POA Recovery Pte Ltd v Yau Kwok Seng: Investment Fraud, Maintenance, and Champerty
In [2022] SGHC(A) 2, the Appellate Division of the High Court of Singapore heard Civil Appeal No 26 of 2021, POA Recovery Pte Ltd v Yau Kwok Seng, and Civil Appeal No 34 of 2021, Joseph Jeremy Kachu Li and Thomas C C Luong v Yau Kwok Seng, regarding an alleged investment fraud. POA Recovery, representing 1,102 investors, claimed the respondents perpetrated a Ponzi scheme involving crude oil investments in Canada. The court dismissed POA Recovery's claim, finding the assignment of claims was void due to maintenance and champerty, and that the evidence did not support fraud or fraudulent misrepresentation. The court also dismissed the appeal by Li and Luong. The court ordered POA Recovery to bear the costs of AD 26, fixed at S$85,000 (all-in). Li and Luong are to, jointly and severally as co-appellants, bear the costs of AD 34, fixed at S$35,000 (all-in).
1. Case Overview
1.1 Court
Appellate Division of the High Court of the Republic of Singapore1.2 Outcome
Civil Appeal No 26 of 2021 and Civil Appeal No 34 of 2021 are dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court dismisses investment fraud claim due to maintenance, but finds no fraud. Investors' losses stemmed from a failed investment scheme.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| POA Recovery Pte Ltd | Appellant | Corporation | Appeal Dismissed | Lost | |
| Yau Kwok Seng | Respondent | Individual | Appeal Dismissed | Won | |
| Capital Asia Group Pte Ltd | Respondent | Corporation | Appeal Dismissed | Won | |
| Capital Asia Group Oil Management Pte Ltd | Respondent | Corporation | Appeal Dismissed | Won | |
| Joseph Jeremy Kachu Li | Appellant | Individual | Appeal Dismissed | Lost | |
| Thomas C C Luong | Appellant | Individual | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Belinda Ang Saw Ean | Judge of the Appellate Division | Yes |
| Woo Bih Li | Judge of the Appellate Division | No |
| Quentin Loh | Judge of the Appellate Division | No |
4. Counsels
4. Facts
- Investors participated in investments relating to crude oil produced in Alberta, Canada from September 2012 until October 2015.
- 1,102 investors claimed to be victims of an investment fraud perpetrated by the respondents.
- The investors claimed to have been defrauded of around CAD130m.
- POA Recovery Pte Ltd was a special purpose corporate entity to which the claims of the investors were assigned.
- The crude oil investment involved investors purchasing physical barrels of crude oil that would be resold for profit.
- The investments were marketed as bearing three key features: purchase of oil, profits for investors, and security.
- Yau Kwok Seng is the sole shareholder and director of Capital Asia Group Pte Ltd and Capital Asia Group Oil Management Pte Ltd.
5. Formal Citations
- POA Recovery Pte Ltd v Yau Kwok Seng and others and another appeal, , [2022] SGHC(A) 2
- POA Recovery Pte Ltd v Yau Kwok Seng, Civil Appeal No 26 of 2021, Civil Appeal No 26 of 2021
- Joseph Jeremy Kachu Li v Yau Kwok Seng, Civil Appeal No 34 of 2021, Civil Appeal No 34 of 2021
- POA Recovery Pte Ltd v Yau Kwok Seng and others (Joseph Jeremy Kachu Li and others, third parties), , [2021] SGHC 41
6. Timeline
| Date | Event |
|---|---|
| Investments relating to crude oil produced in Alberta, Canada began. | |
| Ventures ended. | |
| COGI was forced into receivership. | |
| Canadian court enjoined POA from disposing of its oil and gas leases and assets. | |
| Rick Orman and Paul Tan were appointed directors of POA. | |
| The June Agreement was formed. | |
| Management and control of CAGOM Canada was under a new management committee known as the Interim Advisory Board. | |
| Members of the Interim Advisory Board were appointed as full directors of CAGOM Canada and formed CAGOM Canada’s Executive Board. | |
| Writ of Summons filed. | |
| Amendment to Writ made. | |
| Second amendment to the Writ was made. | |
| POA Recovery furnished S$20,000 as security for AD 26. | |
| Judgment reserved. | |
| Judgment delivered. |
7. Legal Issues
- Fraudulent Misrepresentation
- Outcome: The court found that the evidence did not support a claim of fraudulent misrepresentation.
- Category: Substantive
- Fraud
- Outcome: The court found that the evidence did not support a claim of fraud.
- Category: Substantive
- Maintenance and Champerty
- Outcome: The court found that the assignment of claims to POA Recovery was void for being contrary to the doctrine of maintenance.
- Category: Procedural
- Pleadings
- Outcome: The court found that POA Recovery had not adequately pleaded its causes of action apart from fraud and fraudulent misrepresentation.
- Category: Procedural
8. Remedies Sought
- Monetary Damages
- Account of Profits
9. Cause of Actions
- Fraud
- Fraudulent Misrepresentation
- Negligence
- Breach of Fiduciary Duty
- Breach of Trust
- Dishonest Assistance
- Unlawful Means Conspiracy
10. Practice Areas
- Commercial Litigation
- Investment Fraud
11. Industries
- Oil and Gas
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Vanguard Energy Pte Ltd | High Court | Yes | [2015] 4 SLR 597 | Singapore | Cited for the test regarding the doctrine of maintenance and the exceptions to the rule against maintenance and champerty. |
| Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency | Court of Appeal | No | [2007] 4 SLR(R) 100 | Singapore | Cited for the threshold requirement of factual foreseeability in negligence claims. |
| Tonny Permana v One Tree Capital Management Pte Ltd and another | High Court | No | [2021] 5 SLR 477 | Singapore | Cited for the importance of specificity in arguments in claims against agents for breach of trust and/or fiduciary duty. |
| EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another | Court of Appeal | No | [2014] 1 SLR 860 | Singapore | Cited for the elements of unlawful means conspiracy. |
| The “Jarguh Sawit” | Court of Appeal | Yes | [1997] 3 SLR(R) 829 | Singapore | Cited for the proposition that a plaintiff may pursue a claim assigned to it post-filing of a writ of summons, where such claim had already accrued as at the date of the filing of the writ. |
| BXH v BXI | Court of Appeal | No | [2020] 1 SLR 1043 | Singapore | Cited for observations on the retrospective vesting of rights in an assignee. |
| Central Insurance Co Ltd v Seacalf Shipping Corporation (The Aiolos) | Court of Appeal | No | [1983] 2 Lloyd’s Rep 25 | England and Wales | Cited in relation to subrogation. |
| Read v Brown | Queen's Bench Division | No | (1888) 22 QBD 128 | England and Wales | Cited in relation to the significance of an assignment in determining a plaintiff’s cause of action. |
| Lim Lie Hoa v Ong Jane Rebecca | Court of Appeal | Yes | [1997] 1 SLR(R) 775 | Singapore | Cited for the definition of maintenance proceedings. |
| Giles v Thompson | House of Lords | Yes | [1994] 1 AC 142 | United Kingdom | Cited for the principle of public policy designed to protect the purity of justice and the interest of vulnerable litigants in maintenance and champerty. |
| Choo Cheng Tong Wilfred v Phua Swee Khiang and another | High Court | No | [2021] SGHC 154 | Singapore | Cited for the definition of champerty. |
| Otech Pakistan Pvt Ltd v Clough Engineering Ltd | High Court | No | [2007] 1 SLR(R) 989 | Singapore | Cited for the definition of champerty. |
| Hill v Archbold | Queen's Bench Division | No | [1968] 1 QB 686 | England and Wales | Cited for the definition of maintenance proceedings. |
| Law Society of Singapore v Kurubalan s/o Manickam Rengaraju | High Court | No | [2013] 4 SLR 91 | Singapore | Cited for the definition of maintenance proceedings. |
| Trendtex Trading Corporation v Credit Suisse | House of Lords | Yes | [1982] AC 679 | United Kingdom | Cited for the determination of genuine commercial interest. |
| Brownton Ltd v Edward Moore Inbucon Ltd | Court of Appeal | Yes | [1985] 3 All ER 499 | England and Wales | Cited for the determination of genuine commercial interest. |
| JEB Recoveries LLP v Binstock | High Court of Justice | Yes | [2015] EWHC 1063 (Ch) | England and Wales | Cited for the situation where a special purpose vehicle has no distinct purpose from the investors. |
| Liberty Sky Investments Ltd v Goh Seng Heng and another | High Court | Yes | [2020] 3 SLR 335 | Singapore | Cited for the elements of fraudulent misrepresentation. |
| Liberty Sky Investments Ltd v Aesthetic Medical Partners Pte Ltd and other appeals and another matter | Court of Appeal | Yes | [2020] 1 SLR 606 | Singapore | Cited for affirming the elements of fraudulent misrepresentation. |
| Tan Chin Seng and others v Raffles Town Club Pte Ltd | High Court | No | [2003] 3 SLR(R) 307 | Singapore | Cited for the actionable representation requirement in misrepresentation claims. |
| Zuraimi bin Mohamed Dahlan and another v Zulkarnine B Hafiz and another | High Court | No | [2020] SGHC 219 | Singapore | Cited for the principle that statements of opinion do not constitute actionable misrepresentations. |
| Peek v Gurney | House of Lords | No | (1873) LR 6 HL 377 | United Kingdom | Cited for the rule that a representation must be addressed to or targeted at the representee. |
| Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another | High Court | No | [2013] 3 SLR 801 | Singapore | Cited for the requirement of inducement in misrepresentation claims. |
| Ong Keh Choo v Paul Huntington Bernardo | Court of Appeal | No | [2020] SGCA 69 | Singapore | Cited for the requirement of inducement in misrepresentation claims. |
| Broadley Construction Pte Ltd v Alacran Design Pte Ltd | Court of Appeal | No | [2018] 2 SLR 110 | Singapore | Cited for the principle that a plaintiff would not ordinarily be held to be induced by a misrepresentation if the express contractual terms contradict the representor’s misrepresentation. |
| MCI WorldCom International Inc v Primus Telecommunications Inc | Commercial Court | No | [2004] 2 All ER (Comm) 833 | England and Wales | Cited for the principle that falsity in fraudulent misrepresentation includes statements of half-truth. |
| IFE Fund SA v Goldman Sachs International | High Court of Justice | No | [2006] 2 CLC 1043 | England and Wales | Cited for the principle that falsity in fraudulent misrepresentation includes statements of half-truth. |
| Dimmock v Hallett | Court of Appeal in Chancery | No | (1866) 2 Ch App 21 | England and Wales | Cited for the principle that falsity in fraudulent misrepresentation includes statements of half-truth. |
| Bank of China Ltd, Singapore Branch v BP Singapore Pte Ltd and others | High Court | No | [2021] 5 SLR 738 | Singapore | Cited for the tort of deceit essentially comprises the same legal elements as fraudulent misrepresentation. |
| Panatron Pte Ltd and another v Lee Cheow Lee and another | High Court | No | [2001] 2 SLR(R) 435 | Singapore | Cited for the tort of deceit essentially comprises the same legal elements as fraudulent misrepresentation. |
| Ong Jane Rebecca v Lim Lie Hoa and other appeals and other matters | Court of Appeal | No | [2021] 2 SLR 584 | Singapore | Cited for the principle that no right of appeal lies against a non-decision. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Civil Law Act (Cap 43, 1999 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Crude Oil Investments
- Special Purpose Vehicle
- Assignment Agreements
- Ponzi Scheme
- Maintenance
- Champerty
- Buyer’s Purchase Order
- Conserve Group
- Interim Advisory Board
- Joffre Asset
- POA subsidiaries
15.2 Keywords
- investment fraud
- crude oil
- maintenance
- champerty
- singapore
- civil appeal
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Fraud and Deceit | 75 |
| Contract Law | 70 |
| Misrepresentation | 65 |
| Illegality and public policy | 50 |
| Maintenance and champerty | 45 |
| Civil Procedure | 30 |
16. Subjects
- Investment Fraud
- Contract Law
- Civil Procedure