Well Honour Development Ltd v. The Director of Lands of Lands Department Headquarters

HCAL 2198/2023

[2024] HKCFI 2221

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 2198 OF 2023

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BETWEEN

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J U D G M E N T

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A. Introduction

1.Two score and four years after two lots of land were resumed by and reverted to the Government in 1976, the Applicant company – which had only been in existence since 2006 – brought forth a claim for compensation under the Lands Resumption Ordinance Cap 124 (“LRO”). By a decision dated 11 September 2023 (“Decision”), the Director of Lands (“Director”) refused the Applicant’s claim for compensation.

2.By Form 86 dated 8 December 2023, the Applicant company sought leave to apply for judicial review so as to challenge the Decision.

3.I gave directions for the Director to file an Initial Response which was filed on 6 February 2024. I also gave directions for there to be an oral hearing of the application for leave, which I fixed for 19 March 2024. At that hearing, the Applicant was represented by Mr Edward MH Chan of Counsel, and the Director was represented by Mr Alvin Hor, Acting Senior Government Counsel, together with Ms Nova Tang, Government Counsel.

4.At the beginning of the hearing, I canvassed the possibility of dealing with the matter on a ‘rolled-up’ basis, but Mr Hor thought that the Director might wish to file evidence if leave were to be granted. Therefore, the hearing dealt with the question of leave only.

5.At the end of the hearing, I granted leave to apply for judicial review – essentially because I thought each of the two main points were reasonably arguable, and that it would in any event be helpful for there to be consideration of perhaps previously conflicting Hong Kong decisions, and with the benefit of at least one Australian decision on a similar topic. I also gave directions relating to the filing of further evidence and fixing a hearing. Further affidavit evidence was indeed filed, though with respect it is largely irrelevant to the central issue to be decided, which is one of statutory construction.

6.The substantive hearing was fixed for and occurred on 28 August 2024, when the Applicant was again represented by Mr Chan. The Director was represented by Ms Frances Lok SC, leading Mr Hor and Ms Tang.

7.A the end of the hearing, I reserved my decision to be handed down a few days later. This is my Judgment.

B. Background

8.The factual background to the application is essentially not controversial.

9.The application concerns the resumption of Lot Nos 52 and 57 in DD 131 (“Lots”). The Lots were previously held by two owners as tenants-in-common in equal shares. The two owners were Mr Shum Chik-Kai (“Shum”) and Madam Yeung Chi-king (“Deceased Owner”), who passed away on 6 February 1976. It seems that Shum and the Deceased Owner were co-owners of a number of properties.

10.The Deceased Owner was a spinster, whose parents had pre-deceased her. Her only sibling was a younger brother who had also pre-deceased her, leaving five daughters who were the only persons entitled to apply for Letters of Administration. The nieces did not have a close relationship with the Deceased Owner, and were unaware of any entitlements to her estate until about 1998 or 1999. A delay in obtaining the Letters of Administration to the estate of the Deceased Owner apparently arose in those circumstances (see below).

11.On 28 May 1976, a notice (“Notice”) that the Lots were required for a public purpose and would be resumed was published in the Gazette. The Notice was affixed upon a conspicuous part of the Lots on 31 May 1976.

12.A pre-reversion letter dated 8 June 1976 was issued to Shum and the Deceased Owner. However, because the Deceased Owner had already passed away by that date, the offer letter was not accepted and lapsed.

13.Subsequently, on 2 July 1976, the Lots were resumed and reverted to the Government.

14.On 29 July 1976, a statutory offer of land compensation was made to Shum and the Deceased Owner under the then section 6(1)(a) of the Crown Lands Resumption Ordinance Cap 124 (“CRLO”). The relevant section of the CRLO is materially the same as in the LRO. The statutory offer was again not accepted and lapsed.

15.On 27 February 1979, Shum confirmed his intention to accept the offer of land exchange entitlement – in circumstances where prior to 1983 an owner might be compensated with the land exchange entitlement commonly known as Letters A/B. Whilst the Government ceased to grant land exchange entitlement in 1983, for certain land resumed before that date, the owner might still be granted land exchange entitlement commonly known as a “Modified Letter B” (the deadline for which applications lapsed in 1992).

16.A Modified Letter B dated 27 October 1987 in respect of Shum’s half share of the Lots was granted to Shum upon the application by his appointed solicitors.

17.The Applicant was incorporated in Hong Kong on 11 August 2006, founded by a Mr Lai Choi Fat and his wife Madam Ng Sam Mui. Mr Lai was in the business of dealing with land exchange entitlements including Letter B and Modified Letter B, making searches to track down and contact owners of such letters so as to acquire them for resale.

18.As regards the other half share of the Lots, two nieces (“Administratrixes”) obtained the Letters of Administration to the estate of the Deceased Owner on 8 September 2006. The various nieces had apparently been located as a result of the searches/enquiries made by Mr Lai in Macau – though there was some disagreement between them until resolved in about 2001 (the details of which disagreement do not need to be traversed for present purposes).

19.On 23 November 2006, the Administratrixes assigned to the Applicant the “half share of the right benefit and interest of and in the compensation and/or grant of land in exchange by the Government in respect of the Lots”, alongside two other properties, by way of an assignment (“Assignment”). Proceedings commenced by the Administratrixes to avoid the Assignment were settled in 2008, apparently upon payment of a higher sum in consideration than was payable under the original Assignment.

20.On 5 March 2013, the Applicant submitted a claim for land compensation to the Director. The claim was rejected by the Director on 10 September 2013.

21.On 4 December 2015, the Applicant submitted a Notice of Claim for the outstanding land compensation of the Lots to the Director under section 5 of the New Territories Land Exchange Entitlements (Redemption) Ordinance Cap 495. That claim was rejected by the Director by three letters dated 5 October 2016, 28 July 2017 and 14 December 2018.

22.There were three reasons for the rejection of the claim, being:

(1) the Applicant was not entitled to lodge the claim as an “owner”, defined under the relevant section as “a person who is for the time being a legal owner (whether by himself or any other person or persons) of the land exchange entitlement”;

(2) the pre-reversion offer dated 8 June 1976 did not constitute any land exchange entitlement granted by the Government as it was not accepted and lapsed; and

(3) in fact, no land exchange entitlement had been granted by the Government in respect of the Deceased’s half share of and in the Lots.

23.On 9 September 2019, the Director issued a letter to the Applicant’s solicitors to inform them that, if they considered that the Applicant is entitled to compensation under the LRO regarding resumption of the Lots, they may advise the Applicant to submit to the Director for consideration of the Applicant’s claim pursuant to the relevant statutory provisions and the Applicant’s case will be further assessed by the Director in accordance with the applicable directions, policy and practice in force at the material time.

24.On 17 March 2020, the Applicant submitted a claim for compensation for the outstanding land compensation of the Lots in respect of the Deceased Owner’s half share to the Director under (unspecified provisions of) the LRO. This is the claim to compensation relevant for present purposes. As already noted, it was made almost 44 years after the Lots had been resumed and reverted to the Government.

25.The claim was rejected on 11 September 2023 – i.e. by the Decision – for the following reasons:

(1) The LRO required the Government to pay compensation to the former owner. The term “former owner” was defined in section 2 of the LRO to mean “in relation to land resumed by the Government, the person who was the owner of the land immediately before the land reverted to the Government under section 5”.

(2) The assignment of the right to claim for compensation (i.e. the Assignment) was a private dealing between the parties, and the Director was not in a position to advise whether it was valid and had the intended effect assigning the right to the Applicant.

(3) In order to comply with the statutory requirement under the LRO, the Government was only able to deal with and pay compensation to the Deceased Owner’s personal representatives (or any other party acting in the name of the Deceased Owner’s personal representatives under a valid power of attorney).

26.The Form 86 was filed on 8 December 2023.

C. The Ground of the Challenge

27.The Form 86 identifies one sole ground of review, namely that the Decision was the result of an error of law.

28.The error of law asserted can be summarised as follows:

(1) The Decision ignores the fact that the personal representatives have sold the right to claim compensation, which is a chose in action, to the Applicant.

(2) The sale was supported by consideration and evidenced by the Assignment, prepared by lawyers so that there is no reason to doubt its validity.

(3) A “chose in action” is an expression used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession.

(4) The Decision is contrary to section 9 of the Law Amendment and Reform Consolidation Ordinance Cap 23 (“LARCO”), which provides (with the Applicant’s emphasis):

Any absolute assignment, by writing under the hand of the assignor (not purporting to be by way of charge only), of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this section, section 11 of this Ordinance and sections 25 and 49 of the Conveyancing and Property Ordinance (Cap 219) had not been enacted) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same, without the concurrence of the assignor.

(5) In entering into the Assignment, the Applicant legally stepped into the shoes of the “owner” who is defined in section 2 of the LRO as “the person registered or entitled to be registered in the Land Registry in respect of any land sought to be resumed, or, if such person is absent from Hong Kong, or cannot be found, or is bankrupt or dead, his agent or representative in Hong Kong”.

29.By the evidence filed, the Director opposes the application on the following bases:

(1) The Applicant has failed to exhaust available alternative remedies in the Lands Tribunal – as the proper venue to adjudicate the claim for compensation – before seeking the Court’s intervention by judicial review, where there are no extraordinary or exceptional circumstances.

(2) On the proper construction of the LRO, the Deceased Owner’s right (if any) to land compensation is not assignable.

(3) The Applicant is an unrelated third party having no genuine commercial interest in the subject matter, hence rendering the purported Assignment invalid on the ground of champerty and maintenance or savouring of champerty and maintenance.

(4) In any event, the purported Assignment fails to comply with all the relevant requirements to take effect as a valid assignment.

30.In his submissions, Mr Chan addressed those questions in that order.

31.In her submissions, Ms Lok put the matter slightly differently, by suggesting that there are three issues which require the Court’s determination:

(1) whether on the proper construction of the LRO a right to claim compensation under section 8(1) is assignable;

(2) if yes, whether the assignment of the right by the estate to the Applicant is nonetheless impermissible under general law; and

(3) whether the Applicant is entitled to the mandamus claimed, namely whether the Court should refuse relief in any event because the Applicant failed to submit a claim for compensation under section 8(2) of the LRO for determination by the Lands Tribunal.

32.Though put slightly differently, these points seem in practical terms to raise at least the first questions as were apparently raised by the Director’s evidence. Having considered matters, I think the statutory interpretation/construction point is the key issue, and logically falls to be decided first, as it also has impact on the other issues.

D. Proper Construction of the LRO

33.At the time of the land resumption of the Lots in 1976, the relevant ordinance was the CLRO. However, the terms of the CLRO were materially identical to those now in the LRO, to which the references below will be made.

34.Mr Chan’s argument is straightforward, and is based on his reference to section 8(1) of the LRO. Section 8 in full is in the following terms:

8. Claims for compensation

(1) Any person claiming compensation by reason of the resumption of any land under this Ordinance, and being a person who has not been offered in writing compensation under section 6(1)(a), or has not been served with a notice under section 6(1)(b), may submit a claim in writing to the Authority stating the nature of his estate or interest in the land and the amount which he seeks to recover.

(2) If any such person and the Authority do not agree as to the amount of compensation (if any) to be paid either party may submit the claim to the Lands Tribunal for determination of the amount of compensation (if any) to be paid.

(3) A person claiming compensation under subsection (1) shall submit his claim to the authority within a period of 1 year from the date on which the land reverted to the Government under section 5 or within such further period as the Chief Executive may allow in any case.

(4) A claim submitted by a person under subsection (1), in respect of land resumed under an order made under section 3 on or after commencement of the Crown Lands Resumption (Amendment) Ordinance 1984 (5 of 1984) [i.e. 13 January 1984], may include a claim for any costs or remuneration reasonably incurred or paid by that person in employing persons to act in a professional capacity in connection with such claim.

35.Mr Chan submits section 8(1) allows the right to compensation to be assigned, and for the assignee to make the claim to compensation. He points to the fact that “any person” is entitled to claim compensation by reason of resumption of any land under the LRO, and the fact that the claimant must state the “nature” of his estate or interest specifically recognises that there can be different kinds of interest, there being no restriction on the “nature” of the estate or interest which the claimant can state.

36.Mr Chan also relies on the general and fundamental principle of assignment of a chose in action, that the assignee is in the same position as was the assignor. Mr Chan submits that recognition must be given to the fundamental principle that Hong Kong fully permits the trading of people’s rights and choses in action. It is, he says, highly probable that once an owner who is entitled to compensation receives a Letter B, he will sell it as a chose in action. Whether he is selling a right to compensation or a Letter B, the question is whether he is happy with the price he is offered. Such transactions are aligned with commercial morality and do not violate any norms, and the argument that another person may come forward to make a claim cannot be used to undermine a genuine claim, because all claims are subject to the rules of evidence within the legal system. Further, previous case law recognizes that the amount of compensation to be awarded to an assignee shall not be greater than that amount which would have been paid if no assignment of the claim had taken place.

37.Mr Chan also submits that any reliance placed by the Director on the Australian decision of Kilmaley Investments PTY Ltd v City of Wanneroo [2019] WASCA 156 – see below – is misplaced, where it was decided on its own facts pursuant to Australian legislation, and the particular interpretation of the specific provisions in that legislation. He pointed to numerous differences in that statute which in that case enabled the court to come to the conclusion on its terms that the right was not assignable. For example, Mr Chan contrasts the use of the present tense in the relevant Australian provision with section 8 of the LRO, which Mr Chan submits is wider and not tense specific. Further, he says, there is nothing in the LRO which forbids assignment of the right to compensation, and under the general law of Hong Kong a chose in action is assignable.

38.At the leave hearing, Mr Hor referred to and sought to place some weight on the Kilmaley case at §§146-152, and 158. There, the Court held that a person’s entitlement to compensation is not transmissible or assignable except as expressly provided, and the entitlement to compensation for the land resumed (which is created by statute) is constituted and conferred in such a manner that makes it inalienable. Therefore the interest or right cannot be assigned and there is no scope within the statutory scheme for an assignee to claim compensation.

39.At the substantive hearing, Ms Lok – rightly, I think – placed less emphasis on the particular analysis conducted by the Court in the Kilmaley case by reference to the particular provisions in the Australian legislation, and instead placed emphasis on the approach taken to the process of statutory interpretation adopted by the Court. As she said, it was consistent with the correct approach identified by the CFA in the Jack Chen case (see below).

40.Ms Lok submits that the Applicant is misconceived in arguing that it is entitled to compensation under the LRO, because it is clear on a proper reading and interpretation of the LRO as a whole that – unless the statute identifies otherwise – compensation for land resumption should be provided only to those who had an interest and/or rights in relation to the land immediately prior to the resumption.

41.Ms Lok submits that the starting point of the relevant exercise – with which I agree – is that the Court’s task is to give effect to the legislative intent of the LRO, within the permissible bounds of interpretation. The Court is an interpreter not a legislator. Thus, a purposive approach does not allow the Court to disregard or distort the plain meaning of the text and read the provision in any matter it wants. The task remains one of construction of the words the legislature has actually used, albeit looking at context and purpose.

42.Ms Lok referred to HKSAR v Chen Keen (alias Jack Chen) (2023) 26 HKCFAR 157 at §12, where the CFA stated:

It follows that the legislature’s intention is to be gleaned from the text, context and purpose of the statute. In this regard:

(1) The context of the relevant statutory provision should be taken in its widest sense and will obviously include the other provisions of the statute. All relevant provisions within a statute must be read together as a purposive unity. It is necessary to identify the interpretive considerations involved and then, if they conflict, to weigh and balance them. So far as possible, a statute should be construed as a consistent whole.

(2) It may be relevant and necessary, depending on the case, to consider the recommendation of a report such as that published by the Law Reform Commission, the explanatory memorandum to the relevant bill or a statement by the responsible official of the government in relation to that bill in the Legislative Council. It may also be relevant in any given case to look at the history of the provision concerned, and read it in the historical context of the situation which led to its enactment. The existing state of the law may also be relevant.

(3) Regard must also be had to the practical consequences of opposing constructions. Construction is an exercise in common sense and sound reason. The courts will presume that the legislature did not intend a statute to have consequences which are inconsistent with fundamental rights, or are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless.

43.Ms Lok sought to stress the points made in subparagraphs (1) and (3) as of particular relevance to the current exercise. It also seems to me that the approach to statutory interpretation – like that relating to contractual interpretation – is an iterative process.

44.Looking at the bigger picture or context, it might be thought obvious that the entire purpose of compensation payable upon the resumption of land is to provide compensation to the particular individual whose estate or interest in the land is resumed for the loss and damage occasioned by the resumption at the time it is resumed. It might also be thought that the compensation scheme would also envisage compensation being payable within a relatively short time of the loss and damage occurring, caused by the resumption.

45.Nevertheless, the appropriate context is also to be found in the LRO itself. A focus on just section 8 alone is contrary to the required approach, and risks losing sight of full material context and purpose. Therefore, I will set out that section again in its wider context, starting with elements of the definition section 2, which defines “former owner” and “owner” as follows:

former owner (前業主) means, in relation to land resumed by the Government, the person who was the owner of the land immediately before the land reverted to the Government under section 5;

owner (業主) means the person registered or entitled to be registered in the Land Registry in respect of any land sought to be resumed, or, if such person is absent from Hong Kong, or cannot be found, or is bankrupt or dead, his agent or representative in Hong Kong;

46.In passing, it can be noted that there is no reference within these definitions to an assignee (notwithstanding that the legislature was alive to the possibility of assignments: see section 5 below).

47.Then, in the order in which they appear, reference can be made to various other sections of the LRO, insofar as they are material for present purposes, as follows:

4. Notices

(1) Where resumption is ordered a notice that the land is required for a public purpose and will be resumed shall be published in the Gazette in English and Chinese.

(2) A copy of such notice shall be served on the owner, if he can be found, and a further notice shall be affixed upon a conspicuous part of the land to be resumed or, where the land is divided into lots, sections or subsections, if practicable, upon each lot, section or subsection affected.

(3) The notice affixed to the land shall state the date on which it has been so affixed. It shall also state that the land will be resumed on the expiration of 1 month from such date, unless the Chief Executive shall have authorized the giving of a longer period of notice, in which case the longer period shall be stated.

(3A) Also, the Authority must—

(a) publish a copy of the notice on the website of the Authority;

(b) publish a copy of the notice in 1 issue of an English newspaper and 1 issue of a Chinese newspaper; and

(c) make a copy of the notice available for inspection by the public free of charge at the time and place as the Authority reasonably directs.

(4) A notice published and served or affixed under this section shall be deemed to be notice to the owner of the land and every person interested in the land or having any right or easement therein.

5. Reversion of ownership to the Government

On the expiration of 1 month, or any longer period authorized under section 4(3), the land other than any land purchased by agreement under section 4A shall– …

(b) in all other cases, revert to the Government,

and all the rights of the owner, his assigns or representatives and of any other person in or over the land or any part thereof shall absolutely cease.

6. Compensation

(1) Within a period of 28 days from the date on which land reverts to the Government under section 5, the Authority shall –

(a) write to the former owner and to any person having an estate or interest in the land immediately before reversion under an instrument registered in the Land Registry, making an offer of compensation in respect of the resumption of the land; or

(b) serve on any of the persons referred to in paragraph (a) a notice in such form as the Authority may specify, requiring him to submit his claim for compensation within the time stipulated in such notice.

(2) Where a notice is served on a person under subsection (1)(b) he shall submit his claim in a form specified by the Authority and shall furnish to the Authority such accounts, documents and particulars as the Authority may reasonably require in support of such claim.

(3) If –

(a) a person to whom an offer has been made under subsection (1)(a) does not accept the offer within 28 days from the date thereof; or

(b) a person on whom a notice has been served under subsection (1)(b) –

(i) does not submit his claim within the time stipulated therein; or

(ii) submit his claim but he and the Authority do not agree as to the amount of compensation,

such person or the Authority may then refer the matter to the Lands Tribunal for determination of the amount of compensation to be paid.

7. Power of entry

(1) If a notice has been given under section 4, it is lawful for the Chief Executive or any person authorized by the Chief Executive to enter, without the consent of the owner or occupier, into and upon any land intended to be resumed for the purpose of surveying and taking levels of such land and doing all necessary acts for setting out the line of works.

(2) If any damage is caused by reason of the entry into and upon the land or of any works performed under subsection (1) either the owner or occupier may submit to the Authority a claim for compensation in respect of such damage.

8. Claims for compensation

(1) Any person claiming compensation by reason of the resumption of any land under this Ordinance, and being a person who has not been offered in writing compensation under section 6(1)(a), or has not been served with a notice under section 6(1)(b), may submit a claim in writing to the Authority stating the nature of his estate or interest in the land and the amount which he seeks to recover.

(2) If any such person and the Authority do not agree as to the amount of compensation (if any) to be paid either party may submit the claim to the Lands Tribunal for determination of the amount of compensation (if any) to be paid.

(3) A person claiming compensation under subsection (1) shall submit his claim to the Authority within a period of 1 year from the date on which the land reverted to the Government under section 5 or within such further period as the Chief Executive may allow in any case.

(4) A claim submitted by a person under subsection (1), in respect of land resumed under an order made under section 3 on or after the commencement* of the Crown Lands Resumption (Amendment) Ordinance 1984 (5 of 1984), may include a claim for any costs or remuneration reasonably incurred or paid by that person in employing persons to act in a professional capacity in connection with such claim.

9. Barring of actions against the Government

Subject to the provisions of this Ordinance, no action or suit shall lie against the Government or against any other person for any loss or damage suffered by any person as the result of the resumption of any land under this Ordinance.

10. Determination by Tribunal of compensation payable by Government

(1) The Tribunal shall determine the amount of compensation (if any) payable in respect of a claim submitted to it under section 6(3) or 8(2) on the basis of the loss or damage suffered by the claimant due to the resumption of the land specified in the claim.

(2) The Tribunal shall determine the compensation (if any) payable under subsection (1) on the basis of –

(a) the value of the land resumed and any buildings erected thereon at the date of resumption;

(b) the value of any easement or other right in the land resumed, owned, held or enjoyed by a claimant at the date of resumption;

(c) the amount of loss or damage suffered by any claimant due to the severance of the land resumed or any building erected thereon from any other land of the claimant, or building erected thereon, contiguous or adjacent thereto;

(d) the amount of loss or damage to a business conducted by a claimant at the date of resumption on the land resumed or in any building erected thereon, due to the removal of the business from that land or building as a result of the resumption;

(e) in the case of land resumed under an order made under section 3 on or after the commencement of the Crown Lands Resumption (Amendment) Ordinance 1984 (5 of 1984) –

(i) the amount of any expenses reasonably incurred by him in moving from any premises owned or occupied by him on the land resumed to, or in connection with the acquisition of, alternative land or land and buildings, but excluding any amount to which paragraph (d) applies;

(ii) the amount of any costs or remuneration mentioned in sections 6(2A) and 8(4).

48.I would also point out that pursuant to section 4A of the LRO, where an order has been made for the resumption of any land under section 3, the Authority may before the land reverts to the Government under section 5, agree with the owner and any person having an estate or an interest in such land under an instrument registered in the Land Registry on the purchase of the land and of any such estate or interest therein. That seems to me to make clear that, in distinction, the compensation system relating to resumption of land and its reversion to the Government is not a matter of purchase. This point is also made plain by section 5. Therefore, whilst it might be thought that the purchase of land would be at an agreed price, the compensation payable as a result of the resumption/reversion of land is not a ‘price’; it is compensation for loss and damage.

49.It can also be noted that section 9 bars any claim against the Government for any loss or damage suffered by any person as a result of the resumption of land under the LRO, except as provided for under the LRO itself.

50.Though the sections refer to “the Authority”, that is the same person as the Director. For convenience, and because the Director is the Respondent to these judicial review proceedings, I shall continue to refer to the Director.

51.Obviously, though existing in the context as a whole, the key provisions are sections 5, 6, 8 and 10. In broad terms, those sections identify who is entitled to compensation for the resumption of land and who can be offered or claim that compensation, and how any disagreement as to the compensation is to be determined.

52.In more detail, and on what seems to me to be the proper interpretation of the various provisions together in a logical flow, the following points can be made:

(1) After the resumed land reverts to the Government, all the rights of the owner, his assigns or representatives and of any other person in or over the land or any part of it absolutely cease.

(2) In other words, from the time of the reversion to the Government onwards, no other person at all has any rights at all in or over the land.

(3) Within 28 days after the reversion, the Director must do one of two things, being either (a) making an offer of compensation (“6(1)(a) Offer”), or (b) serve a notice requiring the submission of a claim for compensation (“6(1)(b) Notice”).

(4) In other words, the Director either offers compensation in a particular amount, or requires the person to whom he might have made an offer instead to make a claim for compensation.

(5) The persons to be given the 6(1)(a) Offer or the 6(1)(b) Notice are the same.

(6) Those persons are the former owner and any person having an estate or interest in the land immediately before reversion under an instrument registered in the Land Registry.

(7) Therefore, the Director knows to look at the Land Registry in order to identify the persons to whom he will make a 6(1)(a) Offer or give a 6(1)(b) Notice.

(8) Indeed, “owner” is defined to mean the person registered or entitled to be registered in the Land Registry in respect of the relevant land sought to be resumed, or if such person is absent from Hong Kong cannot be found or is bankrupt or dead, his agent or representative in Hong Kong; and “former owner” is defined to mean the person who was the owner of the land immediately before the land reverted to the Government under section 5.

(9) If a person made a 6(1)(a) Offer accepts that offer, that sets the level of compensation payable.

(10) If the Director agrees to a claim made by the person given a 6(1)(b) Notice, that sets the level of compensation payable.

(11) However, if the 6(1)(a) Offer is not accepted, or if the person given a 6(1)(b) Notice makes no claim or makes a claim which is not accepted by the Director, then either party may refer the matter to the Lands Tribunal for determination of the amount of compensation to be paid.

(12) Section 8 caters for the situation where a person wishes to claim compensation, but that person has not been given either a 6(1)(a) Offer or a 6(1)(b) Notice.

(13) Hence, a section 8 claimant cannot be a former owner or any person having an estate or interest in the land immediately before reversion under an instrument registered in the Land Registry.

(14) Under section 8, such a person may submit a claim in writing to the Director to claim compensation.

(15) The fact that a section 8 claim must be to seek compensation by reason of resumption of the land is made express, and that is why the claimant must state (a) the nature of his estate or interest in the land, as well as being required to state (b) the amount which he seeks to recover.

(16) This identifies the danger of reading the words “any person claiming compensation” in isolation and out of context of the provisions as a whole.

(17) If a section 8 claimant and the Director do not agree as to the amount of compensation (if any), either of them may submit the claim to the Lands Tribunal for determination of the amount of compensation (if any) to be paid.

(18) The addition of the words “if any” identifies that a section 8 claimant – who, in contrast to a person given a 6(1)(a) Offer or 6(1)(b) Notice, has no registered estate or interest in the land – has yet to establish his entitlement to “any” compensation, let alone the amount.

(19) In other words, the Director may disagree with the section 8 claim for either or both the reasons that (a) he does not accept that the claimant has a compensable estate or interest in the land, and/or (b) he does not accept the amount which the claimant seeks to recover.

(20) Whether a claim is made to the Lands Tribunal under section 6(3) or section 8(2), the Lands Tribunal is mandated under section 10(1) to determine the amount of compensation (if any) payable on the same basis.

(21) That determination is on the basis of the loss or damage suffered by the claimant due to the resumption of the land specified in the claim.

(22) That determination must also be made on the basis of the factors identified in section 10(2).

(23) Those factors focus expressly on the loss and damage caused to the claimant upon and at the date of resumption (not some later date), and by reference to the specific features of the land itself at that time and/or the rights enjoyed and the business conducted by the claimant on that land at that time.

(24) The determination made by the Lands Tribunal is as to the amount of compensation (if any), identifying the determination of a section 8 claim is by reference to the same questions as arose between the claimant and the Director.

(25) In short, although the question of entitlement does not arise on a section 6(3) reference but may on a section 8(2) reference, the Lands Tribunal must determine whether the claimant is entitled to any compensation, and, if so, the amount.

53.Hence the context and purpose of the LRO can be seen to be that:

(1) Compensation is payable by the Government to persons who have suffered loss and damage as a result of their land being resumed and that land reverting to the Government.

(2) The fact of reversion itself extinguishes all other rights and interests as might previously have existed in the land.

(3) The identification of the persons to whom compensation will be offered, or who will be invited to make a claim, begins by reference to instruments registered in the Land Registry.

(4) The focus is on the identification of persons having an estate or interest in the land at a particular point in time, being immediately before the reversion.

(5) Those persons identified from the Land Registry must either be given an offer of compensation or be invited to make a claim for compensation.

(6) Because they have registered interests, they will be entitled to compensation, and the only question will be as to the amount of compensation.

(7) If the amount of compensation can be agreed, all well and good.

(8) If the amount of compensation cannot be agreed, the matter can be referred to the Lands Tribunal for determination of the amount of compensation.

(9) But, it is recognised that persons other than as may be identified from the Land Registry might also have an estate or interest in the land which might entitle them to claim compensation by reason of the resumption of that land.

(10) The onus is placed on such a person to come forward and assert his claim.

(11) Hence, such a person can make a claim, but when doing so he must state both what he says is the nature of his estate or interest in the land and the amount which he seeks to recover.

(12) If that person making a claim does not state his estate or interest in the land – and, obviously, if that person does not have any estate or interest in the land – he is not entitled to claim compensation under the LRO.

(13) No other form of right, estate or interest except one in the land which has been resumed will give rise to any right to receive or claim compensation.

(14) In other words, whether the compensation arises under section 6 (through identification by the Land Registry documents) or under section 8 (by self-identification), compensation is only relevantly available to the former owner or persons with an estate or interest in the land immediately before reversion.

(15) If the person offered or claiming compensation cannot reach agreement with the Director as to the amount of compensation (if any), the matter can be referred to the Lands Tribunal for determination.

(16) Such a determination is mandated to be performed on a particular basis, and by reference to factors, which link the particular claimant, his estate or interest in the land, the particulars of the land, and the conduct of activities by that person on that land, all by reference to the date of resumption.

(17) The fact that the Lands Tribunal can determine the amount of compensation (if any) identifies that it may decide no compensation is payable.

(18) Logically:

(a) if a person has an estate or interest in the land immediately prior to its resumption, the fact of resumption and reversion will cause him loss and damage;

(b) the amount of compensation for such loss and damage may fall to be determined, but cannot be zero;

(c) so that, if no compensation is payable, that is because there was no loss or damage suffered by a person with any compensable estate or interest in the land immediately prior to its resumption;

(d) and a determination that there should not be any compensation will be on the basis that there was no interference with any relevant estate or interest in the land arising by reason of the resumption of that land.

(19) In summary, the LRO exists to seek to ensure that persons who have an estate or interest in the land immediately prior to its resumption will be compensated for their loss and damage suffered due to the resumption, with such compensation (if not agreed) to be determined by reference to the specific particulars of that person and that land at the time of resumption.

54.As to the point about the possible determination that there should not be “any” compensation made above, it is necessary to address what Mr Chan has suggested are inconsistent, perhaps irreconcilable, prior decisions as to the extent of the Land Tribunal’s powers or jurisdiction upon a claim being referred to it under section 8(2).

55.In Tsang Hung v Secretary for the New Territories [1977] HKLTR 29, the ratio of the case was that where section 6 under the then CLRO is not complied with, the Lands Tribunal has no jurisdiction. However, for present purposes, it is the comments made obiter which are relevant. The Tribunal noted that there was another person (a Mr Cheung), not a party to the proceedings, who claimed that the subject land had been transferred to his family, though that claim was not recognised by the Assistant Land Officer. The Tribunal noted that if such claim were recognised, it would be appropriate to make an offer or to serve a notice on Mr Cheung under section 6, but as the claim had not been recognised there was no requirement for that to occur. The Tribunal then noted – in a passage which Mr Chan described as “advice” given to one potential claimant:

It would be open to Mr Cheung to make a claim for compensation in writing to the Secretary for the New Territories under s.8 of the [CLRO]. However, I would have considerable doubt whether, his claim to be entitled to the land being rejected, he would have any right to approach the Lands Tribunal until he has established his legal right to the said land. I make this observation as it seems to me clear that both under s.6 and s.8 of that Ordinance and under s.8 of the Lands Tribunal Ordinance that the Tribunal has power only to determine ‘the amount of compensation’ and has no power to determine disputed questions of title.

56.In Tong Kwong Hong Co Ltd v Director of Public Works [1981] HKDCLR 22, the Lands Tribunal determined a preliminary point, namely whether the applicant was entitled to compensation under the CLRO. The Tribunal held that in determining the true nature of the applicant’s occupancy of the land, it was necessary to look at the overall course of dealing between the parties, and held on the facts that the Applicant had an irrevocable licence which carried with it an interest in the land. Hence the applicant was entitled to compensation, in such amount as the Tribunal may award after hearing appropriate evidence.

57.In Suen Sun-Yau v Wong Wai-Kwan [1988] 2 HKLR 71, a decision of the High Court and not the Lands Tribunal, Rhind J described the Tsang Hung case as covering the situation where each of several persons put himself forward as the true owner of a particular estate or interest in land, where there were competing claims for the same estate or interest – though he also noted that, apart from the plaintiff, no one was claiming to be entitled to the sub-lease of the land with which the case before him was concerned. Nevertheless, it was urged upon Rhind J that the Tsang Hung case and the Tong Kwong case were in conflict, and he was invited to rule that the latter case was wrongfully decided. However, Rhind J stated that he perceived no conflict between the two cases. As he put it:

The former deals with the situation where multiple claimants dispute the same estate or interest, whereas the latter deals with the entirely different situation where there is only the one claimant but his title is disputed by the Crown. I can see no reason why a dispute as to title between the Crown and the one claimant should not be resolved by the Lands Tribunal. It makes no sense to for such a claimant to run off first to the High Court and then the Lands Tribunal when the Lands Tribunal by itself is quite capable of dealing with such an issue. In practice, the Lands Tribunal always sits with either the President, who is the Chief Justice, or a presiding officer who is a District Judge. Can anyone seriously suggest it is not within the competence of such people to resolve a dispute as to title between the Crown and a claimant?

The irony of the case before me is there is not even a dispute as to title between the Crown and the plaintiffs, as far as I am aware.

58.Mr Chan criticises those various comments. First, he said that there was a misdescription of the Tsang Hung case, which in fact had only one potential claimant, and there was no competing claim. Secondly, he said that the capability of the people in the Lands Tribunal is in reality beside the point, where the true question was whether the Tribunal had jurisdiction or not, and ability could not confer jurisdiction.

59.I see some force in those criticisms, but I do not think it detracts from the real conclusion to be drawn from these cases. The real distinction is between (1) cases where there are competing claims to the estate or interest which is said to give rise to the claim for compensation upon resumption, and (2) where a claimant asserts an interest, but there is an issue as to whether or not that claimant actually has that interest so as to give rise to a claim for compensation.

60.In the first situation, the contest is between the competing individuals who each asserts that he has the relevant estate or interest, and that contest does not involve the Director. Plainly, those matters fall to be dealt with in the ordinary way of a civil dispute between parties to litigation in the Courts. The resolution of that question by a Court would be logically antecedent to the making of a claim under the LRO.

61.In the second situation, the contest is not over who has the relevant title or interest in the land, but whether the claimant to compensation has an interest or not. There is no antecedent question, and this is the question arising under the LRO. That is a contest between the claimant and the Director who, on the assumption that the matter has come before the Lands Tribunal, has denied the claim. Plainly, that is a matter falling within the jurisdiction – as well as the ability or competence – of the Lands Tribunal. Indeed, it is the existence of that jurisdiction which gives meaning to the words “if any” in section 10 of the LRO, and the earlier section 8(2).

62.The Tsang Hung obiter comments related to the first situation, and the Tong Kwong case was an example of the second.

63.I would also mention in passing that, at the leave hearing, Mr Hor referred to Wing In Oil Co Ltd v Director of Buildings and Lands [1988] HKDCLR 25, which he said identifies the Lands Tribunal’s jurisdiction to determine entitlement of compensation under section 8 of the LRO. But I do not think that adds greatly to the analysis already conducted above.

64.Additionally, as to the words “any person” in section 8 of the LRO – where I have already held that the wording of the section in context makes clear that the person who makes a claim must establish that he had an interest in the subject land prior to its resumption – reference can also be made to the commentary at §§4.20 and 4.21 in ‘Land Compensation & Valuation Law in Hong Kong’, 4^th Ed, 2017, which states:

4.20 … In practice, [any person] commonly includes tenants, certain licensees and other occupants whose estates or interests are often unregistered. The major procedural difference is that they receive neither written personal notice of the resumption or the statutory offer of compensation or, alternatively, a request to submit a claim. The onus therefore rests on them to take the initiative to apply for compensation.

4.21 These claimants must also have an estate or interest in the land, even if that estate or interest is not registered. In practice, many claimants are not owners but have lesser interest as tenants or sub- tenants. The substance and not the name of any occupation document is decisive. This may allow occupants described as licensees, sub-licensees or permittees to claim if the documents establish an estate or interest in the land.

65.Looking at the question of the correct interpretation of the LRO overall, I accept the argument advanced by Ms Lok on behalf of the Director that the ordinary meaning, and the logical flow, of the statutory provisions in the LRO (taking into account both context and purpose) support the conclusion that only the persons entitled to the compensation can claim it. Those persons are the former owner or persons with an estate or interest in the land immediately before reversion. That is so, whether the claim to compensation for the resumption arises under section 6 or section 8.

66.I also accept the submission that, properly construed, section 8 therefore does not give rise to some freestanding assignable commodity. The express definition of “owner” extends beyond the registered owner only to a specific class of persons (the registered owner’s agent or representatives, but not his assigns). By what is expressly included, the legislation makes clear what is impliedly excluded.

67.To put it another way, it is necessarily implicit in the LRO, properly construed, that (1) a person’s entitlement to compensation is not transmissible save as expressly provided, primarily for the benefit of his estate, and (2) subject to the limited extension expressly provided for, the entitlement to compensation is only vested in the person having an interest in the land immediately prior to its reversion, and is only exercisable by such persons. Hence, the entitlement to compensation is constituted and conferred in a manner that makes the entitlement inalienable. Albeit by reference to different statutory provisions in Hong Kong than in Australia, the conclusion after taking the required approach to statutory interpretation is the same: there is no scope in the statutory scheme for an assignee to claim compensation.

68.Turning to the facts of the current case, it is obviously not irrelevant that when the Applicant made its claim to compensation in March 2020, supposedly under the provisions of the LRO, it did not identify which provision – even if it might be thought obvious that the relevant provision was section 8. If indeed the claim was made pursuant to section 8, it is also not irrelevant that the Applicant did not state the nature of its estate or interest in the land, despite the fact that section 8 required that to be stated (in addition to the amount sought to be recovered). That is simply because the Applicant had no estate or interest in the land which it could state.

69.As Ms Lok put it, the Applicant has no interest in the land “past, present and future”. Indeed, I would point out that the Applicant only came into existence in 2006, more than 30 years after any potentially assignable interest in the land had absolutely ceased to exist in 1976 pursuant to section 5 of the LRO.

70.Hence, I conclude that the LRO does remove the right to claim compensation by or as an assignee in the position of the Applicant.

71.I acknowledge that Mr Chan places reliance on the English case of Dawson v Great Northern and City Railway Co [1905] 1 KB 260, dealing with assignment of a chose in action and the application of the provision almost identical to section 9 of LARCO as relied upon by the Applicant. The Dawson case was apparently followed in Hong Kong in Glory United Development Ltd v Director of Lands [2019] HKEC 70, where it was held that once the claim accrued, whether the owner still retained the land after the Notice is irrelevant. There was nothing in the similar legislation applicable in that case to confine the claimant to the person who has made a claim for compensation, nor was there anything prohibiting an assignment of the right to compensation once accrued.

72.But, it suffices for me to point out that the Dawson case can be distinguished from the present circumstances. In that case, the relevant interest assigned was an interest that was ancillary to and ran with the land which was itself assigned. This was a matter given great weight by the Court in Dawson. That seems to me to be very different from the current situation where the interest in the land immediately prior to the resumption was automatically extinguished and absolutely ceased following resumption of the land and upon its reversion to the Government.

73.I also acknowledge Mr Chan’s reference to the decision of A Cheung J (as the Chief Justice then was) in Ho Sum Keung v Director of Lands (unreported, HCAL 123/2003, 27 May 2005), where in obiter remarks dealing with “forensic points” reference was made to an agreement where the beneficiary of an estate had apparently agreed to sell the estate’s interest in the Modified Letter B (“MLB”) application to a company belonging to the applicant, for consideration which to some extent depended on the success of the application for the issue of MLBs or payment of cash compensation. The Judge noted that it was of no concern to the Court whether the application for judicial review had been prosecuted for the benefit of the beneficiary or her attorney, nor was it really relevant to the Government’s floodgate argument that some of the potential cases may involve outside commercial interests in them.

74.But, with respect, I do not think those comments are of any real assistance for present purposes, because the case also recognised that the MLB scheme had no statutory underpinning, and there was no legal binding framework governing and regulating repeated applications, reviews or ‘appeals’.

75.The present case concerns applications which must be made under the relevant statute, namely the LRO, and it is the proper interpretation of that statute which is the key to the case.

E. Champerty and Maintenance

76.On the basis of my finding on the proper interpretation of the LRO, I need not decide the arguments relating to champerty and maintenance. But, for the sake of completeness, I can identify the arguments put forward on the point as follows.

77.Ms Lok submits that, even if the right to compensation under the LRO were to be regarded as assignable, it is necessary then to go on to consider whether it would violate the general law on maintenance and champerty. She refers to the well-established principles that an assignment of a bare cause of action unsupported by an interest of a kind sufficient to justify the assignee’s pursuit of the proceedings for his own benefit is void because it is champertous. The reason is because such assignment may involve a third-party trafficking or gambling in the outcome of litigation.

78.The exceptions are (1) if the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, and (2) if the assignee had a genuine commercial interest in taking the assignment and enforcing it for his own benefit.

79.Ms Lok submits that the Applicant in this case plainly has no genuine commercial interest in the Assignment, and at least no pre-existing commercial interest in the compensation or a claim to compensation prior to the Assignment. Mr Lai’s evidence for the Applicant makes clear that the Applicant is in the business of acquiring and re-selling land exchange entitlements for profit, and Ms Lok submits that such “trafficking” of the compensation claim is the very mischief that the doctrine of champerty aims to prohibit.

80.Mr Chan submits that this entire point is merely a red herring. This is because, he says, the Director has always acknowledged the right of the Administratrixes to make a claim under the LRO, and therefore there is never any potential litigation between the assignor and the Government. The chose is the compensation payable by the Government, which is a property. He submits that assignment of property is valid, even though that property may be incapable of being recovered without litigation.

81.Mr Chan refers to the passage in Dawson, followed in Hong Kong in Glory United Development Ltd v Director of Lands [2019] HKLdT 1, at §§18-19, which HHJ Kot, Presiding Officer, cited with approval – namely, the concept that the accrued right to compensation is a right, arising directly under the notice to treat served by the defendants, to compensation for damage which might be done in the lawful exercise of powers conferred on them by the legislature. The compensation was a sum to be ascertained in the way prescribed by the legislature, and payment thereof by the defendant was imposed on them as one of the terms of the exercise of those powers, and may be regarded as the price payable for the exercise of the powers, and hence was property.

82.I have already above pointed out that the analogy to ‘price’ does not seem to me to be helpful or accurate. Rather, what is being compensated is the loss and damage suffered by the owner or person with an estate or interest in the land immediately before its reversion. But any further analysis of this point seems to me to be unnecessary in the light of my finding already made that the terms of the LRO properly construed make the claim to compensation upon resumption and reversion of land inalienable.

F. Whether Available Alternative Remedy

83.It is not controversial that, save in exceptional circumstances, the jurisdiction to grant judicial review will not be exercised where other remedies are or were available and have not been used. Put another way, it would generally be a strong reason to refuse leave to apply for judicial review – or to refuse substantive relief – if there is an available alternative remedy.

84.In this case, by reference to the analysis conducted above, I have formed the view that the Lands Tribunal provided the available alternative remedy.

85.I note Mr Chan’s further reference to the Ho Sum Keung v Director of Lands (unreported, HCAL 123/2003, 27 May 2005) case, and the part of the judgment holding that the Director’s decisions relating to the Modified Letter B scheme in that case were amenable to judicial review. On that basis, Mr Chan submits that at least judicial review of the Director’s Decision in this case is a “viable option” (his phrase). But, as already pointed out, that case involved a non-statutory scheme and there was no question of any relevant statute providing for an available alternative remedy.

86.In this case, it seems to me that the Lands Tribunal has been given the jurisdiction – apparently mandatory, as the Lands Tribunal “shall” make the relevant determination – to determine the amount of compensation to which the Applicant is entitled, if any (where I have held that encompasses both the question of whether the Applicant is entitled to any compensation, and, if so, the amount). It also seems to me that the nature of the arguments deployed by the parties in these proceedings are precisely the type of argument which are readily resolved in the specialist tribunal set up for these purposes, namely the Lands Tribunal.

87.Therefore, the current judicial review proceedings against the Director should not have been commenced – and/or should not lead to the grant of substantive relief – without first considering and/or exhausting the alternative remedy specified under section 8(2) of the LRO.

88.Of course, in the light of my holding above, there is no point in practice in now pursuing the available alternative remedy in the Lands Tribunal. That is because I have decided the issue which would otherwise have fallen to be decided by the Lands Tribunal. But the ruling may have impact on future claims.

G. Disposition

89.In the circumstances set out above, the Applicant’s substantive application for judicial review is dismissed.

90.I currently see no reason why costs should not follow the event of that dismissal. Therefore, the Applicant should pay the Director’s costs of and occasioned by these proceedings, to be taxed if not agreed on the party and party basis, with certificate for two Counsel. However, as I have not heard any argument on costs, I make the above order first on a nisi basis, to become absolute if no variation application is made within 14 days. Any variation application will be dealt with on paper.

Mr Edward M.H. Chan, instructed by K. Y. Woo & Co., for the applicant

Ms Frances Lok SC, instructed by the Department of Justice, Mr Alvin Hor, Senior Government Counsel (Ag.) and Ms Nova Tang, Government Counsel, of the Department of Justice, for the respondent