LAU YUK CHUEN v. GAUSS ELECTRONICS CO. LTD. AND OTHERS

HCCW 145 & 146/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 145 OF 1999

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J U D G M E N T

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1. I have before me two petitions for winding up. The Petitioner in each case is Mr Lau Yuk Chuen, a minority shareholder of two companies, Gauss Electronics Co. Ltd (Gauss), and East Point Investment Ltd (East Point), which are private companies limited by shares, the latter formed solely for the purpose of holding the office and factory premises of Gauss. Until 30 October 1998, when his appointments were terminated at a meeting of the board, the Petitioner was the managing director and finance manager of Gauss, and at an Extraordinary General Meeting of Gauss held on 8 December 1998, he was removed as a director. He seeks relief under section 168A of the Companies Ordinance (Cap 32), his petitions originally praying for the winding up of the companies or alternatively that the other shareholders, the 2nd to 4th Respondents, be ordered to buy his shares at a price to be fixed by the Court.

2. By an order by consent dated 19 April 1999, Mrs Justice Le Pichon ordered that the 2nd to 4th Respondents do purchase the Petitioner's shares in each company at a price to be fixed by the Court and that the application for the winding up of the companies be stayed until further notice. The determination of the price and the question of costs was adjourned sine die, and it is that matter which is now before me for further consideration.

3. The parties seek a number of orders in respect of the determination of the price, those which are not in dispute being (1) the appointment of a valuer; (2) access to be given to the valuer to all books, accounts and documents of the companies necessary for the valuation; (3) the valuer to have the right to engage suitable experts to value the assets; and (4) the costs of the valuation to be shared equally. A further matter of the payment of dividends of Gauss for the year ending 31 December 1997, declared at the Annual General Meeting of Gauss held on 19 March 1999, was conceded by the Respondents during the course of the hearing and an order to that effect was made.

4. Of the remaining orders sought, those principally in dispute are in respect of the date on which the shares should be valued, whether they should be valued with a discount for the fact that the Petitioner's shareholding is a minority holding, whether interest should be paid and from when, and costs of the proceedings. For the determination of these matters it is necessary to resolve the main issue here, which is whether the Petitioner was unjustifiably excluded from the management of Gauss, and unjustifiably dismissed as managing director and finance manager, and removed as a director.

Background

5. The Petitioner, the 2nd and 3rd Respondents, who had met and worked together at the Hong Kong Telephone Company in the 1960's, the father of the 4th Respondent and a Mr Kwok, formed a partnership in 1977 known as Gauss Electronic Industries Company to carry on a business in the manufacture of and dealing in transformers, trigger coils and other accessories required for making photographic flashlights, each contributing $20,000 as capital. The 4th Respondent's father took no part if the management of the company and was only an investor. The Petitioner at that time was employed by another company called Nam Kwong Electrical Co. and it is alleged by the Respondents that he too was merely a passive investor. However, I accept the Petitioner's evidence that, although he received no salary from the partnership, he was involved in policy making, and using his contacts through his employment to help secure orders for the partnership, Nam Kwong being a manufacturer of bulbs for flashlights.

6. In 1983 it was decided to convert the partnership into a limited company, and Gauss was incorporated on 18 March of that year and, eventually, the 3,000 shares of $100 each were held equally by the same five partners. Under the provisions of the Articles of Association all except the 4th Respondent's father were made "permanent directors" of the company. In 1984 East Point was incorporated with the 10,000 $1 shares again held equally. The shares in both companies held by the 4th Respondent's father were transferred to the 4th Respondent in April 1987, with the same understanding that he would take no part in the management of either company. The other shareholders and directors shared out the management duties between them, the Petitioner being initially manager of research and development, then in 1991 managing director, general manager and finance manager as well, until 1995 when he relinquished his duties as manager of research and development and general manager, retaining his posts of managing director and finance manager. This was his situation when the events leading to his dismissal occurred in 1997 and 1998.

7. The only other change in directors and shareholders in these two companies prior to 1998 took place in 1989 when there were allegations of misconduct by Mr Kwok. As a result of this, Article 5 was deleted, and Mr Kwok was removed as a director. Some time later, his shares were purchased by the other shareholders. The Petitioner and the 2nd to 4th Respondents accordingly now hold 750 shares each of Gauss, and 2,500 shares each of East Point.

8. In 1986 a joint venture agreement was entered into by Gauss with two companies in the PRC to expand into the PRC market, and for this purpose a new company called Tianjin Nanco Electronics Co. Ltd (Nanco) was formed. Under the agreement the joint venture was to last for ten years. Upon its expiration in 1996, no new agreement being forthcoming, it was decided to enter into a new joint venture, and another company called Golden Eagle (Tianjin) Electronics Company Ltd (Golden Eagle) was formed, with Gauss holding 50% of the shares, and a new company Called Eagle Lite Ltd (Eagle Lite) holding the other 50%. Eagle Lite's shareholders were the Petitioner, the 2nd and 3rd Respondents, a Ms Silon Tang Sik Luen, a Mr Leung Kwok Wing and a Mr Choy Han Sum. The three last named were senior employees of Gauss. The Petitioner and the 2nd and 3rd Respondents were directors of all four companies, and Ms Silon Tang at least was a director of Eagle Lite as well as being an executive secretary in Gauss.

The position of the parties

9. The Petitioner complains that the affairs of Gauss have been conducted by the other shareholders in a manner unfairly prejudicial to him, and that he has been unfairly excluded from the management of the company. He says that the date of valuation of the shares should therefore be 8 December 1998, the date he was removed as a director, the value of the shares should not be discounted to reflect the fact that it is a minority holding, and he should receive interest on their value from the date of valuation.

10. The Respondents' case is that they were entitled to remove him, either as an exercise of their legal rights under the Companies Ordinance, or because he has been in breach of his fiduciary duties as a director, and has been grossly incompetent in discharging his functions as finance manager. They contend that the date of valuation should accordingly be the date of the petition, a discount should be made to reflect any loss the Petitioner has occasioned to the company, and no interest should be paid. The matter of a discount to reflect the fact that the Petitioner shares are a minority holding was not, properly in my view, serious pursued by the Respondents.

11. The principal issue behind all these considerations is whether the company was in the nature of a quasi-partnership and the removal of the Petitioner was just and equitable in all the circumstances of this case. In the case of a normal limited company, it is not unusual for directors to be removed for any one of a number of reasons. Indeed, the Articles often provide for retirement by rotation with re-election not guaranteed. As a matter of law, the majority shareholders and directors have the legal right to exclude or remove another director and shareholder, but the courts will not allow the exercise of such powers where, because of the nature of the company and the relationship between the members of it, it would be inequitable to do so. This question arises particularly where the company is in the nature of a quasi-partnership, which is what the Petitioner maintains is the position here.

12. It is not in dispute that the principles set out in Ebrahimi v. Westbourne Galleries [1973] AC 360 should be applied in determining whether Gauss was a quasi-partnership. Under these principles the test falls into three parts: an association formed or continued on the basis of a personal relationship, involving mutual confidence, often to be found where a pre-existing partnership has been converted into a limited company; an agreement, or understanding that all or some of the shareholders shall participate in the conduct of the business; and restriction upon the transfer of the members' interest in the company.

13. It is apparent to me that Gauss falls fairly and squarely within this definition. The parties had been in partnership for 6 years before forming the company, having worked together before that, and upon that formation they all, except the 4th Respondent who, with his father before him, had always been an investor and sleeping partner, joined in the management. It was clearly the intention that this situation should continue, as there was provision in the Articles that they should be permanent directors. There was also provision in the Articles that shares could not be transferred without the consent of the directors.

14. The Respondents have sought to persuade me that, because of the deletion of Article 5 relating to permanent directors in 1989, the agreement or understanding that they should participate in the management came to an end, and the status of the company ceased to be that of a quasi-partnership thereafter.

15. I have no difficulty in finding that this was not the case. It is not in dispute that this was done when it was necessary to remove Mr Kwok as a director, and I accept the Petitioner's evidence that they were advised that this was the easiest way to achieve it. I do not accept that there was any intention by the other directors to change any of the other working arrangements between them. The only other way for Mr Kwok to cease to be a director under the Articles was for him to dispose of his shareholding. There is no evidence that this was offered until a much later stage.

16. It follows that the Respondents have to satisfy me that the exercise of their legal rights in removing the Petitioner as a director and excluding him for the management of the company was not unjust, inequitable or unfair. They seek to do this by alleging that the Petitioner was in breach of his fiduciary duties as a director of Gauss, and was grossly incompetent as finance manager.

17. In support of their allegations, they point to three separate matters. The first relates to the transfer of orders from a company called Kingsland International Ltd (Kingsland), which were directed to Gauss, to Golden Eagle in 1996. The second is an allegation by the Respondents that the Petitioner solicited business from Nissin Industries (HK) Ltd (Nissin), a customer of Gauss, for Golden Eagle, thereby taking business away from Gauss. The third is that the Petitioner, as finance manager, failed to claim refunds of tax due to the company. I will deal with each of these separately.

Kingsland

18. One of the products developed by Nanco during the joint venture was a device called an auto battery analyzer (ABA) used to test car batteries. After the expiration of the joint venture, Golden Eagle continued to produce the device, for which one of the customers was Kingsland. The Petitioner's evidence is that he and Mr Choy Han Sum had to travel frequently to Tianjin, where Golden Eagle was situated, and of which he was general manager as well as a director. He said that there was a question of which company should pay Mr Choy's expenses as the 2nd Respondent was unwilling for them to be paid by Gauss. It was suggested by Ms Silon Tang, who was a director of Eagle Lite as well as a shareholder, at a board meeting on 25 November 1996, and agreed, that orders for the ABA should be handled by Eagle Lite so that it could earn a profit to pay such expenses. She accordingly wrote to Kingsland on 5 December 1996 telling them of the new arrangement. They replied with queries the same day and a further letter was sent to them, signed by the Petitioner, but, he says, drafted by Ms Tang. The Petitioner says that the 2nd Respondent, who was general manager of Gauss, knew all about this arrangement.

19. The 2nd Respondent, however, who was the only other director to give evidence, says that this was done without their knowledge by the Petitioner who, by diverting orders from Gauss to Eagle Lite, was in breach of his fiduciary duties as a director of Gauss. I find this assertion extremely difficult to believe. Although there is no mention of the arrangement in the minutes of the board meeting of 25 November 1996, which may or may not be a result of not everything discussed being recorded, the documents relating to the Kingsland orders were kept openly in an office that the 2nd Respondent shared with Ms Silon Tang, and there is no evidence that any effort was made to conceal the orders from other directors. At the time, the directors were all on good terms and worked closely together and I consider it unlikely that they did not know which orders were directed to which of their companies. Indeed, Ms Tang being still, I understand, employed by Gauss, could well have shed a good deal of light on what transpired over these orders, yet was not called to give evidence. Neither was the 3rd Respondent called, although I understand that he was in court throughout this hearing and might have shed more light on this, as on the other matters in issue.

20. The 2nd Respondent said in evidence that when he discovered what had happened, he called a board meeting on 5 December 1997 to ensure that it did not happen again. The minutes of that meeting do not, however, support his assertion. There are merely two relevant resolutions, one of which stipulates that orders received by Gauss shall not be subcontracted without approval from the board and signed by the 2nd Respondent, and a rather general resolution reminding directors and staff not to, inter alia, use the company's confidential information to solicit the company's customers. In view of the circumstances I find it unlikely that this referred to the Kingsland orders.

21. In any event, it is clear that the 2nd Respondent, even if he considered that the Petitioner had acted against the interests of Gauss, did not consider it sufficiently serious to warrant further action, as nothing further was done, and the matter was not mentioned again until, I believe, these proceedings. This incident could not therefore have been a good reason by itself for removing the Petitioner a year later.

Nissin

22. When Golden Eagle was first established it was largely supplied with orders from Gauss subcontracting to it, although I accept the Petitioner's evidence that this was not intended to be its sole source of income. It was not be sensible to form such a company and then not allow it to seek business for its products elsewhere. Equally I accept that there may well have been an agreement that it should not act to the detriment of Gauss by taking business away from Gauss from established customers.

23. It is not entirely clear what transpired between the directors of Gauss in late 1997 and throughout 1998, but it does not seem to be in dispute that there was a considerable amount of ill feeling between the Petitioner and the 2nd and 3rd Respondents, to the extent that many of the matters now being aired could not then be easily discussed. If they had, the present situation may well not have arisen at all. Be that as it may, for reasons which are not clear, Gauss' orders to Golden Eagle were halted completely for the first three months of 1998. The 2nd Respondent initially said that this was because they received no orders from their customer Nissin, but when it was pointed out that there had been a number of orders, then said that it was because they were urgent. This again was not entirely supported by the documentary evidence of the orders themselves. In any event, Golden Eagle being cut off from orders from Gauss sent its sales staff to seek orders elsewhere. One of the companies approached was Kodak Shanghai, who were a customer of Nissin and who referred Golden Eagle's products to them for testing. Golden Eagle's staff then contacted Nissin who found their products of good quality, and, having received a quotation in February 1998, also found their prices acceptable.

24. The purchasing manager of Nissin, Mr Lam Kwok Kit, who was also called to give evidence, by the Respondents, said that about two weeks after he received the quotation the Petitioner called to see him, as he frequently did. On this occasion he wanted to discuss the possibility of orders for Golden Eagle. But Mr Lam was adamant that in doing so, the Petitioner wanted to ensure that no business would be taken away from Gauss.

25. Mr Lam said that, at that time there were three suppliers to Nissin, Gauss, and two others, Union and TCE. They were not satisfied with Union and were looking for another supplier at similar prices. He said that he assured the Petitioner, who showed concern for the position of Gauss, that any orders for Golden Eagle would not affect those for Gauss. Indeed, this turned out to be the case, as the figures for orders for Gauss for 1998 showed a massive increase from just over $6 million in 1997 to nearly $18 million in 1998, while Golden Eagle also benefited from Nissin switching orders from Union and TCE.

26. The evidence is therefore very clear that, far from approaching Gauss' customers to solicit business at Gauss' expense, the Petitioner was concerned to see that no damage was done to Gauss while he was trying to do his duty to the other company to which he also owed duties, namely Golden Eagle. He owed fiduciary duties to both companies and he was required to keep an even hand while discharging them. The Respondents have produced no evidence to persuade me that he did other than that.

The Tax refund

27. The third limb of the Respondents' complaints against the Petitioner arise out of his duties as finance manager. As is usual a firm of accountants was instructed to prepare the company's accounts each year, and no doubt it was to the finance manager they reported. It came to the Petitioner's notice in 1997 or early 1998, when he was shown a newspaper cutting by the 3rd Respondent, that tax relief could be claimed in respect of offshore income generated in their factory in PRC. This was pointed out to the accountants and a claim for a refund duly made to the Inland Revenue. This was paid, as indeed all overpayments made since 1992 have now been repaid.

28. It is difficult to see precisely what it is that the Respondents say amounts to gross negligence here. The Petitioner is not a highly educated man. He has no tertiary education and no training in financial matters and clearly relied entirely on the accountants for advice on financial matters. None of the directors were highly trained businessmen, but skilled in one line with good ideas and a good product. I find it extremely unlikely that they relied heavily on any financial expertise he may have. Even if they had, what is alleged cannot amount to more than an oversight, which has not caused any loss to the company. It is certainly not in the category of negligence.

29. I accordingly find that none of the Respondents' reasons given for dismissing the Petitioner and removing him as director bear close examination, and whatever other reasons they may have had at the time to wish to part company with him, those given here do not justify the treatment meted out to him, and the majority shareholders have clearly conducted the affairs of the company in a manner prejudicial to him and his interests. It follows that there is no reason for any conduct on the part of the Petitioner to be taken into account to justify a deduction from the full value of his shares.

Date of valuation

30. In the light of the above, what then is the proper date of valuation?

31. The normal date for valuation in a case such as this is the date of the petition, which here is 13 February 1999, and one which on the authorities is frequently adopted. As Rogers JA said in Re Tai Lap Investment Co. Ltd [1999] 3 HKC 660:

It is certainly a logical date. It is the date when unequivocally the petitioner has crystallised his intention of not submitting to the conduct of which he complains.

32. Is there an argument in this case for an earlier date as sought by the Petitioner? There may well be circumstances that would give rise to discretion being exercised in respect of a date before the presentation of the petition. As Rogers JA went on to say in the same case:

In my view, if the basis of a court's order is that the company involved has been usurped and its assets misapplied by those of whose conduct complaint is made, on the face of the matters, the appropriate date to take is the date of the usurpation or the date where that wrongful conduct has unequivocally been declared by the petitioner to be unacceptable.

33. This clearly envisages a situation where a date earlier than the petition may be appropriate. However, in this case, while there is evidence that the company has been usurped, there is none that shows the assets have been misapplied or the company or its assets misdirected. As far as I know the company is still a going concern, and I have no evidence at all that it is in anything but as healthy a condition as when the Petitioner was ousted. From what I have seen, and the evidence of ill feeling between the former partners, the reasons for his dismissal were more likely to be personal than with a view to deal with the company in a way designed to benefit those remaining.

34. In those circumstances, there seems to me to be no reason for me to select any other date than that which is usual, and I accordingly consider it appropriate that the date of presentation of the petition should be the date for valuation of the Petitioner's shares in both companies.

Interest

35. The Petitioner seeks interest, not only on the purchase price from the date of valuation, but on the sum of $816,000, for which I gave judgment on 25 November 1999, being the Petitioner's share of the dividend declared at the Annual General Meeting of Gauss, from 19 March 1999, the date of the meeting, to payment.

36. To deal first with the matter of the dividend, there was no explanation from the Respondents as to why this had not been paid. The original answer to the claim for payment was to the effect that the Petitioner's entitlement to the dividend would be paid upon transfer of the shares, or be reflected in the value of the shares. This, of course, totally missed the point that the dividend was due and owing upon being declared, and did not explain why it had not been paid before. There was no explanation why payment should be delayed, or why it should only be paid upon transfer of the shares. In the course of the hearing Mr Wong for the 1st to 3rd Respondents conceded that payment should be made and an order was made accordingly.

37. I can see no reason why the Petitioner should not be compensated by way of interest for being kept out of the money he has been entitled to since the dividend was declared on 19 March this year, and I order that the 1st Respondent do pay interest on the sum due at 10% from that date to the date of my order on 25 November, and thereafter at judgment rate until full payment.

38. The matter of interest on the purchase price of the Petitioner's shares presents a more difficult problem. While Mr Wong concedes that section 168A is wide enough to give discretion to the Court to order what is considered to be right and equitable, he says that there was no prayer in the petition for interest in the event of an order to purchase, nor was there anything in the consent order except an order for the determination of the price and the question of costs.

39. Where interest is claimed under section 48 of the High Court Ordinance, then such a claim must be specifically pleaded under Order 18, rule 8. However, here the claim is under section 168A of the Companies Ordinance, and, Mr Wong having conceded that this is wide enough to allow an order for interest, the same requirement for pleading does not in my view apply.

40. Is the consent order wide enough for such a claim? This refers to the determination of the "Price" without mentioning interest or any other matter which has to be taken into account. What does the word "price" mean in this context? The basic definition of the word is the sum of money which one has to pay to purchase something, and it must be distinguished from "value". What we are concerned with in these proceedings is the value of the shares at a given date. The price, which the Respondents must pay to acquire the shares, can accordingly be that value plus any interest ordered to be paid. The price is what must be paid, whether it is made up of the value only, or the value with any other additional sums ordered to be added to it.

41. As to whether interest should be ordered, Mr Chan for the Petitioner has drawn my attention to the decision of Mrs Justice Le Pichon in Re Tai Lap Investment Co. Ltd [1999] 1 HKLRD 384 where the learned judge awarded interest, to date before the order for buy out, on the basis that it was not awarded qua interest but as a proxy to measure the increment in the value of the Petitioner's investment in the company appropriate to reflect the fact that the Respondent's interests had the use of the Petitioner's investment since the date of the petition, that being, as here, the valuation date. This decision does not follow that of Nourse J in Re Bird Precision Bellows Ltd [1984] 3 All ER 444. His view of the matter was that the agreement was that the Respondents should buy out the Petitioners at a such price as the court should determine. That sum was held to be a sum equal to the fair value of the shares, and no more. He found that there was no agreement that the Petitioners should receive damages for loss of use of the purchase moneys.

42. However, the views of the courts have since come round to the view that such interest can be recovered, and in coming to the decision she did inRe Tai Lap Investment Co Ltd, Mrs Justice Le Pichon was following similar decisions in Rankine v. Rankine (1995) 18 ACSR 725, and Dynasty Party Ltd & Others v. Coombs (1996) 138 ALR 64.

43. I would agree with the reasoning in those cases. The section is wide enough to give the necessary discretion to the Court, and it seems equitable that there should be some compensation for the fact that the Respondents have had control over and use of the Petitioner's investment since the date to the petition. I therefore order that the price payable for the shares shall include interest on their value of 10% per annum from that date.

Directors' fees and bonus

44. The Petitioner was removed as a director of Gauss on 8 December 1998. Both the 2nd and 3rd Respondents were paid directors' fees for that year of $509,000 and a bonus of $245,787.50. The Petitioner has hitherto received nothing, and now claims similar sums pro rata for that year to the date he was removed.

45. I agree that there is no reason why he should not receive the same rewards accorded to the other directors, particularly in view of my findings above that he was throughout that year working to the benefit of the company. The difficulty is how the sum should be calculated. It might after all have been a different amount if there were three directors to be paid rather than two.

46. The fairest way of dealing with this must be to direct the valuers to add back into the value of the shares the sums paid to the other directors, as if they had not been paid, and the Petitioner will then benefit by an appropriate increase in that value to reflect the fees and bonus not paid to him at the time.

Costs

47. From my findings above it is apparent that I consider that there was no good reason shown by the Respondents for removing the Petitioner and leaving him no alternative but to commence these proceedings. It follows that the Respondents should bear the costs of these proceedings.

Conclusion

48. My orders in this matter is accordingly as follows:

A. In HCCW 145 of 1999:

(1) The 2nd, 3rd and 4th Respondents do purchase the 750 ordinary shares of HK$100 each in the capital of Gauss Electronics Company Limited (Gauss) presently registered in the name of the Petitioner at a price to be fixed by such valuer ("the Valuer") being a chartered accountant, as may within 14 days be agreed upon by the Petitioner and the 2nd to 4th Respondents or failing such agreement as may be appointed by the President for the time being of the Hong Kong Society of Accountants upon the application of either party with or without the consent of the others;

(2) The Valuer be directed to value the Petitioner's shares on the following basis:-

(a) The price shall be the fair market value of the shares determined by reference to the assets, profitability and future prospects of Gauss as at 13 February 1999; (b) The Petitioner's shares shall be valued without any discount for the fact that the Petitioner's shareholding is a minority holding; (c) The Valuer shall be given complete and unimpeded access to all the books, accounts and documents of Gauss which are necessary for the valuation; (d) The Valuer shall have the right to engage suitable experts to value the assets of Gauss; (e) The Petitioner, the 2nd, 3rd and 4th Respondents shall have the same right of access to information about Gauss which bears upon the value of the shares, and each of them shall have the right to make submissions to the Valuer, in such form as shall be determined by the Valuer (f) For the purposes of the valuation of the shares, there shall be included under "current assets" of Gauss the sums of $491,575 and $1,018,000 being respectively the bonus and directors' fees paid to the 2nd and 3rd Respondents for the year ending 31 December 1998; (g) The Valuer is to take into account, in such way as he sees fit, as current assets of Gauss, the sum of $2,076,584 being the tax overpaid by Gauss for the years 1992/93 to 1996/97 and refunded to Gauss by the Inland Revenue.

(3) The costs of the Valuer's valuation shall be shared equally by the Petitioner and the 2nd to 4th Respondents;

(4)

(a) The 1st Respondent do pay interest to the Petitioner on the sum of $816,000 (being the Petitioner's share of the dividends for the year ending 31 December 1997 as declared at the Annual General Meeting of Gauss held on 19 March 1999) at 10% per annum from 19 March 1999 to 25 November 1999 and then at judgment rate until the date of payment; (b) The 2nd, 3rd and 4th Respondents do pay interest to the Petitioner on the purchase price at 10% per annum from 13 February 1999 to the date of payment;

(5) The 2nd, 3rd and 4th Respondents do pay the Petitioner the costs of these proceedings to be taxed if not agreed;

(6) All further proceedings in this matter be stayed, save that the parties be at liberty to apply for the purpose of carrying into effect the terms of this order.

In HCCW 146 of 1999

(1) The 2nd, 3rd and 4th Respondents do purchase the 2,500 ordinary shares of HK$1 each in the capital of East Point Limited (East Point) presently registered in the name of the Petitioner at a price to be fixed by such valuer ("the Valuer") being a chartered accountant, as may within 14 days be agreed upon by the Petitioner and the 2nd to 4th Respondents or failing such agreement as may be appointed by the President for the time being of the Hong Kong Society of Accountants upon the application of either party with or without the consent of the others;

(2) The Valuer be directed to value the Petitioner's shares on the following basis:-

(a) The price shall be the fair market value of the shares determined by reference to the assets, profitability and future prospects of East Point as at 13 February 1999; (b) The Petitioner's shares shall be valued without any discount for the fact that the Petitioner's shareholding is a minority holding; (c) The Valuer shall be given complete and unimpeded access to all the books, accounts and documents of East Point which are necessary for the valuation; (d) The Valuer shall have the right to engage suitable experts to value the assets of East Point; (e) The Petitioner, the 2nd, 3rd and 4th Respondents shall have the same right of access to information about East Point which bears upon the value of the shares, and each of them shall have the right to make submissions to the Valuer, in such form as shall be determined by the Valuer

(3) The costs of the Valuer's valuation shall be shared equally by the Petitioner and the 2nd to 4th Respondents;

(4) The 2nd, 3rd and 4th Respondents do pay interest to the Petitioner on the purchase price at 10% per annum from 13 February 1999 to the date of payment;

(5) The 2nd, 3rd and 4th Respondents do pay the Petitioner the costs of these proceedings to be taxed if not agreed;

(6) All further proceedings be stayed, save that the parties be at liberty to apply for the purpose of carrying into effect the terms of this order.