COURAGE INVESTMENTS LTD AND ANOTHER v. GO SIN LI alias WU SHEN LI AND OTHERS

LDCS 17000/2020

[2022] HKLdT 7

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAIN APPLICATION NO 17000 OF 2020

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DECISION ON COSTS

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1.  This Tribunal handed down its judgment on 21 December 2021. Inter alia, this Tribunal was satisfied that the redevelopment of the Lots is justified due to the “age” or “state of repair” of the Building and that the applicants have taken reasonable steps to acquire all the undivided shares in the Lots including those of the 1^st & 3^rd respondents and all the undivided shares in the Lots, the subject of the compulsory sale application (“the Application”) herein, be sold by way of a public auction for the purposes of the redevelopment of the Lots under s.4(1)(b) of the Land (Compulsory Sale for Redevelopment) Ordinance (“the Ordinance”).

2.  This Tribunal made no order as to costs.

3.  On 31 December 2021, Messrs Hui & Lam LLP, on behalf of the 4^th respondent, sought to vary the costs order nisi to:

“the Applicants do pay the 4^th Respondent costs in the proceedings on the High Court scale, including any costs reserved, to be taxed if not agreed.”

4.  In gist, Messrs Hui & Lam LLP relied on the compensation approach in the compulsory sale applications as determined by the Court of Appeal in Good Faith Properties Ltd & Others v Cibean Development Co Ltd [2014] 5 HKLRD 534.  In that case, the Court of Appeal cited Emslie & Simpson Ltd v Aberdeen District Council (No 2) [1995] RVR 159 in which

Lord Hope said at p.164:

“It seems to me that the underlying principle in these cases is that the acquiring authority is liable to pay compensation to the owner or occupier of the lands taken. The expenses of determining the amount of disputed compensation may be seen to be part of the reasonable and necessary expense which is attributable to the taking of the lands compulsorily by the acquiring authority. The principle which applies to litigation … is that the cost of litigation should fall on him who caused it. The cost of determining the amount of the disputed compensation would seem, according to this principle, to fall on the acquiring authority without whose resort to the use of compulsory powers there would have been no need for the owner or occupier to be compensated. That seems to me to be the proper starting point for an examination of the question of expenses in these cases.”

5.  The Court of Appeal was also of the opinion that the observation by Lord Morison in Emslie & Simpson Ltd v Aberdeen District Council (No 2), supra, at p.162 was equally apposite in the context of compulsory sale:

“… A person whose interest in land is under threat of compulsory acquisition is in an unenviable position. He is compelled either to accede to the acquisition or to take the steps provided by the legislature to oppose it. If the order is confirmed he has no option but to comply with it and to have the amount of compensation determined either by agreement, if he can secure it, or if not, by a reference to the tribunal within the statutory framework which is laid down for that purpose. In these respects it appears to me that he is in a different position from that of the ordinary litigant and my understanding is that, if a person unsuccessfully opposes confirmation of the compulsory purchase order, he is not ordinarily found liable for the expenses of the statutory procedures which are laid down for the hearing of his objection.”

6.  In the end, the Court of Appeal emphasized the need to safeguard the constitutional right of private ownership of the minority owners. However, who are the minority owners? Under section 2 of the Ordinance, minority owner in relation to a lot which is the subject of an application under section 3(1) means the person or persons who owns or own undivided shares in the lot otherwise than as a mortgagee, and includes any person who becomes a successor in title to any such person or persons at any time before a purchaser of the lot becomes the owner of the lot where the lot is the subject of an order for sale.

7.  In the present case, after the commencement of the compulsory application dated 9 July 2020, the Tribunal received a copy of letter from Messrs Hui & Lam LLP dated 29 January 2021, stating that they acted on behalf of Mr Ng Chi Hing (“Mr Ng”) and Madam Sit Oi Yam (“Madam Sit”) and, inter alia, that

(a)  The 1^st respondent in the Application (“R1”), being the registered owner of Ground Floor, No 10A Water Street, Hong and Ground Floor, No 155 Third Street, Hong Kong had passed away on 14 February 1978 in Indonesia;

(b)  Mr Ng was a grandson of the 1^st respondent;

(c)  Mr Ng and Madam Sit had been occupying R1’s shops for a period longer than the statutory period under the Limitation Ordinance and were entitled to adverse possession of R1’s shops;

(d)  Mr Ng and Madam Sit were not beneficiaries of the estate of R1; and

(e)  Mr Ng and Madam Sit had taken out originating summons against the estate of R1 seeking possessory title of R1’s shops in DCMP 2280/2020.

8.  The applicants’ solicitors, Messrs Vincent T K Cheung, Yap & Co, had tried to make enquiries to Messrs Hui & Lam LLP by letters dated 3 February 2021 and 10 May 2021 regarding DCMP 2280/2020 of no avail. Then in view of Mr Ng and Madam Sit’s alleged interest in R1’s shops, the applicants considered it to be in the interest of all parties concerned if Mr Ng and Madam Sit were joined as a party in the compulsory sale application proceedings. And Mr Ng was so joined pursuant to an order of the Tribunal dated 16 June 2021.

9.  Then by a letter dated 8 July 2021, Messrs Hui & Lam LLP stated that R4 was not opposing the Application. Neither did they participate in the proceedings.

10.  Recently, in Lam Sai Wan v Minloy Limited, CACV 404/2018 (unreported, dated 7 January 2022)[1], the Court of Appeal confirmed that the fact that a person who has acquired a possessory title does not mean that he is entitled to be registered as owner of the Lot. In law, the acquisition of a possessory title through adverse possession does not operate as a statutory conveyance and does not entitle the holder of the possessory title to be registered as owner in substitution of the paper owner. See §36 of the judgment.

11.  Thus, even in Good Faith Properties, supra, the Court of Appeal, by referring to Penny’s Bay Investment Co Ltd v Director of Lands, LDMR 23 of 1999 (unreported, dated 7 Nov 2007), affirmed that the question of costs for proceedings in the Lands Tribunal is governed by Section 12 of the Lands Tribunal Ordinance.  It is up to the Tribunal to apply a proper approach to deal with costs under the Ordinance.

12.  In view of the above, I maintain the decision that there should be no order as to costs for the Application. The request by Messrs Hui & Lam LLP dated 31 December 2021 be refused.

[1] [2022] HKCA 37