RAND CO. LTD. v. THE DIRECTOR OF LANDS

LDLR 7 OF 2001

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO. 7 OF 2001

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J U D G M E N T

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Background

1. This is an application by the Applicant for compensation in respect of two properties, i.e. (i) Flat A, G/F, 32 Wan Chai Road ("Flat A") and Flat E, G/F, 30C Stone Nullah Lane ("Flat E"), Wan Chai, Hong Kong (together referred to as "Property 1") and (ii) Flat B, G/F, 34 Wan Chai Road ("Flat B") and Flat F, G/F, 30B Stone Nullah Lane ("Flat F"), Wan Chai, Hong Kong (together referred to as "Property 2"), which were reverted to the Government on 10 March 2000 under the Lands Resumption Ordinance ("the Ordinance"), Cap. 124, pursuant to a gazetted and published Government Notice No. 7851 dated 6 December 1999.

2. On 7 June 2000, the Applicant submitted through its agent, Multiple Surveyors Limited, a formal claim for compensation in the sums of $14,500,000 and $13,700,000 for Property 1 and Property 2 respectively. The Respondent in the Notice of Opposition rejected the claims as excessive. The Lands Tribunal is empowered under Section 10(2)(a) of the Ordinance to assess the amount of compensation for the resumed properties, i.e., the open market values of Property 1 and Property 2 on the date of reversion, 10 March 2000.

3. Before the hearing, the experts for the Applicant and the Respondent filed valuation reports for the subject properties. They were of the opinion that the resumed properties had the following open market values, on vacant possession basis:

	Applicant's expert		Respondent's expert
	(using Reduced Zoning Method- see Exhibit AR-1, pages 58 and 103)		(using Traditional Method- see Exhibit AR-1, pages 196 and 197)
Property 1:	$14,781,270 of which		$10,647,900 of which
Flat A:	$12,170,550	Flat A:	$8,775,000
Flat E:	$2,610,720	Flat E:	$1,872,900
Property 2:	$13,763,150 of which		$10,510,200 of which
Flat B:	$11,199,050	Flat B:	$8,624,700
Flat F:	$2,564,100	Flat F:	$1,885,500

4. At the hearing, the Applicant called an expert surveyor, Mr. Simon Lau to give evidence. Mr. Lau affirmed that he agreed with and accepted the contents of the reports dated 14 September 2001 and 8 December 2001 prepared by his former colleague, Mr. Keith Siu, who had left employment of the company. In Mr. Siu's reports, it was stated that inspection was carried out on 22 May 2000. Mr. Siu however did not give evidence and was not available for cross-examination. Since Mr. Lau only took up the instruction shortly before the hearing, he did not have the benefit of inspecting the subject properties before or near the reversion date. Nevertheless, Mr. Lau gave evidence that he was very familiar with the locality in which the properties were situated.

5. Mr. James Ng, the expert surveyor giving evidence for the Respondent did inspect the properties prior to reversion and their subsequent demolition. He also led his team in taking physical measurements and photographs of the resumed properties. We therefore agree with the submission of Mr. Wong, the Respondent's Counsel, that we should give more weight to the evidence of Mr. Ng, when there were disputes between the two experts regarding the resumed properties.

Agreement between the parties

6. It is common ground that the direct comparison method be used in the determination of the open market values of the resumed properties. Also, the parties agreed that the compensation payable to the Applicant should be computed on a "subject to tenancy" basis. They agreed on the details of tenancies, the capitalization rate for the rental income, the remaining lease term as well as the present value factor for the reversionary interests. Finally, in approaching the valuation of the properties, the parties agreed that each resumed property should be treated as consisting of two separate portions, i.e. one portion fronting Wan Chai Road and another portion fronting Stone Nullah Lane corresponding to their address descriptions, with entirely two different sets of comparables.

Issues before the Tribunal

7. Whilst Mr. James Ng, the Respondent's expert used all the comparables provided by the Applicant's expert, the Applicant disagreed on the adoption of additional comparables by Mr. Ng. In addition, there was significant disagreement between the two experts as to the relevance and use of Reduced Zoning method in the analysis of their comparables and the valuation of the resumed properties. Although the parties managed to agree, prior to final submissions, most of the measurements of the resumed properties and the comparable shops, they still disagreed on a few measurements. Therefore, in this judgment, we would have to decide on the following issues:

(1) what are the suitable comparables for the valuation of the resumed properties;

(2) whether Reduced Zoning method should be adopted;

(3) what relevant and suitable adjustments should be made to the comparables; and

(4) determination of minor disputes between the parties as to the measurements of the resumed shops and the comparables.

The resumed properties

8. The two resumed properties formed two of the ground floor units of Nos. 32-38 Wan Chai Road and Nos. 30-30C Stone Nullah Lane, which was an 8-storey composite development with shops on ground floor, offices on first floor and domestic flats on other upper floors. The development was certified for occupation on 26 May 1967. After the reversion of the resumed properties to the Government, the building was demolished to form part of an urban renewal site. It remained as a vacant site at the time of our site inspection made in the afternoon of 2 January 2002.

9. According to the approved building plans for the development, Property 1 comprised 2 portions, namely Flat A and Flat E, at different levels. Flat A was situated at a higher level and fronted onto Wan Chai Road whilst Flat E, situated at a lower level and connected to Flat A by an internal staircase, fronted onto Stone Nullah Lane. Similarly, Property 2 comprised 2 portions, namely Flat B which was situated at a higher level and fronting onto Wan Chai Road, and Flat F which was situated at a lower level fronted onto Stone Nullah Lane.

Occupation status of the resumed properties

10. According to the Applicant, Property 1 was held under a 3-year tenancy at a rent of $56,000 per month exclusive of rates expiring on 30 September 1997. Thereafter, the tenant was holding over as a monthly tenant. On the date of reversion, Property 1 was occupied as a frozen meat shop, by the tenant known as "Luen Wah Frozen Meat & Food Company". Property 2 was subject to a 3-year tenancy at a rent of $36,000 per month exclusive of rates expiring on 31 December 1999. As at the date of reversion, the tenant, Lam Kwai Yu trading as "Kam Yu Fashion" was still occupying the property.

11. Although there were initially disputes between the parties as to whether compensation should be paid to the Applicant on the basis of vacant possession, the Applicant in the final submission accepted that the resumed properties were subject to tenancies. The parties further agreed that as these tenancies were protected under Part V of the Landlord and Tenant (Consolidation) Ordinance, a period of 6 months for obtaining vacant possession was required .

The measurements of the resumed properties and the comparables

12. We note from the two experts' valuation reports that they had minor differences in the measurements of the subject properties. Prior to the final submissions, the parties managed to agree the following effective saleable areas:

Subject property	Effective saleable area
Property 1, Flat A	45.24 sq.m.
Property 1, Flat E	20.77 sq.m.
Property 2, Flat B	No agreement
Property 2, Flat F	20.65 sq.m.

13. In arriving at the effective saleable area of the subject properties, the parties agreed to convert, where appropriate, the areas of the yards by using a conversion factor of 1/6.

14. For Flat B, there was agreement on the saleable area of the main accommodation, at 46.40 sq.m. However, there was no agreement on the treatment of the yard. On the one hand, the Applicant's expert contended that since the yard was only accessible by the occupants of Property 2 and of the shop on No. 36 Wan Chai Road, half of the yard should be included in the saleable area. On the other hand, the Respondent's expert contended that the yard was not shaded in the Deed of Assignment for Property 2. The Applicant has produced no evidence to show that the yard was used by the occupier of Property 2 and the occupier of the shop on No. 36 Wan Chai Road in common. We agree that since the Applicant has failed to prove title or right over the yard, the area of the yard adjoining Flat B of Property 2 should not be counted towards the effective saleable area of Flat B of Property 2. Therefore, we decide that the effective saleable area of Property 2 shall be 46.40 sq.m., the parties' agreed saleable area of its main accommodation.

15. According to the parties, the resumed properties had the following frontages and headrooms:

Property	Frontage	Frontage	Headroom	Frontage
	Applicant	Respondent	Applicant	Respondent
Flat A	4.72 m	4.19 m	2.74 m	2.8 m
Flat E	4.26 m	3.92m	3.81m	4.0 m
Flat B	3.14 m	2.92 m	2.74m	2.9 m
Flat F	4.26 m	3.92 m	3.81m	4.0 m

16. Mr. Ng, the Respondent's expert stated in the valuation report (Exhibit AR-1, pages 204-205) that the saleable areas of the resumed properties as estimated by both Mr. Siu, the Applicant's expert and himself were based on the approved building plans. Mr. Ng said that the headroom measurements of Flat A and Flat B of the resumed properties and those of the comparables were obtained from the Rating & Valuation Department whilst those of Flat E and Flat F of the resumed properties were based on in-situ measurements. Mr. Siu however did not disclose how he arrived at his measurements.

17. Mr. Ng further added that he had measured from the approved building plans the distance between the inner faces of the partition walls in arriving at the internal frontages. On the other hand, Mr. Siu admitted that he had measured between the centres of the partition walls. Mr. Ng opined that since the widths of the partitions walls might vary from building to building, and the partition walls would not form part of visible portions of the shops, it would be more meaningful to compare the shop frontages by the internal measurements.

18. Both the expert surveyor and the Counsel for the Applicant criticised Mr. Ng for not attributing any floor area to the unauthorized cocklofts of Flat E and Flat F, which were referred to in Mr. Ng's valuation report (Exhibit AR-1, page 144). The Respondent responded that Mr. Ng had in his valuation taken the cocklofts into account by making upward adjustments for higher headroom. However, after having raised the criticism, Mr. Siu had not attributed any additional floor area to the cocklofts for Flat E and Flat F but dealt with this point by making adjustment for higher headroom. His adjustment was in fact less favourable than the Respondent's.

19. Mr. Ng's evidence is accepted and his measurements were preferred as regards the headrooms and frontages of the resumed properties and the comparables. As to the instances where the parties still disagree on the estimated saleable areas, we decide to take the average of the experts' estimated figures since the differences between them were minimal in the first place and we were not provided with any plans and full set of internal dimensions for verification.

Whether Reduced Zoning method should be adopted

20. The experts had diverging views as to whether Reduced Zoning method of analysis of comparables and valuation of the resumed properties should be used. The parties cited a few local authorities on the subject issue in support of their contentions. On the one hand, the Applicant submitted, "It cannot be said that this method cannot be applied in Hong Kong as a matter of law". Three Lands Tribunal cases in Hong Kong, which decided on the subject, were cited. Whilst the method was not adopted in two cases, it was applied in one case. Moreover, the very location of the two resumed properties - the wet market characteristics of the general area surrounding the shops, as well as the importance of the front portions of these shops led one to conclude that this Reduced Zoning Method should be adopted. Also, the Applicant submitted that odd shapes of the rear parts of Comparables 4, 8 and 10 and the differences in the depths of the comparables would make this method to be particularly appropriate.

21. On the other hand, the Respondent submitted that in so far as the three reported cases were concerned, it was only in Lee Pui Leung's case that the Lands Tribunal allowed the use of the zoning method because the subject shop in that case differed from the comparables very substantially in shape. However, the Respondent submitted that between the subject shops fronting Wan Chai Road and their comparables, there was little difference in shape, size or depth. It was not in dispute that for the subject shops fronting Stone Nullah Lane and their comparables, there was a greater divergence on depths. Nevertheless, the Respondent submitted that they were all relatively small, rectangular shaped shops so that any difference in depth should be better adjusted by making quantum allowances, rather than resorting to the zoning method. More importantly, the Respondent submitted that the zoning method could lead to arbitrary results as, for instance, a different choice of the depth of Zone A alone (for example, 20 ft. for zone A as adopted by the Applicant's expert as against 7 m or over 23 ft. for zone A as adopted by the Respondent's expert, based on the common practice of the Rating & Valuation Department) would lead to differences in valuation figures of up to 13%.

22. In the earliest of the 3 cases cited by the parties, Man On Land Investment Co. Ltd. v. Director of Public Works [1977] HKLTR 4, at 7, the Tribunal decided that:

"The Tribunal does not consider this method is easily applicable to Hong Kong conditions especially in the case of smaller shops and considers therefore that it is of marginal value."

23. More recently, Judge Cruden made the following comments regarding the applicability of the zoning method in Ngai Kai-suen v. Director of Lands [1994] HKDCLR 123 at 124 at 127:

"We affirm that the amount of frontage is a very important factor to take into account in valuing a shop. There are a number of different methods of valuing shops. One of the better methods is based on directly taking frontage into account.... Zoning does recognise the higher value of a shop frontage. However, dividing areas towards the rear into zones, in an attempt to determine their lesser value, is unnecessarily arbitrary and can often be inaccurate...."

24. In the third case cited, Secretary for the New Territories v. Lee Poi-Leung [1982] HKDCLR 5 at 12-13. The Tribunal referred to Man On and said at page 13:

"In that case the comparable shops and the subject property differed little in shape or size and a direct comparison was not difficult. In the present case, however, the subject shop is triangular and had little depth compared to its frontage, whilst in all the comparables the depth/frontage ratio was considerably greater. We are of the opinion therefore, in this case, that a degree of zoning of the comparables would be permissible."

25. We find the analysis and submission of the Respondent on the similarities and differences in shape, size or depth of the subject Wan Chai Road and Stone Nullah Lane shops and their respective comparables to be correct. We also hold that the previous observations and decisions of the Tribunal on the applicability of the zoning method in the cited cases are still relevant today. In the circumstances, we decide that it would be more appropriate to use the traditional approach in the direct comparison method, instead of the Reduced Zoning Method as put forward by the Applicant's expert in this case. That is, each comparable would be adjusted on the basis of sale price per unit saleable area (with adjustments made to ancillary areas to arrive at an effective saleable area, where applicable). After making appropriate adjustments in respect of various factors of adjustments, an after adjustment unit rate for each adopted comparable would be calculated before one reaches a decision on the adopted unit rate for the subject shops.

Choice of comparables for Wan Chai Road shops

26. For the parts of the subject properties fronting Wan Chai Road (i.e. Flat A and Flat B) the Applicant's expert has chosen two suitable comparables whilst the Respondent's expert has chosen five. For the sake of convenience, only the numbering of the comparables by the Respondent's expert will be used.

27. Mr. Lau gave oral evidence that only Comparables 3 and 5 provided suitable and direct comparison to the Wan Chai Road shops and the others, Comparables 1, 2 and 4 were not sufficiently similar to the subject properties, as they did not fall within the same "wet market" area of Wan Chai Road. Mr. Lau also suggested that there was a distinction and agglomeration of certain trades in the wet market area and the by-product area. It was partly for this reason that he opined that Comparable 4, a Thai foodstuff shop adjoining a shop next to Comparable 3 fell outside the wet market area. In answering the questions put to him during cross-examination, Mr. Lau produced a revised plan (Exhibit AR-1, page 214A) showing his estimated boundaries of the traditional wet market area and by- product area. Mr. Lau spent considerable time in his evidence in chief and cross-examination to explain the importance of identifying the limits of the wet market. On the contrary, Mr. Ng disagreed with the findings of Mr. Lau so much so that he suggested that the wet market area extended to many side streets to the west of Wan Chai Road. One of the reasons given by Mr. Ng was that one could find shops and stalls selling wet market goods in Gresson Street, which was over ten blocks away from Wan Chai Road.

28. At the request of the parties, the Tribunal together with all concerned conducted a site inspection of the subject properties and the comparables used by both parties on 2nd January 2002. We realised the limitation of our inspection as it was made almost two years after the valuation date. We have been reminded by the parties and we understand that at the time of our site inspection, the locality had already experienced some significant changes in that the subject properties and other premises affected by the same resumption scheme had been demolished and scaffolding had been erected surrounding the urban renewal site. Nevertheless, we find the inspection to be very useful, as it actually assisted us a lot in reaching our decisions as to the choice of comparables and their adjustments.

29. In the Respondent's final submission, it was submitted, "It would be wrong to speculate what the position would be like at the material time based upon our recent site visit. The only reliable evidence comes from Mr. Ng and his report with photographs." We agree that since Mr. Ng was the only expert who had conducted site inspections at the material time, he was the only expert who could give "direct and reliable evidence". In this connection, the Tribunal wishes to comment that with modern day video-cam technology and its ease of use, the parties of a resumption claim should, as far as possible, take a video recording of the subject properties, the locality as well as the comparables, in addition to making notes and taking photographs when inspecting the site before and prior to reversion. This would assist the Tribunal considerably and help to minimise any factual dispute as well as to cut short the hearing time in future should a compensation claim be referred to the Tribunal for determination.

30. We disagree with the definitions and the strict demarcation of boundary of wet market trades and by product trades given by Mr. Lau. Whilst we agree that the stretch of Wan Chai Road between Queen's Road East and Johnston Road has the characteristics of a major wet market trade street, we do not share the same view as Mr. Lau that just because Comparable 4 was not directly fronting onto Wan Chai Road but was, technically, facing towards Triangular Street, it does not provide a suitable comparable to the subject Wan Chai Road shops. We also disagree with Mr. Lau that Comparable 3 was not visible by people coming in private cars, or that because its size was only about half of the subject Wan Chai Road shops, it should be discarded.

31. We also disagree with Mr. Ng that just because there were some shops and stalls selling wet market trades in Gresson Street, the wet market trade area is covering the entire blocks in between Wan Chai Road and Gresson Street or beyond. Rather, we think that normally these blocks will be treated as the catchment area of Wan Chai Road wet market trade area. From the relatively limited number of shops and stalls in Gresson Street and the similarly more limited types of goods sold there, we must draw the conclusion that Gresson Street is a minor wet market trade area in Wan Chai providing limited fresh market products and by-products to local residents in that part of Wan Chai adjoining Admiralty district.

32. For Comparable 1, although it is close to Wan Chai Road geographically, we agree with the Applicant that the pedestrian flow and the characteristics of this part of Johnston Road were quite different from the stretch of Wan Chai Road where the subject properties were situated. We do not share with Mr. Lau's view and the Applicant's submission that this comparable is not suitable because it was not used for one of the traditional wet market trades. Also, we fully agree with the Respondent that it is unrealistic to select comparables by reference to the actual trades carried on in a particular shop. Rather, the fundamental considerations of a shop are, as suggested by Mr. Ng, the retail potential and pedestrian flows. In this connection, it is our finding that this is not a suitable comparable to the subject Wan Chai Road shops.

33. Similarly, for Comparable 2, even though it is situated next to Hopewell Centre and Wu Chung building, both the pedestrian flow and the characteristics of this part of Queen's Road East were quite different from the wet market part of Wan Chai Road. It is therefore our finding that this is not a suitable comparable to the subject Wan Chai Road shops.

34. We come to the conclusion that out of the 5 comparables quoted by Mr. Ng as the suitable comparables for Wan Chai Road shops, only Comparables 3, 4 and 5 are suitable. We do not agree with the Respondent's submission that just because a valuation surveyor (or the Tribunal) finds that the busiest and thus the most expensive spots in a locality provide the most suitable comparables, it must be the case that the valuation cannot be accurate. Valuation is not a simple averaging exercise. If the best comparables happen to be located in the busiest part of a street or a locality, what the Tribunal must not do is to attempt to neutralise the values by adopting unsuitable comparables at the other end of the scale.

Adjustments of the comparables for Wan Chai Road shops

35. We set out below the consideration, effective saleable areas, and unadjusted unit rates of the chosen comparables and their adjustments for the purpose of arriving at an appropriate unit rate for Flat A of the resumed properties. Since the frontage of Flat B is narrower, we agree to follow the approach by Mr. Ng in which he suggested that the appropriate unit rate for Flat B should be 95% of that of Flat A after taking into account their differences in frontages.

Schedule 1 (A= Applicant; R=Respondent; LT=Lands Tribunal)

36. From the above analysis, we adopt the average of the chosen comparables, at $226,509, rounded off to $226,500 per sq. m. to be the appropriate unit rate for the valuation of Flat A and Flat B of the resumed properties. For Flat B, we accept Mr. Ng's approach and adopt 95% of the unit rate for Flat A ($226,500 X 95%), or $215,175 as the appropriate unit rate for Flat B.

Choice of comparables for Stone Nullah Lane shops

37. For the Stone Nullah Lane shops, the Applicant has chosen 2 comparables whilst Mr. Ng has chosen a total of 6 comparables to be suitable. Mr. Lau gave oral evidence that only Comparable 8 and 10 were suitable comparables. Again for convenience, we shall use the numbering adopted by Mr. Ng. We set out below the parties' reasons for including or excluding the comparables and the rationale of our decisions on the Tribunal's choice of the best comparables for the subject Stone Nullah Lane shops: -

Comparables 6- We agree with the Applicant's submission that "this is a little shop in the far away Anton Street. This street has some vehicular traffic but little pedestrian flow.... There are also no characteristics of the peripheral of a wet market in Anton Street." We therefore agree that this is not a suitable comparable at all.

Comparable 7- The Applicant submitted, "This shop is inside a Triangular Street which is narrow and appears to be a less patronized part of the peripheral of the market. Its pedestrian flow is markedly different from that of the other parts of the peripheral. The Stone Nullah parts of the properties have the benefit of a temporary market at one end and the peripheral of the market at the other. This characteristics is not shared by this comparable which is thus not a comparable." We do not agree with the above submission. Although Triangular Street is narrower than Wan Chai Road, it is similar to Stone Nullah Lane in location characteristics. We decide this to be a suitable comparable.

Comparables 8 and 10- The experts agreed these 2 comparables to be suitable comparables. We are in agreement with their opinion.

Comparable 9- This shop is inside Spring Garden Lane with busy vehicular and pedestrian flow. The location is so much different from the subject Stone Nullah Lane shops that Mr. Ng gave a 30% discount in his valuation. We agreed with the Applicant that such a big discount just for location speaks for itself against the use of this shop as a comparable. This comparable should be discarded.

Comparable 11- The Applicant submitted that this comparable should be discarded for the sheer difference in size between this comparable and the subject Stone Nullah Lane shops. However, we note that whilst this comparable is over 4 times the sizes of the subject Stone Nullah Lane shops, it has a much wider frontage too. We also agree with the Respondent that if the Applicant included Comparable 10 as a suitable comparable, there is no reason that this comparable should not be included, since Comparable 10 and Comparable 11 are adjacent to each other. All in all, we decide that Comparable 11 is a suitable comparable.

38. To conclude, we decide that Comparables 6 and 9 should be discarded whilst Comparables 7, 8, 10 and 11 should be employed in the valuation of the subject Stone Nullah Lane shops.

Adjustments of comparables for Stone Nullah Lane shops

39. We set out below the consideration, effective saleable areas, and unadjusted unit rates of the chosen comparables for Stone Nullah Lane and their adjustments:

Schedule 2 (A= Applicant; R=Respondent; LT=Lands Tribunal)

40. From the above analysis, we adopt the average of the chosen comparables, at $80,767, rounded off to $80,800 per sq. m. to be the appropriate unit rate for the valuation of Flat E and Flat F of the resumed properties.

Comments on the adoption of factors and levels of adjustments to the Comparables by the Tribunal

41. There is only one main factor in relation to whether adjustments should be made to the comparables which was disagreed by the two parties. This is the factor of frontage under which only Mr. Ng gave allowances to reflect the differences between the subject properties and the comparables. Otherwise, the two experts agreed on the factors for which adjustments should be made to the comparables in this valuation.

42. We agree with Mr. Ng that since frontage is obviously a factor that has a bearing on the value of a shop, there is no reason that adjustment should not be made for this factor.

43. Regarding the level that is applied to each adopted comparable in respect of the various factors for adjustments, the Tribunal finds that the experts' figures are not too far apart, with the exception of the adjustments for location and size. On the whole, Mr. Ng's percentages of adjustments are generally more logical and reasonable, especially in the adjustments for frontages and headrooms. The Tribunal has considered the levels adopted by the experts before reaching its decisions on the appropriate percentages to be applied for each comparable. With very few exceptions, the level of adjustment adopted by the Tribunal falls within the range of adjustments suggested by the experts. Where the level of adjustment suggested by both experts is not accepted, the Tribunal reaches its decisions after having regarded to our own observation from site inspection.

Estimation of the open market values of the resumed properties, on the basis of subject to tenancy

44. Based on the above estimates of the appropriate unit rates for the assessment of the open market values of the resumed properties and the agreed details of tenancies and discounting rates, we set out below our valuation of the open market values of the resumed properties:

Valuation 1- Valuation of Property 1 (Flat A and Flat E)

Valuation 2- Valuation of Property 2 (Flat B and Flat F)

Additional value due to the merging of the resumed properties

45. Mr. Chan submitted in the final submission that the contiguous location of the two resumed properties led to an advantage offered by the unity of ownership of properties, as was the case in Million-Add Development Ltd. v. Secretary for Transport [1997] CPR 316 at 316H to I, 317D to E, 321B to E and 323 D to G. This was relied upon to support Mr. Simon Lau's oral evidence that all 4 shops (Flats A and B on Wan Chai Road and Flats E and F on Stone Nullah Lane) could be developed together into some sort of daily supermarket for market necessities by virtue of contiguous positions and common ownership. However, if these advantages were indeed advantages as suggested by Mr. Simon Lau, he should have made suitable adjustments in his submitted valuations. Without putting the suggested benefits in terms of dollars and cents in surveyors' terminology, it would be difficult if not impossible for the Tribunal to have come to a conclusion in its determination of the open market values of the resumed properties. This is also precisely the area where the experts' view could be of relevance and importance to the Tribunal. Unfortunately, Mr. Simon Lau fell short of going one necessary step further assuming that he wished the Tribunal to accept his oral contention.

46. Mr. Wong in his addendum to final submissions set out his reasons for opposing Mr. Chan's contention:

"(1) The case of Million-Add concerned contiguous lots of land in Tai Po...

(2) We are dealing with two shop units on the ground floor separated by a staircase and load bearing and structural walls ...There is no evidence that the Applicant owned all the other units in this development.

(3) Mr. Ng has already given evidence that it is not possible to take down the load bearing walls and the staircase between Shops A and B so as to run the two units as one. As between the Wanchai Road side and the Stone Nullah Lane side, there was a significant difference in height of 1.2m, which would prevent the use as contended for.

(4) Mr. Lau in any event said the valuation contended for in Mr. Siu's report had already taken into account this joint redevelopment potential."

47. We agree with what Mr. Wong submitted above and find that because of the physical restraints, we do not see that there is little chance of developing the subject properties into a supermarket in the general sense. We therefore decide that what Mr. Lau said in his oral evidence has no merit.

Orders

48. Accordingly, we order that the Respondent do pay the Applicant compensation for Property 1 and Property 2 in the sums of $11,848,000 and $11,470,000 respectively. The matters of professional fees, interest and costs be adjourned to a date to be fixed by the Assistant Registrar, with liberty to apply for any other ancillary and consequential matters.