3/21/2025

Security of Payment Legislation:

A payment claim is sent on a Saturday – when is it received under the Act? (You’ll have 15 business days from that day to send back a payment schedule or be liable to pay the full amount claimed)

If notice provisions in your construction contract provide that an electronic communication that is made on a non-business day is taken to be received at 9am on the next business day, will those contractual provisions apply to a payment claim sent under The Building and Construction Industry (Security of Payment) Act 2021 (WA) or SOP Act (Act)?

(A quick reminder - although it is called the Building and Construction Industry (Security of Payment) Act, this legislation applies to contracting chains (including suppliers of related goods and services) for the delivery of major construction projects including in the mining sector!)

The decision of the Western Australian Supreme Court in Martinus Rail Pty Ltd v Co-Operative Bulk Handling Ltd [2025] WASC 373 (Martinus v CBH) may be surprising for some.

Why it matters

The Act permits a party to a construction contract to make a 'payment claim' for a 'progress payment' that it claims is due under the Act and the Act requires the party responding to the payment claim to respond by giving a 'payment schedule' within a maximum of 15 'business days'. If the payment schedule is not given within the time allowed, the respondent to the payment claim becomes liable to pay the full amount claimed.

In Martinus v CBH the plaintiff emailed a payment claim pursuant to the Act to the defendant on Saturday 31 August 2024 in the amount of $22,646,617.21 (excl. GST). The defendant responded on Tuesday 24 September 2024 with an email attaching a payment schedule certifying the amount of $5,425,550.66 (excl. GST) as owing by the plaintiff to the defendant and refused to pay to the entirety of the amount claimed by the plaintiff in the payment claim.

Was CBH’s payment schedule sent to Martinus within the 15 business days required by the Act? Or were they too late, and therefore liable to pay the entire amount of Martinus’ payment claim?

Why the confusion?

Not uncommonly, the construction contract in Martinus v CBH contained notice provisions that provided, in effect, that if electronic communications (to a designated email address) were made on a non-business day, they were taken to be received at 9.00 am on the next business day.

If those contractual provisions apply to the sending of a payment claim under the Act, then the payment claim emailed by Martinus to CBH on Saturday 31st August was taken to have been received by CBH at 9am on the business Monday. If that were the case, then the payment schedule sent by CBH on Tuesday the 24th of September 2024 was “in time” (spoiler: it wasn’t) and CBH did not automatically have to pay the full amount of the payment claim (spoiler: it did).

 The answer

The Building and Construction Industry (Security of Payment) Regulations 2022 (WA)(Regulations) provide for when a document that is authorised or required by or under the Act (such as a payment claim) to be given to a person is taken to have been given (emphasis supplied).

Regulation 23(a) says a document sent to a person by email or any other form of electronic communication is taken to have been given to a person ‘when the electronic communication is taken to be received by the person in accordance with the Electronic Transactions Act 2011 section 14'. (emphasis supplied)

The introductory words of s 14 of the Electronic Transactions Act 2011 use the phrase “unless otherwise agreed”. CBH had taken that to mean the contract notice provisions would apply to determine when a payment claim sent by email would be taken to have been given. Contrastingly, Martinus said the words of the text in paragraph (a) in section 14(1) apply, namely, the time of receipt of the electronic communication is the time when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee. (emphasis supplied)

Ultimately, the essential question was what is meant by the words ‘when the electronic communication is taken to be received by the person in accordance with the Electronic Transactions Act 2011 section 14', from Regulation 23(d).

In answering that question, the court considered that:

1. the Act does not provide that the parties to a contract may agree when a payment claim is given under the Act, and

2. properly construed, Regulation 23(d) of the Regulations and s 14 of the Electronic Transactions Act 2011 had the effect that the 15 business days for the purposes of the Act was to be calculated from when the emailed payment claim was capable of being retrieved, which meant the Saturday in this case.

The court considered that what the parties had agreed by their contract notice provision “is irrelevant”. Regulation 23(d) and s 14(1)(a) of the Electronic Transactions Act 2011 have the effect that Martinus’ emailed August Payment Claim was given to CBH on Saturday 31 August 2024. CBH had therefore not sent a payment schedule to Martinus within the statutory timeframe of 15 days and so Martinus was entitled to judgment for the full amount of the payment claim, together with interest.

 Takeaway: On the basis of Martinus v CBH the parties to a contract, agreement or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party in Western Australia (*) should bear in mind, commercially, that where a payment claim under the Building and Construction Industry (Security of Payment) Act 2021 (WA)(Act) is sent by email to an email address designated in a construction contract for such communications, the “15 business days” clock under the Act for giving a responsive payment schedule starts ticking from the time the email attaching the payment claim is sent and capable of being retrieved by the email addressee. (emphasis supplied!)

(*)         including, under the Act, fabricating or assembling items of plant used for “extracting or processing any mineral bearing or other substance” (emphasis supplied).

Geoffrey Walker & Associates ABN 92 495 396 

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