Lam Wo Ping et al v Chen Jian Yun et al

THE EASTERN CARIBBEAN SUPREME COURT IN THE COURT OF APPEAL TERRITORY OF THE VIRGIN ISLANDS BVIHCMAP2023/0006 BETWEEN: [1] LAM WO PING [2] LAM KIN CHUNG Appellants and [1] CHEN JIAN YUN [2] ZHONG DA MINING HOLDING LIMITED Respondents Before: The Hon. Mr. Mario Michel Justice of Appeal The Hon. Mde. Vicki Ann Ellis Justice of Appeal The Hon. Mr. Trevor M. Ward Justice of Appeal Appearances: Mr. Alex Taylor Hall KC with Mr. Simon Hall for the Appellants Mr. Terence Mowschenson KC with Mr. Stuart Cullen for the Respondents ______________________________ 2024: February 12 August 20. ______________________________ Commercial appeal – Service of court process out of the jurisdiction – Part 7 of the Civil Procedure Rules 2000 (“CPR”) – Jurisdictional gateways – Rules 7.3(2)(a), 7.3(7)(a) and (b) of the CPR – Whether the appellants established a good arguable case that the claim fell within one or more of the classes of cases in which permission to serve out may be given in relation to a jurisdictional gateway – Forum conveniens – Burden of proof – Whether the appellants demonstrated that the forum being seised must clearly or distinctly be the appropriate forum for the trial of the dispute – Connecting factors – Whether the judge weighed the appropriate connecting factors that demonstrated the most real and natural connection with the action – Appellate interference – Appellate interference in a judge’s finding on the relative merits of trial in an instant jurisdiction and trial abroad – Whether the judge made a significant error of principle, or in the considerations taken or not taken into account, such that the decision exceeded the generous ambit within which reasonable disagreement is possible – Application to adduce fresh evidence – Ladd v Marshall test – Whether the evidence could not have been obtained with reasonable diligence for use at trial – Whether the evidence would have an important influence on the result of the case This is an appeal against the decision of the commercial court judge granting the first respondent’s application to set aside an order permitting service out and striking out the appellants’ claim. The appellants are Mr. Lam Wo Ping (“Mr. Lam Snr”) and Mr. Lam Kin Chung (“Mr. Lam Jnr”), father and son, and businessmen from the People’s Republic of China (“PRC”). The first respondent is Mr. Chen Jian Yun (“Mr. Chen”), also a businessman from the PRC, and the second respondent is a company incorporated in the Territory of the Virgin Islands (“the Company”). Mr. Lam Snr was the legal and beneficial owner of the one issued share in the Company. By an instrument of transfer dated 1st March 2017 (“the 1st Share Transfer”), Mr. Lam Snr, purported to transfer that share to Mr. Lam Jnr. However, the 1st Share Transfer was not entered in the register of members of the Company, which Mr. Lam Snr said was due to his lack of knowledge of that requirement. Later, on 9th March 2017, Mr. Lam Snr executed a second instrument of transfer (“the 2nd Share Transfer”), where he purported to transfer the share to Mr. Chen. The 2nd Share Transfer was said by Mr. Lam Snr to be subject to certain conditions arrived at from an oral agreement between Mr. Lam Snr and Mr. Chen in 2017 (“the 2017 agreement”). According to Mr. Lam Snr, the conditions of the 2017 agreement were, in sum, that: (1) beneficial ownership of the share would not pass to Mr. Chen upon executing the 2nd Share Transfer; (2) registration of the 2nd Share Transfer was subject to approval of the appellants and would only be permitted if the Company was impacted by the debts of the family business; and (3) if Mr. Chen became registered as legal owner of the share such ownership would be on trust for Mr. Lam Snr subject to an obligation to re-transfer legal title thereof immediately upon request. These conditions were vigorously disputed by Mr. Chen who contended that the 1st Share Transfer was not valid or genuine and that he was registered as the shareholder of the Company on or about 15th March 2017, so that the appellants could be shielded from liabilities of the Company, which was experiencing financial difficulties. It was upon the registration of the 2nd Share Transfer that the relationship between the parties went awry, as it was, according to the appellants, without their knowledge and approval. Consequently, the appellants sought, among other reliefs, rectification of the Company’s register under section 43(1) of the Business Companies Act. They were also granted leave to serve the claim on Mr. Chen in Hong Kong by order dated 13th October 2022 (“the service out order”). Mr. Chen, however, was of the view that the courts in the PRC had the jurisdiction to hear and determine the claim, and not the commercial court in the BVI. As such, on 13th January 2023, Mr. Chen sought to set aside the service out order pursuant to rule 7.7(2) of the Civil Procedure Rules (“the CPR”) and alternatively, to stay the claim on the grounds of forum non conveniens. On 25th April 2023, the commercial court decided in favour of Mr. Chen relying heavily on Nilon Limited and another v Royal Westminster Investments S.A. and others in coming to its conclusion. The key findings of the judge were that: (1) the appellants, who bore the burden of proof failed to demonstrate that they had a reasonable basis for bringing a claim against the Company for reasons analogous to those analysed at paragraphs 52, 53 and 58 to 60 of Nilon, as such, the issue of forum conveniens or whether Mr. Chen was a necessary and proper party to the proceedings did not arise; (2) the claim would fail as the jurisdictional gateways for service out under rules 7.3(7)(a) or 7.3(7)(b) of the CPR were not available to the appellants; and (3) in any event, having regard to paragraphs 66-69 of Nilon, the appellants had not satisfied the court that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out. Being dissatisfied with the judge’s decision, the appellants appealed to this Court. They advanced 4 grounds from which the following issues could be culled: (1) whether the judge erred in finding that there was no good arguable case that the claim fell within rule 7.3(2)(a) of the CPR; (2) whether the judge erred in finding that there was no good arguable case that the claim fell within rule 7.3(7)(a) or (b) of the CPR; (3) whether the judge erred in finding that the BVI was not clearly and distinctly the most appropriate forum for the trial of the dispute; and (4) whether the judge erred in striking out the claim against the first respondent and the Company. At the hearing of the appeal, the appellants applied to adduce the following fresh evidence: (1) the judgment of the PRC first instance court; (2) Mr. Chen’s civil appeal petition to the PRC appellate court; (3) the appellants’ defence to Mr. Chen’s appeal; and (4) the judgment of the PRC appellate court dated 8th August 2023. The appellants argued that their application satisfied the principles set out in Ladd v Marshall. They submitted that the fresh evidence they sought to adduce had an important influence on the outcome of the appeal, as it showed that Mr. Chen had submitted to the PRC appellate court that it ought to determine the question of ownership and control of the Company, but that court declined to do so, and in the process, rejected four sets of evidence submitted by Mr. Chen, including documents in relation to the key issue of ownership and control of the Company, which is the central issue in the BVI proceedings. The Court dismissed the application and promised to incorporate the reasons for its decision to do so in the judgment. Held: dismissing the appeal and making the orders set out at paragraph 137, that: 1. In determining an application to adduce fresh evidence, it is well settled in this jurisdiction that the Court is guided by the principles in Ladd v Marshall which comprise the following three limb test: (1) it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and (3) the evidence must be such as is presumably to be believed, or in other words it must be apparently credible, though it need not be incontrovertible. Ultimately, the core consideration is whether it is in the furtherance of the overriding objective to do justice between the parties to permit the applicant to rely on evidence not relied on in the lower court. The Court considered that, with the exception of the PRC appellate court judgment, all the other evidence that the appellants sought to adduce existed since June 2022, that is, well before the hearing and ruling of the BVI commercial court. With reasonable diligence, this evidence could have been deployed at the BVI commercial court, but the appellants failed to do so. Consequently, the appellants did not satisfy limb one of the Ladd v Marshall principles. Ladd v Marshall [1954] 1 WLR 1489 applied; Geminis Investors Limited v Goods Technology Starting International Limited BVIHCMAP2022/0020 (delivered 23rd August 2023, unreported) considered. 2. The Court does not agree with the appellants’ interpretation of Staray Capital Limited and another v Cha, Yang (also known as Stanley), that on an application to adduce fresh evidence, the court is not limited to permitting an applicant to rely only on documents that existed at the time of the first instance judge's decision. Staray’s case did not decide that evidence that did not exist before the trial would be accepted. In fact, the reasoning in Staray’s case is that evidence in the form of opinions was admissible on a fresh evidence application because the information or evidence used to generate those opinions existed well before the trial took place. In this case, the PRC appellate court judgment was not in existence at the time of the BVI commercial court’s decision. The purpose for which the appellants were seeking to deploy it was to prove the findings or conclusions of the PRC appellate court; not to prove the underlying facts giving rise to the judgment, which were in existence at the time of trial and well known. Additionally, the PRC appellate court judgment did not consider and make determinations on the legal or beneficial ownership of the Company and consequently, the issues before that court did not bear upon the present matter. Staray Capital Limited and another v Cha, Yang (also known as Stanley) BVIHCMAP2013/0009 (delivered 14th July 2014, unreported) distinguished; WWRT Limited v Carosan Trading Limited and Boris Kaufman BVIHCMAP2022/0002 (delivered 20th July 2022, unreported) applied. 3. The Court was overall satisfied that the evidence the appellants sought to adduce was irrelevant and would not have an important influence on the result of the case. Accordingly, the application to adduce fresh evidence was dismissed. Ladd v Marshall [1954] 1 WLR 1489 applied. 4. On an application for service out of the jurisdiction, the following three requirements must be satisfied: (1) there must be a serious issue to be tried on the merits as is the test for summary judgment, meaning that the claimant must show that there is a real as opposed to a fanciful prospect of success; (2) there must be a good arguable case that the claim falls within one or more classes of cases in which permission to serve out may be given in relation to a jurisdictional gateway; and (3) in all the circumstances, the forum which is being seised must clearly or distinctly be the appropriate forum for the trial of the dispute. In the present case, if the claim against the Company was bound to fail then that would be relevant to the question of whether, as between the appellants and Mr. Chen, there was a serious issue to be tried. The Court considered whether the appellants had established a good arguable case that the claim fell within one or more of the classes of cases in which permission to serve out may be given in relation to a jurisdictional gateway – which meant in the context of the present case – a gateway through which an application for service out must pass before permission may be granted. Three jurisdictional gateways were engaged in this case: rules 7.3(2)(a), 7.3(7)(a), and 7.3(7)(b) of the CPR. Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; AK Investment CJSC v Kyrgyz Mobile Tel Limited and Others [2011] UKPC 7 applied; Part 7 of the Civil Procedure Rules 2000 applied. 5. The Court found that the jurisdictional gateways for service out under rules 7.3(2)(a) and 7.3(7)(a) of the CPR were not open to the appellants. In relation to rule 7.3(2)(a), the question engaged was whether there was a real issue to be tried between the appellants and the Company. The Court noted that the claim was made under section 43(2) of the Business Companies Act for rectification of the Company’s register of members (“rectification proceedings”). The jurisdiction of the court in rectification proceedings is ill-suited to cases where substantial matters are in dispute. Considering that the appellants commenced rectification proceedings in circumstances where there was a substantial dispute concerning the validity of both purported share transfers, and the terms of the 2017 agreement, their claim for rectification against the Company was bound to fail. Accordingly, there could be no claim to which Mr. Chen could be a necessary and proper party. Regarding the jurisdictional gateway under rule 7.3(7)(a), the Court considered the nature of the claim and found that the crux of the dispute was competing claims of two parties in relation to the entitlement to the Company’s sole share, and therefore, a good arguable case had not been made out because the subject matter of the claim did not relate to the constitution, administration, management or conduct of the affairs of a BVI company. Rules 7.3(2)(a) and 7.3(7)(a) of the Civil Procedure Rules 2000 applied; Sections 41(1), 42, and 43 of the Business Companies Act No.16 of 2004 of the Revised Laws of the Virgin Islands applied; Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; Re North British Australasian Company (Limited), Ex p Robert Swan (1859) 7 C.B. (N.S.) 400 distinguished; Re Diamond Rock Boring Co Ltd, Ex p Shaw (1877) 2 QBD 463 distinguished. 6. The Court found however that the jurisdictional gateway available under rule 7.3(7)(b) of the CPR was available to the appellants. In determining the relevant question of whether the subject matter of the claim related to the ownership or control of a company incorporated within the jurisdiction, the Court noted that the claim was against the Company for rectification of its register to reflect Mr. Lam Jnr as its registered shareholder and to remove Mr. Chen as a member of the Company. The Court found that in this case, the claim for rectification was directly concerned with the question of who is entitled to be registered as the legal owner of the share and concomitantly, ownership of the Company. Rule 7.3(7)(b) of the Civil Procedure Rules 2000 applied; Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; Re London, Hamburgh and Continental Exchange Bank, Ward and Henry’s Case (1867) LR 2 Ch App 431 applied. 7. The Court then addressed the judge’s finding that, in any event, the appellants did not demonstrate that the BVI court was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to permit service out. Firstly, the Court agreed with the judge that the primary application was to set aside the order for service out and accordingly, the appellants bore the burden of establishing that the BVI court was clearly and distinctly the most appropriate forum. Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 applied; Livingston Properties Equities Inc and Others v JSC MCC Eurochem and Another [2020] UKPC 31 applied; Thornton Tomasetti Inc v Anguilla Development Corporation Ltd AXAHCVAP2014/0008 (delivered 15th September 2015, unreported) applied. 8. The Court held that in determining whether there is another available foreign court with competent jurisdiction more appropriate than the local court to try the claim, the court must perform a balancing exercise in weighing “connecting factors;” meaning factors which demonstrate the most real and natural connection with the action. In considering whether the commercial court weighed the appropriate connecting factors, the Court disagreed with the appellants’ contention that the judge failed to take into account the governing law, location and language of the witnesses, and documents. Even though the Court acknowledged that paragraphs 67 and 69 of the Nilon case were irrelevant insofar as they contained no reasoning on the appropriate forum, the judge never expressly said that those paragraphs contained the factors which she considered. The Court found that the judge, by incorporating paragraph 66 of the Nilon case into her decision, made it pellucid what connecting factors she considered. The relevant connecting factors were that: (1) the 2017 agreement was made in the PRC between Chinese nationals resident there, and related to the beneficial ownership of underlying assets comprising six mining companies situated in the PRC; (2) the language of the parties is mandarin Chinese; and (3) the law governing the 2017 agreement is PRC law. The Court noted that even though the BVI was where the rectification remedy must be sought, it would be the same situation if the underlying dispute was dealt with in the PRC because the situs of the share is the BVI. IPOC International Growth Fund Ltd v LV Financial Group Ltd et al BVIHCVAP2003/0020 and BVIHCVAP2004/0001 (delivered 22nd November 2004, unreported) applied; Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; VTB Capital plc v Nutritek International Corp [2013] UKSC 5 applied; Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 applied. 9. Lastly, the Court highlighted that the solution of disputes about the relative merits of trial in an instant jurisdiction and trial abroad is pre-eminently a matter for the trial judge. An appeal, therefore, should be rare and the appellate court should be slow to interfere. Accordingly, having regard to the foregoing conclusions, the Court did not find that the judge made a significant error of principle, or a significant error in the considerations taken or not taken into account, such that her decision exceeded the generous ambit within which reasonable disagreement is possible. VTB Capital plc v Nutritek International Corp [2013] UKSC 5 applied; Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 applied; Lubbe and Others v Cape PLC [2000] UKHL 41 applied; Tibit Limited v The Federal Republic of Nigeria BVIHCMAP2021/0042 (delivered 24th March 2024, unreported) applied; Anjie Investments Limited and Tian Li Holdings Limited v Cheng Nga Yee and Cheng Nga Ming Vincent BVIHCMAP2016/0003 (delivered 24th November 2016, unreported) applied; WWRT Limited v Carosan Trading Limited and Boris Kaufman BVIHCMAP2022/0002 (delivered 20th July 2022, unreported) applied. JUDGMENT

[1]WARD JA: This is an appeal against the order of a judge of the Commercial Court in the Territory of the Virgin Islands dated 25th April 2023. By that order, the judge granted the first respondent’s application and, inter alia, set aside a previous order made, permitting service outside the jurisdiction and struck out the appellants’ claims against both respondents.

Background

[2]The appellants, Lam Wo Ping (“Mr. Lam Snr”) and his son, Lam Kin Chung (“Mr. Lam Jnr”) are both businessmen in the People’s Republic of China (“PRC”). They were the claimants in the court below. The first respondent, Chen Jian Yun (“Mr. Chen” or “the first respondent”), who was the first defendant in the court below, is also a businessman in the PRC. The second respondent, Zhong Da Mining Holding Limited, (“the Company”), which was the second defendant in the court below, is a company incorporated under the BVI Business Companies Act (“the Business Companies Act” or “the Act).1 Mr. Lam Snr was the legal and beneficial owner of the one issued share in the company from its incorporation. The appellants contended that by an instrument of transfer dated 1st March 2017 (“the 1st Share Transfer”), Mr. Lam Snr purported to transfer the share to his son, Mr. Lam Jnr While the necessary formalities of a director's resolution and stock transfer form were completed, the 1st Share Transfer was not entered in the register of members of the Company. According to Mr. Lam Jnr’s affirmation in support of the application for permission to serve out, this was because he was not aware of the formal requirement for registration of the 1st Share Transfer.

[3]By a second instrument of transfer dated 9th March 2017 (“the 2nd Share Transfer”), Mr. Lam Snr purported to transfer legal title to the share to Mr. Chen. The 2nd Share Transfer was allegedly subject to certain conditions agreed orally between Mr. Lam Snr and Mr. Chen (the “Common Understanding”). I will return in more detail to treat with this “Common Understanding” later. It suffices for present purposes to state broadly that the appellants contended that it contained stipulations that: (a) beneficial ownership of the share would not pass to Mr. Chen upon execution of the 2nd Share Transfer; (b) registration of the 2nd Share Transfer was subject to prior approval from the appellants and would only be permitted if the company was actually impacted by the debts of the family business, and then, only with the prior approval of both appellants; and (c) if Mr. Chen became registered as legal owner of the share, such ownership would be on trust for Mr. Lam Snr, subject to an obligation to re-transfer legal title of the share immediately upon request by Mr. Lam Snr.

[4]The appellants said that without their knowledge and authorisation, the 2nd Share Transfer was subsequently registered by the Company through its then registered agent, Vistra (BVI) Limited (“Vistra”), on the instructions of Mr. Chen. They however, challenged Mr. Chen’s assertion that the date of registration occurred on or about 15th March 2017.

[5]In his defence, Mr. Chen contended that the 1st Share Transfer was neither genuine nor valid. He claimed to have been registered as the shareholder in the Company on or about 15th March 2017 after fees were paid to restore the Company to “good standing,” and he asserted that he had been the sole registered shareholder in the company since 2017 and the sole beneficial owner of the share. He further contended that the share was transferred to him so that the appellants could be shielded from any liabilities of the Company (or its group of companies) which were experiencing severe financial difficulties, as was their family business. The reason why the appellants transferred the share to him for US$1.00 was that they wished to ensure that they bore no responsibility for the debts of the Company’s group of companies and thereby avert reputational damage.

[6]The validity of the two instruments of transfer forms the substance of the dispute between the appellants and Mr. Chen. The appellants contended that the 1st Share Transfer was valid and gave Mr. Lam Jnr a present entitlement to the legal title. They said that the 2nd Share Transfer was null, void and without legal effect in light of the 1st Share Transfer and because it was subsequently rescinded by Mr. Lam Snr, and, as a result, its registration by Vistra was similarly void. The appellants therefore sought orders against the Company pursuant to section 43(1) of the Business Companies Act to rectify its register to reflect Mr. Lam Jr. as the shareholder. They also sought damages against Mr. Chen for losses suffered as a result of “the unlawful registration” of the 2nd Share Transfer and for his failure to maintain the Company in good standing. The proceedings in the Court below

[7]On 12th May 2022, the appellants filed a claim form in the BVI seeking orders, inter alia, to rectify the register of the Company. By order dated 13th October 2022, Jack J [Ag.] granted the appellants permission to serve the claim on Mr. Chen out of the jurisdiction in Hong Kong.

[8]On 13th January 2023, Mr. Chen filed an application pursuant to Rule 7.7(2) of the Civil Procedure Rules 2000 (“the CPR”) seeking an order that the order of 13th October 2022 be set aside and to strike out, or alternatively, stay the claim on grounds of, inter alia, forum non conveniens. Mr. Chen contended that the courts of the BVI were not the natural or appropriate forum for the determination of the claim, and that the courts of the PRC were an available forum having competent jurisdiction and were clearly and distinctly the more appropriate forum.

[9]On 25th April 2023, Mangatal J granted the applications and set aside the order granting permission to serve Mr. Chen out of the jurisdiction and struck out the claim against Mr. Chen and the Company.

The judge’s reasons

[10]The judge delivered an oral decision. In relation to the service out issue, the judge held that an application to set aside service out, under rule 11.16 of the CPR, “causes the claimant’s application to be dealt with again.” She considered that the logic flowing from that proposition was that “the burden is therefore on the Claimants to show that BVI is clearly and distinctively (sic) the appropriate forum and that it would in fact be different if the First Defendant was starting with a forum challenge, in which case the burden would be on the Defendant/Applicant.”2 Accordingly, the judge held that the appellants had failed to demonstrate that they have a reasonable basis for bringing a claim against the Company for reasons analogous to those analysed in Nilon Limited and another v Royal Westminster Investments S.A. and others3 at paragraphs 52, 53 and 58 to 60 and therefore the question whether Mr. Chen was a necessary and proper party and, a fortiori, the issue of forum conveniens, did not arise.

[11]The judge held further that the claim also failed on gateway 7.3(7)(a) of the CPR because no good arguable case had been made out that the subject matter of the claim relates to the constitution, administration, management or conduct of the affairs of a BVI company. The judge relied on the analysis and logic contained in paragraphs 59 and 60 of Nilon as the basis for her conclusion.

[12]The judge was of a similar view in relation to gateway 7.3(7)(b) of the CPR, which avails a claimant where the claim relates to ownership or control of a company incorporated in the jurisdiction. The judge concluded that the claim against the Company concerned whether Mr. Chen’s registration as a member of the Company was in breach of an oral agreement purportedly made in the PRC. Thus, it was not properly concerned with the legal validity of Mr. Chen’s registration as a shareholder of the Company and did not relate to or concern his ownership and consequently his control of the Company. In her view, the claimants did not establish that they had much the better of the argument on that point.

[13]Finally, the judge held that, in any event, the claimants had not satisfied her that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out. The judge relied on paragraphs 66 to 69 of Nilon to justify her conclusion on this point.

Preliminary application to adduce additional evidence in the appeal

[14]The first order of business at the hearing of the appeal was an application by the appellants to adduce additional evidence on the appeal. After hearing submissions from both sides, the Court dismissed the application and promised to incorporate the reasons for our decision in this judgment. I will therefore set out the Court’s reasons for dismissing the appellants’ application before turning to the substantive appeal.

[15]The appellants sought to have admitted, as additional evidence, the following documents from proceedings before the first instance and appellate courts in Fujian Province in the People’s Republic of China (the “PRC Proceedings”): (1) the judgment of the Fujian Intermediate People's Court (the “PRC first Instance court”) case no. (2022) Fujian 05 Civil First Instance No. 910 dated 9th June 2022; (2) Chen Jian Yun’s (“Mr. Chen”) Civil Appeal Petition to the High People’s Court of Fujian (the “PRC appellate court”) dated 16th June 2022; (3) the appellants’ defence to Mr. Chen's appeal dated 20th October 2022; and (4) the judgment of the PRC appellate court, case no. (2022) Fujian Civil Final Instance no. 1285 dated 8th August 2023.

[16]The appellants submitted that the new evidence fulfilled the requirements for admission consistent with the well-known principles set out in Ladd v Marshall4 and as applied by several decisions of this Court, including the consolidated appeal of Adam Bilzerian et al v Terrence V. Byron et al; Gregory Gilpin- Payne et al v Stephen First et al; Adam Bilzerian et al v Zachary Getz et al; Adam Bilzerian v Kevin Horstwood; Keyapaha International Ltd et al v Laura Getz et al; Adam Bilzerian et al v Terrence V. Byron et al; Adam Bilzerian v Gerald Lou Weiner et al; Adam Bilzerian v Gerald Lou Weiner et al; Gregory Gilpin-Payne et al v Stephen First et al.5

[17]The principal document that the appellants sought to adduce was the judgment of the PRC appellate court, which was only issued on 8th August 2023, which was after Mr. Chen's application in the court below dated 13th January 2023 to set aside and strike out the appellants' claims, and the judge’s order dated 25th April 2023 granting Mr. Chen’s applications. As such, the appellants said it could not have been obtained any earlier. The appellants acknowledged that the application for leave also included documents that pre-date the 13th January 2023 application to set aside and strike out the order for service out and the hearing and determination of the application. These documents comprise the decision of the PRC first instance court and the parties' respective cases as they were put in writing to the PRC appellate court. They however submitted that the judgment of the PRC appellate court and its relevance can only be explained in the context of, and with reference to, those other PRC Documents.

[18]Secondly, the appellants submitted that the new evidence would probably have an important influence on the outcome of the appeal and therefore satisfy the second limb of the Ladd v Marshall principles. The submission grounding that assertion was that the PRC Documents show that Mr. Chen submitted that the PRC appellate court should determine the question of the ownership and control of the Company, but the PRC appellate court refused to do so. The PRC appellate court rejected four "sets of evidence" submitted by Mr. Chen, including documents in relation to the key issue of ownership and control of the Company, which is the central issue in the BVI proceedings.

[19]The appellants relied on the holding of the PRC appellate court that, “In the view of this Court, the four sets of evidence submitted by [Mr. Chen] are insufficient to establish that [Mr. Chen] is a qualified plaintiff in this case. Accordingly, this Court does not admit any of these four sets of evidence…” “Chen Jianyun needs to present evidence showing his direct interest in the companies involved” but "[t]he evidence currently available falls short of proving this connection."

[20]It is further said that Mr. Chen had contended in the PRC Proceedings that “the share transfer document provided by Lam Wo Ping and Lam Kin Chung was evidently forged at a later date to seize the equity and mining qualifications of the [the Company] and its domestic subsidiaries.” The appellants submitted that that allegation was rejected by the PRC courts so that in the event Mr. Chen seeks to advance that allegation in this appeal, this Court should be aware of the PRC’s rejection of it.

[21]Thirdly, the appellants submitted that the new evidence is credible since the PRC documents were sourced directly from the records of the courts of the PRC, or written documents submitted to the PRC Courts.

[22]The first respondent accepted that the credibility limb of the Ladd v Marshall test was met. However, he joined issue with the first limb and submitted that the first limb of Ladd v Marshall had not been satisfied because the judgment of the PRC appellate court did not exist at the time the judge below made her order granting Mr. Chen’s applications. The first respondent cited WWRT Limited v Carosan Trading Limited et al6 as authority for the proposition that to satisfy the first limb of the Ladd v Marshall test, the evidence to be adduced must be in existence at the time of the trial or determination of the issue being appealed.

[23]In relation to the other PRC Documents that were in existence at the time, the first respondent submitted that the appellants chose not to bring them to the attention of the first instance judge despite being aware of their existence and the likelihood that the PRC Courts would make a determination on the points which the appellants allege would have an important influence on determination of the service out and/or strike out issues. As such those documents fail the first limb of the Ladd v Marshall test in that, they could have been obtained with reasonable diligence by the appellants for use at the first instance hearing. To allow the appellants to rely on them at appeal would be contrary to the overriding objective.

[24]Secondly, in relation to the 2nd limb of Ladd v Marshall, the first respondent submitted that the PRC Documents would not have an important influence on the result of the case because neither the judgment of the Fujian Intermediate People’s Court, nor the judgment of the PRC appellate court made any determination as to the legal or beneficial ownership of the Company. It was contended that the PRC documents relate to a case concerning entirely different issues to the claim to which this appeal relates. The issue before the PRC courts arose from the first respondent’s allegation that the appellants had unjustifiably infringed on the assets and equity of a PRC company, Fujian Tianpeng Mining Co Ltd, and six of its PRC subsidiaries. The registered shareholder of 99.9% of the shares in Fujian Tianpeng Mining Co Ltd is a Hong Kong company; Hong Kong Tianpeng Mining Co Ltd, which itself is a direct subsidiary of the second respondent; Zhong Da Mining Holding Ltd.

[25]It was further argued that the judgments of the PRC Courts that the appellants wished to adduce determined that because the first respondent was not the registered shareholder of Fujian Tianpeng Mining Co Ltd (rather he holds an indirect beneficial interest in that company through the Company and Hong Kong Tianpeng Mining Co Ltd), he did not have standing to bring the claim. The PRC Courts did not have to, and did not make any determination as to the legal or beneficial ownership of the Company nor did they make any determination as to the evidence Mr. Chen adduced as to his interest in the Company. Accordingly, the first respondent submitted that the findings of the PRC Courts were irrelevant to the appeal and so failed the second limb of the Ladd v Marshall test.

[26]Finally, it was submitted that insofar as the appellants sought to rely on the judgments of the PRC Court in order to prove the existence of a fact which the appellants said was in issue in the dispute before the PRC Courts, such evidence would be inadmissible pursuant to section 90 of the Evidence Act.7 It could not, therefore, have any influence – let alone an important influence – on the result of the appeal.

[27]By way of reply to the first respondent’s submissions in relation to the first limb, the appellants relied on Staray Capital Limited et al v Cha, Yang (also known as Stanley)8 to say that the facts giving rise ultimately to the PRC appellate court’s judgment predate the hearing below even if the decision did not, and on that basis, and applying the broader and more relaxed approach to the Ladd v Marshall principles, this Court should permit the judgment to be adduced.

Discussion

[28]The principles governing an application to adduce fresh evidence on appeal are well settled within this jurisdiction and do not require any elaborate thesis in this judgment. The propositions derived from the many cases from this Court applying the well-known Ladd v Marshall principles may be summarised succinctly. On an application to adduce fresh evidence, the core consideration is whether it is in the furtherance of the overriding objective to do justice between the parties to permit the applicant to rely on evidence not relied on in the lower court. In determining this question the court is guided by the principles in Ladd v Marshall which entail a three limb test: (1) it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; (3) the evidence must be such as is presumably to be believed, or in other words it must be apparently credible, though it need not be incontrovertible. However, the first limb would be relaxed in an interlocutory application where a full hearing or trial determinative of the claim is yet to take place but would not be where there had been a trial or a full hearing on the merits: Geminis Investors Limited v Goods Technology Starting International Limited.9

[29]In relation to the first limb of Ladd v Marshall, two things are clear. First, the documents other than the PRC appellate court judgment existed since June 2022, well before the hearing and determination of the applications before the court below. This means that with reasonable diligence they could have been deployed in those proceedings. On that basis, subject to considerations of whether in furtherance of the overriding objective to do justice, the Court should permit the appellants to rely on this evidence which it did not deploy in the court below, they would fail the first limb of Ladd v Marshall.

[30]Secondly, it is equally clear that the PRC appellate court judgment was not in existence at the time of the judge’s determination below. This Court has held in Geminis Investors Limited that: “As it relates to applications to adduce fresh evidence there is no shortage of cases in the Eastern Caribbean, and in the United Kingdom which show that to satisfy this limb of the test the evidence to be adduced must be evidence that existed at the time of the trial but could not have been obtained with reasonable diligence for use at the trial. This limb does not however contemplate that evidence that did not exist at the time of trial or a change in circumstance post-trial could be evidence adduced before the Court of Appeal.”

[31]The language here is very clear and the appellants’ submission that the Court is not limited to permitting an appellant to rely only on documents that existed at the time of the first instance judge's decision is at odds with the stated principle. The appellants nonetheless attempted to justify reception of the PRC appellate court judgment by seeking to draw a parallel with the reasoning of this Court in Staray Capital Limited to support their argument that the PRC appellate judgment is admissible because the facts giving rise to it predate the hearing below even though the decision does not.

[32]In Staray Capital Limited the applicant sought to adduce two opinions from the Shanghai Municipal Bureau of Justice which were produced in response to complaints filed by the second appellant against the respondent. The opinions post dated the trial which was held between 28th and 31st January 2013. Thom JA, delivering the Court’s judgment, accepted that these two opinions produced after the trial had satisfied limbs (i) and (iii) of the Ladd v Marshall principles. In WWRT this Court opined that, properly understood, Staray Capital Limited and another did not decide that evidence that did not exist before the trial would be accepted. It distinguished that case on the basis that while the production of the opinions by the Shanghai Municipal Bureau of Justice took place sometime after the trial, the information or evidence used to generate/populate those opinions existed well before the trial that took place in January 2013. The appellants deployed a similar argument here.

[33]The difficulty with the appellants’ argument is that the application in relation to the PRC Appellate judgment and the purpose for which it is deployed is to prove the findings or conclusions of the PRC appellate court, which they say bear upon the present matter; it is not to prove the underlying facts which were always in existence and well known. The only new or additional evidence is the conclusions or findings of the PRC appellate court, which post-date the hearings below. This judgment would therefore fail the first limb of Ladd v Marshall, subject to considerations of whether in furtherance of the overriding objective to do justice, the Court should permit the appellants to rely on this evidence. This will be addressed presently. Would this evidence probably have an important influence on the result of the case, though not necessarily decisive?

[34]The answer to this second limb of Ladd v Marshall turns on an understanding of what issue was under consideration in the PRC Proceedings and what the judgments actually decided. Having read the first instance and appellate judgments of the PRC, this Court considers that the first respondent's submissions accurately characterise the issues and findings of the PRC judgments. They decided that the first respondent did not have standing to bring a claim that the appellants had unjustifiably infringed on the assets and equity of a PRC company, Fujian Tianpeng Mining Co Ltd (in which Mr. Chen claimed 100% equity) and six of its PRC subsidiaries. This was because he lacked standing to do so as he was not the registered shareholder of Fujian Tianpeng Mining Co Ltd. The sole registered shareholder of that company is Hong Kong Tianpeng Corporation, which is a direct subsidiary of the second respondent, Zhong Da Mining Holding Ltd.

[35]One of the four sets of documents adduced by the first respondent to support his assertion that he had standing to bring the claim was Hong Kong Tianpeng Corporation’s Annual Reports from 2016 to 2020 to seek to prove that he holds 100% of the shares in the second respondent to these proceedings (the Company) and thereby indirectly holds 100% of the shares of Hong Kong Tianpeng Corporation.

[36]The appellate court’s stated reason for rejecting the four sets of evidence presented by Mr. Chen was: “In the view of this Court, the four sets of evidence submitted by Mr. Chen Jianyun are insufficient to establish that Chen Jianyun is a qualified plaintiff in this case. Accordingly, the Court does not admit any of these four sets of evidence.”

[37]The appellate court invoked article 122 of the civil procedure law of the PRC which required a lawsuit to meet the condition, among others, that, “the plaintiff must be a citizen, a legal entity, or other organization directly interested in the case…” The appellate court further held: “To substantiate his lawsuit claiming infringement of corporate property equity, Chen Jianyun needs to present evidence of direct interest in the companies. The evidence currently available falls short of proving this connection. Therefore the initial trial court appropriately concluded that the plaintiff lacked the proper standing and justifiably dismissed the case. If Chen Jianyu believes that he has made actual investments in the companies involved, he can pursue separate litigation to affirm his equity ownership or shareholder status.”

[38]Nothing in the judgment leads to or supports the appellants’ assertion that the PRC courts made any determination as to the legal or beneficial ownership of the company, nor, as the first respondent rightly contends, did they make any determination as to the evidence Mr. Chen adduced as to his interest in the Company. They simply found that he had not established a direct interest in the PRC company, Fujian Tianpeng Mining Co Ltd and six of its PRC subsidiaries and therefore was not a qualifying plaintiff within Article 122 of the Civil Procedure Law of the PRC.

[39]Even if in furtherance of the overriding objective this Court was persuaded to admit the new evidence notwithstanding that the appellate judgment was not in existence at the time of the hearing below and the first instance PRC judgment and other documents could with reasonable diligence have been produced at that hearing, we were satisfied that they are irrelevant and would not have an important influence on the result of the case. Accordingly, the application to adduce additional evidence was dismissed.

[40]In light of the Court’s conclusions on the foregoing, the need for consideration of the section 90 arguments did not arise.

[41]I turn now to consider the substantive appeal.

Grounds of appeal

[42]The appellants raised four grounds of appeal. Ground 1 contends that the judge erred in fact and law in finding that there was no good arguable case that the claim falls within rule 7.3(2)(a) of the CPR.

[43]Ground 2 complains that the judge erred in fact and law in finding that there was no good arguable case that the claim falls within rule 7.3(7)(a) or (b) of the CPR.

[44]Ground 3 avers that the judge erred in her alternative finding and/or decision that the BVI is not clearly and distinctly the most appropriate forum for the trial of the dispute for reasons that are indistinguishable from paragraphs 66 to 69 of Nilon’s case.

[45]Ground 4 contends that the judge erred in striking out the claim against the first respondent and the Company.

Ground 1 - The appellants’ submissions

[46]In relation to the judge’s conclusions on whether there was a serious issue to be tried, the appellants contended that the reasons given by the judge did not constitute reasons or adequate reasons as they did not explain how she arrived at her conclusions. For that reason alone her reasons are liable to be set aside. Secondly, the appellants submitted that the judge erred by applying the wrong legal test in requiring the appellants to, “demonstrate they have a reasonable basis for bringing a claim against the company” when the test is whether there is a serious issue to be tried. Compounding this, the judge failed to assume the pleaded facts were true, failed to consider or conclude that the facts relied on were “demonstrably untrue and unsupportable” and made a finding as to the relative merits of that contested evidence when she should not have made any findings as between witnesses on contested facts. The judge’s reliance on paragraphs 52, 53 and 58 to 60 of Nilon was misplaced because unlike the Mahtani parties in Nilon, Mr. Lam Jnr has a present right to be registered as the sole shareholder pursuant to the 1st Share Transfer and, further, those paragraphs in Nilon considered issues of jurisdictional gateways and not forum non conveniens but did not address whether there was a serious issue to be tried.

Discussion

The legal framework

Service out

[47]The principles governing an application to serve a claim on a person outside the jurisdiction are set out in Part 7 of the Civil Procedure Rules (Revised Edition) 2023. In this case the application to serve Mr. Chen out of the jurisdiction was made under rule 7.3(2)(a) and 7.3(7). These provisions are commonly referred to as the gateways through which an application for service out must pass before permission may be granted.

[48]Rule 7.3(2)(a) provides as follows: “(2) Court process may be served out of the jurisdiction if a claim is made - (a) against someone on whom the claim form has been or will be served, and - (i) there is between the claimant and that person a real issue which it is reasonable for the court to try; and (ii) the claimant now wishes to serve the claim form on another person who is outside the jurisdiction and who is a necessary and proper party to that claim.”

[49]Put simply, and in the context of this case, service out would be permissible if: (1) a claim had been or would be made against the Company;(2) as between the appellants and the Company there was a real issue to be tried; and (3) the first respondent, Mr. Chen, whom it was sought to serve outside the jurisdiction, was a necessary or proper party to the claim against the Company. Lord Collins in Nilon commented that “the necessary or proper party head of jurisdiction was anomalous, in that, by contrast with the other heads, it was not founded upon any territorial connection between the claim, the subject matter of the relevant action and the jurisdiction of the English courts.” This question is answered by asking, “supposing both parties had been within the jurisdiction would they both have been proper parties to the action?”10

[50]Rule 7.3(7) addresses claims about companies, and provides: “(7) Court process may be served out of the jurisdiction if the subject matter of a claim relates to - (a) the constitution, administration, management or conduct of the affairs; (b) the ownership or control; or (c) the insolvency, of a company incorporated within the jurisdiction.”

[51]Rule 7.7(2) provides that the court may set aside service if: (a) service out of the jurisdiction is not permitted by the rules; (b) the claimant does not have a good cause of action; or (c) the case is not a proper one for the court’s jurisdiction.

[52]The applicable principles relating to service out are well known and apply irrespective of the gateway accessed. They were articulated with much lucidity by the Board in Nilon: “On an application for service out of the jurisdiction, three requirements have to be satisfied. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context “good arguable case” connotes that one side has a much better argument than the other. Third, the claimant must satisfy the court that in all the circumstances the forum which is being seised (here the BVI) is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.”

[53]Importantly, Nilon also instructs that the action is not properly brought against the anchor defendant (here the Company) if it is bound to fail. It further instructs that the question of the merits of the claim is relevant to the question of whether the claim against the anchor defendant is “bound to fail” and to the question whether there is a “serious issue to be tried” in relation to the claim against the foreign defendant (here Mr. Chen); and there is no practical difference between the two tests, which are the same as the test for summary judgment.

[54]Both parties seem to accept that the judge correctly stated the applicable principles as reflected at pages 19 to 20 of the Record of Appeal. The challenge is to her application of these principles to the facts of the case.

Issue 1 - Whether there is a serious issue to be tried

[55]The first task therefore is to ascertain whether, as between the appellants and Mr. Chen, there is a serious issue to be tried on the merits in relation to substantial questions of fact or law or both. The threshold for establishing this is a low one and the test is the same as for summary judgment, which means that the applicant for service out must show that its claim possesses a real, as opposed to a fanciful, prospect of success: AK Investment CJSC v Kyrgyz Mobile Tel Limited and Others.11

[56]The judge’s conclusions on whether there was a serious issue to be tried was that the claimants had failed to demonstrate that they have a reasonable basis for bringing a claim against the company for reasons analogous to those analysed in Nilon at paragraphs 52, 53 and 58 to 60 and therefore the question whether Mr. Chen was a necessary and proper party and, a fortiori, the issue of forum conveniens, did not arise.

[57]The appellants contend that the reasons given by the judge do not constitute reasons or adequate reasons as they do not explain how she arrived at her conclusions. For that reason alone, her reasons are liable to be set aside. Secondly, it is said that the judge erred by applying the wrong legal test in requiring the appellants to “demonstrate they have a reasonable basis for bringing a claim against the company” when the test is whether there is a serious issue to be tried. Compounding this, the judge “failed to assume the pleaded facts were true, failed to consider or conclude that the facts relied on were ‘demonstrably untrue and unsupportable’ and made a finding as to the relative merits of that contested evidence when she should not have made any findings as between witnesses on contested facts.”

[58]While I do not understand the respondents to contest that as between the appellants and Mr. Chen there is a serious issue to be tried - Mr. Mowschenson accepted this much during the course of his oral submissions to this Court – in written submissions the first respondent seeks to explain the judge’s reference to “a reasonable basis for bringing a claim against the company” by submitting that the judge was there referring to paragraphs 52, 53 and 58 to 60 of Nilon “which describe in clear terms why resort to a claim under section 43 of the BVI Business Companies Act 2004 (BCA) is wholly misconceived in circumstances where a right to a share in a company, and to be registered in respect thereto, is disputed and the dispute requires a substantive investigation.”12

[59]In my view, the judge appears to have dealt somewhat compendiously with the first limb and seems to have merged it with the second limb, which concerns whether there is a good arguable case in relation to a jurisdictional gateway. As I see it, the judge seems to have had in mind the requirement stipulated at rule 7.3(2)(a)(i) for there to be a real issue between the appellants and the Company which it was reasonable for the court to try when she made reference to “a reasonable basis for bringing the claim against the company.” Nonetheless, it is clear that whether this requirement is fulfilled is ultimately related to the question whether there is a serious issue to be tried as between the appellants and Mr. Chen: see Nilon at paragraph 15(6). Whether the appellants have good arguable case that the court has jurisdiction within one or more of the grounds specified in CPR Rule 7.3

[60]The last point leads me to consider whether the appellants had established a good arguable case that the application for service out fell within one of the permissible gateways under the CPR. I will deal first with the gateway provided by rule 7.3(2)(a).

Rule 7.3(2)(a) gateway -The rectification claim

[61]It is necessary to have in mind the circumstances which brought about the need for an application for service out on Mr. Chen. The appellants’ application for service out on Mr. Chen stems from its institution of the claim for rectification against the Company. The issue in the first instance relates to whether the appellants met all the requirements for service out.

[62]It is not disputed that the appellants had issued a claim form against the Company. However, three issues arise; the first two of which are interrelated. The first is whether there was a real issue between the appellants and the company which it was reasonable for the court to try. The answer to this issue turns on whether the appellants can bring proceedings for rectification of the share register of the Company when the reason for seeking rectification is an untried allegation that Mr. Chen caused himself to be registered as the legal owner of the sole share in the Company in breach of an agreement made with Mr. Lam Snr that he would not do so, save in certain specified circumstances and, even then, that he would hold the legal title as a trustee, and be subject to an obligation to re-transfer the legal title to Mr. Lam Snr immediately upon demand.

[63]The second issue is whether Mr. Chen was a necessary and proper party to the appellants’ claim against the Company. This depends on the answer to the first issue, for it is only if the appellants can bring a claim for rectification against the Company in the circumstances described above that it may be said that Mr. Chen is a necessary and proper party to that claim, and against whom there is a serious issue to be tried.

[64]The third issue is, assuming that Mr. Chen is a necessary and proper party to the appellants’ claim against the Company, whether the BVI is an appropriate forum for the appellants’ claim against the first respondent.

[65]The first question for consideration in the quest to determine whether service out was permissible through gateway 7.3 (2)(a)(i) is whether there is a real issue to be tried between the appellants and the Company on the merits. This necessarily engages the question whether the claim against the Company is bound to fail; for if it is, then it cannot be said that there is a claim to which Mr. Chen is a necessary and proper party.

[66]It is therefore necessary to examine the appellants’ claim against the Company. The appellants’ claim against the Company is for rectification of its register of members pursuant to section 43 of the Act. For context, so far as relevant, section 41(1) of the Act provides that a company shall keep a register of members containing the names and addresses of the persons who hold registered shares in the company. By section 42 of the Act, it is provided that the entry of a person’s name in the register of members as a holder of a share in a company is prima facie evidence that legal title in the share vests in that person, whom the company may treat as the only person entitled to exercise any voting rights attaching to the share; receive notices; receive a distribution in respect of the share; and exercise other rights and powers attaching to the share.

[67]Section 43 provides: “43. (1) If (a) information that is required to be entered in the register of members under section 41 is omitted from the register or inaccurately entered in the register, or (b) there is unreasonable delay in entering the information in that register, a member of the company, or any person who is aggrieved by the omission, inaccuracy or delay, may apply to the Court for an order that the register be rectified, and the Court may either refuse the application, with or without costs to be paid by the applicant, or order the rectification of the register, and may direct the company to pay all costs of the application and any damages the applicant may have sustained. (2) The Court may, in any proceedings under subsection (1) determine any question relating to the right of a person who is a party to the proceedings to have his name entered in or omitted from the register of members, whether the question arises between (a) two or more members or alleged members, or (b) between members or alleged members and the company and generally the Court may, in the proceedings, determine any question that may be necessary or expedient to be determined for the rectification of the register of members.”

[68]On the face of it, section 43(2) of the Act appears to imbue the court with a wide enough discretion to permit enquiry into and resolve any disputes about entitlement to be registered before making an order for rectification. This was the view of the Court of Appeal in Nilon. However, the Privy Council disagreed, clarifying that that section 43(2) of the Act does not imbue the court with jurisdiction in rectification proceedings to determine the rights of a claimant to have their name entered in the register of members where there are substantial factual disputes.

[69]In Nilon, the Mahtani parties brought proceedings in the BVI against Mr. Varma for breach of a contract to procure the issue of shares in Nilon to the Mahtani parties, and against Nilon for rectification of its share register to show the Mahtani parties as shareholders. The claim against Mr. Varma was that he agreed to procure and/or cooperate in procuring the issue of voting shares in Nilon to the Mahtani parties in agreed proportions, but that he failed to cause their names to be entered in the register of members of Nilon, or to cause Nilon to issue them with voting shares and share certificates, and that notwithstanding that failure they acquired an equitable interest in Nilon’s shares. As Mr. Varma was resident in London, the claimants applied to the BVI Commercial Court for permission to serve Mr. Varma out of the jurisdiction under rule 7.3(2)(a) of the CPR. The principal issue before the Board was whether permission should have been given by the BVI court to the claimants to serve Mr. Varma out of the BVI, and relatedly, whether the claim against Nilon should have been struck out on the basis that there was no sustainable cause of action for rectification.

[70]The Board considered that the substance of the Mahtani parties’ claim on this aspect was for an order for specific performance requiring Mr. Varma to procure the allotment and issue of their respective shareholdings. The Board undertook an extensive survey of the legislative antecedents of the United Kingdom equivalent of the BVI Act and the voluminous case law on rectification of a company’s share register. Having done so the Board drew a number of conclusions emerging from the case law: (1) from the earliest days of the legislation the courts have made it clear that the summary nature of the jurisdiction makes it an unsuitable vehicle if there is a substantial factual question in dispute. In such a case an issue may be directed to be tried but it may also be dismissed or struck out; (2) There is no doubt that the legislation is primarily concerned with legal title and the object of [section 41] was to secure a list or register which could show who were the shareholders entitled to the profits, and liable to contribute to the debts of the company. The Board specifically concluded that “the legislation both in the BVI and in Great Britain is concerned with rectification of the register of members, and membership concerns legal title.”

[71]The Board concluded that “proceedings for rectification can only be brought where the applicant has a right to registration by virtue of a valid transfer of legal title, and not merely a prospective claim against the company dependent on the conversion of an equitable right to a legal title by an order for specific performance of a contract (emphasis added). Accordingly, the Board held: “The Mahtani parties have no such present right, which could only arise after they had been successful in their principal claim against Mr. Varma, and only after he had been ordered to procure the issue and allotment of the shares to them. In these proceedings the Mahtani parties have no arguable case to a present right to rectification, and there is therefore no claim against Nilon to which Mr. Varma can be a necessary and proper party.”

[72]In summary, three salient points emerge as important take-aways. First, the jurisdiction given to the court to order rectification of the register of a company is summary in nature and ill-suited to cases where substantial factual matters are in dispute. Secondly, in such a case, the court may dismiss or strike out the claim for rectification. Thirdly, the Act is concerned with the rectification of membership of the company, which means persons holding legal title to shares.

[73]The appellants criticise the judge’s decision on the basis that it failed to distinguish the facts of this case from Nilon by failing to recognise that unlike the Mahtani parties in Nilon, Mr. Lam Jnr has a presently assertable right to be registered as a member of the company by reason of the 1st Share Transfer. They seek to draw analogy with cases such as Re North British Australasian Company (Limited), Ex p Robert Swan13 and Re Diamond Rock Boring Co Ltd, Ex p Shaw14 which were similarly concerned with rectification of the share register and both of which were discussed in Nilon.

[74]In Re North British Australasian Company, Mr. Swan had entrusted custody of his shares to his broker. The broker fraudulently transferred them to two innocent third parties, who were made parties to the application. The sole question was whether Mr. Swan was estopped from denying his title by his negligence. The Court of Common Pleas held that the equivalent of section of 43(2) of the Act applied, not only where there was a dispute between the applicant and the company, but also where (as here) the dispute existed between two persons, each of whom alleged himself to be a member of a company in respect of the same shares. The Court was divided, and Mr. Swan failed. However, Mr. Swan was ultimately successful in the Exchequer Chamber in an action for a declaration of title and for an order of mandamus requiring rectification of the register.

[75]Re Diamond Rock Boring Co Ltd was another case where there was a real dispute between rival members. In that case, an agent acted for both Shaw, who was the purchaser, and Piers, who was the seller of shares in a company. Piers executed a transfer in favour of Shaw and sent it to the secretary of the company, but the agent failed to pay over the price to Piers and falsely told Piers that Shaw would not complete. Piers therefore demanded the return of the transfer. The agent cut off Piers’ signature from the transfer and absconded. Shaw sought and obtained rectification on the basis that the transfer had been duly executed and Shaw had legal title.

[76]The rationale for the decision was explained and helpfully summarised in Nilon at paragraph 47: “Lord Coleridge CJ emphasised (at pp 475, 476) that, “Shaw had an undoubted legal right to the shares, and was entitled to be registered as the owner of them” and that Shaw was “a person whose name, without sufficient cause, has been omitted from the register.” Bramwell LJ said (at p 480) that Shaw had “made out that he has good title, except registration, for he paid Piers’ agent the price of the shares, and the transfer was duly executed.” Brett LJ said (at p 484) that, “it would be perfectly monstrous, if, after the purchase has been duly completed, and the money paid, and the transfer executed, the right of Mr. Shaw to be registered as the shareholder could be affected by the fact of Sir E Piers or his agent having destroyed the transfer.”

[77]It seems to me that those two cases can be distinguished on the basis that although there were rival claims in respect of the entitlement to be registered, the underlying facts seemed to have been accepted and it was a question of determining on those facts, which party was entitled to be registered.

[78]The situation in this case is different. In this case, the evidence before the judge below and this Court is that Mr. Chen is the registered shareholder of the sole share in the Company. He currently holds legal title to the share. The appellants’ challenge to Mr. Chen’s legal title is founded upon assertions that the 2nd Share Transfer was allegedly subject to the conditions agreed orally between Mr. Lam Snr and Mr. Chen that: (1) beneficial ownership of the share would not pass to Mr. Chen upon execution of the 2nd Share Transfer; (2) registration of the 2nd Share Transfer was subject to prior approval from the appellants and would only be permitted if the Company was actually impacted by the debts of the family business; (3) if Mr. Chen became registered as legal owner of the share, such ownership would be on trust for Mr. Lam Snr, subject to an obligation to re- transfer legal title of the share immediately upon request by Mr. Lam Snr; and (4) without the appellants’ knowledge and authorisation the 2nd Share Transfer was registered by the Company on the instructions of Mr. Chen.

[79]These contentions are vigorously disputed by Mr. Chen, who contends that: (1) the 1st Share Transfer is neither genuine nor valid and that he only became aware of it when he saw a copy of it attached to a written statement of Mr. Lam Snr dated 22nd July 2021, which was some 4 years later; (2) he was registered as the shareholder in the Company on or about 15th March 2017 after fees were paid to restore the Company to “good standing”, and that he has been the sole registered shareholder in the Company since 2017 and the sole beneficial owner of the share; (3) the share was transferred to him so that the appellants could be shielded from any liabilities of the Company (or its group of companies) which were experiencing severe financial difficulties, as was their family business. The reason why the appellants transferred the share to him for US$1.00 was that they wished to ensure that they bore no responsibility for the debts of the Company’s group of companies and thereby avert reputational damage.

[80]It seems to me that, on any view, there are substantial factual disputes which must be resolved concerning the validity of both purported share transfers and the terms of the “common understanding.” The resolution of these substantial factual disputes must precede any determination whether or not Mr. Chen is properly registered as the shareholder in respect of the share.

[81]While it may be correct to say that this case differs from Nilon because, unlike the Mahtani parties in Nilon, Mr. Lam Jnr claims a presently assertable right to be registered as a member of the Company by reason of the 1st Share Transfer to him, it does not impact the principle derived from Nilon that the jurisdiction given to the court to order rectification of the register of a company is summary in nature and ill-suited to cases where substantial factual matters are in dispute. The appellants’ reliance on this factual difference therefore ignores the fact that Mr. Lam Jnr’s assertion of a present right to registration is mired in dispute as it hinges on the validity of the 1st Share Transfer to him, which is strongly disputed by Mr. Chen, who asserts that it is a recent fabrication. That issue remains to be resolved, as is the question whether the purported 2nd Share Transfer to Mr. Chen is null and void and of no effect. This in turn will depend on factual findings in relation to the terms of the common understanding.

[82]No court can properly determine the rectification claim without first resolving the substantial factual disputes relating to both share transfers. This means that the claim against the Company was bound to fail because proceedings for rectification can only be brought where the applicant has a right to registration by virtue of a valid transfer of legal title and there is no substantial factual dispute in relation to that asserted right. On this basis, the gateway for service out via rule 7.3(2)(a) was not open to the appellants as it cannot be said that there was a real issue between the appellants and the Company which it was reasonable for the court to try. The claim against the company being bound to fail, there could be no claim to which Mr. Chen could be a necessary or proper party.

[83]I would therefore hold that the judge was right to hold that the appellants failed on that gateway and in the normal course, subject to what is said below about whether the appellants had established a good arguable case in relation to gateways 7.3(7)(a) or 7.3(7)(b), it would follow that the issue of forum conveniens would not arise: Nilon at paragraphs 53 and 54.

Ground 2

Gateway 7.3(7)(a)

[84]This brings me to a consideration of the appellants’ challenge to the judge’s findings in relation to the gateway via rule 7.3(7)(a). The judge held that the claim also failed on gateway 7.3(7)(a) because no good arguable case had been made out that the subject matter of the claim relates to the constitution, administration, management or conduct of the affairs of a BVI company. The judge relied on the analysis and logic contained in paragraphs 59 and 60 of Nilon as the basis for her conclusion that the appellants failed on this gateway.

[85]The appellants argue that the judge erred in relying on paragraphs 59 and 60 of Nilon because those were in reference to a claim about beneficial ownership of the share in a company which the Board held will not fall within this gateway, whereas the claim here is for declarations as to the validity of share transfers, rectification of the Company’s register of members and directors, damages, interests and costs. Thus, the judge’s reasoning was inadequate and, in any event, plainly wrong.

[86]The first respondent relies on Anjie Investments Limited et al v Cheng Nga Yee et al15 to ground the argument that a dispute as to shareholding between existing shareholders and persons claiming to be shareholders is not a matter falling within the expression “the constitution, administration, management or conduct of the affairs” of the company.

Discussion

[87]To succeed under gateway 7.3(7)(a), an applicant for service out must establish that the subject matter of the claim relates to the constitution, administration, management or conduct of the affairs of a company incorporated within the jurisdiction. Typically, matters falling within the rubric of the rule would include, for example, issues relating to the powers of organs of a company, the appointment of directors, and the right of shareholders to bring derivative actions. To determine whether a particular claim can be accommodated through this gateway, the court is required to identify and assess the substance of the real dispute underlying the claim.

[88]Although the appellants’ claim seeks, inter alia, declarations as to the validity of share transfers, rectification of the Company’s register of members and directors, in my view the real underlying dispute centers around the competing claims of two parties in relation to its sole issued share with one contending that he is a registered member of the Company while the other asserts that he has a present right to be registered as a member of the Company. This issue does not relate to the constitution, administration, management or conduct of the affairs of a company; the real dispute is about who is entitled to be registered as a member of the Company.

[89]In my view, the judge correctly held that the gateway provided by rule 7.3(7)(a) did not avail the appellants.

Gateway rule 7.3(7)(b)

[90]Service out is permitted through this gateway where the subject matter of the claim relates to the ownership or control of a company incorporated within the jurisdiction.

[91]The judge concluded that the claim against the Company concerned whether Mr. Chen’s registration as a member of the Company was in breach of an oral agreement purportedly made in the PRC. Thus, it was not properly concerned with the legal validity of Mr. Chen’s registration as a shareholder of the Company and did not relate to or concern his ownership and consequently his control of the Company.

[92]The appellants challenge this conclusion, arguing that the judge’s reasoning ignored Mr. Lam Jnr’s presently assertable right to be registered as a member of the Company by reason of the 1st Share Transfer. It is further said that rule 7.3(7)(b) is not on a plain reading limited to questions of the validity of a person’s registration as a shareholder but is drawn broadly enough to include beneficial ownership. Furthermore, argued the appellants, the appellants’ claim for rectification and declarations as to ownership concern the legal or beneficial ownership of shares in a BVI company, and the right to be registered as a shareholder, and therefore related to ‘control’ of that BVI company.

[93]For the first respondent it was submitted that the dispute in this matter is over the entitlement to be registered as shareholder of the share, more particularly whether the 1st Share Transfer should result in the registration of Mr. Lam Jnr or whether the 2nd Share Transfer properly resulted in the registration of Mr. Chen. It is contended that while the share might carry control or ownership of the Company, that is merely incidental to the claim, and while the ultimate result of the dispute might affect control or ownership of the Company, the direct dispute is not over ownership or control.

[94]While the respondent’s argument may have some attraction to it, I am satisfied that on a proper construction of rule 7.3(7)(b), it is flawed. The rule is framed in broad terms and merely requires that the subject matter of the claim relates to ownership or control of a company incorporated within the jurisdiction. The claim against the Company is for rectification of its register of members to reflect Mr. Lam Jnr as its registered shareholder and to remove Mr. Chen as a member of the Company. As Nilon posits, citing approvingly the observations of Lord Cairns in Re London, Hamburgh and Continental Exchange Bank, Ward and Henry’s Case:16 “the object of [section 41] was to secure a list or register which would show who were the shareholders entitled to the profits, and liable to contribute to the debts, of the company. The legislation both in the BVI and in Great Britain is concerned with rectification of the register of members, and membership concerns legal title.” (Para 39).

[95]A claim for rectification is directly concerned with who is entitled to be registered as the legal owner of the share and is therefore concerned with ownership of the Company. For this reason, I would hold that the appellants had much the better of the argument, and therefore a good arguable case, that the court has jurisdiction within the gateway provided by rule 7.3(7)(b) to permit service out on Mr. Chen. I would hold that the judge erred in holding otherwise.

[96]The matter doesn’t end there, however. The judge held that if she were wrong about the jurisdictional gateway issue, the appellants had not in any event, satisfied her that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out. The judge relied on paragraphs 66 to 69 of Nilon to justify her conclusion on this point.

[97]The judge’s approach here accorded with the statement of principle in Nilon that “the fact that there is a specific gateway dealing with the ownership or control of a particular type of property within the jurisdiction does not obviate the need for a claimant to show that the BVI is clearly the appropriate forum.” The issue on this appeal is whether she was right to conclude that the appellants had not satisfied her that BVI was the appropriate forum and whether she correctly assigned the burden of proof on this issue. I therefore turn now to examine the issue of forum conveniens which is the subject of complaint under ground 3.

Forum Conveniens

[98]The forum conveniens rule requires a court to be satisfied that the local jurisdiction is clearly or distinctly the most appropriate forum for the trial of the claim. The court must consider whether there is another available foreign with competent jurisdiction more appropriate than the local court to try the claim. In this context, appropriate means more suitable for the interest of all the parties and the ends of justice: Spiliada Maritime Corp v Cansulex Ltd.17

[99]The task of determining which is the more appropriate forum requires the court to assess which forum has the most real and natural connection with the action. This entails engaging in a balancing exercise of a number of factors, sometimes referred to in the case literature as “connecting factors”. A non-exhaustive list of such factors include the place of commission of the acts giving rise to the action, the availability of witnesses, the likely languages they speak, the place where the parties reside and carry on business, the law governing the transaction: IPOC International Growth Fund Ltd v LV Financial Group Ltd et al.18 It has been held that the location of the witnesses is a core factor: Nilon.

[100]This task of weighing the various connecting factors has variously been described as engaging the exercise of the judge’s discretion, which is how the Board in Nilon seems to have regarded it; while another view holds that the exercise carried out by the judge was not the exercise of a discretion but an evaluative, or a balancing, exercise: per Lord Neuberger in VTB Capital plc v Nutritek International Corp,19 at paragraph 97.

[101]Whether regarded as the exercise of discretion or as the performance of an evaluative or balancing exercise, the learning is the same when it comes to an appellate court’s approach to reviewing a decision of a judge on the question of forum conveniens: “an appellate court should not interfere with a decision of a lower court which has applied the correct principles and which has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the appellate court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion which has been entrusted to the court:” Nilon at paragraph 16. In Spiliada Lord Templeman counselled that the solution of disputes about the relative merits of trial in the instant jurisdiction and trial abroad is pre-eminently a matter for the trial judge and an appeal should be rare and the appellate court should be slow to interfere. This approach has been adopted by this Court in a number of decisions.20

[102]The rationale for such reticence is perhaps best expressed by Lord Bingham in Lubbe and Others v Cape PLC21 where he stated: “This is a field in which differing conclusions can be reached by different Tribunals without either being susceptible to legal challenge. The jurisdiction to stay is liable to be perverted if parties litigate the issue at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum.” The burden of proof and the judge’s reasons on forum conveniens

[103]The judge held that the burden of establishing that the BVI was clearly or distinctly the most appropriate forum rested on the appellants who were the applicants for service out. The judge took the view that since she was engaged with an application to set aside the order for service out, that “causes the claimant’s application to be dealt with again.” She considered that the logic flowing from that proposition was that “the burden is therefore on the Claimants to show that BVI is clearly and distinctively (sic) the appropriate forum and that it would in fact be different if the First Defendant was starting with a forum challenge, in which case the burden would be on the Defendant/Applicant.”22

[104]The judge regarded the cases of Livingston Properties Equities Inc and Others v JSC MCC Eurochem and Another23 and Nilon as supportive of her conclusion on the burden of proof. At paragraph 62 of Nilon, the Board stated, that “the burden was on the Mahtani parties to show that the BVI was the appropriate forum.” It will be recalled that the Mahtani parties, like the appellants here, were the claimants in the court below and the order for service out on Mr. Varma, which they had obtained, was the subject of an application by him to set it aside. The judge seems to have reasoned that by analogy, the appellants similarly bore the burden of proof.

[105]Mr. Taylor KC for the appellants says that this was wrong, submitting that it was the respondent who asserted that the PRC was an available forum, which made this an issue of foreign law, and the burden was therefore on the respondent to adduce expert evidence on foreign law to make good his assertion. This he failed to do. Thus, the judge erred in finding that the PRC was an available forum as she had no reasonable basis for doing so.

[106]Counsel for the first respondent contends that the burden of proof is on the appellants to show that the BVI is the convenient forum as this is a service out case. Reliance is placed on VTB Capital Plc v Nutritek International Corp.

Discussion - The burden of proof

[107]The cases recognise a difference in the onus of proof in an application for service out, where the burden is on the claimant to establish that the local jurisdiction is clearly or distinctly the most appropriate forum for the trial of the claim; as opposed to an application to stay proceedings on grounds of forum non conveniens, where the burden is on the defendant to show that there is an available foreign jurisdiction with competent jurisdiction more appropriate than the local court to try the claim. This distinction is made very clear in Spiliada, where Lord Goff stated: “It seems to me inevitable that the question in both groups of cases must be, at bottom, that expressed by Lord Kinnear in Simm v Rainbow, to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice. That being said, it is desirable to identify the distinction between the two groups of cases. These, as I see it, are threefold. The first is that, as Lord Wilberforce indicated, in the Order 11 cases [service out] the burden of proof rests on the plaintiff, whereas in the forum non conveniens cases [stay applications disputing the court’s jurisdiction] that burden rests on the defendant.”

[108]Similarly, in Thornton Tomasetti Inc v Anguilla Development Corporation Ltd,24 the question of forum fell to be considered in the context of an application by the appellant to set aside service out. Counsel for the appellant took the point that one of the recitals to the master’s order which stated, “I remain unconvinced that New York Law and the New York courts should be the proper jurisdiction” suggested that the master had placed the burden on the appellant to prove that New York was the more appropriate forum. The Court held that when properly construed in context the recital could not be regarded as imposing any burden on the appellant to prove that New York was the proper forum. The court observed that the burden was on the claimant to satisfy the Court that the local court was the more appropriate forum as he was seeking to move the court to exercise its discretionary power to serve out.

[109]In this case the application before the judge was one to set aside an order for service out, and in the alternative for a stay of proceedings on grounds of forum non conveniens. The primary application was to set aside the order for service out and it was on that application that the respondents succeeded. The judge was accordingly right to hold that the appellants bore the burden of proof on the forum issue. The Connecting factors The judge’s reasons on forum conveniens

[110]The judge did not expressly set out the factors she weighed in the scales when deciding the question of forum conveniens. Instead, she took the short-handed approach of stating that she relied on the reasoning contained in paragraphs 66 to 69 of Nilon. For ease of reference, I set them out in full here: “66. The reality of the matter is that, apart from the fact that the claim is that Mr Varma made a promise to allot shares in a BVI company, and that if they are successful the Mahtani parties may obtain an order that Mr Varma procure the allotment or transfer to them of shares in Nilon, the issues have nothing to do with the BVI at all. The alleged contract was made in England, the company was to be managed from Jersey, the underlying business was concerned with Nigeria and India, the operating companies would be in Nigeria, the witnesses (including Mr Mata and Mr Surana, the managing director and secretary of Nilon, and who were said to be involved in the formation and performance of the Joint Venture Agreement) would be mainly in England. The documents are in England or Jersey. There is no suggestion that there are any witnesses or documents in the BVI, or that there is any connection with the BVI other than as the place of Nilon’s incorporation. 67. Nor is it relevant, as the Mahtani parties contend, that the BVI CPR now contain a specific provision permitting service of a claim form out of the jurisdiction if the subject matter of the claim relates to (a) the constitution, administration, management or conduct of the affairs of a BVI company; or (b) the ownership or control of such a company (Rule 7.3(7) of the BVI CPR, as introduced by the Eastern Caribbean Supreme Court Civil Procedure (Amendment) Rules (SRO 47 2011, in force from October 1, 2011). This appeal must be dealt with under the CPR as they stood. In any event, the fact that there is a specific gateway dealing with the ownership or control of a particular type of property within the jurisdiction does not obviate the need for a claimant to show that the BVI is clearly the appropriate forum. 68. In those circumstances the Mahtani parties could not have shown that the BVI is clearly or distinctly the appropriate forum. 69. Their Lordships will therefore humbly advise Her Majesty that the appeals should be allowed and that the action against Nilon be struck out and the permission to serve Mr Varma out of the jurisdiction be set aside.”

[111]The appellants submit that in so far as the judge relied on paragraphs 67 to 69 of Nilon such reliance was misplaced because paragraphs 67 to 69 do not include any reasoning on the appropriate forum and were thus irrelevant. In relation to reliance on paragraph 66, it is said that this paragraph was self- evidently in reference to a case which was different on both its facts and as a matter of principle. The appellants contend that the facts in Nilon were therefore irrelevant and the judge erred by taking them into account, and erred by failing to take relevant factors into account, including the facts of the case before her.

[112]The appellants submit that the judge also failed to take into account the following relevant factors.

[113]First, the governing law. At common law, the right of a transferee to be registered on the books and records of a company as the owner of the shares is governed by the law of incorporation and this principle is enshrined in section 245 of the Act, which provides that the situs of the ownership of shares in a BVI company is in the BVI. Accordingly, BVI law governs the share transfers and the right to be entered on the registers of the company at the heart of this dispute.

[114]Secondly, the location of witnesses. The judge failed to consider the all- important factor that the appellants' case, particularly as it related to the unauthorized registration of the 2nd Share Transfer and the unauthorized change in registered agent, involved parties in the BVI, with witnesses in the BVI. A significant number of key persons that would provide evidence and/or disclosure in these proceedings are located in the BVI. Witness statements and disclosure will be required from the Company and persons employed by the registered agents, namely TMF, Vistra and SHRM.

[115]Thirdly, the documents and language. The appellants submit that another relevant and important factor distinguishing this case from Nilon, which the judge failed to consider, is that BVI persons employed by the registered agents speak English and the relevant documents owned by the Company and the registered agents to be disclosed in the proceedings will be in English and are located in the BVI, and therefore subject to the BVI court's jurisdiction.

[116]Fourth, remedies. The judge erred in failing to consider that an effective remedy of rectification is governed by BVI law and can only be granted by the BVI court, and there was no evidence that it, or any of the other relief, could be granted by the PRC Court. The BVI court has in personam jurisdiction over the Company and may grant that remedy as of right and pursuant to the BVI Business Companies Act. Given the importance of the remedies to this case, in particular rectification, the judge should have considered that practical justice may well not be done if the claim has to be brought in a jurisdiction which does not have an equivalent remedy or cannot grant the relief sought or does not have jurisdiction over the necessary parties against whom enforcement would be necessary, namely the Company and possibly the Company's BVI registered agent, or whose judgments might not be enforceable in this jurisdiction. That would result in multiple, if not duplicative, proceedings to achieve a conclusion to the parties’ dispute which could be achieved by this Court in one go.

[117]The last point leads to the fifth factor which the appellants say the judge ignored: multiplicity of proceedings. The appellants argue that the BVI Court has in personam jurisdiction over the Company and the appellants are entitled to pursue their claims against the Company in the BVI, since the claims against the Company should not have been struck out. If the appellants are required to pursue their claims against Mr. Chen in the PRC, that would give rise to a multiplicity of proceedings about the same issues, and the risk of inconsistent decisions.

[118]The appellants contend that all of the previously mentioned relevant factors connecting this dispute to the BVI should have been considered and weighed up by the judge, and her failure to do so was clearly and blatantly wrong and exceeded the generous ambit within which reasonable disagreement is possible.

[119]On behalf of the respondents, a number of connecting factors are posited as demonstrating that the PRC is the natural forum.

[120]First, in relation to the governing law, the first respondent highlights that the dispute arises out of a 2017 agreement (the common understanding) made between Mr. Lam Snr and Mr. Chen in January (according to Mr. Chen) or in March (according to Mr. Lam Snr) in 2017. The 2017 Agreement was entered into: i) orally; ii) in Chinese; iii) in Fujian Province, PRC; iv) between PRC nationals resident in PRC; and v) relates to the ultimate beneficial ownership of underlying assets (6 mining companies) situated in the PRC. The agreement was made in the PRC and would be governed by that law. Further, the 1st Share Transfer was allegedly executed in the PRC and the 2nd Share Transfer was signed in the PRC and handed over to Mr. Chen in the PRC.

[121]Secondly, as it relates to location of witnesses, the first respondent’s position is that the important witnesses to matters involving the core of the dispute, the appellants and Mr. Chen, are resident in the PRC, which is a core factor. The fact that there might be some witnesses whose evidence is likely to be peripheral (since they did not witness the making of the 2017 Agreement) but who might explain why they registered Mr. Chen as the shareholder, and who might be resident in BVI and speak English, is not a weighty factor. The reason why the Company agent effected the registration is unlikely to be relevant to the substantive issues in this matter, which relate to the agreement made between Mr. Lam Snr and Mr. Chen in 2017.

[122]Third, in relation to the language spoken by the key witnesses, Mr. Chen and Mr. Lam Jnr are not fluent in English.

[123]Fourth, so far as it relates to the situs of the share, the fact that the share was in a BVI company does not attract much weight and is outweighed by the other connecting factors to the PRC.

[124]Fifth, the fact that BVI law would govern the issue of rectification does not attract much weight because regardless of the forum in which the factual dispute in relation to the agreement and the share transfers is resolved, the remedy of rectification would ultimately require the intervention of the BVI court and the dispute between the parties would be res judicata.

Discussion and analysis

[125]It is important to have in mind what is the real or underlying dispute between the parties in this case. The claim is for, among other things, declarations as to the validity of share transfers and rectification of the Company’s registers of members and directors. In the appellants’ own words, as reflected in their skeleton submissions at paragraph 32: “the appellants’ claim concerns the right of the Second Appellant to be registered and whether, as a result of the Common Understanding, the First Defendant was entitled to conduct the affairs of the Company as he did by registering himself as sole shareholder, changing registered agents etc.”

[126]It seems to me that the real issue in dispute between the parties is the validity of the share transfers and whether Mr. Chen violated the 2017 oral agreement between himself and Mr. Lam Snr by causing himself to be registered as sole shareholder of the Company. The answer to this question will then determine the consequential question who is entitled to be registered as shareholder of the sole share in the Company. To my mind the judge therefore correctly identified the real or underlying issues between the parties.

[127]The issue is whether the judge erred in relying on the reasoning in paragraphs 66 - 69 of Nilon in coming to her conclusion that the appellants had not persuaded her that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out.

[128]I say straight away that I agree with the appellants’ contention that paragraphs 67 and 69 were irrelevant as they contained no reasoning on the appropriate forum and were thus irrelevant. In relation to the judge’s reliance on paragraph 66, my understanding of what the judge meant to convey was that she was adopting the factors identified in that paragraph as those relevant to the case before her, and also the reasoning to explain the weight or lack thereof that she assigned to each factor. I do not understand the judge to have simply treated the facts in Nilon as identical to the facts in this case.

[129]The factors identified at paragraph 66 of Nilon were: (1) the place where the agreement in relation to the shares was made; (2) the place from which the company was to be managed; (3) the location of the underlying businesses; (4) the location of the main witnesses to the agreement; and (5) the location of documents. The Board reasoned that apart from the fact that the claim was that Mr. Varma had made a promise to allot shares in a BVI company and that if successful the Mahtani parties may obtain an order that Mr. Varma procure the allotment or transfer of shares in Nilon, the issues had nothing to do with the BVI at all.

[130]While, regrettably, the judge did not expressly say that these, or some of them, were the specific factors she was taking into account in the case at bar, it is clear that by incorporating paragraph 66 of Nilon into her decision it was quite apparent what connecting factors the judge considered. I therefore cannot accept the appellants’ submission that the judge failed to take into account the relevant facts before her, the governing law, the location of the witnesses, the language of the witnesses and the documents. It is also apparent that her reasoning was that upon consideration of these factors BVI was not the more appropriate forum.

[131]I remind myself of the need for appellate restraint when reviewing the judge’s evaluative balancing exercise on the issue of forum. This Court may only interfere where it is satisfied that the judge made a significant error of principle, or a significant error in the considerations taken or not taken into account. This guards against the risk of parties litigating the issue “at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum.”

[132]In assessing the relevant connecting factors, the position seems to me to be as follows. The disputed 2017 agreement was made in the PRC between Chinese nationals resident in the PRC and relates to the ultimate beneficial ownership of underlying assets comprising six mining companies situated in the PRC. The language of the main protagonists, the appellants and the first respondent, who can speak directly to the agreement, is Mandarin Chinese. The law governing that agreement would be PRC law. All of these factors point to a real and substantial connection to the PRC.

[133]On the other hand, the connection to the BVI is that the Company in which the disputed share is held is a BVI company. Secondly, the Company’s registered BVI agent administrators are potentially witnesses but only so far as it relates to the reasons why Mr. Chen was registered as the shareholder. Thirdly, the BVI is the place where the remedy of rectification will have to be obtained should the appellants succeed. However, this would be so even if the underlying dispute is dealt with in the PRC because the situs of the share is the BVI. As the Board held in Nilon, rectification is “purely a matter of the machinery of enforcement.” I am therefore unable to follow the appellants’ argument that the judge erred in holding that BVI was not shown to be the more appropriate forum because, among other things the respondent did not adduce evidence that the remedy of rectification would be available in the PRC.

[134]Weighing matters in this way, I am unable to conclude that the judge made a significant error of principle, or a significant error in the considerations taken or not taken into account such that her decision exceeded the generous ambit within which reasonable disagreement is possible. I bear in mind that this is the test and not whether this Court would have weighted the connecting factors differently and heed Lord Neuberger’s advice at paragraph 93 of VTB Capital Plc v Nutritek International Corp that, “appellate courts should be vigilant in discouraging appellants from arguing the merits of an evaluative interlocutory decision reached by a judge, who had to balance the various factors relevant to the appropriate forum, when the complaint is, in reality, that the balance should have been struck differently.”

[135]I would therefore dismiss ground 3.

Conclusion

[136]In summary, I have concluded that the judge was correct to hold that the appellants had not satisfied the requirements for service out on Mr. Chen via gateways 7.3(2)(a) or 7.3(7)(a). I have concluded, however, that the judge was wrong to hold that the appellants had not met the requirements under the gateway provided by rule 7.3(7)(b). This notwithstanding, the judge did not err in concluding that the appellants had failed to show that BVI was the more appropriate forum.

[137]I would therefore dismiss the appeal and make the following orders: (1) The appellants shall pay the respondents’ costs of the fresh evidence application to be assessed by a judge of the Commercial Court if not agreed within 21 days of delivery of this judgment. (2) The appellants shall pay the respondents’ costs in the appeal fixed at two-thirds of the costs assessed in the court below.

I concur

Mario Michel

Justice of Appeal

I concur

Vicki Ann Ellis

Justice of Appeal

By the Court

Deputy Chief Registrar

THE EASTERN CARIBBEAN SUPREME COURT IN THE COURT OF APPEAL TERRITORY OF THE VIRGIN ISLANDS BVIHCMAP2023/0006 BETWEEN:

[1]LAM WO PING

[2]LAM KIN CHUNG Appellants and

[3]By a second instrument of transfer dated 9th March 2017 (“the 2nd Share Transfer”), Mr. Lam Snr purported to transfer legal title to the share to Mr. Chen. The 2nd Share Transfer was allegedly subject to certain conditions agreed orally between Mr. Lam Snr and Mr. Chen (the “Common Understanding”). I will return in more detail to treat with this “Common Understanding” later. It suffices for present purposes to state broadly that the appellants contended that it contained stipulations that: (a) beneficial ownership of the share would not pass to Mr. Chen upon execution of the 2nd Share Transfer; (b) registration of the 2nd Share Transfer was subject to prior approval from the appellants and would only be permitted if the company was actually impacted by the debts of the family business, and then, only with the prior approval of both appellants; and (c) if Mr. Chen became registered as legal owner of the share, such ownership would be on trust for Mr. Lam Snr, subject to an obligation to re-transfer legal title of the share immediately upon request by Mr. Lam Snr.

[4]The appellants said that without their knowledge and authorisation, the 2nd Share Transfer was subsequently registered by the Company through its then registered agent, Vistra (BVI) Limited (“Vistra”), on the instructions of Mr. Chen. They however, challenged Mr. Chen’s assertion that the date of registration occurred on or about 15th March 2017.

[5]In his defence, Mr. Chen contended that the 1st Share Transfer was neither genuine nor valid. He claimed to have been registered as the shareholder in the Company on or about 15th March 2017 after fees were paid to restore the Company to “good standing,” and he asserted that he had been the sole registered shareholder in the company since 2017 and the sole beneficial owner of the share. He further contended that the share was transferred to him so that the appellants could be shielded from any liabilities of the Company (or its group of companies) which were experiencing severe financial difficulties, as was their family business. The reason why the appellants transferred the share to him for US$1.00 was that they wished to ensure that they bore no responsibility for the debts of the Company’s group of companies and thereby avert reputational damage.

[6]The validity of the two instruments of transfer forms the substance of the dispute between the appellants and Mr. Chen. The appellants contended that the 1st Share Transfer was valid and gave Mr. Lam Jnr a present entitlement to the legal title. They said that the 2nd Share Transfer was null, void and without legal effect in light of the 1st Share Transfer and because it was subsequently rescinded by Mr. Lam Snr, and, as a result, its registration by Vistra was similarly void. The appellants therefore sought orders against the Company pursuant to section 43(1) of the Business Companies Act to rectify its register to reflect Mr. Lam Jr. as the shareholder. They also sought damages against Mr. Chen for losses suffered as a result of “the unlawful registration” of the 2nd Share Transfer and for his failure to maintain the Company in good standing. The proceedings in the Court below

[7]On 12th May 2022, the appellants filed a claim form in the BVI seeking orders, inter alia, to rectify the register of the Company. By order dated 13th October 2022, Jack J [Ag.] granted the appellants permission to serve the claim on Mr. Chen out of the jurisdiction in Hong Kong.

[8]On 13th January 2023, Mr. Chen filed an application pursuant to Rule 7.7(2) of the Civil Procedure Rules 2000 (“the CPR”) seeking an order that the order of 13th October 2022 be set aside and to strike out, or alternatively, stay the claim on grounds of, inter alia, forum non conveniens. Mr. Chen contended that the courts of the BVI were not the natural or appropriate forum for the determination of the claim, and that the courts of the PRC were an available forum having competent jurisdiction and were clearly and distinctly the more appropriate forum.

[9]On 25th April 2023, Mangatal J granted the applications and set aside the order granting permission to serve Mr. Chen out of the jurisdiction and struck out the claim against Mr. Chen and the Company. The judge’s reasons

7.The Court then addressed the judge’s finding that, in any event, the appellants did not demonstrate that the BVI court was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to permit service out. Firstly, the Court agreed with the judge that the primary application was to set aside the order for service out and accordingly, the appellants bore the burden of establishing that the BVI court was clearly and distinctly the most appropriate forum. Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 applied; Livingston Properties Equities Inc and Others v JSC MCC Eurochem and Another [2020] UKPC 31 applied; Thornton Tomasetti Inc v Anguilla Development Corporation Ltd AXAHCVAP2014/0008 (delivered 15th September 2015, unreported) applied.

[10]The judge delivered an oral decision. In relation to the service out issue, the judge held that an application to set aside service out, under rule 11.16 of the CPR, “causes the claimant’s application to be dealt with again.” She considered that the logic flowing from that proposition was that “the burden is therefore on the Claimants to show that BVI is clearly and distinctively (sic) the appropriate forum and that it would in fact be different if the First Defendant was starting with a forum challenge, in which case the burden would be on the Defendant/Applicant.” Accordingly, the judge held that the appellants had failed to demonstrate that they have a reasonable basis for bringing a claim against the Company for reasons analogous to those analysed in Nilon Limited and another v Royal Westminster Investments S.A. and others at paragraphs 52, 53 and 58 to 60 and therefore the question whether Mr. Chen was a necessary and proper party and, a fortiori, the issue of forum conveniens, did not arise.

[11]The judge held further that the claim also failed on gateway 7.3(7)(a) of the CPR because no good arguable case had been made out that the subject matter of the claim relates to the constitution, administration, management or conduct of the affairs of a BVI company. The judge relied on the analysis and logic contained in paragraphs 59 and 60 of Nilon as the basis for her conclusion.

[12]The judge was of a similar view in relation to gateway 7.3(7)(b) of the CPR, which avails a claimant where the claim relates to ownership or control of a company incorporated in the jurisdiction. The judge concluded that the claim against the Company concerned whether Mr. Chen’s registration as a member of the Company was in breach of an oral agreement purportedly made in the PRC. Thus, it was not properly concerned with the legal validity of Mr. Chen’s registration as a shareholder of the Company and did not relate to or concern his ownership and consequently his control of the Company. In her view, the claimants did not establish that they had much the better of the argument on that point.

[13]Finally, the judge held that, in any event, the claimants had not satisfied her that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out. The judge relied on paragraphs 66 to 69 of Nilon to justify her conclusion on this point. Preliminary application to adduce additional evidence in the appeal

[14]The first order of business at the hearing of the appeal was an application by the appellants to adduce additional evidence on the appeal. After hearing submissions from both sides, the Court dismissed the application and promised to incorporate the reasons for our decision in this judgment. I will therefore set out the Court’s reasons for dismissing the appellants’ application before turning to the substantive appeal.

[15]The appellants sought to have admitted, as additional evidence, the following documents from proceedings before the first instance and appellate courts in Fujian Province in the People’s Republic of China (the “PRC Proceedings”): (1) the judgment of the Fujian Intermediate People’s Court (the “PRC first Instance court”) case no. (2022) Fujian 05 Civil First Instance No. 910 dated 9th June 2022; (2) Chen Jian Yun’s (“Mr. Chen”) Civil Appeal Petition to the High People’s Court of Fujian (the “PRC appellate court”) dated 16th June 2022; (3) the appellants’ defence to Mr. Chen’s appeal dated 20th October 2022; and (4) the judgment of the PRC appellate court, case no. (2022) Fujian Civil Final Instance no. 1285 dated 8th August 2023.

[16]The appellants submitted that the new evidence fulfilled the requirements for admission consistent with the well-known principles set out in Ladd v Marshall and as applied by several decisions of this Court, including the consolidated appeal of Adam Bilzerian et al v Terrence V. Byron et al; Gregory Gilpin-Payne et al v Stephen First et al; Adam Bilzerian et al v Zachary Getz et al; Adam Bilzerian v Kevin Horstwood; Keyapaha International Ltd et al v Laura Getz et al; Adam Bilzerian et al v Terrence V. Byron et al; Adam Bilzerian v Gerald Lou Weiner et al; Adam Bilzerian v Gerald Lou Weiner et al; Gregory Gilpin-Payne et al v Stephen First et al.

[17]The principal document that the appellants sought to adduce was the judgment of the PRC appellate court, which was only issued on 8th August 2023, which was after Mr. Chen’s application in the court below dated 13th January 2023 to set aside and strike out the appellants' claims, and the judge’s order dated 25th April 2023 granting Mr. Chen’s applications. As such, the appellants said it could not have been obtained any earlier. The appellants acknowledged that the application for leave also included documents that pre-date the 13th January 2023 application to set aside and strike out the order for service out and the hearing and determination of the application. These documents comprise the decision of the PRC first instance court and the parties' respective cases as they were put in writing to the PRC appellate court. They however submitted that the judgment of the PRC appellate court and its relevance can only be explained in the context of, and with reference to, those other PRC Documents.

[18]Secondly, the appellants submitted that the new evidence would probably have an important influence on the outcome of the appeal and therefore satisfy the second limb of the Ladd v Marshall principles. The submission grounding that assertion was that the PRC Documents show that Mr. Chen submitted that the PRC appellate court should determine the question of the ownership and control of the Company, but the PRC appellate court refused to do so. The PRC appellate court rejected four "sets of evidence" submitted by Mr. Chen, including documents in relation to the key issue of ownership and control of the Company, which is the central issue in the BVI proceedings.

[19]The appellants relied on the holding of the PRC appellate court that, “In the view of this Court, the four sets of evidence submitted by [Mr. Chen] are insufficient to establish that [Mr. Chen] is a qualified plaintiff in this case. Accordingly, this Court does not admit any of these four sets of evidence…” “Chen Jianyun needs to present evidence showing his direct interest in the companies involved” but "[t]he evidence currently available falls short of proving this connection."

[20]It is further said that Mr. Chen had contended in the PRC Proceedings that “the share transfer document provided by Lam Wo Ping and Lam Kin Chung was evidently forged at a later date to seize the equity and mining qualifications of the [the Company] and its domestic subsidiaries.” The appellants submitted that that allegation was rejected by the PRC courts so that in the event Mr. Chen seeks to advance that allegation in this appeal, this Court should be aware of the PRC’s rejection of it.

[21]Thirdly, the appellants submitted that the new evidence is credible since the PRC documents were sourced directly from the records of the courts of the PRC, or written documents submitted to the PRC Courts.

[22]The first respondent accepted that the credibility limb of the Ladd v Marshall test was met. However, he joined issue with the first limb and submitted that the first limb of Ladd v Marshall had not been satisfied because the judgment of the PRC appellate court did not exist at the time the judge below made her order granting Mr. Chen’s applications. The first respondent cited WWRT Limited v Carosan Trading Limited et al as authority for the proposition that to satisfy the first limb of the Ladd v Marshall test, the evidence to be adduced must be in existence at the time of the trial or determination of the issue being appealed.

[23]In relation to the other PRC Documents that were in existence at the time, the first respondent submitted that the appellants chose not to bring them to the attention of the first instance judge despite being aware of their existence and the likelihood that the PRC Courts would make a determination on the points which the appellants allege would have an important influence on determination of the service out and/or strike out issues. As such those documents fail the first limb of the Ladd v Marshall test in that, they could have been obtained with reasonable diligence by the appellants for use at the first instance hearing. To allow the appellants to rely on them at appeal would be contrary to the overriding objective.

[24]Secondly, in relation to the 2nd limb of Ladd v Marshall, the first respondent submitted that the PRC Documents would not have an important influence on the result of the case because neither the judgment of the Fujian Intermediate People’s Court, nor the judgment of the PRC appellate court made any determination as to the legal or beneficial ownership of the Company. It was contended that the PRC documents relate to a case concerning entirely different issues to the claim to which this appeal relates. The issue before the PRC courts arose from the first respondent’s allegation that the appellants had unjustifiably infringed on the assets and equity of a PRC company, Fujian Tianpeng Mining Co Ltd, and six of its PRC subsidiaries. The registered shareholder of 99.9% of the shares in Fujian Tianpeng Mining Co Ltd is a Hong Kong company; Hong Kong Tianpeng Mining Co Ltd, which itself is a direct subsidiary of the second respondent; Zhong Da Mining Holding Ltd.

[25]It was further argued that the judgments of the PRC Courts that the appellants wished to adduce determined that because the first respondent was not the registered shareholder of Fujian Tianpeng Mining Co Ltd (rather he holds an indirect beneficial interest in that company through the Company and Hong Kong Tianpeng Mining Co Ltd), he did not have standing to bring the claim. The PRC Courts did not have to, and did not make any determination as to the legal or beneficial ownership of the Company nor did they make any determination as to the evidence Mr. Chen adduced as to his interest in the Company. Accordingly, the first respondent submitted that the findings of the PRC Courts were irrelevant to the appeal and so failed the second limb of the Ladd v Marshall test.

[26]Finally, it was submitted that insofar as the appellants sought to rely on the judgments of the PRC Court in order to prove the existence of a fact which the appellants said was in issue in the dispute before the PRC Courts, such evidence would be inadmissible pursuant to section 90 of the Evidence Act. It could not, therefore, have any influence – let alone an important influence – on the result of the appeal.

[27]By way of reply to the first respondent’s submissions in relation to the first limb, the appellants relied on Staray Capital Limited et al v Cha, Yang (also known as Stanley) to say that the facts giving rise ultimately to the PRC appellate court’s judgment predate the hearing below even if the decision did not, and on that basis, and applying the broader and more relaxed approach to the Ladd v Marshall principles, this Court should permit the judgment to be adduced. Discussion

[28]The principles governing an application to adduce fresh evidence on appeal are well settled within this jurisdiction and do not require any elaborate thesis in this judgment. The propositions derived from the many cases from this Court applying the well-known Ladd v Marshall principles may be summarised succinctly. On an application to adduce fresh evidence, the core consideration is whether it is in the furtherance of the overriding objective to do justice between the parties to permit the applicant to rely on evidence not relied on in the lower court. In determining this question the court is guided by the principles in Ladd v Marshall which entail a three limb test: (1) it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; (3) the evidence must be such as is presumably to be believed, or in other words it must be apparently credible, though it need not be incontrovertible. However, the first limb would be relaxed in an interlocutory application where a full hearing or trial determinative of the claim is yet to take place but would not be where there had been a trial or a full hearing on the merits: Geminis Investors Limited v Goods Technology Starting International Limited.

[29]In relation to the first limb of Ladd v Marshall, two things are clear. First, the documents other than the PRC appellate court judgment existed since June 2022, well before the hearing and determination of the applications before the court below. This means that with reasonable diligence they could have been deployed in those proceedings. On that basis, subject to considerations of whether in furtherance of the overriding objective to do justice, the Court should permit the appellants to rely on this evidence which it did not deploy in the court below, they would fail the first limb of Ladd v Marshall.

[30]Secondly, it is equally clear that the PRC appellate court judgment was not in existence at the time of the judge’s determination below. This Court has held in Geminis Investors Limited that: “As it relates to applications to adduce fresh evidence there is no shortage of cases in the Eastern Caribbean, and in the United Kingdom which show that to satisfy this limb of the test the evidence to be adduced must be evidence that existed at the time of the trial but could not have been obtained with reasonable diligence for use at the trial. This limb does not however contemplate that evidence that did not exist at the time of trial or a change in circumstance post-trial could be evidence adduced before the Court of Appeal.”

[31]The language here is very clear and the appellants’ submission that the Court is not limited to permitting an appellant to rely only on documents that existed at the time of the first instance judge’s decision is at odds with the stated principle. The appellants nonetheless attempted to justify reception of the PRC appellate court judgment by seeking to draw a parallel with the reasoning of this Court in Staray Capital Limited to support their argument that the PRC appellate judgment is admissible because the facts giving rise to it predate the hearing below even though the decision does not.

[32]In Staray Capital Limited the applicant sought to adduce two opinions from the Shanghai Municipal Bureau of Justice which were produced in response to complaints filed by the second appellant against the respondent. The opinions post dated the trial which was held between 28th and 31st January 2013. Thom JA, delivering the Court’s judgment, accepted that these two opinions produced after the trial had satisfied limbs (i) and (iii) of the Ladd v Marshall principles. In WWRT this Court opined that, properly understood, Staray Capital Limited and another did not decide that evidence that did not exist before the trial would be accepted. It distinguished that case on the basis that while the production of the opinions by the Shanghai Municipal Bureau of Justice took place sometime after the trial, the information or evidence used to generate/populate those opinions existed well before the trial that took place in January 2013. The appellants deployed a similar argument here.

[33]The difficulty with the appellants’ argument is that the application in relation to the PRC Appellate judgment and the purpose for which it is deployed is to prove the findings or conclusions of the PRC appellate court, which they say bear upon the present matter; it is not to prove the underlying facts which were always in existence and well known. The only new or additional evidence is the conclusions or findings of the PRC appellate court, which post-date the hearings below. This judgment would therefore fail the first limb of Ladd v Marshall, subject to considerations of whether in furtherance of the overriding objective to do justice, the Court should permit the appellants to rely on this evidence. This will be addressed presently. Would this evidence probably have an important influence on the result of the case, though not necessarily decisive?

[34]The answer to this second limb of Ladd v Marshall turns on an understanding of what issue was under consideration in the PRC Proceedings and what the judgments actually decided. Having read the first instance and appellate judgments of the PRC, this Court considers that the first respondent’s submissions accurately characterise the issues and findings of the PRC judgments. They decided that the first respondent did not have standing to bring a claim that the appellants had unjustifiably infringed on the assets and equity of a PRC company, Fujian Tianpeng Mining Co Ltd (in which Mr. Chen claimed 100% equity) and six of its PRC subsidiaries. This was because he lacked standing to do so as he was not the registered shareholder of Fujian Tianpeng Mining Co Ltd. The sole registered shareholder of that company is Hong Kong Tianpeng Corporation, which is a direct subsidiary of the second respondent, Zhong Da Mining Holding Ltd.

[35]One of the four sets of documents adduced by the first respondent to support his assertion that he had standing to bring the claim was Hong Kong Tianpeng Corporation’s Annual Reports from 2016 to 2020 to seek to prove that he holds 100% of the shares in the second respondent to these proceedings (the Company) and thereby indirectly holds 100% of the shares of Hong Kong Tianpeng Corporation.

[36]The appellate court’s stated reason for rejecting the four sets of evidence presented by Mr. Chen was: “In the view of this Court, the four sets of evidence submitted by Mr. Chen Jianyun are insufficient to establish that Chen Jianyun is a qualified plaintiff in this case. Accordingly, the Court does not admit any of these four sets of evidence.”

[37]The appellate court invoked article 122 of the civil procedure law of the PRC which required a lawsuit to meet the condition, among others, that, “the plaintiff must be a citizen, a legal entity, or other organization directly interested in the case…” The appellate court further held: “To substantiate his lawsuit claiming infringement of corporate property equity, Chen Jianyun needs to present evidence of direct interest in the companies. The evidence currently available falls short of proving this connection. Therefore the initial trial court appropriately concluded that the plaintiff lacked the proper standing and justifiably dismissed the case. If Chen Jianyu believes that he has made actual investments in the companies involved, he can pursue separate litigation to affirm his equity ownership or shareholder status.”

[38]Nothing in the judgment leads to or supports the appellants’ assertion that the PRC courts made any determination as to the legal or beneficial ownership of the company, nor, as the first respondent rightly contends, did they make any determination as to the evidence Mr. Chen adduced as to his interest in the Company. They simply found that he had not established a direct interest in the PRC company, Fujian Tianpeng Mining Co Ltd and six of its PRC subsidiaries and therefore was not a qualifying plaintiff within Article 122 of the Civil Procedure Law of the PRC.

[39]Even if in furtherance of the overriding objective this Court was persuaded to admit the new evidence notwithstanding that the appellate judgment was not in existence at the time of the hearing below and the first instance PRC judgment and other documents could with reasonable diligence have been produced at that hearing, we were satisfied that they are irrelevant and would not have an important influence on the result of the case. Accordingly, the application to adduce additional evidence was dismissed.

[40]In light of the Court’s conclusions on the foregoing, the need for consideration of the section 90 arguments did not arise.

[41]I turn now to consider the substantive appeal. Grounds of appeal

[42]The appellants raised four grounds of appeal. Ground 1 contends that the judge erred in fact and law in finding that there was no good arguable case that the claim falls within rule 7.3(2)(a) of the CPR.

[43]Ground 2 complains that the judge erred in fact and law in finding that there was no good arguable case that the claim falls within rule 7.3(7)(a) or (b) of the CPR.

[44]Ground 3 avers that the judge erred in her alternative finding and/or decision that the BVI is not clearly and distinctly the most appropriate forum for the trial of the dispute for reasons that are indistinguishable from paragraphs 66 to 69 of Nilon’s case.

[45]Ground 4 contends that the judge erred in striking out the claim against the first respondent and the Company. Ground 1 – The appellants’ submissions

[46]In relation to the judge’s conclusions on whether there was a serious issue to be tried, the appellants contended that the reasons given by the judge did not constitute reasons or adequate reasons as they did not explain how she arrived at her conclusions. For that reason alone her reasons are liable to be set aside. Secondly, the appellants submitted that the judge erred by applying the wrong legal test in requiring the appellants to, “demonstrate they have a reasonable basis for bringing a claim against the company” when the test is whether there is a serious issue to be tried. Compounding this, the judge failed to assume the pleaded facts were true, failed to consider or conclude that the facts relied on were “demonstrably untrue and unsupportable” and made a finding as to the relative merits of that contested evidence when she should not have made any findings as between witnesses on contested facts. The judge’s reliance on paragraphs 52, 53 and 58 to 60 of Nilon was misplaced because unlike the Mahtani parties in Nilon, Mr. Lam Jnr has a present right to be registered as the sole shareholder pursuant to the 1st Share Transfer and, further, those paragraphs in Nilon considered issues of jurisdictional gateways and not forum non conveniens but did not address whether there was a serious issue to be tried. Discussion The legal framework Service out

[47]The principles governing an application to serve a claim on a person outside the jurisdiction are set out in Part 7 of the Civil Procedure Rules (Revised Edition) 2023. In this case the application to serve Mr. Chen out of the jurisdiction was made under rule 7.3(2)(a) and 7.3(7). These provisions are commonly referred to as the gateways through which an application for service out must pass before permission may be granted.

[48]Rule 7.3(2)(a) provides as follows: “(2) Court process may be served out of the jurisdiction if a claim is made – (a) against someone on whom the claim form has been or will be served, and – (i) there is between the claimant and that person a real issue which it is reasonable for the court to try; and (ii) the claimant now wishes to serve the claim form on another person who is outside the jurisdiction and who is a necessary and proper party to that claim.”

[49]Put simply, and in the context of this case, service out would be permissible if: (1) a claim had been or would be made against the Company;(2) as between the appellants and the Company there was a real issue to be tried; and (3) the first respondent, Mr. Chen, whom it was sought to serve outside the jurisdiction, was a necessary or proper party to the claim against the Company. Lord Collins in Nilon commented that “the necessary or proper party head of jurisdiction was anomalous, in that, by contrast with the other heads, it was not founded upon any territorial connection between the claim, the subject matter of the relevant action and the jurisdiction of the English courts.” This question is answered by asking, “supposing both parties had been within the jurisdiction would they both have been proper parties to the action?”

[50]Rule 7.3(7) addresses claims about companies, and provides: “(7) Court process may be served out of the jurisdiction if the subject matter of a claim relates to – (a) the constitution, administration, management or conduct of the affairs; (b) the ownership or control; or (c) the insolvency, of a company incorporated within the jurisdiction.”

[51]Rule 7.7(2) provides that the court may set aside service if: (a) service out of the jurisdiction is not permitted by the rules; (b) the claimant does not have a good cause of action; or (c) the case is not a proper one for the court’s jurisdiction.

[52]The applicable principles relating to service out are well known and apply irrespective of the gateway accessed. They were articulated with much lucidity by the Board in Nilon: “On an application for service out of the jurisdiction, three requirements have to be satisfied. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context “good arguable case” connotes that one side has a much better argument than the other. Third, the claimant must satisfy the court that in all the circumstances the forum which is being seised (here the BVI) is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.”

[53]Importantly, Nilon also instructs that the action is not properly brought against the anchor defendant (here the Company) if it is bound to fail. It further instructs that the question of the merits of the claim is relevant to the question of whether the claim against the anchor defendant is “bound to fail” and to the question whether there is a “serious issue to be tried” in relation to the claim against the foreign defendant (here Mr. Chen); and there is no practical difference between the two tests, which are the same as the test for summary judgment.

[54]Both parties seem to accept that the judge correctly stated the applicable principles as reflected at pages 19 to 20 of the Record of Appeal. The challenge is to her application of these principles to the facts of the case. Issue 1 – Whether there is a serious issue to be tried

[55]The first task therefore is to ascertain whether, as between the appellants and Mr. Chen, there is a serious issue to be tried on the merits in relation to substantial questions of fact or law or both. The threshold for establishing this is a low one and the test is the same as for summary judgment, which means that the applicant for service out must show that its claim possesses a real, as opposed to a fanciful, prospect of success: AK Investment CJSC v Kyrgyz Mobile Tel Limited and Others.

[56]The judge’s conclusions on whether there was a serious issue to be tried was that the claimants had failed to demonstrate that they have a reasonable basis for bringing a claim against the company for reasons analogous to those analysed in Nilon at paragraphs 52, 53 and 58 to 60 and therefore the question whether Mr. Chen was a necessary and proper party and, a fortiori, the issue of forum conveniens, did not arise.

[57]The appellants contend that the reasons given by the judge do not constitute reasons or adequate reasons as they do not explain how she arrived at her conclusions. For that reason alone, her reasons are liable to be set aside. Secondly, it is said that the judge erred by applying the wrong legal test in requiring the appellants to “demonstrate they have a reasonable basis for bringing a claim against the company” when the test is whether there is a serious issue to be tried. Compounding this, the judge “failed to assume the pleaded facts were true, failed to consider or conclude that the facts relied on were ‘demonstrably untrue and unsupportable’ and made a finding as to the relative merits of that contested evidence when she should not have made any findings as between witnesses on contested facts.”

[58]While I do not understand the respondents to contest that as between the appellants and Mr. Chen there is a serious issue to be tried – Mr. Mowschenson accepted this much during the course of his oral submissions to this Court – in written submissions the first respondent seeks to explain the judge’s reference to “a reasonable basis for bringing a claim against the company” by submitting that the judge was there referring to paragraphs 52, 53 and 58 to 60 of Nilon “which describe in clear terms why resort to a claim under section 43 of the BVI Business Companies Act 2004 (BCA) is wholly misconceived in circumstances where a right to a share in a company, and to be registered in respect thereto, is disputed and the dispute requires a substantive investigation.”

[59]In my view, the judge appears to have dealt somewhat compendiously with the first limb and seems to have merged it with the second limb, which concerns whether there is a good arguable case in relation to a jurisdictional gateway. As I see it, the judge seems to have had in mind the requirement stipulated at rule 7.3(2)(a)(i) for there to be a real issue between the appellants and the Company which it was reasonable for the court to try when she made reference to “a reasonable basis for bringing the claim against the company.” Nonetheless, it is clear that whether this requirement is fulfilled is ultimately related to the question whether there is a serious issue to be tried as between the appellants and Mr. Chen: see Nilon at paragraph 15(6). Whether the appellants have good arguable case that the court has jurisdiction within one or more of the grounds specified in CPR Rule 7.3

[60]The last point leads me to consider whether the appellants had established a good arguable case that the application for service out fell within one of the permissible gateways under the CPR. I will deal first with the gateway provided by rule 7.3(2)(a). Rule 7.3(2)(a) gateway -The rectification claim

[61]It is necessary to have in mind the circumstances which brought about the need for an application for service out on Mr. Chen. The appellants’ application for service out on Mr. Chen stems from its institution of the claim for rectification against the Company. The issue in the first instance relates to whether the appellants met all the requirements for service out.

[62]It is not disputed that the appellants had issued a claim form against the Company. However, three issues arise; the first two of which are interrelated. The first is whether there was a real issue between the appellants and the company which it was reasonable for the court to try. The answer to this issue turns on whether the appellants can bring proceedings for rectification of the share register of the Company when the reason for seeking rectification is an untried allegation that Mr. Chen caused himself to be registered as the legal owner of the sole share in the Company in breach of an agreement made with Mr. Lam Snr that he would not do so, save in certain specified circumstances and, even then, that he would hold the legal title as a trustee, and be subject to an obligation to re-transfer the legal title to Mr. Lam Snr immediately upon demand.

[63]The second issue is whether Mr. Chen was a necessary and proper party to the appellants’ claim against the Company. This depends on the answer to the first issue, for it is only if the appellants can bring a claim for rectification against the Company in the circumstances described above that it may be said that Mr. Chen is a necessary and proper party to that claim, and against whom there is a serious issue to be tried.

[64]The third issue is, assuming that Mr. Chen is a necessary and proper party to the appellants’ claim against the Company, whether the BVI is an appropriate forum for the appellants’ claim against the first respondent.

[65]The first question for consideration in the quest to determine whether service out was permissible through gateway 7.3 (2)(a)(i) is whether there is a real issue to be tried between the appellants and the Company on the merits. This necessarily engages the question whether the claim against the Company is bound to fail; for if it is, then it cannot be said that there is a claim to which Mr. Chen is a necessary and proper party.

[66]It is therefore necessary to examine the appellants’ claim against the Company. The appellants’ claim against the Company is for rectification of its register of members pursuant to section 43 of the Act. For context, so far as relevant, section 41(1) of the Act provides that a company shall keep a register of members containing the names and addresses of the persons who hold registered shares in the company. By section 42 of the Act, it is provided that the entry of a person’s name in the register of members as a holder of a share in a company is prima facie evidence that legal title in the share vests in that person, whom the company may treat as the only person entitled to exercise any voting rights attaching to the share; receive notices; receive a distribution in respect of the share; and exercise other rights and powers attaching to the share.

[67]Section 43 provides: “43. (1) If (a) information that is required to be entered in the register of members under section 41 is omitted from the register or inaccurately entered in the register, or (b) there is unreasonable delay in entering the information in that register, a member of the company, or any person who is aggrieved by the omission, inaccuracy or delay, may apply to the Court for an order that the register be rectified, and the Court may either refuse the application, with or without costs to be paid by the applicant, or order the rectification of the register, and may direct the company to pay all costs of the application and any damages the applicant may have sustained. (2) The Court may, in any proceedings under subsection (1) determine any question relating to the right of a person who is a party to the proceedings to have his name entered in or omitted from the register of members, whether the question arises between (a) two or more members or alleged members, or (b) between members or alleged members and the company and generally the Court may, in the proceedings, determine any question that may be necessary or expedient to be determined for the rectification of the register of members.”

[68]On the face of it, section 43(2) of the Act appears to imbue the court with a wide enough discretion to permit enquiry into and resolve any disputes about entitlement to be registered before making an order for rectification. This was the view of the Court of Appeal in Nilon. However, the Privy Council disagreed, clarifying that that section 43(2) of the Act does not imbue the court with jurisdiction in rectification proceedings to determine the rights of a claimant to have their name entered in the register of members where there are substantial factual disputes.

[69]In Nilon, the Mahtani parties brought proceedings in the BVI against Mr. Varma for breach of a contract to procure the issue of shares in Nilon to the Mahtani parties, and against Nilon for rectification of its share register to show the Mahtani parties as shareholders. The claim against Mr. Varma was that he agreed to procure and/or cooperate in procuring the issue of voting shares in Nilon to the Mahtani parties in agreed proportions, but that he failed to cause their names to be entered in the register of members of Nilon, or to cause Nilon to issue them with voting shares and share certificates, and that notwithstanding that failure they acquired an equitable interest in Nilon’s shares. As Mr. Varma was resident in London, the claimants applied to the BVI Commercial Court for permission to serve Mr. Varma out of the jurisdiction under rule 7.3(2)(a) of the CPR. The principal issue before the Board was whether permission should have been given by the BVI court to the claimants to serve Mr. Varma out of the BVI, and relatedly, whether the claim against Nilon should have been struck out on the basis that there was no sustainable cause of action for rectification.

[70]The Board considered that the substance of the Mahtani parties’ claim on this aspect was for an order for specific performance requiring Mr. Varma to procure the allotment and issue of their respective shareholdings. The Board undertook an extensive survey of the legislative antecedents of the United Kingdom equivalent of the BVI Act and the voluminous case law on rectification of a company’s share register. Having done so the Board drew a number of conclusions emerging from the case law: (1) from the earliest days of the legislation the courts have made it clear that the summary nature of the jurisdiction makes it an unsuitable vehicle if there is a substantial factual question in dispute. In such a case an issue may be directed to be tried but it may also be dismissed or struck out; (2) There is no doubt that the legislation is primarily concerned with legal title and the object of [section 41] was to secure a list or register which could show who were the shareholders entitled to the profits, and liable to contribute to the debts of the company. The Board specifically concluded that “the legislation both in the BVI and in Great Britain is concerned with rectification of the register of members, and membership concerns legal title.”

[71]The Board concluded that “proceedings for rectification can only be brought where the applicant has a right to registration by virtue of a valid transfer of legal title, and not merely a prospective claim against the company dependent on the conversion of an equitable right to a legal title by an order for specific performance of a contract (emphasis added). Accordingly, the Board held: “The Mahtani parties have no such present right, which could only arise after they had been successful in their principal claim against Mr. Varma, and only after he had been ordered to procure the issue and allotment of the shares to them. In these proceedings the Mahtani parties have no arguable case to a present right to rectification, and there is therefore no claim against Nilon to which Mr. Varma can be a necessary and proper party.”

[72]In summary, three salient points emerge as important take-aways. First, the jurisdiction given to the court to order rectification of the register of a company is summary in nature and ill-suited to cases where substantial factual matters are in dispute. Secondly, in such a case, the court may dismiss or strike out the claim for rectification. Thirdly, the Act is concerned with the rectification of membership of the company, which means persons holding legal title to shares.

[73]The appellants criticise the judge’s decision on the basis that it failed to distinguish the facts of this case from Nilon by failing to recognise that unlike the Mahtani parties in Nilon, Mr. Lam Jnr has a presently assertable right to be registered as a member of the company by reason of the 1st Share Transfer. They seek to draw analogy with cases such as Re North British Australasian Company (Limited), Ex p Robert Swan and Re Diamond Rock Boring Co Ltd, Ex p Shaw which were similarly concerned with rectification of the share register and both of which were discussed in Nilon.

[74]In Re North British Australasian Company, Mr. Swan had entrusted custody of his shares to his broker. The broker fraudulently transferred them to two innocent third parties, who were made parties to the application. The sole question was whether Mr. Swan was estopped from denying his title by his negligence. The Court of Common Pleas held that the equivalent of section of 43(2) of the Act applied, not only where there was a dispute between the applicant and the company, but also where (as here) the dispute existed between two persons, each of whom alleged himself to be a member of a company in respect of the same shares. The Court was divided, and Mr. Swan failed. However, Mr. Swan was ultimately successful in the Exchequer Chamber in an action for a declaration of title and for an order of mandamus requiring rectification of the register.

[75]Re Diamond Rock Boring Co Ltd was another case where there was a real dispute between rival members. In that case, an agent acted for both Shaw, who was the purchaser, and Piers, who was the seller of shares in a company. Piers executed a transfer in favour of Shaw and sent it to the secretary of the company, but the agent failed to pay over the price to Piers and falsely told Piers that Shaw would not complete. Piers therefore demanded the return of the transfer. The agent cut off Piers’ signature from the transfer and absconded. Shaw sought and obtained rectification on the basis that the transfer had been duly executed and Shaw had legal title.

[76]The rationale for the decision was explained and helpfully summarised in Nilon at paragraph 47: “Lord Coleridge CJ emphasised (at pp 475, 476) that, “Shaw had an undoubted legal right to the shares, and was entitled to be registered as the owner of them” and that Shaw was “a person whose name, without sufficient cause, has been omitted from the register.” Bramwell LJ said (at p 480) that Shaw had “made out that he has good title, except registration, for he paid Piers’ agent the price of the shares, and the transfer was duly executed.” Brett LJ said (at p 484) that, “it would be perfectly monstrous, if, after the purchase has been duly completed, and the money paid, and the transfer executed, the right of Mr. Shaw to be registered as the shareholder could be affected by the fact of Sir E Piers or his agent having destroyed the transfer.”

[77]It seems to me that those two cases can be distinguished on the basis that although there were rival claims in respect of the entitlement to be registered, the underlying facts seemed to have been accepted and it was a question of determining on those facts, which party was entitled to be registered.

[78]The situation in this case is different. In this case, the evidence before the judge below and this Court is that Mr. Chen is the registered shareholder of the sole share in the Company. He currently holds legal title to the share. The appellants’ challenge to Mr. Chen’s legal title is founded upon assertions that the 2nd Share Transfer was allegedly subject to the conditions agreed orally between Mr. Lam Snr and Mr. Chen that: (1) beneficial ownership of the share would not pass to Mr. Chen upon execution of the 2nd Share Transfer; (2) registration of the 2nd Share Transfer was subject to prior approval from the appellants and would only be permitted if the Company was actually impacted by the debts of the family business; (3) if Mr. Chen became registered as legal owner of the share, such ownership would be on trust for Mr. Lam Snr, subject to an obligation to re-transfer legal title of the share immediately upon request by Mr. Lam Snr; and (4) without the appellants’ knowledge and authorisation the 2nd Share Transfer was registered by the Company on the instructions of Mr. Chen.

[79]These contentions are vigorously disputed by Mr. Chen, who contends that: (1) the 1st Share Transfer is neither genuine nor valid and that he only became aware of it when he saw a copy of it attached to a written statement of Mr. Lam Snr dated 22nd July 2021, which was some 4 years later; (2) he was registered as the shareholder in the Company on or about 15th March 2017 after fees were paid to restore the Company to “good standing”, and that he has been the sole registered shareholder in the Company since 2017 and the sole beneficial owner of the share; (3) the share was transferred to him so that the appellants could be shielded from any liabilities of the Company (or its group of companies) which were experiencing severe financial difficulties, as was their family business. The reason why the appellants transferred the share to him for US$1.00 was that they wished to ensure that they bore no responsibility for the debts of the Company’s group of companies and thereby avert reputational damage.

[80]It seems to me that, on any view, there are substantial factual disputes which must be resolved concerning the validity of both purported share transfers and the terms of the “common understanding.” The resolution of these substantial factual disputes must precede any determination whether or not Mr. Chen is properly registered as the shareholder in respect of the share.

[81]While it may be correct to say that this case differs from Nilon because, unlike the Mahtani parties in Nilon, Mr. Lam Jnr claims a presently assertable right to be registered as a member of the Company by reason of the 1st Share Transfer to him, it does not impact the principle derived from Nilon that the jurisdiction given to the court to order rectification of the register of a company is summary in nature and ill-suited to cases where substantial factual matters are in dispute. The appellants’ reliance on this factual difference therefore ignores the fact that Mr. Lam Jnr’s assertion of a present right to registration is mired in dispute as it hinges on the validity of the 1st Share Transfer to him, which is strongly disputed by Mr. Chen, who asserts that it is a recent fabrication. That issue remains to be resolved, as is the question whether the purported 2nd Share Transfer to Mr. Chen is null and void and of no effect. This in turn will depend on factual findings in relation to the terms of the common understanding.

[82]No court can properly determine the rectification claim without first resolving the substantial factual disputes relating to both share transfers. This means that the claim against the Company was bound to fail because proceedings for rectification can only be brought where the applicant has a right to registration by virtue of a valid transfer of legal title and there is no substantial factual dispute in relation to that asserted right. On this basis, the gateway for service out via rule 7.3(2)(a) was not open to the appellants as it cannot be said that there was a real issue between the appellants and the Company which it was reasonable for the court to try. The claim against the company being bound to fail, there could be no claim to which Mr. Chen could be a necessary or proper party.

[83]I would therefore hold that the judge was right to hold that the appellants failed on that gateway and in the normal course, subject to what is said below about whether the appellants had established a good arguable case in relation to gateways 7.3(7)(a) or 7.3(7)(b), it would follow that the issue of forum conveniens would not arise: Nilon at paragraphs 53 and 54. Ground 2 Gateway 7.3(7)(a)

[84]This brings me to a consideration of the appellants’ challenge to the judge’s findings in relation to the gateway via rule 7.3(7)(a). The judge held that the claim also failed on gateway 7.3(7)(a) because no good arguable case had been made out that the subject matter of the claim relates to the constitution, administration, management or conduct of the affairs of a BVI company. The judge relied on the analysis and logic contained in paragraphs 59 and 60 of Nilon as the basis for her conclusion that the appellants failed on this gateway.

[85]The appellants argue that the judge erred in relying on paragraphs 59 and 60 of Nilon because those were in reference to a claim about beneficial ownership of the share in a company which the Board held will not fall within this gateway, whereas the claim here is for declarations as to the validity of share transfers, rectification of the Company’s register of members and directors, damages, interests and costs. Thus, the judge’s reasoning was inadequate and, in any event, plainly wrong.

[86]The first respondent relies on Anjie Investments Limited et al v Cheng Nga Yee et al to ground the argument that a dispute as to shareholding between existing shareholders and persons claiming to be shareholders is not a matter falling within the expression “the constitution, administration, management or conduct of the affairs” of the company. Discussion

[87]To succeed under gateway 7.3(7)(a), an applicant for service out must establish that the subject matter of the claim relates to the constitution, administration, management or conduct of the affairs of a company incorporated within the jurisdiction. Typically, matters falling within the rubric of the rule would include, for example, issues relating to the powers of organs of a company, the appointment of directors, and the right of shareholders to bring derivative actions. To determine whether a particular claim can be accommodated through this gateway, the court is required to identify and assess the substance of the real dispute underlying the claim.

[88]Although the appellants’ claim seeks, inter alia, declarations as to the validity of share transfers, rectification of the Company’s register of members and directors, in my view the real underlying dispute centers around the competing claims of two parties in relation to its sole issued share with one contending that he is a registered member of the Company while the other asserts that he has a present right to be registered as a member of the Company. This issue does not relate to the constitution, administration, management or conduct of the affairs of a company; the real dispute is about who is entitled to be registered as a member of the Company.

[89]In my view, the judge correctly held that the gateway provided by rule 7.3(7)(a) did not avail the appellants. Gateway rule 7.3(7)(b)

[91]The judge concluded that the claim against the Company concerned whether Mr. Chen’s registration as a member of the Company was in breach of an oral agreement purportedly made in the PRC. Thus, it was not properly concerned with the legal validity of Mr. Chen’s registration as a shareholder of the Company and did not relate to or concern his ownership and consequently his control of the Company.

[90]Service out is permitted through this gateway where the subject matter of the claim relates to the ownership or control of a company incorporated within the jurisdiction.

[92]The appellants challenge this conclusion, arguing that the judge’s reasoning ignored Mr. Lam Jnr’s presently assertable right to be registered as a member of the Company by reason of the 1st Share Transfer. It is further said that rule 7.3(7)(b) is not on a plain reading limited to questions of the validity of a person’s registration as a shareholder but is drawn broadly enough to include beneficial ownership. Furthermore, argued the appellants, the appellants’ claim for rectification and declarations as to ownership concern the legal or beneficial ownership of shares in a BVI company, and the right to be registered as a shareholder, and therefore related to ‘control’ of that BVI company.

[93]For the first respondent it was submitted that the dispute in this matter is over the entitlement to be registered as shareholder of the share, more particularly whether the 1st Share Transfer should result in the registration of Mr. Lam Jnr or whether the 2nd Share Transfer properly resulted in the registration of Mr. Chen. It is contended that while the share might carry control or ownership of the Company, that is merely incidental to the claim, and while the ultimate result of the dispute might affect control or ownership of the Company, the direct dispute is not over ownership or control.

[94]While the respondent’s argument may have some attraction to it, I am satisfied that on a proper construction of rule 7.3(7)(b), it is flawed. The rule is framed in broad terms and merely requires that the subject matter of the claim relates to ownership or control of a company incorporated within the jurisdiction. The claim against the Company is for rectification of its register of members to reflect Mr. Lam Jnr as its registered shareholder and to remove Mr. Chen as a member of the Company. As Nilon posits, citing approvingly the observations of Lord Cairns in Re London, Hamburgh and Continental Exchange Bank, Ward and Henry’s Case: “the object of [section 41] was to secure a list or register which would show who were the shareholders entitled to the profits, and liable to contribute to the debts, of the company. The legislation both in the BVI and in Great Britain is concerned with rectification of the register of members, and membership concerns legal title.” (Para 39).

[95]A claim for rectification is directly concerned with who is entitled to be registered as the legal owner of the share and is therefore concerned with ownership of the Company. For this reason, I would hold that the appellants had much the better of the argument, and therefore a good arguable case, that the court has jurisdiction within the gateway provided by rule 7.3(7)(b) to permit service out on Mr. Chen. I would hold that the judge erred in holding otherwise.

[96]The matter doesn’t end there, however. The judge held that if she were wrong about the jurisdictional gateway issue, the appellants had not in any event, satisfied her that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out. The judge relied on paragraphs 66 to 69 of Nilon to justify her conclusion on this point.

[97]The judge’s approach here accorded with the statement of principle in Nilon that “the fact that there is a specific gateway dealing with the ownership or control of a particular type of property within the jurisdiction does not obviate the need for a claimant to show that the BVI is clearly the appropriate forum.” The issue on this appeal is whether she was right to conclude that the appellants had not satisfied her that BVI was the appropriate forum and whether she correctly assigned the burden of proof on this issue. I therefore turn now to examine the issue of forum conveniens which is the subject of complaint under ground 3. Forum Conveniens

[100]This task of weighing the various connecting factors has variously been described as engaging the exercise of the judge’s discretion, which is how the Board in Nilon seems to have regarded it; while another view holds that the exercise carried out by the judge was not the exercise of a discretion but an evaluative, or a balancing, exercise: per Lord Neuberger in VTB Capital plc v Nutritek International Corp, at paragraph 97.

[98]The forum conveniens rule requires a court to be satisfied that the local jurisdiction is clearly or distinctly the most appropriate forum for the trial of the claim. The court must consider whether there is another available foreign with competent jurisdiction more appropriate than the local court to try the claim. In this context, appropriate means more suitable for the interest of all the parties and the ends of justice: Spiliada Maritime Corp v Cansulex Ltd.

[99]The task of determining which is the more appropriate forum requires the court to assess which forum has the most real and natural connection with the action. This entails engaging in a balancing exercise of a number of factors, sometimes referred to in the case literature as “connecting factors”. A non-exhaustive list of such factors include the place of commission of the acts giving rise to the action, the availability of witnesses, the likely languages they speak, the place where the parties reside and carry on business, the law governing the transaction: IPOC International Growth Fund Ltd v LV Financial Group Ltd et al. It has been held that the location of the witnesses is a core factor: Nilon.

[101]Whether regarded as the exercise of discretion or as the performance of an evaluative or balancing exercise, the learning is the same when it comes to an appellate court’s approach to reviewing a decision of a judge on the question of forum conveniens: “an appellate court should not interfere with a decision of a lower court which has applied the correct principles and which has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the appellate court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion which has been entrusted to the court:” Nilon at paragraph 16. In Spiliada Lord Templeman counselled that the solution of disputes about the relative merits of trial in the instant jurisdiction and trial abroad is pre-eminently a matter for the trial judge and an appeal should be rare and the appellate court should be slow to interfere. This approach has been adopted by this Court in a number of decisions.

[102]The rationale for such reticence is perhaps best expressed by Lord Bingham in Lubbe and Others v Cape PLC where he stated: “This is a field in which differing conclusions can be reached by different Tribunals without either being susceptible to legal challenge. The jurisdiction to stay is liable to be perverted if parties litigate the issue at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum.” The burden of proof and the judge’s reasons on forum conveniens

[103]The judge held that the burden of establishing that the BVI was clearly or distinctly the most appropriate forum rested on the appellants who were the applicants for service out. The judge took the view that since she was engaged with an application to set aside the order for service out, that “causes the claimant’s application to be dealt with again.” She considered that the logic flowing from that proposition was that “the burden is therefore on the Claimants to show that BVI is clearly and distinctively (sic) the appropriate forum and that it would in fact be different if the First Defendant was starting with a forum challenge, in which case the burden would be on the Defendant/Applicant.”

[104]The judge regarded the cases of Livingston Properties Equities Inc and Others v JSC MCC Eurochem and Another and Nilon as supportive of her conclusion on the burden of proof. At paragraph 62 of Nilon, the Board stated, that “the burden was on the Mahtani parties to show that the BVI was the appropriate forum.” It will be recalled that the Mahtani parties, like the appellants here, were the claimants in the court below and the order for service out on Mr. Varma, which they had obtained, was the subject of an application by him to set it aside. The judge seems to have reasoned that by analogy, the appellants similarly bore the burden of proof.

[105]Mr. Taylor KC for the appellants says that this was wrong, submitting that it was the respondent who asserted that the PRC was an available forum, which made this an issue of foreign law, and the burden was therefore on the respondent to adduce expert evidence on foreign law to make good his assertion. This he failed to do. Thus, the judge erred in finding that the PRC was an available forum as she had no reasonable basis for doing so.

[106]Counsel for the first respondent contends that the burden of proof is on the appellants to show that the BVI is the convenient forum as this is a service out case. Reliance is placed on VTB Capital Plc v Nutritek International Corp. Discussion – The burden of proof

[110]The judge did not expressly set out the factors she weighed in the scales when deciding the question of forum conveniens. Instead, she took the short-handed approach of stating that she relied on the reasoning contained in paragraphs 66 to 69 of Nilon. For ease of reference, I set them out in full here: “66. The reality of the matter is that, apart from the fact that the claim is that Mr Varma made a promise to allot shares in a BVI company, and that if they are successful the Mahtani parties may obtain an order that Mr Varma procure the allotment or transfer to them of shares in Nilon, the issues have nothing to do with the BVI at all. The alleged contract was made in England, the company was to be managed from Jersey, the underlying business was concerned with Nigeria and India, the operating companies would be in Nigeria, the witnesses (including Mr Mata and Mr Surana, the managing director and secretary of Nilon, and who were said to be involved in the formation and performance of the Joint Venture Agreement) would be mainly in England. The documents are in England or Jersey. There is no suggestion that there are any witnesses or documents in the BVI, or that there is any connection with the BVI other than as the place of Nilon’s incorporation.

[107]The cases recognise a difference in the onus of proof in an application for service out, where the burden is on the claimant to establish that the local jurisdiction is clearly or distinctly the most appropriate forum for the trial of the claim; as opposed to an application to stay proceedings on grounds of forum non conveniens, where the burden is on the defendant to show that there is an available foreign jurisdiction with competent jurisdiction more appropriate than the local court to try the claim. This distinction is made very clear in Spiliada, where Lord Goff stated: “It seems to me inevitable that the question in both groups of cases must be, at bottom, that expressed by Lord Kinnear in Simm v Rainbow, to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice. That being said, it is desirable to identify the distinction between the two groups of cases. These, as I see it, are threefold. The first is that, as Lord Wilberforce indicated, in the Order 11 cases [service out] the burden of proof rests on the plaintiff, whereas in the forum non conveniens cases [stay applications disputing the court’s jurisdiction] that burden rests on the defendant.”

[108]Similarly, in Thornton Tomasetti Inc v Anguilla Development Corporation Ltd, the question of forum fell to be considered in the context of an application by the appellant to set aside service out. Counsel for the appellant took the point that one of the recitals to the master’s order which stated, “I remain unconvinced that New York Law and the New York courts should be the proper jurisdiction” suggested that the master had placed the burden on the appellant to prove that New York was the more appropriate forum. The Court held that when properly construed in context the recital could not be regarded as imposing any burden on the appellant to prove that New York was the proper forum. The court observed that the burden was on the claimant to satisfy the Court that the local court was the more appropriate forum as he was seeking to move the court to exercise its discretionary power to serve out.

[109]In this case the application before the judge was one to set aside an order for service out, and in the alternative for a stay of proceedings on grounds of forum non conveniens. The primary application was to set aside the order for service out and it was on that application that the respondents succeeded. The judge was accordingly right to hold that the appellants bore the burden of proof on the forum issue. The Connecting factors The judge’s reasons on forum conveniens

[111]The appellants submit that in so far as the judge relied on paragraphs 67 to 69 of Nilon such reliance was misplaced because paragraphs 67 to 69 do not include any reasoning on the appropriate forum and were thus irrelevant. In relation to reliance on paragraph 66, it is said that this paragraph was self-evidently in reference to a case which was different on both its facts and as a matter of principle. The appellants contend that the facts in Nilon were therefore irrelevant and the judge erred by taking them into account, and erred by failing to take relevant factors into account, including the facts of the case before her.

[112]The appellants submit that the judge also failed to take into account the following relevant factors.

[113]First, the governing law. At common law, the right of a transferee to be registered on the books and records of a company as the owner of the shares is governed by the law of incorporation and this principle is enshrined in section 245 of the Act, which provides that the situs of the ownership of shares in a BVI company is in the BVI. Accordingly, BVI law governs the share transfers and the right to be entered on the registers of the company at the heart of this dispute.

[114]Secondly, the location of witnesses. The judge failed to consider the all-important factor that the appellants' case, particularly as it related to the unauthorized registration of the 2nd Share Transfer and the unauthorized change in registered agent, involved parties in the BVI, with witnesses in the BVI. A significant number of key persons that would provide evidence and/or disclosure in these proceedings are located in the BVI. Witness statements and disclosure will be required from the Company and persons employed by the registered agents, namely TMF, Vistra and SHRM.

[115]Thirdly, the documents and language. The appellants submit that another relevant and important factor distinguishing this case from Nilon, which the judge failed to consider, is that BVI persons employed by the registered agents speak English and the relevant documents owned by the Company and the registered agents to be disclosed in the proceedings will be in English and are located in the BVI, and therefore subject to the BVI court’s jurisdiction.

[116]Fourth, remedies. The judge erred in failing to consider that an effective remedy of rectification is governed by BVI law and can only be granted by the BVI court, and there was no evidence that it, or any of the other relief, could be granted by the PRC Court. The BVI court has in personam jurisdiction over the Company and may grant that remedy as of right and pursuant to the BVI Business Companies Act. Given the importance of the remedies to this case, in particular rectification, the judge should have considered that practical justice may well not be done if the claim has to be brought in a jurisdiction which does not have an equivalent remedy or cannot grant the relief sought or does not have jurisdiction over the necessary parties against whom enforcement would be necessary, namely the Company and possibly the Company’s BVI registered agent, or whose judgments might not be enforceable in this jurisdiction. That would result in multiple, if not duplicative, proceedings to achieve a conclusion to the parties’ dispute which could be achieved by this Court in one go.

[117]The last point leads to the fifth factor which the appellants say the judge ignored: multiplicity of proceedings. The appellants argue that the BVI Court has in personam jurisdiction over the Company and the appellants are entitled to pursue their claims against the Company in the BVI, since the claims against the Company should not have been struck out. If the appellants are required to pursue their claims against Mr. Chen in the PRC, that would give rise to a multiplicity of proceedings about the same issues, and the risk of inconsistent decisions.

[118]The appellants contend that all of the previously mentioned relevant factors connecting this dispute to the BVI should have been considered and weighed up by the judge, and her failure to do so was clearly and blatantly wrong and exceeded the generous ambit within which reasonable disagreement is possible.

[119]On behalf of the respondents, a number of connecting factors are posited as demonstrating that the PRC is the natural forum.

[120]First, in relation to the governing law, the first respondent highlights that the dispute arises out of a 2017 agreement (the common understanding) made between Mr. Lam Snr and Mr. Chen in January (according to Mr. Chen) or in March (according to Mr. Lam Snr) in 2017. The 2017 Agreement was entered into: i) orally; ii) in Chinese; iii) in Fujian Province, PRC; iv) between PRC nationals resident in PRC; and v) relates to the ultimate beneficial ownership of underlying assets (6 mining companies) situated in the PRC. The agreement was made in the PRC and would be governed by that law. Further, the 1st Share Transfer was allegedly executed in the PRC and the 2nd Share Transfer was signed in the PRC and handed over to Mr. Chen in the PRC.

[121]Secondly, as it relates to location of witnesses, the first respondent’s position is that the important witnesses to matters involving the core of the dispute, the appellants and Mr. Chen, are resident in the PRC, which is a core factor. The fact that there might be some witnesses whose evidence is likely to be peripheral (since they did not witness the making of the 2017 Agreement) but who might explain why they registered Mr. Chen as the shareholder, and who might be resident in BVI and speak English, is not a weighty factor. The reason why the Company agent effected the registration is unlikely to be relevant to the substantive issues in this matter, which relate to the agreement made between Mr. Lam Snr and Mr. Chen in 2017.

[122]Third, in relation to the language spoken by the key witnesses, Mr. Chen and Mr. Lam Jnr are not fluent in English.

[123]Fourth, so far as it relates to the situs of the share, the fact that the share was in a BVI company does not attract much weight and is outweighed by the other connecting factors to the PRC.

[124]Fifth, the fact that BVI law would govern the issue of rectification does not attract much weight because regardless of the forum in which the factual dispute in relation to the agreement and the share transfers is resolved, the remedy of rectification would ultimately require the intervention of the BVI court and the dispute between the parties would be res judicata. Discussion and analysis

[126]It seems to me that the real issue in dispute between the parties is the validity of the share transfers and whether Mr. Chen violated the 2017 oral agreement between himself and Mr. Lam Snr by causing himself to be registered as sole shareholder of the Company. The answer to this question will then determine the consequential question who is entitled to be registered as shareholder of the sole share in the Company. To my mind the judge therefore correctly identified the real or underlying issues between the parties.

[125]It is important to have in mind what is the real or underlying dispute between the parties in this case. The claim is for, among other things, declarations as to the validity of share transfers and rectification of the Company’s registers of members and directors. In the appellants’ own words, as reflected in their skeleton submissions at paragraph 32: “the appellants’ claim concerns the right of the Second Appellant to be registered and whether, as a result of the Common Understanding, the First Defendant was entitled to conduct the affairs of the Company as he did by registering himself as sole shareholder, changing registered agents etc.”

[127]The issue is whether the judge erred in relying on the reasoning in paragraphs 66 – 69 of Nilon in coming to her conclusion that the appellants had not persuaded her that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out.

[128]I say straight away that I agree with the appellants’ contention that paragraphs 67 and 69 were irrelevant as they contained no reasoning on the appropriate forum and were thus irrelevant. In relation to the judge’s reliance on paragraph 66, my understanding of what the judge meant to convey was that she was adopting the factors identified in that paragraph as those relevant to the case before her, and also the reasoning to explain the weight or lack thereof that she assigned to each factor. I do not understand the judge to have simply treated the facts in Nilon as identical to the facts in this case.

[129]The factors identified at paragraph 66 of Nilon were: (1) the place where the agreement in relation to the shares was made; (2) the place from which the company was to be managed; (3) the location of the underlying businesses; (4) the location of the main witnesses to the agreement; and (5) the location of documents. The Board reasoned that apart from the fact that the claim was that Mr. Varma had made a promise to allot shares in a BVI company and that if successful the Mahtani parties may obtain an order that Mr. Varma procure the allotment or transfer of shares in Nilon, the issues had nothing to do with the BVI at all.

[130]While, regrettably, the judge did not expressly say that these, or some of them, were the specific factors she was taking into account in the case at bar, it is clear that by incorporating paragraph 66 of Nilon into her decision it was quite apparent what connecting factors the judge considered. I therefore cannot accept the appellants’ submission that the judge failed to take into account the relevant facts before her, the governing law, the location of the witnesses, the language of the witnesses and the documents. It is also apparent that her reasoning was that upon consideration of these factors BVI was not the more appropriate forum.

[131]I remind myself of the need for appellate restraint when reviewing the judge’s evaluative balancing exercise on the issue of forum. This Court may only interfere where it is satisfied that the judge made a significant error of principle, or a significant error in the considerations taken or not taken into account. This guards against the risk of parties litigating the issue “at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum.”

[132]In assessing the relevant connecting factors, the position seems to me to be as follows. The disputed 2017 agreement was made in the PRC between Chinese nationals resident in the PRC and relates to the ultimate beneficial ownership of underlying assets comprising six mining companies situated in the PRC. The language of the main protagonists, the appellants and the first respondent, who can speak directly to the agreement, is Mandarin Chinese. The law governing that agreement would be PRC law. All of these factors point to a real and substantial connection to the PRC.

[133]On the other hand, the connection to the BVI is that the Company in which the disputed share is held is a BVI company. Secondly, the Company’s registered BVI agent administrators are potentially witnesses but only so far as it relates to the reasons why Mr. Chen was registered as the shareholder. Thirdly, the BVI is the place where the remedy of rectification will have to be obtained should the appellants succeed. However, this would be so even if the underlying dispute is dealt with in the PRC because the situs of the share is the BVI. As the Board held in Nilon, rectification is “purely a matter of the machinery of enforcement.” I am therefore unable to follow the appellants’ argument that the judge erred in holding that BVI was not shown to be the more appropriate forum because, among other things the respondent did not adduce evidence that the remedy of rectification would be available in the PRC.

[134]Weighing matters in this way, I am unable to conclude that the judge made a significant error of principle, or a significant error in the considerations taken or not taken into account such that her decision exceeded the generous ambit within which reasonable disagreement is possible. I bear in mind that this is the test and not whether this Court would have weighted the connecting factors differently and heed Lord Neuberger’s advice at paragraph 93 of VTB Capital Plc v Nutritek International Corp that, “appellate courts should be vigilant in discouraging appellants from arguing the merits of an evaluative interlocutory decision reached by a judge, who had to balance the various factors relevant to the appropriate forum, when the complaint is, in reality, that the balance should have been struck differently.”

[135]I would therefore dismiss ground 3. Conclusion

[136]In summary, I have concluded that the judge was correct to hold that the appellants had not satisfied the requirements for service out on Mr. Chen via gateways 7.3(2)(a) or 7.3(7)(a). I have concluded, however, that the judge was wrong to hold that the appellants had not met the requirements under the gateway provided by rule 7.3(7)(b). This notwithstanding, the judge did not err in concluding that the appellants had failed to show that BVI was the more appropriate forum.

[137]I would therefore dismiss the appeal and make the following orders: (1) The appellants shall pay the respondents’ costs of the fresh evidence application to be assessed by a judge of the Commercial Court if not agreed within 21 days of delivery of this judgment. (2) The appellants shall pay the respondents’ costs in the appeal fixed at two-thirds of the costs assessed in the court below. I concur Mario Michel Justice of Appeal I concur Vicki Ann Ellis Justice of Appeal By the Court Deputy Chief Registrar

[1]CHEN JIAN YUN

[2]ZHONG DA MINING HOLDING LIMITED Respondents Before: The Hon. Mr. Mario Michel Justice of Appeal The Hon. Mde. Vicki Ann Ellis Justice of Appeal The Hon. Mr. Trevor M. Ward Justice of Appeal Appearances: Mr. Alex Taylor Hall KC with Mr. Simon Hall for the Appellants Mr. Terence Mowschenson KC with Mr. Stuart Cullen for the Respondents ______________________________ 2024: February 12 August 20. ______________________________ Commercial appeal – Service of court process out of the jurisdiction – Part 7 of the Civil Procedure Rules 2000 (“CPR”) – Jurisdictional gateways – Rules 7.3(2)(a), 7.3(7)(a) and (b) of the CPR – Whether the appellants established a good arguable case that the claim fell within one or more of the classes of cases in which permission to serve out may be given in relation to a jurisdictional gateway – Forum conveniens – Burden of proof – Whether the appellants demonstrated that the forum being seised must clearly or distinctly be the appropriate forum for the trial of the dispute – Connecting factors – Whether the judge weighed the appropriate connecting factors that demonstrated the most real and natural connection with the action – Appellate interference – Appellate interference in a judge’s finding on the relative merits of trial in an instant jurisdiction and trial abroad – Whether the judge made a significant error of principle, or in the considerations taken or not taken into account, such that the decision exceeded the generous ambit within which reasonable disagreement is possible – Application to adduce fresh evidence – Ladd v Marshall test – Whether the evidence could not have been obtained with reasonable diligence for use at trial – Whether the evidence would have an important influence on the result of the case This is an appeal against the decision of the commercial court judge granting the first respondent’s application to set aside an order permitting service out and striking out the appellants’ claim. The appellants are Mr. Lam Wo Ping (“Mr. Lam Snr”) and Mr. Lam Kin Chung (“Mr. Lam Jnr”), father and son, and businessmen from the People’s Republic of China (“PRC”). The first respondent is Mr. Chen Jian Yun (“Mr. Chen”), also a businessman from the PRC, and the second respondent is a company incorporated in the Territory of the Virgin Islands (“the Company”). Mr. Lam Snr was the legal and beneficial owner of the one issued share in the Company. By an instrument of transfer dated 1st March 2017 (“the 1st Share Transfer”), Mr. Lam Snr, purported to transfer that share to Mr. Lam Jnr. However, the 1st Share Transfer was not entered in the register of members of the Company, which Mr. Lam Snr said was due to his lack of knowledge of that requirement. Later, on 9th March 2017, Mr. Lam Snr executed a second instrument of transfer (“the 2nd Share Transfer”), where he purported to transfer the share to Mr. Chen. The 2nd Share Transfer was said by Mr. Lam Snr to be subject to certain conditions arrived at from an oral agreement between Mr. Lam Snr and Mr. Chen in 2017 (“the 2017 agreement”). According to Mr. Lam Snr, the conditions of the 2017 agreement were, in sum, that: (1) beneficial ownership of the share would not pass to Mr. Chen upon executing the 2nd Share Transfer; (2) registration of the 2nd Share Transfer was subject to approval of the appellants and would only be permitted if the Company was impacted by the debts of the family business; and (3) if Mr. Chen became registered as legal owner of the share such ownership would be on trust for Mr. Lam Snr subject to an obligation to re-transfer legal title thereof immediately upon request. These conditions were vigorously disputed by Mr. Chen who contended that the 1st Share Transfer was not valid or genuine and that he was registered as the shareholder of the Company on or about 15th March 2017, so that the appellants could be shielded from liabilities of the Company, which was experiencing financial difficulties. It was upon the registration of the 2nd Share Transfer that the relationship between the parties went awry, as it was, according to the appellants, without their knowledge and approval. Consequently, the appellants sought, among other reliefs, rectification of the Company’s register under section 43(1) of the Business Companies Act. They were also granted leave to serve the claim on Mr. Chen in Hong Kong by order dated 13th October 2022 (“the service out order”). Mr. Chen, however, was of the view that the courts in the PRC had the jurisdiction to hear and determine the claim, and not the commercial court in the BVI. As such, on 13th January 2023, Mr. Chen sought to set aside the service out order pursuant to rule 7.7(2) of the Civil Procedure Rules (“the CPR”) and alternatively, to stay the claim on the grounds of forum non conveniens. On 25th April 2023, the commercial court decided in favour of Mr. Chen relying heavily on Nilon Limited and another v Royal Westminster Investments S.A. and others in coming to its conclusion. The key findings of the judge were that: (1) the appellants, who bore the burden of proof failed to demonstrate that they had a reasonable basis for bringing a claim against the Company for reasons analogous to those analysed at paragraphs 52, 53 and 58 to 60 of Nilon, as such, the issue of forum conveniens or whether Mr. Chen was a necessary and proper party to the proceedings did not arise; (2) the claim would fail as the jurisdictional gateways for service out under rules 7.3(7)(a) or 7.3(7)(b) of the CPR were not available to the appellants; and (3) in any event, having regard to paragraphs 66-69 of Nilon, the appellants had not satisfied the court that the BVI was clearly and distinctly the most appropriate forum for the trial of the dispute so as to move the court to exercise its discretion to permit service out. Being dissatisfied with the judge’s decision, the appellants appealed to this Court. They advanced 4 grounds from which the following issues could be culled: (1) whether the judge erred in finding that there was no good arguable case that the claim fell within rule 7.3(2)(a) of the CPR; (2) whether the judge erred in finding that there was no good arguable case that the claim fell within rule 7.3(7)(a) or (b) of the CPR; (3) whether the judge erred in finding that the BVI was not clearly and distinctly the most appropriate forum for the trial of the dispute; and (4) whether the judge erred in striking out the claim against the first respondent and the Company. At the hearing of the appeal, the appellants applied to adduce the following fresh evidence: (1) the judgment of the PRC first instance court; (2) Mr. Chen’s civil appeal petition to the PRC appellate court; (3) the appellants’ defence to Mr. Chen’s appeal; and (4) the judgment of the PRC appellate court dated 8th August 2023. The appellants argued that their application satisfied the principles set out in Ladd v Marshall. They submitted that the fresh evidence they sought to adduce had an important influence on the outcome of the appeal, as it showed that Mr. Chen had submitted to the PRC appellate court that it ought to determine the question of ownership and control of the Company, but that court declined to do so, and in the process, rejected four sets of evidence submitted by Mr. Chen, including documents in relation to the key issue of ownership and control of the Company, which is the central issue in the BVI proceedings. The Court dismissed the application and promised to incorporate the reasons for its decision to do so in the judgment. Held: dismissing the appeal and making the orders set out at paragraph 137, that:

1.In determining an application to adduce fresh evidence, it is well settled in this jurisdiction that the Court is guided by the principles in Ladd v Marshall which comprise the following three limb test: (1) it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and (3) the evidence must be such as is presumably to be believed, or in other words it must be apparently credible, though it need not be incontrovertible. Ultimately, the core consideration is whether it is in the furtherance of the overriding objective to do justice between the parties to permit the applicant to rely on evidence not relied on in the lower court. The Court considered that, with the exception of the PRC appellate court judgment, all the other evidence that the appellants sought to adduce existed since June 2022, that is, well before the hearing and ruling of the BVI commercial court. With reasonable diligence, this evidence could have been deployed at the BVI commercial court, but the appellants failed to do so. Consequently, the appellants did not satisfy limb one of the Ladd v Marshall principles. Ladd v Marshall [1954] 1 WLR 1489 applied; Geminis Investors Limited v Goods Technology Starting International Limited BVIHCMAP2022/0020 (delivered 23rd August 2023, unreported) considered.

2.The Court does not agree with the appellants’ interpretation of Staray Capital Limited and another v Cha, Yang (also known as Stanley), that on an application to adduce fresh evidence, the court is not limited to permitting an applicant to rely only on documents that existed at the time of the first instance judge’s decision. Staray’s case did not decide that evidence that did not exist before the trial would be accepted. In fact, the reasoning in Staray’s case is that evidence in the form of opinions was admissible on a fresh evidence application because the information or evidence used to generate those opinions existed well before the trial took place. In this case, the PRC appellate court judgment was not in existence at the time of the BVI commercial court’s decision. The purpose for which the appellants were seeking to deploy it was to prove the findings or conclusions of the PRC appellate court; not to prove the underlying facts giving rise to the judgment, which were in existence at the time of trial and well known. Additionally, the PRC appellate court judgment did not consider and make determinations on the legal or beneficial ownership of the Company and consequently, the issues before that court did not bear upon the present matter. Staray Capital Limited and another v Cha, Yang (also known as Stanley) BVIHCMAP2013/0009 (delivered 14th July 2014, unreported) distinguished; WWRT Limited v Carosan Trading Limited and Boris Kaufman BVIHCMAP2022/0002 (delivered 20th July 2022, unreported) applied.

3.The Court was overall satisfied that the evidence the appellants sought to adduce was irrelevant and would not have an important influence on the result of the case. Accordingly, the application to adduce fresh evidence was dismissed. Ladd v Marshall [1954] 1 WLR 1489 applied.

4.On an application for service out of the jurisdiction, the following three requirements must be satisfied: (1) there must be a serious issue to be tried on the merits as is the test for summary judgment, meaning that the claimant must show that there is a real as opposed to a fanciful prospect of success; (2) there must be a good arguable case that the claim falls within one or more classes of cases in which permission to serve out may be given in relation to a jurisdictional gateway; and (3) in all the circumstances, the forum which is being seised must clearly or distinctly be the appropriate forum for the trial of the dispute. In the present case, if the claim against the Company was bound to fail then that would be relevant to the question of whether, as between the appellants and Mr. Chen, there was a serious issue to be tried. The Court considered whether the appellants had established a good arguable case that the claim fell within one or more of the classes of cases in which permission to serve out may be given in relation to a jurisdictional gateway – which meant in the context of the present case – a gateway through which an application for service out must pass before permission may be granted. Three jurisdictional gateways were engaged in this case: rules 7.3(2)(a), 7.3(7)(a), and 7.3(7)(b) of the CPR. Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; AK Investment CJSC v Kyrgyz Mobile Tel Limited and Others [2011] UKPC 7 applied; Part 7 of the Civil Procedure Rules 2000 applied.

5.The Court found that the jurisdictional gateways for service out under rules 7.3(2)(a) and 7.3(7)(a) of the CPR were not open to the appellants. In relation to rule 7.3(2)(a), the question engaged was whether there was a real issue to be tried between the appellants and the Company. The Court noted that the claim was made under section 43(2) of the Business Companies Act for rectification of the Company’s register of members (“rectification proceedings”). The jurisdiction of the court in rectification proceedings is ill-suited to cases where substantial matters are in dispute. Considering that the appellants commenced rectification proceedings in circumstances where there was a substantial dispute concerning the validity of both purported share transfers, and the terms of the 2017 agreement, their claim for rectification against the Company was bound to fail. Accordingly, there could be no claim to which Mr. Chen could be a necessary and proper party. Regarding the jurisdictional gateway under rule 7.3(7)(a), the Court considered the nature of the claim and found that the crux of the dispute was competing claims of two parties in relation to the entitlement to the Company’s sole share, and therefore, a good arguable case had not been made out because the subject matter of the claim did not relate to the constitution, administration, management or conduct of the affairs of a BVI company. Rules 7.3(2)(a) and 7.3(7)(a) of the Civil Procedure Rules 2000 applied; Sections 41(1), 42, and 43 of the Business Companies Act No.16 of 2004 of the Revised Laws of the Virgin Islands applied; Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; Re North British Australasian Company (Limited), Ex p Robert Swan (1859) 7 C.B. (N.S.) 400 distinguished; Re Diamond Rock Boring Co Ltd, Ex p Shaw (1877) 2 QBD 463 distinguished.

6.The Court found however that the jurisdictional gateway available under rule 7.3(7)(b) of the CPR was available to the appellants. In determining the relevant question of whether the subject matter of the claim related to the ownership or control of a company incorporated within the jurisdiction, the Court noted that the claim was against the Company for rectification of its register to reflect Mr. Lam Jnr as its registered shareholder and to remove Mr. Chen as a member of the Company. The Court found that in this case, the claim for rectification was directly concerned with the question of who is entitled to be registered as the legal owner of the share and concomitantly, ownership of the Company. Rule 7.3(7)(b) of the Civil Procedure Rules 2000 applied; Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; Re London, Hamburgh and Continental Exchange Bank, Ward and Henry’s Case (1867) LR 2 Ch App 431 applied.

8.The Court held that in determining whether there is another available foreign court with competent jurisdiction more appropriate than the local court to try the claim, the court must perform a balancing exercise in weighing “connecting factors;” meaning factors which demonstrate the most real and natural connection with the action. In considering whether the commercial court weighed the appropriate connecting factors, the Court disagreed with the appellants’ contention that the judge failed to take into account the governing law, location and language of the witnesses, and documents. Even though the Court acknowledged that paragraphs 67 and 69 of the Nilon case were irrelevant insofar as they contained no reasoning on the appropriate forum, the judge never expressly said that those paragraphs contained the factors which she considered. The Court found that the judge, by incorporating paragraph 66 of the Nilon case into her decision, made it pellucid what connecting factors she considered. The relevant connecting factors were that: (1) the 2017 agreement was made in the PRC between Chinese nationals resident there, and related to the beneficial ownership of underlying assets comprising six mining companies situated in the PRC; (2) the language of the parties is mandarin Chinese; and (3) the law governing the 2017 agreement is PRC law. The Court noted that even though the BVI was where the rectification remedy must be sought, it would be the same situation if the underlying dispute was dealt with in the PRC because the situs of the share is the BVI. IPOC International Growth Fund Ltd v LV Financial Group Ltd et al BVIHCVAP2003/0020 and BVIHCVAP2004/0001 (delivered 22nd November 2004, unreported) applied; Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2 applied; VTB Capital plc v Nutritek International Corp [2013] UKSC 5 applied; Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 applied.

9.Lastly, the Court highlighted that the solution of disputes about the relative merits of trial in an instant jurisdiction and trial abroad is pre-eminently a matter for the trial judge. An appeal, therefore, should be rare and the appellate court should be slow to interfere. Accordingly, having regard to the foregoing conclusions, the Court did not find that the judge made a significant error of principle, or a significant error in the considerations taken or not taken into account, such that her decision exceeded the generous ambit within which reasonable disagreement is possible. VTB Capital plc v Nutritek International Corp [2013] UKSC 5 applied; Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 applied; Lubbe and Others v Cape PLC [2000] UKHL 41 applied; Tibit Limited v The Federal Republic of Nigeria BVIHCMAP2021/0042 (delivered 24th March 2024, unreported) applied; Anjie Investments Limited and Tian Li Holdings Limited v Cheng Nga Yee and Cheng Nga Ming Vincent BVIHCMAP2016/0003 (delivered 24th November 2016, unreported) applied; WWRT Limited v Carosan Trading Limited and Boris Kaufman BVIHCMAP2022/0002 (delivered 20th July 2022, unreported) applied. JUDGMENT

[1]WARD JA: This is an appeal against the order of a judge of the Commercial Court in the Territory of the Virgin Islands dated 25th April 2023. By that order, the judge granted the first respondent’s application and, inter alia, set aside a previous order made, permitting service outside the jurisdiction and struck out the appellants’ claims against both respondents. Background

[2]The appellants, Lam Wo Ping (“Mr. Lam Snr”) and his son, Lam Kin Chung (“Mr. Lam Jnr”) are both businessmen in the People’s Republic of China (“PRC”). They were the claimants in the court below. The first respondent, Chen Jian Yun (“Mr. Chen” or “the first respondent”), who was the first defendant in the court below, is also a businessman in the PRC. The second respondent, Zhong Da Mining Holding Limited, (“the Company”), which was the second defendant in the court below, is a company incorporated under the BVI Business Companies Act (“the Business Companies Act” or “the Act). Mr. Lam Snr was the legal and beneficial owner of the one issued share in the company from its incorporation. The appellants contended that by an instrument of transfer dated 1st March 2017 (“the 1st Share Transfer”), Mr. Lam Snr purported to transfer the share to his son, Mr. Lam Jnr While the necessary formalities of a director’s resolution and stock transfer form were completed, the 1st Share Transfer was not entered in the register of members of the Company. According to Mr. Lam Jnr’s affirmation in support of the application for permission to serve out, this was because he was not aware of the formal requirement for registration of the 1st Share Transfer.

67.Nor is it relevant, as the Mahtani parties contend, that the BVI CPR now contain a specific provision permitting service of a claim form out of the jurisdiction if the subject matter of the claim relates to (a) the constitution, administration, management or conduct of the affairs of a BVI company; or (b) the ownership or control of such a company (Rule 7.3(7) of the BVI CPR, as introduced by the Eastern Caribbean Supreme Court Civil Procedure (Amendment) Rules (SRO 47 2011, in force from October 1, 2011). This appeal must be dealt with under the CPR as they stood. In any event, the fact that there is a specific gateway dealing with the ownership or control of a particular type of property within the jurisdiction does not obviate the need for a claimant to show that the BVI is clearly the appropriate forum.

68.In those circumstances the Mahtani parties could not have shown that the BVI is clearly or distinctly the appropriate forum.

69.Their Lordships will therefore humbly advise Her Majesty that the appeals should be allowed and that the action against Nilon be struck out and the permission to serve Mr Varma out of the jurisdiction be set aside.”