Most notifications for relief filed online reach compromise

This is the fifth in The Straits Times series on legal issues that matter against the backdrop of the Covid-19 outbreak. The aim of these articles is to inform and enhance awareness. Today's articles dwell on aspects of the Covid-19 (Temporary Measures) Act, force majeure clauses and the legal doctrine of frustration in avoiding contract liability, as well as the use of mediation in resolving disputes.

People in the Central Business District last month. As of early this month, nearly 6,600 notifications for relief had been filed online by parties unable to fulfil their contractual obligations because of the impact of the Covid-19 outbreak. However,
People in the Central Business District last month. As of early this month, nearly 6,600 notifications for relief had been filed online by parties unable to fulfil their contractual obligations because of the impact of the Covid-19 outbreak. However, only some 1,000 needed to be settled by an assessor, which meant that the vast majority were able to come to some compromise about unfulfilled obligationsST PHOTO: MARK CHEONG

As of early this month, close to 6,600 notifications for relief had been filed online by parties unable to fulfil their contractual obligations because of the impact of the coronavirus.

This was up from the 3,943 electronic notifications for relief served in the first five weeks since the Covid-19 (Temporary Measures) Act came into effect, as reported in Parliament in early June.

However, of those, only some 1,000 needed to be settled by a state-appointed assessor - with over 220 determinations issued - which meant that the vast majority were able to come to some compromise about unfulfilled obligations.

The Law Ministry said: "We are heartened to see that of the notifications for relief filed the majority did not require an assessor to make a determination. Some parties originally applied for but later withdrew their application for an assessor's determination, as they were able to negotiate and reach a compromise by themselves."

The notification process was spawned by the Act, which was passed in April and amended in June. The Act provides a range of reliefs for parties in certain contracts, for a prescribed period until Oct 19.

The reliefs include protection from legal and enforcement action, such as court and insolvency proceedings, enforcement of security over specified property and assets, repossession of goods under a hire-purchase or rental agreement, and termination of lease or licence of non-residential property for non-payment of rent, among other things.

If parties are unable to reach an agreement on their own even after a relief notification is served, they may apply for an assessor's determination for an outcome that is just and equitable in the circumstances.

Providing an update on the impact of the Act, a MinLaw spokesman said parties benefit from the breathing space afforded by the Act and will be better prepared to recover from the impact of Covid-19.

"Filing for relief under the Act is a signal that a party is facing difficulties meeting its contractual obligations. Parties should take these measures in good faith and explore compromises outside the Act where possible."

MinLaw also acknowledged that construction work stoppage has had ripple effects on parties that may not be a direct party to a construction or supply contract.

For example, a new tenant who was supposed to use a three-month rent-free period from February to May to renovate his premises was unable to do so, as the renovation company could not operate during that period due to manpower restrictions.

 
 

As the renovation could take place only in June and last month, this meant that the tenant could not generate any revenue for those two months but still had to pay rent.

"In the case of the tenant who had lost his rent-free period, the assessor may consider varying the original contractual obligations between the landlord and tenant, such that the tenant is effectively able to recover some of the benefit of the original rent-free period that was lost," said the spokesman.

MinLaw is finalising the scope of this relief, the types of contracts to be covered and assessors' powers in such situations, and will release details at a later date.

"The Covid-19 situation is still evolving and the Government is monitoring closely. We are considering further temporary measures, to assist micro and small companies which, as a result of Covid-19, may require support to either restructure their debts or wind down their businesses," said the spokesman.

A version of this article appeared in the print edition of The Straits Times on August 17, 2020, with the headline 'Most notifications for relief filed online reach compromise'. Print Edition | Subscribe