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Service of notices and claims: more than just "sticking it to them"

Construction Law News | March 2017

The Building and Construction Industry Security of Payments Act [NSW] is intended to provide building and subcontracting businesses with a cheap, quick way to recover debts due to allow a building site to continue to operate and meet costly timeframes. In order to achieve this objective the legislation imposes mandatory time frames for the service of invoices (Payment Claims) and responses to Invoices (Payment Schedules) and mechanisms to resolve disputes and recoup payment.

A by-product of these mandatory provisions in the Act is the argument over what constitutes proper “service” of notices and claims to comply with the mandatory time frames.

In a recent case the Supreme Court determined that service on a USB device of an adjudication application to resolve a dispute over a payment claim did not constitute service in writing as is required under Section 17 of the Act.

Parkview Constructions Pty Limited -v- Total Lifestyle Windows Pty Ltd t/a Total Concept Group [2017] NSWSC 194

In this case Parkview Constructions Pty Limited (“Parkview”) succeeded in their application to the Supreme Court of NSW to quash an adjudication determination which had been made against them under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOPA”).

Total Lifestyle Windows Pty Ltd t/as Total Concept Group (“Total Concept”) issued Parkview with a payment claim (“PC”) on 11 October 2016 pursuant to section 13(1) of SOPA. In response to this PC, Parkview issued Total Concept with a payment schedule (“PS”) on 25 October 2016, pursuant to section 14(4)(b) of SOPA.

Total Concept had until 8 November 2016 to submit their adjudication application (“Application”) to an authorised nominating authority (“Authority”). At 1.29pm on 8 November 2016, Total Concept uploaded their application to the Authority’s online portal (“1st Application”). The 1st Application was not the version which Total Concept intended to rely on. An alternative version of the Application which Total Concept did intend to rely on was uploaded to the authority at 2.11pm on that same day (“2nd Application”).

On 8 November 2016 Total Concept express posted a copy of the 2nd Application on a USB device to Parkview. Parkview received the USB in their post box on 9 November 2016 and only accessed the files on the USB on 11 November 2016. Parkview lodged their adjudication response (“Response”) on 16 November 2016. Section 20(1) of SOPA requires an adjudication response to be lodged 5 business days after receiving an adjudication application.

The Adjudicator determined that Total Concept’s Application was served on 9 November 2016 and disregarded Parkview’s Response on the basis that is was served out of time. As a result Parkview had to pay the amount in the PC to Total Concept.

Parkview commenced proceedings in the Supreme Court on 14 December 2016 seeking to quash the Adjudicator’s determination and claiming that:

  1. the Adjudicator had wrongly disregarded their Response; and
  2. the Application lodged by Total Concept (1st Application) differed from the Application served on Parkview (2nd Application), which resulted in the Adjudicator taking into account material which was not properly part of Total Concept’s Application.

The Court found in Parkview’s favour and ordered that the adjudication determination be quashed. As a result of this decision, the court has imposed permanent injunctions restraining Total Concept from relying on the adjudication determination.

In these proceedings the court considered whether delivery of a USB device containing an adjudication application was sufficient to constitute service for the purposes of section 17(5) of SOPA. Section 17(5) of SOPA requires that a copy of an adjudication application must be served on respondent concerned. The court held that delivery of the USB device in this case was not sufficient as service in writing for the purposes of that section.

The reasoning adopted by the court in these proceedings may also apply to the service of other documentation under SOPA, including payment claims, payment schedules and adjudication responses.

There can often be large amounts of information contained in adjudication applications and responses under SOPA and it can be tempting for claimants and respondents to lodge and serve material by uploading it onto a USB device or a cloud-based file transfer system. Given the time limitations imposed under SOPA and in most construction contracts, it is important to ensure that you are aware of any service or timeframe provisions and that you strictly adhere to them.

Forum Law can advise and assist builders and subcontractors with all aspects of building and construction law including the NSW Home Building Act. We are on the legal panel of the Housing Industry Association of NSW. We provide an obligation-free 30-minute phone chat on (02) 9560 3388 or you can visit us in the Italian Forum in the inner west Sydney suburb of Leichhardt.

Forum Law is an active member of several reputable law and industry associations. We have recently obtained ISO9001 accreditation.