SIU SAU KUEN v. THE DIRECTOR OF LANDS

CACV 180/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 180 OF 2012

(ON APPEAL FROM LDLR NO. 1 OF 2010)

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J U D G M E N T

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Hon Kwan JA:

1. I agree with the judgment of Fok JA.

Hon Fok JA:

Introduction

2. This appeal is concerned with the question of whether the compensation payable for the compulsory resumption of the applicant’s property was properly assessed by the Lands Tribunal (the Tribunal) and, in particular, whether the test for determining if the compensation payable under the Lands Resumption Ordinance (Cap. 124) (the Ordinance) should include an element for its development value was properly formulated and applied.

3. By its Judgment dated 9 March 2012 (Judgment), the Tribunal assessed the amount of compensation payable to the applicant in the sum of $4,710,000.  Dissatisfied with this assessment, the applicant applied to the Tribunal for leave to appeal, which was refused by the Tribunal’s Reasons for Decision dated 19 April 2012 (Reasons for Decision).  On the applicant’s renewed application for leave to appeal, leave was granted by this court[1] on 15 August 2012.

The Property and its resumption

4. The applicant was the registered owner of the ground floor unit at No. 426A Un Chau Street, Cheung Sha Wan, Kowloon (“the Property”).  The Property was used as a shop for processing and selling glass.  It was situated in a six-storey tenement building completed in 1956, on a site area of 100.34 m² including a scavenging lane.  On the approved building plans the Property was designed for shop use and it was held under a government lease that was unrestricted in general, except for offensive trades.  It was zoned for “Residential (Group A)” uses on the relevant Outline Zoning Plan.

5. By a notice of resumption dated 7 July 2005, the Government gave notice of its resumption of the Property for the implementation of a development scheme by the Urban Renewal Authority called “K21” at Castle Peak Road/Hing Wah Street/Un Chau Street.  K21 was part of a larger resumption scheme consisting also of three other development proposals called “K20”, “K22” and “K23”.  For its own part, K21 comprised 24 to 25 tenement buildings, consisting of 291 domestic premises and 59 non-domestic premises.  The notice of resumption was affixed to the Property on 15 July 2005 and reversion of the Property to the Government took effect under the notice on the expiration of 3 months from that date, namely on 15 October 2005.

6. On 23 March 2010, the applicant made an application to the Tribunal for determination of the amount of compensation to be paid in respect of the resumption of the Property pursuant to s. 6(3) of the Ordinance.

The Tribunal’s approach

7. Pursuant to s. 10(1) of the Ordinance, the Tribunal is directed to assess compensation payable in respect of a claim under s. 6(3) “on the basis of the loss or damage suffered by the claimant due to the resumption of the land specified in the claim” and s. 10(2)(a) stipulates that this is to be determined on the basis of “the value of the land resumed and any buildings erected thereon at the date of resumption”.

8. Under s. 12(d) of the Ordinance, “the value of the land resumed shall be taken to be the amount which the land if sold by a willing seller in the open market might be expected to realize”.

9. It was the applicant’s case before the Tribunal that compensation for the resumption of the Property should incorporate its development value, that being “an added value on the open market because of the likelihood that it will be incorporated into a scheme of redevelopment”: see Cheung Lai-wan & Others v Director of Lands and Survey[2] [1977] HKLTLR 14 at 17.

10. In its Judgment, the Tribunal accepted that, in determining the compensation for resumption of a property, the claimant is entitled to include the development value if justified (Judgment §36).

11. So far as the assessment of that development value was concerned, the Tribunal appears to have adopted a two-stage approach advocated by the respondent’s counsel, namely (Judgment §31):

(1)       Stage 1: Whether it is more likely than not that such redevelopment will, in a no-scheme world, take place on the date of resumption; if this question is determined against a claimant, that would be the end of the matter; and

(2)       Stage 2: If Stage One is determined in favour of a claimant, the Court/Tribunal would then proceed to conduct a valuation of the redevelopment potential.

12. The Tribunal considered the evidence and concluded that there was no or no sufficient evidence to suggest that at the date of resumption “there might well have been several people ready to buy up properties … with a view to collecting a site worth redevelopment”[3] (Judgment §§38 to 41).

13. Although it held that there was no evidence to reflect development value in the Property, so that Stage One was determined against the applicant, the Tribunal went on to deal with Stage Two for the sake of completeness (Judgment §54).  In this regard, the Tribunal considered and rejected the applicant’s expert valuer’s approaches (as to residual valuation and premium ratio) (Judgment §§54 to 67).  Instead, it held that the direct comparison method was the best approach in valuing the market value of the Property and that, if the Property had any development value, this would be reflected in the comparables (Judgment §68).  On the facts, it considered that four of the respondent’s expert’s comparables (identified as RC6, RC8, RC9 and RC10), which were shops in 8-storey buildings of a similar age to that in which the Property was situated, might reflect the development value, if any, of the Property (Judgment §46).

14. The Tribunal ultimately assessed the value of the Property as being $4,713,298 which it rounded off to $4,710,000 (Judgment §188) and it awarded the applicant this sum by way of compensation (Judgment §193(2)).

The appeal

15. On appeal, the applicant challenges the Tribunal’s decision on two broad grounds, namely:

(1)  First, on the basis that the Tribunal’s formulation of the Stage One approach was wrong in principle and law; and

(2)  Secondly, on the basis that the finding that there was no or no sufficient evidence to suggest that at the date of resumption there might well have been several people ready to buy up properties with a view to collecting a site worth redevelopment was predicated on a wrong premise.

16. In substance, these two challenges are, first, to the formulation of the relevant test and, secondly, as to its application.

17. On the basis that these challenges were made good, the applicant invited this court to set aside the Tribunal’s assessment of compensation and to remit the matter to the Tribunal for re-assessment.

The applicant’s challenge to the formulation of the test

18. Mr Patrick Chong, counsel for the applicant, submitted that the Stage One test apparently adopted by the Tribunal is in line with and “by and large” applied in cases such as Cheung Lai-wan, Million-Add Development Ltd & Anor v Secretary for Transport [1997] CPR 316 and Joy Take Development Ltd & Ors v Director of Lands [2008] 6 HKC 232.

19. However, Mr Chong noted that the facts of those cases involved claimants for compensation who owned an entire block of land being resumed rather than just one unit on it.  Those owners had contended that, but for the resumption, they could have co-operated with the owners of the adjoining lands jointly to redevelop their combined sites together.  As such, Mr Chong maintained that it was understandable that the Tribunal embarked on the fact-finding exercise it did in those cases, namely to assess whether the claimants could have jointly redeveloped their sites with their neighbours’ on or before the date of resumption.  If they could, that would be the best-use of the claimants’ lands.  In this regard, Mr Chong referred to the fundamental principle in land compensation that the claimant is entitled to compensation for the best-use of the dispossessed land: see Cruden Land Compensation & Valuation Law in Hong Kong (3^rd Ed.) at pp. 123-4.

20. This did not mean, Mr Chong submitted, that the cases were laying down a general rule that, if before the date of resumption, the claimants could not have jointly co-operated with their neighbours, no compensation would be awarded for the development potential.  Even though the lands might not be able to be incorporated into a larger redevelopment scheme before the date of resumption, they nonetheless would still have development potential, albeit to a lesser extent.

21. The crux of Mr Chong’s criticism of the Stage One test as formulated by the Tribunal, therefore, was that that formulation would appear to preclude the award of compensation for development value in a case where an adjoining owner of land had not agreed and committed to redevelopment of its land together with the claimant’s land before the date of resumption of the claimant’s land.

22. Mr Chong illustrated this criticism and argument by way of the following example.  In January, the adjoining owner promised he would only be willing to amalgamate his site with the claimant owner’s land jointly to redevelop their sites in July.  The adjoining owner expressly stipulated he would not do so any earlier than July.  In the meantime, the Government issued a notice in February notifying the claimant that his land would be resumed in March and it was so resumed.  As at the date of resumption in March, in light of the express agreement between the two land owners, the resumed land could not have been incorporated in a redevelopment plan.  Applying Stage One of the approach formulated by the Tribunal, the claimant would receive no compensation for the potentiality of development.  That, however, would be unfair in the light of the agreement to develop.  Instead, it would be appropriate to recognise the “second best” use of the claimant’s land in this scenario and take into account the potentiality for development by assessing the present value of that potential as at the date of resumption.

23. It was submitted that this argument was supported by Cheung Lai-wan where the Tribunal, having rejected a valuation based on a joint-site development, considered an alternative of redevelopment of the sites individually.  At p. 18 of the report, President Power (as he then was) said:

“The witness for the Respondent, Mr Hay, who also submitted a proof of evidence Exh.2, approached the valuation ‘on the basis that the lots were ripe for redevelopment.’ However in his approach each lot was redeveloped individually.

The Tribunal is of the opinion that in this case Mr Hay’s approach is the correct one provided that he can show that the redevelopment value of the land exceeds the capitalized value of the existing rents. …”.

24. In Million-Add and Joy Take, the Tribunal found that there would be redevelopment on a joint-development basis and so there was no need to consider this alternative.  But, it was submitted, neither of those cases, nor Cheung Lai-wan were authority for the proposition that, if joint-development were not possible, “that would be the end of the matter” as postulated by the Tribunal’s Stage One test in the present case.

25. Thus, it was submitted, the Tribunal should have gone on to consider whether the Property had future potential for redevelopment given the location and attributes of the Property in a no-scheme world.  Mr Chong supported this submission by reference to Transport for London (formerly London Underground Ltd) v Spirerose Ltd (in administration) [2009] 1 WLR 1797.  In that case, planning permission had not been granted to the claimant as at the date of resumption but the House of Lords held that the valuation should take into account its potential for development, albeit discounted for future uncertainties.  Lord Collins, with whose speech the rest of their Lordships agreed, said (at §95):

“I emphasise that the reference is to ‘possibilities of the land and not its realised possibilities’, and that a deduction would have to be made to take account of the fact that the land might not be required for building or might not be required for a considerable time. This is a powerful confirmation of a principled approach to valuation. … It is elementary that the price which the land in question might reasonably be expected to fetch on the open market at the valuation date would be expected to reflect whatever development potential the land has …”.

26. Similarly, in Waters & Ors v Welsh Development Agency [2004] 1 WLR 1304, Lord Nicholls emphasised the need to take the potentiality of development into account when assessing compensation, when he said:

“32. … The resultant compensation, which takes potentiality into account in all cases, approximates more closely to the price an owner could reasonably expect if the property were sold in the open market between a willing seller and a willing buyer. …

…

36. … Potentiality is part of the market value of land and must be taken into account when assessing compensation. Potentiality should be valued even if the only likely purchaser is the acquiring authority itself. That was decided in the Indian case”.

27. The latter case referred to by Lord Nicholls as “the Indian case” is Raja Vyricherla Narayana Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] AC 302.  In that case, Lord Romer said (at p. 313):

“For it has been established by numerous authorities that the land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined … but also by reference to the uses to which it is reasonably capable of being put in the future. No authority indeed is required for this proposition. It is a self-evident one. No one can suppose in the case of land which is certain, or even likely, to be used in the immediate or reasonably near future for building purposes, but which at the valuation date is waste land or is being used for agricultural purposes, that the owner, however willing a vendor, will be content to sell the land for its value as waste or agricultural land as the case may be. It is plain that, in ascertaining its value, the possibility of its being used for building purposes would have to be taken into account. It is equally plain, however, that the land must not be valued as though it had already been built upon … it is the possibilities of the land and not its realized possibilities that must be taken into consideration.”

28. Finally, in this context, Mr Chong also cited Cedars Rapids Manufacturing and Power Company v Lacoste & Ors [1914] AC 569, where the Privy Council stated the following two propositions (at p. 576), namely:

“(1.) The value to be paid for is the value to the owner as it existed at the date of the taking, not the value to the taker. (2.) The value to the owner consists in all advantages which the land possesses, present or future, but it is the present value alone of such advantages that falls to be determined.”

29. In my view, if what the Tribunal did was to apply the test encapsulated in the formulation of Stage One of the two-stage approach set out in §31 of the Judgment, there would be some justification for Mr Chong’s submission that the Tribunal formulated the test incorrectly.  As noted above, that formulation was in the following terms, namely:

“(a) Stage One: Whether it is more likely than not that such redevelopment will, in a no-scheme world, take place on the date of resumption; if this question is determined against a claimant, that would be the end of the matter”.

As such, the test would appear to look only to development potential committed to take place as at the date of resumption and would not, on its face, appear to cater for the existence of future potentialities for development.

30. However, I accept the submission of Mr Simon Lam, counsel for the respondent, that the test as set out in §31 of the Judgment is in fact merely an adoption of the submission advanced by him as counsel below (and which he did not seek to defend on appeal, accepting it to be too narrow) since the Stage One and Stage Two approach set out there is apparently quoted from his submission.  It is therefore not clear that the Tribunal was expressing itself to be in agreement with that formulation. Instead, I would accept Mr Lam’s submission in this court that the test the Tribunal actually applied is to be found in §§37 and 41 of the Judgment, namely: whether the Tribunal was satisfied on the evidence that, at the date of resumption, there were people ready to buy up properties in the subject lot with a view to collecting a site worth redeveloping.

31. That being so, it is not the case that the Tribunal applied a test that required it not to take account of any future redevelopment potential existing as at the date of the resumption.  Rather, the Tribunal focused on the question of whether there was evidence to establish that there was this redevelopment potential, i.e. existing in the future, at that date.  This is made clear in §13 of the Reasons for Decision where the Tribunal said:

“So, it is not the case that we did not take into account any redevelopment potential that could have been in the future, but it is entirely a matter of whether there are [sic] evidence establishing that there was this possibility at the date of the resumption. And, in our case, we found there was no such evidence.”

32. Therefore, whilst at first blush the so-called Stage One test[4] identified by the Tribunal appears to contain an error, and would be better not to be expressed in that way in future, the reality is that the Stage One test actually applied by the Tribunal was capable of reflecting the development value for potential redevelopment as at the date of valuation.

33. However, in order to avoid any confusion that might arise by formulating the relevant test in the way the Tribunal appeared to do in §31 of the Judgment and to provide guidance on this for future cases, I would instead suggest that the inquiry on which the Tribunal should focus in deciding whether an element of development value should be included in the compensation to be paid on the resumption of land should look to the considerations that were identified by Cruden DJ when sitting as Presiding Officer of the Tribunal in Tsang Chun Ki & Anor v Director of Engineering Development, unrep., LDMT 2/1984, 24 October 1984 at pp. 6-7.  There, His Honour said:

“The applicants therefore only had to establish that redevelopment was likely. They did not have to establish that specific redevelopment proposals contemplated by the owners had been frustrated by the resumption. [The respondent’s expert’s] evidence was misconceived to the extent that it was concerned with the absence of any actual proposals by the applicants to redevelop rather than addressed to the different question whether the likelihood of redevelopment existed and if so to what extent. Although I accept that it is proper to consider whether the absence of any actual proposal is in the circumstances evidence of the possible unlikelihood of redevelopment.

 On the other hand, the likelihood of redevelopment would strongly be established if evidence of an actual redevelopment proposal, solely frustrated because of the resumption, was adduced.  However, the likelihood of redevelopment may also be established by different and far less positive evidence.  For example, in Director of Lands & Survey v Cheung Ping-kwan (1978) HKLTLR 101, 107 there was evidence of redevelopment in the vicinity of the resumed property but no evidence of any redevelopment plans for the resumed property.  The Lands Tribunal inspected the locality and from that merely visual evidence was prepared to find that a merger of the resumed property with two of its neighbours ‘was likely within a for[e]seeable time scale and that such a merger would result in a viable redevelopment scheme’.”

34. Restating the relevant test in the light of those considerations will address the concerns of Mr Chong with regard to the Tribunal’s apparent formulation of that test, since the potentiality of future development, existing as at the date of the resumption, will be taken into account.  I would therefore restate the test as follows:

“Whether, on a balance of probabilities, the evidence discloses that, as at the date of resumption, redevelopment of the property resumed was likely. Such likelihood may be demonstrated by:

(i) actual proposals by the applicant to redevelop the property (or unlikelihood demonstrated by the absence of such proposals) whether on its own or by merger with other properties, or

(ii) evidence of redevelopment in the vicinity of the resumed property (whether accompanied by evidence of redevelopment plans for the resumed property or not), so long as such evidence of redevelopment in the vicinity supports a finding that redevelopment on its own or merger of the resumed property with other properties giving rise to a viable redevelopment scheme was likely within a reasonably foreseeable time scale.”

35. So far as the cases cited by Mr Chong are concerned (namely Spirerose, Waters & Ors v Welsh Development Agency, the Indian case and Cedars Rapids Manufacturing and Power Company v Lacoste & Ors), I would accept Mr Lam’s submission that these each concerned development potentials or possibilities that already existed as at the relevant valuation date.  As such, they do not establish any proposition that wholly future potentialities, i.e. the viability of future redevelopment that could not be shown as at the date of the resumption to be likely within a reasonably foreseeable time scale, should be taken into account or reflected in the valuation.[5] I do not think there is any basis for the applicant to contend that this is what the authorities require and it is noteworthy that, even in Mr Chong’s example summarised above, the thrust of the example is addressed to an agreement for development that has actually been made before the date of valuation, albeit is not to be carried out until after that date.  As I have indicated, it is that sort of future potential that should be reflected in the valuation, as well as likely future redevelopment supported by evidence of redevelopment in the vicinity of the resumed property but not wholly future potentialities.

36. I do not therefore accept the applicant’s first main ground of appeal based on the formulation of the Stage One test.

The applicant’s challenge to the application of the Stage One test

37. The applicant’s second broad ground of appeal focuses on the Tribunal’s application of the Stage One test.  The criticism here appears to be two-fold, namely that: (1) the Tribunal failed to consider whether it was possible that, after the resumption date, there was any chance that the Property could have been redeveloped or acquired for the purpose of redevelopment; and (2) the Tribunal failed to take into account the effect of the extracts of the annual report of the Land Development Corporation in 1997 (the 1997 LDC plan).

38. Taking criticism (1) first, the applicant submitted that the Property must have had the potential of redevelopment because of the following attributes, namely:

(1) It was part of a building erected on a piece of land which had not fully utilised its plot ratio;

(2) The building in which the Property was located and the buildings in the vicinity were about 48-years old at the time of resumption;

(3) The Property was zoned for Residential (Group A) use in the Outline Zoning Plan and thus capable of being developed at a higher density and for a more valuable composite development without the need for further Government approvals;

(4) It was situated in a convenient and busy location in Kowloon.

39. Mr Chong relied on dicta in Tak Shing Investment Co Ltd v Director of Lands, unrep., LDLR 23/1995, 9 April 1996 (at p. 4) and Tsang Chun Ki & Anor v Director of Engineering Development (at p. 5) to support the proposition that it is very common in Hong Kong for old and under-developed properties like the Property to be bought by a property developer or speculator to exploit the potential for redevelopment.

40. That this potential should be reflected in the assessment of the valuation on resumption of the Property was supported, it was submitted, by the requirement in s. 12(d) of the Ordinance that the value of the land resumed should be taken to be the amount which a willing seller of the land might be expected to realise in the open market.

41. I have already addressed above, in relation to the applicant’s first main ground of appeal, the criticism that the Tribunal did not consider the possibility that the Property could have been redeveloped after the resumption date.  As I have noted, however, it is apparent from the Judgment that the Tribunal did consider the development potential of the Property, namely the chance that the Property would be redeveloped in the future, but concluded that there was no or insufficient evidence to show that, as at the date of resumption, there were people ready to buy up properties in the subject lot with a view to collecting a site worth redeveloping (Judgment §41). The Tribunal went on to say, in §42 of the Judgment, that:

“… In the present case, almost all the owners in K21 were different. No single lot was owned by one owner. We are not satisfied that in a no-scheme world, there were several people ready to buy up properties in the subject lot with a view to collecting a site worth redeveloping on the date of resumption. We are not satisfied on the balance of probabilities that there was existence of this possibility. Thus, we do not find that there was any likelihood back in 2005 to have the Property redeveloped. …”

42. This is clearly a finding of fact on the evidence before the Tribunal and the question is whether this finding, which was open to the Tribunal, has been shown to be plainly wrong such as to entitle this court to reverse it.  In this regard, turning to the applicant’s criticism (2) of the Tribunal’s application of the Stage One test, Mr Chong submitted that the Tribunal erred in failing to take into account the effect of the 1997 LDC plan.

43. It was submitted that, although the Tribunal purported to make its finding of facts “in a no-scheme world”, it was evident that the Tribunal did not in fact take the effect of the 1997 LDC plan into account.  Mr Chong submitted that the reality was that, once the lands had been earmarked by the LDC in 1997, this would naturally put off developers and speculators who would not wish to buy into litigation.  This explained the Tribunal’s observation that “[o]ver the years, there had been very little acquisition activities going on in the K21 area”[6] and that there were not “several people ready to buy up properties in the subject lot with a view to collecting a site worth redeveloping on the date of resumption”.[7]  As a matter of commercial common sense, Mr Chong submitted, the reality was that the sterilisation started in 1997, at which time the 1997 LDC plan scared off developers and speculators.

44. In this regard, Mr Chong relied on Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111 for the proposition that losses sustained after inception of a scheme for the resumption of land but before resumption were due to the resumption of the land within s. 10(1) and qualified for compensation if the conditions applicable to post-resumption losses were fulfilled.  Thus, in that case, the loss of profits in the shadow period, being the period after the possibility that the claimant’s site might be resumed became known and which had a paralyzing effect on its operations, were awarded.

45. In further support of this argument, Mr Chong referred to a list of redevelopment sites showing 45 examples of sites of low-rise tenements redeveloped in the Sham Shui Po district, some of which were in the immediate vicinity of the Property.  He submitted that these examples illustrated that, but for the 1997 LDC plan, the Property could have been incorporated in a redevelopment plan in a no-scheme world even before the date of resumption as there were developers and speculators interested in the area. Notwithstanding this, Mr Chong continued, the Tribunal did not explain why it did not accept the applicant’s expert’s evidence regarding the sterilizing effect of the 1997 LDC plan.

46. Mr Chong also relied on the evidence given by the applicant’s expert, referred to in §41 of the Judgment, “that the applicant might have to wait for about 10 years to have the Property developed, and he contended that the applicant had the financial ability to hold on to the Property for another 10 years”.  He submitted that the Tribunal’s holding that this was “totally beside the point” disclosed an error of law in its fact finding as regards the question of whether the Stage One test was satisfied by the applicant.

47. Mr Lam submitted in response that the alleged sterilization effect of the 1997 LDC plan was pure conjecture on the part of the applicant and that there was no probative evidence to support it.

48. I agree with this submission and the reasoning advanced by Mr Lam in support of it.

49. The document described as the 1997 LDC plan consists of four sheets, being extracted from another document the provenance of which is unclear.  There is no evidence that the document came from a publication of the LDC or that it was even published in 1997, although it seems that when it was introduced into the trial bundles it was agreed to be an extract of the annual report of the LDC in 1997.  The document did not form part of the appendices to the applicant’s expert’s report and although it appears to have been introduced by the applicant on the first day of the trial below[8] and referred to obliquely by counsel for the applicant in his opening submissions,[9] it was not obviously referred to at trial in the evidence of the witnesses nor was it referred to in counsel’s closing submissions.  Even if the 1997 LDC plan was rather cryptically referred to by the applicant’s expert in evidence,[10] it was not put to the respondent’s expert as evidence supporting the alleged sterilization effect.

50. More importantly, the projects in the list which appear to be relied upon by the applicant are not directly referable to the schemes in question in the present case, including K21.  The projects are listed under a heading “Projects under Planning” but there is no explanation as to what precisely this designation means or whether this would have a sterilization effect on the properties covered by the development schemes leading to the resumption of the Property.  Reference to the transcript demonstrates that the applicant’s expert referred in cross-examination to developers being put off by a scheme, but that scheme was one published in 2005 and not in 1997.  The alleged blighted effect arising from any plan in 1997 was not dealt with in closing arguments for the applicant, hence it is unsurprising that the blighted effect which the Tribunal did deal with (Judgment §§101 to 107) concerned the period from the commencement of negotiations concerning the K20, K22 and K23 projects in 2004 to the resumption date in October 2005. Similarly, the applicant’s expert also referred in cross-examination to the effect of the Housing Society’s decision to zone K21 for redevelopment (which might or might not have been a cryptic reference to the effect of the 1997 LDC plan) but it would appear from his expert report that he was referring to something occurring after the publication of the Cheung Sha Wan Outline Zoning Plan which was dated 12 August 2005.  Thus, the scheme to which he was referring would appear to be one in 2005 and not 1997.

51. Furthermore, Mr Lam pointed to the following matters in support of his argument that the effect of the 1997 LDC plan contended for by the applicant was conjecture.  First, the fact that it was accepted by the Tribunal[11] that it was because redevelopment by private developers was too slow that the Urban Renewal Authority had to step in and implement the development proposals K20, K21, K22 and K23.  The inclusion of the site in LDC planning would therefore point towards a lack of interest by private developers. Secondly, the Tribunal also noted[12] that, since 1983, there were only three suspected acquisition transactions within the area of K21.  Even if one only considered the period up to 1997, this still represented a period of 14 years in which only three transactions took place, none of which were in the building in which the Property was situated. Thirdly, the Tribunal did not confine itself to looking at the site of K21 but looked to the whole area of Sham Shui Po, in which, since 1985, there were only 45 development projects and the fact, confirmed by a site visit in May 2011, that only sporadic redevelopments were seen.[13]

52. As regards reliance on the applicant’s expert’s evidence that the applicant might have to wait for about 10 years to develop the Property, Mr Chong confirmed that this was the only evidence to which the applicant could point to support the potentiality of redevelopment.  As such, I do not think there can be any doubt that this would not satisfy the Stage One test as I have indicated that should be formulated.  This is clearly not evidence of any actual proposal by the applicant to redevelop the Property, nor is it evidence of redevelopment in the vicinity of the resumed property such as to support likely future redevelopment.  Indeed, in my view, that evidence could not show the viability of future redevelopment as at the date of the resumption to be likely within a reasonably foreseeable time scale.

53. For these reasons, I do not accept the applicant’s case that the Tribunal erred in its application of the Stage One test.

54. This conclusion makes it unnecessary to deal with Mr Lam’s further point that the applicant’s argument based on the 1997 LDC plan is procedurally objectionable.  Had it been necessary to do so, however, I would have accepted Mr Lam’s submission in this regard.  As already mentioned, the document was introduced by the applicant at a late stage in the trial below and was not referred to at trial in the evidence of the witnesses or in counsel’s submissions (or, if it was, any such reference was at best ambiguous).  The respondent’s expert was never cross-examined on the document or on the alleged sterilization effect, nor was the Tribunal invited to consider or take this into effect.  I am not satisfied that the point is such that, had it been raised by the applicant at trial, the respondent would not have wished to adduce evidence in response to it.  Applying the applicable principles,[14] I do not consider that it is open to the applicant to raise this new point for the first time in this court on appeal.

55. The conclusion that the Tribunal did not err in the application of the Stage One test also makes it unnecessary to express any view on the further argument of Mr Lam that the applicant’s complaints in this regard are immaterial by reason of the fact that the development value of the Property was already taken into account by the Tribunal.  The factual basis of that argument is addressed above at §13.

Conclusion

56. For the above reasons, I would dismiss this appeal.

57. It was common ground that costs should follow the event and I would accordingly make an order that the applicant pay the costs of the appeal to the respondent, to be taxed if not agreed.

Hon Barma JA:

58. I agree with the judgment of Fok JA.