Simon Carves Ltd v Ensus UK Ltd

Simon Carves Ltd v Ensus UK Ltd

The court held that SCL had established a strong case that, as between it and Ensus, the bond was null and void and returnable upon issue of the Acceptance Certificate, as no pending or previously notified claim existed. The court found that SCL had reserved its rights during the bond extension negotiations. Accordingly, the injunction restraining Ensus from making a call on the bond should continue, as damages would not be an adequate remedy and the balance of convenience favoured maintaining the status quo.

Parties
Claimant: Simon Carves Limited; Defendant: Ensus UK Limited
Jurisdiction
England and Wales
Judgment Date
23 March 2011
Procedural Posture
Commercial/construction Dispute / Interim Application for Injunction
Outcome
Interim injunction continued
Legal Topics
Performance Bonds, Injunctions, Contractual Interpretation, On Demand Bonds, Interim Relief
Commercial Law Construction Law Banking Law Performance Bonds Injunctions Contractual Interpretation On Demand Bonds Interim Relief

Case Brief

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Parties

Simon Carves Limited

Claimant

Ensus UK Limited

Defendant

Procedural Posture

Commercial/construction Dispute / Interim Application for Injunction

Legal Issues

  1. 1 Whether the beneficiary (Ensus) can be restrained from calling on an on-demand performance bond by reason of the underlying contract terms
  2. 2 Whether the bond was null and void as between the parties upon issue of the Acceptance Certificate absent any pending or previously notified claims
  3. 3 Whether the court can grant an injunction to restrain a call on a bond in the absence of fraud

Ratio Decidendi

The court held that SCL had established a strong case that, as between it and Ensus, the bond was null and void and returnable upon issue of the Acceptance Certificate, as no pending or previously notified claim existed. The court found that SCL had reserved its rights during the bond extension negotiations. Accordingly, the injunction restraining Ensus from making a call on the bond should continue, as damages would not be an adequate remedy and the balance of convenience favoured maintaining the status quo.

Court Disposition

Interim injunction continued

Orders

  • Ensus restrained from making a call on the performance bond pending further order
  • SCL to continue the bond in the sum of £2.3 million until end of April 2011 or further order