In Takashi Hongo v Peak Legend Limited, the applicant succeeded in the increasingly commonplace but frustrating situation where the beneficiary of a revocable bare trust cannot obtain execution of the trust due to an uncooperative or defunct corporate nominee.
Mr Hongo was the beneficial owner of the sole share in BVI company Peak Legend Limited. The sole share had been held on a bare trust by a nominee entity, Deep Tach Consultancy Limited. The applicant wished to change his nominee and had directed Deep Tach to transfer the share accordingly. Despite repeated requests, Deep Tach failed to do so and, on further investigation, it became apparent that there was no longer any human agency behind the entity, which had been neglected by a now-defunct corporate services provider.
While the declaration of trust made plain that Hongo had been entitled to call for the transfer of the shares, the executed instrument of transfer stated to be attached to the declaration of trust could not be located. This prevented a claim for rectification post-Nilon v Royal Westminster Investments SS. Hongo had been advised to seek a vesting order pursuant to Section 52 of the Trustee Ordinance 1961 (Chapter 303) as a potential alternative to seeking rectification.
The court granted the vesting order sought and appointed an insolvency practitioner as the statutory proper person to execute the transfer of the share. The court further indicated that, had it not granted the vesting order, this would have been an appropriate case for appointing a receiver over the share, as argued by the applicant's alternative application.
This important judgment protects the critically important efficacy of effective nominee arrangements.
For further information on this topic please contact Sarah Thompson or Jonathan Addo at Harneys' Tortola office by telephone (+1 284 494 2233) or email ([email protected] or [email protected]). Alternatively, contact Ian Mann at Harneys' Hong Kong office by telephone (+852 5806 7800) or by email ([email protected]). The Harneys website can be accessed at www.harneys.com.
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