CHINA NATIONAL LIGHT INDUSTRIAL PRODUCTS INPORT & EXPORT CORP. v. TAN CHENG KEE AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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Contract - allegation of duress and undue influence

Contract - construction - whether signatories described as directors liable personally

Contract - consideration -whether any consideration

1. The Plaintiff's claim against the Defendants is based on an agreement evidenced in part in writing. The written evidence of the agreement is contained in a document dated 3rd March 1982. I will refer to this document as the Guarantee as it has been so described in the trial. The agreed translation of this document is at page 2 of Defendant's bundle of documents. The Guarantee was addressed to the Plaintiff and was signed by five persons who are the 1st, 2nd and 3rd Defendants in this action and one Wong Siu Ming (Wong Siu Ming) and one Lam Kwai Chuen (Lam). The name of Tung Ming Trading Limited also appeared at the foot of the guarantee. The 1st Defendant has not appeared to this action. The 2nd and 3rd Defendants are represented, by Mr. Daniel Fung. Mr. Anthony Neoh appeared for the Plaintiff.

2. It is the Plaintiff's case that by this agreement the Defendants agreed to lend in total HK$4,000,000 to one Tung Ming Trading Co. Ltd. (Tung Ming) so that Tung Ming could in turn repay their indebtedness to the Plaintiff which stood at HK$5,915,823 as at 3rd March 1982.

EVENTS LEADING UP TO 3RD MARCH 1982

3. In November 1979, Tung Ming was incorporated. It had a paid up capital of HK$500,000 and five shareholders. The five shareholders and Directors were the Bangkok Hotel (H.K.) Limited, the 2nd Defendant, the 3rd Defendant, Wong Siu Ming and Lam Kwai Chuen. The Bangkok Hotel (H.K.) Limited was apparently controlled by Mr. Tan Cheng Kee, the 1st Defendant. For the purpose of this action, I do not need to distinguish the 1st Defendant from the Bangkok Hotel (H.K.) Limited and will refer to him as if he were a shareholder and Director of Tung Ming. The 1st Defendant is an uncle, though a distant one, of the 2nd Defendant who represented the 1st Defendant's interest in Tung Ming and together they owned 50% of the shares in Tung Ming. The 3rd Defendant owned 15% of the shares thus leaving Lam and Wong Siu Ming with 35%. The three Defendants constituted a majority both on the Board and as shareholders.

4. Some time in late 1979 or early 1980, Tung Ming started trading with the Plaintiff in ceiling fans sold under  the brand name of TMT. The business started modestly and payments were by Letters of Credit. The business was a success and there was tremendous expansion, and soon the payment terms were changed to documents against acceptance. The period of credit was initially forty five days, then sixty days and by late 1981, ninety days. The position of the Plaintiff and Tung Ming was regulated by a Guaranteed Sales Agreement which was made annually. Basically, Tung Ming would provide technical knowhow as well as raw materials to the Plaintiff and the Plaintiff would produce ceiling fans in different factories in China. The only relevant Guaranteed Sales Agreement is that which was made on 1lth November 1980 for the year 1981. Apart from the Guaranteed Sales Agreement, there were Sales Confirmations, a specimen of which can be found at page 11 of the agreed bundle, which would contain the details of the ceiling fans to be supplied by the Plaintiff to Tung Ming.

5. By early 1982, the Plaintiff had six factories manufacturing ceiling fans for Tung Ming employing over 1,500 workers. Also by 15th February 1982 some HK$5,700,006 were overdue and there were approximately HK$3,000,000 worth of acceptances which had not yet matured. On 15th February 1982, the Plaintiff wrote to Tung Ming saying that they should immediately settle the overdue amount and that "before receipt of substantial information from you, we will withhold the issue of goods".

6. It would appear from the evidence that starting from early 1982, conflict had developed between the 2nd Defendant and Wong Siu Ming. Soon the Company was split into two camps, the Defendants forming one, Lam and Wong Siu Ming the other.

7. It is unimportant for the purpose of this Judgment why or when exactly the conflict started between the 2nd Defendant and Wong Siu Ming. Suffice it for me to note that by 16th February 1982, the conflict had come to a head as the Minutes of a Board meeting on that day makes clear. In passing I should also mention that this was the first formal and minuted meetings of the Directors of Tung Ming.  Prior to that, the evidence is that Wong Siu Ming and the 2nd Defendant together made all decisions relating to Tung Ming. Although they had chosen to operate in the guise of a limited company, my impression is that Tung Ming was run very much as if it were a partnership, with the 2nd Defendant and Wong Siu Ming being the dominant partners. The actual division of labour was as follows. Wong Siu Ming was responsible for sales and exports of ceiling fans and Lam was responsible for the technical side of the production. The 2nd Defendant, however, only attended the offices of Tung Ming on two afternoons a week and look after the accounts and finance. The 3rd Defendnt played a very minor part in the affairs of Tung Ming, if at all, but was put in charge of a subsidiary called Smart Factory which did additional work on ceiling fans prior to their exportation to the United States of America.

8. The dispute was bitter and soon the question of Lam and Wong Siu Ming selling their shares was raised. However, Lam and Wong Siu Ming's offer to sell their shares to other shareholders was rejected. On 22nd February 1982 after receipt of the Plaintiff's letter of 15th February 1982, the Directors of Tung Ming unanimously resolved that the debts to the Plaintiff should be settled immediately and that the Directors should go to Canton to discuss the question of repayment with the Plaintiff.

9. At this juncture I should mention that Tung Ming's business had been successful and it made a net profit of HK$384,364 for the year 1980 and HK$3,469,564.99 in 1981 out of which Tung Ming paid a bonus of` HK$700,000 in 1982 and dividends of HK$300,000 for 1980 and HK$l,050 000 for 1981. However, Tung Ming's commitments were substantial and it had purchased real property in the form of four commercial units and one industrial unit. Of the four commercial units, two were occupied by Tung Ming and the other two rented out. As for the industrial unit; it was occupied by Smart Factory. It seems to be accepted that Tung Ming's assets (estimated to be about HK$14 million in February 1982) and which included approximately HK$5,000,000 of material supplied to the Plaintiff exceeded its liability (approximately HK$13 million). However, it was clear to all five shareholders that Tung Ming had cashflow problem and that without injection of further funds into Tung Ming, Tung Ming would not have been in a position immediately to repay the Plaintiff. Moreover, one consequence of the dispute and the meeting of 16th February 1982 was that the 1st Defendant who had been financing the operation of Tung Ming, terminated his support, and more than HK$1,000,000 was withdrawn from Tung Ming in order to repay him. As can be seen the business was thriving and I can see no reason why the shareholders should not wish the business to continue although it would appear that they had a temporary set back in the winter of 1981 as a result of fierce competition.

10. Lam, Wong Siu Ming and the three Defendants went to Canton on 25th February 1982 and they had a series of meetings with representatives of the Plaintiff between 25th February and 3rd March 1982 when the guarantee was signed. Notes of some of these meetings were taken contemporaneously by Mr. Ho Yiu Chung (Ho), a staff in the Electrical Appliances Section dealing with ceiling fans. The meetings were attended by various personnel of the Plaintiff. They included Mr. Mak Yong Bun (Mak),the Manager of the Electrical Appliances Section who gave evidence as PW2, Mr. Tse Fu Shing, Deputy General Manager of the Plaintiff, and a Mr. Kuo Wai Chi (Kuo), head of the Electrical Appliances Section. Ho's notes are to be found at pages 254 to 273 and also at exhibit P1. They are however not verbatim records but according to him they contain the gist of what was discussed at those meetings.

11. It may be helpful to set out here chronologically, the meetings and what Ho had recorded, so far as they may be relevant.

MEETING ON 25TH FEBRUARY 1982

12. Ho was at a meeting attended by Kuo and Mak of the Plaintiff and Wong Siu Ming, Lam, the 2nd and the 3rd Defendants. The 1st Defendant was not present at this meeting. Basically Ho's notes recorded what the 2nd Defendant was supposed to have said which was essentially an explanation as to why so much had become overdue. He explained for instance that the preceding winter was bad and that sales were below expectation and that Tung Ming had more stock of raw material than was necessary and that the 1st Defendant was no longer willing to contribute towards the capital because of Wong Siu Ming.

MEETING ON 26TH FEBRUARY 1982

13. Those attending on behalf of the Plaintiff included kuo, Tse and Ho. For Tung Ming, all the shareholders except the 1st defendant. At that meeting Kuo was recorded to have said "Mr. Wong talked for a bit yesterday. I talked too. I said we have given your company a letter and a telegram  concerning the problem of  the amount overdue. Overdue amount HK$5 million odd. We welcome your presence here, and hope that you can solve the problem of the outstanding debts. How has the problem been considered? Yesterday I talked about the second problem that the peak season for fans has come, however, the sales of goods in February is not considered good, it would not do if there is a further delay for the delivery of the goods. For further delay, we will ask somebody else to do it. We are not willing to find another person to do it, you force us to do so. Thirdly we will ask your company to compensate us for the fees incurred because of the late delivery of the goods. We will deal with you if it is unresolved for a long time. If the first two problems are solved then the third problem does not exist. Hope that you will not delay any more. If there is one to two weeks' delay, the month of March will be gone". It is also recorded that Wong Siu Ming said "Manager Kuo, please put your mind at peace. We will be sure to pay the money". Also the 2nd Defendant is recorded to have said "it has been decided by our Board of Directors' meeting that the debts should be paid in a short time. Now the account receivable is HK$1,000,000 which can be remitted in". Incidentally, the evidence is that apart from the letter of 15th February 1982, there was also a telex on the same subject although the latter was not produced.

MEETING ON 27TH FEBRUARY 1982

14. Again on behalf of the Plaintiff, Kuo, Ho and Mak attended. On behalf of Tung Ming, all five shareholders were present together with a Miss Lam. After the lst Defendant had spoken about the internal dissention in Tung Ming, the 2nd Defendant is recorded to have said "now that so much money is owed to the Company, it is better to (find out) how much money the Company has now that can be paid in (sic) and how much is owed by others that has to be recovered, if it is insufficient, shareholders shall contribute according to shares held". Lam is recorded to have said in reply "the aim of Tung Ming in setting up the business is cash from the rich and skill from the able. This is a past practice. What about following the past practice and ask Mr. Wong Kwong Hung and Mr. Tan to raise the money?". The 3rd Defendant is recorded to have said "every shareholder should find his/her own way to raise sufficient". And the lst Defendant "I agree with the opinion of Mr. Wong Kwong Hung". On 27th February there was also a meeting of the Board of Directors of Tung Ming. I will not refer to the translation of the Minutes which are to be found at pages 265 to 271. There was no meeting on Sunday, 28th February 1982.

MEETING ON MONDAY, 1ST MARCH 1982

15. This was attended by Kuo, Mak and Ho on behalf of the Plaintiff and on behalf of Tung Ming only four persons i.e. all shareholders except the 1st Defendant. The record began with Mr. Kuo saying "we hope that you can solve the problem of paying up the D/A goods price of HK$5,000,000 odd this week". The 2nd Defendant is then recorded to have said "it is certain that the money has to be paid. What I mean is will Mr. Wong Siu Ming please forward a plan, then shareholders on both sides should by consultation, is this agreeable?". Wong Siu Ming is recorded to have said "let's follow the past practice and ask Mr. Tan Cheng Kee and Mr. Wong Kwok Hung to lend out the money first and be repaid later".

MEETINGS ON 2ND MARCH 1982

16. There were two further meetings, one in the morning and one in the afternoon on 2nd March 1982. However, according to Ho, as nothing new was said on either occasion, he did not take any note of those two meetings. In the morning he met with Lam and Wong Siu Ming and suggested to them that they should try their best to repay the debt. In the afternoon, the 2nd and 3rd Defendants were also present, but they were met separately by Mak and Kuo.

MEETING ON  3RD MARCH 1982

17. At this meeting the guarantee was signed. There is no record of this meeting and Ho was cross examined about it. I think it was suggested that it was sinister that he took no note on 3rd March.  Ho's explanation is that as little was said on this occasion and the Guarantee was produced, he saw no need to record the meeting.

18. Incidentally, I should mention that the 2nd and 3rd Defendants did not accept Ho's notes of any of the meetings to be entirely reliable. In particular, they denied having said or heard anyone say that shareholders should lend to Tung Ming proportionately to their shareholdings or at all. I believe it was implicit in their case that the records were not only inaccurate but that they were deliberately so.

DURESS AND UNDUE INFLUENCE

19. The Defendants' complaint relating to the Guarantee is that they were obtained by duress and undue influence. This is the first issue of fact that I have to determine. There was much cross examination by both Mr. Fung and Mr. Neoh on credibility and although there were only five witnesses, their evidence occupied thirteen days. In this Judgment I shall not endeavour to deal with each facet of the evidence or each controversy but will only deal with those which help me decide this factual issue. Also, in deciding this issue of fact Mr. Fung has asked me to have regard to circumstantial evidence and not to rely solely on the direct evidence of the persons who attended the important meeting on 3rd March 1982. I shall do so, and in so doing, I shall refer to more of the evidence than would seem necessary.

20. The facts relied on as constituting duress and undue influence are identical. The 2nd Defendant alleged that on 3rd March 1982, Ho orally threatened all five shareholders by saying that unless the guarantee were signed by all the shareholders, they need not contemplate returning to Hong Kong. According to the 3rd Defendant, in the afternoon of lst March 1982, when he asked Ho if he could return to Hong Kong, He said he could not and that if the debt was not paid off, none of them could leave. The 3rd Defendant then mentioned the matter to Tse, who, according to him said Ho was right and that "if money was not settled, how should we be allowed to return to Hong Kong?". Again on 2nd March, the 3rd Defendant mentioned the subject of his returning to Hong Kong to Ho because  his son was ill but he could see Ho was not quite willing "to allow us to leave" and he did not pursue the matter. He said that in the evening of 2nd March, he mentioned to the 1st Defendant that he wanted to return to Hong Kong, the 1st Defendant's reaction was that he was also eager to go back but stayed behind because the matter was unresolved and he wanted to see a solution. It is clear from the 3rd Defendant's evidence that if he felt that he had been threatened by Ho or Tse, he did not let either the 1st Defendant or the 2nd Defendant know about it. Certainly the 2nd Defendant never mentioned in his evidence that he was aware that there had been any threats before 3rd March 1982. I think it is remarkable that if the 3rd Defendant had indeed been threatened he should have failed to mention it to the 1st or the 3rd Defendant.

21. The 2nd and 3rd Defendants also alleged that officers of the Plaintiff, and in particular, Ho, had received gifts from Lam and Wong Siu Ming, and that although those gifts were paid for by Tung Ming, Ho was informed that they were paid for by Lam and Wong Siu Ming, otherwise Ho would have been afraid to accept such gifts. These gifts allegedly included T. V. sets, refrigerators, calculators and clothings. Ho has denied receiving any such gift though he said on one occasion Mak on behalf of the Plaintiff accepted a gift of a T. V. set from Tung Ming, after being pressed by Tung Ming to accept it and that the T. V. set was handed over to the Plaintiff to dispose of according to its rules. The T. V. set was eventually installed at the offices of the Plaintiff.

22. The relevance of the gifts, so Mr. Fung contends, is that they explained the" special relationship" between officers of the Plaintiff, in particular, Ho, with Lam and Wong Siu Ming. The relevance of this alleged special relationship, he suggests, is the Defendants' allegation that the Plaintiff were not really anxious to recover the overdue payment from Tung Ming but that the demand for repayment was only made after the Defendants refused Lam and Wong Siu Ming's request that they should have an equal shareholding in Tung Ming. According to the Defendants, at the meetings between 25th February 1982 and 2nd March 1982, the Plaintiff put improper pressure on them to sell enough of their shares to Lam and Wong Siu Ming so that the two camps should have the same number of shares. And also, when the Plaintiff failed to persuade them to sell their shares, the Plaintiff threatened them with "detention" in China unless they signed the guarantee. Indeed, the Defendants suggested that the letter of demand of 15th February 1982 was written by the Plaintiff, at the behest of Wong Siu Ming, not for the purpose of obtaining repayment from Tung Ming but in order to put pressure on the Defendants with a view to persuading them to sell enough of their shares to Wong Siu Ming and Lam so that Wong Siu Ming and Lam should hold 50% of the shares. Thus it was repeatedly put to Ho and Lam who gave evidence on behalf of the Plaintiff that the Plaintiff were not really anxious to obtain repayment from Tung Ming but, because of   their special relationship with Lam and Wong Siu Ming, the Plaintiff put pressure on the Defendants during the meetings from 25th February to 3rd March 1982 at first to sell their shares and then finally to sign the guarantee. Thus, according to the Defendants, the demand for payment was merely a means to an end, the end being the advancement of the interest of Wong Siu Ming and Lam. There is no doubt from the notes of the meetings kept by Ho and Ho admitted as much in evidence that the Plaintiff were anxious that the Defendants on the one part, Wong Siu Ming and Lam on the other part should be reconciled. However, I believe that the reconciliation was considered to be desirable because the Plaintiff felt that if the conflict between the shareholders were not reconciled, the possibility for the Plaintiff recovering the money due and to become due from Tung Ming would be adversely affected and also perhaps more importantly, the sale of ceiling fans already produced and to be produced by the six factories would be in jeopardy and that even if the Plaintiff should be able to replace Tung Ming, it would probably have meant losing the 1982 season.

23. I will now deal in some detail with the events of 3rd March 1982 in view of the serious allegations made against the Plaintiff's officers.

24. According to the 3rd Defendant, he, the 1st Defendant, the 2nd Defendant and the 1st Defendant's nephew went to the office of the Plaintiff some time after 8:00 a.m. They were met by Ho who asked "how about the money? Have you found out something after consideration?". Ho said the Plaintiff hoped that it would be settled as soon as possible. According to the Defendants they remained silent and at that time neither Lam nor Wong had arrived. They sat there for more than ten minutes and said nothing. Then Lam and Wong Siu Ming arrived and they sat at a different screened off area. Exhibit D4 is a sketch of the seating arrangement on that morning. The 2nd Defendant and the lst Defendant sat at one table, the 3rd Defendant at another. Then the 3rd Defendant heard Ho saying to the 1st and 2nd Defendants that they had to settle the debt as soon as possible otherwise they could not return to Hong Kong. He also said that Ho asked the three of them whether they had found a solution. The 2nd Defendant replied "we are now considering it, we are trying to find a solution and will come up with it soon". Then Ho is supposed to have said words to the effect that after they had thought through the matter, they should write a guarantee. The 3rd Defendant said "As he raised the question of writing a guarantee, I did not know what it was nor did Wong Kam Hung (the 2nd Defendant) or his uncle (the 1st Defendant), the three of us then had a conversation as to what was required of us to write out". According to the 3rd Defendant that was the first time Ho raised the question of a guarantee. Also it was the first time that anyone raised the question of a guarantee. Then Ho went over to where Lam and Wong Siu Ming were seated and after a while he came back. When he returned, according to the 3rd Defendant, the Defendants asked Ho what guarantee he was talking about. Ho said "we should write a letter of guarantee". Then the 3rd Defendant suggested to Ho that if he wanted some such document to be written, he should ask Wong Siu Ming to write it. The 2nd Defendant and Ho then walked up to where Wong Siu Ming was. When they got there, there was some discussion as to who should write the guarantee. The 2nd Defendant asked Wong Siu Ming to do so and Wong Siu Ming asked the 2nd Defendant to do so. Eventually Wong Siu Ming said the 3rd Defendant should be asked to write it. Lam agreed because he said the 3rd Defendant's handwriting was better. Then the 2nd Defendant said to the 3rd Defendant "In that case how about you write it out?". The 3rd Defendant then paused to think for a while whether it was appropriate for him to write it. Then later when he went to take up the writing, he asked what was to be written. According to the 3rd Defendant, Ho said "it is all ready, I am going to tell you". Then Ho and he returned to the table and then Ho dictated as he wrote. He made a draft and after the draft was finished, he said Ho took it to show it to Kuo and other people. Kuo was at that time at Wong Siu Ming's table. After that it was returned to the 3rd Defendant who was asked to copy it and he saw that there were some corrections. One correction was to amend "Kor Ki " to "Yu Ki" an expression which appeared three times in the guarantee. The 3rd Defendant said he did not know the expression "Yu Ki" (meaning overdue) although he went to a Chinese school and is a graduate of a University in China. He accepted that "Kor Ki" is the colloquial expression for "Yu Ki". I must say I find his evidence that he did not know the expression "Yu Ki" incredible since as he had to admit "Yu ki" would be the expression used in newspapers and books. I think there he overgilded the lily. He also said that Ho asked him to make three copies and for that purpose carbon papers were given to him. Also that when he wanted to use the Plaintiff's notepaper for the purpose, Ho said "No" and said that the 3rd Defendant should use Tung Ming's letter paper which was accordingly done. After a fair copy was made with two carbon copies, the 3rd Defendant added punctuations and proof read it. Then Ho read it and said it was O.K. The 3rd Defendant then said "well I have finished my duties, now give it to Wong Kam Hung". It was then taken to the 2nd Defendant and the 1st Defendant and after the 2nd Defendant had read it, he asked Ho to take it to Wong Siu Ming and Lam to read and that they should sign it after reading. But after Wong Siu Ming read it, he took it back to the Defendants' section and said the Chairman (meaning the 1st Defendant) should sign first and Ho said "the sooner it is signed, the sooner you can leave". He said Wong said "whoever sign first would be able to leave first". He said the 1st Defendant looked at the 2nd Defendant, and the 2nd Defendant looked at the 1st Defendant. They nodded and said "sign, sign". The 1st Defendant then signed first. When it was the 3rd Defendant's turn to sign, he said he asked the 1st Defendant "If I sign, what would happen to me?" He said at that time he was very scared because if he declined to sign that would mean that he could not return to Hong Kong. Then, according to him, the 3rd Defendant said "Sign it, sign it, let's find a way out on our return". Seeing that both the 1st and the 2nd Defendants had already signed and the time was about 11 o'clock and they were in a hurry to go back to the hotel to pack, the 3rd Defendant also signed. After that, Lam and Wong Siu Ming signed. The three Defendants kept one copy, one was kept by Wong Siu Ming and the original was kept by the Plaintiff. When the 3rd Defendant was asked why he thought he could not leave unless he signed, he said "because if you decline to sign and then they would make you attend incessant meetings until you succumb and sign it". He said the reason why he thought so was because on 1st and 2nd March when he told Ho and Tse he wanted to leave Canton, they turned down his request. The 3rd Defendant said he took the threats seriously because his travel documents were with the hotel and he thought that Ho could ask the hotel not to release the document to him and he said that was very simple in China and according to him he had heard of cases where that had been done. The 3rd Defendant only came to Hong Kong from China in 1977. He said because then it took him more than ten years to get his application to leave China approved, he did not wish to be detained there.

25. The version of the 2nd Defendant is slightly different. According to the 2nd Defendant, on 3rd March, before the guarantee was signed, he was told that if they decline to sign then they would not be allowed to return to Hong Kong. He said between 25th February and 3rd March, there were numerous meetings with the Plaintiff during which according to him the Plaintiff repeatedly tried to persuade the Defendants to sell enough of their shares to Wong Siu Ming and Lam so that the two camps should have the same number of shares because they said Wong Siu Ming and Lam had contributed a lot to the ceiling fan business. But they refused to sell and upon hearing that they refused to sell, the Plaintiff demanded repayment and according to him, the Plaintiff then did so because the Plaintiff was aware that if the Defendants refused to sell their shares, the Plaintiff could do nothing to them. The 2nd Defendant said on the morning of 3rd March, at the Plaintiff's office Ho told the Defendants that should they fail to settle the matter then "we need not contemplate returning to Hong Kong". He thought by matter Ho was referring to either their selling their shareholdings to Wong Siu Ming and Lam or settling Tung Ming's outstanding debt to the Plaintiff. He said earlier in the evening of 2nd March, Wong Siu Ming made an offer to buy his shares for HK$1 a share. He also said that in the evening before, Wong Siu Ming said to him as it was known by all of them that Tung Ming had insufficient cash to meet repayment, he had discussed with Ho and it was likely that the shareholders of the Company had to bear a portion of the debt proportionately. Anyway to go on with the 3rd Defendant's narrative he said on arrival at the Plaintiff's office in the morning of 3rd March, his group occupied a different area from Lam and Wong Siu Ming. After they sat down, Ho came over but he did not ask them to sell their shares to Wong Siu Ming and Lam although according to him, prior to 3rd March at all the previous meetings, the main subject of discussion was the question of the Defendants selling their shares to Wong Siu Ming and Lam. He said on the morning of 3rd March, Ho said "now at whatever cost this matter must be settled, otherwise you should not think you could return to Hong Kong". He said Wong Siu Ming then asked Ho in what way he wanted the matter to be settled. According to him, Ho simply asked for a letter of guarantee to be written and when the 3rd Defendant asked him how it should be written, Ho took him to the next table to write out that document. He said he could see Ho from where he was and he said "I could see Ho gesticulating and Wong Shu Yin was writing when Ho's lips were moving". Then according to him a girl fetched some carbon paper to them and it seemed to him that Wong also gave some letter paper of Tung Ming to the 3rd Defendant and then the 3rd Defendant wrote something again and the result was the guarantee. Then he said Ho said "sign it quickly and the sooner you sign it, the sooner you would be able to return to Hong Kong". When he said that, the lst Defendant, the 3rd Defendant and Kuo Wai Chi were also present. He said nobody was willing to sign and the 1st Defendant asked him in Chiuchow dialect "now what is the situation?" and he said "most important of all, we have to return to Hong Kong in the first place, so we have to sign it regardless of the consequence". So he said the three of them signed. The 1st Defendant signed first, he following and the 3rd Defendant last and after that, Wong Siu Ming and Lam signed. After they signed, they left in a hurry, packed their bags and returned to Hong Kong. According to him, on returning to Hong Kong, the 1st Defendant had to be admitted into hospital because of the shock of having been threatened in Canton. However he said although he was reluctant to sign the guarantee, at the time he signed the document, he knew that he was not undertaking any personal liability and he had always held that view.

26. According to Lam, in the evening of 2nd March, there was a meeting of all five shareholders at which despite his suggestion that the Company should be funded as was the past practice by the lst and 2nd Defendants, it was eventually resolved that the shareholders would lend HK$4,000,000, proportionately to their shareholdings in Tung Ming, to Tung Ming. According to Lam, the 1st and 2nd Defendants insisted on proportionate contribution. He said in the morning of 3rd March, after they reached the Conference Room of the Plaintiff, Mak, Kuo, Ho and other people were there and they asked the shareholders how they were going to be paid. The 3rd Defendant then told them about the decision the previous evening. Then the 3rd Defendant prepared a draft which was signed by the parties. According to him, he did not hear any threat being uttered by Ho or by any other person on 3rd March 1982.

27. Before making any findings relating to this issue, I will deal with the subsequent events, for as Lord Scarman said in Pao On v Lau Yiu Long 1980 A. C. 614 at 635

"In determining whether there was a coercion of will such that there was no true consent, it is material to inquire whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it. All these matters are, as was recognised in Maskell v Horner (1915) 3 KB 106, relevant in determining whether he acted voluntarily or not"

28. After the shareholders' return to Hong Kong and within the ten day period, Tung Ming remitted some money up to the Plaintiff company. However the 2nd Defendnt said the remittance which totalled almost HK$900,000 had nothing to do with the guarantee and Tung Ming was simply paying what it could towards the reduction of the overdue Bills of Exchange accepted by them. He said some time later, the Plaintiff company again invited all of them to go to Canton. He did so and when he was asked why was he prepared to do so, he said he was no longer afraid because first, Tung Ming had already made two remittances totalling almost HK$900,000. Secondly, the Plaintiff invited them in an amicable and friendly tone! Thirdly, he thought that in order to do business with China, he had to clear up all unsettled matters with China and finally he was no longer afraid of the possibility of being detained because on returning to Hong Kong, he came to know of a daughter of the Head of the Public Security Bureau in Canton who was working at a Cantonese restaurant in Canton. He said the first thing he did on returning to Canton was to call on her. Her name is Yeung Chih. He said she had told him that if anything untoward should happen, all that he had to do was to approach her and all the problem would be solved. He returned to Canton on 12th March and left on 14th March.

29. According to Ho, on 10th or 11th March, the Plaintiff company telephoned the shareholders and asked them to come to Canton to discuss the matter again. On 13th March, all five shareholders came to the Plaintiff's office and he had a note of that meeting and according to that note, the 2nd Defendant was recorded to have said that on 8th or 9th March, a sum of HK$500,000 was remitted and on about 10th March, HK$395,000 was remitted. It then went on to say on the subject of the personal guarantee of the shareholders "Tan Cheng Kee's opinion was that an appointment be made for us to go to the Bank together to present the drafts and make remittance to the company at the same time". I think, as an alternative the 2nd Defendant also asked whether it was acceptable to the Plaintiff that "we pay a further million and your company deliver (us) goods to the extent of HK$700,000 then we pay yet HK$l million and you deliver another HK$700,000". Also at the meeting the 2nd Defendant suggested that the Plaintiff should invest in Tung Ming. The Manager of the Plaintiff, Tse, said to the five shareholders that they should try to cooperate in order to solve the problem and that one way of achieving cooperation was for the majority not to seek to impose its will on the minority. What was recorded was that he said "to show your sincerity to cooperation:-

30. The matter was not pursued any further and the next time the Plaintiff and the shareholders of Tung Ming met was on 17th March 1982. By that time more than ten days had elapsed since 3rd March and apart from the HK$895,000 remitted by Tung Ming, no further funds had been paid to the Plaintiff. This meeting was attended by the 2nd and 3rd Defendants, Lam and Wong Siu Ming, the 1st Defendant, did not attend. On the part of the Plaintiff it was attended by Tse, Kuo, Mak and Ho. At that meeting, according to Ho,the Plaintiff pressed for payment of the HK$4 million as agreed by the five shareholders. At this meeting the 2nd Defendant was recorded to have said that although they were willing to give whatever amount of shares the Plaintiff would wish to have in Tung Ming "however" if Wong Siu Ming needs one more share, we will not give him unless the sun rose from the West". But Mak told me that the Plaintiff did not wish to have any share in Tung Ming.

31. According to the record kept by Ho, one of the matters discussed was whether or not the tension between the two camps could be eased if a middleman could be found who would hold the swing votes. But the meeting concluded with the 2nd Defendant saying there was no point to discuss the matter further and that after his return to Hong Kong, the first thing was that the Manager of Tung Ming had to be changed, the debt owed to the Plaintiff must be paid in accordance with what had previously been agreed. And he said if the other two, meaning Lam and Wong Siu Ming,would not remit money, they (presumably meaning the three Defendants) would do so. He said he would act according to the guarantee and he would start taking delivery of goods again. That was the end of the meeting.

32. The next day there was another meeting at the Plaintiff's office after the 1st Defendant had arrived. There was a meeting held with the 1st Defendant alone. Tse met with him alone because he thought that he was older than the other shareholders and because of that, he had seniority. At page 282 is a record of the discussion with Tan but unfortunately Tan proved to be as stubborn as the rest and the meeting led nowhere. It may be worth remarking that this meeting was also attended by the auditor of Tung Ming, a Mr. Chiang. Mr. Chiang apparently took the view that Wong Siu Ming and Lam had contributed a lot to the development of the business of Tung Ming and therefore he felt that Wong Siu Ming's proposal that the shareholdings in the company should be equalised was a reasonable one. Also Tse was recorded to have said "we, Light industrial, (Plaintiff), have two principles:

33. The meeting was then concluded and the lst Defendant was left to discuss with the other two Defendants. At about 5:00 p.m. that afternoon, the five shareholders again met with members of the Plaintiff company. The Plaintiff was informed by the 2nd Defendant "according to Mr. Wong Siu Ming, it seems that there is no chance of cooperation. One way is for us to buy his shares. Another way is for him to buy our shares. What do you think Manager Tse?". Mr. Tse then said "in fact, we shouldn't interfere in problem among you shareholders. Up to now we still hope you will become reconciled. According to our understanding of your views, (there should be) equal (number of) shareholders, three shareholders in each family equal number of shares, 45%, 40% or 46% are possible, I shall recommend a middleman. If this is accepted, studies should be made immediately into details of the next step. I am willing to spend two days to study the plan with you". There were silence for two minutes and then Mr. Tse said "I had a conversation with the senior Mr. Chan (the lst Defendant) today. He is an elder. I hope he can do something for you. If you think that the above plan won't work for the present moment, the agreement between our company and your company should come to an end temporarily. We will reconsider it when you, present Directors, can come to terms". When it became obvious that there could be no agreement a cancellation memorandum was signed. The cancellation memorandum which is at pages 78 and 79 of the agreed bundle of documents formally terminated the Guaranteed Sales Agreement and in it, the Plaintiff reserved, inter alia, its right to claim damages from Tung Ming arising out of Tung Ming's breach of the Guaranteed Sales Agreement.

34. What happened next was that on or about 25th March 1982, the three Defendants writing on behalf of a company called East Winner Trading Limited in which they were major shareholders requested the Plaintiff to grant them the right to sell the TMT ceiling fans. The 2nd Defendant told me that this letter was not written in earnest because by that time the Defendants were aware that the Plaintiff had already commenced selling TMT ceiling fans to a company formed by Wong Siu Ming, and that the Defendants wrote this letter with a view to strengthening their intended complaint against officers in the Plaintiff company and in particular Ho to the relevant authorities in China. According to the 2nd Defendant, that plan was later dropped because he was afraid of retaliation. However, he said that East Winner eventually commenced doing business with another organisation (the China Machinery Equipment Import and Export Corporation) in Canton and in order to do so, they reported in a letter to that Organisation their former dealings with the Plaintiff, in particular, Tung Ming's outstanding debt to the Plaintiff.

35. However, when a letter dated 26th July 1982, exhibit D5, which was signed in the name of East Winner Trading Limited in Chinese and chopped with its chop was shown to the 2nd and 3rd Defendants, both of them denied that they had any prior knowledge of the letter being written or sent although the 3rd Defendant admitted that the letter was in the handwriting of a Mr. Yip who was a staff of East Winner Trading Limited. This is a letter of eight pages written in Chinese. The contents of this letter would appear to be largely consistent with the allegations made by the 2nd and 3rd Defendants against the Plaintiff and Ho in the course of this action. However, there was one glaring omission in that there was no suggestion in this eight page letter that Ho or Mr. Tse had ever threatened any of the Defendants or that the guarantee was procured by duress or undue influence. I only need quote one passage from this letter to get its flavour

"In Mainland China, Wong Siu Ming and Lam Kwai Chuen adopted such tactics as offering bribes and gifts to Ho Yiu Chung and other persons of the Plaintiff which included television sets, tape-recorders, watches of reputable brands, large quantities of calculators, clothes, etc. and by inviting them to Hong Kong to spend a fortune. As a result of Ho Yiu Chung and the others favourable attitude and confidence in them, the former when contract, sacrificed the interests of the state and offered favourable prices and terms, e. g. in the absence of any pledge or guarantee. they gave Wong Siu Ming special favourable payment terms of D/A ninety days. What a dangerous way of trading! What did China National Light Industrial know about the personal credit worthiness of Wong Siu Ming that made it give him such a big favour? For the two years of 80 to 81, Tung Ming Company spent over HK$200,000 on gifts to and entertainment of clients (this can be checked with the accountants' record), even when certain persons came from Mainland China, they borrowed HK$30,000 from Tung Ming Company as expenses which sum remains unpaid up to now. For the reason of further pull, Mr. Ho Yiu Chung, Wong Siu Ming of Tung Ming had suggested that Mr. Ho Yiu Chung should personally retain remuneration of a commission of 50 cents for every ceiling fan business"

36. The rest of the letter was in the same vein.

37. Thus, it is perhaps not suprising that the 2nd and 3rd Defendants should disown knowledge of this letter, for they would find it difficult to explain why in such a strongly worded letter the writer should have failed to mention that Ho and Tse had threatened the Defendants in order to force them to sign the guarantee if either or both of them had indeed done so.

38. Turning to the pleadings, undue influence and duress were pleaded for the first time by the 3rd Defendant on 4th July 1987 and by the 2nd Defendant on 4th August 1987 notwithstanding that proceedings were begun in December 1984 and that they first served their Defences on 12th February 1985 and 10th January 1985 respectively. The explanation for the late pleading by the 2nd Defendant was that he did not wish to jeopardise his position in China and because he was not sure that the Plaintiff was serious about proceeding with the action, he decided not to plead duress and undue influence until it became clear to him presumably in August 1987 after the case had been set down for trial that the Plaintiff was serious.

39. I am afraid having observed the 2nd Defendant in the witness box, I have come away with the strong impression that the 2nd Defendant, although obviously intelligent, careful and strong willed, is not a truthful witness. I am afraid I believe the 3rd Defendant who is quite intelligent and perhaps stronger willed, is equally unreliable. Moreover I find their version of what happened on 3rd March quite improbable. Having seen them in the witness box and in view of the attack they made on Ho both in evidence and in East Winner's letter, I am sure that they would hot have been so easily cowed. If there had been such threats I have no doubt that the 2nd Defendnts upon returning to Hong Kong would have repudiated the guarantee. What is perhaps also remarkable is that they should have returned to China so readily and so soon after 3rd March 1982. I do not believe the 2nd Defendant when he said he returned because he thought that he could enlist the protection of a daughter of the Head of the Public Security Bureau in Canton whom he met for the first time after his return to Canton. Nor do I believe the 3rd Defendant when he said he learned after 3rd March, a good friend of his could protect him from harm. Also I do not believe that the Defendants did not cause East Winner's letter, Exhibit D5, to be written and sent. I find their account of what happened on 3rd March to be unconvincing.

40. On the other hand, I was impressed with the evidence of Ho, Mak and Lam. I am satisfied on the evidence before me that Ho never threatened the Defendants as alleged or at all. Insofar as the 3rd Defendant alleged that Tse had also threatened him, I do not accept the 3rd Defendant's evidence. On the question of alleged bribes to Ho, to a large extent they depend on the evidence of the 2nd and 3rd Defendants. I do not find their evidence to be reliable and insofar as it may be necessary, I find that there had been no such bribe. Indeed, as I had pointed out in the course of the evidence, I doubt the relevance of such allegations. I find the suggestion that the Plaintiff was not eager to be repaid the overdue amount and only demanded repayment in order to put pressure on the Defendants to sell shares to Wong Siu Ming and Lam far-fetched. I have no doubt in my mind that the dominant motive of the Plaintiff in February and March 1982 was to obtain payment of the overdue amount and the punctual payment of bills accepted by Tung Ming as and when they fall due. A second but perhaps less pressing problem was the fact that Tung Ming had been slow in taking the required number of ceiling fans so that there was a backlog of almost 300,000 ceiling fans in the Plaintiff's godowns. This I consider to be a secondary problem because quite obviously and as the letter of 15th March 1982 made clear, without the payment of the overdue amount, the Plaintiff was hardly likely to be prepared to deliver further ceiling fans even if Tung Ming, as seems probable, wish to take delivery of them. I do not think it is at all probable that Ho would have threatened any of the Defendants as alleged or at all. No am I satisfied that the Plaintiff had at any time put pressure on the Defendants to sell any of their shares to Lam and Wong Siu Ming. Indeed, I find that throughout the Plaintiff's officers acted reasonably and in good faith. I believe had anyone threatened any of the Defendants, the 2nd and 3rd Defendants would not have taken such threats meekly. In my opinion the circumstantial evidence weighed heavily in favour of the Plaintiff rather than the Defendants. Further if Ho was the author of the guarantee, as alleged, it is difficult to see why he should only require the shareholders to lend HK$4,000,000 to Tung Ming and not the entire amount due. The omission of any reference in Exhibit D5 and the late pleading of duress and undue influence suggest strongly that the allegation was invented for the purpose of trial. I am satisfied that the notes of the various meetings kept by Ho are accurate and reliable. Further I do not believe that the letter of East Winner dated 25th March 1982 was written with a view to gathering evidence prior to a complaint to the relevant authorities. It is to be noted that the letter was hand delivered to Kuo of the Plaintiff. One would have thought that if the Defendants merely wanted evidence, they would have sent it by registered post. Nor do I believe that the Defendants were aware as early as 25th March 1982 that the Plaintiff would trade with Wong Siu Ming or Wong Siu Ming's companies. I accept the evidence of the Plaintiff that such trading only started at the end of March 1982. (Incidentally, I should mention that Lam and Wong Siu Ming paid their share of the HK$4,000,000 to the Plaintiff on 5th June 1982. However, this fact carries no weight on any of the issues in this case). I believe as late as 25th March 1982, the Defendants were still entertaining hope of doing business with the Plaintiff in a different corporate guise and that the Defendants only said in evidence that this letter was written for a different purpose in order to get over the fact that the letter would give the lie to their allegation that they thought the Plaintiff was unfairly favouring Wong Siu Ming and Lam and that they had long despaired of being able to continue doing business with the Plaintiff and thus they had no reason to undertake any personal liability. I also do not accept the uncorrobrated evidence of the 2nd and 3rd Defendants that they had already started investigating alternative suppliers of ceiling fans in March 1982. Even were that so I believe they did so just in case they could not persuade the Plaintiff to do business with them and not because they had already given up hope of doing business with the Plaintiff.

41. I turn now to the construction of the document dated 3rd March 1982 which is set out in full below. I have not found construction of the guarantee easy and am indebted to Counsel for their persuasive arguments.

"China National Light Industrial Products

Import and Export Corporation

Kwang Tung Province Branch Office.

 

Guarantee concerning the repayment of our Company's overdue D/A debt as follows:-

 

To repay to your Company the overdue D/A for goods totalling HK$5,915,823.00, our Company (address: 2nd floor, Blocks A & B, 97 Wellington Street, Hong Kong) guarantees to repay not less than HK$5,000,000.00 of the overdue D/A purchase price for goods within 10 days from today.

 

The details of the (repayment) method are as follows:-

 

(1)   (2)

Remittance from our company's current account the sum of HK$1 million.   The five shareholders shall raise the funds to be lent to Tung Ming for repayment of the indebtedness due to your company. Each shareholder undertakes the following amount:-   Ten Cheng Kee HK$1,000,000.00 Wong Kwong Hung HK$1,000,000.00 Wong Siu Ming HK$1,000,000.00 Wong Shu Yin HK$600,000.00 Lam Kwai Chuen HK$400,000.00

 

It is guaranteed that the above loans from each shareholder will be paid to the National Commercial Bank Limited by cashier orders within 10 days. Tung Ming Company will make repayment to your Company.

 

It is guaranteed that the remaining debt of HK$95,823.00 shall be repaid within 20 days from today."

42. It will be noted that it was addressed to the Plaintiff and it is described as a Guarantee. In the first paragraph, it is said that "our company (i.e. Tung Ming)' guarantees to repay not less than HK$5 million of the overdue D/A purchase price for goods within ten days from today'". So quite obviously this document contained a guarantee by Tung Ming to repay the Plaintiff.

43. Also I note that it provides that the shareholders "shall raise the funds to be lent to Tung Ming for repayment" and "it is guaranteed that the above loans will be paid to the National Commercial Bank by cashier orders, within ten days". I have to decide whether paragraph 2 was intended to be a personal undertaking by the shareholders to the Plaintiff so to lend to Tung Ming. Construing this document on the assumption that it is self contained, I am of the opinion that the shareholders were as much parties to this document as Tung Ming although the words "signature of Directors" appeared immediately preceding their signatures. In my opinion, those words "signature of the Directors" were merely descriptive and were not meant to indicate that they signed in a representative capacity. Ho tells me and I accept that he was not aware of the difference between shareholders and Directors. The 2nd Defendant tells me, which I do not accept, that he was aware of the difference. It seems to me clear that what was intended by this document is that the shareholders were guaranteeing to the Plaintiff or undertaking to the Plaintiff that they would within ten days pay by Cashier Orders to the National Commercial Bank Limited their respective loans to Tung Ming which would in turn make repayment to the Plaintiff. Construing the guarantee in the background of the admitted knowledge on the part of the Plaintiff and the shareholders that without the help of the shareholders, Tung Ming would not have been able to repay within a reasonable time, I am of the opinion that it was intended and understood by all concerned that the shareholders were undertaking to the Plaintiff that they would lend the sum of HK$4,000,000 to Tung Ming. It would not have been intended, nor would it have been acceptable to the Plaintiff if all that was being given was an undertaking by Tung Ming or if it was a mere declaration of intent. I will deal with the question of consideration below.

44. Moreover, I believe, and Mr. Neoh has submitted, that it would be incorrect to look merely at the guarantee since the guarantee is no more than written evidence of the agreement sued on. The guarantee should be read in the context of the agreement as a whole. Also in this context, I should deal with the defence that there was no consideration given for the guarantee or undertaking. For that purpose, it is essential that one should have regard to the Minutes of meetings taken by Ho and Ho's recollection of what happened at those meetings. As I have said elsewhere, I was favourably impressed by the evidence of Ho and have no hesitation in finding that the Minutes are an accurate record of what was discussed or said at the meetings and also that his recollection aided by reference to these Minutes are reliable and should be accepted. That being the case, it would be seen that certainly on 26th February 1982, Kuo had made it clear to the Defendants that unless a solution be found regarding the overdue payment, the Plaintiff would cancel the Guaranteed Sales Agreement with Tung Ming and trade with somebody else in its place.

45. Also on 1st March, Kuo said he hoped that the problem of paying the HK$5 million odd could be solved during that week.

46. It was in that context that on 3rd March the Defendants offered to lend HK$4 million to Tung Ming in return for the Plaintiff giving time to Tung Ming and not cancelling the Guaranteed Sales Agreement. Time given was not merely the 10 days to pay the HK$5,000,000 but also the 20 days to pay the balance. As Mr. Neoh put it, Kuo made it quite clear to the Defendants on 26th February 1982 that unless the problem of the outstanding debts be solved, the Plaintiff would terminate the Guaranteed sales Agreement and ask somebody else to take over from Tung Ming.

47. So on the morning of 3rd March, the Defendants returned to the office of the Plaintiff and indicated their proposal regarding the repayment of the overdue amount. According to Ho, this is what happened. He said on that day, all five shareholders came. Kuo and Mak asked them if they had solved the problem of repayment. The 3rd Defendant said 'we have discussed the matter, last night we had a meeting of the shareholders at the Overseas Chinese Hotel, and we have reached a plan about repayment'. Ho then asked them the details of the repayment plan and the 3rd Defendant said the company had some money and it could afford repayment of HK$1 million. He went on to say the lst Defendant, the 2nd Defendant and Wong Siu Ming would each be responsible for contributing HK$l million. He himself would contribute HK$600,000 and Lam would be responsible HK$400,000. Then Ho said as the total is only HK$5 million when in fact the amount overdue is over HK$5.9 million, what about the HK$900,000 odd. The 3rd Defendant asked the Plaintiff to allow ten days more to raise the remaining Hk$900,000 odd.Kuo and Mak said as the major amount of the debt would be paid, the remaining smaller amount could be delayed and that the Plaintiff should consider the matter from their long term friendship's point of view. I think at that juncture an agreement was made. They then asked the Defendants to write a letter of guarantee. The 3rd Defendant of his own accord wrote the guarantee. The wording was the 3rd Defendant's, nobody from the Plaintiff suggested the wording to the 3rd Defendant and of course Ho said he never threatened anybody at that meeting or at all. He confirmed, however, that after the document was prepared, there was some reluctance on the part of the five shareholders to be the first to sign. Eventually it was decided that the Chairman, the 1st Defendant, should sign first although the 1st Defendant suggested that the General Manager perhaps should sign first.

48. It is quite clear that from the point of view of the Plaintiff, the intention was that the shareholders should be personally responsible to repay HK$4 million out of the HK$5.9 million. Perhaps they were not overly concerned with the mechanics of the payment i.e. whether HK$4 million should be paid directly by the shareholders to them or by the shareholders to Tung Ming who would in turn pay them. The mechanics was spelt out in the guarantee and accepted by the Plaintiff and they gave time to Tung Ming accordingly.   I think in lawyer's language the agreement made between the parties was that: in consideration of the Plaintiff allowing time to Tung Ming to repay the debt of HK$5.9 million odd, as to HK$5 million of which within ten days and the remaining HK$900,000 odd within twenty days, the Defendants' shareholders agreed to lend HK$4,000,000 to Tung Ming to enable Tung Ming to repay the Plaintiff. I believe it is important on the construction of the agreement and the construction of the guarantee to ascertain what the consideration was for the "promise" to lend money to Tung Ming. I believe the consideration in each case was that the Plaintiff would give time to Tung Ming and also that the Plaintiff would not during that period cancel the Guaranteed Sales Agreement with Tung Ming. In the result the Guaranteed Sales Agreement was not cancelled until 18th March 1982 and no active step was taken to recover payment until 20th March 1982 (see  annexure to Exhibit D5). Thus I find that there was sufficient consideration for the guarantee or undertaking to lend to Tung Ming.

49. It follows from the above that the defence of duress and undue influence fails for lack of any factual foundation. Also I find that the Defendants have personally undertaken to the Plaintiff, for sufficient consideration, to lend the amount set out against their names in the guarantee to Tung Ming and that they are liable to the Plaintiff for breach of such undertaking.

50. There is no dispute over the amount of damages should I find an enforceable agreement against the Defendants. That being the case, I find that the amounts payable by the lst, 2nd and 3rd Defendants arising out of the breach of the agreement are  HK$1,000,000, HK$1,000,000 and HK$600,000 respectively.

51. I order that Judgment be entered against the 1st Defendant in the sum of HK$1,000,000, against the 2nd Defendant in the sum of HK$1,000,000 and against the 3rd Defendant in the sum of HK$600,000 with interest from 13th March 1982 until judgment at 1% over the best lending rate prevailing from time to time. Costs against the Defendants.