HONG KONG SAI KUNG NGONG WO RESORT DEVELOPMENT LTD v. ZHANG XIANJIE

HCA 1387/2018 & HCA 2127/2018
[HEARD TOGETHER]

[2022] HKCFI 1710

HCA 1387/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1387 OF 2018

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BETWEEN

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HCA 2127/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2127 OF 2018

_________________

BETWEEN

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(HEARD TOGETHER)

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JUDGMENT

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A THE ACTIONS

1.  These actions centre on a house in Sun On Village, Sai Kung (“the House”).

2.  The first action (HCA 1387/2018, “the Ownership Action”) is brought by Hong Kong Sai Kung Ngong Wo Resort Development Limited (“Ngong Wo”) against Mr Zhang Xianjie (“ZX”), the House’s registered legal owner. Ngong Wo claims to be the full beneficial owner of the House and seeks declaratory and other relief against ZX on this footing.

3.  The second action (HCA 2127/2018, “the Mortgage Action”) is brought by Fu Tat Credit Limited (“Fu Tat”) against ZX, ZX’s son Mr Zhang Jing (“XJ”) and Ngong Wo. Fu Tat claims inter alia for possession of the House which was undisputedly mortgaged to Fu Tat as security for a HK$5 million loan to ZX and ZJ as borrowers.

4.  Besides ZX’s filing of a Defence in the Ownership Action on 2 August 2019, neither ZX nor ZJ have actively contested the claims against them. Both were entirely absent from the trial.

5.  The active parties at trial were Ngong Wo and Fu Tat as the respective plaintiffs in the Ownership and Mortgage Actions, with Ngong Wo also pressing its case as 3^rd Defendant in the Mortgage Action. Mr Roland Lau appeared as counsel for Ngong Wo, and Mr Ernest Koo appeared with Mr Tyrone Tang as counsel for Fu Tat. I have been much assisted by counsel on both sides.

B BACKGROUND FACTS[1]

B1. Ngong Wo

6.  Ngong Wo was incorporated in Hong Kong on 3 May 2021 with the following initial shareholdings:

Shareholders	Number of Shares
Mr Zhang Yuanyue (“ZY”)	24,000 shares
ZX	24,000 shares
Mr Zhang Jianping	12,000 shares
Royal Leader Investment Limited	40,000 shares
Total:	100,000 shares

7.  On 6 July 2012, the shareholding structure of Ngong Wo was altered as follows:

Shareholder	Number of Shares
Zhang Yuanyue (“ZY”)	28,000 shares
ZX	35,000 shares
Mr. Zhang Jiaping	5,000 shares
Royal Leader Investment Limited	25,000 shares
Zhuhai Company	7,000 shares
Total:	100,000 shares

8.  Zhuhai Company became the sole shareholder of Ngong Wo on 18 September 2013.

9.  On 28 December 2017, all 100,000 shares in Ngong Wo were transferred from Zhuhai Company to Honorable International Corporation.

10.  ZX was a Director of Ngong Wo from its incorporation on 3 May 2012 until 14 August 2017.

11.  ZX and ZY were at all material times the only two shareholders of Zhuhai Company. ZX was also Zhuhai Company’s Legal Representative and Executive Director / General Manager until about 21 August 2017, at which point Mr Wang Li Hong became Zhuhai Company’s Legal Representative, and ZY and Mr Zhang Jinwei became its only shareholders.

B2. The House

12.  By two Provisional Agreements for Sale and Purchase both dated 23 May 2012, ZX purchased two properties from their respective vendors: (1) G/F & M/F of No. 746A Sun On Village, Section A of Lot No. 746 in D.D. 215, Sai Kung, New Territories (“Property 1”); and (2) 1/F and Roof of No. 746A Sun On Village, Section A of Lot No. 746 in D.D. 215, Sai Kung, New Territories (“Property 2”).[2]

13.  The purchases of Property 1 and Property 2 were completed on 9 July 2012. The properties have since then been registered in the sole name of ZX.

14.  At all material times, Property 1 and Property 2 have together comprised a single 3-storey building, i.e. the House.

15.  Following the purchase under ZX’s name the House was substantially renovated, with that work completing in about February 2013.

B3. Fu Tat and the Loan

16.  Fu Tat was at all material times and remains a Money Lender licenced under the Money Lender’s Ordinance (Cap 163).

17.  By a Loan Agreement dated 11 June 2016 (“Loan Agreement”) between Fu Tat as the lender and ZX and ZJ as the Borrowers, Fu Tat loaned to ZX and ZJ the sum of HK$5 million (“the Loan”) at the interest rate of 15.6% per annum.

18.  By a Legal Charge dated 11 June 2016 executed by ZX as the Mortgagor and ZJ as the Borrower, registered in the Land Registry by Memorial No. 16061301170012 on 13 June 2016, the House was mortgaged to Fu Tat as security for inter alia the Loan and accrued interest, the title deeds having been deposited with Fu Tat’s solicitors since 3 June 2016.

19.  In accordance with the Loan Agreement, ZX and ZJ paid to Fu Tat six monthly interest instalments each of HK$65,000 for the period from 11 June to 11 December 2016. But they failed to repay any of the Loan principal (HK$5 million) on the principal due date of 11 December 2016.

20.  On 11 January 2017, ZX and ZJ paid a further sum of HK$65,000 to Fu Tat as interest on the outstanding principal for the month from 11 December 2016 to 11 January 2017. They have made no further payments to Fu Tat since then.

21.  Due to their default, ZX and ZJ are liable to Fu Tat for (1) the principal in the sum of HK$5,000,000; and (2) the interest accrued thereon calculated at the rate of 15.6% per annum from the date of 11 January 2017 until full payment.

C MATTERS FOR TRIAL

C1. The rival claims

22.  By its Amended Statement of Claim dated 30 August 2018 in the Ownership Action, Ngong Wo primarily claims against ZX for declarations to the effect that Ngong Wo is the sole beneficial owner of the House along with consequential claims for the effective transfer by ZX of legal title in the House to Ngong Wo, indemnities and costs.

23.  Ngong Wo’s case for relief is essentially that:

(1) At the material times, Ngong Wo’s business plan was to develop a holiday resort project in Sai Kung. For reasons of operational convenience, the House was purchased for office use and staff accommodation in the name of ZX, who was a director of Ngong Wo mainly stationed in Hong Kong and Zhuhai and entrusted with Ng Wong’s daily management and affairs.

(2) It was the common intention between ZY (who was mainly stationed on the Mainland) and ZX that the House be purchased under ZX’s name to be held on trust for Ngong Wo.

(3) Ngong Wo duly provided all the purchase monies and renovation costs in respect of the House.

(4) In the premises, ZX was and is holding the House for Ngong Wo on common intention constructive trust and/or resulting trust.

(“the Ngong Wo Beneficial Interest Claim”).

24.  By a Defence dated 2 August 2019, ZX denied holding the House on trust for Ngong Wo and put Ngong Wo to strict proof of its alleged payment of purchase and renovation costs. As earlier noted, ZX has not otherwise actively contested either of the actions at hand. He has not tendered any witness evidence and did not appear at the trial in any capacity.

25.  On the basis of the Loan Agreement and the Legal Charge, Fu Tat’s Amended Statement of Claim dated 21 May 2019 in the Mortgage Action primarily seeks an order for delivery of vacant possession in respect of the House against ZX, ZJ and Ngong Wo. Fu Tat also claims against ZX and ZJ for HK$5 million as the outstanding principal of the Loan, together with HK$1,300,000.00 as interest of the Loan at the rate of 15.6% per annum for the period from 11 January 2017 to 11 September 2018 and then further interest at the 15.6% per annum rate from 12 September 2018 until payment in full.

26.  After being joined (on its application) as 3^rd Defendant to the Mortgage Action on 23 April 2019, Ngong Wo filed its Defence and Counterclaim dated 2 July 2019. This essentially repeats and rests on the Ngong Wo Beneficial Interest Claim first made in the Ownership Action.

27.  In its Reply and Defence to Counterclaim in the Mortgage Action dated 23 September 2019, Fu Tat denies the Ngong Wo Beneficial Interest Claim. Fu Tat further contends that in any event:

(1) It neither knew nor ought to have known that the ZX was not the House’s sole beneficial owner or that Ngong Wo has any beneficial interest in the House as alleged or at all.

(2) Ngong Wo is estopped from denying the priority of Fu Tat’s interest in the Legal Charge over any beneficial interest of Ngong Wo in the House, because Ngong Wo through ZX had actual and/or imputed knowledge of the Loan Agreement and/or the Legal Charge prior to the execution of the instrument(s).

C2. Issues arising

28.  Ngong Wo and Fu Tat agree that three main issues arise for determination:

(1) Whether Ngong Wo is the sole beneficial owner of the House under constructive and/or resulting trusts (“the Beneficial Ownership Issue”).

(2) Whether Ngong Wo’s beneficial interest in the House (if established) takes priority over Fu Tat’s security interest under the Legal Charge on constructive notice grounds (“the Constructive Notice Issue”).

(3) Whether Ngong Wo is estopped from denying the priority of Fu Tat’s security interest by reason of ZX’s knowledge of the Loan Agreement and/or Legal Charge (“the Estoppel Issue”).

D THE BENEFICIAL OWNERSHIP ISSUE

29.  Ngong Wo seeks to establish its beneficial ownership of the House on the basis of:

(1) common intention constructive trust, Ngong Wo’s claim being that it was the common intention of ZY and ZX that the House be purchased in the name of ZX to hold on trust for Ngong Wo; and/or

(2) resulting trust, based on Ngong Wo’s claim that it provided all the funds for purchasing and renovating the House.

30.  While formally denying the Ngong Wo Beneficial Interest Claim, Fu Tat advances no positive factual case on the matter. It simply puts Ngong Wo to proof of its claim.

D1. Resulting trust

31.  I shall deal first with Ngong Wo’s resulting trust claim since, unlike its stance on the constructive trust question, Fu Tat accepts that a resulting trust may arise in law if Ngong Wo’s factual case on the purchase of the House succeeds.

32.  The relevant legal principles here are well-established. The following propositions are common ground between Ngong Wo and Fu Tat:

(1) Where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B. Properly understood, a resulting trust that arises in this way “is not imposed by law against the intentions of the trustee…but gives effect to his presumed intention”: Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] AC 669 at 708A-D.

(2) Accordingly, the doctrine of resulting trust relied on by Ngong Wo is simply an evidential tool for establishing its alleged intention as regards the beneficial ownership of the House, which is unnecessary if there is actual evidence of intention: see Mok Hing Chung [2019] HKCA 452, unrep. 18 April 2019, §22, §25 (Kwan VP, giving the judgment of the Court).

(3) In the present case, there may accordingly be a rebuttable presumption that the provider of funds for acquiring the House in ZX’s name did not intend to gift the House to ZX. But this rests on the key factual question as to whether it was Ngong Wo rather than ZX who funded the purchase of the House.

33.  On the evidence before me, I find that Ngong Wo’s case on funding is made out on the balance of probabilities.

34.  There is significant documentary evidence supporting Ngong Wo’s case, in the form of the Report and Financial Statements for Ngong Wo for the period from 3 May 2012 (its date of incorporation) to 31 March 2013 (together “the 2012-2013 Financial Statements”).

35.  In the Statement of Financial Position as at 31 March 2013 signed by ZX and Mr Chan Wai Yu as directors of Ngong Wo on 9 August 2013, the company’s listed Non-Current Assets are “Property, plant and equipment” valued at HK$10,288,937.00, and “Land under development” valued at HK$98,482,564.00.

36.  Point 7 of the Notes to the independently audited financial statements particularises the relevant “Property, plant and equipment” items as comprising “Leasehold properties”, “Furniture and fixture” and “Decoration”. The cost attributed to “Leasehold properties” there is HK$9,236,395, which may be compared with the undisputed combined purchase price of Property 1 and Property 2 (plus stamp duty, legal costs and agency fees) of HK$9,036,196.00.

37.  The stated amount for “Decoration” at Point 7 is HK$1,418,000.00, which notably corresponds with (1) the contemporaneous records of two cheque payments of HK$520,000 each made by Ngong Wo to “建明工程公司” for respectively “西貢三層樓裝修費40% 預付款”[3] and “西貢辦公室住宅裝修第二次付款”,[4] aggregated with (2) the sum of HK$378,000.00 referred to in an application for payment, approved by ZX on 1 February 2013, for the total remaining balance of the decoration fee for a 3-storey building with the address of the House (香港西貢新安村92號房) (“the Payment Application”). This in turn ties with the admission at §7 of ZX’s Defence in the Ownership Action that “[Ngong Wo] did make two payments of HK$520,000.00 each in respectively late 2012 and early 2013 towards the renovation costs of Property 1 and/or Property 2”.

38.  The Payment Application further supports Ngong Wo’s case on beneficial ownership in stating that the sum of HK$378,000.00 was to be included as part of the “investment total under the books and accounts of [Ngong Wo]” (original Chinese: “該款納入香港西貢昂窩渡假村發展 有限公司, 總投資帳目”). Considered in context, this may be accorded some weight as evidence of the existence, acknowledged by ZX, of other sums having been paid in respect of the House as part of an investment by and for the benefit of Ngong Wo.

39. Standing back, I consider that the overall documentary picture (comprising the full range of financial statements, accounts and other primary records available at trial) aligns with Ngong Wo’s witness evidence and the commercial arrangements addressed there.

40.  The witnesses at trial for Ngong Wo were ZY (who testified from the Mainland via video-link), Mr Wang Li Hong (a director of the company) and Mr Chan Wai Yu (manager and former director). While I bear in mind that ZY, Mr Wang and Mr Chan were each closely associated with Ngong Wo, they were generally prepared at trial to answer all questions put to them in direct terms, and to confirm some propositions put to them even where apparently not in their favour. Overall, I find that each were straightforward, honest and credible in the evidence they gave.

41.  Most relevantly for present purposes, I have assessed as essentially credible and have for the funding question taken into account the firm and direct evidence of ZY, Mr Wang and Mr Chan to the effect that all the investment money in respect of Ngong Wo’s holiday resort project in Sai Kung (“the Resort Project”), including for the purchase of the House, were provided by ZY and ultimately transferred from the Mainland to Hong Kong via arrangements made by ZX.

42.  Taking the evidence of each of Ngong Wo’s witnesses together with the contemporaneous documents, including the 2012-2013 Financial Statements, the following matters are in my view made out on the balance of probabilities:

(1) In the period around when the House was purchased and renovated, Ngong Wo in the early stages of developing the Resort Project. ZY was and is a company director of Ngong Wo and the major investor in the Resort Project.

(2) With ZY and his family based primarily in Shanxi Province and ZY’s other businesses in the Mainland, after Ngong Wo was established its major affairs were entrusted to ZX (with whom ZY has no kinship) as a director and shareholder the company.

(3) Leaving to one side his alleged payment for the purchase of the House for the moment, ZX has made no capital contribution towards the Resort Project.

(4) To facilitate the Resort Project, Ngong Wo needed to acquire a property in Sai Kung District as its Hong Kong office. The House was eventually chosen. The ground floor could be and was indeed used as an office, while the two upper floors could be and were used to provide occasional accommodation for ZY and other Ngong Wo staff when visiting Hong Kong from the Mainland.

(5) At the time when the decision to purchase the House was made, Ngong Wo had not opened any Hong Kong bank account. The funds for the purchase of the House and its subsequent renovation were transferred by ZY on behalf of Ngong Wo to one Mr Zhang Jianping (one of Ngong Wo’s original directors and shareholders), who then arranged for the funds to be transferred to the solicitors assisting with the purchase of the House. The House was eventually purchased with those transferred funds, and subsequently treated as an asset of Ngong Wo.

(6) The above payment arrangement was in line with the documented remittance of at least RMB80 million from ZY to Mr Zhang Jianping in connection with the funding of the Resort Project.

43.  On the basis of these factual findings, and in the absence of any evidence sufficient to displace the presumption that the House was not intended as a gift to ZX, Ngong Wong’s claim to beneficial ownership by way of resulting trust succeeds.

D3. Common intention constructive trust

44.  Since Ngong Wong has succeeded in establishing its full beneficial ownership of the House by way of resulting trust, I need not rule on its claim based on common intention constructive trust.

45.  That leaves for another day the question of whether common intention constructive trusts are confined to “domestic” contexts, as contended with some force by Mr Koo by reference to an array of authorities, including Lewin on Trusts (20^th edn) [10-062]-[10-063], Crossco No.4 Unlimited v Jolan Ltd [2012] 1 P&CR 16 at §§85-87 and §107 and Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at §68 and §81. Mr Lau was candid in stating that he was unable to find any direct authority supporting Ngong Wong’s stance on the availability of the doctrine in a commercial setting like the present.

E THE CONSTRUCTIVE NOTICE ISSUE

46.  The Constructive Notice Issue is premised on the finding that the House was beneficially owned by Ngong Wong when the Loan Agreement was entered.

47.  It is common ground that, even if Ngong Wong owns the House beneficially, its equitable interest must yield to Fu Tat’s legal interest unless it is shown that Fu Tat had prior notice of Ngong Wo’s interest. There is no claim that Fu Tat had actual notice of Ngong Wo’s alleged interest in the House. The disputed issue is whether Fu Tat nonetheless had constructive notice.

48.  The primary principles and approach have not been disputed by the parties, including the recent summary discussion of the doctrine of notice in CS Credit Limited v Marspan Limited & Anor [2021] HKCFI 3707 at §52 (Recorder Sit SC). While the entire summary is helpful, the observations made at §52(3)-(5) of CS Credit Limited bear repeating here (original emphasis kept):

“(3) The standard required of the purchaser, where constructive notice is in issue, is to make all usual and proper inquiries: Megarry & Wade §5-017. One asks what enquiries would have been made as a matter of prudence (“ought reasonably”), having regard to what is usually done by men of business under similar circumstances: Sun Sek Haw v Au So Kum [1999] 3 HKLRD 12, 22B-E. This is said to be a high standard: Sun Sek Haw 21E.

(4) The inquiry as to whether a purchaser has made all usual and proper inquiries is a fact-sensitive one and depends on all the circumstances of the case: Sun Sek Haw 21H.

(5) Given the inquiry is fact-sensitive, it would not be possible to conclusively define the circumstances in which a purchaser will have constructive notice, but generally speaking: -

(a) If the purchaser (X) in fact appreciates that a proprietary right in the property probably exists, he has actual notice.

(b) If a reasonable person with the attributes of X should have appreciated based on facts already available that the proprietary right probably existed, X has constructive notice of the existence of the right, and further inquiry would not be necessary.

(c) If the facts known to X would give a reasonable purchaser in his position serious cause to question the propriety of the transaction, X must make inquiries which would have revealed the probable existence of a proprietary right.

See Papadimitriou v Credit Agricole Corpn and Investment Bank [2015] 1 WLR 4265, §§12-20; see also Megarry & Wade §5-018 (adopted in Ho Lai Lei v Mang Wan Kwan Simon [2020] HKCFI 527, §112)”.

E1. No duty to inquire arising

49.  Fu Tat submits that there were no facts or circumstances that put it on inquiry as to the existence of Ngong Wo’s equitable right in the House.

50.  I agree.

51.  At trial, the general manager of Fu Tat, Mr Lo Shi Ki, gave the following account, which I have considered in the light of the wider span of evidence to hand and accept in full:

(1) Before Mr Lo approved the grant of the Loan to ZX and ZJ, he met with both of them and inspected the House.

(2) At the meeting, Mr Lo learnt that ZJ was ZX’s son, and they were Mainland residents, with ZJ being also a Hong Kong resident. ZX said that he owned a company in Hong Kong and that he owned land in Sai Kung for a resort development, and that his son, ZJ, who did business together with him, had the authority to handle his business on his behalf.

(3) At the meeting, ZX told Mr Lo that the House was solely owned by him and provided Mr Lo and Fu Tat with the address and other information for Fu Tat to verify.

(4) Mr Lo was also told by ZX and ZJ that the House was only used as their residence in Hong Kong and their company’s office.

(5) Upon inspecting the Property, Mr Lo found that the ground floor was used as an office, with a female staff member working there. Upon accessing the upper floors, Mr Lo saw rooms, slippers and clothes. He was also told by ZJ during the inspection that ZJ lived there and ZX also lived there when he was in Hong Kong.

(6) Affixed to an external wall of the House was a sign bearing the Ngong Wo company name (“the Signage”). Mr Lo in fact had a shop near the House and had before the date of the inspection often walked past the Signage.

(7) Mr Lo did not ask ZX or ZJ anything of their Hong Kong company, nor did he conduct any investigation as to whether ZX was the owner of any such company. As Mr Lo explained, this was because he was engaged in the mortgage business and was (to his mind) dealing with ZX’s private property.

(8) On 3 June 2016, about a week before the Loan was granted, Fu Tat’s solicitors received from ZJ the title deeds and related documents in respect of the House and its ownership.

52.  I see nothing in the circumstances of this case to put Fu Tat on inquiry as to the possible existence of Ngong Wo’s equitable interest in the House.

53.  Referring to the Signage and the fact that the House was being used as an office, Ngong Wo asserts that this should have put Fu Tat on notice as to its alleged equitable right in the property. But why? In the context of this case, there was in my view nothing inherently inconsistent or remarkable as regards the existence of the Signage and the partial use of the House as an office to give serious cause to question the nature and extent of ZX’s ownership of the House. Based on the information accessible to Fu Tat, Ngong Wo could have been the company referred to by ZX and ZJ, particularly given that the House was evidently also being used as a residence, consistently with what ZX and ZJ has earlier said about its use. Moreover, even allowing for the possibility that the company named on the Signage (Ngong Wo) was not that of ZX, there was in my view no compelling reason to further inquire given that Ngong Wo could readily have been a company leasing the House from ZX. In short, the overall circumstances would not have pointed a reasonable party in Fu Tat’s position to the probable existence of Ngong Wong’s proprietary interest; nor would they give serious cause to question the propriety of the arrangements in question.

54.  Ngong Wo’s reliance on cases involving matrimonial homes occupied jointly by two spouses though registered in the sole name of one of them do not in my view assist it. Fu Tat was not dealing with a property in a matrimonial or domestic context, where occupation by a person may constitute prima facie evidence of their equitable interest in the property.

55.  All told, Ngong Wo’s case on constructive notice does not get off the ground.

E2. Whether further inquiries would have revealed the probably existence of Ngong Wo’s interest in the House

56.  My firm primary conclusion being that Fu Tat had no duty to inquire in this case, I will only briefly state why Ngong Wo’s case fails in any event when it comes to causation.

57.  Ngong Wong does not dispute the requirement of a causal link between, on the one hand, such further inquiries as Fu Tat could have but had not undertaken, and on the other hand the revelation of the probable existence of its interest in the House: see CS Credit Limited (above) at §52(7); Barclays Bank Plc v O’Brien [1994] 1 AC 180 at 195G-H.

58.  In my view, the required causal link is in this case far from made out. Given that Ngong Wo’s affairs at the time were (on its own case) primarily if not exclusively handled by ZX and ZJ, any attempts to further inquire would most likely have been deflected or thwarted by them as part of the same scheme that led to Ngong Wo’s own difficulties as regards the ownership of the House.

F THE ESTOPPEL ISSUE

59.  Given my findings on the Constructive Notice Issue, I do not propose to delay matters by addressing Fu Tat’s fallback contention that ZX’s knowledge of the Legal Charge should be imputed to his principal Ngong Wo, such that Fu Tat’s interest should take priority over Ngong Wo’s.

G OUTCOME AND FURTHER DIRECTIONS

60.  For the reasons set out above:

(1) Ngong Wo’s claim in the Ownership Action succeeds.

(2) Fu Tat’s claim in the Mortgage Action succeeds. For the avoidance of doubt, the net effect of my rulings with regard to the House in the Ownership and Mortgage Actions is that Fu Tat is entitled inter alia to vacant possession of the House even though the Ngong Wo Beneficial Interest Claim has been made out to the extent of my finding that a resulting trust had arisen following the purchase of the House with Ngong Wo’s funds.

(3) It is unnecessary in the circumstances for me to grant the declaratory orders sought by Ngong Wong by way of counterclaim in the Mortgage Action concerning its beneficial interest in the House.

61.  Absent agreement the parties shall in light of this judgment within 14 days of this Judgment file submissions as to the appropriate final orders on relief and costs in both actions.