BS Mount Sophia v Join-Aim: Interim Injunction & Unconscionable Call on Performance Bond

In BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd, the Singapore Court of Appeal dismissed an appeal against the High Court's decision to grant an interim injunction restraining BS Mount Sophia from calling on a performance bond provided by Join-Aim, pending arbitration. The court, presided over by Chao Hick Tin JA, Andrew Phang Boon Leong JA, and V K Rajah JA, found a strong prima facie case of unconscionability based on the chronology of events and the conduct of BS Mount Sophia. The underlying dispute involved a construction contract and allegations of delay, with Join-Aim claiming the call on the bond was unconscionable.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Court of Appeal dismissed an appeal, upholding an interim injunction against BS Mount Sophia's call on Join-Aim's performance bond, finding a strong prima facie case of unconscionability.

1.7 Decision Date

8 May 2012

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
BS Mount Sophia Pte Ltd	Appellant	Corporation	Appeal Dismissed	Lost	Melvin See of Rodyk & Davidson LLP Daniel Tay of Rodyk & Davidson LLP Lawrence Teh of Rodyk & Davidson LLP
Join-Aim Pte Ltd	Respondent	Corporation	Injunction Upheld	Won	Tan Chee Meng of WongPartnership LLP Quek Kian Teck of WongPartnership LLP

3. Judges

Judge Name	Title	Delivered Judgment
Chao Hick Tin	Justice of the Court of Appeal	No
Andrew Phang Boon Leong	Justice of the Court of Appeal	Yes
V K Rajah	Justice of the Court of Appeal	No

4. Counsels

Counsel Name	Organization
Melvin See	Rodyk & Davidson LLP
Daniel Tay	Rodyk & Davidson LLP
Lawrence Teh	Rodyk & Davidson LLP
Tan Chee Meng	WongPartnership LLP
Quek Kian Teck	WongPartnership LLP

4. Facts

BS Mount Sophia (Appellant) engaged Join-Aim (Respondent) to construct a residential condominium.
Join-Aim provided a performance bond for $484,440 to secure its obligations under the contract.
The contract stipulated a completion date of 1 January 2010, subject to extensions granted by the Architect.
The Architect issued a Delay Certificate certifying a 93-day extension, setting the completion date at 4 April 2010.
Join-Aim disputed the completion date and requested a further extension to 27 August 2010, which was denied.
BS Mount Sophia called on the bond for $360,084.62, alleging delays and entitlement to liquidated damages.
Join-Aim sought an injunction, arguing the call was unconscionable due to disputed delays and outstanding payments.

5. Formal Citations

BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd, Civil Appeal No 143 of 2011, [2012] SGCA 28
Join-Aim Pte Ltd v BS Mount Sophia Pte Ltd and another, , [2012] SGHC 3

6. Timeline

Date	Event
2008-02-28	Building contract signed
2010-01-01	Contractual completion date
2010-07-19	Proposed practical completion date
2010-08-27	Architect certified works completed
2010-10-04	Architect issued email regarding completion certificate
2011-03-04	Architect issued Delay Certificate and Completion Certificate
2011-03-31	Join-Aim disputed completion date in letter to Architect
2011-05-16	Join-Aim submitted Progress Claim No 30 (Revision 4)
2011-05-24	Join-Aim requested extension of time
2011-06-06	Architect's Direction AD-38 issued
2011-06-21	Architect sent Architect’s Direction AD-40
2011-06-22	Architect denied extension of time request
2011-07-05	Join-Aim's lawyers opposed completion date
2011-07-07	Validity of Bond extended to 2012-02-26
2011-07-15	Join-Aim referred dispute to arbitration
2011-07-27	BS Mount Sophia called on the Bond
2011-08-02	Join-Aim applied for ex parte interim injunction
2011-10-11	Inter partes hearing; interim injunction granted
2012-02-26	Original expiry date of performance bond
2012-04-01	Arbitration scheduled for late April
2012-05-09	Court of Appeal dismissed the appeal

7. Legal Issues

Unconscionable Call on Performance Bond
- Outcome: The court found a strong prima facie case of unconscionability, justifying the continuance of the injunction restraining the call on the bond.
- Category: Substantive
- Sub-Issues:
  - Lack of bona fides
  - Abusive call on bond
  - Unfairness
- Related Cases:
  - [2011] 2 SLR 47
  - [1995] 2 SLR(R) 262
  - [1999] 3 SLR(R) 44
  - [2000] 1 SLR(R) 117
Interim Injunction
- Outcome: The court upheld the interim injunction restraining the Appellant’s call on the Bond pending arbitration.
- Category: Procedural

8. Remedies Sought

Injunctive Relief

9. Cause of Actions

Breach of Contract
Unconscionable Conduct

10. Practice Areas

Construction Litigation
Commercial Litigation
Arbitration
Performance Bonds

11. Industries

Construction
Real Estate

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
JBE Properties Pte Ltd v Gammon Pte Ltd	Court of Appeal	Yes	[2011] 2 SLR 47	Singapore	Cited for the principle of ascertaining the nature of a performance bond based on the true construction of the instrument and the substance of the parties’ rights and obligations.
Bocotra Construction Pte Ltd and others v Attorney-General	Court of Appeal	Yes	[1995] 2 SLR(R) 262	Singapore	Cited as establishing unconscionability as a ground for granting an injunction restraining a beneficiary from calling on a performance bond.
Chartered Electronics Industries Pte Ltd v Development Bank of Singapore	High Court	Yes	[1992] 2 SLR(R) 20	Singapore	Cited to distinguish performance bonds from letters of credit and to support the argument that a less stringent standard should be adopted for restraining a call on a performance bond.
IE Contractors Ltd v Lloyds Bank Plc and Rafidain Bank	Court of Appeal	Yes	[1990] 2 Lloyd's Rep 496	England and Wales	Cited to contrast the Singapore position on performance bonds with the English position.
Edward Owen Engineering	Court of Appeal	Yes	[1978] 1 QB 159	England and Wales	Cited to contrast the Singapore position on performance bonds with the English position.
GHL Pte Ltd v Unitrack Building Construction Pte Ltd	Court of Appeal	Yes	[1999] 3 SLR(R) 44	Singapore	Cited for the elements of unconscionability, including abuse, unfairness, and dishonesty.
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 elements of unconscionability, including abuse, unfairness, and dishonesty, and for the high threshold required to establish unconscionability.
Anwar Siraj and another v Teo Hee Lai Building Construction Pte Ltd	Court of Appeal	Yes	[2003] 1 SLR(R) 394	Singapore	Cited to emphasize that courts should be slow to upset the status quo and disrupt the allocation of risk agreed upon by the parties in a building contract.
Eltraco International Pte Ltd v CGH Development Pte Ltd	Court of Appeal	Yes	[2000] 3 SLR(R) 198	Singapore	Cited to emphasize that courts should be slow to upset the status quo and disrupt the allocation of risk agreed upon by the parties in a building contract and that the entire picture must be viewed when determining unconscionability.
Raymond Construction Pte Ltd v Low Yang Tong and another	High Court	Yes	[1996] SGHC 136	Singapore	Cited for the definition of unconscionability as involving unfairness, distinct from dishonesty or fraud.
Wellmix Organics (International) Pte Ltd v Lau Yu Man	High Court	Yes	[2006] 2 SLR(R) 117	Singapore	Cited to show that the general contract law doctrine of unconscionability is in a state of flux.
Sandar Aung v Parkway Hospitals Singapore Pte Ltd (trading as Mount Elizabeth Hospital) and another	Court of Appeal	Yes	[2007] 2 SLR(R) 891	Singapore	Cited to show that the general contract law doctrine of unconscionability is in a state of flux.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appeal	Court of Appeal	Yes	[2009] 2 SLR(R) 332	Singapore	Cited to show that the general contract law doctrine of unconscionability is in a state of flux.
Chua Chian Ya v Music & Movements (S) Pte Ltd (formerly trading as M & M Music Publishing)	Court of Appeal	Yes	[2010] 1 SLR 607	Singapore	Cited to show that the general contract law doctrine of unconscionability is in a state of flux.
Regina (Daly) v Secretary of State for the Home Department	House of Lords	Yes	[2001] 2 AC 532	United Kingdom	Cited for the principle that context is everything.

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
Interim Injunction
Liquidated Damages
Completion Certificate
Delay Certificate
Architect's Direction
Progress Claim
Extension of Time
Powergrid unit testing

15.2 Keywords

Performance bond
unconscionability
injunction
construction
arbitration
Singapore
contract law
building contract
liquidated damages

17. Areas of Law

Area Name	Relevance Score
Unconscionability	95
Performance Bond	90
Injunctions	85
Contract Law	70
Arbitration	60
Construction Law	50

16. Subjects

Construction Dispute
Contract Law
Arbitration
Injunctions
Performance Bonds