Orient Sea Investments Ltd and Others v. Cheung Wing Ching and Others
Read the full judgment text of LDCS 27000/2018 on BabelCite. This LDCS judgment was delivered on 21 June 2024.
1. On 24 August 2020, I handed down a judgment (“the Judgment”) which ordered, inter alia, all the undivided shares of and in Section A of Marine Lot No 430, Section B of Marine Lot No 526 and Section B of Marine Lot No 321 (hereinafter collectively referred to as “the Lots”) on which a building known as State Theatre Building was with the postal address of Nos 277-291 King’s Road, Nos 4, 4A-D, 6, 6A-D Java Road and Nos 2-16 Tin Chong Street, Hong Kong be sold by way of public auction for the pu
Cited by 3 cases · Cites 2 cases
|
LDCS 27000/2018 [2024] HKLdT 55 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION LAND COMPULSORY SALE MAIN APPLICATION NO. 27000 OF 2018 __________________________ BETWEEN
__________________________
________________________ REASONS FOR DECISION ________________________ Background 1.On 24 August 2020, I handed down a judgment (“the Judgment”) which ordered, inter alia, all the undivided shares of and in Section A of Marine Lot No 430, Section B of Marine Lot No 526 and Section B of Marine Lot No 321 (hereinafter collectively referred to as “the Lots”) on which a building known as State Theatre Building was with the postal address of Nos 277-291 King’s Road, Nos 4, 4A-D, 6, 6A-D Java Road and Nos 2-16 Tin Chong Street, Hong Kong be sold by way of public auction for the purposes of redevelopment pursuant to section 3(1) of the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“the Ordinance”). The judgment was later amended for corrigendum on 25 September. 2.Included in the Order for Sale in §69 of the Judgment as amended is a condition (“the Condition”) whereby the purchaser of the Lots or its successor in title were to complete redevelopment of the Lots and make the redevelopment fit for occupation within a period of 6 years after the date on which the purchaser of the Lots became the owner of the Lots (“the Building Covenant Period”). 3.Subsequently at a public auction on 8 October 2020, Orient Sea Investments Limited (“Orient Sea”), ie A1, successfully bid for the Lots at a price of $4,776,000,000. By an assignment dated 9 November 2020 and registered in the Land Registry by Memorial No 201201025270342, A1 became the registered owner of the Lots on the same date. Thus the Building Covenant Period as stated in the paragraph above would expire on 8 November 2026. 4.There are 2 summons from A1, therefore, applying for:
5.Initially there was only an Ex-Parte Summons filed on 10 May 2024 (“the Ex Parte Summons”) applying for extension of the Building Covenant Period for 12 months. 6.However, in Wealth Master International Limited & Others v Wong Weng Wa Vincent, LDCS 18000/2014 (unreported, dated 11 March 2021), I stated my view at §12 of the decision that the Director of Lands or more appropriately the Secretary for Development should be invited to join as an interested party because the Building Covenant Period was imposed pursuant to Schedule 3 to the Ordinance. Section 9 of the Ordinance in particular reads as follows:
7.According to my understanding, the Lands Department, being the administrator of Government leases, is still responsible for enforcing similar building covenants in Government leases. In Welland Resources Limited & Another v Mega Joyful Limited, LDCS 6000/2022 (unreported, dated 12 September 2023), it was evidenced that the Lands Department was charging substantial premium as a condition for not enforcing the re-entry for such breach in respect of Inland Lot 9048, a land sale comparable. For instance, 2% of the assessed land value will be charged for the first year (or part thereof); 4% for the second year; 8% for the third year and so on. 8.According to §98 of the Affirmation of Wong Ka Yan Mabel dated 9 May 2024 attached to the Ex Parte Summons, A1 did on 11 April 2024 try to seek the view of the Lands Department in such regard but to my surprise, the Lands Department replied on 18 April 2024 specifying the following:
9.With respect, if the Lands Department is not at a position to comment on an application for extending a building covenant under Government lease of a lot, who else is at such a position? The Tribunal has never been the administrator of Government leases. I am afraid that Schedule 3 to Ordinance has not passed this responsibility to the Tribunal though it empowers the Tribunal to extend Building Covenant Period. Then on what basis does the Tribunal exercise its discretion? Definitely, the Tribunal is not in the position to charge premium like the Lands Department for the breach. Would it be a Catch 22 situation? 10.I trust this is a Government policy whether to enforce the breach of the Building Covenant Period or charge a premium for not enforcing such a breach. Thus, paragraph 3 of the Minutes of the meeting of the Bills Committee on the Bill on 11 March 1998 recorded that the Principal Assistance Secretary for Planning, Environment and Lands had concurred that where necessary, the Lands Tribunal could invite the Secretary for Justice to intervene. 11.Therefore, on 13 May 2024, I ordered that the Secretary for Development and the Director of Lands should join as parties of the Ex Parte Application to explain Government’s position. 12.Then in response to letters from Messrs Howse Williams, solicitors on behalf of A1, dated 13 May 2024, 16 May 2024 and 17 May 2024, the Lands Department gave a further reply on 23 May 2024. While acknowledging that the matter to grant any extension of the Building Covenant Period is solely at the discretion of the Tribunal, the Lands Department stated in §4 of the letter that:
13.On 14 June 2024, the Secretary for Justice also stated that:
14.With respect, the same letter of reply states that the Secretary for Development is not a relevant party to the imposition or extension of the period for redevelopment. 15.Thus the hearing of the Ex Parte Summons proceeded in the absence of the administrator of the Government leases and the policy maker of whether to enforce the breach of Building Covenant Period as specified under section 9. 16.Having heard the submission of Mr Mok Yeuk Chi, counsel for A1, I made an order that:
17.Here are my reasons. Grounds in support of the Ex Parte Summons 18.As disclosed by the Affirmation, there is a co-operation between A1 and the owner of various adjoining lots (“the Adjoining Lots”), Sky Ace Enterprises Limited, for development as “one single site” under the Building (Planning) Regulations though the Redevelopment could still be developed by A1 on its own without the need to include or involve any part of the Adjoining Lots. 19.But because of the need for conservation of the Former State Theatre[1] which A1 decides to do so voluntarily, a lot of extra effort, time and costs have been expended. One major difficulty of the overall conservation and revitalization project is that the standard and methodology adopted for the construction of the Former State Theatre are not compatible with the current statutory and practice requirements. A1 assessed that substantial structural strengthening works would be required, and at the same time, to avoid any major implication to the building outlook envelop, transportation of mega steel column, I beam, and the like. “Heritage Impact Assessment Report” was necessary to review and assess design proposals of the Former State Theatre and the area within its curtilage. 20.Further, according to the Affirmation, substantial amount of time and efforts have been incurred to engage professionals/consultants to prepare, study and/ or consider, among other things:
21.The Affirmation also disclosed that the Buildings Department has compiled a “Practice Guidebook on Compliance with Building Safety and Health Requirements under the Buildings Ordinance for Adaptive Re-use of and Alteration and Addition Works to Heritage Building” (2019 Edition) (the “Guidebook”) in consultation with relevant authorities such as the Antiquities and Monuments Office (“AMO”), Fire Services Department and Architectural Services Department to provide pragmatic design alternatives and approaches as well as safety guidelines in the setting of heritage conservation. Time, costs and efforts, it was suggested, have been spent to observe the guidelines and recommendations given in the Guidebook for the purpose of the revitalization of the Former State Theatre. 22.Apart from the above, there is also a wide range of statutory requirements/ compliances to observe and follow for the preservation of the Former State Theatre. According to the Affirmation, these increased the technical and practical difficulty to the Redevelopment considering the age of the Former State Theatre and the present statutory requirements/ compliances/ standards related to, among others:
23.According to the Affirmation, during the planning stage of the Redevelopment, there was ongoing and regular communication with the AMO, which was actively invited to provide feedback on the designs and preservation schemes at different stages of the Redevelopment. In addition, some existing site constraints have also rendered normal construction works and practices impossible for the Former State Theatre. For example, as there are only small openings on the façade (which is to be preserved in its entirety) of the Former State Theatre, bulky or lengthy construction materials have to be divided into parts first to go through the small openings, then undergo in situ welding works for construction use. 24.Furthermore, while the Redevelopment is actively ongoing, the Affirmation stated that the contractors and related parties need to closely monitor the potential risks that may pose difficulty or disrupt the project. For example, as a new basement will be constructed right next to the Former State Theatre, there is a live risk of potential “settlement” of the Former State Theatre throughout the entire Redevelopment process. Pre-construction surveying could only go so far as to identify such potential risk but cannot deduce whether, when and where it may happen. Discussion 25.In view of the above, I am persuaded that the extensive scope and extent of extra and special works and arrangements required for the conservation and revitalization of the Former State Theatre would have prolonged the development period when compared with other conventional redevelopment projects. 26.Notwithstanding the above, I am informed that all “Foundation” and “Excavation and Lateral Support (ELS)” works of the Redevelopment have been completed. Specifically, the ground floor slab construction is expected to be completed by the end of 2024. It is the expectation of the Authorized Person that the application for Occupation Permit can be submitted by July 2027. 27.By the Affirmation, I am also referred to a Practice Note issued by the Lands Department on 18 March 2022 on ‘Concession to Building Covenant Extensions” (Issue No 2/2022)[2] which sets out the details of the granting of extension of building covenants. However, its footnote 5 specifically states that the Practice Note does not apply to the building covenant that may be imposed by the Tribunal in an order for sale under the Ordinance. This notwithstanding, I agree that the Practice Note is still relevant and useful as it demonstrates the position of the Lands Department as regards the aftermath and detrimental impact across the building industry caused by the pandemic. 28.Under the Practice Note, all types of developments with unfulfilled building covenants imposed by the Lands Department are automatically granted a free extension of time of 6 months. 29.Thus, bearing in mind the present application for extension of the Building Covenant Period for mere 12 months, I made the order as granted which permits A1 to complete and make fit for occupation the Redevelopment from 8 November 2026 to 8 November 2027. Costs 30.With the undertaking by A1 that it would deal separately with the Secretary for Justice on costs, I make no order as to costs.
Mr Mok Yeuk Chi, instructed by Messrs Howse Willams, for the 1st Applicant 2nd to 13th applicants, unrepresented and did not appear The 4th, 15th, 16th, 19th, 20th, 21st, 22nd, 25th, 26th, 30th, 31st, 32nd & 35th were absent and unrepresented Attendance of the Secretary for Justice as Interested Party was excused |
Cases cited in this judgment
Other judgments that cite this case
Further hearings and rulings under LDCS 27000/2018