CHEN YUNG NGAI KENNETH AND ANOTHER v. HO YUK WAH DAVID (A BANKRUPT) AND OTHERS

CHEN YUNG NGAI KENNETH AND ANOTHER v. HO YUK WAH DAVID (A BANKRUPT) AND OTHERS

On the balance of probabilities the court found the 18 November 2004 sale of APIHL and the 31 December 2007 re-capitalisation were shams intended to mask David Ho's beneficial ownership; accordingly those transactions are void, David Ho remained beneficial owner and controller of the relevant companies via nominees,...

Source-derived case information.

Citation
[2020] HKCFI 2518
Parties
Plaintiffs (trustees in Bankruptcy): Chen Yung Ngai Kenneth; Chan Mei Mei (trustees-in-bankruptcy substituted for Ip Pui Lam Arthur; Ip Pui Sum); 1st Defendant (bankrupt): Ho Yuk Wah David; 2nd Defendant: Gladius Limited; 3rd Defendant: Ontrade Properties Limited; 4th Defendant: King Ocean Development Inc; 5th Defendant: Asia-Pac Group Investments Limited; 6th Defendant (in Liquidation): Asia-Pac Infrastructure Development Limited; 7th Defendant (discontinued): Asia-Pac Pacific Region Properties (Holdings) Limited; 8th Defendant: Grand Asia Capital Services Limited; 9th Defendant: Pacific Shine Limited; 10th Defendant: Sparkle Lanes Limited; 11th Defendant: Tsun King Group Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
28 September 2020
Case Number
HCA971/2012
Procedural Posture
Trusts and Insolvency Recovery of Assets for Bankruptcy Estate / Trial Judgment (court of First Instance)
Outcome
Declarations and mandatory orders granted in favour of the Plaintiffs as set out in judgment; costs reserved
Legal Topics
Sham Transaction, Resulting Trust, Beneficial Ownership, Nominee Shareholders, Adverse Inference, Security for Costs
Source Language
en
Trusts Company Law Insolvency and Bankruptcy Civil Procedure Equity Sham Transaction Resulting Trust Beneficial Ownership +3 more

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Parties

Chen Yung Ngai Kenneth; Chan Mei Mei (trustees-in-bankruptcy substituted for Ip Pui Lam Arthur; Ip Pui Sum)

Plaintiffs (trustees in Bankruptcy)

Ho Yuk Wah David

1st Defendant (bankrupt)

Gladius Limited

2nd Defendant

Ontrade Properties Limited

3rd Defendant

King Ocean Development Inc

4th Defendant

Asia-Pac Group Investments Limited

5th Defendant

Asia-Pac Infrastructure Development Limited

6th Defendant (in Liquidation)

Asia-Pac Pacific Region Properties (Holdings) Limited

7th Defendant (discontinued)

Grand Asia Capital Services Limited

8th Defendant

Pacific Shine Limited

9th Defendant

Sparkle Lanes Limited

10th Defendant

Tsun King Group Limited

11th Defendant

Procedural Posture

Trusts and Insolvency Recovery of Assets for Bankruptcy Estate / Trial Judgment (court of First Instance)

Legal Issues

  1. 1 Whether the 2004 transfer of APIHL was a sham and void
  2. 2 Whether the 2007 re-capitalisation of the 6th Defendant was a sham and void
  3. 3 Whether the 2nd and 5th Defendants (and 2nd re 9th Defendant) hold shares on trust for David Ho

Ratio Decidendi

On the balance of probabilities the court found the 18 November 2004 sale of APIHL and the 31 December 2007 re-capitalisation were shams intended to mask David Ho's beneficial ownership; accordingly those transactions are void, David Ho remained beneficial owner and controller of the relevant companies via nominees, and declarations and mandatory orders transferring the relevant shares to the trustees were granted.

Court Disposition

Declarations and mandatory orders granted in favour of the Plaintiffs as set out in judgment; costs reserved

Orders

  • Declaration that the 2nd and 5th Defendants held and hold all shares of the 6th Defendant registered in their names on behalf and for the benefit of David Ho
  • Order that the 2nd and 5th Defendants take all necessary steps to transfer their respective shareholdings in the 6th Defendant to the Plaintiffs within 56 days