By Robert Riddell and Daniel Fitzpatrick of Gadens Lawyers, Sydney

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 Thursday week, if not before. Many will not re-open until well into January.

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 continues to run.

For example, if your office were to close on 18 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, 11 January 2009. Many will only be returning to work that day. Being served late in December with an adjudication application would be even worse, as the Act only allows five business days for lodging a response (or two days after the adjudicator notifies acceptance of his or her appointment, whichever is the latter).

So much for natural justice!

History demonstrates that there are some who are quite prepared to set that trap. The starkest illustration of this is perhaps the 2003 decision in 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, whetherthat amount is payable under the contract or not.

Some have attempted to argue that a payment claim is not served until it comes to the respondent's attention. Nice try, but no cigar! It matters not that your doors are closed or your mail box is not being cleared (or both). Time starts to run from the date the payment claim lands on your doorstep or is received into your fax machine's memory.

Indeed, facsimiles are a service hot spot. The facsimile machine need not even print out the claim! A satisfactory transmission report at the senders end and oral evidence as to the faxing of the payment claim led the court in Zebicon Pty Limited v Remo Construction Pty Limited to find that the claim was received into the memory of the respondent's facsimile machine (satisfying section 31(2)of the Act). Too bad if the claimant fed the claim into its fax machine upside down!

It is important to have a procedure to check for incoming correspondence over the Christmas period. You may also consider turning the fax machine off.

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. The Corporations Act authorises service on a company's registered office. 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 any payment claims served over the break.

A simple procedure to check for claims 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.

On behalf of the partners and staff of gadens lawyers we take this opportunity to wish you and your families an enjoyable and relaxing Christmas and New Year, and we look forward to working with you again in 2009.

Sydney

Robert Riddell

t (02) 9931 4940

e rriddell@nsw.gadens.com.au

Scott Laycock

t (02) 9931 4865

e slaycock@nsw.gadens.com.au

Brendan Hoffman

t (02) 9931 4956

e bhoffman@nsw.gadens.com.au

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.