Kazuo Okada suffered a major loss and legal setback in his attempt to regain control of the corporate empire behind Okada Manila, the largest luxury integrated resort in the Philippines following a court decision.
The Tokyo District Court issued last Jan. 25 a decision that effectively brings to an end Okada’s bid to re-take control of Okada Holdings Limited.
OHL owns 67.9 percent of Universal Entertainment Corp.
UEC is a Japanese listed company that owns Tiger Resort Asia Limited which, in turn, owns Tiger Resort, Leisure and Entertainment, Inc.
TRLEI is the Philippine company that owns and operates Okada Manila.
In its Jan. 25 decision, the Tokyo District Court confirmed the validity of the 30-year Trust Agreement which led to the ouster of Okada from control of OHL.
A copy of the 26-page decision in Japanese, together with an English translation, was released to the media recently.
Okada’s legal setback in the Tokyo court is just the latest in a string of losses and legal setbacks both here and abroad. Last November 2018, the Parañaque Regional Trial Court dismissed the intra-corporate case filed by Okada in the Philippines seeking to be reinstated in the TRLEI Board.
In 2017, Kazuo Okada was ousted from the management of OHL by his son, Tomohiro Okada, and daughter, Hiromi Okada.
Hiromi signed a 30-year Trust Agreement with her brother Tomohiro that gave the latter majority control of OHL.
Kazuo Okada pinned his hope for a comeback on the outcome of lawsuits in Tokyo and Hong Kong between Tomohiro and Hiromi, in which Hiromi is challenging the validity of theTrust Agreement.
After Okada was removed, Hiromi disowned the Trust Agreement and claimed she was deceived into signing it, but Tomohiro maintained that it was a valid agreement that Hiromi signed with full knowledge and consent.
Tomohiro filed a case in Tokyo to confirm the validity of the Trust Agreement.
The Trust Agreement itself provides that it is governed by Japanese law and all disputes relating to the agreement fall within the exclusive jurisdiction of Tokyo courts.
On the other hand, Hiromi filed a case in Hong Kong, questioning the validity of the Trust Agreement. Last year, however, the Hong Kong court stayed or stopped the proceedings in the Hong Kong case, to await the outcome of the Tokyo case initiated by Tomohiro.
The decision in the Tokyo case was highly anticipated because it was critical in determining the chances of a comeback by Kazuo Okada. Kazuo was rooting for Hiromi to win the case, so that the Trust Agreement would be invalidated and his removal from OHL would be reversed or undone.
However, Kazuo Okada’s hopes were dashed by the judgment issued on Jan. 25 by the Tokyo District Court in favor of Tomohiro.
The Tokyo District Court rejected Hiromi’s claims and upheld the validity of the trust agreement between Hiromi and Tomohiro.
The Court declared that the Trust Agreement executed between Hiromi and Tomohiro “does effectively exist”, and ordered Hiromi to bear the court costs.
Based on the factual findings of the Tokyo District Court, Hiromi understood and knowingly signed the Trust Agreement.
Tomohiro explained the terms of the Trust Agreement to her and even provided her with a memo explaining the contents of the Trust Agreement.
Hiromi thus understood that the Trust Agreement was for the purpose of removing Kazuo from OHL and UEC directorships, to “prevent the deterioration of the corporate value of OHL and UEC”.
Hiromi would continue to receive the dividends from her OHL shares, but control over the voting and disposal of the shares was to be held by Tomohiro for 30 years.
Foreseeing that Kazuo might attempt to make Hiromi change her mind later on, the Trust Agreement restricted Hiromi’s right to terminate the trust.
Hiromi executed the Trust Agreement before a Japanese notary public, and before she did so, the contents of the Trust Agreement were again explained to her.
The Court also referred to documents that Hiromi had signed to remove Okada as director of OHL, as well as an email exchange from Hiromi showing that she was aware of the dispute with Okada.
The Court thus concluded that “[Hiromi’s] statement that, in executing the Trust Agreement, [she] signed and sealed the same without understanding the content, meaning, and purpose of the Trust Agreement cannot be adopted.
”The Court further held that “it cannot be said that there was a misunderstanding when [the parties entered] into the agreement,” and that “[Hiromi’s] assertion that [Tomohiro] deceived [her] cannot be adopted.”
The Tokyo District Court also rejected Hiromi’s arguments that the terms of the Trust Agreement were invalid for supposedly being “in violation of public order and morals.”
The Court ruled that the terms of the Trust Agreement—such as the 30-year period and the restrictions on Hiromi’s ability to transfer her shares or terminate the Trust Agreement during the said period—are all allowed under Japanese law, particularly its Trust Act.
The Court held, “[Hiromi’s] assertion that the Trust Agreement is in violation of public order and morals and therefore ineffective cannot be adopted.”