PACIFIC BUSINESS LTD v. THE PERSONAL REPRESENTATIVES OF BUTT MUT (DECEASED) AND ANOTHER

LDCS 6000/2010

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAIN APPLICATION NO. 6000 OF 2010

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BETWEEN

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JUDGMENT

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Introduction

1.  This is a trial for an order of sale under the Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545) (“the Ordinance”). The 2 Respondents have passed away and no one has appeared for them in the proceedings herein. It is therefore a case for the Applicant to come up with proof under all the requirements in the Ordinance.

Background

2.  On 21 April 2010, the Applicant commenced the present proceedings. At the material time, the Applicant owned all shares of the premises known as Nos. 6 and 8 Maidstone Road, Kowloon (‘the Buildings”), except those held by the 1^st and 2^nd Respondents. They were and are the co-owners of half interest of the 1^st Floor of No. 6 Maidstone Road.

3.  The Applicant later deposed, through its manager, Miss Rowena Lo, that it could not reach both Respondents. It however learnt that one Miss Chan Nui claimed to be the natural daughter of the 2^nd Respondent. She further informed the Applicant through her solicitors that the Respondents were husband and wife. Both of them passed away some years ago, but no grant of probate or letters of administration was obtained to deal with their estates. The Department of Justice confirmed that she would not take any steps in the administration of the estates of both Respondents. Miss Chan Nui however made no further response to the Applicant, including an offer to acquire the remaining half interest in the 1^st Floor of No. 6 Maidstone Road.

4.  On 16 July 2010, H.H. Judge M. Wong, ordered, inter alia, that notices were to be published in 2 local newspapers, one in Chinese and one in English, to call upon the Respondents to establish their claims in the present proceedings. It was done so, but neither the Respondents nor anyone else, including Miss Chan Nui, has filed anything with this Tribunal Court to establish their claims.

5.  The Applicant then applied for the proceedings to be listed for a formal trial. At the call-over hearing of the same, a number of persons appeared purporting to represent the Respondents. Madam歐陽潤金and Mr. 陳潤添 asked to act for the 1^st Respondent, the said Madam Chan Nui, for the 2^nd Respondent.  However, their applications were dismissed by Deputy Judge Lui on 12 January 2011. They did not take up the matter further.  

6.  To conclude, when the Applicant appeared before this Court at the trial, the application was effectively unopposed.  It was a matter for them to come up with formal proof of its case. At the end of the trial, we agreed that the Applicant had done so and as such, judgment was granted to it accordingly. We now give our brief reasons for the judgment.

Reasons

7.  Upon consideration of all the evidence, authorities and submissions from Mr. Victor Dawes, Counsel for the Applicant, we were satisfied that all requirements under the Ordinance had been proved on balance.

(a) At the commencement of the present proceedings, the Applicant owned more than 90% of the undivided shares in the Buildings. The Buildings were divided into 10 units and each unit had one share. The Applicant had acquired 9.5 units already and as such, on 21 April 2010, the Applicant owned 95% interest in the Buildings.

(b) The redevelopment of the subject lands was justified due to the age or state of repair of the Buildings.

(i) Mr. Benson Wong, in his Condition Survey Report filed herein, opined that :

“7.0 CONCLUSIONS

7.1 After completing the condition survey and considering Mr. K.S. So’s structural assessment report, I based on my experience as a building surveyor practicing in the field of building maintenance, repair and redevelopment for over 30 years, recommend the owners to redevelop rather than to repair the Building, particularly bearing in mind additionally that the Building is an obsolete commercial/residential building and does not possess any historical value or architectural merit, and is merely a building of the past that can be replaced.”

(ii) Mr. K.S. So, also stated in his Structural Assessment Report herein, that:

“13.0 Conclusions and Recommendations

Conclusions

13.1 Based on my investigation, I am of the opinion that the structural frames of the Buildings are in need of repair as the Building is practically approaching the end of its design working life given that the Building was designed for a design working life of 50 years. According to my investigation findings as set out below, the Building completed 55 years ago has exhibited signs that their structural frames have deteriorated to the final stage of their design working life.

….

13.2 I also conclude that according to the current condition of the structural frames of the Building the deterioration will continue steadily due to extensive carbonation of the concrete. It is inevitable that new defects will occur and previous defects though repaired will recur readily, requiring substantial repairs or even partial demolition and re-construction of some defective structural members in the future when, for example, there are unacceptably high reductions in the factors-of-safety, or structural performance factors in the reinforced concrete structural members due to substantial loss of cross-sectional areas of the embedded steel reinforcement bars.

Recommendations

13.3 I recommend that hammer tapping work be carried out to all structural members of the Building and any defects such as spalling and cracks discovered together with spalling and cracks already identified to be repaired as a matter of urgency.

13.4 I recommend that hammer tapping work together with the carrying out of repair works to rectify defects such as spalling and cracks found in structural members to be carried out periodically in the future. The next cycle of such repair works should be carried out in 5 years time after the completion of repairs works as recommended in paragraph 13.3 above. The time frame for subsequent cycles of repair works will be dictated by the quality of repair as well as the rate of deterioration of structural members of the structural frames. ”

(iii) We would further add that the above expert evidence also satisfied us of the Intelligent House test (Intelligent House Ltd. v. Chan Tung Shing & Ors [2008] 4 HKC 421)

(c) The Applicants did take reasonable steps to acquire all shares in the subject lands. As stated the Opening Submissions of Mr. Dawes, the evidence of the manager of the Applicant, Miss Rowena Lo, might be summed up in the followings:

“ (1) …

(2) The unit in question (i.e. 1/F of No.6) was previously owned by Au Young Ying, Butt Mut and Chan Kam To as tenants in common holding the respective shares of 2/4, 1/4 and 1/4. Offers were made to purchase their unit since mid-2006.

(3) All the registered owners have apparently passed away. The agent of the applicant subsequently located Chan Yun Tim and Chan Kit Chu (children of Au Young Ying and Chan Kam To) who informed them that Au Young Wing was the concubine of Chan Kam To.

(4) In June 2006, an offer was made to the children to purchase the unit for HK$3,780,000 and to pay a further sum[sic. some] of HK$80,000 to assist them to obtain the letters of administration in respect of the estates of Butt Mut and Chan Kam To.

(5) It was subsequently discovered that no letters of administration could be obtained because: (a) Butt Mut who was a beneficiary of the estate of Chan Kam To; (b) she had died intestate and without having obtained letters of administration of the estate of Chan Kam To; and (c) she herself died intestate with no issue or beneficiary.

(6) On 03.07.09, Chan Yun Tim and Chan Kit Chu as administrators of the estate of Au Young Ying sold and assigned the 2/4 share of and in the unit to the Applicant at the price of HK$1,925,000 (half of HK$3.85 million).

(7) Further investigation revealed that no probate application or letters of administration or grant of probate in relation to the estates of Butt Mut and Chan Kam To were made.

(8) After valuation advice was obtained, further offers were made by the applicant through their solicitors in the hope that this will come to the attention of the personal representatives of the 2 estates…No replies were received to these offers.”

(d) Last but not least, the value of the properties of the 1^st and the 2^nd Respondents as assessed were: (i) not less than fair and reasonable, as well as (ii) not less than fair and reasonable when compared with the value of the Applicants’ properties as assessed.

(i) Mr Charles Chan, stated in his first report dated 11 January 2010 the following valuation:

“

Street No.	Existing Use Value
	G/F	1/F	2/F	3/F	4/F
No.6	$9,790,000	$3,050,000	$2,840,000	$2,760,000	$2,210,000
No.8	$11,030,000	$3,050,000	$2,990,000	$2,480,000	$2,450,000
Total EUVs					$42,650,000

…”

(ii) Mr Chan revised the valuation in his 2^nd Report dated 22 March 2011:

“

Street No.	Existing Use Value
	G/F	1/F	2/F	3/F	4/F
No.6	$10,210,000	$3,130,000	$2,920,000	$2,830,000	$2,270,000
No.8	$11,490,000	$3,130,000	$3,070,000	$2,550,000	$2,520,000
Total EUVs					$44,120,000

“

(iii) With reference to S.3 (1) (a) of the Ordinance and Part I of the Schedule I thereof, we took the view that Mr. Chan provided us with better estimates on the same date when he obtained the latest available figures from the Rating and Valuation Department. Both valuations were in fact referred to 21 April 2010. There was good ground for so doing. Neither the 1^st Respondent nor the 2^nd Respondent would be prejudiced.

(iv) We therefore allowed the valuation of the 1^st Report to be amended as those contained in the 2^nd one.

Conclusion

8.  Having considered the above, we were satisfied that the requirements and conditions as laid down in the Ordinance had been met and an order for compulsory sale sought by the Applicant should be granted.  We made the order accordingly, including that the Buildings are to be sold for the purpose of redevelopment by way of auction under section 4 (1) (b) of the Ordinance, at the reserve price of $100,000,000.00 under the particulars and conditions substantially the same as those in the draft Particular and Conditions of Sale (as contained in hearing bundle D at p.1419 to 1444) initialed and approved by this Tribunal on 11 August 2011.