The Supreme Court of NSW has recently considered when and how electronic service of a payment schedule is effected under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) in light of a contractual deeming provision.

Key takeaways

In this case, Piety Constructions Pty Ltd v Hville FCP Pty Ltd [2022] NSWSC 1318, the Court confirmed that when considering if and when a payment schedule is served under the SOP Act, the date of actual receipt will prevail regardless of any contractual provisions to the contrary.

What happened in this case?

This case considered whether Hville FCP Pty Ltd (Developer) had provided a payment schedule to Piety Constructions Pty Ltd (Builder) within 10 business days as required by section 14 of the SOP Act. If not, the Developer was liable to pay the full value of a $16 million payment claim to the Builder.

The contract between the Developer and Builder required the use of an electronic information exchange system (Procore) to serve notices. The contract also included a provision that if a notice was served after 4:30pm it was deemed to be given at 9:30am the following business day.

The Builder served a payment claim for around $16 million on 2 May 2022. The Developer provided a payment schedule through Procore at 6:30pm on 16 May 2022, being the last business day for service of the payment schedule. The Builder accessed and viewed the payment schedule through Procore later that same evening.

The question considered by the Court was whether, notwithstanding the Builder actually received and viewed the payment schedule on 16 May 2022, the payment schedule was deemed to be served the following day (and therefore out of time), by virtue of the contractual deeming provision.

What was the outcome?

Justice Stevenson held that the payment schedule was served on time and the Developer was accordingly not liable to pay the full amount of the Builder’s payment claim.

In light of the object of the SOP Act, and previous authorities, his Honour was of the view that regard must be had to the realities of what occurred to avoid coming to a legal conclusion divorced from reality. His Honour considered that, to hold otherwise would be to “desert reality and impose on the Developer a wholly artificial result with enormous financial consequences”.

Alternatively, his Honour considered that any such deeming provision would be void pursuant to section 34 of the Act, such that, on either basis the Developer did serve a payment schedule on time.

Further information / assistance regarding the issues raised in this article is available from the author, Sarah Hammond, Special Counsel, Emily Barnett, Paralegal, or your usual contact at Moray & Agnew.

The content of this publication is intended to provide a summary and commentary only. It is not intended to be comprehensive nor does it constitute legal advice, and has been prepared based on applicable legislation at the date of publication. You should seek legal advice on specific circumstances before taking any action.