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

• Judge: Karthigesu JA
• Judgment Date: 24 February 1998
• Neutral Citation: [1998] SGCA 14
• Defendant Counsel: Andre Francis Maniam and Lawrence Tan (Wong Partnership)
• Year: 1998
• Subject Matter: Whether terms of bond entitled beneficiary of bond to call on bond in satisfaction of claims arising under any contract in respect of other projects,Performance bond,Validity of demand under bond,Whether demand could only be made pursuant to contracts between one party and other party acting alone,Contract,Contractual terms
• Citation: [1998] SGCA 14
• Published date: 19 September 2003
• Court: Court of Three Judges (Singapore)
• Plaintiff Counsel: Peter Chow and Lim Yong Khern (Wee Swee Teow & Co)

Judgment:

LP THEAN JA

(delivering the grounds of judgment of the court): The facts

1.On 30 July 1992, the respondents (`HDB`) awarded the appellants (`Chip Hua`) a contract for a project known as the Jurong West Neighbourhood 3 contract 21 (`the Jurong West contract`). Pursuant to the terms of this contract, Chip Hua provided HDB with a security bond in the sum of $818,500 from UMBC Insurance Sdn Bhd (`UMBC`) on 4 August 1992 (`the bond`).

2.Around November 1993, Chip Hua together with another company, Hock Heng Trading and Construction Pte Ltd (`Hock Heng`), submitted joint tenders to carry out building works for two of HDB`s projects located in Choa Chu Kang. The joint tenders were accepted by HDB on 6 December 1993. Further, in November 1994 or thereabouts, Chip Hua and Hock Heng again submitted joint tenders to carry out works for three HDB`s projects at Bukit Panjang, Serangoon Central and Hougang respectively. The joint tenders for the first two projects were accepted on 31 December 1994 and the tender for the third project on 17 January 1995. We shall refer to the contracts for these five projects as the `joint contracts`. Pursuant to each of the five joint contracts, Chip Hua and Hock Heng provided HDB with security bonds amounting in aggregate to a sum of $4,798,340.

3.Unfortunately, the works under the joint contracts did not progress smoothly. As a result of the delays, HDB claimed against Chip Hua and Hock Heng damages for breaches of contract. By letters dated 16 April 1996, HDB called on the performance bonds provided as security for the joint contracts, and the amounts thereunder amounting in aggregate to $4,798,340 were paid to HDB.

4.Following that, HDB indicated to Chip Hua that they would call on the bond (for the Jurong West contract) in satisfaction of their claims against Chip Hua and Hock Heng under the joint contracts. On 4 April 1996, Chip Hua wrote to HDB urging HDB not to call on the Jurong West bond, and HDB replied on 17 April 1996 informing Chip Hua that they were seeking legal advice on the position. Subsequently, by a letter dated 6 May 1996, HDB informed Chip Hua that they would proceed to call on the bond. This was followed by a formal letter from HDB to UMBC dated 29 May 1996 demanding payment under the bond.

5. Proceedings below

On 10 June 1996 Chip Hua obtained ex parte an interim injunction restraining HDB from calling on the bond until the hearing of an inter partes summons-in-chambers in which Chip Hua applied for a continuation of the injunction until trial. Subsequently, the summons was heard before a judge in chambers on 24 October 1997, and was dismissed. [See [1997] 2 SLR 797.] Against the decision of the learned judge, Chip Hua appealed. We allowed the appeal and now give our reasons.

6. Appeal

The main issue before us was whether HDB was entitled to call on the bond to satisfy their claim under the joint contracts. This turned on the construction of the provisions of the bond. It is convenient at this juncture to refer to the relevant provisions of the bond. We turn first to the recital which, so far as relevant, states as follows:

(1) The Board [ie HDB] has accepted the tender of the Contractor [ie Chip Hua] 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`).

(2) The Contractor is obliged under the said Contract to submit an approved bond from the Contractor and an approved party as security for the...