DRAGONRIDER OPPORTUNITY FUND LP v. LAM FUNG AND ANOTHER

CACV 71/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 71 OF 2013

(ON APPEAL FROM HCA 752/2012)

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AND

CACV 202/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 202 OF 2013

(ON APPEAL FROM HCA 752/2012)

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BETWEEN

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(Heard Together)

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REASONS FOR JUDGMENT

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Hon Cheung CJHC:

1.  At the conclusion of the hearing, we dismissed these appeals from two judgments given by Deputy High Court Judge Le Pichon on 21 March 2013 and 10 September 2013 respectively. We now give our reasons.

The facts

2.  The facts pertaining to the issues before us can be very briefly stated.  Mr Lam Fung owned interests in a molybdenum mining business through a company called Fabulous Way Limited.  He sought capital injections from investors with a view ultimately to securing a listing for that business.  He therefore entered into an investment agreement dated 2 October 2007 with Dragonrider Opportunity Fund LP to sell 230,700 ordinary shares representing approximately 23.07% of the issued share capital of Fabulous Way to Dragonrider as “Investor”.  The total consideration payable was US$52.63 million.  Under the investment agreement, which was subsequently amended by a supplemental agreement dated 12 November 2007, Dragonrider was entitled to direct that any of the shares sold thereunder be transferred on completion to any nominee, assignee or other person (clause 5.2).

3.  The sale and purchase of shares were duly completed and the 230,700 shares sold were (at the direction of the Dragonrider) registered in the names of Dragonrider and other investors nominated by Dragonrider to take up the shares :

3,397 shares	0.3397%	Dragonrider
87,033 shares	8.7033%	Angel Wise
87,669 shares	8.7669%	Stark Moly Ltd
32,876 shares	3.2876%	SIG China Investments One Ltd
19,725 shares	1.9725%	Addgood Holdings Ltd
230,700 shares	23.07%

4.  Clause 16 of the investment agreement (as amended) provided for a put option whereby Mr Lam would be bound to purchase all or part of the sale shares on exercise of the put option by way of service of a put option notice :

“16.1 Put Option

(a) In consideration of the sum of US $1.00 by the Investor (the sufficiency and receipt of which the Vendor hereby acknowledges), the Vendor hereby irrevocably grant to the Investor a right to require the Vendor to purchase all or part of the Ordinary Shares (“Put Option Shares”) held by the Investor at the Option Consideration on the terms and subject to the conditions of this Agreement (the “Put Option”) ...

(b) On the exercise of a Put Option by the Investor, the Vendor will become bound to purchase the Put Option Shares, and the Investor will become bound to complete, or to procure the completion of, the sale of the Put Option Shares on the Transfer Terms.

(c) Subject to Clause 16.1 (d), the Put Option may be exercised by the Investor in respect of all or part of the Ordinary Shares held by him by serving on the Vendor the Put Option Notice by facsimile or by registered post or by hand only during the Option Period … failing which it will lapse and cease to have any further effect. The Put Option Notice shall not be served on the Vendor in the event that a Listing has occurred.

...

(f) For the avoidance of doubt, the Put Option shall be exercisable by the Investor for such number of times as he may desire during the Option Period ... subject always to the provisions of Clause 16.1 (a) to (e).

(g) For the avoidance of doubt, notwithstanding anything to the contrary herein, the Put Option shall lapse and cease to have any further effect upon a Listing occurring.

16.2 The Option Completion shall take place at such place as the Parties may agree on the date falling fourteen (14) days after the Exercise Date ... or such other date as the Investor and the Vendor may agree. On Option Completion: -

(a) the Investor shall deliver to the Vendor the share certificate(s) together with valid share transfer forms in respect of the Put Option Shares or otherwise procure the delivery of the Put Option Shares; and

(b) the Vendor shall deliver to the Investor cash, cheque or any other means as may be agreed between the Vendor and the Investor, payable to the Investor, and/or its nominee(s), for the full amount of the Option Consideration.

...”

5.  Clause 5.7 of the investment agreement provided :

“For the avoidance of any doubt, each of the Investor Nominees and/or Other Investor shall have the same obligations and rights as Dragonrider under this Agreement as if it is a party to this Agreement and may enjoy the benefit of or enforce the terms of this Agreement in accordance with the provisions of the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore. The Vendor and the Company agree that the Investor Nominees and the Other Investors, shall be entitled to exercise the rights over Ordinary Shares registered under their names, through Dragonrider.”

6.  Both the investment agreement and the supplemental agreement are governed by Singapore law.  It is common ground amongst the Singapore law experts that the combined effect of clauses 5.7 and 16 under Singapore law was that “the Investor Nominees and/or Other Investor”, that is, Angel Wise, Stark Moly, SIG and Addgood, to whom some of the sale shares were transferred at the direction of Dragonrider, were all entitled to exercise the put option in relation to their respective shares.

7.  The listing attempt, however, failed, and on 3 and 30 December 2009 respectively, SIG and Stark Moly issued and served their respective put option notices to require Mr Lam to buy back the 32,876 shares and 87,669 shares in Fabulous Way which the two companies respectively held.  In both cases, Mr Lam failed to buy back the shares within the 14‑day period stipulated in clause 16.2 of the investment agreement.  SIG and Stark Moly therefore commenced proceedings seeking specific performance, and both obtained summary judgments against Mr Lam respectively (HCA 219/2011 and HCA 1581/2010).

8.  In the meantime, on 30 March 2010, Dragronrider issued and served a put option notice on Mr Lam.  It was issued by Dragonrider on behalf of itself and the other four investors.  The put option notice read:

“PUT OPTION NOTICE

We refer to the Investment Agreement dated 2 October 2007 between (1) the Vendor (as defined in the Agreement), (2) the Company (as defined in the Agreement), (3) and ourselves, as amended by the Supplemental Agreement dated 12 November 2007 (collectively, the “Agreement”) and the letters from inter alia the Vendor to ourselves dated 30 December 2009, 30 January 2010 and 26 February 2010.

Terms defined in the Agreement shall have the same meanings in this Put Option Notice unless the context requires otherwise. References to a Clause are to a clause of the Agreement.

We hereby notify you pursuant to Clauses 5.7 and 16.1 (c) of the Agreement that we wish to exercise the Put Option granted under Clause 16.1 of the Agreement to require you to buy 230,700 Ordinary Shares¹ at US$82,660,962, per calculation in the footnote below.²

Yours faithfully,

ASIASONS PRIVATE EQUITY INC

For and on behalf of

DRAGONRIDER OPPORTUNITY FUND L.P.

[Signature]

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JARED LIM CHIH LI

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¹ The 230,700 Ordinary Shares comprise of the 3,397, 87,033, 87,669, 32,876 and 19,725 Ordinary Shares registered in the names of Dragonrider Opportunity Fund L. P., Angel Wise Limited, Stark Moly Limited, SIG China Investments One, Ltd and Addgood Holdings Limited respectively.

² Principal Amount = US$52,630,000

18% IRR compounded monthly= 1.5% per month

Assuming that Option Completion occurs on 13 April 2010 (14 days after Exercise Date pursuant to Clause 16.2 of the Investment Agreement)

No. of months elapsed from the Completion Date of Tranche 1 Sale Shares (3 October 2007) to Option Completion Date (13 April 2010) = 30.32

Option Consideration = US$52,630,000 x (1.015)^ 30.32”

The litigations

9.  Mr Lam again failed to buy back the shares pursuant to Dragonrider’s put option notice.  This gave rise to HCA 752/2012.  By her judgment dated 21 March 2013, the deputy judge ordered specific performance of clauses 16.1(b) and 16.2 of the investment agreement for the buying back of the Dragonrider and Addgood shares.  As for the Angel Wise shares, for a complication which it is not necessary to go into, they were hived off from the main Order 86 application for specific performance and were heard by the deputy judge separately.  By her judgment dated 10 September 2013, the deputy judge ordered specific performance in relation to those shares against Mr Lam as well.

10.  There was another dispute between Dragonrider and Mr Lam and it also related to the investment agreement.  On 12 October 2007, ten days after entering into the investment agreement, Mr Lam executed a share charge by way of a first fixed charge over Mr Lam’s remaining shareholding interest in Fabulous Way and some related assets in favour of Dragonrider to secure performance of his obligations under the investment agreement.  Clause 5.4 of the share charge provided for the transfer of the charged portfolio into the name of Dragonrider or its nominees after the occurrence of “an event of default”, which was defined to include the default by Mr Lam in the due performance of the investment agreement.

11.  In view of Mr Lam’s failure to buy back the shares pursuant to the put option notice served by Dragonrider, the deputy judge decided, in her judgment dated 21 March 2013 given under HCMP 839/2012, that an event of default had occurred, and therefore Mr Lam was obliged to transfer the relevant shareholding in favour of Dragonrider (or Stark Moly for reasons which again I need not go into).  It is common ground that the outcome of HCMP 839/2012 depended wholly on whether the deputy judge was right on her conclusion that Mr Lam had failed to honour Dragonrider’s put option notice.

12.  Aggrieved by the deputy judge’s decisions, Mr Lam appealed – CACV 71/2013 and CACV 72/2013 relating to the judgment of 21 March 2013; and CACV 202/2013 in relation to the later judgment dated 10 September 2013.

13.  Mr Tim Kwok, for Mr Lam, took various points (which he had run unsuccessfully before the deputy judge) in support of the three appeals, which may be conveniently referred to as the absence of authority point; severability point; and lack of subject matter point.  I will deal with them in the following order.

Severability and lack of subject matter

14.  I will first deal with the severability point and lack of subject matter point together.  Put very briefly, Mr Kwok’s argument is that on its true construction as a matter of Singapore law, the put option notice issued by Dragonrider was for the buy back of the “entire indivisible holding of 230,700 ordinary shares”.  However, first, Dragonrider lacked authority from the other investors to issue the put option notice in so far as it purported to cover shares transferred into the names of these other investors.  Secondly, in relation to the shares of SIG and of Stark Moly, these two companies had already exercised their respective put options by issuing prior put option notices for the buy back of their respective shares.  By the time of Dragonrider’s put option notice, those shares had already been contracted to be bought back by Mr Lam from SIG and Stark Moly under the contracts concluded by these two companies’ respective put option notices.

15.  Mr Kwok argued that since as a matter of Singapore law, the put option notice issued by Dragonrider was in relation to the entire indivisible block of 230,700 shares in Fabulous Way, it was simply invalid and of no effect.

16.  I accept the legal analysis of Mr Lam’s expert (Mr Lim Tat) that once SIG and Stark Moly exercised their respective put options by serving their respective put option notices, binding contracts for the buy back of their respective shares were concluded between Mr Lam and each of the two companies respectively.  Although Mr Lam failed to buy back the respective shares within 14 days, neither SIG nor Stark Moly accepted Mr Lam’s repudiatory breaches but insisted on specific performance of the respective contracts.  They eventually sued Mr Lam to judgment for specific performance.  In those circumstances, on a proper construction of the investment agreement (as amended) and the relevant put option notices, I have no doubt, as a matter of law, that Dragonrider could not subsequently issue a put option notice purporting to sell the same shares back to Mr Lam again.  Such purported exercise of the put option in relation to those shares must be of no legal effect.

17.  I therefore reject the suggestion that Dragonrider’s put option notice could somehow co‑exist with the put option notices of SIG and Stark Moly in so far as they covered the same shares.  On the facts, I also reject the argument that Dragonrider’s subsequent put option notice had the legal effect of superseding and extinguishing the earlier put option notices of SIG and Stark Moly.

18.  However, it does not follow that the put option notice of Dragonrider is ineffective and of no effect in its entirety.

19.  Mr Kwok argued that under Singapore law, it is not open to treat Dragonrider’s put option notice as covering anything other than the “entire indivisible holding of 230,700 ordinary shares”.  In this regard, Mr Kwok’s expert, Mr Lim, had this to say in his expert report (paragraph 21(k)) :

“In my view, a Singapore Court is likely to hold that the Put Option Notice constitutes the exercise of a Put Option for the entire indivisible holding of 230,700 Ordinary Shares for the following reasons:

(i) Based on an objective ascertainment of the plain and ordinary meaning of the language in paragraph 3 of the Put Option Notice, the Put Option was an exercise for the entire indivisible holding of all 230,700 Ordinary Shares.

(ii) The Option Consideration sought by Dragonrider in paragraph 3 of the Put Option Notice was for the lump sum of US$82,660,962. Notably, the Put Option Notice (including footnote 2 of the Put Option Notice) did not contain any breakdown of the sums payable to the Investor Nominees or Other Investors.

(iii) Asiasons Private Equity Inc’s letter to Mr Lam dated 30 March 2010 refers to the Put Option Notice ‘on behalf of Dragonrider Opportunity Fund L.P.’.  In the Put Option Notice, the identities of the shareholders of Fabulous Way were listed as a footnote (viz. footnote 1 of the Put Option Notice) instead of a specific reference to Dragonrider’s representation of these shareholders within the main text of the Put Option Notice.”

20.  Dragonrider’s expert, Professor Tan, disagreed.  In his supplemental opinion on Singapore law, he opined :

“2.5 In my respectful view, the reasons set out in paragraph 21(k) of the Aequitas opinion [ie Mr Lim’s report] do not support the view that the Put Option Notice constitutes the exercise of an indivisible holding of 230,700 Ordinary Shares. Indeed it seems to me to be very unusual to regard a shareholding stake as being indivisible. This is even more so where it is clear that the shares in question could be held by different parties. It is one of the fundamental principles of Company Law that each share in a company is transferable and unless there are provisions in the Articles of Association or in a contract to the contrary, there is no reason to regard any holding of shares to be an indivisible holding which can only be sold or otherwise disposed of in its entirety. In fact, the Form of Put Option Notice in Schedule 4 of the Investment Agreement is premised on it being possible for Put Option Notices to be given in respect of a portion of the Ordinary Shares that were purchased from Mr Lam. Clauses 16.1(c) and (f) also make it clear that the Put Option can be exercised over a portion of the 230,700 Ordinary Shares. Given that the 230,700 Ordinary Shares do not form an indivisible holding, I do not believe that Singapore law would construe the Put Option Notice as an exercise ‘for the entire indivisible holding of 230,700 Ordinary Shares’[1] and I know of no Singapore or Commonwealth authority (and none has been offered) that supports the position taken in the Aequitas opinion.

2.6 Furthermore, I do not agree that paragraph 3 of the Put Option Notice objectively construed leads to the conclusion that it was being exercised for an indivisible holding of all 230,700 Ordinary Shares. Footnote 1 of the Put Option Notice, which appears in relation to the reference to ‘230,700 Ordinary Shares’ immediately makes it clear that the ‘230,700 Ordinary Shares’ comprise ‘3,397, 87,033, 87,669, 32,876 and 19,725 Ordinary Shares registered in the names of Dragonrider Opportunity Fund L.P., Angel Wise Limited, Shark Moly Limited, SIG China Investments One, Ltd and Addgood Holdings Limited respectively.’ [underlining added] Accordingly, I am of the view that a Singapore court is likely to take the view that the Put Option Notice has clearly stated that the exercise of the Put Option Notice was for the respective number of Ordinary Shares held by the 5 shareholders which totaled 230,700 Ordinary Shares.

2.7 I am of the view that the reference to US$82,660,962 without any breakdown of the sums payable to the Investor Nominees or Other Investors is of no significance. First, not only does the Investment Agreement not require such a breakdown, the Investment Agreement makes it clear in Schedule 4 (Form of Put Option Notice) that a breakdown is not necessary. All that is required is that the party exercising the Put Option states the number of Ordinary Shares and the total amount payable. Second, given that the number of Ordinary Shares registered in the names of the Investor Nominees or Other Investors had been set out in footnote 1, it is a simple matter of arithmetic for the amounts due to the Investor Nominees or Other Investors to be ascertained based on the number of shares held by them as a percentage of the 230,700 Ordinary Shares. The Aequitas opinion at paragraph 21(k)(ii) appears to imply that if a breakdown of the sums due to the Investor Nominees or Other Investors had been set out the position may be different. It is my view that this is precisely what footnote 1 effectively does.

2.8 A further reason in the Aequitas opinion for its view is that there was no specific reference within the main text of the Put Option Notice that Dragonrider was representing the Investor Nominees and Other Investors. I know of no principle in the law of Agency in Singapore that requires notification of an agency in the main text of a document rather than say in a footnote, annex or other document comprising part of the agreement between the parties. The Aequitas opinion recognizes that Dragonrider’s representation of the Investor Nominees and Other Investors has been set out in the Put Option Notice but takes issue that this is not within the main text of the Put Option Notice. In my respectful view this is not a relevant consideration under Singapore law.

2.9    I would add that given the context within which the Investment Agreement was entered into, where Mr Lam knew that Dragonrider was free to direct that any of the Sale Shares be transferred to the Investor Nominees and Other Investors, together with the fact and knowledge of such transfers on Mr Lam’s part, these are relevant facts that a Singapore court would take into account in determining whether the Put Option Notice related to an indivisible holding of 230,700 Ordinary Shares regardless of the existence or otherwise of footnote 1.”

21.  Interpretation of documents is of course a matter for the court, not the experts.  Dragonrider’s put option notice was served pursuant to the investment agreement (as amended).  The latter formed the context of the notice.  The first relevant matter to note about the agreement is that there is nothing in the investment agreement to require that the entire block of shares sold thereunder must be bought back as one block.  In fact, the wording is to the contrary.  The put option can be exercised repeatedly in relation to any quantity of shares.  Moreover, the agreement provides for the sale shares to be registered in the names of different nominees or investors and it is worded in such a way that both the investors/nominees and Dragonrider (whether for itself or as agent for the investors/nominees) may exercise the put option in relation to some or all of the shares.

22.  Commercially speaking, one cannot see any reason why the shares must be viewed as an indivisible block.  It serves no commercial purpose.  The whole purpose of the put option is to enable Dragonrider and the other investors to sell back the shares to Mr Lam in case events do not happen in the way they have hoped.

23.  That being the case, it would really take a strong case in order to construe Dragonrider’s put option notice as covering the 230,700 shares as an “indivisible block”; in other words, an all‑or‑nothing sort of situation.  For this would simply make little if any commercial sense.

24.  Turning to the wording of the notice, the first thing to note is that there was nothing in that notice to say that either all the shares had to be bought back or none at all.  The notice itself referred to all the shares, even though by the time of the issue of the notice, both Mr Lam and Dragonrider knew full well that two earlier put option notices had been issued.  The evidence suggests that this was done deliberately to play safe, as it was not absolutely sure whether the earlier put option notices were effective – particularly when Mr Lam had failed to buy back the shares in question pursuant to those notices.  However, importantly, the notice made it very clear, in footnote 1, that the 230,700 shares comprised 5 different blocks, registered in the names of 5 different companies (including Dragonrider).  Given the known factual background of this case, there can be no doubt to anybody that Dragonrider’s notice was intended to require Mr Lam to buy back the 5 blocks of shares from the 5 companies respectively.

25.  I see nothing in the expert evidence before me to suggest that under Singapore law, the put option notice served by Dragonrider is any different in substance from five separate notices issued and served by Dragonrider in relation to the 5 blocks of shares set out in footnote 1, or a notice which contained 5 different parts, with each part covering the buy back of one block of shares.  The fact that Dragonrider has chosen to use a more economical way of exercising the put option by serving a composite put option notice cannot be a reason for rejecting the entire notice in favour of Mr Lam.

26.  The fact that the 5 blocks of shares were detailed in a footnote rather than the body of the notice is merely a question of drafting style rather than one of substance.  Viewed thus, the fact that for one reason or another the put option was not validly exercised in relation to one or more blocks of shares does not, by itself, affect the legal validity of the exercise of the put option in relation to the remaining blocks.  In this sense, Dragonrider’s put option notice must be regarded as “severable”.

27.  Mr Kwok argued that Mr Lam needed certainty under the put option to know precisely where he stood, given that a put option notice would lead immediately to a contract binding on him to buy back the shares covered.  That need required the shares covered by the notice to be absolutely certain.  This was achieved by requiring strict compliance with the put option (as a matter of Singapore law).  I can follow the apparent logic of the argument.  Where it breaks down is that the uncertainty here was brought about by the existence of two put option notices seeking to cover the same shares. That uncertainty was quite inevitable given that the investment agreement allowed both Dragonrider and the other investors to exercise the put option.  It simply could not be removed by construing Dragonrider’s notice as capable of covering one indivisible block only.  For even if Dragonrider were to serve five, instead of one, notices, Mr Lam would still have been left in the same uncertain position.

28.  There is nothing in the Singaporean case of MacarthurCook Property Investment Ptd Ltd v Khai Wah Development Pte Ltd [2007] SGHC 93, a case heavily relied on by Mr Kwok, which bears any relevance to the present question of construction (under Singapore law).  In particular, I do not think the case suggested at all that objective intent or the contextual approach is irrelevant to the proper interpretation of the investment agreement or Dragonrider’s put option notice.

29.  For these reasons, I see no merit in the argument on severability and lack of subject matter.  In my view, the deputy judge was entirely correct in holding that Dragonrider’s put option notice was good in relation to Dragonrider’s own shares, as well as the shares in the names of Addgood and Angel Wise.

Absence of authority

30.  That leaves the absence of authority point.  Mr Kwok questioned the authority of Dragonrider to issue its put option notice on behalf of the other four investors.  For the reasons given above, in so far as Mr Kwok’s point relates to the authority from SIG and Stark Moly, it is wholly irrelevant.  In any event, for the reasons given in the judgment below, there is sufficient evidence to demonstrate the authority of Dragonrider to issue the put option notice on behalf of SIG and Stark Moly respectively (in so far as authority is concerned).

31.  In relation to Angel Wise which is in liquidation, there is a board resolution dated 1 March 2010 from Angel Wise authorising Dragonrider to exercise the put option on its behalf and to complete the transaction and/or to enforce the exercise of the put option as it deems fit without further reference or consultation with Angel Wise.  There is also a letter dated 23 April 2013 from Stephenson Harwood, solicitors then acting for Angel Wise’s liquidators, confirming Dragonrider’s authority to pursue any enforceable interest that Angel Wise has in the put option on behalf of Angel Wise in these proceedings.  Finally, there is also a letter dated 15 May 2013 from Reed Smith Richards Butler, solicitors for Stark Moly, confirming that Stark Moly consents to Dragonrider’s pursuit of its claims against Mr Lam to enforce its rights in relation to the Angel Wise shares (which have been charged to Stark Moly).

32.  The burden is on Mr Lam to raise a triable issue.  In relation to Angel Wise, Mr Lam has failed to raise any triable issue on this authority point.

33.  As regards Addgood, unlike the question of authority raised in relation to Angel Wise and Stark Moly, Mr Lam never took any point on authority in the draft defence or his opposing affirmation in relation to Addgood.  The first time it was mentioned was at a directions hearing before Master Kwang in which Mr Kwok orally raised doubts about Dragonrider’s authority from Addgood to issue the put option notice.  But it was not followed by any amendment to the draft defence, nor was there any evidence filed by Mr Lam on the point.

34.  The deputy judge was absolutely right in observing in her judgment (paragraph 24), that it is incumbent on the defendant to show that there is a triable issue or an arguable defence by affidavit or otherwise, and the defendant’s affidavit must “condescend upon particulars”, stating clearly and concisely what the defence is and what facts are relied on to support it.  She concluded, on the facts, that whilst Mr Lam did “condescend upon particulars” in relation to authority from Stark Moly and Angle Wise, he obviously failed to do so in relation to Addgood (and SIG).  She found it was too late for Mr Kwok to raise the absence of authority point in relation to Addgood before her.  I entirely agree with that approach.  There is simply nothing to back the bare suggestion by Mr Kwok that Addgood may not have authorised Dragonrider to issue the put option notice in so far as its shares are concerned.  This is particularly so when despite the lapse of 4 years, we have heard nothing from Addgood or others (apart from Mr Lam himself) to doubt the authority of Dragonrider to issue the put option notice regarding the Addgood shares.  According to Mr Kwok, his client has not even bothered to write to Addgood to find out the true position.

35.  There is no merit in this argument of Mr Kwok either.

An event of default

36.  For these reasons, an event of default has indeed occurred and the deputy judge was therefore right in giving judgment for Dragonrider in relation to the share charge.

Disposition

37.  For these reasons, the appeals were dismissed with costs on an indemnity basis as per clause 12.1 in the investment agreement (as amended) and clause 16.1 in the share charge respectively – we saw nothing to persuade us not to exercise our discretion to award indemnity costs in accordance with the contractual provisions.

Hon Barma JA:

38.  I agree.

Hon McWalters J:

39.  I agree with the judgment of Cheung CJHC.