Wang Shuai v. Zhang Qiaohui

CACV 275/2023, [2024] HKCA 304

On Appeal From [2023] HKCFI 2067

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 275 OF 2023

(On Appeal from HCA 64 of 2019)

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REASONS FOR JUDGMENT

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Hon Anthony Chan J (giving the Judgment of the Court) :

1.This was the Defendant’s appeal against the Order of Deputy High Court Judge Sara Tong SC (“Judge”) dated 9 August 2023 by which the Defendant’s appeal against the summary judgment granted by Master Keith Lam against her in this action was dismissed. The reasons of the dismissal were set out in a detailed Decision dated 9 August 2023 (“Decision”), [2023] HKCFI 2067.

2.This appeal was dismissed at the end of the hearing with costs to the Plaintiff.  These are the reasons for the dismissal.

Background

3.The dispute between the Plaintiff (as buyer) and the Defendant (as seller) arose from the sale and purchase of the entire share capital in a company known as HK Arts & Culture Interchange Centre Ltd (“Company”).  The Defendant was the sole shareholder and director of the Company.  The Company was the registered owner of 4 commercial units and 2 car park spaces in a building situated at Connaught Road West (“Properties”).  An important part of the transaction was the acquisition of the Properties.

4.The transaction was governed by a sale and purchase agreement dated 3 August 2018 (“SPA”).  A deposit equivalent to 10% of the purchase price, HK$11,800,000 (“Deposit”), was paid by the Plaintiff to the Defendant under the SPA.  The agreed completion date was 12 October 2018 (“Completion Date”). 

5.The transaction fell through because of, according to the Plaintiff’s case, breaches of warranties on the part of the Defendant as follows.  Pursuant to Clause 8.2 and Clause 15.4 of Schedule 2 of the SPA (the provisions of the SPA which were relevant to this appeal are set out in the Annex to this Judgment), the Defendant warranted that the Properties were not subject to any tenancy agreement. 

6.In late September 2018, the Plaintiff discovered in the course of due diligence investigation that the 2 parking spaces, respectively numbered 221 and 222, were let pursuant to 2 tenancy agreements (“TAs”) :

(1)  For 221, tenancy agreement dated 3 October 2017 for the period from 1 November 2017 to 31 October 2018;

(2)  For 222, tenancy agreement dated 12 April 2018 for the period from 5 June 2018 to 4 June 2020.

7.The existence of the TAs was not disputed by the Defendant.  According to the Plaintiff’s case, the Defendant was in breach of the warranties under Clause 8.2 and Clause 15.4 of Schedule 2.  By reason thereof, the Defendant was unable to fulfil the conditions precedent for completion under Clauses 2.1.5 and 2.1.6 of the SPA.  By a letter dated 11 October 2018 from the Plaintiff’s solicitors (“TYL”) to the solicitors then acting for the Defendant (“CWL”), the Plaintiff exercised his right to rescind the SPA pursuant to Clause 2.5 thereof, and demanded the return of the Deposit on or before 12 October 2018 pursuant to Clause 2.6.

8.The Defendant did not return the Deposit and accused the Plaintiff of repudiating the SPA by failing to fulfil his completion obligations and purported to forfeit the Deposit. 

Issues

9.The issues in this appeal revolved around the proper construction of various provisions of the SPA.  It is unnecessary to set out the reasons of the Judge for disagreeing with the Defendant’s arguments because substantially the same arguments were advanced again in this appeal.  The analysis of this Court agrees with that of the Judge. 

Grounds of appeal

10.There were 16 grounds of appeal.  It was evident from the submissions of Mr Chan, who appeared with Mr Tsui for the Defendant, that a number of these grounds overlapped with one another.  It should be said that grounds of appeal ought to be structured, clear and succinct.  Repetition by alternative formulations and overlapping should be avoided.

11.Essentially, the grounds of appeal were that the Judge erred in :

(1)  The construction of the relevant clauses of the SPA in failing to take into account the wider context of the conveyancing transaction (Ground 1);

(2)  Holding that Clause 2.1.5 covered breaches of the SPA committed before the signing of the SPA when the true construction was that the Clause only covered breaches committed after the signing of the SPA (Ground 2);

(3)  Failing to hold that the remedial effect of Clauses 2.4 and 2.5 applied to any breach of the SPA, including those covered under Clause 2.1 (Grounds 3 to 5);

(4)  Rejecting the assertion in a letter from CWL to TYL dated 12 October 2018 (“Letter”) that vacant possession of the car park spaces would be delivered to the Plaintiff upon completion (Ground 6);

(5)  Failing to hold that Clause 8.2 and Clause 15.4 of Schedule 2 (“Subject Clauses”) were inconsistent with Clauses 2.1, 2.4 and 2.5.  On a true and proper construction, Clauses 2.1, 2.4 and 2.5 prevailed over the Subject Clauses (Grounds 7, 8 and 16);

(6)  Holding that the opinion of CWY was unnecessary for the Plaintiff’s rescission of the SPA pursuant to Clauses 2.4 and 7.3 of the SPA (Grounds 9 and 15);

(7)  Rejecting the reliance by the Defendant on Clause (c) of Schedule 4 (“Clause (C)”) of the SPA, which provided that: “the Vendor shall deliver the Properties subject to the Tenancy Agreement …” (Grounds 10 to 14).

Admissibility of the Defendant’s draft affirmation

12.The Plaintiff took issue with the admissibility of the draft affirmation of the Defendant (“Draft Affirmation”) which was exhibited to the 2^nd affirmation of Cheng Kin Yat, the Defendant’s former solicitor, filed on 28 March 2023.  The reason given for the need to have the Defendant’s evidence adduced in such manner was that the Defendant, domiciled in the Mainland, was unable to come to Hong Kong in time for the execution of her affirmation due to the difficulty in getting the necessary visa by reason of over demand after the lifting of travel restrictions previously in place during the COVID pandemic. 

13.The Judge received the Draft Affirmation on a de bene esse basis and took the view that the outcome of the appeal did not turn on the contents of the document[1].

14.We are unable to see any good reason to allow the Defendant to rely on the Draft Affirmation.  It remained an unsigned, undated and unattested document notwithstanding that para 6 of the affirmation of Cheng referred to the Defendant’s undertaking to have the Draft Affirmation filed and served once she managed to come to Hong Kong to sign it before a Commissioner of Oath.  There was no explanation for not fulfilling the undertaking despite the long passage of time. 

15.In any case, as submitted by Mr Chan, the only point of relevance of the Draft Affirmation was the assertion that the TAs were terminated on about 30 September 2018.  The assertion was rejected by the Judge as a bare assertion unsupported by any documentary evidence which normally would have existed[2].  We agree with the Judge, and the Draft Affirmation was excluded as evidence. 

Ground 1    

16.To begin with, the Judge was perfectly alive to the fact that although the transaction was the sale and purchase of the share capital of the Company, the acquisition of the Properties was part and parcel of the transaction[3].

17.This ground suggested that there were inconsistencies amongst the provisions of the SPA, and the Judge was required to resort to the context of the transaction to resolve the inconsistencies. 

18.We are unable to agree with the Defendant’s understanding or construction of the provisions of the SPA.  It was evident that the SPA had to provide for, mainly, the sale and purchase of the share capital as well as the passing of good title to the Properties at completion. Various provisions were therefore incorporated into the SPA to govern, eg, due diligence investigation of the Company’s affairs (Clauses 2.1.7, 2.3 and 2.4) and good title to the Properties (Clause 7.1).  Certain clauses were designed to cover more than one aspect of the transaction, eg, Clause 2.5, which provided for the fulfilment of conditions precedents.  Under Clause 2.1, the conditions precedent embraced, inter alia, good title to the Properties and satisfactory completion of due diligence.  However, properly understood, there was no inconsistency between the provisions.

19.The Subject Clauses were clear in their terms. The Defendant had not identified any real inconsistencies amongst the provisions of the SPA which required the Court to have regard to the conveyancing context of the transaction so as to resolve inconsistent provisions.  The concept of willing purchaser and willing vendor (Mexon Holdings Ltd v Silver Bay International Ltd (2000) 3 HKCFAR 109, 117E) relied upon by the Defendant was of no relevance in this case. 

20.Clause 2.1 of the SPA set out the conditions precedent for the completion of the transaction.  It was readily apparent from Clauses 2.1.1 to 2.1.8 that the conditions precedent covered a number of matters, eg, good title to the Properties had to be shown and proved (2.1.1), no breach of the Warranties from the date of the SPA up to the Completion Date (2.1.5) and satisfactory completion of due diligence (2.1.7).

21.Warranties were defined under Clause 1.1 to mean: “the representations, warranties, undertakings made or given by the [Defendant] to the [Plaintiff] as contained in Clause 7, Clause 8 and Schedule 2 [of the SPA]”. 

22.Clause 7 was primarily concerned with the good title of the Properties.  Under Clauses 7.4 and 7.5, the usual vendor warranties could be found, eg, there was no unauthorized or illegal structure in the Properties (7.4).

23.Clause 8 set out a number of other representations, warranties and undertakings of the Defendant as vendor. Clause 8.1 acknowledged that the Plaintiff “is entering into [the SPA] in reliance on such Warranties and will continue to be so up to and including the time of Completion”.  By Clause 8.2, the Defendant warranted, inter alia, that: “the Company has not entered into and/or granted any leases, tenancy agreements, … in any manner or commitments therefor in relation to the Properties, or any part thereof”.

24.Schedule 2 contained a large number of warranties, amongst which were warranties in relation to the Properties.  They were set out under Clause 15 thereof, and Clause 15.4 was in terms similar to Clause 8.2. 

25.In the premises, there was no ambiguity about the warranties that there was no tenancy agreements over the car parking spaces, and the Plaintiff had relied upon them in entering into the SPA.  The absence of breach of the warranties was a condition precedent to the completion of the transaction. 

Ground 2

26.This ground was based on the proposition that Clause 2.1.5, read with Clause 2.1.6, only applied to breach of warranty committed after the SPA was made.  With respect, the proposition was misconceived and flew in the face of the clear wordings of the Subject Clauses.

27.First, the Subject Clauses referred to a representation of fact: (a) “the Company has not entered into … any leases …” (Clause 8.2) and (b) “no leases … have been entered into …” (Clause 15.4 of Schedule 2).  Plainly, these warranties (“Subject Warranties”) were given at the time of entering into the SPA, and the Plaintiff relied upon them at the time (Clause 8.1). 

28.If the representation of fact was incorrect at the time of entering into the SPA or on the date of the SPA, the Subject Warranties were breached (and the breach continued until it was waived by the Plaintiff (see below)).  It was undisputed that the TAs were created before the SPA was made.  The Subject Warranties should never have been given.

29.It has already been pointed out that the conditions precedent for completion under Clause 2.1 embraced a number of different matters.  Both Clauses 2.1.5 and 2.1.6 dealt with compliance with the Warranties: (a) “no breach of the Warranties from the date of [the SPA] up to and inclusive of the Completion Date” (2.1.5); and (b) “the Warranties remaining true and accurate … as at Completion” (2.1.6).  These clauses might overlap in their application, but their terms were perfectly clear and allowed no argument that they only applied to breach of warranty committed after the SPA was made. 

30.The reliance by the Defendant on Clause 16.1(b) of Schedule 2 did not assist the argument.  Clause 16 dealt with warranties in respect of the Company, one of which was that it would not enter into any leases in relation to the Properties or any part thereof (16.1(b)).  It is to be contrasted with Clause 15 of that Schedule which dealt with warranties in relation to the Properties (see para 24 above).  It may be seen that Clause 16.1(b) provided additional assurance to the Plaintiff that no part of the Properties would be leased out by the Company. 

Grounds 3 to 5

31.There is no warrant to read into Clauses 2.4 and 2.5 any “remedial effect” over any breach of the Subject Warranties.  As a matter of plain common sense, the proposition that breaches of the Subject Warranties could be remedied by terminating the TAs prior to completion means that the Subject Warranties were meaningless.  There was no reason for the Subject Warranties to have been given on the first place.  The SPA could simply have stated that vacant possession of the car parking spaces would be delivered upon completion.  Instead, the Defendant warranted that the spaces were not let out.

32.With respect, we agree with the Judge’s construction of Clauses 2.4 and 2.5 set out at paras 36 to 38 of the Decision :

“36. Therefore, reading Clause 2.1 with Clause 2.5, the proper construction of Clause 2.5 should be as follows:

(1) For the conditions in Clause 2.1 which require fulfillment on or before completion, the Defendant is required to either (i) fulfill such conditions at least 7 Business Days before the Completion Date; or (ii) procure a waiver of the condition from the Plaintiff at least 7 Business Days before the Completion Date, failing which the Plaintiff shall be entitled to rescind the SPA.

(2) For Clause 2.1.5 which specifically requires compliance from the date of the SPA up to and inclusive of the Completion Date, if there has been any breach or non-compliance by the Defendant, she is required to procure a waiver of the condition from the Plaintiff at least 7 Business Days before the Completion Date, failing which the Plaintiff shall be entitled to rescind the SPA.

37. Adopting the Defendant’s purported construction of Clause 2.5, namely, that any breach of Clause 2.1.5 can be remedied by the Defendant at least 7 Business Days before the Completion Date, would be to ignore the clear and express requirements of Clause 2.1.5 itself.

38. Third, contrary to Mr Chan’s submission, Clause 2.4 also cannot be construed to mean that a breach of Clause 2.1.5 concerning breaches of Warranties can be “remedied” by the Defendant. Clause 2.4 contemplates that “due diligence investigation” would be carried out by CWY after the entering into of the SPA, and provides that if it is discovered during such due diligence investigation that there is “any problem”, the Defendant shall remedy the same as soon as possible before the Completion Date.

(1) As pointed out by Mr Lo, when Clause 2.4 is read together with the condition precedent at Clause 2.1.7, which requires “satisfactory completion of due diligence review by the Purchaser on the business, financial, legal and other aspects of the Company before Completion and satisfied with the results thereof;”, it is clear that Clause 2.4 complements Clause 2.1.7, in providing for the parties’ agreement for CWY to carry out the due diligence on the business, financial, legal and other aspects of the Company, and if there may be any problem with such aspects, the Defendant shall remedy the same before completion.

(2) In any event, it is plain that this provision cannot relate to the condition at Clause 2.1.5, which expressly requires compliance from the date of the SPA up to and inclusive of the Completion Date. The Defendant’s purported construction of Clause 2.4 again wholly ignores the clear and express requirements of Clause 2.1.5 itself.

(3) My view as aforesaid is also supported by Clause 8.5 of the SPA, which expressly provides that “no investigation by or on behalf of the Purchaser shall prejudice any claim made by the Purchaser under the Warranties”. This clearly shows that any due diligence investigation carried out by CWY cannot affect any claim by the Plaintiff for breach of Warranties.”

Ground 6

33.Firstly, on a proper construction of the SPA and taking the Defendant’s case at the highest, the termination of the TAs was of no assistance to her because she was in breach of the Subject Warranties from the date of the SPA and the only way to be relieved of the attendant liabilities was to obtain a waiver from the Plaintiff.  She did not do so.

34.Secondly, it is trite that on a summary judgment application the burden is on the defendant to make out a triable issue.  In so doing, his evidence must condescend upon particulars and demonstrate a believable case.

35.The Letter merely asserted that vacant possession of the car parking spaces would be delivered to the Plaintiff upon completion.  Mr Chan submitted that it was implied that the TAs had been terminated.  On the Defendant’s case, the remedial action was required to be taken at least 7 business days before completion pursuant to Clause 2.5.  On Mr Chan’s submission, it is unclear what was to be implied as to the timing of the terminations.

36.The Letter was of little relevance.  In the absence of any documentary support, it was of little probative value.  It did not assist the Defendant in making out a triable issue.

37.The reliance by Mr Chan on the averment at para 15.2 of the Defence, which was verified by a statement of truth, that the TAs were terminated on or about 30 September 2018 did not take the matter any further.  The averment was a bare assertion.

Grounds 7, 8 and 16

38.As an alternative to the argument that the Subject Clauses only applied to breaches committed after the SPA was made, the Defendant argued that the Subject Clauses were inconsistent with Clauses 2.1, 2.4, 2.5 and 7.3 in that the latter clauses allowed breaches of the SPA to be remedied.  The latter clauses should prevail because the Court should construe the provisions of the SPA in a way which facilitated the completion of the transaction. 

39.We are unable to agree with the Defendant’s construction of the relevant provisions.  It has been pointed out above that: (a) the terms of the Subject Clauses were perfectly clear; (b) they were breached at the time when the SPA was entered into; and (c) the only way in which the Defendant might be relieved from the legal consequences of the breaches was to obtain the Plaintiff’s waiver. 

40.Clause 2.1 was simply the parenthesis that completion was subject to the conditions precedent which followed.  Clause 2.4 dealt with due diligence.  It allowed the Defendant to remedy any “problem” discovered during due diligence investigation as soon as possible before completion.  The Subject Warranties had nothing to do with due diligence investigation.  It was a representation of fact made by the Defendant which turned out to be wrong.  The fact that the breaches of the Subject Warranties were discovered by the Plaintiff at the time of the due diligence investigation was a matter of coincidence.  Clause 2.4 was not inconsistent with the Subject Clauses.

41.Clause 2.5 dealt with the conditions precedent. Some of conditions precedent required fulfilment on or before completion (eg, Clauses 2.1.3 and 2.1.8) but Clause 2.1.5 required compliance from the date of the SPA up to and inclusive of the Completion Date.  There was no inconsistency between the Subject Clauses and Clause 2.5.  The Defendant could have sought a waiver of the breaches of the Subject Clauses pursuant to Clause 2.5.

42.Clause 7.3 related to title defects and requisitions over the title of the Properties.  Showing and proving good title was covered by a different condition precedent, Clause 2.1.1.  We see no inconsistency between Clause 7.3 and the Subject Clauses.   

Grounds 9 and 15

43.The opinion of CWY would only be relevant to Clauses 2.4 (due diligence) and 7.3 (good title).  It had no relevance to the Plaintiff’s claim.

Grounds 10 to 14

44.Clause (C) came under Part A of Schedule 4 which contained a list of the Defendant’s obligations at completion.  Although “Tenancy Agreement” (with the use of capital letters) might suggest that it was a specific document, there was no definition for it in the SPA.  Moreover, the existence of any tenancy agreement over the Properties would be contrary to the Subject Warranties.  It would be unhelpful to speculate on why Clause (C) was included in the SPA. 

45.Importantly, it was not the Defendant’s pleaded case that the Subject Warranties were not breached as the Defendant’s obligation at completion was to deliver the Properties subject to the “Tenancy Agreement”, which meant the TAs.  It appears to this Court that these were opportunistic grounds of appeal.

46.We agree with the Judge’s reasons for rejecting the Clause (C) argument as set out in para 52 of the Decision :

“52  First, in this action, the Defendant has never put forward a case that the Subject Warranties have not been breached as the Defendant’s obligation at completion is to “… deliver the Properties subject to the Tenancy Agreement” as stated in Clause (c):

(1) Such a case has never been pleaded in the Defence filed by the Defendant herein. It is trite that where a defendant has already filed a Defence, it cannot, in opposition to a summary judgment application, rely on a case not pleaded in the Defence: see Hong Kong Topkey Limited v. Wintac (Hong Kong) Limited [2023] HKCFI 1711, §§14-16, applying the decision of the Court of Appeal in Kaefer AG v. Winfield Marine Services Co Ltd [2022] HKCA 807, §§30-32.

(2) In any event, such a case is also inconsistent with the express plea by the Defendant at paragraph 15.2 of the Defence that the Car Park Leases were terminated on or about 30 September 2018.  As provided in Order 18 rule 12A of the Rules of the High Court (Cap 4A), a party may in a pleading make an allegation of fact which is inconsistent with another allegation of fact in the same pleading only if: (a) the party has reasonable grounds for doing so; and (b) the allegations are made in the alternative.  The Defendant has not provided any reasonable grounds for relying on inconsistent factual alternatives.

(3) There is also no credible evidence that the Plaintiff agreed to purchase and the Defendant agreed to sell the Properties subject to the Car Park Leases.

(4) Even in CWY’s Oct 2018 Letter, CWY stated on behalf of the Defendant that “vacant possession of the subject Car Park Spaces would be delivered to the Purchaser upon completion”, clearly indicating that the Defendant did not agree to sell the Properties subject to the Car Park Leases.”

Disposition

47.For the above reasons, this appeal was dismissed with costs to the Plaintiff. 

Mr Benny Lo and Mr Victor Chan, instructed by Terry Yeung & Lai, for the Plaintiff

Mr Kenneth CL Chan & Mr Raymond WN Tsui, instructed by Peter Mo & Co., for the Defendant

CACV 275/2023

Annex

(Relevant provisions of the SPA)

Clause 1.1

“Warranties”: means the representations, warranties, undertakings made or given by the Vendor to the Purchaser as contained in Clause 7, Clause 8 and Schedule 2 hereto.

Clauses 2.1

Completion and the obligations of the Purchaser under this Agreement shall be subject to and conditional upon:-

2.1.1  the Vendor having shown and proved that the Company has a good title to the Properties in accordance with Sections 13 and 13A of the Conveyancing and Property Ordinance (Cap 219 of the laws of Hong Kong);

2.1.2  there having been no outstanding notices, orders, complaints or requirements issued by any governmental body, authority or department to the Company in respect of the Properties or any part thereof or requiring compliance with the terms of the Government Lease in respect of the Properties;

2.l.3   the Vendor having at its own costs and expenses procure a release(s)/discharge(s) of all the charge(s)/mortgage(s) and incumbrance of whatsoever nature on the Properties including but not limited to the Legal Charge/Mortgage TO THE INTENT that the Properties should be free from all the Encumbrances upon Completion;

2.1.4  the Company having no liabilities or indebtedness (whether actual or contingent) as at Completion other than the Sale Loans;

2.1.5  there having been no breach of the Warranties from the date of this Agreement up to and inclusive of the Completion Date;

2.1.6  all the Warranties remaining true and accurate in all respects as at Completion;

2.l.7   satisfactory completion of due diligence review by the Purchaser on the business, financial, legal and other aspects of the Company before Completion and satisfied with the results thereof; and

2.1.8  the Vendor having duly complied with this Agreement in all respects insofar as the same are to be complied with on or before Completion.

Clause 2.3

To facilitate the carrying out of the due diligence investigation by the Purchaser, the Vendor hereby undertake to deliver to the Purchaser or CWY all documents relating to the Company within 21 days from the date of this Agreement.

Clause 2.4

The parties hereto are aware that Messrs. Chan, Wong & Yip shall carry out the due diligence investigation for and on behalf of the Purchaser.  If it is discovered during the due diligence investigation that there is any problem, the Vendor shall remedy the same as soon as possible before the Completion Date.  For the purpose of this Clause the opinion of Messrs. Chan, Wong & Yip as to whether they are satisfied with the results of such due diligence investigation is final and conclusive and binding on the parties hereto.

Clause 2.5

The Vendor shall use their best endeavours to procure and ensure that all the Conditions Precedent referred to in this Clause are fulfilled as early as practicable.  The Vendor shall at all times hereafter keep the Purchaser fully informed in writing in respect of all matters in connection with the fulfilment of the said conditions.  In the event that any of the Conditions Precedent is not fulfilled (or waived by the Purchaser) at least 7 Business Days before the Completion Date, the Purchaser shall be entitled to rescind this Agreement upon giving written notice with immediate effect to the Vendor without liability on the part of the Purchaser.

Clause 2.6

Upon rescission of this Agreement by the Purchaser pursuant to Clause 2.5 above, all moneys paid by the Purchaser to the Vendor under this Agreement shall be returned to the Purchaser forthwith who shall also be entitled to recover from the Vendor damages (if any) which the Purchaser may sustain by reason of such failure on the part of the Vendor.

Clause 7.1

The Vendor shall show and prove that the Company has good title to the Properties.  The Vendor shall at its own costs and expenses show and prove the title of the Company to the Properties in accordance with Sections 13 and 13A of the Conveyancing and Property Ordinance (Cap 219 of the laws of Hong Kong) and shall at the like expenses make and furnish to the Purchaser such deeds or documents of title, wills and matter of public record as may be necessary to prove such title.

Clause 7.3

If CWY shall not be satisfied with the Vendor’s title·and/or if the Vendor shall be unable or (on the grounds of difficulty, delay or expense or on any other reasonable ground) unwilling to remove or comply with the requisitions of CWY, then the Purchaser shall have the right to rescind this Agreement.  In this event, the Purchaser shall forthwith be entitled to the return of deposit paid hereunder but without costs or compensation (and without interest if that return is made within 7 days) and the parties hereto shall enter into and cause to be registered at the Land Registry an Agreement for Cancellation.  For the purpose of this Clause the opinion of CWY as to whether title of the Vendor is satisfactory is final and conclusive and binding on the parties hereto.

Clause 7.4

The Vendor hereby warrants and declares that there is no unauthorized or illegal structure or alternation of and in the Properties and the Company has not received and is not aware of any notice or order from any Government or other competent authority requiring the Company to demolish or reinstate any part of the Properties.  If it should be discovered that any unauthorized or illegal structure or alteration exists or such notice or order existed prior to the date hereof or if any such notice or order shall be issued on or before the Completion Date, the costs for such demolition or reinstatement shall be borne by the Vendor.

Clause 7.5

The Vendor hereby further warrants and declares that the Company has not received and is not aware of any notice or order from any Government or other competent authority or the manager or management committee of the building of which the Properties forms part (the “Building”) requiring the Company as one of the co-owners of the Building to effect repair, maintenance or renovation to any common part(s) or facility(ies) of the Building.  If it should be discovered that any such notice or order existed prior to the date hereof or if any such notice or order shall be issued on or before the Completion Date the cost for such repair, maintenance and renovation shall be borne by the Vendor.

Clause 8.1

The Vendor hereby represent, warrant and undertake to the Purchaser and its successors and assigns that each of the Warranties is true, complete and accurate in all respects and not misleading in any respect, and acknowledges that the Purchaser is entering into this Agreement in reliance on such Warranties and will continue to be so up to and including the time of Completion.

Clause 8.2

The Vendor hereby represent, warrant and confirm to the Purchaser that … (v) the Company has not entered into created and/or granted any leases, tenancy agreements, licence agreements or agreements to part with possession or occupation or options to renew in any manner or commitments therefor in relation to the Properties, or any part thereof; … .

Schedule 2

Clause 15.4

No leases, tenancy agreements, licence agreements or agreements to part with possession or occupation or options to renew in any manner or commitments therefor have been entered into in relation to the Properties, or any part thereof.

Clause 16.1

From the date of this Agreement until the Completion Date (save with the prior consent in writing of the Purchaser) the Company will not:

(b)  enter into create and/or grant any leases, tenancy agreements, licence agreements or agreements to part with possession or occupation or options to renew in any manner or commitments therefor in relation to the Properties, or any part thereof;

Schedule 4

Part A

At Completion:-

(c)  the Vendor shall deliver the Properties subject to the Tenancy Agreement but otherwise free from all the Encumbrances;

[1] Decision, [26].

[2] Decision, [39]-[42].

[3] Decision, [4].