Case Document

100%Judiciary

CACV 380/2018

[2019] HKCA 355

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 380 OF 2018

(ON APPEAL FROM HCMP NO 3166 OF 2014)

____________________

	IN THE MATTER of JIANG YUAN INTERNATIONAL DEVELOPMENT LIMITED
	and
	IN THE MATTER of Section 724 of the Companies Ordinance (Cap 622)

____________________

BETWEEN
	XU LIU CHUN	Petitioner
and
	WU CHANG JIANG	1^st Respondent
	JIANG YUAN INTERNATIONAL DEVELOPMENT LIMITED	2^nd Respondent

____________________

Before:

Hon Kwan VP, Yuen JA and G Lam J in Court

Date of Hearing:	26 February 2019
Date of Judgment:	18 April 2019

_________________

J U D G M E N T

_________________

Hon G Lam J (giving the judgment of the Court):

Introduction

1.These are an appeal and a cross‑appeal from the judgment[1] of Deputy High Court Judge Lee (as he then was) (“Judge”) on the petition presented by Mr Xu Liu Chun (“Xu”) against Mr Wu Chang Jiang (“Wu”) for relief from unfairly prejudicial conduct of the affairs of Jiang Yuan International Development Ltd (“the Company”), a company incorporated in Hong Kong.

2.The appeal, brought by Xu, concerns the question whether a sum of US$9.2 million withdrawn from the Company’s bank accounts in 2012 should be treated as the assets of the Company in the valuation of his shares which the Judge ordered Wu to purchase. The cross‑appeal is brought by Wu against the Judge’s finding that Xu is the beneficial owner of 40% of the shares in the Company.

Background

3.Xu and Wu first met in 1986 when both of them worked in a port authority in Fujian. Wu, then aged 36, was a senior bureaucrat, while Xu, aged 18, was a chauffeur. Wu treated Xu fondly in an avuncular manner and helped him with his career even after Xu had left the port authority in 1988.

4.In 2005, Wu took part in a company called Fujian Changjie Road and Bridge Technology Consulting Co Ltd (福州暢捷路橋技術諮詢有限公司) (“Changjie”), set up by his colleagues, so as to pursue certain business opportunities in Angola with which he had connections, in particular a project for the repair of the Luanda‑Lobito Highway (“Luanda‑Lobito Highway Project”). Wu became the single largest shareholder of Changjie holding 41.4% of its shares.

5.Changjie was desirous of undertaking the Luanda‑Lobito Highway Project in Angola. Without the requisite accreditation, however, it was unable to contract directly with the main contractor, China International Fund Limited (中國國際基金有限公司) (“CIFL”), and therefore took part through cooperation with another company — Fujian Ningde City Road and Bridge Corporation (福建寧德市路橋總公司) (“Ningde”). In September 2005, at Wu’s request, Xu helped set up an office in Fuzhou (福州辦事處) (“Fuzhou Office”) to handle the administrative matters concerning the Luanda‑Lobito Highway Project. Wu also made Xu the person‑in‑charge of the Fuzhou Office. On 1 November 2005, Ningde signed a sub‑contract with CIFL at the price of US$78,296,904. On 2 December 2005, Ningde and Changjie entered into a Co‑operation Agreement pursuant to which they would split (in the ratio of 30:70) the net profit to be earned from the Luanda‑Lobito Highway Project.

6.Wu left the public service in Fujian in 2006. In February 2006, a Mainland company called Fujian Jiang Yuan Investment Development Ltd (福建江源投資發展有限公司) (“FJY”) was formed with Wu holding 60% of the shareholding, and Xu and one Mr Wang Yonghui (“Wang”) each holding 20%. The judge, rejecting Wu’s case that Xu’s 20% shares were held on trust for Wu, found that the parties intended Xu to be the beneficial owner of the 20% in FJY.[2] The Judge, however, also rejected Xu’s case that there was an agreement or intention that Wu and Xu would own FJY in the proportion of 60:40.[3]

7.Subsequently, as the Angolan government wished to contract directly with the sub‑contractor for the repair of the highway, the main contract with CIFL was terminated and, in substitution, FJY signed a contract on 19 November 2007 with the relevant Angola authority for the repair of the Luanda‑Lobito Highway at the same price of US$78,296,904. There was a dispute as to whether, as Xu alleged, FJY took up the Luanda‑Lobito Highway Project in its own right or, as Wu alleged, FJY merely acted as a signing agent for Changjie. Though the Judge said it was strictly unnecessary to resolve this dispute,[4] he found that FJY was employed to sign the contract with the Angolan government in order to bypass Ningde, that notwithstanding FJY was the contracting party Changjie continued to be heavily involved in the project and the work continued to be performed by the personnel of Changjie as before, and that in February 2011 the profits available were distributed to Changjie’s shareholders in accordance with their shareholdings in Changjie rather than to FJY’s shareholders.[5] At Wu’s insistence in recognition of Xu’s contribution to the project, US$273,984 was paid to Xu which was about 13.2% of the total dividends and 4.5% of the total profits. In around March 2008 Wang left FJY and transferred his 20% shareholding to Wu without payment.

8.Meanwhile, on 17 September 2007, the Company was incorporated in Hong Kong with an initial authorised capital of US$100,000 divided into 1,000 equal shares, increased on 27 December 2007 to US$3 million divided into 30,000 equal shares. Xu and Wu initially held 400 and 600 shares and, after the increase, 12,000 and 18,000 shares respectively. Apart from being the Company’s only registered shareholders they were also its only two directors. It was common ground that the initial purpose of setting up the Company was to receive and make remittances,[6] there being exchange control in Mainland China which made it difficult to remit US dollars from Angola into the Mainland.

9.On 29 February 2008, the Company signed two contracts with the Angolan authorities for (i) the repair of the roads at Lubango‑Benitaba and Benitaba‑Lucira at the price of US$64,471,610.59 (“Lubango Contract”); and (ii) the repair of the roads at Namibe‑Tombwa at the price of US$29,550,943.13 (“Namibe Contract”). There was no evidence that the Company had any other business apart from these two contracts.

The proceedings below

10.In December 2014 Xu presented a petition pursuant to s 724 of the Companies Ordinance (Cap 622) seeking, inter alia, an order that Wu purchase his 40% shareholding in the Company at a value to be assessed. As the Judge has summarized,[7] five complaints were made by Xu against Wu in the petition: (a) misappropriation of US$9.2 million from the Company between 18 July 2012 and 19 November 2012; (b) misappropriation of US$4.4 million from the Company on or around 23 September 2014; (c) refusing to swap duties with Xu in breach of a an agreement reached in or around 2007; (d) excluding Xu from the management of the Company, in breach of the shareholders’ agreement; and (e) denying Xu access to the financial information of the Company in relation to, inter alia, its business in the Republic of Angola.

11.The main defence raised by Wu is that the 40% shareholding of Xu in the Company was not held by Xu beneficially but on trust for Wu. The Judge held that Wu failed to discharge the burden of proving Xu was his nominee in relation to the shares.[8] This holding is the subject matter of Wu’s cross‑appeal.

12.On Xu’s complaints the Judge held that grounds (b) and (e) above were made out[9] but grounds (c) and (d) were not.[10] There is no appeal in relation to these grounds and it is unnecessary to refer to them in any detail. The Judge also held that Xu failed to establish unfair prejudice in relation to ground (a), although he did not entirely accept Wu’s case on the facts either.

13.The Judge ordered Wu to purchase Xu’s shares at a price to be determined by the court if not agreed. It is the question whether the sum of US$9.2 million complained of in ground (a) should be taken into account in the valuation that forms the subject matter of Xu’s appeal.

Xu’s appeal — the US$9.2 million

14.There is no dispute that a total of US$9.2 million was paid out of the Company’s bank accounts as follows:

Date Amount (US$) Payee

18-7-2012 2,000,000 Hong Kong Tian Mei Investment Ltd

31-7-2012 1,000,000 Hong Kong Tian Mei Investment Ltd

24-9-2012 1,600,000 Da Cheng Trading Co

26-9-2012 2,600,000 Da Cheng Trading Co

19-11-2012 2,000,000 Da Cheng Trading Co

Total 9,200,000

15.Xu’s case as stated in the petition and in his evidence is as follows. As both FJY and the Company had made substantial profits from their projects in Angola, Xu wished dividends to be declared but Wu suggested that the profits should be used to purchase landed properties in Mainland China for the Company and in the end Xu agreed. They also agreed that money would be transferred from the Company to Wu for the sole purpose of acquiring such properties. Xu did not know the relationship between the payees, namely, Hong Kong Tian Mei Investment Ltd (“Tian Mei”) and Da Cheng Trading Co (“Da Cheng”), on the one hand, and Wu on the other, but believed they were controlled or owned by Wu. Wu used RMB26,208,114 out of the sum to acquire a villa in Fujian from Fujian Huan Le Tian Di Property Co Ltd (“Fujian HLTD”) in around February 2014, which was registered in Wu’s own name. Despite Xu’s demands, Wu has refused to transfer the property or return the balance of the funds to the Company. Accordingly, Wu wrongfully misappropriated the sum of US$9.2 million from the Company.

16.Wu’s case on the US$9.2 million was as follows.[11] Both Ningde and Changjie had through their board of directors agreed that 35.7% of the contract price received from the Luanda‑Lobito Highway Project would be “special fees” (「特殊費用」), amounting to approximately US$27.95 million,[12] to be deployed by Wu as the Chairman with full authority. Subsequently, after FJY was substituted as the nominal contractor, the special fee was adjusted to 35%. The sum of US$9.2 million in fact consisted of funds being partly special fees and partly his share of the dividends from the Luanda‑Lobito Highway Project. The Company was a mere conduit for the purpose of receiving and transferring funds. The payments were made with the knowledge and consent of Xu who signed the relevant vouchers. Wu never told Xu that the money was to be used for purchasing landed properties.

17.The Judge’s conclusions in relation to this issue, as set out below, turned largely on the respective burdens of proof on the parties:

(1)   Xu failed to show the purchase of properties in the Mainland had anything to do with the alleged misappropriation of US$9.2 million.[13] The Judge did not accept Xu’s case that Wu had told him that the sum of US$9.2 million would be used solely to purchase properties in the name of the Company, finding Xu’s evidence on this aspect “both incredible and improbable”.[14] Instead, the evidence supports Wu’s case that the property[15] was purchased for use as the office of FJY and that it was registered in Wu’s name because it was paid for by him, as FJY had insufficient funds.[16]

(2)   Since the US$9.2 million came from the Company’s bank accounts, there was a presumption of ownership in favour of the Company. Wu had the burden of proof to establish that the money consisted wholly of his share of the dividends from the Luanda–Lobito Highway Project and “special fees”.[17]

(3)   Wu had proved that the funds in the Company’s bank accounts included his share of the profits from the Luanda‑Lobito Highway Project. However, in the absence of clear evidence, the Judge was unable to find how much money in the Company’s bank accounts belonged to Wu personally.

(4)   As to the special fees, the Judge accepted Wu’s evidence that there were in fact such “special fees”, that Xu was aware of their existence from the very beginning of the Luanda-Lobito Highway Project and that they continued to exist after FJY had entered into the picture. Moreover, in view of Xu’s acceptance of the Company’s role as a platform for receiving and making remittances, the Judge found it more likely than not that the funds in the Company’s account consisted partly of the “special fees”.[18]

(5)   The Judge found that the funds in the Company’s bank accounts consisted (at least partly) of, and that the US$9.2 million paid out by the Company included, the special fees as well as Wu’s own share of profits. He considered, however, that Wu had not shown that the US$9.2 million consisted wholly of money from these two sources. The Judge did not accept that the Company “could not have owned” any part of the US$9.2 million. He concluded: “To this extent and by a narrow margin, I find that [Wu] has failed to discharge his burden of rebutting the presumption of ownership”.[19]

(6)   However, even assuming part of the US$9.2 million belonged to the Company, Xu’s case of “misappropriation” would not be made out unless the money was withdrawn without authority or in breach of Wu’s fiduciary duty.[20] Since the Judge also found (as was common ground) that Xu had consented to and made the withdrawals concerning the US$9.2 million, and Xu and Wu were the only two shareholders and directors of the Company, Xu failed to establish any misappropriation of the Company’s funds or any unfair prejudice arising from the withdrawals.[21]

18.By way of remedy for the unfair prejudice established by Xu on other grounds, the Judge ordered Wu to purchase Xu’s 40% shareholding in the Company, at a price to be determined by the court if not agreed. The Judge further ordered that Xu’s shares be valued on the following basis: (a) by reference to the assets, profitability and future prospects of the Company as at 4 December 2014 (ie the date of the petition); (b) the valuation should take into account the unilateral withdrawal of US$4.4 million by Wu (ie ground (b)); and (c) without any discount for minority holding.[22]

19.On this appeal, Xu seeks an additional order, insofar as necessary, either that (1) the valuation of his shares should also take into account the US$9.2 million withdrawn, as part of the assets of the Company, or that (2) the Company’s beneficial ownership of the US$9.2 million (or any part thereof) be determined and the valuation of his shares do take such determination into account.

20.In essence, there are two questions arising on Xu’s appeal:

(1) Did the Judge decide, by implication, that the valuation of Xu’s shares should also take into account the sum of US$9.2 million as an asset of the Company?

(2) If not, should this court make an order that the valuation of shares should also take the US$9.2 million into account as an asset, or an order that the proportion of the US$9.2 million beneficially owned by the Company be determined?

21.On the first question, we have no doubt that the Judge intended that the US$9.2 million was not to be taken into account as an asset of the Company in the valuation of Xu’s shares.

22.In CVC/Opportunity Equity Partners Ltd v Demarco Almeida [2002] UKPC 16, Lord Millett said at para 37:

“ There are essentially three possible bases on which a minority holding of shares in an unquoted company can be valued. In descending order these are: (i) as a rateable proportion of the total value of the company as a going concern without any discount for the fact that the holding in question is a minority holding; (ii) as before but with such a discount; and (iii) as a rateable proportion of the net assets of the company at their break up or liquidation value.”

23.The Judge did not pronounce on the appropriate basis of valuation of Xu’s shares (no doubt intending to leave that to the second stage) but whichever basis was to be adopted, it was plainly highly relevant whether the two substantial sums said to have been misappropriated by Wu from the Company were to be taken in the valuation as part of the assets of the Company.

24.After determining that the date of petition should be taken as the date of valuation so that Xu will not be credited for any success or suffer the consequences of any mismanagement or loss that occurred afterwards,[23] the Judge said at paragraph 114 of his judgment:

“ Furthermore, in view of my findings above, the valuation should take into account the unilateral withdrawal of the US$4.4 million by R when assessing the value of P’s shares.”

25.If the Judge had intended to give the same treatment to the US$9.2 million, plainly he would have included a reference to that sum. The Judge clearly did not implicitly order the US$9.2 million to be taken into account.

26.As to the second question, it is common ground that the US$9.2 million is and has been since the transfers in 2012 no longer in the coffers of the Company. If the funds had been wrongfully misappropriated by Wu, it would be possible for the court, upon finding unfairly prejudicial conduct in respect of such payments, to order a purchase of Xu’s shares and to order that specific allowances be made in the valuation of the shares for the misappropriations. Such a direction in the valuation would be warranted “for giving relief in respect of” the unfairly prejudicial conduct, that is to say, the misappropriations (see s 725(1)). In the absence of any finding of misappropriation of the US$9.2 million, however, there is no basis for the court to direct that the amount or any part thereof should notionally be put back into the Company’s balance sheet. There is no appeal against the Judge’s finding that there was no misappropriation.

27.Nor is there any basis for including that sum in the valuation on the ground that the money remains an asset of the Company. In support of Xu’s appeal, Mr Suen submitted that even though on the Judge’s findings the Company had made authorised payments totalling US$9.2 million to third parties, the sum remains a receivable for the Company from the third parties. We are unable to accept this submission. As the Judge found, the payments were made with the knowledge and consent of the only two shareholders and directors of the Company — Wu and Xu. As such they were binding on the Company as authorised payments: Re Duomatic Ltd [1969] 2 Ch 365. The mere fact of payment, even if made to a stranger, does not give rise to a presumptive implied obligation to repay: Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd (2015) 18 HKCFAR 364, at para 106.

28.In his reply submissions Mr Suen submitted that the Company had a claim to the villa acquired in Wu’s name using the US$9.2 million, and that the value of this claim should be determined in the valuation exercise. It was argued that since the purchase monies came from the Company, the property was held on resulting trust for the Company. We are unable to accept this contention. Quite apart from the fact that this was neither raised in the Notice of Appeal nor, as far as we can see, run at trial, the Judge has specifically found that “there is no direct evidence linking the money withdrawn with the purchase money of any properties in the mainland”,[24] that the events supported Wu’s evidence about the purchase (ie that the property was paid for by him), and that Xu was “unable to prove that the purchase of the Mainland properties had anything to do with the alleged misappropriation”.[25] On these factual findings, which Xu has not sought to disturb, it is not open to him to argue that the Company had any beneficial interest in the villa in question.

29.It follows that Xu has failed to establish any ground for his appeal or for the additional order relating to valuation sought by him. His appeal must accordingly be dismissed.

Wu’s cross‑appeal — the 40% shareholding

30.Wu’s case on the establishment of the Company, as stated in his affirmation below, was as follows. In anticipation that the Angolan government was likely to terminate the main contract with CIFL and directly enter into contract with those actually undertaking the contract works, Wu decided to set up a company in Hong Kong because Changjie was a Mainland company and it would be difficult to remit into the Mainland the contract price paid by the Angolan government in US dollars. The Company was accordingly incorporated on 17 September 2007. The original authorised share capital of US$100,000 was not immediately paid up then since the Angolan government had not yet made a final decision on the termination of CIFL’s contract at that time.

31.On the initial decision to set up the Company, Wu said in his affirmation:

“ 46. In fact, Xu Liu Chun again proposed to participate in the operation of the Hong Kong company when Hong Kong Jiang Yuan was incorporated. As I was not familiar with the operation of investment and the laws and regulations of Hong Kong, I thought he would be able to assist in my investment in Hong Kong in the future if he spent time to learn about investment in Hong Kong. Thus, I agreed to arrange in the same manner as in the case of Fujian Jiangyuan, i.e. I would provide all the funds whereas he might choose to provide funds in the future and before that was done, he would only hold shares of the Company as a nominee shareholder on behalf of myself. The actual shareholding proportion would depend on his actual capital contribution.”

32.On the increase of capital to US$3 million, Wu said:

“ 51. … subsequent to the signing of ‘Luanda maintenance project contracting agreement’ by Fujian Jiangyuan on behalf of Changjie Company in November 2007, I decided to increase the registered capital of Hong Kong Jiang Yuan Limited to US$3 million because the funds of Luanda-Lobita Project needed to be returned to China through Hong Kong Jiang Yuan.”

33.As to the payment of funds for the share capital of the Company, Wu said:

“ 47. The registered capital of Hong Kong Jiang Yuan Limited, together with the registered capital of US$100,000 at its incorporation and the additional fund of US$2,900,000 provided during the capital increase in December 2007, were remitted in one go via the Angola account after the Hong Kong Jiang Yuan Limited bank account was set up subsequent to my confirmation that Fujian Jiangyuan could directly take over the Luanda‑Lobita Project. Xu Liu Chun had never provided a dime.

48. In fact, Xu Liu Chun did not have the ability to provide funds because, as mentioned above, his monthly income as a manager of the Fuzhou Office was RMB7,100. Until 2007, less than one-third of the Luanda-Lobita Project was finished and no bonus was available to him. I adduce exhibit ‘WCJ-31’, which is the photocopy of the monthly statement of my Angola bank account which shows that on 19 May 2008, a sum of US$3 million was transferred to Hong Kong Jiang Yuan Limited from the bank account under my name.”

34.Mr Xie Yung, the Financial Controller of FJY, also gave evidence that pursuant to Wu’s instruction, in about November 2007, he notified the relevant accountants firm in Hong Kong to enlarge the share capital of the Company from US$100,000 to US$3 million. He said that he learnt from Wu in May 2008 that Wu had personally remitted US$3 million from Angola to the Company in Hong Kong.

35.For his part, Xu denied that the Company arose from the Luanda‑Lobita Highway Project. He said that he and Wu had long intended to set up a company in Hong Kong to develop further the construction business in Angola and facilitate financial transactions. He agreed that the initial authorised capital of US$100,000 was not paid up when the Company was incorporated. In his second affirmation he did not expressly dispute that Wu remitted US$3 million from his Angolan bank account to the Company for the share capital, but said that “this could not have been his personal properties because he only received the distributed sum for him from the Luanda‑Lobita Project in 2011 and he was only a civil servant with limited savings”.[26] Xu said that much of the accounts payable of FJY was paid into Wu’s personal bank account in Angola but those sums were held by him on behalf of FJY, and that the money used to pay up the share capital of the Company was FJY’s money.[27] In his third affirmation Xu said that he and Wu went to Hong Kong to complete the procedures for increasing the share capital and that at that time they already had the necessary funds, which belonged to the two of them. Xu said that Wu was simply injecting the capital using the funds payable to FJY from the Luanda‑Lobita Highway Project.[28]

36.There were no bank documents put in evidence showing any injection of capital in or around December 2007 by either party. There was however a bank record showing a remittance of US$3 million from Wu’s own bank account (in Angola) to the Company on 19 May 2008. The distribution of dividends and bonuses of the Luanda–Lobito Highway Project (which took place in 2011 and 2012) could not account for the funds for the increased capital.[29]

37.The Judge noted that since Xu was the legal holder of the 40% shares, the burden lay on Wu to establish his assertion that Xu was merely his nominee.[30] In the end the Judge concluded that Wu had failed to discharge the burden of proof for the reasons he set out[31] which are quoted here:

“ (a) R’s remittance in May 2008 is inconsistent with his statement made in the documents filed with the Company Registry that the increased capital had already been paid up as at 27 December 2007. Similarly, I am not satisfied that the remittance is referable to the acquisition of the Company’s shares by either R or P in September 2007;

(b) the evidence of Mr Xie Yung, the successor of Mr Wang as the Financial Controller of FJY, that the share capital of the Company was injected in May 2008 and not December 2007, is contrary to the evidence of R and the Agreed Chronology. This part of Mr Xie’s evidence is not accepted;

(c) there are no documents showing any declaration of trust by P. R’s belated oral evidence that there had been such a written agreement, which had not been mentioned in any of his affirmations, is not accepted; and

(d) I find that it is more likely than not that R did not personally have US$3 million in or around December 2007, bearing in mind that he had been a civil servant in the mainland before as well as the circumstances surrounding the setting up of FJY. I find that it is more likely than not that the Company’s paid-up capital came from the proceeds of the projects in Angola rather than R’s personal resources.”

38.Based on the finding that the US$3 million capital of the Company came from the proceeds of the projects in Angola rather than Wu’s personal resources, the Judge held that the question of resulting trust did not arise.[32] Further, he held that, in view of the close personal and work relationship between the parties at the time, even assuming Xu had not personally contributed any funds towards the capital of the Company, it was inherently probable that it was their common intention then that Xu should be the beneficial owner of the 40% shares.[33]

39.On Wu’s cross‑appeal, it was contended that the Judge erred in rejecting Wu’s case of resulting trust. It was argued that the share capital plainly did not come from Xu, and that it must have come from the US$3 million remittance in May 2008 from Wu’s account to the Company’s account. But even assuming the money came via Wu’s account, there is nothing to impugn the Judge’s finding that Wu did not personally have such an amount of money and that the capital probably came from the proceeds of the projects in Angola rather than Wu’s personal resources.

40.On behalf of Wu, Mr Paul Wu accepted that proceeds of the Angolan projects would not belong to Wu until there was a distribution of dividends, and that on the Judge’s finding Wu did not have funds of his own to pay the capital in 2008. He argued, however, that assuming the money paid actually belonged to Changjie, the fact that Wu procured the money to be used in paying up the Company’s share capital meant that there was a resulting trust over Xu’s 40% shares in favour of Wu, even though Wu might have to account to Changjie for the use of the money.

41.We do not accept this contention, which seems to us contrary to principle. Nor were counsel able to refer us to any authority that supports it. There is nothing to show that Wu borrowed the money by way of loan and then made his own investment using the loan proceeds. If the money used to pay up the share capital did not belong to Wu in the first place (even if it went through his account), there is no reason why the law should presume, as between him and Xu, that the shares put in Xu’s name were held on trust for Wu. Since Xu was also involved in the Angolan projects, if the money had to be accounted for to one of the entities involved such as Changjie, it would at least be equally probable that it was intended that both Wu and Xu had to account in the proportion in which the shares were split between them. We fail to see any basis for the resulting trust contended for, which as Mr Paul Wu confirmed was the only basis of the cross‑appeal. It follows that the cross‑appeal must also be dismissed.

Disposition

42.For the above reasons, both the appeal and cross‑appeal fail. Counsel are agreed that costs should follow the event. Accordingly both the appeal and cross‑appeal are dismissed with costs.