The principle of unconscionability allows courts to restrain performance bond calls when unfair conduct is evident, considering the entire context of contracts and dealings.

Zainun Ali JCA:

(1) I am in full agreement with my learned brother Ramly Ali, JCA in his judgment which have coherently set out the facts of this appeal and the rationale which is applicable therein.

(2) The concept of unconscionability has steadily grown in stature and has had firm footholds in other jurisdictions.

(3) In the past, judicial pronouncements went the way of fraud as being the only ground, in seeking an injunction to restrain a call on a performance bond. However recent judicial pronouncements have confirmed that unconscionability has a place in such circumstances, as an additional ground.

(4) In my view, consonant with the principle as laid down by my learned brother, unconscionability is a doctrine which allows courts to deny enforcement of a contract because of abuses arising out of the contact.

(5) In my view the principle underlying the unconscionability doctrine is the prevention of oppression and unfair conduct; and because the determination of unconscionability is fact specific, courts must consider such a claim on a case by case basis and assess the totality of the circumstances.

(6) One such instance is found in the Singapore case of Gammon Pte Ltd v. JBE Properties Pte Ltd (SCDA Architects Pte Ltd, third party) (2010) SGHC 130. Where the court ordered the call on a performance bond to be deferred as a claim of unconscionability had been established.

(7) The facts are these. The plaintiff was engaged by the defendant (a developer) to construct a building. In the course of work, the defendant pointed out defects with the facade cladding of the building. The plaintiff undertook to rectify these defects.

(8) The architect engaged by the defendant to supervise the works issued the completion certificate certifying completion (completion certificate), which also enclosed a schedule of outstanding classes of defects. The plaintiff failed to remedy the outstanding defects, despite reminders. The defendant then called on the performance bond to fund the completion of the rectification work by another contractor, engaged by the defendant. The defendant claimed that it was justified in making the call on the basis that the outstanding sum due to it was S$1,820,198.59, which included a sum of S$1,200,800 as the cost of rectification of the cladding defects. The defendant claimed to have awarded the contract for the rectification works to Weng Thai Construction (WTC).

(9) Though the plaintiff did not dispute that there were outstanding defects, it alleged that it would be unconscionable for the defendant to call on the performance bond from a bank.

(10) The view taken by the court was that the plaintiff had established a strong prima facie case of unconscionability. The defendants claim of S$2,200,800 claim for the rectification of cladding defects stood out like a sore thumb. In addition, the plaintiff alleged that she award to WTC was a share, where inter alia, there no time frame was specified in which to carry out the work in the letter of award, the method of rectification was also not specified. WTCs lack of expertise was confirmed when it showed inclination to appoint another entity to carry out the work. More importantly, the price of S$2,200,800 for the contract awarded to WTC was wholly out of proportion to the value of the works. In the circumstances, the concluded that WTCs tender price of S$2.2 million to repair some 83 relatively minor cladding defects was astronomical and grossly inflated so as to enable the defendant to justify the call on the full sum of the performance bond.

(11) It was also noted by the court that the total amount which the defendant claimed the plaintiff owed mainly for defective works amounted to more than 25% of the original contract value which the defendant awarded to the plaintiff to co