New Civilbuild Pte Ltd v Guobena Sdn Bhd and Another
| Jurisdiction | Singapore |
| Judge | Lee Seiu Kin JC |
| Judgment Date | 29 June 1998 |
| Neutral Citation | [1998] SGHC 214 |
| Court | High Court (Singapore) |
| Year | 1998 |
| Published date | 19 September 2003 |
| Plaintiff Counsel | Koh Geok Jen (Koh Ong & Partners) |
| Defendant Counsel | Tan Woon Tiang (Tan & Tan),Brij Raj Rai (Tai Ping Insurance Co Ltd) |
| Subject Matter | Building and Construction Law,Building and construction related contracts,Guarantees and bonds,Sub-contractor obtains ex parte injunction to restrain payment or call on performance bond,No fraud alleged,Whether 'unconscionability' a separate basis for granting injunctive relief,Whether injunction should be discharged,Civil Procedure,Injunctions,Whether full and frank disclosure,Whether writ discloses cause of action,Whether injunction should have been made inter partes,O 29 r 1(2) Rules of Court |
| Citation | [1998] SGHC 214 |
On 19 January 1998, the plaintiffs obtained an ex parte injunction restraining the first defendants from calling on or receiving the proceeds of a performance bond issued by the second defendants to the first defendants in the sum of $1,642,045. The injunction also restrained the second defendants from making payment to the first defendants pursuant to the performance bond. The injunction was to continue until trial or further order.
2.The first defendants took out this summons on 23 January 1998 to discharge the injunction. On 23 April 1998, after hearing the parties, I discharged the injunction with costs. The plaintiffs have appealed against my order and I now give my grounds of decision. [Editorial Note: The plaintiffs withdrew their appeal.]
3.The first defendants were the main contractor for the Tanglin Regency condominium project. By a contract dated 21 September 1995 (the `sub-contract`), the first defendants sub-contracted part of the works of the project to the plaintiffs. According to the title of the sub-contract document, these works were the structural and architectural works for the main and ancillary building, and external works. The contract price was a lump sum of $16,413,047.88, subject only to such variations as were ordered by the developer. The period for completion was specified to be 19 months from 21 September 1995, ie the completion date was 21 April 1997. There was provision for liquidated damages for delay, at $20,000 per day. The plaintiffs would be paid on a monthly basis within 14 days of the first defendants receiving payment from the employer, with a 10% retention, subject to a maximum of 5% of the contract amount. Half the retention would be released to the plaintiffs upon issuance of the completion certificate by the architect and the balance upon settlement of the final account or at the end of the defects liability period or upon the completion of rectification of defects, whichever is the latest. Clause 10 of the contract provides for the performance bond and states as follows:
10.1 Performance bond shall be 10% of the whole contract sum. (A specimen is enclosed in Appendix `E`.)
10.2 The bond shall include a provision for extension of the validity of the said bond if the sub-contractor delays in completing the works. Provided always that all cost and expense with respect to such extension shall be solely borne by the sub-contractor.
10.3 The bond shall be demand bond and be so arranged such that it is capable of being invoked by the main contractor at any time on demand without obligation to accord any reason.
10.4 The sub-contractor shall deposit with the main contractor a performance bond from a financial institution approved by the main contractor.
10.5 It shall be a condition precedent to the commencement of any interim payment that the bond must be submitted and accepted by the main contractor at the respective times specified for submission stated above.
4.Appendix `E` to the sub-contract contains the specimen form for the performance bond. The plaintiffs arranged for the second defendants to issue the bond, which conformed with the specimen form.
5.On 17 December 1997 the first defendants wrote to the second defendants to demand payment of $1,642,045 under the bond. This was a simple demand and the first defendants did not state any grounds for it. The plaintiffs were advised of this letter, no doubt by the second defendants, and wrote to the first defendants on 18 December 1997 expressing their surprise at the demand and asserting that they had completed their scope of works before 27 October 1997 and were not in delay. The first defendants` solicitors replied to the plaintiffs on 22 December, saying that the plaintiffs had `failed to perform and/or breached [its] obligations under the sub-contract`. The plaintiffs` solicitors replied to this letter on 31 December 1997, asking for particulars of the alleged breach on an urgent basis. The first defendants` solicitors replied on 2 January 1998 to say that the breaches included the plaintiffs` failure to carry out certain works and delay in the completion of the sub-contract works.
6.Meanwhile, on 30 December 1997 the first defendants wrote a second letter to the second defendants to demand payment under the bond. This time the first defendants advised that they were of the opinion that the plaintiffs had committed breaches of their obligation under the sub-contract. On 5 January 1998 the solicitors for first defendants sent a letter of demand to the second defendants and threatened to commence legal action if payment was not made within three days.
7.On 14 January 1998 the plaintiffs filed the writ in this suit in which the substantial remedy was an injunction restraining the first defendants from calling on the performance bond. Then on 19 January the plaintiffs took out Summons-in-Chambers 420/98 for an interlocutory injunction pending trial. The application was made ex parte before Lai Siu Chiu J who granted the injunction.
8.In their ex parte application, the plaintiffs claimed that they had fulfilled all their obligations under the sub-contract and that only rectification and minor works remained. The plaintiffs also pointed out that prior to the first demand letter of 17 December 1997, the first defendants had not indicated to the plaintiffs that they would be calling on the bond.
9.On 23 January 1998 the first defendants took out this summons to discharge the injunction. Counsel for the first defendants, Mr Tan, submitted that the injunction ought to be discharged on two grounds: (i). the application for the injunction was flawed because:
(a). it should have been made inter partes;
(b). there was no full and frank disclosure; and
(c). there was no cause of action disclosed in the writ of summons; and
(ii). no fraud had been alleged by the plaintiffs.
(i) Application for injunction flawed
10. (a) Application should be made inter partes
Mr Tan submitted that the plaintiffs` application for the injunction should have been made inter partes because there was no particular urgency. The first defendants had made a demand as early as 17 December 1997. The second defendants had not paid up immediately although they were obliged to. No doubt they had informed the plaintiffs of the call in order to give them an opportunity to resolve the matter with the first defendants, as is usual in such cases. The first defendants followed this up with a second letter of demand on 30 December 1997 and finally with their solicitors` letter of 5 January 1998 which contained a threat of legal action if payment was not made within three days, ie by 8 January. Notwithstanding this, no payment was made by 19 January, some 11 days after the expiry of the deadline. Therefore the application was not of such urgency that notice of the summons could not be extended to the first defendants` solicitors, who were on record, so that they had an opportunity to attend the hearing. Furthermore, the affidavit of Gee Kim Fah, filed on 19 January 1998 in support of the application, did not state that the application was urgent nor did it contain any ground for not making an inter partes application.
11.Order 29 of the Rules of Court deals with, inter alia, interlocutory injunctions and rule 1(2) provides that such applications may be made ex parte where the case is one of urgency. Mr Tan cited the case of Castle Fitness Consultancy Pte Ltd v Manz [1989] SLR 896, [1990] 1 MLJ 141 for the proposition that an injunction obtained ex parte should be discharged where there were no grounds for notice not to be given to the defendant. In that case, Coomaraswamy J, in discharging an interim injunction, cited the practice of the Chancery and Queen`s Bench Divisions of the English High Court which required a party making an ex parte application to state cogent reasons for not notifying the defendant of the application. The learned judge was of the view that the opponent should be given notice of the ex parte application and invited to attend unless the circumstances justify it, such as where the purpose of the order would be defeated if the opponent had prior knowledge. However I do not understand him to go so far as to hold that he had discharged the ex parte injunction on the basis that notice ought to have been given to the opponent. Indeed, he was concerned with whether he could discharge the injunction on an ex parte application made by the defendants. He held that he could as in that case, the defendants had given notice of the application to the plaintiffs who declined to appear. The injunction was in fact discharged on its merits. Another ground for discharge was that the plaintiffs had failed to make full and frank disclosure to the court in their application.
12.Mr Tan also cited Png Siaw Luan v Wong Tui San [1990] SLR 643 [1990] 3 MLJ 340 in support of the same proposition. The High Court there discharged the injunction on various grounds. In relation to the ground that the application for the injunction was made ex parte when it should have been made inter partes, the court said ([1990] SLR 643 at p 662, [1990] 3 MLJ 340 at p 351):
The attorneys further submitted that at the time the plaintiff made her ex parte application, ie after the competitive bidding, there was no urgency which justified an ex parte application. There was also no justification for the plaintiff applying ex parte without notifying the attorneys or the solicitors for the fourth defendant. The plaintiff and her solicitors were aware that the parties had solicitors and who they were.
The foregoing submissions of the attorneys are well founded and supported by the twin cases of Tunas (Pte) Ltd v Mayer Investment Pte Ltd & Ors and Castle Fitness Consulting Pte Ltd v Manz. I would accordingly and notwithstanding that I have already discharged the said injunction order made on 22 May 1990 as varied by the order of court...
To continue reading
Request your trial