Christmas is almost here again and most people will be looking
forward to enjoying a well earned break. Many offices will be
closing for the year on Friday and some will not re-open until well
into January. In particular, the building and construction industry
traditionally enjoys a lengthy shut down period during which tools
are downed and hands stretch out for a few cold drinks until works
Unfortunately for some, one thing that does not take much time
off over Christmas is the Building and Construction Industry
Security of Payment Act (the Act). Apart from
public holidays, weekends and the days between Christmas and New
Year, the time for providing payment schedules and adjudication
responses under the Act continues to run.
For example, if your office were to close on 19 December 2008
and you are served with a payment claim under the Act the following
day, the 10 business days to provide a payment schedule in response
would expire on Monday, 12 January 2009. Many people may only be
returning to the office that day. Being served late in December
with an adjudication application would be worse yet, as the Act
only allows 5 business days for lodging a response.
It is worth remembering that the Act remained relatively unused
until the 2003 decision of Walter Construction Group v CPL
(Surry Hills), where the developer was found liable for almost
$14 million after failing to respond in time to a claim served on
20 December 2002. Failing to provide a response in time can you
leave you liable under the Act to pay the entire amount of the
claim, whether that amount is payable under the contract or not.
You obviously don't want to be caught in that trap. It also
appears that the number of claims being made under the Act has
significantly increased over the last 3 months, as people start
chasing outstanding money harder.
For this reason it is important to have a procedure to check for
incoming correspondence over the Christmas period. Under the Act
claims can be served on an ordinary place of business or other
premises provided for in the construction contract, whether they
are open or not. Service on a company's registered office is
also valid service, so if you use an accountant or other advisor as
your registered office you should ensure that they have a process
in place to check for claims over the break.
Most claims for payment said to be made under the Act and
relating to construction work or related goods and services will
attract the operation of the Act. Given the potentially dire
consequences of not responding to a claim in time, it is important
that any claims for payment that are received are carefully
examined and not simply left in the in-tray of someone on leave.
Relatively innocuous looking invoices can often result in
significant judgments under the Act.
If a simple procedure to check for claims is put in place, you
can avoid receiving an unwanted Christmas present in the New Year.
If you have any concerns in relation to a document you receive, we
recommend you seek advice from us as soon as possible to avoid a
situation where your time to provide a response has expired.
t (02) 9931 4956
t (02) 9931 4830
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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