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: 2 March 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
- Lower court: Singapore International Commercial Court (SIC)
- Lower court citation: Perry, Tamar and another v Esculier, Bonnet Servane Michele Thais and another [2022] SGHC(I) 10
- Lower court case number: SIC/S 4/2020
- Appeal type: Civil appeal from SIC
- Appeal case number: Civil Appeal from the Singapore International Commercial Court No 7 of 2022
- Judgment length: 27 pages, 7,039 words
- Legal areas: Conflict of laws; equity; property; trusts; recipient liability; proprietary liability
- Statutes referenced: Not specified in the provided extract
- Cases cited: Not provided in the extract
Summary
This Court of Appeal decision arose out of a dispute connected to a Ponzi scheme administered by the “Lexinta” group under the control of Bismark Badilla (“Mr Badilla”). The appellants (later investors) alleged that the respondents (earlier investors) received “Disputed Moneys” that were not the respondents’ legitimate investment returns, but rather funds that the appellants had transferred into the scheme. The appellants sought to recover those moneys on the basis that the funds remained held on trust by an entity within the Lexinta group and could be traced into the respondents’ hands.
The central difficulty was not the existence of a Ponzi scheme, but the legal framework governing the appellants’ proprietary and equitable claims. The appellants advanced competing choice-of-law positions: Swiss law (as expressly chosen in the asset management agreements (“AMAs”)), Singapore law (as the lex situs of the funds), and Hong Kong law (as the law of the place of incorporation of Lexinta Group Limited (“LGL”), the company that actually made the payments to the respondents). The Court of Appeal ultimately dismissed the appeal, holding that the governing law analysis was decisive and that the appellants’ claims failed under the applicable law.
What Were the Facts of This Case?
The Ponzi scheme was administered by a group of companies collectively referred to as “Lexinta”. At least five companies were involved. Three of them were expressly identified in the AMAs as part of the “Lexinta Group” and were named as the “Asset Manager” and counterparty to the investment contracts. Two other companies—LGL and Lexinta AG—were not named in the AMAs. The scheme was promoted through representations that the Lexinta Group would invest investors’ funds into initial public offerings (IPOs) of listed securities prior to listing and then sell the holdings after listing for profit.
The respondents were earlier investors. They entered into an asset management agreement with the Lexinta Group in April 2014 (the “Esculier AMA”). The appellants invested later, entering into two AMAs on 18 April 2016 and 7 July 2016 (the “SRE AMA” and “BGNIC AMA”). All three AMAs were said to have substantially similar terms. The appellants’ case was that the scheme did not operate as represented; instead, it functioned as a classic Ponzi scheme where money from later investors was used to pay earlier investors.
In late 2015, the respondents sought to realise profits. From August 2016 to February 2017, they received payments totalling approximately 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 by the first appellant (or for the first appellant’s benefit) and transfers by the British Guarantee National Investment Company (“BGNIC”), an investment vehicle of the first appellant’s family. The second appellant later acquired BGNIC’s rights and interests in those transferred moneys via a sale and purchase agreement dated 25 September 2017.
After the appellants discovered in March 2018—through ex parte discovery orders obtained from the Hong Kong courts—that the Disputed Moneys had been transferred to the respondents’ DBS account in Singapore, DBS froze the respondents’ account following demands from the appellants’ lawyers. Because the parties could not agree on ownership, DBS commenced interpleader proceedings in the High Court of Singapore (HC/OS 1016/2019). The High Court declined to decide the interpleader summarily and ordered that the competing claims be determined in separate proceedings between the appellants and the respondents, with DBS’s attendance dispensed with. Those further proceedings became SIC/S 4/2020 (“Suit 4”).
What Were the Key Legal Issues?
The first key issue concerned the appellants’ pleaded proprietary and equitable theory. The appellants argued 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 the AMAs for investment. On this approach, the payments to the respondents were not the respondents’ legitimate returns; rather, they were repayments funded by the appellants’ money. The appellants further contended that under Hong Kong law, they could trace and recover the moneys from the respondents because the respondents were not bona fide purchasers for value without notice.
The second key issue was choice of law. The respondents contended that Swiss law governed because the AMAs contained an express choice of Swiss law. The appellants responded that Swiss law was not necessarily the governing law for the trust-based proprietary claim and that other connecting factors pointed to Singapore law (lex situs) or Hong Kong law (incorporation of LGL). The Court of Appeal had to determine which legal system governed the appellants’ claim and, crucially, whether that system recognised the trust concept and the corresponding proprietary consequences.
The third issue was whether, even if the appellants could establish a trust or proprietary interest, they could succeed against the respondents on the basis of recipient liability. The Judge below found that the respondents had received the Disputed Moneys at a fortuitous time and that the appellants’ claim depended on the governing law. The Court of Appeal therefore had to consider how proprietary liability and any “notice” requirement would operate under the applicable legal framework.
How Did the Court Analyse the Issues?
The Court of Appeal began by emphasising the nature of Ponzi schemes. In such schemes, money is circulated among investors: later investors typically suffer losses while earlier investors may receive payments that look like profits. In this case, the respondents exited at a time when the scheme still had liquidity, enabling them to receive substantial sums. The Court accepted that the payments to the respondents were funded by money originating from the appellants’ transfers into the scheme, at least on the appellants’ narrative. However, the Court stressed that the legal relevance of the appellants’ equitable and proprietary arguments depended on the governing law of the transaction and the trust-based claim.
On the factual findings, the Judge below had found that a Ponzi scheme was in operation at the latest from 2015, though the exact start date could not be fixed. The Court of Appeal’s extract indicates that the appellants had tried to leverage the “start date” issue, presumably to argue that certain transfers fell within the period when the scheme was already operating as a Ponzi scheme. Yet, the Court’s reasoning suggests that even if the start date were significant, the decisive question remained whether the appellants could establish a proprietary claim under the applicable law.
One of the Judge’s findings was that, although LGL was not named as part of the Lexinta Group in the AMAs, the AMAs extended by implication to include LGL as a party. The Court of Appeal’s extract indicates that the appellants’ case was framed around the assertion that there was no contractual relationship between the parties and LGL, and that LGL therefore held the funds on trust. The Judge rejected that approach, but the Court of Appeal’s ultimate dismissal of the appeal turned on the governing law analysis rather than solely on the implied party issue.
The Court of Appeal addressed the competing choice-of-law positions. The respondents’ primary argument was that Swiss law applied because the AMAs contained an express choice of Swiss law. The appellants argued for Singapore law as lex situs and for Hong Kong law as the law of LGL’s incorporation. The Court of Appeal agreed with the Judge that Swiss law was the applicable law because the foundational source of the alleged trust was the AMAs, which were governed by Swiss law. This meant that the appellants’ trust-based proprietary claim had to be assessed under Swiss law.
Under Swiss law, the Court held that the concept of a trust was not recognised in the way required for the appellants’ claim. As a result, the appellants had no cause of action against the respondents under Swiss law based on the alleged trust. The Court also considered the appellants’ alternative argument that Hong Kong law would apply and would allow tracing and recovery from the respondents, particularly because the respondents were allegedly not bona fide purchasers for value without notice. However, once Swiss law governed the foundational proprietary claim, the appellants’ Hong Kong law route could not salvage the claim.
The Court’s reasoning also reflects a broader conflict-of-laws principle: where an equitable proprietary claim is said to arise from a contractual arrangement that contains an express choice of law, the court will often treat that contractual choice as the starting point for determining the governing law of the proprietary consequences. In other words, the appellants could not avoid the consequences of the contractual choice by reframing the claim as one in equity or trust if the trust was said to be derived from the contract’s structure and obligations.
Finally, the Court dealt with other issues raised by the appellants, including notice and recipient liability. The Judge below had found that even if Hong Kong law applied, the appellants could not claim because the respondents were bona fide purchasers for value without notice. The Court of Appeal’s extract indicates that this finding was not the primary basis for dismissal once Swiss law was accepted as governing. Nonetheless, it underscores that recipient liability in tracing and proprietary recovery disputes often turns on whether the recipient took for value and whether they had notice of the claimant’s proprietary interest.
What Was the Outcome?
The Court of Appeal dismissed the appeal. The practical effect was that the appellants’ claims to recover the Disputed Moneys from the respondents failed, because the governing law was Swiss law and Swiss law did not recognise the trust concept necessary to sustain the appellants’ proprietary/equitable cause of action.
The Court of Appeal therefore upheld the result below, including the respondents’ counterclaim for damages arising from the freezing of the respondents’ DBS account. The freezing had prevented the respondents from investing the moneys to achieve a higher return, and damages were awarded to compensate for that loss.
Why Does This Case Matter?
This decision is significant for practitioners dealing with cross-border fraud, Ponzi schemes, and tracing or proprietary recovery claims. It illustrates that, in conflict-of-laws disputes, the court’s choice-of-law determination can be outcome-determinative even where the underlying facts strongly suggest wrongdoing and misappropriation. The Court of Appeal’s approach shows that courts will not treat “equity” or “trust” labels as a way to bypass an express contractual choice of law where the alleged trust is said to arise from the contract itself.
From a doctrinal perspective, the case highlights the interaction between contractual choice of law and proprietary/equitable claims. Where the claimant’s proprietary interest is anchored in the contractual framework, the governing law of the contract may govern the proprietary consequences. This is particularly important in investment structures where AMAs contain express choice-of-law clauses and where the claimant seeks to characterise the recipient’s receipt as traceable trust property.
For law students and litigators, the case also serves as a reminder that recipient liability and tracing remedies are not merely factual inquiries. Even if a claimant can show that the recipient received funds originating from the claimant’s money, success depends on the legal system’s recognition of the relevant proprietary mechanism (here, the trust concept) and on any additional requirements such as notice and bona fide purchase for value. In practice, claimants should therefore conduct early conflict-of-laws analysis and assess whether the chosen or likely governing law provides the substantive legal tools needed for the pleaded proprietary claim.
Legislation Referenced
- Not specified in the provided extract.
Cases Cited
- Not provided in the provided 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.