Professional Documents
Culture Documents
BETWEEN
LEUNG MAN CHEUNG
LEUNG KAM CHEUNG and OTHERS
Applicants
and
SECRETARY FOR PLANNING AND LANDS
LAND DEVELOPMENT CORPORATION
Respondent
Intervener
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AND
CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NOS. 900 of 2000, 901 of 2000, 902 of 2000, 903 of 2000,
904 of 2000, 906 of 2000, 907 of 2000, 909 of 2000, 910 of 2000,
911 of 2000, 912 of 2000, 913 of 2000, 914 of 2000 & 915 of 2000
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BETWEEN
LI TING CHUNG and OTHERS
Applicants
and
CHIEF EXECUTIVE IN COUNCIL
LAND DEVELOPMENT CORPORATION
Respondent
Intervener
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PROPERTY
(1)
274/2000,
902/2000
(2)
376/2000,
904/2000
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(3)
377/2000,
901/2000
(4)
378/2000,
906/2000
(5)
379/2000,
909/2000
Lai An Chun
(6)
380/2000,
903/2000
(7)
381/2000,
912/2000
(8)
382/2000,
913/2000
Toppy Year
Development Limited
(9)
390/2000,
911/2000
(10)
391/2000,
910/2000
(11)
392/2000,
900/2000
Li Ting Chung
(12)
393/2000,
907/2000
Chan U Tong
(13)
394/2000,
914/2000
Toppy Year
Development Ltd
(14)
396/2000,
915/2000
Toppy Year
Development Ltd
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THE ISSUES
In these applications, the Applicants have, first of all,
identified the issues that are common to all the applications and then dealt
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with issues that are unique to the individual Applicants. I will follow this
structure in my judgment.
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Courts discretion.
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(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
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(1)
(2)
(3)
(4)
Courts discretion.
The Applicants are also relying on the same issues unique to
individual applications.
THE FOCUS
Although I will follow the structure of the issues identified by
the Applicants, it is necessary to bear in mind that the challenge is against
the decision of the Secretary in making the recommendation to the Chief
Executive in Council and the latters decision to order resumption of the
properties. Hence, the focus must be on the decision and the
decision-making process of these two decision-makers.
Ambit of judicial review
In judicial review proceedings, the court is not concerned with
the merits of the decision : In re Amin [1983] 2 AC 818 per Lord Frazer at
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829A. Furthermore, the court is not concerned with mistake of fact unless
facts are objective in the nature of independently ascertainable and
measurable and the decision-makers concept of the facts is plainly or
unassailably wrong : Chan Sau Mui v. Director of Immigration [1992]
6 HKPLR 479 at page 486 per Cons Ag CJ.
Under section 15(4)(c), the Secretary shall not make a
recommendation unless he is satisfied that the Corporation has taken all
reasonable steps to acquire the land including negotiating for the purchase
on terms that are fair and reasonable. Clearly, by this provision, it is the
Secretary who has to be satisfied with the requirements. Where the words
are satisfied are used, they leave the decision, on these issues of fact, to
the decision-maker; there is no appeal to a court against such a decision,
but it may be subject to judicial review for error of law including absence
of any material on which the decision could reasonably be reached : Din v.
Wandsworth L.B.C [1983] AC 657, at page 664 per Lord Wilberforce.
Where the existence or non-existence of the fact is left to the judgment and
discretion of a public body, and that fact involves a wide spectrum ranging
from the obvious to the debatable or to the just conceivable, it is the duty
of the court to leave the decision of that fact to the public body to whom
Parliament has entrusted the decision-making power save in a case where
it is obvious that the public body, consciously or unconsciously, are acting
perversely : Reg v. Hillingdon L.B.C , ex parte Puhlhofer [1986] AC 484,
at page 518 per Lord Brightman.
Judicial review and land resumption
It is necessary at the very beginning to set out the ambit of
judicial review in resumption cases. The principles are recently considered
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by the Court of Appeal in Wong Tak Woon v. The Secretary for Planning,
Environment and Lands, CACV339, and approved by the Court of Final
Appeal in an application for leave to appeal against the decision of the
Court of Appeal (FAMV No.9 of 2000). Keith JA in the Court of Appeal
stated that :
it was not arguable that, in assessing the compensation for
land resumed pursuant to a recommendation to the Chief
Executive under the Land Development Corporation Ordinance
(Cap.15), account may be taken of the value of such property as
would be built on the land under any proposed development.
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relief because any valuation of the properties by the Lands Tribunal would
be based on the date of resumption and not on 23 June 1997, the valuation
date on which the Corporation made its offer. The current market value of
the properties is less than that on 23 June 1997.
This is also one of the arguments advanced before the Court
of Appeal in Wong Tak Woon. Nonetheless, Ribeiro J (as he then was) was
of the view that matters relating to valuation are not amiable to judicial
review.
THE OFFER BEING MADE TOO LOW
This is clearly a matter that falls outside the ambit of judicial
review. The Applicants retained two firms of valuers, namely, F. C. Tam
Surveyors Limited and First Pacific Davis (Hong Kong) Limited in valuing
their properties. The Corporation instructed two firms of valuers, namely,
Vigers (Hong Kong) Limited and Larry H.C. Tam & Associates Limited to
value the properties. The higher of the two valuations received by the
Corporation was used as the basis of its offer to the Applicants. On the
authority of Wong Tak Woon, the court is clearly precluded from going into
matters purely on the differences in the valuation of the experts.
In discharging his duty, the Secretary instructed a firm of
independent consultant, namely, Messrs James Ng Surveyor Limited (the
Government Consultant), to prepare a valuation of the properties. The
Applicants relied on a table provided to members of the Central and
Western District Board in about March 2000, showing a comparison of the
offers made by the Corporation and a valuation of the properties by the
Government Consultant. The assessment of the Government Consultant is
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on the open market value of the properties. The Applicants contended that,
while each and every item of the Corporations offer is higher than the
valuation of the Government Consultant, the table is misleading in the
sense that the Corporations offers represented not only the market value of
the properties as at July 1997 but also an award of ex gratia payment on
top of the market value.
In my view, this is an argument which is difficult to accept.
The offer made by the Corporation was based on the open market value of
the properties plus an ex gratia payment. It must be the offer as a whole
which has to be judged in determining whether the offer is reasonable.
The Secretary had consulted an independent consultant whose valuation
showed that the offer made by the Corporation is higher than his own
valuation.
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Related to the issue of the offers being made too low is the
payment of an ex gratia payment called Home Purchase Allowance
(HPA). In the majority of the cases, the Corporation had made
two offers to the Applicants, the first is on the basis of a sale of their
properties with vacant possession and the second offer is on the basis of a
sale subject to tenancy. In respect of shop premises an additional 5%
incentive payment was included. In certain cases, additional offers were
also made. The argument relied by the Applicants is the huge disparity in
the offer made to one of the properties, namely No.4 Kin Man Street
(No.4) and its immediate neighbour, No.2 Kin Man Street (No.2).
No.4 is a four-storey building. The Corporation made an offer of
$4.726 million to the owners for the whole building. However, the
Corporation acquired the ground floor of No.2 for the sum of $4.3 million.
The breakdown of this sum of $4.3 million showed that $1,667,000 was
for the open market value, $2,693,000 was for an ex gratia allowance, and
$100,000 was for other costs.
The policy and its rationale
The policy of the Corporation is that if the occupation permit
of the premises shows that the premises is for domestic use, then it will
pay the HPA to the owner irrespective of the actual use of the premises. If
the premises is owner-occupier, the HPA is the full 100%. If the premises
is tenanted, then the owner will receive between 50-70% of the HPA. HPA
is not provided to the owner if the owner owns the whole building. In such
a case, the offer will be the higher of the redevelopment value or the
existing use value of the building plus an ex gratia allowance of 10%.
No.4 is a single ownership building, and as a result, the owners were not
offered any HPA.
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Read in the context of the case, what the judge said clearly is not an
authority for saying that claim for ex gratia payment can be made in
judicial review proceedings. This case does not assist the Applicants.
FAILURE TO DISCLOSE COMPARABLES
The Applicants argument
The Applicants contended that the Corporation had acted
unfairly and unreasonably by failing to provide comparables on which the
Corporations surveyors had relied to value their properties. In the absence
of such comparables, they were unable to make worthwhile representations
to the Corporation during the negotiation. Mr Leong characterised this
complaint as one which relates to the manner in which the Corporation
carried out the negotiation. He submitted that the Secretary must not only
be concerned with the question of valuation, but also the manner in which
the negotiation was made in order to satisfy himself that the Corporation
has taken all reasonable steps to acquire the land including negotiating for
the purchase on terms that are fair and reasonable.
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(2)
(3)
comparables, all that the Applicants had identified was one instance in
which the owner of No.2H Davis Street (No.2H) requested comparables
on 9 November 1998. The Corporation refused to provide the comparables
to this representative. The owner of No.2H had in fact at that stage
instructed a surveyor on his behalf. Clearly, if the surveyor considered that
comparables were required, he could have asked for them. In my view, the
Applicants had failed to make out a case on the facts that the Corporation
had failed to disclose comparables to them.
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Commercial dispute
In Mass Energy Ltd v. Birmingham City Council [1993]
Env. L.R.298, different parties submitted tenders for a contract to the local
authority. The local authority accepted one of the tenders. Another party
who had their tender rejected applied for judicial review against the
decision to accept the tender. It was held that it was open to the local
authority to choose one tenderer in preference to others. Glidewell LJ held
that, on its face, it is a commercial dispute between a successful and an
unsuccessful tenderer. The fact that the local authority is restricted by
statute on how to accept contracts does not make it a public law dispute.
Evans LJ stated that In commerce, life is not always fair. The authority
was entitled to act as a commercial animal at the stage when it was
considering the tenders they had received. I find it impossible to say more
than that the council were bound to act commercially. That unfortunately,
does not guarantee complete fairness and may be the plaintiffs did not
receive it, but that is not a ground, in my view, for complaining under the
Act.
Lord Ackner in Walford v. Miles [1992] 2 AC 128, at 138E
held that :
... However the concept of a duty to carry on negotiations in
good faith is inherently repugnant to the adversarial position of
the parties when involved in negotiations. Each party to the
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Applicants Counter-offers
37
9
HK$4,972,000
1 counter-offer on 19.5.98:
HK$7,389,900
38
0
HK$7,599,000
1 counter-offer on 2.9.97:
HK$19,029,100
38
1
HK$7,208,000
HK$13,568,850
HK$12,890,407
38
2
HK$6,572,000
HK$4,830,000
HK$13,838,175
HK$13,146,266
39
0
HK$3,798,000
HK$3,832,000
1 counter-offer on 9.6.98 at
HK$13,725,000
No.15 (ET only)
HK$5,870,000
No.17 (ET only) Business loss: HK$5,870,000
HK$1,985,000
39
2
39
4
HK$4,149,000
HK$3,764,000
HK$4,696,000
HK$10,831,500
HK$10,272,825
39
6
HK$4,668,000
HK$3,764,000
HK$4,696,000
HK$10,813,500
HK$10,272,825
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Mr Hos explanation
Mr Ho in his affirmation stated that the auditing of the
valuation assessments prepared by the consultant was meant to refer to
work of the LDC Section in checking the accuracy of the data, calculations
and measurements. The LDC Section could not and did not in any way
attempt to change, interfere with or overrule the consultants opinion on
valuation matters or on the terms of the Corporations offers. Mr Ho
explained that the LDC Section is a section of staff who possess expertise
in property valuation and market practices. Apart from collating and
summarising the representations made by the Applicants and the
Corporation in respect of the section 15 applications for the Secretarys
consideration, the LDC Section is entrusted with the work of instructing
the Government Consultant to give advice as to the value of the properties
and whether the Corporations offer had been reasonable in monetary
terms. The Director himself played no part in the section 15 applications
or the Secretarys decision to recommend resumption. In relation to the
processing of these applications, the LDC Section takes instructions from
and reports to the Secretary directly. The reason why the Director wrote to
the Applicants in June 1999 was because of specific complaints made to
him about the alleged misconduct of the LDC Section which had to be
replied to and addressed.
My view
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The complaint
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to expect from the laymen that they should know precisely about the
hierarchy of the government structure. All that they were concerned with
is how their properties would be dealt with by the authority. Although the
promise to give reasons for the decision was not given by the Secretary
himself, in my view, the present case is one of the special cases, in which
the Secretary is required to give reasons for his decision because of the
earlier promise by the Director.
What is a special case depends on the facts of each case. It is
not necessary for me to rule whether with this promise, the right had
become crystallised. It is sufficient for me to say that as a matter of good
administration, the authority should observe what it had openly stated on
this issue. This is in fact what happened in this case : the reasons for the
decision were given in the letter dated 10 March 1999. In my view, the
reasons given by the Secretary were sufficient reasons. It identified the
issues in which the Secretary had to decide. This is not a case where the
Secretary was not aware of the concerns of the land owners prior to his
recommendation. The LDC Section had been in correspondence with the
land owners. The land owners had complained about the manner of
negotiation of the Corporation and its disregard of the valuation and
evidence produced by the owners surveyors. The LDC Section had called
for the Corporations comments, a summary of the owners complaints and
the comments were provided to the owners. In the letter dated 18 May
1999, the LDC Section informed the land owners that their comments and
the LDCs response would be presented to the Secretary for his
consideration under section 15 of the LDC Ordinance. The land owners
had made further representations to the Secretary.
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Another [1993] 2 HKLR 303 where Liu J (as he then was) held that where
reasons are given, they must not be so vague, inadequate and unintelligible
as to cloud the issue and the evidential basis. Once given, the reasons
ought to measure up to the standard of administrative law principles. In
my view, the reasons given for the Secretarys decision, in the whole
context of the negotiation, clearly fulfill the obligations imposed by
administrative law principles.
INDIVIDUAL CASES
REDEVELOPMENT VALUE OF NO.4 KIN MAN STREET
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Corporation had long lapsed and the Corporation had requested the
Secretary to make the recommendation.
Factually, the Applicants were wrong when they said that the
Corporation had not taken into account, the redevelopment potential of
their properties. Furthermore, the plot ratio used by the Corporation was in
fact higher than the one permitted by the Building Authority. The owners
complained that the valuation report of Vigers of May 1998 was not
supplied to them until much later in August 1999. I do not see how this
would assist the owners because the Corporation had clearly stated in the
letter of 28 May 1998 that a further assessment had been made by the
valuation consultants. Surely, the experts for the owners could have asked
for a copy of this report instead of making the request much later on.
Furthermore, on the authority of Wong Tak Woon, matters relating to the
actual calculation of plot ratio are valuation matters and are not subject to
judicial review. More importantly, the Secretary clearly had a rational
basis to make the recommendation because the Government Consultant
was of the view that the offers made by the Corporation were reasonable.
RIGHT OF WAY
The owners of No.4 Kin Man Street granted a right of way to
the adjoining property owner in respect of a side lane. The Applicants now
contended that the side lane should not be excluded from valuation.
Factually, the owners own experts had excluded the lane from the
calculation of the value of the property. The owners now relied on
two cases in support of their argument that the right of way should be
included for the purpose of calculating the property value. In Cinat
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As rightly pointed out by Mr Yu, the question there was whether the
redevelopment could take place on a vacant piece of land once it had been
included as part of a site for the purpose of calculating permissible site
coverage and plot ratio of another development. It does not establish the
principle that land which is subject to a right of way can be included in the
site area for the purpose of assessing the plot ratio. In Lea Tai Property
Development Ltd v. Incorporated Owners of Leapoint Industrial Building
Ltd. [1996] 1 HKC 193, Godfrey JA (as he then was) held that in relation
to interference with an easement :
... the owner of the dominant tenement had no absolute right to
use each and every portion of the right of way. He was entitled
to complain only of substantial interference with that right by the
owner of the servient tenement. The owner of the servient
tenement was the owner of the land and was accordingly entitled
to use it for whatever purposes he liked, so long as he did not
substantially interfere with the use of the way by the owner of
the dominant tenement.
The issue there was whether one party to a deed granting mutual right of
way in respect of a driveway could restrain the other party from using the
driveway. Again, it does not support the Applicants contention that the
right of way should be included in calculating the plot ratio.
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adopt the latest approved building plans to measure the floor areas. The
reason is to discourage people from constructing unauthorized structures in
contravention of the Buildings Regulations.
The authorities
In my view, reliance on property cases such as Active Keen
Industries Ltd v. Fok Chi Keung [1994] 2 HKC 67 or the recent decision of
the Court of Appeal in Spark Rich (China) Ltd v. Valrose Ltd,
CACV249/1998 is not helpful. They are all concerned with the question of
whether illegal structures present in a property would constitute a defect in
title in conveyancing transactions.
It has been established by a series of land resumption cases
that unauthorized structures do not attract compensation : Cruden, Land
Compensation and Valuation Law in Hong Kong, 2nd Ed., page 81,
Director of Lands and Survey v. Lau Kin and Chan Yau and Others [1977]
HKLTR 95, Director of Lands and Survey v. Lee Yat Ping and Others
[1977] HKLTR 138, Cham Hon Chi v. Director of Lands (Crown Lands
Resumption Ref. No.8 of 1995).
Mr Leong relied on Linen Export Co. Ltd v. Director of Lands
(Crown Lands Resumption Ref. No.24 of 1994), in which the Lands
Tribunal was assessing a claim for compensation under the LR Ordinance.
It expressed the view that whether a cockloft is approved by the Building
Authority or not, such a cockloft affects the market price realized for
shops. This is clearly not a case which establishes that unauthorized
structures will attract compensation in land resumption. All that the
tribunal was concerned with was how the price of a property used as a
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the four walls. They referred to Hinex Universal Design Consultants Co.
Ltd v. Chan Lai Hing [1998] 1 HKC 317, in which Le Pichon J held that a
subsequent owner had the same unfettered right as the developer in the
allocation of undivided shares vested in him, subject to any prior
prohibition which existed in the deed of mutual covenant or some other
documents. The deed of mutual covenant of No.27 Cadogan Street
enabled the owners to dispose of the whole or any part of their share in the
building and their right to use floor of the building allotted to them for
their exclusive use and enjoyment to any person they may think fit. They
further argued that the mezzanine floor had an independent entrance, hence
it should also attract HPA as well.
To deal with this problem, the starting point must be that the
owners had not formally subdivided their interest. There is no formal
documentation that a separate independent floor had come into existence.
In the circumstances, it is hardly reasonable for them to say that HPA
should have been given to them in respect of a separate independent floor
of the building. In any event, there was never any claim for extra HPA
until the matter was raised in these proceedings.
As to the method of valuing the cockloft, this clearly is a
matter of valuation which is not subject to judicial review. The issue here
is whether there are grounds for the Secretary to be satisfied that the
Corporation had negotiated on terms that are fair and reasonable. In my
view, there clearly are such grounds. The measurement by the Corporation
and by one of the valuers of the owners of this property of the cockloft
area is about the same. The valuation by the Corporation is based on
existing guidelines for valuing cockloft.
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The issue before the Privy Council was not about a statutory
scheme involving a body evaluating facts and making a recommendation
to a decision-maker as in this case. Its decision on the LR Ordinance must
be the binding authority on our courts. The position in this case is
different : it deals with the relationship between the LDC Ordinance and
the LR Ordinance. If the approach of the High Court of Australia is
adopted in the present case, then it would appear that procedural fairness
had been observed if the Applicants were given the opportunity of making
representations to the Secretary on the two issues. On this issue, confining
myself specifically to the statutory scheme under the LDC Ordinance and
the LR Ordinance, since the Secretary is specifically required to be
satisfied that the Corporation has taken all reasonable steps to acquire the
land including negotiating for the purchase on term that are fair and
reasonable and representations had been made by the Applicants to the
Secretary on these issues, procedural fairness will indeed preclude the
Applicants from raising the same representations to the Chief Executive in
Council. In any event, as disclosed in the affirmations of
Ms Cheng Mei Sze, Maisie, the clerk to the Executive Council,
representations, including submissions on these two topics, were made by
the Applicants to the Executive Council. In the circumstances, there is
clearly no cause for complaint of any lack of procedural fairness.
THE CHIEF EXECUTIVE IN COUNCIL TO AWAIT FOR THE RESULT
OF THE CHALLENGE AGAINST THE SECRETARY
As to the complaint that the Chief Executive in Council
should wait for the decision of the Court against the Secretary before
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CONCLUSION
The applications against the Secretary and the Chief
Executive in Council are dismissed.
COSTS
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(P. Cheung)
Judge of the Court of First Instance,
High Court
Mr Alan Leong SC and Mr Tommy K.K. Ho, instructed by
Messrs Simon C.W. Yung, for the Applicants
Mr Wong Yan Yung and Mr Law Man Chung, instructed by
Department of Justice, for the Respondents
Mr Benjamin Yu SC and Mr Anthony Ismail, instructed by
Messrs Kao, Lee & Yip, for Land Development Corporation