Cradle Wealth Solutions v MTN Consultants & Building Management Pte. Ltd. and another

Cradle Wealth Solutions Pte Ltd, whose sole director was Mr Sathish s/o Rames, said it had invested in MTN Consultants & Building Management Pte Ltd under private placement agreements in 2017 and 2018. MTN's sole director and shareholder was Mr Nazarisham bin Mohamed Isa. Cradle Wealth, which faced claims and winding up applications from its own investor-shareholders, sued MTN, Mr Nazarisham and two others in Suit 940 of 2019.

At a mediation on 28 February 2020, after a private discussion at the Supreme Court cafe without lawyers, the parties signed a written settlement agreement drafted by Cradle Wealth's lawyers. MTN and Mr Nazarisham agreed to pay US$4,000,000 by 29 June 2020, with time being of the essence, and Cradle Wealth discontinued Suit 940. Clause 5 was an entire agreement clause excluding oral agreements not embodied in the document. The sum was not paid, and Cradle Wealth sued on the agreement in Suit No 781 of 2020.

The defendants claimed the written agreement was a sham meant to help Cradle Wealth placate its investors, and that the real oral agreement was that the US$4,000,000 would be paid only once certain alexandrite gemstones held by Mr Nazarisham were monetised. In the alternative they relied on an oral condition precedent under s 94(c) of the Evidence Act, a later Deed of Mandate dated 14 March 2020, and promissory estoppel. After the settlement, Mr Sathish and another shareholder, Mr Sylvester Ong, had in fact worked with Mr Nazarisham to try to sell the gemstones.

1. Whether the written settlement agreement was a sham
2. Whether the parties orally agreed that monetising the alexandrite gemstones was a condition precedent to payment, and whether s 94(c) of the Evidence Act allowed evidence of it
3. Whether the Deed of Mandate superseded the settlement agreement and rendered it void
4. Whether Cradle Wealth was estopped from enforcing the settlement agreement

On sham, the court first held that the defence had pleaded enough material facts for the point to be run without irreparable prejudice. Applying Snook and Toh Eng Tiah, a sham requires a common intention that the document not create the rights it appears to create, and there is a very strong presumption that parties mean to be bound. The gemstones were likely mentioned on the day of the mediation, but the court found no agreement that payment depended on their sale. The time-of-the-essence wording pointed to an intention to secure payment, no contemporaneous note recorded the alleged real deal, and the defendants' own counsel did not seek to remove the entire agreement clause. The joint efforts to sell the gemstones were explained by goodwill and a wish to speed up recovery, and on 27 June 2020 Mr Nazarisham offered to sell emeralds too and spoke of the US$4 million needing to be paid, which cut across the alleged condition.

On the condition precedent, the court held that clause 5 clearly deprived any collateral oral agreement of effect, extending the approach in Lee Chee Wei and Wen Wen Food Trading to s 94(c). It also held, against Cradle Wealth, that proviso (c) is not limited by the words of the chapeau of s 94, which would make the provisos otiose and which reflects the rule in Pym v Campbell. Such evidence would have been admissible but for clause 5. In any event, on the facts no such condition was agreed.

The Deed of Mandate was made between Mr Nazarisham, Fides Assets Pte Ltd and Mr Sathish's mother, so neither MTN nor Cradle Wealth was a party and it could not displace the settlement. Promissory estoppel failed because there was no clear promise that the agreement would not be enforced until the gemstones were sold.

The High Court allowed Cradle Wealth's claim against MTN and Mr Nazarisham. It ordered the defendants to pay US$4,000,000.00 with pre- and post-judgment interest at 5.33% per annum from the date of the writ, 24 August 2020, and costs to be agreed or taxed. All four defences failed.