CHAN WAH CHUEN WILLIAM v. DIRECTOR OF HOUSING

LDHA2/2012

THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

HOUSING ORDINANCE APPEAL NO. 2 OF 2012

________________

_______________

JUDGMENT

_______________

1.  There are 2 applications before the Tribunal:

(1)  The respondent’s application:

(a)  to strike out the Notice of Appeal on the ground that it discloses no reasonable cause of action and/or is an abuse of process; or

(b)  for determination of a point of law, namely: “Whether the Lands Tribunal’s jurisdiction to hear and determine any appeal brought under paragraphs 5(d) and 6 of the Schedule [to] the Housing Ordinance (Cap 283) is limited to determining the prevailing market value of the property concerned, and as such the Lands Tribunal shall have no jurisdiction to hear and determine the Appeal herein being an appeal against the initial market value of the suit premises.”

(2)  The appellant’s application, pursuant to section 8A of the Lands Tribunal Ordinance, to transfer this appeal to the Court of First Instance.

2.  Mr Kwok (for the respondent) has clarified at the hearing that his applications are actually two sides of the same coin.  At the end of the day, he is seeking to strike out this appeal for want of jurisdiction.

3.  On the other hand, Mr Leung (for the appellant) has indicated that I need only to consider his transfer application if I rule that this Tribunal does not have jurisdiction to hear the appeal.

Background

4.  This appeal concerns the property at Flat 4 on 15^th Floor of Block A, Fung Lai Court, No 8 Fung Lai Road, Kowloon.  Fung Lai Court was built by the Hong Kong Housing Authority (“the Authority”) under the Home Ownership Scheme.

5.  By an agreement dated 19 August 1998, the Authority as vendor agreed to sell the property to the appellant as purchaser.  The agreement provided, inter alia, that:

“24. The Purchaser shall use the Property for private residential purposes only, and subject to paragraph 1 of the Schedule to the Housing Ordinance (Cap.283) and any amendments thereto, shall ensure that the Property shall be occupied by himself and all the members of his family named in the Application Form…”

“27. The provisions of Clauses … 24 shall survive completion of the sale and purchase by the Assignment.”

“	SCHEDULE 5
(a) Purchase Price :	The purchase price mentioned in Clause 2(1) shall be HK$1,928,800 and shall be paid by the Purchaser to the Vendor as follows…
(b) Initial Market Value :	HK$3,393,800.”

6.  Thereafter, the property was assigned by the Authority to the appellant by an assignment dated 4 September 1998.  It was provided in the assignment that:

“1. In consideration of the sum of DOLLARS ONE MILLION NINE HUNDRED TWENTY EIGHT THOUSAND AND EIGHT HUNDRED ONLY Hong Kong Currency (HK$1,928,800.00) Paid by the Purchaser to the Vendor (receipt whereof is acknowledged) the Vendor as beneficial owner ASSIGNS to the Purchaser the property described in paragraph (1) of the Schedule hereto…

2. This Assignment is subject to the terms covenants and conditions … contained in the Schedule to the Housing Ordinance and any amendments thereto.

…

5. It is hereby agreed and declared by the parties hereto that the initial market value of the Property is DOLLARS THREE MILLION THREE HENDRED NINETY THREE THOUSAND AND EIGHT HUNDRED ONLY Hong Kong Currency (HK$3,393,800.00).

…”

7.  Further, sections 17A and 17AA of the Housing Ordinance (insofar as they are relevant) provide that:

“17A. Sale of land

(1) Subject to the conditions of the Government lease in respect of any land in an estate, and subject to the payment of such purchase price and such terms and conditions of payment as the Authority may determine with the prior approval of the Chief Executive, the Authority may sell or otherwise dispose of any such land.

(2) Subject to the conditions of the Government lease in respect of any land in an estate, the Authority may fix the terms, covenants and conditions on which such land may be sold or otherwise disposed of.

…”

“17AA. Particular condition of sale

(1) Without prejudice to the general power mentioned in section 17A(2) where –

(a) Any land in an estate is sold under section 17A to any person;…

the Director of Housing may stipulate, by notice in the Gazette, that the agreement for sale and purchase and the deed of assignment shall be subject to the terms, covenants and conditions mentioned in the Schedule and the terms, covenant and conditions so stipulated shall be part of the agreement and deed.

…

(3) A statement in any agreement for sale and purchase or deed of assignment mentioned in subsection (1) that the agreement or deed is subject to the terms, covenants and conditions mentioned in the Schedule shall be sufficient evidence, until the contrary is proved, that the Director of Housing has stipulated that the agreement or deed shall be subject to those terms, covenants and conditions.

…”

8.  The Schedule to the Housing Ordinance is entitled “Terms, Covenants and Conditions”.  Paragraph 1 thereof is in the following terms:

“1. Subject to paragraph 4 of this Schedule, the purchaser shall not at any time alienate, convey, charge or part with possession or purport to alienate, convey, charge or part with possession or enter into any agreement to alienate, convey, charge or part with possession of the land sold other than to the Authority, or such person as the Authority may nominate, unless-

(a) …;

(b) the purchaser has first paid to the Authority the amount of the premium calculated under the following formula–

	Prevailing Market Value (Initial Market Value – Purchase Price)
Premium =
	Initial Market Value

Where–

"Premium" (補價) means the amount payable;

"Prevailing Market Value" (現行市值) means, subject to paragraph 6 of this Schedule, the market value of the land assessed by the Director of Housing (the "Director") as at the time when the purchaser pays the Premium;

"Initial Market Value" (最初市值) means the market value of the land assessed by the Director as at the time of purchase and as specified in the last assignment of the land–

(a) from the Authority to any purchaser;…;

"Purchase Price" (買價) means-

(a) if a list price is not specified in the assignment, the consideration stated in the assignment;…

where that assignment is the last assignment of the land–

(i) from the Authority to any purchaser;…”

9.  The appellant now wants to sell the property.  He applied to the Authority for assessment of premium payable under paragraph 1 of the Schedule.  By a letter dated 18 July 2012, the Authority informed him that the prevailing market value of the property for the purpose of calculating the premium had been assessed at $4,130,000 and that the amount of premium payable would therefore be $1,782,795. The appellant is apparently dissatisfied with the assessment, which has prompted this appeal.

This Appeal

10.  By a Notice of Appeal filed on 14 August 2012, the appellant requires the Tribunal to hear “an appeal against the assessment of the Premium in respect of the property described made by the Director of Housing and notified to me/us on the 18^th day of July 2012”. 

11.  The grounds of appeal pleaded that:

(a) It was unreasonable for the Director to assess and adopt $3,393,800 as the initial market value for the purpose of calculating the amount of premium payable by the appellant, which grossly exceeds the current market value of the property as at the date of purchase.

(b) The initial market value of the property should be the current market value of the property as at the date of purchase, which has been assessed by the appellant’s surveyor at $2,700,000.

12.  The appellant also filed an affirmation in support of his appeal, in which he alleged that:

“…

5. On or about 17^th August 1998 I received from the Hong Kong Housing Authority, a letter to attend its office to choose a unit in Fung Lai Court, that letter came with a Chinese explanatory document, which is now exhibited as “CWC-1”.

6. The contents of exhibit “CWC-1” tally with my understanding that the premium payable on disposal of the Home Ownership Scheme units is:

	（購入時的十足市值 – 原來樓價/當時定價）
補價 = 補價時市值 ×		× 100%
	購入時的十足市值

7. I attended the office of the Hong Kong Housing Authority on or about 19^th August 1998, chose Flat 4 on 15^th Floor, Block A, Fung Lai Court (“the Property”) at HK$1,928,800.00 and paid 10% of the purchase price as deposit. I was then given a slip, which is now exhibited to me marked “CWC-2”.

8. (a) I noted in “CWC-2” it was stated under the column near the lower right corner named “(B) 基本折扣率（$）” against the row named “value for stamp duty purposes 印花税估值**” is the figure “2,310,000.00”, which is more than the purchase price.

(b) I then asked the staff, who attended me and whose name I cannot remember, why did this figure appear, I was told it was for stamping purpose. I then asked him/her why the figure for stamping was higher then [sic] the purchase price of the Property and I was told it was supposed to be the then current market value.

(c) Therefore I have always in my mind that the “購入時十足市值” as stated in exhibit “CWC-1” is this figure which I then understand from perusing information from newspaper and estate agent tallies with the then current market value.

(d) I therefore have absolute no idea that there is a term “initial market value” in exhibits “CWC-2”, “CWC-3” and “CWC-5” which is the equivalent to “購入時十足市值” as stated in “CWC-1”.

…

(f) Therefore in these circumstances I reasonably formed the understanding that “購入時十足市值” refers to the then current market value of the Property at the time of my purchase of same, namely 19^th August 1998, which is the date of Agreement for Sale and Purchase of the Property to me, i.e. exhibit “CWC-6”, and that this will form the basis of assessment of premium.

…

11. When I decided to sell the Property recently and apply to the Director of Housing for assessment of premium, I was notified on 18^th July 2012 the premium had been assessed at HK$1,782,795.00. Copy of the relevant letter is exhibited as “CWC-7”.

12. I then made verbal enquiry with the Hong Kong Housing Authority over the phone and it was the first time that I learnt the “initial market value” of the Property is HK$3,393,800.00 and that formed the basis of calculation of the premium and not the current market value at the time of my purchase as aforesaid.

13. Upon taking legal advice I then learnt, contrary to my understanding and belief, “initial market value 最初市值” is in fact the equivalent of “購入時的十足市值” and that in relation to the Property was stated as HK$3,393,800.00 in the assignment of the Property to me (exhibit “CWC-5”).

14. I have caused a retrospective valuation of the Property to be made as at the date of assignment by Prudential Surveyors International Limited which is of the opinion that the then current market value of the Property at 19^th August 1998 is HK$2,700,000.00, copy of the valuation report is now exhibited as “CWC-8”.

…

16. … I have also been advised and verily believe that the market value of the Property assessed by the Director as at the time of purchase and stated in the assignment of the Property to me (exhibit “CWC-3”) must be a reasonable assessment of the then current market value of the Property at the time of my purchase (i.e. 19^th August 1998) and the figure used by the Director in assessing the Premium basing on HK$3,393,800.00 is grossly excessive and unreasonable and defeats the spirit of the Home Ownership Scheme.

17.  The Director’s assessment of the Premium should be based on HK$2,310,000.00 (stamping value) or HK$2,700,000.00 (the value assessed by Prudential Surveyors Limited as at 19^th August 1998) and adjusted accordingly in the light of the facts herein affirmed to.”

13.  Exhibit “CWC-2” is in these terms:

“To applicant 給申請人:

Flat Purchased: Court 屋苑 FUNG LAI COURT

選購單位 Block 座數/樓名 BLOCK A Floor 樓層 15 Flat 單位 4

Initial market value 最初市值:		(A)基本折扣率減 10% (#)	(B)基本折扣率 (#)	(C)基本折扣率加 10% (#)
$3,393,800.00 # Delete where inappropriate	Value for stamp duty purposes 印花税估值**		2,310,000.00
請删去不適用者 ** For information only只供參考用	Stamp Duty Payable 應缴印花税**		34,650.00

”

14.  I have quoted extensively from the appellant’s evidence so that his case can be fully appreciated.  It is apparent from his pleading and evidence that his complaint is solely with the “initial market value” assessed by the Director at the time of purchase and specified in the assignment. 

Discussion

15.  I have to ask myself 3 questions out of these applications:

(1) Do I have the jurisdiction to hear this appeal?

(2) Should I strike out this appeal?

(3) Should I transfer this appeal to the Court of First Instance?

(1)  Do I have the jurisdiction to hear this appeal?

16.  Mr Leung argues that irrespective of which component of the formula in paragraph 1 of the Schedule to the Housing Ordinance an appellant challenges, what requires determination and re-assessment by the Lands Tribunal is the end-product of the formula, namely, the premium.  He observes that “there is no express provision [in the legislation] which prohibits an appeal against the Director’s assessment of Premium (based on a challenge of the initial market value)”.  He invites the Tribunal to adopt a purposive approach to the legislation and accepts that “so long as the subject matter of the appeal is directed at the assessment of the premium, the Lands Tribunal would have jurisdiction to determine the appeal”.  I do not agree.

17.  The Lands Tribunal is a creature of statute and its jurisdiction is derived from statute.  In Hong Kong Oil Co Ltd v Director of Lands, CACV 1/1987, unreported, 1 May 1987, CA (Sir Alan Huggins, VP, Fuad & Clough, JJA), the Court of Appeal accepted, based on an earlier version of the Lands Tribunal Ordinance, that: “The Tribunal is a creature of statute and has only such jurisdiction as has been conferred upon it by the Legislature.”  Although section 10(1) of the Lands Tribunal Ordinance now provides that the Tribunal has the same jurisdiction, powers and duties of the Court of First Instance, that is respect of practice and procedure in the exercise of the Tribunal’s jurisdiction only.  So, there is no question of the Tribunal having jurisdiction on something which the Legislature has not expressly by statute proscribed.

18.  The jurisdiction of the Lands Tribunal is set out in section 8 of the Lands Tribunal Ordinance.  Subsection (4) thereof provides that:

“The Tribunal shall have jurisdiction to determine any appeal submitted to it for determination under any Ordinance specified in the Schedule.”

One of the Ordinances specified in the Schedule to the Lands Tribunal Ordinance is the Housing Ordinance.  Paragraph 5 of the Schedule to the Housing Ordinance (insofar as it is relevant) provides that:

“5. Where a purchaser applies for an assessment of premium to be calculated in accordance with paragraph 1(b) of this Schedule –

…

(b) upon completing the assessment of premium, the Director shall give notice, in writing, to the purchaser of the prevailing market value, the amount of premium and the date, being not less than 28 days from the date of the notice, on or before which the premium must be paid to the Authority;

…

(d) the purchaser may appeal to the Lands Tribunal in accordance with the Lands Tribunal Rules (Cap 17 sub leg A) against the Director’s assessment ofthe prevailing market value of the land within 28 days of the date of notification under subparagraph (b);

…

6. The determination of the Lands Tribunal on an appeal shall be of the prevailing market value as at the date of the determination by the Lands Tribunal unless the purchaser has paid the premium in which case the determination shall be of the prevailing market value as at the date of the payment.

…

8. If the Lands Tribunal assesses the prevailing market value at a different amount to that assessed by the Director, the prevailing market value so assessed shall be used in the formula set out in paragraph 1(b) of this Schedule to re-assess the amount of the premium.

…” (emphasis added)

19.  Form 20 prescribed under rule 65(1) of the Lands Tribunal Rules for use in an appeal to the Tribunal under the Schedule to the Housing Ordinance also refers to requiring the Lands Tribunal “to hear an appeal against the assessment of the Prevailing Market Value in respect of the property”.

20.  So in relation to the Housing Ordinance, the Lands Tribunal is conferred the jurisdiction to hear appeals against the Director’s assessment of the “prevailing market value”.  There is no mention of any jurisdiction to hear an appeal on the calculation of “premium” or the assessment of “initial market value”.

21.  Mr Leung has quoted the following judgment of Kwan JA in Moulin Global Eyecare Ltd (in liquidation) (formerly known as Moulin Optical Manufactory Limited) v The Commissioner of Inland Revenue [2012] 2 HKLRD 911 in his bid to persuade me to adopt a purposive approach to the legislation.

“31. The principles for statutory interpretation are well established. The modern approach is to adopt a purposive approach interpretation and the context of a statutory provision should be taken in its widest sense (HKSAR v Cheung Kwun Yin (2009) 12 HKCFAR 568 at paras 11 to 14). The statute shall receive such fair, large and liberal construction as will best ensure the attainment of its object (Interpretation and General Clauses Ordinance, Cap 1, section 19). The relevant provisions of the legislation should be read together and in the context of the whole statute as a purposive unity in its appropriate legal and social setting; it is necessary to identify the interpretative considerations involved and, if they conflict, to weigh and balance them (Medical Council of Hong Kong v Chow Siu Shek (2000) 3 HKCFAR 144 at 154B to C).”

22.  That quotation refers to the judgment of Li CJ in HKSAR v Cheung Kwun Yin (2009) 12 HKCFAR 568, which further elaborates on the approach.

“11. In interpreting a statute, the court’s task is to ascertain the intention of the legislature as expressed in the language of the statute. This is of course an objective exercise. The court is not engaged in an exercise of ascertaining the legislative intent on its own. As Lord Reid pointed out in Black-Clawson International Ltd v Papierwerke Waldhof – Aschaffenburg AG [1975] AC 591 at 613G.

“We often say that we are looking for the intention of Parliament, but that is not quite accurate.  We are seeking the meaning of the words which Parliament used.”

12. The modern approach is to adopt a purposive interpretation. The statutory language is construed, having regard to its context and purpose. Words are given their natural and ordinary meaning unless the context or purpose points to a different meaning. Context and purpose are considered when interpreting the words used and not only when an ambiguity may be thought to arise. In HKSAR v Lam Kwong Wai (2006) 9 HKCFAR 574 at 606E, Sir Anthony Mason NPJ stated:

“The modern approach to statutory interpretation insists that context and purpose be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity may be thought to arise.”

See also Medical Council of Hong Kong v Chow Siu Shek (2000) 3 HKCFAR 144 at 154 B-C. As the Court pointed out in Town Planning Board v Society for the Protection of the Harbour Limited (2004) 7 HKCFAR 1 at 14 A-C, the mischief rule is an early example of the purposive approach. And the purposive approach (including the mischief rule) has been reflected in Hong Kong in s.19 of the Interpretation and General Clauses Ordinance, Cap.1.

13. The context of a statutory provision should be taken in its widest sense and certainly includes the other provisions of the statute and the existing state of the law. See Town Planning Board v Society for the Protection of the Harbour Limited at 13 I-J and Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461.

14.  The purpose of a statutory provision may be evident from the provision itself.  Where the legislation in question implements the recommendations of a report, such as a Law Reform Commission report, the report may be referred to in order to identify the purpose of the legislation.  The purpose of the statutory provision may be ascertained from the Explanatory Memorandum to the bill.  Similarly, a statement made by the responsible official of the Government in relation to the bill in the Legislative Council may also be used to this end.  See PCCW – HKT Telephone Ltd v Telecommunications Authority (2005) 8 HKCFAR 337 at 351 F-J and Director of Lands v Yin Shuen Enterprises Ltd (2003) 6 HKCFAR 1 at 15 A-H.”

23.  I have no problem with adopting a purposive approach to the legislation.  Our task has always been to ascertain the intention of the legislature as objectively expressed in the language of the legislative provisions.  Words should be given their natural and ordinary meaning unless the context or purpose points to a different meaning.  Despite the appellant’s contention, there is really nothing in the legislation on the alleged intention to provide a means to appeal against the Director’s assessment of the premium.  Mr Leung has been unable to identify any special context or purpose requiring “prevailing market value” in the Schedule to the Housing Ordinance to be read as “premium”.

24.  In my view, the context and purpose actually works the other way.  As recognized by Mr Leung, the amount of premium is an end-product of a mathematical formula.  It is calculated based on 3 components: (1) prevailing market value; (2) initial market value; and (3) purchase price, the first two of which have been defined to refer to historical fact.  Thus in the present context:

(a)   “Initial market value”of the property was assessed by the Director at the time of purchase and specified in clause 5 of the assignment to be $3,393,800.

(b)  Since no list price was specified in the assignment, the “purchase price” would be the consideration stated in clause 1 of the assignment, that is, $1,928,800.

Once these components have been set, there is no room to re-open them for assessment at a later time. 

25.  The only component that is susceptible to assessment at the time of calculation of premium (and re-assessment by the Tribunal in an appeal) is “prevailing market value”.  In my view, it is not correct to equate an appeal against the assessment of prevailing market value with an appeal against the calculation of premium.

26.  I therefore reject the appellant’s contention and rule that the jurisdiction of the Lands Tribunal as provided in the Lands Tribunal Ordinance and the Schedule to the Housing Ordinance is only in respect of appeal against the Director’s assessment of the prevailing market value of the subject land.

27.  Although an appeal against the calculation of premium may be said to encompass an appeal against the assessment of the prevailing market value (which is an essential component thereof), the appellant has pleaded no such complaint in this appeal.  Mr Leung has specifically confirmed at the hearing that he has no instruction to appeal the Director’s assessment of the prevailing market value of the property.

28.  In my view, this appeal (as presently pleaded) which is against the initial market value of the property assessed by the Director at the time of purchase and specified in the assignment is beyond the jurisdiction of the Tribunal.

(2)    Should I strike out this appeal?

29.  It is trite law that the court should only strike out a claim in plain and obvious cases.  A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleadings are considered.   The court will generally prevent the improper use of its machinery.  Pursuing a proceeding in the wrong forum without any hope of success is obviously an abuse of process.  See Hong Kong Civil Procedure 2012, paras 18/19/4, 18/19/6 & 18/19/10.

30.  The respondent in the present appeal seeks to strike out the appeal on the ground that there is no reasonable cause of action and that the appeal is an abuse of process. 

31.  Mr Kwok has discerned from the appellant’s pleading and evidence that the appellant may be alleging that the agreement between him and the Director on the initial market value of the property has been vitiated by the alleged misrepresentation of the unidentified staff of the Authority.  He foresees that the appellant will have difficulty proving his case and that such a claim will be plagued by issues of limitation.

32.  Both Mr Kwok and Mr Leung, however, agree that I need not go so far as to consider whether the appellant has any cause of action against the Director.  Insofar as I can conclude there is no reasonable ground of appeal in this appeal, I should strike out the appeal leaving it to the appellant to consider bringing his claim somewhere else.

33.  Given my ruling above that this appeal is beyond the jurisdiction of the Tribunal, I shall strike out the appeal.

(3)    Should I transfer this appeal to the Court of First Instance?

34.  The appellant has not articulated his case fully.  It is not known if he will run a case based on misrepresentation (as discerned by Mr Kwok) or rely on some other causes of action.  It is not known what remedy he will be seeking against the Director.  There is no means for me to consider whether the appellant’s case is likely to be within the jurisdiction of the Court of First Instance (as opposed to some other forum).  I am not minded to order transfer.

Conclusion

35.  For the above reasons, I allow the respondent’s application.  I have answered the point of law framed by the respondent in paragraph 26 above and I shall strike out this appeal on the ground that it discloses no reasonable ground of appeal and is an abuse of the process of the Lands Tribunal.  The appellant’s application is dismissed.

36.  Costs normally follow the event.  I make an order nisi as to costs that the appellant do pay the costs of and incidental to both applications as well as the costs of the appeal to the respondent on the District Court scale if not agreed.  Unless an application has been made to vary that order, the order shall become absolute 14 days after this judgment is handed down.

37.  The parties have opted for summary assessment of costs. I further direct the respondent to lodge into the Tribunal and serve on the appellant a statement of costs in the form of Appendix A to Practice Direction 14.3 within 28 days after the handing down of this judgment.  The appellant may lodge into the Tribunal and serve on the respondent a concise statement of his objections within 14 days thereafter.  The summary assessment will be conducted by me on paper and the parties will be informed of the result in due course.