'Tomorrow starts today?' NSW Supreme Court finds 'deeming clause' for service of notices void under security of payment legislation

Clauses which 'deem' after-hours service as being made the following day are void under security of payment legislation 3 min read

Following a recent NSW Supreme Court ruling, principals and contractors are now on notice: under security of payment legislation documents served after-hours cannot be contractually deemed to have been served on another day.

In this Insight, we consider Sharvain Facades Pty Ltd (Administrators Appointed) v Roberts Co (NSW) Pty Ltd [2025] NSWSC 606 (Sharvain), where the court determined whether a payment schedule under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) was served within the time required under the SOP Act.

The court was required to consider the effect of a 'deeming clause' contained within the relevant construction contract dealing with notices served after business hours, and whether the clause purported to modify the operation of the SOP Act (by changing the time for service of the payment schedule). Justice Stevenson held that the 'deeming clause' did purport to modify the operation of the SOP Act and was void for all purposes.

The case serves as a warning to adopt caution when calculating the time for service of payment schedules, and to not rely on a 'deeming clause' within construction contracts when doing so (particularly when determining the date on which a notice is received under the SOP Act).

Key facts: when does the clock start?  

The construction contract between the plaintiff and the defendant contained a clause 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 (Deeming Clause).¹ Justice Stevenson expressly acknowledged that 'many building contracts' contain clauses similar to this clause.²

The plaintiff had sent a payment claim to the defendant at 7:17pm on Friday, 28 February 2025, through an agreed electronic platform. The next business day after this date was Monday, 3 March 2025.³

Under the SOP Act, the defendant was required to provide a payment schedule within 10 business days of the payment claim. The defendant provided a payment schedule on 17 March 2025, which was within 10 business days from 3 March 2025, but outside the 10 business days from 28 February 2025.⁴

The critical question was whether the payment claim was served on 28 February 2025 or 3 March 2025.

Decision

Justice Stevenson considered and held that the payment claim had been validly served on 28 February 2025 (ie the date it was submitted after business hours).⁵ The Deeming Clause was void and had no effect.⁶

Justice Stevenson held that the Deeming Clause was void pursuant to section 34 of the SOP Act because it purported to modify the meaning of 'business day' under the SOP Act.⁷ His Honour noted that if such a clause were not void, the parties could theoretically agree to postpone the effect of service by 'any number of days… thus leaving it to the parties to decide with what speed the processes under the Act should operate'.⁸ For that reason, such a deeming clause must be void.

The requirements for service were instead governed by the Electronic Transactions Act 2000 (NSW) without modification (despite that legislation allowing parties to vary requirements by agreement). Under that legislation, a notice can be served at any time during a day.⁹

Practical implications for principals and head contractors

Though relatively straightforward, this decision carries meaningful consequences for those managing construction contracts, particularly when it comes to interpreting notice provisions under the SOP Act:

• Similar deeming clauses purporting to determine the date of service for matters relating to the SOP Act (or equivalent legislation in other jurisdictions) are likely to be void. There was nothing unconventional about this particular clause and the reasoning of the court would be applicable to many other standard form clauses of this kind.
• Other procedural requirements relating to SOP Act payment claims might also be void in light of this decision. Parties might wish to consider how SOP Act notice requirements might be separated from the procedural requirements applicable to other kinds of notices to avoid undermining or voiding other notice requirements under their construction contracts.
• Principals and head contractors should continue to be conservative in their calculation of notice requirements under the SOP Act, and—when making those calculations—should assume that deeming provisions do not apply to any notices received under the SOP Act.