Perry, Tamar and another v Esculier, Jacques Henri Georges and another and another matter [2021] SGCA(I) 5

Originating Summons No 16 of 2021

Introduction

The appellants in this appeal are the plaintiffs in the action in the Singapore International Commercial Court (“SICC”) known as SIC/S 4/2020 (“Suit 4”). In Suit 4, the appellants claim to be the beneficial owners of a sum of money that is being held in an account in DBS Bank Ltd (“DBS”) in Singapore in the name of the second respondent. Faced with competing claims from the appellants and the respondents to the money, DBS started interpleader proceedings in the High Court in August 2019 (“OS 1016”). Consequently, on 30 January 2021, a court order was made that in effect directed that a new action be filed in the High Court with the appellants as plaintiffs and the respondents as defendants so that ownership of the money could be determined. The new suit was filed in March 2020 and it was subsequently transferred to the SICC whereupon it became Suit 4.

The appellants subsequently applied in SIC/SUM 55/2020 (“SUM 55”) for leave to amend their Statement of Claim in Suit 4 to (a) include an alternative claim based upon s 73B of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) (the “CLPA claim” and the “CLP Act” respectively) or upon the equivalent provision in Hong Kong being s 60 of the Conveyancing and Property Ordinance (the “CPO Claim” and the “HK Ordinance” respectively), and (b) add Lexinta Group Ltd (“LG Ltd”), a Hong Kong company, as a party to Suit 4. The International Judge (the “Judge”) heard the application on 25 September 2020 and dismissed it for the reasons given in his Grounds of Decision (“GD”) dated 30 October 2020.

The legal backdrop against which these amendments to the appellants’ pleadings were sought was the Court’s exercise of its interpleader jurisdiction under O 17 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”). The fundamental question which arose in this appeal was whether the additional claims that the appellants sought to bring could properly fall within the interpleader jurisdiction. Determination of this question involved, among other things, a determination of whether the relevant claims were “personal” or “proprietary” for the purposes of the Court’s interpleader jurisdiction.

Having heard the parties and considered their written submissions, we dismissed the appeal. We set out our reasons below.

The relevant facts

The parties

The first appellant is a Polish business person and private investor. She is a beneficiary of the second appellant, which is a Netherlands Curacao Commercial Register private fund foundation.

The respondents, both of whom are French nationals, are a married couple. The second respondent, who is the wife, is the holder of the bank account to which the disputed monies have been credited.

Also relevant to the story behind the proceedings were:

(a) Bismark Antonio Badilla Rivera (“Badilla”), a Spanish national ordinarily resident in Switzerland. He is under investigation for fraud and was allegedly responsible for perpetrating an international Ponzi scheme. He appears to be in remand in Switzerland.

(b) LG Ltd, a Hong Kong company described as an “independent affiliated company of the Lexinta Group”. Its sole known director is Badilla.

(c) The Lexinta Group of companies (the “Lexinta Group”) which included LG Ltd, Lexinta Limited, Lexinta Management Limited, Lexinta Inc and Lexinta AG. Badilla was the President and founder of the Lexinta Group. The Lexinta Group was alleged to have been in the business of asset investment and management.

(d) Yachel Baker (“YB”), an Israeli national who was alleged to have been an investor in the Lexinta Group.

(e) Solid Real Estate & Development (1993) Limited (“SRE”), an Israeli private company of which the first appellant is the sole director and shareholder.

Factual background

The dispute in Suit 4 centred on competing claims by the parties to a sum of approximately US$10.24m (the “Monies”) in an account with DBS in Singapore held in the name of the second respondent (the “DBS Account”). Between 5 August 2016 and 1 February 2017, LG Ltd sent various sums of money to the DBS Account and the sums remitted eventually totalled US$10.24m.

The appellants’ claim to the Monies arose out of an alleged Ponzi scheme. This Ponzi scheme was said to have been operated by Badilla via the Lexinta Group. The appellants contended that the Lexinta Group had represented that they would be able to purchase blocks of shares in companies prior to those shares being listed on a stock exchange, reaping considerable profits for investors as a result. On the basis of these representations, various investors, including the appellants, transferred money to companies in the Lexinta Group pursuant to what are now said to have been fraudulent asset management agreements. The appellants further alleged that, as matters transpired, the Lexinta Group had stolen the transferred money, using the same to enrich Badilla and to keep the fraudulent scheme afloat.

By contrast, the respondents contended that the “[a]ppellants’ allegations of a ‘Ponzi scheme’ [were] not admitted and ha[d] yet to be tried” [emphasis in original]. Instead, the respondents’ account of the background facts was that Badilla and the Lexinta Group had held themselves out as providers of investment and asset management services, and both the appellants and the respondents had availed themselves of these services pursuant to various (and separate) asset management agreements entered into with Lexinta Group entities.

The respondents began investing with the Lexinta Group around April 2014. From 16 April 2014 to 26 February 2015, the respondents invested an aggregate of €4m and US$1m (or a total of around US$6m) with the Lexinta Group.

Subsequently, in late-2015, the respondents informed the Lexinta Group that they wanted to terminate their investment. The date agreed with Badilla for the return of their investment (with profit, less the commission fees payable) was 15 April 2016. The respondents understood that they would receive their original investment of around US$6m back, along with profits of around US$4.4m, for a total of around US$10.4m. The deadline of 15 April 2016 came and went without any payment, and the respondents’ Swiss lawyers, Bär & Karrer, sent various demands for payment to the Lexinta Group and Badilla. Eventually, the Lexinta Group complied with the demands and paid the respondents in a number of tranches between August 2016 and February 2017. As stated earlier, the total amount transferred was approximately US$10.24m. All of the Monies were transferred from LG Ltd’s bank account with DBS at its Hong Kong branch (the “Lexinta Account”) to the DBS Account in Singapore.

As for the appellants, their position was that they had, directly and indirectly, invested at least US$24m with the Lexinta Group since around mid-2016. The first appellant indicated that she began having doubts regarding these investments by December 2017 following the Lexinta Group’s failure to transfer certain moneys to her account. Further, contact with Badilla had ceased by November 2017. These doubts were said to have been compounded by the first appellant’s discovery of various proceedings against Lexinta entities in Hong Kong between end-2017 and early-2018.

On 6 March 2018, the first appellant and YB, who was also an investor in the Lexinta Group, obtained ex parte discovery orders from the Hong Kong courts against DBS for the banking records of the Lexinta Account. On 13 March 2018 and 10 April 2018, DBS disclosed documents and records in respect of the Lexinta Account pursuant to the discovery order. This resulted in the first appellant and YB becoming aware of the sums paid by LG Ltd to the DBS Account. The first appellant and YB thereafter asserted that the respondents had been party to the Ponzi scheme as “accomplices” or “associates” of Badilla’s. They then claimed ownership of the Monies. In May 2018, the first appellant’s Hong Kong lawyers demanded that DBS transfer the Monies to the first appellant. Shortly thereafter, DBS froze the first respondent’s DBS Account.

In letters from DBS to each of the respondents dated 11 March 2019, DBS (a) informed the respondents that, following a review of their accounts, it had decided to close all the respondents’ bank accounts with DBS, and (b) requested that the respondents provide transfer instructions for the moneys held in those accounts. The respondents’ evidence was that they provided the transfer instructions sought on or around 15 March 2019. However, DBS refused to comply with the transfer instructions, and the respondents claimed that this marked the first time they realised that all their accounts with DBS were frozen. On 5 April 2019, the respondents’ solicitors wrote to DBS, demanding that it comply with the respondents’ transfer instructions.

Procedural history

Faced with competing claims to the Monies, DBS commenced OS 1016 on 8 August 2019. The second respondent, the first appellant, and YB were named in OS 1016 as the first, second, and third defendants respectively. OS 1016 was heard before Dedar Singh Gill JC (as he then was) on 10 January 2020. At the hearing:

(a) The first appellant expressly abandoned all allegations that the respondents had been involved in Badilla’s alleged Ponzi scheme. This led to Gill JC repeatedly questioning the first appellant’s counsel on whether the first appellant did in fact have an interest in the Monies, and what the evidence of such an interest was.

(b) Counsel for the first appellant drew to the Court’s attention a letter from the second appellant supporting the making of the interpleader order, and indicating that it wished to intervene. Gill JC declined to permit the second appellant to intervene until it came before him to state its claim to the Monies, describing the attempted circumvention of procedure as being “wholly unsatisfactory”.

(c) Third, counsel for YB (who also appeared as counsel for the first appellant) renounced any claim by YB to the Monies. Thereafter, YB played no further part in the proceedings.

Over the course of the hearing of OS 1016, in considering the strength of the first appellant’s claim to the Monies after she had abandoned her allegation that the respondents were party to Badilla’s fraud, Gill JC repeatedly observed that the first appellant's claim was weak. In particular, he observed that the appellants’ evidence in support of their beneficial title to the Monies was “very very thin”.

Following the hearing of OS 1016, the Court made a number of orders, as set out in HC/ORC 1066/2020 (“ORC 1066”). ORC 1066 provided for the Monies to continue to be held in the DBS Account (so as to continue generating interest), and also set out timelines for a trial of the contest over title to the Monies between the first appellant and second respondent. In particular, Gill JC ordered that:

The plain wording of ORC 1066 and Gill JC’s observations in OS 1016 notwithstanding, a degree of procedural irregularity arose following the making of ORC 1066:

(a) First, the first appellant filed a Statement of Claim dated 31 January 2020 in OS 1016 itself even though Gill JC had already indicated that there were to be further (and separate) proceedings.

(b) Second, and somewhat inexplicably, the first appellant’s Statement of Claim dated 31 January 2020 stated, for the first time and without forewarning, that the second appellant was a second plaintiff in the action, and that the second respondent was the second defendant. This, in effect, appeared to have been an attempt to render the joinder of those parties a fait accompli, even though no permission had been granted by Gill JC at the hearing of OS 1016.

Given the irregularities, parties were required to appear before Gill JC again on 10 February 2020.

At that subsequent hearing, Gill JC made HC/ORC 1975/2020 (“ORC 1975”). ORC 1975 provided that, among other things:

On 19 March 2020, the appellants commenced the High Court suit (which later became Suit 4) in line with Gill JC’s order, with themselves as the plaintiffs and the first and second respondents as the defendants. In their Statement of Claim (Amendment No. 1), the appellants based their claims to the Monies on two causes of action:

(a) First, the appellants asserted that the respondents’ investments with the Lexinta Group were not genuine, and that the respondents’ initial investments would have been dissipated long before. Accordingly, any returns on the investment were fake and “could only have come from monies sent [to the Lexinta Group] by the [appellants]”. The appellants thus asserted that the Monies had been paid by the Lexinta Group in breach of fiduciary duties owed to the appellants as beneficial owners thereof or in breach of trust and that therefore they had continuing equitable property rights in the Monies.

(b) Second, the appellants made a claim in unjust enrichment against the respondents.

On 19 June 2020, the respondents’ counsel wrote to the appellants indicating that the respondents intended to amend their Defence and Counterclaim to specifically plead that the law applicable to the dispute was Swiss Law and that, under Swiss Law, which “does not know the institution of the common law trust or equitable proprietary rights over bank account balances”, the appellants’ claims were arid.

In response, the appellants proposed a number of further amendments to the Writ and Statement of Claim. These became the subject of an application (“SUM 55”), which was filed on 7 August 2020. The amendments sought included:

(a) The joinder of LG Ltd as an additional defendant;

(b) The addition of the CLPA claim and the CPO claim;

and

(c) The inclusion of an averment that the governing law of the dispute was Hong Kong Law (and not Swiss Law) because it was “the law most closely connected” to the dispute.

These amendments were sought on the basis that, as the first appellant claimed in her supporting affidavit, Suit 4 was a “freestanding” action independent of the Court’s interpleader jurisdiction and which “proceed[ed] under the general procedural rules applicable to all such claims, including as to amendment and joinder of parties”. The appellants also asserted that there was no difficulty with their reliance on claims (such as unjust enrichment) “even if one or more of those claims might result in a money [as opposed to proprietary] judgment”.

Shortly thereafter, on 28 August 2020, the respondents applied to strike out the appellants’ claim in unjust enrichment.

The Decision Below

On 25 September 2020, the Judge allowed the respondents’ striking out application and struck out the appellants’ claim in unjust enrichment. In relation to SUM 55, the Judge declined to permit the joinder of LG Ltd or the addition of the CPO and CLPA claims. However, the Judge permitted the amendment asserting that the governing law of the dispute was Hong Kong Law.

Broadly, the Judge’s reasoning, as gleaned from the transcript of the 25 September 2020 hearing and the GD, was that (a) Suit 4 was not a freestanding action and was instead the direct result of Gill JC’s orders for the parties’ disputes over the Monies to be determined through the Court’s interpleader jurisdiction; (b) the Court’s interpleader jurisdiction was a creature of statute for the benefit of applicants who wish to discharge their legal obligations but do not know to whom they should do so, and therefore this jurisdiction entailed the Court dealing with proprietary claims to property as opposed to personal claims for remedies against named defendants; (c) the CLPA and CPO claims were personal and not proprietary claims; (d) it would improperly circumvent the rules on service out of the jurisdiction if the CLA and CPO claims were permitted; and (e) it was neither just nor convenient to join LG Ltd, particularly since it appeared to be a shell company with no directors apart from Badilla, who was in remand in Switzerland.

The appellants then sought and received leave to appeal. There was a small complication in that initially the appellants decided not to appeal against the rejection of the CLPA claim as they were under the impression that s 73B of the CLP Act had been repealed by s 464 of the Insolvency Restructuring and Dissolution Act 2018 (No 40 of 2018) (“IRD Act”). Subsequently, however, they discovered that transitional provisions within the latter statute meant that s 73B could still apply to the facts of this case. They therefore filed OS 16 of 2021 (“OS 16”) with this Court seeking leave to appeal in relation to the CLPA claim as well. We heard OS 16 together with the main appeal.

The arguments on appeal

On appeal, the appellants conceded that, contrary to their position below, Suit 4 was not a freestanding action and that they were thus constrained in what claims could be brought. Rather, the appellants’ primary argument before us was that, by reference to the cases and the remedies available for the CPO and CLPA claims, those were proprietary and not personal actions, and that they thus fell within the ambit of interpleader relief. As an alternative, the appellants argued that the CPO claim was a “prior legal step” leading up to a proprietary remedy, and that a proprietary remedy could thus be said to be “contingent” on a claim under the HK Ordinance such that the CPO claim still fell within the Court’s interpleader jurisdiction. The appellants further contended that LG Ltd should be joined as a party because its joinder was necessary to fully and effectually resolve the dispute. Moreover, the CLPA claim should be permitted as a “consequential” amendment. Complicating the appellants’ position, however, was a shift that occurred between the filing of the Appellants’ Case and OS 16:

(a) In their Case, the appellants had indicated that, as the CLPA had been repealed, they would be relying on a claim under the IRD Act instead. They also requested that this Court permit the addition of that claim as “consequential relief” pursuant to ss 37(5) and 37(6) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (as in force immediately before 2 January 2021) and O 57 rr 13(3) and 13(4) of the ROC (as in force immediately before 2 January 2021).

(b) About two months later, the appellants totally changed their position on the CLPA. Abandoning their earlier concession that s 73B of the CLPA had been repealed, the appellants sought to revive their CLPA claim and argue that they should be granted leave to appeal out of time with respect to the CLPA claim. The appellants contended this position was tenable because s 464 of the IRD Act, read with Reg 15 of the Insolvency, Restructuring and Dissolution (Saving and Transitional Provisions) Regulations 2020 (the “Transitional Regulations”), permitted a claim under the IRD Act to be brought alongside rather than instead of the CLPA claim. Accordingly, all of the (i) CPO claim, (ii) claim under the IRD Act (“the IRDA Claim”), and (iii) CLPA claim were permitted under the Court’s interpleader jurisdiction.

The respondents’ arguments centred, by contrast, on showing that the claims sought to be added by the appellants fell outside the scope of what was permitted by Gill JC’s earlier orders. In particular, the respondents argued that permitting the addition of the claims sought by the appellants would be an abuse of the Court’s interpleader jurisdiction. The respondents further contended that the appellants’ arguments relating to joinder and the “consequential” addition of the other claims should be rejected.

The issues

This appeal centred fundamentally on a question of law, namely, whether the CPO claim, and by extension the CLPA claim, fell within the Court’s interpleader jurisdiction. This turned on consideration of:

(a) the nature of the CPO claim and the correct interpretation of the cases which both parties had sought to rely on, and

(b) whether the CPO claim was an “essential step” for obtaining a proprietary remedy, and whether this sufficed to bring it within the ambit of the Court’s interpleader jurisdiction.

Assuming the CLPA claim could properly be the subject of the appeal at all given the appellants’ shifting positions on it, determination of whether the CPO claim fell within the Court’s interpleader jurisdiction would determine the question of whether the CLPA claim (the Singapore law equivalent thereof) could properly be brought.

Apart from the CPO and CLPA claims, there remained three associated questions which fell to be determined:

(a) Was the joinder of LG Ltd necessary and convenient such that it should have been permitted;

(b) Should the appellants have been permitted to add the IRDA claim to their pleadings; and

(c) Should the appellants be granted leave to appeal out of time against the Judge’s decision to deny them permission to amend their pleadings to add the CLPA claim?

We consider the CPO claim first, before addressing the other questions enumerated above.

The CPO claim

The law

The starting point of the law on interpleader is the longstanding decision of the English Court of Appeal in De La Rue v Hernu, Peron & Stockwell, Limited [1936] 2 KB 164 (“De La Rue”). In his consideration of the status of an action commenced as part of interpleader proceedings, Greer LJ observed from 168 to 170 that:

Greene LJ also observed in De La Rue from 17 to 173 that:

De La Rue thus makes clear that an action commenced as part of interpleader proceedings is not a freestanding action. Although it is in form an action between the rival claimants to particular property, it is in substance a proprietary dispute, the resolution of which is necessary to help the party applying for interpleader relief to determine who the liability (in the form of the property) is owed to.

The leading case on interpleader proceedings in this jurisdiction is the judgment of Steven Chong J (as he then was) in Precious Shipping Public Co Ltd and others v OW Bunker Far East (Singapore) Pte Ltd and others and other matters [2015] 4 SLR 1229 (“Precious Shipping”). At [17] and [18] of Precious Shipping, Chong J considered the general power of the court in relation to interpleader proceedings:

The extracts cited above when applied here demonstrated that what was central was determining whether the claims which the appellants sought to rely on were: (a) (proprietary) claims which related to the ownership or title to the Monies and would be capable of establishing that the appellants had title to the Monies; or (b) claims which did not provide the appellants an ownership claim to the Monies themselves but simply gave the appellants the right to obtain a judgment against the respondents for an identical amount of money, and which were thus personal claims. Hereafter, in our reasoning, we adopt the language of “proprietary claims” and “personal claims” as set out above.

While the parties were agreed that the Judge’s summary of the law on interpleader, incorporating both De La Rue and Precious Shipping, provided an accurate summary of the legal position, their submissions as to the appropriate conclusions to draw were diametrically opposed. The appellants insisted that the CPO and CLPA claims were proprietary claims, while the respondents contended that they were merely personal.

The nature of the claims

In order to determine whether the CPO (and CLPA) claims were proprietary or personal, we had to examine the text of s 60 of the HK Ordinance, which forms the basis for the CPO claim. Section 60 provides:

As is clear from the text highlighted in bold italics, the section was derived from s 172 of the English Law of Property Act 1925 (c 20) (UK) (the “English LPA”). Section 172 of the English LPA was itself re-enacted from para 31 to Part II of Schedule 3 to the Law of Property (Amendment) Act 1924 (UK), which was in turn itself a reformulation of the provisions in ss 2 and 6 of the Statute of 13 Eliz 1571 (c 5) (the “1571 Statute”). As observed by the Court in Wong Ser Wan v Ng Bok Eng Holdings Pte Ltd and another [2004] 4 SLR(R) 365 at [4] (“Wong Ser Wan”), the 1571 Statute was intended to protect creditors against action taken by debtors to dissipate their assets.

The text of other comparable legislative instruments deriving from s 172 of the English LPA, including s 73B of the CLP Act, is identical in all material respects with s 60 of the HK Ordinance. Section 73B of the CLP Act provided:

As is apparent from the text of both s 60 of the HK Ordinance and s 73B of the CLP Act, no provision is made for the precise remedies available should those sections apply.

Does the CPO claim fall within the Court’s interpleader jurisdiction

In our view, the CPO claim, and by extension the CLPA claim, did not fall within the Court’s interpleader jurisdiction. Even taking the appellants’ case at its very highest, and assuming for the sake of argument that the CPO and CLPA claims would operate as against the Monies, neither claim would give the appellants title to the same. While the CPO and CLPA claims would have to be brought against the respondents (and, preferably, LG Ltd as well), a successful claim would only render the transfer of the Monies to the respondents voidable on the basis that they were sent out with intent to defraud LG Ltd’s creditors generally. The Monies would then have to be returned to LG Ltd’s creditors or liquidators for general distribution. There is clear authority for this proposition. In Wong Ser Wan at [22] and [23], Judith Prakash J (as she then was) stated that:

Prakash J’s observations were particularly apposite on the instant facts because the appellants had been conspicuously silent as to precisely how the CPO and CLPA claims could be said to give rise to title in the Monies for themselves. The most that could be said, even if the CPO and/or CLPA claims were to succeed, was that the Monies would go to LG Ltd for it to pay out as necessary. Quite simply, a successful CPO and/or CLPA claim would not be based on the appellants themselves having title to the Monies.

The respondents were thus right to point out, as an illustration, that, if the appellants had sought to rely solely on the CPO/CLPA claims in OS 1016, the requirements for the Court’s exercise of its interpleader jurisdiction would not be met because the CPO and CLPA claims did not give the appellants a claim against DBS Bank for the Monies.

The precise orders made in OS 1016 fortified the conclusion above. ORC 1066 specifically stipulated at [2] that the interpleader proceedings would entail the first appellant and second respondent “hav[ing] their respective claims to the [Monies] determined” (emphasis added). Gill JC also made clear that the first appellant was to “state her claim to the monies” (emphasis added). It was thus evident that, even setting aside the precise legal ambit of interpleader proceedings generally, the specific interpleader proceedings authorised by OS 1016 did not permit claims which did not involve the parties asserting claims to the “Monies” themselves. No appeal was lodged against Gill JC’s orders, and it was therefore not open to the appellants to seek to circumvent those orders by mounting claims which fell outside the ambit of what had been permitted. In other words, even assuming that the CPO and CLPA claims were not outside the ambit of the Court’s interpleader jurisdiction generally, the specific orders made in OS 1016 precluded their being brought in Suit 4. For completeness, we should add that any appeal against Gill JC’s orders to expand the interpleader proceedings to include non-proprietary claims would have failed in any event.

It was also clear that the CPO and CLPA claims could not even properly be said to be proprietary claims. The weight of authority on the effect of statutory provisions such as s 60 of the HK Ordinance and s 73B of the CLP Act is that the claims made thereunder are personal claims which can be enforced against the persons sued but are not proprietary claims against the property that provides the subject matter of the suit. The parties here relied on similar authorities to argue whether the CPO and CLPA claims were proprietary (in the sense of directly attaching to the property in question) or personal (in the sense of being a general claim for recovery against the other party) but sought to draw different conclusions from the same. To that end, we turn to consider the authorities that the parties relied on.

Regal Castings

The first case the parties relied on was Regal Castings Ltd v Lightbody [2008] NZSC 87 (“Regal Castings”), which concerned a claim under s 60 of the New Zealand Property Law Act 1952 (No. 51, 2007 Reprint) (“NZ Act”). Section 60 of the NZ Act, is in pari materia with s 73B of the CLP Act and s 60 of the HK Ordinance. The respondents and the Judge relied on Regal Castings to highlight that the CPO claim was a personal one, while the appellants insisted that such a reading was erroneous. At [21] of Regal Castings, Elias CJ observed that:

The mark-ups on the extract above underscore the different emphases the appellants and respondents placed on the same passage. The appellants chose to emphasise (as set out in italics) the specific nature of the remedies which may be ordered under s 60 of the NZ Act (and the CPO/CLPA claims more generally), pointing to the fact that remedies such as “reconveyance of the property, declaration of trust … or appointment of receivers” are proprietary remedies which take effect against the property and not as money judgments. By contrast, the respondents emphasised (as set out in bold underline) that the remedies which could be granted would be granted against the registered proprietors personally, and that the operation of s 60 of the NZ Act was “not a claim in rem”, particularly since it “d[id] not assert ‘encumbrances, liens, estates, or interests’ such as would amount to an attack on the title obtained”.

We preferred the respondents’ interpretation of Regal Castings for two reasons:

(a) First, it was clear from reading [21] of Regal Castings in context that emphasis was not being placed on the specific species of remedy ordered arising out of s 60 of the NZ Act. Rather, what Elias CJ had taken pains to point out was that the remedies ordered operated against the registered proprietors personally and did not amount to an attack on title to the property. Critically, s 60 did not assert any defect in title. This was incompatible with the appellants’ suggestion that s 60 of the NZ Act provided a proprietary claim. If s 60 of the NZ Act was, as the appellants contended, a proprietary claim for the purposes of interpleader proceedings, it would necessarily have to be a claim which mounted an attack on the title to the property in question, because otherwise there would not be multiple “competing” claims to title of the property in question (see Chong J’s decision at [79] of Precious Shipping). Regal Castings thus could not be said to assist the appellants.

(b) Second, the appellants asserted that s 60 of the NZ Act did not “operate directly to divest the transferee of legal title and in that specific sense only [was] granted against respondents personally, rather than operating in rem” [emphasis in original]. This reasoning was critical for the appellants, in that they otherwise had no basis to explain why Elias CJ categorically stated that s 60 of the NZ Act did not operate “in rem”. However, apart from their own insistence on carving out the “specific sense” of s 60 being a personal remedy as it did not operate to divest the transferee of legal title, the appellants were unable to point to any reasoned basis for why that “specific sense” should be carved out in such a manner and not apply to the effect of s 60 as a whole. There was, after all, no suggestion from Elias CJ in the entirety of the judgment in Regal Castings that her reference to s 60 not operating in rem operated only in the narrow and limited context of s 60 not directly divesting the transferee of legal title. The appellants’ attempts to explain away the clear statement that s 60 of the NZ Act does not operate in rem were thus unpersuasive. They artificially contrived a “specific sense[s]” of operation in rem and then cherry-picked the “specific sense” of the phrase “in rem” which was congruent with their narrative, all while providing no justification for that particular approach to the phrase.

In sum, Regal Castings was authority for the respondents’ position. The appellants’ reading of the case was strained and unduly focused on a narrow segment of [21] of Regal Castings where Elias CJ was merely highlighting examples of the potential forms the remedy ordered might take.

Oswal

The next case the parties joined issue over was Commissioner of Taxation v Oswal (No 6) [2016] FCA 762 (“Oswal”), a decision of the Federal Court of Australia concerning the operation of s 89(1) of the Property Law Act 1969 (WA) (“WA Act”). That section is another clone of s 60 of the HK Ordinance. The relevant segments of Oswal were as follows:

The emphasis placed on Oswal by the appellants and the respondents centred on [55] of that judgment. The appellants emphasised that the remedy under s 89 of the WA Act included rendering “voidable an alienation of property”, and argued that the remedy available was thus a proprietary remedy, therefore indicating that s 89 was a proprietary claim. The respondents, on their part, focused on Gilmour J’s observation at [55] that the statutory remedy provided for under s 89 “d[id] not seek to impugn the title to property”, arguing that it therefore could not be proprietary.

Again, the respondents’ approach to [55] of Oswal should be preferred, for three reasons.

(a) First, while the appellants had sought to rely on the final sentence of [55] of Oswal, that sentence did not in fact assist their case. There, Gilmour J observed that it was the alienation of the property with the relevant intent, in this case by means of the grant of the mortgage, which gave rise to the statutory relief claimed and which operated “in personam”. This did not, however, shed any light on the nature of the statutory relief itself. If anything, the statutory relief being (i) triggered by acts which operate in personam; and (ii) dependent on the transferor of the property acting with the “relevant intent”, coupled with Gilmour J categorically stating that the statutory remedy “does not seek to impugn the title to property”, strongly indicates that the remedy has a personal nature, and that it is not a proprietary claim for the purposes of the Court’s interpleader jurisdiction. This was unsurprising when one read [55] of Oswal in context – Gilmour J was describing a personal remedy triggered by the “relevant intent” of a person and which operated because of the persons involved (as opposed to operating against the property directly). The respondents’ reading of [55] of Oswal was also more congruent with the rest of the judgment, in particular [53] where Gilmour J pointed to “the right of a plaintiff to bring against a registered proprietor a claim in personam, founded in law and equity, for such relief as a court acting in personam may grant” [emphasis added].

(b) Second, even taking the appellants’ position at its highest, s 89 of the WA Act only operated to “render voidable an alienation of property, made with the intent to defraud the [disponor’s] creditors” [emphasis added] (Oswal at [55]). It did not, without more, affect title.

(c) Third, nothing in Oswal expressly supported the appellants’ contention that the said s 89 gave rise to proprietary remedies and therefore was a proprietary claim. Quite simply, Gilmour J in Oswal did not appear to have relied on the type of remedies available under the section to draw any conclusions about the nature of a claim under s 89 of the WA Act.

In short, Oswal, like Regal Castings, did not assist the appellants. If anything, it was the respondents who were able to derive support from the case.

Skandinaviska Enskilda Banken v Conway

The next case which the parties joined issue over was Skandinaviska Enskilda Banken AB (Publ) v Conway and another [2020] AC 1111 (“SEB v Conway”), which concerned, at least in part, the application of s 145(1) of the Cayman Companies Law (2013 Revision). Section 145(1) of the Cayman Companies Law is a provision that, as its own title provides, addresses the issue of voidable preferences in insolvency. It is quite different from s 60 of the HK Ordinance and similar legislation. Section 145 provides that:

It was thus immediately apparent that the claim in SEB v Conway was not akin to claims such as the CPO or CLPA claim. To be fair to the appellants, they did not suggest so. Rather, the appellants sought to rely on two extracts, at [63] and [75].

At [63] of SEB v Conway, the Privy Council observed that:

At [75] of SEB v Conway, the Privy Council went on to note that:

While the appellants did not go on to cite [76], the very next paragraph, it was nonetheless instructive for reading [75] in its proper context:

The appellants relied on SEB v Conway for the proposition that, if the statute concerned is silent as to the remedies available where a voidable transaction is set aside, the remedies available are those under general law, and include proprietary remedies. The appellants thus argued that SEB v Conway indicated that claims like the CPO and CLPA claims, which were silent as to the remedies available, could give rise to proprietary remedies, and that this sufficed to bring such claims within the Court’s interpleader jurisdiction.

We were unpersuaded by the appellants’ argument on SEB v Conway:

(a) First, the appellants’ argument entailed at least two sleights of hand: In particular, (i) the appellant extrapolated the reasoning in SEB v Conway at [63] concerning the silence of s 145(1) of the Cayman Companies Law as to the available remedies to a general principle which governed all situations where remedies are not expressly provided for in a statute, even though the reasoning set out at [63] and [75] of the Privy Council’s decision was limited to that specific statute. Moreover, (ii) the appellants regarded the mere availability of “proprietary remedies”, without more, as sufficing to bring a claim which might potentially give rise to such remedies within the Court’s interpleader jurisdiction. SEB v Conway was applied out of its context in relation to (i), and was relied on for a proposition it simply did not make in (ii).

(b) Second, and related to the point above, SEB v Conway could not be said to assist the appellants in relation to claims like the CPO or CLPA claims. This was because SEB v Conway addressed a fundamentally different statutory provision. Section 145 of the Cayman Companies Law deals with situations of preference in insolvency. The CPO and CLPA claims do not concern that situation. This difference was further reflected by the provision in ss 145(2) and 145(3) of the Cayman Companies Law for related-party transactions, which are unsurprisingly absent from s 60 of the HK Ordinance and s 73B of the CLP Act. While the appellants sought to generalise comments made by the Privy Council in relation to s 145 of the Cayman Companies Law to all statutes which provide for avoidance of a transaction but do not prescribe the precise remedy, there was no suggestion from the Privy Council that such a generalisation could be drawn. Rather, the specific contours of each statutory provision ought to be considered.

SEB v Conway was thus readily distinguishable from the instant facts. The appellants’ reliance on it rested on a number of leaps in logic and it thus did not assist the appellants.

Fundamentally, the cases cited above – in particular, Regal Castings and Oswal, which actually pertain to claims based on provisions similar to those underlying the CPO and CLPA claims – did not advance the appellants’ case. In fact, Regal Castings and Oswal were at odds with the appellants’ position. Thus, even if one were to set aside the fact that the CPO and/or CLPA claims would not give the appellants themselves claim to title over the Monies, those claims would nonetheless still fall outside the Court’s interpleader jurisdiction.

Is the CPO claim a contingent proprietary claim which falls within the Court’s interpleader jurisdiction?

The appellants’ alternative argument was that, even if the CPO and CLPA claims were not proprietary claims for the purposes of the Court’s interpleader jurisdiction, they were nonetheless proprietary claims because they would allow the appellants to assert proprietary rights to the Monies contingent upon the setting aside of the transfers by LG Ltd to the second respondent. The sole case the appellants relied on for this proposition was Global Currency Exchange Network Ltd v Osage 1 Ltd [2019] 1 WLR 5865 (“Osage”). Osage concerned an interpleader application (now known as a stakeholder application in England and Wales) subject to Part 86 of the English Civil Procedure Rules (UK). The segment of Osage the appellants relied on was [52]:

The appellants submitted that “even if the CPO Claim [was] regarded as a prior legal step to enable the Appellants to establish a direct proprietary right to the [Monies], it [was] a claim which [could] and should be determined in the Suit in order to decide to whom DBS should make payment of the [Monies]”.

The appellants’ reliance on Osage was misplaced:

(a) First, Osage was readily distinguishable from the present case. Osage concerned an application for interpleader relief by a currency exchange service provider where it expected competing claims to be made against the funds it held for and on behalf of an oil company, but where no such claims had yet been made. The issue in Osage was thus a threshold one of whether the Court had the jurisdiction to grant the application and give directions for the potential claimants to be notified of the proceedings. This would have had the effect of marking out the claims that might be made to the funds held by the applicant. It was in this context that the Court held that it did have such jurisdiction, because the investors would have competing claims so long as they exercised their rights to rescind their investment agreements with the oil company. By contrast, this threshold issue did not arise in the present proceedings. This was because there was no question that, at all material times, as a result of (i) the purported equitable proprietary claim asserted by the appellants to the Monies, and (ii) the respondents’ own claim to own the sum as returns on their investments, the parties in the instant case already had competing claims to the Monies. Thus, no issue arose as to whether the Court had the jurisdiction to grant interpleader relief, and no complaints of this nature were placed before the Judge. Rather, unlike in Osage, the question in the instant appeal of whether a further claim could be added to existing interpleader proceedings was one which arose only after the question of jurisdiction addressed in Osage had already been resolved.

(b) Second, and critically, even if Osage were applicable to the instant facts, it did not provide support for the proposition the appellants attempted to rely on it for. In Osage at [52], the court observed that “[a] claim that can be brought provided that the claimant takes a prior legal step, here rescission, is still in my view a competing claim”. By contrast, the appellants sought to argue that the “prior legal step”, in this case the CPO and CLPA claims, were in and of themselves “competing claim[s]”. This was entirely different from what the court in Osage had decided, and represented a clear sleight of hand. In Osage, the “prior legal step” was rescission, but significantly the claim which the prior legal step rested on (and which was permitted in the interpleader proceedings) was already a proprietary claim by virtue of constructive trust (see Osage at [38(ii)]). However, on the instant facts, the “prior legal step” the appellants pointed to was the CPO/CLPA claim, while the actual proprietary claim which rested on the prior legal step was not in fact set out. Osage thus did not at all stand for the proposition the appellants sought to foist upon it, and was not authority for a “prior legal step” being able to operate as a standalone claim in interpleader proceedings.

The appellants’ alternative argument, which relied solely on Osage as support, was thus wholly without basis.

In sum, the CPO and CLPA claims did not assert title to the Monies for the appellants. Moreover, contrary to the appellants’ suggestions, there was no basis for a “prior legal step” to morph into a standalone proprietary claim in and of itself. Accordingly, the bulk of the appellants’ arguments fell away. In our view, permitting the claims the appellants sought to rely on would be an abuse of process and of the Court’s interpleader jurisdiction:

(a) In Commonwealth of Australia v Peacekeeper International FZC UAE [2008] EWHC 1220 (QB) (“Commonwealth of Australia”) at [42], Foskett J observed at [42] that:

(b) Commonwealth of Australia was subsequently approved by the English Court of Appeal in Stephenson Harwood LLP v Medien Patentverwaltung AG and another [2021] 1 WLR 1775 (“Stephenson Harwood”), which itself cited the decision of Lord Esher MR in Eschger Co v Morrison, Kekewich Co (1890) 6 TLR 145, where His Lordship “doubted very much whether the court had the power to transform an interpleader issue into a wholly general action”. At [20] of Stephenson Harwood, the English Court of Appeal went on to state that:

The Court’s interpleader jurisdiction is one which has to be carefully controlled. Considerations such as the extent of parties’ submission to jurisdiction, and concern as to parties attempting to circumvent the rules on service out of jurisdiction by way of the Court’s interpleader jurisdiction, militate in favour of the interpleader jurisdiction being applied only within its prescribed bounds. Claims such as the CPO and CLPA claims, being claims which did not assert title on behalf of the appellants to the Monies, fell outside those bounds. Accordingly, the appellants’ appeal in relation to the CPO claim failed.

The consequential and further orders sought

We now consider the remaining matters, namely, (a) OS 16 and the appellants’ application for leave to appeal out of time against the Judge’s decision on the CLPA claim; (b) the joinder of LG Ltd; and (c) the IRDA claim.

We were not persuaded by the appellants on any of these matters.

(a) In relation to OS 16, we saw no need to consider whether an extension of time to appeal against the Judge’s decision on the CLPA claim ought to be granted because even if such an extension were granted, the CLPA claim could not properly be brought in Suit 4 in so far as it does not fall within the Court’s interpleader jurisdiction. This followed from the fact that the CLPA claim is the Singapore law equivalent of the CPO claim. Accordingly, OS 16 would make no difference even if it were successful – the CLPA claim would not be permitted in any event. We therefore dismissed OS 16.

(b) Turning next to the joinder of LG Ltd, the appellants themselves acknowledged that their submissions on joinder would only arise “[i]f it [was] determined that the CPO Claim may be properly brought in the Suit”. Given our findings on the CPO claim, the issue of joinder was rendered moot. In any event, we were not persuaded to disturb the Judge’s conclusions on the point, nor were we satisfied that the Court’s interpleader jurisdiction was the proper avenue for the appellants’ disputes with LG Ltd to be resolved.

(c) As for the IRDA claim, the appellants had sought to have the claim included as “consequential relief” assuming that the appeal to add the CPO claim was successful. Accordingly, the failure of the appellants to persuade us to do so doomed their attempts to add the IRDA claim.

Conclusion

For the reasons set out above, we dismissed the appeal. The CPO and CLPA claims did not fall within the ambit of the Court’s interpleader jurisdiction, and there was no basis to permit the joinder of LG Ltd. Similarly, the consequential relief sought in the form of adding the IRDA claim to the pleadings fell away given the failure of the substantive appeal. Therefore, OS 16 was also dismissed.