------------------------------ Chief Justice Ma: 1. I agree with the judgment of Lord Phillips of Worth Matravers NPJ. Mr Justice Ribeiro PJ: 2. I agree with the judgment of Lord Phillips of Worth Matravers NPJ. Mr Justice Tang PJ: 3. I agree with the judgment of Lord Phillips of Worth Matravers NPJ. Mr Justice Bokhary NPJ: 4. I agree with the judgment of Lord Phillips of Worth Matravers NPJ. Lord Phillips of Worth Matravers NPJ: Introduction 5. On 12 July 2007 the first appellant (“Vand”) entered into a share purchase agreement (“the SPA”) with the respondent (“Pony”) under which it agreed to sell to Pony 370 million shares in a Hong Kong Company called Hans Energy Company Limited (“Hans”). Completion took place on the following day. The second appellant, Mr David An, guaranteed Vand’s obligations under the SPA. The SPA included a put option under which, on the occurrence of certain specified events, Pony would be entitled to sell the shares back to Vand. On 6 July 2009 Pony purported to exercise that option. This action raises the issue of whether the put option was validly exercised. On 30 November 2011 Reyes J gave a judgment in which he held that the put option had been validly exercised. He subsequently ordered Vand and Mr An to pay Pony the put option price of HK$510,708,649.03, together with interest. 6. The appellants appealed against the order of Reyes J. On 30 October 2012 the Court of Appeal dismissed their appeal. Kwan JA gave the only reasoned judgment, with which Fok JA and McWalters J agreed. Vand and Mr An now appeal as of right to this Court. Background to the SPA 7. One of the attractions to Pony of the SPA was an indirect interest that Hans enjoyed in a petro-chemical dock construction project (“the Dock Construction Project”) at the Guangdong Dongguan Humen Bay Shatian Bay Region in the People’s Republic of China (“PRC”). The Construction Project was to be carried out by Dongguan Dongzhou International Petrochemical Storage Company Limited (“Dongguan Dongzhou”), a company formed specifically for this purpose. 8. The Dock Construction Project required approval by, among others, the National Development and Reform Commission of the PRC (“NDRC”). That approval had been obtained on 5 September 2005. At that time, however, Dongguan Dongzhou had not yet been incorporated. The approval was granted on the basis that Dongguan Dongzhou would be a joint venture company in which the majority shareholding would be owned, indirectly, by Hans, but a 15% interest would be held by Dongguan Humen Port Holding Company (“DHPC”), a company owned by the local municipal government. 9. In circumstances that do not appear from the judgments below, and are not material, DHPC’s interest in the Dock Construction Contract was subsequently bought out by (Guangdong (Panyu) Petrochemical Storage & Transportation Limited (“Yuehai”). This was one of the Hans group of companies, which consequently became the owner of 15% of the shares in Dongguan Dongzhou. This change in shareholding had the approval of the local municipal government, but had not been approved by NDRC. 10. The lawyers advising Pony on the drafting of the SPA had two relevant concerns. It is reasonable to conclude that these were communicated to Vand and Mr An, so that it is legitimate to have regard to them as relevant background to the SPA. The first concern was that Yuehai had not obtained a necessary certificate of approval by NDRC for storing product oil in its facilities. 11. The second, and material, concern was expressed in a report to Pony by Clifford Chance. Privilege was waived in respect of the relevant passage, which commented as follows on the change in the ownership of Dongguan Dongzhou after the grant of approval by NDRC: “We understand that the failure to obtain NDRC’s approval for the changes in equity holders may cause the NDRC to suspend the project operations and impose administrative liability on persons who are responsible for the failure.” The relevant provisions of the SPA 12. The parties agreed to the insertion into the SPA of the following provisions in order to meet the two concerns referred to above. “6.2 Covenants by the Vendor (A)The Vendor hereby covenants with the Purchaser that it shall procure the Company [Hans] to carry out all reasonable steps (i) to obtain the final approval certificate for storage of product oil from the relevant government authority in respect of the facilities owned by (“Yuehai”) for the purpose of storing product oil in accordance with the applicable laws and regulations as soon as possible; and (ii) to obtain the necessary approval from, and to carry out the relevant filings with, the National Development and Reform Commission of the People’s Republic of China (中华人民共和国国家发展和改革委员会) in respect of the change in ownership of the petro-chemical dock construction project at the Guangdong Dongguan Humen Bay Shatian Bay Region as soon as possible ((i) and (ii) together the “Approvals”). (B) The Vendor further covenants with the Purchaser that it shall furnish to the Purchaser copies of all relevant official receipts, confirmations or such other documents from the relevant government authorities with respect to the Approvals. The Vendor shall keep the Purchaser informed with respect to the application procedures and provide the Purchaser with the right to access all relevant information and any communications with the relevant government authorities as may be reasonably required by the Purchaser and the right to enquire the progress of the applications from time to time. (C) The Vendor hereby grants an irrevocable put option (the “Put Option”) to the Purchaser to sell, and to require the Vendor to buy, all of the Put Option Interest subject to the terms and conditions of this Clause 6.2. (D)The Put Option may be exercised by the Purchaser upon the occurrence of any of the following events at the Put Option Price: (1) the failure of Yuehai to obtain the final approval certificate for storage of product oil (成品油仓储经营批准证书) from the relevant government authority in respect of the facilities owned by it for the purpose of storing product oil in accordance with the applicable laws and regulations, at the fault of, or arising from an act or omission of, the Vendor or Yuehai; or (2) the failure of Yuehai to obtain the necessary approval from or to carry out the necessary filing with, the National Development and Reform Commission of the People’s Republic of China (中华人民共和国国家发展和改革委员会) for the change in ownership of the petro-chemical dock construction project at the Guangdong Dongguan Humen Bay Shatian Bay Region, at the fault, or arising from an act or omission of, the Vendor or Yuehai. (E) Within 30 Business Days upon the occurrence of any of the triggering events as referred to in Clause 6.2 (D) above, the Purchaser may exercise the Put Option by delivering a put option notice (the “Put Option Notice”) to the Vendor … (F) Notwithstanding any provisions herein contained to the contrary, the Put Option granted under this Clause 6.2 shall lapse automatically upon the expiry of two years from the Completion Date.” 13. Clause 8.3 of the SPA provided that neither the vendor nor the guarantor should have any liability in respect of any claim under the SPA unless notice of the claim was given within 24 month of the date of completion. 14. Clause 8.6 provided that neither the vendor nor the guarantor should be liable for, inter alia: “anything expressly provided to be done but omitted to be done pursuant to this agreement.” 15. Pony pleaded that the SPA was subject to an implied term to the following effect: Vand would be able to take, and would succeed in taking, all the steps necessary to procure approval by NDRC in respect of the change in share ownership of Dongguan Dongzhou within two years of the completion date. At para 110 of his judgment Reyes J held that no such term was to be implied. He observed that permission might not have been obtained from NDRC within the two year period without this being attributable to any fault or omission on the part of Vand or Yuehai, whereupon the put option would simply lapse. I consider that Reyes J was correct to reject the implied term. Indeed, it was implicit from clause 6.2 F of the SPA that the parties envisaged that what would otherwise be a triggering event might occur after the expiry of the two year period. Formalities 16. To obtain NDRC’s consent to the change of ownership of Dongguan Dongzhou, the relevant application had to be passed up the following hierarchical chain. No short cuts could be taken: (i) Application for consent had to be made to the Dongguan Humen Bay Management Committee (“DHBMC”). (ii) Having approved the application DHBMC had to pass the application up to the Dongguan Municipal Development and Reform Bureau (“DMDRB”) (iii) Once approved by DMDRB the application had to be referred to successive higher levels of authority, including the Development and Reform Committee of Guangdong Province until, finally, it reached the NDRC. 17. Applying hindsight on the basis of what in fact occurred Reyes J concluded at paragraph 150 of his judgment that, had there been a prompt application for the approval, and had progression of the application up the hierarchical chain then proceeded smoothly, it would have taken between 10 and 15 months “give or take a week or so” for the approval of NDRC to be obtained. The application for approval was not, however, made promptly nor was progression of the application up the chain smooth. What in fact occurred 18. It fell to Dongguan Dongzhou to take the necessary steps to obtain approval of the application. This action has proceeded, reasonably, on the premise that Vand, in carrying out its obligations under clause 6.2 of the SPA, was in a position, through Hans and its chain of subsidiary companies, to procure that Dongguan Dongzhou acted with all reasonable diligence in seeking the approval of the application. This Dongguan Dongzhou signally failed to do. 19. Dongguan Dongzhou did not make the initial application to DHBMC until 14 November 2008, that is about 16 months after the date of completion of the SPA. Thereafter Dongguan Dongzhou’s conduct in chasing up the progress of the application was described by Reyes J at para 130 of his judgment as “lack-a-daisical”. In particular the company did nothing between 21 January 2009 and 20 April 2009, at which date it was found that DHBMC had lost the original application, so Dongguan Dongzhou had to submit a new one. Thereafter at para 134 Reyes J identified a further lack of diligence on the part of Dongguan Dongzhou in taking a month between 22 May 2009 and 23 June 2009 in making a submission to the Development and Reform Commission of Guangdgong Province when this could and should have been done in half that time. 20. On 6 July 2009 Pony wrote to Vand purporting to exercise the put option. The letter alleged that Yuehai had failed to obtain NDRC’s approval of the change in ownership of Dongguan Dongzhou and that this failure arose through the fault, or an act or omission, of Vand or Yuehai. This was said to constitute the occurrence of an “event” as provided for in clause 6.2(D)(2) of the SPA. 21. Vand replied on 10 July 2009 denying that any such event had occurred. 22. On 8 February 2010 NDRC wrote a letter approving the change in the ownership of Dongguan Dongzhou. The rival contentions 23. Vand advanced a number of reasons for contending that there was no valid exercise by Pony of the put option. These were dealt with carefully and at length by Reyes J, who rejected each one of them. The Court of Appeal affirmed his judgment in relation to each. Before this Court, however, Mr Warren Chan S.C. with admirable economy refined his oral argument to a single point. The principle underlying this point had always featured in Vand’s arguments below, but I believe that Mr Charles Sussex S.C. for Pony was correct to comment that Mr Chan’s formulation of the point before us was novel. Mr Sussex sensibly made no objection to this. 24. Mr Chan’s point was that, on the true construction of clause 6.2 of the SPA, the “failure” by Vand to procure the “necessary approval” had to be an “event” capable of triggering the running of the 30 day period within which the option had to be exercised. A letter from NDRC refusing to approve the change of ownership would have constituted such an event. As it was Pony was not able to point to the occurrence of any such event within 30 days of 6 July, when Pony purported to exercise the put option. All that Pony was able to point to was a continuous period during which Vand had not yet succeeded in obtaining NDRC’s approval. This did not constitute an “event”. 25. Mr Sussex accepted that a letter from NRDC refusing to approve the change of ownership of Dongguan Dongzhou would amount to a “failure” by Vand to procure the necessary approval. He contended, however, that a “failure” to procure the “necessary approval” could also be a “continuing failure”. Provided that the continuing failure was caused by the fault, or an act or omission, of Vand or Yuehai it could trigger the put option. On the facts Mr Sussex contended that there had been fault on the part of Vand and Yuehai in failing to make a timely application for approval of the change of ownership of Dongguan Dongzhou. This was a breach of Clause 6.2(A)(ii). Vand then came under a continuing duty to remedy this breach and its omission to do so amounted to a continuing failure to procure the necessary obligation, giving rise to a right to exercise the put option. 26. I have referred at paragraph 15 above to Pony’s unsuccessful attempt to imply a term into the SPA that Vand would take all the steps necessary to procure approval by NDRC of the change of ownership of Dongguan Dongzhou within two years of the completion date. In argument at first instance Mr Sussex built on this implied term by submitting that the put option could be exercised once a reasonable person would conclude that, by reason of Vand’s omission to remedy its breach of Clause 6.2(A)(ii), it would not be possible to obtain NDRC approval by 13 July 2009, that is within two years of completion. The findings of the Courts below 27. Mr Sussex’s submissions found favour with Reyes J, notwithstanding that he had rejected the implied term upon which it appeared to be founded. The critical finding of the judge appears at para 155 of his judgment: “The failure to remedy the breach of cl.6.2A(ii), by taking prompt action to advance the application …can amount to an ‘omission’ within the meaning of cl. 6.2D(2). I agree with Mr Sussex that by June 2009 Dongguan Dongzhou (and hence Vand) had by its lack of activity behaved in such a way as to lead a reasonable person to conclude that it would not be possible to obtain NDRC approval by 13 July 2009. There being a continuing omission to act promptly in June 2009 there would be a triggering event within cl.6.2D(2).” 28. In the Court of Appeal Kwan JA endorsed this conclusion in identical terms at para 54 of her judgment. Discussion 29. The result of this case turns, my view, on two vital words in clauses 6.2(D) and (E) of the SPA: “failure” and “events”. The 30 day period for exercising the put option had to be triggered by a specified “event”. That event was the “failure” of Yuehai to obtain the approval of NDRC to the change in ownership of Dongguan Dongzhou. 30. An “event”, giving that word its natural meaning, is something that happens at a specific moment in time. In answer to the question “when did that event occur” it is usually possible to identify a date. In a helpful passage in Axa Reinsurance (UK) PLC v Field [1996] 1 WLR 1026 at p 1035 Lord Mustill defined an “event” and distinguished its meaning from that of the word “cause”: “In ordinary speech, an event is something which happens at a particular time, at a particular place, in a particular way…A cause is to my mind altogether less constricted. It can be a continuing state of affairs; it can be the absence of something happening”. 31. That the parties to the SPA intended event to bear its natural meaning is confirmed by the qualification of the word “event” by the word “triggering”. The event was to be a happening that would be capable of triggering the start of a 30 day period. Thus it had to be possible to identify the date on which the event occurred. 32. “Failure” is a word that can have a number of different meanings, depending upon the context in which it is used. In some contexts it can be used to describe a specific event happening at a particular time: “heart failure”, “the failure of the electricity supply”, “failure to pass a driving test”. The word can, however, be used perfectly naturally in a different sense, to describe a non-event, a continuous state of affairs, a period during which an individual does not do something. It can be another word for an omission. Contrast “yesterday I failed to pass my driving test” with “throughout the seven years that he lived in England he failed to take a driving test”. The first describes an event, the second a non-event or omission. 33. Mr Chan and Mr Sussex were agreed that a refusal by NDRC to approve the change of ownership would properly have qualified as “a failure to obtain” NDRC’s approval of the change of ownership with the meaning of clause 6.2(D). That accorded to the word “failure” the first of the meanings that I have set out above. Had there been such a refusal there would have been no difficulty in treating it as an “event” that triggered the 30 day period for exercising the put option. Furthermore, it was to guard against the risk of such a refusal that the parties had inserted the put option into the SPA. For these reasons I consider that counsel were correct in agreeing that such a refusal by NDRC would have constituted a “failure to obtain the necessary approval” within the meaning of clause 6.2 (D). 34. Mr Sussex submitted, however, that the word “failure” in clause 6.2(D) was also capable of covering the second meaning of that word that I have identified above, namely the omission on the part of Vand to obtain the approval of NDRC to the change of ownership over a continuous period. On this argument the “failure to obtain approval” described not merely a refusal of approval but a continuous period during which Vand had not yet succeeded in obtaining approval. In my opinion this submission faced insuperable obstacles. 35. In the first place while the continuous omission to obtain approval could, if taken out of context, properly be described as a “failure” to obtain approval, it could not properly be described as an “event”. It was the antithesis of an “event”, it was a “non-event”. Thus, in the context of clause 6.2, “failure” could not properly bear the meaning of a continuous state of affairs. 36. Secondly, because it was not an “event”, the continuing omission to obtain approval was incapable of acting as a trigger. Pony has throughout this litigation been unable to point to a moment in time when the “failure” to obtain approval triggered the running of the 30 day option period. As I understand Pony’s case it is that there was a continuous triggering of the right to exercise the put option during the continuous omission to obtain NDRC’s approval to the change of ownership, at least during any period when the omission to obtain approval was itself caused by an omission on the part of Vand to rectify its earlier fault in not making a prompt application for approval. 37. This leads to the third obstacle. It is impossible to identify, in theory, let alone in practice, at what point in time, on Pony’s case, the fact that Vand had not yet succeeded in obtaining approval first triggered the right to exercise the put option. The continuous omission to obtain approval began on the day of completion of the SPA, but on Pony’s argument did not give rise to a right to exercise the put option until it was attributable to the fault, or an act or omission, of Vand or Yuehai. When, in theory, did that moment arrive? When NDRC should have responded to the application for approval had Vand and Yuehai taken all reasonable steps to obtain this? This would mean that the put option could have been exercised had Vand been responsible for even a week of delay in the process of obtaining approval. This, understandably, was never Pony’s case. I was not clear what Pony’s case was as to the moment when the put option first became exercisable. It seems to me that whatever it was in theory, it was impossible in practice to identify when that moment would arrive. This was because no one could forecast with any degree of accuracy how long the laborious process of obtaining approval would take if Vand exercised due diligence. 38. In short, it is neither possible to read, in its context in clause 6.2, the word “failure” as meaning a continuing omission, nor is it possible to give workable effect to clause 6.2 if “failure” is given that meaning. 39. It is no doubt these difficulties that led Pony in these proceedings to seek to link the right to exercise the put option to the expiry of the period of two years from the date of completion of the SPA. Reyes J and the Court of Appeal appear to have accepted this linkage in the passage that I have quoted at para 27 above. I have not found that passage easy to follow. It uses the language of repudiatory or anticipatory breach of an obligation to obtain NDRC approval by July 13th 2009. But there was no such obligation and concepts of repudiatory or anticipatory breach do not assist in resolving the critical issue in this case of the meaning of “failure to obtain the necessary approval”. 40. My conclusions can be shortly summarised. The “event” described as “failure to obtain the necessary approval of NDRC” in clause 6.2 of the SPA was a refusal by NDRC to give that approval. That event never occurred. On the contrary, NDRC finally gave its approval to the change of ownership of Dongguan Dongzhou. It follows the put option was never triggered. 41. Mr Sussex urged that such a result was not acceptable as it meant that Pony had no remedy if Vand took no steps to obtain approval from NDRC within the two year period. This may be true, but the terms of the SPA suggests that the concern of the parties was with events that occurred within the period of two years from completion. Not only did the put option lapse at the end of two years, but no other kind of claim could be advanced after two years had elapsed. Pony was concerned that NDRC would treat their lack of consent to the change of ownership of Dongguan Dongzhou as a ground for suspending the project operations. If that was going to happen it was likely to happen within two years, and Mr Sussex accepted in argument that the parties could reasonably have expected that NDRC would respond within two years to the application for approval of the change of ownership. 42. As things turned out, the concern that led to the insertion of the put option never came to pass. NDRC approved the change of ownership of Dongguan Dongzhou, albeit belatedly. In these circumstances I do not consider that Pony has reason to feel aggrieved at my conclusion that the put option was never triggered and that, accordingly, this appeal must be allowed. 43. I would make an order nisi that Pony pay the costs of Vand and Mr An in this court and in the courts below. Any submissions as to costs to be made in writing and lodged with the Registrar within 21 days from the date of this judgment, and any response to be made within 21 days thereafter; and in default of such written submissions, that the order nisi should stand as an order absolute without further order. Mr Warren Chan SC and Mr Liu Man Kin instructed by K & L Gates, for the Appellants Mr Charles Sussex SC and Ms Queenie Lau instructed by Herbert Smith Freehills, for the Respondent