Parastate Labs Inc v. Wang Li: Appeal on Quantum of Mareva Injunction for Breach of Fiduciary Duty
In Parastate Labs Inc v. Wang Li, the Court of Appeal of Singapore heard an appeal regarding the quantum of a Mareva injunction. Parastate Labs Inc. sought a worldwide Mareva injunction against Wang Li for US$5 million, alleging breach of fiduciary duties related to an investment in the Babel Quant Alpha USDT Fund. The High Court granted the injunction but limited it to US$2.5 million and required Parastate to fortify its undertaking as to damages. The Court of Appeal allowed Parastate’s appeal, increasing the injunction to US$5 million and ordering additional fortification of US$100,000.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal allowed Parastate's appeal, increasing the Mareva injunction against Wang Li to US$5 million, fortifying damages to US$100,000, for breach of fiduciary duty.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Parastate Labs, Inc | Appellant, Claimant | Corporation | Appeal Allowed | Won | |
| Wang Li | Respondent, Defendant | Individual | Appeal Allowed | Lost | |
| Yang Zhou | Defendant | Individual | |||
| Babel Asia Asset Management Pte Ltd | Defendant | Corporation | |||
| Babel Holding Ltd | Defendant | Corporation |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Justice of the Court of Appeal | No |
| Steven Chong | Justice of the Court of Appeal | Yes |
4. Counsels
4. Facts
- Parastate invested US$5 million in the Babel Quant Alpha USDT Fund, managed by Babel Finance.
- In June 2022, Parastate sought to withdraw its investment but was informed that Babel Finance was experiencing financial difficulties.
- Parastate alleged that Babel Asia and Babel Holding breached their fiduciary duties and/or trustee duties.
- Parastate alleged Mr Wang dishonestly assisted Babel Asia’s and Babel Holding’s breaches.
- The Judge granted the Mareva injunction but limited the quantum to US$2.5 million and required fortification of S$50,000.
- Parastate failed to state available assets to meet its undertaking as to damages in its affidavit.
- Parastate failed to include prescribed undertakings 9 and 10 provided in Form 25 of the SCPD 2021.
5. Formal Citations
- Parastate Labs Inc v Wang Li, Civil Appeal No 16 of 2023, [2023] SGCA 27
6. Timeline
| Date | Event |
|---|---|
| Parastate invested US$5 million in the Babel Quant Alpha USDT Fund. | |
| Parastate sought to withdraw its investment. | |
| Parastate commenced OC 130 seeking liquidated damages of US$5 million from Mr Wang and Mr Yang. | |
| HC/OC 130/2022 filed. | |
| HC/SUM 2564/2022 made. | |
| Judge delivered grounds of decision in Parastate Labs Inc v Wang Li and others [2023] SGHC 153. | |
| Court of Appeal heard and allowed Parastate’s appeal. | |
| Case management stay of OC 130 as against Mr Wang was granted, in effect till this date. | |
| Babel Holding has sought leave to convene its scheme meeting on or before this date. |
7. Legal Issues
- Quantum of Mareva Injunction
- Outcome: The Court of Appeal held that the Judge's exercise of discretion to reduce the quantum of the Mareva injunction from US$5 million to US$2.5 million was not based on principled grounds and increased the injunction to US$5 million.
- Category: Procedural
- Related Cases:
- [2015] 5 SLR 558
- [2018] 2 SLR 159
- Breach of Fiduciary Duty
- Outcome: The court did not make a final determination on the breach of fiduciary duty claim, as the appeal concerned an interlocutory application for a Mareva injunction. However, the court noted that Parastate had established a good arguable case for breach of fiduciary duty.
- Category: Substantive
- Full and Frank Disclosure
- Outcome: The Court of Appeal found that there was no material non-disclosure to speak of as neither had an impact on the Judge’s findings of a good arguable case and a real risk of dissipation of assets, or Parastate’s ability to honour its undertaking as to damages.
- Category: Procedural
- Related Cases:
- [2009] 4 SLR(R) 365
- [2009] 1 SLR(R) 1000
- [1987] CLY 3064
- [2015] JMSC Civ 151
8. Remedies Sought
- Liquidated Damages
- Mareva Injunction
9. Cause of Actions
- Breach of Fiduciary Duty
- Dishonest Assistance
10. Practice Areas
- Commercial Litigation
- Asset Recovery
- Injunctions
11. Industries
- Finance
- Cryptocurrency
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Bouvier, Yves Charles Edgar and another v Accent Delight International Ltd and another and another appeal | Court of Appeal | Yes | [2015] 5 SLR 558 | Singapore | Cited for the principle that Mareva injunctions can be a draconian measure with potential for abuse. |
| JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others | Court of Appeal | Yes | [2018] 2 SLR 159 | Singapore | Cited for the principle that Mareva injunctions can be a draconian measure with potential for abuse and the expectation that plaintiffs seeking equitable relief come to court with clean hands. |
| Bank Mellat v Nikpour | Unknown | Yes | [1985] FSR 87 | England | Cited to describe Mareva relief as one of the law’s two “nuclear” weapons. |
| F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry | House of Lords | Yes | [1975] AC 295 | England | Cited for the genesis of the requirement for an undertaking as to damages and the purpose it serves. |
| CHS CPO GmbH (in bankruptcy) and another v Vikas Goel and others | High Court | Yes | [2005] 3 SLR(R) 202 | Singapore | Cited for the principle that an order for fortification depends on whether a real risk of loss could be shown by the defendant and ought not to be made if the effect would be to unjustifiably deprive a plaintiff that otherwise has established the merits of the injunction of its rights. |
| Bahtera Offshore (M) Sdn Bhd v Sim Kok Beng and another | High Court | Yes | [2009] 4 SLR(R) 365 | Singapore | Cited as an example of a case where the ex parte Mareva injunction was discharged because of the plaintiff’s failure to make full and frank disclosure. |
| Multi-Code Electronics Industries (M) Bhd and another v Toh Chun Toh Gordon and others | High Court | Yes | [2009] 1 SLR(R) 1000 | Singapore | Cited as an example of a case where the ex parte Mareva injunction was discharged because of the plaintiff’s failure to make full and frank disclosure. |
| Block and another v Nicholson (trading as Limascue Stud) | English Court of Appeal | Yes | [1987] CLY 3064 | England | Cited for the principle that it is the duty of an applicant seeking an ex parte injunction to make full disclosure of any facts which could reasonably be regarded as relevant to the exercise of the Court’s discretion to grant such an injunction. |
| North American Holdings Company Ltd v Androcles Limited | Supreme Court of Judicature | Yes | [2015] JMSC Civ 151 | Jamaica | Cited as an example of a case where the ex parte Mareva injunction was discharged because of the plaintiff’s failure to make full and frank disclosure regarding the plaintiff's undertaking as to damages. |
| The “Vasiliy Golovnin” | Court of Appeal | Yes | [2008] 4 SLR(R) 994 | Singapore | Cited for the underlying rationale that the judge deciding the application may not have been appropriately sensitised to the real merits of the application as a result of the material non-disclosure. |
| JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others | Court of Appeal | Yes | [2021] 1 SLR 1298 | Singapore | Cited for the principle that it would be a disproportionate and unprincipled reaction to the unsatisfactory state of the first and second respondents’ asset disclosure to maintain the Mareva injunction at the higher amount. |
| Parastate Labs Inc v Wang Li and others | High Court | Yes | [2023] SGHC 153 | Singapore | The decision below being appealed. |
13. Applicable Rules
| Rule Name |
|---|
| Order 13 rr 1(6) and 1(7) of the Rules of Court 2021 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Rules of Court 2021 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Mareva Injunction
- Undertaking as to Damages
- Fortification
- Full and Frank Disclosure
- Dissipation of Assets
- Good Arguable Case
- Babel Quant Alpha USDT Fund
- Cryptocurrency
- Tether
- Material Non-Disclosure
15.2 Keywords
- Mareva injunction
- fiduciary duty
- cryptocurrency
- Singapore
- appeal
- injunction quantum
- undertaking as to damages
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Mareva Injunctions | 95 |
| Injunctions | 85 |
| Civil Procedure | 70 |
| Costs | 30 |
| Fiduciary Duties | 20 |
16. Subjects
- Civil Procedure
- Injunctions
- Financial Law