NG Man Sun v Peckson Ltd and Chen, Mei Huan
| Jurisdiction | British Virgin Islands |
| Judge | Adderley, J |
| Judgment Date | 28 February 2019 |
| Neutral Citation | VG 2019 HC 12 |
| Docket Number | CLAIM NO.: BVIHC (COM) 88 of 2012 |
| Court | High Court (British Virgin Islands) |
| Date | 28 February 2019 |
IN THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
Adderley, J.
CLAIM NO.: BVIHC (COM) 88 of 2012
Mr Philip Jones QC of Serle Court and with him Ms Victoria Ann Lord of Harney Westwood & Riegels, for the Claimant
Mr John McDonnell QC of Three Stone Chambers and with him Ms Rosalind Nicolson of Walkers for the Defendant
Gratuitous transfer — Resulting Trust — How proved — Burden of proof — Standard of proof
The claimant (“Mr Ng”) claims to be the beneficial owner of certain shares in the first defendant (“the Peckson Shares” or “the Shares”) and applies to the court to rectify its Register of Members under s.43 of the Business Companies Act 2004 to place his name thereon in place of that of the second defendant. The name of the second defendant (“Madam Chen”) was on the Register as the legal owner at the commencement of these proceedings.
The first defendant, Peckson Limited (formerly named Peckham Ltd) is a British Virgin Islands (“BVI”) company. It is the owner of all the shares in Empresa Hoteleira de Macau Limitada (Empresa”), a Macau company, which owns the New Century Hotel, a 5-star hotel in Macau, in which there is a casino called the Greek Mythology Casino. The property was valued in November 2012 in the neighbourhood of HK$ 3.75 billion.
The first casino at the Hotel opened in 1997. It was called the New Century Casino. It was not owned or operated by Empresa. It was owned and operated by a BVI company called Century Diamond Entertainment Investment Limited (“Century Diamond”).
The casino was reopened under the name Greek Mythology in December 2004.
The new business was owned and operated by a Macau company called, in English, Greek Mythology (Macau) Entertainment Group Limited (“ Greek Mythology”).
Amax International Holdings Limited (“ Amax”), a Bermuda-incorporated, Hong Kong-listed company, acquired various shares in Greek Mythology.
Mr Ng was a shareholder in Amax. By the end of March 2011, he held 28.66% of Amax's share capital, and Amax held 24.82% of Greek Mythology.
There were proposals in 2005 to list Greek Mythology in the United States. Because of the strict background checks in the United States, solely for the purpose of listing in the United States, Mr Ng transferred the 30.1% shareholding he had in his own name to Madam Chen in March 2007 and she became ‘the administrator’ of Greek Mythology in place of Mr Ng.. The proposed listing was abandoned in mid-2007.
The case was first heard by Bannister J where he dismissed the claim on 14 Nov 2013.
An appeal was allowed from Bannister J's judgment by the EC Court of Appeal on 29 September 2015.
On 17 August 2017 the Judicial Committee of Her Majesty's Privy Council (“the Privy Council) 1 allowed the appeal against the judgment of the Court of Appeal in so far as it held that the Shares were legally owned by Madam Chen but were held on resulting trust for Mr Ng, but also rejected Bannister J's reasons for dismissing Mr Ng's claim as the beneficial owner and finding that Madam Chen was the legal and beneficial owner, because none of the reasons on which Bannister J made his decision had been put to Mr Ng and ought to have been.
Bannister J had rejected Madam Chen's case that the Shares were since 1996 held in trust for her by Mr Ng because he had bought them with HK$100 million provided by her to him for that purpose. He did not believe Mr Ng's handwriting on the receipt for HK$100 million as genuine and preferred the evidence of the handwriting expert called by Mr. Ng who found that it was a forgery.
Bannister J had found that there was consideration for the transfer of the 40,000 shares (referred to later in the judgment) to Madam Chen as evidenced on the face of the Bought Note and the Sold Note, and that it was not necessary for that purpose to have proof that the consideration was in fact paid. There was no pleading that the documents were a sham.
He had rejected Mr Ng's explanation for making the transfer and Madam Chen not paying any consideration namely that it was not intended that she keep the Shares but that it was to be retransferred within 6 months. His case was that the Shares were transferred to Madam Chen as his nominee for the purpose of obtaining the necessary approvals from Beijing for a Cotai Strip Casino/Hotel Project in Macau. I observe here that this was similar to what he had done in 2007 when he anticipated listing the Casino in the United States. Bannister J also rejected Mr Ng's case that there had been an agreement with Madam Chen that she would transfer the Shares back to him in 6 months.
He had also rejected any notion of the Shares having been transferred gratuitously, and even if they were Mr Ng's Declaration against interest was sufficient to negative the presumption of resulting trust.
The Privy Council has therefore sent the matter back to be retried by another judge, as I understand it, mainly for the following reasons:
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(1) There was the absence of a plea by Mr Ng that the documents were a sham which would have implied that the intention was that the US$40,000 consideration was never to be paid but on the other hand there was the absence of a plea by Madam Chen that the Note and Transfer (later defined) were by way of sale, or alternatively they were by way of gift, or to keep them out of the reach of Mr Ng's creditors. The Privy Council felt that the possible result of these scenarios was not properly explored namely:
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(1) the recital in the Transfer was inaccurate and the US$40,000 was still payable, or
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(2) the parties' intention in stating in the Note and Transfer that the consideration had been paid was that it should never be paid in which case there was no sale and the transfer of the Shares was gratuitous.
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This yielded 2 possible results:
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(1) Madam Chen held on presumptive resulting trust for Mr Ng, or
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(2) the Shares were a gift from Mr Ng to Madam Chen
The Privy Council sent the case back to explore those scenarios.
The Shares are now being held by Receivers appointed by the Court, pending determination of the matter, funded by US$ 2 million paid into court by Mr Ng at an earlier stage and US$ 1 million paid into court by Madame Chen.
In its Judgment the Privy Council made certain comments obiter:
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(1) (At para 46) “Mr MCDonnell applies to introduce fresh evidence, only available since the trial, in the form of a defence put in on behalf of Mr Ng in Macau legal proceedings positively explaining the Transfer as designed to avoid the risk of seizure of Mr Ng's assets by creditors.” The Court of Appeal refused to admit it, but the Privy Council expressed the view that, if the matter went back for rehearing there would be a strong case for admitting it as being relevant in cross examination, and seemed to suggest that Madam Chen should apply to amend the pleading of her positive case.
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“…(1) the parties are both free to conduct their respective cases at the rehearing as if it was the first trial but (ii) their respective cases should be based on their existing pleadings and witness statements, subject to amendments and further evidence as the court should allow, in particular new evidence deriving from the Macau defence.
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(2) They will be entitled to rely on the transcripts of the proceedings before Bannister J as cross-examination material.”
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The first case lasted 5 days. It lasted 15 days this time and there were about 80 bundles. In my judgment the case can be split into two parts.
The first part deals with Madam Chen's claim that at the time the Peckson Shares were transferred to her, she was already the beneficial owner and Mr Ng as bare trustee was simply transferring the legal ownership to her or “back” to her, as she put it..
The second part deals with the claim by Mr Ng that at the time of the transfer he was both the legal and beneficial owner of the Shares and he transferred the legal title to Madam Chen temporarily, to be retransferred after 6 months, so that she could apply for approval to purchase 2 strips of land to develop a very valuable (HK$ 25–30 billion) hotel/ casino project in Macau, and at the time of the application demonstrate to the authorities in Beijing and Macau her ownership of substantial assets.
At the risk of appearing to make short shrift of this part, in my judgment there is no basis or utility for the court to examine the evidence because the necessary claim arising out of the cause of action has not been pleaded and no application has been made to amend. The court must assume that with both parties being represented by eminent counsel the decision was deliberate.
Putting it another way Madam Chen claims that she made a gratuitous advance of HK$100 million to Mr Ng for the purpose of providing the deposit to purchase from the Bank of China for HK$900 million the repossessed hotel now owned by Empresa. She claimed that Mr Ng took the money, and did not use it for that purpose. She produced a receipt dated 17 November 1996 allegedly signed by Mr Ng acknowledging receipt of the HK$100 million shortly before the hotel was bought, and an allegedly contemporaneous handwritten note on an envelope noting the details of a telephone conversation which she allegedly had with Mr Ng confirming her provision of the funds.
There is clear uncontested evidence that the money was not provided to Peckson for the purpose of providing the deposit to purchase the hotel, because the transaction was self-funding. Mr lu, Po Shing gave evidence, which was supported by the documentary evidence, of how Mr Ng purchased Empresa through Peckson. The purchase of Empresa was paid out of:
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(1) the 1996 Loan of...
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