SOPA moves into the 21st century: email service now permitted in certain circumstances

An amendment to the notice provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) came into effect on 27 June 2017.1

Section 31 of the Act has been amended to:

  1. remove facsimile as a form of service under the Act; and
  2. permit the service of notices by email, to an email address specified by the person for the service of notices of that kind.

What does this mean?

The amendments came into effect on 27 June 2017 and apply to all construction contracts, even those entered into prior to 27 June 2017.

Payment claims made under the Act are notices and must be served in accordance with section 31 of the Act. Despite the requirement for a party to "provide" a payment schedule to the other party under section 14(4)(b) of the Act, the Courts have stated that "'provide' does not mean anything different from 'serve'".2 Therefore, payment schedules provided under the Act are also notices which must be served in accordance with section 31 of the Act.

Where Aconex or a similar project management platform is not in use, it is common for all communications in relation to construction projects, including the submission of payment claims and payment schedules, to be conducted by email regardless of whether such communication is contemplated by the contract terms. For example, the unamended AS4000 suite of contracts do not contemplate electronic service of any documents.

While the amendment may, on a cursory review, permit email service in all cases, this is not so. The amendment to the Act permits service of notices by email "to an email address specified by the person for the service of notices of that kind". That is, it is necessary for the recipient to have specifically nominated an email address for service of notices under the Act.

In our view, it is not necessary for the relevant construction contract to specify an email address for service of notices under the Act. The intention of the legislature appears to be to allow a party to nominate an email address other than by way of the terms of the relevant construction contract, such as by sending an email or even verbally at a meeting. This position is to be contrasted with section 31(1)(e) which permits service to be effected "in such other manner as may be provided under the construction contract concerned".

What should you do?

Often the address for service of notices in construction contracts is a matter which is completed without much thought, shortly before execution. Given this amendment, when preparing a construction contract, thought should be given to the manner in which the contract will be administered and, where it is intended for communications and claims to be issued by email, the construction contract should expressly nominate a single email address for each party for the service of notices under the Act.

It is doubtful the service of notices via Aconex and other online project management platforms will be considered service by "email". Should such platforms be used, the construction contract should expressly provide for notices to be given via those platforms to ensure that section 31(d) of the Act applies. Otherwise, there may be uncertainty in relation to the effectiveness of purported payment claims and other notices issued under the Act, which is not in the interests of either party.

A notice served under the Act by facsimile will no longer be valid service under the Act unless the construction contract expressly provides otherwise.

1The Act was amended by the Electronic Transactions Legislation Amendment (Government Transactions) Act 2017 (NSW).
2 Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [2006] NSWCA 259, [61].

 

Alex Whiteside

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Alex Whiteside Partner

Alex specialises in providing advice to the construction, infrastructure and mining sector. Alex focusses on providing advice during the delivery, completion and disputes phases of projects.

Alex acts for construction contractors, equipment suppliers and government entities and has extensive experience in drafting and negotiating project documentation, ranging from the Australian Standard suite of contracts through to project specific and PPP documentation.

Alex has a particular focus on disputes, including expert determination, adjudications, arbitration and Court proceedings. Alex has acted for clients in a broad range of construction and mining disputes including scope and variation claims, design, defect and delay/prolongation claims, injunctions and security of payment adjudications and appeals. Alex has significant expertise in Supreme Court actions in the Technology and Construction List.

Alex has completed secondments in the legal teams of Lendlease, Transport Infrastructure & Services and Sydney Trains.

Alex commenced his career advising insurers in relation to professional indemnity insurance policy coverage and claims.

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