ABLE LUCK DEVELOPMENT LTD AND OTHERS v. BOLY METAL MANUFACTORY LTD AND OTHERS

LDCS 11000/2018

[2022] HKLdT 52

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAIN APPLICATION NO 11000 OF 2018

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D E C I S I O N

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BACKGROUND

1.  This is R4’s application for leave to appeal against the judgment made by this tribunal on 22 April 2022 (“the Judgment”) ordering, inter alia, that all the undivided shares of and in Kun Tong Inland No 15 (“the Lot”) together with a building erected thereon known as Yip Fat Factory Building, No 77 Hoi Yuen Road, Kowloon be sold by public auction for the purposes of redevelopment of the Lot. R4 also applies for stay of execution of the Judgment.

2.  These applications are dealt with on paper without oral hearing. By this Decision, we give our ruling together with the reasons therefor.

3.  The Applicants are represented by Mr Edward Chan SC and Mr YC Mok. R4 is represented by Mr Anthony Ismail.

4.  Mr Ismail proposes 11 grounds of appeal, grounds 1 to 9 concern zoning and grounds 10 to 11 concern revitalization.

ZONING

R4’s Grounds about Zoning

5.  R4’s 9 grounds of appeal about zoning all boil down to the single contention that a zone shall be treated as an “Industrial zone” for the purpose of section 4 of the Land (Compulsory Sale for Redevelopment) (Specification of Lower Percentage) Notice, Cap 545A (“the Notice”) as long as uses for some kinds of industrial purposes are permitted in the area regardless whether the industrial purpose is the main purpose and regardless of the broad land use designated for the zone. On this basis, R4 submits that the Lot, being within an industrial zone, is not a lot specified for the purpose of section 3 of the Notice and therefore the Applicants cannot take advantage of the reduced ownership threshold of 80%. As the Applicants have failed to meet the 90% threshold applicable at the time of their application for a compulsory sale, an order for sale shall not be granted.

6.  R4’s elaborated arguments under those grounds can be found in their draft revised Notice of Appeal which is attached at Appendix I.

Discussion in Judgment about Zoning

7.  This tribunal discussed the issue of zoning at some length in paragraphs 11 to 45 of the Judgment under the heading “Ownership of the Applicants”. Those analyses remain applicable in the present disposal of R4’s grounds of appeal about zoning.

8.  In short, the tribunal’s interpretation of section 2 of the Notice is this: The fact that the permitted uses of “Other Specified Uses (Business) Zone” (“OU(B)”) include some industrial use does not detract from the fact that an “Industrial zone” is different from a “OU(B) zone”.

9.  The tribunal arrived at this interpretation by a constructions of the plain words of section 2 of the Notice in the context of:-

(a)	The relevant sections of the Town Planning Ordinance;[1]
(b)	The zoning history of the zone which has included the Lot, namely the rezoning from “I” to “OU(B)” zone;[2]
(c)	The purpose of the introduction of the OU(B) zone (namely, to encourage existing “I” buildings in non-industrial zones to be redeveloped);[3] and
(d)	The purpose of the promulgation of the Notice (namely, to overcome the problem that large-scale rezoning of “I” zones into non-industrial zones failed to achieve the desired scale of redevelopment and to lower the required ownership percentage in order to facilitate the redevelopment of under-utilized or disused industrial buildings standing on land which has been rezoned from industrial to non-industrial).[4]

Applicants’ Submissions about Zoning

10.  The Applicants consider the tribunal’s interpretation of section 2 of the Notice plainly right both on authority and also in principle and logic. In summary, the Applicants maintain that the definition in section 2 of the Notice must be referring to the zoning adopted rather than any area where some kind of industrial use is permitted. An OU(B) zone cannot at the same time also be made an “Industrial zone” as this is beyond the power of the Town Planning Board to do so. R4’s contention is tantamount to reading different/extra words[5]into the definition in the Notice. R4’s reliance on those forms and guidelines are futile as the Town Planning Board cannot widen their power by publications. R4’s submission that the LegCo Briefs are inadmissible and irrelevant is contrary to the basic rule of interpretation.

11.  The Applicants state the facts about the zoning of the relevant outline zoning plan (“OZP”) in paragraphs 3 to 7 of their submissions. The summary is helpful and is appended[6] below (in paragraphs 12 to 16) to lay the foundation for further discussions.

Facts about the relevant OZP

12.  At all times until G.N.6394 of 19 October 2001 the Lot was within the Industrial zone in the relevant OZP. As published in G.G.6394, the Town Planning Board amended the OZP by rezoning all the industrial sites in Kwun Tong Industrial Area from “Industrial (I)” to “OU(B)”. From then onwards, industrial zone ceased to exist in the OZP of the Lot in Kwun Tong area.

13.  For the present purpose, the relevant time is the time of the application for the compulsory sale order. At that time the relevant OZP contained 7 land use zonings i.e. (i) Commercial (1); (ii) Residential (Group A); (iii) Residential (Group B); (iv) Government, Institution or Community; (v) Open Space; (vi) Other Specified use (For “Business” only); and (vii) Green Belt.

14.  The planning intention of the Other Specified Uses (For “Business” only) is “This Zone is intended primarily for general business uses. A mix of information technology and telecommunications industries, non-polluting industrial, office and other commercial uses are always permitted in new “business” buildings. Less fire hazard-prone office use that would not involve direct provision of customer services or goods to general public is always permitted in existing industrial or industrial-office buildings.”.

15.  The object of the relevant OZP is set out in section 3 of the Explanatory Statement of the Plan. In particular paragraph 3.1 says that “The Object of the Plan is to indicate the broad land use zonings and major transport network …”.

16.  In relation to the pre-amended OZP, the subject lot fell into industrial zone (which had since been removed) and the Notes to that pre-amended OZP described the industrial zone: “Land zone for this purpose is intended to provide for industrial developments including general industrial uses, service trades and warehouses …”.

Analysis

17.  Below we shall analyze the intended appeal by three steps: step one is to set out the relevant statutory provisions. Step two is to briefly explain the system of land-zoning and the composition of an OZP so as to set the scene for step number three, deciphering R4’s arguments.

Statutory provisions

18.  Section 3 of the Notice provides that:

“80% is specified as the percentage required for the purposes of section 3(1) of the Ordinance in respect of a lot that belongs to any class of lot specified in section 4.”

19.  Section 4(1)(c) of the Notice provides that:

“(1) The following classes of lot are specified for the purposes of section 3 –

(c) a lot that is not located within an industrial zone and each of the buildings erected on the lot—

(i) is an industrial building;

(ii) was issued with an occupation permit at least 30 years before the relevant date.”

20.  The term “industrial zone” in section 4(1)(c) of the Notice is defined in section 2 to mean:

“a zone that is set apart for industrial use in a draft plan prepared by the Town Planning Board or approved[7] by the Chief Executive in Council under the Town Planning Ordinance (Cap.131)”

Land zoning system and OZP

21.  Hong Kong has adopted a hybrid-system of zoning and planning permission. The Town Planning Board makes map based statutory plans[8] such as OZP, each covering a geographical district. Plans are zone based. A statutory plan divides the land governed by it into a number of designated zones such as residential, industrial or green belt etc.

22.  The object of an OZP is to indicate the broad land use zonings.[9] An OZP has three components, namely: (i) a map, (ii) notes and (iii) an explanatory statement. The map and the notes together form the statutory plan. The explanatory statement forms no part of the plan for statutory purposes.[10]

23.  The notes of a specified zone consist of three parts: (i) The first part sets out in the form of two columns. Uses which are always permitted in that zone are arranged under Column 1 and uses which may be undertaken with planning permission are arranged under Column 2; (ii) The second part sets out the planning intention of the zone; and (iii) The third part contains remarks, which qualifies some of the uses listed in column 1 or column 2.[11]

Deciphering Arguments

24.  The subject zone was designated with the land use of “OU(B)”. As mentioned in paragraph 14, the planning intention of the zone is set out in the notes to the OZP as:

“The zone is intended primarily for general business uses. A mix of information technology and telecommunications industries, non-polluting industrial, office and other commercial uses are always permitted in new “business” buildings. Less fire hazard-prone office use that would not involve direct provision of customer services or goods to general public is always permitted in existing industrial or industrial-office buildings.”

25.  With such planning intention in mind, the Town Planning Board identified the individual uses that are unquestionably related to the intended purpose of the zone for inclusion in Column 1 (i.e. uses that are “always permitted” or as of right) and identified the individual uses that are compatible with the purpose of the zone for inclusion in Column 2 (i.e. uses allowed upon permission).

26.  It is therefore the designation of a zone that determines or affects what individual uses should be included in the two columns of the notes, not the other way round. We pause at this juncture to specifically respond to paragraph 17 of R4’s submission which asserts that “a zone is defined by its permitted uses whether with or without planning permission from the Town Planning Board”.

27.  It is unclear what R4 actually means by the word “define”. If this word is used to denote the meaning of “explain” such that the sentence means “what can or cannot be undertaken in a zone is explained more clearly by the permitted uses in the two columns”, then we would have no strong view on this general statement which does not really touch upon the present dispute one way or another.

28.  But if the word “define” is employed by R4 to mean “determine”, then we must register our rejection of this statement which manifestly reverses the cause and effect as explained in paragraphs 25 and 26 above.

29.  In our view, R4’s construction of section 2 of the Notice is manifestly contrary to the ordinary meaning of the statutory language. Section 2 defines an “industrial zone” in an OZP as “a zone that is set apart for industrial use…” (Chinese version: 劃出作工業用途的地帶). These words, in our view, cannot be loosely construed or casually taken to mean “an area where industrial use is or may be permitted” (Chinese version: 可作工業用途). This is what R4 advocates regrettably.

30.  Section 4 of the Notice requires that to be eligible for a lower ownership percentage of 80%, the subject lot must not be located within an “industrial zone” which term is defined by section 2 to mean “setting apart of a zone for industrial use”. We call attention to the words “set apart” and “zone”. The right focus must be on the land-use zoning of a broader sense, rather than on the minute inclusion or exclusion of an assortment of individual uses in the schedule to the notes of the plan.

31.  Illustrative of this is the fact that many individual uses are commonly permitted under different zones[12]. Temporary use[13] of any building are always permitted as long as they comply with any other relevant legislation. As the permitted uses within a zone could vary and diversify, it is obviously wrong to say that each zone/area should be called or considered a zone for any of the permitted use.

32.  R4’s interpretation also cannot sit well with section 4 of the Notice and would produce absurdity and internal inconsistency in the section. Section 4 provides that in order to enjoy the reduced ownership requirement (80%) in section 3, the target lot (i) “must not be located within an industrial zone”; and (ii) each of the buildings erected on the lot “should be an industrial building” issued with an occupation permit at least 30 years before the relevant date.

33.  If the building being of an industrial nature is a prerequisite to enjoying the reduced ownership threshold of 80%, it cannot be envisaged why the statutory provision should contradict itself by simultaneously making the existence of individual industrial uses on the land a disqualifying factor for enjoyment of the reduced ownership.

34.  R4 also tries to use some guidelines, notes, technical documents and reference materials to strengthen their argument. We do not think those publications can assist them at any rate.

35.  The Town Planning Board can certainly issue publications to define the meaning of the terms commonly referred to in plans, to avoid using verbose and lengthy descriptions in the plans and to facilitate better understanding of the plans. For instance, the “Master Schedule of Notes” is a document that is subject to revision from time to time, it explains what uses and developments may be undertaken or continued on land covered by a statutory plan and whether planning permission must be obtained for any of them. It also contains sample notes of different types of land zones. The “Definition of Terms” sets out a number of “broad use terms” to obviate the need to apply for planning permission for a change of use from one type to another in the same broad[14].

36.  That notwithstanding, the Town Planning Board cannot by those publications widen or change the scope of their power as set out in section 4(1) of the Town Planning Ordinance Cap.131, nor can those publications assume the status of 2 and 4 of the Notice in determining whether the reduced ownership prerequisite in section 3 of the Notice is satisfied in a particular case.

37.  As said, before 2001, the Lot was within an industrial zone in the relevant OZP. There has since been a rezoning exercise in the Kwun Tong Industrial Area where the Town Planning Board rezoned all industrial sites from “Industrial (I)” to “OU(B)”. Industrial zone ceased to exist in the relevant OZP ever since. In light of this background, it offends logic for R4 to insist that the Lot was still on an industrial zone on the date of the compulsory sale application.

38.  We cannot emphasize enough to say that an OU(B) zone is different and distinct from an industrial zone and they come with different planning intentions. If a zone is designated as an OU(B) zone, it cannot be designated as an industrial zone at the same time. It is a piece of uncontroverted fact that the relevant zone has been designated as an OU(B) zone. Once we accept that sections 2 and 4 of the Notice refer to the land-use zoning of a broader sense, there is no room for R4 to insist that the zone should be nonetheless be considered as an industrial one.

39.  R4 also submits that the Legislative Council Briefs of 2009 & 2010 “are inadmissible as aids to construction of sections 2, 3 and 4 of the Notice and/or irrelevant and/or unhelpful” because the plain meaning of the statutory provisions must be adopted, the Town Planning Board documents must be read in a down-to-earth and practical manner, and the LegCo Briefs cannot trump the planning intention of “OU(B)” zone for a mix of technology and telecommunications industries, non-polluting industrial, office and other commercial uses.

40.  To reply in short, R4’s allegation that the tribunal did not adopt the plain meaning of the provision is wrong. Contrarily, it was exactly by a construction of the plain words of section 2 of the Notice that the tribunal came to the interpretation upheld in the Judgment.

41.  The historical background, the purpose of the recozing exercise and the purpose of the introduction of the Notice to reduce the ownership threshold were discussed in the Judgment to demonstrate how the unpersuadable interpretation advocated by R4 cannot reconcile with the fundamental context and statutory purpose[15] of the piece of legislation concerned. As mentioned in paragraph 7 above, we shall adopt those analyses for the present purpose without repetition.

42.  In hastily dismissing the LegCo Briefs on the purported reason of irrelevance, R4 simply cannot challenge the tribunal’s analyses of those briefs and the conclusion reached on the purpose of the introduction of the new zone OU(B) and the purpose of the subsequent promulgation of the Notice.

43.  Having set out the fallacies of R4’s contention, we would like to close out our discussion with some concluding observations on the way in which R4 runs their line of arguments.

44.  In paragraph 22 of R4’s submission, they submit that: “The language of section 2 of the Notice follows the language of section 4(1)(b) of the TPO. It does not define “industrial use”. However, the “industrial use or other specified use” must be in a draft plan.”.

45.  This paragraph essentially marks the beginning of R4’s chain of arguments as expanded in this manner: whereas the statutory provisions in dispute are sections 2 and 4 of the Notice, R4 tries to establish some link between section 2 of the Notice and section 4(1)(b) of the Town Planning Ordinance, Cap.131. Whilst section 4(1)(b) of the Town Planning Ordinance, Cap.131 empowers the Town Planning Board to make provision for zones set apart for residential, commercial, industrial or other specified uses etc, R4 brushes aside the primary consideration of zone designation, cherry-pick the term “industrial use”, turn it into plural in reliance of Cap.1 and sets out to search for a definition for it. It is said that the definition can be found in the “draft plan prepared under … the TPO”. R4 then sees a need to further look for the definition or meaning of the “draft plan prepared under … the TPO” and they claim to be able to locate the answer from the schedule of uses in the notes of the plan. From this schedule which contains a variety of individual uses, R4 identifies individual uses of industrial nature which are then employed to ascribe meaning to sections 2 and 4 of the Notice.

46.  As we have discussed above, the meaning of “industrial zone” in section 4 of the Notice is defined in section 2 thereof to mean the “setting apart of a zone for [certain] use”. This plainly refers to the designation of zone by the Town Planning Board and the proper focal point should be the broader category of land-use zone which the land is designated. When the answer is right at hand right before our eyes, there is simply no need for R4 to circuitously look for further meaning or a further definition for the definition in section 2 of the Notice. This is palpably a misdirected over-analysis which cannot clarify the law but confuse.

REVITALIZATION

47.  Grounds 10 and 11 of R4’s intended grounds of appeal concern revitalization.

48.  In short, R4 contends that the tribunal was wrong in not considering the possibility of revitalizing the building in lieu of redevelopment. On the other hand, the Applicants submit that R4’s contention about revitalization was dismissed by the tribunal for unassailable reasons in the Judgment.

49.  This tribunal has dealt with the question of revitalization at length in paragraphs 89 to 106 of the Judgment. We shall adopt those analyses without repetition.

50.  R4 relies on the statement by the then Secretary for Planning, Environment and Lands in LegCo during the Second Reading of the Land (Compulsory Sale for Redevelopment) Bill on 7 April 1998 and quotes paragraph 39 of Century Supreme v Kam Chi Kit Charles and Others to support their contention that the tribunal should take into account “all relevant factors” which in their view should include revitalization.

51.  Our answer to this is: first, the discussion in the Second Reading was not about revitalization at all. The “statement” by the then Secretary was apparently in response to a question raised as to whether the Lands Tribunal should take into account whether compulsory sale of a lot would cause undue hardship to the minority owner. The Secretary said that the relevant clauses has been drafted to allow the Lands Tribunal to take into account other relevant factors including that of undue hardship on the part of the minority owners.

52.  The quoted discussion in Century Supreme likewise was not about revitalization but concerned a different topic – “hardship” to the minority owners. There in that case, the tribunal[16] observed that the statutory requirements of section 4 of the Land (Compulsory Sale for Redevelopment) Ordinance, Cap.545 are expressed by way of using two forms of grammatical negation in one phrase or sentence, i.e. double negative. The tribunal went on to analyze that whilst the textual expression of the section does not compel the tribunal to make an order for sale even though the “age or state of repair” and “reasonable steps” requirements are satisfied, the ordinance actually does not indicate upon occurrence of what events the tribunal should refuse making one either. The tribunal then excluded those highly subjective and general factors (such as emotional attachments to property, fondness of the neighborhood and local community etc), which were the “hardship” raised by some minority owners in that particular case, as being insufficient to sabotage an otherwise successful compulsory sale application.

53.  Apparently, the materials in the Second Reading and the discussions in Century Supreme are inapt for the present situation and are being quoted by R4 out of context.

54.  R4 also submit that the “hard fact” that revitalization is infeasible is irrelevant because the tribunal should “only focus on whether redevelopment is justified by reason of the age or state of repair of the building concerned” which is “a question of law of general importance” but not a fact.

55.  We do not see why the tribunal, having dealt with the questions of law raised about revitalization, cannot also approach this question from the perspective of practical reality.

56.  R4 further says that the “hard fact” may well change if circumstances change and it is “pure speculation (and not fact)” that the Applicants will never agree to revitalizing the Building in the future.

57.  All we have to say is that the Applicants have clearly rejected R4’s suggestion of revitalization. During his oral testimony, the Applicants’ factual witness, Yeung Kin Man, was expressive of severe displeasure with the idea of revitalization and with R4’s vandalizing their redevelopment project at all costs. We are afraid that the tribunal can only assess based on what is before it at the time of assessment. To rule by fancying some slim chance of the Applicants’ changing their mind sometime in the future after judgment is delivered is “pure speculation” to say the least. This can literally be called delusional if one is to view and perceive the interactions between the Applicants and R4 in these proceedings with some clarity of mind.

DISPOSITION

58.  To conclude, we find no reasonable prospect of success in the intended appeal of R4, nor is there other reason in the interest of justice that the appeal should be heard. Leave to appeal is refused. No stay is granted.

59.  We order that R4, having failed the leave and stay applications, do pay the Applicants’ costs thereof with certificate for two counsel granted on the High Court scale to be taxed if not agreed. This is a costs order nisi which will become absolute upon expiry of 14 days from today.

60.  Lastly, we thank counsel for their able assistance.

Appendix