Ryobi-Kiso (S) Pte Ltd v Lum Chang Building Contractors Pte Ltd and another

Ryobi-Kiso (S) Pte Ltd v Lum Chang Building Contractors Pte Ltd and another

The court dismissed the plaintiff's application because the Call fell within the clear terms of the unconditional Performance Bond and Sub-Contract, the plaintiff failed to establish the high prima facie standard of unconscionability or bad faith, and the 1st Defendant produced credible evidence of the plaintiff's delays and losses making the Call not unconscionable; therefore no injunction would issue and costs were awarded to the 1st Defendant.

Citation
[2013] SGHC 86
Parties
Plaintiff (sub Contractor): Ryobi-Kiso (S) Pte Ltd; 1st Defendant (main Contractor/beneficiary): Lum Chang Building Contractors Pte Ltd; 2nd Defendant (issuer of Performance Bond): Unnamed insurance company
Court
General Division of the High Court
Jurisdiction
Singapore
Judgment Date
24 April 2013
Case Number
Originating Summons No 720 of 2012/G
Procedural Posture
Originating Summons (application for Injunction to Restrain Call on Performance Bond) / Interlocutory Judgment Dismissing Injunction Application; Appeal Pending; Substantive Disputes Referred to Arbitration
Outcome
Originating summons dismissed; interlocutory injunction refused; plaintiff ordered to pay costs
Legal Topics
Performance Bond, Unconscionability, Injunction, Termination of Contract, Liquidated Damages, Calls on Bond, Adjudication
Source Language
English
Construction Law Contract Law Equity Banking & Securities (performance Bonds) Arbitration Performance Bond Unconscionability Injunction +4 more

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Parties

Ryobi-Kiso (S) Pte Ltd

Plaintiff (sub Contractor)

Lum Chang Building Contractors Pte Ltd

1st Defendant (main Contractor/beneficiary)

Unnamed insurance company

2nd Defendant (issuer of Performance Bond)

Procedural Posture

Originating Summons (application for Injunction to Restrain Call on Performance Bond) / Interlocutory Judgment Dismissing Injunction Application; Appeal Pending; Substantive Disputes Referred to Arbitration

Legal Issues

  1. 1 Whether the beneficiary's call on an unconditional performance bond was unconscionable such that an injunction should restrain payment
  2. 2 Whether the plaintiff established a strong prima facie case of unconscionability or fraud to justify interlocutory relief
  3. 3 Whether the terms of the bond and sub-contract authorized the call and justified the beneficiary's conduct

Ratio Decidendi

The court dismissed the plaintiff's application because the Call fell within the clear terms of the unconditional Performance Bond and Sub-Contract, the plaintiff failed to establish the high prima facie standard of unconscionability or bad faith, and the 1st Defendant produced credible evidence of the plaintiff's delays and losses making the Call not unconscionable; therefore no injunction would issue and costs were awarded to the 1st Defendant.

Court Disposition

Originating summons dismissed; interlocutory injunction refused; plaintiff ordered to pay costs

Orders

  • Application dismissed
  • Injunction restraining the 1st Defendant from receiving payment under the Call refused