Singapore's Covid-19 (Temporary Measures) Act 2020: What in Law's Name Should F&B Tenants Do?

Singapore's Covid-19 (Temporary Measures) Act 2020 ("Covid-19 Act") was passed on 7 April 2020, with Part 2 on Temporary Relief for Inability to Perform Contracts coming into force on 20 April 2020. Read together with Section 3, Section 5 suspends the obligation on F&B tenants to pay rent for 6 months, if the inability to pay is to a "material extent" caused by the Covid-19 situation ("Temporary Relief"). F&B landlords are in such a case prevented from taking any action to enforce that obligation or to forfeit the lease. F&B tenants who wish to seek cover under this Temporary Relief should file a Notification for Relief, which can be reviewed, in cases of dispute, before a panel of assessors (to be appointed under Sections 10 and 11 of the Covid-19 Act).

As we come to the close of the first Circuit Breaker, many F&B tenants are still grappling with deluded landlords who do not seem to grasp the harsh reality, and who are still unwilling to compromise suitably on rental. While it is a separate matter to keep negotiating and hoping (with all fingers crossed) that F&B landlords will waive rental for the duration of the Circuit Breaker, the Covid-19 Act at least provides F&B tenants with a short-term reprieve to ease cash flow. In a crisis like this one, it is hard to see how any F&B tenant would not be "materially" affected by the devastating loss of revenue caused by the Circuit Breaker, its extension, and indeed, the consistent decline that began the moment Covid-19 touched our shores. Upon the implementation of social distancing and then Circuit Breaker measures, F&B sales have sharply plummeted way beneath any seasonal down-cycle, crashing to the floor in many instances or hovering unsteadily, just inches above. In relation to F&B tenants, therefore, eligibility for Temporary Relief is obvious and it would be perverse to try to argue otherwise.

Although obvious, Temporary Relief for F&B tenants is not automatic. So what should F&B tenants do to avail themselves of the Temporary Relief? It bears to note that Section 9 of the Covid-19 Act, which establishes the need to serve a Notification of Relief on F&B landlords (and any guarantors F&B tenants may have), does not in fact prescribe the precise legal form that the notification of relief must take. Instead, Section 9 makes reference to Section 19, which envisages subsidiary legislation to prescribe this legal form. These subsidiary regulations were passed on 20 April 2020 as the Covid-19 (Temporary Measures) (Temporary Relief for Inability to Perform Contracts) Regulations 2020 ("Regulations"). What this means is that it is not sufficient to merely notify F&B landlords of the intention to seek Temporary Relief. A valid and effective Notification for Relief must be submitted in the legal form.

Section 4 of the Regulations specifies that the Notification for Relief must be filed in Form 1, found here: https://www.mlaw.gov.sg/covid19-relief/notification-for-relief. Where the chosen mode of service is via the electronic system, F&B tenants must submit the electronic form either as an individual using SingPass or as a corporate entity using CorpPass. The electronic system requires input of the relevant F&B landlord's last known email address, for service upon that landlord by this means, to fulfil the mode of service requirements found in Section 5 of the Regulations. If for some reason, any F&B tenant is unable to use the electronic system, there is a PDF form that must be filled out and served by way of any means under Section 5 ("Other Modes of Service"); namely, by email to landlord's last known email address, by pre-paid registered snail mail to landlord's last known postal address, or by text via a messaging system that is internet-based, provided on the landlord's website, social media blog or page, or social networking website. Where a messaging system is chosen, it must be a method by which tenant and landlord have used to correspond about lease matters, prior to the Notification for Relief. The Regulations do not provide a list of qualifying messaging systems but the language is wide enough to include WhatsApp, WeChat, Telegram, Google Chat (Hangouts), FaceBook Messenger, and Linkedin Messaging, to name a common few. Interestingly and of particular note, Short Message Service (SMS) may not fall within Section 5 insofar as it is not primarily web-based. This omission is likely to have not been deliberate, but F&B tenants would do well not to use SMS in order to avoid unnecessary dispute.

After the Notification for Relief is served, if there are F&B landlords out there who doubt the severity of the Covid-19 impact on F&B (and I am sure there will be those), an application may be made by either party to have the dispute assessed by a panel within the 6 months prescribed for Temporary Relief. The assessment procedure is governed by Part 4 of the Regulations. In an effort to eliminate costs for the parties, no legal representation is permitted and no costs will be awarded against either party. This is a double edged sword in the sense that F&B tenants must then educate themselves on the assessment process in order to adequately represent themselves. In summary, an application must be made in Form 6 to the Registrar of Assessors ("Registrar"), accompanied by the Notification for Relief and the underlying lease in question, either via the electronic system or by the Other Modes of Service and a Declaration of Service in Form 4 must be submitted to the Registrar 1 working day following the application. Once the Registrar accepts the application, the applicant will receive Form 8 which must be forwarded to the other party with 2 working days by way of the Other Modes of Service, in order for the other party to file a response. Respondents have 5 working days to file a response via the electronic system or Other Modes of Service. The required Forms are found here: https://www.mlaw.gov.sg/covid19-relief/application-for-assessor. It is important to know that if deadlines are missed, parties can apply for extension of time via email to the Registrar, citing the assessment application number. The relevant email address should be found in the application documents.

When all is in order, the Registrar sets a date and place for the hearing. Email correspondence to determine the application is preferred, but where exchanges via email are deemed to be unsuitable, the hearing may be held online or at the Courts. If there is more than one assessor, the decision must be unanimous. If either party is absent from the hearing, the panel of assessors may move to dismiss the application or make a determination, although if there is good reason, the absent party may apply to set the dismissal or determination aside, using Form 9, here: https://www.mlaw.gov.sg/covid19-relief/set-aside-dismissal-or-determination. The final decision by the panel is binding and there is no appeal.

For F&B tenants who have become embroiled in legal action pertaining to inability to pay rent prior to the entry into force of Part 2 of the Covid-19 Act (or through sheer force by landlords determined to ignore the Covid-19 Act), the process is slightly different. A Memorandum of Notification for Relief needs to be filed with the courts of the arbitral tribunal, as the case may be. Similarly, if an application for assessment follows, this must be notified to the court or the arbitral tribunal. The procedures for these vary from court to court and tribunal to tribunal but F&B tenants involved in such legal proceedings will be able to rely on their lawyers to advise and follow through on these matters. At this point, it is pertinent to mention that there are no transitional provisions in the Covid-19 Act and although Part 2 applies retrospectively to rental not paid from 1 February 2020, it does not help F&B tenants who were kicked out before Part 2 came into force on 20 April 2020. To me, this is a huge oversight, because the Draft Bill was announced on 1 April 2020, the Covid-19 Act was passed on 7 April 2020, but Part 2 on Temporary Relief only came into force on 20 April 2020. That gave F&B landlords 20 days to evict tenants who could not pay rent, force them to vacate the premises and forfeit the lease. Do these F&B tenants have recourse under the Temporary Relief provisions? I think not. It is an injustice that should have been foreseen and plugged with transitional provisions. Regretfully it was not and I am sure there are some who have suffered for it.

We move on to Part 6 of the Covid-19 Act Concerning the Remission of Property Tax that came into force on 22 April 2020 requiring F&B landlords to pass on property tax rebates in entirety to tenants, either by payment of money (lump sum or instalments) or by offsetting against rental or any other fees owed. Part 6 envisages subsidiary legislation to regulate the process of how disputes should be handled by the Valuation Review Panel and any other aspect under this Part that might need clarification. We are still waiting for those subsidiary regulations. What F&B tenants really want to know is how landlords are going to pass down property tax rebates. At present, without regulations to mandate the method of passing down such Government benefit, F&B landlords are dragging their feet. Most F&B tenants have not heard anything regarding this matter and those who have, receive ambiguous responses citing previous rental discounts as having partially or wholly fulfilled this obligation to pass on the rebate. There is nothing F&B tenants can do at this time, unfortunately, short of anticipating (maybe just hoping) that legislation will step in.

To the legislators, we understand that Part 6 aims to tackle the inequitable conduct of many landlords to selfishly swallow up the benefit of property tax rebate, and Part 6 definitely helps to put pressure on these landlords. However, without concrete directions, landlords continue to deny responsibility, claiming that any discounts offered or are being offered satisfy the obligation to pass on the benefit. The Temporary Relief and Part 6 have prompted landlords to excuse themselves from the negotiating table, taking the defensive stand that rental is deferred so we shall let it snowball and property tax is passed on by letting F&B tenants offset whatever it is that makes up that property tax. On the most extreme end of the spectrum is F&B tenants seeing rental invoices accumulate over the next 6 months with a meagre 10-20% offset to account for the property tax rebate. This is far from ideal because there will be that avalanche of rental once the Temporary Relief is lifted in 6 months. F&B tenants need this to be a clear three-prong approach: Temporary Relief from paying rental, rental waivers during the Circuit Breaker, and passing on of property tax rebates. Landlords should not be allowed to fold one into the other to effectively shirk from responsibility in this downward spiral we call Covid-19.

With that, I hope I have helped F&B tenants (of whom I am one) navigate these unchartered waters as laypersons and I also hope that we can see more enforceable measures against landlords who are using every means possible to manipulate the intention of the Covid-19 Act.

*I am an entertainment / hospitality lawyer and nightlife / F&B entrepreneur. I am also privileged to be a member of the loose but very united coalition known as savefnbsg. This article is my opinion and my effort to assist my fellow F&B tenants in understanding the current legal position. This article does not constitute legal advice.