When does the clock start? Payment schedules under the Security of Payment Act

Are you in the construction industry, and has your business received a payment claim under the Security of Payment Act (SoP) from a contractor? If planning to issue a payment schedule, don’t cut it too close! There are critical timeframes within which a payment schedule should be served. Act conservatively, and allow enough of a “buffer”, don’t wait till the eleventh hour to issue a payment schedule.

That is the moral of the story from a very recent WA Court of Appeal decision, Co-operative Bulk Handling (CBH) Ltd v Martinus Rail Pty Ltd [2026] WASCA 82. This case illustrates the drastic consequences if a principal “cuts it too close” and does not allow a buffer, in terms of the timeframe for issuing a payment schedule.

It would be easy to get lost in the finer and complex details of computing or counting days in the decision. Below we explore the final technical details. However, the drastic consequences of not acting conservatively and allowing a buffer are well illustrated in this case:

• a principal, no doubt well-resourced internally and externally with legal functions – ended up having to cough up in excess of $22 million (the claimed amount in the payment claim); and
• a case centering on legal technicalities around computing of time, had to wind its way through the Supreme Court of WA, through a first-instance Judge, and the Court of Appeal, – no doubt this would be a not inexpensive exercise, with attendant distraction of all involved from productive business activities.

The finer technical details of the case

In the Western Australian Court of Appeal decision in Co-operative Bulk Handling Ltd v Martinus Rail Pty Ltd [2026] WASCA 82 provides important guidance on one of the most critical aspects of the security of payment regime. When does the statutory clock begin running for a respondent to serve a payment schedule? The issue was significant because it determined whether a payment schedule responding to a payment claim of 22 million was served within the 15-business day prescribed by s 25(1)b of the Building and Construction Industry (Security of Payment Act) schedule was out of time and the respondent became liable for the full claimed amount. If time commenced on Monday 2 September 2024 pursuant to a contractual deeming provision, the payment schedule was served within time. The Court ultimately confirmed that for the purposes of the SOP Act, the statutory countdown commences when an electronic payment claim becomes capable of retrieval by the recipient, rather than when a contractual clause deems the document to have been received.

Why timing matters under the SoP Act

Section 25(1)(b) of the SoP Act requires a respondent to provide a payment schedule within 15 business days after a payment claim is made, unless the construction contract provides an earlier timeframe. Failure to comply may result in the respondents’ becoming liable for the entirety of the claimed amount as statutory debt. Consequentially, determining a precise date on which a payment claim is made is often a deciding factor. The central issue before the Court was therefore not whether the payment claim had been received, but rather when the statutory period for responding commenced.

Facts

On Saturday, 31 August 2024, Martinus Rail Pty Ltd emailed a payment claim for approximately $22.6 million to Co-Operative Bulk Handling Ltd (CBH). The email was sent at approximately 4:35 pm and expressly identified itself as a payment claim under the SoP Act. The construction contract contained a notice of provision deeming communications received after 5:00 pm or on a non-business day to be received at 9:00 am on the next business day. CBH served its payment schedule on Tuesday, 24 September 2024. The validity of the payment schedule determined entirely on identifying the date from which the 15 business-day response period commenced. If the payment claim was made on 31 August 2024, the response period expired on 20 September 2024, and the payment schedule was out of time. If the payment claim was deemed received on 2 September 2024, the payment schedule was valid.

The Courts Analysis: When does time start running?

The Court examined s 22(2) of the SoP act, which provides that a payment claim is made when it is given. The Court then considered reg23(d) of the Building and Construction Industry (Security of Payment) Regulations 2022 (WA), which provides that an electronically transmitted document is taken to be given to be taken when it is received in accordance with s 14 of the Electronic Transactions Act 2011 (WA). Section 14 1(a) provides that electronic communication is received when it becomes capable of being retrieved at the designated address of the recipient. The Court emphasised that the statutory scheme focuses on the point at which communication enters the recipient’s control and becomes capable of access, rather than the point at which it is actually opened or read. Accordingly, the payment claim was received when it became capable of retrieval on Saturday, 31 August 2024.

Why did the Contractual deeming clause fail?

CBH argued that the words “unless otherwise agreed” in s 14 of the Electronic Transactions Act permitted the parties to agree on a different time of receipt. The Court rejected that submission and held that reg 23(d) incorporates only statutory rules concerning receipt contained within s 14 (1)(a) and (b). It does not incorporate contractual agreements that seek to modify those statutory rules. The Court found that the SoP regulations consistently treat receipt as occurring when the document comes within the recipient’s control and is capable of access. Allowing contractual deeming provisions to alter that point would undermine certainty and consistency within the statutory regime. Accordingly, the contractual provision deeming receipt to occur at 9:00 am on the next business day, could not postpone the commencement of the statutory response period.

Key Takeaways

The most important aspect of the decision is the Court’s confirmation that time begins running for the service of a payment schedule when an electronic payment schedule becomes capable of retrieval by the recipient. The commencement of the statutory period is not postponed because

• the email was sent on the weekend;
• the email was not open until a later date;
• the contract contains a notice clause deeming a receipt to occur later; nor
• the parties have agreed to a different contractual time of receipt.

For security and payment purposes, the critical question is whether the payment claim has become capable of retrieval at the nominated email address.

The Court of Appeal decision provides important clarity regarding the commencement of the statutory timeframe for serving payment schedules. The decision confirms that the SoP regime adopts an objective test based on the capability of retrieval rather than contractual deeming mechanisms or actual knowledge. Once a payment claim reaches a designated email address and becomes capable of retrieval, the statutory clock begins running. Respondents who fail to actively monitor nominated email addresses do so at considerable risk.

Legal advice is always recommended if you’re unsure.

For more, contact Aaron McDonald (Director), Dirk Branford (Director) and Eu-Ming Teng (Special Counsel) at Pragma Lawyers on aaron@pragma.law, dirk@pragma.law or eu-min@pragma.law.