TAHNOON PASHA v AVERE MARK HILL & Anor

Facts

Mr Tahnoon Pasha, Mr Avere Mark Hill and Mr Chionh Chye Kit were shareholders of Cynopsis Solution Pte Ltd; Mr Hill and Mr Chionh were also its directors. On 3 February 2021 Mr Pasha agreed to sell his 170,266 shares to them and a third buyer for $6,750,000, payable in four tranches with interest. The first tranche and the principal of the second were paid, but the defendants then sought repeated extensions. On 7 November 2023 the parties signed two separate documents: a Side Letter raising the interest rate to 8.5% and requiring payment on a sale of the company or, failing a sale, by 24 June 2025; and an Advisory Contract under which Mr Pasha would advise on a sale for a fixed fee of $250,000 plus a performance payment. Clauses 5.4 and 5.5 of that contract required him to act with independence and in good faith to promote a sale and for the benefit of the company as a whole. A later Addendum of 9 November 2024 raised the interest on the last tranche to 9% and extended it to 26 June 2025. No sale took place and nothing was paid.

Mr Pasha sued for the debt in Originating Claim No 591 of 2025 on 28 July 2025. The defendants counterclaimed that by suing he had breached clauses 5.4 and 5.5, and alleged that investors withdrew as a result. The Assistant Registrar struck out the counterclaim and entered summary judgment for Mr Pasha on 12 November 2025. The defendants appealed in Registrar's Appeal No 230 of 2025, pursuing only the counterclaim under clauses 5.4 and 5.5.

Issues

1. Whether the counterclaim that suing for the debt breached the duty to act independently and in good faith under clause 5.4 disclosed a reasonable cause of action.
2. Whether clause 5.5, the duty to act for the benefit of the company, could restrain Mr Pasha from enforcing the debt.
3. Whether the counterclaim raised a novel issue of law that made striking out inappropriate.
4. Whether the counterclaim was factually unsustainable in light of the contracts and correspondence.

Holding

The High Court dismissed the defendants' appeal. It affirmed the Assistant Registrar's orders striking out the counterclaim under O 9 r 16(1)(a) and (c) of the Rules of Court 2021, as legally and factually unsustainable, and entering summary judgment for Mr Pasha. It made no finding on abuse of process and did not need to decide set-off or a stay of execution. Costs were fixed at $18,000 all in, payable by the defendants to Mr Pasha.

Reasoning

On independence, this point was not pleaded, and the authorities relied on, which concerned independent advice when gifts are challenged, came from a very different setting. Mr Pasha never held himself out as free of conflicting interests: he agreed to advise precisely because he was owed money and the defendants said a sale was the only way they could repay. Any duty of independence attached to the advice he gave, and the defendants did not say that advice was tainted.

On good faith, the defendants relied on Re Compound Photonics to argue for a duty of fidelity to the bargain. The court read that case as cautioning against using a good faith clause to import unexpressed obligations, especially in a professionally drafted contract with an entire agreement clause, as this one had. Australian authority discussed there held that good faith does not require a party to subordinate its own interests to the other's. A duty in one contract could not forbid conduct entirely outside it, such as enforcing a debt under a separate earlier contract. Clause 5.5 failed for the same reasons.

On novelty, a novel point of law can make striking out inappropriate, but only where it has some footing in authority or the contract. This point had neither.

On the facts, the Side Letter and the Advisory Contract did not refer to each other, the Side Letter expressly provided for payment if no sale happened, and the correspondence showed Mr Pasha consistently warning that he would sue and wanting not to be out of pocket. Mr Hill had himself called the debt a private matter with nothing to do with the company. Nothing showed any agreement that Mr Pasha would wait for a sale before being paid.

From the judgment