Case Summaries

Bintai Kindenko Pte Ltd v Samsung C&T Corp and another [2019] SGCA 39

 SUPREME COURT OF SINGAPORE

30 May 2019

Case summary

Bintai Kindenko Pte Ltd v Samsung C&T Corp and another   
[2019] SGCA 39
Civil Appeal No 95 of 2018

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Decision of the Court of Appeal (delivered by Justice of Appeal Tay Yong Kwang):

Outcome: The CoA dismisses appeal against decision to discharge an ex parte interim injunction which restrained a call on a banker’s guarantee.

Facts

1          The first respondent, Samsung C&T Corporation (“the First Respondent”), was appointed by HSBC Institutional Trust Services (S) Limited (“the Employer”) as the main contractor for a project to upgrade the Suntec City Convention Centre and its retail podium (“the Project”). It appointed the appellant, Bintai Kindenko Pte Ltd (“the Appellant”), as the Project’s mechanical and engineering sub-contractor: [4] and [5].

2          In the Sub-Contract between the Appellant and the First Respondent, cl 3 stated that the form of the Main Contract was the Singapore Institute of Architects (“SIA”) Lump Sum Contract (9th Edition) and the Sub-Contract between the parties shall be SIA Conditions of Sub-Contract 4th Edition, 2010, including all Particular Conditions as set out in the Main Contract. Both the Particular Conditions of Main Contract and the Particular Conditions of Sub-Contract included the same exclusionary clause that excluded the First Respondent and the Appellant respectively from relying on the ground of unconscionability to restrain any call or demand on the performance bond or any receipt of cash proceeds under the performance bond. These were referred to in the grounds of decision as the Exclusion Clauses: [8], [13] and [14].

3          It turned out that various phases of the Sub-Contract works were not completed on time and disputes arose between the parties as to whether the Appellant was liable for these delays. Between March 2014 and December 2015, the Appellant sought extensions of time to the contractual deadlines for the respective phases of the Sub-Contract works but these requests were all rejected by the First Respondent. The First Respondent also stated that it would hold the Appellant responsible for the delays allegedly caused by it, which included liability for liquidated damages and claims for any additional costs incurred by the First Respondent. Subsequently, the First Respondent wrote to the Second Respondent, the bank, to demand payment on the banker’s guarantee provided by the Appellant: [20]–[29].

4          The Appellant became aware of the First Respondent’s call on the banker’s guarantee on 28 August 2017 and it took out an ex parte application for an interim injunction to restrain the First Respondent from calling on the banker’s guarantee and the bank from paying out on the guarantee. The judge below granted the ex parte interim injunction. The First Respondent applied for the discharge of the injunction. After hearing both parties, the judge discharged the interim injunction: [31]–[33]. The Appellant appealed against the decision of the judge to discharge the interim injunction.

Decision on appeal

5          The court will only intervene to prevent a beneficiary from calling on a performance guarantee if it can be shown that the call was either fraudulent or unconscionable: [1].

6          The First Respondent, as the party seeking to rely on the Exclusion Clauses, bore the burden of showing that the Appellant’s right to rely on the unconscionability exception was contractually excluded. It had to show credible evidence that the Exclusion Clause was incorporated into the Sub-Contract. The judge below found that the Particular Conditions of Sub-Contract were incorporated into the Sub-Contract by virtue of cl 3, and there was no reason to disturb his conclusion. The Court of Appeal was not persuaded by the Appellant’s contention that the Exclusion Clauses could not have been incorporated because the Appellant was not given a copy of the Particular Conditions of Main Contract and the Particular Conditions of Sub-Contract at the time of contracting. It did not matter whether the Appellant was actually given a copy or whether it had any knowledge of what those terms were. It is a well-established principle that in the absence of fraud or misrepresentation, a party is bound by all the terms of a contract that it signs, even if that party did not read or understand those terms: [49], [53], [56], [58] and [59].

7          The Appellant argued that in the event that the Exclusion Clauses were incorporated into the Sub-Contract, they should nevertheless be considered unenforceable pursuant to the Unfair Contract Terms Act (Cap 396, 1994 Rev Ed). This point was not raised before the judge below and the Appellant did not seek leave from the Court of Appeal to raise this new point. The Court agreed with the First Respondent that it would be prejudiced if the Appellant were allowed to raise this new point on appeal, because the First Respondent did not have the opportunity to adduce evidence relevant to the reasonableness of the Exclusion Clauses at the time of contracting. In any case, the Court held that it was not inclined to hold that the Exclusion Clauses were inherently unreasonable and unenforceable: [65]–[71].

8          The judge below found that there was no strong prima facie case of fraud on the part of the First Respondent to justify the interim injunction. The Court of Appeal found that there was no compelling reason to disagree. However, there was some merit in the Appellant’s arguments about the validity of the First Respondent’s claims against it although they were not sufficient to establish a strong prima facie case of fraud. There was no evidence of the Employer making any claims against the First Respondent for delays, and the First Respondent’s errors in computing some of the periods of delay suggested that the First Respondent had simply made up its liquidated damages claims in haste: [73]–[77].

9          A party seeking an ex parte interlocutory injunction has a duty to make full and frank disclosure of all material facts. The Court of Appeal found that the Appellant failed to discharge its duty to make full and frank disclosure during the ex parte hearing because it did not draw the judge’s attention to the fact that there was an issue about whether the unconscionability exception was excluded by contract. Although the Court has the discretion to continue an interim injunction notwithstanding the lack of full and frank disclosure, the Court did not consider that this was an appropriate case for the exercise of that discretion, because the Exclusion Clauses were obviously highly material in the ex parte application and would have affected significantly the judge’s decision to grant an interim injunction: [79] [80] and [83].

 

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

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