Christmas. It’s the time of year full of festive cheer, too much ham and beer and…
unexpected construction claims.

With less than a month until Christmas, its time to turn our minds to the operation of Security of Payment Legislation over the shutdown period to ensure the holidays aren’t made less joyful by unanticipated disputes and unforeseen claims.

Like everyone else, principals and head contractors should be looking forward to a much-needed break, and whilst the Building and Construction Industry Security of Payment Act 1999 (NSW) (the SOP Act) provides some relief over the Christmas period, they will need to remain vigilant to avoid an unexpected surprise!

Here are Morrissey Law + Advisory’s tips and tricks to negotiating the Christmas period unscathed!

The Christmas ‘Break’

The SOP Act does provide principals and head contractors with some relief over the Christmas break. In addition to public holidays and weekend days not being ‘business days’ for the purpose of the Act, the 27th, 28th, 29th, 30th and 31st of December don’t qualify as business days either. Meaning no business days arise between Christmas and New Year’s Day.

Noting the above, with both Christmas and New Year’s Day falling on a Wednesday, business days will arise on the Monday and Tuesday before Christmas and the Thursday and Friday after New Year’s. Therefore, the common shutdown period between 21 December 2019 and 6 January 2020, includes 4 business days for the purposes of the SOP Act.

Accordingly, it is important to take the above into consideration when calculating the ‘due date’ for any action under the SOP Act.

(It’s also worth noting there is no relief if a statutory demand is received – there is still only 21 days to pay or have that set aside.)

The Act must go on!

The SOP Act provides short-lived relief, but that’s all it is… short-lived. If a principal or head contractor receives a claim they don’t intend to pay, they must respond in accordance with the Act. Failure to do so will have the same ramifications as any other time of year.

Deadlines

If a principal or head contractor has 10 business days to respond to a payment claim, it must be received on the 10th business day, not sent on the 10th business day.

This can be tricky over the break as offices close, fax machines are unplugged and emails ‘won’t be checked over Christmas.’ It is important to be organised and serve payment schedules in accordance with the relevant contract.

The other side of that coin, of course, is that principals and head contractors don’t want to be caught off-guard by receiving a payment claim or an adjudication application whilst they’re out of the office and lose valuable time to respond.

Therefore, all potential channels of communication should be checked over the break. Including all mailing addresses, satellite or remote offices, the registered office, places of business and all email addresses (if the construction contract allows for electronic service of payment claims).

Expect the Unexpected

As contractors finalise their accounts for 2019, principals and head contractors should expect the unexpected. From ambit claims, to ‘sneaking’ in one last claim for 2019, all parties should be proactive to avoid any unfortunate surprises in the New Year.

Remember, claims can still be made on the Monday and Tuesday before Christmas (23-24 December), so don’t get caught out!

 

Note: For the purposes of this article, we are referring to New South Wales jurisdiction (the Building and Construction Industry Security of Payment Act 1999 (NSW)).
The security of payment regime varies between states and territories. If you have any questions around the regime in other jurisdictions, please reach out to our team
.

 

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.