MILLION HONOUR TRADING LTD v. MAK LAI HING DAISY AND ANOTHER

HCA 1852/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1852 OF 2009

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J U D G M E N T

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This action and the parties

1.  This is the trial of an action between the plaintiff (“MH”) and the defendants (“Chans”, individually “Mr Chan” and “Mrs Chan”) (“Main Action”) and the third party proceedings between Chans and the third party (“Firm”) (“TP Proceedings”).

2.  This case concerns the sale and purchase of the sole issued share (“Share”) in Lucky Point Ltd (“Company”) by MH to Chans under a Company Sale and Purchase Agreement in Chinese (公司買賣協議書) dated 15 June 2009 (“Provisional Agreement”).  

3.  MH was and is the registered owner of the Share and thus the sole owner of the Company.  The Company in turn is the registered owner of a property at Cullinan I, 1 Austin Road (“Property”) since 18 January 2010.   

4.  At the time of the Provisional Agreement, the Company had entered into an agreement to purchase the Property and that contractual right was the sole asset of the Company.  Therefore, in essence the transaction under the Provisional Agreement (“Transaction”) was for the sale and purchase of the right to acquire the Property.

5.  The Chans are husband and wife.  The Firm acted as their solicitors in respect of the Transaction.  

6.  In summary, MH claims that Chans defaulted under the Provisional Agreement by failing to complete the Transaction.  Chans make no admission to MH’s case, but they leave it to the Firm to make any defences and arguments as to which party was at fault for failing to complete the Transaction.  If they are held to have acted in breach of the Provisional Agreement, they would claim against the Firm on the basis that it had been negligent in failing to give proper advice to them. 

7.  The resolution of this dispute requires an examination of what transpired in the course of the attempt to complete the Transaction.

8.  By an order dated 8 June 2011, the Firm was given leave to defend against MH’s claims in the Main Action, either alone or jointly with Chans, including raising defences, arguments or answers for them as against MH which they do not raise, and to appear at the trial of the Main Action.  By another order dated 18 December 2013, the Main Action and the TP Proceedings are to be tried together.

Background

9.  Much of the background facts are not in dispute. Insofar as the dealings between the solicitors acting for MH in the Transaction, Messrs Liu, Chan and Lam (“LCL”) and the Firm are concerned, they are well documented in the correspondence which is uncontroversial.  The following facts are not in dispute.  

10.  The Company was incorporated on 11 February 2009, with GNL09 Ltd (“GNL09”) being the founder member holding the sole issued share and the first director.  The Company was acquired by MH on 21 February 2009.  The share held by CNL09 was transferred to MH and Ms Chan Lei Mei of MH (“Ms Chan”) replaced GNL09 as the sole director of the Company. 

11.  It is clear that GNL09 was a corporate service company and that the Company was a shelf company.  

12.  Two days later, on 23 February 2009 the Company entered into an agreement (Memorandum for Sale) for the purchase of the Property from MTR Corporation Ltd (“MTR”) at the consideration of HK$19,043,000.  A Sale and Purchase Agreement between MTR and the Company was made on 2 March 2009 (“MTR Agreement”).  These documents were signed by Ms Chan on behalf of the Company, and LCL acted for the Company in those matters. 

13.  It is clear that the Company was acquired by MH as a corporate vehicle for holding the Property.  Completion under the MTR Agreement was to occur on 18 January 2010.   

14.  By June 2009, the Company had paid a total sum of HK$3,808,600 to MTR as deposits and part payment under the MTR Agreement. Such funds came from MH.

15.  The Provisional Agreement was entered into on 15 June 2009.  The consideration for the sale of the Share was HK$5,265,600, to be paid for in the following manner :-

(a) A sum of HK$1,000,000 shall be paid by Chans on the signing of the Provisional Agreement as the initial deposit (臨時訂金): Clause 1(a);

(b) On or before 26 June 2009, the parties shall sign a formal agreement “Formal Agreement”) and Chans shall pay a sum of HK$457,000 “as part payment of the consideration” (作為部份轉讓費用): Clause 1(b);

(c) Completion shall take place on or before 14 August 2009, and Chans shall pay the outstanding consideration of HK$3,808,600: Clause 1(c).

16.  The Provisional Agreement contains, inter alia, express terms to the effect that :-

(a) MH shall warrant that the Company had no outstanding liability or litigation, and MH shall be responsible in full for any liability or litigation arising before the completion date of 14 August 2009: Clause 2.2;

(b) On the day of completion, at the same time as completion, MH shall hand over all relevant documents of the Company, eg, company registration certificates, common seal, memorandum and articles of association, meeting minutes, etc: Clause 4(b)[1];

(c) MH warrants and guarantees that :

(i) MH owned all the shares in the Company, the Share was not subject to any mortgage, and MH had the right to sell the Share without needing any consent from a third party: Clause 5(a)-(c);

(ii) The Company shall not at completion have any liability, litigation, tax problem, or illegality issues: Clause 5(e);

(d) Clause 8 provides that : “If the vendor after signing this agreement shall not perform this agreement and complete the transfer, then the vendor shall compensate the purchaser with double the initial deposit, and both sides agree not to claim against each other…”;

(e) Clause 9 provides that : “If the purchaser after signing this agreement shall not perform this agreement and complete the transfer, then the vendor shall have the right to forfeit the initial deposit.  And both sides agree not to claim against each other…”.

17.  It is common ground that a sum of HK$1,000,000 had been paid as initial deposit under the Provisional Agreement (“Initial Deposit”).  Further, HK$457,000 had been paid as part payment of consideration under Clause 1(b) (“Further Payment”), although no Formal Agreement was entered into by the parties (see below).  It is uncontroversial that both the Initial Deposit and Further Payment are in the hands of MH’s solicitors, ie, it has not had the use of the money.

18.  On around 3 July 2009, the Firm took over as the solicitors for Chans and had the conduct of the Transaction on their behalf since then. 

19.  On 11 August 2009, Chans remitted funds to the Firm for the purpose of, inter alia, paying the balance of the purchase price. 

20.  Despite the negotiations over the Formal Agreement, no binding agreement was reached at the end, and the parties proceeded on the basis of the Provisional Agreement. 

21.  As of the completion date, 14 August 2009, which was a Friday, the Firm had raised on Chans’ behalf a number of demands or requisitions with LCL on various matters relating to the Transaction.  For present purposes, it is only necessary to refer to the following 2 requisitions :-

(a) By a letter dated 11 August 2009, the Firm requested LCL to provide various documents relating to the Company in order to show MH’s title to the Share (“Documents Requisition”).  Although that letter referred to 17 items, it is clear from the Consolidated List of Issues provided by the parties (“L/I”) and the cross-examination of the witnesses that the dispute has been narrowed down to 2 documents, namely, (i) the original Instrument of Transfer between GNL09 and MH (“IT”) and (ii) the original Bought and Sold Notes between GNL09 and MH (“Notes”) (collectively “Outstanding Documents”); 

(b) By a letter dated 14 August 2009, the Firm made the point that according to its audited accounts as at 31 July 2009 (“Audited Accounts”), the Company had current liabilities in the sum of HK$3,819,589[2] (“Current Liability Requisition”).

22.  LCL’s answers to these requisitions can be seen from the following correspondence :-

(a) By a letter dated 12 August 2009, LCL supplied, inter alia, copies of the certified copies of the IT and Notes to the Firm;

(b) In response to the Firm’s demand by a letter sent in evening of the 12 August 2009 for the originals of those documents, LCL stated in their letter of the 13 August 2009 the following :

“May we draw your particular attention to Schedule 3 of the Agreement for Sale and Purchase signed between our respective clients, which has no terms obliging our client to produce Instrument of Transfer and Bought and Sold Notes made between previous transferor and our client. You may conduct a company search against the Company to check our client is being shown as the current shareholder of the Company. Production of the above items of documents is entirely not necessary in the circumstance.”

(c) The Firm replied on the same day saying that MH was obliged to provide all the Company’s documents which were in its possession according to the terms of the Formal Agreement.  In addition, it was stated :

“Moreover, it is shown in the record of the Companies Registry that the current shareholder of the Company is GNL09 Limited, its founder members but not your client, Million Honour Trading Limited. Your client therefore should produce to our client the original stamped Instrument of Transfer and the Bought and Sold Notes as proof that the said GNL09 Limited has duly sold and transferred the subject share to your client.

We are instructed to put on record that our client is willing and ready to complete the purchase the entire issued share of the Company on or before 14^th August 2009 in accordance with the said Agreement for Sale and Puchase.

Should your client insist not to produce the documents in question to our client by completion, our client will treat your client’s refusal as repudiation of the said Agreement for Sale and Purchase and shall take such appropriated action to enforce his rights under the said Agreement.”

(d) By letter dated 14 August 2009, LCL confirmed that MH had in its possession, inter alia, certified copies of the IT and Notes.  Further, LCL maintained that MH had proven its good title to the Share and that Chans were obliged to complete the Transaction that day; 

(e) LCL’s letter of 14 August 2009 was sent twice.  With the one sent at 12:35 pm, LCL attached a draft acknowledgement of debt (“Acknowledgement”) to be executed by MH at completion by which MH would waive the current liability of HK$3,814,589[3], all of which were owed to it.

23.  In the end, completion did not take place on 14 August 2009.

24.  By LCL’s letter dated 17 August 2009, MH forfeited “the deposit” due to the non-completion by Chans. There is no issue that only the Initial Deposit, but not the Further Payment, may be forfeited by MH.  However, the latter has not been returned to Chans.

25.  On 27 August 2009, MH commenced the present action against Chans. 

26.  Chans counterclaim against MH for, inter alia, specific performance and alternatively return of the payments made and damages to be assessed.   

27.  The Firm acted as Chans’ solicitors in the initial stages of the Main Action. The original Defence and Counterclaim (dated 12 October 2009) and the witness statement of Mr Chan (dated 10 April 2010) were prepared with the advice of the Firm.   

28.  On 14 July 2010, Chans issued the TP Proceedings.

29.  The purchase of the Property by the Company from MTR was completed on 18 January 2010 as scheduled.

The issues

30.  The L/I contains no less than 26 issues.  The disagreement over some of the non-agreed issues is a matter of formulation. However, like many cases, after the evidence has been unfolded many of the issues have fallen away. 

31.  The kernel of dispute concerns the failure to complete the Transaction.  The Firm maintains that it did not send over the balance of the purchase price to LCL on 14 August 2009 because the Documents Requisition and the Liability Requisition had not been satisfactorily answered.  Hence, the validity of those requisitions is one of the 2 key issues in the Main Action.  The other key issue is a factual dispute whether the Firm and LCL had on 14 August 2009 reached an oral agreement to extend the completion date to 1:00 pm on 17 August 2009, the following Monday (“Extension Agreement”). 

32.  In respect of the TP Proceedings, the dispute concerns the proper discharge of the Firm’s duties to Chans, namely, whether it had properly advised them over the merits and risk of the requisitions and whether it had obtained the necessary instructions from them on the same.

Witnesses 

33.  Two witnesses were called by MH – Ms Ip of LCL (“Ip”) who handled the Transaction on behalf of MH and Ms Chan.  Mr Chan gave evidence on behalf of Chans.  Two witnesses testified for the Firm.  Firstly, Mr Woo (“Woo”) who was at the material times its senior conveyancing clerk handling the Transaction.  Secondly, Mr Lau (“Lau”) the partner of the Firm who supervised Woo.  I shall deal with the material oral evidence when I address the various topics below.

The Liability Requisition

34.  It is clear from that evidence that the Liability Requisition is not a live issue.  Both Woo and Lau accepted in cross-examination that the outstanding liability of the Company could have been dealt with satisfactorily on 14 August 2009 by way of a loan assignment the terms of which had been agreed by the parties, and that the Liability Requisition would not have hindered the completion of the Transaction. 

35.  Regrettably, Mr Ng, who appeared for the Firm, was unable to concede that the Liability Requisition is no longer an issue.  He submitted that there is a factual dispute over why the Acknowledgement was produced by LCL on 14 August 2009 (see para 22(e) above).  He argued that MH had acted capriciously over the method to be adopted to eliminate the Company’s debts and such conduct is to be taken into account in accessing that of the Firm. 

36.  I am unconvinced by Mr Ng’s argument.  In any case, I see no merit in the allegation levelled against MH.  I shall deal with this matter succinctly now, although the events of the 14 August 2009 will have to be examined more closely below. 

37.  It is common ground that prior to 14 August 2009, the parties had managed to agree on the terms of the Formal Agreement (subject to execution of course).  Schedule 4 of that agreement contained a loan assignment (“Loan Assignment”) which would deal with the outstanding liabilities of the Company.  A copy of the Formal Agreement, signed by Mr Chan[4], was sent over to LCL by the Firm on 11 August 2009 for the execution by MH.  According to the unchallenged evidence of Ms Chan, on 13 August 2009 she attended the office of LCL to execute various documents for the completion of the Transaction.  One of the documents she was expected to sign was a copy of the Formal Agreement.  However, minor amendments were made by her on that document and consequently it was not executed. 

38.  It is common ground that the Audited Accounts were sent by LCL to the Firm on 13 August.  According to Ip, there was a great deal of discussions between the solicitors over the outstanding liabilities of the Company on that day after the Audited Accounts were sent to the Firm.  In the course of the discussions, Woo asked for a waiver to be executed by MH in order to deal with the liabilities and Ip agreed to provide a draft of the same.  Accordingly, the Acknowledgement was sent to the Firm on 14 August 2009.  Woo said that the Acknowledgement was produced by LCL out of the blue and when he asked Ip about it, he was told that her client did not like to sign the Loan Assignment.

39.  However, later that day at 3:33pm Ip sent over to the Firm the completion documents prepared by her and amongst which was a copy of the Loan Assignment, with the appropriate figure stated therein as the loan to be assigned in favour of Mr Chan upon completion of the Transaction. It was on the strength of this document that both Woo and Lau in their evidence agreed that the Liability Requisition was resolved.  Be that as it may, Woo’s evidence is that MH had further changed its mind by reverting back to the Loan Assignment. 

40.  First of all, the suggestion that MH behaved in a totally capricious manner is not something which one should lightly accept. Secondly, the contemporaneous documents are against this suggestion.  None of the Firm’s letters contained a complaint about such unusual behaviour.  Quite the contrary, in LCL’s letter dated 17 August 2009 it was stated as follows :

“Your client should be fully aware of the ‘current liabilities’ of the Company right from the start of the transaction. The ‘liabilities’ are revealed in the draft formal Agreement for Sale and Purchase prepared by us and approved by you. When we disclosed the Audited Accounts of the Company to you on 13^th August 2009, you said there was a discrepancy which amounted to $10,989.00 only. Although a reasonable breakdown and explanation for the ‘discrepancy’ were provided to you, you said that the Loan Assignment which had been approved was not acceptable and the terms of the formal Agreement could not be agreed. We immediately prepared a Letter of Acknowledgement by Million Honour Trading Ltd. for your approval as requested. Subsequently, you disagreed with the wordings of our draft Letter of Acknowledgement and insisted in the Loan Assignment with the amount of ‘current Liabilities’ amended. We acceded to your request again. …”

41.  Moreover, those assertions in LCL’s letter were not rebutted in any of the correspondence which followed. 

42.  In the premises, I have no difficulty rejecting the Firm’s complaint.  Further, for the reasons stated in this judgment I do not find Woo to be a credible witness. 

43.  On the other hand, I find Ip to be an honest witness.  Mr Ng is highly critical of Ip’s credibility.  In particular, Mr Ng criticised the brevity of Ip’s witness statements and submitted that the lack of detail in those statements meant that the Firm was taken by surprise by much of Ip’s evidence. I certainly agree that the statements in question are unsatisfactory by reason of their lack of detail.  On the other hand, I do not know how those statements came to be prepared.  It is not inconceivable that, rightly or wrongly, a view was taken that in light of the contemporaneous correspondence it was unnecessary to have lengthy statements.  Indeed, Ip only looked at Woo’s witness statements a few days before she gave evidence.  I see no justification to read something sinister into the matter.  Ip’s evidence is largely consistent with the contemporaneous documents.  She controlled her instinct to argue with the cross-examiner when she gave evidence.  She came across as a credible witness despite the fact that her actions in handling the Transaction were subjected to close scrutiny and she was thus put under considerable pressure in cross-examination.

44.  Ip’s account of the events concerning the Acknowledgement is corroborated by Ms Chan, who said that on the 13 August 2009 the Firm requested a waiver from MH because of the liability issue.  I also find Ms Chan to be an honest witness.  Her evidence was not vigorously challenged.  She was straightforward and spontaneous in the witness box.  She was firm but fair in her evidence.  I see no material inconsistency between her evidence and the contemporaneous documents.

The Outstanding Documents 

45.  It is not disputed by MH that the Outstanding Documents were at all material times in its possession.  The evidence is that when the Company documents were handed over to LCL by Ms Chan for the purpose of the Transaction, she retained the Outstanding Documents believing that they belonged to MH and should be retained for tax purposes.  However, they were subsequently misplaced because of a removal exercise.  Ms Chan was unable to locate the Outstanding Documents despite having searched for them, and they were only found after the completion date on about 16 August 2009.

The approach adopted by the Firm 

46.  It is clear from the evidence of both Woo and Lau that they handled the Transaction as if it was a sale and purchase of a landed property.  In particular, there was a wholesale employment of the law and practice applied to a conveyancing transaction.  Once that is understood and an adjudication made on whether that approach was correct as a matter of law, the answers to much of the disputes here will become apparent. 

47.  Mr Ng tries vigorously to defend the approach taken by the Firm by submitting that the Transaction was in truth a sale and purchase of the Property.  In fact, the acquisition of the Property by the Company had not been completed and at most it was a sale and purchase of the contractual right to acquire the Property. 

48.  I do not see any proper legal basis for handling the Transaction as a conveyancing transaction.  It was the sale and purchase of a share in a shelf company.  The Transaction was governed by the Provisional Agreement and, as Chans’ solicitors, the Firm should have been guided by the terms of that agreement and the law applicable to a sale and purchase of shares.  Regrettably, both Woo and Lau were labouring under a misapprehension of the law and their insistence on getting the Outstanding Documents, which was the cause of the non-completion (putting aside the Extension Agreement), was quite unjustified.

Good title to the Share

49.  I agree with the submissions of Mr Lam SC, who appeared for MH, that the appropriate analysis should begin with the question : how does one become a member of the Company. The answer involves looking at the relevant provisions of the articles of association of the Company (“AA”) and the Companies Ordinance, Cap 32 (“Ordinance”)[5].

50.  Section 65 of the Ordinance provided that :

“The shares or other interest of any member in a company shall be personal estate, transferrable in manner provided by the articles of the company, and shall not be of the nature of real estate.”

51.  Regulations 7, 8, 22, 23 and 25 of Part I of Table A of the Ordinance, which applied to the Company by virtue of Regulation 1 of AA, provided as follows :

“7. Except as required by law, no person shall be recognized by the company as holding any share upon any trust, and the company shall not be bound by or be compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these regulations or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

8. Every person whose name is entered as a member in the register of members shall be entitled … one certificate for all his shares or several certificates each for 1 or more of his shares …

22. The instrument of transfer of any share shall be executed by or on behalf of the transferor and transferee, and the transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect thereof.

23. Subject to such of the restrictions of these regulations as may be applicable, any member may transfer all or any of his shares by instrument in writing in any usual or common form or any other form which the directors may approve.

25. The directors may also decline to recognize any instrument of transfer unless … (b) the instrument of transfer is accompanied by the certificate of the shares to which it relates, and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer; …”.

[all emphasis herein are added]

52.  Clause 3 of AA on “Transfer of Shares” provided that “The Directors may in their absolute discretion decline to register any transfer of shares …”.

53.  Importantly, a person becomes a member of a company upon being registered as a member in the company’s register of members.  This is how a member of a company was defined under s 28 of Ordinance :

“(1) The founder members of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.

(2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.”

54.  Section 95(1) of the Ordinance provided that :

“Every company shall keep in the English or Chinese language a register of its members, and enter therein the following particulars–

(a) the names and addresses of the members, and in the case of a company having a share capital a statement of the shares held by each member, distinguishing each share by its number so long as the share has a number, and of the amount paid or agreed to be considered as paid on the shares of each member;

(b) the date at which each person was entered in the register as a member;

(c) the date at which any person ceased to be a member…”

55.  Most importantly, s 102(1) of the Ordinance provided that :

“The register of members shall be prima facie evidence of any matters by this Ordinance directed or authorized to be inserted therein.”

56.  It should also be noted that under s 71 of the Ordinance :

“A certificate, under the common seal of the company … specifying any shares held by any member, shall be prima facie evidence of the title of the member to the shares.”

57.  In International Credit and Investment Co (Overseas) Ltd & Anr v Adham & Ors [1994] 1 BCLC 66, it was held by Harman J at 72h-i:

“As I observed it is an inevitable conclusion of law that the shares in Attock are therefore chose in action situate within England and Wales. It is trite law and unarguably the case that title to shares is based upon entries in the share register of the company. Certificates of holdings of shares are merely prima facie evidence of the existence on a share register of entries at the date on which the certificate is given. A share certificate is not in any sort of sense conclusive evidence at a later date of the proper title to shares at that later date. In order to prove title to shares one must go to the share register.”

58.  Further, Nourse LJ held in J Sainsbury plc v O’Connor (Inspector of Taxes) [1991] 1 WLR 963 at 977H:

“There is no difficulty in ascertaining the legal ownership of shares, which is invariably vested in the registered holder.”

59.  It is true that the register of members and a share certificate constitute prima facie, but not conclusive, evidence of title.  However, they create a legal presumption, which can only be rebutted by evidence showing the contrary.

60.  Hence, for Chans to ascertain whether MH had good title to the Share, all that they needed to do was to inspect the register of the Company.  If MH was the current member shown in the register, by reason of the legal presumption Chans were entitled to, and should in the absence of evidence to the contrary, assume that MH had good title to the Share.  It was unnecessary for them to make any further inquiry.

61.  Further, if MH was able to produce a share certificate issued in its name, due to the legal presumption, this would be an additional piece of evidence confirming that it had good title to the Share. Such evidence would serve to reinforce what was stated in the register.

62.  In this case, there is no dispute that the Firm was supplied with (a) the share register of the Company (referred to in the evidence as the “statutory book”) showing that the Share belonged to MH[6] and (b) the certificate of the Share in the name of MH in good time prior to completion. 

63.  According to the Firm’s evidence, extracted under cross-examination, there was, in truth, no doubt over MH’s good title to the Share in light of the statutory book and the share certificate.  This fundamental concession undermines the fabric of the Firm’s case.

Documents Requisition  

64.  I believe that the concession was made for 2 reasons.  Firstly, by the time the Firm’s witnesses gave evidence, they were under no illusion on the law as it had been so clearly laid out in Mr Lam’s opening submissions.  Secondly, those witnesses were not given any room to wriggle out of giving an answer to that critical question. 

65.  I make this point because it is clear from the evidence (in particular, the contemporaneous correspondence) that up to the time of completion the Firm had taken an erroneous view on what was required to show good title to the Share.  It insisted on either the production of the Outstanding Documents or the certified copies of the same with a statutory declaration explaining their loss.  In other words, the stance then taken – that MH could not show good title to the Share merely by producing the statutory book and the share certificate – is very different to the concession made by the Firm’s witnesses (in particular, Lau) in this trial.  The Firm had, in my view, erroneously treated the Outstanding Documents as documents of title and blindly applied the conveyancing law and practice in insisting on its demands. 

66.  There is ample support for the above conclusion.  Woo had said in his evidence that he was told by Lau to obtain 4 documents for the proof of title to the Share – the share certificate, statutory book, the IT and the Notes.  He was also told by Lau that the IT and Notes were documents of title, and he felt that there was some risk that the same might be used to create a mortgage. 

67.  When he was cross-examined by Mr Lam, Lau agreed that at the material times he treated the Outstanding Documents as if they were “original title documents in a conveyancing transaction”.  However, he had carried out no legal research and knew of no legal authority to support the application of conveyancing practice to the Transaction.  Lau accepted that he did tell Woo that the Outstanding Documents were documents of title, but he explained that he did not actually mean what he said – he meant to say that they were documents for proof of title.  Further, he did not think that an equitable mortgage could be created with the Outstanding Documents. 

68.  It is convenient here to say a few words about the credibility of Lau as witness.  He is not a good witness at all.  His evidence is very convoluted.  I have no doubt that the difficulties in his evidence are attributable to the fact that he was trying to defend the erroneous view which he had taken on the need to have the Outstanding Documents for, as he put it, showing good title to the Share.  The concession he made (see para 63 above) was only extracted after prolonged cross-examination and some questions asked by the court.

69.  In the course of their evidence, both Woo and Lau said that the Outstanding Documents were required because Mr Chan might need them to answer the requisition of the purchaser should he decide to sell the Share in the future.  In fact, both of them agreed under the pressure of cross-examination that their concern over the Outstanding Documents could be boiled downed to this simple point.  It is clearly a bad point which is premised upon the misconception that the Outstanding Documents are needed to prove good title to the Share. 

70.  Once it is accepted that the absence of the Outstanding Documents can give rise to no real doubt on the title to the Share, it must equally be accepted that the future purchaser of the Share will not be in a position to raise any proper requisition based on the absence of the Outstanding Documents. 

71.  As Mr Lam has pointed out, if the Firm’s contention were correct, then in a share sale transaction each and every original instrument of transfer and bought and sold notes in respect of all the previous buying and selling of the share will have to be provided by the vendor.  This is plainly untenable. 

72.  For completeness, in the course of his evidence Lau did mention other reasons for demanding the Outstanding Documents, eg, to ensure that they were not forged.  I see no merit in such “reasons”.  They are merely excuses advanced to defend a lost cause.  Further, the circumstances of this case – the acquisition of a shelf company shortly after it was incorporated for the purpose of holding a property (see paras 10 to 14 above) – could give rise to no genuine doubt over MH’s title to the Share.  As Ms Chan said in her evidence, MH’s ownership of the Share is a fact. 

73.  In the premises, I have no hesitation in holding that the Documents Requisition was not a proper requisition, and it could not have justified the non-completion of the Transaction by Chans. 

74.  Again for completeness, Mr Lam disputes Chans’ entitlement to raise requisition under the Provisional Agreement.  Such entitlement is said to be premised upon an implied term of that agreement – that MH was required to show good title to the Share (a proposition transplanted from conveyancing transactions).  Mr Lam submitted that there was no necessity for the implied term and it is therefore unjustified.  Given the conclusion above, it is unnecessary to rule upon this point of law.  However, out of deference to counsel’s arguments, I should indicate that I would have upheld such an implied term because a purchaser of the Share might have perfectly reasonable question(s) over the title to the same.

Clause 4(b) of the Provisional Agreement

75.  The terms of clause 4(b) of the Provisional Agreement can be seen from para 16(b) above.  One of the reasons put forward by the Firm to justify the demand for the Outstanding Documents is that they were covered by clause 4(b) and MH was obliged to hand them over upon completion.

76.  In my view, it is not really necessary to resolve this argument which turns upon the construction of clause 4(b).  The reason being that, even assuming that there was a breach of that clause, it did not automatically follow that Chans were entitled not to complete the Transaction.  

77.  It is trite as a general principle of law of contract that not every breach of a contractual term, in particular, when that term may be breached in different manners, would amount to a repudiation so as to give the innocent party the right to terminate the contract.

78.  This general principle of law of contract was applied in Grant v Cigman [1996] 2 BCLC 24 to the vendor’s failure to deliver his share certificates on completion in a sale of the shares.  At pgs 32g-33c, Judge Weeks QC held that :

“… on completion usually a number of things have to be done by each side, some of fundamental importance such as paying the price or tendering a transfer, some of much less importance such as handing over documents of title or an acknowledgement for production. As Lord Diplock said in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 1 All ER 474 at 485, [1962] 2 QB 26 at 66, one has to distinguish between those events which discharge one party from further performance of the contract and those events which do not ...

In my judgment non-production of the share certificates in this case on the date fixed for completion does not amount to such an event, although non-production of the share transfers would have. My view might be different if everyone had not accepted that Mr Grant and his children were the duly registered shareholders in Lapid Development Ltd, so that the absence of the actual share certificates was a formality which could easily be put right ...”.

79.  There can be no serious dispute that Chans would only be entitled to refuse to complete the Transaction if MH’s breach of clause 4(b) (assuming there was such a breach) amounted to a repudiation of the Provisional Agreement.  Chans’ concern expressed at the material time and as pleaded (by the Firm on their behalf) was whether they would obtain a good title to the Share.  As I have analysed above (and indeed conceded by the Firm’s witnesses), the absence of the Outstanding Documents did not affect the title to the Share.  There was no proper reason not to complete the Transaction, and the failure to do so was clearly a repudiation of the Provisional Agreement by Chans.

80.  For completeness, I shall state briefly my view on the proper construction of clause 4(b).  To begin with, it was drafted in wide terms – “all relevant documents of the Company” [emphasis added]. Thus, the width of the obligation is qualified by the requirement that the documents must be those belonging to the Company. 

81.  This construction sits with common sense. Further, it is supported by the ejusdem generis principle : see Chitty on Contracts, 31^st edn, vol 1, paras 12-087 to 090.  The examples referred to in clause 4(b) are all documents belonging to the Company. 

82.  I agree with Ms Chan that the Outstanding Documents belong to MH (see para 45 above).  They are documents relating to the purchase of the Share by MH from GNL09.  I cannot see how it can be said that they belong to the Company. 

83.  In the premises, I do not believe that MH was in breach of clause 4(b) by not being able to produce the Outstanding Documents upon completion.

84.  I should also say that in light of the unchallenged evidence that Ms Chan did try but was unable to locate the Outstanding Documents, it is not entirely clearly whether MH was in breach of clause 4(b) even on the assumption that those documents fell within the clause.  There appears to be scope for arguing that MH’s obligation was limited to producing what was in its possession and if the Outstanding Documents could not be found it may be said that they did not come within the clause.  However, this point has not been not fully addressed by counsel and it is unnecessary to decide it in any event.

Extension Agreement

85.  This is the only remaining reason which may justify the non-completion on the part of Chans.  To determine this factual dispute, the events of the 14 and 15 August 2009 will have to be examined in more detail. 

86.  On the day of completion, at 11:28 am the Firm faxed to LCL its letter dated 14 August 2009 (see para 21(b) above).  An hour later, at 12:28 pm LCL faxed to the Firm its letter of the same date enclosing therewith a draft Acknowledgement.  Woo’s evidence is that after receiving this fax he immediately called Ip and asked her to explain why MH suddenly wanted to execute the draft Acknowledgement and not the Loan Assignment.  This was denied by Ip in her evidence (see para 38 above).

87.  At 12:35 pm on the same day, LCL faxed to the Firm for the second time its letter of 14 August 2009 but it was accompanied with a revised draft Acknowledgment (see para 22(e) above). 

88.  According to Woo, he had a telephone conversation with Ip at around 3:00 pm later that day.  During that conversation, he was told that the Outstanding Documents had been lost and he asked Ip to prepare a statutory declaration to explain the same.  Ip agreed to produce a draft of that document for his approval.  Further, Woo suggested that the time for completion should be extended to before 1:00 pm on the following Monday (17 August 2009) because (i) time was needed for the production and approval of the statutory declaration; (ii) he needed time to produce a letter of undertaking for Ip’s approval; and (iii) it was too late to stamp the transfer documents on that day and late penalty would be levied if completion was to take place.  Ip agreed to the extension.  Woo then asked for the completion documents to be sent over so that he could make the necessary amendments, including the completion date. 

89.  Ip agreed that she had a telephone conversation with Woo at about 3:00 pm on 14 August 2009 during which she mentioned the loss of the Outstanding Documents.  However, she denied that she agreed to provide a draft statutory declaration.  She only responded by saying that she needed to have instructions on the matter.  Woo did indicate his wish to postpone completion to the 17 August 2009 and the reason given was that it was too late to have the transfer documents stamped.  The preparation of statutory declaration was not a reason advanced for the postponement.  Ip was unable to recall if the letter of undertaking was mentioned by Woo but it was not advanced as a reason for postponement.  Ip said that the late stamping penalty was very small.  She said that she agreed to send over the completion documents but not for the purpose of amendment by Woo.  

90.  Ip’s evidence is that she refused the extension request because the instructions she had from MH were very clear, ie, it would not agree to an extension of the completion date.  However, she did tell Woo that if he sent over the balance of the purchase price she would try her best to see if MH would accommodate the request. 

91.  At around 3:33 pm on 14 August 2009, the completion documents were sent over by Ip to Woo via facsimile.

92.  At around 5:00 pm on the say day, there was another telephone conversation between Woo and Ip.  According to Woo, he mentioned 2 particular matters, namely, the need for MH to provide a warranty over the liabilities of the Company (“Warranty”) and certain board minutes were outstanding (“Outstanding Minutes”).  He said that Ip was in a rush to leave her office.  She asked him to prepare the Warranty and said that she would send him the Outstanding Minutes the next morning.

93.  Ip took no issue with the fact that she had a conversation with Woo at about 5:00 pm on 14 August 2009.  However, she could not recall if the request for the Outstanding Minutes was made during the same.  She said that she asked Woo when the balance of the purchase price would be sent over.  It was possible that the Warranty was discussed during that conversation but Ip was adamant that she disagreed with the suggestion because she saw no duty on MH’s part to provide the Warranty.  Woo said to her that he would prepare the document and she responded by saying that she would have to see if her client would agree to execute such document. 

94.  At around 12:05 am on 15 August 2009, Woo emailed the completion documents with his manuscript amendments (including the alteration of the completion date to 17 August 2009) back to Ip together with a draft undertaking letter and a draft Warranty. 

95.  At around 10:51 am on the same day, Ip faxed the draft Outstanding Minutes to Woo.  Those documents referred to meetings held on 17 August 2009.  Unsurprisingly, Ip was taxed in cross-examination on why she put that date on those documents. Her evidence is that after she returned to her office on 15 August 2009 and saw Woo’s email, she had a telephone conversation with him.  She spoke to Woo because she had to ask him why the balance of purchase price had still not been received by her.  Woo assured her that the Firm was in receipt of the funds but he asked to see the draft Outstanding Minutes first.  Ip explained that she dated those documents in accordance with the request of Woo.  They were only drafts and they were sent over on condition that she must “see the money” before 1:00 pm that day. 

96.  Ip also said that whether there would have been completion on that day if the money was delivered would depend on MH because the completion date had passed.  She told Woo that the cheque for the balance of purchase price could be made payable to LCL instead of MH. 

97.  I believe that the objective indicia are not in favour of Woo’s version of events.  There are 3 powerful reasons against it. Firstly, MH’s position had been clearly stated via LCL’s letter dated 14 August 2009 – MH had proven its title to the Share and Chans were obliged to complete the Transaction that day (see para 22(d) above).  There is also the evidence from Ms Chan that she told LCL (probably Ip) on 13 August 2009 that she would not postpone the completion date.  It would have been highly unusual for an experienced solicitor like Ip to have agreed to something, which Woo acknowledged to be of monumental importance, without consulting her client. However, if Woo is to be believed, Ip did exactly that.  This is inherently improbable, and all the more so when it would have gone against the express instructions received by Ip.  I can see nothing which lends credence to Woo’s version.    

98.  For the same reason, I disbelieve the allegation that Ip agreed to provide a statutory declaration.  Ip’s version is more likely to be true.  The declaration would have to be made by, probably, Ms Chan.  She did not know at the time if Ms Chan was agreeable to providing the same.  Nor did she know what explanation would be provided by Ms Chan.  The suggestion that Ip agreed to provide the document without asking her client is very hard to believe. 

99.  Both Woo and Lau accepted that they did not seek Chans’ instructions prior to making the Extension Agreement.  Allegedly, they relied upon an earlier instruction that completion could take place once the requested documents had been provided.  Putting aside whether those instructions were given, it is very difficult to believe that Woo would have put forward something of such importance without specific instruction.  He agreed that the postponement of completion would have affected Chans’ rights. He said that this was the only occasion where he had agreed an extension of completion without prior instruction.  

100.  According to Mr Chan, he knew nothing about the Extension Agreement and it was only mentioned for the first time by the Firm on 16 April 2010 during a mediation exercise.

101.  I have no doubt that Woo did not seek instruction over the Extension Agreement because it did not exist. 

102.  I shall deal with 2 issues raised by the Firm before moving to the second reason for rejecting Woo’s version.  There are 3 “reasons” pleaded by the Firm for entering into the Extension Agreement[7]. None of them is convincing.  The third reason was disowned by Woo.  The first reason concerns both the statutory declaration and the letter of undertaking. It is alleged that time was needed to produce those documents.  I have already dealt with the former.  As to the latter, Woo agreed that it was a standard document which he was required to produce for completion, and that its production was not a reason to postpone completion. 

103.  The second reason is the stamp duty point (see para 88 above).  Woo initially said that he told Ip that the late stamping penalty would be HK$20,000 odd.  However, that was never put to Ip despite her evidence that she thought that such penalty was an insignificant sum.  Moreover, Woo changed his evidence under cross-examination and agreed that the penalty was in fact a small sum.  Woo was visibly uncomfortable during this part of the cross-examination.  I disbelieve his evidence.  These “reasons” are made up to support a false case. 

104.  For completeness, it is also pleaded by the Firm that there are documents which “evidenced” the Extension Agreement[8].  With respect, these are self-serving allegations with no merit. 

105.  The second compelling reason for rejecting Woo’s version is that there is no trace of the Extension Agreement in any of the contemporaneous documents.  This is most surprising given its importance.  Both Woo and Lau agreed that it would have been a simple exercise requiring no more than a few minutes to record that agreement in writing.  Woo said that it was again the first time that he had failed to record such an agreement in writing.

106.  Woo’s evidence must be assessed against the backdrop that, according to him, by 10 August 2009 he thought that it was an unusual case due to the failure by MH to hand over the Outstanding Documents.  Further, on the day of completion, Woo had good reasons (according to his own evidence) to be alarmed about the reliability of MH.

107.  Thirdly, the post-completion conduct of the Firm strongly militates against the existence of an Extension Agreement.  On his own evidence, after concluding a conversation with one of LCL’s partners at about 12:15 pm on 17 August 2009, Woo had no reason to believe that MH would adhere to the Extension Agreement.  He said that he immediately reported the matter to Lau.  He was told to contact Chans immediately.  However, neither of them put in writing the Extension Agreement. 

108.  Whilst Lau and Woo were having a meeting with Mr Chan, at about 13:27 pm on 17 August 2009, the Firm received LCL’s letter forfeiting the deposit paid on the ground that their clients had failed to pay the balance of the purchase price (see para 24 above).  Yet, there was still no reference to the Extension Agreement in the Firm’s reply letter.  Instead, it proposed to extend the completion date to 20 August 2009.  Lau said that he did consider referring to the Extension Agreement but he was in a hurry, and it would be time-consuming to describe the details.  Such explanation needs only be stated to be rejected.

109.  Lau sought to rely on his conference notes of 15 August 2009, in particular, the word “verbal” in the 4^th paragraph to suggest that he did mention the Extension Agreement to Mr Chan during the meeting on that day.  Putting aside the dispute by Chans of the authenticity of that document, this is a poor attempt to hide the inadequacy of the Firm.  I cannot see how the use of that word, in its context, can be a reference to the Extension Agreement.  I agree with Mr Lam that the reference to “verbal” is probably a reference to an alleged oral agreement to sign the Formal Agreement[9]. Further, in the second paragraph of the notes, it was stated that completion “could be” postponed from 14 August 2009.  Had there been the Extension Agreement, the notes should have said that the completion “had been” postponed. 

110.  On 17 August 2009, Woo had a meeting with Chans.  As confirmed by the transcript of that meeting[10], there was no mention of the Extension Agreement at all during that meeting which lasted in excess of 48 minutes.  Given that Mrs Chan was concerned why the balance of the price was not paid on 14 August 2009, there can be no sensible reason to explain the lack of mention of the Extension Agreement. 

111.  On 22 August 2009, MH’s new solicitors sent a long letter to the Firm setting out in detail MH’s version of the relevant events and its stance.  The Firm did not reply immediately.  On 24 August 2009, Lau, Woo and Chans had a conference with counsel for advice.  The transcript[11] shows that there was no mention of the Extension Agreement.  Lau had to withdraw in cross-examination his evidence that it was mentioned during the conference.  It is startling that counsel was not consulted on such an agreement.  Lau’s explanation was that he thought, in the absence of written evidence, the Extension Agreement was a “non-runner”.  Hence, he did not inform counsel of it.  With respect, such evidence cannot be taken seriously. 

112.  On the material before the court, the first time that the Extension Agreement was mentioned was in the defence filed by the Firm on 13 October 2010 in the TP Proceedings.  Lau’s only explanation was that it was pleaded upon counsel’s advice.  There is no explanation why he changed his mind about seeking counsel’s opinion.

113.  With respect, I agree with Mr Lam that the Extension Agreement is a concoction of Lau and Woo, which was made after the commencement of the TP Proceedings.

114.  I believe that it is sufficiently plain from the above that I find neither Woo nor Lau to be a credible witness.

Time of the essence 

115.  Finally, there can be no serious argument on the issue that time for completion was of the essence of the Provisional Agreement.  Clause 2 of annex 1 thereof stated that “the purchaser must complete the transaction on or before 14 August 2009 …”[12].  Those terms demonstrate unequivocally that time was of the essence. 

116.  Further, generally speaking, time is of the essence in a sale of shares agreement.  In Chan Tan (a female) v Tong Hoi, Lo, CACV151/1997 (13/11/1997) which involved a sale of shares agreement, Godfrey JA held at pg 6 :

“(I should add that an agreement of this sort is one in the nature of which time is of the essence: see Hare v Nicoll [1966] 2 QB 130).”

117.  In light of the findings above that (a) the Documents Requisition did not constitute a valid reason not to completion the Transaction and (b) there was no Extension Agreement, the determination of the TP Proceedings is straightforward.

Duties owed by solicitors to their clients

118.  There is no dispute over the applicable principles and I shall adopt, with modifications, the summary contained in Mr Ng’s opening submissions. 

119.  The duties owed by solicitors to their clients have been set out in Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] 1 Ch 384, where Oliver J held (at 402-403) that a solicitor should not be judged by the standard of a “particularly meticulous and conscientious practitioner … The test is what the reasonably competent practitioner would do having regard to the standards normally adopted in his profession …”.  This dictum was cited with approval in Hong Kong in Foshan Hua Da Industrial Co v Johnson, Stokes & Master [1999] 1 HKLRD 418 at 425B-D per Stock J (as he then was).

120.  In Foshan Hua Da, at 462E-F, the court also referred to the dictum of the House of Lords in Rondel v Worsley [1969] 1 AC 191 that “the onus of proving professional negligence over and above errors of judgment is a heavy one”.

121.  In determining whether a solicitor has exercised reasonable skill and care, he should be judged in the light of the circumstances at the time.  As Simon Brown LJ held in Martin Boston & Co v Roberts [1996] 1 PNLR 45 at 50C-D: “the standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect”.  The solicitor’s action or advice may, with the benefit of hindsight, be shown to be wrong, “but hindsight is no touchstone of negligence”, per Megarry J in Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172 at 185:

“In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone of negligence”.

122.  This principle was also adopted in Foshan Hua Da, at 425H-J.

The negligence of the Firm

123.  It is not disputed that Chans had put the Firm in funds to complete the Transaction and that they acted in accordance with the advice given to them by the Firm. 

124.  I agree with Mr Man, who appeared for Chans with Mr Lam, that if this court comes to the findings set out in para 117 above, then the Firm was negligent in (a) holding a plainly erroneous view of the law and (b) not advising Chans that there was a real risk that its view was wrong, and that there were alternative courses open to them, ie, to complete or not to complete the Transaction. 

125.  In truth, once this court has come to the findings set out in para 117 above, there is no real defence to the TP Proceedings because it is not disputed that neither Woo nor Lau had ever advised Chans on the risk that their view might be wrong prior to, and including, the date of completion :

(a) Woo accepted that prior to 17 August 2009 he had not given any advice to Chans as to the risks of losing the litigation over the Transaction nor the consequences of losing such litigation.

(b) Even on the Firm’s case (which is disputed by Chans), the advice given by Woo to Chans (there was no contact between Lau and Chans until 15 august 2009) on the Documents Requisition at 2 meetings which took place on 10 and 13 August 2009 was unqualified.

(c) Clearly, Woo did not address his mind to the possibility that the Firm’s view might be wrong.  This is clearly demonstrated by what he said on 17 August 2009.  He told Chans that he thought the litigation with MH was “sure win” and “clear cut”, and that he could not see how they could lose.  Both Woo and Lau confirmed in cross-examination that they were very confident of their view on the Documents Requisition and that the Originals were “obviously required”.

(d) No contrary case was put to Mr Chan in cross-examination.

126.  In the premises, I asked Mr Ng in the course of final submissions what defence the Firm might have if court found against it on both the Documents Requisition and the Extension Agreement.  The only answer advanced by Mr Ng was that the court was required to consider the Firm’s action in light of the circumstances at the time.

127.  With respect, I have no doubt that the Firm was clearly negligent in the discharge of its duties to Chans.  Its view on the Documents Requisition was not one which could be held by a reasonably competent solicitor.  Further, no such solicitor should have completely failed to advise his client that his view may be wrong, and on the options open to the client if his view is wrong. 

128.  In the premises, it is unnecessary to resolve the factual disputes over the authenticity of 2 attendance notes of Woo.  They are disputed because, according to Chans, they falsely record that advice was given to Mr Chan during meetings which took place on 10 and 13 August 2009.  However, for completeness, I shall briefly state my reasons for finding in favour of Chans.  I believe that those documents were created after the completion had fallen through, ie, not contemporaneously as alleged by Woo.

129.  Woo was pressed in cross-examination as to why he could not produce the soft copies of the attendance notes, which were made with the use of a computer (it would be possible to discern from the same the time when those documents were created).  He simply was unable to provide a credible explanation.  He accepted that he was prompted by the computer to choose whether a soft copy should be saved.  However, he made a conscious decision not to do so. 

130.  Further, there is a rather glaring error in the attendance note of the 10 August 2009.  It recorded that a cheque was given by Mr Chan for the balance of the purpose price when in fact the payment was made via bank transfer.  Such an error would have been unlikely if the attendance note was made contemporaneously.

131.  Finally, I believe Mr Chan’s evidence, which was vigorously tested in cross-examination, save for 1 matter.  The exception concerns his evidence that the Property was acquired for self-use.  This piece of evidence is not consistent with a declaration he provided to the Firm and Mr Chan was evidently uncomfortable during this part of his evidence. 

132.  For completeness, I should also mention Lau’s evidence that he had advised Mr Chan on the risk that the Firm’s view might be wrong on 15 August 2009, which is disputed. I agree with Mr Man that once this court has rejected the Firm’s case on the Extension Agreement, this piece of evidence becomes irrelevant because the date of completion had passed. 

133.  I also agree that this piece of evidence is, in any event, not credible.  It is not mentioned in Lau’s witness statements; not supported by Woo’s evidence; contradicted by Lau’s own notes of the 15 August 2009 meeting (I reject his contrary contention); and undermined by the lack of cross-examination of Mr Chan on such allegation.

134.  Finally, there is no causation issue here.  Mr Chan’s evidence that he and his wife would have gone ahead with completion if they had been properly advised was not challenged.

Conclusions 

135.  By reason of the matters aforesaid, I conclude that Chans were in breach of the Provisional Agreement by failing to pay the balance of purchase price upon completion on 14 August 2009.  Such conduct constituted a repudiation of the same, which was accepted by MH.  Further, the Firm was negligent in failing to advise Chans properly in the course of the Transaction which resulted in the breach of the Provisional Agreement.

136.  The appropriate relief are not in dispute.  I make the following order on the Main Action :

(a) a declaration that Chans have repudiated the Provisional Agreement;

(b) a declaration that MH is entitled to forfeit the Initial Deposit and an order that this sum (being held by MH’s solicitors), including any interest accrued thereon, shall be released to it;

(c) the Further Payment, including any interest accrued thereon, be returned to Chans;

(d) Chans shall return to MH all documents relating to the Company which are still in their possession or power;

(e) Chans’ Counterclaim be dismissed.

137.  The following order is made in respect of the TP Proceedings :

(a) Payment by the Firm to Chans in the sum of HK$1,000,000;

(b) Damages to be assessed by a Master.

138.  As regards costs, I make an order nisi that the costs of the Main Action, including the Counterclaim, as well as those of the TP Proceedings be borne by the Firm to be taxed if not agreed.

139.  Last but not least, I am grateful to counsel for their assistance in these matters.