First Kind Ltd and Another v. Liu Keng Chor, The Administrator of the Estate of Li Fung Man Deceased and Another

LDCS 12000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 12000 OF 2014

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LDCS 13000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 13000 OF 2014

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LDCS 14000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 14000 OF 2014

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LDCS 15000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 15000 OF 2014

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LDCS 20000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 20000 OF 2014

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LDCS 21000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 21000 OF 2014

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D E C I S I O N

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1.On 6 May 2016, this Tribunal handed down a decision on, inter alia, a number of preliminary issues basically against the minority respondents who raised them but with a costs order nisi that their costs be paid by the majority applicants according to the compensation principle. This is the hearing of the respondents’ leave to appeal applications against the Tribunal’s said decision and the applicants’ costs variation applications proposing there being no order as to costs.

Brief Background

2.Along Nos 925-947 Canton Road, Mongkok there stand 6 pairs of contiguous tenement buildings which are 60 years old. Each building pair stand on a pair of lots. The same applicant A1 alone or together with another applicant A2, being the majority owners of each building pair, took out 6 separate applications under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“LCSRO”) (collectively referred to as “the 6 CS applications” and individually “a CS application”) for 6 compulsory orders for sale of all the undivided shares in the respective building pair. The 6 CS applications are respectively assigned the following case numbers by the Tribunal, and are hereafter referred to as CS-12, CS-13, CS-14, CS-15, CS-20 and CS-21 respectively:

i) LDCS12000/2014: No.929-931 Canton Road;

ii) LDCS13000/2014: No. 937-939 Canton Road;

iii) LDCS14000/2014: No.933-935 Canton Road;

iv) LDCS15000/2014: No.941-943 Canton Road;

v) LDCS20000/2014: No.925-927 Canton Road; and

vi) LDCS21000/2014: No.945-947 Canton Road.

3.Of all the active defending respondents in the 6 CS applications, they are represented by 6 different firms of solicitors with 1 respondent acting in person. Realizing that the 6 pairs of lots would have a higher redevelopment potential, and thus a higher redevelopment value (“RDV”) if sold as a merged site than the aggregate of the pairs sold individually, 3 teams of lawyers representing some respondents in the 6 CS applications joined force and took out 2 sets of applications for:

i)   consolidation of the 6 CS applications and that they are to be tried together (“consolidation summonses”);

ii)   determination of a number of preliminary issues concerning whether the Tribunal has power/duty to order sale of the 6 pairs of lots as one amalgamated site, or a combination of lots, thus fixing the reserve price according to the “on their own” instead of the “on its own” formulation; and that the potentials of the amalgamated lots should be reflected in the RDV of lots when sold individually. It is the parties’ common ground that by engaging the “on their own” formulation, the reserve price will be much higher than the aggregate of the reserve price fixed for each pair (“preliminary issues summonses”).

4.The applicants and the 3 teams of solicitors in the 6 CS applications came up with 7 agreed issues to be determined by the Tribunal for the 2 sets of summonses. They also came up with an agreed understanding, which is basically this: the more lots from among the 6 CS applications to be joined together and sold in one single auction, the higher will be their RDV and thus the reserve price for the auction in respect of the joint lots. That in turn will result in more compensation payable to each minority if sale of lots concerned is ordered under the LCSRO.

5.The applicants opposed the 2 sets of applications.

6.For easy reference, the 7 agreed preliminary issues for the Tribunal are repeated as follows:

i) whether the Tribunal has a power and/or discretion under the LCSRO generally to order that the 12 lots in question to be sold together as a whole in one public auction if compulsory sale orders under the LCSRO are made by the Tribunal in respect of each application;

ii) whether the Tribunal has a power and/or discretion to make a consequential direction under section 4(6) or any other provisions of the LCSRO that the 12 lots in question are to be sold together as a whole by one public auction if compulsory sale orders under the LSCRO are made by the Tribunal in respect of each application;

iii) Alternatively, whether the Tribunal has a power and/or discretion to make a consequential direction under section 4(6) or any other provisions of the LCSRO that a combination of one or more of the 12 lots in question are to be sold in one or more auctions as the Tribunal thinks fit;

iv) If an order or a consequential direction for a combined sale of the 12 lots as a whole in one auction is made by the Tribunal, whether the Tribunal has a duty and/or power and/or discretion under the LCSRO to direct that the reserve price for the auction should be set on a merged site basis to reflect the full and the greatly enhanced redevelopment potential of the enlarged site;

v) In the event the Tribunal directs sale of the 12 lots not as a whole site but as combination of one or more lots, either in one or more auctions, whether the Tribunal has a duty and/or power and/or discretion under the LSCRO to direct that the reserve price for each combination be set to reflect its share in the full redevelopment potential of the 12 lots as a merged site;

vi) In the event that only one lot (or only one pair of buildings comprised in an application^[1]) is ordered to be sold by public auction under the LSCRO, whether the Tribunal has a duty and/or power and/or discretion under the LSCRO to direct that the reserve price of that lot be set to reflect its share in the full redevelopment value of the 12 lots as a merged site; and

vii) Irrespective of the answers to the above, whether all the 6 applications, or a combination of them should be consolidated, or alternatively, whether the 6 applications or one or more combinations of these 6 applications should be heard together and by the same panel of the Tribunal.

7.The analysis of the Tribunal was set out in my decision handed down on 6 May 2016. It would not be necessary for me to repeat the same here save and except the Tribunal’s answers to these issues, as follows[2]:

i) Yes, a discretion to do so, but only under s.4(6)(a)(i) of the LCSRO;

ii) Yes, a discretion to do so;

iii) Yes, a discretion to do so;

iv) No;

v) No;

vi) No; and

vii) Yes, the 6 CS applications are to be heard and tried together by the same judge or panel of Tribunal.

8.Following the principles set out by the Court of Appeal (“CA”) in Good Faith Properties Ltd v Cibean Development Co Ltd[3], the Tribunal applied the compensation approach on costs in compulsory sale cases to the determination of the aforesaid summonses. In the said decision, the Tribunal made a costs order nisi that the applicants do bear costs of the 2 sets of applications despite the facts that the applicants can be regarded as successful on all major issues except (vii).

9.Of the original respondents who took out the aforesaid 2 sets of summonses all, except those in CS-21, took out leave to appeal application[4]. After a perusal of their summonses, leave to appeal is basically sought against issues (i) to (vi)[5]. No appeal is lodged against the decision in respect of issue (vii), i.e. the 6 CS applications are to be heard together. On the other hand, R1 in CS-13[6], who neither took out the 2 sets of summonses nor participate in their argument, filed an application for leave to appeal on 3 June 2016 (collectively “leave to appeal applications”).

10.The applicants consider since the Tribunal basically ruled against the respondents on all preliminary issues except issue no. (vii), even though following the principles in Good Faith, there should be no order as to costs. They took out a set of summonses for this purpose all dated 19 May 2016 (“costs variation applications”).

11.Initially, Lo & Lo representing their clients in CS-12, CS-13, CS-14 and CS-15 also issued a batch of 4 summonses dated 1 June 2016 to, inter alia, vary the said costs order nisi to the effect that the costs be on indemnity basis with 2 certificates for counsel. Ms Ngai for the respondents in these 4 CS applications submitted this was in response to the applicants’ indication that they might withdraw the 6 CS applications, which at the end did not happen. Ms Ngai now dropped the 4 costs summonses and proposed there be no order as to costs. Mr Eric Shum for the applicants did not oppose. An order to that effect was granted at the hearing.

12.So before the Tribunal there are basically 2 sets of applications, namely, the leave to appeal applications and the costs variation applications as set out in [9] and [10] above. It is noted that the leave to appeal applications are directed against the aforesaid preliminary issues nos. (i) to (vi) only. No appeal is lodged against issue no. (vii) by the respondents.

13.At the first call-over hearing for all these summonses in July 2016, the parties were directed to fix a hearing date for argument in consultation with one counsel’s diaries of all parties concerned. The hearing was eventually fixed to 16 December 2016 by the parties.

Whether R1 in CS-13 Should be Allowed to Apply for Leave to Leave

14.The preliminary issues summonses were first heard before the Tribunal on 18 December 2014. Mr Adam To of KB Chau & Co acting for R1 in CS-13, when asked whether they would be adopting a neutral stance and be abiding by whatever decision the Tribunal would be making, indicated it was his client’s position [7]. He asked on behalf of his client to be excused from attendance. On this basis, the Tribunal gave, inter alia, the following directions:

“7. Since the 1^st Respondent in LDCS13000/2014 is willing to abide by any decision of the Court, his attendance of further hearing for the consolidation and the questions of law summonses be excused”

15.As a matter of facts, neither R1 in CS-13 nor KB Chau & Co attended any subsequent hearings leading to and inclusive of the full blown argument hearing of the 2 sets of summonses.

16.A preliminary question arises as to whether R1 in CS-13 is entitled to lodge his leave to appeal application having prior indicated that he would abide by the Tribunal’s decision. On this preliminary question, R1 in CS-13 grounds, so far as can be discerned from counsel Mr Tsang’s submission, can be understood and framed into the following 3 broad grounds:

i) the order affects substantially the interest of R1 in CS-13;

ii) the rules of appeal do not prohibit his client from seeking leave to appeal in the circumstances; and

iii) if R1 in CS-13 does not seek to join in now, he would get a lesser chance to participate if the matter goes on further to the Court of Final Appeal (“CFA”). He relied on the CFA decision in Flywin Co Ltd v Strong & Associates Ltd[8] and paragraph 59/10/7 of the Hong Kong Civil Procedure, Vol 1 (2017).

17.Mr Shum for the applicants opposes. The gist of his submission is that in light of R1’s in CS-13 stance that he is willing to abide by the Tribunal’s decision and therefore took no steps in the proceedings, R1 in CS-13 is estopped from raising issues and lodging the appeal. He is relying on res judicata by way of issue estoppel between the applicants and R1 in CS-13. He, however, submits no authorities to support his argument. So far as can be discerned from Mr Shum’s submission, the situation is akin to the parties having entered into a consent order. The issues between them have been settled. Thus R1 in CS-13 is estopped from backing out.

18.It is Mr Shum’s case that, by indicating to be bound by the decision of the Tribunal on issues raised in the 2 sets of summonses, the issues between the applicants and R1 in CS-13 have been conclusively determined. 

19.In the Tribunal’s judgment, the real question to be decided is whether or not a party, who consciously consents to be bounded by an agreement in the form of a consent order, should be allowed to back out from such decision.

20.The rationale behind the doctrine of res judicata is the requirements for finality and conclusiveness of judicial decisions by putting limits to right of citizens to reopen dispute while recognizing any determination of dispute may be imperfect. It is also in the interest of an individual to be protected from repeated suits and prosecutions for the same causes[9] or from vexatious multiplicity of suits.

21.The learned author states in paragraph 1.02 of Spencer Bower And Handley Res Judicata (4 Ed) (2009) that in order to set up res judicata, certain elements need be established:

“1.02 A party setting up a res judicata as an estoppel against the opponent’s claim or defence, or as the foundation of his own, must establish its constituent elements, namely that:

(i) The decision, whether domestic or foreign, was judicial in the relevant sense;

(ii) It was in fact pronounced;

(iii) The tribunal had jurisdiction over the parties and the subject matter;

(iv) The decision was –

(i) final;

(ii) on the merits;

(v) it determined a question raised in the later litigation; and

(vi) the parties are the same or their privies, or the earlier decision was in rem.”

22.In the present case the Tribunal accepts Mr Shum’s submission that the situation is analogous to that of a consent order having been entered for or against R1 in CS-13 on issues in the 2 sets of summonses. Judging from this light it appears to the Tribunal that the constituent elements set out above have basically been satisfied. It is an order made by the Tribunal at one of the call-over hearing binding on the parties. The matter is final on the issues to be disposed of between the applicants and R1 in CS-13. The decision need not be correct in law or in fact because res judicata gives effect to the policy of the law that the parties to a decision should not afterwards be allowed to re-litigate even though the decision may be wrong[10]. His remedy lies in the appeal, which is subject to hurdles set out in the following paragraph. The fact that the decision is by consent cannot help R1 in CS-13 as it is as efficacious as those pronounced after a contest[11]. No doubt this Tribunal has jurisdiction over the matter in question, and the said matter is being raised again now.

23.In the present case, R1 in CS-13 has been legally represented throughout. He should have received proper advice and must have known that any determination of the Tribunal on the preliminary issues would have affected his interest. R1 in CS-13 may have his own reasons for not participating in the argument hearing. He may be lacking fund or may wish to take advantage of a free ride on those issues. It is perfectly reasonable to say that he has made a conscious decision not to participate in the 2 sets of summonses despite the fact that he has been given a full and fair opportunity of participating or defending/protecting his position. As a result, his attendance in all proceedings relating to these issues was exempted. Now, he wants to back out. Yet he advances no explanation on why he chose not to take part before, but would like to actively taking part now. In the Tribunal’s judgment, unless R1 in CS-13 can point out specifically factors that vitiates his consent, e.g. fraud, I am afraid he is caught by the res judicata by way of issue estoppel, and should not be allowed to back out.

24.This Tribunal considers the fact that the decision affects the interest of R1 in CS-13 cannot be a factor for granting leave. It is only the minimum threshold to engage the question of appeal for the simple reason if a party has no interest in a decision he obviously has no right in the appeal.

25.Further, the mere fact that the relevant rules not prohibiting R1 in CS-13 lodging an appeal does not mean that the said R1 then should be allowed to participate automatically.

26.In the Tribunal’s judgment, paragraph 59/10/7 of the Hong Kong Civil Procedure, Vol 1 (2017) and Flywin cannot assist R1 in CS-13. Flywin is the authority for the proposition that if a party omitted to take an issue at trial and then sought to raise it on appeal, they are generally barred from doing so unless there is no reasonable possibility that the state of the evidence relevant to the point would have been materially more favorable to the other side if the point had been taken at trial. It is a matter of fairness[12]. Even if a point is not barred on this basis, the appellate court would be unwilling to pursue a point which has not been pursued in the lower court. Paragraph 59/10/7 of the White Book states the principles in similar terms. If a participating party raising no issue at the first instance hearing is generally not allowed to raise that issue in the appeal, logically and naturally, it would appear even more difficult for a non-participating party in the original contest to raise it. Although after perusing the grounds of appeals settled by Mr Tsang on behalf of R1 in CS-13 they are basically similar to those raised by the other participating respondents, the question remains as to why R1 in CS-13, who has consciously chosen not to participate in the first instance argument, should be allowed to participate in the appeal. No explanation has been advanced.

27.By reason of the above, this Tribunal is not convinced that R1 in CS-13 should be allowed to take part in the appeal, his application for leave to appeal is hereby dismissed. His interest, however, will not be prejudiced or materially prejudiced[13] as the other contesting respondents are taking the same matter further to the CA.

28.In the following discussion, unless otherwise stated, when referring to respondents under the heads of the leave to appeal application, the Tribunal is referring to the R2 of CS-12, CS-13 and CS-14, R1, R2 and R3 of CS-15 and R1 to R8 in CS-20.

Leave to Appeal Application of the Other Respondents

29.These preliminary issues are raised by the minorities with a view to engaging the “on their own” instead of the “on its own” formulation in setting the reserve price provided in Schedule 2 Paragraph 2 of the LCSRO. The purpose is to achieve the highest RDV which only a merged site can fetch as against lots sold/assessed individually. As said in my said decision, the issues concern whether the Lands Tribunal can direct sales of adjoining lots, which are subjects of different applications under the LCSRO by the same or connected groups of majority owners against their will as a merged site, and if not, whether it can do so indirectly by consequential directions. Additionally, whether in so doing, the “on their own” formulation will be engaged to cover more lots. It boils down to a matter of construction of a number of provisions of the LCSRO[14].

30.In a nutshell, the Tribunal concludes that it only has a discretion under s.4(6)(a)(i) to direct sale of the lots together as if whole or as a combination of one or some pairs of them after taking all the circumstances into consideration. However, due to the constrains of LCSRO, particularly s.3(1) & (2), s.4(6) and s.5(1) thereof as construed by the Tribunal, a sale order of a particular application cannot cover lots other than those comprised in the original application. Thus, despite the wordings of Paragraph 2 Schedule 2, the reserve price so set should be restricted to only lots comprised in the original application. The final reserve price of the enlarged sites for the single auction will be the aggregate of that for each application. The final sale price would be left to market force determined by the auction. With a view to achieving sale of the lots in a single auction, directions for synchronization of sales can be made along the line set out in the CA decision of Golden Bay Investment Ltd v Chou Hung[15] mentioned in the CFA decision of Capital Well Limited v Bond Star Development Limited[16]. However, each set of synchronization directions are to facilitate sales together with the adjoining lots but, by reason of the aforesaid, cannot include the said adjoining lots. The Tribunal also directs that in the circumstances of these cases the 6 applications are to be heard together.

31.The grounds of appeals of the remaining respondents lodging the leave application are basically similar. There is no dispute the issues sought to be appealed against concern questions of law. The 3 questions of law framed by Mr Patrick Fung SC with Ms Nancy Ngai for determination by the CA are[17]:

i)   Whether the tribunal has a discretion under s.4(6)(c) of the LCSRO, in addition to s.4(6)(a)(i) thereof, to direct that the lots, the subjects of different applications made under the LCSRO, are to be sold together as a whole in one public auction if compulsory sale orders are made by the Tribunal in the aforesaid applications under the LCSRO?

ii)   Where an applicant or a group of related applicants making separate applications for separate orders for sale of lots are capable of being jointly redeveloped as a composite site on the expert and/or factual evidence, whether the Tribunal must exercise its discretion under s.4(6)(a)(i) and/or s.4(6)(c) of the LSCRO to direct a combined sale of the lots, the subjects of the different applications, together as a whole in one public auction if compulsory sale orders are made by the Tribunal in the aforesaid applications under the LCSRO?

iii)   When the Tribunal directs a combined sale of the lots, the subjects of different applications, in one public auction, whether the reserve price for the auction must be set on the merged site basis under Paragraph 2 of Schedule 2 of the LCSRO reflecting the full and enhanced RDV of the composite site constituted by the lots, the subjects of the aforesaid applications?  (Highlights added by Mr Shum)

32.These obviously are the three main questions that need be determined. Further, in answer to the said questions, this Tribunal considers other connected questions of law such as the following must necessarily engage and need be answered:

i)   Whether, on a proper construction of s. s.3(1) & (2), s.4(6) and s.5(1) of the LCSRO, their respective or combined effect is that the subject of an order for sale must include only lots comprised in the original application;

ii)   Whether the court has power to compel applicants (no matter connected or not) to combine adjourning lots in one single application under the LCSRO;

iii)   Whether the CA’s decision of Bond Star Development Ltd v Capital Well Ltd[18] requiring lots 100% owned by the applicant(s) to be taken out of the application has limited application or even ceased to have effect in light of the CFA decision in Capital Well Ltd v Bond Star Development Ltd[19]. This clarification is essential because very often the majorities can only acquire 100% ownership after lodging their application to the Tribunal. Some 100% owned lots may be withdrawn from the application some time before trial as a result, rendering joining of lots impossible if Bond Star is applicable.

iv)   Whether the protection afforded by Articles 6 and 105 of the Basic Law would require the Tribunal, in situation where separate applications are made under the LCSRO for separate sale orders in respect of adjourning lots like the present ones, to order sale of lots as a merged site or otherwise to set a reserve price for the lot(s) in question reflecting the RDV of all lots jointly developed on a merged site basis.

33.Mr Shum opposes the leave application on the ground that the respondents are simply trying to re-argue their case once again in the CA, despite the fact their argument has been dealt with, both herein and in line with previous authorities, including the Tribunal’s decision in Day Bright Development Ltd & Ors v Choi Pak Ling & Ors[20] (by a panel comprising me and another member). His argument is that leave, even if to be given at all, should only be given by the respondents from the CA.

34.Applications by the same or connected groups of applicants for sale of adjourning lots under LCSRO by separate applications are not uncommon. As stated in my said decision on the preliminary issues, there are 2 lines of conflicting decisions made by different panels of the Tribunal on the very same questions about assessment of RDV and the setting of reserve price by the Tribunal. I share Ms Ngai and Mr Lam’s views that it would be most undesirable to leave the matter in a state of uncertainties as it now stands.

35.Section 11(2) of the Lands Tribunal Ordinance, Cap 17 (“LTO”) provides that any appeal to the CA against a decision of the Tribunal shall be on the ground that such decision is erroneous in point of law. There is no disputes the issues now sought to be appealed against are points of law. Section 11AA(6) of LTO further stipulate:

“(6) Leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that –

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

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

36.The “reasonable prospect of success test” is the same as that stated in section 14AA(4) of the High Court Ordinance, Cap 4. It is stated in paragraph 59/2A/4 of Hong Kong Civil Procedure (2017) Vol. 1 the following:

“... In SMSE v KL [2009] 4 HKLRD at para. 17 Le Pichon JA observe:

“... The relevant test appears in section 14AA(4) of the High Court Ordinance. In granting leave, the judge must have considered that the test set out in section 14AA(4) had been met. The section requires that the court be satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard before granting leave. Reasonable prospects of success involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’.”

In Wynn Resorts (Macau) SA v Mong Henry (unrep., [2009] H.K.E.C. 1293), Chu J (as she then was) observed that:

“The adoption of the ‘reasonable prospect of success’ test, as opposed to the ‘real prospect of success’ test, in our legislation is not accidental. In the Interim Report of the Chief Justice’s Working Party on Civil Justice Reform (2001), the proposal was to adopt the ‘real prospect of success’ test as the threshold for granting leave to appeal: Proposal 44 and para 535-539. In the Final Report (2004), however, the Working Party decided to adopt as the test for granting leave a requirement that the appeal has reasonable prospects of success, as conveying the notion that the prospects of succeeding in the appeal must be ‘reasonable’ and therefore more than ‘not fanciful’, without having to be ‘probable’: recommendation 115 and para. 656 ...

To meet the ‘reasonable prospect of success’ test, an applicant is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although he does not have to demonstrate that the appeal will probably succeed.”

(Emphasis added)

37.The Tribunal will adopt the test referred to in the aforesaid two cases. In the Tribunal’s judgment, after reading the grounds set out in the notices of appeal, it really cannot be said that the case now launched by the respondents are merely arguable. They are decently framed and are more than arguable. The fact that there are conflicting decisions of the Tribunal speak for itself, though the Tribunal will not pitch its chance of succeeding as high as probable for the obvious reasons that this Tribunal has, on a balance, refused to accept them. The argument advanced has merits and deserves to be heard on appeal.

38.Since the threshold has been met, Mr Shum’s submission that the participating respondents should ask for leave from the CA cannot be accepted. To do so will be a breach of duty required of the Tribunal under the present statutory framework.

39.In the last paragraph of 59/2A/4 (p.1109) Hong Kong Civil Procedure Vol 1 (2017), it was stated that the CA may also grant leave if the question is one of general principles; decided for the first time; or a question of importance upon which further argument and a decision of the CA would be to the public advantage. In the present cases there are conflicting decisions of the Tribunal on the same issues on many occasions. Although there is no statistics kept of developers breaking up lots in their applications to the Tribunal under the LCSRO, speaking from experience and judging from the numbers of conflicting cases referred to in my said decision, such is not rare. There are also cases that separate applications in respect of contiguous lots are taken out initially, but some are withdrawn subsequently due to the applicants acquiring 100% of the undivided shares in the lots comprised in the application. There are also applications in which several lot are included in one single application but one or some of them are 100% acquired after the issue of the application, and thus are withdrawn from that application. The clarification of the aforesaid LCSRO provisions help address concerns of minorities, whose properties are being compulsorily acquired against their will through no fault of their own, as to whether or not they have been properly compensated. Their property rights are constitutionally protected. Nevertheless, these provisions have never been considered by the CA. In the Tribunal’s judgment the true construction of these provisions is a matter of great public importance and concern. Even if this Tribunal were wrong in granting leave to appeal under the first limb of s.11AA(6) of the LTO, the Tribunal will also be granting leave under the “in the interests of justice” limb.

40.By reason of the above, this Tribunal hereby grant leave to appeal to the respondents in respect of the questions more particularly set out in [31] and [32] above.

Costs Variation Applications

41.The gist of Mr Shum’s submission can broadly be summarized as follows:

i)   the CA’s decision of Good Faith (supra) is not applicable because that case concerns costs of main trial whereas the present applications are interlocutory;

ii)   the respondents are pursuing a line of argument almost all has been rejected by this Tribunal. It would be unfair to the applicants if they are still required to pay costs to the respondents. It is especially so when the applicants are successful in resisting the fixing of reserve price based on a merged site basis, which is the most critical and substantive issue to be determined in the preliminary issues exercise; and

iii)   the line of argument advanced by the respondents are obviously unreasonable or having no real chance of success.

42.Concerning the first broad point, this tribunal considers the “applications test” adopted by the Appeal Committee of the CFA in Onway Engineering Ltd v Shun Wing Construction and Engineering Co Ltd^[21]  applicable in determining whether or not an application is interlocutory. The test is: the matter is “interlocutory” unless determination of the application will finally dispose of the action or finally determine a substantial issue in the action, whichever party succeeds on the application^[22].  In the tribunal’s view, the preliminary issues applications are not interlocutory because they finally determine substantive issues, namely, the power to order sales of lots as a merged site and setting of consequential reserve price for the auction. Support can be lent from rule 30E(1) and (2) of the Lands Tribunal Rules, Cap 17A (“LTR”) which state that for the purpose of determining the time within which a leave to appeal application should be lodged, an order determining any question of law without a full trial is not interlocutory in nature.

43.Even assuming the respondents do not take out the preliminary issues summonses, no doubt these issues will be raised at trial and the parties have to incur time and expenses to deal with them anyway. They would become part and parcel of the main trial. The Tribunal cannot see why the compensation principles on costs do not apply to the present costs order.

44.This Tribunal shares the submission of Mr Lung, counsel for the R1 and R2 in CS-21, that indeed the applicants do not seem to be contending Good Faith inapplicable otherwise they would have asked for costs from the respondents relying on the usual “costs to follow event” principle.

45.On the third point raised, by reason of what this Tribunal has decided on the leave to appeal applications of the respondents, this Tribunal cannot agree that they have pursued lines of argument which are so devoid of merits that warrants a deprivation of costs. This Tribunal also does not agree that the argument falls within the exceptions of the compensation principles stated in Good Faith.

Disposition and Order

46.The Tribunal now makes the following orders:

i) The application by R1 in CS-13 for leave to appeal is dismissed;

ii) Leave to appeal against my said decision dated 6 May 2016 in respect of the issues set out in [31] and [32] above is granted to R2 in CS-12, CS-13, CS-14, R1, R2, R3 in CS-15, and R1 to R8 in CS-20;

iii) The costs order nisi set out in [105] of my said decision dated 6 May 2016 is made absolute;

iv) The costs of the leave to appeal application as between the applicants and the respondents in CS-12, CS-13, CS-14, CS-15 and CS-20 be in the cause of the appeal with certificate for counsel;

v) The costs of the leave to appeal application as between the applicants and R1 in CS-13 be paid by R1 in CS-13 with certificate for counsel;

vi) The costs of the costs variation applications be paid by the applicants to the respective respondents in the 6 CS applications participating in the argument of the 7 preliminary issues with certificate for counsel;

vii) For the purpose of taxation, one-third of the hearing time on 16 December 2016 and one-sixth of the applicants’ overall costs in respect of the leave to appeal application be appropriated to the argument between the applicants and R1 in CS-13;

viii) For the purpose of taxation, one-third of the hearing time on 16 December 2016 and five-sixth of the applicants’ overall costs in respect of the leave to appeal application be appropriated to the argument between the applicants and the participating respondents in CS-12, CS-13, CS-14, CS-15 and CS-20 in respect of the leave to appeal application;

ix) For the purpose of taxation, one-third of the hearing time on 16 December 2016 be appropriated to the argument on the costs variation applications; and

x) The costs orders (iv) to (ix) are costs nisi, assessed on High Court Scale, and will be made absolute if no application is made to vary the same within 14 days from today.

Mr Erik SHUM, instructed by Lo, Wong & Tsui, for the applicants

(LDCS 12000/2014, LDCS 13000/2014, LDCS 14000/2014, LDCS 15000/2014, LDCS 20000/2014 and LDCS 21000/2014)

Ms Nancy NGAI, instructed by Lo & Lo, for the 2^nd respondents (LDCS 12000/2014, LDCS 13000/2014 and LDCS 14000/2014)

Mr Alvin TSANG, instructed by K B Chau & Co, for the 1^st respondent (LDCS 13000/2014) (Leave to Appeal Application only)

Ms Nancy NGAI, instructed by Lo & Lo, for the 1^st, 2^nd and 3^rd respondents (LDCS 15000/2014)

Mr Gary LAM instructed by Chui & Lau, for the 1^st to 8^th respondents (LDCS 20000/2014)

Mr Vincent LUNG, instructed by T K Tsui & Co, for the 1^st and 2^nd respondents (LDCS 21000/2014) (Costs Variation Application only)