106 SINGAPORE LAW REPORTS [2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd and another application[2011] SGCA 1Court of Appeal Civil Appeal No 160 of 2009 and Summons No 697 of 2010Chan Sek Keong CJ, Andrew Phang Boon Leong JA and V K Rajah JA6, 13 April 2010; 19 January 2011ContractContractualtermsInterpretationofforcemajeureclauseEventbeyond control of affected party When requirement to take reasonable steps aroseContract Contractual terms Interpretation of force majeure clause Meaningof word disrupted Commercial practicabilityFactsThisappealinvolvedtheinterpretationofaforcemajeureclause(clause 3)relieduponbytheAppellantasadefenceforitsfailuretoperformacontractenteredintobeforetheIndonesiangovernmentannouncedabanonsandexports.Clause3itselfreadasfollows:ThePurchasermustprovidesufficientadvancenoticeinconfirmingeachorder.TheSuppliershallbeundernoobligation to supply the concrete if the said supply has been disrupted by virtueof inclement weather, strikes, labour disputes, machinery breakdowns, riots, andshortageofmaterial,ActsofGodoranyotherfactorsarisingthroughcircumstancesbeyondthecontroloftheSupplier.TheAppellanthadcontractedtosupplyready-mixedconcrete(RMC)totheRespondent(thecontract).WhentheIndonesiangovernmentannouncedon23 January2007thatitwouldimposeasandbanfrom6 February2007,theAppellantwrotetoinform the Respondent that the sand ban would lead to a shortage of materials tomanufactureRMC.Shortlybeforethesandbancameintoeffect,theBuildingand Construction Authority (BCA) announced that it would release sand fromits stockpiles at a fixed price, but the sand would be made available only to maincontractors such as the Respondent. It was undisputed that the Appellant had noaccess to BCAs sand stockpile. The Appellant wrote to inform the Respondenton 1 February 2007 that the prices for RMC had to be revised upwards due to theshortage of materials caused by the sand ban which was beyond the Appellantscontrol.TheAppellantalsosentaquotationwithrevisedprices.TheRespondentdidnotagreetotheincreasedprices.Shortlythereafter,theAppellantssandsuppliersstoppedsupplyingsandtotheAppellantduetothesandban.On15 February2007,theBCAannouncedthatthepriceofsandreleasedfromitsstockpilewouldbeincreasedto$60pertonne,andthatthesandwouldbereleasedtomaincontractorsonafirstcomefirstservebasissubject to availability.Subsequently, the Appellant informed the Respondent in a letter dated 1 March2007thattheformerwaswillingtocreditbacktotheRespondentthecostsincurred for procuring sand from the BCA. The same letter included a quotation(the 1 March quotation) with prices of RMC that were higher than those found[2011] 2 SLR Part 00-cases.bookPage 106Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 107inthecontract.Therepresentativesfrombothpartieshadameetingon19 March2007,buttherewasnoagreementreachedatthismeeting.TheRespondents director had offered to supply manufactured sand at the meeting.Thereafter,theRespondentinformedtheAppellantinaletterdated20 March2007 that the Appellant was bound by the prices agreed under the contract, andstated that it was willing to accept, under protest, the prices stated in the 1 Marchquotation. The Respondent however, did not respond to the Appellants requesttoprocuresandfromtheBCAonitsbehalf.TheAppellantsentanotherquotationdated2 April2007(the2 Aprilquotation)withpriceslowerthanthe contracted prices, but with a termthatrequiredthe Respondenttoexcludethe cost of procuring sand from the BCA. The Respondent did not reply to the2 April quotation but informed the Appellant in a letter dated 26 April 2007 thattheRespondentsdirectorhadproposedinthemeetingof19 March2007thattheRespondentwaswillingtosupplysandbasedonthecontractprices.TheAppellant replied on the same day to clarify that what the Respondents directorhad proposed was only to supply manufactured sand.Held, allowing the appeal:(1) Whether the Appellant could avail itself of clause 3 depended on two sub-issues. First,ithadto be shown that theeventsstatedin clause 3 had disruptedthe supply of RMC. Second, the supervening event had to be shown to be beyondthecontroloftheAppellant.TheAppellantsargumentthatthelastpartofclause 3 should be read separately from the rest of the clause was contrary to thecommercial intent of the parties, as by that argument, even a disruption that wascreated by the Appellant would permit the Appellant to avail itself of the benefitof clause 3. A holistic interpretation should be adopted: at [42] to [44] and [47].(2) The words hinder and disrupt suggested a datum measure of difficultythatinterferedwiththesuccessfulperformanceofacontract.Bothwords,however,connotedalowerthresholdofnegativitycomparedtothewordprevent.Unlikeasituationinvolvingprevention,situationsinvolvingdisruptionorhindrancedidnotrenderperformanceofthecontractimpossible. The difficulty that manifested itself in the form of an increase in costsorpriceswas,inandofitself,insufficienttoconstituteadisruptionorahindrance.Whereacommercialtransactionwasinvolved,thedeterminationofwhetherthedifficultyconstitutedahindranceordisruptionoughttobeinformedbyconsiderationsofcommercialpracticability.Eventsthatdidnotpreventtheliteralperformanceofacontractbutwouldrenderthecontinuedperformanceofacontractcommerciallyimpracticable,wouldgenerallyconstitute a disruption or hindrance within the meaning of the force majeureclause in question: at [56].(3) ThepresentcircumstancesdidpresentconsiderabledifficultiesfortheAppellantsoastoconstituteadisruptionwithinthemeaningofclause 3.Inparticular,theAppellanthadnoaccesstoBCAssandstockpiles.TheAppellants own sand suppliers stopped supplying sand and relied upon the forcemajeure clause in their respective contracts. A party in the Appellants positionwasalsoplacedinthecommerciallyimpracticablesituationwhereithadtochoosebetweenbeinginbreachofthecontractandperformingthecontractwhilebeingvulnerabletopotentiallyexorbitantdemandsfortheservicesof[2011] 2 SLR Part 00-cases.bookPage 107Tuesday, March 29, 201111:40 AM108 SINGAPORE LAW REPORTS [2011] 2SLRprocuringsandfromBCAbymaincontractorswhowereinamonopolisticposition.ItwasalsoimpossiblefortheAppellanttoperformthedeliveryofmorethan100m3ofconcretewithintwodayspursuanttotherequirementunder cl 5 of the contract: at [60] to [64].(4) ThecourtagreedwiththeobservationsofRibeiro PJinGoldlionPropertiesLimitedvRegentNationalEnterprisesLimited[2009]HKCFA58at [99]thattherecouldnotbeablanketprincipletotheeffectthattherewasarequirementtotakeallreasonablestepsbeforeaforcemajeureclausecouldbereliedon.Whethertheaffectedpartyhadtohavetakenallreasonablestepsbefore he could rely on the force majeure clause depended, in the final analysis,onthepreciselanguageoftheclauseconcerned.Nevertheless,wheretheforcemajeure clause in question related to events that had to be beyond the control ofoneormoreoftheparties,thenthepartyorpartiesconcernedoughttotakereasonablestepstoavoidtheeventoreventsstipulatedintheclause:at [65]to[69].(5) TheAppellanthadtakenreasonablestepstoavoidtheoperationofclause 3. The Appellant offered in its letter dated 1 March 2007 to credit back tothe Respondent the cost of procuring the sand from BCA. This was in substance,as good as a request for the Respondent to help the Appellant procure the sandfromtheBCA.Thisofferwas,however,ignoredbytheRespondent.Furthermore,withtheAppellantsoffertocreditbacktotheRespondentthecost of procuring sand from BCA, the Appellant was effectively selling RMC atbelowcostprice.TherewasalsoevidencetosuggestthattheRespondentwasunwilling to supply sand to the Appellant: at [73], [74], [79] and [81] to [83].(6) TheRespondentsoffertosupplymanufacturedsanddidnotaffecttheAppellantsrelianceonclause 3,astheevidenceclearlydemonstratedthatmanufacturedsandwasnotaviablealternativetoconcretingsand.TheRespondentsofferwascontrived,and,atbest,anemptygesture,astherewasundisputed evidence that concreting sand would still be required in any event aspartofthesandcomponenttoproduceRMC,andthattherehadbeennoapprovaltousemanufacturedsandatthetimeoftheRespondentsoffer.Theevidence showed that even if there was approval to use manufactured sand afterthe offer was made, the approved use of manufactured sand was only up to 50%of the sand component required to produce RMC: at [91] to [98].[Observation: While a mere increase in prices of source materials was generallyinsufficient,inandofitself,toconstituteahindranceorpreventionthatcould invoke a force majeure clause such as that of clause 3, the issue was open asto what the legal position would be if the increase in prices was astronomical. Itwas observed in Brauer & Co (Gt Britain), Ltd v James Clark (Brush Materials),Ltd [1952] 2 Lloyds Rep 147 at 154 that, if in that case, the price increase was onehundredtimesasmuchasthecontractprice,itwouldbeafundamentallydifferent situation which had unexpectedly emerged, and the seller in that casewouldnotbeboundtoperformthecontract.Thegenerallegalprincipleinrelationtoamereincreaseinpriceinthecontextofwhetherornotahindranceorpreventionhadoccurredvis--visaforcemajeureclausemirroredthegeneralprincipleinrelationtothecommonlawdoctrineoffrustration, under which, generally speaking, a mere increase in price would not[2011] 2 SLR Part 00-cases.bookPage 108Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 109constituteafrustratingevent.Insofarasthelattergeneralprinciplewasconcerned,atleasttwojudgesintheHouseofLordsdecisionofTsakiroglou &CoLtdvNobleeThorlGmbH[1962]AC93,viz,Lord ReidandLord Hodson,appearedtoatleastbrieflyhintthatincreasedcostsmightconstitute a possible ground for frustration where they were so extreme as to beastronomical(at 118and128129,respectively)apropositionthat,infact,appeared to find some support in the local context in the decision of this court inGlaheInternationalExpoAGvACSComputerPteLtd[1999]1 SLR(R)945(especially at [24]): at [53].]Case(s) referred toB &S Contracts and Design Ltd v Victor Green Publications Ltd [1984] ICR 419 (refd)Bolckow, Vaughan, and Co v Compania Minera de Sierra Manera (1916) 114 LT 758 (refd)Brauer &Co (Great Britain) Ltd v James Clark (Brush Materials) Ltd [1952] 2 Lloyds Rep 147 (refd)Channel Island Ferries Ltd v Sealink UK Ltd [1987] 1 Lloyds Rep 559, QBD (Comm) (refd)Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyds Rep 323, CA (Civ) (refd)Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd [2006] 1 SLR(R) 927; [2006] 1 SLR 927 (refd)Frontier International Shipping Corp v Swissmarine Corp Inc (The Cape Equinox) [2005] 1 Lloyds Rep 390 (refd)Glahe International Expo AG v ACS Computer Pte Ltd [1999] 1 SLR(R) 945; [1999] 2 SLR 620 (refd)Goldlion Properties Ltd v Regent National Enterprises Ltd [2009] HKCFA 58 (refd)Holcim (Singapore) Pte Ltd v Kwan Yong Construction Pte Ltd [2009] 2 SLR(R) 193; [2009] 2 SLR 193 (refd)Hwa Lai Heng Ricky v DBS Bank Ltd [2010] 2 SLR 710 (refd)Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] 3 SLR(R) 769; [2006] 3 SLR 769 (refd)Magenta Resources (S) Pte Ltd v China Resources (S) Pte Ltd [1996] 2 SLR(R) 316; [1996] 3 SLR 62 (refd)Matheos, Owners of Steamship v Louis Dreyfus and Co [1925] AC 654 (refd)Peter Dixon & Sons Ltd v Henderson, Craig & Co Ltd [1919] 2 KB 778 (refd)Precise Development Pte Ltd v Holcim (Singapore) Pte Ltd [2010] 1 SLR 1083 (distd)RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413; [2007] 4 SLR 413 (folld)Review Publishing Co Ltd v Lee Hsien Loong [2010] 1 SLR 52 (folld)Tennants (Lancashire) Ltd v C S Wilson and Co Ltd [1917] AC 495 (refd)[2011] 2 SLR Part 00-cases.bookPage 109Tuesday, March 29, 201111:40 AM110 SINGAPORE LAW REPORTS [2011] 2SLRTrade and Transport Inc v Iino Kaiun Kaisha Ltd (The Angelia) [1973] 1 WLR 210 (refd)Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93 (refd)Francis Xavier SC, Mohammed Reza and Low Yi Yang (Rajah &Tann LLP) for the appellant; Tan Liam Beng, Tan Kon Yeng Eugene and Soh Chun York (Drew &Napier LLC) for the respondent.[Editorialnote:Thedecisionfromwhichthisappealaroseisreportedat[2010]1 SLR 1083.]19 January 2011 Judgment reserved.Andrew Phang Boon Leong JA (delivering the judgment of the court):Introduction1 This is yet another case in a series of cases arising from the Indonesiansand ban of 2007 (the Sand Ban). Not surprisingly, the crux of the presentappeal turns on the interpretation of a force majeure clause. More generally,however, it is important to note at the outset that, save where the relevantcontractualtermsconcernedinthecaseathandareidenticaltothecorresponding terms in a previous decision, previous decisions would be oflimitedassistance.Thisishowever,subjecttothesituationwheregeneralpointsoflegalprincipleareinvolved.Itfollowsthatthecourtmustpayparticular regard to the specific terms and the relevant context in questionin arriving at its decision.2 Thisisanappealbytheappellant(theAppellant)againstthedecisionofthetrialjudge(theJudge)inPreciseDevelopmentPteLtdvHolcim(Singapore)PteLtd[2010]1 SLR1083(theJudgment).Thepresentappealcentres,inthemain,onaspecificterminthecontractbetweenthepartiesaswellasonafewcrucialpiecesofcorrespondencebetweentheparties(allofwhichwillbesetoutinmoredetailattheappropriate junctures in the present judgment).3 Brieflystated,theAppellantandtherespondent(theRespondent)had entered into a contract (the Contract) for the supply of ready-mixedconcrete (RMC) from the former to the latter. The Contract was enteredinto before the Sand Ban came into effect on or about 6 February 2007 (seeThe Jakarta Post dated 24 January 2007).4 TheSandBancreatedashortageofsandandaggregates(whichconstitutedmaterialsrequiredforthemanufactureofRMC).TheAppellants position was that, as a consequence of the Sand Ban, it could nolongersupplyRMCatpre-SandBanprices.CitingtheSandBan,the[2011] 2 SLR Part 00-cases.bookPage 110Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 111AppellantinformedtheRespondentthatitcouldsupplyRMConlyiftheRespondentwaswillingtopayapricehigherthanthecontractprice.TheRespondentscasewasthattheAppellanthadbreachedtheContractbyevincing an intention not to supply concrete at the prices stipulated in thecontract.TheRespondentsuedtheAppellantforbreachofcontractandasked for damages in the sum of $5,074,411.43. The Appellant raised threedefences, one of which was based on the force majeure clause found in theContract(thetworemainingdefenceswillbedealtwithbelow).Theforcemajeure clause was contained in cl 3 of the Contract (cl 3), and providedas follows:ThePurchasermustprovidesufficientadvancenoticeinconfirmingeachorder. The Supplier shall be under no obligation to supply the concrete if thesaid supply has been disrupted by virtue of inclement weather, strikes, labourdisputes,machinerybreakdowns,riots,andshortageofmaterial[,acts]ofGod or any other factors arising through circumstances beyond the control ofthe Supplier. [emphasis added]5 TheJudgerejectedallthreedefencesandheldthattheAppellant,inrefusingtosupplyRMCtotheRespondentatthecontractprice,wasinbreachoftheContract.InterlocutoryjudgmentwasawardedinfavouroftheRespondent,withdamagesfortheRespondenttobeassessedbytheRegistrar.6 TheAppellanthasnotpursuedthedefencerelatingtoanallegeddischargeoftheContractbymutualagreementinthepresentappeal(seealsobelowat [26]).WefindtheJudgesreasoningaswellasdecisioninrelationtotheissueofterminationpursuanttocl 10oftheContract(cl 10)tobepersuasiveandcorrect(seealsobelowat [33][34]).Inthecircumstances, the only issue before this court centres on whether or not cl 3(the force majeure clause) applies in order to afford the Appellant a defenceagainst the Respondents claim.7 Itshould,however,alsobenotedthattheAppellantalsosought,inthepresentappeal,toamenditsdefencetoincludeanalternativedefencethattheContracthadbeenfrustrated.Iftheapplicationisallowed,thiswouldconstituteasecondissuebeforethiscourt.However,wearenotpersuadedthattheAppellantoughttobepermittedtoamenditsdefence,notleastbecause(astheRespondentargues)newevidencewouldberequired(ourdetailedreasonsonthisissuearesetoutbelowat [102][105]).Weturnthentothesubstantiveissueinthisappeal(centringontheinterpretationofcl 3).However,beforeproceedingtodoso, we set out the relevant factual (including documentary) matrix.[2011] 2 SLR Part 00-cases.bookPage 111Tuesday, March 29, 201111:40 AM112 SINGAPORE LAW REPORTS [2011] 2SLRFactual backgroundIntroduction8 Turningtotherelevantfactualbackground(whichiscrucialtotheinterpretation as well as application of cl 3), the Appellant entered into theContract with the Respondent on 10 November 2006 for the supply of RMCforawarehouseproject.TheRespondentisthemaincontractorfortheproject.TheAppellantisinthebusinessofmanufacturingandsupplyingRMCtoconstructioncompanies,anditusesconcretingsandandaggregates as source materials to manufacture RMC.9 The Contract consists of a quotation dated 10 November 2006 and apageofTermsandConditions.TheContractrequiredtheAppellanttosupply90,000m3(+/- 15%)ofconcretetotheRespondentfortheproject.Amongst the grades of concrete included in the Contract was Grade 30, forwhich the Appellant quoted a price of $65 per cubic metre. In the quotationdated 10 November 2006, para 3 states as follows:All prices fixed till 31st Dec 2007.10 ThesalientclausesintheTermsandConditionsoftheContractincludedcl 3(setoutaboveat [4]),andcl 10andcl 15whichreadasfollows:Clause 10The supplier reserves the right to terminate the contract giving one monthswritten notice to the Purchaser stating the reasons for the termination.Clause 15Forconcreteorderthatexceed100[cu m],twoday[s]advancebookingisrequired. All bookings are to be accepted by the Supplier. In no event shall theSupplierbeliableforanyliquidateddamagesarisingfromanycausewhatsoever loss of profits consequential or otherwise.[emphasis added]Announcement of the Sand Ban11 TheIndonesiangovernmentsuddenlyannouncedonorabout23 January 2007 (see The Straits Times dated 25 January 2007) that it wouldimposeaSandBanfrom6 February2007.Thishadanimmediateimpactontheavailabilityandpricesofsand.TheAppellantwrotetotheRespondent on 26 January 2007 to inform it of the Sand Ban, and that thiswould lead to a shortage of materials to manufacture RMC. The AppellantstatedthatitwasmeetingtheBuilding&ConstructionAuthority(theBCA) to discuss alternative options for the supply of sand. The Appellant[2011] 2 SLR Part 00-cases.bookPage 112Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 113statedthatitmighthavetoceasethesupplyofconcreteandadvisedtheRespondent to seek alternative avenues of supply.12 Subsequently,inacirculardated1 February2007,theBCAannounced that it would release sand from its stockpiles, priced at $25 pertonne.However, only main contractors such as the Respondent would haveaccesstotheBCAssandstockpiles,andunderwhichsystemtheBCAwouldsupplysanddirectlytothemaincontractors(suchastheRespondent)foronwarddeliverytoRMCsuppliers(suchastheAppellant). It is therefore common ground that the Appellant had no accesstotheBCAsstockpiles.Thesamecircularstatedthattheamountofconcrete, grade of concrete, and concreting sand required for the Februaryweekly demand would have to be certified by the Professional Engineer ofthe project. It is pertinent to note that there is no mention of manufacturedsand in this circular.The Appellants Letter and Quotation of 1 February 200713 TheAppellantinformedtheRespondentbywayofaletterdated1 February 2007 that: the sudden announcement by Indonesia of the ban on sand, soil and topsoilexportstoSingaporeresultedinanimmediatescarcityofmaterialsandescalating prices that were totally beyond [the Appellants] control.TheletteralsomentionedameetingwiththeMinisterofNationalDevelopment on 30 January 2007, where the Minister had apparently statedthattheSandBanwasanabnormalsituationthatwasbeyondanyonescontrol. The Appellant stated that it had been notified by the BCA that sandwould be released from the BCAs stockpile from 1 February 2007 and thatthereshouldbeconcretingsandavailable,albeitathigherprices.TheAppellantinformedtheRespondentinthisletterthatitwasunabletosupplyRMCatthepricesagreeduponintheContract(thecontractedprices) due to the shortage of sand caused by the Sand Ban. In addition, theletter of 1 February 2007 stated that:In light of all the factors mentioned above that is beyond our control, we havenoalternativebuttoreviseourconcreteprices.Pleasefindattachedourquotationforthesupplyofconcreteeffective1 February2007foryourconsideration.14 The quotation referred to in this letter and attached (the 1 FebruaryQuotation) quoted prices of RMC which were 30% to 50% higher than thecontractedprices.TheRespondent,however,didnotagreetothepricesstated in the 1 February Quotation, and hence did not sign the quotation.[2011] 2 SLR Part 00-cases.bookPage 113Tuesday, March 29, 201111:40 AM114 SINGAPORE LAW REPORTS [2011] 2SLREvents leading up to the implementation of the Sand Ban15 On 5 February 2007, a day before the Sand Ban came into effect, oneoftheAppellantssandsuppliers,HuatShuaCompanyPteLtd(HuatShua),informedtheAppellantthatitwasunabletosupplysandtotheAppellant,andthatthesupplyagreementbetweenHuatShuaandtheAppellanthadbeenterminatedunderitsforcemajeureclausewithimmediate effect. It is noteworthy that the Appellants other sand supplier,BibrightShippingPteLtd(Bibright),hadinformedtheAppellanton2 February2007thatBibrightssandstockpilehadbeentakenoverbytheBCA,andthatBibrightcouldonlyreleasetheirconcretingsandsupplybasedontheBCAsapproval.BibrightalsoceaseditsobligationtosupplysandtotheAppellantbasedontheforcemajeureclauseintheirsupplyagreement.16 Byaletterdated5 February2007fromtheRespondenttotheAppellant,theRespondentstatedthattherewouldbenodisruptiontothesupply of RMC within the meaning of cl 3, since the BCA would be releasingsand from its stockpiles in the following terms: Clause 3ofthesupplycontractprovidesthatyoushallbeundernoobligationtosupplyifthesaidsupplyhasbeendisruptedbyfactorsarisingthrough circumstances beyond your control.However,asBCAwouldbereleasingthegovernmentsandstockpilefrom1 February 2007, there would be no disruption in supply within the meaningof Clause 3.The Respondent insisted in this letter that the Appellant was therefore stillobliged to supply RMC at the contracted prices.The Appellants letter dated 9 February 200717 Byaletterdated9 February2007,theAppellantinformedtheRespondent that it had no access to BCAs sand stockpiles, as follows:theIndonesianGovernmentsdecisiontobansandexportstoSingaporewas totally beyond our control resulting in an immediate scarcity of materialsandescalatingprices.Ourproductionwasseverelycurtailedbytheimmediateshortageofmaterialsfollowingtheannouncement[oftheSandBan] Inourefforttoextendsupporttoagoodcustomer,weofferedtotryandsourcethesandfromtheopenspotmarket.Theincreaseinpriceoftheconcretewastoenableustosourceforalternativesuppliesathigherpricesand we sent to your company a revised quotation on 1 February 2007 [the1 February Quotation (above at [14])] for consideration but to date have notreceived your acceptance.[2011] 2 SLR Part 00-cases.bookPage 114Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 115EvenwiththeannouncementbyBCAonthereleaseofnationalstockpilesfrom1 February2007,themechanismimplementeddoesnotpermitustoorder any sand directly, further complicating our production planning.It is not our intention to disrupt supply but this is an abnormal situation thatis totally beyond our control [emphasis added]18 Inthatsameletter,theAppellantexplainedthattheincreaseintheprices of concrete as stated in the 1 February Quotation (see above at [14])wastoallowtheAppellanttosourceforalternativesuppliesofsandathigherprices.ItiscommongroundthattheRespondentdidnotreplytothis letter. The Appellant contended that this failure to reply demonstratesclearlythattheRespondentwasnotwillingtohelptheAppellantprocuresand from the BCA.The BCAs circular dated 15 February 200719 On 15 February 2007, the BCA announced that the price of sand fromthestockpilewouldbeincreasedto$60 pertonnefrom1 March2007.There was a fixed limit on the amount of sand that could be released fromthe BCAs stockpile because, as the BCAs circular stated, there was a weeklyquota for the BCAs sand stockists. The circular stated that the sand wouldbereleasedonafirstcomefirstservebasis,andthatoncetheweeklyquotaofsandhadbeenreached,theBCAwouldstopreleasingsandimmediately. The circular stated that only main contractors of projects withconcretingworkstobecarriedoutinthemonthofFebruary2007wereallowed to request for sand to be released from the stockpile from February.Again, there was no mention of manufactured sand in this circular.20 On26 February2007,theAppellantwrotealettertoinformtheRespondentthatthesupplyofaggregates(anothermaterialrequiredtomanufactureRMC)hadstopped.Subsequently,theBCAannouncedon28 February2007thatRMCcompanies(includingtheAppellant)couldpurchaseaggregatesfromtheBCAsstockpileatafixedpriceof$70 pertonne.The Appellants letter and quotation dated 1 March 200721 On 1 March 2007, the Appellant wrote to the Respondent to inform itthattheBCAhadincreasedthepriceofsandandaggregatesto$60 pertonne and $70 per tonne, respectively. The Appellant stated that they weretaking steps to look for other sources of sand and aggregates, and that, forthetimebeing,theyhadnochoicebuttorevisethepricesofRMC.ThesameletterinformedtheRespondentthattheAppellantwaswillingtocreditbacktotheRespondentthecostincurredforprocuringsandandaggregates from the BCA, in the following terms:[2011] 2 SLR Part 00-cases.bookPage 115Tuesday, March 29, 201111:40 AM116 SINGAPORE LAW REPORTS [2011] 2SLRIf you [the Respondent] are able to provide the sand and 20 mm aggregate, wewillcreditbacktoyouthesandatS$63 pertonnedeliveredand20 mmaggregateatS$73 pertonnedelivered,inaccordancetotheBCAprice.[emphasis added]22 Attachedtothesameletterwasaquotation(the1 MarchQuotation). The price for normal mix Grade 30 concrete was stated to be$185.00 percubicmetre(abouta180% increasefromthecontractedpriceof$65.00 percubicmetrefornormalmixGrade 30concrete).TheunitpriceofGrade 40NormalMixConcreteandGrade 50NormalMixConcrete were offered in the quotation at $190.00 and $199.00, respectively.ItisimportanttonotethatthesewerethesamepricesthattheRespondentpaid when it bought RMC from Buildmate (Singapore) Pte Ltd (Buildmate)in March 2007 (see below at [86]). The quoted prices (found in the 1 MarchQuotation) are reproduced, as follows:The Respondents purchase of sand through Buildmate 23 ItwasrevealedatthetrialthattheRespondenthadactuallysuppliedsandtoBuildmate.Buildmatesdirector,Mr PehAhSee(Mr Peh),admitted that the Respondent had used Buildmate to purchase RMC fromtheAppellant.ItwasrevealedbyMr PehthatBuildmatewasnotitselfasourceofRMC.TheRespondentwouldsupplysandtoBuildmate,whereuponBuildmatewould(inturn)supplythesandtotheAppellant.The Appellant would buy the sand from Buildmate at the same price offeredto the Respondent, viz, at $63 per tonne. The Appellant would then use thesand to make RMC and sell it to Buildmate. Buildmate would (in turn) selltheRMCanddeliverittotheRespondentatthesamepriceatwhichtheyhad bought it from the Appellant, with no extra charge.24 Inaddition,Mr PehChongEng,theRespondentsprojectmanager,gaveevidencethattheRespondenthadpurchasedGrade 40NormalMixconcreteandGrade 50NormalMixConcretefromBuildmateattheunitpriceofS$190.00andS$199.00,respectively.Thesewereexactlythesameprices that the Appellant had quoted in the 1 March Quotation.Grade 15 Normal Mix concrete at Unit Price of $179.00Grade 30 Normal Mix concrete at Unit Price of $185.00Grade 35 Normal Mix concrete at Unit Price of $187.00Grade 40 Normal Mix concrete at Unit Price of $190.00Grade 50 Normal Mix concrete at Unit Price of $199.00[2011] 2 SLR Part 00-cases.bookPage 116Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 11725 Therewasnoevidenceadducedonthecommercialmotivationsforthe Respondent to obtain RMC through Buildmate. It was undisputed thattherewerecommondirectorsbetweentheRespondentandBuildmate.ItwasalsorevealedatthetrialthatBuildmatedidnotpaytheAppellantfortheRMCsuppliedbytheAppellant.BuildmatehadowedtheAppellantapproximately$600,000forRMCsupplied.However,insteadofmakingpayment, Buildmate offered to supply sand to the Appellant as a substitutefor payment, which the Appellant refused to accept. The Appellants claimagainst Buildmate has since been settled.The meeting of 19 March 200726 The Appellant and Respondent had a meeting on 19 March 2007. TheRespondents position is that there was no agreement arrived at between thepartiesatthismeeting.TheAppellantsoriginalpositionwasthatthepartieshadagreedtodischargetheContractandhadenteredintoanewarrangement in which the Respondent would supply sand and aggregates totheAppellantfreeofcharge,andinwhichtheAppellantwouldsupplyRMC to the Respondent at a reduced price. The Appellant contended thatthequotationdated2 April2007(seebelowat [28])wassenttotheRespondent pursuant to what had been agreed to between the parties at themeetingof19 March2007.However,theAppellanthassinceshiftedfromthispositionbystatingthatthemeeting(of19 March2007)failedtoresolvethedifferencesoftheparties.Hence,itisnowcommongroundbetweentheAppellantandtheRespondentthattherehadbeennonewagreementarrivedatbetweenthepartiesduringthemeetingof19 March2007. In the circumstances, this particular issue (or, rather, defence raised bythe Appellant) at the trial is no longer an issue in the present appeal (see alsoabove at [6]).27 On 20 March 2007, the Respondent replied to the Appellants letter of1 March 2007 and the 1 March Quotation. The Respondent stated that theAppellant was bound by the price agreed in the Contract. Nevertheless, theRespondentaccepted,underprotest,thepricesofconcreteinthe1 MarchQuotation in the following terms: in order to avoid disruption to the projectwe [the Respondent] shall payyou [the Appellant] under protest, the increased price of the concrete mix asset out by you [in the letter dated 1 March 2007] without prejudice to all ourrights and objections against the increased price.28 The Appellant sent another quotation dated 2 April 2007 (the 2 AprilQuotation)totheRespondent.Thequotedpriceswerelowerthanthecontractedprices(thenormalmixGrade 30concretewasquotedat$55.00 per cubic metre). However, cl 2 of the Standard Terms & Conditionsof this particular quotation stated that:[2011] 2 SLR Part 00-cases.bookPage 117Tuesday, March 29, 201111:40 AM118 SINGAPORE LAW REPORTS [2011] 2SLRTheabove[quoted]pricesexcludethecostofConcretingSandand20mmAggregates which are to be supplied by [the Respondent] to [the Appellant]batching plants free of charge. [emphasis added]29 TheRespondentdidnotreplytothe2 AprilQuotation.Instead,theRespondentwrotetotheAppellantaletterdated26 April2007,whichstatedthatMr OhBengHwa(oneoftheRespondentsdirectors)hadproposedinthemeetingof19 March2007thattheRespondentwouldsupply the sand and aggregates based on the same old rate as that agreedfor theAppellant tosupply RMCat thecontractedprices. The same letterstatedthat,unlesstheAppellantagreedtothisparticularproposalby27 April2007,theRespondentwouldholdtheAppellantliableforalldamage suffered.30 TheAppellantrepliedonthesameday(byaletterdated26 April2007),andclarifiedthatthemeetingon 19 March2007wastodiscussthepossibilityofthesupplyofmanufacturedsand(asopposedtoconcretingsand)andaggregates.TheAppellantdidnotagreewiththeRespondentsproposalandreiteratedthattheSandBanwasanabnormalsituationcovered by the terms of the Contract (pursuant to cl 3, quoted above at [4]).The decision of the court below31 TheAppellantreliedonthreedefencestotheRespondentsclaim.First,theAppellantclaimedthattheContracthadbeendischargedbymutual agreement at the meeting of 19 March 2007. Second, the Appellantclaimedthatcl 10permittedittoterminatetheContractupongivingonemonths written notice and that it had given such notice by its letter to theRespondentdated1 February2007.Third,theAppellantclaimedthatitsobligationtosupplyconcreteatthepricesstipulatedintheContractwasdischargedundercl 3whentheSandBandisrupteditssupplyofrawmaterials.32 As also noted above (at [6] and [26]), there is no need to deal with thefirst defence. It is now common ground between both parties that there hadbeen no new agreement made at the meeting of 19 March 2007.33 In so far as the second defence is concerned, we have already noted, atthe outset of this judgment (above at [6]), that we find the Judges reasoningas well as decision in relation to the issue of termination pursuant to cl 10 tobe persuasive and correct. Put simply, we agree with the Judges finding thattheAppellantsletterof1 February2007couldnotamounttoanoticeofterminationwithinthemeaningofcl 10.TheJudgewasclearlycorrecttofindthattherequirementofunequivocalcommunicationfromtheAppellant of its intention to terminate the Contract was not satisfied, as theletterof1 February2007hadonlymadeitknowntotheRespondentthatthe Appellant had no alternative but to revise [the] concrete prices. This[2011] 2 SLR Part 00-cases.bookPage 118Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 119phrasewasambiguousasitcouldhavemeantthattheAppellantwasexercising its right to suspend the supply of RMC under cl 3, and not cl 10.Indeed,thesameletterof1 February2007hadusedlanguagewhichparallelsthatincl 3.Paragraph 1oftheletterdated1 February2007(alsoreproduced in part above at [13]) states as follows:AswehavenotifiedyouthesuddenannouncementbyIndonesiaoftheban on sand resulted in an immediate scarcity of materials and escalatingprices that were totally beyond our control. [emphasis added]And,atpara 5ofthesameletter,theAppellantstated,inasimilarvein,thus:In light of all the factors mentioned above that is beyond our control, we haveno alternative but to revise our concrete prices. [emphasis added]34 ThelanguagejustreproducedintheprecedingparagraphsuggestsstronglythattheAppellantwas,infact,referringtocl 3.Theuseofthephrase scarcity of materials parallels the phrase shortage of material incl 3, while the phrase beyond our control is found in the language of cl 3itself. The use of the phrase revise our concrete prices suggests an offer tovarycontractualterms,nottoterminatethecontractualrelationship.AreasonableinterpretationwouldbethattheAppellantwas,infact,relyingupontheforcemajeureclause(viz,cl 3)toceasesupplyingRMCtotheRespondent.35 Thisleavesuswiththeremainingdefencebaseduponcl 3itselfwhich, because of its vital importance to the outcome of the present appeal,is reproduced again as follows:ThePurchasermustprovidesufficientadvancenoticeinconfirmingeachorder. The Supplier shall be under no obligation to supply the concrete if thesaid supply has been disrupted by virtue of inclement weather, strikes, labourdisputes,machinerybreakdowns,riots,andshortageofmaterial[,acts]ofGod or any other factors arising through circumstances beyond the control ofthe Supplier. [emphasis added]36 The Judge was of the view that the Appellant could only rely on cl 3 ifthe following two conditions had been met:(a) the Appellants ability to supply concrete had been disrupted byany of the events mentioned in cl 3; and(b) theeventarosethroughcircumstancesbeyondtheAppellantscontrol.37 TheJudgehadnodoubtthattheSandBanwasbeyondtheAppellantscontrol.ThequestionthattheJudgefocusedonwaswhethertherehadbeenadisruptionwithinthemeaningofcl 3.TheJudgeinterpreted the word disrupt by reference to its ordinary meaning, as wellas by considering the need to achieve a commercially viable and reasonable[2011] 2 SLR Part 00-cases.bookPage 119Tuesday, March 29, 201111:40 AM120 SINGAPORE LAW REPORTS [2011] 2SLRresult (see [34] of the Judgment). On this basis, the Judge held (see [42] ofthe Judgment):[T]herewillbeadisruptionwithinthemeaningofclause 3onlywhenanevent occurred that made it difficult for the defendant to supply concrete tothe plaintiff but it excluded a rise in the price of the raw materials used by thedefendant to produce concrete. [emphasis added]38 The Judge held that a price rise of raw materials was immaterial to theissue whether the supply of concrete was disrupted by a shortage of material(heresand)byreferencetoEnglishcaselaw(whichwillbedealtwithat [51][52] below).39 The Judge further held on the evidence that it was not difficult for theAppellanttosupplyconcretetotheRespondentasitdidnotasktheRespondent to assist it by requesting for sand from the BCA stockpiles. Infailingtomaketherequest,theAppellanthadfailedtomakereasonableeffortstoensurethatthesupplyofconcretewouldnotbedisrupted.Inother words, the proximate cause of the disruption in the supply of concretewas not the Sand Ban but the Appellants own failure to source the supplyofsandfromorthroughtheRespondent.Accordingly,therewasnodisruption beyond the control of the Appellant within the meaning of cl 3.40 TheJudgefoundthattheRespondenthadbeenwillingtoassisttheAppellant in this regard based on two facts, viz:(a) theRespondentknewthat,asbetweentheparties,onlyithadaccess to BCAs stockpiles;(b) the Respondent had stated in its letter (to the Appellant) dated5 February2007(seeaboveat [16])thattherewasnodisruptionofsupply because sand was available from the BCA stockpiles.41 The Judge found that the fact that the Respondent had reminded theAppellant that sand was available from the BCA stockpile despite knowingthattheRespondenthadaccesstotheBCAsand,andnottheAppellant,demonstratedthattheRespondentwaswillingtohelptheAppellantprocuresandfromtheBCA.Further,theJudgefoundthattheAppellanthad not taken any steps to ask the Respondent to request for sand from theBCA.Inthecircumstances,theJudgefoundthattheAppellantcouldnot(unlike the Singapore High Court decision in Holcim (Singapore) Pte Ltd vKwanYongConstructionPteLtd[2009]2 SLR(R)193(KwanYong)whichrelated,interalia,toanidenticalclause)relyoncl 3,andthereforeheldthattheAppellantwasinbreachoftheContractwhenitfailedtosupply RMC to the Respondent at the contracted prices.[2011] 2 SLR Part 00-cases.bookPage 120Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 121Our decisionIssues raised42 Thereisonemainorumbrellaissueinrespectofthepresentappeal, viz, whether or not the Appellant can avail itself of cl 3 in order todefeattheRespondentsclaimagainstitforbreachofcontract.Theinterpretationofcl 3aswellasitsapplicationtothefactsofthepresentcase raise (in turn) two sub-issues, both of which must be satisfied.43 Thefirstsub-issueiswhetheranyoftheeventsstatedincl 3haddisruptedthesupplyofconcrete.Themeaningoftheworddisruptedhastobeascertainedbeforethefirstsub-issuecanbefullydeterminedbyapplying that meaning to the facts of the present proceedings.44 The second sub-issue is whether the event (or events concerned) werebeyondthecontroloftheAppellant.Thisraisesthequestionofwhetherthe Appellant is required to take all reasonable steps to avoid the operationofcl 3.TheAppellantbearstheburdenofproofwithrespecttobothsub-issues.45 We will commence by setting out the general legal principles relatingto the construction and interpretation of force majeure clauses in relation toeach of the two sub-issues set out above.46 We will then proceed to apply the general legal principles to both theconstructionandinterpretationofthelanguageofcl 3itselfaswellasitsapplicationtothespecificfactsathand.Foreaseofanalysisandunderstanding,wewillapplytherelevantgenerallegalprinciplestothespecificfactsintwostageswhichcorrespondtothetwosub-issues,respectively.A preliminary point the need to adopt a holistic interpretation of both sub-issues47 This preliminary point arises, in no small part, because the Appellanthad sought to argue that the last part of cl 3 (centring on the phrase arisingthroughcircumstancesbeyondthecontroloftheSupplier)oughttoberead separately from the rest of that particular clause so that a disruption ofsupplybecauseofshortageofmaterialwhetherwithinthecontroloftheAppellant or not would bring cl 3 into operation. If the phrase was indeedto be read separately from the rest of cl 3, no issue would arise with regardto whether the Appellant is required to take all reasonable steps to avoid theoperationofthatparticularclause(which,itwillberecalled,isinfactthesecond sub-issue (see above at [44])).48 With respect, we are unable to accept the Appellants argument as it isnot only inconsistent with a plain reading of cl 3 itself but is also contrary to[2011] 2 SLR Part 00-cases.bookPage 121Tuesday, March 29, 201111:40 AM122 SINGAPORE LAW REPORTS [2011] 2SLRthe general intent of that clause as well (reference may also be made to theEnglishHighCourtdecisionofFrontierInternationalShippingCorpvSwissmarineCorporationInc(TheCapeEquinox)[2005]1 LloydsRep 390aswellasChittyonContractsvol 1(Sweet & Maxwell,30th Ed,2008)(ChittyonContracts)atpara 14-138).Inthislast-mentionedregard,itfliesagainstallnotionsofcommercialintentaswellascommonsensetointerpretcl 3inthemannerthattheAppellanthasjustarguedbecauseitwouldmeanthatthepartiesintended,interalia,evenadisruption that was created by the Appellant itself to permit the Appellantto avail itself of the benefit of cl 3. It would take only a moments reflectiontoconcludethatthiscouldnot,objectivelyspeaking,havebeentheintentionofthepartiesatthetimetheyenteredintotheContract.Inthecircumstances, therefore, a holistic interpretation ought to be adopted withregard to both sub-issues.The governing or umbrella principle relating to the construction and interpretation of force majeure clauses49 Stripped to its essence, the governing legal principle in the context oftheconstructionandinterpretationofforcemajeureclausesisasimplealbeit not simplistic one that is embodied within the following statementof principle by this court in RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd[2007] 4 SLR(R) 413 (RDC Concrete) as follows (at [54]):Themostimportantprinciplewithrespecttoforcemajeureclausesentails,simultaneously,aratherspecificfactualinquiry:thepreciseconstructionofthe clause is paramount as it would define the precise scope and ambit of theclauseitself.Thecourtis,inaccordancewiththeprincipleoffreedomofcontract,togivefulleffecttotheintentionofthepartiesinsofarassuchaclause is concerned. [emphasis in original]The first sub-issue: whether or not any of the events stated in cl 3 itself had disrupted the supply of RMC within the meaning of that clause(1) Interpretation of the word disrupted50 Inordertoinvokecl 3,theAppellantmustdemonstratethatthesupply of concrete has been disrupted by the shortage of material. In thecircumstances, therefore, the meaning of the word disrupted must first beascertained. Although there is, to the best of our knowledge, no case law intheCommonwealth(apartfromthedecisioninthecourtbelow)withrespect to the meaning of the word disrupted, it is nevertheless useful tohave regard to prior decisions which have interpreted similar words used inthecontextofforcemajeureclauses(forexample,thewordhindered).These decisions are helpful in so far as they furnish guidance on the generalmeaningnotonlyoftheworditselfbutalsoofotherwords(inthislatterrespect,fromacomparativeperspective).Theascertainmentofsuch[2011] 2 SLR Part 00-cases.bookPage 122Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 123generalmeaningitselfisnot,ofcourse,conclusivesimplybecausetheapplicationofthatmeaningtotheoveralllanguageoftheforcemajeureclause as well as to the precise factual context is of signal importance.51 In the recent Hong Kong Court of Final Appeal decision of GoldlionProperties Limited v Regent National Enterprises Limited [2009] HKCFA 58(Goldlion Properties),the appellant, in order to invoke theforce majeureclause,hadtodemonstratethatitwasunabletocompletethesaleofthepropertyconcernedduetoanymatterwhichintheappellantsreasonableopinionmateriallyhinders,preventsorobstructsthecompletionofthesale.Ribeiro PJ(withwhomNazarethandBrennan NPJJagreed,BokharyandChan PJJdeliveringajoint(andseparate)concurringjudgment),endorsed the House of Lords decision of Tennants (Lancashire), Limited vC S Wilson and Company, Limited [1917] AC 495 (Tennants). Ribeiro PJcitedwithapproval(at [82])apassagefromTennantstotheeffectthat[p]reventingdeliverymeansrenderingdeliveryimpossibleandhinderingdeliverymeanssomethinglessthanthis,namely,renderingdeliverymoreorlessdifficult,butnotimpossible(perLord Atkinson,at 518). Ribeiro PJ further observed that:[a]s a matter of language, it is clear that the word hinders sets a substantiallylowerthresholdthanthewordprevents(withthewordobstructsoccupying a position perhaps somewhere in between)(SeealsoGoldlionPropertiesat [94]).Ribeiro PJdid,however,alsorefer(at [82])totheobservationsofEarl LoreburninTennants(at 510),observingthatthelearnedlawlordputthebarsomewhathigher,interpretinghinderingtomeaninterposingobstacleswhichitwouldbereallydifficulttoovercome;however,thelearnedjudgeproceededtoobserve (also at [82]) that, nevertheless, hindering was on any view not aconceptrequiringthesuppliertoshowthatsomecontingencyhadprevented delivery [emphasis added]. We agree that the word preventedconnotesamuchhigherdegreeinrelationtoobstaclestoperformanceofthe contract compared to the word hindered.52 WealsonotethatTennantsalsolaiddownthe(related)generalprinciple to the effect that even a great or huge increase in price would not,inandofitself,constituteahindrance.Itisnot,however,altogetherirrelevant. As Lord Dunedin observed in Tennants (at 516):Pricemaybeevidence,butitisonlyoneofmanykindsofevidenceastoshortage. If the appellants had alleged nothing but advanced price they wouldhave failed. But they have shown much more. They have shown a total failureof what after all was the main source of supply to their business AlltheseprincipleswerealsoendorsedandappliedinanotherEnglishdecision thathas oftenbeencitedtogether withTennants,viz, theEnglishCourtofAppealdecisionofPeterDixon&Sons,LimitedvHenderson,Craig &Co, Limited [1919] 2 KB 778 (Peter Dixon).[2011] 2 SLR Part 00-cases.bookPage 123Tuesday, March 29, 201111:40 AM124 SINGAPORE LAW REPORTS [2011] 2SLR53 Wepausetoobserve,inthisregard,thatwhilstamereincreaseinprice is generally insufficient (in and of itself) to constitute a hindrance orprevention, we leave open the issue as to what the legal position would beif the increase in price is astronomical (cf the reference by Denning LJ in theEnglish Court of Appeal decision of Brauer &Co (Gt Britain), Ltd v JamesClark(BrushMaterials),Ltd[1952]2 LloydsRep 147at 154(Brauer)tothefactthat,ifinthatcase,thepriceincreasewasonehundredtimesasmuch as the contract price, then that would be a fundamentally differentsituationwhichhadunexpectedlyemerged,andhe[theseller]wouldnotbeboundtopay[forthelicenceconcerned]).Indeed,thegenerallegalprinciple in relation to a mere increase in price in the context of whether ornotahindranceorpreventionhasoccurredvis--visaforcemajeureclause mirrors the general principle in relation to the common law doctrineoffrustration(underwhich,generallyspeaking,amereincreaseinpricewillnotconstituteafrustratingevent(cfalsoRDCConcrete([49]supraat [70][74])).Indeed,eveninsofarasthelattergeneralprincipleisconcerned,atleasttwojudgesintheHouseofLordsdecisionofTsakiroglou &CoLtdvNobleeThorlGmbH[1962]AC93,viz,Lord ReidandLord Hodson,appearedtoatleastbrieflyhintthatincreasedcostsmightconstituteapossiblegroundforfrustrationwheretheyweresoextremeastobeastronomical(at 118and128129,respectively)aproposition that, in fact, appears to find some support in the local contextinthedecisionofthiscourtinGlaheInternationalExpoAGvACSComputer Pte Ltd [1999] 1 SLR(R) 945 (especially at [24]).54 Asmentionedabove,thecrucialwordinthecontextofthepresentproceedingsisdisrupt.Fromlinguisticaswellaslogicalandcontextualperspectives, it is clear, in our view, that, like the word hinder, the worddisruptdoesnotmeanprevent.Inthesamevein,anincreaseincostsalonewillnotconstituteadisruption.Morespecifically,however,what(general) meaning ought to be attributed to the word disrupt, bearing inmind the fact that the particular factual matrix and context will also need tobeconsideredbythecourtbeforearrivingatafinaldecisioninanygivencase?55 TheOxfordEnglishDictionary(Oxford:ClarendonPress,2nd Ed,1989) (OED) defines the word disrupt (vol IV at p 832) as follows: Tobreak or burst asunder; to break in pieces, shatter; to separate forcibly. Thesameworkdefinesthewordhinder(vol VIIatp 242)invariousways,including the following: To put or keep back; To do harm to; to injure,impair,damage;andTokeepback,delay,orstopinaction;toputobstacles in the way of; to impede, deter, obstruct, prevent. Although thereis,inthelast-mentionedphrase,areferencetothewordprevent,thatword itself is defined in the OED quite differently (as is to be expected sincethepresumptionisthatnowordintheEnglishlanguageoughttoberedundant) and, inter alia, as follows (vol XII at p 445): To forestall, balk,[2011] 2 SLR Part 00-cases.bookPage 124Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 125orbafflebypreviousorprecautionarymeasures;Tocutoffbeforehand,debar,preclude(apersonorotheragent)from,depriveofapurpose,expectation, etc. [emphasis in original]; and (perhaps, most appropriately,having regard to the legal context as well as case law considered above) Tofrustrate, defeat, bring to nought, render void or nugatory (an expectation,plan, etc.).56 The definitions of the words disrupt and hinder are at a generallevelatleastnotdissimilar.Bothwordsconnotealowerdegreeofnegativitycomparedtothewordprevent.And,perhapsmoreimportantly,bothwordssuggestadatummeasureofdifficultythatinterfereswiththesuccessfulcompletionofthetransactionconcerned.However,unlikeasituationinvolvingprevention,thedisruptionorhindrancedoesnotrenderfurtherperformancebyoneparty(orbothparties)impossible(whichwouldbeakintoasituationof(legal)frustration). It is also clear that difficulty that manifests itself in the form ofan increase in costs is in and of itself insufficient to result in a finding ofdisruption or hindrance. However, the level of guidance at this point is,unfortunately,notveryhelpful.Onecanexplainthis,inpart,bythefactthattherearemyriadsituationsofdisruptionorhindrance.Nevertheless,weareoftheviewthatafurther(ifminimal)attemptatdefiningwhatmightconstituteadisruptionorhindrancewouldbehelpful.Inthisregard,whereacommercialtransactionisinvolved,theprocessofascertainingwhetherornotaparticularsetofcircumstancesconstitutesadisruptionorhindrancewithinthemeaningoftheforcemajeureclauseconcernedoughttobeinformedbyconsiderationsofcommercial practicability (bearing in mind, of course, the particular contextinwhichthecontracthadbeenenteredinto(includinganyrelevantcommercial practice in the trade and/or resultant dislocation in the trade)).Hence, if, for example, events occurred which, whilst not preventing literalperformance of the contract as such, were such as would render continuedperformance commercially impractical, there would, in our view, generallybeadisruptionorhindrancewithinthemeaningoftheforcemajeureclauseinquestion.Stilllesswouldthoseeventsneedtorenderfurtherperformanceofthecontractimpossible,whichwouldbemoreakintoasituation of prevention (as explained above).57 The following observations by Earl Loreburn in Tennants ([51] supraat 510511) may also be usefully noted:Toplaceamerchantinthepositionofbeingunabletodeliverunlesshedislocateshisbusinessandbreakshisothercontractsinordertofulfilonesurely hinders delivery.[2011] 2 SLR Part 00-cases.bookPage 125Tuesday, March 29, 201111:40 AM126 SINGAPORE LAW REPORTS [2011] 2SLRInmyviewthishindereddelivery.Itdidnotpreventdeliveryormakeitimpossible, but it hindered delivery within the meaning of the contract nowunder consideration [emphasis added]58 Inasimilarvein,wewouldalsonotethefollowingobservationsbySwinfen Eady MR in Peter Dixon ([52] supra at 785):[I] think in substance the question is this: Having regard to the facts as set outintheaward,wasthereevidenceuponwhichthearbitratorsasreasonablemencouldcometotheconclusionatwhichinfacttheyarrived?Havingregardtothegeneraldislocationoftrade,totheneedforenteringintofreshcontracts to obtain tonnage, to the fact that all standing contracts by all partiesinthetradewere nolongerabletobecarriedout,Iamofopinionthatuponthese facts much more than merely an increase in price was proved, and it is noanswer to say to the sellers: It was possible to carry out your contract and youcouldhavegotridoftheobstacleordifficultybyobtainingtonnageatanincreased price, or by paying Beckers an increased sum for them to supply you.Inmyjudgmenttherewasampleevidencebeforethearbitratorsonwhichthey could arrive at the conclusion, at which they did in fact arrive, that thesellerswerehinderedinthedeliveryofthepulpwithinthemeaningofthecontract. [emphasis added]And thefollowingobservations byBankes LJinthe samecase(at 786)arealso helpful:Ithinktworuleswerecertainlylaiddowninthatcase[viz,Tennants].Onewasthatariseinpricewouldnotinitselfconstituteahindrancetodeliverywithin the meaning of such a contract as this; and I think the second rule maybe gatheredfrom the language of Lord Dunedin[in Tennants;seealsoaboveat [52]], where, in speaking of the judgment of Neville J., he says that thelearnedjudgereadthewordhinderinthegeneralsenseofinanywayaffectingtoanappreciableextenttheeaseoftheusualwayofsupplyingthearticle..... [emphasis added]59 Another illustration may be found in the House of Lords decision ofOwners of Steamship Matheos v Louis Dreyfus and Company [1925] AC 654(Louis Dreyfus). Although this particular decision related to a prohibitionclause,thesamegeneralpointsofprinciplewouldbeapplicable.InLouisDreyfus,theplaintiffshipownerbroughtaclaimagainstthedefendantcharterer fordemurrage. The charterer wasunableto load goodsontothevessel owing to a severe frost which had causedthe dockto be completelyfrozenover.Thechartererrelieduponaclauseinthecharterpartywhicheffectivelysuspendedthecharterersobligationtoloadgoodsundercircumstanceswheretherehadbeendetentionbyfrostorice.Theshipowner argued that that clause could not be invoked by the charterer asit was still possible to load the goods onto the vessel by the use ofmanuallabour. The House rejected this argument. In particular, Viscount Cave LCwasoftheview(at 660)that,giventheiceboundconditions,loadingby[2011] 2 SLR Part 00-cases.bookPage 126Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 127hand during the frost was in the commercial sense impracticable. Indeed,the expenses of manual loading were prohibitive, the charterers would runthe risk of losing the goods and no insurer would have been willing to coversuchadangerousmethodofloading.Moregenerally,however,thisismerely an illustrative situation and much would (as was already alluded toabove)dependupontheprecisefactualmatrix.However,thegeneralprinciple as such seems to us to be not only sound but also just and fair.(2) Whether the present circumstances, seen in its commercial context, present sufficient difficulty to constitute a disruption within cl 360 ThecircumstancesinthepresentcasedidpresentconsiderabledifficultiesfortheAppellant.First,itisundisputedthat,sincetheIndonesianGovernmentannouncedtheSandBan,theBCAhadimplementedasystemthatonlyentitledcontractors(suchastheRespondent)tohaveaccesstotheBCAssandstockpiles(seealsoaboveat [12]).TheAppellanthadnoaccesstothesestockpiles.Secondly,whenthe Sand Ban came into effect, the Appellants own sand suppliers, BibrightandHuatShua,stoppedsupplyingsandtotheAppellantandreliedupontheforcemajeureclausesfoundintheirrespectivesupplycontracts(seeaboveat [15]).ThesituationwasexacerbatedbythefactthatBibrightssand stockpileat theTuas Aggregate Terminalhadbeentaken over by theBCA, with the result that Bibright Shipping could only release sand with theBCAs approval and could no longer supply sand to the Appellant.61 Thirdly,eveniftheRespondentweretohelpprocuresandfromtheBCAssandstockpiles, therewasnoguarantee thattheRespondent wouldhavereceivedtherequisitequantitiesofsand.ThiswasconfirmedbyMr NgCherCheng,thedeputydirectorofprocurementpoliciesdepartmentattheBCA.Further,therewasafixedlimitontheamountofsandthatcouldbereleasedfromtheBCAssandstockpiles.TheBCAscircular dated 16 February 2007 stated that there was a weekly quota for theBCAs sand stockists. The circular stated that the sand would be released ona first come first serve basis, and that once the weekly quota of sand hadbeenreached,theBCAwouldstopreleasingsandimmediately(seealsoaboveat [19]).Inaddition,theBCAcirculardated1 February2007statedthat only projects with concreting works to be carried out in the month ofFebruary2007wereallowedtorequestsandtobereleasedfromstockpilefrom February.62 Given the above circumstances, there can be no doubt that there weresufficient difficulties to constitute a disruption within the meaning of cl 3.The Appellants traditional sources of sand from Indonesia were effectivelycut off by the system implemented by the BCA as well as by the reliance byitsownsuppliersupontheforcemajeureclausesintheirrespectivecontractswiththeAppellant(notingthattheBCAhadinfacttakenoveroneofthesupplierssandstockpiles).GiventhattheBCAonlygranted[2011] 2 SLR Part 00-cases.bookPage 127Tuesday, March 29, 201111:40 AM128 SINGAPORE LAW REPORTS [2011] 2SLRaccessofsandsuppliestomaincontractors,thesecontractors(includingtheRespondent)wouldbeinamonopolisticposition.TheRespondentcouldtakeadvantageofitspositiontochargeanexorbitantpriceforitsservicesinassistingtoprocuresandfromtheBCA.Underthesecircumstances,theAppellantwasfacedwithtwostarkchoices.IfithadchosentostopperformingtheContract,itwouldhavebeenliablefordamagestotheRespondent(assumingthatcl 3didnotapply).IfithadchosentoperformtheContractbysupplyingconcreteatthecontractedprices,itwouldhavefallenpreytoanypotentialexorbitantdemandsofmain contractors who had access to sand supplies. This left the Appellant intheunsatisfactorysituationinwhichtheRespondentcouldinsistthattheAppellantadheretotheContract(thusobtainingRMCatpre-SandBanprices) and, at the same time, earn a profit for its services of procuring sandfrom the BCA. If the Appellant was to adhere to its contractual obligations,it would have had no choice but to seek sand supplies from the RespondentforwhateverpricetheRespondentmighthavechargedforit.Suchacommerciallyimpracticablesituationconstituted,inourview,adisruptionwithinthemeaningofcl 3.Itmustbecautionedthatthisanalysis is not focused on the prices of sand but, rather, on the difficultiesfaced by the Appellant in the present overall commercial context. Further, itdid not matter whether the Respondent did in fact seek exorbitant prices forits services in procuring sand (in this regard, and as will be seen below, theRespondent did not even offer to help procure sand from the BCA for theAppellant).ItwassufficientthattheAppellantwasplacedinacommercially impracticable situation, as explained above.63 TheRespondentdidcontend(inpassingandwithoutargumentorevidence) that the Appellant could have obtained sand from countries otherthan Indonesia. Although it can be said that it was possible for the Appellanttoprocuresandfromnon-traditionalsources,itwouldhavebeencommerciallyimpracticabletodoso,giventhatcl 15oftheContract(cl 15)(seeaboveat [10])envisagedordersexceeding100m3ofconcretetobedeliveredwithintwodaysaftertheorderhasbeenplaced,andtheAppellant would not have been able to do so if it had had to seek supplies ofsandfromnon-traditionalsources.Thiscommercialimpracticabilityisreinforced by the fact that cl 15 provided that the Appellant must accept allordersforconcrete.Indeed,thepresentsituationmayhavegonebeyondthatofcommercialimpracticability.GiventhatitwouldbeimpossibletodeliverconcretetotheRespondentwithintwodayseveniftheAppellanthad sought alternative sources of sand from non-traditional sources, a caseof frustration would have been made out had it been pleaded and argued intheCourtbelow.WesurmisethatthiswasperhapswhytheAppellantsoughttoamenditspleadingstoincludeanalternativedefenceinfrustration(althoughthishasnotbeenallowedforthereasonsstatedin[103][105] below).[2011] 2 SLR Part 00-cases.bookPage 128Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 12964 We are therefore, of the view that the clear shortage of sand resultingfromtheSandBanhadcreatedgenuinedifficultiessoastoconstituteadisruptionwithinthescopeandmeaningofcl 3.However,asalreadynoted above, this is not an end to the matter in so far as the present appeal isconcerned.Weneednowtoturntoconsiderthesecondsub-issue,viz,whether or not the event (or events concerned) were beyond the control ofthe Appellant.The second sub-issue: whether or not the event was beyond the control of the Appellant(1) Is there an independent legal principle inherent in all force majeure clauses to the effect that the affected party, in order to avail itself of the benefit of the force majeure clause, must have taken all reasonable steps to avoid the force majeure effects of the event in question?65 Aninterestinglegalissuethatarisesinthecontextofthepresentproceedings in general and the second sub-issue in particular is whether ornot there is, as Ribeiro PJ put it in Goldlion Properties ([51] supra at [98]),a free-standing legal principle to the effect (as counsel for the respondentsargued,relyingontheEnglishdecisionofChannelIslandFerriesLtdvSealink UK Ltd [1988] 1 Lloyds Rep 323 (Channel Island Ferries)) that: there is inherent in the concept of a force majeure clause the principle thatthepersonwhoseekstorelyuponitmustprovethat,evenifaqualifyingeventhadoccurredwhichcouldmateriallyimpedeorhindercompletion,such person had taken all reasonable steps to avoid the force majeure effects ofthat event. [emphasis added in italics and bold italics]Thelearnedjudgewasoftheviewinnouncertaintermsthatsuchalegal principle did not exist; as he observed (at [99]):I am unable to accept that argument. I see no juridical basis for positing anyfree-standinglegalprincipleofthetypeurged.Whatconditionsmustbesatisfiedforapartytobringhimselfwithinaforcemajeureclausedependssimply on its construction and, properly understood, Channel Island Ferriessays nothing different.66 We agree with these observations of Ribeiro PJ in Goldlion Propertiesthattherecannotbeanyblanketprincipletotheeffectthatthereisarequirement to take all reasonable steps before the force majeure clause canbereliedon(whichlanguageembodiestheintentionofthepartiesthemselves). In this regard, we note that the proposition stated in Chitty onContracts ([48] supra at para 14-140) supports such a blanket principle:ItisforapartyrelyinguponaforcemajeureclausetoprovidethefactsbringingthecasewithintheclauseHemustfurtherprovethattherewerenoreasonablestepsthathecouldhavetakentoavoidormitigatetheevent or its consequences.[2011] 2 SLR Part 00-cases.bookPage 129Tuesday, March 29, 201111:40 AM130 SINGAPORE LAW REPORTS [2011] 2SLRIn our view, this proposition is too wide. Whether the affected party musthavetakenallreasonablestepsbeforehecanrelyontheforcemajeureclausedepends,inthefinalanalysis,onthepreciselanguageoftheclauseconcerned.Nevertheless,itmightwellbethecasethat,atleastwheretheclause in question relates to events that must be beyond the control of one ormoreoftheparties,thenthepartyorpartiesconcernedoughttotakereasonable steps to avoid the event or events stipulated in the clause. In sucha situation (as is in fact the case in the present proceedings), there is, in ourview,apersuasivecaseforrequiringtheaffectedpartytotakereasonablestepstoavoidtheeffectsoftheeventinquestion.Therationaleforthisapproach is a simple and commonsensical one: to the extent that the partyor parties concerned do not take reasonable steps to avoid the event or eventsin question, it cannot be said that the occurrence of the eventor events wasbeyond the control of the party or parties concerned in which case the clausewould not apply. In this regard, it is pertinent to note that in cases where itwasheldthattheaffectedpartywasrequiredtotakereasonablestepstoavoidtheeffectsoftheeventinquestionbeforeitcouldrelyontheforcemajeureclause(see,forexample,RDCConcrete([49]supra)at [64];Channel Island Ferries Ltd v Sealink UK Ltd [1987] 1 Lloyds Rep 559 at 570;and the English Court of Appeal decision of B &S Contracts and Design LtdvVictorGreenPublicationsLtd[1984]ICR419),thelegalissuethatarosecentredonforcemajeureclauseswhichrelatedtoeventsspecifiedthereinthat were beyond the control of the party concerned. It should also be notedthat these cases were also decided with respect to the precise factual matrixconcernedingeneralandontheconstructionofthepreciselanguageofeach force majeure clause in particular. We would observe, parenthetically,thatthereareresonancesherewiththeprincipleunderthedoctrineoffrustrationthattherecanbenoself-inducedfrustration.Indeed,theproscriptionagainstself-inducedfrustrationhasasimilarrationaleinasmuchasitisnecessary,inorderforthedoctrineoffrustrationtooperate, that neither contracting party is at fault.67 However,thefocusoughttobeonthesubstanceasopposedtotheform.Hence,intheEnglishHighCourtdecisionofTradeandTransportIncorporated v Iino Kaiun Kaisha Ltd (The Angelia) [1973] 1 WLR 210, forexample,thecourtheld,interalia(and,asitturnedout,bywayofobiterdicta), that the party concerned ought to have taken steps to ascertain (andthereforediscovered)thenon-availabilityofvehiclesbeforethecontractwasconcludedandcouldnotavailitselfoftheforcemajeureclauseasaconsequence.Theforcemajeureclauseitselfreferred,interalia,tounavoidable hindrances as well as to hindrances happening without thefault of the charterer [the party seeking to rely on the force majeure clause inthisparticularcase],shippersorsuppliersofcargo[emphasisadded](reference may also be made to the English High Court decision of Bolckow,Vaughan,andCovCompaniaMineradeSierraManera(1916)114 LT 758).[2011] 2 SLR Part 00-cases.bookPage 130Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 13168 In so far as the exception referred to above (at [66]) is concerned, onemightarguethatitisinherentwithinthemeaningofconceptssuchashinderandpreventinthecontextofforcemajeureclausesthatsuchconceptswouldonlyoperateinasituationwheretheeventoreventsconcernedarebeyondthecontrolofthepartyorpartiesconcerned.Alternatively,itmightbearguedthattherequirementtotakereasonablestepsoughttobeestablishedbasedontheinterpretationofthepreciselanguageoftheclauseitself(cf,forexample,Brauer([53]supra)).Theformer is analogous (albeit not identical to) a term implied in law, whilstthelatterisanalogous(albeit,again,notidenticalto)atermimpliedinfact (and see generally the local decisions of Forefront Medical Technology(Pte) Ltd v Modern-Pak Pte Ltd [2006] 1 SLR(R) 927 (at [29][44]) and JetHoldingLtdvCooperCameron(Singapore)PteLtd[2006]3 SLR(R)769(at [89][91]) with regard to the relationship between these two categoriesofimplied terms).Indeed,thelatterargumentisconsistentwiththemoregeneralapproachadoptedbyRibeiro PJinGoldlionProperties(seeaboveat [65]).However,wedonotneedtoexpressaconcludedviewontheformer argument in the present appeal, particularly in the light of the viewwehavejustexpressedintheprecedingparagraphwithregardtothenarrowersituation(wherethereisanexpressreferencetotheeventoreventsconcernedbeingbeyondthecontrolofthepartyorpartiesconcerned).Itisinteresting,however,tonotethatRibeiro PJ,inGoldlionProperties,wasoftheview(at [100])thatChannelIslandFerrieswasdistinguishable on the basis that that case related to the prevention andnot the hindrance of the contractual performance; in the learned judgeswords (at [102]):One can readily accept that if the wording of a force majeure clause makes itoperativeonlyifthequalifyingeventhaspreventedperformanceitisnecessarily implicit that the clause does not apply if performance could in facthave been rendered by the taking of reasonable steps. Such a clause justifies aconstructionwhichplacesanobligationonthepartyrelyingonittoshowthathehastakenallreasonablestepstorenderperformance.Butnosuchobligation is implicit in the proposition that a particular matter has materiallyhindered performance. [emphasis in original]69 Withrespect,althoughtheabovereasoningisnotunpersuasive,weareoftheviewthatsuchanapproachistoonarrowandthat,eveninasituationwherethereismerelyhindranceofperformance,thepartyrelying on the force majeure clause concerned ought also to be required toshowthatithastakenallreasonablestepstoavoidtheeventoreventsconcernedifthereistherequirementthattheeventoreventsmustbebeyond the control of that particular party.70 We pause to observe parenthetically that it might well be the casethat the majority of force majeure clauses would incorporate (in substanceand/orform)therequirementthattheeventoreventsconcernedmustbe[2011] 2 SLR Part 00-cases.bookPage 131Tuesday, March 29, 201111:40 AM132 SINGAPORE LAW REPORTS [2011] 2SLRbeyondthecontrolofthepartyorpartiesconcerned.Ifso,thentherequirement to take reasonable steps might well be the rule rather than (asalludedtoaboveat [66])theexception.However,whatevertheactualposition, the general principleis, in ourview, clear.Toreiterate, where theclause in question relates to events that must be beyond the control of one ormoreoftheparties,thenthepartyorpartiesconcernedoughttotakereasonablestepstoavoidtheeventoreventsstipulatedintheclause.However,absentthisparticularsituation,thisrequirementtotakereasonablestepsisnotablanketoneassuchandwhetherornotsucharequirementobtainsintheparticularsituationathandwoulddependonthepreciselanguageoftheclauseitself(whichlanguageembodiestheintention of the parties themselves).71 Where the affected party seeking to rely upon the force majeure clausemusttakereasonablestepstoavoidtheeventoreventsstipulatedintheforce majeure clause, whether he has done so will, of course, be a question offact; it is also not an absolute duty as only reasonable steps need to be taken.We are here in the sphere of the application of the law to the precise factualmatrix concerned. Hence, in the Singapore High Court decision of MagentaResources (S) Pte Ltd v China Resources (S) Pte Ltd [1996] 2 SLR(R) 316, forexample,itwasheldthattherewasnodutytomitigate;asS Rajendran Jobserved (at [96][97]):96 Thepresentcaseisclearlyonewherearrangementsbyasupplierhigher up the string to ship the goods had already been made when the delayby reason of force majeure happened. There was, therefore, no obligation onthepartoftheplaintiffstotryandobtaintherequisiteureathroughanalternative source.97 Butevenapartfromthefactthatthiswasacasewherethecontractwith the suppliers higher up the chain had been entered into at the time of theforce majeure, this was not a contract under which the sellers were at libertytobuygoodsafloat.TheplaintiffsherewerenotmerelyobligedtodeliverprilledureaofUSSRoriginbutwereinadditionrequiredto(a) markthegoods with specific shipping marks provided by the defendants; (b) ship thegoods only in certain vessels not specifically prohibited by the contract; and(c) shipthegoodsfromaspecifiedport.Iagreewiththesubmissionoftheplaintiffsthat,insuchasituation,therewasnoquestionofbuyinggoodsafloat. This is further reinforced by the fact that the contract here was not aCIF contract since, by the contract, the defendants were to provide insurancefor the goods from the port of loading.(2) Application to the facts of the present appeal(A) THE ISSUE72 The issue is, in essence, a simple one. Given the fact that cl 3 expresslystipulates that the shortage of material (here, sand to manufacture concrete)must have arisen through circumstances beyond the Appellants control in[2011] 2 SLR Part 00-cases.bookPage 132Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 133order for the clause to operate, the burden is on the Appellant to show thatit had taken all reasonable steps to avoid the operation of cl 3. We are of theview that there is sufficient evidence to demonstrate that the Appellant had,onthebalanceofprobabilities,takenreasonablestepstoavoidtheoperation of cl 3. Let us elaborate.(B) REASONABLE STEPS TAKEN BY THE APPELLANT BUT REJECTED BY THE RESPONDENT73 ItiscommongroundthatwhentheSandBancameintoeffect,theBCAimplementedamechanisminwhichonlymaincontractors(suchastheRespondent)wouldhaveaccesstoBCAssandstockpiles.TheAppellanthadnoaccesstotheBCAssandstockpile.TheAppellanttooktheefforttonotifytheRespondentofthisfact,bywayofitsletterdated9 February2007(reproducedaboveat [17]),whichclearlyinformedtheRespondentthatthemechanismimplementedbytheBCAmeantthattheAppellantcouldnothaveaccesstotheBCAsstockpiles.However,theRespondents lack of willingness to assist the Appellant is demonstrated bythefactthattheAppellantsletterof9 February2007wasignored.Itisundisputed that there was no response to this letter. If the Respondent hadbeenwillingtohelpprocuresandfromtheBCA,itwouldhaverepliedtothisletter.ThisisinstarkcontrasttothemechanismimplementedbytheBCAinwhichithadencouragedcontractorstoassistintheprocurementandsupplyofsandtoRMCcompanies,bywayofitsonwarddeliverymechanism as stated in the BCAs circular dated 1 February 2007.74 Inaddition,theAppellanthadwrittenaletterdated1 March2007(see above at [21]) in which it had offered to credit back to the Respondentthe cost of the sand, calculated at $63 per tonne of sand in accordance to theBCA price, if the Respondent was able to provide the Appellant with sand(the Appellants offer). This was, in substance, as good as a request for theRespondenttohelpprocuresandfromtheBCAstockpiles.However,theRespondent simply ignored the Appellants request.75 The Judge, however, was unconvinced that the Respondents rejectionoftheAppellantsoffermeantthattheRespondentwasunwillingtohelpsupplysandtotheAppellant.Inparticular,theJudgewasconcernedthatthe Appellants offer to credit back the costs of procuring sand had a catch theofferincludedariseinthepriceofconcretefoundinthe1 MarchQuotation. In this regard, the Judge observed as follows (see the Judgmentat [50][52]):50 the[Appellant]claimedthatithadmadeanoffertothe[Respondent]on1 March2007indicatingthatitwouldcreditbacktothe[Respondent] the cost of any sand and aggregates that the [Respondent] wasabletoprovideat$63 pertonand$73 pertonrespectively.Thegistofthe[Appellants] argument seemed to be that the [Respondents] rejection of its[2011] 2 SLR Part 00-cases.bookPage 133Tuesday, March 29, 201111:40 AM134 SINGAPORE LAW REPORTS [2011] 2SLRoffershowedthatthe[Respondent]wasunwillingtohelpthe[Appellant]apply for BCA sand for the manufacture of concrete.51 I reject the [Appellants] argument. The [Appellants] offer of creditingback the cost of any sand and aggregates provided by the [Respondent] waspremised on the assumption that the [Respondent] would obtain the suppliesfrom the BCA, since its offer price of $63 and $73 tracked the BCA price ($60and$70respectivelyexcludingthecostofdelivery).Hadthisbeenastandalone offer which the [Respondent] rejected, I would have regarded it asstrong evidence that the [Respondent] was unwilling to help the [Appellant]apply for sand from the BCA stockpile. However, the [appellants] offer had acatch it included a rise of almost 200% in the price of concrete as compared tothe prices stated in the Contract.52 The [Appellant] had no right to impose higher prices of concrete on the[Respondent].Thecommonthreadthatranthroughthecasescitedearlieristhatariseinthepriceofrawmaterialsisnotsufficienttotriggeraforcemajeureclauselikecl 3.Ifthe[Respondent]waswillingtoassistthe[Appellant] by applying for BCA sand (where the [Appellant] pays for the BCAsand),the[Appellant]wasobligedtoacceptthesandandperformtheContract without imposing further conditions. [emphasis added]76 In our view, and with respect, we find (from the Judges observationsquotedintheprecedingparagraph,inparticular,thoseportionsthathavebeenemphasised)thattheJudgeconflatedseveralquestions.Thereareinfact three separate questions raised in the Judges observations:(a) whether the Appellant has the right to impose higher prices forconcrete;(b) whether a rise in the price of sand is sufficient to trigger a forcemajeure clause; and(c) whethertheRespondenthaddemonstrateditswillingnesstoassist the Appellant to procure sand.Aswewillelaborateuponinamoment,theonlyquestionthatoughttohave been addressed by the Judge was the one in (c) above.77 Inourview,whethertheAppellanthastherighttoimposehigherpricesforconcrete(see[76(a)]above)isirrelevantatthisparticularstage.This question is only consequential upon the real inquiry, which is whethertheAppellantcaninvokecl 3inthefirstplace(see[76(b)]above).IftheAppellantcaninvokecl 3,theRespondentandAppellantaredischargedfromperformingtheircontractualobligationsundertheContractandarefree to form a new contract with new prices. Hence, whether the Appellanthasarighttoimposehigherpricesforconcretecannotassistusindetermining whether the Appellant can avail itself of the benefit of cl 3, forthat is the very question which the present inquiry seeks to answer.[2011] 2 SLR Part 00-cases.bookPage 134Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 13578 Asexplainedearlier(at [42][44]),whethertheAppellantcanavailitselfofthebenefitofcl 3isdependentonwhetherthecircumstancesconstitutedadisruptionwithinthemeaningofcl 3,andwhethertheshortageofmaterialwasbeyondtheappellantscontrol.Wehavealreadyexplained(at [50][53])thatamereincreaseinpriceisinsufficienttotriggercl 3insofarasitisordinarilyinsufficienttoconstituteadisruption. We have, however (at [53]), left open the issue as to what thelegalpositionwouldbeiftheincreaseinpricewasastronomical.Inaddition,wehavedeterminedearlier(at [60][64])thatthepresentcircumstances were sufficiently difficult to constitute a disruption withinthe meaning of cl 3.79 In so far as the second sub-issue as to whether the shortage of materialwas beyond the Appellants control is concerned, a vital question would bewhethertheAppellanthadtakenreasonablestepstoavoidtheeffectscausedbytheshortageofmaterial.Inthisregard,onespecificquestioniswhether the Respondent was willing to assist the Appellant to procure sandfromtheBCA(see[76(c)]above).AsisevidentfromtheJudgesobservations above (at [75]), the Judge was concerned that the Appellantsoffer had included a 1 March Quotation with increased prices of concrete.WewouldbeinclinedtoagreewiththeJudgeiftheRespondenthadrejected both the increased prices offered in the 1 March Quotation as wellastheAppellantsoffertocreditbackthecostofobtainingsand.IftheRespondent had indeed rejected the 1 March Quotation, it would have beenconsistentwiththeJudgesconcernthattheRespondentdidnotagreetotheAppellantsofferbecauseitwouldhavebeenforcedtoaccepttheincreased prices in the quotation. However, the Judge did not, with respect,consider the fact that the Respondent had indeed accepted the prices in the1 March Quotation as evidenced in the Respondents letter dated 20 March2007 in which the Respondent agreed to pay the increased prices set out inthe1 MarchQuotation.EventhoughtheRespondenthadacceptedtheincreasedprices,it did not respondto theAppellantsoffer inthe 1 March2007 letter to credit back the Respondent the costs of procuring sand fromtheBCA.The1 MarchQuotationwasattachedtothe1 March2007letterwhich contained the Appellants offer. Having accepted the prices offered inthe1 MarchQuotation,theonlyreasonwhytherewasnoresponsetotheAppellantsoffer,readtogetherwiththesimilarsilencefromtheRespondent after receiving the Appellants letter of 9 February 2007, is thattheRespondenthadbeenunwillingtohelptheAppellantprocuresandfrom BCA.80 ItisimportanttoemphasisethattheAppellantsoffertocreditthecost of obtaining the sand from BCA at the price of $63 per tonne of sandbacktotheRespondent,demonstratesthelengthstowhichtheAppellantwas prepared to go in order to ensure its continued ability to manufactureRMC.Thepriceof$63 pertonneofsandwas$3 morethanthepriceat[2011] 2 SLR Part 00-cases.bookPage 135Tuesday, March 29, 201111:40 AM136 SINGAPORE LAW REPORTS [2011] 2SLRwhichtheRespondentcouldobtainsandfromtheBCA.Thismeansthatfor every tonne of sand that the Respondent procured for the Appellant, theRespondent would obtain an extra $3.81 Further,sincethepriceofGrade30RMCquotedbytheAppellantwas$185 percubicmetre(seeaboveat [22]),theeffectivesellingpriceofRMCwas$182 percubicmetre(viz,thequotedpriceof$185$3reimbursement to the Respondent for procurement of sand). This is belowthe cost price of the RMC which was $183.85 per cubic metre (the cost pricewasrevealedatameetingbetweentheConstructionIndustryJointCommittee and the BCA held on 25 April 2007). This again emphasises theefforts that the Appellant was willing to make in order to meet its obligationtomanufactureandsupplyRMCtotheRespondent.ThisalsodemonstratesthattheAppellantwasnotattemptingtoprofiteerfromtheshortage of sand caused by the Sand Ban.82 The above analysis is also reinforced by further evidence which will bedealt with in detail below (at [83][90]). (C) THE RESPONDENT HAD BEEN UNWILLING TO SUPPLY SAND TO THE APPELLANT 83 There was no documentation evidencing the fact that the RespondenthadofferedtohelpsupplysandtotheAppellant.WhilsttheRespondenthadobtainedsandfromtheBCAfromasearlyasFebruary2007,ithadchosen,instead,togivethesandtoathirdpartyanentityknownasGroupIndustriesatSungeiKadut.ThedirectoroftheRespondent,Mr PehChongEng,admittedinthecourtbelowthatsomewhere[sic]inFebruary,theRespondenthadappliedforsandfromtheBCAandhadindeed obtained some supply of sand. Since the Respondent had known that,as between the parties, only it had access to the BCAs stockpiles, it ought tohaveinformedtheAppellantthatithadobtainedsandfromtheBCA.InsteadofthusinformingtheAppellant,theRespondentignoredtheAppellantsletterof9 February2009,inwhich(aswehaveseen)theAppellant made it clear that it could not obtain sand from the BCA.84 ItwasfurtherrevealedinthecourtbelowthatRespondenthadsupplied sand to Buildmate. Mr Peh, Buildmates director, revealed that theRespondentwouldsupplysandtoBuildmate,andBuildmatewould(inturn) supply sand to the Appellant at the same price as that offered by theAppellanttotheRespondent(seeaboveat [23])at$63 pertonne.TheAppellant would use the sand to manufacture RMC and sell it to Buildmate,whereuponBuildmatewould(inturn)supplythesameRMCtotheRespondent.Unfortunately,itwasnotplacedonrecordastowhatthecommercialreasonswerebehindthisstrangeandroundaboutwayfortheRespondent to obtain RMC.[2011] 2 SLR Part 00-cases.bookPage 136Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 13785 There was however, some hint that Buildmate was used as an entity toobtainRMCfromtheAppellantwithoutpayment:itwasrevealedthatBuildmatedidnotpaytheAppellantfortheRMCsuppliedtoit(whichRMCwas,inturn,suppliedbyBuildmatetotheRespondent).Buildmateowed the Appellant approximately $600,000 for RMC supplied and, insteadof making payment, Buildmate had offered to supply sand to the Appellantassubstitutepayment,whichtheAppellantrefusedtoaccept.SinceonlycontractorssuchastheRespondentcouldhaveaccesstosandatthatparticular point in time, and Buildmate had offered to use sand as substitutepayment for the RMC, there is a suggestion that the Respondent had beenusingBuildmatetoobtainRMCwithoutpayment.Atthesametime,theRespondentrefusedtosupplysandtotheAppellantandhadchosentosupply it to Buildmate instead; the Appellants hands were tied inasmuch asitcouldnotmanufactureRMCpursuanttotheContract.Ifso,theRespondentwouldbehavingitscakeandeatingit:byobtainingRMCwithout payment, and by insisting on claiming against the Appellant for itsbreach of contract for failure to provide RMC under its contract. Given thatthisisnotapleadedissue,andinviewofthefactthatthepriordisputebetweenBuildmateandtheAppellanthasbeensettled,weshall,however,refrain from making any determination on this matter.86 Notwithstandingtheabove,onethingremainsclearfromthispuzzlingarrangement.ItreinforcesthefindingthattheRespondentwasunwillingtoassistinsupplyingsandtotheAppellant.ThisisbecauseMr Peh Chong Eng, the Project Manager, revealed that the Respondent hadpurchasedGrade 40NormalMixConcreteandGrade 50NormalMixConcretefromBuildmateattheunitpriceofS$190.00andS$199.00,respectively; these were exactly the same prices for RMC as those offered bytheAppellantinthe1 MarchQuotation.SincetheRespondenthadacceptedthepricesofferedbytheAppellant,thereisnoexplicablereasonwhy it had chosen to supply sand to a third party (Buildmate) and not to theAppellant,exceptforthefactthattheRespondenthadbeenunwillingtosupplysandtotheAppellant,whatevertheunderlyingcommercialmotivations might have been.87 ApartfromsupplyingsandtoGroupIndustriesatSungeiKadutand Buildmate (instead of the Appellant), Mr Peh Chong Eng actually gaveevidencethattheRespondentdidnotinformtheAppellantthatitwaswilling to help because it believed that the Appellant was already sourcingforalternativesuppliesofsand.Thisdemonstrates,infact,thattheRespondent had thought, rightly or wrongly, that there was no need to helpthe Appellant.88 The Respondent also sought to argue that it had, by virtue of its lettertotheAppellantdated26 April2007(seealsoaboveat [29]),offeredtosupply sand to the Appellant. The letter stated that Mr Oh Beng Hwa (theRespondents director) had proposed during the meeting of 19 March 2007[2011] 2 SLR Part 00-cases.bookPage 137Tuesday, March 29, 201111:40 AM138 SINGAPORE LAW REPORTS [2011] 2SLRthattheRespondentwouldsupplythesandandaggregatetotheAppellantatpre-sandbanpricesinexchangefortheAppellanttosupplyRMC at contracted prices. The material parts of the Respondents letter of26 April 2007 are reproduced below, as follows:On 19thMar[ch] 2007, our Mr Oh [Beng Hwa] met with your Mr Leong andMr Sohtodiscussthematterofyourdemandforincreaseinpriceofconcrete mix OurMr Oh[BengHwa]proposed,withoutprejudice,thattoresolvethematter, we supply the sand and aggregate to you based on the same old rate asthat agreed by you, for you to supply the concrete mix at the same fixed priceas in the aforesaid contract contained in [the] quotation dated 10 November2006 [emphasis added]89 However,thisletterdoesnotadvancetheRespondentscaseinthisparticularregardsimplybecauseitwasconditionalontheAppellantsupplying concrete to the Respondent at the contracted prices. Indeed, thisparticular letter was no more than an ultimatum issued by the Respondentto the Appellant, which the latter rejected (see also [30] above).90 Even more crucially, the Respondents purported offer to supply sandwas in fact only an offer to supply manufactured sand. There was no offer tosupply concreting sand. This was confirmed by Mr Oh Beng Hwa when hegaveevidencethattheRespondenthadproposedatthe19 March2007meeting(referredtointheRespondentsletterdated26 April2007)tosupply manufactured sand, as opposed to concreting sand. The Respondentre-confirmedthispositionthatithadofferedtheAppellantmanufacturedsand at the meeting of 19 March 2007 in its closing submissions.(D) THE RESPONDENT HAD OFFERED TO SUPPLY MANUFACTURED SAND TO THE APPELLANT BUT THIS WAS NOT A VIABLE ALTERNATIVE91 TheAppellantdidnotaccepttheRespondentsoffertosupplysand.Inaletterdated26 April2007,theAppellanthighlightedthattheRespondents offer was confined only to the supply of manufactured sand.WenotethattheJudgedidnotconsiderthisamaterialaspectoftheAppellants letter of 26 April 2007 (see [18] of Judgment); neither was thereanydiscussionontheissuesrelatingtomanufacturedsandintheJudgment. In our view, if manufactured sand had been a viable alternativeto concreting sand available to the Appellant for use in the manufacture ofRMC,andtherewasnogoodorjustifiablereasonwhytheAppellantdidnot accept the Respondents offer to supply this viable alternative, it cannotbe said that the Appellant had taken reasonable steps to avoid the operationof cl 3. However, the undisputed evidence adduced in the proceedings in thecourtbelowdemonstratesthattheRespondentsoffertosupplymanufactured sand was a contrived one. There was in fact, at the time when[2011] 2 SLR Part 00-cases.bookPage 138Tuesday, March 29, 201111:40 AM[2011] 2SLRHolcim (Singapore) Pte Ltd v Precise Development Pte Ltd 139theofferwasmadeon19 April2007(whichwasreiteratedintheRespondentsletterof26 April2007),noapprovalgrantedtousemanufactured sand as part of the sand component to produce RMC. In anyevent, the undisputed evidence demonstrates that it has never been the casethatmanufacturedsandcouldconstitute100%ofthesandcomponenttomanufacture RMC. This means that concreting sand would still be requiredinanyevent.Insofarastheoffertosupplymanufacturedsandsimplyevades the pertinent questions of how and from where the Appellant couldobtainconcretingsand,withoutwhichtheAppellantisunabletoproduceRMC,weareoftheviewthattheRespondentsoffertosupplyonlymanufactured sand cannot be said to be a genuine offer. We now turn ourattention to the specific evidence.92 First,theevidencefromtheRespondentsownwitnessesshowsthatthere was, in fact, no approval to use manufactured sand. The RespondentsProjectManager,Mr PehChongEng,gaveevidencethatapprovaloftheQualified Person had to be obtained before manufactured sand can be usedtomanufactureRMC.Assuch,itfollowsthatsuchapprovaltousemanufacturedsandshouldhavebeenobtainedattheverylatestbythemeetingof19 March2007whentheRespondenthadofferedtosupplymanufacturedsand to theAppellant. Onthe contrary, theevidence showsthat no such approval had been obtained at the material time. When Mr OhBengHwa(theRespondentsdirector)wasaskedwhethertheuseofmanufacturedsandwasapprovedonlyinDecember2007,heatfirstanswered that he was unsure, after which he made reference to the concretemixdesigndated22 November2006exhibitedinhisAEIC.However,Mr OhBengHwaadmittedthatthe wordsmanufacturedsandwerenotfound