Construction contracts frequently include a deeming clause providing that any notice, including the service of a payment claim or payment schedule, served after 5:00pm is deemed to be received at 9:00am on the next business day.
In Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161 (Roberts v Sharvain), the NSW Court of Appeal held that such a clause no longer has any effect on the calculation of time under Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA). The statutory clock runs from the date of service as defined in the Act, not the date deemed by the contract. This means a payment claim served after 5:00pm on a business day is still taken to be served on that business day under SOPA.
Determining the time for when a payment claim was served is critical for calculating when a payment schedule needs to be served. Section 14(4) SOPA requires the respondent to provide a payment schedule to the claimant within the earlier of:
- the time required by the construction contract; or
- 10 business day after the payment claim is served.
If no payment schedule is provided within that time, the respondent becomes liable to pay the full claimed amount on the due date for the progress payment, and the claimant can commence court proceedings to recover the debt.
Therefore, understanding when a payment claim is served is essential.
Facts and reasoning behind the decision
Sharvain emailed a payment claim for $3.208 million to Roberts on Friday, 28 February at 7:18pm. The contract contained a clause deeming any notice sent after 5:00pm on a business day will be treated as having been received at 9:00am on the next business day (Deeming Clause).
Relying on the Deeming Clause, Roberts issued its payment schedule on Monday, 17 March 2025, which was within 10 business days if service was deemed to occur at 9:00am on Monday, 3 March 2025.
The court held that the Deeming Clause had no effect for the purposes of SOPA. The Court held that service occurred when the claim was actually sent, being 7:18pm on Friday, 28 February 2025, even though it was sent after 5:00pm, because it was served on a business day. Pursuant to s4 of SOPA, service after 5:00pm is still service on the same business day, and the contractual deeming clause could not postpone the date of service. This meant the 10-business day period expired on Friday, 14 March 2025. The payment schedule was therefore late, and Sharvain was entitled to judgement under SOPA section 15.
The Court’s reasoning rests on the structure and protective purpose of the SOPA:
- a payment claim sent by email is “served” when it is capable of being retrieved by the recipient (section 31). Sharvain’s email was retrievable at 7:19pm on 28 February, and service occurred at that time;
- the Deeming Clause attempts to alter when a notice is treated as received on a “business day”, but s4 of SOPA defines a business day without limiting service to business hours. A payment claim can be served at any time on a business day. Postponing service would extend the s14(4) of SOPA deadline. Pursuant to section 34, any provision that alters the operation of the SOPA is void; and
- s14(4) of SOPA allows a construction contract to impose a shorter time for serving a payment schedule, but it cannot lengthen the statutory 10-business-day limit. This reflects SOPA’s policy of quick resolution.
Key Takeaways
This decision underscores the need for caution when calculating the time for serving payment schedules and confirms that contractual deeming clauses cannot be used to extend SOPA timeframes. Parties must calculate the deadline by reference to the date of service as determined under SOPA and the statutory 10-business day limit, not any deeming provision in the contract. A conservative approach is essential. It also means that where payment claims are served on a Friday, the respondent needs to act expeditiously in considering the payment claim and its response in a payment schedule to meet the timeframe in serving the payment schedule. Consideration will need to be given to other timeframes provided in SOPA. SOPA timing rules should be applied strictly, and legal advice should be sought promptly if the date of service or deadline is uncertain.
At Bryks Lawyers, we are experienced in advising on Building and Construction Industry Security of Payment Act 1999 (NSW) and construction contracts. Contact us today to see how we can assist you!
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