Ming Siu Hung and others v J F Ming Inc and another (British Virgin Islands)

Under section 184I of the BVI Business Companies Act 2004, the court has a broad remedial discretion once unfair prejudice is established. It may consider all relevant facts concerning the company and the relationships between its shareholders and directors, including later conduct and likely future events, subject to relevance and weight.

A buy-out is not a preferred remedy as a matter of law, although it may be appropriate in serious cases. An appellate court must show restraint when reviewing the exercise of that discretion. Mere disagreement about the weight given to relevant matters is insufficient.

The appellants, three minority shareholders in JF Ming Inc, challenged the conduct of the controlling shareholder and sole director, Lawrence Ming Shui Sum. It was found that his persistent failure to provide financial information required by article 120 of the company’s Articles of Association, followed by waiver resolutions, was oppressive, discriminatory and unfairly prejudicial under section 184I of the BVI Business Companies Act 2004.

Leon J ordered Lawrence to buy the appellants’ shares. The Court of Appeal set aside that order and substituted orders requiring the provision of financial information, while upholding the findings of unfair prejudice. The central issue before the Board was whether Leon J had made errors of principle which entitled the Court of Appeal to re-exercise the remedial discretion.

Appeal allowed. Lord Briggs delivered the single judgment of the Board, which advised that Leon J’s order requiring Lawrence to purchase the appellants’ shares be restored.

1. Remedial discretion. Once unfair prejudice is established, section 184I of the BVI Business Companies Act 2004 gives the court a broad discretion to select a just and equitable remedy. The court may consider any relevant aspect of the company’s history and the relationships between shareholders and directors, including conduct after the claim was issued and matters fairly found although not pleaded. It must consider both past conduct and what is likely to happen in the future. This approach was consistent with Grace v Biagioli [2005] EWCA Civ 1222.
2. No preferred buy-out remedy. Neither the BVI Act nor its United Kingdom predecessor makes a buy-out the preferred remedy, whether generally or in quasi-partnership companies. The appropriate remedy depends on the facts. Nevertheless, in a serious case of oppression, discrimination and unfair prejudice, it will usually be difficult for an appellate court to conclude that a buy-out fell outside the reasonable range of the first-instance discretion. The broader proposition in Grace v Biagioli [2006] 2 BCLC 70 and Sikorski v Sikorski [2012] EWHC 1613 (Ch) did not establish a preferred remedy as a matter of law.
3. Applicant conduct. The applicant’s conduct may be relevant and may carry substantial weight. Delay plus prejudice may found laches, and estoppel or misconduct may in some cases justify refusing relief. Mutual misconduct may support a buy-out providing a clean break. The weight of the applicant’s conduct is fact-sensitive and ranges from decisive to none; the remedy remains primarily a response to the unfair prejudice proved.
4. Appellate restraint. Review of a discretionary decision is at its most limited where the judge has considered relevant matters, avoided irrelevant factors and reached a rational conclusion. The Board applied the principles summarised in Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5, In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33 and Chu v Lau [2020] UKPC 24. Mere disagreement about weight, or a preference for a different remedy, does not justify intervention.
5. Application. Leon J expressly considered the appellants’ earlier financial misconduct and reasonably gave it little or no weight. He also found that their delay in requesting information was not blameworthy and had not contributed to Lawrence’s later misconduct. His references to dividends were factual observations about the importance of financial information, not reliance on an unpleaded complaint. The Court of Appeal therefore had no basis to re-exercise the discretion.

• Privy Council: In [2021] UKPC 1, the appeal was allowed and Leon J’s buy-out order was restored.
• Court of Appeal of the Eastern Caribbean Supreme Court (British Virgin Islands): On 28 June 2017, the Court of Appeal set aside the buy-out order but upheld the findings of unfair prejudice and the orders concerning financial information.
• British Virgin Islands, Leon J: On 16 August 2016, following the liability trial, the judge found unfairly prejudicial conduct and ordered Lawrence to purchase the appellants’ shares.