廈門新景地集團有限公司 formerly known as 廈門市鑫新景地房地產有限公司 v. ETON PROPERTIES LTD AND OTHERS

HCCL 13/2011

[2024] HKCFI 2373

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 13 OF 2011

(TRANSFERRED FROM HCA NO 961 OF 2008)

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R U L I N G

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1.  On 14 May 2024, Judgment was handed down, whereby the Plaintiff was awarded damages.

2.  From paragraphs 95 to 101 of the Judgment, this Court referred to the experts’ evidence on the valuation of the retail units of the development. At paragraph 95, it was explained that for the reasons set out in the Judgment, Mr Leung’s valuation based on the use of the Bundled Transactions was preferred, subject to the adjustments proposed by Mr Lau, which were dealt with in paragraphs 97 to 100 of the Judgment.

3.  At paragraph 97, the Court first agreed that a bulk discount was reasonable and accepted the Plaintiff’s case for an upward adjustment of 7.5% for the Bundled Transactions. From paragraphs 98 to 100, the Court stated its acceptance of the adjustments made by Mr Lau, for the frontage, size, and layout of the retail units, as well as the post-valuation-dates transactions included by Mr Leung.

4.  At paragraph 101 of the Judgment, the parties were directed to submit the final figure, after taking into account the adjustments allowed by the Court.

5.  The parties finally submitted, on 23 August 2024, a Redfern Schedule, setting out each party’s computation of the figures for the disputed valuation of the retail units.

6.  As this Court explained to the parties when directions were given in May 2024 for the compilation of the final figures, this is not the occasion to reopen the findings made in the Judgment, nor is it appropriate or necessary for detailed submissions to be made again on the adjustments and the valuation. The Judgment already made findings as to the valuation preferred and the adjustments allowed – apart from the actual final figures to be computed. It should be a matter simply of making calculations by reference to the evidence of the experts already filed and considered at trial.

7.  Reading paragraphs 93 to 101 of the Judgment, it should be clear and the intention of the Court was to accept Mr Leung’s methodology for valuation of the retail units, but with the locational adjustments adopted by Mr Lau for frontage, size and layout of the units. Mr Leung’s valuation had included post-valuation-dates transactions, which were stated at paragraph 100 of the Judgment to be accepted by the Court and (according to Table 15 of Mr Leung’s Amended Final Report) were assessed on the basis of a -5.4% adjustment for time.

8.  Therefore, on the basis of the Redfern Schedule, the valuation of the retail units is RMB 89,060,490 (for Retail L1) and RMB 32,948,677 (for Retail L2).

9.  As for the dispute as to the “project management costs”, and whether these should be included in ascertaining the costs of the development, to be deducted in the assessment of the net profits, this Court already explained the approach adopted for the assessment at paragraphs 101 to 106 of the Judgment. In essence, the costs of and profits from the development were to be based on the 5^th Defendant’s audited statements, which figures were used as a “proxy” in the exercise. The Court considered that it was for the Defendants to establish their assertion that further or additional items of costs should be deducted from the sales income as recorded in the accounts. The Court explained in the Judgment the amounts which were accepted on the evidence to be deductible, and those which were not. Sales and administrative expenses in particular were dealt with at paragraphs 130 to 133. No “project management costs” as contended by the Defendants were considered by the Court to have been shown to be deductible, and no such deduction was allowed.

10.  Based on the above, the figures reflected in “Approach 4” submitted by the parties should represent the final award for damages.