Gammon v JBE Properties: Injunction Against Performance Bond Call Due to Unconscionability
Gammon Pte Limited sought an injunction against JBE Properties Pte Ltd in the High Court of Singapore on April 28, 2010, to prevent JBE from calling on a performance bond issued by BNP Paribas Singapore. Gammon argued that JBE's claim was unconscionable due to grossly inflated costs for rectifying defects. The court, presided over by Chan Seng Onn J, found a strong prima facie case of unconscionability and granted the injunction, ordering Gammon to complete rectification works within six months and reserving costs.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Injunction granted to restrain the defendant from receiving payment from BNP Paribas Singapore on a performance bond until further order.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Gammon sought an injunction to restrain JBE Properties from calling on a performance bond. The court granted the injunction, citing unconscionability due to inflated rectification costs.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| SCDA Architects Pte Ltd | Other | Corporation | |||
| JBE Properties Pte Ltd | Defendant | Corporation | Injunction Granted Against | Lost | |
| Gammon Pte Limited | Plaintiff | Corporation | Injunction Granted | Won | |
| BNP Paribas Singapore Branch | Other | Corporation |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Seng Onn | Judge | Yes |
4. Counsels
4. Facts
- The defendant engaged the plaintiff to construct a building for $11,515,000.
- SCDA Architects Pte Ltd was engaged as the architect and superintending officer.
- Defects in the façade cladding were highlighted to the plaintiff.
- The defendant called on the performance bond to fund the completion of rectification work.
- The plaintiff alleged that the award to Weng Thai Construction was a sham.
- WTC's tender price of S$2.2 million to repair minor cladding defects was considered astronomical.
- The court found that there was gross exaggeration of the costs of rectification of outstanding defects.
5. Formal Citations
- Gammon Pte Limited v JBE Properties Pte Ltd, Suit No 235 of 2009 (Summons No 1224 of 2009), [2010] SGHC 130
6. Timeline
| Date | Event |
|---|---|
| Letter of award issued to the plaintiff to construct the Building. | |
| Contractual completion date. | |
| Extension of the completion date certified by SCDA. | |
| Defects with the façade cladding of the building were highlighted to the plaintiff through the issuance of superintendent officer instructions. | |
| Defects with the façade cladding of the building were highlighted to the plaintiff through the issuance of superintendent officer instructions. | |
| Plaintiff undertook to rectify defects in its letter. | |
| Completion certificate issued certifying completion on 16 January 2008. | |
| Defendant called on the performance bond. | |
| Defendant called on the performance bond. | |
| Lowest quotation from TLT dated for rectification of non-cladding defects. | |
| Award to Weng Thai Construction for rectification of Cladding Defects. | |
| Interim Certificate No 22/09 dated. | |
| Interim Certificate No 23/09 dated. | |
| Decision Date |
7. Legal Issues
- Unconscionability
- Outcome: The court found a strong prima facie case of unconscionability due to the grossly inflated costs for rectifying defects.
- Category: Substantive
- Related Cases:
- [2000] 1 SLR(R) 117
- [1996] SGHC 136
- [1999] 3 SLR(R) 44
8. Remedies Sought
- Injunctive Relief
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Construction Litigation
- Commercial Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Dauphin Offshore Engineering & Trading Pte Ltd v The Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan | Court of Appeal | Yes | [2000] 1 SLR(R) 117 | Singapore | Cited for the principle of unconscionability in relation to calls on performance bonds. |
| Raymond Construction Pte Ltd v Low Yang Tong & Anor | High Court | Yes | [1996] SGHC 136 | Singapore | Cited for the definition of 'unconscionability' involving unfairness and conduct lacking in good faith. |
| GHL Pte Ltd v Unitrack Building Construction Pte Ltd and another | Court of Appeal | Yes | [1999] 3 SLR(R) 44 | Singapore | Cited regarding abusive calls on performance bonds and the court's intervention in cases of fraud or 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
- Unconscionability
- Rectification Costs
- Defects
- Injunction
- Completion Certificate
- Superintendent Officer Instructions
- Cladding
15.2 Keywords
- performance bond
- unconscionability
- injunction
- construction
- defects
- rectification costs
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Performance Bond | 95 |
| Unconscionability | 90 |
| Contract Law | 60 |
| Breach of Contract | 50 |
| Injunctions | 40 |
| Construction Contract | 30 |
16. Subjects
- Construction Dispute
- Contract Law
- Performance Bonds