In MGW Engineering Pty Ltd t/a Forefront Services v CMOC Mining Pty Ltd [2021] NSWSC 514, the NSW Supreme Court found that a provision in a contract that deemed that service of a payment claim had occurred the day after the payment claim had actually been served was a valid and did not breach section 34 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA).
This decision means that a party can dictate that if a document is served outside of ordinary business hours, it will be deemed to have been served the next day.
Facts
On 3 February 2021 at 5.15pm, an employee of Forefront Services (Forefront) personally delivered four SOPA payment claims totalling $6,161,020.35 (total amount) to an employee of CMOC Mining Pty Ltd (CMOC) at the Northparkes Copper and Gold Mine (Mine). On 4 February 2021, Forefront electronically issued the payment claims to CMOC using the ‘Aconex’ software platform. However, CMOC did not serve its payment schedule upon Forefront until 18 February 2021; that is, more than 10 business days after 3 February 2021.
Issues
The Court had to decide whether the payment claims were served on CMOC on 3 February 2021 or on 4 February 2021, as contended by CMOC, pursuant to section 31 of the SOPA. If the Court determined that the payment claims were served on 3 February 2021, then CMOC would be entitled to the total amount. However, if the Court found that the payment claim was served on 4 February 2021, then the payment claims would be been met by effective payment schedules scheduling $180,912.05.
Key provisions
Critically, the Court was required to consider the operation of section 31(1) of the SOPA, which provides that a document may be served on another person:
‘(a) by delivering it to the person personally, or
(b) by lodging it during normal office hours at the person’s ordinary place of business, or
[….]
(e) in the case of service by a party to a construction contract on another party to the construction contract—in the manner that may be provided under the construction contract.’
Under section 31(3) of the SOPA, this section can be applied in conjunction with other statutory provisions that relate to the service of documents, like section 109X Corporations Act 2001 (Cth). Under section 109X, service can be effected if the documents are left at or posted to the ‘company’s registered office‘, or are personally delivered to a ‘director of the company‘.
Finding
Stevenson J held that the payment claims were served on 4 February 2021 and the payment schedules were effective for the following reasons.
The payment claims were not delivered to CMOC ‘personally‘ on 3 February – s31(1)(a)
Forefront contended that they ‘personally‘ served the payment claims on CMOC on 3 February 2021, pursuant to section 31(1)(a) of the SOPA. However, at [37], His Honour found that the payment claims were not ‘personally‘ delivered to CMOC until 4 February 2021. This was because Forefront contravened section 109X(1) Corporations Act 2001 (Cth), as the Mine was not CMOC’s registered office and the CMOC employee that received the claims was not a director of the company.
Further, clause 47.1(b) of the Contract provided that any notice served on CMOC ‘must‘ be marked to the attention of ‘the Company Secretary‘. However, the payment claims were marked for the attention of ‘the Company’s Representative‘. At [27], His Honour contended that the Payment Claims could not be considered to have been personally served on CMOC unless those documents came to the attention of the Company Secretary or Company’s Representative. Since they did not attend the Mine until 4 February 2021, His Honour concluded that the payment claims were not ‘personally‘ delivered to CMOC until that date (at [37]).
The payment claims were not ‘lodged‘ with CMOC ‘ordinary place of business’ during ‘normal office hours‘ – s31(1)(b)
In the alternative, Forefront asserted that they lodged the payment claims at CMOC’s ordinary place of business during normal office hours on 3 February 2021, pursuant to section 31(1)(b) of the SOPA . However, at [43], His Honour held that payment claims were not genuinely ‘lodged‘ with CMOC, as they were not brought to ‘to the attention of the relevantly responsible person‘. Simply leaving the documents with an employee is not enough. Further, the alleged service did not occur within CMOC’s normal ‘office hours‘ of 8am to 5pm, which His Honour held were distinct from the Mine’s standard ‘operating‘ hours of 8am to 6pm.
The payment claims were not served ‘in a manner provided by‘ the Contracts on 3 February 2021 – s31(1)(e)
Forefront contended that the payment claim was served ‘in a manner‘ prescribed by the Contract on 3 February 2021, pursuant to section 31(1)(e) of the SOPA. Clause 47.2 of Contract provided that if the documents are delivered to the Mine after 4pm on a particular Business Day, Notice will deemed to have been given ‘at the commencement of business on the next Business Day‘. Since the payment claims were served after 4pm on 3 February 2021, Stevenson J held that they were therefore given to CMOC on 4 February 2021, pursuant to clause 47.2. At [80] His Honour noted that clause 47.2 does not abrogate or modify section 31 of the SOPA. If Forefront had satisfied the requirements of section 31(a), (b), (c) or (d), then service would have been effective despite the fact that it breached clause 47.2.
Implications
While parts of the decision are fact specific, the decision supports the drafting in many contracts that service outside of ordinary business hour is effective the following day. Given that His Honour found that the deeming provisions in relation to service did not breach section 34, the question remains open as to whether it would be possible to deem service had occurred a number of days later and not just the next business day.
It is not known whether an appeal will be lodged in relation to the decision.
This article was written by Paul Deschamps, Partner, David Jury, Partner, Lucas Keogh, Partner and Gabriella Possati, Solicitor.
