COVID-19 (Temporary Measures) (Amendment No 2) Bill

Order for Second Reading read.

5.18 pm

The Second Minister for Law (Mr Edwin Tong Chun Fai): Sir, I beg to move, "That the Bill be now read a Second time."

Sir, when the Government first put the COVID-19 (Temporary Measures) Act before this House, we explained that the sanctity of contract is fundamental for Singapore and a key aspect of the rule of law. We do not lightly intervene in contracts. But sanctity of contract is also not absolute, and intervention is needed when there is a need to safeguard the fundamental integrity of our economic structure for the common good.

The Act, which was passed for the first time in April this year, was a major intervention in certain types of contracts, in response to the economic shock caused by COVID-19. It recognised the reality of the situation: that almost nobody, no one, could have anticipated or prepared for the impact of COVID-19 in Singapore and in the world. The assumptions that one had made in entering into those contracts at the time they did, went out the window with COVID-19.

If we did not intervene and people insisted on strict contractual rights in respect of contracts made prior to the onset of COVID-19, many would suffer. Good businesses could go under; bankruptcies and insolvencies could rise dramatically. More jobs would be lost. So, we moved this Bill, first in April, and subsequently, in June, we made further refinements.

The fundamental idea underpinning the reliefs was that a fair sharing of obligations would be necessary given the exceptional times that we found ourselves in. Without such an arrangement, many SMEs would suffer and it would be detrimental to our economy as a whole.

The Bill today builds on the reliefs that we have already put in place by ensuring that they can be implemented more smoothly and more efficiently and to make sure that the reliefs get to the ground in the best possible way.

Sir, the Bill consists of two main parts. The first is to make a number of technical amendments to facilitate the implementation and the delivery of reliefs. Second, it introduces temporary measures for the Minister to extend certain collective sale deadlines on a case-by-case basis. I will explain both.

Sir, I will briefly recap the key reliefs before dealing with the amendments.

In April, we introduced temporary and targeted measures to alleviate the impact on parties who are unable to perform their contractual obligations because of COVID-19. This was the legal circuit breaker that we had implemented, to temporarily hold in abeyance the imposition of strict legal rights and strict enforcement of legal rights. It was intended to give businesses at that point in time some cash flow relief, some breathing space to find the possibility of negotiating a mutual and acceptable settlement.

We set up the Panel of Assessors for COVID-19 Temporary Relief, or PACT, to adjudicate disputes quickly and effectively between the parties, taking into account the particular circumstances that exist between the parties and having, ultimately, regard to the justice of the situation between the parties.

PACT Assessors were, therefore, empowered to make determinations which were just and equitable in the circumstances.

[Deputy Speaker (Mr Christopher de Souza) in the Chair]

We also introduced measures to facilitate alternative meeting arrangements. This ensured that organisations and entities could continue to fulfil their regulatory as well as corporate governance functions, even when personal attendance at meetings might not be viable or safe due to the safe distancing measures that we had put in place.

In June 2020, we introduced a rental relief framework for SMEs and specified non-profit organisations. This addressed the growing need to provide tenants with immediate rental relief from their accumulated rental obligations.

Let me just briefly summarise the framework that exists in place so that Members can appreciate the context in which we seek to make the amendments in this Bill.

The rental relief framework mandated an equitable co-sharing of rental obligations between the Government, landlords and tenants. It provided additional rental relief for tenants who are substantially impacted by COVID-19, and also facilitated the appointment of a panel of rental relief Assessors to consider the disputes between the parties in the manner I outlined earlier.

The relief measures have been a lifeline for many Singaporeans and local businesses. Let me just give Members a sense of the numbers of the cases that have gone through the system.

As at first September 2020, 7,046 Notifications for Relief, or NFRs, had been served through MinLaw’s electronic system. There are others which are done manually which we are unable to track in the system, and out of these, 1,272 applications for determinations by Assessors have been filed. So, out of the slightly more than 7,000, about 1,200 had sought assessments by Assessors. Out of this number, almost 60% of them has been disposed of in the space of about four months.

The reason we believe why there is a much smaller number of applications for assessments than there are Notifications for Relief is because we provided a framework in the legislation for parties to assess for themselves what might work for them and we encouraged them actively to look within that framework to find a solution without having to come to Assessors.

Most of the determinations have been issued quickly and from the day an application for an Assessor’s determination is filed, parties can generally expect the determination to be issued within four weeks, if they file the documents requested and also provide the substantiation for the claims that they make. Some cases take a little longer because the nature of the case is a bit more complicated and more complex. The process has worked well in most cases and I must say that we record our sincere thanks to the many volunteer Assessors, as well as the Registry staff who have come forward in the last few months to offer their services and who sat as Assessors in many of these cases.

These measures come on top of the various relief measures totalling approximately a 100 billion across four Budgets since May, including the Jobs Support Scheme, the Jobs Growth Incentive, as well as the COVID-19 Support Grant. So, the measures that we have put in place in April and in June ought to be looked at and seen in the context of the other measures that are also put in place to assist businesses and to assist employees as well.

Feedback from the businesses on the measures so far have been positive, and for what it is worth, there have been some surveys done by UOB, Accenture, and Dun and Bradstreet – these are not commissioned by the Government or MinLaw. Based on these surveys, we gathered that approximately 72% of the companies that were polled by these three agencies said they were satisfied and happy with the relief measures that had been rolled out.

On the rental relief front, we have been actively engaging landlords and SME tenants, both before the Bill was constructed, as well as after that, to continue the engagement process to explain how it works and to assist with ironing out problems on the ground.

This Bill today does not introduce major changes to the policy framework and to the intent that I have outlined, but makes a number of clarificatory and also technical amendments to facilitate a better delivery of the reliefs. We gleaned many of these from interacting with the Assessors, understanding how we can better deliver the services on the ground, and also appreciating the process which has taken place in the last few months.

Sir, I will now highlight the key amendments to this House.

Clause 8 expands the powers of the rental relief Assessors. At present, only three distinct matters may be determined by a rental relief Assessor.

First, whether the tenant satisfies the prescribed criteria to qualify for rental relief. Second, whether the tenant satisfies the prescribed additional criteria for the additional relief. So, there are two layers – basic and the additional. Thirdly, whether the landlord satisfies the criteria for the reduction of the additional rental relief – that is the landlord relief portion.

The Bill today expands the powers of the rental relief Assessors to allow them to make determinations on a wider range of matters in order to better assist landlords and tenants to implement the rental waivers in a fair manner.

The Bill will empower the Assessors to determine the amount of rent to be waived pursuant to lease agreements. This will address instances where service or maintenance charges are not broken down under the lease agreement. The reason for this, if I may explain to Members, is that the relief that has been given – two months from the Government and two months from the landlords – cover the base rent without the charges. The reason for not requiring the landlords to waive the charges is because these charges continue to be due to the service providers in the form of maintenance or utilities charges. Sometimes, the lease agreement itself might not stipulate which portion is the base rent and which portion are the service charges. These amendments seek to empower the Assessors to make a determination as to which portion ought to be waived.

In addition, the Rental Relief Regulations, which I am sure Members have studied carefully, also provide a series of formula which applies to the different scenarios for rental relief waivers to take place; sometimes, depending on when the tenant has moved in or moved out, or whether or not the business is of one nature or another, depending on the criteria.

This is to enlarge the power so that should an Assessor come across these cases, it will not lack the jurisdiction to address all of these disputes holistically.

Clauses 15 to 17 of the Bill reconcile the operation of Part 8 of the Act with the Building and Construction Industry Security of Payment Act, commonly known as SOPA. Sir, Part 8 has not yet come into force, and MinLaw is working to finalise the details of the relief under Part 8. When it comes into force, Part 8 will provide relief for prescribed contracts that have been affected by delays in construction, supply or related contracts.

This was introduced in light of the severe impact that COVID-19 had on the construction industry. The extent to which a tenant is able or unable in some cases to move in because of the landlord's inability to renovate or retrofit; these are scenarios that could be captured in Part 8.

Part 8 will, in turn, allow assessors limited prescribed powers to adjust the terms of a contract that has been impacted by COVID-19. So, in the scenario I outlined, should there be a reason for not being able to allow the tenant to move in in time, because you have not made good the premises, the assessors can make some adjustments to the contract. The overriding and overarching consideration is to achieve a just and equitable outcome for both parties.

To give one further example, a contractor may have rented equipment from a supplier and the equipment is un-used during the circuit breaker because the site was closed as would have been the case for much of the circuit breaker period. There can be significant unfairness in this situation if the contractor must continue to pay rental even though he was unable to use the equipment throughout the period because of COVID-19 restrictions.

Some suppliers that we spoke to, said that they would waive the rental for the period where the contractor cannot use the equipment due to COVID-19 restrictions. They felt that it was not right for them to continue charging rental at the expense of the contractor. For many of these, we applaud these suppliers for responding to COVID-19 in the right spirit and certainly in the context of assisting holistically, the entire industry.

At the same time, we have also come across many situations where suppliers continue to insists on the full rental throughout the period despite the conditions prevailing at that point in time. This is where Part 8 can come in, to play a part to resolve the matter in a just and equitable manner between the parties.

I would emphasise to Members that the powers of the Assessor in this context are narrowly defined. The categories of contracts that the Assessor can adjust under Part 8 are circumscribed by subsidiary legislation. Further, the applicants will also be required to show that the contract was affected in the first place by a delay in the performance of a construction or supply contract and was otherwise in breach, and this was materially caused by COVID-19 related restrictions.

Parties would also have an opportunity to be heard before the Assessor on any points of disagreement between the claimant and the respondent, before the Assessor makes a decision. The assessment process will also be subject to a rigorous review internally. And if I may share with Members, in the last few months, we have had many briefings with the Assessors so that there is alignment across the process. Both Minister Shanmugam and myself have also met with Assessors to go through the cases and we do that on a regular basis to achieve alignment and a fair degree of consistency across the cases.

In this Bill, we have provided for how proceedings and the determination under Part 8 will interact with other legal proceedings. For example, clause 15 of the Bill provides that an application for relief under Part 8 will trigger a temporary moratorium on the commencement of other legal proceedings. This is necessary as otherwise, there could be parallel proceedings, one under Part 8 of this Bill and another under either SOPA or as a case may be, in judicial proceedings.

The moratorium will therefore apply until the Part 8 application is rejected or withdrawn, or until a determination has been issued. This will, as I mentioned earlier, mitigate and reduce the risk of parallel proceedings.

In the construction industry, many contracting parties rely on SOPA adjudication proceedings. The amendments will also provide SOPA adjudicators with the same powers to adjust contract terms as an Assessor under Part 8 may have. This applies as long as the contract has not been previously gone through the Part 8 process. In other words, you cannot go through Part 8, get a result, perhaps not happy with it and then apply for a further adjustment go through the SOPA proceedings. That will not be allowed.

This amendment, in empowering the SOPA adjudicators the same bandwidth as the Assessors to make the same adjustments, will allow for SOPA adjudicators to also have the same ability to reach a just and equitable outcome in those cases. In many of these SOPA cases, the issues are similar, across whether or not the performance has been affected by an event like COVID-19 and whether or not the payments are due and how much is due and at what stage. Because of the twinning of these issues that arise in such typical SOPA claims, we felt that it was appropriate to clothe the SOPA adjudicator with the same level of discretion and also powers to make those adjudications.

Mr Deputy Speaker, Sir, the construction sector in Singapore is currently going through challenging times. The Government is committed to working closely with the industry to get through this difficult period. I must say that we will do all we can to continue to cushion the impact of COVID-19 on the industry and to help the industry emerge from this as best as we can and perhaps stronger from the crisis.

Sir, I move on now to touch on the provisions that cover the alternative meeting arrangements, which the Bill does by amending Part 4 of the Act. Part 4 provides for alternative arrangements to enable meetings to be held by electronic means, where personal attendance would otherwise have been required.

Members would know that many entities, whether large corporates or smaller societies or charities they do not have a constitutional document that would automatically allow them to hold virtual meetings without physical presence. These arrangements are therefore critical for those entities to allow them to carry on business and also to proceed with governance functions and obligations safely through this pandemic.

They can proceed with their meetings virtually and also, through that virtual platform, make important collective decisions while still complying with safe distancing regulations.

The alternative arrangements are currently linked to the duration of a control order. We have received feedback that this creates some uncertainty because some companies have their Financial Year end at the end of this year and they have until March or April to hold their meetings.

Many of these entities must plan for these meetings months in advance and make the appropriate arrangements. Clause 12 therefore amends section 27 to delink the alternative arrangements from the control orders. It enables alternative arrangements to be prescribed if the Minister for Law considers it necessary or expedient to limit or prevent the spread of COVID-19, even where there is no control order in force, for the purposes of these alternative arrangements for meetings.

With this amendment, we intend to extend the Meetings Order further, to 30 June 2021. This would cover the period of time that I mentioned earlier for all the meetings to take place, including in the context of some, the adjourned meetings as well, up till June 2021. The possibility of a further extension might be considered but we can take that assessment depending on the prevailing conditions subsequently. This extension will give entities the option to hold virtual meetings in place of physical meetings.

Lastly, Sir, the Bill also introduces further amendments to the Registrar's powers, in response to feedback from the PACT Registry in operationalising the Act. These amendments seek to facilitate the efficient and effective operation of the Act and will apply to both the PACT Registry and the Rental Relief Registry. The PACT Registry deals with the COVID-19 Bill as we passed in April and the Rental Relief Registry deals with the ones we passed in June this year.

Currently, the Registrars have the power to reject applications that do not comply with the form and manner prescribed by the regulations. But, this power is limited. What the Registrars and Assessors have seen has been certain defective applications which have come through, not falling within the original prescription, but nonetheless, defective or failed in some way. These applications still make their way through the system because there is no power to dismiss them ab initio, as of right. They, therefore, drain the time and resources of the Registry and also the volunteer Assessors.

Clauses 5, 8 and 14 therefore provide that the Registrar will have a power, a discretionary rejection power on certain grounds. One, where the contract is not a scheduled contract, so it does not come within the ambit of the Act altogether; two, if the application is incomplete; and three, if the application is materially false or misleading, or frivolous, or is an abuse of process. Members would know that this closely aligns with the kinds of standards that we prescribe for filing papers in judicial proceedings.

Sir, these amendments seek to achieve a balance between the optimum use of limited resources, and as I mentioned earlier, many of them are volunteer resources as well and also striking a balance with fairness to the parties.

The Bill also makes certain clarificatory amendments, in line with the Regulations which have been promulgated. Section 7A provides for a cap on late payment interest and charges. There was some doubt as to whether the time period when this cap would apply, so we made that clear.

Clause 3 makes clear that the cap on late payment interest applies to interest accruing from 1 February to the end of the prescribed period.

Sir, at this juncture, if I may just acknowledge two suggestions raised by Mr Edward Chia during the earlier debate, which pertain directly to the issues in this Bill.

Mr Chia proposed extending the statutory repayment schemes beyond rental arrears, to help businesses who want to restart. Currently, we have a statutory repayment scheme that applies only to rental arrears but Mr Chia is proposing that we go beyond this. We are aware of this suggestion, it has been raised with us. But, we wanted to proceed very carefully because this opens up a significant amount of outstandings that will be subject to the repayment schedule or that could be termed out in the repayment schedule, possibly to the detriment of creditors as well.

So, we want to balance the cash flow needs of these creditors against those businesses who have fallen into debt. We will study this further and determine if this is appropriate and if so, on what kind of scale.

Mr Chia also made reference to whether we could provide relief for Directors from liability for insolvent trading in this period. Mr Chia would be pleased to know that the Bill already covers that, in fact, the Act has been passes in April. It already covers that and a company is not treated as incurring liabilities without a reasonable prospect of meeting them in full during the prescribed period, and that is the threshold for insolvent trading liability for an individual director.

Sir, let me move on now to the amendments on collective sales very briefly.

Clause 19 of the Bill introduces a new Part 9, that expressly empowers the Minister for Law to extend collective sale deadlines on a case-by-case basis, by way of Ministerial Order. This will also cover deadlines that have already passed, provided that the other requirements for extension are met.

This measure is intended to address feedback from some Collective Sale Committees or "CSCs", that they require extensions to the deadlines specified in the Land Titles Strata Act. Ordinarily, these deadlines ensure that the CSC follows through with the collective sale process in a timely manner, minimising uncertainty for the owners in the development.

However, we have received feedback from CSCs that their ability to complete the collective sale process could have been genuinely and also materially impacted by COVID-19. For example, they may have been unable to secure a buyer due to travel restrictions for instance and also possibly the circuit breaker measures.

All applications for extension will be evaluated carefully, and only those cases where the CSC has been genuinely and materially impacted by COVID-19 will an extension be granted. The process and procedure for such an application will be set out in subsidiary legislation.

Sir, let me just quickly conclude. Over the past few months, as Members would appreciate, we had to respond very quickly to the pandemic. We have had to be agile, act quickly, provide effective relief to businesses and individuals, to help as far as possible, to cushion the impact of COVID-19. So far we have seen encouraging and tangible results from the reliefs that were introduced in the first two rounds. We have seen how the Act has provided breathing spaces and also provide for there to be a way in which the two parties, as I mentioned earlier, can use a framework that is published in the Legislation to work through their own difficulties. The numbers, I think, bear out that proposition.

Sir, this Bill builds on the amendments introduced earlier in April and June and effectively gave us more leeway in the way in which we administer the cases on the ground to deliver the reliefs in a way which the Act has contemplated it. With that, Mr Deputy Speaker, I beg to move.

Question Proposed.

Mr Deputy Speaker: Mr Murali Pillai.

5.44 pm

Mr Murali Pillai (Bukit Batok): Mr Deputy Speaker, Sir, before I start my speech, may I take this opportunity to congratulate your goodself as well as the hon Member Ms Jessica Tan on being elected as the Deputy Speakers of the First Session of the Fourteenth Parliament.

Sir, I stand in support of this amendment Bill as I hear from the hon Minister Mr Edwin Tong, the focus of this Amendment Bill is to facilitate the better delivery of reliefs and in particular to provide the Registrars and Assessors with flexibility to arrive at just outcomes in the cases that they have been assigned.

The rental relief measures introduced as an amendment to COVID-19 (Temporary Measures) Act in June 2020 represents one of the hallmarks of the Government's decisive response in mitigating the effects of COVID-19 pandemic on individuals and small businesses. The targeted relief has an impact of producing cost and improving cash flow, which we all know, is the lifeline of companies.

It would be good for us at this point in time, in this House, to appreciate and understand the positive impact of the Act in helping these individuals and companies. I recall the hon Minister, Minister Shanmugam mentioning 260,000 SMEs employing over two million workers potentially stood to benefit directly from the rental relief measures alone. Hon Minister, Minister Edwin Tong today mentioned about 7,000 notifications for leave has been filed.

May I please ask the hon Minister in dollar terms, what is the total value of rental rebate the commercial, industrial and office tenants have or will stand to receive arising from the property tax rebate offered by the Government? Similarly, in dollar terms, what is the estimated additional rental rebate that commercial, industrial and office tenants have or will receive from their landlords.

As I understand these are tenants who have suffered at least a 35% drop in revenue over the April-May 2020 period this year compared to the corresponding period last year.

Assessors appointed under this Act, in my respectful view, form the backbone of the implementation of this Act. We are fortunate that a good number of professionals drawn from law, accountancy and tax practices have stepped forward to help in this huge endeavour in the midst of the crisis that no doubt would have affected them too. They are paid a token honorarium but have and will continue to put in quite a lot of time and effort in the discharge of their important duties.

Being drawn from the professions, they bring with them credibility too. To each of them, we owe a debt of gratitude in answering the call for our nation, and I join the hon Minister in thanking them too. May I please ask how many Assessors have been appointed under the Act to date, and what steps have been taken to ensure that they will be able to execute their duties? In this regard, I note with interest that the hon Minister himself has been involved in briefing sessions with them.

I now move on to the impact of the Act on smaller landlords. The hon Minister Shanmugam recognised the potential plight of the smaller landlords who rely on rent for their livelihoods in his June 2020. The smaller landlords are individuals or sole proprietor landlords whose aggregate annual value of their properties are equal to or lower than $60,000 as at 13 April 2020 and the rental income form 75% of their gross income in Year of Assessment 2019.

For such landlords, they can apply for an assessment to provide half of the additional relief required. I have anecdotally received feedback on potential hardship that may be visited on these landlords arising from two general situations. The first is a timing mismatch between when IRAS provides the property tax rebate and the tenant's decision in not paying the rent equivalent to the rebate as provided for under the Act. Second, the decisions on the part of tenants not to pay rent amounting to the full extent of the additional rental relief available under the Act not taking into account the landlord's status as a small landlord.

I wonder if the hon Minister could please shed light on how these affected landlords may be assisted on the possibly unintended consequences of this Act.

Finally, given the gloomy economic conditions that now exist, which has led to the extension of the Job Support Scheme to March 2021, I wonder whether the hon Minister would consider extending the prescribed period of relief from making payment which is due to expire in October 2020, to be extended further, and if so, how can that be balanced against the plight of counterparties who would be more impacted by any extension of time?

In this regard, I note that the hon Minister, Minister Shanmugam acknowledged in the MinLaw's Addendum to the President's speech that in the coming months, some companies will face a real risk of insolvency and financial constraints may cause litigants to forgo pursuing their legal rights. He also intends to introduce in this House cost-effective measures for small businesses to restructure or wind-up.

All of us in this House must recognise that these are tough times. There are no easy solutions in this area of providing rental relief to individuals and organisations impacted by the pandemic. Failing which, their businesses will cease. There will be more muscular organisations which will not be happy with the relief measures under this Act. However, the pitching of the legislative policy must always be in favour of greater good of Singapore and Singaporeans. This amendment Bill continues to strike that appropriate balance. I support the Bill.

5.51 pm

Ms Sylvia Lim (Aljunied): Deputy Speaker, in the past few months the COVID-19 (Temporary Measures) Act imposed on landlords the obligation to pass on property tax rebates and waive rentals to benefit tenants who are SMEs. These measures rewrote the tenancy agreements they had entered causing income disruption to landlords. These interventions were meant to support business tenants and help them pull through the circuit breaker which disrupted their businesses.

Sir, I had an opportunity recently to interface with the rental relief scheme as a resident who was a small landlord saw me. In August, IRAS had sent her a notification of cash grant and rental waivers informing her of the grant she was to receive and the fact that she was to provide four months of rental waivers to her tenant. This lady was in her 90s and in an extremely poor health, who moved out of a landed house to receive rental income to repay a family debt and to fund her daily expenses and medical costs.

As the family found that the rental waivers required were too much for them to bear, they came to see me at my Meet-the-People Session for assistance. I advised them that she should apply for an assessment on account of financial hardship. If successful, she would only need to provide half of what was initially required that is two months rental waiver. To that end, clause 8 of this Bill updates section 19M on applying for an assessment.

Section 19M requires the landlord to apply to the Registrar of Assessors within the prescribed time and in the prescribed form in manner. This assessment would determine, among other things, whether a landlord was entitled to a reduction of the additional rental relief. Under the proposed changes to section 19M contained in this Bill, subsection 8 specifically enables the Registrar to reject an application if the application is incomplete or otherwise non-compliant, meaning if it is far later than the prescribed time or somehow does not conform to the manner specified.

Currently, the prescribed time for filing an application for assessment is 10 days after the landlord receives a notice of cash grant. Sir, given the newness of the scheme, I hope the Registrar will be accommodating of applications which may be filed out of time or perhaps not contain all the supporting documents the Registrar requires at the first instance.

Coming back to the example I gave, the resident had to wait a few days to see me, and in fact had only been recently discharged from a hospital. Her family was also more conversant in Chinese and found going through the requirements novel and onerous. The application needed to be filed via SingPass to the Singapore Land Authority as the managing agency. Such steps are not so straightforward for some small landlords and probably some tenants as well.

Sir, the avenue for assessment is a crucial one to redress any injustice between the landlord and tenant caused by the COVID-19 legislative interventions. As such, it is important that the process be user-friendly and that information be easily available in the four major languages. Furthermore, the Registrar should be open to accepting applications for assessments that may be slightly out of time or incomplete, so as not to exclude meritorious applications.

Mr Deputy Speaker: Mr Louis Ng. We will move on. Mr Vikram Nair.

5.55 pm

Mr Vikram Nair (Sembawang): Mr Deputy Speaker, I declare my interest as a lawyer who practices both construction and corporate dispute resolution. I will be commenting on these two areas on the Bill.

The first section I would like to address is clauses 15 to 17 of the Bill, which modifies some of the procedures relating to the Security of Payment Act or SOPA. The construction industry has been one of those hard hit by the COVID-19 crisis. Generally, construction contracts are very prescriptive with parties having specific obligations to perform certain works within specific time frames. Two things are generally of critical importance: time and money.

One of the biggest problems contractors faced, is that if there are delays or issues in a construction project, payment may be withheld by the paying party. This can be between developer and main contractor or between contractors and their own sub-contractors. Dispute resolution through courts or arbitration may take time.

It was a deal with this process that the Security of Payments Act system was set up, which generally provided a fast way for claimants to recover payments due before full resolution of all disputes. These process requires both the claimants and respondents to adhere to strict timelines to file claims and responses and the adjudication would give a quick decision. This process has significantly reduced the time and costs of resolving construction disputes and many disputes would not proceed to full hearing after that.

The COVID-19 situation has hit this industry hard and works in many places had to be stopped. While the current legislation gives contractors moratorium for liabilities arising from delays caused by COVID-19, I expect that now works are gradually resuming, parties will want to be clear that they will be able to recover payment for works, as well as benefit from any necessary COVID-19 reliefs granted by the Act.

Clause 15 clarifies the moratorium would apply to claims brought under SOPA and clauses 16 and 17 would allow the contract to be modified in a manner that is "just and equitable." And I acknowledge that this is the framework that has been used by Assessors dealing with all claims affected by COVID-19.

I think this also harmonises the two Acts by giving adjudicators the same powers as Assessors which makes eminent sense, so two processes are not needed, but this also gives a lot of flexibility to Assessors and adjudicators in modifying the contract, which is not very common in the construction industry, and this may create a lot of legal uncertainties, because there are many, many ways in which contracts may be affected by COVID-19.

The balance that Assessors and adjudicators would need to take is want to make sure that parties are able to perform or enforce bargains they believed they made, but not be penalised by the effect of the moratorium. The additional time and costs needed for performance of these contracts would also need to be carefully considered because it is not always easy to determine where these should fall, and this is almost always what construction contracts try to do too – place responsibility for losses or delays on one person or the other.

For example, if a project has been delayed for six months and has to be restarted, there will be costs to remobilised, there will be shortages of manpower, higher costs for hiring. I think in many ways, Assessors will have to exercise a lot of discretion on how they are going to allocate these additional costs. If there are any guidelines for Assessors or adjudicators where they should bear in mind, this may be helpful especially in a very prescriptive industry like construction.

The second area I would like to address is clause 12, which relates to Alternative Arrangements for Meetings. Generally, I have had very good feedback on the provision for these alternative arrangements. It basically allows AGMs and Board meetings to be held virtually. The feedback, of course I had, was that the hard deadline that was initially in place made it difficult for companies to plan for AGMs that may take place longer, especially where they need sometime in advance to call AGMs; and sometimes AGMs get adjourned. So, it was not clear the legislation would continue to apply to adjourned meetings. I think it was very helpful the Minister clarified that the legislation is now going to be in place until June next year which gives a good long window of time.

On this point, I have two suggestions. The legislation itself gives the Minister discretion to decide how long or short a time frame this legislation is going to be in place for; this amended proceedings. And I think at the very least three months advance notice would be helpful, a longer period would be even better.

In this regard, there is actually no harm in erring in the side of caution and giving a longer period because I think there is not much downside – even if the COVID situation is better – there is no harm if the virtual meeting provisions are still in place and meetings can go on virtually.

The second point that I would also like to make is, in fact, these provisions have been so well received that I have had feedback that perhaps the Companies Act should be amended to allow these alternative meeting arrangements to stay in place indefinitely. But this is for the Ministry's consideration.

Mr Deputy Speaker: Mr Louis Ng.

6.00 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, I stand in support of the Bill. I thank the Ministry for the rental relief afforded to many tenants and sub-tenants under the Act. It has, indeed, been a lifeline for many SMEs in these difficult economic times. I just have a few quick clarifications to seek.

On my recent market walkabouts, I found that some sub-tenants, especially coffeeshop stallholders, are not benefiting from the rental relief framework. They are not aware of the laws that have been passed and the rental relief they can get. It is good that eligible tenants and sub-tenants do not need to do anything and, instead, the landlords are obliged to notify their tenants of the rental relief. However, I understand that some landlords are not notifying their tenants and some tenants are also not notifying their sub-tenants.

In addition, some coffeeshop stallholders in Nee Soon East are aware of the rental relief but did not know that it was for four months. Some only got one month of relief. They also do not know where to seek recourse. Not requiring eligible tenants and sub-tenants again to take any further steps to obtain rental relief is a well-intentioned measure. However, it may be a double-edged sword if it is not accompanied by proactive communication and enforcement of the relief measures to tenants and sub-tenants.

We need to take a more proactive approach to ensure that the rental relief is reaching those who need this lifeline the most.

Sir, I have four clarifications.

First, can the Minister share how many complaints the Ministry has received with regard to landlords or tenants not providing the two months of rental relief that is supported by the Government to tenants and sub-tenants respectively?

Second, what percentage of these complaints are resolved with the rental relief being subsequently provided to the tenants and sub-tenants respectively?

Third, as some tenants and sub-tenants, especially again the coffeeshop stallholders, still appear to be unaware of their rental relief rights under this framework, can the Minister share if a more comprehensive communication mechanism could be put in place urgently to inform eligible tenants and sub-tenants of such reliefs? If not, can landlords and tenants be made responsible to show evidence that they have informed their tenants or sub-tenants respectively of their rental reliefs?

Fourth, given the additional rights of the assessor to vary the relief amounts pursuant to this new Bill, can the Minister share what safeguards will be put in place to ensure that tenants and sub-tenants have sufficient clarity from the outset of the rental relief and amounts that they should be entitled to? Similar to my earlier point, how will MinLaw be communicating this to the tenants and sub-tenants?

Sir, notwithstanding these clarifications, I stand in support of the Bill.

Mr Deputy Speaker: Mr Zhulkarnain Abdul Rahim.

6.04 pm

Mr Zhulkarnain Abdul Rahim (Chua Chu Kang): Mr Deputy Speaker, Sir, I stand in support of this amendment Bill.

I thank the Second Minister for Law for the explanations to the amendment Bill. I declare my interest as a corporate dispute lawyer and sitting on boards of several charities and companies. Members of my firm are also volunteers of the assessor team.

The amendments, as proposed in the Bill, are timely and, in particular, the amendments to section 27 of the Act in relation to the alternative meeting arrangements for organisations during the COVID-19 pandemic. Current alternative meeting arrangements expire on 30 September. With the extension to June 2021, this is greatly welcomed as it avoids several difficulties. The present amendment, which will pave the way forward for an extension of timeline, is also welcomed by organisations and charities as well.

However, I am proposing whether the Government can look into how we can incorporate such alternative meeting arrangements on a long-term basis, embedded as part of our companies' and charities' legislative and regulatory framework beyond this COVID-19 period, beyond a temporary basis.

The feedback I have received and my own experience are that these alternative meeting arrangements have proven to be not only cost-efficient but effective as it compels meetings to prioritise and focus on the business at hand. Indeed, COVID-19 has precipitated and necessitated the digital adoption and transformation of our organisations.

But having taken the first steps of the digitalisation journey, we should adopt a framework that would encourage organisations to continue to forge ahead with the digitalisation journey for our organisations.

Mr Deputy Speaker, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] In my experience as a former Director of the Singapore Malay Chamber of Commerce and Industry (DPPMS), an alternative platform for holding meetings was a most welcomed one. This is because most of the DPPMS members are businessmen or micro-SMEs and, by allowing AGMs to be held through alternative platforms, such as online communications, this can help lower their costs because many of our enterprises have spread their wings to either regional or international markets. In addition, when I was a Director at AMP, we have studied how digital transformation can be implemented in our Malay/Muslim welfare organisations. Through COVID-19 and the amendments to the Act, many more organisations can make use of this opportunity to undergo digital transformation. Therefore, I welcome this amendment.

(In English) Mr Deputy Speaker, Sir, in conclusion, I support the amendments. I would like to ask the Minister whether alternative meeting arrangements can be considered in the long-term as part of our public and private companies' and charities' legislative and regulatory framework, just like Member Vikram Nair said earlier. This will be the start of our digitalisation movement towards alternative meeting arrangements as our organisations become more global in nature and members are situated anywhere around the world. Further, this will stand us in good stead to be prepared for future crises.

Mr Deputy Speaker, Sir, I support the amendments in the Bill.

Mr Deputy Speaker: Mr Shawn Huang.

6.08 pm

Mr Shawn Huang Wei Zhong (Jurong): Mr Deputy Speaker, I am in support of the amendment Bill. The changes to the Bill will help to provide clarity to Singapore's legal intervention. In particular, I note that under the new amendments, the assessor will be given enhanced powers to specify the amount of the rent to be waived. This will reduce the ambiguity and potential conflict between landlord and tenant, which will allow them to focus on their businesses.

Over the last few weeks, several tenants and landlords have approached me with regard to rental disputes. Many have longstanding relationships with one another but could not find an amicable way to resolve. This has been further amplified by the economic challenges faced across various industries. The amendment will help to better mediate and close issues with certainty and reason.

A number of residents have shared that the legal intervention thus far under the Act has helped their small businesses. They appreciate that it is not a broad brush attempt but seeks to differentiate between the needs of SMEs and provide targeted solutions. I commend the efforts of the MinLaw team, along with other Ministries and agencies, who continue to review the Act to ensure that it remains relevant to this ever-changing COVID-19 situation.

Mr Deputy Speaker, I beg to move.

Mr Deputy Speaker: Minister Edwin Tong.

6.09 pm

Mr Edwin Tong Chun Fai: Mr Deputy Speaker, I thank the Members for their support of this Bill and I will just very quickly jump into the questions that have been raised and deal with them directly.

Mr Murali Pillai asked how many assessors have been appointed and what steps have been taken to ensure that they perform their duties well and how are they trained for that.

As of 4 September 2020, a total of 298 assessors have been appointed to the PACT Registry and the rental relief panel. As I have explained earlier, we do have regular discussions with them – myself, Minister Shanmugam and also the MinLaw officers. In that way, we keep a parity and we ensure that the decisions are also consistent with each other across the different panels.

There are 12 panels and each of them is headed by a senior District Judge from the State Courts. That is how the cases are administered.

The MinLaw team also conducts daily check-in sessions with the PACT Registry to provide guidance on the cases filed. So, not only on the cases that have been looked at or assessed, but the cases filed, to get a sense as to whether or not there needs to be improvement to the way in which we administer and operationalise the way in which the registry functions.

Mr Murali Pillai also asked whether there have been plans to extend the moratorium order under the current Act, which is due to expire on 19 October 2020 and how such a possible extension might be balanced against the interests of both parties.

In answering the second question, first, we have to bear in mind that, as I have said, it is intrusive to step in to intervene into parties' contracts. So, we do that judiciously and we always have to keep an eye on whether or not it is appropriate, what is the right level of intervention and whether, in the first place, the circumstances require that intervention.

So, we will monitor that carefully to make an assessment based on prevailing circumstances, whether that is still necessary. But I just want to cite, for the Member's information, that we have seen a general downward trend in the number of Notifications For Reliefs that have been filed. From July to August, compared to May and June, we have seen a downward trend. This suggests to us that either the number of cases has been coming down in terms of the disputes or, as I have postulated at the start, the cases have come down partly also because there is not even a need to file an NFR, given that the framework has become a little bit better socialised to the public and people know what the framework provides for and, therefore, can negotiate on their own accord outside of the NFR regime altogether.

So, we will monitor that, together with the prevailing circumstances, to assess whether or not we need to extend the moratorium.

Mr Murali Pillai also asked about the total value of the rental rebate that the commercial, industrial and office tenants have received and what is the estimated additional rental rebate.

The Government's assistance for the rental relief component comprises both the property tax rebate for 2020 and also the cash grant from the Government. The property tax rebate for the 2020 period amounts to about $1.8 billion and the cash grant component, as announced by Deputy Prime Minister Heng at the Fortitude Budget, is about $2 billion. So, in total, these are the two components which make up the grants given in respect of the rental relief framework.

It is worth noting that both components of the Government support are calculated based on the annual value of the property and that might not exactly be the same amount of the rental waivers that individual landlords provide. As I have mentioned earlier, the annual value is the approximated annual return that the property is expected to fetch. But what the market or what the landlord might get out of that particular property might well be different. So, there is that possibility of discrepancy. And the other, of course, is the waivers are only in respect of the base rent or contractual rent and not the service and utility charges.

Mr Louis Ng raised several concerns in his usual quickfire fashion and I will try and replicate a quickfire response.

First, on the construct of the scheme and whether tenants are aware or not aware, and whether it is easy to use. We did receive some feedback that in having to pass down the property tax rebate from the Government to landlord, landlord to tenants, there might be some friction in that process, which is why this scheme that we have designed that was passed in June does not rely on that "passing the parcel" as it were, but simply by way of notification from IRAS. Once that notification kicks in, then it applies by way of waivers. So, it is not so much what you have to pass down but rather what the tenants do not have to pay for the relevant period. So, it is deliberately designed in this way to ensure that, as far as possible, no active step needs to be taken by the tenant.

Second, Mr Louis Ng asked what if landlords are either slow or failed to inform their tenants. We have a framework that is set in place. Mr Louis Ng will know from the Act, it mandates the landlord to pass a copy of the notice to tenants within four working days. We have prescribed that but, obviously, there are also roughness at the edges – some might not know that they have received it, some might be unable to find their tenant for a period of time. They may not be operating their business and so on. So, we understand that and all that is taken into account.

But there is a default framework that applies absent anything else. So four days to pass down the notice. And after the notice of cash grant is received by the property owner, he is also required by law to pass a copy to his tenant and the framework is designed, as I mentioned earlier, in this case, once you receive the notice, then the waivers will kick in.

Finally, Mr Louis Ng also raised the point about information and education. I think it is a highly relevant point. The whole idea is for people to understand what the framework provides for and to be able to use the framework in a way which applies to them. We have put up the usual infographics, we have explained it as best as we can, we have also taken to having a dedicated website just to explain this and put all the materials at one place. Both Minister Shanmugam and myself have conducted several webinars and sessions, in some cases, face-to-face, some cases on online portals to explain this to people who then pass on the information. For example, we have sat down with several merchants associations and federations so that they in turn can pass down the information to their members and in that way disseminate it. So, we try as best as we can to plug into these networks and try and explain and give information.

We have also used community means, through organisations on the ground, using business associations, giving them the materials. And, ultimately, if they do have questions after all of this, we do have a team; it has been highly stretched but we do have a team that sits and takes calls and explains and also walks through the process. Later on, when I address Ms Lim's points about timing and about not being too strict, I will also explain further what else our officers do to assist in this programme.

Mr Murali Pillai asked about some landlords who may have financial difficulty and may face difficulties themselves. Let me first explain the operation of the waiver system.

The Government puts up the first one or two months, depending on whether it is industrial/office or commercial property. So, one month for industrial/office and two months for commercial. The tenants will enjoy a further additional rental relief of one or two months correspondingly, if they are able to demonstrate a 35% drop in revenue in the comparable period; and absent anything else it will be April and May 2019 against April and May 2020. You compare that and if you have a 35% drop, the additional relief kicks in. It is only the additional relief that the landlords are obliged to bear.

In the scenario where you might find a retiree landlord or a small landlord whose annual takings from rental income is a substantial portion of the annual income – 75% in this case – then that person can also apply for relief. The qualifier there is as long as you do not hold properties where the annual value is more than $60,000. We fix it at 60,000 because that is the median annual value of commercial properties in Singapore.

Based on these numbers, we expect that it does cover a fair number and if one is holding to the properties that exceeds the median annual value of commercial properties in Singapore, then you might not qualify or you would not qualify for the scheme.

I would not say it captures everyone, but by and large in hardship cases, you are likely to fall within this framework, you will get the relief from the Assessors and the landlords, those who think that they can qualify, should apply for assessment by the Assessors.

On top of that, as we have explained, and as Mr Shanmugam explained when this Bill was introduced in June, there are also other softer measures, such as the bank loans and forbearance and other measures that working through MAS, the banks have offered.

Ms Sylvia Lim asked about process timing and whether parties who filed appeals or filed applications out of time, whether or not that would be taken against them. The short answer is absolutely not. We look at the substance of the case and the merits of the case. The Registrar has a discretion to accept applications out of time and will do so as long as there is merit in the application, there is good reason and it is not a frivolous reason.

In addition our officers also often receive requests for clarification, either on the phone or in person or online. On occasion our officers also proactively assist the applicants in form filling or in explaining the process and procedure so that they will be able to have their applications either for rental relief or for landlords' additional relief to be heard by the Assessors.

So, I wish to assure Ms Sylvia Lim that this is being done already and if she is aware of any other cases which fall through the cracks, which require assistance, please do reach out to us and we will assist.

Mr Vikram Nair asked some questions about SOPA – about the timing and the cash flow. We understand that SOPA is really designed to ensure that there is security of payment and cash flow is critical in the industry. The provisions in this Bill do not affect the timeline in SOPA. All we are saying is as long as you have got an application for determination filed under Part 8 of this Act, then do not duplicate the process by also asking for relief in SOPA and I think that is a fair position to take. You do not get two bites at the cherry for relief.

As far as guidelines are concerned for Assessors and adjudicators, the same briefings, the same guidance we give to the current Assessors, we will also give to the SOPA adjudicators. Those who are given the same ambit of powers of discussion as the current PACT Assessors, they will also be given the same guidance.

Finally, on alternative meeting arrangements, I thank the various Members. Mr Vikram Nair spoke about it, Mr Zhulkarnain also spoke about it and I think the proof of the pudding is in the eating. I think if you are asking for this on a permanent basis, it cannot be quite a bad thing. So, I thank the Members for that. I just want to point out that actually under the Companies Act, as long as the constitutional documents or the memorandum and articles of the company or the relevant organisation, provides for it, then you can, in fact, already hold your meetings in a non-physical manner. There needs to be some compliance with the Companies Act and different companies or different societies may have slightly different obligations to fulfil. But by and large the scheme is there, the regime is there. If you are able to take advantage of it because your own constitution allows for it, then you can do so.

For the moment, our intention as I mentioned is to give certainty to companies who are planning for the year-end AGMs, some as far as six months down the road and we want them to know that they will be covered by the alternative arrangements. They can continue to make those arrangements and beyond that we will make an assessment. For the long term, we will study it and if this is something that is useful and workable, we will consider whether or not and to what extent we can incorporate that into a more permanent position.

Sir, I think I have touched on all the questions and I wish to end by thanking Members for speaking despite this being late in the day at the end of a long week of debate. I thank you very much for your support and I look forward also to your continued support as we continue to refine the COIVD-19 (Temporary Measures) Bill. These are steps that we gather as we encounter situations on the ground and we react to it by introducing amendments from time to time to this Bill. I thank you all very much and I beg to move, Mr Deputy Speaker.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Edwin Tong Chun Fai.]

Bill considered in Committee; reported without amendment; read a Third time and passed.