BVI Update – CASE CLOSED – Trial ends with showdown on handling evidence

Lawyers for Sino Union and Government are confident that their case before the BVI commercial court will see government established as the rightful owner of the majority shares in Shangri-La International Development Holdings transferred by Rich Victory of former Ambassador David Hsiu.

The 69.3 million dollars worth of shares were gifted in November 2005, but the transfer approved by director’s resolution in April 2006 was never registered.

The case closed Thursday afternoon and the parties now await the ruling of Justice Bannister.

Shortly after the conclusion of the two-part, six-day trial which began in July 2009, we spoke to Senior Counsel Anthony Astaphan who represented the Government and Lead Attorney for Sino Union, Queens Counsel Reginald Armour:

Audio Interview

It seemed at the start of day three that lawyers arguing for the Government of Dominica to be registered as the majority owner of the Shangri-La, had encountered a major issue with their cross examination strategy… But by the end of the day both Queens Counsel Reginald Armour and Senior Counsel Anthony Astaphan

appear to have brushed aside the sustained attack on their handling of evidence by defense attorney

Paul Chaisty QC.

The bid by claimants, Sino Union is to have the share register of the Shangri-La International Development Holdings Ltd reflect Government’s ownership of 51% of the shares as documented on the share transfer instrument of February 12^th, 2006 and a director’s resolution dated April 18^th, 2006. Rich Victory Investments Ltd is opposing that claim with the argument that the share transfer was never registered because the agreed conditions were not met.

The case before Justice Bannister ended Thursday after five hours of summary arguments.

Chaisty, a London based Commercial Lawyer, began his two and a half hour summary of Rich Victory’s case with a mini lecture on questioning witnesses following which he listed a number of matters in evidence on which he thought the claimant’s lawyers should have cross examined defense witnesses.

Chaisty argued that because these pieces of evidence were not challenged by the claimants in cross examination, then there can be no challenge now to relying on the statements in question as truth and fact. He cited for example:

1)      David Hsiu’s affidavit and its references to Las Vegas meeting with Prime Minister Skerrit in October 2007 which explained in some detail some the crisis allegedly created by Mr. Felix Chen of Sino Union going to the opposition which caused concern to the Prime Minister. Chaisty termed it a “significant passage of the evidence of Mr. Hsiu that was not touched”

2)      The meeting at Dorchester in London on February 18, 2008 where PM is alleged to have indicated to David Hsiu that Government had no interest in the shares.  Chaisty noted, “there was opportunity, there was time… but there was no cross examination on this point”

3)      During the Dorchester meeting on February 18^th the Prime Minister is alleged to have said “I have already signed the letter confirming Government has no interest in the shares”. Kieron Pinard-Byrne said he was informed of the meeting and advised that he should pick up the signed letter from the PM’s office. But the paid witness was not questioned on this submission.

4)      The evidence that both Hsiu and Pinard-Byrne are both independent professionals with no financial stake in Rich Victory was accepted without challenge.

5)      When Chaisty put to the Prime Minister in July that it would be extraordinary to commit Government to holding shares in a private company with no due diligence the Prime Minister replied he relied on the advice of Hsiu. But Hsiu was not cross examined on this statement.

Chaisty insisted that the lack of cross examination on these “critical” points have left “enormous holes in the submissions by Sino Union and Government”

He urged the court to place Roosevelt Skerrit and Felix Chen (in spite of the justice dimension of his 20 million US dollar loss) in the category of witnesses whose submissions in evidence were too inconsistent to be relied on:

“Felix Chen had a deep sense of dissatisfaction about the expenditure of 20 million dollars and therefore wanted the matter resolved. There are understandable reasons why he does not feel constrained to give an entirely correct explanation in his submission

“The Prime Minister finds himself in a difficult position… He knew and continues to know that at all times the share transfer was conditional and he agreed with Mr. Hsiu and Mr. Pinard-Byrne in that regard… Sino Union has applied unfair pressure on the Prime Minister… He was put under pressure in Parliament by questions from his political opponents…

That pressure he has been placed under has forced him to give evidence which is not accurate”.

The Rich Victory attorney said that in comparison to the unreliable inconsistencies of the witnesses for the claimant, there is nothing that could be said about the quality of the evidence delivered David Hsiu and

both of whom he described  as independent and professional.

But in response, Sino Union attorney Reginald Armour told the court it was the defense witnesses who were inconsistent, untruthful and therefore unreliable in their testimony.

His key case in point was the evidence by Pinard Byrne that the due diligence and AGM conditions for the transfer of the shares mysteriously introduced after the only written condition of completion of the High School project were mandated by the Prime Minister.

However in his evidence under re-examination, Hsiu claimed that the additional conditions came from the advice of Pinard-Byrne.

Armour said it is simply not credible based on the evidence “that either Pinard-Byrne or Hsiu could insist in this court against the clear evidence of the Prime Minister that there existed any conditions such as those oral conditions which were never reduced to writing until after the commencement of the liquidation proceedings”.

Both Armour and Anthony Astaphan were dismissive of the criticisms that they did not cross examine Hsiu about the Las Vegas and Dorchester meetings with the Prime Minister claiming that both were irrelevant to the case.

They were blunt in their accusations that the Rich Victory witnesses abused the trust of the Prime Minister and in some instances used their privileged positions to wrongfully “arrogate unto themselves roles that were not given to them by anyone”.

Pinard-Byrne for example was auditor, mediator, share escrow agent and government’s liaison on corporate matters. Whether from the Rich Victory Chair, the Prime Minister or from Pinard-Byrne himself, he wrote every critical piece of correspondence in the matter of the gift of Rich Victory’s majority shares in the Shangri-La:

• The Lucy Ma’s letter of intention to transfer the shares dated November 18, 2005
• The Prime Minister’s letter to Felix Chen dated November 28^th, 2005 announcing government’s receipt of the Shangri-la shares
• The instrument of Transfer dated February 12^th, 2006
• The director’s resolution to transfer the shares dated April 18^th, 2006
• The letter from Pinard-Byrne to Felix Chen dated April 27^th, 2006 stating in part, “As you are aware I have been holding the executed transfer in escrow pending completion of the first phase of the project but recent instructions are that registration must now proceed…”

Armour argued that given the official roles he accepted, Pinard-Byrne was duty bound to register the shares but refused to discharge that responsibility. More than that he had no authority to nullify, cancel or abort share transfer as he purported to do on November 24^th, 2006, claiming that he did so on the instructions of the Prime Minister when that was “completely false”.

The claimants’ attorneys insisted in their closing arguments that the alleged share transfer conditions cannot be validated with documentary evidence because they never existed and were concocted for the purpose of defeating the 2008 move to establish the government as the rightful owner of the shares.

They reiterated that the oral evidence of Rich Victory is in total conflict with the documentary evidence produced; the transfer of shares was unconditional; and the entire case of RV to a large extent is fabricated.

About the Prime Minister testifying in court on the opposite side of his once trusted advisors, and being savaged by their submissions that he was untruthful and under duress, Astaphan replied:

“The Prime Minister should be entitled to rely on and trust Hsiu and Pinard-Byrne without having to be accused of ineptitude… those he had relied on and trusted pulled he rug from under his feet… this is not a question of being subjugated to Mr. Chen… this is a situation of trust gone bad.”