On 7 July 2023, the Eastern Caribbean Court of Appeal handed down judgment in BVIHCMAP 2021/0034 Lau Man Sang, James and Others v. King Bun Limited and Others. Conyers represented the successful Respondents before the Court of Appeal. The appeal arose from the Appellants’ challenges to a successful derivative action originally brought by the Respondents as minority shareholders (and as Claimants before the BVI Commercial Court) concerning claims against the Appellants (as Respondents before the BVI Commercial Court) for breaches of directors’ duties, fraud on the minority and sale of assets to the Chairman of the board at an undervalue.
By a judgment handed down by Wallbank J. on 11 August 2021 following a 22 day trial on liability, the BVI Commercial Court decided that the claims made by the Respondents (as Claimants below) against all directors of Vanway International Group Limited were successful. Those claims concerned breaches of directors’ duties under sections 120 to 122 and section 175 of the BVI Business Companies Act, including breaches of fiduciary duties and breaches of their duty of care.
In a thorough 67 page judgment, the Court of Appeal upheld the judgment of Wallbank J and rejected the myriad grounds of appeal proffered by the Appellants. As part of a number of important findings, the Court of Appeal affirmed that where a director failed to consider the separate interests of his company or where there is a challenge to the good faith of a director, the test becomes an objective one and not simply whether the director believes he was acting bona fide. The Court of Appeal further held that where directors have acted in breach of their duties, in order for them to be absolved from liability for failure to comply with their duties, full disclosure must be made to the shareholders, so that shareholders are furnished with the full knowledge they need to assent to or ratify the breaches of directors’ duties. The Court of Appeal concluded that in this case the judge’s conclusion that the Appellants failed to comply with their duty was clearly one open to him to make based on the evidence, and was not a conclusion that no reasonable court would have reached. Thus, the judge was entitled to decide that full disclosure was not provided to the shareholders. The Court of Appeal also fully rejected the Appellants’ argument that a 5 month delay between the conclusion of trial and handing down of judgment adversely affected the learned judge’s assessment of the oral evidence at trial.
The successful Respondents’ legal team was led by Jern-Fei Ng, KC of 7BR and James Bailey of 7 King’s Bench Walk instructed by Conyers’ global team comprised of Jerry D. Samuel (BVI), Dr. Alecia Johns (Cayman), Norman Hau and Catherine Wong (both based in Hong Kong).
Conyers is pleased that its clients achieved this well-deserved victory.
Read the judgment in full below.