Lead Harvest Group Ltd and Others v. Cheong Wing Electric Ltd and Another
Read the full judgment text of LDCS 6000/2018 on BabelCite. This LDCS judgment was delivered on 7 February 2022.
1. This is an application for a compulsory sale order (“the Application”) under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“the Ordinance”) to sell all the undivided shares of the Sub-Section 2 of Section E of Quarry Bay Marine Lot No 2 and the Extension Thereto (collectively “the Lot”) on which a building known as Zung Fu Industrial Building (“the Building”) stands and its postal address is No 1067 King’s Road, Quarry Bay, Hong Kong.
Cited by 7 cases · Cites 8 cases
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LDCS 6000/2018 [2022] HKLdT 8 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION LAND COMPULSORY SALE MAIN APPLICATION NO. 6000 OF 2018 __________________________ BETWEEN
__________________________ Before: His Honour Judge M WONG, Presiding Officer of the Lands Tribunal and Mr Lawrence PANG, Member of the Lands Tribunal Dates of Hearing: 15-19, 22-26, 29-30 November 2021, 1-2 December 2021 and 13 January 2022 Date of Handing Down of Judgment: 7 February 2022 __________________ J U D G M E N T __________________ THE APPLICATION 1.This is an application for a compulsory sale order (“the Application”) under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“the Ordinance”) to sell all the undivided shares of the Sub-Section 2 of Section E of Quarry Bay Marine Lot No 2 and the Extension Thereto (collectively “the Lot”) on which a building known as Zung Fu Industrial Building (“the Building”) stands and its postal address is No 1067 King’s Road, Quarry Bay, Hong Kong. 2.The Building is a 15-storey industrial building accessible from King’s Road and Shipyard Lane. According to a set of building plans of reference no 2/3133/69 approved by the Building Authority on 23 October 1969, 8 April 1970, 13 October 1971 and 28 January 1972 (collectively “the Approved Building Plans”), the Ground Floor to the 2nd Floor were planned for car servicing and related uses, while the 3rd Floor to the 14th Floor were planned for workshop area. 3.The occupation permit of the Building (permit No H194/71), which was issued on 14 October 1971, permitted the following uses:
4.By reference to an alteration and addition plan approved by the Building Authority on 6 November 1992, part of the flat roof on the 3rd Floor was then converted into store room. Another part of the flat roof on the 3rd floor was also converted into store room by reference to another alteration and addition plan approved by the Building Authority on 20 July 1993. 5.By a deed of mutual covenant vide memorial no UB815199 dated 21 May 1971 as registered in the Land Registry, equal and undivided shares of the Lot have been allotted to the following premises:
6.Mr Mok Yeuk Chi (“Mr Mok”), leading Mr Jonathan Lee, counsel for the applicants, summarized in his opening submission that at the time of the Application, ie on 2 February 2018, the applicants altogether owned 86.957% undivided shares of the Lot and the remaining shares are held as follows:
7.R1 is represented by Mr Allen Lam (“Mr Lam”) and R2 is represented by Mr Denis Chang, SC, leading Mr Ross M Y Yuen (“Mr Yuen”) and Ms Emily Ting. ISSUES IN THE APPLICATION 8.Mr Mok identified the following issues to be determined by the Tribunal, namely:
THE EVIDENCE 9.The applicants have filed the following documents in support of the Application:
10.R1 and R2 did not file any witness statement. They appointed a joint valuation expert, Mr Lee, who prepared a Valuation Report dated 16 June 2020 on the EUV of various units in the Building and on the RDV of the Lot. Mr Lee also prepared an updated RDV Report dated 5 October 2021[1]. 11.Both Mr C Chan and Mr Lee filed a Joint Statement dated 27 July 2020 agreeing to assess the RDV on single-site basis. Further, Mr C Chan and Mr Lee filed the following Joint Statements:
12.Originally by the order of the Tribunal dated 19 November 2018, the Application was to be heard together with another similar application (LDCS 7000/2018) in respect of an adjoining lot at which another industrial building (Wah Ha Factory Building) stands. However, on the 4th day of the trial, ie 18 November 2021, it turned out that LDCS 7000/2018 could only be part heard because a new expert witness on building conditions of Wah Ha Factory Building had to be appointed in due course. WHETHER THE APPLICANTS ARE ENTITLED TO MAKE THE APPLICATION 13.Section 3(1) of the Ordinance requires an applicant to have not less than 90% of the undivided shares in a lot before he can make an application. 14.Section 3(5) of the Ordinance provides that the Chief Executive in Council may, by notice in the Gazette, specify a percentage lower than the percentage mentioned in section 3(1) in respect of a lot belonging to a class of lots specified in the notice. 15.The Land (Compulsory Sale for Redevelopment (Specification of Lower Percentage) 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 in respect of the classes of lots specified in the Notice from 90% to 80%. Those classes of lots include: “a lot that is not located within an industrial zone and each of the buildings erected on the lot—
16.As mentioned, the occupation permit for the Building was issued on 14 October 1971 (namely, not less than 30 years before the date of the Application). The Lot also falls within an area zone “Commercial” under the approved Quarry Bay Outline Zoning Plan No S/H21/26 dated 6 July 2010, ie not within an industrial zone. The Notice is therefore applicable and the threshold percentage should be 80%. 17.At the time of the filing of the Application, the applicants altogether owned 86.957% of the undivided shares of the Lot. We therefore agree that the applicants are entitled to make the Application under section 3(1) of the Ordinance. EUV AS AT 22 DECEMBER 2017 18.On the 8th day of trial, ie 24 November 2021, the applicants, R1 and R2 came into agreement on the pro rata share of R1 and R2’s properties, namely both at 5.5% of the total EUV. 19.Thus, the dispute on EUV between the parties were settled and it is odiose to determine the various EUV assessment. As such, the Tribunal agrees that Attachment 1 attached to Mr Mok’s closing submission dated 5 January 2022 would only serve the purpose of giving effect to the parties’ agreement on the 5.5% apportionment ratio and should not be used as a benchmark for any other valuation assessment in the present case or in LDCS 7000/2018. WHETHER REDEVELOPMENT OF THE LOT IS JUSTIFIED 20.Section 4(2) of the Ordinance provides that the Tribunal shall not make an order for sale unless it is satisfied that the "age or state of repair" of the Building is justified and that the applicants have taken "reasonable steps" to acquire all the undivided shares of the Lot. While R1 did not take issue on these matters, R2 put the applicants to strict proof. 21.Mr Mok in his opening submission referred to the guidelines laid down in Top Sail International Limited v Cheng Kai Ming, LDCS 18000/2010, unreported, dated 15 November 2011 (“Top Sail”) and Charmlink Limited v Lee Tong Hing & Others, LDCS 16000/2010, unreported, dated 29 November 2011 (“Charmlink”) on the factors that the Tribunal should consider in determining whether redevelopment is justified due to age and state of repair. 22.In Top Sail, the Tribunal stated that:
23.Such a discretion by the Tribunal was followed in Charmlink:
24.There is no argument on the principles set out in Top Sail and Charmlink. 25.For the age and state of repair requirements, the applicants adduced the expert evidence of 2 experts: Mr Benson Wong who is an authorised person and a building surveyor, and Mr C M Wong who is a structural engineer. Their expertise is not disputed. 26.In his Structural Assessment Report dated 16 January 2020, Mr C M Wong conducted a structural assessment of the Building on the basis of the following tests/surveys:
27.Mr C M Wong found the following defects in the Building:[2]
28.Based on the above findings, Mr C M Wong opined that the deterioration of the structural eleements of the Building has entered the propagation phase. Once that phase is reached, the deterioration will accelerate and additional defects may appear in more locations. Frequent maintenance and repair works may be required in the near future in order to keep the Building in a safe and functional state.[3] 29.The durability/condition of structural elements is inferior to the requirements by current standards (eg the concrete cover of 36% of the samples is less than that required). Given that the requirements for the aforementioned items have not been met, the design life of the Building should be shorter than 50 years as stated in the Code of Practice for Structural Use of Concrete 2013, but the Building has already been 50 years old. 30.Mr Benson Wong, in his Condition Survey Report dated 17 January 2020, identified defects and deficiencies in, inter alia, the following aspects of the Building:
31.Mr Benson Wong stated that the Building fails to meet the prevailing construction and statutory requirements and suffers from 16 aspects of functional obsolescence with safety/hygiene implications which include the following:
32.Mr Benson Wong remarked that the Building is in a poor state of repair. All defects and deficiencies found in the structural frames, components, finishes and service installations cannot be easily rectified by simple and piecemeal repair. He estimated that the total costs of immediate repair works to restore the Building to tenantable standard came to $78,808,708 which represents about 26.0% of the cost of constructing a new building similar to the Building. He concluded that the Building had deteriorated to a state which is beyond reasonable economic repair. As more rapid deterioration would occur in the future, necessary maintenance and repairs would inevitably be more frequent and extensive making the continued occupation of the Building not economical and even unsafe. He recommended the owners to redevelop rather than repair given that the Building neither possesses any historical value or architectural merit. 33.Both Mr Benson Wong and Mr C M Wong were not cross-examined. More importantly, both R1 and R2 have not adduced any evidence, factual or opinion, in relation to the “age” and “state of repair” of the Building. Throughout the hearing, they have not suggested that the Building should be retained. Having considered the evidence before the Tribunal, we are satisfied that redevelopment of the Building is justified due to the age and state of repair of the Building. WHETHER THE APPLICANTS HAVE TAKEN REASONABLE STEPS 34.The applicants are under an obligation to take reasonable steps to negotiate on terms that are fair and reasonable for the purchase of the interest of the respondents under Section 4(2)(b) of the Ordinance. 35.It is not disputed that the applicants have made the following offers to the respondents through their solicitors to acquire the units or interests they own:-
36.In Intelligent House Ltd v Chan Tung Shing & Others [2008] 4 HKC 421 where the majority owner relied on its valuation expert to formulate some of the offers, the Tribunal ruled at paragraph 334(3) that:
Thus, the applicants are entitled to rely on their valuation expert which is a reputable valuation firm. 37.More importantly, the Court of Final Appeal in Capital Well Ltd v Bond Star Development Ltd (2005) 8 HKCFAR 578, [2005] 4 HKLRD 363 (“Capital Well”) has emphasized at paragraph 33 that:
38.Bearing in mind the above, we are satisfied that on the evidence available and in the circumstances of the Application, the applicants have taken reasonable steps to acquire all the undivided shares in the Lot including negotiating for the purchase of such of those shares as are owned by R1 and R2 on terms that are fair and reasonable. DISPUTES ON THE ESTIMATION OF THE RDV OF THE LOTS Optimum Hypothetical Development Model 39.Both Mr C Chan for the applicants and Mr Lee for R1 and R2 agreed to resort to the residual valuation method in determining the RDV. This can be done by deducting development cost (including construction costs, professional fees, finance costs etc) and developer’s profit from the estimated gross development value (“GDV”) of the completed optimum development. 40.By their Joint Statement dated 30 October 2021, the two valuation experts agreed that the retail/office model is the optimum hypothetical form of development on the Lot. All along they proceeded with their valuations on the assumption that the hypothetical development would be a Grade A office building. For instance, in Mr Lee’s updated RDV Report dated 5 October 2021, he stated at paragraph 11 as follows:[5]
41.Despite that, the differences in the comparison of their models are shown as follows:[6]
42.As regards the above, Mr Albert Chan and Mr Tsui came into, inter alia, the following agreements:[7]
43.As a result of the above, Mr C Chan considered that the saleable area of the hypothetical development adopted by Mr Lee should be reduced significantly. Notwithstanding this, the notional corrider proposed by Mr Lee would only attract nominal rent as it must be kept open and accessible all the time[8]. The TRS marking in the common lift lobbies on office floors would down-grade the image of the hypothetical building and hence would adversely affect its value[9]. This is not a matter of discrimination but a fact of perception and stigma to refuse space in reality in that one would not find TRS at conspicuous place in Grade A office buildings. Although after the 2nd Joint Statement, Mr Lee’s revised plans for 1/F to 2/F appear to have relocated the TRS to a less conspicuous place, they remain visible at the lift lobby. While the TRS for 3/F to 24/F has been revised to locate at a position separated from the 3 passenger lifts, owing to the lack of lift provision, office worker would tend to use the service lift next to the passenger lifts for convenience and will still see the TRS on the floor. 44.Mr C Chan also commented that the main entrance lobby proposed by Mr Lee on G/F is too small when compared to the sizes of entrance lobbies to other Grade A office buildings. If a concierge counter is to be included as well, it will be even more cramped and incompatible with the status of a Grade A office. Even Mr Lee in his oral evidence agreed that a grander entrance lobby would have positive impact on the valuation of the upper office floors. 45.Unfortunately, the lift lobby on the upper floors proposed by Mr Lee is also narrow and less decent; the 4-lift provision is significantly below the standard of other Grade A office buildings. A copy of the G/F plan proposed by Mr Lee[10] is attached at Appendix 1 of this judgment. In contrast, the office comparables relied on by him, Island Place Tower, Island Place comprises 12 passenger lifts (and 2 service lifts) and K Wah Centre comprises 6 passenger lifts (and 1 service lift). Moreover, the location of the service lift proposed by Mr Lee is separated from the main lobby. That is, in effect, during normal office hours, there would be only 3 passenger lifts. 46.Mr Lam for R1 intended to come to rescue of Mr Lee in his closing submission, suggesting that intending visitors would not mind waiting for lifts if they really intend to reach a particular office floor. Mr Lam referred to Argyle Centre in Mong Kok as an example where many medical practitioners are housed. With respect, Argyle Centre cannot be taken as a Grade A office; also the class of tenants located in Argyle Centre is significantly different from those that can be found in Grade A office. For instance, medical clinics would seldom be found in a Grade A office. 47.More particularly, one would seldom find a long queue for lifts in a Grade A office building. 48.Whereas Mr Lee was of the view that the reliance on lifts for office attendance is becoming less acute against the backdrop of work being increasingly IT and communication-oriented, we consider the number of people visiting the office would not necessarily become lesser when the hypothetical development on the Lot enjoys a location in proximity to the Taikoo Shing MTR Station. We agree with Mr Mok’s submission that even if work from home is to be the new trend, and the prospective tenants would rent less space because of the reduced workers, this would not necessarily have an effect on office attendency simply because each floor may have more tenants each renting less space. For instance, the prevailing fade of coworking and flexible office space in Hong Kong is a good example. 49.On the other hand, Mr C Chan’s model, which was based on modification of the design provided by Mr Lee and in fact designed by Mr Tsui, comprises an office building with 3 lifts serving the low zone floors (2/F to 13/F) and 3 lifts serving the high zone floors (14/F to 24/F) with a grand and spacious office lobby on 1/F accessible by a pair of escalators from G/F. We prefer the layout design of Mr C Chan as it is comparable to that of the new 22-storey commercial/office tower at 1001 King’s Road which has a pair of escalators leading from the entrance lobby at the junction of King’s Road and Westlands Road. Similar design is found at One Island East at 18 Westlands Road and Berkshire House at 25 Westlands Road. It would be more economically sensible to sacrifice some lobby space on G/F in favour of retail uses but provide a more spacious lobby on 1/F. A copy of the G/F plan proposed by Mr C Chan[11] is attached at Appendix 2 of this judgment. 50.In respect of the upper floors design, the efficiency ratio of Mr Lee’s model was about 88.4% which is higher than that of Mr C Chan’s model of 83.1% for high zone and 81.71% for low zone. We agree with Mr C Chan that Mr Lee’s proposed efficiency ratio is unreasonably high for Grade A office building when Island Place Tower’s is about 69.8% and K Wah Centre’s is about 81.9%, both being adopted as the comparable office buildings. This is particularly the case when we have preferred Mr Chan’s provision of 6 lifts instead of Mr Lee’ provision of 4 lifts. 51.Perhaps instigated by the provision of food and beverage accommodation at 1001 King’s Road, Mr Lee proposed a special unit on the top floor for an outlet of food and beverage such as restaurants, clubs or other places of entertainment. It was however pointed out by the Tribunal at the trial that such provision might not be economical or worthwhile because by the Code of Practice for Fire Safety in Buildings 2011, the occupancy factor[12] for office is 9 whereas that for café, restaurants, dining areas, lunges, bars and pubs is 1. The width of the required staircase would be significantly increased if the provision of food and beverage is only on one upper floor[13]. Even Mr Tsui did not design the 24/F as a restaurant or else the number of sanitary fitments would be increased thereby reducing usable area. 1001 King’s Road should be distinguished because it is designed as a ginza-type development in the first place. During our inspection conducted on 17 November 2021, we found no similar accommodation in those newly constructed Grade A buildings in the vincinity. 52.Thus, we do not agree with Mr Lee that such food and beverage provision on the top floor of the hypothetical development should be included. 53.As regards the provision of carparking space, the major difference between Mr C Chan and Mr Lee is that Mr C Chan proposed 3 basement floors for the carparks while Mr Lee proposed just 2 basement floors on the assumption that 43 carparking spaces can be provided on double deck. Mr C Chan considered mechanical double deck parking system not being welcomed by car-drivers and building management as it is relatively inconvenient and costly. 54.While Mr Edward Chan, SC who acted on behalf of one of the respondents in LDCS 7000/2020 pointed out that such double deck carparking provision can be found in Cheung Kong Centre at 2 Queen’s Road Central, the provision of double deck carparking in Cheung Kong Centre can be distinguished because it is located at the hub of the CBD in Hong Kong where carparking spaces are in hot demand. In comparison, the Lot at which the proposed hypothetical development is situated is at a relatively peripheral location though it is transforming into a new office and commercial district being surrounded by popular residential estates. 55.In addition, Cheung Kong Centre was completed around 1999. According to the Practice Note for Authorized Persons, Registered Structural Engineers and Registered Geotechnical Engineers (PNAP) APP-2, with effect from 1 April 2011, underground carpark is given 100% GFA exemption while aboveground carpark only gets 50%. Mr C Chan had extracted office buildings with occupation permit issued after 2013 from major commercial areas on Hong Kong Island which reveal that majority of these buildings have basement carparks but do not opt for mechanical parking:[14]
56.We agree with Mr C Chan that double deck carparking is not yet popular in Hong Kong and not favoured by car-drivers. This is the case notwithstanding that ever since February 2000, the Lands Department of the Hong Kong Government issued a Practice Note No 2/2000[15] which allows a mechanical car parking system as an alternative to achieve the same provision of car parking space. Even Mr Lee agreed during cross-examination that the waiting list to rent a conventional space would be longer than that of double deck parking spaces despite lower rent for the latter. Thus, in order to reach the requisite number of car parking spaces, Mr C Chan’s provision of 3 levels of basement is adopted. 57.Pacific Base Holdings Limited & Other v Lee Hop Biu & Others, CACV 426/2020 (unreported, dated 31 May 2021) concerned a similar application under the Ordinance in respect of an old building or buildings which was/were constructed over two different lots but connected by two common staircases. The appellant contended that the Ordinance does not permit redevelopment of part of a building and it was not feasible to do so structurally. The Court of Appeal ruled, intera alia, that:
58.In that regard, the Court of Appeal ruling must be read in that context. In the present case, we agree with Mr Mok that Mr Lee’s model has not been formulated with the required degree of care and attention. It would appear that his model was prompted by the single desire of formulating what on paper could provide the maximum saleable area without paying much regard to whether in reality his saleable area could fetch his high level of value obtained from comparables from developments of much better design. 59.As stated in paragraph 42 above, Mr Tsui’s proposal did not show the required plant rooms on 2/F-24/F and Mr Tsui agreed to adjust the layout plan of each floor so as to include such plant rooms which accout for some 4% of the GFA. Nevertheless, Mr Tsui had never come up with any revised proposal. It was only during cross-examination that Mr Lee said he could accommodate the 4% GFA by enlarging the floor plate but Mr Lee’s residual valuation did not take into account the reduced saleable floor area that would result therefrom. Assessment of the Value for G/F & 1/F 60.As regards the assessment of the G/F, Mr C Chan and Mr Lee tended to adopt the following as the reference ground floor unit (“the Reference Shop Unit”):[17]
61.As can be seen from the above, there are no significant differences between Mr C Chan and Mr Lee on their designs of the Reference Shop Unit save on frontage onto King’s Road. We prefer Mr C Chan’s layout design for the G/F, and we adopt his proposed Reference Shop Unit. 62.Mr C Chan and Mr Lee referred to the following comparables and arrived at a unit rate of $509,000 per sq m and $933,000 per sq m respectively:[18]
Choice of Comparables and Adjustment for Location 63.The Lot is situated at a corner site around the junction of King’s Road and Shipyard Lane, and opposite to the commercial complex of Kornhill Plaza across King’s Road via a pedestrian crossing. An exit of the MTR Tai Koo Station is also located at the ground floor of the commercial complex which houses a number of restaurants and shops serving the daily needs of the residents of the surroundings. This enclave serves a few popular residential housing estates such as Taikoo Shing, Kornhill, and even Nan Fung Sun Chuen and the Orchards etc. No doubt the retail premises of the hypothetical development would attract a lot of patrons and customers. 64.Having said that, we do not agree to adopt Comparables E1, E4, E5 and E7 proposed by Mr C Chan as these “comparables” are located near the market place in another completely different district in Sai Wan Ho. The location there is of completely different character. Indeed, in Shapiro, Mackmin and Sams, Modern Methods of Valuation, 12th edition, p 327, the location factor is explained as follows:
65.Comparable E2 is also proposed by Mr C Chan but its location is poor when compared with the subject, being situated at a recessed area on Greig Street which section is a cul-de-sac leading to The Orchards. Mr Lee, while not adopting this as a comparable, suggested a location adjustment of 35% as opposed to Mr C Chan’s 5%. We prefer Mr Lee’s adjustment. 66.Comparable E3, also proposed by Mr C Chan, is currently occupied by a bank and is situated close to the subject along King’s Road. However, we do not agree there should be no adjustment for location. We would allow +10%, particularly in light of that the Reference Shop Unit is close to a pedestrian crossing which appears to have been overlooked by Mr C Chan until he was being cross-examined. 67.Comparable E6, although also on King’s Road, is situated further away. Mr C Chan described this comparable as situated along a section of King’s Road which enjoys significantly higher pedestrian flow. It is located near a wet market in front of Tak Lee Building and Wai Lee Building and also next to the footbridge landing connecting to the Quarry Bay Municipal Services Building. However, in our view, when the hypothetical development is built, there will be a Grade A office building with 8 shops on G/F. Its locational advantage will not be less than that being enjoyed by this comparable. We prefer to adopt no locational adjustment. 68.Comparable E8 was proposed by Mr Lee and accepted by Mr C Chan in their Joint Statement. It is currently occupied by a fast food shop amidst a newly developed commercial/office hub called Taikoo Place, which is perhaps second to the Central District on Hong Kong Island[19]. However, because of this, we agree with Mr Lee that pedestrian flow would be limited to the working hours and beyond which the area would become quiet. Also, it is on a smaller street when compared to the subject site which faces King’s Road and opposite to Taikoo Shing MTR Station. We prefer Mr Lee’s adjustment of +15% for location. 69.Comparable E9 is situated close to E6 but within the pedestrian precinct of the wet market between Tak Lee Building and Wai Lee Building. We agree with Mr Lee’s original location adjustment of +20%. 70.Comparable E10 lies on Yau Man Street, which, like Greig Street where comparable E2 is located, is a local distributor leading from King’s Road to the residential developments like Kornville, The Orchards and Nan Fung Sun Chuen. We again agree with Mr Lee’s original location adjustment of +30%. Adjustment for Size 71.According to Mr Lee, no agreement for size adjustment could be reached with Mr C Chan only because the latter had chosen Comparable E3 which had a significant size as a comparable. On the other hand, Mr Lee’s comparables are all of a much smaller sizes than the Reference Shop Unit. In this regard, we will adopt Mr C Chan’s dual-rate adjustment approach: 1% per 5 sq m difference for size under 100 sq m and 1% per 10 sq m difference for size over 100 sq m. Adjustment for Frontage & Headroom 72.Mr C Chan and Mr Lee agreed that the frontage of the comparables would be adjusted at 2% per 1 metre difference and the headroom would be adjusted at 6% per 1 metre difference. Adjustment for Layout 73.Both Mr C Chan and Mr Lee agreed that there should be adjustments for layout but their opinion differed as to magnitude. Comparable E2, for instance, has a frontage as much as 14.1 metres when compared with 9.6 metres of the Reference Shop Unit. We agree with Mr C Chan that it was unreasonable for Mr Lee in not allowing any adjustment. 74.For the same reason, we adopt the layout adjustment for Comparable E3 as proposed by Mr C Chan. Level of Shop Front 75.Comparable E10 is located at a level below the proper pavement of Greig Street from which it is only accessible via a few steps. We agree to adjust it at 3% instead of Mr Lee’s suggested 5% to reflect the relative inconvenience. Business Condition 76.Mr Lee proposed an additional adjustment for improved business condition when the hypothetical development is completed. While we have already taken this into account in the location adjustments above, we do not agree with such an additional adjustment. 77.The following table shows our adjustments:
78.With regret, the outcome of the adjusted unit rates comprises a wide range from $581,648 per sq m to $1,190,547 per sq m, with a sample standard deviation of as much as $213,920. This is undesirable as it is trite that as a matter of valuation practice, comparables needing large adjustments should be avoided. The better practice is in fact to avoid comparables requiring many adjustments especially when some of the factors are based essentially on intuition or impression which are not always susceptible to verification for accuracy. In this regard, Comparable E6 appears to be the best comparable with a total adjustment of 29.1% which is within an acceptable range. It also happens that its adjusted unit rate of $1,190,547 per sq m lies relatively close to the average of the other comparables at $857,394 per sq m. 79.The second best comparable appears to be E8 with its total adjustment slightly below 50%. 80.We are prepared to adopt $1,000,000/sq m as the unit rate for the Reference Shop Unit. 81.Then we follow the adjustments proposed by Mr C Chan in the assessment of the GDV of the other shop units as follows:[20]
Assessment of the Value for 1/F (Retail) 82.In respect of the value of the 1/F retail units, Mr C Chan initialy agreed with Mr Lee that it would be 60% of that of the average ground floor. Mr C Chan however changed it to 55% on the ground that he had revised his design of the headroom of 1/F from 5 metres to 4 metres and changed the size of his Reference Shop Unit. 83.Mr C Chan explained that such conversion factor is not a constant and indeed would depend on many factors. He further explained that even if the design remains unchanged, the conversion factor may change due to change in the particulars of the Reference Retail Unit on G/F. For example, the unit rate of a small Reference Retail Unit would be higher than the unit rate of a large Reference Retail Unit. 84.In fact, it is for the above reason that the conversion factor would apply to the average ground floor unit rate instead of the unit rate of the Reference Retail Unit. In the present circumstances, as Mr C Chan’s model has the main lift lobby to the office tower on 1/F which is accessible via staircases, lifts and escalators, the value of shops on 1/F would likewise be higher than Mr Lee’s model of the 1/F which is accessible via staircases and lifts only. 85.At this juncture, we would also like to mention that according to the hypothetical model of Mr Lee, prospective shoppers to the 1/F have to use one of the 4 (if not 3) lifts or to take the stairs in order to reach there. This is much undesirable when we note the adjoining Kornhill Plaza has provided for escalators to the upper floor retail spaces. When Mr Lee was challenged on the poor access of 1/F of his model, he had out of the blue responded that he might revise his model by including 2 bullet lifts. However, by reference to his layout plan for G/F as shown in Appendix 1 of this judgment, we could find no space for these two bullet lifts. In any event, we do not agree that the service of bullet lifts can be comparable to the convenience of a constantly moving escalator. 86.Thus, while we accept Mr C Chan’s model that the 1/F would be better served by escalators, we determine the unit rate of the shop on 1/F at 60% of that of the average ground floor, ie $556,400 per sq m. Assessment of the Value for the Upper Floors (Offices) 87.By their Joint Statement dated 30 October 2021, Mr C Chan and Mr Lee agreed to adopt sales in 2 developments as comparables for the purpose of assessing the value of the office premises for their hypothetical developments. They are Island Place Tower, Island Place at 510 King’s Road in North Point and K Wah Centre at 191 Java Road also in North Point which lies closer to the Lot. 88.Island Place Tower is in fact a single office tower completed in 1997 as part of the Island Place development complex comprising, in addition to the office tower, three residential towers next to it surmounting a commercial plaza. Island Place Tower has 29 storeys with a typical floor space of approximately 2,000 sq m, under-floor trunk, extra high ceiling height, and grand entrance/ lift lobby area. The building has a total gross floor area of about 50,000 sq m which is served by 12 passenger lifts and two service lifts. 89.K Wah Centre comprises a 29-storey office tower completed even earlier in 1991 at relatively isolated location off the waterfront[21]. It consists of a total gross floor area of about 36,000 sq m (which is similar to the total GFA of the hypothetical development of 34,625.10 sq m) with a typical floor space of approximately 1,250 sq m (as compared with 1,356 sq m of the hypothetical development) which is served by 6 passenger lifts and one service lift. This building is however situated at a relatively isolated location and the management runs a shuttle bus service to and from a ferries pier nearby. 90.We regret that the two buildings are more than 20 years old and located at a relatively faraway location. However, given that they are the only comparables provided by the experts, we cannot but adopt them for consideration and analysis:[22] Island Place Tower
K Wah Centre
91.Mr C Chan and Mr Lee further had the following agreements/disagreements on the various adjustment factors:[23]
92.In addition, Mr C Chan and Mr Lee failed to agree on adjustment factors like location, views, scale and facilities quality & specification, aspect etc. 93.The following table shows the adjustments applied by Mr C Chan (and those by Mr Lee, if any, are in parentheses):[24]
Adjustment for Location 94.The area under consideration is undergoing a transformation from an industrial hub into a high class office/commercial area with many newly developed Grade A office towers. In this regard, we agree with the location adjustments proposed by Mr Lee. Adjustment for Size 95.Although Mr C Chan and Mr Lee agreed on the formula for the adjustment for size, they have different assumptions on the reference office unit (“Reference Office Unit”):[25]
96.Unfortunately, most of the comparables obtained (save for F1 and F2) are in respect of premises with areas of 120 sq m or thereabouts. Such areas should not be regarded as home to companies of international fames or sectors, including banking & finance, legal services, insurance, accounting, luxury brands, media & advertising, telecommunications and technology etc. We consider that these types of companies would be less sensitive to the difference in floor areas in this new office location and therefore consider a lesser adjustment on unit price. This view is supported by the fact that Comparable F5 & F6 were in effect one single transaction occurring on the same date and the unit rate assigned to each of them were the same. We prefer Mr Lee’s adjustments on size. Adjustment for View 97.As the hypothetical development will be abutting King’s Road and far away from the seafront, we agree with Mr C Chan that the view enjoyed by the new development will mostly building view. This is particularly the case when the building at its back, ie Wah Ha Factory Building, is under another compulsory sale application LDCS 7000/2018. Thus, we agree with Mr C Chan on his proposed adjustments for view. Adjustment for Floor Level 98.Although Mr C Chan and Mr Lee agreed on the formula for the adjustment for floor level, there is a minor difference in the floor level of the Reference Office Unit. As we have explained in paragraph 49 above, we prefer Mr C Chan’s model and therefore are content to adopt his adjustments for floor level. In any event, the difference is insignificant. Adjustment for Headroom 99.Mr C Chan adopted a higher rate of 6% per 1 m for the G/F shops and a lesser rate of 2% per 1 m for office, relying particularly on the Tribunal’s judgment in New Dorset Investments Limited v Leung Wing Hing Joss Sticks Factory (Hong Kong) Limited & Others, LDCS 30000/2018 (unreported, 9 June 2020), where the experts in that case agreed the adjustment for headroom at 2% per 1 m difference. Mr Lee considered the latter inadequate. We note that Mr C Chan himself has adopted a much higher headroom for the Reference Office Unit when compared with the comparables. He agreed during cross-examination that the higher the headroom, the more storage space and the more room for raised flooring for storage of optical fibre cables etc for an office occupier. The New Dorset Investments Limited case should be distinguished as the hypothetical development in that case was not envisaged as a Grade A office/commercial building, being situated at a secondary location with a site area of mere 172.76 sq m. In this regard, we agree with Mr Lee and are content to adopt his rate of 4% per 1 m difference in headroom. 100.Thus our assessment of the adjusted unit price for the hypothetical Reference Office Unit is as follows:
Conclusion on Office Value 101.It is interesting that the analysis arrives at two sets of adjusted values: those from Island Place Tower give a range from $308,927/sq m to $376,454/sq m while those from K Wah Centre give a lower range from $227,943/sq m to $306,678/sq m. 102.In respect of the comparables from Island Place Tower, Mr C Chan refused to adopt F1 as a comparable because its size is too small when compared with the Reference Office Unit; it tended to cater for a different market. Seeing the vast difference in adjusted unit rates between F1 and F5 & F6, we agree with Mr C Chan. The average adjusted unit rate for comparables F5 & F6 is $309,767/sq m. 103.In respect of the comparables from K Wah Centre, F2 appears to fall outside the range for whatever reason or the market is imperfect. If this comparable F2 is disregarded, the average adjusted unit rate becomes $293,002/sq m which is about 5% different from $309,767/sq m. If comparable F3 is also disregarded because of its significant total adjustment involved, the average adjusted unit rate is $286,164/sq m which is about 8% different from $309,767/sq m. 104.On the evidence before this Tribunal and given the analysis above, we are of the view that $300,000/sq m is to be adopted as the unit rate for the Reference Office Unit. Then we proceed to determine the total GDV for the office portion, following Mr C Chan’s template below:[26]
Assessment of the Value for Private Car Parking Spaces 105.As regards the assessment of the GDV for the private car parking spaces, Mr C Chan referred to all the following comparables but Mr Lee relied on the first three only:[27]
106.Save for the adjustment for time which was based on the Private Office Price Index, Mr C Chan and Mr Lee had no agreement on any of the adjustment factors. While we have concern about whether price index for office is applicable for the carparking spaces, we find, as we shall see below, this would make only little difference in the end result. 107.In repsect of floor level adjustment, Mr C Chan adopted 1% per level difference while Mr Lee adopted 3% per floor. Judging from the preference or tendency of car users when coming to park their cars in a multi-storey car park, as suggested by Mr Lee, we agree that 3% per floor is the appropriate adjustment. Only when the carparking spaces nearer the street level are fully exhausted would drivers tend to seek carparking spaces on the next floor. As long as Mr C Chan had assumed the Reference Private Car Parking Space be on the Basement Level 2, he could apply the same unit rate to assess the value of the other parking spaces on Basement Level 1 or Basement Level 3 if the provision of carparking space is approximately evenly distributed on different floor levels. 108.Mr C Chan applied adjustments to reflect the difference in car park ratio of the comparables but Mr Lee did not agree. Mr Lee stated that there might not be a restriction on the carpark user being an occupant of the hypothetical development; there is simply no correlation between the number of occupiers and the number of units of the building to make the ratio indicative and meaningful. We trust Mr Lee’s assertion is correct for commercial premises and therefore agree with Mr Lee. 109.On the other hand, Mr C Chan made no adjustment for location as the buildings in which the comparables lie are in the same vicinity. Mr Lee considered otherwise on the ground that it should reflect the relative ease of access to and from the CBDs and common destination such as cross-harbour tunnels between the hypothetical development and the comparables. With respect, we consider Mr Lee’s argument misconceived as the hypothetical development is not a multi-storey public carpark. Neither does it lie adjacent to a regional shopping centre of great attraction whilst the City Plaza located in Taikoo Shing had already been provided with convenient parking facilities. Mr Lee’s allowance is not necessary if not misplaced. 110.Mr C Chan also made no adjustment for the age of the building concerned. In this regard, we agree with Mr Lee that age adjustment is appropriate to reflect the aging building facilities of the development concerned. 111.Thus, the adjustments proposed by the experts are shown as follows:
112.Upon review, the adjusted result shows an unreasonably wide range of value from $1,695,750 to $3,198,150 with an average about $2,347,021 but a sample standard deviation of $595,022. Firstly, comparables G5 & G6 appear to be a single transaction with a significantly low price; that Eastern Centre is situated close to the Taikoo Shing MTR Station does not necessarily explain the significant difference in price for the carparking spaces but its older and outmoded design perhaps does. If these “two comparables” from Eastern Centre are disregarded, the average will become $2,607,530 with a lower sample standard deviation of $483,911. 113.Whereas Mr Lee did not adopt comparables G4 to G8 as they were dated, if we follow suit, the average will become $2,747,317 but a slightly higher sample standard deviation of $621,925. 114.Faced with the above figures, we are prepared to determine the value of the Reference Car Parking Space on the Basement Level 2 at $2,800,000. 115.In fact, Mr Lee had introduced the sale of 61 car parking spaces on 2/F of Parkvale, 1060 King’s Road on 7 June 2021 at $139,880,000 as a comparable. Completed in the end of 1989, Parkvale comprises a total of 4 blocks, providing 838 residential units. For reasons unknown, the car parking spaces which were supposed to provide ancillary car park to the residential development have been operated as a fee-paying public carpark. Owing to its peculiar nature, it does not assist much in the captioned valuation exercise save that the average value of each carparking space at $2,293,115 plus a gross up of bulk discount, say 20%[28], ie $2,751,738 may provide a floor value of private carparking space in the vicinity. 116.Incidentally, we referred the parties at the trial to that Swire Properties Limited, the developer of Taikoo Shing, which is also the holding company of the applicants in this case, had offered 946 car parking spaces in the Taikoo Shing residential development for sale since November 2020. According to the applicants, 748 single car parking spaces had been sold under $2,500,000 while 106 single car parking spaces had been sold above $2,500,000 (ie about 12%). However, unlike the case for Parkvale, under a Sub-Deed of Mutal Covenant dated 1 March 2021, these carparking spaces are restricted to the residents of and visitors to the flats of Taikoo Shing.[29] 117.Again, this additional information does not assist when we have determined the value of the Reference Private Car Parking Space on Basement Level 2 at $2,800,000. Assessment of the Value for Lorry Car Parking Spaces 118.Mr C Chan proceeded to assess GDV for the lorry parking spaces by reference to the following comparables:
119.Applying the similar adjustments discussed above, we get the following:
120.As we have disregarded the comparables in Eastern Centre in the determination of the GDV of Reference Private Car Parking Space on Basement Level 2, we would do the same in the determination of the value of Reference Lorry Parking Space for the sake of consistency. In any event, the price paid for the lorry carpark in Eastern Centre also appears on the low side. 121.Mr Lee did not adopt comparable H1, nor did he adopt comparable H2 for the purpose of direct comparison. Instead, Mr Lee adopted H2 as reference in comparison with comparables G7 and G8 above and arrived at a ratio of some 1.24 and 1.34 respectively or an average around 1.29.[30] 122.We appreciate Mr Lee adopting this approach as there is only one comparable H2. If we follow Mr Lee’s approach, we get $2,800,000 x 1.29 = $3,612,000 instead of mere relying on comparable H2’s adjusted value of $3,172,200. In this regard, we note an inconsistency in that we have arrived at $2,800,000 by disregarding comparables G7 and G8 to an extent. We should not have come back and say that they are good comparables for analysis. We would adopt $2,600,000 x 1.29 = $3,354,000 instead. 123.Thus, we prefer to determine the value of the Reference Lorry Parking Space at $3,400,000. Value for Motorcycle Spaces 124.In their Joint Statement dated 29 September 2020, Mr C Chan and Mr Lee agreed the value of a motorcycle space at $200,000[31]. However, in their later Joint Statement dated 30 October 2021, Mr Lee reverted to an assessment of $350,000 each. 125.As the difference between $200,000 and $350,000 is not significant when the value of the motorcycle spaces accounts for a nominal portion of the GDV, we adopt $200,000 per space. Other Parameters 126.By their Joint Statement dated 30 October 2021, Mr C Chan and Mr Lee had the following agreements/disagreements on other parameters of the residual valuation:[32]
Construction Cost 127.In fact, both Mr C Chan and Mr Lee made reference to the building cost data published by by Rider Levett Bucknall Ltd (“RLB”) – office buildings with high to very high quality finishes and derived their construction cost based on the Development Cost Pro-forma promulgated by the Hong Kong Institute of Surveyors. Their difference in result is mainly due to the different assumption of the provision of carparking in basements. As we have preferred Mr C Chan’s approach to Mr Lee’s, we will adopt Mr C Chan’s construction cost of $1,426,758,875 (which is only about 7% higher than that of Mr Lee). 128.Mr Yuen for R2 also proposed to carry out a cost and benefit analysis as regards the construction cost of the additional carparking basement. Here, Mr C Chan’s provision of 3 levels of basement would be 6,925.02 m2 x $27,300/m2 = $189,053,046[34] whereas Mr Lee’s calculation would be 3,600.05 m2 x $26,000/m2 = $93,601,300[35]. 129.First of all, this is not a like-to-like comparison as Mr C Chan provided for each basement floor of about 2,300 sq m whereas Mr Lee provided 1,800 sq m which would be more congested. Secondly, by reference to a RLB’s opinion letter dated 12 August 2020[36] (instead of the end of 2021), the construction cost of a 2-level basement with a floor height of 4.8 metres as assumed by Mr Lee was $26,700 per sq m. In addition, the difference between $189,053,046 and $93,601,300 is $95,451,746, and when the difference is divided by the number of double-deck carparks of 43, it is equivalent to $2,219,808 which is less than the value we determine at $2,800,000 for each private carparking space. In any event, the construction cost for the basements as proposed by Mr Lee did not account for the additional costs for the double deck sets themselves, which according to the letter of RBL afore-mentioned, is about $70,000 to $100,000 per set. Therefore, it is obvious that Mr C Chan’s model is more viable. Construction Period 130.Mr C Chan had undertaken a survey of the construction period of comparable Grade A office developments as shown below:[37]
131.Although Mr Lee rebutted that, for instance, the design of various parts of the 1001 King’s Road had been repeatedly amended resulting in an extended construction period, we consider amendments to plans from time to time is a common feature. 132.In this regard, we adopt a construction period of 48 months as suggested by Mr C Chan. Development Profit 133.In Shapiro, Mackmin and Sams, Modern Methods of Valuation, 12th edition, p 222, the development profit is explained as follows:
134.In this regard, Mr C Chan referred to new supply of office amounting to 1,568,000 sq m in the coming 5 years, which, according to him, is expected to exceed demand significantly. Mr C Chan alleged that investors and developers expect further correction of office rent in future on the basis of the following price index for Grade A offices published by RVD:[38]
135.With respect, as opposed to Mr C Chan’s assertion, the price indices do show that in the least Grade A office market has shown signs of turning around as suggested by Mr Lee. The picture would become clearer, as submitted by Mr Yuen, when the moving averages of 3 months or 6 months are taken into consideration. The office market has been improving since September 2020:
136.More importantly, as alluded to in paragraph 68 above, the area under consideration is transforming into a new office/commercial district which may attract prospective tenants from, for instance, the CBD. 137.By reference to the Annual Report of Swire Properties Limited for 2020 at p21, it also suggested that: “The Hong Kong economy and business confidence are showing signs of improvement. Juliu Baer, a Swiss private bank, will be moving from Central to Two Taikoo Place, where it will take 92,000 square feet of office space. Office leasing momentum is expected to pick up gradually.” 138.For instance, in May 2021, the Government successfully sold an office/commercial site of about 14,802 sq m, being Inland Lot No. 8945 at Caroline Hill Road, Causeway Bay, Hong Kong at a premium of $19,778,000,000 which was equivalent to an accommodation value of $198,000 per sq m approximately inclusive of a child care centre, a day care centre for the elderly and a district health centre totalling over 20,000 sq m, but excluding the gross floor area of a public vehicle park[39] to be constructed by the successful bidder.[40] 139.Following Nice Beauty Limited v Yan Yan Motors Limited & Others, LDCS 14000/2019, unreported, dated 6 December 2021, which was another compulsory sale application concerning a site of 505.48 sq m in Tsim Sha Tsui in Kowloon, we prefer a profit allowance of 17.5%. Interest Rate 140.In Shapiro, Mackmin and Sams, Modern Methods of Valuation, 12th edition, pp 220-221, the interest cost is explained as follows:
141.As Mr Lee pointed out in his Valuation Report dated 16 June 2020 at paragraph 5.23 that[41] in the past, many valuers might drew reference form the Hong Kong Dollars Prime Rate[42] to determine the finance cost to be adopted in the residual valuation. However, the Hong Kong Interbank Offered Rate (“HKBOR”) has become popular for funding purposes whereby interest rates are quoted as a certain percentage points known as “spread” above HIBOR. 142.Mr Lee stated further and we agree as follows:
143.Mr Lee also stated that it is quite common for some developers in Hong Kong to raise fund in the money market by issuing bonds. He had conducted a quick search on the internet to find out the market information of the bonds issued by different developers and the result showed that the asking yield of those outstanding bonds were below 3%. 144.In order to gather more relevant information on the market yield of bonds issued for property development and denominated in Hong Kong dollar, R2 also procured its banker from Hang Seng Bank to compile a list of bonds issued by Swire Properties Limited which showed both the coupon rate and asking yield was below 3%. In addition, R2 provided e-mail correspondence between it and its bank in September 2021 which showed that the latter might be willing to povide development loan for a “Commercial Project” with HK$1 billion at 1-month HIBOR + 1.4% to 1.65% per annum.[43] 145.Recently in Famous Concept Development Limited v Thousand Treasure Investment Limited & Others, LDCS 30000/2019, unreported, dated 2 November 2021, another compulsory sale application case, an expert produced evidence that since January 2021, the HIBOR has fluctuated between 0.16% at the highest to 0.04% or 0.06% prevailing which was the lowest in the past 12 years or so. In that case, the Tribunal accepted the 3.5% interest rate proposed by the expert. As at the date when Mr Lee prepared his updated RDV Report dated 5 October 2021, the 1-month HIBOR was about 0.1%. 146.However, in his closing submission on 13 January 2022, Mr Mok drew the Tribunal to the attention that the Federal Reserve of the United States just announced that it was accelerating its removal of monetary support for the economy, citing a rise in inflation that has seen the biggest jump in prices nearly 40 years. In a move to cool growth, the policy makers also said that they expected to hike interest rates three times in 2022. Incidentally, Link Asset Management Limited, the manager of Link Real Estate Investment Trust (Hong Kong stock code: 823), announced that it has successfully priced the US$600 million senior notes with 10-year maturity, due 2032, at coupon rate of 2.75% which is consistent with the finding of Mr Lee as stated in paragraph 143 above. 147.In view of the above and having regard to the project size of the hypothetical development which is commercial in nature, we will adopt an interest rate of 3.5%. FINDING ON RDV AND THE RESERVE PRICE 148.Thus, subject to what we have stated above, we shall follow Mr Mr C Chan’s updated residual valuation model dated 30 October 2021[44] on the determination of the RDV which is reproduced at Appendix 3 to this judgment. We determine the land value of the Lot at $5,052,600,000 (ie accommodation value of $145,923/m2). 149.Meanwhile, it is noted that Hysan Development Company Limited (“Hysan”) together with the Chinachem Group were the successful tenderers of Inland Lot 8945. Hysan is the largest landowner in Causeway Bay and owns, inter alia, a portfolio of commercial buildings comprising Lee Garden One, Lee Garden Two, Lee Garden Three, Lee Garden Five, Lee Garden Six, One Hysan Avenue, Leighton Centre, Lee Theatre Plaza and Hysan Place and Inland Lot 8945 is somewhere to the southeast. 150.On 5 July 2021, the Government announced the approval of premium waivers for three pedestrian links in Admiralty, Wan Chai and Causeway Bay under the Policy of Facilitating Provision of Pedestrian Links by Private Sector. By reference to the plan attached to the press release, the proposed development of Inland Lot 8945 will be connected to Causeway Bay MTR Station by a system of covered walkway via Lee Garden Siz, Lee Garden Five, Lee Garden Two and Hysan Place.[45] 151.Mr Lee in his Valuation Report dated 16 June 2020, paragraph 5.9 stated the following:[46]
152.This is particularly the case when Inland Lot 8945 is situated in a different district and enjoyed the prospective premium owing to the system of covered walkway where Hysan is eager to expand its empire in Causeway Bay. 153.In this regard, notwithstanding that Inland Lot 8945 was sold by the Government at an AV of $198,000 per sq m or thereabout, it is noted that the second bid was only $135,941 per sq m and the third bid was $122,459 per sq m.[47] 154.Wheresa pursuant to Schedule 2 to the Ordinance, the Lot which is the subject of an auction shall be sold subject to a reserve price which takes into account the redevelopment potential of the Lot on its own, we adopt the estimated RDV of $5,052,600,000 as the Reserve Price for the auction of the Lot. OTHER INCIDENTAL MATTERS 155.The applicants propose to appoint Mr Anthony Chow and Ms Anna Chow, being consultants of Messrs Guantao & Chow, Solicitors & Notaries, as the sale trustees. Based on the information on their background and experience as set out in their letter dated 27 September 2021[48], we are satisfied that they are proper persons to be appointed as trustees to discharge the duties imposed on trustees under the Ordinance. The remuneration package proposed in the said letter appears to be reasonable. 156.The applicants have prepared a set of draft Particulars and Conditions of Sale of the Lot[49]. Subject to any amendment that may become necessary as a result of our ruling on the arrangement of auction above, the particulars and conditions of sale of the Lot by public auction submitted by the applicants are also reasonable. ORDER 157.Thus, we make the following orders:
COSTS 158.We make a costs order nisi that:
159.Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days from the date of this judgment.
Mr Mok Yeuk Chi and Mr Jonathan Lee, instructed by Mayer Brown, for the 1st to 5th applicants Mr Allen Lam, instructed by Messrs Edward Ko & Company, for the 1st respondent. Mr Denis Chang SC, leading Mr Ross M Y Yuen and Ms Emily Ting, instructed by Simon Reid-Kay & Associates, for the 2nd respondent
[1] See Bundle C5/9/826-905. [2] See Bundle E1/1/51. [3] See Bundle E1/1/52. [4] The Court of Final Appeal stated further at paragraph 36 of the judgment that: “What the Tribunal must do is to consider whether, in the circumstances of each case, the offer falls within a band of what represents a fair and reasonable assessment of the value of the minority owner’s interest reflecting a proportionate share of the redevelopment value of the whole site.” [5] See Bundle C4/8/830-831. [6] See Bundle C5/9/907. [7] See Bundle C5/10/996-1003. [8] See Clause B10.3 of the Code of Practice for Fire Safety in Buildings 2011 and the photos at Bundle C5/9/935-938. [9] See Bundle C4/8/857. [10] See Exhibit R2. [11] See Bundle C4/7/797. [12] Usable floor area in m2 per person. [13] See Table B2 in the Code of Practice for Fire Safety in Buildings 2011. [14] See Bundle C2/3/262. [15] See Bundle C3/4/602. [16] See §43 of the judgment. [17] See Bundle C5/9/910. [18] See Bundle C5/9/912-913. [19] In this regard, we do not agree with Mr Yuen’s assertion that the location of the Lot is difficult to attract top-tier tenants such as investment banks, securities traders, and large international law firms to lease office on the site. To the contrary, time to time news media have been reporting such tenants being attracted to the Taikoo Place and one may always find name of prestigious tenants having address at the Taikoo Place. See also www.taikooplace.com/en/work/tenants. For instance, many years ago, the Consulate General of Canada had moved its office in Central to Berkshire House, 25 Westlands Road. [20] See Bundle C5/9/949. [21] With respect, K Wah Centre is quite a distance from the commercial developments and government development like K11 Atelier King’s Road, 625 King’s Road and North Point Government Offices etc. [22] See Bundle C5/9/919-920. [23] See Bundle C5/9/921. [24] See Bundle C5/9/922. [25] See Bundle C5/9/918. [26] See Bundle C5/9/950. [27] See Bundle C5/9/927. [28] In Sentry Holdings (Asia) Limited and The Colonial Treasuer Incoporated v Cali Enterprises Limted, LDLA 11 & 43/1983 [1983-85] CPR 140, the Tribunal considered that a bulk 15% discount was reasonable. But 1 x 1.2 x (1-15%) ≈ 1.0. [29] See Exhibit R4. [30] See Bundle C5/9/992. [31] See Bundle C4/6/700. [32] See Bundle C5/9/907-908. [33] The figure was updated by Mr C Chan on 30 October 2021 based on Building Cost Data in 2nd Quarter of 2021. [34] See Bundle C5/9/948. [35] See Bundle C4/8/897. [36] See Bundle C2/3/438. [37] See Bundle C2/3/267. [38] See Bundle C5/9/943-944. [39] The public vehicle park will comprise 100 private car parking spaces, 15 light goods vehicle parking spaces, 5 medium goods vehicle parking spaces, and 5 coaches parking spaces. [40] See Bundle C4/7/769. [41] See Bundle C3/4/469. [42] Usually finance cost was assumed to be 1% below Prime Rate. [43] See Bundle C4/8/902-903. [44] See Bundle C5/9/947. [45] See Bundle C4/7/781-785. [46] See Bundle C3/4/464. [47] See Bundle C4/7/756. [48] See Bundle F/2/4. [49] See Bundle F/7/12-40. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Other judgments that cite this case
Further hearings and rulings under LDCS 6000/2018