Perry, Tamar and another v Esculier, Jacques Henri Georges and another and another matter

• Jurisdiction: Singapore
• Judge: Judith Prakash JCA
• Judgment Date: 19 October 2021
• Neutral Citation: [2021] SGCA(I) 5
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 12 of 2021 and Originating Summons No 16 of 2021
• Year: 2021
• Published date: 22 October 2021
• Hearing Date: 04 August 2021
• Plaintiff Counsel: Mark Hubbard (New Square Chambers) (Co-counsel),Yee Mun Howe Gerald and Jonathan Lim Shi Cao (Premier Law LLC) (Co-counsel)
• Defendant Counsel: Colin Liew (Duxton Hill Chambers (Singapore Practice Group)) (Co-counsel),Kam Su Cheun Aurill, Lim Rui Hsien Esther, and Valerie Thio Shu Jun (Legal Clinic LLC) (Co-counsel)
• Subject Matter: Civil Procedure,Interpleader,Principles,Actions in rem and in personam,Amendment of pleadings
• Citation: [2021] SGCA(I) 5

Judith Prakash JCA (delivering the grounds of decision of the court): Introduction

The appellants in this appeal are the plaintiffs in the action in the Singapore International Commercial Court (“SICC”) known as SIC/S 4/2020 (“Suit 4”). In Suit 4, the appellants claim to be the beneficial owners of a sum of money that is being held in an account in DBS Bank Ltd (“DBS”) in Singapore in the name of the second respondent. Faced with competing claims from the appellants and the respondents to the money, DBS started interpleader proceedings in the High Court in August 2019 (“OS 1016”). Consequently, on 30 January 2021, a court order was made that in effect directed that a new action be filed in the High Court with the appellants as plaintiffs and the respondents as defendants so that ownership of the money could be determined. The new suit was filed in March 2020 and it was subsequently transferred to the SICC whereupon it became Suit 4.

The appellants subsequently applied in SIC/SUM 55/2020 (“SUM 55”) for leave to amend their Statement of Claim in Suit 4 to (a) include an alternative claim based upon s 73B of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) (the “CLPA claim” and the “CLP Act” respectively) or upon the equivalent provision in Hong Kong being s 60 of the Conveyancing and Property Ordinance (the “CPO Claim” and the “HK Ordinance” respectively), and (b) add Lexinta Group Ltd (“LG Ltd”), a Hong Kong company, as a party to Suit 4. The International Judge (the “Judge”) heard the application on 25 September 2020 and dismissed it for the reasons given in his Grounds of Decision (“GD”) dated 30 October 2020.

The legal backdrop against which these amendments to the appellants’ pleadings were sought was the Court’s exercise of its interpleader jurisdiction under O 17 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”). The fundamental question which arose in this appeal was whether the additional claims that the appellants sought to bring could properly fall within the interpleader jurisdiction. Determination of this question involved, among other things, a determination of whether the relevant claims were “personal” or “proprietary” for the purposes of the Court’s interpleader jurisdiction.

Having heard the parties and considered their written submissions, we dismissed the appeal. We set out our reasons below.

The relevant facts The parties

The first appellant is a Polish business person and private investor. She is a beneficiary of the second appellant, which is a Netherlands Curacao Commercial Register private fund foundation.

The respondents, both of whom are French nationals, are a married couple. The second respondent, who is the wife, is the holder of the bank account to which the disputed monies have been credited.

Also relevant to the story behind the proceedings were: Bismark Antonio Badilla Rivera (“Badilla”), a Spanish national ordinarily resident in Switzerland. He is under investigation for fraud and was allegedly responsible for perpetrating an international Ponzi scheme. He appears to be in remand in Switzerland. LG Ltd, a Hong Kong company described as an “independent affiliated company of the Lexinta Group”. Its sole known director is Badilla. The Lexinta Group of companies (the “Lexinta Group”) which included LG Ltd, Lexinta Limited, Lexinta Management Limited, Lexinta Inc and Lexinta AG. Badilla was the President and founder of the Lexinta Group. The Lexinta Group was alleged to have been in the business of asset investment and management. Yachel Baker (“YB”), an Israeli national who was alleged to have been an investor in the Lexinta Group. Solid Real Estate & Development (1993) Limited (“SRE”), an Israeli private company of which the first appellant is the sole director and shareholder.

Factual background

The dispute in Suit 4 centred on competing claims by the parties to a sum of approximately US$10.24m (the “Monies”) in an account with DBS in Singapore held in the name of the second respondent (the “DBS Account”). Between 5 August 2016 and 1 February 2017, LG Ltd sent various sums of money to the DBS Account and the sums remitted eventually totalled US$10.24m.

The appellants’ claim to the Monies arose out of an alleged Ponzi scheme. This Ponzi scheme was said to have been operated by Badilla via the Lexinta Group. The appellants contended that the Lexinta Group had represented that they would be able to purchase blocks of shares in companies prior to those shares being listed on a stock exchange, reaping considerable profits for investors as a result. On the basis of these representations, various investors, including the appellants, transferred money to companies in the Lexinta Group pursuant to what are now said to have been fraudulent asset management agreements. The appellants further alleged that, as matters transpired, the Lexinta Group had stolen the transferred money, using the same to enrich Badilla and to keep the fraudulent scheme afloat.

By contrast, the respondents contended that the “[a]ppellants’ allegations of a ‘Ponzi scheme’ [were] not admitted and ha[d] yet to be tried” [emphasis in original]. Instead, the respondents’ account of the background facts was that Badilla and the Lexinta Group had held themselves out as providers of investment and asset management services, and both the appellants and the respondents had availed themselves of these services pursuant to various (and separate) asset management agreements entered into with Lexinta Group entities.

The respondents began investing with the Lexinta Group around April 2014. From 16 April 2014 to 26 February 2015, the respondents invested an aggregate of €4m and US$1m (or a total of around US$6m) with the Lexinta Group.

Subsequently, in late-2015, the respondents informed the Lexinta Group that they wanted to terminate their investment. The date agreed with Badilla for the return of their investment (with profit, less the commission fees payable) was 15 April 2016. The respondents understood that they would receive their original investment of around US$6m back, along with profits of around US$4.4m, for a total of around US$10.4m. The deadline of 15 April 2016 came and went without any payment, and the respondents’ Swiss lawyers, Bär & Karrer, sent various demands for payment to the Lexinta Group and Badilla. Eventually, the Lexinta Group complied with the demands and paid the respondents in a number of tranches between August 2016 and February 2017. As stated earlier, the total amount transferred was approximately US$10.24m. All of the Monies were transferred from LG Ltd’s bank account with DBS at its Hong Kong branch (the “Lexinta Account”) to the DBS Account in Singapore.

As for the appellants, their position was that they had, directly and indirectly, invested at least US$24m with the Lexinta Group since around mid-2016. The first appellant indicated that she began having doubts regarding these investments by December 2017 following the Lexinta Group’s failure to transfer certain moneys to her account. Further, contact with Badilla had ceased by November 2017. These doubts were said to have been compounded by the first appellant’s discovery of various proceedings against Lexinta entities in Hong Kong between end-2017 and early-2018.

On 6 March 2018, the first appellant and YB, who was also an investor in the Lexinta Group, obtained ex parte discovery orders from the Hong Kong courts against DBS for the banking records of the Lexinta Account. On 13 March 2018 and 10 April 2018, DBS disclosed documents and records in respect of the Lexinta Account pursuant to the discovery order. This resulted in the first appellant and YB becoming aware of the sums paid by LG Ltd to the DBS Account. The first appellant and YB thereafter asserted that the respondents had been party to the Ponzi scheme as “accomplices” or “associates” of Badilla’s. They then claimed ownership of the Monies. In May 2018, the first appellant’s Hong Kong lawyers demanded that DBS transfer the Monies to the first appellant. Shortly thereafter, DBS froze the first respondent’s DBS Account.

In letters from DBS to each of the respondents dated 11 March 2019, DBS (a) informed the respondents that, following a review of their accounts, it had decided to close all the respondents’ bank accounts with DBS, and (b) requested that the respondents provide transfer instructions for the moneys held in those accounts. The respondents’ evidence was that they provided the transfer instructions sought on or around 15 March 2019. However, DBS refused to comply with the transfer instructions, and the respondents claimed that this marked the first time they realised that all their accounts with DBS were frozen. On 5 April 2019, the respondents’ solicitors wrote to DBS, demanding that it comply with the respondents’ transfer instructions.

Procedural history

Faced with competing claims to the Monies, DBS commenced OS 1016 on 8 August 2019. The second respondent, the first appellant, and YB were named in OS 1016 as the first, second, and third defendants respectively. OS 1016 was heard before Dedar Singh Gill JC (as he then was) on 10 January 2020. At the hearing: The first appellant expressly abandoned all allegations that the respondents had been involved in Badilla’s alleged Ponzi scheme. This led to Gill JC repeatedly questioning the first appellant’s counsel on whether the first appellant did in fact have an interest in the Monies, and what the evidence of such an interest was. Counsel for the first appellant drew to the Court’s attention a letter from the second appellant supporting the making of the interpleader order, and indicating that it wished to intervene. Gill JC declined to permit the second appellant to intervene until it came before him to state its claim to the Monies, describing the attempted circumvention of procedure as being “wholly...