DING YONG v. SONG LIHUA AND OTHERS

HCA 1543/2014

[2018] HKCFI 1285

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1543 OF 2014

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J U D G M E N T

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I. Introduction

1.  In this action, the Plaintiff (“Ding”) claims against the 1^st to 4^th Defendants a sum of RMB5 million under a Settlement Agreement dated 2 September 2011 (“SA”) entered into between the Defendants on the one side (“Jasmin Parties”) and Ding, his two corporate vehicles viz Golden Chain Properties Inc (“Golden Chain”) and Aromanice Personal Care Co Ltd (“Aromanice”) and Yu Xiao Qing on the other (“Ding Parties”).  Under Clause 1(1) of the SA, the Defendants agreed to pay Ding a settlement sum of RMB8.5 million in two stages.  The first sum of RMB3.5 million (less certain legal costs) was duly paid on 1 December 2011.  The second sum of RMB5 million was due and payable within 2 years of the payment of the first sum.  The Defendants fail to pay it despite various demands made and hence the present action.

II. Background facts

2.  Ding, via his corporate vehicles, was at all material times engaged in the business of manufacture and sale of non‑organic bath and body personal care products in inter alia the PRC.  

3.  The 1^st Defendant (“Song”) is the founder, principal director and, directly or indirectly, majority shareholder of the 3^rd Defendant (“Jasmin Holdings”), 4^th Defendant (“Jasmin International”) and 5^th Defendant (“Jasmin Shenzhen”). Song, via her own corporate vehicles, was at all material times engaged in the manufacture and sale of organic skin care products, principally in Australia and to some extent the PRC.  The 2^nd Defendant (“Chalmers”) was Song’s assistant and a director of Jasmin Holdings at the material time.

4.  In 2010, Ding and Song agreed to cooperate in the distribution and sale of certified organic skincare and cosmetic products under the brand “JASMIN” in the PRC.  In furtherance of their business cooperation:

(1)  Song and Ding entered into a Memorandum of Understanding dated 13 May 2010 while Song/her corporate vehicles and Ding/his corporate vehicles entered into various distribution agreements, share option agreements and a shareholders agreement in July and August 2010, the details of which were set out in Recital (A) of the SA (collectively “Jasmin Agreements”);

(2)  Golden Chain invested RMB10 million in Jasmin Holdings and became its 10% shareholder holding 10 million shares[1];

(3)  Ding was appointed a director of Jasmin Holdings;

(4)  Song agreed to transfer certain intellectual rights to Jasmin Holdings.

5.  In early 2011, disputes arose and developed between Song and Ding to such extent that they could no longer continue their business cooperation.  Recital (C) of the SA recorded their disputes as follows:

“ (1) The Jasmin Parties allege, and Ding denies, that Ding has breached his fiduciary duties as a director of [Jasmin Holdings] and [Jasmin International].

(2) Ding, [Golden Chain] and [Aromanice] issued proceedings in HCMP 841 of 2011 (the “Hong Kong Proceedings”) and on 20 May 2011 obtained an injunction against Song, Chalmers, [Jasmin Holdings] and [Jasmin International] (the “Injunction”). On 3 June 2011, the Hong Kong Proceedings were dismissed, the Injunction was discharged and Ding, [Golden Chain] and [Aromanice] were ordered to pay costs of the Hong Kong Proceedings of Song, Chalmers, [Jasmin Holdings] and [Jasmin International] on an indemnity basis to be taxed if not agreed (the “Costs Order”).

(3) On or about 23 March 2011, [Aromanice] commenced proceedings against [Jasmin Shenzhen] in the Shenzhen Futian Court (the “PRC Proceedings”), and applied for and obtained a freezing order over the Bank of China bank account of [Jasmin Shenzhen] (the “[Jasmin Shenzhen] Account”), the bank accounts and credit cards of Song and the bank account of Tamborine Organic Cosmetics (Shenzhen) Ltd (the “TOCS Account”) in the total sum of RMB3,073,781 (the “Freezing Order”). The amount in dispute related to a sum of prepayment of monies transferred from [Aromanice] to [Jasmin Shenzhen] in the sum of RMB3,073,781. In obtaining the Freezing Order, [Aromanice] was required to provide to the Court security by way of a bond in the sum of RMB3,104,279.37 (the “Bond”). Following Song arranging [Jasmin Shenzhen] to deposit funds into [Jasmin Shenzhen’s] Account, the TOCS Account and the bank account of Song were unfrozen.

(4) Between 27^th to 30^th April 2011, and unbeknown to Song, Chalmers and [Jasmin Holdings], [Golden Chain] caused the sum of US$199,086.51 to be transferred from [Jasmin Holdings’] bank account to the account of [Golden Chain] maintained with HSBC.

(5) Notwithstanding the dismissal of the Injunction, the bank accounts of [Jasmin Holdings] and [Jasmin International] maintained with HSBC have been frozen by HSBC.

(6) On 15 January 2011 the Jasmin Parties issued an e‑mail giving notice to [Aromanice] to terminate the distributorship of [Aromanice] in respect of Jasmin Products.

(7) [Jasmin Holdings] and [Jasmin International] have not been able to convene and proceed with board meetings due to the differences between the parties and Ding’s refusal to attend such meetings.  It is apparent that it is no longer viable for the Parties to continue working together.”

6.  Clause 1 of the SA was entitled “Settlement”.  The material parts of Clause 1 provided:

“ In full and final settlement of all differences and disputes between the Parties:

(1) Song agrees to buy and [Golden Chain] agrees to sell [10,000,000 Jasmin Holdings shares] at the consideration of RMB8.5 million (the “Settlement Sum”) upon the terms and conditions of this Agreement.

…

(4) Ding shall forthwith upon the signing of this Agreement sign a Contract Note and an Instrument of Transfer in terms of the draft Contract Note and Instrument of Transfer annexed as Schedule 3 to this Agreement (the “Contract Note and Instrument of Transfer”) for the transfer of the [10,000,000 Jasmin Holdings shares] to Song. The signed Contract Note and Instrument of Transfer shall be held in escrow by Ding’s solicitors, Messrs Stevenson Wong & Co of 4/F & 5/F, Central Tower, No 28 Queen’s Road, Central, Hong Kong, and shall be delivered to the Jasmin Parties’ solicitors, Messrs Gall of Unit 302, 3/F, Dina House, Ruttonjee Centre, 11 Duddell Street, Central, Hong Kong forthwith upon the Jasmin Parties’ payment of the First Sum in accordance with the provisions set out in Clause 1(1) of Schedule 4 to this Agreement…

(5) Ding shall forthwith upon the signing of this Agreement sign a letter of resignation as a director of [Jasmin Holdings] in terms of the draft letter of resignation annexed as Schedule 5 to this Agreement.

…

(8) Subject to paragraph 9(2)[2] of this Agreement, the Jasmin Parties:

(a) hereby agree to pay to Ding the Settlement Sum in accordance with the payment terms set out in Schedule 4; and

(b) shall be jointly and severally liable to pay to Ding the Settlement Sum.

(9) The Ding Parties agree to pay the Costs Order, to be taxed (the “Taxed Costs”) if not agreed (the “Agreed Costs”)…

(10) The PRC Proceedings shall be disposed of in the manner as provided in the PRC Proceedings Settlement Agreement and the Application for discharge of the Freeze Order attached as Part A of Schedule 1 hereof. Within 3 days of receiving the Letters of Clarification as attached as Part B of Schedule 1, [Jasmin Shenzhen] and/or [Aromanice] agree to take all necessary steps to effect payment in the sum of RMB3,073,781 from the [Jasmin Shenzhen] Account to [Aromanice].

(11) The Parties agree that upon the signing of this Agreement, the Jasmin Agreements shall be deemed terminated and the Parties shall be mutually discharged from the Jasmin Agreements.

(12) Subject to the terms of this Agreement, the Parties hereby absolutely waive all claims that they have or may have under the Jasmin Agreements and the HK Proceedings and the PRC Proceedings against each other of them.”

7.  The relevant parts of Schedule 4, Clause 1 provided:

“ 1. The Jasmin Parties will pay to Ding:

(1) The sum of RMB3,500,000.00 less the sum stated in the Bill of Costs (the “Bill of Costs Sum”) or the Agreed Costs whichever is the lower, within 90 days from the date of this Agreement (the “First Sum”).

…

(3) The sum of RMB5,000,000.00 within 2 years after the payment of the First Sum.”

8.  Subsequently, Ding resigned as a director of Jasmin Holdings and Golden Chain transferred its 10 million Jasmin Holdings shares to Song.

III. The Parties’ pleaded cases and witnesses

9.  Only Ding and Song attended and participated at the trial.  Each side called 1 witness viz Ding and Song who adopted their witness statements as evidence in chief.

10.  Ding’s pleaded case is straightforward.  He relies on the express term of the SA that the RMB5 million is due and payable, jointly and severally, by the Defendants within 2 years after payment of the first sum on 1 December 2011.

11.  In their Defence, all the Defendants admitted having entered into the SA, paid the first sum but failed to pay the RMB5 million. Their pleaded case is that Ding was in breach of Clauses 3, 5(1) and 6(3) of the SA as a result of which, by virtue of Clause 9(3), they are all absolved from the obligation to pay the second sum of RMB5 million.

12.  Clauses 3, 5(1), 6(3) and 9(3) of the SA provided:

“ 3. NON‑COMPETITION

Subject to no default by the Jasmin Parties in the payment of the First Sum, the Ding Parties undertake from the signing of this Agreement up until a period of 2 years after payment of the First Sum, whether acting by themselves or through their servants, agents, shareholders, investors, associates, subsidiaries, employees or otherwise (the “Ding Group”), that they will not engage in, either directly or indirectly, the distribution, manufacturing, marketing, sale, or provision of certified organic skincare and cosmetic products or services in competition with any member of Song, Chalmers, [Jasmin Holdings], [Jasmin International], [Jasmin Shenzhen] and their related associates and subsidiaries (the “Jasmin Corporate Group”) anywhere in the world. For the purpose of this provision, certified skincare and cosmetic products mean and refer to organic skincare and cosmetic products certified by agreed certifiers namely the OFC, USDA, Ecocert, Soil Association, BDIH and IFOAM or similar International recognized organic certification bodies.

…

5. NON‑DISPARAGEMENT

(1) The Ding Parties agree whether acting by themselves or through the Ding Group, that they will not at any time disparage, defame, reflect adversely or make any untrue or misleading oral or written statement concerning the business and affairs of the Jasmin Corporate Group, whether acting by themselves or through their servants, agents, shareholders, investors, associates, subsidiaries, employees or otherwise (the “Jasmin Group”). The Ding Parties also agree whether acting by themselves or through the Ding Group, that they will not engage in any action, activity, conduct that is harmful or contrary to the interest of any member of the Jasmin Group.

…

6. NON‑DISCLOSURE AND CONFIDENTIALITY

…

(3) The Ding Parties undertake whether acting by themselves or through the Ding Group that they will not use or disclose or divulge, either directly or indirectly, any Information, ideas, methods, techniques, programs, strategies, business plans, marketing plans, polices, manuals, forms, organic certifications, specifications, processes, statements, formulae, trade secrets, drawings, product formulations, product ingredients, packaging designs and materials, product mixing and manufacturing and packing methods strategies, processes and protocols of any member of the Jasmin Group deriving from and/or arising out of the Jasmin Agreements anywhere in the world.

9. FURTHER PROVISIONS

…

(3) In the event that any of the Ding Parties have breached or are in breach of any of the terms of this Agreement, including but not limited to, Clauses 3, 4, 5, 6 and/or 9(4) the Jasmin Parties will not be obliged to pay any balance of the Settlement Sum.” 

13.  Ding denies any breaches of the SA.

IV. Deliberation

14.  At the risk of stating the obvious, the party making an allegation of fact bears the burden of proving it on balance of probabilities: Wong Hon Sun v HKSAR (2009) 12 HKCFAR 877 at [23].  It is therefore for the 1^st to 4^th Defendants to establish the alleged breaches of the SA in order to resist Ding’s claim in the present action.  Since the 2^nd to 4^th Defendants did not attend this trial to make good their pleaded Defence, their Defence to Ding’s claim should fail in the normal course of event, but for the fact that their Defence and Song’s Defence are in substance the same.

15.  This court will therefore go on to consider Song’s pleaded Defence first before coming to a decision on Ding’s claim against the Defendants.

Alleged breach of Clause 3

16.  Mr Kwok submits correctly that in order to establish a breach of Clause 3, the Defendants have to prove (1) the Ding Parties, whether acting by themselves or through inter alia their “associates” (“Ding Group”); (2) engaged in the distribution, manufacturing, marketing, sale etc of “certified organic skincare and cosmetic products” in competition with the Defendants or their associates and subsidiaries; (3) from the signing of SA on 2 September 2011 to 2 years after payment of the first sum (“Relevant Period”).

17.  In her Defence, Song alleged a breach of Clause 3 on the basis that:

(1)  Mr Alan Unger, an American businessman, is an associate of Ding because they were in a joint venture called Beauty Therapy Works (“BTW”).  Song believed that the two continued their activities to at least 2 September 2011 and may well have continued for some time thereafter.  Mr Unger is therefore an associate of Ding.

(2)  Subsequent to the breakdown in relationship between Ding and the Defendants and notwithstanding Clause 3 of the SA, Mr Unger has continued to engage in the provision of certified organic skincare and cosmetic products named “London Organics” (“London Organics Products”).

(3)  The London Organics Products are organic products certified by Ecocert.

18.  Ding’s case, as pleaded in his Reply, is that:

(1)  His joint venture with Mr Unger was only for conventional, non‑organic bath products.

(2)  Ding has ceased to have any business dealings or relationship with Mr Unger since April 2011 and they were no longer associates.

(3)  Ding has no knowledge or involvement with the London Organics Products.

19.  Ding’s evidence is that he started a joint venture business with Mr Unger in early 2009 by the name BTW.  In or about April 2011, the business relationship ended as Mr Unger owed him lots of money in relation to the joint venture.  Hence, by the beginning of the Relevant Period ie 2 September 2011, his relationship with Mr Unger had long ceased.

20.  On the undisputed evidence, this court has no doubt that the relationship between Ding and Mr Unger had ceased in or about April/May 2011 when Mr Unger was unlawfully detained by Ding and his staff for 3 days from 29 April to 2 May 2011.

21.  In a document entitled “Paper of Sentence” issued by the People’s Court of Jimei District, Xiamen City, Fujian Province, exhibited to Song’s supplemental witness statement, the following was recorded:

“ After the hearing, we found out:

The defendant Yong Ding and the victim Alan Seth Unger (US Nationality, hereinafter referred to as Alan) co‑founded BTW company in 2009, and thus co‑operated business of personal care products.  In the course of operating business, two persons had economic dispute.  Therefore, Yong Ding asked Alan to negotiate in the lounge, the sixth floor, the administration building, Landy Trading Developing Co., Ltd. (hereinafter referred to as Landy Company), No. 192‑196, Tianfeng Road, Jimei district, Xiamen at about 3pm on 29 April 2011. After the negotiation broke down, Defendant Yong Ding instructed the vice general manager Defendant Tao Ding to arrange to unlawfully deprive the personally freedom of Alan.  Defendant Tao Ding then instructed companies’ staffs defendants Wenjin Fu, Zhongyi Zhang and Xiaozhong Zhang to unlawfully deprive the personally freedom of Alan…”

22.  Ding was found guilty of illegal detention and sentenced to “fixed‑term imprisonment of one year and two years’ probation. (the term of probation begins from the date the sentence is made)”.  Ding was cross‑examined on this by Song at the trial and he frankly admitted to it.  But he explained to this court the term of imprisonment imposed by the PRC Court was in effect “suspended” for 2 years so he never had to go to jail.

23.  Subsequent to the unlawful detention incident, the two were engaged in arbitral and legal proceedings, as evidenced by a US Judgment obtained by Mr Unger against Ding in August 2014.  Mr Ding was examined on this and, according to him, the two are still engaged in legal proceedings in the PRC where Mr Unger is taking enforcement proceedings.

24.  The term “associates” is not defined in the SA and this court can only resort to its ordinary and natural meaning.  According to the Shorter Oxford English Dictionary, “associate” means “a partner, a comrade, a companion, an ally, a confederate, a colleague”.

25.  In this court’s view, in light of the incident of unlawful detention and the subsequent litigation which is still on‑going, whatever business or personal relationship Mr Unger and Ding once had must have ended by April/ May 2011 and has never resumed.  In these circumstances, Mr Unger and Ding could hardly be regarded as “associates” in any meaning sense of that term and this court will so find.

26.  If Mr Unger was not an associate of Ding in the Relevant Period, whatever Mr Unger might have done in terms of selling or providing London Organics Products cannot be attributed to and regarded as a breach by Ding.  In other words, Song fails to establish even the first element of the alleged breach of Clause 3.

27.  What is more, Mr Kwok submits and this court agrees that Song has failed to establish the other two elements of the alleged breach of Clause 3 — there is no evidence on the London Organics Products generally or Mr Unger’s involvement in selling or providing them in the Relevant Period.

28.  There is no physical sample or even a photograph of the London Organics Products and there is no explanation as to why they are considered to be organic (apart from the name).  In this regard, Clause 3 of SA defined certified skincare and cosmetic products as “organic skincare and cosmetic products certified by agreed certifiers namely the OFC, USDA, Ecocert, Soil Association, BDIH and IFOAM or similar International recognized organic certification bodies”.  There is before this court no certificate from Ecocert, or any other internationally recognised organic certification bodies, to establish that London Organics Products have been certified as such.

29.  For these reasons, this court finds Song has failed to establish the alleged breach of Clause 3.

Alleged Breach of Clause 5(1)

30.  Clause 5(1) of the SA prohibits the Ding Parties from inter alia making any untrue or misleading statement concerning the business and affairs of the Jasmin Corporate Group or engaging in any action, activity, conduct that is harmful or contrary to the interest of any member of the Jasmin Group.

31.  In her Defence, Song alleged that she believed Ding has been directly or indirectly engaged in the manufacture and sale of 4 products with the names “Cane Sugar Orange Blossom Shower Gel”, “White Knight Cracked Repair Cream”, “KSM Extra Strength Anti‑Acne Gel Fresh” and “SHEVBO Extra Repair Cream” (collectively “Products”), in breach of Clause 5(1).

32.  Song alleged that the Products:

(1)  were extensively marketed and sold in Hong Kong;

(2)  bore labels suggesting they were manufactured by Jasmin Place with the address of the headquarters of the Jasmin Group in Queensland, Australia;

(3)  bore bar codes which are registered with regard to the existing products of the Defendants;

(4)  were of poor quality;

(5)  were marketed so as to mislead consumers into believing they were good quality products associated with the Defendants.

(6)  In consequence, Ding has engaged in action, activity or conduct that is harmful or contrary to the interest of the Jasmin Group.

33.  Further, Song alleged that she believed Ding has been directly or indirectly engaged in the manufacture of the “Olive Organics” range of skincare owned by AS Watsons.  No further particulars were pleaded.  Unlike her case on the Products, Song did not allege that the Olive Organics skincare products were misleading or of poor quality.  Nor was there any explanation as to how the mere manufacture of the Olive Organics skincare products would constitute disparagement or action, activity or conduct that is harmful or contrary to the interest of the Jasmin Group.

34.  Ding denies any knowledge of or connection with the Products or the Olive Organics skincare products.

35.  Song’s evidence in this regard consists of the following.

36.  First, in her first witness statement at paragraph 20, Song stated that:

“ … a wide range of ‘copy products’ started appearing for sale in Hong Kong, with a claim that they were made by Jasmin Skincare. It is my strongest opinion that these originated from the Plaintiff’s (or a close Associate’s) factory in Xiamen. As I no longer live in Hong Kong then this has been hard to prove conclusively. I also feared travelling to Xiamen to further investigate these matters, because of what had happened to Mr Unger at the hands of the Plaintiff and his henchmen.”

37.  Second, Song testified on Day 2 of trial that, after she had relocated from Hong Kong to Australia in mid‑late 2013, subsequently corrected to January 2013, she was alerted by a customer to one of these copy products being sold in pharmacies in Hong Kong.  She then came back to Hong Kong to investigate and bought samples of the copy products from a pharmacy.  In cross‑examination, Song said she reported the matter to Invest HK the staff of which referred her to Hong Kong Customs and Excise Department but she never did.

38.  Third, the samples themselves are not in evidence.  All that is before the court are photos of the 4 Products.

39.  It is obvious to this court that Song has no proof, other than her subjective belief, that Ding or his companies, associates etc are responsible for the manufacture or the sale of the Products.  Nor is there proof that the Products are of poor quality.  The alleged breach of Clause 5(1) in relation to the Products is a complete non‑starter.

40.  The same can be said of the alleged breach of Clause 5(1) by manufacturing the Olive Organics skincare products owned by AS Watsons.

41.  Apart from Chalmers’ witness statement which is not allowed in evidence by reason of his absence at the trial, there were before this court only a few emails exchanged among Ding’s staff viz Linda Gao and Amber, Kendra Chan of AS Watsons and Chalmers in early 2011.  The long and short of the emails was that Chalmers had introduced AS Watsons to Ding’s business “Landy” in relation to a proposed project with AS Watsons and Chalmers accused Amber of bypassing him and directly dealt with AS Watsons by offering them a “Landy produced formulation”.

42.  Ding’s evidence is that AS Watsons never placed any orders with his companies in relation to this particular project.  He also categorically denied that Landy, or the Ding Group/Ding Parties as defined in the SA, have manufactured or sold any Olive Organic Range skincare products to AS Watsons.

43.  In short, apart from a bare assertion, there is no proof that Ding has been directly or indirectly engaged in the manufacture of the “Olive Organics” range of skincare products owned by AS Watsons.

44.  For these reasons, this court finds Song has failed to establish the alleged breach of Clause 5(1).

Alleged breach of Clause 6(3)

45.  Simply put, Clause 6(3) of the SA prohibits the Ding Parties from using, disclosing or divulging, directly or indirectly, any information, ideas, methods, processes, formulae, product formulations, product ingredients etc of the Jasmin Group deriving from and/or arising out of the Jasmin Agreements.

46.  In this regard, Song alleged that

(1)  Ding and Mr Unger were associates;

(2)  both Ding and Mr Unger were privy to the intellectual property of the Jasmin Group in relation to organic skincare products;

(3)  by continuing to develop the London Organics Products (the relevant formulations and technology of which belong to the Jasmin Group) after the Settlement Agreement was reached, Ding and Mr Unger have clearly disclosed or used the Information, ideas, methods, etc of the Jasmin Group in breach of Clause 6(3) of the Settlement Agreement.

47.  All these allegations are denied by Ding.

48.  To establish a breach of Clause 6(3), Mr Kwok submits and this court agrees that Song has to prove:

(1)  Ding and Mr Unger were associates on or after the SA was entered into on 2 September 2011;

(2)  Ding and Mr Unger were privy to the Jasmin Group’s intellectual property in relation to the Defendants’ organic skincare products; and

(3)  the London Organics Products were developed using such intellectual property ie Jasmin Group’s relevant “formulations and technology”.

49.  For reasons already explained in paragraphs 20‑25 above, this court finds the relationship between Ding and Mr Unger had ceased in or about April/May 2011 and that Mr Unger was not an associate of Ding thereafter.  Hence, Song is unable to establish even the first element of the alleged breach of Clause 6(3).

50.  Further, it is wholly unclear what Jasmin Group’s “formulations and technology” Song is referring to and there is no evidence from her that Ding and Mr Unger were privy to such “formulations and technology” in relation to their organic skincare products, whatever that may be.  In fact, in Song’s supplemental witness statement, she actually admitted she had withheld Jasmin Group’s product formulations from Ding albeit that all other trademarks and packaging designs were freely available.  A similar admission that Song had withheld Jasmin Group’s product formulations from Ding was made in her written opening.  In these circumstances, Song is unable to establish the second element of the alleged breach of Clause 6(3) either.

51.  Lastly, there is no evidence on what formulations and technology were actually used to develop the London Organics Products or the basis on which Song claimed that those formulations and technology belonged to the Jasmin Group.  Song is simply making a bare assertion which this court cannot accept at its face value.

52.  For all these reasons, this court must hold that Song has failed to establish the alleged breach of Clause 6(3).

Unpleaded Defence of Duress and Fear

53.  At the trial, the principal focus of Song’s submission and testimony was that she was forced to enter into the SA under duress and out of fear, by reason of certain threats by and intimidating behavior of Ding.  This line of defence is not pleaded, despite ample opportunity had been afforded to her to do so, and this court simply cannot entertain an unpleaded defence.

54.  Furthermore, a contract tainted by duress is only voidable, not void: Chitty on Contracts 32^nd Ed Vol 1 paragraph 8‑054.  The evidence before this court is that Song, as well as the other Defendants, have clearly affirmed the SA by performing and accepting the Ding Parties’ performance of their obligations under the SA, by admitting to the SA in their Defence and by pleading in their Defence that Ding was in breach of it.

55.  In the circumstances, quite apart from the fact that this line of defence is not pleaded, it is not open to Song to rely on it.

V. Disposition and costs order nisi

56.  To conclude, this court finds in favour of the Plaintiff and shall enter judgment against the 1^st to 4^th Defendants in the sum of RMB5 million together with interest thereon at the commercial rate of prime plus 1% from 2 December 2013 to judgment and thereafter at the judgment rate until full payment.

57.  There shall be an order that the 1^st to 4^th Defendants do, jointly and severally, pay the judgment sum and interest to the Plaintiff.

58.  There shall also be an order nisi that costs of the action be to the Plaintiff, to be taxed if not agreed, and paid by the 1^st to 4^th Defendants forthwith.