Infinity Treasures Pte Ltd v Global Currency Exchange Network Limited

It was appointed by Venture International Holdings Limited (“Venture”) under a contract dated 16 May 2012 to market a financial product offered by Venture called “the Exit Strategy” (“ESC”) in Singapore, Malaysia and Hong Kong.

By a further contract dated 1 September 2013 but executed on 3 October 2013, Infinity Treasures was appointed by Project Kudos Group Ltd (“Kudos”) as marketing agent for ESC and for another product, “Rebuilding America” (“RBA”).

Infinity Treasures earned marketing fees for its marketing of ESC and RBA.

Global Currency provided remittance and payment services in relation to investments in ESC and RBA under which they held sums paid by investors in those products for certain purposes.

In July 2013, Global Currency opened a bank account on Infinity Treasures’ behalf with Royal Bank of Scotland (“the Account”) for the purpose of receiving the marketing fees Infinity Treasures was entitled to.

Venture and Kudos paid commission fees due to Infinity Treasures into the account.

Global Currency was obliged to pay the credit balance of the Account to Infinity Treasures or as Infinity Treasures instructed.

I directed that a notice explaining the nature of the proceedings and the steps which had to be taken to participate in them had to be served upon (i) Infinity Treasures; (ii) all those previously served under the orders of Teare J and Bryan J; (iii) all of those who were registered as investors in the RBA Product; and (iv) any other persons who had contacted Global Currency or the Court asserting a claim (“the Notice”). This comprised 1228 persons.

Directions were given as to how service was to be effected.

Within 21 days of service of the order, any person seeking to advance a claim was required “to file with the court through the court’s CE Filing System a witness statement which explains the basis on which they have a claim to the Fund which is signed, dated and contains a statement of truth.”.

For any person who claimed to be an investor but who failed to comply with that requirement, “it will be open to the court to determine the issues relating to the Fund without any reference to any claim they may have or to reject their clam”.

The Notice summarised the proceedings and the order made to date, and stated that my order was “intended to provide a final opportunity for those wishing to assert claims to the Fund to notify their claims and to serve evidence in support of them.”

The Notice explained that the witness statement should explain the amount invested in ESC/RBA products, the amount received back; why the claimant said that they are entitled to payment from the Fund and how much; identify and attach any documents relied upon; and must contain a Statement of Truth (the Notice setting out the required form).

The Notice stated that Global Currency was claiming its costs and the current amount of costs claimed, attaching Global Currency’s costs schedules, and that investors who wished to oppose an order to that effect had to explain their reasons for doing so.

The Notice stated:

“The witness statement should state whether you are content for the court to determine the Stakeholder Application and the Defendant’s application to be paid its legal costs on the documents, or whether you wish to make oral submissions at a hearing to be heard remotely. If you do not ask to make oral submissions at a hearing, the court will proceed on the basis that you are content for the court to determine the Stakeholder Application and the Defendant’s application for costs on the documents.

The court anticipates determining all claims to the Fund and the Defendant’s application to be paid its costs out of the Fund, either on the documents or following an oral hearing, before the end of July 2023.”

Those persons who have contacted the court but not provided a signed witness statement or who have provided a statement with no text have not sufficiently complied with the court’s orders, and will not be recognised as claimants.

Those persons who have filed witness statements but not included a statement of truth in any form have failed sufficiently to comply with my order and will not be recognised as claimants.

Those persons who have included a statement of truth which does not meet the requirements of the CPR, but who confirmed the truth of their statement or where such a statement was served on their behalf have done enough to comply with the court’s orders, and will be recognised as claimants. These individuals are: Benjamin Lim Lye Hock; Tan Mee Huay; Randhir Radhakrishnani; Ung Bin Ngu*; Koh Wah Heng* & Yeoh Huay Na*; Ho Toh King* and Lau Mee Kwong*; Ho Meng Leong (Deceased)*; Chin Boon Tat* and Wong Binti Batlan*; Chin Boon Tat*; Loh Hun Khan* and Chay Ci-En Belinda*; Chai Min Fui* and Chai Mei Kean*; Vasantha A/P Muthusamy*; Kularatnam A/L M Subramaniam* and Sugathini A/P Masilamoney*; Kuluratnam A/L M Subramaniam*; Chieng Ing Meow*; Tan Yin Ying*; Tan Han Khian*; Khor Boon Hoch*; Loh Chee Chin* and Loh Chee Kuang*; Er Liong Tek*; Ng Kim Yong*; Chua Shang Tze*; Chiew Pang Ding*; Lim Weng Yat*; Ting Pang Won*; Tan Cheng Chee* and Tan Yi Ling Evelynn*; Wong Sie Pui*; Mohammed Francis Arthur Lewis* and Shamsiah Binti Mohd Yusof*; Ravindranathan A/L N Naraya Menon*; Amran Bin Abu Bakar*; William Kong Sing Ong*; Chiew Hong Kee*; Tan Seng Kong* and Chong Ai Peng*; Chan Joon Moi*; Yong Yen Lim*; Chuah Hok Leng*; Lim Kim Lan; Ng Guat Lay; Pin Pin Tay; Yip Chai Ping*; Jia Hui Tan; Tan Yian Huay. Investors marked * are investors for whom a statement was made on their behalf by Tan Han Meng.

Those persons who provided signed statements including statements of truth are also recognised as claimants.

An “Exit Strategy Cycle Agreement” between the investor and the SPV. This provided that the funds invested were to be paid to Global Currency. The funds were to be transferred to an Escrow Account governed by an Escrow Agreement from where they could be accessed by the SPV for limited purposes. The SPV was able to use those funds over a 12 month-period to buy and sell property which the SPV was to hold on trust for the investors. At the end of 6 months the SPV was to pay the investor 6% of their stake, and after a further 6 months, 9% of their stake plus their investment amount, such payments to be made regardless of the outcome of the property investments. On payment of those amounts, the investors’ proprietary interest in the properties or their proceeds would cease.

The amounts payable to investors after 6 and 12 months were to be paid to another company, “Global Custodial Services Ltd” (“Global Custodian”), who was to hold them “on trust”, and on-pay them to the investors. Global Custodial shares the same address as Global Currency, and has at various stages had common directors. I am satisfied that these companies are linked.

A “Trustee Agreement” was concluded between the investor, the SPV and Global Custodian, under which Global Custodian was to hold properties acquired with the investment on trust for the investors.

An “Escrow Agreement” was concluded between the SPV and the Escrow Agent, with funds “to be released only for the purposes of purchasing, rehabilitating (construction) and selling residential properties … or as otherwise provided herein”, which last phrase appears to be a reference to payments out to the investors at the end of the investment cycle, such payment to be made to Global Custodian.

A “disclosure statement” explained the different roles of Global Custodian and Global Currency. Sums the investor wished to invest were to be paid to Global Currency, which were to be held in a segregated account. Global Currency was then to remit the funds (exchanged into another currency as appropriate) to Global Custodian, who, once investment in the fund for each SPV had closed, would transfer funds into the Escrow Account for investment. Global Custodian was also required to hold those funds in a segregated account and on trust for the investors.

A “sales closing” document signed by the investor stated, “all funds are held in the Escrow Account by the Escrow Agent and shall only be released by the Escrow Agent for the purposes of purchasing or refurbishing of properties or the purpose of making payments to partners [viz investors] as due herein.”

Within the time period when Global Currency was involved, there were six ESC investment funds from July 2013 to December 2013.

The RBA investment followed a similar structure, except that the investment period was 24 rather than 12 months, and the SPV promised to pay 18% of the investment value back after 12 months, and the investment amount and a further 20% after 24 months.

The amounts paid by the investors to Global Currency appear to have been held on trust for the investors. Were that not the case, the protections afforded by the Escrow Account could not have been achieved.

The amounts paid by the SPV for payment to the investors would have been received by Global Custodial on trust for the investors.

There was no provision for payment of commission to Infinity Treasures from funds paid to Global Currency, nor from the Escrow Account, nor from sums payable to Global Custodial.

For each ESC cycle, funds would be returned to Global Currency equivalent to 6% of the invested sum within 6 months of the end of the month of investment (so for an investment in the ESC for January 2013, a sum equivalent to 6% of the investment would be remitted to Global Currency before the end of July 2013).

For each ESC cycle, funds would be returned to Global Currency equivalent to the invested sum plus 9% of the invested sum within 12 months of the end of the month of investment (so for an investment in the ESC for January 2013, a sum equivalent to 109% of the investment would be remitted to Global Currency before the end of January 2014).

For each RBA cycle, funds would been returned to Global Currency equivalent to 18% of the invested sum within 12 months of the end of the month of investment (so for an investment in the RBA for September 2013, a sum equivalent to 18% of the investment would be remitted to Global Currency before the end of September 2014).

For each RBA cycle, funds would been returned to Global Currency equivalent to the invested sum plus 20% of the invested sum within 24 months of the end of the month of investment (so for an investment in the RBA for September 2013, a sum equivalent to 120% of the investment would be remitted to Global Currency before the end of September 2015).

Investors in the February 2013 ESC were sent a list of properties said to have been acquired dated 9 May 2013, and an “audit report” produced by an entity called Glenmuir International Limited (“Glenmuir”) – said to be registered in the Seychelles – on 12 May 2013. This purports to show the entirety of the investment being paid into the Escrow Account and the purchase of 44 properties.

There are similar documents for the April 2013 ESC dated 12 and 22 July 2013 (the audit report stating that the entire investment of S$8,020,000 had been paid into the Escrow Account).

In November 2013, Global Custodian provided an audit report for the August 2013 ESC describing funds received and properties acquired.

There are reports of properties acquired (but, at least in the court papers, no audit reports) for the September 2013 ESC (17 December 2013) and the October 2013 ESC (14 January 2014).

Global Custodian provided an audit report in November 2013 for the November 2013 ESC.

A report and audit letter for the October 2013 ESC appears to have been circulated on 4 February 2014, although I have not seen the documents.

On 1 May 2014, RKF Law Offices provided a report on properties said to have been acquired for the October 2013 RBA product, and there appears to have been an audit report as well, circulated under cover of a letter of 7 May 2014.

An update pack for the November 2013 RBA was circulated on 25 June 2014, which included a letter from a firm of US attorneys describing the properties said to have been acquired.

There is a similar letter from US attorneys relating to the December 2013 RBA product dated 23 July 2014.

A S$ account (“the S$ Account”) with DBS Bank in Singapore, where funds from investors were received, currency conversions made, and payments transferred for investment (“Inwards Payments”), and to receive $S payments which Global Currency had received from the SPVs for onwards payment to investors (Global Currency having first converted those payments from the SPVs into S$) (“Outwards Payments”).

The Account was used both to receive funds transferred from Inwards Payments by way of commissions to Infinity, and to receive Outwards Payments from the SPVs for transfer to the S$ Account and onto the investors.

S$20,091,406.40 was paid into the account between 13 September 2013 and 28 September 2014 (this is the figure shown on the spreadsheet exhibited by Mr Hyde, which differs from the figure of S$18,723,285 in Mr Hyde’s statement).

S$5,512,275 of this amount was money paid for commissions believed to be due to Infinity on the sale of ESC products which was paid from Inwards Payments received by Global Currency from investors and paid into the S$ Account.

S$6,466,800 of this amount was money paid for commissions believed to be due to Infinity on the sale of RBA products which was paid from Inwards Payments received by Global Currency from investors and paid into the S$ Account.

S$6,738,300 described as “referable to the partial reimbursement from the SPVs of payments made from the Account to the [S$ Account] for distribution to investors”. The language would suggest that funds in the Account may have been used to meet Outwards Payments due to Investors, with the SPVs then making the Account good in respect of some of those payments.

S$5,910, a single payment made on 4 October 2013.

The total was S$17,466,623.40 (this being the figure on the spreadsheet exhibited by Mr Hyde – Mr Hyde’s figure is S$17,466623.40).

S$5,123,372 was paid to the S$ Account “to meet the Claimant’s payroll”. The basis on which this was said to be a legitimate application of funds in the Account is not clear.

S$9,505,800 transferred to the S$ Account “for distribution to investors on account of sums then due from Investors from the Scheme but not paid when due by the SPVs”. The inference I draw is that monies standing to the credit of the Account appear to have been used to make the payments promised under the investments but not made by the SPVs.

S$587,330 paid to an account of Infinity Treasures in Singapore. The basis on which this was said to be a legitimate application of funds in the Account is not clear.

Other payments out, totalling S$882,000.

One of the documents which investors had to confirm their “Servicing Consultant/Manager” (which I am satisfied embraced Infinity Treasures in its marketing role) was the Global Custodial “Transparency and Disclosure Statement”.

This states that funds received by Global Currency will “be held in a segregated client account” and then transferred to the Escrow Account for investment.

The document emphasised that both Global Currency and Global Custodial “take the protection of investors’ capital seriously and have to that end introduced robust procedures for the daily monitoring of the segregated client accounts.” Payment of these funds to Infinity Treasures does not involve payment into the Escrow Account, nor the use of the funds for investment.

Further, the “Sales Closing Document & Disclosure Checklist” which Infinity Treasures provided to investors stated “all funds are held in the Escrow Account and shall only be released by the Escrow Agent for the purposes of purchasing or refurbishing of properties or for the purpose of making payments to partners [i.e. investors] as due herein.” There was nothing about the funds being used to make payments of commission to Infinity Treasures.

There was no suggestion in that material that Global Currency had a role which involved meeting Project Kudos expenses, something which would have been of obvious materiality to those asked to entrust their funds to the scheme. Instead, the document suggested that it was an exhaustive statement of the roles of the two Global entities (“it is important to note that each entity undertakes differing functions and the processes that they perform are described below”).

Infinity Treasures provide no facts or material on the basis of which they could have believed that Global Currency had access to funds from Project Kudos, or which did not come from investors, from which to pay commissions.

On the basis of the marketing materials which it was responsible for circulating, I am not persuaded that Infinity Treasures can have understood that Project Kudos was entitled to give instructions for the investor funds held by Global Currency to be used to meet Project Kudos’ liabilities to Infinity Treasures.

It is apparent from the witness statement of Mr Hyde on behalf of Global Currency that at some point it “invited the Claimant to produce documentation to show that the payment of Investor Funds was authorised by the Investors”, but no such documents were produced.

The material before me suggests that ESC products went into default in November 2013. On that basis, any claim to the Fund in respect of the July 2012 ESC product is rejected, the entire interest of any such investor having been exhausted by receiving the promised return.

While the evidence is unclear, it seems to me more likely that the sums removed from the investor funds to the Account were removed from those funds prior to the point of transfer to the SPVs, rather than from the proceeds of sales. The application of monies for commissions seems more likely to have occurred at or near the time of investment, rather than only once payments were due from investments.

On that basis, I am satisfied that I should treat any investment made during the period between 13 September 2013 and 17 July 2014 as having an interest in the Fund by reference to the proportion of their investment.

Over that period, amounts for the following investments would have paid into the Account during its period of operation:

On that basis, the total of eligible and established claims is S$4,430,000 against a Fund of S$2.6m.

Subject to any award of costs to Global Currency, it follows that each claimant with an eligible and established claim is entitled to the percentage of the Fund set out in the final column next to their name. When there is no such number, there is no entitlement.

Its role was to receive funds for investment and pay proceeds to investors.

Global Currency made payments into the Account from investor funds which “it understood were due” on the instructions of the SPV directors “which at the time [Global Currency] believed the SPV Directors were entitled to give”. However, it is apparent that Global Currency had not identified any material establishing the basis on which the SPV Directors would be entitled to give instructions as to the application of trust funds, because Global Currency later requested documents of that kind from Infinity Treasures, but none were provided.

Global Currency says that in September 2014, it “began a review of the Investment Agreements and the associated documentation that they were aware of” and “became concerned” that they suggested that the SPV Directors did not have authority to direct Global Currency to make the payments they did. However, that information appears to have been available to Global Currency at all times. In any event, as a custodian of funds to be held in a segregated account, it might be thought that Global Currency ought not to have paid those funds away without establishing that there was a sound basis for doing so.

The Global Currency audit reports do not inform investors that funds have been applied to meet commissions said to be due to Infinity Treasures.

Wong Sook Heng, Loh Soon Whye, Ng Siew Lang Margaret and Tan Choon Chye Kevin have sought to be added as new claimants, but the time for asserting claims has passed.

Dennis Ang, Eileen Hong, Chuang Mui Jong Alexandra, and Tee Wei Liang Alexander claim to have filed contemporaneous witness statements. However they provided no evidence of this, nor could any statements be found on the court system.

Lim Seng Chan and Pin Pin Tay claim in respect of ESC investments in April 2013 and August 2013, which are outside the eligible time period.

Goh Siew Mee, Teo Yeok Tee, and Teo Seok Khun claim to have filed compliant witness statements, but the relevant documents do not contain signed statements of truth.

Lew Chin Lien (Liu Zhenglian) produced evidence that she had filed a contemporaneous witness statement. However, her claim concerns an ESC investment in July 2013, and she has not produced sufficient evidence that her investment was in fact made within the eligible time period.

Investors’ current bank account details, including:

Investors’ identity documents, including both:

For those investors listed as two individuals in the schedule, payment instructions from both individuals as to how to split the payment.