Gomez v Kuhadas

Federal Court of Australia|2015-06-05|Before: Gleeson J

Parte Feast (1887) 4 MB 36 Reece v Webber [2011] FCAFC 33; (2011) 192 FCR 254 Shannon v Commonwealth Bank [2014] FCAFC 108; (2014) 318 ALR 420 Sobey v Nicol [2007] FCAFC 136; (2007) 245 ALR 389 Ter Yin Wei v Lim Leet Fang [2012] SGHC 82 Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; 186 CLR 574 Vasiliou v Marchesi [2008] FCAFC 129

Counsel for the Appellant: The Appellant appeared in person

Counsel for the Respondent: The Respondent appeared in person

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

JUDGE: GLEESON J DATE OF ORDER: 5 JUNE 2015 WHERE MADE: SYDNEY

The appeal be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 622 of 2014

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

JUDGE: GLEESON J DATE: 5 JUNE 2015 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The appellant ("Mr Gomez") appeals from a decision of a judge of the Federal Circuit Court ("FCC") to set aside bankruptcy notice BN169661 issued on 26 February 2014 against the respondent ("Mr Kuhadas"): Kuhadas v Gomez [2014] FCCA 1130. 2 The bankruptcy notice was founded upon orders of the Supreme Court of New South Wales made on 14 February 2014 made pursuant to the Foreign Judgments Act 1991 (Cth) ("Foreign Judgments Act"). By those orders, Mr Gomez obtained registration of a judgment of the High Court of the Republic of Singapore dated 28 October 2011 in the sum of S$1,211,289.70 plus interest and costs against Mr Kuhadas ("Singapore judgment"). 3 The amount of the Singapore judgment was assessed following entry of a default judgment against Mr Kuhadas. 4 On 30 August 2012, Mr Gomez filed a creditor's bankruptcy application with the High Court of Singapore ("Singapore bankruptcy application"), based upon the Singapore judgment. That application was returnable before a Registrar on 4 October 2012, and the proceedings were then adjourned a number of times. After negotiations, Mr Gomez and Mr Kuhadas made an agreement, the subject of this appeal, on about 22 February 2013. Pursuant to that agreement, Mr Kuhadas paid Mr Gomez an amount of S$25,000 and provided him with executed documents for the issuance of shares in a company called Magnetron Insurance & Financial Services Pty Ltd ("Magnetron"). On 7 March 2013, on Mr Gomez's application, leave was granted to withdraw the Singapore bankruptcy application. 5 Mr Kuhadas' application to set aside the bankruptcy notice was accompanied by an affidavit sworn by him on 20 March 2014. At paragraph 16(a) of this affidavit, Mr Kuhadas identified as a ground for his application: Compliance with the "scheme of arrangement" proposed by Boey via his email of 22nd February 2013 is deemed as full and final settlement of the judgment debt. Furthermore i) Boey in his email of 22 February or 7th March 2013 did not expressly relay to me that the proposed "scheme of arrangement" for my compliance for discontinuing the bankruptcy proceeding was only part payment of judgment debt. ii) Boey also did not at any time after 7th March 2013 convey to me in writing that the settlement "reached via his email of 22 February 2013 and my acting on same was only to be treated as part payment of the judgment debt.… 6 "Boey" is a solicitor who acted for Mr Gomez. His full name is Boey Swee Siang ("Mr Boey"). 7 By a notice stating Mr Gomez's grounds of opposition to the application, filed on 9 April 2014, Mr Gomez stated his intention to oppose the application on the following ground, among others: At no time either before or after entry of the Judgment did [Mr Gomez] agree to compromise the debt the subject of the Judgment. The whole of the amount [Mr Kuhadas] was ordered to pay in the Judgment remains due and payable.

Primary judge's reasons 8 The primary judge noted Mr Gomez's acceptance that he and Mr Kuhadas made an agreement on 22 February 2013. His Honour identified two issues for determination being: (1) Assuming that the 22 February 2013 agreement discharged Mr Kuhadas of his obligation to perform the Singapore judgment, does that constitute a ground for setting aside the bankruptcy notice? (2) If yes, did the 22 February 2013 agreement discharge Mr Kuhadas of his obligation to satisfy the Singapore judgment? 9 The primary judge concluded (at [76] and [77] of his reasons) that: (1) Mr Kuhadas had given "substantial reasons for questioning whether the registration of the Singapore judgment could withstand being set aside on the ground that it had been released within the meaning of s 7(2)(a)(ix) of the [Foreign Judgments] Act"; (2) The Singapore judgment was released as a result of the 22 February 2013 agreement and Mr Kuhadas satisfying items 1, 3 and 4 of the email dated 22 February 2013 from Mr Boey to Mr Kuhadas ("Mr Boey's email", set out in full below); (3) The registration of the Singapore judgment was therefore liable to be set aside under s 7 of the Foreign Judgments Act; (4) The debt demanded in the bankruptcy notice based on the registration of the Singapore judgment was not a debt that Mr Kuhadas owed Mr Gomez; (5) Accordingly, the bankruptcy notice should be set aside.

22 February 2013 agreement 10 The primary judge made the following undisputed findings about the agreement: (1) Sometime before 22 February 2013, Mr Kuhadas opened negotiations with Mr Boey, acting on behalf of Mr Gomez. Those negotiations resulted in an agreement contained in an exchange of emails between Mr Kuhadas and Mr Boey. The first email is Mr Boey's email, which states: Dear Sir, In response to your e-mail: 1. The first tranche of S$25,000 shall be paid to us by no later than 1 March 2013 at 4 p.m. 2. The second tranche of S$25,000 shall be paid to us upon sale of of [sic] your unit in Ballota Park, with interest at the rate of 10% p.a. from 1 March 2013 until date of full payment. 3. We shall continue to retain your cheque of S$50,000 as security for the above payment. 4. You shall sign and return the properly and duly executed documents for the issuance of new Magnetron shares by today, 4 p.m. In consideration of the same, our client is agreeable to withdraw the bankruptcy application once items 1 and 4 have been done, and you have unequivocally given your agreement to item 3. (2) Mr Kuhadas responded by email he sent from Sydney on 22 February 2013: Hi Boey Swee Siang I just arrived in Sydney from Singapore at 6pm australian time today and read your message upon reaching home Enclosed, please find the respective documents for the creation of new share certificates as well as the transfer of shares of MAGNETRON INSURANCE Yes I agree to Item 3 and I will ensure $25,000 is paid to your office no later than 1st March 2013 and the balance $25,000 will accrue interest at 10%p.a till paid Thank you for your assistance. (3) The agreement was supported by the following consideration flowing from Mr Kuhadas: (a) The promise to pay part of the Singapore judgment; (b) The promise to pay interest at the rate of 10% on the amount of S$25,000 pending payment of that amount on sale of the unit at Ballota Park; (c) The promise to sign and return documents necessary for the issuing of new shares in Magnetron; (d) The promise to take steps to sell the Ballota Park unit; (e) The agreement to Mr Gomez's retention of a cheque for S$50,000 as security for the payment of the S$25,000 from the sale of the Ballota Park unit. 11 On 7 March 2013, Mr Boey sent the following email to Mr Kuhadas: Dear Sir, Please be informed that the bankruptcy petition filed by my client was heard today, and, as per the agreement between parties, in consideration of your payment of S$25,000 upfront, and a further S$25,000 (with interest at the rate of 10% p.a.) to be paid upon the sale of your property at Balotta Park [sic], we applied for leave to withdraw the bankruptcy application.

Findings about sale of Ballota Park unit 12 The primary judge noted Mr Kuhadas' evidence that he had placed the property at Ballota Park on the market but "till todate [sic] there has been no firm offer". The primary judge inferred that Mr Kuhadas had no equity in the property beyond the S$25,000 he agreed to pay to Mr Gomez because "if Mr Kuhadas held equity in a greater amount, it is reasonable to expect that Mr Gomez would have succeeded in extracting an agreement from Mr Kuhadas to pay more than the SGD25,000".

Grounds of appeal 13 The notice of appeal contains six grounds of appeal. They are that the primary judge erred: (1) in finding that the 22 February 2013 agreement discharged Mr Kuhadas of his obligation to pay the Singapore judgment debt; (2) in finding that the words "to withdraw the bankruptcy application" in the 22 February 2013 agreement are to be construed as "to withdraw the bankruptcy application and thereby release you from your obligation to pay the judgment on which the bankruptcy application is based"; (3) in failing to give the words "in consideration of the same, our client is agreeable to withdraw the bankruptcy application" their plain meaning; (4) in implying into the 22 February 2013 agreement the words "and thereby release you from your obligation to pay the judgment on which the bankruptcy application is based"; (5) in finding that it would be fair and equitable to imply a term that upon the coming into effect of the 22 February 2013 agreement, Mr Kuhadas would be released of his obligation to pay the Singapore judgment; (6) in finding that an implied term in the 22 February 2013 agreement that, upon the coming into effect of the agreement Mr Kuhadas would be released of his obligation to pay the Singapore judgment, would not contradict any express term of that agreement.

Mr Gomez's application to adduce further evidence 14 In his written submissions, Mr Gomez (who represented himself on the appeal) foreshadowed an application to adduce further evidence comprising: (a) The full set of 19 emails exchanged between Mr Boey and Mr Kuhadas leading to the emails of 22 February 2013; (b) Transaction reports said to relate to Mr Kuhadas' disposal of assets in Singapore "thus negating the effectiveness of the 1st BA" (a reference to bankruptcy proceedings against Mr Kuhadas in Singapore that were withdrawn by Mr Gomez); (c) An email communication between Mr Kuhadas and his travel agent dated 8 December 2012. 15 At the hearing, Mr Gomez sought to tender two other documents, being correspondence from two banks in Singapore dated in January 2013 concerning garnishee orders directed to the banks at Mr Gomez's request. 16 Section 27 of the Federal Court of Australia Act 1976 (Cth) provides relevantly: In an appeal, the Court shall have regard to the evidence given in the proceedings out of which the appeal arose, and has power to draw inferences of fact and, in its discretion, to receive further evidence, which evidence may be taken: (a) on affidavit; or (b) by video link, audio link or other appropriate means in accordance with another provision of this Act or another law of the Commonwealth; or (c) by oral examination before the Court or a Judge; or (d) otherwise in accordance with section 46. 17 The discretion to receive further evidence on appeal is a wide one, but must be exercised judicially: Computer World (Victoria) Pty Ltd v Internet Centre of Excellence 2000 Pty Ltd [2006] FCA 752 at [15] citing CDJ v VAJ (No 2) [1998] HCA 76; (1998) 197 CLR 172 at 185. In Computer World, Weinberg J identified finality, discoverability of the evidence and its likely effect on the orders made as factors that are usually relevant to the exercise of the discretion. 18 The discretion is to be exercised in the context of an appeal by way of rehearing, in which the Court is required to determine the rights of the parties upon the facts and in accordance with the law as it exists at the time of hearing the appeal: Sobey v Nicol [2007] FCAFC 136; (2007) 245 ALR 389 at [69]. While this might suggest that further evidence should generally be admitted, the Full Court in Sobey confirmed that the following statement of the plurality in Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7 remains relevant: It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. 19 Relevant considerations include whether: (1) The party seeking to adduce evidence can show that it could not, with reasonable diligence, have been adduced at the trial; and (2) The evidence is such that very probably the result would have been different: NASB v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 24 at [42]; Reece v Webber [2011] FCAFC 33; (2011) 192 FCR 254 at [15]; Shannon v Commonwealth Bank [2014] FCAFC 108; (2014) 318 ALR 420 at [126]. 20 An application to adduce further evidence should be supported by an affidavit explaining why the evidence now sought to be adduced was not led at the trial: Vasiliou v Marchesi [2008] FCAFC 129 at [5] and rule 36.57 of the Federal Court Rules 2011 (Cth). As Mr Gomez was self-represented and no such affidavit was read, I asked him to explain to me why the evidence was not tendered to the FCC. His explanation was, in substance, that the significance of the material was not apparent at that time because Mr Kuhadas' case in reliance on the 22 February 2013 emails was not clearly articulated. As a secondary point, Mr Gomez claimed that his legal advisers had failed to recognise that the material should have been tendered. 21 I do not accept the first proposition. The outline of submissions lodged on behalf of Mr Gomez in the FCC summarises one of the grounds relied upon by Mr Kuhadas to set aside the bankruptcy notice as follows: That the amount claimed in the bankruptcy notice is not due because on 22 February 2013 the parties entered into a "scheme of arrangement" by which the judgment debt was fully and finally settled…and accordingly there was no debt in existence capable of supporting the bankruptcy notice. 22 In response to that ground, Mr Gomez's outline of submissions states: …the respondent denies the applicant's allegation that the Singapore Judgment debt was fully and finally settled by virtue of the "scheme of arrangement" the applicant alleges: i. The "scheme of arrangement" was not an agreement to compromise the Singapore Judgment debt, nor an agreement to refrain from commencing any further proceedings to seek to enforce the Singapore Judgment debt… ii. The terms of Mr Boey's email very clearly state the scope of the agreement. They are that in consideration of the applicant satisfying the conditions, including paying the first instalment, "the respondent was "agreeable to withdraw the bankruptcy applicant". Those are the terms of agreement the applicant accepted, and he acknowledges at paragraph 10 of his first affidavit that the "scheme of arrangement" was "for discontinuing the bankruptcy motion". iii. The applicant is misconstruing the terms of that agreement to conflate the words "withdraw the bankruptcy application" with "fully and finally settle the judgment debt". The words of the agreement are plan [sic] and make no reference to any general release of the applicant from liability for the Singapore Judgment debt. 23 This material shows that Mr Gomez (or at least his legal advisers) knew of and addressed the case put by Mr Kuhadas by reference to the 22 February 2013 emails. 24 As to the second point, that is not a satisfactory explanation for the failure to adduce the further evidence before the FCC. 25 Apart from the 19 emails, the further evidence sought to be adduced is not relevant to the issue on the appeal, which is the proper construction of the 22 February 2013 agreement. Accordingly, the application to tender that evidence is rejected. 26 As to the 19 emails, while one or more those emails may be relevant to the issue at hand, it is far from clear that they advance Mr Gomez's case. For example, on more than one occasion, in January 2013 Mr Kuhadas referred to his proposal as being to the effect that Mr Gomez "walks away" with $50,000. Later in January 2013, Mr Kuhadas also said: "All I want is to be free man and try to rebuild my career and life…". An email from Mr Boey dated 29 January 2013 quotes Mr Kuhadas as saying that his relative "agreed to advance…$50,000 to offer to Kevin as a one time settlement inorder [sic] for Kevin to drop the bankruptcy". An email from Mr Kuhadas, also dated 29 January 2013, expresses his "heartfelt thanks to a good resolution to the long drawn matter, a decision they will never regret". In February 2013, Mr Kuhadas said that the best he could do "is to offer $25,000 as full and final settlement to discharge me from bankruptcy and the related mental harassment it is causing me". 27 In those circumstances, given that the emails were available to be tendered at the FCC hearing and that I do not accept Mr Gomez's explanation for why they were not tendered, in my view, I should not allow this additional evidence to be received on the appeal.

Nature of appeal 28 The power to set aside a bankruptcy notice arises from s 30 of the Bankruptcy Act 1966 (Cth), which specifies the general powers of courts in bankruptcy. The Act confers no general discretion to set aside a bankruptcy notice that is valid in form and not an abuse of process: Re Briggs; Ex Parte Briggs v Deputy Commissioner of Taxation (WA) (1986) 12 FCR 310 at 311-312; Re Athans; Ex Parte Athans (1991) 29 FCR 302 at 310; Australian Securities and Investments Commission v Forge [2003] FCAFC 274; (2003) 133 FCR 487 at [27]. 29 The primary judge was satisfied that the FCC had power to set aside a bankruptcy notice based on a foreign judgment registered under s 6 of the Foreign Judgments Act, and that the FCC would exercise that power where the judgment debtor has given substantial reasons for questioning whether in truth and reality the foreign judgment ought to have been registered, or for questioning whether its registration "could withstand being set aside under s 7(2)(a) of [the Foreign Judgments] Act". 30 Mr Gomez did not appeal against these parts of the primary judge's reasons. 31 Accordingly, the issue on the appeal is whether the primary judge erred in his construction of the 22 February 2013 agreement and, in particular whether, by reason of the 22 February 2013 agreement, Mr Kuhadas' obligation to satisfy the Singapore judgment has been discharged.

Relevant principles 32 In Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35], French CJ, Hayne, Crennan and Kiefel JJ stated: …this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd (in rec) [[2009] EWCA Civ 633 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". (Citations omitted.) 33 In this case, the main issue is the meaning of Mr Gomez's promise to withdraw the Singapore bankruptcy application. The question is whether that promise impliedly included a promise to take no further steps to enforce the Singapore judgment on which the Singapore bankruptcy notice was based. Put another way, the question is whether the 22 February 2013 agreement and acts done by Mr Kuhadas pursuant to the agreement amount to an accord and satisfaction by which the Singapore judgment was discharged. 34 Accord and satisfaction is the purchase of a release from an obligation, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative: British Russian Gazette and Trade Outlook Ltd v Associated Newspapers Ltd [1933] 2 KB 616 at 643. In Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; 186 CLR 574, Gummow J (at 610) explained that: Accord and satisfaction (the former being the agreement or consent to accept the latter) requires acceptance of something in place of the full remedy to which the recipient is entitled, coupled with provision of the consideration agreed upon. 35 For an agreement to constitute an accord and satisfaction, it must clearly demonstrate that the creditor intended to release the debtor from his or her claims in consideration of the payment to be made: Ashton v Pratt [2015] NSWCA 12 at [173] (Bathurst CJ). "When a man has got a judgment it cannot be held that any agreement is to be taken as satisfaction of the judgment unless it is clear that it is so.": Re Feast, Ex Parte Feast (1887) 4 MB 36 (Lord Esher MR) at 41. However, this does not involve a standard of proof over and above the usual civil standard: Ashton v Pratt at [173]. 36 In Commissioner of Taxation v Hadidi (1994) 51 FCR 453, a Full Court considered the effect of a settlement agreement made between the parties after the Deputy Commissioner of Taxation had obtained default judgments against the taxpayers in the sum of about $100,000, whereby the taxpayers agreed to pay $75,000. Beaumont and Heerey JJ noted that it was common ground that upon payment of the total sum of $75,000, each debtor was entitled, both at law and in equity, to an unconditional discharge and release from liability under their respective judgments, saying at 461: "It is an unlikely intention to impute to the parties that in November 1989 the [Commissioner of Taxation] was agreeing to accept, in place of judgments totalling about $100,000, a bare promise by the respondent and her husband to pay instalments totalling $75,000, so that upon any default in payment the appellant would have to return to court and commence proceedings all over again on a fresh cause of action". 37 In McDermott v Black [1940] HCA 4; (1940) 63 CLR 161, a purchase was induced by the vendor's fraudulent misrepresentations to enter into a contract for the sale of shares. Prior to the completion of the contract, the purchase complained of the misrepresentations, but later withdrew all allegations imputing any impropriety to the vendor conditionally upon the vendor granting him an extension of time to complete the contract. The extension of time was granted but the purchaser refused to complete, and the vendor rescinded the contract. The purchaser sued the vendor for damages for deceit, relying on the misrepresentations which he had withdrawn. It was held that the withdrawal of the allegations amounted to a promise not to sue in respect of the misrepresentations or to a release of any cause of action in respect of them. 38 Starke J said at 175-176: A withdrawal of allegations of false representations on the part of the appellant would be useless from a business point of view if it had only an evidentiary value or was but an affirmation of the agreement, still leaving the appellant open to an action for damages for deceit. Consequently, the respondent's proposal that he would withdraw all allegations imputing anything improper to the appellant means, I think, that he would not bring any action against the appellant in respect of those allegations if an extension of time were granted to him of three weeks from a specified date so that he might complete the contract. And this proposal was accepted by the appellant. 39 Similarly, Dixon J (with whom McTiernan J agreed) said at 186: It would be futile for Black to withdraw allegations which he was to be at liberty to revive. The purpose of the withdrawal was not that of social amenity but to complete and close a business transaction.

Appeal grounds 1 to 4: whether the 22 February 2013 agreement discharged Mr Kuhadas' obligation to pay the Singapore judgment debt 40 The primary judge's precise finding was not that the 22 February 2013 agreement discharged Mr Kuhadas of his obligation to pay the Singapore judgment debt. Rather, it was that the Singapore judgment debt was released as a result of the 22 February 2013 agreement and Mr Kuhadas' satisfying items 1, 3 and 4 of Mr Boey's email (at [10] above). 41 The primary judge recognised (at [49]-[51] of the reasons for judgment) that the 22 February 2013 agreement did not expressly address the effect of that agreement on the Singapore judgment, either by reserving Mr Gomez's rights under the judgment or by releasing Mr Kuhadas from his obligations under the judgment. 42 I agree with the primary judge that, in the circumstances of this contract, it would be "commercial nonsense" for the parties to have agreed that Mr Gomez would withdraw the bankruptcy application upon the basis that he was free to reissue another bankruptcy application, or to take enforcement action in relation to the Singapore judgment debt at any time. If that was the agreement, all that Mr Kuhadas gained was a delay of the date of his bankruptcy, because Mr Gomez would be required to make a new bankruptcy application in order to secure that bankruptcy. There is nothing in the language of the 22 February 2013 agreement or the surrounding circumstances to suggest that such a delay could have benefited Mr Kuhadas in any significant way. 43 In his written submissions to this Court, Mr Gomez suggested that the mere withdrawal of the bankruptcy application conferred a benefit on Mr Kuhadas, saying "it was done out of goodwill to aid Mr Kuhadas' sale of the [Ballota Park unit] without impacting the other joint owners of the property". However, the only evidence about the purpose of the sale of the Ballota Park unit is Mr Boey's 7 March 2013 email (at [11] above), which indicates that the sale was intended to raise funds to pay Mr Gomez the second S$25,000 payment. There is no evidence that Mr Kuhadas would benefit from the sale and, as the primary judge found, it is reasonable to infer that Mr Kuhadas had no equity in the property beyond the S$25,000 he agreed to pay to Mr Gomez. If the bankruptcy application was withdrawn to facilitate the sale of the Ballota Park unit, the person who benefited from that withdrawal was Mr Gomez. 44 The primary judge identified three matters which, in his Honour's view, supported a conclusion that the parties intended that Mr Kuhadas was to be released from the Singapore judgment upon his performance of the matters set out in items 1, 3 and 4 of Mr Boey's email. These were: (1) The agreement that Mr Gomez would retain the S$50,000 cheque as security for the second S$25,000 payment; (2) The requirement that Mr Kuhadas pay interest of 10% per annum on the second S$25,000 payment; (3) The construction contended for by Mr Gomez would have left it open to Mr Gomez to seek to enforce the Singapore judgment immediately after he withdrew the bankruptcy application. 45 I agree with the primary judge that the provision in the 22 February 2013 agreement concerning the retention of the S$50,000 is a strong indicator that the parties intended the agreement to operate as an accord and satisfaction of the Singapore judgment. It would make no sense for Mr Gomez to refrain from banking the cheque if the Singapore judgment debt was not intended to be satisfied by the terms of the agreement. Yet it is necessarily implicit in the 22 February 2013 agreement that Mr Gomez would not bank the cheque and would return it to Mr Kuhadas once the second S$25,000 payment was made. 46 The provision for interest to accrue on the second S$25,000 supports the same conclusion for the reason given by his Honour. That is, it makes no sense for interest to accrue on that sum while outstanding if that sum merely forms part of a judgment debt upon which interest is also accruing. In this regard, I note that Mr Gomez asserted that interest was accruing on the Singapore judgment at an average rate of 5.33% per annum. 47 The absence of any terms for payment of the balance of the Singapore judgment debt also tends to reinforce the conclusion that the agreement was intended to operate as an accord and satisfaction of the Singapore judgment. 48 Another textual matter supporting that conclusion is the reference to the two payments of S$25,000 as the "first tranche" and the "second tranche". That language indicates that the two payments formed portions of a single amount (together with interest on the second tranche) payable by Mr Kuhadas, as opposed to two payments in reduction of the Singapore judgment debt, the balance of which was to remain outstanding. 49 As to the primary judge's third reason, although compliance with items 1, 3 and 4 was plainly what was required under the agreement in order to obtain Mr Gomez's withdrawal of the bankruptcy application, it is not obvious that the parties should be taken to have intended that the Singapore judgment was satisfied at the same time. The other alternative is that Mr Kuhadas was (or is) required to make the second S$25,000 payment to give the necessary satisfaction. This alternative takes into account the relative unlikelihood that the parties intended Mr Gomez to be left to sue on a fresh cause of action in the event that Mr Kuhadas did not make the second $25,000 payment, which payment was required by paragraph 2 of Mr Boey's email. 50 However, on balance, in my view, the absence of any specific reference to other enforcement rights following the withdrawal of the bankruptcy notice leads me to conclude that the primary judge was correct in finding that the Singapore judgment was discharged at or about the time that the bankruptcy notice was withdrawn. 51 It follows that I reject grounds 1 to 4 of the notice of appeal.

Appeal grounds 5 and 6: whether a term should be implied into the 22 February 2013 agreement that Mr Kuhadas would be released of his obligation to pay the Singapore judgment debt upon the coming into effect of that agreement 52 Having rejected grounds 1 to 4, the appeal must fail and accordingly it is strictly unnecessary to consider grounds 5 and 6, which concern the primary judge's alternative reasoning based upon the implication of a term in the 22 February 2013 agreement. 53 However, in my view, an implied term to the effect that Mr Kuhadas' obligations under the Singapore judgment would be taken to be discharged upon the withdrawal of the bankruptcy application passes the "reasonable and equitable" test (BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 347, 351-352) once it is accepted that Mr Gomez's construction does not make commercial sense and is inconsistent with the express provisions of the agreement. In particular, this test does not require a comparison between the total amount of the judgment debt and the consideration provided by Mr Kuhadas under the 22 February 2013 agreement because the underlying premises of the agreement are that Mr Gomez was unable to secure full payment of the judgment debt at the time of the agreement, and that he would be unlikely to obtain full payment if Mr Kuhadas was made bankrupt. 54 Not only does such an implied term not contradict the express terms of the agreement, as I have explained above at [44], [45] and [47], it is consistent with the express terms in several respects.

Other matters raised by Mr Gomez 55 Mr Gomez's written submission to the effect that, in late January 2013, he "knew…that Mr Kuhadas was a high flight risk and the bankruptcy application would not have served its intended purpose as Mr Kuhadas was deliberately haemorrhaging his assets in Singapore" is consistent with a conclusion that the parties' mutual intention was that the 22 February 2013 agreement was a settlement of Mr Kuhadas' obligation under the judgment debt because it indicates Mr Gomez's belief that he was unlikely to recover the amount owing through the process of bankruptcy. Mr Gomez's submission that the "primary consideration for the withdrawal of the [Singapore bankruptcy application] was that Mr Kuhadas had disposed of all his assets in Singapore and was living outside the reach of the law in Singapore" is also consistent with that conclusion. 56 In the context of this state of knowledge, there is no reason to accept the submission that the promises made by Mr Kuhadas, which Mr Gomez describes as "meagre", were not sufficient consideration. Similarly, there is no reason to accept the submission, even if it were relevant, that it would have been unreasonable for Mr Kuhadas to believe that Mr Gomez was prepared to agree to a discharge of the Singapore judgment on the terms set out in the 22 February 2013 email. 57 Mr Gomez asserted that the cheque for S$50,000 was "worthless" and that Mr Kuhadas' agreement "to endorse the issuance of 'new' share certificates" had no intrinsic value. However, these assertions were not supported by evidence and tend to be contradicted by the inclusion of items 3 and 4 in Mr Boey's email in that it would not make commercial sense for the parties to have agreed to those matters if they were of no value. 58 Although he did not contend that the primary judge had erred by applying the law of Australia to the case before him, in his written submissions, Mr Gomez asserted that the proper law of the 22 February 2013 agreement was the law of Singapore. I have considered the Singaporean cases cited by Mr Gomez, namely Gay Choon Ing v Long Sze Ti Terence Peter [2009] SGCA 3, Minah L Mande v Schneider [1998] SGHC 60 and Ter Yin Wei v Lim Leet Fang [2012] SGHC 82. None of these cases suggest to me that the applicable law differs as between Australia and Singapore. 59 In particular, Ter Yin Wei is not authority for the proposition that the phrase "full and final settlement" or similar language is required to make an agreement by way of accord and satisfaction. As the primary judge noted, an agreement properly construed in the relevant context may be found to include an implied release of claims: cf. Marinchek v Cabport Pty Ltd [2010] NSWCA 334 at [34] and [35] (Macfarlan JA, Handley AJA and Harrison J agreeing).

Conclusion 60 Accordingly, the appeal should be dismissed. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.

At a glance

Court

Decision date

Before

Source

Judgment (22 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (28)

Cited By (1)