TANG CHACK WING (by his next friend TANG KIT YAN CARRIE) v. YUNG WOON KWAI

HCA 1837/2020

[2024] HKCFI 1331

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1837 OF 2020

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JUDGMENT

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A.  Introduction

1.  Mr Tang Chack Wing (“Mr Tang”, the Plaintiff) and Mr Yung Woon Kwai (“Mr WK Yung”, the Defendant) have been working under the same roof of Chun Yip group of companies for over 40 years. As the evidence shows, together they worked very hard. And together they saw the growth and shared the success of the group. This is the trial of a dispute between them.

2.  In 2019, Mr Tang wished to retire and sold all his stake to Mr WK Yung. Now, Mr WK Yung argues that he is not obliged to pay because he has validly terminated the agreement. Mr Tang instead claims against Mr WK Yung for specific performance of the agreement and the outstanding purchase price under the agreement. This action turns on whether Mr WK Yung’s termination is valid.

3.  The agreement between them was in Chinese, namely, “股份買賣合同” (“Agreement for Sale and Purchase of Shares”) (“ASP”). It was signed on 15 August 2019. In the ASP, Mr Tang sold all his shares in 4 companies in Chun Yip group of companies to Mr WK Yung at the price of HK$1 billion (HK$1,000,000,000). Mr WK Yung paid the first instalment of HK$10,000,000 but failed to pay the rest. Therefore the balance of the purchase price now Mr Tang claims against Mr WK Yung is HK$990,000,000.

4.  The time went back to 1960s when Mr Yung Yui Kwai (“Mr YK Yung”), Mr WK Yung’s brother, set up a Chun Yip Polyethylene Products Co. for the manufacture of plastic products. Mr WK Yung joined the business in early 1970s. In 1979, they incorporated Chun Yip Plastics Limited (駿業塑膠有限公司) (“CY Plastics”) to take over the business of Chun Yip Polyeyethylene Products Co.

5.  Mr Tang joined CY Plastic in around 1981. He was responsible for sales and marketing, as well as export and shipping logistics, of CY Plastics’ products. Mr WK Yung was responsible for the overall management of the manufacturing and production process in the Shenzhen factory. Mr YK Yung, being the founder, the then Chairman and Managing Director of Chun Yip group of companies (“CY Group”) oversaw all aspects of the business and the day-to-day operation.

6.  Since 1980s, the business grew substantially. A number of companies were incorporated, each holding assets and operating a part of CY Group’s business. These companies include:

(1)  Chun Yip Industrial (Holding) Limited (駿業國際企業(集團)有限公司) (“CY Holding”), a company incorporated in Hong Kong;

(2)  Chun Yip Holdings Limited (“CY Mauritius”), a company incorporated in Mauritius.

(3)  Joinmark Investment Limited (高邦投資有限公司) (“Joinmark”), a company incorporated in Hong Kong; and

(4)  駿业塑胶(深圳)有限公司 (“CY Shenzhen”), a company incorporated in Shenzhen.

7.  CY Shenzhen was a wholly owned subsidiary of CY Mauritius. CY Shenzhen owns a large-scale factory in Shenzhen which manufactures CY Plastics’ products.

8.  Under the ASP, Mr Tang sold all his shares (the “Subject Shares”) in CY Plastics, CY Holding, CY Mauritius and Joinmark (the 4 companies collectively “the Subject Companies”) to Mr WK Yung.

9.  Unfortunately, Mr Tang was recently certified by doctors as lacking the mental capacity to conduct the present legal proceedings and testify at this trial. By the order of Mr Justice Fung made at the pre-trial review on 17 August 2023, his daughter Ms Tang Kit Yan Carrie (“Ms Carrie Tang”) was appointed as his next friend to conduct and to continue the present proceedings. Ms Carrie Tang gave evidence for his father.

B.  Background leading to the ASP

10.  Since 2009, there had been a legal feud between (a) Mr YK Yung of one side and (b) Mr WK Yung and Mr Tang of the other, which involved accusations of breach of fiduciary duties, mismanagement, misappropriation of company funds, attempts to disrupt and derail the business of CY Plastics and CY Holding and exclusion from management[1].

11.  The litigation between the two camps ended in 2019 with a settlement. They signed 3 settlement agreements on 15 August 2019 – the same date as the ASP. The settlement agreements split the companies, assets, and business of CY Group between the two camps. This is recorded in Recital (B) of the ASP.

12.  Clause 2.1 of the ASP provided that signing of 2 of the said 3 settlement agreements (which concern the Subject Companies) was condition precedent to the sale and purchase of the Subject Shares. This is readily understandable because as recorded in Recital (D) and Clause 4.1 of the ASP, after completion of the said 2 settlement agreements with Mr YK Yung, Mr Tang and Mr WK Yung would become the only shareholders of the Subject Companies, each holding 50% shares of every company. The ASP is predicated upon this state of affairs.

13.  Recital (B) of the ASP also recorded Mr Tang’s intention to retire from the company business (“賣方亦打算退出公司業務”). This intention would be realized as and when the sale of his shares to Mr WK Yung is completed.

C.  The ASP

14.  I set out the material terms of the ASP in its original Chinese[2] below:

“ 1.1 定義: …

…

“成交日”指本合同第 3.2條所述的支付最後一期作價的同一日;

…

3. 股份轉讓價格及付款方法

3. 1 出售股份的總作價為十億港元 (HK$1,000,000,000)。

3. 2 買方須按下列時間表分期將上述作價直接支付給賣方：

付款日期	金額
2019年9月15日	一千萬港元 (HK$10,000,000)
2020年8月15日	一億九千萬港元 (HK$190,000,000)
2021年8月15日	二億港元 (HK$200,000,000)
2022年8月15日	三億港元 (HK$300,000,000)
2023年8月15日	三億港元 (HK$300,000,000)
合共:	十億港元 (HK$1,000,000,000)

3.3 倘若買方未能按照上述時間表支付任何款項，買方須於相關的到期日的7天前向賣方發出書面通知。在下文第3.4條的規限下，賣方須給予買方兩個月的寬限期。倘若買方仍未能在寬限期內支付相關的已到期的分期付款及相關利息，所有本來仍未到期的分期付款將被視作為即時到期，賣方可以書面即時要求買方全數支付買方根據本合同須支付但仍未支付的款項，並可向法庭就該等款項申請勝訴判決。為免歧義，雙方確認，在賣方仍未全數收到上述的作價、相關利息及相關的訟費前，賣方並不須要將出售股份轉名予買方，但賣方並不可以任何方式處置出售股份，並須於全數收到上述的作價、相關利息及相關的訟費後的二個工作天內將出售股份轉名予買方。

3.4 倘若買方未能支付任何到期的款項，買方須就該等已到期但仍未支付的款項向賣方繳交利息，年利率為富邦銀行提供的最優惠利率，直至相關款項付清為止，而此利率亦適用於法庭就該等款項頒發勝訴判決予賣方之後。

…

4. 成交前該等公司的運作

4.1 雙方確認，於完成該和解契據後，他們兩人是該等公司的僅有股東及董事。

4.2 在等待成交之際：

(A) 雙方應促使該等公司經營其日常業務猶如一般正營運中的事業，並會在經營上徵詢對方的意見；

(B) 未經雙方事先書面同意，該等公司不得作出任何日常業務以外的交易；

(C) 雙方須確保該等公司的董事局的成員不變；

(D) 雙方須確保該等公司不會發行任何新的股份；

(E) 賣方及買方不得將其於該等公司中持有的股份以任何方式轉讓予其他人；

(F) 在任何情況之下，買方不得要求賣方向該等公司作任何形式的注資；及

(G) 在任何情況之下，買方不得要求賣方就該等公司向任何人提供作任何形式的私人擔保及/或彌償。

5. 成交

…

5.2 成交時賣方須向買方提交：

(A) 已簽妥有關票據轉讓給買方(或按其指示的任何一方)的買賣票據、證券轉讓文書及有關的股票；買賣票據及證券轉讓文書須依照該等公司的章程所規定的格式；

(B) 任何由賣方委派在該等公司出任董事或員工的人仕所簽署的辭職書(有效日期由成交日開始)；及

(C) 有關撤銷該等公司的銀行帳戶授權簽署的檔，並委任買方所指定的人仕為銀行帳戶的新授權簽署人。

…

6. 保證

…

6.4 為免歧義，買方確認他完全清楚該等公司的狀況，包括而不限於其業務、財政、法律訴訟等。賣方並不須就該等公司的狀況作出任何保證。

…

8. 其他事項

…

8.10 時間因素：時間是本合同的要素。”

References to clause numbers below are to the clauses in the ASP.

D.  Mr WK Yung’s failure to pay

15.  After the signing of the ASP, on 15 September 2019, pursuant to Clause 3.2, Mr WK Yung paid the first instalment of the consideration at HK$10,000,000 to Mr Tang.

16.  On 15 August 2020, Mr WK Yung did not pay Mr Tang the second instalment of the purchase price in the sum of HK$190,000,000.

17.  On 18 August 2020, Mr Tang’s then solicitors (Messrs Au, Thong & Tsang, “ATT”) sent a letter to Mr WK Yung, giving him a two-month grace period pursuant to Clause 3.3[3]. The letter further demanded that pursuant to the same clause, if Mr WK Yung still could not pay the said sum of HK$190,000,000 together with relevant interest within the grace period, i.e. before 15 October 2020, all instalments which had not yet been due under the ASP should be deemed to be immediately due and payable, and Mr Tang could forthwith demand in writing Mr WK Yung to pay the total outstanding amount and could apply to the court for successful judgment in respect of that amount. ATT also invited Mr WK Yung to contact them if he had any suggestion regarding payment of the said amount.

18.  The said two-month grace period expired on 15 October 2020. Mr WK Yung did not pay the second instalment.

19.  On 16 October 2020, ATT, on Mr Tang’s behalf, issued a letter before action to Mr WK Yung, demanding for payment within 7 days of the entire remaining balance of the purchase price of the Subject Share under the ASP, totalling HK$990,000,000.

20.  Mr WK Yung did not pay either.

E.  Mr WK Yung’s First Termination

21.  Instead, on 22 October 2020, Mr WK Yung’s solicitors (Messrs Hugill & Ip, “Hugill”) issued a letter in Chinese to ATT referring to the ASP (“Hugill’s Termination Letter”)[4]. At paragraph 1 of this letter, Hugill informed Mr Tang that because of the previous social incident and Coronavirus disease pandemic, the business of the Subject Companies has been seriously adversely affected; and that although Mr WK Yung had the intention to complete the ASP transaction, he could not reach a supplemental agreement which was acceptable to both parties. In that circumstance, as stated this letter, Mr WK Yung did not have the ability to complete the transaction and could only terminate the ASP.

22.  Paragraph 2 of Hugill’s Termination Letter stated that Mr WK Yung thereby formally informed Mr Tang that the ASP was terminated.

23.  Paragraph 3 of the same letter stated that Mr WK Yung expected to continue to operate the Subject Companies together with Mr Tang.

24.  At this juncture, in my judgment, by his conduct, namely repeated failure to pay in accordance with Clause 3.2 and Clause 3.3, culminated in the issuance of Hugill’s Termination Letter, Mr WK Yung has committed a repudiatory breach of the ASP.

25.  It is plain that Mr WK Yung’s non-payment of the purchase price deprives Mr Tang’s fundamental entitlement under the ASP.

26.  Hugill’s Termination Letter attempted to explain why Mr WK Yung terminated the ASP: (1) poor business of the Subject Companies caused by the previous social incident and Coronavirus disease pandemic, (2) no supplemental agreement concluded between Mr WK Yung and Mr Tang and (3) Mr WK Yung’s inability to complete the transaction. Obviously, none of them entitles Mr WK Yung to terminate the ASP lawfully. There is nothing in the ASP which allows Mr WK Yung to rely on these reasons to terminate. Inability to pay a committed obligation is never a lawful reason for not paying. However, Mr WK Yung did not rely on these reasons in his pleading.

27.  In paragraph 8 of the Amended Defence, Mr WK Yung averred that Mr Tang had breached Clause 4.2(A) and repudiated the ASP, by failing to actively engage in the operations of the businesses of the Subject Companies and/or failing to procure and ensure the normal daily operations of the businesses of the Subject Companies. Then in paragraph 9 of the Amended Defence, Mr WK Yung averred that he accepted Mr Tang’s repudiation and by Hugill’s Termination Letter, he terminated the ASP.

28.  I find this plea unsustainable.

29.  Firstly, the Termination Letter did not say what the plea says. In the letter, Mr WK Yung did not allege that Mr Tang had breached the ASP at all. As mentioned in paragraphs 20 and 26 above, it was Mr WK Yung who notified Mr Tang that he was unable to complete the transaction. His solicitors confirmed in writing that it was because of his inability to pay the outstanding price that he terminated the ASP. And it was the poor business, which was caused by the social incident and the pandemic in the last few years, that led to his inability to pay[5]. As said above, obviously, inability to complete was no lawful reason for him not completing. The Termination Letter was Mr WK Yung’s unilateral declaration that he would not honour his obligations under the ASP. In other words, Hugill’s Termination Letter squarely evinced Mr WK Yung’s intention not to be bound by the ASP. In contrast to his plea, Mr WK Yung did not lay the blame on Mr Tang in the letter. The reason for Mr WK Yung’s unilateral termination, as recorded in Hugill’s Termination Letter, has nothing to do with Mr Tang.

30.  Secondly, and in any event, as to be explained in Section F below, in my judgment, Mr Tang did not breach Clause 4.2(A).

F.  No breach of Clause 4.2(A)

31.  To recapitulate, Clause 4.2(A) reads: “在等待成交之際: (A)雙方應促使該等公司經營其日常業務猶如一般正營運中的事業，並會在經營上徵詢對方的意見”. (“Prior to the completion of the transaction, the seller and the buyer shall prompt or cause[6] the normal daily operations of the businesses of the Subject Companies and that the seller and buyer would consult with each other on the operations of the businesses of the Subject Companies ”).

32.  Mr WK Yung’s allegation of Mr Tang’s breach of Clause 4.2(A) is pleaded in paragraph 8(1) to (4) of his Amended Defence:

“(1) The Plaintiff has failed to attend office at Unit 1004B, East Ocean Centre, 98 Granville Road, Tsim Sha Tsui East, Kowloon, Hong Kong of the Companies (the "Companies Office") since March 2020.

(2) The Plaintiff’s working hours reduced dramatically. He effectively stopped meeting up with new clients and customers, and effectively stopped marketing the products of the Companies.

(3) During the Plaintiff’s absence from the Companies Office. It was very difficult for the Defendant to contact him. Apart from approving cheques occasionally, he has usually been contactable only through his wife. Ms. Vicky Tang and the Plaintiff would only reply selectively to any issues raised by the Defendant pursuant to the operations of the businesses of the Companies.

(4) The Plaintiff refused to sign on the loan documents which were necessary for the Companies to obtain loan from banks to ensure the normal business operations of the Companies.”

33.  None of these complaints infringes the express term of Clause 4.2(A):

(1)  In substance, Mr WK Yung is complaining that Mr Tang did not do his job, in dereliction of his duties. However, nothing in Clause 4.2(A) prescribed, specifically or generally, what those duties are and what the works or the kinds of works are that Mr Tang, and indeed Mr WK Yung (as the clause refers to “雙方”, i.e. “both parties”) should do for compliance.

(2)  The first part of Clause 4.2(A), namely “雙方應促使該等公司經營其日常業務猶如一般正營運中的事業”, is to require Mr Tang and Mr WK Yung to prompt the daily business of the Subject Companies to be operated like a normal ongoing business[7]. It is apposite for the Defendant’s counsel to describe the clause as “Normal Operations Clause” and the requirement of this clause as “operating as usual”[8].

(3)  The clause did not prohibit Mr Tang and Mr WK Yung to delegate works to their subordinates. For instance, I see no complaint lodged against Mr WK Yung for delegating his works to Ms Patricia Yung, his daughter. Likewise, I see no complaint against Mr Tang for delegation of his works to Ms Carrie Tang, his daughter.

(4)  The clause did not require Mr Tang or Mr WK Yung to attend the office of the Subject Companies in person. It also did not prescribe their working hours or minimum working hours.

(5)  Mr WK Yung accused Mr Tang that he had not met new clients. However, there is nothing in the clause which requires that he has to meet new clients personally.

(6)  Mr WK Yung also accused Mr Tang that he stopped marketing the products of the Subject Companies “as he did before”[9]. However, the clause did not express a requirement for him to do the marketing himself or do the same “as he did before”[10]. The evidence shows there were salespersons in the Subject Companies. Nothing in the clause requires Mr Tang to do the marketing works himself.

(7)  In the context of Clause 4.2(A) and the ASP, the business of the Subject Companies has been run for many years. Both parties agree that the business grew over the years and became very successful. As such, its operation should have already been on track (and there is no evidence adduced by either party to say it was not). If there was anything which required Mr Tang or Mr WK Yung to do personally, the clause should specify what it was. However, the only specific requirement is for them to consult each other[11]. The absence of imposition of heavy work duties on Mr Tang personally in Clause 4.2(A) also tallies with the fact, as mentioned in paragraph 13 above, that Mr Tang sold his shares to Mr WK Yung because he intended to retire from the company business (“賣方亦打算退出公司業務”) [12].

(8)  Mr WK Yung also complains that it is very difficult to contact Mr Tang. Again, this is not something required for in Clause 4.2(A).

(9)  As to the complaint of Mr Tang’s refusal to sign on the loan documents which were necessary for the Subject Companies to obtain loan from banks to ensure the normal business operations of the Subject Companies, this appears to be not the case factually. There was no evidence produced by Mr WK Yung which show that there was such a loan document which Mr Tang refused to sign. Mr WK Yung did not identify or name which documents they were and in respect of which loan, not to mention how and in what way the normal business operations of the Subject Companies were affected by Mr Tang’s refusal to sign. As submitted by the Plaintiff’s counsel, all that Ms Patricia Yung, who assisted in the management of the businesses of the group and gave evidence for the Defendant, maintained during cross-examination was a complaint of delay only. Hence, this complaint does not hold water. In any event, even assuming that the complaint is on Mr Tang’s delay in signing, it is still not the Defendant’s case that as a result of such delay, loans could not be obtained, or the business was materially adversely affected.

34.  For the above reasons, Mr WK Yung’s complaint of Mr Tang’s breach of Clause 4.2(A) is a non-starter.

G.  Clause 4.2(A) – an innominate term

35.  If I am held to be wrong, that indeed Mr Tang was in dereliction of his duties (that he should have done as what Mr WK Yung pleaded but he did not) and breached Clause 4.2(A), I would hold, as the Plaintiff’s counsel submitted, that Clause 4.2(A) is not a condition (strictly so called), the breach of which entitled Mr WK Yung to terminate the ASP. In my view, it is an innominate term of the ASP and Mr Tang’s breach of it does not deprive Mr WK Yung of substantially the whole benefit of the contract.

36.  Regarding the ascertainment of whether a clause is a condition or an innominate term, I refer to the succinct summary of Gross LJ in the English Court of Appeal in Ark Shipping v Silverburn Shipping [2019] 2 CLC 57 at §46:

“… that: (i) it is a matter of the intention of the parties on the true construction of the contract; (ii) where, upon the true construction of the contract, the parties have not made the term a condition, it will be innominate if a breach may result in trivial, minor or very grave consequences; (iii) unless it is clear that a term is intended to be a condition or (only) a warranty, it will be innominate.”

This approach is followed recently by Deputy High Court Judge Man SC in Pui Ying Middle School of Hong Kong v Hong Kong Council of the Church of Christ in China [2021] HKCFI 692 at §255.

37.  The “innominate term” is so described simply because there are contractual terms where they can neither be classified as “condition” (the breach of which amounts to repudiation of the contract) nor as “warranty” (the breach of which does not entitle the non-defaulting party to treat the contract as repudiated). This nature was very well explained by Diplock L.J. (As Lord Diplock then was) long before it was so named, in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 70:

“There are, however, many contractual undertakings of a more complex character which cannot be categorised as being “conditions” or “warranties”, if the late nineteenth-century meaning adopted in the Sale of Goods Act, 1893, and used by Bowen L.J. in Bentsen v. Taylor, Sons & Co.⁴⁶ be given to those terms. Of such undertakings all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend upon the nature of the event to which the breach gives rise and do not follow automatically from a prior classification of the undertaking as a “condition” or a “warranty”. For instance, to take Bramwell B.'s example in Jackson v. Union Marine Insurance Co. Ltd.⁴⁷ itself, breach of an undertaking by a shipowner to sail with all possible dispatch to a named port does not necessarily relieve the charterer of further performance of his obligation under the charter party, but if the breach is so prolonged that the contemplated voyage is frustrated it does have this effect.”

38.  So, in determining the legal consequence of an innominate term, the Court should look at the consequence of the breach and see whether it has taken away the non-defaulting party substantially the whole benefit which he should obtain from the contract.

39.  In the present case, I find Clause 4.2(A) neither a condition nor a warranty. The first observation is Clause 4.2(A) was not expressed to be a condition or a warranty in the ASP. Whilst this is not decisive, this is a relevant consideration and indeed the starting point of the analysis. Had the parties wished to make the position plain, they could have used the language of condition (or warranty, as the case may be). They have not done so. Further, it would not have been the parties’ original intention at the time of the ASP to treat every breach of Clause 4.2(A) of one party as repudiation which entitles the other party to terminate the ASP[13]. Taking one of Mr WK Yung’s complaints in paragraph 8(3) of the Amended Defence (see paragraph 32 above) as illustration, assuming it is correct to say that Mr Tang breached Clause 4.2(A) because it was very difficult to contact him, in my view, such a breach would not have deprived Mr WK Yung of substantially the whole benefit which it was intended that he should obtain from the ASP[14]. Still further, assuming that there was an objective bystander, if we ask him to take one step backward and observe what happened, and put to him the question whether the parties intended Clause 4.2(A) to be a condition or a warranty, in my view, following Ark Shipping referred to in paragraph 36 above, the answer of the objective bystander would be he could not tell because a breach of Clause 4.2(A) might result in trivial, minor or very grave consequences. Since it cannot be definite that Clause 4.2(A) was intended to be a condition or only a warranty, it will be innominate.

40.  Then the next step will be to consider whether the alleged breaches of Mr Tang, assuming established, entitled Mr WK Yung to treat those breaches as repudiation and terminate the ASP.

41.  As explained in the passage in Hongkong Fir Shipping referred to in paragraph 37 above, the exercise is to examine the extent of the breaches. The test is recapitulated in Pui Ying Middle School of Hong Kong at §257:

“Whether a breach of an innominate term amounts to repudiation turns on the seriousness of the consequences of the breach. The test is whether the innocent party is being deprived of substantially the whole benefit of the contract: Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 70 (Diplock LJ); or whether the breach goes “to the root of the contract” at 63-64 (Sellers LJ).”

42.  At the trial, I can see no evidence adduced by Mr WK Yung showing what substantial benefit that he should have obtained from the purchase of the Subject Shares has been deprived of by reason of the alleged breaches. Coupled with the reasons explained in paragraph 33(3) to (9) above, even assuming that those matters pleaded in paragraph 8(1) to (4) of the Amended Defence did amount to breach of Clause 4.2(A), I find it to be unlikely that the alleged breaches have deprived him of substantially the whole benefit of the ASP.

43.  Therefore, if I am held to be wrong, that the complaints laid in paragraph 8(1) to (4) of the Amended Defence are indeed breaches of Clause 4.2(A), nonetheless it would not entitle Mr WK Yung to treat Mr Tang’s breach as repudiation and terminate the ASP.

44.  For the above reasons, Mr WK Yung’s attempt to terminate the ASP by Hugill’s Termination Letter on 22 October 2020 failed. To the contrary, the letter evinces his intention not to perform the ASP and complete the purchase. Apart from the non-payment of the price due, it also constituted his repudiation of the ASP.

45.  It follows, in my judgment, that unless and until Mr Tang accepts Mr WK Yung’s repudiation (by Mr WK Yung’s wrongful failure to pay and by his unlawful termination of the ASP by issuance of Hugill’s Termination Letter) and terminate the ASP (or in other words, for so long as the ASP is subsisting), Mr WK Yung’s obligation to pay the balance of the purchase price of the Subject Share remains continuing. It is a continual breach. In my view, this formed the major context of the events that followed.

H.  Mr Tang’s 2 Winding Up Petitions

46.  On 29 October 2020, Mr Tang commenced the present proceedings against Mr WK Yung for the remaining unpaid purchase price of his shares in the Subject Companies and specific performance of the ASP.

47.  Negotiations between the parties ensued, but they did not bear fruit.

48.  On 28 April 2021, Mr Tang, through his former solicitors ATT, lodged 2 winding up petitions (collectively “the Petitions”) against CY Holding and CY Plastics respectively (under HCCW 167/2021 and HCCW 168/2021, collectively “the Winding Up Proceedings”). The contents of the 2 Petitions are basically identical. I shall briefly describe below the contents of the Petitions, since they constitutes the context upon which Mr WK Yung went for a second bite of the cherry and terminated the ASP for the second time.

49.  Section 177(1)(f) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance[15] was cited in the Petitions as the basis for winding up of two of the Subject Companies by the Court.

50.  In summary, the Petitions recited (1) the basic information of the company, (2) the background leading to the ASP, (3) Mr WK Yung’s failure to comply with the ASP to pay, (4) Mr Tang’s commencement of the present proceedings and (5) Mr WK Yung’s defence in the present proceedings (i.e. the Clause 4.2(A) defence discussed above). Then, with nothing more, the Petitions conclude:

“In the circumstances, it is just and equitable that the Company should be wound up.”

51.  In other words, all that Mr Tang relied on in asking the Court to wind up CY Holding and CY Plastics on just and equitable ground was the unresolved dispute in the present proceedings. No other issues were raised.

52.  It is incumbent for me to express the view that I have grave doubt as to whether, as a matter of law, the Court would order to wind up a company on just and equitable ground solely (and no other) on the basis that there is an ongoing litigation concerning an unperformed share purchase agreement between its shareholders (who are also directors).

53.  Therefore, it is also incumbent for me to express the view that the Petitions have no real prospect of success. It is apparently obvious that given the contents of the Petitions, the prospect of CY Holding and CY Plastics being wound up was distantly remote.

I.  Mr WK Yung’s Second Termination

54.  Whilst Mr WK Yung was still in a state of continuous breach because of his continual failure to pay the balance of the purchase, seemingly he saw the Petitions, added with some lately alleged Mr Tang’s dilatory incidents, as another opportunity to get away from the ASP. On 9 July 2021, Mr WK Yung issued another letter from Hugill (“Hugill’s 2^nd Termination Letter”), basing on a newly formulated implied term and again Clause 4.2(A).

55.  Mr WK Yung’s case in this respect can be found in paragraphs 11 and 12 of the Amended Defence:

“11. Without prejudice to the fact that the Agreement was already terminated by the Defendant on 22 October 2020, it is averred that the Plaintiff subsequently committed further serious and repudiatory breaches of the Agreement:

(1) In further breach of Clause 4.2(A):

i. There was unreasonably delay in the Plaintiff approving the audit documents of the Companies.

ii. The Plaintiff had unreasonably delayed the approval of certain written resolutions regarding the conversion of CY Mauritius from a Category 2 company into an Authorised Company, which was necessitated by the legislative changes in the Republic of Mauritius. Such written resolutions are necessary for the continued operation of CY Mauritius. And in turn its substantive factory in Shenzhen, PRC.

iii. The Plaintiff filed winding up petitions in Hong Kong on 28 April 2021 to seek to wind up CY Plastics and CY Holdings, culminated in winding up proceedings HCCW 167/2021 (for CY Holdings) and HCCW 168/2021 (for CY Plastics) (collectively, the “Winding Up Proceedings”). As a result, the business operations of CY Holdings and CY Plastics have been seriously disrupted. The bank accounts of those companies have been frozen. This necessitated validation applications to be made by the Defendant to the Companies Court on 21 May 2021.

(2) In breach of the Implied Terms, the Plaintiff commenced the Winding Up Proceedings to seek to wind up CY Holdings and CY Plastics, which have the inevitable effect of:

i. Seriously disrupting the business and operations of the Companies (in particular CY Holdings and CY Plastics);

ii. Diminishing, negatively affecting and/or destroying the value and economic substance of the Subject Shares (in particular the shares in CY Holdings and CY Plastics); and

iii. Adversely affecting CY Holdings and CY Plastic’s ability to continue to operate as a going concern.

12. By reason of the matters pleaded in paragraph 11 above, the Plaintiff has further evinced an intention not to be bound by the Agreement. The Defendant accepted the Plaintiff's aforesaid further breaches of the Agreement, and by a letter from Messrs. Hugill & Ip dated 9 July 2021, the Defendant terminated the Agreement again (without prejudice to the fact that the same has already been terminated by the Defendant on 22 October 2020).”

56.  As to the Implied Terms alleged to have been breached by Mr Tang, Mr WK Yung’s formulation is pleaded in paragraph 5 of the Amended Defence:

“5. Further, the Defendant avers that the Agreement contains the following implied terms (out of the necessity to give the Agreement business efficacy and/or to represent the obvious intention of the parties) that:

(1) The Plaintiff will not do anything and will not procure or suffer anything to be done, which would have the effect of diminishing, negatively affecting and/or destroying the value and economic substance of the Subject Shares, which is the subject matter of the sale and purchase under the Agreement.

(2) The Plaintiff will not do anything and will not procure or suffer anything to be done, which would adversely affect the ability of the Companies (in particular CY Plastic and CY Holdings) to operate as a going concern.

(collectively, the “Implied Terms”)[16]”

57.  I shall first deal with the alleged breach of the alleged Implied Terms, then the alleged further breach of Clause 4.2(A) [17].

J.  The Alleged Implied Terms

58.  First, I shall deal with whether there is such implication as alleged by Mr WK Yung and if so, what are the contents of the terms.

59.  Mr WK Yung pleaded that the alleged Implied Terms are implied out of the necessity to give the Agreement business efficacy and/or to represent the obvious intention of the parties. There are no particulars pleaded in support of the implication. In the Defendant’s opening submissions[18], it is said since the Subject Shares are the very subject matter of the ASP, it goes without saying that Mr Tang cannot destroy the Subject Shares’ value pending completion, or venture to put an end to a state of affairs where the Subject Shares can be transferred to Mr WK Yung[19]. The Defendant’s closing submissions add nothing further.

60.  My first observation is the alleged Implied Terms go much wider than what the Defendant submitted and relied upon. As mentioned in the preceding paragraph, the purpose of the implication is to prevent destruction of the subject matter of the ASP, i.e. the Subject Shares, so that they could be transferred from Mr Tang to Mr WK Yung on completion. The scope of the Defendant’s suggested implication is much wider than the prevention of destruction. As can be seen from paragraph 5 of the Amended Defence referred to in paragraph 56 above, it covers not only destruction but doing anything which may diminish or negatively affecting the value and economic substance of the Subject Shares.

61.  Secondly, the scope of the alleged Implied Terms is not only wide but also unreasonable (see Footnote 19 above). The value diminished can be trivial or insignificant. The negative effect can be small. The cause of diminution can be faultless on the part of Mr Tang during the normal course of conducting business. The alleged Implied Terms as formulated by the Defendant are so wide that Mr Tang can be allegedly caught with a breach for doing something petty or blameless. I have grave doubt if this is what the parties would have intended. As such, in my view, such implication cannot be “goes without saying”.

62.  Thirdly, as discussed above, Clause 4.2(A) requires the parties to keep the normal daily operations of the businesses of the Subject Companies. The scope and nature of this clause, described by the Defendant’s counsel as the Normal Operations Clause or “operating as usual”, is the same as, similar to, or largely overlapped with the second part of the alleged Implied Terms, the essence of which is to prevent the operation of the Subject Companies as a going concern from being adversely affected. I therefore consider that this part of the alleged Implied Terms has been displaced by Clause 4.2(A) which is an express term of the ASP.

63.  Fourthly, the wording of the alleged Implied Terms in the Amended Defence is not clearly formulated. Words like “procure or suffer anything to be done, which would have the effect of …” are not capable of clear expression or delineation. The meaning of the phrase “economic substance” cannot be defined with sufficient precision. For clarity, I prefer the straightforward formulation in the Defendant’s written submissions (see Footnote 16 above).

64.  Lastly, the ASP is all about Mr Tang selling the Subject Shares to Mr WK Yung. I accept the Defendant’s counsel’s submissions that it goes without saying that Mr Tang should not do anything to destroy the value of the Subject Shares which he is going to sell to Mr WK Yung.

65.  For the above reasons, I am prepared to hold that there is an implied term of the ASP, but its contents are limited to the extent that Mr Tang will not do anything to destroy the value of the Subject Shares (“No Destruction Implied Term”).

66.  Consequently, I reject the implication of the other parts of the Implied Terms alleged by the Defendant, namely, that the Plaintiff will not do anything to diminish the value of the Subject Shares; that the Plaintiff will not do anything to adversely affect the ability of the Subject Companies to operate as a going concern. With this conclusion, there is no need to look into the question of whether Mr Tang has breached these two parts of the alleged Implied Terms (which I find not in existence).

67.  I then go on to decide whether Mr Tang has breached the No Destruction Implied Term.

K.  No breach of No Destruction Implied Term

68.  In my judgment, there is no such breach.

69.  In so far as the No Destruction Implied Term is concerned, the Defendant’s case is:

(1)  According to paragraph 11(2)(ii) of the Amended Defence, which is recited in paragraph 55 above, the alleged breach of the No Destruction Implied Term was based on the Plaintiff’s commencement of the Winding Up Proceedings “to seek to wind up CY Holding and CY Plastics, which have the inevitable effect of … destroying the value of the Subject Shares (in particular the shares in CY Holding and CY Plastics)”.

(2)  The Petitions have the effect of destroying the value of the Subject Shares, and of putting an end to a state of affairs where the Subject Shares can be validly transferred to the Defendant[20].

70.  Destruction is permanent. The starting point is commencement of the Winding Up proceedings would not per se destroy the Subject Shares. It is only when an order for winding up is made then the Subject Shares (together with the value that they carry) can be destroyed.

71.  The Defendant’s counsel submitted[21] that pursuant to section 182 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap. 32[22], in a winding up by the Court, a transfer of the shares made after commencement of the winding up will be void; therefore, the Plaintiff created a situation where he could no longer validly transfer those parts of the Subject Shares (which were caught under the Winding Up Proceedings) to the Defendant.

72.  It is correct for the Defendant’s counsel to say that after Mr Tang commenced the Winding Up Proceedings, he could not transfer his shares in CY Holding and CY Plastics to the Mr WK Yung. But this inability is not necessarily permanent. It depends on whether, at the end after the trial of the Winding Up Proceedings, the Petitions succeed or not, or in other words, whether winding up order would be granted against the two companies. Other than the Petitions being dismissed, if they were withdrawn, Mr Tang’s ability to transfer the shares to Mr WK Yung could also be restored.

73.  Moreover, the submission of the Defendant’s counsel has ignored the important fact that at the time when Mr Tang issued the Petitions on 28 April 2021, his obligation to transfer the Subject Shares to Mr WK Yung has not yet arisen. Clause 3.3 expressly stated that it is not necessary for Mr Tang to transfer the Subject Shares to Mr WK Yung before he received the outstanding purchase price, the related interest and the legal costs in relation to his application to the court for judgment of the outstanding purchase price (“為免歧義，雙方確認，在賣方仍未全數收到上述的作價、相關利息及相關的訟費前，賣方並不須要將出售股份轉名予買方”)[23]. It is incontrovertible that at the time when the Petitions were issued, Mr WK Yung has not yet paid Mr Tang the outstanding purchase price of HK$990,000,000. As such, Mr Tang has not yet been obliged to transfer the Subject Shares to Mr WK Yung.

74.  Therefore, Mr Tang’s inability to transfer after the commencement of the Winding Up Proceedings does not assist Mr WK Yung’s case[24].

75.  The Defendant’s counsel also relied on the remark of Hartmann J (as His Lordship then was) in Re Essentially Yours (HK) Ltd, unreported, HCCW 378/2000, 29 December 2000 at the first complete paragraph of page 12 of the judgment:

“… if this petition for winding up is successful, the shares which EYI will then be forced to acquire will be worthless. If the Company is wound up, the subject matter of Global Faith's action against EYI will be destroyed before that action comes to trial. The implications for both Global Faith and EYI will be profound.” (emphasis added by the Defendant’s counsel)

76.  This reliance does not assist the Defendant either. As is clear from the beginning of the above cited passage, the share will only be worthless and destroyed “if this petition for winding up is successful”. This is in line with the view expressed in paragraph 70 above: that commencement of the Winding Up proceedings would not destroy the shares of the two companies; and that it is only when an order for winding up is made that those shares (together with the value that they carry) can be destroyed.

77.  For completeness, I should mention that on 8 September 2021, with leave of the Court, the Plaintiff withdrew the Petitions and discontinued the Winding Up Proceedings. Throughout the period between the commencement and the discontinuance of the Winding Up Proceedings, Mr WK Yung did not pay or did not ever indicate[25] that he intended to pay the outstanding purchase price. As such, Mr Tang’s obligation to transfer the Subject Shares to him did not arise.

78.  For the above reasons, I conclude that Mr Tang’s commencement of the Winding Up Proceedings by issuance of the Petitions does not amount to a breach of the No Destruction Implied Term.

79.  However, I do consider that Mr Tang’s act of commencing the Winding Up Proceedings amounted to a breach of Clause 4.2(A), although such breach did not constitute repudiation. This finding will be discussed in the following section.

L.  Mr Tang’s Breach of Clause 4.2(A) by Lodging the Petitions and its Consequence

80.  As explained in paragraph 33, particularly 33(1), above, the requirement of Mr Tang and Mr WK Yung under, Clause 4.2(A), particularly its first part (i.e. “雙方應促使該等公司經營其日常業務猶如一般正營運中的事業”), is to keep the normal business operation of the Subject Companies.

81.  It must be correct that lodging a winding up petition against a company is a serious threat against a company. As the Defendant’s counsel described, the existence of a winding up petition, a fact which is known to the public, could be disturbing and would cause serious concern to the Subject Companies in running their business. As Yuen J (as Her Ladyship then was) described in Wong Tin Chee & ors v Wong To Yick & anor [2001] 2 HKLRD 683 at page 688, the first complete paragraph, the threat of a pending winding-up order hanging over the head of a company is like the sword of Damocles. Mr Tang’s filing of the Petitions put the two companies into an extremely precarious situation.

82.  As such, it would be difficult to say the normal business operation of the Subject Companies would not be affected by the Petitions. A validation order has to be applied for, so as to continue normal business transactions like selling products or making payments. I would not describe this situation of the two companies as “operating as normal”.

83.  In the above circumstance, therefore, I find that Mr Tang, by lodging the Petitions, has breached Clause 4.2(A).

84.  However, I would not find that the breach constituted a repudiation and entitled Mr WK Yung to terminate the ASP, for the reasons that (1) as discussed in Section G above, Clause 4.2(A) is an innominate term, and (2) the consequence of Mr Tang’s breach did not deprive Mr WK Yung substantially the whole benefit which he should obtain from the ASP.

85.  Looking at the consequence of the breach, the Defendant’s counsel submitted[26] the Petitions had the following deleterious effects on the Subject Companies:

(1)  the bank accounts of CY Holding and CY Plastics were frozen;

(2)  the cancellation of 9 supply orders by a major supplier of raw materials, Mitsubishi Corp (HKG) Limited (“Mitsubishi”);

(3)  general panic among the Joint Companies' customers, e.g. email from one Mr Alvin Tan;

(4)  poor staff morale of the Subject Companies; and

(5)  widespread impact on the goodwill of the Subject Companies, with doubt cast on their stability and reliability.

86.  I agree with the Plaintiff’s counsel that the consequence of the Petitions did not deprive the Defendant substantially the whole of the benefits that he would have obtained from the ASP:

(1)  While Mr WK Yung mentioned in his witness statement[27] that there was freezing of the bank account(s) of CY Holding and CY Plastics after the lodging of the Petitions, on damage allegedly done to their business, the only evidence that he has provided to the Court was rejections of 3 telegraphic transfers in the respect amounts of USD33,094.88, USD35,500.87 and USD30,852.60[28], totalling less than USD100,000. With only this piece of evidence, certainly inconvenience was caused, as rightfully admitted by the Plaintiff’s counsel, but I cannot go anything further than this description. There was no evidence of other bigger issue(s) arising[29]. There was no evidence showing that the two companies could not continue with their business because of this problem. This was not to mention that it might well be within a reasonable man’s expectation that a validation order, which would ensure smooth payment in and out of the companies’ bank account(s), would likely be obtained[30] . The resolution of the problem was well within reasonable contemplation.

(2)  There was some evidence suggesting that some employer’s contribution to the mandatory provident fund could not be made by the Subject Companies because of the freezing of the bank account(s). There was no evidence before me showing how serious or extensive it was. In my view, same as sub-paragraph (1) above, it was more of an inconvenience than a grave damage which deprived the Defendant substantially of the whole benefit that he could have obtained from completing the ASP. Again, once validation orders, which was reasonably expected to be granted, were granted, the problem would be resolved.

(3)  As to the cancellation of 9 supply orders by Mitsubishi, this is the only specific evidence showing that transactions were cancelled after the lodging of the Petitions. However, it is more notable that no purchase orders from the group’s customers were shown to have been cancelled as a result of the Petitions.

(4)  I also accept the Plaintiff’s counsel’s submissions[31], that:

(a)  The meeting minutes with Mitsubishi showed that Mitsubishi as supplier understood that progress was made by the two companies subject to the Petitions and they “will resume normal operating”.

(b)  Ms Patricia Yung agreed during cross-examination that most of the statements she made to Mitsubishi as recorded in the meeting minutes represented the truth[32], and not mere exaggerated good news.

(c)  There was no other cancellation of supply orders and purchase orders (i.e. end-user orders) by other suppliers and customers during the period.

(d)  validation orders were being applied for and once granted, daily administration order would be able to be maintained.

(5)  The Defendant did not say that manufacturing could not be continued to meet customers’ orders after the said cancellation of 9 supply orders from Mitsubishi.

(6)  Therefore, in my judgment, the Mitsubishi problem was in substance an inconvenience caused by the Petitions but the adverse effect of which was insignificant.

(7)  As to the alleged general panic among the Joint Companies’ customers, the Defendant could only identify one incident, which was an email exchange from a customer’s representative Mr Alvin Tan. There is nothing in these emails. At the end of the email exchange between Mr Alvin Tan and Ms Patricia Yung, Mr Tan was apparently satisfied with Ms Patricia Yung’s explanation and maintained trust in the CY Group. The Defendant did not show other records of the customers’ complaints or expressed worries about the Petitions. There was evidence as to the extent of how the business was adversely affected.

(8)  The same deficiency appears with the Defendant’s assertions of poor staff morale and widespread impact on the goodwill of the Subject Companies. Apart from the Defendant’s and Ms Patricia Yung’s bare assertion, there is no evidence adduced in support. There is also no evidence adduced as to how these problems have affected the business of the Subject Companies and particularly the extent of the adverse effect on the business.

(9)  It is also remarkable that Hugill’s 2^nd Termination Letter was issued on 9 July 2021, more than 1 month after the validation orders granted on 4 June 2021. With the validation orders, the daily administration should have been, according to what was said in Ms Patricia Yung’s meeting with Mitsubishi (see Footnote 32 above), back to normal.

(10)  There is also no evidence on how and to what extent the value of the Subject Shares has been dropped by reason of Mr Tang’s alleged breaches.

87.  As submitted by the Plaintiff’s counsel, Ms Patricia Yung alleged during cross-examination that the impacts of the Petitions were indeed substantial because there were other complaints. However, she did not name who those customers or suppliers were and did not produce any documentary evidence to prove the existence of these complaints. Moreover, she agreed that any downturn in performance of the Subject Companies[33] might be due to the poor economic climate caused by the pandemic.

88.  For the above reasons, the only conclusion that this Court can reach is that the Plaintiff’s breach of Clause 4.2(A) by his lodging of the Petitions does not carry the consequence of depriving the Defendant of substantially the whole benefit of the ASP that he should obtain from it, i.e. the Subject Shares.

89.  For completeness, I should mention that as referred to in paragraph 55 above, the Defendant also pleaded that there was unreasonably delay in the Plaintiff approving the audit documents of the Companies, and that he had also unreasonably delayed the approval of certain written resolutions regarding the conversion of CY Mauritius from a Category 2 company into an Authorised Company, which was necessitated by the legislative changes in the Republic of Mauritius. These 2 complaints are in the same nature of those complaints made by the Defendant in respect of his first unlawful termination, as discussed in sections E & F above. There is no dispute that Mr Tang did sign the requisite documentation, albeit allegedly belatedly (which, in my view, is necessary for me to make a finding). For the same reasons as explained in section F above, there is no breach of Clause 4.2(A) on Mr Tang’s part in respect of the matters complained in paragraphs 11 and 12 of the Amended Defence. If I am held to be wrong, following the analysis in section G above, I do not consider the consequence has any substantial or material adverse effect on the business of the Subject Shares such that Mr WK Yung would be substantially deprived of the whole benefit that he should obtain from the ASP had he proceeded to pay and complete it.

M.  Alleged Renunciation by the 15 April 2021 Email

90.  The Defendant relied heavily[34] on an email issued by Ms Carrie Tang to Ms Patricia Yung on 15 April 2021 (“the 15.4.2021 Email”) to say that this email evinced Mr Tang’s clear intention not to be bound by the terms of the ASP.

91.  In essence, the Defendant said:

“By 9 July 2021 (i.e. the date of termination), (i) Carrie had already communicated P's “ONLY intention” to “cash out his shares and retire”, and the serious threat of winding up the CY Group which had the effect of disabling P from selling his shares to D, by the 15 April 2021 Email; and (ii) the Petitions had also been present.” [35]

“The parties’ negotiation for a supplemental agreement was not fruitful, and P / Carrie grew increasingly frustrated as a result. She described the situation as “hitting a wall” (“碰壁”).

The frustration culminated in the 15 April 2021 Email, in which Carrie's message was loud and clear – the terms “cash out” and “wind up” appeared multiple times in the said Email.” [36]

92.  I disagree.

93.  As is trite for determining whether a statement by a party evinces an intention not to perform the contract, such statement must be objectively clear and absolute, see Philipp Doodt v Huang Shihu [2020] HKCFI 241 at §43 per Deputy High Court Judge Blair, citing Ipson Renovation Ltd v IO of Connie Towers, unreported, HCCT 26/2014, 16 December 2016 at §45:

“The test for repudiatory breach is not in dispute. As summarised by Mimmie Chan J in Ipson Renovation Ltd v IO of Connie Towers (unrep., HCCT 26/2014, 16 December 2016) at §45, for there to be a repudiation or renunciation of a contract, there must be a clear and absolute refusal to perform it in some essential respect. Further, any purported acceptance of repudiation must be unequivocal. The test of whether there is a renunciation is whether the actions of the party in default are such as to lead a reasonable person to conclude that he no longer intends to be bound by its provisions. The party in default may intend to fulfil the contract but may be determined to do so only in a manner substantially inconsistent with his obligations, or may refuse to perform the contract unless the other party complies with certain conditions not required by its terms. In such a case, the authorities show that the contract has been sufficiently renounced. The critical question is whether, by its words or conduct, a party has evinced an intention not to perform the contract, which a reasonable person in the position of the other party would regard as clear and absolute. See further Chitty on Contracts (33^rd ed) §24-018.”

94.  In addition, in my view, in understanding what a document means, particularly in the present case an email written by someone who is not a lawyer, one must consider the context of that email and should not look at the face of isolated sentences only.

95.  As the Defendant’s counsel correctly mentioned (see paragraph 91 above), the 15.4.2021 Email was written by Ms Carrie Tang, expressly on Mr Tang’s behalf, in the context of the futile, unfruitful negotiation with Mr WK Yung for a supplemental agreement of the ASP. In addition, it is very important to note, and the Defendant’s counsel did not mention, that, as mentioned in the email itself[37], the 15.4.2021 Email was also written against the backcloth of Mr WK Yung’s fundamental breach of his own obligation, i.e. his failure to pay under the ASP. It follows that at that particular juncture, the obligation of Mr Tang to transfer the Subject Shares to Mr WK Yung has not arisen. The other relevant context that the Court should take into account in understanding the meaning of the 15.4.2021 Email is, as recited in Recital (B) of the ASP and mentioned in paragraph 13 above, the purpose of Mr Tang’s sale of all his shares in the Subject Companies is to retire.

96.  In my judgment, it is reasonably clear to a reasonable man with the knowledge of the above context that what was said in the 15.4.2021 Email was essentially:

(1)  All that Mr Tang intended, as was made known to Mr WK Yung in the last few years, was to retire and cash out his shares from the Subject Companies.

(2)  The way that Mr Tang intended to cash out his shares from the Subject Companies was to sell his shares in the Subject Companies to Mr WY Yung by the ASP, i.e. the “contract”. But Mr Yung has breached the ASP.

(3)  Mr Tang then laid his hope on the negotiation with Mr WK Yung of a supplemental agreement of the ASP. But Mr Yung has now also backed out of the negotiation.

(4)  Mr Tang did not intend to continue to run the business of the Subject Companies with Mr WK Yung as if Mr Yung had not breached the ASP.

(5)  Winding up the companies (including CY Mauritius) was Mr Tang’s last resort. But because of Mr WK Yung’s breach and refusal to sign a supplemental agreement, Mr Tang was left with no choice. So, he would not sign the document (“form”) in relation to CY Mauritius.

(6)  Mr WK Yung was welcome to continue with the negotiation of a supplemental agreement, but he should do so quickly, because Mr Tang’s winding up papers would be finalised in a matter of “days”.

(7)  Mr Tang did not intend to make thing worse, but he had to protect his own interest, given it was crystal clear that it was Mr WK Yung who did not keep his promise under the ASP in the first place.

97.  As such, if the Court put to the reasonable man who has just read the 15.4.2021 Email with the knowledge of the above context, the rhetorical question that whether Mr Tang, by the 15.4.2021 Email, did mean that he would not complete the ASP and transfer the Subject Shares to Mr WK Yung even if Mr Yung now came back and told Mr Tang, “I now pay you” and did pay Mr Tang the balance of the purchase price in accordance with the ASP, in my view, the reasonable man’s answer will certainly be that Mr Tang will proceed with completion of the ASP and transfer the Subject Shares to Mr WK Yung.

98.  I therefore do not consider that by the 15.4.2024 Email, Mr Tang has evinced an intention not to perform the ASP by transferring the Subject Shares to Mr WK Yung if Mr Yung paid him the balance of the purchase price together with interests thereon and legal costs in accordance with the ASP.

99.  I should add that the reference to commencing winding up proceedings does not alter the above analysis and conclusion because, as I have held above, lodging the Petitions did not per se constitute repudiation of the ASP.

N.  Conclusion and Disposal of the Plaintiff’s claim

100.  For the above reasons, all the arguments raised by the Defendant in defence failed. Mr WK Yung breached the ASP by his failure to pay. Mr Tang succeeded in his claim. Mr Tang asks for payment of the balance of the purchase price, i.e. HK$990,000,000. This order can only be made in specific performance of the ASP. After Mr WK Yung complies with the order to pay, in accordance with the ASP, Mr Tang shall have to transfer the Subject Shares to Mr WK Yung.

101.  Mr WK Yung’s counterclaim for return of the first instalment of the purchase price of the Subject Shares, i.e. HK$10,000,000 is accordingly dismissed.

102.  I therefore order that judgment be entered for the Plaintiff against the Defendant in the following terms:

(1)  There be a decree of specific performance of the ASP.

(2)  In specific performance of the ASP, the Defendant shall pay to the Plaintiff the outstanding purchase price of HK$990,000,000, together with interest on the sum of HK$190,000,000 for the period from 16 August 2020 to 15 October 2020 at the rate of the prime rate offered by Fubon Bank (Hong Kong) Limited (“Fubon Bank”) and further interest on the sum of HK$990,000,000 for the period from 16 October 2020 until the date of full payment at the prime rate offered by Fubon Bank.

(3)  Thereafter the Plaintiff and the Defendant shall complete the sale and purchase of the Subject Shares in accordance with the terms of the ASP.

103.  Costs should follow the event. I make an order nisi (which shall become absolute after 14 days of this Judgment unless an application for variation is made) that the Defendant shall pay costs of this action, with certificate for two counsel, to the Plaintiff, the amount of which is to be taxed if not agreed.

104.  I express my gratefulness towards the parties’ counsel for their able assistance.