Max Sources Pte Ltd v Agrocon (S) Pte Ltd and another

• Jurisdiction: Singapore
• Judge: Colin Seow AR
• Judgment Date: 21 April 2015
• Neutral Citation: [2015] SGHCR 11
• Citation: [2015] SGHCR 11
• Court: High Court (Singapore)
• Published date: 23 April 2015
• Docket Number: Suit No 1155 of 2014 (Summons No 174 of 2015)
• Plaintiff Counsel: Mr Mohammad Haireez (Haridass Ho & Partners)
• Defendant Counsel: Mr Ong Ying Ping (OTP Law Corporation) (instructed) and Mr Thangavelu (Thangavelu LLC)
• Subject Matter: Contract,Compromise,Settlement Agreement,Formation,Consideration,Forbearance,Civil Procedure,Summary Judgment
• Hearing Date: 20 March 2015,17 March 2015

Colin Seow AR: Introduction

This is an application for summary judgment (“O 14 application”) taken out by Max Sources Pte Ltd (“the Plaintiff”) against Agrocon (S) Pte Ltd (“the 1st Defendant”) and Mr Ramiah Kumanaruban (“the 2nd Defendant”), on the basis of an alleged settlement agreement entered into between the parties.

Background

The Plaintiff and the 1st Defendant are Singapore-incorporated companies engaged in the business of general wholesale trade. The 2nd Defendant is at all material times the sole director and sole shareholder of the 1st Defendant.

The Plaintiff has commenced Suit No 1155 of 2014 against both the Defendants claiming a sum of $378,578.87 (before interest and costs), being the amount due and payable by the Defendants pursuant to an alleged settlement agreement (“the alleged Settlement Agreement”) entered into between the parties sometime in March 2014. The alleged Settlement Agreement reads as follows:

MAX SOURCES PTE LTD

61 Bukit Batok Crescent Hex 02-05

Heng Loong Building Singapore 658078

Date:- 03/03/2014

I, Kumanaruban (Director of Agrocon (S) Pte Ltd), [identity number redacted] confirm hereby that I owe Max sources pte ltd SGD378578

(three hundred seventy eight Thousand five hundred and seventy eight dollars Only).

I am issuing my company Agrocon S pte ltd cheques to Max sources pte ltd. I will pay to Max sources as per mentioned here under.

30th March 2014 SGD15000 OCBC Chq number 875949

25th April 2014 SGD 20,000 OCBC Chq number 875950

20th May 2014 SGD 65000 OCBC Chq 875951 or 5c supply of 5% broken rice IR64 at the rate mutually agreeable. As soon as cargo arrive and released to Max sources account, Max sources will issue SGD20,000 cheque to Agrocon S pte ltd, Cheque will only be issued once cargo is released to Max sources account.

20th June 2014 SGD65000 ocbc chq 875952 or 5c supply of 5% broken rice IR64 at the rate mutually agreeable.

20 July 2014 SGD65000 ocbc chq875953 or 5c supply of 5% broken rice IR64 at the rate mutually agreeable.

28 August 2014 SGD65000 Ocbc chq 875954 or 5c supply of 5% broken rice IR64 at the rate mutually agreeable.

20 September 2014 SGD 65000 ocbc chq875955 or 5c supply of 5% broke swarna or IR 64 at the rate mutually agreeable.

15th October 2014 SGD18,578.00 OCBC Chq 875956.

Cheques will be kept as guarantee till cargo is supplied of acceptable quality. Once cargo is supplied cheques will be returned back to Kumanaruban and/or Agrocon S pte ltd. Incase cargo is not supplied to max sources, Max sources will reserve right to bank in cheque and onus goes to Kumanaruban and/or Agrocon S pte ltd to clear the cheques. One week grace period will be given if necessary to Agrocon before on the date of cheque due date to honour cheque and keep sufficient balance into their bank account. In the Event Cargo is not supplied and/or Cheques are also not honoured Max sources pte ltd has right to claim this legally along with interest as per Singapore regulation.

Its Upto Max sources pte ltd whether they want cheque or supply of commodity rice and/or sugar.

Cargo will be supplied before 15th of each month and cheque to be dated also of the same date every month 15th of that particular month.

Thanks & Regards

[signed]

Rasia Kumanaruban

[identity number redacted]

Shareholder/Director/Personal capacity.

The Defendants have denied the Plaintiff’s claim in its entirety. Before me, Mr Ong Ying Ping who is instructed counsel for the Defendants has sought to resist the O 14 application by casting doubts over the Plaintiff’s case that the alleged Settlement Agreement was a genuine and valid settlement agreement between the parties. In doing so, Mr Ong has advanced broadly four strands of argument which may be summarised as follows.

First, Mr Ong submits that there is no reference to any dispute between the parties to be found in the alleged Settlement Agreement. Speaking from his experience as a lawyer who has dealt with a fair number of compromise agreements in practice, Mr Ong points out that this is unusual and should accordingly be taken into consideration by the court in determining whether a settlement agreement truly exists in the present case.

Second, in the Statement of Claim, the Plaintiff claims that the alleged Settlement Agreement had arisen out of a dispute in relation to an oral profit-sharing agreement (“the Underlying Oral Agreement”) which was entered into between the Plaintiff and both the Defendants for the execution of the sale and purchase of white long grain rice between Singapore and Batam, Indonesia.¹ However, the Defendants in their Defence allege that the Underlying Oral Agreement was a sham transaction created by one Mr Ravi Shankar (a director of the Plaintiff) (“Ravi”) in order for him (Ravi) to deceive his wife and co-director, one Mdm Tilokani Bharti Murlidhar (“Bharti”), into “thinking [that] the profit-sharing transactions were made with the 1st Defendant” when “[i]n fact, the transactions were made between [Ravi] and other parties in Batam, Indonesia, including a company known as PT Maxal Management”.² In other words, the Defendants are asserting that the 2nd Defendant was never involved in his personal capacity in any business transactions under the Underlying Oral Agreement. As such, Mr Ong argues that there is no reasonable explanation as to “why the 2nd Defendant should issue [the alleged Settlement Agreement] in his “personal capacity”” (emphasis in original) unless he was providing a personal guarantee to the Plaintiff, which Mr Ong adds is “incredibly curious” in the present case.³

At this juncture, I should also add that the 2nd Defendant has raised some further allegations in the present O 14 application with the intent to impugn the alleged Settlement Agreement. In the 2nd Defendant’s first show cause affidavit, it was alleged, inter alia, that: the 2nd Defendant signed the alleged Settlement Agreement because Bharti had threatened the safety of him and his family;⁴ and in any event, the 2nd Defendant was under the impression that he was signing the alleged Settlement Agreement only on behalf of the 1st Defendant.⁵

The third pillar of Mr Ong’s submission is that the amount claimed pursuant to the alleged Settlement Agreement fails to tally with the documentary evidence of the invoices disclosed so far in the proceedings. As such, Mr Ong contends that this constitutes yet another anomalous factor surrounding the alleged Settlement Agreement that raises a triable issue as to whether the alleged Settlement Agreement is in fact a genuine compromise arrived at by the parties.

Lastly, Mr Ong argues that even if this court is not persuaded that any triable issue has been raised in the present case, the case should nonetheless still proceed to trial under the alternative limb provided in O 14 r 3(1) of the Rules of Court (Cap 322, R 5) (“Rules of Court”), viz. on the ground that “there ought for some other reason to be a trial”. To support this argument, Mr Ong refers to the English authority of Miles v Bull [1969] 1 QB 258 at 265-266 which has been applied locally by the High Court in Concentrate Engineering Pte Ltd v United Malayan Banking Corp Bhd [1990] 1 SLR(R) 465; and in reference to the present case, Mr Ong argues that (a) there has been certain unconscionable practices on the part of Ravi and/or the Plaintiff in undercutting the selling price of the rice under Underlying Oral Agreement,⁶ and (b) “[t]o allow the Plaintiffs to obtain judgment after such unconscionable behavior – which effectively prevented [inter alia] the Defendants […] from selling the rice would be unjust, and would fall under “for some other reason to be trial of that claim” under Ord 14 r 3(1)”.⁷

Against the Defendants’ submissions, counsel for the Plaintiff, Mr Mohammad Haireez, submits, inter alia, that the Defendants are making an impermissible attempt to revisit the merits of the underlying dispute between the parties, as the parties have already agreed to settle their dispute via the alleged Settlement Agreement. Mr Mohammad Haireez also argues that the 2nd Defendant’s allegations of duress and misimpression with respect to his signing of the alleged Settlement Agreement (see [7] above) should be disregarded in this O 14 application because these are matters not previously pleaded in the Defence. It is also submitted that the unpleaded allegations are devoid of merit in any event.

Issues before the court

In the course of submissions, it became apparent to me that the following are the issues pertinent to the present O 14 application: whether the Plaintiff has successfully established a prima facie case that the alleged Settlement Agreement is a valid settlement agreement, and if so whether sufficient cause has been shown by the Defendants as to why summary judgment should not be entered against them; if the alleged Settlement Agreement has not been established as such, whether summary judgment could still be entered against the Defendants on the basis that the alleged Settlement Agreement nevertheless represents an admission of liability by the Defendants; and if leave to defend is ultimately granted in favour of the Defendants, whether such leave to defend should be conditional or unconditional.

I will address each of these issues in sequence.

The decision Whether the Plaintiff has successfully established a prima facie case that the alleged Settlement Agreement is a valid settlement agreement

From the outset, I thought I should first address the Plaintiff’s contention that the Defendants should not be allowed in the present proceeding to revisit the merits of the underlying dispute between the parties, given the existence of the alleged Settlement Agreement (see [10] above).

In determining an O 14 application where a settlement agreement exists, it is true that a court will generally not look beyond the four corners of the settlement agreement...