EASE GOLD DEVELOPMENT LTD v. SECRETARY FOR TRANSPORT

CACV 3422/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 3422 OF 2001

(ON APPEAL FROM LDMR 13 OF 1999)

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J U D G M E N T

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Hon Mayo VP (delivering the judgment of the Court):

1. This is an appeal from an interlocutory judgment of H.H. Judge Chow sitting in the Lands Tribunal dated 22 October 2001 when he refused the applicant's application for the extension of time to pursue its claim for compensation under the Roads (Works, Use and Compensation) Ordinance Cap. 370 (the Ordinance).

2. The claim arose in connection with the Government compulsorily obtaining temporary occupation for a period of three years from 17 November 1995 of land owned by the applicant's predecessor-in-title.

3. It is provided in the 2nd Schedule of the Ordinance that compensation is based on the amount of an open market rent for the claimant's interest in the land for the relevant period.

4. Vigers who were surveyors on behalf of the predecessor submitted a claim to the respondent on 15 November 1996 for compensation in the sum of $101,300.00. The valuation was based upon the use of the land as a fish pond.

5. The applicant purchased the land by virtue of a sale and purchase agreement dated 4 September 1997 and subsequently an assignment dated 6 September 1997.

6. The respondent made a without prejudice offer to the applicant's predecessor-in-title on 3 October 1997. The offer was open for a period of 28 days.

7. An extension of the offer was requested and granted but by a letter dated 28 December 1997 written by the applicant's then solicitor the offer was rejected.

8. The reason for this was that the applicant had obtained a valuation from another firm of surveyors Fotton Surveyors Ltd valuing the interest at $14.3 million. This was based upon the best use of the land being open storage.

9. By a letter dated 2 November 1998 Fotton made a claim for compensation in this amount.

10. At this point it is pertinent to observe that section 29 of the Ordinance sets out various provisions which are designed to enable a claimant and the respondent to endeavour to negotiate a settlement of the claim being made. It is provided in section 29(7) that no claim should be lodged in the Lands Tribunal until a period of seven months has elapsed.

11. Notwithstanding this the applicant lodged a claim in LDMR 3/1999 on 25 February 1999.

12. On 11 March 1999 the respondent filed a notice of opposition which was confined to three issues. These were:

(1) The applicant was not entitled to compensation.

(2) The 7-month period above referred to had not elapsed.

(3) $14.3 million was excessive.

13. After correspondence was exchanged between the parties LDMR 3/1999 was withdrawn and LDMR 13/1999 was substituted for it. The issues were then limited to the first and third issues in LDMR 3/1999.

14. By agreement of the parties the only issue which was canvassed at the hearing on 14 December 1999 was the question as to whether the applicant was entitled to compensation.

15. Judge Chow delivered an 8-page judgment on 4 January 2000 in which it was held that the applicant was indeed entitled to make the claim. It should perhaps be added that the main issue which was being ventilated before the Judge was whether any compensation which was payable should be paid to the applicant or their predecessor-in-title.

16. On 20 March 2000 the respondent sought leave to amend its notice of opposition. The main issue which this amendment sought to introduce was that the applicant's entitlement was time barred by virtue of section 28(1) of the Ordinance.

17. Section 28 reads:

"28. Claims out of time

(1) Subject to subsections (2) and (6), if a claim or an amendment thereto is not served on the Secretary before the expiration of the period specified in the fourth column of Part II of the Schedule in respect of that matter, the right to claim compensation therefor shall be barred.

(2) The period referred to in subsection (1) may, upon application made to the Lands Tribunal either before or after the expiry of that period, be extended in accordance with this section.

(3) Notice of an application under subsection (2) shall be given to the Secretary by the applicant.

(4) The Lands Tribunal may extend the period within which a claim must be served upon the Secretary if it considers that the delay in serving the claim was occasioned by mistake of fact or mistake of any matter of law (other than the relevant provision in the fourth column of Part II of the Schedule) or by any other reasonable cause or that the Crown is not materially prejudiced in the conduct of its case or otherwise by the delay.

(5) An extension may be granted by the Lands Tribunal under subsection (4), with or without conditions for such period as it thinks fit but not in any case exceeding 6 years from the time when the right to compensation first arose.

(6) Without prejudice to subsections (2) to (5), where an order has been made under section 13(1), 15(1) or 17(1) and notice of the order has not been served in accordance with section 14(1)(a), 16(1)(a) or 18(1)(a) respectively, the Secretary may, if satisfied that the claimant has not had actual notice of the order, accept service of a claim after the period specified in the fourth column of Part II of the Schedule for such service, and if he does so, the claim shall be deemed to have been served within that period."

18. The application which we are concerned with was the applicant's application to extend time under section 28(2).

19. The question which had to be determined by the Judge was whether the applicant had satisfied the conditions referred to in section 28(4). This was dealt with in a judgment dated 22 October 2001, which is the subject of this appeal. However for reasons which will become apparent later in this judgment it will also be necessary to consider a Decision of the Judge dated 26 March 2001 ("the Decision"). At the hearing before us Mr Mok for the applicant applied for leave to amend the notice to appeal so as to include references to the Decision. We granted leave for this.

20. It is not possible to consider the judgment of 22 October 2001 without also considering the Decision which was made in relation to a ruling made pursuant to Rule 18 of the Lands Tribunal Rules.

21. We are concerned with the first preliminary issue which was before the Judge in the Decision. This was whether "the present claim was statute barred and if so whether the Tribunal should extend time in favour of the applicant".

22. Unfortunately it would appear that there was some confusion. The Judge inquired of counsel who represented the applicant before him (not being Mr Mok) whether he was seeking an extension of time pursuant to section 28(2). Counsel said that he was not as he was contending that he was placing reliance upon the original claim which had been lodged in time.

23. This being the case the Judge stated at page 8 of the Decision that it was premature to make a ruling in relation to any extension of time.

24. However at the conclusion of the Decision he made the following determination:

"Determination

I determine that the claim for the sum of $14,300,000.00 is an amendment to the claim for the sum of $101,300.00. The submission of this claim of $14,300,000.00 was not served on the Respondent before the expiry of the one-year period which ended on 16.11.1996. According to section 28(1) of the Ordinance, the Applicant's right to claim compensation in respect of this amendment is barred.

I impose the following orders : -

1. The costs of this preliminary hearing be reserved.

2. The parties are at liberty to make application for the future conduct of these proceedings."

25. Mr Mok informed the court that his client did not lodge an appeal against this determination as it had clearly been their impression that the question of an extension of time had not been adjudicated upon. They therefore decided that the most satisfactory and efficient way of proceeding with the matter would be to make an application for an extension in due course.

26. However it is apparent in the 22 October 2001 judgment that the Judge was troubled by the previous history of the application.

27. He referred to his determination and expressed the view that he had no jurisdiction to allow an extension of time under section 28(1).

28. This was a rather surprising view to take in the light of the wording of section 28(2) which enables the Tribunal to grant extensions of time after the expiry of the period referred to in section 28(1).

29. Be that as it may the consequence of all of this is that the Judge was under the mistaken impression that he had no jurisdiction to extend the time.

30. The Judge did however go on to consider some of the matters referred to in section 28(4). He indicated that if he was seized of the matter he would not have been disposed to extend the time.

31. He did not consider that there had been any mistake of law or of fact.

32. At para. 4 of his judgment he states:

"4. In the Affirmation dated 20 August 2001, Alain Lau said, 'I am asked to give my views and comments on the previous claim of these proceedings lodged by the agent representing the former co-owners of the subject lots .... However, I was not given the opportunity to read or examine or even have a sight of the submission made by Vigers'. From the foregoing, it can be seen that his statement made in the affirmation was merely his opinion. Therefore, the 'mistaken advice' referred to by Counsel Mr Lui was not based on facts. Moreover, this 'mistaken advice' was only a mistaken advice on assessment of compensation. What section 28(4) refers to relates to the mistake of fact or mistake of law which results in the delay in serving the claim, and has no relationship with the mistaken advice on the assessment of compensation."

33. Mr Mok submitted that the Judge had misunderstood the position.

34. Clearly it was arguable that when Vigers had proceeded with their valuation on the basis that the use of the land was as a fish pond they had made a mistake of fact and law. The Government's own expert described the basis of compensation payable in this way:

"6. Basis of Compensation

6.1 Under Item 2(a)(ii) of Part II of the Schedule of the Ordinance, the basis on which compensation is to be assessed should be the amount of an open market rent for claimant's interest in the land occupied during the period of the temporary occupation of land by Government. According to the Paragraph 12 of Part I of the Schedule of Cap 370, when the compensation is to be assessed on the basis of the value of a rent, that rent shall be assessed as at the date of the happening of the relevant event mentioned in the first column of Part II of the Schedule.

6.2 The open market rent is regarded as the amount which the land, if put up for letting in the open market by a willing landlord, might reasonably be expected to realize. The rental value should reflect its optimal lawful use having regard to the lease conditions as well as the requirements under the Town Planning Ordinance (Cap. 131)."

35. This being so it may well have been the case that Vigers could have based their valuation upon a more favourable basis than use as a fish pond.

36. There is considerable merit in Mr Mok's contention.

37. The Judge then went on to consider the question as to whether the respondent would suffer any prejudice if time was extended in the manner prayed for by the applicant. He concluded that it would. Amongst other matters he referred to the procedure outlined in section 29 and expressed the view that the respondent would have to consider matters all over again.

38. With respect this is not so. It is evident from the papers that the respondent has been aware of the contentions which are being advanced by the applicant for some considerable time. There will be no need for them to reconsider anything new. If an extension of time is granted the application can be proceeded with expeditiously and the case can be brought to a conclusion. No convincing evidence has been forthcoming to satisfy us that the respondent would suffer any significant prejudice if time is extended in the manner proposed.

39. What is of particular importance is that the Judge has not for the reasons which have been given fully considered the applicant's application for an extension on its merits. Even when the Judge did consider the relevant issues he appears to have been in error.

40. As it would appear that the Judge was in error when he should have been exercising a discretion reposed in him we have come to the conclusion that we should ourselves now exercise it. We do so and order that time be extended under section 28(2) in such a manner so as to enable the amended claim to be proceeded with. To this extent the appeal is allowed. We further make an order nisi that the applicant will have its costs of this appeal and the hearing below.