DAWOOD KHAN AND OTHERS v. THE SECRETARY FOR PLANNING AND LANDS

HCAL260/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW PROCEEDINGS
LIST NO.260 OF 2000

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J U D G M E N T

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THE APPLICATION

1. This is the fifth in a series of judicial review applications relating to land resumption that I have dealt with in the past 10 months : Wong Tak Woon v. The Secretary for Planning, Environment and Lands HCAL143/1999, 16 November 1999 (on appeal to Court of Appeal CACV 339 of 1999, 11 January and 3 March 2000 and to the Court of Final Appeal FAMV 9 of 2000, 27 June 2000), Incorporated Owners of Wah Kai Industrial Centre v. Secretary for Justice [2000] 2 HKLR 458, Kaisilk Development Limited v. Secretary for Planning, Environment and Lands, HCAL148/1999, 10 March 2000 and Leung Man Cheung, Leung Kam Cheung & Others v. Secretary for Planning and Lands and The Chief Executive in Council; HCAL274/2000, 14 September 2000.

2. The present application is by the owners of the following properties :

Applicants	Properties
1st Applicant	Rear Portion, 2nd Floor, No.9, Cornwall Avenue, Tsim Sha Tsui, Kowloon
2nd Applicant (co-owner with his sister Diana Lai)	1st Floor, 17 Mody Road and 1st Floor, 19 Mody Road, Tsim Sha Tsui, Kowloon
3rd and 4th Applicants	Front Portion, 4th Floor, 11 Hanoi Road, Tsim Sha Tsui, Kowloon
3rd and 5th Applicants	Rear Portion, 4th Floor, 12 Hanoi Road, Tsim Sha Tsui, Kowloon

The decisions that are challenged

3. The challenge by the applicants is against :

(1) The decision of the Secretary of Planning and Lands ("the Secretary") to recommend to the Chief Executive in Council resumption of their properties.

(2) The decision of the Secretary made in April 1998 to extend the 12 months period originally stipulated under section 15(3)(a) of the Land Development Ordinance ("the LDC Ordinance") so as to give more time to the Land Development Corporation ("the LDC") to recommend resumption to the Secretary.

4. The applicants further applied for leave to challenge the decision of the Chief Executive in Council to order resumption of their properties.

THE HISTORY OF REDEVELOPMENT

Comprehensive redevelopment area

5. The properties are located within a site zoned "other specified use (comprehensive redevelopment area)" ("CRA") on the draft outlined zoning plan for Tsim Sha Tsui, No.LK1/56. The CRA was gazetted on 2 July 1976. A number of objections were received by the Town Planning Board ("the TPB") from the owners of the properties within the proposed CRA. These objections were considered and rejected by the TPB. The effect of the CRA zoning is that the area can only be developed comprehensively according to a master layout plan to be approved by the TPB pursuant to section 4A of the Town Planning Ordinance ("the TP Ordinance"), Cap.131.

The Crown leases

6. The previous Crown leases of the properties within the CRA were due to expire on 24 December 1978. In September 1978, the then Executive Council approved the grant of Crown leases for the six composite sites within the CRA zone to a corporation or corporations (to be formed) comprising at least 75% of the former owners. The corporation or corporations were required to redevelop each site according to a master development plan to be approved by the TPB. The Government informed the owners of this in November 1978. Eventually, a group of owners successfully formed six corporations with the support of 75% of the owners and applied to the Government to grant the new leases for redevelopment. In June 1982, the Executive Council approved the acceptance of the application from the six corporations subject to a condition that non-participating owners should be given a final opportunity to participate. However, because of the disputes between different groups of the owners and the crash of the property market in 1984, the redevelopment proposal initiated by the six corporations eventually fell through.

7. In July 1984, the Government received a petition requesting the regrant of the Crown leases back to the former owners. In March 1985, the Executive Council approved the regrant upon the payment of the regrant premium. After a lengthy negotiation, the Crown leases were regranted to the owners for a term from 1 January 1987 to 30 June 2047. It was also agreed between the owners and the Government that the regrant premium would be repayable in a lump sum or alternatively by 21 annual instalments until 2008.

Involvement of the LDC

8. In April 1995, the Secretary gave his approval in principle to the LDC to prepare a development scheme plan for the CRA under sections 5(2)(a)(i) and 13(1) of the LDC Ordinance. On 28 April 1995, the TPB approved the development scheme plan under section 14(2)(a) of the LDC Ordinance. The development scheme plan No.S/K1/LDC1/1 (which was later gazetted on 12 May 1995) was since then deemed to be a draft plan prepared by the TPB under section 14(3) of the LDC Ordinance ("the draft scheme plan"). Objections to the draft scheme plan were received from the affected owners including the 1st applicant. However, all these objections were either subsequently withdrawn by the objectors or rejected by the TPB.

9. On 27 May 1997, the draft scheme plan was approved by the Governor-in-Council and was subsequently known as the "K11 Scheme". The approved scheme plan was gazetted on 6 June 1997. The area covered by the scheme plan was bound by Hanoi Road, Bristol Avenue, Carnarvon Road and Mody Road in Tsim Sha Tsui. A master layout plan was approved by the TPB on 5 September 1997. This plan was subsequently amended and approved by the TPB on 3 December 1999. The new master layout plan involves development of commercial and office use with a public open space.

10. The Kowloon Canton Railway Corporation ("KCRC") has proposed to extend its railway line from Hung Hom to Tsim Sha Tsui. As part of the proposal, a subway will be constructed along Mody Road to link the new railway station with the existing MTR station in Tsim Sha Tsui. Part of the Cornwall Avenue, which is covered by the redevelopment, will be required by KCRC as a work site for the construction of the subway. An entrance for the new railway station will be constructed at Cornwall Avenue which will abut the redevelopment at basement level.

LDC's efforts to acquire the properties

11. On 23 June 1997, the LDC started to request the owners within the scheme plan to provide it with the tenancy details of their properties before 23 July 1997 for the purpose of making offers in August 1997. Because of the difficulties encountered by the LDC in obtaining the information and request from owners for more time to collate the information, the deadline was extended eventually to 22 September 1997. The LDC received all the tenancy information on 21 October 1997.

Owners Participation Scheme ("OPS")

12. The K11 Scheme was the first LDC's project which involves the participation of affected owners, i.e. the Owners Participation Scheme ("the OPS"). The OPS is an alternative to the standard option of cash purchase, and affected owners were allowed to participate in the redevelopment of the scheme area either as a cost sharing participant or a non-cost sharing participant. The OPS allowed all affected owners an equal opportunity to participate in the redevelopment and share the risk and return of the redevelopment on an equal basis. The OPS would be effective only when the threshold of 70% participation based on property value has been achieved.

The extension of time

13. On 8 April 1998, the LDC applied to the Secretary under section 15(3)(a) of the LDC Ordinance for an extension of 12 months until 27 May 1999 in order to enable it to make the application to the Secretary for the recommendation of the resumption. As the draft scheme plan was approved by the then Governor-in-Council on 27 May 1997, unless time is extended, the LDC's application for the Secretary's recommendation has to be made not later than 26 May 1998. The Secretary extended time by six months, i.e. up to 27 November 1998.

The offers

14. On 16 April 1998, the LDC made the cash and OPS offers to the owners. Initially, the OPS offers would only be valid until 25 June 1998, whereas the cash offer would only be valid until 28 July 1998. The cash offer was later extended to 28 September 1998.

15. The properties of the applicants were built in the 1950s. They and other buildings within the redevelopment area are now in a dilapidated state. The redevelopment involves the acquisition by the LDC of a total of 143 property interest or 201 properties from the owners. Some owners hold more than one property. The LDC has been able to acquire approximately 94% of the 201 properties. The owners of approximately 61% of the property interest (or 70% of the value of the properties) agree to sell their properties to the LDC on the OPS basis. There are approximately 85 individuals from approximately 34 households still living within the redevelopment area.

16. The 1st applicant's property at Rear Portion, 2nd floor, No.9 Cornwall Avenue is 670 sq.ft. gross or 641 sq.ft. net in area. The cash offer was $4,365,000, made up of $1,864,000 as the market value of the property and $2,501,000 as ex gratia payment. $100,000 was given as costs. The 1st applicant accepted this offer after the deadline of 28 September 1998. However, the late acceptance was rejected by the LDC for being out of time.

17. The 2nd applicant's properties at 1st floor, 17 Mody Road has an area of 1,061 sq.ft. gross or 998 sq.ft. net. The initial cash offer based on sale with tenancy was $4,771,000. Subsequently, on the basis of vacant possession, the revised offer was $5,072,000 which is made up of $3,347,000 as the market value and $1,725,000 as ex gratia payment. In respect of 1st floor, 19 Mody Road, the area is 1,171 sq.ft. gross or 1,105 sq.ft. net. The initial cash offer with tenancy was $5,282,000. This was revised to $5,616,000 on the basis of delivery up of vacant possession. This sum is made up of $3,706,000 as the market value of the property and $1,910,000 as ex gratia payment. The costs of $100,000 was included.

18. The 3rd and 4th applicants' property, at Front Portion, 4th floor, 11 Hanoi Road is 651 sq.ft gross or 569 sq.ft. net. The initial cash offer was $3,875,000 : $1,644,000 was for the market value of the property and $2,231,000 as ex gratia payment. This offer was subsequently revised to $1,644,000 which is the market value of the property without any payment of ex gratia payment.

19. In respect of the 3rd and 5th applicants' property at Rear Portion, 4th floor, 12 Hanoi Road, the area is 628 sq.ft. gross or 550 sq.ft net. The initial offer was $3,746,000, made up of $1,538,000 as the market value of the property and $2,208,000 as ex gratia payment. This offer was subsequently revised to $2,642,000 which is made up of $1,538,000 as the market value of the property and 50% HPA at $1,104,000 payable to the 5th applicant.

20. In respect of the 3rd and 4th applicants, apart from the property which is now the subject matter of the challenge, they also owned two other properties in the same area, namely, 1st floor, 11 Hanoi Road and 2nd floor, 11 Hanoi Road. Offers of $8,246,000 for each of these two other properties were made and accepted by the 3rd and 4th applicants. The reason why the offer for the Front Portion, 4th floor, 11 Hanoi Road was reduced was because according to the LDC policy an owner is eligible to receive ex gratia payment on no more than two vacant properties within the redevelopment project. Since the 3rd and 4th applicants owned more than two properties in the project, they were allowed HPA on the first two properties and not the third one. Likewise, for the Rear Portion of 4th floor, 12 Hanoi Road, because the 3rd applicant, Lai Leung Oi Kum, had already taken the ex gratia payment on her two other properties, therefore, only the 5th applicant, Lai Sze Nga was entitled to her portion of the ex gratia payment.

APPLICATION FOR RESUMPTION

21. As the LDC was unable to acquire all the properties within the scheme area, including the properties of the applicants, it applied to the Secretary on 27 November 1998 requesting him to recommend to the Chief Executive in Council for the resumption of the properties. On 28 March 2000, the Secretary decided to make the recommendation to the Chief Executive in Council. The Chief Executive in Council approved the resumption on 27 June 2000 and an order for resumption was made on 29 June 2000. The properties will be vested with the Government on 7 October 2000.

THE JUDICIAL REVIEW

Challenge under the basic law is abandoned

22. In their original application, a number of grounds were relied upon by the applicants. This includes a challenge that section 15 of the LDC Ordinance contravenes article 105 of the Basic Law. Section 15 of the LDC Ordinance, provides, among other things, that :

"(1) The Corporation may in the circumstances specified in subsection (2) apply in writing to the Secretary requesting him to recommend to the [Chief Executive] in Council the resumption of land under the Lands Resumption Ordinance.

(2) The circumstances referred to in subsection (1) are -

(a) that the Corporation has been unable to acquire any land within the area of a plan which is deemed to be a draft plan by virtue of section 14(3) of this Ordinance; or

(b) that the Corporation has been unable to acquire any land which it requires to implement a development proposal authorized under section 5(2)(b) of this Ordinance.

(3) The Secretary shall not make a recommendation in pursuance of subsection (2)(a) -

(a) ....

(b) unless he is satisfied that the Corporation has taken all reasonable steps to otherwise acquire the land including negotiating for the purchase thereof on terms that are fair and reasonable.

(4) The Secretary shall not make a recommendation in pursuance of subsection (2)(b) -

(a) ....

(b) ....

(c) unless he is satisfied that the Corporation has taken all reasonable steps to otherwise acquire the land including negotiating for the purchase thereof on terms that are fair and reasonable."

23. Article 105 of the Basic Law provides that :

"The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property.

Such compensation shall correspond to the real value of the property concerned at the time and shall be freely convertible and paid without undue delay."

24. This point, which appears to be a proper ground for judicial review, was abandoned at the hearing together with other points.

The three grounds of challenge

25. The applicants now rely on the following three grounds :

(1) Procedure impropriety, in that, the applicants were not given the chance to make representations to the Secretary when the LDC applied to him to extend the time to make applications under section 15(3)(a) of the LDC Ordinance.

(2) In making the offer, the LDC had chosen 18 February 1998 as the valuation date of the properties; this is a irrational decision.

(3) Failure to apply the correct Home Purchase Allowance ("HPA") policy set out in the Acquisition Principles ("the Principles"). The LDC had wrongly applied the March 1998 Principles which would grant the applicants an HPA based on the value of a 10 year old property. The applicants contended that they were entitled to an HPA based on the value of a five year property according to the July 1997 Principles. Further, the LDC had misinterpreted the March 1998 Principles in that the July 1997 Principles should apply since the acquisition work by the LDC had commenced in 1997.

26. The applicants seek leave to amend their application in respect of the grant of HPA. The application to amend was opposed by the respondents and the LDC. I shall deal with the amendment when I deal with the HPA.

The relief

27. Although the relief sought in the written application is for orders quashing the decisions, the applicants said that they do not wish to imperil the resumption of the redevelopment project and the relief now relied upon by the applicants are :

(1) a declaration that the payment of the ex gartia payment should be based on the value of a five-year old flat; and

(2) a declaration that the 18 February 1998 valuation date is not a lawful date and 21 October 1997 should be adopted instead.

RIGHT TO BE HEARD

Fook Lai Ying v. Governor in Council

28. The applicants relied on Fook Lai Ying v. Governor in Council [1997] HKLRD 810, and submitted that they should be notified of the LDC's application to the Secretary for extension of time to enable them to make representations to the Secretary.

Are the applicants so entitled?

29. It should be pointed out that the challenge based on the right to be heard in fact is made out of time. The applicants were aware that the Secretary had extended time on 8 November 1999, the application was only made in April 2000. The fundamental question is whether the applicants are entitled to make representations to the Secretary at that stage. In my view, the answer is "no". What fairness requires in a decision-making process depends on the character of the decision-making body, the kind of decision it has to make and the statutory or other framework in which it operates : Lloyd v. McMahon [1987] AC 625 at 702. Lord Mustill in R. v. Secretary of State for the Home Department, ex parte Doody [1994] 1 AC 531 at page 560 further stated that what fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects.

30. Section 15(3) of the LDC Ordinance provides that the Secretary shall not make a recommendation for resumption unless two conditions are satisfied :

(i) The application is made to him not less than 12 months or such further period, as the Secretary may allow, after the approval by the Chief Executive-in-Council of the draft plan.

(ii) He is satisfied that the Corporation has taken all reasonable steps to otherwise acquire the land including negotiation for the purchase thereof on terms that are fair and reasonable.

The proper perspective

31. The starting point is, of course, a matter of construction of section 15 to see whether it requires representation by owners affected by the decision. The section does not impose such a requirement. That, however, is not the end of the matter because this is precisely where the requirement of fairness will come in if the situation so requires.

32. The decision of the Secretary to extend time is an interim decision which does not affect the ultimate decision of whether he is satisfied that the LDC has taken all reasonable steps to acquire the land including negotiation for the purchase on terms that are fair and reasonable. There are decisions in tax cases which held that if a public officer is to make an interim decision which does not affect the ultimate right of the taxpayer, the requirement of fairness would not be imposed. In Wiseman v. Borneman [1971] AC 297, Lord Reid (at p.308) held that :

"If a Tribunal were entitled to pronounce a final judgment against the taxpayer, justice would certainly require that he should have a right to see and reply to his statement but all that the Tribunal can do is to find that there is a prima facie case against him ... no one supposes that justice requires that he (i.e. the public officer) should first seek the comments of the accused or the defendant on the material before him ... There must be a balance between the need for expedition and the need to give full opportunity to the defendant to see the material against him."

33. Likewise, in Pearlberg v. Varty [1972] 2 WLR 534, a taxpayer was denied the right to be heard in an application by the tax authority to apply for leave to raise assessments. Among the considerations regarded by Lord Hailsham was that the statute makes no reference to a right of audience and that the decision once made, does not make any final determination of the rights of the taxpayer. Viscount Dilhorne stated that one should not start by assuming that what parliament has done in the lengthy process of legislation is unfair; one should rather assume that what has been done is fair until the contrary is shown. He held that where the person affected can be heard at a later stage and can then put forward all the objections he could have preferred if he had been heard in the making of the application, it by no means follows that he suffers an injustice in not being heard on that application.

34. In Aristides and another v. Minister of Housing and Local Government and another [1971] All ER 195, Section 43(4) of the English Housing Act 1957 provided that :

"... an order authorising the compulsory purchase of land comprised in a clearance area shall be submitted to the Minister within six months, and an order authorising the compulsory purchase of land surrounded by or adjoining a clearance area shall be submitted to the Minister within twelve months, after the date of the resolution declaring the area to be a clearance area, or within such longer period as the Minister may, in the circumstances of the particular case, allow."

Willis J held that when the Minister is considering an application for extension of time, he is acting administratively and has an entirely unfettered discretion whether to grant or refuse it. There is no room for the rule of right to be heard to apply. See also Supperstone & Goudie on Judicial Review 1997 Ed., at page 8.36 and Wade on Administrative Law 8th Ed. at p.492 on this case.

Opportunity to make representation had already been given and exercised

35. Mr McCoy SC, counsel for the applicants, seeks to distinguish Aristides on the facts. Mr Wong, counsel for the respondent, also referred to Ma Wan Farming Limited v. Chief Executive in Council & Another [1998] 1 HKLRD 514, where the Court of Appeal in construing Article 10 of the Hong Kong Bill of Rights (i.e. right to a fair hearing), in relation to a proposal and orders for resumption for the purpose of road works, held that where an administrative determination had a high policy content or was made on the grounds of expedience, then there were some limits to the requirement of full jurisdiction on the right to have a fair hearing; in these cases, the final decision on the merits should rest with the Executive; decisions concerning the expropriation of land for a road were cases with a high policy content.

36. It is not necessary for me to go into the facts of Aristides. Neither is it necessary for me to rely on Ma Wan Farming Limited. Ultimately, whether the owners had the right to representation on the extension of time depends on the construction of the LDC Ordinance and the circumstances of the case. The owners had been given opportunity to make representations. Under the statutory scheme, when the LDC submitted the development scheme to the Town Planning Board for approval, the owners were already given the right to make objections to the scheme. One of the applicants, namely the 1st applicant, had made objections to the scheme.

37. Furthermore, before the Secretary made the recommendation to the Chief Executive in Council to resume the properties, the owners were given further opportunities to make representations to the Secretary. On 5 November 1997, the owners' solicitor wrote to the Secretary and asked whether he had extended time under section 15(3)(a). On 8 November 1999, the Secretary replied that time had been extended in April 1998. On 12 November 1999, with knowledge that the Secretary had extended time, the owners made detailed representations including complaint on delay and the timing of the offer. On 18 November 1998, the association of owners formed as a result of the acquisition by LDC also made representations to the Secretary. Section 40(2) of the Interpretation and General Clauses Ordinance provides that where any ordinance confers power to approve any thing, such power shall include power to withdraw the approval. The Secretary is clearly entitled to withdraw the approval given for the extension of time if the situation warrants.

38. After the Secretary had decided to make recommendation to the Chief Executive in Council to resume the land, he advised the owners that they could make representations to the Chief Executive in Council on matters other than those relating to the valuation. The owners did not make representations to the Chief Executive in Council but instead commenced the present proceeding.

39. In my view, the owners had been given the opportunities to make representation which may ultimately affect their rights to the properties. There is no room for further representation concerning the extension of time. As pointed out by the authors of de Smith on Judicial Review of Administrative Action, 5th Ed., the courts are increasing favouring an approach based in large part upon an assessment of whether, in all the circumstances of the hearing and appeals, the procedure as a whole satisfies the requirement of fairness. See also the Verteuil v. Knaggs [1918] AC 557, Man Yee Firm v. Li Chan Shi [1925] HKLR 28, Pagliara v. Attorney General [1994] 1 NZLR 86, Movick v. The Attorney General [1978] 2 NZLR 545.

40. The cases indicated that there is no such thing as a technical breach of natural justice. An applicant who cannot show that there has been any breach of natural justice in substance cannot expect to be granted any relief in judicial review : R. v. Chief Constable of the Thames Valley, ex p. Cotton [1990] IRLR 344 at 351.53. See also George v. Secretary of State for the Environment and Another [1979] 77 LGR 689, at 695 where Lord Denning MR stated that :

"... you should not find a breach of natural justice unless there has been a substantial prejudice to the applicant as a result of the mistake or error which has been done."

In Malloch v. Aberdeen Corporation [1971] 1 WLR 1578, at 1595, Lord Wilberforce stated that :

"A breach of procedure, whether called a failure of nature justice, or an essential administrative fault, cannot give him a remedy in the courts, unless behind it there is something of substance which has been lost by that failure. The court does not act in vain."

No evidence of collusion

41. Mr McCoy submitted that there was collusion between the Secretary and LDC in the extension of time. He referred to the letter of 8 April 1998 from the LDC to the Secretary asking for extension. The reasons given for the delay was because of the requirement of tenancy details and the time taken to prepare the OPS. The letter did not disclose about the revaluation of the property price because of the market conditions.

42. In my view, there is no evidence of collusion at all. While the letter did not refer to revaluation, the owners were clearly aware of the revaluation. If the applicants wish to mount a case of collusion, then clearly this must be expressly formulated in the application for judicial review so that the Secretary and the LDC can respond to it. There is none in the present case. Without making any criticism in the present case, it is appropriate to remind oneself of what Lord Templeman said in R. v. Independent Television Commission, ex parte TSW Broadcasting Ltd [1996] JR 185 at 195 :

"But judicial review should not be allowed to run riot. The practice of delving through documents and conversations and extracting a few sentences which enable a skilled advocate to produce doubt and confusion where none exists should not be repeated."

See also the comment of Henry LJ in R v. Independent Television Commission ex parte Virgin Television Limited [1996] EMLR 318 at p.341.

THE VALUATION DATE

The role of the LDC

43. It is apparent from the series of cases that there is a misconception by the public on the role of the LDC when it acquires properties from the owner. No doubt the LDC is a public body entrusted with the task of urban renewal. It is also funded by the Government. However, the LDC Ordinance also requires the LDC to carry out its transactions in accordance with prudent commercial principles : section 10(1). Hence, in its negotiation with the property owners leading up to the acquisition of their properties, the LDC is conducting transactions which are purely private and commercial and the public law principles are not applicable : see the cases discussed in my earlier decision. If any further authority is required, it can be found in Matteograssi SpA v. The Airport Authority [1998] 2 HKLRD 213.

18 February 1998

44. Mr McCoy accepted that matters relating to the valuation of the properties are not subject to judicial review. However, he submitted that the valuation date of the offer is still subject to the supervision of the court. It has to be pointed out immediately that there is no challenge in the application to the decision of the LDC in using 18 February 1998 as the valuation date as a separate ground of challenge. The applicants now said that the valuation date should be 21 October 1997 when the LDC received all the information on the tenancy of the properties.

45. It is necessary to see how the applicants developed their case on the valuation date. In the written application, it was stated that the valuation should be made at around the middle of 1997 because the LDC, in its letter of 23 June 1997, stated that it envisaged that its offers would be forwarded in August 1997. It went on to say that since the LDC had retained independent valuation consultants on 15 September 1997, then the valuation date ought to have been fixed at no later than 15 September 1997. The valuation date of 21 October 1997 now urged upon the court was only first raised in the submission at the hearing. The reason why the applicants wish to adopt an earlier valuation date than the 18 February 1998 is because the property market in Hong Kong collapsed after July 1997, and the fall became prominent after October 1997.

Why is the valuation date amenable to judicial review?

46. Apart from submitting that the courts in the previous decisions starting from the Court of Final Appeal decision of Wong Tak Woon, have never held that the valuation date is not subject to judicial review, the applicants have not put forward any proper argument why the valuation date is amenable to judicial review.

47. In order to deal with this, it is necessary to analyse the nature of the valuation date in an acquisition process. The valuation date does not exist independently on its own. It is only one facet in the offer of acquisition. The valuation date has to be ascertained first before the valuation can be made and a purchase price can be offered. This must be the inevitable conclusion when one considers the valuation date. If the valuation date is only one essential component of the offer of acquisition, then clearly the date is not amenable to judicial review. In a commercial negotiation, how can a seller demand the buyer to use a valuation date which may be to his advantage.

48. Ribeiro J (as he then was) in Wong Tak Woon stated that any disputed property valuation should be determined by invoking the recommended resumption procedure by applying the principles for compensation laid down by the Land Resumption Ordinance ("the LR Ordinance"). Keith JA stated that what is fair and reasonable should be considered in the light of the provisions for the assessment of compensation under the LR Ordinance. This being the state of the law, the applicants are clearly not entitled to have a valuation at any particular date.

Is 18 February 1998 Wednesbury unreasonable?

49. Even if, for the purpose of argument, the valuation date is amenable to judicial review, the only basis in which the date of 18 February 1998 can be challenged is that it is Wednesbury unreasonable to adopt this date.

50. Under the LR Ordinance, the valuation date for the purpose of assessing compensation in the Lands Tribunal is the date of resumption. This makes sense because the date of resumption is the date in which the rights of the property owners are transferred to the Government. During the negotiation, it is of course not possible to ascertain the resumption date which will take place sometime in the future. This being the case, the valuation date for the purpose of making the offer to the owners should be as close to the offer as possible on the basis that if the offer is accepted then the property interest will change hands. In the present case, the offer was made on 16 April 1998 and the valuation date used was 18 February 1998. Clearly, the Secretary was entitled to come to the view that a fair and reasonable offer for the purchase of the properties had been made.

51. The applicants stated that they were prepared to sell their properties with vacant possession, hence they should not be prejudiced by any delay in making the offer. Further, they stated that by 21 October 1997, all the tenancy data had been collected by the LDC.

52. As explained in the offer letters of the LDC, both the cash offer and the OPS offer were conditional upon LDC achieving a 70% participation based on value of the properties. This threshold was required in order to self-finance the redevelopment project. Clearly the applicants could not be expected to be dealt with separately by the LDC.

53. The Secretary and the LDC accepted that there was no detail evidence on the steps taken by the LDC from October 1997 to April 1998. However, the applicants had not previously relied on the October valuation date. If they had not identified the issue then the Secretary and the LDC cannot be criticized for not meeting their case. What is available by way of evidence is that substantial time was required to obtain the necessary information from the owners and put together the OPS package. As a matter of fact, the applicants had indicated interest in the OPS as evidenced by letters dated 8 June 1998 from the 2nd applicant Mr David Lai and his sister Diana Lai's solicitors regarding the 1st Floor of 17 and 19 Mody Road and also the letter of 16 June 1998 from the Independent Owners Association For Fair Treatment, formed by the owners in their negotiation with the LDC and the letter dated 24 June 1998.

Re-valuation not disclosed?

54. The applicants submitted that the real reason for the delay in making the offer was because the LDC had revalued the properties due to the collapse of the property market. Mr McCoy criticised the Secretary and the LDC as being not forthright on the revaluation of the properties. He referred to R v. Lancashire County Council, ex parte Huddleston [1986] 2 All ER 941, in which Sir John Donaldson MR, at page 948 commented that "It is not discreditable to get it wrong. What is discreditable is a reluctance to explain fully what has occurred and why". He further stated that the judicial review process is "to be conducted with all the cards face upwards on the table and the vast majority of the cards will start in the authority's hands." Mr McCoy also relied on what Lord Ackner said in Walfort v. Miles [1992] 2 AC 128 :

"Each party to the negotiation is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations."

Although at one stage, Mr McCoy seemed to suggest that there was misrepresentation, this was not pursued by him and there was no allegation of misrepresentation in the application.

55. The Secretary and the LDC accepted that there was revaluation of the property before the offer was made. However, the revaluation of the property is clearly a matter that was known to the applicants. Mr David Lai, as Chairman of the Owners' Equity Association, had complained to Legislative Councilors about the actions of the LDC. In a letter dated 2 September 1998, the Legislative Council Secretariat informed Mr Lai that :

"LDC reiterates that it originally intended to raise the resumption proposal to owners in August 1997 so it sent letters to owners in July 1997 requiring them to provide relevant information concerning the redeveloped property. However, the evaluation process has been delayed as many owners are unable or unwilling to provide relevant information. Meanwhile, due to the market alteration, the property value needs to be reviewed so LDC indicates that the evaluation on Redevelopment Plan has been finished only in February 1998. The property value decreases after February 1998 but LDC still adopts the value as at February." (my emphasis)

Further, in a meeting dated 7 May 1998 held by the LDC with the owners, the LDC explained that 18 February 1998 was chosen because all preparation work was finished at that time : see Notes of Briefing section for owners affected by K11 project submitted by the LDC at the hearing.

56. One of the owners (not the applicants) had also complained to the Ombudsman that the LDC had unreasonably delayed the acquisition of the properties. The Ombudsman, in his letter dated 16 March 1998, informed this owner that :

" The LDC pointed out that as a statutory body, they are required to handle carefully the assessment and participation details. Given the downturn of the economy recently, the two surveyor firms commissioned by the LDC have been instructed to review the value of the affected properties in order to reflect the market changes." (my emphasis)

This letter was disclosed by the Secretary in these proceedings.

57. The applicants' own surveyor had adopted 18 February 1998 as the valuation date. Furthermore, when the owners wrote to the LDC on 22 September 1998, it was stated that :

"We do not disagree on the date of valuation dispute (sic) the LDC has repeatedly delayed the offering process since August of 1997."

Since the LDC is required to operate on prudent commercial principles, clearly it is entitled to revalue the property price as a result of the drop in the market conditions. The Ombudsman concluded that there was no prima facie evidence showing the LDC had unreasonably delayed in the redevelopment project. This is one of the matters considered by the Secretary as well. In the circumstances, I fail to see how it can be argued that the valuation date of 18 February 1998 or the Secretary's decision which accepted the 18 February 1998 date was Wednesbury unreasonable. Further as can be seen earlier, the 3rd and 4th applicants actually accepted the valuation date when they accepted the LDC's offer to purchase their other properties.

58. The applicants argued that the LDC had been actuated by an opportunistic motive to delay the fixing of the valuation date to take advantage of the drop in the market. This would enable the LDC to achieve a lower valuation for the properties. In my view, there really is no basis for this complaint because the LDC could not predict how the property market would behave. As the Secretary submitted that had the market values gone up in the interim, no doubt the affected owners would not be contented if the LDC made an offer on the basis of a valuation back in June or August 1997.

HOME PURCHASE ALLOWANCE

Ex gratia payment is non-justiciable

59. The purchase price offered by the LDC consists of the value of the property and an ex gratia payment called the Home Purchase Allowance ("HPA"). The HPA is non-justiciable : see the cases mentioned in Leung Man Cheung. The ex gratia payment, being one essential component of the offer of acquisition, is not amenable to judicial review. The concept of accrued right does not exist. Neither is the concept of legitimate expectation available in a private commercial transaction : see the cases referred to in Kaisilk.

The new projects

60. According to the Secretary, the LDC's new HPA policy as announced in January 1998 and published in March 1998 would be applied consistently to all 26 renewal projects announced on 2 January 1998. The K11 project was one of the 26 projects. In terms of time, the change in the LDC's HPA policy followed the change in the Government's own HPA policy in 1997 where the replacement flat for the purpose of calculating HPA was changed to a 10 year old one. In a press release dated 2 January 1998, the LDC announced that it unveiled a massive urban renewal programme involving 26 sites; the programme accords with the SAR Chief Executive, Mr Tung Chee Hwa's policy address that the pace of urban renewal has to be accelerated. The Hanoi Road redevelopment project is one of the 26 sites.

The Principles

61. The English version of the Principles of January and March 1998 stated that :

"Contents of this document are only applicable to the LDC projects on which acquisition work starts in 1998."

The January 1998 version in Chinese stated that :

"本文所載，乃土地發展公司為受影響的物業所訂定的收購準則。但本文內容只適用於一九九八年開始進行收購的重建計劃。日後如有必要，土地發展公司得根據實際情況將物業收購準則予以修訂。"

The March 1998 version in Chinese stated the following :

"本冊子所載的收購準則，內容適用於一九九八年及其後開始進行收購的重建計劃。日後如有必要，土地發展公司得根據實際情況另行修訂物業收購準則。"

62. The relevant words are "開始進行收購"or "proceeding with acquisition". Question arises as to when the LDC proceeded with acquisition? Was it in 1997 when it first notified the owners that it intended to acquire the properties, or in April 1998 when the offer was made? The Principles are not statutory documents. One should not construe them in a way one would construe a statue. They set out how the HPA will be offered to the owners. Starting from the premise that the HPA is an ex gratia payment, to import a notion that the owners are entitled as of right to an HPA based on a five-year flat is difficult to accept. What is more important is that until an offer is made, it would be meaningless to talk about acquisition of property. The Secretary had clearly recognised that the payment of the HPA should be in accordance with the new Government policy based on an allowance of a 10-year old flat. There can hardly be any room for argument that somehow there was a misinterpretation of the Principles. The applicants had not made out a case on the HPA. As no useful purpose would be achieved by the amendment, I would not allow the amendment on this issue.

Conclusion

63. Accordingly, the application for judicial review against the decisions of the Secretary is dismissed. As to the application for leave to issue judicial review against the decision of the Chief Executive in Council to resume the land, the parties agreed that I do not need to make any order in the event that I find against the applicants. In any event, I would have dismissed the application for leave against the Chief Executive in Council by reason of my decision on the applicants' case against the Secretary. The Secretary and LDC are to have the costs nisi of the application.