TSANG KAM LAN v. YOOK TONG ESTATES LTD.

1997, No.MP325

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This application for judicial review arises out of what is said to be a decision of the Secretary for Planning, Environment and Lands in November when he made a recommendation that two properties, Nos.446 and 448 Reclamation Street in Kowloon, should be resumed. That is the Hong Kong method, because of the land ownership, equivalent to the compulsory purchase of these two properties. I confess that when I first saw all these papers and the massive authorities that I have been provided with, it seemed to me to raise points of difficulty, but fortunately I have had experienced counsel in front of me and the issue in reality is a relatively narrow one.

2. The statutory framework under which these matters occurred is found first of all in the Land Development Corporation Ordinance. This established a corporation whose role is to bring about urban renewal essentially. It has considerable financial powers and it has a Secretary for Planning, Environment and Lands ("the Secretary") and in order to bring about urban renewal when persons are unwilling to sell their property, it can take steps to ensure that these properties are acquired. As I said it is technically called resumption because there is a Crown lease. Under s.15, the corporation may write to the Secretary and say

"Would you please bring about the acquisition of certain properties so that we can ourselves carry out urban renewal."

Portions of Hong Kong over the years have been subject to this type of development. It is important that there are these wide powers, because in a crowded and congested type of urban development as we have here, a large amount of land is generally required. So one might have, for example, one or two owners unwilling to sell and so the Corporation can cause this to be brought about. And indeed this is what has happened here. This is a large scale redevelopment of the Reclamation Street and another street in Hong Kong where there are pre-war buildings which clearly have outlived their usefulness and urban renewal is required.

3. So one finds s.15 which puts into operation a procedure whereby the Secretary considers the request that is made to him, he then can make a recommendation, it then goes to the Governor-in-Council to be approved and the Governor then makes an order under s.3 of the Crown Lands Resumption Ordinance and he decides the resumption is required for public purpose. The acquisition by the Land Development Corporation being for a public purpose, that is by virtue of subsection 6.

4. So one really has a number of procedural steps which have to be followed and the person whose property is acquired then, under the Crown Land Resumption Ordinance, has a right to go to the Lands Tribunal which fixes the value of the property subject to a variety of valuation rules. There is then appeal procedures whereby points of law can be raised and it can go to the Court of Appeal and ultimately to the Privy Council as some cases have.

5. The applicants here are the owners of Nos.446 and 448 Reclamation Street. It is a slightly unusual building in that they share a common staircase above the ground floor. As a matter of ordinary common sense, one would anticipate that development of one would probably bring about development of the other. The two owners from some time in 1988 clearly were seeking to develop the site. They realized that a joint development was more profitable than single developments. However what had happened some years earlier was that the development in Hong Kong, which can be seen on development plans, showed that there had been a notation GIC and that notation and the late notation in April 1988 of a central development area (CDA) demonstrated to anyone who either owned or wished to purchase properties that there would be, in the foreseeable future, urban redevelopment. This of course does take some time. There are provisions whereby blighted properties can be sold. But what happened here was that the two applicants made efforts to bring about development themselves and they were really bound to fail. In 1989, the LDC came onto the scene and offered $1.6 million odd to No.448 and $2 million to No.446 and the owners did not wish to take the money.

6. Thereafter, there was a series of offers and negotiations going on to try to persuade the owners to sell their properties. The dates and chronology are clearly set out by counsel and solicitors to whom I am grateful. As there was an inability by the LDC to acquire both these and other properties, they made a request and the Secretary ultimately made a recommendation.

7. What this case is about is a challenge to the Secretary's recommendation and what in essence Ms Eu Q.C. wishes to bring about is to utilize the Court in a way so that her clients get a lot more money.

8. The factual position is that if the sites are valued singly, they are worth in the region of $10 million, it fluctuates as the market in Hong Kong fluctuates but that is the sort of figure. However, if developed together, they would fetch up to $29 million, this is because the plot ratios which control development are altered when one has more than one site. It is not necessary for me to describe it, because it is well-known how the plot ratio can be increased so that, for example, on a joint development one might have 20-storey buildings and on an individual development of only 6 storeys. So that is what this case is all about. It is all about obtaining money. That is not to criticize it, people are entitled if they think they can get more money to try to come to Court to persuade a judge to allow them to have it.

9. The role of the Court is well-known. I do not wish to refer to all the authorities but I am not an appellate judge here, I am a review judge. There have been a number of recent decisions in England in the House of Lords, basically because the English High Court judges appear to be adopting an appellate role, but that has not been the situation in Hong Kong. Judges know that their sole function is to review. In other words to ensure that the decision-maker does not abuse his powers, nor misuse his power, nor that citizens' rights are adversely affected.

10. The role of the Secretary is to make a recommendation and subsection 3 says he shall not make a recommendation unless he is satisfied that the Corporation has taken all reasonable steps to acquire the land, which they have done, but it must include negotiating for the purchase on terms that are "fair and reasonable". Under subsection 5, he is entitled to consult a person to assist him in forming an opinion on which to base his decision in respect of that negotiation. There clearly has been active negotiation. Ms Eu's case put in a nutshell is simply this : She says that there is apparently some obligation on the Secretary to offer them a value that reflects a joint development of these two properties, because, she says, if he does not do that he has not negotiated on terms that are fair and reasonable. This is a somewhat startling proposition when looked at like that because it would involve the Court in forcing the Secretary virtually to disregard the normal provisions which are found in the Lands Tribunal for deciding what is the appropriate value to be given to a property. In other words the Court is being turned into a valuer, in that I am being asked to make an order to force the Secretary to tell these two property owners that he will acquire on a higher basis. If he does, I would have thought they would leave it at that. They would be no doubt congratulating their lawyers on preventing them having the expense of going to the Lands Tribunal. As I said when one isolates the point, one can see the great difficulties that face this application.

11. I have looked through all the papers and at one time in the course of arguments, I had thought that the Secretary was not perhaps aware of the particular facts of the case. If indeed under subsection 3, the Secretary makes the recommendation which is totally devoid of reality, in other words so unreal that one can say he has not really made a recommendation, or treats the applicants in such a way that their standard fair treatment has been taken away, then perhaps the Court can begin to interfere by judicial review.

12. In July, there was produced a report from Patrick Lo Surveyors who are independent surveyors appointed for the purpose of advising in this case and it is a very full and lengthy report which is found in the papers here. One of the matters which they researched was to decide whether or not there had been an approach by the LDC which was fair and reasonable. These words found, as they are in the Ordinance, are very wide words. What is fair and reasonable to the Secretary may not be fair and reasonable to the person whose property is being acquired. That is an obvious comment, because all persons consider their properties more valuable than they are, particularly in Hong Kong some people have inflated ideas of the value of their properties when a Government department wants to take it - it suddenly jumps from $5 million to $10 million. So what is fair and reasonable must mean what is in the normal market conditions fair and reasonable. That is why the Secretary is entitled to go out and get an independent report which is what he did. It was a very long report, I do not refer to it in detail but the surveyors examined all of the matters; they examined what is called the "marriage value", that is two or more owners joining together to bring about redevelopment and they came to the conclusion that insofar as these two properties were concerned, there was not sufficient evidence to prove that they had the intention and resources to carry out redevelopment with adjoining owners and therefore they did not consider it to be appropriate to allow marriage value. That conclusion could be a wrong conclusion and no doubt in the Lands Tribunal it would be tested on evidence and counter evidence, expert against expert, submissions being made on law, all the sort of standard matters that are dealt with in the Lands Tribunal. It is not necessary to refer to all the authorities, but the incorporation of other land into a scheme of redevelopment can be taken into account. All these of course are matters for the valuers and for the Lands Tribunal which is an expert tribunal.

13. So when the Secretary looked at this report, was he satisfied that the purchase was on terms that were fair and reasonable as far as he was advised. And it seems to me he was. As I said it may be some of the values are wrong, it may be that someone will go to the Lands Tribunal and persuade the Tribunal that their properties were worth $2 million more than Messrs Lo thought they were, but these are not matters that the Court should be involved in at all. The challenge therefore to the Secretary here must demonstrate that he either did not properly carry out his statutory duty or that his decision is really so unreal as to be Wednesbury unreasonable, which really means it is not based on any reason at all. It seems to me that the matter was considered very fairly and if there was any doubt in this case about the approach he has adopted, the matter is made abundantly clear by the steps he took after receiving the report. The report was received and obviously the applicants did not like it because they were only going to get $10 million instead of $29 million.

14. On 6 November there was a written representation which is found at p.122, I do not refer to it in detail, but this was a letter coming from the solicitors, probably drafted by counsel. I have come across this type of approach to Government departments, it is a standard submission that is made in writing, I suppose it keeps members of the Bar busy to draft these but it is a very full submission essentially of the history, the background, the facts, the answers to the approach of the surveyors and it sets out in reality what has been said to me in Court. It says at the end this :

"That the offers that were made were never fair or reasonable and our clients are still willing and prepared to continue to negotiate on fair and reasonable terms. We trust that the best way to proceed is for our clients and the LDC to continue their negotiations which will save cost and time of compulsory resumption."

It asked not to make a recommendation. That went to the Secretary and it was considered and two weeks or so later the Secretary wrote back and said that the representations had been considered but nevertheless the recommendation is still to be made. I cannot see that the applicants were treated unfairly, the matters were all canvassed at length. What in essence, as I said, is sought is very unusual in that I am being asked to make an order essentially which would bind the Secretary to make an offer of compensation on a completely different basis. In my judgment, I have no power to do that.

15. The citizens here, that is the owners, are protected by law. The law gives them a right to go to the Lands Tribunal. They can go and argue the case. Ms Eu says if they go there they might lose some bonus. That is a matter for them, they must decide, the value has gone up from $1.1 million up to $10 million but apparently they want more.

16. I have examined all the submissions that have been made, I am in no doubt at all that the decision of the Secretary is not amenable to judicial review. I can find nothing in any shape or form unlawful, nor is his decision in any way flawed. The other challenge is against the Governor-in-Council, that really is a non-starter. I cannot see how his decision based on the recommendation is open to challenge. As I said this is not one of those cases where I have to protect the rights of individuals who are being subjected to some potentially unfair treatment by a Government department. I think these two applicants have been very fairly treated all the way along, their views have always been taken into account. The approach of valuation is what is disputed. That is a matter no doubt which the Lands Tribunal will sort out later on.

17. This application is dismissed.