Deemed-service clause doesn’t buy extra time for provision of payment schedule under SOPA

Can a deeming provision in a construction contract – which purports to deem notices served after 5pm as having been served on the next business day – delay or extend the date of service of a payment claim for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA)?

This question is critical for determining whether a payment schedule has been served within the 10 business day period required by the SOPA, and the consequences that then follow.

In an important decision for the construction sector which reaffirms the primacy of the SOPA over contractual terms, the NSW Court of Appeal in Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161 found that the deeming clause did not operate to change the time of service of the payment claim to the following business day for the purposes of calculating time under SOPA for the provision of a payment schedule. In addition, it set out important guidance on the use of electronic platforms for serving payment claims, and when the clock starts to run.

Impact of deeming clause on timing of service of payment claim under SOPA

Roberts Co (NSW) Pty Ltd was the head contractor who had engaged Sharvain Facades Pty Ltd to carry out construction works at Westmead Hospital. The construction contract contained a deeming clause to the effect that a notice sent after 5pm on a business day will be treated to have been given to and received by the addressee at 9am on the next business day.

Sharvain sent, by an agreed electronic message system called Payapps, a payment claim for approximately $3.2m to Roberts at about 7:18pm on Friday, 28 February 2025. Roberts provided a payment schedule on Monday, 17 March 2025.

Under section 14(4) of the SOPA, Roberts had to provide a payment schedule within the time required by the construction contract or within 10 business days after the payment claim was served, whichever time expired earlier.

If the 10 business day period commenced on Friday, 28 February 2025 (when it was actually served), the payment schedule was out of time as it had to be provided by Friday, 14 March 2025, and Sharvain was entitled to judgment under section 15 of SOPA. However, if time commenced on the next business day (i.e. Monday, 3 March 2025) as contemplated by the deeming provision in the construction contract, the payment schedule was provided within time.

Why the deeming clause did not override the time of service of the payment claim

At first instance, Justice Stevenson found that the deeming clause in the construction contract was void under section 34 of the SOPA for purporting to modify the definition of "business day" under the Act and that therefore section 13A of the Electronic Transactions Act 2000 (NSW) (ET Act) determined the time of receipt of the payment claim (being 28 February 2025). Similar deeming provisions have been considered in other first instance decisions^[1] where the courts have looked at whether such clauses are void under the SOPA.

The Court of Appeal did not consider it necessary to deal with whether the deeming clause was void or valid. It considered the crucial issue to be the application of s14(4) of the SOPA ie. whether the deeming clause could have the effect of extending the statutory period for providing a payment schedule. It found that the "10 business days after the payment claim is served" in section 14(4)(b)(ii) of the SOPA plainly meant served within the terms of the Act and within the period specified by the Act unaffected by any inter partes contractual variation. As a result, it found:

• the payment claim was sent and capable of being retrieved on 28 February 2025;

• the time required under the construction contract pursuant to the deeming clause for the provision of a payment schedule commenced 3 February 2025 and expired 17 March 2025;

• the 10 business day period after service of the payment claim expired on 14 March 2025;

• the period for providing a payment schedule under section 14(4) could be contractually shortened, but not lengthened;for the purposes of section 14(4), the 10 business day period after service (14 March 2025) expired earlier than the time required by the contract (17 March 2025), and therefore the earlier time (14 March 2025) prevailed;the payment schedule provided on 17 March 2025 was out of time and Sharvain was entitled to judgment for approximately $3.2m.

Justice McHugh also found that by the deeming clause, section 13A(1) of the ET Act did not apply as the parties had "otherwise agreed" within the meaning of that section.