Litigation Recent Decisions 11/07/95

Unsatisfied performance bond in building contract

Trafalgar House Construction (Regions) v General Surety & Guarantee Co (1995)

HL (Lords Keith, Ackner, Jauncey, Lloyd and Steyn) 29/6/95.

Summary: Surety's rights and liabilities under a performance bond for the completion of a building sub-contract and whether it was in the nature of a guarantee.

Under a sub-contract for the construction of a leisure complex the sub-contractor KD Chambers (Chambers) undertook to provide the main contractors with a bond for the sum of £101,285 which it did jointly with the appellant. In September 1990 administrative receivers were appointed over Chambers who confirmed that Chambers could not complete the sub-contract and thereafter the respondent completed the necessary work itself. The respondent obtained judgment under RSC O.14 for the amount of the bond against the appellant, who was denied leave to defend. The appel- lant's appeal was against the dismissal of its appeal from that decision.