Mark Glynn, Construction Partner at Swaab considers the recent decision of Sharvain Facades Pty Ltd (Administrators Appointed) v Roberts Co (NSW) Pty Ltd [2025] NSWSC 606
Time
Time is an important aspect of the delivery of a building and construction project.
A successful project contract not only specifies the time within which the works must be carried (date for practical completion) but also the time within which rights, entitlements, obligations and acts must be exercised, met or performed.
Certainty and advance notice of issues all contribute to the greater likelihood of a successful project being delivered within time and budget and reduce the likelihood of dispute.
A failure to comply with contractual time requirements is a breach of the contract for which the affected party may have a claim for loss suffered. However, a potentially more significantly adverse consequence of failing to comply with the contractual time requirements is the loss of a right because of a time bar.
It is no surprise therefore that many construction contracts provide prescriptive regimes accompanied by specified time periods within which things must happen and include an express definition of a business day.
For example:
- within 10 business days of becoming aware of anything which will cause delay to the works, the contractor must notify the principal;
- within 10 business days of becoming aware, a contractor must advise a principal of a change on law that necessitates a change to the works and additional cost;
- within 5 business days of encountering a latent condition, a contractor must notify the principal; or
- relevant to this article, within 10 business days of receiving a payment claim from a contractor, the principal must issue a payment schedule.
Further certainly regarding time is provided by ‘deeming clauses’; which deem when an act or thing to be done under the contact is deemed to have been done by qualifying what constitutes a day or a business day.
Typically, a contract will provide that:
- the time for doing any act or thing under the contract, if it falls on a day which is not a business day, will be deemed to fall on the next business day; and
- a notice given after 5PM, being the generally accepted time of close of business, is deemed to have been given the following day.
How do these deeming clauses which govern the time for something to be done by defining a ‘business day’ interact with the time for doing something under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).
NSW SOP Act
The NSW SOP Act defines a ‘business day’ as any day other than a number of nominated exceptions and so for the purposes of the SOP Act, time begins to run the following business day.
It is well established that under the SOP Act, the time for doing something such as serving a payment claim or a payment schedule or an Adjudication Response for example within a specified number of business days, runs up until 11:59PM on the last business day of the prescribed SOP Act time period and time starts to run on the following business day.
Sharvain Facades Pty Ltd (Administrators Appointed) v Roberts Co (NSW) Pty Ltd
This issue was considered recently by the NSW Supreme Court in the matter of Sharvain Facades Pty Ltd (Administrators Appointed) v Roberts Co (NSW) Pty Ltd.
The contractor, Sharvain Facades Pty Ltd (Administrators Appointed) sent, by an agreed electronic message system, a payment claim for $3,207,999.03 to the Roberts Co (NSW) Pty Ltd (the “Principal”) at or about 7:17pm on Friday, 28 February 2025.
The relevant contract contained a provision to the effect that if a “Notice” was sent after 5pm on a business day, the Notice “will be treated to have been given to and received” by the addressee at 9am on the next business day (the Deeming Clause).
The business day following Friday, 28 February 2025 was Monday, 3 March 2025.
The critical question was whether the payment claim was served on 28 February 2025 or 3 March 2025
The Roberts Co’s payment schedule was served on 17 March 2025, more than 10 business days after 28 February 2025 but within 10 business days of 3 March 2025.
The criticality arises because the SOP Act provides that if a payment schedule is not served within 10 business days of service of the payment claim, a contractor is entitled to judgment under section 15 of the SOP Act for the full amount of its payment claim.
What is the effect of a ‘deeming clause’ on time under the SOP Act
The parties cannot under the terms of their construction contract, agree to contract out of the SOP Act.
Section 34 of the SOP Act provides that any agreement that modifies or restricts the operation of the SOP Act is void.
In Sharvain Facades v Roberts Co, the Court held that the Deeming Clause which provided that notices received after 5PM on a given business day were to be treated as if received at 9AM on the following business day, was void pursuant to section 34 of the SOP Act because the clause purported to modify the meaning of ‘business day’ under the SOP Act.
A deeming clause which modifies or restricts the operation of the SOP Act definition of business day, is void.
The Decision
In Sharvain Facades v Roberts Co the Court determined that:
- the Deeming Clause was void
- the Sharvain Facades payment claim was given on 28 February 2025
- the Roberts Co payment schedule served 17 March 2025, was served more than 10 business days after 28 February 2025
- Sharvain Facades was entitled to judgement of the Court in the full amount of its payment claim, namely $3,207,999.03.
Key Takeaway
Under the SOP Act, a document can be given at any time during a business day.
This means that a payment claim can be issued at any time before 11:59PM on a business day and time begins to run, for example under section14(4)(b)(ii) for the service of a payment schedule, on the next business day.