Chen & Anor v Chui & Ors

A commercial agreement must be construed as a whole. A clause referring to later registration does not necessarily postpone beneficial ownership where the wider agreement indicates immediate joint ownership. Relevant factors may include equal funding, profit-sharing, shared risk and joint decision-making. Findings of fact based on oral evidence are rarely disturbed on appeal without a proper basis for intervention. Fresh evidence must satisfy the three tests identified in Ladd v Marshall [1954] 1 WLR 1489; evidence that could have been obtained earlier, or would probably not have affected the result, does not qualify.

The claimants and defendants developed a business venture which became Herbmagic (UK) Limited. After relations broke down, the claimants sought specific performance of a cooperation agreement, transfer of shares and rectification of the company register. The High Court found that the parties had agreed to equal ownership and rejected allegations that the claimants had repudiated the agreement.

The defendants sought permission to appeal on contractual construction and factual findings. They also sought to adduce further witness evidence concerning missing company funds. The central issues were whether the agreement conferred immediate equal ownership, whether the factual findings should be disturbed, and whether the proposed new evidence was admissible.

1. Permission and new evidence. The application for permission to appeal and for admission of further evidence was refused.

2. Construction of the agreement. Read as a whole, the cooperation agreement clearly supported equal joint ownership. Clause 1 concerned registration in the partners’ names, rather than postponing ownership until the claimants obtained long-term residence. Clauses concerning equal funding, profit-sharing, shared risk, joint decisions and the ten-year duration amply justified the judge’s construction.

3. Factual findings. Whether there was an oral agreement and whether the claimants had repudiated the agreement were essentially questions of fact. The judge had heard the witnesses and reached conclusions for which there was no proper basis for appellate interference. The proposed appeal on those matters had no realistic prospect of success.

4. Fresh evidence. The evidence had to satisfy the three tests identified in Ladd v Marshall [1954] 1 WLR 1489. It was not likely to be evidence that could not have been obtained at the time of trial. In any event, it was not likely to have affected the outcome. The application was therefore dismissed and the order was: application refused.

• Court of Appeal (Civil Division): On 18 June 2008, Lord Justice Lawrence Collins refused permission to appeal and refused the application to admit further evidence.
• High Court of Justice, Chancery Division, Bristol District Registry: HHJ McCahill QC made the order dated 14 September 2007, finding that the parties had agreed to equal ownership and rejecting the alleged repudiation.