"Turning for a moment away from damages for deceit, the general rule in other areas of the law has been that damages are to be assessed as at the date the wrong was committed. But recent decisions have emphasised that this is only a general rule: where it is necessary in order adequately to compensate the plaintiff for the damage suffered by reason of the defendant's wrong a different date of assessment can be selected.... In many cases, even in deceit, it will be appropriate to value the asset acquired as at the transaction date if that truly reflects the value of what the plaintiff has obtained. Thus, if the asset acquired is a readily marketable asset and there is no special feature (such as a continuing misrepresentation or the purchases being locked into a business that he has acquired) the transaction date rule may well produce a fair result. The plaintiff has acquired the asset and what he does with it thereafter is entirely up to him, freed from any continuing adverse impact of the defendant's wrongful act. The transaction date rule has one manifest advantage, namely that it avoid any question of causation. One of the difficulties of either valuing the asset at a later date or treating the actual receipt on realisation as being the value obtained is that difficult questions of causation are bound to arise. In the period between the transaction date and the date of valuation or resale other factors will have influenced the value or resale price of the asset. It was the desire to avoid these difficulties of causation which led to the adoption of the transaction date rule. But in cases where property has been acquired in reliance on a fraudulent misrepresentation there are likely to be many cases where the general rule has to be departed from in order to give adequate compensation for the wrong done to the plaintiff, in particular where the fraud continues to influence the conduct of the plaintiff after the transaction is complete or where the result of the transaction induced by fraud is to lock the plaintiff into continuing to hold the asset acquired... In sum, in my judgment the following principles apply in assessing the damages payable where the plaintiff has been induced by a fraudulent misrepresentation to buy property: (1) the defendant is bound to make reparation for all the damage directly flowing from the transaction; (2) although such damage need not have been foreseeable, it must have been directly caused by the transaction; (3) in assessing such damage, the plaintiff is entitled to recover by way of damages the full price paid by him, but he must give credit for any benefits which he has received as a result of the transaction; (4) as a general rule, the benefits received by him include the market value of the property acquired as at the date of acquisition; but such general rule is not to be inflexibly applied where to do so would prevent him obtaining full compensation for the wrong suffered; (5) although the circumstances in which the general rule should not apply cannot be comprehensively stated, it will normally not apply where either (a) the misrepresentation has continued to operate after the date of the acquisition of the asset so as to induce the plaintiff to retain the asset or (b) the circumstances of the case are such that the plaintiff is, by reason of the fraud, locked into the property; (6) in addition, the plaintiff is entitled to recover consequential losses caused by the transaction; (7) the plaintiff must take all reasonable steps to mitigate his loss once he has discovered the fraud.... In the circumstances, it would not in my judgment compensate Smith for the actual loss they have suffered (i.e. the difference between the contract price and the resale price eventually realised) if Smith were required to give credit for the shares having a value of 78p on21 July 1989 . Having acquired the shares at 82¼p for stock Smith could not commercially have sold on that date at 78p.. It is not realistic to treat Smith as having received shares worth 78p each when in fact, in real life, they could not commercially have sold or realised the shares at that price on the date. In my judgment, this is one of those cases where to give full reparation to Smith, the benefit which Smith ought to bring into account to be set against its loss for the total purchase price paid should be the actual resale price achieved by Smith when eventually the shares were sold."
"It is right that the normal method of calculating the loss caused by the deceit is the price paid less the real value of the subject matter of the sale. To the extent that this method is adopted, the selection of a date of valuation is necessary. Andy generally the date of the transaction would be a practical and just date to adopt. But is not always so. It is only prima facie the right date. It may be appropriate to select a later date. That follows from the fact that the valuation method is only a means of trying to give effect to the overall compensatory rule: Potts v Miller 64 CLR 282, 299 per Dixon J and County Personnel (Employment Agency) Ltd v Alan R Pulver & Co[1987] 1 WLR 916 , 925-926, per Bingham LJ. Moreover, and more importantly, the date of the transaction is simply a second order rule applicable where the valuation method is employed. If that method is inapposite, the court is entitled to assess the loss flowing directly from the transaction without any reference to the date of the transaction or indeed any particular date. Such a course will be appropriate whenever the overriding compensatory rule requires it."
"(1) Where a plaintiff has been induced by a fraudulent representation to acquire shares, the object of an award of damages in tort is to compensate him for what he has lost by making the acquisition into which he has been tricked. The basic rule is that his loss will be measured by the difference between what he paid and the true value of what he acquired at the time of the acquisition. To this may be added consequential loss (if any) flowing directly from the acquisition; for example, commissions, brokerage and carrying costs. (2) If the plaintiff has not resold the shares he will not have to give credit for what he might have obtained on a resale; unless, in choosing to retain the shares, he has acted unreasonably or imprudently.... (4) In ascertaining the plaintiff's loss under the basic rule events subsequent to the acquisition can be taken into account only if, and insofar as, they are relevant for the purpose of ascertaining the true value of the shares at the time of the acquisition. A subsequent depreciation in the value of the shares caused by events which have no natural or proximate connection with the circumstances existing at the time of the acquisition must be disregarded.... (6) Events subsequent to the acquisition may be relevant for one or both of two purposes... Secondly, subsequent events may assist, positively, in ascertaining what the true value of the shares was at the time of the acquisition."
"Date for assessment of damages Damages for tort or breach of contract are to be assessed at the date of the breach unless the circumstances are such that the selection of a different date would more justly give effect to the overriding compensatory rule. See County Personnel (Employment Agency) Ltd v. Allan R. Pulver & Co.,[1987] 1 WLR 916 at pp. 925-926, cited with approval by Lord Browne-Wilkinson in Smith New Court Ltd v. Scrimgeour Vickers (Asset Management) Ltd .,[1997] AC 254 at p. 266. In assessing the damages, credit must be given for benefits received arising out of the transaction for which damages are claimed. Where the benefits received take the form of property or an interest in property, in many cases it will be just to take the value of the interest at the date of its acquisition. It will normally be just to do so where there is an available market of which the plaintiff has a fair opportunity, if so minded, to take advantage. Where a person who has been fraudulently induced to buy property thereafter freely decides to retain it, he will have adopted the transaction and so the fair measure of his loss will ordinarily be the excess which he has paid over market value at the date of its acquisition, plus any consequential expenses. If he does not wish to retain the property, whether it is fair that he should give credit for its 'market' value at that date or some other date must depend in particular on its marketability and on his state of knowledge. As to marketability, the reference to a plaintiff who is 'by reason of the fraud locked into the property' is not to be taken as if it were a statutory test but as a vivid description of a person who does not have access to an available market."
"23. It is not possible to take the simple approach taken in Kennedy v. Emden in this case, because there are two representations in respect of which the claimant seeks compensation. It cannot be right to take the date of valuation as at the date of assessment, because the value will have been affected over the 5 years between the Closing Date and the date of assessment by the fluctuations in the market in the intervening period. The fluctuations are not related to the contract between the parties and the misrepresentation, and it would be inappropriate for one party or the other to gain or lose by reason of them. 24. The date of valuation (on the basis of various hypothetical assumptions) must therefore be the Closing Date. It is the hypothetical assumptions that must be adjusted to take account of the change in circumstances by the date of assessment."
"It is ordered by consent that the date for the valuation of the Subscription Shares is the Closing Date, 31 st March 1997, without prejudice to the Defendants' entitlement at trial of the Inquiry to contend that matters subsequent to the Closing Date which have been fully particularised in their Points of Defence shall be taken into account in the assessment of the Claimants' loss. IT IS DIRECTED that: 1. The Claimants and the Defendants each have permission to adduce expert evidence on property valuation and on share valuation limited to one expert in relation to each of the two disciplines on each side .... 5. The Defendants do within 28 days of the service of the Points of Claim: Serve and file Points of Defence: to give full particulars of each and every matter subsequent to the Closing Date upon which they rely as a factor to be taken into account in the assessment of the Claimants' loss .... state the effect of each such factor on the valuation of the Subscription Shares at the Closing Date ..."
"The company must be valued in the light of facts which existed at [the date of valuation] ... But regard may be had to later events for the purpose only of deciding what forecasts for the future could reasonably have been made on [the valuation date]"
"50. A plaintiff must plead the damage claimed and set out the method by which he arrives at the claim. An alternative approach should also be pleaded. In Anglo-Cyprian Trade Agencies v. Paphos Wind Industries[1951] 1 All ER 873 ["
"5.7 Voting Rights. In the event that the Class A Shares are not redeemed in their entirety by the end of the 72 nd month after the Date of Funding, Sealand agrees to transfer to the holders of the Class A Shares, in accordance with their Proportionate Class A Interest, all voting right appertaining to the Common Shares then held by Sealand, to be exercisable by the holders of the Class A Shares for so long as any Class Shares remain outstanding and shall do all such things as are necessary to ensure that, during such period, such voting rights are exercised by the holders of Class A Shares as aforesaid. Upon redemption in full of the Class A Shares, the voting rights appertaining to the Common Shares registered in the name of Sealand shall revert to Sealand."
"7.1 Inactive Shareholders (1) A Shareholder shall be deemed to be an Inactive Shareholder immediately following the occurrence of any of the following events (each a 'Triggering Event"): ... (c) if the Shareholder is declared bankrupt or makes a proposal in bankruptcy or becomes the subject of bankruptcy or other similar proceedings; (d) if the Shareholder makes an assignment for the benefit of creditors or otherwise acknowledges its insolvency; (e) if a Shareholder suffers its Shares to be liable to seizure; and (f) if a Shareholder ceases paying its debts as they mature (other than those being contested in good faith and by appropriate proceedings). (2) Each Shareholder shall give notice in writing to the Company promptly following the occurrence of a Triggering Event. (3) From and after the date that a Shareholder becomes an Inactive Shareholder, the right of such Shareholder to appoint any Directors shall be suspended and any appointed Director of such Inactive Shareholder shall resign from the Board of Directors; and the votes of such Shareholder or its appointed Directors or both of them, as the case may be, shall be excluded for purposes of determining whether a decision, action or matter has been approved and the other Shareholders should be entitled to increase the number of Directors appointed by them proportionately as may best reasonably be done to maintain the rights and representation of the other Shareholders. 7.2 Irrevocable Option to Purchase Shares of Inactive Shareholder (1) Each Shareholder hereby grants to the other Shareholders an irrevocable option (which option shall not be revoked by the death of such Shareholder or a Sponsor) (the 'Purchase Option'), exercisable in the event that it becomes an Inactive Shareholder, to purchase all but not less than all of the Shares held by it, directly or indirectly (the 'Purchased Shares').... 7.3 Purchase Price for Shares The purchase price (the 'Purchase Price') for the Purchased Shares of the Inactive Shareholder (the 'Vendor') shall be the product obtained by multiplying the number of Purchased Shares by the Fair Market Value of the Shares determined in accordance with the provisions of Article 10.... 7.6 Material Breach by Sponsors (1) The Sponsors shall be deemed to be Defaulting Sponsors for the purposes of Section 7.6(3) immediately following the occurrence of any of the following events (each a 'Material Breach'): (a) a breach of (i) Section 3.1, 3.2, 3.4, 3.6, 3.7 or 7.6(2) of this Agreement or (ii) Section 5, 6, 7.3 or 7.4 of the Subscription Agreement giving rise to a claim under the Subscription Agreement, which has an adverse economic effect on the interests of the Shareholder in the Company and, in either case, such breach (if capable of cure) is not cured or any claim resulting from such breach is not paid or otherwise satisfied within a period of sixty (60) Business Days after the Sponsors receive notice of such breach from the Company or otherwise becomes aware of such breach; and (b) a breach of a Management [i.e. Employment] Contract by any of the Sponsors which has a material adverse effect on the Company. (2) The Company shall give notice in writing to the Sponsors and/or the Sponsors shall give notice to the Company and the other Shareholders promptly following the occurrence of a Material Breach. (3) During such time that the Sponsors are Defaulting Sponsors, and have not redeemed or paid compensation agreed to or assessed in judicial or arbitration proceedings in respect of the relevant material breach, the Directors appointed by the Qualifying Shareholders, if any, shall be entitled to increase the number of Directors of the Company and to nominate such additional Directors such that the Directors nominated by the Qualifying Shareholders shall control the Board of Directors."
"If the transferee shall assign the land use right of the land, on the same conditions as are contained herein the transferor has the priority over any third parties."
"Delay in Payment. If the transferee cannot pay the land transfer fee according to the schedule, the transferor will be required to provide the transferee a Payment Default Notice. The Transferee will be allowed six months to cure any default, provided that the Transferee pay the Transferor 24% annual interest on the outstanding payment calculated for each day late, payable quarterly or upon curing the default. If the default is not cured within six months, the Transferor has the right to demand that the Transferee sell the Grant of Land Use Rights with priority payment given to monies, and interest and liquidated damages owed to [Huaxia], with any residual applied to repayment of [SLEC's] total investment."
"It is for the Claimants to prove their case on their evidence. Mr Hansen is not the only witness supporting the Defendants' case and their case does not rest on his testimony."
"(1) As appears from the shareholders agreement, 90% of the moneys paid by the minority shareholders was by way of investment in SLEC, priority redeemable preference shares, entitling the holders only to the return of their principal and interest at a fixed rate from a date. There was no purchase of shares from the Hansens or any Hansen entity. There was no payment to the Hansens of any moneys. These shares gave no right to any dividends or share in the equity of SLEC at any time. There was a right only to the return of the principal and interest on redemption. In this respect the transaction really resembles a loan which (in accordance with the findings of Lightman J.) was procured by fraud. In such case there is no loss unless and until there has been no repayment of the loan. (2) Accordingly a question is why the Class A shares have not been redeemed. It is for the Claimants to prove that the Class A shares have not been redeemed by reason of the Defendants breach of contract or misrepresentation. At no stage was any payment made to Huaxia by SLEC or any reserves of funds in SLEC created which impacted upon the ability of SLEC to redeem shares. The failure to redeem was unconnected with any possible legal claim by Huaxia (the likelihood of which was minimal). Further the Defendants aver that the Company through its receivers has failed to use all reasonable efforts to redeem the Class A Shares on the Scheduled Redemption Date in accordance with its obligations under Condition 7(a) of the Class A Share Conditions. The Defendants further aver by reference to the valuations of the land as at the Closing Date that the likelihood as at the Closing Date was that the Company's assets would be sufficient to enable it to redeem the Class A shares on the Scheduled Redemption Date. In this respect the Defendants will assert (in reliance upon paragraph 9. of a report of Charles Nicholas Brooke dated June 6, 2002) that the value of the Housing land as at the Closing Date on the basis that the five instalments had been paid was$150,000,000 and on the basis that they were unpaid,$125,000,000 and that loans to fund the ongoing construction of the Project could have been raised against the Housing Project which was saleable at the time. The Company failed to use all reasonable efforts to redeem the Class A Shares on the Scheduled Redemption Date in accordance with its obligations under Condition 7(a) of the Class A share conditions. The Defendants assert that the following (possibly among other) reasons led to the failure to redeem: (a) Boardroom disputes involving matters unrelated to Huaxia's claim which paralysed the Company; (b) the appointment of Receivers for reasons unrelated to Huaxia's claim; (c) the New Joint Receivers and Managers, appointed in March 2001, have allied themselves with the interest of the Claimants. PARTICULARS (i) the JRMs have a personal interest in the project. (ii) They have put themselves into a position of conflict (iii) They have concealed their personal interest and indeed have lied, and lied upon oath, about its existence. (iv) The JRMs have used coercion or improper pressure to obtain a statement from Ricky Tang in an attempt to refute the Defendants' evidence. The JRMs are using company property for purposes unconnected with the company's business. (v) The JRMs are not being even-handed in the way they deal with the Defendants and the Minority Shareholders. (vi) The JRMs' reports to the TCI Court have been extreme in their language, and actuated by bias. Reliance will be placed on the affidavits filed on behalf of the Defendants in support of their application to change the receivers in the TCI proceedings and served on Messrs Misick and Stanbrook, the Claimants' TCI lawyers. (d) The strategy adopted by the Claimants and referred to in paragraph 23 below."
"There is no dispute but that land tax was paid by Huaxia by way of transfer of land. Whether this was on their own behalf or on behalf of the Defendants is a matter of construction. The Defendants accept that there was no valuation of the land transferred at any particular price."
"The Defendants do not seek to allege that the items referred to ... amount to paid up investment, but that amount in value in the hands of the Company which must be reflected in the value of the Company's assets and therefore in the value of the shares."
"WHEREAS A. SLEC entered into agreements (Contract No. 27 and Contract No. 28) on December 19, 1994 with Shanghai Pudong Huaxia Development Co., Ltd. ("
"10.6 HUAXIA AGREEMENT The Grantee [SLGCC] shall, during the Term [of the LTOA] perform all obligations of the Grantor [SLEC] under the Huaxia Agreement which have not already been performed, with respect to the construction and operation of the Golf and Country Club and shall indemnify the Grantor in respect of all obligations arising under the Huaxia Agreement in respect of the Property [the Golf Course Land] and the operation of the Golf and Country Club.... 10.8 ... the parties hereby acknowledge that the Grantor [SLEC] is not, by this Agreement, transferring, assigning or otherwise disposing the Land Use Rights to the Grantee [SLGCC]...."
"188. Huaxia have not served a default notice under the Contracts or taken steps to commence arbitration proceedings as provided for in the Contracts as they are entitled to do in case of default of payment of the Five Instalments (or indeed the Two Instalments). But Huaxia has however throughout insisted on its right to full payment; until shortly before this action the Hansens acknowledged to Huaxia the liability of SLEC to pay and promised to pay; and since the due date for payment of the first instalment Huaxia have made repeated demands for payment and maintained and reserved their right to take remedial action against SLEC by reason of the failure to pay and therefore under the Contracts (unless Chinese law otherwise provides) SLEC's primary asset is at risk."
"24. There has been no attempt to conclude a settlement of any claim by Huaxia. The Minority Shareholders have used the potential claim by Huaxia to try to gain control of the company and as the foundation for their claim to damages instead of agreeing to settle or negotiate with Huaxia as would have been in the best interests of the company."
"The Claimants' case is that they would have not acquired the Subscribed Shares at all had they known the true position. It is inconceivable to me that any financial investor considering the acquisition of the Subscribed Shares, in their right mind, would have concluded otherwise. There would therefore not have been any financial investor willing to acquire the Subscribed Shares and the market value of the Subscribed Shares is nil."
"My Lord, the issue here is what would the market place pay for a 40 percent interest in the shares that were held by the claimants, both the Class A shares and the common shares combined. Mr Caldwell has ultimately adopted an approach of determining what cash could be derived from those shares if the company was put into liquidation, and in doing so he has made a number of assumptions, and he has ultimately derived a value for the business which is actually higher than the final figure he ascribes to the value of the shares, and if I may just refer to his report. I wanted to refer, first of all, to paragraph 977 on page 20. Effectively what he says is when you go through his calculation, the value of the company is 98.2 million, or the value that is attributable to the Class A shares and to the common shares is 98 million, but he then restricts his value of those shares to 44.1 and whatever the balance - 4.9 million shares for each class of share. Now, the position I have taken is that - I am comfortable with the approaches that Mr Caldwell talks about. You either value a company using an earnings basis, an asset basis or a liquidation basis, but at the end of the day what you are trying to assess is what is the - what would anybody in the market place pay for those shares, and what I have effectively said is that there must be - once you have gone through these calculations, and these are nothing more than mathematical calculations, there must be some form of reality check, and when I went through this process myself, the reality check that I made was, well, let us just look at what is being placed on offer here. We have a company which - where the management and controlling directors, controlling shareholders, have been found to be fraudulent. If you were to offer those shares in the market place, a prospective purchaser of those shares is going to ask - is going to go through a process, and the primary process is to understand and evaluate the risks associated with the - a potential acquisition, and then measure that against the benefits. The benefits, I do not think there is any question about, they have been defined in the business plan. It is the risks that need to be addressed, and it is the risks I look at. The-”first of all, you have the normal business risks associated with the business, and those business risks were accepted by the claimants when they entered into the contract. But above and beyond that, when it is determined that the defendants had committed fraud, there is a raft of new risks which appear. The first risk is that the fraud that has been identified is not the only fraud. The next risk is that once the fraud has been identified, that the Hansens will deny the fraud. You then have risks associated with the fact that the Hansens are also key management of SLEC, and they are also controlling directors of SLEC. So you start with that set of risks. In addition to that, there are the risks of future fraud. I acknowledge that the money that has been paid into the company has been paid into a controlled bank account which requires joint signatures, and so it would be reasonable to anticipate that there is a small amount of risk associated with that, but there is always the potential for the risk of forgery in order to obtain those funds. I have no idea how large or small that risk might be. More importantly though, as management of the company, as directors of the company, and also with regard to SPNA, the legal representative and the holders of the company chops, the Hansens are in a position to be able to commit the company to liabilities, so you have a basic layer of risk. Now, on top of that, if you then did proceed to acquire the company, there are further risks involved because you then have to make two choices - I am sorry, I did not mean acquire the company, I means acquire the 40 per cent shareholding, but you then have two choices: do you proceed- let the company proceed in accordance with its business plan? If you do that, there are a number of consequences of that decision. The first is the company needs more money. So as a prospective investor, the additional prospect is to inject further money into the business. However, you would not want to inject further money into the business whilst the Hansens were managing the business in key management positions. You would not want to invest where management is fraudulent, and so you would have to embark on the task of removing the Hansens from management. You certainly would prefer not to have them as directors of the company, because directors themselves are in a position to commit the company, and so you would want to embark upon the task of removing them as directors. Finally, you would not contemplate injecting money into the business whilst they were still holding 60 per cent of the equity of the business. They would be - ultimately therefore be rewarded by 60 percent of the profits, having not put any of the equity into the business at all, and so there would be a need to renegotiate the shareholding of the company. So this is another additional layer of risk and issue that one would have to take into account. The alternative scenario to proceeding with the business is liquidating the business. The liquidation of the company, however, requires a resolution, a special resolution, I understand, of the shareholders, and therefore there is a risk that that special resolution would not be forthcoming, and therefore your only recourse from a liquidation prospective would be to sit back and wait six years to March 31 st , 2003, at which time the shareholders agreement permits you to, or gives you the right to, control the voting rights of the common shares held by the Hansens. There, of course, at that point in time would be a risk that they might challenge your right to exercise their voting rights, and so yet a further risk, and so the potential, from a liquidation prospective, is that you might have to wait a substantial amount of time before you were able to liquidate the company. So my conclusion fundamentally is that would be nobody in the market place who would be prepared to take on all of those risks, and therefore I just do not think that anybody would be prepared to buy the shares, or alternatively, given that we are talking about fair market value, they would probably be prepared to offer a dollar to take the shares off the claimants' hands, and the dollar being the amount to, I presume, enter into an enforceable contract to do so. Lightman J. The whole of that exercise involves no substantive consideration of the underlying assets, or very limited The exercise is effectively a measure of the risks versus the rewards, my Lord."
"would consider it highly unlikely that somebody holding the share capital of the Claimants at that time would have considered the market value of their investment to be nil."
"what price would be achieved in the open market between a willing vendor and a willing purchaser."
"without knowing precisely what such rights would be and how the funding would be achieved, it is not possible to put a precise value upon the interest of the Claimant in those circumstances."
"Well, rather like the question posed, I mean, without knowing the liability or how it has to be discharged or how the funding might be provided, it is very difficult to say."
"A method of determining the value of a property which has potential for development, redevelopment or refurbishment. The estimated total costs of the work, including fees and other associated expenditure, plus an allowance for interest, developer's risk and profits, is deducted from the gross value of the completed project. The resultant figure is then adjusted back to the date of valuation to give the residual value."
"[SLEC] is under an obligation to contribute financial support to the Golf Course Project in recognition of the value to [SLEC] of the use of the clubhouse facilities by residents of the villas. This support should amount to$500 per unit per month: however, due to the shareholders dispute, this contribution is currently not being paid."
"Mr Brooke has made no specific allowance for Developer's Profit on the basis that as at 31 st March 1997, having secured the land, the Land Use Rights, approval of the Master Plan and significant pre-lease interest together with completion of the land formation and part of the associated infrastructure, the only inherent risk remaining was that of construction risk and market absorption, both of which he had allowed for in the adoption of a high construction cost and a phased programme of development."
"On 31 st March 1997, SLEC entered into a lease agreement with SLGCC for the lease and possible transfer of Land Use Rights of the Golf Course Land to SLGCC for a nominal consideration. In consideration for this lease agreement SLGCC undertook to assume the obligations of paying Huaxia the Land Use Right Transfer fee of$3,988,363 which became payable after 31 st March 1997."
"Element of valuation31 March 1997 31 May2002 (1) Gross Development Value (psm) (a) Mr Brooke Villa:$2,700 Villa:$2,200 Flats:$2,295 Flats:$1,760 (b) Mr Wong Villa:$2,400 Villa:$2,100 Flats:$1,680 Flats:$1,500 (2) Construction Cost (psm) (a) Mr Brooke$1,000 $600 (b) Mr Wong$800 $600 (3) Professional Fees (a) Mr Brooke 10% 10% (b) Mr Wong 10% 10% (4) Interest Rate (a) Mr Brooke 10.5% 7% (b) Mr Wong 10.5% 7.5% (5) Marketing Costs (a) Mr Brooke inc. in Contingency inc. in Contingency (b) Mr Wong 3% 3% (6) Contingency (a) Mr Brooke 10% 10% (b) Mr Wong 10% 10% Element of valuation31 March 1997 31 May 2002 (7) Developer's Profit (a) Mr Brooke See below See below (b) Mr Wong 22.5% 20% Mr Brooke has made no specific allowance for Developer's Profit on the basis that as at31 March 1997 , having secured the land, the Land Use Rights, approval of the Master Plan and significant pre-lease interest together with completion of the land formation and part of the associated infrastructure, the only inherent risk remaining was that of construction risk and market absorption, both of which he has allowed for in the adoption of a high construction cost and a phased programme of development. As at31 May 2002 , the risk is considered materially less in that all of the infrastructure is complete for the entire development, villas have been constructed and the surrounding golf course and supporting facilities are in place. (8) Valuation of Surplus Land and Town Centre (a) Mr Brooke$470 psm$461 psm (b) Mr Wong$123.9 psm$161.7 psm (9) Adjustment assuming false representations and breached warranties (a) Mr Brooke Outside instructions Outside instructions (b) Mr Wong -50% -30% (10) Adjustment for payment of Land Use Right Fees (a) Mr Brooke$25m *$25m * (b) Mr Wong$19.957m **$19.957m ** · Assuming commercial settlement ** Assuming levy of interest and liquidated damages (unknown amount) (10) Adjustment for payment of Land Use Right Fees (Cont'd) Mr Brooke referred to the possibility of SLEC remaining responsible for the settlement of Land Use Right Fees for both the Housing and Golf Course Projects and for this reason valued the Golf Course Project to demonstrate that the value of the asset covered any outstanding Land Use Right Fee due in respect of the Golf Course Land as at31 March 1997 and31 May 2002 . (11) Completed Villas31 March 1997 31 May 2002 (a) Mr Brooke N/A$27.6m (b) Mr Wong N/A$26.3m "
"Total costs to construct the Golf Course is budgeted at$12.1 million , approximately$3.1 million for Phase 1 of the Clubhouse ... only approximately$4 million additional funds needs to be raised."