YICON LTD AND ANOTHER v. CHINA LIGHT AND POWER CO LTD

Property law - compensation for diminution of value of land caused by registration of statutory electricity easement - preliminary issue whether land adjacent to easement but not situated within its boundaries entitled to claim compensation - right to compensation solely statutory and liability essentially a matter of statutory interpretation - Held:

IN THE LANDS TRIBUNAL OF HONG KONG

-----------------

-----------------

JUDGMENT

-----------------

1. The Applicants have applied, pursuant to Section 10 of the Electricity Networks (Statutory Easements) Ordinance, Cap.357 ("the Ordinance") for compensation to be paid to them by the Respondent. The Applicants are the respective owners of certain land situate at Yuen Long, New Territories, Hong Kong being Lots 2758, 2782, 3697, 3825, 3836, 3868; and Lots 2751, 2755, 2756, 3451, 3457, 3465, 3601, 3605, 3611, 3612, 3784, 3807RP, 3833, 3877, 3878 all in Demarcation District No.124 and Lots 1885 and 2190 in Demarcation District No.130.

2. On 5th October 1993 the Respondent's Approved Scheme for the Black Point 400 KV Power Transmission System, was deposited in the Land Registry, in compliance with Section 3(2) of the Ordinance. The Governor in Council later on 8th March 1994, ordered that the provisions of the Ordinance should apply in favour of the Respondent, to enable it to carry out works in accordance with the Approved Scheme. The Order was published on 18th March 1994 in No.11 Volume CXXXVI The Hong Hong Government Gazette under L.N. 171 of 1994.

3. The practical affect of the Order was that it empowered the Respondent to construct, operate, maintain, repair or replace an electricity network over or below the ground of the privately owned land, particularised in the Approved Scheme. Upon registration the Respondent was entitled to commence to exercise those statutory powers. The Respondent was thereby authorised to erect power lines above the ground, commonly known as oversails, for the Black Point Transmission Line.

4. I record that a power company's statutory rights created under the Ordinance are limited. Generally they only permit the construction of oversails or underground lines and created limited ancillary rights of access over other land - Sections 4 (1), 8. These rights do not extend to constructing permanent structures, poles, masts or pylons on privately owned land - Section 4(1).

5. The Schedule to the Approved Scheme lists a very large number of properties between Black Point and Shatin, described therein as being "private land affected by the proposed 400kV Overhead Transmission Network..." The Approved Scheme goes on to state that the land affected by the transmission network "....is that within a 25 metre corridor on either side of a line drawn from centre to centre of the towers. The area of private land affected is shown coloured pink on the wayleave plans."

6. The Schedule includes more than one hundred lots in Demarcation District 124 and more than fifty lots in Demarcation District No.130. However, it is common ground that none of the subject land owned by the Applicants, is included in the Schedule. The Respondent rejected the Applicants claim, on the ground that only owners of land included in the Schedule, were entitled to claim compensation.

7. The right to compensation is contained in Section 10(1) of the Ordinance, which provides:

8. The dispute between the parties on the interpretation of Section 10(1), raised a clear question of law. On 31st July 1995, the Tribunal granted the Respondent's application, to determine this question as a preliminary issue. By consent the question was finally formulated in these terms:

"In the absence of any Order made by the Governor-in Council under Section 3 of the Electricity Networks (Statutory Easements) Ordinance, Cap.357 ("the Ordinance") affecting any land(s) owned by the Applicants herein and registered against such land pursuant to Section 5 of the Ordinance (against whose land it is agreed that the Section 3 Order was and is not registered), whether Section 10(1) of the Ordinance imposes any liability upon the Respondent in favour of the Applicants if a diminution in the value of such land can be established."

9. No doubt the issue could have been expressed with greater clarity. The narrow dispute really centred on whether, where an Order has been made, owners of land situated outside but adjacent to the scheduled lots, also have a right to claim compensation under Section 10(1). The inclusion in the agreed question of the words "the Section 3 Order" sufficently, if less clearly, raises this same issue.

10. Mr. Kat for the Respondent in summary submitted, that its liability to pay compensation was limited to the class of owners whose properties had, by virtue of the Order, become subject to the rights in favour of the power company, created by Section 4. The Section 4 rights may, of course, only be exercised against the owners of the scheduled lots situated within the statutory easement. It followed from this submission, that owners of adjacent land outside the statutory easement, even if suffering a diminution in value, caused by works carried under the Order, were not entitled to compensation.

11. Mr. Wong for the Applicants, equally clearly submitted, that such adjacent owners were entitled to claim compensation. In his submission, the right to compensation was not limited to owners against whom the power company was given a statutory right to route electricity lines, either over or under their land. The relevant but different question, was whether any such adjacent land, had also suffered a diminution in value, attributable to the registration of the Order.

12. In recent months the question whether the class of persons entitled to compensation, is merely co-extensive with the class of persons against whose land the power company is given statutory rights, has become a matter of some public controversy. It initially involved more than one hundred owners of land adjacent to the Black Point Power Transmission System, many of whom filed applications for compensation with the Tribunal.

13. The dispute, as a matters of law, essentially raises a narrow question of statutory construction. The Applicants properly approached the matter on this basis. It was submitted that once the Order was registered under Section 5, twofold but quite separate consequences followed. First, the power company became entitled to exercise the rights against private land created by Section 4. Secondly, owners of private land at the date of registration of the order, became entitled to compensation under Section 10, if their land suffered a diminution of value, attributable to the Order.

14. Mr. Wong submitted that Section 10(1) should be broadly construed and that its unambiguous terms made it it unnecessary to look beyond its express provisions. Those provisions clearly did not expressly limit compensation to owners of land within the statutory easement. To the contrary, they referred to "any land." The only restrictions were that a claimant had to be an "owner" at the relevant date and claims were limited to "any diminution of the value ... attributable" to registration of the Order.

15. It was submitted that as the Applicants were the respective Crown lessees of the subject land, they each fully satisfied the definition requirements of "owner" set out in Section 2. Their status was therefore quite different to that of the applicants in Chan Sik Cheung v. Director of Lands [1995] 3 HKC 199. The case was cited by the Respondent and concerned a compensation claim under the Foreshore and Sea-bed (Reclamations) Ordinance, Cap.127. Claims thereunder are expressly limited to persons having an "interest, right or easement" in the foreshore or sea-bed. It was undisputed that the unsuccessful applicants did not own any interest, right or easement therein.

16. Although it would strictly be a matter for subsequent evidence, the Tribunal was invited to exercise its commonsense and accept that not only land immediately under oversails but also adjacent land could by their existence, also suffer a diminution in market value. The Legislature, it was submitted, could not have intended that losses suffered by adjacent owners would not be compensated. Chow Chi Keung v. China Light and Power Co. Ltd MR No.1/82 was cited as an example where compensation was calculated for the whole lot and not merely for the two-thirds immediately under the oversails.

17. Mr. Kat submitted that all rights to compensation were statutory and referred the Tribunal to the judgment of Lord Parmoor in Sisters of Charity of Rockingham v. R [1922] 2 AC 315, 322 and to Cruden Land Compensation and Valuation Law in Hong Kong 25. The general principle cited is subject in some jurisdictions to exceptions. These include in England at least since 1919 the notable exception, that the majority of disturbance claims, are common law rather than statute based. Lord Parmoor as the author before his ennoblement of Cripps on Compulsory Acquisition of Land. would have been particularly aware of this position.

18. I accept that in the present proceedings, any claim for compensation, is exclusively statutory based. This is an uncontroversial holding for the Applicants solely based their claim within the four statutory corners of Section 10(1). Turning to that Section, Mr. Kat emphasised that the reference to "any land" was qualified by the limitation to land affected by the order. Similarly, the liability of the power company to pay compensation was limited to the owner of "the land", which was referable only to land affected by the order.

19. In support of this narrower interpretation of Section 10(1), the Tribunal was taken to other Sections, to demonstrate that this interpretation, accorded with the overall scheme of the Ordinance. Section 4(1) empowers a power company to exercise its statutory rights "in or over land situated on the route of such electricity network." I accept that the following rights set out in Section 4 are over "such land" and do not extend to adjacent land. The only express reference to other land is the Section 7 temporary access rights, which are not relevant to the present applications.

20. After referring to the fact that the relevant date for assessing compensation, as provided by Section 10(6), is the the date of registration of the order, Mr. Kat emphasised that it is the act of registration and not the works thereunder, which gives rise to the right of compensation. I accept that compensation is not, in terms, payable for any loss caused by the erection of oversails but is for any diminution of value attributable "to the registration of the order." It was submitted that a right to compensation can only arise in favour of land, directly affected by the registration of an Order, by virtue of being such land as is particularised in the Approved Scheme deposited in the Land Registry.

21. The adoption of the act of registration, as the statutory criterion for loss, is not necessarily adverse to the Applicants claims, as owners of merely adjacent land. Section 10(6) provides that "value" means "open market value of the land as assessed at the date of registration of the order." It is true that as that date the oversails will not have been erected. However, before a Section 3 order is made and later registered, the Approved Scheme, containing detailed documented construction and operational details, has to be deposited in the Land Registry.

22. The Section 3(2) mandatory requirement to deposit the Approved Scheme, before the Order is registered under Section 5, means that the market will be aware of the existence of the Scheme, before any works are commenced. It may reasonably be inferred that the market perception, will include the assumption, that the network will in fact be constructed, in accordance with the Approved Scheme.

23. If land both within and adjacent to the statutory easement as a matter of fact, suffers a diminution of value no doubt its extent will usually be larger in the case of the former class of land. The former class of land will certainly be directly subject to the procedure of registration and the consequential right to erect oversails immediately above such land. However while these matters would be very relevant to quantum, they do not necessarily go to liability.

24. Mr. Wong submitted that there was no magic in registration simpliciter. The market would be more concerned with the likelihood of the statutory easement powers being exercised in terms of the Approved Scheme. On this point Mr. Wong cited In re Stockport, Timperley and Altringham Ry. Co. (1864) 33 LJ (QB) 251 and in particular the following words of Lord Watson in the House of Lords, which are also referred to in Sisters of Charity of Rockingham v. R at page 327:

"It appears to me to be the result of these authorities, which are binding upon this House, that a proprietor is entitled to compensation for depreciation of his other lands, in so far as such depreciation is due to the anticipated legal use of works to be constructed upon the land which has been taken from him under compulsory powers."

25. Unlike the House of Lords and the Privy Council, this Tribunal is not, of course, concerned with the diminution of value to an owner's other retained land, caused by the public works carried out on his former land, compulsorily acquired from him for such works. However, Lord Watson's statement of principle, reinforces the Tribunal's view that Mr Wong's submission on this issue is correct. I accept that compensation is payable for diminution of value attributable to the registration of the order. I further hold that in quantifying such diminution, the Tribunal is entitled to take into account not merely the fact of registration but also the market perception of the anticipated likelihood of the works, authorised by the order, being carried out. The effect such works will have on value is therefore a relevant factor for the Tribunal to take into account.

26. To return to Section 10(1), the Tribunal's earlier findings have further reduced the dispute to the proper interpretation of two provisions in that Section. First, do the opening words, "Where an order made... affecting any land...", narrowly include as affected land, only those lands within the statutory easement? Alternatively, do they extend to adjacent land outside the easement, whose "value" has been "affected" by the order creating the easment"? Secondly, which of the similarly competing alternative interpretations, to the later words of the Section referring to "the land" which has suffered a diminution of value "attributable to the registration of the order", is correct.

27. After considering the wording of Section 10(1) in the context of the whole of the Ordinance, I hold that the opening words comprising "an order affecting any land" can only refer to land within the statutory easement, as particularised in the deposited Approved Scheme. On his construction, the land is that affected by being expressly included in the Approved Scheme and not other adjacent land whose value, as a matter of fact, may also be adversely affected by an order.

28. I hold that the Section 10(1) reference to "the land" refers only to land within the statutory easement. The final words of Section 10(1) providing for diminution compensation, for the owner's "estate or interest therein" necessarily as a matter of grammar as well as construction, refer to the same land. It is therefore only that affected land within the statutory easement, that can suffer any compensatable diminution of value, attributable to the registration of the order.

29. In any event I am satisfied that the same conclusion may be arrived at if Section 10(1) is considered in isolation. However, the primary meaning of the Section is strongly reinforced by the scheme of the Ordinance reflected in the other Sections to which reference has already been made. In addition, by way of example, the provisions of Section 6 further indicate the consistent restrictive approach of the Legislature.

30. Section 6 deals with the publication of the registered Order. Among the publication requirements, Section 6(2)(c) provides that the advertisement must contain particulars of "the land affected by the order." The words "land affected" are necessarily limited to the lots particularised in the deposited Approved Scheme being those which fall within the boundaries of the statutory easement. The later reference in Section 6(2)(d) to "such land" can also only refer to those particularised lots. There is simply no justification to construe the similar terminology of Section 10(1) any differently.

31. The Tribunal's answer to the question posed in the the preliminary issue is therefore "No". The practical effect of this negative answer, is that owners of land adjacent to but wholly outside the statutory easement, have no right to apply for compensation pursuant to Section 10(1). The present Applicants claims must therefore fail.

32. This conclusion is not contrary to the Tribunal's observations in Chow Chi Keung v. China Light and Power Co. Ltd (supra). In that case about two-thirds of one unpartitioned lot was within the statutory easement. In those very different factual circumstances, a right to claim compensation, clearly arose. It was equally unsurprising, that in quantifying diminution of value, the Tribunal took into account the affect of the oversails, on the whole of the unpartitioned single lot.

33. During this hearing and in other recent similarly based claims, applicants have advanced certain arguments of policy and fairness. The present Applicants and others may well be disappointed at the outcome of their claims. The Tribunal records that it is obliged to determine each application in accordance with the existing law. If it is considered that compensation should be awarded for land outside a statutory easement, that is not a matter for this Tribunal but for the Executive and Legislature.

34. Finally, the Tribunal is obliged to both parties for their clear, comprehensive and very helpful submissions. Liberty to apply is reserved in their favour for any consequential matters.

DATED this 16th day of October 1995.