廈門新景地集團有限公司formerly Known As 廈門巿鑫新景地房地產有限公司 v. Eton Properties Ltd and Others

CACV 235 /2024, [2026] HKCA 888

On appeal from [2024] HKCFI 1291

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 235 OF 2024

(ON APPEAL FROM HCCL NO 13 OF 2011)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.This is an application for leave to appeal to the Court of Final Appeal against the judgment of the Court of Appeal handed down on 12 December 2025 ([2025] HKCA 1119), dismissing the appeal of the 1^st and 2^nd defendants^[1] against the judgment of Mimmie Chan J dated 14 May 2024 in the assessment of damages after an eight-day hearing ([2024] HKCFI 1291) and her two further rulings on 9 September 2024 and 15 October 2024. Five grounds of appeal were raised^[2] and all were rejected.

2.The defendants filed a notice of motion for this purpose on 9 January 2026 by their new legal team.  Not counting the judgment of the Court of Final Appeal in the defendants’ appeal on liability^[3], a total of 45 authorities were cited by them, of which only five were cited by the former team on appeal.  The arguments of Mr Christopher Chain SC^[4] on the minimum performance principle and collateral benefits are new arguments not raised at the appeal or at the trial.

3.The questions stated as of great general or public importance in the notice of motion are:

Question 1

Should the assessment of damages account for the benefits that may be yielded to (or losses avoided by) the innocent party (A) as a result of the breach (even though they accrued prior to the date of assessment) and/or the defaulting party (B)’s right to negotiate and bargain for a more favourable result in meeting the contractual purpose?

Question 2

Where the performance of the obligation is such that even if it had been performed, there was a degree of uncertainty as to the nature and extent of the resulting performance, in assessing the quantum of damages for breach of such obligation:

a.     Does the innocent party (A) need to plead and prove their ability to overcome such uncertainties;

b.     May the uncertainties be sidestepped or resolved by simply adopting the profits that were actually earned by the defaulting party (B) to estimate the profit that would have been earned by the innocent party (A)?

4.Mr Chain submitted that Questions 1 and 2a should be answered in the affirmative and Question 2b in the negative.  If the questions are answered in favour of the defendants and the appeal allowed, it would appear that the Court of Final Appeal might be asked to remit to the Court of First Instance for a fresh inquiry to be conducted with amended pleadings and additional evidence. 

5.At the core of these questions is the contention that in performing the Implied Promise to honour the Award, the 1^st and 2^nd defendants would not provide the 5^th defendant’s design to the plaintiff gratuitously and would have charged the plaintiff a fee for adopting the 5^th defendant’s design after good faith negotiations.  Hence, credit should be given to the value of the 5^th defendant’s design in assessing the damages of the plaintiff.  As there would be negotiation of price which the plaintiff could have been required to pay the 1^st and 2^nd defendants to adopt the 5^th defendant’s design, there is inherent uncertainty on the nature and extent of the resulting performance had the 1^st and 2^nd defendants complied with the Implied Promise, apart from the plaintiff’s ability to pay the construction costs of the development and to obtain under article 7.2(4) of the Agreement a certificate issued by the contracting enterprise that the construction price had been paid off or a declaration that the unpaid construction price shall be borne by the plaintiff.  It is incumbent on the plaintiff to plead and prove how they might overcome such uncertainties.

6.Mr Man submitted to the contrary it is untenable to suggest there is an alternative mode of performance in that the 1^st and 2^nd defendants were entitled to perform the Implied Promise without providing the 5^th defendant’s design, as this is contrary to the obligation of the 1^st and 2^nd defendants under the Implied Promise to transfer the 4^th defendant’s shares to the plaintiff enabling the development of the Land to be continued by the plaintiff with the 5^th defendant’s design.  In other words, the benefits of the 5^th defendant’s design are what the 1^st and 2^nd defendants were obliged to transfer to the plaintiff pursuant to the Implied Promise and are not additional benefits.  It was the undisputed evidence of the plaintiff’s witness that the plaintiff would simply and realistically have adopted the 5^th defendant’s design and continued the development based on that design^[5].  There is no uncertainty as to the nature and extent of the resulting performance.  Mr Man further submitted it is untenable to suggest that the 1^st and 2^nd defendants would have charged the plaintiff a fee for adopting the 5^th defendant’s design in the counterfactual in that the 5^th defendant together with its design would become indirectly owned by the plaintiff when the 4^th defendant’s shares were transferred to the plaintiff for the agreed consideration of RMB 120 million.

7.We do not think it necessary to enter into the debate if the contentions of the defendants in the proposed appeal are reasonably arguable.

8.The problem with the defendants’ contentions is that there is no plea and no evidence adduced by them at the trial to suggest that the 1^st and 2^nd defendants would have required the plaintiff to pay a fee for adopting the 5^th defendant’s design.  The alleged uncertainties regarding the nature and extent of the resulting performance if the 1^st and 2^nd defendants had complied with the Implied Promise are unpleaded.  No complaint was made at the trial that the plaintiff might not be able to pay construction costs and obtain the required certificate or declaration.  According to Mr Bernard Man SC, who appeared for the plaintiff before the judge in the assessment of damages and on appeal^[6], the 1^st and 2^nd defendants have not adduced any evidence at trial to show had they complied with the Implied Promise, they would have demanded a fee from the plaintiff for adopting the 5^th defendant’s design.  Nor was it pleaded by the 1^st and 2^nd defendants that they would have been entitled and would have charged a fee.  This argument was only made in passing for the first time during oral submissions by the defendants’ former leading counsel in November 2025 at the hearing of the appeal (he did not appear at the trial).

9.We have considered those parts of the amended statement in response^[7] and the amended notice of appeal^[8] referred to in Mr Chain’s reply submissions.  We do not agree with him the contentions now sought to be made in the proposed appeal have been pleaded or raised before the judge.  In the amended notice of appeal, it was contended in §2(d) that the judge erred in assuming that the 1^st and 2^nd defendants “were in a position to allow, and would have allowed”, the plaintiff to adopt the 5^th defendant’s design “for free” or without taking into account what “the 5^th defendant could have charged the Plaintiff for allowing it to adopt its design and the works”.  This is not the same as the contention now sought to be raised in the proposed appeal or the contention raised before us on appeal^[9].

10.The contention that “what P would have earned based on its own design would best reflect how D5’s superior design would be taken into account and given credit to in good faith negotiations” is a new point which has not been pleaded and involves factual issues which have not been explored at the trial.  Likewise, the new allegation of uncertainties in the nature and extent of the resulting performance if the 1^st and 2^nd defendants had complied with the Implied Promise are fact-sensitive.  We are inclined to think these are caught by the “state of the evidence” bar in the Flywin doctrine^[10], in which a new point would not be allowed to be taken on appeal in circumstances which would obviously cause unfairness to the other party.

11.Furthermore, as mentioned the arguments on the minimum performance principle and collateral benefits have not been raised at the trial or on appeal.  Under the second aspect of the Flywin doctrine being the “not considered on intermediate appeal” hurdle^[11], it is only in the most exceptional circumstances that the Court of Final Appeal will entertain an appeal on a new issue, not fully explored and argued below, when it involves a major development of the law.  The well-established practice is for this court to decline to grant leave to appeal for completely new points not argued on appeal and below, but leave it to the Appeal Committee to determine if there are most exceptional circumstances to warrant the granting of leave despite the hurdle of “not considered on intermediate appeal”^[12].

12.Apart from impacting on the court’s ability to properly adjudicate upon the matter, the new arguments on uncertainties in the nature and extent of the resulting performance are fact-sensitive, and require pleadings as to what would have been the best performance, and what were the benefits to the plaintiff which would have reduced the damages.  Such pleas or arguments would have materially affected the state of the evidence at trial. All this goes to unfairness to the other party.

13.For the above reasons, we refuse to grant leave to appeal to the Court of Final Appeal on any of the questions framed.

14.The defendants also rely on the “or otherwise” limb.  In accordance with usual practice, we will leave it to the Appeal Committee to determine if there are exceptional circumstances to exercise the discretion to grant leave on this basis.

15.We order the defendants to pay the plaintiff’s costs of this application with a certificate for three counsel.  We assess costs summarily at $800,000.

Mr Bernard Man SC, Mr James Man and Mr Jonathan Ng, instructed by Anthony Siu & Co, for the Plaintiff (Respondent)

Mr Christopher Chain SC, Mr Michael Lok and Ms Tinny Chan, instructed by Baker & Mckenzie, for the 1^st and 2^nd Defendants (Appellants)