HAPPY ENOUGH LTD v. DIRECTOR OF LANDS

LDLR 5/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND RESUMPTION APPLICATION NO 5 OF 2012

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D E C I S I O N
(Leave to Appeal)

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Introduction

1.  This is an application taken out by the respondent, the Director of Lands, by a summons filed on 13 April 2016 for leave to appeal against the tribunal’s decision handed down on 17 March 2016 (“the Judgment”).

2.  The applicant was former owner of a property known as Ground Floor including Mezzanine Floor (“the Cockloft”), 13 Pei Ho Street, Shum Shui Po, Kowloon (“the Property”).  It is situated at ground level of a 5-storey building.  A Notice of Application was filed on 13 June 2012 asking for determination on compensation for lands resumed under the Lands Resumption Ordinance (“LRO”) in relation to the Property.  It was our decision that the Property be valued as a shop as opposed to a domestic unit.  On such basis, the respondent was ordered in the Judgement to pay the applicant compensation in the sum of $10,960,000 (Judgment §139).  At the same time we have determined the compensation for the Property as residential premises at $3,846,000 in case we were wrong in our finding on user.

3.  Relying on both limbs under section 11AA(6) of the Lands Tribunal Ordinance (“LTO”), that (a) the appeal has a reasonable prospect of success and (b) there is some other reason in the interest of justice why the appeal should be heard, the respondent now seeks leave to appeal against our finding that compensation be assessed as shop.

4.  There is no dispute on the principles governing application for leave to appeal.

Consent between the Parties

5.  We have in fact recently dealt with a similar application in LDLR 2/2013, the Director of Lands was also the respondent therein.  The property in LDLR 2/2013 is in close proximity with the Property, and both properties were governed by the same Government lease.  Decision granting leave to appeal in LDLR 2/2013 has been handed down on 29 July 2016.

6.  The respondent in the present interlocutory application has proposed some grounds of appeal in its Draft Notice of Appeal which are basically similar to those set out in LDLR 2/2013 except the one set out in paragraph 2.4(e)(iii).  The applicant herein has conceded that leave be granted for those grounds similar to those in LDLR 2/2013 except the one in paragraph 2.4(e)(iii).  At the hearing, arguments advanced were solely on this dispute.

Paragraph 2.4(e)(iii) in the Draft Notice of Appeal

7.  In paragraph 2.4(e)(iii) it said that the tribunal’s construction of “dwelling house” with reference to the definition of “domestic building” under the Public Health and Building Ordinance 1903 (“1903 Ordinance”) was erroneous:

	(e) Even insofar as the relevant requirement was “wholly or partly for human habitation”, it could not have been met in the present case.  The Property was valued on the basis of entire shop use and contained no domestic element:
		(i)	......;
		(ii)	.....; and
		(iii)	The tribunal should not have held that the structural design of the Property was not for human habitation.  The portion of the Property which did not have the Cockloft above it was 36.99 m2 and had a headroom of 5.08 m (see Judgment §§27-28) in excess of the statutory requirements. There was also no evidence to show that the Cockloft could not be removed or demolished to comply with the statutory requirements;

8.  In opposition, it is submitted for and on behalf of the applicant by Mr Yim that:

	a.	The issue(s) set out is/are not question(s) of law.
	b.	It is not open for the respondent to assert that 36.99m2 of the Property had headroom of 5.08m because the tribunal did not make such a finding of fact. Instead, the tribunal found that the headroom of the Property was under dispute: see §30 of the Judgment.
	c.	During the hearing before the tribunal the respondent has never raised that “There was also no evidence to show that the Cockloft could not be removed or demolished to comply with the statutory requirements”.
	d.	Alternatively, even if the issue(s) set out in paragraph 2.4(e)(iii) is/are question(s) of law (which is denied), there is no reasonable prospect of success.

9.  From the above, it could be seen that Mr Yim has split paragraph 2.4(e)(iii) into 2 aspects.  Sub-paragraph 8b above is a question on finding of headroom and he called it the Headroom Point; at sub-paragraph 8c above is a question on whether the Cockloft could be demolished and he named that as the Demolition Point.

The Headroom Point

10.  On the Headroom Point, Mr Yim submitted that whether 36.99m² of the Property had headroom of 5.08m is no doubt a finding of fact.  It is plainly obvious that the headroom of the Property is under dispute (see §30 of the Judgment) and the tribunal did not make such finding of fact.  He criticised the respondent for seeking to impugn a finding of fact by the tribunal and not a question of law.

11.  Mr Yim further submitted that the respondent does not have reasonable prospect of success in establishing that the tribunal was plainly wrong in not accepting that 36.99m² of the Property had headroom of 5.08m (16.66ft).  He said that the tribunal had already considered the arguments for and against the Headroom Point at §§28-29 of the Judgment but found that it was under dispute and that the respondent’s expert had not dealt with the headroom in different area of the Property.  The tribunal could not be said to be plainly wrong.

12.  We agree with Mr Yim’s submission on the Headroom Point.

The Demolition Point

13.  At the hearing, Ms Wu further submitted that her argument on the Demolition Point was two-fold.  First, there was no proof that the Cockloft came in as part of the structural design as submitted by Mr Yim or as assumed by the tribunal.  Secondly there was no evidence to show that the Cockloft could not possibly to be demolished to comply with the statutory requirement for residential use.

14.  We agree with Mr Yim that the argument on the Demotion Point had not been advanced at trial and no submission on this aspect had been made at the stage of final speeches.  The line virtually taken by the respondent at trial was that where a substantial part of the Property had complied with the statutory requirement, whether the whole of the Property could be used as domestic or residential purpose.  We are of the view the respondent should not be allowed to take a fresh line of opposition after trial or at the stage of application for leave to appeal.  The applicant would be prejudiced as they would be deprived of the opportunity to deal with it on facts and in law.  Further, the tribunal had not dealt with this argument either simply because it had not been raised at the time of trial.

15.  Further we found the respondent’s argument on the Demolition Point unconvincing also.  We are of the view that such argument will only produce absurdity.  It is not disputed that no approved building plan showing the floor slab of the Mezzanine floor or the Cockloft as in the form a plan similar to that of No 9 Pei Ho Street at Bundle B/205 could be identified.  Nonetheless, there was in front of the tribunal a plan at Bundle B/207 showing the structural frame of the Property including the Ground Floor and the Mezzanine Floor (i.e. the Cockloft).  This page was part of the Approved Building Plan issued by the Building Authority.  Further, it is the respondent’s evidence that the Cockloft was included in the Assignment Plan (Bundle B/144).  Lastly, the respondent had taken into consideration the Cockloft when making assessment for compensation and this indicated that it had taken it as structure authorised by the Building Authority.  On balance, had we been asked to make a ruling at trial, we would have said it came as the structural design.  We see no merit on this argument.

16.  Moreover, to say that this tribunal should have considered the possibility for it to be demolished to comply with the statutory requirement is far-fetched and would serve no purpose.  There was no evidence to suggest that the applicant had ever intended to use the Property for residential purpose and therefore had wanted to remove the Cockloft to comply with the statutory requirement.  The Property had all along been used as shop as far as the applicant could tell.

17.  For the above reasons we dismiss the application of the respondent as we are not satisfied that the proposed ground of appeal as set out in paragraph 2.4(e)(iii) has met the requirement set out in section 11AA(6) LTO.

Proposed Modification to Paragraph 2.4(e)(iii)

18.  Mr Yim further submitted that although not clearly spelt out in the Draft Notice of Appeal, Ms Wu seems to suggest in §16 of her submission that the tribunal erred in finding that if a substantial part of the Property could not satisfy the headroom requirement, the whole Property was not for human habitation (see §30 of the Judgment).  Based on such observation Mr Yim submitted that any argument along this line could not stand.  On this, Mr Yim submitted that:

	a.	It is not disputed that under the 1903 Ordinance and 1950 Ordinance, a headroom/clear space of not less than 12 feet and 11 feet respectively was required for any lowest storey used or adapted to be used for human habitation: §27 of the Judgment.
	b.	It is not disputed that 21.55m2 of the Property was with headroom/clear space of less than 11feet (§30 of the Judgment), falling short of the statutory requirements.
	c.	Even if the respondent’s contention is that the tribunal erred in finding that if a substantial part of the Property could not satisfy the headroom requirement, the whole Property was not for human habitation, such contention would only be meaningful if there was evidence showing that the remaining portion i.e. 36.99m2 of the Property, had a sufficient headroom.

19.  The solicitors for the applicant has on behalf of the applicant made a proposed modification to paragraph 2.4(e)(iii) along the line as observed by Mr Yim in the following manner before the present hearing:

“(iii) the Tribunal should not have held that the structural design of the Property was not for human habitation on the ground that the headroom of a substantial part of the Property was below 11 feet.”

20.  The proposal was rejected by the respondent and at the hearing Ms Wu confirmed that the respondent would not change its stance.  We have considered the submission of Mr Yim and most important of all we have considered the stance of the respondent as confirmed by Ms Wu.  We do not find it right to grant leave on a ground which was opposed by both parties.

Costs

21.  Since we have refused argument put forth by the respondent we say that the respondent should pay costs of this application in relation to argument arising from paragraph 2.4(e)(iii).  Such costs are to be taxed if not agreed at High Court Scale.

22.  For those grounds where parties agreed that leave be granted, there be costs in the cause of appeal.