Leighton Contractors v J-Power Systems: Performance Bond Call Dispute
Leighton Contractors (Singapore) Pte Ltd (“LCS”) applied to the High Court of Singapore to restrain J-Power Systems Corporation (“JPS”) and The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) from receiving and making payment pursuant to a performance bond. JPS had subcontracted part of its works to LCS, and pursuant to this sub-contract, LCS provided a performance bond. JPS made a call on the performance bond, and LCS sought to restrain this call, alleging unconscionability. The court, presided over by Choo Han Teck J, dismissed LCS's application, finding no strong prima facie evidence of unconscionability on the part of JPS.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Leighton Contractors sought to restrain J-Power Systems from calling on a performance bond. The court dismissed the application, finding no strong evidence of unconscionability.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Leighton Contractors (Singapore) Pte Ltd | Applicant | Corporation | Application dismissed | Lost | Andrew Ang |
| J-Power Systems Corp | Respondent | Corporation | Application dismissed | Won | Joseph Chai |
| The Hongkong and Shanghai Banking Corporation Limited | Respondent | Corporation | Application dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Choo Han Teck | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Andrew Ang | PK Wong & Associates LLC |
| Joseph Chai | Lee Chai & Boon |
4. Facts
- JPS was awarded a contract to install undersea pipelines.
- JPS subcontracted part of the works to LCS.
- LCS provided a performance bond equivalent to 5% of the sub-contract price.
- The performance bond was an unconditional or “on-demand” one.
- JPS made a call on the performance bond.
- LCS contended that JPS’s conduct as a whole was unconscionable.
- LCS argued that JPS had to apply for adjudication on three separate occasions for payment.
5. Formal Citations
- Leighton Contractors (Singapore) Pte Ltd v J-Power Systems Corp and Another, OS 1125/2008, [2009] SGHC 7
6. Timeline
| Date | Event |
|---|---|
| JPS made a call on the Performance Bond | |
| Judgment reserved | |
| Application dismissed |
7. Legal Issues
- Unconscionability
- Outcome: The court found no strong prima facie evidence of unconscionability on the part of JPS.
- Category: Substantive
- Related Cases:
- [1999] 4 SLR 604
- [2000] 1 SLR 657
- Restraint of Performance Bond Call
- Outcome: The court dismissed the application to restrain the call on the performance bond.
- Category: Procedural
8. Remedies Sought
- Injunction to restrain payment under the performance bond
9. Cause of Actions
- Restraint of Performance Bond Call
10. Practice Areas
- Commercial Litigation
- Construction Law
11. Industries
- Construction
- Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| GHL Pte Ltd v Unitrack Building Construction Pte Ltd | Court of Appeal | Yes | [1999] 4 SLR 604 | Singapore | Cited for the principle that unconscionability is a sufficient ground to restrain a call on a performance bond. |
| Dauphin Offshore Engineering & Trading Pte Ltd v The Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan | Unknown | Yes | [2000] 1 SLR 657 | Singapore | Cited for the definition of unconscionable conduct. |
| Bocotra | Unknown | Yes | [1995] 2 SLR 733 | Singapore | Cited for the standard of proof required for allegations of unconscionability. |
| Eltraco International v CDH Development | Unknown | Yes | [2000] 4 SLR 290 | Singapore | Cited for the principle that courts should guard against unnecessarily interfering with contractual arrangements. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Performance bond
- Unconscionability
- On-demand bond
- Adjudication
- Sub-contract
- Liquidated damages
15.2 Keywords
- Performance bond
- Unconscionability
- Construction
- Singapore
- Injunction
16. Subjects
- Construction Dispute
- Banking
- Contract Law
17. Areas of Law
- Banking
- Civil Procedure
- Contract Law
- Construction Law
- Performance Bonds