IN THE HIGH COURT OF THE.docVIP

CACV 366/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 366 OF 2007 (ON APPEAL FROM HCA NO. 1250 OF 2006) ---------------------------- BETWEEN CHAK KAK 1st Plaintiff YUEN WAI CHUNG 2nd Plaintiff LAI KAM ON 3rd Plaintiff CHOI CHI HANG 4th Plaintiff NGAI WAI YUK, ALICE 5th Plaintiff and PACRIM INTERNATIONAL CAPITAL INC. Defendant ------------------------ Before: Hon , Cheung JA and Chu J in Date of Hearing: 23 May 2008 Date of : 4 June 2008 _______________ _______________ : Introduction The defendant is a company listed on the Toronto Stock Exchange. This is the plaintiffs’ claim against the defendant for, inter alia, CN$60,000 said to be payable by the defendant on the redemption of the 60,000 convertible preference shares (“CP shares”) of CN$1.00 each in the defendant held by each of the plaintiffs. Notices of the redemption had been issued by the defendant on 27 October 2003, stating that the CP shares were being redeemed at a value of CN$0.01 per share. According to the defendant, they had received in August 2003 an independent valuation of the CP shares from Global Merger Acquisition Finance Inc which assessed their value as “nominal from a financial point of view”. Yam J, after trial, decided in favour of the plaintiffs. This is the defendant’s appeal. Background The facts are not very clear. But I think I can proceed on the basis that in about 1992, each of the plaintiff invested CN$150,000 in order to qualify for emigration to Canada. If the investment had prospered they would have received CN$160,000 pursuant to a Promissory Note issued to them by the First Mortgage Nova Scotia Fund Inc (“the Funds”). As of about June 1997, each of them had received a first instalment of CN$50,000. In the meantime, as was explained in the Funds’ letter to note holders dated 10 June 1997 (“the letter”), because the investment was made under the investment program which was designed to create jobs and ben