New Eagle Development Ltd v. Chu Biu Cheung As Trustee for and on behalf of Cepriano Lee Alias Chu Biu Chung and Others

LDCS 9000 / 2013

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 9000 OF 2013

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J U D G M E N T
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Background

1.This is an applicationpursuant to Section 3(1) of the Land (Compulsory Sale for Redevelopment) Ordinance, Cap. 545 (“the Ordinance”) for compulsory sale of all the undivided shares in the Remaining Portion of Section A of New Kowloon Inland Lot No 46 (“Lot 1”) and Sub-section 1 of Section A of New Kowloon Inland Lot No 46 (“Lot 2”) which are hereinafter referred to collectively as “the Lots” for the purposes of the redevelopment (“the Application”).

2.Erected on the Lots is a pair of 6-storey tenement buildings (“the Buildings”) known as Nos 9 & 11 Nam Cheong Street, Kowloon respectively.  According to a set of building plans dated 20 January 1955 and the amended plans dated 1 December 1955, the Buildings accommodate 2 symmetrical units on each floor from Ground Floor to 5^th Floor sharing 2 common staircases.  Domestic Permit (Permit No 78^K) for the Buildings was issued on 17 October 1956 wherein permission was granted to occupy and use the Buildings for domestic purposes.  Thus, the Buildings are aged more than 50 years before the Application was commenced on 20 May 2013.

3.When the Application was first taken out, the applicant owned all 6 equal undivided shares of and in Lot 2 but only 4 out of 6 equal undivided shares of and in Lot 1 with the remaining 2 shares owned by the 1^st respondent and 2^nd respondent respectively as follows:

Floor	9 Nam Cheong Street (Ownership)	11 Nam Cheong Street (Ownership)
Ground Floor	1 (applicant)	1 (applicant)
1st Floor	1 (1st respondent)	1 (applicant)
2nd Floor	1 (applicant)	1 (applicant)
3rd Floor	1 (applicant)	1 (applicant)
4th Floor	1 (2nd respondent)	1 (applicant)
5th Floor	1 (applicant)	1 (applicant)

The average of the percentage of the undivided shares owned by the applicant was thus 83.34%.

4.By an order dated 14 July 2015, the 3^rd respondent was appointed to represent the estate of Cepriano Lee alias Chee (or Chu) Pio (or Biu) Chun (or Chung)(朱標忠), deceased, for the purpose of the proceedings.

5.The 4^th respondent is joined in the proceedings because the persons are claiming adverse possessory title to the 1^st respondent’s unit.

6.No Notice of Opposition or any other evidence on behalf of the 1^st respondent or the 2^nd respondent has been filed.  Ms Gekko S Y Lan (“Ms Lan”), counsel for the applicant, submits that the 1^st respondent and 2^nd respondent are missing owners.  On the other hand, the 3^rd respondent and 4^th respondent have confirmed through their respective solicitors that they would not contest the Application.  Thus, Ms Lan simply called the witnesses to prove the applicant’s case.  The applicant contends that all the requirements of the Ordinance have been satisfied and asks for an order for sale in terms of the draft order submitted. 

Section 3 of the Ordinance – Ownership of the Applicant

7.Section 3(1) of the Ordinance requires the applicant to have not less than 90% of the undivided shares in a lot before it can make an application. 

8.Section 3(5) of the Ordinance also states that the Chief Executive in Council may, by notice in the Gazette, specify a percentage lower than the percentage mentioned in subsection (1) in respect of a lot belonging to a class of lots specified in the notice.

9.Pursuant to Section 3(5) of the Ordinance, the Notice was gazetted on 22 January 2010 and came into operation on 1 April 2010 (“the Notice”). Section 3 of the Notice lowered the threshold for compulsory sale, insofar as it is applicable, from 90% to 80%.  Section 4(1) of the Notice specified for the purposes of Section 3:

“(a) a lot with each of the units on the lot representing more than 10% of all

the undivided shares in the lot;

(b) a lot with each of the buildings erected on the lot issued with an occupation permit at least 50 years before the relevant date; and

(c) …”

10.By reference to §§2 & 3 above, the Lots are therefore covered by the Notice and the applicable percentage is 80%.

Determination of the existing use values (“EUV”) of all units in the Buildings

11.Pursuant to section 3 of the Ordinance, the Application was accompanied by a valuation report (“Application Report”) dated 6 May 2013 prepared by Mr Alnwick Chan of Knight Frank Petty Limited (“Mr A Chan”), the applicant’s valuation expert witness, containing the assessments of the values of all units (which are conveniently termed as the existing use values, the “EUV” of all units) in the Buildings on the Lots as at 8 March 2013.  The assessments were therefore within 3 months before the date of the Application as required by the Ordinance.

12.Under section 4(1)(a)(ii) of the Ordinance, in the case of any minority owner of the Lots who cannot be found, for instance, the 1^st respondent or the 2^nd respondent as submitted by Ms Lan, the majority owner of the Lots is required to satisfy the Tribunal that the value of the minority owner’s property as assessed in the application is “(A) not less than fair and reasonable; and (B) not less than fair and reasonable when compared with the value of the majority owner’s property as assessed in the application.”

13.In the Application Report of 6 May 2013, Mr A Chan explained the method of valuation and the process of his assessment to arrive at the EUV of each unit of the Buildings.

14.In his valuation of the EUV of the domestic units of the Buildings, Mr A Chan adopted the following methodology :

(a) He selected 3rd Floor, No 9 Nam Cheong Street (“the Reference Residential Unit”), which is situated on the middle floor of the domestic portion as the reference unit for the purpose of valuing its unit price. 

(b) The unit price of the Reference Residential Unit was first assessed by making reference to market comparables.  He took into account 9 comparable transactions in 9 different buildings nearby.  After making what he regarded as the necessary adjustments (for time, building age/condition, view, floor, size, physical condition & building management, layout, view, location) for all these comparable transactions, he excluded the highest and the lowest and then took the average of the adjusted unit rates of the remainders to come to the unit price of the Reference Residential Unit.

(c) He further considered the floor difference, internal conditions, size and ventilation and of the Reference Residential Unit and the remaining residential units within the Buildings and made adjustments to arrive at the EUV of all the residential units.

15.In assessing the EUV of the 2 Ground Floor units, Mr A Chan adopted the following methodology:-

(a) He selected Ground Floor, No 9 Nam Cheong Street as the reference unit (“the Reference Shop Unit”).  He then took into account 10 comparable retail transactions in 9 different buildings nearby. After making what he regarded as the necessary adjustments (for time, location, building age/condition, frontage/depth, headroom and size) for all these comparable transactions, he again excluded the highest and the lowest and then took the average of the adjusted unit rate of the comparables to come to the unit price of the Reference Shop Unit.

(b) He then used the unit rate of the Reference Shop Unit to assess the other ground floor unit.

(c) He converted the saleable areas of the yard and cockloft of the ground floor units by using a conversion factor of 1:6 and 1:4 respectively.

16.Mr A Chan updated the Application Report by a supplemental report dated 26 August 2015 (“Supplemental Report”) in which he:

(a) provided further explanations on the usage assumption of the ground floor premises by reference to Cheer Capital Limited v Unibase Investment Limited as Trustee for Kam Yee Wai Andrew, Lam Yin Ming Lawrence and Lam Hon Keung Keith, LDCS 5000 & 6000 of 2013 dated 12 June 2015 (unreported);

(b) revised the time adjustment based on updated property index prepared by the Rating and Valuation Department;

(c) made minor amendments to correct the transaction details, dimensions of the comparables and the subject units of the Buildings etc;

(d) included 2 sub-sale transactions to replace the former ones; and

(e) added 6 comparables for the upper floor domestic units.

17.In the process, Mr A Chan noted from the occupation permit issued on 17 October 1956 that the Buildings were for “domestic purposes” but both ground floor units of the Buildings were previously occupied for non-domestic - retail or workshop purposes. Pursuant to his further observation of the locality, Mr A Chan opined that the ground floor premises along this section of Nam Cheong Street are predominated by retail shops.  Such non-domestic purposes do not conflict with the Deed of Mutual Covenant; the Building Order registered against Ground Floor and Cockloft of No 9 Nam Cheong Street did not suggest any enforcement action against the non-conforming use either.  He therefore opined that shop use is the optimum use of the ground floor units of the Building.

18.The same issue was considered by the Tribunal in a number of cases including Cheer Capital Limited, supra. In a recent case, Pacific China Development Limited & Another v The Personal Representative of Chu Tak Hing, deceased, Administratrix of the estate of Ye Kei Ming, deceased, LDCS 10000 of 2014 dated 5 February 2016 (unreported), the Tribunal followed the approach adopted in the various previous decisions in which the Tribunal accepted that assessment of the EUV of ground floor units on the basis of shop use despite its non-conforming use when compared with that provided in the occupation permit[1].

19.Also, in Wing Hong Investment Company Limited v Fung Sok Han & Others, HCA 2075 of 2009, dated 25 September 2015 (reported as [2015] EC 2010), there was conversion of carport into shops in defiance of the occupation permit but the Buildings Department formed the opinion that it would not take any enforcement action against the change of user if it did not pose any structural danger and did not obstruct the fire escape. Judge Chan of the Court of First Instance remarked that the mere failure to inform the Building Authority of a change of use under section 25(1) is not an offence. Therefore, I consider that the ground floor premises of the Buildings are rightly assessed on the basis as shops.

20.The EUV of all units in the Buildings, including the 1^st and the 2^nd respondents’ units, as at the relevant date of valuation of 8 March 2013, based on the above revisions, are as shown in the Supplemental Report of Mr A Chan: see the table at Bundle D/77 which is reproduced below:

Floor	No 9 Nam Cheong Street	No 11 Nam Cheong Street
Ground Floor	$11,111,630	$9,533,240
1st Floor	$2,996,270	$2,996,270
2nd Floor	$2,935,580	$2,792,110
3rd Floor	$2,880,400	$2,736,930
4th Floor	$2,825,220	$2,681,570
5th Floor	$2,350,670	$2,488,620
Total	$48,328,690

21.I am satisfied, insofar as it is necessary, that the value of the 1^st respondent’s and the 2^nd respondent’s units as assessed by Mr A Chan is not less than fair and reasonable and not less than fair and reasonable when compared with the value of the applicant’s properties:

(a) the 1^st respondent’s unit - assessed at $2,996,270 (representing 6.2% of the total EUV of all units);

(b) the 2^nd respondent’s unit - assessed at $2,825,220 (representing 5.85% of the total EUV of all units); and

(c) the total EUV of all units - assessed at $48,328,690.

Section 4(2) of the Ordinance - Justification and Reasonable Steps

22.The second determination under Section 4(1)(b) of the Ordinance is whether an order of sale should be made.  According to Section 4(2) of the Ordinance, this would involve 2 considerations, namely :-

(a) is the redevelopment justified due to age or state of repair of the Buildings; and

(b) has the Applicant taken reasonable steps to acquire all the undivided shares in the Lot.

23.The applicant has to satisfy this Tribunal that the above statutory requirements were met, otherwise, an order of compulsory sale ought not to be granted. 

24.Firstly, for the requirement under (a) above, I have taken into consideration the expert evidence of Mr Dennis Wong (“Mr D Wong”), a building surveyor, and Mr Ng Tim Yeung Sammy (“Mr S Ng”), a structural engineer adduced by the applicant. 

25.Mr S Ng had conducted a structural assessment of the Buildings and prepared a report dated 15 August 2015.  He identified the following defects in the Buildings:

(a) Cracks, bulging and spalling at 37 locations were found during the visual inspection of the exterior façade, internal common areas and 2 units of the Buildings; the cracks and bulging will continue to expand due to continuous reinforcement corrosion in the presence of oxygen and moisture, resulting in more extensive spalling;

(b) Covermeter survey revealed that of the 204 spots tested out of the 10 structural members surveyed, 19 spots (9.3%) in the beams did not have sufficient concrete cover strength to protect the embedded steel reinforcement bars against corrosion;

(c) Carbonation has reached the concrete cover of 90% of the 10 samples of slabs, beams and columns. It is very likely that the carbonation has depasssivated the cement part at reinforcement level and reinforcement corrosion would actively propagate in the presence of oxygen and moisture;

(d) 80% of the core samples have a chloride content exceeding 0.4%, active corrosion is likely to occur on the reinforcement surface with surrounding concrete at such a high level of chloride content;

(e) Core Compression tests revealed that 4 (40%) of the concrete cores were considered to have inadequate concrete strength where 5 (50%) of the samples to have concrete strength of doubtful adequacy; and

(f) Open-up Inspection revealed that sign of corrosion was observed at all 8 exposed reinforcement. 75% has reached corrosion grade Low C (ie more than half or completely covered with a heavy surface rust) and the 12.5% reach grade High D (heavy rust, with surface damage and starting to scaling and/or pit).

26.Based on the above findings, Mr S Ng considered the Buildings are subject to reinforcement corrosion and the structural elements of the Buildings are in poor condition.  He recommended hammer tapping should be carried out to find the extent of spalling and cracking in the structural members, and all revealed cracks, bulged concrete and spalling should be patch repaired with application of protective coating.

27.Mr S Ng also concluded that the Buildings have failed to meet the minimum requirements as stated in the Code of Practice on Structural Use of Concrete 2004 in respect of the cover for beam and slab, the concrete strength and maximum chloride content.  Having regard to the age of the Buildings, which were 59 years old, Mr S Ng considered the structural elements had passed the end of their design working life. He estimated the costs of repair to be $412,000 but his does not include the dealing with problems such as high carbonation and high chloride content because such repair would be both technically and financially impracticable.

28.Mr D Wong, in his Condition Survey Report dated 26 August 2015, stated that the Buildings are aged because:

(a) there is no equipotential boding system provided for metal fixtures such as window, doors and railings for safety protections as required under the Code of Practice for Electricity (Wiring) Regulations 2009.

(b) there is no hose reel/fire hydrant/fire alarm system as required under the Code of Practice for Minimum Fire Service Installations and Equipment 1994 (“FSI Code 1994”);

(c) the staircases and corridors did not meet the requirement of the current Code of Practice for Fire Safety in Building (“Fire Safety Code 2011”) issued by the Buildings Department;

(d) there is no protective barrier, cat ladder or any practical means of access for carrying out inspection works to the upper roof area as required under the Occupational Safety and Health regulations, Cap 509A;

(e) there is no refuse chute/room, and the bagged refuse placed in the corridors would obstruct the escape routes;

(f) there are no architectural features and proper overhangs at roof level or on the facades of the buildings making it more prone to wear and tear and deterioration of the external wall finishes; and

(g) there is no building automation system with service connections to a control room for instant fault signaling an repairing.

29.In respect of the state of repair of the Buildings, Mr D Wongcommented that:

(a) The Building Facades: all windows were in very poor conditions; conditions of building façade and rear boundary wall were poor; cracks and spalled concrete were found on walls and concrete window canopies; Rapid Infrared Thermographic Survey detected 26 spots of delamination on the accessible external wall rendering; asbestos containing materials were found in corrugated sheet, corrugated sheet debris and insulation material inside fuse box at different areas that need to be removed; unauthorized building extensions, unauthorized retractable canopy and numerous unauthorized metal fixtures were found;

(b) The Main Roof: Roof finishes were in poor condition; signs of vegetation suggested water membrane was defective; water tanks were in poor conditions with cracks, rust stain and mould growth; antennas in poor condition with unauthorised wire mesh fencing found;

(c) The Staircase and Typical Floor Lobbies: unauthorized openings were found on wall of fire enclosure to the staircase and entrance gates were found swinging out onto the corridors; there was no handrail on one side of all staircases; unauthorized metal roof was installed over rear means of escape on Ground Floor; rear exit of means of escape at 5th Floor of No 11 Nam Cheong Street was blocked; staircases and corridors were generally in a poor state of repair with spalling, cracks and hairline cracks, water stain, peeled off paint, damaged or debonded plasters found at various locations;

(d) The Flats and Shops Internally: unauthorized internal flat sub-divisions; no window provision at a number of toilets; kitchens were not enclosed with fire resisting walls and doors; unauthorized alterations with concrete raised floors embedding the soil and waste drainage pipes without access arrangement for cleaning and maintenance; there were toilets opened directly to the kitchens in contravention of the Building (Standards of Sanitary Fitments, Plumbing, Drainage Works and Latrines) Regulations; condition of internal decorations and finishes ranged from poor to very poor, with dampness from the floor to ceiling, cracking and spalling of concrete, peeled off wall finishes and dilapidated false ceiling finishes; there were unauthorized openings to roof slab and floor structures;

(e) Fresh/Flushing Water Supply: most of the fresh water supply to the units were disconnected, rusted and in poor condition; flushing water tanks at roof were abandoned; fresh water supplies were directly connected to the sanitary fitments which may contaminate the fresh water system and contrived the Water Works Ordinance, Cap 102;

(f) The Above-ground Drainage: waste water pipes of the domestic flats are not directly connected to the vertical stacks but discharged to hoppers which further discharged into stacks; condensation drain pipe system for all air-conditioning units need to be installed to avoid creating water dripping nuisance;

(g) The Underground Drainage: the drains were either blocked or damaged and not functioning which need to be replaced;

(h) Electricity Supply Installation: power supply to the flats was cut off and most of the cable within the Buildings were removed and dismantled; there was no lightening protection and equipotential bonding systems for safety protection; and

(i) Fire Services Installation: there was no emergency lighting, exit/directional signs, fire alarm system or smoke detection system provided to staircases and corridors.

30.Based on the above findings, Mr D Wong concluded that:

(a) The Buildings that were 59 years old as at the date of his report had many problems as a result of its age which impaired appearance and function;

(b) Due to changes in statutory requirements, advanced technology and higher expectations over the years, the Buildings had become sub-standard with many problems affecting the hygiene, safety, convenience and enjoyment of the Buildings;

(c) The physical and functional hazards of the Buildings were a result of deficiencies in the planning, design, use of material, facilities and workmanship of the Buildings when they were first constructed;

(d) The problems were further aggravated due to unauthorized building works, lack of maintenance and the absence of proper building management all of which had rendered the Buildings to be well below a habitable standard and fall short of many basic requirements expected in new buildings;

(e) Some of the problems, eg overloading of the structure due to unauthorized sub-division of the flats and unprotected electrical installations in the fire escape staircases, are of hazardous nature and detrimental to the safety of users of the Buildings as well as the general public;

(f) The Buildings were obviously below a tenantable standard with its structural frames in poor condition and most of its components, finishes and services deteriorated towards the end of their effective life spans;

(g) The overall state of repair of the Buildings was poor with many of their components, finished and services installations showing deterioration beyond reasonable repair;

(h) The Buildings were in a state of disrepair and demolition of the Buildings would relieve owners from heavy repair responsibilities, which evidently had been neglected for a long time;

(i) The fact that the Buildings have been left in a state of disrepair for so long had aggravated the problems which would require more substantial repairs to be undertaken to re-instate the condition of the Buildings to a tenantable standard;

(j) The economic benefits brought about by the repair to the existing derelict building is far less than the option of redevelopment; and

(k) The carrying out of the essential repairs would cause considerable disturbance and would require a very long implementation period, which would be about 15 months, during which the occupation and enjoyment of the units would be affected intermittently.

31.Mr D Wong assessed the cost of essential repairs at $8,110,381 (ie about $10,586/m²) which amounts to some 52.43% of the unit construction cost of a new similar superstructure (about $20,190/m²).  He also concluded that even after the essential repair works have been implemented, the Buildings would remain old with its design and construction out-dated and below market expectations and constitute continuing repair liability to the owners.  In these circumstances, Mr D Wongopined that demolition of the existing derelict buildings for redevelopment is not only economically more viable but will also improve the living standard of the new occupants and contribute to the renewal of the neigbourhood and enhance the overall environment.  He therefore recommended redevelopment.

32.In the absence of contrary expert evidence,I accept the applicant’s evidence in whole.  I am satisfied that based on the evidence of Mr S Ng and Mr D Wong, redevelopment of the Lots is justified due to the age and the state of repair of the Buildings which are in a very poor state of repair.

Reasonable Steps to Acquire All the Undivided Shares in the Lots

33.The applicant is under an obligation to negotiate on terms that are fair and reasonable in a situation when the whereabouts of a minority owner are known.  According to a witness statement dated 28 August 2015 from Lui Wing Yan, a manager of the applicant, the applicant had made the following offers through their solicitors to the 1^st and 2^nd respondents for the purpose of acquiring the their interest in the Lots:

	1st respondent’s unit		2nd respondent’s unit
Date of Offer	EUV	Amount Offered	EUV	Amount Offered
27 March 2013	$2,637,600	$4,397,000	$2,488,620	$4,149,000
19 April 2013	$2,747,960	$4,558,000	$2,587,940	$4,293,000

34.The offers were based on the redevelopment value (“RDV”) of the merged site of Nos 1-19 Nam Cheong Street as assessed by Knight Frank Petty Limitedinstead of the Lots on their own.  In addition, a 5% premium was added.

35.Nevertheless, attempts made to locate the 1^st and 2^nd respondents were in vain and therefore no further offers were made thereafter.  Ms Lan submits, and I accept, that the applicant would not been able to negotiate with the 1^st and 2^nd respondents on the intended acquisition of their respective interests in the Lots.

36.Insofar as the 3^rd and 4^th respondents are concerned, Ms Lan submits that it is not necessary for the applicant to make any offers to them because they are not minority owners as defined in the Ordinance.  I agree.

37.In light of the above, I am satisfied that the applicant has taken reasonable steps to acquire all the undivided shares in the Lots including the 1^st and 2^nd respondents’ interest. 

Reserved Price for the Auction

38.The applicant submits that the reserve price for the auction of the Lots should be fixed at $53,800,000, based on the assessment by Mr A Chan of the RDV of the Lots in his valuation report of 1 February 2016 (“RDV valuation report”).

39.In his report, Mr A Chan had considered 3 site/enbloc sale comparables as follows:

Date of Instrument	Address	Net Site Area (m2)	Class of Site	Price	Accommodation Value* (/m2)
19.12.15	62 Fuk Wing Street	104.05	A	$39,230,000	$41, 892
20.11.15	14 Nam Cheong Street	77.65	B	$34,600,000	$49,510
15.6.15	252 Yu Chau Street	83.90	A	$30,800,000	$40,789

* based on the maximum plot ratio of 9 as permitted under the prevailing Outline Zoning Plan.

40.As regards 14 Nam Cheong Street which is closest to the Lots, Mr A Chan opined it has no redevelopment prospect because its existing building thereon has a plot ratio about 8.46 and its adjoining lot at 16-18 Nam Cheong Street has also a building erected thereon with a plot ratio up to 14.75.  On the other hand, Mr A Chan ruled out the remaining two comparables as they are subject to potential amalgamation with adjacent sites to obtain higher development flexibility and efficiency.

41.In the above regard, I agree with him that the residual method has to be employed as the method of assessment of the RDV of the Lots. This is done by deducting development costs (including construction costs, professional fees, finance costs etc) and developer’s profit from the estimated gross development value of the completed development.

42.Mr A Chan opined that the optimum development on the Lots comprised a 23-storey building with retail shops on Ground Floor and First Floor (which accommodates a clubhouse as well) and one residential unit on each upper floor.  The details of the hypothetical development and residual valuation were set out in Appendix 7 of his RDV valuation report.  The details of the comparables for shop and residential units with adjustments were set out in Appendix 5 and Appendix 6 respectively.  I have gone through his valuation in detail.  I am satisfied with his valuation, including the valuation assumptions he has adopted, the values and the costs parameters that he has used in his valuation. 

43.The total registered area of the Lots is approximately 155.8 sq m.  Based on his residual valuation, he arrived at $53,800,000 or an accommodation value of $43,917/m2.

44.At trial, Mr A Chan added that there is a recent tender sale on 3 February 2016 by Government of New Kowloon Inland Lot 6534 at the junction of Fuk Wa Street/Camp Street/Fuk Wing Street which lies further away from the vicinity.  This site, a corner site with a larger area of 3,173 sq m (and therefore better design flexibility), achieved an accommodation value of $46,961/m² (excluding the area of the refuse collection facilities that have to be provided).  I agree with Mr A Chan that it supports his valuation of the Lots at an accommodation value of $43,179/m² and I decide that the reserve price for the auction of the Lots should be HK$53,800,000.

Trustees

45.The Applicant proposed to appoint Mr Chow Wing Kin Anthony and Ms Chow Suk Han Anna, who are partner and consultant respectively of Messrs Guantao & Chow, as the sale trustees.  I am satisfied that they are proper persons to be appointed and I also approve the remuneration package proposed in the letter dated 1 February 2016 from their firm.

Particulars and conditions of sale of the Lots

46.Ms Lan has submitted a set of draft particulars and conditions of sale by public auction for my consideration.  I understand these are the usual terms used for compulsory sale and I approve them.

Conclusion and Order

47.By reasons of the aforesaid, I am satisfied that the redevelopment of the Lots is justified due to the age and state of repair of the Buildings; and the applicant has taken reasonable steps to acquire the undivided shares of the Lots.  This Tribunal is also satisfied that the value of the minority owners’ units as assessed in the Application are not less than fair and reasonable, and not less than fair and reasonable when compared with the value of the applicant’s properties as assessed in the Application.  This Tribunal now makes the following orders:

(1) All the undivided shares in the Lots, the subject of the Application, be sold by way of public auction for the purposes of redevelopment of the Lots under the Ordinance;

(2) Mr Chow Wing Kin Anthony and Ms Chow Suk Han Anna nominated by the applicant, be appointed trustees (“the Trustees”) to discharge the duties imposed on trustee under the Ordinance in relation to the Lot and the Trustees be authorized to charge such remuneration for their services in accordance with the terms set out in the letter from Messrs Guantao & Chow dated 1 February 2016;

(3) For the purposes of the sale of the Lots by public auction :-

(a) The sale of the Lots be on the particulars and conditions of sale the same or substantially the same as those in the draft Particulars and Conditions of Sale ( as set out on page 188-212 of Bundle A) initialed and approved by the Tribunal;

(b)The reserve price of the Lots be set at HK$53,800,000;

(c) Subject to further extensions that the Tribunal may subsequently allow upon the application of the purchaser of the Lots or its successor in title, the redevelopment of the Lots be completed and made fit for occupation within a period of 6 years after the date on which the purchaser of the Lots becomes the owner of the Lots; and

(4) Service of a copy of this Order be dispensed with subject to notices being inserted and published once within 30 days from the date hereof in a Chinese language newspaper and in an English language newspaper on the same day:-

(a) informing the owners of the Lots and all persons claiming to be the owners of the Lots, that an order for sale of the Lots has been made by the Tribunal; and

(b) giving information as to the place where and the times during which a copy of this Order may be obtained; and

(5) There be liberty to the applicant, the 1^st to 4^threspondents and the Trustees to apply to the Tribunal for further directions.

Costs

48.The applicant does not ask for costs.  I make a costs order nisi that there be no order as to costs between the parties.  Unless any of the parties apply by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

Ms Gekko S Y Lan, instructed by Messrs Zhong Lun Law Firm, for the Applicant

The 1^st Respondent, absent

The 2^nd Respondent, absent

The 3^rd Respondent, attendance excused

The 4^th Respondent, attendance excused