Yashwant Bajaj v Toru Ueda

• Jurisdiction: Singapore
• Judge: Valerie Thean J
• Judgment Date: 22 October 2018
• Neutral Citation: [2018] SGHC 229
• Court: High Court (Singapore)
• Docket Number: Originating Summons (Bankruptcy) No 47 of 2018 (Registrar’s Appeal No 177 of 2018)
• Published date: 21 November 2019
• Year: 2018
• Hearing Date: 30 July 2018
• Plaintiff Counsel: Shaun Lee and Pravin Shanmugaraj Thevar (Bird & Bird ATMD LLP)
• Defendant Counsel: Jeremy Leong and Mohamed Najib (Acton Law LLC)
• Subject Matter: Insolvency Law,Bankruptcy,Statutory Demand
• Citation: [2018] SGHC 229

Valerie Thean J: Introduction

The plaintiff, Mr Yashwant Bajaj, and the defendant, Mr Toru Ueda, former partners in a fund management business, sued each other in the High Court as a result of disputes concerning the cessation of their partnership. After mediation, their claim and counterclaim were compromised with a settlement agreement (“Settlement Agreement”). The Settlement Agreement envisaged final calculations to be effected by an independent accountant. Following an evaluation process that did not go smoothly, the appointed independent accountant issued a qualified opinion but set out a calculation according to the rubric provided by the Settlement Agreement. This calculation resulted in a sum owing from Mr Bajaj to Mr Ueda.

Mr Ueda followed on with letters asking Mr Bajaj to pay the sum calculated by the accountant, an additional sum specified by the Settlement Agreement and Mr Bajaj’s share of the accountant’s fees. These letters were ignored. Subsequently, Mr Ueda served a statutory demand on Mr Bajaj on 17 April 2018 (the “Statutory Demand”) claiming the same.

Mr Bajaj applied to set aside the Statutory Demand. On 13 July 2018, an Assistant Registrar dismissed Mr Bajaj’s application. On 30 July 2018, I dismissed Mr Bajaj’s appeal therefrom. Mr Bajaj has filed an appeal against my decision and I set out the grounds of my decision.

Background

Mr Bajaj and Mr Ueda were partners involved in a fund management business. The fund they managed was known as the Hachiman Japan Fund. The parties managed the fund through the use of several corporate entities:¹ Hachiman Capital Management (“Hachiman Cayman”), a fund management company incorporated in the Cayman Islands in 2004; Hachiman Capital Management Private Limited (“Hachiman Singapore”), a wholly owned subsidiary of Hachiman Cayman incorporated in Singapore; TY Advisors (“TY Cayman”), a company incorporated in the Cayman Islands; and TY Advisors Japan (“TY Japan”), a branch of TY Cayman registered in Japan.

I shall refer to Hachiman Cayman and Hachiman Singapore collectively as the “Hachiman Entities”, and to TY Cayman and TY Japan as the “TY Entities”. The parties were the directors and equal shareholders of Hachiman Cayman and TY Cayman. They managed the Hachiman Japan Fund together from Japan from 2004 to 2009. For tax and regulatory reasons, the parties conducted their business activities in Japan though TY Japan. TY Japan would provide sub-advisory services to Hachiman Cayman, the offshore fund management company. From 2009 to 2011, the parties managed the Hachiman Japan Fund from Singapore through Hachiman Singapore.² In the course of their business, the parties made use of the services of two unrelated companies for corporate support: Tricor Singapore Pte Ltd (“Tricor”) a company in Singapore which provided services such as book keeping and the running of a trust account for Hachiman Singapore; and Kaneyama & Associates (“Kaneyama”) a business in Japan which handled the financial records of TY Japan.

Sometime in September 2010, the parties agreed to wind up their joint business and end their partnership. They entered into an agreement for how the assets of their business ought to be divided. Unfortunately, shortly after this agreement, there was a dispute over certain subsequent transactions and business decisions, as well as a dispute as to the precise nature and scope of their agreement. While these disputes were ongoing, Mr Bajaj resigned as a director of the TY Entities around March 2011, and also resigned as a director of the Hachiman Entities in May 2011, to enable him to take up a directorship in another fund management company.³

Mr Ueda commenced a suit against Mr Bajaj on 13 March 2013 (“the Suit”). Mr Bajaj filed a counterclaim. The parties agreed to refer the dispute to mediation and eventually resolved the Suit by entering into the Settlement Agreement on 19 August 2014.⁴

The Settlement Agreement is central to the present dispute. Its key terms are the following:⁵ Clause 1 provides that “[t]he parties are to jointly appoint an Independent Accountant to calculate and populate the entries” in “Tables X and Y”, two tables enclosed in the Settlement Agreement. Clause 2 provides a calculation formula premised on figures found in Tables X and Y (“the Settlement Amount”). Clauses 3 and 4 provide for payment of the Settlement Amount to either Mr Bajaj or Mr Ueda, depending on whether the Settlement Amount calculated is a positive or negative sum. Clause 6 provides that all “costs, fees and expenses of the Independent Accountant” as well as Singapore Mediation Centre’s (“SMC”) fee for appointing the Independent Accountant shall be borne by Mr Bajaj and Mr Ueda equally. Clause 8 provides that all parties “will take all necessary steps to procure that the parties and the Independent Accountant are to be given free and unfettered access to all documents of [Hachiman Cayman] and all related entities” for the purposes of Clause 1. Clause 9 provides that the “Independent Accountant’s calculations shall be final and binding”. Clause 10 provides that “[Mr Bajaj] is to pay [Mr Ueda] USD50,000”. Clause 14 provides that “[t]his Settlement Agreement represents a full and final settlement and/or compromise of all disputes and/or claims whatsoever arising out of or in connection with [the Suit, Hachiman Cayman, Hachiman Japan Fund, Hachiman Singapore, TY Cayman, TY Japan] or otherwise. Clause 15 provides that parties undertake to make all reasonable endeavour to implement the terms of the Settlement Agreement. Clause 16 provides that the parties undertake to return before Mr George Lim SC (“the Mediator”) for further mediation to resolve any disputes or issues arising out of the performance of this Settlement Agreement. Clause 17 provides for payment of the sums due under the Settlement Agreement by instalments, and also provides for such sums to become immediately payable upon a failure to pay any instalment within the time stipulated.

On 14 November 2014, pursuant to a Neutral Evaluation Agreement, the parties consented to the appointment of Mr Sajjad Akhtar (“Mr Akhtar”) to provide a “Neutral Evaluation Service”. It was not disputed that this was in effect appointing Mr Akhtar as the “Independent Accountant” under Clause 1 of the Settlement Agreement. Under the Neutral Evaluation Agreement, the parties agreed to a “Documents-only” Neutral Evaluation and also agreed that the terms of the SMC’s Neutral Evaluation Rules (the “Neutral Evaluation Rules”) were incorporated.⁶

The neutral evaluation process was marred by delays and various incidents. The parties initially agreed to submit an agreed statement of facts to Mr Akhtar. A draft was forwarded by Mr Ueda’s solicitors to Mr Bajaj on 12 December 2014; however, Mr Bajaj refused to finalise the agreed statement of facts.⁷ Case statements as well as replies to the case statements were filed by both parties between 12 January 2015 and 3 February 2015.⁸ These case statements contained the documents necessary to calculate and populate Tables X and Y.⁹ Mr Ueda provided an 86-page folio of documents comprising various transaction records, bank statements from 2011 and management accounts provided by Tricor.¹⁰

After reviewing the case statements and the replies, Mr Akhtar had several queries.¹¹ He thus proposed a clarification hearing to be attended by both parties. There were difficulties in arranging for a common time for this hearing, and Mr Ueda’s solicitors initially proposed that Mr Akhtar meet with each party individually instead. Mr Bajaj, however, insisted on having both parties present at the hearing.¹² Finally, both parties agreed via email on a common hearing date of 2 April 2015. Mr Ueda flew in from Tokyo to attend the hearing and provide explanations. Mr Bajaj did not appear. Mr Ueda and Mr Akhtar proceeded with the hearing in Mr Bajaj’s absence.¹³ In his 2nd affidavit, Mr Bajaj claimed that he did not agree to meet on 2 April 2015¹⁴ but Mr Ueda countered with a copy of Mr Bajaj’s email of 3 March 2015 agreeing to the date. ¹⁵

Subsequent to the hearing, Mr Akhtar requested an explanation for Mr Bajaj’s absence. Mr Bajaj claimed that he was overseas and did not receive Mr Akhtar’s email notification reminding the parties of the hearing. In his detailed description of the neutral evaluation process annexed to his Report, Mr Akhtar expressed doubt about the reasons provided by Mr Bajaj for his absence. The notification email was sent to Mr Bajaj’s usual email address and Mr Akhtar did not receive any notification of non-delivery. Mr Akhtar also noted that Mr Bajaj had previously agreed to the date.¹⁶ In his 3rd Affidavit, Mr Bajaj contended that he was in Italy organising a rock festival at the time and his residence in Italy did not have internet connectivity.¹⁷ Mr Ueda highlighted that this was unlikely for three reasons: (i) Mr Bajaj was operating as a fund manager at the time; (ii) Mr Bajaj was organising a rock festival; and (iii) his residence in Italy was described, in a news article, as a “luxury villa”.¹⁸

In order to push the process forward, Mr Ueda waived his right under Clause 7 of the Settlement Agreement to be represented in all meetings with the Independent Accountant and consented for Mr Akhtar to meet Mr Bajaj without Mr Ueda’s representatives in a separate clarification meeting.¹⁹ Notwithstanding, despite Mr Akhtar’s efforts to set up a meeting, Mr Bajaj effectively ignored him. Mr Akhtar sent several emails during the month of April 2015 requesting a suitable meeting date from Mr Bajaj, but Mr Bajaj ignored the emails.²⁰ Finally, on 3 July 2015, Mr Bajaj responded, proposing to make himself available on or after 24 August 2015. Mr Ueda was concerned about the delay in the process, and his solicitors suggested by way of an email on 10 July 2015 that the clarification hearing take place through a...