In your opinion, how do you find the Building and Construction Industry Security of Payment Act 2004 relevant in assisting Contractors / Suppliers in obtaining payments for work-done/ materials supplied?
Before we proceed with any in-depth discussion, we want to make it clear that whatever we present below, are purely our own opinions and deductions from what we have observed, we have no intention of persuading others to support or agree on our views.
It is an undeniable fact that with the implementation of the Building and Construction Industry Security of Payment Act 2004 (hereinafter referred to “SOP Act 2004”) starting in full operation from 1 April 2005, has facilitate many unresolved non-payment issues in the Construction Industry. In the event that the Claimant fails to receive the payment by the prescribed date, the Act confers on him the right to institute adjudication proceedings, and exempts the Claimant from any liability for any loss or damage caused by any suspension of work after an adjudicated amount remained unpaid.
The SOP Act 2004 renders void any ‘pay when paid’ or ‘pay if paid’ provisions in all Construction Contracts covered by the Act, and no one is allowed to contract out of such provisions – Section 9, SOP Act 2004.
The Act also renders void any provision in the Contract that tries to restrict the Claimant or any attempt to deter him from taking action under the Act – Section 36, SOP Act 2004.
The Common Practices in the Construction Industry
Although the aforesaid Act with the mentioned provisions are clearly beneficial in helping Claimants in obtaining payment for work-done or materials supplied, but in Singapore, the culture is non-litigious and many a time, the unpaid Contractor / Supplier would not proceed to institute Adjudication proceedings under the SOP Act 2004 with just a few non-payments of Progress Claims, some of them would only willing to take further action in obtaining payments when the unpaid amount is so huge that it has really threatened the survival of the Company...
By that time, it might be too late to have the unpaid matter to be settled with Adjudication under the SOP Act 2004, as the items that involved in their intended claim become too many for the Adjudicator to be able to give the Determination within the period of 14 days as prescribed in the Act. As this period could only be extended with the concurrence of the parties to the dispute. Thus, the Respondent to the Claim may refuse to concur on the aforesaid time extension, raising issues by ways of counterclaims and set-offs which could render the dispute more complex than suggested. If the Adjudicator could not be reasonably expected to address the issues of the dispute within the time allowed by the Act, the claim may have to be reformulated in order to reduce or simplify the issues, notwithstanding that this may require the Claimant to forfeit some grounds of claim. Alternatively, if the matter is very complex, the claimant may consider leaving the claim for resolution by arbitration or the courts.
What we are doing about this?
Clearly, as experienced Contracts and Claims Consultants since January 2000, we have been helping many Contractor Clients on non-payment issues and Employer / Main Contractor Clients to rebut spurious claims.
Obviously, in genuine non-payment cases, or over-claims such as Construction Variations, Extension of Time Claims and Claims for Loss & Expense etc.., we as innovative Contracts and Claims Consultants will go all the way out to defend the Clients’ financial interests, to help them to be financially afloat.
Many people have asked us what we have done to obtain payments without going through the Courts, all we can tell them is that there is “no standard template” to do such work (thus you could not find the steps in any legal textbook), our tactics would change based on the other parties’ response, of course we would act within the ambit of law as we are not law breakers. Our target is to help the Client to win and protect their financial rights, not unjust enrichment, which would never be entertained by any Adjudicator, Arbitrator or Judge obviously. We always tell people jokingly that if other Country is going to invade Singapore, we Singaporeans are going to fight back innovatively. Obviously, we are going to use innovative defence tactics to fight back, beyond their wildest imaginations; we are not going to let the enemy have any breathing space, we would aim & hit them real hard! Of course, to ensure self preservation.
Doing work as Specialist Contracts and Claims Consultants is similar to fighting a war at the battle, there are a lot of preparation works. It is not surprising that many of our friends see us spending a lot of time studying, updating ourselves on all the latest developments in Law and Engineering, so that we could be effective Consultants to our Clients. We always tell our Client that when we have decided to take up his case, we want to make sure that he will win in order not to suffer financial damage caused by the other party. Obviously, the claim documents that we prepare for our Clients consist of many engineering facts & arguments substantiated with legal arguments, and we change our tactics all the time…, among all the other related works, we also help our Clients in negotiation process. Thus, if eventually the “opponent” still refuses to pay justly for work-done / materials supplied, even knowing that he would never win in legal proceedings with all the claim evidence and legal arguments presented to him, we would help our Client to ensure a favourable legal judgement would be obtained against the Respondent / Opponent, with the Client’s Legal Representatives in Arbitration or in Court.
However, for work in the Oil and Gas Industry, we always work with our Clients who are lawyers and helping them to draft Contracts which involve engineering operations and also drafting Affidavits in possible Legal Proceedings.
From the aforesaid, you understand that to be successful in any claim, the client must work very closely with the Contracts & Claims Consultant and give her all the facts of the case so that she could produce effective claim documents to help him to get back his monies/ rebut spurious claims. Everyone that is involved in these works would need to work very hard; it is common for us to go through many bulky stacks of documents in order to find ways to substantiate the Claim, obviously the Contracts & Claims Consultant must be a quick reader, fast responder, meticulous and having an eye for details, besides having sound knowledge in Engineering & Law, thus we also choose our assistants very carefully. But the hard work is worth it, when we see that justice is done eventually.
Er. Goh Cheow Leng Maria
First drafted on 10 September 2008.