Knowledge Highlights 15 October 2020

On 30 September 2020, amendments to the Covid-19 (Temporary Measures) Act 2020 (“Act”) and related subsidiary legislation came into force. These changes strengthen the legal relief and mechanisms available to support businesses and individuals in riding out the impact of the Covid-19 pandemic.

The changes that came into force on 30 September 2020 include:

  • expanded powers for rental relief assessors; and 
  • the commencement of Part 8 of the Act (“Part 8”), which provides a mechanism for parties to specified contracts to obtain relief if they are affected by a delay or breach in a construction or supply (or related) contract, and such delay or breach is materially caused by Covid-19.

The new Part 9 of the Act (“Part 9”) and related subsidiary legislation came into force on 6 October 2020. Part 9 empowers the Minister for Law to extend collective sale deadlines on a case-by-case basis by way of Ministerial Order.

This Alert provides an overview of the new measures.

Expansion of the powers of rental relief assessors 

Power to make determinations on actual amount of rent to be waived

The amendments to the Act which came into force on 30 September 2020 empower rental relief assessors to make determinations on disputes relating to the actual amount of rent to be waived under the rental relief framework, only where the amount is affected by any of the following factors:

  • Amount of maintenance and service charges (which are excluded under the rental waivers), especially where such charges are not explicitly listed in the lease or licence agreement 
  • Amount that can be offset by assistance provided by the landlord earlier 
  • Tenant(s) occupying the property for only a part of the relief period 
  • Sub-division of the property, i.e. there are multiple sub-tenants, not all of whom may be eligible for the waivers

Issues that rental relief assessors are not able to determine include the following:

  • Existing arrangements that have been mutually agreed upon between landlords and tenants on the implementation of rental waivers 
  • Disputes over type of property 
  • Non-rent issues, e.g. inability to vacate or reinstate premises, lease termination
  • When landlord imposes new contractual terms as condition to provide waivers
  • Whether tenant must pay maintenance and service fees

Timelines for submitting applications for rental relief assessor’s determination

The timelines which apply to landlords or tenants submitting applications for a rental relief assessor’s determination on disputes relating to the actual amount of rent to be waived are set out below:

  • If the Inland Revenue Authority of Singapore (“IRAS”) notice of cash grant, or copy of the notice, was received on or before 30 September 2020, the application should have been submitted by 14 October 2020.
  • If the IRAS notice of cash grant, or copy of the notice, is received after 30 September 2020, the application is to be submitted within 10 working days after receiving the notice. 

While late applications may still be considered on a case-by-case basis, the Ministry of Law (“MinLaw”) strongly encourages applicants to abide by the stipulated timelines for submission of an application as far as possible, for speedier resolution of disputes.

Implementation of Part 8

Conditions for relief to apply

Part 8 came into force on 30 September 2020 and provides a mechanism for parties in the following three situations described below to obtain relief, if they are affected by delays or breaches in construction or supply (or related) contracts which are materially due to Covid-19, namely:

  • Relief for renters of goods used for construction work who are liable for additional rental expenses: A person who has rented plant or materials for use in construction work may apply for relief under Part 8 if he is or will be liable to his supplier for additional rental expenses due to a delay or breach in a construction or supply (or related) contract and that delay or breach is due to the Covid-19 situation, and provided that the person could not have avoided the additional rental expenses by taking reasonable steps.
  • Relief for tenants of non-residential property who are unable to carry out or complete renovation or fitting out works during rent-free period: A tenant of non-residential property who has been granted a rent-free period to carry out renovation or fitting out works may have lost the benefit of the rent-free period if its contractors were unable to carry out or complete the renovation or fitting out works due to the Covid-19 situation. The tenant may apply for relief under Part 8 in respect of the rent-free period that it was not able to utilise.
  • Relief for landlords who are unable to deliver possession or allow use of property under lease or licence of non-residential property: A landlord of non-residential property may be unable to deliver possession to the tenant by the date stipulated in the lease or licence due to Covid-19 related delays in a separate construction contract that the landlord has with a third party. The landlord may apply for relief under Part 8 in respect of its inability to meet the delivery date to the tenant.

The following additional conditions apply to be eligible for relief:

  • The affected contract must be in force at any time between 1 February 2020 and 31 March 2021 (both dates inclusive);
  • The affected contract must be entered into before 25 March 2020; and
  • The delay or breach in the construction or supply (or related) contract must occur between 1 February 2020 and 31 March 2021 (both dates inclusive).

Application for relief

Parties are strongly encouraged to negotiate with the other party to reach a suitable compromise before applying for relief under Part 8. Parties may apply for relief under Part 8 by submitting an application to the registrar of assessors by 31 May 2021.

Powers of assessor and SOPA adjudicator

To mitigate the impact of the delay or breach in the construction or supply (or related) contract on the applicant, an assessor may adjust, if it is just and equitable in the circumstances, the following contractual terms:

  • Return date of goods or rental rate payable: Where a contractor is liable for additional rental expenses for goods used for construction work, the assessor may adjust the date by which the renter must return the goods, or the rental rate payable for the duration that the renter holds possession of the goods.

In this regard, the assessor will not make a determination on the final amount owed to any party as this may depend on other factors or contractual clauses besides the rental rate and return date. After the assessor makes a determination, parties may rely on the determination in subsequent dispute resolution proceedings. Where there has already been an adjudication application made under the Building and Construction Industry Security of Payment Act (“SOPA”) before the contractor has applied for relief under Part 8, the SOPA adjudicator is empowered under the Act to take into account the effects of Covid-19 and make equitable adjustments similar to those an assessor may make under Part 8. 

  • Duration of rent-free period: Where a tenant of non-residential property is unable to carry out or complete renovation or fitting out works during its rent-free period, the assessor may adjust the contractual term in the lease or licence which provides for the rent-free period, e.g. extend the rent-free period.
  • Date of delivery of possession of property to tenant: Where a landlord is unable to deliver possession under a lease or licence of non-residential property, the assessor may adjust the date stipulated in the lease or licence for delivery of possession of the property to the tenant.

Moratorium

Once an application for relief under Part 8 is filed, no party to the contract can commence court or arbitral proceedings, or proceedings under SOPA, in relation to the subject of the said application. This moratorium on legal proceedings will be in place until a determination under Part 8 is issued or the application is rejected or withdrawn. Correspondingly, no application for relief under Part 8 can be filed if court, arbitral or SOPA proceedings have already commenced in relation to the subject of the intended application.

Temporary powers to extend deadlines for collective sales

The new Part 9 which came into force on 6 October 2020 empowers the Minister for Law to extend collective sale deadlines under the Land Titles (Strata) Act on a case-by-case basis by way of Ministerial Order. This includes deadlines that have already passed, provided that the other requirements for extension are also met.

Only in 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 are set out in the Covid-19 (Temporary Measures) (Temporary Measures for Conduct of Collective Sale of Property) Order 2020.

Reference materials

The following are available from the MinLaw website www.mlaw.gov.sg:

The following subsidiary legislation is available on the Singapore Statutes Online website sso.agc.gov.sg:

Expansion of assessor’s powers and implementation of Part 8

Powers to extend deadlines for collective sales

Further information

Allen & Gledhill has a Covid-19 Resource Centre on our website www.allenandgledhill.com that contains knowhow and materials on legal and regulatory aspects of the Covid-19 crisis.

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 covid19taskforce@allenandgledhill.com.

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