Knowledge Highlights 24 September 2020
On 22 September 2020, the Covid-19 (Temporary Measures) (Amendment No. 2) Act 2020 (“Amendment Act”) was gazetted. Save for a few technical provisions relating to the rental relief regime which are deemed to have come into operation on 31 July 2020, the provisions of the Amendment Act are not yet in force. Among other things, the Amendment Act amends the Covid-19 (Temporary Measures) Act 2020 (“Act”) by:
- Expanding the powers of rental relief assessors;
- Clarifying the interaction between Part 8 of the Act (“Part 8”) and the Building and Construction Industry Security of Payment Act (“SOPA”) and other dispute resolution mechanisms;
- Miscellaneous amendments expanding the power of the registrar of assessors (“registrar”) to reject applications under the Act and clarifying that the cap on interest charges applies from 1 February 2020 to the end of the prescribed period; and
- Empowering the Minister for Law (“Minister”) to extend collective sale deadlines on a case-by-case basis where the collective sale committee is genuinely and materially impacted by Covid-19.
The Act will also be amended in relation to alternative arrangements for meetings. A series of Orders (“Meetings Orders”) has been promulgated under the Act to enable various types of entities to convene, hold or conduct meetings by electronic means. The Ministry of Law has announced that it plans to extend the Meetings Orders to 30 June 2021. More information on the extension can be found in our Alert titled “Covid-19: MinLaw to extend duration of legislation for alternative meeting arrangements to 30 June 2021”.
Expansion of the powers of rental relief assessors
Under the current provisions of the Act, only three distinct matters may be determined by rental relief assessors:
- Whether the tenant satisfies the prescribed criteria to qualify for rental relief;
- Whether the tenant satisfies the prescribed additional criteria for the additional rental relief; and
- Whether the landlord satisfies the criteria (i.e. financial hardship) for a reduction of the additional rental relief.
In his second reading speech on the Covid-19 (Temporary Measures) (Amendment No. 2) Bill, Second Minister for Law Edwin Tong explained that the powers of rental relief assessors will be expanded to allow them to make determinations on a wider range of matters to better assist landlords and tenants to implement the rental waivers in a fair manner. Such determinations relate to the amount of rent to be waived under the framework, where the amount is affected by any of the following factors:
- Amount of service or maintenance charges: The rental relief under the rental relief framework covers base rent without service or maintenance charges as these charges continue to be due to service providers. The amendments under the Amendment Act empower the rental relief assessors to determine which portion of the rent is to be waived especially in cases where the lease agreement does not apportion between rent and service or maintenance charges.
- Other factors affecting rental waiver amount under rental relief framework: The rental relief regulations provide a series of formulae which apply to different scenarios for rental waivers to take place, sometimes depending on when the tenant has moved in or moved out or whether the business is of one nature or another. Other situations may involve the amount of assistance earlier provided by the landlord which may affect the rental waiver amount. The Amendment Act will enlarge the assessors’ powers so that the assessors do not lack the jurisdiction to address all of these disputes holistically.
Reconciling the operation of Part 8 with the SOPA and other dispute resolution mechanisms
The Amendment Act introduces new provisions in the Act to reconcile the operation of Part 8 with the SOPA and other dispute resolution mechanisms.
Part 8, which has not come into force, will provide relief for prescribed contracts that have been affected by delays in construction, supply or related contracts. This relief has been introduced in light of the severe impact of Covid-19 on the construction industry.
Part 8 will allow assessors limited prescribed powers to adjust the terms of a contract that has been impacted by Covid-19. The overriding and overarching consideration is to achieve a just and equitable outcome for parties. Applicants will be required to show that the contract was affected by a delay in the performance of a construction or supply contract, or a breach of such contract, and that such delay or breach was materially caused by Covid-19-related restrictions. Parties will also have the opportunity to be heard before the assessor on any points of disagreement between the claimant and respondent, before the assessor makes a decision.
When Part 8 is brought into force, amendments to the Act will ensure that the different dispute resolution mechanisms interact smoothly in the following ways:
- Avoiding parallel proceedings: No application for relief under Part 8 can be filed under the Act if court, arbitral or SOPA proceedings have already commenced in relation to the subject of the application. Similarly, once an application for relief is filed under Part 8, the other party or parties to the contract cannot commence court, arbitral or SOPA proceedings for the same matter. This moratorium on legal proceedings will continue until a determination under the Act is issued or the application is rejected or withdrawn.
- Adjusted contract terms to apply to subsequent applications made under SOPA: Where a determination under the Act has been issued and the terms of the contract adjusted, any subsequent application or determination made under the SOPA must be based on the adjusted contract terms.
- SOPA adjudicators empowered to give similar relief an assessor may provide under Part 8: Where a SOPA adjudication application is made prior to the other party seeking relief under the Act, the SOPA adjudicator will be empowered to account for the effects brought about by Covid-19 by giving similar relief an assessor may under Part 8 provide.
Increased registrar powers to reject applications under the Act
The Amendment Act introduces further amendments to the registrar’s powers. These amendments seek to facilitate the efficient and effective operation of the Act and will apply to both the Panel of Assessors for Covid-19 Temporary Relief (“PACT”) Registry as well as the Rental Relief Registry.
Currently, registrars have a limited power to reject applications that do not comply with the form and manner prescribed by the regulations. Registrars and assessors have seen defective applications come through, not falling within the original prescription, but nonetheless defective or failed in some way. These applications are processed as there is no power to dismiss them at the beginning, draining the time and resources of the Registry and volunteer assessors.
To achieve a balance between an optimum use of limited resources and fairness to parties, the Amendment Act provides that the registrar will have discretionary rejection powers on certain grounds, including the following:
- Where the contract is not a scheduled contract, i.e. not within the ambit of the Act;
- If the application is incomplete; or
- If the application is materially false or misleading, frivolous, or an abuse of process.
Provisions on cap on late payment interest applied to interest accruing from 1 February 2020 to end of prescribed period
The Act will be amended to clarify that the cap on late payment interest applies to interest accruing from 1 February 2020 to the end of the prescribed period, currently 19 October 2020.
The Minister will be empowered to extend collective sale deadlines under the Land Titles (Strata) Act on a case-by-case basis, by way of Ministerial Order. This will include deadlines that have already passed, provided that the other requirements for extension are also met.
Only in those cases where the collective sale committee had been constituted before 25 March 2020, and had been or will be genuinely and materially impacted by Covid-19 will an extension be granted. The process and procedure for such applications will be set out in subsidiary legislation.
- Covid-19 (Temporary Measures) (Amendment No. 2) Act 2020
- Second Reading Speech by Second Minister for Law Edwin Tong, on the Covid-19 (Temporary Measures) (Amendment No. 2) Bill
- Press release: Amendments to the Covid-19 (Temporary Measures) Act
In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at email@example.com.