SKY MOTION HOLDINGS LTD v. CHINA CREATE CAPITAL LTD

CACV 285/2021

[2021] HKCA 875

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 285 OF 2021

(ON AN APPEAL FROM HCA NO 1151 OF 2019)

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J U D G M E N T

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Hon Kwan VP:

1.  I agree with the judgment of Yuen JA and the orders proposed in her judgment.

Hon Yuen JA:

2.1.  On 5 March 2021 the plaintiff applied to this court for leave to appeal from the Decision of DHCJ MK Liu (“the judge”) given on 5 January 2021¹ whereby the defendant was given unconditional leave to defend HCA1151/2019 (“the action”). 

2.2.  The judge refused to give leave to appeal on 19 February 2021.  The plaintiff applied for leave to appeal from this court.  Having considered the papers, the court directed that there should be a “rolled-up” hearing, in other words, that the application for leave to appeal would be heard, and if the court were to decide that leave should be given, it would immediately proceed to hear the appeal.

2.3.  At the hearing on 28 May 2021, this court decided to give leave to appeal, and consequently proceeded to hear the appeal.  This is the Judgment on the appeal.

Background

3.  The plaintiff’s claim arose from a Chinese agreement dated 25 October 2018 and entitled “Loan Agreement” (“the Agreement”).  However, it is common ground² that it was actually an agreement for the transfer by the defendant to the plaintiff of financial instruments (secured notes and shares)³ of a Hong Kong listed company called Jiayuan International Group Ltd (“JIGL”) in consideration of payment by the plaintiff of $343,912,270 (“the Agreement sum”).  The Agreement did not specify an apportionment of the Agreement sum between the secured notes and the shares, although the secured notes were described in the Agreement as “JIGL 12% Senior Secured Notes due 2020 with a par value of US$35 million”.  Neither party has suggested that the agreement was severable.         

4.1.  The Agreement had been negotiated before 25 October 2018 between Cheuk Hiu Nam (“Cheuk”)⁴ on behalf of the plaintiff and Wang Tao (“WT”) on behalf of the defendant.  These two persons were known to each other through previous business dealings. 

4.2.  With regard to the Agreement, Wang Bingqin (“WBQ”)⁵ on behalf of the plaintiff also liaised (on a Wechat group chat⁶⁾ with Huang Xuli (“HXL”), WT’s assistant who according to WT “handled administrative affairs according to my instructions”⁷. 

4.3.  The Agreement was signed on behalf of the defendant by HXL.  The defendant does not dispute that HXL was authorised to sign the Agreement⁸. 

5.1.  The Agreement provided⁹ that the plaintiff would transfer the Agreement sum to the defendant on 25 October 2018, and that the defendant would:

(1)  on or before 2 November 2018, transfer to the plaintiff the secured notes (“the Notes”);

(2)  on or before 2 November 2018, transfer to the plaintiff 5.45 million shares of JIGL (“the 1^st tranche of shares”);

(3)  on or before 23 November 2018, transfer to the plaintiff 85.76 million shares of JIGL (“the 2^nd tranche of shares”).

5.2.  In Clause II(4), the plaintiff “guaranteed” that the Agreement sum would be transferred on 25 October 2018, and the clause provided that if the plaintiff failed to do so,

-  the plaintiff shall pay compensation to the defendant at 0.5% per day from 26 October 2018, and

-  meanwhile the defendant “shall postpone the ... arrangement [i.e. transfer of the financial instruments] to the corresponding working day”.    

5.3.  Clause III provided that if the defendant failed to transfer -

-  the Notes and the 1^st tranche of shares within 7 working days (by 2 November 2018):

the defendant shall pay a penalty to the plaintiff at 0.5% per day from the day past due, until the loan principal and overdue interest are fully paid off;

-  the 2^nd tranche of shares within one month (by 25 November 2018)¹⁰:

the defendant shall pay a penalty to the plaintiff at 0.5% per day from the day past due, until the shares “have been successfully transferred to the securities account designated by [the plaintiff] and the corresponding overdue interest are fully paid off”. 

5.4.  Clause III further provided that the rights and obligations of both parties shall only be discharged when the plaintiff is satisfied that the defendant has performed the transfer of all the above financial instruments.

Plaintiff’s payments

6.1.   The plaintiff’s case is simple: prior to the signing of the Agreement, on 25 October 2018 WT’s assistant HXL sent on the Wechat group chat a document entitled “Fund Arrangement.xls”¹¹. In that document, 8 account-holders, their respective bank details and amounts were set out.  By 25 October 2018, the plaintiff paid (or caused to be paid) all the amounts set out therein, and thus it has performed the payment obligation in the Agreement.  

6.2.  In the Fund Arrangement Table, the 1^st account holder (typed in a different colour) was Ai Yangxu (“Ai”), and there were set out under his name his bank details and the amount of “$20 million”.  The name and bank details correspond with those given by WT to Cheuk in a whatsapp message of 22 October 2018 in the context of a series of messages in which, after WT gave Ai’s bank details to Cheuk, she (WT) asked for part payment first, and Cheuk replied that she (Cheuk) had passed on the remittance details, and (after discussing the form of “the contract”) said that it would be best if the contract could be signed that evening and the funds would be remitted the next morning¹².  The following day (23 October 2018), the plaintiff caused $20 million to be paid to Ai. 

6.3.  Thus the funds were remitted in the context of a “contract” to be signed.  There is no evidence that these persons were discussing any contract other than the Agreement (which was in fact signed within the next three days).  WT alleged (WT 3^rd Aff §12) that the sum paid to Ai was Cheuk’s repayment of an earlier loan which WT had arranged for her, and had nothing to do with the Agreement.  This was a bare assertion with no documentary evidence in support indicating the parties, the sum, or time for repayment of the alleged loan. And if the sum was repayment of a loan, it does not explain the discussion about the form of a contract to be signed.    

6.4.  The rest of the Fund Arrangement Table comprised 7 account-holders and their respective bank details and amounts, the last account-holder being the defendant itself, stating its bank account details and a sum of $153,162,270. 

7.  On 25 October 2018, the plaintiff transferred a total of $435,662,270 to these 7 accounts, including the said sum of $153,162,270 to the defendant.  Together with the $20 million to Ai, the total sum paid¹³ by the plaintiff was about $455 million. (This ties in with the sum of “$450 million” mentioned in the Wechat group chat)¹⁴. 

8.  There was no message from the defendant to the plaintiff after 25 October 2018 complaining (or even mentioning) that it had received only $153,162,270, and not the full Agreement sum which the plaintiff had guaranteed to pay on that day. 

9.  In the defendant’s defence, WT alleged that it did not do so because under Clause II(4), it was entitled (in addition to compensation) to postpone the transfer of the financial instruments, the first transfer of which was due on 2 November 2018.  However, that does not explain the defendant’s acts in performance of the Agreement discussed in §§10-13 below, which are documented in the whatsapp messages.    

Defendant’s transfers of shares

10.1.  On 30 October 2018 (Tuesday), Cheuk asked WT to start the transfer of the Notes and shares “this week” (2 November 2018 being a Friday).  The defendant’s following acts in response to this and other requests for performance are significant.  

10.2.  First, on 30 October 2018 WT replied simply that the transfer was being done¹⁵.  She did not express any surprise that the plaintiff was asking for transfers of the financial instruments when her company had (allegedly) not received the Agreement sum which the plaintiff had “guaranteed” would be paid on 25 October 2018.  This conduct on her part was inconsistent with the defendant’s case that full payment had not been paid which would have entitled it to postpone transfer. 

10.3.  Second, although Clause II(4) provided that the transfer was to be postponed failing full payment, on 31 October 2018 the defendant transferred 3.45 million shares to the plaintiff.  WT alleged that the transfer was to “appease” Cheuk (WT 4^th affirmation §44).  There was no reason given why she needed to “appease” Cheuk if the plaintiff had failed to perform its side of the agreement.

11.1.  Third, the following day (1 November 2018), when Cheuk asked WT to make arrangements as soon as possible, WT replied that she was keeping her eye on it and told Cheuk to “rest assured”¹⁶. It is notable that again, WT did not express any surprise at the plaintiff’s audacity in asking for transfers of more financial instruments when (on the defendant’s case) the plaintiff had not even made the full “guaranteed” payment.  WT did not even ask when the balance (the substantial sum of $190,750,000) was likely to be forthcoming.

11.2.  Fourth, on 8 November 2018 the defendant made a further transfer to the plaintiff of 2 million shares (thereby completing the transfer of the 1^st tranche, albeit partly early and partly late). 

11.3.  The above acts on the part of the defendant, in compliance with the plaintiff’s contemporaneous demands for transfers of the financial instruments, are inconsistent with the defendant’s allegation that the plaintiff had failed to pay the Agreement sum. 

Subsequent events

12.  As mentioned earlier, under the Agreement, the 2^nd tranche of shares (85.76 million) were due to be transferred on 23 November 2018. 

13.1.  Pausing here, it is necessary to refer to the parties’ discussion about the form of transfer in the following whatsapp messages.  On 1 November 2018 in reply to Cheuk’s chaser, WT replied with the reassurance that she (WT) was keeping her eye on it.  Immediately following that, WT wrote: “it seems have to use paper scrip?”  

13.2.  Cheuk responded thanking WT, saying it was because WBQ said she could not co-ordinate with HXL, that physical scrip was comparatively more troublesome, and she would see if there was another way. 

13.3.  WT then said they (meaning WBQ and HXL) will deal with it, and she would keep her eye on it.  Cheuk then sent some emojis expressing appreciation, and WT replied that it was something she (WT) should do.  

13.4.  Even if these messages can be read to mean that it was the plaintiff which was asking for physical scrip instead of electronic transfer, it is notable that WT’s reply was inconsistent with her allegation (WT 1^st Aff §20) that she was “annoyed” with Cheuk’s request for physical scrip, and more importantly, her allegation that Cheuk and she agreed to postpone the timetable for transfer to a date “to be further agreed” (WT 1^st Aff §21) (“the oral agreement for deferment”).  This is relevant to the deferment argument which will be discussed later in this Judgment.            

13.5.  Subsequently on 19 November 2018, Cheuk asked for the scrip of the “80 million” shares to be transferred within these 1-2 weeks.  There was no reply to this message.  It is notable that WT did not reply to challenge the plaintiff’s request for transfers of the rest of the shares when (on the defendant’s case) the plaintiff had not even made the full “guaranteed” payment and they had an oral agreement for deferment and had not agreed a new date.

13.6.  On 23 November 2018 (the date under the Agreement for transfer of the 2^nd tranche of shares), Cheuk told WT that WBQ had not been able to contact HXL.  As she (Cheuk) would like to obtain part of the scrip before the end of the month, she asked WT to instruct HXL to answer WBQ’s telephone calls. 

13.7.  WT’s reply was “ok”.  Again, it is notable that WT did not express any surprise that Cheuk had the audacity to ask for transfer of the shares when (on the defendant’s case) the plaintiff had not made full payment of the “guaranteed” sum, and so (1) the defendant was entitled to postpone transfer under the original Agreement, and (2) they had an oral agreement for deferment and had not agreed a new date.  Nor did WT ask when the balance of $190,750,000 was likely to be paid.      

14.  It is common ground the defendant did not thereafter transfer the 2^nd tranche or the Notes.

Proceedings

15.1.  On 24 June 2019, the plaintiff obtained a Mareva injunction against the defendant in the Agreement sum of $343,912,270. 

15.2.  On 26 June 2019, the plaintiff issued a concurrent writ (the defendant being incorporated in the BVI, as was the plaintiff).     

15.3.  On 25 September 2019, Coleman J continued the injunction in the increased sum of $500 million¹⁷. 

15.4.  On 29 November 2019, the defendant filed a Defence.  It was subsequently amended by leave given on 5 January 2021.  

Plaintiff’s application for summary judgment

16.  In the meantime, on 7 May 2020, the plaintiff applied for summary judgment.  It is trite law that in such an application, the burden is on the defendant to satisfy the court that it has a real or bona fide defence (ie that there are triable issues), or that there ought for some reason to be a trial of the claim.

The judge’s Reasons for Decision

17.  The judge summarised the defendant’s arguments as follows¹⁸:

“(1)  P has not yet made full payment under the agreement and hence the Transfer Obligation¹⁹ has not yet arisen … [“the no full payment argument”];

(2)  According to P’s case, the instructions given by D through [HXL] to P ... are contained in a Fund Arrangement Table.  The authenticity of the Fund Arrangement Table is disputed by D [“the authenticity argument”].

(3)  Without prejudice to the above, [HXL] does not have the authority to send the Fund Arrangement Table on behalf of D to P [“the authority argument”].

(4")  There is an oral agreement reached by Cheuk on behalf of P and WT on behalf of D in early November 2018, by which the original timetable in the agreement for the performance of the Transfer Obligation has been postponed [“the deferment argument”].

(5)  There is another oral agreement reached by Cheuk on behalf of P and WT on behalf of D on 4 November 2018, by which the Agreement has been amended [“the Notes argument”].

(6)  Under the Agreement, D is required to pay interest to P if D has failed to discharge the Transfer Obligation on time.  It is D’s case that the interest rate imposed is too high and the interest clause is a penalty clause, and hence that clause should not be enforceable” [“the penalty clause argument”].

18.  The judge took the view that the “no full payment argument” was arguable and as a result, he considered that he would not comment on the other defences²⁰.  His reasons for accepting the “no full payment argument” were set out in §19 as follows:

“(1)  P says that apart from the Agreement, there are some other dealings between P and D. This is the reason for paying the HK$111,750,000 ... [“the excess sum” i.e $455,662,270 - $343,912,270]. These other dealings are denied by D. Bearing in mind that the sum involved in these other dealings is a very substantial sum, if P’s case on this point is true, there must be documentary evidence in support of these other dealings. However, as to these other dealings, P has chosen not to provide any particulars, let alone evidence.

(2)  Mr Chong²¹ submits that the other dealings are irrelevant in these proceedings and P should not trouble the court by producing documents concerning the other dealings in these proceedings.  With respect, I am unable to accept the submission made by Mr Chong.  The existence or the non-existence of the other dealings is a contested issue in these proceedings, and the answer on this issue would have a direct impact on the strength of the parties’ respective cases. Further, as submitted by Mr Wang²², even if the other dealings exist, the total amount involved in the other dealings would also be a material issue.  If the total involved in the other dealings is more than HK$111,750,000, by paying HK$455,662,270 to D, P may have only paid off the total owed to D in the other dealings and part of the sum (not the full sum) specified in the Agreement.

(3)  Mr Chong submits that in [16] of WT’s affirmation dated 16 August 2019, WT has admitted that she knows New Merit Group Ltd (“NM”), Blooming Balance Limited (“BB”) and Lin Lifen (“LL”).  Mr Chong submits that these are D’s friends, and the payments to NM, BB and LL should be treated as payments to D under the Agreement.  I am unable to accept these submissions:

(a)  WT in the same paragraph of her affirmation denied that she had ever given any instruction to P to transfer any sum to NM, BB and LL.  There is no admission from WT that D has instructed P to pay parts of the sum specified in the agreement to NM, BB and LL.

(b)  It is P’s case that the HK$455,662,270 paid to D is the sum specified in the Agreement plus the amounts payable to D in some other dealings.  There is no plea in P’s pleadings saying that the sums paid to NM, BB and Lin Lifen are solely for the Agreement and not for the other dealings.  There is also no evidence on this point.

(4)  Taking all the aforesaid into account, I am driven to the conclusion that D’s denial of the existence of the other dealings is believable.

(5)  While the non-existence of the other dealings is believable, whether P’s case is true would become a triable issue.  If the other dealings in fact do not exist as alleged by D, applying common and commercial sense, there would be no reason for P to pay D HK$455,662,270, when the payable sum specified in the Agreement is only HK$343,912,270.  It is arguable that the actual amount paid by P to D under the Agreement may only be HK$153,162,270 as alleged by D, and all the other amounts as shown in the Table are not related to D and the Agreement.

(6)  Mr Chong submits that D’s conduct and part performance of the Agreement constitute circumstantial evidence showing that full payment has been made by P.  Mr Wang has made a reply to these submissions.  I am persuaded by Mr Wang’s submissions. 

(7)  In particular, I have to mention that as to the alleged complaints made by P to D concerning D’s breach of the Agreement, P is bound by its own pleading, ie the FBP.  ‘Summary Judgment if it is to be given is to be given on the pleaded case’.  In its application for summary judgment, P is not entitled to put forward a case which is inconsistent with the FBP.

(8)  With all the aforesaid in mind, in my view, it cannot be said that it is clear and obvious that full payment must have been made by P”.

(Emphasis added).

Discussion

19.  It is well-established law that the grant of unconditional leave is a matter of discretion.  As such, an appellate court would not interfere unless the judge’s reasons disclose any error of law, or misapprehension of material fact, or if the judge failed to take relevant matters into account, or took irrelevant matters into account, or if the order was so plainly wrong that an appellate court would have to interfere.  For the reasons given below, I take the view with respect that the discretion was wrongly exercised in this case.

20.1.  First, in respect of the “no full payment” argument, the evidence showed that the plaintiff’s transfers were in accordance with the Fund Arrangement Table.  If that Table was authentic and HXL was authorized to send it, then the plaintiff would have paid the Agreement sum, albeit with the excess sum. 

20.2.  As for the authenticity of the Table, it showed a sum of $153,162,270 to be paid to the defendant at a designated bank account.  The defendant admits that it did indeed receive that sum in that account on the day specified for performance of the Agreement.  The defendant has adduced no evidence to explain how the plaintiff was aware of its (the defendant’s) bank account details if it had not sent the Table and when it said it had no previous dealings with the plaintiff.  

20.3.  As for HXL’s authority to send the Table, the defendant has admitted that HXL “handled administrative affairs according to my instructions” and was even authorized to sign the Agreement.  Further, when on 22 October 2018, Cheuk referred to Jacky (of the plaintiff) contacting HXL to arrange details for remittance of funds, WT never mentioned that HXL had no authority to make such arrangements.  Indeed, when Cheuk said she would see how they (Jacky and HXL) co-ordinated with each other, and hoped that the contract would be signed that evening and funds transferred the next morning, WT said simply “good”.  For the “authority argument”, WT merely alleged that the single act of sending the Table was not authorized, but could not explain why HXL (who had always “handled administrative affairs according to my [WT’s] instructions”) did so. WT has only said that HXL has left the defendant’s employ and she has not been able to contact her.  

20.4.  Further, the defendant’s denial of authenticity and authority must be tested against the fact that there was no contemporaneous documentary evidence (despite the many whatsapp messages passing after 25 October 2018) in which it mentioned that the Agreement sum had not been paid.  On the contrary, the defendant’s conduct in §§10-13 above showed that it acknowledged the plaintiff’s payment of the Agreement sum. 

20.5.  However, the judge thought he did not need to consider the “authenticity” or “authority” arguments.  With respect, that is a failure to deal with these crucial issues. If the Table was authentic and was sent with authority, then the plaintiff would have performed the Agreement by payment of the Agreement sum, albeit with the excess sum.

21.1  Secondly, the judge was concerned instead with the absence of evidence from the plaintiff of the other dealings accounting for the excess sum.  From that, the judge then speculated that the other dealings (which the defendant actually denied) might have involved more than the excess sum, and from that, he further speculated that the plaintiff may have paid less than the Agreement sum.

21.2.  With respect, that approach is erroneous.  The burden was on the defendant to show a real or bona fide triable issue that the plaintiff had failed to pay the Agreement sum.  If it is accepted that the payments were in compliance with an authentic and authorized Fund Arrangement Table (as to which see §§20.2 – 20.4), the purpose of the excess sum is a distraction only.  The plaintiff was not claiming repayment of it (because its case was that it was for other dealings).  Nor was the defendant claiming a right to retain it (because its case was that there were no other dealings). 

21.3.  It was never the defendant’s case that the plaintiff owed it another sum of such magnitude that the Agreement sum was not paid in full.  Even if this had been its case, it was the defendant’s burden to establish on the evidence a triable issue on this argument.  By requiring the plaintiff to prove what the excess sum was for²³, the burden was reversed.  The error was compounded by speculation that the excess sum might be greater²⁴.  As the judge said that he considered “the answer on this issue would have a direct impact on the strength of the parties’ respective cases”²⁵, his view on this aspect obviously influenced his decision to give unconditional leave.

22.  Thirdly, §19(3)(a) of the Reasons for Decision is based on WT’s denial or non-admission that instructions had been given to the plaintiff to transfer funds to some of the recipients.  This obviously ties in with the “authenticity” and “authority” arguments regarding the Fund Arrangement Table, and it was erroneous to deal with it as a stand-alone point without considering those arguments which should have been examined against the contemporaneous documents and the defendant’s conduct discussed in §§10-13 above.

23.  Fourthly, in §19(3)(b) of the Reasons for Decision, the judge said: “there is no plea in P’s pleadings saying that the sums paid to NM, BB and Lin Lifen are solely for the Agreement and not for the other dealings.  There is also no evidence on this point”.  However §§7-10 of the Amended Statement of Claim pleaded, and §§18-20 of WBQ’s 1^st affirmation filed on 7 May 2020 asserted, the defendant’s designation of the 8 bank accounts (including the above recipients) in accordance with clause II(4) of the Agreement, and the plaintiff’s payments pursuant thereto.    There were also WT’s messages on 24 and 25 October 2018 in which she was asking for payment as soon as possible as “her friends” and “others” were waiting for the funds for other transactions. Whether the sums paid to the other recipients were solely for the Agreement or for the other dealings matters not, so long as the full Agreement sum had been paid in accordance with the defendant’s payment instructions in the Fund Arrangement Table.      

24.  For the above reasons, the judge’s conclusion that unconditional leave should be given by reason of the “no full payment argument” cannot be supported.  As all the relevant documents are before this court and both counsel have made full submissions, it would be a waste of time and costs for the summary judgment application to be remitted to the judge for consideration of the other arguments. Pursuant to Order 59 rule 10 RHC, this court shall exercise the powers of the court of first instance to decide the application.

25.  The “authenticity argument” and “authority argument” have been discussed in §§20.2-20.4 above and will not be repeated here. 

26.1.   As for the “deferment argument”, the defendant’s allegation is that in “early” November 2018, there was an oral agreement between WT for the defendant and Cheuk for the plaintiff that the transfer of the financial instruments would be postponed “to a date to be discussed and agreed”.  On the facts, this must be an alternative argument to the “no full payment argument”, because if there had been no full payment, then under the Agreement the transfer would in any event be postponed, and it would not have been necessary for there to have been a separate oral agreement. 

26.2.  The defendant has not stated the date when such an agreement was reached.  Given that the parties had entered into a written contract which had specified exact dates for the transfer, and there were many whatsapp messages passing between them, it is surprising that none of the contemporaneous documentary evidence mentions any such oral agreement, or refers to any proposal for fixing a new date.    

26.3.  On the contrary, on 8 November 2018, the defendant made a further transfer of 2 million shares.  Further, when on 19 November 2018, Cheuk asked for further shares, there was no reply from the defendant resisting that request by reason of the alleged deferment agreement.  And on 23 November 2018, the defendant’s reply was simply “ok”.  The above conduct of the defendant (at least by 19-23 November 2018, clearly after “early” November) is inconsistent with the alleged oral agreement for deferment.

26.4.  Further, the only matter that WT alleged needed further discussion was the cost of the transfer of physical scrip.  She has not stated what that cost was, but given that the Agreement sum was nearly $344 million, one would have thought the cost would be relatively insignificant, and as shown in §13.3 above, Cheuk and WT were then on amicable terms. 

27.1.  As for the “Notes argument”, the defendant’s case is that on 4 November 2018, it agreed to arrange a loan of USD7 million (including HK$5 million) for Cheuk/the plaintiff, for which the plaintiff agreed that the defendant need not transfer the Notes as such, but only needed to transfer the balance of the proceeds of sale of the Notes on maturity after deducting what it owed to the defendant.

27.2.  Again, the whatsapp messages contain no mention of this alleged oral agreement.  And while Cheuk accepts there was a $5 million loan from the defendant to Hong Kong Jiayuan Holdings Ltd, she denied it had anything to do with the Notes. 

27.3.  However, it is evident from the whatsapp messages commencing 5 November 2018 that JIGL was planning a tap issue of notes, and that Cheuk was grateful to WT for arranging subscriptions for the issue.  Further, it is notable that on 19 November and 23 November 2018, Cheuk asked for transfer of the shares only, and in neither message did she mention the Notes.  This may be contrasted with her previous messages (30 October 2018 and 1 November 2018) when she asked for both shares and Notes.  Nor is there any evidence of any demand for the Notes on the Wechat group chat.    

27.4.  Cheuk’s affirmation, filed after WT’s 4^th affirmation, simply denied the Notes argument.  Materially, she did not explain why she no longer chased for, or even referred to, the Notes after 5 November 2018.  But for this argument, I would be prepared very nearly to give judgment for the plaintiff.  However, her evidence must be taken in the round, and her lack of candour in respect of the Notes argument impacts upon the other issues in this case.

28.  Finally, as for the “penalty clause argument”, it is not necessary to deal with this in light of the order which is proposed below. 

Order

29.  In the circumstances, I propose to order that conditional leave to defend be given.  The defendant has not raised any arguments that its financial situation is such that conditional leave should not be granted.  Insofar as it wishes to fulfill the condition from the portfolio which is subject to the Mareva injunction, that is a matter for an application to the judge and not to this court.     

30.  The plaintiff has asked for an order for judgment on liability with damages to be assessed.  The parties agree on a share price of $3.44 for the purposes of calculating the sum to be paid into court for conditional leave.  There is no evidence regarding the value of the Notes at the time when the Agreement should have been performed.  Accordingly, I would order that leave be given to the defendant to defend the action upon its payment into court of the sum of $295,014,400 ($3.44 x 85,760,000 shares) within 28 days of the date of this Judgment.  To cater for the possibility that the defendant may not be able to obtain a date before the court of first instance for its application for variation of the injunction, there will be liberty to apply in this respect only.

31.  As for costs, I propose an order nisi that:

-  if the condition is not complied with, the defendant shall pay the plaintiff’s costs of the action and of the appeal;

-  if the condition is complied with, the costs of the application before the judge shall be costs in the cause, but the costs of the appeal shall be paid by the defendant to the plaintiff in any event.