Back
2023 MarsdenLR 1371
HIGH COURT MALAYA KUALA LUMPUR
EVERSENDAI CONSTRUCTIONS (M) SDN BHD – Appellant
Versus
SAMSUNG C & T CORPORATION UEM CONSTRUCTION JV SDN BHD – Respondent
[Originating Summons No: WA-24C-156-08/2022]
The court affirmed that a demand on a bank guarantee can be restrained if it is found to be unconscionable due to non-compliance with contractual obligations and suspicious timing.
Headnote:(A) Specific Relief Act 1950 - Sections 50 and 51 - Courts of Judicature Act 1964 - Section 25(2) - Arbitration Act 2005 - Section 11(1) - Injunctive relief sought to prevent a demand on a bank guarantee due to alleged unconscionable conduct by the defendant - Court found that the defendant failed to comply with contractual requirements before calling the guarantee, particularly the notice and consultation requirements - The defendant's timing of the call on the bank guarantee, made shortly before an adjudication decision, raised suspicions of unconscionability - The court granted the injunction sought to restrain the defendant from calling on the bank guarantee until the resolution of the disputes. (Paras 1, 4, 6, 66, 91)
Facts of the case:
The plaintiff sought an injunction against the defendant to prevent them from calling on a bank guarantee issued in favor of the defendant. The plaintiff alleged unconscionable conduct by the defendant in making the demand, particularly citing failure to comply with the subcontract agreement's requirements for notice and consultation. (Paras 1-2, 9-10)
Findings of Court:
The court found that the defendant did not fulfill the necessary contractual obligations prior to calling on the bank guarantee and that the timing of the call was suspicious, suggesting an intent to undermine the adjudication process. (Paras 66-74)
Issues: The main issues were whether the defendant complied with the contractual requirements before calling on the bank guarantee and whether the timing of the call was suspicious and unconscionable. (Paras 1, 66-74)
Ratio Decidendi: The court held that the defendant's failure to comply with the notice and consultation requirements of the subcontract agreement constituted grounds for finding unconscionability. The court emphasized that the timing of the call on the bank guarantee, made just before the adjudication decision, raised serious concerns about the defendant's motives. (Paras 66-74)
Result: Injunction granted against the defendant restraining them from calling on the bank guarantee until the resolution of disputes. (Paras 91)
| Table of Content |
|---|
| 1. plaintiff's application for injunction against defendant. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. details of parties and contractual agreements. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 3. plaintiff's grounds for alleging unconscionability. (Para 41 , 42) |
| 4. court's analysis of unconscionability claims. (Para 43 , 44 , 45 , 46 , 47 , 48) |
| 5. timing of call on bank guarantee as a factor in unconscionability. (Para 63 , 64 , 66 , 67) |
| 6. court's decision to grant injunction. (Para 91) |
Introduction
[1] This is basically an application by the Plaintiff for an order for injunctive relief against the Defendant to prevent the Defendant from making a demand on the Bank Guarantee dated 31 May 2016 ('BG') issued by HSBC Amanah Malaysia Berhad ('HSBC') on behalf of the Plaintiff in favour of the Defendant on the ground of unconscionable conduct by the Defendant ('Injunction Application').
[2] Specifically, vide Originating Summons ('OS') dated 11 August 2022 (Encl 1), the Plaintiff sought, among others, for the following orders:
"1. that the Defendant whether by themselves or through their servants, agents, employees and/or anyone who acts under the instructions of the Defendant, its agents and/or its employees and/or otherwise howsoever shall and hereby be restrained from making a demand or issuing a demand on the entire and/or part of the sum of the performance security in the sum of RM32,849,223.61 ("Performance Security") by way of a Bank Guarantee No APNKI401061 dated 31 May 2016 issued by HSBC Amanah Malaysia Berhad on behalf of the Plaintiff in favour of the Defendant ("Bank Guarantee") until final disposal of all disputes between the Plaintiff and the Defendant pursuant cl 20.4 and Clause 20.5 of the Subcontract Agreement dated 1 May 2016 (Reference No: SSUEM/201512/DSC/8) ("Subcontract Agreement") or until further order;
2. that the Defendant whether by themselves or through their servants, agents, employees and/or anyone who acts under the instructions of the Defendant, its agents and/or its employees and/or otherwise howsoever shall and hereby be restrained from receiving the full sum or any part of the said Bank Guarantee until final disposal of all disputes between the Plaintiff and the Defendant pursuant cl 20.4 and Clause 20.5 of the Subcontract Agreement or until further order;
3. further and in the alternative, in the event the Performance Security guaranteed under the Bank Guarantee has been paid to the Defendant, that the Defendant whether by themselves or through their servants, agents, employees and/or anyone who acts under the instructions of the Defendant, its agents and/or its employees and/or otherwise howsoever shall and hereby be restrained from utilising the sum received under the said Bank Guarantee until final disposal of all disputes between the Plaintiff and the Defendant pursuant cl 20.4 and Clause 20.5 of the Subcontract Agreement dated 1 May 2016 or until further order;
4. further to prayer (3) above, the Defendant shall be ordered to refund the sums received under the said Bank Guarantee to HSBC Amanah Malaysia Berhad or alternatively to place the sum received under a stakeholder account with accruing interest with HSBC Amanah Malaysia Berhad until final disposal of all disputes between the Plaintiff and the Defendant pursuant cl 20.4 and Clause 20.5 of the Subcontract Agreement or until further order;
5. further and/in the alternative, a declaration that it is unconscionable for the Defendant to call on the Bank Guarantee;
6. exemplary damages;
7. costs;
8. liberty to apply...".
[3] On the same date, the Plaintiff had also filed an Ex-Parte Notice of Application (Encl 2) for an order for injunctive relief against the Defendant pending disposal of encl 1 together with a Certificate of Urgency (Encl 6)
[4] The same provisions are cited in the intitulement of encls 1 and 2 namely, ss 50 and 51 of the Specific Relief Act 1950 [Act 137] (' SRA 1950'), sub-section 25(2) and para 6 of the Schedule of t
