Chen v Ng (British Virgin Islands)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Mance,Lord Neuberger |
| Judgment Date | 17 August 2017 |
| Neutral Citation | [2017] UKPC 27 |
| Court | Privy Council |
| Docket Number | Appeal No 0072 of 2016 |
| Date | 17 August 2017 |
[2017] UKPC 27
Lord Neuberger
Lord Mance
Lord Clarke
Lord Sumption
Lord Hodge
Appeal No 0072 of 2016
Privy Council
From the Court of Appeal of the Eastern Caribbean Supreme Court (British Virgin Islands)
Appellant
John McDonnell QC
Raymond Davern
(Instructed by Mayer Brown International LLP)
Respondent
Christopher Parker QC
Victoria Ann Lord
(Instructed by Gibson Dunn & Crutcher LLP)
Heard on 22 and 23 May 2017
Lord Neuberger AND
This appeal concerns the ownership of 40,000 of the 50,000 issued shares in Peckson Ltd ("Peckson"), a company incorporated in the British Virgin Islands. Since 1996, Peckson has owned the shares in Empresa Hoteleira de Macau Limitada ("Empresa"), a Macau-registered company, whose sole asset is the New Century Hotel in Macau ("the Hotel").
Around the time that Peckson acquired Empresa, 40,000 Peckson shares ("the Shares") were registered in the name of Ng Man-Sun ("Mr Ng"), and the remaining 10,000 shares were held by Sociedade de Turismo e Diversões de Macau SARL.
At all material times, the two directors of Peckson were Mr Ng and Chen Mei Huan ("Madam Chen"), who were living together in the Hotel, with two children. On 4 October 2011, Mr Ng and Madam Chen executed the following documents: (i) a formal Note ("the Note") recording a sale of the Shares by Mr Ng to Madam Chen for US$40,000, (ii) an Instrument of Transfer ("the Transfer") recording the transfer of the Shares by Mr Ng to Madam Chen for US$40,000 "paid to [Mr Ng] by [Madam Chen]", (iii) a written resolution of the directors of Peckson approving the transfer of the Shares, and (iv) a share certificate in the name of Madam Chen in respect of the Shares. It is common ground that the US$40,000 never changed hands. On or shortly after 4 October 2011, Peckson's register of members was altered by replacing Mr Ng's name with that of Madam Chen as the owner of the Shares.
On 21 November 2011, Mr Ng signed Peckson Board Minutes, which were written in Chinese and stated (according to the certified translation) that the Shares had "belonged to him personally", and that "after the transfer, all the [Shares] were vested under [Madam Chen's] name and [Mr Ng] did not retain any right or interest". The following day, he signed a declaration in Chinese confirming (again according to the certified translation) that he did "not keep any right" in the Shares.
On 24 August 2012, Mr Ng began proceedings against Peckson in the High Court of the British Virgin Islands claiming, inter alia, a declaration that the Transfer was void and of no effect, and an order that Peckson's register of members be rectified to replace Madam Chen's name with his name as the owner of the Shares.
On 26 October 2012, Madam Chen applied to be added as a defendant to the proceedings on the ground that "this is a dispute as to the ownership of the Shares between [Mr Ng] and [Madam Chen]" and that "as this matter is in truth a personal dispute between [Mr Ng] and [Madam Chen], it is not in the best interests of [Peckson] for its resources to be expended in legal costs defending this action". That application was unopposed, and Madam Chen was added as a defendant the following month. In March 2013, Madam Chen filed her Defence and Counterclaim seeking declarations that as from 4 October 2011 Mr Ng ceased to have any interest or right of any kind in the Shares, and that since that date she had been the only true legal and beneficial owner of them.
Thereafter the case proceeded as a contest between Mr Ng and Madam Chen as to which of them was the beneficial owner of the Shares, with Peckson playing no part other than that of a nominal defendant.
In his Statement of Claim and supporting written evidence, Mr Ng alleged, in very summary terms, that, as the legal and beneficial owner of the Shares, he had transferred them to Madam Chen in October 2011 on the express understanding that she would transfer them back to him some six months later. The reason which he gave for this alleged arrangement was based on the fact that he wished to obtain government approval for the development of a new hotel and casino on the Cotai Strip in Macau, a project which he intended to carry out through a company called Chong Gold International Ltd ("Chong Gold"), of which he was the major shareholder, CEO, and President. He said that Madam Chen had suggested to him that, as he had been the victim of bad publicity he or any company seen to be associated with him would not be looked on favourably by the Beijing or Macau authorities, whereas she had good contacts in Macau and Beijing, and so she should apply to the authorities for the necessary permissions. However, he said, she pointed out that if she was the applicant for the permissions, that would require her to establish that she had significant assets in her name, and for that reason she suggested that the Shares be transferred to her, but only on a temporary basis.
Madam Chen denied this. Her case, as revealed by her Defence and written evidence, was that she had been the beneficial owner of the Shares from the outset and that Mr Ng transferred the Shares to her pursuant to a pre-existing obligation.
The case came on before Bannister QC J(Ag) on 22 October 2013, and the hearing lasted six days. In his skeleton argument on behalf of Madam Chen, Mr McDonnell QC mentioned a "potential argument" that the BVI court did not have jurisdiction to hear the case. However, he added, as this would involve contending that a decision of the Eastern Caribbean Court of Appeal was wrong, he confined himself "to reserving the right to make [the argument] to a higher court".
During the ensuing trial, Mr Ng and Madam Chen were each subjected to a full cross-examination, limited by the Judge to one-and-a-half days in each case. It was put to Mr Ng, who gave evidence through an interpreter, that at least one of his reasons for transferring the Shares to Madam Chen was to conceal them from his creditors. He was also asked about the proposed development, and in the course of those questions reference was made to a feasibility report in respect of the project, but the report was not opened let alone read. More broadly, Mr Ng was challenged as to his probity which he warmly defended. Madam Chen was also cross-examined fully.
Bannister J handed down a characteristically clearly expressed and promptly produced judgment on 14 November 2013. After summarising the facts, he turned to Madam Chen's case that she had been the beneficial owner of the Shares from the inception, and rejected it for a number of reasons which are not germane for present purposes.
The Judge then turned to Mr Ng's explanation of the circumstances in which the Transfer was executed, which was substantially as set out in para 8 above, and said that he could not accept that evidence either. He explained that "[t]he reason stems from the fact that the … proposed development on the Cotai Strip [was to be] by … Chong Gold". The Judge then referred to two extracts from the feasibility report which emphasised the importance of Mr Ng's involvement and the difficulty of replacing him. The Judge then mentioned that those two "passages were not put to Mr Ng in cross-examination or relied upon specifically at trial by [Mr McDonnell]". However, said the Judge, "they illustrate the submission which Mr McDonnell made", namely that "it was irrational to suppose that [the Transfer] could assist [Madam Chen] to promote, in Beijing, a project that was on its face a project of Mr Ng's". Mr Ng's explanation for the Transfer of the Shares was thus said the Judge one "which he, as a highly experienced businessman, must have known could bring him no advantage, because it was self-evidently futile". This was not a point that had been put to Mr Ng in cross-examination.
The Judge added that, in any event, he considered that, if his story was true, Mr Ng would not have transferred the Shares to Madam Chen without ensuring that Madam Chen gave him a blank transfer which he could use to retransfer the Shares at the end of the six month period. That was a point which had not been put to Mr Ng in cross-examination, but he had dealt with it in his witness statement, where he said that it had not occurred to him to ensure that he had a blank transfer of the Shares from Madam Chen, and he had not been advised to take such a course.
The Judge then went on to reject a submission on behalf of Mr Ng that the Transfer was gratuitous which he described as "proceed[ing] on a false basis", given the reference in the Transfer and also in the Note to the consideration of US$40,000, even though it had not actually been paid.
The Judge then reached his conclusions. Having rejected Mr Ng's case on the facts, he said that Mr Ng had failed to discharge "the legal and evidential burden" of establishing "why the documents which he executed should not have carried into effect the agreement which they evidence on their face — a sale and purchase [of the Shares] completed by Madam Chen's entry in Peckson's register of members". The Judge added that "Mr Ng cannot show that the Transfer was gratuitous because his own documents contradict him".
The Judge therefore concluded and determined that the Shares were beneficially as well as legally owned by Madam Chen, and Mr Ng had no interest in, or rights over, them.
Mr Ng appealed to the Eastern Caribbean Court of Appeal (Baptiste and Michel JJA and Kentish-Egan QC JA(Ag)), who, for reasons set out in a clear and careful judgment given by Kentish-Egan JA, allowed his appeal. First, they held that it had not been open to the Judge to hold that Madam Chen had acquired the legal and the beneficial ownership...
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