LAM PO CHIU MARK v. ION GLOBAL (BVI) LTD AND OTHERS

HCA 4754/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4754 OF 2003

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BETWEEN

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J U D G M E N T

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This litigation

1.  In this case the plaintiff, Mr Mark Lam Po Chiu, sues the 1^st, 2^nd and 3^rd defendants for the sum of US$741,937.00.

2.  This amount is said to represent the price of his shares in a company known as ‘e2e Business Solutions Ltd’ (‘e2e’), shares which Mr Lam maintains should have been purchased by the 1^st defendant, Ion Global (BVI) Limited (‘Ion Global’) pursuant to the exercise of a Put Option granted within a ‘Stock Purchase and Subscription Agreement’ dated 14 February 2000 and executed by plaintiff and 1^st defendant on 22 March 2000.

3.  Whilst the 1^st defendant is pursued as the direct contractual counterparty – which, it is said, should have purchased the shares consequent upon the issue by Mr Lam of a Put Option Notice dated 18 February 2003, but in breach of its contractual obligation failed so to do – the claim against the 2^nd and 3^rd defendants, CDC Corporation (‘CDC’) and Mr Peter Yip Hak Yung respectively, is mounted solely upon the secondary tortious basis of inducing the 1^st defendant to breach the contract represented by the Principal Agreement.

4.  Whilst not complex, this case cannot be understood absent reference to the factual matrix which spawned it.

The factual background

5.  The plaintiff, Mr Lam, is a computer software developer‑cum‑entrepreneur, who was involved in the late 1990’s in the development of that which then was perceived as a niche market in ‘internet-based software’.

6.  Pursuant to this aim, in 1998, together with a colleague, a Mr Roger Covey, Mr Lam founded ‘Chelcon Technology Group Limited’; of the issued shareholding, Mr Covey held 2,850,009 shares therein, and Mr Lam 150,001.

7.  Chelcon Technology, later to be renamed ‘e2e Business Solutions Ltd’ (‘e2e’), provided internet-based software and e‑business consultancy services.

8.  The 1^st defendant, Ion Global, is a BVI registered company, and itself is, or at least was, involved in the business of providing e‑business consulting services in Pacific-region companies; Ion Global is wholly-owned by the 2^nd defendant, CDC, which is registered in the Cayman Islands and is listed on the Nasdaq in New York.

9.  CDC is a holding company with investments in a variety of BVI companies (including the wholly-owned Chinadotcom Ventures Limited to which Ion Global transferred all its shareholding in e2e in December 2001), which provide services in the internet and e‑business field such as internet media and advertising, mobile applications, software outsourcing and business software.

10.  The 3^rd defendant, Mr Peter Yip, is a director and CEO of CDC; whilst he himself directly holds no shareholding therein, his wife and children are the beneficiaries of a trust which holds in the order of 19‑20% of the shares in that company.

11.  Clearly also Mr Yip is a man of very significant influence in the running of this corporate group. Although in evidence before this court Mr Yip attempted to play down the extent of his wide-ranging personal importance and influence within this group, I have no doubt, and indeed so find, that he was and remains the de facto controlling mind of the 1^st and 2^nd defendants; in the sage words of Deputy Judge Ian Carlson, who in June 2009 had presided over an attempted (and ultimately unsuccessful) strike out of the plaintiff’s Re-amended Statement of Claim, Mr Yip is the “eminence gris under whose influence the directors and executives of these two companies take their lead in the overall conduct … of these companies’ affairs.”

12.  But this is to get ahead of the story.

13.  Mr Lam first came into contact with the 2^nd defendant, CDC, in January 2000 through the good offices of Dr Raymond Chi’ien, who then was Chairman of the Board of CDC, which at that time recently had listed on the Nasdaq; with the capital so raised CDC was seeking suitable investment opportunities within the internet-related and e-business fields.

14.  After this initial contact further discussions took place with CDC executives, including Mr Stephen Mackay, the then President of Ion Global and Vice-President of CDC. After several meetings, Mr Mackay expressed to Mr Lam a confirmed interest in e2e’s business and proposed a majority-share acquisition of e2e by Ion Global; preliminary terms of sale thereafter were agreed, which involved the purchase by Ion Global of 1,470,005 shares from Roger Covey, 30,000 shares from Mr Lam, and the issuance of 375,001 new shares in e2e to Ion Global, the net effect of which was that after the sale Ion Global would own 55% of e2e shares.

15.  Mr Lam’s evidence to this court, which in terms of all material factual matters I accept, was that the reason that the two founders of Chelcon/e2e wished to enter into this share sale to Ion Global was twofold: first, that they had been assured that there would be a public listing of e2e on the Nasdaq, or upon some internationally-recognised exchange, within two years of this takeover, and further that in the share sale agreement that these gentlemen also would be granted a Put Option, which obliged Ion Global to purchase their remaining shareholding in e2e in the event that the envisaged public listing of e2e did not occur within the time frame as then anticipated.

16.  Moreover, they understood that should the share sale come about via the exercise of the Put Option, CDC also wished that Mr Covey and Mr Lam should remain involved in e2e, the better to integrate e2e with the overall operations of CDC, which thereby would ensure that business referrals would continue to be made from CDC to e2e.

17.  The plaintiff’s evidence on this aspect, again accepted by this court, was that Covey and himself had been most concerned to ensure that they had not parted with ownership of their ‘baby’, e2e, too easily and for insufficient consideration, and thus that they regarded the Put Option within the share sale agreement as, in Mr Lam’s words, “the ultimate deal breaker”, since the insertion of the Put Option would afford Covey and himself the possibility of a ‘clean break’ and enable them to realize the value of their remaining shares if the anticipated public listing of e2e did not occur.

18.  It is a matter of record that by the ‘Stock Purchase and Subscription Agreement’ (‘the Principal Agreement’) dated 14 February 2000 that Messrs Covey and Lam, the shareholders of the entity then known as Chelcon Technology Group Ltd, agreed to sell stock in that company to the predecessor of Ion Global, The Connection Group (BVI) Limited.

19.  I return to the content of this ‘Principal Agreement’ later in this judgment; for present purposes, suffice to say that under this Agreement it was envisaged that the consideration for the transfer of the shares was to come from CDC, which had issued a Promissory Note for US$7,840,000 to Mr Covey as payment for 1,470,005 shares and another Promissory Note for US$160,000 to Mr Lam as payment for 30,000 shares. These shares thereafter were transferred to the purchaser, the 1^st defendant, with Chelcon then issuing 375,001 new shares to the 1^st defendant.

20.  As a result of these transfers, the shareholding situation in Chelcon/e2e was as follows: Mr Lam held 3.56%, or 120,001 shares, Mr Covey held 40.89%, or 1,380,004 shares, and Ion Global held 55.56%, or 1,875,006 shares, and thus the latter entity controlled the company.

21.  The evidence, which essentially is undisputed, is that after this share transaction CDC and Ion Global rapidly assumed full control over the composition of the e2e Board of Directors, and, as Mr Lam expressed the position, also controlled “the setting of strategic directions, operating and financial policies” of e2e; about 3 months after the signing of the Principal Agreement, Ion Global appointed five of their representatives to the Board of e2e, including Messrs Hamilton, McKay, Winslow and Widdicombe.

22.  Whilst Mr Lam formally was retained as CEO of e2e, his role within the company fundamentally was diminished, and he was delegated certain functions only, such as the running of sales and marketing, and certain consulting and software development functions; more significant corporate functions, including finance, audit, company secretarial, human resources, administration and the setting of corporate strategy were placed under the control of officers of the 1^st and 2^nd defendants.

23.  It seems not to have taken a great deal of time for cracks to begin to appear to the relationship between Mr Lam and Mr Covey on the one hand and the CDC/Ion Global representatives on the other; in particular, Mr Lam says that Mr Covey and Mr Peter Yip met in New York on 20 November 2000, and that Covey later told him that at that New York meeting that Mr Yip had informed Covey that the terms of the Principal Agreement would not be honoured unless Messrs Covey and Lam were willing to renegotiate that which Mr Yip considered a poor and “badly negotiated” deal from the viewpoint of CDC.

24.  Under the Principal Agreement, the Promissory Notes as issued to Messrs Covey and Lam originally were due and payable by CDC on or before 31 December 2000, but payment to Mr Covey was not forthcoming and was witheld. In the event, matters could not be settled, and in January 2001 Mr Covey issued legal proceedings against CDC – which I understand also included a claim for failure to honour Covey’s Put Option – and Ion Global; these proceedings subsequently were settled, albeit the court is unaware of the precise terms thereof.

25.  The upshot of Mr Covey’s departure from the scene consequent upon settlement of his litigation was that Ion Global had acquired Mr Covey’s remaining 1, 380,004 shares in e2e in exchange for Mr Covey waiving his rights under the Put Option granted in the Principal Agreement; the result of this was that Ion Global then owned a total of 3,255,010 shares, that is, 96.44% of e2e’s total issued share capital of 3,375,011 shares.

26.  This left Mr Lam as the only survivor of the original company, still holding 3.56% or 120,001 shares.

27.  Mr Lam continued to work in the business of the company, in particular in the evaluation of potential acquisition candidates for CDC to absorb. He also remained preoccupied with the much-touted possibility of bringing e2e to market on an IPO, and it had been this possibility, he said, which had sustained him in his continuing (and increasingly uphill) labours within the business of e2e.

28.  However, in a meeting with Mr Yip in July 2002 Mr Lam was told that CDC would not be helping e2e to go public as prevailing market conditions were poor; instead Mr Lam was requested to engage in negotiations with a company known as Platinum China (another CDC subsidiary which had been acquired in April 2002) with a view to effecting a merger of e2e with that company in order to form a new company to be titled ‘CDC Software’.

29.  Mr Lam stated, and I accept, that he did not agree with this proposed course, and informed Mr Yip that he intended to exercise his Put Option within the Principal Agreement; nevertheless, at an e2e Board Meeting on 13 November 2002 chaired by Mr Widdicombe, with Mr Yip in attendance, Mr Lam was ordered to deliver a presentation upon such merger prospects with China Platinum – the very plan to which he had objected. Mr Lam says, truthfully in my view, that his request at that meeting to raise the issue of his existing Put Option was rejected on the premise that this had not been placed within the particular meeting agenda.

30.  In the event, Mr Lam’s continuing requests to have the issue of his Put Option placed before the e2e Board came to nought; nevertheless he states that at one stage Mr Yip offered to buy out his remaining shares in e2e at “an attractive price” if Mr Lam would approach, discuss and broker a merger with Platinum China.

31.  Accordingly, Mr Lam worked with personnel of Platinum China and duly came up with a merger plan, which subsequently he presented at the office of CDC; however, nothing came of Mr Yip’s promise to purchase his shares.

32.  Thereafter Mr Lam’s position within e2e deteriorated markedly. On 29 November 2002 he had a meeting at the office of Mr Widdicombe to review the alleged “poor performance” of e2e, and he was asked to take a reduction in salary. Mr Lam refused, and told Mr Widdicombe that he wished to exercise his Put Option and requested an e2e Board Meeting in order to discuss this.

33.  However, Mr Lam stated that this request was ignored, and on 2 December 2002 he submitted to Mr Yip his resignation letter from e2e, which resignation was accepted; at the same time he declined Mr Yip’s request that he, Mr Lam, remain on the e2e Board.

34.  Thereafter, Mr Lam purported to exercise his Put Option, and on18 February 2003 gave formally gave Notice obliging Ion Global to purchase his remaining shares in e2e within sixty days.

35.  However, this Notice was ignored, and the Put Option to purchase Mr Lam’s 120,001 shares was not executed – hence these proceedings.

The evidence

36.  At the hearing of this case there were but two viva voce witnesses of fact: the plaintiff, Mr Mark Lam, and the 3^rd defendant, Mr Peter Yip.

37.  Their style of giving evidence was very different.

38.  Mr Lam was focused and methodical and, I am minded to add, transparently honest. Perhaps unsurprisingly, he knew every nuance of his case, and had every fact at his fingertips. Taken in the round, he was an impressive witness and in my view obviously was a witness of truth. Accordingly in terms of matters of fact which were within his direct knowledge, I have, as I have said, accepted his evidence without reservation.

39.  Whilst ostensibly charming and authoritative, Mr Yip was very different. His forensic style was not to confront a question directly, or, if pressed to do so, to make a brief and often dismissive response to the specific question posed, and thereafter to launch into a monologue relating to ancillary matters, the impression given being of someone who wished to divert attention from the immediate issue the subject of cross-examination.

40.  Notwithstanding the apparent modesty he affected, Mr Yip was very clearly the ‘big boss’ (to use Mr Lam’s description) of CDC and the associated group, and notwithstanding Mr Yip’s ostensible lack of recollection of matters of detail, I formed the strong impression that there was little within the operations of the CDC group of which either he was unaware or with regard to which he did not have a strong commercial opinion. I also formed the impression that he knew far more about Mr Lam’s position, and about the purported operation of the Put Option within the Principal Agreement, than he was prepared to accept, despite his strong denial of any adverse influence in this regard and his apparent lack of detailed recollection of important issues as were canvassed in cross‑examination. I do not wish to be unfair, but in summary I am driven to the conclusion that in his evidence Mr Yip was not being full and frank with the court.

41.  If and so far as it is necessary in the determination of objective factual issues in this case, I have little hesitation in preferring Mr Lam’s version of events to that of Mr Yip.

The contractual position

42.  The ‘Stock Purchase and Subscription Agreement’ or ‘Principal Agreement’ as it was referred to throughout this trial, is dated 14 February 2000, although it is not disputed that it was executed subsequently on 22 March 2000.

43.  This document, in some 17 sections, has been drafted by lawyers – I suspect that there is considerable element of ‘cut and paste’ in its make-up – and it is fair to say that it does not yield up its secrets easily; it contains a profusion of good old-fashioned ‘boiler plate’, it has Schedules and Exhibits A-F, and is redolent with detail.

44.  For immediate purposes, however, the relevant sections are Sections 13 and 14.

45.  Section 13 is entitled ‘Put and Call Option’; section 13.01 says that in consideration of the Sellers entering into this Agreement, the Purchaser grants each of the Sellers an option (“the Put Option”) exercisable only in accordance with the provisions of section 13.02, to require the Purchaser by written notice to purchase within 60 days of the issuance of the Put Notice the remainder of the outstanding shares of the Company as thencurrently held by the Sellers.

46.  Section 13.02 states that, subject to the Purchaser’s rights under Section 14, the Put Option may be exercisable with effect from 2 years from the Closing Date (in this instance, 22 March 2000), provided first, that there has been no IPO of the company within that 2 year period, and second, that a Warrant Certificate shall have been issued by the Company to the purchaser in accordance with section 14.04 prior to the expiry of the 2 year period, otherwise known as the ‘Put Option Vesting Date’.

47.  Thereafter section 13.04 says that the purchase price payable for the Put Option shares shall be based upon a valuation of the Company in accordance with the formula therein specified.

48.  As thus stated, therefore, the procedure for the exercise of the Put Option for sale of the remaining shares of Messrs Covey and Lam in e2e is tolerably clear, save that such exercise is constrained by the provisions of Section 14 of the Principal Agreement, which section is entitled ‘Issuance of Revenue Warrants’.

49.  Within this Agreement, ‘Revenue Warrants’ essentially represent a type of credit-mechanism to be given to the Purchaser of the shares under the Put Option.

50.  These Warrants are specified to have an aggregate value of US$0.50 for every US$1.00 of revenue which has been generated by the Company from business referrals from the purchaser, Ion Global, or its associated company China.com, during the 24 month period available for the exercise of the Put Option, with the result that each US$1 of Revenue Warrants “shall be equal to US$1 worth of shares in the Company”; thereafter a formula is set out which calculates the percentage of the outstanding share capital of the Company to which the Purchaser under the Put Option thus shall be entitled.

51.  In terms of the precise formulation of the Purchaser’s share entitlement thus accruing, section 14.04 states that the Revenue Warrants are to be issued in the form of a ‘Warrant Certificate’which is to be executed as a deed by the Company and delivered to the Purchaser “on the date falling 24 months from the Closing Date (the ‘Issue Date’)” and shall be exercisable for a period of 12 months from the date of their issuance.

52.  Accordingly, the broad shape of the contractual position was thus: the sellers of their outstanding shares in e2e were to be able to sell pursuant to the Put Option within a 2 year window of opportunity, pursuant to a recognized pricing formula, and subject to the accretion by the Purchaser, via the use of these ‘Revenue Warrants’, of an amount to be calculated, again pursuant to a specified formula, of the outstanding issued share capital of the Company.

53.  However, within these sections as drafted there lurks an anomaly: given the interaction between the ‘ Put Option Vesting Date’ [Clause 13.02] and the issue date of the Warrant Certificates [Clause 14.04], on its face it appears that these dates are identical, that is, 22 March 2002, and thus that it is not possible for any Warrant Certificate that is issued pursuant to Clause 14.04 to fulfil the requirement of Clause 13.02(b). Thus the due operation of Clause 13.01 – which requires adherence to Clause 13.02 – prima facie is not possible.

54.  It is this drafting anomaly upon which the defendants place reliance in their defence of the present claim.

The parameters of the argument

55.  For the defendants, Mr Eric Lau argued that the Principal Agreement was negotiated at ‘arm’s length’ and represented a professionally drafted document, and that the plaintiff well knew about the relevant conditions (that is, no public offering and the issuance of the Warrant Certificate by e2e) as conditions precedent to his right to exercise his Put Option.

56.  He suggested that as CEO of e2e the plaintiff was in a position to, but pointedly did not, convene a Board Meeting to discuss the exercise of the Option and the issuance of a Warrant Certificate, and that in any event the 3^rd defendant, who was not involved with the daily and detailed operation of e2e, and was not a director thereof, had not himself or through the 1^st or 2^nd defendants sought to exert influence in order to block either the convening of a Board Meeting or to prevent the exercise of the Put Option.

57.  He went further. Mr Lau argued that the plaintiff had his own particular reason for not insisting on an e2e Board Meeting to discuss the exercise of his Put Option, since his primary (and clearly predominant) concern was that e2e should be publicly listed, and that exercise of the Put Option represented his “fall back” position only.

58.  On behalf of the plaintiff, Miss Abigail Wong made what essentially was a two-pronged submission: first, that on the issue of the ability to exercise the Put Option, there had been no substantive defence raised by the defendants, and that the challenge to the plaintiff’s claim essentially went solely (and erroneously) to locus standi, namely, that since the Warrant Certificate was not issued by e2e prior to the ‘Vesting Date’ as required under clause 13.02(b) of the Principal Agreement the plaintiff had not been entitled to exercise the Put Option at all – a proposition which she maintained was defeasible, and could be remedied as a matter of contractual construction; and second and in any event, it was plain that the driving force behind the refusal to comply with the Put Option obligations under the Principal Agreement obviously was the 3^rd defendant, who was “the shadowy power” behind the scenes of this entire operation, and whose word essentially was law – hence the plaintiff must be able to succeed on this basis against the 3^rd defendant also.

Decision

59.  There are two primary issues for decision in this case. I take them in turn.

(a)  Was the purported exercise of the Put Option valid?

60.  So far as the cause of action in breach of contract against the 1^st defendant is concerned, namely that in breach of the Principal Agreement the 1^st defendant wrongfully had failed to purchase Mr Lam’s remaining shares in e2e pursuant to his issuance of a Put Option Notice on 18 February 2003, this is the plaintiff’s primary hurdle. Absent establishment of any such contractual breach, it seems clear that this case falls away against all defendants.

61.  Miss Wong accepts that there is a drafting problem (“internal contradictions” was the way she put it) inherent in the Principal Agreement in light of the non-issuance of Warrant Certificates by the company, to which the exercise of the Put Option is said to be subject; indeed, as matters currently stand, due to such ‘contradictions’ within the Agreement, she accepted that due issuance of the Warrant Certificates was “impossible”.

62.  Faced with this difficulty, Miss Wong did not move for the remedy of rectification, nor is any case advanced on behalf of the plaintiff in terms of mistake, common or unilateral, or misrepresentation. Instead Miss Wong pursued several alternative construction contentions, which she submitted enabled the plaintiff’s case on the Principal Agreement to get home.

63.  In this regard, in her written opening she had argued that the ‘severability clause’ within clause 16.10 may be relied upon to save the Put Option, and/or that on a proper construction of clauses 13 and 14 of the Principal Agreement, the issuance of the Warrant Certificates was permissive and not mandatory, so that failure to issue the same did not preclude the validity of the exercise of the Put Option, and/or that there was an “effective waiver” of the requirement of the issuance of Warrant Certificates which may be inferred from the defendants’ conduct, and/or that in order to give effect to that which the parties clearly intended to be the position that the Principal Agreement thereby was subject to the necessary implication of contractual terms.

64.  Of the alternatives thus advanced by counsel, I have no difficulty in dismissing each as a viable possibility in the context of this case, save for the ‘implied term’ submission, which was the only issue which ultimately was pressed in final argument, and clearly comprised the main plank of the plaintiff’s case. As Miss Wong outlined it, her submission focused upon the implication of a term to the effect that the 1^st defendant would act in good faith, and would not hinder the plaintiff’s exercise of the Put Option by failing to procure the issuance of the Warrant Certificates – which act was, of course, required to be approved by deed by e2e’s Board; slightly different iterations of similar implied terms are pleaded at paragraph 10 of the Re‑Amended Statement of Claim.

65.  Miss Wong argued that in light of the inclusion of the provision as to the Put Option within the Principal Agreement, and to the obvious significance accorded thereto in context of the general factual matrix, that the implication of such a term was required in order to give business efficacy to the contract, that such a term did not (indeed could not) contradict any express term of the Principal Agreement, and that the Principal Agreement in its present form effectively would render the Put Option nugatory, and thus could not be effective without it. She also says (I think) that the ‘entire agreement clause’ (Clause 16.02) did not invalidate implication of a term necessary to provide business efficacy upon what popularly is known as ‘the Moorcock test’.

66.  I have reflected at some length upon this construction argument, not least because of the clear and obvious general merit I perceive within the plaintiff’s case.

67.  Ultimately, however, I have been unable to accede to the ‘implied term submission’ as a way around the impasse created by the drafting of this agreement, drafting which I am told was vetted and approved by lawyers on both sides of the fence; in short, I fail to see how this problem can be ‘construed’ out of existence. In any event, and at the risk of undue repetition, I return once more to the particular provisions in question.

68.  Clause 13.01 of the Principal Agreement provides that the Put Option was “subject to Section 13.02 and Section 14”, and that it was “only exercisable in accordance with Section 13.02”.

69.  However, Section 13.02 provides that the Put Option was exercisable “with effect from the date falling 2 years from the Closing Date ‘the Put Option Vesting Date” – that is, 22 March 2002 – provided that two conditions are satisfied.

70.  These conditions are first, that e2e must not have been publicly listed by the Vesting Date – and it is common ground that this condition is satisfied – and second, that the Warrant Certificate “shall have been duly issued by e2e to [the 1^st defendant] in accordance with Section 14.04 prior to the Put Option Vesting Date”: see Clause 13.02(b).

71.  It is this second precondition which creates the difficulty, because by Clause 14.04 the issuance of the Warrant Certificates “shall be executed as a deed by e2e and delivered to [the 1^st defendant] on the date falling 24 months from the Closing Date (the ‘Issue Date’)” – and clearly this cannot be achieved given the coincidence of the date.

72.  It seems to me that Miss Wong’s argument, and her suggestion as to an appropriate implied term, does not solve the problem, however much her client would wish this to be the case. I say this for two reasons: first, that the proposed implied term does not meet the immediate difficulty, since it can be argued that there can be no lack of good faith on the part of the Board of e2e if (as is the case) the precise contractual term(s) themselves operate to prohibit due compliance irrespective of considerations of good faith; and second, that it is trite law that the construction device of any implied term cannot be used if the same is, or would be, inconsistent with the express wording of the contract: if authority for this proposition be needed see, for example, Chitty on Contracts, Volume 1, at para 13-009.

73.  In light of this conclusion, there is no need for present purposes to make a finding upon whether the presence of the ‘entire contract’ clause operates to obviate any necessary implication of terms, even if such was amenable on the facts of this case; without finally deciding the point, which was but barely argued if at all, I suspect that the correct answer is that such a clause is not decisive but that, as the authorities clearly tend to establish, the court will be the more reluctant to make any such implication where the parties have entered into a carefully drafted contract containing, as does this one, extremely detailed terms as were agreed between them.

74.  Accordingly, commercially sympathetic though I am with the plaintiff’s current position, and with the unfortunate circumstances in which he now finds himself, wherein the obligation to purchase his remaining shares under the Put Option effectively is rendered nugatory, it seems to me that to imply the term/terms as sought by Miss Wong necessarily would entail a judicial rewriting of the specific contractual provisions, and thus achieve rectification ‘through the back door’ – a temptation which, it seems to me, I am constrained by principle to reject.

75.  It follows from the foregoing, therefore, that in answer to the question posed, namely, ‘Was the purported exercise of the Put Option valid’, in my judgment, as a matter of contractual construction the answer regrettably must be ‘No’.

(b)  If the exercise of the Put Option had been valid, did D2 and/or D3 procure breach of the Agreement?

76.  In light of the foregoing conclusion, strictly there is no need to progress to the second stage; as earlier observed, in the absence of establishment of contractual breach, the case must fall away against the other defendants upon this ancillary cause of action which, I am told, is pursued against the 3^rd defendant, Mr Yip, primarily because the 1^st defendant, Ion Global, is a BVI company, so that undoubtedly there would be difficulties facing a successful plaintiff in terms of execution.

77.  Nor do I consider that I am in any position sensibly to indicate any final view on the alternative cause of action now pursued against Mr Yip personally, given that this court has declined to imply a term (or terms) into the Principal Agreement. In short, before evaluating whether there has been any inducement to breach a contract, as is alleged against Mr Yip, it is necessary to establish the terms of the contract allegedly subject to such inducement– and, as matters currently stand, it cannot be said that Mr Yip has been responsible for non-compliance with a contract which on its face Miss Wong herself accepts is “impossible” to perform.

78.  Nevertheless, notwithstanding this conceptual difficulty, I am prepared to observe, in broad terms, that urbane (and loquacious) though he undoubtedly was, in my judgment parts of Mr Yip’s evidence in relation to his dealings with Mr Lam, and in his purported ignorance of the details of the Put Option, merited the characterization of “disingenuous” and “evasive”. Moreover I entertain little doubt that relatively early in the game that Mr Yip indeed had come to the view that the Put Option in question – which under the Principal Agreement potentially had applied both to Mr Lam, the current plaintiff, and to Mr Covey, his former partner – represented too expensive a contractual commitment, and that Mr Yip firmly had set his face against any payout upon this basis for the e2e shares then residually held by Messrs Lam and Covey. On the available evidence it is tolerably clear that nothing occurred in the operation of this CDC group absent Mr Yip’s imprimatur, and to hold otherwise in my view would be to fly in the face of the clear commercial reality.

79.  Suffice it to say, therefore, that in so far as there had been a contractually operable Put Option consequent upon the issuance by Mr Lam of his Put Option Notice – which I have held that there was not – I have no doubt that Mr Yip would have made it his business to decide and/or influence whether payment would be made for Mr Lam’s remaining shares upon the basis of the Put Option formula appearing within the Principal Agreement.

80.  For the reasons earlier given, however, this opinion serves to take the case no further from the plaintiff’s standpoint in terms of establishment of the alternative cause of action against Mr Yip or the 2^nd defendant.

Quantum

81.  In the circumstances this element again is of contingent relevance only.

82.  Miss Wong has formulated differing ways of arriving at the sum claimed – including the highly unusual course of filing supplemental submissions without leave after the conclusion of the trial, although it must be said that this was done without objection on the part of the defendants – and if and in so far as the quantum of this claim had imposed itself upon the result of this case (which it has not), I should have been content, on the available evidence, to have adopted the figure as claimed by the plaintiff, namely that of US$741,937.00.

Order

83.  In light of this judgment, it must follow that the plaintiff’s case against the 1^st, 2^nd and 3^rd defendants must be dismissed.

84.  I so order.

Costs

85.  I have felt constrained to make the foregoing Order, although I confess that this strikes me as a less than satisfactory result, since, as earlier observed, the broad merits of this case seem to me to lie entirely the other way.

86.  I have reflected upon the issue of costs, and after taking all the circumstances into account, in the exercise of my discretion I am minded to make an order nisi, to become absolute within 14 days of the date of the judgment herein absent formal application being made so to vary, that there be no order as to the costs of this action.