In the recent case of Takashi Hongo v Peak Legend Limited and Others, Harneys acted for the successful Applicant in the increasingly commonplace but frustrating situation where the beneficiary of a revocable bare trust is unable to obtain execution of the trust due to an uncooperative or defunct corporate nominee.
Harneys acted for Mr Hongo, the beneficial owner of the sole share in a BVI company: Peak Legend Limited (Peak Legend). The sole share was held on a bare trust by a nominee entity, Deep Tach Consultancy Limited (Deep Tach). The Applicant wished to change his nominee and directed Deep Tach to transfer the share accordingly. Despite repeated requests, Deep Tach failed to do so and upon 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.
Whilst the Declaration of Trust made plain that Mr Hongo was 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 and Others. Harneys advised that Mr Hongo seek a vesting order pursuant to section 52 of the Trustee Ordinance 1961 (Cap 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 also 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 bona fide nominee arrangements.