Envy Asset Management Pte. Ltd. (In Liquidation) and others v Lau Lee Sheng and others

Envy Asset Management Pte Ltd, Envy Management Holdings Pte Ltd and Envy Global Trading Pte Ltd, all in liquidation, purported to trade physical nickel from around 2015. The trading did not exist; the court described the scheme as the largest Ponzi scheme in Singapore's history, soliciting over S$1.5bn from investors. In Originating Claim No 193 of 2022, the companies and their liquidators sued six former employees, sales and other staff whom the liquidators accepted were unaware of the fraud, to claw back commission payments, profit sharing payments, referral fees and over-withdrawn sums (returns paid above their own invested principal). Basic salaries and bonuses were not claimed. A related judgment against two directors and an employee was issued at the same time: Envy Asset Management Pte Ltd (in liquidation) and others v Ng Yu Zhi and others [2025] SGHC 143.

The claims were brought under s 73B of the Conveyancing and Law of Property Act for payments before 30 July 2020, under s 438 of the Insolvency, Restructuring and Dissolution Act 2018 for later payments, and alternatively as transactions at an undervalue, unfair preferences and unjust enrichment. The employees said the payments were earned under their contracts, which they said turned on declared rather than actual profit, and asked the court to exercise its discretion against a claw back. Some counterclaimed for misrepresentation, quantum meruit and set-off. One defendant disputed that the companies had been insolvent throughout.

1. Whether the companies were insolvent when the payments were made.
2. Whether the payments were extra-contractual, so that the employees gave no valuable consideration and the payments could be set aside as transactions defrauding creditors or at an undervalue.
3. Whether the claims in unfair preference and unjust enrichment were made out.
4. Whether the court should decline to order a claw back, and whether the counterclaims or any set-off succeeded.

On solvency, the court found the companies insolvent from the outset: they had no legitimate business and could meet earlier investors only with new investors' money. Following Re Casa Estates (UK) Ltd (in liquidation) [2014] 2 BCLC 49, paying debts as they fell due did not show solvency in a Ponzi scheme, and the suggestion of undisclosed profitable assets was only hypothetical.

On the payments, the contracts tied commissions and profit shares to actual monthly net profit, and most defendants accepted that no profit meant no commission. Applying CH Biovest Pte Ltd v Envy Asset Management Pte Ltd (in liquidation) and others [2025] 1 SLR 141, it would be absurd to read profit as profits fraudulently declared, and such an implied term would fail the officious bystander test. Referral fees too presupposed a genuine investment. With no contractual basis, the employees gave no value, so the good faith defence in s 73B(3) failed; the payments were gifts and so transactions at an undervalue, and the presumed intent to defraud satisfied s 438. They discharged no debt, so they were not preferences; absence of consideration is not a recognised unjust factor, and unjust enrichment had no role where statutory remedies applied.

The court held it had a discretion to refuse a claw back, but one to be exercised sparingly where many investors are owed large sums. The employees kept their salaries and bonuses and had not shown their lives changed for the worse. CPF contributions were recoverable as the employees beneficially owned them, but excess income tax paid would be deducted as a matter of fairness. The misrepresentation counterclaim showed no loss to over-withdrawn investors, and its employee-based version and the quantum meruit claim were unpleaded. Set-off failed for want of mutuality; under-withdrawn investors must prove in the liquidation.

The court allowed the claim in part. It held that all the payments, save S$21,000 claimed against the third defendant, could be clawed back as transactions defrauding creditors and transactions at an undervalue, and ordered each defendant to pay the sum set out in the judgment, including S$17,932,745.26 by the first defendant and S$6,120,892.95 by the third defendant, less any excess income tax they paid because of the payments. The claims in unfair preference and unjust enrichment failed, as did the counterclaims. Costs and final computation were left for later directions.