Dauphin Offshore v HRH Sheikh Sultan: Unconscionability & Performance Bonds
In Dauphin Offshore Engineering & Trading Pte Ltd v The Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan, the Singapore Court of Appeal heard an appeal against the High Court's decision to discharge an ex parte interim injunction restraining HRH from demanding payment under a bank guarantee. Dauphin sought the injunction, alleging unconscionability. The Court of Appeal dismissed the appeal, finding that Dauphin had failed to establish a strong prima facie case of unconscionability to justify restraining the call on the performance guarantee.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal case regarding an injunction to restrain a call on a performance bond, addressing unconscionability and full disclosure.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Dauphin Offshore Engineering & Trading Pte Ltd | Appellant | Corporation | Appeal dismissed | Lost | Asokan Govindarajalu, Henry Heng |
| The Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan | Respondent | Corporation | Appeal dismissed | Won | P Jeya Putra, Derek Tan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Justice of the Court of Appeal | Yes |
| L P Thean | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Asokan Govindarajalu | Rodyk & Davidson |
| Henry Heng | Rodyk & Davidson |
| P Jeya Putra | Joseph Tan Jude Benny |
| Derek Tan | Joseph Tan Jude Benny |
4. Facts
- Dauphin contracted with HRH to build a luxury motor yacht for US$5,850,000.
- HRH was to make payments in installments, secured by an irrevocable letter of credit.
- Dauphin was required to provide a bank guarantee for US$877,500 for repayment of the first installment.
- HRH paid the first installment and opened the letter of credit.
- Dauphin provided a performance guarantee issued by the Bank of America.
- HRH terminated the contract, citing 19 instances of breach of contract by Dauphin.
- HRH made a demand/call on the guarantee.
5. Formal Citations
- Dauphin Offshore Engineering & Trading Pte Ltd v The Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan, CA 62/1999, [2000] SGCA 4
6. Timeline
| Date | Event |
|---|---|
| Contract signed for Dauphin to build a yacht for HRH. | |
| Keel of the yacht was laid. | |
| Dauphin gave fax notice to HRH that the keel of the yacht had been laid. | |
| HRH acknowledged receipt of the notice. | |
| Second installment was due. | |
| Meeting between HRH and Dauphin representatives. | |
| HRH gave Dauphin notice of termination of the contract. | |
| Dauphin informed by Bank of America that HRH had made a demand/call on the guarantee; Dauphin took out a writ and made an ex parte application for an injunction. | |
| HRH applied to have the ex parte interim injunction discharged. | |
| High Court discharged the injunction and ordered an inquiry as to damages. | |
| Decision in GHL Pte Ltd v Unitrack Building Construction Pte Ltd & Anor [1999] 4 SLR 604. | |
| Court of Appeal dismissed the appeal. |
7. Legal Issues
- Unconscionability
- Outcome: The court held that while unconscionability is a separate ground for granting injunctive relief in performance guarantee cases, the standard of proof requires a strong prima facie case, which was not met in this instance.
- Category: Substantive
- Sub-Issues:
- Lack of bona fides
- Related Cases:
- [1995] 2 SLR 733
- [1990] SLR 1116
- [1993] 3 SLR 350
- [1999] 2 SLR 368
- [1999] 4 SLR 604
- Full and Frank Disclosure
- Outcome: The court found that Dauphin had failed to make full and frank disclosure in its ex parte application, but the court still has the discretion to continue the injunction if the justice of the case requires.
- Category: Procedural
- Related Cases:
- [1988] 3 All ER 197
- [1988] 3 All ER 188
8. Remedies Sought
- Injunctive Relief
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Injunctions
- Banking
- Construction Law
11. Industries
- Construction
- Shipbuilding
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Bocotra Construction Pte Ltd v A-G (No 2) | Court of Appeal | Yes | [1995] 2 SLR 733 | Singapore | Cited for the principle that fraud or unconscionability is the sole consideration in applications for injunctions restraining payment or calls on bonds. |
| Royal Design Studio v Chang Development | High Court | Yes | [1990] SLR 1116 | Singapore | Cited as a conscious departure from the principle that fraud was the only exception when it held that all the relevant facts of the case must be considered. |
| Kvaerner Singapore Ltd v UDL Shipbuilding (Singapore) Pte Ltd | High Court | Yes | [1993] 3 SLR 350 | Singapore | Cited for the opinion that the fraud exception is not an immutable principle of universal application. |
| New Civilbuild Pte Ltd v Guobena Sdn Bhd & Anor | High Court | Yes | [1999] 1 SLR 374 | Singapore | Cited as a case where the judge thought that the Court of Appeal in Bocotra did not intend to create `unconscionability` as a separate ground of relief. |
| Min Thai Holdings Pte Ltd v Sunlabel Pte Ltd & Anor | High Court | Yes | [1999] 2 SLR 368 | Singapore | Cited as a case where the High Court held that `unconscionability` was a separate ground, apart from `fraud`, for restraining calls on performance guarantees. |
| GHL Pte Ltd v Unitrack Building Construction Pte Ltd & Anor | Court of Appeal | Yes | [1999] 4 SLR 604 | Singapore | Cited for reaffirming that in Singapore `unconscionability` has been accepted as and is a separate ground in itself for granting injunctive relief in so far as a performance guarantee is concerned. |
| Dormeuil Freres SA v Nicolian International (Textiles) Ltd | N/A | Yes | [1988] 3 All ER 197 | N/A | Cited for the principle that the court has the discretion to continue or grant a fresh injunction if the justice of the case so requires, even after a failure to make full and frank disclosures. |
| Brink`s-Mat Ltd v Elcombe & Ors | N/A | Yes | [1988] 3 All ER 188 | N/A | Cited for the principle that the court has the discretion to continue or grant a fresh injunction if the justice of the case so requires, even after a failure to make full and frank disclosures. |
| Potton Homes Ltd v Coleman Contractors Ltd | N/A | Yes | [1984] 28 Build LR 19 | N/A | Cited as the genesis for the line of local cases applying the concept of unconscionability as a separate ground to restrain a call on a performance bond. |
| Chartered Electronics Industries v Development Bank of Singapore Ltd | High Court | Yes | [1999] 4 SLR 655 | Singapore | Cited for the strong prima facie standard required to prove unconscionability. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Performance bond
- Guarantee
- Unconscionability
- Full and frank disclosure
- Ex parte injunction
- Irrevocable letter of credit
- Repudiatory breach
- Stability calculations
- Keel laying
15.2 Keywords
- Performance bond
- Unconscionability
- Injunction
- Singapore
- Contract
- Guarantee
16. Subjects
- Contract Law
- Banking Law
- Civil Procedure
- Construction Dispute
- Performance Bonds
- Injunctions
17. Areas of Law
- Banking Law
- Civil Procedure
- Contract Law
- Injunctions
- Performance Bonds