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Security of payment claims and statutory demands – What to look out for during the holidays

With the construction shutdown period around the corner, businesses must ensure they have proper procedures for the holidays. Claims made over the Christmas period require prompt response times and a failure to respond to claims under the security of payment legislation or the Corporations Act 2001 (Cth) may have serious and detrimental effects on a business.

Businesses must continue to check for service of documents throughout this period as failure to respond in time to certain claims, can cripple the business.

Security of payment claims and adjudications

Security of payment legislation is designed to facilitate prompt payment and to resolve construction disputes in a timely manner, this requires individuals and corporations to have fast response times.

It is particularly important to note that different states and territories will have different response times for security of payment claims.

We provided a brief comparison below in our article here.

The definition of business day and working day under the security of payment legislation varies between each jurisdiction, particularly over the industry shutdown period. It is paramount that individuals and businesses are aware of what constitutes as a business day or working day under the relevant legislation.

Briefly under the security of payment legislation:

  • In New South Wales, business day means any day other than a Saturday, Sunday, public holiday or 27,28,29,30 or 31 December.
  • In Queensland, business day does not include a Saturday, a Sunday, a public holiday, special holiday or bank holiday, any day occurring within the following periods, 22-24 December, 27-31 December and 2 – 10 January.
  • In the ACT, business day does not include 27, 28, 29, 30 or 31 December.
  • In Victoria, business day does not include a Saturday or Sunday, or a day that is wholly or partly observed as a public holiday in Victoria.
  • In South Australia, a business day means any other than a Saturday, Sunday, public holiday, 27 – 31 December or any other day on which there is a State-wide shut-down of the operation of the building and construction industry.
  • In Western Australia, a business day means a day other than a Saturday, Sunday, public holiday or a day in the period beginning on 25 December in a year and ending on 7 January in the following day.
  • In Tasmania, a business day means any day other than a Saturday, Sunday, a day specified in s4 of the Statutory Holidays Act 2000, or a day specified in Part 1 of Schedule 1 to the Statutory Holidays Act 2000, or Part 1 or 2 of Schedule 2 of the Statutory Holidays Act 200 or 27-31 December.
  • In Northern Territory, a working day means a day other than a Saturday or Sunday or a public holiday as defined in the Public Holidays Act.

If you have been severed with a payment claim or an adjudication application over the break, it is absolutely vital you are aware of the response time applicable to your jurisdiction and when a payment schedule or adjudication response will need to be submitted.

When serving documents, you will need to ensure that the documents are received by the other party within the period provided by the legislation and the documents have been properly served in accordance with the legislation.

Statutory demands under the Corporation Act

Any incorporated business will need to be mindful of their obligations to respond to statutory demands that have been issued against them under the Corporation Act 2001 (Cth) (the Act). Statutory demands are formal demands that have been issued under the Act that are due and payable to a creditor. The statutory demand can relate to more than one debt as long as the debt in total or the single debt is above the statutory minimum of $2,000.00.

If you have been served with a statutory demand, you will need to respond to the statutory demand within 21 days after the demand has been served on you. Public holidays and the Christmas break will not affect the response time.

If a statutory demand is not paid within 21 days, withdrawn or formally set aside, the company who has been issued the statutory demand will be presumed insolvent and the creditor can commence winding up proceedings.

Although a company can rebut the application for winding up, the onus of proving solvent is strict.

What can you do over the break?

It is not uncommon for creditors to serve a payment claim or a statutory demand during the holiday periods in hopes that a business or individual will fail to respond. However, with proper procedures in place this can be avoided.

To avoid the holiday period from effecting you and your business, ensure that you are aware of any payment claims or statutory demands that are served on you and the required response time that relates to your jurisdiction.

Both your office and registered office should be check regularly throughout the break to ensure you are aware of any payment claims or statutory demands that may have been served on you. If your registered address is your accountant, ensure that procedures are in place for them to check their office regularly during the break and if you have been served, how to contact you and get the documents to you during the shutdown period.

If you have any questions, or need any assistance during the holiday period, contact Michael Morrissey (m.morrissey@morrisseylaw.com.au) or Hamish Geddes (h.geddes@morrisseylaw.com.au).

 

 

 

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.