Have you served a payment claim for works your company has undertaken? When serving payment claims under the NECA Legal advises that when serving payment claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) it is crucial to ensure the validity of such a claim to guarantee its enforceability. A recent decision by the New South Wales Supreme Court in MGC Engineering Pty Ltd t/a Forefront Services v CMOC Mining Pty Ltd (2021) clarified the requirements of serving valid payment claims and where the Court found that a payment claim served on an employee of a Respondent but not on the allocated representative under the contract was not proper service of payment claim thus invalidating the payment claim.

Valid payment claims

In accordance with section 13 of the Act, a valid payment claim must:

  1. be served by or on behalf of a Claimant;
  2. identify the Respondent and the construction work performed or related goods and services;
  3. indicate the amount of the claim; and
  4. relate to work performed on or prior to a reference date.

MGW Engineering Pty Ltd t/a Forefront Services v CMOC Mining Pty Ltd (2021) (Forefront Services v CMOC Mining)

Section 31 of the Act

Section 31 of the Act lists the various ways in which documents can be served on another party. These include:

  1. by delivering it to the person personally; or
  2. by lodging it during normal office hours at the person’s ordinary place of business; or
  3. by sending it by post addressed to the person’s ordinary place of business; or
  4. by email to an email address specified by the person for the service of documents of that kind; or
  5. by any other method authorised by the regulations for the service of documents of that kind; or
  6. in the case of service by a party to a construction contract on another party to the construction contract – in the manner that may be provided under the construction contract.

Forefront Services v CMOC Mining

Forefront Services v CMOC Mining questioned whether handing a payment claim to an employee of the Respondent constitutes proper service of the payment claim within the meaning of the Act. In this case, the Claimant’s representative handed four payment claims to an employee of the Respondent for works valued at over $6 million. It was found that service of these documents did not occur in accordance with s 31(1)(a) of the Act (delivering the document to the relevant party personally).

In its determination, the Court found that service of a claim to an employee of the Respondent who is not their allocated representative is not sufficient to meet this requirement. Rather, it entails service of the document to the relevant person themselves, or the authorised representative of that person. The case identified that Claimant’s should review contracts to ensure that payment claims are being served on the correct person within the Respondent’s company.

Service of documents on a company

It was further determined, in Forefront Services v CMOC Mining, that where a case concerns a company or corporation, it must be shown that some steps had been taken to serve the document on the relevant party or responsible person. When serving a payment claim on a company, the claim can be lodged during normal office hours at the person’s ordinary place of business in accordance with s 31(1)(b) of the Act. Accordingly, as it was found in the above case, where a company’s ordinary hours are between 7:30am and 4:30pm, service of the document at 5:15pm is not within normal office hours. Therefore, the claim is deemed to be served on the following business day.

How can I ensure proper service of a payment claim?

Evidently, there is lots to consider when serving a payment claim. The simplest and easiest way to serve a payment claim is by email to the email address nominated in the contract for this purpose. Here are some tips to ensure that the service of a payment claim is proper and valid:

  1. Should you choose to deliver the claim to the Respondent personally, be sure to hand it to that person or their allocated representative only.
  • Where you are physically issuing a payment claim to a company’s ordinary place of business, be sure to serve it within that company’s normal office hours.
  • Always check relevant clauses in the contract for specific requirements on how and when to serve a claim.
  • Always keep evidence of service for later reference where necessary, i.e. turn on delivery receipts for emails.

NECA Legal t/as CTI Lawywers are experts in the New South Wales Security of Payment Legislation. If you have any questions on the service of payment claims, give us a call on 1300 361 099.

This summary is a guide only and is not legal advice. For more information on legislative obligations, please call NECA Legal on 1300 361 099.

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