Newtech Engineering Construction Pte Ltd v BKB Engineering Constructions Pte Ltd and Others

JurisdictionSingapore
CourtHigh Court (Singapore)
Judgment Date26 June 2003
Date26 June 2003
Docket NumberSuit No 42 of 2003

[2003] SGHC 141

High Court

Tay Yong Kwang J

Suit No 42 of 2003

Newtech Engineering Construction Pte Ltd
Plaintiff
and
BKB Engineering Constructions Pte Ltd and others
Defendant

Lawrence Lim and Chong Kuan Keong (Chong Chia & Lim LLC) for the plaintiffs

Lai Swee Fung (UniLegal LLC) for the first defendants.

American Cyanamid Co v Ethicon [1975] AC 396 (distd)

Bocotra Construction Pte Ltd v AG [1995] 2 SLR (R) 262; [1995] 2 SLR 733 (folld)

Dauphin Offshore Engineering & Trading Pte Ltd v The Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan [2000] 1 SLR (R) 117; [2000] 1 SLR 657 (folld)

Four Seas Construction Pte Ltd v The Tai Ping Insurance Co Ltd [1998] SGHC 414 (distd)

GHL Pte Ltd v Unitrack Building Construction Pte Ltd [1999] 3 SLR (R) 44; [1999] 4 SLR 604 (folld)

Building and Construction Law–Building and construction related contracts–Performance bonds–Nature of performance bonds–Injunctions–Purposes for grant–Grounds for restraining receipt of payment under performance bonds

The plaintiffs (“Newtech”) and the first defendants (“BKB”) entered into two building sub-contracts, for which performance bonds were issued. Newtech sought an injunction to restrain BKB from receiving payment under the respective performance bonds on the ground that the call on the bonds was made in bad faith and was unconscionable. Newtech submitted that BKB encountered delay in their own works which had to be completed before Newtech could carry out their works and further, that there was no complaint until the first performance bond was called upon, about 26 months later. In the case of the second performance bond, the call was made 11 months into the defects liability period.

Further, BKB's statement of account showed discrepancies when compared with that of Newtech's, including an alleged overpayment to Newtech which Newtech alleged was “simply conjured up in an attempt to establish over-payment of a sum suspiciously close to the total bond sum that was called”.

It was BKB's case that the performance bonds were unconditional and irrevocable in nature. BKB further contended that Newtech had not only failed to produce sufficient evidence to show any alleged fraud or unconscionable conduct but Newtech were also in breach of the two sub-contracts. Newtech admitted the works were completed late and that they were therefore liable for liquidated damages.

Held, allowing the plaintiffs' application for injunction:

(1) Newtech's arguments showed a strong prima facie case of unconscionability on the part of BKB in calling on the two performance bonds in issue: at [25].

(2) BKB failed to explain the discrepancies in their final statements of account, were unable to produce any documents to support its contention and in particular, it failed to show how the costs of removal of surplus earth, to which they attributed the discrepancies in their statement of account, ballooned. The changes to the final accounts appeared to have been arbitrarily made and buttressed Newtech's contention that they were done to show overpayment of an amount suspiciously close to the total amount payable under the bonds: at [26].

(3) Newtech had produced cogent evidence to support their contention that they were not in default of their contractual obligations and that there was therefore no reason to call on the bonds. The entire circumstances of the case suggested strongly that BKB had an ulterior motive in calling on the bonds. It did not appear to be based on any bona fide claim they had against Newtech. The calls on the bonds appeared to have been made to ameliorate their cash flow problems: at [27].

Tay Yong Kwang J

1 The plaintiffs were the first defendants' sub-contractors in respect of a building construction project at Sembawang Camp. Two sub-contracts were entered into on 31 January 2000 and on 18 April 2000. The plaintiffs claimed to have performed and completed their scope of works but have not been paid by the first defendants an outstanding sum of $376,944.99 (inclusive of 3% goods and services tax). The second defendants issued a performance bond pursuant to the first sub-contract and the third defendants issued a performance bond for the second sub-contract.

2 In these two summonses-in-chambers, the plaintiffs sought to restrain the first defendants from receiving payment of $43,150 from the second defendants and from receiving payment of $200,000 from the third defendants under the respective performance bonds. The basis of the applications was that the call on the two bonds was made in bad faith and unconscionably...

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3 cases
  • CEX v CEY and another
    • Singapore
    • High Court (Singapore)
    • 18 May 2020
    ...underlying contract in the first place (see Newtech Engineering Construction Pte Ltd v BKB Engineering Constructions Pte Ltd and others [2003] 4 SLR(R) 73 at [27] (“Newtech Engineering”)). Some authorities have gone further, relying on “credible prima facie evidence of defects in the works”......
  • Long Rise Pte Ltd v Logistics Construction Pte Ltd and AXA Insurance Singapore Pte Ltd
    • Singapore
    • District Court (Singapore)
    • 17 January 2019
    ...and imposed backcharges without basis (see: Newtech Engineering Construction Pte Ltd v BKB Engineering Constructions Pte Ltd & Ors [2003] 4 SLR(R) 73; and Gammon Pte Ltd v JBE Properties Pte Ltd [2010] 3 SLR 799); the backcharges were earlier already disputed by the Plaintiff in adjudicatio......
  • Newtech Engineering Construction Pte Ltd v BKB Engineering Construction Pte Ltd and Others
    • Singapore
    • High Court (Singapore)
    • 27 March 2004
    ...plaintiff restrained the defendant from doing that, see Newtech Engineering Construction Pte Ltd v BKB Engineering Constructions Pte Ltd [2003] 4 SLR 73 which was affirmed on 7 There was a dispute over piling works for the culvert. This was not specifically provided for in the sub-contract.......

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