Cachet Multi Strategy Fund SPC (on behalf of Cachet Special Opportunities SP) v Feng Shi and others [2024] SGHC 327

Case Details

• Citation: [2024] SGHC 327
• Court: General Division of the High Court of the Republic of Singapore
• Decision Date: 26 December 2024
• Coram: Choo Han Teck J
• Case Number: Originating Claim No 10 of 2022 (Registrar’s Appeals Nos 174 and 175 of 2024)
• Hearing Date(s): 22 November 2024
• Claimants / Plaintiffs: Cachet Multi Strategy Fund SPC (on behalf of Cachet Special Opportunities SP)
• Respondent / Defendant: Feng Shi (1st Defendant); Alex SK Liu (2nd Defendant); Haven Global Network Pte Ltd (3rd Defendant)
• Counsel for Claimants: Jill Ann Koh Ying, Ho Yi Jie, Wendy Lin Weiqi, Nicole Seah Kar Hsin and Zhan Xiangyun (WongPartnership LLP)
• Counsel for Respondent: Samantha Ong Xin Ying and Kelvin Lee Ming Hui (WNLEX LLC) for the second defendant
• Practice Areas: Civil Procedure; Production of documents; Private or internal correspondence

Summary

The judgment in Cachet Multi Strategy Fund SPC v Feng Shi and others [2024] SGHC 327 addresses a critical intersection of the Rules of Court 2021 (ROC 2021) regarding the production of documents, specifically the tension between the general exclusion of "internal documents" and the mandatory duty to disclose "known adverse documents." The dispute arose from a US$20m investment by the claimant, Cachet Multi Strategy Fund SPC ("Cachet"), into Haven Global Network Pte Ltd ("Haven"), which Cachet alleged was induced by the fraudulent misrepresentations of Haven’s co-founders, Feng Shi ("Mr Shi") and Alex SK Liu ("Mr Liu").

The primary procedural conflict centered on two Registrar’s Appeals (RA 174 and RA 175). RA 174 was brought by Mr Liu against an order requiring him to file an affidavit stating whether he possessed "known adverse documents" related to specific categories of the dispute. RA 175 was brought by Cachet, seeking the production of specific documents that the Assistant Registrar had declined to order. The case serves as a definitive exploration of Order 11 of the ROC 2021, clarifying that the "internal documents" exception under O 11 r 5(2) does not operate as a blanket immunity for documents that a party knows to be adverse to its case. Choo Han Teck J emphasized that the duty to disclose known adverse documents is a continuing one that overrides the general protection afforded to a party's internal or private correspondence.

Doctrinally, the decision reinforces the shift from the "broad discovery" model of the ROC 2014 to the "request for production" model of the ROC 2021, while ensuring that the streamlined process does not facilitate the suppression of evidence. The court held that while the ROC 2021 aims to reduce the burden of discovery, it does not permit a party to hide documents that they know would undermine their own position or support the opposing party's case. This balance is essential for maintaining the integrity of the adjudicative process under the new procedural regime.

The broader significance of this case lies in its treatment of the "fraud exception" to legal professional privilege and the practical application of the "known adverse" test. By dismissing both appeals and upholding the order for an affidavit, the High Court signaled that defendants in high-stakes fraud litigation cannot rely on procedural technicalities to avoid disclosing documents that go to the heart of the alleged conspiracy. The judgment provides a roadmap for practitioners navigating the production of documents in complex commercial disputes where internal communications are often the "smoking gun" evidence of intent and knowledge.

Timeline of Events

1. 6 June 2018: Early discussions or events related to the Haven project commenced.
2. 1 August 2018: Relevant date in the lead-up to the investment transaction.
3. 3 September 2018: Cachet entered into a Subscription Agreement with Haven to subscribe to a 10% shareholding for US$20m.
4. 5 October 2018: Subsequent event following the execution of the Subscription Agreement.
5. 27 March 2019: Date relevant to the unfolding dispute regarding the representations made to Cachet.
6. 18 April 2019: Cachet rescinded the Subscription Agreement based on alleged fraudulent misrepresentations.
7. 29 April 2019: Follow-up actions taken by the parties post-rescission.
8. 2 September 2019: Cachet commenced arbitration proceedings against Haven (the "Haven Arbitration").
9. 11 June 2021: Procedural milestone in the recovery or arbitration process.
10. 11 August 2021: Cachet successfully recovered the Investment Sum through enforcement proceedings in Hong Kong.
11. 26 November 2021: Date related to the ongoing disputes between the parties.
12. 9 March 2023: Procedural date in the current Originating Claim 10 of 2022.
13. 23 June 2023: Further date relevant to the interlocutory applications for document production.
14. 22 November 2024: Substantive hearing of Registrar’s Appeals Nos 174 and 175 of 2024 before Choo Han Teck J.
15. 26 December 2024: Delivery of the judgment by the High Court.

What Were the Facts of This Case?

The claimant, Cachet Multi Strategy Fund SPC ("Cachet"), is a hedge fund incorporated in the Cayman Islands. The dispute arose from its investment in Haven Global Network Pte Ltd ("Haven"), a Singapore-incorporated company. On 3 September 2018, Cachet entered into a Subscription Agreement with Haven, agreeing to pay US$20m for a 10% shareholding. This investment was purportedly intended to fund the development of a blockchain-based platform for insurance products, which was represented as being ready for launch by late 2018.

The first defendant, Mr Shi, was the co-founder, CEO, chairman, and majority shareholder of Haven. The second defendant, Mr Liu, was also a co-founder and director, serving as the Chief Technology Officer (CTO). Cachet alleged that it was induced to enter the Subscription Agreement by several fraudulent misrepresentations made by Mr Shi. These representations included claims that Haven had developed a viable blockchain platform and that AXA, a major insurer, was a committed participant in the project. Cachet further alleged that Mr Liu, as CTO and co-founder, was a co-conspirator who was aware of the falsity of these representations and participated in the misuse of the US$20m investment sum.

Following the investment, Cachet claimed it discovered that the representations were false. On 18 April 2019, Cachet rescinded the Subscription Agreement and demanded the return of the US$20m. When Haven failed to repay, Cachet commenced the Haven Arbitration on 2 September 2019. The arbitral tribunal eventually found that the representations were indeed fraudulent and ordered Haven to repay the sum. Cachet managed to recover the Investment Sum in August 2021 through enforcement actions in Hong Kong, but it continued to seek damages for losses, including interest and costs, which it claimed were not fully covered by the arbitration award.

In the current litigation (Originating Claim 10 of 2022), Cachet sued Mr Shi and Mr Liu personally for fraudulent misrepresentation and conspiracy. Cachet’s case against Mr Liu was that he was "actively involved in the Haven Project since its inception" and must have known that the technical capabilities of the platform were misrepresented to investors. Mr Liu’s defense was that his role was strictly technical and that he was not privy to the business negotiations or the specific representations made by Mr Shi to Cachet. He denied any involvement in a conspiracy to defraud the claimant.

The interlocutory battle concerned Cachet’s requests for the production of documents. Cachet sought internal communications between Mr Shi and Mr Liu, as well as communications with third parties like AXA, to prove that the defendants knew their representations were false. Mr Liu resisted these requests, relying on the "internal documents" exception in the ROC 2021 and asserting legal professional privilege over certain communications. The Assistant Registrar (AR) had ordered Mr Liu to file an affidavit regarding "known adverse documents" but declined to order the production of several other categories of documents. Both parties appealed this decision.

What Were the Key Legal Issues?

The court was tasked with resolving three primary legal issues that are central to the modern Singaporean approach to civil procedure and evidence:

• The Scope of "Known Adverse Documents" under O 11 r 2(1)(b) ROC 2021: The court had to determine the precise definition of a "known adverse document" and whether a party can be compelled to file an affidavit specifically addressing whether such documents exist in their possession. This involved interpreting the phrase "known to be adverse" and the extent of the "reasonable search" required under the new rules.
• The "Internal Documents" Exception under O 11 r 5(2) ROC 2021: A major point of contention was whether the prohibition against the production of "internal documents" (such as private correspondence between co-defendants) is absolute, or whether it is subservient to the mandatory duty to produce known adverse documents. The court had to reconcile the policy of protecting private communications with the policy of preventing the suppression of adverse evidence.
• The "Fraud Exception" to Legal Professional Privilege: Cachet argued that even if certain documents were privileged, that privilege was vitiated by s 128 of the Evidence Act 1893 because the communications were made in furtherance of a fraud. The court had to decide if Cachet had established a prima facie case of fraud sufficient to displace the privilege.

How Did the Court Analyse the Issues?

Choo Han Teck J began by contrasting the document production regimes of the ROC 2014 and the ROC 2021. Under the ROC 2014, discovery was broad, governed by the Peruvian Guano test of relevance. The ROC 2021, however, shifted to a "request for production" model under Order 11, which is designed to be more restrictive and efficient. The judge noted that under O 11 r 2(1), a party is only required to produce documents they rely on or "known adverse documents."

The Definition of Known Adverse Documents

The court relied on the interpretation provided in [2024] SGHCR 9. Choo J affirmed that for a document to be a "known adverse document," it must satisfy two criteria: it must be adverse to the party’s case (or supportive of the opponent’s case), and the party must know it is adverse. The judge emphasized at [20] that "known" means the party is actually aware of the document's adverse nature. This is a subjective-objective hybrid; while it relies on the party's knowledge, the court can infer such knowledge from the circumstances.

The Internal Documents Exception vs. Known Adverse Documents

The most significant part of the analysis concerned O 11 r 5(2), which states that "internal documents" are not to be produced. Mr Liu argued that this rule provided a blanket protection for his private communications with Mr Shi. Choo J rejected this interpretation. He reasoned that the "internal documents" rule is intended to protect the "private thoughts and internal deliberations" of a party, but it cannot be used to hide evidence that the party knows is adverse. The judge held at [23]:

"because the ban against the production of internal documents does not apply to known adverse documents, Mr Liu remains obliged, as part of his continuing duty, to produce internal documents that he knows or reasonably ought to know are adverse to his case"

The court clarified that O 11 r 5(2) is a rule of "non-production" for the general request process, but it does not override the fundamental duty in O 11 r 2(1)(b). If an internal document is also a "known adverse document," the duty to disclose it prevails. To hold otherwise would allow the ROC 2021 to become a "litigator’s charter for the suppression of evidence," which was never the intention of the reforms.

The Requirement for an Affidavit

Regarding the AR's order for Mr Liu to file an affidavit, the court found this to be a necessary and proportionate measure. Under O 11 r 6, the duty to disclose known adverse documents is a continuing one. Choo J noted that in cases of alleged fraud and conspiracy, the defendants are often the only ones who know what internal documents exist. By requiring an affidavit, the court puts the defendant on notice of their legal obligation, making them liable for perjury if they falsely claim no such documents exist. The judge cited Lutfi Salim bin Talib and another v British and Malayan Trustees Ltd [2024] 5 SLR 86, noting that while an affidavit is generally conclusive, the court can look behind it if it is "plain and obvious" that documents must exist.

Legal Professional Privilege and the Fraud Exception

On the issue of privilege, the court applied the two-stage test from Mykytowych, Pamela Jane v V I P Hotel [2016] 4 SLR 829. First, the party claiming privilege must show the documents meet the requirements for LPP. Second, the party challenging it must show that an exception applies. Cachet invoked s 128 of the Evidence Act 1893, arguing the communications were in furtherance of an illegal purpose (fraud). Choo J held that the standard for the fraud exception is a prima facie case. While the Haven Arbitration had found fraud against Haven and Mr Shi, the court noted that Mr Liu was not a party to that arbitration. Therefore, the findings there did not automatically establish a prima facie case of fraud against Mr Liu personally for the purpose of vitiating his privilege at this interlocutory stage.

What Was the Outcome?

The High Court dismissed both RA 174 and RA 175. The decision of the Assistant Registrar was upheld in its entirety. The court's primary order was for Mr Liu to file an affidavit addressing the existence of known adverse documents. The operative order was stated at [36]:

"I thus order Mr Liu to file an affidavit, stating whether there exist known adverse documents falling under Appeal Requests (a) to (d) and whether he has them in his possession."

The specific outcomes for each appeal were as follows:

• RA 174 (Mr Liu’s Appeal): Dismissed. Mr Liu’s argument that he should not be compelled to file an affidavit regarding internal documents was rejected. The court held that his continuing duty to disclose known adverse documents remained despite the "internal documents" exception in O 11 r 5(2).
• RA 175 (Cachet’s Appeal): Dismissed. Cachet’s request for the immediate production of specific categories of documents was denied. The court found that the order for an affidavit was the more appropriate and proportionate step at this stage, as it would clarify what documents actually existed before the court considered further orders for production.
• Costs: Choo J reserved the costs of both appeals to the trial judge, as the significance of the documents (or their absence) would be better evaluated after the full facts were ventilated at trial.

Why Does This Case Matter?

This case is a landmark interpretation of the ROC 2021 document production regime. It addresses a loophole that many practitioners feared: that the "internal documents" exception would be used to shield relevant but damaging evidence in commercial litigation. By ruling that the duty to disclose "known adverse documents" is paramount, the High Court has ensured that the ROC 2021 remains a tool for justice rather than a shield for opacity.

For the Singapore legal landscape, this judgment reinforces the "Ideals" of the ROC 2021 set out in Order 3 Rule 1, particularly the ideals of fair access to justice and the expeditious disposal of cases. Choo J’s reasoning demonstrates a pragmatic approach to fraud litigation, where the asymmetry of information between the claimant and the defendants is often vast. By requiring a "known adverse" affidavit, the court provides a mechanism to bridge this gap without reverting to the overbroad and expensive discovery practices of the past.

The decision also clarifies the relationship between different rules within Order 11. It establishes a hierarchy where the mandatory disclosure obligations in Rule 2 and the continuing duty in Rule 6 take precedence over the general exclusions in Rule 5. This provides much-needed certainty for practitioners when advising clients on their disclosure obligations. It is now clear that a client cannot simply say "this is an internal email, so I don't have to produce it" if that email contains information that directly contradicts the client's pleaded defense.

Furthermore, the treatment of the fraud exception to privilege serves as a reminder of the high threshold required to displace LPP. Even with a prior arbitral award finding fraud against a related party, the court maintained a strict requirement for a prima facie case against the specific individual asserting the privilege. This protects the sanctity of legal advice while leaving the door open for disclosure if the claimant can produce specific evidence of the defendant's personal involvement in the wrongdoing.

Practice Pointers

• Advise Clients on the "Known Adverse" Duty: Practitioners must ensure clients understand that the duty to disclose known adverse documents is proactive and continuing. It is not enough to wait for a specific request; if a client discovers a document that hurts their case, they have a legal obligation to disclose it under O 11 r 6.
• Internal Documents are Not Immune: Do not assume that internal Slack messages, WhatsApp chats, or emails between co-defendants are protected by O 11 r 5(2). If these documents are "known adverse," they must be produced.
• The Power of the "Known Adverse" Affidavit: If you suspect an opponent is withholding key evidence, apply for an order requiring them to file an affidavit specifically addressing "known adverse documents." This forces the individual to personally attest to the search and existence of such documents, carrying the threat of perjury.
• Threshold for Fraud Exception: When seeking to vitiate privilege under s 128 of the Evidence Act 1893, focus on establishing a prima facie case against the specific party holding the privilege. General allegations of fraud against a company may not be sufficient to pierce the privilege of an individual director.
• Proportionality in Requests: The court in this case preferred an affidavit over a broad order for production. When drafting requests for production, consider asking for an affidavit as an alternative or preliminary step to ensure the request is seen as proportionate and focused.

Subsequent Treatment

[None recorded in extracted metadata]

Legislation Referenced

• Evidence Act 1893 (2020 Rev Ed), s 128
• Rules of Court 2021, Order 3 Rule 1
• Rules of Court 2021, Order 11 Rule 1
• Rules of Court 2021, Order 11 Rule 2
• Rules of Court 2021, Order 11 Rule 3
• Rules of Court 2021, Order 11 Rule 4
• Rules of Court 2021, Order 11 Rule 5
• Rules of Court 2021, Order 11 Rule 6

Cases Cited

• Considered: [2024] SGHCR 9
• Considered: Lutfi Salim bin Talib and another v British and Malayan Trustees Ltd [2024] 5 SLR 86
• Referred to: Mykytowych, Pamela Jane v V I P Hotel [2016] 4 SLR 829
• Referred to: Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and other appeals [2007] 2 SLR(R) 367
• Referred to: ARX v Comptroller of Income Tax [2016] 5 SLR 590
• Referred to: Gelatissimo Ventures (S) Pte Ltd and others v Singapore Flyer Pte Ltd [2010] 1 SLR 833

Source Documents

• Original judgment PDF: Download (PDF, hosted on Legal Wires CDN)
• Official eLitigation record: View on elitigation.sg