Chamberlains Secures Major Win: Court Rules Contractual “Deeming Clause” Void, Upholds Security of Payment Act

Chamberlains Law Firm has secured a significant victory for its client, Sharvain Facades Pty Ltd (Administrators Appointed), in a crucial decision handed down by the Supreme Court of New South Wales. The judgment, delivered by Stevenson J on 12 June 2025, affirms the primacy of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) over contractual clauses that attempt to modify its operation.

The case, Sharvain Facades Pty Ltd (Administrators Appointed) v Roberts Co (NSW) Pty Ltd, hinged on the precise date a payment claim of over $3.2 million was served. The contractor, represented by Dr A J Greinke and Mr P J Hick of Counsel, instructed by Chamberlains, sent the payment claim via an agreed electronic system at approximately 7:17 PM on Friday, 28 February 2025.

The principal, Roberts Co (NSW) Pty Ltd, argued that a “deeming clause” in the contract meant the claim was not officially received until 9:00 AM on the next business day, Monday, 3 March 2025. The clause stated that any notice sent after 5:00 PM would be treated as received on the following business day. This distinction was critical, as the principal’s payment schedule was served on 17 March 2025—within 10 business days of 3 March, but not of 28 February.

The Role of Payapps in Service

A key aspect of the case was the method of service. The contract specified that progress claims were to be submitted through an approved electronic system, which the parties agreed was Payapps. The Court noted that the contractor submitted the claim correctly through this system. The act of submission on Payapps generated an email to the principal’s nominated representative. The Court treated this as the legally effective act of service. The judgment confirmed that using the contractually agreed electronic platform was a valid means of service under the Act.

The Court’s Ruling

Stevenson J rejected the principal’s argument, finding in favour of our client. His Honour concluded that the deeming clause was an attempt to modify the operation of the Act and was therefore void under section 34 of the legislation. The Act defines a “business day” as the full day, and the Court found that contractual clauses cannot redefine this by deeming a business day to end at 5:00 PM.

With the deeming clause voided, the Court determined that service was effected when the electronic message generated by Payapps became “capable of being retrieved” by the principal on 28 February 2025, in line with the Electronic Transactions Act 2000 (NSW).

Consequently, the payment schedule was served out of time, entitling our client to judgment for the full amount claimed.

This judgment is a vital reminder for all participants in the construction industry that the protections afforded by the Act cannot be contracted out of. Chamberlains Law Firm is proud to have represented Sharvain Facades in this landmark case, reinforcing the statutory rights of contractors and ensuring the Act’s critical payment mechanisms are upheld.

The successful team was led by Michael Terry-Whitall and Counsel, Dr A J Greinke and Mr P J Hick.