Overview – Relief for contracts affected by construction delays under Part 8 of the Act
Important Note: The prescribed time to make a Part 8 Application ended on 31 May 2021.
Part 8 of the COVID-19 (Temporary Measures) Act commences on 30 September 2020 and provides relief for specific individuals and businesses that are affected by delays or breaches in separate construction or supply (or related) contracts (defined here), where such delays or breaches are due to COVID-19.
Relief under Part 8 is applicable in the following three situations prescribed in the COVID-19 (Temporary Measures) (Part 8 Relief) Regulations 2020:
Situation A – Where a person who rented goods used for construction work is or will be liable for additional rental expenses
A person who has rented goods for use in construction work may apply for relief if he is or will be liable to his supplier for additional rental expenses due to a delay or breach in a separate construction or supply (or related) contract. For example, a contractor may have rented goods (e.g.scaffolding material, hand drills) from a supplier to perform works under a construction contract that the contractor has with a third party. The contractor may be liable for additional rental expenses incurred as a result of returning the goods later than intended because construction works are delayed due to the COVID-19 situation. The contractor may apply for relief under Part 8 in respect of the additional rental expenses.
Situation B – Where a lessee or licensee (i.e., a tenant) of non-residential property is unable to carry out or complete renovation or fitting out works during the rent-free period
A tenant of non-residential property may be granted a rent-free period to carry out renovation or fitting out works. Such a tenant may have lost the benefit of the rent-free period if its contractors were unable to carry out or complete the renovation or fitting out works under a separate construction contract due to the COVID-19 situation. The tenant may apply for relief under Part 8 in respect of the rent-free period that it was unable to utilise.
Situation C – Where a lessor or licensor (i.e., a landlord) of non-residential property is unable to deliver possession by the date stated in the lease or licence agreement
A landlord of non-residential property may be unable to deliver possession to the tenant by the date stipulated in the lease or licence, due to COVID-19 related delays in a separate construction contract that the landlord has with a third party. The landlord may apply for relief under Part 8 in respect of its inability to meet the delivery date to the tenant.
In each of the three situations above, the affected parties may submit an application for relief under Part 8 of the Act. If it is just and equitable in the circumstances, the Assessor may adjust specified contractual terms, so as to mitigate the impact of the delay or breach in the separate construction or supply (or related) contract on the applicant.
Please note that applications that do not fall within the three categories of cases above will be rejected.
We strongly encourage all parties to make best efforts to arrive at an amicable settlement, through mutual discussion and negotiation, and if need be, mediation. COVID-19 has had a significant impact on everyone. Parties are encouraged to act reasonably and work together to reach a mutually acceptable solution.
Further details may be found in the FAQs linked below: