1. INTRODUCTION

Measures to prevent the spread of Covid-19 have caused many in the construction industry in Singapore to struggle with labour, supply and other issues. The ability to resume work remains drastically affected; for example, covid-19 tests will need to be regularly carried out on the workforce, and there is always the risk of yet another dormitories incident occurring.

The Covid-19 (Temporary Measures) Act (the “Act”) is the “legal circuit breaker” seeking to “stanch the flow of blood” of those who have been materially affected by the Covid-19 pandemic.

With the latest tweaks to the Act that came into force on 20 June 2020, it seems an apt time for the SCL(S) to do its part for the larger construction community.

We have proposed to do so by writing a series of comprehensive articles that hopefully will help provide guidance to parties that need to call upon the Act for relief.

In this part of the series, we provide a set of FAQs that deals with the practical aspects i.e. the “HOW – how to trigger the reliefs under the Act; how to apply for an assessor determination; what information is needed, and so on.

We have read the materials and been through the process, and we have distilled this for you.

    1. HOW TO USE THESE FAQs

The questions are grouped roughly in an order that a notification for relief and an assessor determination would take place.

Please use a word search to find the answers below.

The FAQs unfortunately stop short at the end of the assessor determination process. Beyond that stage, things do get quite complicated, and it is best to consult your lawyers.

These FAQs do not cover insolvency-related reliefs; enforcement of security or loan facility-related matters; nor reliefs under the new Part 8 (in relation to contracts that are not construction or supply contracts but that are affected by a delay or breach of the former) which is not yet in force as at the date this article is written.

If you have any comments or have any burning unanswered questions, please do email our covid-19 relief team1 and we will see if we can update this FAQ.

    1. FREQUENTLY ASKED QUESTIONS (AND ANSWERS)

For convenience, and in line with the examples in the Act, we will refer to :

 a) The party serving the notification for relief as “A”.
 b) The party served with the notification for relief as “B”.

III.1 Reliefs

  1. Under the Act, what special relief is there for construction and supply contracts?
    Assuming you fall within the requirements of the Act, these are the 3 main forms of relief for construction and supply contracts:
    • Moratorium against commencing /stay of certain types of proceedings (Section 5 of the Act)
    • Preventing calls on performance bonds/extending their duration (Sections 6(1) and 6(2) of the Act)
    • Defence against liquidated damages / claims for breach of contract (Sections 6(5) to 6(7) of the Act)
    • Since 13 May 2020, actions which are listed in regulation 3A of the Regulations, such as interest or increase in charges, are also caught by the Act.
    • There is a new Part 8 to the Covid-19 Act which provides relief (via the assessor process) for parties to non-Scheduled Contracts (i.e. not construction or supply contracts) that are affected by delays or breaches in construction or supply contracts. However, Part 8 is not yet in force.
  1. What is the period over which the Act grants relief?
    • The prescribed period of relief is 6 months starting from 20 April 2020 (i.e. it ends on 19 October 2020), but it may be extended by another 6 months.
  2. Is the relief automatically available?
    • No, if you qualify for relief, you will need to serve a Notification for Relief. (see Part III.6 below)

III.2 Resources

  1. Where can I find more information about the Act?
  2. Where can I find the relevant statutes and regulations, and press releases2?
  3. Where can I find the relevant forms?
  4. What can I do to find out more about the information required?
    • You can access the forms available online, gather the necessary information (and documents), and do a “trial run” before you make the actual submission.

III.3 Moratorium

  1. Does the moratorium cover Building and Security (“SOP Act”) adjudications?
    • The moratorium only covers the enforcement of SOP Act determinations that relate to obligations that A is unable to perform due to Covid-19.
    • No. SOP Act Adjudication proceedings themselves are not caught by the moratorium under s.5(3) of the Act. It is still business as usual at the SMC, Adjudication Applications are still being lodged, and determinations are still being obtained.
    • There are likely to be implications, if adjudications determinations are made against A
  2. What is the effect of an assessor’s decision on arbitration or litigation?
    1. Arbitration or litigation proceedings cannot be commenced or proceeded with, if the requirements are met and the required notifications are served. Such proceedings will be stayed until the conditions for continuing are met.
  3. Does the moratorium cover arbitrations?
    • On the face of it, the moratorium under the Act only covers arbitrations under the Arbitration Act.
    • For arbitrations under the International Arbitration Act, there is a question of whether or not the parties have chosen Singapore law to govern their contract, and whether the parties have thereby chosen the Act to apply to their contractual relationship.
  4. Does the moratorium cover the entire proceedings or just part of the proceedings?
    • Only such part that is related to the inability due to Covid-19. Under Section 5(5) of the Act, the moratorium does not extend to parts of the proceedings which do not relate to the subject inability.
  5. Does the moratorium cover enforcement of court judgments, Arbitration Act awards and adjudications?
    • Yes, see section 5(3)(n) of the Act.
  6. Is there a blanket bar against enforcement, or is it only enforcement in relation to the subject inability that is caught by the moratorium?
    • Only enforcement that is “in relation to the subject inability” due to Covid-19 is caught by the moratorium. See section 5(2) of the Act.
    • However, it may be difficult in practice to enforce parts of a judgment or determination, and you should consult your lawyers on this.
  7. Can B commence or proceed with litigation/arbitration proceedings that are not related to the subject inability?
    • Given the risks of potential liability to a fine under the Act, it may be safer to consider getting an adjudicator’s determination first.
    • Procedural issues are complex, so you should consult your lawyers on this.
  8. Does the moratorium apply automatically to stay ongoing proceedings once the Notification for Relief is served?
  9. Are my contractual rights, obligations and powers affected by the Act?
    • Under section 5(13) of the Act, it expressly states that section 5 of the Act does not affect the taking of any other action in relation to the subject inability, including an action pursuant to the Frustrated Contracts Act (Cap. 115) or a force majeure clause in the contract (where applicable).
    • However, reliance on such clauses in the face of the Act can be complex, so you should consult your lawyers on this.
    • For arbitration, you have to adapt the above procedures.
  10. Will limitation for causes of action be affected by the Act?
    • Section 5(7) of the Act provides for an extension of the limitation period to bring an action for the corresponding period where the moratorium is in place.
    • Limitation issues are complex, so you should consult your lawyers on this.

III.4 Performance Bonds

  1. Do the reliefs in Section 6 apply if no Notification for Relief is served?
    • No, the precondition is that it has to be a case mentioned in Section 5 of the Act. If you qualify for relief, you will need to serve a Notification for Relief.
    • However, issuers/beneficiaries of “on-demand” performance bonds may have to do an additional layer of checks to see if the Act applies, and if there are any additional requirements imposed by the Act for any call on a performance bond
  2. When can B make a call on an “on-demand” performance bond that is caught by the moratorium?
    • Under section 6(2) of the Act, during the prescribed period, B may not make a call on the performance bond in relation to the subject inability, earlier than 7 days before the date of expiry of the bond (or if extended, the extended date of expiry)
    • Pursuant to section 6(4) of the Act, the restrictions under section 6(2) will cease to apply only after a) A withdraws its Notification for Relief; or b) an assessor decides that the case in question is not one to which section 5 applies.
  3. Under the Act, can the duration of a performance bond be extended?
    • Yes, for performance bonds that are caught by the Act, A can make an application to the issuer of the performance bond not less than 7 days before the date of expiry of the performance bond or equivalent, to extend the term of the performance bond or equivalent. See Section 6(3) of the Act.
    • A must serve a notice of the application on B at the same time.
  4. Who bears the interest/charges under the extended period of the bond?
    • See Section 3A of the Regulations which may apply. You may need to consult a lawyer in relation to your specific circumstances.
  5. Is there a form for the application to extend the term of a performance bond?
    • No.3
  6. What if B makes a call on an on-demand bond that is caught by the moratorium?
    • Under section 8 of the Act, a call on the performance bond in contravention of section 6(2) of the Act is void.
    • B may also be liable to be fined.

III.5 Defences under Sections 6(5) and 6(6) of the Act

  1. Do the reliefs in Section 6 apply if no Notification for Relief is served?
    • No. See also answer to Question 16.
  2. When is the last day to serve the Notification for Relief, in order to avail oneself of the defences?
    • Before the end of the prescribed period. See answer to Question 38.
  3. Can B apply to the assessor for fair and equitable orders in relation to these defences?
    • For construction and supply contracts, an assessor may not make any further determinations, such as relating to the extent of delay that is attributable to COVID-19, the amount of liquidated damages or damages payable; nor whether the defence to a claim for a breach of contract under section 6(6) of the Act applies.
    • The assessor may only determine if case in question is one to which relief under section 5 the Act may be sought.
    • So, the assessor may determine whether a party is unable to perform the obligation in question, or whether the inability is caused to a material extent by COVID-19. If not, the defence may be pared back by the assessor.
  4. Is the Section 6(5) defence against delays in performance retrospective?
    • Yes. Under Section 6(5), “any” period from 1 February 2020 for which the subject inability subsists, is to be disregarded in determining the period of delay in performance by A.
  5. Who is overall responsible for delays, if there are concurrent delays during this period of delay in performance by A?
    • Unclear from the Act and remains open to argument.
  6. Does the Act provide for an entitlement to claim extensions of time for such period of delays falling within the Act?
    • Not expressly, but the contractor will not be liable to pay liquidated damages for delay during such period.
  7. Does the Act provide for an entitlement to claim prolongation costs for such period of delays falling within the Act?
    • - No.
  8. Does a delay (due to Covid-19) on the part of the Employer to provide the site access for the contractor to commence/carry out the works, fall under the Section 6(5) defence to delays in performance?
    • Unclear from the Act and remains open to argument.
  9. Can a contractor who has failed to supply goods and services due to Covid-19, rely on the defence to breach of contract in Section 6(6)?
    • If he meets the requirements of the Act, yes.
  10. Can an employer who has failed to pay his contractor; or a contractor who has failed to pay his subcontractor, due to Covid-19, rely on the defence to breach of contract in Section 6(6)?
    • No.
  11. Will limitation for causes of action be affected by the Act?
    • Section 5(7) of the Act provides for an extension of the limitation period to bring an action for the corresponding period where the moratorium is in place.
    • Limitation issues are complex, so you should consult your lawyers on this..

III.6 Notification for Relief

  1. What do I need to do before I serve a Notification for Relief?
    • Check forms at https://www.mlaw.gov.sg/covid19-relief/forms and obtain essential information beforehand, e.g. contact details and email address of all relevant parties.
    • Obtain required documents in support e.g. contract
    • Prepare SingPass for individuals, and CorpPass for entities;
  2. What must I do to prepare and file a Notification for Relief (“Notification”)?
    • Under regulation 9(1) of the Regulations, a Notification must be based on Form 1 and must contain the following information:
      1. Particulars of A, A’s representative, B, any guarantor or surety of the obligation breached, and the issuer of the performance bond;
      2. The description, date and category of the contract;
      3. The date on which the obligation as due to be performed, the nature of the obligation that the contracting party was unable to perform, and how the inability to perform the obligation was materially caused by a Covid-19 event;
      4. Any proposal by A to perform the subject obligation in an alternative manner;
      5. Supporting documents; and
      6. A declaration to the effect that all information provided is true and correct.
      7. - You will need your SingPass/CorpPass to submit the Notification.
  3. Is there any limit as to the documents I can attach?
    • There is a 7 MB file size limit.
  4. On whom do I serve the Notification upon, and by when must I serve it (after filing)?
    • The Notification must be served on:
      1. B, before the end of the prescribed period; and
      2. The guarantor or surety of the obligation breached and the issuer of a related performance bond, no later than one working day after the date of service of Notification on B.
        (“Relevant Parties”)
  5. How do I serve the Notification on all Relevant Parties?
    • Under regulations 5(1) read with 9(3) of the Regulations, the default mode of service is by sending the Notification for Relief to the other parties’ “last email address” using the electronic system at https://www.mlaw.gov.sg/covid19-relief/notification-for-relief.
    • - Regulation 5(1) then lists a hierarchy of various other modes of service such as by email, internet-based messaging or website, or finally by prepaid registered post to the last postal address. The next mode of service can only be used, if the preceding mode of service cannot be used.
  6. What is the “last email address”?
    • Regulation 5(2) of the Regulation sets out a hierarchy for how to determine the “last email address” of a party. It is:
      1. the designated email address; or
      2. If there is no such email address, an email address which A corresponds with B on matters relating to the contract; or
      3. If there is no such email address, an email address which B represents to A or to the public as the email address to which communications to B may be sent.
  7. What must I do to stay ongoing proceedings which are caught by the Act?
    • After serving the Notification, A will have to lodge a Memorandum of Notification for Relief (“Memorandum”) with the Court or arbitral tribunal to stay any ongoing proceedings relating to the subject inability.
    • The Memorandum must be based on Form 2, and must contain the following information/documents:
      1. Information identifying the proceedings before the court or arbitral tribunal;
      2. A declaration of service of the Notification which must state when such service was effected (and also state the method of service of the Notification); and
      3. It must be accompanied by a copy of the Notification.
  8. How does A serve this on the Court or arbitral tribunal?
    • After serving the Notification, A will have to lodge a Memorandum of Notification for Relief (“Memorandum”) with the court or arbitral tribunal to stay any ongoing proceedings relating to the subject inability.
    • For matters in the Supreme Court or State Courts, the Memorandum will have to be filed using the e-Litigation system. See Question 15 for the links to resources.
    • For matters in arbitration, you will need to submit the Memorandum to the Tribunal.
  9. Can a Notification be withdrawn?
    • Yes. A may at any time withdraw the Notification by serving a notice of withdrawal in Form 3.
    • The procedure for service is similar to that for the Notification. It must be served on the Relevant Parties.
    • If an Application has been submitted before the withdrawal, A must also submit to the Registrar a copy of the notice of withdrawal, by way of email as provided in the acknowledgment of the receipt of Application, together with a declaration in Form 4, within 2 working days after the date of service of the notice of withdrawal.
    • If a Memorandum has been filed with the Court or submitted to a tribunal, A must similarly file with the Court or submit to the Tribunal the notice of withdrawal and a memorandum of service of withdrawal in Form 5.
    • See regulation 10 of the Regulations.

III.7 Application for Assessor Determination

  1. What can B do if B thinks the outcome arising from the Notification is unfair and wishes to dispute it?
    • B can make an Application for Assessor’s Determination. (“Application”).
    • Alternatively, B can defer its claims against or disputes with A until the prescribed period is over.
  2. Is there a time limit to make an Application?
    • Yes, within 2 months after the end of the prescribed period. See regulation 14(2) of the Regulations.
  3. What do I need to do before I make an Application?
    • Check forms at https://www.mlaw.gov.sg/covid19-relief/forms and obtain essential information beforehand, e.g. particulars, reasons to support the application for determination.
    • Obtain required documents in support e.g. contract.
    • Prepare SingPass for individuals, and CorpPass for entities;
  4. What must I do to prepare and file an Application?
    • Under regulation 14 of the Regulations, a Notification must be based on Form 6 and must contain the following information/documents:
      1. A copy of the Notification;
      2. A copy of the contract (or if the contract is not in writing, a description of how the contract was made and its terms);
      3. - You will also need to provide the following information/documents:
      4. Any proposal for A to perform the subject obligation in an alternative manner;
      5. Supporting documents; and
      6. A declaration by B that all information provided is true and correct.
      7. You will need your SingPass/CorpPass to submit the Notification.
  5. Is there any limit as to the documents I can attach?
    • There is a 7 MB file size limit.
  6. What are the next steps for the Application?
      • These are the steps to be followed.
      • Application for Assessor’s Determination: B lodges the Application
      • Review by Registrar: The Registrar will review the Application, and if satisfied that it is in order, sends to A an acknowledgement of receipt and the form of response in Form 8 (Response to Application for Determination) or the electronic location where that form may be obtained;
      • Service of Application to A: B must then serve the Application with the documents received from the Registrar on A, and all Relevant Parties, within 2 working days.
      • Declaration of service: B must then submit a declaration of service based on Form 4, within 1 working day.
      • Response to Application: A must submit to the Registrar and serve on B and all Relevant Parties, a response to the Application (“Response”), within 5 working days.
      • Details of hearing: The Registrar will send A and B a notice of appointment of assessor, and if applicable, notice of date and place for hearing.
      • Hearing: The assessor will conduct a hearing. This is generally done by the asynchronous exchange of emails. The assessor may require an online or physical hearing.
      • Determination: Registrar will inform A and B, and all relevant parties, of the Assessor’s Determination.
    For a summary of the timelines, see accompanying graphic “Application for an Assessor’s Determination”.
  7. How do I serve the prescribed documents?
    • See Questions 38 and 39, and see regulation 14(8) and 14(9).
  8. What is the prescribed fee?
    • Zero.
  9. If there are ongoing litigation or arbitration proceedings, are there any other requirements for service?
    • If a copy of the Notification has been lodged with a court or tribunal, B must, within 2 working days, file with the court or submit to the arbitral tribunal, a notification of status based on Form 7.
    • Where the Application has been concluded or withdrawn, B must, within 2 working days, similarly file or submit Form 7. This must be accompanied with a copy of the notice of the assessor’s dismissal or determination, or a copy of the withdrawal of the application.
  10. What are the qualifications of the assessors?
    • The minimum qualifications are stated at regulation 11 of the Regulations. They will have at least 3 years of working experience.
  11. What will the assessor consider, in making a determination?
    • The assessor may consider the ability or inability (and financial capacity, if relevant) of the party who is supposed perform the obligation that is subject of the application; as well as the extent to which the inability is caused by Covid-19
    • The assessor must seek to achieve an outcome that is just and equitable in the circumstances.
    • See Section 13 of the Act.
  12. What sorts of orders can an assessor make?
    • The assessor may determine if case in question is one to which relief under section 5 the Act may be sought.
    • The assessor may determine whether a party is unable to perform the obligation in question, or whether the inability is caused to a material extent by COVID-19.
    • For construction and supply contracts, an assessor may not make any further determinations, such as relating to the extent of delay that is attributable to COVID-19, the amount of liquidated damages or damages payable; nor whether the defence to a claim for a breach of contract under section 6(6) of the Act applies
    • It is not entirely clear from the Act, but it has been suggested that the assessor may specify a shorter period of relief than the prescribed period (for e.g., up until the party may be able to perform the obligation in question).
  13. What are some of the matters that the parties may wish to focus on to assist the assessor?
    • Parties may wish to focus on clearly identifying the contractual obligation in question, documents demonstrating the ability or inability to perform, and the causal linkages between COVID-19 and the inability to perform
    • The parties may wish to address whether the contractual obligation in question was being performed before the onset of COVID-19, the financial position before COVID-19, and contrast that with the current position.
    • A will also tend to address on the impact of the circuit-breaker measures on their business and ability to perform their obligations.
    • If you have other questions relating to your specific circumstances, please consult a lawyer
  14. Can an assessor’s determination be challenged in Court?
    • An assessor’s decision is not appealable. See Section 13(9) of the Act.
    • But in certain circumstances, it may be challenged in Court by way of judicial review, based on very limited grounds such as breach of natural justice, irrationality and procedural impropriety.
  15. Can an assessor’s determination be revisited?
    • Under the new Section 13A of the Act, after an assessor has given a determination, the assessor or another assessor may, either on the assessor’s own motion or on the application of A or B or both, vary or replace the determination, or require the parties to attend before the assessor for a further review and to make any further determination as is appropriate.
    • Clerical mistake or error arising from any accidental slip or omission may be corrected under regulation 25 of the Regulations.
  16. Is an assessor’s determination binding on all parties?
    • Yes. See Section 13(9) of the Act.

III.8 Miscellaneous

Penalties

  1. What are some of the criminal penalties for ignoring a notification and insisting on proceeding with your contractual rights?
    • Any person who contravenes certain provisions of the Act without reasonable excuse is liable to be fined an amount not exceeding $1,000;
    • Any proceedings which are commenced in breach shall upon the lodgment of a copy of the Notification be dismissed;
    • Certain actions such as re-entry that are carried out in breach of the act are invalid
    • See Section 8 of the Act.
    • A person who without reasonable excuse fails to comply with an assessor’s further determination under Section 13(3) or 13(6) of the Act, is liable to be fined an amount not exceeding $1,000. See Section 13(11) of the Act.
  2. What are some of the other penalties under the Act?
    • A person who breaches confidentiality may be liable to a fine not exceeding $1000. The person who has suffered loss due to the breach of confidentiality has a statutory cause of action, and may seek injunction or damages. See the new Section 15A of the Act.

Legal representation

  1. Can I be represented by a lawyer at assessor proceedings?
    • No, unless permission of the assessor is obtained. See the new Section 14 of the Act.
  2. Can I be represented by a lawyer for matters under the Act that are outside of assessor proceedings (such as to help prepare the Notification or Application)?
    • Yes.

 

ANNEX

The Process for an Assessors Determination

Authored by:
Kelvin Teo, Council Member of SCL (S), Director - Drew & Napier LLC  
Nicole Toh, Senior Associate - Drew & Napier LLC  
Chester Su, Legal Executive - Drew & Napier LLC

*Important Note: This article is not intended to constitute legal advice, and should not be relied upon as such. Please consult your lawyers if you require any legal advice in relation to your specific factual circumstances.

 


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