Read the full judgment text of CACV 000166/2006 on BabelCite. This Court of Appeal judgment was delivered on 31 January 2007 before Tang VP, Cheung JA and Poon J.
Civil appeal – beneficial ownership of shares – resulting trust – express trust – burden of proof – credibility of witnesses – appellate review of findings of fact – directors – injunction. Civil law – trusts – resulting trust where transferee gives no value – express oral trust supported by explanation that written declaration would prejudice listing. Beneficial ownership of 75 of 100 shares in Hawkins Development Limited, which held 80% of a Liaoning iron-mining joint venture; shares transferred on 27 March 2000 to the 1st and 2nd defendants, allegedly to enable listing on the GEM Board. Whether the trial judge was plainly wrong to find the 1st plaintiff proved the 75 shares were held on trust for him – held, no; decision plainly right, applying Whisprun Pty Ltd v Dixon [2003] 200 ALR 447 and Ting Kwok Keung v Tam Dick Yuen & Others [2002] 5 HKCFAR 336. The 1st plaintiff's evidence was preferred as honest; the 2nd defendant's account was inherently improbable and parts of it were found to be lies; the alleged investor Zhao never appeared or funded the joint venture; the 2nd defendant, a sophisticated MBA graduate, produced no documentary record of the alleged agreement either, undermining his case. Handwritten notes by the 1st plaintiff on a restructuring fax did not invalidate the trust finding, given his modest knowledge and reliance on the 2nd defendant. Whether the 5th and 7th defendants (wife and sister of the bankrupt 2nd defendant) should be restrained by injunction from acting as directors of Hawkins – held, yes; injunction upheld, no evidence from them and a continuing risk they would purport to act as directors. Appeal dismissed; plaintiffs to have costs of the appeal (order nisi).
Legal issues: Whether trial judge's finding on beneficial ownership of 75 Hawkins shares was plainly wrong · Whether injunction restraining 5th and 7th defendants as directors of Hawkins should stand
Outcome: Appeal dismissed. The trial judge's findings that the 75 Hawkins shares were held on trust for the 1st plaintiff and the injunction restraining the 5th and 7th defendants were upheld.
Cited by 2 cases · Cites 1 case