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Ensure you're not served a payment claim while closed for the holidays

Construction Law News | December 2015

It is important that those who operate in the building and construction industry are aware of the possible effects of a payment claim being served on your office during this period of industry shutdown.

The NSW Supreme Court in Olympia Group Pty Ltd v Tyrenian Group Pty Ltd [2010] NSWSC 319, service of a payment claim is only effective when it is served on the party to the construction contract, and not to a related party.

Section 31(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA”) requires all notices, including payment claims, to be served on a party to a construction contract by:

  • by delivering it to the person personally
  • by lodging it during normal office hours at the person’s ordinary place of business
  • by sending it by post or facsimile addressed to the person’s ordinary place of business
  • in such other manner as may be prescribed by the SOPA regulations, or
  • in such other manner as may be provided under the construction contract concerned.

Under section 31(2) of SOPA, service of a notice that is sent to a person’s ordinary place of business, as referred to in (c) above, is taken to have been effected when the notice is received at that place. This means that during the industry shutdown period, or during any period that your offices are closed, you need to make it absolutely clear to all those concerned that your office is closed and that you are unavailable for a specified period of time.

If you fail to serve a payment schedule in response to a payment claim, under subsection 14(b) of SOPA you will become liable to pay the full amount of the payment claim on the due date. Subsection 16(2)(a)(i) of SOPA also provides that where a payment claim has been validly submitted under SOPA and no payment schedule in response is provided, the claimant may recover the unpaid portion of the claimed amount as a debt.

To avoid being served with a payment claim when there is nobody in your office to receive the documents, it is good practice to:

  • turn off your fax machine
  • indicate on your website, telephone message and all office emails that your office will be closed for a certain period, and
  • set up out of office automatic replies for all office emails.
Forum Law is uniquely qualified and experienced in all matters of building and construction law. Contact us through our online form or phone us on 02 9560 3388 to discuss any building matter including those concerning the Home Building Act [NSW].

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