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Chen v Ng (British Virgin Islands) [2017] UKPC 27 - The importance of putting matters to witnesses

Ng Man-Sun (“Mr Ng”) and Chen Mei Huan (“Madam Chen”), who were living together, were the directors of Peckson, a BVI company. The appeal concerned the ownership shares in Peckson (“the Shares”).

What was this case about? 

These were registered in the name of Mr Ng.  On 4 October 2011 Mr Ng and Madam Chen executed various documents recording the transfer of the Shares to Madam Chen for US$40,000 and amending Peckson’s register of members to record Madam Chen as the owner of the Shares.  It was common ground that the US$40,000 never changed hands.

In 2012 Mr Ng brought proceedings seeking a declaration that the transfer was void and of no effect.  He asserted that he had transferred the Shares to Madam Chen on the express understanding that she would transfer them back to him six months later.  The reason given for this was so that Madam Chen could establish that she had significant assets in her name and thus make an application for permission to develop a new hotel and casino in Macau (a successful application being considered more likely if Mr Ng’s involvement was undisclosed).  Madam Chen denied this.  Her case is that she had been the beneficial owner of the Shares from the outset and that Mr Ng transferred the Shares to her pursuant to a pre-existing obligation.

What did the court decide?

The first instance judge rejected the pleaded cases on both sides.  He did not accept Mr Ng’s account for two stated reasons.  The first concerned evidence indicating that his involvement in the Macau application was evident in any event and second, that if it had really been intended that Madam Chen were to transfer the Shares back to him, he would have ensured that she gave him a blank transfer document which he could use to retransfer the Shares at the end of the six-month period.

Neither of these matters were put to Mr Ng in cross-examination (though his credibility was challenged in many other respects), nor were they referred to at the hearing.  The Privy Council decided this was dangerously unfair and so the findings against him could not stand and the matter would be remitted for a new trial.

What are the practical implications of this case?

In general, if grounds are to be relied on as reasons for disbelieving a witness they ought to be put to the witness.  In a perfect world this will always happen.  However, it is recognized that it will not always occur, particularly in a long and complex case and where (as here) the cross-examination time is rationed.  Nevertheless, a failure in this regard is not necessarily fatal and will not automatically allow a successful appeal.  Specific factors to be taken into account include:

  • The importance of the relevant issue both absolutely and in the context of the case.
  • The closeness of the grounds to the points which were put to the witness.
  • The reasonableness of the grounds not having been put, including the amount of time available for cross-examination and the amount of material to be put to the witness.
  • Whether the ground had been raised or touched on in speeches to the court, witness statements or other relevant places.
  • The plausibility of the notion that the witness might have satisfactorily answered the grounds.

Matthew Winn-Smith / 25th Sep 2017


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