CLA ENGINEERING LTD v. DBS BANK (HONG KONG) LTD AND ANOTHER

CLA ENGINEERING LTD v. DBS BANK (HONG KONG) LTD AND ANOTHER

The bond was an on‑demand unconditional performance bond triggered by Leighton's compliant written demand and accompanying statement; the clause relied on by CLA governed extension of the Long Stop Date and did not make payment conditional; unconscionability is not a sufficient ground to restrain payment under such a bond; Leighton was not obliged to hold any paid sum on trust absent the specified contractual trigger; accordingly the ex parte injunction was discharged and CLA's applications dismissed, though leave to abridge service and to amend were granted and a short continuation of the interim order was maintained until judgment.

Citation
[2018] HKCFI 626
Parties
Plaintiff: CLA Engineering Limited; 1st Defendant: DBS Bank (Hong Kong) Limited; 2nd Defendant: Leighton Contractors (Asia) Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 March 2018
Case Number
HCMP273/2018
Procedural Posture
Miscellaneous Proceedings — Injunction to Restrain Payment Under Performance Bond / Hearing of Inter Partes Summonses on Return Date; Judgment on Summonses
Outcome
Order of Deputy Judge To of 2 March discharged; CLA's applications for continued/interim relief dismissed; leave granted to abridge service and to amend summons; ex parte order continued only briefly until judgment then discharged; costs ordered nisi in favour of Leighton.
Legal Topics
Performance Bond, On Demand Guarantee, Interim Injunction, Proprietary Injunction, Material Non Disclosure, Arbitration
Source Language
EN
Contract Banking Equity Civil Procedure Construction Performance Bond On Demand Guarantee Interim Injunction +3 more

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Parties

CLA Engineering Limited

Plaintiff

DBS Bank (Hong Kong) Limited

1st Defendant

Leighton Contractors (Asia) Limited

2nd Defendant

Procedural Posture

Miscellaneous Proceedings — Injunction to Restrain Payment Under Performance Bond / Hearing of Inter Partes Summonses on Return Date; Judgment on Summonses

Legal Issues

  1. 1 Whether the bond was an on‑demand or conditional bond
  2. 2 Whether the court should restrain the bank from paying under the bond
  3. 3 Whether beneficiary must hold paid funds on trust for the obligor

Ratio Decidendi

The bond was an on‑demand unconditional performance bond triggered by Leighton's compliant written demand and accompanying statement; the clause relied on by CLA governed extension of the Long Stop Date and did not make payment conditional; unconscionability is not a sufficient ground to restrain payment under such a bond; Leighton was not obliged to hold any paid sum on trust absent the specified contractual trigger; accordingly the ex parte injunction was discharged and CLA's applications dismissed, though leave to abridge service and to amend were granted and a short continuation of the interim order was maintained until judgment.

Court Disposition

Order of Deputy Judge To of 2 March discharged; CLA's applications for continued/interim relief dismissed; leave granted to abridge service and to amend summons; ex parte order continued only briefly until judgment then discharged; costs ordered nisi in favour of Leighton.

Orders

  • Order of 2 March 2018 made by Deputy Judge To discharged
  • CLA's applications for a new order in the terms of the previous one and for the alternative relief dismissed