As the Christmas and New Year period approach rapidly and companies seek to finalise outstanding payment claims, it is imperative that an adequate process is implemented to deal with payment claims and adjudication applications that are served while your office is closed.

Indeed it may seem an opportune time to serve a payment claim or adjudication application pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW)(the Act) on an unexpecting respondent. In circumstances where this does occur, it is important to note that the Act waits for no one and the statutorily imposed time limits are steadfast. Therefore, for an unsuspecting respondent, the consequences of missing a payment claim or adjudication application could be an unwelcoming pie to your new year's resolution.

Here's why.

Pursuant to the Act, a respondent has 10 business days to respond to a payment claim with a payment schedule. In the event that the 10 business day deadline is not complied with, (in most cases) the respondent becomes liable for the full amount. To put this simply, the respondent effectively relinquishes its statutory entitlement to submit a payment schedule in response to the payment claim which ought to contain its assessment of the value of the works claimed for.

The definition of "business days" under the Act only excludes weekends, public holidays and 27 December – 31 December of any given year. Accordingly, there is an obvious shortfall in terms of time to respond to payment claims served on a respondent, particularly for large and/or complex claims.

Service is taken to have been effected once the payment claim has been served on the respondent and NOT when the respondent first notices it. This may done via post, email and fax. There are no provisions within the Act which allow for extensions of time, nor will the statutory deadlines be relaxed on the premise that the payment claim did not come to the attention of anyone within a business. The payment claim is taken to be served even if no one notices it, provided it is done in accordance with the Act.

Before kicking the legs up for a hard-earned break over the Christmas and New Year period, it would be prudent to ensure that you have implemented procedures which minimise your exposure to the contingencies identified in this article. This may include:

  • diarising when your company can expect to receive a payment claim
  • monitoring your ordinary place of business
  • monitoring the registered office
  • adequately educating staff to deal with payment claims or adjudication applications in your absence
  • ensuring access to emails and fax
  • knowing how to deal with a payment claim or adjudication application served during the break period.