ZHANG LAN v LA DOLCE VITA FINE DINING GROUP HOLDINGS LIMITED

Facts

Under a share sale agreement dated 10 August 2013, La Dolce Vita Fine Dining Company Limited and its parent La Dolce Vita Fine Dining Group Holdings Limited (the LDV Entities) bought 86.2% of the holding company of the South Beauty restaurant chain founded by Mdm Zhang Lan. They paid US$286,850,887, mostly into her Hong Kong account. In 2014 Mdm Zhang incorporated Success Elegant Trading Limited (SETL) in the British Virgin Islands, opened accounts in its name with Credit Suisse and Deutsche Bank in Singapore, and moved large sums into them. On 3 and 4 June 2014 a family trust for her son was declared and her sole share in SETL was transferred to the trustee, Asiatrust.

The LDV Entities later won arbitral awards against Mdm Zhang for negligent misrepresentation, had them recognised in Hong Kong and registered the Hong Kong judgments in Singapore. In HC/SUM 2703/2021 and HC/SUM 2704/2021 they sought receivers over SETL's bank accounts by way of equitable execution. The High Court judge found that Mdm Zhang beneficially owned the moneys and appointed receivers. Mdm Zhang and SETL each appealed, in AD/CA 4/2023 to AD/CA 7/2023.

Issues

1. Whether the appellants needed permission to appeal against the order appointing receivers
2. Whether the judge erred in finding that Mdm Zhang remained the beneficial owner of the moneys in SETL's accounts after 4 June 2014

Holding

The Appellate Division dismissed all four appeals and affirmed the appointment of receivers over SETL's bank accounts. The LDV Entities were awarded costs of $35,000 inclusive of disbursements, payable jointly and severally by Mdm Zhang and SETL.

Reasoning

On permission, the court held that the proper basis for appointing receivers by way of equitable execution was O 51 r 1(1) of the Rules of Court 2014, not the preservatory power in s 4(10) of the Civil Law Act. The orders rested on a final determination of rights over the assets and left nothing more to decide, so they were not interlocutory and the appeals lay as of right.

On beneficial ownership, the question was Mdm Zhang's intention when the trust documents were executed on 4 June 2014, with later conduct admissible. The trust documents did not expressly deal with the bank account moneys, and whether a trust over a company's share extends to its assets depends on the facts. The court found this was not an ordinary case. As settlor she had almost no role under the trust, yet from June 2014 to February 2015 she alone directed transfers of around US$32.3m from the Credit Suisse account, including some to herself that she could not explain, with no sign of the trustee's direction. On 3 and 4 March 2015, just after receiving notice of the Hong Kong freezing orders, she ordered urgent transfers out of the Deutsche Bank account, which pointed to her treating the money as her own. SETL had done nothing for around seven years to challenge the Singapore freezing orders, which suggested it did not see itself as the owner.

Her solicitors' letter of 6 March 2015 stating that she "maintains" the Deutsche Bank account supported the inference. The Hong Kong contempt decision had little weight because it applied the criminal standard of proof. The bank forms were equivocal or consistent with her ownership, and the tax forms naming SETL as beneficial owner of the income were outweighed by her later conduct.

From the judgment