Case Details
- Citation: [2024] SGHC(A) 10
- Court: Appellate Division of the High Court of the Republic of Singapore (SGHC(A))
- Originating Application No: 42 of 2023
- Originating Claim No: 231 of 2023
- Summons No: 2078 of 2023
- Date of Appellate Decision: 28 February 2024 (hearing); 12 April 2024 (decision date)
- Judges: Debbie Ong JAD and Valerie Thean J (Valerie Thean J delivering the judgment of the court)
- Plaintiff/Applicant: Three Arrows Capital Ltd & 2 Ors
- Defendant/Respondent: Cheong Jun Yoong
- Applicants (capacities): Christopher Farmer and Russell Crumpler as joint liquidators of Three Arrows Capital Ltd
- Respondent (capacity): Claimant in OC 231; respondent in AD/OA 42/2023
- Procedural Posture: Application for permission to appeal against the General Division judge’s dismissal of (a) an application to set aside leave for service out of jurisdiction and (b) an application to set aside service of the originating claim
- Legal Areas: Civil procedure; service out of jurisdiction; forum conveniens; jurisdictional gateway; trust and proprietary claims; disclosure in ex parte applications
- Statutes Referenced: Rules of Court 2021 (ROC 2021); Supreme Court Practice Directions 2021 (SCPD 2021)
- Cases Cited: Russell Crumpler et al. v Cheong Jun Yoong et al., BVIHC (COM) 2023/0003; 2022/0119 (BVI Judgment) (and reference to the Singapore General Division decision: Cheong Jun Yoong v Three Arrows Capital Ltd and others [2024] SGHC 21)
- Judgment Length: 26 pages; 7,236 words
Summary
Three Arrows Capital Ltd and its joint liquidators sought permission to appeal against a General Division decision dismissing their application to set aside leave for service out of Singapore and to set aside such service. The underlying dispute concerned whether certain assets associated with a purported “DeFiance Capital” fund were held on trust for the respondent, Mr Cheong, and other investors, or whether they formed part of the insolvent estate of Three Arrows Capital Ltd (“Three Arrows”).
The Appellate Division dismissed the application for permission to appeal. It held that the General Division judge was correct to find that the jurisdictional gateway for service out of jurisdiction was satisfied: there was a good arguable case of sufficient nexus to Singapore, Singapore was the forum conveniens, and there was a serious question to be tried on the merits. The court also rejected the contention that there had been material non-disclosure in the ex parte application for leave to serve out.
What Were the Facts of This Case?
Three Arrows is a cryptocurrency investment fund incorporated in the British Virgin Islands (“BVI”). It was placed under liquidation by a BVI court on 27 June 2022 (the “BVI Liquidation Proceedings”). In August 2022, the liquidators obtained an order in the BVI for recognition of the liquidation proceedings in Singapore as a foreign main proceeding. This recognition formed the procedural backdrop for the Singapore litigation, in which the liquidators sought to protect the assets said to belong to the insolvent estate.
Mr Cheong, a Singapore citizen, managed a portfolio of assets which he contended was a standalone fund called “DeFiance Capital” (“DC Fund”). He asserted that certain assets within the Three Arrows ecosystem—referred to as the “DC Assets”—were held on trust for his benefit and for fellow investors in the DC Fund (“DC Investors”). The DC Assets included (i) contracts for equities or cryptoassets entered into in Three Arrows’ name, (ii) shares held in Three Arrows’ name, and (iii) cryptoassets held in sub-accounts of accounts in Three Arrows’ name.
Mr Cheong’s case was that the DC Assets were segregated and controlled as part of an “Independent Fund Arrangement” that promised independent control and separate management. On his account, the DC Fund was managed independently by him, with assets and operations kept distinct from Three Arrows’ other activities. Practically, he used designated sub-accounts and crypto-currency wallets controlled by him, including a Fireblocks workspace (“DC FB Workspace”) set up solely for his use to store the tokens that formed part of the DC Assets.
In May 2022, Mr Cheong incorporated DeFiance Ventures Pte Ltd (“DVPL”) and DeFiance Capital Ltd (“DCPL”). Three Arrows transferred rights and interests in the DC FB Workspace and the DC Assets in the DC sub-accounts to DCPL on 14 June 2022. Subsequently, on 20 June 2023, DCPL novated the DC FB Workspace to DVPL. Importantly, the transfer did not include other interests held in Three Arrows’ name, particularly those relating to SAFEs and shares issued pursuant to SAFEs, which remained within Three Arrows’ broader structure.
What Were the Key Legal Issues?
The immediate legal issue on appeal was not the merits of the trust claim itself, but whether the General Division judge was correct to dismiss the liquidators’ application to set aside (a) the order granting leave to serve the Singapore originating claim out of jurisdiction and (b) the service itself. This required the court to examine whether the jurisdictional gateway for service out of Singapore was properly satisfied.
Under the Rules of Court 2021 and the Supreme Court Practice Directions 2021, the claimant must show, among other things, a good arguable case of sufficient nexus to Singapore, that Singapore is the forum conveniens, and that there is a serious question to be tried on the merits. The liquidators argued that these requirements were not met, and that the respondent had failed to make full and frank disclosure when seeking ex parte leave to serve out.
A further issue—central to the jurisdictional gateway inquiry—concerned how the court should determine the “location” of cryptoassets and, relatedly, where a trust “arises” for the purpose of assessing whether a cause of action arose in Singapore. The liquidators challenged the approach adopted by the General Division judge, particularly the test for determining where a trust arises and the factors used to locate cryptoassets in the jurisdictional analysis.
How Did the Court Analyse the Issues?
The Appellate Division began by framing the application as one for permission to appeal. In this context, the court’s task was to determine whether the proposed appeal raised arguable errors of principle or law, or whether there was a sufficient basis to disturb the General Division judge’s discretionary and legal conclusions on the service-out requirements. The court emphasised that the threshold for permission to appeal is not satisfied merely by disagreement; rather, the applicants needed to show that the decision was plainly wrong or that there was a question of general principle or importance warranting appellate intervention.
On the jurisdictional gateway, the General Division judge had applied O 8 r 1(1) of the ROC 2021, which permits service out of Singapore with the court’s approval if the court has jurisdiction or is the appropriate court to hear the action. The judge then relied on SCPD 2021 para 63(2) and (3), which sets out the claimant’s burden to show (a) a good arguable case of sufficient nexus to Singapore, (b) that Singapore is the forum conveniens, and (c) that there is a serious question to be tried. The Appellate Division reviewed these findings and concluded that the requirements were satisfied on the evidence and pleadings at the service-out stage.
First, on sufficient nexus, the General Division judge found a good arguable case that the claim asserted proprietary rights in or over movable property situated in Singapore. The DC Assets were said to be situated in Singapore because they were controlled by DVPL and/or Mr Cheong, both resident in Singapore. In addressing the location of cryptoassets, the General Division judge adopted the approach that the location is best determined by where the cryptoassets are controlled. The Appellate Division accepted that this was a defensible and principled way to treat “location” for jurisdictional purposes, particularly where control is the practical determinant of where the relevant rights can be exercised and where the dispute’s effects are felt.
Second, the General Division judge found an alternative basis: that the cause of action arose in Singapore because the trust arose in substance in Singapore. The Appellate Division treated this as a key part of the jurisdictional gateway inquiry. It endorsed the view that, in substance, the trust’s formation and operation were tied to the Independent Fund Arrangement and the surrounding circumstances, including the agreements and discussions that underpinned the claimed segregation and control. The court’s analysis reflected that “where a trust arises” is not determined by formal labels alone, but by the substance of the arrangement and the relevant connecting factors that show where the trust is effectively constituted and administered.
Third, on forum conveniens, the General Division judge had found that Singapore was the appropriate forum. The forum conveniens analysis is inherently fact-sensitive, but it typically considers where the parties and evidence are located, where the dispute is centred, and whether there is a more natural forum elsewhere. The Appellate Division did not accept that the liquidators had shown a material error in the General Division judge’s balancing exercise. It also took into account that the respondent’s connections to Singapore were substantial, and that the proprietary and trust issues were closely linked to Singapore-based control and administration of the relevant assets.
Fourth, on the serious question to be tried, the court noted that the trust claim was not fanciful or hopeless. At the service-out stage, the claimant need only show that there is a serious question to be tried, not that the claim will necessarily succeed. The Appellate Division agreed that the pleadings raised arguable issues about whether the DC Assets were held on trust and whether the claimed segregation was effective against the backdrop of Three Arrows’ insolvency and the master-feeder structure.
Finally, the court addressed the allegation of inadequate disclosure in the ex parte application for leave to serve out. The liquidators contended that Mr Cheong had failed to make full and frank disclosure of material facts. The Appellate Division upheld the General Division judge’s conclusion that the disclosure concerns did not justify setting aside the leave and service. The court’s reasoning reflected the principle that ex parte applications must be made with candour, but not every omission or contested factual emphasis will amount to material non-disclosure warranting the drastic remedy of setting aside service-out leave.
What Was the Outcome?
The Appellate Division dismissed the application for permission to appeal. As a result, the General Division judge’s decision to dismiss SUM 2078 stood, and the leave for service out of jurisdiction and the service of the Singapore originating claim on the applicants in the BVI remained effective.
Practically, this meant that the Singapore proceedings could continue against the BVI-incorporated company and its joint liquidators, with the trust and proprietary issues to be litigated on their merits in Singapore. The decision therefore confirmed that the jurisdictional gateway for service out was properly satisfied on the pleadings and evidence available at the service-out stage.
Why Does This Case Matter?
This case is significant for practitioners because it clarifies how Singapore courts approach the jurisdictional gateway for service out of jurisdiction in disputes involving cryptoassets and trust-based proprietary claims. In particular, it supports a control-based approach to locating cryptoassets for jurisdictional purposes, which is likely to be influential in future cases where digital assets are held through wallets, custody arrangements, and corporate entities.
It also provides guidance on the test for determining where a trust arises in the jurisdictional inquiry. Rather than treating “place” as a purely formal concept, the court’s reasoning emphasises substance—how the trust arrangement is constituted and where it effectively operates. This is especially relevant in complex investment structures, including master-feeder fund arrangements, where assets may be moved, novated, or segregated through multiple entities and contractual instruments.
From a procedural perspective, the decision also underscores that permission to appeal against service-out determinations will not be readily granted. Applicants must demonstrate more than disagreement with the General Division’s application of the SCPD framework; they must show arguable errors of principle or a question of general importance. Additionally, allegations of non-disclosure must be assessed for materiality, and courts will be cautious about setting aside service-out leave absent a clear basis.
Legislation Referenced
- Rules of Court 2021 (ROC 2021), in particular O 8 r 1(1)
- Supreme Court Practice Directions 2021 (SCPD 2021), in particular para 63(2) and para 63(3)
Cases Cited
- Russell Crumpler et al. v Cheong Jun Yoong et al., BVIHC (COM) 2023/0003; 2022/0119 (BVI Judgment) (dismissal of the BVI setting aside application)
- Cheong Jun Yoong v Three Arrows Capital Ltd and others [2024] SGHC 21 (General Division decision on SUM 2078)
Source Documents
This article analyses [2024] SGHCA 10 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.