Parastate Labs Inc v Wang Li
Jurisdiction | Singapore |
Judge | Judith Prakash JCA |
Judgment Date | 25 September 2023 |
Neutral Citation | [2023] SGCA 27 |
Court | Court of Appeal (Singapore) |
Docket Number | Civil Appeal No 16 of 2023 |
Hearing Date | 04 September 2023 |
Citation | [2023] SGCA 27 |
Year | 2023 |
Plaintiff Counsel | Foo Maw Shen, Chu Hua Yi and Tan Jinwen Mark (FC Legal Asia LLC) |
Defendant Counsel | Choo Zheng Xi, Chew Di Shun Dickson and Yuen Ai Zhen Carol (Remy Choo Chambers LLC) |
Subject Matter | Civil Procedure,Mareva injunctions,Quantum of Mareva injunction |
Published date | 25 September 2023 |
It is well-recognised that Mareva injunctions, which may under certain circumstances be obtained without notice, pre-judgment and with extraterritorial reach so as to freeze a defendant’s assets, can be a draconian measure with a corresponding potential for abuse (
The purpose of a Mareva injunction is, ultimately, to prevent a party from taking steps to deliberately frustrate any judgment of the court that may eventually be obtained and thereby render that judgment nugatory. However, there are situations in which a claimant who successfully obtains an interlocutory Mareva injunction subsequently fails to establish its claim at trial, and in the intervening period, the defendant may have suffered loss as a result of the injunction. Order 13 rr 1(6) and 1(7) of the Rules of Court 2021 (“ROC 2021”) thus prescribes the use of Forms 24 and 25 of the Supreme Court Practice Directions 2021 (“SCPD 2021”) for applicants seeking Mareva relief, which require that the claimant provide an undertaking to compensate the defendant if it is later found that loss was suffered as a result of the injunction (the “undertaking as to damages”).
The genesis of the requirement for an undertaking as to damages and the purpose it serves was outlined by Lord Diplock in
The practice of exacting an undertaking as to damages from a plaintiff to whom an interim injunction is granted originated during the Vice-Chancellorship of Sir James Knight Bruce who held that office from 1841 to 1851. At first it applied only to injunctions granted ex parte but after 1860 the practice was extended to all interlocutory injunctions. By the end of the century the insertion of such an undertaking in all orders for interim injunctions granted in litigation between subject and subject had become a matter of course.
The advantages of this practice … are plain enough. An interim injunction is a
temporary and exceptional remedy which is available before the rights of the parties have been finally determined and,in the case of an ex parte injunction, even before the court has been apprised of the nature of the defendant’s case … at the time of the application, it is not possible for the court to be absolutely certain that the plaintiff will succeed at the trial … If he should fail to do sothe defendant may have suffered loss as a result of having been prevented from doing it while the interim injunction was in force … It is to
mitigate this risk that the court refuses to grant an interim injunction unless the plaintiff is willing to furnish an undertaking … “to abide by any order the court may make as to damages in case the court shall [thereafter] be of opinion that the defendant shall have sustained any damages by reason of [the] order …”[emphasis added]
Further, an undertaking as to damages ought not be merely illusory. Accordingly, the safeguard of requiring the claimant to fortify its undertaking works in tandem with the requirement to provide that undertaking. However, the making of any such order for fortification depends on whether a
The present appeal arose from the decision of the judge below (the “Judge”) on an application for a worldwide Mareva injunction, HC/SUM 2564/2022 (“SUM 2564”) made in the main action, HC/OC 130/2022 (“OC 130”). The appellant, Parastate Labs Inc (“Parastate”) had commenced OC 130 against the respondent, Mr Wang Li (“Mr Wang”) and three other defendants. Parastate sought the injunction for the full value of its claim in OC 130, which was US$5 million, as against Mr Wang. The Judge granted the injunction but limited it to a quantum of US$2.5 million and required that Parastate fortify its undertaking as to damages by paying S$50,000 into court. The Judge delivered his grounds of decision in
On 4 September 2023, we heard and allowed Parastate’s appeal against the Judge’s decision. We ordered that the injunction granted shall cover assets of up to US$5 million with immediate effect. We also ordered that Parastate shall provide additional fortification so that the total amount available shall be US$100,000. Finally, we granted parties the liberty to apply in respect of the injunction and the fortification. We now provide the grounds of our decision.
BackgroundParastate invested US$5 million worth of the cryptocurrency Tether in the Babel Quant Alpha USDT Fund (the “Fund”), managed by a cryptocurrency financial services provider trading as “Babel Finance”, which refers collectively to the third and fourth defendants in OC 130 – Babel Asia Asset Management Private Limited (“Babel Asia”) and Babel Holding Limited (“Babel Holding”) respectively. Babel Asia was the entity that Parastate contracted with. Babel Holding was the sole shareholder of Babel Asia.
The first and second defendants in OC 130, Mr Wang and Mr Yang Zhou (“Mr Yang”), were co-founders of Babel Holding and directors of Babel Asia at certain periods leading up to OC 130. At the time when the key events leading up to OC 130 took place, Mr Wang was the sole director of Babel Asia. Parastate’s case was that Mr Wang was the controlling mind and will of Babel Finance at the material time.
Parastate’s investment was made in March 2022. In June 2022, Parastate sought to withdraw its investment but was informed that Babel Finance was experiencing financial difficulties and could not meet the withdrawal request. According to Parastate, it was informed that Deribit, a cryptocurrency exchange platform, had cross-liquidated all of Babel Finance’s sub-accounts maintained with Deribit, including the Fund’s sub-account, as three of Babel Finance’s sub-accounts (excluding the Fund’s sub-account) had exceeded their maintenance margins.
On 13 July 2022, Parastate commenced OC 130 seeking, among other reliefs, liquidated damages of US$5 million from Mr Wang and Mr Yang on a joint and several basis. Among other things, Parastate alleged that Babel Asia and Babel Holding breached their fiduciary duties and/or trustee duties owed to Parastate in respect of its investment in the Fund, and Mr Wang and/or Mr Yang dishonestly assisted Babel Asia’s and Babel Holding’s breaches. Parastate initially sought via SUM 2564 the Mareva injunction as against both Mr Wang and Mr Yang but later withdrew the application as against Mr Yang. At the time of the
The Judge granted the Mareva injunction but limited the quantum to US$2.5 million and required that Parastate fortify its undertaking as to damages by paying S$50,000 into court (GD at [2] and [40]). The Judge found that Parastate had established a good arguable case against Mr Wang and a real risk of dissipation of assets. However, the Judge decided to limit the quantum of the injunction to half the amount claimed, considering it just and convenient to do so having regard to Parastate’s conduct (GD at [44]).
The conduct in question referred to two of Parastate’s “material non-disclosures … in relation to its ability to meet its undertaking as to damages, and in deliberately omitting prescribed undertakings …” (GD at [39]). These in essence referred to two irregularities in Parastate’s Mareva injunction application.
First, in Parastate’s supporting affidavit for its
To continue reading
Request your trial