HONG KONG AIR CARGO TERMINALS LTD v. COMMISSIONER OF RATING AND VALUATION

LDRA 12/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

RATING APPEAL NO. 12 OF 2001

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REASONS FOR DECISION

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1. At the hearing on 23 February 2004, I disposed of the summons taken out by the Appellant on 20 January 2004 by ordering the Respondent to allow the Appellant to inspect the following documents within 7 days,

(a) Floor plans to show the size and location of the areas allocated to different uses in the HAECO tenement and the GSEL tenement;

(b) Documents showing the rental values attributable to each of these areas in the rating assessments for those tenements.

I now give reasons for such decision.

2. I should explain how the identification of these classes of documents came about. In the summons, the prayer sought the following,

"1. The Commissioner of Rating and Valuation provides the breakdown of the assessment and a list of comparables used for the aircraft maintenance facility at the Hong Kong International Airport, run by the Hong Kong Aircraft Engineering Company Limited ("HAECO tenement");

2. The Commissioner of Rating and Valuation provides the breakdown of the assessment and a list of comparables used for the ground support equipment maintenance and repair facility at the Hong Kong International Airport, run by Ground Support Engineering Limited ("GSEL tenement")."

3. In the summons, the Appellant relied on Section 10(2)(a) and (b) of the Lands Tribunal Ordinance Cap.17 to make the application. These provisions give power to the Lands Tribunal to make order concerning disclosure, production and inspection of documents. In essence, the Appellant was seeking discovery.

4. Concerning the duty of an applicant seeking specific discovery, I have said as follows in my decision of 3 July 2003 in Kabushiki Kaisha Yakult Honsa v Yakudo Group Holdings Ltd, HCA 2409 of 2002, para. 23,

"...it behoves an applicant for specific discovery and inspection of documents to identify such document or class of documents precisely. This is very important because an opponent must be able to tell if an order were made whether a particular document comes within the scope of the order. When a party describes a class of documents in vague and general terms, not only would it cause great difficulties to his opponent in deciding what exactly he needs to do to comply with the order, it would also cause difficulties to the court in testing whether the documents are relevant to the issues in dispute and whether the test of necessity under Rule 13 can be satisfied. Very often, imprecise description of documents in this kind of applications is a sign of fishing on the part of an applicant."

5. Although Section 10(5)(a) of the Ordinance provides that proceedings of the Tribunal shall be conducted with as much informality as is consistent with attaining justice, I am of the view that the above observations are equally applicable in respect of discovery applications in the Lands Tribunal.

6. In the present case, I have difficulties in identifying the documents that might fall within the description "the breakdown of the assessment". I invited Ms Ip, counsel for the Appellants, to identify the documents at the hearing on 23 February 2004. As a result, counsel identified three classes of documents, two of which were set out in my order made on that date. The third class was formulated as follows,

"A list of the documents which exist to support the calculation of each of the above rental values relied on by the RVD, including any internal valuation report and any documents showing the comparable properties which have been considered by the RVD whether or not they were used in arriving at each of the rental values."

I refused to grant discovery regarding this class of document.

7. It is the contention of the Appellant in the substantive appeal that the comparable method could and should be adopted for the purpose of valuation. It also seeks to argue that the HAECO and GSEL tenements are valid comparables. However, as far as I can gather at this stage from submissions by counsel, the Appellant recognized that there are material distinctions in some of the users and facilities at the Appellant tenements and those at the HAECO and GSEL tenements. Hence the overall rating assessments of the HAECO and GSEL tenements are of little assistance. In order to apply the comparable method, the Appellant therefore needs to have the information specified in Paragraph 1 above.

8. Mr Kan, counsel for the Respondent, took a number of objections to the application. First, he submitted that the application is pre-mature. He contended that such application should wait until the parties have exchanged their expert reports. He further suggested that some of the information sought by the Appellant could be included in the Respondent's expert reports or supplemental reports. He argued that the normal sequence should be that each parties' experts set out their evidence in their expert reports and then each would respond to the opponent's expert in a supplemental report. Since the expert reports have not yet been exchanged at the hearing of the application, to put it crudely, Mr Kan submitted that the issues have not been joined.

9. I do not accept that submission. It is a matter of regret that up to the date of hearing, the parties have not yet exchanged their expert reports. The first of these appeals (LDRA 12 of 2001) was launched in February 2001. The last one (LDRA 325 of 2002) was launched in December 2002. The substantive appeals are scheduled to be heard on 19 April 2004 and parties had been informed about the same a long time ago. Directions for exchange of expert reports were first given on 13 May 2003 and the original deadline was 15 September 2003. That direction was not complied with. Due to the apparent lack of progress, this court listed the matter for a call-over hearing on 14 January 2004. The issue of discovery was brought up at that hearing. A tight timetable was prescribed for preparations leading to the substantive appeal. In that timetable, expert reports were to be exchanged by 16 February 2004 and supplemental report shall be exchanged by 22 March 2004. Due to the Respondent's expert report not being available, no exchange took place by 16 February 2004 although the Appellants were ready. One of the applications before me on 23 February 2004 was the Respondent's application for extension of time. After hearing submissions from the parties, I extended the time for the Respondent to file and exchange expert reports to 27 February 2004 and the deadline for supplemental report was further pushed back to 27 March 2004.

10. I also directed that agreed facts to be filed by 1 April 2004. Written opening, hearing bundles and list of issues (to be agreed if possible) were to be filed by 8 April 2004. I also fixed another call-over hearing on 3 April 2004 to monitor the progress of the case. I have already given warning to the parties that if I am not satisfied that the case is ready for hearing on 3 April 2004, this Tribunal will consider vacating the hearing dates in April.

11. Against such background, it is obviously impracticable for the Appellant to wait until the exchange of supplemental reports on 27 March 2004 before the application for discovery is made. I see no reason why the preparation by the Appellant should be postponed by reason of the delay on the part of the Respondent in getting their expert report ready.

12. With regard to the joinder of issues, I accept the submission of Ms Ip that by now it should be clear to everybody that the Appellant would be advocating that the comparable method is the appropriate one for valuation in the present case.

13. Second, Mr Kan raised a number of points to argue why the HAECO and GSEL tenements could not be relevant. It seems to me that these are certainly points which have to be canvassed at the substantive appeal and they should not and could not be resolved in the context of this discovery application. At this stage, the tests under Section 10(2)(a) and (b) are that such documents "may be material" and "documents which the Tribunal may require". Mr Kan was contented to equate those with the tests adopted in the High Court for discovery and inspection. I am satisfied that on such standards, the documents set out in paragraph 1 above should be made available to the Appellant for inspection.

14. Insofar as the inspection is limited to the documents set out in paragraph 1, I do not see how that would be injurious to public interest. In any event, there is no evidence before this Tribunal supporting any claim for public interest privilege. I therefore hold against Mr Kan's submission in that regard.

15. I am however in agreement with Mr Kan on one point. Primarily, each side's experts should do their homework and in general, they should not have the right to study the working papers of his opponents. I have no doubt that the Respondent's expert would set out in his supplemental report his opinion about the validity of using the assessments of the HAECO and GSEL tenements as comparables and the reasons why the comparable method is not applicable in the present case. The Appellant's expert could deal with that when they come to testify at the substantive appeal. In the meantime, having been given the information set out in Paragraph 1, the Appellant's expert should be able to formulate his own opinion as to the adoption of the HAECO and GSEL tenements as comparables and explain why they are valid comparables. To go further is equivalent to seeking access to the working papers of the person who made the assessments for those two tenements. In my view that would serve no useful purpose and would probably protract unnecessary disputes between the experts. Hence, in my judgment, their discovery is not necessary for the fair disposal of the matter. For these reasons, I refused the application in respect of the third class of documents.