張才奎所託管中國山水投資有限公司股份相關員工 AND OTHERS v. 張才奎 AND ANOTHER

張才奎所託管中國山水投資有限公司股份相關員工 AND OTHERS v. 張才奎 AND ANOTHER

The court held that the participating employees were the actual contributors and beneficial owners of the relevant interests; when CSI shares were transferred to the management on 11 April 2005 the equitable (beneficial) interests vested in the employees as fixed/identifiable beneficial interests under Hong Kong law; the BVI discretionary trusts executed on 28 November 2005 could not validly resettle those assets to the detriment of the employees and are ineffective against them; the 2008 Confirmation did not amount to informed ratification of discretionary trusts; accordingly the trustees (Zhang) held 456,325 CSI shares on trust for the plaintiffs and relief including declaration and...

Citation
[2018] HKCFI 195
Parties
Plaintiffs: Relevant employees (1st Group) whose CSI shares were held by Zhang Caikui on trust; Plaintiffs: Relevant employees (SH plaintiffs) in HCA 1282/2017; 1st Defendant: ZHANG CAIKUI; 2nd Defendant: LI YANMIN
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
31 January 2018
Case Number
HCA623/2015
Procedural Posture
Civil Trust and Proprietary Claims Arising From Employee Stock Ownership Scheme and Corporate Restructuring / Judgment at Trial in the High Court, Court of First Instance (final Determination)
Outcome
Judgment for the plaintiffs on trust and proprietary claims
Legal Topics
Fixed Trust Vs Discretionary Trust, Nominee/beneficial Ownership, Retrospective Declaration of Trust, Ratification, Constructive Trust, Certainty of Subject Matter, Receivership, Strike Out Under O41 a R6
Source Language
EN
Trusts Equity Company Law Conflict of Laws Commercial Law Civil Procedure Fixed Trust Vs Discretionary Trust Nominee/beneficial Ownership +6 more

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Parties

Relevant employees (1st Group) whose CSI shares were held by Zhang Caikui on trust

Plaintiffs

Relevant employees (SH plaintiffs) in HCA 1282/2017

Plaintiffs

ZHANG CAIKUI

1st Defendant

LI YANMIN

2nd Defendant

Procedural Posture

Civil Trust and Proprietary Claims Arising From Employee Stock Ownership Scheme and Corporate Restructuring / Judgment at Trial in the High Court, Court of First Instance (final Determination)

Legal Issues

  1. 1 Whether participating employees were beneficial owners of CSI shares or merely objects of discretionary BVI trusts
  2. 2 Whether discretionary BVI trusts were created on 11 April 2005 or could be retrospectively declared effective from that date
  3. 3 Whether a fixed trust under Hong Kong law arose in April 2005 over specified CSI shares

Ratio Decidendi

The court held that the participating employees were the actual contributors and beneficial owners of the relevant interests; when CSI shares were transferred to the management on 11 April 2005 the equitable (beneficial) interests vested in the employees as fixed/identifiable beneficial interests under Hong Kong law; the BVI discretionary trusts executed on 28 November 2005 could not validly resettle those assets to the detriment of the employees and are ineffective against them; the 2008 Confirmation did not amount to informed ratification of discretionary trusts; accordingly the trustees (Zhang) held 456,325 CSI shares on trust for the plaintiffs and relief including declaration and...

Court Disposition

Judgment for the plaintiffs on trust and proprietary claims

Orders

  • Declaration that Zhang Caikui held 456,325 shares in China Shanshui Investment Company Limited on trust for the plaintiffs individually in the proportions pleaded
  • Order that the Receivers (and Zhang Caikui to any extent necessary) take steps forthwith to transfer the 456,325 CSI shares currently registered in the Receivers’ name to the plaintiffs or persons nominated by them