Are you being served

• Introduction
• Dispute over service of the payment claim
• Court rules that the payment claim was validly served
• Key takeaways

Introduction

The Queensland Court of Appeal has made determinations in respect of service provisions under the security of payment regime in relation to a dispute over non-payment of a payment claim, in RE Oakey Pty Ltd v Canadian Solar Construction (Australia) Pty Ltd [2024] QCA 202.

The decision largely dealt with issues regarding service of payment claims in construction projects under Australia's security of payment legislation. The case highlights the practical approach taken by Courts in applying the service provisions of the legislation.

The Court determined that a payment claim was properly served on the principal as it had been received and came to the attention of a person with authority to deal with it under the contract.

Dispute over service of the payment claim

The dispute in Re Oakey concerned whether a payment claim issued by the contractor on a solar farm project had been validly served under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act).

The contractor sent a payment claim by email to a key representative of the principal (Principal's Representative), along with several representatives of the project manager. The email was not delivered to the Principal's Representative at the time it was issued because his email address had changed.

The principal argued that the payment claim had not been validly served because it was required to be delivered to the Principal's Representative. The contractor argued that the payment claim did not need to be received by the Principal's Representative, and it was sufficient that it was received other representatives of the project manager.

The principal failed to issue a payment schedule in response to the payment claim within the required timeframe under the BIF Act. The contractor then applied to the Court for payment of the full amount of the payment claim.

Court rules that the payment claim was validly served

The Court of Appeal upheld the primary judge's decision that the payment claim had been validly served, and dismissed the principal's appeal.

Method of service

The principal claimed that contract required the payment claim to be sent to the Principal's Representative. The contractor argued that the payment claim had been 'given' (i.e. the language used under s. 75 of the BIF Act) to several representatives of the project manager, who had express authority under the contract to act as agent for the principal, including authority to deal with payment claims. The evidence of the representatives of the project manager was that, as the Principal's Representative had been copied into the email (albeit by way of a redundant email address), they assumed that the Principal's Representative would action the payment schedule.

The Court found that the contract did not require payment claims under the BIF Act to be sent in a specified way. Absent any requirement in the contract, a payment claim is properly to be taken to have been given if it has actually been received and come to the attention of a person with authority to deal with that document under the contract. It does not matter whether or not the contractor has complied with a (non-mandatory) method of service under the contract.

Representatives of the project manager who received the payment claim were authorised to receive payment claims and had authority to deal with them under the contract. Therefore, the payment claim had been validly given to the principal.

Other issues

The principal also argued that the payment claim was not properly served because the parties had adopted a common assumption that payment claims had to be sent to the Principal's Representative. The Court dismissed this argument, finding that there was no such common assumption between the parties.

The Court also dismissed arguments by the principal that the contractor had engaged in misleading or deceptive conduct, and unconscionable conduct, by purporting to send the payment claim to an invalid email address.

Key takeaways

It is well-established good practice that principals on construction projects must ensure that they respond to payment claims within time. However, the decision reinforces that each recipient to a payment claim should take responsibility for ensuring that a payment schedule is sent within time. Assumptions should not be made by a recipient as to whether it is authorised to receive payment claims or not, and a cautious approach should be adopted to ensure a payment schedule is sent within time.

* Norton Rose Fulbright Australia acted for the successful contractor, Canadian Solar Construction (Australia) Pty Ltd, in the primary and appeal proceedings.