Out-Law Legal Update | 10 Jan 2020 | 12:55 pm | 4 min. read
The outcome in the case – between Kindenko Pte Ltd and Samsung C&T Corporation and Bintai Kindenko (34-page / 295KB PDF) – should not be surprising to most. Almost five years have now passed since Singapore's highest court upheld a similar exclusion clause on the basis that clauses which seek to restrict or exclude a remedy are permissible as long as they do not oust the jurisdiction of the court, in the 2015 case of CKR Contract Services Pte Ltd v Asplenium Land Ptd Ltd.
However, the decision is still very much worth noting for at least two reasons:
However, it is unfortunate that the Court of Appeal did not expound further on the "factual circumstances" in which such exclusion clauses will be deemed to be unreasonable. It is also difficult to see the perceived contradiction in the subcontractor's submission: that the impugned exclusion clauses were unreasonable precisely because they oust the jurisdiction of the court to grant an equitable remedy regardless of the facts.
We can only hope that a future decision will provide some needed clarification.
Samsung C&T Corporation was the main contractor for a project to upgrade the Suntec City Convention Centre. The mechanical and engineering works for the project were subcontracted to Bintai Kindenko Pte Ltd.
The main contract between Samsung and its employer provided that Samsung was not entitled to restrain a bond call except in the case of fraud. The subcontract contained a similar exclusion clause in relation to Bintai.
Various phases of the subcontracted works were not completed on time, which resulted in a dispute as to whether Bintai was liable for these delays. Samsung then attempted to call on the banker's guarantee provided by Bintai. Bintai responded by applying to the court for an interim injunction to restrain the call. Bintai's application succeeded, but its success was shortlived as Samsung eventually successfully applied to discharge the interim injunction before the High Court. Bintai appealed.
The Court of Appeal dismissed Bintai's appeal, on the following grounds:
While not critical to the court's decision, it is also worth noting that Bintai's attempts to rely on the UCTA for the first time during the appeal was not met favourably. The Court of Appeal noted that Bintai failed to seek leave to introduce this new point on appeal, but that even if leave had been sought it would not have been granted because:
That said, the Court of Appeal observed that it would not have been inclined to strike down the exclusion clauses in any event.
Bintai argued that the exclusion clauses were inherently unreasonable because they "exclude the court's ability to intervene in circumstances where intervention has already been deemed reasonable". The Court of Appeal found these submissions untenable because they contradicted the clear principle that "whether or not a clause is (or is not) reasonable under the UCTA would depend not only on the various factors enunciated in the UCTA itself as well as in the case law ... but also (and perhaps more importantly) on the precise facts of the case itself".
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