Maurizio De Gasperis and Another v. Shanghai Tang Investment Holding Company Ltd and Others
Read the full judgment text of HCA 1450/2020 on BabelCite. This High Court CFI judgment was delivered on 18 June 2025.
1. An agreement to agree has consistently been regarded by the court as being unenforceable. Yet what if the parties, whether as a practical compromise, or in an attempt to balance finality with flexibility or otherwise, expressly fix certain terms while leaving other terms to be agreed later? This half-way approach is one of the main issues in this action, which arises from a contract document entitled the “Separation Terms” executed following the resignation of Mr Maurizio De Gasperis, the 1 s
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HCA 1450/2020 [2025] HKCFI 2372 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1450 OF 2020 _____________________
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________________ J U D G M E N T ________________ A. Introduction & The Parties 1.An agreement to agree has consistently been regarded by the court as being unenforceable. Yet what if the parties, whether as a practical compromise, or in an attempt to balance finality with flexibility or otherwise, expressly fix certain terms while leaving other terms to be agreed later? This half-way approach is one of the main issues in this action, which arises from a contract document entitled the “Separation Terms” executed following the resignation of Mr Maurizio De Gasperis, the 1st Plaintiff (“Mr Gasperis” or “P1”) as the Chief Executive Officer (“CEO”) of Shanghai Tang Group Limited, the 3rd Defendant (“D3”). In the pleadings, the Plaintiffs originally sought specific performance, together with damages in lieu of or in addition to specific performance; however, at trial, they expressly abandoned the relief of specific performance and now seek damages only. 2.The Separation Terms were entered into between (a) Mr Gasperis and his nominee company Elever Limited, the 2nd Plaintiff (“P2”) (collectively, the “Plaintiffs”); and (b) Shanghai Tang Investment Holding Company Limited, the 1st Defendant (“D1”), Lunar Capital Management Limited, the 2nd Defendant (“D2”) and D3 (D1, D2 & D3 collectively the “Defendants”). Dated 13 December 2019, these Terms govern Mr Gasperis’ resignation and the subsequent relationship between the parties. 3.D1 is incorporated in the British Virgin Islands (“BVI”) and is D3’s parent company. 4.D2 is incorporated in Hong Kong and provides asset management and advisory services to Lunar Capital funds, which invest in consumer-branded businesses[1]. 5.D3 is incorporated in the BVI and is the parent company of the Shanghai Tang Group, a group of companies that owns and conducts businesses under the trademarks “Shanghai Tang” registered in Australia, Canada, the People's Republic of China, Hong Kong SAR, the European Union, Kuwait, Macau, Russia, Singapore, Switzerland, the United Arab Emirates, and the United States of America (the “Trademarks”)[2]. 6.(a) D1 and D3 and (b) D2 filed two separate defences. They are represented by the same legal team, and there is no suggestion that the contents of their defences differ. B. The Main Issues 7.The principal issues[3] for determination are as follows:
C. Background 8.The facts set forth in this section are not in dispute. 9.Mr Gasperis commenced his employment with the Shanghai Tang Group as its Managing Director pursuant to an Employment Contract dated 24 July 2018 signed with Tangs Department Stores Limited. 10.A few months later, in approximately October 2018, Lunar Capital Partners IV, LP, one of Lunar Capital funds, through its investment vehicle, D1, acquired a majority shareholding in D3. 11.Following the acquisition, Mr Gasperis was retained as D3’s CEO, and the parties agreed that he would invest US$1 million to acquire a 20% stake in the issued share capital of D3. 12.On 2 December 2019, Mr Gasperis met with Mr Mao Mao, also known as Jerry Mao, Co-Chairman and Director of D3 and the first witness for the Defendants (“DW1”), to discuss matters relating to his resignation; their discussions continued on 3 December 2019. 13.On 13 December 2019, the Separation Terms were executed. Further, Mr Gasperis signed a CEO Resignation Letter (Appendix A to the Separation Terms), wherein he irrevocably and unconditionally resigned from his position as D3’s CEO and from all executive and non-executive roles with D3 and its subsidiaries, effective immediately. In the letter, Mr Gasperis further confirmed that, except for any amounts owing to him as set out in the Separation Terms, he has no claims or rights of action whatsoever against D3 or its affiliates arising from or in connection with his office or resignation; that there is no outstanding agreement or arrangement obligating D3 or its subsidiaries to make any payments, whether now or in the future; and that nothing remains owing between him and D3 or its subsidiaries. D. Issue 1 D1. Part 2 of the Separation Terms 14.The Plaintiffs’ first claim is based on Part 2 of the Separation Terms (“Part 2”), which I shall set out in full:
D2. The Plaintiffs’ Case on Issue 1 15.In Ps’ Statement of Claim, the Plaintiffs claim[10] that D3 has not provided P2 with any management accounts for the period from 1 March 2020 to 28 February 2021 (the “management accounts”) and has not paid the Plaintiffs the Extra Bonus of USD150,000. Therefore, D3 breached Part 2, and by reason of such breach, the Plaintiffs suffered a loss in the sum of USD150,000[11]. The Plaintiffs claimed an order for specific performance of the Separation Terms and P2 claimed damages to be assessed in lieu of, or in addition to, specific performance[12]. 16.The Plaintiffs made two assertions[13]:
17.In their opening[15], the Plaintiffs expressly and unequivocally abandoned their claim for specific performance. (It should be noted that this abandonment applies not only to their claim regarding the Defendants’ breach of Part 2 under Issue 1 but also to the breach of Part 3 under Issue 2.) Their primary position[16] is to seek contractual damages resulting from the breach of the Separation Terms. Alternatively[17], they seek damages in lieu of specific performance. In the case of Issue 1, the damages sought, whether primarily or alternatively, amount to USD150,000. 18.In their Closing, the Plaintiffs further relied on the oral evidence of Ms Yan Jingjing, D2’s legal counsel and the Defendants’ second witness (“DW2”) during cross-examination. The Plaintiffs submitted[18] that DW2 accepted that, under Part 2, D3 must pay the Extra Bonus of USD150,000 unless it meets its obligation to provide, by the 30 April 2021 deadline, the management accounts showing a loss of more than USD 5 million for the 12-month period ending 28 February 2021. The Plaintiffs further submitted[19] that, as accepted by her, the plain and objective construction of Part 2 is clear: that the obligation to pay the Extra Bonus by 1 May 2021 is mandatory; that there is no condition precedent; nor is there any obligation whatsoever on the Plaintiffs to provide any evidence as to the losses of D3; and that the only way D3 can avoid payment of the Extra Bonus is by providing the management accounts by the 30 April 2021 deadline. 19.I find it convenient to interpose and deal with this submission here. Whilst I have doubts as to whether DW2’s evidence constitutes an admission of D3’s breach of Part 2, in my view, it is not necessary to go into the details of what she specifically said in court and whether what she said could be interpreted in the manner that the Plaintiffs have paraphrased it. This is because the Plaintiffs are relying on her evidence to support their interpretation of Part 2, which is a question of law rather than of fact and, accordingly, is not for DW2 to resolve as a factual witness. Therefore, what DW2 said about the proper interpretation of Part 2 is irrelevant. D3. The Defendants’ Case on Issue 1 20.The Defendants’ first contention[20] is that it is open to D3 to provide the management accounts to P2 and if the accounts show that D3’s losses exceed USD5 million, D3 would have discharged all its obligations; and that in any case, the burden is on P2 to show that the condition for the payment of the Extra Bonus is met, and P2 falls short of discharging that burden. 21.The condition which, in the Defendants’ submissions[21], should be satisfied before D3 is liable to pay the Extra Bonus of USD150,000 is that D3’s losses are less than USD5 million for the period from 1 March 2020 to 28 February 2021, on an EBITDA basis and consolidated basis. 22.Regarding whether this condition was met, the Defendants submitted[22] that the Plaintiffs did not put forward any evidence to show that D3’s losses are less than USD5 million. 23.This submission is not fair. Part 2 expressly requires D3 to provide the management accounts for the 12 months from 1 March 2020 to 28 February 2021 to P2 no later than 30 April 2021. As mentioned above, Mr Gasperis resigned from his position as D3’s CEO and from all executive and non-executive roles with D3 and its subsidiaries, effective immediately on 13 December 2019. Plainly, it is not possible for P2, who resigned in December 2019, to obtain from D3 or possess its management accounts for the period from March 2020 to February 2021, which clearly relate to a period after his resignation. No evidence has been adduced to suggest otherwise. 24.The Defendants also submitted that in the Defendants’ pleadings and witness statement[23], the Defendants have consistently maintained that D3's losses during the relevant period exceeded USD5 million. Thus, P2 is not entitled to the Extra Bonus. 25.This submission is misconceived. Part 2 requires that the losses during the relevant period be evidenced by the management accounts which must be provided by P3 no later than 30 April 2021. The Defendants’ pleadings and the evidence provided by their witness on D3’s losses are self-serving and insufficient to meet that requirement. 26.In the Defendants’ Closing Submissions (“Ds’ Closing”), the Defendants confirmed[24] that they do not dispute the fact that Part 2 is binding and enforceable. They also acknowledged[25] that D3 may have breached the obligation by failing to provide the management accounts by 30 April 2021. The central plank of their case is that, on a true interpretation of Part 2, in order to claim the Extra Bonus, the Plaintiffs must show that the condition for the payment obligation is satisfied, namely that the losses are less than USD 5 million for the period between 1 March 2020 and 28 February 2021, on an EBITDA and consolidated basis[26], and that the Plaintiffs could not discharge this burden[27]. 27.The Defendants also raised a pleading issue. They contended that the Plaintiffs’ claim for the Extra Bonus, which amounts to USD150,000 and is an agreed sum, was not sought as relief in the prayer of Ps’ Statement of Claim[28]. 28.All in all, according to the Defendants[29], the obligation to pay the Extra Bonus did not arise because the pre-condition for the payment had not been fulfilled. The non-provision of the management accounts does not mean that such pre-condition has been fulfilled. The pre-condition still needed to be fulfilled. Since it was not fulfilled, the Plaintiffs’ argument based on non-provision of the management accounts would not cause P2 to suffer any additional loss. The consequence is that P2 would not be entitled to claim any real damages or a sum equivalent to the Extra Bonus. In other words, the breach of non-provision, or late provision, of the management accounts would only give rise to nominal damages[30]. D4. The Defendants’ Last-Minute Disclosure and Application to Adduce Documents 29.As mentioned in paragraph 26 above, the Defendants acknowledge that D3 has a legally binding obligation under Part 2 to provide P2 with the management accounts on or before 30 April 2021 for the purpose of calculating the losses of D3 (on an EBITDA and consolidated basis) by reference to the EBITDA margin for the 12 months from 1 March 2020 to 28 February 2021; and D3 has failed to do so, in breach of Part 2. The evidence of DW2 confirmed that this is the position. She told the Court that The Defendants’ failure to provide the Plaintiffs with the relevant management accounts was the Defendants’ “oversight”[31]. 30.The trial of this action was scheduled to start on 21 October 2024. On 23 September 2024, about 4 weeks before the trial, the Defendants filed and served a Supplemental List of Documents, disclosing 3 items of documents, namely:
31.The Plaintiffs strongly opposed the Defendants’ proposed reliance on the 3 Profit and Loss Statements at trial. Consequently, the Defendants took out a summons dated 2 October 2024 (the “Defendants’ Summons”) seeking leave to adduce those documents. The application is supported by an affirmation of DW1 (“DW1 Affirmation”). 32.The Defendants’ counsel repeatedly referred to the 3 Profit and Loss Statements as the management accounts[32], and submitted that D3 had provided the Plaintiffs with the management accounts (by these (three-page) 3 Profit and Loss Statements on 23 September 2024 “in performance of Part 2 of the Separation Terms”, which “conclusively shows that D3’s loss during the relevant period was USD 11,316,912 (and USD 9,540,731 on an EBITDA basis), meaning that P2 is not entitled to the extra bonus”[33]. 33.At the beginning of the trial, I allowed the 3 Profit and Loss Statements to be admitted on a de bene esse basis. After hearing the evidence and the parties’ submissions, I have decided that the Defendants should not be allowed to adduce the 3 Profit and Loss Statements, and the Defendants’ Summons is dismissed with costs, for the reasons explained below. 34.Firstly, it is not apparent that the 3 Profit and Loss Statements are indeed, or constitute, the management accounts. 35.In terms of description, as recited in paragraph 30 above, the Defendants’ Supplemental List of Documents describes the 3 Profit and Loss Statements as consolidated profit and loss statements rather than as management accounts. 36.In terms of contents, the 3 Profit and Loss Statements are each a one-page document, all undated and unsigned. Each contains financial figures without any accompanying particulars or explanations regarding the basis, derivation, or calculations of these figures. For illustration, the full text of the “Consolidated Profit and Loss statement of the 3rd Defendant for financial period 1 March 2020 – 28 February 2021” is reproduced as follows:
37.On this basis, I find it difficult to regard these documents as constituting “management accounts”. The label “Consolidated Profit and Loss” implies that they are a single financial statement. However, there is nowhere in the evidence explaining whether such a single financial statement like the 3 Profit and Loss Statements is the same as management accounts, which by its name suggest a broader package of financial and management or operational reports compiled for internal business decision-making, and whether management accounts would or would not normally incorporate additional features such as cash flow forecasts, balance sheet summaries, budget versus actual comparisons, key performance indicators. The Defendants may argue that such additional information is unnecessary for calculating the loss of D3. However, in my view, Part 2 does not limit the provision to only an extract of the management reports pertinent to the loss calculation. It expressly requires “the management accounts” to be provided by D3 to P2. The Defendants’ counsel did not draw to my attention any evidence showing or explaining the notion that a profit and loss statement is equivalent to management accounts. 38.Moreover, notwithstanding the Defendants’ repeated references and heavy reliance, nowhere in their submissions did they explain why a one-page profit and loss statement can be taken for granted as “management accounts”. 39.Secondly, even assuming the 3 Profit and Loss Statements are the “management accounts” required under Part 2 (which I doubt for the reasons explained above), the disclosure of the management accounts is dubiously incomplete. 40.In paragraph 8 of DW1’s Affirmation and its exhibit “MM-3”, which was served on the Plaintiffs on or about 2 October 2024, after the Defendants’ Supplemental List of Documents was served on or about 23 September 2024, the Defendants disclosed, again for the first time, additional “management accounts”. DW1 described them as “such management accounts for the group for the years 2020 and 2021”. These appear to refer to “various management accounts for the group on a monthly basis”, prepared “so that the performance of the Group and its constituent parts can be monitored by the management”. DW1, however, stated that, “The figures in such accounts are not the same as that in the Management Accounts as the latter were prepared based on audited accounts of the 3rd Defendant's underlying operational entities.” He further asserted that in either “version” of D3’s “management accounts”, D3’s losses on an EBITDA basis and consolidated basis would exceed US$5 million. Neither DW1 nor the Defendants’ counsel explained why the Defendants did not include these additional “management accounts” (MM-3) in the Defendants’ Supplemental List of Documents. 41.I find these matters perplexing. Part 2 does not specify whether the management accounts required to be provided to the Plaintiffs should be prepared on a yearly or monthly basis. The Defendants’ own evidence shows that there are at least two “versions” of the management accounts, even if the 3 Profit and Loss Statements are indeed considered to be “management accounts”. These two “versions” yield different figures and are derived from different sources. However, the Defendants now seek to adduce only one set of figures, omitting the other, and appears to avoid addressing these inconsistencies and ambiguities by broadly asserting that a material loss has been incurred. Notwithstanding that both versions appear to indicate a loss in excess of USD 5 million, such evidence cannot conclusively establish the loss calculation, nor does it preclude the Plaintiffs’ rights to scrutinize, dispute, and require production and examination of D3’s audited financial statements for the 2020 and 2021 financial years pursuant to the mechanism set out in Part 2. 42.In my view, this is wholly unacceptable for the Defendants to discharge their disclosure duties, whether under the Rules of the High Court or the Separation Terms. Allowing the Defendants to disclose the 3 Profit and Loss Statements in this manner at the eleventh hour is not conducive to the just resolution of the dispute in question in this action, see Kinetic Medical Health Group Company Limited & ors v Dr Tse Ivan Cheong Yau (unreported, HCA 115/2010, 8 May 2013), paragraph 49(a) per DHCJ Marlene Ng. 43.Thirdly, I find the explanation given by DW1 for the late discovery of the 3 Profit and Loss Statements wholly unacceptable. 44.In DW1 Affirmation[34], he gave two reasons purporting to explain why the management accounts were not produced earlier:
45.These reasons are entirely misconceived as they blatantly ignored D3’s unconditional obligation to provide the management accounts no later than 30 April 2021 under Part 2. Whether the Plaintiffs were aware of D3’s business performance is irrelevant to this obligation. It is their right to receive the management accounts expressly agreed to by the Defendants in Part 2. 46.As mentioned in paragraph 29 above, DW2’s reason for the failure to provide the management accounts was “definitely oversight”. 47.Nonetheless I have doubts as to whether the non-provision was indeed merely an oversight, given that (a) the management accounts contain important business data, since, as DW1 noted in his Affirmation, they enable the Defendants’ management to monitor “the performance of the Group and its constituent parts”, (b) the express requirement for the provision of the management accounts in Part 2 is very clear, and (c) the Defendants were of course well aware that they are in litigation with the Plaintiffs, and are being advised by both in-house counsel (DW2) and external lawyers acting for them in this action. Even if they missed the deadline of 30 April 2021 to provide the management accounts, they should not have ignored their duty of discovery in the action for such a long time until the near beginning of the trial. 48.Inadvertence is, therefore, in my view, no convincing explanation for the Defendants’ failure to both provide and disclose the management accounts until the eleventh hour. 49.Fourthly, given the foregoing observations, I agree with the Plaintiffs’ counsel that allowing the 3 Profit and Loss Statements to be adduced would cause clear and significant prejudice to the Plaintiffs. The Plaintiffs simply were not given any reasonably sufficient time and opportunity to investigate the inconsistencies, the ambiguities, the propriety, and the accuracies of the 3 Profit and Loss Statements, as well as the completeness of the disclosure by the Defendants. 50.For the above reasons, the Defendants’ Summons is dismissed. I also make an order nisi for costs of the Summons be forthwith paid by the Defendants to the Plaintiffs, which I summarily assessed[35] at HK$72,780. D5. Discussion on Issue 1 51.The modus operandi of Part 2 appears to me to be as follows:
52.As can be seen from (4) above, the Plaintiffs have the right to (a) consider the management accounts received from D3 and (b) check, verify and challenge the EBITDA margin as set out therein. If the Plaintiffs so challenge, D3 is obliged to produce its audited financial statements to the Plaintiffs once finalized by its auditors. 53.In the present scenario, after all the twists and turns, the Defendants have accepted that D3 breached Part 2 of the Separation Terms by failing to provide the management accounts by 30 April 2021. 54.Without the management accounts, the Plaintiffs are precluded from disputing the actual amount of D3’s loss. Having expressly abandoned the remedy of specific performance at trial, the Plaintiffs are now left with no effective means to compel D3 to furnish the management accounts. 55.However, it would be erroneous for the Plaintiffs to contend that the Extra Bonus of USD150,000 becomes immediately payable solely by virtue of D3’s failure to provide the management accounts. The plain meaning of Part 2 is unambiguous: D3 “shall pay an amount of USD150,000 … if the loss of [D3] … is less than USD5,000,000”. Thus, the payment obligation for the Extra Bonus is triggered only if D3’s loss is demonstrated to be less than USD5 million – that is, the requisite condition precedent. To assert otherwise, that D3 shall pay P2 USD150,000 unless it produces the management accounts by 30 April 2021 showing that its loss is more than USD5 million, is to rewrite Part 2 in a manner that is contrary to its clear terms. 56.Absent the management accounts and the evidence of D3’s loss contained therein, it is impossible to determine whether the condition precedent for the payment of the Extra Bonus has been met. 57.Accordingly, it cannot be held that the Plaintiffs’ loss, arising from D3’s breach of Part 2 by failing to provide the management accounts, amounts to the Extra Bonus of USD150,000. 58.It is unfortunate that the Plaintiffs abandoned the remedy of specific performance. Had they pursued that remedy, they might have compelled D3 to provide a full and proper set of the management accounts, enabling them to ascertain whether the required condition for the payment of the Extra Bonus had been satisfied. 59.In other words, D3’s failure to provide the management accounts does not give rise to a quantifiable loss in the amount of USD150,000 under Part 2 as alleged by the Plaintiffs’ counsel. The Plaintiffs’ claim for USD150,000, whether as damages for breach of Part 2 or as damages in lieu of specific performance, therefore fails. In the absence of evidence of any alternative heads of damages, the only conclusion which this Court can reach is, as submitted by the Defendants, that only nominal damages are warranted. D6. Conclusion on Issue 1 60.The Plaintiffs’ claim against the Defendants for D3’s breach of Part 2 succeeds but only to the extent of D3’s failure to provide the management accounts. Their claim for damages, or damages in lieu of specific performance, in the amount of USD150,000 must accordingly fail, with only nominal damages being granted. E. Issue 2 – Liability E1. Part 3 of the Separation Terms 61.Part 3 of the Separation Terms (“Part 3”) reads as follows:
62.No licence was granted. No licence agreement was signed. And no equity capital was injected. I shall first set out the relevant facts before addressing the issue. E2. The Falling Through of Negotiation 63.The narrative set out below is drawn from both the Plaintiffs’ submissions[36] and the Defendants’ submissions[37]:
64.Consequently, the negotiation fell through. It is common ground that the Plaintiffs neither established a new eyewear business nor set up any company for that purpose. E3. The Plaintiffs’ Case 65.The Plaintiffs made 2 claims under Part 3 against the Defendants[39]. Firstly, in breach of Part 3, D1 or D3 has failed to grant P1 or P2 a licence in respect of the Plaintiffs’ new eyewear business. Secondly, D1 and D2 have failed to inject USD 500,000 into P2 on or before 1 April 2020 (in exchange for 10% of the shares in P2) in order for P2 to conduct the new eyewear business. 66.The Plaintiffs plead[40] that under the Separation Terms, D1 and/or D3 would grant or cause to be granted to P1 and P2 an exclusive licence to run the new eyewear business. However, in this plea the Plaintiffs fail to specify the legal basis for such exclusivity – for example, whether it arises from an express term, an implied term, or otherwise – nor do they set out the material facts in support thereof. 67.The Plaintiffs submit[41] that, upon the proper construction of Part 3, the following obligations are imposed on the parties:
68.In the Plaintiffs’ contention[42], the terms set out in Part 3 mirror and reflect the binding essential terms that had already been agreed P1 and DW1 in the Alleged 2 December 2019 Agreement. Those terms were set out in P1’s two emails to DW1 both issued on 2 December 2025:
DW2 replied to these two emails in one email, stating, “OK”. 69.The Plaintiffs claim[43] that as D1 and D3 have repeatedly produced draft licence agreements that deviated from the Separation Terms, they have, a fortiori, breached Part 3. Additionally, or alternatively, the Defendants also breached Part 5 of the Separation Terms, which requires them to use “all reasonable efforts” to satisfy their mandatory obligations under the Separation Terms[44]. They have failed[45] to negotiate the proposed license agreement in good faith and with all reasonable efforts. E4. The Defendants’ Case 70.Regarding proper interpretation of Part 3, the Defendants advanced a primary position and an alternative position. 71.The Defendants’ primary position[46] is summarized as follows:
72.Their alternative position[48] is: if Part 3 imposes an enforceable obligation on the Defendants to grant the Plaintiffs a licence, the text of Part 3 together with the relevant factual matrix show that D3 is only required to grant or use all reasonable endeavours to grant a non-exclusive licence to P2. E5. Discussion on Issue 2 E5(1) Interpretation of the first paragraph of Part 3 73.I shall first address the interpretation of Part 3. 74.In my judgment, properly construed, the first paragraph of Part 3, which concerns the licence to be granted by D1 and D3 to P1 and his nominee company in respect of the eyewear period, constitutes an agreement to agree. The terms in the first paragraph of Part 3 is insufficiently certain to form a workable licence agreement. As such, the first paragraph of Part 3 is not enforceable. 75.In my view, it is determinative that the essential terms of the licence to be granted by D1 and D3 to the Plaintiffs are missing from Part 3. 76.The first paragraph of Part 3 mandates the following terms of the licence which have been agreed between the parties, but unfortunate no more:
I shall refer to these 3 terms as the “3 Agreed Terms” below. 77.Part 3 and the remainder of the Separation Terms do not mention any other terms of the licence which have been agreed between the parties. Rather, the first paragraph of Part 3 states that the terms of the licence “will be set out in a licence agreement (on terms to be agreed)”. 78.Although, as pointed out by the Plaintiffs[49], Part 3 requires that a licence “shall” be granted, and that the licence agreement was “to be entered into no later than 1 April 2020”, if the parties are unable to agree on additional terms, the only remaining terms (at least on their face) are the 3 Agreed Terms. If what remain in Part 3 are not enforceable such that a licence cannot be granted, then they will remain so notwithstanding the mandatory use of “shall”. 79.The Plaintiffs’ submissions[50] contend that the essential terms relating to the eyewear licence and the eyewear business are already contained in Part 3. Accordingly, Part 3 is binding and enforceable. Terms of the licence agreement which are said “to be agreed” in the first paragraph of Part 3 are non-essential terms that do not detract the binding nature of Part 3. 80.I reject the Plaintiffs’ submissions, for the reasons below. 81.Firstly, as demonstrated by the negotiations set out in in Section E2 above, there were many terms that were not agreed between the parties. In my judgment, as shall be explained below, these outstanding terms include material terms. They include:
82.In my view, these outstanding terms, particularly the element of exclusivity, cannot be regarded as non-essential terms; indeed, they are essential. Without these material terms, the licence agreement is simply unworkable. Such terms have a significant effect of either positively enhancing or adversely diminishing the value of the rights under the licence. In other words, these terms have material financial and commercial impacts on the new eyewear business. Without clearly delineating the parties’ rights and obligations in these areas, the new eyewear business proposed the Plaintiffs simply cannot be commenced or sustained. 83.To illustrate with an example, if the licence does not expressly require that the Plaintiffs secure an exclusive licence, thereby preventing D3 or any third party from using the Trademarks in connection with the new eyewear business, competing operators may be permitted to use the Trademarks concurrently. This would undoubtedly jeopardise the commercial viability of the new eyewear business. In other words, a licence for the Trademarks cannot be granted without expressly defining the exclusivity of their use, as uncertainty in this regard create serious commercial risks. 84.As a matter of fact, as also mentioned in paragraph 63(13) above, this is one of the reasons why the negotiations failed, as illustrated by Mr Gasperis’ own words[51]:
I should comment here that Mr Gasperis’ last sentence above (i.e. “Jerry [DW1] had previously made it clear to me that Shanghai Tang wanted only me to deal with eyewear going forward.”), even on its face value, is vague. It could mean that the only business in which D3 would be willing to deal with Mr Gasperis in future is eyewear. At the very least, it does not necessarily mean that D3 promised to grant Mr Gasperis an exclusive licence. This is particularly so given (1) Mr Gasperis would no longer be an employee of D3, (2) the new eyewear business was intended to be Mr Gasperis’ own business, and naturally he would prefer his own interest over those of D3, and (3) the Defendants would only be a minority shareholder holding a 10% interest in Mr Gasperis’ new eyewear company. 85.For the avoidance of doubt, I should make it clear that it has never been the Plaintiffs’ contention that the licence can be granted without specifying whether its nature is exclusive or non-exclusive. The Plaintiffs’ case is premised solely on the assertion that the licence must necessarily be exclusive, as mentioned in paragraph 66 above: D3 is obliged to grant an exclusive licence to the Plaintiffs. The difficulty for the Plaintiffs is always in establishing on what basis the licence must necessarily be exclusive. 86.For convenience, I shall refer to the outstanding essential terms mentioned above as the “Outstanding Essential Terms” hereafter. 87.Secondly, I find that none of the Outstanding Essential Terms have been incorporated into Part 3, either expressly or impliedly. 88.The starting point is the express wording in the Separation Terms. As noted above, the 3 Agreed Terms are the only terms expressly agreed in Part 3. The term “exclusive” – and indeed any language indicating exclusivity under the licence – does not appear in Part 3 or elsewhere in the Separation Terms. Similarly, terms such as “territory”, “sublicence” and “distributor” do not appear. 89.The Plaintiffs have not pleaded any case to establish why the essential terms are already contained in Part 3, as mentioned in paragraph 66 above. Although the Plaintiffs have pleaded that the nature of the licence to be granted for running the new eyewear business is exclusive, the Plaintiffs have failed to plead the legal basis for such exclusivity, for example, whether it arises from an express term, an implied term, or otherwise. 90.As mentioned in paragraph 68 above, in their submissions, the Plaintiffs rely on the email exchange between Mr Gasperis and DW1 on 2 December 2025 and suggest that the terms set out in Part 3 mirror and reflect the binding essential terms that had already been agreed P1 and DW1 in the Alleged 2 December 2019 Agreement. This suggestion is misconceived. The emails do not assist the Plaintiffs. As set out in paragraph 76 above, in those emails, in respect of the licence to be granted, only the 3 Agreed Terms were mentioned. No reference was made to any of the Outstanding Essential Terms in the communications between Mr Gasperis and DW1. In any event, I agree with the Defendants that these emails constitute pre-contractual negotiations preceding the Separation Terms and are therefore not admissible for the purposes of construing Part 3, see Channel Green Ltd v Huge Grand Ltd [2025] 1 HKLRD 655 at 669, paragraph 34 per Lam V-P (as Lam PJ then was). The Plaintiffs did not dispute the Defendants’ proposition. The only complaint they raise is that this point has not been pleaded. I dismissed this complaint because admissibility of evidence is a question of law that does not necessarily need to be pleaded and given that this point had been put to strict proof in the Defendants’ pleadings[52], the Defendants is entitled to object admissibility as a matter of principle. In any case, this Court does not consider it proper to admit a piece of evidence that is inadmissible in law, solely because the objection was not pleaded. 91.The Plaintiffs further relied on what they term as “factual matrix”, namely (1) the discussions and negotiations leading up to the Alleged 2 December 2019 Agreement and DW1’s direction to DW2 and an officer Peter on 9 December 2019[53]; and (2) a reiteration by DW1 in a text message to Mr Gasperis on 11 December 2019[54] in support of the assertion that the agreement contains all the essential terms, particularly that it was always for an exclusive licence agreement[55]. I fought with great difficulty on this reliance. Leaving aside the question of admissibility which I have discussed above, I cannot find from the references to these “factual matrices” in the Plaintiffs’ submissions that any of the Outstanding Essential Terms were ever discussed or, directly or indirectly, alluded to between the parties. 92.The Plaintiffs assert that it makes no commercial sense for D3 to grant a non-exclusive licence in competition with the new eyewear business, in light of D3's 10% equity stake in the business[56]. I reject this assertion. I cannot see why it would be commercially nonsensical for D3 to grant a non-exclusive licence to the Plaintiffs and invest in their company with a 10% equity stake. On the contrary, DW1’s evidence[57] suggests that if the Plaintiffs’ eyewear products are of poor quality and their sales are inadequate, D3 could proceed with the eyewear business on its own – an option available should the Plaintiffs run the new eyewear business poorly during the fixed licence period. This constitutes a commercially sensible reason for D3 to retain the right to use the Trademarks, notwithstanding the concurrent grant of that same right to the Plaintiffs and despite D3’s minor investment into the Plaintiffs’ new eyewear company. For the same reason, injecting capital into and assuming a role of minority shareholder in the Plaintiffs’ new eyewear company does not, by itself, mean that D3 has granted an exclusive licence to the Plaintiffs[58]. 93.The Plaintiffs submit[59] that all of the evidence before the Court confirms that the licence to be granted was exclusive, relying principally on the oral evidence provided by DW1 and Mr Gasperis during cross-examination. 94.In relation to DW1’s oral evidence, the Plaintiffs refer the Court to the following answers given by DW1:
95.I am afraid the Plaintiffs’ reliance on DW1’s answers above is misplaced. His responses clearly indicate that the Defendants envisaged Mr Gasperis establishing a new eyewear business independently and that, although his new company would purchase eyewear products from Shanghai Tang and produce its own range, if the new venture’s products and sales were poor, D3 would opt to do run the eyewear business on its own. This understanding sensibly explains why an exclusive licence was not contemplated and provides a coherent commercial rationale for the absence of an exclusive provision. Indeed, this contingency plan directly contradicts any claim that exclusivity was ever intended as a binding term. 96.The Plaintiffs further rely[60] on Mr Gasperis’ answer during cross-examination, when it was suggested to him that in each of the draft licence agreements, there simply was no reference to an exclusive licence, to suggest that the licence granted in their favour must be exclusive and worldwide, applying the analogy of marriage between husband and wife. He told the Court:
97.This reliance is, in my view, inapt. Firstly, in my view, marriage is an inappropriate analogy; such an analogy erroneously implies a level of personal and mutual obligation that is absent in the commercial context. The previous employment relationship between D3 and Mr Gasperis is not analogous in any substantive way to the trademark licensor-licensee relationship. Secondly, the phrase “done business together” is too broad a term to describe adequately the relationship attendant upon the granting of a trademark licence. Thirdly, the relationship between an employer and its resigned employee, though not adversarial, is fundamentally dissimilar to that between married partners. 98.The Plaintiffs further allege[61] that every draft licence agreement produced prior to 25 March 2020 was an exclusive licence, and at no stage during the drafting process did the Defendants explicitly request a “non-exclusive” licence. This assertion is not factually correct. As explained in paragraph 63(6)(a) and Footnote 38 above, there is no exclusivity intended in Ds’ 23 February 2020 Draft – only a sole licence was stipulated to be granted in it. 99.In any event, since these draft licence agreements were prepared by both parties after the conclusion of the Separation Terms, they represent post-contractual conduct which is not admissible for the purpose of arguing[62] that the agreement contained in Part 3 conferred an exclusive licence – as this involves the interpretation of Part 3. As a matter of principle, similar to pre-contractual negotiations as explained in paragraph 90 above, post-contractual conducts are equally not admissible. The Plaintiffs rely heavily on Chitty on Contracts, 35th ed at paragraph 16-061 and related authorities in Hong Kong[63] which permit subsequent conduct to be adduced to show whether there was a contract and what the terms of the contract were. However, the issue here is not the ascertainment of the existence of a contract or identification of its terms. The issue here is one of interpretation of contract, namely whether Part 3, correctly construed, includes the Outstanding Essential Terms, particularly the exclusivity of the intended licence. As submitted by the Defendants’ counsel[64], there is an important distinction between the identification and interpretation of terms, as explained in the English High Court’s judgment in Re Sea Containers Services Ltd [2012] EWHC 2547 (Ch) at paragraph 88 per Hildyard J:
Therefore, it is not permissible for the Plaintiffs to use these draft licence agreements after the conclusion of the Separation Terms to show what Part 3 means – in other words, to determine the construction of Part 3. 100.As to implied terms, in my judgment, there is no implication of the Outstanding Terms into Part 3 or elsewhere in the Separation Terms. 101.First of all, the Plaintiffs did not plead any implied terms in its pleadings. 102.There is only a brief reference in their written closing submissions[65] in which the Plaintiffs rely on the factual matrix and the subsequent conduct up to and including the production of Ds’ 25 March 2020 Draft to establish that “it goes without saying” in the Alleged 2 December 2019 Agreement and in Part 3 that the licence agreement to be granted was exclusive; however, but there is no detailed elaboration on the basis of “it goes without saying” or business efficacy which, according to the Plaintiffs, gives rise to the implication of exclusivity as a term in Part 3. In any event, since the Plaintiffs rely on the factual matrix and the post-contractual conduct that I have examined and rejected for the reasons explained above, the brief and unsubstantiated assertion of an implied term by the Plaintiffs is consequently rejected. 103.In rejecting the implied term argument, I have not lost sight of the principle, as the Plaintiffs submitted[66], that the courts should endeavour not to destroy the bargain, including, where necessary, by implying all reasonable terms to avoid any uncertainty, as well as the English High Court’s judgment in Brooke Homes v Portfolio Property Partners [2021] EWHC 3015 (Ch), which they rely[67] on, at paragraph 100, where Deputy High Court Judge Hugh Sims QC expressed the following view:
104.While the Court should do everything possible to assist the parties in preserving a bargain rather than destroying it, including, where necessary, implying reasonable terms to enable the contract to be carried out, such endeavours must be reasonable; and if terms are to be implied, such implication must be found on a sound basis and established ground. Terms cannot be implied “out of the blue” merely to dogmatically make the contract enforceable, as this may simply depart from the original bargain of the parties. In other words, the Court cannot go so far to rewrite the contract solely to make an otherwise unworkable contract workable. 105.For the reasons explained above in relation to the Plaintiffs’ submissions, I cannot find anywhere in the factual context of this case any indication as to how the Outstanding Essential Terms can be implied in a reasonable manner. 106.In the premises, the only conclusion that I can reach is that Part 3, including the 3 Agreed Terms, represents the farthest compromise that the parties could reach at the time when the Separation Terms were signed. The parties expressly left other matters to be agreed. Unfortunately, the Outstanding Essential Terms were so fundamental and commercially determinative that the parties could not reach further agreement during the negotiation of the licence agreement. Whilst as mentioned above I am certainly aware that the Court should be slow to find Part 3 to be unenforceable due to uncertainty, vagueness and constituting an agreement to agree, as held in the English Court of Appeal’s judgment in Pretoria Energy Co v Blankney Estates [2023] L. & T.R. 28 (affirming the first instance judgment of Deputy High Court Judge Joanne Wicks QC [2022] EWHC 1467 (Ch)) at paragraph 17, for the reasons explained above, the gap or the void represented by the Outstanding Essential Terms is too wide to be bridged. The Plaintiffs cannot now rely on Part 3 to unilaterally impose terms that have not been agreed by the Defendants, and which are so material and essential that, without them, the licence would be unworkable, uncertain and hence unenforceable. 107.For completeness, I deal with the Plaintiffs’ complaint that the Defendants’ defence is not pleaded. The Plaintiffs object[68] that the Defendants’ main line of attack, regarding the construction of Part 3 – namely, “it is difficult to see how Ds could be under any obligation to grant an exclusive licence to P2”[69] – is not a matter that has been pleaded by the Defendants in their Defences. They rely on the fact that their plea of the duty to grant an exclusive licence[70] has not been specifically traversed by the Defendants in their Defences. This submission is misconceived. To discern a party’s case, the Court should look at the parties’ entire pleadings and not just one plea. Apart from the express denial, as set out in paragraph 71(1) above, the Defendants’ pleaded case is that Part 3 is an agreement to agree, which is unenforceable, and that the provision is not sufficiently complete and certain to be enforceable in law. Moreover, the Defendants have also pleaded[71] that neither the Separation Terms nor the Alleged 2 December 2019 Agreement contain key provisions that needed to be agreed upon subsequently in the licence agreement, including that no agreement was reached as to whether the terms of the licence should be on an exclusive or non-exclusive basis. As such, in my view, the issue has been clearly and adequately pleaded. 108.For the above reasons, in my judgment, in so far as the granting of a licence of the Trademarks by D3 to the Plaintiffs is concerned, Part 3 of the Separation Terms is uncertain and unworkable and constitutes an agreement to agree. Consequently, it is not enforceable. 109.Having determined that Part 3, for the purposes of the granting of a licence for the Trademarks, is unenforceable, it is unnecessary for me to consider whether the Defendants were correct in introducing additional terms in the licence agreement which, in the Plaintiffs’ submission, contradict the terms that were agreed and incorporated in Part 3, such as imposing conditions for renewal of the Licence after the first 5 years, payment of a fixed royalty for the fourth contract year, with a minimum 10% increase on such royalty for each subsequent contract year, and giving D3 the right to terminate the Licence within the first 5-year term, as referred to in paragraph 63 above. Even if the Defendants were mistaken in introducing these terms, the finding of such errors could not cure the unenforceability of Part 3. E5(2) Reasonable Efforts to Negotiate 110.As mentioned in paragraph [69] above, the Plaintiffs claim that the Defendants had an independent or additional obligation under Part 5 of the Separation Terms “to use all reasonable efforts to satisfy their obligations under these Separation Terms” and they have failed to do so. In particular, the Plaintiffs contend[72] that the Defendants have failed to negotiate the proposed license agreement in good faith and with all reasonable efforts. 111.This argument does not assist the Plaintiffs, because:
Therefore, the Court of Appeal held that an agreement to use best endeavours to negotiate or to negotiate in good faith was not enforceable. The Plaintiff argues[73] that this case can be distinguished from the present case because there was no binding agreement in that case. Obviously, this argument is circular: if the underlying obligation, e.g. to grant a licence, were already enforceable and binding, D3 would be obliged to grant a licence, and there would be no need to rely on the requirement to use the best endeavours to grant a licence. E5(3) Injection of capital into the Plaintiffs’ new eyewear business 112.As mentioned in paragraph 7(2)(b) above, the final issue in Issue 2 is whether the Defendants breached Part 3 by failing or refusing to inject US$500,000 into the new eyewear business in the form of equity capital in exchange for a 10% shareholding in that business. 113.As a matter of fact, as mentioned in paragraph 64 above, no new eyewear business, i.e. the New Business referred to in Part 3, was established, and no new company was set up for that purpose. As such, no capital could be injected into the New Business or any new company incorporated for it. 114.The Plaintiffs submit[74] that the injection of capital required in Part 3 is a mandatory and standalone obligation and was never contingent on the licence being granted. I disagree. In my view, because the Outstanding Essential Terms were never agreed, either expressly or impliedly, Part 3 remains an agreement to agree – uncertain and unenforceable. Accordingly, the Plaintiff cannot compel the Defendants to inject capital where there is no operative New Business. 115.The second paragraph of Part 3 stipulates that, on or before 1 April 2020, D1 or D2 shall inject USD500,000 into the “New Business” in the form of equity capital in exchange for a 10% interest in “the eyewear company incorporated by [Mr Gasperis] of his nominee company”. As evidenced by the heading and the first paragraph and the second paragraph of Part 3 – which appears to be common ground – the New Business pertains to the operation of an eyewear business utilizing the Trademarks of Shanghai Tang. If no licence for use of the Trademarks can be granted, then no New Business can be operated, and the need to incorporate a new company for that purpose is negated. This analysis is consistent with the facts and, in my view, accurately reflects what actually transpired. 116.In practical terms, without the right to use the Trademarks for its eyewear products, the New Business cannot manufacture, market or sell any such products using Shanghai Tang’s Trademarks. I therefore agree with the Defendants’ submissions[75] that Part 3 is conditional upon the granting of the licence and that, if no licence is granted, there will be no New Business – in any commercially viable sense – for D1and D2 to inject capital. E5(4) Conclusion on Issue 2 117.In my judgment, for the reasons explained above, the Defendants did not breach Part 3 of the Separation Terms by failing or refusing, by 1 April 2020, to enter into an agreement to grant a licence in respect of the new eyewear business and to inject US$500,000 in equity capital in exchange for a 10% shareholding in that business. The Plaintiffs’ claim under Issue 2 fails. E5(5) Miscellaneous Matters 118.For completeness, there are two matters that I shall address briefly. 119.The first matter concerns the Defendants’ alternative position on licencing. As mentioned in paragraph 72 above, the Defendants have advanced an alternative position that, if Part 3 imposes an enforceable obligation on them to grant the Plaintiffs a licence, then D3 should be required only to grant, or to use all reasonable endeavours to grant, a non-exclusive licence to P2. 120.In the above, I have determined that Part 3, for the purposes of granting a licence for the Plaintiffs’ new eyewear business, is unenforceable, because, in a nutshell, there were Outstanding Essential Terms that had not been agreed, either expressly or impliedly, in Part 3; they were left for further agreement of the parties; and as these terms were so material and fundamental that, without them, the licence could not possibly be granted, the requirement to grant a licence set out in Part 3 constitutes an agreement to agree – uncertain and unenforceable. Accordingly, the Plaintiffs cannot compel the Defendants to grant them an exclusive licence. 121.This is exactly the same reason why the Defendants’ alternative position, limiting their obligation under Part 3 to granting a non-exclusive licence, is also flawed. As explained above, the nature of the right to use the Trademarks – whether exclusive or non-exclusive – is one of the Outstanding Essential Terms. The reasons given above to explain why a requirement for granting an exclusive licence has not been expressly or impliedly agreed by the parties and incorporated into Part 3 apply equally in explaining why a requirement for granting a non-exclusive licence has not been expressly or impliedly agreed by the parties and incorporated into Part 3. The materiality of the Outstanding Essential Terms is central and renders both the Plaintiffs’ main argument and the Defendants’ alternative argument invalid. 122.The second matter concerns assessment of damages. As the Plaintiffs’ claims against the Defendants for breach of Part 3 have failed, it is unnecessary for me to address this issue in detail. However, for the sake of completeness, I shall briefly discuss it. 123.As noted in paragraph 17 above, the Plaintiffs’ abandonment of seeking specific performance also applies to their claim for the Defendants’ breach of Part 3, i.e. they no longer require the Defendants to inject USD500,000 into New Business. Concerning their claim for breach of Part 3, they primarily[76] assert that if the contract had been performed, P2 would have received USD2,612,520. The Plaintiffs submit that this figure is calculated on the basis of Mr Gasperis’ estimated net profit of USD4,108,000 over 10 years in a “business plan” (which the Plaintiffs provided to the Defendants in January 2020), minus royalty payments of USD1,495,480 over 7 years – assuming royalties are payable from the fourth year and at a rate of 8% of net sales in accordance with Part 3. Similarly, the Plaintiffs’ alternative claim for damages in lieu of specific performance[77], based on the loss of profit they would have earned had the Defendants injected USD500,000 into the New Business in compliance with Part 3, is derived from the same calculations and results in the same figure. 124.In my view, the burden of proof, that USD2,612,520 represents either, as contractual damages, the loss suffered by the Plaintiffs due to the Defendants’ breach of Part 3 or, as damages in lieu of specific performance, the profit the Plaintiffs would have earned had Part 3 been specifically performed, rests squarely on the Plaintiffs. This is trite, as Lord Sumption JSC remarked in the UK Supreme Court’s judgment in Hughes-Holland v BPE Solicitors [2018] AC 599, paragraph 53 at page 629:
The Plaintiffs must satisfy the Court that the basis of their loss calculations is reasonable and that the underlying figures and estimates are soundly derived, reliably established, and not speculative. They cannot “base its case on guesswork or self-serving assumptions”, per Mr Recorder Shieh SC in Degreeasia Limited t/a Hong Kong Institute of Continuing Education v Paules Lee Siu Yuk, unreported, HCA 1686/2006, 25 June 2010 at paragraph 189. 125.It is clear that the Plaintiffs fall significantly short of the evidential threshold. I accept those of the Defendants’ criticisms[78], which I summarize as follows:
126.For the above reasons, I find that even if damages were payable by the Defendants to the Plaintiffs for breach of Part 3, the Plaintiffs have failed to discharge their burden of proving a substantive loss. As a result, such damages can only be nominal. F. Issue 3 127.As set out in paragraph 68 above, under Issue 3, the Plaintiffs alternatively claim that D1 and D3 have breached the Alleged 2 December 2019 Agreement by failing to grant Mr Gasperis or D2 an exclusive licence for the new eyewear business and by injecting the capital of US$500,000 into the New Business or P2 or new company that the Plaintiffs incorporated for the New Business. 128.This alternative claim is a non-starter and must fail in my judgment. 129.As noted in paragraph 68 above, in the Plaintiffs’ own case, the terms set out in Part 3 mirror and reflect the binding essential terms that had already been agreed P1 and DW1 in the Alleged 2 December 2019 Agreement. These terms were evidenced in P1’s two emails to DW1, both issued on 2 December 2025. In other words, in the Plaintiffs’ own case, the Alleged 2 December 2019 Agreement, even assuming it to be extent and binding, contains no material terms beyond those in Part 3[80]. There are no material terms in the Alleged 2 December 2019 Agreement in addition to Part 3, e.g. it does not prescribe that the licence to be granted is exclusive and worldwide[81]. Therefore, the determination and reasoning that applies to Part 3 apply equally to the Alleged 2 December 2019. 130.Secondly, in my judgment, there was no binding agreement reached on 2 December 2019. I agree with the Defendants’ submissions that the email exchange on that date - as referred to in paragraph 68 – merely contemplated a final written agreement, namely the Separation Terms. This is evidenced by Mr Gasperis’ first email, in which he stated that he was recapping DW1’s proposal (the “conditions proposed”) and requested DW1 to confirm so that the parties might “finalise the discussion”. Thus, the negotiation was intended to conclude only after the written the Separation Terms were prepared and signed. 131.Thirdly, Appendices A and B to the Separation Terms, i.e. the CEO Resignation Letter and the Director Resignation Letter, both subsequently signed by P1, confirmed that the Separation Terms are the sole binding agreement between the parties. The CEO Resignation Letter stipulates that there is no agreement or arrangement outstanding under which D3 or any of its subsidiaries has or could have an obligation to P1 whether now or in the future whether for the payment of money or otherwise, whereas in the Director Resignation Letter, P1 states that he confirms that he has no claims against D3 in respect of fees nor in respect of compensation for loss of office, other than those arising under or in connection with the Separation Terms. I do not consider the Plaintiffs are now entitled to backtrack from these words and assert claims based on an alleged agreement (i.e. the Alleged 2 December 2019 Agreement) that is inconsistent with the CEO Resignation Letter and the Director Resignation Letter. 132.Therefore, the Plaintiffs’ alternative claim under Issue 3 must fail. G. Issue 4 133.Issue 4 arises from the email sent by Mr Gasperis to DW2 on 3 December 2019. The Plaintiffs contend, in alternative to their claim under Issue 1, that this email, coupled with DW1’s positive confirmation reply email, constituted a binding agreement – the Alleged 3 December 2019 Agreement; and that D3 has breached this agreement by failing or refusing to pay the Plaintiffs the sum of US$150,000. 134.The Plaintiffs’ case on Issue 4 is pleaded as follows[82]:
135.Similar to Issue 3, the Plaintiffs contend that the terms of the Alleged 3 December 2019 Agreement mirror the terms of Part 2[83]. 136.In my judgment, the Plaintiffs’ alternative claim under Issue 4 must fail for the following reasons:
H. Conclusion and Disposal 137.In conclusion, I make the following orders:
138.With respect to costs:
139.Lastly, I wish to express my appreciation for the helpful assistance of counsel.
Mr Sebastian Hughes and Mr Lavesh Kirpalani, instructed by Munros, for the 1st and 2nd Plaintiffs Mr Terrence Tai and Ms Regina Yip, instructed by Oldham, Li & Nie, for the 1st to 3rd Defendants [1] Paragraph 5 of D2’s Re-Re-Amended Defence (“D2’s Defence”) [2] Paragraph 5 of the Plaintiffs’ Re-Re-Re-Amended Statement of Claim (“Ps’ Statement of Claim”) which is admitted by the Defendants in their pleadings. [3] The issues formulated by both parties are similar. [4] Paragraph 37 of the Plaintiffs’ Closing Submissions (“Ps’ Closing”) [5] Paragraph 81 of Ps’ Closing [6] Paragraph 20A(III) of Ps’ Statement of Claim [7] Paragraph 21 of Ps’ Statement of Claim. This is the Plaintiffs’ plea in alternative to their claims for breach of Part 3. [8] Paragraph 22 of Ps’ Statement of Claim. This is the Plaintiffs’ plea in alternative to their claims for breach of Part 3. [9] Paragraphs 20E and 24A of Ps’ Statement of Claim. This is the Plaintiffs’ plea in alternative to their claims for breach of Part 2. [10] Paragraph 14A of Ps’ Statement of Claim [11] Paragraph 24A of Ps’ Statement of Claim [12] Prayers (a) and (b) of Ps’ Statement of Claim [13] Paragraphs 38-40 of the Plaintiffs’ Opening Submissions (“Ps’ Opening”) [14] Paragraph 14(d) of D1 and D3’s Amended Defence (“D1 & D3’s Defence”) and paragraph 14(d) of D2’s Defence [15] Paragraph 85 of Ps’ Opening, confirmed by the Plaintiffs’ counsel in their oral opening [16] Paragraphs 86-87 of Ps’ Opening [17] Paragraphs 88-90 of Ps’ Opening [18] Paragraph 27 of Ps’ Closing [19] Paragraphs 29 and 30 of Ps’ Closing [20] Paragraph 7(b)(i) of the Defendants’ Opening Submissions (“Ds’ Opening”) [21] Paragraph 27(a) of Ds’ Opening [22] Paragraph 29 of Ds’ Opening [23] Namely, paragraph 14(d) of D1 and D3’s Defence and paragraph 14(d) of D2’s Defence mentioned above; and paragraph 33 of DW1’s Witness Statement [24] Paragraph 65 of Ds’ Closing [25] Paragraph 67 of Ds’ Closing [26] Paragraphs 68 and 66(a) of Ds’ Closing [27] Paragraph 69 of Ds’ Closing. [28] Paragraphs 8 and 68 of Ds’ Closing [29] Paragraph 73 of Ds’ Closing [30] Paragraph 108(a) of Ds’ Closing [31] As quoted in Paragraph 33 of D’s Closing:
[32] Paragraphs 3, 9(b), 31(b), 32 and 34 of Ds’ Opening; paragraphs 68(c)(ii), (iii) & (iv) &(d), 72, 73(b) & Appendix 2 of Ds’ Closing [33] Paragraph 30 of Ds’ Opening; paragraphs 68(c)(ii) of Ds’ Closing [34] Paragraphs 11 and 12 of DW1 Affirmation [35] After considering the Statement of Costs prepared by the Plaintiff’s Solicitors [36] Paragraphs 17 to 26 of P’s Opening [37] Paragraph 30 of D’s Closing [38] An explanation of what an exclusive licence is and what constitutes a sole licence can be found in Kerly’s Law of Trade Marks and Trade Names, 17th ed. at paragraph 15-084 and Footnote 83 to 15-083 respectively: an “exclusive licence” is defined “as being one which authorises the licensee to use the mark, as permitted by the exclusive licence, to the exclusion of all other persons, including the person granting the licence”, whereas “a ‘sole and exclusive’ licence is a licence by which the licensor appoints an exclusive licensee but itself reserves the right to use … such a licence must be treated as a non-exclusive licence. There is reference to the UK Trademarks Act 1994 but I do not consider the position that the relevant position, as applicable here, is affected by this reference, because, as summarized in paragraph 63(6)(a) above, in Ds’ 23 February 2020 Draft (paragraph 2.1), although D3 as licensor grants P2 as licensee the “exclusive” licence to use the Trademarks “solely”, the grant is subject to an express proviso that the licensor (D3) “retains the full rights to exercise the licensed rights”. As such, there is no exclusivity intended in Ds’ 23 February 2020 Draft. [39] Paragraphs 21 and 22 of Ps’ Statement of Claim [40] Paragraph 13(c) of Ps’ Statement of Claim [41] Paragraph 52 of Ps’ Opening and paragraph 79 of Ps’ Closing [42] Paragraph 20D of Ps’ Statement of Claim and Paragraph 46 of Ps’ Closing [43] Paragraph 55 of Ps’ Opening [44] Paragraph 24 of Ps’ Statement of Claim [45] Paragraph 23(a) of the Plaintiffs’ Amended Reply to the Amended Defence of D1 and D3 and paragraph 32(a) of the Plaintiffs’ Re-Amended Reply to the Re-Re-Amended Defence of D2 [46] Paragraph 84 of Ds’ Closing [47] Paragraphs 14(c) and 20 of the Amended Defence of D1 and D3 and paragraphs 14(c) and 20 of the Re-Re-Amended Defence of D2 [48] Paragraph 91 of Ds’ Closing [49] Paragraphs 51 and 69(1) of Ps’ Closing [50] Paragraph 47 of the Plaintiffs’ Closing [51] Paragraph 49(a) of Mr Gasperis’ witness statement [52] Paragraph 20D of the Amended Defence of D1 and D3 and paragraph 19D of the Re-Re-Amended Defence of D2 [53] Paragraph 48 of Ps’ Closing. DW1’s direction on 9 December 2019 was short: “… @jessie yan @Peter stick to what i agreed with maurizio in the email, and make it simple and clear…” [54] Paragraph 49 of Ps’ Closing. What DW1 reiterated was short: “ … i will talk to jessie [DW2], let's stick to what we agreed in the email, she will send comment soon”. [55] Paragraph 66 of Ps’ Closing [56] Paragraph 65 of Ps’ Closing [57] See paragraphs 94 and 95 below. [58] Paragraph 69(3) of Ps’ Closing [59] Paragraph 60 of Ps’ Closing [60] Paragraph 64 of Ps’ Closing [61] Paragraph 61 of Ps’ Closing [62] Paragraphs 66 and 86 of Ps’ Closing [63] Paragraphs 10-11 of Ps’ Closing [64] Paragraph 81of Ds’ Closing [65] Paragraph 86 of Ps’ Closing [66] Paragraphs 39, 42, 91 & 92 of Ps’ Closing [67] Paragraphs 42 & 92 of the Ps’ Closing [68] Paragraphs 53-55 of Ps’ Closing [69] Paragraph 78 of Ds’ Closing [70] Paragraph 13(c) of Ps’ Statement of Claim. Apart from non-admission, in paragraph 13(c) of the Amended Defence of D1 and D3 and paragraph 13(c) of the Re-Re-Amended Defence of D2, it has been denied that P2 obtained any rights in relation to licencing in respect of the eyewear business pursuant to the terms of the Separation Terms. [71] Paragraph 20(a)(ii) of the Amended Defence of D1 and D3 and paragraph 20(a)(ii) of the Re-Re-Amended Defence of D2 [72] Paragraph 23(a) of the Plaintiffs’ Amended Reply to the Amended Defence of D1 and D3 and paragraph 32(a) of the Plaintiffs’ Re-Amended Reply to the Re-Re-Amended Defence of D2; and paragraphs 93-95 of Ps’ Closing [73] Paragraph 90 of Ps’ Closing [74] Paragraph 69(2) of Ps’ Closing [75] Paragraphs 8(f) and 101 (a)-(c) of Ds’ Closing [76] Paragraph 87 of Ps’ Opening. [77] Paragraphs 92-95 of Ps’ Opening [78] Paragraph 111 of Ds’ Closing. I accepted those points which I set out in this paragraph. In some occasions I accept the Defendants’ heads of criticism but state my own reasons. [79] See Mr Gasperis’ witness statement at paragraph 75. [80] This position is further confirmed in paragraph 98 of Ps’ Closing. [81] The Defendants submitted that there are significant differences between the emails and the final Separation Terms, see paragraph 42(c) of Ds’ Closing and its tabulation, but, in my view, those differences, in the context of the present disputes, are not material and do not have significant bearing. Most importantly, they do not affect the analysis in the previous section of this Judgment as to enforceability. [82] Paragraph 20A (VIII), (IV) & (V) of Ps’ Statement of Claim [83] Paragraph 98 of Ds’ Opening | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 1450/2020