Who is minding the shop? Security of Payment over the Christmas period

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WHO SHOULD READ THIS

• Any principal, contractor or subcontractor who has entered into a construction contract for construction work carried out or related goods and services supplied.

WHAT YOU NEED TO KNOW

• How the Christmas and New Year break impacts the service of documents under Security of Payment legislation.

WHAT YOU NEED TO DO

• Ensure that you are aware of the timeframes for service of payment claims and applications for adjudication in your State or Territory.  Put adequate systems in place to monitor documents coming in and out, and for record keeping.

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Christmas has historically been a time when parties have been ‘ambushed’ by statutory payment claims or applications for adjudication.  A party may miss a due date to respond because of an office or site closure.  Key personnel may be away and systems fail with respect to responding to claims.  This is a problem when the due dates under the adjudication regime to respond are strict and inflexible.  Parties served in the lead-up to the Christmas period in Australia should carefully review the due dates to respond. 

Some jurisdictions have periods of time – known as ‘blackout’ periods – which are excluded when counting the due date to respond.  However, as the following table summarises, these periods differ between the States and Territories under the ‘East Coast’ model:

Separate time frames apply for responding to applications for adjudication.

Failing to respond to either payment claims or applications for adjudication impose significant risks for a respondent, which we have set out below.

Risks

With many ‘blackout’ periods ending on 1 January 2020, this may mean that due dates for serving payment schedules, or adjudication responses, are overlooked. 

In some jurisdictions, the consequence for missing the due date for serving a payment schedule could mean that a party is liable to pay the whole of the payment claim as a statutory debt.  By failing to comply with the due date for serving an adjudication response, a respondent is not able to present submissions in support of a payment schedule before an appointed adjudicator.

Risks are more acute in Queensland, as a valid statutory payment claim does not need to state that it is endorsed as a payment claim made under the Building Industry Fairness (Security of Payment) Act 2017 (Qld).  A document that does not expressly state that it is under the Act – but nevertheless meets the statutory requirements of constituting a payment claim – may still give rise to a statutory debt if no payment schedule is served. 

Steps to take

In light of these risks, steps your team can put in place to minimise the risk of missing a statutory Security of Payment due date include:

• monitoring email inboxes, service of notices on registered offices, site offices, addresses for service of notices under the contract, fax machines (if applicable) and online document portals in the lead-up to Christmas;
• ensuring the responsibility of responding to contractual notices and potential Security of Payment related claims or adjudications are allocated to an individual over the Christmas period;
• calculating the due dates for payment schedules or adjudication responses, taking into account the ‘blackout’ period in your State or Territory; and
• having systems in place to monitor whether a payment claim or application for adjudication is served early in the New Year, particularly if key project personnel will still be on leave.

For further information on any of the issues raised in this alert, please contact our team below:

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.