December 13, 2018

Key Amendments to the Building and Construction Industry Security of Payment Act (Cap. 30B)(SOP Act)

Scope of SOP Act

  • Extended to cover prefabrication works where:

― the pre-fabricated components are to be used in construction works outside Singapore and the contract parties are Singapore-incorporated companies; or
― the prefabrication works (whether in Singapore or overseas) are for construction works in Singapore.

Payment Claims

  • Introduction of a 30 month limitation period for the service of payment claims which runs from the latest of the following dates:

― the date on which the construction work in the payment claim was carried out;
― the issuance date of the last document certifying the completion of the construction work; or
― the issuance date of the last temporary occupation permit.

Previously, payment claims could be served even after the end of the Project, subject to the period stated in the Limitation Act, which is usually 6 years from when the cause of action accrued.  

  • New provision which states that payment claims which are served before the stipulated date are deemed to be served on that date. This means that a respondent can no longer challenge the validity of a payment claim on the basis that it was not served on the date stipulated in the contract.

Payment Response

  • Where the contract does not stipulate a time for service of the payment response, a respondent now has 14 days to issue a payment response as compared to the previous 7 days.
  • Codifies the recent Singapore case-law on the effect of a failure to serve a payment response and the failure to set out all reasons for withholding payment in the payment response—the respondent cannot include any such reasons in the adjudication response. This is not limited to substantive reasons but also extends to jurisdictional reasons (i.e. any issues dealing with the validity of the payment claim). There are 2 exceptions to this:

― where the objection only arose after the payment response was provided; or
― where the respondent could not have reasonably known of the objection when providing the payment response.

Service of documents

  • New provision for documents such as payment claims and payment responses to be served via email

What the Adjudicator can consider

  • Expressly provides that an adjudicator can consider claims related to damage, loss or expense but this must be supported by:

― any document showing agreement between the claimant and respondent on the quantum; or
― any certificate or other document that is required to be issued under the contract.    

Adjudication Review

  • Claimant is now entitled to file an application for adjudication review where previously the only party who could do so is the Respondent.
  • Where there is an adjudication review lodged by the respondent, the adjudicated amount is to be paid to authorised nominating body instead of to the claimant. This would put to rest any concerns about being able to recover the adjudicated amount in a successful adjudication review.