Chew Pin Pin v AGF Insurance (Singapore) Pte Ltd

CourtHigh Court (Singapore)
JudgeChoo Han Teck JC
Judgment Date01 March 2001
Neutral Citation[2001] SGHC 40
Citation[2001] SGHC 40
Subject MatterWhether bondsman seeking to resist call has recourse to underlying contract between employer and contractor where contractor not party to suit,Banking,Performance bonds,Call on bond
Defendant CounselFlorence Koh (Florence Koh & Partners)
Docket NumberDistrict Court Suit No 51183 of (Registrar's Appeal No 600038 of 2000)
Plaintiff CounselMonica Neo Kim Cheng (Chan Tan & Partners)
Published date19 September 2003
Date01 March 2001

: This is an unusual case in which the bondsman, an insurance company, sought to resist a call on the performance bond issued by it. The plaintiff employed TDS Construction Pte Ltd (`TDS`) (by a contract dated 9 September 1997) to construct and build three houses at Robin Road. Pursuant to the contract between them TDS procured a performance bond issued by the defendant in the plaintiff`s favour. The relevant provisions of the (undated) bond provide as follows:

1 In consideration of [the plaintiff] not insisting on [TDS] paying Singapore Dollars Two Hundred and Five Thousand only (S$205,000) as a security deposit for the Contract, we hereby irrevocably and unconditionally undertake, covenant and firmly bind ourselves to pay you on demand any sum or sums which from time to time be demanded by you up to a maximum aggregate of Singapore Dollars Two Hundred and Five Thousand only (S$205,000) (`the said sum`).

2 Should you notify us in writing, at any time prior to the expiry of this Bond, by notice purporting to be signed for and on behalf that you require payment to be made for the whole or any part of the said sum, we irrevocably and unconditionally agree to pay the same to you immediately on demand without further reference to [TDS] and notwithstanding any dispute or difference which may have arisen under the Contract or any instruction which may be given to us by [TDS] not to pay the same.

The said bond expired on 31 December 1999. The plaintiff called upon the bond through her solicitor`s letter dated 25 October 1999. The defendant failed to pay and the plaintiff commenced action against it on 19 November 1999. There is no evidence that the contractor or the defendant had offered to extend the period of the bond. The plaintiff obtained summary judgment on 29 February 2000. District Judge Tan Puay Boon dismissed the defendant`s appeal on 8 May 2000. The defendant appealed against that decision to the High Court and the appeal came before me.

Miss Koh argued on behalf of the defendant that there are triable issues for the matter to proceed to trial. Essentially, the defendant`s case was that the plaintiff`s call on the bond was not made in good faith, and that it was therefore fraudulently or unconscionably made. Counsel argued that the plaintiff owed TDS a sum of $420,976.53. This was the amount which TDS has submitted to the Official Receiver as a debt owing to them by the plaintiff. TDS had agreed to $102,500 as the retention sum in the...

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