Luck Most Ltd and Others v. Good Movement Ltd

CAMP 288/2023, [2024] HKCA 1156

On an intended appeal from [2022] HKLdT 43

and [2023] HKLdT 14

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 288 OF 2023

(ON AN INTENDED APPEAL FROM LDCS NO 11000/2020)

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D E C I S I O N

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The Court:

Introduction

1.The applicants and the respondent are respectively the majority owners and minority owner of two lots of land situated at Nos 10-12 Matheson Street, Hong Kong (“the Lots”).  The applicants on 29 May 2020 applied for compulsory sale of the Lots under section 3(1) of the Land (Compulsory Sale for Redevelopment) Ordinance[1] (“the Ordinance”), which was opposed by the respondent.

2.In the proceedings below, the respondent contended that the Tribunal, in fixing the reserve price for auction of the Lots pursuant to a proper interpretation of section 2(a) of Schedule 2 of the Ordinance, should have regard to the potential increase in the value of a piece of land because of the possibility that it could be redeveloped jointly with other pieces of land to form a bigger site (that factor was loosely referred to as “marriage value”, “hope value” or “clay factor” below).  The applicants disagreed.

3.Accepting the applicants’ submissions on interpretation, Deputy District Judge Roy Yu, sitting as a presiding officer of the Lands Tribunal (“the Judge”), by a decision dated 24 February 2023 (“Striking‑Out Decision”),[2] struck out certain paragraphs of the respondent’s grounds of opposition which averred that in assessing the value and/or redevelopment potential of the Lots, the applicants ought to have but failed to have regard to the “marriage value” arising from adjacent sites owned by them or their associates.

4.By an earlier decision dated 2 September 2022 (“Reports Decision”),[3] the Judge expunged various expert reports filed by the respondent. The matter was argued before the Judge on the basis that “marriage/hope value” arising from the fact that lots adjacent to the Lots were also owned by the applicants or associated with them was arguably relevant in fixing the reserved price.  The Judge expunged the reports because they could not assist the Tribunal in assessing the additional figure which should be attributed to the value, the expert having failed to put forward a methodology for apportionment or a figure to represent the premium attributable to such value.

5.The respondent applied for leave to appeal against both Decisions, which was refused by the Judge.[4] The respondent now renews its application for leave to appeal before this Court.

6.Having considered the written submissions of the parties, we take the view that the application can be properly dealt with on paper without a hearing.  We now hand down our decision.

Discussion

7.Under section 11AA(6) of the Lands Tribunal Ordinance,[5] leave to appeal will only be granted if the intended appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  Relying on both limbs, the respondent seeks to raise three points of law on the appeal application against the Striking‑Out Decision, which Mr Chain, counsel for the respondent, characterized as the main application before us:

(1)  Whether in setting the reserve price, the Tribunal can have regard to “marriage/hope value”? (Question 1)

(2)  If no, whether it follows that in an application under the Ordinance, the true value of the subject lot is irrelevant? (Question 2)

(3)  If the answers to both (1) and (2) are in the negative, whether such process may potentially deprive the minority owner of a true and fair share of market value of the Lots, and is therefore in breach of Article 6 (and possibly Article 105) of the Basic Law? (Question 3)

8.Question 1 concerns the proper interpretation of section 2(a) of Schedule 2 to the Ordinance.  It provides:

“The lot the subject of the auction shall be sold subject to a reserve price –

(a)  which takes into account the redevelopment potential of the lot on its own (or, where 2 or more lots are the subject of the auction, on their own); and

(b)  approved by the Tribunal.”

9.As at now, there is no definitive direct authority from the Court of Appeal on the interpretation of section 2(a).  It would appear that there are some judicial remarks which may lend support to the applicants’ position: Fully HK Investment Limited & Ors v Poon Vai Ching, the Executrix of the Will of Poon Kam Chuen (Deceased), HCMP 591/2007, unreported, 4 April 2007, per Le Pichon JA (as she then was) at [18] – [20]; Good Faith Properties Ltd v Cibean Development Co Ltd [2014] 5 HKLRD 534, per Lam VP (as he then was) at [32(d)].  On the other hand, in First Mate Development Ltd v Gee Wing Chung and Ors, CAMP 37/2018, Chu JA (as she then was) in May 2018 granted leave to appeal on the interpretation of section 2(a).  However, the appeal did not proceed as the case was later settled.

10.Moreover, there are two recent decisions by the Tribunal (differently constituted) which suggested that the Tribunal has a discretion to consider marriage/hope value: Asia Bright Enterprise Ltd & Ors v Liu Cheun Man & Ors [2023] HKLdT 30, per HH Judge Michael Wong at [52]; China Orchid International Ltd & Ors v Fujitec (HK) Co Ltd & Ors [2023] HKLdT 38, per HH Judge Michael Wong and Member Lawrence Pang, at [315].

11.In sum, the interpretation of section 2(a), undoubtedly a question of general public importance, remains unsettled.  It is clearly in the interests of justice to have it resolved by the Court of Appeal as soon as possible.  Leave to appeal should be given on this ground.

12.Questions 2 and 3 can be disposed of shortly.

13.The main plank of Mr Chain’s submission is that in reality, the reserve price becomes the actual price on sale.  If the Tribunal did not take into account “marriage/hope value” in setting the reserve price for the Lots, the respondent would be deprived of its entitlement to a full and fair share of the value of the Lots.

14.However, there is simply no evidential basis to support the so‑called reality.  Mr Chain was in fact driven to ask the Court to take judicial notice of it, which is of course impermissible.  Further, whether the reserve price in the present case would eventually become the actual price on auction remains to be seen.  It is mere speculation at this stage to say that it would.  For these reasons, Questions 2 and 3 do not arise.

15.Turning to the intended appeal against the Reports Decision, it is eminently a case management decision.  We have considered the Judge’s reasons and Mr Chain’s submissions.  We do not accept that the Judge had erred in the way as contended that would warrant the Court of Appeal’s intervention: see Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887, per Kwan JA (as she then was) at [31].  There is no reasonable prospect of success in the intended appeal.  Since it is a case‑specific decision, there exists no reason why it is in the interests of justice for the appeal to be heard either.

Conclusion

16.In consequence, we grant leave to appeal on Question 1 in respect of the intended appeal against the Striking-Out Decision and dismiss the remainder of that leave application and the leave application against the Reports Decision in its entirety.

17.On costs, we direct the parties to file written submissions (limited to 3 pages) within 14 days if that cannot be agreed.  We will then dispose of it on paper.