Golden Miles Group Holdings Ltd v. Jacob & Co Ltd
Read the full judgment text of HCA 2453/2017 on BabelCite. This High Court CFI judgment was delivered on 6 March 2025.
1. This action arises out of an agreement dated 18 th November 2016 (“ the Agreement ”), under which the Defendant (“ Jacob & Co ”) granted the Rights (as therein defined) to the Plaintiff (“ Golden Miles ”) and engaged Golden Miles as its sole and exclusive distributor for the marketing and sale of the Products (defined to include watches and jewellery in the brand name of “Jacob & Co”) in the Territory (defined as Hong Kong, Macau and the PRC) for a period of ten years.
Cited by 2 cases · Cites 12 cases
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HCA 2453/2017 [2025] HKCFI 663 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2453 OF 2017 ____________
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______________ J U D G M E N T ______________ A. INTRODUCTION 1.This action arises out of an agreement dated 18th November 2016 (“the Agreement”), under which the Defendant (“Jacob & Co”) granted the Rights (as therein defined) to the Plaintiff (“Golden Miles”) and engaged Golden Miles as its sole and exclusive distributor for the marketing and sale of the Products (defined to include watches and jewellery in the brand name of “Jacob & Co”) in the Territory (defined as Hong Kong, Macau and the PRC) for a period of ten years. 2.Jacob & Co says that it validly terminated the Agreement in September 2017 for Golden Miles’ failure to pay an amount said to be owed to Jacob & Co of US$470,198.15 (“the Disputed Amount”). Golden Miles says that there was an oral agreement in March 2017 (“the Alleged Oral Agreement”) between the parties which meant that no amount was owing to Jacob & Co at the time of the alleged termination. Jacob & Co says that it subsequently further discovered that Golden Miles had submitted a false account of its expenses, providing an additional reason to justify the termination of the Agreement. 3.Golden Miles therefore claims that Jacob & Co wrongfully terminated the Agreement. Its pleaded case seeks, inter alia:
4.Jacob & Co denies liability and contends that it validly terminated the Agreement pursuant to cl.7.2(a) of the Agreement for Golden Miles’ failure to pay the Disputed Amount; alternatively, for Golden Miles’ repudiatory breach of contract, given its false account of expenses. Jacob & Co counterclaims, inter alia, for:
B. THE BACKGROUND 5.Unless otherwise indicated, the following facts are undisputed or indisputable, and I find them as facts. Matters from the parties’ agreed statement of facts and chronology have also been incorporated. B1. The parties 6.Golden Miles was incorporated in Hong Kong. 7.Ms Ho Ming Yuk, also known as Ms Winnie Ho (“Ms Ho”), was at all material times the sole shareholder and sole director of Golden Miles. She was the directing mind of Golden Miles insofar as the Agreement was concerned. 8.Other staff or former staff and representatives of Golden Miles included the following:
9.Ms Ho also set up another company, Brands International, whose name was sometimes used in communications with Jacob & Co. 10.Jacob & Co was incorporated in Switzerland. At all material times it was a manufacturer of luxury watches under the brand of “Jacob & Co” sold across the world. 11.Mr Jacob Arabo (“Mr Arabo”) founded, owned and controlled Jacob & Co. 12.Other staff or representatives of Jacob & Co included the following:
B2. Jacob & Co’s presence in Hong Kong prior to Golden Miles’ involvement 13.From 2005 to 2013, Jacob & Co appointed King Fook Jewellery Group Ltd (“King Fook”) as its exclusive retailer of Jacob & Co’s watches in Hong Kong. At trial, one of the agreements between the parties dated 1st April 2018 was placed before the court; it was said that it was essentially on the standard terms of Jacob & Co. During the nine-year period, King Fook advertised Jacob & Co watches extensively in Hong Kong. 14.During the same period of time, Jacob & Co itself sold jewellery and gemstones in Hong Kong, as these items were not covered by the agreements with King Fook. 15.King Fook ceased to be the distributor in 2013 as it had sought to become the exclusive distributor for the whole of Asia, but Jacob & Co was not agreeable to this. Thereafter, until the Agreement was made in November 2016, Jacob & Co advertised its watches and jewellery in the Territory (Hong Kong, Macau and mainland China). B3. The Agreement 16.The Agreement was drawn up by Golden Miles’ then solicitors. It was signed on 18th November 2016. 17.It defined a number of terms as follows.
18.The Agreement contained, inter alia, the following terms.
B4. Correspondence between the parties prior to the Alleged Oral Agreement 19.On 21st November 2016, shortly after the Agreement was signed, Mr Lam emailed Ms Ho, saying “As in all International Corporations, please ALWAYS share and plan your ideas ahead of time.” He asked her to state her plans in 2016 and 2017, and continued “Naturally, these are all tied to a BUDGET. Technically, we Jacob HQ will subsidise 50% of your YEAR’S ANNUAL Marketing Budget (amount to be agreed) and for Projects that we feel that is aligned to our Global Strategy…”. He then set out a few examples of areas to be avoided in the conduct of promotion of the Products. 20.On the same day, Ms Ho[1] replied to Mr Lam, copying Mr Mazzocchi, setting out six marketing ideas for 2017. Mr Mazzocchi replied on 22nd November 2016 with his comments, indicating agreement with some but not all of the ideas. 21.On 30th December 2016, Mr Lam emailed Ms Ho requesting that she report her monthly sales and stock. 22.On 19th January 2017, Ms Ho emailed Ms Oun, setting out details of publicity conducted in 2016 and planned for 2017. Ms Oun replied on 24th January, asking for details of some of the points, including details of the expenses said to have been incurred for 2016. Ms Oun further calculated that as Golden Miles’ turnover for 2016 was US$2,773,875,
23.On 23rd January 2017, Mr Lam sent an email to Nicola, saying that normally, headquarters had to be advised of promotion projects and detailed costing for approval before Golden Miles started on them, and asking for a breakdown of the cost of the “Prince Event”. “Even though we are supposed to share this 50/50, it is your OBLIGATION… to provide us with the full details.” 24.On 31st January 2017, Mr Lam sent an email to Nicola, asking for further details of various aspects of the cost for the “Prince Event”, and reminding her that these and other details of the event were standard marketing information that was required from Jacob & Co’s partners. 25.On 14th February 2017, Ms Ho emailed Ms Oun, indicating that Golden Miles wanted to sponsor a campaign in the Hong Kong Oxfam Marathon and asking for Ms Oun’s suggestion. Ms Oun responded that sports sponsorship was not part of Jacob & Co’s strategy. 26.On 16th February 2017, Ms Ho emailed Ms Oun, stating that Golden Miles wanted to use a watch for an auction, and asking for suggestions. Ms Oun replied that the schedule of the auction was too close to the Baselworld event and they would not be able to prepare for it properly, so that they would rather postpone participation to another occasion. 27.On 16th February 2017, Mr Lam emailed Ms Ho, copying Mr Mazzocchi and Ms Oun, saying that he had discussed the “Sales Agreement” proposed by Prince “and we find it too punishing for your Co”. He noted that it would leave Golden Miles with a profit margin of only 5% to 7% before marketing expenses, leaving Ms Ho with little or no profit. He said that he and Mr Mazzocchi would explore with her over the coming weeks and in Basel the things that they had to prioritise. 28.The correspondence prior to the March Meeting (as defined below) does not show any disagreement on the part of Ms Ho with the requests that she provide her proposed marketing plans, and other requested information, to Jacob & Co, or any suggestion that she was not obliged to consult Jacob & Co regarding such plans. B5. The March Meeting 29.On 23rd March 2017, Mr Mazzocchi and Mr Lam met Ms Ho at “Baselworld”, an international watch exhibition in Geneva, Switzerland (“the March Meeting”). It is at this meeting that Golden Miles says that the Alleged Oral Agreement was reached, to the effect that Jacob & Co’s contribution to Golden Miles’ marketing expenses would be fixed at 10% of Golden Miles’ purchases, with 5% being a “marketing contribution”, and 5% being a “bonus”, to apply with retrospective effect to all of Golden Miles’ purchases from 2016 onwards. Furthermore, Golden Miles would not need to provide any receipts or proof in relation to its marketing activities and expenses. 30.Jacob & Co says that no agreement was reached at the meeting. It says that at most, there was an agreement in principle that Jacob & Co would contribute an amount equivalent to 5% of Golden Miles’ gross purchases towards Golden Miles’ marketing expenses, but conditional on receiving receipts for all marketing expenses from Golden Miles. There was no agreement for a further 5% bonus – Ms Ho asked for it and threatened not to deal with the sale of the “Billionaire” watch (the most expensive watch created by Jacob & Co to date) but Mr Mazzocchi said that he would only discuss bonus payments conditional upon an annual sales target and provision of a copy of the Prince Jewellery agreement. B6. Correspondence between the parties after the March Meeting 31.On 10th April 2017, Mr Lam emailed Ms Ho with the latest account statement. This showed that Golden Miles had made purchases in 2016 totaling US$2,983,875, and the first quarter of 2017 totaling CHF2,098,292. The statement also showed a “marketing contribution” of US$149,195 and CHF104,915, being 5% of the aforesaid amounts of purchases. Mr Lam’s email further attached two credit notes, one for “Year 2016 Marketing Contribution” of CHF149,195,[2] and the other for “Quarter 1 2017 Marketing Contribution” of CHF104,915. The email stated that the credit could be used to offset some of the amount outstanding from Golden Miles to Jacob & Co. 32.On 21st April 2017, Vicky sent an email to Ms Oun inquiring whether Jacob & Co would be interested in participating in the “8th CHINA RENDEZ-VOUS” exhibition (“the China Rendezvous Event”). On 23rd April 2017, Vicky chased Ms Oun for Jacob & Co’s decision regarding the event. 33.On 24th April 2017, Ms Oun replied to Vicky, asking for more details of the event, and concluding with “Basically I need know: “How much and for what?” Thank you for sending more info.” 34.On 25th April 2017, Vicky sent further information about the China Rendezvous Event to Ms Oun, and asked for her response. Ms Oun replied that Jacob & Co lacked the resources for the event. Taking the events slightly out of order at this point, it is convenient to mention further attempts by Golden Miles to persuade Jacob & Co to join the China Rendezvous Event.
35.On 29th April 2017, Vicky emailed Mr Lam with Ms Ho’s reply to an earlier email of his (which email was not available at trial). Parts of Vicky’s email were in purple and constituted Ms Ho’s reply, although from the contents, it appears that some of the writing in black was also something emanating from Golden Miles’ side. The relevant part of the email read as follows.
36.Based on either the colour or the contents, it is apparent that all the above contents came from Golden Miles’ side, and it was not suggested otherwise at trial. 37.On 1st May 2017, Mr Lam replied to the email, adding his comments in green.
38.On the same day, Mr Lam sent another email to Ms Ho and Nicola, attaching a statement of account.
39.On 5th May 2017, Mr Lam emailed Ms Ho and Nicola, stating “The purpose of this note is to CLOSE 2016 and 3 Months Jan-March 2017…”.
40.On 8th May 2017, Ms Ho sent various calculations of figures by WhatsApp to Mr Lam and asked whether he agreed with them. The calculations included the following.
41.Shortly thereafter, Mr Lam replied, stating that he would have a meeting with head office at 3pm, but that as he had said a long time ago, bonus could not be deducted in advance. Otherwise, the figures were basically the same as Jacob & Co’s. 42.Later that day, Mr Lam emailed Ms Ho and Nicola, saying that there were some small differences between the parties’ figures, which could be due to bank charges. He then said:
43.In a WhatsApp group comprising Ms Ho, Mr Mazzocchi and Mr Lam (“the WhatsApp Group”), Mr Lam wrote the following message on 9th May 2017.
44.Mr Lam then sent an audio message urging Ms Ho to make payment and that this was important as Mr Mazzocchi needed money that week. He said that Ms Ho could deduct the marketing, but not the bonus until the next week or a few weeks later. If she deducted it all then Mr Mazzocchi would not have any money coming in, and he was really struggling. 45.Mr Lam then wrote:
46.To which Ms Ho responded:[3]
47.Mr Lam then wrote:
48.In response to Ms Ho’s proposal to terminate the contract with Prince Jewellery, Mr Lam said that since they had just started, they should try one year (of working with Prince Jewellery). 49.Then, Ms Ho wrote:
50.In response, Mr Mazzocchi wrote:
51.On 10th May 2017, Ms Ho said:
52.Mr Lam replied:
53.On 2nd June 2017, Ms Ho sent the following in the WhatsApp Group:
54.Mr Mazzocchi replied “Thank you” and “Money received. 891’253. Thank you Winnie”. 55.On 28th June 2017, Ms Oun sent an email requesting that Ms Ho and Vicky provide a marketing activity report to Jacob & Co covering activities since January 2017, including invoices paid by Golden Miles. 56.On 10th July 2017, Ms Ho sent a message in the WhatsApp Group setting out a number of invoices and claiming a marketing contribution and bonus for other invoices. 57.On 19th July 2017, Mr Mazzocchi met Ms Ho in Hong Kong. Afterwards, he emailed Ms Ho: “I wanted to thank you again for your warm reception in Hong Kong during my visit.
58.On 21st July 2017, Ms Ho emailed Mr Mazzocchi in response. The points she made included the following.
59.On 23rd July 2017, Ms Ho sent a WhatsApp message to Mr Mazzocchi and Mr Lam, stating that
60.On 24th July 2017, Ms Ho sent an email to Mr Gomis:
61.Mr Gomis replied that day:
62.On 25th July 2017, Ms Ho emailed Mr Gomis:
63.On 26 July 2017, Mr Gomis replied to say that he was not aware of any “commission deduction” or Golden Miles’ contract with Prince Jewellery, and chased for payment of overdue invoices and provision of Golden Miles’ “Marketing report and related invoices”. 64.On 26 July 2017, Mr Mazzocchi emailed Ms Ho, replying to her earlier email of 21st July 2017. The points he made included the following.
65.On 26th July 2017, Ms Ho emailed Mr Gomis, copying Mr Mazzocchi and Mr Lam, saying:
66.On 31st July 2017, Ms Ho sent a WhatsApp message to Mr Mazzocchi at 12:06am:
67.Later that day, Mr Mazzocchi replied:
68.Separately, on 31st July 2017, Ms Ho emailed Mr Mazzocchi, in response to an earlier email:
69.A few emails later, at 6:02pm, Mr Mazzocchi stated:
70.Ms Ho did not respond to this email. 71.On 9th August 2017, Ms Ho emailed Mr Mazzocchi, saying for the first time that she did not need to ask for permission or authorisation for marketing activities. She said that if he was not happy with attending the China event, she would not force him to participate. However she had already paid for the event. She also asserted the right to use Jacob & Co’s intellectual property without permission or authorisation in marketing activities. She also said:
72.On the same day, Ms Oun emailed Ms Ho, with a reminder: “We need visibility before going ahead on any project”. 73.On 10th August 2017, Mr Mazzocchi replied to Ms Ho’s email of 9th August 2017, with various complaints about Ms Ho’s way of doing business. Amongst other things, he said:
74.On 10th August 2017, Ms Ho emailed Ms Oun. One of the matters addressed was Ms Oun’s email of 28th June 2017, in which Ms Oun had asked for a marketing activity report regarding 2017 with corresponding invoices. Ms Ho said:
75.On 15th August 2017, Mr Gomis emailed Ms Ho, requesting that she remit an overdue balance of US$953,371.50 within the next 5 business days. It further noted that as no report had been sent to Jacob & Co despite many emails requesting justification for Golden Miles’ expenses, no marketing deductions had been applied to the regular invoices. 76.On 18th August 2017, Ms Ho emailed Mr Mazzocchi, saying that according to her calculation, she did not owe any money. Also, she had sent the marketing report on 15th August 2017. 77.Prior to September 2017, which is when Jacob & Co says that it terminated the Agreement, Golden Miles did not provide Jacob & Co with a copy of the agreement said to have been concluded with Prince Jewellery or other retailers in the Territory. B7. The marketing reports 78.Golden Miles sent three versions of a marketing report, with a number of invoices, to Jacob & Co in August 2017. 79.On 15th August 2017, Ms Ho emailed Ms Oun with the first version, saying that some invoices were missing as she was still waiting for them, but would provide them “asap”. The report gave a figure of US$1,824,965 as the total of the marketing fees. 80.On 17th August 2017, Ms Ho emailed Ms Oun with the second version, saying that there were some updates, and that she would “keep sending” invoices once she got them. The report gave a figure of US$1,850,975 as the total of the marketing fees. 81.Ms Oun replied on 23rd August saying that she did not know how to match the attachments (presumably to the contents of the report), and she also asked for an explanation of the correspondence, and what was meant by “physical resources” in the report. 82.On 24th August 2017, Ms Ho emailed Ms Oun with the third version of the marketing report (with attachments including invoices) to Jacob & Co (“the Marketing Report”). The covering email said that there were new attachments, and she believed that this method would be easier and more clear. She noted Ms Oun’s comments that some invoices were missing, some of them were not understandable, and some were not sufficient and asked which were in question. The report gave a figure of US$1,712,520 as the total of the marketing fees. 83.On 25th August 2017, Ms Oun emailed Ms Ho, noting that the total amount in the latest report (US$1,712,520) was different from the total amount in the earlier report of US$1,824,965, and saying that she was going to check the latest report. B8. The August Meeting 84.On 28th August 2017, there was a meeting in Geneva, Switzerland (“the August Meeting”). The attendees of this meeting included Ms Ho, Mr Mazzocchi, Mr Arabo and Mr Terry Yeung. 85.At the meeting, Mr Arabo produced to Ms Ho a statement of Golden Miles’ account as at 28th August 2017. This showed an open balance due from Golden Miles in the amount of US$470,198.15 (the Disputed Amount), after taking into account a 5% “marketing” deduction of US$572,773.35. 86.There was some discussion between the parties as to whether a deduction of 7% rather than 5% would be given to Golden Miles for marketing expenses starting from September 2017. B9. Demands for the Disputed Amount 87.On 29th August 2017, Mr Gomis emailed Ms Ho, asking for payment of the Disputed Amount. The email (“the 29.08.2017 Email”) read as follows.
88.On 31st August 2017, Ms Ho wrote to Mr Arabo denying that Golden Miles owed any money to Jacob & Co. She said that for Jacob & Co to only give a 5% marketing fee, “there is no respect shows of the contract (50/50 shared with no maximum stated) and the meeting in March (5% Marketing fee and 5% Bonus)”. 89.On 6th September 2017, Mr Mazzocchi emailed Ms Ho, saying that Golden Miles’ overdue balance stood at US$470,198.15 and asking for immediate settlement. 90.On 7th September 2017, Ms Ho emailed Mr Mazzocchi stating that she did not accept the Disputed Amount was due and owing. 91.There was then some further correspondence regarding the parties’ dispute as to whether Golden Miles owed the Disputed Amount. B10. Jacob & Co’s purported termination of the Agreement and the aftermath 92.By a letter from its solicitors Messrs Deacons dated 29th September 2017, Jacob & Co sought to terminate the Agreement pursuant to cl.7.2 of the Agreement, on the basis that the Disputed Amount was outstanding as at 28th August 2017, Jacob & Co had given notice through the 29.08.2017 Email that Golden Miles was to pay this amount, and over thirty days had elapsed since the 29.08.2017 Email (“the 29.09.2017 Termination Letter”). 93.By a letter from its solicitors Messrs Reed Smith Richards Butler (“RSRB”) dated 16th October 2017, Golden Miles denied that any sum was due to Jacob & Co by reason of the Alleged Oral Agreement, so that the purported termination of the Agreement was invalid. 94.By a further letter from RSRB dated 24th October 2017, Golden Miles sent Jacob & Co a cheque for the Disputed Amount, without prejudice to its right to claim for its return. The writ in these proceedings had been issued earlier that day. 95.Jacob & Co says that it discovered in November 2017 that in fact, a substantial number of the items in Golden Miles’ marketing reports were false or exaggerated, and amounted to a repudiatory breach of the Agreement. 96.Jacob & Co further says that it discovered in November 2017 that Golden Miles was about to open a shop in Macau bearing the name “Jacob & Co”, but Jacob & Co had never consented to the opening of the shop. C. THE ISSUES 97.The agreed issues arising for my determination are as follows.
D. WHETHER ALLEGED ORAL AGREEMENT MADE (OR AN AGREEMENT AS PLEADED IN RADC PARAGRAPH 10A) 98.I will first deal with one of the issues that took up much of the time at trial, and that is the question of whether the Alleged Oral Agreement was made at the March Meeting. 99.It can be seen from the figures in the statement discussed at the August Meeting that if Golden Miles establishes that the Alleged Oral Agreement was made, then it would not have owed money to Jacob & Co (as Golden Miles would have been entitled to a further US$572,773.35 as a 5% bonus), whereas if Jacob & Co establishes that no oral agreement was made (whether as regards marketing or bonus), then Golden Miles would have owed both the Disputed Amount and also the US$572,773.35 which had been deducted from the originally outstanding amount as 5% of that outstanding amount. This is of course relevant to whether Jacob & Co was right in asserting that Golden Miles owed money to it at the time of the 29.08.2017 Email. D1. The parties’ cases 100.Golden Miles pleads that the terms of the Alleged Oral Agreement were as follows.
101.Jacob & Co’s pleaded case is as follows.
D2. Relevant principles in assessing credibility 102.The credibility of the witnesses’ evidence is of course important in assessing whether the Alleged Oral Agreement was made. 103.I first remind myself that it is Golden Miles who bears the burden of proving that the Alleged Oral Agreement was made, containing the terms alleged by it. It is not for Jacob & Co to disprove it. 104.In assessing the witnesses’ evidence, I have had regard to the principles summarised in Hui Cheung Fai v Daiwa Development Ltd, unreported, HCA 1734/2009, 8 April 2014 at [77] to [83] (DHCJ Eugene Fung SC). In particular:
105.I have also had regard to the summary of relevant principles made by HH Judge Simon Barker QC in Northampton Borough Council v Cardoza and others [2019] BCC 582:
106.I have further borne in mind the reminder of K Yeung J in Siao Miu Hua v Wu Ching Kuen [2024] HKCFI 232 at [84] that:
D3. Alleged Oral Agreement not established 107.Having considered all of the evidence, I do not accept that the Alleged Oral Agreement was made as claimed. D3.1 How the March Meeting and Alleged Oral Agreement supposedly came about 108.Golden Miles’ pleaded case was that after the Agreement was executed, the parties disagreed on whether Golden Miles was obliged to seek Jacob & Co’s prior approval before conducting marketing activities, and as a result, the March Meeting took place and the Alleged Oral Agreement was made.[6] 109.However, this is not reflected by the correspondence. As will have been seen above, from about November 2016 to February 2017, there were various requests and chasers from Jacob & Co’s side to Ms Ho, asking for details of marketing plans and details of expenses planned or incurred, and Ms Ho did not suggest that she was not obliged to provide such information. On the contrary, she emailed Mr Lam or Ms Oun with marketing ideas, details of publicity already conducted or to be conducted, and also requested Ms Oun’s input regarding various marketing ideas. It was not the case that at the time, there was a disagreement about whether Golden Miles had to seek approval for marketing, such as to trigger the March Meeting or Alleged Oral Agreement. 110.The correspondence after the March Meeting also does not suggest that any disagreement over the need to seek approval for marketing activities was the catalyst for the March Meeting and the making of the Alleged Oral Agreement. Instead, Jacob & Co continued to ask for such information, and Golden Miles continued to provide it, and to ask for approval, in a similar fashion to that prior to the March Meeting. D3.2 No agreement to dispense with need for production of receipts 111.In the correspondence after the March Meeting, Jacob & Co continued to ask for information about marketing plans, and Golden Miles continued to respond. Indeed, it was Vicky who emailed Ms Oun on 21st April 2017 asking whether Jacob & Co would be interested in participating in the China Rendezvous Event. Ms Oun replied on 24th April 2017 asking for more information, and Vicky obliged on 25th April 2017 and asked for her response. 112.Later on, on 28th June 2017, Ms Oun asked for a marketing activity report covering activities since January 2017; it will be recalled that Golden Miles sent three versions of such a report in August 2017. 113.Ms Ho’s message of 10th July 2017 in the WhatsApp Group set out a number of invoices and claimed a marketing contribution and bonus for other invoices. 114.On 21st July 2017, Ms Ho emailed Mr Mazzocchi, saying that he had not replied as to whether Jacob & Co would proceed with the China Rendezvous Event and complaining about Jacob & Co’s lack of response about other projects. Notably, in this email, (1) Ms Ho was seeking to respond to Mr Mazzocchi’s complaint about the failure to provide proof of spending, and (2) Ms Ho referred to discussions at the March Meeting, yet she did not suggest that there had been any discussion (let alone agreement) at the March Meeting that receipts were to be dispensed with. 115.On 24th July 2017, whilst Ms Ho on the one hand referred to a 5% marketing contribution and a 5% “commission deduction”, at the same time, she said that “We will also give back all the receipts to you as soon as possible.” Mr Gomis replied the same day, reiterating that expenses had to be supported by invoices, and saying that the 5% marketing contribution would be acknowledged “as soon as we receive your invoices”. Ms Ho did not contradict this when replying. 116.It was only in Ms Ho’s email of 9th August 2017 to Mr Mazzocchi that Ms Ho asserted for the first time that she did not need permission for, or authorisation of, marketing activities. 117.All of this critically undermines the claim that it was agreed at the March Meeting that the parties agreed that receipts and documentary proof of marketing activities and expenses were to be dispensed with. D3.3 Correspondence shows evolving stance 118.The correspondence after the March Meeting shows that the parties did not arrive at a concluded agreement on the pleaded terms alleged by Golden Miles. Whilst there were references to a 5% marketing contribution and, later on, a 5% bonus (which was also sometimes described as a “commission”), what the correspondence shows is that Golden Miles sought to extract further benefits or concessions from Jacob & Co as time went on, rather than that there was any concluded agreement reached at the March Meeting. 119.Golden Miles relied heavily on the email of 10th April 2017 from Mr Lam to Ms Ho with the latest account statement. Mr Lam referred to the raising of a credit, being Jacob & Co’s “marketing contribution”, and attached credit notes for “Year 2016 Marketing Contribution” and “Quarter 1 2017 Marketing Contribution”, being 5% of the amounts of the purchases made in those periods. This is consistent with there having been an agreement between the parties for a 5% marketing contribution; but it is equally consistent with there having merely been an agreement in principle about such a contribution, with receipts to be provided for Golden Miles’ marketing expenses. 120.In cross-examination, Mr Gomis (Jacob & Co’s Chief Finance Officer at the time) explained that it was a common practice for Jacob & Co to have posted such credit notes into the company’s system on a temporary or provisional basis, so as to give the relevant distributor a projection of what his financial situation would be, and on the assumption that he would provide all necessary documents (such as receipts) to Jacob & Co to enable the credits to be confirmed; once the documents had been provided, the posting would be confirmed in the system. He also explained that the credit notes would have been issued in accordance with Jacob & Co’s usual arrangement with distributors that an amount equal to 10% of total purchases had to be spent on marketing, with Jacob & Co and distributor each contributing 5%.[7] I accept this evidence – Mr Gomis was extensively cross-examined about this email but was not shaken in his explanation as to how the company system operated with regard to such credit notes and provisional postings. He had no particular reason to be untruthful about the matter – he was not said to have been personally involved in making any oral agreement, and in any event he no longer worked for Jacob & Co by the time of the trial. Leading counsel for Golden Miles, Mr Rimsky Yuen SC (appearing with Mr Thomas Wong) submitted that Mr Gomis’ team would surely have ascertained what Ms Ho owed and what credit was due to her before issuing the credit notes, and they would therefore have learnt that the Alleged Oral Agreement had been made. However, it is to be remembered that Jacob & Co’s case is not that no agreement of any sort was made, but that there was an agreement in principle to give a marketing contribution of 5% of gross purchases provided that Golden Miles in turn provided receipts for expenses. The issue of credit notes is entirely explicable either on the basis of such an arrangement, or on the basis that this was the usual marketing contribution arrangement with distributors. 121.Mr Lam was also cross-examined about this email. His evidence was that he did not pay much attention to how the figures had been calculated and he simply passed on the documents which had been generated by Jacob & Co’s head office; he did not have a duty to ascertain the amounts due from or to Ms Ho; and his task was to relay collect payment from Ms Ho. The essence of Mr Lam’s explanations was that in collecting payment, he did not necessarily collect specific sums of money referable to a particular invoice; Ms Ho made ongoing and partial payments for various invoices and the head office would be responsible for calculating the resulting balance of the parties’ accounts. Mr Yuen submitted that when Mr Lam sent out his email of 10th April 2017 together with the credit notes, he must have known that the credit had been calculated on the basis of 5% of Golden Miles’ gross purchases and that this was different from what had been agreed in the Agreement; it was said that this supported the existence of the Alleged Oral Agreement. However, given the limited scope of Mr Lam’s role, and his evidence that he was not involved in the negotiation of contractual terms with Golden Miles, it seems to me to be entirely believable that he did not particularly apply his mind to the significance, if any, of the figures in the credit notes and repeated in his email of 10th April 2017, and I accept Mr Lam’s evidence in this regard.[8] 122.There was then Vicky’s email of 29th April 2017 setting out Ms Ho’s reply to an earlier email of Mr Lam. Ms Ho referred to her side’s agreement “to pay 5% of what we buy before, just based on a special situation”, and stated that “The 5% payment is not a long term decision.” She went on to say that under the Agreement, Golden Miles has promised to buy US$1.8m worth of products from Jacob & Co, and Jacob & Co was to “give 50% of our expense” (rather than 5% of gross purchases). These contradict the claim that the parties had reached any definitive agreement that Jacob & Co’s contribution to marketing expenses had been changed permanently to 5% of Golden Miles’ gross purchases. Furthermore, the email did not make any reference to the other 5% “bonus” which had supposedly been agreed at the March Meeting. 123.Mr Lam’s reply to this email was on 1st May 2017. In response to Ms Ho’s comment that the 5% payment was “not a long term decision”, Mr Lam said “Yes, Please TELL them as we discussed in the other email. Tell them you need them HQ to spend more.” This again indicates that the parties did not consider that Jacob & Co had definitely agreed to contribute 5% of gross purchases on a permanent basis. 124.Mr Yuen submitted that the later part of this email supported Golden Miles’ case of an oral agreement, in that Mr Lam complained of Golden Miles’ failure to provide advance information regarding costing of proposed marketing projects and to seek Jacob & Co’s endorsement before proceeding, and then went on to say “That is why in Basel, we agreed that to “solve” this problem, we will just both STICK to the International Marketing Law, meaning, Country Marketing Budget will be 10% of PURCHASES, and both sides will be responsible for half”. However, Mr Lam also went on to emphasise that he was willing to talk to Vicky to explain to her what was meant by “International Standard Marketing”. Mr Lam explained in cross-examination that this later part of the email was a reference to his repeated explanations at the March Meeting and afterwards to Ms Ho and her team that it was necessary for them to provide advance information and documents regarding their proposed marketing plans, in line with (what he considered to be) international practice. I accept this explanation. It was apparent from Mr Lam’s written emails and his spoken English in his evidence that he did not always articulate his points with precision, so that it was necessary to consider his statements in context, rather than to construe the words in his emails in the way that one might do with a statute. 125.There was then Mr Lam’s email to Ms Ho of 1st May 2017, saying that Mr Gomis had checked, but Jacob & Co’s auditors would not allow any automatic grant of bonus before year-end results; separately, Mr Mazzocchi would confirm “your Bonus upon Target reached”. This suggested that there had not been any concluded agreement about a bonus, with checks needing to be carried out first. It also is consistent with Jacob & Co’s case that any bonus would have been conditional upon reaching an annual sales target which had yet to be agreed,[9] rather than Golden Miles’ case that the parties had already decided that a bonus of 5% of gross purchases would be granted. Ms Ho did not reply to dispute anything in the email or to suggest that a concluded agreement had already been reached regarding the bonus irrespective of what Jacob & Co’s auditors’ views might have been about the agreement. 126.Mr Yuen put to Mr Gomis that the email meant that the bonus had been agreed, but would not be credited until the end of the financial year. Mr Gomis disagreed, explaining that if the bonus had indeed been agreed, then from a financial point of view, there would not have been any reason why it could not be applied right away. In any event, Mr Yuen’s proposition would not assist Golden Miles’ case: if no bonus could be credited until the end of the financial year, then it would not be a sum due to Golden Miles until then, so that Golden Miles would have owed money to Jacob & Co at the time of the 29.08.2017 Email. 127.In the same chain of cross-examination, Mr Gomis further said that if there had been an agreement, he would have required some kind of documentation to support this, to comply with Jacob & Co’s internal policies. Whilst Mr Gomis was not present at the March Meeting and could not therefore testify as to whether the Alleged Oral Agreement was made, the absence of any internal record of the agreement within Jacob & Co, at a time when it is not said that there was any reason for denying the agreement, supports Jacob & Co’s case that no agreement was made. 128.Mr Lam wrote a further email of 8th May 2017 reiterating that no bonus could be deducted in advance. He also said “Also note, that Bonus if applicable, is only for 2017. Nobody mentioned about 2016 in Basel Fair meeting…”. Ms Ho did not write back to say that (1) the bonus was definitely applicable, not conditional, or (2) the bonus was also for 2016 and also for years beyond 2017. 129.On the same day, Ms Ho sent various calculations to Mr Lam by WhatsApp and asked whether he agreed with them. The calculations included figures for a 5% deduction for “marketing contribution” and another 5% deduction for “BONUS” for 2016 and the first quarter of 2017. Although invoices for the second quarter of 2017 were set out as well, no deductions were made in respect of those invoices. Mr Lam’s reply by WhatsApp was that “as I said a long time ago, bonus cannot be deducted in advance”. This again indicates that the bonus was being unilaterally applied by Ms Ho. 130.On 9th May 2017, Mr Lam sent a message to the WhatsApp Group saying that Mr Mazzocchi had agreed to a deduction for “Marketing 2016”, “Marketing 2017 (1st Quarter …)” and had “broken many rules” and let Ms Ho deduct “Bonus for 2016 and 2017”. He added “please note that Bonus is only for this time” and that “for now, 2018 will have no Bonus”. The message indicates that the deductions were limited to those periods (rather than for the entire duration of the Agreement). Given the sequence of the correspondence as set out above, it seems that the “bonus” element was gradually pushed by Ms Ho and that after a while, Mr Mazzocchi relented and then allowed Ms Ho to make deductions for it. 131.There were then messages by Mr Lam urging Ms Ho to make partial payments as Jacob & Co needed money to arrive. Mr Gomis was cross-examined to the effect that Jacob & Co did not have any cash flow issues, but whether or not that was the case, the more important point is that Mr Lam was chasing Ms Ho for payment, saying that Mr Mazzocchi had specially allowed various deductions for limited periods, and Ms Ho’s response was not to say that the agreement had been to have such deductions permanently, but instead, to threaten to terminate her contract with Prince Jewellery. This in turn drew Mr Lam’s attempt to persuade Ms Ho to at least work with Prince Jewellery for a year. 132.Ms Ho’s response was:
133.Tellingly, again, Ms Ho’s response was not that there had been any oral agreement regarding the bonus, but instead, to push for a bonus for at least the duration of the three-year contract with Prince, on the basis that it could be “counted in the budget” (and not because it had been agreed). 134.The negotiations back and forth continued, with Mr Mazzocchi pleading with Ms Ho not to focus on 2018 and suggesting that the bonus for 2018 would be finalised in October or November 2017; Ms Ho standing firm; and finally Mr Lam saying on 10th May 2017 that Mr Mazzocchi had agreed that Jacob & Co would support Golden Miles as long as it was in its agreement with Prince Jewellery. These concessions explain why Jacob & Co allowed Golden Miles to make deductions for the 5% marketing contribution and 5% bonus when Golden Miles made payments. 135.On 19th July 2017, Mr Mazzocchi’s email asked for proof of spending and pointed out that the Agreement referred to 10% net profit (the requirement for marketing expenditure), split 50:50 between the parties. Whilst Ms Ho’s response of 21st July 2017 did refer to an agreement in March, she said that this was for 0.5% (no doubt a typographical error for 5%) as marketing fee, without any mention of a bonus. 136.On 10th August 2017, Ms Ho’s email to Ms Oun referred to the March Meeting and claimed that there had been an agreement about a 5% marketing fee, but did not mention any agreement about a further 5% bonus. 137.It is appropriate to point out at this juncture that Golden Miles’ pleaded case is that the Alleged Oral Agreement was one made at the March Meeting, and not thereafter. It is not entitled to rely on allegations of oral agreements made after the March Meeting as giving rise to a 5% bonus. D3.4 No agreement as to duration 138.It was Golden Miles’ own position shortly after the March Meeting that the arrangement for Jacob & Co to contribute 5% of Golden Miles’ gross purchases towards marketing expenses “was not a long term decision”. The duration for which the 5% marketing contribution was to be paid was important. The lack of agreement as to duration contradicts the pleaded term that the deduction was to be made every quarter (ASOC paragraph 5.4) (and the implication that deductions were going to continue throughout the duration of the Agreement). 139.As regards the 5% bonus, as mentioned, the correspondence shows that the position was an evolving one and Ms Ho applied pressure after the March Meeting to extract additional periods from Mr Mazzocchi for which a bonus could be applied, rather than there having been any agreement as to such periods back in the March Meeting. 140.The lack of agreement as to the duration of the deductions contradicts the pleaded term that the deduction was to be made every quarter (ASOC paragraph 5.4). D3.5 No reason for Jacob & Co to give up requests for marketing plans and receipts 141.At trial, Golden Miles’ position was that it had no obligation under the Agreement to provide details about its marketing plans or to provide receipts of its expenses, relying on cl.2.1(b) of the Agreement; Jacob & Co’s position was that Golden Miles was obliged to provide such information, relying on cl.2.1(k) of the Agreement. 142.Regardless of the true legal position under the Agreement, at the time of the Alleged Oral Agreement in March 2017, Jacob & Co evidently considered that it was entitled to the information, and continued to ask for it. The correspondence shows that such information was important to Jacob & Co, with Jacob & Co expressing frustration when it was not provided. Under the Alleged Oral Agreement, Jacob & Co would no longer have been entitled to do so.[10] It would have been illogical for Jacob & Co to have given up (what it considered to be) its rights to information which it considered important. It was suggested by Ms Ho in her evidence that Jacob & Co stood to benefit because under the Alleged Oral Agreement, Jacob & Co’s share of marketing expenses would have been capped at 5% of Golden Miles’ purchases, with Golden Miles shouldering any amounts above this. However, there is no evidence to suggest that this would have been more advantageous than the amount which Jacob & Co was originally bound to pay under the Agreement. 143.Although Golden Miles says that receipts would not have been necessary since, under the Alleged Oral Agreement, Jacob & Co’s marketing contribution would have been based on the amount of gross purchases rather than on the actual expenses spent, this is a bootstraps argument: it presupposes that the Alleged Oral Agreement has been established. In any event, under the Agreement, Jacob & Co would still have needed the receipts to verify that Golden Miles had indeed spent no less than 10% of its net profit on marketing and promotion, as Golden Miles was obliged to do under cl.2.1(h). It is not Golden Miles’ case that this obligation was somehow abrogated by the Alleged Oral Agreement. 144.Furthermore, I do not agree in the first place with the logic of the argument that fixing Jacob & Co’s marketing contribution obviated the need to provide marketing plans and receipts[11] – it assumes that Jacob & Co had no interest in the information other than for verification of the amount it was to pay, when in fact Jacob & Co was concerned more broadly with monitoring and approving the marketing carried out by its distributors. Again, whilst the extent to which Jacob & Co was entitled under the Agreement to monitor and approve the marketing carried out by this particular distributor might be open to dispute, the point for present purposes is that rightly or wrongly, Jacob & Co was clearly very much concerned throughout its relationship with Golden Miles to monitor and control the latter’s marketing plans, so that the suggestion that it agreed to relinquish (what it thought was) its entitlement to do so does not make sense. D3.6 Ms Ho’s credibility and reliability 145.I did not find Ms Ho to be a credible or reliable witness in her evidence as to whether the Alleged Oral Agreement was made as she claimed. I give a few examples as follows. 146.On 29th April 2017, Vicky’s email (on Ms Ho’s behalf) to Mr Lam stated that “The 5% payment is not a long term decision.” When it was put to her that this was inconsistent with her claim that the parties had agreed (permanently) to a 5% contribution for marketing, Ms Ho sought to brush it off on the grounds that the email had been written by her staff (Vicky) and she had no idea whether Vicky had misunderstood her meaning. This was one of a number of occasions on which Ms Ho sought to blame her staff for emails written which were inconsistent with Golden Miles’ case. 147.On 31st July 2017 she sent a WhatsApp message to Mr Mazzocchi asking for a written confirmation that at the March Meeting, it had been agreed that for each watch sold, Golden Miles would get a deduction of 5% marketing and another 5% commission. Mr Mazzocchi wrote back both by WhatsApp and by email saying that the arrangement was for Golden Miles to provide invoices and a copy of the Prince Jewellery Agreement. Ms Ho did not respond to Mr Mazzocchi’s email to refute this. Her explanation in her witness statement was that she only learned of Mr Mazzocchi’s position after the commencement of proceedings, as Nicola had not read the relevant parts of Mr Mazzocchi’s email to her. This is hardly credible when Ms Ho had expressly asked Mr Mazzocchi to confirm his position – she would surely have asked to understand Mr Mazzocchi’s position clearly and not merely have been satisfied to hear from Nicola that Mr Mazzochi “did mention” a 5% plus 5% arrangement.[12] 148.Mr Lam sent an email of 8th May 2017 to Ms Ho, saying that nobody had mentioned anything about a bonus for 2016. When it was put to Ms Ho that she did not respond to complain that the matter had been agreed at the March Meeting, she answered that it was because she did not read her emails. However, whilst Ms Ho might not have personally been composing her emails, it is undeniable that she was communicating with Jacob & Co via email, getting her staff to prepare the emails sent by Golden Miles and reading to her the emails received from Jacob & Co. 149.Mr Mazzocchi’s message of 9th May 2017 in the WhatsApp Group asking Ms Ho “please let’s not focus right at this moment on 2018” was put to Ms Ho. She commented that this was Mr Mazzocchi seeking to renege from the Alleged Oral Agreement. When asked why she did not write back at the time complaining about this (and instead wrote about other matters), Ms Ho was evasive and unable to give any sensible answer. 150.I do not accept the submission that Ms Ho truly believed that the Alleged Oral Agreement had been made, and that this informed her approach to the provision of receipts “out of courtesy”.[13] The correspondence shows that she sought to expand, bit by bit, the scope of the bonus which Jacob & Co was willing to give, culminating in a claim that it had all along been agreed. Furthermore, Ms Ho did respond to Jacob & Co’s requests for invoices, and even sent two corrected versions of the marketing report, never once suggesting that this was only out of “courtesy”. She assured Ms Oun that she would “keep sending” invoices once she had them, which would hardly have been necessary if the report was merely a matter of “courtesy”. She also sought to address Ms Oun’s comments about missing, insufficient or non-comprehensible invoices. I return to this claim of “courtesy” later when I consider the Marketing Report. 151.I further found some of Ms Ho’s answers regarding the provision of receipts not to be credible, as I set out below. However, I put those matters aside for present purposes, bearing in mind that the unsatisfactory nature of her evidence in that area does not necessarily reflect on her credibility in this. D3.7 Adverse inference from Mr Mazzocchi’s absence from trial? 152.Mr Yuen submitted that an adverse inference should be drawn against Jacob & Co by reason of the fact that Mr Mazzocchi was not called to testify at trial. The adverse inference claimed was that the Alleged Oral Agreement was made. 153.However, as leading counsel for Jacob & Co, Mr Anthony Chan SC (appearing with Mr William Wong) submitted:
154.In the present case, I do not accept Golden Miles’ evidence that the Alleged Oral Agreement was made. Furthermore, I accept Mr Lam’s evidence that no agreement was made at the March Meeting. The question of drawing an adverse inference does not arise. D4. Oral agreement as pleaded in RADC paragraph 10A? 155.Jacob & Co accepts that there was some (non-binding) agreement in principle at the March Meeting that it would allocate 5% of Golden Miles’ gross purchases as its contribution to marketing expenses, although it says that this was conditional on receiving receipts for all marketing expenses from Golden Miles. It pleaded in the alternative that if there were a binding agreement that it would contribute 10% of Golden Miles’ gross purchases, with 5% as “marketing contribution” and 5% as “bonus”, then this was on the basis that Golden Miles was obliged to provide receipts and documentary proof as to its marketing activities and expenses. 156.Whilst Jacob & Co continued to chase Golden Miles for provision of receipts and information as to past and planned marketing activities after the March Meeting, just as it had before the March Meeting, it is not clear that at the March Meeting, any direct link between Jacob & Co’s provision of a marketing contribution (or bonus) on the one hand, and Golden Miles’ provision of the receipts and marketing information on the other hand, was agreed. I note that the chasers for the receipts and marketing information were not put on the basis that they were part of the bargain struck at the March Meeting. I further note that in his oral evidence, Mr Lam said that he considered that nothing was achieved at the meeting; it was more of a meeting where the parties updated each other. He did not have the impression that any agreement was reached at the meeting. 157.Jacob & Co did not call Mr Mazzocchi to give evidence at trial in support of its positive case as to what transpired at the March Meeting. It was not suggested that Jacob & Co were unable to procure him to give evidence; indeed Mr Gomis said that he had been in touch with Mr Mazzocchi until a few months prior to the trial. In the circumstances, I place little weight on his affidavit evidence as to the agreement about the need for the provision of receipts in exchange for Jacob & Co’s contribution to marketing expenses. 158.I therefore do not find that the agreement as pleaded in RADC paragraph 10A was made. 159.I should note that whether or not Golden Miles was entitled to retain the 5% marketing contribution and 5% bonus it had claimed, on the basis of the various concessions which were made via (for example) the credit notes or Mr Mazzocchi’s emails, and leaving aside the Alleged Oral Agreement, was not explored in the evidence, and not the subject of submissions. Golden Miles’ pleaded case is that it did not owe any money to Jacob & Co as at the time of the 29.09.2017 Termination Letter because of the Alleged Oral Agreement alone.[14] E. WHETHER ANY ORAL AGREEMENT MADE VOID FOR UNCERTAINTY 160.In light of my findings that no oral agreement was made at the March Meeting, this issue does not arise. F. WHETHER JACOB & CO ENTITLED TO TERMINATE AGREEMENT BY ISSUE OF 29.09.2017 TERMINATION LETTER 161.Given my finding that the Alleged Oral Agreement was not made, Golden Miles is not entitled to rely on it to assert that it was not indebted to Jacob & Co. The next question that arises for consideration is whether Jacob & Co was then entitled to terminate the agreement for non-payment of the Disputed Amount. F1. Whether 29.08.2017 Email constitutes notification under cl.7.2 of the Agreement 162.It will be recalled that cl.7.2 the Agreement provided that:
163.An option to terminate an agreement is construed in the same manner as any other option, and accordingly any condition must be strictly complied with. See Lewison, The Interpretation of Contracts, 8th ed., pages 1006-1007. Where the parties have agreed on a specific procedure by which an option is to be exercised, then that procedure must be followed in order for the option to be validly exercised: Bess Fashion Management Co Ltd & anor v Star Play Development Ltd & anor [2002] 1 HKC 709 at [21(1)] (Ma J, as he then was). 164.In the present case, it is necessary for “written notification” “thereof” to have been given before a party can exercise its right to terminate the Agreement. The question is what “thereof” denotes. 165.Mr Chan submitted[15] that only the “breach or default” needs to be referred to in any notice under cl.7.2(a), but not the requirement that the breach or default be cured within thirty days, nor any indication of an intention to terminate the Agreement in the event that the breach is not cured. 166.In my view, on a proper construction of cl.7.2, a notice which a party seeks to rely on for the entitlement to invoke cl.7.2(a) needs to indicate in some way that it is such a notice, whether by express reference to cl.7.2(a), or by requiring that the breach or default complained of be cured within thirty days, or otherwise. Clause 7.2(a) is broad in scope, as it entitles a party to terminate the Agreement in respect of “any” breach; it further entitles the terminating party to carry out the termination, once thirty days have elapsed and the breach remains uncured, without any further notice and with immediate effect. Since “any” breach could potentially lead to termination of the Agreement, it would be highly uncertain if it were not sufficiently indicated that a particular breach is relied upon as a cl.7.2(a) breach – any and all complaints about a failure to achieve strict adherence to the Agreement could potentially constitute notices under cl.7.2(a). For example, if Jacob & Co supplied 1,990 copies of its watches catalogue rather than the 2,000 copies required under cl.3.1(e), and Golden Miles simply complained about the shortfall in writing without requiring ten copies to be provided within thirty days (or otherwise indicating that its complaint was made pursuant to cl.7.2(a)), Mr Chan’s construction would lead to the result that Golden Miles could then terminate the Agreement without further notice a month later. In the absence of clear wording, I do not accept that the parties’ objective intention was that a party’s breach – however minor or easy to cure – would entitle the other party to terminate the Agreement without further notice, thirty days after merely mentioning the breach in writing but without having indicated a potential invocation of cl.7.2(a). 167.Mr Chan argued that since cl.7.2 enabled termination with “immediate effect” if cl.7.2(a) were satisfied, it would defy the purpose of the clause to require a party to set out in advance an intention to terminate the Agreement.[16] However, the fact that cl.7.2(a) provided for the possibility of curing a breach or default shows that the intention was to allow such curing. If a party were not sufficiently put on notice that a breach or default might be relied upon to terminate the Agreement, it would be deprived of the opportunity to attempt any cure, which would undermine the intention of allowing breaches and defaults to be cured. 168.Furthermore, unilateral notices served under contractual rights reserved must be sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they are intended to operate: Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 768G (Lord Steyn). 169.There is no dispute that in construing the 29.08.2017 Email, an objective approach is to be adopted, and regard should be had to the relevant factual matrix. In other words, the court must place itself in the position of the recipient to see what he would reasonably have understood the document to mean, given the recipient’s knowledge of the contractual terms and relevant circumstances surrounding the document: Bess Fashion Management Co Ltd at [22(3), (4)]. 170.Mr Chan submitted that one of the matters which a reasonable recipient of the email would have had at the forefront of his mind would have been the terms of the Agreement (cf. Mannai Investment Co Ltd at 768B). Ms Ho accepted in cross-examination that she was aware of the provisions in the Agreement concerning payment, and that if Golden Miles did not pay according to the terms of the Agreement, Jacob & Co could use cl.7.2 to terminate the Agreement. Furthermore, the relevant context of the 29.08.2017 Email was the August Meeting on the previous day, at which (it is said) that Mr Arabo told Ms Ho that Golden Miles still owed the Disputed Amount. In cross-examination, Ms Ho acknowledged that the figure referred to in the email of US$470,198.15 was connected to the discussions at the August Meeting and that Mr Gomis was reminding her to pay it immediately. However, at the same time:
171.Taken in context, then, the 29.08.2017 Email indicated that Jacob & Co intended to continue the business relationship rather than to terminate it. On an objective reading, a recipient in the position of Golden Miles would reasonably have understood the request for payment as one of the ongoing requests for payment which Jacob & Co made from time to time. Whilst Ms Ho would no doubt have been generally aware that the Agreement could be terminated for failure to pay in accordance with its terms, termination was not specifically contemplated at the August Meeting or in the 29.08.2017 Email. 172.In my judgment, the 29.08.2017 Email did not constitute a notification under cl.7.2(a) of the Agreement. Consequently, Jacob & Co was not entitled to terminate the Agreement pursuant to this clause (as it sought to do by the 29.09.2017 Termination Letter). F2. Whether Jacob & Co entitled to terminate the Agreement at common law for non-payment of the Disputed Amount 173.Mr Chan confirmed in closing submissions that Jacob & Co was not seeking to argue that Golden Miles’ failure to pay the Disputed Amount entitled Jacob & Co to treat the Agreement as terminated at common law (as opposed to under cl.7.2 of the Agreement). F3. Whether cl.7.2(a) ousts termination at common law for repudiatory breaches 174.I next turn to consider Golden Miles’ argument that cl.7.2 of the Agreement laid down a comprehensive code for terminating the Agreement, ousting any right that Jacob & Co had to terminate the Agreement at common law for repudiatory breach on grounds coming within the scope of cl.7.2.[18] 175.Mr Yuen did not dispute that the starting point in construing a termination clause is that there is a presumption that neither party intends to abandon any remedies for its breach arising by operation of law, and clear express words must be used in order to rebut this presumption. See Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 717G-H (Lord Diplock). The rationale, as explained in Tridant Engineering Co Ltd v Mansion House Holdings Ltd, unreported, HCCT 3/1996, 15th June 2000 at pp.67-68 (DHCJ To), is that the objective of a contractual termination clause is (1) to define particular situations in which a right to terminate will arise and (2) provide for rights and remedies for the determining party which a common law termination would not confer, thus supplementing rather than excluding the common law right of termination, in the absence of express provision to the contrary. 176.However, Mr Yuen submitted that a termination clause will be held to exclude the right to terminate at common law for grounds coming within the clause, citing Amoco (UK) Exploration Co v British American Offshore Ltd (Comm Court, 16th November 2001) and Lockland Builders v Rickwood (1995) 46 Con LR 92.
177.All that these authorities do is beg the question of whether cl.7.2(a) of the Agreement in the present case is worded so as to catch all breaches of contract and to exclude the right to terminate at common law for repudiatory breach. 178.In my judgment, cl.7.2(a) is not so clear as to exclude the right to terminate for a repudiatory breach.
179.In closing submissions, Mr Yuen submitted that the definition of “Rights” in the Agreement indicated that termination was to be confined to the methods provided in the Agreement. That definition provided as follows.
180.The argument was that the term “as provided for in this Agreement” qualifies “determined”. However, it seems to me that:
181.It should be borne in mind that this definition clause seeks to define “Rights” rather than termination, so that the suggestion that it circumscribes the methods of termination of the Agreement should be approached with reservation. 182.Even if it could be said that “as provided for in this Agreement” qualifies the word “determined”, this only begs the question of what, exactly, is provided for in the Agreement as regards termination, so that one goes back to the question of what the proper construction of cl.7.2 is, and as explained above, my view is that it does not oust determination at common law for repudiatory breach. 183.Mr Yuen further referred to BSkyB Ltd v HP Enterprise Services UK Ltd [2010] EWHC 86 (TCC) at [1366], where Ramsey J said that “the fact that for a particular breach the contract provided that there should be a period of notice to remedy the breach would indicate that the breach without the notice would not, in itself, amount to a repudiatory breach”. It was submitted that cl.7.2(a) therefore prevented any repudiatory breach from arising unless notice was given in respect of such breach and the defaulting party failed to cure it within thirty days.[19] However, this presupposes that cl.7.2(a) mandates that notice must be given for all breaches, but as I have explained above, this is not the case. At the end of the day, as Ramsey J essentially acknowledged at [1366], it is really a question of construction of the clause in issue in each case as to whether termination for repudiatory breach at common law is excluded. 184.Mr Yuen also cited SA Christensen, The Construction and Performance of Commercial Contracts, 3rd ed., at p.141, where the learned authors stated that “Comprehensive provisions for termination that apply to ‘all breaches or defaults’ by a party are likely to be construed by a court as applying in all cases of termination whether under the clause or at law, except termination for repudiation by renunciation.” First of all, cl.7.2(a) refers to “any” breach rather than “all” breaches, and does not purport to be comprehensive – in other words, it gives a party the option of relying on a breach for termination under cl.7.2(a) rather than mandating that all breaches must be dealt with pursuant to cl.7.2(a). Secondly, Christensen acknowledges that even comprehensive provisions for termination may well not exclude termination at common law for repudiatory breach. 185.I therefore do not consider that cl.7.2(a) ousts the right of the parties to terminate the Agreement for repudiatory breach at common law. F4. Whether cl.7.2(a) nevertheless applies to termination at common law for repudiatory breaches so as to require notification and opportunity to cure 186.Mr Yuen’s alternative argument was that even if cl.7.2(a) does not exclude the common law right to terminate the Agreement, cl.7.2(a) nevertheless applies to a common law termination of the Agreement, such that it is necessary to give thirty days’ notice of an intended termination and the opportunity to the defaulting party to cure it.[20] I do not agree.
187.I therefore do not consider that cl.7.2(a) requires that in the case where a repudiatory breach of contract has taken place, a party must serve notice under cl.7.2(a) requiring curing of the breach before it can accept the breach of contract. 188.The question of whether Golden Miles was in repudiatory breach of contract, justifying termination by Jacob & Co, therefore arises for consideration. Before I address this question, I first consider the issue of whether there were certain implied terms as claimed by Jacob & Co. G. WHETHER AGREEMENT CONTAINS IMPLIED TERMS OF HONESTY AND GOOD FAITH 189.It is Jacob & Co’s pleaded case in RADC paragraph 6 that the Agreement contained implied terms that (1) the parties would perform their contractual obligations and behave honestly, and (2) the parties would act in good faith towards one another. 190.Jacob & Co says that Golden Miles was in repudiatory breach of these (and other) terms by submitting fraudulent and exaggerated receipts for expenses. I consider the issue of breach in the next section. In this section, I deal with the issue of whether the terms should be implied into the Agreement. 191.As Mr Yuen submitted, no general obligation of good faith is implied into contracts; an obligation of good faith exists only where the parties are in some kind of fiduciary relationship, such as that between parties to an insurance contract, partnership contract or employment contract: GDH Ltd v Creditor Co Ltd [2008] 5 HKLRD 895 at [57] (DHCJ To). Mr Chan clarified that his position was not that the Agreement fell into a category of contract where the law would imply the obligation as a legal incident of the relationship between the parties, but that rather, on the facts of the present case, the terms should be implied. G1. The applicable legal principles for implying a term into a contract in fact 192.The requirements for implying a term into a contract as a matter of fact were set out in Kensland Realty v Whale View Investment Ltd (2001) 4 HKCFAR 381 at [59] (Ribeiro PJ), citing BP Refinery (Westernpoint) Pty Ltd v Shire of Hastings (1978) 52 AJLR 20 at p.26. The term must:
193.Lord Neuberger PSC commented on these requirements in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd and anor [2016] AC 742 at [21] as follows.
194.In Nazir Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2, Lord Hughes (with whom Lord Neuberger, Lord Clarke and Lord Carnwath agreed), after referring to Marks and Spencer plc, observed as follows.
G2. Whether terms should be implied in the present case 195.Jacob & Co relied on two matters for the implication of the terms it sought: “the circumstances and nature of the business between the parties as stipulated in the terms of the Agreement”, and the matters pleaded in RADC paragraph 3, such as the fact that it was critical for Jacob & Co’s brand that Jacob & Co should lead and coordinate marketing campaigns and sale strategies with its various distributors. As Mr Yuen pointed out, the matters pleaded in RADC paragraph 3 were not said to have been discussed with Golden Miles at the time when the Agreement was entered into. Jacob & Co has not established that they were matters within Golden Miles’ contemplation at that time. It could not be said that a notional reasonable person in the position of Golden Miles would have concluded the Agreement with these matters in mind. It is therefore difficult to see how these matters could support the implication of terms into the Agreement. 196.This leaves “the circumstances and nature of the business between the parties as stipulated in the terms of the Agreement”. 197.Insofar as the implied term of good faith is concerned, there is already a provision in cl.2.1(c) of the Agreement that Golden Miles was to act loyally and faithfully towards Jacob & Co in relation to the Business. It is not clear to me what an implied term of good faith would add to this clause. I therefore do not see how it can be said that the implied term is either necessary to give business efficacy to the Agreement, or so obvious that it goes without saying. Insofar as it seeks to go further than cl.2.1(c), it would be inconsistent with the clause. The implied term of good faith therefore cannot meet the requirements for implication of a contractual term. 198.Insofar as the implied term relating to honesty is concerned, it seems to me that there is also at least a large measure of overlap with cl.2.1(c) of the Agreement. Indeed, Mr Chan indicated that the implied terms had been pleaded as a “belt and braces” measure and did not add materially to the express terms of the Agreement. 199.Whilst Leggatt LJ in Yam Seng Pte v International Trade Corp Ltd [2013] 1 CLC 662 at [137] appeared to suggest a general principle that all contracts should be understood as requiring honesty in their performance, or that a term should generally be implied to this effect,[21] the weight of subsequent authority is that such a term may either be implied as an incident of certain categories of contract (but this is not Golden Miles’ case), or in particular cases by reason of the context: Chitty on Contracts, 35th ed., paragraph 2-098. 200.It does not seem to me that the context of the Agreement requires such an implication. The parties dealt at arms’ length to strike a commercial bargain, and set out their respective rights and obligations in the Agreement. Many of the terms are not obviously compatible with an implied term that the parties “must perform their contractual obligation and behave honestly”.[22] For example, what would it mean for Golden Miles to promote the Products (cl.2.1(a)) “honestly”, or for Jacob & Co to refrain from infringing on Golden Miles’ rights (cl.3.1(a)) “honestly”? 201.In reality, what Jacob & Co is concerned with is cl.2.1(k) of the Agreement, which provided that Golden Miles was to submit written reports at regular intervals to Jacob & Co, showing levels of sales and outstanding orders, and also any other information relating to the performance of its obligations under the Agreement that Jacob & Co might reasonably require from time to time. Its case is that on its proper construction, cl.2.1(k), read together with cl.2.1(c) of the Agreement, required Golden Miles to supply reports and information under cl.2.1(k) which were true and accurate.[23] I would accept that the proper construction of cl.2.1(k) is that Golden Miles was obliged to supply regular reports, and other information when requested, which were true and accurate to the best of its knowledge. Given that Golden Miles was distributing Jacob & Co’s products, the reports and information were evidently for the purpose of keeping Jacob & Co informed of the level of sales and any other matter relating to the performance of Golden Miles’ contractual obligations. For the reports or information to be of any meaningful use to Jacob & Co, it must be the case that Golden Miles was to submit them on the basis that they were, to the best of its knowledge, true and accurate. This was particularly so given that Golden Miles had a relatively free hand in deciding on how it would promote and procure sales (cl.2.1(b)) whilst also having the obligation to spend no less than 10% of its net profit on marketing and promoting the Products (cl.2.1(h)), with Jacob & Co being obliged to pay half of the marketing costs (cl.3.1(d)). Jacob & Co would very much have to rely on the information provided by Golden Miles in order to find out how the sales of its products were faring and how much it should pay for marketing. It would be nonsensical if Golden Miles could fulfil its reporting obligation by submitting reports and information it knew to be false. In other words, the terms “reports” and “information” under cl.2.1(k) should not be stretched to include “reports known to be false” or “information known to be false”. 202.In light of these points, I do not consider that it can be said a term that the parties should “perform their contractual obligation and behave honestly” meets the requirements of necessity or obviousness. H. WHETHER GOLDEN MILES IN REPUDIATORY BREACH FOR SUBMITTING FALSE OR EXAGGERATED RECEIPTS H1. The applicable principles 203.In the case of a breach of an “intermediate” or “innominate” contractual term, the breach will be repudiatory where its consequences are so serious as to deprive the innocent party of substantially the whole benefit which it was intended that he should obtain from the contract: Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 70 (Diplock LJ). 204.Chitty on Contracts at paragraph 28-043 describes the test as follows.
H2. The terms alleged to have been breached 205.Jacob & Co alleged that in submitting fraudulent and exaggerated claims of marketing expenses in the Marketing Report, Golden Miles was in repudiatory breach of:
206.The veracity of the items in the Marketing Report was investigated by Ms Michelle Chan (“Ms Michelle Chan”) and Ms Cathy Wu (“Ms Cathy Wu”), solicitors who were respectively formerly and currently employed by Jacob & Co’s solicitors. Both of them gave evidence at trial to confirm the investigations they carried out. H3. The extent of the falsity and exaggeration in the Marketing Report 207.The Marketing Report set out a table of 40 items.
208.I now turn to deal with those items of which complaint was made.[24] I have borne in mind that given the seriousness of the allegation made against Golden Miles and Ms Ho, there should be cogent evidence before I find that any of the expenses were fraudulently claimed, or exaggerated in presentation. The more serious an allegation is, the less likely it is that the event in question occurred, and hence, the more cogent should be the evidence before the court concludes that the allegation is established on the balance of probability: Re H (Minors) [1996] AC 563 at 586C-H (Lord Nicholls). H3.1 Items 1 & 2 209.Item 1 was described as “Sponsor a china blogger a watch” with the figure of US$6,225. Item 2 was described as “Any pay to the blogger per month USD8500*6 month” with the figure US$51,000. 210.The supporting invoices provided were issued by “My Favourite Limited”, with a Hong Kong address and signed by an unidentified person and chopped with the company chop of My Favourite Limited. Both invoices stated “This agreement serves to confirm that Golden Miles have sponsored a china blogger a watch with details below”. The first invoice stated that there was a “fee” of US$6,225; the second stated that there was a “fee” of US$8,500 per month for six months, totaling US$51,000. 211.In Ms Ho’s witness statement, she said that the blogger was someone called “Shirley”, who was engaged by one Mr Lau Kei (“Mr Lau”) and a middleman called Yuan Yu (“Ms Yuan”). Ms Yuan was apparently Ms Ho’s customer who purchased bags from Ms Ho’s other company Brands International. For the payment of US$6,225 in item 1, this was in fact a gift to Ms Yuan as she was upset that Mr Lau gave a watch to Shirley as a gift. 212.For the payments to Shirley totaling “at least” US$51,000 in item 2, Ms Ho’s statement said that these were made through Ms Yuan, in the form of setting off amounts owed by Ms Yuan to Brands International, but there were no invoices from either Shirley or Ms Yuan. My Favourite Limited was a company belonging to Mr Terry Yeung (who was not said to have had anything to do with Shirley or Ms Yuan). Ms Ho did not provide any explanation as to why the invoices were issued by My Favourite Limited, save to say that “As Emily and Nicola have both left the employment of Golden Miles, and as I have lost contact with Madam Yuan since about 6 months ago, I have yet to ascertain the full picture in this regard. I will endeavor to ascertain the situation and update this Court as soon as I am in a position to do so.” The witness statement was made in September 2019. 213.Ms Ho was unable to provide any comprehensible “update” at trial. She could only say that My Favourite Limited did not do the work in items 1 and 2; it gave a quotation but Golden Miles did not use it; the invoices wrongly referred to an “agreement” but there was none. She provided no evidence of what amounts Brands International might have charged Ms Yuan and which might have been set off against payments made through Ms Yuan to Shirley. She provided no evidence of any communications with Ms Yuan regarding payment, such as text messages. For the US$6,225 in item 1, she suggested that it was appropriate to pay Ms Yuan to pacify her because she had expected that Ms Yuan would have kept some of the payments intended for Shirley but instead she had paid them all to Shirley. 214.I do not believe Ms Ho’s claim that the amounts under items 1 and 2 were incurred and paid to Shirley. There simply is no credible evidence that this was done. Merely showing a screenshot of Shirley’s post wearing and promoting a Jacob & Co watch does not establish that such expenses were incurred or paid. Ms Ho’s own documents to My Favourite Limited contradicted her story. H3.2 Item 3 215.Item 3 was described as a “Charitable donations chi hang foundation a watch by Jacob and (7,450) and”, with the figures US$18,000, HK$140,400, and RMB156,000 (the figures appear to be equivalents in the three currencies). It relates to a watch with a retail value of US$17,000 which was donated by Jacob & Co to the Chi Heng Foundation, through an arrangement made by Golden Miles, at a charitable event organised by the Chi Heng Foundation in Shanghai. Ms Ho agreed that it cost Golden Miles nothing, as the watch was donated by Jacob & Co. She however claimed that Golden Miles made a cash donation of RMB68,000 at the event which was not included in item 3. The figure of RMB156,000 was in fact the hammer price at which the watch was sold in the charity auction at the event. 216.Ms Ho herself said in evidence that the figure of RMB156,000 was not a marketing expense, but the “market value” of the watch. However, the Marketing Report had represented the RMB156,000, like the other items, as part of the “marketing fee” incurred by Golden Miles. There was no evidence that any additional donation of RMB68,000 was made. 217.In her supplemental witness statement, Ms Ho claimed that there was nothing wrong with stating the hammer price of the watch as this was the “true, market or ultimate value of the donation made by Golden Miles”. It was also said that the purpose of the report was not to claim any expenses. 218.However, the amount was not stated in the Marketing Report as representing such “true, market or ultimate value of the donation”. Rather, it was included with other items of expenses claimed to have been incurred and paid by Golden Miles. Nor was there any indication that the watch had in fact been supplied by Jacob & Co to Golden Miles without any cost. The presentation of the item was misleading, to say the least. H3.3 Item 4 219.Item 4 was described as “China charity federation”, with the figures of US$69,231, HK$540,000 and RMB600,000. It relates to a donation made to the China Charity Foundation. The website of the China Charity Foundation shows that it was a donation made in the name of Ms Ho, not Jacob & Co. 220.When Ms Michelle Chan called the China Charity Federation to investigate, she was told that the RMB600,000 was paid in the name of Ho Ming Yuk (Ms Ho), and that Ms Ho subsequently asked the organisation to change the name to that of Golden Miles when issuing a certificate of thanks, although the name on the list of donors on the organisation’s website was not updated. The staff member also said that he was not aware of Jacob & Co or its involvement in the donation. 221.For this item, I do not consider that the evidence is so cogent as to establish any fraudulent intention on the part of Golden Miles. H3.4 Item 6 222.Comprised within item 6 was a sum of HK$176,850, said by Ms Ho in her witness statement to represent the retail value of a “Five Time Zone Watch” taken away by Ms Marianne Wong of Time Concept Group Limited[25] without authority, as alleged remuneration, after Golden Miles terminated its business relationship with Time Concept. Jacob & Co’s complaint is that the watch was sold and shipped to Ms Ho’s Brands International at the cost of US$8,940, so there was no reason for Golden Miles to claim that it cost two and a half times that amount. 223.In her supplemental witness statement, Ms Ho claimed that it was “right and fair” to cite the retail price of the watch in the Marketing Report as this was the revenue that Golden Miles would have fetched but for Ms Wong’s misappropriation. 224.I agree with Jacob & Co’s submission that even on Golden Miles’ case that Ms Wong stole the watch, the retail value of the watch could not represent marketing expenses incurred by Golden Miles for carrying out any marketing. When the proposition was put to Ms Ho, she said that she disagreed, because Ms Wong had said that the amount was a sum spent for marketing. When the proposition was put to her again, she said that she either had to report the theft to the police, or to agree to what Ms Wong had done. The answers do not make sense and do not explain how the theft of the watch bought for US$8,940 could have been properly and honestly represented as a marketing expense of HK$176,850. H3.5 Items 7 and 12 225.Item 7 was described as “Gift for Prince event (02-05/2017)” in the amount of HK$36,400 (or US$4,667) and item 12 as “Gift for VIP” in the amount of HK$90,000 (or US$11,539). The invoices provided to Jacob & Co were issued by “Watch & Jewellery”, a business operated by Brands International. Jacob & Co’s complaint is that Brands International in fact ceased business on 1st January 2016, as shown by the Government’s business registration records. 226.Ms Ho’s explanation was that her staff forgot to pay the business registration fee for Brands International and its business registration therefore expired, but once the omission was discovered, the fee was paid and the business registration restored. Ms Ho was not further challenged about this. She was challenged as to the genuineness of the gifts allegedly purchased. While Ms Ho could produce no evidence that chocolates or gift boxes had been bought, there was equally nothing to really cast doubt on her claim that this had been done. 227.Ms Ho said that item 7 had been mistakenly invoiced twice by Watch & Jewellery, and ascribed it to an inadvertent mistake on Nicola’s part. There is nothing to really cast doubt on this explanation. H3.6 Items 16 and 34 228.Item 16 was described as “Hainan Rendez-Vous”, for the amount of RMB 2,400,000 (or USD276,923 or HK$2,160,000). This was the China Rendezvous event referred to above. Item 34 (in the “Material Resources for Promotion and Advertisement (estimated)” section of the Marketing Report) was described as “Hainan Rendez-Vous (Transport, security, renovation, declaration)”, for the amount of RMB 1,800,000 (or USD 207,692 or HK$1,620,000). Two invoices with a logo “China Rendez-Vous Hainan China” and said to have been issued by Hainan Visun Rendez-vous Limited (“HVRL”) were included:
229.Jacob & Co’s complaint is that it had clearly indicated to Golden Miles that it should not proceed with the event, and in fact Golden Miles had not paid either of the invoices for RMB2.4m or RMB1.8m. Furthermore, the RMB1.8m invoice was not a reasonable estimate of construction costs. 230.Golden Miles’ case was that it intended to take part in the event, and Mr Arabo had confirmed his agreement to proceed as at 11th September 2017, so that as at August 2017, Golden Miles had expected to incur the two amounts. Furthermore, it had to pay a penalty of RMB400,000 due to last minute cancellation. 231.I have earlier noted that Jacob & Co had in fact turned down the (repeated) requests of Golden Miles to participate in the event, on 25th April 2017, 9th May 2017 and 26th July 2017. Mr Mazzocchi’s email of 26th July 2017 made this very clear. He cited Ms Oun’s email of 4th May 2017 and said “I do not understand how you can claim that you received no answers? I just listed above 3 mails NOT confirming that J&Co should participate. More clear than “we do not want to commit” Bopha [Oun] cannot be… Please do not do the China Rendez vous It is not accepted and we will not participate as mentioned in our mail back in May.” 232.Ms Ho referred to the topic again in her email to Mr Mazzocchi of 9th August 2017. She said that she would not force him to participate, but she had already paid for the event. 233.Ms Ho repeated the claim of having already paid for the event in her email to Mr Mazzocchi of 7th September 2017,[26] saying that “For the China event (China Rendezvous) which has been already confirmed and full paid (Hk$2,400,000) however there is no reply for you about whether it should be continued or cancelled. And now the deadline was passed and we need to cancel for this event with a penalty fee”.[27] 234.It seems that Ms Ho then sent a message to Mr Arabo by WhatsApp on 11th September 2017, saying that although the deadline had passed, the organiser had given Golden Miles one more chance, asking for a reply within two hours. “Could you please kindly inform me that whether this event should be continued? If we miss this chance again, then we won’t have further chance.” It was only then that Mr Arabo replied on the same day “Yes go ahead.” 235.In my judgment, it was disingenuous of Ms Ho to say in her witness statement that “On 11 September 2017, Mr Arabo still confirmed to me by WhatsApp his agreement to go ahead with this marketing activity. Therefore, as at August 2017, Golden Miles expected to incur these costs”, without mentioning any of the earlier correspondence on the topic where Jacob & Co had consistently told her and her staff that it did not consent to participation in the event. In particular, as at August 2017 when the invoices were issued, Golden Miles could not have had the claimed expectation, based on Jacob & Co’s stance at the time, that it would go ahead (with Jacob & Co’s consent) to participate and incur the costs therefor. 236.Ms Ho did not deny that the invoices for RMB2.4m and RMB1.8m were in fact never paid and that she should be taken as knowing that this was the case. This means that when Ms Ho wrote her emails of 9th August 2017 (saying that she had already paid for the event) and of 7th September 2017 (saying that the amount of “Hk$2,400,000” (no doubt a reference to the RMB2.4m invoice) had been fully paid), she knew that this was untrue. 237.All that Golden Miles ever paid for the China Rendezvous Event was a penalty of RMB400,000, paid in October 2017. Mr Gomis was cross-examined to the effect that since Golden Miles paid the penalty, the claim was not fraudulent, but Jacob & Co’s complaint is not that the penalty amount was fraudulently claimed, but that the RMB2.4m and RMB1.8 amounts were fraudulently claimed to be expenses as they were never paid, as Ms Ho well knew. 238.Ms Ho could not provide any explanation as to why the invoice for RMB2.4m could have honestly been included in the Marketing Report as an expense incurred by Golden Miles. 239.For the RMB1.8m invoice, it transpired that the invoice was actually issued at Ms Ho’s request – a fact discovered by Ms Cathy Wu when she contacted Ms Ng of HVRL to investigate its two invoices. In response, Ms Ho in her supplemental witness statement admitted that she had asked for the invoice to be issued, but said that this was because she wanted to give Jacob & Co a total cost projection for the exhibition. She said that it was common practice that participants in an exhibition would have to pay not only a participating fee (which would have been the RMB2.4m amount), but also an amount to cover miscellaneous expenses (which would have been the RMB1.8m amount). 240.Ms Cathy Wu in her witness statement had stated that HVRL had said that Ms Ho had asked for the invoice to be issued “for reasons unknown”. Ms Cathy Wu was cross-examined about this as her attendance note at the time had not mentioned “for reasons unknown”, and as she had not ascertained whether the Ms Ng of HVRL whom she spoke to was the one who had dealt with Golden Miles before. 241.But whether or not HVRL knew why Golden Miles had asked for the invoice is not the point. The point is that there was no reason for Ms Ho to ask for the invoice to be issued, and then to include this in the Marketing Report as if it were an expense incurred by Golden Miles. Her claim that it was to give a cost projection made no sense if Golden Miles was not participating and not incurring the cost. Her further answer in oral testimony that she asked for the invoice and gave it to Jacob & Co, because she did not want Jacob & Co to think that Golden Miles had not done much, only serves to show that she did want Jacob & Co to rely on the document and think that Golden Miles had incurred the cost (which, to her knowledge, it had not). 242.There is no explanation as to why the invoice for RMB1.8m could have honestly been included in the Marketing Report as an expense incurred by Golden Miles. H3.7 Item 32 243.Item 32 was described as “Prince Showcase renovation”, for the amount of HK$280,000 (or US$35,897). It related to a quotation dated 16th August 2017 from one Point Advertising & Design (“Point Advertising”) for HK$280,000 to supply and construct several showcases for Prince Tower. Ms Michelle Chan contacted a Mr Cheung of Point Advertising and discovered that (1) after issuing the quotation, Golden Miles had asked Point Advertising to issue an invoice, saying that it would pay before the work started, (2) Point Advertising had issued the invoice to Golden Miles with the same content on 17th August 2017, (3) Golden Miles did not engage Point Advertising for the work and had not paid the invoice. These points were not disputed by Golden Miles (including its witnesses Ms Ho and Ms Charl Cheng). 244.In her witness statement, Ms Ho’s explanation was that the quotation related to a special counter planned to be set up at Prince Tower. Golden Miles had been actively working on its implementation when Jacob & Co suddenly terminated the Agreement. In her supplemental witness statement, Ms Ho said that Golden Miles approved the quotation but before it could ask Point Advertising to proceed with the work, Jacob & Co terminated the Agreement. In her oral testimony, Ms Ho did not deny that Golden Miles had requested the issue of an invoice before work started and said that it would pay before work started. Her explanation was that Golden Miles had to give a sum to Point Advertising for buying materials. This does not make sense if Point Advertising did not require such a payment. Ms Ho could not explain why Golden Miles sought to pay if Point Advertising did not ask for payment. In re-examination, Ms Ho said that Golden Miles sought to make payment before the work was completed because it wanted Point Advertising to quickly finish the design and building, and “So, when it issued the invoice to us, we would make payment, because it needed to buy materials.” However, there is simply nothing to suggest that Point Advertising wanted payment to be made in order to buy materials, or to speed up its design and building. 245.Furthermore, the dates do not add up. The invoice (which was not before the court) was apparently dated 17th August 2017. According to the oral testimony of Ms Charl Cheng, the project at Prince Tower was originally planned to kick off at the end of August or early September. Jacob & Co claimed to terminate the Agreement by a letter of 29th September 2017. Yet no payment was made (as Ms Charl Cheng also knew). If the purpose of the payment was to speed up design and enable purchasing of materials by Point Advertising, there is no explanation as to why it was not made by the time of termination of the Agreement, and no explanation why Point Advertising was not in fact engaged. 246.I find that the inclusion of item 32 was to dishonestly represent that an expense of $280,000 had been incurred even though Ms Ho (and Ms Charl Cheng) knew that it had not. H3.8 Item 9 247.Item 9 was described as a “Public Relations fee”, for the sum of US$25,641 (or HK$200,000). Jacob & Co says that there was no independent evidence confirming payment of the expense. Golden Miles’ case is that the payment was made by cash by Mr Terry Yeung to a marketing consultant called Karen Wong in around March 2017, whom he introduced to Ms Ho. 248.In his oral testimony, Mr Terry Yeung said that there would have been WeChat discussions between him, Ms Ho and Karen Wong; and he would have recorded the proposal from Karen Wong regarding an event for Golden Miles. However, no evidence of such discussions or proposal was ever disclosed by Golden Miles. No receipt or other documentary evidence of the payment having been made has ever been produced. 249.Whilst it may be said that the lack of documentary evidence casts doubt on whether the payment was truly made or whether it was made in return for the work alleged, I do not consider that this is sufficient to conclude that the claim of making payment was a fraudulent or exaggerated one. H3.9 Item 11 250.Item 11 was also described as a “Public Relations fee”, for the sum of US$128,205 (or HK$1,000,000). Jacob & Co says that there was no independent evidence that any services were provided in return for the payment. In Ms Ho’s witness statement, she said that the item relates to fees paid to Madam Jing Ling (“Madam Jing”), who had an extensive social and business network in Hong Kong and on the mainland, and who introduced a number of important contacts to Ms Ho. Ms Ho said that the total amount of fees paid to Madam Jing for her service and contribution to marketing, together with gifts such as caterpillar fungus, exceeded HK$1m. A cheque drawn by Golden Miles in favour of Madam Jing for HK$400,000 and another for HK$500,000 was in the evidence. There was also a WeChat exchange showing that Madam Jing was apparently to be paid a share of Golden Miles’ profit upon Prince Jewellery successfully selling a watch. 251.Given this evidence, I do not agree that Jacob & Co establishes that the item was a fraudulent or exaggerated one. H3.10 Conclusion regarding the extent of the falsity and exaggeration in the Marketing Report 252.I therefore find that there were several items in the Marketing Report, some of substantial value, which were falsely claimed as expenses incurred by Golden Miles when they had not been so incurred. Furthermore, Ms Ho was aware of the falsity. In this regard, I also bear in mind the context in which the Marketing Report was provided – as explained in the next paragraph, Ms Ho would have been well aware that what Jacob & Co was expecting to receive in the Marketing Report was an account of expenses incurred, and receipts to prove the expenditure. 253.I do not accept the submission that the Marketing Report has to be viewed in the context that it was provided as a matter of “courtesy”.
254.Standing back and looking at all of the items above, I also agree with Mr Chan’s submission that they demonstrate that (1) Golden Miles was not conducting the Business in an orderly and business-like manner, in that either Ms Ho did not incur some of the expenses as claimed, or that (2) even on her own version of events, the Business was conducted in a shambolic way (for example the lack of any records regarding the blogger’s fees or the set-off with Ms Yuan under items 1 and 2), or the lack of records as to what was done in return for the $200,000 cash payment to a marketing consultant under item 9 or the “over 1 million” paid to Madam Jing under item 11. 255.I therefore accept Jacob & Co’s submission that Golden Miles was in breach of cll.2.1(c), 2.1(d) and 2.1(k) of the Agreement in falsely claiming that expenses had been incurred when they had not. H4. Whether breaches repudiatory 256.The next question that arises is whether the breaches were repudiatory in nature. The assessment is multi-factorial in nature. The bar is a “high” one, and the breach must affect the very substance of the contract. 257.The starting point is to consider the Agreement. The purpose of the Agreement was not simply for Jacob & Co to maximise sales of its watches to Golden Miles by whatever means possible. It is not disputed that the Products under the Agreement were high-end watches. It was apparent from the Agreement that apart from the Territory, Jacob & Co sold the Products in other places around the world (see for example cll.3.1(q), 3.1(u)). Golden Miles was to be appointed as Jacob & Co’s sole and exclusive distributor for the purpose of marketing and selling the Products in the Territory. The first of Golden Miles’ obligations listed under cl.2.1(a) was to promote the Products in the Territory. It had to spend no less than 10% of its net profit on marketing and promoting the Products (cl.2.1(h)). In other words, a key obligation of Golden Miles under the Agreement was to promote the Products in the Territory and sell them to customers, using a specified minimum level of expenditure. 258.Golden Miles was to be Jacob & Co’s exclusive distributor for ten years. During that time, Golden Miles could promote and procure sales by means which it considered appropriate (cl.2.1(b)), all the while acting loyally and faithfully towards Jacob & Co in relation to the Business (cl.2.1(c)). Jacob & Co was itself not allowed to sell any Products in the Territory whether directly or through anyone else (cl.3.1(a)), it had to use its best endeavours to prohibit the parallel import of Products into the Territory (cl.3.1(u)), and it could not carry out its own advertising, marketing or promotional activities in the Territory except with Golden Miles’ agreement (cl.3.1(p)). Not only did Golden Miles have a large measure of control over marketing activities in the Territory, but also, Jacob & Co was to do various things to support Golden Miles’ promotion of the Products (see for example cll.3.1(b) to 3.1(f)), including the payment of half[28] of the cost of all advertisements and promotional activities incurred by Golden Miles (cl.3.1(d)). Golden Miles did however have to submit regular reports about levels of sales, and also provide any other information relating to the performance of its obligations which Jacob & Co might reasonably require (cl.2.1(k)). 259.What was therefore contemplated under the Agreement was that Jacob & Co would entrust the important task of promotion of the Products entirely to Golden Miles within the Territory for a substantial period of ten years, whilst supporting such promotion and paying for half of it. In return, Golden Miles would (inter alia) spend a specified amount on promotion, act loyally and faithfully to Jacob & Co, and provide accurate information relating to the performance of its obligations when requested – information which Golden Miles must have known would be relied on by Jacob & Co. In such a context, provision of false information about expenses supposedly incurred on promotion of the Products went to the very substance of the Agreement. 260.I bear in mind that only some of the claimed expenses were false. That said, some of them were for substantial amounts, such as the RMB2.4m invoice and RMB1.8m invoice in respect of the China Rendezvous Event, which were the two largest invoices out of all the items in the Marketing Report. 261.Taking all these matters into account, I find that the breaches[29] were repudiatory of the Agreement. H5. Whether Jacob & Co can rely on the breaches to justify termination of the Agreement 262.The falsity of the claimed expenses was discovered only after the termination of the Agreement. Jacob & Co relies on the principle that a party who terminates a contract for a wrong reason can rely on another valid reason to justify the termination, even if he did not know of that valid reason at the time of termination, so long as (1) the valid reason (a) existed at the time of the termination, and (b) could not have been put right by the defaulting party, and (2) the terminating party is not precluded by waiver or estoppel from relying on the valid reason, citing Boston Deep Sea Fishing and Ice Company v Ansell (1889) 39 Ch D 339 at 352 (Cotton LJ) and 364 (Bowen LJ) and Chitty on Contracts at paragraph 28-067. 263.Golden Miles does not dispute the general principle, but focuses on the proviso that if the point not taken was one which could have been put right, the principle does not apply, citing Arnold Roberts Ltd v Glorious Motors Ltd [2018] HKCFI 2467 at [108], [109] (Recorder Stewart Wong SC). It further advanced the propositions that:
264.Golden Miles submits that accordingly, in order for Jacob & Co to have validly terminated the Agreement, it should have identified the alleged breaches (the false Marketing Report and receipts) and should have notified Golden Miles of this so as to give it a fair opportunity to put matters right; had it done so, there is no reason why Golden Miles could not have immediately put them right (by resubmission of the Marketing Report), so that the Agreement could have continued to run its course without any loss of trust and confidence.[30] 265.As Jacob & Co submitted, whether or not a breach is capable of remedy is a practical rather than technical inquiry: Akici at [64]. On the facts, I consider that the breach constituted by the submission of false expenses in the Marketing Report was irremediable, even if one proceeds on the basis of the propositions advanced by Golden Miles above. This was not a case of Golden Miles innocently, or even negligently, including expenses in the Marketing Report as incurred expenses when they had not been incurred. Rather, it was a case of Golden Miles presenting expenses as incurred expenses whilst knowing that they not been so incurred. It makes little sense to say that Jacob & Co needed to identify these for Golden Miles’ benefit before Jacob & Co could validly terminate the Agreement. Once Jacob & Co learnt of the falsely claimed expenses, its trust in Golden Miles would have been lost. Even if the Marketing Report had been corrected, Jacob & Co would have lost trust in Golden Miles, so matters could not have been put right for the future, and the Agreement could not (contrary to Golden Miles’ submission) have continued to run its course without any loss of trust and confidence. Furthermore, for what it is worth, I consider that it was not only the case that the breaches could not have been put right, but also that the breaches would not have been put right by Golden Miles: the attitude of Ms Ho at trial was that there was nothing wrong with the way in which the false expenses had been included in the Marketing Report. I. JACOB & CO’S COUNTERCLAIM I1. Counterclaim for US$572,773.35 266.At the August Meeting, Mr Arabo presented a statement of Golden Miles’ account as at 28th August 2017, showing an open balance due from Golden Miles in the amount of US$470,198.15 (the Disputed Amount), after taking into account a 5% “marketing” deduction of US$572,773.35. It is Jacob & Co’s case that Mr Arabo said that he would allow Golden Miles to make the deduction only if it paid the US$470,198.15 immediately, and provided supporting receipts for its marketing expenses. When this was put to Ms Ho in cross-examination, her response was that Mr Arabo did not say or write this down at the time, and that it was only mentioned in the email afterwards. That is presumably a reference to the 29.08.2017 Email from Mr Gomis, asking for payment of the US$470,198.15. Ms Ho went on to say that Mr Arabo had suggested that from September onwards, a total deduction of 7% rather than 10% (5% marketing and 5% “bonus”) would be used, and her response was that she would consider it. 267.Since I have found that the Alleged Oral Agreement was not made, and since it is not Golden Miles’ case that aside from the Alleged Oral Agreement, there was any other basis for Golden Miles to make the deduction of 5% of gross purchases, there was no basis for Golden Miles to withhold payment of US$572,773.35 from the amounts due to Jacob & Co for its purchases under the Agreement. I2. Counterclaim for opening of Macau shop 268.It is Jacob & Co’s case that in November 2017, it learnt that Golden Miles was about to open a shop in Macau, without having first obtained Jacob & Co’s consent. Since the Agreement had by then been terminated, the use of Jacob & Co’s intellectual property and operation of the shop was a breach of cll.7.6(c), (d) and (f) of the Agreement. It is Golden Miles’ case that whilst it originally had planned to open a shop at the site of the Macau shop, Jacob & Co unreasonably refused to consent to the plan, and Golden Miles never proceeded to open the shop; it had told one Jonathan Lee, a watch retailer who was to open the shop, that the opening could not proceed because Jacob & Co had not given its consent. 269.The evidence relied on by Jacob & Co was hearsay evidence from Mr Gomis, who said that Ms Marianne Wong of Time Concept Limited visited the shop in January 2018, named as “F&J by Jacob & Co”, and saw that it was selling Jacob & Co watches, some of which were the same models as watches which Golden Miles had bought from Jacob & Co. 270.Ms Ho’s explanation was that she had sold some watches to Jonathan Lee, some of which he on-sold through his shops, and that the Macau shop was one such shop. She said that Golden Miles did not know about, or authorise, these sales. 271.There is insufficient evidence for me to be satisfied that Golden Miles was indeed operating the Macau shop or selling watches it had bought from Jacob & Co at that shop. 272.I reject this part of the counterclaim. J. GOLDEN MILES’ CLAIM FOR LIQUIDATED DAMAGES 273.In light of my findings above, Golden Miles’ claim for relief does not arise. For completeness, however, I will briefly deal with the parties’ dispute regarding Golden Miles’ entitlement to claim liquidated damages, which was argued in opening submissions. 274.Paragraph 104 of Golden Miles’ Opening stated that Golden Miles relied on cl.7.4 of the Agreement, and claimed that it was therefore entitled to US$12m by way of liquidated damages. 275.Jacob & Co objected that no claim for liquidated damages had been pleaded. The only claim for damages in the ASOC was a claim for unliquidated damages for “loss of sale and profits”, and “loss of goodwill”, arising from the alleged wrongful termination of the Agreement by Jacob & Co. 276.Mr Yuen submitted that the claim for liquidated damages under cl.7.4 of the Agreement did not need to be pleaded. He submitted that:
277.Mr Chan submitted that allowing the claim to proceed would cause irreparable prejudice to Jacob & Co. He submitted that had a claim for liquidated damages been properly pleaded, Jacob & Co could have pleaded its defence thereto, and prepared relevant evidence in support. For example, there might have been an argument that cl.7.4 represents an unenforceable penalty clause. For that purpose, the court would need to determine whether the clause was out of all proportion to the innocent party’s legitimate interest in enforcing the contract. That legitimate interest would first have to be identified, and then an assessment would have to be made as to whether the clause was out of all proportion to that interest, by considering the circumstances in which the contract was made. See Law Ting Pong Secondary School v Chen Wai Wah [2021] 3 HKLRD 195 at [69], [70] (Chu JA, as she then was). In the present case, it would have been relevant to enquire into what the parties’ expectations as to profits and loss and damage at the time of entering into the Agreement were. These are all matters on which Jacob & Co could have adduced factual evidence. 278.In my judgment, Golden Miles was not entitled to proceed on an unpleaded claim for liquidated damages under cl.7.4 of the Agreement. Whether or not the issues have been sufficiently identified by the pleadings in any particular case depends on the context of the individual case: cf. Lee Yuk Shing at [79] (Kwan JA, as she then was). In Lee Yuk Shing, all the material facts had been pleaded and it was merely the legal consequence of those facts which had not. Similarly, there was no issue of prejudice in Poon Hau Kei (see [24]). In the present case, whilst Golden Miles may not have sought to adduce any further evidence to support its calculation of liquidated damages, Jacob & Co may have wished to adduce further evidence in support of an argument that cl.7.4 was unenforceable as a penalty. 279.The fact that reference to Golden Miles’ intended reliance on cl.7.4 of the Agreement was made in its Listing Questionnaires does not address the prejudice. A statement of intention by a plaintiff in its Listing Questionnaire that it intends to rely on a clause in a contract for the computation of damages is no substitute for a properly pleaded claim setting out the basis and quantification of the claim, to which a defendant can properly plead a defence, and prepare evidence in support. The submission that it was Jacob & Co’s fault for failing to raise the absence of pleading is to put the burden on the wrong party. 280.I therefore rule that it is not open to Golden Miles to advance a claim for liquidated damages under cl.7.4 of the Agreement. K. CONCLUSION; DISPOSITION 281.I dismiss Golden Miles’ claim. 282.I make a declaration that Jacob & Co has validly terminated the Agreement. 283.Jacob & Co succeeds in its counterclaim for US$572,773.35. I dismiss the remainder of the counterclaim (relating to the Macau shop) for damages and injunctive relief. 284.I further make a costs order nisi that Golden Miles is to pay to Jacob & Co the costs of and occasioned by the action, with certificate for two counsel, to be taxed if not agreed.
Mr Rimsky Yuen SC leading Mr Thomas Wong, instructed by Reed Smith Richards Butler LLP, for the Plaintiff Mr Anthony Chan SC leading Mr William Wong, instructed by Deacons, for the Defendant [1] At the material time, Ms Ho had two email accounts. At trial, reference was made to emails sent to and from one or other of these. Ms Ho’s evidence was that her English was not very good, so that sometimes the emails would be drafted by her staff, or read by her staff and relayed to her. Nothing material turns on this. Accordingly, emails to and from her email accounts are described in this judgment as having been sent to and from Ms Ho, save where the emails were addressed to, or sent from, one of her staff. [2] It seems that this should have been in US$ but nothing turns on this. [3] As translated. [4] The original read “0.5%”, no doubt a typographical error which was presumably ought to have read “5%” instead. [5] Leggatt J’s observations in Gestmin SGPS SA were cited with approval by Kwan VP (giving the judgment of the court) in Galleria (Hong Kong) Ltd v DBS Bank Ltd, Hong Kong Branch [2021] HKCA 611 at [175]. [6] Amended Statement of Claim (“ASOC”) paragraphs 4, 5. [7] At trial, he mistakenly thought that this had also been the contractual arrangement with Golden Miles. [8] For similar reasons, I reject the submission that it is unbelievable that Mr Lam would not have paid attention to other figures calculated by Jacob & Co’s head office generally (cf. Golden Miles’ closing paragraph 44C(2)). [9] Although I would emphasise that what I am concerned with for present purposes is whether I accept Golden Miles’ version of events, rather than an exercise of comparing the parties’ versions, so that whether or not Jacob & Co’s version entirely tallies with the documents is not, strictly speaking, relevant. Incidentally, for this reason, I have not sought to address every point made by Golden Miles against Jacob & Co’s version of events. [10] Although exactly how this would have worked is not clear, as it was not Golden Miles’ case that Jacob & Co’s right to ask for information under cl.2.1(k) of the Agreement was abrogated by the Alleged Oral Agreement. [11] Golden Miles’ closing paragraph 44. [12] Ms Ho’s statement paragraph 54. [13] Cf. Golden Miles’ closing page 33. [14] ASOC paragraph 6.2. [15] Closing paragraph 55.1. [16] Closing paragraph 55.2. [17] See for example Affidavit of Maurice Mazzocchi, paragraph 39(e). [18] Closing paragraphs 72, 80. [19] Closing paragraphs 79, 80. [20] Closing paragraph 4.1(1). [21] Which was in the context of an implied duty of good faith; Leggatt LJ considered that honesty was one aspect of good faith (see eg. [138], [145]). [22] RADC paragraph 6.1. [23] See closing paragraphs 6A, 56.3. [24] I do not separately address the items which were not the subject of cross-examination. Having reviewed the evidence relied on by Jacob & Co, I do not consider that it sufficiently supports the claim of fraud or exaggeration advanced. [25] Time Concept Group Limited was described by the parties as an agent acting under the instructions of Jacob & Co. [26] This was after the submission of the Marketing Report on 24th August 2017. [27] I note in passing that Ms Ho’s refusal to take “no” for an answer is somewhat reminiscent of the approach she took with regard to the “bonus”. [28] That Jacob & Co and Golden Miles subsequently discussed a different method of calculating Jacob & Co’s payment does not detract from this. [29] In this regard, it is the breaches of cl.2.1(c) (obligation to act loyally and faithfully towards Jacob & Co in relation to the Business) and cl.2.1(k) (obligation to submit written reports and information requested by Jacob & Co) that are key. The facts constituting such breaches also constituted a breach of cl.2.1(d) (obligation to conduct the Business in an orderly and business-like manner), but I do not consider that a breach of cl.2.1(d) alone on these facts would be repudiatory of the Agreement. [30] Closing paragraphs 88 to 90. | ||||||||||||||||||||
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