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The Times, they are a'changin - Using Electronic Document Management Systems?

Editor's comment: It is quite common for even the biggest contractors to require subcontractors to use an electronic document management system for everything BUT payment claims that are required to be served by hand or by snail-mail. It is a patent attempt to, at the least, frustrate seamless payment processes.

In this case the judge would not have a bar of it, and wondered, quite reasonably, why payment claims should be treated differently from other notice. There was some good fortune here too, since the Developer's representative had seen and acted on the payment claim, so the judge could see that it had indeed been received.

Even so, claimants should be very careful about the form of service of payment claims and other notices under a contract or subcontract.

In a recent subcontract I reviewed, the subcontractor(s) are required to copy EVERY item of correspondence, in hard copy, within 24 hours of the email correspondence or notice. So much for modern efficiency. In this case everything has to be done twice. The subcontractor was advised to develop a procedure for an administration person to be copied in to every email for printing and posting at the end of every day.

The following post is from B McNamara for the Queensland Law Reporter, edited for general readability.

(The Trust Company (Australia) Ltd atf the WH Buranda Trust v Icon Co (Qld) Pty Ltd [2019] QSC 87.)

[Note that the applicant and the respondent in the Court case are the opposite of the adjudication - i.e., the respondent is the builder, the claimant is a developer. For the purpose of simplicity I have adopted Developer and Builder]

In this case the Builder delivered a BCIPA payment claim to the Developer's contractual representative through an agreed electronic document management and control system.

After unsuccessfully challenging the claim at adjudication, the Developer sought a declaration that the decision was void because the Builder had not properly served the applicant with the claim for the purposes of BCIPA.

Justice Applegarth held that upon the proper construction of the contract and in the circumstances at hand, the Builder had properly served the applicant with the claim.

The matter turned upon whether BCIPA required service of the claim to a physical address or permitted service by EDMS, and whether BCIPA required service to be effected upon the applicant, rather than upon its representative.

The Decision

Section 103(1) of the BCIPA allows a notice or other document under BCIPA to be served “in the way if any, provided by the ... contract”, which shifted the question of service to the proper construction of the contract.

Justice Applegarth found that the contract differentiated between BCIPA payment claims and other notices. It was not objectively apparent why the contract would require service of BCIPA payment claims to a physical address – in this case the applicant’s solicitors – when the applicant’s representative was responsible for reviewing those claims.

The contract required service of other BCIPA notices to the principal’s physical address, and otherwise provided a means for the applicant to deal with claims in a timely manner contemplating the delay related consequences that arise under BCIPA.

His Honour noted that this construction also gave the contract a “business-like” operation, where the Developer’s preferred construction would have instead bifurcated the service and handling of a single document.

Although the contract contained a general prohibition on service by email, Justice Applegarth found that service via the agreed EDMS complied with the contractual mode of delivery and was not service by email per se.

Nevertheless, his Honour accepted that, because the EDMS only notified a party that a claim was available for download, service may not have actually been effected, and it was therefore necessary to consider whether service had been effected in a manner not contemplated by the contract.

Section 103(2) of the BCIPA makes it clear that in addition to service in accordance with the contract, service by other means permitted at law is also valid. While s.17 of the BCIPA requires that the person liable to pay the relevant claim must receive it, that provision operates in the context of the general law and recognizes service upon an agent as valid.

As the Developer’s representative had in fact accessed the claim, Justice Applegarth held that service had been effected. In the result, the application was dismissed with costs.

B McNamara - Queensland Law Reporter 19/4/2019

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