PENNY'S BAY INVESTMENT CO LTD v. DIRECTOR OF LANDS

LDMR No. 23 of 1999

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application under Foreshore and Sea-bed (Reclamations) Ordinance

Application No. LDMR 23 of 1999

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D E C I S I O N

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1. By the present summons, the Applicant applied for an order to be made that the points of law as identified in the attached Preliminary Points of Law to be "Statement of Facts and Determinedtrial of the Applicant's " be determined as preliminary issues before the Application herein under the Foreshore and SeaOrdinance ("the Ordinance") -Bed (Reclamations) in accordance with Rule 18 of the Lands Tribunal Rules.

2. The "Statement of Facts" include the following paragraphs of facts:-

"	1.	In 1970, the Applicant, Penny's Bay Investment Company Limited ("PBIL") acquired Lot 22 in DD356, Penny's Bay, Lantau, Hong Kong ("Lot 22") by way of an Agreement and Conditions of Exchange dated 2 January 1970 registered in the Tsuen Wan Land Registry as new Grant No 4706 ("Exchange Agreement"). Pursuant to the Exchange Agreement, PBIL was granted a Lease of Lot 22 for a term of 99 years less the last 3 days beginning on 1 July 1898 and extended to 30 June 2047 by the New Territories leases (Extension) Ordinance (Cap.150). The lot was about 2,010,000 sq ft in area and shown on Plan I annexed to the Exchange Agreement.
	2.	Pursuant to Special Condition 31 of the Exchange Agreement, PBIL enjoyed a private proprietary right to use the foreshore of Penny's Bay as limited by Special Condition 31 for access between Lot 22 and the sea.
	3.	During the period of PBIL's ownership of Lot 22, the lot was let to Cheoy Lee Shipyards Limited who used the lot for the purpose of shipbuilding and related purposes. Throughout the period of PBIL's ownership, there was no effective landward access to Lot 22. Marine access in accordance with Special Condition 31 was the only effective means of access to the lot.
	4.	On 25 April 1995, the then Governor in Council, pursuant to section 8(1)(c) of the Foreshore and Sea-Bed (Reclamations) Ordinance ("the Ordinance"), authorized a proposal to reclaim about 1260 hectares of the foreshore and sea-bed at Penny's Bay at Lantau Island for the purpose of construction of CT10 and CT11 and related infrastructures. The authorization was published in Gazette Notice no GN1574 dated 5 May 1995 ("1995 Authorization") pursuant to section 9(1)(b) of the Ordinance.
	5.	By virtue of the 1995 Authorization, and pursuant to section 10(1) of the Ordinance, PBIL's right to the marine access at Penny's Bay to Lot 22 was legally extinguished.
	6.	Section 12(1) of the Ordinance provides for the payment of compensation to any person who claims that his interest, right or easement in or over the relevant area of foreshore and sea-bed will be injuriously affected by the 1995 Authorization.
	7.	On 3 May 1996, PBIL lodged a claim with the Director of Lands for compensation pursuant to section 12(1) of the Ordinance in the sum of HK$2,539,000,000 (including a claim for the loss of value in Lot 22 in the sum of HK$2,200,000,000). The claim is premised upon marine access as the only effective means of access of Lot 22 and extinguishment thereof by virtue of the 1995 Authorization will leave it completely landlocked with no alternative means of access.
	8.	Later, the Government changed its plan for the construction of CT10 and CT11 and instead thereof proposed the development of, inter alia, a theme park in joint venture with Disney Enterprise at the Penny's Bay area. In October 1999, the Directore published a new proposal to reclaim a part of the foreshore and sea-bed of Penny's Bay for, inter alia, the construction of a theme park, together with plan no ISM0308. The new proposal was published in Gazette Notice No GN5917 dated 15 October 1999. This proposed reclamation comprised a portion of the reclamation which would otherwise take place under the 1995 Authorization and a small area outside it.
	9.	On 2 November 1999, PHIL applied to the Lands Tribunal pursuant to section 13(3) of the Ordinance to determine its claim for compensation arising from the extinguishments of its marine access by the 1995 Authorization.
	10.	By a Notice of Opposition filed on 19 November 1999, the Director opposed PBIL's claim on the grounds that PBIL has suffered no loss compensable under section 12 of the Ordinance, or alternatively that the amount of compensation is excessive.
	11.	Be a letter dated 7 January 2000 to PBIL's solicitors, the Department of Justice, on behalf of the Director, stated that in assessing PBIL's claim for compensation, the benefits of the engineering and planning proposal as contained in the "Description of the Undertaking" stated in the 1995 Authorization had to be taken into account. They alleged that the infrastructure referred to in the 1995 Authorization covered roads, and the roads when completed or in the process of being completed would open up the full redevelopment potential of Lot 22. After taking into account such "betterment" element, they concluded that PBIL has suffered no loss.
	12.	On 28 March 2000, the Chief Executive in Council decided to withdraw the authorization of the 1995 Authorization ("2000 Withdrawal"). This decision was published in Gazette Notice No GN2230 dated 10 April 2000.
	13.	Also on 28 March 2000, the Chief Executive in Council decided to authorize the further reclamation as announced by the aforesaid Gazette Notice No GN5917 under section 8 of the Ordinance ("2000 Authorization"). This decision was published in Gazette Notice No GN2231 dated 14 April 2000.
	14.	By a Deed made on 3 April 2001, PBIL surrendered Lot 22 to the Hong Kong Government, without prejudice to its claim for compensation under the Ordinance."

3. The Tribunal is invited by the Applicant to determine the following preliminary points of law:-

"	1.	Upon the proper construction of sections 10(2), 11 and 12 of the Ordinance, whether the claim for compensation by PBIL is subject to any set-off, diminution or otherwise adversely affected by the 2000 Withdrawal and/or the 2000 Authorization, which were events occurring after the relevant rights of PBIL to the foreshore and sea-bed had been extinguished in1995.
	2.	Upon the proper construction of sections 10(2), 11 and 12 of the Ordinance, whether the claim for compensation by PBIL is subject to any set-off or diminution by reason of any "betterment" referable to the infra-structural and other works authorized under the 1995 Authorization, which had not been and would no longer be carried out.
	3.	Whether Question 1 or Question 2 are to be answered differently when sections 10(2), 11 and 12 of the Ordinance are constructed in the light of Articles 6 and 105 of the Basic Law.
	4.	If the answer to Question 1 or Question 2 or to both is in the affirmative, whether sections 10(2), 11 and 12 of the Ordinance are invalid and to be struck down for being inconsistent with the constitutional provisions under Articles 6 and 105 of the Basic Law."

4. For the sake of determining whether the application satisfies the requirements of Rule 18 of the Lands Tribunal Rules, it is necessary to set out the rule in full:-

"	(1)	The President or a presiding officer may, on the application of any party, order any point of law which is within the jurisdiction of the President or a presiding officer to decide and which appears to be in issue in the proceedings to be disposed of at a preliminary hearing before the President or a presiding officer.
	(2)	If the decision on the point of law substantially disposes of the proceedings, the President or a presiding officer may order that the argument shall be treated as the hearing of the case or may make such other order as the thinks fit."

5. The essential requirements to be satisfied before Rule 18 can be invoked are firstly that there is a point of law to be decided, secondly that the point of law is within the jurisdiction of the President or a presiding officer to decide, and thirdly that the point of law appears to be in issue in the proceedings. It is the Applicant who took out this application. Accordingly it bears the burden of satisfying this Tribunal that these requirements have been met. It follows, for the purpose of satisfying the first requirement, that it has to identify the points of law to be decided. In this regard the Applicant has set out the 4 "points of law". But are they really points of law within the context of Rule 18?

6. The first two points of law refer to sections 10(2), 11, and 12 of the Ordinance. It will be useful for this Tribunal to set out sections 10, 11, and 12 of the Ordinance for the purpose of determining the relevance of sections 10(2), 11 and 12 of the Ordinance in this interlocutory application. Sections 10, 11 and 12 provide as follows:-

"	10.	Extinguishment of rights upon publication of notice of authorization
		(1)	Subject to section 17, upon the publication of a notice of authorization in the Gazette under section 9(1)(b)-
			(a) all public and private rights in relation to the foreshore and sea-bed affected thereby shall be extinguished and cease to exist; and
			(b) no person shall have any right against the Government of any other person to compel or restrain anything authorized under section 7, 8(1)(b) or 8(1)(c).
		(2)	No action shall be brought or continued in respect of the extinguishment under subsection (1), in whole or in part, of any public or private right.
	11.	No Claim for money except under this Ordinance
			No person shall have any right against the Government or any other person to claim any money in respect of anything authorized under section 7, 8(1)(b) or 8(1)(c) except to the extent of the entitlement to claim compensation under section 12.
	12.	Claims for compensation
			(1) Any person who claims that his interest, right or easement in or over such foreshore and sea-bed will be injuriously affected by the reclamation may deliver to the Director a written claim stating the sum of money which he is willing to accept in full and final settlement of his claim together with such particulars as he may possess to substantiate the claim and shall furnish to the Director such accounts, documents and further particulars as the Director may request him to furnish, in support of the claim.
			(2) A claim under subsection (1) shall be made before the expiry of the time specified in the notice served by the Director and published under section 9(1) in respect of the reclamation.
			(3) ...........................。"

7. In its submission the Applicant refers to section 10(1) of the Ordinance, but it has not shown how section 10(2) is related to "set off", "diminution" or "betterment" ("elements of defence") referred to in the first two points of law. It also has not demonstrated how section 11 is likewise connected with the elements of defence.

8. Section 10(2) and section 11 are simple and straight-forward rules. They cannot be related to the elements of defence. If section 10(1) is relevant for the Applicant's purpose, it should be included in the "points of law", instead of section 10(2).

9. The provisions of sections 10(2) and section 11 can never apply to the situations of the Respondent, and therefore these provisions cannot be related to the elements of defence.

10. Under the first 2 points of law, sections 10(2), 11 and 12 are bound together, and it is apparent that the points of law are derived from these statutory provisions as a whole. It is not up to the Tribunal to separate them from one another and determine which section is the correct one for forming the point of law. They are tied up together and must be considered together, and, if any statutory provision should not be included in the point of law, that point of law must fail. Here, sections 10(2) and 11 are not relevant, and should not be so included. Therefore the first two points of law must fail.

11. The next question which the Tribunal has to decide is whether under Rule 18(1) the Tribunal has the power to apply any legal rules to facts of the case. It is not the Applicant's case that Rule 18(2) is to be involved. In any event it is not applicable, because even if the Applicant succeeds in this application, the Tribunal will still have to determine its claim.

12. Under Rule 18(1) the Tribunal only has the power to dispose of any point of law. It is inappropriate to apply any rule of law to the facts of the case, because in disposing any point of law, it is unnecessary to make reference to any facts at all. To make reference to facts of the case is not to dispose a point of law, but to resolve issues in the case. There is no legal basis for the Tribunal to do this. But this is what the Applicant is asking the Tribunal to do. On this ground the Applicant's application must fail.

13. Under points of law No.3 and 4, the Applicant refers to Articles 6 and 105 of the Basic Law. I fail to see how these 2 Articles can be relevant for the purpose of this Rule 18 application. The Applicant proceeds with its claim under the relevant statutory provisions of the Ordinance. As submitted by the Applicant, these provisions give rise to the 4 points of law. Articles 6 and 105 cannot be related to these points of law. Further it seems irreconcilable that the Applicant is asking the Tribunal to declare invalid some statutory provisions upon which it lodged its claim for compensation.

14. Upon Rule 18, the onus is as the Applicant to identify the points of law to be disposed of. It has failed to do so. The alleged "points of law" attached to the summons are not points of law within the context of Rule 18.

15. In order to ascertain whether Rule 18 has been complied with, the Tribunal must firstly be satisfied that these is a set of agreed facts or a set of facts admitted in the pleadings giving rise to a point of law to be decided. In the present application the Applicant set out 14 paragraphs of facts. Whilst agreeing to the contents of these facts, the Respondent, in effect, submitted that these facts only represent a certain part of the case and are not conclusive of all the facts required for the purpose of this application.

16. No doubt in any export report the expert will set out the principles of assessment on the damages payable (if any) and apply these principles to the facts of the case and/or to comparables which are facts for form assessing compensation. The Applicant has already submitted its expert report, but the Respondent has not done so. However, it has a right to do so under Rule 20(6) of the Lands Tribunal Rules.

17. The Applicant submitted that the agreed fact are sufficient to provide the context for the determination of the points of law, and that the points of law will set the framework and determine the manner as to how the assessment of the compensation should the place. I do not agree. Since the points of law determine the manner or methodology on the assessment of compensation, it must necessarily follow that the Tribunal has to ascertain the methodology on assessing compensation. Such methodology will be fully disclosed in the parties' expert's report. The Respondent has not indicated that it will not prepare that expert report and the Applicant has not made such an allegation. It is only when the Respondent's expert report has been prepared and filed into court, then there will be sufficient factual materials for the Tribunal to decide whether all the material facts disclosed give rise to a point of law to be decided, and which appears to be in issue in the proceedings. In conclusion the Applicant has made a pre-mature contained application.

18. For these reasons the Applicant's application is dismissed. I make an order nisi for costs (to be made absolute in 4 week's time) in favour of the Respondent, (with certificates for its 2 Counsels), to be taxed on the High Court Scale, if not agreed.