SUCCESS BRAVO LTD v. THE CHINA HONG NIN LIFE INSURANCE CO LTD AND OTHERS

LDCS 19000/2022

 [2026] HKLdT 37

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAIN APPLICATION NO 19000 OF 2022

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BETWEEN

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D E C I S I O N 

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Background

The Applicant applied for a compulsory sale order under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“Ordinance”) to sell all the undivided shares of the Remaining Portion of Section H of Inland Lot No 1460 (“Lot”) and a building erected thereon known as Bonny View House (“Building”), Nos 63 & 65 Wong Nai Chung Road, Hong Kong (“Application”).  The Building is a 13-storey (including a basement and a mezzanine floor) composite building fronting Wong Nai Chung Road on its western side and facing Ventris Road on its eastern side, served by 2 lifts and 2 common staircases, and governed by the Occupation Permit No H 135/71 issued by the Buildings Department on 21 July 1971.

By a judgment dated 17 March 2026, [2026] HKLdT 14 the Tribunal dismissed the Application because the Tribunal was not satisfied that redevelopment of the Lot was justified on the ground of age or state of repair in terms of section 4(2)(a)(i) of the Ordinance (“Judgment”).

By summons dated 2 April 2026, the Applicant seeks leave to appeal against the Judgment (“Summons”) setting out six draft Grounds of Appeal (“Ground 1-6”).  

By Order dated 20 April 2026 the Tribunal directed, inter alia, that: -

The Application for leave to appeal be dealt with on paper.

The Applicant do lodge into the Tribunal the agreed application bundle limited to the essential documents (“AB”) within 14 days from the date thereof.

The Applicant do lodge and serve submissions in support (with list and copy of authorities) within 14 days thereof.

 The Respondents do lodge and serve submissions in opposition (with list and copy of authorities) within 14 days thereafter.

The Applicant do lodge submissions in reply (with list and copy of authorities) within 7 days thereafter.

The Applicant lodged submissions in support of the Summons draft Grounds of Appeal on 30 April 2026, of Mr YC Mok who appeared for the Applicant throughout (“A Subs”). 

The 1st to 5th Respondents (“R1-R5”) represented by Mr But and Ms Prisca Cheung and the 6th Respondent (“R6”) represented by Mr Vod KS Chan and MS Kathy Sze their respective trial counsel, each lodged submissions in opposition dated 14 May 2026 (“R1-R5 Subs” and “R6 Subs” respectively).  The 8th Respondent gave notice that it adopts a neutral position on the Summons.  The Applicant lodged a submission dated 26 May 2026 in reply to Respondents’ submissions (“A Reply”), which we have also considered notwithstanding that it was lodged out of time.

Draft grounds of Appeal

In short the Grounds are as follows: - 

Ground 1, the Tribunal introduced a new test of “market reality” (“MRT”) in the Judgement §123 and §156 which is inconsistent with the relevant guidelines set out in Intelligent House Limited v Chan Tung Shing & Others [2008] 4 HKC 421.

Ground 2, the Tribunal erred in law by excluding specified items (“5 Items”) of repair cost, mostly expressly or implicitly on the ground of MRT and all erred in law.

Ground 3, if the excluded 5 Items of repair costs are to be included, the Cost Ratio Comparison and the EUV Ratio Comparison would have reached 29% and 4% respectively, which should lead to the conclusions that redevelopment of the existing development is justified due to the state of repair of the Building and the sale order should be granted.

Ground 4, the Tribunal erred in law at Judgement §§156 – 158 because it indicated that an applicant is required in law to satisfy both the Cost Ratio and the EUV Ratio Comparison prior to the conclusion that redevelopment of the building is justified due to the state of repair of the Building.

Ground 5, the Tribunal erred in law in failing to follow the guidelines set in IH §165(3) to assess whether redevelopment is justified after looking at all factors under both “age” and “state of repair” collectively and refused the sale order. 

Ground 6, leave to appeal should be granted in the interests of justice.

LAW

Leave To Appeal 

Lands Tribunal Ordinance, Cap. 17

Sections 11(2) and 11AA (1) and (6) of the Lands Tribunal Ordinance, Cap 17 (“LTO”) provide: 

“11.	Decisions of Tribunal final

(2)	Subject to section 11AA and the provisions of any Ordinance relating to appeals from the Tribunal, any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law. (Amended 3 of 2008 s. 39) …

11AA.	Leave to appeal

(1)	Subject to subsection (2), no appeal may be made under section 11(2) unless leave to appeal has been granted by the Tribunal or the Court of Appeal. …

(6)	Leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that—

(a)	the appeal has a reasonable prospect of success; or

(b)	there is some other reason in the interests of justice why the appeal should be heard. …”

In this decision all bold emphasis in cited paragraphs of authorities, the Judgment and legislation (as above) is added. 

R1-R5 submit that for leave to appeal under sections 11(2) and 11AA (1) and (6) LTO an appeal must identify a genuine misdirection in law with a reasonable not fanciful prospect of success. Mere disagreement with the Tribunal’s factual or evaluative findings does not meet the threshold. Where an appeal lies only on a question of law the appellate court may intervene in relation to a finding of fact if the finding is perverse or irrational or where there is no evidence to support it, or it was made by reference to irrelevant factors without regard to relevant factors. 

For the principles applicable to an appeal from an exercise of discretion R1-R5 rely upon Wong Kar Gee Mimi v Sevren Villa [2012] IJHLRD 887. At §31 the Court of Appeal held that generally, an appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which reasonable disagreement is possible. Shine Grace Investment v Citibank [2022] HKCA 1341 at §60 also sets out the principles. The threshold for challenging a discretionary decision is high, being “plainly wrong” or “falling outside generous ambit of reasonable disagreement”. It is not enough to show that the appellate court might have exercised the discretion differently. R1-5 submit that complaints directed to assessment of expert evidence, the classification of works, the reliability of cost assumptions or the weight/preference according to competing professional opinions will not suffice unless they demonstrate a true legal misdirection.  

R6 relies upon Chan Chong v Director of Lands [2019] HCA 758 [27] where the Court of Appeal referred to the Lands Tribunal being a specialist tribunal, and that an applicant for leave to appeal should not ask the appellate court to re-hear the arguments that have been advanced before the Tribunal by dressing them up as an “error of law”, as follows:

“27. The Tribunal is entitled to set out the main thrust of its decision in a judgment, without having to set out, discuss and then reject, each and every contention raised. On top of that, it is a specialist tribunal. Unless there were plainly obvious errors in respect of material factors which the Tribunal failed to take into account, it is not open to applicants to ask the Court of Appeal to re-hear all the arguments they had advanced before the Tribunal by dressing up omissions of the Tribunal to address each such argument as an error of law” 

The Applicant does not only rely on the Tribunal failing to take into account a factor, but the authority is pertinent when it comes to applications under the Ordinance.   

Compulsory Sale

Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545

Issue 3 was whether the redevelopment of the Lot is justified due to the age or state of repair of the Building in accordance with section 4(2)(a)(i) of the Ordinance? 

Section 4(2) of the Ordinance provides that: -

“(2) The Tribunal shall not make an order for sale unless, after hearing the objections, if any, of the minority owners of the lot the subject of the application under section 3(1) concerned, the Tribunal is satisfied that —

(a)	the redevelopment of the lot is justified (and whether or not the majority owner proposes to or is capable of undertaking the redevelopment) —

 due to the age or state of repair of the existing development on the lot; or

… ; and

(b)	the majority owner has taken reasonable steps to acquire all the undivided shares in the lot ….”.

Thus, under section 4(2)(a)(i) of the Ordinance the Applicant had to satisfy the Tribunal that the redevelopment of the Lot was justified due to the age or state of repair of the Building. The Applicant failed to do so. Therefore, the Tribunal refused to make an order for sale: Judgment §§67-68.

Intelligent House guidelines

Intelligent House Limited v Chan Tung Shing & Others [2008] 4 HKC 421 (“IH”) construed section 4((2)(a)(i) of the Ordinance and provided guidelines. The Grounds for leave to appeal concern the proper application of the Ordinance and the IH guidelines, so some of the material paragraphs are set out in full.  IH §§147, 148, 150 and 151 provide:

“147.     “Redevelopment” is defined under section 2 of the Ordinance to mean “the replacement of a building on (or formerly) on” the subject lot.

148.     The terms of “satisfied”, “justified”, “age”, “state of repair” and “existing development” are not defined under the Ordinance.

149.     …

150.     Further, in not defining or prescribing any criteria for the terms “justified” and “satisfied” under s. 4(2)(a)(i), we are of the view that the legislature intended to give the Tribunal a wide discretion to look at all the circumstances and factors relating to the grounds of “age” and “state of repair” of the existing building, to decide whether it is “satisfied” that redevelopment (meaning replacing the old building with a new one) is “justified”.  This is particularly so as:

(1)  The ordinary and plain meaning of the word “justified” is that there being any good reasons or cause to support or warrant the occurrence or existence of certain matter, thing or action. The meaning is thus wide and general.  See:  meaning set out in Shorter Oxford English Dictionary.

(2)  The plain and ordinary meaning of “satisfied” is to mean to be convinced or be provided with sufficient proof.  The meaning is also wide and general.   See: meaning set out in Shorter Oxford English Dictionary.

(3)  The objective and intention of the Ordinance is to “assist”[34] or  “facilitate”[35] urban renewal.

151.     As such, on a proper construction of s. 4(2)(a)(i) and in light of the intention of the Ordinance, the section entitles the Tribunal to look at and take into account anything directly or indirectly related to the “age” and “state of repair” of the existing or old building on the subject lot, to see whether it is convinced that replacing the old one with a new building (thus redevelopment) is shown to be warranted or supported.  When deciding whether redevelopment is so warranted or supported, the Tribunal is entitled to and should have in its mind the objective that the making of an order for sale is to facilitate and assist urban renewal.”

Tenantable condition

The Judgment wholly accepted and applied the IH guidelines, including as set out at §69 of the Judgment, as follows: 

“69. Intelligent House Limited v Chan Tung Shing & Others [2008] 4 HKC 421 construed section 4(2)(a) of the Ordinance and laid down useful guidelines for the Tribunal’s determination of the statutory requirements. The Tribunal accepted the submissions of Mr Roots leading Mr Mok on the proper construction of the Ordinance in determining the requirements under section 4(2)(a)(i) at paragraph 145-146 and 147-151. Materially, at §145:

“145. However, Mr Roots submits that, on a proper construction of the Ordinance and the relevant provision, with reference to the intention and objective of the Ordinance to facilitate and assist urban renewal, in determining whether the requirements under s 4(2)(a)(i) are satisfied:

(1) The Tribunal is entitled to look at any factors or matters that are directly or indirectly related to the elements of “age” or “state of repair” of the existing building.

(2) While looking at these factors or matters to decide whether redevelopment is justified, the Tribunal is also entitled to look at any comparison made between the old/existing building and a new building or any proposed redevelopment.

(3) It is open to the Tribunal to consider and look at the obsolescence of an existing building in terms of its functional items or facilities, since this is something related (directly or indirectly) to the “age” of the building. The older a building is, the more obsolete and outdated its facilities are.

(4) Further, the Tribunal is entitled to compare these facilities of the old building with what a modern day building could correspondingly offer whether as required by the present day regulations or law, or because of the advance of technology, or because of the rising expectations of the public for proper, safe and hygienic habitation and residence.” 

IH held that the applicable standard is that of “tenantable condition”. The Tribunal accepted that the standard is “tenantable condition” and applied that test: Judgment §114-119. The Judgment §115 provides: 

“115. For the ground of “state of repair”, Mr Benson Wong has relied on the guidelines as set out in Intelligent House where, inter alia, at paragraphs 145(6), 165(2)(c) and 199 the Tribunal accepted that ‘tenantable condition’ should be used as a benchmark to formulate the repair works required:

“145(6) … in considering the cost of the ‘state of repair’, the Tribunal is similarly entitled to look at repair works which are necessary to render the building a tenantable condition, which is reasonably fit for use in the sense that it should be safe and hygienic for occupiers and visitors, and provide a standard of comfort and convenience which is reasonable in the present day circumstances for the type of building in question.  Mr Roots emphasizes in his closing submissions that he is not contending that (a) the repairs that needed to be carried out is to make the old building “as new” either by today’s standards or even by the standards when it was built, and (b) modern finishes and installations should replace the types originally provided except where that is required by law or good safety practice. …

165(2)(c) Moreover, for the purpose of determining whether it is economically worthy to do so, the Tribunal is entitled to look at repairs which would render the building to a tenantable condition fit for the enjoyment of its tenants and visitors, which is reasonable in the present day circumstances for the type of building in question. …

199 	…, we accept that under the ground of “state of repair”, it is the standard of tenantable conditions that dictate what would be the necessary repairs that need to be carried out at the subject buildings.   For what constitute tenantable conditions, we adopt our conclusion made at paragraph 165(2)(c) above and Mr Benson Wong’s view that, they should be those which would render the building fit for the enjoyment of its tenants and visitors, which are reasonable in the present day circumstances for the type of building in question, and with its structural frames, components, finishes and service installations in either fair or good conditions, requiring no repair in the near future.”.

IH §166 also held:

“166.     Further, given the wide terms in which the provision is drafted, we must emphasize that the above propositions are not intended to be an exhaustive list of what the Tribunal is entitled to look at under s. 4(2)(a)(i) to decide whether redevelopment is justified on the ground of ‘age’ or ‘state or repair’”. 

The Judgment §70 referred to the approach of the Tribunal of considering each “age” and “state of repair” separately while appreciating that there may be considerations common to both as follows:

“70. As a general approach and in Top Sail International Limited v Cheng Kai Ming, LDCS 18000/2010 (unrep. 15 November 2011) the Tribunal held that ‘age’ and ‘state of repair’ were two separate grounds and even though there might be considerations common to both, the Tribunal should still consider them separately.” 

The Judgment §74 appreciated that it was entitled to, and did in fact look at all factors collectively, in terms:

“74. According to Intelligent House at paragraph 165(3), the Tribunal is entitled to look at all factors under ‘age’ and ‘state of repair’ collectively to see if that justifies redevelopment, even though, when each of them is considered alone, it is insufficient to do so.  In gist, this is a comprehensive consideration approach and the goal is to make a judgment by evaluating a wide range of relevant factors under an additive and holistic process.  The current jurisprudence relying mainly on the approach formulated in Intelligent House is functioning well.”

Ground 1 – The Tribunal introduced an impermissible market reality test

Ground 1 is founded upon the Tribunal’s references to “market reality”. The Applicant has elevated the references to contend that the Tribunal invented and applied a new “test” contrary to IH. We do not accept that the Tribunal introduced a new market reality test, be it called “MRT” or otherwise and which is contrary to the guidelines set out in IH. 

Ground 1 is essentially that “market reality”, as perceived by the Tribunal, is restrictive in nature contrary to the guidelines in IH by excluding the 5 Items in the assessment of the total repair cost estimate.  If market reality, as referred to in the Judgement, is a new test being applied to “state of repair”, there should be proper guidance from the Court of Appeal on whether “MRT” is a proper test under the state of repair limb to justify redevelopment.  

The material paragraphs are §§123 and 156 of the Judgment. §123 states:

“123. The Tribunal notes that according to market reality, major repair works of a building should mainly focus on restoring a building’s structural integrity or fixing significant damage.  This is different from renovation of a building, which involves updating or modernising a building to improve its appearance, functionality, or performance.  However, ‘improvement’ of items may also be justified to be material repair works.  The justification may include for example, the usual replacement of dilapidated or worn out items by its modern equivalent.  We also agree that ‘preventive maintenance’ is a reasonable item to be included in order to maintain the existing condition until the next repair cycle”.  

The Tribunal was there comparing and contrasting “repair” with renovation and “improvement” and simply “notes” that according to market reality, repair items should mainly focus on restoring a building’s structural integrity or fixing significant damage. The Tribunal did not direct that in the assessment of the “state of repair” on whether redevelopment is justified, other major repair works as well as improvement items having valid justification, have to be excluded.  The A Subs §6 argues that Judgment §123 “confined” necessary repairs to restoring integrity or fixing significant damage and excluded updating or modernisation. That is simply not so. 

R1-R5 submit that a fair reading of the Judgment is:

§123 prima facie distinguished between (1) “repair works” required to restore structural integrity or significant damage; and (2) “renovation works”, namely “improvements” which improve appearance, functionality or performance.

The Tribunal also considered that “improvement works” may in some circumstances nevertheless be justified as material repair works, such as the usual replacement of dilapidated or worn-out items by its modern equivalent.

The Tribunal was aware of the risk of maintaining a strict categorisation between “repair’’ and “improvement”. Rather than being fixed on labels the Tribunal considered each proposed repair works item and evaluated whether it should truly be allowed as tenantable repairs and, if so, assess cost.

The approach is consistent with IH §164. Nothing was “confined” or “restricted”.

In §123 “according to market reality” was merely a neutral expression used as a descriptive shorthand with reference to common practice in “present day circumstances” in the context of discussing the common-sense classification between (1) genuine “repair works” to fix defects, repair damage and restoring structural integrity; and (2) “renovative works” (broadly improvement) which are generally for enhancement of appearance, modernisation or functionality of buildings.  It applied common sense and observations of ordinary daily life.  It did not establish a new test: R1-R5 Subs §6(b).  

Further, the Tribunal accepted that “preventative maintenance” as propounded by Mr Benson Wong the Applicant’s building condition expert, may be included where it is reasonable to maintain the existing condition until the next repair cycle: Judgment §123. We consider the above a fair reading of the Judgment. We agree that is inconsistent with the Applicant’s contention that the Tribunal adopted an impermissibly narrow test.

Furthermore, the concept of “market reality” commands wide recognition among experts and professionals practicing within the property market, and its scope extends well beyond matters of mere common sense and strict valuation in monetary terms. It is not in dispute that the decisions of individual property owners are inherently subjective.  That very proposition serves to demonstrate that "market reality" may constitute a material consideration, in so far as it embodies the collective will of the majority of reasonable persons in the circumstances and may assist the Tribunal in arriving at an objective determination. 

The Applicant’s argument that “market reality” is “restrictive in nature” as compared with the IH guidelines is misconceived. The assertion that this was used by the Tribunal to confine items is incorrect. Noting market reality did not improperly exclude items. The Tribunal did not introduce or apply a new test contrary to IH. Therefore, we do not consider there is a need for there to be proper guidance from the Court of Appeal on any new test. 

Statutory discretion

IH construed section 4(2)(a)(i) of the Ordinance holding that the Tribunal has a wide discretion: IH §§148, 150 and 151. R1-R5 consider that the Applicant’s contentions must be recognised as being contrary to the statutory reality that the Tribunal’s discretionary powers are wide and unfettered. It is only following an unfavourable outcome that the Applicant now seeks to depart from the broad IH approach and impose a more restrictive interpretation precluding the Tribunal from looking at the “market reality”. This notwithstanding that it is a specialist tribunal entitled to include the Members expertise and experience in considering the expert evidence and making determinations. 

We agree with Mr But that against the IH guiding principles for an unfettered discretion to be exercised by the Tribunal when holistically engaged section 4(2)(a)(i) of the Ordinance has a wide ambit. There is nothing in the legislation to prohibit the Tribunal from taking into account realistic and pragmatic concerns of owners and prevalent, namely “present-day” practices as adopted in the market when assessing whether a proposed repair item is reasonably necessary to attain tenantable standards, which is of itself a novel concept. Mr But says that therefore, it cannot be objectionable for the Tribunal to have regard also to “market reality”, in evaluating the state of repair and whether there existed real grounds to justify demolition of the building or simply to repair and retain it. 

Mr But concludes while the “tenantable” repair exercise is a useful guideline/tool to enable the Tribunal to appraise how dilapidated the building might be by quantifying items of defects/ shortcomings into repair costs, it is just one consideration in the “state of repair” limb. That is so. Under the Ordinance the broad question remains whether redevelopment is justified due to the age or state of repair of the existing building. As the Tribunal pointed out at §99 of the Judgment, the issues are matters of degree and extent to be considered in reality. We maintain that view.

§145(1) of IH held that “The Tribunal is entitled to look at any factors or matters that are directly or indirectly related to the elements of ‘age’ or ‘state of repair’ of the existing building”.  In contrast to quantifiable diagnostic measures such as the Concrete Core Compression Test or the Sulphate Content Test under the Structural Assessment prepared by the two structural assessment experts, “market reality” is not a quantifiable measurement designated to confirm a specific physical property or performance standard.  In determining whether a property repair project is economically worthy to do as explained by IH, cost effective or financially viable the Tribunal may consider any factor directly or indirectly related to state of repair. IH requires that the Tribunal have regard to what is reasonable in present day circumstances for the type of building in question, which in our view may include reference to “market reality”: IH §165(2)(c). That does not constitute a new test in law.  Rather, it serves as a factor or matter, which the Tribunal is entitled to have regard to in the assessment process, following the IH guidelines. Even the concept of “market reality” as defined by the Applicant is a matter that may be included in the exercise of discretion in the process of forming a judgement on the “state of repair” of the Building.  

The A Subs §7 relies on IH at §145(4) and (6) but would agree that the passages do not support the proposition that every current regulatory or statutory standard, even if not retrospectively applicable, must be treated as a necessary repair. 

R1-R5 submits that IH §145(6) is crucial:

IH states that the objective of the hypothetical repair exercise is “not” to make the old building “as new”. Modern finishes or installations are not required merely because they are available or even desirable.

Repairs may be relevant where they are required by “law” or required by “good safety practice”, but whether a particular item is necessary remains a question of fact and degree.

The expression “… present day circumstances for the type of building in question” is illuminating. It encompasses a reality check on what repair works should be pragmatically carried out in each case when facing the existing apparatuses of the building which can still offer a high degree of comfort, hygiene, convenience and safety, and at the same time give recognition to the fact that the law, namely the latest standards as applicable when designing a new building does not in most cases demand retrospective compliance for older buildings.

In this regard we agree that IH §164 is also important: 

“164. However, this is not necessarily to be equated with everything that a proposed redevelopment building could offer or provide. A proposed redevelopment may well offer facilities and functional components well above or much better than what would have been expected of for providing a reasonable standard of tenantable condition in present day. Whether certain proposed repairs fall within this standard is to be decided on a case-by-case basis, depending upon the evidence and what is the use of the existing building”.  

Whether a proposed repair falls within the relevant standard is case specific and depends on the evidence and use of the building. We agree that IH clearly permits the Tribunal to exercise the discretion on the basis of the evidence adduced on any particular application without mandating that any particular repair must be included. 

R1-R5 submit that the Applicant’s restrictive approach aims to put a hefty price tag on every aspect of the building which could be improved while ignoring the substantive merits and effectiveness of the proposed works and that such approach should be rejected. They say that the A Subs §7(c)-(d) formulation would in effect turn the state of repair limb into a general obligation to mandatorily retrofit an old building to modern standards whenever an expert can identify a “safety related” improvement, without paying heed to other realistic considerations, such as the extent of the improvement and cost-effectiveness. That is not the law and not what IH requires. It would shift the purpose of the statutory inquiry away from whether redevelopment is justified by age or state of repair, to judging existing buildings solely on their failure to meet evolving specifications, resulting in a technological arms race or a checklist approach comparing all apparatuses and the building with the most updated standards that must be implemented, regardless of the actual circumstances, not weighing the cost-effectiveness and necessity of each repair item. 

The Applicant relies heavily on the safety aspect of tenantable condition and the IH requirement for the building to be reasonably fit for use in the sense that it should be “safe and hygienic for occupiers and visitors, and provide a standard of comfort and convenience which is reasonable in present day circumstances for the type of building in question”: §145(6); see also IH §145(4) “proper, safe and hygienic habitation and residence”. We reject any suggestion that the Tribunal somehow disregarded safety. The Tribunal was acutely aware of safety requirements and considered all of the evidence, in particular that of the experts as to any safety issue and whether proper safety provisions were in place. After consideration of in particular the expert evidence on safety related issues, we were satisfied that the Building was safe for occupiers and visitor and that there were not safety concerns that needed to be address immediately, in the terms found. The fire service installations, lifts and staircase safety issues are addressed below.

R1-R5 Subs §29 refer to Century Supreme v Kam Chi Kit LDCS 24000/2018 (21.1.2022) at §65: 

“ … it is a misconception to think that whenever the subject building is found to be inferior than modern buildings, then the tribunal must reach the conclusion that redevelopment is justified. To what extent the existing building falls short of modern-day standard certainly is one of the considerations to be taken into account”. 

The Applicant thoroughly reviewed and assessed the extent to which the Building fell short of any modern-day standard. The Tribunal took into account all matters regarding the extent to which the Building fell short of various modern day standards relied upon, but was not satisfied that those matters combined with all the other evidence could justify redevelopment. 

We accept the submission of R1-R5 that the Applicant’s formulation is not the test under section 4(2)(a)(i) of the Ordinance in so far as it seeks to fetter the discretion. As emphasised in IH §150, the exercise is of a wide discretion. We agree that it should not be constrained by narrow approaches that are detached from reality.

Whether major repairs are situational 

The Applicant also argues that “major repairs are not situational”, contrary to §156 of the Judgement: A Subs §§7(d)(IV) & 7(e). The Judgment §156 did not create an exclusionary rule, but discussed the differing nature of repairs as follows:  

“156.  In market reality, sellers often address minor issues (e.g. painting & fixing leaks) to improve appeal, but major repairs (e.g. roof replacement & structural fixes) may not always yield a proportional increase in sale price.  While minor repairs are almost universal, major repairs are situational.  Accordingly, when applying this concept to the exercise, the prospective cost and economic benefit of works is crucial, as they will dictate whether the owners concerned would choose to do the repair project on the ground that the total cost is reasonable and thus reject redevelopment.”

R1-R5 rightly point out that §156 generically recognised that major repairs are situational and that the cost-benefit justification of what tenantable repairs should be carried out must depend on the circumstances. That observation is both practical and consistent with the established tests in IH §164.

 While R6 points out that according to the Oxford Dictionary, the ordinary meaning of “situational” is “connected with or changing according to the particular situation that exists”. Thus, the Tribunal must be correct to note that major repairs are “situational”, because for major repair work items, the scale and scope of works, materials and manpower required and, importantly, repair costs must depend largely upon the particular situation. Whereas minor repairs are almost universal in terms of costs and scale: R6 Subs §14.  

Thus, A Subs §7(e) taking the second sentence of the §156 of the Judgment to contend the Tribunal erred to describe major repair items as situational as it would contradict the IH guidelines which are meant to be inclusive is misconceived: R6 Subs §15.  Read in context together with the whole section on Cost Benefit, the paragraph emphasises the importance of comparing repair costs, with the enhancement value, in determining whether redevelopment is justified under the “state of repair” limb. If repair costs are disproportionate to the enhancement value the repair works can bring to the building redevelopment would be the better option. Accordingly, the Tribunal then continued immediately, at §§157-158, to set out the Cost Ratio comparison and the EUV Ratio comparison and subsequently applied them in the assessment of the “costs benefit”: R6 Subs §16. We agree that this is entirely consistent with IH.

In certain instances, major repairs may necessitate substantial works that entail either a disproportionately large expenditure of funds or an extended period of construction, during which cessation of occupation of the premises shall be required.  Under such circumstances, the owners may be compelled to consider alternative courses of action, including but not limited to full reconstruction or the deliberate vacancy of a portion of the building.  Should such conditions obtain, the building may be deemed to have suffered physical or functional obsolescence, thereby justifying its redevelopment on grounds of the building’s age under the Ordinance.

The general Cost Ratio and EUV Ratio comparisons adopted by the Tribunal in previous judgements under the Ordinance do not conflict with the statement that major repairs are situational in “market reality”.  The rationale of these comparisons is to assess whether it is economically worthwhile to do the repairs and if not, redevelopment is justified. The Tribunal did not mandate any rule regarding major repairs, nor situational repairs. 

In any event, the 5 Items the subject of the intended appeal do not constitute such major repairs.   These items related to “improvement works”, “demolition of UBW” and “preventive maintenance” respectively.   Accordingly, any argument as to whether major repairs are situational is academic or hypothetical and a false issue, as it does not arise for consideration on the facts in this case.

The A Subs §§8-10 contend that it was wrong to have regard to how unit owners may decide in a major repair project because such owners may act for subjective reasons. The Tribunal did not ask what any particular owner would do, nor apply the subjective views of an owner in substitution for the statutory test, risking undisclosed reasons motivating the owner impacting the result. The Tribunal considered whether proposed repair items formed part of a realistic and reasonable repair project. That is an objective and realistic assessment of the justification of the work items as would be conducted by a reasonable person. It is a legitimate consideration in checking necessity and proportionality in the course of applying the tenantable condition standard. It was one way of objectively cross-checking whether an item of proposed repair is reasonably warranted. Thus, a legitimate consideration in exercising the wide discretion.

IH §152(6) also recognises that section 4(2)(a)(i) of the Ordinance is drafted in wide terms and “did not limit or define in which way an applicant is to prove or satisfy the tribunal that the grounds are met (or not met)”. It remains our view that the tenantable condition exercise should not be detached from reality. We agree with R1-R5 that there was no legal error in evaluating proposed repairs taking a pragmatic approach balancing the improvements and necessity against cost-effectiveness, detriment and risks. We do not consider the market reality references to be a genuine misdirection in law or that we took an irrelevant matter into account. We are not satisfied that there is a reasonable prospect of success that the exercise of our discretion was plainly wrong or could be outside the generous ambit within which reasonable disagreement is possible. 

Tenantable Condition 

The Applicant added an amendment to the Grounds to take issue with the reference to Proudfoot v Hart (1890) 25 QBD 42 at paragraph §116 of the Judgment. That reference was followed by §117, setting out that the Applicant’s experts adopted “tenantable condition” as the standard to formulate the repairs in terms of IH, and which we adopted at §119, as follows: 

“116. State of repair or tenantable condition was defined in Proudfoot v Hart (1890) 25 QBD 42 where Lord Esher MR stated ‘…Good tenantable repair is such repair as, having regard to the age, character, and locality of the house, would make it reasonably fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it …’.

117. Mr Benson Wong has adopted “tenantable condition” as “the standard to formulate the necessary repairs which would render the building fit for the enjoyment of its tenants and visitors, in the sense that it is safe and hygienic, and provides a standard of comfort and convenience which is reasonable in the present-day circumstances for the type of buildings in question, and would render the building’s structural frames, components, finishes and service installations in a fair condition, requiring no repair till the next inspection / repair cycle”.  

The Judgment at §119 then expressly stated that the guidelines set out by Mr Benson Wong, reproducing IH, “are accepted by the Tribunal”. The Applicant seeks to marry the reference Proudfoot to its MRT argument to support Ground 1, making the proper construction of the “tenantable condition” definition a sub-issue arising under the MRT Ground.  R6 says that the tenantable condition ground is not actually a sub-issue of the MRT Ground and should be dealt with as a separate ground. The Applicant contends that the meaning of “tenantable condition” as defined in IH is distinct from the concept of “tenantable repair” applicable in the context of the MRT articulated in the landlord and tenant authorities under Proudfoot.  However, the Tribunal did not apply tenantable repair and landlord and tenant authorities instead of compulsory sale authorities and does not accept that the MRT Ground is made out.

R1-R5 object to the Applicant’s amendment to add the Proudfoot ground, but say the point is without substance as the operative test adopted was not the test in Proudfoot but expressly the IH formulation of tenantable condition: Judgment §§115, 117, 119. The subsequent analysis also proceeded by reference to necessity, tenantability, safety, hygiene, comfort and convenience: Judgment §§121-123.That is so. The reference to Proudfoot was no more than to the expression “tenantable” at common law, a starting point, and Proudfoot lends support to the method adopted in IH. Mr But says that IH used the word “tenantable”, why should the Tribunal be precluded from reciting an ancestral position. Proudfoot terms bear a strong resemblance to the IH tests at §§145(6), 165(2)(c) and 199: “standard of comfort, hygiene, convenience … in present day circumstances for the type of building in question”; “… tenantable conditions fit for the enjoyment of its tenants and visitors, which is reasonable in the present day circumstances for the type of building in question”.

R6 adds correctly, that it is also clear from §74 of the Judgment that the Tribunal never intended to depart from IH, which expressly sets out that according to IH the Tribunal “is entitled to look at all factors under ‘age’ and ‘state of repair’ collectively to see if that justifies redevelopment, even though each considered alone is insufficient to do so. … The current jurisprudence relying on the approach formulated in Intelligent House is functioning well.”: R6 Subs §§29-30. 

Further, R6 is correct to observe that the Tribunal’s intention to adhere to the IH guidelines is also reflected by the decision to reject the “New Tests”, “Cautions” and “Blight” submissions of R1-R5.  

R6 considers it misleading for the Applicant to say that the Tribunal failed to follow the line of previous decisions established in Fortress Jet Ltd v Tang Hoi Yip & Others, (unreported LDCS 3000/2015 11.8.2017). That was a decision of the Tribunal and not as binding precedent. In Precise Lucky Ltd v Ko Kai Kwun Miguel and Othrs [2025] HKLdT 63; (LDCS 18000/2022, unreported, 21.10.2025) the Tribunal at §335 also cited the same paragraph from Proudfoot, but added at §336 that the Tribunal had come to a “similar view” in IH.  Mr Chan says that Mr Mok was also counsel for the applicant in Precise Lucky Ltd but the applicant did not appear to find the reference to Proudfoot objectionable or an appeal ground. We agree with Mr Mok that there can be no implication that an applicant, or indeed counsel, is satisfied with a decision or reason of the Tribunal because there was no appeal. In any event their views would be irrelevant. We do not accept R6 Sub in that regard. 

Proudfoot is not a compulsory sale decision and not contrary to Fortress Jet Ltd. However, even if there were conflict between the two authorities we did not hold that “tenantable repair” in the landlord and tenant context is the same as tenantable condition as defined by IH or under the Ordinance. We applied the latter at Judgment §§117 -119. We do not accept that there are now two conflicting lines of authority in light of the Judgment. In our view there was no error of law in referring to Proudfoot. In the circumstances the argument, sub-issue or issue is without foundation and we do not accept it has a reasonable prospect of success. We refuse to grant leave to appeal on this Ground.  

Mr But makes the further point that in fact the “tenantable condition” approach under IH is not found under section 4(2)(a)(i) of the Ordinance. It is merely an illustrative method to conveniently measure how dilapidated a building has become and thereby to consider whether redevelopment is justified under the state of repair limb. No error of law can arise under this point.   Be that as it may, the tenantable condition standard is long established and it is not suggested that it should be departed from or revisited for change. 

We did not apply a “free-flowing” weighing exercise with no “rail-guards”, as Mr Mok described R1-R5’s previous submissions.  We contrast that with the disciplined exercise we carried out fully considering the expert evidence, guided by IH. We did not apply a new test contrary to IH or go beyond what is permitted under the Ordinance. In our view Ground 1 does not have a reasonable prospect of success. We decline to grant leave to appeal on Ground 1.

Ground 2 – The Tribunal wrongly excluded specific items of repair cost on ground of MRT and all erred in law

The respective building condition experts each identified items for repair, gave cost estimates and commented on their counterpart’s opinions. Ground 2 is that the Tribunal erred in law by excluding the 5 Items proposed by Mr Benson Wong, in the repair cost estimate. The Respondents’ building condition expert was Mr Raymond Chan. The expert evidence was voluminous, including reports, Joint Expert Statements and oral evidence. We also had the benefit of a site visit. 

We consider that the Applicant’s primary contention that the Tribunal erred in law because it excluded the 5 Item’s costs, expressly or implicitly on the ground of MRT misconceived. The 5 Items were excluded after considering and by reason of the expert evidence and our assessment of the evidence. There was no “MRT”, while the concept of “market reality” was referred to in the process of making a judgement on some items in relation to the “state of repair” it did not cause specific items to be wrongly excluded.

R1-R5 rightly recognise that the Tribunal’s treatment of each of the 5 Items was highly evidential, forensic and evaluative.  We did not apply a rule excluding modern standards or safety-related protocols. The exercise was fact-sensitive and case-specific. Mr Benson Wong’s opinions were not rejected wholesale.  Rather, for proper items of repair his estimate was used and accepted as the starting point and then adjusted where comments of Mr Raymond Chan were accepted: Judgment §129.  R1-R5 say that was a fair and balanced approach. 

Among the 5 Items, the 1st, 4th and 5th Items are in the nature of “improvement work” absent mandatory statutory requirements.  The 2nd Item pertains to the “demolition of UBW” regarding the Lightwell Structures, and the 3rd Item concerns “preventive maintenance work”. We shall address the nature of the improvement works before each of the 5 Items.

Improvement Work

An issue that arises is whether, given no repair work was required for the 1st, 4th and 5th Items, the Tribunal still had to include improvement work to upgrade the existing structural feature or building facility that was not a present statutory requirement.  If positive, what was the extent of improvement work that may reasonably be undertaken, and the applicable cost estimate.  

The Applicant’s case is that under the IH guidelines, when assessing the cost of the “state of repair”, the Tribunal is entitled to identify works required by current regulatory and statutory requirements, when they are either retrospective and apply to the subject building or, if they are not retrospective, for proper, safe and hygienic habitation and residence (i.e. improvement work).  The Tribunal has no objection in principle to that approach, which recites IH terms. However, when applying the approach during the assessment process, whether an item is permissible remains subject to further consideration of any factors or matters that are directly or indirectly related to the elements of “age” or “state of repair” of the existing building under the IH guidelines.   The Tribunal’s entitlement in this regard is also not absolute, it is qualified by a standard of reasonableness in terms of IH §145(6), a material part of which is repeated:

“Further, in considering the cost of the ‘state of repair’, the Tribunal is similarly entitled to look at repair works which are necessary to render the building a tenantable condition, which is reasonably fit for use in the sense that it should be safe and hygienic for occupiers and visitors, and provide a standard of comfort and convenience which is reasonable in the present day circumstances for the type of building in question. …”.

Given tenantable condition is subject to the standard of reasonableness and that the tenantable repair standard cannot be detached from reality, R1-R5 emphasise the following.  It is not an excuse for applicants to prescribe gold-plating repair items to justify redevelopment of a building.  The words “market reality” did not alter that standard, but rather served as one of the considerations to screen out superfluous items from items of repair that were truly justified.  They described the practical context in which the Tribunal had to decide whether a proposed item would form part of a reasonable repair project or was merely some perceived improvement or enhancement in safety margin which may just be minimal, fanciful, disproportionate, unnecessary or outweighed by other countervailing factors such as costs in reality’s terms, due to the existing conditions of the building.  That is an evaluative exercise that the Tribunal had rightfully undertaken. 

At §123 of the Judgement we fully accepted that improvement of items may also be justified to be included material repair work.  The improvement works had to be supported by valid justification.  The burden was on the Applicant to justify the material repair works, not the Respondents to establish they be improvement works and justification for refraining from carrying out such works.  The term “justification” is to be construed broadly and generally.  All factors or matters relating to the “age” or “state of repair” of the building should be considered, and in our view one factor that did not have to be ignored when considering improvement works was “market reality”. That was consistent with IH.

Regarding the said 3 Items for improvement under the intended appeal, we did not make cost findings for excluded items. A Subs in the Application and the Summons has not justified or for example demonstrated that alternative improvement methodologies, being more cost-effective and commensurate with the old age of the Building and the general repair cycle, were duly considered prior to the formulation of the basis of repair cost estimate.  The consequence is that, were the Tribunal to adopt the Applicant’s proposed cost estimate for those improvement items for an appeal, the resulting provision would be excessive and constitute over-budgeting. The standard is tenantable condition, which requires consideration of reasonableness for the building in question.  

The 1st Item proposal to replace the existing staircase handrail was an improvement item and cost-effectiveness was a core dispute.  In assessing the items for improvement, the exercise is a hypothetical one undertaken solely to assist the Tribunal in considering whether the building should be redeveloped.  The standard adopted was that of tenantable condition. The extent of improvement works is not without limitation.  Where the improvement works are mandatory under relevant legislation all requisite works were to be included.  Where the improvement is purely to bring the building to a tenantable condition, the extent of the works is subject to the standard of reasonableness as set forth in IH §145(6).  Given that the Building was over 50 years of age and that the usual repair cycle was merely 10 years, cost-effectiveness constituted one of the key factors to be considered when justifying the extent of improvement works to be included in the cost estimate.  It was unrealistic and unreasonable to allow additional costs for improvement works whose sole objective was to extend the useful life of the premises well beyond the usual repair cycle.  The Tribunal’s finding that it was not reasonable to include the 1st Item in the repair cost estimate is addressed below.

With regard to advancements in modern technology and rising public expectations, the Tribunal followed the IH guidelines, that upgrading or improvement of existing facilities within a building may be undertaken.  In applying this approach in a reasonable manner, the Tribunal considered that such works could however be carried out progressively in accordance with a well-defined schedule, striking a reasonable balance between the needs of users, the scope and extent of the works, the costs thereof, the disturbance to occupants, and all other relevant factors to the item in question addressed by the experts.

The 4th and 5th Items related to the upgrading of fire services installations and lifts respectively. There was no dispute between the two building condition experts that these improvement works were proposed for safe habitation.  There was dispute over the cost estimate.  The fundamental difference concerned the timing of when such improvement works should commence.  Mr Raymond Chan took the view that, as there is no statutory requirement, it was inappropriate to upgrade the existing building to meet the new standard at present. We agreed.

The Tribunal emphasised that improvement works had to be supported by valid justification.  Generally, when the relevant facilities were in a poor state of repair such that substantial repair work was required, there was little argument that, concurrently with such repair, the Tribunal was entitled to identify reasonable improvement works directed towards ensuring proper, safe, and hygienic habitation and residence.

Conversely, when no substantial repair work was required, the justification for carrying out improvement works alone was weaker.  In applying the IH guidelines, unless justification was provided and accepted, it was considered premature to carry out any improvement work on a service installation that was already under tenantable condition, operating properly in compliance with all applicable essential performance standards, and such improvement work may instead be included in the next repair cycle.  The Tribunal considered that approach reasonable. It is also consistent with “market reality”, although that was not mandated as a new test.  The standard applied was tenantable condition. The Tribunal’s decisions in respect of each improvement Item were made on the basis of the expert evidence. The decision that it was not reasonable to include the 4th & 5th Items in the repair cost estimate is addressed below.

We agree with the observations at R1-R5 Sub §7 that:

 “…The Tribunal did not hold that modern standards, safety considerations or preventative maintenance are irrelevant.  It accepted that such matters may bear on the analysis but found, after weighting the evidence, that the particular items were not reasonably required to restore the Building to tenantable condition.  Those were all plainly evaluative findings within its proper remit.  It does not become a question of ‘law’ merely because the Applicant disagrees with the weight given to Mr, BW’s evidence”.

1st Item -staircase railings improvement work

The Applicant seeks to appeal against the finding excluding the Replacement Cost of the Staircase Railings under the Repair Item - staircases / protected lobbies / lift halls / corridors.  The Tribunal found, inter alia, that: 

§135 of the Judgement:

“…Mr Benson Wong opines that the metal railings installed along the outer edge of the staircases having an effective height of 900 mm require replacement with new metal railings of 1,100 mm height for fire safety purpose and the total estimated cost is $360,000.  Mr Raymond Chan is however of the view that the existing metal railing complied with the building safety standard at the time of construction and there is no requirement to improve the provisions in the Building to comply with the latest statutory requirement.   The Tribunal considers that there is nothing to suggest the existing height of the metal railings would have rendered any obvious safety hazards to the residents.  Under the market reality principle, this item would not be within a general repair project of a building.  We agree with Mr Raymond Chan that this item does not require change”.

The Tribunal found that the improvement work was not justified, which is also supported by “market reality”.  However, whatever the market reality, the Tribunal preferred the expert opinion of one expert to another. There was ample evidence to support the finding. 

The Tribunal in various cases has considered similar repair work.  In IH §238, Mr Benson Wong had also recommended installing and repairing the railings on the parapet wall to the height of 1,100 mm as required by the 1990 Building Regulations.  At IH §240, the Tribunal held:

“…There is nothing to suggest that the existing height of the parapet wall, if not increased to 1.1 m (albeit not required by the Regulations) would have rendered any obvious safety hazards to the residents of the 2 buildings.  In the premises, even gauged against the standard of tenantable conditions as explained above, we do not think that the works recommended by Mr Benson Wong falls properly within the ground of ‘state of repair’ under the Ordinance”. 

Here the Tribunal had regard to all of the expert evidence and facts and, having attended the Building, did not regard the existing railings had any material deficiency that could be prayed in aid to justify redevelopment.  The provision of increased railing height was not reasonably required to maintain tenantable condition.   

The staircase railings are located outside the private residential areas of the units on the upper floors.   The increase in height of the railings would not bear upon proper or hygienic habitation, nor would it concern the safety of residents or visitors in the reasonable use of the staircase.  The contention advanced was that in the event of a fire it may be safer to have the height of the railings to be raised to modern standards, but such upgrading is not a statutory requirement for existing buildings.  Furthermore, this work could be carried out by way of simple improvement work. Such work may be regarded as “routine maintenance”, capable of being covered by the monthly management fees received.  

Having considered all the circumstances, we remain of the view that it would not be a reasonable improvement item to be included in the repair cost estimate.  It raises no point of law.  In our view there is no reasonable prospect of success so we would not grant leave to appeal for 1st Item.

Further, for the intended appeal the Applicant just assumes the quantum of Mr Benson Wong must be accepted. The Tribunal was not bound to accept all of Mr Benson Wong’s cost estimates and reject those of Mr Raymond Chan.  In the Joint Expert Statement at AB-235, Mr Raymond Chan opined that “…The shortfall of 200mm is very minimal.”.  We did not make costs findings for excluded items. We do not do so now.  The Applicant adopts Mr Benson Wong’s estimate which is not simply to raise the railing but to replace the existing 900 mm high metal railings of the confirming height with 1,100 mm to the front and rear staircases of $360,000 for an appeal. Yet Mr Benson Wong did not provide valid justification of why replacement was necessary rather than simple improvement to increase the height of the existing railing, for example by adding a compatible top rail or welded extension as appropriate. The Tribunal accepted Mr Chan’s opinion that no improvement works was required and thus the cost was nil. We do not accept that if, contrary to our finding, this item should have been included the proper costs would be for total replacement when simple improvement work of increasing the height of the railings may be carried out instead. To accord with IH a pragmatic approach taking the cost of simple improvement work, which would depend on method and materials subject to the key factor of cost-effectiveness, would be more reasonable. 

2nd Item – lightwell structures/UBW

The Applicant seeks to include the Demolition Cost of Lightwell Structures under the Repair Item – flat / shops / stores internally, which cost was excluded.  

For the 2nd Item, an issue was whether, given that no repair work was required for the Item, the Tribunal still had to include demolition work of the UBW.  If positive, then what was the extent of improvement work that may reasonably be undertaken, and what was the applicable cost estimate.  

The Tribunal found as follows:

Since no major repair work was required, it was unreasonable to commence demolition work of the Lightwell Structures UBW.   The findings are at §141 of the Judgement:

“141…The Building consists of common parts such as external walls, roofs, staircases as well as private parts being the flats and shops.  Therefore, in reporting the state of repair of the Building, the conditions and necessary repairs relating to the building components in both the common and private parts of the Building should be included.  However, this must be distinguished from the decorative conditions or in this case, unauthorised building works within the private premises.  The Tribunal is of the view that for those defects or deficiencies of fitting out works or here also unauthorised building works noted inside or associated with individual units, that do not fall below safety or tenantable condition standards otherwise, the respective owners should be responsible… For these structures (the Lightwell Structures), although they are UBW, being under a reasonable maintenance condition and causing no potential obstruction to means of fire escape, additional values have been assigned to the assessment of market value according to the market reality principle on the ground that enforcement risk is insignificant.  Accordingly, it is unreasonable to assume inclusion of demolition in the repair works…”. 

In this regard the facts were distinguishable from those in IH. In our view the difference is material. 

 IH §262 found:

“We (the Tribunal) do not see how it can be seriously suggested that, in restoring the buildings to a tenantable condition, it is unreasonable to demolish unauthorized structures (which by definition are not permitted under the law) and to reinstate them in accordance with the approved plans.  As such, as a matter of principle, for the purpose of assessing the costs to be involved in restoring the buildings to a tenantable condition, such costs should also be included”.  

Relying on that paragraph the Applicant contends that all UBWs must always be removed, irrespective of condition, even when not a safety hazard, and this is an approach directly contradictory to that taken at Judgement §141 that the demolition of Lightwell Structures was not required.  The Applicant says that IH laid down a general rule. It was not just a guideline. It must be taken as all UBWs must always be removed. We do not agree. We accept that as a matter of principle it would be unreasonable not to remove UBWs where that is required to restore the Building to tenantable condition. The reason is not simply because they are unauthorised per se. The Ordinance requires the Tribunal consider state of repair on the facts of each application, not exercise Buildings Ordinance enforcement powers. The material distinction is that in IH the demolition was necessary to restore the buildings to tenantable condition. 

§262 of IH referred to UBW that were not properly maintained and in order to restore the building to tenantable condition, the cost to demolish and reinstatement in accordance with the approved plans should be included. Additionally, they were unauthorised and not permitted.  However, on this Application, the overall internal condition of the Building on average was considered “Fair” which was defined by both valuation experts as “The Condition is up to tenantable standard with no obvious defects noted, although some minor defects might be noted”: Judgment §§42-44.   

As mentioned at §141 of the Judgement in general, where premises are in a poor state of repair such that substantial repair works are required, concurrently with such repairs, the owner may consider demolishing the attached UBW, as further expenditure to maintain the UBW may not be cost-effective or financially viable.  Conversely, where no substantial repair works are required, UBW are not a matter of the “state of repair” of the building, but purely a matter of the “state of permissibility” under the relevant Buildings or other Ordinances.  In such circumstances, the demolition of UBW alone was unrealistic, not reasonable and to be disregarded. 

Judgement §141 is not contrary to IH in not requiring demolition of the Lightwell Structures.  The approach taken was reasonable on the facts here. IH laid down “guidelines”. It did not mandate that any particular item must always be included in a cost estimate. We do not consider that we misunderstood the law in this regard. Each UBW should be considered on the facts in all of the circumstances.  For example, the demolition cost of the UBW on and over the roof of Unit 10A of the Building was included in the estimated major roof area repair works but such UBW was subject to an outstanding Building Order under section 24(1) of Cap. 123: Judgment §134. 

We agree with Mr Mok that the EUV assessments are conducted under Schedule 1 of the Ordinance and that the cost assessment conducted under section 4(2)(a)(i) of the Ordinance is for a different purpose. However, we do not agree that it is wrong in principle to have regard to our earlier findings in respect of the UBWs when making findings under section 4(2)(a)(i) of the Ordinance. We had to consider the same UBWs. We necessarily had to consider the same facts, and material factors overlap. Any findings with regards the nature of the UBWs, safety and enforcement risk in so far as relevant should be consistent.  

Further, the Applicant contends that “the Tribunal failed to take into consideration, adequately or at all that both experts agreed on this repair item and only disagreed on the amount of cost”.   We took their opinions into account but this does not assist. The experts did not agree on which party should take responsibility for the repair item.  Mr Raymond Chan’s view was that individual owners should bear their own cost to remove UBW within individual units.  We also took into account the structural experts evidence. 

Who should pay the cost of demolition was not the issue. IH provides that proper items within units are to be included.  Construction of the Ordinance and application of IH guidelines was for the Tribunal, rather than the building condition experts.  On our findings, supported by the evidence, the Lightwell Structures were not a safety hazard, there was no safety issue and there was low enforcement risk. It was unreasonable for the cost to demolish the Lightwell Structures to be included in the repair cost estimate assessment when they did not render the Building below tenantable condition. Therefore, in the exercise of the discretion we did not include the cost of their demolition. The Ordinance requires we assess “state of repair”.  We do not consider that we erred in law or that the exercise of discretion was plainly wrong, being outside the generous ambit within which a reasonable disagreement is possible. In our view no error of law arises which requires resolution by the Court of Appeal.  We do not consider Item 2 under Ground 2 has a reasonable prospect of success.  We decline to grant leave to appeal for Item 2. 

The Applicant contends that the total cost estimates of Mr Benson Wong should be added. The cost estimate for demolition of the unauthorized Lightwell Structures and reinstatement of the affected areas according to the approved general building plans, as submitted by Mr Benson Wong and Mr Raymond Chan were $1,600,000 and $540,000 respectively. We did not make costs findings for excluded item. We do not do so now. IH guidelines would have to be applied. The estimate mainly covers demolition work and a basic standard is sufficient. Mr But’s point that the Applicant is not entitled to gold-plated repairs is apt. Simply on its face Mr Benson Wong’s estimate would appear excessive when Mr Raymond Chan’s evidence is that $540,000 would cover the works. In answer to the quantum the Applicant seeks to add back we merely repeat that we were not bound to accept Mr Benson Wong’s cost estimate. We are not satisfied that the Applicant has a is a reasonable prospect of success of adding back the Applicant’s full cost estimate.  

3rd Item – above ground pluming preventative maintenance

The Applicant seeks to include General Inspection and Repair Cost of the Aboveground Plumbing Installation on appeal. The basis of appeal is our classification of items. The A Sub and A Reply take issue with how items were classified so we are bound to address classification. 

The 3rd Item issue is whether the subject repair item should have been classified as “preventive maintenance” work.  If so, it was then necessary to ascertain the reasonable scope of the work that may be undertaken and the applicable cost estimate.  If, alternatively, the work was classified as “routine maintenance”, or general running costs the estimated cost was to be treated as routine expenditure, to be met from the periodic management fee as usual. 

The Tribunal found as follows:

Judgement §142 excluded Mr Benson Wong’s repair cost for the “aboveground plumbing” ($231,000) and “electrical installation” ($105,000), which Mr Raymond Chan rejected as improvement works.  The Tribunal did not find the evidence supported the work item as necessary and thus the cost was determined as nil.  The Applicant submits that some works (amounts to a total of $127,000) under “aboveground plumbing” were items of “preventive maintenance” or “general inspection and maintenance” that should have been included in the cost assessment.   The Applicant does not appeal exclusion of “electrical installation”. 

Regarding the aboveground plumbing, in the Joint Expert Statement, Mr Benson Wong confirmed that the fresh water supplies to the flats and shops be in serviceable order, while Mr Raymond Chan opined that the condition of the aboveground pipework was good and in a serviceable condition with no replacement required.

In the Joint Expert Statement Mr Raymond Chan opined that “…the cost of mandatory and regular inspection services should be regarded as running cost of the building.  Such cost of mandatory and regular inspection services proposed by Mr Benson Wong should be excluded in the total repair cost for a fair determination of repair cost in this exercise.”: AB-360.  The Tribunal agreed with this view, as household utility facilities of a building, unlike its structural features, are generally subject to “routine maintenance”.  Routine maintenance generally denotes regular general inspection and immediate repair, carried out with a view to confirming that the system remains operational and to identifying any obvious defects, which are ordinary running costs of the Building.  “Preventive maintenance”, on the other hand, comprises discretionary but prudent planning or inspection on a need basis, aimed at avoiding future system degradation or maintaining the existing condition until the next repair cycle: Judgment §123.   

The Applicant’s argument is that (i) its estimated cost of carrying out general inspection and repair of the fresh water pipework ($56,000) and (ii) its estimated cost of carrying out general inspection and repair to the upfeed and downfeed pipework of the flushing water supply system ($71,000) should be included as they are an item of “preventive maintenance” or “general inspection and maintenance”.  The Tribunal however considered that fresh water supplies or plumbing constitutes an essential component of household utility facilities and should be subject to “routine maintenance”, including regular general inspection and immediate repair as necessary, so part of running costs.  The respective fees of (i) and (ii) above, amounting to $127,000 therefore constitute recurring expenditures under “routine maintenance”, and which is covered by the management fees collected monthly from individual owners pursuant to the Deed of Mutual Covenant for running costs.  Including the “routine maintenance” expenditure in the repair cost estimate would be contrary to IH guidelines and push up the total repair cost applicable to the subject comparative exercise unreasonably and was rejected. We maintain that such cost must be excluded. 

The Applicant also alleges that the Tribunal has been inconsistent by accepting the cost of general inspection and repair of the “drainage” ($470,000) and general inspection for “fire services installations” ($50,000), but rejecting the same cost for “aboveground plumbing”.  The Tribunal’s findings are not inconsistent. The general inspection and repair of the drainage and general inspection for fire services installations were required on a need basis and the costs were therefore accepted in the Judgement for repair cost assessment as "preventive maintenance”.  As compared with the drainage and fire services installations, there was no conflict in the Tribunal rejecting general inspection and repair of the aboveground plumbing installation as they were purely “routine maintenance” work.  The findings were made on the different facts and evidence for each item.

The Tribunal accepted the view of Mr Raymond Chan that regular inspection was a running costs of the Building and neither repair nor replacement was required at present for the aboveground plumbing.  We preferred the evidence of Mr Raymond Chan to that of Mr Benson Wong. Should such be required in future, the expenditure would be covered by the “routine maintenance” cost. The Tribunal declines to grant leave to appeal for this item, as it was not a “preventive maintenance” or “general inspection and maintenance” cost item that should have been included in the repair cost estimate.  It raises no point of law and in our view there is no reasonable prospect of success on Item 3.

4th Item- fire services installations improvement work

The Applicant seeks to appeal to include the Upgrading of Fire Services Installations Cost.  The primary allegation is that the “…The fire safety protection given by the existing fire service installation is at a lower level compared to those required under Fire Safety (Buildings) Ordinance Cap. 572.  The existing fire service installation constitutes a deficient condition with safety implications which should be taken into consideration for the purposes of ‘state of repair’, notwithstanding that no fire safety direction has been issued and there is no statutory requirement to upgrade to meet the current standard…”.  The said matters, and in particular fire safety, were taken into consideration. The Tribunal having taken the condition and safety implications into account however held a different view to that of the Applicant, as follows: 

§105 of the Judgement expressly took into account the evidence that:

“..the Building is sub-standard in terms of fire services requirement including the installation of automatic sprinkler system, fire hydrant & hose reel system, fire escape arrangement and fire resisting construction.  In this regard, according to the Joint Statement on Structural Assessment prepared by the two structural assessment experts, they share the same view that there is at present no statutory requirements for upgrading the fire resisting construction provisions of an old building if there is no change in use.  The Building is a composite building comprising shops and domestic flats and there is no report that any Unit has changed its initial permitted use.  Inspection of the Building has also revealed that the existing fire services installation is under reasonable maintenance condition.  Again, this argument of Mr Benson Wong does not advance the matter.  The Tribunal considers that there is no reasonable doubt on the existing installation to maintain fire safety”.

Mr Benson Wong in his expert reports recommended to (i) provide an automatic sprinkler system ($1,010,350); (ii) replace the existing fire hydrant and hose reel system ($165,000); (iii) replace the existing non-self-illuminated exit signs of upper floors by internally illuminated exit signs ($47,000); and (iv) provide a secondary electricity supply to back up the electricity supply to the enhanced fire service installations ($60,000).  The Tribunal can immediately refuse leave to appeal for items (ii), (iii) and (iv), as clearly the facts could not warrant reconsideration of the said items in particular, in light of the expert evidence.  Item (ii) was unnecessary and it would unreasonable to include any cost since the existing fire hydrant and hose-reel system were running properly and should replacement be required in future, it is routine maintenance work to be covered by the monthly management fee received.  Nor did we accept item (iii) replacement of sign since it is basically minor work that can be covered by routine maintenance work if and when required.  The Tribunal also considered item (iv) wholly unjustified.  If the primary electricity supply is properly maintained, there is no need for a secondary electricity supply.   Even if a secondary electricity supply were to be installed in future, such should be treated as routine maintenance work.  

There was no dispute that repair work for fire safety is not required at present as there was no fire safety direction under Cap. 572 served on the Building.   According to joint on-site inspection of the Building, no deficiency was identified as far as the fire services installations were concerned.  As set out in the foregoing paragraphs, the Tribunal determined that in applying the IH guidelines, unless justification was provided and accepted, it shall be considered premature to carry out any improvement work on a service installation under tenantable condition operating properly in compliance with all applicable essential performance standards, and such improvement work may instead be included in the next repair cycle.  

The main difference between the two experts was on the provision of automatic sprinkler system for the shops of the Building.  However, this system was not required when the Building was constructed.  Reference was made to the Fire Services Department (“FSD”) Circular Letter No 3/2007 dated 8 August 2007 (trial documents, Exhibits “R3”) including:

“…We understand that in many of these old buildings, construction of new works in meeting the current fire safety standards may be difficult due to structural or spatial constraints.  The Ordinance therefore requires the carrying out of only those improvement works which are considered essential. The specific improvement requirements stipulated in a fire safety direction are also drawn up in a like spirit following inspection of the building concerned … A reasonable period will be specified to allow sufficient time for owners to complete the improvement works. To avoid unnecessary spending, owners may consider carrying out such works to fulfil the requirements together with the routine maintenance works as appropriate.  Besides, there might be some constraints on construction that would make compliance with the fire safety requirements difficult.  In those special circumstances, relaxation may be considered on the merits of each case, taking into account such factors as the potential fire risk, floor layout, nature of uses, actual occupancy, combustible materials, etc… This Department will continue to adopt a flexible and pragmatic approach in handling cases in which owners encounter practical difficulties in complying with the new fire safety standards…”. 

The absence of any existing fire safety direction served on the Building may not be conclusive but was plainly relevant.  It indicated that the fire services installations were, at present, being properly maintained.   Even if a fire safety direction were to be served in the future, the specific improvement requirements thereby imposed may be updated to a different version.  Furthermore, FSD may consider granting relaxations on the merits of each individual case as stipulated in Circular Letter No. 3/2007 for the non-domestic portion of a building. Where such a relaxation is granted, the current cost estimate prepared by Mr Benson Wong would not represent a pragmatic approach, leading to over-budgeting.  Moreover, FSD would stipulate a reasonable period within which owners were to complete the improvement works, and the time schedule may fall within the next repair cycle.   In the absence of any requisite repair works specified under a fire safety direction, any proposal to undertake immediate improvement works was speculative both as to cost estimate and as to the scheduled time for completion. 

In the Joint Expert Statement AB-224, Mr Benson Wong noted that the requirement of provision of automatic sprinkler system for the shops was incorporated in the predecessor versions of the FSI Code 2022 and has been in force for more than 30 years.  No such system had been provided for the subject shops since then, so why must it be provided at present.  No evidence was submitted by the Applicant to justify such immediate improvement work.  Under the circumstances, the Tribunal maintains its decision to reject the subject repair item in the cost assessment was correct. It was premature and speculative.   Consideration of the work may, however, be deferred to the next repair cycle.  The rationale is consistent with “market reality”. However, regardless of market reality we were entitled to prefer particular expert evidence. This improvement work was not required for proper safe habitation or to achieve tenantable condition. We found there was no safety concern. That was a question of fact determined in light of the expert evidence. We exercised the discretion on the basis of the evidence. We do not accept Mr Mok’s submission that because we referred to market reality we failed to exercise our discretion and that the ruling was wrong in law. We had to consider and assess all the expert and other evidence and come to a decision on the Item. That exercise shows there was no failure to exercise the discretion.  Item 4 raises no point of law.  In our view there is no reasonable prospect of success and we decline to grant leave to appeal for Item 4. 

To address the Applicant’s quantum for an intended appeal and according to the Joint Expert Statement we note that Mr. Benson Wong’s estimate of the said improvement works of all items as above, amounted to a total of $1,282,350.  In deriving the Reconstruction Cost of the Building, he had sought the assistance of a quantity surveyor and under his submitted Construction Cost Report for Fire Services (new provision), the cost estimate was $1,290,000.  Thus, Mr. Benson Wong’s estimated cost, for upgrading and complete replacement of fire services installations, is roughly the same. We did not make costs findings on excluded items and do not do so now. IH guidelines would have to be applied.  The Applicant’s quantum for the intended appeal would be contrary to IH §145(6) in so far as the cost estimate could not be pragmatic, particularly bearing in mind the relaxation that may be given by FSD for such work. We are not satisfied the Applicant has a reasonable prospect of success of adding back the full costs estimate claimed. 

5th Item- upgrading of lifts improvement work

The Applicant’s intended appeal seeks to include the Upgrading of Lifts Cost.  The Applicant’s arguments lack merit for the following reasons:

Several paragraphs of the Judgement are particularly relevant.  

§106 “…the Building has insufficient Barrier Free Access (“BFA”) facilities provide.  It has two lifts installed but none of them has been upgraded to become an accessible lift.  Furthermore, there is no accessible ramp connecting the public pavement with the lowest lift landings.  Mr Raymond Chan opines that the Building does not need to upgrade the existing building to meet the current BFA standard unless major works with A & A Plan approval is required.  The Tribunal is of the view that the Building is a medium-rise composite development with lift and is not situated in a highly populated area.  The lack of such BFA facilities is not a strong justification for functional obsolescence”.

§145 “… There is no dispute that overall, the lifts are in serviceable order and have the required lift certificate displayed inside each of the lift cars”.

§146 “Mr Benson Wong has engaged a Registered Lift Engineer to carry out a condition survey of the lifts.  He concludes that: (a) the issuance of the lift permit only ensures a fair level of safety; and (b) the lift permits do not exempt the lifts from mandatory maintenance and improvement works required under current relevant lift regulations.   An estimated cost of works amounting to $1,775,000 has been proposed, but is totally rejected by Mr Raymond Chan as unnecessary”.

§147 “The Tribunal shares the view of Mr Raymond Chan as this is an ‘improvement’ item to modernise the lifts and there is a lack of justification to include it in the repair works”.

There was no dispute that overall, the lifts were in serviceable order and had the requisite lift certificates. The relevant current lift regulations were introduced for enhancing safety but they are not required to be complied with for lifts in an existing building.  The Tribunal would agree that while more frequent routine maintenance works may be required for lifts of an older generation, this is recurring expenditure to be covered by the management fee received monthly from individual owners under the DMC. The evidence established the maintenance works. 

As emphasised at §106 of the Judgment the Building is a medium size composite development not situated in a highly populated area. It comprises a total of 40 domestic units, with 4 units located on each floor from the 1st to the 10th floor.  The Building is served by 2 lifts, resulting in a ratio of 20 domestic units per lift: Judgment §1.  When compared with other multi-storey buildings in Hong Kong of a similar age, this lift-to-unit ratio is relatively low, indicating that the frequency of use of each lift is correspondingly low.  In the circumstances, the justification for immediate lift upgrading for the Building was extremely weak.

In the Joint Expert Statement, Mr Benson Wong stated that “…though both lifts were overhauled in about 2016, after further considering the survey findings, safety, cost and effectiveness considerations, Mr Hung has recommended a major modernization of the lifts…the total replacement of the lift…the total cost…is $1,775,000”.   Mr Raymond Chan emphasised that both lifts were overhauled in about 2016, which was relatively recent.  The lifts were regularly maintained and certified to be satisfactory by EMSD.  The Tribunal considered the observation of Mr Raymond Chan reasonable and well taken. We must not lose sight of purpose of the enquiry. The question was not how could the Building be upgraded.

There was no argument that the level of safety protection of the existing lifts was at a level lower than as required under the current relevant lift regulation.  However, no repair work was required at present.  The work suggested by Mr Benson Wong was purely an improvement item but no valid justification was provided for why improvement work needed to be carried out now.   In applying the IH guideline, unless justification was provided and accepted, it was considered premature to carry out any improvement work on a service installation under tenantable condition operating properly in compliance with all applicable essential performance standards, and such improvement work may instead be included in the next repair cycle.  We found this was an improvement item to modernise the lifts and there was a lack of justification to include it: Judgment §147. The Applicant relies upon safety to appeal the exclusion of Item 5. However, we found as a fact that the lifts were adequate and certified. They were not unsafe. We did not regard the existing lifts to have any vital deficiency that could be prayed in aid as an element to reinforce justification for redevelopment here.  The Tribunal is not persuaded to grant leave to appeal for the reasons above, and in particular, that both lifts were overhauled in about 2016.  This 4th Item raises no point of law.  There is no reasonable prospect of success.

We do not accept the broad proposition of Mr Mok that improvements items concerning safety would restore the item to tenantable condition and are necessary items without justification. That assumes that the item was below tenantable condition. No such assumption should be made. The facts and evidence must be considered in every case for every item. If an item is already of tenantable condition there may be improvements that can be made to make it safer. That does not mean the item was not of tenantable condition before the improvement.  Simply identifying works as being related to safety does not necessitate inclusion in the costs estimate. IH does not mandate that every safety related improvement must be made.    

To be complete and address the Appellant’s quantum for leave to appeal, the conclusion of the Lift Condition Survey Report submitted by Mr Benson Wong was that “…UCMP (Unintended Car Movement Protection) and ACOP (Ascending Car Overspeed protection) are categorized as critical items, the lack of these items is posing high safety risk with accidents occurred before in Hong Kong… the absences of these critical items would highly affect the safety of passengers…”.  According to the Cost Estimate for Major Modernization Work for the Existing Lift System, the cost estimate directly related to UCMO and ACOP amounted to $880,000 only as compared with the total cost estimate of $1,775,000.  The UCMP and ACOP would be the most relevant items for a lift modernisation if required. We did not make findings on the proper cost estimate on excluded items. We do not do so now. IH guidelines would have to be applied. The Respondents’ submissions on the proper standard and excessive costs would be pertinent. We are not satisfied that the Applicant has a reasonable prospect of success of adding back the full cost estimate claimed. 

The A Sub and A Reply have cautioned against making new findings or giving different reasons on a leave to appeal application, in light of the Respondents’ submissions. The Applicant’s point is well taken and fully accepted.  We must also observe that in applications under the Ordinance, including the present one, there is a vast amount of evidence, particularly expert evidence, including reports, joint statements, bundles of documents, tables and schedules. As stated in to Chan Chong at §27, the Tribunal is entitled to set out the main thrust of its decision in a judgment without having to set out discus and reject each and every contention. That must be so when dealing with expert evidence as here where to set out each of the reasons listed by the expert accepted or rejected would unduly lengthen a judgment, when the parties are well able to understand the decision by reference to the particular expert’s evidence.   

The Applicant’s intended appeal on each of the 5 Items is against our findings of fact and exercise of discretion in light of our evaluation and assessment of the expert evidence and all the evidence. In our view there was no misdirection in law. We do not consider that our exercise of discretion on any of the 5 Items was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible. In our view the Applicant has not shown an error of law with reasonable prospects of success. We do not grant leave to appeal on Ground 2. 

Ground 3 - Cost Ratio and EUV Ratio

Ground 3 is contingent upon the success of Ground 2. 

The Judgement §§163 and 165 found that the Adjusted Repair Cost as estimated by Mr Benson Wong was approximately $15,000,000.  Comparing that estimate with the total Reconstruction Cost and EUV, the Cost Ratio was 19.5% and the EUV Ratio was 2.7%, which were below the review benchmark of 25% and 3% respectively.  The proposed repair works were therefore considered as cost effective and financially viable for implementation.  In turn, on the basis of each of those assessments redevelopment of the Lot was not justified due to the “state of repair” of the Building. 

The Applicant’s intended Ground 3 includes the 5 Items in the repair cost assessment.  Assuming acceptance of the Applicant’s evidence and cost estimates in full for each of the 5 Items the total amount as claimed would then be increased to HK$22,360,322.88, producing a Cost Ratio of 29% and an EUV Ratio of 4%: A Subs §§31-32.  The Applicant concludes that if the two review benchmarks were achieved, the Tribunal would then have found the proposed total repair items not cost effective and not financially viable, leading to a finding that redevelopment was justified due to the “state of repair”. 

The argument depends on Ground 2. If the Tribunal was entitled to exclude the disputed 5 Items, Ground 3 necessarily fails. Mr Chan says that the Applicant has tried to frame a question of fact as a question of law. The calculation of repair costs is merely a mathematical exercise after the Tribunal decides which repair item is to be included and the respective quantum of costs. Leave to appeal under section 11 of the LTO should not have been sought as if this is a stand-alone ground. It is not an interpretation or application of law or exercise of discretion point, but a pure question of fact. The Applicant does not actually allege error of law. Mr But also says that the Applicant’s revised figures are not independent grounds of appeal. Unless the Applicant can establish that the Tribunal was legally bound to include those items, the 29% and 4% figures never arise. We agree. 

The A Reply makes it clear that it accepts that Ground 3 is consequential on the result of Ground 2 and says that is interwoven with Ground 1. Therefore, A Sub treated Grounds 1-3 as related. The Applicant submits that if leave to appeal is granted on Ground 1 and 2 it should also be granted on Ground 3. We agree that Ground 3 depends on the results under Ground 2 and if leave should be granted for Ground 2, Ground 3 must also be considered. 

As the Tribunal would not grant leave to appeal for each of the 5 Items for the reasons stated above, the Cost Ratio and the EUV Ratio remain unchanged at 19.5% and 2.7% respectively.  On that basis redevelopment of the Lot was not justified due to the “state of repair” of the Building.  Ground 3 does not arise.

The Tribunal has in the past used the comparison of repair cost as against the reconstruction cost and EUV but the ratios cannot be a fixed percentage and will depend on the facts. Our findings on cost effectiveness and review benchmark ratios included the following at §§ 160-162 of the Judgment:

“Cost Effectiveness

160. In giving oral evidence, both building condition experts agreed that the repair cycle of the said works was 10 years or a decade.  The Tribunal takes the view that given the general description of design working life of an ordinary building in Hong Kong is 50 years, completion of the works would represent the design working life will be extended by 20%, of which a general review benchmark for the Cost Ratio can be drawn following the same.

161.	The Tribunal however considers that the review benchmark applicable to each case should be a holistic and flexible one based on individual merits and locality of the building.  For instance, a landowner of a flat within a high-rise composite building located in an old and run down area may not be willing to make a higher contribution for maintenance such that the review benchmark of 20% is the reasonable bottom line.  However, a landowner of an apartment like the Building being a medium-rise composite building located in a more high-end residential area may expect the repair cycle can be prolonged for a few more years by means of proper routine maintenance.  Under the circumstances, the review benchmark may be over 20%.   

162.	Mr Benson Wong explained that from his experience, the review benchmark for the Cost Ratio would be 25% for a composite building comprising shops & domestic units.  Mr Raymond Chan agreed with this statement.   As the Building is a medium rise composite building located in a more high-end residential area of Happy Valley, we accept the common view of the 2 experts that a review benchmark of 25% is reasonable for the Application.”    

R1-R5 submit that Mr Benson Wong’s evidence undermines the Applicant’s present case. Mr Benson Wong accepted that his 25% yardstick was his own and was “not very scientific”. Yet the Applicant now seeks to treat a 29% Cost Ratio as if it were legally decisive, despite that personal yardstick not being scientific.  The Tribunal was not required to be bound by Mr Benson Wong’s yardstick as if a rule of law. Nor was it required to find a figure marginally above that informal benchmark would compel redevelopment. We found that the review benchmark applicable to each case should be a holistic and flexible one based on the individual merits and locality of the building: Judgment §§160-161. Mr Raymond Chan agreed with Mr Benson Wong. Though not bound to do so, we accepted that the review benchmark of 25% was reasonable. We agree with Mr Mok that should not be revisited. 

Nor was the Tribunal bound to accept the quantum of Mr Benson Wong’s costs, particularly when Mr Raymond Chan also had a costs appraisal. IH sets the standard as tenantable condition, which requires having regard to reasonableness. Mr But’s objection to “gold plated repairs” must have merit. The 5 Items repair costs full quantum of Mr Benson Wong adopted by the Applicant for the purposes of the draft Grounds could not go unchallenged, just on their face, as being unreasonable and excessive. We did not make findings on the proper costs for excluded items and refrain from doing so now. However, we do not accept the A Reply that seems to suggest we therefore accepted Mr Benson Wong’s costs estimates. We did not. Simply by reference to the submission, the evidence and facts found, even if all of the 5 Items were to be included, contrary to the Tribunal’s findings, the Applicant would have to show a reasonable prospect of success of achieving its revised quantum and that the Cost Ratio would not still fall short of the review benchmark of 25%, still indicating that the proposed repair works were cost effective to implement so would not justify redevelop of the Lot.  The Applicant takes issues with any application of the EUV Ratio comparison in the first place, but if the Tribunal was entitled to have regard to the EUV Ratio, the Applicant would alternatively need to show that comparison supported redevelopment because the repairs were not financially viable. To address A Subs in support of Grounds 2 and 3, we accept the Respondents’ submissions that the Tribunal was not bound to accept the Applicant’s quantum and we cannot see how the Applicant would have a reasonable prospect of success of showing either ratio would overcome the benchmarks and indicate redevelopment was justified. Appended hereto is an Appendix headed Comparison of Repair Cost Estimates showing the respective expert’s repair cost estimates and the Tribunal’s adjusted repair cost as found in the Judgment. 

The intended appeal on Ground 3 raises no point of law.  In our view, it has no reasonable prospect of success. We refuse to grant leave to appeal on Ground 3. 

Ground 4 – Whether both the Cost Ratio and EUV Ratio have to be satisfied

The Applicant contends that “…The Tribunal erred in law in requiring both the Cost Ratio Test and the EUV Ratio Test (as set out in Judgment §§156-165) to be satisfied before the Tribunal can find that redevelopment of the subject building is justified under the ‘state of repair’ limb…”: A Subs §§34-36.  That is not what the Tribunal held. We did not require both ratios be satisfied. Ground 4 is based on a false premise. 

The Respondents submit that the Judgment §§156-159, describe the Cost Ratio and the EUV Ratio as analytical aids for assessing cost effectiveness and financial viability. The Tribunal did not treat them as statutory conditions. We consider that is a fair reading of those paragraphs and of the Judgement. The Applicant’s contention is twofold.

Cost Ratio - the sole comparison

First, the overwhelming number of recent Tribunal judgements under the Ordinance only conducted a proportionality test by comparing the repair cost and reconstruction cost as the baseline.   There is no need to do a comparison of the adopted total repair cost against the total EUV of all units of the Building.  

§157 of the Judgement states that:

“In various Land Compulsory Sale application decisions the Tribunal has employed a proportionality test by comparing the repair cost and reconstruction cost (the ‘Cost Ratio’) as the baseline.  In the case where the respective Cost Ratio was found as excessive, the Tribunal would accept the state of repair justified redevelopment of the building.  The reason is that the owners would consider the repair proposal as not cost effective or worth carrying out”.   

The Tribunal agrees in principle that the Cost Ratio is the primary comparison that has been adopted and where in a case it reveals redevelopment is justified, like the majority of LDCS judgements, it may be unnecessary to conduct the EUV Ratio comparison.  The situation in this Application, to the contrary was not like the majority of cases where the Cost Ratio indicated that it was not cost effective to implement the repair works. Here the Cost Ratio was below the applicable review benchmark of 25% used by the Applicant’s expert.  If the Tribunal only considered the Cost Ratio and followed the Applicant’s approach, that there was no need to consider any other comparison, the immediate conclusion should have been drawn that the “state of repair” of the Building did not justify redevelopment.  The Tribunal, however, was prepared to consider other bases upon which it may be shown that redevelopment was justified. In our view, in accordance with the IH guidelines, the analysis did not have to conclude at the Cost Ratio comparison, as other useful factors may properly be taken into account, financial viability being one of them. 

In most compulsory sale applications in the past the applicant has readily satisfied section 4(2)(a)(i) of the Ordinance and an order for sale has been granted. On occasion the respondents may not even adduce their own expert evidence on age and state of repair, and the applicant may simply be put to proof. The substantial disputes are more often in respect of EUV, RDV and the reserve price. Granted that is a generalisation, but it may explain why in most recent decisions the Tribunal only conducted the Cost Ratio comparison. Even if the majority of recent cases used only the Cost Ratio, that has not established a rule of law prohibiting consideration of other economic factors. IH guidelines would permit such and in any event at §166 IH expressly held that the relevant propositions were not exhaustive. 

At §158 the Judgement went on to find that: “In previous Land Compulsory Sale application judgments, particularly when the Cost Ratio has reached the arguable threshold, the comparison of repair cost with total Existing Use Value (“EUV”) of the building (the “EUV Ratio”) was also employed…”.  Thus, in circumstances where a comparison of the Cost Ratio does not yield a straightforward or conclusive justification for redevelopment, the comparison of the EUV Ratio may also be considered as an additional matter to weigh in the balance.        

Both comparisons or tests have been used in the past. In Asia Rich Incorporation Ltd v Li Kam Wah [2023] HKLdT 9; (LDCS 15000/2019, unrept. 1.2.2023) the Tribunal applied the EUV Ratio in addition to the Cost Ratio and stated at §74 that it can be “an indicator to estimate the willingness of the owners to spend costs on repair”.  The Applicant replies that the EUV Ratio as formulated in the Judgment is not the same as in previous judgments. In our view IH does not curtail the comparisons or methodology that must be applied when assessing whether repairs are economically worthy, or otherwise, and whether the Applicant has satisfied the Tribunal that redevelopment is justified. 

R6 submits that none of the bases for an appeal from an exercise of discretion to lie are made out. The wide discretion would clearly permit employment of different comparisons to assess whether redevelopment is justified in terms of economic effectiveness. The comparison may be taken into account. We agree that also employing the EUV Ratio comparison does not amount to an error of law. Accordingly, this sole comparison argument is without merit.  

Satisfying both Ratios - unnecessary

Secondly, the Applicant contends that by identifying cases where the adopted repair cost satisfied any one of the two comparisons as marginal, the Tribunal gave the “indication” that an applicant is required in law to satisfy both comparisons.  Since each of these two comparisons, is an attempt to identify an objective criterion for the Tribunal to conclude whether a repair proposal before it can be considered cost effective / financially viable, “it would be helpful to the profession if the Court of Appeal can provide an authoritative ruling on whether an applicant is only required to satisfy any one of the two comparisons”. In our view no such ruling is required because an applicant is not required in law to satisfy either one, nor both, of the comparisons. The Tribunal must apply the Ordinance, following the IH guidelines. The comparisons are merely aids in assessing whether redevelopment is justified.  The Ordinance does not prescribe any mathematical formula that must be applied or economic factor that must be satisfied to justify redevelopment.  The Tribunal did not hold otherwise.  The profession does not require help in this regard. IH does not limit how an applicant may satisfy the Tribunal that redevelopment is justified.

§159 of the Judgement noted that: 

“The Cost Ratio and the EUV Ratio will reveal the cost effectiveness and financial viability of the project respectively.  For marginal cases, the repair proposal may be considered as cost effective but not financially viable, or vice versa.  Under the circumstances, setting a review benchmark for both ratios respectively may assist to reach a decision”.  

R1-R5 submit §159 does not call for an applicant to satisfy both comparisons. We agree. The paragraph was considering the utility of a review benchmark. Mr But emphasises that the wording of §159 is important. The Tribunal said that setting review benchmarks for both ratios “may assist” in marginal cases. It did not say both ratios are statutory hurdles. It expressly recognised that, in marginal cases, a repair proposal may be cost effective but not financially viable, or financially viable but not cost effective. That is the language of evaluative judgment. Whereas the A Sub §35 mistakes a benchmark which “may assist” for a rule. 

R6 also maintains that the Tribunal did not expressly or impliedly suggest that both the Cost Ratio and the EUV Ratio have to be satisfied under section 4(2)(a)(i) of the Ordinance. Conversely, neither the Ordinance nor IH guidelines provide that the Tribunal can only consider the Cost Ratio, or confine itself to any particular test or comparison, when assessing the economic worthiness of repair. The employment of the two comparisons or tests cannot be an error of law. IH §150 held that the legislature in not defining or prescribing any criteria for the term “justified” and “satisfied” under section 4(2)(a)(i) of the Ordinance intended to give the Tribunal a wide discretion to look at all the circumstances and factors relating to the grounds of “age” and “state of repair” to decide whether it is “satisfied” that redevelopment is “justified’”.  We agree.

   Mr Benson Wong’s evidence that banks would generally consider repayment ability rather than comparing repair cost with EUV at most shows that the EUV Ratio is not generally a banking formula. His opinion on banking practice does not establish that the Tribunal was prohibited under the Ordinance from considering the economic significance of repair cost relative to the value of the property interests.

There can be no legal objection to considering both ratios. They measure different things. The Cost Ratio compares repair cost with reconstruction cost. The EUV Ratio compares repair with existing-use value. Each may inform the question of whether repair is economically sensible. Considering both ratios is one way of enabling cases that do not clearly justify redevelopment to be further critically examined by means of review benchmarks.  We did not hold that both ratio comparisons must be conducted in every case or even in every marginal case, much less that any respective review benchmark must be satisfied before redevelopment can be justified under the “state of repair” limb. That must turn on the evidence. From whichever angle we considered the evidence we were not satisfied that redevelopment was justified.

On this application the evidence of both Mr Benson Wong and Mr Raymond Chan favoured a review benchmark of 25% for the Cost Ratio. If the repair proposal had been considered not cost-effective but financially viable, the Tribunal in considering the state of repair may, in accordance with the IH guidelines, have taken a balanced view of the two ratios, together with the “age” limb collectively to determine whether redevelopment was justified.  To what extent one of the respective ratio falls short of any review benchmark is one of the considerations that may be taken into account.  However, on the facts and evidence adduced at this trial the issue does not arise. The Applicant did not satisfy the Cost Ratio comparison showing that it was excessive so that repair was not cost effective but because the EUV Ratio comparison showed that repair was financially viable the Tribunal was not satisfied that redevelopment was justified. The Applicant did not satisfy either ratio. Therefore, the question is hypothetical. This may explain why the Applicant seeks instead to characterise it’s contentions as a question of law requiring appellate guidance for the profession. In our view no such guidance is required. 

The Ground 4 intended appeal does not enjoy a reasonable prospect of success. We refuse leave to appeal on Ground 4. 

Ground 5 - the Tribunal is entitled to look at all factors under “age” and “state of repair” collectively

Ground 5 is that the Tribunal failed to assess age and state of repair “collectively”: A Subs §§40-43. The Applicant contends that the Tribunal erred in law in failing to follow the guideline in IH §165(3) which has always been followed in subsequent cases. However, that guideline was actually cited with approval at Judgement §74: “According to Intelligent House at paragraph 165(3), the Tribunal is entitled to look at all factors under ‘age’ and ‘state of repair’ collectively to see if that justifies redevelopment, even though, when each of them is considered alone, it is insufficient to do so”. We proceeded to adopt the comprehensive consideration approach formulated in IH by evaluating all the relevant factors as claimed by the parties and identified by the Tribunal under an additive process.  Related factors including the UBWs, fire services installation and lifts were considered comprehensively and collectively under both the “age” and “state of repair” limbs. Having considered every item and on the basis of all of the evidence overall we were not satisfied that redevelopment was justified.

At §113 of the Judgement the conclusion on “age” was that: “Overall, we find that the Applicant has not satisfied the ‘age’ requirement under section 4(2)(a)(i) of the Ordinance”.  Prior to arriving at that conclusion, we had found the following at §§97 -112:

based on the structural assessment report, the Building is in a structurally sound and fair condition, and its service life can be extended as long as regular repair and maintenance works are carried out.;

subjective element of physical obsolescence due to appearance of the Building is of little weight in the question of whether redevelopment is justified;

there is no reasonable doubt on the existing installation to maintain fire safety;

the lack of BFA facilities is not a strong justification for functional obsolescence;

the lack of some modern standard facilities is not uncommon for buildings of the same age, while upgrading is not difficult as they are not structural element of the Building;

that as per visual inspection of Mr. Raymond Chan, the existing building condition and building components are in a fair condition…not yet passed their useful life; and

we accept the view of Mr. Raymond Chan that after completion of a major repair works project, no major repair work of the Building should be anticipated for the coming decade.

The conclusion on “state of repair” at §166 of the Judgement was that: “The proposed repair works are cost effective and financially viable for implementation.  Overall, we are not convinced that the evidence meets the statutory threshold. The Applicant has not satisfied the requirement for ‘state of repair’ under section 4(2)(a)(i) of the Ordinance.” 

The Tribunal considered all of the evidence, there was no failure to consider any matter relied upon. After having considered all of the evidence cumulatively and collectively there was no way that we could be satisfied that redevelopment was justified.   

R6 refers to Judgment §70 expressly stating that “age and state of repair were two separate grounds even though there might be considerations common to both, the Tribunal should consider them separately”. That is the approach endorsed by IH and followed by the Tribunal in previous cases. Mr Chan says reading that together with Judgment §74, which cited IH §165(3) with approval shows that no factor was considered alone or treated as a determining factor, but that the Tribunal has taken a holistic approach to assess all factors under the two separate limbs in the overall assessment and determination of whether redevelopment was justified. There was no error in application of the law. Mr Chan submits that Ground 5 is totally without merit and has no prospect of success at all. 

R1-R5 Subs §161, points out that at first blush, the Applicant has erred and failed to explain why a collective approach is conceptually correct as a matter of statutory construction when section 4(2)(a)(i) of the Ordinance expressly used “or” not “and” as the disjunctive word connecting “age” and “state of repair”. On a literal reading they are separate considerations.

That said, R1-R5 accept and recognise that as a matter of substance and practical reality of buildings, many considerations and evidential aspects between the two limbs do inevitably and incidentally overlap. The Tribunal considered and dealt with all evidential aspects, coming to conclusions on both age and state of repair and thereby formed a holistic or collective conclusion based on the overall scheme of things that redevelopment was not justified. Mr But says that the Applicant should not be granted leave just for the sake of raising a novel legal argument based on semantics. In any case there is nothing in the ground. The Applicant’s argument cannot stand with the Judgment, the Tribunal expressly directed itself to the combined approach at Judgment §74, citing IH §165(3) that the Tribunal is entitled to look at all factors under both limbs collectively to see if that justifies redevelopment, even though, each considered alone, is insufficient to justify redevelopment.

R1-R5 observe that the Tribunal then undertook a continuous analysis from Judgment §§81-166, demonstrably considering all matters, which are not separately sealed. Those matters informed the combined assessment in a comprehensive and holistic way. The Tribunal concluded redevelopment was not justified on the evidence so answered Issue 3 in the negative at Judgment §167. Mr But reminds the Tribunal that a judgment is to be read as a whole. The Tribunal was not required to create a separate heading labelled “combined assessment”. It is enough that the Tribunal identified the correct principle and applied it in substance. The findings made left no realistic basis for a different result on an express combined assessment. The Building was not found to be dangerous. Its age and obsolescence were not sufficient. The necessary repair cost was found to be proportionate, cost effective and financially viable. Ground 5 therefore discloses no error of law. We agree with those submissions. In our view there could not have been any other result. Given the wide discretion, that is necessarily given by the Ordinance and the facts, that conclusion could not be plainly wrong or outside the generous ambit within which reasonable disagreement is possible. 

Further, given that the proposed repair works were both cost effective and financially viable, there was no doubt that the project was worthy of implementation.  Should that be the case, any related factors that might otherwise support redevelopment under the "age" limb shall either cease to exist or have only a diminishing effect.  In light of the foregoing findings and conclusions with respect to both the "age" limb and the "state of repair" limb all matters relied upon combined could not justify, and the Tribunal could not and cannot identify, any other factor that would on an express collective review lead to a determination that redevelopment was justified. 

Section 4(2)(a)(i) of the Ordinance requires the Tribunal be satisfied that redevelopment is justified due to “age or state of repair”. The statutory language expressly provides “or”, using the disjunctive word between the bases. Issue 3 as formulated by the parties was “Whether the redevelopment of the Lot is justified due to the age or state of repair of the Building in accordance with section 4(2)(a)(i) of the Ordinance?” In our view it was quite proper that we make the determination in the precise statutory terms founding the jurisdiction. Criticism of §167 of the Judgment answering Issue 3 in terms posed and using the actual statutory language of the Ordinance is unwarranted. The Judgment shows the exercise conducted, that we identified the correct principle and proceeded to apply it in substance as we considered everything cumulatively and collectively. In our view Ground 5 does not have a reasonable prospect of success. We decline to grant leave to appeal on Ground 5.

Interests of Justice

The Applicant also seeks to invoke the “interests of justice” basis for leave to appeal under section 11AA(6)(b) of the LTO: A Subs §§2(b), 12, 18(a)(I), 38-39, 43. The Applicant relies on Grounds 1 to 5. 

The “interests of justice” basis is an exceptional ground. The legislature under section 11(2) of the LTO confines an appeal from the Tribunal to a point of law, intending that Lands Tribunal proceedings be final in most cases, while also allowing for an appeal when required in the interests of justice.

There is no exhaustive list of the circumstances in which an appellate court would find there is some other reason in the interests of justice that an appeal should be heard. They include that the question is one of general principle and decided for the first time or of importance upon which further decisions of the appellate court would be to the public advantage. 

The Applicant submits that the above grounds are matters that ought to be determined by the Court of Appeal in the interests of justice.   

R6 submits that leave should not be granted on any of the specified Grounds 1-5 yet on the interests of justice basis. The Tribunal did not deviate or depart from the settled IH guidelines or go beyond the Ordinance. 

R1-R5 submit that this is not a case requiring appellate guidance on a new legal test. The Tribunal did not introduce a new legal test but simply applied IH, which has been followed for two decades. The Applicant submits that the Tribunal did introduce a new test and there is conflict between IH and the Judgment. We do not agree for the reasons above. Nor is there conflict between the Judgment and IH requiring resolution by the Court of Appeal. Mr But says that IH has set out sufficiently clear principled guidelines. The Applicant relied heavily on IH at the hearing without reservation. The remaining task for the Tribunal must be fact-specific. We agree that the interests of justice do not require an appeal merely because the Applicant disagrees with the Tribunal’s assessment of expert evidence.

The Tribunal rejected the “5 new test” and “cautions” propounded by R1-R5 at trial at Judgment §§74-78. We found that any general principles by applying a “reductive and sequential process” or involving vague and undefined concept would be difficult to administer without objective benchmark as each case “is determined according to its facts and individual merit”: Judgment §78. The said ruling accepted the Applicant’s submissions in opposing the R1-R5 propounded tests at trial. Mr But considers that the Applicant’s contention that the Court of Appeal could and should now advance further propositions in their favour “in the interests of justice” is merely wishful thinking. 

Buildings and developments on lots in Hong Kong exist in many varied forms. Justification for redevelopment for one type of building, say an old industrial building in a former industrial district must vary greatly from that of a high-rise apartment block or house in a residential district or tenement buildings in an urban commercial district, albeit that they might be of the same age or have some similar aspects.  

Mr But emphasises that whether a building is ripe for redevelopment due to age or state of repair must necessarily depend on many factors. The material considerations, analysis, complexities and permutations thereof  are so vast there simply cannot be a one-size-fits-all set of rules and principles which can be exhaustive or detailed enough to cover all types of developments. The general guidelines from IH are already clear, definitive and workable enough. Such principles have been tested and withstood challenge throughout the past 20 years. Notwithstanding some highly technical arguments they have provided more than adequate guidance for the vast combination of circumstances. 

The discretion under section 4(2)(a)(i) of the Ordinance is couched in wide and general terms. The legislature intended to leave room and flexibility for the Tribunal to cater for differing buildings and social circumstances over time. Mr But asserts that it would be dangerous and over-ambitious to lay down further principles on a single occasion in the hope of micromanaging all future cases, as doing so would run the risk of curbing the Tribunal’s statutory powers and artificially distort the redevelopment justified limb. The present guidance in IH has already struck a fine and workable balance between clarity and flexibility. 

Mr But cautions that the Applicant’s attempt to clarify or develop new principles from an appellate court would likely become a futile and meaningless exercise due to the inherently fact sensitive and expertise dependant nature of the decisions under the Ordinance. The Court of Appeal would not have the benefit of expert assistance to lay down suitable general principles. Save for making general or abstract observations on section 4(2)(a)(i) of the Ordinance, it is unlikely to be able to add to the body of jurisprudence incrementally developed. 

Mr Mok considers that R1-R5’s submissions suggest the Court of Appeal would not be able to give authoritative rulings on section 4(2)(a)(i) of the Ordinance. We agree that clearly any such contention must be rejected.  We do not accept the extreme terms advanced by R1-R5. We do however, consider that it would be difficult to frame more exacting principles or guidelines that would be of greater practical assistance than those presently applied, from the facts of this case. IH framed the guidelines after hearing expert evidence. The IH guidelines would be better revisited on an appeal from an application where the Tribunal had, after considering opposing expert evidence and submissions, determined that there should be a departure from the IH guidelines and adopted an alternative approach to determine whether an order for compulsory sale should be granted.  At least then the Court of Appeal would have alternative approaches or guidelines applied to actual facts to consider and from which to formulate new guidelines or give further guidance and authoritatively determine which of the alternatives is the proper approach to be followed under the Ordinance.  Contrary to the Applicant’s position, the Judgment does require an alternative approach be followed instead of IH, therefore authoritative guidance on the proper approach under the Ordinance is not required.  

We must agree with the Respondents that this case is not one of general legal importance. It was a specialist tribunal’s application of settled principles to the facts on the evidence adduced.   In our view no question of general principle or general or public importance arises from this case.  

Further, in terms of “justice” R1-R5 urge the Tribunal to appreciate the grave prejudice and ongoing hardship they would suffer if leave to appeal is granted. R6 is also prejudiced the longer these proceedings continue. The Respondents have been burdened by expensive litigation involving disbursements paid for 3 sets of experts without yet recovering their costs. They refer to the disparity of arms. 

Further, the minority owners have had the potential sale hanging over them and continually encumbering their property for more than 3 years. With the registration of the Form 32 in the Land Registry the minority owners’ ability to realise, mortgage or lease their units in the open market have been adversely impacted for years now. New leases require a break clause to cater for the event of compulsory sale. The lack of security of tenure leads to reduction in rental income. The uncertainty of occupation puts owners in limbo, may the Building be a permanent home or should they be trying to acquire a replacement unit for after a prospective sale. Mr But says that dismissal of the Application should mark the end of the proceedings so the parties can part ways, allowing the minority owners to exercise their property rights, including of sale in the open market, which rights should be protected by the Court. Considered not only from the Applicant’s position but with regard to the minority owners, these factors militate against grant of leave to appeal under the “interest of justice” limb of the LTO. The Tribunal is ever cognisant of the impact of an application under the Ordinance on minority owners. The position of a minority owner is well recognised and reflected in Court of Final Appeal and Court of Appeal authorities.  

The Applicant replies that R1-R5 Sub on prejudice and hardship are totally detached from the “interests of justice” limb jurisprudence and should be rejected. In our view the interests of justice limb is not limited. There should not be a blanket ban on consideration of prejudice or hardship under this limb. For example, were an application for leave to appeal used to cause hardship or as an instrument of oppression the interests of justice limb should be sufficiently broad to allow such to be considered. That is not this case. If there were merit in the grounds advanced leave should be granted.   

Where draft grounds of appeal do not show an error of law with a reasonable prospect of success the Tribunal should be slow to find that leave should be granted on the same grounds but in the interests of justice. 

In sum, contrary to A Reply we do not consider the Applicant has satisfied the interests of justice limb: (1) The Applicant submits a new test has been applied contrary to IH. We do not agree. It is not necessary for more exacting principles or guidelines to be developed or stated; (2) We do not agree that there are two lines of authority because of our decision to exclude an item from the repair cost estimate, namely Item 2 the Lightwell Structure UBW; (3) We did not apply the landlord and tenant authorities instead of compulsory sale authorities by simply referring to Proudfoot. The Applicant’s reference to Fortress Jet Ltd does not require an appeal to be heard on that argument; (4) There are not two lines of LDCS judgments on whether both the Costs Ratio and the EUV Ratio have to be satisfied. They do not; (5) We do not accept that we failed to follow the guidance to consider all factors collectively under “age” and “state of repair” in determining whether redevelopment was justified. We strictly followed the statutory provision and the IH approach in determining that redevelopment was not justified.  

  For the reasons above we do not consider the Applicant has discharged the burden of showing there is some other reason in the interests of justice why the intended appeal should be heard. That is our view without regard to any injustice suffered by R1-5 and R6 by continuation of legal proceedings should leave to appeal be granted.   We refuse leave to appeal on the interest of justice basis.    

Disposition

An appeal against a decision of the Tribunal shall be on the ground that such decision is erroneous in point of law: section 11(2) of the LTO. Leave shall not be granted unless the Tribunal is satisfied the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard: section 11AA(6)(a) and (b) of the LTO. The Applicant has not identified any point of law. We are not satisfied that the intended appeal has a reasonable prospect of success. In our view there is no other reason in the interest of justice why the intended appeal should be heard. For the above reasons we refuse to grant the Applicant leave to appeal. The Application is dismissed.

Costs  

We make a costs order nisi that the Applicant shall pay the costs of the 1st to 5th Respondents, the 6th Respondent and the 8th Respondent on the High Court scale with certificate for counsel to be taxed if not agreed.  Any party may apply within 14 days hereof to vary the costs order nisi. If no such application is made the nisi order shall become absolute. 

Mr Mok Yeuk Chi, instructed by Lo & Lo, for the applicant

Mr Adrian But and Ms Prisca Cheung, instructed by CPH Legal, for the 1st to 5th respondents

Mr Vod Chan and Ms Kathy Sze, instructed by LCP, for the 6th respondent

The 8th respondent, represented by Haldanes, Solicitors

Appendix

Comparison of Repair Cost Estimate

(*) Note – The estimated cost of the repair items under the intended appeal as submitted by the Applicant.