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Privy Council Emphasizes the Primary Role of the Trial Judge as the Decision-Maker in Shareholders’ Disputes – the Scope for Appellate Intervention is Limited.

March 2021 AppealCompaniesUnfair Prejudice

Summary

In the context of an unfair prejudice claim, the Privy Council recently overturned the decision of the Eastern Caribbean Court of Appeal and restored the decision of Leon J. of the Commercial Court of the British Virgin Islands, in effect ordering a mandatory buy-out, at a price to be determined by the court, of minority shareholdings by the majority shareholder whose acts were found to be oppressive, unfairly discriminatory and unfairly prejudicial to the minority, pursuant to section 184I of the BVI Business Companies Act.  The Privy Council (per Lord Briggs) took the view that unless the trial court had taken into account factors that it should not have taken into account, or omitted to consider ones that should have been assessed, the hands of appellate judges are necessarily tied and can only interfere to correct errors of law or an irrational decision.  The criticisms against undue appellate activism reinforce that discretionary decisions of trial judges in shareholders disputes will likely be endorsed or upheld in the end, so long as the decision is one that is within the parameters of a just and equitable judicial response to the facts.

Background

These proceedings comprised an unfair prejudice claim.  The three Appellants and the Second Respondent (“Mr Ming”) are siblings who fell out with each other since the 1970s and had a long history of disputes between them in relation to J.F. Ming Inc., the First Respondent, incorporated in the British Virgin Islands by their late grandfather as a holding company for a successful business in property development and leasing.  The Appellants are minority shareholders; Mr Ming is a majority shareholder.  Since the siblings’ long and bitter litigation in Hong Kong concluded in May 2006 with a decision from the Court of Final Appeal made in favour of Mr. Ming, he has been in control of and in charge of J.F. Ming Inc. as its sole director.

 

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Privy Council Emphasizes the Primary Role of the Trial Judge as the Decision-Maker in Shareholders’ Disputes – the Scope for Appellate Intervention is Limited.

 

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