Commercial Action2006

WANG RUIYUN v. GEM GLOBAL YIELD FUND LTD

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CACV147/2010WANG RUIYUN v. GEM GLOBAL YIELD FUND LTD
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75023-EN-2011-01-27

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HCCL 16/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 16 OF 2006

____________

BETWEEN

	WANG RUIYUN	Plaintiff
and
	GEM GLOBAL YIELD FUND LIMITED	Defendant

____________

Before: Hon Reyes J in Chambers

Date of Hearing: 27 January 2011

Date of Judgment: 27 January 2011

______________

J U D G M E N T

______________

1. Within the GEM Group, there are at least 2 companies with the name “GEM Global Yield Fund Limited”. There is the Defendant company (GEM Nevis) incorporated in Nevis. There is also a company (GEM Cayman) incorporated in the Cayman Islands.

2. Mr. Wang obtained a default judgment against GEM Nevis for $128,351,291.56. The judgment debt remains unpaid. Mr. Wang has therefore been searching for assets of GEM Nevis to garnishee.

3. A search of the records of the Hong Kong Stock Exchange (HKSE) revealed that a company of the Defendant’s name held shares in Kaisun Energy Group Ltd. (formerly Challenger Group Holdings Ltd.) and shares in China Timber Resources Group Ltd. Mr. Wang also found a public announcement by Kaisun stating that Joy Harvest Ltd. was a wholly-owned subsidiary of a company of the Defendant’s name.

4. Mr. Wang applied to the Master for a charging order nisi to be imposed on the Kaisun, China Timber and Joy Harvest shares which the researches of his lawyers had identified. The Master made a charging order nisi and directed that, unless cause was shown otherwise, the charging order nisi would become absolute.

5. Note that, by the time of the hearing before the Master, Mr. Wang’s solicitors had ascertained that the relevant company had long ago sold its Kaisun shares and held China Timber warrants as opposed to China Timber shares. Accordingly, the Master imposed the charging order nisi on the relevant China Timber warrants and Joy Harvest shareholding.

6. In these proceedings, GEM Nevis and GEM Cayman apply for the charging order nisi to be set aside. They do so on the basis that the assets charged do not belong to GEM Nevis, but GEM Cayman.

7. The GEM companies stress that there can be no dispute over the ownership of the assets by GEM Cayman (rather than GEM Nevis). They point out, for instance, the even the HKSE records which Mr. Wang’s lawyers consulted specifically gave a Cayman Islands address for the company identified as owning the Kaisun and China Timber securities. Further, the Company Registry’s records for Joy Harvest (which Mr. Wang’s lawyers also looked at before seeking a charging order nisi) gave a Cayman Islands address for the GEM entity holding Joy Harvest’s sole issued share.

8. Before they obtained the charging order nisi, Mr. Wang’s solicitors acknowledge that they were aware that the relevant assets were held by a GEM entity with a Cayman Islands address. But, because of the identity in company names, the solicitors thought that GEM Nevis might have transferred its registration from Nevis to the Cayman Islands. This belief of Mr. Wang’s solicitors has, however, been shown to have been wrong. The GEM entities are distinct legal persons.

9. Mr. Ronny Tong SC (appearing for Mr. Wang) argues that there are nonetheless grounds for suspecting that GEM Nevis has a beneficial interest in GEM Cayman’s assets.

10. First, Mr. Tong points to the “close connection” between GEM Nevis and GEM Cayman.

11. There is obviously a close connection between the two companies. They not only share the same name. It is accepted that they both belong to the GEM group. But I am unable to infer from this circumstance alone that GEM Nevis has a beneficial interest in GEM Cayman’s assets.

12. It is certainly a peculiar circumstance that both companies have the same name. Indeed, it appears from the further researches of Mr. Wang’s solicitors that there may be other companies in the GEM group with the same name as GEM Nevis and GEM Cayman. But these other companies have apparently been registered in jurisdictions other than Nevis or the Cayman Islands.

13. Sometimes, a similarity in corporate names is employed to mislead persons into dealing with a company X in the belief that the impressive assets of another company X’ are those of X. In such situation, where a person has been induced to believe that X is more creditworthy than it actually is and that person extends credit to X accordingly, there may be grounds for (say) piercing the corporate veil and treating the identically named companies within a group as one and the same.

14. But this is not that situation. There is no evidence of a representation of the type just described having been initially made to Mr. Wang so that he gave credit to GEM Nevis under the impression that GEM Cayman’s assets belonged to GEM Nevis.

15. The evidence here is merely that, after having been awarded a judgment sum by this Court, Mr. Wang proceeded to search available databases (including that of the HKSE) to find assets apparently held in the name of GEM Nevis. It was thus only after he extended credit to GEM Nevis that Mr. Wang learned of the assets sought to be charged in this case. Mr. Wang does not appear to have been misled into dealing with GEM Nevis in the first instance as the result of that company sharing a similar name with GEM Cayman.

16. Contrary then to Mr. Tong’s submission, without more evidence, I cannot simply conclude from the “close connection” between the GEM companies that GEM Cayman “connived” with GEM Nevis to mislead Mr. Wang or any other creditor. That appears to me too big a jump in inference to make.

17. Second, Mr. Tong complains that GEM Nevis and GEM Cayman have “consistently adopted a secretive approach as to [their] corporate information and [their] transactions and public records are also kept in an obfuscating manner”. It is, for instance, unclear how precisely GEM Cayman obtained the assets sought to be charged by Mr. Wang. Mr. Tong speculates, in the absence of any evidence whatsoever on the matter, that GEM Nevis may have funded GEM Cayman's acquisition of the assets so that there might be (say) a resulting trust of the assets in favour of GEM Nevis.

18. I am far from persuaded on the evidence that the GEM companies keep their records in an “obfuscating” manner. It is true, for example, that there have been public announcements referring to a company by the Defendant’s name but not specifying whether the reference was to GEM Nevis, GEM Cayman or some other GEM entity of the like name. But I cannot infer from such circumstance alone that the omission has been deliberately done for the purposes of fraud.

19. In any event, assume for the sake of argument that the publicly available records of the 2 GEM companies are obscure.

20. This is a case where a creditor (such as Mr. Wang) seeks to establish that the asset of a third person T (such as GEM Cayman) should be charged with repayment of monies due from a debtor (such as GEM Nevis). In such situation, it is for the creditor to put forward at least a prima facie case that T’s asset is beneficially owned by the debtor.

21. Unless a creditor is able to discharge that preliminary evidential (as opposed to probative) burden, I do not think that T should be under any obligation to volunteer information about its transactions or records. It would be oppressive to T to hold otherwise.

22. That is because to hold otherwise would mean that, merely by alleging that an asset belongs to a debtor, a creditor could impose a burden on T (on the face of it, an innocent party distinct from the judgment debtor) to prove that T’s property belongs to T. That cannot be right. It would be an unwarranted intrusion on T’s rights of privacy and confidentiality.

23. In contrast, once a creditor makes out a prima facie case, T would at least have something concrete which T could rebut. The threshold of a prima facie case having been met, the evidential burden would shift to T to counter the creditor’s evidence and show cause why the charging order should not be made absolute. If T discharges this evidential burden, the ultimate probative burden would be on the creditor to establish its case.

24. The pertinent question is whether sufficient evidence has been adduced by the creditor (Mr. Wang) to indicate that the charged assets ultimately belong not to a third person (GEM Cayman) but to the debtor (GEM Nevis).

25. The fact that solicitors of the GEM companies have been (according to Mr. Tong) coy or uncooperative or that publicly available records are obscure does not seem to me sufficient to constitute a prima facie case. The GEM companies’ solicitors maintain that by showing that GEM Nevis and GEM Cayman are distinct companies they have done enough to rebut the allegations here. Everything else (the GEM solicitors say) is pure speculation on the part of Mr. Wang’s lawyers.

26. It is well-known that the information which can be obtained about Nevis or Cayman Island companies from their respective registries is sparse. That is possibly a reason why Nevis or Cayman Island shelf companies are used in commercial transactions. One deals with such companies at one’s own risk knowing that to be the case. The mere “obscurity” of the available records cannot be a ground for assuming that all Nevis or Cayman Island companies are to be treated as ipso facto suspect or fraudulent.

27. Third, Mr. Tong suggests there is something suspicious about the GEM group using different vehicles in the same name to operate in Hong Kong. He wonders “if the attempt is designed to evade ... legal obligations”.

28. I have in effect dealt with this submission in my discussion of Mr. Tong’s first and second points. Mr. Tong needs to be more concrete. His speculations do not amount to a prima facie case.

29. It is not enough to say that something (say, that GEM Nevis provided the funds by which GEM Cayman acquired assets) could conceivably be the case. At a sufficiently abstract level, everything and anything may be possible. But the Court needs something more than that. As Mr. Simon Westbrook SC (appearing for the GEM companies) observes, the Court is not here “to investigate alleged obscurities [in] the hope that something will turn up on the investigation”. See Ashita Impex Ltd. v. Leganza International Pte Ltd. and Another HCMP 1430 of 2005 (6 December 2007), at para.24, applying Megarry VC’s famous dictum in Lady Anne Tennant v. Associated Newspapers Group Ltd. [1979] FSR 298 on “surmise and Micawberism” to the context of garnishee orders nisi.

30. In my judgment, Mr. Wang has failed to establish a prima facie of GEM Nevis owning the charged assets. Had a prima facie case been shown, I would in the exercise of my discretion have ordered an issue to be tried as to the beneficial ownership of the assets. In the event, there being no prima facie case established, the charging order nisi should be discharged.

31. I will now hear the parties on costs and consequential orders.

(A. T. Reyes)
Judge of the Court of First Instance
High Court

Mr. Ronny Tong, SC and Ms. Janet Ho, instructed by Messrs Alvin Liu & Partners, for the Plaintiff

Mr. Simon Westbrook, SC and Mr. Jose-Antonio Maurellet, instructed by Messrs Gall, for the Defendant

73521-EN-2010-10-27

WANG RUIYUN v. GEM GLOBAL YIELD FUND LTD

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HCCL 16/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 16 OF 2006

----------------------

BETWEEN
	WANG RUIYUN	Plaintiff
and
	GEM GLOBAL YIELD FUND LIMITED	Defendant
----------------------

Before: Hon Stone J in Chambers (Open to Public)

Date of Hearing: 14 September 2010

Date of Judgment: 27 October 2010

-------------------------

J U D G M E N T

-------------------------

This application

1. There is before the court a summons dated 26 August 2010 issued by the defendant to set aside interlocutory default judgment, dated 6 August 2009 against the defendant as to liability, together with a consequential order that damages be assessed, with costs to be taxed if not agreed.

2. Damages subsequently were so assessed by Master de Souza, wherein by Order dated and entered 9 June 2010, it was adjudged that the defendant do pay to the plaintiff the sum of HK$128,351,291.56, together with costs of the assessment on a full indemnity basis, to be taxed if not agreed.

3. The factual background to this dispute is detailed in a judgment of this court dated 6 March 2007 pursuant to the plaintiff’s application for summary judgment, wherein it was ordered that the sum of HK$40,503,237.28 (as then had been paid into court by the defendant), together with accrued interest thereon, be paid out to the plaintiff, and is recited once more in the judgment as to the assessment of damages by the learned Master.

4. In outline, the plaintiff in this action, Mr Wang Ruiyun, a mainland investor and resident of the PRC, was in dispute with the defendant, Gem Global Yield Fund Ltd, a company incorporated in the West Indies and a member of the Global Emerging Markets Group, on the basis that the defendant fund had been in breach of its contractual obligations under a ‘put option’, whereunder the defendant had had the option of acquiring custody and authority to purchase/onsell tranches of the plaintiff’s shareholding in a company known as Bestway International Holdings Ltd, but, so alleged the plaintiff, had failed to perform its side of the bargain; in response the defendant fund was alleging, inter alia, ‘market rigging’ to which the plaintiff was alleged to have been privy: see the details outlined in paragraphs 5-17 of the Order 14 judgment dated 6 March 2007, resulting in the court ordering that the sum of HK$40.5 million odd as paid into court by the defendant to be paid out to the plaintiff; upon this summary judgment application the court further ordered that an additional sum of HK$930,412.15 (see paragraphs 77-81 of the judgment) be paid by the defendant to the plaintiff, which sum I am informed also now has been paid by the defendant.

5. However, these amounts did not represent the entirety of Mr Wang’s claim against this defendant fund.

6. By re-amendment of his pleaded claim (at paragraphs 21- 24 thereof), such re-amendment being dated 18 May 2009, Mr Wang averred that the fund also owed him in damages the sum of HK$128,347,247.00, and by paragraph 25 thereof accepted that the respective sums of HK$40,503,237.28 and HK$930,412,016 ‑ namely, the fruits of the summary judgment application ‑ should be set-off against this sum as thus claimed by re-amendment.

7. The fact of this re-amendment, and the date thereof, had significant bearing on the argument in this application, the parties being represented by Mr Simon Westbrook for the plaintiff, and Mr Ronny Tong, leading Mr Jeevan Hingorani, for the defendant.

Procedure prior to the entry of default interlocutory judgment

8. Procedurally this case was complicated by the fact that, prior to the re-amendment of the plaintiff’s Statement of Claim, by Order of this court dated 13 January 2009, Messrs Lovells, the solicitors hitherto acting for the defendant, had obtained the permission of the court to cease to act.

9. The Certificate of Service of Order for the Withdrawal of Solicitor Ceasing to Act was served on the defendant fund, whose offices are situate in Charlestown, Nevis, West Indies, by prepaid ordinary airmail, and on Messrs Alvan Liu & Partners, solicitors for the plaintiff, at their offices in Hong Kong. Thereafter, all communications to the defendant fund purportedly were ‘served’ by those acting for the plaintiff in like manner, namely by airmail to the defendant’s Charlestown address.

10. Prior to Messrs Lovells ceasing to act, by Order of the same day, that is, 13 January 2009, this court had heard an application inter partes for specific discovery by the plaintiff, and had made an order that within 14 days, the defendant serve on the plaintiff a supplemental list of documents specified in the Schedule attached to the summons, and that this supplemental list was to be verified by affidavit, with inspection to follow within 7 days of service of such supplemental list; at that hearing the representative of Lovells who was present indicated that he had no instructions on the substance of the plaintiff’s specific discovery application.

11. Immediately after making that order this court entertained Lovells’ application to come off the record, and ultimately it was the non‑compliance by the defendant with the specific discovery order as then made that was to result in the default judgment which now is sought by the defendant to be set aside.

12. A summons dated 30^th April 2009 by the defendant seeking such judgment in default was adjourned for 14 days by order dated 22 July 2009, it being ordered that the matter be relisted for hearing at 9.30 am on 6 August 2009, and that at such hearing the defendant do appear and show cause why judgment should not be entered in favour of the plaintiff in terms of the Re-Amended Statement of Claim.

13. At this stage the court was concerned that, with the departure of its Hong Kong solicitors, that the defendant should be afforded an additional opportunity to make such representations as it wished.

14. No such appearance by or on behalf of the defendant materialized, and thus, on 6 August 2009 Interlocutory Judgment formally was entered against the defendant, the Order of that date pronouncing that the defendant having failed to appear to show cause why judgment should not be entered against it, judgment on liability was to be entered against the defendant in favour of the plaintiff, with damages to be assessed by a Master at a date and time to be fixed, together with costs of the application.

15. As earlier indicated, Master de Souza proceeded formally to assess such damages, and thereafter the defendant issued its application of 26 August 2010 to set aside this interlocutory default judgment on the basis that the plaintiff failed to obtain an order pursuant to Order 11, rule 9(4), RHC, for service out of the jurisdiction of any summons, notice or order issued, given or made in these proceedings.

16. In addition to the application so to set aside, if such be successful the defendant further sought an extension of time to comply with the hitherto extant Order for specific discovery.

17. I further record, for the sake of completeness, that the defendant has issued a Notice of Appeal dated 7 July 2010, wherein if and in so far as this application to set aside the default judgment be unsuccessful, the defendant intends to appeal against the assessment of damages of Master de Souza of 9 June 2010, and therein to seek an order that this judgment be set aside, and that damages be re‑assessed.

18. For present purposes there is no necessity to elaborate upon the grounds contained in that Notice of Appeal, save to note that the gravamen of the appeal as now mounted is that within such assessment errors of law had occurred, in particular that the learned Master had failed to apply the basic principle that damages are to be assessed at the date of breach, and had failed properly to consider the issue of mitigation of loss.

19. It follows that if and in so far as the defendant now is successful in its present application to set aside the default judgment underpinning that assessment, the necessity for such appeal against the damages assessment falls away, and no doubt would be withdrawn by consent.

Evidence in support of the present application

20. This application to set aside such default judgment, in the monetary terms as now assessed, is backed by the 3^rd Affidavit of one Mr Chris F Brown, sworn in New York on 7 August 2010, his earlier affidavits having been primarily concerned with the defences available to his client in opposition to the plaintiff’s Order 14 application; in addition, a 4^th affidavit of Mr Brown, sworn on 13 September 2010, was handed up to the court the following day at the time of argument.

21. Mr Brown’s 3^rd affidavit is of some 15 pages. It outlines the background of the GEM Group and that of the defendant company, summarises the claims as made against the defendant, provides a potted procedural history, with specific reference to the defendant commencing to act in person, the fact of the specific discovery application and the plaintiff’s application for a consequent ‘unless’ order and the plaintiff’s order to re-amend the existing Statement of Claim; thereafter it rehearses the grant of interlocutory judgment on liability and the assessment of damages as occurred, and at Section E thereof deposes to the factual reasons for default of the Orders as made by the court, which default in itself led to the default judgment of which complaint presently is made.

22. This affidavit further asserts the fact that this was an ‘irregular’ judgment, given the plaintiff’s failure to comply with Order 11, rule 9(4), in that absent leave so to do the default application was not properly served on the defendant after Messrs Lovells’ departure from the record, and at Section G goes on to depose to the residual merits of the defendant’s case.

23. Within the context of the present application to set aside that which is accepted by Mr Tong SC to be an ‘irregular’ judgment, undoubtedly the most significant part of this lengthy affidavit by Mr Brown is Section E, at paragraphs 29-38 thereof, which deposes to the reasons why default judgment was permitted to be entered.

24. This affidavit speaks for itself.

25. The thrust of the reason as put forward is contained within paragraphs 32-35, which I quote in terms:

“32. After the return of the onsold shares, and the satisfaction of the Plaintiff’s claims for special damages (representing the proceeds of the shares sold), the background circumstances surrounding and leading to the present proceedings led me to believe that the Plaintiff would not proceed to take this matter to trial as the plaintiff did not appear to have any other damages suffered at all (see details at Section G below).
33. Solely due to the mistaken belief on the part of the Defendant, and the ignorance of the seriousness of the outcome of such a mistake, the Defendant inadvertently chose not to participate in the proceedings after 15 January 2009 and verily believed that the Plaintiff would ‘walk away’ because the Plaintiff already had been paid the proceeds of the Transaction [ie. the proceeds of the plaintiff’s shares as actually had been sold by the defendant] and had returned to him the unsold shares. Accordingly, the Defendant did not see how the Plaintiff could be entitled to anything further. Given the fact that the Defendant paid no heed to any Court documents after 15 January 2009, it has all along been unaware of the contents of the Court documents in particular the Plaintiff’s application for an Unless Order, the Order of 22 July 2009 and the Judgment subsequently entered, until June 2010. It turned out that the Plaintiff did not walk away but in fact subsequently obtained an Interlocutory Judgment on Liability, and thereafter a Final Judgment on Damages.
34. GEM, as an international investment group with worldwide investments, and the Defendant within the GEM group, are both serious and committed companies. We fully appreciate that orders made by this Honourable Court must be obeyed, and obedience to Court orders is the foundation on which its authority is founded. The Defendant should not have ignored or disobeyed any Court order and will not do so in future.
35. Upon realizing it was wrong in its belief that the Plaintiff would not seriously proceed with the matter, the Defendant sought urgent legal advice to see how the Defendant could immediately remedy the situation as soon as it was notified of the judgment dated 9 June 2010 on 11 June 2010. For the avoidance of doubt, a Notice of Appeal against the Judgment dated 9 June 2010 was also issued on 7 July 2010 under the case no. CACV 147 of 2010…” (Interpolation added)
……..

26. Thereafter the affidavit asserts Mr Brown’s belief that all relevant documents have been disclosed, and that further inquiries are taking place from third party brokers to ensure that this is indeed the case. The point also is made that any injustice or prejudice to the plaintiff can be cured by costs, and paragraph 38 of this Section offers “an unreserved apology” to the court for what has occurred, and a request for leave to comply out of time with the court’s orders.

The argument

27. The parameters of the argument were predictable, albeit expertly presented by senior counsel on either side of the adversarial fence.

28. For the defendant/applicant, Mr Westbrook SC stressed that there was and had been no intention whatever to “ignore or flout” the ‘unless order’, and hence that such failure to comply therewith should not be regarded as “contumelious”; thus, if the court were to accept that proposition, the action should be permitted to proceed, citing Keith J (as he then was) in Chow Kai Sang v Toi Samuel [1996] 4 HKC 330, at 337F. He further noted that no leave had been obtained to serve the summonses out of the jurisdiction, and that accordingly the judgment was irregular.

29. Mr Westbrook submitted that it was significant in the present case that the plaintiff’s allegation of loss in terms of the figure of HK$128 million odd had only been added to the claim by re-amendment in May 2009 after the defendant’s solicitors had ceased to act and the defendant was unrepresented, and that prior to 15 January 2009 the defendant actively had defended this action at a stage when there was “no hint of any other claim by the plaintiff”.

30. He accepted that it was unfortunate that the plaintiff had adopted the stance that undoubtedly it had taken towards this litigation, namely that in the erroneous belief that “the litigation was worthless” the plaintiff had taken a view and had decided to ignore the proceedings in the belief that they would simply go away and die a natural death; what clearly had not been anticipated, he said, was that after the departure from the record of Messrs Lovells, that the plaintiff belatedly would re-amend the Statement of Claim to “conjure up” an entirely fresh claim for HK$128 million, and that subsequent documents as had been sent to the plaintiff “simply went unread, even if delivered to the West Indies’ address”.

31. Counsel further accepted that these explanations did not entirely excuse the defendant’s inaction, but suggested that such was at the least understandable in the particular circumstances, and that in no sense was any disrespect intended to be shown to the court or had there been any intention to “flout” court orders.

32. Mr Westbrook also complained about the content of the judgment whereby damages of HK$128 million odd had been assessed, maintaining that crystallization of any loss on the plaintiff’s unsold shares should have been on the basis of the price at the date of the defendant’s alleged breach of its contractual obligations, namely March 2006, and that as a consequence the figure now awarded in default damages against his client was “wildly inflated”.

33. After reviewing the service “irregularities”, the rules of court and relevant English case law, usefully cited in the judgment of Kwan J (as she then was) in BOC v Chow Tat Wah, unrep., judgment dated 26 February 2002, wherein her ladyship had been keen to emphasise that the judicial discretion to cure an irregularity “should be exercised with caution where service out of the jurisdiction is concerned”, Mr Westwood invited this court to set aside the existing default judgment, and to extend the time for complying with the ‘unless order’ in order that the action should proceed as if the default had not taken place.

34. His parting shot was to suggest that in order to mitigate the effects of the defendant’s own failings, the defendant proposed and would submit to orders from the court as to wasted costs, and to adhere to a strict timetable for the fixing of trial dates wherein “the thorny issues” of liability and quantum would be able to be properly ventilated.

35. Unsurprisingly, Mr Tong SC was unreceptive to Mr Westwood’s placatory submissions.

36. He expressed indignation at the gall of the plaintiff in the application as now made and the content of the affidavit in support, made it abundantly clear that his position was that the plaintiff “intentionally and contumeliously” had ignored the court’s process, in this case the Order dated `13 January 2009, and that the defendant had intimated “scant regard” for its legal obligations in this litigation, and submitted that the court should not exercise its discretion in favour of the defendant’s application on the basis of the evidence now put forward.

37. Alternatively, if and in so far as the court were to consider allowing the defendant back into litigation upon which it already had turned its back by ignoring the letters as sent to, and received at, the defendant’s office in the West Indies, then Mr Tong requested that stringent conditions be imposed as a basis on which to set aside the default judgment, and in giving time to the defendant to comply with the proper future conduct of these proceedings, including the extant order for specific discovery.

38. In his written skeleton argument leading counsel pointed out that the defendant and Mr Chris Brown had in the past evidenced “scant regard for court process”, that in addition to non-compliance with the order for specific discovery, earlier there had been breach of an injunction granted on 23 March 2006, non-compliance with an order dated 6 March 2007 to file and serve an Amended Defiance, this failure in itself leading to issuance of an ‘unless order’ dated 3 March 2008, and in addition there had been non‑compliance of a Consent Order dated 11 June 2008 directing the exchange of witness statements.

39. He also attacked Mr Brown’s credibility and bona fides in his affidavit evidence, noting that Mr Brown admitted that he had thought that the plaintiff’s claim would “go away” and so deliberately had left court documents “unread”, he criticized the assertion that the defendant had a good defence in terms of ‘market rigging’ and forgery, given that this court by its judgment of 6 March 2007 already had struck out the ‘market rigging’ defence, from which decision there had been no appeal, also pointing out that the so-called ‘forgery’ allegation itself never had found its way into the pleadings, and emphasised that in any event the defendant was entitled to pursue its extant appeal against the assessment of damages as handed down by Master de Souza.

40. Mr Tong also stressed that whilst the defendant sought to set aside the judgment and consequent Order on the ground of irregularity pursuant to the provisions of Order 2, rule 2 RHC, the irregularity being the plaintiff’s failure to obtain leave to serve out under Order 11, rule 9, the law was that such an irregularity did not nullify the proceedings, nor any step, document, judgment or order therein, although they may be set aside.

41. In this context he pointed to the fact that, the ‘irregularity’ apart, it was clear (and indeed was not disputed) that the defendant had had notice of the documents for which leave to serve out had not formally been obtained, and that in the commentary in the White Book (at para 2/1/2), the following commentary appears:

“Defective service of proceedings, however gross the defect and even a total failure to serve, where the existence of proceedings is nevertheless known to the defendant, is an irregularity which can be cured by the exercise of discretion under O.2 r.1”

In this connection, Mr Tong relied also on the authority of Boocock v Hilton International [1993] 1 WLR 1065, and in particular the observations of Neill LJ, who therein had referred to the decision in Benson Ltd v Barbrak Bank Ltd [1987] AC 597, in order to counterbalance the defendant’s reliance on Leal v Dunlop Bio-Processes International Ltd. [1984] 1 WLR 874.

42. Mr Tong concluded his submission by observing that the history of this case indicated that the defendant consistently had ignored orders of the court, culminating in the Order of 13 January 2009, and the subsequent Notice of Hearing dated 1 June 2009 requiring the defendant to attend court. He also observed that letters from the plaintiff’s solicitors to the defendant dated 20 May 2009 and 9 July 2009 in themselves did not require leave, and suggested that in the circumstances it was “inconceivable” that the defendant truly had believed that the court documents of which it admitted it had had notice simply (and safely) could be ignored, and thus that its conduct demonstrably had been both “intentional” and “contumelious”.

43. Mr Tong accordingly maintained that the defendant singularly had failed to discharge the burden that lay upon it to convince the court to set aside the judgment and to exercise its discretion in the defendant’s favour.

Decision

44. I confess that the more that I looked at this case, the more I was discomfited by the apparently wholly cavalier attitude of the defendant ‑ in his brief and belated 4^th affidavit Mr Brown refers in particular to paragraphs 33 and 35 of his 3^rd affidavit, and again confirms “that the Defendant paid no heed to any Court documents after 15 January 2009” ‑ which documents undoubtedly it had received, and correspondingly the more difficult I found the exercise of fairly weighing the balance and in effecting an appropriate exercise of the court’s discretion.

45. In the circumstances I have to say that this was a pretty close‑run thing, and I wish to observe that Mr Brown’s statement (at paragraph 33 of his 3^rd affidavit) that the defendant “inadvertently chose” not to participate in the proceedings after 15 January 2009 manifestly failed to strike a sympathetic chord; to the contrary, the decision to ‘walk away’ demonstrably was entirely ‘advertent’, since at bottom what effectively he is saying is that this was a forensic miscalculation because the defendant simply had failed to appreciate the seriousness of its actions, and deliberately had remained unaware of the contents of the court documents as sent to it after January 2009 until, says Mr Brown, June 2010.

46. However, difficulties of evaluation apart a decision one way or another there must be, and after carefully weighing everything in the balance, and not least because in principle I am unenamoured by default judgments, and because the plaintiff’s significant re-amendment indeed did come relatively late in the day, I have decided to exercise my discretion in the plaintiff’s favour, but at the same time to impose a term with which the plaintiff must comply if it is to have this judgment ‑ and the consequential damages assessment ‑ formally set aside.

47. In this connection I note that this was Mr Tong’s ‘fall-back’ position (skeleton argument, para 24) as an alternative to his preferred option of outright dismissal of the defendant’s application, and that on behalf of the defendant Mr Westbrook also had trailed his coat as to a possible imposition of conditions (skeleton argument, para 47(5)) if ultimately that was what would be required to get his client home.

Order

48. It follows from the foregoing that the Order of this court on this application will be in these terms:

(i)     That the default judgment dated 6 August 2009, and the assessment of damages consequential thereon dated 9 June 2010, be set aside upon compliance by the defendant herein on condition that the defendant do pay into court within 28 days from the date hereof the sum of HK$60 million (being approximately 70% of the plaintiff’s net residual claim), such sum to be held in an interest-bearing account, alternatively that such sum as aforesaid be furnished by means of a first class bank guarantee in terms acceptable to the plaintiff;
(ii)    Absent compliance with such condition as aforesaid (or compliance pursuant to judicial extension of the time limit as aforesaid) the default judgment entered by Order dated 6 August 2009, and the assessment of damages consequent thereon, entered by Order dated 9 June 2009, do stand;
(iii)   That in the event of compliance with this Order, and with the payment into court as aforesaid, application be made by the plaintiff within 14 days of the date of such compliance for directions for the further conduct of this litigation, including an extension of time with which to comply with the extant specific discovery order;
(iv)   There be liberty to apply as to the terms of this Order.

Costs

49. This has been an unedifying application which has been necessitated solely by the defendant’s wholly advertent inaction.

50. In the circumstances, therefore, it seems appropriate that the defendant be subjected to a stringent costs’ order as follows:

That the defendant do pay to the plaintiff the costs of and occasioned by and otherwise arising from this application, including the costs of the hearing on 14 September 2010 (which is certified as fit for two counsel), such costs (unless agreed) to be quantified on a gross sum assessment by a Master upon a common fund basis, the payment of such costs as thus assessed to be made to the plaintiff (or his solicitors) within 21 days of the date of such assessment.

(William Stone)
Judge of the Court of First Instance
High Court

Mr Simon Westbrook SC and Mr Jose-Antonio Maurellet, instructed by Messrs Gall, for the defendant

Mr Ronny KW Tong SC and Mr Jeevan Hingorani, instructed by Messrs Alvan Liu & Partners, for the plaintiff

71443-EN-2010-06-09

WANG RUIYUN v. GEM GLOBAL YIELD FUND LTD

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HCCL 16/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 16 OF 2006

(TRANSFERRED FROM HCA NO. 623 OF 2006)

________________________

BETWEEN

	WANG RUIYUN	Plaintiff
	AND
	GEM GLOBAL YIELD FUND LIMITED	Defendant

________________________

Coram : Master de Souza in Court

Dates of Hearing : 28 April 2010

Date of Handing Down Judgment : 9 June 2010

_______________

JUDGMENT

_______________

I. INTRODUCTION

1. The Defendant having failed to appear, judgment on liability was entered against it with damages to be assessed pursuant to the order of Stone J on 6 August 2009. The Registrar subsequently issued directions for the filing and serving of affidavits for the purpose of the assessment, ordering that they do stand as evidence in chief and may be read at the assessment hearing. In the event, the Defendant failed to participate any further in the suit. The Plaintiff’s 6th affirmation was read into evidence. The matters it deposed to remain wholly unchallenged, forming the factual basis for this decision.

II. The Evidence

2. The Plaintiff, a mainland investor and resident of the PRC, owned directly and indirectly through a holding company some 6.86% of the issued share capital of a Hong Kong listed company Bestway International Holdings Ltd (‘Bestway’) that traded in plastic products, principally PVC films. More specifically, he beneficially owned 107.4 M shares in Bestway and was also the beneficial owner of a BVI corporation, Victory Investment China Group Ltd which itself held 245.4 M shares in Bestway. He was the third largest shareholder in Bestway.

3. The Defendant, a company incorporated in the West Indies and a member of the Global Emerging Markets Group, had as part of its business invested in companies on the main board of the Hong Kong Stock Exchange if the investments represented substantial equity. The evidence disclosed that the Defendant professed interest in Bestway following Bestway’s public announcement of its intention to acquire a 12% interest in a PRC corporation Cangzhou Chemical Industrial. Ltd, a joint stock company listed on the Shanghai Stock Exchange. It was against this background that the parties to the suit entered into lengthy and detailed negotiations for the sale of shares in Bestway by the Plaintiff to the Defendant.

4. As a prospective purchaser, the Defendant, a well-known investor, represented a substantial attraction for the Plaintiff. A sale of a large number of shares to such an investor would have the advantage of significantly enhancing the value of the shares in the market. Were the Plaintiff to unload his shareholding in Bestway directly on the open market, a contrary effect would have been achieved. It would likely have resulted in a considerable diminution in the price of the shares with the public perceiving the exercise as share dumping.

5. In February 2006, the parties entered into 3 linked contracts, respectively named the Equity Line of Credit Agreement (‘ELC Agreement’), the Cash Escrow Agreement (‘Escrow Agreement’) (both being dated 14 February 2006), and the Side Letter Agreement dated 27 February 2006 (‘Side Letter Agreement’).

6. The cumulative effect of these agreements summarized most succinctly in paragraph 7 of Stone J’s judgment in the O.14 proceedings dated 6 March 2007 was as follows.

7. The Plaintiff was entitled to deliver to the Defendant a Draw Down Notice for a tranche of Bestway shares and on the same day deposit those shares into the Defendant’s broker’s CCASS account. Pursuant to a contractual formula, the Plaintiff’s Draw Down Notice had to specify a ‘floor price’ below which he would not sell the shares to the Defendant, the actual price being ascertained by a formula within the ELC Agreement. On the business day following receipt of confirmation of the CCASS deposit, the Defendant was obliged to deposit into the Escrow Account held by an Escrow Agent an amount equal to 90% of the trading price for Bestway shares prior to the issue of the Draw Down Notice multiplied by the number of shares deposited into the Defendant’s broker’s CCASS account. The Defendant would then have 15 trading days (or longer, if a contractual formula applied) to purchase for itself or by on-selling the same shares, subject to various conditions concerning the volume or prices at which Bestway shares have been trading during that period. At the end of the relevant period, the Defendant or the Escrow Agent had to account to the Plaintiff either for the sale proceeds from the sale of the shares to the Defendant or, if not required by the contractual terms to purchase the shares, for the return of the unsold shares, or a combination of both.

8. On the undisputed evidence, pursuant to Clause 2.1 and Schedule 2 of the ELC Agreement, the Plaintiff delivered to the Defendant on 17 February 2006 a signed Draw Down Notice requesting the Defendant to purchase 926 M shares with a Floor Price of HK$ 0.18 per share. The draw down amount was the number of shares representing the average trading volume of the 15 Trading Days immediately preceding the Draw Down Notice, namely 926 M shares. Clause 2.4(b) provided that the Defendant undertook not to sell any shares at a price below one and one ninth times the Floor Price, i.e. HK$ 0.20. The Floor Price stipulated the price below which the Plaintiff would not sell to the Defendant. The Pricing Period defined as the period of 15 consecutive Trading Days immediately following the Draw Down Notice would have been 20 February 2006 to 10 March 2006. None of the above being clearly defined in the contractual arrangement could have been the subject of controversy.

9. The terms of the initial Draw Down Notice were subsequently amended by the Side Letter Agreement at the request of the Defendant to permit the deposit into the Defendant’s broker’s account the initial number of shares in 3 tranches.

10. Pursuant to the ELC Agreement and the Side Letter Agreement, the Plaintiff deposited with the Defendant the 1st tranche of 312 M shares on 27 February 2006 and the 2nd tranche of a similar amount of shares on 6 March 2006. This 2nd tranche of shares was actually transferred on 7 March 2006 on account of the wrongful initial rejection by the Defendant. Transfer of the 3rd tranche of 320 M shares contemplated for 13 March 2006 did not materialize as it was rejected by the Defendant’s broker, Merrill Lynch.

11. Under the Side Letter Agreement, the Pricing Period was also amended to a period between 28 February 2006 and 20 March 2006 inclusive. As is discernible in the totally ineffectual unsigned Closing Notice (about which more later) sent by the Defendant to the Plaintiff dated 21 March 2006 (see page 756 of Bundle D), the Knockout Days fell within this period.

12. The Side Letter Agreement obliged the Defendant, no later than the Business Day following receipt of confirmation of deposit of each of the above tranches, to deposit HK$ 69,076,800, HK$ 69,076,800 and HK$ 66,862,800 respectively into the Escrow Account.

13. The Defendant failed to make timely payment for the 1st tranche of shares. It was only on 1 March 2006 that it deposited funds into the Escrow Account. No deposit was made in respect of the 2nd or 3rd tranches. In respect of the 3rd tranche, the Defendant had refused to accept the deposit or to make any payment for it.

14. Pursuant to Clause 3 of the ECL Agreement, the Defendant was obliged to furnish to the Plaintiff a Closing Notice on or prior to the Closing Date, namely the 16th Trading Day following the Draw Down Notice, stating the Purchase Price, the number of shares over and above the applicable initial deposit (if any) required to be further deposited by the Plaintiff, the applicable Unit Price, or the number of shares out of the initial deposit which shall be transferred and delivered back to the Plaintiff.

15. As is plain from the contractual documents, the issuance of a Closing Notice was a condition precedent to the Defendant returning shares placed by way of the initial deposit under the Draw Down Notice. The Purchase Price for the Closing Notice was defined as the sum of money which equaled the product of the Purchase Amount particularized in the Closing Notice (i.e. the initial deposit less the shares to be returned to the Plaintiff) and the applicable Unit Price: the ECL Agreement at Bundle D pages 574 and 578 (Clause 2.4(a)).

16. Quite aside from the Defendant’s incontrovertible failure to take up and pay for the 2nd and 3rd tranches of shares and the late payment for the 1st tranche, the evidence further disclosed that the Defendant had on-sold shares below one and one ninth of the Floor Price and was dumping more than 20,800,000 shares each day in total disregard for the ECL Agreement. Flooding the market with shares in such a manner drove down the value of the shares of Bestway to the detriment of the Plaintiff. There can be no doubt that these are matters indicative of significant contractual breaches on the part of the Defendant.

17. It seems reasonably certain that by early March 2006 (if not before), the Defendant had taken the decision not to be further bound by its contractual obligations. Accordingly, on 21 March 2006, the Defendant sent to the Plaintiff a draft Closing Notice previously referred to as being unsigned and invalid, stating its intention to return to the Plaintiff 407,933,333 shares.

18. To be valid and effective, a Closing Notice had to be issued, signed and delivered to the Plaintiff as it provided the only contractual mechanism for transfer back of shares by the Defendant to the Plaintiff. Further, the contract entered into required the Defendant to accept on deposit all the shares placed on initial deposit and to pay for them. In short, the shares had first to be accepted by the Defendant before any legitimate attempt could be made to return all or some of them by issuance of a Closing Notice. The Defendant having failed to comply with its contractual obligation as respect the return of shares was obliged to take up and pay for all the shares under the initial deposit.

19. On 22 March 2006, the Plaintiff obtained an ex parte Mareva injunction restraining the Defendant from dealing in the Bestway shares transferred to it and from withdrawing money from the Escrow Account. In breach of the injunction, the Defendant further sold some 3,963,333 of the Plaintiff’s shares. Subsequently, the Defendant returned some 402,970,000 shares to the Plaintiff which was accepted in mitigation of his loss.

iii. The Plaintiff’s Loss

20. Plainly, the Plaintiff has sustained considerable loss and damage consequent upon the Defendant’s arbitrary disregard of its contractual obligations to take up and pay for shares according to the formula stipulated in the link contracts.

21. Featuring prominently in the assessment of the Plaintiff’s loss and damage is the concept of Knockout Days as defined in the contractual documents. The term is defined thus:

(a)
On which 90% of the Closing Trade Price is less than the Floor Price stated in the Draw Down Notice last delivered by the Seller to the Purchaser, or
(b)
On which shares are not traded on the Main Board for the whole Trading Day; or
(c)
During which Trading has been suspended for more than one hour; or
(d)
In respect of which the Purchaser has made an election in accordance with Clause 2.4(a) that such Trading Day is a Knockout Day.

22. The Defendant alleged that there were 5 Knockout Days, namely days on which the Closing Trade price of Bestway shares was less than HK$ 0.20 per share. If the Defendant were right, its duty to compensate the Plaintiff would be significantly lessened.

23. As Mr. Hingorani, counsel for the Plaintiff rightly submitted, only paragraph (a) of the above definition was applicable in the circumstances. None of the remaining scenarios had occurred.

24. The blatant dumping of large numbers of shares on the market by the Defendant through Merrill Lynch drove down the daily closing price of the shares. As the actual price payable by the Defendant was determined by reference to the daily closing price in the 15 Trading Days after the Draw Down Notice, the artificially low price engineered through dumping had the effect of reducing the Purchase Price payable by the Defendant.

25. The fall in value of the shares is plain for all to see. The shares were performing well in the period between 28 December 2005 and 1 March 2006 when the closing price stood at HK$ 0.20 a share and that was the lowest price for the period. The Table of Bestway Share Prices from November 2005 to November 2006 quoted by the Hong Kong Stock Exchange and exhibited as WRY-AH2 to the Plaintiff’s 6th Affirmation (‘the Share Table”) charted the performance of the shares and demonstrated most convincingly the damaging effect of the Defendant’s conduct on the shares.

26. There can be no quarrel that the Defendant had contracted to purchase 926 M shares. In its mandatory disclosures of interest pursuant to Cap. 571, it announced it became interested in that quantum of shares in Bestway. None of this was controversial.

27. Mr. Hingorani submitted that under the ELC Agreement, absent the condition precedent being satisfied, the Defendant was obliged to purchase 926 M shares at or above HK$ 0.20 per share. The Purchase Price payable would have been at least HK$ 166,680,000 being (926,000,000 x HK$ 0.20 per share x 90%).

28. He however contended that the period for calculating the Closing Trade Price should be the period before share dumping began. As the first breach occurred on 2 March 2006, he urged that the relevant period for ascertainment of the share value ought to be 9 February 2006 to 1 March 2006. With that I am in total agreement as a tortfeasor should not benefit from his wrongdoing.

29. The average Closing Trade Price for the relevant period was HK$ 0.2348 per share with reference to the Share Table in Bundle E, page 1330.

30. I would therefore assess damages as follows.

31. The Purchase Price payable by the Defendant would be 926 M shares x HK$ 0.2348 per share x 90%. This equates to HK$ 195,682,320. The damages payable would therefore be HK$ 195,682,320 less the amounts received by the Plaintiff from the Defendant (HK$ 40,503,237.28 + HK$ 930,412.16), less the amount received by the Plaintiff from the sale of shares not taken up (HK$ 25,897,379). The net damages payable by the Defendant would be HK$ 128,351,291.56. This is the amount that I assess to be paid by the Defendant to the Plaintiff. I so order.

32. There shall be interest at judgment rate on the judgment sum from the date of the writ until full satisfaction thereof.

33. As to costs, I also accede to counsel’s submission that full indemnity costs are appropriate given the Defendant’s callous and multiple breaches of its contractual obligations and the various spurious allegations in the original Defence and Counterclaim prior to the pleadings being substantially altered.

34. I order that the Defendant shall pay the Plaintiff’s costs of the assessment including the costs reserved in respect thereof on full indemnity basis, taxed if not agreed. There shall be a certificate for counsel.

	(B.L. de Souza)
	Master of the High Court

Mr. Jeevan HINGORANI instructed by Alvan Liu & Partner for Plaintiff.

Defendant absent.

Appeal by the defendant to Court of Appeal against the assessment of damages dismissed. Please refer to CACV147/2010 dated 20 June 2011

56226-EN-2007-03-06

WANG RUIYUN v. GEM GLOBAL YIELD FUND LTD

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HCCL 16/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 16 OF 2006

(transferred from HCA 623/2006)

-------------------------

BETWEEN

	WANG RUIYUN	Plaintiff
	and
	GEM GLOBAL YIELD FUND LIMITED	Defendant

----------------------

Before : Hon Stone J in Chambers (Open to public)

Dates of Hearing : 9 January and 2 February 2007

Date of Handing Down Judgment : 6 March 2007

-------------------------------------------------------

JUDGMENT /
REASONS FOR JUDGMENT

-------------------------------------------------------

Introduction

1. There is before the court the plaintiff’s summons dated 14 September 2006, the hearing of which took place over a period of two days.

2. By the terms of that summons, the plaintiff sought, interalia, an order for (1) summary judgment under Order 14, rule 1, and/or judgment on admissions under Order 27, rule 3 to be entered for the plaintiff for the sums of HK$40,503,237.28 and HK$930,412.15, alternatively (2) an order for interim payment under Order 29, rule 10(1) in the like sums, (3) an order under Order 22, rule 8(2) for the payment out of court to the plaintiff of the sum of HK$40,237.28, together with interest accrued thereon, and (4) an order under Order 18, rule 19(1) that certain parts of the defendant’s Defence and Counterclaim be struck out.

3. At the conclusion of the hearing, this court ordered that the sum of HK$40,503,237.28, which had been paid into court by the defendant, be paid out to the plaintiff, together with interest accruing thereon, and that the reasons underpinning this decision would be set out in a judgment to be handed down, which in addition would include judgment upon other matters raised.

4. This is that judgment.

The factual background

5. The background to this case relates to financial transactions which took place between the plaintiff, a mainland investor and resident of the PRC, and the defendant, a corporation incorporated in the West Indies, and a member of the Global Emerging Markets Group.

6. In this action, the plaintiff, who directly and indirectly through a holding company owned some 7.28% of a Hong Kong listed company Bestway International Holdings Ltd (‘Bestway’), sues the defendant in relation to transactions undertaken pursuant to a contractual ‘put’ option whereunder the defendant had the option of acquiring custody and authority to purchase/on-sell tranches of the plaintiff’s 107.9 million shares in Bestway.

7. As Mr Barlow, who appeared for the plaintiff, described it, the position was that under three linked February 2006 contracts, respectively termed the Equity Line of Credit Agreement (‘ELC Agreement’), the Cash Escrow Agreement and the Side Letter Agreement, the parties agreed that :

(i) the plaintiff would be entitled to deliver to the defendant a Draw Down Notice for a tranche of Bestway shares and on the same day deposit those shares into the defendant broker’s CCASS account;

(ii) pursuant to a contractual formula, the plaintiff’s Draw Down Notice was to stipulate a ‘floor price’ below which he would not sell his shares to the defendant, the actual price being ascertained by a formula within the ELC Agreement;

(iii) the business day following receipt of confirmation of the CCASS deposit, the defendant was to deposit into the Escrow Account held by an Escrow Agent an amount equal to 90% of the trading price for Bestway shares prior to the issue of the draw down notice multiplied by the number of shares deposited into the defendant broker’s CCASS account;

(iv) the defendant then had 15 trading days (or longer, if a contractual formula applied) to purchase for itself or by on-selling the Bestway shares concerned, subject to various conditions concerning the volume or prices at which Bestway shares were trading during that period; and

(v) at the end of the relevant period the defendant or the Escrow Agent was to account to the plaintiff either for the sale proceeds from the sale of the shares to the defendant or, if not required by the contractual terms to purchase the shares, for the return of the unsold shares, or a combination of both.

8. On the facts it is undisputed that pursuant to the foregoing arrangements, the plaintiff delivered a Draw Down Notice dated 17 February 2006, requesting that the defendant purchase 926 million Bestway shares with a floor price of HK$0.18 per share; the terms of this initial notice later were amended to permit the deposit into the defendant’s broker’s account this number of shares in 3 tranches, and in fact the plaintiff deposited 2 tranches only, the 1^st tranche of 312 million shares on 27 February 2006 and the 2^nd tranche of 312 million shares on 6 March 2006.

9. On 1 March 2006 the defendant deposited into the Escrow Account approximately HK$69 million in respect of the sale of the 1^sttranche of shares only; no deposit was made in respect of the 2^ndtranche.

10. It appears that at some stage in early March 2006 the defendant formed the view that there was market rigging in the market for Bestway shares, and thus declined further to perform its side of the agreement.

11. On 21 March 2006 the defendant sent the plaintiff a draft Closing Notice whereunder the defendant was to return to the plaintiff 407,933,333 of the plaintiff’s unsold shares, and late on the following day, that is, 22 March 2006, the plaintiff obtained from Yam J an ex parte Mareva injunction restraining the defendant from first, dealing in the Bestway shares transferred to it, and second, from withdrawing money from the Escrow Account.

12. Subsequently the defendant returned to the plaintiff a total of 402,970,000 of the plaintiff’s shares, leaving a shortfall of 4,963,333, which the defendant reported as having been onsold.

13. In purely mathematical terms, the cumulative result of the dealings that took place was that, in addition to returning the unsold shares, the defendant was obliged to pay the plaintiff for the 221,030,000 shares which the defendant itself had bought from the plaintiff; the purchase price for 216,066,667 of these shares bought by the defendant was HK$40,503,237.28, which was payable to the plaintiff.

14. However, such price was not so paid.

15. On 23 March 2006 the defendant’s solicitors offered, on the defendant’s behalf, “to pay into court the sum of HK$40,503,237.28 and return the unsold shares to your client in return for a discharge of the injunction.”

16. This offer was accepted, and this sum paid into court, and thereafter the defendant returned 402,970,000 of the unsold shares, rather than the 407,933,333 as in fact were due.

17. The defendant initially refused to consent to the sum in court, namely, HK$40,503,237.28, being paid out to the plaintiff, although it is unclear why this should have been the case given that, on any basis, this sum represented the proceeds of sale of the defendant’s purchase of 216,066,667 shares belonging to the plaintiff.

The pleaded shape of this case

18. Against this factual background, in its Amended Statement of Claim dated 17 May 2006 (in an action which, prior to transfer to the Commercial List, originally was HCA 623 of 2006), seeks special damages in the sum of HK$40,503,237.28, together with an order that the plaintiff return all unsold shares, and if and in so far as the proceeds of sale have been paid out of the Escrow Account to the defendant declaratory relief that such proceeds of sale are held on trust for the plaintiff by the defendant, an account of the proceeds of sale held on trust by the defendant, and an order for payment of such monies to the plaintiff.

19. By its Defence and Counterclaim, dated 24 July 2006, the defendant fund joins issue with the plaintiff’s claim, and pleaded, inter alia, a conspiracy on the part of the plaintiff with others unidentified to misrepresent the true state of the trading of Bestway shares on the Hong Kong Stock Exchange, the only particulars of which then available, pending discovery and interrogatories, being the bald allegations that between 13 December 2005 and 14 February 2006 the plaintiff with his broker and others “formed a pool with the purpose of continually buying and selling the Shares amongst themselves and/or amongst other [associated] parties”, and that the result was that this had artificially increased the price and volume of the Bestway shares which were traded in that period.

20. It further is alleged that the defendant had entered the ELC Agreement only because of the misrepresentation perpetrated as to the true state of Bestway share trading, that the defendant had discovered the situation only on about 7 March 2006, that the ‘pool’ buying and selling which had taken place contravened specified sections of the Securities and Futures Ordinance, Cap 571, that the defendant was entitled to rescind the ELC Agreement, which it did by email on 9 March 2006, and that as a consequence the defendant was “under no obligation further to perform its obligations under the ELC Agreement.”

21. In this original pleading the defendant counterclaimed for “loss and damage”, although no particulars of such could be furnished prior to discovery and interrogatories.

22. This, therefore, was the state of play at the time of the first hearing of the plaintiff’s summons the subject of this judgment.

23. At that stage, also, the defendant itself had taken out its own summons, dated 15 December 2006, wherein it had sought that the money paid into court by the defendant pursuant to the Order of Chung J dated 24 March 2006, together with accrued interest thereon, be paid out to the defendant “forthwith”.

24. The basis for this application is not evident, and entirely sensibly Mr Man, who appeared for the defendant on both applications, ultimately opted not to proceed with this summons.

The plaintiff’s applications : adjournment

25. At the initial hearing of the plaintiff’s summons, on 9 January 2007, the broad picture which emerged demonstrably was not in the defendant’s favour.

26. In short, and putting to one side the ‘market rigging’ allegation aimed at the plaintiff, it was tolerably clear that a significant parcel of the plaintiff’s shares – 216,066,667 – had been purchased by the defendant itself, and that the defendant had declined to transfer to the plaintiff the fruits of such sale – HK$40,503,237.28 – which was part of the funds in the Escrow Account which now had been paid into court as part of the bargain whereby the injunction of 22 March 2006, granted by Yam J against the defendant, had been discharged.

27. At first blush, therefore, it seemed reasonable to infer that since this sum no longer was in the Escrow Account, but instead had been paid into court, the court effectively now was in the position in which the Escrow Agent would have been had such funds remained therein, namely that such funds were held on trust for and on behalf of the unpaid vendor of the shares, the plaintiff.

28. Nor, for that matter, was it entirely clear what ‘loss and damage’ had been suffered by the defendant in the transactions the subject of its pleading and counterclaim; to the contrary, in the circumstances it was difficult to see how there could have been any such ‘loss and damage’ at all.

29. Accordingly, although not vouchsafed on the face of the evidence which had been filed, the court inquired of Mr Man, the defendant’s counsel, as to the profit, if any, which the defendant itself had made as a result of the now disputed transactions with the plaintiff; it seemed a safe bet that the defendant had not been acting as a charitable institution in lending its services to these transactions, even though, in effect, the game had been called off before half time because of the defendant’s apparent concern in relation to the alleged ‘market rigging’, which activity it now placed at the plaintiff’s door.

30. Mr Man duly made such inquiry, and informed the court from the Bar that his client had made a profit in “the range of HK$3.1-3.2 million”, a figure considerably below that which had been suggested by the plaintiff (which had suggested the sum of in or around US$1 to 1.5 million) and one which Mr Barlow, counsel for the plaintiff, crisply observed had been gained by the defendant “entirely without risk” to itself, since the on-sale of the plaintiff’s shares as had been effected by the defendant had been of shares acquired from the plaintiff on a discounted basis under the ELC Agreement. In the event, at the adjourned hearing of these applications Mr Man was good enough to clarify the figure originally given to the court, and in his helpful supplemental submission this figure was amended to “an effective return of around HK$4.46 million.”

31. In the circumstances, said Mr Barlow, the situation which confronted the court was that, by reason of the defendant’s “speculative” ‘market rigging’ plea, wherein no loss had been caused to the defendant – to the contrary, a substantial profit had been made – it was apparently wished to compel the plaintiff to retain in court that which undoubtedly represented its funds pending trial of the other claims in these proceedings.

32. Looked at in the round, this submission had considerable force; however, prior to ruling on the plaintiff’s summons the court indicated to Mr Man that it would afford the defendant the opportunity, if so wished, to reframe its case, Mr Man not having been the author (nor being then even instructed) of the original Defence and Counterclaim.

33. Accordingly, the plaintiff’s summons was stood down for a short period in order for any such amendment to be considered.

Amendment to the defendant’s case

34. By a draft Amended Defence, submitted to the court shortly before the adjourned hearing on 2 February 2007, a number of significant changes were made to the defence case as originally framed.

35. First, the defendant’s Counterclaim is deleted, as are the claims for rescission of the ELC Agreement and the claims based on the Securities and Futures Ordinance, and the causes of action based on conspiracy and misrepresentation have been removed.

36. The primary case as now put forward is in contract, and is based on an implied term (or true construction) of the ELC Agreement to the effect that the purchase price and volume of the Bestway shares determined under that Agreement should not be affected by any, and that there was no, market rigging to which the plaintiff was privy or of which the plaintiff had knowledge, and that the particulars as pleaded at paragraph 15 in the draft Amended Defence (representing the best particulars the plaintiff could give pending discovery and interrogatories) revolve around a startling increase in trading volume of Bestway shares in the market on 14 February 2006, the date of the ELC Agreement, and on the following two days, and that (at subpara 15(vi)) “there was no market development that could support such a drastic increase in the trading volume of the Shares during the three Trading Days between the execution of the ELC Agreement (14^thFebruary 2006) and the Draw Down Notice Date (17^thFebruary 2006).”

37. In the premises, it is asserted that the plaintiff is not entitled to the amount claimed of HK$40,503,237.28, and further that “the plaintiff is in breach of the terms of the ELC Agreement which would entitle the Defendant to damages to be assessed, which would operate to set off against any damages that the Plaintiff is entitled to.”

38. The way in which this would work, explained Mr Man, is that the plaintiff’s damages claims as presently pursued are for the crystallized sums of HK$40,503,237.28 and/or HK$930,412.15, and that these are sums representing the alleged contractual purchasing price due from the defendant to the plaintiff in respect of the Bestway shares, as calculated by using the formula set out under ‘Unit Price’ in the ELC Agreement, a formula that involves using market data of the Closing Trade Prices during the Pricing Period, as defined.

39. Hence, he said, if the market had not been rigged, as is alleged, different figures would have been entered into the formula, yielding a different purchase price owing from the defendant to the plaintiff – and thus (so the argument goes) had there been no market rigging by the plaintiff, the profit to be made by the defendant on the onsale of the Bestway shares may well have been higher, which sum could be set off against the current figure purportedly payable to the defendant.

40. This, therefore, is the form of the amended draft pleading which Mr Man asks that the defendant be given leave to file and serve, and this also represents the revised backdrop against which Mr Barlow’s various applications – including in particular his strike out application – henceforth are to be evaluated.

The plaintiff’s applications : the argument

41. In terms of his arguments on the strike out, Mr Barlow remained opposed to certain of the amendments as proposed, notwithstanding that, interalia, the allegation of conspiracy now had been abandoned.

42. As matters now stood, save for the formal denial within paragraph 15 of the draft amendment (regarding paragraph 21 of the claim, namely the allegation of breaches by the defendant of the ELC Agreement), Mr Barlow nevertheless objected to the remainder of that paragraph, which averred a “further answer” to the such allegation of breach, and “on the basis that the ELC Agreement is valid and enforceable”, asserted that it was incorrect for the plaintiff to adopt data from the market in calculating the Closing Trade Prices and the Pricing Period Obligation “as the market was rigged at the relevant time” and that “It is averred that the Plaintiff was privy to such market rigging or had knowledge of the same”, there following 8 particulars thereof.

43. Thereafter follow the conclusionary pleas (at 15(b)) that “the Plaintiff is accordingly not entitled to the amount alleged (HK$40,503,237.28) and (at 15(c)) the further plea that “the Plaintiff is in breach of the terms of the ELC Agreement … which would entitle the Defendant to damages to be assessed, which would operate to set-off against any damages that the Plaintiff is entitled to”.

44. Mr Barlow observed that the proposed plea was “just as speculative and unparticularised as before”, and that paragraph 15(c) of the draft pleading was “hopelessly confused” in light of the fact that now there was no counterclaim – indeed, it had been specifically removed – and further that there was no entitlement to damages – since, on the plaintiff’s own case there had been no loss – and thus, on either basis, there was nothing to ‘set off’.

45. To this Mr Man was undaunted. He submitted that, notwithstanding removal of the conspiracy plea and the defendant’s counterclaim, that nevertheless his client was entitled to approach the case in this manner, and that if and in so far as there had been ‘market rigging’, in proving its case the plaintiff simply was not entitled to the sums it now claimed, but, to the contrary, only to such sums which would enure in terms of a share price which would have prevailed absent any such market manipulation.

46. In terms of his monetary applications, namely for summary judgment/interim payment/judgment onadmissions, Mr Barlow accepted that it made little practical difference to his client under which juridical head he succeeded, provided that he was able now to obtain money which indubitably had been acquired and retained by the defendant consequent upon the sale of the plaintiff’s Bestway shares, and which now formed the basis of the payment into court; however, whilst maintaining that he was entitled to the payments sought under any of the heads invoked, he nevertheless primarily asked for summary judgment in terms of the sums of HK$40,503,237.28 and HK$930,412.15, as pleaded on the face of his summons.

47. For his part Mr Man recognized, I think, the force of the submission as to the payment out of court of monies which, on any basis, represented the fruits of the purchase by the defendant of the plaintiff’s shares, although he stoutly maintained the line that such sum could and should be subject to adjustment if and in so far as the market rigging allegation was to be sustained.

The plaintiff’s applications : decision

48. As outlined, the plaintiff pursues the defendant on two fronts : the strike out and the application for immediate monetary award, whether by way of summary judgment, judgment on admissions or interim payment.

49. On reflection, it seems to me that the strike out application necessarily informs the approach of the court to the question of immediate monetary relief, and thus I take this element first.

(i) Strike out

50. I am intrigued (and, also somewhat nonplussed) by the amendments to the defendant’s case proposed by Mr Man whom, as earlier noted, was afforded the opportunity to move to amend his client’s case at the conclusion of the initial hearing.

51. Whilst the case as now pleaded, in terms of the proposed draft amendment, produces greater clarity of approach, for my part I find it difficult fully to understand the deletion of the Counterclaim.

52. If, as Mr Man now submits, it remains open to the defendant even to mount a case on market rigging on the part of, inter alia, the defendant, this would make a material difference to the monies claimable by the plaintiff (and hence to the right to the entirety of the funds currently standing in court); however, absent any counterclaim on the part of the defendant (and none now is propounded), it is not easy to appreciate how this might assist the defendant, even were such a case successfully to be made.

53. As Mr Barlow pointed out, whilst Order 18, rule 17 makes provision for a defence of monetary set-off whether or not such also is added as a counterclaim, as M/N 18/17/2 makes clear, a set-off is a monetary cross –claim, but in the present case the defendant now specifically disavows any such cross-claim.

54. This submission seems to me to be well-founded. Were, for example, the case to be made that the plaintiff in fact is not to be entitled to the monies which represent the fruits of the sale of the plaintiff’s shares, it is unclear precisely what is said to be the status of such monies, or at least a part thereof, given that the defendant now apparently makes no claim thereto; perhaps it stands upon what it perceives to be its contractual rights, although notwithstanding the ingenuity of the approach, I confess that do not fully grasp how this would work, given that it remains the defendant’s case that it has suffered no loss – per contra, it has made a significant profit consequent on the arrangements in place between the parties.

55. In light of that which factually has occurred, whereby the plaintiff’s money from the share sales was paid into the Escrow Account by the defendant – from which, of course, it subsequently was withdrawn and paid into court – that there is no question but that this prima facie is money to which the plaintiff is entitled; indeed it must have been held in the Escrow Account upon trust for the plaintiff, and thus that if and in so far as the defendant does not wish the plaintiff to have it, it must itself claim it, a course which now appears to be eschewed. In short, on these facts the plaintiff’s prima facie entitlement is a given – these monies having been placed in the Escrow Account to the credit of the plaintiff – and if the defendant now wishes to gainsay such entitlement and to claim all or part of the crystallised sum for itself, it seems to me that it must formulate a claim thereto.

56. Nor, for that matter, does the defendant condescend to particulars as to any variation in the sum of money it itself has made as a result of the onsale of the plaintiff’s Bestway shares – is it, for example, to be said that it should have made less, or more, than the “effective return of around HK$4.46 million” which the court has been told has enured to it consequent on these transactions; and, if less, what would/should happen to the resultant balance?

57. Accordingly, in my view the plausible manner in which this case now has been sought to be amended begs more questions than it answers.

58. It also, if I may say so, hides under the veil of the more restrained language of contractual breach essentially the like allegation as to wrongdoing on the part of the plaintiff as existed under the now expurgated version of the original Defence and Counterclaim.

59. True it is that the allegations of conspiracy and misrepresentation now have gone in terms of the proposed draft pleading. However, this document has as its central allegation the plea (at paragraph 15(a)) that “It is averred that the Plaintiff was privy to such market rigging or had knowledge of the same”.

60. In the circumstances I find it difficult to read or to regard this as other than amounting to a plea of fraud/fraudulent conduct, however felicitously it now is re-dressed in contractual garb; indeed, I do not think that the concept of ‘market rigging’, as still alleged on the face of the pleading, is susceptible to a non-fraudulent connotation, even if such forensically was desired, and although I bear in mind that this alleged activity now is subsumed under the label of mere contractual breach, in my view the court is entitled to look at the substance and not merely the form.

61. If this be correct, it strikes me that this draft amendment is susceptible to the like criticism as mounted by Mr Barlow with regard to the original version, wherein he emphasized the well-known necessity properly to particularize a plea of fraud/fraudulent conduct, citing in this context the observation of this court in Akai Holdings Ltd (in liquidation) v. Domine KoCheong Wing and ors (unreported, HCCL 20 of 2005, judgment dated 9 June 2006, at para 31) :

“Equally, in terms of the pleading of fraud it is well established that, in addition to the requirement of properly-particularised pleadings – see Order 18, rule 12(1) – there was a ‘special rule’ that allegations of fraud be pleaded with the “utmost particularity”: see ADS vWheelock Marden & Co Ltd [1994] 2 HKC 264, whilst ‘speculative pleading’ absent proper particularization will not be entertained: see Wharf Properties Ltd v EricCumine Associates [1991] 2 HKLR 154(PC).”

62. Nor do I consider that Mr Barlow was being unduly unfair when he castigated the plaintiff’s approach, in the first pleading instalment, as “all surmise and Micawberism”, in the celebrated words of Megarry VC, and he maintains the assertion that the proposed second instalment “is just as speculative and unparticularised as before”.

63. In addition, it also seems to me that the case that the defendant wishes to mount is, for all practical purposes, virtually non-justiciable; how, one wonders, could this particular omelette ever fairly be unscrambled, even with the aid of expert surmise (in this context I decline use of the word ‘evidence’) as to the likely price of the shares absent any such alleged market manipulation – which, as I have observed, in any event has caused no loss to the defendant?

64. In this connection, and specifically to counter the ‘non-justiciability’ argument, I appreciate that Mr Man helpfully invoked the authority of the decision of Chadwick J in Smith New Court v. Scrimgeour Vickers [1992] BCLC 1104, wherein the court attempted to value the shares of a listed company whose share price had been affected by fraud, namely a deliberate misrepresentation that a third party was interested in the acquisition of Ferranti shares, and the task fell to the court to attempt to assess the value of the shares had such a false market not been created, and thus, with the assistance of expert evidence, to arrive at a figure for consequential damage. However, whilst I appreciate that in appropriate situations the court must always try to do the best that it can, I do not think that that case is analogous, nor the decision itself of assistance, and on the basis of the present facts, and not least in light of the speculative (and strongly disputed) allegation in the present action regarding the plaintiff being “privy to such market rigging”, for my part I decline to countenance any such attempt to peer into a crystal ball, which in the particular circumstances in my view would serve only to produce the potential for unfairness and injustice.

65. At the end of the day, therefore, I have decided, albeit not without some degree of reflection, to accede to the strike out application, as amended consequent upon the proposed draft amended pleading.

66. In this regard, Mr Barlow says that he wishes only to strike out that part of the proposed amended Defence commencing from the second sentence of paragraph 15 to the end of that paragraph.

67. Accordingly I grant this application to strike out in consequentially amended form, and thus permit, if so desired, the remainder of this case to proceed on the basis of the proposed draft Defence, subject to the aforesaid excision. I so order.

(ii) Monetary relief

68. Having thus disposed of the application to strike out, this leaves outstanding the plaintiff’s applications for immediate monetary relief, which are framed on the alternative bases of summary judgment, judgment on admissions, and interim payment.

69. As earlier observed, Mr Barlow accepts that, from his client’s viewpoint, little turns on the juridical label to be attached to any such immediate monetary recovery, although he make his primary submission in terms of the grant of summary judgment.

70. As was indicated at the outset, at the conclusion of this hearing this court ordered that the plaintiff was to have relief in terms of the payment out of the sum presently in court – that is, the amount of HK$40.5 million odd, together with accrued interest – with the proviso that the reasons underpinning the grant of such relief would be forthcoming.

71. Given that I have decided that the strike out application is to be granted in these circumstances, I further have concluded, out of the three heads proposed, that this is an appropriate case for the grant of summary judgment to the plaintiff in the sum of HK$40, 503, 237.28, together with interest accrued thereon as at the date of payment out of court.

72. I so order.

73. At the end of the day the proposed amended Defence (even in unelided form) in my view contains the same central difficulty identified by Mr Barlow at the outset.

74. It is this : however the defence case ultimately is framed, the ineluctable fact remains that the defendant acquired the plaintiff’s shares, and onsold them for a profit (now said to be some HK$4.46 million), absent any real degree of commercial risk, but until very recently it has declined to give to the plaintiff the price thus obtained – in this context it is worth noting that, by letter dated 31 January 2007 from the defendant’s solicitors, Lovells, to the plaintiff’s solicitors, Robertsons, the defendant did indicate that it was “prepared to consent to an order that interim payment in the amount of HK$40,503,237.28 which it paid into court on 30 March 2006, plus any interest which has accrued thereon at this stage, be made to your client”, although this was said to be without prejudice to the defendant’s position that the plaintiff “is not entitled to this amount because of market rigging and/or manipulation to which your client was privy.”

75. This offer to settle this dispute in advance of the hearing did not in fact achieve its objective because, whilst written in open correspondence, it came girt about with conditions, including consent for leave to amend in terms of the new draft Defence, a withdrawal of the plaintiff’s strike out application with no order as to costs, and a further order that costs of the interim payment and summary judgment applications be costs in the cause.

76. However, given that these ‘package’ conditions were not accepted in toto, Mr Man was not instructed to concede to the plaintiff’s attempt to obtain the monies in court, and as a consequence the matter was fully argued. At the end of the day, however, and given that the plaintiff now has obtained summary judgment, and not merely an order for interim payment, as apparently was envisaged by those acting for the defendant, it may be thought that a more prudent course would have been not to have sought to drive so hard a tactical bargain.

77. Payment out of court of the principal sum of HK$40.5 million odd – as was ordered at the conclusion of the hearing – does not finally conclude this matter of immediate monetary payment, of course, because pursuant to the plaintiff’s summons there remains in play a further sum, albeit far smaller, which similarly is sought by the plaintiff.

78. This is the amount of HK$930,412.15, which it is common ground represents the converted price (as per the price stated in the draft Closing Notice) of the shortfall of 4,963,333 shares as returned by the defendant to the plaintiff (402,970,000 in fact were returned as against the projected figure of 407,933,333), which at HK$0.1874513 per share, produces the sum in question.

79. In this regard, whilst Mr Man was instructed to make no concession as such, as counsel he very fairly observed that he was in position to make no distinction in argument between the sum of HK$40.5 million odd, and this latter figure of HK$930,412.15.

80. I agree. It seems tolerably clear that as goes the main sum so goes this smaller figure, and accordingly I grant summary judgment to the plaintiff in the sum of HK$930,412.15.

81. Unlike its much larger counterpart this sum never was paid into court, and I make an order nisi that interest thereon be paid at the rate of 2% over Hong Kong dollar prime from time to time prevailing from the date of the issuance of the writ to the date of judgment herein, and thereafter that there be interest on such principal sum at the judgment rate from time to time prevailing.

Alternative finding

82. Save as to the issue of costs, the foregoing is sufficient to dispose of the matters presently in issue on these applications.

83. I should, however, also make an alternative finding if and in so far as I be wrong in considering that summary judgment should be granted to the plaintiff in the respective sums of HK$40,503,237.28 and HK$930,412.15.

84. It seems clear, however, that had this court not granted summary judgment (as it now has), an appropriate alternative finding would have been that there be interim payment to the plaintiff by the defendant in the aforesaid sums (as indeed was canvassed by the defendant, in terms of the larger amount at least, in the inter-solicitor correspondence prior to the adjourned hearing).

85. Accordingly, had I not otherwise concluded, I would have ordered that there be interim payment of these sums by the defendant to the plaintiff, and that, with regard to the sum of HK$930,412.15 which was not in court, that such be paid to the plaintiff by way of interim payment within 14 days of the date of judgment herein.

Costs

86. Two consequential issues arise.

87. First, in light of this judgment it seems to me appropriate that the costs of and occasioned by these applications, including the hearings on 9 January and 2 February 2007, be to the plaintiff, and I make an order nisi to this effect.

88. Second, at the conclusion of the hearing of these applications Mr Barlow asked that the court consider making a ‘gross sum’ order as to costs, and referred the court to the material thereon in the papers, as to which request I do not think that Mr Man demurred in principle.

89. Whilst I am surprised that the parties should wish to avail themselves of that which is commonly recognised to be the ‘broad brush’ approach of the Commercial Court to issues of costs/security for costs, if indeed this remains the case I should be prepared to consider the relevant material and to essay such an immediate ‘gross sum’ order, thereby obviating the necessity for taxation; in this event, however, I require some assistance on the figures, and in this regard I would be prepared to entertain the solicitors for the parties in Chambers on a short 9.30 am application in order to finalise this aspect of the case.

90. At such hearing, it strikes me that it would be convenient for this court also to essay some form of case-management, and to make directions for the further conduct, if thought necessary, of that which remains of this case.

91. I am grateful to both counsel for their assistance.

(William Stone)
Judge of the Court of First Instance
High Court

Mr Barrie Barlow, instructed by Messrs Robertsons, for the plaintiff

Mr Bernard Man, instructed by Messrs Lovells, for the defendant

(a)	On which 90% of the Closing Trade Price is less than the Floor Price stated in the Draw Down Notice last delivered by the Seller to the Purchaser, or
(b)	On which shares are not traded on the Main Board for the whole Trading Day; or
(c)	During which Trading has been suspended for more than one hour; or
(d)	In respect of which the Purchaser has made an election in accordance with Clause 2.4(a) that such Trading Day is a Knockout Day.