YUE WAI KEUNG v. CHINA CHENGTONG INVESTMENT CO LTD

HCA 1220/2021

[2026] HKCFI 4395

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1220 OF 2021

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.  This is the trial of the Counterclaim of the Defendant (“D”) against the Plaintiff (“P”), now deceased[1]. Pursuant to the Order of this Court dated 1 April 2026, P’s claim against D in this action has been struck out under O.15, r.9(1) of the Rule of High Court, Cap. 4A and these proceedings were ordered to proceed in the absence of any persons representing the estate of P for the reasons given in my Decision (see [2026] HKCFI 4394).

2.  By Summons dated 22 June 2026 (“New WS Summons”), supported by the Affirmation of Bai Chunrui (“Bai 1^st”), D seeks leave to file 張永青的證人陳述書 (“Zhang’s WS”). On 23 June 2026, I directed that the New WS Summons be dealt with on the first day of the trial of this action which was scheduled to last 3 days.

3.  Mr Roger Phang, counsel, appeared at the trial of this action. No one appeared on behalf of P.

B. UNDISPUTED BACKGROUND

B1. The Parties

4.  P was a permanent resident of Hong Kong, ordinarily resident in Hong Kong. He was at all material times the 51.376% majority owner of Luen Fat Securities Limited (“Luen Fat”). Luen Fat holds licences granted by the Securities and Futures Commission (“SFC”) for carrying out Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities under the Securities and Futures Ordinance, Cap. 571 (“SFO”).[2]

5.  D is a company incorporated in Hong Kong. It is an indirectly wholly-owned subsidiary of China Chengtong Holdings Group Company Limited, which is in turn wholly owned by the State-Owned Assets Supervision and Administration Commission of the State Council (國務院國有資產監督管理委員會).[3]

B2. The SPA

6.  By the Agreement for the Sale and Purchase dated 7 November 2016 (“SPA”)[4] executed between: (i) P (as Second Vendor) and other minority shareholders of Luen Fat (collectively, “Vendors”); and (ii) D (as Purchaser), the Vendors agreed to sell, and D agreed to purchase, 48,384,000 shares in Luen Fat (“Sale Shares”) (amounting to 80% of the total issued shares of Luen Fat), subject to the terms and conditions as set out in the SPA.

7.  Upon the signing of the SPA, D duly paid the sum of HK$15,200,000 as a deposit to P (“the Deposit”) pursuant to Clause 3.2(a) thereof.[5]

8.  Under the terms of the SPA:

8.1. Completion of the sale and purchase of the Sale Shares (“Completion”) was to take place, upon fulfilment of all the conditions set out in Clause 4.2, on the date falling on the third business day after fulfilment of the said conditions, or such later date as the parties may agree (Clause 5.1[6]);

8.2. If the said conditions have not been satisfied on or before 12:00 noon on the “Long Stop Date”, the SPA shall cease and determine and the Deposit shall be handled in the manner as provided in Clause 3.6 (Clause 4.4[7]);

8.3. The SPA shall be terminated and P shall return the Deposit (without interest) in full unconditionally to D forthwith in any event within 10 business days if Completion does not take place as a result of the lapse of the Long Stop Date or otherwise than the default of D or the Vendors (Clause 3.6[8]).

9.  Clause 4.2[9] provides that Completion shall be conditional upon and subject to:

9.1. D being satisfied in its absolute discretion with the results of the due diligence review to be conducted under Clause 4.1 (Clause 4.2(1));

9.2. All necessary consents, licences and approvals from the shareholders and regulators required to be obtained on the part of the Vendors and Luen Fat in respect of the SPA and the transactions contemplated thereby having been obtained and remain in full force and effect (Clause 4.2(2));

9.3. All necessary consents, licences and approvals from the shareholders and regulators required to be obtained on the part of D in respect of the SPA and the transactions contemplated thereby having been obtained and remain in full force and effect (Clause 4.2(3));

9.4. The “Warranties” (contained and referred to in Clause 6 and Schedule 2 of the SPA) given by the Vendors remaining true and accurate and not misleading in all respects (Clause 4.2(4));

9.5. The approval from SFC in relation to the change of substantial shareholder of Luen Fat having been obtained and not revoked, canceled or lapsed (Clause 4.2(5));

9.6. Luen Fat having employed such number of qualified responsible officer(s) for Type 1 and Type 4 regulated activities as required under the SFO and the relevant rules and regulations to supervise the business of the regulated activities carried on by Luen Fat (Clause 4.2(6));

9.7. Luen Fat having executed the Employment Contracts with its key management in major terms and conditions as agreed by the parties (Clause 4.2(7)); and

9.8. The execution of the Shareholders Agreement and Debt Assignments by the parties (Clauses 4.2(8) and (9)).

10.  The SPA also contains the following terms:

10.1. “This Agreement shall not be amended, supplemented or modified except by instruments in writing signed by all parties hereto” (Clause 15[10]);

10.2. “… No provision of this Agreement may be amended or modified otherwise than by the express written agreement of the parties hereto” (Clause 19[11]);

(collectively, “No Oral Modification Clauses”)

10.3. “The Consideration shall be adjusted in accordance with the following formula:

N = (HK$70,000,000 – A) x 80%

Where

…

A = the actual net asset value after adjustment of additional or reduced provisions for doubtful debts (the “Doubtful Debts”) to be agreed by both parties hereto upon completion of the due diligence review on the Company pursuant to Clause 4.1. (Clause 3.3)[12].”

B3. Extensions of the Long Stop Date

11.  The “Long Stop Date” is defined in Clause 1.1[13] of the SPA as 30 June 2017 (or such other date as the parties to the SPA may agree in writing).

12.  Between April 2016 and January 2020, due diligence review of Luen Fat was still being conducted[14]. In particular, in around April or May 2017, Mr Wu, the then chief executive officer of D, informed P that D was still in the process of applying for the necessary licenses from the China Securities Regulatory Commission (“CSRC”) and in around November or December 2017, Mr Wu informed P that D was still in the course of locating and negotiating with CEPA joint venture partners such that it was unlikely that Completion could take place on or before 31 December 2017.

13.  Upon negotiation with the Vendors, it was agreed on two occasions that the Long Stop Date be extended to: (1) 31 December 2017 by the first letter of extension; and (2) 31 December 2018 by the second letter of extension.[15]

14.  Subsequently, D had undergone a restructuring of business in around late 2018 and early 2019, and there was a change in personnel. Given that the due diligence review was yet to be completed and no suitable business partner had yet been found in Mainland China, it was expected that the transaction contemplated under the SPA could not take place until completion of the said restructuring and the finding of a suitable business partner. After negotiation, the parties entered into a third letter of extension dated 28 June 2019 (“Third Extension Letter”) to further extend the Long Stop Date to 31 December 2019.[16]

15.  Materially, the Third Extension Letter[17] provided as follows:

“ Pursuant to the [SPA] and the First Extension Letter, we hereby acknowledge and confirm our mutual agreement in writing to extend the latest date for fulfillment (or waiver, if applicable) of all the conditions as set out in Clause 4.2 of the [SPA] to 31 December 2019, or such later date as the Vendors and the Purchaser may agree (the ‘Long Stop Date’).

Subject only to the variations herein contained and such other alterations (if any) as may be necessary to make the [SPA] consistent with this letter, the [SPA] shall remain in full force and effect and shall be read and construed together with this letter and be enforceable as if the terms of this letter were incorporated therein by way of addition and substitution, as the case may be.”

B4. Lapse of the Long Stop Date

16.  On 31 December 2019, the Long Stop Date (as extended) had lapsed and no further extensions were agreed thereafter.

17.  By a letter dated 10 January 2020[18] (“Demand Letter”), D informed P of the lapse of the Long Stop Date (as extended) on 31 December 2019 and demanded P to return the Deposit to D within 10 business days pursuant to Clause 3.6 of the SPA.

B5. The Statutory Demand and the Setting Aside Application

18.  As P failed to return the Deposit to D, D issued a Statutory Demand dated 26 July 2021 (“SD”) against P.

19.  On 16 August 2021, P applied to set aside the SD.

20.  On the same day, P commenced the present action against D for, inter alia: (1) a declaration that P is entitled to forfeit the Deposit; and (2) damages to be assessed by reason of D’s alleged default in failing to proceed to Completion, to be deducted from or set off against the Deposit.

21.  By a decision dated 14 June 2022 (“Setting Aside Decision”)[19], DHCJ H. Au-Yeung (as he then was) set aside the SD and held inter alia that:

21.1. It is at least arguable that D was in breach of the SPA by failing to proceed to Completion if the conditions precedent under Clause 4.2 had in fact been satisfied by 31 December 2019;[20] and

21.2. P’s estoppel arguments (based on the alleged “January 2019 Representation/Promise”[21] and the alleged “June 2019 Representation/Promise” which were purportedly made orally) cannot assist him because of the No Oral Modification Clauses in the SPA and the fact that the Third Extension Letter providing that the SPA was to “remain in full force” was signed after the representations were allegedly made.[22]

22.  D decided not to appeal against the Setting Aside Decision and instead pursued its claim against P by way of the Counterclaim in this action.

C. PARTIES’ RESPECTIVE CASE AND THE ISSUES TO BE TRIED

C1. D’s case on the Counterclaim

23.  D’s case is that P, in breach of Clauses 3.6 and 4.4 of the SPA, has failed and/or refused to return the Deposit to D when Completion did not take place as a result of lapse of the Long Stop Date.[23]

24.  As the Long Stop Date had lapsed on 31 December 2019 and not all conditions precedent under Clause 4.2 were satisfied before then, D is entitled to and did enforce Clauses 3.6 and 4.4 of the SPA and demanded for the return of the Deposit, which was liable to be returned within 10 Business Days after 31 December 2019.[24]

25.  D therefore seeks payment of the sum of HK$15,200,000 (i.e. the Deposit), or alternatively, damages to be assessed. However, it was confirmed by Mr Phang that that the alternative relief is not pursued.

C2. P’s Defence to the Counterclaim

26.  P’s defence is that he is entitled to forfeit the Deposit, or alternatively to retain it to set off the losses incurred by him as a result of D’s failure to proceed to Completion.[25]

27.  However, as P’s claim against D in this action has been struck out, there is no longer any claim for: (1) a declaration that he is entitled to forfeit the Deposit; or (2) losses suffered by him as a result of D’s alleged breach of the SPA against which he can set off his liability to return the Deposit.

28.  Nonetheless, Mr Phang accepted that P may have a defence to D’s Counterclaim if he has pleaded any grounds which prevent D from demanding or bringing a claim for the return of the Deposit pursuant to Clauses 3.6 and 4.4 of the SPA.

29.  No such grounds are pleaded specifically in the P’s Defence to Counterclaim, but §18 thereof repeats the entirety of the SOC and the Amended Reply. By reference to that, it would appear that P has pleaded the following grounds which may have the effect of preventing D from demanding for the return of the Deposit:

29.1. D is estopped, whether by way of convention or representation, or alternatively as a promissory estoppel, from resiling from the Feb/March 2019 Representation/ Promise[26] (the representation/promise by Mr Wu that if the deal with D eventually fell through for whatever reason, P would be entitled to retain the Deposit as compensation) and the June 2019 Representation/Promise[27] (that any further extension of the Long Stop Date would be conditional upon: (a) D will proceed to Completion; (b) D shall provide a written explanation on the undue delay of the Completion; and (c) in the event the acquisition is terminated for whatever reason, P shall be entitled to retain the Deposit), on which P had detrimentally relied in agreeing to further extend the Long Stop Date (“Estoppel Defence”);[28]

29.2. D is not entitled, by reason of the prevention principle, to take advantage of its own wrongdoing (i.e. breaching Clause 5.1 of the SPA and/or the collateral contract (“Collateral Contract”) that was constituted by the Feb/March 2019 Representation and the June 2019 Representation/Promise) by not proceeding to Completion on or before the extended Long Stop Date and recovering the Deposit under Clause 3.6 (“Prevention Principle Defence”);[29] and

29.3. P’s alleged entitlement to forfeit the Deposit as a matter of business efficacy and/or the inherent nature of deposits as a matter of general law (“Nature of Deposit Defence”).[30]

C3. The issues to be determined

30.  As submitted by Mr Phang, the issues (“the Issues”) to be determined are as follows:

30.1. Whether D is entitled to the return of the Deposit pursuant to Clauses 3.6 and 4.4 of the SPA within 10 business days after 31 December 2019, and in particular:

(1) Whether D is estopped from claiming for the return of the Deposit;

(2) Whether D is in breach of the SPA and/or the Collateral Contract by failing to proceed to Completion on or before the Long Stop Date;

(3) Whether D is prevented by the “prevention principle” from recovering the Deposit; and

(4) Whether P is entitled to forfeit the Deposit as a matter of business efficacy and/or the inherent nature of deposits as a matter of general law.

D. THE EVIDENCE

31.  P has filed and exchanged the following witness statements:

31.1. The Witness Statement of Yue Wai Keung (“P’s WS”); and

31.2. The Witness Statement of Ng Min Kiong (“Ng’s WS”).

32.  D has filed and exchanged the following witness statements:

32.1. 李舒放的證人陳述書 (“Li’s WS”); and

32.2. 李舒放的補充證人陳述書 (“Li’s SWS”).

D1. The New WS Summons and D’s evidence

33.  By the New WS Summons, D seeks leave to file Zhang’s WS as per the draft annexed thereto within 3 days from the date of the order to be made, and that Zhang’s WS do stand as evidence-in-chief of Zhang Yongqing (“Mr. Zhang”) unless otherwise directed by this Court. D also seeks an order dispensing with service of Zhang’s WS on P as it was submitted that this would not result in any unfairness or prejudice since the copy of Zhang’s WS was annexed to the New WS Summons and also exhibited to Bai 1^st, and both have been served on P and sent to: (1) Man Wing Tuen, P’s wife/ex-wife; and (2) the executor(s)/administrator(s) and/or the next of kin of P.

34.  The principles for a late application for leave to serve additional witness statement and to call additional witness at trial have been set out by DHCJ Marlene Ng (as she then was) in Nam Ching Wun v Tsun Un Pawn Shop and Others (unrep, HCA 2151/2008, 7 October 2014) at §§53-59. These include:

34.1. Notwithstanding the general principles below, each case necessarily turns on its own circumstances;

34.2. The court must exercise its case management discretion in a fair manner having regard to all the circumstances and the explanation given for the lateness of the application;

34.3. If the predicament that the application finds himself in is of his own making and the applicant has only himself to blame for the delay and inaction, e.g. when the need for additional witness is already evident at an early stage of the proceedings and the applicant for no reason waited until the last possible moment to introduce a new witness statement that contains substantial mattes, then the court is unlikely to grant indulgence;

34.4. Even before the CJR and more so afterwards, it would be rare for the court to grant late indulgence even on terms as to costs without a satisfactory explanation given to justify the delay and the grant of indulgence;

34.5. The court bears in mind that the primary aim in the exercise of case management powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties, but neither does the court forgets the need to deal with cases expeditiously, cost-effectively and proportionately to achieve justice and fairness for the parties before the court and also for other litigants who have demands on the court’s resources;

34.6. The court will take note of the presence or absence of any real prejudice to the other party. Delay itself can amount to real prejudice, especially when a milestone date is likely to be jeopardized by: (a) insufficient remaining time until the milestone event to accommodate the other party’s response if the application is granted; (b) the other party being unfairly or oppressively burdened by having to scramble up a response if the application is granted which thereby adversely affects necessary efforts on his part to meet any milestone event/requirement; and/or (c) significant time that will be taken up by new matters at trial such that the trial dates are likely to be compromised;

34.7. The court is also unlikely to be sympathetic to any late application that raises a new dimension or focus at a late stage that shifts the litigation goalposts, especially when time and opportunity have already been given for the applicant to put forward the fullness of his case; and

34.8. After the CJR, the court expects careful and conscientious consideration and attention to be given to the completion of timetabling/listing questionnaires before the case is set down for trial. The court will be concerned to see if there is any conscious flouting of the rules of the court, practice directions and/or case management timetables or any over-arching or deliberate manoeuvring on the part of the applicant. Disobeying rules of court and court-imposed case management directions and timetable without good reason makes a mockery of the case management system envisaged by the CJR.

35.  I agreed with Mr Phang’s submissions that in the circumstances of this case, I should exercise my case management discretion in favour of granting leave for D to file Zhang’s WS for the following reasons:

35.1. The timing and lateness of the application is explained by the fact that D’s sole witness, Mr. Li Shufang (“Mr. Li”), who ceased to be employed by D’s parent company on 31 January 2026, did not previously definitively refuse to testify at trial but only confirmed orally his refusal to attend trial to give evidence on 8 June 2026.[31] D then immediately identified Mr. Zhang as the most appropriate person presently available to give evidence on D’s behalf[32], and took out the New WS Summons on 22 June 2026. I do not believe there was any deliberate flouting of court-imposed timetables or improper manouervring;

35.2. Having compared the witness statements, the scope of evidence in Zhang’s WS does not go beyond that in Li’s WS and Li’s SWS. In fact, they are almost identical. No new allegations are made in Zhang’s WS which would require any response from P and therefore no prejudice is caused to P; and

35.3. In effect, Mr. Zhang is only replacing Mr. Li to give evidence on behalf of D, due to Mr. Li’s refusal to testify at trial and no delay or disruption would be caused to the trial and trial timetable.

36.  I also agreed that service of the filed Zhang’s WS could be dispensed with. I therefore granted an order in terms of the New WS Summons save that an undertaking was given that Zhang’s WS be filed forthwith and in any event, within the first day of trial.

37.  Given that Mr. Li did not attend the trial, his two witness statements were expunged from the trial bundles.

D2. P’s factual witnesses and their witness statements

38.  As P has passed away and P’s other witness did attend the trial of this action, P’s WS and Ng’s WS shall not be admitted into the evidence or considered at all and were expunged from the trial bundles.

E. ANALYSIS AND MY FINDINGS ON THE ISSUES

E1. Whether D is entitled to the return of the Deposit pursuant to Clauses 3.6 and 4.4 of the SPA

39.  Clause 3.6 of the SPA[33] provides as follows:

“ If Completion does not take place as a result of lapse of the Long Stop Date or otherwise than the default of the Purchaser or the Vendors, this Agreement shall be terminated and the Second Vendor [i.e. P] shall return the Deposit (without interest) in full unconditionally to the Purchaser forthwith in any event within ten (10) Business Days and neither party shall have any obligations and liabilities hereunder and neither party shall take any action to claim for damages or to enforce specific performance or any other rights and remedies save for any antecedent breaches of the terms hereof.” (emphasis added)

40.  This should be read together with Clause 4.4[34]:

“ Save for the conditions set out in Clause 4.2(1) and (4) may at any time be waived by the Purchaser in writing, all other conditions set out in Clause 4.2 are incapable of being waived. If the conditions set out in Clause 4.2 have not been satisfied (or as the case may be, waived by the Purchaser) on or before 12:00 noon on the Long Stop Date, this Agreement shall cease and determine (save and except Clauses 11, 12, 20 and 21 which shall continue to have full force and effect) and thereafter neither party shall have any obligations and liabilities towards each other hereunder save for any antecedent breaches of the terms hereof, and under such circumstances, the Deposit shall be handled in the manner as provided in Clause 3.6.” (emphasis added)

41.  The combined effect of these clauses is that if the conditions in Clause 4.2 have not been satisfied by 12:00 noon on 31 December 2019 (i.e. the Long Stop Date, as extended), the SPA terminates automatically and the Deposit must be returned to D unconditionally within 10 business days thereafter.

42.  I am of the view that:

42.1. There can be no dispute that the Long Stop Date had been extended to 31 December 2019;

42.2. There is no evidence to show that all conditions set out in Clause 4.2 of the SPA had been fulfilled before then, such that Completion ought to have taken place pursuant to Clause 5.1;

42.3. There is not even a positive averment in P’s pleadings that all such conditions had been fulfilled, whether before the Long Stop Date or at all. P’s only complaint was that the non-fulfilment of the conditions precedent had never featured in any contemporaneous records or communications as a reason for D refusing to proceed to Completion[35];

42.4. Whether or not all conditions precedent had been satisfied before the Long Stop Date is a question of fact to which no evidence is given by P;

42.5. On the other hand, Mr Zhang’s evidence (which has not been challenged and I accept) is that at the time of the Long Stop Date, most of the conditions precedent had not been satisfied[36];

42.6. If those conditions were satisfied, one would expect to see evidence of, inter alia: (1) SFC’s approval of the change of substantial shareholder as required under Clause 4.2(5); (2) the obtaining of the necessary licenses and/or approvals from the CSRC for the formation of a sino-foreign joint venture securities company as required under Clause 4.2(3) (see also Clause 7.3A); (3) employment contracts executed by Luen Fat and its key management (including P) as required under Clause 4.2(7); (4) execution of the Shareholders Agreement required under Clause 4.2(8); (5) execution of the Debt Assignment required under Clause 4.2(9); and (6) discussions between D and the Vendors regarding the adjustment of the consideration pursuant to Clause 3.3 (which is to be agreed upon completion of the due diligence review on Luen Fat);

42.7. One would also expect to see evidence that the Vendors: (1) delivered or procured the delivery of the documents set out in Clause 5.2 to P; and/or (2) caused a board meeting of Luen Fat to be held to prior to Completion to pass the resolutions required in Clause 5.3; and

42.8. There is also no evidence that the non-fulfillment of the conditions precedent was due to the default of either D or the Vendors.

43.  In the circumstances, Clauses 3.6 and 4.4 of the SPA are prima facie engaged as I am not satisfied that the conditions precedent in Clause 4.2 were satisfied on or before the Long Stop Date.

44.  Upon a proper construction of Clauses 3.6 and 4.4, non-completion before the lapse of the Long Stop Date is a complete and sufficient reason that triggers P’s obligation to return the Deposit to D:

44.1. Clause 3.6 uses the disjunctive word “or” to separate the conditions of: (1) lapse of the Long Stop Date; and (2) otherwise than the default of the Purchaser or the Vendors, evincing a clear intention that these conditions are separate and distinct;

44.2. In any event, neither party relied on Clauses 3.4 and 3.5[37] to terminate the SPA for the other party’s default and there is also no evidentiary basis for me to find that there was default on the part of D or the Vendors, and even if either party did so, those clauses expressly impose the same obligation on P to return the Deposit to D unconditionally within 10 business days.

45.  By the Demand Letter[38], D demanded P to return the Deposit to D within 10 business days pursuant to Clause 3.6 of the SPA.

46.  As P has failed and/or refused to do so, he is therefore in breach of Clauses 3.6 and 4.4 of the SPA. Unless P can establish any reason why D is not entitled to enforce those clauses to sue for the return of the Deposit, judgment should be entered for D.

E2. Whether D is estopped from claiming for the return of the Deposit

47.  P contended that D is estopped from demanding for the return of the Deposit by reason of the Feb/March 2019 Representation/Promise and the June 2019 Representation/Promise on which P detrimentally relied.[39] The alleged representations/promises, which were allegedly made orally, are that:

47.1. “… if the deal with D eventually fell through for whatever reason, P would be entitled to retain the Deposit as compensation”[40]; and

47.2. “In the event the acquisition is terminated for whatever reason, P shall be entitled to retain the Deposit”[41].

48.  I agree with Mr Phang that the No Oral Modification clauses in the SPA (i.e. Clause 15 and 19) are fatal to P’s alleged estoppel.[42] This was accepted by the learned judge in the Setting Aside Decision, §§48-52[43].

49.  That No Oral Modification Clauses are legally effective has been recognised in Chow Tai Fook Nominee Limited v Diamond City Limited and Anor [2021] HKCFI 3019 at §48 per Wilson Chan J, citing MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] 2 WLR 1603 at §§10-16 per Lord Sumption JSC and Hansom Finance Ltd v Lai Leong [2021] HKCFI 409 at §29 per Linda Chan J.

50.  Accordingly, even if the Feb/March 2019 Representation/Promise and the June 2019 Representation/Promise are proved, they would be invalid by reason of the No Oral Modification Clauses in the SPA.

51.  Furthermore, even if made, the Feb/March 2019 Representation/Promise and the June 2019 Representation/Promise would have been superseded by the Third Letter of Extension.[44] See Setting Aside Decision, §51[45].

52.  In any event, for completeness, the Estoppel Defence is not proved because:

52.1. There is no evidence (as the witness statements on behalf of P have been expunged) to prove the existence of the Feb/March 2019 Representation/Promise and/or the June 2019 Representation/Promise, which P bears the burden of proof, the making of which D has denied as not being supported by any records and being incredible[46];

52.2. There is no contemporaneous document recording or evidencing either of these alleged representations or promises;

52.3. The only document relied on by P is an email sent by Ms Fanny Chan (on behalf of P) to Mr Amin Ng on 25 June 2019[47] but what is unilaterally stated in that email as the purported agreement between the parties is inconsistent with P’s pleaded case that P can keep the Deposit. Rather at §3 it was stated: [有關按金事宜，必須經雙方同意後作出決議。] (English translation: Any matter regarding deposits shall be resolved through mutual agreement by both parties). It is therefore not evidence of the existence of the Feb/March 2019 Representation/Promise and/or the June 2019 Representation/ Promise.

E3. Whether D is in breach of the SPA and/or the Collateral Contract by failing to proceed to Completion on or before the Long Stop Date

53.  As already mentioned, P has not proven any breach of SPA by D failing to proceed to Completion as I was not satisfied that the conditions precedent were satisfied on or before the Long Stop Date. There can be no breach of the SPA by D.

54.  Furthermore, as P has failed to prove the existence of the Feb/March 2019 Representation/Promise and the June 2019 Representation/Promise, the same cannot constitute the Collateral Contract. The question of whether there was breach of the Collateral Contract does not fall to be considered.

E4. Whether D is prevented by the “prevention principle” from recovering the Deposit

55.  P further contended that D is in breach of Clause 5.1 of the SPA, and therefore D is not entitled, by reason of the “prevention principle”, from taking advantage of its own wrongdoing and demanding for the return of the Deposit: see Kensland Realty Ltd v Whale View Investment Ltd (2001) 4 HKCFAR 381 at §§91-96.

56.  But as already mentioned above, the conditions precedent in Clause 4.2 were not fulfilled on or before the lapse of the Long Stop Date on 31 December 2019 and D cannot therefore have been in breach of Clause 5.1.

57.  In the premises, where there is no breach of any obligation owed to P, the prevention principle is simply not engaged. See also the Setting Aside Decision, §19[48].

E5. Whether P is entitled to forfeit the Deposit as a matter of business efficacy and/or the inherent nature of deposits as a matter of general law

58.  Finally, P claimed to be entitled to forfeit the Deposit pursuant to the inherent nature of deposits as a matter of general law or as a matter of business efficacy.

59.  However, as P has not established that D was in breach of Clause 5.1 of the SPA, P’s entitlement to forfeiture plainly does not arise.

F. DISPOSITION AND ORDERS

60.  By reason of the matters above, judgment should be entered in favour of D on its Counterclaim. I would order P to pay to D the sum of HK$15,200,000 together with interest thereon from the 10^th business day after 31 December 2019, i.e. 15 January 2020 at 1% above HSBC prime rate until date of judgment and thereafter at judgment rate until payment in full.

61.  I see no reason why costs should not follow the event. P should pay D the costs of this action including the Counterclaim (and all costs reserved) to be taxed if not agreed.

62.  Lastly, I thank Mr Phang for his assistance.