Royal Design Studio Pte Ltd v Chang Development Pte Ltd

• Jurisdiction: Singapore
• Judge: L P Thean J
• Judgment Date: 28 November 1990
• Neutral Citation: [1990] SGHC 93
• Docket Number: Motion in Suit No 1265 of 1990
• Date: 28 November 1990
• Published date: 19 September 2003
• Year: 1990
• Plaintiff Counsel: Karan Nair and Antony Lee (Ong Tan & Nair)
• Citation: [1990] SGHC 93
• Defendant Counsel: George Tan (Chan Tan & Pnrs)
• Court: High Court (Singapore)
• Subject Matter: Whether plaintiff entitled to remain in possession of said land,Injunctions,Performance bond,Credit and Security,Balance of convenience,Contract,Whether defendant entitled to call upon plaintiff's alleged breach of contract,Injunction to restrain defendant from calling on performance bond and evicting plaintiff from defendant's land,Breach,Discharge,Whether bond which was similar to letter of credit was virtually promissory note on demand,Civil Procedure,Construction joint-venture

The plaintiff on 18 July 1990 obtained ex partean interim injunction against the defendant in the following terms:

(1) The defendant whether by itself or its agents or servants or howsoever otherwise be restrained from calling on and/or receiving payment of the sum of S$120,000 or any sum whatsoever under a performance bond dated 24 August 1988 and numbered D88G00249 SBBN issued by the Asia Insurance Co Ltd until the trial of this action or further order.

(2) The defendant whether by itself or its agents or servants or howsoever be restrained from evicting the plaintiffs, their servants and agents from the work site at lots 116-113 and 116-114 mk 22 Glasgow Road until the trial of this action or further orders.

There are in effect two interim injunctions, and I shall refer to them as the first and second injunctions respectively.

On 27 July 1990, the defendant applied by notice of motion for a discharge of the two injunctions and also for an order that the plaintiff vacate the land and premises of the defendant known as lot nos 116-113 and 116-114 of mk 22 situated at Glasgow Road and deliver possession thereof to the defendant. The motion came on for hearing before me, and at the conclusion I discharged the second injunction, ordered the plaintiff to vacate the defendant`s land and premises and deliver possession thereof to the defendant not later than 23 August 1990 and reserved costs. In order to preserve the status quo until trial, I allowed the first injunction to continue. At that time I did not appreciate that the performance bond, which, by the first injunction, the defendant was restrained from enforcing, would expire on 8 October 1990. My attention, however, was later drawn to this point by the solicitors then acting for the defendant. Subsequently, there was a change of soli, and the present solicitors for the defendant requested for hearing of further arguments on the discharge of the first injunction. I allowed their request and heard further arguments from both counsel for the plaintiff and defendant, and at the conclusion of the further hearing I varied the first injunction by adding thereto a proviso to the effect that should the plaintiff fail to procure a fresh performance bond on the same terms and conditions as contained in the present performance bond to be issued and delivered to the defendant by 5 October 1990, then the first interim injunction shall ipso facto be discharged and cease to have further effect. I now give my reasons.

The dispute between the plaintiff and the defendant relates to a joint venture they both entered into for the construction on the defendant`s land, namely, lots 116-114 and 116-113 of mk 22 situated at Glasgow Road, of nine units of three-storey terrace houses. By an agreement dated 11 June 1988 (the agreement) made between them, the plaintiff agreed at its own costs and expenses to construct and complete for the defendant nine units of three-storey terrace houses in accordance with the specifications described therein and the drawings approved by the competent authority and accepted by both of them, and in consideration therefore, the defendant agreed on completion of the construction of the terrace houses and issue of the temporary occupation licence thereof to convey to the plaintiff 31/2 units of the terrace houses (plaintiff`s 31/2 units). All the plans and specifications for the houses were prepared by the defendant`s architect for the project, and the defendant agreed to bear the fees of the architect and engineer in the preparation of the plans and specifications and the planning and supervision of the construction of the houses. It was a condition of the agreement that the plaintiff would deliver or cause to be delivered to the defendant a performance bond in the sum of $165,000 issued by a bank or an insurance company and that one Leslie Yeo Hern, a director of the plaintiff, would execute and deliver to the defendant a personal guarantee in the sum of $1m to secure the due completion of the construction by the plaintiff of the nine units of terrace houses. Subsequently, the amount of the performance bond was reduced to $120,000, and pursuant to the agreement, the plaintiff procured the issue of a performance bond dated 24 August 1988 by Asia Insurance Co Ltd and the execution of the personal guarantee by Leslie Yeo Hern.

Under the agreement, the plaintiff was to complete the construction of the terrace houses so as to be fit for occupation within 14 months, and to secure the issue of the temporary occupation licence thereof within 17 months, from the date of the permit to commence or carry out building works issued to the defendant by the Building Control Division of the Ministry of National Development. The permit to commence or carry out building works was granted on 18 August 1986 and therefore the plaintiff was to complete the construction by 17 October 1989 and to secure the issue of the temporary occupation licence by 17 January 1990. The plaintiff commenced construction at the end of June 1988. It was contemplated by agreement that the costs of construction of the houses would be financed progressively from the sale proceeds of the plaintiff`s 31/2 units, and cl 23 of the agreement provided the mechanics for processing applications by the plaintiff for such moneys and releases thereof by the defendant. However, after the commencement of construction the parties appeared to have agreed to a variation of this term. The project architect of the defendant issued to the plaintiff interim certificates of payment, and the defendant made progress payments to the plaintiff on the basis of these certificates; a building contract prepared by the project architect was executed by the plaintiff and returned to the architect. No less than six interim certificates had been issued and the total amount certified was $995,500 of which the defendant had paid a sum of $948,021.21 leaving a balance of $47,478.79 unpaid. Presumably all such payments made by the defendant would be set off against the proceeds of sale of the plaintiff`s 31/2 units under cl 23 of the agreement. According to the defendant, by early May 1989, seven units of the terrace houses, including the plaintiff`s 31/2 units, had been sold. The total sale price of the plaintiff`s 31/2 units amounted to $1.575m.

Dispute subsequently arose between the plaintiff and the defendant. The plaintiff complained that the defendant had delayed some of the payments under the interim certificates, namely, first, fifth and sixth certificates, and such delay had put a severe strain on the plaintiff`s cash flow and hampered the progress of the works, thereby resulting in delay in the works. In particular, it alleged that the defendant had not paid in full the amounts due under the fifth and sixth certificates, ie the balance of $47,478.79, and as of June 1990 it had submitted to the defendant`s architect a claim for $161,878.80 for work done and material supplied, but no certificate was issued in respect of such claim. The defendant, on the other hand, complained that the plaintiff had been guilty of delay in the construction of the houses; in particular, the plaintiff had failed to complete the construction of the houses within the time agreed upon. The defendant had extended the time for completing the construction to 31 December 1989 and then to 30 April 1990 but reserved its rights to impose liquidated damages from 1 January 1990 to the date of completion. On 1 May 1990, the defendant by notice in writing terminated the joint-venture agreement and requested the plaintiff to vacate the defendant`s land and premises. The plaintiff thereupon instituted this action against the defendant and obtained ex parte the injunctions to which I have adverted.

I was firmly of the view that the second injunction ought to be discharged, and I accordingly made the order. The joint venture had been terminated and the plaintiff should not be permitted to remain in possession of the site and the defendant should be at liberty to engage other contractors to continue with the construction of the houses. If the injunction were to continue it would bring about a stalemate: the defendant refused to pay the plaintiff on the ground of breach of contract by the plaintiff and the termination of the joint-venture agreement was justified; the plaintiff, on the other hand, refused to proceed with the construction of the houses on the ground that it had not been paid and the termination was wrongful. Such a position is untenable. Even if the termination was wrongful, the plaintiff would still have to vacate the site and deliver possession thereof to the defendant. The plaintiff may proceed with its claim against the defendant for damages. The balance of convenience was clearly in favour of a discharge of the injunction.

I now turn to the first injunction, namely, the...