Ryobi-Kiso v Lum Chang: Injunction Against Performance Bond Call in Construction Contract Dispute
In Ryobi-Kiso (S) Pte Ltd v Lum Chang Building Contractors Pte Ltd, the High Court of Singapore heard an application by Ryobi-Kiso for an injunction to restrain Lum Chang from calling on a performance bond under a construction sub-contract. The court, presided over by Justice Quentin Loh, dismissed the application on 24 April 2013, finding no unconscionability on the part of Lum Chang in making the call. The court determined that Lum Chang had provided sufficient evidence of Ryobi-Kiso's delays and breaches of contract to justify the call on the performance bond. The substantive dispute is subject to ongoing arbitration.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed with costs.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court dismissed Ryobi-Kiso's application for an injunction against Lum Chang's call on a performance bond, finding no unconscionability.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Ryobi-Kiso (S) Pte Ltd | Plaintiff, Applicant | Corporation | Application dismissed | Lost | |
| Lum Chang Building Contractors Pte Ltd | Defendant, Respondent | Corporation | Call on performance bond allowed | Won | |
| Insurance company | Defendant, Respondent | Corporation | Application dismissed | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Quentin Loh | Judge | Yes |
4. Counsels
4. Facts
- Ryobi-Kiso was engaged by Lum Chang under a sub-contract dated 11 February 2010.
- The sub-contract was for part of the works under the Main Contract.
- Ryobi-Kiso provided Lum Chang with an unconditional performance bond in the sum of $1.88m.
- The works involved carrying out piling and associated works.
- The completion times for the Sub-Contract Works are spelt out in Part 3 of the Schedule.
- Lum Chang called on the Performance Bond on the grounds of Ryobi-Kiso’s breaches of the Sub-Contract.
- Ryobi-Kiso commenced proceedings to restrain Lum Chang from receiving the proceeds of the Call.
5. Formal Citations
- Ryobi-Kiso (S) Pte Ltd v Lum Chang Building Contractors Pte Ltd and another, Originating Summons No 720 of 2012/G, [2013] SGHC 86
6. Timeline
| Date | Event |
|---|---|
| Main Contract signed between Lum Chang and Land Transport Authority. | |
| Sub-Contract signed between Ryobi-Kiso and Lum Chang. | |
| Performance Bond issued by the 2nd Defendant. | |
| Lum Chang requested Ryobi-Kiso to submit a program for Stage 4 Works. | |
| Ryobi-Kiso forwarded quote and schedule for Stage 4 Works. | |
| Lum Chang terminated the Sub-Contract with Ryobi-Kiso. | |
| Ryobi-Kiso commenced first adjudication application. | |
| Adjudication decision ordering Lum Chang to pay Ryobi-Kiso $1.86m. | |
| Adjudication decision ordering Lum Chang to pay Ryobi-Kiso $1.86m. | |
| Lum Chang called on the Performance Bond. | |
| Contract with ZPPL formally entered into. | |
| Ryobi-Kiso commenced proceedings to restrain Lum Chang from receiving proceeds of the Call. | |
| Arbitration commenced. | |
| Hearing on the originating summons. | |
| High Court dismissed the application. |
7. Legal Issues
- Unconscionability
- Outcome: The court found no unconscionability on the part of the 1st Defendant in making the Call.
- Category: Substantive
- Related Cases:
- [2000] 1 SLR(R) 117
- Breach of Contract
- Outcome: The court did not make a judgment on the merits of whether the Plaintiff or 1st Defendant had breached the Sub-Contract.
- Category: Substantive
8. Remedies Sought
- Injunction to restrain payment under the performance bond
- Declaration that the 1st Defendant be restrained from receiving payment under the Call
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Construction Disputes
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 restraining calls on performance bonds. |
| Anwar Siraj and another v Teo Hee Lai Building Construction Pte Ltd | Court of Appeal | Yes | [2003] 1 SLR(R) 394 | Singapore | Cited for the high and strict standard of proof required of the applicant seeking an injunction. |
| GHL Pte Ltd v Unitrack Building Construction Pte Ltd and another | Court of Appeal | Yes | [1999] 3 SLR(R) 44 | Singapore | Cited regarding the court's role in intervening in abusive calls on performance bonds. |
| JBE Properties Pte Ltd v Gammon Pte Ltd | Unknown | Yes | [2011] 2 SLR 47 | Singapore | Cited for the key consideration in ascertaining whether a call on a performance bond should be restrained is achieving a fair balance between the interests of the beneficiary and those of the obligor. |
| BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd | Court of Appeal | Yes | [2012] 3 SLR 352 | Singapore | Cited for the circumstances where a beneficiary ought to take a step back and re-examine its entitlement and conduct prior to calling on the bond. |
| Raymond Construction Pte Ltd v Low Yang Tong | High Court | Yes | [1996] SGHC 136 | Singapore | Cited for the principle that mere breaches of contract by the beneficiary of the performance bond are not, by themselves, unconscionable. |
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
- Sub-Contract
- Unconscionability
- Call
- Liquidated Damages
- Stage 4 Works
- Donuts & Peanuts
- Zone 2 Station Box
15.2 Keywords
- Performance bond
- injunction
- construction contract
- unconscionability
- breach of contract
- Singapore High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Construction | 95 |
| Performance Bond | 90 |
| Contract Law | 90 |
| Construction Law | 90 |
| Injunctions | 85 |
| Building and Construction Contracts | 80 |
| Breach of Contract | 80 |
| Commercial Disputes | 70 |
| Arbitration | 60 |
| Civil Procedure | 50 |
16. Subjects
- Construction Dispute
- Contract Law
- Performance Bonds