A recent decision in the Queensland Court of Appeal has confirmed the pragmatic approach adopted by the courts in relation to service of documents under a construction contract in the earlier decision of Canadian Solar Construction Pty Ltd v Re Oakey Pty Ltd [2023] QSC 288.
This decision also reinforces the notion that it is always preferable for a principal / payment claim recipient to take a conservative and thorough approach reviewing payment claims and responding via payment schedules.
This article provides a summary of the decision and our insights in relation to the steps principals / recipients can take to mitigate the risks of not issuing a payment schedule in (seemingly) uncertain circumstances.
Background
In RE Oakey Pty Ltd v Canadian Solar Construction (Australia) Pty Ltd; Canadian Solar Construction (Australia) Pty Ltd v RE Oakey Pty Ltd [2024] QCA 202, the appellant / cross respondent, RE Oakey Pty Ltd, was the principal for a solar farm project (Oakey).
The respondent / cross appellant, Canadian Solar Construction (Australia) Pty Ltd, was engaged as the contractor for design and construction of the project (Canadian Solar).
On 26 June 2023, a representative of Canadian Solar submitted a payment claim under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act). The claim (PC 64) was valued at approximately $4 million and issued to an email address for Oakey belonging to a Mr Wang, who was a representative of Oakey for the purposes of receiving payment claims.
This was the same email address from which Oakey had been issuing payment schedules in response to claims for the previous three years. The email attaching PC 64 copied five other executives / representatives of Oakey, including members of the project management team (as an agent for Oakey) assigned to the project (Project Manager).
It was accepted at trial that Mr Wang did not receive the email and that it bounced back to the sender at Canadian Solar. However, it was accepted that the other recipients at Oakey did receive the email. Further, it also was accepted at trial that Canadian Solar did not see the bounce back email and did not become aware of the email not being received by Mr Wang until 14 July 2023, when Mr Wang asked for a copy of PC 64.
Oakey did not respond to PC 64 within the required time under the BIF Act. Canadian Solar then brought an application against Oakey alleging that the Oakey’s failure to respond meant that it was liable to pay the full amount of PC 64 pursuant to section 77 of the BIF Act.
Primary Decision
In the primary decision dated 15 December 2023, His Honour Justice Freeburn of the Queensland Supreme Court found that:
- PC 64 was ‘given’ to Oakey. Although the email attaching PC 64 was not initially ‘received’ by Mr Wang, members of the Project Manager did receive the email. His Honour concluded that upon a proper interpretation of the contract, there was no requirement for a payment claim to be served in a specified way (i.e. specifically to Mr Wang’s email address). The court also concluded that this interpretation extended to the Project Manager being listed as the party to administer the contract, which included receiving and responding to payment claims. As five other members of the Project Manager did receive the email, they could be considered to have received PC 64 on the date of the email;
- the Contract required that a ‘valuation certificate’ (or payment schedule) be issued within 10 business days of a payment claim being issued. As RE Oakey did not issue a payment schedule in response to PC 64, it was found to have not responded in time;
- Canadian Solar was not estopped from asserting that PC 64 was validly given to Oakey. This was primarily due to all previous payment claims not being sent just to Mr Wang. As such, His Honour was not able to infer that the parties adopted the common assumption that payment claims could only be considered properly given if they were delivered (by email) to Mr Wang only;
- Canadian Solar’s conduct in failing to respond to the bounce back email was not misleading or deceptive under section 18 of the Australian Consumer Law (ACL). His Honour accepted Canadian Solar’s submission that the inclusion of names in the ‘To’ and ‘cc’ fields of an email represents that the sender has attempted to send an email to the addresses listed, rather than representing that it had in fact been delivered to the addresses; and
- Canadian Solar’s conduct was not unconscionable under section 21 of the ACL. Having assessed the circumstances in which Canadian Solar sent the email enclosing PC 64 to Mr Wang and five other recipients, His Honour did not consider it appropriate for the court to denounce the conduct as “…offensive to a conscience informed by a sense of what is right and proper according to the values of contemporary Australian society”. This was reinforced by the finding that there were two ‘mistakes’ at the heart of the dispute, rather than deliberate actions which could be considered dishonest or intended to deceive.
His Honour granted Canadian Solar’s application and ordered that Oakey pay it the value of PC 64 pursuant to section 78(2)(a) of the BIF Act, being $4,030,714.74 (excluding GST).
Appeal
Oakey appealed the primary decision on the basis that Freeburn J erred in his interpretation of the relevant provisions of the Contract.
Oakey also appealed His Honour’s finding that the claimed amount did not include GST. For the purposes of this update, we will focus on the parts of the appeal relating to the findings outlined above.
The Court of Appeal upheld the primary decision on the basis that Oakey failed to prove that Freeburn J erred in each of His Honour’s findings.
In dismissing Oakey’s appeal, the court held (amongst other things) that:
- in the absence of a contractual provision to the contrary, a payment claim is considered to have been properly given “…if it has actually been received and come to the attention of a person with authority to deal with that document under the contract”;
- as it relates to service, the words of the relevant provisions in a contract “…are to be given their natural and ordinary meaning, consistent with the context in which they appear…taking into account its contents as a whole”;
- the court will give weight to a historic “clear course of conduct” between parties sending and receiving payment claims / payment schedules;
- in the event where a party was not aware of receiving a bounce back email and did not deliberately remain silent about it, it is difficult to prove that party misled or intended to deceive another party under the ACL; and
- unconscionability under section 21 of the ACL was not established in circumstances where Canadian Solar established a consistent trend in the way it issued payment claims.
Key Takeaways
The Court of Appeal’s decision in RE Oakey confirms the pragmatic approach the courts will take in respect of the service of payment claims under contracts and the BIF Act.
For contractors and subcontractors issuing payment claims, the decision highlights the need to ensure that claims are issued in accordance with the relevant contract, and that claims are issued to multiple recipients of the principal’s representative / party nominated to receive claims.
For principals, the decision reiterates the need to ensure that adequate systems are in place for receiving and processing payment claims. This includes ensuring that email inboxes are sufficiently monitored and that recipients of a payment claim communicate with one another to ensure a responsive schedule /certificate is submitted on time.
Key contacts:
Alexander Nordang – Principal
Emilio Torto – Lawyer