Unitrack Building Construction Pte Ltd v GHL Pte Ltd and Another

• Jurisdiction: Singapore
• Judgment Date: 31 March 1999
• Date: 31 March 1999
• Docket Number: Suit No 1913 of 1998 (Summons in
• Court: High Court (Singapore)

Unitrack Building Construction Pte Ltd

Plaintiff

and

GHL Pte Ltd and another

Defendant

[1999] SGHC 73

MPH Rubin J

Suit No 1913 of 1998 (Summons in Chambers No 9146 of 1998)

High Court

Contract–Remedies–Injunctions–Restraining call on performance bond–Beneficiary inexplicably inactive and indifferent to demand and take possession of bond–Whether expectation of having bond revised the reason for beneficiary's inactivity and indifference–Whether just and conscionable for beneficiary to enforce bond–Whether injunction should continue

The first defendant, GHL Pte Ltd (“GHL”), awarded the plaintiff, Unitrak Building Construction Pte Ltd (“UBC”), a building contract. Pursuant to the terms of the award, UBC furnished a performance bond issued by the second defendant, AGF Insurance (Singapore) Pte Ltd (“AGF”), to GHL for 10% of the contract sum. In the course of works, UBC defaulted and abandoned the project. GHL accepted UBC's repudiation and gave written notice to AGF demanding payment of the sum under the bond. UBC obtained an interim injunction restraining GHL from claiming on the performance bond issued by AGF. GHL applied to set aside the injunction.

Held, dismissing the application:

Given GHL's inexplicable inactivity and indifference for more than a year in demanding and taking possession of the performance bond, there was substance in UBC's argument that the parties were content to allow the bond to remain with UBC after its execution with the expectation of having the bond revised. It would be unjust and unconscionable for GHL to enforce a bond it had not even bothered to take possession of. The principles of fairness warranted the continuation of the injunction: at [17], [21] and [24].

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

Min Thai Holdings Pte Ltd v Sunlabel Pte Ltd [1998] 3 SLR (R) 961; [1999] 2 SLR 368 (folld)

New Civilbuild Pte Ltd v Guobena Sdn Bhd [1998] 2 SLR (R) 732; [1999] 1 SLR 374 (refd)

Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609 (refd)

Tang King Kai (Tang & Partners) for the plaintiff

Chong Yee Leong and Eileen Tay (Rajah & Tann) for the first defendant

Florence Koh (Tan & Koh Partnership) for the second

MPH Rubin J

1 This appeal arises from my declining to set aside an interim injunction obtained by the plaintiffs on 13 January 1999 restraining the first defendants, GHL Pte Ltd (“GHL”), from seeking or claiming any payment on a performance bond issued by the second defendants, AGF Insurance (Singapore) Pte Ltd (“AGF”), until further order upon the plaintiffs' usual undertaking by its counsel as to damages.

2 On 26 January 1999, I heard GHL's application to set aside the injunction order. At the conclusion of the hearing, I disallowed GHL's application and ordered that the costs of the application be costs in the cause. GHL wrote in for further arguments and even after hearing further arguments from counsel on 23 February 1999, the earlier orders made remained unaltered.

Background

3 The plaintiffs, a company whose main business is that of building contractors, was awarded a building contract by GHL on or about 24 April 1997 for the construction of a five-storey boarding house at Lorong 17, Geylang, Singapore for a contract sum of $5,781,400. Under the terms of the award, the plaintiffs were required to furnish a performance bond to GHL for $578,140 which is equivalent to 10% of the contract sum in order to guarantee due performance of the plaintiffs' obligations under the award. In the event, the plaintiffs requested and arranged with AGF for the issue of a performance bond for the stated amount. Curiously, however, neither the original bond nor the duplicate thereof issued by AGF on or about 26 June 1997 was ever handed over to GHL.

4 Why the original bond or even a copy thereof was not handed over to GHL was explained by the plaintiffs' director, Mr Seah Yit Sim in his first affidavit filed on 27 November 1998. He said at paras 5 to 10 of his affidavit:

1. 5 After securing the said performance bond, the plaintiffs did not give or deliver it to the first defendants as the plaintiffs were waiting for the architect's nomination instructions of the nominated sub-contractors and suppliers for the said project and for the contracts documents to be prepared by the architect and to be signed between the plaintiffs and the nominated sub-contractors that may be appointed. This was a requirement under Art 29 (1) of the Articles and Conditions of the Building Contract signed by the plaintiffs …

2. 6 However, the first defendants' architect failed to give any nomination instructions to the plaintiffs and he did not prepare any contract documents for the plaintiffs to sign with the nominated sub-contractors or suppliers although the following sub-contractors and suppliers had been appointed by the first defendants:

   …

1. 7 Consequently, the performance bond of the second defendants was never delivered or given to the first defendants.

2. 8 On or about 30 April 1998, it was agreed between the plaintiffs and the first defendants that the plaintiffs' contract sum be revised to $1,961,400 to exclude the sub-contractors work and that the sub-contractors shall deal directly with the first defendants. A copy of the letter dated 30 April 1998 signed by the parties is now produced …

3. 9 On 6 October 1998, the plaintiffs wrote to the first defendants that since the contract sum has been revised to $1,961,400, the original performance bond (Ref No 9700004577) was not valid and should be cancelled and replaced by a fresh performance bond for $196,140 being 10% of the revised contract sum. The plaintiffs also advised the first defendants that the original performance bond (which was in the plaintiffs' possession all the time) would be returned to the...