Security of Payment claims, responses and Statutory Demands…

December 22, 2015 by Amanda Ismail


Michael Morrissey and Hamish Geddes from Nexus Law Group provide a great overview as to how you can avoid any payment claim disputes over the Christmas period!

Don’t let a forgotten claim spoil the holidays!

The race towards Christmas can be a hectic time of year, but it’s important that proper procedures are put in place prior to the construction industry shutdown to ensure there are no unwanted presents or surprises when you reopen your office in 2016.

It’s important to stay aware of claims that may need a prompt response time, even over the holiday.  A failure to respond to claims, including under the Security of Payment legislation or the Corporations Act 2001 (Cth), could have a devastating effect on your business.

Security of Payment claims and adjudications

The Security of Payment legislation is designed to facilitate prompt payment.  This means fast response times are always required.  If your company works across different states and territories be aware the response times for Security of Payment claims can vary dramatically between jurisdictions.

Each state or territory has a different time periods for the response.  These are broken down broadly in the table below:

Importantly, what is a business or working day varies between each jurisdiction, particularly over the Christmas period, so this can critically effect when a schedule or response needs to be submitted.

  • In NSW Business Days are any days that are not a Saturday, Sunday, public holiday or 27-31 December 2015.
  • ACT, South Australia and Tasmania mirror the NSW legislation insofar as what days are and aren’t Business Days.
  • In Queensland Business Days are days that are not Saturday, Sunday, a public holiday, 22-24 December, 27-31 December, or 2-10 January 2015. This means that for Queensland projects, Security of Payment should not pose a substantial problem as the clock is not ticking during the standard industry shutdown.
  • In Victoria however, the position is substantially different. For any Victorian claim Business Days include all days that are not Saturday, Sunday or a public holiday.  This means that the clock will be ticking between 27 and 31 December.
  • In Western Australia, it’s working days instead of business days and working days are all days other than Saturday, Sunday or public holidays. In the Northern Territory it is weekends, public holidays and 27-28 December.

If you do receive a Payment Claim or an Adjudication Application over the break it is vital you check the response time you have and to ensure any claim or response is filed and served within the required time.

For example, in NSW you have 10 Business Days to respond to a Payment Claim with a Payment Schedule if you do not intend to pay the full amount, 5 Business Days to respond to a notice under s17(2) of the Building and Construction Industry Security of Payment Act 1999 (NSW), and 5 Business Days to submit an adjudication response.

Remember, in serving any documents, the documents must be received by the other party within the period provided by the legislation – not just sent.

Statutory demands – a silent threat to business

Any incorporated businesses need to also be mindful of responding to any statutory demands issued against them.  Statutory demands are formal demands for payment under the Corporations Act 2001 (Cth) issued on the basis that the debt is due and payable and can be made by any creditor claiming more than $2,000.00.

A statutory demand must be responded to within 21 calendar days.  Public holidays and the Christmas break do not affect the response time.

If a statutory demand is not paid within the 21 days, withdrawn, or formally set aside, a company will be presumed insolvent and a creditor can commence wind up proceedings.

Our experience is that disgruntled creditors, particularly those with a dubious claim or debt, may use the statutory demand of Security of Payment processes over the break in the hope that a business fails to respond.  This can be avoided by good management.

What to do over the break

Ensure that both your office and registered office are checked regularly throughout the break and industry shutdown to ensure that you see all claims or demands that require responding to.  If your registered office is your accountant, ensure they have procedures in place to check what documents have been served on them and to get those documents to you, particularly any document that could critically effect the business.

A prompt response to any claim made over the break or seeking legal advice may help avoid headaches or heartache to start 2016.

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