Re Vanguard Energy: Validity of Litigation Funding in Insolvency; Companies Act s 272(2)(c), Maintenance and Champerty
In Re Vanguard Energy Pte Ltd, the Singapore High Court, presided over by Chua Lee Ming JC, addressed the validity of a litigation funding arrangement in an insolvency case. The liquidators of Vanguard Energy sought approval for an Assignment Agreement with shareholders to fund pending claims, given the company's insufficient assets. The court considered issues under s 272(2)(c) and s 328 of the Companies Act, as well as the doctrines of maintenance and champerty. The court approved the Assignment Agreement, holding that it fell within the liquidator's power of sale under s 272(2)(c) and did not offend the doctrine of maintenance and champerty.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application granted; Assignment Agreement approved.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court examines litigation funding in insolvency, addressing Companies Act s 272(2)(c) and maintenance/champerty doctrines. Assignment Agreement approved.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Re Vanguard Energy Pte Ltd | Applicant | Corporation | Application granted | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chua Lee Ming | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Balakrishnan Ashok Kumar | TSMP Law Corporation |
| Tay Kang-Rui Darius | TSMP Law Corporation |
4. Facts
- Vanguard Energy Pte Ltd was placed under compulsory liquidation on 21 November 2014.
- The Liquidators were unwilling to proceed with pending or potential claims without indemnity or funding.
- Mr. Kartono, Mr. Seah, and Mr. Soh agreed to provide the necessary funding.
- The Company and the Liquidators entered into a funding agreement with Mr. Kartono, Mr. Seah, and Mr. Soh on 13 February 2015.
- An affidavit was subsequently filed by one of the Liquidators, annexing a draft Assignment of Proceeds Agreement.
- The Assignees will provide upfront funding for 50% of the solicitor-and-client costs and any security for costs to be provided by the Company, subject to a cap of $300,000.
- The Assignees will indemnify the Company against any shortfall between the Recovery and the amount of Co-Funding.
5. Formal Citations
- Re Vanguard Energy Pte Ltd, Companies Winding Up No 211 of 2014 (Summons No 801 of 2015), [2015] SGHC 156
6. Timeline
| Date | Event |
|---|---|
| Vanguard Energy Pte Ltd placed under compulsory liquidation | |
| Approval obtained at a creditors’ meeting | |
| Company and Liquidators entered into a Funding Agreement | |
| Decision Date | |
| Company filed three actions in the High Court |
7. Legal Issues
- Validity of Assignment Agreement under s 272(2)(c) of the Companies Act
- Outcome: The court held that s 272(2)(c) of the Companies Act permits the sale of a cause of action as well as the proceeds from such actions, and therefore the assignment of the Assigned Property is a sale of the Company’s property which is permitted under s 272(2)(c) of the Act.
- Category: Substantive
- Related Cases:
- [1995] 1 Ch 80
- [2008] EWHC 238 (TCC)
- [1996] 64 FCR 380
- Applicability of the doctrine of maintenance and champerty to the power of sale under s 272(2)(c) of the Act
- Outcome: The court held that s 272(2)(c) provides a statutory power of sale and the doctrine of maintenance and champerty has no application to the exercise of this power.
- Category: Substantive
- Related Cases:
- [1999] 2 AC 1
- [1995] BCC 911
- [1997] 2 WLR 764
- [1996] 64 FCR 380
- Whether the Assignment Agreement offends the doctrine of maintenance and champerty
- Outcome: The court held that the Assignment Agreement does not offend the doctrine of maintenance and champerty.
- Category: Substantive
- Related Cases:
- [1997] 1 SLR(R) 775
- [1982] AC 679
- [1985] 3 All ER 499
- [1994] 1 AC 142
- [2003] QB 381
- [2005] NSWCA 83
- [2007] 2 HKLRD 414
- Whether the payments to the Assignees under the Assignment Agreement contravene s 328(1) and/or s 328(3) of the Act
- Outcome: The court held that since the Assigned Property will be assigned to the Assignees, ss 328(1), (3) and (10) of the Act are therefore not relevant.
- Category: Substantive
8. Remedies Sought
- Approval of Assignment Agreement
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Commercial Litigation
- Insolvency
- Corporate Law
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Grovewood Holdings Plc v James Capel & Co Ltd | English Court | Yes | [1995] 1 Ch 80 | England | Cited for the principle that a transfer of a cause of action in return for financing an action and a share of recoveries is a sale. |
| Ruttle Plant Limited v Secretary of State for Environment Food and Rural Affairs No 2 | English Court | Yes | [2008] EWHC 238 (TCC) | England | Cited to support the view that the fruits of an action form part of the assets of the company which the liquidator must realise. |
| Re Movitor Pty Ltd (In Liquidation) | Federal Court of Australia | Yes | [1996] 64 FCR 380 | Australia | Cited for the principle that a share in the fruits of an action belonging to an insolvent company is property of the company. |
| Alrich Development Pte Ltd v Rafiq Jumabhoy | Court of Appeal | Yes | [1995] 2 SLR(R) 340 | Singapore | Cited to support the argument that the word 'property' is used in the Bankruptcy Act and the Act in the same sense. |
| Norglen Ltd (in liquidation) v Reeds Rains Prudential Ltd and others | English Court | Yes | [1999] 2 AC 1 | England | Cited for the principle that liquidators’ statutory powers place them in a privileged position regarding assignment of causes of action. |
| Re Oasis Merchandising Services Ltd | English Court | Yes | [1995] BCC 911 | England | Cited to show the court's disagreement with the distinction between the sale of a cause of action and the sale of the fruits of litigation. |
| In Re Oasis Merchandising Services Ltd | Court of Appeal | Yes | [1997] 2 WLR 764 | England | Cited to show the Court of Appeal agreed with Walker J’s observations. |
| Lim Lie Hoa and another v Ong Jane Rebecca | Court of Appeal | Yes | [1997] 1 SLR(R) 775 | Singapore | Cited for the definitions of maintenance and champerty. |
| Trendtex Trading Corporation v Credit Suisse | House of Lords | Yes | [1982] AC 679 | England | Cited for the principle that an assignment will be struck down as savouring of maintenance if the assignee has a genuine commercial interest in taking the assignment and in enforcing it for his own benefit. |
| Brownton Ltd v Edward Moore Inbucon Ltd | Court of Appeal | Yes | [1985] 3 All ER 499 | England | Cited for the principle that the court should look at the totality of the transaction in deciding whether there was a genuine commercial interest. |
| Giles v Thompson | House of Lords | Yes | [1994] 1 AC 142 | England | Cited for the principle that the law on maintenance and champerty can best be kept in forward motion by looking to its origins as a principle of public policy designed to protect the purity of justice and the interests of vulnerable litigants. |
| Regina (Factortame Ltd and others) v Secretary of State for Transport, Local Government and the Regions (No 8) | Court of Appeal | Yes | [2003] QB 381 | England | Cited for the principle that it is necessary to look at the agreement under attack in order to see whether it tends to conflict with existing public policy that is directed to protecting the due administration of justice with particular regard to the interests of the defendant. |
| Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd | New South Wales Court of Appeal | Yes | [2005] NSWCA 83 | Australia | Cited for the principle that the “social utility of assisted litigation” has been reinforced by the trend of case law in recent years. |
| Siegfried Adalbert Unruh v Hans-Joerg Seeberger | Hong Kong Court of Final Appeal | Yes | [2007] 2 HKLRD 414 | Hong Kong | Cited for the principle that countervailing public policies must be taken into account, especially policies in favour of ensuring access to justice and of recognizing, where appropriate, legitimate common interests of a social or commercial character in a piece of litigation. |
| Martell and others v Consett Iron Co Ltd | English Court | Yes | [1955] 1 Ch 363 | England | Cited for the term “a common interest”. |
| Eastglen Ltd (in liquidation) v Grafton | English Court | Yes | [1996] BCC 900 | England | Cited for the principle that there is a public interest in liquidators being able satisfactorily to carry out the duties which the statutory scheme confers on them. |
| Berezovsky v Hine & Ors | England and Wales Court of Appeal (Civil Division) | Yes | [2011] EWCA Civ 1089 | England | Cited for the proposition that legal privilege may be waived for a limited purpose only. |
| Re ACN 076 673 875 Ltd | Supreme Court of New South Wales | Yes | [2002] NSWSC 578 | Australia | Cited for the principle that one of the factors to be considered in the context of an application to approve a litigation funding agreement was the risks involved in pursuing the claim including the costs likely to be incurred in the proposed litigation. |
| The Bell Group Ltd (in liq) v Westpac Banking Corporation | Supreme Court of Western Australia | Yes | (1997) 16 ACLC 65 | Australia | Cited for the principle that there is no jurisdiction to make an order in advance of recovery, protection or preservation. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) s 272(2)(c) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 328(1) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 328(3) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 328(10) | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) s 2(1) | Singapore |
| Insolvency Act 1986 (c 45) (UK) | United Kingdom |
| Corporations Act 2001 (Cth) | Australia |
15. Key Terms and Keywords
15.1 Key Terms
- Liquidation
- Litigation Funding
- Assignment Agreement
- Maintenance
- Champerty
- Liquidators
- Co-Funding
- Assigned Property
- Recovery
- Claims
15.2 Keywords
- liquidation
- litigation funding
- assignment agreement
- maintenance
- champerty
- insolvency
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Restructuring and Insolvency | 95 |
| Winding Up | 90 |
| Insolvency Law | 85 |
| Corporate Insolvency | 80 |
| Company Law | 75 |
| Bankruptcy | 70 |
| Litigation Funding | 60 |
| Transactions Defrauding Creditors | 40 |
| Contract Law | 30 |
16. Subjects
- Insolvency
- Litigation Funding
- Company Law
- Civil Procedure