In Method Constructions Australia Pty Ltd v ABI Investment Holdings (Melbourne) Pty Ltd  VCC 1797, Judicial Registrar Burchell considered whether a payment claim delivered by a courier was a valid payment claim under a construction contract.
The plaintiff, Method, and the defendant, ABI, entered into a contract for the design and construction of townhouses, carparking and landscaping works at 1289 Burke Road, Kew.
The contract provided for a range of ways in which notices could be served, one of which was delivery to the address of the addressee set out in the contract. In doing so, the notice was considered to be given and received when delivered. The other relevant terms of the contract included:
- Within 10 days of receipt of a payment claim, the superintendent was to assess the payment claim and issue a payment certificate stating the amount to be paid;
- Within 20 business days of receipt of a payment claim, or within 10 business days of issue of a payment certificate, the defendant was to pay the plaintiff the amount equivalent to the payment certificate;
- Liquidated damages were $1,250 per day.
Practical completion was achieved on 21 November 2019, 71 days after the date for practical completion prescribed in the contract. Method owed $87,500 in liquidated damages, and was required to undertake further works.
“Method pointed towards the courier’s records that it used to deliver
the payment claims as evidence of service of the payment claims”
Between 7 February 2020 and 21 April 2020, Method alleged that a courier served a payment claim dated 31 March 2020 on ABI. It served a further tax invoice on 20 April 2020 via courier. In response to the 20 April invoice, ABI issued a payment schedule on 28 April 2020 providing for a scheduled amount of $0 because of a lack of a reference date, failure to meet the requirements of a payment claim and defects in the works.
This resulted in Method issuing a notice to suspend works due to ABI’s failure to respond to the 1 April payment claim. ABI contended that it had not received the payment claim at either its Kew or Balwyn addresses, that the Kew address was not a valid address for service, that Method had issued a payment claim incorporating amounts already certified by the superintendent (but had not yet been paid by ABI), referring to ss 14(4) and 14(5) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act), in respect of the remaining balance, the superintendent considered payment claims made after 27 February 2020 invalid because they would exceed the 3 month period of the reference date.
On the other hand, Method pointed towards the courier’s records that it used to deliver the payment claims as evidence of service of the payment claims, as well as ABI’s failure to challenge this. In support of submitting the claim to the Kew address, Method submitted that the Kew address was a valid address for service as it was provided for in an Annexure to the contract.
The court had to consider what the valid address for service was and whether service was validly effected on 1 April 2020, being the date the 31 March 2020 payment claim was served by courier.
The court considered s 16(2)(a) of the SOP Act, which provides that a claimant may recover from a respondent any unpaid portion of an amount claimed where the respondent fails to issue a payment schedule within time in response to the claim. The court noted the limited defences available to a payment claim under the SOP Act, none of which were available to ABI in the circumstances.
In doing so, it had to consider whether the payment claims were served on either the Kew or Balwyn addresses for ABI. This called into question directly contradictory evidence from each party, where Method submitted that it had proven that the claims were served through the courier’s records, whereas ABI submitted that it had never received anything from the courier, whilst also relying on CCTV footage recently installed. Ultimately, Burchell JR accepted Method’s submissions and was satisfied that the payment claim was validly served because the contract provided for the address, and because previous certificates had been delivered to Kew, Method was entitled to believe that the Kew address was the correct address for service. Further, because of the evidence of the courier and the contractual provision providing that a notice must be given and received, which would be considered delivered upon delivery, allowed Burchell JR to come to the conclusion that the documents were delivered to ABI.
This is a welcome judgment for parties operating in the construction industry issuing payment claims. It confirms that the courts will seek to interpret a construction contract and its interaction with the SOP Act in a manner that promotes the recovery of progress payments for the performance of work.
The court also considered whether the payment claim was invalid because of a lack of a reference date. Read the full judgment here.
Charlotte Sinclair is a formidable litigator with a focus on building, construction and major torts litigation.