FOOK LEE HOLDINGS LTD v. THE SECRETARY FOR TRANSPORT AND HOUSING
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LDMR 2/2016
[2021] HKLdT 67
IN THE LANDS TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS REFERENCE APPLICATION NO 2 OF 2016
___________________
BETWEEN
| FOOK LEE HOLDINGS LIMITED | Applicant | |
| and | ||
| THE SECRETARY FOR TRANSPORT AND HOUSING | Respondent |
___________________
Before: Mr Lawrence Pang, Member of the Lands Tribunal
Date of Hearing: 1 September 2021
Date of Decision: 23 September 2021
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D E C I S I O N
(Leave to Appeal)
__________________
Introduction and Background
1. On 21 May 2021, I handed down a judgment (“the Judgment”) which, inter alia, order nil compensation be paid to the applicant by the respondent for the temporary occupation of the Temporary Occupation Area (“the TOA”) beside a hotel (“the Hotel”) during the period from 26 February 2014 to 26 April 2017 (“the Relevant Period”). This order was made on the ground that during the Relevant Period, the car parking spaces on the TOA were relocated next to it to an area (“the Temporary Carpark”) comprising the northwestern edge of the “Pink Stippled Black Cross-Hatched Green Area” and the whole “Pink Hatched Green Area” within the same lot (“the Lot”) which could accommodate 29 car parking spaces (including 9 lorry car parking spaces that were not provided in the TOA) instead of the original 20[1]. Pursuant to Item 13 of Part I of the Schedule to the Roads (Works, Use and Compensation) Ordinance, Cap 370 (“the Ordinance”) under which the TOA was created, no double compensation should be allowed for any person to recover compensation (a) in respect of a loss or expense which he has not suffered or incurred; or (b) which is greater than the loss suffered or expense incurred by him.
2. This is the application’s application for leave to appeal against the Judgment on the following grounds (which were more particularly elaborated in the Affidavit of Au Hei Yee and draft Notice of Appeal):
(1) The Tribunal erred in deciding that Item 13(a) of Part I of the Schedule to the Ordinance applied because this section does not preclude a claimant from recovering compensation in respect of “a loss” which he has suffered or incurred;
(2) The Tribunal erred in finding that the relocation of the carparking spaces to the northern portion of the Lot is a relevant consideration because as a fact, the applicant suffered a loss of the temporary occupation of the TOA, nor was a similar piece of land for occupation provided to the applicant by the Government during the Relevant Period;
(3) The Tribunal erred in finding that evidence was required that the Temporary Carpark during the Relevant Period had any beneficial use to the applicant prior to the relocation of the carparking spaces from the TOA;
(4) The Tribunal erred in deciding that the Pointe Gourde principle applied because the restriction on user of the TOA was removed (or, more accurately, suspended) during the Relevant Period;
(5) Similarly, the Tribunal erred in misinterpreting and misapplying the Government Lease (“the Government Lease”) which governs the use and development of the Lot (including the Hotel, the TOA and the Temporary Carpark etc) whereby the provisions, more particularly Special Conditions 54 to 57, were not intended to apply to a hypothetical carpark at the TOA but the actual carpark that was built on partly within the “Pink Cross-hatched Green Area” and partly within the “Pink Stippled Black Cross-hatched Green Area” of the Lot and such carpark continued to exist at the Temporary Carpark, though a Non-Pink Area for the hotel purposes, during the Relevant Period with a consent of the Government;
(6) The Tribunal erred in finding that the 2 metres clearance requirement in Special Condition 38(b)(v)(I) of the Government Lease applied and had the adverse impact of limiting the number of carparking spaces that could be provided in the TOA;
(7) The Tribunal erred in making a mistake of fact that the TOA could only accommodate 20 carparking spaces since the original ancillary carpark for the Hotel occupied not just the TOA but also some portion of the Pink Stippled Black Cross-Hatched Green Area of the Lot so that there were 9 loading/unloading spaces and bays for tour buses outside the TOA;
(8) The Tribunal erred in making decisions adverse to the applicant on (a) the need for evidence showing that the land which had become the Temporary Carpark was of beneficial use prior to relocation; (b) the clearance of 2 metres referred to in Special Condition 38(b)(v)(I); and (c) carparking spaces or loading and unloading spaces referred to in Special Conditions 54(b) and 55(a), without first giving the applicant an opportunity to adduce evidence and make full submission thereon.
Ground 1- Loss or No Loss
3. Under Ground 1, the applicant asserts, in essence, that the Tribunal had committed an “error of law in finding that the applicant had suffered no loss and/or in misinterpreting the relevant legislation” because “a loss” under Item 13(a) of Part I of the Schedule to the Ordinance “can and must mean the loss of temporary occupation of the TOA”. Mr Anthony Ismail (“Mr Ismail”), leading Justin Ismail (collectively hereinafter referred to as “Messrs Ismail” where appropriate), counsel for the applicant, submitted that the consequence of creating a right of temporary occupation in favour of the Government automatically caused a loss of temporary occupation to the applicant, referring to Leverson Ltd v Secretary for Transport, LDMR 32/2000 (unreported, 19 September 2003) at §43:
“We agree with the Applicant that when an easement or permanent right is created over the land of a claimant, it is fair to compensate him for the diminution in value to his interest in the land. That is his loss and he should be compensated for that loss. If the Government were to negotiate with the claimant for a consensual granting of the easement or permanent right, the claimant, as the hypothetical willing seller and the Government, as the hypothetical willing purchaser, would have agreed that the price for the easement or permanent right should, in principle, be equivalent to the diminution in value of the claimant's interest in his land, and not merely diminution in value of the part of his land subject to the creation of the permanent right or easement. Conversely, it would not be fair to compensate the owner of the land on the basis of the curtailed approach as contended for by the Respondent. In other words, the contention advanced by the Applicant is consistent with the purpose behind the compensation provisions in the Ordinance.” (underline added)
4. Messrs Ismail argued that the Tribunal held in Leverson that the diminution in value to an applicant’s interest in the land was the applicant’s loss notwithstanding that Item 2(a)(i) of the second column of Part II of the Schedule to the Ordinance only specifies the basis on which compensation is to be assessed. It did not say that the diminution in value must be paid as a matter of compensation.
5. Messrs Ismail then referred to Article 105 of the Basic Law which provides that “the Hong Kong Special Administrative Region shall, in accordance with law, protect the right of legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property.”
6. Ms Bonnie Y.K. Cheng (“Ms Cheng”), counsel for the respondent, submitted that this Ground 1 is a non-starter and a circular argument, when one properly considers and construes the provisions in the Ordinance together in a coherent manner. Ms Cheng referred to the following sections of the Ordinance:
“26. No recovery of money except under this Ordinance
No person shall have any right against the Crown or any other person to recover any money—
(a) in respect of any use authorized under this Ordinance; or
(b) in respect of any works or anything else authorized under this Ordinance except to the extent of the rights to compensation provided for in section 27.
27. Compensation
(1) The compensation referred to in section 26 is the right to recover from the Crown for the matters set out in the first column of Part II of the Schedule a sum assessed on the basis specified opposite thereto in the second column thereof and with regard to the provisions of Part I of the Schedule, subject to—
(a) the claim being served on the Secretary within the appropriate period specified in the fourth column of Part II of the Schedule; and
(b) the other provisions of this Ordinance.
(2) Every person who is described in the third column of Part II of the Schedule shall have the right to recover compensation for the matters set out opposite thereto in the first column to the extent suffered or incurred by him as assessed under this Ordinance.
(3) The rights to compensation mentioned in the Schedule shall exist in addition to any benefit accruing to a claimant as a result of the implementation of any subsisting conditions imposed by the Governor in Council under section 11(2).” (underline added)
7. In respect of the latter, ie section 11(2) of the Ordinance provides that the Chief Executive in Council may authorize the works and the use, with or without modification and subject to such conditions, as to the amelioration or avoidance of the effects of the works and the use or otherwise.
8. Then Ms Cheng referred to Item 2(a) of Part II of the Schedule to the Ordinance as follows:
Matters for which
compensation may
be claimedBasis on which compensation is
to be assessedPersons who may claim compensation for
their respective lossesPeriod within which
the claim must be served on the Secretary2. (a) The creation of an easement or other permanent right or a right of temporary occupation under section 15. (i) In the case of an easement or other permanent right, the amount by which the open market value of the claimant’s interest in the land is diminished.
(ii) In the case of the creation of a right of temporary occupation, the amount of an open market rent for claimant’s interest in the land occupied during the period of the easement.Any person owning a compensatable interest in the land. Before the expiration of 1 year from the date on which the easement or right is created.
(underline added)
9. Item 13 of Part I of the Schedule to the Ordinance further provides that:
“Nothing in this Ordinance shall enable any person to recover compensation—
(a) in respect of a loss or expense which he has not suffered or incurred; or
(b) which is greater than the loss suffered or expense incurred by him:
Provided that in assessing compensation under this Ordinance, no account shall be taken of any amount recovered by the claimant under a policy of insurance.” (underline added)
10. By reference to the above, Ms Cheng submitted that the creation of the TOA is only a “matter for which compensation may be claimed”. If no TOA was created, the applicant could not even begin to lodge a claim pursuant to the Ordinance in the first place. To construe that “a loss” under Item 13 of Part I of the Schedule to the Ordinance as alleged would simply render Item 13 superfluous and otiose.
11. Indeed, in the Judgment at §85, I opined, on the basis of the analysis of the comparables submitted by the parties, the total loss of rent from 26 February 2014 to 26 April 2017 on the basis of fee-paying car park was $4,935,840. However, this was not the end of the matter. As specified in Item 1 of Part I of the Schedule to the Ordinance. the provisions in this Part (which includes Item 13) shall, where applicable, have effect for the purpose of assessing compensation under Part II of this Schedule. In the present case, given that the car parking spaces were all relocated sideway within the same Lot during the Relevant Period, the applicant suffered no loss of the use of the car parking spaces[2]. Thus, to prevent a person from recovering compensation under Item 13 of Part I of the Schedule to the Ordinance for a loss which he has not suffered, I concluded therefore nil compensation shall be paid.
12. Ms Cheng submitted, and I agree, that this is consistent with the judgment in Leverson, supra, where the “loss” on the facts of that case was also said to be “the diminution in value to his interest in the land” as under the second column of Part II rather than “the creation of an easement or other permanent right, ie the first column of Part II.
13. During the hearing on 1 September 2021, Mr Ismail placed particular emphasis on “the right to recover …” under sections 26 and 27(1) of the Ordinance in support of his argument that the consequence of creating a right of temporary occupation in favour of the Government automatically caused a loss of temporary occupation to the applicant. Mr Ismail even suggested that sections 26 and 27(1) of the Ordinance are even in conflict with Item 13 of Part I of the Schedule to the Ordinance.
14. With respect, while it is trite that causation is relevant to the question of the recoverability of damages (or compensation in the present case), the principle is that the defendant is only liable to pay damages (or compensation) for the loss and damage which his wrongful act has caused. The amount of compensation to which a person is entitled must be affected by whether he would have suffered the loss. By analogy, it simply cannot logically be suggested that the “loss” under Item 13 in the present case would somehow be simply “the creation of … a right of temporary occupation’.
15. Further, in Land Compensation & Valuation Law in Hong Kong, 4th ed, 2017, §20.48 at p 623, it was expressly said that:
“(t)he assessment of compensation includes the valuation principles set out in Part I of the Schedule … Compensation may be claimed … on the basis specified in the second column of Part II, after having regard to the valuation principles contained in Part I.” (underline added)
16. It is unhelpful for the applicant to simply emphasise the “right” to compensation under the Ordinance, or to assert that “the statutory scheme of compensation is not concerned with the claimant’s use of its land but his right of occupation and the temporary loss or deprivation of that right” when section 27(2) of the Ordinance only prescribes a right to compensation “to the extent suffered or incurred by him as assessed under [the] Ordinance”. The applicant’s reference to Article 105 of the Basic Law does not advance its argument when there is no loss suffered and there could be no compensation.
17. For instance, in Supreme Honour Development Limited v The Director of Lands, LDMT 1/2001 (unreported, dated 10 March 2008), the Secretary for Planning, Environment and Lands authorized under Section 10(1)(a) of the Mass Transit Railway (Land Resumption and Related Provisions) Ordinance, Cap. 276 the closure or substantial alteration of Connaught Road Central or part thereof from 17 December 1994 so as to facilitate the airport railway construction works. The claimant in the that case filed an application to the Tribunal for determination of compensation caused by the above said roadwork in the sum of $14,702,728.30 for various floors/unit of Fung House located at Nos. 19 – 20 Connaught Road Central, Central, Hong Kong. In the least, the Tribunal found the claimant in that case had suffered no loss and therefore no compensation in respect of the ground floor retail space[3], 1/F[4], 8/F, 9/F, 16/F, 17/F, 18/F and 20/F.
18. Then in Wo Kee Trading Company Limited v The Secretary for Transport, LDMR 28/2000 (unreported, dated 13th June 2002), Wo Kee Trading Company Limited who was the tenant of a site resumed by the Government pursuant to section 34 of the Railways Ordinance, Cap 519 was entitled to claim compensation from the Government. The following table shows the result of the claim as awarded by the Tribunal:
Partial loss of goodwill Nil Loss due to termination of contracts with suppliers, and supplier's extra storage charges and interests Nil Loss of fixtures and facilities and cost of reinstatement $60,273 Loss on forced sale of stock Nil Severance payments to employees Nil
19. Similar occurrence or result was found in 梁續有(以天祥參茸藥行的名營業) 對 地政總署署長, LDLR 4/2006 (unreported, dated 22 February 2008) where no compensation was awarded by the Tribunal in respect of the then claimant for loss of goodwill, forced sale of stock and rental of storeroom.
20. In Yip Kui trading as Tai Wo Trading Company v The Secretary for Transport, LDMR 52/2000 (unreported, dated 18 September 2002), the Tribunal made the following award of compensation under the Railways Ordinance, Cap 519:
Profit Rent Nil Temporary Loss of Profit Nil Loss of Goodwill Nil Agency Fee, Stamp Duty & Removal Cost $87,557 Severance Payment Nil Loss of Equipment Nil Loss of Fixtures and Fittings $23,500 Loss of Stock Nil
21. When the case reached the Court of Appeal, CACV 379/2002 (unreported, dated 13 June 2003), Hon Rogers VP (as he then was) stated at §21 that:
“I have already emphasised the point that compensation can only be awarded in respect of loss or damage which has been suffered or expenses which have been incurred.”
22. All in all, there is no ambiguity or confliction between sections 26 and 27(1) and Item 13 of Part I of the Schedule to the Ordinance. The Ordinance only prescribes a right to compensation “to the extent suffered or incurred by him as assessed under [the] Ordinance”. Section 26 further prescribes that “no person shall have any right against the Government or any other person to recover any money … except to the extent of the rights to compensation provided for in section 27”.
23. In the present case, I held that the applicant did not suffer “a loss” because the use of the ancillary carparking spaces for the Hotel for which the TOA was restricted under the Government Lease was “relocated sideways within the Lot”. Mr Ismail argued that although the carpark was relocated and used, the TOA itself was not. The TOA was occupied by the Government (instead of the applicant) as a matter of fact.
24. Firstly, there are numerous examples where land was compulsorily purchased but nil compensation was awarded:
- Cohen v Knowsley Metropolitan Borough Council [2004] EWLands ACQ_123_2001 (27 August 2004) where a vacant, derelict and seriously vandalised block of flats which was of unattractive appearance was acquired;
- Borough of Telford & Wrekin, Re Notice of Reference [2009] UKUT 160 (LC) (21 August 2009) where a steeply sloping area of untended former scrubland situated between a public highway and the south bank of a river was acquired;
- Obsidian FG Ltd & Others v Secretary of State for Transport [2010] UKUT 299 (LC) (20 August 2010) where tubes of subsoil were acquired for Channel Tunnel Rail Link.
25. Indeed, in Director of Buildings and Lands v Shun Fung Ironworks Limited [1995] 2 WLR 404, [1995] 2 AC 111, the Privy Council laid down three conditions to qualify for compensation:
(a) Being causally connected,
(b) Not too remote;
(c) Not a loss which a reasonable person would have avoided.
26. In the present case, obviously “the loss” of the use of the ancillary carparking spaces for the Hotel for which the TOA was restricted under the Government Lease was avoided by the relocation. A letter dated 15 January 2014 from the Highways Department (which was shown at Trial Bundle B/492 of the trial) is reproduced below:
“ Proposed Temporary Car Park for Harbour Grand Hong Kong
I refer to the meeting among representatives of your company, Harbour Grand Hong Kong, AECOM, Chun Wo-CRGL-MBEC Joint Venture and this office on 3 January 2014.
As requested, I attach a drawing no CWIECL/027-009[5] showing the proposed layout and entrance of the temporary car park for Harbour Grand Hong Kong for your reference. Please be advised that DLO/HKE[6] and TD[7] have expressed no adverse comments on the proposed details.
Yours faithfully,”
27. It is manifested that the applicant made a request to the Government to permit the use of the Temporary Carpark so as to avoid the “loss”. As stated at §12 of the Judgment, the Government had already undertaken the reinstatement works arising out of or in connection with the creation of the TOA. While this Temporary Carpark was restricted under the Government Lease for non-industrial (excluding private residential, office, hotel, petrol filling station, and godown) purposes in relation to cultural, leisure and tourist-related activities[8], it appears from the “Site Plan” approved by the Building Authority on 19 September 2008 (which was Appendix IV to the applicant’s expert report)[9] and the photographs taken on 12 February 2014 and 19 February 2014[10] that there being of no beneficial use. Indeed, this particular piece of land was admitted by the applicant “to be resumed by Government after reversion of the TOA” to the applicant[11].
28. More particularly, as stated clearly on the “Site Plan” approved by the Building Authority on 19 September 2008, this piece of land on which the Temporary Carpark was situated was designated for “future cultural, leisure and tourist-related activities complex (Max. 16.8mPD) as in approved Master Layout Plan under Town Planning Ordinance (for indication purpose only to be constructed in the future after Government confirmation on the [Island Eastern Corridor] Extension” and “future waterfront promenade as in approved Master Layout Plan under Town Planning Ordinance (for indication purpose only to be constructed in the future after Government confirmation on the [Island Eastern Corridor] Extension” respectively. (underline added)
29. In respect of the latter, this has been reserved by Special Condition No (47)(a) of the Government Lease for the construction of a promenade of a minimum uniform width of 10 metres:
“(47)(a) The lessees shall within 36 calendar months (or such other extended periods as may be approved by the Director) after 120 calendar months from the date of [14 June 2005] or immediately after the date of a letter from the Director indicating that the part or parts of the Future Extension of the Island Eastern Corridor to be erected on the Second Reserved Areas[12] as stipulated in Condition No (38)(c) has been completed, whichever is the earlier at their own expenses and in all respects to the satisfaction of the Director, in such manner, with such materials … and to such design, standards, and specifications as the Director shall approve, form, construct, provide, landscape, develop and complete a promenade of a minimum uniform width of 10 metres along the entire length of the seawall between the points A and B … " (which comprised the area of the Temporary Carpark)
30. As stated at §104 of the Judgment, “there had been no evidence before me that prior to the creation of a right of temporary occupation and then the relocation of the car parking spaces to the Temporary Carpark, that land which had become the Temporary Carpark during the Relevant Period had any beneficial use to the applicant”.
31. For the above reasons, Ground 1 must fail.
Grounds 2 and 3 - Relocation
32. Under Grounds 2 and 3, the applicant asserts that the Tribunal erred in law in finding that “the relocation of the carparking spaces to the northern portion of the Lot is a relevant consideration”, and that ‘evidence was required that the land within the Lot which had become the ancillary carpark of the Hotel … during the Relevant Period … had any beneficial use to the Applicant prior to the relocation”.
33. Ms Cheng submitted, and I agree, that as Grounds 2 and 3 are premised on the applicant’s assertion that the “loss” under Item 13 of Part I of the Schedule to the Ordinance means the “loss of temporary occupation of the TOA” and “are to be considered together [with Ground 1], they must fall together with Ground 1.
34. To the extent that the applicant complained that “(n)either party adduced any evidence of the beneficial use of that piece of land prior to the relocation” and “(n)or did the Tribunal inform the parties that it was or may be relevant and invite the parties to adduce such evidence or make submissions”, I had invited the parties after hearing the evidence of the experts on valuation but well before the closing submissions of the parties to consider the application of Item 13 of Part I of the Schedule to the Ordinance in the present case because of the relocation. As Ms Cheng rightly pointed out, it was the duty or burden of the applicant to adduce evidence, if any, to justify its claim. In Lancaster City Council v Thomas Newall Limited [2013] JPL 1531, [2013] EWCA Civ 802 at §31, the English Court of Appeal even held that “the tribunal's holding that [the claimant] did in fact suffer loss was an error of law, because there was no evidence justifying it”.
35. More recently, in Sam Woo Marine Works Ltd v The Incorporated Owners of Po Hang Building, LDBM 252/2014 & LDBM 255/2018 (unreported, dated 27 May 2021), the Tribunal made the following observations at §§61 and 63-64 which should provide a complete answer to the applicant’s complaint:
“61. Sam Woo contends that it is wrong for me to proceed to analyze the figures extracted from the audited accounts, which are incomplete and unreliable, without inviting the parties to make submissions thereof, and that I erred in forming the view that Sam Woo was the one that caused or contributed to the perceived unfairness which view was without evidential basis.
…
63. Should Sam Woo consider the figures in the existing evidence incomplete and unreliable, it is always up to them to make submissions accordingly and to adduce whichever evidence they consider complete and reliable for the court’s consideration.
64. In my view, it is within my judicial function to analyze the evidence adduced by the parties in order to assess whether certain allegation is substantiated by evidence or not. Ms Ng’s suggestion that a judge is obliged to have in readiness at trial all intended analyses of evidence and judicial reasoning and to have them rehearsed or revealed to the parties in advance at trial for their comments or else such analyses or reasoning could not be included in his judgment is unorthodox and unheard of."
36. Indeed, a claimant seeking compensation must be grounded in the evidence before the court. The court must, when quantifying loss, be astute to identify those points where the evidence falls short, and where the court becomes reliant upon estimates or assumption. Such estimates or assumptions will need to take account of the fact that the probabilities in the counter-factual world may not mean that these estimates or assumptions will inevitably hold good.[13]
37. And to the contrary of Mr Ismail’s argument, the respondent did provide (or consent) the Temporary Carpark for the applicant’s relocation during the Relevant Period.
Grounds 4 and 5 – the Pointe Gourde Principle
38. Under Grounds 4 and 5, the applicant alleged that the Tribunal erred in “deciding that the Pointe Gourde principle applied so that the user restriction was not removed” and “misinterpreting and misapplying the Government Lease if it should be taken into account in assessing the open the market rent”.
39. Firstly, Mr Ismail drew my attention to that in the present case, it was the “open market rent” pursuant to Item 2(a) of Part II of the Schedule to the Ordinance instead of open market value. However, this distinction is neither here or there. I had set out the definition of “market rent” in HKIS Valuation Standards 2017 at §17 of the Judgment as follows:
“The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”
40. By analogy, this definition has little differences from the definition of “market value” in HKIS Valuation Standards 2017[14]:
“the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”
41. Mr Ismail further referred to Tang Moon Kau v Secretary for Environment, Transport and Works [2008] 1 HKLRD 10 at §§11-15 where the Tribunal held that the common law principle laid down in Pointe Gourde and Melwood as enacted in section 12(aa) of the Lands Resumption Ordinance concerned land resumption cases and was not applicable to temporary occupation cases. With respect, Mr Ismail had taken the ruling of the Tribunal out of the context.
42. In this case, Tang Moon Kau, ie the claimant, claimed for the open market rent for the portion of his agricultural land (“the Land”) that was occupied by the Government pursuant to the Railway Ordinance which has a mirror provision for compensation like the Ordinance. The claimant argued that his land which was used as a fishpond should be put to its “best possible use”, i.e. open storage under the Melhado principle.
43. There were two main issues in that case, namely whether in assessing the open market rent of the Land, the Tribunal was permitted by law to consider “open storage” as the use of the Land, and if so, whether the Land had in fact the necessary physical attributes, such as physical access, making it suitable for such use[15]. Whereas the land was zoned “Unspecified” in the relevant Development Permission Area Plan, then “Undetermined” or “OU” (Other specified uses) in the subsequent Outline Zoning Plans, the claimant argued that the Land had been “blighted” by the respective zoning and therefore invoked the Pointe Gourde principle so that this blighting effect should be ignored. The respondent, on the other hand, argued that the Land should be valued on the basis of “fishpond” and there was no common law principle in temporary occupation cases that compensation would be payable for “blight” caused by town planning. The Tribunal then was led to the point that section 12(aa) was to an extent enactment of the Pointe Gourde principle and in that regard, section 12(aa) was not applicable for temporary occupation cases and so was the Pointe Gourde principle.[16]
44. In this Tang Moon Kau case, the Tribunal also referred to the common law provision in Chapter One of the report of a Special Committee on Compensation and Betterment (“the Report”) as follows:
“There is no common law right to compensation or obligation to pay betterment. Where a statute authorizes the compulsory acquisition of private land, it may provide for payment of compensation. In modern times legislation has usually included an obligation to pay compensation to the private owner. Where statutory law on the right to compensation is unclear, the common law provides certain principles to assist interpretation. First, where an Act provides for taking of private land, the common law presumes that compensation is payable, unless there is a clear contrary intention. In these cases title to private land is compulsorily conveyed from the owner to the State. Secondly, where statutory law merely regulates the use of private land, the opposing common law principle is that compensation is not payable, unless there is clear statutory provision. Regulatory powers may restrict or prohibit development but do not deprive the private owner of his title to the land. These contrasting approaches are summed up in the phrase that if you take you must compensate; if you regulate you need not.” (emphasis added)
45. The Tribunal therefore agreed with the respondent that the adverse zoning was an enactment to impose planning control rather than to “blight” the Land. Based on the common law as summarized in the Report, no compensation should be payable in respect of the alleged “blight” caused by such town planning.[17]
46. It is particularly important to note that the Tribunal, in the following paragraph of Tang Moon Kau, ie §20 of the judgment, stated that:
“Thus, even if the Pointe Gourde principle applies, the 1991 DPA should not be ignored. The 1994 OZP may have to be ignored because the change brought by it may be due to the intended construction of the West Rail.”
47. Returning to the present case, the Government Lease is to regulate the use of, inter alia, the TOA. It is unreasonable to expect that when the Government created a temporary occupation of the TOA, the restriction or regulation in the Government Lease should be ignored or as suggested by the applicant disappeared. The physical attribute of the TOA under the Government Lease, immediately prior to the TOA, was an ancillary carpark for the Hotel comprising 20 carparking spaces.
48. In the latter regard, it is clear from Special Conditions 54 and 57 together that the lessee is not entitled to create as many carparking spaces on the Lot as it desires. The number of such spaces is subject to the specific stipulation in Special Condition 57 as pointed out in the Judgment at §78, such that the number of carparking spaces specified in Special Condition 54(a) cannot be increased by more than 5% or 50 in number (whichever is the less) of the number calculated in accordance with Special Condition 54(a).
49. In Transport for London (London Underground Ltd v Spirerose Ltd [2009] UKHL 44, [2009] 1WLR 1797, [2009] RVR 225, [2009] 4 All ER 810, Lord Neuberger made the following remarks on the application of the Pointe Gourde principle:
55. “The only way the Pointe Gourde principle could be relied on, as a matter of logic, appears to me to be on the basis that, if the scheme in question had not been in existence, then at some time before the valuation date, the respondent land owner would have applied for, and, on the balance of probabilities, obtained permission for mixed development. … the Pointe Gourde principle … is concerned with the effect of the scheme on the value of the owner’s interest, not with the characterisation of that interest - see the remarks of Lord Cross of Chelsea in Rugby Joint Water Board v Shaw-Fox [1973] AC 202, 253, approving a dictum of Russell LJ in Minister of Transport v Pettitt (1968) 67 LGR 449, 462. ...
56. Quite apart from this, I do not consider that it is right to invoke the Pointe Gourde principle, or any other principle developed by the courts, for the purpose of adding a wholly new assumption to the statutory assumptions which have been laid down by the legislature - see per Lord Pearson in Shaw-Fox [1973] AC 202, 214-5. All the more so if that assumption is effectively inconsistent with one or more of the express statutory assumptions. I do not thereby intend to suggest the Pointe Gourde principle has no part to play in this field, but its role is relatively limited. I agree with Lord Collins, when he says in para 128 that it is “a principle of statutory interpretation, mainly designed and used to explain and amplify the expression ‘value'". As Lord Walker implies in para 36, the principle is a factor to be borne in mind when construing the compensation legislation with a view to achieving, so far as possible, a result consistent with its aim of fair compensation. That seems to me consistent with principle and with most of the authorities, including all the decisions of this House and of the Privy Council, to which your Lordships were taken.” (underline added)
50. Recently, Golf Café Bars Limited v West Yorkshire Combined Authority & Another [2021] UKUT 0016 (LC), which was also referred to by me at §60 of the Judgment, was a claim for compensation for the temporary acquisition of parts of land within a service yard next to a golf café bar on the ground floor of a building for the construction of a railway station. For some years, the claimant let carparking spaces in the service yard to residents of the building which was however in breach of its leasehold user covenant. The English Upper Tribunal (Lands Chamber) had the following remark at §25 of its judgment:
“The basis of compensation for temporary possession … is for any loss or damage. It is not clear to me what loss or damage the claimant suffered. …”
51. And unlike this Golf Café Bars case, the carparking spaces of the TOA was relocated in compliance of the spirit of section 11(2)(b) of the Ordinance so that “the effects of the works and the use or otherwise” was ameliorated or avoided.
52. I agree with Ms Cheng’s submission that insofar as the applicant continues to maintain, in essence, that Special Conditions 54 to 59 only lay down the minimum requirements which, once met, the Lot owner is entitled to use the Lot for extra carparking lots, free from any of the restrictions prescribed, such contention is obviously flawed. Obviously these provisions have the clear and objective intention that any carparking spaces on the Lot should serve the Hotel. If they can be just ignored or disregarded when the Government allowed to have the carparking spaces relocated and the claimant can then do whatever as it likes on the TOA, for the purpose of compensation, it is a result inconsistent with fair compensation.
53. In the premises, Grounds 4 and 5 have no merit and must also fail.
Grounds 6 and 7- Protection of Columns of Island Eastern Corrider
54. Under Ground 6, the applicant complains that the Tribunal “erred in law in finding that the 2 metres clearance requirement in SC(38)(b)(v)(I) applied and had the adverse impact of limiting the number of carparking spaces that could be provided in the TOA because the 2 metres clearance requirement was to be made available for inspection and maintenance works at all times “Except with the prior written approval of the Director”, and there was no evidence that the Director had not or would not have given such kind of prior written approval”.
55. I agree again with Ms Cheng’s submission that this complaint is ill-found. The short point is that there was no evidence before the Tribunal that the Director had or would have given any written approval to the applicant. Citing again the remark by Lord Neuberger in the Spirerose case in §49 above, “if the scheme in question had not been in existence, then at some time before the valuation date, the respondent land owner would have applied for, and, on the balance of probabilities, obtained (such approval)”? It is groundless for the applicant to suggest that the Tribunal should have assumed that the Director had or would have done so, notwithstanding the absence of evidence. There is simply “no evidence justifying it”. See the citation of Lancaster City Council v Thomas Newall Limited [2013] in §34 above.
56. Under Ground 7, the applicant alleges that the Tribunal erred in law “in deciding that SC(23) and the 2 metres clearance requirement in SC(38)(b)(v)(I) had the adverse impact on limiting the number of carparking spaces that could be provided in the TOA because it was based on the mistaken fact that there was a difference between the number of carparking spaces that could be accommodated by the Temporary Carpark and that by the original ancillary carpark of the Applicant’s hotel” and “misunderstanding or mistaking the evidence given by Mr Ng Yiu Wah, the Applicant’s expert”.
57. In the latter regard, Mr Ismail referred to the cross-examination of Mr Ng by Ms Cheng on 2 February 2021 (as contained at pp69-70 of the transcript) as follows:
Q. But your high-efficiency car park again goes back to your assumption that the car-parking space will be – can deviate from the lease condition. A. Yes, you are correct. Q. Okay. Now, can – you also took the view, Mr Ng, that no adjustments need to be made for the presence of the Island Eastern Corridor supporting columns. A. Right. Q. Remember, you said that in your report? And I think, in your report, you said that, because they are very small in size, about 4 square metres each, and you said they occupy about only one per cent of the affected portion of the lot, so you say that the pillars will have minimal, if no, impact on the design of the proposed vehicle car park here. A. Yes. Q. That’s your evidence? I’m just wondering, Mr Ng, has the four square metres you ascribe to the size of the supporting columns, have they taken into account the barriers – the protective barriers around the supporting columns or it’s just the supporting columns itself? A. I don’t know what barriers that you mention because it’s just, well, during the day of valuation, it’s just the bare pillar. Q. Sorry? A. So what – it is just the bare pillar existing on the site during the time of valuation so I don’t know what barriers that you are referring to. Q. Now, the reason I’m asking this is because, in the lease, if we go back to A1, 147, … A. “147”? Q. 147. If we look at the Roman number v – or – yes, Roman number v here, and what we see here is that, a requirement which says, “the lessee shall ensure that adequate measures shall be taken at their own expense and in all respects to the satisfaction of the Director to protect that part of the Island Eastern Corridor passing over the area or any amendment or substitutions thereof from time to time in relation to the use of untensioned, corrugated beam barriers for the protection of columns shall be followed except with the prior written” – “with the prior written approval of the Director.” So I see that there is a requirement for the owner to maintain a barrier protection for the protection of the columns and I also see from the picture you provided at – in the same bundle, page 26, which I assume would be taken around the time you valued the site,… A. Sorry, which page? Q. Page 26. A. “26”. Q. 26. That there appears to be some planters surrounding the column. So, in view of the requirement for there to be a protective barrier, as we’ve seen from the lease, and the presence of these planters in the photos that you’ve taken, would you agree with me that, when we look at the size of the column, we would have to take into account the presence of some barrier in whatever form? A. Yes. First of all, the picture shows that those are actually – those features surrounding the pillars are actually planters so I would think those are the planters provided by the hotel itself. So, if you are talking about the protection to be given under the special condition, then it will depend on – well, because we have no sight, during our inspection, of any of such kind of the requirement that’s stated in the condition. So we have no idea whether it would cause much impact on the circulation. Q. But you would agree with me that, for the owner to comply with the lease, obviously, he has to make some space for the barrier? A. But, even if this is so, I would think the size would be very minimal. The column of the size is just 4 metres squared so how big would it be for the barrier? So I would think that’s again, very small area. Q. But, just to make sure that we’re on the same page. When you design the hypothetical layout, you took no account of the protective barriers – the size of the protective barrier” A. Yes, I would say so because I would think that the area occupied by that barrier, if there is so, would not be great.
58. With respect to Mr Ismail, from the last two questions and answers above, it is clear that Mr Ng admitted that, in designing the hypothetical layout[18], he took no account of the protective barriers as required under Special Condition (38)(b)(v) of the Government Lease. Mr Ng simply thought the planters around the columns were provided by the Hotel instead of complying with the Special Condition (38)(b)(v) of the Government Lease. He even thought that the space for the protective barriers would be very small or minimal without giving any hint on the allowance for the 2 metres clearance from soffit and around columns. I therefore remarked in the Judgment that “Mr Ng’s defence is unbelievable by looking at the congested layout proposed by him”. As stated at §31 of the Judgment, the Tribunal is not bound to accept the submission of any party or Mr Ng and may rely upon its own experience in determining the dispute on valuation.
59. During the hearing on 1 September 2021, Mr Ismail pointed out that the Temporary Carpark had, prior to the relocation of the carparking spaces in the TOA, provided for 9 loading/unloading spaces and bays for tour buses. But this does not disturb the fact that the TOA could only accommodate 20 carparking spaces prior to the relocation. There has been no mistake on fact.
60. According to the layout as shown on the drawing no CWBIECL/027-009, this Temporary Carpark could accommodate 29 car parking spaces (including 9 lorry car parking spaces that were not provided in the TOA) instead of the original 20[19]. One may only say that the layout of these 9 loading/unloading spaces and bays for tour buses had been re-arranged.
61. Thus, Grounds 6 and 7 also fail notwithstanding that Grounds 4 and 5 have no merit and failed.
Ground 8 – Natural Justice
62. Under Ground 8, the applicant alleges that the Tribunal was in “breach of the rules of natural justice” and “erred in law in making decision adverse to the Applicant on (1) the need for evidence showing that the land which had become the Temporary Carpark was of beneficial use prior to relocation; (2) the clearance of 2 metres referred to in SC(38)(b)(v)(I); and (3) carparking spaces or loading and unloading spaces referred to in SC(54)(b) and 55(a), without first giving the Applicant an opportunity to adduce evidence and make full submission thereon”.
63. As stated in §34 above, I had invited the parties after hearing the evidence of the experts on valuation but well before the closing submissions of the parties to consider the application of Item 13 of Part I of the Schedule to the Ordinance in the present case because of the relocation. It is for a claimant before the Tribunal to prove the loss claimed. It is manifest that when Mr Ng was asked if “no adjustments need to be made for the presence of the Island Eastern Corridor supporting columns”, Mr Ng’s answer was simply “Right”. See the transcript reproduced at §57 above. And similarly, when Mr Ng was asked if his high-efficiency hypothetical car park layout could deviate from the lease conditions, his answer was “Yes, you are correct”. What else evidence that the applicant is going to adduce?
64. At this juncture, I would refer to the following observations by Lord Browne-Wilkinson of the House of Lords in Target Holdings Ltd v Redferns [1996] 1 AC 421 at p. 432E to H:
“At common law there are two principles fundamental to the award of damages. First, that the defendant's wrongful act must cause the damage complained of[20]. Second, that the plaintiff is to be put 'in the same position as he would have been in if he had not sustained the wrong for which he is now getting compensation or reparation:' Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39 per Lord Blackburn. ... those two principles are applicable as much in equity as at common law. Under both systems liability is fault-based: the defendant is only liable for the consequences of the legal wrong he has done to the plaintiff and to make good the damage caused by such wrong. He is not responsible for damage not caused by his wrong or to pay by way of compensation more than the loss suffered from such wrong. The detailed rules of equity as to causation and the quantification of loss differ, at least ostensibly, from those applicable at common law. But the principles underlying both systems are the same." (underline added)
65. The applicant was deprived of its occupation of the TOA in the public interest. It was entitled to compensation for the open market rent during the Relevant Period in the "no scheme" world but without double compensation. After a lengthy hearing, the Tribunal determined, on the basis of evidence of the valuation experts on both side. What the applicant now is, in reality, seeking in its application to admit new evidence, was a "second bite at the cherry": an opportunity to put forward new evidence.
66. But insofar as the applicant implicitly accepts that this is not an appropriate ground of appeal, such concession must be correct.
Applicable Legal Principles for Appeal
67. Under Section 11(1)(a) of the Lands Tribunal Ordinance (“LTO”), a decision of the Tribunal in determining the amount of compensation payable by the Government (acting on whose behalf, the Secretary for Transport and Housing) shall be the final determination thereof. However, under section 11(2) of the LTO, any party to the proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law, subject to section 11AA.
68. Section 11AA(1) of the LTO requires leave to be granted by the Tribunal or the Court of Appeal before an appeal under section 11(2) can be made.
69. Section 11AA(6) provides also that leave to appeal shall not be granted unless the Tribunal is satisfied that:
(a) the appeal has a reasonable prospect of success; or
(b) there is some other reason in the interests of justice why the appeal should be heard.
70. Such criterion of “reasonable prospect of success” was described in SMSE v KL [2009] 4 HKLRD 125 at para 17 by Le Pichon JA (as she then was) as involving the notion that the prospect of succeeding must be “reasonable” and therefore more than “fanciful” without having to be “probable”.
71. At §85 of the Judgment, the Tribunal determined the open market rent of the TOA from 26 February 2014 to 26 April 2017 on the basis on fee-paying car park at $4,935,840. I concluded at §97 that the applicant as the hotel operator would bid for the TOA at least equal to the open market rent payable for a public fee-paying carpark. The applicant had no challenge on that.
72. However, this was not the end of the matter. At the request of the applicant, the Government accommodated the provision of the carparking spaces next to it though within the same Lot where prior to the creation of the TOA the applicant derived no beneficial use. During the hearing on 1 September 2021, Mr Ismail pointed out that this piece of land had, prior to the relocation of the carparking spaces in the TOA, provided for 9 loading/unloading spaces and bays for tour buses. But this does not disturb the fact that the TOA could only accommodate 20 carparking spaces prior to the relocation. According to the layout as shown on the drawing no CWBIECL/027-009, this Temporary Carpark could accommodate 29 car parking spaces (including 9 lorry car parking spaces that were not provided in the TOA) instead of the original 20[21]. One may only say that the layout of these 9 loading/unloading spaces and bays for tour buses had been re-arranged.
73. Apart from this, the applicant could not provide any evidence of beneficial use of that piece of land which had become the Temporary Carpark despite the Tribunal had invited the parties after hearing the evidence of the experts on valuation but well before the closing submissions of the parties to consider the application of Item 13 of Part I of the Schedule to the Ordinance in the present case because of the relocation.
74. Insofar as the Appellant's failure to advance the “new evidence” at that stage due to some error or omission on the part of its professional advisors, the Tribunal must, when quantifying loss, be astute to identify those points where the evidence falls short. In Thomas Newall Limited supra at §31, the English Court of Appeal had the following ruling:
“TNL's problem is that there was, however, no evidence before the tribunal on which it could find that TNL had suffered the claimed, or any, loss. That was because, for the reasons explained, there was no evidence entitling the tribunal to link the time devoted by the Loxam directors on acquisition matters to consequential loss suffered by TNL ... In this case, however, TNL adduced no evidence of any such nature, and so there was no basis upon which the tribunal could find that it had suffered any 'management time' loss. … that head of claim was exclusively dependent upon factual evidence that only TNL could adduce. In the event, TNL adduced no relevant evidence. Its claim under this head should therefore have been rejected. The tribunal's holding that it did in fact suffer loss was an error of law, because there was no evidence justifying it.”
75. On the contrary in the present case, as stated in §27 above, there was evidence from the “Site Plan” approved by the Building Authority on 19 September 2008 (which was Appendix IV to the applicant’s expert report)[22] and the photographs taken on 12 February 2014 and 19 February 2014[23] that there being of no beneficial use. Indeed, this particular piece of land was admitted by the applicant “to be resumed by Government after reversion of the TOA” to the applicant.
76. In the above regard, I hold that the intended appeal has no reasonable prospect of success.
77. As submitted by Ms Cheng, the applicant asserted for the first time in this intended appeal that it could rely on the limb of “other reason in the interests of justice” in support, because “the appeal would present the Court of Appeal with a question of general principle, decided for the first time; or a question of importance which upon further argument and a decision would be to the public advantage; and/or provide much needed clarification on an area of the law or to entertain an argument that the law ought to be changed”.
78. Mr Ismail relied on the point that there had been no authority having to examine and/or turning on Item 13 of Part I of the Schedule to the Ordinance despite its long existence. But avoidance on double compensation has always been a rule of law. The Ordinance cannot have been intended to provide compensation over and above the value, actual or potential, that the TOA had before or after the temporary creation was initiated.
79. In the present circumstances, I was referred to by Ms Cheng Daimler AG v Leiduck [2020] 3 HKLRD 579 where an application for leave to appeal was also on the arguments as Mr Ismail. Lisa Wong J dismissed the application for leave on the same limb at §26:
“ … [The legal provision] has a long existence. Despite its history and the habitual exceeding diligence of counsel on both sides in this case, I have not been referred to a single authority, whether direct or indirect, on any aspect of [the legal provision]. I find it difficult to envisage the recurrence of the same or similar combination of facts and circumstances, the resolution of which would turn on the burden of proof so that some future case or cases might benefit from a judgment of the Court of Appeal on the incidence of the burden of proof under [the legal provision].”
80. I agree the same in the present case. As submitted by Ms Cheng, the present case is very peculiar on its own facts and circumstances (including the relocation of the carparking spaces within the same Lot, the lack of evidence showing that the land which had become the Temporary Carpark had any beneficial use to the applicant, as well as the various restrictions imposed under the Government lease on the permitted use of the TOA). I agree that the problem encountered by the applicant would unlikely surface in another case where an applicant can discharge its burden of adducing evidence (including evidence of any beneficial use of the Temporary Carpark) to support its claim for compensation. Hence it is difficult to envisage the recurrence of the same or similar combination of facts and circumstances, the resolution of which would turn on Item 13 of Part I of the Schedule to the Ordinance as in the present case.
Conclusion
81. For the above reasons, I dismissed the applicant’s application on 18 June 2021 seeking leave to appeal against the Judgment. I also make an order nisi that the applicant should pay the respondent’s costs with certificate for counsel, to be taxed on High Court Scale if not agree.
| Lawrence Pang | |
| Member | |
| Lands Tribunal |
Mr Anthony Ismail and Justin Ismail, instructed by Messrs Woo Kwan Lee & Lo, for the Applicant
Ms Bonnie Y.K. Cheng, instructed by the Department of Justice, for the respondent
[1] See §98 of the Judgment.
[2] See §101 of the Judgment.
[3] See §39 of the judgment.
[4] See §71 of the judgment.
[5] This drawing was referred to at §98 of the Judgment.
[6] DLO/HKE stands for District Lands Office, Hong Kong East of the Lands Department.
[7] TD stands for the Transport Department.
[8] See §5 of the Judgment.
[9] Trial Bundle A1/197.
[10] Trial Bundle A1/25 & 26.
[11] Trial Bundle A1/27.
[12] The airspace at and above a level of 12 metres above the Hong Kong Principal Datum of the Pink Stippled Black Cross-hatched Green Area with the TOA in between.
[13] See also Britned Development Ltd v ABB [2018] EWHC 2616 (Ch) at §12(9) which was affirmed by the English Court of Appeal [2019] EWCA Civ 1840, [2019] WLR(D) 610.
[14] The concept of Market Value presumes a price is negotiated in an open and competitive market, a circumstance that occasionally gives rise to the use of the adjective open before the words Market Value. The words open and competitive have no absolute meaning. The market for one property could be an international market or a local market. The market could consist of numerous buyers and sellers, or could be one characterized by a limited number of participants. The market in which the property is exposed for sale is not a definitionally restrictive or constricted market. Stated conversely, the omission of the word open does not indicate that a transaction would be private or closed.
[15] See §5 of the judgment.
[16] See §16 of the judgment.
[17] See §17 of the judgment.
[18] See Tribal Bundle A2/268.
[19] See §98 of the Judgment.
[20] In the present case, it is tantamount to the first column of Item 2(a) of Part II of the Schedule to the Ordinance.
[21] See §98 of the Judgment.
[22] Trial Bundle A1/197.
[23] Trial Bundle A1/25 & 26.
more appropriate.
.
, Mr Ng made further reference to the hourly rates of open and covered car parks in Shau Kei Wan and Sai Wan Ho in §§33 & 37 above and noted the difference of hourly rates between open and covered carpark would be 
.
. While Mr Ng explained that open-air sheltered car parking spaces on the ground floor would be generally more convenient than indoor multi-storey car-parking spaces like the Grand Promenade Public Car Park, the latter may provide better management.