Building and Construction Industry Security of Payment Act amendments effective from 15 December 2019 to enhance fast and low-cost dispute resolution mechanism

19 December 2019

On 15 December 2019, the amendments to the Building and Construction Industry Security of Payment Act (“Act”) and the Building and Construction Industry Security of Payment Regulations (“Regulations”) came into operation pursuant to the Building and Construction Industry Security of Payment (Amendment) Act 2018 and the Building and Construction Industry Security of Payment (Amendment) Regulations 2019. The amendments are aimed at improving the administration of the Act and proceedings under the Act.

By way of background, the Building and Construction Industry Security of Payment (Amendment) Bill was passed in Parliament on 2 October 2018 following a review of the adjudication mechanism under the Act by the Building and Construction Authority (“BCA”) together with industry stakeholders.

Key amendments

On 26 November 2019, BCA released a circular on the key amendments to the Act and Regulations. Some of these amendments are highlighted below:

  • Expansion and clarification of scope of application of Act
    • Expansion of the Act to include contracts relating to prefabrication of components overseas for projects in Singapore;
    • Clarification that claims for work done or goods supplied before contract termination are valid;
    • Clarification that a payment claim will be valid even if it is served before the date or period set out in the contract;
    • Clarification that repeat payment claims are allowed under the Act. 
  • Enhancements to adjudication process
    • Provisions for claimants (and not just respondents) to apply for adjudication review in specified circumstances;
    • Provisions to allow adjudicators to disregard specific circumstances where a claimant fails to provide certain documents or information in an adjudication application if the adjudicator is satisfied the non-compliance does not materially prejudice the respondent;
    • Clarification that adjudicators are to disregard objections by respondents not included in payment responses save in certain circumstances.
  • Other changes
    • Revision of minimum interest rate for late payment;
    • Specification of a non-exhaustive list of grounds on which parties can commence proceedings to set aside an adjudication determination;
    • Provisions for modes of service of documents to include email and instant messaging platforms in an agreed file format;
    • Provisions dealing with “complex claims” for prolongation costs, damages, losses or expenses.

Comment

The Act first came into force in 2005 and the industry has grown in familiarity with its use over the years. Since then, the number of adjudications has grown, and with it, the body of jurisprudence on the interpretation of some of the Act’s critical provisions. This set of amendments serves the purpose of incorporating the court’s decisions in case law, clarifying the provisions, as well as making several notable changes to the adjudication process. These changes are mostly welcome, although the application of some of the new provisions could give rise to potential pitfalls and new issues if not properly understood and treated with care. The effects and consequences of certain provisions are also uncertain and may have to be tested by practitioners and the courts. What remains clear is the commitment towards keeping the adjudication process a low-cost and speedy mechanism for the resolution of payment claims.

It is important to note that save for a few transitional provisions, the changes to the Act and Regulations will apply even for existing contracts or projects after
15 December 2019 and stakeholders should take note of its implications on the claim and response process, amongst other things, going forward.

Reference materials

The following materials are available from the BCA website www.bca.gov.sg and Singapore Statutes Online sso.agc.gov.sg:

 

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