Re Fan Kow Hin: Third-Party Litigation Funding in Bankruptcy & Assignment of Clawback Claims
In Re Fan Kow Hin, the Singapore High Court considered an application by the trustees in bankruptcy to sanction a funding arrangement for litigation on behalf of the estate. The defendants to that litigation opposed the application. The court, presided over by Aedit Abdullah J, allowed the application, holding that the proceeds of clawback claims under the Bankruptcy Act form part of the bankrupt's estate and may be assigned by the trustees. The court also found that such an assignment is not contrary to public policy as being champertous or in maintenance.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application Allowed
1.3 Case Type
Insolvency
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court sanctioned a funding arrangement for bankruptcy litigation, allowing assignment of clawback claim proceeds. The court held that such assignment is not champertous.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Fan Kow Hin | Applicant | Individual | Application Allowed | Won | Andrew Chan, Alexander Yeo, Chew Jing Wei |
| Defendants to High Court Suit No 1078 of 2017 | Respondent | Other | Application Denied | Lost | David Chan, Cai Chengying, Shirin Swah |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Andrew Chan | Allen & Gledhill LLP |
| Alexander Yeo | Allen & Gledhill LLP |
| Chew Jing Wei | Allen & Gledhill LLP |
| David Chan | Shook Lin & Bok LLP |
| Cai Chengying | Shook Lin & Bok LLP |
| Shirin Swah | Shook Lin & Bok LLP |
4. Facts
- The trustees in bankruptcy sought the court’s sanction of a funding arrangement for litigation.
- The litigation was commenced on behalf of the bankruptcy estate.
- The litigation involves clawback claims under the Bankruptcy Act.
- The trustees sought approval of an agreement assigning a proportion of the benefits of the clawback claims.
- The defendants to the clawback claims opposed the funding application.
- The 2017 amendments to the Civil Law Act permit third-party litigation funding in respect of international arbitration.
- The trustees argued that the assignment of the fruits of an insolvency clawback claim is permitted by law.
5. Formal Citations
- Re Fan Kow Hin, Originating Summons (Bankruptcy) No 479 of 2017 (Summons No 2898 of 2018), [2018] SGHC 257
6. Timeline
| Date | Event |
|---|---|
| Originating Summons (Bankruptcy) No 479 of 2017 filed | |
| Hearing of Summons No 2898 of 2018 | |
| Judgment reserved |
7. Legal Issues
- Third-Party Litigation Funding
- Outcome: The court held that third-party litigation funding is permissible in the context of insolvency, provided the assignee has no control over the proceedings.
- Category: Substantive
- Related Cases:
- [1998] Ch 170
- [2006] 2 SLR(R) 717
- [2015] 4 SLR 597
- Assignment of Clawback Claims
- Outcome: The court held that the proceeds of clawback claims under the Bankruptcy Act form part of the bankrupt's estate and may be assigned by the trustees.
- Category: Substantive
- Maintenance and Champerty
- Outcome: The court held that the assignment of clawback claims was not champertous or in maintenance as it is aimed at providing access to justice in the context of an insolvency.
- Category: Substantive
- Related Cases:
- [2015] 4 SLR 597
- [1997] 1 SLR(R) 775
8. Remedies Sought
- Sanction of a funding arrangement
- Approval of assignment of benefits or proceeds of clawback claims
9. Cause of Actions
- Avoidance of transactions at an undervalue
- Unfair preferences
10. Practice Areas
- Commercial Litigation
- Insolvency Litigation
- Third-Party Litigation Funding
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| In re Oasis Merchandising Services Ltd | Chancery Division | Yes | [1998] Ch 170 | England | Cited for the principle that fruits of a cause of action arising after insolvency are recoverable only by the liquidator under statutorily-conferred powers and do not form part of the company’s property in liquidation. |
| Neo Corp Pte Ltd (in liquidation) v Neocorp Innovations Pte Ltd | Court of Appeal | Yes | [2006] 2 SLR(R) 717 | Singapore | Cited as the Singapore Court of Appeal followed the English decision in In re Oasis Merchandising Services Ltd. |
| Re Vanguard Energy Pte Ltd | High Court | Yes | [2015] 4 SLR 597 | Singapore | Cited for the holding that maintenance and champerty did not apply to a liquidator’s exercise of the power of sale under s 272(2)(c) of the Companies Act and for laying down criteria under which the assignment of a bare cause of action would not offend the rules against champerty and maintenance. |
| Manharlal Trikamdas Mody and another v Sumikin Bussan International (HK) Ltd | High Court | Yes | [2014] 3 SLR 1161 | Singapore | Cited for the holding that the right to enforce statutory moratoria was personal to the Official Assignee and therefore incapable of assignment at law. |
| Buchler and another v Talbot and others | House of Lords | Yes | [2004] 2 AC 298 | England | Cited for the argument that Oasis was doubted and impliedly overruled by the House of Lords. |
| Movitor Pty Ltd (Receiver and manager appointed) (In liquidation) v Anthony Milton Sims | Federal Court of Australia | Yes | [1996] FCA 1320 | Australia | Cited as an Australian case that took a contrary line even in corporate insolvency cases. |
| Elfic Limited and others v Macks and others | Court of Appeal of Queensland | Yes | [2001] QCA 219 | Australia | Cited as an Australian case that took a contrary line even in corporate insolvency cases. |
| Cook (Liquidator), in the matter of Italiano Family Fruit Company Pty Ltd (in liq) v Italiano Family Fruit Company Pty Ltd (in liq) | Federal Court of Australia | Yes | [2010] FCA 1355 | Australia | Cited as an Australian case that took a contrary line even in corporate insolvency cases. |
| Lim Lie Hoa and another v Ong Jane Rebecca | Court of Appeal | Yes | [1997] 1 SLR(R) 775 | Singapore | Cited for the holding that an assignment of a cause of action may not be champertous if it is ancillary to a transfer of property or there is genuine interest in the assignment. |
| R (Factortame Ltd) v Secretary of State for Transport (No 8) | Queen's Bench | Yes | [2003] QB 381 | England | Cited in Vanguard for the doctrine of maintenance and champerty. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Bankruptcy Act (Cap 20, 2009 Rev Ed) | Singapore |
| Civil Law Act (Cap 43, 1999 Rev Ed) | Singapore |
| Bankruptcy Act | Singapore |
| Bankruptcy Act | Singapore |
| Civil Law Act | Singapore |
| Civil Law Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Trustees in bankruptcy
- Funding arrangement
- Clawback claims
- Transactions at an undervalue
- Unfair preferences
- Assignment
- Maintenance
- Champerty
- Bankruptcy estate
- Third-party litigation funding
15.2 Keywords
- Bankruptcy
- Third-Party Funding
- Clawback Claims
- Assignment
- Maintenance
- Champerty
16. Subjects
- Insolvency
- Bankruptcy
- Third-Party Funding
- Assignment of Rights
17. Areas of Law
- Insolvency Law
- Bankruptcy
- Civil Procedure
- Contract Law