DEEPAK MISHRA & Anor v RASHMI BOTHRA

Facts

Deepak Mishra and his wife Nimisha Pandey became close friends with Rashmi Bothra and her husband Rajesh Bothra in Singapore around 2011 or 2012. From 2011 the claimants and Rashmi, directly and through companies they owned or controlled, made loans and payments to each other, forming a running account of 287 transactions; Rajesh handled the transactions for his wife but was not a party. The relationship broke down in February 2021, and in Originating Claim No 593 of 2023 the claimants claimed US$54,752,064 under the account, while Rashmi counterclaimed US$137,112,023. The trial concerned 89 disputed transactions, grouped into ten issues; the rest were undisputed.

During his testimony, Deepak described letter of credit discount trades in which he remitted money to Indian companies, which procured letters of credit in favour of Rashmi's companies for goods that, he said, were never shipped; Rajesh had the letters of credit discounted and paid most of the proceeds to Deepak's companies, keeping a 2.5% handling fee whose balance the two men shared. Deepak admitted this misled the banks. The claimants then withdrew all their claims except one about a jointly owned penthouse, contending the whole running account was unenforceable for illegality. Rashmi denied illegality and pressed her counterclaim.

Issues

1. Whether the letter of credit discount trades, and with them the whole running account, were unenforceable for illegality
2. Which of the disputed payments Rashmi could claim under the running account
3. How the parties' claims over the acquisition cost, expenses and mortgage repayment for the penthouse should be resolved

Holding

The High Court allowed Rashmi's counterclaim in part and entered judgment for her for US$71,321,679.83, with interest at 5.33% a year from the date of the originating claim until judgment. The claimants' remaining penthouse claim failed. Costs submissions were to be filed within 14 days.

Reasoning

Applying Fan Ren Ray and others v Toh Fong Peng and others [2020] SGCA 117, unpleaded illegality may bar enforcement where all the relevant facts are before the court and the illegal object is clear. The court found that 15 of the disputed payments were proven to be repayments from letter of credit discount trades: Rajesh admitted most came from discounting proceeds less the handling fee, and a reconciliation email showed excess proceeds owed back to the Indian party, which would make no sense for genuine sales. Rajesh's denials were not believed, and as Rashmi chose not to recall him to show goods were shipped, an adverse inference was drawn. Those trades had the illegal object of deceiving the banks, so those 15 payments were unenforceable. Ten others were not shown to be linked to such trades, for example because the payment came before the letter of credit was issued.

The illegality did not taint the whole account: there was no evidence it was set up for that purpose, many transactions were unrelated, and a running account claim requires each transaction to be assessed. Rashmi was entitled to the undisputed balance of US$41,272,115. Payments to an entity called Mystic and a payment described as a loan repayment fell outside the account, and two other payments were found to repay earlier sums from Deepak's companies.

On the penthouse, the claimants could not count payments already credited in the undisputed transactions, so they owed half of Rashmi's excess contribution to the purchase. Their proven expense payments were less than the rental income, so they had no claim for expenses. No agreement relieved them of half the mortgage repayment.

From the judgment