Bank of China (Hong Kong) Ltd v. Twin Profit Ltd and Others

CACV 94/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 94 OF 2010

(on appeal from HCMP 874/2009)

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Before: Hon Yuen JA, Hon Stone and Sakhrani JJ in Court

Date of Hearing: 19 November 2010

Date of Judgment: 10 February 2011

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J U D G M E N T

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Hon Yuen JA:

1.I agree with the judgment of Stone J. Accordingly, this appeal is dismissed with an order nisi as to costs in favour of the plaintiff. As to the appropriate scale for taxation of such costs, the parties are invited to make short written submissions to the Court within 14 days of the date of this Judgment.

Hon Stone J:

This appeal

2.This is the defendants’ appeal against the judgment of Mr Justice Fok delivered on 30 March 2010.

3.By this judgment, the learned judge dismissed with costs on an indemnity basis the defendants’ appeal against the Order of Master de Souza made on 25 January 2010, by which the learned Master had acceded to the plaintiff’s application under Order 28, rule 4(1) RHC, and had entered summary judgment in favour of the plaintiff in the aggregate sum of HK$265,840,469.02, together with interest thereon, and made further orders against the 2^nd and 5^th defendants for delivery to the plaintiff of vacant possession of various charged properties.

The factual background

4.As the judge below observes, in what if I may say so is a clear and succinct judgment, the claim of the plaintiff is a simple one.

5.The plaintiff, Bank of China (Hong Kong) Ltd., and its predecessors, the Kincheng Banking Corporation HK Branch (‘KBC HK Branch’) and the Bank of China HK Branch (‘BOC HK Branch’), had extended various banking facilities to the defendants.

6.In particular, in exchange for such banking facilities, the 1^st, 2^nd and 5^th defendants variously had provided mortgages over a number of properties by way of security: in the Originating Summons dated 8 May 2009 commencing this action these properties respectively are defined as the ‘1^st, 2^nd and 3^rd Charged Properties’.

7.This dispute has its factual origin in a bank merger: pursuant to the Bank of China (Hong Kong) Limited (Merger) Ordinance, Cap 1167, (‘the Merger Ordinance’) all the businesses and undertakings of, inter alia, KBC HK Branch and BOC HK Branch were transferred to and vested in the plaintiff with effect from 1 October 2001. As a result, as the judge observed, the plaintiff statutorily succeeded to all the rights and interests of KBC HK Branch and BOC HK Branch qua lenders vis-à-vis the various defendants, and as such is entitled to enforce such security rights against them.

8.Thus, the plaintiff’s case is that it was, and remains, entitled to vacant possession and delivery of the Charged Properties, together with recovery of sums due under the mortgages, together with interest and costs.

9.The defendants’ case is set out in three affirmations made on their behalf by Mr Mok Wei Tak, a director of each of the defendants.

10.In the judgment presently under appeal, Fok J meticulously has summarized the contentions that are made therein. For present purposes there is no necessity to repeat in detail this factual narrative.

11.Suffice it to say to that the gravamen of the defence to the summary judgment as was mounted (and in due course rejected both by Master de Souza and by the learned judge below) amounted to the contention that the financial difficulty of the defendants in being unable to pay to the plaintiff bank the debts the subject of the present action arose as a direct result of the failure of the Bank of China and Kincheng Investments & Developments (China) Ltd (‘Kincheng China’) to pay to the 6^th and 7^th defendants, together with an entity known as Carefree Development Ltd (‘Carefree’) a sum of HK$136 million, which represented the balance outstanding and payable by Kincheng China arising from the sale to Kincheng China of a 60% interest in a Beijing building, Beijing Central Plaza, which was owned, via subsidiary companies, by the 6^th and 7^th defendants and by Carefree.

12.In this regard, it is said that not only had there been a written sale and purchase agreement dated 22 February 2000 entered into between the 6^th and 7^th defendants and Carefree of the one part, and by Kincheng China of the other, but additionally that there had been an oral agreement with the Bank of China that Kincheng China (acting as agent or nominee of its principal, Bank of China) would pay the 6^th and 7^th defendants and Carefree additional consideration in the sum of HK$186 million, of which but HK$50 million thus far had been paid, thereby leaving outstanding and due and owing the aforesaid balance of HK$136 million.

13.It also is alleged that representatives of the plaintiff’s pre‑merger predecessors had participated in the negotiations in respect of this non‑payment of HK$136 million by Kincheng China, and thus, it is asserted, such participation supported the defendants’ contention that such outstanding liability of BOC and/or Kincheng China came within the statutory definition of the “businesses” and “undertakings” which, by virtue of the Merger Ordinance, had been transferred to and now currently vest in the plaintiff.

14.Thus, runs the argument in this appeal, the 6^th and 7^th defendants have a valid set-off and counterclaim against the plaintiff for such failure to pay the additional HK$136 million; in addition to such set‑off, the defendants seek, by counterclaim, to assert a right to (unparticularized) unliquidated damages, all of which, it is said, must be placed in the balance against the plaintiff’s existing claim.

15.At bottom, therefore – as the learned judge below expressly recognized – the key argument arising from this somewhat unusual factual matrix is precisely what was, or was not, transferred to the plaintiff under the Merger Ordinance?

16.If the liability to pay these monies indeed thus was transferred, then clearly this outstanding sum of HK$136 million must be taken into account; if it was not so transferred, then equally clearly this version of events does not assist in the defence of this claim as now mounted by the plaintiff.

17.In the event, Fok J analysed the terms of the Merger Ordinance in order to determine precisely what had been merged into and transferred to the plaintiff, and after a detailed review of the evidence as filed, ultimately the judge came to the view that the acquisition of the building in question, Beijing Central Plaza, could not be regarded as business being carried on by either BOC or Kincheng Banking Corporation in or from their branches in Hong Kong, and therefore did not constitute part of the businesses as thus statutorily merged into the plaintiff.

18.In this connection the judge particularly noted the use of the word “existing” within section 2(1) of the Merger Ordinance, and concluded that it could not be said that the financial arrangements relating to the purchase of Beijing Central Plaza properly could be regarded as forming part of the business of KBC HK Branch and/or BOC HK Branch.

19.The crux of this appeal, therefore, was whether the learned judge was correct in so concluding upon the evidence before him, and accordingly thus was correct in upholding the summary grant to the plaintiff of the relief as sought in its originating summons, and as initially granted by Master de Souza?

The argument

20.As was the position below, the plaintiff was represented by Mr Jat Sew-Tong SC, together with Mr Mike Lui, and the defendants by Mr Russell Coleman SC, together with Mr Jeremy SK Chan.

21.In opening this appeal on behalf of the defendants, Mr Coleman’s argument was that the appeal ought to be allowed if there was a triable case on the proposed defence and counterclaim.

22.He noted that procedurally after the plaintiff bank had issued its originating summons dated 8 May 2009, the defendants themselves had taken out a summons the following day pursuant to the provisions of Order 28, rule 8 RHC, seeking orders therein that these proceedings should continue as if begun by writ, and requesting relevant directions as to both the plaintiff’s claim and the defendants’ intended counterclaim. His main point was that the precise relationships between these parties could properly be explored only in interlocutory steps towards, and thereafter at, a formal trial, and that the defendants’ assertions as to the counterclaim should not have been summarily dismissed – as now represented the current position consequent upon the hearing before the Master and the Judge below.

23.Mr Coleman submitted that pre-October 2001 ‘Bank of China’ and ‘Kincheng Bank’ were two entirely different corporate entities, both of which were PRC, and not Hong Kong, companies. Thus, prior to the Merger Ordinance, the so-called ‘Hong Kong’ and ‘PRC’ branches of BOC represented no more than different businesses conducted in Hong Kong and China respectively by the same PRC legal entity; accordingly, his argument went, in law there was no such thing as ‘Bank of China Hong Kong Branch’, and that in so far as the statutory definition within the Ordinance referred to “the business carried on by Bank of China in or from its branch in Hong Kong”, this was merely to recognize what that PRC company was doing in or from Hong Kong.

24.In this context leading counsel made reference to certain Bank of China documentation, and argued similarly in relation to the “notional” ‘HK’ and ‘PRC’ branches of Kincheng Banking Corporation, which remained no more than businesses respectively conducted in Hong Kong and the PRC by the same PRC-incorporated legal entity.

25.Thus, he said, when the Merger Ordinance had provided that Bank of China Hong Kong was to take over all the business carried on by Kincheng Banking Corporation “in or from its branch in Hong Kong”, it was certainly triable and/or arguable – which in the present context was the only benchmark that he had to meet in order to succeed in this appeal ‑ that this expressly included the business conducted by KBC through its wholly‑owned subsidiary Kincheng China.

26.If this be correct, Mr Coleman submitted, an analysis of the various mortgages and loans in question, taken together with the sworn evidence of the factual background put in by the defendants – which in this case was contained in the three affirmations of Mr Mok Wei Tak, who personally had been involved in the Beijing City Plaza project since its inception and had attended almost all the relevant meetings – served to demonstrate that it was BOC which had decided to use Kincheng China in order to purchase the shares of Beijing Central Plaza’s holding companies, and thus by this means to acquire the building.

27.In this context, counsel referred in some detail to minutes of meetings held in order to discuss the then-proposed transaction, which recorded involvement by Bank of China and ‘Hong Kong Kincheng Bank’, and noted in particular that a Minute of a 27 May 1999 meeting, which had discussed the mode of acquisition of shares, apparently had concluded that it was KBC’s wholly-owned subsidiary Kincheng China that had become involved as BOC’s agent or nominee, and that KBC’s use of Kincheng China, which was a Hong Kong company managed and controlled from KBC’s Hong Kong Branch, served to underline the point that what was occurring was “business activity in or from Hong Kong”.

28.Mr Coleman pointed out that it was then agreed that Kincheng China would pay the original shareholders of the Beijing Central Plaza Building (namely, Carefree, and the 6^th and 7^th defendants) the sum of RMB720 million ‑ which less loans and advances came to HK$186 million ‑ as BOC’s agent or nominee, and indeed on 23 March 2001 BOC through Kincheng China had paid the sum of HK$50 million, thereby leaving unpaid the balance of HK$136 million, notwithstanding that the indirect subsidiary holding companies already have been transferred to Kincheng China for and on behalf of BOC, their directors have resigned, and thus these erstwhile holding companies are now held by BOC.

29.A further illuminating element in the ‘change of ownership equation’, Mr Coleman argued, was an internal Memorandum dated 29 November 2000, wherein the Hong Kong-Macau Regional Office Bank of China wrote to BOC Head Office, copying in the KBC Hong Kong Branch, which on its face made it clear that it was the KBC Hong Kong Branch (and not merely its wholly-owned subsidiary Kincheng China) which was involved in the purchase of Beijing Central Plaza by BOC as its agent/nominee, so that all KBC actions were subject to and pursuant to authorizations from BOC.

30.There is a good deal of correlative detail on which leading counsel also relied, which for present purposes is unnecessary to recount, but all of which, said Mr Coleman, served to support his thesis, which was that the obvious involvement of the notional ‘Hong Kong Branches’ of the pre‑October 2001 Bank of China and Kincheng Bank, and their respective officers and staff, supported the arguable proposition that this purchase properly could be characterized as “business carried on in or from Hong Kong”, and therefore whether BOCHK is liable, by the merger having now assumed the relevant liabilities of BOC and KBC.

31.If this hypothesis be correct, he said, arising from the non‑payment of the balance of HK$136 million, the 6^th and 7^th defendants have valid counterclaims against both BOC qua principal and KBC qua agent; both BOC and KBC, the parent of Kincheng China, have now merged into the plaintiff, BOCHK, (formerly known as Po Sang Bank), and in the circumstances such counterclaims are not suitable for summary dismissal, and leave ought to be granted to the 6^th and 7^th defendants to file and serve counterclaims, counterclaims which also would include the additional loss and damage alluded to in the affirmations of Mr Mok, which, if established, also should be the subject of set-off against the plaintiff’s claim.

32.In fact, Mr Coleman concluded, the existing payment of HK$50 million was consistent with the defendants’ case as now revealed on the papers, and thus the defendants are able to demonstrate a real reason why this action should be permitted to continue as if by writ with all the appropriate interlocutory steps, including discovery, which would lead to a full trial with viva voce testimony.

33.With great respect to Fok J, counsel said, the learned judge’s detailed consideration of the position within his careful analysis represented the type of exercise which properly only could be conducted at trial, and the fact that the learned judge had dismissed the arguments arising from the content of the currently-available documents ‑ for example, using phrases such as “may or may not”, “explicable by”, “does not support a conclusion”, “it does not follow”, “there is no reason to conclude” – ironically served to underscore the very existence of triable issues in this case.

34.On the other side of the table, Mr Jat SC for the plaintiff ridiculed this argument: this appeal, he said, was “entirely devoid of merit”, and stated categorically that the plaintiff never was party to the Beijing property transaction now relied upon so centrally by the 6^th and 7th defendants, that an analysis of the defendants’ conduct to-date “plainly contradicts” the position now belatedly asserted, and that in any case the purported disputes involving the sum of HK$136 million could not possibly give rise to any arguable defence on the part of the 1^st to 5^th defendants.

35.Mr Jat observed that the plaintiff and its predecessors ‑ BOC HK Branch and KBC HK Branch – had extended banking facilities to the defendants, and that the 1^st, 2^nd and 5^th defendants had provided mortgages over the Charged Properties as security therefor. He further noted that when these proceedings were commenced, the undisputed outstanding debt had stood at HK$295 million, and after the start of this case the 1^st defendant had sold the 1^st Charged Property on 30 September 2009, and that the net proceeds were applied to discharge part of the outstanding debt. So there could be no doubt whatever, he submitted, that notwithstanding the now-alleged ‘set-off and counterclaim’, the defendants all along clearly had accepted liability for a debt owed to the plaintiff.

36.Mr Jat accepted that pursuant to the Merger Ordinance, all business and undertakings of BOC HK Branch and KBC HK Branch had been transferred to and had vested in the plaintiff with effect from 1 October 2001, and thus it followed that the plaintiff had succeeded to the rights and interests of both these entities qua lenders to the defendants, and there could be no doubt but that it was entitled to enforce such rights against them.

37.He emphasized, however, that so far as BOC – a state-owned enterprise established under PRC law – and Kincheng Banking Corporation was concerned, it was only their businesses carried on in or from their branches in Hong Kong which had been merged into the plaintiff, and that in terms of the scope of the merger, it was crucial to bear in mind that only property and liabilities of BOC HK Branch and KBC HK Branch “existing, outstanding or in force immediately before” 1^st October 2001 would be merged and succeeded to by the plaintiff.

38.So far as the case now being put forward on behalf of the defendants was concerned, given that there was no dispute that prima facie the plaintiff was entitled to judgment, the burden thus fell on the defendants to demonstrate an arguable case, and in this regard, said Mr Jat, the allegations made were first, incredible/highly implausible, and second and in any event, did not give rise to any defence.

39.In credibility terms, leading counsel submitted, this novel ‘set‑off stance’ wholly was contradicted by a review of the defendants’ own course of conduct since the purchase of Beijing Central Plaza, and thus rightly could be characterized as nothing but an “afterthought”; if, for example, the defendants all along had believed that the plaintiff was not entitled to enforce payment of apparently undisputed debts on the ground that, pursuant to the merger, the plaintiff could be impleaded in the acquisition of this Beijing building – in which connection there was no evidence whatever that the plaintiff ever had taken over any part of the liability of those corporate entities which had been involved in the Central Plaza transaction, or that the plaintiff or its predecessors had been responsible for the alleged non-payment of the outstanding sum ‑ then it reasonably would have been anticipated that such allegation would have been subject to some form of documentation.

40.However, the fact was that in the relevant contemporaneous correspondence (such as, for example, the 7^th defendant’s letter to the plaintiff dated 16 June 2008) there was no mention of any allegation that the plaintiff was not entitled to claim repayment from the defendants because of the non-payment of the HK$136 million by Kincheng China, and indeed even as late as December 2008 – see the 7^th defendants letter to the plaintiff on 2 December 2008 – the defendants still were relying on the unsettled dispute over Beijing Central Plaza in order simply to request an extension of time to repay the debt, and that there had been no question raised as to the primary liability to repay; in fact, correspondence between the parties after the commencement of proceedings in relation to the sale of the 1^st Charged Property contained a clear acknowledgment by the defendants of such liability.

41.In the course of his submission Mr Jat further argued that the mere fact of the plaintiff’s knowledge, through its officers, of the Beijing Central Plaza transaction or its aftermath could not give rise to any legal liability on the part of the plaintiff, and in so far as it now was said that the undisputed evidence was that this transaction could legitimately be regarded as “business” of the KBC HK Branch or BOC HK Branch, the undisputed evidence was that Kincheng China was a separate legal entity from, and had not merged with, the plaintiff.

42.His main point in this regard was that in submissions the defendants singularly had failed to address the fact that, under the Merger Ordinance, it was abundantly clear that the plaintiff had succeeded only to the property and liabilities of the BOC HK Branch and KBC HK Branch which liabilities were “existing, outstanding or in force immediately before” the crucial merger date, which was 1 October 2001.

43.Mr Jat also stressed that, whatever else could be said about this case, there could be no doubt but that the Beijing Central Plaza transaction solely concerned the 6^th and 7^th defendants, and not the 1^st ‑ 5^th defendants, a proposition to which there could be no answer.

44.Accordingly, counsel asked this court to affirm the judgment of Fok J below; alternatively to order that the plaintiff be entitled to enter judgment against the 1^st -5^th defendants, and thus to be in a position to enforce the security held over the 2^nd and 3^rd Charged Properties (the 1^st Charged Property having already been sold).

Decision

45.The essence of the case put up in the affirmations of Mr Mok Wei Tak, a director of each of the defendants, is that it was the defendants’ intention to use the proceeds of sale of their interest in Beijing Central Plaza to repay the defendants’ undisputed debts to the plaintiff, and that consequent upon the failure of BOC and/or Kincheng China to pay the outstanding balance of HK$136 million the defendants find themselves in financial difficulties which otherwise would not have been encountered.

46.There is no doubt about this plea: the only issue now arising is whether the Merger Ordinance had had the effect of bringing into the relevant ‘accounting net’ liability for such sum on the part of the plaintiff, which pursuant to the merger is said to have inherited such liability; the defendants’ contention in this regard is that representatives of the plaintiff’s predecessors participated in the negotiations between the parties consequent upon non-payment of this balance by Kincheng China, and that this falls within the definition of “the businesses and undertakings” transferred to and vested in the plaintiff.

47.The learned judge below thought not. I confess that at first blush I had formed the preliminary view that, setting aside a sum of in or about HK$238 million which on any basis could be demonstrated otherwise indisputably to have been accruing to the plaintiff, that the judge below may have accorded insufficient weight to certain documents prayed in aid by the defendants as demonstrating that this plaintiff statutorily had assumed responsibility for the balance remaining of the total debt of the defendants, which on the schedule of figures with which this court has been supplied amounted to some HK$282,181,187.29, including interest, as at 19 November 2010, the latter being the latest calculation date adopted in this schedule.

48.On this line of reasoning, therefore, my initial reaction was that the appeal would have to succeed in part, and the order of the learned judge below be varied to give leave to the 6^th and 7^th defendants to defend as to the monetary differential.

49 However, on reflection closer scrutiny of the relevant documentation has served to convince me otherwise, and to form the view that the learned judge was correct in dismissing the appeal from the order of Master de Souza, and in holding that no triable issue had been raised that any liability on the part of Kincheng China for failure to pay the sum of HK$136 million arising out of the acquisition of Beijing Central Plaza gives rise to any alleged set-off or counterclaim against the plaintiff’s claims in this action.

50.Try as I might, ultimately I am unable to accept that the documents variously relied on in Mr Coleman’s highly persuasive submission constitute any more than isolated straws in the evidential wind, and that even when taken cumulatively do not suffice to discharge the accepted burden upon the defendants to demonstrate a triable issue.

51.For example, the minutes of a meeting dated 27 May 1999 [Exhibit ‘MW-2’] wherein the purchase of Beijing Central Plaza was the subject of discussion, and wherein is recorded the participation of the ‘Deputy General Manager of Hong Kong Kincheng Bank’ in the discussion do not strike me as constituting references to the purchase of this building on behalf of BOC by KBC HK Branch; in fact, as this document specifically records, the involvement of ‘Kincheng Bank’ was proposed simply as a trustee for the Beijing branch office of BOC.

52.Similarly, I do not ascribe much weight to the share acquisition agreements entered into on 22 February 2000 by which Kincheng China agreed to acquire the shares of the relevant subsidiaries of the 6^th and 7^th defendants, and of Carefree, and the proposition that these agreements sensibly can be read as supporting a conclusion that the share acquisition was part of the business of KBC HK Branch, not least since it was and is abundantly clear that the whole point of buying this building in the first place was to act as Head Office and Beijing Branch Office of BOC.

53.Nor do I consider that a document upon which particular reliance was placed before this court by Mr Coleman, namely an internal memo dated 29 November 2000 entitled “Urgent report on Kincheng Bank’s acquisition of Beijing Central Plaza” [Exhibit ‘MW-2’] issued by the ‘Bank of China Hong Kong and Macau Regional Office’, and which appears to have been copied to ‘Kincheng Bank, Hong Kong Branch’, strike me as being of great assistance to the defendants’ argument, given that this document expressly records that the involvement of ‘Kincheng Bank’ was being proposed to act as trustee for the Beijing branch office of BOC; as the learned judge below drily noted, the mere fact of copying an internal memo to a particular branch “does not elevate the obligation of Kincheng China into the business of that branch”, which in this instance was the KBC HK Branch.

54.There were a number of other documents relied upon in Mr Coleman’s persuasive address, but at the end of the day it must be borne in mind that the failure to pay the sum of HK$136 million solely was that of Kincheng China, which it is common ground was a subsidiary of Kincheng Banking Corporation and not of KBC HK Branch, and, as the learned judge below also has noted in his meticulous factual treatment, Kincheng China (and its liabilities) would not fall within the language of the Merger Ordinance, and in particular the definition of “existing” within section 2(1) thereof, which in turn refers to the “existing property and liabilities of the Hong Kong branches of the Mainland incorporated banks”, which included KBC HK Branch.

55.The hard fact remains that none of the documents proffered in support of the defendants’ case states the Beijing Central Plaza purchase was undertaken as part of the business of one or other of the Hong Kong branches in question, and as Fok J has emphasized, it is the defendants’ own evidence that it was the representatives of BOC Head Office and/or the Beijing branch office of BOC that were responsible for the decision to acquire this building.

56.The view that ultimately I now have formed to the effect that the outstanding liability of Kincheng China cannot thus be ‘forced’ within the language of the Merger Ordinance, and thereby afford the defendants ‑ or at least the 6^th and 7^th defendants ‑ some relief by way of set-off and counterclaim, is in my view reinforced by the available contemporaneous correspondence, wherein it is striking that no reference whatever is made to such alleged right of set-off when the defendants were faced with demands by the plaintiff for payment of outstanding banking facilities.

57.For example, in his judgment Fok J specifically notes that in the letter dated 16 June 2008 from the 7^th defendant to the plaintiff, the 7^th defendant makes express reference to the indebtedness due and owing by each of the defendants to the plaintiff, and that whilst the letter indeed refers to the intention on the part of the defendants to use funds received from the disposal of their interest in Central Plaza in order to repay the various outstanding loan amounts, this letter also records the disposal by the defendants of “several properties used as collateral to reduce the amount owing to you”, proposing at the same time to dispose of the property known as the ‘1^st Charged Property’, and citing consideration of disposing the ‘2^nd Charged Property’.

58.As the judge below pithily expressed the point in his judgment (at paragraphs 49-50):

“If the defendants regarded the failure of Kincheng China to pay the additional HK$136 million as a breach of contract for which the plaintiff was responsible and which gave rise to a set-off and counterclaim, it strains credulity that the defendants would have already disposed of other properties to repay their indebtedness in part and would be proposing to dispose of further charged properties for that purpose.

The letter of 16 June 2008 concluded with a request to review the interest payable but did not in any way dispute liability for the indebtedness.  The letter also included a reference to selling Beijing Central Plaza as one of the proposals for repayment.  If the defendants believed there was a liability on the part of the plaintiff in respect of any default by Kincheng China in respect of the acquisition of Beijing Central Plaza, it flies in the face of reality for this not to have been mentioned in this letter.”

59.I agree. Whilst, as earlier observed, it appeared at one stage of the argument appropriate to consider varying the order below and to permit the 6^th and 7^th defendants to go to trial on the case as now developed by their leading counsel, at the end of the day contemporary reality speaks volumes, and as the judge also has noted, it was only after issue of the originating process in this case that on 21 May 2009 the defendants’ solicitors went on record, presumably on instructions, to suggest that there were “substantive factual disputes amounting to a defence of set-off, if not a counterclaim as well”, albeit details of such were not condescended to in that letter.

60.However, details having now been provided in the form of counsels’ submission, the defendants’ case strikes me at bottom as little more than an ingenious and belated attempt to delay the inevitable conclusion: in hard terms, to buy some more time.

61.Tempting though this may have seemed, at least in the case of the 6^th and 7^th defendants, ultimately I am persuaded that this would be incorrect in principle, and that in substance there is nothing on the available evidence which would justify the conclusion that the defendants are able successfully to discharge the burden of demonstrating that the alleged liability on the part of Kincheng China to pay the additional sum of HK$136 million in respect of the acquisition of Beijing Central Plaza should accrue to the plaintiff pursuant to the operation of the Merger Ordinance, and thus, contrary to the view of the Master and Fok J, that this case is unsuitable to summary judgment in the terms as now entered.

62.In the circumstances, therefore, for my part I would dismiss this appeal, with an order nisi that costs of this appeal do follow the event, such costs to be taxed, if not agreed.

63.I further would order that this appeal be certified as fit for two counsel.

Hon Sakhrani J:

64.I agree with the judgment of Stone J.

Mr Russell Coleman SC & Mr Jeremy SK Chan, instructed by Messrs Mayer Brown JSM, for the Appellants/1^st – 7^th Defendants

Mr Jat Sew-Tong SC & Mr Mike Lui, instructed by Messrs Li & Partners, for the Respondent/Plaintiff

Please refer to FAMV4/2012 for the relevant appeal(s) to the Court of Final Appeal.