Case Update on The Micro Tellers Network Ltd and others v Cheng Yi Han and others [2023] SGHC(I) 13

In the recent decision of The Micro Tellers Network Ltd and others v Cheng Yi Han and others [2023] SGHC(I) 13 (“the Judgment”), the Singapore International Commercial Court (“SICC”) considered various claims, amounting to over US$7 million, brought by the Plaintiffs against an ex-lawyer ("D1”) and his wife (“D2”) for fraud, breach of trust and/or fiduciary duties, unjust enrichment, conspiracy, and dishonest assistance.

1. In a 169-page Judgment, the learned SICC Judge made various findings but importantly, dismissed the claims against the wife in their entirety. Clasis LLC represented the wife. 
   
   (I) Brief Facts
     
2. The facts of the case are complex, broadly involving two transactions, referred to as the “Europe Transaction” and the “Private Bank Acquisition”, both of which occurred on or about April 2018. In brief:  

   1. The Europe Transaction involved a proposed trade of Bitcoin (“BTC”), which were purchased by funds supplied by certain of the Plaintiffs. The intention was that the BTC should be sold to buyers in Europe at a profit, the consideration being 5 million Euros which was to be paid in cash. In the event, after the BTC had been transferred, it turned out that the banknotes supplied were forgeries.  

   2. The Private Bank Acquisition related to the purchase of a private bank, utilizing the Plaintiffs’ funds amount to over US$2.5 million. The Plaintiffs either asserted that they had not authorized the use of their funds for the purposes of the Private Bank Acquisition or that they had been the subject of a “bait and switch”, in that they intended to acquire a bank in the Curacao but instead, were sold a bank in the Union of Comoros.   

3. The underlying dispute involved allegations of fraud, forgery, and misrepresentation, where D1, who was at the time a solicitor employed by a well-known law firm, was accused of incorporating a private company bearing a similar name as the law firm (“the Company”), and using it to induce the Plaintiffs and others to make transfers to the Company’s bank accounts.  

4. The entity had a sole director and shareholder – D2, i.e., D1’s wife. On the evidence, D2 had signed blank cheque and telegraphic transfer request forms at D1’s request but was otherwise uninvolved in the running of the Company and at no knowledge of the payments in and out of the Company’s bank account.  

5. The Plaintiffs sued D1 in fraud, breach of trust and/or fiduciary duties, unjust enrichment, and conspiracy. They also sued D2 for dishonest assistance and conspiracy. 
   
   (II) SICC’s Findings in the Judgment  
    

6. In the 169-page Judgment, the Honourable Justice Simon Thorley, KC, International Judge (“Thorley IJ”), held:  

   1. The Plaintiffs’ claim against D1 in respect of the Private Bank Acquisition, which were based on deceit and breach of trust/fiduciary duty, succeeded, subject to certain undertakings and conditions imposed on the enforcement of the judgment.  

   2. However, the Plaintiffs’ claim against D1 for dishonest assistance and conspiracy were entirely dismissed with costs. 

7. In this regard, the learned Thorley IJ held, after hearing the evidence and assessing D2’s demeanor on the stand during the trial, that whilst D2 may have signed blank cheques and telegraphic transfer request forms at D1’s request, and therefore, technically rendered assistance for the breach of D1’s duties to the Plaintiffs, her conduct did not cross the threshold of dishonesty, which required either actual knowledge of the breach of duties, wilful blindness, or a failure to act as an ordinary honest person in her shoes would have.  

8. The learned Judge held that D2 did not have actual knowledge of D1’s breach of duties. Neither was she wilfully blind, given that at the time of the Company’s incorporation, she did ask D1, her husband, whether the similarity in name with his then-employer would cause an issue. Having received the reassurance that it would not, she acted as an ordinary honest person would in her circumstances, bearing in mind that she was then newly married to a successful solicitor, and did not probe further.  

9. In this regard, the learned Judge accepted D2’s submissions that the facts of the present case bore similarities to the earlier SGHC decision of O’Laughlin Industries Co Ltd and another v Tan Thiam Hock and others [2021] SGHC 35, where a defendant who acted as director and authorised signatory of a company but was otherwise uninvolved in the primary defendants’ schemes, was also cleared of dishonest assistance. The learned Judge therefore dismissed the Plaintiffs’ claims in dishonest assistance.  

10. Given that the claim in dishonest assistance failed, the claim in conspiracy was held to be unsustainable and was also dismissed. 
    
    (III) Conclusion
     

11. The Judgment was the culmination of a long-running litigation that started in 2019 and Clasis LLC is pleased to have successfully represented D2 in getting the claims against her dismissed. The underlying dispute showcased the difficulties in litigating a case based on fraud, conspiracy and dishonest assistance, and the high threshold that needs to be crossed in such claims.