Payment Claims over Christmas Break: A Matter of Timing

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By Ziv Ben-Arie, Partner, Andrew Wallis, Partner, and Peter Meades, Partner

As offices shut down over the holiday period, some claimants see this as an opportune time to try to ambush potential respondents with payment claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act), in the hope that they will go undetected, and become due and payable debts. Apart from the period between Christmas and New Year, the Act does not make many allowances for the industry standard holiday shutdown period, which usually goes until the end of the first or second week in January.

Once a payment claim under the Act is received (assuming it is valid), the respondent has 10 business days to provide a payment schedule otherwise they become liable for the full amount claimed. Under the Act, business days only exclude weekends, public holidays, and 27-31 December (inclusive). This leaves very little time, particularly in the case of large claims, to provide a satisfactory response (remembering the Payment Schedule set out all arguments for deducting or withholding that may be relied on). If the claim, say served on 23 or 24 December 2015, is not discovered until reopening (for example, Monday 11 January 2015) as this year the 10 business days response period will begin from Monday, 4 January 2016.

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, faxing to the same, or any manner provided for by the contract. Service can also be affected on the registered office. As soon as the claim is on the doorstep or in the fax machine’s memory, the 10 day period has begun.

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. Specifically, these should be checked as late as possible on 24 December 2015, and as early as possible on 4 January 2016, so as to allow the maximum time to prepare a response.

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 available over the entire period (and it is far better to be safe than sorry). If you have any questions or require further information please do not hesitate to contact us.

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

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