The present you don’t want to get – Dealing with SOPA payment claims over the holidays.
Unfortunately, the Christmas break poses as an opportunity for some to leverage the strict timeframes under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act), in the hope the other party will miss the relevant deadlines.
Under SOPA, if a payment claim is not responded to within 10 business days, then the respondent is liable for the entire amount claimed. Given that it is parties can sometimes ‘load up’ progress claims, the consequence of missing a SOPA payment claim over the break are significant and, in some cases, has crippled a construction business.
The same goes in reverse for service of payment schedules and Adjudication Applications, given that parties only have 5 days to file in Adjudication Response. Often a party serves a Payment Claim, a Schedule or an Adjudication Application just before the break in order to deliberately force the other party to have to respond over the break or even better in the hope they miss it and do not respond at all.
Thankfully, the Act gives a small reprieve for this period, as it defines a business day as “any day other than:
- a Saturday, Sunday or public holiday, or
- 27, 28, 29, 30 or 31 December.”
Nevertheless. Receiving service of a document under the Act during this period is still problematic, for the reasons outlined above.
Missing a Statutory Demand is a similar issue during the Christmas Break. Like SOPA Act matters, the consequences of missing a Stat Demand can be devastation on a business in that they are deemed insolvent at law. Unlike SOPA, there is no extension of time by the exclusion of certain ‘business days’ over the holiday period – it is strictly 21 days to have a Stat Demand set aside.
How do you protect yourself?
- Ensure that someone is monitoring your address for service (your ASIC registered office and principal place of business) and emails during the holiday period.
- Check your contract for any periods which exclude service of and response to payment claims.
- Consider drafting an exclusion period for service of and response to SOPA Act payment claims over the holiday period (i.e. deletion of what would otherwise be a reference date under the contact.
- If all else fails, you should always have an experienced construction law expert on call who is familiar with this extremely technical area of law (not all ‘construction lawyers’ have actual hard experience with SOPA).
If you are served with anything under the Act just before or during the Christmas break, contact Nick Achurch of our office on (02) 9016 0141 so we can help you manage the process.
This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.