EXTENSION OF TIME AND CL. 23 SIA CONDITIONS
In this blog, we highlight some of the salient points raised in Ser Kim Koi v GTMS Construction Pte Ltd & 2 Ors [2022] SGHC(A) 34 (“SKK v GTMS”) in relation to Cl. 23 SIA Conditions, which addresses extensions of time.
In the interests of brevity, we will not cover every single point raised in SKK v GTMS and will just highlight certain key points raised in relation to Cl. 23 of the Singapore Institute of Architects, Articles and Conditions of Building Contract (Lump Sum Contract) (9th Ed, September 2010) (“SIA Conditions”), a commonly encountered standard form contract in Singapore.
Cl. 23(3) SIA Conditions. In SKK v GTMS, the court held that (among others) the architect did not prematurely grant an extension of time before the cessation of the delay event ([61] – [63] SKK v GTMS). The court held that Cl. 23(3) SIA Conditions simply provides the latest date by which an architect must notify the contractor of the architect’s decision.
This decision reassures architects administering the contract that they do not need to wait until after a delay event has ceased operating to grant an extension of time.
As the court observed at [63], practically, this is also important as “… the earlier an architect is able to determine the EOT application and issue the EOT certificate, the better. Consistent with this approach, cl 23(2) requires the architect, within one month from the receipt of a request from the contractor for an EOT, to inform the contractor whether or not he considers the event or instruction or direction in principle entitles the contractor to an EOT. This avoids a situation where the contractor has no assurance of a realistic completion date, which may in turn unnecessarily, and indeed deleteriously compromise the construction works. …” (emphasis added in original).
Does an architect need to read an extension of time clause every time? On a related note, the court also held that there was no need for the architect to re-read Cl. 23(1) SIA Conditions every time the architect was dealing with an extension of time application ([70] SKK v GTMS).
This is because the court found that the evidence (especially the contemporaneous correspondence) shows that the architect did have a working knowledge of the SIA Conditions in relation to extensions of time, and he was entitled to rely on his team to assist him in discharging his duties. Additionally, the court held at [71] SKK v GTMS that the architect could also subsequently rely on Cl 23 SIA Conditions in the proceedings, though it is fact dependent.
This is important as sometimes, during cross-examination, questions may be posed to a contract administrator on whether the contract administrator had addressed his/her mind to a clause in question when administering the contract by reading the clause.
[70] – [71] SKK v GTMS tells us that even if the contract administrator did not specifically read the clause at the material time, this does not necessarily equate to the contract administrator failing to have the relevant clause in mind at the relevant point in time. It all depends on the facts.
Meaning of force majeure for Cl. 23(1)(a). The court also addressed what “force majeure” means in Cl. 23(1)(a) SIA Conditions.
The essence is that it refers to a “radical event that prevents the performance of the relevant obligation (and not merely making it more onerous), and which is due to circumstances beyond the parties’ control” (at [77] SKK v GTMS).
It is important to note that the court clarified that many of the events listed in Cll. 23(1)(b) – (e) could fall within the meaning of force majeure events and circumstances in Cl. 23(1)(a): however, the fact that they have been placed in separate sub-paragraphs shows that the meaning of force majeure in Cl. 23(1)(a) deals with events and circumstances other than those in Cll. 23(1)(b) – (e) ([81] SKK v GTMS).
“81 Clearly, many of the events and circumstances set out in cll 23(1)(b)–(e) could fall within the meaning of force majeure events and circumstances. However, the fact that they have been separately placed in succeeding paragraphs of sub-clause (1) shows that force majeure events and circumstances under cl 23(1)(a) covers force majeure events and circumstances other than those set out in cll 23(1)(b)–(e). What cl 23(1)(a) covers will therefore be, as we have stated above in [77], 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 “lock down” 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. We note, for completeness, that cll 23(1)(l) and (m) specifically cover the shortage of labour and the shortage of goods or materials respectively resulting from domestic and foreign government actions.”
On the facts of the case, the court found that SPPG’s requirement for an OG Box therefore does not constitute a “force majeure” event within the meaning of Cl. 23(1)(a) SIA Conditions ([82] SKK v GTMS). Among others, the requirement does not amount to “… such a radical or external event that is beyond the contemplation or control of the parties or something unforeseen to occur during the performance of the contract…“ (emphasis in original) as it is “… common knowledge in the building and construction industry (indeed it is general knowledge) that the electrical supply for any dwelling comes off or is drawn from the electrical grid of Singapore, whether directly in landed property, or indirectly, through electrical transformers and/or switchgear, servicing condominiums or blocks of flats… ” (at [83] SKK v GTMS). Further, “… it is also common knowledge that a home owner cannot simply engage his own contractor and tap his electricity off the power grid. There are laws, regulations and rules governing how one can draw electricity from the electrical grid. How one draws electricity from the power grid is (as we set out below) within the sole purview and requirements of SPPG. …” (at [84] SKK v GTMS).
However, the court held that the requirement for an OG Box would fall within a “… falls within a “statutory obligation” covered by cl 7 and cll 23(1)(f) and/or (o), which specifically provide for an EOT in such an event …” (at [92] SKK v GTMS).
This is important as it shows that if the event in question is something within, or ought to be within, the “common knowledge” of the parties, it is unlikely that it would be such a radical or external event beyond the parties’ control or contemplation so as to meet the definition of “force majeure“ in Cl. 23(1)(a) SIA Conditions. Additionally, contract administrators and parties applying for extension(s) of time would do well to remember that a single delay event may sometimes qualify for more than one ground for extension of time: if so, it is usually prudent to identify (and support) all relevant grounds for extension of time in the relevant extension of time notice and application.
Significance. SKK v GTMS also addresses other issues such as, e.g., concurrent delay (see [170] – [173]). We focussed in this blog on the portion addressing Cl. 23 SIA Conditions because (a) the SIA Conditions is (as mentioned previously) a very commonly encountered standard form contract in Singapore and (b) Cl. 23 SIA Conditions deals with extension(s) of time, which is also an issue close to the heart of contract administrators.
What is important to note is that a contract administrator should be familiar with the clauses governing extensions of time. While there may not be a need for the contract administrator to re-read the clauses every single time there is an extension of time application, it is important for contract administrators to ensure that you have addressed your mind to the relevant issues when you are confronted with an extension of time application. Among others, you need to ask if, e.g., the application was brought in time, whether the delay is a compensable delay under the contractual provisions, and if so, what is the appropriate number of days of extension of time (if any).
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