Ng, Man Sun (also known as Ng Wei) v Peckson Ltd (a BVI company)
| Jurisdiction | British Virgin Islands |
| Judge | Farara JA |
| Judgment Date | 08 April 2020 |
| Judgment citation (vLex) | [2020] ECSC J0408-3 |
| Docket Number | BVIHCMAP2019/0011 |
| Court | Court of Appeal (British Virgin Islands) |
| Date | 08 April 2020 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE COURT OF APPEAL
The Hon Mr. Paul Webster Justice of Appeal [Ag.]
The Hon Mr. Gerard St. C. Farara, QC Justice of Appeal [Ag.]
The Hon Mr. Eamon Courtenay, SC Justice of Appeal [Ag.]
BVIHCMAP2019/0011
Mr. Philip Jones, QC with him, Ms. Victoria Lord, Mrs. Kimberly Crabbe-Adams and Mr. Romane Duncan for the Appellant.
Mr. John McDonnell, QC with him, Mrs. Dancia Penn-Salah, QC for the Second Respondent.
Commercial appeal — Retrial by order of Judicial Committee of Privy Council — Application for rectification of the register of members of BVI company — Dispute over beneficial ownership of shares in BVI company between appellant and second respondent — Whether trial judge erred in not making findings as to the credibility of the witnesses and the existence of oral Agreement — Shares transferred by appellant to second respondent — Whether transfer of shares for stated consideration which was never intended to be paid a gratuitous transfer — Whether transfer of shares gave rise to resulting trust — Whether transfer of shares to second respondent a gift — Onus of proof — Effect of registration as owner of company shares — Whether minutes of meeting of company directions and written declaration by appellant are decisive as to beneficial interest in shares — Whether trial judge erred in rejecting appellant's case on the Cotai Strip Project — Whether trial judge erred in finding that appellant transferred the shares to second respondent to evade his creditors — Whether trial judge ought to have found that second respondent was appellant's “figurehead” or bare nominee
The appellant (“Mr. Ng”) and the second respondent (“Madam Chen”) had lived together in a de facto marriage for over 20 years. The first respondent Peckson Limited (“Peckson”), a British Virgin Islands (“BVI”) company, was the owner of all the shares in Empresa Hoteleira de Macau, a Macau company (“Empresa”) which it acquired in 1996. Empressa is the owner of the New Century Hotel in Macau (“the Hotel”). Mr. Ng and Madam Chen's relationship ended in 2012, after Mr. Ng had transferred 40,000 shares in Peckson (the “Shares”) to Madam Chen on 4 th October 2011, ostensibly for a stated consideration of US $40,000.00. The transaction was effected by virtue of a Bought Note and Sold Note as well as an Instrument of Transfer all dated 4 th October 2011. The transfer of the Shares to Madam Chen was approved by a written resolution of the directors of Peckson dated 4 th October 2011 and signed by both Mr. Ng and Madam Chen in their capacity as directors of the company. A share certificate, also dated 4 th October 2011, (the “Share Certificate”) was issued by Peckson to Madam Chen. It is common ground between the parties that the stated consideration of US $40,000.00 for the transfer of the Shares was never paid and was never intended to be paid.
In August 2012, Mr. Ng commenced a claim in the Commercial Court against Peckson for an order that the transfer of the Shares by him to Madam Chen on 4 th October 2011 is void and of no effect, for an order for rectification of the register of members of Peckson to show Mr. Ng as the registered owner of the Shares, and for certain consequential orders. Madam Chen applied to be and was joined as a party to the proceedings. She filed a defence and counterclaim which sought declarations that Mr. Ng ceased to have any interest or right in the Shares as of 4 th October 2011 and that she is, and has been since that date, the only true legal and beneficial owner of the Shares. The dispute was considered by a learned judge of the Commercial Court, who gave judgment in favour of Madam Chen. The learned judge treated the transfer as a ‘sale’ and transfer for valuable consideration, albeit not paid.
Mr. Ng appealed. The Court of Appeal allowed Mr. Ng's appeal and declared him to be the owner of both the legal and beneficial interest in the Shares. The Court held that the learned judge erred in treating the 2011 transfer of the Shares as a sale, as no such positive case had been pleaded by Madam Chen. Indeed, her pleaded case was that, she had provided the deposit for the purchase of the Hotel and pursuant to an alleged oral agreement between herself and Mr. Ng in 1996 (“the 1996 Oral Agreement”), she had retained the beneficial interest in the Shares when they had been transferred. The Court further found that the transfer of the Shares, not being for valuable consideration, gave rise to a presumption of a resulting trust in favour of Mr. Ng, which had not been rebutted by Madam Chen, who had not led any evidence that Mr. Ng intended to make a gift of the Shares to her.
Madam Chen appealed to the Privy Council. The Board allowed the appeal, and remitted the matter to the Commercial Court for retrial before a different judge. The Board posited that either the consideration of US$40,000 for the Transfer was still payable, or the parties never intended that it be paid, and, accordingly the transfer was not by way of sale, but was a gratuitous transfer. The Board therefore opined that the judge at the retrial should explore issues that would yield two possible results, either that Madam Chen held the Shares on a presumption of a resulting trust for Mr. Ng; or that the Shares were a gift from Mr. Ng to Madam Chen.
The matter came on before Adderley J for retrial. By the end of the retrial, it was common ground between the parties that the transfer was a gratuitous transfer. The learned judge dismissed Mr. Ng's claim and granted Madam Chen's counterclaim. He found that Mr. Ng ceased to have any interest or right of any kind in the Shares of Peckson and that Madam Chen was, and has since 4 th October 2011 been, the only true beneficial owner of the Shares and the only person entitled to be registered as their legal owner.
Mr. Ng, being dissatisfied with the judgment, appealed. Madam Chen counter appealed, advancing several grounds in support of the judgment. At the conclusion of the hearing, learned counsel for Madam Chen, asked this Court not to make any conclusions on the counter notice of appeal. From the grounds of appeal, the following issues arise for this Court's determination: (i) whether the judge erred in failing to make certain findings of fact and as to the credibility of evidence in relation to the existence of the 1996 Oral Agreement; (ii) whether the transfer of the Shares gave rise to the presumption of a resulting trust in favour of Mr. Ng, whereby he retained and was entitled to a re-transfer of the beneficial interest in the Shares, or was it a gift to Madam Chen? The resolution of the second issue involves a consideration of: (a) statements made by Mr. Ng in a 22 nd November 2011 declaration (the “Declaration”) and recorded in 21 st November 2011 Board minutes (the “Minutes”) to the effect that he retained no right or interest in the Shares; (b) Mr. Ng's evidence relating to a 2011 Oral Agreement, as the reason for the transfer, and according to which the transfer of the Shares was temporary; (c) whether the transfer of the Shares was a pretence or sham transaction; and (d) whether a reason for the transfer was so that Mr. Ng could evade his creditors.
Held: dismissing the appeal and affirming the decision of the learned judge; awarding costs of the appeal to the Second Respondent, Madam Chen, such costs, if not agreed within 21 days, to be assessed by a judge of the court below at the rate of two-thirds of the amount awarded to the Second Respondent in the court below; dismissing the counter appeal and awarding costs to the Appellant, Mr. Ng, to be assessed by a judge of the court below, if not agreed within 21 days; and awarding costs of the application to prevent Mr. Ng from prosecuting this appeal, to the Appellant, to be assessed by a judge of the court below, if not agreed within 21 days, that:
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1. The existence or non-existence of the 1996 Oral Agreement was critical to the fundamental issue in this case of who retained the Shares from 1996 to October 2011. If Madam Chen's evidence as to the alleged 1996 Oral Agreement was accepted, this would be determinative of the matter, as Madam Chen would have been entitled to demand that Mr. Ng transfer the legal interest in the Shares to her. Alternatively, both the legal and beneficial interest in the Shares were vested in Mr. Ng in 1996, and the remaining question for the court to answer was whether the transfer gave rise to a resulting trust in favour of Mr. Ng or it was a gift by Mr. Ng of both the legal and beneficial interest in the Shares to Madam Chen. The learned judge therefore ought to have made findings of fact and as to the credibility of both Madam Chen and Mr. Ng's evidence on the existence of the 1996 Oral Agreement.
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2. The starting point is that the registered title to the Shares is indisputably with Madam Chen. Therefore, Madam Chen was entitled to rely on her registered title to the Shares as prima facie evidence as to where both the legal and beneficial ownership lies. The burden was therefore on Mr. Ng to displace her registered title to the Shares, by cogent evidence, either from the Bought Note and or Instrument of Transfer, or by the surrounding circumstances of the transaction, that he retained the beneficial interest in the Shares. It is only where Mr. Ng has established some right to or over the Shares giving rise either to a presumption of a resulting trust in his favour or to a contractual right to have the Shares re-transferred to him, that the burden shifts to Madam Chen to rebut that presumption.
Stack v Dowden [2007] 2 AC 432 applied; Portland Managements Ltd v Harte [1977] QB 306 applied.
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3. The principles of equity provide for the identification of beneficial interests...
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