Académique Documents
Professionnel Documents
Culture Documents
A AA
B LDCS 4000/2016 BB
[2018] HKLdT 21
C CC
O Before: Deputy District Judge Lui, Presiding Officer of the Lands Tribunal OO
S
_________________ SS
T TT
J U D G M E N T
U UU
A
V VV
B
A -2- A
B _________________ B
C C
1. This is an application for a compulsory sale order under the
Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“the
Ordinance”) (hereinafter referred to as “the Application”) to sell all the
E E
undivided shares of the Remaining Portion of Section A of Kowloon Inland
F Lot No 1693, the Remaining Portion of Section B of Kowloon Inland Lot F
K
2. The occupation permit for the Buildings (“OP”) was issued K
pursuant to the Building Ordinance (Chapter 123 of the Revised Edition,
L L
1950) on 13 September 1955 whereby permission was granted to occupy
M
and use the Buildings for domestic purposes. M
N N
3. Section 2 of such earlier Building Ordinance defines ‘domestic
R R
4. It is not disputed that the total gross floor area of the Buildings
S is about 1,503.17 sq m but the Government lease governing the use and S
V V
A -3- A
B nearly doubling the gross floor area) pursuant to the prevailing Draft Mong B
K
follows: K
L L
(a) The 1/5 undivided share held by the 1st respondent
M
(“R1”) allotted to G/F, 65 Soy Street; M
nd
(b) The 1/5 undivided share held by the 2 respondent
N N
(“R2”) allotted to G/F, 63 Soy Street;
V V
A -4- A
E E
10. Section 3(5) of the Ordinance provides that the Chief
F Executive in Council may, by notice in the Gazette, specify a percentage F
K
lowered the threshold for compulsory sale in respect of the classes of lots K
specified in the Notice from 90% to 80%. Those classes of lots include: “a
L L
lot with each of the building erected on the lot issued with an occupation
M
permit at least 50 years before the relevant date (ie the date of the M
application under the Ordinance)”.
N N
U U
V V
A -5- A
K
The Issues in the Application K
14. Mr Li summarized the following issues as shall be determined
L L
by the Tribunal according to section 4 of the Ordinance:
M M
(a) Issue not disputed by the respondents but subject to
N N
proof by the applicants, namely: -
V V
A -6- A
Ordinance.
C C
(c) Issue in dispute between the applicants and R1: -
(i) whether Apps have taken reasonable steps
to acquire all the undivided shares of the
E E
Subject Lots including those owned by R1 on
F terms that are fair and reasonable in accordance F
K
the units in the Buildings as at 1 June 2016 as K
assessed in accordance with Part 1 of Schedule
L L
1 to the Ordinance.
M
(ii) if an order for sale of the Lots be granted, what M
the redevelopment value (“RDV”) of the Lot
N N
should be for the purpose of setting the reserve
on terms that are fair and reasonable in accordance with section 4(2)(b) of
T T
the Ordinance. The issue is just one of valuation.
U U
V V
A -7- A
B The Evidence B
K
(i) the Application Report dated 15 August 2016 K
pursuant to Part 1 of Schedule 1 to the
L L
Ordinance;
M
(ii) RDV report dated 2 May 2017; M
(iii) a Supplemental EUV Report dated 2 May 2017
N N
on the revised EUV as at 1 June 2016;
V V
A -8- A
K
RDV as at 18 October 2017. K
L L
18. Mr A Chan and Mr Lam have prepared 2 Joint Statements,
M
one dated 29 June 2017 setting out their agreements and disagreements, M
followed by another dated 15 November 2017.
N N
R R
EUV as at 1 June 2016
S Assessment of G/F Units S
V V
A -9- A
B B
E E
23. In Tsuen Wan Trade Association Education Foundation Ltd. v.
F Chui Kam Ying [2012] 2 HKLRD 1163, Jeremy Poon J (as he then was), F
K K
24. A fortiori, in Wing Hong Investment Company Limited v Fung
L L
Sok Han & Others, [2016] 1 HKLRD 1, Chan J found at §235 of the
V V
A - 10 - A
Chow J was of the view that there was no real risk of enforcement by the
C C
Government or Building Authority in respect of the alleged unauthorised
partitions. See §§97-103 of the judgment.
E E
26. Further, at §107 of the judgment, the learned judge observed
F that: F
T 28. Pursuant to the Joint Statement dated 29 June 2017, the two T
V V
A - 11 - A
C C
Frontage (m) Effective
Transaction Saleable Floor Headroom Depth Unit
Comp Ref: Address Age Consideration
Date Area (m2) (m) (m) Price*
Clear Physical (/m2)
E Ref Unit G/F, 63 Soy 1955 1 Jun 16 58.39 + C/L: 3.2 3.83 2.74 17.37 E
Street 26.76 + Yard:
16.98 + Flat
F Roof: 4.85 F
$631,591
KF1/CS2 Unit 7, G/F, 1964 16 Mar 16 $33,468,000 50.50 + Yard: 3.92 4.22 3.77 12.66
G G
Block 2, Tsui 14.94
Yuen Mansion,
H 83-87 Dundas H
Street/ 2-20
Kwong Wa
I Street I
KF2 $351,256
G/F & C/L, 1974 3 Mar 16 $22,800,000 55.43 + C/L: 2.70 4.54 2.87 13.56
J Chung Kay 37.91
J
Building, 515
K Shanghai Street K
KF3 $394,454
Unit B, G/F & 1976 8 Jan 16 $33,000,000 69.80 + C/L: 3.80 4.57 2.84 16.02
L C/L, Master 53.2 + Yard: 3.33 L
Building, 297-
299 Reclamation
M Street M
KF4 $458,498
Unit 12, G/F & 1964 14 Dec 15 $29,000,000 51.65 + C/L: 5.12 5.40 3.53 9.65
N N
M/F, Ngai Hing 46.40
Mansion, 2-24
O Pak Po Street O
P P
Q Q
R R
S S
T T
U U
V V
A - 12 - A
B B
Frontage (m) Effective
Transaction Saleable Floor Headroom Depth Unit
Comp Ref: Address Age Consideration
Date Area (m2) (m) (m) Price*
C Clear Physical (/m2) C
KF5 $377,577
Unit A, G/F & 1976 20 Oct 15 $32,600,000 72.34 + C/L: 3.04 4.07 2.84 16.02
C/L, Master 53.74 + Yard:
Building, 297- 3.40
299 Reclamation
E E
Street
KF6 $461,559
F G/F & C/L, 1976 20 Aug 15 $35,000,000 61.67 + C/L: 2.20 2.93 2.87 13.72 F
David 40.65 + Yard:
Commercial 23.98
G House, 139 G
Portland Street
KF7 $434,028
H G/F, Joye Fook 1966 6 Jul 15 $25,000,000 55.54 + Yard: 3.85 4.59 5.33 13.44
H
Mansion, 468 12.37
I Shanghai Street I
CS1 $2,160,15
G/F, 62 Fa Yuen 1961 5 Aug 16 $131,100,000 60.69 3.92 4.27 4.27 13.41 8
J Street J
CS3 $2,236,42
Unit 4, G/F, 25- 1959 3 Aug 15 $63,000,000 16.03 + Yard: 2.90 2.90 4.98 7.06 2
O O
29. Further, the two valuation experts have agreed the following
P adjustment factors for the assessment of the non-domestic premises in the P
1
Buildings :
Q Q
R R
S S
Mr A Chan Mr Lam
T T
Time Private Retail Price Indices as published by the Rating and
U 1
See Bundle C6/1919. U
V V
A - 13 - A
B B
Valuation Department (“RVD Index”)
C C
Age 1% for every 10 years NA
difference
Street
J J
M Adjustments M
Effective Adjusted
Comp
Unit Price* Unit Price
Ref: Time
(/m2) Location Age Frontage Headroom Size Layout/ Shape Total (/m2)
N KF1/ $631,591 -2.4% 0.0% -1.0% -1.0% -2.0% -2.0% 0.0% -8.4% $578,537 N
KF3 $394,454 -2.9% 5.0% -2.0% -1.0% 0.0% 2.0% 0.0% 1.10% $398,793
P P
KF4 $458,498 -3.9% 5.0% -1.0% -3.0% -2.0% 0.0% 0.0% -7.90% $422,277
KF5 $377,577 -8.3% 5.0% -2.0% -1.0% 0.0% 2.0% 0.0% -4.30% $361,341
Q Q
KF6 $461,559 -9.1% 0.0% -2.0% 2.0% 0.0% 0.0% 0.0% -9.10% $419,557
R KF7 $434,028 -8.8% 0.0% -1.0% -2.0% -5.0% -2.0% 0.0% -18.80% $352,431 R
CS1 $2,160,158 (1.6%) (-35.0%) (-1.4%) (-3.1%) (0.0%) (-8.0%) (-45.90%) ($1,168,645)
S S
CS3 $2,236,422 (-9.1%) (-25.0%) (0.6%) (-4.5%) (-12.0%) (-8.0%) (-58.00%) ($939,297)
CS4 $800,657 (20.2%) (-5.0%) (-1.9%) (-3.3%) (-6.0%) (-8.0%) (5.0%) ($840,690)
T T
U U
V V
A - 14 - A
B 31. As can be seen from the above, there is only one common B
Kong.
G G
32. Although this section of Soy Street is quieter with the presence
H H
of a few educational institutions towards its end at Yim Po Fong Street, a
I local traffic distributor running in parallel to a railway embankment, we do I
major factor for consideration for shops, we agree with Mr A Chan that for
M M
premises that are aged, there would be additional cost for repair and
N maintenance though the amount would not be significant when compared N
with the values for retail purposes. For this reason, we prefer the
O O
adjustment for age at 1% for every 10 years’ difference as proposed by Mr
P A Chan to nil adjustment proposed by Mr Lam. P
T
35. Such a difference was considered by the Tribunal on various T
occasions. For instance, in Tai Ping Restaurant Limited v Director of
U U
V V
A - 15 - A
preferred the adjustment for full frontage to the adjustment for clear
C C
frontage because the former would not miss the effects of columns on the
frontage if any in the frontage adjustment. As explained at §38 thereof:
E E
“38. I consider columns on the frontage of a shop are valuable,
but the weight of such columns in an assessment is generally less
F than that of clear frontage. Subject to the availability of F
information, different weights should be attached to columns on
the frontage and clear frontage respectively in an assessment.
G G
Nevertheless, in the absence of detailed assessment, there is no
material difference between these two approaches if each could
H be applied consistently in the valuation.” H
I I
36. Earlier in Good Faith Properties Limited and Others v Cibean
J Development Company Limited, LDCS 42000/2011 (unreported, dated 31 J
T absolute differences between the two experts are minimal and we just adopt T
U 2
See for instance Bundle C5/1588. U
V V
A - 16 - A
Road, the busy thoroughfare running from north to south that has divided
I I
Mong Kok to a certain extent into two districts of different characters. For
J instance, shops in the vicinity of the reference shop unit are predominated J
discarded as well. We must point out once again that apart from pedestrian
T T
U U
V V
A - 17 - A
B flow, the location value of a shop would also depend on “the character of B
the pedestrians (who they are, what they are there for, etc)”3.
C C
surprised that Mr A Chan has eventually discarded KF1 on the ground that
I I
it was out of line with the others.
J J
44. Indeed, we note that Mr A Chan has proposed 4 other shop
K
comparables for the assessing of the gross development value (“GDV”) in K
determining the RDV as at 18 October 2017, they being:
L L
M M
N N
Frontage
Saleable (m) Effective
Comp Transaction Headroom Depth
Address Age Consideration Floor Area Unit Price*
O Ref:* Date (m) (m) O
(m2) (/m2)
Physical
$582,133
P KF8 Unit 11, G/F & 1964 16 Mar 17 $28,280,000 37.81 + 4.14 3.53 9.65 P
M/F, Ngai Hing C/L: 43.07
Q Mansion, 2-24 Q
Pak Po Street
KF9 $388,740
R G/F, 511 1964 3 Mar 16 $29,000,000 65.51 + 4.94 3.15 13.87 R
Shanghai Street C/L: 34.29
KF10 $407,220
S S
Unit 4, G/F, On 1984 31 Aug 16 $18,500,000 45.43 4.14 3.50 11.84
Hong Building,
T 15-23 Yin T
3
See Siu Sau Kuen v. the Director of Lands, unreported, LDLR 1/2010, 9 March 2012 at
U §§160-169. U
V V
A - 18 - A
B B
Chong Street
KF11 $517,748
C Unit D, G/F, 1973 26 Aug 16 $33,840,000 65.36 7.25 4.03 9.15 C
Lisa House, 12-
14A Yim Po
Fong Street
* These comparable numbers have been renamed by us so as not to confuse with those
E for assessing the EUV. E
F F
45. We find no reason why these comparables (save for KF9
G which lies to the west of Nathan Road as explained in §40 above) were not G
included for the assessment of the EUV where the transaction dates are
H H
generally much closer to the relevant date as at 1 June 2016.
I I
46. Apart from the closer dates of transaction, KF8 and KF11 are
J more relevant in terms of location. KF8 is situated just next to KF4 and J
P from that of the area surrounding the Buildings. In any event, the visibility P
of this latter comparable is blocked by the hawkers’ stall along Yin Chong
Q Q
Street and Mr A Chan considers its location inferior to the subject. We
R accept Mr Lam’s evidence that the hawkers’ stall would be closed during R
night time, rendering the area becoming very quiet especially when
S S
compared with the subject.
T T
4
U If KF4 is excluded, the sample standard deviation is reduced from $61,491 to $38,488. U
V V
A - 19 - A
49. CS1 is situated within the hub of “the Sneakers Street” which
enjoys a conglomeration of trades famous for selling sportswear, sports
E shoes etc. As referred to in Snowland Limited v Director of Lands, LDLR E
making footwear since the 1980s. They come for the latest designs and
H H
limited-edition releases from all over the world...”
I I
50. In comparison, the Buildings are situated in a section farthest
J away from the busiest part of Mong Kok where as stated at §32 above, a J
few educational institutes are located where the shopping route from west
K K
to east is interrupted. Pedestrian flow would not continue towards the
L subject section of Soy Street as suggested by Mr Lam as it is truncated by L
the Sai Yee Street Garden and Playground lying in between. That the
M M
Buildings are situated within 5 minutes’ walking distance from Fa Yuen
N Street is neither here nor there as shops’ value may change only at short N
busiest hub of Mong Kok. In addition, it has a significantly small size even
R R
when the area of the covered yard is included. The proposed adjustment for
S size by Mr Lam is manifestly not adequate nor appropriate as it caters for a S
different market. Indeed, despite its small size, this “comparable” is further
T T
subdivided into three shops – a herbal tea house, a money changer and a
U juicy food outlet (facing the scavenging lane thereof), the latter two being U
V V
A - 20 - A
decreases the further the date of the transaction is away from the valuation
J J
date. Nevertheless, when there is dearth of good comparables and the
K location for a shop is the most important factor for consideration, we K
U 5
Exhibit R1. U
V V
A - 21 - A
B for instance, G/F, 63 Soy Street is occupied by a laundry shop and a tailor B
Effective Adjustments
F Comp Adjusted Unit F
Unit Price* Layout/
Ref: Time Location Price (/m2)
(/m2) Age Frontage Headroom Size Shape Total
KF1/ $631,591 -2.4% 15.0% -1.0% -1.0% -2.0% -3.0% -8.0% -2.4% $616,433
G CS2 G
KF4 $458,498 -3.9% 20.0% -1.0% -3.0% -2.0% 0.0% -8.0% 2.1% $468,126
H KF8 $582,133 -5.2% 20.0% -1.0% -1.0% -2.0% -6.0% -8.0% -3.2% $563,505 H
KF11 $517,748 1.6% 20.0% -2.0% -7.0% 0.0% 0.0% -8.0% 4.6% $541,564
CS4 $800,657 20.2% -15.0% -3.0% -1.0% -3.3% -6.0% -8.0% -16.10% $671,751
I I
Average: $572,276
Average (if KF4 is $598,313
J excluded): J
Average (if KF4 and $573,834
CS4 are excluded):
K K
N N
Subject Shop
O
Effective Floor Area (m2) EUV O
Premises
G/F, 61 Soy Street 70.72 $42,432,000
P G/F, 63 Soy Street 68.72 $41,232,000 P
Q
G/F, 65 Soy Street 68.41 $41,046,000 Q
T T
U 6
The sample standard deviation becomes lower if KF4 is excluded. U
V V
A - 22 - A
additional value, the critical factors appear to be the size and visibility of
F F
the return frontage. While there is no apparent difference between the two
G experts, we consider the approach of Mr Lam wrong in principle. Firstly, G
the Tribunal has been hesitant to adopt a uniform frontage adjustment for
H H
every difference of 1 m as indiscriminate application of such would lead to
I absurd result. See §94 of Supergoal Investment Limited v Five F Ming I
House Limited & Others [2014] 1 HKLRD 286. Secondly, this approach of
J J
Mr Lam assumes that the frontages to both streets would have equal
K advantage (attraction) which is not the case as Hak Po Street is a quieter K
street. In addition, this approach of Mr Lam would have double counted the
L L
value of the floor space that lies at the corner; it is the higher value for the
M floor space that counts in the captioned analysis instead of the mere M
R
basis of non-domestic use or otherwise. Mr Lam was of the opinion that R
8
“the commercial potential of the first floor units is limited”. However,
S S
after the inspection of the Buildings on 1 December 2017, Mr Lam agrees
T
to the non-domestic use basis; the assessments by Mr A Chan in his T
7
Compare C5/1601 and C5/1602.
U 8
See Bundle C6/1765. U
V V
A - 23 - A
adopted9:
C C
H H
Assessment of U/F Units
I 60. Also, by reference to the Joint Statement dated 29 June 2017, I
the two experts have agreed on the EUV of the upper floors as follows10:
J J
R Conclusion on EUV R
T T
9
See C5/1489.
U 10
See C6/1919. U
V V
A - 24 - A
$235,187,893 and the pro rata shares of R1’s interest and R2’s
C C
interest are 17.4542% and 17.5315% respectively.
E E
Whether Redevelopment of the Lot is Justified
F 62. Section 4(2) of the Ordinance provides that the Tribunal shall F
not make an order for sale unless it is satisfied that the "age or state of
G G
repair" of the Building is justified and that the applicants have taken
H "reasonable steps" to acquire all undivided shares of the Lot. The only H
K
63. In his opening submission, Mr Li referred to Alliance Fame K
Limited & others v Mak Kam To & Others, LDCS 9000/2015 (unreported,
L L
dated 4 August 2017) in which the Tribunal adopted the guidelines laid
M
down in Top Sail International Limited v Cheng Kai Ming, LDCS M
18000/2010 (unreported, dated 15 November 2011 (“Top Sail”) and
N N
Charmlink Limited v Lee Tong Hing & Others, LDCS 16000/2010
V V
A - 25 - A
G G
65. Such a discretion by the Tribunal was followed in
H Charmlink: H
“30. We are of the view that the Tribunal has discretion to
determine at what stage a building should be redeveloped after
I I
considering all the relevant factors concerning the age of the
building in question. The relevant factors in the present case are
J that the Building is over 50 years old and it has passed its J
designed life. It is also obsolescent in design and not economical
to maintain. All these factors point to the fact that the Building
K has come to an end of its physical as well as economical life. K
Thus, we find that redevelopment is justified on the ground of the
L
age of the Building. L
P P
Q Q
66. There is no argument on the principles set out in Top Sail and
R Charmlink. It is agreed that they are guidelines for the Tribunal in the R
T 67. For the age and state of repair requirements, the applicants T
V V
A - 26 - A
Thomson Chan (“Mr T Chan”) who is a civil and structural engineer. Their
C C
expertise is not disputed.
when compared with the modern Code of Practice for Structural Use of
G G
Concrete 2013.
H H
K
covermeter survey, compression tests on concrete cores, carbonation tests, K
chloride test and testing on the cement content were conducted. Inter alia,
L L
Mr T Chan found the in-situ concrete compressive strength is about 12%
M
less the design strength, which may be due to insufficient cement used M
during construction. Reduced concrete strength and heavily corroded
N N
reinforcement had drastically reduced the strength of the structural
R R
70. Mr T Chan comes to the conclusion that it is more costs
S effective to demolish and rebuild and not to repair when the Buildings have S
U U
V V
A - 27 - A
April 2017, stated that there is loose rendering and spalled concrete
C C
covering some 23% of external walls plus numerous cracks on the external
walls and the beams underneath the balconies. Similar cracks or spalled
concrete were found inside the domestic flats.
E E
certificate and the safety of the main power supply system is doubtful. In
G G
addition, there is exposed wiring in staircases and some Residential Current
H Circuit Breakers are in poor condition. Worst still, there is no fire services H
J J
73. The Buildings have no flushing water supply; the condition of
K
the above-ground soil and waste disposal system is poor: there is misuse of K
anti-siphonage pipe, abandoned waste water pipes, non-provision of
L L
rainwater pipe shoes, insufficient fall for horizontal soil pipes and lack of
M
connection anti-siphonage pipe and lack of connection of anti-siphonage M
pipe to the horizontal soil water pipe. As regards underground drains, a
N N
CCTV survey has been carried out revealing 5 out of 9 underground pipe
P P
74. Turning to the age of the Buildings, Mr Cheung observed that
Q the Buildings are over 50 years of age and passed its design life. In giving Q
Based on the latter, Mr Cheung accepted that there are problems with
T T
material strengths, design life, progressive failure, redundancies and
U moment joint. U
V V
A - 28 - A
B B
75. Mr Cheung also found the Buildings are inferior in terms of:
C C
(a) means of fire escape as the staircase is not
provided with emergency lighting system as required
under the Code of Practice for Fire Safety in Buildings
E E
2011 (“FS code”), only a handrail on one side of the
F staircase and the clear of 920mm is less than 1050mm F
M
2008, FS code, Disability Discrimination Ordinance; M
(e) Energy efficiency as there is no certificate of
N compliance in accordance with Buildings Energy N
Efficiency Ordinance;
O (f) no drain pipes to collect condensation water from air- O
conditioners, etc.
P P
V V
A - 29 - A
B B
K
interest of the respondents under Section 4(2)(b) of the Ordinance. K
L L
79. It is not disputed that the applicants have made the following
M
offers to the respondents through their solicitors to acquire the units or M
interests they own: -
N N
Offer Date of offer R1’s Unit R2’s Unit
O 1st round* 27 Jun 16 $32,900,000 $33,950,000 O
P
2nd round 19 Jul 16 $34,545,000 $35,647,500 P
letters of KFP, it is regretted that they were some 20% or 18% lower than
T T
nd
the EUV as found by the Tribunal; the 2 round offers were not better as
U U
V V
A - 30 - A
B they were some 16% or 14% lower than the EUV. For the 3 rd offer, they B
were still some 10% or 8% lower than the EUV. These offers appear not to
C C
be fair and reasonable.
dated 31 May 2013), the Tribunal ruled at §61 that not only pre-Application
F F
steps should be considered by the Tribunal, but all reasonable steps before
G the making of a sale order by the Tribunal to acquire the minority owner’s G
K
83. In Intelligent House Ltd v Chan Tung Shing & Others [2008] 4 K
HKC 421 where the majority owner relied on its valuation expert to
L L
formulate some of the offers, the Tribunal ruled at §334(3) that:
S S
85. More importantly, the Court of Final Appeal in Capital Well
T Ltd v Bond Star Development Ltd (2005) 8 HKCFAR 578, [2005] 4 T
V V
A - 31 - A
F F
86. As said in §15 above, both Mr Lee and Ms Wong for the
G respondents no longer oppose the order for sale on the ground of the G
applicants not having taken reasonable steps to acquire all the undivided
H H
shares in the Lot on terms that are fair and reasonable in accordance with
I section 4(2)(b) of the Ordinance. I
J J
87. Bearing in mind the above, we are satisfied that on the
K evidence available and in the circumstances of the present Application, the K
applicants have taken reasonable steps to acquire all the undivided shares in
L L
the Lot including negotiating for the purchase of such of those shares as are
M owned by R1 and R2 on terms that are fair and reasonable. M
N N
Disputes on the estimation of the RDV of the Lots
O O
Optimum Hypothetical Development Model
P
88. At the hearing, no suitable redevelopment site comparables P
were adduced as evidence for this Tribunal to consider. Both Mr A Chan for
Q Q
the applicants and Mr Lam for R1 and R2 agreed to resort to the residual
V V
A - 32 - A
B costs etc) and developer’s profit from the estimated gross development B
should comprise a 22-storey composite building with retail shops and plant
G G
room on G/F& 1/F, club house on 2/F and residential units on upper floors
H (each having 2 units per floor). They have also agreed the other parameters H
including the saleable areas per floor and even the GDV for the residential
I I
portion. The table below shows their agreements:
J J
K K
L L
M M
N N
Mr A Chan Mr Lam
O Site Area 328.4 sq m O
Marketing Cost 2%
T T
Demolition Cost for the Buildings $2,931,182
U U
V V
A - 33 - A
that the two experts cannot come into agreement, resulting in their
G G
difference in the residual land value.
H H
M M
92. Mr Lam, on the other hand, adopts the same 4 comparables he
N used for valuing the EUV. We have however, ruled that only CS2 and CS4 N
are relevant.
O O
P P
93. Thus, in the special circumstances of the present case, we are
Q prepared to adopt the same set of comparables for assessing both the EUV Q
V V
A - 34 - A
B B
Saleable
C Shop
Area Frontage (m) Return frontage (m) Shape C
No
(m2)
1 67.35 5.58 abutting Soy 12.07 abutting rectangular
Street scavenging lane
2 109.62 13.32 abutting Soy 4.84 abutting Pak Po “L”
E Street Street E
3 66.87 10.24 abutting Pak NA rectangular
Po Street
F F
§§31-54 above. But for the location adjustment, we note Mr A Chan agrees
H H
to give a higher average rate because of the potential shopping
I development at 1/F of Concord Building opposite to the Buildings. We I
would also envisage that with the new development at the Lot itself, the
J J
trading environment would improve. We would therefore add a further 10%
K for location13. Our valuation of Shop 1 is as follows: K
L L
Adjustments
M Effective M
Comp Adjusted Unit
Unit Price
Ref: Time Return Price (/m2)
(/m2) Location Age Frontage Headroom Size Total
Frontage
N N
KF1/ $631,591 7.0% 25.0% 5.0% 3.0% 2.0% -2.0% 8.0% 48.0% $934,755
CS2
O KF4 $458,498 5.3% 30.0% 5.0% 0.0% 2.0% 0.0% 8.0% 50.3% $689,122 O
KF8 $582,133 3.9% 30.0% 5.0% 3.0% 2.0% -2.0% 8.0% 49.9% $872,617
P P
KF11 $517,748 11.3% 30.0% 4.0% -3.0% 1.0% 0.0% 8.0% 51.3% $783,353
CS4 $800,657 41.6% -5.0% 3.0% 2.0% 0.0% -2.0% 8.0% 47.6% $1,181,770
Q Q
Average: $892,323
S * We adopt 8% for the return frontage for the scavenging lane instead of Mr A Chan’s S
10%.
T T
13
See Alliance Fame Limited & Others v Mak Kam To & Others, LDCS 9000/2015
U (unreported, dated 4 August 2017), §116. U
V V
A - 35 - A
B B
96. As before, we are going to adopt a unit rate for Shop 1 at say
C C
$950,000/m2 and the value of this shop unit is therefore:
67.35 m2 x $950,000/m2 = $63,982,500.
E 97. If we carry out a similar analysis for Shop 2, the result will be E
as follows:
F F
Effective Adjustments Adjusted
Comp
Unit Price Return Unit Price
G Ref: Time Location Age Frontage Headroom Size Total G
(/m2) Frontage (/m2)
KF1/ $631,591 7.0% 25.0% 5.0% 18.0% 2.0% -18.0% 15.0% 54.0% $972,650
CS2
H H
KF4 $458,498 5.3% 30.0% 5.0% 16.0% 2.0% -17.0% 15.0% 56.3% $716,632
I KF8 $582,133 3.9% 30.0% 5.0% 18.0% 2.0% -22.0% 15.0% 51.9% $884,260 I
KF11 $517,748 11.3% 30.0% 4.0% 12.0% 1.0% -13.0% 15.0% 60.3% $829,950
J J
CS4 $800,657 41.6% -5.0% 3.0% 18.0% 0.0% -18.0% 15.0% 54.6% $1,237,816
Average: $928,262
K K
Average (if KF4 is $981,169
excluded):
L L
98. That is, we determine the unit rate for Shop 2 at $981,000/m2
M and the value of this shop unit is therefore: M
N N
109.62 m2 x $981,000/m2 = $107,537,220.
O O
99. At this juncture, we note that the adjustments for size nearly
P P
cancel out the adjustments for frontage in respect of the comparables, ie the
Q combination of, say, two standard sized shops of equal frontage and depth Q
nd
(thus yielding 1/2 the depth to frontage ratio) would not necessarily
R R
justify a higher unit price - an observation discussed by the Tribunal at
S §§94-97 in Supergoal Investment Limited, supra. For this reason, we have S
V V
A - 36 - A
B B
100. For the rectangular shop with a shop front of 6.79m and a
C C
depth of 11.49m, our analysis is as follows:
E Adjustments E
Effective
Comp Adjusted Unit
Unit Price Return
Ref: Time Price (/m2)
(/m2) Location Age Frontage Headroom Size Frontage Total
F F
KF1/ $631,591 7.0% 15.0% 5.0% 5.0% 2.0% -6.0% 0.0% 38.0% $871,596
CS2
G KF4 $458,498 5.3% 20.0% 5.0% 3.0% 2.0% -3.0% 0.0% 42.3% $652,443 G
KF8 $582,133 3.9% 20.0% 5.0% 5.0% 2.0% -9.0% 0.0% 36.9% $796,940
H H
KF11 $517,748 11.3% 20.0% 4.0% -1.0% 1.0% -3.0% 0.0% 42.3% $736,755
CS4 $800,657 41.6% -10.0% 3.0% 5.0% 0.0% -9.0% 0.0% 35.6% $1,085,691
I I
Average: $828,685
K K
N N
102. We find the result is only slightly smaller than $107,537,220.
O We are satisfied that the value for Shop 2 at $107,537,220. O
P P
103. For Shop 3, our analysis is as follows:
Q Q
R R
S S
T T
U 14
This is the adjustment for its corner location, smaller size etc U
V V
A - 37 - A
B B
Effective Adjustments
Adjusted Unit
C Unit Price Layout/ C
Time Location Age Frontage Headroom Size Total Price (/m2)
(/m2) Shape
KF1/ $631,591 7.0% 10.0% 5.0% 12.0% 2.0% -2.0% 5.0% 39.0% $877,911
CS2
KF4 $458,498 5.3% 15.0% 5.0% 10.0% 2.0% 0.0% 5.0% 42.3% $652,443
E KF8 $582,133 3.9% 15.0% 5.0% 12.0% 2.0% -2.0% 5.0% 40.9% $820,225 E
KF11 $517,748 11.3% 15.0% 4.0% 6.0% 1.0% 0.0% 5.0% 42.3% $736,755
F F
CS4 $800,657 41.6% -15.0% 3.0% 12.0% 0.0% -2.0% 5.0% 44.6% $1,157,750
Average: $849,017
G G
Average (if KF4 is $898,160
excluded):
H H
I I
104. That is, we determine the unit rate for Shop 3 at say
J $900,000/m2 and the value of this shop unit is therefore: J
K K
2 2
66.87 m x $900,000/m = $60,183,000.
L L
105. As a result, the total GDV for the hypothetical shops is
M M
unit value of the ground floor as the unit value for 1/F. However, Mr A
Q Q
Chan refers to Shop 3 while Mr Lam refers to Shop 1.
R R
V V
A - 38 - A
improved.
C C
E 108. The two experts have agreed the GDV for the residential E
portion on the upper floors at $337,851,150 which is equivalent to
F F
$206,700/m2.
G G
Development Profit
H H
109. As stated at §89 above, the experts have agreed the
I developer’s profit should be 15% on costs. But when Mr A Chan was I
referred to the recent Government tender land sales including the one at
J J
Cheung Sha Wan on 15 November 2017 and the others earlier in Kai Tak
K area during cross-examination, he conceded the developer’s profit can be K
V V
A - 39 - A
B B
I I
114. The applicants has prepared a set of draft Particulars and
J J
Conditions of Sale of the Lots16. Subject to any amendment that may
K
become necessary as a result of our ruling on the arrangement of auction K
above, the particulars and conditions of sale of the Lots by public auction
L L
submitted by the applicants are also reasonable.
M
Order M
115. This Tribunal make the following orders:
N N
(1) This Tribunal is satisfied that the redevelopment
respondents;
R R
(2) All the undivided shares in the Lot, the subject of
S the Application herein, be sold by way of a public S
U 16
See Bundle B/381-406. U
V V
A - 40 - A
K
(i) The sale of the Lot be on the particulars K
and conditions of sale substantially the same as
L L
those in the draft Particulars and Conditions of
M
Sale to be initialed and approved by the M
Tribunal.
N N
(ii) The reserve price be set at $386,391,000.
V V
A - 41 - A
Ordinance.
C C
Costs
116. The law on costs is succinctly summarized at §4 of Good
E E
Faith Properties Limited and Others v Cibean Development Company
F Limited. LDCS 42000/2011 (unreported, dated 12 June 2015) which F
(e) One should not be too ready to condemn the exercise of such
R rights to be heard by the minority owner as unreasonable conduct R
in resisting an application under Cap 545 (§17);
S (f) The proper approach of the Tribunal for the costs of a S
successful claimant (ie a claimant who is awarded more than the
T amount of an unconditional offer by the respondent) should be T
that he is entitled to his costs incurred in the proceedings in the
absence of some ‘special reason’ to the contrary (§28);
U U
V V
A - 42 - A
B ….. B
K
(n) The proper approach is to examine whether the respondent
K
acted unreasonably in relying on the evidence of its expert, Mr
Lai, so as to cause the proceedings to be unnecessarily prolonged
L or to cause the unnecessary expenditure of additional costs L
(§62).”
M M
P P
118. Referring to the same principles, however, Mr Li submits that
Q in the present case, there should be no order as to costs because it is Q
T
wrong as a matter of law to persist to say that the 1/F units of the Buildings T
rd
should be valued as domestic flat until the 3 day of trial. There is a
U U
V V
A - 43 - A
B plethora of authorities on the correct legal position and costs and time have B
Q Q
121. Mr Li also takes issue on Mr Lam’s position on valuing the
R
1/F units of the Buildings until “a volt change of accepting Alnwick Chan’s R
1F valuation as shop at trial:
S S
V V
A - 44 - A
B gate. In short, he said the 1F units had not been used as shop and B
could not be used as shop. Then he said that after the inspection,
he saw that there were signs indication the use of 1F as shop and
C he had inspected the interior of some of 1F units. He then said C
that after site inspection, he did his valuation of 1F as shop and
found such valuation be close to Alnwick Chan.”
E E
122. Mr Li suggests there was no logic to say that because the 1/F
F
units had not been used as shops at the time of (Mr Lam’s) alleged F
inspections prior to trial. Mr Li criticizes Mr Lam’s change of stance was
G G
inexplicable when even an external inspection of the Buildings could find
H
various signage and advertisements showing the use of 1/F units as shops; H
Mr Lam simply failed to conduct a proper valuation of 1/F units.
I I
V V
A - 45 - A
B B
C C
E E
Deputy District Judge Lui Lawrence Pang
F Presiding Officer Member F
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V
1
A A
B B
Appendix 1
C Residual Valuation C
GDV
O O
P P
Q Q
R R
S S
T T
U U
V V