Gautam (SA) Pty Ltd as trustee for Gautam Trust v Mossop Group Pty Ltd - [2023] SASC 161

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeal: Civil)
GAUTAM (SA) PTY LTD AS TRUSTEE FOR GAUTAM TRUST v MOSSOP GROUP PTY LTD
[2023] SASC 161
Judgment of the Honourable Justice Hughes
9 November 2023
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS
The appellant, Gautam (SA) Pty Ltd as trustee for Gautam Trust (“Gautam”), trades as Corporate Ceilings. Gautam undertook construction work on two building projects in 2020 for Mossop Group Pty Ltd (“Mossop”) pursuant to two separate contracts. Five progress payments claimed by Gautam were either not paid or were not paid in full. Gautam maintains that it is owed the sum of $59,417.35 by Mossop for work performed under the contracts.
Gautam brought an action to recover that sum under the Building and Construction Industry Security of Payment Act 2009 (SA) (“SOP Act”) in the Magistrates Court. The progress payment claims had been via email, to a general “accounts” email belonging to Mossop. The Magistrate dismissed the claim, finding that Gautam had not made valid claims for progress payments in accordance with the contracts and the SOP Act.
Gautam contended on appeal that:
1.    There was an erroneous finding of fact that Mossop had not directed Gautam to send payment claims by email.
2.    There was an erroneous finding of fact that there was no evidence as to when Mossop received the payment claims.
3. That there was an erroneous finding that Gautam was not entitled to serve payment claims by email by virtue of the Electronic Communications Act 2000.
Held, dismissing the appeal:
1. Mossop had not directed Gautam to serve progress payment claims via email; by emailing the claims to Mossop, Gautam did not serve the claims in the manner anticipated by the contracts or contemplated by the SOP Act.
2.    Gautam failed to establish the dates that the claims were served, in that it did not establish that on the dates of arrival, or some other date, the progress payment claims had come to the attention of a person liable to determine the claims.
3. The Electronic Communications Act 2000 did not assist Gautam because the appellant had not shown that the parties consented to the provision of payment claims by email.
Building and Construction Industry Security of Payment Act 2009 (SA) ss 8, 13, 14, 15, 16, 33, 34; Electronic Communications Act 2000 (SA) s 8, referred to.
Ausenco Operations Pty Ltd v Ferretti International Ottoway Pty Ltd [2020] SASC 46; Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175; The Trustee for Allway Unit Trust Trading as Westside Mechanical Contracting Pty Ltd v R&D Airconditioning Pty Ltd & Ors [2018] SASC 46; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; Howship Holdings Pty Ltd v Leslie & Anor (1996) 41 NSWLR 542; The Trust Company (Australia) Ltd atf the WH Buranda Trust v Icon Co (Qld) Pty Ltd & Anor [2019] QSC 87; Wärtsilä Australia Pty Ltd (ACN 003 736 892) v Primero Group Ltd (ACN 149 964 045) [2020] SASC 162; Okaroo Pty Limited v Vos Construction and Joinery Pty Ltd & Anor [2005] NSWSC 45, considered.

GAUTAM (SA) PTY LTD AS TRUSTEE FOR GAUTAM TRUST v MOSSOP GROUP PTY LTD
[2023] SASC 161
Civil

HUGHES J: The appellant in these proceedings, Gautam (SA) Pty Ltd as trustee for Gautam Trust (“Gautam”), trades as Corporate Ceilings. Gautam undertook construction work on two building projects in 2020 for Mossop Group Pty Ltd (“Mossop”) pursuant to two separate contracts. Gautam maintains that it is owed the sum of $59,417.35 by Mossop for work performed under the contracts.
Gautam brought an action to recover that sum under the Building and Construction Industry Security of Payment Act 2009 (SA) (“SOP Act”) in the Magistrates Court.
The scheme has been aptly described as one that operates in parallel to the construction contract for the prompt making of progress payments to subcontractors.[1]
[1]Ausenco Operations Pty Ltd v Ferretti International Ottoway Pty Ltd [2020] SASC 46 at [39] per Doyle J.
Division 1 of Part 3 of the SOP Act governs the making and payment of claims for progress payments in relation to arrangements between builders and subcontractors. The terms “builders” and “subcontractors” is not used in the legislation, but it is used in the contracts between the parties and it is convenient to adopt that language in this decision. Relevantly, s 13 provides that a subcontractor who has performed work under a subcontract may make a payment claim from the builder for a progress payment. A payment claim must be served on the builder within a particular time frame stipulated under the section. A builder may respond with a payment schedule setting out whether it agrees to pay the claim and if it agrees only to part of the claim, what amount will be paid and why the builder declines to pay the full amount. The builder is liable to pay the full amount if no payment schedule is provided within a specified time frame.
Gautam’s payment claims that were the subject of the litigation before the Magistrate were made in relation to two contracts between Gautam and Mossop. One concerned construction work for a building known by the parties as the SCC Pines Health and Wellness Construction (under the “SCC Contract”) and the other concerned construction at the Riverland General Hospital (under the “RGH Contract”). Both contracts were executed between June and August 2020. They had identical clauses relevant to the dispute.
Clause 14 of the SCC Contract said:
14.Payment claims
14.1 The Subcontractor must submit a progress claim to the Builder on the 20^th day of each month, for works up to and including the 25^th day of the month for each of the months from January to November.
14.2 The Subcontractor must submit its December progress claim to the Builder on the 14^th December, for works up to and including the 20^th day of December.
14.3 The subcontractor is entitled to make 1 (one) claim per month. Claims received prior to the 20^th in any month from January to November shall be deemed as received on the 20^th day of the month.
14.4 Progress claims received after the 20^th day of each month of each of the months of January to November will be deemed to be the following month’s claim.
14.5 Progress claims received after the 14^th December will be deemed to be January’s claim.
14.6 The progress claim must identify a claim breakdown, works completed within the preceding month, amounts previously certified and retention deductions.
14.7 Progress claims must be submitted by post, facsimile transmission or hand delivered to be a valid claim. Progress claims submitted by email are not valid claims under the subcontract.
…
Clause 41 of the RGH Contract was relevantly identical.
The interpretation of these clauses, and their interaction with the provisions of the SOP Act, gave rise to the litigation before the Magistrate.
Of eight claims, five were not paid or were not paid in full and those five were the subject of the dispute (“the payment claims”). They were claims made:
·Under the SCC Contract on 22 September 2020 in respect of $21,476.92 being the difference between the claimed amount of $44,647.35 and the amount paid of $23,170.43;
·Under the RGH Contract on 23 August 2020 in respect of $5,653.24 being the difference between the claimed amount of $38,779.74 and the amount paid of $33,126.50;
·Under the RGH Contract on 22 September 2020 in respect of $10,120.65 being the difference between the claimed amount of $58,366.65 the amount paid of $48,246.00;
·Under the RGH Contract on 25 October 2020 in respect of $13,811.49 being the difference between the claimed amount of $30,250.00 and the amount paid of $16,438.51;
·Under the RGH Contract on 24 November 2020 in respect of $8,355.05 being the whole of the amount claimed where no payment was made.
The total of the payment claims amounted to $59,417.35.
It was not in dispute at trial that Gautam provided the payment claims to Mossop by email. Gautam contended that the emails constituted service and that service occurred on the dates that the emails were received by Mossop, such dates being the same dates as when the emails were sent by Gautam.
Mossop contended at trial that notwithstanding that it had part-paid some of the payment claims, the claims were not served within the regime of the SOP Act and therefore did not enliven Gautam’s entitlements to payment or Mossop’s obligation to pay under the scheme. Mossop also defended its non-payment of the payment claims on the basis that, in the alternative, Mossop had served responding payment schedules within the requirements of the regime, denying liability to meet the claimed amounts or parts thereof.
What the Magistrate decided
The Magistrate dismissed Gautam’s claim. The Magistrate found that a valid payment claim under the SOP Act is one that:
·The subcontractor has an entitlement to make;
·Has been served under the contract or as permitted by the SOP Act;
·Has been shown to have been served on a particular date;
·Has not been responded to by the builder within 15 days after service.[2]
[2]Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175 at [6].
The Magistrate found, and it was not disputed, that Gautam purported to make its payment claims by sending emails on 23 August 2020, 22 September 2020, 25 October 2020 and 24 November 2020, respectively, to the email address “[email protected]”, and by no other method. The payment claims were expressed to be claims made under the SOP Act.[3]
[3]Ibid, at [13].
The Magistrate considered the parties’ arguments as to how the SOP Act governed the making of payment claims and in particular how the SOP Act permitted those claims to be provided by a subcontractor to a builder in order for them to enliven the SOP Act scheme.
Section 34 of the SOP Act describes the methods by which a “notice by or under this Act is authorised or required to be served on a person”. Those methods are:
·Personal delivery;
·Lodgement at the place of business;
·Post or fax;
·As prescribed by the regulations;
·As prescribed in a construction contract.
Section 34 is said to be in addition to and not limiting or excluding, the provisions of any other law with respect to the service of notices.
At trial, Gautam contended that although the contracts expressly prohibited service of payment claims by email, that contractual term had been varied by Mossop through its employee, Ms Dansie, who expressly instructed Gautam to act in a different manner. Gautam relied on evidence of an email from Ms Dansie to Gautam[4] dated 12 September 2019 which stated, amongst other things, that:
All invoices & accounts queries should be directed to the Mossop Accounts Dept via [email protected] for quicker processing.
[4]GK 6 to the affidavit of Khaneja Gautam affirmed on 9 February 2022, AB 385.
Gautam contended at trial that this constituted a variation to the contract, or a direction under the contract which, by clause 38.1 in the SCC Contract and clause 47.3 in the RGH Contract, Gautam was required to comply with.
The Magistrate rejected these arguments but found that although the contract prohibited service of payment claims by email, the legislative scheme was inconsistent with this prohibition as s 34 did not exclude the operation of the common law with respect to service, which in turn allowed for service by email. The Magistrate found that at common law, a document is served when it is received by the person with the authority to receive it.[5] Her Honour determined that service of payment claims by email is consistent with the requirements of the SOP Act if the payment claim is received by an appropriate recipient.[6]
[5]Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175 at [24].
[6]Ibid, at [25].
However, the Magistrate found that there was no evidence as to who had received the email such as was required to identify when service to an appropriate recipient in Mossop had occurred. Her Honour found that there was no evidence as to when the payment claims came to the attention of any particular individual at Mossop.[7]
[7]Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175 at [26].
The Magistrate concluded that service of the payment claims could only be found to have occurred on some unidentified date between when the emails were sent by Gautam and the time at which Mossop sent the corresponding payment schedules to Gautam.[8] The differences between those dates were:
·In respect of the SCC Contract claim, 22 days;
·In respect of the August RGH Contract claim, 22 days;
·In respect of the September RGH Contract claim, 22 days;
·In respect of the October RGH Contract claim, 22 days;
·In respect of the November RGH Contract claim, 21 days.
[8]Ibid, at [27].
The Magistrate further found that even if the Electronic Communications Act 2000 applied so as to authorise Gautam to serve payment claims by email despite the contractual prohibition, such service was still required to be made to an appropriate person, and Gautam still faced the problem that it did not establish when service on an appropriate officer of Mossop occurred.[9]
[9]Ibid, at [41].
Because the Magistrate considered that there was insufficient evidence to establish when the emails came to the attention of an appropriate person, it followed that it was not possible to determine whether the payment schedules had been issued by Mossop within the required time frame.
The Magistrate found that Gautam’s entitlement to make a progress claim was governed by ss 8 and 4 of the SOP Act, which authorised the contractual setting of the reference dates. Her Honour found that the contracts provided for progress claims to be made on the 20^th day of the month but that the SOP Act, as interpreted by this Court in The Trustee forAllway Unit Trust Trading as Westside Mechanical Contracting Pty Ltd v R&D Airconditioning Pty Ltd & Ors,[10] had the effect that the reference date in respect of these claims was the 20^th of the month preceding each claim respectively.[11] In so concluding, the Magistrate rejected Mossop’s argument that the contractual reference date commences the 15 day period within which a payment schedule is due. Instead, a responding payment schedule is to be sent within 15 days of service of the payment claim as prescribed by the SOP Act.[12]
[10][2018] SASC 46 per Doyle J.
[11]Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175 at [44-45].
[12]Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175 at [57-58].
On the basis that s 33(2)(a) of the SOP Act provides that a contractual clause that purports to avoid or modify the Act is void, the Magistrate found that clause 14.5 of the SCC Contract was void insofar as it purported to apply to a statutory progress claim because it was inconsistent with the SOP Act.[13]
[13]Ibid, at [58].
The Magistrate found that it was not possible to conclude that any of Mossop’s payment schedules were out of time because the evidence as to when payment claims were served was deficient, and on the evidence, left open the possibility that the payment schedules were issued within time.[14]
[14]Ibid, at [61].
The appeal
Gautam appealed the decision. It contends on appeal that:
1.There was an erroneous finding of fact that Mossop had not directed Gautam to send payment claims by email.
2.There was an erroneous finding of fact that there was no evidence as to when Mossop received the payment claims.
3.That there was an erroneous finding that Gautam was not entitled to serve payment claims by email by virtue of the Electronic Communications Act 2000.
Mossop filed a Notice of Alternative Contentions. It contends that:
1.There ought to have been a finding that the service of payment claims in the manner that occurred did not meet the requirements of s 13 of the SOP Act.
2.That, contrary to the Magistrate’s finding, the contracts did not exclude, modify or restrict the SOP Act in contravention of s 33(2) of the SOP Act.
3.That the SOP Act permits alternative reference dates other than receipt, and the Magistrate ought to have found that different dates had been agreed under the contracts.
4.In the alternative to 3 above, that the reference dates for the two contracts were the last day of the month and not the 20^thof the month.
Consideration of the appellant’s appeal
Legislative framework
The scheme for the making and recovery of progress payments by way of payment claims and payment schedules is summarised in paragraph 4 above but for convenience is set out in full below.
Part 3—Procedure for recovering progress payments
Division 1—Payment claims and payment schedules
13—Payment claims
(1)A person referred to in section 8 who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the contract concerned, is or may be liable to make the payment.
(2)A payment claim—
(a)     must identify the construction work (or related goods and services) to which the progress payment relates; and
(b)     must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount); and
(c)     must state that it is made under this Act.
(3)The claimed amount may include an amount—
(a)     that the respondent is liable to pay the claimant under section 28(3); or
(b)     that is held under the construction contract by the respondent and that the claimant claims is due for release.
(4)A payment claim may be served only within—
(a)     the period determined by or in accordance with the terms of the construction contract; or
(b)     the period of 6 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),
whichever is the later.
(5)A claimant cannot serve more than 1 payment claim in respect of each reference date under the construction contract.
(6)However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.
14—Payment schedules
(1)A person on whom a payment claim is served (the respondent) may reply to the claim by providing a payment schedule to the claimant.
(2)A payment schedule—
(a)     must identify the payment claim to which it relates; and
(b)     must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount).
(3)If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment.
(4)If—
(a)     a claimant serves a payment claim on a respondent; and
(b)     the respondent does not provide a payment schedule to the claimant—
(i)within the time required by the relevant construction contract; or
(ii)within 15 business days after the payment claim is served,
whichever time expires earlier,
the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.
15—Consequences of not paying claimant where no payment schedule
(1)This section applies if the respondent—
(a) becomes liable to pay the claimed amount to the claimant under section 14(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section; and
(b)     fails to pay the whole or a part of the claimed amount on or before the due date for the progress payment to which the payment claim relates.
(2)In those circumstances, the claimant—
(a)     may—
(i)    recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in a court of competent jurisdiction; or
(ii)make an adjudication application under section 17(1)(b) in relation to the payment claim; and
(b)     may serve notice on the respondent of the claimant's intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract.
(3)A notice referred to in subsection (2)(b) must state that it is made under this Act.
(4)If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt—
(a)     judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1); and
(b)     the respondent is not, in those proceedings, entitled—
(i)to bring a cross‑claim against the claimant; or
(ii)to raise a defence in relation to matters arising under the construction contract.
16—Consequences of not paying claimant in accordance with payment schedule
(1)This section applies if—
(a)     a claimant serves a payment claim on a respondent; and
(b)     the respondent provides a payment schedule to the claimant—
(i)within the time required by the relevant construction contract; or
(ii)within 15 business days after the payment claim is served,
whichever time expires earlier; and
(c)     the payment schedule indicates a scheduled amount that the respondent proposes to pay to the claimant; and
(d)     the respondent fails to pay the whole or a part of the scheduled amount to the claimant on or before the due date for the progress payment to which the payment claim relates.
(2)In those circumstances, the claimant—
(a)     may—
(i)    recover the unpaid portion of the scheduled amount from the respondent, as a debt due to the claimant, in a court of competent jurisdiction; or
(ii)make an adjudication application under section 17(1)(a)(ii) in relation to the payment claim; and
(b)     may serve notice on the respondent of the claimant's intention to suspend carrying out construction work (or to suspend supplying related goods and services) under the construction contract.
(3)A notice referred to in subsection (2)(b) must state that it is made under this Act.
(4)If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt—
(a)     judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1); and
(b)     the respondent is not, in those proceedings, entitled—
(i)to bring a cross‑claim against the claimant; or
(ii)to raise a defence in relation to matters arising under the construction contract.

All three of the appellant’s grounds of appeal concern the findings made by the Magistrate as to the effectiveness of the appellant’s payment claims.
Gautam’s claims were made by email, and the terms of both contracts stated that progress claims served by email were not valid.[15]
[15]SCC Contract clause 14.1 (AB 52); RGH Contract clause 42.1.1 (AB 170).
As to ground 1, the appellant maintained that there was sufficient evidence before the Magistrate to justify a finding that Ms Dansie, an employee of Mossop, issued two directions to Gautam to send all invoices to the email address to which Gautam sent the payment claims.[16]
[16]In an email in relation to the previous “Hilton Project” (AB 451) and in reply to payment claims emailed on 23 August 2020 in relation to both the SCC Contract and the RGH Contract (AB 596).
Gautam’s counsel, Mr Grace, referred to clause 38.1 of the SCC Contract which provides:
38Continuing obligation to work
38.1Notwithstanding any dispute, determination, arbitration or court proceedings, the Subcontractor must, if the Works have not been completed, at all times (unless otherwise provided for in the Subcontract) proceed without delay to continue to execute the Works and perform its obligations under the Subcontract, and in so doing must comply with all written directions given to it under the Subcontract.
The appellant relied upon this contractual provision, and its similar counterpart in the RGH Contract at clause 47.3, to argue that Gautam was subject to a direction from Mossop that overrode the prohibitions on the provision of payment claims by email.
On appeal, the contention that the Magistrate erred in finding that Gautam had not been directed to send payment claims to Mossop was developed, if not transmogrified, into a contention that there was a course of conduct between the parties that had the effect of varying the obligation on the subcontractor and in particular, overriding the express written provision that payment claims were ineffectual if submitted by email.
The authorities upon which the appellant relied did not address the issue of the parties’ intentions with respect to contractual variation, and only addressed circumstances in which email might constitute service. The heart of the appellant’s ground of appeal was that the Magistrate erred in not concluding that the contract had been varied as a result of the parties’ conduct. A contract may be varied by conduct[17] but the appellant’s case fell short of establishing that the conduct created such a variation. The contention that a contractual term authorising the giving of directions by the builder to the subcontractor in the context of the building works to be performed, should be construed as a term which in its operation should be understood to override an express provision of the contract regarding service of payment claims, was not developed.
[17]GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at [217] per Finn J.
Clearly, the primary purpose of the contractual provision regarding obedience to directions is one that is directed at the continued performance of the building works under the contract during any period of dispute. The preferable construction of these provisions is that they are enlivened by a dispute, and that they are limited to the execution of the works to be performed under the contract. Neither of those preconditions is met in respect of the submission of payment claims. Further, the appellant did not establish that, even if the directions clauses were enlivened, they operated to elevate directions above express provisions of the contract or varied the contracts. The parties did not refer the Court to any contractual provisions regarding variations except those in both contracts relating to varying the scope of the works (which is not relevant to these proceedings). There is also a general variation clause in the RGH Contract in clause 48 of the Australian Standard contract, which forms part of the RGH contract,[18] which prohibits variations or waiver of the terms of the subcontract without the prior consent in writing of the Main Contractor in each instance.
[18]AB 334.
Even if the contractual provisions concerning the giving of directions contemplates directions that run counter to the contract, which is doubtful, there was no evidence that Ms Dansie was authorised to issue such a direction, or vary the contract. There was no evidence before the Court on which it could properly have been found that Ms Dansie had the authority to vary the contract by the issuing of directions. Ms Dansie was not a person referred to in the contract as holding any particular role with respect to the contract.
Finally, whilst it is not necessary to decide, the directions related to “invoices”. Arguably, payment claims are not invoices. At least, the ambiguity of the reference to invoices demanded that the appellant check with a person with whom he was required to deal under the contract whether Ms Dansie’s email purported to alter the terms of the contract.
The Magistrate’s findings on this issue are upheld and the appellant’s ground of appeal is rejected.
When the claims were received
The appellant’s second ground of appeal was that the Magistrate made an erroneous finding that there was no evidence as to when Mossop received the payment claims. The appellant submitted that there was ample evidence that Mossop received the payment claims for the purpose of effective service, on the dates that they were sent by Gautam by email.
Section 34 of the SOP Act describes the methods by which a “notice by or under this Act is authorised or required to be served on a person”. Those methods are set out in paragraph 16.
Section 34 is said to be in addition to and not limiting or excluding, the provisions of any other law with respect to the service of notices.
It was necessary for Gautam to establish when Mossop was served with the payment claim because the act of service is relevant to the period within which the payment schedule must be provided for the builder to avoid liability to pay the claim by default.
Gautam contended that the Magistrate erred in finding that it had not established a date of receipt by Mossop of the payment claims for the purposes of the SOP Act.
The appellant led evidence at trial about the making of and responding to the payment claims. That evidence established to the Magistrate’s satisfaction that an officer of Mossop received the documents on a date not specified, and that at some particular time those payment claims came to the attention of an appropriate officer i.e. one whose receipt of the payment claims led to the claims being ‘served’, and who responded to the payment claims with payment schedules. However, the Magistrate found that at trial Gautam did not establish the particular dates upon which the appropriate officer received the payment claims. Instead, it established only that the emails had been received by an unspecified person on unspecified dates and that Mossop sent payment schedules on specified dates.[19]
[19]Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175 at [59].
To recover a progress claim, a person entitled to the progress payment “must serve it on the person who, under the contract concerned, is or may be liable to make the payment”.
The Magistrate found that the appellant established that service had occurred, notwithstanding the prohibition in the contract, if it established that common law service requirements had been met.
The appellant relied on the decisions of Howship Holdings Pty Ltd v Leslie & Anor[20] and The Trust Company (Australia) Ltd atf the WH Buranda Trust v Icon Co (Qld) Pty Ltd & Anor[21] as establishing the proposition that service was effected when the document was received.
[20](1996) 41 NSWLR 542.
[21][2019] QSC 87.
The appellant submitted that it was established that Gautam sent claims by email as follows:
·In relation to the SCC Contract: on 22 September 2020;
·In relation to the RGH Contract: on 23 August 2020, 22 September 2020, 25 October 2020 and 24 November 2020.
The appellant relied on its evidence of a stamp on each of the payment claims that stated “Mossop Received” and the relevant date, and accompanied by a handwritten signature with a “Rejected” or “Short paid” box ticked, and a different date, as evidence fulfilling the requirements of services at common law. The appellant also relied upon a document provided by the respondent to the Court at trial which summarised the events in which the respondent had described the payment claims as received on the dates that they were sent by Gautam.[22]
[22]AB 1119 to 1154.
In particular, the appellant said that the “date received” stamp established service on that date at common law.
By the appellant’s reasoning, the SCC Contract payment claim was served by 22 September 2020,[23] and each of the RGH Contract payment claims had been served on the dates they were sent by virtue of stamps indicating receipt by Mossop on that date.[24]
[23]AB 627.
[24]AB 901, 943, 949, 971.
The proper interpretation of “serve” must be one that reflects firstly the words of s 13 and interprets those words to accommodate s 34. Thus, although s 34 authorises a variety of types of service including service under common law, the starting point is the words of s 13 which require payment claims to be served “on the person who, under the contract concerned, is or may be liable to make the payment.” The assistance is provided by s 34 as to what constitutes “service” must, as a matter of statutory interpretation, yield to the requirements of s 13.
Howship Holdings Pty Ltd v Leslie & Anor[25] was called in aid by the appellant. It supports the proposition that various methods of transmission of a document may lead to effective service and that the essential element of service is the reaching of the recipient. That case assists the appellant to establish that, at common law, email may be an effective method of transmission. However, the elements of service at common law do not override the specific words of the statute. Section 13 expressly requires service to be made to the person who, under the contract, is or may be liable to make the payment. As the Magistrate found, that means that although email may be an effective method of transmission, it does not establish service without further evidence as to the receipt of the emailed payment claim by the appropriate person within Mossop.
[25](1996) 41 NSWLR 542.
The respondent contended that the appellant did not confront the gravamen of the Magistrate’s reasoning in its grounds of appeal, its written submissions, or in its oral submissions.
The evidence on this issue was as follows. The appellant’s director sent each payment claim to an email address that did not specify an individual as recipient. He sent each claim as an attachment to an email and addressed each email “Hello accounts”, and sent it to the “accounts” email address described earlier in these reasons.
Under the SCC Contract, there is a list of nine of Mossop’s personnel and the roles they are assigned by the contract.[26] None is designated as the person to whom payment claims are to be made. Mr Ross-Smith, counsel for the respondent, conceded that if the appellant had directed the payment claims to one of these persons and demonstrated that the person had been served, it would have been difficult to resist the conclusion that the claim had been made to a person who is or may be liable to make the payment under the contract. However, it was not shown that any of the named persons received the claims.
[26]AB 41.
Under the RGH Contract, Mr Ian Reeve is nominated as the “Main contractor’s representative”.[27] Gautam did not show if or when Mr Reeve was served with the payment claims, or when any other person who might have been liable to pay such a claim, was served.
[27]AB 141.
Gautam relied on evidence that:
·With respect to the SCC Contract payment claim sent on 22 September 2020:[28]
[28]AB 987-989.
·that the claim bore a stamp stating “Mossop received” with a date of 22 September 2020;[29]
[29]AB 627.
·That a Mossop officer Darren Fogarty ticked a box on the payment claim stating “Short paid”, for $44,647.35 and dated it 29 October 2020;[30]
[30]AB 627.
·That Darren Fogarty created a payment schedule in respect of this claim on 29 October 2020.[31]
[31]AB 998.
·With respect to the RGH Contract payment claim sent on 23 August 2020 in the amount of $38,779.00:[32]
[32]AB 1009-1110.
·That the payment claim bore a stamp stating “Mossop received” with a date of 23 August 2020;[33]
[33]AB 901.
·That Darren Fogarty ticked a box on the payment claim stating “Short paid”, for $38,779.74 and dated it 3 September 2020;[34]
[34]AB 901.
·That Darren Fogarty created a payment schedule in respect of this claim on 3 September 2020.[35]
[35]AB 1021.
·With respect to the RGH Contract payment claim sent on 22 September 2020 in the amount of $58,366.65:[36]
[36]AB 1011-1013.
·That the payment claim bore a stamp stating “Mossop received” with a date of 22 September 2020;[37]
[37]AB 901.
·That Darren Fogarty ticked a box on the payment claim stating “Short paid” and dated it 29 October 2020;[38]
[38]AB 901.
·That Darren Fogarty created a payment schedule in respect of this claim on 29 October 2020.[39]
[39]AB 1032.
·With respect to the RGH Contract payment claim sent on 25 October 2020 in the amount of $30,250.00:[40]
[40]AB 1025-1027.
·That the payment claim bore a stamp stating “Mossop received” with a date of 25 October 2020;[41]
·That Darren Fogarty ticked a box on the payment claim stating “Short paid” and dated it 25 November 2020;[42]
·That Darren Fogarty created a payment schedule in respect of this claim on 25 November 2020.[43]
·With respect to the RGH Contract payment claim sent on 24 November 2020 in the amount of $8,355.05:[44]
·That the payment claim bore a stamp stating “Mossop received” with a date of 24 November 2020;[45]
·That Darren Fogarty ticked a box on the payment claim stating “Rejected” and dated it 16 December 2020;[46]
·That Darren Fogarty created a payment schedule in respect of this claim on 16 December 2020.[47]
[41]AB 1045.
[42]AB 1045.
[43]AB 1044.
[44]AB 1037-1040.
[45]AB 971.
[46]AB 971.
[47]AB 1057.
From this evidence, it is consistent with the Magistrate’s reasons that the Magistrate was satisfied that “Mossop” received the appellant’s claims on the date that they were sent but that until the claims were the subject of a decision by Mr Fogarty as to whether they would be paid or not, it could not be concluded that the claims had come to the attention of an appropriate person within Mossop. Although not referred to in the Magistrate’s reasons, there was evidence before the Court that Mr Fogarty is the respondent’s contract administrator, and one of the nine persons listed on the SCC contract as the builder’s project staff, and the payment schedules state that the signatory is authorised to determine the claims. Although the payment schedules were not in fact signed, they bore the printed name of Mr Fogarty, and his signature appears on the original payment claims themselves.
Thus the appellant’s failure at trial was not to establish that the payment claims had arrived at Mossop but, given that they had not been served in the manner anticipated by the contracts, the failure was to establish that on the dates of arrival, or some other identified date, they had come to the attention of a person liable to determine the claims, so as to be able to establish when service was effected on that person.
The appellant ran its case on the basis that the emails were served on the dates on which they were sent. The Magistrate correctly rejected that proposition, because it was not shown that, on that day, they reached anyone in particular and certainly not a person who was authorised to pay the claims. The evidence of acceptance or rejection of the claims establishes that the claims were received by Mr Fogarty at some date on or before the dates on which they were partly or wholly rejected, namely:
·29 October 2020;
·3 September 2020;
·29 October 2020;
·25 November 2020;
·16 December 2020.
However, the appellant must show a particular date of service in order to establish that the payment claims are valid. As stated by Stanley J in Wärtsilä Australia Pty Ltd (ACN 003 736 892) v Primero Group Ltd (ACN 149 964 045) & Ors,[48] an element of a valid claim is that it is served on or after a reference date.[49] This is consistent with s 8 of the SOP Act which includes the reference date as conditioning the entitlement to a progress payment.[50] As the appellant cannot establish a particular date of service for any of the payment claims, it cannot establish that the claims were valid.
[48][2020] SASC 162.
[49]At [90].
[50]Okaroo Pty Limited v Vos Construction and Joinery Pty Ltd & Anor [2005] NSWSC 45 at [53].
It follows that the appellant cannot establish that the respondent’s payment schedules were out of time. It is therefore not necessary to resolve any dispute as to the reference date, or how the payment schedules are calculated because on any interpretation of the contract and the legislation, there must be a valid claim to engage the respondent’s obligations as to a payment schedule, and a valid claim has not been established. The second ground of appeal fails.
Electronic Communications Act 2000
Gautam’s third ground of appeal was that the Magistrate erred in finding that Gautam was not entitled to serve payment claims by email by virtue of the Electronic Communications Act 2000.
This ground of appeal must be rejected and may be dealt with briefly. The Magistrate did not find that the appellant was not entitled to serve the payment claims by email pursuant to the Electronic Communications Act 2000.
Properly understood, the Magistrate considered the terms of s 8 of the Electronic Communications Act 2000 and found that the requirements for service had not been established. Relevantly, s 8 requires that the “the person to whom the information is required to be given consents to the information being given by means of an electronic communication”.
Her Honour found that the evidence did not establish that aspect of the requirements for giving information that is required to be given in writing, electronically. Rather, her Honour found that there were two pieces of evidence relevant to that consent. The first was Ms Dansie’s instruction to Gautam to send invoices by email. Her Honour found that the emails were silent as to the process for payment claims as distinct from invoices.[51] To that it may be added that Ms Dansie had not been established to be a person “to whom the information is required to be given”, insofar as payment claims were concerned. Her Honour found that the second piece of evidence was the express prohibition in the contract, which did not support a finding that Mossop had consented to receipt of payment claims by email. The Magistrate found that the Electronic Communications Act 2000 did not assist the appellant because the appellant had not shown that its requirements for provision of information by email were satisfied.
[51]Gautam (SA) Pty Ltd As Trustee For Gautam Trust v Mossop Group Pty Ltd [2022] SAMC 175 at [41].

In this regard, the circumstances are distinguishable from those in Wärtsilä Australia Pty Ltd (ACN 003 736 892) v Primero Group Ltd (ACN 149 964 045)[52] in which the construction contract did not stipulate how payment claims were to be provided, allowing a conclusion that communications between the parties agreeing provision of claims by email met the consent requirement to enliven the Electronic Communications Act 2000.
[52][2020] SASC 162.
The Magistrate’s reasoning as to the way in which the Electronic Communications Act 2000 operates and its application to the evidence that was adduced, is upheld.
Grounds of alternative contention
The respondent submitted that there were further findings that the Magistrate ought to have made.
It is unnecessary to consider the Notice of Alternative Contention. Although my reasons for the disposition of the appeal recognise some of the points made, it is not necessary to express any concluded view about each of the alternative contentions.
The appeal is dismissed. I will hear the parties as to costs.