DONALD KOO HOI-YAN v. EMMANUEL CHU CHEE KAO AND OTHERS

HCMP3533/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.3533 of 1995

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J U D G M E N T

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Introduction

1. In this matter, three solicitors who had previously been in practice together as partners in the firm of Kao Lee and Yip ("KLY") unfortunately have had a serious falling out. This has produced four separate High Court Proceedings. What I suspect is the major action, in which judgment is still awaited, concerns a claim by the 1st and 2nd defendants in this matter who have alleged that the plaintiff having left the partnership has set up practice on his own account taking some of the former partnership's staff and best clients with him in breach of certain terms of the partnership deed. In deciding this matter, I am not concerned with any of the issues raised in that trial nor in its outcome but the background giving rise to it has no doubt set the tone for this matter and also a related action brought at the instigation of the 1st and 2nd defendants, to which I must make some further reference in due course, and which on advice has been discontinued.

2. The subject matter of this originating summons is a little unusual for a firm of solicitors in the sense that the parties and the two other partners in KLY decided to embark on a substantial property investment which made a handsome profit and which in turn was partly invested in what was then a much sought after and "exclusive" China Fund administered by the Bank of China. That Fund now, much in the way of these things, has in effect collapsed taking with it most of the parties' investment and this fact together with the falling out of the parties has resulted in all of the litigation between them including of course this originating summons. Fortunately the evidence, which although substantial on paper, has been most economically dealt with by counsel with the result that the trial has taken less time than its estimated length.

3. Although I must attend to the detail of the relief sought and the issues which I am required to resolve more fully presently, it would be helpful if I first stated in summary form what it is that the plaintiff wishes the court to order on his behalf arising from the two investments which I have just mentioned. He no longer seeks an account and inquiry which had been asked for in the originating summons. I gratefully adopt the summary of what is now sought from the typed note to Mr Whitehead's final speech who appears for him. Firstly, a Declaration that the 1st and 2nd defendants hold a 10% share in the net proceeds of sale in the property investment at Bank of America Tower (which I can identify more fully in a moment) or the balance thereof, and all other property which might have been purchased or acquired by the use of, or converted from such proceeds of sale upon trust for the benefit of the plaintiff (see the Re-Amended Originating Summons, paragraph 5). Secondly, an Order that the 1st and 2nd defendants do pay the plaintiff such sum (which is now agreed to be $868,530.79 as at 31 December 2001) together with accruing interest. Thirdly, a Declaration that the 3rd defendant holds 150,000 shares in Bank of China Fund Limited on trust for the benefit of the plaintiff. (See Re-Amended Originating Summons, paragraph 3A). And lastly, an Order that the1st and 2nd defendants procure the 3rd defendant to transfer, and that the 3rd defendant do transfer, subject to the approval of the Board of Directors of the Fund 15% (i.e. 150,000 shares in the Fund) to the plaintiff. (Re-Amended Originating Summons, paragraph 3).

4. In essence, the 1st and 2nd defendants' response is that the plaintiff has always been aware of the standing of the investments, his interest in them and the nature or form which those investments took; and that an account of the investments has always been available to him and that the 1st and 2nd defendants have always been and remain willing and able to pay out what is due to him. If that is right it must follow that this litigation and more particularly the expense that inevitably goes with it has been entirely unnecessary. That therefore is how the land lies, as it were, between the parties and I am now required to consider the evidence, largely concentrating on the means by which these two investments were made, in order to determine the intention of the parties at the time that the transactions were entered into, which in turn will have governed the legal relationship between the parties inter se.

Background

5. The plaintiff and the 1st and 2nd defendants are very experienced solicitors, particularly in commercial matters, having been in practice for many years now. The plaintiff started his career in 1980 as an assistant solicitor with the firm of C.Y. Kwan & Co. and remained with them until 1 April 1985 when he joined KLY as an assistant solicitor. The 1st and 2nd defendants were two of the founding partners of KLY. On 1 July 1985, the plaintiff was made an equity partner, but in October the following year, he left the partnership to join the Bank of China as one of its in-house counsel. Having spent a little over two years there he rejoined KLY as a partner on 1 January 1989 having signed the Deed of Partnership on 16 December 1988. Pursuant to his position as a partner of KLY, he was re-appointed as a director of KLY (Nominees) Limited, Truthful (Nominees) Limited and KEP Secretarial through which KLY would act as nominees on its own behalf as well as on behalf of its clients. As appears from the Deed of Partnership (see page 21, Plaintiff's Volume 1), the 1st and 2nd defendants as the founding partners of KLY held 35% each of the shares in the partnership. The remaining 30% was distributed equally among the other three partners being the plaintiff, Miss Pauline Li and Mrs Alexa Lam both of whom had joined following the plaintiff's initial departure in 1986 and who have since withdrawn from the partnership to pursue their careers elsewhere. The 1st and 2nd defendants, as founding partners, with 70% of the shares clearly held the dominant position within KLY, in addition to which they were more senior in the profession and older than the other three.

6. It is helpful to keep in mind a timetable of events before I attend to the nature of the two transactions that have caused this matter to come to court. I propose to set out these events, which are not in dispute, in as neutral a way as possible.

Chronology

7. Shortly after he rejoined the partnership in January 1989, the plaintiff was informed by Mr Yip, the 2nd defendant, (who was most closely involved in this) that the partners proposed to make a property investment because that presented a good opportunity to make a profit having regard to the fact that property was then on the rise. The plaintiff agreed to join in the purchase. Indeed, I am satisfied that he was grateful for the opportunity. Suffice it to observe that it is now accepted by the plaintiff that this purchase was not intended to be and did not become an asset of the partnership of KLY. A property was identified, being the entire 14th floor of the Bank of America Tower together with three parking spaces. The Bank was a good client of KLY and it became known to the 1st and 2nd defendants that the Bank was in the process of selling some of the floors of its building. Miss Pauline Li was deputed to deal with the negotiations and the details of the purchase.

8. On 9 January 1989, she wrote a letter to the Bank "subject to contract". The purchase price was agreed at $70,000,000 and "earnest money" of $1,000,000 was paid to the vendors. The partners decided to use a company, Dollarwell Limited ("Dollarwell"), to make the purchase. Dollarwell was owned by KLY (Nominees) Limited and Truthful (Nominees) Limited, to which I have already made reference, which were wholly owned by the 1st and 2nd defendants. The Sale and Purchase Agreement was signed on 13 January 1989 by Dollarwell and Bank of America for the agreed price of $70,000,000. On this occasion a further $6,000,000 was paid by Dollarwell to the vendors, this included $700,000 being the plaintiff's share of the deposit which had been lent to him, interest free, by KLY against his future share of profits in the practice. I should observe that although the plaintiff agreed to involve himself in this substantial purchase, he had no money of his own with which to contribute to his 10% share in it, consequently this amount of the deposit had to be provided to him in this way by means of a loan.

9. The balance of the purchase price of $63,000,000 was taken on mortgage from Daiwa Bank which was arranged on 16 March 1989 and executed on 18 April 1989. I need not recount at this stage the mechanics of these transactions. I will make reference to some of them, as may be required, to explain some of the more contentious aspects of the matter. There then followed a declaration of trust in writing dated 20 April 1989 to the effect that Dollarwell held the property on trust in favour of the partners of KLY in the proportion of their shares in the partnership, 10% being the plaintiff's share.

10. By August 1990 the hoped for increase in property values had been achieved, notwithstanding a short interruption caused by the events of 4 June 1989 at Tiananmen Square. A Japanese owned company called Greatluck Investments Limited ("Greatluck") agreed to purchase the property for $88,000,000 which sale was completed on 16 October 1990, thereby providing a handsome profit of $18,000,000.

11. On 23 October 1990 it was resolved that the investors in the property should be paid a total of $10,000,000 which was expressed to be by way of a loan from Dollarwell against the payment to them of future dividends from the company. The plaintiff's 10% share, being $1,000,000, was paid to him on the same day, for which he acknowledged receipt.

12. In July 1992 Miss Pauline Li left the partnership of KLY and on 11 December 1992 she was paid a further $1,500,000 by Dollarwell which was also expressed to be a loan to her from the company.

13. In August 1992 the 3rd defendant was incorporated by company formation agents and on 12 November 1992 it was acquired on behalf of the investors, the legal position being that the two shares in the company were wholly owned by KLY (Nominees) Limited and Truthful (Nominees) Limited. At this time, largely I think, through Mr Kao's, the 1st defendant's connections it became possible for the remaining partners in the practice to acquire one unit in the exclusive and much sought after Bank of China Fund. The purchase of such units was hard to come by and considered to be an excellent investment. Each unit, in round figures, was valued at US$1 million. On this occasion, Mrs Alexa Lam was assigned the task of dealing with the mechanics of this acquisition. On 18 November 1992, KLY's office account paid US$1.05 million ($8,127,600) for one unit on behalf of the 3rd defendant. This amount now represented most of the undistributed profit from the sale of the property at Bank of America Tower, with a remaining sum being held back as provision for taxation of Dollarwell, such matters being eventually settled with the Revenue by July 1993. The practice was then reimbursed this amount by three instalments being, $3,600,000 on 18 November 1992, $3,680,000 on 26 November 1992 and a final payment of $847,600 on 24 December 1992.

14. It is sufficient for present purposes to note that various statements of account had been prepared by Miss Yu Helena, KLY's accountant, which purported to show the financial standing of Dollarwell and of the respective investors.

15. Matters started to go wrong in about December 1992. The plaintiff gave notice of his intention to withdraw from the partnership on 30 December 1992. Other accounts were prepared, notably, one on 31 March 1993 showing the individual position of the plaintiff, the 1st and 2nd defendants and Mrs Alexa Lam. The plaintiff was given further statements in May 1993 to show the position as at 31 March 1993 and a further document was given to him in June 1993. On 7 October 1993 a statement of Dollarwell shareholders' loans was issued in respect of the partial distribution of the profit made on the sale of the Bank of America property to Greatluck in October 1990. A point has arisen in respect of these payments as to whether these were to be considered genuine loans which are in fact recoverable from the investors at the suit of Dollarwell or whether the payments have some other rather inchoate status which would perhaps not make them recoverable as such. I will need to return to this matter in due course.

16. On 30 September 1993 the plaintiff left the practice of KLY having worked out about two-thirds of his contractual period of notice and resigned his directorships of the practice's two nominee companies.

17. Litigation then started in earnest. Within 48 hours of the plaintiff's departure, KLY issued a writ against him regarding the circumstances of his departure from the practice. In November 1995, the plaintiff countered by bringing an action against the 1st and 2nd defendants for an account of profits in respect of KLY which was settled in February 1997. Two days later, on 24 November 1995, the plaintiff issued this originating summons. Four days after that, Dollarwell started an action instigated by Mr Kao and Mr Yip to recover the shareholders' loan of $1,000,000 from the defendant in relation to the distribution of the share of profits for the sale of the Bank of America Tower property. In this action, it was only the plaintiff who was sued by the company. The other recipients of the loans including Miss Pauline Li and Mrs Alexa Lam were not pursued. That was eventually discontinued by the company on legal advice on 24 November 2001 and Mr Kao and Mr Yip now accept that this action should not have been brought and have undertaken to pay the plaintiff's and Dollarwell's costs personally.

18. Finally, by way of narrative, the China Fund, having taken a considerable beating in the course of the past few years financial turmoil, proposes to wind down. This decision was taken on 3 September 2002, it previously, on 27 February 2002, having offered to pay its surplus cash to its shareholders. On 27 September the Fund offered the 3rd defendant (Fortune Honor) US$33,333 and RMB600,000 as shareholders' loans, a paltry amount when compared to the original investment and the fanfare and expectation that had attended it. These payments were accepted on behalf of the 3rd defendant in October 2002 and paid into its bank account with the Chekiang First Bank.

Comment

19. All of this has gone on after the issue of this originating summons during which time the 1st and 2nd defendants have, largely through Miss Helena Yu, their in-house accountant, "kept score" in the sense that on their case, at all events, proper accounts have been maintained for Dollarwell and the 3rd defendant so that the plaintiff and other investors have all been able to know the particular standing and amount of their investments going back to the starting position on 18 April 1989 when the purchase of the Bank of America property was completed.

20. A final account has now been prepared with a note of accruing interest, on the basis of prime rate, which Mr Whitehead is disposed to accept as a correct figure.

21. Sadly, I am now required to rule as to the basis of the way in which these investments were made and held, but not to the actual mathematical outcome which is now agreed. If I were to rule that it was on the basis of a trust, with the 1st and 2nd defendants as trustees and the plaintiff, Miss Pauline Li and Mrs Alexa Lam, as beneficiaries then presumably the plaintiff will have got the better of the legal argument and would feel able to ask for the costs of the summons; but if I were to find, as Mr Chang for the defendants submits, that there was never any question of a trust coming into effect either express, implied or constructive and that his clients have always been willing to pay out to the plaintiff what is properly due to him on his investments, Mr Chang will have succeeded and his clients will be in a position to say that they should get the costs of this chapter of the litigation. Viewed in this way, which is the reality of the situation, this all comes down to a matter of costs where these highly experienced commercial solicitors who no doubt, daily in the course of their professional life, are advising their clients of the implication of costs in litigation have been unable to resolve their differences even on this relatively small aspect of their numerous disputes which have come to the courts.

22. Against this factual background I now need to resolve what has become a rather arid issue upon which the costs of this litigation must be decided.

The purchase at Bank of America Tower

23. As to the steps which were taken to effect the purchase, in terms of the use of Dollarwell and the means by which the purchase was financed by a very substantial mortgage obtained from the Daiwa Bank which was guaranteed by the partners, I am satisfied that the plaintiff has substantially underplayed his knowledge and understanding of the detail of these matters. He has taken the approach in the witness box of saying that, whilst grateful for the opportunity to participate in the venture, he had left it all to the 1st and 2nd defendants who he trusted to go about the matter in the right way. It is quite clear from all the important documents that he has signed before and after the purchase that he must have known much more than he appears to be willing to admit to. It is inconceivable, in my judgment, that anybody who became involved in such a very substantial purchase involving a $63,000,000 mortgage liability would have been prepared to sit back and let the senior partners deal with the matter. I simply do not accept that evidence. Whilst the general scheme of things had been left to the senior partners, I am satisfied that the plaintiff and the two others were very much kept abreast with the development of the purchase and knew of all the material steps that that had to be taken. Nobody involved in a potential $63,000,000 liability would sit back and say that he was confident that the liability would have been met out of the rental of the premises and, failing a tenant, that the profits of the firm were such as to meet the liability until another tenant was found.

24. As to the effect of the purchase by means of Dollarwell, Mr Whitehead has understandably placed great reliance on what Mortimer JA said in his judgment on the hearing of the defendant's appeal from the refusal by Sears J to strike out the summons as disclosing no cause of action. Mortimer JA summarized the matter in this way :

"Mr Thomas QC (for the plaintiff) put the matter succinctly and correctly. He said this issue here is whether the plaintiff was investing in property through a company or whether he was investing in a company. That is a question of fact which cannot be resolved on affidavit. It is a particularly important question of fact in these proceedings. It this investment was through the trustees in a floor of the building, using the company for the purpose, then the accounts and inquiries will lead to a conclusion in his favour. If it is otherwise he finds himself with an investment in a shelf company in which he is not even a shareholder; he has no control over it; there is no method by which he can obtain any payment out of the company; and the most he has is a declaration of trust by shareholders that they hold some of the shares beneficially for him."

Of course it needs to be emphasized that all that the Court of Appeal was required to decide was whether Sears J had been correct to hold that it was simply not open to him, on the basis of the material then before the court, to hold that the originating summons had no prospect of success on its pleaded basis. Whilst Mr Whitehead reminds me that much of the material before the Court of Appeal on that occasion is identical to the evidence before me, he also rightly accepts that the issue before that court was far narrower than the investigation into the evidence that I am now bound to conduct and the substantive answers which I must give in the light of that investigation.

25. In order to demonstrate that a trust came into existence, whereby the 1st and 2nd defendants constituted themselves trustees for the plaintiff and of necessity for the other two junior partners, he has to show with reasonable certainty, firstly, an intension to create the trust, secondly, what the subject matter of the trust is, and lastly, who the beneficiaries of that trust are.

26. The 2nd defendant, Mr Yip, has given evidence that he had decided that the most efficient way in which to approach this purchase was through a company, in this instance Dollarwell. The last thing that he wished to happen was that anybody, including of course himself and the 1st defendant, should be burdened with the duties of trusteeship. As he saw it, the purchase could be made through a company in which the individual investors would have rights which would be protected by the operation of company law. It seems to me that it is important to consider the reality of the matter as it arose in early 1989 when everybody was getting along very nicely and no one could have predicted the bitter and large-scale litigation that was to follow a few years later. It is also important not to erect a trust by process of ex post facto reasoning where there is no justification for such a conclusion.

27. The process by which companies are used to purchase property is of course commonplace in Hong Kong. Mr Chang is careful to draw the distinction between a mere nominee company established to hold property in trust for the investors, when in such circumstances it is the investors themselves who acquire a beneficial interest in the property and where in such circumstances they can be said to be investing in property through the company as opposed from investing in the company. He has submitted that the real distinction is not whether the company can be said to have been used or intended to be used as "a corporate vehicle" for investment but whether its role is to be that of a "mere nominee" in the sense that I have just described. This, he submits, is to be sharply contrasted with a case where the legal and beneficial interest of the property is acquired by the company itself and that the investors' interest is in the equity of a company. Such an interest may be taken in the form of shares issued by the company and registered in the names of the investors or held in trust for them. That having been said, Mr Chang also submits that in order to establish any trust relationship between the first two defendants as trustees on the one hand and the plaintiff as one of the alleged beneficiaries on the other, it is simply not enough for the plaintiff to show that a corporate vehicle such as Dollarwell has been used to acquire property.

28. What has happened here, submits Mr Chang, is that Dollarwell was indeed the legal and beneficial owner of the property. Support is to be found in the fact that this property was never held or intended to be held by the company as a mere nominee for the partners. It is clear from the contemporaneous documents that the property was mortgaged to the Daiwa Bank by the company as legal and beneficial owner. The audited accounts which I have seen have always being prepared on the basis that the company was the legal and beneficial owner and when it came to sell the property to Greatluck it did so as the legal and beneficial owner. Were it otherwise and it merely held a property as nominee that property would not be an asset of the company and there would have been no profits or dividends to be declared. The property would have been off balance sheet.

29. It is also material to observe that it had been decided that the company itself was to hold the property as a long-term investment and it is accepted by the plaintiff that there had been discussion of the possibility of the 14th floor being used as the partnership's offices.

30. I am satisfied that the five investors were and continue to be the beneficial owners of the shares in Dollarwell in the proportion of what had been their respective shareholdings in KLY. That is amply made out by the fact that declarations of trust were executed in their favour. The evidence is that a copy of that declaration of trust was never actually shown to the plaintiff. That is not a requirement and it is clear from the authority of Maddleton v. Pollock (1876) 2 Ch. D. 104 that it is not even necessary that the beneficiary should be aware of the declaration of trust. The particular declarations in this case were executed on 20 April 1989 two days after the completion of the purchase of the property and four days after the authorized capital of the company had been increased to a substantial $9,000,000.

31. Complaint is made that the shares in the company are held by the practice's nominee companies which in turn are wholly owned by the 1st and 2nd defendants. Nevertheless, in my view Mr Chang is right in his submission that it does not matter that the declaration of trust had not been executed earlier, such as at the time when the purchase was completed, because it had never been the intention of the partners that these nominee companies should hold Dollarwell shares as beneficial owners. That is because the share capital, a substantial $9,000,000, was funded not by these nominee companies but by the investors themselves. In such circumstances, the law would have implied a trust by Dollarwell even before the written declaration of trust.

32. Accordingly, once that declaration of trust was executed spelling out the parties' interests as beneficial owners of the shares, there could not have been, in my judgment, any question of the first two defendants being constituted trustees for the plaintiff and the other two. What was put in place, once the declaration of trust was executed, was a familiar framework by which property is purchased in Hong Kong. As I have already indicated this had been intended as a long term investment through Dollarwell which was not a company created short term as a matter of convenience. The company prepared audited accounts and was able to satisfy the Revenue as to the authenticity of its position.

33. Mr Yip in the course of his evidence has drawn attention to the fact that under such a corporate structure, all the investors would be protected. With this in mind, Mr Chang has submitted that the plaintiff does have proper remedies as the beneficial owner of these shares. He has in the course of his final speech drawn attention to the fact that as beneficial owner of a 10% interest in the equity of the company, he has the right to call for a transfer of his shares and that pending registration he has the right to call upon the nominee to vote in accordance with his directions. By way of example he has drawn the attention to the case of Ho Tung v. Ho Tung, CACV 315/2002, 7 November 2002, unreported. If his direction is not acted upon, he can apply under the Trustee Ordinance for a new trustee to be appointed and he can take steps to prevent the person directing the nominee company from acting in breach of trust. Additionally, section 177 of the Companies Ordinance provides the circumstances in which a company can be wound-up and in addition there are the alternative remedies provided by section 168A which empowers a court to wind-up a company in circumstances where there has been unfair prejudice to shareholders. These are real remedies which could have been and remain available to the plaintiff in order to protect his interests in Dollarwell.

34. I have previously referred to the question of the distribution of part of the profit made on the sale of the property. In view of the fact that it was not considered advisable to declare a dividend for perfectly sound tax saving reasons, it was decided that part of the profits should be distributed by means of shareholder loans which could, in due course, be set off against any future dividends that the company might declare. During the course of the evidence, I felt some doubt as to whether these loans could be described as genuine loans in the accepted way of such matters. Now that I have heard all of the evidence and what has been submitted by both counsel on these transactions, I am satisfied that they are capable of being sued on by, for instance, a liquidator in a winding-up. But I am also satisfied that the intention was that they would never be called in. What has complicated the matter is that once the parties turned to litigation and the plaintiff had brought an action for an account of the partnership profits, Mr Kao and Mr Yip then retaliated by causing Dollarwell to sue the plaintiff in this matter in respect of that loan. Mr Yip explained it all very well when he said something to the effect that "he sues me I sue him!". It is now accepted by the two senior partners that this was not the right thing to do and the action has been discontinued with costs implications for both of them.

35. I am satisfied therefore that Mr Chang's analysis of the situation is the correct one. This whole notion of a trust has been a creature of this bitter dispute between the three main contestants where the plaintiff has sought to make a target of the 1st and 2nd defendants rather than seeking to enforce his undoubted rights through the companies court against Dollarwell if that was ever necessary.

36. This being my view, the remedies sought against the first two defendants in respect of the Dollarwell investment and through it the acquisition and eventual sale of the property and the distribution of profit following the sale, must stand dismissed. The figures which result from all of those transactions have now been agreed, although the route by which the plaintiff is entitled to his share has caused the matter to be tried, with the result that the plaintiff has failed to demonstrate the trust which he has contended for. I will leave it to the parties to decide how the plaintiff is to obtain what is due to him. As I understand it, where the amount is known and agreed, I apprehend there will be no difficulty as to its payment out to him subject, of course, to any orders for costs that may have to be made against him as a result of this judgment.

The purchase of the Bank of China, China Fund

37. The remainder of the undistributed profits from the sale of the property were invested in one unit (comprising one million shares) in the China Fund by means of a company used for that purpose, namely the 3rd defendant. Again, what is due to the plaintiff appears to have been settled between the parties in the sense that the figures have now been agreed. The payment of the agreed amount previously had not been accepted by the plaintiff because he required a declaration of trust in his favour as to the basis upon which this investment was made and the actual amount remained in dispute. There is a technical difficulty about this matter in the sense that Mr Emmanuel Kao, the 1st defendant, who I am bound to say I found to be by far and away the most impressive witness in the case, had expected that Mrs Lam who he had asked to establish the framework through which the unit was to be purchased had not, in fact, put in place the appropriate mechanism by the issue of sufficient shares in the 3rd defendant to deal with the matter appropriately. I am satisfied that the investment was not by means of a trust whereby his interest was to be held on trust by the 1st and 2nd defendants for his benefit. I have already recited the way in which this matter was dealt with when I previously dealt with the factual basis of the matter. The 3rd defendant acquired and paid for the unit in the fund by means of a temporary loan by KLY on behalf of the remaining investors. That loan was repaid to KLY by the investors funded out of the profits made from the sale of the property which were held by Dollarwell which made long term loans to the shareholders it not having declared any dividends. These loans were not to be capitalized by the 3rd defendant with the result that the investors became creditors of the company as well as beneficial owners of the shares in the company. The present difficulty is that only two shares have been issued. Mrs Lam who established the company had been asked by the 1st defendant to issue sufficient shares to reflect the beneficial entitlement of all the investors. It matters not that this has not been done because there is no issue taken by the first two defendants, who are in a position to direct the affairs of the 3rd defendant, that the plaintiff must be paid out in a way that reflects his proper entitlement. As I have already observed these figures now appear to be agreed.

38. As to the material issue, I am left in no doubt that the whole basis of the investment in the fund was to be through the 3rd defendant and that appropriate shareholdings should have been created to reflect the individual entitlement of each of the four investors. There is nothing here which is in any way suggestive of the 1st and 2nd defendants being the plaintiff's trustees.

39. In respect of this matter therefore the plaintiff must also fail and accordingly the part of the relief sought in respect of this transaction must also be dismissed. For the sake of completeness, I shall say that consequent upon this judgment the Originating Summons must stand dismissed in its entirety with, I would have thought, the inevitable consequence that the plaintiff must pay all of the defendants' costs. This order for costs will be an order nisi in the usual way.