TARUN HOTCHAND CHAINANI v AVINDERPAL SINGH S/O RANJIT SINGH & 2 Ors

Facts

Tarun Hotchand Chainani (the plaintiff) and Avinderpal Singh s/o Ranjit Singh (the first defendant) are former business partners, equal shareholders and directors of Avitar Holdings Pte Ltd, and directors of its wholly-owned subsidiary Avitar Enterprises Pte Ltd. In Suit No 703 of 2020 the plaintiff alleged that around 2005 the two men reached an understanding (the Understanding) to use the subsidiary's funds to invest in stock or real estate, and to account to each other and the company for the principal and share the profits equally. He claimed the first defendant had breached it by buying local and overseas properties with company funds without accounting and sought relief including an account and winding up under s 216 of the Companies Act.

The first defendant's original Defence denied the Understanding. The two men later signed a settlement agreement appointing an auditor to account for properties in its schedule, which included the local properties in paragraph 10 of the Statement of Claim. At hearings of the plaintiff's discovery application in April 2022, the first defendant's counsel confirmed that he accepted the Understanding as pleaded, and the plaintiff withdrew part of his discovery request. The first defendant's amended Defence then admitted paragraph 8 "to the extent that there was an understanding between the parties" limited to the scheduled transactions. After the plaintiff amended his claim again to add an overseas property in Dubai, the first defendant filed Defence (Amendment No 2), adding a sentence saying the paragraph 10 transactions were not part of the Understanding. The plaintiff applied by Summons No 671 of 2023 to strike out that sentence. An Assistant Registrar heard the application.

Issues

1. Whether the added sentence in the first defendant's Defence (Amendment No 2) was a genuine consequential amendment
2. Whether the added sentence was an attempt to resile from admissions the first defendant had made about the Understanding
3. Whether the first defendant had given a cogent reason to be allowed to withdraw those admissions

Holding

The Assistant Registrar allowed the plaintiff's application and struck out the sentence. The first defendant was ordered to re-file and serve his Defence (Amendment No 2) without it, the plaintiff was given liberty to file an amended Reply within 14 days after that, and the first defendant was ordered to pay costs of the application fixed at $5,500, inclusive of disbursements.

Reasoning

The plaintiff's latest amendment added an overseas property in paragraph 13 and left paragraphs 8 to 10 and the definition of the Understanding unchanged. The disputed sentence dealt with paragraphs 8 and 10 and did not mention paragraph 13, so it could not be a consequential amendment; the first defendant had in any case dealt with the Dubai property in a separate new line. That finding alone did not decide the matter, since a non-consequential amendment may still raise a real issue, so the court went on to ask whether it withdrew an admission.

Drawing on Hollis v Burton [1892] 3 Ch 226 and an Australian decision, the court held that a party who seeks to withdraw an admission must give a sensible explanation, backed by substantial evidence, that the admission was a mistake. Here the existence of the Understanding had been admitted through counsel at the discovery hearings, in a letter, and in the amended Defence. Because the first defendant accepted that the paragraph 10 local properties were among the scheduled transactions, he had also admitted that the Understanding applied to them. The court rejected his argument that a lower-case "understanding" in his pleading meant only a narrower duty to account, finding that the wording referred expressly to paragraph 8, that the distinction had never been raised before, and that it appeared to be an afterthought.

The admissions were clear and considered, not inadvertent, and no cogent explanation was offered for retracting them. The sentence was therefore an impermissible attempt to reopen a settled issue. The court stressed that whether the Understanding was actually breached remains for trial.

From the judgment