LDRA000078/1985
IN THE LANDS TRIBUNAL OF HONG KONG
(Appellate Jurisdiction)
Rating Appeal Nos. 73, 74, 75, 77 and 78 of 1985
BETWEEN
PONG HAY LAM
Appellants
AND COMMISSIONER OF RATING AND VALUATION
Respondent
TRIBUNAL: His Honour Judge Leonard, Presiding Officer and M. W. Phillips, Esq., Member
Date of Judgment: 18th April 1986
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DECISION
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1. This is an appeal against the assessed rateable values for certain flats in Block D, King Shan Court, No. 32 Fung Shing Street which is off Po Kong Village in Kowloon. Block D is known as King Ying House. The estate was built as part of the Hong Kong Government's Home Ownership Scheme and it was completed in 1983. It is managed by the Housing Department. Each of the appellants in this case is an owner-occupier of the tenement in respect of which he or she appeals.
2. All the tenements in question came into occupation during 1983. Rates payable on each of the tenements therefore fell to be assessed by means of an interim valuation based on the 1977 list. The date for valuation was the 1st April, 1977, the date when that list came into force. There has, however, been a general revaluation, the new list coming in with effect from 1st April, 1984. The relevant date for valuation purposes is 1st July 1983 as designated in the Hong Kong Government Gazette GN 2412 of 1983. By the time that the Commissioner for Rating and Valuation valued the tenements in question, the 1984 list had already been published so the Commissioner found himself carrying out at the same time interim valuations for the purposes of the 1977 and the 1984 lists.
3. From the 12th April 1985 the Commissioner gave notice to the owners of the subject tenements that their rateable values would be as follows (and for convenience we would list them in the order in which the appellants are listed in this consolidated appeal) : -
1.
8th Floor Flat 8 $7,500 with effect from 1st July, 1983. $24,900 with effect from 1st April, 1984
2.
1st Floor Flat 8 $7,320 with effect from 1st July, 1983. $24,300 with effect from 1st April, 1984.
3.
2nd Floor Flat 8 $7,500 with effect from lst July, 1983. $24,900 with effect from 1st April, 1984.
4.
5th Floor Flat 8 $7,500 with effect from 1st July, 1983. $24,900 with effect from 1st April, 1984.
5.
4th Floor Flat 8 $7,500 with effect from 1st JuLy, 1983. $24,900 with effect from 1st April, 1984.
4. It will be noted that all the valuations are identical except for that of the flat on the 1st floor which is slightly less. During April 1985 the various appellants served upon the Commissioner notices of objection to the proposed interim valuations on the grounds that the tenements were valued above their proper rateable values. On 7th June 1985 the Commissioner issued notices of decision that the rateable values were to remain unchanged. In early July 1985 the owners appealed to the Lands Tribunal against the Commissioner's decisions.
5. The subject tenements are all two bedroomed flats situated as we have already described, each one having an area of 38.5 square metres.
6. King Shan Court is an exclusively residential complex. There are open areas at podium level with parking below. Commercial facilities are available in the Fu Shan Estate which immediately adjoins the estate with which we are concerned. The general aspect of the tenements we have listed is south-easterly overlooking a building site intended for a further Home Ownership Scheme development and a film studio some 150 metres away beyond which is an open hillside. The subject tenements are also fairly close to the refuse collection point for that estate. The flats are also situated, above a point where taxis frequently set down passengers, and where vehicles enter the underground parking area. The Tribunal has had the opportunity to view the subject tenements as well as most of the comparable premises which were cited in evidence.
7. The rateable values of the tenements were determined in accordance with sections 7 and 7A of the Rating Ordinance Cap. 116.
Section 7(2) defines rateable value as -
'... an amount equal to the rent at which the tenement might reasonably be expected to let, from year to year, if -
(a)
the tenant undertook to pay all usual tenant's rates and taxes; and
(b)
the landlord undertook to pay the Crown rent, the costs of repairs and insurance and any other expenses necessary to maintain the tenement in a state to command that rent.'
Section 7(3) provides that,
"For the purpose of an interim valuation of a tenement, the value to be ascribed to the, tenement ... shall not exceed the value which would have been ascribed thereto in the valuation list if the tenement had been subsisting throughout the year before that in which the valuation list came into force".
Section 7A(3) is also pertinent:-
"For the purposes of an interim valuation, the rateable value of any tenement ... shall be the value which would have been ascribed thereto on the relevant date on the assumption that at that date,
(a)
the tenement was in the same state as at the time of service of the notice; (12th April 1985)
(b)
any relevant factors affecting the mode or character of occupation were those subsisting at the time of service of the notice; and
(c)
the locality in which the tenement is situated was in the same state, with regard to other premises situated in the locality, the occupation and use of those premises, the transport services and other facilities available in the locality and other matters affecting the amenities of the locality, as at the time of service of the notice".
8. As previously mentioned, the "relevant date" in ascertaining those rateable values effective on 1st July 1983, is 1st April 1977, the date that the previous valuation list came into force. For those rateable values effective on 1st April 1984, which is the date the current list came into force, the relevant date as designated by the Governor under Section 11 of the Rating Ordinance is 1st July 1983.
9. At this stage we should observe that when the parties appeared before the Tribunal at the hearing of the appeal the 1st appellant and the 4th & 5th appellants announced that they only wished to pursue the appeals in relation to the 1984 list. The 2nd and 3rd appellants proceeded with their appeals in relation to both lists.
10. When the hearing started, we were given to understand that Madam Ko Po Ling had been appointed to appear for and give evidence on behalf of all the appellants. As it turned out, Mr. Pong (Al), and Madam Lau Chun Ye (alias Lui Chum Yee) (A3) gave evidence. We then heard from Miss Marie-Anne Keatt, the expert witness called on behalf of the Respondent. Miss Keatt is a Rating and Valuation Surveyor employed in the Rating and Valuation Department of the Hong Kong Government.
11. The evidence given by an on behalf of the appellants revealed that they took the view that the Respondent's valuer had taken insufficient account of the detriment to the enjoyment of the tenements which was attributable to the noise of motor vehicles and to the presence, very close to the tenements, of a refuse collection point. There was mention of annoyance due to the proximity of the film studio. It appeared this was due to firecrackers being exploded in the grounds in the early hours of the morning. The only evidence related to one isolated incident and we did not therefore consider it material.
12. The appellants also pointed out that there was no public transport which directly served the estate and that there were no commercial facilities such as shops and banks present within the estate. So far as the facilities in the adjoining estate were concerned, the appellants asserted that they were extremely limited, that the choice of commodities was poor and that prices were higher than in the local market.
13. It became apparent that there were plans to build another estate on the construction site next door. At the time that the notices of assessment were served preliminary site formation works had commenced on that area. We agreed that that was a matter, which it was proper to take into account.
14. There was also criticism of the fact that the valuations of the tenements on all the floors concerned were uniform apart from that for the first floor. The appellants argued that there must be a difference in the degree of detriment caused by activities on the ground floor for tenements at different levels in the building.
15. We now turn to the evidence given by the Commissioner's valuer, Miss Keatt. We are indebted to Miss Keatt for a detailed written submission which was tendered to the Tribunal under Rule 18 of the lands Tribunal Rules. This witness began by pointing out that she could not ascertain a rental level from properties in the immediate vicinity because there were no private residential developments there. It was therefore necessary for her to look at the nearest private residential developments in the general locality. These were at Tsz Wan Shan which is a little over a half mile away. She produced at Appendix C1 of her report a list of comparables. We did not make any internal inspection of the comparables but we did go to look at the buildings in which they were situated in order to get some idea of comparability in terms of age, design and situation. Miss Keatt said that she had taken into account the fact that whilst the comparables lacked any open space they were better located in terms of access to commercial facilities and of transport routes. Miss Keatt considered that the best comparables at Appendix C1 were those listed at Nos. 1, 2, 3 and 4. She had selected tenements for which the lease commencement dates were close to the relevant date of 1st April 1977 for the 1977 list.
16. For the 1984 list lass Keatt felt again obliged to consider rental evidence in Tsz Wan Shan. She did derive some assistance from rental evidence in respect of Telford Gardens in Kowloon Bay which is just over a mile away from the subject developments. Her comparables are listed at Appendix C2 to her report. Telford Gardens is a large residential and commercial complex completed in 1982 which enjoys excellent commercial and recreational facilities as well as public transport. The Kowloon Bay MTR Station, a bus terminus and a taxi rank are all located there. Telford Gardens does suffer from the noise occasioned by the presence of large numbers of people and vehicles. Moreover, there are large construction works underway at the adjoining Kowloon Bay reclamation industrial area.
17. Miss Keatt considered that the best comparables at Appendix C2 were (A) to (D) since they were of similar age and construction to the appeal tenements, and the lease commencement dates were close to the relevant date (i.e. 1st July 1983). We will come back to these comparables but first we will consider the valuations at 1st April 1977.
18. After making adjustments for size Miss Keatt arrived at a unit rate of $19.25 per square metre. She said that further adjustments would be necessary to reflect the comparatively less attractive location of the appeal tenements to reflect fully the nuisance element in respect of the refuse collection point.
19. The adjustments made by the witness were 10% for location and 5% for the presence of the refuse collection point. She said the 10% location adjustment was based on her professional judgment.
20. The witness said that she adopted the same rate for the 2nd floor to the 8th floor because there was nothing in her rental evidence to indicate the necessity for making any adjustments. In fact according to the figures she produced, her comparables showed no regular pattern of rental variations in relation to similar units located at different levels.
21. For the presence of the refuse collection point the witness made a reduction of 5%, justifying this by reference to examples at Telford Gardens. In particular she referred to a refuse collection point shown in photograph No. 28 of a bundle of photographs which she produced in evidence. On this point we would observe that the refuse collection arrangements at Telford Gardens appear to have boon incorporated in the original design whereas the arrangements on the estate with which we are concerned appear to have been the product of an afterthought. They have resulted in an area which should be left clear for traffic going to what was obviously intended to be a visitor's carpark and turning area being obstructed by the rubbish collection skip. The nuisance caused by the rubbish collection arrangements is therefore increased by the interference it produced to the normal traffic and parking arrangements as well as the noise produced by the regular visit of the rubbish collection vehicles.
22. The 5% reduction was an overall reduction and the witness conceded that the first floor flat might probably be affected to a greater extent than the others so she deducted a further 2½% in relation only to the first floor flat.
23. As we have said the only live appeals in relation to the 1977 list are those of A2 and A3 whose premises are on the first and second floors respectively. The valuations appealed against are $7,320 for A2 which is the equivalent of $610 per month exclusive of rates and 57,500 for A3 which corresponds to $625 per month exclusive of rates. In our view there is no material difference between the rental values applicable to the first and second floors. On the evidence we have formed the view that each would let at $600 per month exclusive of rates. We therefore determined the rateable values of flat 8 first floor and flat 8 second floor at 7,200.
24. The appeals of A2 and A3 are therefore upheld in relation to the 1977 list and the Collector of Rates is ordered to amend the valuation list with effect from 1st July 1983 by reducing the rateable value of Plat 8 first floor from $7,320 to $7,200 and by reducing the rateable value of Flat 8 second floor from $7,500 to $7,200. The Collector of Rates is further ordered to make any necessary refund of rates. Liberty to apply is reserved to both parties.
25. We now turn to the question of the appeals relating to the 1984 list. Using her comparable, (A) to (D) and adjusting for size at 5% in each case Miss Keatt produced adjusted. unit rates per square metre of $64.70, $64.87, $62,74, and $65.06. Looking at those four figures the witness selected $63.50 per square metre to be the appropriate basic unit rate in respect of the appeal tenements. Miss Keatt then gave detailed evidence of adjustments which she made for location and the presence of the refuse collection point and she finally arrived at a rate per square metre of $53.90. Although we feel that there are flaws in the method by which the witness arrived at her result, in particular we think it rather unrealistic to apply the same adjustment for flats from the second to the eighth floor in respect of the refuse collection point, we have nevertheless formed the view that for flats of 38.5 square metres on the estate with which we are concerned a unit rate of about $54 per square metre is reasonable. Having said that, we repeat that we consider there is an argument here for making some distinction between flats at different levels. Taking as a starting point the general level of $2,075 which we think is about right, and making adjustments for differences between flats at different levels, we arrive at the following rental values :-
1/F flat 8
$1,900 per month exclusive of rates
2/F flat 8
$1,900 per month exclusive of rates
4/F flat 8
$2,025 per month exclusive of rates
5/F flat 8
$2,025 per month exclusive of rates
8/F flat 8
$2,075 per month exclusive of rates
We therefore determine the rateable values as follows:-
1/F flat 8
$22,800
2/F flat 8
$22,800
4/F flat 8
$24,300
5/F flat 8
$24,300
8/F flat 8
$24,900
26. The appeal of the first appellant Pong Hay Lam is therefore dismissed. The appeals of Szeto Chun Yiu, Lau Chun Ye, Mdm. Lee Wan and Ng Kwok Kuen and Young Siu Ling succeed. The Collector of Rates is ordered to amend the valuation list effective from the 1st April 1984 by reducing the rateable value of 1st floor flat 8 and 2nd floor flat 8 to $22,800, and the rateable value of 4th floor flat 8 and 5th floor flat 8 to $24,300.
27. The Collector of Rates is further ordered to make any refund of rates which may be necessary in consequence of this decision. Liberty to apply is reserved to both parties.
28. Dated this 18th day of April, 1986.
(D.J. Leonard)
(M. W. Phillips)
Presiding Officer
Member
Representation:
Appellants in person
Mr. Davis Hui, Crown Counsel for the respondent