The Court of Appeal of the NSW Supreme Court has found that emailing a link to documents stored in an online repository did not constitute valid service under the Building and Construction Industry (Security of Payment) Act 2021 (WA), and that strict compliance with the Act’s one-business-day service requirement was necessary to establish jurisdiction.
The decision turned largely on the statutory interpretation of the Act, pursuant to cross-vesting legislation. Although the decision concerns a Perth-based development and WA legislation, it may influence decisions in other jurisdictions in relation to the service of electronic documents by email.
The decision may also lead to amendments to similar statutes across Australia to clarify whether emailing links to documents, rather than the documents themselves, constitutes valid service.
Background
The dispute arose out of design and construction works associated with the refurbishment of a hotel in Perth.
On 3 September 2024, the first respondent, Tackelly No 8 Pty Ltd (Tackelly), issued a Take Out Notice to the appellant, Reward Interiors Pty Ltd (Reward Interiors), purporting to take the remaining works out of the hands of Reward Interiors, while otherwise seeking to keep the contract on foot.
Reward Interiors responded by issuing a Termination Notice.
What then followed was a process for payment, response, adjudication and review under the WA SOPA. While the payment and adjudication process is broadly similar to security of payment legislation in other Australian jurisdictions, the WA SOPA uniquely provides for an additional adjudication review process.
Reward Interiors then served Tackelly with a Payment Claim under the WA SOPA for $10,623,382.70 and the return of two Bank Guarantees.
On 17 September 2024, Tackelly issued a Payment Schedule in response to the Payment Claim scheduling a negative payment amount of approximately $1.35 million, and refusing to return the Bank Guarantees.
On 16 October 2024, Reward Interiors lodged an Adjudication Application with Adjudicate Today and, on 31 October 2024, Tackelly lodged an Adjudication Response.
On 25 November 2024, the adjudicator, Max Tonkin (second respondent), delivered his decision finding that Reward Interiors was owed $2,607,168.96 plus interest and the return of the Bank Guarantees (Adjudication Determination).
On 2 December 2024, Tackelly applied for a Review of the Adjudication Determination (Review Application) with the Resolution Institute (fourth respondent).
Service requirements under the WA SOPA
Section 42(3) of the WA SOPA states that the party making a review application ‘must give’ [emphasis added] a copy of the application and any accompanying documents to the other party within one business day after the application is made.
Section 113 of the WA SOPA defines ‘give’ to include ‘serve, send or otherwise provide’. Where the contract provides a method for giving the documents, that method must be used if it is reasonably practicable to do so. Otherwise, documents, including review applications under s 42(3), may be given by:
- delivering the document to the person personally
- leaving the document at the person’s ordinary place of business
- sending the document by post to the person’s ordinary place of business
- under sub-section 3(d), emailing the document to an email address specified by the person for giving documents of that kind, or
- under sub-section 3(e), ‘any other method (including the use of an electronic database, document system or any other means by which a document can be accessed electronically) authorised by the regulations for giving documents of that kind to the person’.
The regulations to the WA SOPA did not authorise the method of service used in this case. This meant that using an ‘electronic database, document system or any other means by which a document can be accessed electronically’ was not a valid method of giving the documents between the parties unless their contract expressly authorised that method.
Accordingly, Tackelly was required to ‘give’ the Review Application to Reward Interiors by 3 December 2024, as required by s 42(3). Crucially, the manner in which the Review Application was given had to comply with s 113 of the WA SOPA.
On 2 December 2024, Tackelly’s solicitors sent an email to Reward Interiors’ managing director and solicitor.
Rather than attaching the Review Application and accompanying documents directly, the email attached another email containing a link generated by Mimecast which, if clicked, would enable the recipient to download the documents hosted in a separate, cloud-based Mimecast repository (Mimecast Email).
Although Reward Interiors’ managing director opened and read the Mimecast Email within approximately 10 minutes of receiving it on 2 December 2024, he did not attempt to open the attachment or click the link at that time. Based on his previous experience, he understood that he could not open file attachments or download files from file-sharing sites using his work mobile phone.
He subsequently forwarded the Mimecast Email to Reward Interiors’ solicitors and copied an associate director, who similarly did not attempt to open the email or attachment using his work mobile phone.
The Review Application and accompanying documents were not downloaded by Reward Interiors’ managing director until 4 December 2024, after the one-business-day limit imposed by s 42(3) of the WA SOPA had expired. However, the parties accepted that the documents could have been immediately accessed and downloaded from the Mimecast repository on 2 December 2024. There was no suggestion that Reward Interiors had attempted to avoid service.
In its Adjudication Review Response, Reward Interiors alleged that the review adjudicator Neil Kirkpatrick (fifth respondent) lacked jurisdiction to determine the Review Application because it was not ‘given’ in accordance with s 42(3) of the WA SOPA.
The ensuing adjudication review and court process required the determination of two related issues:
- Jurisdictional Issue: whether the requirement under s 42(3) of the WA SOPA (that the applicant give a copy of the Review Application and accompanying documents to the other party within one business day) is a jurisdictional precondition, and if so, whether a failure to strictly comply with the timing or manner of service means the review adjudicator lacks jurisdiction to determine the application.
- Service Issue: whether sending an email containing a Mimecast link, rather than direct file attachments, constitutes a valid method of ‘giving’ a document ‘by email’ under s 113 of the WA SOPA.
The review adjudicator determined the Jurisdictional Issue in the affirmative, finding that he lacked jurisdiction to determine the Review Application (Review Adjudication Determination).
On 16 January 2025, Tackelly commenced proceedings in the NSW Supreme Court, pursuant to cross-vesting legislation, seeking to set aside both the Adjudication Determination and the Review Adjudication Determination.
Supreme Court
The primary judge concluded the Jurisdictional Issue in the negative, finding that the time requirements under s 42(3) were not a precondition to the jurisdiction of a review adjudicator to consider a review application. Accordingly, the primary judge quashed the Review Adjudication Determination, declaring it invalid on the basis that the review adjudicator had fallen into jurisdictional error (Primary Jurisdictional Issue Finding).
With respect to the Service Issue, the primary judge found that Tackelly’s service of the Review Application through the Mimecast Email did not amount to ‘giving’ the application in accordance with s 113, as required by s 42(3) of the WA SOPA (Primary Service Issue Finding).
Reward Interiors appealed the Primary Jurisdictional Issue Finding, and Tackelly filed a notice of contention with respect to the Primary Service Issue Finding.
Court of Appeal
The Court of Appeal, comprising Ward P, McHugh JA, and Free JA, unanimously disagreed with the Primary Jurisdictional Issue Finding. The Court found that giving a review application within the one-business-day timeframe under s 42(3) of the WA SOPA was a jurisdictional precondition which had to be strictly complied with for the review adjudicator to have jurisdiction to determine a review application.
However, the Court of Appeal was split over the Service Issue.
Ward P found that the sending of the Review Application and the accompanying documents by way of the Mimecast Email met the definition of ‘give’ under s 113 of the WA SOPA, in that the relevant documents were given, served, sent, or, crucially, ‘otherwise provided’ by email under sub-section 3(d).
Her Honour succinctly stated, ‘the fact that one had to click on another email and then on the link to the Mimecast repository, does not mean that it was not “provided” to the recipient of the email’.
On this basis, her Honour would have dismissed the appeal.
Their Honours McHugh and Free found:
- The fact that s 113 of the WA SOPA expressly allowed for service by email under sub-section 3(d), and contemplated that service ‘by any other method (including the use of an electronic database, document system or any other means by which a document can be accessed electronically) authorised by the regulations for giving documents of that kind to the person’ under sub-section 3(e), meant that the legislature had expressly contemplated service through systems such as Mimecast, but had left the authorisation of those methods to the regulations, which did not authorise the method used in this case.
- The Mimecast Email did not constitute a form of ‘giving’ under s 113 of the WA SOPA. The Mimecast Email only provided the recipient with a means to ‘access’ the Review Application and accompanying documents, but not the documents themselves. If the Review Application and accompanying documents had been directly attached to one or more emails (which their Honours conceded would have been impractical considering the size and number of documents), this would have met the definition of ‘giving’ under s 113 of the WA SOPA.
Accordingly, their Honours McHugh JA and Free JA allowed the appeal, thereby upholding the original Review Adjudication Determination.
What does this mean for you?
For parties to construction contracts, the key takeaways are:
- Security of payment legislation generally imposes a ‘brutally fast’ regime for the speedy determination of payment claims, driven by the underlying philosophy of ‘pay now, argue later’.
- SOPA legislation differs in critical ways across jurisdictions. What may be a jurisdictional precondition in one jurisdiction may be merely facilitative in another, particularly in relation to methods of service and timeframes.
- It is crucial to understand the requirements of each Security of Payment Act (SOPA) and its accompanying regulations, particularly the applicable service methods and timeframes.
- Regardless of the jurisdiction, the most common and practical way to serve documents under SOPA legislation is electronically. However, owing to the size and number of documents involved, it may not always be possible to serve them as email attachments.
- To avoid falling foul of applicable service requirements, ensure your construction contract expressly provides for the intended methods of serving documents required or permitted to be given under SOPA legislation, including through an electronic database or document management system such as Mimecast.
Barry Nilsson’s Building, Construction & Engineering specialists help clients understand and meet their obligations under SOPA legislation. We can advise on service requirements and timeframes, and review construction contracts to ensure service provisions are clear and practical. If you need advice on any of these issues, please reach out to our team.
