Chiu Teng Construction v AXA Insurance: Performance Bond Dispute

In the High Court of Singapore, Chiu Teng Construction Co Pte Ltd brought an application against AXA Insurance Pte Ltd to trigger liability under a performance bond. The court, presided over by Lee Seiu Kin J, allowed the application, finding that Chiu Teng Construction had provided sufficient evidence of loss to justify calling on the bond. The court also addressed the time limits for demanding payment under the bond, determining that the second call was valid. The defendant has since appealed.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Application Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The High Court allowed Chiu Teng Construction's application to trigger AXA Insurance's liability under a performance bond, re-examining indemnity bond principles.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
AXA Insurance Pte LtdDefendantCorporationApplication DismissedLost
Chiu Teng Construction Co Pte LtdPlaintiffCorporationApplication AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Lee Seiu KinJudgeYes

4. Counsels

Counsel NameOrganization
Ganesh Bharath RatnamGurbani & Co LLC
Lee Peng Khoon EdwinEldan Law LLP
Sanjana JayaramanEldan Law LLP

4. Facts

  1. Chiu Teng Construction was the main contractor for refurbishment works at Nanyang Technological University.
  2. Chiu Teng Construction appointed QBH Pte Ltd as a sub-contractor for the project.
  3. AXA Insurance issued a performance bond in favor of Chiu Teng Construction at the request of QBH.
  4. Disputes arose regarding Chiu Teng Construction's certification of QBH's payment claim.
  5. An adjudicator determined that Chiu Teng Construction owed QBH a sum of S$386,859.21.
  6. Chiu Teng Construction made a First Call on the Bond, which was deemed defective by the court.
  7. Chiu Teng Construction made a Second Call on the Bond after QBH was placed under liquidation.

5. Formal Citations

  1. Chiu Teng Construction Co Pte Ltd v AXA Insurance Pte Ltd, Originating Summons No 603 of 2020, [2020] SGHC 234

6. Timeline

DateEvent
Performance Bond No LBP/P1821315 issued
Chiu Teng Construction appointed QBH Pte Ltd as a sub-contractor
Adjudicator determined that Chiu Teng Construction owed QBH a sum of S$386,859.21
Chiu Teng Construction made the First Call on the Bond
Court held that the Bond is an indemnity bond
QBH placed under liquidation
Chiu Teng Construction wrote to QBH’s liquidators setting out various heads of claim
Chiu Teng Construction made the Second Call on the Bond
AXA Insurance responded indicating that the demand for payment was defective
Hearing date
Judgment date

7. Legal Issues

  1. Liability under Performance Bond
    • Outcome: The court found the defendant liable to the plaintiff under the bond, as the plaintiff had shown sufficient evidence of loss.
    • Category: Substantive
    • Sub-Issues:
      • Proof of actual losses
      • Interpretation of indemnity bonds
    • Related Cases:
      • [2011] 2 SLR 47
      • [2013] 3 SLR 1142
  2. Validity of Second Call on Bond
    • Outcome: The court found that the second call was made within the specified time limits and was therefore valid.
    • Category: Procedural
    • Sub-Issues:
      • Time limits for demand of payment
      • Interpretation of bond clauses regarding extension

8. Remedies Sought

  1. Payment under Performance Bond

9. Cause of Actions

  • Breach of Contract
  • Claim on Performance Bond

10. Practice Areas

  • Commercial Litigation
  • Construction Law

11. Industries

  • Construction
  • Insurance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
JBE Properties Pte Ltd v Gammon Pte LtdCourt of AppealYes[2011] 2 SLR 47SingaporeCited for propositions relating to indemnity bonds and the interpretation of performance bonds as being conditioned upon facts rather than documents.
York International Pte Ltd v Voltas LtdHigh CourtYes[2013] 3 SLR 1142SingaporeCited for agreeing with the conclusions in JBE regarding the nature of indemnity bonds and the requirement to prove actual losses.

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
  • Indemnity Bond
  • Actual Loss
  • Second Call
  • Notice to Terminate
  • Final Extension Direction

15.2 Keywords

  • Performance Bond
  • Construction
  • Insurance
  • Singapore
  • High Court
  • Indemnity
  • Breach of Contract

17. Areas of Law

Area NameRelevance Score
Performance Bond95
Credit and Security75
Contract Law60
Construction Law50
Company Law25

16. Subjects

  • Construction Dispute
  • Contract Law
  • Insurance Law