Ming Shu Hung, Ronald v J F Ming Inc.
| Jurisdiction | British Virgin Islands |
| Judge | Jack, J |
| Judgment Date | 23 August 2022 |
| Judgment citation (vLex) | [2022] ECSC J0823-2 |
| Docket Number | CLAIM NO. BVIHC (COM) 2014/0053 and 2022/0027 |
| Court | High Court (British Virgin Islands) |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
CLAIM NO. BVIHC (COM) 2014/0053 and 2022/0027
Mr. Christopher Parker QC and Mr. Joshua Folkard, with them Mr. Malcolm Arthurs of Martin Kenney & Co for the Claimants
Ms. Blair Leahy QC, with her Ms. Eleanor Morgan and Ms. Sophie Christodoulou of Mourant Ozannes for the Second Defendant
The First Defendant did not appear and was not represented
Jack, J [Ag.]: Ming John Fook had seven children. I shall without disrespect call him and the children by their English given names. The children were Alex, Bertha, Hubert, Kenneth, Lawrence, Ronald and Tong. Kenneth and Tong are now deceased.
John came to Hong Kong in the 1950s and established a flourishing construction and property redevelopment company. Latterly the business traded through a company Ming Hsing Development Co Ltd (“MHD”). In April 1992 he had incorporated in this Territory the first defendant (“JFM”) and transferred to it all his business and assets. Lawrence, his second son, worked in the business and was latterly a director of both MHD and JFM. The other children worked abroad and were not involved in the business.
There had been animosity between Lawrence and his siblings going back as long ago as 1977. In that year, the siblings used shareholdings given them by their father to oust Lawrence from the business. John was furious. He bought back the shares and reinstated Lawrence.
On 29 th September 1992 John signed a memorandum in Chinese (“the Chinese memorandum”) which stated that he had transferred all his assets to JFM and had decided to divide all the shares of JFM into seven equal parts to be distributed equally to his children. The Chinese memorandum was executed in the presence of a trainee solicitor and a clerk from Baker & Mackenzie, the well-known law firm.
John arranged for all of his seven children to attend a dinner on 10 th October 1992, where the Chinese memorandum was read out. Each of the children was given HK$5 million at the dinner.
John died on 21 st December 1992.
What John did not say at the dinner on 10 th October 1992 was that at least purportedly at a meeting of the board of JFM on 8 th August 1992, he had procured that 10,000 shares in JFM were allotted to Lawrence. It was at a board meeting of 18 th September 1992 that another 7,000 shares were allocated for the purpose of distribution to the seven children in accordance with the Chinese memorandum.
In January 1993, after John's death, Lawrence distributed the 7,000 shares to each of the siblings as well as himself. He also arranged for each of them and himself to receive HK$5 million. Whether this was by way of a dividend or an advance (i.e. a loan) is in dispute. JFM also paid the estate duty due on John's estate. Again the appropriate treatment of this sum is in dispute.
On 30 th April 1993 there was another meeting of shareholders chaired by Alex where the siblings resolved that JFM should be liquidated. Lawrence never acted on that resolution.
On 28 th January 1994 there was a shareholders' meeting of JFM. Lawrence authorised a further distribution of HK$1 million to each of the siblings. Kenneth was appointed as an additional director of MHD.
On 21 st February 1994 a shareholders' resolution purported to remove Lawrence as a director. He responded, through Baker & Mackenzie, to say that the removal was invalid because he held 11,000 shares. This was the first time the existence of the 10,000 share distribution had been shared with the other siblings. This revelation prompted the beginning of over a quarter of a century of litigation.
On 24 th September 1996, Hubert, Tong, Ronald and Bertha started proceedings in the Hong Kong courts seeking a declaration that the Chinese memorandum was John's last will. As part of these proceedings orders were obtained for the forensic examination of 8 th August 1992 minutes and the ten share certificates for 1,000 shares each issued or purportedly issued to Lawrence.
On 29 th November 1999 the four siblings issued fresh proceedings in Hong Kong asserting that the minutes and share certificates had forged signatures, alternatively that they were signed by John without his knowledge or consent. By judgment of 30 th April 2004 Deputy High Court Judge Anthony To found that the minutes of 8 th August 1992 were forged. 1 John, he found, signed four of the share certificates in
the mistaken belief these were the certificates for distribution to the siblings; he did not sign the other six. Lawrence had practised a fraud on his fatherOn 26 th May 2005 the Hong Kong Court of Appeal (Cheung, Tang JJA and Kwan J) dismissed the appeal. 2 It found that John did not know and could not have known the content of the August minutes and the ten share certificates. However, it did not uphold the deputy judge's finding of fraud on the basis that fraud had not been pleaded. Nor did it uphold his finding of forgery, holding at para [31] that “unless the judge was satisfied that the signatures were not genuine he should not have so found.”
On 23 rd May 2006 the Hong Kong Court of Final Appeal (Bokhard, Chan, Ribeiro PJJ and Fuad and Eichelbaum NPJJ) allowed an appeal by Lawrence. 3 It concluded that the evidence did not show that John lacked knowledge when he signed the August minutes and the ten share certificates. Ribeiro PJ, giving the only reasoned judgment of the Court, held:
“89. Various categories of cases, such as those involving breaches of trust or fiduciary duty or other conduct which equity impugns as a species of fraud in equity, have been held to justify such equitable intervention [setting aside documents]. However, the courts have emphasised that the doctrine does not involve some vague notion of unconscionability but requires the establishing of specific grounds for relief, with proof of the necessary elements.”
On the basis that forgery had not been established, he went on to find that no adequate case had been made out to set aside the August minutes and the signatures affixed to the share certificates.
The result of the Hong Kong proceedings was that Lawrence held 11,000 shares and the other six siblings 1,000 each. Lawrence subsequently purchased the shares of Alex, Hubert and the estate of Kenneth. Lawrence's evidence at the first
After losing in the Hong Kong Court of Final Appeal, Ronald, Bertha and the estate of Tong took no immediate further action. Lawrence's case is that the Hong Kong property market in 2006 was in bad shape and that JFM and MHD were struggling. This was caused in part by improper behaviour of his siblings during the interregnum between the judgment of 2004 and the Court of Final Appeal's decision in 2006, when the siblings had control of the companies. This is not a matter for me to determine at the current stage of these proceedings. Lawrence says that after he took control again the companies performed better, helped by a rising property market in Hong Kong. I shall come back to this.
In 2014 Ronald, Bertha and Tong's estate issued the unfair prejudice claim under section 184I of the BVI Business Companies Act 2004 now before me. 5 The complaint as originally pleaded was that Lawrence had, in breach of the Articles of Association, failed to provide any financial information, so that the claimants did not know if they had any claim for dividends. The relief sought was an order for production of the financial information and the cancellation of a shareholder resolution waiving the provision of financial information. No claim for a buy-out was made.
The trial before Leon J was listed for three days commencing on 13 th October 2015. At the commencement of the trial, the judge acceded to an application by the
“…Upon Counsel for the Claimants' assurance that the Claimants will not adduce further evidence in chief consequent upon the amendments sought and will in the usual way not go outside the four corners of the pleaded case
By consent it is ordered:
1. [Permission to amend]
2. In the event of the Court ordering that the Second Defendant should buy the shares of the Claimants:
(a) The basis and principles for determining the price for the shares shall be determined at a future hearing following filing and service by the parties of statements of case and written submissions on the evidence adduced at this trial;
(b) The means by which the valuation process shall be conducted shall be determined at the future hearing.”
On the third day of the trial, after the evidence was complete, Mr. Parker QC, who then as now appeared for the claimants, asked for an adjournment so he could make an application for an amendment of the claimants' pleadings. The judge granted the adjournment, but an appeal to the Court of Appeal against the granting of the adjournment was successful on 12 th January 2016. 6 The trial resumed and was heard over 23 rd, 24 th and 25 th February and 26 th...
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