[1] Chi Hung Andy Chan [2] Chi Lim AU [3] Hung Kwong Fok [4] Wai Keun Elinor Fung Claimants/Respondents v [1] Noble More Grouname Ltd [2] Offshore Incornameorations Ltd [3] KA Chuen Kevin Lai Defendants/Applicants

JurisdictionBritish Virgin Islands
CourtHigh Court
JudgeRamdhani J.
Judgment Date23 March 2017
Neutral CitationVG 2017 HC 5
Judgment citation (vLex)[2017] ECSC J0323-6
Docket NumberCLAIM NO. BVIHC 228 OF 2016
Date23 March 2017
[2017] ECSC J0323-6

IN THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

CLAIM NO. BVIHC 228 OF 2016

In the Matter of the Noble More Group

Between:
[1] Chi Hung Andy Chan
[2] Chi Lim AU
[3] Hung Kwong Fok
[4] Wai Keun Elinor Fung
Claimants/Respondents
and
[1] Noble More Grouname Limited
[2] Offshore Incornameorations Limited
[3] KA Chuen Kevin Lai
Defendants/Applicants
Appearances

Mr. Nicholas Brookes of Ogier for the First and Third Defendants/Applicants

Mr. Peter Ferrer of Harney, Westwood & Riegelsfor the Claimants/Respondents

Company — Ownership of Shares — Executed Instruments of Transfer — BVI company refusal to correct share register — Recorded owner challenging validity of Instrument of transfer — Service out of jurisdiction — Application to set aside service out of jurisdiction — Jurisdictional gateways — Necessary or proper party to claim CPR7.3(2) — Claim related to ownership and control of company CPR 7.3(7) — Whether BVI clearly or distinctly the appropriate forum — Connecting factors to the BVI — Whether the pleadings, correspondence, common sense or submission demonstrate that connecting factors point away from the BVI.

The claimants are all nationals and residents in Hong Kong, each of whom claim to hold an executed 'Instrument of Transfer' of 7000 shares in their respective names, in the Noble More Group Limited (D1), a BVI company. They filed a Fixed Date Claim in the BVI High Court seeking rectification of D1's company's register under section 43 of the BVI Business Companies Act 2004, to reflect that they were the owners of the respective shares. The claim was brought against D1 and two other defendants, namely Offshore Incorporations Limited (D2), another BVI company, the registered agent of D1, and Ka Chuen Kevin Lai (D3), a Hong Kong national residing in that jurisdiction. In the affidavit and documents supporting the claim, the claimants' case is as follows: 'In October 2005, the company the Noble More Group Limited (D1) was incorporated as an international business company in the BVI. At the date of its incorporation it had seven shareholders who were also directors – these were all the claimants and three others, two nationals of Hong Kong and one from mainland China. At that time the claimants were shareholders and directors in a Hong Kong company, one Offmax which was in the business of selling office furniture out of Hong Kong. The three other persons were suppliers of Offmax. D1 was a joint venture between the claimants as owners of Offmax and the suppliers. The business of the two companies was conducted largely from Hong Kong; no business was done in the BVI. D3 became involved with the business of the two companies providing expertise in exporting furniture and became a shareholder of D1 in September 2008 and a director in December 2012. On or about December 2010, the claimants, being advised that Offmax and D1 should not have common directors and shareholders for tax reasons, ceased being shareholders and directors. As a result of this, D3 executed four 'Declarations of Trust' stating that he held 7,000 ordinary shares in D1 in trust for each of the claimants. The Declarations stipulated that D3 was under an obligation to transfer to each of the claimant on request, the 7,000 shares he held on trust. On the 10 th July 2015, each of the claimants exercised his rights under the Declaration and requested that the shares be transferred to each of them respectively. It is contended that on the 10 th July 2015, D3 executed four separate instruments of transfers vesting 7,000 shares in the names of each claimant. Between the months of October to December 2015, the claimants sought to have D2, the registered agent of D1 rectify the share register to reflect that each of them was the owner of 7,000 shares. By late October 2015, the claimants considering themselves shareholders, held a shareholder's meeting and removed D3 as a director of D1 and appointed themselves directors. Eventually D2 informed the claimants that it would not rectify the register as D3 had informed that the share transfer were 'void and of no effect'. He had earlier told the claimants that D3 was also not agreeing with 'the changes of administrator of the company'.'

An application was made to serve the claim out of jurisdiction on D3 and the court queried during that hearing about whether the summary nature of a rectification application was appropriate when there was an underlying dispute related to the ownership of the shares. The Fixed Date Claim was then amended to remove the rectification application and to seek in its stead, declarations that the Instruments of transfers of the shares and the resolutions removing D3 and appointing them directors were valid and binding. On the 11st November 2016, leave was granted to serve the claim out of jurisdiction.

This then led to the present applications before the court filed on the 31 st of January 2017, and the 1 st February 2017, on behalf of D3 and D1 respectively.

D3's application was an application to set aside service on the basis that (a) there were certain procedural irregularities related to the service, (b) that there were no jurisdictional gateways to allow for service out of jurisdiction, and (c) the BVI was not the natural or appropriate forum. D3's supporting affidavit stated inter alia that the 'declarations of trust which are the subject matter of the claimants' claim are governed by Hong Kong Law' and that there were other connecting factors point to Hong Kong being the more appropriate form. It was also contended that there had been material non-disclosure by the claimants at the hearing of the application to serve out. Additionally, it was argued that the claimants were bound by an arbitration clause contained in D1's Articles of Association to submit themselves to arbitration to resolve any dispute related to ownership of shares or to the administration of the company.

D1's application was also an application going to jurisdictional issues, seeking an order to stay the proceedings and a declaration that the court should not exercise it jurisdiction to hear the claim. This application was grounded on contentions that the claim disclosed no cause of action and or was frivolous and vexatious, as well as that the BVI was not the appropriate forum to try the claim.

Held: setting aside service of the proceedings against D3 and staying the claim against D1 and D2, that:

  • 1. An application to set aside service out of jurisdiction amounts to a rehearing of the original application for permission to serve out and accordingly the burden of proof is on the claimants to show that there is (a) a real issue between the claimant and the foreign defendant to be tried on the merits, (b) that there is an arguable case that one or more of the jurisdictional gateways are available and (c) that the local jurisdiction is clearly or distinctly the appropriate forum and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction and on this application not set aside service already granted.

    Applied: Nilon Limited and Anors v Royal Westminister Investment S.A. and ORs [2015] 4 LRC 584; Spiliada Martime Corp v Cansulex Ltd. [1987] AC 460Collier v Williams [2006] EWCA 20; Marty Steinberg et al v Banque De Patrimoines Prives Geneve et al Claim No. 253 of 2009

  • 2. It is the claimants' case that they held executed Instruments of Transfer executed by D3 giving to each of them 7,000 shares in the company, and that when they had requested the registered agent D2 to correct the share register to reflect that each was the owner of 7,000 shares, there was a refusal purportedly on the basis that the recorded owner of the shares D3, had instructed D2 that the Instruments of Transfer were void and of no effect'. These contentions gave rise a serious issue to be tried on the merits between the claimants and D1 and D2. Further, having regard to the contentions that D3 had caused D2's refusal, and D3's apparent acceptance on his own application to set aside service that he was challenging the validity of the Instruments of Transfers, a serious issue on the merits for trial arose between the claimants and D3.

  • 3. There is a good arguable case that the claim falls within two classes of cases in which permission to serve out may be given. First, D3 was a necessary or a proper party to finally resolve this issue between the claimants and D1 and D2 once and for all. Accordingly CPR 7.3(2) grounds the first gateway. As pleaded, the case is one related to the ownership and administration of a BVI company and this engages CPR 7.3(7) grounding the second jurisdictional gateway.

  • 4. In considering whether the claimants have shown that the BVI is clearly or distinctly the appropriate forum, the court must have regard to the connecting factors in the context of the nature of the dispute. Here the court is to have regard to the pleaded case, the evidence including the correspondence, common sense and the submissions made by counsel. Whilst the court could not use the submissions to fill any gaps in the evidence or to find connecting factors which the evidence did not ground, matters which were raised must be considered in a practical manner. In this case, D3's answer to the claim comprises of two statements, one contained in correspondence to D2 that the share transfers are 'void and of no effect' and the second in his affidavit that 'Declarations of Trust …are the subject matter of the claimants' claim'. These statements when taken together with the claimants' claim and the supporting documents suggest that in considering whether to grant the relief sought, the 'dealings' or documents in Hong Kong are likely to be relevant to claim. The claimants' own evidence of events leading up to the declarations and the instruments of...

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