Building & Construction Industry Security Of Payment Act (SOP ACT) Singapore

Since its inception in 2005, the SOP Act has become an important part of the construction industry dispute resolution landscape in Singapore. Over 900 cases have been filed with the Singapore Mediation Centre (the designated Authorised Nominating Body) to date, with only a handful of cases being referred for review or where enforcement was resisted. The 28 day timeline for the entire adjudication process is one of the shortest among jurisdictions with a statutory adjudication regime, and this is now the preferred avenue for a quick and relatively affordable process to resolve construction payment disputes in Singapore.

We have over the years assisted clients in the preparation of claim submissions for:

• Interim payment claims for residential property construction projects under the SIA form of contract;
• Interim and final account claims for mixed retail and office construction projects under the SIA form of contract;
• Payment claim for bespoke sub-contract with conditional payment clause for variation works; and
• Other payment claims related to bespoke sub-contract and purchase order terms.

We have also acted as expert witness for claimants and respondents in SOP Act adjudication proceedings.

Enforcement of the Amended SOP Act
The SOP Act was amended by the Singapore Parliament in October 2018 and the amendments is enforced as of 15 December 2019, where these will apply to all payment claims served after this date.

Key changes includes:

• Express provisions to deal with terminated contracts and the effect of contract provisions suspending payment post-termination;
• To include pre-fabricated components for construction works produced overseas but utilised in Singapore under the ambit of the amended SOP Act;
• Exclusion of damages, loss & expense claim from the amended SOP Act unless these are provided in the contract documents / agreement between the parties;
• “Patent errors” expressly defined as “errors that are obvious, manifest or otherwise easily recognisable on the face of the claim”;
• A minimum interest rate based on the rate specified under the Supreme Court of Judicature Act is now provided in the amended SOP Act. A higher interest rate will be used if it is stipulated in the parties’ contract terms;
• Amended SOP Act now amends the limitation period (for contracts entered into post 15 December 2019) to serve a payment claim to 30 months from the latest of the date when the work was carried out, or certified, or the issuance of the latest TOP at the time the payment claim is served;
• Section 37 of the amended SOP Act provides the service by email is a valid mode of service as long as the email is capable of being retrieved by the addressee;
• Amended SOP Act now allows claimants to serve payment claims on or before the specified date or fixed period under the contract. The payment claim will then be deemed to have been served only on the contractual date or the last day of the period;
• Amended SOP Act explicitly allows unpaid payment claims to be included in subsequent payment claims unless the pertinent claim had been adjudicated on the merits;
• The default period for provision of a payment response (if silent in the relevant construction contract) has now been extended from 7 days to 14 days;
• Amended SOP Act now empowers an adjudicator to accept an adjudication application that is not compliant with the Building and Construction Industry Security of Payment Regulations, where non-compliance with those regulations does not materially prejudice the respondent;
• Amended SOP Act now empowers the adjudicator to consider reasons or objections not raised in a payment or adjudication response where (a) new circumstances had arisen or (b) the respondent could not have reasonably known of such circumstance;
• Claimants may now apply for adjudication review where the adjudicated amount is lower than the amount claimed by the claimant by at least S$100,000.00. Where the claimant lodges an adjudication review, the respondent is only required to pay the adjudicated amount to the claimant after the adjudication review determination is issued; and
• Amended SOP Act now allows the adjudicated amount to be deposited with a trust account to be established by the ANB pending the outcome of any adjudication review.

Further information on SOP Act adjudication and the adjudication process are available from the Singapore Building and Construction Authority and the Singapore Mediation Centre. Please visit www.bca.org.sg and www.mediation.com.sg for latest updates and amendments.

USEFUL CONTACT:
Singapore Mediation Centre
(Authorised Nominating Body)
1 Supreme Court Lane, Level 4, Singapore 178879
Tel: +65 6332 4366
Fax: +65 6333 5085
Website: mediation.com.sg
Email: enquiries@mediation.com.sg