THREE ARROWS CAPITAL LTD & 2 Ors v CHEONG JUN YOONG
14 cases cited
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Judges (2)
Counsel (9)
Drew & Napier LLC Firm WongPartnership LLP Firm Chin Tian Hui Joshua Counsel Respondent Claire Neoh Kai Xin Counsel Respondent Hing Shan Shan Blossom Counsel Respondent Kwong Kai Sheng Counsel Applicant Lionel Leo Zhen Wei Counsel Applicant Liu Zhao Xiang Counsel Applicant T Abirami Counsel Applicant
Case Significance
Three Arrows Capital Ltd and others v Cheong Jun Yoong [2024] SGHC(A) 10 was decided by the Appellate Division of the High Court (Originating Application No 42 of 2023), with Valerie Thean J delivering the judgment of the court (sitting with Debbie Ong JAD) on 12 April 2024 after a hearing on 28 February 2024. The applicants were Three Arrows Capital Ltd, an investment fund in the business of trading in cryptocurrency, together with its joint liquidators Christopher Farmer and Russell Crumpler. They sought permission to appeal against a decision of a Judge of the General Division of the High Court who had dismissed their applications to set aside an order granting the respondent, Cheong Jun Yoong, permission for service of an originating claim out of Singapore, and to set aside that service. The court dismissed the application for permission to appeal.
Summary
SUPREME COURT OF SINGAPORE
[12 April 2024]
Case summary
Three Arrows Capital Ltd and 2 Ors v Cheong Jun Yoong [2024] SGHC(A) 10
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Decision of the Appellate Division of the High Court (delivered by Justice Valerie Thean):
Outcome: The Appellate Division of the High Court dismisses the application for permission to appeal against the decision of a Judge of the General Division of the High Court which dismissed an application to set aside an order for service of proceedings out of jurisdiction and the service of originating claim in the BVI.
Background
1 The first applicant, Three Arrows Capital Ltd (“Three Arrows”), an investment fund in the business of trading in cryptocurrency and other digital assets, is 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 are its joint liquidators (collectively, the “Liquidators”).
2 On 22 August 2022, the Liquidators obtained an order for the BVI Liquidation Proceedings to be recognised in Singapore as a foreign main proceeding.
3 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”).
4 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 the High Court on 25 January 2023.
5 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”).
6 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. It was only on 12 December 2023 that 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”).
7 By an order granted on 9 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.
8 In AD/OA 42/2023, the applicants seek permission to appeal against the decision of the Judge on the basis that there are questions of general principle decided for the first time, that there are 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.
Decision
Contentions as to a point of general principle or importance
9 Mr Cheong erroneously argues 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 involve questions of law that can be assessed without further evidence, the issue of such potential points of law would also logically be relevant to an application for permission to appeal to that appellate court: at [23].
(i) Jurisdictional gateways
10 The question of how the jurisdictional location of 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 affect 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 was alternatively satisfied: at [31] to [32].
11 As for the Judge’s finding that there was a good arguable case that the trust arose in substance in Singapore, the other jurisdictional gateway raised in para 63(3)(p) of the SCPD 2021, the questions of whether, where and when the alleged trust arose, these 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].
(ii) Forum non conveniens
12 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].
13 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 forum conveniens 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 outweigh the factors in favour of Singapore: at [37].
14 The purported questions raised regarding the significance of the applicable regulatory law and the relevance of competing jurisdictions where the same issues are contested in both insolvency proceedings in the centre of main interests and civil proceedings also do not disclose grounds for permission to appeal. It is settled law that the civil domestic court may well be forum conveniens even where the main insolvency proceedings are 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].
15 The relevance of a party’s submission to jurisdiction in the forum conveniens analysis was not a question of importance and the BVI court’s finding that Mr Cheong had submitted to the jurisdiction of the BVI courts does not make it so. The principles on the issue of submission are well-settled under Singapore law. Submission to jurisdiction may relate to the existence of jurisdiction in that court but another jurisdiction may still be considered the forum conveniens in respect of the exercise of jurisdiction: at [39].
16 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 raise a question of principle or importance as any question would involve the interpretation of the definitions listed within the CBIP which was peculiar to the facts of the case: at [40] to [42].
Contentions on a prima facie case of error
17 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 was entered into: at [46].
18 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 varies from case to case and is not a scientific exercise. A prima facie case of error is not disclosed by a mere assertion that the Judge had reached the wrong conclusion on the evidence: at [47] to [48].
This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.
What was decided in Three Arrows Capital Ltd v Cheong Jun Yoong [2024] SGHC(A) 10?
The Appellate Division of the High Court dismissed the application by Three Arrows Capital Ltd and its joint liquidators for permission to appeal. They had sought to challenge a decision refusing to set aside an order allowing Cheong Jun Yoong to serve an originating claim out of Singapore.
Who were the applicants in the Three Arrows Capital permission-to-appeal case [2024] SGHC(A) 10?
The applicants were Three Arrows Capital Ltd, an investment fund trading in cryptocurrency, together with its joint liquidators Christopher Farmer and Russell Crumpler. The respondent was Cheong Jun Yoong. The case concerned service of an originating claim out of jurisdiction.
Cases Cited (14)
SG (5)
SLR (9)
[1997] 2 SLR(R) 862 [2006] 1 SLR(R) 135 [2011] 2 SLR 196 [2014] 2 SLR 815 [2019] 2 SLR 372 [2020] 1 SLR 275 [2020] 2 SLR 638 [2021] 2 SLR 683 [2022] 2 SLR 158
Referenced in
Legal concepts & references
Judgment
Read the full judgment on the official Singapore Courts portal.
Read on eLitigationSource: eLitigation ([2024] SGHC(A) 10)