1 The claimant is the beneficial owner of certain shares in a company that had a vessel as its sole asset of substance. In this action, he alleges that the defendants, who include the trustee of the shares, had engaged in an elaborate scheme to deprive him of his interest in the vessel through the company by conspiring to have the vessel transferred from the company to the first defendant who is currently the registered owner of the vessel.

2 The first defendant applied to set aside orders for permission for service out of the jurisdiction and substituted service that the claimant had obtained against it on a number of grounds, including that the claimant’s case was bad in law and therefore disclosed no serious issue to be tried. Having considered the parties’ submissions, I agreed that the claim as framed was legally unsustainable and set aside the order for permission for service out of the jurisdiction on that basis. In summary, my reasons were that the intermediation of both corporate and trust structures between the claimant and the vessel meant that the claimant’s loss was irrecoverable due to the reflective loss principle or the claimant had no standing to advance claims which required him to have an interest in the vessel.

3 Given that this application raised interesting conceptual puzzles arising from the holding structure of the vessel through both a corporate vehicle and a trust over the shares in the same, the resolution of which turned on the nature of the rights of a beneficiary under a trust and a shareholder of a company, I give my detailed reasons in these grounds of decision.

4 The factual background to this matter is quite involved, but I propose to focus only on those facts which are material to my reasoning on the merits of the claimant’s claims, which are drawn primarily from the claimant’s pleaded narrative in the Statement of Claim. ¹

5 The claimant, Mr Aleksandr Viktorovich Prosetskii (“Mr Prosetskii”), alleges that he entered into an agreement with the fourth defendant, Mr Viktor Sergeevich Baransky (“Mr Baransky”) and one Mr Dmitri Bykhovski (“Mr Bykhovski”), in late December 2020 or early 2021, where the trio would purchase a vessel and share in the earnings of the operation of the vessel (the “Vessel”). ²

6 The Vessel was purchased in early 2021 and came to be held under the third defendant, Seasreno Marine Ltd (“SML”), of which Mr Baransky was a 50% shareholder whereas Mr Prosetskii and Mr Bykhovski together held the other 50% shareholding. ³ Mr Prosetskii and Mr Bykhovski’s shares in SML were held by a nominee, Ms Svetlana Igorevna Korshunova (“Ms Korshunova”), who had been proposed by Mr Bykhovski. ⁴ On the other hand, Mr Baransky’s shares in SML were held by the sixth defendant, Ms Ludmila Babuschin (“Ms Babuschin”), who was also appointed as the sole director of SML. ⁵ Subsequently, in late 2021, Mr Prosetskii took over Mr Bykhovski’s shares in SML. ⁶

7 According to Mr Prosetskii, it was agreed between him, Mr Baransky and Mr Bykhovski for the profits from the operation of the Vessel to be split between them in a proportion of 55% (to Mr Baransky) and 45% (to Mr Prosetskii and Mr Bykhovski). Mr Baransky’s additional 5% share of the profits – relative to the parties’ shareholdings in the holding company of the Vessel – was on account of how two associates of Mr Baransky, Mr Mikhail Ivanov (“Mr Ivanov”) and the seventh defendant, Mr Ivan Obukhov (“Mr Obukhov”), would handle the day-to-day operations of SML and the Vessel. ⁷

8 The purchase of the Vessel was fronted by another company, Ikasto Ventures Inc (“IVI”), which Mr Prosetskii claims was controlled by Mr Baransky. ⁸ However, IVI was never the registered owner of the Vessel and SML was registered as the owner of the Vessel immediately after the seller. ⁹ The use of IVI to front the purchase of the Vessel is significant in so far as it is part of the backdrop against which the Vessel came to be under the current ownership of the first defendant, Courtwell Asia Ltd (“Courtwell”) (see [12] below).

9 Mr Prosetskii alleges that the events leading up to Courtwell’s current ownership of the Vessel consisted of a scheme masterminded by Mr Baransky for the Vessel to be appropriated for use by the Russian Federation as part of a “shadow fleet” of vessels used to evade sanctions imposed in response to the ongoing conflict between the Russian Federation and Ukraine. The scheme comprised three parts.

10 The first part of the scheme began in early 2024 with a transfer of the Vessel from SML to the third defendant, Infinite Tide Corp (“ITC”), which change was suggested by Mr Ivanov on the pretext that Seychelles, the jurisdiction of ITC’s incorporation, was a more convenient jurisdiction for the conduct of shipping-related business. ¹⁰ As had been the case with SML, Ms Babuschin held Mr Baransky’s shares in ITC as his nominee, and was also appointed as the sole director of ITC. ¹¹

11 At about the same time that ITC was incorporated and the Vessel was transferred from SML to ITC, Mr Prosetskii (who had by then taken over Mr Bykhovski’s shareholding in SML), transferred his shares in SML and ITC (the “Shares”) from his existing nominee (Ms Korshunova) to a new nominee – the fifth defendant, Mr Igor Smirnov (“Mr Smirnov”). Although Mr Prosetskii did not know Mr Smirnov prior to this, he went along with the nomination of Mr Smirnov as Mr Smirnov had come recommended by Mr Obukhov as a reliable person to hold the Shares on Mr Prosetskii’s behalf. ¹² In consequence, a trust deed was executed in February 2024 between Mr Prosetskii and Mr Smirnov, under which Mr Smirnov agreed to hold the Shares on trust for Mr Prosetskii (the “Trust Deed”). ¹³ Apart from setting out Mr Smirnov’s duties as trustee, the Trust Deed contained an exclusive jurisdiction clause in favour of the Singapore courts and a Singapore choice of law clause: ¹⁴

12 The second part of the scheme, which began after the transfer of the Vessel to ITC and the transfer of the Shares to Mr Smirnov, involved freezing Mr Prosetskii out of information about the Vessel’s operations and the profits of the Vessel’s operations. During this time, the Vessel underwent a number of changes in its flag state, as well as a change of its name from “MT Raven” to “MT Vikram”. ¹⁵

13 The final part of the scheme consisted of the staging of an arbitration in December 2024 between the holding companies of the Vessel (ie, SML and ITC) and Courtwell, in which Courtwell brought a claim for the Vessel as assignee of IVI’s rights under an apparent agreement for the sale of the Vessel from IVI to SML which was later subject of a novation between SML and ITC. ¹⁶ The arbitration produced an award in February 2025 that ordered the transfer of the Vessel from ITC to Courtwell. Mr Prosetskii alleges that the arbitration and the basis of Courtwell’s claim to the Vessel were shams contrived to justify the transfer of the Vessel from ITC to Courtwell, an entity which he suspects is under the control of Mr Baransky. ¹⁷ Mr Prosetskii bases his suspicion about the genuineness of the arbitration on a few factors. These include: (a) that, to Mr Prosetskii’s knowledge, there was never supposed to be a sale of the Vessel from IVI to SML; (b) how Courtwell seemed to be a dormant shelf company before it sprung to life by taking the assignment of IVI’s rights and swiftly commencing the arbitration against ITC; and (c) the suspicious manner in which the arbitration was commenced, ranging from: (i) ITC having put up no real contest, being represented by Ms Babuschin (who had no legal expertise) as compared to counsel, despite standing to lose its only valuable asset in the Vessel; (ii) the appointment of a relatively unknown and junior lawyer as arbitrator; (iii) the lack of a hearing for the arbitration; and (iv) the speed in which the award was rendered from the commencement of the arbitration (two months). ¹⁸

14 The end-result of the scheme was the “devaluation and denudation” of Mr Prosetskii’s beneficial interest in the Shares caused by the loss of Mr Prosetskii’s indirect interest in the Vessel (through the Shares in SML and ITC). ¹⁹ The scheme forms the basis of his claims against the defendants in the present suit, HC/OC 1031/2025 (“OC 1031”), for a number of causes of action including conspiracy. As against Courtwell specifically, Mr Prosetskii pleaded three causes of action:

15 Courtwell applied to set aside orders that Mr Prosetskii had obtained granting him permission to serve OC 1031 on Courtwell out of the jurisdiction and in the manner of substituted service. Although it challenged essentially every conceivable requirement for permission for service out of the jurisdiction and substituted service, the primary contention at the hearing before me was that Mr Prosetskii’s claims did not raise a serious issue to be tried as they were legally defective. Courtwell’s arguments on this front, which I consider below, were broadly twofold:

(a) First, Mr Prosetskii did not have basis to advance a claim against Courtwell in knowing receipt for its receipt of the Vessel as it was the Shares, and not the Vessel, that had been held on trust for Mr Prosetskii. ²³

(b) Second, Mr Prosetskii’s claims were claims for the devaluation of his interest in the Shares, and this was loss which was reflective of loss suffered by ITC and SML and for which he could not recover based on the rule against recovery of reflective loss. ²⁴

16 Apart from disputing Courtwell’s arguments on the law, Mr Prosetskii emphasised that there were numerous factual disputes surrounding the transfer of the Vessel to Courtwell that necessitated a trial. ²⁵ In relation to Courtwell’s objection based on the reflective loss principle, Mr Prosetskii submitted that the rule did not apply to his claims as he was claiming as a beneficiary under a trust and not a shareholder of ITC or SML and, in any event, an exception to the rule recognised in Giles v Rhind [2003] Ch 618 (“Giles v Rhind”) was applicable as SML and ITC were unable to bring claims against the wrongdoers.

17 I agreed with Mr Prosetskii that, to the extent that there were disputed issues of fact, ²⁶ it would not have been appropriate to attempt to resolve them in this interlocutory setting. I can also say that I was sympathetic to the narrative that was ably presented by his counsel, Mr Tan Jun Hong, who highlighted that the circumstances in which Courtwell had come into the picture and acquired the Vessel gave grounds for a reasonable suspicion that Courtwell was not independent of Mr Baransky’s influence and had acted in concert with the other defendants. The veracity of Mr Prosetskii’s theory that Mr Baransky had masterminded the appropriation of the Vessel from SML and ITC through the other defendants would be a matter to be tested at trial.

18 But, in so far as Courtwell’s arguments were directed towards the legal sustainability of Mr Prosetskii’s claims, they undercut Mr Prosetskii’s focus on the facts as it was not sufficient for him to raise a plausible factual narrative; he also had to fit that narrative into the rubric of recognised causes of action so as to establish that he was entitled to the reliefs sought. Courtwell’s point was that, due to Mr Prosetskii’s lack of an interest in the Vessel and the reflective loss principle, he would not be entitled to any remedy even if his factual case was accepted as true. If these legal objections were well-founded, a trial would serve no good purpose as Mr Prosetskii would ultimately fail no matter what the established facts may be: Group Lease Holdings Pte Ltd v Group Lease Public Co [2025] 3 SLR 1315 at [44].

19 In the context of an application to set aside an order for permission for service out of the jurisdiction, the merits (or lack thereof) of Mr Prosetskii’s claims were relevant in so far as one of the requirements for the grant of such permission under O 8 r 1(2) of the Rules of Court 2021 is the need for the claimant’s claim to raise a serious question to be tried: Beranek, Michal v Sreerangam Muruthi [2026] SGHCR 10 (“Beranek”) at [92]. As Courtwell was a foreign company, Mr Prosetskii needed to establish the court’s jurisdiction over Courtwell by service of originating process in accordance with the rules for service out of the jurisdiction under s 16(1)(a)(ii) of the Supreme Court of Judicature Act 1969 (2020 Rev Ed) (“SCJA”): Beranek at [198(b)]. Thus, in the event that the order granting him permission for service out of the jurisdiction was set aside for any reason (including the lack of merit in his claims), Mr Prosetskii would have had no right to serve OC 1031 on Courtwell under s 16(1)(a) of the SCJA: Beranek at [201]. In turn, the order for substituted service and/or the service effected on Courtwell would be set aside: Beranek at [212]–[213].

20 As mentioned at the outset of these grounds, I agreed with Courtwell’s submissions that Mr Prosetskii’s claims were legally unsustainable. In view of what I have just said, this was dispositive of the entire application as it was a sufficient basis for setting aside the order for permission for service out of the jurisdiction and, in consequence, the order for substituted service and service effected on Courtwell pursuant to it. It thus suffices, for the purpose of explaining my decision, to address the singular issue of whether Mr Prosetskii’s claims raised a serious issue to be tried.

21 As prefaced above, I considered that a proper appreciation of the nature of Mr Prosetskii’s rights as the beneficial owner of the Shares under a trust was crucial to the determination of the merits of his claims. I therefore begin with a general examination of the nature of a trust and the rights of a beneficiary under a trust, before turning to address Mr Prosetskii’s claims in order.

22 In common parlance, it is not infrequently said that where a trustee (“T”) holds property (“X”) on trust for a beneficiary (“B”), B has an equitable interest in X. This poses no difficulty in most cases. But, on occasion, the true nature of B’s rights under a trust does make a difference and a failure to appreciate it can lead to error in analysis.

23 There is a considerable amount of writing on the subject of the nature of B’s rights, to which I owe a significant intellectual debt in forming my views. Although I have made appropriate references to these detailed analyses below, they merit close study in their own right, and it will not be possible to explore the question in comparable detail or depth. For the purpose of laying the foundation on which my decision in this application was based, it will suffice to make three general points:

In the course of the discussion that follows, it will be seen at various points that an appreciation of the true nature of equitable interests is key to rationalising certain quirks of such interests that have been recognised in different areas of the law. I should caveat that my analysis is strictly not a novel conception of a trust or B’s equitable interest: see the decision of the Court of Appeal in Ernest Ferdinand Perez De La Sala v Compañia De Navegación Palomar, SA [2018] 1 SLR 894 at [145]–[146]. The discussion is therefore clarificatory, rather than revolutionary, in its purpose, although I acknowledge that there does not appear to have been a prior local decision that has covered the matter in such depth.

24 The first point is that B’s equitable interest is not a right in, or a right that is exigible against, X itself. In this way, B’s equitable interest differs from a legal interest, such as that held by T, which is a right exigible against X. The result, as Professor Frederic Maitland explained over a century ago, is that it is a mistake to think of B’s equitable interest as constituting B an owner of X and to see T and B as both owners of X, albeit the former at common law and the latter in equity. Instead, the true position is that T is the owner of X, albeit T is under an obligation to B in respect of his legal interest or right of ownership (see F W Maitland, “Lecture I: The Origin of Equity (I)” in Equity Also The Forms of Action at Common Law: Two Courses of Lectures (A H Chaytor & W J Whittaker eds) (Cambridge University Press, 1910) at pp 17–19):

25 Maitland’s point finds support in dicta of courts which have sometimes pointed out the fallacy of speaking of legal and equitable interests as having a parallel co-existence at all times in X: see, for example, Commissioner of Stamp Duties (Queensland) v Hugh Duncan Livingston [1965] AC 694 at 712; DKLR Holding Co (No 2) Pty Ltd v The Commissioner of Stamp Duties (New South Wales) (1982) 149 CLR 431 at 463 (per Aickin J), 473–474 (per Brennan J); Low Gim Har v Low Gim Siah [1992] 1 SLR(R) 970 at [35]. This conception of a duality of interests or estates, as Maitland tells us, is based on a fundamental misconception as to the relationship between the common law and equity, as the two are not rivalrous systems who each assert T and B to be the owner of X. There is no conflict as equity, being a second-order system, accepts the common law’s claim that T is the owner and proceeds on this premise: see generally, Ben McFarlane, “Avoiding Anarchy? Common Law v Equity and Maitland v Hohfeld” in Equity and Law: Fusion and Fission (John C P Goldberg, Henry E Smith & P G Turner eds) (Cambridge University Press, 2019) (“Avoiding Anarchy”). As Justice James Edelman has observed, extrajudicially, a “common law property right is in relation to the res”, but an equitable interest is “one step removed” because “[i]t is an interest which relates to the trustee’s rights …” [emphasis in original]: James Edelman, “Two Fundamental Questions for the Law of Trusts” (2013) 129 LQR 66 (“Edelman”) at 66. So, if no trust exists, it is a mistake in language and principle to speak of a person holding both the legal and equitable interest separately in X, because an absolute owner simply holds a legal interest and no equitable interest exists, as McLelland J summarised in Re Transphere Pty Ltd (1986) 5 NSWLR 309 (at 311):

26 The implications of this can be seen from three dimensions. First, from the perspective of T, the fact that it is only T who holds a right exigible against X – such that T has, as McLelland J said, “all the rights of an absolute owner” – explains how a bona fide purchaser for value without notice of an equitable interest – “equity’s darling” – can become the absolute owner of X despite acquiring only T’s legal interest. As Professors Ben McFarlane and Andreas Televantos have noted, while it is sometimes thought that the defence of the bona fide purchaser is an exception to the nemo dat rule as it appears that the purchaser has acquired both the legal and equitable interest in X from T (despite T having only held the former), this analysis rests on the false premise that a person must hold both the legal and equitable interest in X to be the absolute owner of X: see Ben McFarlane & Andreas Televantos, “As Complex as ABC? Bona Fide Purchasers of Equitable Interests” in Intermediaries in Commercial Law (Paul S Davies & Tan Cheng-Han) (Hart Publishing, 2022) at pp 238–240. The better view, which is consistent with Maitland’s and McLelland J’s analyses of a trust and T’s and B’s positions under it, is that the acquisition of T’s legal interest suffices, and the effect of the bona fide purchaser defence is to negate B’s equitable interest vis-à-vis the purchaser, rather than to pass it onto the purchaser.

27 Seen from this perspective, “[t]here is an important continuity between the position of O, a party who simply has an unencumbered right which she is free to use for her own benefit, and that of T, a party who holds the same type of right on trust”: Ben McFarlane, “Trusts, Property and Rights” in Philosophical Foundations of the Law of Express Trusts (Simone Degeling, Jessica Hudson & Irit Samet eds) (Oxford University Press, 2023) at p 50. What this means is that the rights held by an absolute owner and the rights held by T as trustee for B are the same: the only difference is that the latter is subject to obligations in favour of B, which B has a right to enforce, in respect of those same bundle of rights: see William Swadling, “Property: General Principles” in English Private Law (Andrew Burrows ed) (Oxford University Press, 3rd Ed, 2013) at paras 4.145–4.146.

28 This analysis is confirmed by Akers v Samba Financial Group [2017] AC 424 (“Akers”). In that case, the UK Supreme Court considered if a transfer of shares held on trust for a company to a bona fide purchaser for value constituted a “disposition” of the company’s property for the purpose of being avoided under s 127 of the Insolvency Act 1986 (c 45) (UK). The court unanimously answered this in the negative. Lord Mance JSC, delivering the lead judgment (with whom all the members of the court agreed), explained that there had, strictly speaking, not been any disposition of the company’s equitable interest as what had instead occurred was that the equitable interest that had hitherto been enforceable against the trustee had been rendered unenforceable against the purchaser (at [51]):

In other words, while a bona fide purchaser “has title to the property, and is free to use that property for [his] own benefit, this is not because previously separate legal and beneficial interests have been reunited”; instead, the correct analysis is that the bona fide purchaser has acquired the legal interest from T and, in light of the bona fide purchase, is not subject to any obligation in favour of B (unlike T) in respect of the legal interest: Ben McFarlane & Robert Stevens, “What’s Special About Equity? Rights About Rights” in Philosophical Foundations of the Law of Equity (Dennis Klimchuk, Irit Samet & Henry E Smith eds) (Oxford University Press, 2020) (“Rights About Rights”) at pp 200–201. Indeed, Lord Mance’s analysis that there is no disposition of B’s equitable interest also explains why, if the legal interest in X should return to T subsequently, X will be held on trust by T for B once again, notwithstanding the intervention of a bona fide purchaser – or even multiple bona fide purchasers – in the interim: Byers v Saudi National Bank [2024] AC 1191 (“Byers”) at [24].

29 Second, from B’s perspective, the fact that B does not have a right exigible against X explains why a cause of action for tortious interference with X accrues to T and not B: see, for example, Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] 1 AC 785 (“The Aliakmon”) at 809E–F; The State-Owned Company Yugoimport SDPR v Westacre Investments Inc [2016] 5 SLR 372 (“Westacre”) at [116]. Since it is only T who has a right that is exigible against X, damage to X amounts only to an interference with a right of T and not B: Ben McFarlane & Robert Stevens, “The Nature of Equitable Property” (2010) 4 J Eq 1 (“Nature of Equitable Property”) at 3–4. But, because T holds his rights subject to B’s equitable interest and is thus under an obligation to B in respect of his rights, B has a right to compel T to enforce his cause of action. And while B may short-circuit the process by combining his action against T with T’s action against the wrongdoer through the Vandepitte procedure – so named after the eponymous decision of the Judicial Committee of the Privy Council in Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70 (“Vandepitte”) – by bringing proceedings against the wrongdoer and joining T as a defendant, the Vandepitte procedure is a “rule of procedure” and not substance as it remains that it is strictly a cause of action against T, and not B, against the wrongdoer which is being enforced: Westacre at [117], citing Parker-Tweedale v Dunbar Bank plc [1991] Ch 12 at 19H–20A; Finaport Pte Ltd v Techteryx Ltd [2025] 1 SLR 1236 (“Finaport”) at [40]–[42] and [45]; Roberts v Gill & Co [2011] 1 AC 240 at [55]; Marcus Smith, “Equitable Owners Enforcing Legal Rights” (2008) 124 LQR 517 at 520.

30 Thus, it is well-established that an equitable interest in X does not suffice to give B title to sue in conversion: Joseph v Lyons (1884) 15 QBD 280 at 285; MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675 (“MCC Proceeds”). Although there is a line of authority that has recognised a putative exception to this where B is a beneficiary in possession of X (see, for example, Healey v Healey [1915] 1 KB 938), it has been recognised by courts and commentators that this is not a true exception, but actually proves the rule, as B’s title to sue in such circumstances arises not from his equitable interest but from his common law possessory interest: The Aliakmon at 812C–E; MCC Proceeds at 689g–j (per Mummery LJ), 697e–698a (per Pill LJ), 701c–e (per Hobhouse LJ); Andrew Tettenborn, “Trust Property and Conversion” (1996) 55 CLJ 36 at 39; Kit Barker, “Equitable Title and Common Law Conversion: The Limits of the Fusionist Ideal” (1998) 6 RLR 150 at 153; Emma Hargreaves, “The Nature of Beneficiaries’ Rights under Trusts” (2011) 25 Tru LI 163 at 168–169. The Court of Appeal was therefore correct when it referred to conversion as a “common law cause of action” in a recent decision [emphasis added]: see Valency International Pte Ltd v JSW International Tradecorp Pte Ltd [2026] 1 SLR 140 at [75]. This is because, as all the members of the English Court of Appeal recognised in MCC Proceeds, an interference with equitable rights is not actionable under a common law cause of action:

(a) Mummery LJ, whose reasoning Pill LJ associated himself with (at 698g), said that the answer was “rooted deep in English history” as “conversion is a common law action and the common law did not recognise the equitable title of the beneficiary under a trust” (at 691f).

(b) Hobhouse LJ (as he then was), said that, far from being a “quirk of history”, “[i]t is of the character of legal remedies that they derive from legal rights” and “[e]quitable rights are of a different character and are recognised by the grant of equitable remedies which too have a different character” (at 701f–g).

31 This segues into a third point, which is the different effects of a legal interest and B’s equitable interest on a transferee or recipient of X. In Byers, Lord Burrows JSC opined that a claim for knowing receipt was “the equitable analogue of the tort of conversion … albeit that that analogy is a loose one because, unlike the tort of conversion, it requires knowledge and does not impose strict liability” (at [148]). The analogy to conversion was premised on a view of knowing receipt as “a proprietary wrong by the defendant knowingly interfering … with the equitable proprietary rights of the claimant” (at [151]). The difficulties with this analogy have been highlighted by commentators and are underscored by how its originator, Professor Lionel Smith, has rowed back from it: Rory Gregson & Timothy Pilkington, “Byers v Saudi National Bank: What’s the Wrong in Knowing Receipt?” (2024) 87 MLR 1347 (“The Wrong in Knowing Receipt”) at 1354–1355; Lionel Smith, “The Continuing Interest of Knowing Receipt” (2024) 83 CLJ 238 at 240–241. For my part, I find those criticisms persuasive and consider a better analogue to be the tort of inducing breach of contract (see [49] below). For present purposes, however, it suffices to focus on one problem, which is that the analogy overlooks that legal and equitable interests are sufficiently dissimilar in their effects on third parties that it is overly reductionist to downplay the difference between conversion and knowing receipt by framing it in terms of the former being a kind of strict liability and the latter being fault-based. What matters is why this difference exists.

32 The essential difference between legal and equitable interests in property is that “whilst a legal property right imposes an immediate prima facie duty on the rest of the world not to interfere with [X], an equitable interest does not”: Ben McFarlane and Andreas Televantos, “Third Party Effects in Private Law: Form and Function” in Oxford Studies in Private Law Theory: Volume I (Paul Miller & John Oberdiek eds) (Oxford University Press, 2020) (“Third Party Effects”) at p 113. It is trite that the tort of conversion does not require “the defendant to know that [X] belonged to someone else or … to have a positive intention to challenge the true owner’s rights”: Tat Seng Machine Movers Pte Ltd v Orix Leasing Singapore Ltd [2009] 4 SLR(R) 1101 at [45]. This is explicable on the basis that a legal interest in X, such as a right of possession, has the erga omnes effect of excluding the rest of the world from interfering with X in a manner that is inconsistent with that right. The right binds the world as it attaches to X directly and establishes a direct connection between the claimant and X.

33 An equitable interest, in contrast, does not have this quality of universal exigibility. A recipient’s conscience must be affected in order for him to be affected by B’s equitable interest: Akers at [89]; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (“Westdeutsche”) at 705C–706A. So, a claim for knowing receipt by B in respect of X requires the recipient to have knowledge that X is traceable to T’s breach of trust which renders it unconscionable for him to retain X: George Raymond Zage III v Ho Chi Kwong [2010] 2 SLR 589 at [23]. A recipient of X who is not a bona fide purchaser for value will therefore not be liable for knowing receipt if he disposes of X before acquiring notice of B’s equitable interest: Independent Trustee Services Ltd v GP Noble Trustees Ltd [2013] Ch 91 (“ITS”) at [76]. The fact that B’s equitable interest does not automatically affect a recipient in the same way as a (legal) right of possession suggests that it is not a right that is exigible against X and does not entail a direct connection between B and X. Instead, it is consistent with Justice Edelman’s observation that B is “one step removed” from X; in particular, the need for the recipient to have knowledge of T’s underlying breach of duty to B indicates that liability for knowing receipt is premised on interference with a right of B against T in respect of X rather than a right of B in or against X.

34 If the analysis above is correct and B’s equitable interest is not a right in or against X, what then is it? The answer to this, in my view, lies in a recognition that the essence of a trust is not property – that is to say, B has a right in or against X – but obligation, namely, the obligation(s) owed by T to B under the trust, for which B has correlative rights of enforcement. Thus, a leading treatise defines a “trust” as an “equitable obligation” as follows (see Underhill and Hayton: Law of Trusts and Trustees (Paul Matthews, Charles Mitchell, Jonathan Harris & Sinéad Agnew eds) (LexisNexis, 20th Ed, 2022) at para 1.1(1)):

The majority of the High Court of Australia made the same point when it stated in Commissioner of State Revenue v Rojoda Pty Ltd (2020) 376 ALR 378 that “the creation of a trust involves the creation of new equitable obligations … [and] never involves ‘movement’ of property in the sense of a conveyance of title from one person to another” (at [44] per Bell, Keane, Nettle and Edelman JJ).

35 This is not a novel proposition. It was noted by Maitland in his analysis of the trust which I have referred to at [24] above, who elaborated, in another of his celebrated lectures on equity, that the “original notion” of a trust was that “a person who has undertaken a trust is bound to fulfil it”, such that “[t]he right of cestui que trust is the benefit of an obligation”, albeit B’s rights came to resemble proprietary rights as they were enforceable against persons other than T, such as T’s creditors, donees and purchasers of T’s interest with notice of B’s rights: F W Maitland, “Lecture IX: The Nature of Equitable Estates and Interests (I)” in Equity Also The Forms of Action at Common Law: Two Courses of Lectures (A H Chaytor & W J Whittaker eds) (Cambridge University Press, 1910) at pp 115–119.

36 More recent accounts by scholars have reached the same conclusion as to the obligational roots of the trust and tell the same story of how B’s right to enforce the trust obligation became reified over time: David Foster, “Historical Conceptions of the Express Trust, c 1600–1900” in Philosophical Foundations of the Law of Express Trusts (Simone Degeling, Jessica Hudson & Irit Samet eds) (Oxford University Press, 2023); David Fox, “Bankruptcy Protection for Trusts before the Judicature Acts” in Equity Today: 150 Years After the Judicature Reforms (Ben McFarlane & Steven Elliott eds) (Hart Publishing, 2023). After examining a number of definitions of a trust between 1791 and 1958, Justice Edelman’s conclusion was that the focus was “on the beneficiary’s power or right as one which relates to the rights of the trustee or, conversely, the particular liability or obligation of the trustee in relation to the trust rights which are held”: Edelman at 72–73. Similarly, Professor Smith has observed that “[t]he common law trust was not created by changing the idea of property” but was “created by a distortion of the law of obligations, in particular an enormous expansion of the universally accepted possibility of third party liability for interference with obligations”: Lionel Smith, “Trust and Patrimony” in Trusts and Patrimonies (Remus Valsan ed) (Edinburgh University Press, 2015) (“Trust and Patrimony”) at p 50.

37 A number of features of the trust and B’s equitable interest bear out the claim that it is at base a right to enforce an obligation. I give three examples. The first, which is self-explanatory, is the notion that there is an “irreducible core” of obligations that a trustee cannot purport to exempt himself from through an exemption clause. This proposition is often attributed to Armitage v Nurse [1998] Ch 241, where Millett LJ (as he then was) stated that (at 253H–254A):

38 Second, an obligational analysis provides insight into unravelling the mysteries posed by purpose trusts to a unified or coherent understanding of the trust. Purpose trusts have conventionally been seen as anomalous, and have even been deemed illegitimate outside the context of charitable purposes, on the basis that there can be no trust over X if there is no beneficiary in the picture for the equitable interest to vest in. The necessity of a beneficiary to the existence of a trust – the “beneficiary principle” – was referred to by Viscount Simonds, delivering the opinion of the Board in Doris Caroline Mary Leahy v Attorney-General for New South Wales [1959] AC 457, who said that “a trust may be created for the benefit of persons as cestuis que trust but not for a purpose or object … [f]or a purpose or object cannot sue” (at 479). Starting from this premise, the High Court in Zhao Hui Fang v Commissioner of Stamp Duties [2017] 4 SLR 945 (“Zhao Hui Fang”) concluded, after ruling out the factual beneficiaries of the charity, the trustees of the charity and the public as “the beneficial owners of property held under a charitable purpose trust”, that “the beneficial interest in a charitable purpose trust is simply ‘in suspense’ and … there is in such a trust simply no ascertained or ascertainable beneficiary” (at [87]). The prevailing view of the charitable purpose trust that has been taken in the local case law is therefore that such trusts constitute an exception to the beneficiary principle: Koh Lau Keow v Attorney-General [2013] 4 SLR 491 at [18]–[19]; Goi Wang Firn v Chee Kow Ngee Sing (Pte) Ltd [2015] 1 SLR 1049 at [46]; Zhao Hui Fang at [58].

39 The purpose trust is only anomalous, however, on a theory of the trust as consisting of a duality of estates where there is a separate legal and equitable interest in X at all times, as it flows from this that one must be able to locate two different persons – T and B – who respectively hold the legal and equitable interest so as to constitute a trust. The so-called beneficiary principle is a hangover from this and in turn encourages the kind of Sisyphean endeavour that the court in Zhao Hui Fang embarked on to identify the “locale of the beneficial interest under a charitable purpose trust” in circumstances where there is no identifiable person who plays the part of B (at [87]). But if a trust is viewed in terms of T being subject to obligations in respect of his rights in X, the purpose trust looks much less unusual as it fits within that structure. Indeed, in line with this, there has been a noticeable trend in recent scholarship towards placing greater emphasis on the position of T and the duties or obligations he is under as the defining aspect of the trust, such that it suffices for there to be a trust if T is subject to obligations that are enforceable by a person with standing to do so – for example, the Attorney-General (in the case of charitable purpose trusts) or successor trustees – even if such person may not be a beneficiary in the conventional sense: Jessica Hudson & Charles Mitchell, “Standing in Trusts Law, The Beneficiary Principle and the Juridical Nature of Trustee Duties” (2026) 142 LQR 211; Ben McFarlane, “The Nature of Equitable Property Revisited” (2026) 79 Current Legal Problems (Forthcoming). It suffices to say that these attempts at refining our understanding of the trust institution by paring it down to its bare essentials suggest that it is the obligation(s) that T is subject to which define the trust. It may be, as the position of purpose trusts suggests, that the existence of a beneficiary is strictly not a necessary part of a trust, but to the extent that this is and will be the paradigm case, B’s equitable interest can be seen not as rights in or against X but rights that correlate to T’s obligations in respect of his rights in X.

40 Third, the fact that a trust is properly seen as the obligation(s) owed by T to B explains why, if X is foreign land, a Singapore court has jurisdiction to entertain a claim by B to decide if T holds X on trust for B notwithstanding the rule of private international law – often referred to as the Moçambique rule, after the eponymous decision of the House of Lords in The British South Africa Company v The Companhia de Moçambique [1893] AC 602 – that a Singapore court has no jurisdiction to decide questions of title to foreign land: Penn v Lord Baltimore (1750) 1 Ves Sen 444. This is because a claim by B to enforce a trust is in the nature of a claim to enforce an obligation against T and not a claim by B for a determination as to whether he holds rights in or against X itself: Sinéad Agnew & Ben McFarlane, “The Nature of Trusts and the Conflict of Laws” (2021) 137 LQR 405 at 411–414. It is therefore not strictly accurate to think of the court’s jurisdiction to enforce a trust over X as being based on an exception to the Moçambique rule. Rather, since a claim in respect of a trust is not a claim to determine rights in X, it is of a type that falls outside the scope of the rule and does not engage it to begin with.

41 The last point I make concerns how the obligational analysis of the trust can be reconciled with the distinctive third-party effects of B’s equitable interest under the trust. Essentially, how can an obligation owed by T to B affect third parties other than T?

42 The short answer is that it is neither an inherent nor a necessary part of the concept of an “obligation” that it is personal as between two parties. Equity has transcended this by the “depersonalisation of the trust obligation”: while B’s equitable interest consists of a right to enforce an obligation, the obligation is not tied to T personally but T’s “capacity as holder of a particular right” [emphasis in original]: Ben McFarlane, “The Trust and Its Civilian Analogues” in The Worlds of the Trust (Lionel Smith ed) (Cambridge University Press, 2013) at p 522; Avoiding Anarchy at p 351. It can therefore affect persons other than T who stand in the same capacity. In this way, an equitable interest is distinguished from a purely personal right, such as a debt, which is only enforceable against a specific individual, and comes to mimic the proprietary character of a right in or against X, which also is depersonalised in so far as it imposes a duty of non-interference with X on the rest of the world as opposed to specific persons: Third Party Effects at p 110.

43 The genius of equity, as one legal historian has put it, is that it “has proved that from the materials of obligation you can counterfeit the phenomena of property”: S F C Milsom, Historical Foundations of the Common Law (Butterworths, 2nd Ed, 1981) at p 6. The essential idea behind this counterfeit has been variously expressed in terms of B’s equitable interest being “rights against a right” (Nature of Equitable Property at 5–6), “rights that relate to other rights” (Rights About Rights at p 191), “rights in the right that [T] holds in [X]” (Trust and Patrimony at p 52), or “an interest or encumbrance upon the rights held by [T]” (Edelman at 72).

44 Based on this analysis, the third-party effects of B’s equitable interest in X can be explained on the basis that persons who acquire rights in X that derive from T’s rights may be subject to the same limitations as T in respect of those rights. Indeed, this was recognised by Lord Sumption JSC in Akers in his Lordship’s description of an equitable interest (at [82]):

It has been noted that while Lord Sumption JSC referred to an equitable interest as a “right in rem”, he used that term in an “idiosyncratic” and “unusual” sense because “[t]he term ‘in rem’ usually refers to a right that imposes a prima facie duty of non-interference on the rest of the world” – in the same way as a legal property right (see [32] above) – and not merely successors in title: Rights About Rights at pp 197–198; see also, Ben McFarlane & Simon Douglas, “Property, Analogy and Variety” (2022) 42 OJLS 161 at 180–181. The fact that Lord Sumption JSC referred to a specific class of persons, namely, those who succeed to T’s rights in X – “third parties into whose hands the property or its traceable proceeds may have come” – proves that B’s equitable interest is not tied to either T or X, but T’s rights in X, because the common denominator between T and his successors in title is, obviously, the rights they hold.

45 It should be clarified, however, that while the language of a successor to T’s rights in X being bound by B’s equitable interest is often used, this is a metaphor that may mislead if it is understood as suggesting that a recipient of T’s rights in X is instantly affected by B’s equitable interest upon receipt. This is because the annexing of T’s rights in X with an obligation to B only creates the eventuality of the recipient being affected by B’s equitable interest. Whether and when that eventuality materialises would depend on whether and when the recipient’s conscience is affected by notice of the trust relationship between T and B (see [33] above). This could range from never (if the recipient is equity’s darling), the time of the receipt of the rights in X (if the recipient is disabled from being equity’s darling based on notice of B’s equitable interest), or a later time (if the recipient has no notice of B’s equitable interest at the time of receipt but is not a bona fide purchaser on the basis of being a donee, but subsequently becomes aware of B’s equitable interest) (see [48] below).

46 The upshot of this is that B will only have a claim against the recipient if, at the time of the claim, the recipient’s conscience has become affected by knowledge of T’s obligations to B. In such circumstances, B will have a claim for X in specie or its traceable substitutes if the recipient retains his rights in X or its traceable substitutes, or a claim for knowing receipt if the recipient has disposed of his rights in X but had his conscience affected prior to the disposal. The third-party effect of B’s equitable interest on a recipient has thus been explained in terms of the recipient coming under a duty to B in respect of his rights in X in a similar way to T: see generally, Sinéad Agnew & Ben McFarlane, “The Paradox of the Equitable Proprietary Claim” in Modern Studies in Property Law vol 10 (Sinéad Agnew & Ben McFarlane eds) (Hart Publishing, 2019) (“Equitable Proprietary Claim”). What makes this possible, however, is that the subject of B’s equitable interest is T’s rights in X, and not T or X. To borrow the helpful visual imagery used by one commentator, “[t]he rights held in trust are all burdened by the obligations of the trust”, which “explains why a trust asset, when coming into the hands of another party, may bind that third party, because the duty is stuck to the right with glue”: George Gretton, “Up there in the Begriffshimmel?” in The Worlds of the Trust (Lionel Smith ed) (Cambridge University Press, 2013) at p 528.

47 I turn to my substantive analysis of Mr Prosetskii’s claims. I begin with his claim for knowing receipt as it should be apparent, in the light of my analysis of Mr Prosetskii’s rights as a beneficiary of a trust over the Shares, that his claim against Courtwell for knowing receipt of the Vessel, was problematic on its face. I think the point is self-explanatory, but I will elaborate on it shortly.

48 A claim for knowing receipt is “ancillary” to the proprietary claim that a beneficiary of a trust (“B”) may make in respect of trust property (“X”) that is disposed of by his trustee (“T”) in breach of trust: Byers at [8] (per Lord Hodge DPSC, Lord Leggatt JSC and Lord Stephens JSC), [42] (per Lord Briggs JSC). To understand what this means, it is necessary to consider what happens when X is disposed of in breach of trust by T, which can be briefly summarised as follows:

(a) T comes under an immediate duty to B to remedy his breach by recovering his rights in X: Target Holdings Ltd v Redferns [1996] 1 AC 421 at 437C; Re Medora Xerxes Jamshid [2024] 5 SLR 1006 at [95]. This explains why B’s claim against T to reconstitute the trust for the value of the misapplied rights has often been described as a claim to enforce a primary obligation (ie, in the nature of debt or specific performance) rather than a claim to enforce a secondary obligation (ie, in the nature of damages for compensation for loss): see, for example, Charles Mitchell, “Equitable Compensation for Breach of Fiduciary Duty” (2013) 66 Current Legal Problems 307 at 322–323; Yip Man & Goh Yihan, “Navigating the Maze: Making Sense of Equitable Compensation and Account of Profits for Breach of Duty” (2016) 28 SAcLJ 884 at para 28; James Edelman, “Equitable Damages” in Equity Today: 150 Years After the Judicature Reforms (Ben McFarlane & Steven Elliott eds) (Hart Publishing, 2023).

(b) At the same time, the question arises as to whether B will have a claim against the recipient. This depends, in the first place, on whether the recipient’s conscience is affected by knowledge of the initial trust relationship between B and T: Akers at [89]. The possibilities can be broken down as follows:

(i) If the recipient is a bona fide purchaser for value, he will henceforth be immune to any proprietary claim for the rights in X he has received (or any substitutes traceable to those rights) or personal claim in knowing receipt for the value of the rights in X that he has received: Equitable Proprietary Claim at pp 310–312. Even if the recipient subsequently acquires knowledge of T’s breach of trust and B’s prior rights, no claim will lie against him: Byers at [3] (per Lord Hodge DPSC, Lord Leggatt JSC and Lord Stephens JSC), [23]–[24] (per Lord Briggs JSC), [167]–[171] (per Lord Burrows JSC).

(ii) If the recipient is not a bona fide purchaser for value, and his conscience is affected at the time of receipt, he will be liable to an equitable proprietary claim by B for his rights in X or its traceable substitutes from that time. The justification is that, upon the recipient acquiring such knowledge of B’s prior rights that burdens his conscience, he comes under a moral duty to return his rights in X to T (to hold on trust for B) or to B, which equity “underwrites and enforces” by constituting him a constructive trustee for B: Equitable Proprietary Claim at pp 313–314. A claim for knowing receipt generally becomes relevant if the recipient, having had his conscience affected by knowledge of the initial trust, no longer holds any rights in X or its traceable substitutes by the time of the claim. In such a case, the knowing recipient is said to be personally “liable to account” as a “constructive trustee” for the value of the rights in X that he was under a duty to restore to B: see, for example, Agip (Africa) Ltd v Jackson [1990] 1 Ch 265 at 291F–H.

(iii) If the recipient is not a bona fide purchaser for value, but does not acquire knowledge of B’s rights at the time of receipt, he is not amenable to a proprietary claim by B for his rights in X or its traceable proceeds until such time that he acquires such knowledge that affects his conscience. So, if the recipient disposes of his rights in X in the meantime in a way that leaves no traceable substitute, his position will be no different to that of a bona fide purchaser for value as outlined at [48(b)(i)], ie, he will not be liable to any claim, whether proprietary or personal: ITS at [76]. But once the recipient acquires the knowledge that affects his conscience, he will be in the same position as that outlined at [48(b)(ii)]. There is some debate in the case law as to whether the correct characterisation of the recipient’s position prior to acquiring such knowledge is that he is a “constructive trustee” albeit not subject to any duties – the view preferred by, for example, Lloyd LJ in ITS (at [80]–[84]) and by Lord Millett extrajudicially (see P J Millett, “Restitution and Constructive Trusts” (1998) 114 LQR 399 at 403–404) – or that he is not a constructive trustee at all – the view preferred by Lord Browne-Wilkinson in Westdeutsche at 707B–E. There is a consensus, however, that this is a question of semantics as it is common ground that the recipient is not subject to any duty to B – and thus not liable to a claim for proprietary or personal relief – until his conscience is burdened by knowledge of the trust: ITS at [79], [85]; Westdeutsche at 707E–F; Mohammud Jaamae Hafeez-Baig & Jordan English, The Law of Tracing (Federation Press, 2021) at paras 1.116–1.117.

49 Based on this scheme, knowing receipt is a claim to enforce the duty to B that a recipient of rights in X becomes subject to upon having his conscience affected by knowledge of the trust obligations that are annexed to the rights which he has received. Liability is for an equitable wrong that is justified on the basis that, if the recipient fails to restore his rights in X to T or B, he would be in breach of said duty to B and an accessory to T’s breach of duty by knowingly depriving B of T’s performance of his duties as trustee: The Wrong in Knowing Receipt at 1358–1359; Charles Mitchell & Lusina Ho, “Knowing Receipt, Equitable Proprietary Rights, and Duties of Due Administration” (2026) 89 MLR 278 at 299. Seen in this light, to close the loop on a point adverted to at [31] earlier, rather than an equitable analogue of conversion, knowing receipt is, in my opinion, better understood as an equitable analogue of the tort of inducing breach of contract in so far as the gravamen of the claim is the recipient’s role in interfering with T’s performance of his obligations to B.

50 Given that knowing receipt focuses on the recipient’s wrongdoing in depriving B of T’s performance of his obligations in respect of X, it follows that a claim can only be made against a defendant who has received T’s rights in X. If the defendant receives some other property (“Y”), his receipt, retention or disposal of Y can constitute no wrong to B as B is owed no obligation in respect of Y.

51 This, in a nutshell, was the problem with Mr Prosetskii’s claim for knowing receipt. Courtwell did not acquire rights that were encumbered by obligations owed to Mr Prosetskii because it was the Shares, and not the Vessel, that were held on trust for Mr Prosetskii and which Mr Smirnov was subject to obligations qua trustee to Mr Prosetskii qua beneficiary. Courtwell’s receipt of the Vessel could thus have constituted no wrong against Mr Prosetskii.

52 To put things in less technical language which overlooks the nuances of the true nature of a beneficiary’s interest under a trust (but which, for present purposes, does no harm), a beneficiary under a trust can only bring a claim for knowing receipt in respect of trust property, or property that the beneficiary had an equitable interest in. The relevant “trust property” in this case was the Shares and it was that which Mr Prosetskii had an equitable interest in. Accordingly, Mr Prosetskii could only have had a claim against Courtwell for knowing receipt in the event that the Shares had been disposed of in breach of trust by Mr Smirnov and received by Courtwell. To the extent that a claim for knowing receipt could arise against Courtwell in respect of its receipt of the Vessel, such a claim could only lie at the instance of SML or ITC, as the owners of the Vessel, based on the Vessel having been disposed of in breach of fiduciary duty by their directors due to their involvement in the process of the Vessel coming into the hands of Courtwell. Indeed, this was reflected in how the reliefs that Mr Prosetskii sought for his claim for knowing receipt – an order for reconveyance of the Vessel to ITC and that Courtwell “account to ITC as constructive trustee and pay to ITC any profit or benefit that [Courtwell] obtained from the Vessel’s use and operation” – inured to ITC rather than him personally. It was strange that Mr Prosetskii was essentially seeking relief on ITC’s behalf – this, in my view, was effectively a concession that he had no personal claim for knowing receipt against Courtwell.

53 For these reasons, I found that Mr Prosetskii’s claim against Courtwell for knowing receipt was legally unsustainable and therefore disclosed no serious issue to be tried.

54 Moving on to the conspiracy claim, this was an instance where the true nature of Mr Prosetskii’s interest in the Shares came into sharp focus as it made all the difference. In short, Mr Prosetskii’s equitable interest in the Shares did not entitle him to pursue a claim in the tort of conspiracy for damage done to the Shares. This conclusion, however, could be broken down into two different strands of reasoning:

(a) The first, which was how Courtwell attacked Mr Prosetskii’s claim for conspiracy (and dishonest assistance), and which thus assumed the focus of the arguments before me, was that the loss that Mr Prosetskii was seeking to recover was a devaluation of his interest in the Shares that was reflective of loss suffered by ITC and SML, and therefore irrecoverable as a matter of law based on the reflective loss principle.

(b) The second, which was not identified by the parties, was a more fundamental difficulty, which is that damage done to the Shares was not actionable by Mr Prosetskii in the tort of conspiracy, a common law cause of action, based on his equitable interest in the Shares.

I propose to take the second point first and to postpone consideration of the reflective loss point to later as it is an objection that also applies to the dishonest assistance claim. Focusing on the second point, while it was not argued by the parties, it was in substance the same ghost that haunted Mr Prosetskii’s knowing receipt claim – a lack of appreciation of the nature of his equitable interest in the Shares – albeit taking a different form.

55 It is trite that a claim for the economic tort of conspiracy is not actionable per se: Group Lease Holdings Pte Ltd v JTrust Asia Pte Ltd [2023] SGHC(A) 37 at [8]. Thus, in order for Mr Prosetskii to mount a claim for conspiracy, he had to first establish that he had suffered damage, ie, an interference with some right or interest of his that was protected by law: Deloitte & Touche LLP v Hin Leong Trading (Pte) Ltd [2026] SGCA 33 (“Deloitte”) at [45].

56 Based on my reading of Mr Prosetskii’s Statement of Claim, the only actionable damage that his pleadings encompassed was economic loss in the form of a devaluation of his beneficial interest in the Shares. There was some suggestion otherwise in oral submissions by his counsel, Mr Tan Jun Hong, who submitted that Mr Prosetskii had also pleaded damage in the form of a loss of the profits under an agreement between him, Mr Bykhovski and Mr Baransky to share the earnings from the operation of the Vessel. But, as I explain at [66]–[68] below, I did not think that this was a tenable reading of the Statement of Claim. For present purposes, the analysis here proceeds on the basis that the only head of damage pleaded by Mr Prosetskii was damage to his beneficial interest in the Shares.

57 In this connection, the difficulty with Mr Prosetskii’s position was that damage done to the Shares amounted to an interference with Mr Smirnov’s, and not Mr Prosetskii’s, rights. As explained at [24]–[33] above, the equitable interest of a beneficiary under a trust over property does not constitute a right in, or that is exigible against, the property. Mr Prosetskii thus did not have any right in the Shares so that damage to the Shares would constitute damage done to him. What Mr Prosetskii had, as the beneficiary under a trust over the Shares, was the benefit of Mr Smirnov’s duties to him qua trustee, and he would be confined to equitable claims for breaches of those duties (against Mr Smirnov) or interference in the trust relationship (against third parties). The latter category would include claims for knowing receipt – in respect of the Shares, as explained earlier – or dishonest assistance of Mr Smirnov’s breach(es) of trust or fiduciary duty. The pursuit of these claims would, of course, be subject to the rule against recovery of reflective loss if the loss that Mr Prosetskii suffered overlapped with loss suffered by ITC or SML for which they had their own cause(s) of action against the same wrongdoer.

58 Given that damage to the Shares was damage suffered by Mr Smirnov, so too any cause of action in tort in respect of such damage would have accrued to him and not Mr Prosetskii. Indeed, this is clearly established in the context of the tort of conversion in the cases referred to at [31] above. It is true that, to the extent that Mr Smirnov may have had such a cause of action, Mr Prosetskii could have brought an action in the name of Mr Smirnov through the Vandepitte procedure. But, as explained at [30] above, this would entail only the procedural elision of two different actions – an action by Mr Smirnov against the tortfeasors and an action by Mr Prosetskii against Mr Smirnov for breach of duty in failing to bring the former action – and it would remain that the substantive right being enforced was that of Mr Smirnov. It is well to refer, in this regard, to the useful summary given by Kannan Ramesh JAD in the recent decision of the Appellate Division of the High Court in Finaport on this point (at [45]):

59 It follows that the viability of any claim for conspiracy had to be tested from Mr Smirnov’s perspective. Here, however, it was clear that Mr Prosetskii faced an insurmountable difficulty for the simple reason that, on his own case, Mr Smirnov was complicit in the conspiracy. As a matter of common sense, Mr Smirnov could not maintain a claim for conspiracy to which he was part of against his alleged co-conspirators: the conduct of these co-conspirators would not constitute a tort against him if, as Mr Prosetskii alleged, he had consented to or participated in the conspiracy that damaged the Shares. The absence of a cause of action on Mr Smirnov’s part meant that there was no substantive right that Mr Prosetskii could enforce on his behalf even if he was taken to have been proceeding based on the Vandepitte procedure (leaving aside questions as to whether this had to, or was sufficiently, pleaded). In my view, Mr Prosetskii’s claim for conspiracy was therefore legally unsustainable, even before getting into issues of reflective loss, on the basis that there was no cause of action – either of his own or of Mr Smirnov – that he could base his claim on.

60 Accordingly, if it had been necessary, I would have been inclined to find that Mr Prosetskii’s claim for conspiracy did not raise a serious issue to be tried separate from Courtwell’s arguments on reflective loss. The short point was that, having interposed Mr Smirnov as the owner of the Shares, Mr Prosetskii had to be taken as having accepted that Mr Smirnov had all the incidents of ownership so that damage to the Shares would constitute damage to Mr Smirnov and not him personally. Fundamentally, Mr Prosetskii’s attempt to make a claim for conspiracy in his own right was ill-conceived as it failed to appreciate the limitations inherent in him having only had an equitable interest in the Shares. Be that as it may, it was not strictly necessary for me to rest my decision on this point because, as I explain next, I agreed with Courtwell that Mr Prosetskii’s claims for conspiracy and dishonest assistance were barred by the reflective loss principle in any event.

61 The reflective loss principle, as its name suggests, bars recovery of a certain kind of loss suffered by a shareholder in his capacity as such, namely, the diminution in the value of his shares or distributions from the company that is the result of loss suffered by the company in consequence of a wrong to it for which the company has its own cause of action to recover: Marex Financial Ltd v Sevilleja [2021] AC 39 (“Marex”) at [39]; Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd [2022] 1 SLR 884 (“Miao Weiguo”) at [206].

62 In Miao Weiguo, the Court of Appeal undertook a root-and-branch re-assessment of the underpinnings of the reflective loss principle and located its basis in the unique nature of shares as a right of participation in the company rather than as an asset with a market value (at [198] and [206]). In settling on this view, the court repudiated a different (and wider) rationale for the rule that had previously held sway (see, for example, the earlier decision of the Court of Appeal in Townsing Henry George v Jenton Overseas Investment Pte Ltd [2007] 2 SLR(R) 597), which had centred on the prevention of double recovery by the company and its shareholder(s) against the same wrongdoer: see Miao Weiguo at [149], summarising the earlier position in terms of a “Preventive Rule” that was qualified by a “Policy Exception” focused on the absence of a risk of double recovery or prejudice to other shareholders or creditors.

63 The reflective loss principle is thus to be understood as a corollary of the company being a separate legal person from its shareholders. As Andrew Phang Boon Leong JCA (as he then was) explained, there are two main consequences from this: (a) first, the company is the proper plaintiff to bring claims for wrongs done to it; and (b) second, the shareholders are taken to have accepted when buying into the company that the value of their investment follows the fortunes of the company, such that in the event that that investment is damaged due to a wrong done to the company, their recourse is limited to the exercise of rights of control in respect of how the company responds to the wrong against it: Miao Weiguo at [199]–[202]. The underlying rationale of the reflective loss principle was relevant in this case in so far as Mr Prosetskii had invoked the exception to the principle recognised in Giles v Rhind in the event that his claim was prima facie caught by the reflective loss principle. It was thus necessary to test the compatibility of the Giles v Rhind exception against the logical underpinnings of the reflective loss principle. I return to this at [74]–[79] below.

64 For a claim to be barred by the reflective loss principle, two conditions have to be met: (a) first, the loss suffered must be reflective of that of the company; and (b) second, the company and the shareholder must have parallel or co-existing causes of action against the same defendant: Victor Joffe KC et al, Minority Shareholders: Law, Practice and Procedure (Oxford University Press, 7th Ed, 2024) at para 3.109. I consider each in turn.

65 The first condition concerns the characterisation of the loss that Mr Prosetskii was seeking to recover. In my judgment, it was clear from a review of his Statement of Claim that the loss that Mr Prosetskii was seeking to recover through his claims for conspiracy and dishonest assistance was the devaluation of his interest in the Shares caused by the transfer of ITC and SML’s only asset of substance, the Vessel, to Courtwell. This was a quintessential example of loss that was reflective of that suffered by ITC and SML.

66 Starting with the issue of the scope of Mr Prosetskii’s pleadings on loss, it was telling that the opening words of his Statement of Claim stated in terms that the loss he was seeking to recover was the diminution in value of his interest in the Shares: ²⁷

After the background facts were recited, ²⁸ the Statement of Claim went on to set out the events leading up to the transfer of the Vessel to Courtwell under a header titled “Devaluation and Denudation of Prosetskii’s Beneficial Interest in the Shares”. ²⁹ Following this, the pleadings on Mr Prosetskii’s individual causes of action did not identify or particularise any specific head of loss. In these premises, it was quite clear, in my view, that the only loss that had been pleaded in the Statement of Claim was the “devaluation and denudation” of Mr Prosetskii’s interest in the Shares.

67 As mentioned earlier, when confronted with this in the course of his oral submissions, counsel for Mr Prosetskii, Mr Tan Jun Hong, sought to improvise and pivoted to the position that the Statement of Claim included a pleading of an additional head of loss, namely, the loss of the profits of a tripartite agreement between Mr Prosetskii, Mr Bykhovski and Mr Baransky at the outset when they made the decision to invest in the Vessel. The existence of such an agreement was pleaded in the Statement of Claim as part of the factual background giving rise to Mr Prosetskii’s claims, ³⁰ but it was, with respect, fanciful to suggest that it was a reasonable reading of Mr Prosetskii’s pleadings that he had identified the loss of profits or distributions under such an agreement as a head of loss that he was seeking damages for. Indeed, when challenged by me to identify where exactly a pleading of such a loss could be found in the Statement of Claim, Mr Tan Jun Hong was only able to point to a prayer for relief of “[d]amages and/or equitable compensation” ³¹ and a generic pleading of “loss in the form of [Mr Prosetskii’s] rights over and interest in the Vessel” within the pleadings on his conspiracy claim. ³² Neither, in my view, could bear the weight that was placed on it:

(a) A pleading of “damages and/or equitable compensation” begs the question what loss is sought to be remedied through the award of damages or equitable compensation. It does not of itself identify what the loss is.

(b) A pleading of “loss in the form of [Mr Prosetskii’s] rights over and interest in the Vessel” makes no reference to the loss of profits under the agreement between Mr Prosetskii, Mr Bykhovski and Mr Baransky. Indeed, it refers, in its own terms, to Mr Prosetskii’s (indirect) interest in the Vessel through his Shares in ITC and SML, and when read in the context of his other pleadings (noted above) that capture the gist of his claim as being made in respect of the “devaluation and denudation of [his] beneficial interest in the [S]hares”, it can only mean exactly that.

68 Indeed, the difficulties in Mr Prosetskii’s position were apparent from how a pleading of the loss of the profits under the agreement would have raised more questions than it answered. These included, for example, how the profits were to be distributed as between the three parties given that the earnings from the Vessel’s operation would accrue, in the first place, to ITC or SML as the entity holding the Vessel. The pleadings also did not explain what became of this agreement after Mr Bykhovski dropped out of the picture and Mr Prosetskii took over his interest in the Shares of SML (see [6] above) – presumably, the agreement became such that there would be a 55:45 split in the profits as between Mr Baransky and Mr Prosetskii respectively, but this was not pleaded. Finally, the claim that Mr Prosetskii was to receive profits from the Vessel’s operation through the agreement seemed to me to be logically inconsistent with his prayer for the relief of an account of the profits of the Vessel’s operation to ITC for his claim for knowing receipt (see [52] above), which presupposed that the profits of the Vessel’s operations accrued to ITC (or previously SML) rather than Mr Prosetskii, Mr Bykhovski and Mr Baransky personally. At any rate, nothing was pleaded to explain or overcome this logical gap. These difficulties underscored that it was untenable to construe the Statement of Claim as having included a pleading of loss other than the devaluation of Mr Prosetskii’s interest in the Shares.

69 In this regard, a diminution in the value of a shareholder’s shares in a company arising from a misappropriation of the company’s assets is the paradigm example of reflective loss. Indeed, the present case was basically a real-life enactment of the “cash box” illustration used by the English Court of Appeal to explain the reflective loss principle in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204 (“Prudential Assurance”), save that the contents of the cash box were not fiat currency but the Vessel (at 223C–E):

In the example above, although two different wrongs are committed by the same wrongdoer against the shareholder (deceit to obtain the key to the cash box) and the company (robbery of the cash box), the loss of the shareholder comes about as a knock-on consequence of the loss suffered by the company. Even if the shareholder has suffered a factual loss, the effect of the reflective loss principle is to deem him as having suffered no legally cognisable loss such that it is only the company who has a claim against the wrongdoer. So too in this case. The alleged “devaluation and denudation” of Mr Prosetskii’s interest in the Shares came about as consequence of ITC and SML’s loss of the Vessel and it clearly constituted reflective loss.

70 Mr Prosetskii sought to avoid this conclusion by arguing that, even if the only loss he had pleaded was the devaluation of his interest in the Shares, such a loss did not constitute reflective loss because he was not the legal owner of the Shares but only their beneficial owner under a trust. ³³ I did not accept this. It was technically correct that Mr Prosetskii was not a direct shareholder of ITC or SML but an indirect shareholder as a beneficiary under a trust over the Shares due to the interposition of Mr Smirnov between him and the companies. But this, in my view, was neither here nor there. The reflective loss principle would be toothless if it could be sidestepped by simply interposing an intermediary – say, a holding company or a trustee – between a shareholder and the company so as to create a “Russian doll” structure in the shareholding of the company. To give an extreme example, if the ultimate beneficial owner of company A’s shares were to interpose innumerable layers of holding companies or trustees – B, C, D and so on and so forth – between him and company A, it would surely be absurd if every intermediary in the chain past B (the direct shareholder of A) could make a claim against a defendant who causes loss to the company A that triggers a downward chain reaction of the devaluation of the shares in B, C, D and so on and so forth. This would be contrary to the purpose of the reflective loss principle which, in my view, is to prevent exactly this kind of proliferation of claims.

71 At the end of it, the inescapable fact was that Mr Prosetskii’s loss came about as the consequence of a wrong done to ITC and SML in the form of the scheme to transfer the Vessel to Courtwell. Thus, if the Vessel were to be restored to ITC or SML, the loss suffered by Mr Prosetskii would be erased in the same way as the restoration of the contents of the cash box in the illustration in Prudential Assurance would cause the company’s shares to rebound in value. That, in my judgment, sufficed to show that Mr Prosetskii’s loss was reflective of ITC and SML’s loss of the Vessel.

72 The second condition for the reflective loss principle to apply was that ITC or SML had to have their own cause of action against the same wrongdoer. I considered this straightforward. If, as was Mr Prosetskii’s own case, there was a conspiracy to misappropriate the Vessel and to procure its transfer to Courtwell, ITC and SML would in principle have claims against the conspirators. These would include, for example, an equitable proprietary claim or personal claim for knowing receipt against Courtwell for its wrongful receipt of the Vessel or claims in tort for conspiracy. To the extent that ITC or SML’s directors may have been complicit in the conspiracy, it would not be likely that their knowledge or fraudulent intent would be attributed to ITC or SML to defeat their claims against the conspirators: Deloitte at [108].

73 For the foregoing reasons, I was satisfied that Mr Prosetskii’s claim for the devaluation of his interest in the Shares constituted a claim for reflective loss that was barred by the reflective loss principle, subject to Mr Prosetskii’s last angle of attack that invoked an apparent exception to the principle.

74 The final string to Mr Prosetskii’s bow was that, even if his loss was caught by the reflective loss principle, the principle would be disapplied by the exception attributed to the case of Giles v Rhind. ³⁴ The Giles v Rhind exception, in brief, posits that a shareholder could make a claim for what would otherwise be reflective loss if the wrongdoer had disabled the company from pursuing its own cause of action: Miao Weiguo at [139].

75 I rejected Mr Prosetskii’s reliance on the Giles v Rhind exception on the basis that I did not consider it to form part of Singapore law. I am cognisant that the Court of Appeal in Miao Weiguo made an express reservation as to whether the Giles v Rhind exception continued to form part of Singapore law as the issue did not arise on the facts of the case (at [155]), and subsequent decisions have also been content to proceed on that basis: Khan Aisanullah v Rajib Kumar Dhali [2024] SGHC 313 at [69] (per Chan Seng Onn SJ); Yeo Xueli Celeste v Sin David [2025] SGHC 166 at [22] (per Mohamed Faizal JC). But, in my judgment, it was reasonably clear that the Giles v Rhind exception was so fundamentally inconsistent with the identified rationale of the reflective loss principle that it could not logically remain good law following Miao Weiguo.

76 In the first place, as a matter of authority, the issue is not completely untravelled ground as the Court of Appeal had already weighed in on it in its observation that there was “great force” in Lord Reed PSC’s rejection of the Giles v Rhind exception in Marex: Miao Weiguo at [155]. It is obvious from this that the writing is on the wall, and had the issue called for a decision, it is almost certain that the Court of Appeal would have followed suit and confirmed the demise of the Giles v Rhind exception.

77 I say this also because, in my view, it is clear from point of principle that the Giles v Rhind exception cannot coexist with the reflective loss principle as it is now understood in the wake of Marex and Miao Weiguo. In short, the Giles v Rhind exception is based on the now-discredited view of the reflective loss principle as a rule that is concerned with double recovery by a company and its shareholder(s) against a common wrongdoer. This explains why it posits that, if the company is disabled from suing, the shareholder should be entitled to do so. Marex and Miao Weiguo, however, have established that the inability of a shareholder to recover reflective loss goes deeper than that: the bar is of a substantive nature that arises from the inherent nature, and limitations of, shares as a right of participation in the company. The mere fact that the company may not be able to sue, therefore, no longer provides a sufficient justification for the shareholder being able to sue for loss which, in the eyes of the law, he has not suffered in the first place. This was explained by Lord Reed PSC in Marex who, speaking of Giles v Rhind, said that (at [70]):

78 To put things from a different angle, what lies beneath the reflective loss principle is the view that a shareholder who buys into a company accepts that the fate of his investment follows the fortunes of the company, and “[w]rongs done to the company are part and parcel of a company’s fortunes – a part of the vicissitudes of corporate life, as it were”: Miao Weiguo at [200]. A wrong against the company of such magnitude as to disable the company from pursuing its cause of action is no doubt a greater misfortune than one which does not, but it is a misfortune nonetheless and thus remains within the ambit of the rule against recovery of reflective loss.

79 Given this, clinging to the Giles v Rhind exception after Miao Weiguo would, in my view, result in the law speaking out of both sides of its mouth. Indeed, while the Court of Appeal did specifically carve out the Giles v Rhind exception as a subject for another day, it all but did reject it, in substance, when it acknowledged that the position at the time, which consisted of a general “Preventive Rule” against recovery that was qualified by a “Policy Exception”, was untenable as “the attempt to straddle the company law principle and the policy against double recovery ultimately fail[ed]”: Miao Weiguo at [150]. The Giles v Rhind exception flows from the same font – ie, concerns of double recovery – as the Policy Exception. It follows, as a matter of course, from the abandonment of the Policy Exception and the commitment to a substantive rule against recovery of reflective loss that the Giles v Rhind exception is, as a first instance court in England and Wales post-Marex put it, “dead for all intents and purposes on any straightforward interpretation of Marex” and, I would add for our local context, Miao Weiguo: see Breeze v The Chief Constable of Norfolk Constabulary [2022] EWHC 942 (QB) at [51].

80 Accordingly, I rejected Mr Prosetskii’s reliance on the prospect of the Giles v Rhind exception applying. Even if the point was strictly left as a loose end in Miao Weiguo, it was not one that I considered arguable and did not raise a serious issue to be tried in respect of Mr Prosetskii’s conspiracy and dishonest assistance claims.

81 In the light of my conclusion that none of Mr Prosetskii’s three causes of action against Courtwell raised a serious issue to be tried, I set aside the order granting him permission to serve OC 1031 on Courtwell out of the jurisdiction.

82 The setting aside of the order for permission in turn meant that Mr Prosetskii had no right to serve OC 1031 on Courtwell seeing as it was a foreign company over which the court’s jurisdiction could only be established by service of originating process in accordance with the rules for service out of the jurisdiction. In consequence, I also set aside the order for substituted service and the service effected on Courtwell.

83 For the foregoing reasons, I allowed the application. After hearing the parties on costs, I fixed the costs of the application in the sum of $23,000 (all-in), payable by Mr Prosetskii to Courtwell. Although my decision was based on only one of the three requirements for permission for service out of the jurisdiction (ie, whether there were serious issues to be tried), I had the benefit of submissions on the entire suite of issues that typically arise in applications to set aside orders relating to service. A figure of $23,000 (all-in), while perhaps on the higher end for such applications, seemed to me to be commensurate to the complexity of the matter.

84 Finally, I thank the parties’ instructed counsel, Mr Tan Jun Hong (for Mr Prosetskii) and Mr Paul Tan (for Courtwell), and their respective teams of instructing solicitors from Incisive Law LLC and Drew & Napier LLC, for their helpful submissions. I am also grateful for their patience – and acknowledge the same of counsel from Rajah & Tann Singapore LLP (for ITC, SML and Ms Babuschin) and Setia Law LLC (for Mr Smirnov), who attended on watching brief – in accommodating a hearing that ran unusually late into the evening due to my curiosity and inexperience.