MF Global Singapore v Vintage Bullion: Proprietary Claims in Liquidation

In MF Global Singapore Pte Ltd (in creditors’ voluntary liquidation) and others v Vintage Bullion DMCC (in its own capacity and as representative of the customers of the first plaintiff) and another matter, the Singapore High Court addressed the issue of proprietary claims by Vintage Bullion DMCC, representing LFX and Bullion customers, against MF Global Singapore Pte Ltd, which was undergoing creditors’ voluntary liquidation. The central dispute revolved around the treatment of profits made by the LFX and Bullion customers under leveraged foreign exchange and leveraged commodity transactions. Vintage asserted proprietary claims over these profits, while MF Global Singapore contended that Vintage only held unsecured claims. The High Court ruled in favor of the liquidators, determining that the LFX and Bullion customers did not have a proprietary entitlement to the sums standing in the Customer Segregated Accounts that may be broadly attributable to the value of the Unrealised Profits and Forward Value whether by way of statutory or express trust.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment in favor of the Liquidators on the substantive issues.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

High Court case concerning proprietary claims of LFX and Bullion customers against MF Global Singapore in liquidation, focusing on statutory and express trusts.

1.7 Decision Date

24 June 2015

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
MF GLOBAL SINGAPORE PTE LIMITED (IN CREDITORS’ VOLUNTARY LIQUIDATION)	Plaintiff	Corporation	Won	Won	Danny Ong of Rajah & Tann Singapore LLP Andre Yeap of Rajah & Tann Singapore LLP Sheila Ng of Rajah & Tann Singapore LLP Ong Kar Wei of Rajah & Tann Singapore LLP
Chay Fook Yuen (In his capacity as joint and several liquidator of MF Global Singapore Pte Limited (In Creditors' Voluntary Liquidation)	Plaintiff	Individual	Won	Won	Danny Ong of Rajah & Tann Singapore LLP Andre Yeap of Rajah & Tann Singapore LLP Sheila Ng of Rajah & Tann Singapore LLP Ong Kar Wei of Rajah & Tann Singapore LLP
Bob Yap Cheng Ghee (In his capacity as joint and several liquidator of MF Global Singapore Pte Limited (In Creditors' Voluntary Liquidation)	Plaintiff	Individual	Won	Won	Danny Ong of Rajah & Tann Singapore LLP Andre Yeap of Rajah & Tann Singapore LLP Sheila Ng of Rajah & Tann Singapore LLP Ong Kar Wei of Rajah & Tann Singapore LLP
Tan Puay Cheng (In his capacity as joint and several liquidator of MF Global Singapore Pte Limited (In Creditors' Voluntary Liquidation)	Plaintiff	Individual	Won	Won	Danny Ong of Rajah & Tann Singapore LLP Andre Yeap of Rajah & Tann Singapore LLP Sheila Ng of Rajah & Tann Singapore LLP Ong Kar Wei of Rajah & Tann Singapore LLP
Vintage Bullion DMCC (In its own capacity, and for and on behalf of and as representative of all customers of MF Global Singapore Pte Limited (In Creditors' Voluntary Liquidation) who have LFX Claims for Profit (as defined in the Originating Summons filed herein) and/or Bullion Claims for Profit (as defined in the Originating Summons filed herein)	Defendant	Corporation	Lost	Lost	Manoj Pillay Sandrasegara of WongPartnership LLP Thio Shen Yi of TSMP Law Corporation Lionel Leo of WongPartnership LLP Kelvin Koh of TSMP Law Corporation Joy Tan of WongPartnership LLP Stephanie Yeo of WongPartnership LLP Muhammad Nizam of WongPartnership LLP

3. Judges

Judge Name	Title	Delivered Judgment
Hoo Sheau Peng	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Danny Ong	Rajah & Tann Singapore LLP
Andre Yeap	Rajah & Tann Singapore LLP
Sheila Ng	Rajah & Tann Singapore LLP
Ong Kar Wei	Rajah & Tann Singapore LLP
Manoj Pillay Sandrasegara	WongPartnership LLP
Thio Shen Yi	TSMP Law Corporation
Lionel Leo	WongPartnership LLP
Kelvin Koh	TSMP Law Corporation
Joy Tan	WongPartnership LLP
Stephanie Yeo	WongPartnership LLP
Muhammad Nizam	WongPartnership LLP

4. Facts

MFGS was a member and clearing member of the Singapore Exchange.
MFGS held a Capital Markets Services license issued by the Monetary Authority of Singapore.
MFGS offered over-the-counter LFX and Bullion products.
Customers were required to open accounts with MFGS to facilitate trades.
MFGS did not act as its customers’ agent but as principal.
Margins placed by customers were deposited into MFGS’ Customer Segregated Accounts.
MFGS engaged in hedge transactions with UBS and DB to hedge its own exposure.

5. Formal Citations

MF Global Singapore Pte Ltd (in creditors’ voluntary liquidation) and others v Vintage Bullion DMCC (in its own capacity and as representative of the customers of the first plaintiff) and another matter, Originating Summons No 289 and 578 of 2013, [2015] SGHC 162

6. Timeline

Date	Event
2006-08-21	Vintage opened an account with MFGS.
2011-10-20	Vintage closed out all its LFX transactions.
2011-10-28	Vintage liquidated 121 lots of silver.
2011-10-31	MF Global Holdings Ltd filed a voluntary petition for relief.
2011-10-31	MAS directed MFGS to cease entering into new transactions.
2011-10-31	Vintage liquidated a further 241 lots of silver.
2011-11-01	MFGS entered into provisional liquidation.
2012-01-10	Liquidators applied for authorization to distribute US$350m.
2012-02-08	Court granted the application for distribution.
2012-04-23	Vintage received payment of US$5,137,229.93 as interim distribution.
2012-05-28	Shareholder passed a resolution for voluntary winding up of MFGS.
2013-07-16	Court order in OS 289 appointed Vintage to represent LFX and Bullion customers.
2015-06-25	Judgment reserved.

7. Legal Issues

Proprietary Claims in Liquidation
- Outcome: The court held that the LFX and Bullion customers did not have a proprietary entitlement to the sums standing in the Customer Segregated Accounts that may be broadly attributable to the value of the Unrealised Profits and Forward Value whether by way of statutory or express trust.
- Category: Substantive
- Sub-Issues:
  - Statutory Trust
  - Express Trust
  - Segregation of Funds
  - Customer Assets
Statutory Interpretation
- Outcome: The court interpreted the relevant provisions of the CTA, CTR, SFA, and SFR to determine the scope of the statutory trusts and segregation obligations.
- Category: Procedural
- Sub-Issues:
  - Purposive Interpretation
  - Interpretation of 'Accruing to'
  - Interpretation of 'On Account Of'
Express Trust
- Outcome: The court held that MFGS did not intend to create an express trust over the Unrealised Profits and Forward Value for the benefit of the LFX and Bullion customers.
- Category: Substantive
- Sub-Issues:
  - Certainty of Intention
  - Certainty of Subject Matter
  - Certainty of Objects

8. Remedies Sought

Declaration of Proprietary Interest
Distribution of Assets

9. Cause of Actions

No cause of actions

10. Practice Areas

Commercial Litigation
Liquidation
Financial Services Regulation

11. Industries

Financial Services

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Kon Yin Tong and another v Leow Boon Cher and others	High Court	Yes	[2011] SGHC 228	Singapore	Cited for the distinction between contingent and prospective liability.
Lim Lye Hiang v Official Assignee	Court of Appeal	Yes	[2012] 1 SLR 228	Singapore	Cited for the definition and nature of a chose in action.
Simpson and Company v Thomson, Burrell	House of Lords	Yes	[1877] 3 App Cas 279	United Kingdom	Cited to illustrate the logical impossibility of an obligor of a chose in action holding that chose in trust for the obligee.
Mac-Jordan Construction Ltd v Brookmount Erostin Ltd (in receivership)	English Court of Appeal	Yes	[1992] BCLC 350	England	Cited to show that a contractual obligation to segregate moneys does not automatically confer an equitable interest in the notional fund.
Public Prosecutor v Low Kok Heng	High Court	Yes	[2007] 4 SLR(R) 183	Singapore	Cited for the approach to statutory interpretation under section 9A of the Interpretation Act.
Ying Tai Plastic & Metal Manufacturing (S) Pte Ltd v Zahrin bin Rabu	Court of Appeal	Yes	[1983–1984] SLR(R) 212	Singapore	Cited for the principle that a statute should not be taken as fundamentally altering the common law unless it uses words that point unmistakably to that conclusion.
Goldring Timothy Nicholas and others v Public Prosecutor	High Court	Yes	[2013] 3 SLR 487	Singapore	Cited for the principle that a statute should not be taken as fundamentally altering the common law unless it uses words that point unmistakably to that conclusion.
Ayerst (Inspector of Taxes) v C. & K. (Construction) Ltd	House of Lords	Yes	[1976] AC 167	United Kingdom	Cited for the principle that a statutory trust may not bear all the indicia of a trust recognized by the Court of Chancery apart from statute.
Power Knight Pte Ltd v Natural Fuel Pte Ltd (in compulsory liquidation) and others	High Court	Yes	[2010] 3 SLR 82	Singapore	Cited for the principle that a statutory trust may not bear all the indicia of a trust recognized by the Court of Chancery apart from statute.
In the matter of the intervention into the solicitors’ practices known as Ahmed & Co	High Court of Justice	Yes	[2006] EWHC 480 (Ch)	England and Wales	Cited for the principle that the meaning of 'trust' in a statute depends on its context and may not be a classic private trust.
Re Global Trader Europe Ltd (in liquidation)	Not Available	Yes	[2009] 2 BCLC 18	England	Cited for the legal analysis of transactions conducted by a brokerage firm and its customers.
Cheong Heng Loong Goldsmiths (KL) Sdn Bhd & Anor v Capital Insurance Bhd and another appeal	Not Available	Yes	[2004] 1 MLJ 353	Malaysia	Cited for the interpretation of 'accrued debt' in the context of garnishee proceedings.
Shanti Prasad Jain v Director of Enforcement Foreign Exchange Regulation Act	Supreme Court of India	Yes	AIR 1962 SC 1764	India	Cited for the interpretation of 'accrued debt' in the context of garnishee proceedings.
Webb v Stenton	Not Available	Yes	(1883) 11 QBD 518	England	Cited for the interpretation of 'accrued debt' in the context of garnishee proceedings.
Lim Boon Kwee (trading as B K Lim & Co) v Impexital SRL (Sembawang Multiplex Joint Venture, garnishee)	High Court	Yes	[1998] 1 SLR(R) 757	Singapore	Cited for the interpretation of 'accrued debt' in the context of garnishee proceedings.
Fairview Developments Pte Ltd v Ong & Ong Pte Ltd and another appeal	Court of Appeal	Yes	[2014] 2 SLR 318	Singapore	Cited for the distinction between entitlement to payment and accrual of a cause of action.
Pinetree Resort Pte Ltd v Comptroller of Income Tax	Court of Appeal	Yes	[2000] 3 SLR(R) 136	Singapore	Cited for the interpretation of 'accrue' in the context of section 10(1) of the Income Tax Act.
ABD Pte Ltd v Comptroller of Income Tax	Court of Appeal	Yes	[2010] 3 SLR 609	Singapore	Cited for the interpretation of 'accrue' in the context of section 10(1) of the Income Tax Act.
In the matter of Lehman Brothers International (Europe) (In Administration) and In the matter of the Insolvency Act 1986	United Kingdom Supreme Court	Yes	[2012] UKSC 6	United Kingdom	Cited to show that international practice leans in favor of protection of the investor.
In Re MF Global Australia Ltd (in liq)	Supreme Court of New South Wales	Yes	[2012] NSWSC 994	Australia	Cited to show that international practice leans in favor of protection of the investor.
In re Kayford Ltd	Not Available	Yes	[1975] 1 WLR 279	England	Cited for the principle that an intention to create a trust may be inferred by examining evidence of the alleged settlor’s words and conduct.
Guy Neale and others v Nine Squares Pty Ltd	Court of Appeal	Yes	[2015] 1 SLR 1097	Singapore	Cited for the principle that an intention to create a trust may be inferred by examining evidence of the alleged settlor’s words and conduct.
Hinckley Singapore Trading Pte Ltd v Sogo Department Stores (S) Pte Ltd (under judicial management)	Court of Appeal	Yes	[2001] 3 SLR(R) 119	Singapore	Cited for the principle that the ultimate question to decide is whether, in the light of the terms of the agreement, there was an intention to create a trust.
Neste Oy v Lloyds Bank PLC	Not Available	Yes	[1983] 2 Lloyd’s Rep 658	England	Cited for the principle that courts are disinclined toward finding a trust relationship in everyday commercial transactions.
Paul v Constance	Not Available	Yes	[1977] 1 WLR 527	England	Cited for the principle that there must be clear evidence from what is said or done of an intention to create a trust.
Re Lehman Brothers Finance Asia Pte Ltd (in creditors’ voluntary liquidation)	High Court	Yes	[2012] 1 SLR 64	Singapore	Cited for the principle that the date on which voluntary liquidation commences is the most appropriate date to determine a party’s proprietary entitlement.
Henry v Hammond	Not Available	Yes	[1913] 2 KB 515	England	Cited for the principle that if the terms upon which the person receives the money are that he is bound to keep it separate, then he is a trustee of that money.
Re London Wine Co (Shippers) Ltd	Not Available	Yes	[1986] PCC 121	England	Cited for the principle that to create a trust it must be possible to ascertain with certainty not only what the interest of the beneficiary is to be but to what property it is to attach.
Re English & American Insurance Co Ltd	Not Available	Yes	[1994] 1 BCLC 649	England	Cited for the principle that how funds are accounted for on the balance sheet is not necessarily conclusive of their legal character.
Barlow Clowes International Ltd (in liq) and others v Vaughan and others	Not Available	Yes	[1992] 4 All ER 22	England	Cited for the principle that the mixing of a trustee’s own funds with those he holds on trust for a beneficiary may lead to further issues in the identification of property through the tracing process.
Re Global Trader Europe Ltd (in liq) (No 2)	Not Available	Yes	[2009] EWHC 699 (Ch)	England	Cited for the principle that the date on which voluntary liquidation commences is the most appropriate date to determine a party’s proprietary entitlement.
In the matter of MF Global UK Limited (in special administration)	Not Available	Yes	[2013] EWHC 92 (Ch)	England	Cited for the principle that the date on which voluntary liquidation commences is the most appropriate date to determine a party’s proprietary entitlement.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed)	Singapore
Commodity Trading Act (Cap 48A, 2009 Rev Ed)	Singapore
Securities and Futures Act (Cap 289, 2006 Rev Ed)	Singapore
Bankruptcy Act (Cap 20, 2009 Rev Ed)	Singapore
Income Tax Act (Cap 134, 2014 Rev Ed)	Singapore
Limitation Act (Cap 163, 1996 Rev Ed)	Singapore
Interpretation Act (Cap 1, 2002 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Leveraged Foreign Exchange (LFX)
Leveraged Commodity Transactions (Bullion Transactions)
Customer Segregated Accounts
Unrealised Profits
Forward Value
Ledger Balance Carried Forward (C/F)
Margin Excess/Deficiency
Master Trading Agreement (MTA)
Daily FX Activity Statements
Seg Fund Statement
Value Date

15.2 Keywords

liquidation
proprietary claims
LFX
bullion
statutory trust
express trust
segregation
customer assets

17. Areas of Law

Area Name	Relevance Score
Winding Up	95
Company Law	70
Trust Law	60
Contract Law	50
Liquidation	40
Banking and Finance	30

16. Subjects

Insolvency
Trusts
Financial Law
Commodities Trading
Securities