Andrew Kelly and Aaron Benstead

QLD Supreme Court Serves up Interpretation of Service in Design and Construct Contracts

Andrew Kelly and Aaron Benstead

10 October, 2019

Dispute resolution

Key message

Earlier this year, the Supreme Court of Queensland handed down a decision in The Trust Company (Australia) Ltd atf the WH Buranda Trust v Icon Co (Qld) Pty Ltd & Anor [2019] QSC 87, which is a reminder to principals and contractors to ensure that their design and construct contracts do not contain ambiguous or conflicting terms, especially in the context of service and payment claims. It also indicates that evidence of actual receipt of a document can circumvent issues relating to the validity of service when sent via an emailed link.

Although this legislation is specific to Queensland, the laws are relatively similar in other States, so the message is something that should be considered nationally.

The Adjudication Decision

In late 2015, Icon Co (QLD) Pty Ltd (Icon) was contracted by Wee Hur Pty Ltd to design and construct the Buranda Student Accommodation for the sum of $175 million. The contract was subsequently novated from Wee Hur Pty Ltd to The Trust Company (Australia) Ltd As Trustee for the WH Buranda Trust (Buranda Trust) as principal.

In December 2018, Icon submitted a progress claim (PC 37) pursuant to the requirements of the now repealed Building and Construction Industry Payment Act 2004 (QLD) (BCIPA) for the amount of $510,243.51. AECOM, as agent for the principal, issued a payment certificate which concluded that the amount due was only $89,761. Subsequently, Icon made an adjudication application in which the adjudicator found in favour of Icon, concluding that the amount due by Buranda Trust was $561,267.86 (The Adjudication Decision).

The Supreme Court Decision

Buranda Trust contended before the Supreme Court that The Adjudication Decision should be declared void because the adjudicator did not have the jurisdiction to make that determination. Buranda Trust’s argument was founded on the basis that PC 37 had not been validly served. Icon had provided PC 37 by uploading it to an online cloud platform called Aconex, which sent an automated email linking to PC 37 to the email address of Buranda Trust’s agent, AECOM. Buranda Trust argued that this was not valid service because clause 7A of the contract provided that any notice served by Icon under the BCIPA shall be served to Buranda Trust’s physical address, and further that clause 7 provided that a notice sent by email was not a valid notice for the purposes of the contract. Icon argued that the service of PC 37 was valid because clause 37 of the contract stipulated that progress claims shall be given in writing to the Principal’s Representative, and further that service was not merely via email notification but rather through the mutually agreed Aconex system.

The court’s decision turned primarily on the interpretation of clause 37 and 7A of the contract. It was not determinative that payment claims could aptly be described as a “notice” under the BCIPA. Rather, the court held that to reconcile the operation of clause 37 and 7A and to give the contract a business-like operation, progress payments made under the BCIPA would be served validly under clause 37, and clause 7A would apply to other BCIPA notices (such as adjudication applications). Moreover, in consideration of the commercial context of the contract the court held that service should be made on the Principal’s Representative because it was they who conducted the assessment and certification of payment claims.

The court also differentiated this case from an earlier decision whereby it was held that the sending of an email containing a link to a file would be insufficient to evidence service. This was distinguishable because in the present case, Icon did not rely upon the sending of the email containing the notification as itself constituting service. Instead, Icon relied on evidence that the relevant document had actually been received by the authorised agent of the principal. The service of PC 37 on the Principal’s Representative was therefore held to be valid and The Adjudication Decision was upheld.

Implications

  • Ensure construction contracts provide clear and unambiguous terms regarding the service of payment claims.
  • Aconex can be used to serve a payment claim under security of payment legislation if permitted by the contract.
  • If you wish to rely on emailed links as service, ensure this is clearly articulated in the contract or else you may need to evidence that the document has actually been received.

For more information on this decision, or what the implications are for you or your business, please contact:

Andrew Kelly | Partner | +61 7 3338 7550 | akelly@tglaw.com.au

Aaron Benstead | Senior Associate | +61 7 3338 7903 | abenstead@tglaw.com.au