Singapore court decides in favour of Keppel DC Reit facility manager in payment dispute

The Singapore High Court has made a decision in favour of a facility manager of Keppel DC Reit, paving the way for a positive outcome for the litigation announced by the data-centre real estate investment trust (Reit) in March 2022.

DXC Technology Services Singapore was ruled to be in breach of its Standard Services Agreement (SSA) with Keppel DC Singapore 1, the master lessee and appointed facility manager of a data centre in Serangoon North.

DXC had tried to reduce the amount of floor space it leased, but Keppel DC Singapore argued that the SSA did not permit DXC to do so at the time.

Keppel is claiming S$3 million from DXC as the sum outstanding from April 2021 to December 2021, as well as all losses it suffered as a result of DXC’s refusal to pay for the space it unilaterally gave up from Apr 1, 2021 to Mar 31, 2025.

In a written judgement, Justice Hri Kumar Nair said that he accepted Keppel DC Singapore’s interpretation of the agreement.

He will hear both parties separately on the appropriate relief, but appeals will be heard only after Keppel’s claim has been fully dealt with. Trial of the case has been scheduled for February.

In 2010, DXC had entered into an SSA with Keppel to lease out a total space of 20,300 square feet (sq ft) split into four modules: A, B, C and D.

The SSA was renewed for five years from March 2017, and then again for five years from March 2020.

In 2020 and 2021, however, DXC reviewed its requirements and asked to give up the use of modules C and D.

It issued a purchase order on May 13, 2021, for the use of only modules A and B, which Keppel argued was in breach of the SSA.

DXC also issued a change order on May 17, 2021, asking to return modules C and D.

DXC argued that the SSA had a clause allowing the company to request changes to the services provided at any time before completion.

Justice Nair said that the clause relating to the change order “does not stipulate that Keppel is obliged to agree to DXC’s requested changes”.

He noted also that the SSA guarantees Keppel a minimum charge in the event of termination or suspensions of services.

“If DXC’s interpretation is correct, it can simply avoid paying the minimum charge by reducing the data centre to only 1 sq ft of space instead of suspending or terminating the SSA. The parties clearly could not have intended such an outcome,” he said.

Source: Business Times © SPH Media Limited. Permission required for reproduction.

Keppel DC Singapore 1 Ltd v DXC Technology Services Singapore Pte Ltd [2024] SGHC 7

ADV: Essential Leadership Skills for Young Legal Professionals (Feb 2024) Couple agreed to split 50% of flat's value, but court says it must be 100%