A simultaneous novation and assignment is legally compatible under Singapore law, affirming that a failed novation does not release the borrower or guarantor from obligations, and that effective assignments can occur despite complexities in contractual relationships.

JUDGMENT

Anantham Kasinather J:

Background Of Facts

[1] On 14 June 1996, Legend International Resort Ltd ('LIR'), Metroplex Berhad ('Metroplex') and Rothschild entered into a Credit Agreement whereby Rothschild and other banks (collectively referred to as the Lenders) agreed to extend various banking facilities to LIR on the terms and conditions set out in the Credit Agreement, one of which was for Metroplex (the respondent) to guarantee the sums payable by LIR.

[2] Rothschild and Morgan Stanley entered into the Sale and Purchase Agreement dated 8 November 2004 ('S&P') Rothschild agreed irrevocably to sell 'by novation' to Morgan Stanley 'those of the Assigned Rights that are capable of novation, and otherwise sells, transfers, assigns, and conveys the Assigned Rights' to Morgan Stanley.

The subject matter of the S&P, the 'Assigned Rights' ('AR') was defined to mean:

any and all of (Rothschild's) right, title, and interest in, to and under the Loan and to the extent related thereto, the following:

a) All other amounts funded by or payable to (Rothschild) under the Credit documents and all obligations owed to (Rothschild) in connection with the Loans;

b) The Credit Documents;

c) ...

d) All claims ... and any other right of (Rothschild), whether known or unknown, against (LIR), any Obligor, ... or other Entity that in any way is based upon, arises out of or is related to any of the foregoing including ... any other right of (Rothschild) against ... other Entity arising under or in connection with the Credit documents;

e) All Guarantees and all Collateral and security of any kind for or in respect of the foregoing;

f) ...

g) ...

h) ...

Rothschild executed and delivered a Novation Notice dated 10 November 2004 in accordance with cl. 24(C) and Schedule 2 of the Credit Agreement listing as "rights and/or Obligations to be Novated":

a) Existing Lender's Commitment to be novated: US$4,900,000 and

b) Existing Lender's Outstandings to be novated: US$4,900,000.

[3] Morgan Stanley signed the Novation Notice agreeing that it "assumes and acquired new rights and/or obligations in accordance with cl. 24(C)" of the Credit Agreement on and with effect from 10 November 2004. The Novation Notice was signed by Morgan Stanley as New Lender and by Rothschild both in its capacity as Existing Lender and as Agent on behalf of (inter alia) "the other parties to the Agreement".

[4] Rothschild notified LIR, by letter dated 10 November 2004, that it had "assigned all (its) rights, title and interest in the above loan with effect from 10 November 2004 to (Morgan Stanley)". No notice appears to have been given to Metroplex.

[5] Subsequently, Rothschild and Morgan Stanley executed a Deed of Assignment dated 7 April 2005 which referred to the S&P Agreement and stated that Morgan Stanley wishes, for the avoidance of doubt "to ensure ... that it has so acquired by way of assignment from Rothschild, all of Rothschild's right, title and interest in, to and under the Assigned Rights (as such term is defined in the Sale Agreement) and as contemplated by the Sale Agreement". The recitals also provided that it was "in order to ensure that this is so" that Rothschild and Morgan Staley were entering into the Deed of Assignment (the "Further Assignment").

[6] A notice to LIR and Metroplex dated 7 April 2005 was sent notifying them that:

Pursuant to a deed of assignment dated 7th April 2005 between the Assignor and Assignee, to the extent that the Assignor still retained any of the same as at the date of Assignment, the Assignor assigned to the Assignee:

a) All of such right, title and interest of the Assignor in, to and under the Outstan