AES Façade Pte Ltd v Wyse Private Limited: Unconscionability in Performance Bond Call Dispute

In AES Façade Pte Ltd v Wyse Private Limited, the High Court of Singapore addressed an originating summons filed by AES Façade Pte Ltd seeking an injunction to restrain Wyse Private Limited from demanding payment under a performance bond issued by Liberty Insurance Pte Ltd. The central issue was whether Wyse Private Limited's call on the performance bond was unconscionable. The court dismissed the application, finding that AES Façade Pte Ltd failed to prove unconscionability. The court considered the nature of the performance bond and the circumstances surrounding the call, including ongoing arbitration proceedings.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Application dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case regarding an injunction to restrain a performance bond call. The court dismissed the application, finding no unconscionable conduct.

1.7 Decision Date

19 July 2018

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
AES Façade Pte Ltd	Plaintiff	Corporation	Application dismissed	Lost	De Vaz Ian Marc Rosario, Tay Bing Wei, Chek Xinwei Liana
Wyse Private Limited	Defendant	Corporation	Won	Won	Philip Antony Jeyaretnam SC, Melissa Thng Huilin, Amogh Nallan Chakravarti
Liberty Insurance Pte Ltd	Defendant	Corporation	Neutral	Neutral

3. Judges

Judge Name	Title	Delivered Judgment
Lee Seiu Kin	Judge	Yes

4. Counsels

Counsel Name	Organization
De Vaz Ian Marc Rosario	WongPartnership LLP
Tay Bing Wei	WongPartnership LLP
Chek Xinwei Liana	WongPartnership LLP
Philip Antony Jeyaretnam SC	Dentons Rodyk & Davidson LLP
Melissa Thng Huilin	Dentons Rodyk & Davidson LLP
Amogh Nallan Chakravarti	Dentons Rodyk & Davidson LLP

4. Facts

Plaintiff and first defendant entered into a subcontract for building façade works.
Plaintiff procured a performance bond from the second defendant in favor of the first defendant.
First defendant made a demand for payment under the Performance Bond.
Plaintiff sought an injunction to restrain the first defendant from demanding payment.
First defendant commenced arbitration proceedings against the plaintiff for liquidated damages.
The validity of the Performance Bond was extended twice, and was at the time of the hearing due to expire on 12 April 2018.
The first defendant has consistently asserted its claim for liquidated damages since August 2016.

5. Formal Citations

AES Façade Pte Ltd v Wyse Pte Ltd and another, Originating Summons No 1245 of 2017, [2018] SGHC 163

6. Timeline

Date	Event
2014-11-28	Plaintiff and first defendant entered into a subcontract.
2016-04-12	Date of completion stipulated in the main contract.
2016-11-15	Works certified by the architect to be completed.
2016-11-25	Plaintiff submitted payment claim PC20.
2016-12-28	First defendant served a payment response.
2017-02-17	Adjudication determination was dated and served on the parties.
2017-02-21	Plaintiff's solicitors demanded payment of the adjudication amount.
2017-02-24	Plaintiff's solicitors issued another letter demanding payment.
2017-02-28	Enforcement order obtained.
2017-03-03	Enforcement order served on the first defendant; first defendant commenced arbitration proceedings.
2017-03-17	First defendant filed an application to set aside the enforcement order.
2017-05-24	Application to set aside the enforcement order was dismissed.
2017-06-08	Plaintiff received $1,072,519.20.
2017-09-22	Plaintiff’s defence and counterclaim filed in the arbitration proceedings.
2017-10-02	First defendant made a demand for immediate payment under the Performance Bond.
2018-02-28	Judgment date.
2018-04-12	Performance Bond was due to expire.
2018-07-20	Reasons for decision given.

7. Legal Issues

Unconscionability
- Outcome: The court found that the plaintiff failed to prove a strong prima facie case of unconscionability on the first defendant’s part.
- Category: Substantive
- Sub-Issues:
  - Abuse
  - Unfairness
  - Dishonesty
- Related Cases:
  - [2012] 3 SLR 352
  - [1999] 3 SLR(R) 44
  - [1996] SGHC 136
  - [2000] 3 SLR(R) 198
  - [2018] 3 SLR 404
  - [2011] 2 SLR 47

8. Remedies Sought

Injunctive Relief

9. Cause of Actions

Breach of Contract
Injunction

10. Practice Areas

Construction Law
Commercial Litigation
Arbitration
Performance Bonds

11. Industries

Construction

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
BS Mount Sophia Pte Ltd v Join-Am Pte Ltd	Court of Appeal	Yes	[2012] 3 SLR 352	Singapore	Established guiding principles on the circumstances under which a finding of unconscionability can be made in relation to calls on performance bonds.
GHL Pte Ltd v Unitrack Building Construction Pte Ltd	N/A	Yes	[1999] 3 SLR(R) 44	Singapore	Cited for the principle that unconscionability covers acts involving abuse, unfairness and dishonesty.
Raymond Construction Pte Ltd v Low Yang Tong	High Court	Yes	[1996] SGHC 136	Singapore	Cited for the definition of unconscionable conduct as conduct so reprehensible or lacking in good faith that a court of conscience would either restrain the party or refuse to assist the party.
Eltraco International Pte Ltd v CGH Development Pte Ltd	N/A	Yes	[2000] 3 SLR(R) 198	Singapore	Cited to caution that not every instance of unfairness amounts to unconscionability and that the existence of genuine disputes is not sufficient per se to constitute unconscionability.
LQS Construction Pte Ltd v Mencast Marine Pte Ltd and another	N/A	Yes	[2018] 3 SLR 404	Singapore	Cited for the principle that the existence of genuine disputes between the parties is not sufficient per se to constitute unconscionability.
JBE Properties Pte Ltd v Gammon Pte Ltd	N/A	Yes	[2011] 2 SLR 47	Singapore	Cited for the principle that abusive and oppressive calls may result not only in the beneficiary gaining an undeserved windfall but also severely curtailing the liquidity of the obligor.
Bocotra Construction Pte Ltd and others v Attorney-General	N/A	Yes	[1995] 2 SLR(R) 262	Singapore	Cited for the principle that the construction of the terms and nature of an instrument such as the Performance Bond depends not on the label adopted by the parties but the substance of the rights and obligations established by its terms.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Building and Construction Industry Security of Payment Act (SOPA) (Cap 30B, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Performance Bond
Unconscionability
Injunction
Liquidated Damages
Adjudication
Subcontract
Arbitration

15.2 Keywords

Performance bond
unconscionability
injunction
construction law
arbitration

16. Subjects

Building and Construction Dispute
Performance Bonds
Contract Law
Arbitration Law

17. Areas of Law

Building and Construction Law
Contract Law
Credit and Security
Injunctions