SECRETARY FOR THE NEW TERRITORIES v. LEE PUI LEUNG

Lands Tribunal - practice- whether decision on the hearing of a review may itself be the subject of a further review - comparison between review provisions of Lands Tribunal, District Court and Magistrates Court - Sections 11 and 11A lands Tribunal ordinance, Cap. 17, Rule 26 Lands Tribunal Rules, Cap 17.

IN THE LANDS TRIBUNAL OF HONG KONG

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Crown Lands Reference No. 1 of 1981

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JUDGMENT

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1. The short question to be determined is whether there can, under the Lands Tribunal Ordinance, Cap. 17, be a review of a review.

2. In these proceedings the applicant originally applied to the Lands Tribunal to determine the amount of compensation payable to the respondent as a result of the Crown resuming certain land at Tsuen Wan under the Crown Lands Resumption Ordinance, Cap.124. The application was heard by a Lands Tribunal of which I was not a member. That Tribunal delivered its decision on the 8th day of January 1982 when the respondent was awarded compensation of $1,425,000. From that decision both parties applied for a review pursuant to Section 11A of the Lands Tribunal Ordinance. The application for a review was granted and the same members of the Tribunal sat for the subsequent review hearing. On the 21st day of June 1982 the Tribunal delivered its decision on the review.

3. On the 19th day of July 1982 the respondent applied for a further review, again pursuant to Section 11A.

4. This application for a further review appeared to raise a preliminary point of law, namely whether the Lands Tribunal has power to hear an application for a further review. In pursuance of my statutory powers I elected to intervene and determine the preliminary point of law.

5. The review application in which the Tribunal's decision was delivered on the 21st day of June 1982, was held purports to Section 11A. The present application for review also purports to be made under section 11A. Section 11A provides :

6. The principal Ordinance was enacted on the 1st day of  December, 1974. Section 11A was added in 1978 by the Lands Tribunal (Amendment)Ordinance 1978 No. 80/78.

7. Miss Yuen, for the respondent, first submitted that in considering the jurisdiction issue which has arisen, the Tribunal was to assume, for the purposes of this application, that the substantive grounds for a review are prima facie sufficient and are not frivolous or vexatious. For the limited purposes of this preliminary issue I, of course, make that assumption.

8. Secondly, it was submitted that the Lands Tribunal is a creature of statute and the Tribunal's statutory powers are decisive of the issue. Again I accept that submission. Turning to those statutory powers it is undisputed that the answer to the question before the Tribunal is a matter of statutory interpretation. The respondent submits that under the Lands Tribunal ordinance, whether a literal or purposive approach is adopted, where the Tribunal has already delivered a decision on a review application under Section 11A, it has the further power under section 11A, subsequently to review its decision on the prior review.

9. Adopting a literal interpretation, Miss Yuen pointed out that Section 11A (3) empowers the Tribunal to review "any decision". There are no express words in Section 11A which restrict the meaning of "any decision" to the original decision. Nor are there any express words which exclude a decision on a prior review from being further reviewed.

10. I was also referred to Section 11(1) which provides that subject to any appeal rights, which are limited to points of law, the decision of the Tribunal in determining the amount of compensation payable "shall be the final determination thereof". It was submitted that any apparent conflict between Sections 11 and 11A is removed if those sections are considered together. It is then clear that as to questions of fact the Tribunal makes the final determination either originally or, if an application is granted under Section 11A,on a review. In other words there is no appeal from the Tribunal on a finding of fact.

11. On a point of law the position is different. There is an appeal by way of case stated on a point of law under Section 11(2).

12. The position under Section 11A was contrasted with the different position under Section 53 of the District Court Ordinance, Cap. 336 where, in the exercise of its civil jurisdiction only, the District Court has the power to review a prior judgment or order. Whereas Section 11A refers simply to a "decision" of the Tribunal and makes no distinction between the original decision and the review decision, in the District Court Section 53(3) expressly distinguishes between :

13. Counsel for the respondent conceded that because of these different statutory provisions there is clearly no power in the District Court, in its civil jurisdiction, further to review a prior review. She further submitted that the analogous power of magistrates to review a prior determination under Section 104 of the Magistrates Ordinance, Cap.227 was drafted in such a different manner as to be of no help in deciding the position under our Section 11A.

14. Counsel for the respondent also referred to 'Maxwell on Interpretation of Statutes'(12th Edn) at page 246 :

"

The effect of strict construction might be summed up by saying that, where an equivocal word or ambiguous sentence leaves a reasonable doubt of its meaning which the canons of interpretation fail to solve, the benefit of the doubt should be given to the subject and against the legislature which has failed to explain itself."

In the substantive application, it was submitted, the dispute was precisely between the Crown compulsorily resuming land and the subject seeking compensation for the resulting loss. Any ambiguity in Section 11A as to whether the right to a further review existed should, it was submitted, be resolved in favour of the respondent subject.

15. Counsel for the respondent then submitted that if a purposive approach to Section 11A was adopted it merely reinforced the conclusion which flowed from adopting a literal approach, namely that there was power to review a prior review decision. Predictably I was referred to Section 19 of the Interpretation and General Clauses Ordinance, Cap. 1 and reminded that the general principle of statutory interpretation in Hong Kong required the Tribunal to give Section 11A "such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit". It was submitted that the object of the Lands Tribunal ordinance was, inter alia, to facilitate the payment of just compensation to property owners whose land had been compulsorily resumed by the Crown. If the Tribunal erred in law there was a right of appeal to the Court of Appeal. Where the Tribunal erred on a finding of fact there was no right of appeal. The Ordinance, however, gave relief to a party against whom such an adverse finding was made, for he could apply for a review under Section 11A. If on the review a further erroneous finding of fact were made it was consistent with the object of the Ordinance that the aggrieved party should be able to apply for a further review to correct that error.

16. Mr. McCallough, for the applicant, submitted that under the Lands Tribunal ordinance there was no power to grant an application for a review of a prior review. As the respondent had already been granted a review of the original decision and that review application had been disposed of culminating in the Tribunal's decision of the 21st day of June 1982, the Tribunal simply had no jurisdiction to grant a further review.

17. As to Section 11A he immediately conceded that on a literal interpretation of the Section there was no restriction on a further review. However, he submitted that if the Section was interpreted to permit further reviews, the result would an absurdity, as there would be no finality to litigation.

18. Further it was submitted, that there was no potential conflict between Sections 11 and 11A which could only be resolved by following the respondent's approach to those sections. For it was submitted the two sections dealt with completely different matters. Section 11 provided for appeals to the Court of Appeal on points of law. Section 11A was concerned with a right of review to the Tribunal itself on findings of fact. The sections existed independently of each other.

19. As to the respondent's citation from Maxwell he pointed out that the extract formed that part of Chapter 11 headed at page 238 as "3. Strict Construction of Penal Laws". The cited extract was therefore e only applicable to penal laws. Neither the Lands Tribunal Ordinance nor the Crown Lands Resumption ordinance were penal laws. It was therefore submitted that the extract was irrelevant.

20. Mr. McCallough further submitted not only was the cited extract irrelevant, but it was dangerous to rely exclusively on any particular canon of construction collected in Maxwell. He based this on the following statement from Chapter III Cross 'Statutory Interpretation' page 42 :

21. He submitted the proper approach for a Tribunal faced with this conflict of riches was to apply Rule 3 of the four basic rules Professor Cross formulated from the mass of case law which he sets out at page 43 of his "Statutory Interpretation"  :

In formulating that rule Professor Cross relied particularly on the judgment of Lord Reid in Federal Steam Navigation Co. Ltd. v. Department of Trade and Industry (1974) 2 All L.R. 97,100.

22. Counsel for the applicant was bluntly critical of the draftsman not using in Section 11A the more precise language employed in the comparable Section 53 of the District Court Ordinance. In his submission a literal interpretation, permitting a series of reviews, would lead to such an absurdity that this was an exceptional case where the Tribunal should read words into Section 11 A. Words should necessarily be implied to limit a party's right to apply for only one review to prevent the absurdity arising.

23. In further support of that submission he cited the judgment of Lord Denning in Eddis & Anor. v. Chichester Constable & Ors. (1969) 2 Ch. 345. In that case the Court of Appeal was concerned with the proviso to Section 26 of the Limitation Act 1939. On a literal meaning of the proviso, time would have run differently in an action for conversion from an action for specific performance. Lord Denning agreed that the proviso taken literally gave rise to an absurdity. At page 358 Lord Denning was prepared to imply into the proviso the words "or its value" to prevent that absurdity arising :

24. Counsel for the applicant submits that the words "any decision" should similarly be interpreted to avoid the literal absurdity arising. "Any decision" should therefore be construed as "any decision other than a prior review decision".

25. Finally, he doubted whether on other grounds the Tribunal had jurisdiction. Under Section 11A (3), he pointed out, the Tribunal must decide within 1 month from the date of any decision whether to review that previous decision. Here the application by the respondent for a review was in time. But the Tribunal did not within that 1 month decide whether to review its previous decision. It still has not done so Instead it set down the application for hearing on the preliminary point whether it had jurisdiction to decide to hold a review under Section 11A.

26. In reply Counsel for the respondent emphasised that she did not claim that on a further review the Tribunal would have power to review findings of fact made at the original hearing.The only findings which could be reviewed on a further review were those found at the last previous review. In her submission the power to grant a further review would not conflict with the principle that there should be finality in litigation. For the findings at the original hearing could not be reopened. An applicant would be limited to attacking any findings made at the last previous review. As there was no appeal on fact there was no other alternative where a mistake of fact which arose for the first time at a review hearing could be remedied. Miss Yuen submitted that there could be no injustice in trying to get the facts right.

27. With the benefit of those submissions from both Counsel, which were advanced with considerable cogency and clarity, I must now rule whether there can be a review of a review. There appears to be no prior decisions of the Tribunal on this point. Nor are there any reported decisions on this point in relation to Section 53 of the District Court Ordinance or Section 104 of the Magistrates Ordinance. In view of the very different wording of the former Ordinance it is perhaps not surprising that apparently no party has ever attempted to argue that in the District Court there can be a review of a review.

28. Both parties are agreed that on a literal interpretation there is nothing in Section 11A which would restrict the Tribunal's power to allow a prior review to itself be reviewed. Certainly Section 11A solely uses the word "decision" to describe any conclusion the Tribunal may come to whether at an original hearing or otherwise. Section 11 also uses the term "decision". Section 11 also provides that the "decision" of the Tribunal shall be the final "determination". The Lands Tribunal Rules and in particular Rule 26 at least initially also only used the term "decision". However, under the Lands Tribunal (Amendment) Rules 1982 published in No. 21 Volume CXXIV Hong Kong Gazette on the 28th day of May 1982, I note that the word "decision" was deleted from Rule 26 and the words "judgment, decision or order" were substituted. However, Section 11A remains unamended. Clearly no distinction is   expressly made within Section 11A between a decision prior to a review an the determination at the review hearing.

29. On the other hand, what is equally clear is that in the District Court, which exercises a comparable jurisdiction, there can only be one application for review after judgment at the substantive hearing. In other words, there cannot be a further review of the findings arrived at on the review hearing. In the District Court, of course, there can be no review of any decision in the exercise of the Court's criminal jurisdiction. The power of review under Section 53 is limited to the District Court's civil jurisdiction. The provisions of the District Court limiting a party's right to one review and also an appeal to the Court of Appeal are consistent with the fundamental principle that there should be finality to litigation.

30. Counsel for the respondent strongly urged that not only was the right to a further review the proper interpretation of Section 11A but it was also a very just and necessary provision due to the restrictions on appeals to points of law. This submission has rather less weight than it would otherwise have due to the appellate practice which has evolved in Hong Kong. An examphe of that practice is what occurs under the Landlord and Tenant (Consolidation.) Ordinance, Cap. 7. Up to and including today jurisdiction thereunder has been shared between the District Court and the Lands Tribunal. From tomorrow the whole Ordinance falls within the exclusive jurisdiction of the Lands Tribunal. Appeals from the District Court under Section 68A in respect of Part II and from the Lands Tribunal under Section 119Q are limited to points of law. While there have so far been no appeals from the Lands Tribunal under Part IV there have many numberous appeals from the District Court under Part II. Indeed, they would make up the bulk of civil appeals from the District Court.

31. However, the limitation of appeals to points of law under Part II seems to have have little effect in restricting the issues argued on appeal. In many cases it seems the Ordinance might just as well have permitted general anneals on fact as well as on law. For the apparent limitation to points of law is in practice nearly meaningless. First, it is always open to an appellant to found his appeal on the point of law that the decision appealed from could not on the evidence have been arrived at by a reasonable tribunal of fact properly directed on the law. That apparent point of law is merely a formula by which, on appeal, all the findings of fact are at large. Secondly, at least some Courts of Appeal have never felt inhibited, even where the preceding global ground had not been invoked by appellant, from holding that an appeal on a distinct point of law nevertheless enables an appellate Court to come to a different finding of fact. A recent example of this latter practice is evident in the Court of Appeal's judgment in Cheng So Shi v. Madam Shing Ngan Civil Appeal No. 86 of 1982 delivered on the 15th day of September, 1982. The appeal was from the District Court under Part II of the Landlord and Tenant (Consolidation) Ordinance and therefore limited to points of law. In that judgment Cons J. A., observed :

"

Waiver is basically a question of fact and as such may be thought to be beyond the purview of this court with regard to appeals under Part II of the ordinance. However in reality it is not a question of fact, for with respect to the learned e judge below he proceeded in this respect upon a misconception of the law. He assumed it was for the landlady to prove that there had been no waiver."

32. The limitation in Section 11 of a right of appeal on a point of law in reality is therefore not as restrictive as Counsel urged. Furthermore there is only one right of appeal. There is no right given to a party to bring a succession of appeals to the Court of Appeal. This is at least some indication that the Legislature would not have intended that there would be a greater right give to a party in respect of reviews.

33. In deciding which of the various competing and to some extent conflicting canons of construction I should select to apply to Section 11A I am mindful of the warnings cited from Professor Cross. I also accept that the respondent's citation from Maxwell is more relevant to penal legislation. However, it still has some relevance where the issue is one between Crown and subject although the legislation is not penal in character. I therefore do bear that principle in mind in approaching Section 11A although I give it a little less weight than if I were construing a penal Ordinance. I also give due weight to the limited nature of the respondent's submissions. Namely, that it is only the prior review which the respondent claims may be reviewed subsequently. The respondent does not suggest or attempt to argue that Section 11A permits the findings at the original hearing to be further attacked on a second review.

34. I appreciate that both of these latter submissions of the respondent argue strongly for the literal interpretation of Section 11A permitting a limited further review. I appreciate too, that 1 can only come to a contrary conclusion if words limiting applications to one review only, may be implied into Section 11A.

35. Should such words of limitation be implied? Lord Denning on a number of occasions was not reluctant to imply words into a statute where he felt that course was just and necessary. When it was put to Counsel for the applicant that this practice was often criticised by the House of Lords he ventured the opinion - nothwithstanding Lord Simonds in Magor and St. Mellon's Rural District Council v. Newport Corporation (1952) A.C. 189 and elsewhere strongly to the contrary - that statutory interpretation was one area where the previous Master of the Rolls was rarely reversed. Whatever that position may be it is quite clear that words should only be implied out of necessity where the circumstances are exceptional.

36. In my opinion that qualification is inherent in Rule 3 of Professor Cross's four basic rules. I remind myself that when the Lands Tribunal Ordinance was first enacted there was a right of appeal to now the Court of Appeal but no right of review. It was only 4 years later that Section 11A was enacted to provide for a right of review to the Tribunal itself. Except in one particular the new power which was enacted in Section 11A was substantially the same as the long prior existing power of review in civil matters in the District Court. The difference was that the amendment did not go on to make any express distinction between the original decision of the Tribunal and the later determination on a review.

37. When I consider that difference in the context of the whole Ordinance and in relation to other rights of review in Hong Kong, I am unconvinced that the Legislature intended to create a very different right of successive reviews in the Lands Tribunal. The principle in favour of finality in litigation is against such a construction. That principle is reinforced by the fact that Section 11A applies to a Tribunal and not a Court. The hoped for virtues of a Tribunal are that it will perhaps be a speedier and more informal judicial body than a court. The context in which the words "final determination" is used in Section 11 is indicative of the Legislative 's wish that claims for compensation should be determined speedily without the complications of an involved appellate structure.

38. To interpret Section 11A as allowing successive reviews would run counter to all those basic principles. After consideration I have come to the conclusion that this is an exceptional case where it is necessary to imply into Section 11A words restricting a party to one application for review. I am conscious of the fact that in any event an appeal always lies from a review hearing as well as from the original hearing. For the reasons given I am well satisfied that it was the Legislature's intention to allow only one application for review. Having come to this conclusion it is unnecessary for me to rule on the applicant's final submission.

39. I therefore hold that the respondent has no right to bring a second application for review under Section 11A even though it is limited to findings made at the prior review hearing. Accordingly this Tribunal has no jurisdiction to entertain this second application and it is dismissed on those grounds. Liberty to apply for costs and any other consequential matters is reserved.

DATED this 30th day of September, 1982.

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D E C I S I O N

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1. Both parties applied under section 11A of the Lands Tribunal Ordinance for a review of the decision given by the Tribunal on 8th January 1982.

2. The ground for the Applicant's application was stated as follows :

"It was ordered that the Secretary for the New Territories pay the Claimant's costs on the High Court scale. In outline I consider that the Claimant should pay the Applicant's costs or at least there should be no order as to costs. In this case the Applicant offered compensation to the Claimant in the sum of $1,151,000.00 whereas the Claimant sought compensation in the sum of $3,428,300.00. The award of the Lands Tribunal was in the sum of $1,425,000.00. Clearly, the Applicant was far closer in assessing and offering a proper sum for compensation than that requested by the Claimant.".

3. The grounds for the Respondent's application were stated as follows :

"(1)	The Tribunal having accepted that the area used as a kiosk was an area in which the Claimant formerly had an interest as owner, erred in excluding the said area from its computation of its award of compensation.
(2)	The Tribunal having accepted that the effects of the 1976 Outline Zoning Plan for Tsuen Wan (LTW/146) on the value of the subject premises should not be disregarded, which said plan located the subject property at the central part of the Town Centre development, erred in considering the subject property as being "on the edge of what is described as a Town Centre development".
(3)	Pursuant to (2) above, the Tribunal erred in using comparables C2, C3 and C5 in the valuation of the subject property, all of which comparables were accepted by the Tribunal as being fringe properties.
(4)	The Tribunal erred in deferring the analysed unit prices for comparables C2, C3 and C5 for a period of 5 years for the valuation of the subject property, in the absence of evidence that the Town Centre development would not have come to fruition until the expiry of that period of time from the date of reversion.
(5)	The Tribunal having accepted that comparables C2, C3 and C5 were fringe properties, erred in deferring their analysed unit prices for a period of 5 years for the valuation of the subject property because even if it were correct to use a deferment period of 5 years, the Tribunal should have regard to the subject property as at the central part of a Town Centre development that would come to fruition at the end of the deferment period and any deferment if carried out should be carried out on values for shop premises now situated at locations that may fairly be regarded as within the central part of a Town Centre in Tsuen Wan.".

4. Mr Robert McCullogh, Crown Counsel, again appeared for the Applicant, while the Respondent was again represented by Miss Maria Yuen of Counsel.

5. Before the commencement of the arguments, Mr McCullogh, with the acquiescence of Miss Yuen, clarified for the record the identification of the plans produced to the Tribunal at the original hearing, and produced three new plans numbered LTW 146, LTW 146/A and LTW 146/C.  It was agreed by both parties that the new plans were not in any material respect different from the plans originally produced and on the basis of which the Tribunal had reached its decision. There was accordingly no suggestion that the Tribunal's decision would have been affected if the new plans had been before the Tribunal at the original hearing. We make it clear for the record that it is the new plan numbered 146A whose effects are to be taken into account, and the new plan numbered 146C that led to the resumption of the subject premises, and whose effects are therefore to be disregarded.

6. It was decided to hear the Respondent's argument first, but before Miss Yuen opened, it was accepted by Mr McCullogh and the Tribunal that the Respondent's ground (1) was valid and that the area of the kiosk should be included in the calculation of compensation.

7. With regard to the Respondent's ground (2) Miss Yuen argued that the subject property, far from being on the fringe of the proposed Town Centre as shown on Plan LTW 146A, was in fact approximately at the centre of the Castle Peak Road boundary of the Town Centre Zone, which, she pointed out, extended to the re-aligned Route TWISK on the North and East sides, Castle Peak Road on the South-West side and an un-named road to the West. Her argument continued that not only was the subject property at the nucleus or hub of the Town Centre Area directly opposite the mass transit railway station and close to the bus terminus, but it was also adjacent to the area zoned Commercial/Residential on the opposite side of Castle Peak Road and was thus in a local centre as well as a Town Centre. She admitted out that the subject property was not at the physical centre of the Town Centre Zone but submitted that the physical centre is not necessarily the nucleus. This nucleus must be ascertained by looking at how it relates to the remainder of the town. She therefore asked the Tribunal to find that their earlier decision that the subject property is on the fringe of the Town Centre Zone is inappropriate. Physically the property was on the edge of the area but looking at the services, major roads and those areas already developed, the property was very much at the hub of the proposed Town Centre.

8. Miss Yuen further submitted that in view of the above arguments the comparison of the subject property with comparables C2, C3 and C5 was also inappropriate. The Respondent, she said, accepts that these comparables are on the fringe of the existing Town Centre but that if it is agreed that the subject property is at the nucleus of the proposed Town Centre then the correct comparable to be used is one in the nucleus of the existing centre, which is, she submitted, at Sha Tsui Road. In this case a suitable comparable would be C4 on the Respondent's list (at Annexure 6) just off Sha Tsui Road. At Annexure 8 the adjusted price for property in this area is shown as $68,817 per square metre. Since at the date of resumption the subject property qua part of the proposed Town Centre had not reached the same stage of maturity as comparable C4, Miss Yuen agreed that a period of deferment would be appropriate but argued that using a 5-year period was unduly pessimistic. Averaging the adjusted values of C2, C3 and C5 and then deferring this resultant figure for a period of 5 years meant doubly penalising the subject property by disregarding the enhancement factor of 35% placed on the existing fringe properties by the Respondent's valuer. So far as the figures are concerned, enhancing C2, C3 and C5 by 35% produces a result that is close to the figure arrived at by deferring the figure for C4 by 5 years.

9. Miss Yuen quoted a passage from Keeble's Principles of Town Planning to the effect that the effective Town Centre is where the services are, and we shall deal with this point later in our decision.

10. Mr. McCullough submitted that the introductory remarks in Keeble's Principles quoted by Miss Yuen were not relevant. If they were, then it would be necessary to ignore comparables C2, C3 and C5 and look at C4. If the Town Centre is where the services are, then looking at the plan at Annexure 6, C4 is on the fringe. Mr McCullough further argued that no detail is shown on Plan LTW 146A, and indeed the area designated as the Town Centre is noted on the Plan as being subject to detailed local planning. He said that in Hong Kong there was no practical difference between the T/C and the C/R designations. Even if the Mass Transit Railway station were close to the subject property its effect would depend on the position of the walkways. He submitted that a deferment period of 5 years was realistic, i. e 2-1/2 years for site formation and 2 - 2-1/2 years for construction. C4 as a comparable is on the edge of a C/R zone and adjacent to industrial properties.

11. In her reply, Miss Yuen argued that Mr McCullough's arguments served only to strengthen her case. If, as he stated, C4 was a fringe property then it should be used as a comparable.

12. We must first point out that what the Tribunal is required to do is to assess the market value of the property as at the date of the resumption, assuming, as we have done, that the new plan LTW 146C is the "scheme" the effects of which have to be disregarded and that the effects of new plan LTW 146A are to be taken into account. It is to be noted, however, that plan LTW 146A is only a draft plan. We must emphasise that it is all the effects of plan LTW 146A that are to be considered, not merely those which might have a beneficial effect on the subject property.

13. Dealing with the grounds set out in the Respondent's application for a review in the order in which they appear :

14. Ground (1) has been dealt with above.

15. As for ground (2) there is no doubt in our minds that the subject property is on the fringe of the area described on plan LTW 146A as the Town Centre zone. This zone is the area described by Miss Yuen as bounded by Route TWISK on the North and East, Castle Peak Road on the South-West and an un-named road on the West. It should not be confused with the existing township of Tsuen Wan, although it is obviously intended to be an extension of that township. It is, however, as we pointed out in our original decision, separated from the existing town by Castle Peak Road, which is not only a main trunk road carrying a very heavy volume of traffic in both directions, but also in our opinion a separator of the township and the proposed extension, which separation would be increased in its effect by the construction of an overhead MTR station. On this plan there are no walkways shown, and as far as the plan itself is concerned we cannot see that they would be necessary. Certainly it is only on a later plan (Exhibit 3) that these walkways appear. In spite of this separation there appears to be no reason that we can see from the plan why the proposed Town Centre should not grow as an entity in its own right. This form of development of separate centres is by no means unknown, not only in Hong Kong but in many other townships with populations akin to that of the expanded Tsuen Wan.

16. Mr McCullough is correct in pointing out that the note on plan LTW 146A refers to the necessity for detailed planning of this area, and this is a factor which must be taken into account when assessing the total effect of the plan. Because of this there is no certainty as to where the nucleus of the zone will develop. An inspection of the existing Tsuen Wan township reveals that the hub of the town is not near the transport services or the Town Hall, and in this respect we are of the opinion that Keeble's Principles of Town Planning, which were first propounded many years ago, are not necessarily relevant in today's conditions in Hong Kong. We are convinced that the nucleus of a Town Centre is made by the actions of the people using it, and that its location can change from time to time depending on the prevalence of such facilities as popular restaurants, cinemas and other amenities which may be in favour with the populace at any one particular time. In other words the main criterion is public taste.

17. The above reasoning leads us directly to the Respondent's ground (3), and here we must refer again to the fact that what is being sought is the market value of the property as at the date of resumption.

18. In looking at the various comparables to decide which were the correct ones to use, the Tribunal considered the conditions and circumstances which would fit the case of the subject property in its relationship to the proposed Town Centre, and we reiterate our statement on page 11 of the original decision that adjustments made as a preliminary to valuation in respect of the effects of the superseded plan LTW 146A must be largely a matter of conjecture. However, the points that must be taken into account are, first, that detailed planning of the Town Centre zone had not then taken place and was in fact overtaken by later plans, secondly, that any suppositions on the question of market value must involve the "reasonable man" and not a speculator, and thirdly, that as we pointed out in the case of the Director of Lands & Survey v Cheung Yuen - keung [1978 HKLTR 45 at p.51] -

"…value is determined at any time by future expectations in the minds of investors. These expectations may ultimately prove wrong in the event, but at the date of the valuation the investor believes that his forecast is correct and this will provide the mainspring, behind the force of his demand".

19. A reasonable purchaser of the subject property would not, we are convinced, assume that the subject property is at the centre of an as yet undetailed Town Centre. His bid would be such as to ensure that in the event of detailed planning of the area being in any way unfavourable to the subject property he would not thereby be unduly prejudiced.

20. With this in mind the Tribunal considered very carefully which comparables would satisfy the conditions envisaged. Our opinion remains that the relationship of the subject property to the proposed Town Centre would be, as nearly as could possibly be foreseen, similar to the relationship of the fringe properties chosen to the existing Tsuen Wan Town Centre, with their values adjusted to (inter alia) the resumption date. It follows from this that no enhancement factor is needed but that, and here we come to the Respondent's ground (4), a further adjustment would be needed because the proposed Town Centre was not then in existence, whereas the Tsuen Wan centre was, and had been for a considerable period.

21. Whilst we do hot necessarily agree with Mr McCullough's reasoning as to why a 5-year period is correct, we cannot accept Miss Yuen's example of the mass transit railway construction period on the Tsuen Wan line as being relevant. She made no mention of the period required for the planning of this line in advance of its construction, and this, we feel, is of equal importance. We have no doubt either that planning of other recently completed projects in Tsuen Wan such as the bus terminus and the Nam Fung Centre was commenced a considerable time before any work on the projects was started. We therefore remain unconvinced that the period of deferment of 5 years is not the correct one to use. Neither do we consider that this involves any question of a double penalty being imposed on the subject property.

22. The Respondent's ground (5) merely reiterates that the subject property should be considered as a central part of the proposed Town Centre development, and this question has been dealt with above.

23. To sum up, we do not accept the Respondent's grounds (2) to (5) as valid, and we therefore confirm our previous award, subject only to the inclusion of compensation for the area of the kiosk. The award, as so amended, is as follows  :

	$
Value of income to 29.2.82 (Mr Cullen's figures)	76,221
Reversion to 64.497 sq. m of shop and 7.4 sq. m of yard (at 1/5) at $22,986	$1,516,547
	.92296	1,475,933
Defer 12-1/2 months @ 8%	1,399,712

24. The open market value of the interest we therefore take at :

$1,476,000

and our previous award is amended to this figure.

25. As for the Applicant's application for a review on the question of costs, Mr McCullogh acknowledged that since under section 12 of the Lands Tribunal Ordinance the President or Presiding Member, as the case may be, has complete discretion as to costs, he strictly speaking had no ground for his application, which he therefore formally withdrew. However, since a review was in fact taking place he asked us to consider his submissions.

26. As the question is of some general importance, we have thought it right to set out the arguments and our decision.

27. Mr McCullogh referred to the decision of the Tribunal on the question of costs in Director of Lands & Survey v. Wong Chung-don & Others 1977 HKLTR 43 at p. 62. There Mr President Power set out the Tribunal's practice in the following terms :

"It has already been made clear that the normal rule that costs follow the event applies in the Tribunal.

28. It will be seen that the owners of 6 & 8A Chung's Lane were unsuccessful in their claims in that each received compensation in the same amount as had been offered by the Crown. They must in the circumstances fail in their application for costs of their applications. The other five owners were successful in that each received compensation in an amount somewhat greater than the Crown's offer. Nonetheless the Crown suggests that the circumstances of these applications are such that no order for costs should be made in favour of the five claimants. It is argued :

(a)    that the Crown was really successful in all applications in so far as the claimants received an amount which was only marginally greater than the Crown offered.

(b)    that the Crown succeeded with regard to the major points of law in issue in so far as the Tribunal held, contrary to the contentions of the claimants, that both the Pointe Gourde principle and s.12(aa) of the Crown Lands Resumption Ordinance applied to the claims.

29. As regards (a) it is true that the claimants received only marginally more than they were originally offered by the Crown but I do not consider that they should, because of this, be deprived of their costs. Surely the Tribunal must approach this in the same way as it would a payment into Court. If the litigant receives more than is paid in even though the difference be not great he is nonetheless entitled to his costs. Further in the present case the approach, although not the figures upon which it was based, of the claimant's expert was used by the Tribunal in fixing the amount awarded.

30. It is true the Crown was successful as regards the major points of law argued however these were difficult and doubtful points upon which no decision had ever been given in Hong Kong. In all of the circumstances I do not consider that any special order should be made in favour of the Crown as regards the costs of those issues.".

31. Mr McCuIlogh made the following points, namely that-

(1)    the rule stated above is a general rule and that in the exercise of its discretion the Tribunal should look at the circumstances of the case;

(2)    the rule relates to the determination of liability;

(3)    in the present case there is no dispute as to liability, and the Tribunal's function is to assess as experts the proper amount of compensation;

(4)    this is not a case where the Respondent had much choice, because the Crown Lands Resumption Ordinance provides that a former landowner can apply to the Tribunal in the event of failure to agree compensation;

(5)    accordingly, the question arises as to what event the costs follow;

(6)    the Respondent was awarded by the Tribunal less than he had claimed, and was therefore the loser;

(7)    this was borne out by the fact that it was the Respondent, not the Applicant, who had applied for a review of the award of compensation; and

(8)    the Tribunal could not equate the Applicant's offer with a payment into court in a High Court action.

32. Miss Yuen's answer was brief, and to the effect that if the Respondent had not come to the Tribunal he would not have received the amount awarded by the Tribunal, which was higher than that offered by the Applicant. She considered that that represented success and that the general rule should apply.

33. Our conclusion, after due consideration, is that we are not convinced by Mr McCullogh's arguments for altering the existing practice. We agree with the position adopted by Mr President Power in the case cited above. In our view there is material difference between the present case and a High Court action for damages where liability is admitted, the only matter in dispute is the quantum of damages, and a sum of money is paid into court. It is true that the latter case would arise out of a tort or breach of contract, whereas our case arises out of the legitimate exercise of a statutory power. We do not think that matters. In both cases, there is an admission of liability but disagreement between the parties as to the proper amount of damages or compensation, and we see no reason why we should not look upon the Crown's offer in a Crown land resumption as being the equivalent of an amount paid into court.

34. We are aware of no special circumstances in the present case that would suggest any departure from the normal rule. On the contrary, we point out that, as in the case cited above, we did in fact adopt the Respondent's approach, namely that the effects of the 1976 plan are not to be disregarded. We shall therefore adhere to the normal rule enunciated by Mr President Power and we confirm the award of costs set out in our decision of 8th January.

35. As for the costs of this review, we direct that each party shall pay his own costs.

Coram: J. Lyons, Presiding Member, and W. Hume and D.W. Mahoney, Additional Members, in Court

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JUDGMENT

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1. In these proceedings the Secretary for the New Territories requires the Tribunal under section 6(3)(b)(ii) of the Crown Lands Resumption Ordinance to determine the amount of compensation to be paid in respect of the resumption of "1/9th part or share of and in Lot 2079 R.P in D. D 449 (i. e. Ground floor of House M, 226 Castle Peak Road, Tsuen Wan, N. T.)", a claim for $3,428,300 submitted by the Respondent under Section 6(2) of the Ordinance not having been agreed by the Applicant. In his Rule 18 document the Applicant proposed that the proper amount of compensation was $1,151,000.

2. The notice under section 3 of the Ordinance that inter alia Lot 2079 R. P. was required for a public purpose was dated 11th August 1980 and published in the Government Gazette as G.N. 2541 of 1980. It stated that the Lot would be resumed and revert to the Crown on the expiration of 6 months from the date of the affixing of the notice to the land. The notice was affixed to the land on 15th August 1980, which means that the valuation date is 16th February 1981.

3. The rejected claim that had been submitted by the Respondent and the Applicant's application to the Tribunal both indicated that the Respondent was, prior to the resumption, the owner of the ground floor of Lot 2079 R. P. The Ground floor premises consisted of two shops, a store, a kiosk or shop stall, and a yard, having the following areas as measured from the plan:-

4. The Tribunal noted, however, that Mr Sung Tze-wah, A.R.I.C.S., the expert-values called by the Applicant, did not include the kiosk or shop stall in his stated particulars of the Respondent's interest, while Mr Ian R.C. Cullen, Dip. Gen. Survey, A.R.I.C.S. the expert values called by the Respondent, stated in his description of the property that the kiosk or shop stall was located in a portion of the ground floor designated as a right of way. This uncertainty as to the exact premises to be valued was cleared up when Mr Robert McCullough, Crown Counsel, who appeared for the Applicant, tendered a copy of the Assignment dated 21st May 1968 and registered in the Tsuen Wan District Land Office by Memorial No. 81771 by which the Respondent had acquired his 1/9th share of and in Lot 2079 R. P. This revealed that the Respondent was indeed the owner of the whole of the ground floor. That being the case, Miss Maria YUEN of Counsel, who appeared for the Respondent, amended her claim to include the whole value of the kiosk or shop stall, to which Mr McCullough acquiesced. The whole of the ground floor is accordingly hereinafter referred to as the subject premises.

5. The first issue to which we have directed our attention in this matter is one raised by Mr Cullen, namely, whether or not the valuation is affected by the existence of a scheme which would involve the application of the principle generally referred to as the Pointe Gourde principle. That principle would require the Tribunal, in assessing the value of the subject premises at the valuation date, to disregard any effect of the scheme on the value of the premises.

6. The prelude to the resumption of Lot 2079 R.P. began when, on 2nd July 1976, a draft Outline Zoning Plan for Tsuen Wan (LTW/146) was published by the Government. According o Mr Cullen's Rule 18 document, which was not in this particular challenged by the Claimant, this plan designated a large land parcel situated to the north of Castle Peak Road and including Lot 2079 R. P. for future development into a Town Centre. The notes attached to the plan apparently envisaged that the area affected might include shops, offices, public facilities, continued residential land use and a possible Mass Tranisit Railway Station Castle Peak Road directly outside the subject premises. Implementation of this plan did not necessitate the resumption of Lot 2079 R. P.

7. Subsequently the Government amended the draft Outline Zoning Plan, and on 26th August 1977 published am amended plan (LTW/146A). On this amended plan the area formerly designated as a Town Centre was shown as Commercial/ Residential, but the permitted or planned uses were substantial as indicated in the notes to the 1976 Plan.  The material change as far as the Respondent was concerned, however, was that the northern extension to Tai Ho Road which in the 1976 plan change would have passed in front of the subject premises, had now been realigned so as to pass through them. It was this plan that led to the resumption of Lot 2079 R. P.

8. In these circumstances we have no doubt but that a scheme exists. The question to be resolved is whether the scheme consists of the two plans taken together as representing one evolving scheme for the redevelopment of Tsuen Wan, or is represented by the second plan only.

9. If the former view is taken, the Tribunal in valuing the subject premises should ignore the effects of both plans and value the subject premises in the circumstances in which they existed before the 1976 plan, i.e. situated in a centralised position within the then layout of Tsuen Wan and amidst low-density residential and light industrial developments.   If, however, the latter view is taken, the effects of the 1976 plan are not to be disregarded by the Tribunal, but only the effects of the 1977 Plan.

10. Since the latter view is clearly more beneficial to the Respondent, it was no surprise that Mr Cullen urged that view upon the Tribunal, though without producing any real evidence in support of his contention. As far as the Claimant's case was concerned, his witness, Mr Sung, under cross- examination stated that the resumption of Lot 2079 R. P. was for the northern extension of Tai Ho Road and for no other purpose, and in this connection it is to be noted that the heading to the Resumption Notice G.N. 2541 of 1980 reads:-

"Resumption of Post-War Multi-Storey Buildings at Tai Ho Road/Castle Peak Road for Tai Ho Road Extension Tsuen Wan, New Territories".

In his final address to the Tribunal Mr McCullough acknowledged that he could not dispute Mr Sung's evidence, but he pointed out, quite correctly, that what constitutes a scheme is a matter of fact for determination by the Tribunal, and he felt that the question was open to the Tribunal to decide as it saw fit.

11. Unfortunately neither counsel was able to refer us to any authority that might guide as on this important issue. We are ourselves aware of a Lands Tribunal case in England in which six comprehensive development areas arising out of a city centre redevelopment were held to be one single scheme (John T. Bell & Sons Ltd v. Newcastle upon Tyne City Council (1971) 11 R.V.R. 209). In that case, however, the six areas were entirely separate from, though contiguous to, each other, and appear to have been dealt with separately purely for administrative convenience, programming and financial considerations. Our case is different :  here we have the 1976 plan followed in 1977 by an amended plan that relates to substantially the same area as the 1976 plan, but with somewhat different proposals.  If we were to accept that the two plans are to be looked at together as representing one single scheme, this would involve us in accepting that immediately after the publication of the 1976 plan the value of the subject premises (since they were not to be resumed under that plan) was enhanced by virtue of the plan, but that when the 1977 plan appeared (involving the resumption of the subject premises) the value of those premises at once reverted back to what it was before the 1976 plan was published.  We would also have to accept that if, before the resumption took place under the 1977 plan, the Government had had yet another change of mind and produced a third plan, which did not involve the resumption of the subject premises, the value of those premises would once more have risen to reflect the advantages of the scheme. We cannot believe that that could be a correct view, and we therefore hold that in the circumstances of this case the scheme is represented by the 1977 plan only, which means that we do not disregard the effects of the 1976 plan on the value of the subject premises.

12. Before we turn to the actual valuations prepared by Mr Sung and Mr Cullen we wish to make these observations on their approach.

13. In the first place the Tribunal has emphasised on a number of occasions in the past and particularly in the case of CHEUNG Lai-wan and others v. Director of Public Works, 1977 HKLTLR 14 at p. 18 that it is not prepared to rely on opinion evidence which is unsupported by factual evidence where such factual evidence is available. We are of the opinion that there should be little difficulty, for instance, in arriving at an adjustment figure for time difference based on evidence if only sufficient effort is put into analysing correctly the evidence presented. Similarly there should be an abundance of evidence on the differentials to be applied for location, trading potential, saleable ratio and all the other elements which go to make up a correct analysis. Most of these should be an on-going exercise so far as professional valuers are concerned, and it should seldom be necessary for an expert witness to rely solely on his "experience" when arriving at a figure for any purpose. Experience in this context consists of choosing between two or more figures which have been arrived at by a mathematical analysis. There are of course variations on this method of procedure, such as a straightforward average if the expert considers all comparables are of equal validity, the choosing of one or more-from a selection if the expert considers that is appropriate or the weighting of one or more to arrive at a correct figure, i.e. to say "I lean 60% towards A and 40% towards B" and to calculate accordingly. What is not acceptable is for an expert to arrive by analysis of his comparables at a number of different figures and then to choose one out of his head which bears no calculable relationship to the results of his analyses. Thus in the case of Watford Construction Co. Ltd v. Secretary for the New Territories 1977 HKLTLR at pp. 263-4 the Tribunal stated:-

"Mr Wong arrived at his valuation figure of $3 per sq. ft. by taking an average of the 'Part A' comparables. This gave him a figure of $2.05 per sq. ft. He adjusted that figure and his stated reason for so doing was as follows:-

'However, having considered the location and accessibility of the subject lot in relation to the comparable lots quoted, some of which are situated much closer to Shek Wu Hui than the subject lot and hence fetched higher prices I have decided that the Crown's assessed value of $3 per sq. ft. ($32.29 per m² ) was a fair and reasonable compensation for the agricultural lot at the time of resumption.(p. 6 of EX .4)

14. The Tribunal is, frankly, at the complete loss to know what Mr Wong means by this statement.  He was according to his opening paragraphs, endeavouring to arrive at the due market value as restricted by the lease conditions at the date of reversion to the Crown'. What he has done is to take an average value from a number of dissimilar and unadjusted comparables. It is valid, in the view of this Tribunal, to take an average from the sale prices of a number of dissimilar comparables only after an analysis of each has revealed how it differs from the subject land so that these differences can then be quantified and the sale price of the comparables adjusted accordingly. After conducting the averaging exercise Mr Wong arrived at a value of $2.05, per sq. ft. He then, because some of the comparables were 'much closer to Shek Wu Hui than the subject lost and hence fetched higher prices' concluded that the Crown's value of $3 was 'fair and reasonable'. Surely if more valuable comparables were included in prices averaged then the value of the subject land must have been at some figure below $2.05 per sq. ft and not at $3 per sq. ft. The Tribunal is aware that Mr Wong's actual words in Exhibit 4 were that the Crown's offer was ' fair and reasonable' but it was apparent from his evidence overall that he was also saying that it was his expert opinion that $3 was the value for compensation of the land. This Tribunal wishes to make it clear that the duty of an expert witness is to give his honest opinion as to the value of the subject land. It is no part of his function to suggest to the Tribunal that the Crown acted fairly and reasonably at the time it made its offer. This Tribunal cannot help but have the suspicion that Mr Wong's whole 'valuation' exercise was conducted in order to justify the Crown's offer of $3 per sq. ft and not in order to assist the Tribunal to arrive at the compensation value of the land.  Indeed when Mr Wong came to give evidence he stated that Item 2 should be omitted his list of comparables. The average figure then arrived at, with Item 2 deleted, was $1.54 per sq. ft. some 51 cents lower than his original average price.  (See Exhibit 7A). However this seemed in no way to affect his contention that $3 per sq. ft was the proper figure for compensation. Indeed it seemed apparent to the Tribunal that no matter what average figure Mr Wong arrived from his comparables he would always eventually arrive at $3 per sq. ft. as the proper figure for compensation."

15. It is because of this type of illogical reasoning by expert witnesses that the Tribunal has suggested that mathematical adjustments be made to figures thrown up by comparables to arrive at the value of the property being considered.

16. The second observation we feel obliged to make is that we consider that there should be a much greater effort on the part of both sides to agree as many facts as possible before the hearing. There have been cases in which no attempt had been made to agree even simple measurements.  In the case of YEUNG Ying-kit, Bill v. Commissioner of Rating and Valuation, for instance, 1978 HKLTLR 242 at p.247 the Tribunal said:-

"During the course of the hearing it became apparent that the parties were not in agreement as to the area of the subject tenement and as to the areas of some of the comparables.  The hearing was adjourned....."

17. This type of approach is an unnecessary waste of the Tribunal's time, and it is of interest to note that the President of the United Kingdom Lands Tribunal, Sir Douglas Frank Q.C., has laid down for that Tribunal the following rules:-

18. We strongly recommend this procedure to all those concerned with applications to this Tribunal.

19. On the same point we are very much concerned with the use and presentation of comparables. In the subject case, the applicant produced six comparables and the Respondent/Claimant, eleven. None of the Applicant's comparables appeared in the Respondent's list, and vice versa, although Mr Sung agreed, on a question from the Tribunal, that he was aware of the Respondent's comparables.

20. We consider that here again there is room for agreement between the parties on a list of comparables from which each side can then choose those on which it intends to base its case. It can then consider the reasons why it rejects the others on the list so that these reasons can be explained to the Tribunal.

21. The third observation we wish to make has been made on many different occasions. An expert witness when giving evidence before the Tribunal is no longer negotiating on behalf of a client. His sole purpose at that stage of the proceedings is to assist the Tribunal in arriving at a correct decision. He should answer questions put to him to the best of his ability and should not, for example, except when being questioned on the other expert's evidence, assert in answer to questions by counsel or the Tribunal as to his own methods or procedure that the witness for the other party has taken the same or any other course of action.

22. Turning now to the Rule 18 Documents we find that as part of his analysis in dealing with pedestrian flow Mr Cullen has used what is known as a simple linear regression analysis. As this is the first time such an approach has been used in valuations before the Tribunal we have considered this method with particular care.

23. In the case of the Director of Lands Survey V. CHEUNG Yun-heung, 1978 HKLTLR 45 at pp. 48-49 the Tribunal was asked to approve the use of a method known as the "real value" approach. This method, apparently propounded by a Dr Ernest Wood was rejected by the Tribunal on the grounds set out on page 50 of the decision in that case, and it appears to us that two of the grounds for the rejection apply equally in the case of regression line analysis; i. e. that

24. It is true that in the case of Dr Wood's "real value" approach we were dealing with a new and recent suggestion which may or may not eventually be adopted, while regression line analysis is far from being a new concept and has in fact been available as a method of analysis for many years. It is significant, however, in our opinion that it has nevertheless not over those years been generally adopted as a suitable method for valuation purposes.

25. It must be emphasised that we did not reach this conclusion without a great deal of serious thought and we do not rule out its use in future provided there is acceptable evidence that the valuation  profession generally is prepared to adopt it.

26. In saying that regression line analysis is not at present a suitable line of approach we do not condemn pedestrian flow as an item to be considered. We accept that this is a factor to be taken into account, although not necessarily, in our view, a deciding factor. We are not persuaded that there is a direct relationship between pedestrian flow and value, and can envisage a number of circumstances in which an increase or decrease in pedestrian flow would have no significant effect on property values. It is axiomatic that no analysis can provide a result of greater accuracy than the data on which it is based.

27. The Tribunal inspected the subject premises and the comparables on 25 November 1981. It was obvious from this inspection that in the environment and conditions as they existed at that date none of the comparables was sufficiently similar to the subject premises in respect of either location or trading potential for a direct comparison to be made and that considerable adjustment would be necessary to arrive at a proper valuation of the subject premises.

28. It is perhaps unfortunate that in this case the "no scheme (or pre-scheme) world" is not represented by the physical conditions pertaining before implementation of the current plans was commenced. It is necessary to cast our minds back not to the low density residential and light industrial development mentioned above but to a Town Centre proposal which was wholly superseded by later schemes without so much as a brick having been laid as it were.  This is undoubtedly the most difficult of the adjustments to be made as a preliminary to valuation and, whilst the other items of adjustment are capable of quantification, this one must in the circumstances be largely a matter of conjecture. There can be little or no evidence of values and probably less evidence of the effect on values of taking these circumstances into account, even if we accept that the scheme had a significant effect on values. Be that as it may, what we now have to consider is a property on the edge of what is described as a Town Centre development separated from the remainder of the town by a main road carrying a considerable volume of traffic to and from the North Western part of the New Territories, and compare this with other property in a similar situation which has developed in Tsuen Wan.

29. Included in the scheme which we are to take into account is a proposed Mass Transit Railway Station in Castle Peak Road and, as the Railway itself is designed in this area to be overhead, it follows that the station must be overhead. If this station had been designed in a similar manner to the other overhead stations in the system already in existence it would be logical to assume that it would have staircase entrances and exits form either side of Castle Peak Road and a facility for non- passengers to cross the road. So far as can be seen, however, there would have been no need for the complicated system of overhead pedestrian ways which has been incorporated into the latest plan, nor were we made aware of any such proposals in the 1976 scheme although we are aware of the popularity of these systems in other parts. One of the effects of the station as originally proposed would thus have been to draw the two sections of the town a little closer together, and we consider that this fact alone would have affected to a degree the value of the subject premises.

30. We turn now to the question of the use of what is known as the "zoning" method of analysis of shop values. The underlying principle of this method of analysis is that it is the front portion (including the shopfront) of a shop which attracts the customers, the rear portion often being used mainly for storage purposes. The front portion is thus the most valuable. The Tribunal has already considered the question of zoning analysis in Man On Investment Co. Ltd. and others v. Director of Public Works 1977 HKLTLR 4 at p.7, where stated:-

"The Tribunal does not consider this method is easily applicable to Hong Kong conditions especially in the case of the smaller shops".

31. In that case the comparable shops and the subject property differed little in shape or size, and a direct comparison was not difficult. In the present case, however, the subject shop is triangular and has little depth compared to its frontage, whilst in all of the comparables the depth/frontage ratio was considerably greater. We are of the opinion therefore in this case that a degree of zoning of the comparables would be permissible.

32. In his submission Mr Cullen used a 6 metre depth for his zone A.  Apart from a statement by Mr Sung that zoning in this case was in his opinion unnecessary, Mr Cullen's method of analysis on this point was not seriously challenged, and we therefore accept it.

33. There appeared to have been little research carried out on the question of adjustment for time difference. Mr Cullen used an adjustment figure of 20% per annum, and although Mr Sung's rate is not quoted it appears from the adjustments he has made that he is using approximately the same figure. We therefore adopt 20% per annum as being the correct figure to use.

34. The expressions "location" and "trading potential" we take, in the circumstances of this case, to be synonymous, bearing in mind that what is required is the vacant possession value of a shop and not a shop being used for any particular purpose. We appreciate that the subject shop was occupied at the date of reversion and but for the resumption would have continued to be so occupied for a period of 12½ months, and we shall deal with that point later in this decision.

35. On the question of pedestrian flow we are of the opinion that this forms part of the location or trading potential adjustment and is reflected in the prices paid in the market. We accept Mr Cullen's statement that purchasers of this type of commercial property are aware of and take account of pedestrian movements, although no evidence was adduced to show that they analysed in the way that My Cullen has done. We are satisfied that if suitable comparables are analysed and adjusted  in respect of location/trading potential then this in itself includes pedestrian flow as an item of adjustment.

36. At this stage we turn to the evidence which was put in as exhibits in the case. One plan, that of the subject premises themselves, was incorrect, a fact which was revealed by the photographs produced by the Applicant. There can be no excuse for incorrect plans, and in this case a miscarriage of justice could have resulted had not this point been noticed by a member of the Tribunal. There was additionally a misunderstanding about the right of way shown on the plan and thus of the status of the kiosk, and neither party appeared to be aware of the wording of the assignment and in consequence of the precise interest to be valued.

37. We turn now to the valuations. The first point we wish to make is that what is to be valued is the Claimant's interest.  It may well be that by taking the vacant possession value of the premises and deducting therefrom what is described as the tenant's interest a correct figure will be arrived at, but it equally well may not. There are circumstances in which the tenant's interest plus the landlord's interest do not necessarily add up to the vacant possession value.

38. In the analysis of his comparables Mr Cullen added 20% of his derived vacant possession value for enhancement because of the scheme. He has apparently taken no account of the fact that the scheme is one which would take a considerable period to come to fruition, and the effects of the scheme would need to be discounted for that period.  We therefore use a deferment period of 5 years at 8%  interest. We are not, however, convinced that the implementation of the scheme at some future date would have any significant effect as at the resumption date on the values of the comparables all of which are on the opposite side of the main road from the subject property. We therefore reject this adjustment as being too remote and speculative in nature.

39. We have reached the conclusion that the following comparables suitably adjusted could be used in the valuation of the subject property.

40. The date shown for the Applicant's Comparable No. 5 is for the actual assignment of the property and not the date of the agreement for sale and purchase. Although otherwise suitable as a comparable, this fact would result in too low a figure and must be rejected on that account.

41. The analysis of the remaining comparables is thus as follows:-

42. We are left with 3 analysed figures of $20,787, $24,498 and $23,524 per square metre of floor space on a Zone A basis with vacant possession. The average of these three figures is $22,936.

43. The agreed areas of the subject property are 61.997 square metres of floor space and 7.4 square metres of yard. As these figures have been agreed between the parties we shall use them, although they appear not to conform to the amended plan Exhibit 9.

44. The valuation of the subject premises thus becomes:-

45. Shop A (Whole) Income to 29.2.82

46. The open market value of the interest we therefore take as $1,425,000, and we award this sum as compensation.

47. The Applicant will pay the Claimant's costs on the High Court scale mutatis mutandis with certificate for counsel.