Anwar Siraj v Teo Hee Lai: Unconscionability in Performance Bond Call

In Anwar Siraj & Another v Teo Hee Lai Building Construction Pte Ltd, the Singapore Court of Appeal, comprising Chao Hick Tin JA and Tan Lee Meng J, heard an appeal regarding an injunction that restrained Mr. Anwar Siraj and Madam Norma Khoo Cheng Neo from demanding payment under a performance bond issued by Tai Ping Insurance. The bond was related to a building contract with Teo Hee Lai Building Construction Pte Ltd (THL) for the construction of a house. The court allowed the appeal, finding that THL had not established a case of unconscionability on the part of the appellants, and set aside the injunction.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Court of Appeal allowed an appeal, setting aside an injunction that restrained Anwar Siraj from demanding payment under a performance bond. The court found no unconscionable conduct.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Anwar SirajAppellantIndividualAppeal AllowedWon
Teo Hee Lai Building Construction Pte LtdRespondentCorporationAppeal DismissedLost
Norma Khoo Cheng NeoAppellantIndividualAppeal AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Chao Hick TinJudge of AppealYes
Tan Lee MengJudgeNo

4. Counsels

Counsel NameOrganization
G RamanG Raman & Partners
V SuriamurthiG Raman & Partners
S ThulasidasLing Das & Partners

4. Facts

  1. Appellants engaged the respondent to construct a house for $1,200,000.
  2. The agreed completion date was 9 January 2001, but the house was handed over on 5 April 2001.
  3. A performance bond of $120,000 was issued by Tai Ping Insurance in favor of the appellants.
  4. The appellants made a demand under the performance bond due to alleged unrectified defects.
  5. The respondent sought an interim injunction to restrain the appellants from obtaining payment under the bond.
  6. The judicial commissioner restored the interim injunction based on alleged unconscionability.
  7. The appellants appealed to the Court of Appeal.

5. Formal Citations

  1. Anwar Siraj & Another v Teo Hee Lai Building Construction Pte Ltd, CA No 53 of 2002, [2002] SGCA 51

6. Timeline

DateEvent
Contract signed for demolition and construction of a new house.
Agreed date for completion of the new house.
Tai Ping Insurance furnished a performance bond for $120,000.
House handed over to the appellants.
THL gave notice of arbitration.
Appellants made a demand under the performance bond for $120,000.
Ex-parte interim injunction granted by the District Court was set aside.
Court of Appeal allowed the appeal.

7. Legal Issues

  1. Unconscionability
    • Outcome: The court found that the respondent had not established a case of unconscionability on the part of the appellants.
    • Category: Substantive
    • Sub-Issues:
      • Denial of access for rectification work
      • Sufficiency of security for claims
    • Related Cases:
      • [1995] 2 SLR 523
      • [2000] 4 SLR 290
      • [2000] 1 SLR 657

8. Remedies Sought

  1. Payment under performance bond
  2. Injunction

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Construction Law

11. Industries

  • Construction
  • Banking
  • Insurance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Bocotra Construction Pte Ltd v Attorney-GeneralCourt of AppealYes[1995] 2 SLR 523SingaporeCited for the principle that fraud and unconscionability are grounds for restraining a beneficiary of a performance bond from demanding payment.
Eltraco International Pte Ltd v CGH Development Pte LtdCourt of AppealYes[2000] 4 SLR 290SingaporeCited to define unconscionable conduct in the context of performance bonds, clarifying that unfairness alone does not necessarily constitute unconscionability.
Dauphin Offshore Engineering & Trading Pte Ltd v The Private Office of HRH Sheikh Sultan Khalifa bin Zayed Al NahyanCourt of AppealYes[2000] 1 SLR 657SingaporeCited for the standard of proof required to establish unconscionability when calling on a performance bond, requiring a strong prima facie case.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Performance bond
  • Unconscionability
  • Interim injunction
  • Building contract
  • Rectification work
  • Liquidated damages

15.2 Keywords

  • Performance bond
  • Unconscionability
  • Construction contract
  • Injunction
  • Singapore
  • Court of Appeal

17. Areas of Law

Area NameRelevance Score
Performance Bond95
Unconscionability90
Contract Law70
Breach of Contract60
Construction Law50
Civil Procedure30

16. Subjects

  • Construction Dispute
  • Contract Law
  • Banking