This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.
Significant changes to the statutory adjudication regime for the building and construction industry have been passed on 2 October 2018 following the second reading in Parliament of the Building and Construction Industry Security of Payment (Amendment) Bill 2018 (“Bill”). The Bill expands and clarifies the scope for application of the Building and Construction Industry Security of Payment Act (Cap. 30B) (“Act”), amends the provisions regulating payment claims and payment responses, and revises adjudication and post- adjudication processes. With the commencement date of these amendments yet to be announced, this article highlights amendments that are anticipated to have significant day one impact upon coming into effect.
Scope of the Act
The scope of the Act will expand to include:
- construction contracts and supply contracts that have been terminated;
- contracts for the prefabrication of works outside Singapore for local projects; and
- contracts for the prefabrication of works that are carried out locally for export overseas, where both contracting parties are locally registered.
The Act will also restrict damage, loss or expenses claims by either claimant or respondent at adjudication. The adjudicator must disregard any part of a payment claim or a payment response related to such claims that is not supported by:
- any document showing agreement between the claimant and respondent on the quantum of such claims; or
- any certificate or other document required to be issued under the contract.
Payment Claim and Payment Response
- Enables a payment claim to be served before the due date and specifies when such claim is deemed to have been served.
- Clarifies that the following types of claims are valid claims under the Act:
- ‘repeat’ payment claims (where no additional work has been done or no additional goods or services have been supplied);
- claims for work done or goods supplied before contract termination; and
- final payment claims.
- Reduces the current practice of a 6-year limitation period for service of a payment claim under a supply contract to 30 months from the date on which the goods and services to which the amount in the payment claim relates were last supplied.
- Reduces the current practice of a 6-year limitation period for service of a payment claim under a construction contract to a 30-month limitation period from the latest of the following dates:
- the date on which the construction work to which the amount in the payment claim relates was last carried out;
- the issuance date of the last document certifying completion of the construction work under a contract as at the time the payment claim is served; or
- the issuance date of the last temporary occupation permit as at the time the payment claim is served.
- Increases the time for a respondent to provide a payment response from 7 to 14 days after service of the payment claim where the construction contract does not provide for the response time.
Shutting out belated objections by respondents
- Adjudication Response. Respondents, with limited exception, are prevented from raising objections in the adjudication response that were not raised to the claimant in writing on or before the relevant due date(for supply contracts) or were not previously included in the relevant payment response (for construction contracts). The exceptions are:
- for supply contracts, where the circumstances of the respondent’s objection only arose after the relevant due date or the respondent could not have reasonably known of the circumstances by the relevant due date;
- for construction contracts, where the circumstances of the respondent’s objection only arose after the provision of the payment response or the respondent could not have reasonably known of the circumstances when providing the payment response.
- Adjudication Determination and Adjudication Review. Adjudicators, with limited exception, must not consider respondents’ objections that were not included in the adjudication response (including at any adjudication review). The exceptions are:
- the circumstances of the objection only arose after lodgement of the adjudication response;
- the respondent could not reasonably have known of those circumstances when lodging the adjudication response; or
- the objection relates to a patent error.
- Setting aside applications. Respondents are barred, with limited exception, from commencing proceedings to set aside adjudication determinations or judgments obtained under section 27 of the Act where the ground of application relies on objections not included in the adjudication response. The exceptions are:
- the circumstances of the objection to support that ground only arose after lodgement of the adjudication response; or
- the respondent could not reasonably have known of those circumstances when lodging the adjudication response.
Other notable amendments
- Provisions for the appointment of a replacement adjudicator (including in adjudication reviews) and the effect of such appointments on the adjudication application (or adjudication review).
- The enablement of adjudicators to accept adjudication applications lacking certain prescribed information or documents, provided the respondent is not materially prejudiced.
- Imposition of the interest payable on the unpaid amount of a progress payment that has become due and payable at the higher rate as between:
- the contractual interest rate, or
- the interest rate prescribed in respect of judgment debts under the Supreme Court of Judicature Act (presently 5.33% per annum ).
- Giving claimants a limited right to review adjudication determinations that was previously available only to respondents.
- Providing a non-exhaustive list of grounds on which a party to adjudication may commence proceedings to set aside the adjudication determination or judgment obtained under section 27 of the Act.
- Providing for certain powers of the court in setting aside proceedings, and the effect of an adjudicator’s determination of remitted issues further to an order of court.
If you would like to better understand the implications of the amendments to the Act on your day-to-day contract administration or in relation to your statutory rights and obligations, please do not hesitate to approach the key contacts listed for this article.