WO KEE TRADING CO LTD v. THE SECRETARY FOR TRANSPORT

cacv 288/2002

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 288 of 2002

(on appeal from LDMR NO. 28 OF 2000)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This was an appeal from a judgment of the Lands Tribunal given on 13 June 2002.  At the conclusion of the hearing on 26 January 2005, this appeal was dismissed with reasons to be given in writing, which we now do.

History of these proceedings

2.  The initial hearing of this appeal took place in January 2003.  On that occasion this court was not able to follow the appellant’s (applicant’s) argument specifically with reference to the notice of appeal.  At this court’s suggestion, counsel for the applicant requested an adjournment so that he might be able to consider the notice of appeal and, if considered appropriate, seek the assistance of leading counsel.  When this appeal was restored some two years later leading counsel had been instructed but there had been no application or other attempt to amend the notice of appeal.

The facts

3.  Since 1994 the applicant has been the tenant of a site in Kam Tin Road, Yuen Long.  The site has been used as the location for the applicant’s business of selling left-hand drive cars.  The total area occupied by the applicant was 6,450 square metres which included 645 square metres of Government land.  It was apparently agreed between the parties that the applicant’s site was 5,805 square metres.  In October 1998 a resumption notice was published under the Railways Ordinance, Cap. 590 in respect of 1,315 square metres of the land.  That portion of the site reverted to Government on 16 January 1999 as part of the West Rail Scheme.  As a result, the applicant claimed compensation in respect of the loss of the land on a number of bases.  The claim was put on the basis of partial loss of goodwill, loss due to termination of contracts with suppliers and suppliers’ extra charges and interest, loss of fixtures and facilities and cost of reinstatement, loss on forced sale of stock and finally severance payments to employees. 

4.  There were a number of important findings of fact made by the Lands Tribunal.  In the first place based on the evidence, in particular the evidence adduced by the applicant, the Tribunal found that prior to the resumption the maximum capacity of the site had been 650 cars.  After resumption the maximum capacity of the site was 500 cars.

5.  The Tribunal found that the applicant’s figures and the records produced were by no means satisfactory.  The Tribunal went to a great deal of trouble to construct the various tables set out in its judgment which indicated the size of business conducted by the applicant.  These tables included tables showing the average number of imports and purchases in Hong Kong and thus the total cars taken in by the applicant each month and the average sales each month.  Based on the various figures, the Tribunal drew up a chart showing the numbers of cars that the applicant had in stock at the beginning of each month.  The figures showed the relevant statistics from April 1996 to April 1999.  One of the facts which the Tribunal derived from the figures that had been collated was that only in one month, namely September 1998, had the stock at the beginning of the month exceeded 500 cars.  What is equally significant is that it would appear that despite the fact that the applicant had laid off sales persons in the months prior to September 1998 and, according to its own evidence, it was then experiencing extreme competition from its close neighbours involved in the same trade, it continued not only to import cars but also to purchase cars in Hong Kong which would have swelled the numbers of cars in stock.  In those circumstances the Tribunal was justified in treating the number of cars in stock in September 1998 as not merely atypical and unrepresentative but as irrelevant in determining whether the applicant had suffered any loss of business representing a loss of goodwill.  On the same basis the Tribunal came to the conclusion that there was no loss due to termination of contracts with the suppliers.

6.  In relation to the claim in respect of forced sale of stock, the Tribunal found that there were a number of fundamental difficulties in the applicant’s case.  Not least the applicant had not produced a list of cars earmarked for forced sale nor had the applicant’s witnesses demonstrated that the 350 cars which are alleged to have been sold at forced sale prices were, in fact, sold at forced sale prices.  Moreover the Tribunal was not satisfied that the applicant could not have stored the necessary cars instead of selling them at low prices, particularly as it went on purchasing cars at a time when it was supposedly selling cars at reduced prices.

7.  The forced sale aspect of the case also impinged upon the severance payments to employees.  These employees had been terminated prior to the resumption notice and hence the connection with the resumption notice with the consequent resumption of the land and the termination of the employees could not be established.  What was evident, however, was that in the months prior to September 1998 there had been a considerable increase in competition from the applicant’s nearby neighbours in the same trade and this had caused a fierce price war.  That price war had thus started some time before the date of the resumption notice.

8.  The Tribunal awarded a sum of $60,273 in respect of loss of fixtures and facilities and cost of reinstatement.

This appeal

9.  On this appeal Mr Mumford SC, who appeared on behalf of the applicant at the resumed hearing, sought to raise a case that the Tribunal should have awarded compensation to the applicant on the basis of a proportion of its loss of business which had occurred as a result not only of the resumption under the Railways Ordinance but also a resumption under the Roads (Works, Use and Compensation) Ordinance, Cap. 370.  Consequent upon resumption notice GN 6423 dated 30 December 1998, a further 2,230 square metres of the applicant’s land was resumed under the Roads (Works, Use and Compensation) Ordinance on 1 March 1999.  That land was cleared at the same time as the clearance in respect of the West Rail Scheme.  Again, there is no dispute that the Applicant has sought compensation in respect of this resumption as well under LDMR 3 of 2001.  We were told, after some inquiry was made as to why that application had not been heard, that the Government had indicated that it would not make an offer in respect of the road resumption until the compensation under this claim had been settled.  As a consequence the applicant had agreed either tacitly or explicitly to delay the hearing of the claim for compensation in respect of the road resumption until after this application had been dealt with.  Perhaps later, but in any event we were shown relevant papers which demonstrated that the hearingof that application had been fixed to commence on 27 January 2003 but an order was entered by consent vacating the date, apparently with the intention that this appeal should be heard first.

10.  Mr Mumford’s point was that the total amount of loss of goodwill should have been assessed on the basis of the loss caused by both resumptions combined and the amount should have been split between the two cases on a basis proportional to the amount of land resumed in each case.  Equitable though that might sound at first blush, there are number of difficulties.  In the first place that is neither how the applicant presented its case in its application nor how it has conducted its case since then.  Furthermore, the applications to the Lands Tribunal were made quite separately.  The application in respect of this claim is dated 31 May 2000.  The application in respect of the road resumption is dated 7 February 2001.  The applicant has deliberately delayed bringing on the claim in respect of the road resumption and continued to do so until after the hearing of this appeal.  In the second place there is no provision in either Ordinance for apportioning the compensation between two separate resumptions.  Finally, and probably most importantly, although the land clearance in respect of both resumptions took place on the same day, the fact remains that the resumption in respect of the West Rail Scheme took place first and the resumption in respect of the road took place thereafter.  As a matter of causation, therefore, one would look at the result of the resumptions accordingly.

11.  Quite apart from that, the applicant was faced with the difficulty that having proceeded in the Tribunal in respect of the West Rail Scheme resumption alone, it was now seeking to raise this point on appeal and the point did not emerge from any of the multiple paragraphs in the notice of appeal.  It was indicated to Counsel that if this point were to be pursued the best that could be hoped for would be that this court would remit the matter to the Tribunal for reconsideration because this court could not be in a position to determine the necessary facts.  It was also indicated that, until an application were made to amend the notice of appeal to raise this ground, the matter could not be pursued any further.  Counsel said that he did not wish to make any application to amend the notice of appeal.  In those circumstances, this point inevitably failed.

The remaining points on the appeal

12.  In respect of the remaining points which were raised on the appeal, they can all be categorised as matters of fact.  Since an appeal to this court in this case only lies in respect of matters of law, the points sought to be raised on behalf of the applicant were not open to it in this court.  In addition, many of the points sought to be taken were based upon the premise that the Tribunal should have considered the effect of both the West Rail Scheme resumption and the road resumption.

13.  Some attempt was made to challenge the figures given in the tables produced by the Tribunal and contained in the judgment.  The major ground of complaint in this respect was that the Tribunal should have added the figures for all cars acquired by the applicant during a month to the figure of cars in stock at the beginning of that month and ignored the effect of any sales in determining the stock that would have been on the site at any relevant time.  Not only was this a question of fact but it appears that the Tribunal went to a great deal of trouble in preparing the tables and it has not been demonstrated in argument or otherwise that the figures that the Tribunal took and their resulting tables were other than fairly based upon the material which had been presented, albeit that material had been presented in a less than satisfactory form. 

14.  There were points raised by Counsel on the assessment made by the Tribunal of the loss of fixtures and facilities and reinstatement costs.  One of the major problems faced by the Tribunal was that there was no expert witness who gave evidence on behalf of the applicant.  The Tribunal was thus left with only the evidence from the respondent’s expert.  In those circumstances the Tribunal was entitled to proceed on the basis that his assertion that some of the fixtures were illegal was correct.  The Tribunal was under no duty to exercise any discretion to allow a claim in respect of these.  In any event any fixture in the land would have become part of the land.  In so far as there was a suggestion that the Tribunal had not given allowance for the costs of removal of 2 containers, quite apart from the fact that it had not been demonstrated that this item had been proved as an item in respect of which a claim could be made, the total amount claimed was $2,000 which would not have merited an appeal.

15.  In those circumstances the appeal fell to be dismissed.

Hon Le Pichon JA:

16.  I agree.

Hon Yuen JA:

17.  I agree.