Master Marine AS v Labroy Offshore Ltd and others

Master Marine AS v Labroy Offshore Ltd and others

The Refund Guarantees were properly characterised as first demand performance bonds; the New Demand Clause permits a New Demand under the First Limb once the builder fails to procure timely replacement guarantees or extensions (a lapse of the security), and that right crystallises and is exercisable irrespective of whether the underlying contract has been rescinded or arbitration is pending; consequently the injunction restraining payment was wrongly granted and must be discharged.

Citation
[2012] SGCA 27
Parties
Appellant: Master Marine AS; First Respondent: Labroy Offshore Ltd; Second to Fourth Respondents: Second to fourth respondents (the Banks)
Court
Court of Appeal
Jurisdiction
Singapore
Judgment Date
18 April 2012
Case Number
Civil Appeal No 79 of 2011
Procedural Posture
Civil Appeal (court of Appeal) / Final Judgment on Appeal (injunction Discharged)
Outcome
Appeal allowed; injunction discharged; appellant entitled to costs; directions given on interest submissions
Legal Topics
Performance Bond, Refund Guarantee, First Demand Guarantee, Strict Compliance, Contractual Interpretation, Time Is of the Essence, New Demand Clause, Injunction Against Payment
Source Language
English
Contract Law Commercial Law Banking and Finance Arbitration Construction Law Equity (injunctions) Performance Bond Refund Guarantee +6 more

Case Brief

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Parties

Master Marine AS

Appellant

Labroy Offshore Ltd

First Respondent

Second to fourth respondents (the Banks)

Second to Fourth Respondents

Procedural Posture

Civil Appeal (court of Appeal) / Final Judgment on Appeal (injunction Discharged)

Legal Issues

  1. 1 Whether the Refund Guarantees are to be characterised as first demand performance bonds or conditional guarantees
  2. 2 What conditions precedent must be satisfied to make a valid New Demand under the Refund Guarantees
  3. 3 Whether extrinsic/contextual evidence may be admitted in construing the New Demand Clause and the extent of such evidence for performance bonds

Ratio Decidendi

The Refund Guarantees were properly characterised as first demand performance bonds; the New Demand Clause permits a New Demand under the First Limb once the builder fails to procure timely replacement guarantees or extensions (a lapse of the security), and that right crystallises and is exercisable irrespective of whether the underlying contract has been rescinded or arbitration is pending; consequently the injunction restraining payment was wrongly granted and must be discharged.

Court Disposition

Appeal allowed; injunction discharged; appellant entitled to costs; directions given on interest submissions

Orders

  • Appeal allowed
  • Final injunction restraining the Banks from making payment to Master Marine AS under the New Demand discharged