Peh Swee Chin SCJ:

Two letters figure prominently in this appeal with facts of the case practically undisputed. It will only be necessary to set out such of the facts as found necessary for elucidating the points in issue.

The appellants, together with 4 other parties, were cited as defendants in the civil suit concerned herein, brought by the respondent that was plaintiff below. (Such defendants are hereinafter called the defendants collectively; the appellants, the appellants/defendants, whenever the context requires the distinction; and the respondent, the plaintiff/company).

The defendants were beneficial owners of shares in a company called Britama Properties Sdn. Bhd, (hereinafter called the Britama). Britama is a holding company of 2 wholly-owned subsidiaries one of which is called Prime International (Holdings) Pte Ltd., (hereinafter called the Prime Company).

The defendants sold their respective shares or shareholdings in Britama to the plaintiff/ company by an agreement dated 15 February 1985 (hereinafter called the sale agreement) in consideration of allotment to the defendants, shares in the plaintiff/company credited as fully paid up. Under the sale agreement, the defendants undertook, jointly and severally, to pay the plaintiff/ company, sums of money by which, certain specified sums of money set out in the sale agreement and represented to the plaintiff/company by the defendants as correct, were less. These specified sums first referred to the amount of the combined operating profit of Britama and Prime company, and secondly to the amount of the total value of total assets of Britama and Prime Company and all their subsidiaries.

In addition to the sums undertaken to be paid as computed above, the defendants undertook also, jointly and severally, that the unaudited balance sheets of Britama made up to 31 December 1984 gave a fair view of the financial position of Britama.

All the above undisputed facts were set out in the relevant amended statement of claim dated 5 September 1987 by which it was further alleged that a sum of Singapore $3,298,244.83 owed by defendant No 7 from among the defendants (viz, Associated Management Services Pte Ltd.) to Britama was wrongly stated as part of the deposits of Britama with "bankers and other institutions". The amended statement of claim claimed (a) $92,961, being the emerging shortfall in regard to the aforesaid combined operating profit, damages for breach of warranty or alternatively interest; (b) RM78,214, being the emerging shortfall in regard to the aforesaid value of total assets, damages for breach or alternatively interest and the said sum of $3,298,244.83, the sum which was said to have been wrongly described in the aforesaid balance sheets.

After the writ herein was filed, firm though intermittent negotiations were under way between defendant No 7 and British American Investment Pte Ltd., a subsidiary of the plaintiff/company which was allowed by the plaintiff/company to negotiate on its behalf with defendant No 7 with regard to the claim of the plaintiff/ company in the civil suit concerned herein. Nothing of substance really turns on the right of this subsidiary to so negotiate on behalf of the plaintiff/company, (this company is hereinafter called British American IPL). On 4 April 1990, defendant No 7 wrote to British American IPL regarding the settlement in connection with the civil suit concerned herein (hereinafter called the 1990 letter) which is the crux of the appeal and which is set out below:

ASSOCIATED MANAGEMENT SER-

VICES (PTE) LTD.

c/o No 1 Sixth Lok Yang Road, Singapore 2262

4 April 1990

Mr Steve S V Wong British American Investment Pte Ltd. 57 Robinson Road 6th storey British American Insurance Building Singapore 0106

Dear Sir

We write to offer you, pursuant to the Charge dated 7 July 1989, the sum of S$3,800,000 (this is inclusive of the RM1,500,000 due to British American Life and General Assurance Bhd and/or its subsidiaries