NSW appeal ruling on WA Security of Payment Act shines light on need for contract provision over sending online link

The recent decision emphasises how the ‘one business day’ requirement for giving a copy of an adjudication application is a jurisdictional issue - and that emailing a link to document is not “giving” a document, as the Building and Construction Industry (Security of Payment) Act 2021 requires.

How the dispute came about

The dispute concerned a design and construct contract between Reward Interiors and Tackelly No 8 for the refurbishment of a hotel in the Perth central business district.

Following the termination of the contract, Reward lodged a payment claim under the act, claiming A$10,623,382.70 (approx. US$7.5 million) and the return of bank guarantees.

This claim was met with a negative payment schedule, scheduling A$1.35m payable to Reward. This disparity motivated Reward to lodge an adjudication application. On this initial application, the adjudicator found in Reward’s favour. However, after this initial determination, Tackelly made an adjudication review application under the act.

Tackelly was required to give a copy of the review application to Reward within one day. In order to do so, Tackelly provided via email a link to download the documents. The adjudicator determined that he lacked jurisdiction to determine the review application because it had not been “given” to Reward – but the primary judge set this decision aside.

It was this action - of providing the document via Mimecast - that was the subject of the Court of Appeal’s decision.

The two questions raised concerned whether the requirement to give a copy of an application under the act was jurisdictional; and whether the documents had been “given” in the sense defined by the act.

The ruling

As to jurisdiction, the Court of Appeal determined where a copy of an application was not given within the meaning of the act, an adjudicator will lack jurisdiction to determine an application.

President Ward considered that the nature of the requirement for ‘giving’ in the legislation favours the view that the requirement is a jurisdictional one. The mandatory language of the provision, and the “carefully calibrated timeframes” baked into the legislation, each tie back to the giving of the application to the respondent. In this sense, the process in the act ‘hinges’ on the giving of the application.

Also influential to the judge’s view was the underlying policy of the act. The security of payment regime aims to deliver an expedited process and prompt payment. A harsh interpretation of the operation of this mechanism was said to promote this policy as it narrowed the opportunity for payment disputes under the act.

This combination of factors resulted in the finding that the requirement was jurisdictional and essential to the adjudicator finding jurisdiction.

The court’s reasoning was split with regard to the service issue, but the majority found that a Mimecast link email did not constitute “giving” for the purposes of the act.

Justice Free reasoned that in providing a link to a repository, the application had not been given and that instead Reward had been given a means of access – distinguishing between attaching a document to an email and merely emailing a link.

What this means for you

Adjudicators and parties know that the one business day timing for service under the act is jurisdictional. The Victorian version of the act requires an adjudication application to be “served” within 3 business days. While this has yet to be tested by the relevant courts, the Court of Appeal’s reasoning in this decision is persuasive to suggest that the Victorian requirements for service are also jurisdictional.

The New South Wales version of the act requires an adjudication application be “served”, but does not provide a time period within which to do so. It is commonplace in New South Wales for adjudication applications to be lodged and not served for a period of time, to allow for commercial negotiations. Arguably, this decision does not displace that practice.

Practically, electronic service remains open but only if properly authorised by the legislation or contract. Service may still be effected if documents are provided in a way that is not authorised but only when the documents have actually been received – i.e. accessed and downloaded – but by that time it may be too late. The practical lesson is to write the method into the contract at the outset: a well-drafted clause providing for service via a nominated secure portal or repository will be given effect by the courts. 

The legislation needs to catch up so that the regulations cover Mimecast and other large file repositories.