Mcconnell Dowell v Sembcorp: Interim Injunction for Performance Bond Call

Mcconnell Dowell Constructors (Aust) Pty Ltd (‘McConnell’) sought an interlocutory injunction against Sembcorp Engineers and Constructors Pte Ltd (‘SE’) in the High Court of Singapore, to restrain SE from calling on a bank guarantee. The bank guarantee was issued in connection with an exclusive sub-contract pre-bid agreement between McConnell and SE for a project in India. McConnell argued that SE's call on the guarantee was unconscionable. Woo Bih Li JC dismissed McConnell’s application with costs, finding that McConnell had not established a strong prima facie case of unconscionability.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Mcconnell Dowell sought to restrain Sembcorp from calling on a bank guarantee. The court dismissed the application, finding no unconscionability.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Mcconnell Dowell Constructors (Aust) Pty LtdPlaintiffCorporationApplication dismissed with costsLostKenny Chooi, Kelvin Fong
Sembcorp Engineers and Constructors Pte Ltd (formerly known as SembCorp Construction Pte Ltd)DefendantCorporationApplication dismissedWonQuentin Loh SC, Leonard Yeoh

3. Judges

Judge NameTitleDelivered Judgment
Woo Bih LiJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Kenny ChooiYeo-Leong & Peh
Kelvin FongYeo-Leong & Peh
Quentin Loh SCRajah & Tann
Leonard YeohRajah & Tann

4. Facts

  1. McConnell sought to restrain Sembcorp from calling on a bank guarantee.
  2. The bank guarantee was issued in connection with an exclusive sub-contract pre-bid agreement.
  3. The agreement related to a project in Manappad, India.
  4. Ficon was supposed to obtain funding for the project but failed to do so.
  5. McConnell argued that Sembcorp's call on the guarantee was unconscionable.
  6. CBI, another intended sub-contractor, paid the amount due under its similar agreement.
  7. The bank guarantee stated that the bank undertakes unconditionally to pay the principal on written demand.

5. Formal Citations

  1. Mcconnell Dowell Constructors (Aust) Pty Ltd v Sembcorp Engineers and Constructors Pte Ltd (formerly known as SembCorp Construction Pte Ltd), Suit 379/2001, SIC 753/2001, [2002] SGHC 8

6. Timeline

DateEvent
Thaburaj Mohan of IGL introduced to Ho Kiam Kheong of SE.
CB & I Eastern Anstalt met with SE to seek appointment as sub-contractor.
McConnell met with SE to seek appointment as sub-contractor.
Mr. Mohan met with representatives of CBI and McConnell and Mr Ho of SE.
SE obtained a letter of confirmation from IGL that it would be awarded the main contract.
SE placed US$125m in an interest-bearing fixed deposit account with Societe Generale in Singapore.
CBI and SE signed an Exclusive Sub-Contract Pre-Bid Agreement.
IGL's letter stated that SE was awarded the main contract.
McConnell and SE signed an Exclusive Sub-Contract Pre-Bid Agreement.
Bank guarantee issued by Australia and New Zealand Banking Group Limited.
Ficon unable to obtain US$158m.
Application for interlocutory injunction filed.
First substantive hearing of the interlocutory injunction.
Judgment Decision Date

7. Legal Issues

  1. Unconscionability
    • Outcome: The court found that McConnell had not established a strong prima facie case of unconscionability.
    • Category: Substantive
    • Related Cases:
      • [1995] 2 SLR 733
      • [1995] 3 SLR 631
      • [2000] 1 SLR 657
      • [2000] 4 SLR 290
  2. Interim Injunction
    • Outcome: The court dismissed the application for an interim injunction.
    • Category: Procedural
  3. Performance Bond
    • Outcome: The court held that the right to call on the bank guarantee depends on the terms of the guarantee itself.
    • Category: Substantive

8. Remedies Sought

  1. Interlocutory injunction

9. Cause of Actions

  • Injunction to restrain call on bank guarantee

10. Practice Areas

  • Commercial Litigation
  • Construction Law
  • Performance Bonds

11. Industries

  • Construction
  • Banking

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Bocotra Construction Pte Ltd v A-G (No 2)Court of AppealYes[1995] 2 SLR 733SingaporeCited for the principle that a higher degree of strictness applies when establishing unconscionability in interlocutory proceedings for restraining a call on a guarantee.
Star-Trans Far East Pte Ltd v Norske-Tech Ltd & OrsHigh CourtYes[1995] 3 SLR 631SingaporeCited for the principle that an injunction to restrain a call on a bond will only be granted in exceptional circumstances and with compelling evidence.
Dauphin Offshore Engineering & Trading Pte Ltd v The Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al NahyanCourt of AppealYes[2000] 1 SLR 657SingaporeCited for the standard of proof required to demonstrate unconscionability, requiring a strong prima facie case.
Eltraco International Pte Ltd v CGH Development Pte LtdCourt of AppealYes[2000] 4 SLR 290SingaporeCited to clarify the concept of 'unconscionability' and to emphasize that unfairness alone does not necessarily constitute unconscionability.

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

  • Bank guarantee
  • Performance bond
  • Unconscionability
  • Interlocutory injunction
  • Exclusive sub-contract pre-bid agreement
  • Funding agreement
  • Payment schedule

15.2 Keywords

  • Bank guarantee
  • Injunction
  • Construction
  • Singapore
  • Contract
  • Performance bond
  • Unconscionability

16. Subjects

  • Banking
  • Contract Law
  • Construction Law
  • Civil Procedure

17. Areas of Law

  • Banking Law
  • Contract Law
  • Injunctions
  • Construction Law