KAISILK DEVELOPMENT LTD v. DIRECTOR OF LANDS

LDLR 1/2005

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Lands Resumption Application No. 1 of 2005

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BETWEEN

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DECISION ON REVIEW

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1.  On 20 May 2011, I delivered a written judgment and determined the compensation for Nos. 10, 12, 14 and 16 Wan Chai Road, Wan Chai, Hong Kong, namely Inland Lot Nos. 505 sA ss1, sA ss2 sA & RP, sA ss3 and sA RP to be $ 74,451,000.

2.  On 16 June 2011, the parties jointly applied for a review of my determination. Parties, by consent, asked for a re-determination of the total development costs (including construction costs, professional fees and contractor’s profit) in the residual method of valuation mentioned in paragraph 44 of the judgment which I have accepted to be $28,320,760, namely the agreed construction costs of $22,476,793  +  $22,476,793 x 6% +  $22,476,793 x 20%.

3.  The parties have jointly submitted to this Tribunal that the common view of the experts and the proper way to take into account of the “professional fees” and “contractor’s profit” in the total development costs should be applying this formula $22,476,793 x 106% x 120% and accordingly, the total development costs should be $28,590,481 instead of $28,320,760.

4.  Although there are many academic discussions and arguments on what should be the best way to calculate the total development costs in a residual method of valuation and there are, in fact, a number of schools of thought, I agree that the agreement and common view of the experts should usually be accepted, unless it was plainly wrong or it was against any established valuation principles.

5.  In the premises, I accept the parties’ joint application to review and upon review, I re-determine the total development costs to be $28,590,481 and the overall compensation to be $ 74,257,000. Since I do not see the benefit of holding an oral hearing for this review, I shall deal with the present application on paper only.

6.  I therefore make the order that paragraphs 44 and 45 of the judgment dated 20 May 2011 be varied by substituting the original paragraphs 44 and 45 by the following paragraphs:-

“44. According the parties agreed assumptions and my determination above, the valuation of the Subject Property is as follows:-

45.  Accordingly, I order that the Respondent do pay the Applicant compensation for the Subject Property in the sum of $74,257,000.  The matters of professional fees, interest and costs shall be adjourned to a date to be fixed, with liberty to apply for any other ancillary and consequential matters.”