DAY BRIGHT DEVELOPMENT LTD AND OTHERS v. CHOW BOWEN CHUN-SING AND OTHERS

LDCS 20000 / 2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 20000 OF 2012

__________________

___________________

_________________

J U D G M E N T

_________________

BACKGROUND

1.  This is an application for compulsory sale of all the undivided shares in Section C of Inland Lot No. 3536 (“Section C”) and Section B of Inland Lot No. 3536 (“Section B”) (hereinafter collectively referred to as “the Lots”) with a building erected thereon known as Nos 704, 706, 708 & 710 King’s Road (“No. 704”, “No. 706”, “No. 708” & “No. 710” respectively), No. 14 Healthy Street (“No. 14”) and Nos. 1, 3 & 5 Nation Street (“No. 1”, “No. 3” & “No. 5” respectively), North Point, Hong Kong (“the Building”), for the purposes of redevelopment pursuant to Section 3(1) of the Land (Compulsory Sale for Redevelopment) Ordinance, Cap. 545 (“the Ordinance”).  

2.  The Building consists of two blocks of 9-storey commercial/residential building each served by 2 common staircases. The front elevation of the Building is facing King’s Road, the side elevation facing Healthy Street and the rear elevation facing Nation Street, a private right of way. There are, in each block, 4 units at each level comprising 4 shops on Ground Floor and altogether 32 residential units from 1/F to 8/F. Each of the shops and residential units is given 1 of 36 undivided shares of each of the Lots. The occupation permit (which covers the Building and other adjacent buildings, collectively known as Kut Cheong Mansion) was issued on 8 September 1960, more than 50 years before the date of the present application on 7 February 2012 (“the Application”).

3.  Kut Cheong Mansion is a composite building comprising 14 tenement buildings arranged in two row of seven. This is in fact one of the many applications concerning these tenement buildings made under Ordinance. A more detailed description of the Kut Cheong Mansion can be found in the Tribunal’s recent unreported decision in LDCS13000/2012 handed down on 14^th March 2014 concerning one of the tenement buildings of the same Mansion made by the same Applicants.  I do not wish to repeat the same here. Suffice for the present purpose, each of the constituent tenement buildings of Kut Cheong Mansion has its own staircases and governed by a separate DMC. The Building (ie each of Section C and Section B) has its own deed of mutual covenants. 

THE APPLICATION

4.  When the 1^st applicant, the 2^nd applicant, the 3^rd applicant and the 4^th applicant (hereinafter collectively referred to as “the applicants”) commenced the present proceedings, the corresponding ownerships of the respective units of Section C are shown in the table below:

5.  The corresponding ownerships of the respective units of Section B as at the date of the Application are shown in the table below:

6.  Thus as at the date of the Application, the applicants together owned 80.5556% equal undivided parts or shares in Section C and 91.6667% in Section B of the Lots.  By the time of the filing of the witness statement of Mr Hui Lok Shan (“Hui’s Statement”), the representative of the applicants, dated 7 November 2013, the applicants had further purchased the addional units owned by (1) the 1^st respondent, (2) the 2^nd & 3^rd respondents, (3) the 4^th respondent, (4) the 7^th respondents, (5) the 8^th & 9^th respondents, (6) 11^th respondent and (7) the 13^th respondent[1] and the Application against them was discontinued. The applicants then owned 94.4444% of all the undivided shares of in each of Section C and Section B of the Lot, i.e. not less than 90% of the undivided shares in the Lot.

7.  The applicants contend that they are entitled to make the Application by virtue of Section 3(2) of the Ordinance.

8.  Thus at the commencement of trial, there was outstanding undivided shares in 4 unit as follows:

(1) 4/F, No. 706 (“the R5’s Unit”), which is registered in the name of the 5^th respondent (“R5”) who has reached a settlement agreement with the applicants. Although proceedings against R5 continue, by a consent summons of 7 April 2014, the applicants and R5 applied for, and obtained, the Order of the Tribunal on 8 April 2014 granting leave to withdraw (a) the Notice of Opposition filed on 28 February 2012, and (b) all the evidence filed by R5 in these proceedings.

(2) 6/F, No. 706 (“the R6’s Unit”), which is registered in the name of the 6^th respondent (“R6”). The applicants were alerted to some doubt on the mental capacity of R6 when a conditional sale and purchase agreement in 2011 fell through. The matter was placed before the Tribunal leading to the Tribunal’s Order of 13 December 2013, which inter alia ordered that:

(A) the proceedings to proceed on the basis that R6 is not shown to be under any disability and

(B) leave to join the occupiers of R6’s Unit, understood to be family members of R6, as the 14^th respondent (“ R14”), the 15^th respondent (“R15”) & the 16^th respondent (“R16”).

No Notice of Opposition has been filed by R6, R14, R15 & R16.

(3) 1/F, No. 710 (“the R10’s Unit”), which is registered in the name of the 10^th respondent (“R10”). A sale and purchase agreement entered into by R10 and the 2^nd applicant in November 2013 was cancelled because of some title doubts. The parties entered into a Settlement Agreement dated 23 December 2013 and by the Order of 6 January 2014, R10 obtained leave to withdraw the Notice of Opposition filed on 27 February 2012. To address the title doubts, the 17^th respondent (“R17”), the 18^th respondent (“R18”) & the 19^th respondent (“R19”) are joined in the proceedings. R17, R18 and R19 have not filed any Notice of Opposition.

(4) 4/F, No. 5 (“the R12’s Unit”), which is registered in the name of the 12^th respondent (“R12”) who, with the 2^nd applicant, have entered into an Agreement for Sale and Purchase dated 16 April 2014 pursuant to which R12 agreed to sell the R12’s Unit to the 2^nd applicant. Completion shall take place on 26 May 2014.

9.  The remaining respondents have either filed no evidence or, in the case of R5, has withdrawn his evidence. In view of this, Mr Y C Mok, counsel for the applicants, just called the witnesses to prove the applicants’ case.  The applicants contend that all the requirements of the Ordinance have been satisfied and ask for an order for sale in terms of the draft order submitted. 

SECTION 3 OF THE ORDINANCE – OWNERSHIP OF THE APPLICANTS

10.  Section 3(1) of the Ordinance requires the applicants to have not less than 90% of the undivided shares in a lot before it can make an application. 

11.  Section 3(5) of the Ordinance also states that the Chief Executive in Council may, by notice in the Gazette, specify a percentage lower than the percentage mentioned in subsection (1) in respect of a lot belonging to a class of lots specified in the notice.

12.  Pursuant to Section 3(5) of the Ordinance, the Notice was gazetted on 22 January 2010 and tabled at the Legislative Council meeting on 27 January 2010.  It came into operation on 1 April 2010.  Section 3 of the Notice lowered the threshold for compulsory sale, insofar as it is applicable, from 90% to 80%.  Section 4(1)(b) of the Notice specified one of the classes for the purposes of Section 3 as “a lot with each of the building erected on the lot issued with an occupation permit at least 50 years before the relevant date (which is the date of the application)”.  The occupation permit in respect of the Building was issued on 8 September 1960, which is more than 50 years as at the date of application.  The Building is therefore covered by the Notice and the applicable percentage is 80%.

13.  When the applicants commenced the present proceedings on 7 February 2012, they altogether owned 80.5556% equal undivided parts or shares in Section C and 91.6667% in Section B of the Lots. They are therefore entitled to make the Application.

DETERMINATION OF THE EXISTING USE VALUES (“EUV”) OF ALL UNITS IN THE BUILDING

14.  Pursuant to section 3 of the Ordinance, the Application was accompanied by a valuation report (“Application Report”) prepared by Mr Charles Chan of Savills Valuation and Professional Services Limited (“Mr C Chan”), the applicants’ valuation expert witness, containing the assessments of the values of all units (which are conveniently termed as the existing use values, the “EUV” of all units) in the Building on the Lot as at 28 November 2011.

15.  The Application Report was prepared not earlier than 3 months before the date of the Application, i.e. 7 February 2012 and is therefore, in our view, in compliance with section 3 of the Ordinance.

16.  Under section 4(1)(a)(i), if there is a dispute between the parties on the EUV of the units in the Building on the Lot, the Tribunal has to determine the values. Section 4(1)(a)(ii) further provides that, in the case of any minority owner of the Lot who cannot be found, the majority owner of the Lot is required to satisfy the Tribunal that the value of the minority owner’s property is “(A) not less than fair and reasonable; and (B) not less than fair and reasonable when compared with the value of the majority owner’s property as assessed in the application.”

17.  Although strictly speaking, the outstanding respondents are not missing owners and their contentions on the EUV of the corresponding units, if any, had been withdrawn, the Tribunal was prepared to do the same.

18.  In the Application Report of 28 November 2011, Mr C Chan explained the method of valuation and the process of his assessment to arrive at the EUV of each unit of the Building.

19.  In his valuation of the EUV of the domestic units of the Building, Mr C Chan adopted the following methodology :

(a) He selected 4/F, No. 708 King’s Road (“the Reference Domestic Unit”), which was situated on the middle floor of the domestic portion as the reference unit for the purpose of valuing its unit price. 

(b) The unit price of the Reference Domestic Unit was first assessed by making reference to market comparables.  He took into account 7 comparable transactions in 6 different buildings nearby.  After making what he regarded as the necessary adjustments (for time, location, age, floor, quantum, aspect and noise effect) for all these comparable transactions, he took the average of the adjusted unit rate of the comparables to arrive at the unit price of the Reference Domestic Unit.

(c) He further considered the floor difference, view, quantum, aspect, lighting & ventilation and internal conditions of the Reference Domestic Unit and the remaining domestic units within the Building and made adjustments to arrive at the EUV of all the domestic units.

20.  In assessing the EUV of all the Ground Floor units, Mr C Chan selected GF, No. 706 King’s Road and G/F, 3 Nation Street respectively as the Reference Shop Units for shops facing King’s Road where pedestrian flow is moderate to high (“the 1^st Group”) and for shops facing Nation Street where pedestrian flow is only moderate (“the 2^nd Group”).  He then took into account 7 comparable transactions in 6 different buildings nearby for the 1^st Group and 5 comparable transactions in 3 different buildings nearby for the 2^nd Group. After making what he regarded as the necessary adjustments (for time, location, visibility, quantum, building age, layout, headroom plus accessibility (for the 2^nd Group only)) for all these comparable transactions, he took the average of the adjusted unit rate of the comparables to come to the unit price of the respective Ground Floor Units.

21.  Mr C Chan updated the Application Report by a supplemental report dated 7 November 2013 (“Supplemental Report”) in which he revised the EUV of all the units in the Building after taking into account the inspection of more units in the Building and the updated property index prepared by the Rating and Valuation Department. In this Supplemental Report, Mr C Chan repeated the exercise he did in the Application Report with the new information and set out his revised assessments of the EUV of each unit as at 28 November 2011.

22.  The EUV of all units in the Building, as at the relevant date of valuation of 28 November 2011, are as shown in paragraph B3.5 of the Supplemental Report: see the table at Bundle B1/6-7 which is reproduced  below:

* This is the summation of values for Shop No. 14A, 14B, 14C, 14D and 14E into which G/F, No.14, Healthy Street East has been sub-divided.

23.  In view of the above, I am satisfied that the EUVs of the R5’s Unit, the R6’s Unit, the R10’s Unit and the R12’s Unit as assessed by Mr C Chan is not less than fair and reasonable; and not less than fair and reasonable when compared with the value of the applicants’ properties:

(a) the R5’s Unit (ie 4/F, No. 706)  - assessed at $2,630,000  (representing 1.004% of the total EUV of all units);

(b) the R6’s Unit (ie 6/F, No. 706) - assessed at $2,500,000  (representing 0.954% of the total EUV of all units);

(c) the R10’s Unit (ie 1/F, No. 710) - assessed at $2,790,000  (representing 1.065% of the total EUV of all units);

(d) the R12’s Unit (ie 4/F, No. 5) - assessed at $2,050,000  (representing 0.783% of the total EUV of all units);

(e) the total EUV of all units - assessed at $261,970,000.

SECTION 4(2 OF THE ORDINANCE – JUSTIFICATION AND REASONABLE STEPS

24.  The second determination under Section 4(1)(b) of the Ordinance is whether an order of sale should be made.  According to Section 4(2) of the Ordinance, this would involve 2 considerations, namely :-

(a) is the redevelopment justified due to age or state of repair of the Building; and

(b) has the Applicant taken reasonable steps to acquire all the undivided shares in the Lot.

25.  The Applicants have to satisfy this Tribunal that the above statutory requirements were met, otherwise, an order of compulsory sale ought not be granted.

26.  Firstly, for the requirement under (a) above, I have taken into consideration the expert evidence of Mr Benson Wong (“Mr Wong”), the building surveyor and Mr So Kin Shing (“Mr So”), the structural engineer adduced by the applicants. 

27.  Mr So had conducted a structural assessment of the Building and prepared a report dated 7 November 2013. He found the following defects in the Building:

(a) visual inspections showed many defects in the form of cracks and spallings in the slabs and beams of 47 flats/units of the Building. Despite the repairs carried out in the common areas of the Building by the Buildings Department were completed on 12 November 2012 pursuant to two orders issued for dangerous buildings (one for Nos. 704 and 706 King’s Road and the other for No. 14 Healthy Street East & No. 1 Nation Street), there are still 7 locations in the common areas with defective structural members. For the Building as a whole, there are a total of 133 structural members exhibiting defects;

(b) covermeter survey revealed that the concrete covers of 1 columns, 1 beam and 2 slabs are not sufficient to (1) protect the embedded steel reinforcement bars against corrosion, (2) protect the bars against fire, and (3) provide sufficient depth of concrete for the safe transmission of bond forces;

(c) carbonation depth test results revealed that carbonation has penetrated past the concrete cover of beam samples and slab samples; this means the alkaline environment in many of the concrete covers, at least in the beams and slabs, which gives protection to the reinforcement bars in the structural members against corrosion have been destroyed and steel bars in these structural members must have been caused to corrode;

(d) compression tests show that the compression strength of 2 of the 10 samples on beams are less than the requirement for concrete strength;

(e) chloride content tests showed an increased risk of corrosion of the embedded steel reinforcement bars, at least in the columns, beams and slabs;

(f) corrosion (open up) surveys revealed columns, beams and slabs exhibit rust of various magnitudes and suffered from reduction in their cross-sectional areas due to corrosion;

(g) the structural frames of the Building are deteriorating and they need to be repaired, the deterioration will continue steadily due to extensive carbonation of the reinforced concrete structural members;

(h) the design and construction of the structural frames were based on an obsolete design, there are at least 9structural design and construction aspects where the Building cannot meet the current structural engineering design requirements and the Building may not process adequate robustness to prevent it from damages arising from accidents or misuse.

28.  Based on the above findings, Mr So concluded that the structural frames of the Building are in need of repair and the Building, completed more than 53 years ago, have exhibited signs that the structural frames have deteriorated to the final stages of its design working life. The deterioration will continue steadily due to extensive carbonation of the concrete.  It is inevitable that new defects will occur and previous defects, though repaired, will recur readily, requiring substantial repairs or even partial demolition and re-construction of some defective structural members in the future.  Repair works will need to be carried out regularly in the future and such repairs will be more and more extensive.  Although the cost of repair may be relatively modest, such costs will escalate in the future as the extent and seriousness of the deterioration of the structural members increases with age.  He recommended that hammer tapping works be carried out to all structural members and any defects be repaired as a matter of urgency.

29.  Mr Wong, in his Condition Survey Report dated 7 November 2013 stated that :

(a) the Building is in a poor state of repair due to general wear and tear;

(b) Despite repairs were carried out by the Buildings Department, the defective concrete, external rendering, internal plastering and drainpipes found in various parts of the Building have imposed threats to safety;

(c) The external rendering on the external walls has signs of deterioration with not less than 184 hidden hollow spots and is potentially dangerous to public safety in the event that loosened rendering falling off ;

(d) the building envelope is not external seepage resistant as evidenced by damp penetrations through the external walls, the main roof coverings and the original mild steel windows;

(e) the common staircases are unsatisfactory means of fire escape for the upper floors because no improvement was made to the fire resisting construction and fire service installation in the Building;

(f) unauthorized building works of enclosed front balconies adversely affected the structural safety of the Building;

(g) the conditions of the internal doors, finishes, bathrooms and kitchens fitments are poor; the most common defects in the flats are missing or defective bedroom, bathroom and kitchen doors, cracks and spalling to the internal floors, walls and ceilings;

(h) sanitary fitments in the bathrooms and cooking facilities in the kitchens generally are broken or otherwise defective requiring replacement;

(i) the original mild steel windows have generally corroded and are not water resistant;

(j) internal electrical installations inside 37 flats have been haphazardly altered and are in poor condition;

(k) internal inspection of flats found equipotential bonding connections are not provided for exposed and extraneous conductive parts;

(l) flushing water supply system  for the Building have been abandoned from use;

(m) condensate drainage system with drain inlets provided for all AC units needs to be installed in order to avoid creating water dripping nuisance;

(n) closed circuit television survey carried out to the underground drainage has revealed defective drainpipes and 6 manholes requiring replacements and reparis;

(o) defects in electrical installation that require repair and maintenance;

(p) fire service systems required to be added in compliance with the requirements of the Fire Safety (Buildings) Ordinance.

30.  Mr Wong assessed the total cost of repair works at $21,158,266 which amounts to 40% of the construction cost of a new similar superstructure.  He came to the conclusion that the Building had deteriorated to a state which is beyond reasonable economic repair as signified by the high repair cost.  As more rapid deterioration will occur in the future, the necessary maintenance and repairs will inevitably be more frequent and extensive, making the continued occupation of the Building not economical and even unsafe, to both occupants and third parties.  He recommended the owners to redevelop rather than repair given the Building does not possess any historical value or architectural merit. 

31.  The applicants also rely upon two economic tests, i.e. the age test and the repair test, conducted by Mr C Chan in his Supplemental Report prepared on 7November 2013.

32.  For the repair test, Mr C Chan adopted the findings by Mr Wong that the total estimated cost to restore the Building to tenantable standard is $21,158,266.  If the unauthorized building works related items are excluded, the net repair cost for the remedial works is about $17,863,230. The enhancement by the repairs (the difference between the After EUV and the Before EUV) is $6,566,700; it is not economically justified to carry out the proposed repair works. 

33.  For the age test, Mr. C. Chan assessed the total existing use value (“EUV”) of $364,020,000 could be enhanced to $370,586,700 if a net repair cost of $17,863,230 were spent. He assessed the redevelopment value (“RDV”) of the Lot on its own at $427,000,000.  Given the RDV is higher than the EUV, Mr C Chan opined that the redevelopment of the Lot is warranted.

34.  There is no contrary expert evidence andI accept the applicants’ evidence in whole.  In particular, I am satisfied that based on the evidence of Mr. So and Mr. Wong, redevelopment of the Lot is justified due to the age and the state of repair of the Building :

(a)the Building is over 53 years old;

(b)the Building is in very poor physical conditions and disproportionate cost is required to repair and maintain the Building; and

(c) the obsolete design of the Building does not suit the present requirements of a building.

REASONABLE STEPS TO ACQUIRE ALL THE UNDIVIDED SHARES IN THE LOT

35.  The Applicantsare under an obligation to negotiate on terms that are fair and reasonable in a situation when the whereabouts of a minority owner are known.

36.  As stated in paragraph 8 above, R5 and the applicants have reached a settlement agreement, pursuant to which R5 applied for and obtained leave to withdraw his Notice of Opposition and all his evidence. This event shows that reasonable steps have been taken to acquire the undivided shares allotted to R5’s Unit.

37.  In respect of R6’s Unit, the 2^nd applicant previously entered into a Conditional Agreement for Sale and Purchase of 19 April 2011 and a Supplemental Agreement with R6 for the purchase of the R6’s Unit which was signed by two sons of R6. The Conditional Agreements fell through when the solicitors acting for R6 failed to produce the necessary Power of Attorney of R6 appointing the said two sons. Subsequently, through their solicitors, Mayer Brown JSM, the applicants had made a number of offers to R6, each being accompanied by a Savills’ letter assessing the share of the RDV apportioned to R6’s Unit according to the statutory formula:

Date of Letter	Particulars
23 November 2011	Offer of $3,840,000
16 December 2011	Offer of $3,840,000
22 March 2012	Invitation for mediation
23 November 2012	Offer of $4,080,000
28  October 2013	Offer of $4,700,000
6 January 2014	Offer of $6,740,000
19 March 2014	Offer of $6,740,000

The offers were generally higher than the valuations. The applicant was guided by expert opinion in making its offers. Mr A. Chan is a professional valuation surveyor from a reputable firm of surveyors in Hong Kong.  There is nothing to suggest that his valuations are other than proper and professional.  The offers made since November 2012 also fares well against our determination:

6th Respondent’s share of RDV as determined by me

$421,000,000 x $2,500,000/ $261,970,000 = $4,017,636

38.  In respect of R10’s Unit, as stated in paragraph 8 above, the sale and purchase agreement entered into by R10 and the 2^nd applicant was cancelled because of some title doubts. The parties instead entered into the Settlement Agreement of 23 December 2013 whereby the parties agreed on the amount of net proceeds R6 shall be entitled to in the event there shall be an order for a compulsory sale in the proceedings herein and a successful auction sale. Mr Mok contends that this may be viewed as an alternative method of performance that reasonable steps have been taken to acquire the undivided shares allotted to R10’s Unit.

39.  In respect of R12’s Unit, again as stated in paragraph 8 above, R12 has accepted the applicants’ latest offer and completion shall take place on 26 May 2014.

40.  In view of the above, I am satisfied that the applicants have taken reasonable steps to acquire all the undivided shares in the Lot including the R5’s Unit , R6’s Unit, R10’s Unit and R12’s Unit. 

RESERVED PRICE FOR THE AUCTION

41.  The applicants submit that the reserve price for the auction of the Lot should be fixed at $421,000,000, based on the assessment by Mr C Chan of the RDV of the Lot on its own as at 25 March 2014 in his valuation report of even date.

42.  I have carefully considered Mr C Chan’s valuation of the RDV of the Lot.  I note Mr C Chan had considered two land sale transactions in the past years, ie the sale of the site at North Point Estate Lane and Shu Kuk Street in North Point in March  2013 and another at 5-9 Hing Wan Street, Wan Chai in April 2012. I agree with him that they are all not suitable for direct comparison purpose because “of the substantial disparity in development potential due to different attributes on location, development scale and development restrictions” between the Lot and the land sale comparables. 

43.  I also referred Mr C Chan to the recent sale by Government of Shau Kei Wan Inland Lot No. 854 on 9 April 2014 for $433,599,000. The site being located at the junction of Oi Kan Road and Oi Tak Street has a site area of 476.4 sq m in comparison of the Lots at a net developable area of 336.31 sq m. This site was tendered out at an accommodation value of $101,129 per sq m. Mr C Chan responded that this Shau Kei Wan site was for pure residential purpose whereas the Lots can be used for both commercial/residential purposes or indeed hotel development. Also, a special attribute of this Shau Kei Wan site is that it enjoys unobstructed seaview over Aldrich Bay. Therefore, it is not suitable for direct comparison purpose.

44.  In the absence of evidence to the contrary, I agree with Mr C Chan that as a last resort, the residual method has to be employed as the method of assessment of the RDV of the Lot. This is done by deducting development costs (including construction costs, professional fees, finance costs etc) and developer’s profit from the estimated gross development value of the completed development.

45.  Mr C Chan opined that the optimum development on the Lot comprised a block of 33-storey hotel with entrance lobby and retail shops on G/F, back of house on 1/F and hotel guest rooms on the upper floors with details of the hypothetical development and residual valuation set out in Appendix IV (Bundle B3/23-25), and details of the comparables with adjustments in Appendix VI (for shops at Bundle B3/34) and Appendix VII (for hotels at Bundle B3/36).  Mr C Chan also adopted the Development Cost Pro-forma promulgated by the Hong Kong Institute of Surveyors to facilitate consideration of construction costs in land value assessments in Appendix V (Bundle B3/27-32). I have gone through his valuation in details.  I am satisfied with his valuation, including the valuation assumptions he has adopted, the values and the costs parameters that he has used in his valuation. 

46.  Based on Mr C Chan’s valuation, I decide that the reserve price for the auction of the Lot should be HK$421,000,000.

TRUSTEES

47.  The Applicants proposed to appoint Mr. Ma Ho Fai (馬豪輝) and Ms. Tsang May Ping (曾美萍) who are senior partner and partner respectively of Messrs Woo Kwan Lee & Lo, Solicitors, Notaries, Agents for Trademarks & Patents, as the sale trustees.  Based on the information on their background and experience as set out in the letter dated 11 April 2014 from their firm, I am satisfied that they are proper persons to be appointed.  Their remuneration at the rate of $5,500 per hour (exclusive of disbursements) as mentioned in the letter dated 11 April 2014 is also reasonable and will be allowed accordingly.

PARTICULARS AND CONDITIONS OF SALE OF THE LOT

48.  Mr Mok has submitted a set of draft particulars and conditions of sale by public auction for our consideration.  While I understand these are the usual terms used for compulsory sale, I approve the draft particulars and conditions of sale accordingly.

CONCLUSION

49.  By reason of the aforesaid, I am satisfied that the redevelopment of the Lot is justified due to the age or state of repair of the Building, and that the applicants has taken reasonable steps to acquire all the undivided shares in the Lot. This Tribunal is also satisfied that the values of the 5^th respondent’s Unit, 6^th respondent’s Unit, 10^th respondent’s Unit and 12^th respondent’s Unit as assessed in this Application are not less than fair and reasonable, and not less than fair and reasonable when compared with the values of the applicants’ units.

ORDER

50.  This Tribunal makes the following orders:

(i) All the undivided shares in the Lot, the subject of the Application, be sold by way of public auction for the purposes of redevelopment of the Lot;

(ii) Mr. Ma Ho Fai (馬豪輝) and Ms. Tsang May Ping (曾美萍) nominated by the applicants be appointed trustees (“the Trustees”) to discharge the duties imposed on trustee under the Ordinance in relation to the Lot and the Trustees be authorized to charge such remuneration for their services in accordance with the terms set out in the letter from Messrs Woo Kwan Lee & Lo, Solicitors dated 11 April 2014;

(iii) For the purposes of the sale of the Lot by public auction :-

(a) The sale of the Lot be on the particulars and conditions of sale substantially the same as those in the draft Particulars and Conditions of Sale ( as set out in page 2162-2190 of Bundle A9) initialed and approved by the Tribunal;

(b) The reserve price be set at $421,000,000;

(c) Subject to further extensions that the Tribunal may subsequently allow upon the application of the purchaser of the Lot or its successor in title, the redevelopment of the Lot and the Building shall be completed and made fit for occupation within a period of 6 years after the date on which the purchaser of the Lot becomes the owner of the Lot; and

(iv) There be liberty to the applicants, the 5^th respondent, the 6^th respondent, the 10^th respondent, the 12^th respondent, the 14^th respondent, the 15^th respondent, the 16^th respondent, the 17^th respondent, the 18^th respondentthe 19^th respondent and the Trustees to apply to the Tribunal for further directions.

COSTS

51.  Since the applicants do not ask for costs, I make a costs order nisi that there be no order as to costs between the parties, such order be made absolute after 14 days if no application is made to vary the said costs order.