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Security Of Payment Legislation


The Building and Construction Industry Security of Payment (Amendment) Bill 2018 has been passed in Parliament on 2 October 2018.

The second reading speech on the Bill, made by Mr Zaqy Mohamad, Minister of State for National Development can be found here. The round up speech can also be found here.

The key amendments to the SOP Act are as follows:

  1. Expanding and clarifying the scope of the application of the Act
  2. - Expand the SOP Act to cover more types of contracts relating to prefabrication works
    - Clarify that claims for work done or goods supplied before contract termination are valid
    - Clarify that adjudicators are to consider claims on damages, losses, and expenses only when the quantum of such claims can be supported by documents
  3. Enhancing requirements on handling of payment claims and responses
  4. - Prescribe a shorter time limit for service of payment claims
    - Clarify a payment claim will be valid even if it is served before the date or period specified in the contract
    - Allow unpaid payment claims to be repeated under the Act
  5. Improving the adjudication processes
  6. - Allow claimants (and not just respondents) to apply for adjudication review
    - Allow adjudicators to disregard specific circumstances where claimants have failed to provide certain documents or information in adjudication applications, so long as the respondents were not materially prejudiced
    - Clarify that any belated objections by respondents will be disregarded by adjudicators or the Courts, unless respondents can prove that their objections could not have been made known earlier

Besides the above key amendments, other revisions to improve the operation of the Act include:

    - Revise minimum interest rate for late payment
    - Specify a non-exhaustive list of grounds on which parties can commence proceedings to set aside the adjudication determination

BCA will keep the industry informed of the commencement date of the amendments.