Construction and Infrastructure update: Don’t let a payment claim impact you this holiday season

Dec 15, 2020

With the end-of-year and holiday season fast approaching, now is the time for respondents to take stock of all current subcontracts and consider whether any subcontractors may try to ‘sneak in’ a payment claim under the Building and Construction Industry Security of Payment Act 2002 (the Act).

What happens if a payment claim is missed?

With the Covid-19 lockdown behind us and the holiday season just around the corner, many construction companies are frantically busy and focused on making up for lost time. With this in mind, respondents need to be vigilant for payment claims under the Act.

Respondents that fail to respond to a payment claim within time leave themselves open to the possibility of a contractor claiming the amount as a debt due in Court.

Contractor’s service of a claim

Importantly, under the Act, a contractor’s claim may only be served by the later of:

  • the period determined by or in accordance with the terms of the contract; or
  • the period of 3 months after the date to be determined by or in accordance with the terms of the relevant contract as the date on which a payment claim may be made ('reference date').

In the case of a one-off payment, if there is no contractual provision, the reference date is the date immediately following the day that construction work was last carried out or goods or services were last supplied.

Service of a claim can be achieved by personal delivery, lodgment at the office, post or facsimile, or, significantly, in any other manner specified in the relevant construction contract.

It is crucial, therefore, that respondents continuously monitor any possible addresses of service throughout the end-of-year holiday period to avoid any unnoticed service of a payment claim (including, but not limited to, the respondent’s address specified in the Contract, the respondent’s ordinary place of business, the respondent’s principal place of business and the respondent’s registered office – which is often the office of the respondent’s accountant).

Importantly, service can be deemed to have taken place regardless of a respondent’s knowledge.

What days are excluded over the holiday season?

The only days that are excluded over the forthcoming holiday period in calculating the respondent’s responsibility to respond to a payment claim are weekends and the following public holidays:

  • Friday 25 December, 2020 (Christmas Day);
  • Monday 28 December, 2020 (Boxing Day public holiday); and
  • Friday 1 January, 2021 (New Year’s Day).

By way of example, if a payment claim is served on a respondent on Wednesday, 23 December 2020, then the respondent must respond to the payment claim by no later than Monday 11 January, 2021.

What happens if a payment claim or worse, an adjudication application, is received over the holiday period?

If you were to receive a payment claim over the holiday period, respondents should contact KCL Law as early as possible as we will have experienced Construction and Infrastructure lawyers on stand-by and ready to assist if needed.

More information

For more information or advice, please contact Darren Cain, Principal Lawyer, on (03) 8600 8835 or dcain@kcllaw.com.au, or Dominic Brown, Associate, on (03) 8600 8851 or djbrown@kcllaw.com.au.

Author

This Construction and Infrastructure update was authored by Dominic Brown, Associate.

Note: This update is a guide only and is not intended to constitute legal advice.

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