BWN v BWO: Interim Injunction to Restrain Call on Performance Bonds in Construction Dispute
In BWN v BWO, the High Court of Singapore, on 11 February 2019 and 12 April 2019, granted an ex parte application by BWN for an interim injunction to restrain BWO from calling on performance bonds in the context of a construction project dispute. The court, presided over by Ang Cheng Hock JC, found that BWN had demonstrated a strong prima facie case of unconscionability on BWO's part. The injunction was ordered to last until the arbitral tribunal could properly consider the issue. The underlying dispute involves a breach of contract claim and a counterclaim.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Interim injunction granted to restrain the respondent from calling on and/or receiving payment on performance bonds.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court granted an interim injunction to restrain BWO from calling on performance bonds issued by BWN's bank due to an ongoing construction dispute.
1.7 Decision Date
2. Parties and Outcomes
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Ang Cheng Hock | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Shankar s/o Angammah Sevasamy | K&L Gates Straits Law LLC |
| Benedict Tan Yixun | Essex LLC |
4. Facts
- Applicant is a construction company specializing in interior decoration.
- Respondent is a building and construction company appointed as main contractor for a hotel project.
- Applicant was engaged as a nominated sub-contractor under two sub-contracts.
- Sub-Contracts are governed by the Singapore Institute of Architects Conditions of Sub-Contract.
- Sub-Contracts required applicant to furnish performance bonds equal to 10% of the Sub-Contract sum.
- Disputes arose over extension of time for applicant to complete works.
- Applicant commenced arbitration proceedings against respondent on 25 April 2018.
- Respondent called on the full amount in the performance bonds on 4 February 2019.
5. Formal Citations
- BWN v BWO, Originating Summons No 177 of 2019, [2019] SGHC 94
6. Timeline
| Date | Event |
|---|---|
| Project commenced | |
| Original contract completion date | |
| Disputes arose between applicant and respondent | |
| Applicant's solicitors sent first letter to respondent regarding extension of time | |
| Arbitration proceedings commenced by applicant against respondent | |
| Parties filed all pleadings in arbitration | |
| Applicant filed application under s 211B(1) of the Companies Act | |
| Respondent called on the full amount in the performance bonds | |
| Court heard applicant and creditors on s 211B application and granted moratorium | |
| Applicant filed application for interim injunction | |
| Court granted interim injunction | |
| Respondent's solicitors requested further arguments |
7. Legal Issues
- Unconscionability in Calling on Performance Bonds
- Outcome: The court found a strong prima facie case of unconscionability, justifying the grant of an interim injunction.
- Category: Substantive
- Sub-Issues:
- Improper purpose
- Lack of clear evidence
- Uncertainty about entitlement
- Related Cases:
- [1995] 2 SLR(R) 262
- [1999] 3 SLR(R) 44
- [2011] 2 SLR 47
- [2012] 3 SLR 352
- [2016] 3 SLR 557
- Interpretation of Supplementary Conditions in Sub-Contracts
- Outcome: The court found that clause 25.1 of the Supplementary Conditions to the Sub-Contracts, which provided the contractual basis for the respondent's entitlement to call on the bonds, had not been satisfied.
- Category: Substantive
8. Remedies Sought
- Interim Injunction
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Construction Law
- Commercial Litigation
- Arbitration
- Performance Bonds
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Bocotra Construction Pte Ltd and others v Attorney-General | Court of Appeal | Yes | [1995] 2 SLR(R) 262 | Singapore | Cited for the principle that unconscionability, apart from fraud, is a distinct ground to restrain payment on a demand under a performance bond. |
| GHL Pte Ltd v Unitrack Building Construction Pte Ltd and another | High Court | Yes | [1999] 3 SLR(R) 44 | Singapore | Cited for the principle that unconscionability is a ground to restrain payment on a demand under a performance bond. |
| JBE Properties Pte Ltd v Gammon Pte Ltd | High Court | Yes | [2011] 2 SLR 47 | Singapore | Cited for the principle that unconscionability is a ground to restrain payment on a demand under a performance bond. |
| BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd | High Court | Yes | [2012] 3 SLR 352 | Singapore | Cited for the definition and scope of unconscionability in the context of performance bonds, encompassing abuse, unfairness, or dishonesty. |
| Arab Banking Corp (B.S.C) v Boustead Singapore Ltd | Court of Appeal | Yes | [2016] 3 SLR 557 | Singapore | Cited for the principle that the unconscionability exception protects the account party from unfair demands by the beneficiary to have the secured sum in hand before a final determination of entitlement. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Arbitration Act (Cap 10, 2002 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Performance Bond
- Unconscionability
- Interim Injunction
- Sub-Contract
- Arbitration
- SIA Conditions
- Supplementary Conditions
- Extension of Time
- Moratorium
15.2 Keywords
- Performance bond
- Interim injunction
- Construction dispute
- Unconscionability
- Arbitration
17. Areas of Law
16. Subjects
- Building and Construction Law
- Contract Law
- Arbitration
- Injunctions