Deemed service provisions are superseded by the Security of Payment Act's provisions in dispute resolution matters.
News Article: Deeming Clause and the Security of Payment Act in Australia
In a recent court case, the NSW Court of Appeal ruled on the validity of a deeming clause that alters the time of service for notices under the Building and Construction Industry Security of Payment Act 1999 (NSW).
Sharvain, a contractor, brought proceedings against Roberts, seeking to enforce a statutory debt under s15(1) of the SoP Act. The dispute arose from a payment claim served on 28 February 2025, and Roberts' late response, which was issued out of time.
The overall effect of s14(4) of the SoP Act is that the period for providing a payment schedule can be contractually shortened, but not lengthened. However, the deeming clause in question attempted to extend the time of service, which is contrary to the Act.
At first instance, Stevenson J held that the Deeming Clause does purport to modify the Act and is therefore void "for all purposes". However, the Court of Appeal dismissed Roberts' appeal and found that service took place on 28 February 2025. Consequently, Roberts' payment schedule was issued out of time, as it was provided more than ten business days after service of the payment claim.
The Court of Appeal did not find that the Deeming Clause was void under s34 of the SoP Act, but left open the question of whether a deeming clause that has the effect of modifying the operation of the SoP Act would be void for all purposes. The Court emphasised that a deeming clause altering the time of service is void under the Act but not necessarily void for all purposes.
This distinction ensures the statutory protections of the Security of Payment regime are maintained without invalidating broader contractual arrangements. The Court's decision aligns with the principle that statutory provisions like those in the Building and Construction Industry Security of Payment Act 1999 (NSW) override inconsistent contractual terms only to the extent of the Act's subject matter.
In summary, the Court of Appeal's ruling clarifies that deeming clauses that alter the time of service for notices under the SoP Act are void only for the purposes of the Act, not necessarily for all purposes. This decision is significant for parties involved in construction projects in NSW, as it reinforces the importance of complying with the mandatory provisions of the SoP Act while preserving the validity of contractual arrangements outside the scope of the Act.
The ruling by the NSW Court of Appeal indicates that deeming clauses altering the time of service for notices under the Building and Construction Industry Security of Payment Act 1999 (NSW) are void only for the purposes of the Act, not necessarily void for all purposes. This decision underscores the significance of adhering to the mandatory provisions of the SoP Act while maintaining the validity of financial and business arrangements outside the Act's purview in construction projects in NSW.
