Case Details
- Citation: [2023] SGCA(I) 2
- Title: Tamar Perry & Anor v Jacques Henri Georges Esculier & Anor
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 2 March 2023
- Hearing Date: 18 January 2023
- Judges: Judith Prakash JCA, Steven Chong JCA and Beverley McLachlin IJ
- Appellants/Plaintiffs: Tamar Perry; Solid Fund Private Foundation
- Respondents/Defendants: Jacques Henri Georges Esculier; Bonnet Esculier Servane Michele Thais
- Procedural Origin: Civil appeal from the Singapore International Commercial Court (“SICC”) Civil Appeal from SICC No 7 of 2022
- Underlying SICC Suit: SIC/S 4/2020 (“Suit 4”)
- Interpleader Proceedings: HC/OS 1016/2019 (“OS 1016”)
- Judge Below: Judith Prakash JCA (as she then was) delivering the SICC judgment; the SICC Judge is referenced in the extract as “the Judge”
- Lower Court Citation: Perry, Tamar and another v Esculier, Bonnet Servane Michele Thais and another [2022] SGHC(I) 10
- Length of Judgment: 27 pages, 7,039 words
- Legal Areas (as indicated): Conflict of Laws; Choice of law; Equity; Property; Trusts; Recipient liability; Proprietary liability
- Key Themes: Ponzi scheme; tracing and recovery; governing law of trust/equitable proprietary claims; bona fide purchaser without notice; lex situs; contractual choice of law
- Core Disputed Payments: “Disputed Moneys” totalling around US$10 million paid by Lexinta Group Limited (“LGL”) to the respondents between August 2016 and February 2017
- Appellants’ Funding: Transfers totalling in excess of US$25 million into LGL’s DBS bank account in Hong Kong pursuant to the SRE AMA and BGNIC AMA
- Notable Entities: Lexinta Group Limited (“LGL”); Lexinta Group companies named in the AMAs (LEXINTA LTD, LEXINTA MANAGEMENT LTD, LEXINTA INC); Lexinta AG; Bismark Badilla (“Mr Badilla”); British Guarantee National Investment Company (“BGNIC”); JL Securities S.A. (“JL Securities”)
- Remedial Context: Freezing of respondents’ DBS account; respondents’ counterclaim for damages arising from the freezing
- Disposition on Appeal: Appeal dismissed (as stated in the extract)
Summary
This appeal arose out of a dispute between investors in a Ponzi scheme administered by the “Lexinta” group. The appellants (later investors) alleged that money they had transferred into the scheme was used to pay earlier investors (the respondents) and that the respondents received those payments without acquiring a proprietary or equitable entitlement. The central difficulty was not the factual existence of a Ponzi scheme, but the legal architecture needed to determine whether the appellants could assert trust-based or proprietary claims against the respondents, and if so, under which governing law.
The Court of Appeal affirmed the SICC Judge’s dismissal of the appellants’ claims. While the Court accepted that the payments were made in the context of a Ponzi scheme and that the “money cycle” had ultimately produced losses for some investors, the decisive issue was choice of law. The Court held that the appellants’ pleaded proprietary/equitable claims depended on the existence and recognition of a trust or trust-like proprietary interest, and that Swiss law—chosen expressly in the asset management agreements (“AMAs”)—governed the relevant transaction. Because Swiss law did not recognise the concept of a trust in the manner required by the appellants’ case, the appellants’ claims failed.
What Were the Facts of This Case?
The Lexinta Ponzi scheme was administered by a group of companies under the control of Bismark Badilla (“Mr Badilla”). At least five companies formed part of the Lexinta group. Three of those companies were expressly identified in the AMAs as the “Lexinta Group” and were named as the “Asset Manager” and counterparty to the AMAs. Two other companies—Lexinta Group Limited (“LGL”) and Lexinta AG—were not named in the AMAs. Despite this, LGL played a practical role in the flow of funds: it was the entity that made the payments to the respondents that later became the “Disputed Moneys”.
The respondents were earlier investors. They invested in April 2014 under an asset management agreement referred to as the “Esculier AMA”. The appellants invested later, under two AMAs dated 18 April 2016 and 7 July 2016, referred to as the “SRE AMA” and the “BGNIC AMA”. The AMAs were substantially similar in terms. Mr Badilla represented to investors that the Lexinta Group would invest funds into initial public offerings (IPOs) of listed securities prior to listing and then sell the holdings after listing for profit.
By late 2015, the respondents sought to realise their profits. From August 2016 to February 2017, the respondents received various payments totalling around US$10 million from LGL. These payments were the “Disputed Moneys”. During the same period, the appellants deposited more than US$25 million into LGL’s DBS bank account in Hong Kong (the “LGL Account”) pursuant to the SRE AMA and BGNIC AMA. The extract details multiple transfers made by the first appellant and by BGNIC (an investment vehicle of the first appellant’s family), and it also notes that the second appellant later acquired BGNIC’s right and interest to the transferred monies by a sale and purchase agreement dated 25 September 2017.
In March 2018, through ex parte discovery orders from the Hong Kong courts, the first appellant learned that the Disputed Moneys had been transferred to the respondents’ DBS account in Singapore. DBS froze the respondents’ account following demands by the appellants’ lawyers. Because the parties could not agree on ownership, DBS commenced interpleader proceedings in Singapore (OS 1016), naming the appellants and respondents as defendants. A Singapore High Court judge declined to decide the interpleader summarily and ordered that the competing claims be determined in separate proceedings between the appellants and respondents, with DBS’s attendance dispensed with. Those separate proceedings became Suit 4 (SIC/S 4/2020).
What Were the Key Legal Issues?
The first legal issue concerned the appellants’ substantive theory of liability. The appellants’ case was that, because LGL was not a party to the SRE AMA and BGNIC AMA, LGL held the Disputed Moneys on trust for the appellants pending transfer to the “Asset Manager” under those AMAs for investment. On that basis, the appellants argued that the payments to the respondents were not the respondents’ legitimate return on investment, and that the respondents should be liable as recipients under the relevant law if they were not bona fide purchasers for value without notice.
The second, and ultimately decisive, issue was choice of law. The parties advanced competing governing laws for the appellants’ equitable/proprietary claims. The respondents contended that Swiss law governed because the AMAs contained an express choice of Swiss law. The appellants argued for alternative connecting factors: that Singapore law applied as the lex situs of the funds, and that Hong Kong law applied as the law of the place of incorporation of LGL. The Court of Appeal had to determine which governing law applied to the existence and enforceability of the trust-based proprietary interest and, consequently, whether the appellants could recover from the respondents.
A further issue, tied to the choice of law analysis, was the significance of the start date of the Ponzi scheme and the timing of the respondents’ exit. The appellants sought to rely on the start date to support their narrative that the respondents’ gains were funded by later investors’ monies. However, the Court indicated that the relevance of these arguments depended on the governing law of the transaction—meaning that even strong factual inferences about the Ponzi scheme might not translate into legal recovery if the governing law did not recognise the required proprietary mechanism.
How Did the Court Analyse the Issues?
The Court of Appeal began by framing the dispute within the typical mechanics of Ponzi schemes: money circulates among investors, and later investors often suffer losses while earlier investors may receive payments that appear profitable. The Court noted that the respondents were “unsuspecting victims” who exited at a fortuitous time, receiving payments that were funded by the appellants’ transfers into LGL. The Court accepted that the use of one investor’s funds to repay another is characteristic of Ponzi schemes and is not, by itself, legally determinative of recovery.
At the same time, the Court emphasised that the “slight complication” in this case was the identity of the payment-maker. The Disputed Moneys were paid by LGL, which was not expressly a party to the AMAs. The appellants therefore constructed a trust-based proprietary claim: they asserted that LGL, having received monies that were contractually destined for the “Asset Manager” under the AMAs, held those monies on trust for the appellants. This theory required the legal system governing the transaction to recognise a trust or trust-like proprietary interest capable of supporting recipient liability.
The Court then turned to the choice of law. The respondents’ position was that Swiss law applied because the AMAs contained an express choice of Swiss law. The appellants’ counter-position relied on different connecting factors: lex situs (Singapore law) and the law of incorporation (Hong Kong law). The Court’s analysis, as reflected in the extract, focused on the “foundational source” of the alleged trust. The SICC Judge had reasoned that even if LGL was not a party to the AMAs, the alleged trust was rooted in the AMAs themselves, which were governed by Swiss law. The Court of Appeal endorsed this approach, treating the AMAs as the starting point for determining the legal character of the appellants’ proprietary claim.
Crucially, the Court held that Swiss law did not recognise the concept of a trust in the way required by the appellants’ pleaded case. As a result, the appellants had no cause of action against the respondents under Swiss law for the recovery of the Disputed Moneys on a trust-based proprietary theory. This meant that the Court did not need to decide, in the abstract, whether the respondents were bona fide purchasers for value without notice under a trust framework, because the threshold requirement—an enforceable trust-based proprietary interest under the governing law—was absent.
The Court also addressed the appellants’ attempt to shift the analysis away from Swiss law by arguing that the start date of the Ponzi scheme and the respondents’ notice should matter. The Court’s reasoning indicates that these arguments could not overcome the governing-law barrier. In other words, even if the appellants could show that the Disputed Moneys were derived from later investors’ funds, the legal mechanism for tracing and recovery depended on the governing law’s recognition of the relevant equitable proprietary concept. Where Swiss law did not provide that mechanism, the appellants’ claims could not succeed.
Finally, the Court upheld the SICC’s approach to the respondents’ counterclaim. The SICC Judge had found that the respondents would otherwise have invested the monies to achieve a higher return, and therefore awarded damages arising from the freezing of the Disputed Moneys in their DBS account. The Court of Appeal’s dismissal of the appellants’ claims left the counterclaim outcome intact.
What Was the Outcome?
The Court of Appeal dismissed the appeal. Practically, this meant that the appellants’ attempt to recover the Disputed Moneys from the respondents failed, and the respondents’ counterclaim for damages arising from the freezing of their DBS account remained upheld.
The decision underscores that, in disputes involving cross-border funds and equitable proprietary claims, the governing law analysis can be dispositive. Even where the factual narrative strongly suggests that payments were generated by a Ponzi scheme, the court will still require a legally recognised proprietary or equitable basis under the applicable law before recipient liability can be established.
Why Does This Case Matter?
This decision is significant for practitioners because it illustrates how choice of law can determine the availability of equitable proprietary remedies in Ponzi scheme litigation. Courts may be willing to accept that funds were misapplied and that later investors’ monies funded earlier investors’ exits. However, the enforceability of tracing and recovery claims against recipients depends on whether the governing law recognises the relevant proprietary/equitable constructs (here, the trust concept relied upon by the appellants).
From a conflict-of-laws perspective, the case reinforces the importance of contractual choice of law clauses in structuring downstream proprietary claims. Where the alleged trust or proprietary interest is said to arise from the contractual framework, courts may treat the contract’s governing law as the “foundational source” for the proprietary analysis. This approach can limit attempts to reframe the claim through alternative connecting factors such as lex situs or the law of incorporation.
For law students and litigators, the case also provides a cautionary lesson on pleading strategy. If a claimant’s theory depends on a trust-like proprietary mechanism, the claimant must be prepared to confront the governing-law barrier—particularly when the contract contains an express choice of law that belongs to a legal system that does not recognise trusts in the same way. The decision therefore has practical implications for drafting, due diligence, and litigation planning in cross-border investment disputes.
Legislation Referenced
- (Not provided in the supplied judgment extract.)
Cases Cited
- (Not provided in the supplied judgment extract.)
Source Documents
This article analyses [2023] SGCAI 2 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.