Lieu Tseng Van v. Jiuzhou Development Co Ltd
Read the full judgment text of HCA 1645/2009 on BabelCite. This High Court CFI judgment was delivered on 7 June 2012.
1. I gave my judgment on the seventh of this month. I now give my reasons.
Cited by 4 cases
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HCA 1645/2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1645 OF 2009 ____________
____________ (By Original Action)
____________ (By Counterclaim)
__________________________________ REASONS FOR JUDGMENT __________________________________ 1.I gave my judgment on the seventh of this month. I now give my reasons. 2.The claims and counterclaims in this action arose out of the failure of a negotiation for the sale and purchase of 80% of the shares of a company called Super Cruise Limited (“Super Cruise”). Super Cruise owns and controls a recreation club called Pine Valley Sports and Country Club (“Pine Valley”) in Doumen District of Zhuhai City, Guangdong Province. The plaintiff (“Lieu”) is and was the owner of 98% of the shares of Super Cruise. The defendant (“JZD”), a company listed in the Hong Kong Stock Exchange, was the potential purchaser. The only asset of Super Cruise is Pine Valley. 3.For the purpose of the negotiation, JZD signed a confidentiality undertaking dated 8 August 2008 to Lieu and Super Cruise agreeing to keep confidential the documents and information provided for its consideration in the negotiation. JZD also paid Lieu RMB26 million in Hong Kong dollars equivalent as earnest money for the negotiation. The repayment of the earnest money is secured by a share charge executed by Lieu and his wife Madam Chen Siu Ling, the 2nd defendant by counterclaim (“Chen”) over 400 or 80% of the shares of Super Cruise and by a loan assignment executed by Van Shipping Company Limited (“Van Shipping”), a company owned and controlled by Lieu, in favour of JZD. 4.JZD claims that the earnest money has become repayable but is still outstanding. It has thus exercised its rights under the share charge and the loan assignment. It has also appointed receivers pursuant to the share charge over the charged shares. Lieu on the other hand claims that JZD has breached the confidentiality undertaking. He also denies that the earnest money is repayable or that the rights under the share charge and loan assignment exercisable. 5.Lieu claims against JZD in his re-amended statement of claim for damages for breach of the confidentiality undertaking, damages for wrongful enforcement of the share charge, forfeiture of the earnest money (which he described as a deposit) or set-off of the same against the damages payable by JZD, and a declaration that the share charge be discharged or set aside. 6.JZD in its re-re-amended defence and counterclaim prays for repayment by Lieu of the earnest money, a declaration that it is entitled to enforce the share charge, a further declaration that its appointment of receivers is valid and effective, an order requiring Lieu and Chen to deliver up the books, documents and company seal and chops of Super Cruise, damages for breach of the share charge, and an indemnity for all costs, expenses and charges incurred in enforcing the share charge and the loan assignment. Background 7.Super Cruise has issued and allotted 500 shares. 490 shares are held by Lieu and 10 by Chen. 8.Super Cruise is the sole beneficial owner of Pine Valley. Pine Valley operates a recreation club in Doumen District, Zhuhai City. It has a country club, a golf course, a gun club and shooting range, a hunting area and other facilities for recreation and leisure. It is the only golf club in Zhuhai that also has a gun club and hunting area. 9.A Zhuhai Huafa Industrial Company Limited (珠海華發實業股份有限公司) (“Huafa”) was interested in acquiring all the interest in Pine Valley. Lieu said they had some negotiations in 2006 which were later called off by Lieu. Huafa approached Lieu again in July 2008. Lieu said Huafa offered him RMB250 million for all the shares in Super Cruise. Before that, Lieu had also negotiated with a property developer in Hong Kong for the sale and purchase of 70% shares of Super Cruise. The developer had paid Lieu an earnest money of HK$15million which was secured by Lieu’s pledge of 350 shares of Super Cruise. The negotiation with the developer did not bear fruit. Lieu later used part of the earnest money paid to him by JZD to repay the earnest money with interest to the developer. 10.Whilst Huafa was negotiating with Lieu, JZD approached Lieu on 7 August 2008 with a view to purchase 80% of the Super Cruise shares from Lieu. JZD signed the confidentiality undertaking on 8 August. By the undertaking, JZD undertook and agreed that the information and documents concerning Super Cruise, its subsidiary Pine Valley and its business and clients to be provided to JZD for review and consideration of the purchase were the confidential information that JZD would safeguard and not disclose to 3rd parties. JZD further undertook to indemnity Lieu and Super Cruise for all loss and damage that would flow from the breach of the undertaking. The exceptions from the undertaking were disclosures required by law or the listing rules of stock exchanges and information already available in the public domain. 11.After the execution of the undertaking, Lieu provided some 136 English documents and records and some 341 Chinese documents and records to JZD on 9 August for the due diligence enquiry on Super Cruise and Pine Valley. The Framework Agreement and the share charge 12.The parties then negotiated a share transfer framework agreement (權益轉讓框架協議). This agreement was signed on 27 August 2008 and modified by a supplemental agreement signed on 10 September 2008. The framework agreement as modified by the supplemental agreement is hereinafter called “the Framework Agreement”. 13.Pursuant to the Framework Agreement, JZD also paid Lieu HK$30 million which was equivalent to RMB26 million. Of this sum, HK$14,122,500 was paid to Lieu personally. The balance of HK$15,877,500 was paid on Lieu’s behalf to an investment company as his repayment of the earnest money of HK$15 million with interest to the Hong Kong property developer and for discharge of his pledge of 350 Super Cruise’s shares. On the same day, Lieu and Chen also executed the share charge over 400 Super Cruise’s shares (“the charged shares”) and Lieu on behalf of Van Shipping also executed the loan assignment in favour of JZD to secure the repayment of the earnest money. 14.The relevant terms of the Framework Agreement are:
15.I also append below the free translation of the relevant terms:
16.I also append the relevant terms of the share charge below for reference:
The public announcement of the negotiation and the news article 17.Lieu’s first claim is for damages for breach of the confidentiality undertaking by JZD. The first public announcement of the negotiation of the sale and purchase of 80% of the shares of Super Cruise by JZD was made on 10 September 2008 for compliance with the listing rules. The announcement therefore came within the exceptions to the undertaking. The contents of the announcement had also been approved by the son of Lieu, Mr Wayne Lieu, on behalf of Lieu before publication. 18.The announcement said that JZD had on 27 August 2008 entered into a letter of intent (which was a reference to the original framework agreement) with a 3rd party in relation to the possible acquisition of 80% of the issued share capital of a Hong Kong company. The letter of intent was amended by a supplemental letter dated 10 September 2008 and became effective on that date. The target company was the owner of a foreign owned enterprise in the mainland. The foreign owned enterprise was principally engaged in the running of a golf club, gun club, hunting area, hotel and sports training in Zhuhai. JZD had to pay the 3rd party RMB26 million earnest money pursuant to the letter of intent. The 3rd party agreed to grant JZD an exclusive right of negotiation up to 31 December 2008 when the letter of intent would expire if no formal agreement was made between the parties. The repayment of the earnest money was secured by certain pledge given by the 3rd party over some shares of the target company. JZD would perform further due diligence review on the target company within 30 business days and to negotiate and sign a formal agreement on or before 31 December 2008. Should a formal agreement be signed, the letter of intent provided that the price for the 80% shares of the target company would not exceed RMB200 million. 19.There were then 5 golf clubs in Zhuhai, but only Pine Valley had a gun club and hunting area as well. Though the announcement made no mention of Lieu, Super Cruise or Pine Valley, its reference to a golf club in Zhuhai that also had a gun club and hunting area was a clear reference to the club ran by Pine Valley. Lieu in oral evidence also agreed that Pine Valley was well known in Zhuhai even before 2008. If someone in Zhuhai should mention about a Zhuhai golf club with gun club and hunting facilities, people there would know that the club was Pine Valley. Lieu further agreed that his negotiation with Huafa for the sale and purchase of Pine Valley before he was introduced to JDZ was also known to the people of Zhuhai. 20.After the publication of the announcement on 10 September 2008, there was then a news article appearing on 16 September 2008 edition of Zhujiang Wan Bao reporting on the negotiation between JZD and Lieu on the sale and purchase of 80% shares of Super Cruise. The article was written by a reporter Mr Hsu Fei and referred to Lieu as the owner of the shares of Super Cruise which was the parent company of Pine Valley. It stated that the price for the possible sale was RMB200 million instead of not exceeding that sum as mentioned in the announcement. It also alleged that the General Manager of JZD, Mr Huang Xin had provided some information to the reporter. Huang was alleged to have told the reporter that there were tough negotiations by various competitors with Pine Valley and they started in the previous year. 21.The news article also appeared in the internet portal of Zhuhai News Network on 16 September. The news network is owned by Zhujiang Wan Bao. Lieu’s complaint of breach of confidence 22.As a result of the news article in the newspaper and on the internet, Lieu on 17 September wrote a complaint letter to Huang of JZD. Lieu said in the letter that enquiry by his staff with the newspaper revealed that the contents of the news article were provided by JZD, the article had been approved by JZD before publication and the reporter had perused the Framework Agreement. Lieu complained that the Framework Agreement should have been kept confidential and not have been shown to the reporter. 23.He further said that the news article had caused worries amongst the staff of Pine Valley and induced many enquiries from suppliers, tour and other agents and the revenue department on the details of the Framework Agreement. These caused him embarrassment and adverse effect. He asked JZD to clarify the erroneous reporting immediately. 24.After this, the issue of breach of confidence by JZD seemed to have gone to rest. It was raised again by Lieu’s lawyers in a letter dated 20 February 2009. The letter complained that JZD had leaked out to the media about the signing of the supplemental agreement (which amended the original framework agreement) and important information of the project. The important information included the identities of the vendor, the target company and the price. The letter also alleged that the disclosure led to other potential buyers undertaking interference actions to sabotage the deal between JZD and Lieu and causing serious damage to Lieu. 25.Lieu’s lawyers raised this issue again in a letter dated 17 April 2009 to JZD. However, they raised it in connection with an allegation of insider dealing rather than Lieu’s loss or damage. The disclosure in the news article 26.Both Huang and the reporter Hsu gave evidence on this matter. Huang denied any breach of the confidentiality undertaking. Both of them denied that Huang had provided any information to Hsu except a copy of the public announcement and the full title of the supplemental agreement. My assessment of the credibility of Huang and Hsu on this issue is not entirely satisfactory. However, the important questions are the extent of the disclosure in the news article over and above that of the public announcement and whether Lieu has suffered therefrom. 27.Though the announcement did not name Pine Valley as the subject of the sale and purchase negotiation, the description therein of the business under negotiation has clearly identified to the people of Zhuhai that Pine Valley was it. Hsu, being a reporter responsible for tourism and economic news of Zhuhai, would have known that Pine Valley was being discussed for the sale and purchase. Hence, the naming of Pine Valley in the news article did not have the effect of a disclosure of something not already made known by the announcement. 28.The news article also mentioned that Pine Valley’s parent company was Super Cruise and the shares of Super Cruise were held by Lieu. However, once the identity of Pine Valley is known from the announcement, the additional information of its parent and the shareholder of the parent is not of any sensitivity. Such information was also available from the Zhuhai government upon payment of a fee. 29.The further matters that have been disclosed in the news article but not in the announcement were the full title of the supplemental agreement and the quantity of the charged shares was at 80%. 30.The news article also carried some brief history of Pine Valley. It also contained some inaccurate information like JZD had been in the talks since the previous year, there were 3 competitors in the talks and price of the deal was at RMB200 million rather than not exceeding that sum. These inaccuracies might have added colours to the article, but they were not disclosures of confidential information. 31.The article also contains an alleged confirmation by Pine Valley to the reporter of the proposed sale and purchase, but Lieu and Mr Wu Wei of Pine Valley both denied that Pine Valley had provided the confirmation. This could have been another inaccuracy in the article. The method and style of reporting in this article left much to be desired. Lieu’s first claim for breach of confidence and decision thereon 32.Lieu pleaded his loss and damage from the breach of the confidentiality undertaking in paras 22 to 26 of his re-amended statement of claim. He alleged that two potential purchasers had offered to purchase 70% of the interest in Pine Valley in about January 2009 on the basis of an agreed valuation of RMB266 million. These purchasers however withdrew on learning of the price mentioned in the Framework Agreement. Lieu did not say whether the purchasers were apprised of the “RMB200 million” price from the news article or the “not exceeding RMB200 million” price from the announcement. He went on to allege that after the withdrawal of the 2 bidders, there was no one willing to offer anything better than RMB200 million for 80% of Pine Valley or Super Cruise. 33.He further alleged that after the failure of his negotiation with JZD, he was unable to negotiate with Huafa for the sale of the entire interest in Pine Valley at RMB250 million. He was also unable to negotiate with any purchaser for the Pine Valley at RMB300 million which was the price of a valuation of it as at 3 July 2009. 34.If this claim should arise from the disclosure in the news article that the price for 80% of Super Cruise shares was at RMB200 million, then this claim must fail once it is accepted that the subject of negotiation referred to in the public announcement was Pine Valley. The obvious reason is that this price information in the article had already been made public with Lieu’s consent in the announcement. In fact the price of “RMB200 million” mentioned in the article was better than the price of “not exceeding RMB200 million” mentioned in the announcement. 35.Furthermore, the mere fact of negotiation with 2 potential purchasers without the making of any agreement with them is too remote a ground to justify any damages. Such claim is wholly speculative (see Halifax Building Society v Urquart-Dykes & Lord [1997] RPC 55 at 87, line 17-22 and Gosfield School Ltd v Birkett Long (a firm) [2006] PNLR 342 at paras 125-131). I therefore dismiss this claim for loss and damage for breach of the confidentiality undertaking or Framework Agreement. Lieu’s second claim for breach of confidence and decision thereon 36.Lieu’s next claim for loss and damage from JZD’s breach of confidence is grounded on a claim by the Sanli Villagers’ Committee. The village committee claimed that the village was entitled to possession of some 200 mu land occupied by Pine Valley. Lieu alleged that the village committee made this claim after learning of the proposed acquisition. They used this claim to pressure Lieu for compensation. Lieu pleaded that the villagers had on 14 March, 4 April and 1 May 2009 attempted to block access to Pine Valley thereby causing disruption to its business and frightened the staff, customers and potential purchasers. Wu Wei of Pine Valley also gave evidence for Lieu that the villagers had indeed blocked the access to Pine Valley on those days. 37.However, if the villagers’ actions were sparked off by the disclosure of negotiation of sale of Pine Valley in the news article published on 16 September 2008, one wonders why they would have waited for some 6 months before acting on 14 March 2009. Further, the negotiation for the sale of Pine Valley to JZD had already been made known for the first time in the public announcement on 10 September. There was nothing more in the article that would have encouraged the villagers to act if they had not been so encouraged by the announcement. The fact that Lieu had been negotiating to sell Pine Valley to Huafa was also known in Zhuhai including the Sanli Village before JZD had come into the picture. 38.In fact, Lieu’s case as unfolded at the trial was that Huafa was behind the villagers’ action. Huafa was JZD’s competitor and did not want JZD to succeed in acquiring Pine Valley. One Leung Ka Wing, who was in a close relationship with one Yuen Shiu Bor of Huafa, then instigated the villagers to act against Pine Valley to sabotage the proposed sale. Lieu further admitted that Huafa would have learnt from the announcement that JZD was negotiating with Lieu for the purchase of Pine Valley. Hence, any loss or damage flowed from the actions of the villagers would have been ultimately caused by the public announcement rather than the news article. In the premises, there is no basis for Lieu to blame the news article for the villagers’ actions. I therefore dismiss this second claim for damages for breach of confidence as well. Due diligence and title problems identified in it 39.The next issue between the parties is on the conduct of the due diligence and up to what time it should have been completed. This further leads to whether JZD was entitled to demand the return of the earnest money on 27 May 2009 under the Framework Agreement and on 3 June 2009 under the share charge. It is therefore necessary to look into the correspondence on the due diligence. 40.According to clause 7.1 of the Framework Agreement, the due diligence should be completed within 30 working days after 10 September. Mr Kwok, counsel for Lieu calculated that the due diligence should have been completed by 29 October. 41.JZD had raised some questions on the assets and liabilities of Super Cruise and Pine Valley on 13 August 2008 before signing the Framework Agreement. Lieu had also provided some answers as supported by some documentation on 14 August. 42.JZD continued with the due diligence after the signing of the aforesaid agreements and security documents. It pleaded in the re-re-amended counterclaim that there were 3 land title issues relating to 3 areas occupied and used by Pine Valley that it regarded as problematic. The 3 matters are pleaded in paragraph 61 of the counterclaim as follows:
43.The first problem relating to the 200 mu land was in fact not mentioned in the due diligence correspondence until after 31 December 2008. The second problem of the mountain slope land owned by Sanli Village was first identified by JZD in a letter to Lieu dated 13 August 2008. Regarding the third problem relating to the land over the reservoir, JZD’s lawyer Madam Zhang had on as early as 20 October proposed a draft lease for execution between Pine Valley and the water authority. 44.JZD’s lawyers on 20 October requested the provision of certain documents for their consideration for the due diligence. Super Cruise complied with the request by providing a number of documents on 23 October. Extension of time for due diligence 45.29 October came and went, but JZD did not issue any certificate of satisfaction with the due diligence or certificate of withdrawal pursuant to clause 7.2 of the Framework Agreement. Nevertheless, nobody said anything about the deadline for completion of the due diligence. Lieu also did not say that under clause 7.2, JZD was deemed to have been satisfied with the result of due diligence. This was so because both sides knew that the due diligence was still continuing. This was clearly demonstrated by the subsequent correspondence between the parties. 46.Furthermore, if Lieu should rely on the deeming provision, that could force JZD to issue a notice of withdrawal under clause 7.2 by relying on clause 3.2.2(i) of the Framework Agreement. In that event, Lieu would have to repay the earnest money with interest at the best lending rate of the Hong Kong Bank no later than 31 December 2008. In the light of Lieu’s then financial condition as revealed in the due diligence of Super Cruise, he obviously did not have the funds to effect the repayment. 47.On 7 November, JZD’s lawyer Madam Zhang revised and re-circulated the draft lease regarding the reservoir land to all concerned. Then Wayne Lieu on 13 November sent an email on behalf of Lieu to one Mr Y K Poon, the then financial controller and company secretary of JZD. He said in the email “… on due diligence work progress, please confirm with your lawyers … and advise what are the outstanding items/issues requiring our attention in order to meet the requirement of Securities and Futures Commission (SFC).” This clearly indicated that Lieu was contented with the continuation of the due diligence and was cooperating with it despite the passing of the deadline and the deeming provision in clause 7.2. 48.JZD replied on 14 November and raised mainly a number of loans due to Super Cruise’s director and outsiders. Wayne Lieu replied on 17 November by referring to clause 2.2 of the Framework Agreement which provided for the deduction of all outstanding loans from the purchase price. JZD responded also on 17 November and said that the due diligence had not been completed because Lieu had not provided the various loan documentation and letters confirming the outstanding amounts. The letter further said that the particulars of the documentation and outstanding debts had to be listed in the due diligence report and the sale and purchase agreement. Hence, JZD repeated its request for the documentation. JZD’s Hong Kong solicitors repeated in a letter dated 18 November the request for the loan documentation for the purpose of the due diligence. 49.Though the parties had mentioned about the loans again in subsequent correspondence, the provision of loan documentation did not seem to be an issue of real concern to JZD. It was not mentioned in the defence and counterclaim at all. I would therefore make no more mention about it. 50.Since the due diligence exercise was still continuing with the collaboration of Lieu, the 30-working-day time limit for its completion under clause 7.1 must have been extended. The extension must have applied to the date for JZD to issue a certificate of satisfaction or withdrawal or for JZD to be deemed to be satisfied with the due diligence under clause 7.2. Lieu had also elected not to invoke the deeming effect in clause 7.2 on the passing of 31 December 2008. The extension of the date under clause 7.2 would also mean the extension of the date for JZD to exercise its rights under clauses 3.2.1, 3.2.2 and 3.2.5. The deadline of 31 December 2008 in clauses 3.2.1 and 3.2.2 for Lieu to repay the earnest money with interest was likewise extended. The same applied to the payment deadline in clause 3.3 the default of which is an event of default under the share charge. 51.However, the extension of time could not have been indefinite. I think when the due diligence should reasonably have been completed, it would then be open to Lieu to put JZD on election on what to do under clause 7.2 and to act accordingly within a reasonable time thereafter. This time would also depend on whether Lieu was willing to allow the due diligence to continue. If JZD should, when put to election, decide to issue a certificate of withdrawal and demand the earnest money back with interest, Lieu would have to make payment within a reasonable time after the demand so as to avoid an even to default under clause 3.3 and JZD’s exercise or rights under the share charge and the loan assignment. JZD could also act under clauses 7.2, 3.2.1 or 3.2.2 at any time before it was put to election by Lieu (see Ng Chek Kwok v Kiu Wai Ming (1992) 1 HKLR 5). (Since I take the view that the earnest money is not forfeitable by Lieu as I will explain below, JZD could also have asked for the money back even if it should fail to do so within a reasonable time after the completion of due diligence, expiry of the Framework Agreement or after it had been put to election by Lieu.) 52.On 19 November, Lieu wrote to Huang and responded to JZD’s suggestion of paying the smaller sum of RMB172 million for 80% shares of Super Cruise. Lieu said that in the light of the amount offered, which was the result of the drastic downturn of the world economy, he offered to increase the shares to be sold from 80% to 90%. Lieu further asked JZD to consult its lawyers on the existing situation of the leased mountain slope of Pine Valley and to accept the status quo rather than to request the Sanli Village Committee to sign a new lease. He said that a new lease would alter the then favourable lease terms. He ended the letter by requesting JZD to speed up the necessary procedure and close the deal before the end of the year. 53.JZD’s lawyer, Madam Zhang circulated another draft lease of the reservoir land on 10 December to all concerned. 54.On 18 December, Wayne Lieu wrote to Y K Poon acknowledging receipt of a draft sale and purchase agreement. He also said that he understood JZD’s lawyers had completed the due diligence to reach the final negotiation stage of negotiation for the sale and purchase agreement and he looked forward to the successful completion of the deal. But he did not refer to clause 7.2 of the Framework Agreement or ask JZD to issue a certificate of satisfaction or assert that JZD’s satisfaction with the due diligence had been deemed. He merely expressed his understanding that the due diligence had been completed and he hoped to have the sale and purchase agreement signed by 31 December 2008. That was the target date provided in clause 13.1 of the Framework Agreement. Completion of due diligence 55.If JZD’s purpose in conducting the due diligence was to verify all the assets and liabilities including debts of Super Cruise and Pine Valley, find out whether they had any legal or tax problem or risk of litigation and to get to know their management team, I think this exercise should have been completed sometime before 31 December 2008. The pleaded first land title problem relating to the 200 mu land had not been mentioned in the correspondence until after December 2008. The second and third pleaded land title problems were known to JZD before the end of October. 56.Regarding the reservoir land in the third pleaded problem, Pine Valley had entered into agreements of usage on 22 August 1996 and 17 March 1997 with a Doumen County Wushan Lianwei Project Management Department (斗門縣五山聯圍工程管理處). But JZD took the view that this department did not have the right to lease the reservoir land to Pine Valley and it was the local water authority responsible for the reservoir that had such right. JZD thus assisted Lieu to liaise with the water authority which promised to enter into a lease over the reservoir land with Pine Valley. JZD’s lawyer Madam Zhang had also on 20 October 2008 circulated the draft lease for the reservoir land to all parties concerned. 57.Regarding the mountain slope land owned by Sanli Village in the second pleaded problem, JZD had prior to 19 November 2008 asked Lieu to procure a fresh lease between Pine Valley and the Sanli Village Committee which would have a term coterminous with the business period of the golf club. This lease problem was first identified in JZD’s letter to Lieu and dated 13 August 2008. Lieu’s position was that the golf course land had a 50-year lease and would be coterminous with the business period of the club. It was the land where the gun club stood that was rented from the villagers for a 10-year term (Lieu’s solicitors later said in a letter dated 17 April 2009 that there were 2,700 mu such land and all but 108 mu had lease term coterminous with the business period of Pine Valley whilst the lease for the 108 mu would expire in 2015 but had renewal provisions). Hence, this problem was known to JZD even before the signing of the Framework Agreement. 58.It turned out that JZD did not accept Pine Valley’s lease over the 108 mu land as satisfactory and insisted that Lieu should enter into a new lease with Sanli Village Committee for the mountain slope. JZD also provided a draft lease to Lieu to lengthen the term for this 108 mu on the slope so that it would be coterminous with the neighbouring land. 59.Regarding the 200 mu free use land in the first pleaded problem, JZD all along knew that it was land resumed by Doumen County Government and injected into Pine Valley as capital contribution for a 10% interest in Pine Valley which interest the government later sold to Lieu. This land had a land use certificate issued by the Doumen County Branch of the National Land and Resources Bureau. JZD raised a problem about this land in its letter of 13 August. That was not the same problem as now expressed in the counterclaim. Lieu then addressed to that problem in his reply of 14 August. 60.However, the villagers of Sanli Village suddenly asserted a new claim by a letter to Pine Valley and dated 23 December 2008. They asserted that this land was occupied by Pine Valley illegally. It is this issue that JZD now relies on in the counterclaim. But this issue created by villagers did not appear to have any basis. Lieu’s solicitors had by a letter dated 30 December 2008 to the villagers clarified the situation. They made it clear that Pine Valley had a government land use certificate for the land. 61.This issue was, from the standpoint of the Doumen Branch of National Land and Resources Bureau, also a non-issue. The bureau issued a letter dated 12 February 2009 to the People’s Government of Doumen confirming that Pine Valley had a land use certificate for this land and the villager’s claim for compensation should be addressed to the local county government. 62.This issue was in fact not mentioned by JZD in the correspondence on the due diligence until shortly before 11 March when JZD mentioned it to Lieu. Lieu’s solicitors then explained the situation in a letter dated 11 March to JZD. JZD’s solicitors replied by a letter dated 12 March and only made a general and unparticularised allegation on Pine Valley’s acquisition of this land. The problem on this 200 mu land thus arose after JZD had completed the due diligence. It was also without basis. 63.JZD thus had before 31 December 2008 learnt of the then existing problems of the lands occupied by Pine Valley. The due diligence should have been completed insofar as land titles were concerned. This was so regardless of whether JZD was happy with such titles. In this action, JZD is only relying on land title problems allegedly discovered in the due diligence and not any other problem. Rectification of title problems 64.JZD was obviously keen to complete the sale and purchase. That was why it did not issue a certificate of withdrawal under clause 7.2 despite the discovery of the title problems. But it required a good due diligence report to show to the shareholders to secure their approval for the purchase. A good due diligence report would require the rectification of the land title problems. The rectification required Pine Valley to enter into a lease for the reservoir land with the local water authority and another lease of the appropriate term for the 108 mu of land on the mountain slope. 65.JZD in fact provided assistance to Lieu and Pine Valley in securing these 2 leases. JZD had liaised with the water authority and provided several drafts of the lease for the reservoir land. Mr Wu Wai of Pine Valley also had meetings with the water authority on this matter. One of the meetings took place on 19 December wherein Mr Wu discussed the draft lease with the water authority. He advised JZD’s lawyer Madam Zhang about this meeting by an email of the same date. JZD also provided a draft lease for the 108 mu land on the slope. Its lawyer also accompanied Lieu’s staff to attend a meeting with the Sanli Village Committee. But the villagers were not cooperative. Rumour has it that they were on the side of Huafa and assisted Huafa to sabotage JZD’s negotiation with Lieu. Extension of the Framework Agreement 66.31 December 2008 came and went. Nobody referred to the expiry of the Framework Agreement under its clause 11. Lieu also did not return the earnest money under clause 3.2.1 or 3.2.2 because JZD did not issue any certificate of withdrawal under clause 7.2 and then ask him to repay it under clause 3.2.1 or 3.2.2. There was then also no allegation under clause 3.2.5 that Lieu had breached the Framework Agreement resulting in the transfer not taking place. Hence, JZD also could not exercise any right under the share charge and the loan assignment. 67.On the other hand, Lieu also did not put JZD to election on what to do under clause 7.2 despite the due diligence should have been completed. The obvious reason is that JZD, if asked to make the election under clause 7.2, might have no choice but to elect to withdraw and demand the earnest money back as Lieu knew that JZD was not satisfied with the land titles and no good due diligence report could be produced. In that event, Lieu would have to face the difficulty of raising the money to repay JZD. 68.Despite the passing of 31 December 2008, the parties just continued with the negotiation of the terms of sale and purchase within the scope of the Framework Agreement. They also worked together to try to rectify and make good the land titles. Both sides wanted to accomplish the sale and purchase of the 80% shares of Super Cruise. 69.In the correspondence, the due diligence then seemed to have assumed an extended meaning and significance of not only to verify the nature and effect of the land titles, but also to rectify the problems with a view to produce a good due diligence report. The time for completing the due diligence and the life of the Framework Agreement were both extended by the conduct of the parties. 70.On 12 January 2009, Wayne Lieu sent an email to return to Y K Poon the draft sale and purchase agreement with revisions. 71.On 14 January 2009, Wayne Lieu sent another email to Y K Poon advising him that Lieu’s lawyers would also take part in the negotiation of the sale and purchase agreement. This yet again shows that the parties continued to conduct vis-à-vis one another on the basis of the Framework Agreement. 72.Wu Wei sent a further email to Madam Zhang on 17 January 2009 advising her of another meeting between him and the water authority on 16 January in which both sides agreed on the terms of the lease for the reservoir land. Lieu fixed time to expire on 9 February 2009 73.However, Lieu became impatient on 23 January 2009. He wrote to Huang on that day and complained that JZD’s lawyers had taken an intolerable amount of time to conduct the due diligence even though the Framework Agreement required it to be completed within 30 working days. He said he was not prepared to entertain anymore request form JZD’s lawyers. He also said that the exclusivity in (clause 9 of) the Framework Agreement had expired and other parties interested in Pine Valley had appeared. He asked JZD to sign the sale and purchase agreement before 9 February 2009 failing which he would regard JZD as having abandoned the project. I think this can be regarded as Lieu’s notice to fix 9 February 2009 as the new limit of validity of the Framework Agreement. That would in effect also be the new deadline for completion of the due diligence under clause 7.1 and JZD’s election under clause 7.2. 74.Huang replied on 10 February 2009. He denied of having delayed the due diligence. He instead said that JZD had pushed back the due diligence to give Lieu time to rectify the title problems on the mountain slope and the reservoir land. He also said that the agreement on price and rectification of the title problems were the prerequisites for signing the sale and purchase agreement. He then referred to the differences between the parties on the terms of the sale and purchase agreement and suggested to suspend the negotiation until after the new lease for the reservoir land had been signed. He imposed a deadline on 28 February 2009 for Lieu’s rectification of the title problems and urged Lieu to negotiate and sign the sale and purchase agreement as soon as possible. 75.JZD did not act pursuant to clause 7.2 on or before 9 February. It considered that the due diligence had not been completed as it was aiming at producing a good due diligence report. However, this view was farfetched as Lieu had made it quite clear in his letter of 23 January that he was not going to entertain anymore request. Hence, JZD could not insist that Lieu should do anything to improve the result of JZD’s due diligence. It was then for JZD to decide whether to go ahead with the deal. JZD could issue a certificate under clause 7.2 to withdraw from the transaction and ask for the earnest money back. Lieu’s offer to resume negotiation 76.Lieu’s solicitors responded to Huang’s letter on 20 February. They referred to the expiry of the 30 working days for completion of the due diligence and asserted that JZD’s satisfaction with the due diligence had been deemed by the expiry date. They also said the Framework Agreement had ended on 31 December 2008 and there was no more exclusivity for JZD in the negotiation for the sale of the Super Cruise’s shares. They concluded by saying that if JZD intended to acquire the Super Cruise’s shares according to the Framework agreement, Lieu was prepared to negotiate with JZD and to sign the sale and purchase agreement within a few weeks. This letter completely ignored the extension of time for completing the due diligence and the lengthening of the life of the Framework Agreement. It however contained an offer to resume negotiation per the Framework Agreement. 77.This offer must have embodied a term that if the negotiation be resumed, then JZD should not ask for the return of the earnest money in the meantime and the time for JZD to issue a certificate of withdrawal under clause 7.2 be extended until the conclusion of the negotiation. Otherwise, it would be open to JZD to demand the money back whilst negotiation was going on. The money then could not be applied as the 1st instalment payment under clause 2.4 of the Framework Agreement should the negotiation be successful. 78.It appears that despite Lieu’s letter of 23 January, he was still desirous of negotiating with JZD and cooperating with them to improve the land titles for a good due diligence report. His solicitors by a letter dated 11 March advised JZD of two matters. They first provided JZD with a copy of the letter dated 12 February from the Doumen Branch of the National Land and Resources Bureau which stated that Pine Valley had a land use certificate for 200 mu lands. They then advised JZD that the water authority had signed the new lease for the reservoir land and had given it to Pine Valley. They then repeated the offer to JZD to resume negotiation in accordance with the Framework Agreement but non-exclusively. 79.As I have pointed out above, the offer to resume negotiation embodied a term extending the time under clause 7.2 for JZD to withdraw from the negotiation and it could not demand Lieu to return the earnest money in the meantime. The assertion by Lieu’s solicitors of non-exclusivity in negotiation did not affect the terms of the sale and purchase agreement to be negotiated. It was no more than a threat to JZD to quickly resume the negotiation. 80.On 12 March, the solicitors of JZD replied to the letter of 20 February from Lieu’s solicitors. They complained that Lieu still had not presented the new lease for the reservoir land to the relevant government department for execution. They also complained that Lieu had not diligently negotiated with Sanli Village for the lease proposed by JZD for the mountain slope which failure led to the villagers’ refusal to renew the lease of that land for Pine Valley. They said that if these problems were not rectified, JZD could not be satisfied with the due diligence. They also referred to the previous cooperation of the parties for solving the title problems. They said that it was contrary to the actual circumstances and the spirit of cooperation for JZD to have issued a notice of dissatisfaction with the due diligence and to withdraw. 81.They also referred to the cooperation on the due diligence and negotiation on the terms of the sale and purchase agreement in January 2009 and asserted that there was no more deadline for the due diligence. They blamed Lieu for the deadlock on negotiation for the sale and purchase agreement. They however did not take up the offer to resume negotiation, but appeared to consider that the Framework Agreement was still in force. Resumption of negotiation 82.On 2 April, JZD wrote to Lieu and suggested that parties should meet as soon as possible to discuss the sale and purchase and implement the same. That was really taking up Lieu’s offer to resume negotiation. Lieu replied on 7 April that the parties could negotiate to resolve the difference. He further suggested that the parties could leave the negotiation of the terms of the sale and purchase agreement to their solicitors and they should negotiate on the agreement of cooperation. That was a suggestion to start negotiating for the shareholders agreement as referred to in clause 13.1 of the Framework Agreement. 83.JZD replied on the same day and agreed to negotiate the terms of sale and purchase. The parties eventually met on 16 April. This meeting was conducted per the Framework Agreement. Hence, it was on the basis that the Framework Agreement was in force. The time for JZD to issue a certificate of withdrawal under clause 7.2 was thus extended. The time for JZD to act under clause 3.2.1 and 3.2.2 was likewise extended. The earnest money was still kept by Lieu and would be used as the 1st instalment payment under clause 2.4 in the event of a successful negotiation. 84.On 5 May, JZD’s solicitors wrote again and said that Lieu had not responded to JZD’s proposal conveyed in the meeting of 16 April. They suggested a final meeting on 7 May for an agreement to be made failing which the negotiation would be treated as a failure. Lieu’s solicitors replied on 6 May and suggested flexibility in the negotiation from both sides. They further suggested a postponement of the meeting so that JZD could consider a term for provision of security by Lieu for his performance of the sale and purchase agreement. 85.There were then some further correspondence, but the meeting eventually did not take place. JZD’s demand for return of earnest money and the notice of revocation by Lieu and Chen 86.On 27 May, JZD issued a demand letter to Lieu. JZD said that Lieu had not complied with the Framework Agreement to supply the information on all aspects of the business of Super Cruise to complete the sale and purchase. JZD said it still had doubts about the substantive problems of Super Cruise in the aspects of finance, legal, operational or development. They therefore demanded Lieu to return the Hong Kong dollar equivalent of the earnest money of RMB26 million within 5 working days. This demand was made in terms of clause 3.2.1 which indicated JZD’s dissatisfaction with the result of the due diligence on Super Cruise. It was in effect a notice of withdrawal under clause 7.2 and a demand under clause 3.2.1 for return of the earnest money. 87.Lieu did not comply with the letter of demand. His solicitors responded on 2 June by sending JZD’s solicitors a notice of revocation. The notice alleged that JZD had breached the Framework Agreement and the confidentiality undertaking. It alleged that JZD had breached the Framework Agreement in failing to complete the due diligence within 30 working days from 10 September and failing to issue any certificate under clause 7.2 of the Framework Agreement. It also alleged the breach by JZD of the confidentiality undertaking. It also asserted that the Framework Agreement had expired on 1 January 2009. It then alleged that JZD’s breaches had caused enormous loss and damage to Lieu which far exceeded the earnest money. Hence, the earnest money was set-off by part of the loss and damage. The share charge was therefore no longer effective. All the documents and resolutions signed by Lieu and Chen and delivered under clause 3.2 of the share charge were also purportedly revoked. 88.JZD’s solicitors replied on 2 June and denied the allegation of breach by JZD. 89.Lieu did not return the earnest money. JZD took that as an event stipulated in clause 3.3 of the Framework Agreement. I have already mentioned that the time for JZD to act under clause 3.2.1 or 3.2.2 had been extended to beyond December 2008 and resumed in April 2009. The time for repayment under clause 3.3 therefore must have been extended to a reasonable time after the demand. Lieu never complained that 5-working day period was too short. His solicitors merely said that he was not obliged to return the money as it had been set off. JZD exercised the rights under the share charge 90.An event within the scope of clause 3.3 was an event of default under the share charge. Y K Poon of JZD wrote on 3 June 2009 pursuant to clause 2.1 and 8.1 of the share charge and demanded Lieu to repay the earnest money with interest within 7 working days, failing which, JZD would enforce the share charge without further notice. JZD appointed receivers over the charged shares of Super Cruise on 20 July 2009. Lieu’s arguments for forfeiture of the earnest money 91.Mr Kwok, counsel for Lieu, maintained that the time for the due diligence and the life of the Framework Agreement had not been extended. He submitted that after the expiry of the Framework Agreement after 31 December 2008, JZD had nothing to rely on to demand the return of the deposit. Hence, JZD could not have demanded the return of the same in May 2009. Mr Kwok made this argument on the ground that there was no written variation of the terms of the Framework Agreement under its clause 13.2. This is a narrow view. I take the view that if the parties had in fact varied the terms of the agreement by their conduct but did not record the variation in writing, this clause could not have stopped the variation from taking effect. 92.Mr Kwok, having submitted that JZD could not have demanded the return of the earnest money after 31 December 2008, further submitted that Lieu was not obliged to return the money to JZD and could keep it indefinitely. He said there was practically no difference from the money having been a deposit that had been forfeited by Lieu. 93.Mr Kwok further argued that the earnest money was indeed a deposit and forfeitable when JZD did not issue a notice to withdraw from the negotiation or to complete the sale and purchase of the 80% shares of Super Cruise at RMB200 million or to sign a sale and purchase agreement by 31 December 2008. 94.He reached this conclusion by construing clauses 2.1 and 2.2 as provisions defining two different purchase prices. He submitted that the price defined in clause 2.1 is called “the transfer price” and is fixed at RMB200 million subject to deduction of debts according to clause 5 and nothing else. The price defined in clause 2.2 is called “the actual transfer price” and should be the price as stated in the sale and purchase agreement. He then took the Framework Agreement as a binding sale and purchase agreement of the 80% shares at “the transfer price” of RMB200 million less the deduction of debts according to clause 5 unless the parties should sign the sale and purchase agreement by 31 December 2008. 95.Counsel then submitted that since JZD had failed to issue a notice to withdraw or to complete the sale and purchase of the 80% shares at the “the transfer price” of RMB200 million or to sign a sale and purchase agreement by 31 December 2008, JZD had thereby breached the binding Framework Agreement resulting in the forfeiture by Lieu of the deposit of RMB26 million. 96.I am of the view that this submission is based on an erroneous interpretation and twisted construction of clauses 2.1 and 2.2. Clause 2.1 provides that the transfer price should not exceed RMB200 million. The actual figure would be subject to or dependent upon the result of the due diligence by JZD and the result of the parties’ negotiation for the sale and purchase agreement. No doubt, clauses 2.1.1 to 2.1.3 further provided that the basis for fixing the price under clause 2.1 should be the absence of any unfinished litigation, complete discharge of all debts and that the only asset of Super Cruise being Pine Valley. But this is not to say that the price was fixed at RMB200 million and only subject to deduction of debts as provided in clause 2.1.2 or 5. It is also gravely wrong to suggest that the result of the due diligence will have no effect on the amount of price but will only affect JZD’s decision to buy or not. Counsel also ignored the provision in clause 2.1 of the mechanism of negotiation for the transfer price. 97.The straightforward and correct interpretation of clauses 2.1 and 2.2 is that there would be one transfer price to be determined by the result of the due diligence and negotiation of parties and such price would be on the basis of no debt due to outsiders, no pending litigation and Pine Valley being Super Cruise’s only asset. I therefore reject counsel’s submission that the Framework Agreement is in itself a binding sale and purchase agreement with the price fixed at RMB200 million. The Framework Agreement is not a binding agreement for the sale and purchase of the shares. Is the earnest money a forfeitable deposit? 98.Separate and independent from the above argument, I also consider the question of whether the earnest money is in the nature of a deposit liable to be forfeited within the terms of the Framework Agreement. The only forfeiture provision in the Framework Agreement against JZD is clause 3.2.4 which is contingent on JZD’s failure to abide by the sale and purchase agreement. But the parties failed to arrive at such an agreement and this clause cannot apply. 99.The earnest money was paid by JZD to show its sincerity in entering into the negotiation for the sale and purchase. If the negotiation did not bear fruit, it is prima facie refundable to JZD (see Chitty on Contracts, 30th edn, para 29-064). The fact that the share charge described the money as a deposit does not alter the nature of this money as that is defined by the Framework Agreement and not by the share charge. 100.Miss Chan, SC for JZD also referred me to Chillingworth v Esche [1924] 1 Ch 97. That is a case where a purchaser agreed to buy certain freehold land subject to contract and paid £240 as a deposit and part payment of the purchase price. The parties negotiated for a proper contract. The vendor then signed the contract but the purchaser did not. The purchaser then asked for the return of the deposit. The Court of Appeal held in favour of the purchaser. Pollock MR said at pp 106-107:
The same reasoning applies here. I therefore hold that the earnest money is not a deposit liable to forfeiture and Lieu could not have forfeited it. Has JZD pleaded a proper demand? 101.Mr Kwok also takes the point that JZD’s cause of action is “total failure of consideration” (see paras 12-10 to 12-15, Goff & Jones, The Law of Unjust Enrichment, 8th edn). He then submitted that JZD had not pleaded any cause of action in the counterclaim for the return of the money. He further submitted that JZD could not have pleaded a cause of action in reliance of the Framework Agreement as that had already expired after 31 December 2008. I have already given my reasons on why the Framework Agreement had not expired after 31 December 2008. I take the view that JZD can rely on the agreement in seeking the return of the money. 102.Regarding the cause of action for JZD’s demand of the money, I referred to it as for “money had and received” (see paras 1-29 and 2-41 of Goff & Jones) in the course of counsel’s submissions. However in pleading claims of unjust enrichment, the claimant needs only state the nature of the claim and the facts on which he relies (see para 1-30 of Goff & Jones). JZD has referred to the earnest money in the re-amended defence and counterclaim. JZD denied that Lieu had any right to forfeit it. JZD pleaded in alternative that Lieu had waived the right to forfeit it. JZD further pleaded the demands for repayment by the letters of 27 May and 3 June 2009. Hence, the nature of the claim and the facts in support of it are pleaded. I therefore hold that Mr Kwok’s pleading point also fails. Election by Lieu, estoppel and extension of time 103.JZD has pleaded that the parties have by conduct extended the time limits under clauses 3.2.1 and 3.2.2 to a reasonable time after completion of the due diligence. JZD pleaded further or alternatively that Lieu had elected to treat the due diligence as continuing and waived his right to insist on JZD issuing a notice of satisfaction or notice of withdrawal by the expiry of 30 working days from 10 September and/or estopped from asserting that JZD was obliged by such deadline. 104.On election and waiver, Ms Chan, SC, for JZD referred to the “Kanchenjunga” [1990] 1 Lloyd’s Rep 391 at 399 where Lord Goff said:
Ms Chan thus submitted that Lieu has made the election to treat the due diligence as continuing. I agree that the facts as summarized above indeed show that Lieu has so elected. 105.Mr Kwok, however, submitted extensively on the criteria of promissory estoppel and that such estoppel can only be used as a shield and not a sword. I think a careful reading of the re-amended defence and counterclaim shows that JZD pleaded the estoppel more as an assertion that Lieu should not be allowed to renege from his election and agreement by conduct to continue with the due diligence despite expiry of time than as a plea of promissory estoppel. 106.Mr Kwok also referred to Lieu’s letter dated 23 January and his solicitors’ letter dated 20 February. I have already said that Lieu’s letter of 23 January should have fixed 9 February as the new deadline for the due diligence and limit of validity of the Framework Agreement. That new deadline and time limit was however overtaken by Lieu’s subsequent resumption of negotiation within the scope of the Framework Agreement that created further extension of time for JZD to make its election under clause 7.2. Lieu had done nothing to bring that extension to an end. 107.Regarding the letter by Lieu’s solicitors of 20 February, I have already opined that it was written in ignorance of the previous extension of time for the due diligence and the life of the Framework Agreement. The stance taken in that letter is misconceived though it repeated Lieu’s offer to resume negotiation. 108.Mr Kwok’s main argument is against extension of time. He argued strenuously that the due diligence had to be completed by 29 October 2008 and the Framework Agreement expired after 31 December 2008. His reason was that there was no variation in writing of the Framework Agreement made under its clause 13.2. This argument permeated his written submissions extensively. However I disagree with it and have ruled against it above. Demand for return of earnest money under cl. 3.2.2(i) 109.Even if I am wrong on my conclusion that time for the due diligence and/or expiry of the Framework Agreement had been extended and that JZD should have been deemed to be satisfied with the due diligence, I still hold that JZD was entitled to issue a demand for the return of the earnest money under clause 3.2.2(i) of the Framework Agreement at any time after the negotiation or resumed negotiation had failed. This is so as the earnest money is not forfeitable and must be repaid upon demand. 110.I also hold that the demand on 27 May 2009 could have been such a demand though the grounds stated are those in clause 3.2.1. Once the earnest money is not forfeitable and returnable upon demand, then the demand must be met despite the wrong ground has been alleged. The reason being that no ground need be made and the demand cannot be invalidated by a wrong ground. 111.However, if the demand should have been made under clause 3.2.2(i), then the amount of interest payable would be at the best lending rate of the Hong Kong Bank as provided in clause 3.2.2. Judgment 112.My review of the correspondence above clearly shows an extension of time by the conduct of the parties. I therefore hold that JZD was entitled to make the demand on 27 May under clause 3.2.1 or alternatively 3.2.2(i) of the Framework Agreement and on 3 June under clauses 2.1 and 8.1 of the share charge. The failure by Lieu to return the money justified JZD’s exercise of its rights under clauses 2.1, 8.1(1) and (2) of the share charge as against Lieu and Chen. 113.When I gave judgment on the seventh of April, I overlooked the liability of Chen under her covenant in clause 2.1 of the share charge. I do correct my slip and order that Chen is jointly and severally liable with Lieu to pay JZD the Hong Kong dollar equivalent of RMB26 million with interest at judgment rate from the date of writ to the seventh of this month. The order for delivery up of documents and damages to be assessed should also be addressed to Chen as well. 114.Furthermore, Lieu and Chen were not entitled to issue the notice of revocation to JZD on 2 June to revoke the signed documents delivered under clause 3.2 of the share charge as the earnest money was still outstanding. The purported revocation therefore amounted to a breach by Lieu and Chen of clauses 3.4 and 5.4 of the share charge. That amounted to a default by them of clause 8.1(3) of the share charge which also justified JZD’s exercise of the rights in the share charge against them. For the same reasons, I hold that JZD is entitled to enforce the Loan Assignment against Van Shipping. 115.In consequence of these decisions. I would dismiss Lieu’s claim for discharge or setting aside of the share charge, for damages for enforcement of the share charge or set-off of the earnest money. 116.Regarding the question of interest on the earnest money, clause 3.2.1 provided that the earnest money be repaid with interest at the rate of a one year loan. This provision is unclear. I did not give effect to it. I ordered the judgment rate from the date of writ 23 July 2009) on the seventh of this month. I would now order that interest be payable on the earnest money from 27 May 2009 to the seventh of this month at the best lending rate of the Hong Kong bank. This is in line with clause 3.2.2 and lower than the judgment rate. I use this lower rate in order to be fair to Lieu and Chen as I suspect that there was a slip of hand in the drafting of the supplemental agreement dated 10 September 2008 which restricted the best lending rate of the Hong Kong Bank to clause 3.2.2 only when the intention was to apply it to clause 3.2.1 as well. 117.On the question of costs, the Loan Assignment provided that Van Shipping should pay costs on the indemnity scale and there is no reason to depart from that. 118.I repeat below the judgment I gave on 7 June with corrections indicated above:
Mr Kwok Kam Kwan and Mr Freddy Chu, instructed by Wong Poon Chan Law & Co, for the plaintiff (by original action) and the 1st, 2nd and 4th defendants (by counterclaim) Ms Linda Chan, SC and Ms Elizabeth Cheung, instructed by Wilkinson & Grist, for the defendant (by original action) and the plaintiff and the 3rd defendant (by counterclaim) Please refer to CACV152/2012 for the relevant appeal(s) to the Court of Appeal. | |||||||||||||||||||||||||||||||||||||||||
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