Cachet Multi Strategy Fund SPC on behalf of Cachet Special Opportunities SP v Feng Shi and others [2024] SGHCR 8

Case Details

• Citation: [2024] SGHCR 8
• Court: General Division of the High Court (Assistant Registrar)
• Decision Date: 19 August 2024
• Coram: AR Elton Tan Xue Yang
• Case Number: Originating Claim No 10 of 2022; Summons No 475 of 2024
• Hearing Date(s): 16, 26 July 2024
• Claimant: Cachet Multi Strategy Fund SPC on behalf of Cachet Special Opportunities SP
• Respondents: Feng Shi (1st Defendant); Alex SK Liu (2nd Defendant); Haven Global Network Pte Ltd (3rd Defendant)
• Counsel for Claimant: Ho Yi Jie (WongPartnership LLP)
• Counsel for Respondent: Samantha Ong (WNLEX LLC) for the second defendant
• Practice Areas: Civil Procedure; Production of Documents; Rules of Court 2021

Summary

The decision in Cachet Multi Strategy Fund SPC v Feng Shi represents a foundational interpretation of the document production regime under the Rules of Court 2021 ("ROC 2021"), specifically the restrictive proscription contained in Order 11 Rule 5(2). This provision prohibits the court from ordering the production of "private or internal correspondence" unless the applicant can demonstrate that the request falls within a "special case" or concerns a "known adverse document." The judgment clarifies that these exceptions are intended to be narrow, reflecting a systemic shift away from the broad "train of inquiry" discovery model that characterized the previous Rules of Court 2014 ("ROC 2014") regime.

The dispute arose from a US$20 million investment by the Claimant, a Cayman Islands hedge fund, into the 3rd Defendant, Haven Global Network Pte Ltd. The Claimant alleged that it was induced into this investment by fraudulent misrepresentations made by the 1st Defendant, Feng Shi, with the knowledge of the 2nd Defendant, Alex SK Liu. Following a successful arbitration against the 3rd Defendant and subsequent enforcement in Hong Kong, the Claimant sought specific production of internal communications from the 2nd Defendant to bolster its claims of fraud and conspiracy in the ongoing High Court proceedings.

The Court's analysis centered on the tension between the "Ideals" of the ROC 2021—specifically the need for expeditious proceedings and the economical use of resources—and the traditional desire for comprehensive disclosure. AR Elton Tan Xue Yang held that the introduction of Order 11 Rule 5(2) was a deliberate legislative choice to protect the privacy of internal communications and to prevent "fishing expeditions." The Court emphasized that even if a document is "directly relevant" to the issues in the case, it remains protected from production if it constitutes internal correspondence, unless the high threshold of a "special case" is met.

Ultimately, the Court dismissed the Claimant's application in its entirety. The decision serves as a stern warning to practitioners that the era of wide-ranging discovery of internal emails and WhatsApp messages is over. To succeed in an application for such documents under the ROC 2021, a party must provide specific evidence of the documents' existence and their adverse nature, or demonstrate extraordinary circumstances that justify overriding the general rule of non-production.

Timeline of Events

1. 29 December 2017: Initial interactions or preliminary dates relevant to the formation of the investment vehicle.
2. 31 January 2018: Further preliminary corporate actions involving the parties.
3. 30 June 2018: Date associated with financial representations or status of the 3rd Defendant.
4. 3 September 2018: Execution of the Subscription Agreement between the Claimant and the 3rd Defendant.
5. 5 October 2018: Completion of the investment; the Claimant pays the US$20 million Investment Sum.
6. 26 October 2018: Subsequent corporate activity following the investment.
7. 27 March 2019: Early indications of disputes regarding the representations made.
8. 18 April 2019: The Claimant issues a notice of rescission of the Subscription Agreement.
9. 29 April 2019: Further correspondence regarding the rescission and demand for repayment.
10. 30 June 2019: Relevant date for the assessment of the 3rd Defendant's financial position.
11. 9 July 2019: Commencement of arbitration proceedings by the Claimant against the 3rd Defendant.
12. 19 August 2019: Procedural steps in the arbitration or related enforcement actions.
13. 2 September 2019: Further developments in the dispute between the Claimant and Feng Shi.
14. 2 October 2019: Significant date in the timeline of alleged fraudulent conduct.
15. 19 May 2020: Procedural milestone in the ongoing dispute.
16. 15 October 2020: Further developments in the factual matrix.
17. 17 March 2021: Issuance of the Arbitral Award in favor of the Claimant.
18. 11 June 2021: Commencement of enforcement proceedings in Hong Kong.
19. 11 August 2021: Significant date in the recovery of the Investment Sum.
20. 3 November 2021: Further procedural steps in the Hong Kong enforcement.
21. 26 November 2021: Finalization of certain recovery aspects.
22. 18 April 2022: The Claimant commences Originating Claim No 10 of 2022 in the Singapore High Court.
23. 6 May 2022: Filing of the Statement of Claim.
24. 14 July 2022: Procedural steps in the Singapore litigation.
25. 9 March 2023: Filing of further pleadings or affidavits.
26. 7 June 2023: Significant date in the discovery/production timeline.
27. 10 November 2023: Further developments in the specific production request.
28. 14 March 2024: Filing of Summons No 475 of 2024 for the production of documents.
29. 16, 26 July 2024: Substantive hearings for the production application.
30. 19 August 2024: Delivery of the judgment dismissing the application.

What Were the Facts of This Case?

The Claimant, Cachet Multi Strategy Fund SPC, acting on behalf of its segregated portfolio, Cachet Special Opportunities SP, is a hedge fund incorporated in the Cayman Islands. The dispute centers on a US$20 million investment made by the Claimant into the 3rd Defendant, Haven Global Network Pte Ltd ("Haven"), a Singapore-incorporated company. This investment was formalized through a Subscription Agreement dated 3 September 2018, under which the Claimant acquired a 10% shareholding in Haven.

The Claimant's primary allegation is that it was induced to enter into the Subscription Agreement by a series of fraudulent misrepresentations made by the 1st Defendant, Feng Shi. Feng Shi was the co-founder, CEO, chairman, majority shareholder, and a director of Haven. The alleged misrepresentations were extensive and covered several key areas of Haven's business and financial health:

• Product Development: Feng Shi allegedly represented that Haven had developed a blockchain-based financial products platform that was ready for launch.
• Strategic Partnerships: It was represented that AXA, a major insurance group, was a strategic partner and would use Haven's platform.
• Financial Audits: Feng Shi allegedly claimed that Haven's financial statements had been audited by reputable firms.
• Personal Investment: Feng Shi represented that he had personally invested significant capital into Haven.
• Key Personnel: Representations were made regarding the employment of high-level executives from established financial institutions.

The 2nd Defendant, Alex SK Liu, was a co-founder and director of the Claimant at the material time. The Claimant alleges that Liu was aware that Feng Shi's representations were false but failed to disclose this to the Claimant's board, thereby breaching his fiduciary duties and participating in a conspiracy to defraud the Claimant.

In April 2019, the Claimant purported to rescind the Subscription Agreement on the grounds of fraud and demanded the return of the US$20 million Investment Sum. When Haven failed to comply, the Claimant commenced arbitration. The arbitral tribunal subsequently found that the majority of the representations made by Feng Shi were indeed false and fraudulent. The tribunal ordered Haven to repay the Investment Sum. The Claimant successfully recovered a substantial portion of the debt through enforcement proceedings in Hong Kong, including the seizure of assets and bank accounts.

Despite the recovery against Haven, the Claimant continued its action in the Singapore High Court (OC 10/2022) against Feng Shi and Alex SK Liu personally, seeking damages for deceit, breach of fiduciary duty, and conspiracy. In the course of these proceedings, the Claimant filed Summons No 475 of 2024, seeking the production of two schedules of documents from the 2nd Defendant.

Schedule 1 consisted of six requests for internal communications (emails, WhatsApp messages, and other correspondence) between Alex SK Liu, Feng Shi, and Haven's employees during the period leading up to and immediately following the investment. The Claimant argued these were necessary to prove Liu's knowledge of the fraud. Schedule 2 sought documents related to the 2nd Defendant's personal financial transactions, including bank statements and records of a S$1.15 million payment, which the Claimant alleged were relevant to the "follow the money" aspect of the fraud and the 2nd Defendant's motive.

The 2nd Defendant resisted the application on several grounds:

1. That the requests in Schedule 1 fell within the proscription of "private or internal correspondence" under Order 11 Rule 5(2) of the ROC 2021.
2. That the documents were protected by legal professional privilege.
3. That he did not have possession or control of the requested documents, particularly those residing on Haven's servers or third-party platforms.
4. That the requests in Schedule 2 were irrelevant to the pleaded issues in the OC.

What Were the Key Legal Issues?

The application raised fundamental questions regarding the interpretation of the new discovery regime under the ROC 2021. The Court identified the following key issues:

• The Scope of Order 11 Rule 5(2): What constitutes "private or internal correspondence," and how should the court apply the proscription against its production? This required an analysis of the legislative intent behind the ROC 2021 and the Civil Justice Commission's recommendations.
• The "Special Case" Exception: What is the threshold for a "special case" under Order 11 Rule 5(2)(a)? Does mere relevance, even direct relevance, suffice to overcome the proscription?
• The "Known Adverse Document" Exception: What level of specificity is required for a document to be considered "known" and "adverse" under Order 11 Rule 5(2)(b)? Can a party rely on a general category of documents?
• Averments of Legal Privilege: What is the required standard for an affidavit asserting legal privilege in the context of a production application? The Court had to reconcile the positions in [2023] SGHC 301 and earlier authorities.
• Possession and Control: Under what circumstances is a party deemed to have "possession or control" of documents held by a company of which they are a director or shareholder, or documents stored on cloud-based messaging services?
• The Application of the "Ideals": How do the Ideals set out in Order 3 Rule 1 (fair access to justice, expeditious proceedings, and cost-effectiveness) influence the court's discretion in ordering production?

How Did the Court Analyse the Issues?

The Court began by emphasizing that the ROC 2021 represents a "paradigm shift" in civil procedure. AR Elton Tan noted that the new rules were designed to address the "excessive discovery" that plagued the ROC 2014 regime. The Court's analysis was guided by the "Ideals" in Order 3 Rule 1, which must be the "north star" for interpreting any provision of the ROC 2021.

1. The Proscription on Private or Internal Correspondence

The Court conducted a deep dive into Order 11 Rule 5(2), which states: "The Court must not order the production of any document that is part of a party’s private or internal correspondence... unless (a) it is a special case... or (b) the correspondence is a known adverse document."

The Court observed that this rule was a direct response to the Civil Justice Commission's finding that discovery of internal communications was often the most expensive and least productive part of litigation. AR Elton Tan held that the term "private or internal correspondence" should be given its plain meaning, encompassing emails, inter-office memos, and instant messages (like WhatsApp) between employees of a company or between individuals in a private capacity.

"The Court must not order the production of any document that is part of a party’s private or internal correspondence" (at [50]).

2. The "Special Case" Exception

The Claimant argued that the fraud and conspiracy allegations made this a "special case." The Court rejected this, holding that the "special case" exception requires something more than the mere fact that the documents are relevant or that the cause of action is serious. If "direct relevance" were enough, the proscription in Rule 5(2) would be rendered nugatory, as specific production under Order 11 Rule 2 already requires direct relevance.

The Court referred to the decision in [2024] SGHC 85, noting that the threshold for a "special case" is high. It suggested that a "special case" might exist where the internal correspondence is the only way to prove an essential element of the claim, or where there is evidence of bad faith in the non-disclosure. In this case, the Claimant had already obtained significant evidence through arbitration and other sources; thus, the "necessity" argument was weakened.

3. The "Known Adverse Document" Exception

The Court clarified that for a document to be "known," the applicant must be able to identify it with a high degree of specificity. A request for "all emails between X and Y regarding Z" is a category, not a known document. Furthermore, the document must be "adverse"—meaning it must significantly harm the producing party's case or significantly support the applicant's case.

The Court found that the Claimant's requests in Schedule 1 were framed as broad categories. The Claimant was essentially "fishing" for evidence of the 2nd Defendant's knowledge. This was exactly what the ROC 2021 sought to prevent. The Court distinguished [2007] SGHC 69, noting that the "train of inquiry" test no longer applies.

4. Legal Privilege and Affidavits

The 2nd Defendant had asserted legal privilege over some documents. The Claimant argued that the 2nd Defendant's affidavit was insufficient because it did not list the documents or explain the basis for privilege in detail. The Court disagreed, following the approach in [2023] SGHC 301. It held that at the stage of an application for production, a party need only provide a "sufficient averment" of privilege. A detailed list is only required after an order for production is made, as part of the formal production process under Order 11 Rule 6.

5. Possession and Control

Regarding documents on Haven's servers, the Court applied the principles from [2008] SGHC 98. It held that a director does not automatically have "possession or control" of company documents for the purposes of discovery in a personal capacity. The Claimant failed to show that the 2nd Defendant had a legal right to deal with Haven's documents as his own.

What Was the Outcome?

The Court dismissed the application for the production of all documents in Schedule 1 and Schedule 2. The decision was based on a comprehensive failure by the Claimant to overcome the hurdles set by the ROC 2021.

For Schedule 1 (Internal Correspondence):

• The Court held that the requests were for "private or internal correspondence" and thus subject to the proscription in Order 11 Rule 5(2).
• The Claimant failed to establish that this was a "special case." The Court noted that the Claimant's desire to find "smoking gun" evidence of knowledge did not elevate the matter beyond a standard fraud claim.
• The Claimant failed to identify any "known adverse documents." The requests were for broad categories of communications over an extended period.

For Schedule 2 (Financial Documents):

• The Court found that the requests for the 2nd Defendant's personal bank statements and records of the S$1.15 million payment were not "directly relevant" to the pleaded issues. The Claimant's argument that these documents might show a motive for the fraud was considered too remote.
• The Court applied the test from [2017] SGHCR 15, emphasizing that "direct relevance" requires the document to be a necessary link in the chain of proof for an essential allegation.

The Court concluded with the following operative order:

"For the foregoing reasons, I dismiss the application for production of the Schedule 1 and 2 Documents. I will hear parties on costs." (at [84]).

The Court reserved the issue of costs for further submissions, but the dismissal of the application in its entirety suggests that costs would likely follow the event, in accordance with the general principle that the successful party is entitled to its costs.

Why Does This Case Matter?

This case is of paramount importance to Singapore practitioners as it provides the most detailed judicial treatment to date of the "internal correspondence" shield in the ROC 2021. Its significance can be analyzed across several dimensions:

1. The End of "Train of Inquiry" Discovery

The judgment confirms that the broad discovery principles established in cases like Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) and followed in [2007] SGHC 69 are no longer applicable under the ROC 2021. Practitioners can no longer seek documents merely because they might lead to a "train of inquiry" that could uncover relevant evidence. The requirement is now "direct relevance," and for internal communications, the bar is even higher.

2. Protection of Corporate Privacy

By strictly enforcing Order 11 Rule 5(2), the Court has provided a significant degree of protection for corporate and private communications. This reflects a policy decision that the cost and intrusion of searching through thousands of internal emails and WhatsApp messages often outweigh the potential benefit to the administration of justice. This will have a major impact on how corporate fraud and conspiracy cases are litigated, as these cases traditionally relied heavily on "internal" evidence.

3. Defining the "Special Case"

The Court's refusal to find a "special case" in a US$20 million fraud claim sends a clear signal: "special" means "extraordinary." It is not enough for the case to be high-value or for the allegations to be serious. This creates a high burden for applicants and suggests that the "special case" exception will be reserved for situations where there is a clear "denial of justice" if the documents are not produced.

4. Specificity in Production Requests

The decision underscores the need for extreme specificity in production requests. Practitioners must move away from requesting "categories" and instead attempt to identify specific documents. This may require more robust pre-action discovery or the use of other investigative tools before filing a specific production application.

5. Procedural Efficiency and the Ideals

The judgment is a practical application of the Order 3 Rule 1 Ideals. It shows that the Court will prioritize the "economical use of court resources" and "expeditious proceedings" over the exhaustive search for every potentially relevant document. This is a significant shift in the judicial philosophy of the Singapore courts.

Practice Pointers

• Avoid Category-Based Requests: When seeking internal correspondence, avoid broad categories like "all emails regarding the project." These will almost certainly be struck down under Order 11 Rule 5(2).
• Identify "Known" Documents: Try to identify specific documents (e.g., "the email from X to Y sent on 5 October 2018 at 10:00 AM"). Use information obtained from other sources, such as arbitration or third-party disclosures, to provide this specificity.
• Plead "Adverse" Nature Explicitly: If relying on the "known adverse document" exception, clearly explain in the supporting affidavit why the document is adverse to the other party's case. Do not rely on vague assertions of relevance.
• Establish a "Special Case" with Evidence: If arguing for a "special case," provide evidence that the information cannot be obtained through any other means and that the failure to produce the documents would result in a manifest injustice.
• Check Possession and Control: Before seeking documents from an individual director, ensure you can prove they have the legal right to possess or control those documents independently of the company.
• Affidavits on Privilege: When resisting production on the grounds of privilege, a general averment is sufficient at the application stage. However, be prepared to provide a detailed list if an order is subsequently made.
• Focus on Direct Relevance: For any document request (not just internal correspondence), ensure the document is a "necessary link" to a pleaded issue. Motive or "background" relevance is unlikely to satisfy the "direct relevance" test under the ROC 2021.

Subsequent Treatment

As a relatively recent decision under the ROC 2021, Cachet Multi Strategy Fund v Feng Shi is currently a leading authority on the interpretation of Order 11 Rule 5(2). It follows the restrictive trend set by the High Court in [2024] SGHC 85 and reinforces the procedural philosophy articulated in [2023] SGHC 301 regarding the sufficiency of privilege averments. It is expected to be frequently cited in interlocutory applications where parties seek to pierce the shield of internal corporate communications.

Legislation Referenced

• Rules of Court 2021: Specifically Order 3 Rule 1 (The Ideals); Order 11 Rule 1; Order 11 Rule 2 (Specific Production); Order 11 Rule 5 (Proscription on Production); Order 11 Rule 6.
• Rules of Court 2014: Referenced for the purpose of distinguishing the previous discovery regime (specifically Order 24).
• Access to Information Act, R.S.C. 1985, c. A-1: (Canadian statute referenced in the context of comparative law analysis on privilege).

Cases Cited

• Considered: Lutfi Salim bin Talib and another v British and Malayan Trustees Ltd [2024] SGHC 85
• Referred to: Eng’s Wantan Noodle Pte Ltd and another v Eng’s Char Siew Wantan Mee Pte Ltd [2023] SGHCR 17
• Referred to: Dante Yap Go v Bank Austria Creditanstalt AG [2007] SGHC 69
• Referred to: The Management Corporation Strata Title Plan No 689 v DTZ Debenham Tie Leung (SEA) Pte Ltd and another [2008] SGHC 98
• Referred to: EQ Capital Investments Ltd v Sunbreeze Group Investments Ltd and others [2017] SGHCR 15
• Referred to: Natixis, Singapore Branch v Lim Oon Kuin and others [2023] SGHC 301
• Referred to: Lim Julian Frederick Yu v Lim Peng On (as executor and trustee of the estate of Lim Koon Yew (alias Lim Kuen Yew), deceased) and another [2024] SGHC 53
• Referred to: Comptroller of Income Tax v ARW and another [2017] SGHC 16
• Referred to: Grab Rentals Pte Ltd v Khoo Long Hui [2023] SGMC 46
• Referred to: Wee Eng Siang v Muhammad Sholihin Bin Roslan [2023] SGMC 83
• Referred to: ARX v Comptroller of Income Tax [2016] 5 SLR 590
• Referred to: Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd [2007] 2 SLR(R) 367
• Referred to: United Overseas Bank Ltd v Lippo Marina Collection Pte Ltd and others [2018] 4 SLR 391
• Referred to: CZD v CZE [2023] 5 SLR 806
• Referred to: Wang Piao v Lee Wee Ching [2024] 4 SLR 540

Source Documents

• Original Judgment PDF (eLitigation)
• Case Summary on eLitigation