Fortress Jet Ltd and Others v. Tang Hoi Yip and Cheung Sau Chan Property Ltd and Others

LDCS 3000/2015

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAIN APPLICATION NO. 3000 OF 2015

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REASONS FOR DECISION

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1.The 1^st and 3^rd Respondents (“R1 & R3” and collectively referred to as “R”) applied by the summons dated 15 February 2017 (“Rs’ Application”) for the following orders:

	(1)	Leave to R1 & R3 to join the two adjoining owners of Nos. 23-25, Golden United Limited (“GU”), and No.27, Earn Centre Limited (“EC”) as R4 & R5;
	(2)	leave to amend R1 and R3’s Form 33 in red as the copy annexed to the summons;
	(3)	the Applicants (“AS”), R1, R3, GU and EC do:
		(A)	within 21 days prepare and exchange reports with reference to an amalgamated redevelopment site comprising Nos. 21 & 21A (“the Application Lot”) and Nos. 23-25 & 27 Ashley Road (“the Adjoining Lots”); and
		(B)	procure the valuation experts to hold a without prejudice meeting and prepare a joint statement within such time as the Court may direct; and
	(4)	if considered appropriate, the vacation of the trial dates fixed to commence on 27 March 2017 with 8 days reserved.

2.Rs’ Application was dismissed on the same date and we now hand down the reasons.

3.Mr David Wong, for R1 and R3, submitted as follows:

	“3. By this Interlocutory Application, R seek to preserve their right to claim a pro rata share of the real redevelopment potential of their property in case the Lot is ordered to be sold.  This R now do, based on most recent incontrovertible evidence of the Lot being part of an amalgamated redevelopment site (“ARD Site”) comprising the Lot, and adjoining lots (“Adjoining Lots”) owned by the intended Respondents (“IR”). Thus, if the Lot is to be sold by itself alone, the redevelopment potential realised will be less than real.  The real redevelopment potential is that of the ARD Site (of 8,000 sq. ft.), which undoubtedly has a higher unit rate of redevelopment potential than the Lot (of less than 2,600 sq. ft.). 4. To enable the real and higher rate of redevelopment potential to be realised (so that R will be paid the real value of their property upon being deprived of it), the Adjoining Lots have to be included in the CSO so that they will be included in the auction sale.  Hence IR need to be joined and R’s Notices of Opposition amended. 5. R will rely on Article 6 of the Basic Law which protects private property rights, Article 105 (“BL 105”) which provides for right to compensation for deprivation of property corresponding to the real value of the property, and Article 11 (“BL 11”) which provides no law enacted by the legislature of HKSAR shall contravene the Basic Law. 6. An order for compulsory sale will deprive the owner of his right to the property sold.  Thus the owner has a constitutional right to be paid the real value of his property as required under BL 105 and entrenched by BL 11. 7. Where a property is sold by auction as part of a small site for redevelopment, the redevelopment potential of that site is realised.  A pro rata share of the owner concerned in the sale proceeds will include a pro rata share of the redevelopment potential, which will represent the real value of his property. 8. But where the small site of the property will form part of a large site for redevelopment which together have a higher unit rate of redevelopment potential, yet the property is to be sold as part of a small site by itself, the pro rata share of the owner in the sale proceeds of that site will be less than a pro rata share in the real redevelopment potential, thus less than the real value of the property to be deprived. 9. It is therefore more than arguable that the Land (Compulsory Sale for Redevelopment Ordinance (“LCSRO”) should be purposively construed to confer jurisdiction on the Tribunal to include adjoining sites in the CSO so that it will not contravene BL 11 and BL 105, and the minority owners will be paid the real value of their properties. 10. In First Kind Ltd. (LDCS 12000/2014 [2017] HKCU 99), His Honour Judge K.W. Wong noted that the following connected questions of law that need to be answered (para. 32 therein):
	(i)	Whether, on a proper construction of 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 (sic) lots in one single application under the LCSRO;
	(iii)	Whether the CA’s decision in Bond Star Development Ltd. 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 the light of the CFA decision in Capital Well Ltd. v Bond Star Development Limited; and
	(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 (sic) 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.
	11. The learned Judge granted leave in the light of uncertainties as a result of conflicting decisions made by different panels of the Tribunal, and also on the grounds of the questions being of general principles or importance, the clarification of which will help address concerns of minorities, whose properties are being compulsorily acquired against their will, as to whether or not they have been properly compensated, their property rights being constitutionally protected.  The learned Judge rightly noted that those provisions have never been considered by the CA. 12. IR now complain at paragraph 22 of the First Affidavit of Wong Chung Kwong dated 24th February, 2017 that it is oppressive, unreasonable and unfair to join IR as parties to the Main Application to compel the Adjoining Lots owned by them to be auctioned with the Lot (if a CSO is made) as one ARD Site against their will.  But the auction is expected to realise the real value of the ARD Site, and IR and the Applicants (“AP”) can and are indeed expected to bid for it; and if successful, they need only pay for properties that they do not already own.  After all, it is the AP (as alter ego of CSI) who engage the LCRSO and seek to compel R’s property to be auctioned.  IR are also the alter egos of CSI as their ultimate 100% holding company.  How then can IR be heard to complain? 13. If the ARD Site be eventually auctioned to some other developer who outbids AP and IR (or another alter ego of CSI), that is because the bidding has gone so high that the majority owners consider it more profitable to cash in than to hang on and sink more money into the redevelopment. 14. In that event, both CSI (through AP and IR) and R will stand to benefit in receiving a real or even higher value for their respective properties.  On the other hand, if only the Lot is auctioned by itself, AP (and ultimately CSI) will upon becoming the purchaser, pocket the difference between the real value of R’s property and its value with a lower unit rate of redevelopment potential.  How could R be said to be unfair when R seek to have the real value of their property if they are to be deprived of it while IR will still have the option and capital advantage to bid at the auction or being paid a real or even higher value for their Adjoining Lots. 15. In Capital Well Limited v. Bond Star Development Limited (FACV No.4 of 2005), Bokhary PJ dealt with policy objectives of the LCSRO obiter at paragraphs 39 to 41 of the judgment of the CFA.  He alerted to the danger of confining the power of the Tribunal such that it was impermissible to order sale of other lots wholly owned by the majority owner.  At paragraph 40, the learned Judge welcomed auction of the entire developable site which could be expected to attract only bids from genuine developers, thereby leaving no room for ransom-motivated bids so that redevelopment of the entire site would be able to proceed without impediment, in line with the objectives of the Ordinance.  On that note, the learned Judge left the question open as to whether the Tribunal is precluded from making an order for sale in respect of the composite site.  Relevance of the Basic Law was not considered then.”

4.Mr Mok, counsel for AS, GU and EC, opposed Rs’ Application on the following two main grounds:

	(a)	The Tribunal has no jurisdiction or power under Cap 545 to coercively order the Adjoining Lots to be sold by the compulsory sale order to be granted in the action herein when neither the AS (the majority owner in the Cap 545 action herein) nor R1 & R3 (the minority owner herein) hold any proprietary interest in the Adjoining Lots or coercively join GU and EC (collectively “the Adjoining Owners”) as respondents in the Cap 545 action herein.
	(b)	Further and alternatively, Rs’ Application comes late and clearly should be rejected on case management grounds.

5.Mr Mok submitted as follows:

	“Jurisdiction/Power 3. Nos. 23-25 & 27 have been wholly owned by the Adjoining Owners for rental for over 10 years and the Adjoining Owners intend to keep them for rental even after the option to redevelop Nos.21-27 jointly should materialise.  In other words, neither the majority owner (AS) nor the minority owner (R1 & R3) in the Cap 545 action herein has any undivided shares or proprietary interest in the Adjoining Lots. 4. The CA judgment in Bond Star [2004] 2 HKLRD 855, §§12-19 decided that the majority owner is not entitled to inject into the Cap 545 application a wholly owned adjoining lot under s.3(2)(a) because the adjoining lot is not co-owned.  This decision is against Rs’ Application. 5. The appeal of Bond Star resulted in the CFA judgment in Capital Well (2005) 8 HKCFAR 578.  The CFA judgment in §§38-40 expressed reservation on the practical results that could flow from the CA’s decision referred to in the preceding paragraph.  This notwithstanding, the CFA judgment fully supports the proposition advanced above, namely that the Tribunal is given no jurisdiction or power to compel the inclusion of the Adjoining Lots and to sell them under the compulsory sale order applied for in the action herein and Rs’ Application to join the Adjoining Owners as respondents for that purpose should be rejected:
	a.	The CFA judgment, after expressing the above concern, fully accepted that Cap 545 only permits compulsory sale of co-owned lots: “Plainly, the power coercively to order sale is confined to ordering the sale of a lot or lots in which a majority owner and a minority owner each hold a proprietary interest” (underlines added; the first sentence of §41).
	b.	Then in the rest of the paragraph CFA left open the question whether Cap 545 precludes the Tribunal from making an order for sale in respect of the composite site in the situation where “the majority owner... wishes to have that lot put up for auction together with adjacent redevelopment lots wholly owned by him” (§41; emphasis added).  The question thus formulated by the CFA accepts the choice rests with the majority owner.
	c.	The next question left open by the CFA in §42 is: “whether the Tribunal has discretion to give suitable directions (under s.4(6) of the Ordinance or otherwise) concerning conduct of the sale designed to secure that the sale of the single lot, the subject of its order, can take place together with the sale of the other redevelopment lots, similar to the directions given by the Court of Appeal in Golden Bay Investment Ltd v Chou Hung [1994] 2 HKC 197 at pp.200-202, or along analogous lines”.  The situation covered by Golden Bay was a consolidated trial of 4 separate applications over 4 different co-owned lots each asking for sale of the relevant lot under the Partition Ordinance.  In other words, all 4 lots already formed subject matter of the actions and thus engaged the court’s consolidation and related powers.
	d.	There is no binding authority in support of Rs’ Application to compel the inclusion of the Adjoining Lots (owned by other parties), which do not form subject matter of any action before the Tribunal, to be sold by the compulsory order applied for herein.
	e.	The binding authorities above are against Rs’ Application.  See also Day Bright [2014] 4 HKC 364§§41-51.
	f.	The submissions made in RS §15 ignores completely the actual words used in §§39-41, in particular §40, of the CFA judgment in Capital Well.
	6. §9 of the Skeleton of R1 & R3 (“Sk/Rs”) relied on the questions formulated in §§31-32 of First Kind for the leave to appeal in support of the argument that Cap 545 confers jurisdiction on the Tribunal to compel the inclusion of the Adjoining Lots in the action herein and in support of the Rs’ Application.  §10 of Sk/Rs purport to set out the 4 questions.  However, the questions set out in Sk/Rs §10 failed to point out that in each of the 4 questions set out in §§31 and 32(iv) some words are missing.  In each case, the missing words made clear that the question is concerned with the situation where the lots form “the subject of different [Cap 545] applications” or to similar effect.  This is a situation which engaged the Tribunal’s consolidation and similar powers.  The questions do not cover the situation of compelling the joining of the Adjoining Lots (which are not subject of any Cap 545 action and over which neither AS nor R1 & R3 have any proprietary interest) against the wish of the Adjoining Owners. 7. The following points can be made on the line of the Tribunal judgments in favour of the reserve price being assessed on a merged site basis:
	a.	All three judgments involved the majority owner (a) having started separate Cap 545 actions, each on one building/lot of a row of buildings/lots and (b) in each Cap 545 action, applying for a compulsory sale by auction in respect of each lot.  This situation, like that in Golden Bay, engaged the power of the Tribunal to consolidate the actions or to hear them together or one after the other.  This does not apply to the Adjoining Lots.
	b.	None of these 3 judgments address the points made above about the binding effect of the CFA judgment.  The 3 judgments proceeded:
		i.	as if the CFA’s acceptance that Cap 545 only gives coercive power to sell co-owned lots was not there; and
		ii.	as if the question left open by the CFA in §41 was not dependent on the majority owner’s “wish” and choice to inject his other wholly owned lots.
	c.	In §43 of Many Gain the Tribunal confirmed that the scope of the judgment in Supergoal was to answer the question posed by the CFA: “... in cases where a majority owner each qualifies for making of such a compulsory order and wishes to have that lot put up for auction together with adjacent development lots wholly owned by him, the question arises as to whether, on its true construction, the Ordinance precludes the Tribunal from making an order for sale in respect of the composite site” (emphasis added; see also §§63 & 31[41] of Supergoal). As pointed out above, the CFA question accepts the “wishes” and choice of the majority owner.  Thus Many Gain and Supergoal are not authorities for joining the wholly owned Adjoining Lots in the action herein against the wish of the Adjoining Owners.
	d.	The 3 judgments accordingly cannot form any valid authority in support of the Rs’ Application to compel the Adjoining Owners to be joined as respondents and to compel the sale of the Adjoining Lots under the compulsory sale order in this action.
	8. The ownership of the Adjoining Owners (which includes the rights to determine whether and when to sell) should be protected.  Granting Rs’ Application would break new ground and could have far reaching consequences. 9. Secondly, neither is there any rule or authority to justify the intended joinder of GU and EC as respondents against the wish of the Adjoining Owners and AS, when AS is not making any claim against the Adjoining Owners nor the Adjoining Owners against AS (in the way that an intervening party may).  The respondents’ summons cited R.11, 12 & 15 of the LTR and O.15 r.4 RHC. None of them, including 15/4/12 referred to in footnote 1 to Sk/Rs §17, provide such jurisdiction. 10. Sk/Rs repeatedly mentioned joining the Adjoining Lots and Owners would enable R1 & R3 to obtain real redevelopment value of their units.  It should be borne in mind that the Bills Committee had reached agreement that the redevelopment potential of the lot forming subject of the Cap 545 application should be fixed “on its own” “as it would be difficult to assess the reserve price if other factors such as the potential of adjacent sites acquired by the majority owners were taken into account” (see the discussion of, and the conclusions drawn on, the records of relevant proceedings in LegCo concerning the passing of the bill in Day Bright , §§53-56, particularly §53(ii), (iii) & (vi), §54(i) & (iii) and §56 D-E).   Case Management Power 11. Post-CJR, a late interlocutory application to amend pleadings should not be allowed unless there are exceptional circumstances if it has the effect of derailing the trial dates:
	a.	See §15 of the unreported judgment of 11.3.2013 in CACV 38/2013.
	b.	“Last minute pre-trial applications also disrupt the preparation for the trial on the part of a trial judge in terms of reading into the case.  Instead of getting himself or herself familiar with the issues that have to be tackled at the trial, the judge would have to divert attention and spend time and efforts on such applications.  Thus, such practice has to be discouraged...” (§18).
	c.	“Post-CJR case management recognises that the closer to trial an application to amend pleadings is made the more likely it is to cause real prejudice to the other party, especially when the trial (which is an immovable milestone event unless there are exceptional circumstances) may be compromised by insufficient remaining time until the commencement of trial to accommodate the other party’s reaction to the new pleas if the application is granted, or by the even greater danger of putting the milestone trial at risk” (§26 of the unreported judgment of 6.2.2014 in HCA 382/2009 ).
	d.	“The above sentiments have been reflected in a number of authorities... In particular, the Court of Appeal... warned that a party has a legitimate expectation that he would have his day in court upon the scheduled trial dates and “[there] has to be very strong and exceptional circumstances to warrant further postponement of such trial date”” (§27).
	12. R1 & R3 admitted that soon after the service of the Cap 545 Application of 27.4.2015, they always knew that the Adjoining Lots (Nos.23-27) are owned by the Adjoining Owners, associated companies of AS, and the subject lot is capable of being jointly redeveloped with the Adjoining Lots. 13. It is inexcusable that, if the Applicants’ subjective intention of joint redevelopment is important, they took no step to seek confirmation from the AS on their intention or other steps to protect their interest regarding the joint redevelopment option.  For example, R1 & R3 could have issued interrogatories on the topic and applied for the preparation of RDV to be assessed on the alternative basis of (a) “on its own” and (b) the merged site basis.  This late application is self-induced. 14. Further, the application of the merged site RDV cannot be dependent on the subjective intention of the majority owner.  Rather it should be dependent on whether objectively the subject lot is capable of being jointly redeveloped with the neighbouring lots.  To begin with s.4(2)(a) expressly provides that, when the Tribunal decides whether redevelopment of the lot is justified, it is irrelevant “whether or not the majority owner proposes to or is capable of undertaking the redevelopment”; thus when a majority owner commences a Cap 545 action it cannot be assumed that he must have the subjective intention to redevelop that lot.  Take the example of the majority owner having commenced a series of Cap 545 actions, each for one lot in a row.  The key point could not be whether he subjectively intends to jointly develop or not.  The key point must be the objective fact that if the majority owner should succeed in his Cap 545 actions and the auctions, he would be capable of jointly redeveloping the lots together.  It is this capability which forms the platform for the argument to fix the reserve price according to the merged site RDV. 15. From day one of the Cap 545 action herein, the subject lot has always been capable of being jointly redeveloped with the Adjoining Lots.  There was no reason why R1 or R3 should not earlier,
	a.	plead that AS had failed to disclose that the subject lot is capable of being redeveloped jointly with the Adjoining Lots and such failure to disclose has rendered AS’ offers becoming unreasonable; and
	b.	apply for direction for the RDV to be assessed on two basis: (a) on its own and (b) on merged site.
	16. Rs’ Application is intending to delay and hurt AS financially to improve their position in negotiation, particularly bearing in mind that the first application made by way of the Skeleton of R1 & R3 in the Pre-trial Review on 6.2.2017 was the vacation of the trial dates for the proper preparation of trial, including further discovery. 17. Rs’ Application (filed on 15.2.2017 and to be heard on 28.2.2017, with 26 days before the trial shall commence on 27.3.2017) comes at an exceedingly late stage and should have included all information and particulars to enable the Tribunal and the other parties to know the full case of R1 & R3.  No information or particulars are pleaded or given in the proposed Amended Form 33 or the directions/orders of the Rs’ Application concerning at least the following important new areas:
	a.	After the merged site RDV assessment, how the reserve price of each of (a) the Application Lot, (b) Nos. 23-25 and (c) No.27 is to be fixed and the legal basis for the same?  First Kind(§79) confirmed that the reserve price of each lot is to be assessed “on its own” and the reserve price of the consolidated auction of all lots would be the aggregate.  R1 & R3 have given no information whether the decision of First Kind on this point is accepted and if not, how the reserve price for the consolidated sale should be fixed.
	b.	Further, by what method would the auction proceeds be apportioned to (a) the Application Lot, (b) Nos. 23-25 and (c) No.27 and the legal basis for the same? §§137-144, particularly 141, of Supergoal decided that the only correct method is by the ratio of the total EUV of each building/lot.  Again R1 & R3 have not advised whether they are to follow Supergoal on this point and if not what other method is to be adopted and the legal basis.
	c.	On what legal basis and how would AS’ failure to disclose the joint redevelopment render AS’ offers unreasonable?  For instance, is it said that the disclosure would lead to an increase of each offer by, say, 10%?  If so what is the reason for the increase and the calculation?
	18. Rs’ Application comes far too late and will involve (1) the proliferation of issues and evidence, factual and expert (valuation evidence) and (2) the vacation of the fixed 8-day trial or the delay to be caused by an uncompleted trial after the 8 days:
	a.	To begin with there will be an additional assessment of merged site RDV, disputes concerning this additional assessment (hypothetical model, comparables and so on) and a fight on whether the RDV of each component lot should have been assessed “on its own” or on merged site.
	b.	If R1 & R3 are not following Supergoal on the apportionment of the merged site RDV, there will be additional apportionment method, valuation disputes in respect of each method and dispute on which method of apportionment to adopt.
	c.	The apportionment by the total EUV ratio of each lot will involve the assessment of the EUV of each unit of Nos. 23-25 and each of the unit of No. 27.  There will be the usual valuation disputes on comparables and so on for these new EUV assessments.
	d.	Further, while the upper floor units of the subject lot are domestic, those of the Adjoining Lots are commercial.  The 3 buildings are of different ages and condition.  The additional EUV valuation exercise is likely to be more substantial than that done for the subject lot.  It will also mean more valuation disputes on the new EUV valuation.
	e.	The valuation expert of R1 & R3 requires 21 days to do the RDV report on the merged site basis.   If it is not intended that the new RDV report would also include the question of apportionment, she would need many more days to include the laborious tasks of assessing the EUV of each unit of each of the Adjoining Lots.
	f.	The remaining 26-day gap before the commencement of trial on 27.3.2017 will certainly be too short for the proper preparation of (a) the RDV report which properly covers all required aspects, (b) a meaningful joint meeting to discuss all the original issues on the “on its own” RDV and those raised in the new assessments of merged site RDV and apportionment, (c) a properly prepared joint statement and (d) the filing of the openings and authorities. The joint meeting and the proper preparation of the joint statement should take much more time than the usual joint statement for the update RDV assessment.
	g.	Further, AS and the Adjoining Owners will need to formulate their case and prepare their evidence on whether to include the Adjoining Lots in the auction sale.
	h.	In addition AS will need to find out what is the case of R1 & R3 regarding the newly pleaded issue that the non-disclosure of the joint redevelopment would render AS’ offers becoming unreasonable.  After that AS will need to formulate and prepare their evidence against this new plea.  All these have to be done within the 26-day gap, which normally should only cater for understanding any new issues raised by the update RDV report (directed to be filed and exchanged on 27.2.2017) and the preparation of trial.
	i.	The 8-day trial was fixed after taking into account, inter alia, that (a) the experts had already seen each other’s filed RDV assessment (done on the basis of “on its own”) which formed subject matter of the valuation joint statement of 26.8.2016 and (b) it was anticipated that there would not be much more new dispute in the update RDV Reports not already noted in the joint statement. The new issues resulting from the grant of the Rs’ Application will surely take the trail to much more than 8 days.
	19. Further, joining the Adjoining Owners as respondents leading to the inclusion of the Adjoining Lots in the compulsory sale order in the action herein against their wish is clearly prejudicial to the Adjoining Owners which cannot and will not be compensated in any or any sufficient way. To further compel them to join in the trial with 26-day gap before the trial cannot be a situation warranting the grant of the Tribunal's case management powers in the circumstances.”

6.We agree with Mr Mok’s submissions. Mr Wong failed to convince us that there was any rule or power for R1 and R3 to join respondents against the wishes of AS and the intended respondents.  The authorities are that if the majority owner wishes to include other lots to be auctioned together, he may do so either by covering them in one application, or making separate applications and asking for a direction that the lots be sold together.

7.The tribunal sees no reason why AS could be forced to redevelop Lot nos 23-25 where a comparatively new office building built in 1988 is situated.

8.The orders sought by R1 and R3 will inevitably lead to the vacation of the original trial dates.  There are no exceptional circumstances here.

9.We agree with Mr Mok’s that after the service of the Application of this case on 27 April 2015, R1 and R3 knew or ought to have known that the Adjoining Lots are owned by the associated companies of AS, and the subject lot is capable of being jointly redeveloped with the Adjoining Lots.  The late application is self-induced.

10.As to the issue of the real value of the property under the Basic Law, in Intelligent House Limited v Chan Tung Shing and Tong Foon Ling and others, LDCS 11000/2006, paragraphs 26 to 34 state as follows:

	“26. Insofar as the contentions made under Article 105 are concerned, only the 8th Respondent has provided a written submission in support of the same.  His submissions can be summarized as follows:
	(1)	Article 105 of the Basic Law provides four basic rights in relation to private property, namely, acquisition, use, disposal and inheritance.
	(2)	The second part of Article 105 provides a right to compensation where a person is deprived of any private property in accordance with law.
	(3)	A deprivation of private property must meet two basic conditions: (1) the depriving party must be the Government or State; and (2) the deprivation must be in the public interest.
	(4)	A compulsory sale order under the Ordinance is not a deprivation by the State, but is concerned with the compulsory sale of property among private individuals; accordingly it is against the Basic Law.
	(5)	An owner deprived of his property should receive compensation equal to the price of an equivalent seven years old building, as provided in other ordinances enabling acquisition of private properties by the Government or statutory authorities.
	27. Properly understood, the 8th Respondent’s submission is that, since Article 105 only provides for deprivation of private property by the Government or State (in accordance with the law and with compensation), the Ordinance thus contravenes that Article as the Ordinance provides “deprivation” of property by a private individual but not the Government or State. 28. In our view, this construction is wrong.   On a proper reading, what Article 105 provides for is that, in the situation where the Government or State is to take away private property from an individual, it must and can only do so in accordance with the law, and with compensation measurable to the real value of the property at the time.  The Article however does not exclude a law permitting and requiring a private individual to sell his property to another private individual in accordance with the law, and with appropriate compensation. 29. In relation to this question, Hartmann J’s decision in Harvest Good Development Ltd v Secretary for Justice [2007] 4 HKC 442 is of relevance. 30. In Harvest Good, Hartmann J considered (in paragraphs 129-153) the question of the inter-relationship between sections 7(2) and 17 of the Limitation Ordinance (which provides the legal recognition and basis for adverse possession), and whether these provisions contravene, inter alia, Article 105 of the Basic Law.  His Lordship concluded at paragraph 152 of his judgment that Article 105 only guaranteed the right to compensation where the deprivation constituted expropriation by the State or a State agency, and that a loss of possessory title to land in consequence of the operation of the Limitation Ordinance did not constitute an expropriation. As such, Article 105 is not relevant to, and has no bearing on, the relevant provisions under the Limitation Ordinance.  He therefore held that these provisions were not in contravention of the Basic Law. 31. Although there are differences in terms of the statutory frameworks between the Ordinance and the Limitation Ordinance, both involve the transfer of property from one private individual to another.  We do not see any obvious basis to distinguish this part of Hartmann J’s decision from the present consideration. 32. For the above reasons, we hold that Article 105 of the Basic Law is not relevant, and does not apply to the Ordinance.  There is thus no question of any contravention. 33. However, if we were wrong above, and Article 105 did apply to the Ordinance, we are further of the view that the Ordinance satisfies the requirements under Article 105, and therefore is not in breach of it:
	(1)	Article 105 does not make the deprivation of property unlawful provided that two conditions are met: (a) it must be done in accordance with law, and (b) there must be a right to compensation which reflects the real value of the property taken.
	(2)	With regard to (a), so long as the Tribunal is satisfied that the various requirements and conditions laid down in the Ordinance have been complied with, a compulsory sale is made “in accordance with law” and therefore not in conflict with Article 105.
	(3)	With regard to (b), under the Ordinance, if an order for sale is made, the compensation will amount to each owner’s share of the open market value of the whole lot, taking into account of its redevelopment value.  That in our view should represent the “real value” of the property of each owner.
	34. In the premises, we are of the view that the oppositions raised by those respondents on the grounds of Articles 29 and 105 of the Basic Law are invalid and without merits.”

11.The law relating to the issue of real value of the property under the Basic Law is settled.  There is no merit in the argument.

12.R1 and R3 have no power to coerce AS to join respondents and the application for another valuation reports is too late.  The summons is dismissed with costs.

13.We thank the legal representatives for their assistance.

Mr Mok Yeuk Chi, instructed by Mayer Brown JSM, for the 1^st to 3^rd Applicants and the Intended Respondents

Mr David PH Wong, of Wong Hui, & Co., for the 1^st and 3^rd Respondents