Chip Hua Poly-Construction Pte Ltd v Housing and Development Board

• Jurisdiction: Singapore
• Judge: MPH Rubin J
• Judgment Date: 28 February 1997
• Neutral Citation: [1997] SGHC 43
• Docket Number: Suit No 1043 of 1996 (SIC No 3798
• Date: 28 February 1997
• Year: 1997
• Published date: 19 September 2003
• Plaintiff Counsel: Peter Chow and Lim Yong Khern (Wee Swee Teow & Co)
• Citation: [1997] SGHC 43
• Defendant Counsel: Andre Francis Maniam and Lawrence Tan (Wong Partnership)
• Court: High Court (Singapore)
• Subject Matter: Injunctions,Words and Phrases,'Any',Application by plaintiffs to restrain defendants from calling on security bond,Performance bond,Civil Procedure,'Any other',Validity and effect of such clause,Credit and Security,Whether compelling evidence of fraud or unconscionability,Whether issuing of certificate pursuant to such clause conclusive as to amount due and as to liability,Standard of proof in respect of allegations of fraud or unconscionability,Whether defendants can call on bond in satisfaction of moneys due from plaintiffs under other contracts,Conclusive evidence clause

Chip Hua Poly-Construction Pte Ltd, the plaintiffs herein, applied to the court for the continuation of an ex parte injunction obtained by them on 10 June 1996 restraining the Housing and Development Board (HDB), the defendants herein, from calling on a security bond provided by the plaintiffs to the defendants in connection with the defendants` construction project at Jurong West (the Jurong West contract). After hearing arguments from both sides, I disallowed the plaintiffs` application and my grounds now follow.

The averments contained in the affidavits of the plaintiffs and the defendants establish that the plaintiffs who were the sole contractors in relation to the Jurong West contract were also joint contractors with one Hock Heng Trading and Construction Pte Ltd (Hock Heng) in respect of the defendants` five other projects at Choa Chu Kang, Bukit Panjang, Hougang and Serangoon (the five contracts).

The Jurong West contract was entered into between the defendants and the plaintiffs on or about 30 July 1992, pursuant to which the plaintiffs furnished the defendants with a security bond dated 4 August 1992 (Jurong West security bond) issued by UMBC Insurance Sdn Bhd for a sum of $818,500 - the subject matter of dispute in the proceedings before me.

Inasmuch as the dispute between the parties centre round the construction of the said Jurong West security bond, the relevant provisions thereof read as follows:

[Preamble:]

By this bond we Chip Hua Poly-Construction (Pte) Ltd of No 45 Lorong 27 Geylang Singapore 1438 (hereinafter called the contractor) and UMBC Insurance Sdn Bhd of 1 North Bridge Road [num ]08-01 High Street Centre Singapore 0617 (hereinafter called the surety) are held and firmly bound unto the Housing and Development Board, Singapore [HDB] in the sum of dollars eight hundred eighteen thousand and five hundred only ($818,500) for the payment of which sum the contractor and the surety bind themselves, their successors and assigns jointly and severally by these presents.

[Recital (1):]

The [HDB] has accepted the tender of the contractor for building including sanitary, water and gas installation at Jurong West Neighbourhood 3 Contract 21 (neighbourhood centre), Singapore (Contract No A/296/92) (hereinafter called the said works) resulting in a contract for the said works (hereinafter called the said contract).

[Clause 1:]

The contractor and the surety shall immediately without question and unconditionally pay on demand any sum or sums which may, from time to time, be demanded by the [HDB] up to a maximum aggregate sum of $818,500.00. [Emphasis added.]

[Clause 3:]

The [HDB] may demand payment of a sum or sums under this bond in satisfaction of moneys due from the contractor to the [HDB] under the provisions of any other contractmade between the contractor and the [HDB]. The [HDB] shall not in connection with a demand whether made under the said contract or under any other contract be required to prove either a breach of contract or duty or damages arising from such breach. [Emphasis added.]

[Clause 8:]

... any demand under this bond shall be conclusive that the sum or sums demanded is or are due and payable provided that, ... the sum or sums demanded shall be paid irrespective of:

...

(c) the use or intended use by the [HDB] of the sum or sums demanded;

(d) any dispute or matter between the surety and/or the contractor on the one hand the [HDB] on the other hand regarding directly or indirectly the said contract or any other contract or otherwise . [Emphasis added.]

[Clause 9(a):]

... the [HDB] is not liable to account or explain to the contractor or the surety for the application of any sum or sums paid hereunder and the [HDB] may apply the sum or sums in any way that it thinks fit. [Emphasis added.]

[Clause 9(b):]

Without prejudice to or limiting Clause 9(a) above, the [HDB] may apply the sum or sums paid hereunder:

i towards reducing or settling any liability of the contractor ... whether contractual or otherwise , and if contractual, whether under the said contract or any other contract and/or;

ii by paying some or the entire part thereof to the surety or the contractor or to any other person as the [HDB] thinks fit. [Emphasis added.]

Insofar as material, the Jurong West contract entered into between the plaintiffs and the defendants as regards the construction project at Jurong West incorporated the following clauses from the HDB`s general conditions of contract (GCOC):

Clause 14(1):

... the contractor shall deposit free of interest with the [HDB] the sum provided in the contract to be held by the [HDB] as security for due performance by the Contractor of each and every liability and obligation owing by the Contractor to the [HDB], whether of a contractual or tortious nature and whether arising under the Contract or otherwise, such sum to be retained or otherwise properly dealt with by the [HDB] ...

Clause 14(2):

the contractor may in lieu of the deposit as ... required under sub-cl (1) of this clause provide the [HDB] with a security bond for an equivalent sum ...

Clause 62(1):

All damages (including liquidated damages), costs, charges, expenses, debts or sums for which the contractor is liable to the employer under any provision of the contract may be deducted by the employer from monies due or becoming due to the contractor under the contract or under any other contract between the employer and the contractor including any retention moneys, financial bonds or security deposits or bonds. [Emphasis added.]

Clause 62(2):

All damages (including liquidated damages), costs charges, expenses, debts or sums for which the contractor is liable to the employer under any provision of any other contracts

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