Liang Huat Aluminium v Hi-Tek Construction: Performance Bond Call Dispute
In a dispute between Liang Huat Aluminium Industries Pte Ltd and Hi-Tek Construction Pte Ltd, the High Court of Singapore, on 8 November 2001, dismissed Liang Huat's application to restrain Hi-Tek from calling on a performance bond. Liang Huat sought the injunction, arguing that Hi-Tek's call on the bond was unconscionable. The court, however, found that Liang Huat failed to establish a strong prima facie case of unconscionability, leading to the dismissal of the application and the discharge of the interim injunction.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed and interim injunction order discharged
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court dismissed Liang Huat's application to restrain Hi-Tek from calling on a performance bond, finding no unconscionability.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Liang Huat Aluminium Industries Pte Ltd | Plaintiff, Applicant | Corporation | Application dismissed | Lost | Goh Phai Cheng, Cheah Kok Lim |
| Hi-Tek Construction Pte Ltd | Defendant | Corporation | Judgment for Defendant | Won | Choy Chee Yean, Leo Tan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Goh Phai Cheng | Ang & Partners |
| Cheah Kok Lim | Ang & Partners |
| Choy Chee Yean | Rajah & Tann |
| Leo Tan | Rajah & Tann |
4. Facts
- Hi-Tek was the main contractor for an office extension at Amara Hotel and Shopping Centre.
- Liang Huat was the nominated sub-contractor for the design, supply, and installation of aluminium cladding, windows, and glazing.
- Liang Huat procured a Performance Bond for $538,000 in favour of Hi-Tek.
- Hi-Tek made a call on the Bond on 20 September 2001.
- Liang Huat commenced a Writ action on 25 July 2001 and applied for summary judgment on 17 September 2001 for payment on interim certificates.
- A completion certificate for the main contract had been issued.
5. Formal Citations
- Liang Huat Aluminium Industries Pte Ltd v Hi-Tek Construction Pte Ltd, OS 601411/2001, SIC 602171/2001, [2001] SGHC 334
6. Timeline
| Date | Event |
|---|---|
| Performance Bond issued by The Nanyang Insurance Company Limited in favour of Hi-Tek | |
| Delay certificate issued in respect of Phase 4 of the main contract | |
| Completion certificate for the main contract issued | |
| Liang Huat submitted Application for Payment No 35 | |
| Quantity Surveyor's valuation as at this date | |
| Interim Certificate No 30 for the main contract issued | |
| Liang Huat commenced a Writ action | |
| Sub-contract delay certificate issued to Liang Huat in respect of Phase 4 | |
| Interim certificate No 31 issued | |
| Certificate of Payment of Main Contractor issued by the Architects | |
| Liang Huat applied for summary judgment | |
| Hi-Tek made a call on the Bond | |
| Interim injunction order granted pending further arguments | |
| Arguments presented | |
| Application dismissed and interim injunction order discharged | |
| Decision Date |
7. Legal Issues
- Unconscionability
- Outcome: The court found that Liang Huat had failed to establish a strong prima facie case of unconscionability.
- Category: Substantive
- Call on Performance Bond
- Outcome: The court allowed Hi-Tek to call on the performance bond.
- Category: Substantive
8. Remedies Sought
- Declaration that Hi-Tek shall not be entitled to call on or demand payment under the Bond
- Injunction to restrain Hi-Tek from calling or demanding payment under the Bond
9. Cause of Actions
- Injunction to restrain calling on performance bond
10. Practice Areas
- Construction Litigation
- Commercial Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Dauphin case | N/A | Yes | [2000] 1 SLR 657 | Singapore | Cited for the legal principle that a beneficiary of a performance bond may be restrained from calling for payment if it would be unconscionable to do so, and that the applicant seeking such relief must establish a strong prima facie case of 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
- On-demand bond
- Unconscionability
- Interim Certificates
- Retention Monies
- Sub-Contract Works
- Delay Damages
- Completion Certificate
15.2 Keywords
- Performance Bond
- Construction
- Injunction
- Unconscionability
- Singapore
- High Court
16. Subjects
- Construction Dispute
- Performance Bonds
- Contract Law
17. Areas of Law
- Construction Law
- Contract Law
- Injunctions
- Performance Bonds