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The Danger of Ignoring Your Inbox: Payment Claims and the Security of Payment Act
Under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act), strict deadlines apply to the service of payment claims and payment schedules. A recent Court of Appeal decision has confirmed that even an email address used informally in project communications may be used to validly serve payment claims under the Act.
For principals, builders, and developers, a recent decision of the NSW Court of Appeal illustrates the importance of good project management – and how overlooking an email could mean the difference between being able to dispute a claim and being immediately liable for payment.
Background
In Claire Rewais and Osama Rewais t/as McVitty Grove v BPB Earthmoving Pty Ltd [NSWCA 103], the Appellants (Owners) contracted with the Respondent (Builder) to perform earthworks at their property.
The Owners had provided an email address to the Builder for communications (Address). The parties frequently used the Address to communicate, and the Builder sent several previous invoices to the Address, explicitly stating they were claims made under the Act. In 2023, the Owners made four bank transfers to the Builder totalling $80,000, using the account details provided in these invoices.
In February 2024, the parties fell into dispute in relation to further payments for works carried out at the Property. The parties communicated in relation to the dispute by email.
On 24 April 2024, the Builder sent a consolidated payment claim by email to the Address provided by the Owners, in the sum of $277,007.16.
On 23 May 2024, the Builder’s solicitors sent a notice of intention to apply for adjudication (under s 17(2) of the Act) by post, and also by email to the Address.
The Owners gave asserted that they were not aware of these documents until their solicitor drew them to their attention on 11 June 2024.
Issue
The key issue before the Court of Appeal was when service of the payment claim and s 17(2) notice occurred – were the Owners validly served with the documents on the date the emails were sent to them, or the date the emails were drawn to their attention?
Decision
The Court of Appeal found that that service was effective upon the date the documents were emailed to the Owners, meaning the adjudication was application was not premature and the Owners were liable to pay the Builder the full amount of the payment claim in the sum of $277,007.16.
Central to the Court’s decision were two key findings regarding the operation of the Act.
Implied Specification of Email
An email address may be “specified” for the formal service of documents under the Act (payment claims and schedules) through a course of conduct such as consistent use of an address for paying claims or related correspondence – even in the absence of an express agreement.
Given the Owners had used the email address for communications involving invoices explicitly expressed to be payment claims under the Act, and subsequently paid those claims, they had impliedly specified the email address for service of payment claims and the related s 17(2) notices.
Time of electronic service
If an email address has been specified, service is complete when the document is capable of being retrieved by the recipient, regardless of whn (or if) ether the recipient actually opened or read the email.
How we help
The decision in this case serves as a timely reminder that careful management of communications, documentation, and timelines may could mean the difference between being able to dispute a claim, and being immediately liable for payment.
Specialist Building and Construction Lawyers can play a crucial key role in helping businesses and individuals avoid the kind of losses seen in this case.
Our lawyers provide clear, practical guidance on serving and responding to notices and payment claims, helping principals, contractors and subcontractors understand their potential contractual and statutory liabilities.
Our team also advises on contract administration, helping you put in place robust systems for receiving, reviewing, and managing claims. By keeping your processes watertight and deadlines under control, we protect your rights and minimise the risk of unnecessary losses.
The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.
