MALAYA BANKING BERHAD (as agent for and on behalf of the syndicate of banks comprising Malayan Banking Berhad, Overseas Union Bank Limited, and Oversea-Chinese Banking Corporation Limited) (Plaintiff) v CHINA INSURANCE COMPANY LIMITED (Defendant)

Read the full judgment text of HCCT000048/1999 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 10 September 2002 before Hon Burrell J in Chambers.

Construction law — Performance bonds — Contract termination — Clause 24 of Development Agreement — Order 14A procedure — Application to strike out claim for wasted expenditure damages — Representative action and joinder — Defendant insurer issued a $30 million performance bond guaranteeing contractor's performance on a building project. The developer (UTIL) terminated the contractor (Molitoko) under Clause 24 due to alleged breaches, and the plaintiff bank acting for a syndicate claimed damages under the bond for wasted expenditure after the project was abandoned and left incomplete. Defendant applied to strike out the wasted expenditure claim as failing to disclose a reasonable cause of action and alternatively sought a determination under Order 14A limiting damages to additional completion costs under the contract. The defendant also applied to stay the proceedings pending joinder of other banks as co-plaintiffs. The court declined to determine the legal question under Order 14A without a trial because factual issues heavily influenced the claim validity. The strike out application failed as the pleaded claim disclosed a reasonable cause of action and the defence's abandonment assertion was a matter of fact to be determined at trial. The joinder stay was refused as the representative action was properly constituted and no compelling reason existed to add other banks as plaintiffs. Costs related to the plaintiff's abandonment of delay damages claim were reserved for later resolution.

Legal issues: Order 14A application on construction of Clause 24 · Striking out application under O.18 r.19 on Wasted Expenditure Claim · Joinder summons and representative action

Outcome: Defendant's summonses to strike out or dismiss the wasted expenditure claim and to stay proceedings pending joinder were dismissed. Plaintiff's action allowed to proceed with Maybank as representative plaintiff.