交通城大廈業主立案法團 v. Pakatower Ltd
Read the full judgment text of LDBM 75/2019 on BabelCite. This Lands Tribunal judgment was delivered on 4 February 2026.
1. This is an application by the applicant (“Pakatower”) for review of the judgment (“Judgment”) handed down by this Tribunal on 3 March 2025. The application is made under section 11A of the Lands Tribunal Ordinance, Cap. 17. For convenience, I shall adopt the definitions and abbreviations used in the Judgment.
Cited by 1 case · Cites 2 cases
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LDBM 75/2019 [2026] HKLdT 6 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO 75 OF 2019 ___________________ BETWEEN
___________________ IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO 151 OF 2020 ___________________ BETWEEN
___________________ IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO 152 OF 2020 ___________________ BETWEEN
___________________ (LDBM 75/2019, LDBM 151/2020 and LDBM 152/2020 were consolidated and thereafter be carried on as one action
_________________ D E C I S I O N _________________ PRESENT APPLICATION 1.This is an application by the applicant (“Pakatower”) for review of the judgment (“Judgment”) handed down by this Tribunal on 3 March 2025. The application is made under section 11A of the Lands Tribunal Ordinance, Cap. 17. For convenience, I shall adopt the definitions and abbreviations used in the Judgment. THE ISSUES 2.The present application focuses on two aspects of the Judgment, namely the assessment of the amounts of mesne profits payable by IO to Pakatower and the dismissal of Pakatower’s claim for provision of the Gate Keys. For the present purpose, I should briefly summarize the relevant parts of the Judgment as follows: -
3.In the present application, Pakatower strictly confines its application for review to the following two findings of the Judgment: -
4.Pakatower reiterates that as this is a review application, there are no statutory limitations as to on what grounds the decision can be reviewed, such that the Tribunal can review the decision on any factual, evidential and legal basis: CLP Power Hong Kong Limited v Commissioner of Rating and Valuation [2013] 4 HKLRD 535 at [11-12] MESNE PROFITS ISSUE 5.I will first deal with the Mesne Profits Issue. It is immediately apparent that Pakatower’s present application in this regard differs from Cheung’s opinion in the Cheung’s Report and its own stated case at trial. In Cheung’s Report, Cheung only used DRC for part of his assessment of mesne profits only. However, Pakatower now seeks to extend and expand Cheung’s DRC Assessment to be the sole assessment method for all premises of the Subject Premises. For analysis purpose, it is necessary to set out in some detail the background facts as follows. BACKGROUND FACTS 6.The Building, Transport City Building, which is situated at 1-7 Shing Wan Road, Tai Wai, Shatin, New Territories, is an industrial building comprising of ground floor to ninth floor and a roof. It was 32 years old as at 1 May 2015. The Occupation Permit of it was issued on 13 July 1982. Of relevance to these proceedings are the 1982 Approved Plans and the 1984 Approved Plans. 7.IO is the incorporated owners of the Building which was formed and registered on or about 4 August 1993. Pakatower became the registered owner of the Others Unit (which comprised of the Disputed Premises of the Building) in 1994. 8.At trial, Pakatower did not (and indeed could not) dispute that under the DMC of the Building (executed on 1 November 1982), it was obliged to pay its shares of the costs and expenses for the maintenance and management of the Building, i.e. for managing, operating, maintaining, repairing, replacing and improving facilities, condition and services in or on the Building under clause 46 of the DMC. THE TENANCIES 9.On 15 April 1994, IO entered into a 3-year tenancy agreement (“1994 Tenancy Agreement”) with Pakatower for renting Spaces B to E of the Others Unit from 1 May 1994 to 30 April 1997. 10.In or around 1996, disputes arose between them over IO’s use of the Disputed Premises, which were not covered by any tenancy agreement, and Pakatower’s obligation to contribute certain repair charges of the Building. Upon the expiry of the 1994 Tenancy Agreement, IO neither returned those premises nor entered into any tenancy agreement with Pakatower. Litigations ensued. 11.In or around June 1997, in global settlement of all disputes relating to the Others Unit, Pakatower agreed to discontinue all the legal proceedings against IO, and IO agreed to pay costs of those proceedings and :-
12.The 1997 Tenancy Agreement was the first agreement for renting the Disputed Premises between IO and Pakatower. From 1 May 1997 to the Expiry Date, Pakatower continuously rented out the Disputed Premises to IO for 18 years, at the monthly payment of HK$2,000 from 1 May 1997 to 30 April 2008; HK$2,100 from 1 May 2008 to 30 April 2009 (including Unit 13 staircase space); HK$2,100 from 1 May 2010 to 30 April 2011 (without Unit 13 staircase space); HK$2,100 from 1 May 2011 to 30 April 2013 (including Unit 13 staircase space); HK$2,600 from 1 May 2013 to 30 April 2014 (including Unit 13 staircase space); HK$3,600 from 1 May 2014 to 30 April 2015 (including Unit 13 staircase space), in addition to Pakatower receiving benefit of being exempted from making payment to all repair and maintenance costs and expense of the Building. THE LAST IO TENANCY AGREEMENT 13.The Last IO Tenancy Agreement (dated 24 April 2014) was the last agreement for renting the Disputed Premises and the Unit 13 Staircase Space between Pakatower and IO. It contained, inter alia, the following terms:-
14.After the expiry of the Last IO Tenancy Agreement, IO rejected Pakatower’s offer to rent but refused to return the Disputed Premises to Pakatower. In or after September 2018, IO complained Pakatower to have defaulted on payments of management fees and contributions to repair expenses. Disputes arose ending up with the Judgment. SUBJECT PREMISES 15.In the “Summary Table of Cheung’s Market Rent Valuation based on DRC for Disputed Premises” prepared by Pakatower for the present application, it records that Cheung has divided the 17 premises of the Disputed Premises into 3 groups for his assessment. The relevant parts are now set out in the first 4 columns of the following table, with the last two columns added for the present analysis purpose:-
16.According to Pakatower/ Cheung, the Disputed Premises should be categorized into four classes of premises for analysis purpose as follows: -
17.In the present application, Pakatower confines the Mesne Profits Issue only to #3-#17 premises (the Subject Premises) and #1 and #2 premises are specifically excluded. It also confirms that it will not adduces any new evidence for this application. 18.It is beyond dispute that when assessing mesne profits, the peculiar natures, features and characteristics of the Subject Premises should be taken into account. The following features are no exceptions: -
CHEUNG’S ASSESSMENT 19.According to Cheung’s Report, Cheung’s assessment:
20.In assessing mesne profits, Cheung:
21.For assessment, Cheung classified the Disputed Premises into 3 groups (as set out in the Summary Table) as follows :-
THE JUDGMENT 22.After trial, this Tribunal rejected the assessments made by the two experts and adopted the Last IO Tenancy Agreement as the basis for assessment of mesne profits, for the reasons set out in paragraphs 189-221 of the Judgment. As Pakatower now seeks to overturn this Tribunal’s rejection of Cheung’s DRC Assessment regarding the Subject Premises (limited to Group 2 Premises and Group 3 Premises), my analysis below will concentrate on this area. 23.In the Judgment, this Tribunal concluded that Cheung’s opinion was problematic and unreliable. In paragraphs 210-213 of the Judgment, Cheung’s assessments of both Group 2 Premises and Group 3 Premises were found to have contained fundamental errors for they were wholly based on the wrong footing, which went contrary to the fact that the entirety of the Disputed Premises and the Unit 13 Staircase Space were covered under the Last IO Tenancy Agreement. He mistakenly considered Group 2 Premises were excluded. As such, his assessment was fundamentally wrong. 24.Cheung’s mistake of erroneously taking Group 2 Premises out of the Last IO Tenancy Agreement and assessing them separately from Group 3 Premises did not only amount to double-counting, but also that the assessment of the Group 3 Premises by taking an average on the results of applying DRC and DCM (with the internal floor area and the relevant premises covered erroneously reduced) would be grossly inflated. 25.Besides, Cheung was found to have failed to give sufficient regard to the unfavourable intrinsic qualities and circumstances of the Subject Premises, which tended to push the value of occupation significantly down. Therefore, Cheung’s assessed value should be significantly reduced. 26.In paragraphs 214-221 of the Judgment, both experts’ assessments were rejected, leaving the Last IO Tenancy Agreement to be the best evidence, which Cheung also adopted as the only comparable for DCM assessment for Group 3 Premises. Taking into account of the fact that the Last IO Tenancy Agreement was for exactly the same premises with the same bundle of facilities therein and the same willing parties and absent any evidence for proof that that was not an arm’s length transaction and any other suitable comparable, the rental consideration of it took on more importance and this Tribunal adopted it as the starting point for assessment for all intrinsic qualities and circumstances of the Disputed Premises should have already been taken into account. 27.The rental consideration of the Last IO Tenancy Agreement contained two elements. For the cash element of HK$3,600 under Clause 3A, a deduction of HK$638 had been made to reflect the mesne profit of the Unit 13 Staircase Space as agreed by the parties, making up a total of HK$3,307. Absent any evidence to suggest that the rental values for this type of accommodations and spaces in the locality had increased significantly after the Expiry Date, this Tribunal applied a time adjustment in reference to the Rental Indices, which Cheung regarded as the most reliable indicator in reflecting the overall sale and rental transaction market condition of industrial premises in Hong Kong, arriving at a monthly sum of HK$3,307 as of 1 May 2015, subject to yearly assessment until the date of delivery of vacant possession of the Disputed Premises, i.e. Last IO Tenancy Agreement: HK$3,600
28.Regarding the non-cash element under Clause 3B, Pakatower confirmed that IO had settled all those payments for it and it had never been asked for such payments until 2018 when the parties’ relationship further deteriorated giving rise to the counterclaim. There had been no dispute that Clause 3B was part and parcel of the rental consideration of the Last IO Tenancy Agreement, and accordingly, was adopted as part and parcel of the mesne profit to be borne by IO from 1 May 2015 to the date of delivery of the vacant possession of the Disputed Premises. PAKATOWER’S CONTENTION 29.In the present application, Pakatower reiterates that it will not adduce new evidence in this application. It contends that Cheung’s DRC Assessment should be adopted as the sole assessment for fixing the mesne profits in respect of all premises of the Subject Premises (Group 2 Premises and Group 3 Premises). It’s reasons are that:
DISCUSSION 30.I am not convinced. Pakatower’s contention is a mixture of some general concepts which appears to be sound and logical at first sight, but upon a closer scrutiny, it does not sit well with the valuation principles or peculiar facts of this case. 31.Properly understood, Pakatower’s present application is in effect seeking to rewrite Cheung’s Report by removing many essential parts therein and trying to re-reformulate Cheung’s opinions and assessments by arbitrarily singling out Cheung’s DRC Assessment and further, expanding it to cover all premises of the Subject Premises, with the significance of DCM and the Last IO Tenancy Agreement be completely removed, by way of an affidavit given by Pakatower’s factual witness, Ms Pou and Counsel’s submissions. It is a clear departure from Cheung’s opinion yet without any expert evidence in support. Subject Premises vs Whole Building 32.As a start, it must be emphasized that the subject matter for valuation is not the whole Building but merely the Subject Premises, the 15 areas and accommodations (the “utility rooms” as described by Cheung) which only form a small part and parcel of a 9-storey industrial building. 33.As set out in paragraphs 15-18 above, not only that the Subject Premises were unique and very different from other parts of the Building in nature, layout, configuration, size, location and accessibility, but also that they themselves varied sharply. They were located in different floors and locations. Some were very small and oddly shaped. The use of them was limited. According to the Approved Building Plans and agreed by Cheung, the Housing Premises were primarily designated for use as utility rooms. As agreed by the parties, at least some of them had contained DMC Facilities inside which had been and would be taking up space and operating. 34.All such unfavourable factors would undoubtedly have taken the Subject Premises out of the normal usage and value of the industrial buildings, which tend to push the value of occupation significantly down. Naturally, any valuation involving comparable chosen from normal industrial properties, such as workshops, godowns, factory units or an industrial building as a whole will be bound to produce incorrect results. Flowing from these, it is too obvious that Cheung’s DRC Assessment is fundamentally erroneous and unreliable, bearing in mind that the value of the specialized properties are intrinsically linked to their nature, layout, configuration, size, location, use and accessibility, etc as admitted by Cheung. 35.Even though Cheung said that Cheung’s DRC Assessment was based on an estimate of “the current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation” as defined in the HKIS Standards and “A property market yield is adopted to decaptialise the effective capital value to arrive at the rental value”, Cheung’s DRC Assessment is in fact not a true assessment as such because it is not actually an estimate of the cost of replacing the Subject Premises with their equivalent assets. 36.Instead, Cheung’s DRC Assessment was premised on an estimate of the cost of replacing an industrial building as a whole, but not the Subject Premises. It based on the estimated total cost of the land element and building element for construction of (not the Subject Premises but) the whole building and then averaged out the estimated total unit cost per sq ft generally, ending up with multiplying such general average unit cost per sq ft by the areas of the Subject Premises to determine the mesne profits of the Subject Premises. 37.In my view, Cheung’s DRC Assessment was based on the wrong footing. It has not given due regards to the uniqueness of each premises of the Subject Premises in terms of nature, layout, configuration, size, location, accessibility, headroom, etc of each of the Subject Premises, which are significantly different from the other parts of the building. Commonsense dictates that the construction cost and the depreciation rate of the Subject Premises as well as the costs of the common areas and common parts to be apportioned to each premises of the Subject Premises cannot be the same as those of the other parts of the building as lobbies, corridors, staircases, car parks, lifts, common structures, roof, workshops and factory units, etc.. 38.Likewise, the construction cost and the depreciation rate of each premises of the Subject Premises cannot be the same as each other in view of their many inherent differences. Similarly, the sharing of the cost of the common areas and common parts among different parts/ owners of the building and how such apportionments should be made have not been dealt with by Cheung. 39.No doubt that such fundamental problems and deficiencies have rendered Cheung’s DRC Assessment unreliable. Cheung’s oversimplified board-brush approach by simply taking a general average unit cost (per sq ft) of the total hypothetical replacement cost of the whole building as the “estimated Total Unit Cost/ sq ft” of the Subject Premises could not have properly reflected the true value of the Subject Premises. It has neither accounted for the unfavorable peculiar features of the Subject Premises, nor has it distinguished the Subject Premises from the different parts of the building, which, in reality, would have incurred different construction costs, depreciation rates and cost-sharing of the common areas and parts of the building. With due respect to Cheung, it is too obvious to me that Cheung’s DRC Assessment is full of oversimplifications and plainly wrong. DRC vs Multi-Storey Building 40.Further, Cheung’s DRC Assessment is problematic in principle and in practice. It is in ignorance of the limitation of DRC. While I have no disagreement that DRC may be used where there is no useful evidence of recent transactions due to the specialized nature of the premises, I do not lose sight of the repeated warnings that DRC is not an appropriate valuation method for strata title properties because of the issues of common land and shared building facilities[2]. 41.The truth is neither Pakatower nor Cheung has been able to come up with any decided cases or authorities that DRC has been applied for assessment of just a particular part of a multi-storey building or multi-units building, other than for the whole building or the whole structure as a specialized plant or an equipment asset, ie oil plant, machinery plant, power station. Land Element 42.Solely for the reasons aforesaid, Cheung’s DRC Assessment is bound to be rejected. For completeness sake, I will further briefly summarize its other deficiencies and problems as follows. To begin with, I will first deal with Cheung’s analysis on the “land element”. A summary of it is as follows:
43.For the land element, he adopted the aforesaid 3 transactions of enbloc industrial buildings in other districts as comparable. To me, his assessment of the land element is improper. Firstly, his adoption of the aforesaid transactions of enbloc industrial buildings with solely time adjustment is plainly inadequate. Even if only considering the lands but not the buildings thereon of his three comparable due to his “redevelopment theory”, it is illogical that there would be no adjustment at all to reflect the distinct different locations of the lands. Given his comparable were located in Tsuen Wan, Tuen Mun and even Fanling while the Building was situated in Tai Wai, the accessibility to transport link and the distances to industrial districts and urban districts, etc among them were very different. 44.Another obvious problem goes to Cheung’s calculation of the accommodation value. The “accommodation value” of the land comparable was calculated as the sale consideration divided by the maximum GFA allowed to be built on the relevant lot. Accommodation value approach is known to be comparisons made by analyzing sales of land as dollars per square foot of the potential gross floor area that is possible on the site. 45.However, it has been recognized that such approach is just a rule-of-thumb calculation for simplifying comparisons between different sites. It cannot replace detailed consideration of the potential of a site, as it does not cater for varying site areas and the ratio of saleable floor space to gross floor area. The greater the ratio between saleable floor space and gross floor area, the higher will be the accommodation value[3]. 46.In the present case, Cheung’s three comparable had different plot ratios[4] allowed under the relevant Outline Zoning Plans: while the ones in Tsuen Wan and Tuen Mun had a plot ratio of 9.5, the Fanling comparable had a plot ratio of 3.5 only. Although Cheung tried to overcome this problem by analyzing the sales on the basis of accommodation values, it is common sense that industrial units on the ground floor are considered better than the units above. Thus, for a proposed development that has low plot ratio, the proportion of value attributable to the ground floor accommodation would be higher. As a result, the accommodation value derived from the Fanling comparable would have been exaggerated when it was compared with those with higher plot ratios. 47.Another problem in using the aforesaid accommodation values is that accommodation value is calculated on the basis of the amount of gross floor area permissible. However, as can be seen from paragraphs 15-18 above, many of the Subject Premises comprise meter rooms, fire prevention room, transformer room, switch room, pump room etc which are usually disregarded in the calculation of gross floor area[5]. By reference to what has been said in Cheung’s DRC Assessment as briefly summarized in paragraph 21 above, Cheung was indeed comparing apples to oranges, not like-to-like. 48.Thus considered, it is clear to me that Cheung’s assessment does not reflect the true individual potential of each site. While all three comparable had a similar gross floor area, the difference between L1 and L2 on the one hand and L3 on the other hand in terms of consideration, site area and plot ratio is sharp. However, no adjustment has been made to address such distinct differences. The prices per square foot of the site area as well as the plot ratio are disparate, nevertheless, Cheung’s analyzing on an accommodation value approach ends up with a similar accommodation value (purchase price per square foot of gross floor area) of all three sites. In the premises, the attempts of Mr Kwong, together with Mr Tang, Counsel for Pakatower, to argue that the site size of the Building is 41,592 sq ft with a plot ratio of 5, both are right in the middle of the corresponding ranges of L1 to L3 is no answer to the deficiency of Cheung’s exercise. 49.Consequently, Cheung’s analysis on the land element cannot be adopted with any confidence. The value of ground-floor premises varies greatly. There can be wide varieties in the type and size of buildings that can be erected upon sites in differing localities and of different sizes. Commonsense dictates that a site which offers the construction of a building with extensive site coverage on the ground floor generally attracts more value due to the benefits of more spacious headroom, the convenience for moving and storing heavy machines and goods as well as the generally adopted exemption from contributions to the cost and expenses relating to the lifts and the common parts of the upper floors as enjoyed by the ground floor premises. Viewed in this light, the accommodation values as advanced by Cheung could not have captured the true value of the land. 50.Further, Cheung’s averaging exercises were filled of problems. While there is nothing objectionable to average the adjusted values of the comparable providing it is thereafter appreciated that the resultant figures are arrived at by averaging, it has been regarded as wrong in principle to average the values of unadjusted or improperly-adjusted comparable. Generally and understandably, averaging has been regarded as not a proper method of valuation for such a statistical average will tend to eliminate the effect of the individual peculiarities of those in the transactions. The prices obtained at comparable sales should not be aggregated and averaged. The only safe way is to compare each sale with the subject land separately[6]. 51.In the present case, Cheung just took the average of the three comparable lots of land without proper adjustment. Other than just an adjustment for time, no further adjustment had been made for addressing the sharp differences of the comparable and the land of the Subject Premises. Hence, such an oversimplified statistical or mathematical average value would not have reflected the true value of the land but tended to be misleading. Building Element 52.As to the building element, I should not repeat my analysis as stated in paragraphs 30-39 above. Cheung’s estimate was based on the IFA multiplied by the unit rate in building costs and adjusted for depreciation, professional fees and finance charges. 53.In determining the unit rate in building costs, he adopted the approximate average of the construction costs of “Landlord, High Rise” Industrial Building in Hong Kong according to “Hong Kong Report Quarterly Construction Cost Update” provided by RLB[7], i.e. for valuation as of 1 May 2015, $10,000-11,400/ sq m with an average of $10,700/sq m, which can be converted into $994/ sq ft (before depreciation). Such construction costs were indeed based on prices obtained by competitive tendering for lump sum fixed price contracts, and not specifically based on the features or characteristics of the Subject Premises, even though they also cover E&M rooms. 54.The crucial problem is Cheung’s application of such approximate average construction costs without distinguishing the natures and features of the Subject Premises from other elements comprised in the construction costs. Some examples of the items comprising within the construction costs are foundation, lifts, windows, external rendering and waterproofing etc. By reference to the footnote to the “Approximate Order of Construction Costs in Hong Kong and selected Cities in China” published by RLB, the building costs as stated only excludes furniture, fittings and equipment and site formation. Such construction costs clearly do not only capture the costs of a “bare shell’ as Pakatower now seeks to portray. Actually it is impossible to apportion the construction costs to just a particular portion of a building as the Subject Premises. 55.Besides, Cheung’s omission in accounting for the construction cost of the common parts apportioned to the different parts of the building is obviously an oversight which further rendered his valuation defective. 56.Suffice it to say that Cheung’s adoption of a general approximate average rate for construction cost and a general depreciation rate only provides for a general reference of the average replacement costs for a building as a whole which does not specifically cater for areas or accommodations which bear the same or similar features and characteristics of the Subject Premises. It is general knowledge that the construction cost and the depreciation rates of factory units, workshops, common areas, lifts, car parks, roof, staircases, lobbies and corridors, etc. cannot be the same as those similar to the Subject Premises. 57.Again, as a matter of basic logic, Cheung only adopted time adjustment without any other adjustments for assessment of the building element is undoubtedly inadequate. Likewise, his application of the same average unit rate to all premises of the Subject Premises without making any proper adjustments to reflect the peculiar characteristics and features of each premises of the Subject Premises is a glaring mistake. 58.In my view, Cheung had not given sufficient regard to the unfavourable intrinsic qualities and circumstances of the Subject Premises as elaborated above. According to the Approved Building Plans and agreed by Cheung, most of the Housing Premises were primarily designated for use as utility rooms, which were intrinsically less valuable than workshops and factory units. Moreover, some of them have contained DMC Facilities inside which had been and would be taking up space and operating. 59.Such factors undoubtedly took the Subject Premises out of the normal usage and value of the industrial buildings, which tended to push the value of occupation significantly down. Therefore, Cheung’s value of occupation should be significantly reduced and any valuation involving comparable chosen from or construction costs drawn from normal industrial properties, such as workshop, factory units or an industrial building as a whole, would be bound to produce incorrect results. 60.Thus analyzed, Cheung’s DRC Assessment contained fundamental errors and was bound to be rejected. It fell squarely into the trap that DRC should not be used for assessment of just a particular part of a multi-storey building. It also departed from the well-established principle that DRC is conceptually unsuitable for use as the sole or primary valuation method for valuation, still less of just for a particular part of a multi-storey building. Accordingly, Cheung’s DRC Assessment could not be a useful and fair assessment of the value of the Subject Premises. 61.By the same token, Cheung’s cross-check exercise by making reference to Space B on G/F, Unit 6 on G/F, Unit 12 and the Roof Unit for drawing conclusion that his valuation assessment was reasonable was far-fetched. Comparing the unit prices of those four sales transactions to his estimated market rental value of the Subject Premises was like comparing apples and oranges. In particular, those four premises and the Subject Premises were sharply different in nature, usage, location, size, layout, configuration, accessibility, etc.. It goes without saying that as mentioned above, factory units are generally more valuable than the “utility rooms”. Hence, I found the cross-check unhelpful and served no practical purpose. 62.By reason of matters set out above, I have come to the conclusion that Cheung’s DRC Assessment was erroneous and unreliable. I could not accept that the estimated Total Unit Cost assessed by Cheung reflected the true or fair market value of the Subject Premises. Nor could I believe that a user or occupier would be willing to pay an average cost of constructing the whole building as the average cost for just the areas or accommodation equivalent to the Subject Premises, being just some fragmentary parts of the whole building. LAST IO TENANCY AGREEMENT 63.With the two experts’ assessments rejected, leaving the Last IO Tenancy Agreement to be the best evidence before me, it should be analyzed and relied upon in the assessment of the market rent for the Subject Premises. Admission had been made by Pakatower that the actual rent should be the starting point for assessment, followed by further analysis on other evidence and the ultimate valuation depends on the circumstances and the quality of the evidence available. 64.The truth is that Cheung had chosen not to use DRC as the sole assessment methodology for all premises of the Subject Premises as Pakatower now seeks to do. That was Cheung’s unequivocal opinion. It was his opinion, as he actually did, to use DCM for assessment with the Last IO Tenancy Agreement as his only comparable, followed by the sole adjustment for time. He repeatedly stressed that the Last IO Tenancy Agreement was “the only suitable comparable” he could locate. It was just because of his mistaken belief that it did not cover Group 2 Premises, he did not use it for assessing the value of Group 2 Premises. 65.It cannot be denied that Cheung expressly confirmed that DCM should be preferred if suitable comparable is available and that DRC should only be used where no recent useful transactions for reference is available. Such position is supported by Mobil Oil Hong Kong Limited v Commissioner of Rating and Valuation [1993] HKDCLR 77 (“Mobil Case”) in that DCM was preferred over DRC even where the only available comparable was a previous tenancy of the subject property being valued, so long as that tenancy was adequate comparable. Such long-established valuation principle, as recognized and followed by Cheung, clearly undermines Pakatower’s present application. It also explains why Cheung had chosen not to subject all the Subject Premises to DRC assessment. His opinion and position subverts Pakatower’s present application. 66.I appreciate that it is not common for valuation to rely on one comparable for DCM. That said, the Court has always been open and ready to adopt one single comparable for DCM assessment so long as the comparable is of good quality, especially when that single comparable is highly resemble to the subject matter for valuation. The principle is well expounded in Winland Property Limited v Chang Sai Ho [2024] HKLdT 27 at [119]-[125] and reiterated in Victory Super Ltd v Loi Wai Yung & Ors [2025] HKLdT 55 at [73]-[78]. The learned HHJ Cruden and the learned Member Pang have analyzed a series of decided cases to illustrate the repeated practice of the Court/ Tribunal to adopt one single comparable for assessment. 67.Mobil Case has been regarded as a good example. An earlier agreement in respect of 36.7% of the subject tenement some 3 years earlier was accepted as the sole comparable in the determination of the rateable value, while the Tribunal was in mind of the danger of relying on a sole comparable. 68.Amongst the series of cases referred to, Tai Ping Restaurant Limited v Director of Lands LDLR 1/2013, unreported, 8 December 2014 was listed as another example. The Tribunal illustrated that it is generally not a good approach to use a single comparable for DCM, but nevertheless found the quality of the comparable more important than quantity of the comparable. Reference has also been made to a Privy Council case, Kerzner International Mauritius Holdings Ltd v Assessment Review Committee & Another (Mauritius) [2021] UKPC 18, where the assessment of open market value of a property by adopting only one comparable for valuation was endorsed. 69.I thankfully seek support from the observation and rationale of the learned Judge and the learned Member. While I appreciate the risk of adopting one single comparable, I should not be precluded from relying on the Last IO Tenancy Agreement which is very highly resemble to the Subject Premises. It covered exactly the Subject Premises. It was made between the same parties at the time immediately preceding the assessment day. The quality of it has made it the best comparable. Its rental consideration takes on more importance. This Tribunal has no reason not to adopt it as the best comparable for DCM assessment for all intrinsic qualities and circumstances of the Subject Premises should have already been taken into account when the two parties entered into it. I accept time adjustment in reference to the Rental Indices should be adopted as Cheung did. 70.Much has been said by Pakatower that the rental of the Last IO Tenancy Agreement was unreasonably low. However, not only that such allegation is not justified with any convincing evidence, but also that it does not sit well with the tenancy history between the parties. From 1 May 1997 to the Expiry Date, Pakatower had continuously entered into a series of tenancy agreements with IO. Their tenancy relationship over the Disputed Premises had all along adopted a consistent pattern of rental consideration containing both cash element and non-cash element with a gradual rent increase pattern as set out in paragraph 12 above. 71.I should add that even though Cheung had once stated that “due to the unique nature of the relevant utility rooms, it was difficult for the parties to the [Last IO Tenancy Agreement] to ascertain the market rental at the time of leasing, particularly when the total monthly rental of the subject premises remained the same since 1st May 1997 (or 1st May 2001 for G/F Unit 13 Staircase Space) until 30th April 2013.” in order to justify Cheung’s DRC Assessment for Group 3 Premises. 72.Such comment was unsubstantiated with solid evidence. It also ran counter to the fact that there had been rental adjustments during the period concerned as outlined in paragraph 12 above, also bearing in mind that Pakatower’s non-cash benefit of being exempted from costs and expense of the Building would have been varied year by year. Cheung’s said statement discloses Cheung’s another round of taking unjustified matters into account in his assessment. His doubt as to whether the Last IO Tenancy Agreement alone could properly represent the market rent is baseless. 73.Further, Pakatower’s complaint of unreasonably low rental is misleading. It is not fair for Pakatower to overstate the importance of the monthly cash rental payment by an overemphasis of the Cash Element of the Last IO Tenancy Agreement. It should not be silence on the Non-Cash Element of the agreement. In fact, apart from Cash Element, the Last IO Tenancy Agreement (like all of the previous agreements between IO and Pakatower which also contained the same or similar benefits) also contained Non-Cash Element, which obligated IO to be responsible for the management fees, rates, insurance, repair fees and any other expenses in relation to the rented premises for Pakatower during the term of tenancy. In the Last IO Tenancy Agreement, Clause 3B reads : -
74.At trial, Pakatower confirmed that IO had actually settled all those payments for it and it had never been asked for such payments until 2018 when the parties’ relationship worsened. It is beyond dispute that Clause 3B was part and parcel of the rental consideration of the Last IO Tenancy Agreement. 75.Thus analyzed, it is unarguable that the Last IO Tenancy Agreement is highly resemble to the subject matter of the present valuation. It concerned the same Subject Premises with its tenancy term immediately preceding the assessment day. Further, it was not just a one-off transaction between the same parties but a transaction following a series of continuing connected transactions for the past 18 years. Hence, this is the best evidence before me which I should adopt for assessment of mesne profit in this case. 76.In the absence of any concrete or believable evidence to suggest that Pakatower had not entered into the Last IO Tenancy Agreement on a voluntary basis, such a long-term tenancy relationship tends to show that Pakatower had all along been satisfied with such tenancy terms. It negates any assertion of those tenancy agreements not being arm’s length transactions after proper marketing or the parties had not acted knowledgeably, prudently and without compulsion as Pakatower now suggests. It is illogical and unbelievable that Pakatower would have continuously entered into a series of tenancy agreements with IO against its own will, without proper marketing or knowledgeably, contrary to market rents, for 18 years. Pakatower’s assertion in this regard is unjustified and unpersuasive. 77.In this application, Pakatower now seeks to argue that unlike the earlier tenancy agreements, not all of the Subject Premises were mentioned in the Last IO Tenancy Agreement as the wordings of “Transformer Room, Switch Room, Main Distribution Frame Room, other utility rooms or accommodation on Ground Floor (except the Disputed Semi-Circle Area)” were missing. 78.Such argument is hopeless. It is contrary to my fact-finding in the Judgment. To that, Pakatower has not sought to review, still less of adducing concrete evidence in support or allowing IO a reasonable opportunity to respond. It should not be allowed to slip in such contention or factual allegation through the back door. 79.Further, I do not neglect the fact that Pakatower is debarred from making such allegation, which runs directly counter to its pleaded case in paragraphs 19 -22 of its Consolidated Notice of Application filed on 18 January 2021, in that it was specifically pleaded that: -
80.It is most unfortunate that Pakatower and those assisting it would find it proper to raise such contention and factual allegations in a review application, especially upon its confirmation of not adducing new evidence, contradiction to its pleaded case and without seeking review in this regard. 81.In any way, it suffices to say that the description of the rented premises in the Last IO Tenancy Agreement had in fact long been adopted in all the tenancy agreements no later than 1 May 2010 up to 30 April 2015, for a continuous period of five years, involving no less than five tenancy agreements. From 1997 to 30 April 2015, including the said five years, IO had been continuously occupying and using all the Subject Premises. Pakatower has not been able to adduce any credible evidence to show as to how and why it had continuously allowed IO to so occupied and used all the Subject Premises even after 1 May 2010 for another five years (other than under those tenancy agreements including the Last IO Tenancy Agreement), or that it had ever changed its long-term tenancy relationship with IO by changing the subject matter of the tenancy in or before 2010, or how and why it had allowed IO to continuously occupy and use those rooms for those five years without a lease. In my view, such allegation is unbelievable and unacceptable. I should also add that even if Pakatower’s allegation is true, which I have not so found, the mesne profits arisen from such “unleased spaces or accommodations” would only attract a nominal mesne profit of $1 due to lack of evidence in support. 82.Attempts have also been made by Pakatower to propose that the first tenancy agreement was formed between Pakatower and IO as part of the global settlement of all the 1996-1997 Disputes and therefore should not be in Pakatower’s favour. Again, there had simply no valid evidence to support such assertion, neither to indicate the rental therein was concessionary rent nor the said tenancy agreement was forced upon Pakatower against its will. Quite on the contrary, it was IO who compromised its position by starting to pay rent for the Disputed Premises as well as the legal costs to Pakatower. On balance, the evidence tends to disprove Pakatower’s present allegation that the rentals were not arm’s length transaction or not in its favour. Absent any solid evidence for proof, I refuse to accept Pakatower’s mere speculation. 83.Likewise, Pakatower’s present bare assertion of not obtaining legal advice or valuation before its execution of the Last IO Tenancy Agreement is neither here nor there. Not only that such bare assertion was not supported with valid evidence, but also that, even if true (which I have not so found), it was a decision made by Pakatower out of its own free will. Such a decision of its own choice would not have rendered a transaction freely entered into not an arm’s length transaction or that the rental freely agreed upon not market rent. Similarly, it’s another suggestion of those tenancy agreements between Pakatower and IO being tainted with concessionary rental rates due to bulk-tenancy discount is another pure speculation without slightest evidence in support. I must say that all such allegations are without credible evidence in support and are undesirable to be raised in a review application. 84.Reference has also been made by Counsel for Pakatower to a request of IO dated 12 February 2006 in that IO requested Pakatower to be sympathetic to IO’s financial distress and to consider renting out with the then existing rent as opposed to the market rent. In my view, such reference does not assist Pakatower. Rather, it actually proves that not only that both parties were used to negotiate the tenancy terms freely, but also that they had the market rent in mind which formed the basis of their negotiations. 85.In any event, this piece of evidence only shows a one-off request of IO as early as in 2006. There has been no actual evidence to show what impact such request had brought into reality. Plainly, the causation between the rentals agreed and such request had not been established. Pakatower cannot tell as to whether the rents finally agreed was caused by such request or any other reasons, not to mention that how such request had rendered the rentals throughout the 18 years and in particular, the Last IO Tenancy Agreement, not the market rent. 86.Pakatower’s another argument that it had never gained access to the Subject Premises and therefore could not have leased the Disputed Premises to IO knowledgeably is unconvincing. I fail to see how Pakatower’s own decisions of renting out the Disputed Premises to IO without sight of the internal conditions of them for 18 years would have rendered those freely negotiated tenancy agreements not arm’s length transactions, the rentals agreed not market rents, the agreements not formed knowledgeably. 87.I should add that Pakatower’s present contention that leasing without sight of internal condition is tantamount to not leasing knowledgeably is not justified with legal principles or facts. Further, it is unbelievable that Pakatower would have no knowledge at all about the facts that some of the Subject Premises had been housing the DMC Facilities before and after its acquisition and that IO had subsequently used some of the Subject Premises for its own use or for its authorized users’ use during those 18 years. Such allegation does not sit well with the fact that Pakatower, including the then person in charge of Pakatower (Ms Pou’s father), had been in possession, occupation, use, sale and/ or lease of various premises in the Building before and after the purchase of the Subject Premises and throughout those years concerned. 88.It also contradicts to Pakatower’s own evidence as disclosed at trial. I do not intend to repeat how it came to know about the sale of the Other Units (the Subject Premises were part of them), its acquisition of them, its legal proceedings against IO with the assistance of legal teams ending up with the first tenancy agreement over the Disputed Premises, the DMC, the approved building plans and the former owner’s published documents relating to the condition and use of the Other Units as disclosed by Pakatower. All such background facts further uproot any suggestion of Pakatower having been entered into the tenancy agreements not knowledgeably for 18 years as Pakatower now seeks to paint. 89.Moreover, Pakatower’s reliance on its own offer of a monthly rental of HK$11,663 to IO after the expiry of the Last IO Tenancy Agreement is futile for the simple reason that that was a unilateral offer put forward by Pakatower, after the expiry of the Last IO Tenancy Agreement, and was rejected by IO. No useful purpose can be served by such an unsuccessful unilateral offer in assessment exercise. 90.Further has been said by Pakatower about how the Judgment Mesne Profits have been unreasonably low. However, such complaints are misleading. They are premised on the wrong footing that the mesne profits were fixed at a monthly cash payment of HK$3,307 only. Such complaints are an overemphasis on the Cash Element but in complete silence on the Non-Cash Element of the Judgment Mesne Profits. It is not fair for Pakatower to overstate the Cash Element by merely allocating $3,307 to each Premises of the Subject Premises (based on its IFA) at a unit rate of $1.61/ sq ft ($3,307/ 2,056 sq ft) without taking into account the Non-Cash Element. In fact, the monetary benefits derived and to be derived from the Non-Cash Element are significant. They cover all the fees, costs and expenses payable by Pakatower to IO. The monetary benefits that Pakatower had all along enjoyed and agreed to accept as part and parcel of the rental consideration since 1997 until the Expiry Date. 91.In the premises, all Pakatower’s contentions flowing from its neglect of the Non-Cash Element, being part and parcel of the Judgment Mesne Profits, are basically wrong and doomed to fail. Accordingly, its many arguments basing on drawing comparisons between the aforesaid misleading unit rate of $1.61/ sq ft and the rentals of the other parts of the Building, or that and the market values assessed for some other properties in some decided cases, are misleading and bound to be rejected. It also begs a question as to how Counsel (or factual witness) would be able to take up the role of valuation expert by selecting all those comparable, putting forward all those comparisons and doing assessments in their submissions. 92.It is unfortunate that the Counsel for Pakatower would also see fit to refer to a number of judgments of the decided cases in the last two decades seeking to adopt the assessment calculations, end results and end figures therein as basis or references for the valuation of the Subject Premises. Such suggestions are misconceived. Each case depends on its own facts. This is in particular that property valuation is an expert estimate of a property's market worth which is assisted by experts’ professional analyzing each property’s peculiar natures and characteristics. I fail to see how the valuation calculations, end results and end figures decided on the particular properties and the unique facts of those cases some years ago can provide any reliable basis or suitable comparable for valuation of the Subject Premises. 93.Without assistance of valuation experts, Counsel’s present suggestions are plainly arbitrary and unjustified. Property valuation is not merely a mathematical calculation or comparison. I do not accept such arbitrary exercises. Nor do I agree that Pakatower is entitled to regard itself to have the same benefits or entitlements as the parties in those cases enjoyed. Those suggestions are neither supported by solid evidence nor having been canvassed at trial. It goes without saying that basing the valuation of the Subject Premises on some fragmentary facts or valuation exercises of some decided cases is plainly wrong. 94.Indeed, it is undesirable that Counsel for Pakatower would find it appropriate to put up a number of unjustified arguments in the present application. Those arguments are either without solid factual or expert evidence in support or that they were not canvassed at trial. I do not intend to burden this already lengthy decision with all those bare assertions. Suffice it to say that I have considered each and every argument but found them unsubstantiated and unmeritorious. 95.At the hearing, Mr Kwong indicated that as the submissions of the Counsel of IO in the present application was economical, which virtually did not touch on much substance, this Tribunal should be slow to make observations relating to matters that have not been put to Cheung at trial. 96.With due respect, such submissions have put the cart before the horse. They neglect the fact that Pakatower’s present application seeking to subject all premises of the Subject Premises to Cheung’s DRC Assessment is neither its stated case at trial, nor the expert opinion of Cheung’s Report. In the Judgment, this Tribunal strictly rejected all the assessments of the Two Experts with the reasons given therein. Cheung’s assessment was wholly rejected partly due to his fundamental mistake of taking out Group 2 Premises from the Last IO Tenancy Agreement, which undermined the whole basis of his assessments, be that on DRC or DCM, be that on the Group 2 Premises or the Group 3 Premises, as well as partly due to other errors. 97.It is only in this review application, Pakatower now changes its position seeking to ignore the many essential parts of Cheung’s Report and effectively trying to rewrite Cheung’s Report by expanding Cheung’s DRC Assessment with DCM assessment completely burried. 98.In essence, Pakatower is seeking to rewrite Cheung’s Report by Counsel’s submissions. To subject all the Subject Premises to Cheung’s DRC Assessment was plainly not within Cheung’s Report. Not only that Pakatower’s present contention is unsupported with Cheung’s evidence, but also that it deprives IO of a fair chance to adduce expert evidence or factual evidence in response. The prejudice to IO is obvious. It is an unfair exercise, which should not be allowed. 99.Pakatower’s new contentions also raise my concerns as to how and why Pakatower is entitled to put forward a new valuation assessment after trial, which are not supported by its own expert’s reports. They are clear departure from Cheung’s Report. The observations made by this Tribunal in this review application are to specifically address such new contentions with the evidence available. As demonstrated above, they are drawn from the evidence adduced at trial and based on commonsense and logics. Merely general reference was made to some well-established basic principles. The materials of which have been provided to the parties with reasonable opportunities for them to respond. In the premises, Pakatower’s complaint is unreasonable and unjustified. 100.Further, this Tribunal’s rejection of Pakatower’s application to subject all the Subject Premises to Cheung’s DRC Assessment is on the ground that it is fundamentally wrong in principle and not supported by valid evidence. As can be seen in the analysis above, the problem of such assessment is not just a matter of degree for adjustment by expert. Instead, the whole assessment is fundamentally wrong in principle and by omissions of crucial matters that cannot be rectified or resurrected by Cheung at trial. 101.Accordingly such matters need not be confronted with Cheung in any precision or be dealt with in full in the Judgment, but for Pakatower’s present application, which departs substantially from Cheung’s Report, the pleaded case in the Consolidated Notice of Application and the stated case at trial, by raising a number of new matters, even new factual allegations, and slipping in comparable figures and assessment methods by affidavit, Counsel’s submissions and reference to a number of judgments, despite Pakatower’s confirmation that it would not adduce new evidence in this application. Such significant change of position of Pakatower necessitated further elaborations of the problems of Cheung’s DRC Assessment, which were not directly necessary for the purpose of resolving the issues in dispute at trial. 102.Needless to say, this Tribunal does not assume the role of assisting Pakatower to prove its claim, rectify the defects or supplement the deficiency of its expert evidence. It goes without saying that the Tribunal is not bound to accept the submission of any party or the expert opinions but is empowered to form its own view with the evidence available. 103.By the reasons set out above, Pakatower’s contention to subject all the Subject Premises to Cheung’s DRC Assessment, which is fundamentally erroneous and unreliable, is bound to be rejected. The Last IO Tenancy Agreement is the best evidence before me which should be adopted for valuation of the Subject Premises. Therefore, the Judgment Mesne Profits basing on the Last IO Tenancy Agreement cannot be wrong. I accordingly refuse to vary the Judgment Mesne Profits. GATE KEYS 104.Regarding the Gate Keys Issue, Pakatower invites this Tribunal to review the factual findings in the Judgment. Reference has been specifically made to the relevant building plans as well as the witness evidence in court and the witness statements for further elaboration and clarification. 105.Given my determination on the Gate Keys issue in the Judgment was premised on my understanding that there were three possible ways to access to the Two Staircase Spaces (paragraphs 155 & 159-160 Judgment), the present review should start with my perception in this regard. As to the option of going through the main entrance of the Building, I now accept that, as the building plans show, such option was only available to Unit 10 Staircase Space but not Unit 6 Staircase Space. 106.As to the option of going through other entrances of the Building, Pakatower stresses that such option should focus on the entrances on the ground floor, which limited the entrance available for Unit 6 Staircase Space on the ground floor to the passenger lift next to it and that for Unit 10 Staircase Space on the ground floor to the passenger lifts next to it. 107.That being the case, the availability of such option hinged on the operating hours of those passenger lifts. However, those passenger lifts have very limited operating hours. They did not operate between 6 p.m. to 6 a.m. from Monday to Saturday, and all days on Sunday and public holidays. They had been and would be shut down for repairs from time to time. 108.Thus viewed, routinely at least between 6 p.m. to 6 a.m. from Monday to Saturday, and all days on Sunday and public holidays, as well as irregularly or even unforeseeably, from time to time, the Gate next to Unit 6 Staircase Space is the only way to access Unit 6 Staircase Space. Likewise, the same situation applies to Unit 10 Staircase Space save that the option of going through the main entrance would be still available to Unit 10 Staircase. 109.In the circumstances, for access to the Two Staircase Spaces, especially at the time when those passenger lifts next to them were not working, the gate next to Unit 6 Staircase would become the only way to gain access to Unit 6 Staircase and for Unit 10 Staircase, the gate next to it would be the only alternative way to gain access to it and the only way to gain direct access to it. It goes without saying that one would then have to rely heavily on the assistance of the caretakers of the Building, who were in possession and control of the Gate Keys. 110.On the issue of enlisting the assistance of the caretakers for the Gate Keys, Pakatower complains that it was not merely “slight inconvenience” as the caretakers were not always available due to their other duties or personal reasons as patrolling the building, going to the toilet, delaying in answering the calls. Insofar as such complaints have not been properly addressed by IO and in the absence of any concrete plan to resolve such practical difficulties or to secure proper and effective service of the caretakers in this matter, I would have to accept the option of relying on the caretakers to open the Two Gates for Pakatower carries a strong element of uncertainty, which is, to a certain extent, out of Pakatower’s control and foreseeability. 111.Coupled with Pakatower’s intended use of the Two Staircase Spaces for storage of heavy and bulky items, any delay in answering Pakatower’s requests for gate-opening should be avoided. The fact that such option is the sole way for gaining access to Unit 6 Staircase Space as well as the only alternative way for gaining access to Unit 10 Staircase Space from the outside during the frequent suspensions of the passenger lift respectively next to each of them would understandably embarrass Pakatower’s ordinary access to the Two Staircase Spaces. I would have to agree that such option is not a reliable or fair option for Pakatower. 112.In further consideration of the delivery procedure of the heavy and bulky articles from the outside to the Two Staircase Spaces, the option of going through the main entrance (only available for Unit 10 Staircase Space) and the lifts respectively next to the Two Gates must involve taking lifts to an upper floor, passing through the corridors, which are indisputably narrow and at times obstructed by miscellaneous articles, and walking back down to the Two Staircase Spaces. Hence, I am persuaded that such option should not be taken as the primary or dominant option for Pakatower to gain access to the Two Staircase Spaces. 113.Clarification has also been made to the fact that the gate next to Unit 6 Staircase Space was indeed not part of the original design of the Building as shown in both the 1982 and 1984 building plans, both before and after the time of the execution of the DMC. I accept that the original design and construction of the Building provide direct unrestricted access to Unit 6 Staircase Space through the entrance next to it without a gate. 114.The original design supports Pakatower’s contention that it should have unrestricted access to Unit 6 Staircase Space through the gate next to it, hence, the key to that gate should have been provided to it. IO has failed to provide a valid reason to change the original unrestricted way of access as designed and provided for in the design and construction of the Building and at the time of the execution of the DMC, as this would constitute to interfere and affect Pakatower’s unrestricted right of access through the direct route originally provided in the design and cause inconvenience to Pakatower without valid reason. 115.I should add that even if there were a gate in the design of the Building at the time of the execution of the DMC, Pakatower’s right to gain access through the gate would depend on the circumstances. The peculiar facts of this case as set out above warrant an unrestricted access right through the Two Gates by providing the Gate Keys to Pakatower. 116.In fact, Pakatower’s right to gain access through the Two Gates is not denied by IO. Its right to pass and repass the Common Areas “for all purposes connected with the proper use and enjoyment of the Units” owned by Pakatower under Clause 1(a) of the DMC is not in dispute. Its refusal tied to Pakatower’s request for the Gate Keys by relying on its power to manage the Building and to provide security service under Clause 42(11) and (17) of the DMC. 117.To challenge IO’s purported reason of security management, Pakatower seeks support from a number of matters including the following matters:-
118.The matters aforesaid have met with no serious challenges or satisfactory explanations from IO. Pakatower also explains that there had been no request for the Gate Keys before the Expiry Date for the Two Staircase Spaces had all along been leased to IO until the expiry of the Last IO Tenancy Agreement. 119.I would have agreed that it would be within IO’s power under clause 42(11) and (17) of the DMC to control the Two Gates by not providing them to the owners of the Building if such measures were necessary for security reasons and reasonable in all the circumstances. However, such power cannot have an effect of unreasonably depriving or hindering the right of the owners to pass and repass the Common Areas “for all purposes connected with the proper use and enjoyment of the Units” under 1(a) of the DMC for clause 42(11) and (17) is expressly subject to other clauses in the DMC, including Clause 1(a). 120.Given my findings on the restricted options for Pakatower to access to the Two Staircase Spaces as set out above, Pakatower would be left with no free choice to gain access to the Two Staircase Spaces if not being provided with the Gate Keys. Under such circumstances, I am convinced that the provision of the Gate Keys is necessary for Pakatower, who is the owner of the Two Staircase Spaces. Its position and needs are apparently different from other owners of the Building. I agree that IO is under a duty to provide the Gate Keys to Pakatower, even if it elects not to provide the same to other owners. 121.The combined effect of the peculiar design of the Building, the limited operating hours of the lifts concerned and the unforeseeable working pattern of the caretakers have rendered IO’s refusal to provide the Gate Keys to Pakatower unreasonable, in the sense that it would, in reality, upset Pakatower’s free access to the Two Staircase Spaces, and, in effect, prejudice Pakatower’s right to access under clause 1(a) of the DMC. 122.For reason of matters set out above, I accept that IO is under a duty not to unreasonably restrict or deprive Pakatower of its rights to access to the Two Staircase Spaces through the Two Gates by withholding the Gate Keys from Pakatower. CONCLUSION 123.Having considered the submissions of the parties and all the evidence before me, I make the following Order: -
COSTS 124.Taking into account the outcome of this application and all the relevant circumstances, Pakatower only succeeds in its application for the Gate Keys but loses its application for varying the Judgment Order relating to Judgment Mesne Profits. I make a costs order nisi that there be no order as to costs of the present application. 125.This Costs Order Nisi shall become absolute in the absence of application to vary by filing of Form 1 within 14 days from the date hereof.
Mr Jeremy Kwong and Mr Felix H.Y. Tang, instructed by Holman Fenwick Willan, for the Applicant Mr Billy Poon, instructed by K.M. Tang & Co, for the Respondent [1] Trial Bundle: [C7/1765-1772] [2] Non-Residential Condominium Valuations, Professional Excellence Bulletin [PP-16-E] September 1995 Revised January 2007, p.5 section under “Cost Approach” [3] Valuation of Development Land in Hong Kong by Philip James Roberts Hong Kong University Press 3ed. 1981 p. 48, detailed illustration as elaborated in p.48-49 [4] Plot ratio is defined as the ratio between the gross floor area (GFA as defined under Building (Planning) Regulations), Cap.123F of a building and the area of the site on which it is erected. [5] See Practice Note for Authorized Persons, Registered Structural Engineers and Registered Geotechnical Engineers APP-2: https://www.bd.gov.hk/doc/en/resources/codes-and-references/practice-notes-and-circular-letters/pnap/APP/APP002.pdf [6] Land Compensation & Valuation Law in Hong Kong, Gordon N. Cruden & Liza Jane Cruden, 4th Ed. 2017 at [23.98-23.100] [7] Trial Bundle: [C7/1856] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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