CH Biovest Pte. Ltd. v Envy Asset Management Pte. Ltd. (In Liquidation) and others

Envy Asset Management Pte Ltd (EAM) was one of the Envy companies, which purported to buy nickel at a discount and resell it, offering investors returns from the resale profits under letters of agreement. The Court found that this was in truth a Ponzi scheme: there was no nickel trading, and the profits paid to investors came from other investors' money. CH Biovest Pte Ltd, the appellant, signed nine letters of agreement with EAM between June 2019 and February 2020, investing a total of $5,480,246 and receiving $7,799,730, a "profit" of $2,319,484. All parties agreed that no nickel was traded and that this profit was paid from other investors' money.

The scheme began to collapse in March 2020 after the Monetary Authority of Singapore placed EAM on its Investor Alert List. Winding up orders were made on 16 August 2021. The liquidators, the second to fourth respondents, brought Originating Application No 311 of 2023 to recover only the profit portion of the payments, relying on s 73B of the Conveyancing and Law of Property Act (CLPA), s 224 of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) and unjust enrichment. The High Court judge allowed the two statutory claims, rejected the unjust enrichment claim, and ordered the appellant to repay the sums. The appellant brought Civil Appeal No 23 of 2024, arguing that it was contractually entitled to the profits.

1. Whether EAM paid the overwithdrawn sums in discharge of a contractual obligation to pay profits, and whether the liquidators had to show they had chosen the right type of avoidance provision.
2. Whether the appellant had given consideration that let it rely on the defence in s 73B(3) of the CLPA.
3. Whether the payments were a transaction at an undervalue under s 224(3)(a) of the IRDA.
4. Whether EAM was unable to pay its debts within the meaning of s 226(2)(a) of the IRDA when it made the payments.

On the preliminary issues, the Court held that there is no threshold requirement to pick the correct type of avoidance provision before a claim can proceed. The avoidance provisions share the aim of preserving the company's assets, and neither section's wording imposes such a filter. Nor was EAM ever obliged to pay profits. The letters tied the return to the value of EAM's actual nickel holdings, and with no trades there were no profits. Fairfield Sentry, relied on by the appellant, turned on a certification clause that these letters lacked. Following the later approach in Conway, the question is whether the parties' bargain was actually performed; here it never was, so the payments were non-contractual.

On s 73B(3), the Court traced the defence back to the Elizabethan Statute and older cases, and held that it requires consideration of adequate value given in good faith, not merely consideration in the contract-law sense. Since the payments had no link to the letters, the appellant gave no value for them and could not rely on the defence.

On s 224, the Court disagreed with the judge that the payments were a transaction on terms giving EAM no consideration, because that limb needs some mutual dealing. But the payments were gifts under the first limb: they were delivered, and EAM intended the appellant to keep the money.

On inability to pay debts, the Court declined to adopt the American rule that a Ponzi scheme is insolvent from the start, because Singapore uses the cash flow test and insolvency is a question of fact. Applying that test, EAM owed current liabilities of 85% of each investment at the end of each letter, faced contingent claims from investors, and had no real business to generate cash, so it was hopelessly insolvent.

The Court of Appeal dismissed the appeal. It held that the liquidators' claims under s 73B of the CLPA and s 224 of the IRDA were both made out, so it did not need to decide the unjust enrichment claim and took no view on it. It awarded the liquidators costs in the aggregate sum of $60,000, with the usual consequential orders.