December 2017

Don't let a security of payment deadline pass you by during Christmas

As you are aware, compliance with the time limits imposed under the various State based Security of Payment legislation are not only tight but need to be strictly complied with.

The time limits cannot be extended and failure to comply with a time limit can have adverse consequences.

The time limits prescribed by the Security of Payment Acts (other than the Construction Contracts (Security of Payments) Act (NT)) are all calculated with reference to business days.

For example, under the NSW Security of Payment Act (SOP Act):

  • a Principal or head contractor (Respondent) has 10 business days (or a shorter period of time if so provided in the construction contract), to provide a payment schedule in response to a payment claim;

  • a contractor or subcontractor (Claimant) who has served a payment claim but not been provided with a payment schedule, and wishes to proceed to adjudication, must prepare and serve a s17(2) notice (often referred to as a ‘2nd chance’ notice) within 20 business days from the due date for payment of the payment claim;

  • the due date for payment of a payment claim might be 15 business days in the case of a payment claim made by a head contractor to a principal or 30 business days in the case of a payment claim made by a subcontractor or, in both cases, a shorter period if so provided for in the Construction Contract;

  • a Respondent has 5 business days after receipt of a s17(2), ‘2nd chance’ notice to provide a payment schedule;

  • the claimant has 10 business days after the end of the 5 business days period referred to in the s17(2) ‘2nd chance’ notice to make an adjudication application; and

  • in the event that a claimant makes an adjudication application, a Respondent, who served a payment schedule, has 5 business days to prepare and submit an Adjudication response.

The lead up to Christmas is invariably a very busy period in the construction industry, with participants trying to finish projects so as to meet milestones and enjoy a period of closure over the Christmas and New Year period.

But be aware! … time under the SOP Act does not necessarily stop for as long as you do and there is, therefore, an increased risk that an SOP Act imposed time deadline may pass you by undetected whilst you are busy completing that last pre-Christmas project or are away from the office enjoying a well-earned end of year break.

The following dates are not counted as business days under the various State based SOP Acts:

NSW and ACT

  • a Saturday or Sunday or a public holiday; and

  • 27, 28, 29, 30 or 31 December

Victoria

  • a Saturday or Sunday or a public holiday observed in Victoria

Queensland

  • a Saturday or Sunday or a public holiday, special holiday or bank holiday;

  • 22 to 24 December;

  • 27 to 31 December; and

  • 2 to 10 January

South Australia

  • a Saturday or Sunday or a public holiday;

  • 27, 28, 29, 30 or 31 December; and

  • any other day on which there is a Statewide shutdown of the operations of the building and construction industry

Western Australia

  • a Saturday or Sunday or a public holiday; and

  • a day in the period beginning on 25 December in a year and ending on 7 January in the following year

Tasmania

  • a Saturday or Sunday or a public holiday; and

  • 27, 28, 29, 30 or 31 December

Northern Territory

N/A – the NT SOP Act does not refer to ‘business days’

Why tell me this

Remember, under the SOP Acts, payment claims or adjudication applications can still be made and served on you, and your time to respond or take action may commence running, even if your office is closed or it doesn’t come to the attention of or is not actioned by the appropriate person in your organisation who may be away on leave.

It is important to have a plan in place to deal with any payment claims or adjudication applications which may be made and served on you during the busy pre-Christmas period, or when your office is closed or staffed by skeleton staff over the Christmas and New Year holiday period.

You should ensure that those staff members who are working across the holiday period are able to identify and deal with, or have access to those who can deal with, any documents served under the relevant SOP Act.

Author: Mark Glynn