty Ltd v Hville FCP Pty Ltd [2022] NSWSC 1318

Andrew Hales  |  Karen Hanigan  |  Heidi Knights

Key takeout

The Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) imposes a strict time limit for responding to a payment claim. Courts will strictly apply the 10 business day period for the provision of a payment schedule.

If, as a matter of fact, a document is delivered electronically and accessed by the recipient, it will be considered to have been ‘provided’ on the day it was accessed. This will be so even if the contract contains a provision deeming a notice delivered electronically after 4:30pm to be given at 9:30am on the next business day following the day of transmission.

Facts

Piety Constructions (builder) served a payment claim on Hville FCP (developer) on 2 May 2022 using an electronic information exchange system, ‘Procore’.  

At 6.30pm on 16 May 2022, the builder’s senior project officer was sent an email from Procore which contained a link to the payment schedule for less than one third of the payment claim. Between 6.30pm and 8.10pm on 16 May, the officer opened and read the Procore notification, the payment schedule and a number of other documents listed in the Procore notification.

Clause 7.12 of the building contract provided that a notice delivered electronically at or before 4.30pm on a business day shall be deemed to be given on that day. In any other case, the notice shall be deemed to be given at 9:30am on the next business day. 

The builder argued that, as a result of the contractual deeming provision, under the SOP Act the developershould be taken to have provided the payment schedule the following business day and on that basis was provisionally liable for the full amount claimed as the payment schedule was provided late.

It was common ground that the officer read the notification, including the payment schedule, on the evening of 16 May 2022.  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’.

Decision

The builder’s case was dismissed.

Section 14(4) of the SOP Act requires that a recipient of a payment claim must ‘provide’ a payment schedule in response within 10 business days or any shorter period set out in the contract. Failure to comply with this regime can render the recipient provisionally liable for the full amount of the payment claim, even if the recipient would otherwise have had a strong argument to resist full or part payment.  The SOP Act does not define when or how a document is ‘provided’.

The court held that priority must be given to what actually occurred to avoid coming to a legal conclusion that was divorced from reality.  If a document has actually been received and come to the attention of a person to be served or provided with the document, it does not matter whether or not any facultative regime has been complied with. Accordingly there had been service, provision and receipt.

The court also stated, in obiter, that if clause 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 SOP Act to exclude actual provision where a payment schedule is served electronically. It would, to that extent, be void.