HONGDA CONTAINERS LTD v. THE SECRETARY FOR TRANSPORT

LDMR 7 of 2000

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Miscellaneous Reference No. LDMR 7 of 2000

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Date of Judgment: 18 August 2003

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J U D G M E N T

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Introduction:

1. The Applicant, Hongda Containers Ltd. (in short form "HCL") was a limited company running a business of container storage, repair and maintenance on land held under tenancy agreement. The Government pursuant to the West Rail project resumed a stripe of the Applicant's tenancy land equivalent to about 18.62 % of the total site area. The Applicant ceased business some 67 days after the Government took possession of the resumed land. The Applicant put in a claim for compensation to be assessed on the basis of total extinguishment arguing that the continuation of business on the reduced site was no longer desirable. We gave judgment for the Respondent, the Secretary for Transport and ruled that compensation should only be assessed on the basis of partial extinguishment instead of total extinguishment because we held that no reasonable businessman would cease business as the Applicant did. We gave our reasons in our written Judgment delivered on 4 June 2002 and directed that the Applicant may file further statements and/ or documentary evidence (e.g. the monthly trading accounts of HCL and Hongda Terminal (HK) Ltd. (in short form "HTL")) to substantiate its claim on the alternative basis. The hearing resumed and took the 24, 25 and 27 February 2003 to complete and we now give our judgment on the Applicant's claim.

Issues and Evidence in the resumed hearing:

2. In the resumed hearing, the Applicant did not put in new evidence on primary facts but amended its calculation of loss of goodwill due to the resumption on two alternative bases. The Applicant further called its two witnesses again. They were Mr. CHUNG Siu Wa (AW3) and the Applicant's surveyor Ms. Ellen Y.T. LO (AW8). AW3's report appears between pages 70 and 87 in Bundle E while AW8's report appears from pages 58 to 68 of the same bundle. AW3 set out two bases for his estimation of loss of profits of the Applicant due to the resumption. The differences between the two bases rested on his different assumptions on optimal maximum occupancy rates assumed for the site in the Before and After resumption scenario. Otherwise, he adopted the same formula as he had used in his earlier report dated 10 October 2000 (see pages 226-235 and 235A-235D of Bundle A) in the estimation of the annual profits of the Applicant's business on the site both before and after the resumption. Similar to what AW3 had said when giving evidence before our last Judgment, he only carried out the mathematical computations according to his newly adopted optimal maximum occupancy figures and his previously adopted formula, which were based on the historical accounting data of the Applicant and a number of assumptions. That is, AW3 adopted similar estimates as before, for the total fixed costs (including rent and rates, salary & depreciation) of the Applicant and for all other income of the Applicant (i.e. income from handling, subletting rentals and contribution from repairing workshops). The details of all these could be found in the above referenced pages of Bundle A. AW3 did not elaborate any further on any of the accounting figures previously submitted. Neither did AW3 comment on whether the maximum capacity or the optimal maximum occupancy rate of the site in either situation would have to be changed nor did he say whether the formula would have to be revised. Furthermore, AW3 in his computations assumed the same constant percentages in respect of the percentage of income contribution from storage business over all the income (at 79%) and in respect of the storage charge rates of HK$8.59 per TEU Day

3. Under the first basis, Mr. Chung adopted the Applicant's estimated figure of 21,532 TEUs as the maximum capacity of the site before the resumption. He further adopted 63% as the occupancy rate for the site in the calculation of profits expected by the Applicant assuming that it would be running the full-scale site without the resumption (see page 73 of Bundle E). Based on these two figures, he calculated the optimal maximum occupancy of the site before the resumption at 21,532 TEUs x 63%, or 13,565 TEUs. He found the annual profits of the Applicant generated by the business on the site to be $14,600,000, using the following old formula: - (13,565 TEU Day/day x HK$8.59/TEU Day x 79% x 365 days) + HK$8,000,000 - HK$27,000,000 = $14,600,000. In his computations, he assumed the same previously adopted estimate of HK$8,000,000 for all other incomes apart from storage incomes, and also the same estimate of HK$27,000,000 for total fixed costs.

4. Then, AW3 used the estimated profits figure of HK$14,600,000 to subtract the estimated expected profits of $4,610,213 (calculated using the similar formula, see page 74 of Bundle E) it might obtain assuming that the Applicant had stayed on behind to run the site with reduced area after the resumption. According to AW3, the 63 % occupancy rate could be used again in the estimation of the expected profits after the resumption because he thought that the Tribunal had made a finding in the last Judgment that that percentage was the post-resumption occupancy rate of the site in question. The loss of annual profits for the Applicant's business was therefore calculated as the difference of the estimated profits before and after the resumption, i.e. $14,600,000 - $4,610,213 = HK$9,989,787 (see page 75 of Bundle E). As the years' purchase had been agreed between the Applicant and the Respondent to be 3, the claim for the loss of goodwill under the first alternative basis would be HK$9,989,787 x 3 = HK$29,969,361.

5. AW3 admitted that by reference to the track records of the Applicant, the earning capacity of the original site, at 13,565 TEUs had never been achieved. Therefore, an alternative basis put forward by AW3 was based on the assumption that the average occupancy figure for the site before the resumption was the same as the highest actual occupancy figure, namely 11,070 TEUs achieved by the Applicant in January 1999. He used this to contrast with his estimated maximum occupancy figure of 8,442 TEUs after the resumption, which was obtained using an assumed maximum capacity of the site of 13,400 TEUs and an assumed occupancy rate of 63%. Using the same formula as before and for the first basis as set out in the preceding paragraphs, he arrived at the estimated annual profits before and after the resumption, in the sums of $8,419,576 and $4,610,213 respectively. Hence, he calculated the loss of annual profits for the Applicant in the sum of HK$3,809,363 (see page 79 of Bundle E). AW3 testified saying that the use of 11,070 TEUs/day was reasonable for he had already adopted a no-growth scenario while in fact there was growth potential of the Applicant. Again, using the agreed years' purchase figure of 3, the loss of goodwill on the alternative basis was calculated at HK$11,428,089. Ms. Ellen Y. T. LO (AW8) endorsed the view of AW3.

6. We summarize below the computations of AW3 under the 2 different assumed bases, with the reasons cited by him in brackets:

		First Basis	Alternative Basis
Before Situation	Maximum capacity	21,532 TEUs (per evidence of A1 & layout plan)	--
	Maximum occupancy rate	Assumed 63% (per para. 79 of last Judgment)	--
	Optimal max. occupancy	21,532 x 63% = 13,565 TEUs	Adopt 11,070 TEUs (actual figure of the Applicant in 1/1999)
After Situation	Maximum capacity	13,400 TEUs (per para. 67 of last Judgment)	13,400 TEUs Per para. 67 of last Judgment)
	Maximum occupancy rate	Assumed 63% (per para. 79 of last Judgment)	Assumed 63% (per para. 79 of last Judgment)
	Optimal max. occupancy	13,400 x 63% = 8,442 TEUs	13,400 x 63% = 8,442 TEUs

7. In addition to the claim of loss of goodwill, the Applicant at the resumed hearing also put in a claim for the loss of fixtures and fittings. This only consisted of a claim for the loss of using the concrete paving over the resumed land, calculated at the estimated unit cost of $90 per square metre for the 12,864.8 square metres of land actually resumed by the Government. The loss claimed by the Applicant would be HK$1,157,832. The Applicant alleged that the HK$2.5 millions "consultancy fee" it had paid to the landlord when taking up the tenancy represented its payment for taking over the site and the right to use the various fixtures on the site. Such fixtures included the repair workshops, the concrete paving and the fences of the site. The Applicant of course was also claiming the usual interest and professional cost.

8. The Respondent the Secretary for Transport contested these amended claims. The accountant for the Respondent Mr. TO Chi Kai (RW2) disputed the appropriateness of using 63% as the average occupancy rate in both alternatives of the claims for loss of goodwill. RW2 understood what we had said in paragraph 79 of our last Judgment about the occupancy rate of 63% to be only referring to the rough occupancy rate of the northern part of the site as at 31 August 2001. That said reference, said RW2, has nothing to do with the general occupancy rate of the entire site. RW2 also challenged the alternative calculation of AW3 i.e. his using 11,070 TEUs/day --- the highest monthly score that the Applicant ever achieved during its life on the site --- as the monthly average occupancy figure in his calculation of the pre-resumption annual profits of the Applicant. RW2 said that there was no evidence to show that the Applicant could maintain such level of occupancy throughout the years to come. RW2 went on to analyze the accounts of HCL especially on its business in the last two months or so when the resumption had already taken place. RW2 then concluded that as there was no evidence showing that the Applicant could exhaust its maximum capacity of the post resumption site during that period, the resumption had caused no loss to the Applicant. On the contrary, argued RW2, the resumption had done Applicant the service of reducing its annual rental payable to the landlord. Hence, it was RW2's view that there should be no award on loss of goodwill to the Applicant.

9. Mr. Michael Clarke (RW3) was the surveyor for the Respondent. His report was set out from pages 89 to 100 in Bundle E. He argued that there was no evidence to show that the Applicant had developed its business to such an extent that the reduced site could not cater for its requirements in the 2 months before the Applicant terminated its business. The resumption only had the effect of restricting the Applicant's mode of operation that could be overcome by Applicant's counter measures on work procedures. Hence, the Respondent urged us to make no award on the Applicant's claim on the loss of goodwill.

10. As for the claim on the loss of concrete paving, the Respondent called Mr. Elmo L. Mella (RW4), the plant & machinery valuation expert to give evidence. In the gist, he said that there was no evidence in the various documents showing that the Applicant could derive any proprietary interest on the land other than the use of the same during the life of the tenancy. As a result, there should be no award on such claim. Alternatively, the expert said that even if such award was to be made, the award should only be calculated on the basis of the remainder of the current tenancy held by the Applicant. According to such calculation, the award on this head should only be HK $179,500.

11. Mr. Miu, counsel for the Respondent contended that as the Tribunal had found that it was unreasonable for the Applicant to terminate its business as it did in August, 1999, it was debarred from claiming compensation beyond that date. It was because any loss sustained by the Applicant beyond that date was not suffered by it as a result of the resumption but as a result of its own unreasonable decision.

12. On the other hand, Mr. Shum for the Applicant maintained that the Applicant still had the right to claim for it was not claiming the profits that it would make as if it had stayed behind to operate on the resumed site. Rather, it was claiming the difference between its estimated future profits yieldable on the full-scale site as opposed to those yieldable on the site as affected by the resumption. Such difference, if proved on the balance of probability, should be recoverable by the Applicant.

Whether compensation should be payable to a business on partial extinguishment basis even though the business had in fact been terminated not as a result of the resumption?

13. We find the issue posed at the above heading to be not difficult to answer because if the resumption had caused loss to an aggrieved party, it would only be right for that party to be put back, so far as compensation could do, to his original position as if the resumption had not taken place. In the case of a business that was extinguished completely, the right compensation payable would involve the calculation of the estimated loss of the annual profits of the business times, depending on the nature of that business, the appropriate years' purchase. In the case of partial extinguishment of a business, the compensation would be the portion of loss of profits of that business as caused by the resumption times, again depending on the nature of that business, a factor representing the appropriate years' purchase for that portion of loss of profits. In the latter case, if the business stayed on after the resumption, more information on the portion of loss of profits would normally be available to the assessor to enable him to ascertain the amount of annual loss and hence, the more accurate the result would be. On the other hand, if a business in the latter case of partial extinguishment ceased shortly after the resumption, it might be much more difficult for the owner of that business to prove the amount of the loss of profit that he would suffer assuming that he were to stay on. However, it should always be remembered that proving damages, and proving that such damages were caused by the resumption rested squarely on the owner of the business that was adversely affected by the resumption, such as the Applicant in the present case. The standard of proof is on the balance of probabilities. In our judgment, if an applicant could discharge this burden of proof, there is no reason why he should be debarred from claiming compensation even if he had made a decision, not because of the resumption, to terminate his business. We therefore disagree with Mr. Michael Clark (RW3) that in principle, the loss to the Applicant in the present case should be limited to the last 67 days of its operation.

The evidence before us in the first part of the hearing

14. What then is the evidence before us? We remember that it was the Applicant's case, in the first part of the hearing, that Mr. Simon Lau (AW1) had been forced to terminate the business of the Applicant because the threat of resumption had affected his business so much that he could not secure new orders and that his old customers were cutting their orders as well. AW1 found that he was in great financial difficulties and that he had almost lost all the capital he invested in HCL. Hence, a decision was made in April or May 1999 for his brother Mr. John Lau (AW2) to form a company called HTL to take over the site, the staff and the equipment to run the business of HCL.

15. We had heard the evidence of AW1 and AW2 regarding the business of HCL in great details. Although the Applicant submitted the audited accounts of HCL for the years ending 31 December 1998 and 31 December 1999, the accountant who worked out those accounts were not called by the Applicant even after the Respondent had repeatedly raised queries on the authenticity and accuracy of those accounts. In the end, by contrasting the various figures in the accounts, we have already found in our last Judgment dated 4 June 2002 that both AW1 and AW2 were not telling the truths about the business and financial status of HCL and HTL. The reasons suggested by AW1 as the causes of his cessation of the business of HCL were not even supported by the figures in his submitted accounts, leaving aside the authenticity and accuracy of these accounts for the time being (see paragraphs 33 to 56 of that Judgment).

16. In addition, we have further found that the Applicant's stated actual maximum capacity of the site after the resumption, at 9,942 TEUs was obviously erroneous even based on the two sketch plans produced by AW1. We were told that AW1 had much experience in managing business similar to that of the Applicant before. We were also told that AW1's purported figures were genuine and that the said two sketch plans were the actual layout plans. However, in the course of preparing our last Judgment, we noticed that on the one hand, none of the witnesses from either party spent any time in commenting or analyzing the capacity figures of the sites whilst on the other hand, we could not understand why the overall maximum capacity was reduced by 54% (from 21,532 TEUs to 9,942 TEUs) whilst the site area was only reduced by about 18.6%. We also shared the observation of the counsel for the Respondent that the Applicant had not provided sufficient reasoning for the large difference in the average number of stacks that could be placed on the site in the Before and After situation. We therefore decided to carry out an analysis based solely on the figures shown on the two layout plans. We came to the conclusion that the maximum capacity of the site after the resumption as given by the Applicant could not be right. We also attempted to estimate the maximum capacity of the reduced site ourselves. We calculated this to be 13,400 TEUs based on the Applicant's submitted layout plan and the recommended design guidelines for the empty container depot trade although we did state in paragraph 66 of our last Judgment that we were not satisfied with the layout plan of the site in some positions in the After situation.

17. Last but not the least, from a photograph (Exhibit R7, Photo 6) taken on 31 August 2001 and produced by the Respondent, we found that AW2's evidence of the occupancy status of the site when occupied by HTL after the resumption could not be right. We therefore attempted to estimate the occupancy rate of the northern portion of the reduced site as at 31 August 2001 (i.e. the date of the said photo) based on the following: (a) the photos produced, (b) the part of the layout of the northern site produced by the Applicant and (c) an assumption of 7.5 stacks per bay in the maximum capacity situation and (d) an estimated average number of stacks of 6.5 per bay in the actual situation as revealed by the said photo. We estimated the actual occupancy rate and the actual number of TEUs for the said northern portion of the reduced site as shown in the said photo taken on 31 August 2001 at 63% or 4,173 TEUs. This contradicted with the corresponding figure of 35% or 4,626 TEUs for the whole reduced site as shown in the table marked as Exhibit A6 and produced by AW2.

18. For reasons summarized in the preceding paragraphs, we found in our last Judgment that both AW1 and AW2 were not telling the truths when giving evidence for this case and that AW1 should not have terminated his business in HCL. We further found that AW1 had full knowledge of the Government's plan for resumption even before HCL moved into the site; however, we concluded that "the law would not prohibit someone equipped with the knowledge of possible resumption of a piece of land, to claim compensation by taking up an interest in that piece of land and does suffer loss; provided that he does so before the land is resumed and provided that he does suffer loss as a result" (see paragraph 91 of our last Judgment). At the end, we found that since the Applicant had failed in his duty to mitigate his loss by carrying on his business, he could not claim compensation on the basis of total extinguishment.

Analysis of the evidence produced by the parties after our last Judgment

19. What we have done in our last Judgment, i.e. by contradicting AW1 and AW2's evidence with those accounts and information submitted on the Applicant's behalf does not mean that we have accepted the authenticity of those accounts and figures. When we were summarizing evidence of the Applicant's accountant Mr. CHUNG Siu Wa (AW3) in our last Judgment, we already made the observation that his role was not as an auditor but he simply accepted the truthfulness of all the information and accounts documents supplied to him (paragraph 18 of our last Judgment refers). On the other hand, the Respondent had made it plain throughout the hearing of this case that they challenged the authenticity of the accounts submitted by the Applicant. Furthermore, we have in our last Judgment made an expressed finding of the fact that AW1 had the resumption in mind even before he moved into the site in question and that we had great reservation in accepting the truthfulness of AW1's evidence. As a result, how can we act on those accounts of the Applicant originated from AW1 without closer scrutiny?

20. For the reasons given, we issued the direction in our last Judgment that the Applicant be allowed to file further statement and/or documentary evidence (e.g. the monthly trading accounts of HCL and HTL). In this respect, the statement made by Ms Ellen Y. T. Lo (AW8) in her report (see page 62 of Bundle E) that "Honda Terminals (HK) Ltd. ("HTL") established a similar business on the same site on 1 August 1999. However, the business of HTL is not taken into account in this exercise as a result of the decision of the Tribunal that HTL is not a party in the present case" was therefore clearly wrong.

21. The Applicant in the resumed hearing chose not to put in any new evidence as suggested in our direction but rested their case by making use of the old accounts' figures previously submitted. This is very apparent because the revised computations under the two different bases of Mr. Chung Siu Wa (AW3) were all based on the old accounts' figures, apart from the estimated maximum capacity of the site in the After situation and the estimated occupancy rates of the sites under the Before and After situation. In deciding not to call the accountant who prepared these old accounts to give evidence, we find that the Applicant has denied the Respondent the opportunities of cross-examining the witness. As we could not be satisfied on the balance of probabilities that the old accounts' figures represent the truthful trading position of HCL, we find that the Applicant has failed to prove the damages it had suffered and those future damages it would be suffering should it stay behind on the reduced site. We find that on this reason alone, the claim submitted by the Applicant should be dismissed.

The maximum capacity of the site in the After situation

22. We stated in paragraph 62 of our last Judgment that we attempted to estimate the maximum capacity of the site in the After situation because we had very apparent reasons to believe that the figure quoted to us by AW1 could not be correct. Also, in that Judgment, we sounded out our comment and reservation on the layout plan for the reduced site as submitted by the Applicant although in the end, we estimated the maximum capacity of the reduced site based on the said plan to be 13,400 TEUs. We think that this estimated figure only served to contradict the evidence (i.e. the maximum capacity of the site at 9,942 TEUs) giving to us by AW1. In fact, after adding up this with other pieces of evidence, we drew our conclusion that AW1 was not telling the truth when giving evidence. For reasons stated in our last Judgment, we did not actually say that we were satisfied that the said layout plan for the reduced site provided the optimal utilization of the reduced site after the resumption. We also commented in our last Judgment that there was not even a dimensioned plan for the reduced site. This was the case notwithstanding the evidence from the Applicant that AW1 was very experienced in managing similar businesses. Indeed, we were quite surprised that he did not have at least a simple dimensioned plan for the site. Without such plan, there would be insufficient basis for anyone, including the Tribunal, to postulate any other optimal layout for the reduced site. In concluding, we disagree that as a matter of principle, the Applicant should use 13,400 TEUs as the estimated maximum capacity of the reduced site in the After situation simply because on a layout produced by the Applicant. We have calculated this figure simply for the purpose of contradicting the estimated maximum capacity figure cited by AW1 in his testimony. The Applicant's witnesses when giving evidence after our last Judgment did not adduce any other evidence to support their assumption that this figure of 13,400 TEUs was the actual maximum capacity of the reduced site in the After situation, after the Tribunal rejected their earlier evidence (from AW1) that the maximum figure was 9,942 TEUs. We could not give our view as to whether such a layout plan as produced by AW1 was optimal because there was insufficient data for us to reach our conclusion. We have also compared again the layout produced by AW1 with the photo produced by the Respondent (see Photo 6 of Exhibit R7). We find that the containers were obviously not stacked according to the said layout plan at various places. This reinforced our thinking that this layout was not the one used by HTL and might not be the one used by HCL as well. Given our previous finding that we do not find AW1 to be telling the truths when giving evidence in this case, we find that on the balance of probabilities, the Applicant failed to satisfy us that the maximum optimal capacity of the site in the After situation was 13,400 TEUs.

The expected optimal average occupancy rate of the site in the Before and After situation

23. Similarly, we do not understand why AW3 adopted the 63% figure we estimated in our last Judgment as the estimated average occupancy rate of the site in both the Before and After situation. That particular percentage was what he found by counting the stacks of containers shown in that particular photo for the northern portion of the reduced site, said to be taken on 31 August 2001. We used this as part of the evidence to contradict AW2's evidence before we drew our conclusion in the last Judgment that AW2 was not a truthful witness. We did not mean that this was our estimate of the average maximum occupancy of the site after the resumption. There are too many limitations surrounding our estimate. The figure was only an estimate on a particular day at the end of August 2001, more than 2 years after the cessation of business by HCL. There may be exceptional circumstances affecting the occupation of the site in that particular day. Also, that was only based on the northern part of the site. Therefore, we found from the said photo that an approximate estimate of what we could see in the said photo on the northern part of the site already equaled to about 90% of what AW2 told us as to be the total number of containers stored in the whole site (evidenced by the figures in his Table at Exhibit A6, which set out some random figures AW2 chose to show to the Tribunal regarding the volumes kept in the site by HTL after the resumption, between the months of January 2001 and August 2001). If any actual occupancy figures were to be adopted as the basis for the estimation of the average occupancy of the site after the resumption, they should not be some figures more than 2 years after the cessation of business of HCL, the Applicant and only 2 months before the cessation of business of HTL.

24. In support of AW3's computation in his first basis, Ms. Lo (AW8) said that "should its business capacity by tied in with or fixed by the actual maximum turnover of the original site (i.e. 11,070 TEUs), the Applicant would effectively be denied of its growth potential in the future." However, we note that there was no empirical evidence from the Applicant or its witnesses regarding the growth potential for the Applicant's business or even for the container storage trade as a whole during the relevant period prior to the resumption.

25. For the above reasons, we do not think it is right for AW3. Chung to adopt our snap shot estimated figure of 63% for a portion of the site on a particular date, over 2 years after the resumption, as an appropriate estimate for the optimal maximum occupancy rate of the site in the After situation, in both bases of his computations for the loss of annual profits of the Applicant.

Whether global award is appropriate?

26. We now turn to the question as to whether or not we should award compensation to the Applicant on the basis of a global award. At the resumed hearing, Mr. Shum did not address us on the right global award figure for it was the Applicant's case that the two alternative methods of assessing loss of goodwill on partial extinguishment basis should enable us to come to the correct award to be made. On the other hand, Mr. Miu for the Respondent urged us not to make any global award or if we do, the award should not be anything more than a nominal sum. Mr. Miu sought to support his contention by the English Land Tribunal's decision in Harry Lester Ltd v Southwark London Borough Council [1999] 3 EGLR 179.

27. In that case, there was a long delay between the time of issuing the notice of intention to resume land and the actual taking of the land on the part of the land acquiring authority. In the trial of the claim filed by the applicant, a limited company, the English Lands Tribunal found that the evidence before it was not sufficient in proving that the loss of profits reflected in the accounts of the company was as a result of either the resumption itself or the threat of resumption in the shadow period. Counsel for the applicant invited the Tribunal to take a robust approach in coming to its own award. Mr. Peter H Clarke, the presiding officer of the English Lands Tribunal however said that the Tribunal should decline such a suggestion. He cited the Privy Council's decision in Shun Fung Ironworks Ltd. case in that causation of loss by the resumption or the threat of resumption was one of the elements that an applicant would have to prove in the Lands Tribunal before he could succeed in his claim. The Lands Tribunal had no jurisdiction to award special damages to punish the delay on the part of the acquiring authority. Hence, he concluded that taking a robust approach in awarding damages such as in the Harry Lester Ltd. case was not appropriate.

28. We agreed with the English Lands Tribunal's decision. In our judgment, that decision spelt out good law with good sense. We only have power to award compensation to applicants who have suffered loss as a result of the resumption. For this reason, an applicant always bears the burden of proof of damages he suffered as a result of the resumption. Since we have found that the Applicant in the present case failed to satisfy the burden of proving the truthfulness of his accounts and trade figures, there is no way that we could ascertain whether he had suffered damages as a result of the resumption. In addition, whether the Applicant had suffered any loss in the end would also depend very much on the likely growth potential of the Applicant's business at the relevant date of resumption and the rate at which the Applicant could have realized such potential in the absence of the resumption. However, no further evidence along this line were made available even though we had allowed the Applicant further time to do the same. Taking all the circumstances into account, we have decided not to make any global award in this case.

The loss of Concrete Paving

29. We have studied the tenancies between HCL and the landlords' representatives. In the written provisional tenancy agreement signed on 28 April 1998 between HCL as the tenant and Topmade Development Limited and Pronto Star Limited for the landlord, item (9) therein stipulated a payment of "consultant fee" of HK$2,500,000 to the landlord. In paragraph 6 of AW1's witness statement dated 1 September 2000 (see page 117 of Bundle B), AW1 said

"...As part of the said verbal agreement, the Applicant paid a further sum of $2,500,000 to PSL as consultancy fees being the acquisition costs for the construction and/or improvement work made to the Premises including the concrete paving of the ground, surrounding gates, fencing, office accommodation and the container repair workshops."

30. The above was the entire factual basis that the Applicant had presented in support of its compensation claim for the concrete paving on the resumed land. No other document or evidence was submitted to support the truthfulness of these facts. We wonder if the amount of HK$2,500,000, which was by no means a small sum, was indeed paid for the consideration as stated, why it was termed "consultant fee" rather than some other names that could reflect more closely its purpose. It could be called as, for instance, "acquisition fee" or "premium payment for fixtures and fitting". Instead, it was termed "consultant fee" in the written tenancy document. Could this be a payment representing certain service that had been rendered by the landlords' agent to the Applicant, such as an agency fee for leasing the land to the Applicant but not to somebody else? In this respect, we remember that it was AW1's evidence that Proto Star Ltd. did not own the land itself but was acting as an agent for the various different landlords. Given that the total rent for the Applicant's leased land totaled some HK$34 million in two years' time (averaging about HK$1,400,000 a month), a sum of HK$2,500,000 as agency fee was not an unrealistically high figure especially considering the readiness of the site for the purpose of the Applicant.

31. Quite apart from the choice of the name used for the fee paid by the Applicant, we also notice that Clause 7 of the tenancy agreement signed by the Applicant and Pronto Star Ltd on 24 December 1998 read:

"There are fences, structures and cement platform in the lot. When the tenancy expires or Party B (being the Applicant) withdraws the tenancy, Party B should return them in good condition to Party A (being Pronto Star Ltd). For any damage, Party B should repair it to the satisfaction of Party A and the repair cost will be borne by Party B. Party B should also clear the obstacles in the lot and fence the original boundary. When Party A has checked and it satisfied, Party A will refund the deposit without interest."

32. This clause made it clear that Applicant did not acquire any proprietary interest in those fixtures and fittings independent of the lease itself. The above said tenancy agreement was signed some 7 months after signing of the provisional tenancy and this clause specifically dealt with fixtures and fittings including the cement platform, the very subject matter of the "consultancy fee" according to AW1. Yet, no mention or reference was made by the parties of this "consultancy fee" which should have been paid or due to be paid. Adding all these to the fact that we have already found AW1 not a creditable witness on primary facts for reasons stated in the last Judgment, we find that the Applicant failed to prove on the balance of probabilities that the HK$2.5 million were paid for the purpose as he had stated. Hence it follows that the Applicant did not have any proprietary interest in the concrete paving on the site. We therefore decide to make no award to the Applicant on this head of its claim.

Order

33. For reasons stated hereinbefore, we order that the Applicant's claims are dismissed and we grant a cost order nisi to become absolute in 21 days that the Applicant do bear the Respondent's cost on a party to party basis.