Metupalle Vasanthan and another v Loganathan Ravishankar and another

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean JAD
• Judgment Date: 20 April 2022
• Neutral Citation: [2022] SGHC(A) 18
• Published date: 26 April 2022
• Docket Number: Civil Appeal No 116 of 2021
• Plaintiff Counsel: Lee Ming Hui Kelvin and Ong Xin Ying Samantha (WNLEX LLC)
• Defendant Counsel: Lazarus Nicholas Philip and Elizabeth Toh Guek Li (Justicius Law Corporation)
• Subject Matter: Contract,Formation,Offer,Acceptance,Assignment,Waiver
• Hearing Date: 20 April 2022
• Court: High Court Appellate Division (Singapore)

Hoo Sheau Peng J (delivering the judgment of the court ex tempore): Introduction

The appellants, Metupalle Vasanthan (“Dr Vas”) and Laszlo Karoly Kadar (“Mr Laszlo”), appeal against the dismissal by the learned Judge (“Judge”) of Dr Vas’ claim against the first respondent, Loganathan Ravishankar (“Mr Logan”), for the sum of US$3.05m (the “Skantek debt”). The Skantek debt was allegedly owed by Mr Logan to Mr Laszlo, and then purportedly assigned by Mr Laszlo to Dr Vas.

Background

The facts are detailed by the Judge in Metupalle Vasanthan and another v Loganathan Ravishankar and another [2021] SGHC 238 (the “Judgment”), and we set out those relevant for the appeal.

Sometime in 2013, Mr Laszlo sold his shares in SkanTek Group Limited (“Skantek”) to Mr Logan under an oral contract for US$4m. Skantek held about 70% of the ICE Group comprising a Malaysian company, ICE Mobile Sdn Bhd, and a Singapore company, ICE Messaging Pte Ltd. Mr Logan made payments totalling US$950,000 towards the purchase price, seemingly leaving a balance of US$3.05m. In a letter dated 25 June 2014, marked “without prejudice”, a lawyer representing Mr Logan, Mr Tan Siew Bin Ronnie (“Mr Tan”) from Central Chambers Law Corporation, wrote to Mr Laszlo to acknowledge that a balance of US$2.4m for the transaction would be paid to Mr Laszlo in December 2014 (the “Central Chambers Letter”). The unpaid balance, be it US$3.05m or US$2.4m, formed the Skantek debt.

The parties fell out thereafter. When Mr Laszlo pressed Mr Logan for payment of the Skantek debt, Mr Logan claimed that Mr Laszlo fraudulently misrepresented the value of the ICE Group. He discovered, inter alia, that the ICE Group did not have major contracts lined up with telecommunications giants as represented by Mr Laszlo. Mr Laszlo disputed the allegations; he insisted on payment of the Skantek debt. Sometime after 19 December 2014, there was a telephone call between Mr Tan and Mr Laszlo (the “2014 Telephone Call”). In respect of the call, there is a comprehensive and detailed attendance note by Mr Tan (the “Attendance Note”). According to Mr Tan, during the call, in view of Mr Logan’s allegation of misrepresentation, the parties had agreed not to claim against each other. Thus, the Skantek debt had been compromised. Mr Laszlo, however, contended that during the conversation, he proposed that the parties should move on, but only after Mr Logan had paid him the sum of US$2.4m. No compromise was reached. Notably, the quantum of the Skantek debt that Mr Laszlo said he demanded is different from the US$3.05m claimed by Dr Vas.

Separately, on 13 October 2015, Mr Logan lent US$350,000 to Dr Vas’s company, Clarity Radiology Pte Ltd (“Clarity” and the “Clarity debt”). When Clarity did not repay the money, Dr Vas signed a letter dated 30 July 2017, personally guaranteeing repayment of the Clarity debt, as well as certain other sums furnished to Clarity. Under the personal guarantee, Vas was to make repayment by 30 August 2017, failing which default compound interest at 2% per month would be payable.

Notwithstanding the personal guarantee, Dr Vas made no repayment to Mr Logan. On 29 December 2017, Dr Vas and Mr Logan entered into a trust deed (the “Logan Trust Deed”). The Logan Trust Deed recorded Dr Vas’ indebtedness to Mr Logan in the sum of US$739,624.60, including interest calculated to 15 January 2018. It declared that Dr Vas held 7,000 shares in MyDoc Pte Ltd (“MyDoc”) on trust for Mr Logan. If Dr Vas did not fully repay the amount by 15 January 2018, Dr Vas would transfer those 7,000 MyDoc shares to Mr Logan, who would sell them to a third party at the best price reasonably obtainable, set-off the proceeds of sale against the indebtedness, and return any surplus to Dr Vas. One of the clauses increased the interest rate that was payable upon default.

On 15 January 2018, however, Dr Vas emailed Mr Logan stating that he had used those same 7,000 MyDoc shares as “leverage to pay [Mr Laszlo], as below email, who was owed $2.4m … from yourself. With this, having bought your debt, I hope it makes it easier for your repayment [emphasis added]” (the “15 January 2018 Email”). The email which Dr Vas forwarded was from Mr Laszlo to Dr Vas dated 14 January 2018 (the “14 January 2018 Email”). In it, Mr Laszlo thanked Dr Vas “for the payment of 3M usd from you, attached is the debt note collateral from [Mr] Logan’s lawyer confirming debt”. The attachment was the Central Chambers Letter, acknowledging that the balance of US$2.4m was due to Mr Laszlo.

Mr Logan responded via email, calling Dr Vas’s conduct “unacceptable” and that he was “coming up with a NEW SCAM”. He told Dr Vas to “please … not do anything with Mr [Laszlo] on my behalf. You have nothing to do with this except paying my loan to me”. They met later that day (the “2018 Meeting”). Shortly after the meeting, Dr Vas emailed Mr Logan saying he “[understood] that there may be a lot more behind scenes with this loan obligation to the third party”. He stated that he had “agreed to shelve this” and would write “separately about [his] loan obligation and settlement with Mydoc shares and clarity asset sale”. According to the minutes of the 2018 Meeting, Dr Vas and Mr Logan agreed to, inter alia, assign 7,000 MyDoc shares to Mr Logan, preparatory to finding a buyer for them. However, Dr Vas failed to transfer the 7,000 MyDoc shares to Mr Logan or to repay the monies recorded as owning in the Logan Trust Deed.

On 31 July 2019, Mr Logan issued a statutory demand for the amount in the Logan Trust Deed, which was served on Dr Vas on 1 August 2019. Dr Vas applied to set aside the statutory demand on the basis, inter alia, that Mr Logan owed him more than the amount demanded due to the assignment to him of the Skantek debt. The bankruptcy proceedings were unsuccessful. Meanwhile, Dr Vas also commenced this action. He claimed against Mr Logan for the Skantek debt on the basis that it had been assigned to him. The amount claimed was US$3.05m. He argued in the alternative that the amount should be set-off against the debt of US$739,624.60 owed to Mr Logan under the Logan Trust Deed.

In response, Mr Logan contended that the Skantek debt had been compromised. Mr Logan brought a counterclaim against Dr Vas for the sum of US$739,624.60 reflected in the Logan Trust Deed as damages for Dr Vas’ failure to transfer the 7,000 MyDoc shares to him. As against Mr Laszlo, Mr Logan sought damages for a breach of the compromise agreement between them to not claim against each other, and/or for fraudulent misrepresentation which led to Mr Logan’s purchase of the Skantek shares.

The decision

The Judge found that the Skantek debt had indeed been compromised during the 2014 Telephone Call. In this connection, he accepted Mr Tan’s evidence on what had transpired. He found that this was supported by the Attendance Note. In his view, Mr Tan had the authority to bind Mr Logan to a settlement. Thereafter, the parties considered the dispute between them resolved as a result of the 2014 Telephone Call, and they acted on that understanding. Further, the Judge observed that the present case was akin to Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 (“Carlill”), where the offeror (Mr Laszlo) did not expect or require any notice of acceptance other than performance by the offeree (Mr Logan) of his side of the bargain.

While the determination of the compromise issue was sufficient to fully dispose of the claim, the Judge proceeded, obiter, to deal with other points raised by the parties on the basis there was no compromise. Specifically, the Judge accepted that Mr Laszlo “did assign in equity the Skantek debt (if it existed) on or about 14 January 2018” (see the Judgment at [66]). That said, the Judge ruled that, in any event, Dr Vas had permanently waived the claim for the Skantek debt at the 2018 Meeting. Accordingly, the Judge dismissed the claim.

Turning to the counterclaim, the Judge assessed that the damages payable to Mr Logan for Dr Vas’ failure to transfer the MyDoc shares was primarily the Clarity debt with interest, amounting to US$388,281.22. The Judge dismissed all other counterclaims. There is no appeal against the Judge’s decision on the counterclaims.

The appeal

In the appeal, the appellants contend that the Judge erred in finding that the Skantek debt had been compromised, and that Dr Vas had permanently waived the claim for the same at the 2018 Meeting. Mr Logan argues that the appellants have failed to show that the Judge went wrong on these matters. Having distilled the parties’ arguments before us, there are two issues (with two sub-issues in the second one) for our consideration: Whether the Skantek debt was compromised during the 2014 Telephone Call; and Whether the Skantek debt was assigned to Dr Vas, and if so, whether Dr Vas agreed to waive his claim on 15 January 2018 at the 2018 Meeting.

Whether the Skantek debt was compromised during the 2014 Telephone Call

On the compromise issue, essentially, the appellants run two related arguments. First, the appellants argue that there could not have been a settlement during the 2014 Telephone Call. Mr Tan did not have instructions to settle to begin with at that time. In fact, Mr Tan had explicitly informed Mr Laszlo that he would relay Mr Laszlo’s proposal to Mr Logan and would take instructions from Mr Logan. Furthermore, Mr Laszlo had also stated, in his email to Mr Tan requesting a call, that this would be “absolutely off the record”. Any compromise should have been recorded in an open letter at the very least. Second, on the premise that Mr Laszlo did offer to settle the dispute, the appellants submit that this was never formally accepted by Mr Logan. Silence cannot amount to acceptance. On the face of the Attendance Note, during the call, there was merely an offer by Mr Laszlo to settle the dispute. If there was subsequent acceptance...