Recently, the Supreme Court of Victoria handed down a decision that found a payment claim under the Building and Construction Industry Security of Payment Act 2002 (the Act) was not delivered via a cloud-based information system until it was ‘received and read’ by the respondent.
In the same decision, the Honourable Justice Stynes also shed light on the minimal requirements a payment schedule must satisfy to be valid under the Act.
In this case note, we look specifically at the findings by Her Honour in respect of the validity of the payment schedule in BCS Infrastructure Support Pty Ltd v Jones Lang Lasalle (NSW) Pty Ltd [2020] VSC 739 (BCS v JLL).
For the Court’s decision in respect to the delivery of a payment claim served through a cloud-based information system, read our recent Construction and Infrastructure case note: Be wary of payment claims served through cloud-based information systems.
Background
On 1 December 2019, the defendant, Jones Lang Lasalle (NSW) Pty Ltd (JLL), created a work order named ‘DUMMY1000600’ on the cloud-based information system used by the parties named Corrigo.
On 16 January 2020, the plaintiff, BCS Infrastructure Support Pty Ltd (BCS) manually entered into Corrigo, in relation to ‘DUMMY1000600’, invoice details for the sum of $3,447.13.
At the same time, BCS also uploaded to Corrigo, in relation to ‘DUMMY1000600’, a number of separate documents including a tax invoice endorsed under the Act in the amount of $616,517.64 (the Payment Claim). While the Payment Claim was available to JLL to access, download and read from 16 January, the Payment Claim was not opened and read by JLL until 11 February 2020.
On the day prior to the Payment Claim coming to the attention of JJL (being 10 February 2020), BCS emailed JLL a letter of demand which stated, among other things, that:
- on 2 December 2019 and 16 January 2020, BCS had issued payment claims pursuant to the applicable security of payment legislation for the collective sum of $1,976,324.94 (including GST);
- as JLL had failed to issue any payment schedules within the time required under the applicable legislation and failed to pay the entire amount claimed, JLL had become liable to pay the outstanding amount in the sum of $1,292,364.69; and
- if JLL failed to comply with BCS’ demands for payment, BCS would take steps necessary to protect its interests including, applying for summary judgment to recover the debt.
On 18 February 2020, JLL responded to the letter of demand (the Alleged Payment Schedule). JLL submitted that the Alleged Payment Schedule constituted a payment schedule under the Act.
Payment schedule can identify the relevant payment claim indirectly
Section 15(2)(a) of the Act states that a payment schedule ‘must identify the payment claim to which it relates’.
In BCS v JLL, the Alleged Payment Schedule does not identify the Payment Claim, or in fact any other payment claim specified in the letter of demand.
Her Honour found that this omission was not fatal to the validity of the Alleged Payment Schedule because the Alleged Payment Schedule referred to the letter of demand and the payment claims contained within it, as well as the figure of $1,292,364.69, making it sufficiently clear that all five payment claims are disputed.
Payment schedule can indicate a scheduled amount by inference
Section 15(2)(b) of the Act states that a payment schedule ‘must indicate the amount of the payment (if any) that the respondent proposes to make’.
In BCS v JLL, the Alleged Payment Schedule did not expressly identify the amount of payment that JLL proposed to pay in relation to the Payment Claim. In making her decision, Her Honour found that this was not fatal to the validity of the alleged payment schedule as a ‘nil’ amount can be inferred from a payment schedule by way of expressing an intention not to accept the invoice and by not paying the claimant any amount.
Lessons learnt
A payment schedule may still be valid under the Act even though it does not directly refer to the relevant payment claim or expressly indicate the amount which the respondent proposes to pay to the claimant.
This decision further emphasises that the threshold requirements which a payment schedule must satisfy under section 15 of the Act will not be approached by the Court in an overly technical manner.
More information
To learn more about the decision, or for advice, please contact Darren Cain, Principal Lawyer, on (03) 8600 8835 or dcain@kcllaw.com.au, or Dominic Brown, Associate, on (03) 8600 8851 or djbrown@kcllaw.com.au.
Author
This Construction and Infrastructure update was authored by Dominic Brown, Associate.
Note: This update is a guide only and is not intended to constitute legal advice.