HONG KONG taxpayers are set to recover 'many millions of dollars' paid in compensation to an ironworks company, following a landmark ruling by the Privy Council. The interim judgment against the Shun Fung Ironworks Company, part of New World Development, overturns a Court of Appeal decision that the Government had to pay the firm more than $670 million in compensation and interest. This originated from a claim Shun Fung made for damages, lost profits and the cost of moving its business to China after the Government took over the company's Junk Bay site in 1986 to make way for the construction of Tseung Kwan O new town. It was not until 1992 that the Lands Tribunal ruled that its damages should be limited to $131 million, the figure now reimposed by the Privy Council. Shun Fung appealed against the tribunal decision and the Court of Appeal increased the amount in 1993. Shun Fung had also cross appealed over costs for relocating its business to China and loss of future profits and some of these were agreed by the Privy Council in its 27-page ruling. Lands Department Government Land Agent (Kowloon) Nigel Burley, who supported the Government in the Privy Council hearing, said 'we are very pleased' by the decision. 'It's been an exciting day,' he said. 'This case will go down as the benchmark for compulsory purchase in Hong Kong and Britain for the coming years,' he added. The Government has already paid Shun Fung most of the money due under the Court of Appeal decision, but it now expected to get most of it back. 'We won't know a final figure until both sides have taken into account legal costs and other expenses,' he said. 'Until we have sat down to work out the implications of the award I really can't say how much we are due.' One of the key issues to resolve is what interest rate should be charged between 1986 and 1995 when the Government made its land resumption order. The Privy Council's initial judgment on Monday will be confirmed in two weeks after the Government and Shun Fung have studied the findings and made minor amendments within the Council's recommendations. Mr Burley said these alterations would not change the main decision but would consider legal issues which needed to be taken into account following the judgment. 'The Privy Council will then issue its final decision which will be binding on both sides,' Mr Burley said. Nobody at Shun Fung Ironworks was available for comment.