STONEHILL ASIA LTD AND OTHERS v. FARWEALTH CONSULTANCY AND SERVICES LTD AND OTHERS

    HCA4453/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4453 OF 2003

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REASONS FOR JUDGMENT

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1. The main protagonists in these proceedings are the 2^nd plaintiff (“Kong”) and the 5^th defendant (“Chainid”).  Chainid is the elder brother of Kong.  They both come from a large Thai Chinese family living in Thailand.

2. The 1^st plaintiff (“Stonehill”) is a company incorporated in the BVI on 6 September 2000.  There was one share issued certificate number 1 (“the Stonehill share”) which was registered in the name of Chainid on 6 September 2000.

3. On 10 November 2000 the said share was transferred to Kong and since then Kong was and is the registered shareholder of the Stonehill share.

4. The 3^rd plaintiff (“Lowes”) is a company incorporated in the BVI.

5. The 1^st defendant (“Farwealth”) is a company incorporated in the BVI.  Farwealth provides company formation services for offshore companies.  Farwealth was appointed the secretary of Stonehill on 6 September 2000.

6. The 2^nd defendant (“Gold Fortune”) is a company incorporated in the Bahamas.  On 6 September 2000 Gold Fortune was appointed as the first director of Stonehill.

7. The 3^rd defendant (“Audita”) is a company incorporated in Hong Kong and provides corporate secretarial services.

8. The 4^th defendant (“Chu”) was at all material times the person operating the corporate secretarial services of Farwealth, Armando and Gold Fortune.

9. Chainid is and at all material times was the CEO and managing director of Property Perfect Company Ltd (“Property Perfect”) a publicly listed company in Thailand which specializes in property development.

10. The underlying dispute between Kong and Chainid is over the ownership of the Stonehill share.

11. Kong’s case is that he purchased the Stonehill share from Chainid.  This is strenuously denied.  Chainid’s case is that from 10 November 2000 onwards Kong held the Stonehill share on trust for and on behalf of Krungthep Land Co. Ltd (“Krungthep”) a company incorporated in Thailand and a wholly-owned subsidiary of Property Perfect, and from 19 December 2003 on trust for and on behalf of Chainid.

12. By a purported resolution in writing dated 8 January 2003 Kong as the sole shareholder of Stonehill purported to remove Gold Fortune as director of Stonehill and purported to appoint Lowes as the sole director in place of Gold Fortune.

13. By a purported resolution dated 9 January 2003 of Lowes the corporate and secretarial services rendered by Farwealth to Stonehill were purportedly terminated.

14. Despite demands, Farwealth, Gold Fortune and Chu refused to comply with the instructions of Kong and/or Lowes to cease to act for and on behalf of Stonehill and refused to release all documents held by them to Kong and/or Lowes.

15. By the writ issued in these proceedings on 4 December 2003 Stonehill, Kong and Lowes sought the declaratory and injunctive relief claimed with damages, interest and costs against Farwealth, Gold Fortune, Audita and Chu.

16. By a summons dated 4 April 2007 Stonehill and Kong applied for an order that Farwealth do release the company kit of Stonehill as defined in the summons to Kong.  On 14 August 2007 Saunders J ordered that the said summons be dismissed.  He also ordered that there be an injunction until trial or further order to restrain any party from dealing with the company kit of Stonehill as defined in paragraph 1 of the said summons save for the purposes of Farwealth maintaining Stonehill’s registration and carrying out related duties under BVI law.

17. By a consent order made by Saunders J on 17 August 2007 Chainid was added as the 5^th defendant in the action.

18. Chainid filed his defence and counterclaim against the plaintiffs on 17 December 2007.  By his counterclaim Chainid claimed the relief as set out therein.

19. On 29 January 2010 at the adjourned pre-trial review the plaintiffs were not represented and they did not appear although they had been represented and had appeared by counsel and solicitors prior thereto.

20. By my order made on 29 January 2010 the plaintiffs’ claims were provisionally struck out pursuant to the provisions of O. 25; r. 1C of the RHC.

21. What remained to be tried was the counterclaim of Farwealth against Kong (“Farwealth’s counterclaim”) and Chainid’s counterclaim against the plaintiffs (“Chainid’s counterclaim”).

22. Kong was not represented at the trial of the counterclaims nor did he appear.

23. After hearing evidence and submissions at the trial of the counterclaims, I gave judgment on 15 March 2010 and indicated that written reasons would be given later.

24. Farwealth’s counterclaim was dismissed with costs to Kong.

25. On Chainid’s counterclaim I gave judgment in favour of Chainid against the plaintiffs for the following relief:

(1) A declaration that Kong holds the Stonehill share on trust for and on behalf of Chainid and is liable to account as trustee and account for all profits and make good all loss and damage;

(2)  A declaration that Kong acted in breach of trust and fiduciary duties (including duties and obligations as an agent) owed to Chainid;

(3)    An order that Kong do transfer the Stonehill share to Chainid or as Chainid may direct;

(4)    A declaration that Lowes was never validly appointed as the director of Stonehill and that any acts purportedly done by Lowes in that capacity were invalid and devoid of legal effect;

(5)    An order that Kong do pay damages and equitable compensation and interest to be assessed by a master;

(6)    An injunction that Kong and Lowes, whether by themselves, their agents or servants or otherwise, be restrained from parting with, selling, charging or in any other way disposing of any assets or properties held by or registered in the name of Stonehill and/or held by Stonehill as the custodian of the said assets or properties;

(7)    An injunction that Kong, whether by himself, his agents or servants or otherwise, be restrained from parting with, selling, charging or in any other way disposing of the Stonehill share;

(8) An injunction that Kong and Lowes, whether by themselves, their agents or servants or otherwise, be restrained from using the name and/or corporate status of Stonehill in any way whatsoever;

(9) An order that the injunction granted by Saunders J on 14 August 2007 be discharged and that the company kit (as defined in paragraph 1 of the plaintiffs’ summons dated 3 April 2007) of Stonehill be disposed of as Chainid may direct.

26. These are my reasons in writing.

The issues   

27. Mr Lee with Mr Kwok, for Chainid, helpfully identified the issues to be tried on the counterclaim as follows:

(1) Whether Chainid established and controls: (i)  Property Perfect; (ii)  Krungthep; and (iii) Verdad Ltd (“Verdad”).

(2) Whether, on certain dates in September-November 2000, Chainid caused Verdad to purchase certain Floating Rate Notes and Euro Convertible Debentures issued by Property Perfect (the “relevant bonds”).

(3) Whether, on or about 6 September 2000, Stonehill was incorporated upon the instructions of Chainid via his Thai lawyers to Farwealth, Audita and Chu.

(4) Whether, upon incorporation, the Stonehill share was: (i) allotted to Chainid; and (ii) held by Chainid as nominee and/or agent and/or on trust for Krungthep as the beneficial owner thereof.

(5) Whether, on or about 8 November 2000, Vitavas Vibhagool (“Vitavas”) and his business partners agreed to purchase the relevant bonds (the “Vitavas investment”).

(6) Whether, on or about 9 November 2000, in pursuance of the Vitavas Investment:

(i)  Chainid caused the appointment of Chan Lai Hung (“Chan”) as attorney-in-fact of Stonehill;

(ii) Chan on behalf of Stonehill on the one hand, and Vitavas on the other hand, executed certain contractual agreements pursuant to which: (a) Vitavas purchased the beneficial interest in the relevant bonds; and (b) Stonehill would hold the relevant bonds as custodian and/or trust for Vitavas;

(iii)    Chainid caused Verdad to transfer the relevant bonds from Verdad to Stonehill.

(7) Whether, on or about 10 November 2000, in further pursuance of the Vitavas Investment, Chainid caused the transfer of Chainid’s legal title in the Stonehill share from himself to Kong.

(8) Whether Kong paid consideration of US$1, or any consideration, to Chainid in respect of the transfer of the Stonehill share.

(9) Whether, in all the foregoing premises, Kong held the Stonehill share as nominee and/or agent and/or as trustee for the beneficial owner thereof, namely Krungthep from 10 November 2000 to 19 December 2003 and Chainid from 19 December 2003 to date.

(10)   Whether the purported appointment, on or about 8 January 2003, by Kong of Lowes as director of Stonehill in place of Gold Fortune was valid.

(11)   Whether Farwealth, Audita and Chu were entitled to disregard the purported instructions of Kong in relation to Stonehill and the Stonehill share pending the outcome of the proceedings herein.

(12)   Whether, in purporting to give instructions in relation to Stonehill and the Stonehill share, Kong acted in breach of trust and/or fiduciary duties (including duties and/or obligations as an agent) owed to Chainid.

(13)   Whether, on or about 19 December 2003, the beneficial interest in the Stonehill share was transferred from Krungthep to Chainid.

(14)    Whether, and if so what, loss and damage has been suffered by Farwealth or Chainid as a result of the instructions purportedly given by Kong in relation to Stonehill.

The witnesses

28. I heard evidence from Chainid, Chu, Vidhya Nativivat (“Vidhya”) a Thai lawyer from the firm Bunchong and Vidhya Law Office Ltd (“BVLO”) in Bangkok, Thailand, Somsri Kiattirarat (“Somsri”) a partner in BVLO, Santirak Boonyalert (“Santirak”) a younger brother of Chainid, Boonthiwa Ngowsirimanee (“Boonthiwa”) a sister-in-law of Chainid and Vitavas a real estate developer and investor in, inter alia, Thailand.

29. There were also a large number of documents adduced in evidence.

30. I find that all the witnesses gave honest, truthful and reliable evidence.  I have no hesitation in accepting their evidence.  I believe them.

Property Perfect and Krungthep

31. As I have said, Chainid is the CEO and the managing director of Property Perfect which is a publicly listed company in Thailand.  Chainid is one sibling among a large Thai Chinese family in Thailand. Kong is his younger sibling.

32. Chainid’s case is that he established, owns and controls Property Perfect and its wholly owned subsidiary Krungthep and the businesses conducted through those entities.  Kong on the other hand contends that Property Perfect is owned by the family as a whole including their mother and all siblings.

33. I accept the evidence called on behalf of Chainid.

34. The documentary evidence shows that Krungthep is 99.95% owned by Property Perfect.  At the time of the IPO of Property Perfect Chainid was the largest shareholder of Property Perfect holding 25.67% of the shares as shown in exhibits D94 and D94A.

35. Boonthiwa is the widow of the eldest brother of Chainid.  She wrote the book “The Two Lands” which describes the family history in great detail.  Although the book was only published in 2005, the Thai version was prepared as funeral notes shortly after the death of Chainid’s father in 2001.  This was well before hostilities broke out between Kong and Chainid.  It is clear from extracts of her book that it was Chainid and not the father who was a self made successful businessman and the one who established and controlled Property Perfect.

36. A number of Thai press articles and profiles regarding Property Perfect which have been adduced in evidence make it clear that it was Chainid rather than the father or the family that established Property Perfect.

37. In the judgment of the Civil Court of South Bangkok dated 1 August 2005 in proceedings brought by some of the family members including Kong against Chainid it was held that Property Perfect was not the family’s business (exhibits D121 and D121A).

38. I find that Property Perfect was established and is in substance owned and controlled by Chainid and not by the father or the family.  Krungthep was also established and controlled by Chainid.  I so find.

Verdad

39. Verdad Enterprises Ltd (“Verdad”) is a BVI company established in December 1998 on the instructions of Chainid.  Somsri gave evidence which I accept that in December 1998 she wrote to Chu and asked her to set up Verdad with a bearer share.  She said that the instructions to do so came from Chainid.  Subsequently she also gave instructions to Chu regarding a change in the ownership of Verdad from Thongchai Bhongmakapat, another sibling of Chainid, to Santirak in October 2000 and a change in the bearer share to a named shareholder pursuant to Chainid’s instructions.  Somsri confirmed that her instructions to Chu in relation to Verdad came from Chainid who arranged for the settlement of all the expenses in relation to Verdad.  Santirak also gave evidence that he held the share in Verdad as nominee for Chainid.  I accept their evidence.

40. I am satisfied and find that Verdad was established and is owned and controlled by Chainid.

41. Issue (1) is resolved in favour of Chainid.

42. In 1996 to 1997 Property Perfect issued commercial paper namely Floating Rate Notes (“FRNs”) and Euro Convertible Debentures (“ECDs”).  In 2000 as a result of the Asian financial crisis Property Perfect was in financial trouble.  Property Perfect proposed to enter into “rehabilitation” under a newly amended law in Thailand similar to Chapter 11 protection under United States Law.  As Chainid said, the newly amended law would benefit Property Perfect if put under the rehabilitation regime which allowed for a moratorium of repayment of debts and for suspension of all legal actions having been made and to be made against Property Perfect until dismissal or cancellation or termination of the rehabilitation process by the Thai Bankruptcy Court.

43. Chainid said that in respect of the FRNs and the ECDs the holders of such instruments were creditors of Property Perfect and as Property Perfect was unable to repay the debts to the holders of the instruments he considered a number of alternatives to salvage Property Perfect.  He came up with the idea that Krungthep as a separate entity should be used to help Property Perfect by seeking funds to allow Krungthep to acquire the FRNs and ECDs for participating as creditors in the process of rehabilitation.  Krungthep could also play a role as one of the creditors in the restructuring of the debts of Property Perfect in a satisfactory manner.  With the intention of having Property Perfect enter the rehabilitation regime he consulted BVLO for the acquisition of the FRNs and ECDs by Krungthep. 

44. It is clear on the evidence of Chainid, Vidhya and Somsri, which I accept, that around September 2000 with a view to having Property Perfect enter the rehabilitation regime, Chainid wanted to have Krungthep acquire FRNs and ECDs so as to allow Krungthep as a creditor to support the petition of Property Perfect for rehabilitation.  Vidhya said that since the FRNs and ECDs were only to be issued or sold to overseas investors, it was decided to acquire a BVI company through Chu who had served BVLO previously in the acquisition of off shore companies and providing corporate secretarial services.

45. Chainid was aware that BVLO had on previous occasions used the services of Farwealth for setting up off shore companies and that they had a good professional relationship with Chu.  He instructed BVLO to use the services of Farwealth in setting up the BVI company.

46. Somsri was the person who contacted Chu for the purposes of acquiring the BVI company.  Stonehill was the company selected from a list.  Chu was instructed to issue one share to Chainid.  Chu arranged for Gold Fortune to become the sole director of Stonehill.

47. Somsri also assisted Chu in preparing a nominee agreement between Chainid and Farwealth (exhibit D54) and a letter of indemnity signed by Chainid to Gold Fortune (exhibit D80).

48. As shown in the minutes of a board meeting of Krungthep held on 6 September 2000 (exhibit D8) it was resolved that Krungthep do authorize Chainid to become the shareholder of Stonehill and also authorized Chainid to appoint any person deemed appropriate by him to become the agent of the company in holding shares including assets in companies.  Chainid also mentioned in the meeting that he may hold the shares in his name or appoint Kong to be the shareholder on behalf of Krungthep.

49. By a fax dated 29 September 2000 from Somsri to Chu the prior selection of Stonehill as the BVI company was confirmed.  Instructions were given to Chu to have the share certificate in the name of Chainid and that accounts with HSBC should be opened in the name of Stonehill with Chainid as the signatory.  These instructions were carried out.

50. The Stonehill share was registered in the name of Chainid as shown in Stonehill’s register of members.  On the evidence, which I accept, that share was held by Chainid as nominee for Krungthep.  I so find.

51. On 19 October 2000 Property Perfect petitioned the Thai Bankruptcy Court to be put under the rehabilitation regime (“the first petition”).

52. Around the end of October 2000 Chainid was approached by Vitavas in relation to Vitavas and his overseas partners wishing to invest in the FRNs and ECDs issued by Property Perfect.  As a result of their discussions as set out in the evidence of Chainid and Vitavas, which I accept, around 6 November 2000 Chainid and Vitavas, representing himself and his overseas partners, agreed to the acquisitions of the FRNs and ECDs.  Chainid told Vitavas that Stonehill would purchase the FRNs and ECDs from Verdad and thereafter transfer the same to Vitavas.  As there were restrictions under the terms of the financial instruments Vitavas’ name could not be entered as the instruments had to be held by an overseas entity.  He also told Vitavas that Stonehill already had the accounts opened with HSBC and after transfer of the FRNs and ECDs from Stonehill to Vitavas, Vitavas could further use Stonehill to hold the FRNs and ECDs on behalf of himself and his overseas partners.

53. Chainid said that during his negotiations with Vitavas prior to 8 November 2000 he also told him that although he was registered as the shareholder of Stonehill he proposed to use his brother Kong to act as Krungthep’s nominee so as to disassociate himself from acting as a shareholder of Stonehill, which was a creditor, as he was then the CEO and managing director of Property Perfect, the debtor.  Vitavas and his overseas partners agreed.  Chainid reassured Vitavas that he trusted Kong.

54. At a meeting on 8 November 2000 at the offices of Property Perfect in Bangkok Chainid met Vitavas to finalise the agreement.  Also attending was Thongchai Kunakornporramat, a director of Krungthep.  During the meeting Kong was asked by Chainid to join the meeting where he confirmed to Kong his limited role in relation to the transfer of the share in Stonehill to him.  It was made clear to Kong in front of Vitavas and Thongchai Kunakornporramat during the meeting that Kong would only act in accordance with Chainid’s instructions.  Kong agreed to the arrangement.   Vitavas confirmed the evidence given by Chainid.  I accept their evidence.

55. Chainid also signed a letter dated 8 November 2000 (exhibit D8) confirming that he had been acting as the first shareholder of Stonehill on behalf of Krungthep and that he had authorized and appointed Kong to be the shareholder of Stonehill also for and on behalf of Krungthep.

56. I also find, as is clear on the evidence, that from September 2000 the relevant bonds being ECDs in the amount of US$7,810,000 and FRNs in the amount of US$5,500,000 were acquired by Verdad.  The relevant bonds were subsequently transferred from Verdad to Stonehill on 9 November 2000 after Chainid had reached an agreement with Vitavas and his overseas partners.  Stonehill’s only asset was the relevant bonds.

57. I accept that Chainid’s purpose of acquiring the relevant bonds was in furtherance of the plan to amass sufficient support among creditors to support the petition for the rehabilitation of Property Perfect.  However, the first petition of Property Perfect was unsuccessful as it was dismissed on 8 December 2000 (exhibits D105 and 105A).

58. As to issue (2), I find that on certain dates in September to November 2000 Chainid caused Verdad to purchase the relevant bonds.

59. As regards issues (3) and (4), I also find that on or about 6 September 2000 Stonehill was incorporated upon the instructions of Chainid via his Thai lawyers BVLO to Chu.  The sole share in Stonehill was allotted to Chainid.  I am satisfied on the evidence, which I accept, that it was held by Chainid as nominee and on trust for Krungthep as the beneficial owner.

60. I am also satisfied that as a result of Chainid’s agreement with Vitavas and his overseas partners the relevant bonds were acquired by Verdad and then transferred to Stonehill.  The documents giving effect to the Vitavas investment were a trust deed (exhibit D123), a custodian agreement (exhibit D124) and an assignment (exhibit D125) which were executed on 8 November 2000 at the meeting with Chainid.

61. A power of attorney (exhibit D23) was also executed appointing Chan, a business associate of Chainid in Hong Kong, as the attorney to execute the commercial agreements between Stonehill and Vitavas.

62. Chainid executed an undated instrument of transfer on 8 November 2000 at or shortly after the meeting with Vitavas.  It was undated when he signed it.  It was only after Chu had sent to Somsri Stonehill’s HSBC portfolio statements on 10 November 2000 evidencing receipt of the relevant bonds into Stonehill’s account with HSBC that Somsri instructed Chu to insert the date into the instrument of transfer and other Stonehill corporate documents.  It was in those circumstances that the instrument of transfer (exhibit D24) was executed and dated.

63. On the evening of 8 November 2000 Somsri and Kong with another employee of BVLO flew to Hong Kong from Bangkok to complete the Vitavas investment on the instructions of Chainid.

64. It is clear and I so find that the instrument of transfer (exhibit D24) was dated 10 November 2000 on that day.  This was done after HSBC confirmed that the relevant bonds had been transferred to Stonehill’s account and after receipt of the bank statement by Somsri on the same day.

65. I find that these steps were taken in accordance with Chainid’s instructions that the change in the legal ownership of the Stonehill share should only take place after the Vitavas investment had been completed.  It is also clear, and I so find, that Kong complied with the instructions of Chainid and flew to Hong Kong with Somsri in accordance with the instructions of Chainid.  Kong’s name was entered on the register of members of Stonehill on 10 November 2000.

66. Exhibit D24 states the consideration for the transfer is US$1 paid to Chainid.  It also states that the transfer of the share was for Kong to hold the same subject to the conditions under which Chainid held the same at the time of execution.

67. Kong’s case is that he purchased the share from Chainid.  In his reply and defence to counterclaim Kong also contends that the consideration of US$1 was waived by Chainid.  Chainid confirmed that the consideration was never paid.  His case is that it was not waived.  I accept his evidence and believe him.

68. A beneficial interest in a share would not necessarily pass upon the execution of an instrument of transfer and/or bought and sold notes.  (Liang Jun Xian v Tsui Hin Chi, CACV 88 of 2008, Court of Appeal, 26 September 2008).  It depends on all the circumstances of the case to determine where the beneficial ownership lies.

69. The beneficial interest in a share generally passes upon execution of the instrument of transfer and payment when the contract becomes specifically enforceable (Hawks v McArthur and other [1951] 1 All ER 22).  Here, on the evidence of Chainid, which I accept, there was never any payment nor any waiver of payment.

70. Prior to the transfer to Kong it is clear that Chainid held the Stonehill share as nominee and on trust for Krungthep.  Kong took the transfer of the share by exhibit D24 subject to the same condition.

71. It seems to me, and I so find, that by the instrument of transfer (exhibit D24) the legal title in the Stonehill share passed from Chainid to Kong.  However, the beneficial interest in the Stonehill share was vested in Krungthep and the beneficial interest did not pass to Kong when the instrument of transfer was executed.

72. It was only in December 2002 that Kong first started to make demands on Chu for the corporate kit of Stonehill.  Prior thereto there was no complaint or action by Kong for more than two years after the Vitavas investment was completed in 2000.

73. I am satisfied and find that Kong was merely a nominee shareholder in Stonehill.

74. As to issue (5), I find that on 8 November 2000 Vitavas and his business partners agreed to purchase the relevant bonds.

75. As to issue (6), I also find that on 9 November 2000 in pursuance of the Vitavas investment:

(1)  Chainid caused the appointment of Chan as attorney-in-fact of Stonehill;

(2)  Chan on behalf of Stonehill on the one hand and Vitavas on the other hand executed the contractual documents pursuant to which:

(a) Vitavas purchased the beneficial interest in the relevant bonds; and

(b)    Stonehill would hold the relevant bonds as custodian and/or trustee for Vitavas;

(3)  Chainid caused Verdad to transfer the relevant    bonds from Verdad to Stonehill.

76. I also find as regards issue (7) that on 10 November 2000 in further pursuance of the Vitavas investment, Chainid caused the transfer of Chainid’s legal title in the Stonehill share from himself to Kong.

77. As to issue (8), I find that Kong did not pay any consideration to Chainid in respect of the transfer of the Stonehill share.

78. On the evidence, which I accept, on 19 December 2003 Krungthep passed a resolution (exhibits D120 and 120A) transferring the ownership in the Stonehill share to Chainid. 

79. As to issue (9), I find that Kong held the Stonehill share as nominee and/or trustee for the beneficial owner thereof namely, Krungthep from 10 November 2000 to 19 December 2003 and then Chainid from 19 December 2003 onwards.  Kong is still registered as the shareholder of the Stonehill share.

80. Vitavas on sold his and his partners’ interests in the relevant bonds on 19 September 2002 to Gold Decade Finance Ltd.  On 23 May 2003 Glorybuy Associates Ltd purchased the claims from Gold Decade Finance Ltd.

81. Chainid contends that Kong has acted in breach of fiduciary duties as pleaded in the counterclaim at paragraphs 25 to 32 of the counterclaim.

82. On 8 January 2003 Kong purported to execute a resolution of Stonehill to remove Gold Fortune as the sole director and to appoint Lowes as the new director of Stonehill.

83. On 23 January 2003 Kong caused Lowes to demand that Chu, Farwealth, Gold Fortune and Armando do release all the statutory records and the company kit of Stonehill.

84. On Vidhya’s evidence, which I accept, on 28 August 2003 Kong through Lowes claimed to be the transferee of the relevant bonds from Stonehill.  However, the Plan Administrator rejected the claims of Lowes but approved the claims of Glorybuy.  This led to proceedings in Thailand brought by Lowes contrary to the interests of Chainid as set out in the evidence of Chainid and Vidhya which I accept.

85. I am satisfied that Kong has acted without the knowledge and consent of Chainid and in breach of his fiduciary duties as trustee for Chainid.

86. I am also satisfied that as a result thereof Chainid has suffered loss and damage to be assessed.

87. As to issue (10), I find that the purported appointment on 8 January 2003 by Kong of Lowes as director in place of Gold Fortune was invalid.

88. As to issue (11), I find that Farwealth, Audita and Chu were entitled to disregard the purported instructions of Kong in relation to Stonehill and the Stonehill share pending this outcome of these proceedings.

89. As to issue (12), I find that in purporting to give instructions in relation to Stonehill and the Stonehill share Kong acted in breach of trust and in breach of his fiduciary duties to Chainid.

90. As to issue (13), I find that on 19 December 2003 the beneficial interest in the Stonehill share was transferred from Krungthep to Chainid.

91. I am satisfied that Chainid is entitled to the relief sought in Chainid’s counterclaim.

92. As to Farwealth’s counterclaim, Mr Lee accepted that this should be dismissed.  It was clear from the evidence of Chu and Chainid, which I accept, that Chu and Farwealth have been reimbursed by Chainid for their legal costs and expenses.  There is no loss and damage to Farwealth as a result of the actions of Kong.

93. For the above reasons I gave judgment to Chainid on Chainid’s counterclaim and made the order as set out above at paragraph 25.  I also dismissed Farwealth’s counterclaim with costs to Kong.