Samsung C&T Corp v Soon Li Heng: Performance Bond & Unconscionability under SOPA

Samsung C&T Corporation appealed against a High Court decision to grant an injunction to Soon Li Heng Civil Engineering Pte Ltd, restraining Samsung from receiving money under a performance bond after an adjudication determination (AD) favored Soon Li Heng. The Court of Appeal of the Republic of Singapore, comprising Judith Prakash JA, Belinda Ang Saw Ean J, and Woo Bih Li J, dismissed the appeal on 17 July 2020, with Woo Bih Li J delivering the grounds of decision. The court found Samsung's demand on the performance bond to be unconscionable, as it undermined the temporary finality of the adjudication determination under the Building and Construction Industry Security of Payment Act (SOPA).

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding an injunction restraining Samsung from receiving money under a performance bond. The court dismissed the appeal, finding Samsung's demand unconscionable.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
United Overseas Bank LimitedDefendantCorporation
Samsung C&T CorporationAppellant, DefendantCorporationAppeal DismissedLost
Soon Li Heng Civil Engineering Pte LtdRespondent, PlaintiffCorporationInjunction GrantedWon

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudge of AppealNo
Belinda Ang Saw EanJudgeNo
Woo Bih LiJudgeYes

4. Counsels

Counsel NameOrganization
Lee Peng Khoon EdwinEldan Law LLP
Er Hwee Lee Danna DollyEldan Law LLP
Poon Guokun NicholasBreakpoint LLC
Choy Chee YeanBreakpoint LLC

4. Facts

  1. Samsung engaged SLH as a subcontractor for excavation and disposal works for the Thomson-East Coast Line project.
  2. SLH procured a performance bond from United Overseas Bank Limited in favor of Samsung.
  3. A dispute arose between the parties regarding Payment Claim Number 20.
  4. An adjudicator determined that Samsung was to pay SLH a certain sum, which was later reduced to $2,473,295.20.
  5. Samsung issued a Notice of Dispute and subsequently terminated the Subcontract.
  6. Samsung paid the adjudicated sum to SLH.
  7. Samsung made a demand on the performance bond for the full bond amount of $826,713.53, claiming overpayment by SLH.

5. Formal Citations

  1. Samsung C&T Corp v Soon Li Heng Civil Engineering Pte Ltd, Civil Appeal No 222 of 2019, [2020] SGCA 79

6. Timeline

DateEvent
Re-Measurement Sub-Contract signed
Performance bond issued by United Overseas Bank Limited
Payment Claim Number 20 served on Samsung
Amended Adjudication Determination issued
Samsung issued a Notice of Dispute
Samsung terminated the Subcontract
Samsung paid the adjudicated sum
Payment Claim Number 24 served on Samsung
Email from SLH to LTA regarding disposal of material
Samsung wrote to SLH asserting overpayment
SLH responded to Samsung's letter
SLH submitted Payment Claim Number 25
Samsung issued a further notice of dispute
Disputes referred to adjudication
Samsung made a demand on the PB
SLH commenced proceedings in the High Court seeking an injunction
Adjudication Determination issued
Judge granted the final injunction sought by SLH
Appeal dismissed
Reasons stated

7. Legal Issues

  1. Unconscionability
    • Outcome: The court held that Samsung's demand on the performance bond was unconscionable as it undermined the temporary finality of the adjudication determination.
    • Category: Substantive
  2. Temporary Finality of Adjudication Determination
    • Outcome: The court emphasized the temporary finality of an adjudication determination under SOPA.
    • Category: Substantive

8. Remedies Sought

  1. Injunctive Relief

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Construction Disputes
  • Performance Bonds
  • Injunctions

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Patterson Building Group Pty Ltd v Holroyd City CouncilSupreme Court of New South WalesYes[2013] NSWSC 1484New South WalesDiscussed in relation to whether a beneficiary must demonstrate that it is in fact owed money to have recourse to a security.
Duro Felguera Australia Pty Ltd v Samsung C&T CorporationSupreme Court of Western AustraliaYes[2016] WASC 119Western AustraliaDiscussed in relation to whether demanding payment under bonds was to disregard binding determinations made under the WA Act.
Fletcher Construction Australia Ltd v Varnsdorf Pty LtdN/AYes[1998] 3 VR 812N/ACited for the distinction between a security payable on default and one payable on demand.
Clough Engineering Ltd v Oil and Natural Gas Corp LtdN/AYes[2008] FCAFC 136N/ACited for adopting the distinction from Fletcher regarding the two purposes of a security.
GHL Pte Ltd v Unitrack Building Construction Pte Ltd and anotherCourt of AppealYes[1999] 3 SLR(R) 44SingaporeCited to emphasize that a performance bond is a security for the performance of the main contract.
Fabtech Australia Pty Ltd v Laing O’Rourke Australia Construction Pty LtdFederal Court of AustraliaYes[2015] FCA 1371QueenslandDiscussed in relation to an application for an injunction to restrain a beneficiary from having recourse to bank guarantees after an AD.
Soon Li Heng Civil Engineering Pte Ltd v Samsung C&T Corp and anotherHigh CourtYes[2019] SGHC 267SingaporeThe High Court decision which is the subject of this appeal. The Court of Appeal agreed with the Judge's detailed reasons.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 21Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 36Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Performance Bond
  • Adjudication Determination
  • Unconscionability
  • Security of Payment Act
  • Subcontract
  • Payment Claim
  • Payment Response
  • Temporary Finality
  • Overpayment

15.2 Keywords

  • performance bond
  • adjudication
  • SOPA
  • construction
  • contract
  • Singapore

17. Areas of Law

Area NameRelevance Score
Performance Bond90
Unconscionability85
Credit and Security75
Adjudication50
Contract Law40
Civil Procedure30

16. Subjects

  • Construction Dispute
  • Contract Law
  • Arbitration
  • Performance Bonds