Don’t get caught out – Security of Payment over Christmas

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By Ziv Ben-Arie, Partner

As the industry shuts down over the holiday period, some claimants see this as an opportune time to serve payment claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act), possibly in the hope that they will go undetected, which may have devastating consequences.

Once a payment claim under the Act is served, the respondent has 10 business days to provide a payment schedule. If they do not do so within that time, the party receiving the claim becomes liable for the full amount. -+

Under the Act, “business days” only exclude weekends, public holidays, and 27 – 31 December (inclusive). This may leave very little time, particularly in the case of large claims, to provide a satisfactory response detailing reasons for withholding payment, if that is the case.

If, for example, a claim served on 23 December 2016 is not discovered until after the holiday period, the 10 business days in which a payment schedule must be served may expire.

The clock starts ticking as soon as the payment claim is served, rather than when it comes to the respondent’s attention. Service of a payment claim can be affected by posting it to the respondent’s ordinary place of business or by fax and email. Service at registered offices of companies may also be valid and harder to detect.

It is therefore prudent during this time to implement procedures that prevent a payment claim going unnoticed until it is too late. The physical premises of both the ordinary place of business and the registered office should be monitored, as should the fax machines and email inboxes of everyone involved in a project.

If you receive any documents over the holiday period that may constitute a payment claim under the Act, do not hesitate to call us, as we are available over the entire period (and it is far better to be safe than sorry).

For further information, please do not hesitate to contact us.

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