Demex Pty Ltd v John Holland Pty Ltd [2022] QSC 259

Andrew Orford  |  Petrina Macpherson  |  Keira Takacs

Key takeout

If a payment claim is sent via email, the date it is sent will not automatically be presumed to be the date the payment claim was received, unless evidence is put before the court establishing that it was in fact received on that date. 

Effective service via email does not necessarily require a recipient to be aware that an email has been sent. However, if a disagreement arises as to when a payment claim was served via email, evidence of when the payment claim was sent will be insufficient to prove the time of receipt. 

The practical implication of this case is that if service of a particular document by email is time sensitive, the person sending the email should take steps to ensure the email is in fact received by the recipient prior to the expiration of the due date. 

This case also makes it clear that unless upload to Aconex is specified as a means of service for a payment claim under a construction contract, it will not be considered to be a valid service for the purpose of the Building and Construction Industry Security of Payment Act 1999 (NSW) (NSW Act).

Facts

John Holland Pty Ltd (John Holland) engaged Demex Pty Ltd (Demex) to undertake the demolition of a bridge in NSW.  The contract was a described as a ‘John Holland Standard Subcontract’ (subcontract).  Under the subcontract, if Demex issued a payment claim and John Holland considered a lesser amount was payable, it was required to deliver a payment schedule within 10 business days after receiving the payment claim.  This time frame was consistent with the requirements of the NSW Act.

On Saturday 25 September 2021 at 2:06pm, Demex sent a payment claim to John Holland via email, claiming $5.3 million. On 12 October 2021, John Holland issued a payment schedule, certifying payment for just over $1.1 million. Demex issued a tax invoice for the certified amount, and John Holland paid the invoice in full.

Demex subsequently claimed that the payment schedule issued by John Holland was invalid as it was not delivered within 10 business days after the payment claim was served, making John Holland liable for the full amount claimed under the payment claim. 

The main issue between the parties was whether the payment schedule was served on time in accordance with the NSW Act. The payment claim was served as an attachment to an email, which was sent to an email address specified in the subcontract. The payment claim was also uploaded to Aconex.

Demex argued that the payment claim was served on Saturday 25 September 2021 at or about the time the email was sent to the nominated email account.  Demex relied upon section 13A of the Electronic Transactions Act 2000 (NSW) which provides that the time of receipt of an electronic communication is the time when it becomes capable of being retrieved. Demex submitted it was an obvious inference that the payment claim was received by John Holland at or about the time it was sent. Demex, therefore claimed that the first business day after the payment claim was served was Monday 27 September 2021, making the 10th business day, and the day on which a payment schedule was to be delivered, 11 October 2021.

In response, John Holland argued that Demex failed to prove the email was received by it at or about 2:06pm on Saturday 25 September.  Further, John Holland argued that the terms of the subcontract were that a document sent by email could only be received on a business day and 2.06pm on a Saturday fell outside the working hours specified in the subcontract.  John Holland contended that for the purpose of the NSW Act, service of the payment claim occurred on the day the email was opened and read by the email recipient.  This did not occur until Monday 27 September 2021.  The 10 business days was to be calculated from Tuesday 28 September 2021, expiring on Tuesday 12 October 2021.  Therefore John Holland delivered its payment schedule on time.

Decision

The court dismissed Demex’s application finding it had not proved that the claim had been served on 25 September 2021.

Crowley J held that service was effected when the payment claim was received at the nominated John Holland email address.  Although effective service did not necessarily require John Holland to be aware of the receipt of the payment claim, in this instance, His Honour was not willing to relieve Demex of the need to produce evidence that the payment claim was received on Saturday 25 September 2021.   Crowley J commented that in circumstances where ‘draconian legislation requires strict compliance and results in serious consequences for non-compliance’, evidence of service was an essential matter that Demex was required to prove. 

Crowley J did not accept that it was beyond question that an email is received nearly instantaneously after it is sent.  On the evidence provided, the only definite finding of fact that could be made was that the email was received on Monday 27 September 2021. Therefore, His Honour held that this was the date the payment claim was served and John Holland had validly provided the payment schedule within 10 business days.

As to the fact that the payment claim was uploaded to Aconex a few minutes before it was emailed to John Holland, His Honour concluded that the parties had agreed in the Subcontract that payment claims were to be served by delivery to a specific email address. The Subcontract did not provide for an upload to Aconex to be a means for service for a payment claim. Therefore the upload to Aconex was to be disregarded for the purpose of determining whether a payment claim was received.