KEEP POINT DEVELOPMENT LTD v. CHAN CHI YIM AND OTHERS

FACV No. 9 of 2002

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 9 OF 2002 (CIVIL)

(ON APPEAL FROM CACV NOS 1027 OF 2000 AND 322 OF 2001)

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J U D G M E N T

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Chief Justice Li :

1. I agree with the judgment of Sir Gerard Brennan NPJ.

Mr Justice Bokhary PJ :

2. I agree with the judgment of Sir Gerard Brennan NPJ.

Mr Justice Chan PJ :

3. I agree with the judgment of Sir Gerard Brennan NPJ.

Sir Noel Power NPJ :

4. I agree with the judgment of Sir Gerard Brennan NPJ.

Sir Gerard Brennan NPJ :

5. In 1993 Mr Cheng Kwok Tung, the General Manager of Full Country Development Limited ("Full Country") approached the owners of units in buildings situated at 112-134 Wan Fung Street and 84 Sheung Fung Street, Wong Tai Sin, Kowloon ("the property") with a proposal for the redevelopment of the property. Full Country was controlled by Mr Cheng Kwok Fai, then a respected member of the community. Mr Cheng Kwok Tung proposed that the owners of the units should sell them to Full Country and be paid 10% of the agreed price, the balance of 90% being withheld by Full Country to be applied as payment for a unit of similar dimensions in the new development when completed or in a similar development known as Profit Mansion. Full Country was engaged at that time in the redevelopment of the Profit Mansion site under arrangements similar to those proposed by Mr Cheng.

6. The proposal required the owners of the units in the property to move out of their units and to give vacant possession to Full Country but they were to receive a monthly payment during the construction period as rental reimbursement, a moving allowance and, in the case of some units, an allowance in respect of access to the roof of the building.

The provisional agreement

7. As the value of the proposed new units would vastly exceed the value of the old units, the proposal to allow the unit holders to acquire a new unit for 90% of the sale price of their old unit was extremely attractive. It was sufficient to induce the owners of the old units to agree to the proposal and to sign provisional sale and purchase agreements in Chinese. These agreements prescribed the terms which were to be included in formal sale and purchase agreements to be entered into at a later date. The English translation shows that Full Country promised that "the site of the new development building is not to be sold on". But the unit holders were not offered any security for the performance of Full Country's promise. The provisional agreement contained a clause "that at transaction date of the sale and purchase of [the unit holder's] property and the execution of the Advance Property Selection for Purchase of [Full Country's] new development building need only be lodged at the government stamp office to be stamped".

8. When the respective unit holders signed these provisional agreements, they did not have the benefit of legal advice. Deputy Judge Woolley in the Court of First Instance described them as vulnerable people who "needed firm guidance and informed advice" before entering into a transaction that was obviously dangerous. Full Country procured for them the services of Yuen Sung & Co., a firm of solicitors, whose fees were (for the most part) paid by Full Country. Yuen Sung & Co. ("YSC") were retained to act for each unit holder in entering into a formal agreement for the sale of the holder's unit and the acquisition of an option for the purchase of a new unit in the proposed development or in Profit Mansion. Full Country informed the unit holders that YSC would act for them and provided YSC with the documentation which the unit holders were to be invited to execute. The unit holders were divided into two groups most of whom were brought by bus to YSC's offices; one group in May 1994, the other in October 1994. There were some other unit holders who, for one reason or another, were not included in the groups but who became YSC's clients. All unit holders except one (Mr Cheung Chiu Po) became YSC's clients. Mr Yuen, the principal of the firm, interviewed the unit holders who came by bus. He gave all the unit holders who became his firm's clients advice about the transaction. Typically, the transactions on which YSC advised adopted a common form and it is convenient at this stage to identify the critical elements in the contractual instruments which the unit holders executed.

The formal contract of sale and purchase

9. First, there was a formal contract for the sale and the purchase of the units, stipulating the price, an amount or amounts to be paid by way of deposit and part payment, a date for completion and providing for the payment of the balance of the price by cheque upon completion. The prices stipulated in these contracts exceeded what was found to be the "market values" of the respective units at that time. There is an issue about the basis of an agreed valuation of the units on which this finding depends (to which reference is made below) but the agreed valuation showed that the average value of a basic unit in 1994 was of the order of $700,000. The prices stipulated in the contracts of sale and purchase were much higher, typically $1.2 million or a little more. These contracts were expressed to supersede and to cancel any provisional agreement. The sale and purchase contracts were dated a few days before the stipulated completion date. They required the vendor to give vacant possession on completion. The form of these contracts accorded with standard conveyancing practice in Hong Kong.

The assignment

10. The second document, bearing the completion date, was an assignment of the unit by the unit holder to Full Country in consideration of a sum corresponding to the purchase price stipulated in the sale and purchase agreement, receipt of which was acknowledged by the vendor. These assignments were registered in the Land Registry under the Land Registration Ordinance (Cap. 128). Ten of the unit holders, having received their deposits, received the balance of the stipulated purchase price in cash but the great majority - the unit holders who are respondents in the first of these appeals - agreed to apply 90% of the purchase price to the purchase of an option for a new unit in the proposed redevelopment or in Profit Mansion. The evidence shows that those unit holders who received a cash settlement on completion stipulated for, and received, much greater amounts for their units than did the unit holders who applied 90% of their purchase price to the purchase of an option for a new unit in the proposed redevelopment of the property or in Profit Mansion. On average, the residential units sold for cash fetched $2.09 million as against an average of $1.28 million for the residential units of other client unit holders.

The option agreement

11. In evidence, Mr Yuen was insistent that any unit holder was at liberty either to take a cash settlement or to purchase an option for a new unit. If a unit holder decided to purchase an option, an option agreement was prepared after any necessary discussion about its terms had been concluded. The unit holder executed that agreement, perhaps on the same day as the execution of the sale and purchase agreement or on the completion date. The unit holders who entered into an option agreement were liable for the stamp duty on that agreement. The stamp duty was deducted from the 10% cash amount payable to the unit holder on completion of the sale and purchase contract.

12. The option agreement bore the same date as the assignment of the old unit. It provided that, in consideration of the unit holder's paying to Full Country an amount corresponding to 90% of the purchase price of the unit sold by the holder, "Full Country grants to the [unit holder] the option ... of purchasing the [new unit] at the price" paid for the purchase of the option. The option was to be exercised within 1 month from notice that Full Country was in a position to pre-sell the new units or within 1 month from issuance of the Occupation Permit for the new building. If the option were not exercised, it would lapse. The option agreement may not be exquisitely drawn but the intention seems to be that, in exchange for 90% of the purchase price of the old unit retained by Full Country, the unit holder was to receive an option to acquire a new unit without further payment. The unit holder would lose all benefits under that agreement, and thus lose the benefit of 90% of the stipulated sale price of the old unit, if the option were not exercised. The option agreement also provided for the payment by Full Country to the unit holder of additional amounts for reimbursement of removal costs, for reimbursement of rent of other premises and, in some instances, compensation for decoration of the unit and an allowance for roof top access. One unit holder also was entitled to "compensation for vacant possession".

13. The option agreement provided that Full Country should complete the new building within 24 months from obtaining vacant possession of the old unit. It required a unit holder who exercised the option to enter into a sale and purchase agreement for the new unit, 90% of the purchase price of the old unit being "applied towards payment of the sale price [of the new unit] or part thereof". The unit holder was to pay the stamp duty on the option agreement. Two other clauses of the option agreement are important:

"3.2 Full Country further undertakes that it shall not enter into resolution for winding up or dissolution and further it shall not assign the Property as a whole or in parts or enter into any agreement so to do during the continuance in force of this Agreement and before the completion of the re-development of the said Building (save and except by way of a Legal Charge and/or Building Mortgage of the Property)."

and

"6.3 The parties hereto agree that this Agreement shall not be registered at the Land Registry."

14. The latter clause left the unit holder completely unsecured as against any subsequent purchaser or mortgagee, as ss 3 and 4 of the Land Registration Ordinance provide:

"3. Priority of registered instruments; effect of non-registration

(1) Subject to this Ordinance, all such deeds, conveyances, and other instruments in writing, and judgments, made, executed, or obtained, and registered in pursuance hereof, shall have priority one over the other according to the priority of their respective dates of registration, which dates shall be determined in accordance with regulations made under this Ordinance.

(2) All such deeds, conveyances, and other instruments in writing, and judgments, as last aforesaid, which are not registered shall, as against any subsequent bona fide purchaser or mortgagee for valuable consideration of the same parcels of ground, tenements, or premises, be absolutely null and void to all intents and purposes: Provided that nothing herein contained shall extend to bona fide leases at rack rent for any term not exceeding 3 years.

4. Notice of unregistered instrument not to affect registered instrument

No notice whatsoever, either actual or constructive, of any prior unregistered deed, conveyance, or other instrument in writing, or judgment, shall affect the priority of any such instrument as aforesaid as is duly registered."

The solicitors' duty

15. Thus, although each unit holder was to receive in cash only 10% of the stipulated purchase price of the unit, the option to purchase a proposed new unit when constructed for the balance of 90% was not to be registered as against the title to the property in the Land Registry pursuant to the Land Registration Ordinance. The trial judge (Deputy Judge Woolley) observed "There can be no doubt that this is not just an unusual agreement, but an extraordinary one, fraught with immense danger for an unwary layman who might not appreciate that danger". Far from warning of danger, Mr Yuen gave the unit holders a degree of assurance about the risks of the transaction and did not point out that Full Country was at liberty to mortgage the property for an unlimited amount.

16. It was incumbent upon the solicitors pursuant to the retainer which they must be taken to have accepted on behalf of each of the unit holders to advise each unit holder of the extreme risk to which the unit holders were exposed by entering into the option agreement. Deputy Judge Woolley appositely cited the judgment of Bingham LJ (as he then was) in County Personnel (Employment Agency) Ltd v. Pulver [1987] 1 WLR 916, at p.922:

"It seems obvious that legal advice, like any other communication, should be in terms appropriate to the comprehension and experience of the particular recipient. It is also, I think, clear that in a situation such as this the professional man does not necessarily discharge his duty by spelling out what is obvious. The client is entitled to expect the exercise of a reasonable professional judgment. That is why the client seeks advice from the professional man in the first place. If in the exercise of a reasonable professional judgment a solicitor is or should be alerted to risks which might elude even an intelligent layman, then plainly it is his duty to advise the client of these risks or explore the matter further."

Deputy Judge Woolley rejected YSC's submission that it had been retained merely to prepare the documentation putting the provisional agreement into effect. The clause agreeing that the option agreement was not to be registered in the Land Registry was not in the provisional agreement; it had been included in the draft documentation provided by Full Country's solicitors. Deputy Judge Woolley found:

"In these circumstances [YSC's] duty was clear, to advise and warn of the danger thereby presented. Not only did they not do this, they did not spell out at least one of the other dangers in the agreement, that of the right of Full Country to mortgage the property otherwise than by only a building mortgage, something which Mr Yuen admitted he ought to have done."

His Lordships held as follows:

"In the circumstances I find that Yuen Sung in their capacity of the defendants' solicitors, failed to adequately advise and warn the defendants of the dangers inherent in the option agreement, and advise as to alternative ways of proceeding by which their interests might be protected, and were accordingly in breach of their duty of care and their duty to act in the best interests of the defendants."

The most obvious risks for the unit holders were that Full Country might not complete the building, that it might sell or mortgage the property to a third party who would take title free of the unit holder's options, and that Full Country would be unable to meet any claim for damages arising from breach of the option agreement. Full Country, for its part, may not have entered into the contracts for the purchase of the old units without acquiring a clear title which would allow it to mortgage the whole of the property in order to obtain the funds needed for its redevelopment. The manifest risks of the redevelopment not taking place and the consequent loss were being cast on the unit holders but they were given no adequate warning or advice. As time passed, they discovered that Full Country's contractual promises were not to be fulfilled.

17. Full Country encountered financial difficulties, defaulted in the payments that it was to make to the unit holders under the option agreement and on 30 December 1996 sold the property free of the unit holder's options to Keep Point Development Limited. Although it had an option to repurchase the property it did not do so. Full Country went into liquidation on 4 November 1998. Keep Point developed the property, creating new units for sale. In November and December 1998, the old unit holders sought to register their options on the title to the property or, in some instances, on the title to a unit in Profit Mansion as well. Keep Point brought proceedings which resulted in a declaration that the option agreements were null and void as against Keep Point. The unit holders, defendants in Keep Point's action, were held liable in damages to Keep Point. As defendants in the main action, they brought third party proceedings against Full Country (then in liquidation and without any prospect of meeting its liabilities) and YSC. Deputy Judge Woolley, holding that YSC were in breach of their duty of care, gave judgment against them. The assessment of damages then fell for determination.

The course of litigation

18. In their pleadings, the unit holders gave the following particulars as heads of the damages they claimed:

" (a) The purchase prices of the New Units at such date as the Court may assess;

(b) The rental reimbursements payable to the Defendants .....;

(c) Distress and inconvenience suffered by the Defendants;

(d) Stamp duty paid by the Defendants on the option agreements;

(e) Legal costs incurred by the Defendants in respect of the main action and these Third Party proceedings as well as other ancillary proceedings;

(f) Interest on any sum(s) found due."

In addition, the unit holders sought an indemnity against any damages for which they might be held liable to Keep Point.

19. In written submissions when the unit holder's case was opened, counsel for the unit holders repeated this claim. In closing written submissions, counsel put the claim on alternative bases: either the cash amount which the respective unit holders might have received from Full Country had they declined to enter into the option agreement or the value of the new units. It was submitted that the cash amount which might have been received would have been much more than the amount stipulated in the sale and purchase contracts since those who had taken cash had got more than other holders of comparable units. Counsel for YSC objected to the raising of the claim for the cash amount on the ground that it had not been raised earlier in the litigation and YSC had had no opportunity to investigate whether Full Country had had the ability or the willingness to pay cash to all unit holders.

20. Both bases advanced by the unit holders were rejected by Deputy Judge Woolley. The claim based on the value of the proposed new units was withdrawn by the unit holders' counsel in his final address. It was a claim which would have clearly failed as it depended on a finding that YSC ought to have registered the option agreements in the Land Registry - a step which would have been in breach of those agreements.

21. The cash basis was rejected because, as his Lordship found, there was "no evidence to show ..... that they had the financial resources then to pay all the owners at that level, nor that the financial viability of doing so was such that they would have wanted to do so". As we now know, Full Country rapidly ran into financial difficulties, entered into negotiations with others which fell through, and finally had to sell the site in breach of their agreement with the defendants. This finding, which was affirmed by the Court of Appeal, is clearly correct. In the absence of direct evidence of Full Country's capacity and willingness to pay cash for all units, the inference to be drawn from the provisional agreement, the terms of the option agreement, the collapse of Full Country's project and its sale of the property to Keep Point is inescapable: Full Country intended to acquire the property outlaying only about $39 million (the amount actually outlaid) in exchange for a clear title available as security for mortgage finance. The fact that Full Country had to pay some unit holders an enhanced price in cash in order to gather in all titles to the property does not support a suggestion that Full Country was willing or able to pay an enhanced price, or even the contract price, in cash to all unit holders.

22. Accordingly, Deputy Judge Woolley came to the conclusion:

"..... that there would have been no deal with Full Country at all had they been properly advised, and what these defendants have lost by the negligence of Yuen Sung are their old units, which, as they cannot now be returned to them, means the value of those units on the dates that they were assigned to Full Country."

His Lordship adopted an agreed valuation of the units tendered by consent after the close of the final addresses in the trial. He held that each holder of a unit was entitled to the amount attributed to the unit by the valuation and to the stamp duty which the unit holder had paid on the option agreement less all amounts received by the unit holder from Full Country other than the initial deposit paid upon the signing of the provisional agreement and any loan made to allow redemption of the unit holder's mortgage (which his Lordship held to be repayable to the liquidator of Full Country). One of the unit holders who had paid Full Country an additional $400,000 to secure a larger new unit was held entitled to recover that amount as damages from YSC. His Lordship awarded interest at 6.5% on each unit holder's damages from the date of the assignment of that holder's unit to Full Country. He awarded to each unit holder defendant in the main action an indemnity against liability for the damages and costs payable to Keep Point as the successful plaintiff and against the unit holder's own liability to the holder's own solicitor for costs of the main proceedings and the attempt to register the option.

23. YSC accepted the trial judge's finding that, had YSC discharged their duty to the unit holders, "there would have been no deal with Full Country".

24. In the Court of Appeal, Rogers VP with the concurrence of Le Pichon JA noted that the only question before that Court was the quantification of the values of the old units which the holders had lost as a consequence of YSC's negligence. He did not accept the amounts attributed to the units by the agreed valuation because of what his Lordship saw as a mistaken basis of the valuation. He said:

"Whereas the values for the properties agreed between the valuers for the [unit holders] and [YSC] represent the estimated sale prices for the units sold individually, they leave out of account the share of the value which comes from the series of transactions leading to a site ready for development."

Cheung JA, with whose judgment Le Pichon JA also agreed, thought that the trial judge "had confined the value of the old flats to their bare value without taking into account their redevelopment value." Rogers VP held that "the benefits contracted for, but not ultimately received, as a result of the option/swap agreements do constitute the best assessment of what compensation would be required to restore the defendants to the position in which they were". Cheung JA was of the same opinion. Their Lordships took the amounts specified in the option agreements as the price of the new units to be the best evidence of the value of the old units. Their Lordships also held that "the amounts of rental allowances, removal expenses and possibly amounts allocated in respect of the roof, insofar as they were included in the agreements between the defendants and Full Country, constituted part of the value of the premises for which the defendants were entitled to recover". Interest at bank rate plus 2% was to be paid on all unpaid allowances calculated on the footing that the new units would have been completed two years after Full Country acquired vacant possession of the old units. Interest at the same rate was to be paid on the price of the new units from the notional date of completion of the new building. Their Lordships affirmed the trial judge's award of an indemnity against liability to Keep Point and the unit holder's own solicitor, holding that "there is no ground ... to consider that the defendants acted unreasonably in attempting to mitigate their losses".

The relevant legal principles

25. YSC, the appellants in the first appeal (FACV 9/02) and the respondents in the second (FACV 10/02), do not contest liability. They submit that their liability is measured and limited by the principle "that the [unit holders] should be put, so far as money can do it, and subject to the rules as to remoteness, in the position they would have been in if YSC had discharged their duty". That formulation of the principle accords with the basic rule that the plaintiff who recovers damages in tort is to be restored to the position that he or she would have been in if no tort had been committed: Livingstone v. Rawyards Coal Co. (1880) 5 App. Cas. 25, 39. If the solicitors' liability is seen to arise from breach of their contractual duty to exercise reasonable care in advising the unit holders, their liability is measured by the amount needed to place the unit holders in the same position as they would have been had the contractual duty been performed: Robinson v. Harman (1848) 1 Ex 850, 855; 154 ER 363, 365. Whether the solicitors' liability is seen to arise in contract or in tort (or in both) (Henderson v. Merrett Syndicates Ltd [1995] 2 AC 145), there is no difference in the measure of damages to be assessed in this case (Banque Bruxelles SA v. Eagle Star [1997] AC 191, 211; Hawkins v. Clayton (1988) 164 CLR 539, 583). Had the solicitors performed their contractual duty of care to the unit holders or had there been no negligence in the advice they gave or omitted to give the unit holders, the position of the unit holders would have been the same: in either case, the unit holders would have been left owning, possessing and in occupation of their respective units but they would not have received the payments they did receive from Full Country under the sale and purchase agreement and the option agreement nor would they have gone into temporary premises awaiting the construction of the proposed new units.

26. The assessment of damages calls for consideration of two discrete but related issues: what is the amount which is needed to restore the unit holders to the position in which they would have been if there had been no deal with Full Country (the damages issue) and was it reasonable for the unit holders to attempt to register their options against the titles to the new units and to engage in the litigation with Keep Point (the indemnity issue). It is convenient first to consider the damages issue.

Damages

27. Damages must be assessed by comparing the position in which the respective unit holders would have been with the position they have been in having assigned their title to their units, having yielded up possession and occupancy of those units and having received only a fraction of what those units were worth. They assigned and vacated their units and were induced by the transaction with Full Country to move into other premises until the new units should be available for occupation. In time they discovered that Full Country would not be constructing the new units. There is no evidence of a repudiation of the option agreement by Full Country prior to its sale of the property to Keep Point but once it sold the property to Keep Point, Full Country breached an important undertaking in the option agreement and jeopardized or denied its ability to perform its contract by completing the construction of the new units. With the hope of new units gone, the unit holders would have needed to acquire and own alternative premises of a similar standard to the old units. But they had not then received a capital sum sufficient to pay the purchase price of such premises. So what is needed to restore them to the position they would have been in had they been left owning and in possession of the old units is a sum which gives them the capital value of their units as at the date when they assigned and thus lost title to their units, a sum to compensate them for the cost of removal of their goods and chattels first to temporary and then to permanent accommodation, rental or like payment for use and occupation of temporary accommodation and any amount over and above the capital value of the old units which would have been required to acquire permanent premises similar to their old units once Full Country jeopardized or denied its ability to complete the construction of the new building. In other words, the old unit holders who gave up their ownership, possession and occupation of their units should have received what was needed to put them back into ownership, possession and occupation of premises similar to the old units when it became clear that Full Country could not complete the construction of the new units. These amounts must be assessed according to the market values of the respective times. Whether it is right to award interest on these amounts is discussed below.

28. Further, unit holders were entitled to credit for the amounts expended by them on either stamp duty paid or legal expenses incurred by reason of entry into the transaction with Full Country.

29. Set off against these amounts must be the several sums received by the unit holder from Full Country or received by way of refund of stamp duty. In calculating the receipts from Full Country, the trial judge excluded the amounts lent by Full Country to particular unit holders to discharge outstanding mortgages. The obligation of the unit holder to repay the loan was thought to be enforceable by the liquidator of Full Country but it is difficult to reconcile that proposition with the provisions of the relevant clause in the option agreements under which those loans were made. They were expressed to be repayable on written demand but the relevant clause precluded the making of a demand before the execution of the sale and purchase agreement for the new unit and then only if alternative bank finance was procured for the unit holder by Full Country. The conditions on the making of a demand cannot be met by Full Country.

30. As the parties are not in agreement as to the items to be brought into account by either party or as to the principles of quantification of those items, it is necessary to consider them seriatim.

Loss of title to the old units - valuation as at 1994

31. During his final address to the trial judge on 9 June 2000, counsel for the unit holders clarified the basis of assessing the value of the old units for which the unit holders contended. Abandoning the claim for the value of the proposed new units, he said: "We are simply going to use the old unit contract price basis ..... actually the balance of the purchase price which Full Country should have paid us". Counsel noted that, in the majority of cases, that would be $1.08 million on which interest was also claimed. $1.08 million is 90% of $1.2 million which was the purchase price stipulated in the majority of the sale and purchase contracts for residential units.

32. There was no evidence before the trial judge prior to the close of final addresses which purported to place an open market value on the old units at the times of their respective assignments. Each party had commissioned a valuer to provide a valuation and the valuers finally agreed on the values to be attributed to the units at the times of the assignments (May and October 1994) and, on the assumption that the units had remained in situ, at December 1995, December 1996, December 1998 and March 2000. Counsel for both parties agreed to tender the valuation as an "agreed document" after counsel for the unit holders had had a look at it following the close of addresses. But counsel for the unit holders eschewed any reliance on the valuation, saying:

"..... we don't need the surveyor's report on the basis of our claim. My learned friend needs, it, because on his case it's also old unit basis but they said .....

..... market value, which will be something like 700,000, that sort of figure."

33. The valuers (FPD Savills (Hong Kong) Limited appointed by the unit holders and Vigers Hong Kong Limited appointed by YSC) submitted the "agreed valuation" under cover of a letter declaring that "we have now come to an agreement on the valuation figures of the concerned units as at the respective valuation dates". The letter contained, however, a cryptic qualification: "This valuation is subject to the usual caveats and assumptions as contained in the valuation reports of our respective companies." Regrettably, those "usual caveats and assumptions" were not clarified at the trial. Deputy Judge Woolley based his award on the amounts attributed to the respective units in the agreed valuation as at the dates on which the respective units were assigned to Full Country. As his Lordship noted, these amounts were of the order of $700,000 in the case of the units acquired by Full Country at the stipulated price of $1.2 million.

34. In their Notice of Appeal to the Court of Appeal, the unit holders contended that the redevelopment potential of the old units had not been included in the valuation. The relevant ground read:

"(9) The learned Deputy High Court Judge erroneously failed to recognise the contract prices as the best evidence of the values of the Old Units, including redevelopment potential. The learned Deputy High Court Judge also erred in impliedly excluding the redevelopment potential of the Old Units when he referred to the contract prices as being above the then market values of the Old Units."

35. Clearly enough, in 1994 each of the old units did have a potential for redevelopment and that potential should be reflected in a true valuation of the units at that time (see Jenmain Builders Ltd v. Steed and Steed [2000] PNLR 616, 625). In the Court of Appeal, Rogers VP rejected the agreed valuation as the true valuation of the units and sought to ascertain their value taking redevelopment into account. But his Lordship appears to have gone beyond the value of the potential for redevelopment and held that the agreed valuation left out of account an allowance for what his Lordship described as "the share of the value which comes from the series of transactions leading to a site ready for development". This criticism of the agreed valuation suggests that his Lordship found the true value of those units to be their value after all transactions had been completed to gather in all titles to the property. In other words, his Lordship was referring to the value of the units in the hands of a developer who had acquired all units on the property.

36. The Court of Appeal accepted the benefits to which the unit holders were entitled under the sale and purchase agreements and the option agreements as representing "the value of what Full Country was receiving" and thus the value of what the unit holders had lost. The "rough cross-check on this conclusion" which Rogers VP adopted had regard to a 1996 valuation of the property as a cleared site after the old buildings had been demolished and the site was ready to be developed in accordance with Full Country's development scheme. The check consisted in a division of that valuation figure by the number of old units. In other words, the old units were assumed to have a value which reflected not their potential for redevelopment but their value as an integer in an actual redevelopment undertaken by a developer. Cheung JA held that the benefits which the unit holders might have received under their contracts were the best indication of the value of the old flats. Those benefits, in his Lordship's view "represent what a willing buyer and seller are prepared to accept and pay for a particular property at a particular time in the open market". Of course, if the agreed valuation was made on the correct basis, the Full Country transaction figures greatly exceed what a willing buyer and seller were prepared to pay for and accept.

37. The Court of Appeal held the unit holders to be entitled to so much of the purchase price of their units as they had applied to purchase the options for the new units, and to be so entitled as from the date when the unit holders "were entitled to receive payment of the first rental reimbursement under their respective option agreements". The Court held that the unit holders were entitled also to a rental allowance for 2 years and other benefits (other than a new unit) under the contracts with Full Country. But that was not the transaction with Full Country. The unit holders agreed to sell for 10% of the stipulated price for the old units in cash plus the promise of the benefits under the option agreements. The promise was not fulfilled, except to a minor extent. No attempt to place a value on the promise was made at the trial but events suggest it was worth very little. The Court of Appeal adopted a measure of the unit holders' losses which exceeded the value of those losses.

38. The Court of Appeal did not adopt the measure of the cash value of the individual units in the hands of the unit holders taking account of the potential of the units for redevelopment. That is the value of those units when the holders agree to sell to a developer seeking to enhance the value of the entire site by his efforts to gather in all titles. The development potential component of the value is the additional sum which a willing and reasonable developer would pay to a willing and reasonable seller for a unit in a block ripe for redevelopment, not the value to the developer who has successfully gathered in the titles. A developer who has gathered in all the titles to a parcel of land by his efforts has added to the value of the titles which he has gathered.

39. In submission to this Court, Ms Eu SC who had appeared for the unit holders in the Court of Appeal (but not in the Court of First Instance) asserted that it was common ground in the Court of Appeal that the agreed valuation did not take into account the redevelopment potential of the units as at the relevant dates. In her principal argument, Ms Eu sought support for this submission in a letter dated 3 June 2000 from FPD Savills (Hong Kong) Limited setting out their process of valuation. The Savills letter was not in evidence before either of the courts below and Mr Griffiths SC, counsel for YSC in this Court, objected to the use of the Savills letter at this stage of the proceedings.

40. There is no evidence that the agreed valuation failed to reflect the redevelopment potential of the units, but if it had been common ground in the Court of Appeal that the agreed valuation did not reflect redevelopment potential, this Court should proceed on the same footing.

41. For that reason, the Court requested counsel to return to inform the Court whether that was common ground in the Court of Appeal. Counsel were unable to agree on this proposition and Ms Eu was unable to satisfy us that that common ground had existed. Rather it appears that Ms Eu had submitted in that Court, as she submitted in this Court, that the agreed valuation had not reflected development potential while counsel then appearing for YSC had relied on the agreement at the trial to tender the agreed valuation as proof of the market value of the units on the dates therein specified.

42. Had there been either agreement or proof that, in the Court of Appeal, it had been common ground that the agreed valuation did not reflect the redevelopment potential of the units, there would have been a question whether the basis for assessing the value of the units should be remitted for retrial. It would have been necessary to consider whether the trial judge had been induced - however innocently - erroneously to accept the valuation as the true valuation of the units as at May and October 1994 and whether, in those circumstances, it would be right to remit the assessment of value for retrial. As this Court has no firm foundation on which to conclude that it was common ground in the Court of Appeal that the valuation did not reflect redevelopment potential, we must take the record of the trial as the only material showing the course of the trial in the Court of First Instance.

43. It follows that the only evidence of market value placed before Deputy Judge Woolley was the agreed valuation. Counsel for the unit holders declined to rely on it, yet it is the only evidence of the loss which the unit holders actually suffered by reason of their assignment of their units to Full Country.

44. Ms Eu sought strenuously to uphold the judgment of the Court of Appeal, submitting that $700,000 would not have been a price inducing the unit holders to sell and that the best evidence of an arms-length transaction was the $1.2 million stipulated in the sale and purchase agreements. The fallacies in the submission are twofold: first, if $700,000 or thereabouts be the true market value of a unit in 1994, that is a price which a willing but not over-anxious seller would accept. That is the hypothesis of a true valuation. Secondly, the $1.2 million contract price was not a cash price but merely an element in the overall transaction which contained a powerful inducement to sell (namely, the prospect of acquiring 10% in cash and a new unit) albeit accompanied by countervailing and risky clauses the significance of which was not appreciated by the unit holders.

45. It may be that, at the end of this long litigation, the unit holders would accept an opportunity, if one were given, to relitigate the market value of their units in 1994 and to attack the agreed valuation but that course is contrary to principle, since it appears that counsel for the unit holders agreed to the tendering of the agreed valuation as evidence of the market values of the respective units as at the dates specified in the valuation.

46. The ordinary rule is clearly stated by the High Court of Australia in University of Wollongong v. Metwally (No. 2) (1985) 59 ALJR 481, 483 where the Court said:

"It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."

47. This principle was reaffirmed in the joint judgment of Gibbs CJ, Wilson, Brennan and Dawson JJ in Coulton v. Holcombe (1986) 162 CLR 1, 7, where their Honours said:

"It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish."

48. But the rule is a rule of practice and when there are "exceptional circumstances", it is open to the Court to relieve a party from the consequences of a mistake made at trial. That was recognized by the English Court of Appeal in Wilson v. Liverpool City Council [1971] 1 All ER 628. In that case, a Tribunal had assessed compensation for land compulsorily acquired, basing its decision on a valuation as at a date which a House of Lords decision had shown to be the wrong date in law. The Tribunal did so because the parties had agreed erroneously that another date was the correct date for the valuation. The Court of Appeal refused to allow one party to assert that there should be a reassessment as at the legally correct date, but Lord Denning MR acknowledged (at p.632) that -

"..... it is a matter for the discretion of the court. In this case I do not think that we should allow this valuation to be reopened. The advisers of the claimants must have known of the [House of Lords decision which ruled on the correct date for valuations under the Act]."

49. Widgery LJ agreed. He said (at pp 632-633):

"It seems to me ..... that this case is within the well known rule of practice that, if a point is not taken in the court of trial, it cannot be taken in the appeal court unless that court is in possession of all the material necessary to enable it to dispose of the matter finally, without injustice to the other party, and without recourse to a further hearing below."

50. There are no exceptional circumstances in this case which would warrant a retrial of the issue of the basis for assessing the value of the old units. It follows that Deputy Judge Woolley was correct in taking the agreed valuation as the value of the old units in 1994 and YSC's appeal on this issue must be allowed.

51. The basis for assessing the values of the various units has been the principal subject of dispute about damages both at trial and before the Court of Appeal. In calculating the damages payable by YSC, Deputy Judge Woolley held that all payments received by each unit holder from Full Country should be deducted from the assessed value of the unit. The Court of Appeal, on the other hand, held that the unit holders were entitled to all the benefits promised them in addition to the amount recorded in the option agreements as the purchase price of the new units. If the correct value of the title is expressed by the agreed valuation, it will be necessary to allow the unit holders a further sum to compensate them for the costs arising from their taking the steps they were induced to take by entry into the Full Country transaction. There must be an allowance for the movement of goods and chattels and for occupation of other premises up until the time when the unit holders could and should acquire permanent premises of a similar kind to the units sold to Full Country. These amounts or similar categories of outgoings specified in the option agreements have not been quantified. It would not have been convenient to do so at the trial. There are 63 unit holders in the third party proceeding and, by agreement between the parties and with the concurrence of the trial judge, the Court was invited "to find heads of damages and then ..... the parties [would] work out the figures". By agreement, a limited number of unit holders were called to give evidence.

52. Accordingly, Deputy Judge Woolley gave judgment for the unit holders "for damages to be assessed ..... on the basis as set out in the judgment .... dated 20 June 2002". It is now necessary to consider the remaining heads of damage claimed by the unit holders and their obligation to set off the several categories of receipts for which YSC may be entitled to credit. The order made by this Court will then govern the assessment of damages for individual unit holders pursuant to the order made by Deputy Judge Woolley.

Allowances in respect of roof access and decoration

53. Some option agreements provided for the payment of additional sums on account of the particular unit's access to the flat roof of the old building and on account of the decoration of the unit which would have been lost to the unit holder on the holder's vacating possession. These factors added to the value of the units but, as the buildings had been demolished at the time when the valuers made the agreed valuation, they are not reflected in the agreed valuation figures. Counsel for YSC accepted that the allowances for roof access should be added to the value of the units to which they related. Unit holders are at liberty to recover also the value of decorations lost when they quit their occupation of the old units. The quantum must be assessed by the court when sitting to determine the individual unit holders' claims.

Payments made by Full Country to the unit holders

54. Had there been no transaction, no payments would have been made by Full Country to the unit holders under either the sale and purchase agreement or the option agreement. It follows that the unit holders must give credit for all such payments, as they would not have been received or receivable had there been no transaction.

55. Deputy Judge Woolley so held except in relation to the initial deposits paid by Full Country on the signing of the provisional agreements which, in his Lordship's view, "were not refundable even if the transaction had not been effected." Taking the provisional agreements in Chinese to be binding, it would have been necessary to have them set aside in order to cancel the transaction. If those agreements were set aside in equity on account of the vulnerable position of the unit holders, equity would require the deposit paid under it to be refunded. It follows that the unit holders who received initial deposits under the provisional agreements must give credit for them.

56. To say that credit must be given for all payments received under the transaction does not mean that the unit holders are not entitled to compensation for many of the matters for which allowances or reimbursements were payable under the option agreement. On the contrary, by the negligence of YSC, the unit holders entered into a transaction which induced them to move out of their permanent premises, and to take alternative temporary premises while awaiting Full Country's construction of the new building. To return to permanent premises when Full Country sold the site, they would have needed to pay a price for those premises, to pay stamp duty and legal expenses on the conveyance and to move their goods and chattels once more. An allowance must be made for all of these matters but it may or may not correspond with the amounts which Full Country agreed to pay under the option agreement. That is not to say that those amounts are necessarily irrelevant. They might represent the proper sum to allow if it appears that those amounts were arrived at after genuine arms-length negotiations to determine the figure to represent the unit holder's likely actual expenditure or the worth of an alternative similar facility available to the unit holder.

57. It is necessary to discuss some of the heads of damage to which unit holders might be entitled in order to put them, so far as money can, in the same position as they were in prior to the assignment of the units to Full Country. The unit holders sought damages under these heads only insofar as they sought payment of the amounts promised by Full Country. But it seems that little attention was paid to the assessment of damages apart from the question of the value of the units themselves. When the damages for each of the unit holders come to be assessed, it would be desirable for the unit holders first to give particulars of the damages claimed and then for the parties to endeavour to agree upon the quantum. Before examining those heads of damage, some reference should be made to the payment of stamp duty on the option agreements.

Stamp duty paid by unit holders on option agreements

58. If there had been no transaction with Full Country, no liability for stamp duty would have arisen. Many but not all of the unit holders' settlement statements show that the stamp duty was deducted from the balance payable to them to acquit Full Country's liability to pay them 10% of the unit purchase price in cash. Some unit holders (identified as D27, D44-D47, D63) paid the stamp duty out of their own funds. The unit holders were entitled, in the calculation of damages, to recover the amount of stamp duty paid by them or on their behalf.

59. If the stamp duty office had retained the stamp duty after the option agreements were cancelled, the unit holders whose stamp duty was paid by Full Country would have had to credit YSC with only the net cash amount received on settlement after stamp duty had been deducted. But the option agreements were cancelled and the stamp duty refunded to the unit holders who have retained it. It follows that the quantum of the credit that must be given by unit holders to YSC is the total amount paid to them or paid on their behalf by Full Country, including the stamp duty. The unit holders who paid the stamp duty out of their own funds are entitled to interest thereon between the time when they parted with the expenditure for stamp duty and the time when they received the refund.

Removal expenses

60. The cost of, or an allowance for, the movement of the goods and chattels from an old unit to alternative premises and an allowance for a similar movement from temporary alternative premises to permanent premises constitutes a valid head of damages. It matters not whether the unit holder obtained the services of a carrier whom he paid or whether the unit holder with voluntary assistance effected or would effect the move. To refuse reasonable compensation for unpaid work would be to confer on the tortfeasor the benefit of the unit holder's or a third party's labour when that benefit has been or would be expended for the benefit of the unit holder.

Payment for temporary premises ("Rent allowance")

61. The loss which they suffered was the loss of their accommodation in their old units. That fixes the basis of the compensation to which they are entitled, namely, the value of occupancy of the old units on the assumption that they were still standing. It is immaterial whether a unit holder paid rent for alternative premises, occupied alternative premises which the unit holder owned or resided in premises provided by relatives or friends. If the unit holder did not have to pay rent, the benefit of non-payment belongs to the unit holder not the tortfeasor. If the unit holder paid rent, compensation must be measured only by reference to the rent payable for premises comparable with the old unit. The compensation to be assessed for occupancy of temporary premises may be called a "rent allowance".

62. The period for which the Court of Appeal allowed rental reimbursement was 2 years but that was on the footing that the unit holders should, at the expiration of that time, be paid an amount corresponding to the purchase price agreed for a new unit.

63. To ascertain what a particular unit holder needs by way of rental allowance requires consideration of the time during which the unit holder has remained or will of necessity remain in temporary accommodation. None of the unit holders in these proceedings received more than a fraction of the value of the particular unit before some time in 2000 when, this Court was informed, a payment was made by YSC based on the agreed valuation.

64. What was, or is, needed to place a unit holder in the same position as he, she or it would have been in had no transaction taken place is a sum sufficient to defray the cost of purchasing a unit of a like standard to the holder's old unit. But the holders or some of them may not have had sufficient capital to defray the cost of such a purchase. If a unit holder has been constrained by impecuniosity to remain in temporary premises until the receipt of damages has permitted or will permit the purchase of permanent premises, compensation must be allowed for the whole of that period. It is not limited to 2 years. On the other hand, if the unit holder was in such a position as to be able to acquire permanent premises without resort to the money representing the value of the old unit, it would have been reasonable for that unit holder to acquire permanent premises once the unit holder knew that Full Country had sold the property. The unit holder should have done so to mitigate damage. If such a unit holder failed to do so, the rental allowance would terminate at the date of the unreasonable failure. In other words, the rental allowance is until the unit holder could or should acquire permanent premises.

65. The period of the rental allowance is affected by the period for which interest is awarded (see below).

Cost of Repurchase

66. The costs of purchasing permanent premises consist of the purchase price of a unit similar to the unit sold to Full Country, together with the stamp duty, legal and other expenses involved in the purchase. If the market had gone up between the time of the assignment of the old unit and the time of the purchase of the new permanent premises or the time when new permanent premises could and should have been purchased by the unit holder, the additional cost would have been recoverable by the unit holder. That is not because an enhanced value is attributed to the old unit. It is because, without receipt of that addition, the unit holder who has gone into temporary premises awaiting the construction of the new units was induced to take that step by entering into the transaction and was not in a position to acquire new premises permanently until receipt of damages or was not expecting to have to get such premises prior to the time when Full Country sold the property. But if, as appears to be the case, the market had or has gone down, the liability of YSC to pay compensation for the title lost in 1994 is not thereby diminished. The value of what the unit holder lost was the value of the title to the unit when it was assigned to Full Country. If the market has gone down, YSC is relieved only of the additional liability to which it would have been subject if the market had arisen.

Interest

67. Interest is the compensation to which a party entitled to a sum of money at a particular time is awarded for being deprived of the use of that money up to the time when the party is paid. The unit holders who lost the title to their units when they were assigned to Full Country were then entitled to a sum ascertained by reference to the agreed valuation adjusted to provide for any additional items of value lost less the payments already received from Full Country.

68. But if that sum had then been paid, the unit holder would have been able immediately to pay the purchase price of a similar unit, though it may have been necessary to borrow to pay the conveyancing costs. Thus if it be right to allow interest on that sum from the date of the assignment, it would not be right to allow compensation for occupation of temporary premises. The only additional sum that could be allowed would consist of the costs of the conveyance of new permanent premises and the cost of moving goods and chattels from the unit to the new permanent premises, interest on those sums and the costs of borrowing those sums up to the time of their payment.

69. On the other hand, if a rental allowance is claimed and allowed for a period, no interest is payable on the assessed value of the unit during that period.

70. It is a matter for each unit holder to elect the basis on which compensation is sought. Ms Eu preferred the payment of interest to the alternative basis of rental allowance but the election is a matter for individual unit holders.

71. Interest is payable to a unit holder in respect of unpaid damages from the time when the relevant loss or expenditure was incurred or suffered to the time when payment is received. But unit holders are not to be debited with interest on amounts received by them. Unit holders may have been deprived of their damages but the moneys received by them were their due in the sense that those sums partially paid for their losses and thereby diminished the outstanding liability of YSC.

72. The starting dates for awarding interest do not antedate the dates of assignment of the respective units for that was the date when the negligence of YSC first caused the unit holders damage. From that date (or rather those respective dates) the unit holders were owed the value of their units (including roof allowance and decoration allowance) less any amount which had then been received from Full Country. That amount was, or may have been, reduced from time to time thereafter by receipt of other amounts from Full Country. After each receipt interest would be payable only on the balance then outstanding Thus, it is only when the unit holders received a refund of stamp duty that the balance owing to them is reduced by that amount.

73. Interest on removal expenses, conveyancing costs and any other items of damage accrues in favour of a unit holder from the day when the costs or expenditure were incurred by the unit holder. Interest on rental allowance accrues from the dates when the rental allowance was payable (for example, month by month).

74. The rate of interest adopted by the Court of Appeal was the prime rate of the HSBC plus 2% to the date of judgment and thereafter at the judgment rate until payment in full. That is the correct rate and should be applied in assessing the unit holders' damages.

Particular cases

75. The circumstances of some unit holders require particular reference. They are mentioned by the number attributed to them in the list of defendants in the main action.

D27 : Paid $400,000 to Full Country to obtain a new unit larger than the old unit. D27 is entitled to recover this sum and to have it treated in the same way as the value of the old unit. Interest would be chargeable as from the date when the $400,000 was paid.

D32, D34 and D49 : Opted for units in Profit Mansion and were permitted to occupy them for a time but, having no title to these units, ultimately they were required to quit the premises. They nevertheless sought to register their option agreements against the land title acquired by Keep Point. The temporary occupancy of Profit Mansion units may affect the assessment of their rental allowance and removal expenses. The registration of their option agreements was regarded by the courts below as a step taken in reasonable mitigation of damages. For reasons subsequently stated, this Court should not disturb those concurrent findings.

D36 : seeks indemnity for costs incurred in action taken against Full Country. D32 also sued Full Country. That too may have been a step reasonably taken to mitigate damage but no argument on this issue was addressed to this Court. The Court of Appeal awarded both D32 and D36 the costs incurred by them relating to their respective ancillary proceedings against Full Country. This Court has not heard argument to warrant interference with the order of the Court of Appeal.

D44, D45, D46, D47 : These defendants had purchased option agreements by the application of funds made available by D43 out of the sum which D43 would otherwise have been credited with for a shop unit in the old building. The total amount which was recorded as the price of these defendants' option agreements was $7 million; the agreed valuation attributes a value to D43's shop of $17,440,900. If D43 did in fact lend $7 million to D44 - D47, and they applied that sum to the purchase of their option agreements, YSC is liable to repay that sum to D44 - D47 (who would presumably be liable to repay that amount to D43) but YSC would be entitled as against D43 to credit for the amount paid. Apparently to avoid circularity, the interested parties have agreed that D43 should be the sole claimant in respect of the loss of the shop unit and thus the purchase price paid by D44-D47 for their options is to be treated as having been paid by D43.

D44 - D47 did, however, pay the stamp duty out of their own funds and they are entitled to interest on the sum paid from the date of payment to the date on which they received a refund. It follows that, assuming their agreement with D43, D44 - D47 are not eligible to recover damages against YSC except for interest on stamp duty.

D27, D63 : These unit holders, who paid stamp duty from their own funds, are entitled to interest thereon on the same basis as D44 - D47.

D56: The price for this defendant's shop stipulated in the sale and purchase agreement was $9.2 million as against an agreed valuation of more than $14 million. Its concern relates only to the alleged inadequacy of the rental reimbursement and removal expenses received, a total of $8,332,000. This amount was credited to the unit holder in the settlement statement on completion of the sale and purchase contract. The unit holder's entitlement is unaffected by those items; the entitlement is to the value of the shop irrespective of the price stipulated in the agreement with Full Country less what was received from Full Country plus a rental allowance and removal expenses to be assessed in accordance with this judgment. The settlement statement appears to show a payment made on D56's behalf of $6.8 million as "Redemption Money".

Indemnity

76. Counsel for YSC conceded, correctly in my view, that it was reasonable for the unit holders, faced with the sale of the property by Full Country to Keep Point and the winding up of Full Country to register their options in the Land Registry in November and December 1998. It was a reasonable step, taken as an attempt to salvage what they could out of Full Country's collapse. But counsel submitted it was not reasonable for them to persist in litigation with Keep Point, incurring a liability in damages and costs to Keep Point for which the unit holders seek indemnity from YSC.

77. In the courts below the unit holders have succeeded. The order made by the Court of Appeal orders YSC to indemnify the unit holders for (a) any damages payable by the unit holders to Keep Point in the main action and (b) the proportion of the costs which the unit holders were ordered to pay Keep Point. YSC was also ordered to pay the unit holders' own costs (including costs reserved) of defending the main action on a common fund basis, to be taxed if not agreed "by way of damages".

78. The indemnity orders were made on the footing that the unit holders incurred these liabilities in reasonably seeking to mitigate their damages. The challenge to the orders turns on the answer to the question whether the unit holders acted reasonably in defending Keep Point's action against them. Keep Point advanced their principal argument based on s.3(2) of the Land Registration Ordinance. To succeed under that section, Keep Point had to show that they had acted in "good faith" in acquiring the property from Full Country. That was the point on which the unit holders joined issue. They were then supported by YSC who had a similar interest in defeating Keep Point's claim. Ultimately Keep Point succeeded on this point and also on s.3(1) which did not require proof of good faith but only chronological priority of registration.

79. Deputy Judge Woolley, having the benefit of perceiving the issues litigated in the main action and the manner in which that litigation was conducted formed the view that the unit holders were entitled to an indemnity. The Court of Appeal affirmed that view. Had the result of the litigation appeared at the time to be as certain as it now appears in the light of the judgment in the main action (see [2000] 2 HKLRD 145), it is reasonable to assume that it would have been disposed of peremptorily and YSC would not have contested Keep Point's claim.

80. It is not possible with only the gift of hindsight to hold that the trial judge was in error in his estimate of the reasonableness of the unit holders' defence in the main action. YSC's challenge to the indemnity orders fails.

81. The best course is to set aside the Court of Appeal's Order. The parties should agree on the draft order arising from this judgment and in default of agreement, should make written submissions seeking necessary directions from the Registrar.

82. As to costs, having regard to the issues involved in these appeals, including the heads and quantum of damages to be awarded, we consider that YSC have succeeded to a greater extent than the unit holders. We would therefore make an order nisi as follows: the unit holders shall pay 20% of YSC's costs of the appeals to the Court of Appeal and the costs of the appeals to this Court.

Chief Justice Li :

83. The Court unanimously sets aside the Order of the Court of Appeal. The parties should agree on the draft order arising from this judgment and in default of agreement, should make written submissions seeking necessary directions from the Registrar.

84. The Court unanimously makes the following order nisi as to costs: the unit holders shall pay 20% of YSC's costs of the appeals to the Court of Appeal and the costs of the appeals to this Court. Any party wishing to challenge the order nisi should make written submissions within 28 days. In the absence of any such challenge, the order nisi shall become absolute at the expiry of 28 days.