WAN KWOK KEUNG v. DIRECTOR OF LANDS

LDLR 4 - 12/2016 (Heard Together)

[2019] HKLdT 38

LDLR 4/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 4 OF 2016

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LDLR 5/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 5 OF 2016

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LDLR 6/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 6 OF 2016

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LDLR 7/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 7 OF 2016

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LDLR 8/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 8 OF 2016

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LDLR 9/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 9 OF 2016

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LDLR 10/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 10 OF 2016

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LDLR 11/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 11 OF 2016

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LDLR 12/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO 12 OF 2016

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D E C I S I O N

(Leave to Appeal out of Time)

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Introduction and Background

1.  These are the applications by the 9 applicants, by way of 9 corresponding summonses dated 28 March 2019, for

(a)   extension of time for the applicants to apply for leave to appeal against our judgment handed down on 23 January 2019 (“the Judgment”) and for filing and serving of the Notice of Appeal attached to the summonses;

(b)   leave to appeal be granted to the applicants; and

(c)   leave for Cheung Cho Gau (“Madam Cheung”), the executrix of the estate of the applicants in LDLR 8/2016 and LDLR 10/2016, to substitute as the applicant in LDLR 8/2016 and LDLR 10/2016 respectively and to carry on the proceedings on behalf of the applicants thereof (“Substitution Application”).

2.  On 14 December 2007 (“the Resumption Date”), the Director of Lands resumed 116 private agricultural lots with a total area of about 16,453 square metres in the vicinity of Upper Lam Tsuen River, She Shan River and Upper Tai Po River, Tai Po, New Territories.

3.  By 9 Notice of Applications to Determine Compensation for Land Resumed under the Lands Resumption Ordinance, Cap 124 (“the LRO”) dated 7 July 2016, the applicants applied to the Tribunal to determine the amount of compensation to be paid in respect of lots owned by the applicants that were resumed (“the Lots”). 

4.  After the trial held on 26, 27 and 30 November 2018, the Tribunal handed down the Judgment determining the compensation of the various Lots as follows:

Application No.	Applicant	Lot No	Resumed Area	Compensation
LDLR 4/2016	Wan Kwok Keung	Section K of Lot 1203 in DD 7	17.8 sq m (192 sq ft)	$6,305
LDLR 5/2016	Chung Wai Kwong	Section C of Lot 1203 in DD 7	16.9 sq m (182 sq ft)	$5,986
LDLR 6/2016	Chung Sze Kwong	Section D of Lot 1203 in DD 7	14.8 sq m (159 sq ft)	$5,242
LDLR 7/2016	Lee Chong Yip	Section E of Lot 1203 in DD 7	12.8 sq m (138 sq ft)	$4,534
LDLR 8/2016	Wan Fat Shing	Section M of Lot 1203 in DD 7	9.9 sq m (107 sq ft)	$3,507
LDLR 9/2016	Ma Yiu Ming	Section N of Lot 1203 in DD 7	44.9 sq m (483 sq ft)	$15,904
LDLR 10/2016	Lam Yik Hei	Section P of Lot 1203 in DD 7	41 sq m (441 sq ft)	$14,522
LDLR 11/2016	Join Ease Investment Limited	Remaining Portion of Lot 1203 in DD 7	261 sq m (2,810 sq ft)	$92,446
		Remaining Portion of Lot 1205 in DD 7	5.4 sq m (58 sq ft)	$1,913
		Remaining Portion of Lot 1209 in DD 7	25.3 sq m (272 sq ft)	$8,961
LDLR 12/2016	Cheng Kam	Section B of Lot 1203 in DD 7	10.9 sq m (117 sq ft)	$3,861
		Total:	460.7 sq m (4,959 sq ft or thereabouts)	$163,181

5.  In gist, the Tribunal, accepting the expert’s opinion of the respondent, found the best use of the Lots was open storage with pedestrian access only.

6.  On 21 February 2019, the applicants applied for extension of time for review of the Judgment but such applications were ultimately withdrawn at the hearing on 4 March 2019 with costs to the respondent.

7.  On 28 March 2019, the applicants took out the present applications. By consent of the parties, the Tribunal shall dispose of these applications on paper without oral hearing.

Applicable Legal Principles

8.  Under Section 11(1)(a) of the Lands Tribunal Ordinance (“LTO”), a decision of the Tribunal in determining the amount of compensation payable by the Government (acting on whose behalf, the Director of Lands) shall be the final determination thereof. However, under section 11(2) of the LTO, any party to the proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law, subject to section 11AA.

9.  Section 11AA(1) of the LTO requires leave to be granted by the Tribunal or the Court of Appeal before an appeal under section 11(2) can be made.

10.  Pursuant to rule 30B(2)(a) of the Lands Tribunal Rules (“LTR”), the applications for leave to appeal must be made to the Tribunal within 28 days from the date of the Judgment, ie within 20 February 2019 in the present case.

11.  Section 11AA(6) provides also that leave to appeal shall not be granted unless the Tribunal is satisfied that:

(a)   the appeal has a reasonable prospect of success; or

(b)   there is some other reason in the interests of justice why the appeal should be heard.

12.  Such criterion of “reasonable prospect of success” was described in SMSE v KL [2009] 4 HKLRD 125 at para 17 by Le Pichon JA (as she then was) as involving the notion that the prospect of succeeding must be “reasonable” and therefore more than “fanciful” without having to be “probable”.

13.  Whilst rule 30D of the LTR provides that the Tribunal may extend the time for applying for leave to appeal, an extension of time for appeal is a matter which lies within the discretion of the court. The factors which are normally taken into account in deciding whether to grant an extension of time include:[1]

(a)   The length of the delay;

(b)   The reasons for the delay;

(c)   The chances of the appeal succeeding if time is extended.

14.  Further, an application for an extension of time should be supported by an affidavit deposing to any facts relied on by the applicant and giving a full account of, and explanation for, the whole of the delay since time expired in an application for extension of time apply for leave: Hong Kong Civil Procedure 2019, Vol 1, para 59/2A/10; KNM v HTF, HCMP 288/2011 (unreported, dated 7 September 2011) at para 16, per Fok JA (as he then was).

15.  Where a delay is inexcusable (even if it is insubstantial), the applicant faces a higher threshold, ie the party must show a real prospect of success on the merits and not simply the test of a reasonable prospect of success: KNM v HTF, supra at paras 19-20.

Extension of Time

16.  In this regard, Mr Nicholas Oh (“Mr Oh”), counsel for the applicants, explains the reasons for the delay as follows:

(a)   It took 9 days before the applicants’ former solicitors made Madam Cheung aware of the Judgment on 1 February 2019;

(b)   The intervening Chinese New Year and the fact that Madam Cheung’s husband was away from Hong Kong for 13 days from 2 February to 14 February 2019 meant the applicants could not do anything and could not seek legal advice due to the closing of business of the applicants’ former solicitors during Chinese New Year;

(c)   The papers for the present proceedings were only delivered to the applicants’ present solicitors on 12 February 2019;

(d)   There was insufficient time for the applicants to file an application for leave to appeal in the circumstances;

(e)   Further time was taken up by the applicants’ attempt to apply for extension of time to apply for a review, but which was ultimately withdrawn, between 21 February 2019 to 4 March 2019.

17.  Mr Oh further submits that the length of the delay in the present case is not serious: it was only 36 days from the deadline of 20 February 2019 and there is no or minimal prejudice to the respondent in the present case; whether or not the intended appeal succeeds, the only difference is the amount of compensation payable to the applicants.

18.  In Re Irshad Muhammad [2018] HKCA 864, the application for extension of time for leave to appeal was late for more than 5 weeks, ie like the present case and the length of delay was described by the Court of Appeal as substantial.  In the present case, the Tribunal also considers that the length of delay is substantial.

19.  Secondly, the Tribunal accepts the submissions made by Ms Ebony Ling (“Ms Ling”), counsel for the respondent, that the applicants’ delay is inexcusable for the following reasons:

(a)   By Madam Cheung’s affirmation dated 1 April 2019, her husband received the email attaching the Judgment from the former solicitors on 30 January 2019.

(b)   There was then a conference with the former solicitors in the morning of 31 January 2019, which was 5 days before the Chinese New Year. Presumably, the husband had obtained advice from the former solicitors on the prospects of an appeal in the conference.

(c)   Although Madam Cheung alleged that she became aware of the Judgment on or about 1 February 2019, it is inexplicable why her husband did not inform her earlier after the conference.

(d)   Indeed, the current solicitors wrote to the former solicitors on 1 February 2019, stating that they were instructed to deal with the intended appeal against the Judgment and enclosing Madam Cheung’s letter of authorisation dated 1 February 2019.

(e)   It is therefore clear that the applicants had already intended to appeal against the Judgment as early as 1 February 2019.

(f)   The former solicitors replied promptly, stating that the trial bundle and the Judgment were available for collection until 6 pm on the same day.

(g)   On 12 February 2019, the current solicitors made a request to the former solicitors for the production of further documents, which were again produced by the latter promptly on the same day.

(h)   Notwithstanding the above, especially the fact that on 1 February 2019 the applicants had already instructed the current solicitors to deal with the intended appeal against the Judgment, no reason has been proffered as to why the Notices of Change of Solicitors were only filed on 21 February 2019, ie after the deadline to apply for leave to appeal.

(i)   Also, no explanation has been proffered by the applicants as to why the applications for leave to appeal were not made until 28 March 2019, which was (i) 8 weeks after they had instructed the current solicitors to deal with the intended appeal, and (ii) 5 weeks after the deadline for making the application.

(j)   The taking out of the review applications on 21 February 2019 which was in any event after the deadline for taking out the present application is irrelevant and does not explain why the present applications were not taken out before the deadline.

20.  Given the applicants’ delay is inexcusable, we consider that they must show a real prospect of success on the merits and not simply a reasonable prospect of success.

Leave to Appeal

21.  Under section 12 of the LRO,

“In the determination of the compensation to be paid under this Ordinance—

(a) …

(aa) …

(b) …

(c) no compensation shall be given in respect of any expectancy or probability of the grant or renewal or continuance, by the Government or by any person, of any licence, permission, lease or permit whatsoever:

Provided that this paragraph shall not apply to any case in which the grant or renewal or continuance of any licence, permission, lease or permit could have been enforced as of right if the land in question had not been resumed; and

(d) subject to the provisions of section 11 and to the provisions of paragraphs (aa), (b) and (c) of this section, the value of the land resumed shall be taken to be the amount which the land if sold by a willing seller in the open market might be expected to realize.” (underline added)

22.  At para 41 of the Judgment, the Tribunal concluded that as the expectancy of obtaining the building licence for the subject lands which affects the intrinsic value of the Lots falls squarely within the words of section 12 (c) of the LRO, the best use of the Lots cannot be New Territories Exempted House (“NTEH”) developments. Further at para 42 of the Judgment, we explained that as there was no evidence before the Tribunal that as at the Resumption Date, the Lots were or had been surrounded by any NTEH developments, in most likelihood, the NTEH developments that building licences for which had subsequently been granted in the surroundings had benefited from the Resumption which had improved the accessibility of the environ. At para 43, as particularly evidenced by the physical features of the Lots, for instance, the aerial photo taken in 2007, we agreed with the expert for the respondent that the best use of the Lots was open storage with pedestrian access only (as opposed to vehicular access), such as nursery for growing and selling of plants and flowers, storage of goods/stuff such as metal scrap etc.

23.  In relation to the “as of right” exception under section 12(c) of the LRO, Mr Oh submits that one must be careful to distinguish what the Government can do from whether the applicant can enforce the granting of any licence, permission, lease or permit as of right. He emphasises that the refusal by the Government to grant licence, permission, lease or permit which is in breach of a Basic Law right would be susceptible to enforcement of that right eg by judicial review, and should be considered as falling under the “as of right” exception.

24.  The right relied upon by Mr Oh is Article 40 of the Basic Law which states that:

“The lawful traditional rights and interests of the indigenous inhabitants of the “New Territories” shall be protected by the Hong Kong Special Administrative Region” (underline added)

25.  The interplay between this Article 40 of the Basic Law and the Small House Policy implemented by the Hong Kong Government has been recently discussed in considerable depth in the judgment of Kwok Cheuk Kin & Another v Director of Lands & Others [2019] HKCFI 867.

26.  As described in para 9 of Kwok Cheuk Kin’sjudgment, the prevailing Small House Policy now provides for a Building Licence on land owned by the applicant himself at nil premium, or at a full-rate premium in relation to post-1898 villages. The Free Building Licence was granted to indigenous inhabitants free of any premium if the inhabitant decided to build a village house on his agricultural land for his own use.

27.  The report titled “The New Territories Small House Policy” dated February 1980 cited in para 122 of Kwok Cheuk Kin’sjudgmentstates the following in relation to the Free Building Licence:

“Since the beginning of the lease of the New Territories the custom of the villagers to build houses in their village for their own occupation and on their own agricultural land held under the Block Crown Lease issued in 1905, free of premium, has been recognised. This tradition was officially endorsed by the Executive Council in October, 1959. On approval of the Council in June 1960, the concession of a conversion at nil premium was extended to cover also the pre-war New Grant Lots …” (underline added)

28.  However, the precise nature of the rights or interests (if any) enjoyed by the New Territories indigenous villagers to build small houses in their own villages is not an issue which arose for determination in the present case.

29.  Even though since the beginning of the lease of the New Territories, the custom of the villagers to build houses in their village for their own occupation and on their own agricultural land held under the Block Crown Lease issued in 1905, free of premium, has been recognised.  It was the Government’s position that New Territories indigenous villagers did not have any legal right to build small houses on agricultural land in the absence of a lease modification or a building licence; use of the land for any building purpose was not possible without Government’s approval.

30.  In such regard, the Tribunal maintains that the most authoritative and landmark case on the applicability of section 12(c) of the LRO is Director of Lands v Yin Shuen Enterprises Ltd & Another (2003) 6 HKCFAR 1, in which the CFA faced the covenant in the Block Government Lease exactly the same as the present one and decided against the applicant in that case.

31.  Also, in the present case, the building licences of the Lots have yet to be granted by the Lands Department as at the Resumption Date.  Some of the applicants only applied for and obtained building licences for the remaining portions of the Lots after the Resumption Date. This demonstrates that this once in a lifetime “ding right” had not been forfeited by the resumption and not inextricably tied to the Lots resumed.[2] The applicants in the present case will be unjustly enriched by his traditional rights (if any) by obtaining compensation based on such rights when in fact, they could exercise and some had exercised their rights on the remaining land or other land afterwards.

32.  In view of the above, we agree with Ms Ling that the applicants’ reliance on Kwok Cheuk Kin’scaseis misplaced because:

(a)   The issue in that decision was whether the Small House Policy is rendered constitutional and lawful by Article 40 of the Basis Law, which in turn depends on whether ding rights form part of the “lawful traditional rights and interests of the New Territories indigenous inhabitants” within the meaning of Article 40: Kwok Cheuk Kin’sjudgment, paras 1-2.

(b)   That decision is irrelevant to the present questions of the construction of the Relevant Covenant[3] in the Block Government Lease and the application of section 12(c) of the LRO to a piece of land, the use of which is governed by the Relevant Covenant. It therefore does not shed any light on the disputed issues in the present case.

(c)   Indeed, legal discussion of indigenous villagers’ rights should not be engaged in the present case because the Government is resuming the land, not the indigenous villagers’ rights. The applicants can still exercise their ding rights, if they have, in respect of the other lands.  It is clear from authorities that insofar as a building licence has been granted as at the date of resumption, the building potential thereunder would be taken into account; however, if, as in the present case, no building licence has been granted as at the Resumption Date, then pursuant to section 12(c) of the LRO, no account may be taken of the prospect of obtaining such building licence. This has nothing to do with any indigenous villagers’ rights allegedly enjoyed by the applicants to build NTEHs under the Small House Policy.

(d)   The fact that the Government’s decision in rejecting an application to build a small house under the Small House Policy is amenable to judicial review does not mean that the approval to build shall be granted “as of right” under section 12(c) of the LRO. It merely means that if an applicant is not satisfied with the Government’s refusal of an approval, he could challenge that decision by way of judicial review. Indeed, in Koon Ping Leung v The Director of Lands [2012] 2 HKC 329 as cited by Mr Oh, Lam J of the Court of First Instance (as he then was) held that the respondent’s decision in refusing the application under the Small House Policy could not be regarded as unreasonable or perverse. It refutes the applicants’ submission that the grant of building licence could be enforced “as of right”.

(e)   Once the applicants’ proposition that lease modification and building licences would be granted “as of right” as at the Resumption Date is not established for the reasons above, the assessment of compensation to be paid pursuant to the LRO must not take into account of the prospect of obtaining such lease modification or building licences.

(f)   As to the applicants’ referral to para 40 of the Judgment, the authorities cited by the applicants do not preclude our findings that the Lots are “demised as agricultural or garden ground” and that licence was required (and being obtained by some of the applicants after resumption) for building use.

(g)   By reason of the above, we maintain not to take into account any building or development potential of the Lots when assessing their value, at the Resumption Date, on the basis of a vacant agricultural land with no building or development potential.

33.  Thus, even if the applicants’ delay is excusable, we find the test of a reasonable prospect of success is still not satisfied. Nor is there any other reason in the interests of justice that the appeal should be heard.  Application for leave to appeal out of time must be dismissed.

Substitution Application

34.  Under rule 11 of the LTR, at any stage of proceedings and either on or without the application of a party, the Tribunal may add, strike out, or substitute the name of any person as a party.

35.  Further, under section 10(1) of the LTO, the Tribunal may, so far as it thinks fit, follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction, and for this purpose, has the same jurisdiction, powers and duties of the Court of First Instance in respect of such practice and procedure. Under this section, the Tribunal may apply, inter alia, the Rules of the High Court (Cap. 4A) (“RHC”).

36.  For LDLR 8/2016, the applicant died in Hong Kong on 24 January 2001.  On 24 October 2011, the Grant of Probate was granted to Madam Cheung as the sole executrix of the applicant.

37.  For LDLR 10/2016, the applicant died in Netherlands on 12 February 2001. On 13 June 2011, the Grant of Probate was granted to Madam Cheung as the sole executrix of the applicant.

38.  Under O.15 r.6A(3) and (4) RHC, an action purporting to have been commenced by or against a person shall be treated, if he was dead at its commencement, and the cause of action survives, as having been commenced by his estate or against it, whether or not a grant or probate or administration was made before its commencement. Further, the personal representative should be made a party of the proceedings and apply for a carry on order.

39.  Unfortunately, the Tribunal was never told by the former solicitors and Counsel of the applicants at any stage that there was such a grant before the commencement of proceedings.  As the said grants were issued before the commencement of proceedings, the former solicitors of the applicants shall be able to name the applicants in LDLR 8/2016 and LDLR 10/2016 as Cheung Cho Gau, the executrix of the estate of the applicants therein.  The applicants are unreasonably late in making the Substitution Application after trial with no explanation given.  Having said that, the Tribunal finds necessary to allow the Substitution Application so as to validate and preserve the present proceedings which will not be treated as a nullity on technicality (see 15/6A/2 of Hong Kong Civil Procedure 2019).  Thus, we make an order in terms of para 1 of the summonses dated 28 March 2019 in LDLR 8/2016 and LDLR 10/2016. 

Costs

40.  As costs shall follow event, the Tribunal orders that costs of these 9 summonses be paid by the applicants jointly to the respondent on the High Court Scale.  The applicants lodged their statement of costs claiming costs of $178,212 whereas the respondent lodged her statement of costs for $67,040 only.  We consider that the amount of costs claimed by the respondent is very reasonable and is summarily assessed at $67,040 payable by the applicants jointly forthwith.