This decision provides practical guidance on when a 'payment claim' is taken to have been made (and the date from which the maximum period for providing a payment schedule is to be counted) for the purposes of the Building and Construction Industry (Security of Payment) Act 2021 (WA) (Act).
The introduction of the Act represents the most significant legislative reform to the construction industry in Western Australia to date.
The object of the Act is to provide an effective and fair process for securing payments to persons who undertake to carry out construction work, or to supply related goods or services, in the building and construction industry.
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. The Act requires the party responding to the payment claim to respond by giving a 'payment schedule' within a maximum of 15 'business days'. Section 26 of the Act provides that the respondent to the payment claim becomes liable to pay the claimed amount if the payment schedule is not given within the time allowed.
The decision in Martinus Rail Pty Ltd v Co-Operative Bulk Handling Ltd [2025] WASC 373 illustrates the harsh consequences that a party will suffer if it fails to respond to a payment claim within the timeframe set out in the Act.
Background
Martinus Rail Pty Ltd (Martinus) and Co-Operative Bulk Handling Ltd (CBH) entered into a contract under which Martinus was obliged to construct a rail siding and associated infrastructure at Broomehill in Western Australia (Contract).
Clause 47.4 of the Contract provided that if communications are received under clause 47.2 on a non-business day, they are taken to be received at 9:00 am on the next business day. Clause 47.2 addresses when a 'Notice' given in accordance with clause 47 is treated as having been given and received.
On Saturday, 31 August 2024, at around 4:35 pm WST, Martinus sent an email to CBH attaching a payment claim in the amount of $22,646,617.21 (ex GST). The email reached CBH and became capable of being retrieved by CBH on 31 August 2024 at around 4:36 pm WST.
On Monday, 2 September 2024, CBH opened and read the email and attachment.
On Tuesday, 24 September, at around 4:32 pm WST, CBH sent an email to Martinus attaching a payment schedule in relation to the payment claim, certifying the amount of $5,425,550.66 (ex GST) as owing by Martinus to CBH.
On 25 September 2025, Martinus gave to CBH a tax invoice in respect of the claimed amount ($22,646,617.21 (ex GST)).
CBH refused to pay to Martinus the entirety of the claimed amount.
The parties' respective positions
Martinus argued that clause 47 of the Contract was irrelevant for the purposes of the Act. It contented that, properly construed, section 113(4) of the Act, regulation 23(d) of the Building and Construction Industry (Security of Payment) Regulations 2022 (WA) (Regulations) and section 14 of the Electronic Transaction Act 2011 (WA) (Electronic Transactions Act) had the effect that the 15 business days for the purposes of the Act was to be calculated from the Saturday (31 August 2024).
CBH disputed Martinus' argument. CBH contended that, properly construed, regulation 23(d) of the Regulations and section 14 of the Electronic Transactions Act provided that the parties can agree when a payment claim was taken to be given for the purposes of the Act. CBH argued that, by clause 47.4 of the Contract, the parties had agreed that the payment claim was to be taken as given on the Monday (2 September 2024, the next business day).
In response to CBH's argument, Martinus contended that, when the Contract was properly construed, clause 47 was concerned with the service of Notices and was not an agreement about when a payment claim was given under the Act.
Decision
The Supreme Court of Western Australia awarded judgement in favour of Martinus.
Regulation 23(d) provides that documents sent by email or any other form of electronic communication are 'taken to be given' when 'the electronic communication is taken to be received by the person in accordance with the Electronic Transactions Act section 14' which, in turn, provides that, unless otherwise agreed, electronic communications are received when 'the electronic communication becomes capable of being retrieved by the addressee'.
The Court determined that, when properly construed, regulation 23(d) of the Regulations and section 14 of the Electronic Transactions Act:
- had the effect that the 15 business days for the purposes of the Act was to be calculated from the Saturday (as it was capable of being retrieved then); and
- the Act does not provide that parties to a contract may agree to when a payment claim is given under the Act. As such, what the parties agreed by clause 47.4 of the Contract was irrelevant.
This decision meant that Martinus' payment claim was made on 31 August 2024 and CBH failed to respond to the payment claim within the 15 business day period allowed for a response. It followed that Martinus was entitled to recover the unpaid portion of the claimed amount plus interest.
The Court's decision turned on the proper construction of certain provisions of the Act, Regulations and Electronic Transactions Act, the objects of that legislation and relevant case law from other jurisdictions, to aid in understanding the statutory scheme and operation of the Act, which has been largely untested to date.
Ultimately, the Court was persuaded that:
- regulation 23(d) does not apply the words 'unless otherwise agreed' that appear in the chapeau to section 14 of the Electronic Transactions Act because regulation 23(d) applies when an email or electronic communication is 'taken to be given' by section 14. As the chapeau of section 14(1) does not provide for when an email or electronic communication is 'taken to be given', the chapeau has no relevant application; and
- the policy evident from sections 25(1) and 3(2) of the Act is to ensure expedition by strictly limiting the time for a response to the time limits set out in the Act. As such, the construction (noted above) is consistent with the policy of the Act as it leaves the time limits in section 25(1) of the Act undisturbed.
The Court noted that the construction advanced by CBH had the potential to undermine the expedited procedure established by the Act because it would permit parties to agree to defer the start of the relevant time period and thereby extend that period (potentially indefinitely). Such a construction would be inconsistent with the policy of the Act.
What does this mean for you?
When the bill for the Act was presented the legislative council, the Hon Alannah MacTiernan stated 'Make no mistake about it: the bill is a game changer for security of payment.' This recent decision is an illustrative example of how the Act is a 'game changer'. By not putting in a payment schedule within the statutory timeframe under the Act, CPB was required to pay the unpaid portion of the payment claim (which was presumably the difference between the claimed amount of $22,646,617.21 and the certified amount of $5,425,550.66).
One key takeaway from the decision is that contractually parties are not able to 'agree to defer the start of the relevant time period and thereby extend that period (indefinitely).' In light of this decision, there may be merit in reviewing the notice (or deeming) provisions in construction contracts to which the Act applies to ensure such provisions are compliant with the Act.
Another key takeaway for parties served with a payment claim under the Act on a weekend is that the maximum 15 Business Day period for providing the payment schedule is to be calculated from the weekend (with Monday being 'day 1' as opposed to 'day 0' assuming it isn't a public holiday in Western Australia).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
