Andrew Hales  | Sophie Wallwork  |  Tom Lawler

Ser Kim Koi v GTMS Construction Pte Ltd and others and another appeal [2022] SGHC(A) 34

Key takeout

This decision of the Singapore Court of Appeal provides some interesting commentary on the law in Singapore on what constitutes a ‘force majeure’ event, where the term ‘force majeure’ has not been defined in a contract. 

Although the decision concerns facts and circumstances arising during 2013, it includes an example that refers to the impacts of the COVID-19 pandemic.  The commentary could suggest that in circumstances where a contract does not specifically consider or address the impacts of COVID-19 under the applicable force majeure provisions, a court may consider that these impacts are ‘force majeure’ events (noting that such a finding will depend on the circumstances in question and the exact wording of the relevant contract, including whether ‘force majeure’ is defined in the contract).

Facts

Mr Ser Kim Koi (developer) contracted with GTMS Construction Pte Ltd (builder) under a Singapore Institute of Architects, Articles and Conditions of Building Contract (SIA Conditions) to construct three bungalows on a plot of land, and engaged Mr Chan Sau Tan (architect) to act as the developer’s agent during construction.

During construction, statutory authority SP Powergrid Ltd (SPPG) informed the developer that an overground electricity distribution box was required to be installed in order to connect the new services cable to the electricity supply network.  The architect subsequently notified the builder. The builder sought extensions of time from the developer for delays arising out of the SPPG requirement.  The architect granted the builder’s requests for extensions of time pursuant to clause 23 of the SIA Conditions, which entitled the builder to an extension of time for, amongst other things, ‘force majeure’ events.  The phrase ‘force majeure’ was not defined under the SIA Conditions.

Additionally, clause 7 of the SIA Conditions titled ‘Statutory Obligations’ provided that the builder was:

• required to comply with all notices of any ‘Government authority’ or ‘statutory undertaker’ with jurisdiction in regards to the works, and
• to notify the architect of any variation(s) arising out of such an order, and if appropriate, an extension of time would be given to the builder.

Decision

The trial judge held that the delay arising out of SPPG’s requirement to install the overground electricity distribution box was a force majeure event under clause 23(1)(a) of the SIA Conditions, which justified the granting of the builder’s requests for extensions of time.

The Court of Appeal disagreed, finding that the delay was not a ‘force majeure’ event and instead fell within the ‘statutory obligations’ covered by clause 7 of the SIA Conditions.

As the SIA Conditions did not define a ‘force majuere’, the Court of Appeal considered what would constitute a ‘force majeure’ event within the meaning of clause 23(1) of the SIA Conditions. In particular, the court commented that:

• the ‘force majeure’ provision was only one of seventeen paragraphs under clause 23(1) of the SIA Conditions that governed the builder’s entitlement to an extension of time;

•  many of the events and circumstances set out in clauses 23(1)(b)-(e) could have themselves been ‘force majeure’ events and circumstances, however, the fact they had been separately referred to in each of the succeeding paragraphs in clause 23(1) showed that any ‘force majeure’ events referred to in clause 23(1)(a) of the SIA Conditions was not intended to include the events set out in clauses 23(1)(b)-(e) of the SIA Conditions; and

• therefore, the ‘force majeure’ events referred to in clause 23(1)(a), were ‘radical external events and circumstances that prevent the performance of the relevant obligations and which are due to circumstances beyond the parties’ control – for example the COVID-19 pandemic and the lockdown that followed over much of 2020 and 2021, the shortage of labour and materials due to the COVID-19 pandemic lock-downs, the prohibition of travel between countries and the ensuing disruption of supplies and manufacture of goods and materials’.

For an event to be considered a force majeure event the court said:

• the relevant performance must be prevented and not merely made more onerous and not any event that is beyond the parties’ control necessarily constitutes a force majeure event (ie a change in economic or market circumstances, affecting the profitability of a contract or the ease with which the parties’ obligations can be performed, is not regarded as a force majeure event); and

• a ‘radical event’ covers only those events or circumstances which were generally not, at the time the contract was entered into, contemplated or expected to occur, or which might reasonably have been foreseen to occur, during the performance of the contract.

Accordingly, SPPG’s requirement to install the overground electricity distribution box did not amount to such a ‘radical or external event’ that was ‘beyond the contemplation or control of the parties or something unforeseen to occur during the performance of the contract’ as:

• it was common knowledge that a dwelling must be connected to the power grid to draw electricity, and that a home owner cannot simply engage their own contractor to tap electricity off the power grid;
• it was not uncommon to use overground electricity boxes for housing estates with landed properties rather than direct connections to the mains underneath the roads for each and every house; and
• given three adjacent bungalows were being built on one plot of land, it would be odd to tap off the power mains at three different locations if this could be prevented by the installation of an overground electricity box.