Fung Tin Sang t/a Dragon Trading Co v. The Secretary for Transport

CACV 2747/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 2747 OF 2001

(ON APPEAL FROM LDMR No. 30 of 2000)

Coram: Hon Rogers VP, Hon Le Pichon JA and Hon Cheung JA in Court

Date of Hearing: 25 September 2003

Date of Judgment: 25 September 2003

Date of Reasons for Judgment: 2 October 2003

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REASONS FOR JUDGMENT

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Hon. Rogers V.P. :

1.I agree with the judgment of Cheung J.A.

Hon. Le Pichon J.A. :

2.I agree with the judgment of Cheung J.A.

Hon. Cheung J.A. :

3.This Court dismissed the appeal of the applicant at the conclusion of the appeal. These are my reasons.

The appeal

4.The applicant was the tenant and occupier of a piece of land in the New Territories, namely, Lot No. 493B (Portion) in Demarcation District No. 103, Kam Tin Road, New Territories ("the Land"). The Land was resumed by the Government under the Railways Ordinance, Cap. 519.

5.The applicant was entitled to compensation for the resumption of the Land and he lodged a claim in the Lands Tribunal for the compensation. The parties agreed that the Tribunal (presided by H H Judge Chow and Mr. W. K. Lo) should decide a preliminary issue of whether the compensation was to be assessed on a "total extinguishment" basis. The applicant relied on this basis. The Tribunal decided against the applicant. He appealed against the decision.

Point of Law

6.Under Section 11(2) of the Lands Tribunal Ordinance (Cap. 17), an appeal lies against the decision of the Lands Tribunal if there is an error in point of law. The applicant who appeared in person in this appeal has not identified any point of law in issue in the notice of appeal. The contention in the Notice of Appeal that the Tribunal had committed an error of law was based on some general allegations of factual errors only.

"Total extinguishment"

7.In simple terms "total extinguishment" arises where the resumption causes the affected party to extinguish his undertaking on the land permanently because, for example, he may not be able to find a suitable alternative site for his operations to continue. For a discussion on this topic, see Cruden on Land Compensation and Valuation Law in Hong Kong : 2nd Ed. pages 125-127. The law requires the affected person to act reasonably in response to the resumption : he should take steps to eliminate or reduce the loss. If he does not do so, he would not receive compensation for the loss : The Director of Buildings & Land v. Shun Fung Ironworks Ltd. [1995] 1 HKC 417.

The facts

8.In the present case the applicant was the sole proprietor of a business called Dragon Trading Company ("Dragon Trading"). It was engaged in the sale of parts of motor vehicles on the Land. The resumption notice of the Land was published on 15 October 1998. On 12 January 1999 the applicant was told by the Government to clear the Land on or before 31 March 1999. The business of Dragon Trading actually ceased on 31 March 1999. Its business registration expired on 28 April 1999 and was not renewed.

9.The facts found by the Tribunal were that the applicant had not acted reasonably in deciding not to continue with the business. This concerned his efforts in looking for alternative accommodation.

10.The Tribunal also found that first, the applicant had the financial resources to relocate his business. Second, almost immediately upon the cessation of business of Dragon Trading on 31 March 1999, a new business by the name of Dragon Motor Company ("Dragon Motor") was established on a piece of land also in the Kam Tin area.

11.The partners of Dragon Motor are Mr. Fung Tin Yeung, the brother of the applicant and one Mr. Leung Tit Kwan who was a former employee of Dragon Trading. Dragon Motor had acquired a substantial part of the stock in trade of Dragon Trading. It carried out the same business as Dragon Trading. It used the same supplier of goods. Its employees were all former employees of Dragon Trading. The business operations in terms of its purchase and gross profit were within the range achieved by Dragon Trading.

The applicant did not act reasonably

12.The only ground advanced by the applicant in support of the 'total extinguishment' claim is that he was not able to find a suitable alternative site.

13.The evidence on the contrary showed that it was possible for the applicant, if he had so wished, to carry on the same business at a different location in the same area without reducing the size of his operations.

14.The Tribunal found that the applicant had not acted reasonably. He did not make any real effort in locating an alternative site. The applicant claimed that because he was busily engaged in another business, he entrusted Fung Tin Yeung to look for an alternative site. The later did manage to find one but the applicant later decided not to relocate to that site because of its size and poor access.

15.The Tribunal found that the evidence of the applicant was unsatisfactory. He only made an effort to locate new premises at the initial stage after the notice of resumption was published. The Tribunal also had difficulty in accepting his evidence regarding his instructions to his brother to find a new location. The tenancy which was entered into but eventually not taken up was made by Fung Tin Yeung in his personal name and not that of Dragon Trading. This should not be the case if his task was to find a new location for Dragon Trading.

16.The Tribunal also found Fung Tin Yeung to be an untruthful witness. His evidence was disbelieved in some important aspects, such as the difference in the nature of the two businesses; the new partnership in terms of the actual partners and contribution, and how the tenancy of the new business was entered into. His evidence that it was Leung Tit Kwan who found the new site was disbelieved. He was also disbelieved about his efforts to look for an alternative site for his brother. All these are within the fact-finding powers of the Tribunal.

17.The applicant had entrusted the task of finding an alternative site to Fung Tin Yeung. The latter must be his agent in this regard. He simply cannot say that by doing so he had discharged his duties to act reasonably to look for an alternative location. The Tribunal found that Fung Tin Yeung had not made genuine efforts in looking for an alternative site. It was clearly within the ability of the applicant to ascertain whether Fung Tin Yeung had made genuine efforts in this regard, bearing in mind their close relationship. If he had not bothered to make this inquiry then clearly the Tribunal was entitled to hold that the acts of Fung Tin Yeung were attributable to the applicant.

18.The inference to be drawn from the evidence is that either the applicant was not interested in continuing his business after the resumption or that he had continued his business under the guise of Dragon Motor. The Tribunal did not make an express finding on this. In my view it is not necessary to do so. It is sufficient for the Tribunal to find that the applicant had not made reasonable attempts to find an alternative location for his business. The business ceased not because of the resumption but because of the decision of the applicant.

19.Whether the applicant had acted reasonably was a question of fact. The Tribunal found that he had not. There was ample evidence in support of that finding. The Tribunal did not base its finding simply on an "arithmetical basis" by reference to the time taken by the applicant to look for an alternative site as alleged by him in the notice of appeal.

Conclusion

20.I can see no error in law in the judgment. Accordingly, the appeal was dismissed with costs to the respondent.

Representation:

Mr. Nelson Miu instructed by Department of Justice for the Respondent

Applicant, in person, present