BIF ACT SERIES CHAPTER 3 PROGRESS PAYMENTS – BACK TO BASICS ADJUDICATION – #2
This is the second in a series of articles discussing the ABC’s of the adjudication process and you’re in luck, this one is our shortest yet (jokes). If you missed our first article, you can catch up here.
As before, the words that appear in italics in these articles have special meaning. In most cases they will be words or phrases that are specifically defined in the Building Industry Fairness (Security of Payment) Act 2017 (“BIF Act”).
Throughout the adjudication process under the BIF Act, there are specific actions that must be taken within strict time frames by the claimant or the respondent, relevant to their respective roles in the process. In the first article we mentioned that a payment schedule must be served within 15 business days. The term ‘business day’ is a defined term in the BIF Act and knowing what constitutes a business day and properly calculating time frames for each of the steps in the adjudication process is critical to ensure the strict time frames are complied with. No less critical is the proper service of the documents required to be served as part of the adjudication process. Serving a document improperly or outside the time frames permitted, be it a payment claim, payment schedule, adjudication application or adjudication response, can lead to an adjudicator finding the adjudication application invalid or worse, to an adjudicator deciding the adjudication application and committing jurisdictional error in doing so. The latter could result in a claimant finding themselves a party to a Supreme Court application to have the adjudicator’s decision declared void. Although it sounds like common sense, determining a business day and the correct method and time of service of a document can be more complex than you would think.
This article will detail the nuances in defining a business day and how to properly serve a document within the required time frames stipulated in the BIF Act. Our next article will discuss what a reference date is, how it arises and why it is so important to the adjudication process under the BIF Act.
Back to basics: What is a business day?
The term ‘business day’ is defined in Schedule 2 of the BIF Act as follows:
business day does not include –
- a Saturday or Sunday;
- public holiday, special holiday or bank holiday in the place in which any relevant act is to be or may be done; or
- any day occurring within any of the following periods –
- 22 to 24 December;
- 27 to 31 December;
- 2 to 10 January.
So how does that work? Well let’s use the following scenarios as examples:
- Subcontractor serves a payment claim on the Head Contractor on 19 December 2018. The subcontract agreement doesn’t state a period within which a payment schedule must be served so under s76 of the BIF Act, the Head Contractor has 15 business days to serve a payment schedule on the Subcontractor.
- To work out the date of the last day on which the Head Contractor can serve the payment schedule one must count the business days forward from the date of service, but not counting the date of service.
- Therefore the first of the 15 business days will be 20 December 2018 and the remaining business days will be 21 December 2018, 11, 14 to 18, 21 to 25 and 29 to 30 January 2019. That takes into account the intervening weekends, public holidays and the days excluded by subparagraph (c) of the definition.
- Therefore, the last day on which the Head Contractor can serve the payment schedule is 30 January 2019.
- The Head Contractor (who has its office in Brisbane CBD) serves a payment claim on the Principal on 10 August 2019. The head contract doesn’t state a period within which a payment schedule must be served so under s76 of the BIF Act, the Principal has 15 business days to serve a payment schedule on the Head Contractor.
- To work out the date of the last day on which the Head Contractor can serve the payment schedule, one must count the business days forward from the date of service, but not counting the date of service. However, there is an extra complexity here. The payment claim was served on 10 August 2019, which is a Saturday. So that begs the question as to whether service of the payment claim was effected on the Saturday and the first day of the 15 business day period for serving the payment schedule is Monday 12 August 2019, or is service of the payment claim deemed to have occurred on 12 August 2019 and the first day of the 15 business day period for serving the payment schedule is Tuesday 13 August 2019. The correct answer will depend upon the particular construction contract at issue. If the contract does not prohibit service of a payment claim on a weekend, service will likely be effected on the Saturday. However, if the contract prohibits service of a payment claim on weekends, it may be the case that service will be effective on the following Monday. Although, even that may not be the case if, for example, 10 August 2019 was the last day of the 28 days after the end of the contractual defects liability period referred to in section 75(3)(a) of the BIF Act. In that case the clause of the contract prohibiting service on a weekend may be deemed void under s200 of the BIF Act. There is no general answer that can be applied to this question. It will depend upon the particular circumstances of the case.
- For the purposes of our scenario, we will assume service of the payment claim is effective on Saturday 10 August 2019. The first of the 15 business days will be 12 August 2018 and the remaining business days will be 13, 15 to 16, 19 to 23, 26 to 30 August 2019 and 2 September 2019. Note that location specific public holidays can also throw a spanner in the works, especially local show days. That takes into account the intervening weekends and the exclusions in subparagraph (b) of the definition. In this case, that is 14 August 2019 because that date is the Brisbane Ekka show holiday, which is a public holiday or special holiday in Brisbane which is where the payment schedule must be served.
- Therefore, the last day on which the Principal can serve the payment schedule is 2 September 2019.
It is important you calculate time frames carefully. The BIF Act does not forgive. If you are late to serve a document, even by 1 minute, it is invalid.
As indicated above, the calculation of the relevant times for service of documents under the BIF Act can also be affected by the terms of the construction contract at issue. Contracts often have their own definitions of ‘days, ‘working days’ or business days’ and that can have an effect on calculating the date by which a document must be served. Notably this can be relevant if the contract provides a shorter period for giving a payment schedule or determining the due date for a progress payment.
One further point to make about business days and the doing of an act required by the BIF Act within the periods specified is in respect to the time on each business day by which the act must be done. Other than the lodgement of an adjudication application with the registrar (QBCC), which must be done by 5pm on a business day, anything that must be done on a business day must be done before 12 midnight on the business day.
Back to basics: What is service?
Equally as critical to serving a document within the correct timeframe is the means of service itself. It is all well and good to deliver a document within what you believe to be the required time, but if you do not serve that document properly in accordance with your contract and/or the applicable law, your adjudication application may be invalid.
The law has always been a little bit behind the times when it comes to technology. We of all people understand that serving documents electronically may be practical and convenient for your business, however, that convenience may come at a cost if it is ultimately decided that the method of service was not valid, or the date of service was determined to be later than you thought it was.
By way of example, in the Queensland Supreme Court matter of Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd and Anor  QSC 30 (“Conveyor v Basetec”), Basetec Services Pty Ltd (“Basetec”) purported to serve an adjudication application on Conveyor & General Engineering Pty Ltd (“CGE”) via email, which contained links to access and download the files containing the adjudication application from Dropbox (a file sharing service). It was undisputed that CGE read the email on the day it received the email; however, it did not access the Dropbox links until some 7-10 days after receiving the email. The Court determined that although the use of the Dropbox facility may have been practical and convenient, service was not effected until CGE became aware of the contents of the document. That is, when the Dropbox links were accessed over a week later. Therefore, the adjudication application was not served on the respondent CGE within time. This determination applies to all services similar to Dropbox including iCloud storage services, Google Drive and online file hosting services.
You should also be cautious serving documents by email, unless the contract in question makes express provision, as the legislation currently does not provide for service in this form.
Section 39 of the Acts Interpretation Act 1954 provides a document may be served by leaving it at, or sending it by post, telex, facsimile or similar facility. In the past, Queensland Courts have held email is a “similar facility” to telex and facsimile, however, this must be treated with caution. In Conveyor v Basetec, the Supreme Court of Queensland held email is not a valid method of serving documents unless it is consented to by the party in advance.
Get to know your contract and ways in which you are entitled to serve a document. Also, be conscious of your past conduct. Even though your contract may not explicitly allow service of documents via email, if the parties to the contract have a history of accepting documents from each other by email, there may be a course of conduct that evidences a prior agreement to accept service by email. Further, the parties may be estopped from denying they have been served with the document. Estoppel is a somewhat complex legal principle which we won’t bore you with here.
Take care when you serve the documents. An email sent at 11.30 PM from Brisbane in December to a recipient in New South Wales will be effective service at 12.30 AM on the following business day due to daylight saving in New South Wales. In a matter we were involved in where similar events occurred, the document in question was a payment claim and the date it was served was critical to determining whether the payment schedule was served within time.
There are also circumstances where service is deemed to have occurred, even if the recipient hasn’t become aware of it. For example, a payment claim could be served in accordance with s109X of the Corporations Act 2001 (Cth) which permits a document to be sent by post to the registered office of a company. That provision, in conjunction with s29 of the Acts Interpretation Act 1901 (Cth) will deem service to have occurred “in the ordinary course of post” unless the contrary is proved.
The point is, take care to ensure the method by which you deliver a document required to be delivered under the BIF Act delivers the document in such a way that there can be no argument that it came to the attention of the recipient or otherwise is deemed to have been served within the timeframe required.
The key to effective service:
- We have said it before and we will say it again, make your calendar your bible. All too often we see documents served late. It is imperative you set up a reliable reminder system for your business.
- Understand your rights and obligations under the contracts you enter and ensure you administer those contracts correctly. If you intend to serve a document by email, we recommend you make an express provision in your contract permitting email as an effective means of service. Similarly, if you intend to serve documents via online services, such as Dropbox, include an express provision in your contract permitting this. To avoid argument, you should also consider requesting a delivery receipt, read receipt or a return email.
- Take care when you serve the documents to ensure the recipient receives it on the date that you think they have.
- When serving documents, electronically or otherwise, make sure you are able to prove that you have done so. Simply emailing a Dropbox link with all relevant attachments will not effect service. Until the law catches up with common business practices, it is imperative you protect yourself.
- Get legal advice before offering or signing a contract. Poorly drafted or unfavourable contracts can greatly affect your chance a successful outcome in adjudication.
- Keep checking your mailbox, email and facsimile regularly. Remember, a document can be served even without you realising it.
Don’t wait until it’s too late. Active Law’s construction law division have the experience and expertise in all areas of construction law that you may require.
With more than 37 years’ experience in the construction industry and as an adjudicator in Queensland and other States and Territories for more than 13 years, Active Law’s Paul Hick is very familiar with the practical, financial and legal difficulties contractors face generally as well as with the adjudication procedures in the BIF Act. Paul regularly assists claimants and respondents with the adjudication process and indeed in many other matters requiring expertise in construction law.
Formerly employed by the QBCC, Emma Ward has invaluable insight into statutory regulation and can swiftly identify your rights and obligations to ensure you comply with your statutory and contractual obligations.
So whether you require assistance with a payment claim and adjudication application or a payment schedule and adjudication response, Active Law are well placed to help to achieve the best position possible to make or defend a claim under the BIF Act or any matter requiring expertise in construction law.