Triunion (H.K.) Cereal & Oil Co Ltd v. Apac Investment Holdings Ltd and Others

HCA 1366/2017

[2022] HKCFI 3326

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1366 OF 2017

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Before:  Mr Recorder Victor Dawes SC in Court

Dates of Trial:  21, 22 and 28 July 2022

Date of Judgment:  4 November 2022

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J U D G M E N T

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A.  INTRODUCTION

1.This is another case about an investment opportunity that has turned sour. A dispute arose over the nature of the Plaintiff’s entitlement to shares in a listed company. By the end of this trial, I had no hesitation in concluding that the Defendants failed to honour the bargain and instead drained off seven-eighths of the value of the Plaintiff’s entitlement.

B.  BACKGROUND

B1.  The Parties

2.The Plaintiff (“P”) is a trading company in the business of exporting and importing grain and oil. It is a wholly owned subsidiary of Beijing Orient-Huaken Cereal & Oil Company Limited (“Beijing Orient”) at the material time. Gao Xia (“Mr Gao”) is the sole director of P and the sole shareholder of Beijing Orient since 15 May 2017. Xiang Limin (“Ms Xiang”) is a manager of P.

3.The 1^st Defendant (“D1”) was at all material times the sole owner of the 2^nd Defendant (“D2”). D2 is a controlling shareholder of Eagle Ride Investment Holdings Limited (the “ListCo”). The ListCo was formerly named Radford Capital Investment Limited until 7 January 2014. The 3^rd Defendant (“D3”) is the registered sole shareholder of D1 and the Chairman and director of D1 and D2. D3 is also a non-executive director of the ListCo since 1 November 2013. (Collectively, the “Ds”). Eric Yu Decheng (“Mr Yu”) is the CFO of ListCo and since 1 November 2013, also its company secretary.

4.Another key party to this action is Raiffeisen Zentralbank Osterreich Aktingescellschaft, an Austrian corporate group listed on the Vienna Stock Exchange (“RB Group”). Ma Su (“Mr Ma”) was a manager of RB Group at the time when RB Group subscribed to the D1 Notes (defined below).

B2.  Underlying Facts

5.Much of the facts set out in this subsection is extracted from the Chronology of Key Events in which the parties set out their respective positions.[1] At the outset, I note that a substantial portion of P’s factual case is not positively denied by the Ds. Where the parties failed to agree, I base my findings on the contemporaneous documentary record. Mr Fan (for P) helpfully summarised the developments into three stages which I conveniently adopt.

B2(i).  Stage 1: Subscription of D1 Notes

6.Since early 2013, P and RB Group entered into an investment proposed by D3 (the “Investment”), under which D1 is to be listed by way of an initial public offering (“IPO”).

7.On 6 February 2013, P subscribed to certain convertible notes issued by D1 (the “D1 Notes”) with RMB 43 million (the equivalent of US$6,904,998.06), under which D1 would undergo an IPO and the subscriber would be entitled to convert the subscription money for the D1 Notes at a formula which resulted in the subscriber obtaining shares in D1 upon being listed at RMB 2 per share (the “Formula”). The payment of the subscription monies was satisfied on 6 February 2013 by Beijing Orient directing an equivalent amount of due receivables under a sales contract to be made to D1.

8.There are at least 7 investors (including P and RB Group) who subscribed to the D1 Notes. The others are Zhang Dachun (張大春), Ping Jian (平劍), Gan Lianbin (甘連斌), Wang Haibin (王海濱) and Huang Huihuang (黃輝煌).

9.In around June 2013, D3 informed P that D1 was no longer pursuing an IPO itself, but the D1 Notes would be replaced by another transaction whereby D1 would acquire a listed company.

10.On 7 June 2013, D2 was incorporated by D1 with one sole share in D1’s name, with D3 appointed as director of D2 from 18 June 2013. From 8 August 2013 onwards, Twelve Dragons Limited was director of D2 until 22 September 2014 when the share mortgage over the sole share of D2 in favour of Twelve Dragons Limited as lender was discharged. On 22 September 2014, D3 became the sole director of D2.

11.On 21 June 2013, Pacita Sze of D1 (“Ms Sze”) emailed P enclosing a draft conversion deed with the rights therein substituting for D1 Notes (the unexecuted “1^st Deed”). In the email, P was asked to mail the executed 1^st Deed back to D1 and addressed to D3.

12.On 25 June 2013, the 1^st Deed was executed by P and D1. In their Amended Defence, Ds disputed the date of execution, but that argument was abandoned by the time of trial.

13.On 4 July 2013, RB Group and D1 also entered into a conversion deed in materially identical terms as the 1^st Deed.

B2(ii).  Stage 2: Acquisition of the ListCo and the Share Subdivision

14.In August 2013, D3, a Ms Ji of China Resources Group, Ms Xiang and a Yu Xiaolu of P met at the Beijing building of China Resources Group, whereby D3 informed P that he would acquire a listed company under the 1^st Deed without mentioning its identity.

15.On 29 August 2013, D2 entered into a sale and purchase agreement with Murtsa Capital Management Limited for D2 to acquire 39,373,750 shares in the ListCo for HK$56,745,448.5 (the “Murtsa SPA”), and further expressed intention to acquire all shares in the ListCo by way of a conditional voluntary cash offer (the “Offer”).

16.On 3 September 2013, D1 allotted new shares such that the total number of shares of D1 increased from one share to 1,124,136,738 shares.

17.On 5 September 2013, an announcement of the ListCo was published setting out the details of the Offer (the “2013.9.5 ListCo Announcement”). Central to this case is page 16 of that announcement, which explains the mechanism of a proposed share split:

“The Offeror [i.e. D2] contemplates to propose a share split (the “Share Split”) in the proportion of approximately 1 Share to 8 split shares (“Split Shares”) as soon as practicable as permitted under the Listing Rules and the Takeovers Code.”

“After the completion of the Share Split, and upon full repayment and discharge of the facility granted by Twelve Dragons Limited, the Offeror (i.e. D2) intends to conduct distribution-in-specie whereby the Spilt Shares which are to be held by the Offeror will be distributed to APAC (i.e. D1). Upon completion of the Offeror’s distribution-in-specie, APAC is expected to conduct another distribution-in-specie whereby the Spilt Shares which are to be held by APAC after the Offeror’s distribution-in-specie will be distributed to Mr. Hu (in his personal capacity and as trustee holding such Split Shares on trust for the Investors). APAC is beneficially owned as to approximately 89.6% by Mr. Hu and as to the Investors (whose interests are held on trust by Mr. Hu). Mr. Hu, as trustee of the Investors, intends to transfer to the Investors the Split Shares following the two distributions-in-specie.”

“The Investors, namely (i) Mr. Zhang Dachun（張大春）, Mr. Ping Jian（平劍）, Mr. Gan Lianbin（甘連斌）, Mr. Wang Haibin（王海濱）and Mr. Huang Huihuang（黃輝煌）are PRC residents and involved in investment projects in PRC; (ii) RB International Investments Asia Limited is principally engaged in financial services; and (iii) Triunion (H.K.) Cereal & Oil Company Limited is principally engaged in trading business. As of the date of this joint announcement, each of the Investors has neither held, owned nor had control or direction over any Shares.”

18.The “Share Split” mentioned in the 2013.9.5 ListCo Announcement is the share subdivision in the proportion of 1 to 8 (the “Share Subdivision”) referred to in a subsequent ListCo announcement dated 26 November 2014 (the “2014.11.26 ListCo Announcement”).

19.On 9 September 2013, Ms Sze (on behalf of D1’s Chairman’s office) emailed Ms Liu Qian (using the name 毛毛熊 in the messages) (“Ms Liu”) copying Ms Xiang, amongst others (the “2013.9.9 Email”). This is an important email on which the parties spent considerable time examining at trial. Ms Sze stated in the email “Please see the attached. The name can be seen at p. 16.” The 2013.9.5 ListCo Announcement was also attached.

20.On 1 November 2013, all existing directors of the ListCo resigned from office at the request of D2, and D3 (amongst others) was appointed director of the ListCo.

21.On 6 November 2013, the ListCo published an announcement setting out the details in respect of the Share Subdivision.

22.On 11 November 2013, as a result of completing the Murtsa SPA and the Offer, D2 acquired 90.35% of the issued shares in the ListCo (169,304,674 shares). Thereafter, trading of shares in the ListCo was suspended because after the acquisition and the Offer, D2 held more than 75% shares in the ListCo.

23.On 20 November 2013, the ListCo gave notice of an extraordinary general meeting (“EGM”) to be held on 12 December 2013 to resolve for the Share Subdivision and issued the relevant circular.

24.On 26 November 2013, a Twinky Tam of D2 sent a letter in Chinese of even date by email to P regarding compliance with the Listing Rules following the Offer. This is subsequent to an email chain in which Ms Liu of P asked for a Chinese version and explanation in response to earlier emails from Pauline Du of D2.

25.On 5 December 2013, the ListCo announced that the implementation of the Share Subdivision will be delayed until further notice due to the suspension of trading of the ListCo shares. Eventually, the resolution for Share Subdivision was passed on 12 December 2013.

26.It is Mr Gao’s unchallenged evidence that none of the ListCo announcements from November 2013 to 2014 was sent to P, except for the email chain mentioned above that addresses a compliance issue.

B2(iii).  Stage 3: The 2^nd Deed, the Share Transfer Document, and the aftermath

27.On 9 May 2014, D3 issued separate letters to P and RB Group, promising to allocate 21,163,819 ListCo shares to P and 61,300,000 ListCo shares to RB Group after June 2014. Notably, neither letter referred to the Share Subdivision.

28.On 9 June 2014, trading of ListCo shares resumed on the HKEx after its public float requirement was fulfilled.

29.On 22 September 2014, D2 discharged the share mortgage of Twelve Dragons Limited. The underlying mortgage documents were prepared by Troutman Sanders who acted for Twelve Dragons Limited. D3 executed the mortgage documents on behalf of D2 and D1.

30.On 14 November 2014, Mr Yu sent P a parcel by SF Express comprising (i) the Instrument of Transfer executed by D2; (ii) the Request for Removal of Securities; (iii) the 2^nd Deed executed by D1 and D3; (iv) the Revocation of Trust (attaching a declaration of trust dated 3 September 2013 (the “DoT”)); and (iv) P’s sole director resolution approving the signing of the documents (together, the “Share Transfer Documents”).

31.Ds’ pleaded case was that the 2^nd Deed was executed on 11 December 2014. That argument was also abandoned at trial and Ds accepted that Mr Gao received the Share Transfer Documents (which includes the 2^nd Deed) on 17 November 2014, executed them on the same day and sent back the same.

32.It is also Mr Gao’s unchallenged evidence that he left the dates in the Share Transfer Documents empty (except for the Request for Removal of Securities) at the request of Mr Yu.

33.On 24 November 2014, Mr Yu again sent a parcel by SF Express requesting P to execute a power of attorney (the “PoA”) in favour of D3 in respect of the Share Transfer Documents. Mr Gao returned the signed PoA to Mr Yu on 27 November 2014.

34.It was on 27 November 2014 that P eventually found out about the Share Subdivision for the first time (I will explain the reasons for this factual finding below). That was one day after the 2014.11.26 ListCo Announcement which announced that the Share Subdivision would take effect on 4 December 2014. On the same day, Mr Gao (i) reached out to Mr Yu and Mr Ma who also spoke with D3, each confirming that the Share Subdivision would not affect P’s interest; and (ii) recorded the conversations in an email sent to Mr Yu (the “2014.11.27 Email”). Mr Yu never replied to that email.

35.On 11 December 2014, the share certificate for 21,163,819 shares with a par value of HK$0.0125 each (the “Transferred ListCo Shares”) was issued to P (the “Share Certificate”) and sent to Mr Gao. A week later, Mr Gao returned the signed acknowledgement of receipt for the Share Certificate.

36.It is Mr Gao’s evidence under re-examination that he found out he only had Transferred ListCo Shares at a par value of HK$0.0125 each for the time in the first quarter of 2015.

37.On 16 March 2015, P sent Mr Yu an explanatory statement asserting that P was entitled to further shares representing the shortfall between P’s entitlement under the Share Transfer Documents and the Transferred ListCo Shares (the “Explanatory Statement”). Thereafter, P urged D3 for the transfer of further ListCo shares.

38.Matters then went into abeyance for some time. On 13 October 2016, Mr Gao and Ms Xiang met with D3 (the “2016.10.13 Meeting”). This important meeting was recorded and part of it was played in Court during P’s oral opening. D3 made various statements to the effect that the Transferred ListCo Shares were “undiluted original shares” (原始股). I will return to the 2016.10.13 Meeting below.

39.On 20 October 2016, Mr Gao emailed Mr Yu re-sending the Explanatory Statement.

B3.  The Plaintiff’s Allegations

40.In broad terms, P advances contractual claims against D1 and D2 (the “Contractual Claims”) and tortious claims against Ds (the “Tortious Claims”).

41.With regards to the Contractual Claims, P says it is entitled to be assigned 21,163,819 shares in ListCo with a par value of HK$0.1 per share from D2 pursuant to the Share Transfer Documents. Instead, D1 and D2 breached their obligations by transferring the 21,163,819 shares to P with a diluted par value following the Share Subdivision (with a new par value of HK$0.0125 per share, one-eighth of the original value). In his opening, Mr Fan made clear P will not pursue specific performance and is content to only sue for damages.

42.With regards to the Tortious Claim, P says Ds have committed (i) inducing breach of contract and (ii) unlawful means conspiracy whereby D3 deliberately sought to defeat P’s contractual entitlement by a preordained scheme leveraging on the Share Subdivision.

43.I note that in its Amended Statement of Claim, P made further claims in Quistclose trust, constructive trust, and dishonest assistance. By the time of trial those claims were no longer pursued.

B4.  The Defendants’ Case

44.The main plank of the Ds’ defence against the Contractual Claims is that so long as the correct quantity of ListCo shares is delivered, it matters not what the par value of those ListCo shares is.

45.Ds also pleaded the defences of estoppel:

(1)  P is estopped from raising any claim under the 2^nd Deed by virtual of Clause 5 of the 2^nd Deed; and that Clauses 1 and 5 of the 2^nd Deed released Ds from the performance of the 1^st Deed (the “Release Defence”)

(2)  P is contractually estopped from disputing that he had received 21,163,819 ListCo shares on 11 December 2014 because P had acknowledged receipt (the “Contractual Estoppel Defence”).

46.Ds’ opening submissions also allude to the new bases of estoppel raised in the Defence’s List of Issues. Mr Fan made a pleading point which I address below.

47.As regards the Tortious Claims, Mr Fan accepted that if the Court rejects P’s Contractual Claims, P will fail on its Tortious Claims. Mr Pirie (for Ds) did not expressly address the inducing breach of contract claim in his submissions. As for unlawful means conspiracy, Mr Pirie submitted that there was no specific intent or an agreement between Ds to do harm. Mr Pirie further suggested that any conspiracy allegations would have to include the professional advisors in the takeover deal.

C.  ANALYSIS

C1.  Witness testimony

48.It is trite that in assessing the credibility of a witness, the Court takes into account (1) inherent probabilities or plausibility; (2) consistency with contemporaneous documents or evidence; (3) if a witness is found to be untruthful or unreliable on one matter, that may affect his credibility and reliability in other matters; (4) demeanour of the witness and (5) a witness’s motives: see for example Lee Fu Wing v Yau Po Ting Paul [2009] 5 HKLRD 513 at 524 (DHCJ Au (as he then was)).

C1(i).  Mr Gao

49.Mr Gao is the only witness who gave evidence at trial for P. He struck me as a forthright and honest witness who took his time to digest counsel’s questions and tried his best to answer the questions posed to him. He is clearly not a sophisticated investor, as he showed genuine difficulties in making sense of any technical legal documents or factual issues with any complication. For instance, when asked whether he knew of the conditional voluntary cash offer, he frankly said “I don’t understand”. When it was put to him that he agreed to release the professional advisors in exchange for the Share Certificate under the 2^nd Deed, he said he could not really understand the legal effect of the document. On various occasions, he also appeared to be confused by some calculations put to him by Mr Pirie. None of these is surprising as his main line of business (i.e. P) is a trading company in the business of import and export which does not involve any anything technical or complicated. It is also clear that he has a rather limited understanding of English.

50.Mr Pirie attacked Mr Gao’s credibility on the basis that Mr Gao said he only saw various announcements and notices for the first time in the witness box, whereas he had referred to such documents in his witness statement. I do not think this shows any dishonesty or untruthfulness on the part of Mr Gao. He frankly accepted during cross-examination that his legal representatives and staff assisted with the preparation of his witness statement. Given his lack of understanding of technical investment matters, his lack of English proficiency, and the three years that have elapsed between the preparation of his witness statement and the trial, I do not treat these blemishes on peripheral matters as casting doubt on his credibility. I find that it is not implausible that Mr Gao had only briefly seen the relevant ListCo announcements at the time of preparing his witness statement after being informed of the rough idea therein.

51.In arriving at this conclusion, I bear in mind DHCJ Paul Lam SC’s reminder in Sarah Sally Chan Kent v Chim Sau Ching [2019] HKCFI 3066 at [44] that the Court will have regard to the difficulty of witnesses to recall clearly what happened in relation to events that took place a long time ago, and their evidence may not be reliable not because they lied deliberately.

52.This is also a convenient juncture to set out two preliminary remarks in relation to Mr Gao’s evidence.

53.First, it is clear that Mr Gao was prepared to make a significant investment (in the sum of RMB 43 million) with minimal due diligence. He confirmed under cross-examination that P did not seek professional advice before investing, apart from speaking to Mr Ma of RB Group. Mr Gao signed up to the D1 Notes on the faith of D3 (and the China Resources Group that he D3 appeared to represent). When the mode of the investment changed significantly from the contemplated IPO to a distribution of shares post-acquisition, Mr Gao indicated at trial that P would be satisfied so long as the Formula remains. Further, when Mr Pirie suggested to Mr Gao that P is a sophisticated company with an investment team busy looking at the Internet to see what happened to the ListCo shares, Mr Gao flatly rejected that assertion. Mr Gao also firmly denied Mr Pirie’s suggestion that he is part of an investor group connected with China Resources.

54.Second, Mr Gao did not care much about legal formalities given his trust in D3 at the time. He acknowledged at trial that he signed and returned the Share Transfer Documents without much thought and did so without legal advice. P unsuspectingly kept the dates of the Share Transfer Documents (except the Request for Removal of Securities) empty upon Mr Yu’s requests. As shown in the 2014.11.27 Email, upon D3’s assurance that P’s rights are guaranteed, Mr Gao also unquestioningly executed and sent back the PoA which grants wide powers to D3. Similarly, when pressed under cross-examination about why he did not seek further advice before signing back the Revocation of Trust, Mr Gao answered that his concern was simply to get the ListCo shares because at the time the price was good.

55.The picture that emerges is that P placed unfaltering confidence in D3 throughout the Investment.

C1(ii).  Ms Xiang

56.A witness statement made by Ms Xiang was filed but she did not testify at trial. I therefore disregard her witness statement.

57.Mr Pirie criticised the reasons P gave for Ms Xiang’s absence (i.e. that she was not vaccinated and hence unable to come to Hong Kong). I am of the view that no adverse inference should be drawn against P for failing to secure Ms Xiang’s attendance because as Mr Fan submitted, the matters in Ms Xiang’s witness statements which P wishes to rely were agreed between the parties in the Agreed Chronology of Key Events filed in April 2022. To the extent that Mr Pirie now seeks to retract from the Agreed Chronology in his submissions dated 29 July 2022, I find that P’s factual account is to be preferred (for the reasons discussed below).

C1(iii).  D3

58.D3 did not give evidence at trial. I disregard his witness statement in its entirety. Mr Fan further invited me to draw adverse inferences from D3’s non-attendance.

59.I should make clear that for the reasons set out in Sections C2 and C3, I hold that P’s unchallenged evidence suffices to discharge P’s burden of proof for both its Contractual Claims and Tortious Claims, without having to rely on the adverse inferences. Even if I am wrong in so concluding, I am satisfied that adverse inferences may properly be drawn to tip the balance against the Ds as P has established a prima facie case.

60.The applicable principles are well-known:

(1)  After a prima facie case on the facts is raised with evidence of “sufficient cogency”, adverse inferences could be drawn from the failure to adduce contradictory evidence, particularly where a party could be expected to provide such evidence; in such situations silence would be fatal: Hua Yuan Development Ltd v Zurich Insurance Co Ltd (2014) 17 HKCFAR 493 at [46] (Ma CJ).

(2)  The silence of one party in the face of the other party’s evidence may convert that evidence into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence: Credit One Finance Ltd v Leung Ying Lok [2020] HKCFI 2919 at [69] (Ng J), quoting Prest v Petrodel Resources Ltd & Ors [2013] 2 AC 415 at [44] (Lord Sumption JSC).

61.This is a prototype case to draw adverse inferences. D3 is a party to the action facing serious allegations. Having filed a witness statement, D3 only informed the Court (through Mr Pirie) on the second day of the trial that he would not attend the trial for cross-examination. No good reason was given for his sudden absence. There are also issues in dispute that concern D3’s knowledge and state of mind at the material time, especially with regards to the Tortious Claims. There can be no doubt that D3 has detailed personal knowledge of those matters.

62.Accordingly, as invited by Mr Fan, I draw the general adverse inference that there is no innocent explanation for the false statements that D3 has made (I shall explain what those false statements are below). Further, I note that in a case with two competing theories of event, rejection of one version may usually lead to the acceptance of the other: Ide v ATB Sales Ltd [2008] PIQR P13 at [6]. As such, I also draw the inference that Ds’ factual account tends not to be the truth and it is more likely that the truth is set out in Mr Gao’s account.

C2.  Contractual Claims

C2(i).  Contractual Interpretation

63.The general principles of contractual interpretation are recently reiterated in Eminent Investments (Asia Pacific) Ltd v DIO Corporation (2020) 23 HKCFAR 487 at 503-505 (Ribeiro PJ and Lord Collins NPJ). Those familiar principles need not be regurgitated, save to emphasise that the starting point is an objective interpretation of the natural meaning of the contractual language. The more unreasonable the result, the more unlikely it is that the parties could have intended it, and if they do intend it, the more necessary it is that they shall make that intention abundantly clear: Building Authority v ENM Holdings Ltd (2018) 21 HKCFAR 194 at 209 (Tang PJ and Lord Collins NPJ).

64.The question before me is narrow: whether P’s entitlement is to 21,163,819 ListCo shares at a par value of HK$0.1, or this quantity regardless of any par value.

65.The starting point is the text of the 2^nd Deed. Clause 1 of the 2^nd Deed provides that:

“Triunion (H.K.) Cereal & Oil Company Limited [i.e. P], in consideration of and in view of Eagle Ride Investment Limited [i.e. D2] (the wholly held subsidiary of APAC Investment Holdings Limited) [i.e. D1] transferring twenty-one thousand million, one hundred and sixty-three thousand, eight hundred and nineteen (21,163,819) shares in Eagle Ride Investment Holdings Limited [i.e. ListCo] (and Triunion (H.K.) Cereal & Oil Company Limited hereby acknowledges the receipt of twenty-one thousand million, one hundred and sixty-three thousand, eight hundred and nineteen (21,163,819) shares in Eagle Ride Investment Holdings Limited), hereby agree and confirms that:

(A) All liabilities of APAC or its subsidiaries and/or affiliated/associated companies under the Referred Deed 2 have been (deemed to be) fully performed, and all liabilities of APAC or its subsidiaries … under the Referred Deed have been (deemed to be) fully discharged and released. APAC or its subsidiaries (including Eagle Ride Investments Limited) and/or affiliated/associated companies shall not be liable for any (legal) obligations in respect of the Referred Deed and the Subscription Amount…”

66.It is clear that under Clause 1, D1 is obliged to procure D2 to transfer 21,163,819 ListCo shares to P.

67.Recitals (I) to (III) then describe the 1^st Deed and the acquisition of shares in the ListCo. Recital (IV) records the DoT. Recital (V) provides that:

“On the signing date of this Deed, Triunion (H.K.) Cereal & Oil Company Limited shall obtain 21,163,819 shares transferred by Eagle Ride Investments Limited (a subsidiary fully owned by APAC, listed on the main board of HKEX, stock code: 901). Triunion (H.K.) Cereal & Oil Company Limited hereby agrees and acknowledges that (i) all liabilities of APAC or its subsidiaries and/or affiliated/associated companies under the Referred Deed have been (deemed to be) fully performed and (ii) Triunion (H.K.) Cereal & Oil Company Limited has requested Hu Haisong to cancel the Declaration of Trust.”

68.Strikingly, the Share Subdivision was mentioned in neither the Recitals nor the operative sections.

69.As for D2, its contractual obligation to transfer 21,163,819 ListCo shares to P arises from the Instrument of Transfer.

70.Against this contractual matrix, I find that P is entitled to 21,163,819 ListCo Shares at a par value of HK$0.1 for the following reasons.

71.First, at the date of the 2^nd Deed (17 November 2014), the ListCo shares had a par value of HK$0.1. A reasonable person in the position of the parties would have understood that the ListCo shares mentioned in the Share Transfer Documents to be those subsisting as of that date. Neither the recitals nor the operative clauses of the 2^nd Deed referred to the Share Subdivision. Given the importance of the Share Subdivision to the economic value of the ListCo shares, it is quite extraordinary that it is not recorded if the parties intended that P is entitled to shares with post-subdivision par value.

72.Second, I am satisfied that P only became aware of the Share Subdivision after the 2^nd Deed was executed.

73.As a preliminary matter, Ds pleaded that the Share Subdivision took place on 13 December 2013. That cannot be right. The 2014.11.26 ListCo Announcement puts it beyond doubt that the Share Subdivision will become effective on 4 December 2014 due to delays caused by the suspension of trading.

74.Ds relied heavily on the 2013.9.9 Email to show that P knew about the proposed Share Subdivision prior to the execution of the 2^nd Deed. Mr Pirie was at pains to stress that the email specifically drew P’s attention to page 16 of the 2013.9.5 ListCo Announcement attached therein, where the Share Subdivision was mentioned. Nevertheless, I am persuaded that P did not have knowledge of the Share Subdivision until 27 November 2014:

(1)  First, Mr Gao was not a recipient of the 2013.9.9 Email. His consistent evidence is that he did not read and did not know about the 2013.9.9 email at the time.

(2)  Second, the text of the 2013.9.9 Email only asked P to take note of the “name” in the attachment. The Share Subdivision was not expressly mentioned. P was merely given the 2013.9.5 ListCo Announcement on a “for your information” basis, rather than being asked to verify the accuracy of the 2013.9.5 ListCo Announcement before its publication.

(3)  Third, although the email was sent (and copied) to Mr Gao’s staff, Mr Gao confirmed at trial that his staff members were far from comfortable with technical English. It is telling that on another occasion, P’s staff had asked for Chinese versions upon receiving English documents. Indeed, Mr Gao said under cross-examination that the English proficiency of Ms Liu (recipient of the 2013.9.9 Email) is perhaps worse than his. As Mr Gao suggested, it is entirely plausible, Ms Liu, having seen the email, scrolled to page 16 of the 2013.9.5 ListCo Announcement, saw the Chinese name of P, and simply thought P has taken part in the acquisition.

(4)  Fourth, during cross-examination, Mr Pirie put to Mr Gao that it would have been a good idea to have the public announcements translated and explained to him. But that has no bearing on whether P had knowledge of the Share Subdivision. Putting Mr Pirie’s case to its highest, the 2013.9.9 Email at best presents an occasion for P’s staff to discover on 2013.9.9 what Ds are up to.

(5)  Fifth, Ds do not even suggest that there were further exchanges between the parties regarding the Share Subdivision immediately after the 2013.9.9 Email. It is inconceivable that if P actually knew of the Share Subdivision at the time of the 2013.9.9 Email, Mr Gao and Ms Xiang would not have immediately followed up with D3 (contrast the immediate inquiries P made after 27 November 2014).

(6)  Sixth, the tenor of the 2014.11.27 Email from Mr Gao to Mr Yu strongly suggests that this was the first time P knew about Share Subdivision. In that email, Mr Gao expressly put on record the content of the calls, stressing that “Mr Yu promised that P’s rights would not be diluted” and D3 promised to “protect [P]’s rights”.

75.As such, I find that as at the date of contract, there was no indication to P, and P did not know, that the Share Subdivision was about to take place. The Share Subdivision therefore does not constitute part of the background knowledge available to the hypothetical reasonable person in the contractual construction exercise.

76.Third, the Request for Removal of Securities is also telling. Mr Gao filled in the date as “2014.11”. I read this as an objective expression of P’s intention that the ListCo Shares shall be received by P prior to the Share Subdivision.

77.Finally, I need not go so far as to accept Mr Fan’s submission that the 2013.9.9 Email and the public ListCo announcements do not form part of the factual matrix at all. Whereas courts have cautioned against casting a wide net over information generally available on the Internet: Rockliffe Hall Limited v Travelers Insurance Company Limited [2021] EWHC 412 at [32], I accept that the ListCo announcements are “reasonably available” to the parties when contracting because “factual matrix” includes absolutely anything which would have affected how the language of the document would have been understood by a reasonable man: Huang Qingzhan v China Ding Yi Feng Holdings [2020] HKCFI 484 at [45] (Linda Chan J).

78.That said, I would in any event accord minimal weight to the 2013.9.5 ListCo Announcement insofar as it is suggested that it bears on parties’ objective intention, given my finding that P had no knowledge of it at the time of contracting. I also reject any suggestions that P is somehow obliged to proactively make inquiries or to conduct an Internet search to discover the 2013.9.5 ListCo Announcement (or indeed any other public announcements) at the time of contract.

79.I turn now to address other arguments raised by Mr Pirie.

80.First, Mr Pirie submitted that P simply made a US$ 6.9 million (RMB 43 million) investment in an “unknown number of shares in any listed company, at an unknown price at that stage”. Such a construction defies common sense. As Lam VP (as he then was) observed in New Castle Investments Ltd v WFC Holding Ltd [2020] HKCA 755 at [38]-[41], if there are two available constructions, the Court is entitled to prefer the construction which is consistent with business common sense and reject the other. Here, P made the Investment for a sizeable sum (RMB 43 million). The 2^nd Deed and the Instrument of Transfer must be read in that context, bearing in mind that commercial parties transact shares for their economic value, not the shares per se.

81.Second, it appears to be the Ds’ pleaded case that the purpose of the Investment is merely for P to seek opportunities to collaborate with China Resources Group in the future. All that matters, says the Ds, is the quantity, not the par value of the shares. But Mr Gao’s unchallenged evidence is that D3 had represented to P that there would be high returns from subscribing to the D1 Notes because China Resources Group would acquire shares in D1 post-listing. It is unreal to suggest the par value does not matter to him when making a quick profit was clearly at the forefront of Mr Gao’s mind at the time of contracting.

82.Third, Mr Pirie submitted that P acted “as part of the concert party of 7 investors” to join in the Investment. I accept P’s case that apart from RB Group, at the time P did not know about the other investors. Under cross-examination, Mr Gao denied knowing that P is part of a group of investors who bought shares in the ListCo and I accept his evidence.

83.Fourth, although Mr Pirie did not expressly put his case along these lines, I accept Mr Fan’s submissions that Ds cannot somehow incorporate an additional term by “notice” into the 2^nd Deed through the backdoor. Such argument is unpleaded and is in any event precluded by Clause 5 of the 2^nd Deed: Noble Field Overseas Ltd v United Best Developments Ltd (HCA 1549/2013, 4 November 2016) [31]-[32] (DHCJ Field).

84.Fifth, the DoT does not assist Ds’ case. Whilst it is puzzling why the DoT is required to implement P’s Investment, it does not go to resolve the claims one way or another and it is unnecessary to dwell on it further.

85.Finally, Mr Pirie also referred to me several company law authorities for the proposition that the Share Subdivision was somehow not for an improper purpose. But P did not run its case along these lines, and I need not go into that.

C2(ii).  Implied Terms

86.Since P has succeeded in its claim based on the express terms, I need not rule on the implied term issue. If necessary, I would find that it is proper to imply a term that P is entitled to the ListCo shares with the par value as of the contractual date. For the reasons set out in Section C2(i), the test in Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd [2019] HKCA 261 at [24]-[32] is squarely met. That the ListCo shares are to be bought at the par value at the time of contracting is necessary to make the 2^nd Deed and the Instrument of Transfer work because it is so obvious that it goes without saying and is necessary for business efficacy.

C2(iii).  Estoppel

87.The Release Defence can be quickly disposed of. Ds’ reliance on Clauses 1 and 5 of the 2^nd Deed is misplaced because they at best release Ds’ liabilities under the 1^st Deed:

(1)  Clause 1(A) provides that all liabilities of D1 under the 1^st Deed are released.

(2)  Clause 1(B) releases D3 from liabilities under the DoT.

(3)  Clause 1(C) further waives all rights in respect of “[the 1^st Deed], the DoT, such other documents, such undertaking and the Subscription Amount, including but not limited to the right of recourse and claim (if any)” against D1 and D3.

(4)  Clause 5 provides that the 2^nd Deed shall supersede all prior understandings and agreements of the parties (i.e. the 1^st Deed).

88.Given that P now bases its Contractual Claims under the 2^nd Deed and the Instrument of Transfer instead of the 1^st Deed, the Release Defence must fail.

89.As for the Contractual Estoppel Defence, Ds pleaded and rely on the following sentence in Clause 1 of the 2^nd Deed.

“… (and Triunion (H.K.) Cereal & Oil Company Limited hereby acknowledges the receipt of twenty-one thousand million, one hundred and sixty-three thousand, eight hundred and nineteen (21,163,819) shares in Eagle Ride Investment Holdings Limited) …”

90.Contractual estoppel binds the parties to a particular fact even if they are aware of the true facts. Its rationale lies in the agreed basis for the contractual parties to conduct their relationship arising from the contract. As such, the scope of the estoppel is confined to that as agreed between the parties, which is usually confined to the dealings arising from the contract, but not other aspects of their relationship: Ng Yuk Pui Kelly v Ng Lai Ming Winnie [2021] 5 HKC 1 at [76] (Lam VP (as he then was)).

91.Looking at the pleaded sentence, P’s confirmation of receipt of ListCo shares only goes to the quantity of shares, being 21,163,819, but not its value. As I have explained, the essence of P’s complaint is that it has been given ListCo shares of an incorrect par value. Bearing in mind the reminders in Ng Yuk Pui Kelly, one should be cautious not to expand the scope of the estoppel beyond the parties’ clear contractual language. As such, I hold that Clause 1 does not preclude P from arguing that it is entitled to undiluted shares.

92.The Contractual Estoppel Defence must be rejected.

93.Mr Fan submitted alternatively that any alleged contractual estoppel is abrogated by the parties’ conduct: Chow Shu Soon v Ng Fuk Ming [2022] HKCFI 565 at [61] and [67] (DHCJ P Fung SC); Asgain Co Ltd v Cheng Ka Yan (No. 2) [2018] 2 HKLRD 641 at [18] (Lam VP (as he then was)); Spencer Bower: Reliance-Based Estoppel (5^th ed.) at § 8.75.

94.I agree. Despite P purporting to acknowledge receipt of the ListCo shares under Clause 1 of the 2^nd Deed, D2 had subsequently caused the Transferred ListCo Shares to be issued to P on 11 December 2014 and tendered the Share Certificate on 16 December 2014. If Clause 1 of the 2^nd Deed gave rise to an estoppel, the effect of such estoppel was subsequently extinguished by a counter-estoppel arising from the issuance of Transferred ListCo Shares and the tender of the Share Certificate.

95.I would also add that there can be no pleading objection to the abrogation point because both the material facts and the legal implications have been adequately pleaded in P’s Amended Reply: see Lo Yik Sui v Fubon Bank (Hong Kong) Limited (2020) 23 HKCFAR 138 at 142 (Fok PJ) (holding that there is no requirement for a party to plead the legal consequences of particular facts).

96.On the contrary, I agree with Mr Fan that the defences of estoppel by convention and estoppel by representation subsequently raised were not properly pleaded by Ds.

97.At § 42 of the Amended Defence, Ds pleaded:

“…

(1) It is averred that by virtue of Clause 5 of the 2^nd Deed (as averred at paragraph 45(3)(b) hereof), any such alleged pre-existing and/or existing understanding and/or agreement was superseded by the 2^nd Deed.

(2) It is further averred that by virtue of the said Clause 5, the Plaintiff covenanted and/or promised to confirm and/or not to dispute the fact that the Plaintiff had and/or had had no claim and/or dispute arising out of any such alleged pre-existing and/or existing understanding and/or agreement at and/or by the time of the 2^nd Deed (hereinafter as the ‘Fact of No Claim’).

(3) Insofar as may be necessary, the Defendants will rely on the doctrine of contractual estoppel to bar the Plaintiff from disputing and/or resiling from the Fact of No Claim.

…”

98.At § 45 of the Amended Defence, Ds pleaded:

“…

(4) It is further averred that the 2^nd Deed was a deed of release…

(5) By virtue of Clause 1 of the 2^nd Deed, the Plaintiff’s cause of action over and/or in connection with, inter alia, the 1^st Deed (if any, which is denied) was discharged and/or released by the 2^nd Deed.

(6) Further, by virtue of the phrase ‘聯眾碩亞（香港）糧油有限公司再次確認已獲轉讓二千一百一十六萬三千八百一十九（21,164,819）股鷹力投資控股有限公司股份’in brackets in Clause 1 of the 2^nd Deed, it is clear that the Plaintiff covenanted and/or promised to confirm and/or not to dispute the fact that the subject matter to be transferred under and pursuant to that Clause 1, i.e. 21,163,819 shares of and in the Listed Co. (regardless of whether of HK$0.1 par value each or HK$0.0125 par value each) was and/or had already been transferred to the Plaintiff at or by the time the 2^nd Deed was entered into and/or executed (hereinafter as the ‘Fact of Shares Transfer’).

(7) Insofar as necessary, the Defendants will rely on the doctrine of contractual estoppel to bar the Plaintiff from disputing and/or resiling from the Fact of Shares Transfer.

…”

99.The above paragraphs at best go to the Release Defence and the Contractual Estoppel Defence. I am satisfied that the other purported estoppels are not pleaded and do not arise for my determination. “Estoppel must be specifically pleaded, unless there is no opportunity to do so”: Li Man Wai v Ngan Suet Fong Bonnie [2021] HKCFI 931 at [10] (DHCJ MK Liu).

100.Indeed, looking at the Defence’s List of Issues and Ds’ submissions, it is also difficult to discern clearly whether Ds are relying solely on estoppel by convention, or if estoppel by representation is also invoked.[2]

101.Even if I am wrong on the pleading point, the new bases for estoppel also fail on the facts.

102.At trial, Mr Pirie put to Mr Gao that P must have known that the ListCo shares P received were diluted upon receiving the Share Certificate. It was also suggested to Mr Gao that he was content to accept the Share Certificate because he must have known that the share price had gone up significantly. Yet Mr Gao’s answers are clear and consistent: he accepted the ListCo shares because he believed that he was entitled to those shares. Upon the assurance of D3, he simply checked the number of shares promised and P’s name, which he found to be correct. In my view, Mr Gao’s evidence plainly contradicts any alleged common assumption (for estoppel by convention) and any alleged representation (for estoppel by representation). In any event, there is no evidence pointing towards any reliance on the part of Ds: Unruh v Hans-Joerg Seeberger (2007) 10 HKCFAR 31 at [126], [129]-[130] (Ribeiro PJ).

103.Ds’ estoppel defences must fail.

C3.  Tortious Claims

104.Turning to the two Tortious Claims, Mr Fan invites me to first address the tort of inducing breach of contract. Although in the Amended Statement of Claim the Tortious Claims were made against all Ds, at trial, Mr Fan accepted that Tortious Claims were essentially directed against D3. I therefore focus my analysis on D3.

C3(i).  Inducing breach of contract

105.The legal principles governing the tort of inducing breach of contract are not in dispute. The elements constituting the tort are: (a) a contract; (b) known to a third party who; (c) induces or persuades a contracting party to break it; (d) intending to bring about the breach; and (e) causing loss: Eton Properties Ltd v 廈門新景地集團有限公司 (2020) 23 HKCFAR 348 at 404.

106.I note that the mere fact that D3 has not appeared in Court does not absolve P from proving its case. This is especially true where serious allegations are involved: Choi Lisa Mei Yin v Yau Pak Kin [2020] 2 HKC 228 at [36] (Kwan VP). Having considered the evidence before me, however, I find that D3 carried out a scheme to procure the Share Subdivision and to conceal its effect from P.

107.Elements (a) and (b) are clearly present.

108.(c) Inducing a contracting party to breach: I find that D3 had procured the Share Subdivision to take effect from 4 December 2014 (which I have found to be a breach of contract) as the controller pulling the strings, based on (i) my findings in Section C2 and (ii) the following:

(1)  The ListCo was under D3’s control from 11 November 2013. Apart from being a non-executive director of ListCo, at the material time D3 controlled D2, who in turn was the majority shareholder of ListCo from 11 November 2013 onwards.

(2)  Mr Yu, who was at the material time the company secretary and CFO of the ListCo, acted in accordance with the instructions of D3. That is also clear from the fact the Share Transfer Documents were sent out and received by Mr Yu on behalf of the Ds. During the 2016.10.13 Meeting, D3 also repeatedly emphasised that Mr Yu is responsible for the dealings and encouraged Mr Gao and Ms Xiang to reach out to Mr Yu.

(3)  Twelve Dragons Limited (the lender to D2 for the Offer) ceased to be director of D2 on 22 September 2014, with the share mortgage over the entire shareholding of D2 (held by D1) released on the same day. Thereafter, D2 came under D3’s control without being subject to any rights of Twelve Dragons Limited.

109.(d) Intention to bring about the breach: As Lord Sumption NPJ emphasised in Eton Properties (supra) at 404, the defendant must know not only the fact but also that the legal consequence of his acts is to induce a breach of contract. This is met in the present case: D3 knew full well that distributing only the diluted post-Share Subdivision ListCo shares constitutes a breach of the Share Transfer Documents. Three matters stood out to me:

(1)  First, the assurances made on 27 November 2014. It is not disputed that on that day Mr Gao spoke with Mr Yu on the phone, and with Mr Ma who spoke with D3, each confirming that the Share Subdivision would not affect P’s interest. After Mr Gao recorded the two conservations in an email sent to Mr Yu, Mr Yu never replied to express any objection when it is abundantly clear that at that point D3 must know that the Share Subdivision would mean Mr Gao’s ListCo shares only have one-eighth of their original value.

(2)  Second, the 2016.10.13 Meeting is telling:

(i)  The overall tenor of that meeting is that Mr Gao and Ms Xiang were still trying to find out what had happened and to seek D3’s assurances regarding P’s entitlement.

(ii)  The distinct impression one got from reading the transcript and listening to the recording is that D3 was avoiding the questions posed by Mr Gao and Ms Xiang. When pressed, D3 was evasive and shifted the burden to Mr Yu, urging Mr Gao and Ms Xiang to contact Mr Yu, who is purportedly more familiar with the specifics.

(iii)  D3 reassured Mr Gao and Ms Xiang that they would receive “undiluted original shares” (“原始股”); and that their ListCo shares are “100% undiluted” (“百分之百没有稀释”) – despite knowing that those statements must be false.

(iv)  It is striking that D3 offered to “compensate” (“补偿”) Mr Gao and Ms Xiang by giving them cash or shares in a different company. D3 further alluded to some vague alternative business opportunities in another listed company. All these are inconsistent with D3’s assurances that P has “undiluted original shares”.

(v)  D3 further admitted that without the Share Subdivision, the number of shares held by D2 would not be sufficient for distribution.

(3)  Third, I reject Mr Pirie’s submissions that the 2013.9.9 Email is inconsistent with an intention to deceive because D3 was giving notice to P with regards to the Share Subdivision.

(i)  First, given the lack of evidence from D3, it cannot be readily assumed that it was actually D3 who specifically instructed Ms Sze to send the 2013.9.9 Email. If this is Ds’ case, D3 should at least come to court and explain. Nor is there evidence before me from D3 that he held a genuine belief that the 2013.9.9 Email would or was intended to alert P to the Share Subdivision.

(ii)  Second, again, the 2013.9.9 Email was sent after the 2013.9.5 ListCo Announcement was made. There was no attempt to consult P prior to the announcement.

(iii)  In any event, I agree with Mr Fan that November 2014 (when the acts constituting the tort of inducing breach of contract took place) is the relevant time for assessing whether there is the requisite intention. Tellingly, D3 took no steps to update P about the progress of the Share Subdivision, including the EGM approving the Share Subdivision. In a letter dated 9 May 2014 in which D3 explained to P why the distribution of shares was delayed, D3 did not bother to bring up the Share Subdivision, despite providing five other reasons for the delay.

110.(e) Causing loss: As a result of D3 inducing the breach by D1 and D2, P suffered a loss in receiving ListCo shares with one-eighth of their original value.

111.Accordingly, I am satisfied that D3 orchestrated the Share Subdivision in an attempt to get out of the predicament that the number of ListCo shares was insufficient for distribution without the Share Subdivision.

112.Albeit not strictly necessary, these conclusions are bolstered by the adverse inferences that I draw against D3. Specifically, his non-attendance suggests it is more likely that there is no innocent explanation for the false statements he made.

113.For completeness, I am not satisfied that D3 can invoke the Said v Butt exception where a director acted bona fide within the scope of his authority: East Asia Satellite Television (Holdings) Ltd v New Cotai LLC [2011] 3 HKLRD 734 at 741-743. It is plain from my factual findings above that D3 has not acted in bona fide. It is also unreal to suggest that D3 is acting as a mere agent of D1 and D2.

C3(ii).  Unlawful means conspiracy

114.Given my conclusions on inducing breach of contract, P need not rely on unlawful means conspiracy. Indeed, Mr Fan invites the Court to find unlawful means conspiracy only “insofar as necessary”. Although it is unnecessary to express a definitive view, for completeness I shall briefly explain why P would also prevail under this claim.

115.The elements of this tort are: (a) a combination; (b) of persons including the defendant; (c) to do something which is unlawful in itself; (d) with a common intent to injure (although there is no need for there to be a predominant motive to injure); (e) causing loss to the plaintiff: Kuwait Oil Tanker Co SAF v Al Bader [2000] 2 All ER (Comm) 271 at [108].

116.It is trite that the Court will require cogent evidence in drawing inferences of the conspiracy and the intention: Passport Special Opportunities Master Fund v ESun Holdings Ltd [2011] 4 HKC 62 at 85 (Barma J (as he then was)). But it is also in a rare case that there will be direct evidence of the agreement itself: Binchuang Resources Ltd v Lockwood Group Ltd [2020] HKCFI 2941 at [33] (A Chan J), especially in the present case where D3 decided to avoid cross-examination.

117.I am satisfied that there is a combination amongst D1, D2, and D3 as a result of my findings at [107] above that D3 is the directing mind behind the scheme. The unlawful means consists of the breach of P’s entitlement under the Share Transfer Documents. The intention to injure is reflected in the scheme to drain off seven-eighths of the value of the ListCo shares to which P is entitled, as well as the subsequent attempts to conceal the truth. I would add that such intention may also be inferred from the deliberate commission of the acts, which constitute unlawful means: Kuwait Oil Tanker (supra) at [115], [120]-[121]. As a result, P suffered a loss in receiving ListCo shares with one-eighth of their original value.

118.Finally, there is, with respect, also no merit in Mr Pirie’s suggestion that Deloitte and Troutman Sanders must also be joined in the conspiracy claim. There is no need to name all co-conspirators, nor is it P’s case that the professional advisors are co-conspirators.

D.  QUANTUM

119.With regards to the Contractual Claims, the parties should be put in the same position had the contract been properly performed, with the prima facie date of assessment being the date of breach: Goldbay Fortis Ltd v Rich Resource Development Ltd [2021] HKCFI 1684 at [341] (K Yeung J).

120.In my judgment, the date of breach is the date on which the Share Subdivision took effect (3 December 2014) because after that date the par value of the ListCo shares was no longer HK$0.1, and no ListCo shares were transferred to P on that day.

121.As such, the value of 21,163,819 undiluted ListCo shares, taking into account the adjustments of share price (8 times), is 21,163,819 x (8 x HK$0.75) (HK0.75 being the closing price of the ListCo shares on 3 December 2014) = HK$126,982,914.

122.That sum should be deducted by the value of the Transferred ListCo Shares (21,163,819 shares with a par value of HK$0.0125). The proper date of valuation is the day on which the Share Certificate was delivered to P (16 December 2014). The aggregate value of the Transferred ListCo Shares is therefore HK$0.89 x 21,163,819 (HK$0.89 being the closing price of the ListCo shares on 16 December 2014) = HK$18,835,798.91.

123.Accordingly, the damages for the Contractual Claims are HK$126,982,914 - HK$18,835,798.91 = HK$108,147,115.09.

124.As for the Tortious Claims, damages for inducing breach of contract and unlawful means conspiracy are both assessed at large: McGregor on Damages (21^st ed) at § 48-020; Lonrho Plc v Fayed and Others (No. 5) [1993] 1 WLR 1489 at 1494B (Dillion LJ).

125.As such, D3 is liable for the same losses suffered by reason of D1’s and D2’s breach of contract in the sum of HK$108,147,115.09.

126.I should note that in his supplemental written closing submissions, Mr Pirie indicated that Ds do not accept P’s calculations of damages, but no further argument was advanced in that regard.

E.  CONCLUSION

127.On the basis of the aforesaid, I grant:

(1)  Judgment in favour of P against D1, D2, and D3, who shall be jointly and severally liable in the sum of HK$108,147,115.09 with (a) pre-judgment interest from 3 December 2014; and (b) interest at judgment rate from the date of judgment.

(2)  An order nisi that costs of this action (including all costs previously reserved) be paid by D1, D2, and D3 to P with such costs to be taxed if not agreed. This order will become absolute within 14 days unless the parties apply to vary the same.

128.Lastly, I thank Mr Fan and Mr Pirie for their helpful assistance.

Mr Brian Fan, instructed by Charles Chu & Kenneth Sit, for the Plaintiff

Mr Nicholas Pirie, instructed by Louis K.Y. Pau & Co., for the 1^st to 3^rd Defendants