The Micro Tellers Network Ltd v Cheng Yi Han

• Jurisdiction: Singapore
• Judge: Simon Thorley IJ
• Judgment Date: 06 September 2023
• Docket Number: Suit No 5 of 2020
• Court: High Court (Singapore)

The Micro Tellers Network Ltd and others

and

Cheng Yi Han and others

[2023] SGHC(I) 13

Simon Thorley IJ

Suit No 5 of 2020

Singapore International Commercial Court

Agency — Third party and principal's relations — Defendants acting for plaintiff in respect of funds deposited with them — Whether agency relationship arose

Contract — Implied contracts — Implied retainer — Solicitor knowing that funds held in client entity were not beneficially owned by it — Whether implied retainer arose vis-à-vis client's investors

Contract — Misrepresentation — Fraudulent — Representations made to agent — Whether sufficient that representations were made to third person to be communicated to class of persons including plaintiff

Equity — Fiduciary relationships — Dishonest assistance — Wife who was director of defendant's company used to dissipate client's assets — Whether circumstances supported finding of dishonest assistance

Equity — Fiduciary relationships — Duties — Fiduciary duties undertaken in respect of client — Whether fiduciary duties extended to client's investors which client was acting as agent for

Equity — Fiduciary relationships — Duties — Fiduciary duties undertaken in respect of client — Whether fiduciary duties extended to client's investors which client was not acting as agent for

Tort — Conspiracy — Wife who was director of defendant's company used to dissipate client's assets — Whether husband and wife conspired to defraud clients

Tort — Negligence — Defendant having certain duties he carried out as part of team conducting business transaction — Whether defendant owed and breached duty of care

Held, allowing the claims against the fourth defendant in part and dismissing the claims against the fifth defendant:

(1) In relation to the Europe Transaction, since the Regional Group accepted that Feng had not acted in his capacity as a solicitor, the important question was whether Feng had voluntarily been placed or had placed himself in the position of a fiduciary: at [46].

(2) The evidence showed that Feng played only a minor part in the Europe Transaction. The present case was therefore factually different from Tan Teck Kee v Ratan Kumar Rai[2022] 2 SLR 1250, where the appellant possessed a high degree of control over the investors' interests and the investors were particularly vulnerable to the appellant's exercise of power. In the circumstances, the role played by Feng in the Europe Transaction fell way short of constituting conduct bearing the hallmarks of a fiduciary relationship: at [92], [103] and [104].

(3) No duty of care arose such as to render Feng liable in negligence to the Regional Group, since the requirement of proximity was not satisfied in the circumstances as Feng did not undertake the Europe Duties: at [110].

(4) Feng's attempt to introduce an analysis of the metadata underlying a document adduced by Andrew, in order to show that it was not genuine, could not be allowed. The court's attention should have been drawn to this contention at an earlier stage, and it would be wrong in the overall interests of justice to allow an adjournment to allow further evidence on this matter: at [154].

(5) The evidence showed that Feng did falsely represent to Andrew, inter alia, that WPS was a company associated with and controlled by Walkers and that the funds paid into the WPS Account would be held by Walkers in escrow for the Initial Defendants. The Initial Defendants transferred money from PAM's bank account to the WPS Account on the basis of these misrepresentations: at [169] and [170].

(6) It was sufficient that the representation was made to a third person to be communicated to the plaintiff, or even to a class of persons of whom the plaintiff was one, with a view of its being acted on by the plaintiff. Feng made the false representations knowing that the Initial Defendants held funds from various sources, with the intention that those funds should be transferred to WPS. He had to have contemplated that the investors, whoever they were, were people liable to act upon the representations either with actual knowledge of the representations or by placing their trust in the Initial Defendants, acting as their agents. Micro Tellers therefore made out its case against Feng in fraud: at [187] to [189], [194] and [201].

(7) Feng was retained, in his capacity as a solicitor, to act on PAM's behalf in the Private Bank Acquisition. Accordingly, Feng owed PAM the duties normally associated with such a retainer, which he breached by placing the funds in the WPS Account and then misappropriating the residual sums in that account: at [205] and [206].

(8) Feng knew that PAM was being used as a vehicle for the proposed bank purchase and that the funds held by PAM to be transferred to WPS were not beneficially owned by PAM. In consequence, Feng ought to have appreciated that his duties to PAM as its retained solicitor extended to the investors, whoever they were. Hence, Feng owed the same duties as a solicitor to the investors as he did to PAM: at [209].

(9) The Initial Defendants were acting as agents for Micro Tellers when transferring funds from the PAM bank account to the WPS Account. As between Andrew and Feng, it was clear from their working relationship in respect of the Private Bank Acquisition that Feng had voluntarily placed himself in a position where the law should objectively impute an intention on his part to undertake fiduciary duties. Feng was in breach of these duties owed to Andrew when he dissipated the residual sums in the WPS Account: at [180], [213] and [215].

(10) Since Feng was aware that Andrew was representing other investors, by parity of reasoning with the analysis in relation to solicitors' duties, any duties that Feng owed to Andrew would necessarily also be owed to those investors, whoever they were. Hence, fiduciary duties were owed to PAM, Andrew, and also to all the investors, including Micro Tellers. Feng acted in breach of those duties by inducing the placement of the funds in WPS and then, knowing that those funds were to be held for the specific purpose of the Private Bank Acquisition, misappropriating those funds: at [216] and [217].

(11) The Regional Group fell within the class of persons to whom Feng owed fiduciary duties, which comprised all those who were the beneficial owners of sums placed in the PAM account which were then transferred by the Initial Defendants to the WPS Account on the faith of the false representations made by Feng to Andrew. The fact that the Initial Defendants were not acting as agents for the Regional Group, or that the Regional Group was unaware that their funds were being used for this unauthorised purpose, did not change this analysis: at [232] to [234].

(12) On the facts, Moon did not at any time harbour any suspicion that Feng's business activities would be anything other than wholly legitimate. There was no wilful blindness on her part, and nothing in her conduct which would have been different from that of an honest person. The action against Moon for dishonest assistance therefore failed: at [273], [275] to [279] and [281].

(13) The case based on conspiracy failed since there was no agreement between Feng and Moon to do the acts relied upon: at [284].

(14) There was a question as to the relief to be granted, given that the plaintiffs had maintained their claim in this action in relation to the Private Bank Acquisition when it appeared that, as assignees of the judgment debt under Suit 8, they were already entitled to seek payment of sums in excess of those claimed. Nevertheless, justice could be done by an appropriate undertaking on the plaintiffs' part to avoid the possibility of double recovery . The undertaking should extend to ensuring that only one set of proceedings seeking to enforce the debts were in being at any given time, as well as providing that due credit would be given to Feng for any sums recovered by the Suit 5 Plaintiffs: at [289], [292] and [293].

Case(s) referred to

Aljunied-Hougang Town Council v Lim Swee Lian Sylvia [2019] SGHC 241 (folld)

Anwar Patrick Adrian v Ng Chong & Hue LLC [2014] 3 SLR 761 (distd)

Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 WLR 1476 (folld)

EFT Holdings, Inc v Marinteknik Shipbuilders (S) Pte Ltd [2014] 1 SLR 860 (folld)

Family Food Court v Seah Boon Lock [2008] 4 SLR(R) 272; [2008] 4 SLR 272 (folld)

George Raymond Zage III v Ho Chi Kwong [2010] 2 SLR 589 (folld)

JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd [2020] 2 SLR 1256 (folld)

Kuwait Oil Tanker Co SAK v Al Bader (No 3) [2000] 2 All ER (Comm) 271 (folld)

Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd [2022] 1 SLR 884 (folld)

Micro Tellers Network Ltd, The v Cheng Yi Han [2021] 5 SLR 328 (refd)

O'Laughlin Industries Co Ltd v Tan Thiam Hock [2021] SGHC 35 (folld)

Richardson v Silvester (1873) LR 9 QB 34 (refd)

Swift v Winterbottom (1873) LR 8 QB 244 (refd)

Tan Teck Kee v Ratan Kumar Rai [2022] 2 SLR 1250 (distd)

Thode Gerd Walter v Mintwell Industry Pte Ltd [2009] SGHC 44 (folld)

Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2018] 2 SLR 655 (folld)

Von Roll Asia Pte Ltd v Goh Boon Gay [2018] 4 SLR 1053 (folld)

Facts

The first plaintiff, The Micro Tellers Network Ltd (“Micro Tellers”), was a company incorporated in Hong Kong, whose sole director and shareholder was Charles Cuong Tan-Thatch (“Charles”). The second, third and fourth plaintiffs (“the Regional Group”) were Singapore citizens who pooled their resources for cryptocurrency investments.

The plaintiffs' claims were initially made only against the first three defendants (“the Initial Defendants”) – Cheng Yi Han (“Yi Han”), Ling Hui Andrew (“Andrew”) and Providence Asset Management (“PAM”), a company incorporated in the Cayman Islands, of which Andrew was a director and shareholder. Then Feng (“Feng”), a business associate of Yi Han and Andrew, as well as Feng's wife, Lee...