PEARLDELTA GROUP LTD v. HUGE WINNERS INTERNATIONAL LTD AND OTHERS

CACV 105/2010 AND CACV 106/2010

CACV 105/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 105 OF 2010

(ON APPEAL FROM HCA NO. 595 OF 2008)

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BETWEEN

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J U D G M E N T

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Hon Rogers VP:

1.  This was an appeal from a judgment, in two actions, of Saunders J dated 22 April 2010. In the first action judgment was given for the sum of $86,321,292.66 with interest calculated at $17,689,424.63 up until judgment with interest at judgment rate thereafter. In respect of the second action the judge made a declaration that the appointment of Mr Mo Yu Bin as a director of Huge Winners CNC (Shenzhen) Ltd was in breach of the Subscription and Investment Agreement dated 23 August 2005 (the “SIA”) and was void and of no effect and a further declaration that the resolutions purported to be passed by the Board of Directors of Huge Winners CNC (Shenzhen) Ltd at the meeting held on 11 April 2008 was in breach of the SIA and invalid.

2.  The plaintiff is an investment company, seemingly under the control of a Mr Shaw.  The first defendant is a BVI company and is the holding company of the group companies concerned with the manufacture of printed circuit boards and light-emitting diodes.  The second to sixth defendants in the first action are the shareholders in the first defendant.

3.  On 23 August 2005 the plaintiff entered the SIA with the first defendant. The purpose of the SIA was that the plaintiff would subscribe $20,000,000 for zero-coupon convertible bonds of HK$1 each to be issued by the first defendant.  In the letter of intent issued prior to the SIA, it was said that the bonds were to be convertible at any time within 3 years after their issue at a valuation representing 28% of the first defendant.  Clause 21.1 of the SIA records the fact that the defendants acknowledged that the plaintiff had entered into the SIA with a view to making a capital gain through the disposal of shares to be obtained by the conversion of bonds that were to be issued.  The capital gain was to be made either through a qualifying IPO or a trade sale.  The defendants agreed to use their best endeavours to implement a qualifying IPO or a trade sale within 36 months of the issue of the bonds.  The second to sixth defendants guaranteed the obligations of the first defendant.

4.  The SIA referred to a number of matters including corporate governance and, in particular, to the establishment of an audit committee.  The audit committee was to be comprised of at least the CEO of the first defendant and a director who had been designated by the plaintiff.  For all material purposes that director has been Mr Shaw.  Under clause 16.3 of the SIA:

“All material questions concerning auditing, the acceptance and recommendation for approval of audit reports to the Board, accounting policy matters, and internal financial and risk controls of the Group shall be dealt with and approved by the audit committee.”

5.  The terms of the bonds are important.  They were set out in Schedule 5 of the SIA.  Under the Bond Conditions, it is made clear, in a number of places, that the bonds could be converted or redeemed in whole or in part.  The SIA provided that the Bond Conditions were to have the same effect as if they were set out in the SIA itself.

6.  Clause 1 of the Bond Conditions sets out the interpretation which is to be given in respect of a number of the expressions used in the Bond Conditions.  For example the expression Conversion Right meant the right of the plaintiff, subject to the provisions of condition 6, to convert, during the relevant conversion period, any of the bonds which were held by it into the conversion number of ordinary shares.  Ordinary shares had a par value of US$1.  Conversion was to be at the Conversion Price which was HK$685.70 subject to adjustment from time to time in accordance with condition 7.

7.  The definition of Redemption Amount is important and was defined as follows:

“Redemption Amount

means, in relation to any Bonds as at any date of determination, an amount that would provide to the holder of such Bonds the higher of:

(i) the amount that provides an internal rate of return of 12% per annum based on the number of days elapsed from the Issue Date through the date on which such Bonds are actually redeemed as determined by the following formula:

[I x (1.120)^N/365] – D

where:

I = the Issue Amount of the Bonds;

N = the number of days from and including the Issue Date of the Bonds to but excluding the actual date of redemption of the Bonds; and

D = the aggregate amount (if any) paid to the holder pursuant to condition 5.2;

(ii) the amount determined by the following formula:

1.2 x V
S

where:

V = total assets less total liabilities (excluding the Bonds) of the Company and its subsidiaries on a consolidated basis, as reflected in the most recent Accounts; and

S = the total number of Ordinary Shares outstanding as if the Bonds had been converted into Ordinary Shares at the then current Conversion Price as provided in Conditions 6 and 7;

provided, that in no event will the Redemption Amount of any Bonds be less than the Issue Amount thereof.”

8.  Under clause 6.1 it is provided that:

“The Bonds held by each Bondholder may be converted in whole or in part into Ordinary Shares, at any time at the option of the Bondholder, by delivery of a Conversion Notice.”

9.  Clause 6.2 provided that the bonds should be converted into ordinary shares at the Conversion Price.  Clause 6.3 provided that the bondholder had to complete a conversion notice and deliver it together with the certificates in respect of the relevant bonds.  It also provided that the conversion notice once given could not be withdrawn.  Under clause 6.4 upon conversion the first defendant was required to allot and issue the relevant number of ordinary shares.  The Conversion Price was further referred to under clause 7.  Clause 7.2 provided that subject to the provisions of that Condition, the Conversion Price would from time to time be further adjusted in accordance with the provisions of that sub-clause.  For the purposes of this case it is subcondition (f) which is relevant:

“(f) If and whenever the NPAT for any Financial Period are less than the targets established by the Company and the Initial Bondholder, then the Conversion Price shall be adjusted as follows:

(i) If upon the determination of the NPAT for the financial year ending 31 December, 2005 (“FY05 NPAT”) the FY05 NPAT are less than RMB 20,000,000, then the Conversion Price shall be multiplied by a fraction (1) the numerator of which is equal to FY05 NPAT, and (2) the denominator of which is RMB 20,000,000. Such adjustment will be effective from the date on which the FY05 NPAT is certified in accordance with Condition 7.6 (7.4)

(ii) If upon determination of the NPAT for the financial year ending 31 December, 2006 (“FY06 NPAT”) the FY06 NPAT is less than RMB 40,000,000, then if (1) the ratio of FY06 NPAT divided by RMB40,000,000 is less than (2) the ratio of the FY05 NPAT divided by RMB 20,000,000, the Conversion Price shall be multiplied by the product of:

X x Y

where:

X = RMB 20,000,000

       FY05 NPAT

and

Y= FY06 NPAT

      RMB 40,000,000

Such adjustment will be effective from the date on which the FY06 NPAT is certified in accordance with condition 7.6 (7.4).”

10.  NPAT was defined in the interpretation clause as meaning:

“the net profit after tax (expressed in RMB) of the Company and its subsidiaries on a consolidated basis determined in accordance with AAS”

11.  AAS was defined to mean the applicable accounting standards and the definition was further elaborated.  Clause 7.4 provided:

“7.4 Any adjustment to the Conversion Price will be rounded upwards to the nearest HK$0.01, and subject as hereafter provided in this Condition 7, in no event shall any adjustment (otherwise than as provided in this Condition 7 or upon the consolidation of Ordinary Shares into shares of a larger par value) involve an increase in the Conversion Price. No adjustment to the Conversion Price shall be made unless it has been certified in accordance with this Condition 7 by the Auditor. No adjustment will be made to the Conversion Price in any case in which the amount by which the same would be reduced would be less than HK$0.01. and any adjustment which would otherwise then be required will be carried forwards and taken into account appropriately in any subsequent adjustment.”

12.  Clause 7.6 provided that:

“Notwithstanding the provisions of this Condition 7, in any circumstances where the Directors and the Bondholders consider that adjustments to the Conversion Price provided under the said provisions should not be made or should be calculated on a different basis or date or should take effect on a different date or that an adjustment to the Conversion Price should be made notwithstanding that no such adjustment is required under the said provisions, the Company and the Bondholders may appoint an Approved Bank to consider whether for any reason whatever the adjustment to be made (or the absence of such adjustment) or the adjustment to be made in accordance with the provisions of this Condition 7 is appropriate or inappropriate, as the case may be, and, if such Approved Bank shall consider the adjustment to be inappropriate, the adjustment shall be modified or nullified or an adjustment made instead of no adjustment in such manner as shall be considered by such Approved Bank to be in its opinion appropriate.”

13.  An Approved Bank was defined in the interpretation clause to mean:

“a reputable bank or merchant bank as may be selected by the Company and the Bondholders or, failing agreement, by the Chairman of the Hong Kong Bankers' Association (or any successor entity thereto) for the time being”

14.  Redemption was dealt with under clause 8.2.  If there was an event of default the bondholder was entitled to give notice to redeem all or a portion of his Bonds.  The redemption was to be at the Redemption Amount, which was to be calculated according to the provisions set out above.

15.  The SIA was executed on 23 August 2005 and on 31 August 2005 certificates of the convertible bonds were issued.  There was a draft report on the financial statements of the first defendant for the year ended 31 December 2005 which was prepared by one firm of accountants.  In view of what was considered to have been the unsatisfactory nature of that, another firm of accountants, RSM Nelson Wheeler, was engaged.  That firm produced a draft report on the financial statements of the first defendant for the years ending 31 December 2005 and 31 December 2006. That was in part based, or perhaps prepared in conjunction with, a valuation report prepared by Castiores Magi Asia Ltd.  Mr Deret Au, who was a director of that company, gave evidence on behalf the plaintiff at trial.  The only basis upon which he could have given evidence was as an expert witness, but there had been no directions for the calling of an expert witness at trial.

16.  The judge was satisfied that those responsible from the defendants had deliberately not attended an audit committee meeting in respect of those accounts and that that draft report of the financial statements for those years was never adopted as the company’s accounts.

17.  On 14 March 2008 the plaintiff served 2 notices under the SIA.  The first was a notice of conversion in which the plaintiff claimed to exercise the conversion rights in respect of 0.5% of the convertible bonds which it held.  The notice requested the issue of a certificate of 10 million ordinary shares on the basis that it was entitled to conversion at the rate of $0.01 per share.  The other notice was a notice to redeem $19,900,000 of the convertible bonds.  The amount claimed under that redemption was $86,755,068.  That was said to be based upon the financial statements prepared by RSM Nelson Wheeler and the Castiores Magi Asia Ltd valuation report.  Those demands were swiftly followed by claims against the second to sixth defendants under their guarantees.  On 10 April 2008 the writ in the first action was issued.  That was followed in the following month by the writ in the second action.

The trial

18.  At the trial a number of defences were raised which are no longer relevant.  Those included defences on the basis of misrepresentation, non est factum and unilateral mistake.  The judge dismissed those defences and in paragraph 243 of his judgment held that the plaintiff was entitled to judgment on its claim against all the defendants jointly and severally.  Basing himself on the calculation of the amounts said to have been due as at 1 December 2009 which had been put to him he went on to say at paragraph 243 of the judgment:

“As I understand his position he (Mr Carolan, the Counsel who appeared for the plaintiff at trial) seeks judgment in the sum of HK$86,321,292.66, or alternatively a declaration that Pearldelta is entitled to the conversion shares and an order to specific performance of the obligation to allot and issue the conversion number of Ordinary Shares.”

19.  The judgment entered in the first action was for the sum of HK$86,321,292.66 together with interest of HK$17,689,424.63.  The interest was to run at judgment rate on the total sum of HK$104,010,717.29.  In respect of the second action, which was issued on 9 May 2008, the plaintiff raised claims against the first and second defendants, a Dr Yang as well as against Huge Winners CNC System (Shenzhen) Ltd.  It claimed a declaration that Mr Mo Yu Bin had been appointed as a director in breach of the SIA and a declaration that resolutions passed by the board of directors at the meeting on 11 April 2008 were in breach of the SIA and consequential relief.  The issues in that action do not appear to have been uppermost during the course of the trial, other than the fact that an interlocutory injunction had been granted: see paragraphs 74 to 78 of the judgment.  The order made at the conclusion of the trial followed the relief which was claimed in the statement claim in that action.

20.  Following a further application the defendants have paid the plaintiff the sum of $41,783,117 as a condition of stay of the judgment pending the appeal to this court.

This appeal

21.  On this appeal the plaintiff has filed a respondents’ notice in which it claims a declaration that it is entitled to 10 million ordinary shares in satisfaction of the conversion of the convertible bonds of the value of HK$100,000.  The plaintiff also seeks that it should have its costs on a full indemnity basis, although that does not seem to have been the subject of a request to the judge below when judgment was given.

22.  The first, second and third defendants on this appeal claim that the plaintiff’s only entitlement is to redemption of the bonds.  It is the defendants’ contention that the appropriate sum has already been paid, namely the sum of $41,783,117.  I would mention, at this stage, that it is not entirely clear how that sum was calculated, but since the calculation of the sum is agreed on the basis of formula (i) under Redemption Amount in clause 1 of the Bond Conditions, I do not propose to consider that matter any further.

23.  It is not contested that the plaintiff would have been entitled to conversion of any quantity of the bonds at the rate of $685.70 per share.  However, as the plaintiff sought to be entitled to conversion at a rate other than that it had to rely upon the provisions in condition 7.

24.  The judge held that there was nothing in the evidence to indicate that it would not be proper to him to rely on the audit report that had been prepared by the second firm of accountants, RSM Nelson Wheeler.  He said that the defendants had elected not to put a contrary report to the court and went on to say that they put nothing to the auditors in cross-examination that would lead the judge to conclude that he could not accept the audit report as being accurate.

25.  In my view there was no necessity for the defendants to challenge the audit report because of the contents of that report itself.  Page 1 of the report commences with the following paragraph:

“Disagreement about accounting treatment

Included in the intangible assets is a technical know-how with cost of RMB9,315,000, which is assessed to be having indefinite life and no amortisation has been charged up to 31 December 2006. No evidence shows that the Group has assessed the intangible asset impairment by comparing its recoverable amount with its carrying amount annually in accordance with Hong Kong Accounting Standard 38 “Intangible Assets” (“HKAS 38”). We have not been provided with sufficient information to determine whether any impairment of the intangible asset should be made in the financial statements.”

26.  The following two pages are headed “Basis for disclaimer of opinion”.  There are four paragraphs under that which relate to separate aspects which in themselves would undermine the validity of the accounts.  On the next page the heading is:

“Disclaimer of opinion: disclaimer on view given by financial statements.

Because of the significance of the matters described in the basis for disclaimer of opinion paragraphs, we do not express an opinion on the financial statements as to whether they give a true and fair view of the state of the Group’s affairs as at 31 December 2005 and 2006 and of its results are cash flows for the years ended 31 December 2005 and 2006 in accordance with Hong Kong Financial Reporting Standards.”

27.  As already pointed out, clause 16.3 of the SIA provided that all material questions concerning auditing and the acceptance of recommendation for approval of the audit report to the board had to be dealt with and approved by the audit committee.  Again, as indicated above, the judge was satisfied that those responsible on behalf of the defendants had deliberately not attended an audit committee meeting in respect of those accounts and that the financial statements for the years 2005 and 2006 were never adopted.  Nevertheless the judge said that he considered that he could proceed on the basis of the draft report, because he did not consider that there had been any challenge to it.  In my view, the judge was not entitled to proceed upon the basis of the financial statements that have been put forward.  On the face of the document they could not be said to be accurate.  They were not in a state that the company directors could have adopted the accounts.  The document itself states that they are inaccurate.  Furthermore, the judge’s own findings about the misstatements in the accounts would themselves undermine the validity of those accounts.

28.  In the light of the absence of any audit report which had been approved by the audit committee and the clear dispute as to whether there should be any adjustment to the Conversion Price it was, it seems to me, open to the plaintiff to seek to have an Approved Bank appointed.  In that case the provisions of clause 7.6 of the Bond Conditions would apply and there would seem, at any rate on the face of the matter, no reason why the plaintiff could not have obtained an order to compel the submission to the Chairman of the Hong Kong Bankers’ Association for the appointment of an Approved Bank.

29.  For condition 7.2(f) to apply it was, of course, necessary for the net profit after tax of the first defendant and its subsidiaries for both the years 2005 and 2006 to have been determined in accordance with the applicable accounting standards.

30.  There is another and further point which, also, in my view, prevents the application of any adjustment under condition 7.  The financial statements produced by RSM Nelson Wheeler shows, on the fourth page, that the profit in the year 2005 was RMB8,178,212 and in the year 2006 there was a loss of RMB33,664,628.  In paragraph 166, the judge accepted that it was impossible to apply a negative value for the share price for the purpose of conversion. Indeed, if the judge was saying that it was impossible to apply the formula in condition 7.2(f)(ii) where a loss was made in the year 2006, I would respectfully agree.  In the formula, Y would be a negative figure and the product of X and Y would therefore be negative; the Conversion Price would thus have to be multiplied by a negative figure.  This is only compounded by the fact that a negative figure is conceptually very different from a positive figure.  It represents something which does not exist rather than something which does exist.  It is unnecessary, however, to delve deeper into number theory.  The definition of NPAT itself refers to the net profit after tax.  It does not refer to the net profit or loss after tax.

31.  In those circumstances it would appear clear that there can be no adjustment to the Conversion Price under the provisions of condition 7.2(f).  The judge appeared to obviate the difficulty of being unable to calculate an adjustment to the Conversion Price by resort to condition 7.4.  In my view condition 7.4 cannot be applied if there is not a fixed adjustment to the Conversion Price.

32.  Furthermore, the interpretation given by the judge to condition 7.4 was that it provided a minimum Conversion Price of HK$0.01.  Quite simply, as argued by Mr Yuen SC, who appeared on behalf of the first to third defendants in this court but not in the court below, the reference to the figure of $0.01 is a reference to the adjustment figure not to the Conversion Price.  Hence if it were possible for a multiplicand to be applied to the Conversion Price that was a negative figure, the resultant negative Conversion Price would simply be reduced by $0.01; but it is wrong to take the $0.01 as the minimum Conversion Price.  In that respect I am conscious of the fact that the matter was conceded in the court below but, in my view, it was wrongly conceded.

Redemption

33.  As already mentioned, Mr Au gave evidence as an expert witness although there had been no directions for expert evidence.  It would appear that in accepting the figure of $86,321,292.66 as the appropriate Redemption Amount for the bonds the judge had simply taken a figure which Mr Au had given.  The judgment does not appear to include an analysis of formula (ii) in the definition of the Redemption Amount.  The judge appears simply to have taken it that, in his own words, the plaintiff was entitled to redeem on the basis of the calculation of the notional increase in the capital value of the company, without considering how that should be calculated according to the provisions of formula (ii).

34.  There are places in the judgment where the term redemption has been used to mean conversion.  But in respect of convertible bonds there is a clear distinction between equity represented by shares that have been issued as a result of conversion of bonds and loan which is represented by the bonds.  Loans represented by the bonds can be converted into equity, but a share is a very different thing from a loan.  A share cannot be redeemed except in special circumstances which do not exist here.  The question of redemption is one of redeeming the loan represented by the bonds.  Granted that there may be different ways of calculating the Redemption Amount, but it is the bonds which are to be redeemed and not the equity.

35.  The major obstacle in accepting Mr Au’s calculation is that in one instance he has changed the formula by omitting an essential part and in the other he has added a material ingredient to the formula (ii) which was not there.

36.  The definition of Redemption Amount commences, as one might expect, with the words “…in relation to any Bonds..”, because it is the bonds which are being redeemed in whatever quantity the bondholder chooses.  The two formulae give the calculation of the amount that will be paid in respect of a bond or the bonds.

37.  Mr Au reaches his conclusion on the first occasion, i.e. in the report, by ignoring one part of the formula and, on the second occasion, in his witness statement, by multiplying the figure achieved by application of the formula in (ii) by a hypothetical number, namely the number of shares which would be obtained if the bonds that were being redeemed had been converted into shares.

38.  In paragraph (3) of his report dated 26 November 2007 Mr Au has a heading “Redemption Value” (not “Redemption Amount”).  The calculation ignores the figure “S” in formula (ii). In his witness statement he seeks to multiply the result of the application of formula (ii) by a hypothetical number of shares that would have been obtained had the bonds been converted into shares at the figure he gave.  Quite apart from the fact that his calculation of the number of shares that would have been obtained was based on the premise that the Conversion Price would be $0.01, which in my view is wrong, both approaches appear to me to be illegitimate.

39.  I would add that Mr Au’s witness statement is a little curious because in paragraph 11 he states that the value “V” of RMB72,659,187 used in the report  “was derived from the audit report of HWIL for the financial year ended 31 December 2006 prepared by RSM”.  The document to which, apparently, he is referring as the audit report contains, in paragraph 23 (b), reference to Mr Au’s determination of the redemption value. One can only speculate from that that the 2 documents must have been prepared at the same time.

40.  As already indicated, it would appear that the judge did not purport to interpret the definition; he simply accepted Mr Au’s calculation without any analysis.

41.  It was said by Mr Sakhrani, who appeared on behalf of the plaintiff in this court but not in the court below, that the interpretation of the formula (ii) advocated by Mr Au was valid because it was legitimate to add words such as “multiplied by the number of ordinary shares that would be obtained upon conversion of all bonds” as a means of correcting a mistake in the document as a matter of construction.  In so saying he relied upon the proposition stated by Brightman LJ in the case of East v Pantiles (Plant Hire) Ltd (1981) 263 E.G. 61 which is quoted by Lord Hoffman in the case of Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 at page 11014:

“Two conditions must be satisfied: first, there must be a clear mistake on the face of the instrument; secondly, it must be clear what correction ought to be made in order to cure the mistake. If those conditions are satisfied, then the correction is made as a matter of construction.”

42.  In this instance, even if it is assumed that there is a clear mistake on the face of the instrument, it is by no means clear what correction ought to be made.  The formulae provided under the definition Redemption Amount are clearly intended to produce different results.  The judge made reference to the Letter of Intent and the subsequent correspondence and said in paragraph 27 of the judgment:

“…that redemption at 1.2 x net assets, (if that were higher than 12% IRR), was envisaged during the negotiations.”

43.  That may be true, but even if it were legitimate to have regard to the pre-contract negotiations for the purpose of clarifying an ambiguity, I do not consider that that exchange of communications referred to by the judge establishes that Mr Au’s approach is correct.  Specifically, even on the assumption that something is missing from formula (ii) and that it was intended that that formula would give the bondholder a Redemption Amount for the bonds that would reflect a change in value of the assets of the first defendant and its group, there are clearly other and more appropriate ways of reflecting the changing proportion of the value of the total assets from the initial time, when the bonds represented 28% of the total value.

44.  Finally, I would add that it is not for Mr Au, as an expert witness, to interpret the document.  It is the court that must interpret a document.

45.  In my view, therefore, the plaintiff has only established an entitlement to a Redemption Amount calculated in accordance with formula (i).  The parties are in agreement that the sum already paid to the plaintiff reflects that.  I would mention, however, that that sum appears to have been based on the order dated 10 February 2009.  The figure there of $30,722,038 would appear to be considerably higher than the figure which was given to the judge when he asked for the calculation during the relevant hearing.

46.  I would, therefore, make an order in appeal CACV 105 of 2010 that the judgment below be set aside and judgment be entered for the plaintiff in the sum of $41,528,212.09; it being recorded that that sum has already been paid to the plaintiff.

47.  In respect of appeal number CACV 106 of 2010, the appellants in that appeal ask that the injunctions that have been granted should be discharged and the appeal allowed accordingly on the basis that the plaintiff no longer has any interest in the first defendant.  In that respect, I observe that the Notice of Conversion relied upon by the plaintiff claims 10 million shares.  There is no claim in the alternative based on a Conversion Price of $685.70.  The conversion of 100,000 bonds at the rate of $685.70 would only entitle the bondholder to 145 shares.  That, presumably, would be of no interest to the plaintiff.  Since the final Redemption Date of the bonds was 36 months from the Issue Date, those bonds which are not already redeemed should be redeemed.  The plaintiff would no longer have any interest in either bonds or shares of the first defendant.  As has been submitted on behalf of the appellants, the basis for the orders which were in place has now gone.  Those injunctions should therefore be discharged.

Costs

48.  Apart from the fact that the plaintiff was entitled to obtain a final order it would appear that the remainder of the trial was taken up in respect of issues on which the plaintiff has failed in this court.  On that basis I consider that the first to third defendants should be entitled to 90% of the costs in the court below and the costs in this court in respect of HCA 595 of 2008 and CACV 105 of 2010.  In respect of the second action namely HCA 818 of 2008, the judge observed that as at the date of trial the defendants were in breach of the orders that were made.  In those circumstances I consider that there should be no order of costs in action HCA 818 of 2008 and but that the appellants should be entitled to the costs of appeal CACV 106 of 2010.  I therefore propose that orders of costs nisi should be made accordingly.

Hon Le Pichon JA:

49.  I agree with the judgment of Rogers VP and the orders he proposes.

Hon Stone J:

50.  I agree with the judgment of the Vice President.