Three Arrows Capital Ltd v Cheong Jun Yoong

• Jurisdiction: Singapore
• Judge: Debbie Ong JAD,Valerie Thean J
• Judgment Date: 12 April 2024
• Docket Number: Originating Application No 42 of 2023
• Court: High Court (Singapore)

Three Arrows Capital Ltd and others

and

Cheong Jun Yoong

[2024] SGHC(A) 10

Debbie Ong JAD and Valerie Thean J

Originating Application No 42 of 2023

Appellate Division of the High Court

Civil Procedure — Service — Service of originating process out of Singapore — Applicant seeking permission to appeal against decision of General Division of the High Court dismissing Applicant's application to set aside permission granted for service of originating process on Applicant out of jurisdiction — Whether permission to appeal should be granted

Held, dismissing the application:

(1) Mr Cheong erroneously argued that the BVI Judgment ought to be disregarded because it arose after the date on which the applicants applied for permission to appeal. As an appellate court would generally be open to consider new arguments where these involved questions of law that could be assessed without further evidence, it followed that the issue of such potential points of law would also be relevant to an application for permission to appeal to that appellate court: at [23].

(2) The Judge's decision that the location of cryptoassets should be ascertained by reference to the residence of the controller of the cryptoassets did not disclose a novel issue which would benefit from the decision of a higher tribunal for two reasons. First, the BVI court did not take a differing approach from the Judge. The court did not have to decide on whether the situs of a cryptoasset should be determined by reference to its owner or controller as it applied the presumption that a cryptoasset's controller was also its owner, a presumption which was not displaced. Second, the proposed issue would not have affected the outcome of the Judge's decision as the Judge had found that the jurisdiction gateway for claims founded on a cause of action arising in Singapore under para 63(3)(p) of the Supreme Court Practice Directions 2021 (“SCPD 2021”) was alternatively satisfied: at [31] and [32].

(3) As for the Judge's finding that there was a good arguable case that the trust arose in substance in Singapore under the jurisdictional gateway raised in para 63(3)(p) of the SCPD 2021, the questions of whether, where and when the alleged trust arose raised questions of a factual character, not principle. Further, the Judge had been fully cognisant of the fund structure and stated that it did not change his conclusion: at [33].

(4) The applicants' assertion in their application for permission to appeal that the situs of the cryptoasset should not be a “significant factor” in the forum conveniens analysis was not relevant as the Judge did not expressly consider the situs of the cryptoassets in the forum conveniens analysis: at [35].

(5) The question of the proper weight to be given to the applicants' competing claim, which was premised on foreign law in the forum conveniens analysis would have made little difference in the analysis. The Judge had expressly accepted that the transactions which were implemented through a BVI investment structure pursuant to the subscription agreements were governed by BVI law. In any event, the Judge held that this would not have outweighed the factors in favour of Singapore: at [37].

(6) The purported questions raised regarding the significance of the applicable regulatory law and the relevance of competing jurisdictions where the same issues were contested in both insolvency proceedings in the centre of main interests and civil proceedings also did not disclose grounds for permission to appeal. It was settled law that the civil domestic court could well be forum conveniens even where the main insolvency proceedings were elsewhere. The issue of the applicable foreign regulatory law was not a question of general principle to be decided for the first time: at [38].

(7) The relevance of a party's submission to jurisdiction in the forum conveniens analysis was well settled under Singapore law. Submission to jurisdiction could relate to the existence of jurisdiction in that court but another jurisdiction might still be considered the forum conveniens in respect of the exercise of jurisdiction: at [39].

(8) While the applicants' arguments showed that there was a risk of inconsistent decisions between the Singapore and BVI proceedings, this was only one aspect of the consideration given to the weightage of the relevant factors, and not a point of principle. Neither would the potential application of the cross-border insolvency protocol between the Singapore and BVI courts (“CBIP”) to the Singapore claim have raised a question of principle or importance as any question would have involved the interpretation of the definitions listed within the CBIP which were peculiar to the facts of the case: at [40] to [42].

(9) As for whether the Judge had committed a prima facie case of error, the applicants' contention that the Judge had erred in stating that the trust arose “pursuant to” the “Independent Fund Arrangement” which was made to launch the DC Fund misunderstood the Judge's decision. The Judge was cognisant of the fact that the trust was only constituted when the assets were transferred, after the Independent Fund Arrangement had been entered: at [46].

(10) The Judge also did not commit a prima facie error in the weight he accorded to the location of witnesses in the forum conveniens analysis. The weightage of matters of fact varied from case to case and was not a scientific exercise. A prima facie case of error was not disclosed by a mere assertion that the Judge had reached the wrong conclusion on the evidence: at [47] and [48].

Case(s) referred to

Anil Singh Gurm v J S Yeh & Co [2018] SGHC 221 (refd)

Beluga Chartering GmbH v Beluga Projects (Singapore) Pte Ltd [2014] 2 SLR 815 (refd)

Cheong Jun Yoong v Three Arrows Capital Ltd [2024] SGHC 21 (refd)

Ivanishvili, Bidzina v Credit Suisse Trust Ltd [2020] 2 SLR 638 (refd)

IW v IX [2006] 1 SLR(R) 135; [2006] 1 SLR 135 (refd)

Lakshmi Anil Salgaocar v Jhaveri Darsan Jitendra [2019] 2 SLR 372 (refd)

Lee Kuan Yew v Tang Liang Hong [1997] 2 SLR(R) 862; [1997] 3 SLR 489 (refd)

Liew Kit Fah v Koh Keng Chew [2020] 1 SLR 275 (refd)

Lin Jianwei v Tung Yu-Lien Margaret [2021] 2 SLR 683 (refd)

Luckin Coffee Inc v Interactive Digital Finance Ltd [2024] SGHC(A) 7 (refd)

Rodeo Power Pte Ltd v Tong Seak Kan [2022] SGHC(A) 16 (refd)

Rothstar Group Ltd v Leow Quek Shiong [2022] 2 SLR 158 (refd)

Russell Crumpler v Cheong Jun Yoong BVIHC (COM) 2023/0003; 2022/0119 (refd)

Soo Hoo Khoon Peng v MCST Plan No 2906 [2023] SGHC 355 (refd)

Sun Jin Engineering Pte Ltd v Hwang Jae Woo [2011] 2 SLR 196 (refd)

Facts

The first applicant, Three Arrows Capital Ltd (“Three Arrows”), an investment fund in the business of trading in cryptocurrency and other digital assets, was a company incorporated in the British Virgin Islands (“BVI”). It was placed under liquidation by a BVI court on 27 June 2022 (the “BVI Liquidation Proceedings”). The second and third applicants were its joint liquidators (collectively, the “Liquidators”).

On 22 August 2022, the Liquidators obtained an order for the BVI Liquidation Proceedings to be recognised in Singapore as a foreign main proceeding.

The respondent, Mr Cheong Jun Yoong (“Mr Cheong”), a Singapore citizen, managed a portfolio of assets in Three Arrows that he termed “DeFiance Capital” (the “DC Fund”).

On 4 November 2022, Mr Cheong applied as a non-party for permission to commence and continue action against Three Arrows to assert proprietary rights in respect of the assets in this DC Fund (the “DC Assets”). Permission was granted by a judge of the High Court on 25 January 2023.

About 12 hours later on the same date in the BVI, the Liquidators filed an application in the BVI Liquidation Proceedings for directions from the BVI court as to whether the DC Assets comprised part of Three Arrows' estate, on the basis of signed fund documents and the investment structure therein (the “Parallel BVI Proceedings”).

Mr Cheong subsequently commenced a suit against the applicants (the “Singapore claim”) on 18 April 2023. Essentially, Mr Cheong contended that the DC Assets were held on trust for his benefit and that of fellow investors in the DC Fund. The same claim was in issue in the Parallel BVI Proceedings in which Mr Cheong had applied to set aside a BVI court order granting the Liquidators permission to serve the originating process in the Parallel BVI Proceedings on Mr Cheong in Singapore.

By an order filed on 10 May 2023, Mr Cheong obtained permission to serve originating process on the applicants in the BVI. An application to set aside this order and its subsequent service was dismissed by a judge of the General Division of the High Court (the “Judge”) with brief oral reasons. These reasons were supplemented with the Judge's full grounds of decision on 26 January 2024.

On 12 December 2023, the BVI court dismissed Mr Cheong's application to set aside the Parallel BVI Proceedings, with its reasons set out in a written judgment (the “BVI Judgment”).

In AD/OA 42/2023, the applicants sought permission to appeal against the decision of the Judge on the basis that there were questions of general principle decided for the first time, that there were questions of importance upon which further argument and a decision of a higher tribunal would be to public advantage and that the Judge had committed a prima facie case of error.

Legislation referred to

Rules of Court 2021 O 8 r 1(1)

Eastern Caribbean Supreme Court Civil Procedure Rules 2000 r 7.3(10)

Insolvency Act 2003 (No 5 of 2003) (British Virgin Islands) ss 186, 274A

Lionel Leo Zhen Wei, Liu Zhao Xiang, Kwong Kai ShengandT Abirami (WongPartnership LLP) for the applicants;

Hing Shan Shan Blossom, Chin Tian Hui JoshuaandClaire Neoh Kai Xin (Drew & Napier LLC) for the respondent.

12 April 2024

Valerie Thean J (delivering the judgment of the court):

Introduction

1 This is an application for...