TOP SENSE INDUSTRIES LTD v. FULLY SHARP ENTERPRISES LTD

HCA 1361/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1361 OF 2012

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J U D G M E N T

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Introduction

1.  This is the trial of the plaintiff’s claims in this action and the defendant’s counterclaim.

2.  The trial was fixed to commence before me on 2 February 2015 for a total of four days.  The notice of trial of this action was issued on 20 August 2014.  By the said notice the parties were also given notice of the pre‑trial review fixed before me on 4 November 2014.

3.  At the pre‑trial review on 4 November 2014 both the plaintiff and the defendant were represented by counsel and solicitors.  I was informed by both counsel that the matter was ready for trial and that the time allotted for trial would be sufficient.

4.  I then gave directions for the trial which was due to commence on 2 February 2015.

5.  On 20 January 2005 I dealt with an application by the then solicitors for the defendant Dickman L T Chan & Co for an order declaring that they shall cease to be the solicitors for the defendant and for costs against the defendant.  The defendant did not appear on that application.

6.  By my order dated 20 January 2015 it was ordered that upon compliance with the requirements of Order 67, rule 6(1) of the Rules of the High Court, Dickman L T Chan & Co ceases to be the solicitors acting for the defendant.  It was further ordered that the costs of the application be paid by the defendant to Dickman L T Chan & Co.

7.  At about 3:30 pm on Friday 30 January 2015 Haldanes filed a notice to act as solicitors for the defendant in this action.  Shortly thereafter, Haldanes gave notice by letter that counsel would be making an application on behalf of the defendant on the first day of trial on Monday 2 February 2015 for an adjournment of the trial “in order that we can seek client’s instructions, peruse the pleadings and papers in order that we are in a position to properly advised our client”.

8.  On the first day of trial on Monday 2 February 2015, counsel for the defendant, Ms Ebony Ling, informed me that her instructions were limited to making an application on behalf of the defendant for an adjournment of the trial.  Not surprisingly, the application for the adjournment was opposed.  Having heard counsel’s submissions, I refused the application for an adjournment of the trial for the reasons that I gave at the time.  Ms Ling then applied for leave to withdraw which I granted.

9.  Having filed a notice to act, Haldanes were and are still solicitors on record for the defendant.  However, they did not instruct counsel to represent the defendant at the trial.  The defendant also did not make any application to the Registrar for leave to be represented by a director under Order 12, rule 1(2A) of the Rules of the High Court.

10.  The trial then proceeded with Mr Ivan Cheung appearing as counsel for the plaintiff and without any counsel appearing on behalf of the defendant.

Background

11.  The plaintiff is a company incorporated with limited liability in accordance with the laws of Hong Kong.

12.  The defendant is also a company incorporated with limited liability in accordance with the laws of Hong Kong.

13.  At all material times, the defendant is and was the registered owner of a piece of land known as the Remaining Portion of Lot Nos 870,877,878 and 892 in Demarcation District No 115, Yuen Long, New Territories (“the Land”).

14.  By a financing agreement dated 30 Apr 2005 (“the financing agreement”) made between the plaintiff as the financier and the defendant as the requesting party and on the terms and conditions contained therein the plaintiff agreed to advance a loan to the defendant to enable it to pay off a legal charge on the Land registered in the Land Registry in favour of Melody Garden Company Ltd (“Melody Garden”) and for the defendant to redeem the Land which was subject to the said legal charge.

15.  The financing agreement was signed by Yan Ping Cham (“Yan”) on behalf of the defendant and by Jackin Jim Yin Kwan (“Jim”) on behalf of the plaintiff.

The financing agreement

16.  As set out in the recital B of the financing agreement, the defendant was prior to 30 April 2005 facing a real threat from Melody Garden to repossess and sell the Land.

17.  As set out in recital C, the defendant had sought the plaintiff to provide financial assistance to pay off the said legal charge which the plaintiff agreed to provide on the terms and conditions contained in the financing agreement.

18.  By clause 1 of the financing agreement the plaintiff agreed to provide all redemption monies to assist the defendant to redeem the Land from the said legal charge.

19.  Clause 2 provided that the redemption amount should be disbursed as follows:

(a) HK$600,000 to be paid on the signing of the financing agreement; and

(b) the balance to be paid upon the plaintiff’s solicitors approving the title to the Land.

20.  It was provided by clause 3 that upon title acceptance by the plaintiff’s solicitors and upon the defendant executing a legal charge over the Land to the plaintiff, the plaintiff should pay off the balance of the outstanding amount owed to the legal chargee Melody Garden.

21.  Clause 5 of the financing agreement provided that after executing the legal charge by the defendant in favour of the plaintiff, the plaintiff should provide additional assistance (including financial assistance) to the defendant in the defendant’s section 16 application under the Town Planning Ordinance on certain change of use of the Land.

22.  By clause 6 it was provided that:

“[The defendant] hereby IRREVOCABLY covenants with [the plaintiff] that, irrespective of whether or not its section 16 application is successful, it would still sell the land within 3 years from the date [the plaintiff] advanced the second payment in clause 3 above to repay [the plaintiff].”

23.  By clause 7 it was agreed that:

“[The defendant] shall assign/transfer all rents or income received from the Land (not less than HK$29,000.00 per month) to [the plaintiff] from the draw‑down date in clause 3 above until [the plaintiff’s] loan is repaid in full.”

24.  Clause 8 provided that:

“Upon completion of the sale of the Land, [the plaintiff’s] loan and the subsequent loans and other expenses paid for [the defendant] (including [the plaintiff’s] reasonable legal expenses) shall forthwith be repaid in full by [the defendant] without interest.”

25.  And by clause 9 it was agreed that:

“In the event of the gross sale price of the Land when [the defendant] sells the Land (to honour clause 6 hereinabove) being in excess of HK$4.5 million, any surplus over HK$4.5 million shall be shared between [the plaintiff] and [the defendant] equally.”

The plaintiff’s claims

26.  The plaintiff claims against the defendant in this action for:

(1) a declaration that the plaintiff is entitled to 50% of any surplus over HK$4.5 million when the defendant sells the Land and the gross sale price is over HK$4.5 million pursuant to clause 9 of the financing agreement; and

(2) the sum of HK$2,494,000 pursuant to clause 7 of the financing agreement with interest thereon.

27.  However, there is no claim in this action for the repayment of the principal amount of the loan in the sum of HK$2,445,000.  There is also no claim for damages for breach of the financing agreement.

The main issue

28.  The main issue between the parties is on the proper construction of the financing agreement.

The applicable legal principles

29.  The applicable legal principles on the construction of documents are well settled.

30.  The principles were summarized by Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society and another [1998] 1 WLR 896 at pages 912 to 913:

“… The principles may be summarized as follows.

     (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

     (2) The background was famously referred to by Lord Wilberforce as the ‘matrix of fact,’ but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

     (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

     (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749.

     (5) The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201:

‘if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.’”

31.  I would also refer to what Lord Hoffman NPJ said in Jumbo King Ltd v Faithful Properties Ltd & others (1999) 2 HKFCAR 279 at page 296:

“… The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve ...”

32.  It is clear that the previous negotiations between the parties and their declarations of subjective intent are not admissible for the purpose of the construction of a document.

The witnesses

33.  I heard evidence from Jim and from Antony Wong (“Wong”), a partner of Hastings & Co, solicitors.

34.  Although Yan made a witness statement dated 9 October 2013, I have disregarded the same as Yan did not give evidence at the trial.  As I have said, counsel was not instructed to appear for the defendant at the trial.  There was no evidence called on behalf of the defendant.

35.  I found Jim and Wong to be truthful and reliable witnesses.  I accept their evidence.

36.  I am satisfied on the evidence that pursuant to negotiations that Jim had with Yan the financing agreement was entered into between the plaintiff and the defendant on 30 April 2005.  Wong was the solicitor who drafted the financing agreement and explained the same to Jim and Yan before they signed the same on behalf of the plaintiff and the defendant respectively.  At that time, Wong was a solicitor in the solicitors’ firm Chan, Wong & Lam.

37.  Although Jim and Wong gave evidence of the previous negotiations between the plaintiff and the defendant, I have disregarded that evidence when construing the financing agreement.  I have also disregarded the evidence of subjective intent when considering the evidence of Jim and Wong.

38.  Upon the signing of the financing agreement, the plaintiff advanced the first part of the loan in the sum of HK$600,000 to the defendant as provided for in clause 2 of the financing agreement.

39.  Wong said, and I accept, that after the execution of the financing agreement and the payment of the first part of the loan in the sum of HK$600,000, he followed up on the matter and checked the title deeds of the Land.  Towards the last week of May 2005, Wong was satisfied with the title of the Land.  He informed Jim of this and asked him to prepare the remaining balance of the loan in the sum of HK$1,845,000 to be made to the defendant.

40.  There were two further documents prepared by Chan, Wong & Lam.  One was the legal charge dated 31 May 2005 (“the legal charge”) by the defendant as mortgagor in favour of the plaintiff as mortgagee whereby a legal charge on the Land was created in the plaintiff’s favour on the terms and conditions contained therein.  The other document was the rental assignment also dated 31 May 2005 (“the rental assignment”) whereby on the terms and conditions contained therein the defendant assigned to the plaintiff the rents to be received  from the tenants of the defendant on the Land.

41.  Although the financing agreement did not mention a rental assignment, Wong said that it was the usual practice when securing a loan from a lender with the use of a rented property as a mortgage, the lender would require the mortgagor to execute a legal charge as well as a rental assignment.  The documents would be executed at the same time to secure the loan.  I accept his evidence.

42.  Both the legal charge and the rental assignment were signed by Lo Tse Wai and Ling Shek Lun, who were authorized by the board of the defendant to sign the documents on the defendant’s behalf.  The documents were explained to them by Wong before they were signed.

43.  On 30 May 2005 the plaintiff also advanced the balance of the loan to the defendant in the sum of HK$1,845,000.  With the HK$600,000 advanced as the first part of the loan, the total loan from the plaintiff to the defendant was HK$2,445,000.  This is not disputed.

44.  Both the legal charge and the rental assignment were registered in the Land Registry under memorial nos 05063001010047 and 05063001010059 respectively.

45.  By clause 5 of the financing agreement the plaintiff agreed to provide additional assistance including financial assistance to the defendant in their section 16 application under the Town Planning Ordinance for a change in the use of the land.  Jim said that he had the experience in residential development and that he knew planning consultants specialized in the necessary applications to various Government departments.  Jim said that the use of the Land was undefined at the time of the financing agreement.  There was a great potential for development of the land if an application for a change in the use of the Land to residential/commercial development under section 16 of the Town Planning Ordinance were successfully made.  In that event it was anticipated that the value of the Land would be substantially increased.

46.  Jim was informed by Yan that the land could either be developed on its own or combined as a joint development with adjoining land namely, Lot Nos 879, 880 (portion A1), 880 (portion B1), 881, 882, 884, 885, 889 (remaining portion), 891, 1318, 1326, and 1344 in Demarcation District No 115, Yuen Long (“the Adjoining Land”) owned by the family of the late Tsui Tsin Tong (“Tsui”) to form a large development.  I believe Jim and accept his evidence.

47.  By clause 6 of the financing agreement the defendant covenanted that whether or not its application under section 16 would be successful, the defendant would still sell the Land within three years of the advance by the plaintiff of the second payment under clause 3 to repay the plaintiff.

48.  It is clear on the evidence that the second payment under clause 3 of the financing agreement was made on 31 May 2005 by the payment by the plaintiff to the defendant of the said sum of HK$1,845,000.  The defendant was therefore obliged under clause 6 of the financing agreement to sell the Land within three years, ie by 31 May 2008 to repay the plaintiff.

49.  By clause 9 of the financing agreement the plaintiff and the defendant agreed to share the proceeds of the sale price of the Land if the Land were sold for more than HK$4.5 million.

50.  Although clause 7 required the defendant to transfer all rents or income received from the Land of not less than HK$29,000 per month from the draw down date in clause 3 until the loan was repaid in full, there is no dispute that the defendant has never paid the plaintiff the monthly sum of HK$29,000 from the draw down date ie from 31 May 2005.

51.  The plaintiff’s case is that the monthly payment of not less than HK$29,000 by the defendant to the plaintiff was in the nature of interest payable for the loan granted by the plaintiff to the defendant.

52.  The defendant’s case is that the monthly payment of not less than HK$29,000 was not in the nature of interest for the loan.  It was only to be further security for the loan granted by the plaintiff to the defendant.

53.  On the proper construction of the financing agreement it seems to me that the defendant was obliged to transfer the rental or income of not less than HK$29,000 per month to the plaintiff until the loan was repaid in full.  That is clear from clause 7 of the financing agreement.

54.  There is no merit in the defendant’s case that the monthly sum of not less than HK$29,000 was only to be further security for the loan.

55.  Clause 1 of the rental assignment executed on 31 May 2005 about a month after the financing agreement was entered into provided:

“ As further security for the Secured Indebtedness and the payment of all other moneys (if any) becoming due to the [plaintiff] under the terms of the Legal Charge and the due fulfilment of the covenants and conditions thereof the [defendant] hereby assigns and agrees to assign to the [plaintiff] all the [defendant’s] right, title, interest and benefit to and in any moneys whatsoever payable to the [defendant] by the Lessees and all other rights and benefits whatsoever accruing thereafter to the [defendant], in the [defendant’s] capacity as a Lessor, from the Lessees …”

56.  The defendant cannot rely on the words “as further security” in clause 1 of the rental assignment as support for its case that the transfer of the rent or income of not less than HK$29,000 per month was further security for the loan and not in the nature of interest payable for the loan.

57.  By recital (3) to the rental assignment it was provided that the defendant agreed to execute the rental assignment “by way of further security for the Secured Indebtedness”.

58.  By recital (2), the Secured Indebtedness was defined to mean:

“… all sums from time to time advanced by [the plaintiff] to [the defendant] and outstanding together with interest thereon and all other moneys and obligations in respect of moneys which [the defendant] covenanted to pay to [the plaintiff] under the terms of the [legal charge]”.

59.  As is set out in clause 1 thereof, the rental assignment was executed as further security for the Secured Indebtedness and the payment of all other moneys becoming due to the plaintiff under the terms of the legal charge.

60.  By a confirmation for audit purposes dated 23 March 2007 (“the audit confirmation”) from the auditors of the defendant Wong Hon Sang & Co, the plaintiff was asked to confirm the balances due to the plaintiff by the defendant as at 31 March 2006 as set out in the audit confirmation.  The auditors made it plain that it was in the course of their regular examination of the accounts of the defendant that they found the balance due from the defendant to the plaintiff for the “loan” in the sum of HK$2,452,529 and for “interest” in the sum of HK$290,000.  In the books and accounts of the defendant the sum of HK$290,000 was treated as interest due to the plaintiff as at 31 March 2006.

61.  As Jim said, and as I accept and find, the sum of HK$290,000 due to the plaintiff as at 31 March 2006 mentioned in the audit confirmation was the monthly sum of HK$29,000 payable by the defendant to the plaintiff under the financing agreement for 10 months, ie from 1 June 2005 to 31 March 2006.  It is clearly stated in the audit confirmation that this was in the nature of interest due from the defendant to the plaintiff as at 31 March 2006.

62.  The amount of the loan was in fact HK$2,445,000.  Jim explained that the loan amount mentioned in the audit confirmation (HK$2,452,529) consisted of the amount of the loan of HK$2,445,000 plus the legal fees of HK$7,259.   Jim said that he signed the audit confirmation confirming the amounts stated in the audit confirmation and returned the same to the auditors.  I accept Jim’s evidence.

63.  It seems to me that on the proper construction of the financing agreement the amount of HK$29,000 was payable to the plaintiff by the defendant until full repayment of the loan.  It was in the nature of interest payable for the loan until the loan was repaid in full.

64.  As I have said, there is no dispute that the defendant has not made any monthly payments of HK$29,000 to the plaintiff ever since the draw down date of 31 May 2005.  This was a breach by the defendant of the financing agreement.

65.  Jim said that he had from time to time made oral demands on Yan to pay the monthly sums to the plaintiff but despite demands, this was never paid.  I believe Jim.

66.  By letter dated 23 August 2006 from Chan, Wong & Lam, on behalf of the plaintiff, the defendant was given notice that none of the monthly payments had been made to the plaintiff and the defendant was asked to rectify the breach of the financing agreement forthwith.

67.  There was no reply by the defendant to the said letter dated 23 August 2006 from Chan, Wong & Lam.  There was also no monthly payment of HK$29,000 made to the plaintiff by the defendant.  I am satisfied that the defendant continued to be in breach of the financing agreement.

68.  Jim said that in or about the end of 2007 Yan informed him that Tsui had expressed an interest to him for a combined development of the Land and the Adjoining Land.  However, it would take time to further investigate the details and Yan asked for more time to complete the negotiations with Tsui.  Jim agreed.

69.  It is clear on the evidence of Jim, which I accept, that there was an agreement to extend the time for the sale of the Land pending the result of the negotiations.

70.  By letter dated 24 September 2009 from Hastings & Co, for the plaintiff, to the defendant a demand was made on the defendant to pay the monthly sum of HK$29,000 which had remained outstanding since 31 May 2005.  There was neither a reply to the said letter nor was there any payment made by the defendant to the plaintiff.

71.  Jim said that thereafter he had from time to time asked Yan about the progress of the negotiations but was told that it was in progress and Yan asked for more time to complete the negotiations.  In about May 2010 in a telephone call Jim demanded that Yan settle the outstanding rental income and to sell the Land immediately.  Yan requested that the defendant be given further time.

72.  On Jim’s evidence, which I accept, it was agreed that the defendant would be granted a further two years to complete the negotiations with Tsui’s son.  It was also agreed that the Land had to be sold by the defendant by July 2012 whether or not the negotiations with Tsui’s son were successfully concluded.

73.  There was no further progress on the matter and the monthly payments of HK$29,000 remained outstanding.

74.  By letter dated 13 July 2012 the defendant’s solicitors Cheung & Choy wrote to Hastings & Co informing them that the defendant wished to redeem the property under the legal charge.  They asked Hastings & Co to let them know the total redemption amount calculated up to the redemption date.

75.  By letter dated 18 July 2012 Chan & Associates, on behalf of the plaintiff, replied to Cheung & Choy.  A demand was made by Chan & Associates, on behalf of the plaintiff, to the defendant to settle the outstanding payments of the monthly rent or income up to 31 July 2012 in the total sum of HK$2,494,000, the repayment of the loan in the sum of HK$2,445,000 and legal expenses of HK$10,000.  A demand was also made that the defendant do sell the Land and to share with the plaintiff the surplus in excess of HK$4.5 million in accordance with clause 9 of the financing agreement.

76.  On 2 August 2012 the plaintiff commenced this action against the defendant with the statement of claim indorsed on the writ of summons.

77.  The defence was filed on 15 October 2012.

78.  Also on 15 October 2012 Cheung & Choy wrote to Chan & Associates enclosing a cheque dated 15 October 2012 in the plaintiff’s favour for HK$2,445,000 as repayment of the loan advanced under the financing agreement.  Cheung & Choy further stated that:

“We trust that all our client’s obligations under the Financing Agreement has been fully discharged. In the circumstances, we shall be grateful if you could let us have the release/discharge duly executed by your client and attested by you in relation [the legal charge] and [the rental assignment] within the next 7 days.”

79.  Not surprisingly, the said cheque from Cheung & Choy was returned by Chan & Associates by their letter dated 1 November 2012.  The letter stated, inter alia:

“We are instructed that our client will not accept such payment as it does not settle all the claims for breach of the Financing Agreement in full.”

80.  The defence was amended and a counterclaim was added by the defendant in these proceedings in the amended defence and counterclaim filed on 26 November 2012.

81.  The defendant counterclaimed for declarations, an order that the plaintiff do properly release or discharge the legal charge and rental assignment and also for damages to be assessed.

82.  It seems to me that there is no merit in the defendant’s case that it was entitled to redeem the legal charge and the rental assignment simply by paying the sum of HK$2,445,000 which is the principal amount of the loan.

83.  The draw down date for the second payment of the loan was 31 May 2005.  The principal amount of the loan was HK$2,445,000 which was outstanding from 31 May 2005.  Until repayment of the loan in full, the defendant was obliged to transfer all rents or income received from the Land of not less than HK$29,000 per month from the draw down date until repayment.

84.  The writ was issued and served on 2 August 2012. I am satisfied on the evidence that by that date the defendant continued to be in breach of the financing agreement by failing to pay the monthly sum of not less than HK$29,000 from 1 June 2005 onwards.  By 31 July 2012 the amount owing by the defendant to the plaintiff was the sum of HK$2,494,000, ie HK$29,000 for 86 months from 1 June 2005 to 31 July 2012.

85.  I am satisfied and find that by tendering the cheque for the principal amount of the loan in the sum of HK$2,445,000 by the said letter of 15 October 2012 from Cheung & Choy to Chan & Associates, the defendant failed to discharge all of its obligations to the plaintiff under the financing agreement.  The plaintiff was entitled to reject the payment and to return the said cheque to the defendant’s solicitors as it did by the letter dated 26 November 2012 from Chan & Associates to Cheung & Choy.

86.  There is no merit in the counterclaim.

87.  I am satisfied that despite the extension of time granted to the defendant to sell the Land the defendant continued to be in breach of contract.  The defendant failed to make the payments demanded by the said letter dated 31 July 2012 from Chan & Associates to Cheung & Choy.  I am satisfied and find that the defendant wrongfully repudiated the financing agreement by failing to sell the Land and by failing to transfer the rent or income of not less than HK$29,000 per month to the plaintiff.  I am also satisfied and find that the wrongful repudiation of the financing agreement was accepted by the plaintiff by the issue and service of the writ on 2 August 2012.

88.  In his closing submissions, Mr Cheung submitted that the plaintiff was seeking a declaration that the plaintiff is entitled to 50% of any surplus over HK$4.5 million if the value of the land was over HK$4.5 million as at 2 August 2012.  I am satisfied that the plaintiff is entitled to this declaration.

89.  The plaintiff is also entitled to the sum of HK$2,494,000 being the monthly sum of HK$29,000 for 86 months, ie from 1 June 2005 to 31 July 2012.

90.  The plaintiff is also entitled to interest on the said sum of HK$2,494,000 from service of the writ on 2 August 2012 until judgment at 1% above the best lending rate of HSBC and from judgment until payment at judgment rate.

91.  As I have said, the plaintiff has not claimed damages for breach of the financing agreement in this action.  There is no claim for damages arising from the breach by the defendant of the financing agreement.  There is also no claim in this action for the repayment of the principal amount of the loan in the sum of HK$2,445,000.

92.  I give judgment to the plaintiff against the defendant for:

(1) a declaration that the plaintiff is entitled to 50% of any surplus over HK$4.5 million if the value of the Land was over HK$4.5 million as at 2 Aug 2012;

(2) the sum of HK$2,494,000; and

(3) interest on the said sum of HK$2,494,000 at 1% above the best lending rate of HSBC from 2 August 2012 until judgment and at judgment rate from judgment until payment.

93.  The counterclaim is dismissed.

94.  I also make an order nisi that the defendant do pay the plaintiff its costs of the action and of the counterclaim, such costs to be taxed, if not agreed.