SECURITIES AND FUTURES COMMISSION v. ANDREW LIU AND OTHERS

HCMP 2653/2016

[2026] HKCFI 694

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2653 OF 2016

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BETWEEN

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J U D G M E N T

(CARECRAFT)

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A. Introduction

1.  The Petitioner in this action is the Securities and Futures Commission (“SFC”). The action concerns the operation of the 11^th respondent Arta TechFin Corporation Ltd (formerly known as Fintech Freeman Corporation Ltd) (“Company”) by the other respondents, who will be referred to as, for example, “R1” and “R2”.

2.  By the proceedings, the SFC sought disqualification orders against the individual respondents, all of whom are former directors of the Company, under section 214 of the Securities and Futures Ordinance Cap 571 (“SFO”). This Judgment contains the Court’s decision relating to R1, R2, R3-R7, R9 and R10 (together, “Respondents”).

3.  R8 is not included in that group because the claim against R8 was eventually (but, in my view, belatedly) correctly not pursued and, as I previously expressed in open Court, his reputation is entirely untarnished. In the circumstances, I make no further mention of R8 below.

4.  All of the Respondents have consented to dispose of the proceedings against them by way of the Carecraft summary procedure: see Re Carecraft Construction Co Ltd [1994] 1 WLR 172 and various Hong Kong cases adopting that procedure.

5.  It is well-settled that, in deciding whether to make a disqualification order, the Court is not bound by any agreement reached by the parties. The Court must be independently satisfied, based on the agreed facts, that the business or affairs of the company have been conducted in a manner described in paragraphs (a), (b), (c) or (d) of section 214(1) of the SFO. If so satisfied, the Court must determine the scope and duration of the disqualification order. But it is equally well-settled that the Court is likely to be guided by the agreement that the SFC has reached.

6.  The SFC and the Respondents consented to my dealing with the matter on the papers, with the benefit of written submissions provided by the parties.

7.  Counsel for the SFC were Mr Ambrose Ho SC, Ms Bonnie YK Chen, and Mr Jonathan Fung (in the claim against R1), and Mr Ambrose Ho SC, Mr Norman Nip SC, and Mr Jeff Chan (in the claim against the remainder of the Respondents). Counsel for R1 were Mr Benjamin Yu SC, Mr Laurence Li SC and Mr Byron Chiu. Counsel for R2 was Mr James Man. Counsel for R3-R7, R9 and R10 was Ms Terri Ha. In the light of their written submissions, I have not found it necessary to raise any further questions or for any of the parties further to address me on any issue.

8.  This is my Judgment.

B. Applicable Principles – Directors’ Duties

9.  Before turning to the factual matters, it is convenient to address the principles applicable to directors duties. The various duties owed by directors are well settled and accepted by each of the Respondents.

10.  As directors, the Respondents owed at least the following duties (“Duties”) to the Company:

(1) a duty to act in good faith in the best interests of the Company and for proper purposes, including a duty to disclose all relevant material information to the Company and the shareholders;

(2) a duty to exercise reasonable care, skill and diligence in the performance of their duties as directors of the Company;

(3) a duty to exercise independent judgment in the performance of the duties as a director of the Company; and

(4) a duty to ensure full compliance with the Listing Rules of the SEHK.

11.  Indeed, fiduciary duties include the requirements to act honestly, in good faith and in the interests of the company; to act for proper purposes; to avoid situations where the director’s interests may conflict with that of the company; and not to obtain any undisclosed profit through his position.

12.  There is a common law duty to exercise due and reasonable care, skill and diligence that would be exercised by a reasonably diligent person with the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as carried out by the director in relation to the company, and with the general knowledge, skill and experience that the particular director has.

13.  There is also a duty to ensure full compliance with the Rules Governing the Listing of Securities on the GEM of the SEHK (“GLR”), and a duty properly to supervise the affairs of the company’s subsidiaries.

14.  It is settled that executive directors and non-executive directors have the same responsibility in law as to the management of a company’s business. But, in its application, the duty may and usually will differ. Whilst a non-executive director cannot place unquestioning reliance on others to do their job, the extent to which a non-executive director may reasonably rely on the executive directors and other professionals to perform their duties is fact-sensitive. A company may reasonably look to non-executive directors for independence of judgment and supervision of executive management. Further, whilst a proper degree of delegation and division of responsibility is permissible, and is often necessary, there cannot be total abrogation of responsibility. A board of directors must not permit one individual to dominate them and use them.

15.  In practice, when deliberating on a matter, directors should ask themselves what competing arguments exist for and against the proposed course of action and they should have regard, when assessing them, on the proposed course of action’s impact on the interests of different groups of shareholders.

16.  Directors will have different expertise and experience, and it may be that not all of them would necessarily be equally active in the deliberations which result in a board ultimately taking a collective decision. However, members of the board must scrutinise proposals, particularly important ones, which impact directly on the interests of shareholders. Members of the board must not just take it on good faith that if a director tasked with a particular area of responsibility says something within his remit is a good idea, then it can be approved without critical appraisal.

C. Factual Background

C.1 Agreed Facts

17.  As is typical in this type of procedure, there are Carecraft schedules, which set out the agreed facts and the proposed orders as agreed between the SFC and each of the Relevant Respondents. Those schedules are included as Appendices to this Judgment, being: Appendix A (for R1), Appendix B (for R2), and Appendix C (for R3-R7, R9 and R10).

18.  In so far as it helps to give a broad summary of the factual background, against which the detail in the various Appendices can be considered, the following matters can be set out. Not all facts are agreed by all of the Respondents. Therefore, in so far as there is any apparent conflict between the following summary and the detail of the matters in the various Appendices, the latter should prevail. Unless otherwise identified, and for ease of reference, the definitions and abbreviations adopted in the Appendices will also be adopted in this Judgment. Further, unless otherwise made clear, all references to dollar sums are denominated in Hong Kong Dollars.

C.2 The Respondents

19.  The Company was at all material times listed on the Main Board of the Stock Exchange of Hong Kong (“SEHK”). It was engaged in various finance-related businesses, including the provision of securities brokerage services, insurance brokerage services and financial planning services.

20.  Ambition Union Ltd (“Ambition”) was a wholly-owned subsidiary of the Company.

21.  R1 was a non-Executive Director, and the largest single shareholder of the Company. He is the eldest son of Liu Lit Man and Madam Pearl Liu (“Sellers”). Liu Lit Man was the eldest son of Liu Po Shan, the founder of Chong Hing Bank Ltd (“Chong Hing Bank”).

22.  R2-R7, R9 and R10 were directors of the Company at all material times, save that R5 resigned as a director of the Company with effect from 15 March 2011. R3-R6 were executive directors. R7, R9 and R10 were independent non-executive directors.

23.  R2 was the sole director of Ambition.

C.3 Liu’s Holdings

24.  Liu’s Holdings Ltd (“Liu’s Holdings”) was a family company incorporated in Hong Kong and held shares in Liu Chong Hing Investment Ltd (“LCH Investment”). As at December 2010:

(1) Liu’s Holdings held approximately 45.33% of the total issued shares of LCH Investment, which held 48.53% of Chong Hing Bank.

(2) Liu Lit Man held 149,091 shares of Liu’s Holdings in his own name and a further 26,623 shares jointly with Madam Pearl Liu (“Sale Shares”), totalling approximately 23.43% of its total issued shares.

(3) The other 574,286 shares of Liu’s Holdings were held by various other children of Liu Po Shan or their estates (“Remaining Shareholders”).

25.  The relationship between the shareholders of Liu’s Holdings was governed by a deed dated 20 October 1972 (“Deed”). The essence of the Deed is to prohibit the transfer of shares in Liu’s Holdings to persons outside the Liu family. The Deed only admits to routes through which members can dispose of their shares, namely the shares are either (1) taken up by the other shareholders pursuant to that pre-emption rights or (2) redeemed by way of LCH Investment shares. The Deed also provides that only persons surnamed Liu would be eligible to become a director of Liu’s Holdings.

26.  Articles 15 and 16 of the Memorandum and Articles of Association of Liu’s Holdings (“M&A”) provide that the directors of Liu’s Holdings may decline to register any transfer of shares to a person of whom they do not approve, and that Liu’s Holdings is not bound to recognise any trust in shares.

C.4 R1’s Proposal

27.  Liu Lit Man was in ill health and indebted to the Bangkok Bank. Madam Pearl Liu, who was appointed as his attorney, sought R1’s assistance to sell the Sale Shares.

28.  R1 took advice from a solicitor friend, Andrew Lam of Lam & Co, who reviewed the Deed and suggested the transaction be structured as a sale of the beneficial interest of the Sale Shares, but not the legal title. (In passing, it is unnecessary to make any comment on the reliability of any advice given by Lam & Co, as just stated or as traversed below.)

29.  In around November/December 2010, R1 approached R2 with a view to procuring the Company to acquire (“Acquisition”) the Sale Shares from his parents at the offer price of HK$502,542,037.50 (or HK$12.5 per LCH Investment share), which was approximately at 32% premium to the then current market price of the LCH Investment shares at about HK$9.5 per share.

30.  In respect of the Acquisition, R1 accepts that he had his parents’ interests in mind, and was concerned to assist them to sell the Sale Shares. A previous approach to Liu Lit Chi had been declined, with the latter citing the need to follow the Deed as one of the reasons. However, R1 knew that the Company was cash rich.

31.  The SPA (as defined below) was drafted by Andrew Lam. R2 accepts that he came to know that the deal structure involved a peculiar feature of a split of the legal and beneficial interests in the Sale Shares, as well is the existence of the restrictions contained in the Deed. R2 was able to take verbal legal advice from Andrew Lam, without the need to give formal instructions. But, Andrew Lam was not and could not be an independent legal adviser to the Company, as he had advised R1 on the proposed transaction. R2 was legally qualified and practice as a solicitor in Hong Kong until 2001. Therefore, R2 ought to have made proper enquiries on behalf of the Company as to whether Andrew Lam was in a position of conflict or capable of acting as an independent legal adviser to the Company, but he failed to do so.

C.5 The 8/12/2010 Board Meeting and the SPA

32.  On 7 December 2010, R2 gave notice to the Board of Directors of the Company (“Board”) for a Board meeting to be convened on 8 December 2010, to consider the proposed acquisition of the Sale Shares. R2 also sent to the directors a copy of the agenda for the Board meeting and a draft of the Sale and Purchase Agreement (“SPA”).

33.  On 8 December 2010, the Company’s Board held a meeting to consider the proposed acquisition (“8/12/2010 Board Meeting”). According to the minutes:

(1) The draft SPA and a draft announcement of the transaction was tabled for consideration.

(2) R2 represented, amongst other things, that: (a) the Deed and the SPA had been reviewed by Lam & Co; (b) based on the legal advice obtained, the SPA would not breach the Deed and there was no requirement to seek approval from the Liu family for performing the SPA; and (c) in view of the guarantee which was to be offered by R1, the Company would not suffer any loss as a result of the transaction.

(3) R2, R3-R7, R9 and R10 resolved to approve the SPA.

34.  On the same day, the SPA was executed between the Sellers, R1 (as guarantor) and Ambition (as purchaser). Pursuant to the SPA:

(1) The Sellers sold their respective legal and equitable rights, interests, entitlements, claims and undeclared dividends in the Sale Shares to Ambition, and agreed to hold legal title to the Sale Shares on trust for Ambition (Clauses 3 and 5).

(2) The parties acknowledge that the Deed and the Articles of Liu’s Holdings contained restrictions on the transfer of shares in Liu’s Holdings, but they agreed that they had “doubt about the enforceability of certain provisions in the Articles of the M&A and the Deed regarding the transferability of the legal interests in [the Sale Shares] in that it may be void under the law against perpetuity” (Clause 6).

(3) The Sellers agreed that, in the event, Ambition or its nominee decides to seek a declaration that the provisions in the Articles of the M&A and the Deed are void, they would assist in all respects as shall be reasonably required of them including but not limited to lending their names to the action (Clause 7).

(4) R1 granted an unconditional, continuing and irrevocable guarantee in favour of Ambition as primary obligor in respect of the Sellers’ obligations under the SPA, and agreed to indemnify Ambition for all loss and damage it may suffer as a result of any breach by the Sellers (Clauses 19 and 20).

(5) R1 undertook, as the lawful son of the Sellers, to take all measures and efforts within his control and power to prevent the Sellers from die vesting and bequeathing their respective interests in the Sale Shares after completion (Clause 25).

35.  Nevertheless, R1 admits that, notwithstanding Clause 5 of the SPA, because of the provisions in the Deed and Liu’s Holdings’ M&A, there were substantial practical uncertainties over the prospect and timing of Ambition obtaining legal title to the Sale Shares and securing registration as a shareholder of Liu’s Holdings. The viability of the transfer of legal title would also materially depend on the attitude of and cooperation by other members of Liu’s Holdings.

36.  R2, R3-R7, R9 and R10 admit that they were in breach of his Duties in approving the SPA and the Acquisition at the 8/12/2010 Board Meeting, in that:

(1) There were substantial practical uncertainties over the prospect and timing of Ambition obtaining transfer of the legal title of the Sale Shares, and securing registration in Liu’s Holdings as a shareholder in relation to the Sale Shares; and legal uncertainties as to the prospect of challenging the restrictions under the Deed and the M&A on the transferability of the Sale Shares. Despite these uncertainties, no protective provision was made in the SPA to (a) deal with the contingencies of Ambition failing to obtain the legal title of the Sale Shares, (b) impose any time limit by which the contingencies have to be satisfied, or (c) enable Ambition to terminate the SPA if and when the contingencies were not satisfied, or otherwise unwind the transaction.

(2) The viability of the proposed transaction would materially depend on the attitude of and cooperation by other members in Liu’s Holdings. No independent assurance had been given by the Remaining Shareholders that they would approve or consent to the proposed transaction; and no inquiry or assessment had been made of their willingness (or otherwise) to do so. No consideration was given to seeking such assurance or making such inquiry or assessment.

(3) The proposed transaction was introduced by R1, who was in a position of conflict between his or his parents’ interest and those of the Company/Ambition in respect of the transaction. R2 knew of that position of conflict. He and the other directors should have procured the Company to consider negotiating better terms in the SPA for the inclusion of provisions to deal with the uncertainties and address the contingencies mentioned above, but they failed to do so.

(4) They also failed to procure the Company to seek proper, independent and written legal advice addressing the risks or difficulties of the proposed transaction and the uncertainties in obtaining legal title of the Sale Shares.

37.  R2 also accepts that he failed fairly to present the consideration of the Acquisition, in that he represented to the Board that the aggregate consideration was to 29% discount of the then current net asset value of LCH Investment, but did not explain that the purchase price of HK$12.50 per LCH Investment share was at a 32% premium to the then market price. Further, he did not procure the Company to conduct any independent valuation of the purchase price of the Sale Shares before the Board approved the SPA on 8 December 2010.

C.6 The 10/12/2010 Announcement

38.  On 12 December 2010, the Company published an announcement regarding Ambition’s entry into the SPA (“10/12/2010 Announcement”). It stated, amongst other things, that the directors (excluding the independent non-executive directors) considered the terms of the SPA to be “on normal commercial terms”, “fair and reasonable” and “in the interests of the Company and its Shareholders as a whole. It also stated that the consideration in the SPA had been agreed between Ambition and the Sellers after “arm’s length negotiations”.

39.  R1 admits that the representation was not true, because there were no arm’s length negotiations between the Company and the Sellers in respect of the consideration in the SPA. He also admits that he allowed this representation to remain in the announcement after its publication and took no steps to correct it, resulting in the Company’s shareholders not being given all the information with respect to the Company’s business or affairs that they might reasonably expect.

40.  The other Respondents also accept that the statements in the 20/12/2010 Announcement are misleading. The SPA was not an acquisition “on normal commercial terms”, “fair and reasonable” and “in the interests of the Company and its Shareholders as a whole”. It is agreed that there were substantial practical uncertainties. The Respondents improperly allowed or caused such misleading statements to be published.

C.7 The Deacons’ 1^st Letters

41.  On 20 December 2010, Deacons sent two letters on behalf of the Remaining Shareholders to the Sellers (“Deacons’ 1^st Letters”) unequivocally objecting to the Acquisition, and pointing out that the purported transfer was in direct conflict with the terms of the Deed, as well as the original intention of an understanding made between the Sellers and the Remaining Shareholders at the material time. R1 did not disclose the existence or contents of the Deacons’ 1^st Letters to the Board, nor did he advise the Board to make known its contents to the Company’s shareholders, even though he accepts that upon learning of the letters, he knew of the Remaining Shareholders’ objection to the SPA and Acquisition.

C.8 The A Lam 23/12/2010 Advice

42.  On 24 December 2010, R2 circulated to members of the Board a letter of advice dated 23 December 2010 issued by Lam & Co to the Company (“A Lam 23/12/2010 Advice”), in which it was stated that:

(1) Ambition shall have no legal right to compel Liu’s Holdings to register its name as legal holder of the Sale Shares, not least until legal action was taken by the Sellers and that the relevant provisions in both the Deed and the M&A were declared to be void; and

(2) pending the resolution of that issue, the SPA was enforceable in law by Ambition against the parties concerned of its rights under the SPA.

C.9 The SPA Circular

43.  On 30 December 2010, the Company published a circular (“SPA Circular”) giving notice of an EGM to be held on 18 January 2011 (“18/1/2011 EGM”) to consider and approve the SPA and Acquisition. It was stated in the SPA Circular that the consideration for the Acquisition was agreed after “arm’s length negotiations” and that the SPA was on “normal commercial terms”, “fair and reasonable” and “in the interests of the Company and its Shareholders as a whole”.

44.  Those statements were misleading, in that:

(1) There were no “arm’s length negotiations” between the Company/Ambition and the Sellers in respect of the SPA.

(2) The SPA was not an acquisition on “normal commercial terms”, “fair and reasonable” and “in the interests of the Company and its Shareholders as a whole” – and there were substantial practical uncertainties over the prospect and timing of Ambition obtaining transfer of the legal title of the Sale Shares.

(3) The transaction was proposed to the Company by R1, who suffered from obvious conflicts of interest.

45.  R1 admits that the SPA Circular did not make reference to the Deacons’ 1^st Letters, or to the fact that the Remaining Shareholders objected to the transaction under the SPA. He also admits that he allowed untrue statements to remain in the SPA Circular after its publication and took no steps to correct it. This again resulted in the Company’s shareholders not having been given all the information with respect to the Company’s business and affairs that shareholders might reasonably expect.

46.  R2, R3-R7, R9 and R10 admit that they were in breach of their Duties in allowing or causing the misleading statements to be published, and R2 that he was reckless or negligent as to whether the statements were misleading as he had not ascertained from R1, the Sellers or the Remaining Shareholders or otherwise investigated at the time of the SPA or beforehand the stance taken by the Remaining Shareholders towards the SPA.

C.10 The Deacons’ 2^nd Letter and the 18/1/2011 Board Meeting

47.  On 17 January 2011, Deacons sent a letter on behalf of the Remaining Shareholders to the Company (“Deacons’ 2^nd Letter”), stating that:

(1) The Remaining Shareholders objected to the Acquisition.

(2) After taking legal advice, the Remaining Shareholders were of the view that the Acquisition was in “direct conflict” with the terms of the Deed and that the transaction constituted a breach of the Deed.

(3) The Remaining Shareholders had formally informed the Sellers of their objections to the Acquisition on or about 20 December 2010 (i.e. Deacons’ 1^st Letters).

48.  At 09:20 on 18 January 2011, a meeting of the Company’s Board was held to consider Deacons’ 2^nd Letter (“18/1/2011 Board Meeting”). According to the minutes:

(1) R1 had communicated with Winston Liu, son of Liu Lit Mo (one of the Remaining Shareholders) and confirmed that Liu Lit Mo did not know or authorised the issuance of the letter. The Board expressed “doubts over the genuineness” of Deacons’ 2^nd Letter and the identity of Deacons’ clients.

(2) Andrew Lam joined the meeting in his capacity as legal adviser to the Company on the Acquisition and advised the Board that, amongst other things, Deacons’ 2^nd Letter was simply a “complaint letter” and no action should be taken by the Company, as it may “mislead and cause more confusion in the market about the validity of the complaint”.

(3) The Board resolved that no action was required regarding Deacons’ 2^nd Letter.

49.  Immediately after the 18/1/2011 Board Meeting, the 18/1/2011 EGM took place at 09:30, at which the shareholders of the Company voted to approve the SPA and the Acquisition.

50.  On the same day, pursuant to instructions given by R1, the Company paid the consideration of HK$502,542,037.50 under the SPA by way of a cheque of HK$150,000,000 in favour of Bangkok Bank and a cheque of HK$352,542,037.50 in favour of R1, pursuant to R1’s written instructions.

51.  Of this sum, Madam Pearl Liu allowed a sum of approximately HK$210 million to be kept by R1 for her, as she planned to leave the money to her grandchildren, including R1’s three children.

52.  R1 admits that as at 18 January 2011, he thought that there was no reasonable prospect that the Remaining Shareholders would agree to the transfer of the legal title in the Sale Shares to Ambition. However, he did not apprise the Board or shareholders of his knowledge, understanding and view regarding the share purchase transaction before the resolution was voted on at the EGM.

53.  R2, R3-R7, R9 and R10 were each in breach of their Duties in agreeing to take no action regarding Deacons’ 2^nd Letter at the 18/1/2011 Board Meeting:

(1) Upon receiving Deacons’ 2^nd Letter, R2, R3-R7, R9 and R10 should have appreciated that there was serious opposition from the Remaining Shareholders and considerable uncertainty about the viability of the SPA, in particular the prospect of Ambition obtaining the transfer and registration of the legal title of the Sale Shares.

(2) R1’s assurance that Deacons’ 2^nd Letter had not been authorised by Liu Lit Mo should not have been given any weight when R1 had a personal interest in the transaction going ahead. Even if Liu Lit Mo had not authorised Deacons’ 2^nd Letter, there was not any event no basis for doubting Deacons’ authority to act on behalf of the other five Remaining Shareholders. Insofar as there were doubts over the genuineness of Deacons’ 2^nd Letter, R2 should not have brushed it aside as being “at most some opinion expressed by certain people purported to be clients of Deacons”, and R3-R7, R9 and R10 ought to have procured the Board to make proper inquiry with the Remaining Shareholders and Deacons as to who Deacons actually represented.

(3) In the interests of the Company, R2, R3-R7, R9 and R10 should have procured the Board to make proper inquiry with the Sellers, the Remaining Shareholders and Deacons in respect of the matters raised in Deacons’ 2^nd Letter and the objections to the SPA made known to the Sellers on or around 20 December 2010.

(4) For these purposes, R2, R3-R7, R9 and R10 should have procured the Board to (a) adjourn the EGM until independent proper written legal advice was sought on the issues raised in the Deacons’ 2^nd Letter, and (b) disclose Deacons’ 2^nd Letter to the shareholders at the EGM. The advice from Andrew Lam does not absolve them of responsibility to take those steps.

(5) As a result of the withholding by the Board from the shareholders at the EGM of Deacons’ 2^nd Letter and the objection from the Remaining Shareholders, the shareholders of the Company were not given important and material information directly relevant to the assessment and understanding of the risks involved in the proposed transaction when they exercise their voting rights at the EGM.

C.11 The 18/1/2011 Letter

54.  On 18 January 2011, without the knowledge or consent of the Board, R1 procured and assisted the Sellers to issue a letter to Liu’s Holdings giving notice of a transfer of the Sale Shares to himself, and requesting that all dividends be paid to himself (“18/1/2011 Letter”).

55.  By letter dated 20 January 2011 (“Deacons’ 3^rd Letter”), the Remaining Shareholders rejected the request and reiterated their position as previously set out in the Deacons’ 1^st Letters.

56.  R1 admits that the 18/1/2011 Letter was issued without the knowledge or consent of the Board, and was a breach of the SPA by the Sellers and R1. R1 also admits that he did not disclose to the Board the 18/1/2011 Letter, the Deacons’ 3^rd Letter or the attempt to transfer the Sale Shares to himself.

C.12 Resignation of R5

57.  R5 resigned as a director of the Company with effect from 15 March 2011.

58.  The agreement as to facts concerning events after R5’s resignation do not form part of the undisputed facts as between the SFC and R5.

C.13 The 21/3/2011 Letter and 19/4/2011 Letter

59.  On 21 March 2011, R1 procured the Sellers to issue a further letter to Liu’s Holdings giving “irrevocable” notice of their intention to sell the Sale Shares to other shareholders of Liu’s Holdings (“21/3/2011 Letter”). The 21/3/2011 Letter was issued without knowledge and consent of the Board, was not disclosed to the Board, and also amounted to a breach of the SPA by the Sellers and R1.

60.  R1 also admits that the 21/3/2011 Letter effectively procured the Sellers irrevocably to put it out of their power to convey or transfer legal title of the Sale Shares to Ambition, in breach of the SPA, because it triggered the pre-emption rights of the Remaining Shareholders and the attending mechanism under the Deed.

61.  On 19 April 2011, Liu’s Holdings issued a letter to the Sellers (“19/4/2011 Letter”) stating that:

(1) Pursuant to the request of the Sellers, a total of 150,540 of the Sale Shares had been taken up by the shareholders of Liu’s Holdings at the consideration of HK$365,101,651.20. The consideration was “arrived at HK$2,425.28 per share of [Liu’s Holdings] based on $10.6 per share of [LCH Investment], which is the simple average closing price of the shares of [LCH Investment] on The Hong Kong Stock Exchange for the 30 trading days preceding 21 March 2011 this a discount of 5%”.

(2) The remaining 25,174 shares were to be dealt with by way of a loan of 5,759,811 shares of LCH Investment to the Sellers in accordance with the mechanism provided under the Deed.

(3) The completion date was 18 May 2011.

62.  R1 did not disclose the 21/3/2011 Letter and that the 19/4/2011 Letter to the Board.

C.14 Approval of the Offer for Re-Purchase

63.  On 27 April 2011, R1 procured the Sellers to issue a letter to Ambition, proposing to re-purchase the Sale Shares at a consideration of HK$425,729,493.92 (“Offer for Re-Purchase”). The consideration in the Offer for Re-Purchase was HK$76,812,543.58 lower than the purchase price paid under the SPA, and hence if accepted would result in Ambition/the Company suffering a loss of around HK$76 million within a short period of time, and a corresponding gain by the Sellers.

64.  R1 accepts that the Offer for Re-Purchase contained the following assertions which he knew were untrue:

(1) the Sellers had “received an offer by Liu’s Holdings Limited on behalf of its shareholders (other than [themselves]) for the purchase of 150,540 shares in [Liu’s Holdings]”;

(2) they had “used utmost endeavours … to convince all the remaining shareholders in [Liu’s Holdings] to agree to transfer their legal titles of the shares to [Ambition]”; and

(3) that “after a pro-long period of consideration and negotiation, the remaining shareholders came up with the present offer”.

65.  R1 also did not disclose the fact that it was he who set in train the proposed acquisition of the Sale Shares by Liu’s Holdings which led to the Offer for Re-Purchase.

66.  A Board meeting was convened on 27 April 2011 at 16:30 (“27/4/2011 Board Meeting”). The meeting was chaired by R2 and attended by, amongst others, R3, R4 and R7. It was resolved, amongst other things, that R1 and R2 be authorised to discuss with the Sellers the latest developments as well as their proposals.

67.  On the same day, R2 sought legal advice from Andrew Lam of Lam & Co on the Offer for Re-Purchase on behalf of the Company.

68.  On 28 April 2011, Lam & Co issued a written advice to the Company, which was circulated to members of the Board on the same day, and which stated that:

(1) Lam & Co could not advise the Company on whether it shall accept the proposed re-purchase of the Sale Shares “as the matter is entirely a commercial decision”.

(2) The Company/Ambition had “no locus standi to commence legal proceedings for the purpose of challenging the provisions in the Deed and the [M&A]”.

(3) Lam & Co now had “an opportunity to study thoroughly the Deed and the [M&A]”, but it was not recommended that the Company/Ambition should apply to the Court to set aside the provisions in the Deed as the Court might take the view that “the Deed does not violate the general principle against perpetuity as there is a pre-exemption right and mechanism available to shareholders who want to transfer their shares”.

C.15 The Board Meetings on 6 and 17 May 2011

69.  On 6 May 2011, a Board meeting was held. According to the minutes, the Board discussed the latest developments regarding the Offer for Re-Purchase and proposed to convene a “full board meeting” the following week.

70.  R2 solicited the views of Andrew Yang, who was an executive director of the Company and chairman of the Board, on the Offer for Re-Purchase. Andrew Yang indicated his objection to the proposal. R1 and R2 invited Andrew Yang to attend a lunch meeting and solicited his support for the Offer for Re-Purchase. On 11 May 2011, Andrew Yang sent an email to the Board members stating that unless good reason be given, he did not see how the directors including himself could agree to the Offer for Re-Purchase, which would result in the Company suffering a loss of over HK$70 million.

71.  On 17 May 2011, a Board meeting was held to consider the Offer for Re-Purchase. The meeting was chaired by R2. According to the minutes, the Board considered that the proposed disposal of the Sale Shares was “fair and reasonable and in the interests of Shareholders as a whole”. All directors present voted in favour of the proposed disposal, except that Andrew Yang abstained from voting on the transaction.

C.16 The Disposal Agreement

72.  On the same day, 17 May 2011, the Sellers, R1 and Ambition entered into the disposal agreement (“Disposal Agreement”).

73.  R2, R3-R7, R9 and R10 were in breach of their Duties in approving the Offer for Re-Purchase:

(1) Given R1’s obvious conflict of interest, it was inappropriate to delegate to R1 (alongside R2) the task of conducting negotiations with the Sellers on the Offer for Re-Purchase.

(2) There was no urgency for the Company/Ambition to dispose of the Sale Shares, which would be contrary to the professed intention in the SPA Circular that the Company was to hold the Sale Shares as a “long-term investment”.

(3) No proper enquiries were made of the prospect of the Seller’s re-purchasing the Sale Shares at least at the same price as the purchase price under the SPA and the possibility of extending the time (which was unilaterally imposed by the Sellers) for responding to the Offer for Re-Purchase so as to allow further negotiations to be conducted.

(4) Alternative options ought to have been considered, other than approving the Offer for Re-Purchase.

(5) There was a failure to explore the possibility of seeking compensation from the Sellers and R1 in light of their breaches of the SPA. Instead, R2, R3-R7, R9 and R10 procured Ambition to submit to clause 3 of the Disposal Agreement, which provided that “the parties … shall have no cause for redress or claim against one another under the SPA, save and accept any antecedent bridge”, thereby rendering it uncertain whether Ambition would be able to seek redress against the Sellers and R1.

(6) R2 failed critically to consider the advice given by Lam & Co on 28 April 2011, which presented a markedly different (and substantially more pessimistic) view of the Acquisition compared with the earlier advice on 23 December 2010. R2 failed to seek clarification regarding the significant difference, when no change of circumstances have been mentioned by Lam & Co which would have affected the legal analysis.

74.  However, as a matter of fairness, I note that the independent financial adviser to the Company in respect of the Disposal Agreement expressed the view “that the Consideration is on normal commercial terms and is fair and reasonable so far as the Independent Shareholders are concerned”, having taking into account that the consideration was approximately HK$76.8 million less than the consideration under the SPA.

C.17 The Disposal Circular and the 12 July 2011 EGM

75.  On 25 June 2011, the Company published a circular (“Disposal Circular”) giving notice of an EGM on 12 July 2011 (“12/7/2011 EGM”) for shareholders to consider whether to approve the Disposal Agreement.

76.  The Disposal Circular contains a number of misleading statements:

(1) In relation to the Acquisition:

(a) Having received Deacons’ 2^nd Letter on 17 January 2011, there was no reasonable basis for members of the Board to claim that they believe that the Acquisition was “welcomed by Liu’s Holdings and the Remaining Shareholders” and on a “friendly and cooperative basis”.

(b) Similarly, in light of Deacons’ 2^nd Letter, there was minimal realistic prospect: (i) that the Company could still “convince the Remaining Shareholders of the friendly and cooperative nature of [the Acquisition]”; or (ii) that its purported support or contribution might be “welcomed by Liu’s Holdings, LCH Investment and Chong Hing Bank; or (iii) for there to be “room for negotiations”.

(c) Contrary to the Board’s assertion in the Disposal Circular that they considered Deacons’ 2^nd Letter to have no “effect or impact on the” Acquisition, it had a material adverse impact on the transaction contemplated under the SPA, and the ability to obtain legal title to the Sale Shares.

(d) There was all along no or no reasonable potential that the Remaining Shareholders would be enticed by the consideration under the SPA to “consider exiting from Liu’s Holdings”, thereby allowing the Company to accumulate additional stakes in Liu’s Holdings.

(e) There were no “change of circumstances” (whether in terms of the Remaining Shareholders’ stance or the Company’s ability to accumulate an additional stake in Liu’s Holdings) which could have justified the Company’s entry into the Disposal Agreement.

(2) In relation to the Offer for Re-Purchase, it was misleading to state that the Remaining Shareholders “came up with” the offer to purchase 150,540 Sale Shares after “a pro-long period of consideration and negotiation” between the Sellers and the Remaining Shareholders. There were no negotiations, as the Remaining Shareholders simply took up the shares at a price calculated pursuant to the mechanism set out in clause 7 of the Deed.

77.  R2, R3-R7, R9 and R10 agree that, in breach of their Duties, they failed to provide the shareholders of the Company with all the information that they might reasonably expect, causing them to approve the Disposal Agreement at the 12/7/2011 EGM. R2 also accepts that he was reckless or negligent as to whether the statements in the Disposal Circular were misleading.

78.  R1 admits that he must have been aware that the Disposal Circular contained various untrue statements (see above). He further admits that he ought to have known that the Disposal Circular should have made reference to the fact that (1) it was him who set in train the mechanism for other shareholders in Liu’s Holdings to acquire the shares of his parents, the Sellers, and (2) the so-called “offer” price from the Remaining Shareholders was simply the price calculated pursuant to the mechanism in the Deed. He admits that he acted in breach of his Duties by allowing the Company to publish the Disposal Circular with untrue statements, and did so by providing untrue information to the Board by way of the Offer for Re-Purchase, omitting to provide material information to the Board, and allowing or not otherwise preventing the untrue statements from being published.

C.18 Aftermath

79.  It was in the above circumstances that the Disposal Agreement was approved at the 12/7/2011 EGM.

80.  On 13 July 2011, the consideration under the Disposal Agreement in the sum of HK$425,729,493.92 was paid by the Sellers to the Company.

81.  Therefore, as a result of entering into the SPA and the Disposal Agreement, Ambition and hence the Company suffered a loss of approximately HK$76.8 million (or approximately HK$70.8 million if taking into account the final dividend declared by Liu’s Holdings for the year ended 31 December 2010 in the total sum of HK$5,974,296 received by Ambition in around May 2011).

82.  In contrast, following Ambition’s entry into the Disposal Agreement and the Sellers’ sale of the Sale Shares to the Remaining Shareholders, R1 was gifted 2.8 million shares of LCH Investment (worth approximately HK$23 million) by Madam Pearl Liu – though I acknowledge that R1 says that it would be incorrect to suggest that R1 benefitted at the expense of the Company.

C.19 Contentious Issues

83.  Indeed, there are a number of contentions made by the SFC, which are not accepted as agreed facts, or admitted by R1. It has been said that it may not be necessary for the Court to make findings on the various contentions – because the parties have taken such matters into account in agreeing the appropriate orders to be made, including R1’s non-admission of those contentions and the inherent uncertainties in litigation.

84.  In the circumstances, I accept that it is both unnecessary and probably unhelpful to rehearse either the contentions or the suggested answers to them.

D. Applicable Principles – Section 214 Liability

85.  It is not in dispute that for section 214 of the SFO to be engaged, three basic conditions need to be satisfied:

(1) The corporation in question is or was a listed corporation.

(2) The business or affairs complained of must be that of the corporation, though that can include the business or activities of a subsidiary when the Court will take a “realistic approach” in determining whether the affairs of the subsidiary are the affairs of the holding corporation.

(3) The conduct complained of must fall within one or more of the heads of misconduct specified in section 214(1)(a) to (d).

86.  In this case, the SFC relies upon section 214(1)(a), (b), (c) and (d). With the focus on all those paragraphs, the sub-section materially provides as follows:

Where, in relation to a corporation which is or was listed, it appears to the Commission that at any relevant time the business or affairs of the corporation have been conducted in a manner –

(a) oppressive to its members or any part of its members;

(b) involving defalcation, fraud, misfeasance or other misconduct towards it or its members or any part of its members;

(c) resulting in its members or any part of its members not having been given all the information with respect to its business or affairs that they might reasonably expect; or

(d) unfairly prejudicial to its members or any part of its members,

the Commission may, subject to subsection (3), by petition apply to the Court of First Instance for an order under this section.

87.  Conduct which is “oppressive” under sub-section (a) has been described as tyrannical conduct or abuse of power or a visible departure from the standards of fair dealing. It typically involves an abuse of a person’s rights or powers as a majority to procure the occurrence or non-occurrence of events unfair or prejudicial to the complainants who, by reason of their minority status, can only submit.

88.  Sub-section (b) covers a wide range of misconduct towards members of a listed company. Misfeasance is broadly defined as the performance of an otherwise lawful act in a wrongful manner. The flotation is defined as misapplication, including misappropriation of any property. The phrase “or other misconduct” is something of a belt and braces exercise, presumably to cover the widest range of possible misconduct. By way of example, the failure of a director to exercise the requisite degree of skill and care in the management of the company as may reasonably be expected of a person of his knowledge and experience and holding his office and functions within that company is enough to establish misconduct under the paragraph. I acknowledge and agree that that “other misconduct” has also been held to embrace things such as “culpable neglect of duties”.

89.  As to sub-section (c), it can be complimentary to the other sub-sections, but that it is not easy to think of examples where the affairs of the company have been conducted with no suggestion of impropriety on the part of its directors and with no suggestion of unfair prejudice to the shareholders, yet where it can confidently be said shareholders have been deprived of information which they might reasonably be expected to be given. It is unhelpful to hypothesise other than to say such circumstances may arise and will be evident when they do.

90.  As to sub-section (d), conduct which is unfairly prejudicial is conduct which results in harm to the members of the company or part of the membership in their capacity as members of the company. The harm is harm which could either have been avoided or ameliorated without harming the legitimate interests of others who were parties to the particular transaction. It covers a range of conduct. At one end of the scale is fraud. At the other end of the scale the conduct can take the form of neglect or inaction on the part of those to whom the affairs of a company are entrusted. The question to be asked in such circumstances is whether the conduct concerned is that which can be expected from the managers of the company to whom those affairs have been entrusted. The directors of course cannot leave their duties to be performed by others.

91.  Once section 214 of the SFO is engaged, the principles relating to disqualification orders under section 214(2)(d) are well-established, and do not need reference to authority. Those principles are:

(1) The power to determine the appropriate period of disqualification is a discretionary power. It is necessary for the Court to be satisfied that the director’s involvement in the relevant matter involves a sufficiently serious failure to satisfy his duties that some period of disqualification is justified and fair.

(2) The purpose of imposing a qualification order is twofold. The first, and primary, purpose is that of the protection of the public. The second is the purpose of general deterrence.

(3) In determining the period of disqualification, the Court will adopt a broad-brush approach, where earlier decided cases will be of limited assistance to the exercise of the Court’s discretion.

(4) The period of disqualification must reflect the gravity of the offence. A starting point of assessment may be fixed by reference to the gravity of the conduct, with a discount given for any mitigating factors.

(5) Previous authorities have identified starting points within brackets, which provide guidelines not tramlines. Those brackets are:

(a) disqualification of over 10 years for particularly serious cases;

(b) disqualification of below 5 years for relatively less serious cases; and

(c) disqualification of between 6 and 10 years for cases in between.

(6) The Court will have regard to a wide range of considerations including the age, state of health and character of the offender, the nature of the breaches, the honesty and competence of the offender, the length of time he has been in jeopardy, whether he appreciates and/or admits the breaches, his general conduct before and after the offence, the periods of disqualification of his co-directors that may have been ordered by other courts, and the interests of shareholders, creditors and employees.

92.  The Court’s jurisdiction under section 214(2)(e) to make “other orders it considers appropriate” extends to the making of compensation orders in favour of the listed company.

E. The Agreed Proposed Orders

E.1 Agreed Breach and Liability

93.  The SFC and the Respondents agree that by reason of the matters set out above, the Respondents were responsible for the business and affairs of the Company having been conducted in the manner described in section 214(1)(a), (b), (c), and (d) of the SFO.

94.  Having considered the materials, I also agree. In the circumstances, it is necessary and appropriate to make orders and to grant relief against the Respondents under section 214(2) of the SFO.

E.2 Disqualification Orders

95.  As to disqualification orders under section 214(2)(d), the SFC and each of the relevant Respondents respectively agrees and proposes a disqualification order for a period of:

(1) 8 years against R1;

(2) 6 years against R2;

(3) 2 years against R3;

(4) 2 years against R4;

(5) 1 year against R5;

(6) 2 years against R6;

(7) 1½ years against R7;

(8) 1½ years against R9; and

(9) 1½ years against R10.

96.  I again acknowledge that I am not bound by any agreement reached between the parties, though it is appropriate to be guided by and give some weight to the views of the SFC. However, having considered the overall matters above, in addition to the matters advanced by way of mitigation in submissions made for the individual Respondents (which need not be rehearsed here), I am independently satisfied that the agreed and proposed periods of disqualification should be ordered.

97.  The respective roles and degrees of substantive involvement, reflecting individual responsibilities of the individual Respondents, seem to me to be shown in the proposed differing periods of disqualification. R1’s misconduct was indisputably the most serious and substantial, and is properly reflected by a period of qualification towards the upper end of the ‘middle’ range. R2 also played a very substantial role in the relevant transactions, and that is properly reflected by a period of qualification also in the ‘middle’ range. The substance of the involvement of R3-R7, R9 and R10 was less and also slightly differing between them, to the extent reflected, and that is properly reflected by periods of qualification in the lower ‘less serious cases’ range. I also take account of the date when R5 resigned as a director.

E.3 Compensation Orders

98.  I also agree that the Court should exercise the jurisdiction to make compensation orders against R1 and R2 under section 214(2)(e). The SFC and R1 and R2 respectively agree and propose a compensation order against them for the amount as follows, both amounts of compensation to be paid to the Company:

(1) HK$50 million by R1; and

(2) HK$7.5 million by R2.

99.  I agree that compensation should be paid to the Company, given that it was the Company which paid the consideration under the SPA and receive the consideration under the Disposal Agreement. I also accept the agreed proposed sums of compensation are applicable to the circumstances, in light of the governing principles I have identified above, and to include recognition that the proceedings were ultimately resolved through the Carecraft procedure.

100.  Bearing in mind the time that has passed since the SFC and R1 and R2 reached agreement on the payment of compensation and the amount to be paid, it seems to me to be appropriate that the sum should be paid within 28 days.

101.  I further direct that each of R1 and R2 shall notify the SFC (with supporting documents) within seven days of that payment of the compensation to the Company.

E.4 Costs

102.  As to costs, they are of course in the discretion of the Court. Nevertheless, the SFC has achieved substantially what it sought by the Petition in terms of disqualification and compensation, and I accept that costs should follow the event.

103.  Further, each of the Respondents has reached agreement with the SFC as to the payment of costs. I accept the terms of those agreements as appropriate to the circumstances, and see no reason not to make orders which follow the terms of those agreements. It also seems to me that it is appropriate in the particular circumstances of this case to grant a certificate for three Counsel.

104.  Therefore:

(1) R1 shall pay: (a) the SFC’s costs of these proceedings (excluding the Carecraft Procedure) in the agreed sum of HK$5 million, within 14 days; and (b) the SFC’s costs of the Carecraft Procedure, to be taxed if not agreed, with certificate for three Counsel.

(2) R2 shall pay: (a) the SFC’s costs of these proceedings (excluding the Carecraft Procedure) in the agreed sum of HK$1.2 million, within 21 days; and (b) the SFC’s costs of the Carecraft Procedure, to be taxed if not agreed, with certificate for three Counsel.

(3) R3-R7, R9 and R10 shall pay on a joint and several basis: (a) the SFC’s costs of these proceedings (excluding the Carecraft Procedure) in the agreed sum of HK$2.1 million, within 14 days; and (b) the SFC’s costs of the Carecraft Procedure, to be taxed if not agreed, with certificate for three Counsel.

E.5 Form of Orders

105.  I have been provided with three draft orders, reflecting the above matters, which I have approved. I therefore make an order in the terms of those drafts, but consolidated into one order as set out below.

BEFORE THE HONOURABLE MR. JUSTICE COLEMAN IN COURT

ORDER

IN THE MATTER OF the Petition filed herein on 5 October 2016

UPON the joint application of the Petitioner and the 1^st Respondent by way of Consent Summons filed on 8 March 2023

AND UPON the joint application of the Petitioner and the 2^nd Respondent by way of Consent Summons filed on 17 January 2023

AND UPON the joint application of the Petitioner and the 3^rd to 7^th, 9^th and 10^th Respondents by way of Consent Summons filed on 6 March 2023

AND UPON the Statement of Agreed Facts in respect of the Carecraft Procedure between the Petitioner and the 1^st Respondent (“Carecraft Procedure”)

AND UPON reading the letter by the Petitioner dated 17 January 2023 attaching a copy of the Statement of Agreed Facts in respect of the Carecraft Procedure between the Petitioner and the 2^nd Respondent

AND UPON reading the letter by the Petitioner dated 6 March 2023 attaching a copy of the Statement of Agreed Facts in respect of the Carecraft Procedure between the Petitioner and the 3^rd to 7^th, 9^th and 10^th Respondents

AND UPON reading the submissions of the Petitioner and the Respondents

IT IS ORDERED that:-

1. Leave be granted to the Petitioner to lodge in Court the original signed copy of the Agreed Statement of Facts in respect of the Carecraft Procedure between the Petitioner and the 1^st Respondent.

2. Leave be granted to the Petitioner to lodge in Court the original signed copy of the Statement of Agreed Facts in respect of the Carecraft Procedure between the Petitioner and the 2^nd Respondent.

3. Leave be granted to the Petitioner to lodge in Court the original signed copy of the Agreed Statement of Facts in respect of the Carecraft Procedure between the Petitioner and the 3^rd to 7^th, 9^th and 10^th Respondents.

4. Pursuant to section 214(2)(d) of the Securities and Futures Ordinance Cap 571 (“SFO”), the 1^st Respondent shall not, without leave of the Court, for a period of 8 years with effect from the date of the order made herein:

(a) act or continue to act as a director, liquidator, or receiver or manager of the property or business of:

(i) any corporation incorporated, registered, required to be registered and/or listed in Hong Kong; and/or

(ii) the 11^th Respondent, i.e. Arta TechFin Corporation Limited (formerly known as Freeman FinTech Corporation Limited) (“Company”), or any of its subsidiaries and affiliates.

(b) directly or indirectly be concerned, or take part, in the management of:

(i) any corporation incorporated, registered, required to be registered and/or listed in Hong Kong; and/or

(ii) the Company or any of its subsidiaries and affiliates.

5. Pursuant to section 214(2)(d) of the SFO, the 2^nd Respondent shall not, without leave of the Court, for a period of 6 years with effect from the date of the order made herein:

(a) act or continue to act as a director, liquidator, or receiver or manager of the property or business, of the Company or any other corporation; and

(b) in any way, whether directly or indirectly, be concerned, or take part, in the management of the Company or any other corporation.

6. Pursuant to section 214(2)(d) of the SFO, the 3^rd, 4^th and 6^th Respondents shall not, without leave of the Court, for a period of 2 years with effect from the date of the order made herein:

(a) act or continue to act as a director, liquidator, or receiver or manager of the property or business, of the Company or any other corporation; and

(b) in any way, whether directly or indirectly, be concerned, or take part, in the management of the Corporation or any other corporation.

7. Pursuant to section 214(2)(d) of the SFO, the 7^th, 9^th and 10^th Respondents shall not, without leave of the Court, for a period of 18 months with effect from the date of the order made herein:

(a) act or continue to act as a director, liquidator, or receiver or manager of the property or business, of the Company or any other corporation; and

(b) in any way, whether directly or indirectly, be concerned, or take part, in the management of the Company or any other corporation.

8. Pursuant to section 214(2)(d) of the SFO, the 5^th Respondent shall not, without leave of the Court, for a period of l year with effect from the date of the order made herein:

(a) act or continue to act as a director, liquidator, or receiver or manager of the property or business, of the Company or any other corporation; and

(b) in any way, whether directly or indirectly, be concerned, or take part, in the management of the Company or any other corporation.

9. Pursuant to section 214(2)(e) of the SFO, the 1^st Respondent shall pay the sum of HK$50,000,000 to the Company within 28 days from the date of the order.

10. Pursuant to section 214(2)(e) of the SFO, the 2^nd Respondent shall pay the sum of HK$7,500,000 to the Company within 28 days from the date of the order.

11. The 1^st Respondent and 2^nd Respondent shall notify the Petitioner of the payment of the sums referred to in paragraphs 9 and 10 above and shall provide supporting documents to prove the same within 7 days of the payment of such sums.

12. The 1^st Respondent do pay the Petitioner's costs of these proceedings (excluding the Carecraft Procedure) in the agreed sum of HK$5,000,000 within 14 days from the date of the order made herein.

13. The 1^st Respondent shall pay the costs of the Carecraft Procedure to the Petitioner, to be taxed if not agreed, with certificate for three counsel.

14. The 2^nd Respondent shall pay the costs of these proceedings (excluding the Carecraft Procedure) to the Petitioner in the agreed sum of HKS1,200,000 within 21 days from the date of the order made herein.

15. The 2^nd Respondent shall pay the costs of the Carecraft Procedure to the Petitioner, to be taxed if not agreed, with certificate for three counsel.

16. The 3^rd to 7^th, 9^th and 10^th Respondents shall pay the costs of these proceedings (excluding the Carecraft Procedure) to the Petitioner in the agreed sum of HK$2,100,000 on a joint and several basis within 14 days from the date of the order made herein.

17． The 3^rd to 7^th, 9^th and 10^th Respondents shall pay the costs of the Carecraft Procedure to the Petitioner on a joint and several basis, to be taxed if not agreed, with certificate for three counsel.

106.  Nevertheless, out of an abundance of caution, I also give liberty to apply as to the form of the orders.

Appendix A

Appendix B

Appendix C