The Micro Tellers Network Ltd and others v Cheng Yi Han and others

JurisdictionSingapore
JudgeAudrey Lim J
Judgment Date25 June 2020
Neutral Citation[2020] SGHC 130
CourtHigh Court (Singapore)
Docket NumberSuit No 916 of 2019 (Summons No 6207 of 2019)
Year2020
Published date02 July 2020
Hearing Date08 June 2020,05 February 2020,15 June 2020
Plaintiff CounselHari Veluri, Yeoh Jean Ann, and Joel Lim (TSMP Law Corporation)
Defendant CounselAbraham Vergis and Lim Mingguan (Providence Law Asia LLC),Daniel Chia Hsiung Wen and Ker Yanguang (Morgan Lewis Stamford LLC)
Subject MatterCivil Procedure,Mareva injunctions,Whether good arguable case on the merits,Whether asset belonging to defendant,Whether real risk of asset dissipation
Citation[2020] SGHC 130
Audrey Lim J: Introduction

The first plaintiff, The Micro Tellers Network Limited (“P1”), is incorporated in Hong Kong. Charles Thach (“Charles”) is its sole director and shareholder. The second to fourth plaintiffs (“P2”, “P3” and “P4” respectively) are Michael Lin, Rio Lim, and Clement Wong, who are Singapore citizens (collectively “RG”). The plaintiffs will be referred to collectively as “the Plaintiffs”. The third defendant, Providence Asset Management (“D3”), is incorporated in the Cayman Islands. The first and second defendants, Cheng Yi Han (“D1”) and Andrew Ling Hui (“D2”), are Singapore citizens. D2 is the managing partner of D3 and holds all the ordinary shares of and controls D3. D1, D2, and D3 will be referred to collectively as “the Defendants”.

P1 and RG brought separate claims in this suit (“Suit 916”) against the Defendants, claiming essentially that they were induced to transfer money and/or cryptocurrency to the Defendants upon the latter’s fraudulent misrepresentations. The matter before me concerns the Plaintiffs’ application for a worldwide Mareva injunction against the Defendants.

A plaintiff seeking a Mareva injunction needs to show: (a) that it has a good arguable case on the merits of its claim; and (b) that there is a real risk that the defendant will dissipate its assets to frustrate the enforcement of an anticipated judgment of the court. Underlying these requirements is the threshold of necessity which, in the case of a worldwide Mareva injunction, will likely be more exacting: Bouvier, Yves Charles Edgar and another v Accent Delight International Ltd and another and another appeal [2015] 5 SLR 558 (“Bouvier”) at [36]–[37].

P1’s claim against the Defendants

As a preliminary point, D1’s counsel (Mr Vergis) informed the court in the midst of the hearing before me that D1 had applied to strike out Suit 916 as P1’s claim should be tried separately from RG’s claim. However, D1’s application to strike out the Suit has not been determined. Hence, I proceeded to deal with the Mareva injunction application based on Suit 916 as it stood and considered both P1’s and RG’s claims together.

P1’s version of events

P1 alleged that, from April to October 2018, the Defendants made fraudulent representations to Charles to induce P1 to transfer the equivalent of US$2,700,198 in fiat currency, cryptocurrency, and cash to them.1 The US$2,700,198 comprised: cash of US$276,000; 331 Bitcoin (“BTC”), which were converted into fiat currency of US$2,217,700 on or around 9 or 10 October 2018; and 926 Ethereum (“ETH”), which were converted into fiat currency of US$206,498 on or around 9 October 2018 (“MT Investment”).

The MT Investment was made pursuant to the Defendants’ representations that the sum would be used to purchase 85% of the shares of a private bank in Curacao (“Curacao Bank”) and the 100% value of Curacao Bank would be US$28 million (“Bank Acquisition”). P1 completed payment of the MT Investment by 9 October 2018. However, instead of acquiring Curacao Bank, a bank in Comoros (“Comoros Bank”) was acquired at only US$4 million.2

P1 thus claimed against the Defendants for fraudulent misrepresentation, conspiracy (lawful and unlawful), negligent misstatement, breach of fiduciary duty, breach of trust, and unjust enrichment. In the premises, P1 claimed that the Defendants are liable to pay it US$2,700,198, or fiat currency and/or cryptocurrency of that amount.3

D1’s version of events

D1 does not dispute the MT Investment sums (at [5] above).4 He claimed that the Bank Acquisition could not be completed because of a fraud perpetuated by one Feng Then (“Feng”). The target bank was initially a Cayman company with a banking licence (“Alexandria Bank”) but was changed to Curacao Bank.

The structure of the Bank Acquisition would be for Blue Summit Investments Limited (“BSI”), a special purchase vehicle incorporated in the British Virgin Islands (“BVI”), to acquire 85% of the shares in Curacao Bank. D1 and D2 would be the directors and shareholders of BSI. The remaining 15% of the shares in Curacao Bank would be held by Gestalt Group Ltd that is owned and controlled by Feng. The acquisition of Curacao Bank was negotiated by Feng. After the acquisition of Curacao Bank, 5672 (or 11.344%) of BSI’s shares would be transferred from D1 and D2 to P1, as evinced by the shareholders’ agreement dated 8 October 2018 executed by P1 and BSI (“SHA”). Under the SHA, funds for the purchase of Curacao Bank would be placed in the bank account (“WPS Account”) of Walkers Professional Services Limited (“WPS”). D1 was led to believe that WPS was used by Walkers, a law firm in which Feng was a lawyer, for escrow transactions.5

During the course of the Bank Acquisition, Feng informed D2 that the seller of Curacao Bank would sell Curacao Bank and Comoros Bank together for US$8.5 million. D1 believed that Comoros Bank was eventually acquired and renamed Royal Eastern Bank Ltd (“REB”). However, it transpired that REB was not acquired, but another entity named Royal Eastern Bank Limited with a different banking licence was acquired. WPS did not belong to Walkers but was an entity controlled by Feng, who had misappropriated the funds held in escrow on trust for the Bank Acquisition.6

D1 also claimed that P1’s investment in fiat currency was never within his custody or control. The proceeds of P1’s previous cryptocurrency trades of US$276,000 were paid into D3’s bank account (“D3’s DBS Account”), and D1 believed the US$276,000 was then transferred by D3 to WPS for the Bank Acquisition. D2, but not D1, had access to or control of D3’s DBS Account. The proceeds of the conversion of the 331 BTC and 926 ETH into fiat currency were paid into the OCBC account of 5&2 Pte Ltd (“5&2 Account”), of which D2 is a director. The proceeds were not paid into D3’s DBS Account as that account had been closed by then and D3 did not have any other bank account. D1 had no access to the 5&2 Account. On 10 October 2018, D2 gave instructions to transfer US$2,200,000 – being part of the MT Investment – from the 5&2 Account to the WPS Account. The remainder was kept in the 5&2 Account to be added to a “float” (which represents part of the funds which RG placed with D3 for cryptocurrency transactions (see also [51] below)).7

D1 denied that P1 invested in the Bank Acquisition because of the specific bank targeted, as Charles had committed to a US$5 million investment even before D1 provided details of the first target bank (Alexandria Bank) to him on 19 May 2018. The Bank Acquisition was a “genuine and legitimate transaction” because a bank (Comoros Bank) was acquired, and the plan was to acquire Comoros Bank together with Curacao Bank.8

D2’s version of events

D2 claimed that only US$2,617,910.90 was received by D3 from P1, and this comprised US$276,000 in cash; 331 BTC that was converted to US$2,126,310.90; and 979.955 ETH that was converted to US$215,600.9

D2 denied making most of the representations (as alleged by P1) or that D1 had made the representations on his behalf. D2 had spoken to Charles only once on 14 May 2018 in Hong Kong (“14 May 2018 Meeting”). At that meeting, he informed Charles that he and D1 were raising funds to purchase a private offshore bank; they intended to purchase 85% of the shareholding in Alexandria Bank with a target valuation of US$28 million (at 100%); and the purchase was targeted to be completed in October 2018. The remaining 15% of Alexandria Bank would be purchased by D1 and Feng, D2’s business partner. D2 alleged that Feng was responsible for the loss of P1’s funds.10

After the 14 May 2018 Meeting, D2 decided to change the target bank to Curacao Bank. Around that time, Feng was also negotiating with the seller of Curacao Bank to sell him Comoros Bank. While this was going on, D1 and D2 were raising funds for the purchase of 85% of the bank from other parties. During this time, only D1 corresponded with Charles. The bank would be 100% owned by a BVI entity, Star Dust. D1, D2, and “[their] investors” would hold 85% of Star Dust through BSI, with the remaining 15% held by Feng through Gestalt Group Ltd. By 10 October 2018, D3 had received a total of US$2,617,910.90 from P1. D1 told D2 that the amounts were sent by Charles as the latter’s investment in the offshore bank that they would be purchasing.11

Around November 2018, Feng negotiated to purchase Comoros Bank and Curacao Bank for US$8.5 million in total (US$4 million for Comoros Bank and US$4.5 million for Curacao Bank). D3 and 5&2 would deposit monies which D2 and D1 raised from investors into the WPS Account. Feng had given D2 the “false impression” that the WPS Account was maintained by Walkers, and had “all along told [D2] that WPS was an entity that was controlled by Walkers”. However, WPS was incorporated by Feng in the BVI and wholly owned by Feng’s wife.12 By October 2018, D2 had transferred US$5,184,000 and S$400,000 (including the majority of the sums raised from P1) to the WPS Account for the purchase of Comoros and Curacao Banks. Feng then informed D2 that the purchase of Comoros Bank for US$4 million had been completed and that he had renamed it as REB. Feng said that there was no need to purchase Curacao Bank as REB would fit their purpose of providing offshore banking services. D2 agreed with Feng to discontinue the purchase of Curacao Bank and subsequently asked for the return of the balance of monies not used for that aborted purchase.13

Around February 2019, Feng “confessed” to D2 that WPS was his personal vehicle, and said that the remaining US$4,510,000 was “still safe” in the WPS Account and that he would return it to D2. D2 believed Feng because they were friends and business partners. Then, in June 2019, Feng “admitted” to D2 that he and WPS no longer had the money and that he had taken it for his own purposes. On 2 July 2019, D2 (on behalf of D3 and 5&2) filed Suit 653 of 2019...

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1 cases
  • The Micro Tellers Network Ltd and others v Cheng Yi Han and others and another suit
    • Singapore
    • International Commercial Court (Singapore)
    • 22 September 2021
    ...she had questioned the veracity of some of Mr Ling’s evidence (see The Micro Tellers Network Ltd and others v Cheng Yi Han and others [2020] SGHC 130 (“the Mareva judgment”)).50 Mr Then submits that this casts grave doubts on Mr Ling’s lack of probity and veracity.51 However, that applicati......

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