Background 1. This decision concerns a piece of land located at Penny’s Bay on Lantau Island (“the Land”). The Land is now included in the site of Hong Kong Disneyland. In 1994, however, Penny’s Bay was a remote corner of the coastline, inaccessible except from the sea or on foot. 2. The Land was acquired by Penny’s Bay Investment Company Limited (“PBIC”) in 1970 pursuant to an Agreement and Conditions of Exchange (“the Grant”). The Land enjoyed rights of access to the sea (“the Marine Rights”). 3. In 1994, the Government produced a scheme which involved substantial reclamation at Penny’s Bay in order to provide land for the construction of two container terminals and associated infrastructure (“CT Scheme”). On 5 May 1995, the CT Scheme was formally authorised by the then Governor in Council (“the 1995 Authorisation”). The reclamation required by the CT Scheme would inevitably deprive the Land of the Marine Rights. 4. Under the Foreshore and Sea-bed (Reclamations) Ordinance, PBIC was entitled to compensation for the loss of its Marine Rights. 5. In 1999, the Government abandoned the CT Scheme and instead promoted the Disneyland project. Subsequently the 1995 Authorisation was formally revoked. The Land was required for the Disneyland project, and was surrendered by PBIC to the Government in 2001. It is common ground that PBIC was still entitled to compensation for the loss of its Marine Rights. 6. The question that remained was how the compensation payable to PBIC should be calculated. The 2010 Decision of the Court of Final Appeal 7. When this case came before this Court in 2010, it was held that the amount of compensation should be the difference between the value of the Land as at 5 May 1995 with and without the Marine Rights (“the 2010 Decision”, see Penny’s Bay Investment Co Ltd v Director of Lands (2010) 13 HKCFAR 287). This shall be referred to as the difference between the “Before Value” and the “After Value”. Proceedings in the lower courts 8. Thereafter, in accordance with the guidance given by the 2010 Decision, the Lands Tribunal assessed the difference between the “Before Value” and the “After Value”. 9. Both PBIC and the Director of Lands were dissatisfied with the determination by the Lands Tribunal, and they each appealed to the Court of Appeal. 10. Again, each party was dissatisfied with the Court of Appeal’s decision, and appealed to this Court:- (1)PBIC contends that the expression “godown purposes” in the Grant included mid-stream operation or open storage of containers (“Issue One”); (2)The Director of Lands contends that the “After Value” should be calculated on the assumption that the CT Scheme was bound to be carried out (“Issue Two”). The Decision on Issue One 11. In interpreting the words “godown purposes”, the Court first considered the natural meaning of these words, and then considered whether there was anything in the Grant, or in the surrounding circumstances when the Grant was made, which might contradict that interpretation. 12. The Court considered that a “godown” is a building in which storage takes place, and therefore “godown purposes” would naturally mean the use of a building in which storage takes place, and there is nothing in the Grant or in the surrounding circumstances which casts doubt on that conclusion. 13. Accordingly, the Court held that “godown purposes” cannot be interpreted to include mid-stream operation or open storage of containers. PBIC’s appeal on Issue One is dismissed. The Decision on Issue Two 14. According to the 2010 Decision, in assessing the “After Value”, the Marine Rights are to be treated as irretrievably lost de facto as well as de jure. 15. If this Court assumes that the Marine Rights have been lost, it is not unreasonable for this Court to consider why they have been lost. Hence, it is logical for this Court to assume that the cause of the loss, namely the reclamation, will undoubtedly proceed. 16. Moreover, from the evidence, it was the market’s view that if the reclamationwas bound to proceed, the CT Scheme would be bound to proceed as well. 17. Accordingly, the “After Value” should be assessed on the assumption that the CT Scheme was bound to be carried out. The Director of Lands’ appeal on Issue Two is allowed.