ABLE LUCK DEVELOPMENT LTD AND OTHERS v. PUBLIC GLOBAL INVESTMENTS LTD AND OTHERS

LDCS 7000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAIN APPLICATION

NO 7000 OF 2014

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REASONS FOR DECISION

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1.  At the hearing on 7 September 2016, upon hearing from all parties, we have made the following orders :

(a) Leave be granted for the 5^th - 12^th and 14^th respondents (“Rs”) to file and serve the rebuttal reports out of time;

(b) Rs do file and serve the rebuttal valuation report on or before 14 September 2016 in line with the letter dated 26 August 2016 prepared by Mr Patrick Lai (“Lai”);

(c) applicants do file and serve further rebuttal valuation report in answer to Rs’ rebuttal valuation report on or before 28 September 2016;

(d) Rs do file and serve the rebuttal structural assessment and condition survey report on or before 10 October 2016 except with no further tests on tilting of the Building;

(e) Pre-Trial Review (“PTR”) set down for 18 October 2016 be vacated and be adjourned to 14 November 2016 at 9:30 a.m. in Court 2 (1 hour reserved);

(f) Costs of and occasioned by the Summons, including all costs reserved, be to the applicants, with certificate for counsel, to be taxed if not agreed on High Court scale; and

(g) No order as to costs between the 1^st Respondent (“R1”) and Rs.

2.  At the time the orders were being made, we have indicated that reasons for the decision will be handed down in due course.  This we now do.

Background

3.  On 15 January 2016, directions were given for the parties in this case to file and serve their expert evidence including :

(a) leave for the applicants and the respondents to adduce expert evidence in each of the following 3 disciplines, namely :

(i) aluation;

(ii) Building condition; and

(iii) Structural assessment;

(b) Expert reports to be filed and exchanged on or before 31 August 2016; and

(c) The applicants and the respondents may file and serve their rebuttal expert reports, in reply to the evidence of the other party (if any) on or before 28 September 2016.

4.  At the hearing on 25 April 2016, trial date was fixed to be held in mid- December 2016 with 7 days reserved and a PTR to be held on 18 October 2016.  The deadline for the filing of first round expert reports and rebuttal reports had been brought forward to 30 June 2016 and 15 August 2016 respectively.  The Tribunal was informed at the said hearing that the R1 and the Rs did not intend to file any first round report on building condition and structural assessment but the Rs reserved the right to file their rebuttal reports upon receipt of the applicants’ expert reports in these fields.  There is also the direction for a “without prejudice” meeting of the valuation experts to be held and for a Joint Statement of the valuation experts to be filed not later than 14 days before trial.

5.  Condition Survey report prepared by Mr Benson Wong and the Structural Assessment report prepared by Mr K S So (“So”) were filed by the applicants on 30 June 2016. Parties had also filed and exchanged their valuation report on 20 July 2016 (as a result of a consent order for an extension of time) prepared by Mr Alnwick Chan (“Chan”) for the applicant and Lai for the respondents.

6.  On 12 August 2016, the Rs had filed a summons with this Tribunal asking for an extension of time to file the rebuttal expert reports for all 3 streams (“Summons”). The applicants had filed its rebuttal valuation report on 15 August 2016.

7.  At the first hearing of the Summons on 25 August 2016, in view of the fact that there is an argument as to what amounts to rebuttal evidence and the scope of the rebuttal expert reports, case is adjourned to 30 August 2016 for the Rs to file and serve a list to state the scope of the rebuttal reports sought to be adduced.  A letter from Lai dated 26 August 2016 and a chart prepared by their building condition expert Mr Andy Lam (“Lam”) and their structural assessment expert Mr Ng Ka Wai (“Ng”) dated 29 August 2016 (collectively referred to as the “List”) is filed by Rs to particularise the content of the intended Rebuttal Report.

8.  At the hearing on 30 August 2016, Mr Mok for the applicants takes issue on the following points stated on the List :

(a) On valuation -

(i) The introduction of a comparison analysis between the EUV and the RDV of the Building as at 1 July 2016;

(ii) In the assessment of (i) above, taking into account the costs of repairs prepared by Lam and Ng.

(b) On structural assessment -

(i) To engage a professional surveyor to carry out tests on the verticality of the Building to verify whether there is tilting (“Tilting Issue”);

(ii) To obtain more test samples for more representative and comprehensive results of structural frames of the Building (“Sampling Issue”).

(c) On building condition –

(i) Professional opinions to be provided and signed by relevant professional engineer as to whether total replacement for the underground foul water and storm water drains is necessary (“Water Drain Issue”).

Scope of the Rebuttal Report

9.  Before we deal with the specific issues listed above, we have to state at the forefront that we agree with Mr Mok that rebuttal report should strictly confine to rebuttal on points raised in the applicants’ first round report and should not be the chance to allow the Rs to put in what should be included in the first round report by way of rebuttal in disguise.  Experts of the Rs are entitled to state their opinion to challenge or dispute on the findings by the applicants’ experts but not to conduct further tests in support of another theory suggested by Rs’ experts which should be done in the first round report.

10.  To allow the Rs to conduct further tests or engage other experts of another field after the first round report, this is not adducing rebuttal evidence in response to any expert opinion relied upon by the applicants.  They are in fact taking the proactive step of adducing expert evidence in support of their own positive defence case, and thereby calling upon the applicants to meet such defence case with further expert evidence.  In our view, this is impermissible since such should be done by way of first round report.

11.  The Rs, having decided not to adduce any first round report, must be taken to accept not to conduct any tests of their own and accept whatever factual findings found by the experts of the applicants and just reserve their right to challenge the findings or opinion of the applicants’ experts by the filing of the rebuttal report.  In so doing, the Rs’ experts are entitled to raise new conclusions or opinion based on the factual findings but the rebuttal report should not be used to adduce new issues based on fresh evidence to be obtained.

12.  Bearing this in mind, we shall then turn to each and every issue in dispute in this application before us.

Tilting Issue

13.  So found an expansion joint between the Building and the building which abuts it and So opined that the width of such expansion joint should be 1 inch or 25.4mm thick according to structural engineering practice.  Yet the expansion joint was found to have widened at the top of the Building by 65.6mm and So came to the conclusion that the Building has apparently tilted or rotated through a ratio (an angle) of 1 in 713.  So also found the Building would not develop into a dangerous situation at present and recommended a monitoring of the angular distortion for at least 12 months, including a thorough examination of the expansion joint, at a costs of $900,000.

14.  Mr Chan for the Rs submitted that the Rs were not aware of this situation till after receipt of So’s report and the Rs should be entitled to verify such findings by So.  Even if the Rs had filed its first round report on structural assessment and then came to know about this tilting findings by So, the Rs are entitled to deal with this in rebuttal.  A land surveyor is required to be engaged to find out the cause of the tilting since if it is the building next door which is tilted, this has nothing to do with the state of repair of the Building itself and this also turns on the costs of repair of the Building.

15.  Mr Mok submitted that the expertise of a land surveyor does not fall within that of building surveyor or structural engineer.  In any event, the Tribunal should only concern with the state of the lack of repair of the Building and not the cause of the expansion of the gap or whether it is tilted.  The Rs are entitled to raise different theory to explain the widened gap but not to engage another expert for an opinion.  So is just stating the costs of maintaining the gap for safety purpose only.

16.  We agree with Mr Mok that the cause of the tilting is not a concern of this Tribunal in the consideration of the state of repair of the Building.  It is So’s evidence that the Building has apparently tilted and monitoring of the same is required.  Ng is entitled to rebut such conclusion based on the condition of the Building found by So.  If Ng had been successful in challenging the same, the applicants will fail in its assertion of the fact that the Building is tilted.  This is all that the Rs are required to do and not to prove its positive case by engaging a land surveyor.

17.  We do not agree that the Rs should be allowed to engage a land surveyor to prove or disprove the tilting of the Building.  Ng should confine himself to a challenge of the findings or conclusion of So in the rebuttal report.

Sampling Issue&Water Drain Issue

18.  At the hearing on 7 September 2016, Mr Chan for the Rs confirmed that the Rs are not pursuing with these issues and will confine their rebuttal reports to a comment of the expert reports adduced by the applicants in this regard without the necessity of engaging other professional opinion or conducting any further tests. So this Tribunal need not deal with these issues.

Valuation Issue

19.  Lai had in his valuation report dated 19 July 2016 found the EUV of the Building at $1,126,345,500 as at 25 February 2014. In the same report, Lai also found the RDV of the Building at $855,400,000 also as at 25 February 2014. As a result, Lai was in the opinion that the EUV was higher than the RDV and therefore, the lot on which the Building is erected has no redevelopment potential.

20.  Now having seen that Chan had prepared a valuation of RDV of the Building as at 1 July 2016 in the sum of $1,195,260,000, Lai seeks the introduction of a likewise comparison analysis between the EUV and the RDV of the Building as at 1 July 2016, taking into account the costs of repairs prepared by Lam and Ng.

21.  It is regretted that Lai had not done the same in his valuation report dated 19 July 2016 but we consider such an analysis is relevant in the determination of this case. Lai’s omission or oversight should not be penalised because on the one hand we need his view particularly on the latest RDV of the Building as at 1 July 2016 at the rebuttal anyway. For instance, in Good Faith Properties Limited and Others v Cibean Development Company Limited, LDCS 42000/2011 (unreported, dated 31 May 2013), the Tribunal had at §40 of the judgment confirmed that the time for it to be satisfied with the steps taken being reasonable was at trial and not before. We are of the same view that the time for considering whether the redevelopment of the lot is justified and fixing the reserve price for the auction is at trial or a date closest to it.

22.  On the other hand, we agree with the submissions of Mr Chan that the proposition that the EUV was higher than the RDV and therefore, the Building has no redevelopment potential had been stated in the Notice of Opposition. An updated comparison analysis between the EUV and the RDV of the Building as at 1 July 2016 is justified.

23.  Having said the above, however, we do not agree with the submissions of Mr Chan that somewhat like a “repair test” as contained in, for instance, Day Bright Development Limited & Others v Wong Sai Mui & Others, LDCS 21000/2012 (unreported, 21 March 2014) can be introduced by Lai as this late stage.  Such a test has never been intimated in Lai’s first round report dated 19 July 2016.  Under such circumstances, we refuse to grant leave for the Rs or Lai to include in his analysis the costs of repair to be prepared by Lam and Ng.

24.  Based on the findings above, we made the orders at §1 above.