Join-Aim v BS Mount Sophia: Injunction against Performance Bond Call Due to Unconscionability

Join-Aim Pte Ltd, the plaintiff and main contractor, sought an injunction against BS Mount Sophia Pte Ltd, the first defendant and employer, to prevent them from calling on a Performance Bond. The High Court of Singapore, presided over by Justice Tay Yong Kwang, granted the interim injunction on 9 January 2012, finding that BS Mount Sophia's conduct was unconscionable due to the unexplained backdating of the project's completion date, which significantly increased liquidated damages. The court ordered the injunction to stand pending arbitration between the parties regarding disputes over extensions of time and payment.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Interim injunction granted to the plaintiff, restraining the first defendant from calling on the performance bond, pending arbitration.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Join-Aim sought an injunction to restrain BS Mount Sophia from calling on a performance bond. The court granted the injunction, citing unconscionable conduct by BS Mount Sophia.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Second defendantDefendantIndividualNeutralNeutral
BS Mount Sophia Pte LtdDefendantCorporationInjunction Granted AgainstLost
Join-Aim Pte LtdPlaintiffCorporationInterim Injunction GrantedWon

3. Judges

Judge NameTitleDelivered Judgment
Tay Yong KwangJudgeYes

4. Counsels

Counsel NameOrganization
Teh Kee Wee LawrenceRodyk & Davidson LLP
Melvin See Hsien HueiRodyk & Davidson LLP
Tan Chee MengWongPartnership LLP
Quek Kian TeckWongPartnership LLP

4. Facts

  1. Join-Aim was the main contractor for a building project.
  2. BS Mount Sophia was the employer in the building project.
  3. A Performance Bond was issued by the 2nd defendant in favor of the 1st defendant.
  4. The architect issued a Completion Certificate certifying works were completed on 27 August 2010.
  5. The architect sent an email setting out the practical completion date as 19 July 2010.
  6. The completion date was later changed to 4 April 2010, resulting in increased liquidated damages.
  7. The plaintiff commenced arbitration proceedings against the 1st defendant.

5. Formal Citations

  1. Join-Aim Pte Ltd v BS Mount Sophia Pte Ltd and another, OS 643 of 2011, [2012] SGHC 3

6. Timeline

DateEvent
Contract signed for the erection of a 5-storey residential development.
Works under the Contract were certified completed.
Architect issued the Completion Certificate.
Architect sent the Completion Certificate to the parties by fax.
Architect informed the parties by letter of the Completion Date of 27 August 2010.
Plaintiff submitted Progress Claim No. 30 (Revision 4).
Plaintiff submitted its request for an extension of time of 298 days.
Progress Claim No. 30 (Revision 4) was resubmitted by the plaintiff to the Architect and the 1st defendant.
Architect recommended that an extension of time of 24 days be granted to the plaintiff.
Architect sent the plaintiff a Delay Certificate dated 4 March 2011.
Plaintiff commenced arbitration proceedings against the 1st defendant.
1st defendant made a demand for the amount of S$360,084.62 under the Performance Bond.
Plaintiff obtained an interim injunction restraining the 1st defendant from calling on the Performance Bond.
High Court decided that the interim injunction granted earlier should stand, pending arbitration.
Appeal to this decision was dismissed by the Court of Appeal.

7. Legal Issues

  1. Unconscionability
    • Outcome: The court found that the first defendant's conduct was unconscionable due to the unexplained backdating of the project's completion date, which significantly increased liquidated damages.
    • Category: Substantive
    • Related Cases:
      • [2011] 2 SLR 47
      • [1995] 2 SLR(R) 262
      • [1999] 3 SLR(R) 44
      • [2011] 1 SLR 449
  2. Call on Performance Bond
    • Outcome: The court restrained the call on the performance bond due to unconscionable conduct.
    • Category: Substantive
    • Related Cases:
      • [2011] 2 SLR 47
      • [1995] 2 SLR(R) 262
      • [1999] 3 SLR(R) 44
      • [2011] 1 SLR 449

8. Remedies Sought

  1. Injunction

9. Cause of Actions

  • Restraint of Call on Performance Bond

10. Practice Areas

  • Construction Litigation
  • Commercial Litigation
  • Arbitration

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
JBE Properties Pte Ltd v Gammon Pte LtdCourt of AppealYes[2011] 2 SLR 47SingaporeCited for the principle that unconscionability is a separate and independent ground for the court to grant an interim injunction restraining a beneficiary from making a call on a performance bond.
Bocotra Construction Pte Ltd v AGN/AYes[1995] 2 SLR(R) 262SingaporeCited as a case establishing unconscionability as a ground for restraining a call on a performance bond.
GHL Pte Ltd v Unitrack Building Construction Pte LtdN/AYes[1999] 3 SLR(R) 44SingaporeCited as a case establishing unconscionability as a ground for restraining a call on a performance bond.
Astrata (Singapore) Pte Ltd v Tridex Technologies Pte LtdN/AYes[2011] 1 SLR 449SingaporeCited for the principles distilled from leading cases on the law on applications to restrain calls on performance bonds.
Eltraco International Pte Ltd v CGH Development Pte LtdN/AYes[2000] 3 SLR(R) 198SingaporeCited as a warning that the courts should guard against unnecessarily interfering with contractual arrangements freely entered into by the parties.
Anwar Siraj and anor v Teo Hee Lai Building Construction Pte LtdN/AYes[2003] 1 SLR(R) 394SingaporeCited as a warning that the courts should guard against unnecessarily interfering with contractual arrangements freely entered into by the parties.

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
  • Injunction
  • Liquidated Damages
  • Completion Certificate
  • Extension of Time
  • Arbitration

15.2 Keywords

  • Performance Bond
  • Injunction
  • Construction
  • Unconscionability
  • Arbitration

17. Areas of Law

Area NameRelevance Score
Unconscionability95
Performance Bond90
Construction Law80
Injunctions75
Contract Law60
Breach of Contract50
Arbitration40

16. Subjects

  • Construction Dispute
  • Contract Law
  • Performance Bonds
  • Injunctions
  • Arbitration