ADVERTASIA STREET FURNITURE LTD v. CHINA OUTDOOR MEDIA INVESTMENT (HONG KONG) CO LTD

HCCL 145/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.145 OF 1999

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J U D G M E N T

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The action

1. This action is between two Hong Kong companies.  Both are, or at least were, in the business of outdoor advertising.

2. The plaintiff, which I shall simply call ‘Advertasia’, at the material time specialized in the business of street advertising in the PRC.  The defendant, ‘China Outdoor’, also had similar interests, and was interested in acquiring Advertasia’s interests in China.

3. Accordingly Advertasia and China Outdoor signed an agreement, dated 21 April 1999, which provided for the sale by Advertasia to China Outdoor, for an agreed price of HK$68 million, of the entire issued share capital of four of Advertasia’s Hong Kong subsidiary companies active in China.

4. Only two of these four subsidiaries are of relevance to this dispute.  They are Transit Media Network (Beijing) Ltd and Transit Media Network (Guangzhou) Ltd, which during this case have respectively been referred to as ‘TMB’ and ‘TMG’.

5. It was understood by both parties that at the time the share sale agreement was made that both TMB and TMG had controlling interests in joint ventures which had been established with Chinese partners in Beijing and Guangzhou respectively, and through such joint ventures were entitled to own and control advertising rights in bus shelters in those cities, and that such joint ventures had been duly authorized to carry on such advertising business.

6. In the event, China Outdoor refused to complete under the agreement on or by the completion date, 5 May 1999 at 5:00 p.m., and to pay the monies due thereunder to Advertasia.

7. A certain amount has been said in this case as to why completion did not take place.  Advertasia has alluded darkly to commercial motives behind the decision not to proceed, whilst the position of China Outdoor is that due diligence into the establishment of these Chinese joint ventures, and in particular investigation of documents which had been lodged with Chinese state agencies responsible for approving and licensing such joint ventures, had disclosed irregularities which were thought to pose a serious risk to the interests of China Outdoor as purchaser.

8. I make brief reference to such ‘irregularities’ later in this judgment.  For present purposes, however, suffice it to say that the court has no interest in the motive lying behind such refusal to complete.  The sole concern of this court is whether, as a matter of law, China Outdoor was legally justified in declining to go through with this deal.

9. At the end of the day each of the parties has been advised and has taken a view on the merits.  Mr Cosgrove of the defendant has been advised that he was entitled to refuse to proceed, and Mr Preston of the plaintiff — a company which I am told has remained in existence solely for the purpose of prosecuting this action — has been advised that such refusal was unjustified, and that the deal as struck should be specifically performed, alternatively that there should be damages for breach of that agreement.

10. The task of this court is to decide which of these divergent views is correct.

The sole issue

11. The shape of this action has undergone some change.  Initially the ambit of the matters for decision was considerably wider than ultimately became the case, the defendant having pleaded the defence of misrepresentation and having sought the remedy of rectification.  Much of the evidence which had been prepared in this case was directed toward these matters, which were formally dropped on the first day of trial.  Hence a case which had been set down for ten days was concluded in half the time thus estimated.

12. The matter is larded with large amounts of detail and a very considerable amount of paper — some 30 box files were produced for this trial — but at the end of the day relatively few documents were required.  For the most part such viva voce evidence as was led did not strike me as constituting any more than background, although some aspects of the expert evidence possessed greater relevance.

13. At the end of the day, however, this was not a ‘fact-sensitive’ case.  To the contrary, the outstanding issue is one of construction.

14. In terms of liability the defendant’s sole defence to the plaintiff’s claim is that a condition precedent within clause 1.1 of the share sale agreement had not been fulfilled.

15. This clause reads as follows :

“The consideration shall be paid and the Shares transferred providing that no party has received on or before Completion a valid notice or a copy of a notice stating that the joint venture licences and/or the bus shelter advertising operating rights have been terminated in respect of the businesses of the PRC joint ventures owned by the Subsidiaries in respect of the cities of Beijing and Guangzhou only or it is otherwise discovered that the J.V. contracts attached in Appendix B are not valid or have been terminated.  If any party becomes aware of such notice prior to Completion it shall provide a copy of such notice to the other party.”

(The italicized emphasis represents the handwritten additions to the share sale agreement typescript.)

16. It is common ground that “the J.V. contracts attached in Appendix B” were never thus attached, but that the phrase referred to the Beijing and Guangzhou joint venture contracts.  Accordingly, argument throughout has proceeded upon this basis.  Further, there is no question of the joint venture licences or operating rights having been terminated as at the date of completion, or of any notice having been tendered in this regard.

17. Against this background, the approach of the defendant is to focus on the meaning to be attributed to the phrase “the J.V. contracts … are not valid”.  On behalf of China Media Mr Harris submitted that in determining what “valid” means it is legitimate and necessary to have regard to the commercial purpose of the agreement, praying in aid the observations of Lord Hoffmann on the principles of interpretation in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] AC 896, at 912-913.

18. The ‘purpose’ of the agreement would not have been achieved, said Mr Harris, if there was serious doubt whether the joint ventures in question had been entered into by TMB or TMG or if there was “a more than fanciful risk” at the time that completion was to take place that such joint ventures, as approved by the Chinese state authorities, were liable to be set aside.  Accordingly the word ‘valid’ should be construed in this context.

19. Mr Harris sought support for this argument from a dictum of Lord Jessel MR in Lysaght v. Edwards [1875-1876] 2 Ch D 499, at 507, in which Lord Jessel stated :

“Now, what is the meaning of the term “valid contract”?  “Valid contract” means in every case a contract in form and in substance, so that there is no ground for setting it aside as between the vendor and purchaser – a contract binding on both parties.”

20. The short point, therefore, Mr Harris argued, was that discrepancies which had been identified within the documents submitted to the Chinese state authorities, and in particular the Ministry of Foreign Trade and Economic Cooperation (‘MOFTEC’) at the time approval for the setting up of the joint ventures was sought, rendered the joint ventures liable to be set aside, and thus not “valid” within the meaning of that word as used within the context of this agreement.

21. This submission seemed to me then, as now, to amount to little more than the assertion that “valid” must be construed, in effect, as “not voidable” at any future date.

22. In response Mr Tong SC, for the plaintiff, Advertasia, took several points.

23. His primary argument was that given the content and context of this clause the natural and ordinary meaning of the words “not valid” must mean that the joint venture contracts were void “on or before Completion”, which is both the time stipulated for receipt of the notice specified in the first part of clause 1.1 and also is the time by which it might be “otherwise discovered that the J.V. contracts … are not valid or have been terminated.”

24. In other words, said Mr Tong, as at completion date the only question to be asked is whether these contracts were subsisting and valid; there could be no question that these parties intended to mean anything else, such as what may happen on the next day, or within the next year or the next five years.  And plainly, on the evidence before the court, he said, these contracts indisputably were valid on the day of completion, that is, 5 May 1999, and there could be no possible way of arguing otherwise; indeed Mr Harris had not attempted so to do, not least because these contracts had remained in place for some two or three years until a dispute had arisen — which was decided in the Chinese courts — on the basis that the foreign party thereto was in breach of contract.  In this connection, also, the defendant’s expert, Mr Wu, had accepted that as a matter of Chinese law the joint venture contracts could not be said to be other than valid as at the date of completion.

25. Thus, Mr Tong submitted, even if Mr Harris was correct — which he maintained was not the case— in his contention that due to the discrepancies discovered in the documents submitted to MOFTEC that these joint venture contracts were liable to be revoked by that body, the rhetorical question to be asked in these circumstances was, ‘so what?’  This simply is not what the clause, properly construed, in fact meant.  The relevant phrase which had been adopted, Mr Tong noted, was “not valid or have been terminated”, and in making this agreement the parties had not, as would have been open to them, used a form of words referring to a revocation of approval by MOFTEC, or a revocation or withdrawal of the business licence by the State Administration for Industry and Commerce (‘SAIC’).

26. I agree.  I find it difficult to accept Mr Harris’ contention that the observation of Lord Jessel in Lysaght v. Edwards, op cit., is sufficient to get him home on the meaning he wishes to be attributed to the word ‘valid’, and it is not easy to appreciate why the dictum relied upon in the particular circumstances of Lysaght should be regarded as buttressing the defendant’s argument in the instant case.  As Mr Tong pointed out, the dictum in Lysaght upon which reliance was placed was made not in relation to the construction of a commercial contract, but in the context of the construction of a will, wherein the court had to reach a decision as to how to assess the rights of the testator, and in particular the issue of whether the contract there in issue was ‘valid’ in the sense that it operated so as to convert realty into personality.

27. It follows from the foregoing, therefore, that in terms of the argument as to the construction of the condition precedent within clause 1.1 of the agreement, I accept that Mr Tong’s contention — which he has characterized as his ‘knockout point’ — is correct.  I hold that as at the date of completion the joint venture contracts could not be regarded as other than ‘valid’, and it follows that this conclusion, without more, is sufficient to dispose of the liability aspect of this case in favour of the plaintiff.

Incidental matters

28. Should I be wrong in this primary conclusion, however, I now address certain other issues which have been raised in this case, and to indicate the conclusions that have reached upon these matters.

29. There has been some debate about the identity of the foreign party to the joint venture contracts.  Upon the totality of the evidence there can be no question but that, as a matter of fact, the foreign parties to the joint venture contracts were TMB and TMG, and not a company known as ‘Rapidventures S.A.P.A.H. Limited’, a Hong Kong company which was formally struck from the Companies’ Register on 6 February 1998, some 14 months prior to the share sale agreement the subject of these proceedings.  Mr Preston, a former director of the plaintiff, Advertasia, gave evidence that so far as he knew Rapidventures had never been involved in the running of these joint ventures, and that he had been appointed to the respective boards of the joint ventures and he had regularly participated in board meetings.  I accept this evidence, which was not challenged.

30. In addition, it seems evident, on the mass of documentation before the court, that it cannot seriously be doubted that since the inception of the Beijing and Guangzhou joint ventures that all parties have recognized that TMB and TMG, and not Rapidventures, have been acting as the foreign parties thereto, and that it is overwhelmingly probable that the phrase “Ai Wei Yi” in the Chinese language versions of the joint venture contracts referred to TMB and TMG.  This is patent from the English version of those contracts, and in any event the company registration numbers on both English and Chinese versions of these contracts were those of TMB and TMG.  Moreover, as Mr Tong pointed out, “Ai Wei Yi” has never been the registered Chinese name of Rapidventures, whereas the registered Chinese name of TMB was ‘Ai Wei Yi’ as at the date of the MOFTEC approval of the Beijing JV contract, whilst currently the registered Chinese name of TMG is a shorter version of ‘Ai Wei Yi’.

31. Mr Harris’ submission in terms of that which he referred to as the ‘execution irregularities’ — that is, that TMG and TMB had not executed the respective joint venture contracts, and thus appeared not to be the foreign parties to the joint ventures — is premised upon the fact that as at the date of execution of the Beijing and Guangzhou joint venture contracts (on 2 July 1995 and 25 December 1994 respectively) both TMG (formerly Citiweal) and TMB (formerly Likewin) appear to have had different Chinese names, although the indisputable fact remains that between 4 July and 7 September 1995 Citiweal’s Chinese name was ‘Ai Wei Yi’, and that on 28 September 1995 Likewin had adopted it. Accordingly it is clear that the name ‘Ai Wei Yi’ was in contemporary currency with regard to these companies, and in such circumstances it strikes me as significant that the specific reference within the joint venture contracts to the company registration numbers 477514 and 484496 was a reference to the numbers issued by the Hong Kong Companies’ Registrar to TMB and TMG respectively.

32. Accordingly I do not consider that there is anything in that which I will term the ‘identity point’, and had it been of relevance I should have rejected this argument.  There is no doubt in my mind, on the evidence before this court, that TMB and TMG were the respective foreign parties to these joint ventures.

33. The like issue of identity, however, raises its head not only as at the date of the execution of the joint venture contracts, but also as at the dates upon which MOFTEC approved the joint ventures, which dates were 19 October 1995 for the approval of the Beijing joint venture, and 26 December 1994 for the Guangzhou joint venture.

34. This element of the case falls within that which Mr Harris termed the ‘approval irregularities’. Essentially, this involved an examination of the documents which were submitted to MOFTEC for approval, which in the case of the Beijing joint venture were the Chinese language version of the Beijing JV contract (in which the English name of the foreign joint venture party did not appear, instead the Chinese name being stated as ‘Ai Wei Yi’ with the Hong Kong company registration number 477514), the incorporation and registration documents of Rapidventures SAPAH Limited (which had Hong Kong company registration number 452199), together with a letter from Hua Chiao Commercial Bank Ltd relating to the creditworthiness of Rapidventures.  The Certificate of Incorporation of Rapidventures had been physically altered to add the Chinese name ‘Ai Wei Yi’ (without the characters for ‘Limited’), although this was not the registered Chinese name of Rapidventures.

35. A similar pattern was followed in terms of the documents submitted for the approval of the Guangzhou JV.

36. In this regard Mr Harris argued that the only inference which reasonably could be drawn was that the MOFTEC approval was to a joint venture with Rapidventures as the foreign party, and that since clearly there had been no approval forthcoming in terms of joint ventures with TMB and TMG the defendant’s case as to invalidity of the respective joint venture contracts was thus established.

37. I do not consider that this argument would have succeeded either, had this case been decided other than upon the primary construction basis.

38. Whilst it seems clear that the requisite documentary submissions to MOFTEC and SAIC were less than accurate, and that there arguably existed irregularities within the application process — it is evident that Messrs Duparis and Du, whom at this stage were running the plaintiff’s operation in China, were doing much as they pleased — nevertheless it is worth bearing in mind that that to which MOFTEC was giving its approval was the joint venture enterprise itself, that is, the company that was to be set up pursuant to the joint venture (which was in fact so set up) and to which the business licence also was issued.

39. Moreover, the joint venture having undoubtedly been thus approved, the burden of the expert evidence before the court is that, as a matter of PRC law, the joint venture contracts in fact were valid and remained valid absent cancellation of such contracts: as earlier observed, the defendant’s Chinese law expert, Mr Wu, expressly confirmed during cross-examination (on the fourth day of the trial) that this indeed was the position.  This view was supported by the factual evidence from the plaintiff, which I accept, to the effect that at a meeting on 6 May 1999 the defendant’s PRC lawyer, Mr Ma, had confirmed that the contracts were valid notwithstanding the irregularities, and that he had described a formal rectification process of several weeks.

40. The consensus of the experts is that there was no known precedent in which there had been a revocation of MOFTEC approval upon the basis of documentary irregularities within the application process, and the view of Mr Cai, the plaintiff’s expert, which I accept, was that the official position would be to seek rectification of any perceived irregularities rather than any revocation of approval or invalidation of contracts.  In addition, both experts agreed that MOFTEC would not generally invalidate a JV contract once it had been approved, but instead would leave it to the parties to litigate their differences within the Chinese court/arbitration system.  In this context I further accept the plaintiff’s submission that notwithstanding the existence of English and Chinese versions, these represent but a single joint venture contract, and that, as Mr Wu also accepted, the responsibility of MOFTEC was to approve that contract, with discrepancies between the versions, if any, or resolution of any other dispute, being left to subsequent judicial pronouncement.

41. Mr Tong submitted, in my view correctly, that there was “not one iota” of evidence that the foreign or Chinese parties to these contracts had ever raised any complaint about the documentary irregularities of which complaint now was being made by the defendant, or had wished to litigate the same, and he further submitted that in this case the defendant had not been able to identify any provision of Chinese law by virtue of which these joint venture contracts could be set aside in these circumstances.  An added argument, again in my view correct, was that under Article 55 of PRC Contract Law a right to rescission is lost if it is not exercised within a year of the date on which a party learned the cause for any such rescission, and since the Chinese party to both joint ventures was responsible for submission of the documents to MOFTEC such time bar clearly would have expired by 1999.

42. The short point, it seems to me, is that on the state of the evidence before the court it is not possible to conclude that if MOFTEC had known (and for present purposes I am assuming that it did not) of the irregularities now complained of that it would have declared the joint venture contracts invalid.  To the contrary.  The evidence is altogether the other way.  As a matter of history the joint venture enterprise was approved, and indeed the Beijing joint venture remained in place until the Chinese party successfully sought termination of that joint venture on the ground of breach of agreement on the part of TMB — in which proceedings it was held (and not argued otherwise) that the Beijing joint venture contract was valid.

43. At the end of the day, therefore, had it been necessary, I should have been against the defendant upon the issue of the ‘approval irregularities’ also.  In my judgment the defendant clearly has failed in the attempt to establish that as a matter of PRC law that the JV contracts were invalid on 5 May 1999 by reason of the documentary irregularities. The weight of the evidence is wholly against such a conclusion.

44. I mention, finally, two further matters which have been debated during this case.  I do not think that either is of any consequence.

45. First, Mr Tong submitted that on the true and proper construction of clause 1.1 of the share sale agreement that the invalidity must be “otherwise discovered”, and that as a matter of construction this could not include something that the defendant knew or ought to have known prior to the making of the agreement.  He suggested that the defendant plainly was placed on notice in terms of ‘naming irregularities’ since these difficulties had been mentioned elsewhere in the documentation, in particular in Schedule B to the 2^nd Shareholders’ Agreement, and also that they had been listed in a fax of 23 November 1998 to Mr Cosgrove of the defendant.

46. In his evidence Mr Cosgrove did accept that he had scanned Schedule B, which had raised “alarm bells” in his mind, but looking at the evidence as a whole I would have been disinclined to decide this case on this basis.  The evidence is too tenuous, in my view, and whilst I accept that the defendant had extensive knowledge of the plaintiff’s business, I would not be prepared to find as a fact that the contractual term “otherwise discovered” in itself would have put the defendant out of court.  So I am, or would have been had such been necessary, against the plaintiff on this point.

47. The final issue to which I refer under this head concerns the issue of the ‘Side Agreement’, an issue which was but lately raised by the defendant, wherein its case was amended to plead that the JV contracts that were referred to as falling within Appendix B to the Agreement included not only the Beijing and Guangzhou JV contracts but also a ‘Side Agreement’ which had been signed between the parties on 2 July 1995.  As earlier noted, it is common ground that Appendix B to the share sale agreement never actually was compiled, although it is the plaintiff’s position that such Appendix B was intended to include only the English and Chinese versions of the JV contracts.

48. The ‘trigger’ to the inclusion of this Side Agreement within this case appears to have been the disclosure by the plaintiff of the arbitral award of CIETAC dated 10 July 2000 (which found the Side Agreement to be of no legal effect), and of subsequent Chinese court judgments handed down during this sequence of litigation.  In fact it seems to me that reliance by the defendant on this award is something of a double-edged sword given that this document refers at the same time to the JV Agreement as the “binding document … which has been submitted and approved by the authority”, whilst the subsequent judgment of the Beijing People’s High Court further held that the Side Agreement (referred to in the Chinese judgments as an “addendum”) did not form part of the Beijing JV contract.

49. Be that as it may.  Mr Harris submitted that the Side Agreement, which was signed on the same date as the principal share sale agreement, and which was made between Beijing Municipally Transport Advertising Company and a company which in the Chinese language version has the name ‘Ai Wei Yi’ and in the English language version the name ‘Citiweal’, indeed did form part of the Beijing JV contract, and contained important commercial terms, including the obligation to construct bus shelters and to licence those shelters for advertising purposes.  The Side Agreement and the Beijing JV contract thus were part of the composite whole and, as a matter of Hong Kong law, should be read together and regarded as one, said Mr Harris, and given the Chinese decision as to the invalidity of this side agreement it necessarily followed that the Beijing joint venture contract, as part of that whole, itself was rendered invalid, and thus, in the words of the reamended pleading, “is null, void and of no effect, or is otherwise considered to be invalid under clause 1.1 of the [share sale] agreement”.  This was the thrust of the argument as I understood it.

50. Mr Tong would have no truck with this submission.  He noted that the Side Agreement simply was not a joint venture contract nor part thereof.  It was, he argued, no more than an ancillary agreement providing for the manner in which capital under the Beijing JV contract was to be provided, and, significantly, in contrast to the JV contracts (which became effective as of the date of the MOFTEC certificate of approval), it became binding only upon the issuance of the business licence.  The Beijing JV contract self-evidently could work perfectly well without the aid of the side agreement, he said (and indeed it had), and in any event the Beijing People’s High Court had found as it did and had held, as a matter of PRC law, that the side agreement was not part of the Beijing JV contract.

51. In addition, said Mr Tong, Mr Preston had given evidence that during the negotiations the side agreement never had been mentioned, which evidence had been unchallenged in cross-examination nor contradicted by the evidence of Mr Cosgrove.

52. I agree with Mr Tong’s submission in this regard.  I do not accept that the side agreement was part of the Beijing joint venture contract.  Nor, for the avoidance of doubt, do I consider that on a fair reading of his evidence that Mr Preston effectively had “conceded that the side agreement formed part of the Beijing JV contract”, which was a further submission made on behalf of the defendant.

53. At the end of the day, therefore, in my view the issue of this ‘side agreement’ failed to assist the defendant, and I so hold, or, more accurately, I should have so held if a conclusion upon this question had been necessary to dispose of this case.

The appropriate remedy

54. Having found that the defendant is liable to the plaintiff, the question thus arises as the appropriate remedy in this dispute.

55. The plaintiff asks for specific performance of the share sale agreement.  To the contrary, the defendant suggests that damages is the proper remedy in the circumstances.

56. Mr Harris argued that in so far as liability be established against his client, this case now should be adjourned to a Master for an inquiry into damages.  He submitted that it is common ground that the share sale agreement was to transfer a controlling interest in the joint ventures, and that this cannot now take place because the plaintiff “has failed to maintain the business”.  He further suggested that the court generally will grant specific performance of a sale of shares in an unlisted company in favour of a purchaser only, and that damages would be an adequate remedy.

57. To the contrary Mr Tong submitted that it is established law that a contract to transfer shares in an unquoted company will generally be specifically enforced at the suit either of purchaser or vendor : see Jones and Goodhart, Specific Performance, 2^nd Ed., 1996, at page 161.  In this instance, he argued, there was no reason to depart from such general approach, which applied equally to a claim by purchaser or vendor.  He argued that the plaintiff was ready and able to complete, and that in this instance damages would not be an adequate or appropriate remedy due to the acute difficulty of assessing the market value of TMB and TMG in 1999, not least as the result of the activity of Messrs Deparis and Du —the shareholders whom effectively had hijacked the plaintiff’s operations in China — in relation to these companies.

58. It strikes me that any attempt to assess damages at this stage and in the circumstances of this case would be highly problematic and extraordinarily difficult, and at the end of the day would be most unlikely to produce a just or a fair result.  In my view the remedy of specific performance is appropriate, and in this connection, and as a matter of law, I fail to grasp the relevance of the fact that the plaintiff is not now trading.

59. However, an order of specific performance of the share sale agreement is not the end of the story in terms of the remedies sought.  In addition the plaintiff seeks equitable damages in respect of losses suffered consequential upon the defendant’s breach of agreement, the particulars of which are pleaded at paragraph 8A of the Re-Amended Points of Claim.

60. The position as to these heads of loss is that in themselves the figures have been agreed, subject to the establishment of liability, although it is not agreed that all the sums properly have been incurred.

61. The four heads of consequential loss comprise office costs and business expenses, legal costs incurred by the plaintiff in HCCL No.21 of 2003 (which action was commenced against Messrs Deparis and Du upon certain promissory notes assigned to the defendant under the share sale agreement, action on which was necessary to preserve the plaintiff’s right to specific performance), legal costs incurred in PRC proceedings resulting in the Beijing judgments dated 26 August and 21 November 2003 (the Chinese litigation concerning the validity of the Beijing side agreement and the termination of the Beijing joint venture), and finally certain ‘consultancy fees’ paid by the plaintiff to Mr Preston in respect of the conduct and preparation of this action.

62. Of these four heads, not only are the figures agreed qua figures, but ultimately the only substantive point Mr Harris takes in terms of these claims is that the ‘consultancy fees’ paid to Mr Preston — quantified at HK$1,492,885.30 —did not fall under the head of equitable damage, but were in the nature of litigation costs, and as such should be subject to the normal process of taxation.

63. The issue was not fully argued, but having reflected on the point I am inclined to think that Mr Harris is right.  Accordingly, under the head of consequential loss I disallow the claim for Mr Preston’s ‘consultancy fees’, which seems to me to be more properly dealt with as a matter of costs.

64. If and in so far as specific performance was to be granted, Mr Tong further asked for interest at the commercial rate upon the purchase price, and on such consequential loss as the court may order, to the date of judgment.  I see no reason not to accede to this request, which is sustainable as a matter of law, although there may be practical difficulties which require to be addressed in terms of identifying the specific periods for which interest is to run upon the heads of consequential loss.

Order

65. In summary, therefore, the substance of the order of this court consequent upon trial is as follows :

(1)     There be specific performance of the Agreement dated 21 April 1999 entered into between the plaintiff and the defendant;

(2)     The defendant do further pay to the plaintiff the sum of HK$1,216,404.30 in equitable damages;

(3)     There be an order nisi that interest be paid at the rate of 1% over prime rate upon the sum of HK$50 million from 5 May 1999 to the date of judgment herein, and upon the sum of HK$18 million at the like rate from 30 June 2000 to the date of judgment herein;

(4)     There be an order nisi that interest be paid upon the respective sums of HK$144,122, HK$706,967.49 and HK$365,284.98 at the rate of 1% over prime from dates to be agreed to the date of judgment herein;

(5)     There be an order nisi that the costs of this action be to the plaintiff, such costs to be taxed if not agreed.  I certify this action as fit for two counsel.

66. I should be assisted if junior counsel would agree a draft minute of Order to be engrossed.