Singapore Court of Appeal

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

In Ser Kim Koi v GTMS Construction Pte Ltd [2022] SGHC(A) 34, the Appellate Division of the Singapore High Court considered the meaning of “force majeure” in the SIA standard form, commenting that the term included the COVID-19 pandemic and the resulting effects.

The dispute arose in relation to a construction project involving three bungalows located at 12 Leedon Park, Singapore. Mr. Ser Kim Koi was the owner. GTMS Construction Pte Ltd was the main contractor, and Chan Sau Yan Associates was the appointed architect. The contract between GTMS and Mr. Ser Kim Koi was based on the Singapore Institute of Architects Articles and Conditions of Building Contract (Lump Sum Contract) (9th Ed, September 2010).

Among the issues the court considered was whether the architect had properly granted extensions of time in accordance with Clause 23 of the SIA Conditions. In this case, the architect had approved GTMS's requests for extensions of time resulting from, among others, a delay by SP Power Grid Ltd, a third party, in connecting the main incoming power supply and late notification by SP Power Grid Ltd of a requirement to install an overground distribution box.

Mr. Ser Kim Koi argued that he was entitled to liquidated damages because the architect had improperly granted the extensions of time in circumstances where the preconditions of Clause 23 had not been met. Specifically, he maintained that the delay caused by SP Power Grid Ltd did not qualify as a force majeure event under the SIA Conditions. GTMS and the architect countered that the extensions of time were properly granted because the delay in the project was caused by SP Power Grid Ltd's delay in the arrangement for the power connection and a new and unforeseen requirement for an overground distribution box to be installed.

Force majeure is one possible ground upon which an architect is permitted to grant extensions of time and is described in subsection 23(1)(a) of the SIA Conditions. It provides as follows:

23(1) The Contract Period and the Date of Completion may be extended and re-calculated, subject to compliance by the Contractor with the requirements of the next following sub-clause, by such further periods and until such further dates as may reasonably reflect any delay in completion which, notwithstanding due diligence and the taking of all reasonable steps by the Contractor to avoid or reduce the same, has been caused by:
(a) Force Majeure;
…
(f) Architect’s instructions under Clauses 1.(4)(a), 1.(4)(b) or 1.(4)(c), 7.(1) (or otherwise in accordance with that clause), 11.(2) (where permitted under that clause) and 14 of these Conditions (but not Architect’s direction under Clauses 1.(3) or 12.(5)(b), 12.(5)(c) or 12.(5)(d) of these Conditions); …
(o) the grounds for extension mentioned in Clauses 1.(8), 3.(3), 7, 14, 29.3(a)(ii) and 29.3(b)(ii) of these Conditions; …
(q) any other grounds for extension of time expressly mentioned in the Contract Documents

Subsections (b) through (d) of clause 23(1) cover exceptionally adverse weather conditions; fire, storm, lightning, high winds, and earthquake; war, hostilities, insurgency, terrorism, civil commotion, or riots. The court looked at whether SP Power Grid Ltd's delay constituted a force majeure event within the meaning of Clause 23(1)(a) of the SIA Conditions. It observed that subsections (a) through (e) of Clause 23(1) cover rare and uncommon events and circumstances, whereas subjections (f) to (k) and (n) to (q) cover events and circumstances of a very different nature in that they cannot be said to be uncommon and they are likely to have less impact on a construction project than those events listed in subsections (a) through (e).

While the events set forth in subsections (b) through (e) could fall within the meaning of force majeure in subsection (a), the fact that they have been placed in separate subclauses suggests that 23(1)(a) is intended to cover force majeure events that are different from those set out in subsections (b) through (e). Specifically, the court clarified that Clause 23(1)(a) covers "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 material." (Emphasis added)

Ultimately, the court found that SP Power Grid Ltd 's requirement to install an overground box did not amount to a radical or external event that was beyond the contemplation or control of the parties or an unforeseeable event, and therefore, it was not a force majeure event within 23(1)(a) of the SIA Conditions. Rather, the court noted that a dwelling's connection to the electrical grid to draw electricity is an inevitability. Nevertheless, the court held that the extensions of time were properly granted under other subsections of Article 23(1).

While the judgment makes clear that the text of the contract assumes primary importance in the court’s interpretation of “force majeure,” the court’s commentary is significant in that it provides support to the argument that contracts that neither specify an event of pandemic nor define the term force majeure should be interpreted to cover the resulting effects of COVID-19. We may now see further litigation on this issue as the judgment may open the door to further COVID-19 litigation in Singapore. However, it is too soon to determine whether the floodgates have been opened by this decision. Regardless, aggrieved parties now have Singapore jurisprudence to rely on when enforcing their force majeure clauses - a significant step towards putting COVID-19 behind all parties.