Singapore — Lawyer and opposition leader Lim Tean called a judgment handed down by the High Court on Thursday (Jan 27) as one of “Supreme Importance” as it’s the first time where the defence of frustration was invoked in relation to the Covid-19 pandemic.
One of the clients Mr Lim is representing is the proprietor of a pub that was badly affected by the closure of nighttime establishments since March 2020, similar to many others. His client is being sued by a former landlord for over $400 000 in unpaid rental fees.
Writing that many businesses have been forced to close down, Mr Lim wrote in a Facebook post on Jan 27, adding that “even after the business folds, there are residual issues such as the liabilities under the tenancy agreements for not seeing out the lease.”
The landlord applied to the High Court for summary judgment, where the suing party “believes that the Defendant has no defence to the claim.” Should the court agree and grant the application, the issue would skip a full trial and be judged upon already.
Mr Lim, however, argued that his client is not liable because the lease agreement had been discharged by frustration.
He went on to explain this further, writing “The doctrine of frustration discharges parties from their contract by operation of law when, without the default of either party, a supervening event that occurred after the formation of the contract rendered a contractual obligation radically or fundamentally different from what had been agreed to in the contract.
The supervening event must have significantly changed the nature of the outstanding contractual rights from what the parties could reasonably have contemplated at the time of its execution, that it would be unjust to hold them to the strict contractual obligations.”
The lawyer called it an “exceptional doctrine” where common circumstances would not apply.
In a win for Mr Lim, and more importantly, his client, the High Court dismissed the landlord’s application and ruled that the case should go for trial.
The lawyer included a quote from the written judgment of Justice Choo Han Teck:
“On the face of the Tenancy Agreement, it may be said that there was a shared purpose of using the Premises to run a music lounge. At the time of the contract, parties may not have contemplated that the Premises might be prevented by a tiny coronavirus from being used as a music lounge.
The fact that the Plaintiff had to write in to the URA subsequently in April 2021 to ask for temporary permission to use the Premises as restaurant reinforces my view that the Plaintiff had similarly intended the Premises to be used as a music lounge. With the imposition of Covid-19 measures and closure of night-time entertainment venues, it was obvious that this purpose cannot be achieved”.
Mr Lim added that he is “proud of my contribution to Singapore law in this regard,” writing, “I believe this is the 1st reported judgment where a Defendant has successfully invoked the defence of frustration in relation to the pandemic,” adding he also believes the High Court’s decision “will have major ramifications for business and commerce in Singapore.” /TISG
Read also: Lim Tean: Why Josephine Teo so quiet on OCBC phishing scam?