It is common for contracting parties to include clauses regarding the timing of when certain steps need to be taken, and particularly to provide for anything done after 5pm to be considered done the following business day. This is particularly relevant for claims served under the provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act), which has strict time limits for compliance.

The New South Wales Supreme Court (Court) has recently handed down a decision clarifying the rules around the timing of service of payment claims under the Act. The decision addresses whether parties can contract out of the definition of “business day” in section 4 of the Act and therefore amend the obligations associated with the service of payment claims and payment schedules, which can have consequences for both contractors and head builders in terms of the risks and consequences arising in relation to the rules around timing of those payment claims and schedules.

In Sharvain Facades Pty Ltd (Administrators Appointed) v Roberts Co (NSW) Pty Ltd [2025] NSWSC 606 (the Case), the Court considered whether a clause in a contract that provided for service to be deemed the following business day if served after 5pm was void having regard to the “no contracting out” provision at section 34 of the Act.

The facts giving rise to the Case, and the decision of the Court, are set out further below.

Background

The contract between the Contractor and the Principal included, relevantly, the following clause 29.2:

“Subject to clause 29.2(4), a Notice will be treated as having been given to and received by the addressee at the time set out in the [table set out in the contract]. However, if that time is after 5pm on a Business Day or is not on a Business Day, then the Notice will be treated as having been given to and received by the addressee at 9am on the next Business Day”

(Deeming Clause).

The plaintiff, Sharvain Facades Pty Ltd (Administrators Appointed) (the Contractor) sent, by an agreed electronic message system, a payment claim under the Act for $3,207,999.03 to the defendant, Roberts Co (NSW) Pty Ltd (the Principal) at or about 7:17pm on Friday, 28 February 2025.

By operation of that electronic message system, emails were automatically sent to the Principal’s nominated email addresses at 7:18pm, informing the Principal that a payment claim had been submitted by the Contractor.

The Principal served a payment schedule on 17 March 2025; more than 10 business days after 28 February 2025 but within 10 business days of 3 March 2025. Importantly, from the Principal’s perspective, if it were found that the payment schedule was served outside of 10 business days from the date of service of the Contractor’s payment claim, then the Contractor would be entitled to judgment for the unpaid amount pursuant to section 15 of the Act.

The Key Issues

The fundamental issue to be decided by the Court was whether the Deeming Clause operated to delay service of the Contractor’s payment claim from 28 February 2025 to 3 March 2025. As stated above, if the Deeming Clause so operated, the Principal would have been within the statutory time period to serve its payment schedule, and the Contractor could not obtain judgment in respect of the unpaid amount of the payment claim.

As a matter of construction, the Deeming Clause was uncontroversial. If it applied, it was clear that because the Contractor’s payment claim was served after 5pm, it would be deemed to have been served at 9am on the following business day, being 3 March 2025.

The complication arose because of section 34 of the Act which states:

34   No contracting out

1. The provisions of this Act have effect despite any provision to the contrary in any contract.
2. A provision of any agreement (whether in writing or not)—

a. under which the operation of this Act is, or is purported to be, excluded, modified or restricted (or that has the effect of excluding, modifying or restricting the operation of this Act), or

b. that may reasonably be construed as an attempt to deter a person from taking action under this Act,

is void (Section 34).

The Decision

The Principal submitted that, irrespective of the Deeming Clause, service was not effected on 28 February 2025 because the email generated by the electronic message service was not sufficient. The Court rejected this submission and found that the address to which the email was sent was the “electronic address designated” by the Principal, and the email was capable of being retrieved on 28 February 2025.

The Court then turned to the question of whether the parties had otherwise agreed to extend service by the Deeming Clause.

The Contractor submitted that the effect of the Deeming Clause was to modify the operation of the Act, in breach of Section 34.

The Court agreed with the Contractor’s submission on the basis that the deeming clause purported to change the meaning of “business day” under clause 4 of the Act.

The definition of business day in clause 4 is, “any day other than a Saturday, Sunday, or public holiday, or 27, 28, 29, 30, or 31 December.

The Court held as follows:

a. having regard to the definition of business day in the Act, a document can be served at any time on the appropriate day, and time begins to run for the service on a payment schedule on the next business day;

b. the effects of the Deeming Clause were that:

Key Takeaways

The purpose of the Act is to reduce the risk of insolvency in the building and construction industry by ensuring that members of the contractual chain are paid for the work and services they provide.[1]

To best achieve the above goal, while ensuring adequate protections for head builders against being liable for improper or fraudulent payment claims, the Act sets out strict time-lines with which parties to construction contracts are required to comply when dealing with payment claims.

The Case provides a useful example of the risks of serving material outside of these key time restraints, and reminds those involved in construction of the need to be vigilant regarding the timing of the preparation and service of both payment claims and payment schedules.

Disclaimer

This information is general in nature. It is intended to express the state of affairs as of the date of publication. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.