The Asset Tracing and Recovery Review: Singapore

Overview

Singapore is a leading financial capital of the world. As a global wealth management centre, international funds flow through the jurisdiction on a daily basis.

Financial institutions have faced increasingly stricter and more rigorous compliance, sanctions, anti-money laundering and counter terrorism financing rules and regulations, and have had to allocate significant resources to their financial crimes units. These measures are particularly critical given the increasing prevalence of cyber fraud, e-commerce scams and financial fraud globally. Despite steps taken to prevent fraud, fraud litigation is not uncommon in Singapore, and asset tracing and recovery is an important aspect of fraud proceedings.

Legal rights and remedies

i Civil and criminal remedies

Civil remedies

In Singapore, victims of fraud most commonly seek financial recovery or compensation, or both, through civil remedies. This is because by initiating civil proceedings against the perpetrator of a fraud, the victim (as the plaintiff in the proceedings) can pursue its claim through a variety of processes before, at and after trial. In comparison, in criminal proceedings (which are generally instituted and controlled by Singapore's prosecutorial office, the Attorney-General's Chambers (AGC)), the victim would not have any meaningful control over these proceedings.

As against a perpetrator, the common causes of action commenced include tort of deceit or fraudulent misrepresentation; breach of duty (fiduciary or otherwise); unjust enrichment; and conversion. If a perpetrator carries on his or her business through a company for a fraudulent purpose to defraud victims, there may also be a potential claim in fraudulent trading.

As against the person or persons who assisted the main perpetrator, who may have received or who helped transmit the proceeds of fraud, the common causes of action that are commenced include conspiracy, dishonest assistance and knowing receipt.

It should be noted that tracing does not exist as a claim or remedy per se. However, it is a process that is commonly relied on in civil claims involving fraud, particularly where a victim's property has been mixed with other property or funds. Tracing is the process by which a plaintiff identifies the proceeds of his or her property and who they lie with, then justifies his or her claim that the proceeds can be regarded as representing the property (of which he or she has been defrauded). Through the tracing process, the victim may also be able to identify new assets that were used to substitute his or her property (for example, where defrauded monies are used to purchase a property) and may seek a declaration of constructive trust in relation to those new assets. In this regard, tracing is often a precursor to a further claim.

In Singapore, there is a six-year limitation period on actions founded on a contract or tort.2 However, where an action is based upon the fraud of the defendant3 or where the right of action is concealed by the fraud of such a person, the period of limitation does not begin to run until the plaintiff has discovered the fraud or could have with reasonable diligence discovered it.4

Where a victim successfully obtains judgment against a perpetrator, the victim will then need to enforce the judgment (usually for money). A detailed discussion of enforcement proceedings is beyond the scope of this chapter. However, it should be noted that there are likely limitations to successfully enforcing a judgment and recovering monies awarded by the court in a situation where the perpetrator has, by then, dissipated all of his or her own assets or the defrauded assets, or both, or mixed them such that legal title to the property is no longer traceable.

Tort of deceit or fraudulent misrepresentation

For a victim to succeed in a claim for tort of deceit or fraudulent misrepresentation, the following must be established:5

  1. a representation of fact made by words or conduct;
  2. the representation must be made with knowledge that it is false, or in the absence of any genuine belief that it is true;6
  3. the representation must be made with the intention that it should be acted upon by the plaintiff;7
  4. the plaintiff had acted upon the false statement; and
  5. the plaintiff suffered damage in doing so.

To defend against such a claim, a defendant would need to establish that at least one of the above elements cannot be satisfied. It is not a defence for the defendant to say that the plaintiff failed to take steps to verify the truth of the representations that a prudent person would take.8 Contributory negligence is also not a defence.9

The usual damages sought in a claim for tort of deceit or fraudulent misrepresentation are compensatory in nature and will generally be for financial loss flowing from the misrepresentation or misrepresentations. Such damages would include all consequential losses suffered by the plaintiff in reliance upon the fraudulent misrepresentation and this is regardless of whether or not such loss was foreseeable.10 It is also possible to make a claim for exemplary damages 'where the defendant's deceit was calculated to make a profit beyond the damages payable to the plaintiff as compensation'.11

Breach of duty

Where fraud has been committed by an employee or fiduciary, this may amount to a breach of duty. In respect of an employee, whether or not a breach has been committed will be dependent on the terms of the employment contract and the implied duties of an employee at law.

A fiduciary has, among many other duties, a strict duty not to misuse trust property, not to make an unauthorised profit by reason of his or her position as a fiduciary and to act in good faith.12 For a victim to succeed in a claim of breach of fiduciary duty, it would be necessary to first establish that the defendant is a fiduciary. A common defence by a defendant against such a claim would thus be that he or she is not in fact a fiduciary. Recognised categories of fiduciary relationships include that of trustee–beneficiary,13 agent–principal,14 solicitor–client,15 partners16 and directors.17 The Singapore courts have also, in fact-specific instances, imposed fiduciary obligations in respect of other relationships such as employer–employee,18 and collective sales committees to subsidiary proprietors of strata development.19 The categories of fiduciaries are, therefore, not finite, and each claim (unless falling within the generally accepted fiduciary categories) will need to be analysed on its own facts. The defining characteristic of a fiduciary is someone who has undertaken to act in the interest of another, so as to give rise to a relationship of trust and confidence.20

After establishing the fiduciary relationship, for a victim to succeed in getting a fiduciary to disgorge any profits made, the victim must establish that the profits claimed have been made as a result of the fiduciary's breach of duty.21 Where there is a breach of duty and misconduct by the fiduciary, the victim can ask that the fiduciary account on a 'wilful default basis', which means that the fiduciary is not only required to account for what he or she has received wrongfully, but also for what he or she might have received had it not been for the default. The taking of the accounts may reveal further breaches of fiduciary duty for which the victim can seek an account of profits.22

As for loss suffered, if the victim is able to prove that there has been a breach of duty and loss is sustained, the legal burden shifts to the wrongdoing fiduciary to rebut the presumption that the fiduciary's breach caused the loss. If the fiduciary is unable to rebut the presumption, the victim is entitled to claim equitable compensation (i.e., damages to put him or her in the same position had there been no breach).23

A plaintiff may seek the following equitable or proprietary remedies for a breach of fiduciary duty:

  1. rescission of a contract that involves a breach of fiduciary duty;
  2. equitable compensation payable by the fiduciary to the beneficiary;
  3. an account of the ill-gotten profits payable by the fiduciary to the beneficiary;
  4. tracing the title of ill-gotten property that has been transferred from the fiduciary to the beneficiary;
  5. imposing a constructive trust on such a beneficiary; and
  6. injunctions or specific performance to stop the fiduciary from committing a breach.24

In addition, the Companies Act25 (CA) also prescribes certain directors' duties, and a breach of fiduciary duty can also be a breach of these statutory duties. For example, Section 157(1) CA prescribes that a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of office. A breach of such statutory provisions may result in liability for any profit made by an officer or damage suffered by the company as a result of the breach; and criminal liability.

Unjust enrichment

Unjust enrichment is another cause of action that can be brought against a perpetrator. It can also be brought against a beneficiary of a fraud who may not be the primary perpetrator. This can be particularly useful in cases where the primary perpetrator no longer has the subject monies in hand and, through tracing, it is discovered that the monies have been handed to other parties.

The following elements26 must be established for unjust enrichment to be made out:

  1. the defendant must have been enriched;
  2. this enrichment was at the expense of the plaintiff;
  3. this enrichment was unjust (i.e., the presence of an unjust factor, such as a mistake induced by fraud or a total failure of consideration);27 and
  4. the defendant cannot avail himself or herself of any defences.

A monetary transfer would no doubt constitute a 'benefit'. There also needs to be a nexus between the parties, such that the benefit is at the expense of the victim. Such nexus is shown if the perpetrator received an immediate benefit (e.g., a monetary transfer), or receives a benefit traceable from the victim's assets.28

A common defence relied on is that of a change of position. However, this defence is not available to a wrongdoer. This defence is made out if:

  1. the recipient of the funds has changed his or her position;
  2. the change is bona fide; and
  3. it would be inequitable to require the recipient of the funds to make restitution or restitution in full.29

In addition, there must be a causative link between the receipt of the benefit and his change of position, such that, but for the receipt of the benefit, the defendant's position would not have changed.30

If a claim of unjust enrichment is successfully made out, the plaintiff will have a personal remedy against the defendant, for example, requiring repayment of the sum that had been received or the value of the non-monetary benefit received.31 The plaintiff may also make a claim for restitution from the ultimate recipient of the benefit (who may not be the perpetrator).32

Conversion

To succeed in a claim for conversion, the victim must establish that there was a positive wrongful act of dealing with the goods and an intention in so doing to deny the owner's rights or to assert a right inconsistent with them.33

Examples of defences are that the defendant took the goods lawfully under distress, or with the leave and licence of the plaintiff, or that he or she is entitled as against the plaintiff to a lien on the goods.34 Contributory negligence is not a defence.35

The usual remedy sought is either to retake the goods36 or to claim damages.

Conspiracy

Other than against the main perpetrator, claims can also be brought against persons who have assisted the main perpetrator.

There are two types of civil conspiracy under Singapore law: conspiracy to injure and unlawful means conspiracy.

A victim who seeks to establish a conspiracy to injure must establish37 the following:

  1. a combination of two or more persons and an agreement between and among them to do certain acts;
  2. the predominant purpose of the conspirators must be to cause damage or injury to the plaintiff;
  3. the acts must actually be performed in furtherance of the agreement; and
  4. damage must be suffered by the plaintiff.

A victim who seeks to prove a conspiracy by unlawful means must establish38 the following:

  1. there was a combination of two or more persons to do certain acts;
  2. the alleged conspirators intended to cause damage or injury to the plaintiff by those acts;
  3. the acts were unlawful;
  4. the acts were performed in furtherance of the agreement; and
  5. the plaintiff suffered loss as a result of the conspiracy.

In a claim for unlawful conspiracy, it is irrelevant whether the perpetrator knew that his or her act was unlawful. Blameworthiness comes from intention to injure the plaintiff. This is consistent with the longstanding principle that ignorance of the law is no defence in the realm of tortious liability.39

The usual remedy sought by a successful claimant in a conspiracy claim is that of damages, which are compensatory in nature. The defendants may also be liable to account as constructive trustees for the monies and assets wrongfully received. If it can be shown that, at the time the defendants received the monies or assets, they knew that such monies or assets had been obtained fraudulently from their conspiracy to defraud the plaintiff, such state of knowledge makes it unconscionable for them to retain the monies or assets. The court may in such circumstances impose a remedial constructive trust.40

Dishonest assistance and knowing receipt

A person who is not the primary perpetrator can also be held liable if he or she has dishonestly assisted in a breach of fiduciary duty41 or received property known to be transferred in breach of fiduciary duty.42

To succeed in a claim for dishonest assistance, the victim must establish43 the following:

  1. breach of trust or breach of fiduciary obligation;
  2. the third-party defendant must have procured, induced or assisted the breach of trust or fiduciary duty;
  3. the third-party defendant must have acted dishonestly; and
  4. the resulting loss to the claimant.

To succeed in a claim for knowing receipt, the victim of the fraud must establish44 the following:

  1. disposal of the plaintiff's assets in breach of trust (or fiduciary duty);
  2. beneficial receipt by the third-party defendant of assets that are traceable as representing the assets of the plaintiff; and
  3. knowledge on the third-party defendant's part that the assets received are traceable to a breach of trust or fiduciary duty.

The third-party defendant may be held personally liable to account as if he or she were a constructive trustee where he or she has assisted in the breach of fiduciary duty or where he or she has knowingly received wrongful monies.45 In this regard, the plaintiff can claim against the third-party defendant the value of the property transferred.46

Fraudulent trading

Where a business was carried on for a fraudulent purpose, in the context where insolvency or other proceedings have been brought against the company, the victim can also bring a claim for fraudulent trading against the responsible perpetrator or perpatrators behind the company's business.47 If it is found that the perpetrator was knowingly a party to the fraudulent purpose of the business, the court may declare that person to be personally responsible, without any limitation, for all of the company's debts or liabilities or such liabilities as the court directs.48

To establish liability for fraudulent trading, the victim needs to establish the following:49

  1. that the business of the company was carried out 'with intent to defraud creditors of the company' or 'for any fraudulent purpose'; and
  2. that the person sought to be made liable was knowingly involved in the fraudulent business.

There is generally a high threshold for proving fraud. As to whether there is a fraudulent purpose, the court considers whether there is a dishonest intention in the form of deception practised on an innocent party. Dishonesty can be inferred from the surrounding circumstances, including what an honest person would objectively have done in the circumstances.50

It is recognised that the remedy for fraudulent trading can either be punitive (where the perpetrator is responsible for all liabilities of the company) or remedial or compensatory (where the perpetrator is responsible only for loss that the victim suffered). There is some preliminary suggestion that where a claim is made by a creditor, the relief should be limited to the loss that the creditor suffered as a result of the fraudulent trading (i.e., compensatory relief), but this has not been conclusively determined.51

Criminal remedies

A victim can file a police report and request that the authorities investigate the perpetrator or abettor, or both, of a fraud.52 Fraud offences such as investment fraud, corporate fraud and fraud involving public institutions are usually investigated by the Commercial Affairs Department (CAD), a specialist division of the Singapore police force. Where the fraud involves market misconduct, capital markets or financial advisory offences, the Monetary Authority of Singapore is likely to jointly investigate the matter together with the CAD.

Specific corporate fraud offences are set out in the Penal Code,53 the CA54 and the Income Tax Act,55 and there is no limitation or time bar in respect of criminal offences in Singapore. By way of the Criminal Law Reform Act, which came into force on 1 January 2020, the Penal Code was amended to introduce a new offence of fraud. This new fraud offence will be committed when any person fraudulently or dishonestly:

  1. makes a false representation;
  2. fails to disclose to another person information which he or she is under a legal duty to disclose; or
  3. abuses a position he or she occupies in which he or she is expected to safeguard (or not to act against) the financial interests of another person.56

Other amendments made to address crimes committed in the virtual arena include to widen the definition of 'property' to include 'virtual currency'.57

As mentioned above, the victim will have much less control over criminal proceedings as compared to civil proceedings. At the stage of investigations, the victim (or its representative) is likely to be asked to attend an interview and provide facts and evidence of the alleged fraud. There is no obligation on the part of the investigating authorities to release information gathered from the investigation to the victim, and they usually do not do so. It is, therefore, difficult to obtain evidence from an investigating authority for use in a victim's separate civil proceedings (if any) unless a timely prosecution is commenced and information is made public in trial proceedings.

Following the conclusion of an investigation, the AGC, on the recommendation of the authority or agency investigating the purported offence, will decide whether to charge the perpetrator, give the perpetrator a warning or take no further action. The Singapore authorities take allegations of fraud seriously, and if there is evidence that an offence of fraud has been committed, they are likely to take firm action against the perpetrator.

A victim can also choose to file a magistrate's complaint with the state courts of Singapore, particularly in instances where the authorities have declined to investigate or take action. A magistrate's complaint is generally filed by an individual wishing to commence private prosecution (as opposed to prosecution by the state).

However, a magistrate's complaint is generally not likely to be accepted for filing if:

  1. the act complained of is not a criminal offence;
  2. the offence carries an imprisonment term exceeding three years; or
  3. the respondent has already been charged or issued a stern warning by the state.

Upon successful filing of a magistrate's complaint, a magistrate will examine the complaint and thereafter issue further directions as deemed appropriate. The magistrate retains the discretion to make certain orders as necessary, including directing police investigations or dismissing a complaint. In the event the AGC takes over prosecution of the case, the complaint will be closed.

After a charge has been preferred against the perpetrator, he or she will have two choices: to plead guilty or to proceed to trial if his or her position is that he or she is innocent. If the matter proceeds to trial, the prosecutor will need to establish that the offence was committed beyond reasonable doubt to secure a conviction. If the perpetrator is absent on the day of the trial, the court may issue an arrest warrant against him or her.

Upon a plea of guilt or a conviction after trial, the court then decides what the penalty should be. A perpetrator convicted of fraud will usually receive a custodial sentence, particularly where the amount defrauded is significant. Fines alone have, however, been ordered in instances where the gravity of the offence is less severe or the perpetrator has mitigating factors of sufficient weight operating in his favour.

In addition, before an offender is convicted of any offence, the court has to consider whether to make a compensation order where it may consider it appropriate to do so.58 The court has power to order that the convicted perpetrator of fraud pay a sum fixed by the court by way of compensation to the person injured.59 The court can also order the attachment and sale of movable or immovable property belonging to the perpetrator so that the proceeds of the same can be paid to the victim.

An order for compensation does not affect the right of a victim to a civil remedy for the recovery of any property or for the recovery of damages 'beyond the amount of compensation paid under the order'.60 It should be noted that the courts have held that compensation should only be ordered in instances where the fact and extent of damage are either agreed or clearly and easily ascertainable on the evidence.61

We would also highlight that an order for a convicted offender to pay compensation does not form part of the sentence imposed on the offender, but is for the purpose of allowing the victim to recover compensation where a civil suit is impractical or inadequate.62 Given this, the amount of compensation ordered will generally not exceed what would be reasonably obtainable in civil proceedings.63

ii Defences to fraud claims

See the previous subsection regarding defences to fraud claims.

Seizure and evidence

Where the perpetrator of a fraud is the subject of a criminal investigation, the investigating authorities have wide-ranging powers under the Criminal Procedure Code to search premises and seize evidence, access computers and freeze assets.

It is in the area of civil claims that seizure of assets and obtaining evidence from third parties is more complicated, and we set out below the general procedural mechanisms commonly relied upon by victims of fraud in civil claims.

i Securing assets and proceeds

Mareva injunction

Where civil claims in respect of fraud are concerned, a plaintiff can apply to seize and secure assets or the proceeds of fraud via court proceedings. This is most commonly done by way of a Mareva injunction or freezing order. An application for a Mareva injunction is usually taken out at the same time as the commencement of civil proceedings so as to ensure that the defendant does not have notice of the proceedings and time to shift assets.

The court can grant a domestic Mareva injunction (i.e., over assets held in Singapore)64 where the following conditions are met:

  1. there is a valid cause of action over which the court has jurisdiction that the domestic Mareva injunction is collateral to;
  2. there is a good arguable case on the merits of the plaintiff's claim, although this does not require the court to find a more-than 50 per cent chance of success;65
  3. the defendant has assets within the court's jurisdiction. This includes all assets beneficially held by the defendant, but excludes assets that the defendant legally owns but holds on trust for third parties;66 and
  4. there is a real risk that the defendant will dissipate his or her assets to frustrate the enforcement of an anticipated judgement by the court.

As for an extraterritorial Mareva injunction (i.e., over assets held outside of Singapore), this can be granted by the court if the same conditions as a domestic Mareva injunction are present, though the circumstances that will have to be established to cross the threshold of necessity are likely to be more 'exacting'.67 There are also the following modifications:

  1. a valid cause of action must accrue in Singapore;68 and
  2. it must be shown that the defendant has assets outside the court's jurisdiction. Furthermore, if the defendant has assets both within and outside the court's jurisdiction, it must then be shown that there are insufficient assets within the court's jurisdiction to satisfy the plaintiff's claim.69

An ancillary asset disclosure order would be granted in aid of a Mareva injunction. This is to provide the victim with a snapshot of the perpetrator's assets and to ensure that the assets are not dissipated (further). The perpetrator will be required to file an affidavit disclosing his or her assets by way of an affidavit. It is acknowledged that the information provided is often 'rough and ready',70 given that the disclosure affidavit has to be compiled and filed under stringent timelines. The perpetrator is required to disclose all of his or her assets, and not only such assets limited to the value of the injunction.71 Where the disclosure is inadequate or fails to comply with the disclosure order, a victim can apply to cross-examine the perpetrator on his or her assets.72

As part of an application for a Mareva injunction, a plaintiff will be required to provide an undertaking to comply with any order for damages (sustained by the defendant and third parties as a result of the Mareva injunction) that the court may make.73

To support this undertaking, the plaintiff may be required to:

  1. make a payment into court;
  2. provide a bond by an insurance company that has a place of business in Singapore;
  3. provide a written guarantee from a bank that has a place of business in Singapore; or
  4. make a payment to the plaintiff's solicitor that is to be held by the solicitor as an officer of the court pending any order for damages.74

After obtaining judgment in a civil suit, a plaintiff may also apply for a post-judgment Mareva injunction. This is useful for extending the Mareva injunction until the judgment sum and costs are paid up by the defendant. The plaintiff will have to show that:75

  1. there is a real risk of the defendant dissipating his assets with the intention of depriving the plaintiff of satisfaction of the judgment debt;
  2. the injunction must act as an aid to execution; and
  3. it must be in the interests of justice to grant the injunction.

An application for a Mareva injunction also requires full and frank disclosure, in that the court must be fully informed by the plaintiff of all material facts. Where an application for a Mareva injunction does not contain all material facts, and this is brought to the attention of the court by, for example, the defendant, this may thwart the plaintiff's attempts to seize or secure the defendant's assets.

In Singapore, the courts have also held that, in principle, evidence of a collateral or ulterior purpose on the part of the plaintiff could justify the refusal of a Mareva injunction, although this would ordinarily be difficult to establish at an early stage of proceedings in which Mareva injunction applications are usually brought.76

ii Obtaining evidence

Anton Piller order

In respect of obtaining evidence in the context of civil claims in respect of fraud, a plaintiff can apply to search premises and seize evidence by way of an Anton Piller or a search and seizure order. Similar to a Mareva injunction, this is usually done at the same time as the commencement of civil proceedings, so as to ensure that the defendant does not have notice of the proceedings and time to destroy evidence. An Anton Piller order is considered an exceptional order as it allows the plaintiff to seek discovery to infringe upon the privacy of the other party, without giving a right of response to the respondent.

An ex parte77 Anton Piller order may, in general, be granted if the following conditions are met:78

  1. there is an extremely strong prima facie case of a civil cause of action;
  2. the potential or actual damage to the plaintiff that the plaintiff faces if the Anton Piller order is not granted is serious;
  3. there is clear evidence that the defendant has incriminating documents or items in his or her possession; and
  4. there is a real risk that the defendant may destroy the above documents or items before an application inter partes79 can be made.

However, it is worth noting that even if the above conditions are met, a court may not necessarily grant an Anton Piller order. Rather, a court will only do so after determining that the prospective harm the plaintiff faces (as a result of the Anton Piller not being granted) outweighs the prospective harm that the defendant faces (as a result of the order).80 The applicant therefore has to be clear as to the precise categories of documents and items that are required. Particularly where the documents are stored electronically, specific search terms should be proposed. An excessively wide search order may otherwise be found disproportionate to the purpose of the order. The applicant may also have to incur additional costs, sieving through irrelevant documents that should not have been seized.

As part of the application for an Anton Piller order, similar to an application for a Mareva injunction, the plaintiff will have to undertake to pay damages sustained by the defendant as a result of the Anton Piller order if so ordered by the court. In addition, the plaintiff must also undertake to comply with any order for damages that the court makes in connection with a finding that the actual carrying out of the Anton Piller order was in breach of the terms of the order made, or was otherwise inconsistent with the plaintiff's solicitors' duties as officers of the court.81

To support this undertaking, the plaintiff may be required to take actions similar to those in an application for a Mareva injunction.82 An application for an Anton Piller order also requires full and frank disclosure of a similar nature to that required in an application for a Mareva injunction.83

Third-party discovery or bankers trust order

Where evidence needed for a civil suit in respect of fraud rests with a third party (rather than the defendant) or where there is a need, Singapore's civil proceedings provide for certain mechanisms to allow a plaintiff to obtain this evidence.

For example, where the identities of the perpetrators of a fraud have not been identified and there is a need to trace the property that the victim has been defrauded of, a prospective plaintiff may apply for a Norwich Pharmacal order (also known as an application for pre-action discovery).

Pre-action discovery, may, in general, be granted if the following conditions84 are met:

  1. the non-party possessing the relevant information must have been involved in the wrongdoing, although the non-party need not have necessarily caused or known of the wrongdoing;85
  2. there is a reasonable prima facie case of wrongdoing by the unidentified perpetrators;86 and
  3. granting the order is necessary to enable the plaintiff to bring proceedings, or it is just and convenient in the interests of justice to grant the same.87

Documents and information obtained from pre-action discovery or pre-action interrogatories may be used in furtherance of commencing proceedings in a Singapore court against the wrongdoer.88 This procedure cannot be employed for a collateral purpose or where the applicant does not intend to commence proceedings in Singapore. However, it does not mean that an application must commit to commence the action in Singapore. After obtaining discovery, depending on the circumstances, the applicant may decide that it is more appropriate to commence an action elsewhere and may do so, if the documents and information obtained are not used for purposes of the foreign proceedings.89

Where a third party who has the evidence needed is a bank, a plaintiff may also apply for what is known as a bankers trust order to preserve or trace the proceeds of fraud residing with the bank. Generally speaking, an application for a bankers trust order is granted on similar grounds to a Norwich Pharmacal order90 and, where the court grants such an order, this will override the usual banking secrecy considerations that banks have in releasing information in respect of their customers' assets to third parties.

Fraud in specific contexts

i Banking and money laundering

Where fraud involving banks or money laundering has been committed, this will usually be an offence under the Penal Code or under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA).91

The CDSA criminalises, among other things, acts of money laundering and provides for the confiscation of benefits derived from the same. The CDSA also imposes reporting requirements (by way of a suspicious transaction report) on those with reasonable grounds to suspect that property may be connected to, for example, proceeds of criminal misconduct.

Following amendments to the CDSA that came into effect on 1 April 2019, increased penalties and new offences have been introduced. These include:

  1. an increase in penalties for corporations and professional service providers who are involved with money laundering;
  2. an increase in penalties for not reporting suspicious transactions;
  3. an increase in penalties for tipping off on investigations or a suspicious transaction report lodged under the CDSA; and
  4. the introduction of a new offence that criminalises the possession or use by an accused of property that would be suspected by a reasonable person of being benefits from criminal conduct, if the accused cannot satisfactorily explain how he or she came by the property.

There are also various rules and regulations overseen by the Monetary Authority of Singapore (the central bank of Singapore) that focus on anti-money laundering and combating the financing of terrorism and that regulate, among others, financial institutions. In particular, to tackle financial crime in the digital space (involving virtual assets and digital payment tokens), the Monetary Authority of Singapore has regulatory and surveillance powers under the Payment Solutions Act 201992 as well as targeted guidelines and regulations.

ii Insolvency

Where monies are owed to a victim, the victim can apply to make the perpetrator bankrupt or insolvent as the case may be.

Where a perpetrator is either bankrupt as an individual or insolvent as a corporate entity, the wrongfully gained monies or assets may be subject to a clawback, if the bankrupt or insolvent perpetrator has, within a specific time period, entered into transactions at an undervalue93 or given an unfair preference to a person or entity.94

Under the Insolvency, Restructuring and Dissolution Act 2018,95 individuals responsible for causing the company to trade fraudulently96 or wrongfully97 can also be held personally liable. See Section II(i) above for elaboration on a cause of action in fraudulent trading.

iii Arbitration

Section 24(a) of the International Arbitration Act98 provides that an arbitral award may be set aside by the court where the making of the award was induced or affected by fraud. Likewise, this is also a ground for setting aside of domestic arbitration awards (Section 48(1)(a)(vi) of the Arbitration Act).99

iv Fraud's effect on evidentiary rules and legal privilege

Pursuant to Section 128(1) of the Evidence Act,100 advocates and solicitors are not permitted, without a client's express consent, to disclose privileged communications made in the context of the solicitor and client relationship. However, there are two important exceptions to this rule in Section 128(2), which provides that communications made in furtherance of an illegal purpose, and any fact observed by an advocate and solicitor in the course of his or her employment showing that any crime or fraud has been committed since the commencement of his or her employment, are not protected from disclosure.

International aspects

i Conflict of law and choice of law in fraud claims

For a cross-border fraud claim to be heard in the Singapore courts, there must be a legal connection between the case or the defendant and Singapore; and the Singapore court must be satisfied that, bearing in mind the degree of connection of the case with Singapore and other countries, Singapore is the most appropriate and the natural forum for the dispute.

For a case commenced in the Singapore courts to be served out of jurisdiction, the claim must come within one of the jurisdictional gateways in Order 11, Rule 1 of the Rules of Court,101 and the merits of the case must also pass a threshold test.102

ii Collection of evidence in support of proceedings abroad

Where criminal proceedings in respect of fraud have been instituted abroad, the overseas authorities can make a request to the AGC for mutual legal assistance, which can include the taking of evidence. Singapore has existing mutual legal assistance treaties with a number of countries, and these countries will be rendered assistance in accordance with the terms of the respective treaty and the Mutual Assistance in Criminal Matters Act.103 Where a country does not have such a treaty with Singapore, it may receive assistance if there is an undertaking of reciprocity.

In respect of civil proceedings, under the Evidence (Civil Proceedings in Other Jurisdictions) Act,104 where a letter of request is issued by a foreign court to obtain evidence in Singapore for the purposes of the foreign proceedings, an application can made to the General Division of the High Court in Singapore. The Singapore court has powers to grant orders including for the examination of witnesses, production of documents, inspection, preservation, custody or detention of documents.105

iii Seizure of assets or proceeds of fraud in support of the victim of fraud

The question as to whether the Singapore courts can grant a Mareva injunction in aid of foreign court proceedings, and in circumstances where the merits of the claim will not be determined in Singapore, has also been considered by the courts. In this regard, the current position is that there is no bar on the power of the Singapore courts to grant a Mareva injunction even in aid of foreign court proceedings under Section 4(10) of the Civil Law Act,106 so long as it appears to the court to be just or convenient that such an order should be made.107 The court's power to grant a Mareva injunction in aid of foreign court proceedings is subject to two main conditions: first, the Court has in personam108 jurisdiction over the defendant and second, the plaintiff has a reasonable accrued cause of action against the defendant in Singapore.109

In addition, Section 29(1)(b) of the Mutual Assistance in Criminal Matters Act enables the court to restrain dealing with property in Singapore that may be the subject of foreign confiscation orders. This requires the court to be satisfied that judicial proceedings are to be instituted in that foreign country and there are reasonable grounds for believing that a foreign confiscation order may be granted over the property in Singapore.

iv Enforcement of judgments granted abroad in relation to fraud claims

Under the Reciprocal Enforcement of Commonwealth Judgments Act110 (RECJA) and the Reciprocal Enforcement of Foreign Judgments Act111 (REFJA), when certain requirements are met, judgments made by certain foreign courts may be registered and enforced directly in Singapore. Following the amendments made by way of the Reciprocal Enforcement of Foreign Judgments (Amendment) Act 2019,112 the REFJA has been expanded to include registration of non-money judgments,113 lower court judgments,114 interlocutory judgments115 and judicial settlements or consent orders.116 The Reciprocal Enforcement of Commonwealth Judgments (Repeal) Act 2019117 has also been passed to repeal the RECJA such that the statutory regime on the reciprocal enforcement of foreign judgments will be consolidated into a single framework in the REFJA.

In respect of foreign judgments that do not fall within the RECJA and REFJA, these may generally be enforced under common law if the judgment is for a definite sum of money; final and conclusive; and the foreign court has jurisdiction in the context of conflicts of law.

v Fraud as a defence to enforcement of judgments granted abroad

If a foreign judgment was obtained by fraud, this would be a basis for the courts in Singapore to deny enforcement of or set aside the registration of the said foreign judgment in Singapore under the RECJA, REFJA and common law.

Current developments

Pursuant to the Criminal Law Reform Act, further changes to the Penal Code are expected to come into force. These include:

  1. a new Section 420A creating a new offence of obtaining services fraudulently, knowing that service is made available on a for-payment basis but no intending that full payment be made; and
  2. a new Section 424B for fraud by way of false representation, failure to disclose or abuse of position, which is directly in connection with written or oral contracts for goods and services. The Ministry of Law has explained that this provision, together with Section 424A of the Penal Code, is for the purpose of targeting novel and complex schemes that the current offence of cheating may not cover (for example, the LIBOR-fixing scandal in the United Kingdom). This will be brought into force after a mechanism allowing victims to seek recourse for more common cases involving smaller losses is developed;

From 2 July 2021 to 1 August 2021, the Monetary Authority of Singapore is conducting a public consultation on its proposals to strengthen its investigative powers and enhance its ability to gather evidence. The proposed amendments will be made under a Financial Institutions (Miscellaneous Amendments) Bill. Proposed changes include:

  1. enhanced powers to examine persons and record statements;
  2. powers to enter premises without a warrant, if there are reasonable grounds to suspect premises are used by persons investigated;
  3. obtaining a court warrant to seize evidence, including electronic evidence, where a person fails to comply with an order to produce or there is a risk of destruction of evidence; and
  4. expanded scope for transfer of evidence between the MAS, police and public prosecutor to facilitate inter-agency cooperation.

Footnotes

1 Lee May Ling is a partner and Chua Xinying is a senior associate at Allen & Gledhill LLP.

2 Limitation Act (Cap 163, 1996 Rev Ed) Section 6(1)(a).

3 Or his or her agent.

4 Limitation Act (Cap 163) Section 29(1).

5 Panatron Pte Ltd v. Lee Cheow Lee [2001] 2 SLR(R) 435 at [14].

6 Raiffeisen Zentralbank Osterreich AG v. Archer Daniels Midland Co [2007] 1 SLR(R) 196 at [40].

7 Or by a class of persons that includes the plaintiff.

8 Panatron Pte Ltd v. Lee Cheow Lee [2001] 2 SLR(R) 435 at [24].

9 DBS Bank Ltd v. Carrier Singapore (Pte) Ltd [2008] 3 SLR(R) 261 at [108]–[109].

10 National Bank of Oman SAOG Dubai Branch v. Bilkash Dhamala and others [2021] 3 SLR 943 at [40] citing with approval Wishing Star Ltd v. Jurong Town Corp [2008] 2 SLR(R) 909.

11 Gary Chan and Lee Pey Woan, The Law of Torts in Singapore (Academy Publishing, 2nd Ed, 2016) at paragraph 14.020.

12 Ng Eng Ghee and others v. Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal [2009] 3 SLR(R) 109 at [137] and [142]; Sim Poh Ping v. Winsta Holding Pte Ltd and another and other appeals [2020] SGCA 35 at [253].

13 Keech v. Sanford (1726) 25 ER 223.

14 ERA Realty Network Pte Ltd v. Puspha Rajaram Lakhiani and another [1998] 2 SLR(R) 721; Yuen Chow Hin and another v. ERA Realty Network Pte Ltd [2009] 2 SLR(R) 786.

15 The Law Society of Singapore v. Khushvinder Singh Chopra [1998] 3 SLR(R) 490.

16 Lee Hiok Woon and others v. Lee Hiok Ping and others [1993] 2 SLR(R) 530

17 Hytech Builders Pte Ltd v. Tan Eng Leong and another [1995] 1 SLR(R) 576.

18 Smile Inc Dental Surgeons Pte Ltd v. Lui Andrew Stewart [2012] 4 SLR 308.

19 Ng Eng Ghee and others v. Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal [2009] 3 SLR(R) 109.

20 Turf Club Auto Emporium Pte Ltd and others v. Yeo Boong Hua and others and another appeal [2018] SGCA 44 at [42]

21 UVJ and others v UVH and others and another appeal [2020] SGCA 49.

22 Daniel Fernandez v. Edith Woi and another [2021] SGHC 117 at [146]-[150] citing with approval UVJ and others v UVH and others and another appeal [2020] SGCA 49.

23 Sim Poh Ping v Winsta Holding Pte Ltd and another and other appeals [2020] SGCA 35 at [254].

24 Halsbury's Laws of Singapore, Volume 9 (Singapore: LexisNexis, 2018 Reissue) at paragraphs 110.228–110.229 and 110.231–110.232.

25 Cap 50, 2006 Rev Ed.

26 Wee Chiaw Sek Anna v. Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another [2013] 3 SLR 801 at [98].

27 Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v. Asia Pacific Breweries (Singapore) Pte Ltd and another and another suit [2009] 4 SLR(R) 788 at [260]; Baker, Michael A (executor of the estate of Chantal Burnison, deceased) v. BCS Business Consulting Services Pte Ltd and others [2020] SGHC (I) 10 at [255] and National Bank of Oman SAOG Dubai Branch v. Bikash Dhamala and others [2021] 3 SLR 943 at [58]-[59].

28 Zhou Weidong v Liew Kai Lung and others [2018] 3 SLR 1236 at [52] citing Wee Chiaw Sek Anna v. Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another [2013] 3 SLR 801 at [112], [115]-[116]

29 Seagate Technology Pte Ltd v. Goh Han Kim [1994] 3 SLR(R) 836.

30 Cavenagh Investment Pte Ltd v. Kaushik Rajiv [2013] 2 SLR 543 at [67]; Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v. Asia Pacific Breweries (Singapore) Pte Ltd and another and another suit [2009] 4 SLR(R) 788 at [329].

31 Andrew Phang Boon Leong, The Law of Contract in Singapore (Academy Publishing, 2012) at paragraph 23.243.

32 ibid.

33 UCO Bank (formerly known as United Commercial Bank) v. Ringler Pte Ltd [1995] 1 SLR(R) 399.

34 Halsbury's Laws of Singapore, Volume 18 (Singapore: LexisNexis, 2017 Reissue) at paragraph 240.575.

35 Contributory Negligence and Personal Injuries Act (Cap 54, 2002 Rev Ed) Section 3(1).

36 Blades v. Higgs (1861) 10 CBNS 713, 142 E.R. 634.

37 Nagase Singapore Pte Ltd v. Ching Kai Huat and others [2008] 1 SLR(R) 80 at [23].

38 EFT Holdings, Inc v. Marinteknik Shipbuilders (S) Pte Ltd [2014] 1 SLR 860 at [112].

39 Crest Capital Asia Pte Ltd and others v. OUE Lippo Healthcare Ltd (formerly known as International Healthway Corp Ltd) and another and other appeals [2021] SGCA 25 at [128].

40 National Bank of Oman SAOG Dubai Branch v. Bikash Dhamala and others [2021] 3 SLR 943 at [53]–[55]

41 Halsbury's Laws of Singapore, Volume 9 (Singapore: LexisNexis, 2018 Reissue) at paragraph 110.234.

42 ibid.

43 Caltong (Australia) Pty Ltd (formerly known as Tong Tien See Holding (Australia) Pty Ltd) and another v. Tong Tien See Construction Pte Ltd (in liquidation) [2002] 2 SLR(R) 94 at [33].

44 George Raymond Zage III v. Ho Chi Kwong and another [2010] 2 SLR 589.

45 Griffin Real Estate Investment Holdings Pte Ltd (in liquidation) v. ERC Unicampus Pte Ltd [2019] 5 SLR 105 at [45]–[46].

46 Halsbury's Laws of Singapore, Volume 9 (Singapore: LexisNexis, 2018 Reissue) at paragraph 110.234.

47 Section 238(1) of the Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018); previously Section 340(1) of the Companies Act (Cap 50, 2006 Rev Ed) prior to the repeal.

48 ibid.

49 Tendcare Medical Group Holdings Pte Ltd (formerly known as Tian Jian Hua Xia Medical Group Holdings Pte Ltd) (in judicial management) and another v. Gong Ruizhong and others [2021] SGHC 80 at [51]–[52].

50 ibid. at [54].

51 ibid. at [137].

52 Penal Code (Cap 224, 2008 Rev Ed) Section 109.

53 Cap 224, 2008 Rev Ed; See, e.g., Sections 403, 405, 407, 409, 411, 415, 421–424, 424A, 463, 468 and 477A.

54 See, e.g., Companies Act (Cap 50, 2006 Rev Ed) Sections 157, 401, 402 and 406.

55 See, e.g., Income Tax Act (Cap 134, 2014 Rev Ed) Sections 96 and 96A.

56 Penal Code (Cap 224, 2008 Rev Ed), Section 424A. This section does not however apply where the false representation, failure to disclose or abuse of position is directly connected with a written or oral contract for the supply of goods or services.

57 Penal Code (Cap 224, 2008 Rev Ed), Section 22.

58 Tay Wee Kiat and another v. Public Prosecutor [2018] 5 SLR 438 at [6].

59 Criminal Procedure Code (Cap 68, 2012 Rev Ed) Section 359(1).

60 Criminal Procedure Code (Cap 68, 2012 Rev Ed) Section 359(4).

61 Tay Wee Kiat and another v. Public Prosecutor [2018] 5 SLR 438 at [8].

62 id. at [7].

63 id. at [10].

64 Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021) at [29/1/58].

65 JTrust Asia Pte Ltd v. Group Lease Holdings Pte Ltd [2020] SGCA 54 at [4]

66 Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021), at [29/1/62], citing STX Corp v. Jason Surjana Tanuwidjaja [2014] 2 SLR 1261 at [22].

67 Bouvier, Yves Charles Edgar and another v. Accent Delight International Ltd and another and another appeal [2015] SGCA 45 at [37]

68 Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021), at [29/1/59].

69 id., at page 675, citing Guan Chong Cocoa Manufacturer Sdn Bhd v. Pratiwi Shipping SA [2003] 1 SLR(R) 157 at [29].

70 Bouvier, Yves Charles Edgar and another v. Accent Delight International Ltd and another and another appeal [2015] SGCA 45 at [103].

71 Sea Trucks Offshore Ltd and others v. Roomans, Jacobus Johannes and other [2019] 3 SLR 836 at [44]–[55].

72 Bouvier, Yves Charles Edgar and another v. Accent Delight International Ltd and another and another appeal [2015] SGCA 45 at [105] citing OCM Opportunities Fund II, LP v. Burhan Uray [2004] 4 SLR(R) 74 at [34]–[35].

73 id., at pages 656 and 674.

74 id., at page 657.

75 JTrust Asia Pte Ltd v. Group Lease Holdings Pte Ltd and others [2021] SGCA 26 at [21]

76 JTrust Asia Pte Ltd v. Group Lease Holdings Pte Ltd and others [2018] 2 SLR 159.

77 i.e., where the defendant's solicitors are not given notice of the application for the Anton Piller order and only the plaintiff's solicitors attend the application hearing.

78 Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021) at [29/8A/3], citing Asian Corporate Services (SEA) Pte Ltd v. Eastwest Management Ltd (Singapore Branch) [2006] 1 SLR(R) 901 at [14].

79 i.e., where the application is served on the defendant and both sets of solicitors attend the application hearing.

80 Computerland Corp. v. Yew Seng Computers Pte Ltd [1991] 2 SLR(R) 379; See also Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021) at [29/8A/3].

81 Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021) at [29/8A/6].

82 ibid.

83 Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021) at [29/8A/13].

84 Dorsey James Michael v. World Sport Group Pte Ltd [2014] 2 SLR 208.

85 id., at [39].

86 id., at [44].

87 id., at [45].

88 ED&F Man Capital Markets Ltd v. Straits (Singapore) Pte Ltd [2020] SGCA 64 at [35].

89 id., at [35]–[36].

90 Singapore Civil Procedure (Singapore: Sweet & Maxwell, 2021) at [24/6/9]; [24/6/10], citing La Dolce Vita Fine Dining Co Ltd v. Deutsche Bank AG [2016] SGHCR 3 at [59], [70] and [71]. It remains to be determined whether an application for a bankers trust order needs to meet a higher threshold of proof of fraud (compelling evidence of fraud), or whether the same test (reasonable prima facie case of fraud) used in an application for a Norwich Pharmacal order would also apply: Goh Seng Heng v. Liberty Sky Investments Ltd and another [2017] SGCA 59 at [23]–[32].

91 Cap 65A, 2000 Rev Ed.

92 (No. 2 of 2019)

93 Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018) Section 224; Section 361.

94 Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018) Section 225; Section 362.

95 (No. 40 of 2018).

96 Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018) Section 238.

97 Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018) Section 239.

98 Cap 143A, 2002 Rev Ed.

99 Cap 10, 2002 Rev Ed.

100 Cap 97, 1997 Rev Ed. The equivalent provision for in-house legal counsel is in Section 128A of the Evidence Act.

101 Cap 322, R 5, 2014 Ed

102 Oro Negro Drilling Pte Ltd and others v. Integradora de Servicios Petroleros Oro Negro SAPI de CV and others and another appeal (Jesus Angel Guerra Mendez, non-party) [2019] SGCA 74 at [54] citing Zoom Communications Ltd v Broadcast Solutions Pte Ltd [2014] 4 SLR 500.

103 Cap 190A, 2001 Rev Ed.

104 Cap 98, 2013 Rev. Ed.

105 Evidence (Civil Proceedings in Other Jurisdictions) Act (Cap 98) 2013 Rev. Ed. Sections 3 and 4; Rules of Court (Cap 322) R 5 2014 Ed., Order 66.

106 Cap 43, 1999 Rev Ed.

107 China Medical Technologies, Inc (in liquidation) and another v. Wu Xiaodong and another [2018] SGHC 178 and Bi Xiaoqiong (in her capacity and as trustee of the Xiao Qiong Bi Trust and the Alisa Wu Irrevocable Trust) v. China Medical Technologies, Inc (in Liquidation) and CMED Technologies Ltd [2019] SGCA 50.

108 That is where the defendant is served with an originating process as prescribed under the relevant rules or where the defendant submits to the jurisdiction of the Singapore court: Supreme Court of Judicature Act (Cap 322) 2007. Rev. Ed., Section 16(1).

109 Bi Xiaoqiong (in her capacity and as trustee of the Xiao Qiong Bi Trust and the Alisa Wu Irrevocable Trust) v. China Medical Technologies, Inc (in Liquidation) and CMED Technologies Ltd [2019] SGCA 50 at [62].

110 Cap 264, 1985 Rev Ed.

111 Cap 265, 2001 Rev Ed.

112 (No. 25 of 2019).

113 REFJA, Section 3A.

114 REFJA, Section 2(1), see the definition of 'judgment' and Section 3.

115 ibid.

116 ibid.

117 (No. 24 of 2019). The Reciprocal Enforcement of Commonwealth Judgments (Repeal) Act 2019 has not come into force at the time of this publication.

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