LEE SAI NAM v. LI SHU CHUNG AND ANOTHER

LEE SAI NAM v. LI SHU CHUNG AND ANOTHER

On the evidence the shares in Luen Tat and Pak Tat held on record by Ken/Joseph were held on trust for Lee Sai Nam; the Father retained ultimate control and discretion over profit distributions such distributions were gratuitous family bonuses not enforceable proprietary entitlements; consequently Ken’s counterclaim based on alleged beneficial ownership and profit entitlements fails.

Citation
LEE SAI NAM v. LI SHU CHUNG AND ANOTHER
Parties
Plaintiff / 1st Defendant by Counterclaim: Lee Sai Nam; 1st Defendant / Plaintiff by Counterclaim: Li Shu Chung (Ken); 2nd Defendant (by Original Action): Li Joseph See Sun; 3rd Defendant by Counterclaim: Lee Sin Man Seline; 4th Defendant by Counterclaim: Yuen Hing Enterprise Macao Commercial Offshore Limited; 2nd Defendant by Counterclaim (withdrawn): Allied Ever Holdings Ltd
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
9 December 2015
Case Number
HCA1711/2009
Procedural Posture
High Court Action (court of First Instance) – Civil Dispute Concerning Trusts, Company Shares and Accounts / Trial on Liability (split Trial of Liability and Quantum)
Outcome
Declarations and relief sought by the plaintiff (Lee Sai Nam) granted in respect of trusts over disputed shares; counterclaim by Li Shu Chung dismissed; nisi costs order in favour of plaintiff and separate costs for Seline and Yuen Hing; costs to be taxed if not agreed; liberty to apply within 14 days for variation.
Legal Topics
Resulting Trust, Presumption of Advancement, Express and Constructive Trusts, Beneficial Ownership of Shares, Profit Distribution and Entitlement, Admissibility of Oral Admissions and Taped Evidence, Res Judicata / Prior Winding Up
Source Language
EN
Trusts and Equity Company Law Property Law Family Law Insolvency / Winding Up Evidence Resulting Trust Presumption of Advancement +5 more

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Parties

Lee Sai Nam

Plaintiff / 1st Defendant by Counterclaim

Li Shu Chung (Ken)

1st Defendant / Plaintiff by Counterclaim

Li Joseph See Sun

2nd Defendant (by Original Action)

Lee Sin Man Seline

3rd Defendant by Counterclaim

Yuen Hing Enterprise Macao Commercial Offshore Limited

4th Defendant by Counterclaim

Allied Ever Holdings Ltd

2nd Defendant by Counterclaim (withdrawn)

Procedural Posture

High Court Action (court of First Instance) – Civil Dispute Concerning Trusts, Company Shares and Accounts / Trial on Liability (split Trial of Liability and Quantum)

Legal Issues

  1. 1 Whether 51% shareholdings in Luen Tat held by Ken/Joseph (or nominees) were held on trust for Lee Sai Nam or transferred as gift
  2. 2 Whether 50% shareholdings in Pak Tat were held on trust for Lee Sai Nam or beneficially owned by Ken
  3. 3 Whether distributions of profits were discretionary gratuitous payments by the Father or legally enforceable entitlements under oral agreements

Ratio Decidendi

On the evidence the shares in Luen Tat and Pak Tat held on record by Ken/Joseph were held on trust for Lee Sai Nam; the Father retained ultimate control and discretion over profit distributions such distributions were gratuitous family bonuses not enforceable proprietary entitlements; consequently Ken’s counterclaim based on alleged beneficial ownership and profit entitlements fails.

Court Disposition

Declarations and relief sought by the plaintiff (Lee Sai Nam) granted in respect of trusts over disputed shares; counterclaim by Li Shu Chung dismissed; nisi costs order in favour of plaintiff and separate costs for Seline and Yuen Hing; costs to be taxed if not agreed; liberty to apply within 14 days for variation.

Orders

  • Declarations that the 5% non‑voting deferred shares and the New Shares in Luen Tat held by Ken/Joseph (or nominees) are held on trust for Lee Sai Nam and to be reverted to him or his nominee pursuant to his directions
  • Declaration/orders that the 50 shares in Pak Tat held by Ken are held on trust for Lee Sai Nam