BEST VALUE INTERNATIONAL LTD AND OTHERS v. LI KIT SANG GORDON

LDCS 3000/2010

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS COMPULSORY SALE APPLICATION NO. 3000 of 2010

_______________

____________________________

REASONS FOR DECISION

____________________________

The Interlocutory Application

1.  The Respondent applies for an interim stay of proceeding of the main application under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap. 545 (“the Ordinance”).

The Main Application (“the Application”)

2.  The Application is made under the Ordinance for an order of compulsory sale of all the undivided shares of and in : -

(1)     Kowloon Inland Lot No. 10558 (No. 6 Observatory Road) (“1^st Lot”) ; and

(2)     Kowloon Inland Lot No. 10565 (No. 8 Observatory Road) (“2^nd Lot”).

3.  There is currently a 7-storey commercial/residential composite building, served by 2 staircases, erected on the 2 lots with retail shops on ground floor and residential units on upper floors. The building was about 55 years old.

4.  The Applicants collectively were the registered owners of all the undivided shares of the 2 lots with exclusive right to use all the units of the existing building, except 1 undivided share (out of 6) of the 2^nd Lot with exclusive right to use the residential unit at 3^rd Floor of No. 8 Observatory Road (“the Respondent’s Flat”). It was not in dispute that the average of Applicants’ undivided shares of the 2 lots is 91.67 %.

5.  For determination of the Application, pursuant to section 4(1)(a) of the Ordinance, the first determination by the Tribunal would be the determination of dispute, if any, on the Existing Use Values (“EUV”) of all the units of the existing building pursuant to section 3(1)(a) of the Ordinance.

6.  The second determination under section 4(1)(b) of the Ordinance is whether the compulsory order shall be made. According to section 4(2) of the Ordinance, this would involve 2 issues:

(1) Was the redevelopment of the 2 lots justified due to age or state of repair of the existing buildings; and

(2) Have the Applicants taken reasonable steps to acquire all the undivided shares in the 2 lots including the Respondent’s interests.

7.  Unless the Applicants satisfy this Tribunal that the above 2 issues are answered in the affirmative, an order for sale ought not be granted.

8.  The Respondent filed a Notice of Opposition dated 21 April 2010 stating the grounds of opposition including, inter alia, that:-

(1)     The valuations and considerations adopted in the Applicants’ assessment were incorrect;

(2)     The Applicants failed to take reasonable steps to acquire the Respondent’s interests in the 2^nd Lot; and

(3)     The Applicants failed to justify the redevelopment of the 2 lots due to age or state of repair of the existing building. With regard to age, the building could be classified as a historical building and the Antiquities Advisory Board will assess the heritage value of the building in the near future.

9.  The present interlocutory application concerns the issue raised in the ground of opposition no. (3) above only.

The Grounds for this Interlocutory Application

10.  Mr. Liu, who appears for the Respondent, informs the Tribunal that Nos. 2, 4, 6, 8, 10 & 12 Observatory Road are now listed as new items and new categories to be graded by the Antiquities Advisory Board for their historical and heritage values. A meeting would be held in December 2010 for determination of the grade of the building on the 2 lots. The Respondent submits that the result would be relevant and material for the determination of the Application.

11.  For reasons above, the Respondent asks for an interim stay of the Application until the Antiquities Advisory Board has its meeting in December 2010 and decides on the grade of the existing building on the 2 lots.

12.  The Respondent also explains in detail, in his affirmation and written submissions, the mechanism of how a building, generally, would be assessed by the Antiquities Advisory Board for its historical and heritage values and how the building would be classified into different grades. Submissions are also made on the duties of the Antiquities and Monuments Office and the role of the Antiquities Advisory Board under the Antiquities and Monuments Ordinance, Cap. 53. I do not intend to repeat them here.

Stay of Proceeding

13.  It is the discretion of this Tribunal to grant a stay of proceeding only for good reasons. The burden is on the party who applies for stay to satisfy this Tribunal that there is a good reason to do so. Further, in deciding the application, I also have to take into consideration of the entire circumstances of the case.

14.  I agree with the Respondent that when this Tribunal is to decide whether or not a redevelopment is justified on its age or state of repair, the historical and heritage value of the existing building could probably be of some relevance. However, I do not accept that the conclusion of the Antiquities Advisory Board is an essential fact for the Tribunal’s determination. First of all, I reject the submissions of the Respondent that the Board’s conclusion is binding on this Tribunal because there is simply no legal basis for it. Secondly, I do not accept that, to say the least, the Board’s assessment is going to be decisive for the determination of whether or not an order for sale should be granted under the Ordinance. Thirdly, it is just going to be one of the very many factors which this Tribunal could take into consideration. Parties are, in fact, entitled to have a historical and heritage building expert to give evidence for this Tribunal’s consideration in the hearing proper, if they so wish. Not allowing the Respondent’s request for interim stay of proceeding would not deprive the right of him to adduce evidence for this issue.

15.  The Respondent also suggests that an interim stay would save costs of the parties concerned. I do not see why this must be so. This submission is based on the assumption that this Tribunal would accept the findings of the Antiquities Advisory Board in full without further investigation. As I have decided above, this may not be so. The Applicants are entitled to challenge the findings of the Board and further expert evidence may be needed to be heard. I do not accept that an interim stay of proceeding would save costs as a matter of case management.

16.  The Respondent further submits that the grant of interim stay would protect his property from some irreversible acts or events. However, the Respondent fails to show this Tribunal any evidence on how an interim stay could prevent such irreversible acts or events from happening. I find this submission unhelpful and therefore reject it entirely.

17.  In my judgment, the Respondent fails to explain to this Tribunal why it is essential to have this proceeding be stayed until the Antiquities Advisory Board’s assessment. Further, I do not see how the refusing of an interim stay of proceeding would cause any prejudice on the Respondent in arguing the issue in the hearing proper.

18.  For avoidance of doubt, I would like to clarify that I have not made, and do not intend to make, any comment on the evidence of the parties regarding the fact that whether or not the existing building has any historical and/or heritage values. This would be a matter for this Tribunal to decide in the hearing proper. However, if the parties wish to argue this, as I have indicated above, proper expert evidence should be adduced in support of their arguments.

19.  Further, I disagree with the Respondent’s submissions that the authority of Fineway Property Ltd v Sin Ho Yuen Victor CACV 95 of 2009 (Unreported) applies in the present case. In Fineway Property, the Court of Appeal was suggesting that if a minority owner were aggrieved by the decision of this Tribunal and were to decide to appeal against its decision in making an order for sale, it would be sensible for the minority owner to apply for a stay of execution so that the appeal would not become nugatory. However no decision has yet been made for the Application and I do not see how the reasons of the Court of Appeal are relevant here.

20.  After taking into consideration of the entire circumstances of the case, in particular the grounds in support of the application put forward by the Respondent, I do not accept that there is any good reason established for granting an interim stay of proceeding. I therefore dismiss the Interlocutory Application by the Respondent.

21.  As I do not accept the Respondent’s application for interim stay without the consideration of the Applicant’s Affirmation of Alan W. K. Cheung dated 27 August 2010 which I allow it for the Tribunal’s consideration de bene esse at the beginning of the hearing, it would be no longer unnecessary for this Tribunal to consider the admission of it. For this reason, I do not intend to give leave to the Applicant for adducing the affirmation in the hearing.

Costs

22.  For costs, since this is a contested application, it should normally follow the event. I do not see why this case is an exception to this general rule. I also agree with Mr. Shum that the costs should be taxed on the High Court Scale as this application concerns a property of substantial value and the parties are justified to be appeared by Counsel.

Orders and Further Directions

23.  By reasons of the above, I shall make the following orders:-

(1)     The Interlocutory Application dated 12 July 2010 for an interim stay of the Application until end of 2010 or pending the finalization of the Antiquities Advisory Board’s grading on the existing building under the Application, whichever the later be dismissed;

(2)     A call-over hearing for the Application be fixed by the Listing Officer, estimated time: 1/2 an hour; and

(3)     The Respondent do pay costs of this Interlocutory Application (except the costs in relation to the Affirmation of Alan W. K. Cheung dated 27 August 2010 which is disallowed for admission for the hearing), on the High Court Scale, to the Applicants forthwith with Certificate for Counsel, to be taxed, if not agreed.