Palyanitsa Ltd v Bridgetower Capital Ltd

Palyanitsa Ltd, a BVI company in blockchain and cryptocurrency projects, entered into a staking agreement with Bridgetower Capital Ltd, a Singapore staking services provider, on or about 10 September 2022. Under it Palyanitsa transferred 1,000,000 NEAR Tokens so that Bridgetower could run staking nodes on the NEAR Protocol, share staking rewards, report on performance and create a security token tied to the tokens. Palyanitsa said it terminated the agreement around 19 October 2023 and, in Originating Claim No 139 of 2024, sought the return of the tokens for breach of contract and, alternatively, for breach of trust, fraudulent misappropriation or equitable fraud.

Bridgetower's case was that Palyanitsa signed only as agent for the NEAR Foundation, a Swiss non-profit, and that full legal and beneficial ownership of the tokens was meant to pass to it as the Foundation's investment and as payment for its services. It said the Foundation ended the arrangement in December 2022 and negotiated a revised agreement with it. Palyanitsa applied for summary judgment (SUM 506). Bridgetower applied to amend its defence and add counterclaims for fraudulent misrepresentation and quantum meruit (SUM 1132). Both were heard by an Assistant Registrar.

1. Whether Bridgetower should be allowed to amend its defence and plead its counterclaims for misrepresentation and quantum meruit.
2. Whether Palyanitsa established a prima facie case for return of the tokens in contract or trust.
3. Whether Bridgetower raised triable issues on its agency and ownership defences, and whether any leave to defend should be conditional.

On amendment, the court applied the three-step framework in Wang Piao v Lee Wee Ching [2023] SGHC 216. The case was at a relatively early stage, the amendments were substantial rather than technical, and any prejudice could be met by costs. One pleaded misrepresentation, that Palyanitsa contracted on the Foundation's behalf, was contradicted by the agreement's clear terms naming Palyanitsa as the signing party, so following Broadley Construction Pte Ltd v Alacran Design Pte Ltd [2018] 2 SLR 110 Bridgetower could not have been induced by it. The other two statements did not contradict clause 1 and could proceed. The quantum meruit claim was legally unsustainable because the agreement expressly made Bridgetower bear the costs of running the nodes.

On summary judgment, Palyanitsa showed a prima facie case: it was undisputed that the tokens were not staked for the full term and no security token was created, and a term in fact requiring return of the tokens after termination was necessary given that they were transferred for the purpose of staking. A prima facie resulting trust of the Quistclose kind was also shown, but not an express trust or fraud, which requires cogent evidence.

Bridgetower nonetheless raised triable issues. Extrinsic evidence is admissible on who the contracting parties are, as The Luna and another appeal [2021] 2 SLR 1054 recognised for formation questions, and neither the third party beneficiary clause nor the entire agreement clause clearly excluded an unnamed principal. Unchallenged Telegram messages suggested the Foundation's close involvement. On ownership, clause 1 used both delegation and transfer, and an earlier draft and the security token mechanism called for a full examination at trial. The defence was not barely arguable, so conditional leave was inappropriate.

The Assistant Registrar allowed SUM 1132 in part, permitting the amended defence in full and the misrepresentation counterclaim except the pleaded representation that Palyanitsa contracted for the NEAR Foundation, and disallowing the quantum meruit counterclaim. SUM 506 was dismissed and Bridgetower was granted unconditional leave to defend, with costs to be agreed or decided on written submissions.