Zhang Lan v La Dolce Vita Fine Dining Group Holdings Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD,Aedit Abdullah J
• Judgment Date: 27 June 2023
• Docket Number: Civil Appeals Nos 4 to 7 of 2023
• Court: High Court Appellate Division (Singapore)

Zhang Lan

and

La Dolce Vita Fine Dining Group Holdings Ltd and other appeals

[2023] SGHC(A) 22

Woo Bih Li JAD and Aedit Abdullah J

Civil Appeals Nos 4 to 7 of 2023

Appellate Division of the High Court

Civil Procedure — Judgments and orders — Enforcement — Equitable execution — High Court (General Division) judge granting respondents' application for appointment of receivers — Whether permission was required to appeal against decision of High Court (General Division) — Fifth Schedule Supreme Court of Judicature Act 1969 (2020 Rev Ed) — Order 51 r 1(1) Rules of Court (2014 Rev Ed)

Trusts — Resulting trusts — Presumed resulting trusts — Appellant declaring trust over shares in company — Whether appellant was beneficial owner of assets

Held, dismissing the appeal:

(1) A preliminary issue that arose was whether the appellants, Mdm Zhang and SETL, required permission to appeal against the HC Judgment. Under para 3(l) of the Fifth Schedule to the Supreme Court of Judicature Act 1969 (2020 Rev Ed) (“SCJA”), permission of the appellate court was required to appeal against “an order at the hearing of any interlocutory application” (other than an application for certain matters set out under para 3(l) which were not applicable to the present proceedings). An “order” referred to an “interlocutory order”, which in turn referred to an order that “does not finally dispose of the rights of the parties”. An “interlocutory application” referred to an application whose determination might or might not finally determine the parties' rights in the cause of the pending proceedings in which the application was being brought. The issue was whether the HC Judgment was an interlocutory order made at the hearing of an interlocutory application: at [24] to [26].

(2) The Judge was of the view that the power of the court to appoint receivers by way of equitable execution was founded on s 4(10) of the Civil Law Act 1909 (2020 Rev Ed) (“CLA”), which provided that “a receiver [may be] appointed by an interlocutory order of the court”. A plain reading of the provision suggested that an order under s 4(10) was an “interlocutory order”, which would require permission before an appeal could be made. This was supported by a brief perusal of the legislative history of s 4(10), which indicated that s 4(10) was interlocutory in the sense that it could be exercised pending the final determination of the parties' rights: at [28] and [29].

(3) There was, however, another provision on the appointment of receivers, O 51 r 1(1) of the Rules of Court (2014 Rev Ed) (“ROC 2014”), which addressed the situation where “an application is made for the appointment of a receiver by way of equitable execution”. The exercise of the power under O 51 r 1(1) appeared to be situated at the point of the proceedings where the substantive rights of the parties had already been determined, and where equitable relief was necessary in order for the judgment creditor to attain the fruits of the court's determination on the merits. This was as opposed to the exercise of the power under s 4(10) of the CLA for preservatory purposes. As such, O 51 r 1(1) of the ROC 2014 was the proper statutory basis for the Judge's orders. The Judge's order for the appointment of a receiver by way of equitable execution was not an interlocutory one as the Judge's orders were premised on a determination of the rights over the moneys in SETL's Bank Accounts (the “Assets”); and there was nothing further for the court to determine once the Judge's orders were made: at [30] to [34].

(4) The key substantive issue in the appeals was whether Mdm Zhang was the beneficial owner of the Assets. The court's task was to arrive at an objective assessment of the subjective intentions of the transferor of the Assets; ie, Mdm Zhang. The relevant time to ascertain a transferor's intention was the time the property was transferred to the transferee. On the facts, the operative time at which Mdm Zhang's intention should be assessed was 4 June 2014, being the date at which the Deed of Addition was executed and which she claimed beneficial ownership of the Assets was transferred to Mr Wang and his children: at [37].

(5) The Trust Documents did not expressly deal with the Assets. As such, contrary to Mdm Zhang's submission, her intention with respect to the Assets was not wholly determined with reference to the Trust Documents, but remained an inquiry to be determined against all the available evidence: at [39] and [43].

(6) The evidential significance of the Trust Documents was that it set the contours of the authority and powers exercisable by Mdm Zhang as the settlor, AsiaTrust as Trustee, and Mr Wang as the “protector” (as well as the beneficiary to the Success Elegant Trust together with his descendants). Notably, Mdm Zhang retained no residual powers under the Declaration of Trust except to terminate the protector of the trust. If beneficial ownership in the Assets had truly been transferred by Mdm Zhang, Mdm Zhang's role would be reduced to acting as the authorized signatory over the Bank Accounts up till late-March 2015 and as the sole director of SETL until 3 March 2015 when Mdm Zhang resigned for ATP Directors Ltd to take over as the sole director of SETL: at [39] and [43] to [45].

(7) The events that occurred subsequent to the execution of the Trust Documents were highly probative of Mdm Zhang's intention to retain beneficial interest in the Assets notwithstanding her trust arrangements. Notably, Mdm Zhang directed a series of transfers from 12 June 2014 to 11 February 2015 from the CS Account to Mdm Zhang and Mr Wang (the “June 2014 to February 2015 CS Transfers”). However, four out of seven of these transfers were made directly to Mdm Zhang. While Mdm Zhang's evidence was that two of these four transfers were made for the benefit of Mr Wang, there was no valid reason for the moneys to be transferred first to Mdm Zhang's account. Mdm Zhang was also unable to account for two of the transfers, one of which was for a large sum of US$3m. This was questionable since she was able to give evidence on the other transfers, and further because the trust was administered by a professional trustee. Further, there was nothing in the evidence to show that the trustee, Asiatrust, had directed Mdm Zhang to make the June 2014 to February 2015 CS Transfers. It was thus odd that Mdm Zhang was able to direct those transfers unilaterally given the limited role she was to play as the sole signatory of the CS Account and director of SETL at this juncture: at [48] to [51].

(8) Around two weeks after the last of the June 2014 to February 2015 Transfers, the LDV Entities had on 26 February 2015 filed an ex parte application in the HKCFI to obtain the HK Freezing Orders. The HK Freezing Orders were granted that same day. The LDV Entities' evidence was that Mdm Zhang received notice of the HK Freezing Orders on 2 March 2015. On 3 and 4 March 2015, Mdm Zhang then proceeded to direct transfers for substantial amounts out of the DB Account (the “March 2015 DB Transfers”), with some of these transfers instructed to be made “soonest”. The great haste with which Mdm Zhang had directed the transfers on 4 March 2015, taken together with the fact that she had been served the HK Freezing Orders only oneday earlier, led to the inference that Mdm Zhang had acted as she did in fear that the Assets in Singapore may also be subject to similar freezing orders. In addition, Mdm Zhang exercised a large extent of control over the “urgent” transfers made on 4 March 2015. It was clear that Mdm Zhang saw fit to deal freely with the Assets as she directed certain transfers without any prior direction from the trustee. The control that Mdm Zhang exercised over the Assets and the urgency at which she made the March 2015 DB Transfers spoke to Mdm Zhang's subjective view that the Assets were her own rather than vested in Mr Wang and his issue, or SETL for that matter: at [52] to [55] and [59].

(9) It was pertinent that SETL did not act after the Assets in the Bank Account were frozen following the SG Freezing Orders. At the time of the hearing before the Judge, several years had lapsed without SETL taking any action to contest the SG Freezing Orders. SETL did not give any good reason for this inaction, and its failure to challenge the SG Freezing Orders undermined its case that it was the absolute owner of the Assets: at [60] to [64].

(10) The other circumstantial evidence, such as a letter dated 6 March 2015 by Mdm Zhang's solicitors to DB informing them that Mdm Zhang “maintains” the DB Account, either supported the conclusion that Mdm Zhang was the beneficial owner of the Assets or was of limited evidential value: at [69] to [87].

Case(s) referred to

Acute Result Holdings Ltd v CGS-CIMB Securities (Singapore) Pte Ltd [2022] SGHC 45 (refd)

Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 (refd)

La Dolce Vita Fine Dining Co Ltd v Zhang Lan [2018] HKCFI 548 (refd)

La Dolce Vita Fine Dining Co Ltd v Zhang Lan [2022] SGHC 278 (refd)

Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR(R) 108; [2008] 2 SLR 108 (refd)

Lee Kuan Yew v Tang Liang Hong [1997] 1 SLR(R) 328; [1997] 2 SLR 833, HC (refd)

Lee Kuan Yew v Tang Liang Hong [1999] 1 SLR(R) 533; [1999] 3 SLR 630, HC (refd)

Moh Tai Siang v Moh Tai Tong [2018] SGHC 280 (refd)

Nightingale Mayfair Ltd v Mehta [1999] All ER (D) 1501 (refd)

NRC Holding Ltd v Danilitskiy [2017] EWHC 1431 (Ch) (refd)

OpenNet Pte Ltd v Info-communications Development Authority of Singapore [2013] 2 SLR 880 (refd)

Pankhania v Chandegra [2012] EWCA Civ 1438 (refd)

Prest v Petrodel Resources Ltd [2013] 2 AC 415 (refd)

Skip v Harwood (1747) 3 Atk 564 (refd)

Tan Yok Koon v Tan Choo Suan [2017] 1 SLR 654 (refd)

Telecom Credit Inc v Midas United Group Ltd [2019] 1 SLR 131 (refd)

United Overseas Bank Ltd v Chief Emmanuel C Iwuanyanwu [2001] All ER (D) 40 (Mar) (refd)

Facts

AD/CA...