Demex Pty Ltd v John Holland Pty Ltd

This case considered when service of a payment claim by email was effected under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“Payment Act”). The applicant relevantly sought full payment of its claim for works performed under a construction contract on the basis that the respondent had failed to deliver a payment schedule in the time specified by the Payment Act. The application turned upon the applicant’s argument that the claim had been served when it was sent by email to the respondent on a Saturday afternoon. The respondent resisted the application on grounds including that service was only effective when the email was accessed and read on the following Monday. Crowley J found that the proper interpretation of the Payment Act provides that service is effected when the email is received at the nominated email address, not when it is accessed and read. Notwithstanding, there being no evidence of when the respondent received the email, the application was dismissed.

Crowley J

25 November 2022

Background

The applicant, Demex Pty Ltd (“Demex”), and the respondent, John Holland Pty Ltd (“JH”) were parties to a construction contract concerning works in NSW. [2]. On Saturday 25 September 2021, Demex emailed JH a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“Payment Act”), claiming approximately $5.3 million for work performed under the contract (“claim”). [5]. On 12 October 2021, JH issued a payment schedule in response, assessing Demex’s entitlement at closer to $1.2 million (“schedule”). [7]. Demex issued an invoice for the lesser amount and was paid in full in late October 2021. [7]–[8].

Demex later sought full payment of its claim, arguing that JH had not issued its schedule within 10 business days of being served with the claim, and so was liable for the full amount under ss 14 and 16 of the Payment Act. [11]. Demex’s application turned upon its argument that, by operation of s 13A Electronic Transactions Act 2000 (NSW) (“Transactions Act”), the claim had been served on Saturday, 25 September 2021. [50], [52]. To prove service on that date, Demex argued inter alia that the Court could take judicial notice of the fact that emails are a means of instantaneous electronic communication, and otherwise sought to rely upon an evidential “presumption of regularity”. [54].

JH resisted the application on grounds including that its schedule was provided within 10 business days after the claim was served for the purposes of the Payments Act. [57]. In support of that contention, JH relevantly argued first, that Demex had not shown, for the purposes of the Transaction Act, that JH had received the email at or about the time it was sent. [58]. Second, and in any event, JH asserted that the Transactions Act did not apply, because the parties had agreed that a document sent by email would only be received on a business day. [59]. Third, and similarly, JH argued that the act or event of service only occurred on Monday, 27 September 2021, when the email was opened and read. [60]–[65].

Timing of service

Contrary to JH’s third argument, Crowley J considered that service was effected under the Payments Act when the claim was received at JH’s email address, rather than when JH became aware of it. [67]. Although ss 13, 14 and 31 of the Payment Act did not expressly specify when service by email is taken to be effective, his Honour reasoned that their proper interpretation supports that conclusion. [70]–[75]. That interpretation was also consistent with s 13A of the Transactions Act. [76]–[77].

Similarly, the proper construction of the contract did not provide that service was only effected when JH accessed, opened or read the email, or necessitate that service take place on a business day. [78]–[88]. The Payment Act likewise did not require that service be effected on a business day. [89]–[90]. The finding that service was effected when the claim was received was also consistent with authorities that had considered the service of documents by email in a variety of contexts. [91]–[109].

Proof of service

Justice Crowley noted that there was no direct evidence of the actual time that the respondent had received the email attaching the claim. [111]. While his Honour was prepared to take judicial notice of the fact that email is an electronic form of communication, that did not relieve Demex of the onus of proving that the claim was received on 25 September 2021. [128]. The fact and timing of emails was not “of a class so generally known as to give rise to the presumption that all persons are aware of it.” [138]–[139].

His Honour took the submission regarding a presumption of regularity to be referring to the common law presumption of accuracy with respect to readings or measurements produced by certain scientific or technical instruments. [141]. After considering authorities on the point, his Honour concluded that the date and time stamp on the email could not, without more, be presumed to accurately prove the date and time that the email was received by JH. [142]–[148].

Disposition

In the premises, having regard to the evidence and the “draconian legislation [which] requires strict compliance”, Crowley J did not consider that Demex had proven that JH had received the email on 25 September 2021, and so dismissed the application with costs. [154]–[160].

B McNamara