First Mate Development Ltd v. Gee Wing Chung
Lands Tribunal
Land Compulsory Sale Main Application No 8000 of 2016
Judge Angela Kot, Presiding Officer and Member Lawrence Pang
5, 19 January 2018

Land law — compulsory sale for redevelopment — valuation of lot — “marriage” value — whether open market value of subject lot should include redevelopment potential of adjoining lots on a merged site basis — reserve price qualified by requirement in Sch.2 para.2 to take into account redevelopment potential of lot “on its own” — Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545) Sch. 2 para. 2

Words and phrases — “on its own” — Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545) Sch. 2 para. 2

X, the majority owner of land (‘the Subject Lot’), applied for the compulsory sale of all the undivided shares thereof for redevelopment under s. 3(1) of the Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545). X also owned 100% of various lots (‘1st Adjoining Lots’) and 80% of other lots immediately adjoining the Subject Lot (‘2nd Adjoining Lots’). The 2nd Adjoining Lots were the subject of another compulsory sale application by X. R2 applied for an extension of time to file and serve inter alia a supplemental report on marriage value, arguing that as there was evidence that the Subject Lot would be redeveloped with the 1st and 2nd Adjoining Lots as one merged site, the open market value of the Subject Lot should take into account the redevelopment potential of the 1st and 2nd Adjoining Lots in determining its reserve price. Under para. 2 of Sch. 2 of the Ordinance, “The lot the subject of the auction shall be sold subject to a reserve price — (a) which takes into account the redevelopment potential of the lot on its own (or where 2 or more lots are the subject of the auction, on their own) …”. Section 4(1)(b)(i) provides for the making of an order for sale concerning “all the undivided shares in the lot the subject of the [s. 3(1)] application”. Under s. 5(1), if an order for sale of all the undivided shares is granted, and the parties cannot agree on other means of sale, the lot in question shall be sold by public auction in accordance with the conditions specified in Sch. 2.

Held, dismissing the application, that:

  • Given the wording of para. 2 of Sch. 2, ss. 4(1)(b)(i) and 5(1) of the Ordinance, only the lot the subject of the application itself should be considered when deciding the reserve price and the order for sale. The words “the lot on its own” and “2 or more lots … on their own” refer to the subject of the application, no more, no less. The legislative language was plain and left no room for arguing that in attached rows of lots, the redevelopment value of other lots not the subject of the application should also be considered (First Kind Ltd v. Liu Keng Chor [2016] 3 HKLRD 39 applied). (See paras. 14–19.)
  • Accordingly, the reserve price was qualified by para. 2 of Sch. 2 which requires that the Tribunal to take into account the open market value of only the lot the subject of the application “on its own”, which phrase must be given its purposive meaning (Trocette Property Co Ltd v. Greater London Council (1974) 28 P & CR 408, Director of Lands v. Yin Shuen Enterprises Ltd (2003) 6 HKCFAR 1, Capital Well Ltd v. Bond Star Development Ltd (2005) 8 HKCFAR 578, [2005] 4 HKLRD 363, Dragon House Investment Ltd v. Secretary for Transport (2005) 8 HKCFAR 668 applied). (See paras. 25, 27–28, 34.)
  • R2’s suggestion regarding marriage value was inconsistent with the requirement under para. 2 of Sch. 2 and its application to adduce a supplemental expert report must be dismissed. (See para. 35.)

Application

This was an application by the second respondent for an extension of time to serve a rebuttal valuation report and a supplemental report on marriage value for the compulsory sale for redevelopment of certain lots of land. The facts are set out in the judgment

Jurisdictions: 

Thomson Reuters – Sweet & Maxwell are the publishers of the Authorised Hong Kong Law Reports & Digest ("HKLRD") and the Authorised Hong Kong Court of Final Appeal Reports ("HKCFAR"), and providers of Westlaw HK (www.sweetandmaxwell.com.hk / www.westlaw.com.hk).