NSW court decision on 'business days' definition could have far reaching consequences

The court found that the clause at the centre of the decision was an attempt to modify the Security of Payment Act 1999 (NSW) (NSW SOP Act), which defines a ‘business day’ as “any day other than a Saturday, Sunday or public holiday, or 27, 28, 29, 30 or 31 December”.

Under Section 34 of the NSW SOP Act, any provision of an agreement that modifies or restricts the operation of the act is void.

Background and decision

Under their contract, Sharvain Facades Pty Ltd (‘Sharvain’), the contractor, was to send payment claims and other notices via an electronic payment system called Payapps. Immediately following the issue of a payment claim, Payapps automatically sends a notification to a nominated email of the receiving party, Roberts Co (NSW) Pty Ltd (‘Roberts’).

Sharvain submitted a payment claim to Roberts at around 7pm on 28 February 2025, a Friday. Roberts issued its payment schedule on 17 March, more than 10 business days after 28 February – but within 10 business days of the next business day, Monday 3 March.

If the payment schedule was not served within 10 business days of service of the payment claim, then the contractor would be entitled to judgment for the full amount claimed in the payment claim under section 15 of the NSW SOP Act.

The contract contained a clause stating that if a notice, including a payment claim, was given to and received “after 5pm on a Business Day or is not on a Business Day, then the notice (was to) be treated as having been given to and received by the addressee at 9am on the next Business Day.”

The central question considered by the court was if the contractor’s payment claim was served on Friday 28 February or the following business day, Monday 3 March, because it was sent after 5pm.

The court ruled that “the purported effect of the Deeming Clause, as it applies here, is that time begins to run one day later because a business day is deemed to conclude at 5pm”. Accordingly, the court ruled that the deeming clause modified the operation of the NSW SOP Act and ruled the clause void.

Accordingly, under the NSW SOP Act, a document served at any time during a ‘business day’ will be taken to be served on that day, regardless of any contractual clause that says otherwise.

The court also found that the operation of section 34, in this instance, meant that the deeming provision was “void for all purposes”, rather than void only for the purposes of the NSW SOP Act, meaning that because the deeming provision attempted to modify the operation of the NSW SOP Act, it was also voided for the purpose of all contractual communications between Sharvain and Roberts, not just those communications made under the NSW SOP Act.

Impact on businesses 

Many building contracts contain similar deeming clauses to the one at the centre of the court’s decision.

In order to avoid being caught out under the NSW SOP Act or with time bars under the contract, contracting parties in NSW should assume that notices issued are served on the day they are received.

This decision also has wider implications with section 34 being applied by the court to void a contract clause for all purposes. Contracts are often drafted on the assumption that provisions which offend the act may be void for the purposes of adjudication, but otherwise do not impact contractual claims.

Based on this decision, that assumption is incorrect. Contractual mechanisms which could be impacted by this decision include ‘pay when paid’ provisions, such as the release of security dependent on completion upstream, and linked claims where the pass-through party has no obligation to pay until the resolution of the dispute with the upstream party.

Co-written by Maria Howard, Juan Sanchez Nuesch and Nicholas Piscioneri of Pinsent Masons.