In BCS Infrastructure Support Pty Ltd v Jones Lang Lasalle (NSW) Pty Ltd [2020] VSC 739, Stynes J considered the service of payment claims via a cloud network, and when the clock starts running regarding service on the respondent. In doing so, her Honour also clarified whether there is a need to specify a sum in a payment schedule, where the respondent does not intend to make payment in accordance with a claim.

Facts

The plaintiff, BCS, had a contract with Qantas for works to be performed in airports across Australia.  The defendant, JLL, then took over this contract from Qantas.  Under the contract, BCS was responsible for the maintenance of a number of structures in the airports.

Following the commencement of the relationship with JLL, a new contract was issued to BCS, which BCS did not sign, but JLL did.  That contract provided that BCS would work for lesser rates than it did for Qantas.

JLL contended that an agreement was reached, whereas BCS disputed this.  Despite that, JLL continued to pay BCS in accordance with the earlier rates.  Following this, JLL advised BCS that it would withhold funds for overpayment.  BCS disputed JLL’s entitlement to do so.

The parties used Corrigo as a cloud software, which enabled them to list the works to be completed, serve and pay invoices.  On 16 January 2020, BCS uploaded a payment claim to Corrigo.  On 10 February 2020, BCS emailed JLL a letter of demand regarding the payment claim uploaded to Corrigo on 16 January.  JLL did not see the payment claim until 11 February 2020, when it opened up the relevant account in Corrigo and read it.

On 18 February 2020, JLL responded to the letter of demand, which it contended was the payment schedule in response to the payment claim. BCS argued that JLL failed to pay the amount claimed, and failed to provide a payment schedule in response to its payment claim, as required by the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act).  BCS therefore claimed that JLL needed to pay it the sum subject to the payment claim, in accordance with s 16(2)(a) of the SOP Act.

Issues

There were three issues for the court to determine:

  • Whether the contract was a construction contract for the purposes of the SOP Act;

  • If the contract was considered to be a construction contract, when service of the payment claim occurred; and

  • Whether a payment schedule was served within 10 business days and whether JLL’s letter from 18 February 2020 satisfied s 15 of the SOP Act.

“Stynes J considered the authorities regarding service, which provide that service is more likely to be effected where the addressee has received the payment claim, rather than focussing on the mode of delivery”

Held

Issue 1

Stynes J considered that although the scope of BCS’s work included maintenance of buildings or structures forming part of the land, it was considered to be construction work, therefore fulfilling the requirements that it was subject to a construction contract with JLL. That is because the structures which BCS worked on were so integral to the buildings, that they were considered to be ‘annexed’ to the land, which meant it was a building for the purposes of the SOP Act.[1]

Issue 2

In regards to the second issue, JLL contended that under the SOP Act and the contract, service was meant to occur when the payment claim came to its attention, which was 11 February 2020, when it opened the invoice in Corrigo.

On the other hand, BCS contended that service was effected when the payment claim was uploaded to Corrigo, because it was capable of being retrieved by JLL at that time. It therefore contended that the payment claim was served on 16 January 2020.

Stynes J considered the authorities regarding service, which provide that service is more likely to be effected where the addressee has received the payment claim, rather than focussing on the mode of delivery, because once the notice comes to the attention to the person for whom it is intended, it can then be dealt with.[2] Accordingly, JLL was held to have been served the payment claim on 11 February 2020 because that is when the attachment was opened by JLL, which put it on notice of the payment claim.[3] Therefore, the upload of the payment claim by BCS on 16 January 2020 to Corrigo was not considered to be the date in which the payment claim was served.

Issue 3

The third issue considered whether JLL’s letter dated 18 February 2020, providing a response to BCS’s letter of demand, was a valid payment schedule for the purposes of the SOP Act. Stynes J was satisfied that the letter was a valid schedule because:

  • It generally made reference to the payment claims by responding to the letter of demand and referred specifically to the sum claimed;[4]

  • A scheduled amount although not expressly indicated, could be inferred that it was nil because BCS made it clear that it did not intend to make a payment in accordance with the payment claim;[5] and

  • In accordance with s 15(3) of the SOP Act, the letter gave sufficient reasons for withholding payment because it made reference to the dispute about the rates payable between the parties under the new contract, despite the fact that BCS did not believe that there was a dispute, as all that was required was for the respondent to indicate their reasons for withholding payment.[6]

In light of that, her Honour found that JLL’s letter was delivered within 10 business days of service of the payment claim, satisfying the requirements of s 15 of the SOP Act.

“The date of upload will not necessarily be considered to be the date of service unless the recipient opens the claim on that date”

Comment

Where a claimant serves a payment claim on a respondent via a cloud network, the date of upload will not necessarily be considered to be the date of service unless the recipient opens the claim on that date. The date of service will instead be when the respondent opens the document in the cloud, and that is the point in time in which time will start to run for a defendant to issue a payment schedule under the SOP Act.

Furthermore, the decision also confirms that when a court is assessing the validity of a payment schedule, a practical approach will be adopted where some lack of formalities within the schedule may be accepted by the court.

If you have a dispute about payment claims under the SOP Act, please feel free to contact us for advice.

[1] BCS Infrastructure Support Pty Ltd v Jones Lang Lasalle (NSW) Pty Ltd [2020] VSC 739, [85]-[101].
[2] Ibid, [111]-[112].
[3] Ibid, [119]-[123].
[4] Ibid, [151]-[159].
[5] Ibid, [160]-[162].
[6] Ibid, [169]-[175].
The contents of this article are intended to provide general information and commentary only. It is not intended to constitute legal advice, and has been prepared based on applicable law at the date of publication (18/0/2021).