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When Applicant/Contractor failed to perform on time, it sent Beneficiary/Owner a form for partial handover of the premises, but Beneficiary/Ownerdeclined toacceptsince it had not received all the keys to the premises. Pursuant to the contract, Beneficiary/Owner issued a written Noticeto Proceed to Applicant/Contractor, and included a list of work still outstanding.Applicant/Contractordid not take any further steps to complete the work, and Beneficiary/Owner claimedthat SGD 2.67 millionwas due in liquidated damages. Beneficiary/Owneralso issued a Notice of Termination based on Applicant/Contractor’s failure to act on the Notice to Proceed within 28 days, as required by the contract.

Applicant/Contractorthen suedBeneficiary/Owner “asserting that it was entitled to a balance sum of[SGD]3,298,712.08 under the Contract,[SGD]1,527,500 in retentionmonies to be released to [Applicant/Contractor]upon expiry of the Project’s defects liability period, and a potential sum of [SGD]4,249,030.36 in light of variations made to the Project” byBeneficiary/Owner.

When Beneficiary/Owner also drew on the performance bond,Applicant/Contractorsued to enjoinBeneficiary/Owner from receiving payment on the performance bond and Issuer from honoring any demand made on the bond. After an ex parte hearing, the court granted an injunction. Beneficiary/Ownermoved to discharge the injunction and the High Court of Singapore granted Beneficiary/Owner motion. Applicant/Contractor appealed the decision to discharge the injunction. The High Court of Singapore, Hoo Sheau Peng, JC., upheld her prior decision to discharge the injunction.

Applicant/Contractor claimed that Beneficiary/Owner hadacted unconscionably by failing to notify Applicant/Contractor of the necessary repairs, refusing to issue the handing-over certificate, attempting to coerce Applicant/Contractor to sign documents, improperly certifyingits claims, and prematurely calling on the performance bond.

The Judge stated that an application for an ex parte injunction when the applicant fails to make full and frank disclosure of all material facts and the Court can be dischargedfor misrepresentation.In this case, the Judge found Applicant/Contractor failed to disclose to the Court all material facts since Applicant/Contractor claimed to have finished the project, but the Judge found that there was evidence that showed there was still work outstanding, and that Applicant/Contractor failed to include the Notice to Proceed and the Notice of Termination in its affidavit. Applicant/Contractor also claimed that it had handed over all the keys to the premises, which was shown to be false. The Judge also concluded that Applicant/Contractor did not disclose information about the scope of the project concerning two variations that led to negative claim certifications. The two variations were proposed by Applicant/Contractor, and it was clear that Applicant/Contractor knew they would lead to negative certifications.

The Judge also found that Beneficiary/Owner had not acted unconscionably. Applicant/Contractor claimed that it was premature and unconscionable to call on the performance bond without giving Applicant/Contractor the opportunity to pay for any repairs Beneficiary/Owner had commenced on its own. However, Beneficiary/Owner had stated that under the contract, it was entitled to call on the performance bond to recover liquidated damages, and not only to pay for repairs. The Judge found that these issues were merely a genuine dispute between the parties and not unconscionable. Applicant/Contractor also claimed that it was unconscionable to refuse the handing-over certificate. The Judge found Applicant/Contractor had in fact failed to submit certain documents evidencing completion and that refusing to sign the handing-over certificate was not a “delaying tactic” by Beneficiary/Owner to avoid payments under the contract.

The Judge found that it was not necessary to know the truth or falsity of either the letter for the contract sum reduction or the advanced payment letter, as it was clear that this was a dispute between the parties, and not an issue of unconscionability. Regarding Applicant/Contractor’s contention that the payment claim certifications were “absurd,” the Judge determined that the variations in the project that led to the negative certifications were proposed by Applicant/Contractor, and it was clear that Applicant/Contractor knew they would lead to negative certifications. The Judge found Applicant/Contractor had not submitted information about the scope of the contract to the surveyor certifying Applicant/Contractor’s progress, and therefore there was no evidence of collusion. Finally, the Judge established the very act of calling on the performance bond was not unconscionable due to the significant delay in the project and the total loss and damages available.

TEXT: As reflected in the opinion, the text of the “on demand performance bond” is provided: “this was an unconditional, on-demand bond, ie, that FCI agreed to immediately and unconditionally pay any sum demanded by [Beneficiary/Owner] in writing up to [SGD] 6.16 million without requiring any proof of breach or [Beneficiary/Owner’s] entitlement to such a sum. Clause 4 stated that the performance bond was to remain in force until 24 January 2017 unless cancelled, renewed or extended.”

[ACA]

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