Case Details
- Citation: [2019] SGCA 39
- Case Title: Bintai Kindenko Pte Ltd v Samsung C&T Corp and another
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 30 May 2019
- Civil Appeal No.: Civil Appeal No 95 of 2018
- Coram: Tay Yong Kwang JA; Woo Bih Li J
- Judges’ Roles: Tay Yong Kwang JA delivered the grounds of decision; Woo Bih Li J was on the coram
- Plaintiff/Applicant (Appellant): Bintai Kindenko Pte Ltd
- Defendant/Respondent (First Respondent): Samsung C&T Corp
- Defendant/Respondent (Second Respondent): DBS Bank Ltd
- Representation: Tan Chee Meng SC, Josephine Choo Poh Hua, Dynyse Loh Jia Wen and Eugene Oh (WongPartnership LLP) for the appellant; Kelvin Aw Wei Keng, Leonard Chew Wei Chong and Eugene Lee (Holborn Law LLC) for the first respondent; the second respondent absent and unrepresented
- Procedural History: Appeal from the High Court decision in Bintai Kindenko Pte Ltd v Samsung C&T Corp and another [2018] SGHC 191
- Decision: Court of Appeal dismissed the appeal and upheld the discharge of the ex parte interim injunction restraining a call on a banker’s guarantee
- Legal Areas: Credit and Security (performance bond/banker’s guarantee); Civil Procedure (injunctions and burden of proof); Building and Construction Law (sub-contracts and incorporation of main contract terms)
- Statutes Referenced: Building and Construction Industry Security of Payment Act; Evidence Act; Unfair Contract Terms Act
- Key Contractual Instruments: Letter of Acceptance (First LOA and Second LOA); SIA Lump Sum Contract (9th Edition); SIA Conditions of Sub-Contract (4th Edition, 2010); Main Contract Particular Conditions (MC Particular Conditions); Sub-Contract Particular Conditions (SC Particular Conditions); banker’s guarantee (on-demand)
- Key Themes: Fraud and unconscionability exceptions to restraining calls on performance guarantees; exclusion clauses limiting reliance on unconscionability; incorporation by reference of main contract terms into sub-contract; burden of proof for injunction relief
Summary
This Court of Appeal decision concerns when a court may restrain a beneficiary from calling on an on-demand banker’s guarantee (a performance bond). The appellant, Bintai Kindenko Pte Ltd, sought to prevent Samsung C&T Corp from calling on a banker’s guarantee issued by DBS Bank Ltd. The High Court had discharged an ex parte interim injunction restraining the call, and the Court of Appeal dismissed the appeal.
The Court reaffirmed that intervention is exceptional: a beneficiary’s call may be restrained only if the call is shown to be either fraudulent or unconscionable. The Court also addressed a modern contractual development in construction finance: parties may agree to exclude the unconscionability exception, thereby narrowing the circumstances in which an injunction can be granted. On the facts, the Court held that the relevant exclusion clauses were incorporated into the sub-contract and that the appellant had not established the requisite grounds to justify injunctive relief.
What Were the Facts of This Case?
The dispute arose from a construction project to upgrade the Suntec City Convention Centre and its retail podium (the “Project”). Samsung C&T Corporation was appointed the main contractor by the employer, HSBC Institutional Trust Services (S) Limited. Samsung then appointed Bintai Kindenko Pte Ltd as the mechanical and engineering sub-contractor through a tender process.
Contract formation involved two letters of acceptance. The first letter of acceptance (“First LOA”) was issued in June 2012, but the appellant did not sign or accept its terms and instead proposed amendments. A second letter of acceptance (“Second LOA”) was issued on 3 December 2012, containing amendments and providing that its terms would operate retroactively from 1 June 2012. The appellant accepted the Second LOA and its representative signed an acknowledgment confirming acceptance of all terms and conditions stated therein.
The Second LOA contained a key “back-to-back” clause: it provided that the form of the sub-contract would be based on the Singapore Institute of Architects (“SIA”) Lump Sum Contract (9th Edition) and that the sub-contract would be on the SIA Conditions of Sub-Contract (4th Edition, 2010), including particular conditions as set out in the main contract. The sub-contract was thus designed to mirror the main contract’s structure and risk allocation, at least as to the incorporated conditions.
Two documents were relevant to the “particular conditions” reference. The “Main Contract Particular Conditions” (“MC Particular Conditions”) were signed by the employer and the main contractor and amended the SIA Lump Sum Contract. A second document, the “Particular Conditions of Sub-Contract” (“SC Particular Conditions”), purported to incorporate additional terms or amendments to the SIA Conditions of Sub-Contract, but it was not signed by the appellant or the main contractor. Importantly, the main contract’s preliminaries expressly referred to the SC Particular Conditions. Both MC Particular Conditions and SC Particular Conditions contained similarly worded exclusion clauses intended to limit the ability of the contractor/sub-contractor to restrain calls on the performance bond on grounds other than fraud.
What Were the Key Legal Issues?
The Court of Appeal had to determine, first, the proper legal threshold for granting an injunction to restrain a call on an on-demand banker’s guarantee. Singapore law recognises that such instruments are designed to provide prompt payment and to operate independently of disputes under the underlying contract. Accordingly, the court will only intervene to prevent a beneficiary from calling on a performance guarantee if the call is either fraudulent or unconscionable.
The second issue concerned contractual exclusion. The appellant argued that unconscionability should remain available as a ground for injunctive relief. The Court therefore had to consider whether the parties had effectively excluded the unconscionability exception in the sub-contract, and if so, whether that exclusion was incorporated into the sub-contract terms by reference to the main contract and particular conditions.
Third, the Court addressed the burden of proof in injunction proceedings. Because the relief sought was exceptional and interfered with the autonomy of the guarantee, the appellant bore the burden of establishing the factual and legal basis for fraud or unconscionability (and, where relevant, overcoming any contractual exclusion). The Court’s analysis turned on whether the appellant’s evidence and pleaded case met that burden.
How Did the Court Analyse the Issues?
The Court began by restating the governing principles. It emphasised that the court’s role is limited: it will only intervene to prevent a beneficiary from calling on a performance guarantee if the call is shown to be fraudulent or unconscionable. The Court relied on earlier authority, including BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd and CKR Contract Services Pte Ltd v Asplenium Land Pte Ltd, to frame the “fraud and unconscionability exceptions” as the only recognised bases for restraint.
Crucially, the Court then addressed the contractual dimension. It noted that it had become more common for parties to agree to exclude the unconscionability exception. In CKR Contract Services, the Court held that parties could exclude unconscionability, subject to ordinary constraints on exclusion clauses. Those constraints include questions of incorporation and enforceability. The Court also observed that it would be open to parties to argue that an exclusion clause was not incorporated into the contract in the first place. This case therefore required the Court to examine incorporation by reference and the effect of the “back-to-back” drafting.
On incorporation, the Court focused on the sub-contract’s Clause 3 (the “Form of Sub-Contract”) and the reference to “Particular Conditions as set out in the Main Contract”. The Court treated the main contract’s particular conditions documents as the mechanism by which the sub-contract would receive its additional terms. It examined the MC Particular Conditions and the SC Particular Conditions and the way the SC Particular Conditions were referenced in the main contract preliminaries. The Court’s approach was pragmatic: where the contract structure and references indicate that particular conditions are intended to form part of the contractual matrix, the court will give effect to that intended incorporation.
In this case, the exclusion clauses were expressed in near-identical terms. Clause 5A(5) of the MC Particular Conditions provided that, except in the case of fraud, the contractor shall not be entitled to enjoin or restrain the employer from making any call on the performance bond or receiving cash proceeds, on any other ground including unconscionability. Clause 14A(5) of the SC Particular Conditions contained the corresponding limitation for the sub-contractor. The Court held that these “Exclusion Clauses” applied to the sub-contract relationship and therefore excluded unconscionability as a ground for restraint, leaving fraud as the only remaining basis for injunctive intervention.
The Court then turned to the burden of proof. Even if unconscionability were theoretically available, the appellant would still need to establish the relevant facts showing unconscionability to the required standard. However, because the exclusion clauses narrowed the available grounds, the appellant’s case effectively depended on demonstrating fraud. The Court found that the appellant had not met the burden of showing fraud or any other legally sufficient basis to restrain the call. The Court also considered the nature of the underlying disputes—particularly delay and payment claims—and the fact that the appellant did not dispute the banker’s guarantee’s validity when it was called. The Court’s reasoning reflected the policy that disputes about contractual performance or entitlement should not, absent the exceptional fraud/unconscionability threshold, be used to undermine the guarantee’s function.
Although the extract provided is truncated, the Court’s core reasoning is clear from the grounds: the guarantee was an on-demand instrument with provisions requiring immediate payment upon written demand, without inquiry into underlying disputes or defences. The appellant’s attempt to restrain the call was therefore assessed against the narrow exceptions and the contractual exclusion. The Court concluded that the High Court was correct to discharge the interim injunction because the appellant had not established the necessary grounds.
What Was the Outcome?
The Court of Appeal dismissed the appeal. As a result, the High Court’s discharge of the ex parte interim injunction stood, meaning the appellant’s attempt to restrain Samsung from calling on the banker’s guarantee failed.
Practically, the decision confirms that, in Singapore, beneficiaries of on-demand performance guarantees can expect the guarantee to be honoured promptly unless the applicant can prove fraud or, where not excluded, unconscionability. Where the contract includes effective exclusion clauses, unconscionability may be contractually unavailable, further narrowing the circumstances for injunctive relief.
Why Does This Case Matter?
This case is significant for construction and finance practitioners because it reinforces both (i) the autonomy of on-demand guarantees and (ii) the enforceability of contractual arrangements that limit the scope of judicial intervention. The Court’s emphasis on the fraud/unconscionability exceptions, and its willingness to give effect to exclusion clauses, provides strong guidance for drafting and for litigation strategy.
For parties seeking to restrain a call, the decision highlights the evidential and legal hurdles. Applicants must marshal concrete evidence of fraud (and, where relevant and not excluded, unconscionability). General allegations of unfairness, contractual breach, or disputes over delay and payment are unlikely to suffice, especially where the guarantee contract expressly disclaims inquiry into underlying disputes.
For beneficiaries and issuers, the decision supports the commercial expectation that guarantees will be called and paid without being derailed by underlying disputes. It also signals that careful incorporation drafting—particularly “back-to-back” clauses and references to particular conditions—can effectively exclude unconscionability as a ground for restraint. Lawyers advising on performance bond clauses should therefore scrutinise (a) how particular conditions are incorporated and (b) whether exclusion language is clearly intended to bind the relevant parties.
Legislation Referenced
- Building and Construction Industry Security of Payment Act
- Evidence Act
- Unfair Contract Terms Act
Cases Cited
- BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd [2012] 3 SLR 352
- CKR Contract Services Pte Ltd v Asplenium Land Pte Ltd and another and another appeal and another matter [2015] 3 SLR 1041
- Bintai Kindenko Pte Ltd v Samsung C&T Corp and another [2018] SGHC 191
- [2019] SGCA 39 (this appeal)
Source Documents
This article analyses [2019] SGCA 39 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.