Con­struc­tion con­tract time­frames and their inter­ac­tion with the NSW Secu­ri­ty of Pay­ment legislation.

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.