LEE Wai Chun v. Director of Lands

IN THE LANDS TRIBUNAL OF HONG KONG

Crown Lands Resumption Reference No. 17 of 1995

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Reasons for Decision

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1. The Tribunal heard evidence and submissions in these proceedings on 11th October 1995 on which same date decision was made determining compensation in the sum of $1,900,000. The Applicant now requests that the Tribunal give the reasons in writing for its decision. We hereby set out the reasoning.

2. The Applicant is the owner of the Ground Floor shop premises at No. 2 Sui Lun Street, Kowloon ("the subject premises"). The subject premises were resumed by the Crown pursuant to section 3 of the Crown Lands Resumption Ordinance, Cap. 124 ("the Ordinance") under a Notice of Resumption dated 26th June 1992, published in Volume CXXXIV Hong Kong Government Gazette on 3rd July 1992 as G.N. No. 2264 of 1992 and reverted to the Crown on 3rd October, 1992. Since then, the subject premises have been demolished. The Applicant claimed compensation of $2,178,300 under section 6(2) of the Ordinance. The Respondent contended that the open market value of the subject premises was $1,857,000.

3. We note that the subject premises were part of a major resumption of more than one hundred properties for the Hong Kong Housing Society's Urban Improvement Scheme ("the Scheme"). In addition to Sui Lun Street, the Scheme site extended to Pau Chung Street, Ma Tau Kok Road, Pak Tai Street, San Shan Road and Wang Cheung Street in Ma Tau Kok. In fact, earlier on 10th October, 1986, the Scheme site had been designated as a Comprehensive Redevelopment Area ("CRA") by gazetted amendments to the Draft Ma Tau Kok Outline Zoning Plan S/K10/1 under the Town Planning Ordinance, Cap. 131. This re-zoning had the effect of limiting owners of properties within the CRA to re-developing their lots in accordance with the overall scheme.

4. The Tribunal have had occasions to consider compensation for other properties resumed under the Scheme in, e.g., CLR Nos. 13/94, 15/94 and 17/94. In particular, CLR No. 13/94 concerned No. 9 Wang Cheung Street and CLR No. 17/94 concerned No. 16 Wang Cheung Street. In the said previous cases, two different panels of the Tribunal reviewed the authorities and came to the same conclusion that any affect of the CRA or the Resumption Scheme on value must be ignored.

5. For valuation purposes, Sui Lun Street where the subject premises were situated is almost identical with Wang Cheung Street running parallel and immediately next to it. Each is a cul-de-sac of equal length as the other. In CLR No. 13/94, a differently constituted panel of the Tribunal considered in detail all factors affecting valuation for compensation for the resumption of the ground floor shop at No. 9 Wang Cheung Street. The Tribunal came to the conclusion that the front end section of Wang Cheung Street junction with Pau Chung Street should attract $4,300 per sq.ft. (equivalent to $46,286 per sq.m.), the middle section of Wang Cheung Street $4,000 per sq.ft (equivalent to $43,057 per sq.m.), and the rear dead end of that street $3,750 per sq.ft. (equivalent to $40,366 per sq.m.) for covered building area and 1/8 rate for open yard area. Considering the almost identical circumstances of Wang Cheung Street and Sui Lun Street, one would tend to think that the rates established in CLR No. 13/94 should also apply to Sui Lun Street.

6. The Applicant has not called any expert evidence. She relies on the ground floor unit rate of $53,000 per square metre previously determined by the Tribunal for the ground floor shop at No.107 Pau Chung Street (CLR NO.15 of 1994). However, it has been well established that Sui Lun Street, a cul-de-sac, where the subject premises are situated, is generally inferior to Pau Chung Street.

7. In the premises, we see no reason not to adopt the rates applicable to Wang Cheung Street for the instant case, i.e., $4.300 per sq.ft. (equivalent to $46,286 per sq.m.) for the subject premises at the front end section of the street near its junction with Pau Chung Street. The subject premises abut a lane of 5 feet wide. For this, Mr. Ng, the Respondent's expert witness, conceded during the hearing that an upward adjustment of 1% to 2% would be appropriate. Adopting a 2% adjustment increases the rate to $47,212 per sq.m.

8. At the date of resumption the subject premises were subject to an existing tenancy at a rent of $4,880 per month inclusive of rates which was well below the market rent. This tenancy commenced from August 1988. Had it not been for the resumption, the owner was required to give 6 months' notice to obtain vacant possession. We therefore calculate the open market value of the subject premises subject to the said existing tenancy as follows :-

9. Accordingly, we ordered on 11th October 1995 that,

(i) The Respondent shall pay compensation to the Applicant at $1,900,000;

(ii) The Respondent shall pay the Applicant's costs fixed at $3,800.

Dated this 1st day of December 1995.

 

 

Z. E. Li Presiding Officer

N. T. Poon Member, Lands Tribunal