LIEU TSENG VAN v. ZHUHAI HOLDINGS INVESTMENT GROUP LTD

CACV 152/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 152 OF 2012

(ON APPEAL FROM HCA NO. 1645 OF 2009)

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JUDGMENT

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Hon Lam VP:

1.  I agree with the judgment of Yuen JA.

Hon Yuen JA:

2.1   In this commercial dispute Deputy High Court Judge Louis Chan (now Louis Chan J) held that Mr Lieu Tseng Van (“Mr Lieu”), the recipient of HKD30m in earnest money, was not entitled to forfeit it or keep it by way of set-off, and that Jiuzhou Development Co Ltd (“JZD”), the payer of the money, was entitled to demand its return, failing which it was entitled to enforce, as against Mr Lieu, his wife and companies, a charge on shares which was security for the return of the money. 

2.2   Mr Lieu, his wife and companies have appealed the judgment.      

Background

3.  The background has been set out in detail in the Reasons for Judgment which run to 55 pages.  It is only necessary for me to set out the facts material to my judgment.

4.1   Mr Lieu and his wife controlled 98% of a company called Super Cruise Ltd (“Super Cruise”) which in turn controlled a golf and shooting recreation club called Pine Valley Sports and Country Club (“Pine Valley”) located in Zhuhai, PRC.

4.2   Mr Lieu wanted to sell and JZD wanted to buy 80% of the shares in Super Cruise.  JZD – which has since changed its name to Zhuhai Holdings Investment Group Ltd – was listed on the Hong Kong Stock Exchange. 

5.  In contemplation of the sale and purchase, on 27 August 2008 JZD and Mr Lieu signed a document in Chinese, which was supplemented by another document in Chinese on 10 September 2008.  The composite document has been called “the Framework Agreement”.

6.1   I pause here to remark on the surprising fact that no English translation of the Framework Agreement was provided at trial even though its contents have been exhaustively pleaded in English. 

6.2   After the hearing concluded on 1 June 2012, on 5 June the judge asked the parties’ solicitors for a free translation of a version abridged by the judge.  However the parties’ solicitors were unable to agree on the translation. 

6.3   The judge obviously did not wish that disagreement to delay judgment which was given on 7 June.  The translation used in this judgment is that found in the Reasons for Judgment handed down on 19 June (although we have also been given the parties’ respective versions).

6.4   Although a bilingual judge is able to read Chinese documents in the original language, I would have thought it only common sense that when documents written in Chinese are pleaded in English and are the subject of submissions in English in a trial where the parties are legally represented, those responsible for preparing bundles for trial would see to it that the essential Chinese documents are translated and certified well in advance of the trial to avoid last-minute disagreements causing unnecessary delays.  I trust that this will be taken on board not only by the solicitors in this case, but also by those in other pending litigation.

The Framework Agreement

7.  Coming back to the Framework Agreement, it is common ground that it was legally binding, although Mr Lieu’s leading counsel accepts that the parties were not bound to proceed to a sale and purchase.  The relevant terms are set out here for ease of reference:

“Framework Agreement

…

Jiuzhou Development Company Limited (hereinbelow known as “Party A”), …

Mr Lieu Tsang Van (hereinbelow known as “Party B”), …

1. Subject matter of sale

Party A intend to purchase from Party B 400 shares in Super Cruise, which is the 80% of the issued shares (the “Subject shares”), Party B intends to sell the Subject shares to Party B (the “Sale and purchase”).

2. Price and payment

2.1 Subject to the result of due diligence conducted by Party A and the negotiation outcome of the sale and purchase agreement, the price for the 80% shares in Super Cruise shall not exceed RMB 2 billion dollars (“Sale and Purchase price”); the basis of fixing the price is:

2.1.1 Party B warrants that when the parties sign the sale and purchase agreement, “Pine Valley” (and) “Super Cruise” shall have no unfinished litigation.

2.1.2 Party B warrants that it will fully discharge all debts of “Pine Valley” (and) “Super Cruise” due to outsiders (including but not limited to shareholder loan). Otherwise, the sale and purchase price shall be deducted in accordance with the method in clause 5 of this framework agreement.

2.1.3 The only asset of Super Cruise is its rights of ownership over Pine Valley (shares) (hereinbelow called “Pine Valley rights of ownership).

2.2 For avoidance of doubt, the actual sale and purchase price shall be the price expressly provided in the sale and purchase agreement. On completion, should Super Cruise or Pine Valley is liable to any audited debts, the sale and purchase price shall be deducted in accordance with Clause 5 of this framework agreement, the day of audit and the format of accounts shall be negotiated and decided by parties and the relevant terms shall be incorporated in the Sale and Purchase Agreement.

…

2.4 The Sale and Purchase price shall be paid by two instalments, the first instalment shall be RMB 26 million or a equivalent sum in HK dollars (“Earnest money”), … the second instalment of the sale and purchase price shall be paid on the date of completion.

…

3. Earnest money

3.1 As a security that Party B would return to Party A the Earnest money in accordance of clause 3.2.1, 3.2.2 or 3.2.5 (if so happened), on the date of execution of this framework agreement, (i) Party B shall enter into a share charge with Party A at the same time (in the prescribed format in attachment I of the supplemental agreement) (“Share Charge”), to charge the 80% shares in Super Cruise owned by Party B and Chan Siu Ling (陳少玲) to Party A; and (ii) Party B shall deliver a Loan assignment duly executed by Van Shipping Company, Limited (in the prescribed format in attachment 2 of the Loan Assignment)(Loan Assignment).

…

3.2 Handling of the Earnest money

3.2.1 Should Party A during due diligence discovers substantive problems in Super Cruise or Pine Valley, including but not limited to the aspects of legal, account and finance, or operational and development (including but not limited to (only serve as an example) unclear title for land and property, forbidding sustainable development on the free use land or relevant fee should be paid for such development (save and except the prescribed land use under the current land use certificate (mixed tourist land use)), any current or planned business projects failed to obtain approval or issued by relevant license by the responsible licensing government authorities, the company is liable to existing substantive contingent liabilities, ownership of shares or shareholder loan is under dispute etc), Party A shall have the right pursuant to clause 7.2 of this framework agreement to issue a notice of withdrawal. Party B shall, no later than 31.12.2008, return the full Earnest money paid in its original currency to Party A (if in HKD, exchange rate shall be the rate Party A advanced the Earnest money) with an interest at the rate calculated on the basis of a 1 year loan.

3.2.2 In the event that any of the following situations arises:

(i) If in the course of due diligence, no substantive problem was discovered in Super Cruise or Pine Valley but Party A still issue to Party B a notice of withdrawal under clause 7.2 of this framework agreement; or

(ii) for reasons not attributable to Party A, the sale and purchase was not approved by the Hong Kong Exchanges and Clearing Limited (if needed);

(iii) for reasons not attributable to Part A, the sale and purchase was not approved by the shareholder meeting (if needed);

Then Party B shall, no later than 31.12.2008, return the full Earnest money in its original currency to Party A (if in HKD, exchange rate shall be the rate Party A advanced the Earnest money) with an interest at the rate of the HSBC’s Best Lending Rate. …

3.2.4 If for the reason that Party A is not abiding the formal sale and purchase agreement (“Sale and Purchase Agreement”) and lead the failure of the transaction, then Party B shall be entitled to the whole sum of Earnest money and shall retain all actionable rights.

3.2.5 If for the reason that Party B is not abiding this framework agreement or the sale and purchase agreement and lead to the failure of the transaction, then the whole sum of Earnest money shall be returned to Party A immediately and Party A shall retain all actionable rights.

3.3 Handing of the charged shares

Shall the situations as prescribed under clauses 3.2.1, 3.2.2 or 3.2.5 arise, that Party B failed to return the Party A’s Earnest money on or before 31.12.2008, the Party A shall be entitled, pursuant to the provisions of the share charge, deal with the charged shares on its own motion and/or enforce the Loan Assignment. In the circumstances, Party B shall procure itself and its agent to stop demanding Super Cruise to repay any current debts, upon demand of Party A, agent of Party B shall immediate deliver an undertaking to Party A, undertake to be bound by the above provided regulation until Party B received from Party A a written approval.

4. Condition precedents for sale and purchase

The sale and purchase agreement shall provide but not limited to the following condition precedents (except Clause 4.3 below, one party shall waive the compliance of the whole or part of the conditions to be fulfilled by another party);

4.1 Party A completes the due diligence and within the prescribed period states in writing that it is satisfied with and accepts the result;

4.2 Both parties have signed the shareholders agreement of Super Cruise; and

4.3 The sale and purchase agreement has been approved by Party A’s shareholders at general meeting and Hong Kong Exchanges and Clearing Limited (if applicable).

5. Loans to be cleared

5.1 Before the completion date of sale and purchase, Party B shall procure Super Cruise and Pine Valley to clear all outstanding debt (including but not limited to shareholder loans). Should Super Cruise and Pine Valley be liable to any outstanding debt upon completion of sale and purchase, the total amount of such debt shall be audited and confirmed by an accountancy firm jointly approved by the parties (“Loans to be cleared”).

5.2 Both parties will reduce the price for the sale and purchase in accordance with the amount of the audited Loans to be cleared, detail provisions shall be prescribed in the sale and purchase agreement.

…

7. Due diligence

7.1 Party A shall complete the due diligence in the aspects such as legal, accounting and finance and businesses to the targeted company as soon as possible. Party B shall facilitate the necessary inquiry. Party A shall complete the due diligence in 30 working days after the completion all procedures of the Share Charge as prescribed under the relevant section.

7.2 Party A shall issue to Party B a notice of satisfaction or notice of withdrawal regarding the due diligence to the targeted company at the date of the completion of the due diligence. Shall neither notice of satisfaction nor notice of withdrawal be issued by Party A, Party A shall be deemed satisfy with the result of the due diligence.

…

9. Exclusivity

During the period of validity of this Framework Agreement, Party B and its related parties shall not consult, negotiate or reach any agreement or arrangement in any forms (directly or indirectly) with other parties regarding the targeted interests, assets of Pine Valley and the disposal of shares (including but not limited to transfer).

…

11. Period of validity

This Framework Agreement shall take effect from the date of completion of the Share Charge to 31.12.2008 or the date of execution of the sale and purchase agreement (whichever is earlier). Unless otherwise agreed in this Framework Agreement or otherwise provided by law, no party shall be allowed to discharge this Framework Agreement.

…

13. Miscellaneous

13.1 Parties shall as soon as possible commence negotiation of the sale and purchase agreement and shareholders agreement after the execution of this Framework Agreement with a target date for signing the sale and purchase agreement on or before 31.12.2008;

13.2    Any amendment, modification or supplement to this Framework Agreement shall be made in writing and signed by both parties; …”

Notable points of the Framework Agreement                    

8.1   The following points may be noted (following the order of the Framework Agreement).  First, the judge took the view, contrary to submissions on behalf of Mr Lieu, that the parties had not yet reached a firm agreement in cl.2.1 that the Sale and Purchase price would be RMB 2 billion less only the sum of the audited loans under cl.5. However this issue was not raised on appeal and it is not necessary to say anything more about it.

8.2   Secondly, cl.2.4 provides “ 首期人民幣二千六百萬元等值港幣”.  In the Chinese original, contrary to the English translation, the earnest money shall be paid in the HKD equivalent of RMB26 million but with no option to pay in RMB itself.  This is relevant to one of the grounds of appeal which deals with the amount to be repaid in accordance with the true construction of cl.3.2.1. (See paras. 29.1 - 29.3 below).  It should also be noted that the earnest money was not consideration for the granting of exclusivity in cl.9, because under cl.3.2.2(i) JZD was entitled to the return of the entire sum of money upon issuing a notice of withdrawal even if no substantive problems were discovered in the due diligence exercise and even if the exclusivity period was all but over.

8.3   Thirdly, the share charge provided for in cl.3.1 was duly effected by the execution of a Deed of Charge on 10 September 2008 by Mr and Mrs Lieu, who were also the only directors of Super Cruise (“the Share Charge”).  Contemporaneously they executed blank instruments of transfer of their shares, together with resolutions for approval of the transfer as well as their irrevocable resignations as directors.  This is relevant to the considerations below as to what the parties did (or rather, did not do) after 31 December 2008.  It is also relevant to one of the grounds of appeal which challenges the appointment of receivers and their powers.         

8.4   Fourthly, it is clear from cl.3.2.1 that the parties contemplated that due diligence would be performed by JZD, a listed company which would need a satisfactory report before it could proceed with a purchase, and that the due diligence would include issues about title to land.

8.5   Fifthly, cl.3.2.4 expressly provides for forfeiture of the earnest money, but only where JZD was not abiding by the formal sale and purchase agreement.  Mr Lieu has not argued that this is the case.

8.6   Sixthly, cl.7.1 provides that JZD should complete the due diligence in 30 working days after the completion of the Share Charge procedures.  It is common ground that the Share Charge procedures were completed on 10 September 2008 and that the period of 30 working days (including the extended National Day holidays on the mainland) expired on 29 October 2008.  However I do not understand it to be Mr Lieu’s case that JZD was at fault in not completing the due diligence by that date.  In fact the parties continued corresponding with each other on due diligence items well past that date.

8.7   Seventh, it would be noted that there was no provision that time should be of the essence of the Framework Agreement.  It was accepted by both counsel before us that as a matter of law, where time was of the essence but both parties have let a deadline expire and continued with the transaction, or where time was not originally of the essence, either party could give notice to the other to set a (new) date for performance within a reasonable time. 

Mr Lieu’s case

9.  Put in a nutshell, Mr Lieu’s case is that:

(1) since no notice of withdrawal was issued by JZD by 31 December 2008, JZD was deemed to be satisfied with the result of the due diligence under cl.7.2;

(2) the Framework Agreement had “self-executed”, or expired by effluxion of time on that date under cl.11;

(3) although the parties continued to deal with each other after 31 December 2008, everything that went on between the parties after that date must have been referable to a new, separate transaction or negotiations therefor;

(4) since JZD did not proceed to a sale and purchase by the target date of 31 December 2008, it was in breach of the Framework Agreement and Mr Lieu was entitled to forfeit the earnest money or to keep it as set-off for damages suffered as a result of JZD’s breach of the Framework Agreement.

10.1   It will be seen that Mr Lieu’s case is founded entirely upon the argument that the Framework Agreement had terminated on 31 December 2008.

10.2   It is important to note that it is not his case that the 31 December 2008 deadline had been extended to a new deadline that JZD had failed to meet.

Post-Framework Agreement events

11.1   After the Framework Agreement was signed, JZD’s lawyers continued to raise requisitions on documents provided by Mr Lieu for the due diligence exercise. Apparently in August 2008, Mr Lieu had provided 136 documents in English and 341 documents in Chinese, with more documents provided after requisitions were raised.     

11.2   JZD was most concerned with three matters relating to title of some of the land on which Pine Valley was situated:

(1) some 200 mu of land had been resumed from the village and injected into Pine Valley, but no compensation had been paid to the village committee;

(2) a lease of a mountain slope let by the village committee to Pine Valley had expired, but the village committee had refused to renew the lease;

(3) there was no lease with the water authority for the use of land on top of a reservoir.

11.3   It is not necessary for us to consider how the parties dealt with these issues, save to note that it was clear that both parties wished the transaction to bear fruit, which could not occur if an unsatisfactory due diligence report was provided.  Both parties were therefore actively seeking to resolve these matters, for instance JZD’s lawyers were providing drafts of legal documents, and they even negotiated and met with Pine Valley’s counterparties together with Mr Lieu’s staff, well past 31 December 2008.  It would appear that by mid-March 2009, issues (1) and (3) had been resolved, but not issue (2).

29 October 2008

12.1   As mentioned earlier, on the basis of 30 working days after 10 September 2008, the due diligence exercise should have been completed by 29 October 2008, but it is not Mr Lieu’s case that JZD was at fault for not doing so.

12.2   In December 2008, JZD’s lawyers were revising a lease for the reservoir land and meeting with the water authority together with Pine Valley staff.

31 December 2008

13.  In the words of the judge,

“31 December 2008 came and went. Nobody referred to the expiry of the Framework Agreement under its clause 11”; (para. 66)

“Despite the passing of 31 December 2008, the parties just continued with the negotiation of the terms of sale and purchase within the scope of the Framework Agreement. They also worked together to try to rectify and make good the land titles. Both sides wanted to accomplish the sale and purchase of the 80% shares of Super Cruise” (para. 68);

“In the correspondence, the due diligence then seemed to have assumed an extended meaning and significance of not only to verify the nature and effect of the land titles, but also to rectify the problems with a view to produce a good due diligence report. The time for completing the due diligence and the life of the Framework Agreement were both extended by the conduct of the parties” (para. 69).

14.  It seems to me, with respect, that the above passages were a correct summary of the parties’ intentions and positions.  If Mr Lieu’s position had been that JZD should be deemed satisfied with the due diligence exercise because it had not issued a notice of withdrawal before the Framework Agreement expired by effluxion of time on 31 December 2008, it is difficult to see why Mr Lieu would have continued to work with JZD on resolving the land title issues at all.  He could have stood on his rights (as he later asserted) and insisted on proceeding to sale and purchase, whatever the state of the land titles.     

15.  It is telling that leading counsel for Mr Lieu agrees that in fact, both JZD and Mr Lieu wished to continue with the transaction.  He argues however that because the Framework Agreement (as it were) “self-destructed” on 31 December 2008, the actions of the parties after the stroke of midnight must have been referable to a new, separate transaction or negotiations therefor. 

No new, separate transaction

16.  In my view, that is an unrealistic view of the matter.  As the judge pointed out, neither party referred to clause 11.  There was no contemporaneous correspondence marking that date and its effect on the transaction.  Both parties allowed it to pass without remark.  In my view, the judge was correct in finding that both parties had waived the effect of clause 11.

17.  I pause here to deal with a point raised by those representing Mr Lieu as to the provision under cl.13.2. for amendments or modifications or supplements to the Framework Agreement to be in writing.  This had not been pleaded by Mr Lieu and apparently no evidence was called on it.  It was rejected by the judge at para. 91 as a “narrow view”.  Leading counsel for Mr Lieu accepts, correctly in my view, that if the parties had waived the effect of cl.11, cl.13.2 would not be engaged.

18.1   Coming back to the argument that there were negotiations for a new, separate transaction, it is important, in my view, to note that if Mr Lieu had taken the stand that the Framework Agreement had terminated on 31 December 2008, one would have expected him to have immediately asked for the return of the shares charged as well as the irrevocable resignations of directorships which he and his wife had signed in blank.  The retention by JZD of these commercially significant documents was referable only to one thing - the existence of the Framework Agreement.

18.2   Further, if there had been a new, separate transaction, or more accurately, negotiations in a new, separate transaction, one would have expected both parties – now back to square one – to lay down a new framework.  That was not done. 

Letter of 23 January 2009

19.1   Instead, on 23 January 2009, Mr Lieu wrote to the CEO of JZD a long letter expressing concern about the progress of JZD in the acquisition of Super Cruise – significantly under the caption “Re: Equity Interest Transfer Framework Agreement”, which is the full title of the Framework Agreement.

19.2   In that letter he refers to the Framework Agreement and complains about lack of progress, saying “it is not clear to us if they [JZD’s lawyers] are now done”. He refers to the exclusivity period having expired, not that the period for the validity of the entire Framework Agreement has expired.  He then sets 9 February 2009 as the new date for signing a formal sale and purchase agreement. 

20.  In my view this letter shows clearly that there was no new, separate transaction or negotiations for a new, separate transaction after 31 December 2008, but simply a continuation of the Framework Agreement.  Mr Lieu’s case, founded on the termination of the Framework Agreement by effluxion of time on 31 December 2008, must fail.  As noted earlier, it is not his case that the 31 December 2008 deadline had been extended to a new deadline that JZD had nevertheless failed to meet.

Events thereafter

21.  As events transpired, even after the new deadline of 9 February 2009 passed, the parties continued to deal with each other as before.  It was not until 20 February 2009 that Mr Lieu’s solicitors wrote to JZD claiming that the validity of the Framework Agreement had expired on 31 December 2008 but that he was prepared to continue negotiations “in the spirit of the Framework Agreement”.

22.  Having said that, there were still meetings “to explore a common basis to proceed with the transaction documented in the Framework Agreement” (see letter dated 6 May 2009 from Mr Lieu’s solicitors).  The parties fell out after Mr Lieu postponed a proposed meeting the next day. 

Mutual demands

23.1   On 27 May 2009, JZD wrote to Mr Lieu demanding the return of the earnest money. The letter referred to the Framework Agreement and tracked the language of cl.3.2.1 in referring to substantive problems in the aspects of legal, account and finance, operational and development matters.      

23.2   On 2 June 2009 Mr Lieu’s solicitors wrote to JZD’s solicitors alleging defaults/breaches of the Framework Agreement and Confidentiality Undertaking (the latter matter has not been pursued on appeal).  The solicitors said that Mr Lieu considered it not appropriate to return the earnest money and would seek to set off the losses against the earnest money.  Mr Lieu revoked the Share Charge and demanded the return of the share certificates.  He and his wife also sought to revoke their irrevocable resignations as directors.   

23.3   On 3 June 2009 JZD’s solicitors demanded the return of the earnest money, on threat of enforcement of the Share Charge.

23.4   Mr Lieu did not return the earnest money or any part thereof.

23.5   On 20 July 2009 JZD appointed receivers over the charged shares.

23.6   Proceedings were commenced, leading to the judgment under consideration.

Appeal from declaration of non-forfeiture of earnest money

24.  In light of the discussion at paras 13 to 20 above, in my view Mr Lieu’s arguments set out in para. 9 above must fail.  There are no other grounds on which he claims to be able to retain the earnest money and the appeal from para. 1 of the order (a declaration that the earnest money is not liable to forfeiture and has not been forfeited) made by the judge must be dismissed.

25.  It follows that the appeals from para. 10 (an order dismissing Mr Lieu’s claim for damages for JZD’s breach of the Framework Agreement and for enforcement of the Share Charge) and para. 11 (an order dismissing Mr Lieu’s claim for set off) must also be dismissed. 

Appeal from enforcement of Share Charge and Loan Assignment, appointment of receivers and delivery up of books

26.  Since Mr Lieu has not made any repayment of the earnest money and in the absence of any other grounds, it follows that the appeals from para. 3 (a declaration that JZD is entitled to enforce the share charge and the Loan Assignment) and para. 4 (a declaration that the appointment of the receivers on 20 July 2009 by JZD is valid and effective) must also fail.

27.  Similarly, the appeal from para. 5 (that Mr and Mrs Lieu deliver all the books etc of Super Cruise to the receivers) must fail.  They have signed irrevocable resignations as directors.  The receivers have appointed themselves directors. As such they must be entitled to custody of the books of the company so that they can fulfil their powers and duties as directors.  

Appeal from orders for damages to be assessed

28.1   Paragraph 6 (an order that Mr and Mrs Lieu pay JZD damages for breach of the Share Charge to be assessed), para. 7 (an order that they indemnify JZD for expenses in enforcing the Share Charge to be assessed), para. 8 (an order that Van Shipping pay JZD damages for breach of the Loan Assignment to be assessed), and para. 9 (an order that it indemnifies JZD for expenses in enforcing the Loan Assignment to be assessed) all deal with damages to be assessed.

28.2   Mr Lieu’s ground of appeal in respect of these orders is that there was no order for split trial and that damages had not been particularised in the pleadings. Leading counsel for JZD replies that damages had been referred to in the Witness Statements.

28.3   In my view, what is important is that on a number of occasions as shown in the Transcript, the judge indicated that he would on his own motion order damages to be dealt with separately.  Consistently with that basis, he had stopped evidence being adduced from the receivers and he had also postponed consideration of an amendment proposed by Mr Lieu.  It seems to me that the judge had in effect ordered a split trial and these grounds of appeal must fail accordingly.   

Appeal from currency of payment

29.1   Paragraph 2 of the judge’s order was an order that Mr and Mrs Lieu and his company Van Shipping Co Ltd (the assignor under the Loan Agreement) pay JZD “the Hong Kong dollars equivalent of RMB26 million with interest at the best lending rate of the Hong Kong bank from 27 May 2009 to 7 June 2012”.

29.2   Mr Lieu has contended that there was no basis for the judge to order payment of the “the Hong Kong dollars equivalent of RMB26 million”.  I agree.  It is clear from the original Chinese text of the Framework Agreement that the earnest money was to be paid in HKD with no option to pay in RMB.  In fact HKD 30m was paid.  Clause 3.2.1 provides

“乙方須 … 按甲方支付的原幣種退還全部交易保證金 （若為港幣，則依原甲方支付日滙率計算… ”

“Party B [Mr Lieu] shall ... return the full earnest money paid in its original currency to Party A [JZD] (if in HKD, exchange rate shall be the rate Party A advanced the earnest money ...)”

29.3   It seems to me clear that since the earnest money was paid in HKD, that sum in HKD (HKD30m) should be repaid.  The words in parentheses make it clear that fluctuations in the exchange rate should not affect the amount of  the repayment. 

Order         

30.1   Accordingly, I would dismiss the appeal save that para. 2 of the judge’s order would be substituted with an order that

“Lieu Tseng Van, Chen Siu Ling and Van Shipping Company Limited to pay Jiuzhou Development Company Limited (now known as Zhuhai Holdings Investment Group Ltd) HKD30 million with interest at the best lending rate of the Hong Kong bank from 27 May 2009 to 7 June 2012”.

30.2   I would also make a costs order nisi that the appellants pay 90% of the respondent’s costs of the appeal but that the costs order below shall remain.

Hon Kwan JA:

31.  I agree with the judgment of Yuen JA.