Gorgeous Beauty Ltd v Liu & Ors

The court decided a first instance dispute between two branches of a Taiwanese family about the beneficial ownership of a plot of industrial land in Longtan, Taiwan (the Longtan Property). The key factual finding was that, on the balance of probabilities, the Longtan Property was acquired for the collective benefit of YSC's shareholders rather than for the sole benefit of William Liu. The court examined (a) the authenticity and effect of a Declaration of Trust dated 20 August 2010 and (b) competing accounts as to how and why an offshore structure (involving Seychelles companies and a UK LLP) was used.

On legal issues the judge considered choice of law (Recognition of Trusts Act 1987 and the Hague Convention), the formal requirements of Seychelles domestic law (International Trusts Act 1994 and International Business Companies Act 1994) and English law principles relevant to rectification of the register. The court held that the Declaration of Trust was made without the consent of the majority shareholders and that, on the facts found, Gorgeous Beauty was entitled to an order to rectify the register under section 1096 of the Companies Act 2006. The judgment also records detailed subsidiary findings (eg as to the status of Trillion and the adjacent farmland) relevant to the overall factual conclusion.

Background and nature of the claim: Gorgeous Beauty Ltd, a Seychelles international business company (IBC), brought proceedings seeking a declaration that a Declaration of Trust (dated 20 August 2010) was invalid and an order that entries in the Register of Companies relating to Gold Wealth LLP be rectified pursuant to section 1096 Companies Act 2006. The dispute concerned whether a Taiwanese industrial plot (the Longtan Property) was bought for the collective benefit of the shareholders of Yuan Sheng Corporation (YSC) and held through offshore vehicles, or whether it was acquired for the sole benefit of William Liu and financed by loans from YSC.

Parties, witnesses and procedural posture: The claim was brought at first instance in the Chancery Division. The principal factual contest turned on competing witness accounts from both branches of the Liu family and documentary materials from corporate advisers (GenPro/ILS). Experts on Seychelles law gave opinions for each side. The Registrar of Companies and Gold Wealth LLP were joined but did not actively participate.

Issues framed by the court:

• Primary factual issue: for whose benefit was the Longtan Property acquired?
• Whether the Declaration of Trust (20 August 2010) validly created a trust and, if so, what law governs it (possible English law by implied choice; alternative: Seychelles law).
• Under Seychelles law, whether non‑statutory trusts are recognised or whether only trusts complying with the Seychelles International Trusts Act 1994 are effective.
• Whether the disposition complied with provisions of the Seychelles International Business Companies Act 1994 (notably section 78 and section 9(2)) and whether informal unanimous consent principles (Re Duomatic) could validate non‑compliant acts.
• Whether relief by rectification of the Companies Register under section 1096 Companies Act 2006 was appropriate.

Court’s reasoning and conclusions (concise):

• Credibility and documents: the judge applied the Ocean Frost approach, assessing credibility against documentary material, motives and overall probabilities. The documentary record was patchy, and many witnesses had personal interests, so the judge proceeded cautiously.
• Factual conclusion: weighing witness evidence and documents, the judge concluded on the balance of probabilities that the Longtan Property and adjacent farmland were acquired for YSC shareholders collectively; Trillion was likely a YSC affiliate; and the offshore structure was intended to reflect YSC shareholdings rather than to confer sole beneficial ownership on William Liu.
• Choice of law and trust validity: the judge considered that the Declaration of Trust displayed indicia of an implied choice of English law but, in any event, analysed the position under Seychelles law. The court accepted recent Seychelles appellate authority (Zalazina) indicating that Seychelles law confines recognition to statutory international trusts under the ITA94 and concluded that a non‑statutory trust such as the Declaration would not be effective under Seychelles law.
• Companies/IBCA issues: the court examined IBCA94 provisions (including section 78 and section 9(2)) and the argument invoking informal unanimous consent (Duomatic). It was concluded that if the Defendants’ version of events had been proven the Defendants would have arguments available, but on the facts found Gorgeous Beauty succeeded.
• Remedy: on the factual and legal conclusions reached, the judge granted the relief sought and indicated that it was appropriate to order rectification of the register under section 1096 Companies Act 2006.

First instance: the claim succeeds. The court found on the balance of probabilities that the Longtan Property was acquired for the benefit of YSC’s shareholders, that the Declaration of Trust was made without the consent of the majority shareholders and that rectification of Companies House entries was appropriate (the judge concluded by granting the relief sought). The judge analysed choice of law (implied English law but also considered Seychelles law), and concluded that, if Seychelles law applied, the Declaration would not constitute a valid non‑statutory trust under Seychelles law.