Farooq Ahmad Mann v Xia Zheng: Mareva Injunction, Undervalue Transactions & Matrimonial Assets

In Farooq Ahmad Mann (in his capacity as the private trustee in bankruptcy of Li Hua) v Xia Zheng, the Singapore High Court granted a worldwide Mareva injunction against Ms. Xia Zheng, sought by Mr. Farooq Ahmad Mann, the private trustee in bankruptcy of Mr. Li Hua. The application was made in support of the Private Trustee’s claim against Ms. Xia to avoid certain transfers of property from the Bankrupt to Ms. Xia in the lead-up to the Bankrupt’s bankruptcy on the grounds that these were transactions at an undervalue or fraudulent conveyances. The court found a good arguable case that the transfers were undervalue transactions and that there was a real risk of asset dissipation.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Application allowed and a worldwide Mareva injunction granted.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court grants Mareva injunction against Xia Zheng for alleged undervalue transactions involving matrimonial assets transferred from bankrupt ex-husband.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Xia ZhengDefendantIndividualApplication dismissedLost
Farooq Ahmad Mann (in his capacity as the private trustee in bankruptcy of Li Hua)ClaimantIndividualApplication allowedWon

3. Judges

Judge NameTitleDelivered Judgment
Aedit AbdullahJudgeYes

4. Counsels

Counsel NameOrganization
Oei Ai Hoea AnnaTan Oei & Oei LLC
Tham LijingTham Lijing LLC

4. Facts

  1. The Bankrupt and Ms. Xia were previously married and divorced.
  2. The Bankrupt agreed to transfer his interests in four properties to Ms. Xia for no cash consideration as part of an interim judgment by consent.
  3. The Private Trustee contends the Interim Judgment was an asset protection scheme.
  4. The Bankrupt allegedly used two companies to run a fraudulent investment scheme.
  5. A large sum of some S$65.7m was invested into Sunmax by investors in the period between 2009 and 2012.
  6. The Bankrupt and Ms Xia purchased and/or repaid the mortgage loans taken on the Properties in Singapore, which they held as joint tenants.
  7. The Private Trustee alleges that the Properties were acquired through monies invested in Sunmax that were siphoned off by the Bankrupt and Ms Xia.
  8. The Bankrupt filed a debtor’s bankruptcy application seeking to place himself into bankruptcy.

5. Formal Citations

  1. Farooq Ahmad Mann (in his capacity as the private trustee in bankruptcy of Li Hua) v Xia Zheng, Originating Application No 3 of 2024 (Summons No 34 of 2024), [2024] SGHC 182

6. Timeline

DateEvent
Interim Judgment by consent was entered.
Final Judgment for divorce was entered.
Duchess Avenue Property was sold.
Duchess Road Property was sold.
Bankrupt filed a debtor’s bankruptcy application.
Private Trustee was appointed.
Oral submissions were heard.
Worldwide Mareva injunction was granted.
Ms Xia filed a request for further arguments.
Request for further arguments was allowed.
Further arguments were heard.
Bankrupt was adjudged a bankrupt.

7. Legal Issues

  1. Transactions at an Undervalue
    • Outcome: The court found a good arguable case that the transfers of property were transactions at an undervalue.
    • Category: Substantive
    • Sub-Issues:
      • Transfer of property pursuant to ancillary relief order
      • Collusion to adversely affect a bankrupt’s creditors
      • Insolvency at the time of transaction
      • Consideration received by bankrupt
    • Related Cases:
      • [2008] Ch 412
      • [2013] 2 SLR 297
  2. Real Risk of Dissipation
    • Outcome: The court found a real risk of the defendant dissipating her assets.
    • Category: Procedural
    • Sub-Issues:
      • Dishonest conduct
      • Ease of asset disposal
      • Evasiveness and refusal to provide information
    • Related Cases:
      • [2018] 2 SLR 159
      • [2015] 5 SLR 558
  3. Applicability of Balance of Convenience Test to Mareva Injunctions
    • Outcome: The court rejected the application of the balance of convenience test to the Mareva injunction.
    • Category: Procedural
    • Sub-Issues:
      • Justified vs. unjustified dealings with assets
      • Protection of defendant's interests
    • Related Cases:
      • [2022] 7 CLJ 505

8. Remedies Sought

  1. Worldwide Mareva injunction
  2. Proprietary injunction

9. Cause of Actions

  • Avoidance of transactions at an undervalue
  • Fraudulent conveyances

10. Practice Areas

  • Commercial Litigation
  • Insolvency Litigation
  • Family Law

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
JTrust Asia Pte Ltd v Group Lease Holdings Pte LtdCourt of AppealYes[2018] 2 SLR 159SingaporeCited for the purpose of a Mareva injunction is to restrain a defendant from dissipating his assets with a view to frustrating the enforcement of a potential judgment against him on the claimant’s claim.
Convoy Collateral Ltd v Broad Idea International LtdJudicial Committee of the Privy CouncilYes[2023] AC 389United KingdomCited for the enforcement principle of a freezing injunction.
Bouvier, Yves Charles Edgar and another v Accent Delight International Ltd and another and another appealCourt of AppealYes[2015] 5 SLR 558SingaporeCited for the requirements for the grant of a Mareva injunction and the territorial scope of the order.
Guan Chong Cocoa Manufacturer Sdn Bhd v Pratiwi Shipping SACourt of AppealYes[2003] 1 SLR(R) 157SingaporeCited for the necessity for extending the reach of the Mareva injunction to assets outside of the jurisdiction.
Derby & Co Ltd and others v Weldon and others (Nos 3 and 4)English Court of AppealYes[1990] 1 Ch 65United KingdomCited for the necessity for extending the reach of the Mareva injunction to assets outside of the jurisdiction.
American Cyanamid Co v Ethicon LtdHouse of LordsYes[1975] AC 396United KingdomCited for the general principles governing proprietary injunctions.
RGA Holdings International Inc v Loh Choon Ping Robin and anotherCourt of AppealYes[2017] 2 SLR 997SingaporeCited for the requirements to obtain a proprietary injunction.
Derby & Co Ltd and others v Weldon and others (No 1)English Court of AppealYes[1990] Ch 48United KingdomCited for the requirements to obtain a proprietary injunction.
DDP (in his capacity as the joint and several trustees of the bankruptcy estate of [B]) and another v DDR (a minor) and anotherHigh CourtYes[2024] 3 SLR 1457SingaporeCited for the requirements to set aside a transaction at an undervalue under s 361 of the IRDA.
Cheo Sharon Andriesz v Official Assignee of the estate of Andriesz Paul Matthew, a bankruptCourt of AppealYes[2013] 2 SLR 297SingaporeCited for the possibility of separating the transfer of the Properties and the sale proceeds from the Interim Judgment itself.
Hill and another v HainesEnglish Court of AppealYes[2008] Ch 412United KingdomCited for the principle that ancillary relief orders are not immune from attack through the transaction avoidance provisions in the insolvency legislation.
Simon v Simon and anotherEnglish Court of AppealYes[2024] 1 WLR 1207United KingdomCited for the interplay between IA 1986 and matrimonial law.
Sharland v SharlandUK Supreme CourtYes[2016] AC 871United KingdomCited for the principle that a consent order in family proceedings derives its authority from the court and not from the consent of the parties.
AOO v AONCourt of AppealYes[2011] 4 SLR 1169SingaporeCited for the principle that a consent order must necessarily involve the court.
TQ v TR and another appealCourt of AppealYes[2009] 2 SLR(R) 961SingaporeCited for the principle that the ultimate power resides in the court to order the division of matrimonial assets.
Ong Dan Tze Magdalene v Chee Yoh Chuang and anotherHigh CourtYes[2021] SGHC 129SingaporeCited for the principle that any party seeking the court’s approval for a consent order has a duty to make full and frank disclosure of all material facts.
Milaha Explorer Pte Ltd v Pengrui Leasing (Tianjin) Co LtdCourt of AppealYes[2023] 1 SLR 1072SingaporeCited for the principle that obtaining security on a claim, or guarding against counterparty insolvency, is not a legitimate purpose for seeking a Mareva injunction.
Bugis Founder Pte Ltd v Seng Huat Coffee House Pte LtdHigh CourtYes[2021] 5 SLR 1308SingaporeCited for the principle that a justified dealing with an asset does not show a risk of unjustified dealings with assets.
Organic Grape Spirit Ltd v Nueva IQT, SLEnglish Court of AppealYes[2020] EWCA Civ 999United KingdomCited for the principle that Mareva injunctions granted by courts would contain a carve-out allowing the defendant to make dispositions that are ordinary living expenses or ordinary business expenses.
Vneshprombank LLC v Bedzhamov and othersEnglish Court of AppealYes[2020] 1 All ER (Comm) 911United KingdomCited for the principle that an individual defendant’s ordinary living expenses would be assessed by reference to his pre-freezing order standard of living and expenditure.
Lee Kai Wuen and another v Lee Yee WuenMalaysian Court of AppealYes[2022] 7 CLJ 505MalaysiaCited for the principle that the balance of convenience is not a criterion that needs to be considered by a court when considering the grant of a Mareva injunction.
Maldives Airports Co Ltd and another v GMR Malé International Airport Pte LtdCourt of AppealYes[2013] 2 SLR 449SingaporeCited for the gist of the balance of convenience test.
Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M)English High CourtYes[2009] 1 All ER (Comm) 479United KingdomCited for the concept of “dissipation” in Mareva injunctions.
The “Vasiliy Golovnin”Court of AppealYes[2008] 4 SLR(R) 994SingaporeCited for the principle that there is no need to establish a conclusive case at the outset.
Ninemia Maritime Corporation v Trave Schiffahrtgesellschaft mbH und Co KG (The “Niedersachsen”)English Court of AppealYes[1983] 2 Lloyd’s Rep 600United KingdomCited for the definition of a “good arguable case”.
R (Majera (formerly SM (Rwanda))) v Secretary of State for the Home Department (Bail for Immigration Detainees intervening)UK Supreme CourtYes[2022] AC 461United KingdomCited for the rationale that the rule of law necessitates that court orders and judgments be obeyed.
Wiltopps (Asia) Ltd v Drew & Napier and anotherHigh CourtYes[1999] 1 SLR(R) 252SingaporeCited for the effect of a consent order.
Siva Kumar s/o Avadiar v Quek Leng Chuang and othersCourt of AppealYes[2021] 1 SLR 451SingaporeCited for the effect of a consent order.
Xia Zheng v Song Jianbo and anotherHigh CourtYes[2022] SGHC 124SingaporeCited for the Interim Judgment had resulted in the Bankrupt having no interest in the Orchard Property to which the writ could attach.
TTMI Ltd of England v ASM Shipping Ltd of IndiaEnglish High CourtYes[2006] 1 Lloyd’s Rep 401United KingdomCited for the search for a precise definition of the concept of “dissipation” in the context of Mareva injunctions.
Energy Venture Partners Ltd v Malabu Oil and Gas LtdEnglish Court of AppealYes[2015] 1 WLR 2309United KingdomCited for the practical effect of giving security to the claimant for its claim.
Lee Shieh-Peen Clement and another v Ho Chin Nguang and othersCourt of AppealYes[2010] 4 SLR 801SingaporeCited for the need to prevent the defendant snapping his fingers at a judgment of the court with financial impunity.
Meespierson NV v Industrial and Commercial Bank of VietnamHigh CourtYes[1998] 1 SLR(R) 287SingaporeCited for the purpose of a Mareva injunction is to prevent a defendant from acting dishonourably.
Envy Asset Management Pte Ltd (in liquidation) and others v CH Biovest Pte LtdHigh CourtYes[2024] SGHC 46SingaporeCited for identifying a degree of analogy between the elements of s 73B of the CLPA and the concept of an undervalue transaction under s 361 of the IRDA.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
s 361 of the Insolvency, Restructuring and Dissolution Act 2018Singapore
s 73B of the Conveyancing and Law of Property ActSingapore
s 18(2) and paras 5 and 14 of the First Schedule of the Supreme Court of Judicature Act 1969Singapore
s 363(1)(a) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
s 363(2) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
s 363(3) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
s 364(2)(a) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
s 365(1)(a) of the Insolvency, Restructuring and Dissolution Act 2018Singapore
s 112(1) of the Women’s Charter 1961Singapore
s 112(2)(e) of the Women’s Charter 1961Singapore
s 39 of the English Matrimonial Causes Act 1973United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

  • Mareva injunction
  • Proprietary injunction
  • Transaction at an undervalue
  • Fraudulent conveyance
  • Interim Judgment
  • Dissipation of assets
  • Collusion
  • Insolvency
  • Matrimonial assets
  • Ancillary relief order

15.2 Keywords

  • Mareva injunction
  • Insolvency
  • Matrimonial assets
  • Undervalue transaction
  • Singapore

17. Areas of Law

Area NameRelevance Score
Mareva Injunctions95
Injunctions90
Insolvency Law85
Transactions at an undervalue80
Avoidance of transactions80
Proprietary injunctions70
Family Law40
Civil Practice30

16. Subjects

  • Civil Procedure
  • Insolvency Law
  • Matrimonial Law