C.G. & L. Investment Ltd v. Director of Lands

LDLR000004/1981

Crown lands resumption - compensation - whether subject property contiguous to a decked nullah used for pedestrian passage abutted a "street" - whether decking if nullah for pedestrian use entirely due to scheme of the public work under which subject property resumed - whether Class A site or Regulation 19 site - determination of compensation - Section 6 Crown Lands Resumption Ordinance, Section 2 Public Reclamatioas and Works Ordinance, Cap. 113, Regulations 2, 19 Building (planning) Regulations, Cap. 123

IN THE LANDS TRIBUNAL OF HONG KONG

Coram: TRIBUNAL: His Honour Judge Cruden, Presiding Officer and M.W. Phillips, Esq., Member.

Date of Judgment: 14 December 1982

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JUDGMENT

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1. This is an application by the former registered Crown lessee of Tsuen Wan Inland Lot 29 Section C, Tsuen Wan, New Territories for compensation, pursuant to Section 6 of the Crown Lands Resumption Ordinance, Cap. 124 upon that land being resumed by the Crown.

2. Lot 29 was leased by the Crown on the 22nd day of September, 1937 for a residue of a term of 75 years to be computed from the 1st day of July 1898 together with an option of renewal for a further 24 years less the last 3 days thereof. The lease was subject to the Lot being used for industrial purposes and to the lessee having no right of access to the sea nor right to any compensation in the event of the Crown reclaiming the foreshore on the seaward side. Apart from those conditions there are no conditions in the lease restricting either site coverage or the height of any buildings. The property is now within Planning Area No. 19 of the Tsuen Wan District under Outline Zoning Plan No. LTW/146C. This area is zoned industrial with offensive trades not being permitted.

3. Notice of the resumption was published in No. 20 Volume CXXIII Hong Kong Gazette under G.N. 1418 and was entituled :-

"

Resumption of land for Tsuen Wan Bypass Stage II in Areas 19 and 25, Tsuen Wan, New Territories."

4. The notice went on to declare that the property was:-

"

... required for a public purpose ... the Governor has ordered that the above-mentioned lots ... shall be resumed and revert to the Crown on the expiration of one month from the date of the affixing of the notice to the said land."

5. The time limited under that notice expired and the land reverted to the Crown on the 12th day of June 1981.

6. The hearing was largely occupied with evidence and submissions on two legal issues which must first be resolved before we can proceed to determine compensation. First, was the subject property a Class A site under the Building (Planning) Regulations, Cap. 123 or merely a site subject to Regulation 19 thereof? Secondly, if it were a Class A site, did it acquire that status solely as a consequence of the public purpose for which the property was resumed?

7. Turning to the first of these issues a Class A site is defined in Regulation 2 of the Building (Planning) Regulations as follows:

8. Class A sites are then subject to certain street shadow, site coverage, plot ratio and building height restrictions under Regulations 16. 20, 21 and the First Schedule thereto. By comparision the generally less valuable Regulation 19 sites, are subject to the far more restrictive discretionary powers of the Building Authority under Regulation 19 which provides:

9. The applicant claims the subject property abuts on a street not less than 4.5 m wide and is therefore a Class A site. The respondent submits that the property does not even abut on a street and is therefore a much less valuable Regulation 19 site. We were informed that without prejudice to the applicant proceeding with the present application, the parties had already settled a claim or, the basis that the property is a Regulation 19 site. Under that conditional settlement the respondent has paid $5,297,040 to the applicant. The arrangement between the parties is that if this Tribunal holds that the property is a Class A site and awards higher compensation than that sum the applicant will give the respondent credit for the sum of $5,297,040 already paid.

10. To determine whether the property abuts a street we are obliged to consider the complicated and at times conflicting factual background to the present claim. This requires us to go back to 1977 when plans for a Tsuen Wan Bypass were mooted. There were initially alternative proposals for the Bypass, one of which involved erecting part of the structure on piles over the sea in Tsuen Wan Bay. Finally it was decided that part of the Bay would be reclaimed and a section of the Bypass would be constructed on the resulting reclamation.

11. Notification of the proposed reclamation for the "construction of a bridge, reclamation and ancillary works" was published as Gazette Notification 2417 in No. 40 Volume CXIX Hong Kong Gazette on the 7th day of October 1977 pursuant to Section 2 of the Public Reclamations and Works Ordinance, Cap. 113. The limited purpose of notification under that Ordinance was to allow objection to be made to the proposed reclamation. No separate right to compensation is created. Instead the Governor, in his discretion, may refer a claim of private right to compensation to the Lands Tribunal.

12. Before the reclamation commenced both the subject property as well as a godown to the west of the subject property, abutted and had access to the foreshore along which a seawall was constructed. The subject property had a frontage of 167 feet along that sea wall which was sufficient for 1 or 2 cargo barges to lie alongside loading and discharging goods. While before the reclamation the subject property under the Crown lease had no legal right to marine access, it enjoyed and exercised this de facto access. Photographs were produced showing cargo barges moored alongside the seawall. The godown also used the mooring facilities alongside its property for similar purposes.

13. The subject property and the godown were separated by a strip of Crown land 8.7 metres is width. This was occupied by a nullah 3.5 metres wide flanked on the western or godown side by a passageway 3 metres wide and on the eastern or subject property side, by a passageway 2.2 metres wide. There was evidence that as a consequence of the reclamation and related works alternative access had to be provided for the godown and a decision was made by the Crown to deck the nullah. The surface of the decked nullah and the two flanking passageways were sealed to form a covered surface 8.7 metres wide extending from the point where the nullah had before the reclamation entered the sea at the former seawall, inland to Chai Wan Kok Street. Chai Wan Kok Street was the first inland street parallel to the former seawall. Chai Wan Kok Street constituted the street access for Lot 29 when the area was first subdivided. Later Lot 29 was divided into three separate portions being Sections A, B and C lettered consecutively from the Chai Wan Kok Street frontage to the sea. Access for Sections B and C to Chai Wan Kok Street was preserved by a series of rights-of-way through Lot 29 servicing Sections A, B and C.

14. Contracts were let by the Crown for decking the nullah and the work was carried out from May 1980 to December 1980. Upon completion the surface was asphalted over its entire width and length. The decking was designed for vehicular loading but the surfacing was designed only for pedestrian loading. At least initially access to the decked nullah at its junction with Chai Wan Kok street was controlled by gates and a guard. One of the rights-of-way of Lot 29 abutted the decked nullah where pedestrian access was allowed but bollards were installed to prevent vehicular access at that point.

15. In addition to the undisputed requirement of the godown to have alternative access, there was also considerable other evidence relating to the reason why the nullah was decked. During 1980 the Housing Department, as the new owners of the godown, had employed contractors to convert the godown into flatted factories. Those contractors needed vehicular access to the site. When the Bypass was completed new vehicular access to the godown would be provided as part the new ground level roads on the reclamation but this was many months away. In the meantime alternative temporary access was needed. There was also evidence that when the reclamation was completed it would be used for a variety of purposes including workshops, a dangerous goods godown, cargo handling facilities, bus depot, sports auditorium, secondary school and a housing estate. The decked nullah, long term, could provide permanent pedestrian access from Chai Wan Kok Street and also various pedestrian overbridges in that area, down to the new developments on the reclaimed land. The decked nullah would as well complement the already decked section northwards beyond Chai Wan Kok Street. On environmental grounds the proposal to deck the nullah was also desirable. These environmental grounds were reinforced by the fact that abutting the open nullah on the western side between the godown and Chai Wan Kok Street, was a very large cooked food stall area, servicing the many factories in this locality.

16. The respondent submitted that the sole reason for decking the nullah was to provide pedestrian access to the reclamation which included part of the new roads and footways linked to the Bypass. It was further submitted that the provision of temporary access to the god own was only an interim use made possible from the separate decision to deck the nullah on the former ground. The environmental and hygiene advantages, it was submitted, merely arose incidentally from the decision to carry out the work to provide pedestrian access to the reclamation. A number of witnesses were called and correspondence produced, to establish the precise reason why the nullah was decked.

17. Mr. D. Pannach, District Lands Officer, Tsuen Wan, understood from discussions with other Crown officers that the reason the nullah was decked was to provide pedestrian access to the reclamation. Mr. J.A. Hastings, Senior Town Planner, Tsuen Wan New Town Development Office, gave two reasons why the nullah was decked. He stated that it was to provide a pedestrian way from a proposed footgridge in Castle Peak Road to the proposed workshop area on the reclamation; it was also an environmental improvement to the area. Mr. D.J. Maggs, Engineer for Tsuen Wan By Pass and Tsuen wan Bay Reclamation, Tsuen Wan New Town Development Office, stated that from an engineering viewpoint that portion of the nullah near the subject property's boundary with the former seawall would have had to be decked in order to construct proposed ground level footways and roads in that vicinity, which would form an integral link with the Bypass and the proposed developments on the reclamation. On more general engineering grounds it was also desirable to deck the balance of the nullah inland to Chai Wan Kok Street so that in the longer term, it would provide pedestrian access to the reclaimed land.

18. Mr. Maggs evidence suffered more than other witnesses from his relatively recent appointment to his present position. He only arrived in Hong Kong in March 1981 after the actual decision to deck the nullah had been made and the work completed. Mr. D.W. Elliott, a Housing Department Architect involved from 1979 as the supervising architect in the conversion of the godown into flatted factories, sought to ensure that the contractors had access to the site. When he became involved in discussions and correspondence with other departments of the Crown the decision to deck the nullah as a pedestrian way, had been made and he was more particularly concerned with its suitability for vehicular traffic; the approval of the Fire Services Department; and the Housing Department's liability for maintenance of the surface. Although not called as a witness two letters were produced - Exhibits R. 9D and R. 12 - written on behalf of the Project Manager (Tsuen Wan), who was a senior official responsible for policy matters. In a letter to the Crown's consulting engineers dated the 7th day of May 1979, following a meeting, he gave written instructions for the decking of the nullah within the scope of the other works for the Tsuen Wan Bay Reclamation. This letter is important for its relatively early date and the variety of reasons he gives for decking the nullah:

19. The second letter to the Chief Engineer Highways/New Territories dated the 29th day of December 1980, included this statement:

"

The nullah decking will continue in use as a 'private' access to the converted godown and remain under Housing Department control until the permanent access can be provided from the completed ground level roads on the proposed reclamation. Only then will it be possible for the nullah deck to revert to use as a pedestrian Way, and it will then be handed over to you for maintenance."

20. When we consider the whole of the evidence those letters reinforce the conclusion that, whatever the short term use of the decked nullah, it was principally decked to provide a permanent pedestrian way for the use of the public. In the short term, we are equally satisfied, that it was to provide private vehicular access to the godown and that the gate and guard at the Chai Wan Kok Street entrance were to prevent access by other vehicular traffic. However, both before and after the decking was completed pedestrians used the area for access to the factories on Lot 29 and elsewhere.

21. At the date of resumption, namely the 12th day of June 1981, the decked nullah was still being used for private vehicular traffic to the godown site and for the incidental pedestrian access already described. As at the 12th day of June 1981 was it a "street" for the purpose of Regulation 2? Under that Regulation "street" is defined as:

In the principal Ordinance "street" is defined differently, but again in wide terms:

22. Whatever difficulties, those apparently different definitions may have caused in the past the position has recently been resolved by the Court of Appeal in Mightvstream Ltd v. Attorney-General (1982) H.K.L.R. 56. In that decision the Court of Appeal held that it did not matter that the property before them, a bridge, was not at common law a street for in Hong Kong the Legislature had provided its own statutory definitions. Further, the two different difinitions of "street" were to be read together in determining whether particular property constituted a street. In view of our very detailed statutory definitions and the assistance this recent Court of Appeal decision provides, we do not propose to refer to the several English judgments cited dealing with the definition of a street at common law or the effect on the common law of various English statutory provisions.

23. We are satisfied reading our statutory definitions of street together, that the decked nullah both during its temporary use for restricted vehicular traffic and its permanent intended use as a footpath, would be a "street" for the purposes of our legislation. In our view not only is this status clearly established as a matter of law, but it equally clearly accords with the Crown's practice.

24. As to practice, we had the valuable evidence of Mr. K.B. O'Sullivan an Architect called by the applicant. Mr. O'Sullivan was employed in the Buildings Ordinance Office of the Public Works Department by the Hong Kong Government from 1958 to 1975 during which he acted at times as Principal Government Building Surveyor in charge of the Buildings Ordinance Office. From 1975 to 1979 he was Building Survey Adviser to Government, when his principal task was to carry out a review of building legislation. Since retirement in 1979 he has been in private practice in Hong Kong as an architect. Mr. O'Sullivan gave his opinion that the decked nullah constitutes a "street" under the Buildings Ordinance and in particular under the Building (Planning) Regulations. He therefore was of the opinion that the subject property is a Class A site. From his evidence it was clear that the Buildings Ordinance Office does not narrowly construe the statutory definitions of "street" in determining whether a particular property is a Class A or a Regulation 19 site. He pointed out that it was sufficient that a property abut a street; it was not necessary for the property to have access to that street; still less that the street be open to vehicular traffic.

25. Mr. O'sullivan went on to refer by way of example, to 10 applications to the Buildings Ordinance Office where the issue of "street" arose, and which were approved by the Building Authority. Applications relating to properties at Calder Path, Castle Peak Road and Apleichau showed that combined widths of a footpath and covered nullah; the width of a drainage reserve; the combined width of a pedestrian way and drainage reserve; were all accepted as coming within the definition of "street" to enable the minimum width of 4.5 metres to be achieved. Other applications included one at Tai Chung Road/Chai Wan Kok Street where the width of an open nullah was included; 27 Thing Yip Street where the street width again included an open nullah; 34 Kennedy Road where a private access road on an adjoining site was' treated as a street. In accepting private streets as "streets" for site classification, the fact that entry was restricted by gates barriers or bollards, did not affect the Building Authority's decision. Examples where such areas were accepted as streets, even though access was restricted, were in Hing Hon Road where a private street controlled by a guard box and moveable barrier was accepted as a street and Peacock Road where a right-of-way was controlled by a barrier pole.

26. So not only as a matter of law is the decked nullah, a street but the practice of the Building Ordinance Office, reflecting that law, would equally appear to treat a decked nullah as a street. We might add that while much time was spent in adducing evidence on the present nature of the decked nullah and the reasons for the decking, its prior status seems to have been largely ignored. Before the decking 5.2 metres of its present width made up of 3 metres on the western side and 2.2 metres on the eastern side, was used for pedestrian passage and only 3.5 metres was occupied by the nullah. That area, even before the decking, would probably have been accepted as a street, for site classification purposes. After taking all these matters into account and ignoring whatever was its prior status, we hold that the decked nullah was at the date of the resumption a street for the purpose of the Buildings Ordinance and the Building (Planning) Regulations.

27. We might add that the respondent while acknowledging that this Tribunal was bound by Mightystream v. Attorney-General pointed out that the Attorney-General had lodged an appeal to the Privy Council against that decision and the appeal would probably be heard in March 1983. Neither party sought an adjournment until after the appeal. In any event, even if the Court of Appeal were reversed, it is unlikely that would affect our finding that the decked nullah is a street. For the facts here are not only very much different to those in the Mightystream Case but are also far more favourable to the area in question being a street.

28. We now move on to the second issue, namely is the subject property a Class A site solely as a consequence of the public purpose for which the property was resumed? The property was resumed for the Tsuen Wan Bypass Stage II. It is undisputed that part of that Stage of the Bypass is constructed on existing land and part on reclaimed land. Similarly, the connecting roads and footways to the Bypass will partly be on existing land and partly on reclaimed land.

29. The respondent submits that the reason for decking the nullah was to provide pedestrian access to the footways linked to the Bypass as well as to the workshops and other proposed developments on the reclamation. In that event, it is submitted, the status of the decked nullah as a street, solely resulted from the scheme of the public work for which the subject property was resumed, namely the Bypass. If that were the position then in accordance with the Privy Council decision in Pointe Gourde Quarrying and Transport Co. Ltd. v. Sub-Intendent of Crown Lands (1947) A.C. 565 we would 'have to disregard the property's Class A status and treat it for compensation on the resumption, as a Regulation 19 site. For the enhanced value of the Class A site would in that event be entirely due to the scheme underlying the resumption.

30. To encourage us to reach that finding, the respondent invited us to give greater weight to Mr. Maggs evidence than to the respondent's other witnesses. For it was submitted Mr. Maggs, as the Engineer in charge, was in the best position to know ehether the decking of the nullah had become necessary because of the Bypass scheme. To this the applicant reminded us of the heavy burden placed on the respondent if it wished to rely on the Pointe Gourde principle. Counsel for the applicant referred us to the following passage in the advice of the Privy Council at page 572:

"

It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition."

31. The applicant submitted that it was not sufficient that the Bypass scheme was one of the reasons why the nullah may have been decked. The respondent, it was submitted, must go further and establish that the decking was "entirely" due to the Bypass scheme. There could be no dispute about the law and that is what the respondent submitted the evidence did in fact establish.

32. Returning to that evidence, we are satisfied that the nullah was decked for at least the reasons set out in the letter of the Project Manager (Tsuen Wan) dated the 7th day of May 1979. That letter disclosed a variety of reasons - access to the godown; access to the reclamation; complementing the enclosed section upstream; complementing the proposed culverted section downstream; that decking the nullah would generally be beneficial.

33. From the evidence of the various witnesses called by the respondent it appeared that no doubt understandably, they placed most emphasis on that aspect which most closely related to their official responsibility or professional discipline. Mr. Pannoch as a valuer saw the decking in the context of the Pointe Gourde principle; Mr. Hastings as a planner was concerned with providing exclusive pedestrian access in the vicinity of a major vehicular Bypass and with improving the environmental standards of the locality; Mr. Maggs evaluated the importance of the decking in relation to the proposed reading and ancillary footway links to the Bypass; Mr. Elliott was mainly concerned with the completion of his Housing Department's flatted factory project and ensuring adequate access to the godown site for his contractors.

34. Some of those reasons were obviously more important than others. Some of those reasons were clearly more important to these witnesses depending on how the project affected their own specific responsibilities. Some of those reasons in time preceded others. However, we are satisfied that when the initial decision was made to deck the nullah it was arrived at for more reasons than merely to provide pedestrian access, from existing land to the reclaimed land.

35. If that had been the only initial reason it is at least arguable that even it did not arise solely because of the resumption of the subject property for the Bypass. The reclamation was a base for only part of the Bypass and was not exclusively for the Bypass. The land use and layout of the reclamation were separate from the Tsuen Wan Bypass scheme. The Bypass as well as being partly constructed on the reclamation no doubt also includes the related feeder roads. However, the Bypass scheme cannot reasonably be extended to include also the layout or other uses on the reclamation. Yet one of the most important factual reasons advanced by those respondent witnesses who were most emphatic that the decking was part of the Bypass scheme, was that it would provide pedestrian access to the workshops and other footways on the reclaimed land.

36. Although the point was not argued before us and we do not rely on it for our decision, there is also evidence that the decked nullah may well have had the status of a street, so far as the Building Ordinance Office was concerned, before any decision to deck the nullah was taken.

37. We are satisfied that there was more than one reason which led to the decision to deck the nullah. Further, not all of those reasons arose because of the Bypass scheme for which the subject property was solely resumed. It therefore follows that the status o￡ the decked nullah as a a street was not "entirely" due to the scheme underlying the resumption of the subject property. In those circumstances we hold that the applicant is entitled to compensation for the subject property classified as a Class A site and not merely as a Regulation 19 site.

38. Before proceeding to determine the compensation payable for the subject property as a Class A site we will refer, for completeness, to how the subject property as Section C came to be partitioned into its-present triangular shape. In 1969 when Lot 29 was unpartitioned, the District Office in Tsuen Wan asked the then owner's architect to take into account the proposed Bypass scheme in his plans for new buildings. This very early request was not enforceable but the owners very reasonably took it into account when Lot 29 was partitioned in 1972 into its existing Sections A, B and C. Section C was surveyed and partitioned into its present size and shape in anticipation of the possibility of resumption. Factories were built on Sections A and B which fortunately, due to this foresight and co-operation, will be unaffected by the resumption. On the 10th day of October, 1973 the applicant purchased Section C of Lot 29 being the subject property, for $1,280,000. The subject property has remained bare land although large factories have been built on Sections A and B.

39. Mr. F.Y. Kan, Chartered Surveyor, who gave evidence for the applicant has a long detailed personal knowledge of the subject property going back at least to 1972. He recollected ships loading and unloading on the waterfront contiguous to the subject property as shown in the photographs he produced and acted for the applicant when it purchased the property. He was also involved in preparing plans for a factory building on the subject property before it was resumed. The applicant in fact purchased the property in 1972, well before the assignment was registered on the 10th day of October 1973. Mr. Kan's recollection was that the applicant was unware on purchase that the property was likely to be resumed. Mr. Kan was cross-examined on the issue of the applicant's knowledge of possible resumption at the date of purchase. In our view whether the applicant knew of the likelihood of resumption at the date of purchase is irrelevant to the issue of compensation. For it has been clear, at least since the decision of the Privy Council in Melwood Units Pty. Ltd. v Commissioner of Main Roads (1979) A.C. 426, that in determining compensation we must disregard any dimunition in the value of the land, which may have arisen from knowledge of the proposed resumption. This is clearly not only a just approach but would seem to follow as a necessary corollary from the Pointe Gourde principle which applies in the reverse factual situation.

40. We now turn to determine the compensation payable for the subject property as a Class A site, disregarding any dimunition in value caused by the fact that the property was resumed. Both Mr. Kan the valuer for the applicant and Mr. Pannach for the respondent, agreed that the best comparable on which to base any valuation was the settlement reached for the resumption of Tsuen Wan Inland Lot 53 R.P. which had an area 2606 square metres. Lot 53 R.P. was industrial land at Texaco Road, Tsuen Wan and was resumed on the same date as the subject property.

41. Mr. Pannach referred to the basis of compensation for this comparable as being the same as for Tsuen Wan Inland Lot 53 Section A, which adjoins Lot 53 R.P., having an area of 3,575 square metres. However, due to the underdevelopment of the balance of the site Section A was capable of development to a higher plot ratio of 16.675. The analysed unit rate is $24,395. Section A was also resumed on the same date as the subject property and Lot 53 R.P.

42. Mr. Kan supported his calculations based on Lot 53 R.P. with evidence of the sale on the 30th day of December 1980 of an industrial site on Castle Peak Road, Tsuen Wan. This latter transaction comprised the sale of two adjoining lots described as Tsuen Wan Inland Lot 15 and Tsuen Wan Inland Lot 3 having a considerably larger area of about 15,380 square metres. The sale shows a unit rate of $23,680 per square metre. Mr. Kan after agreeing not to include any allowance for de fact access to the sea for the subject property, applied the analysed rate of $22,320 per square metre directly to the surveyed area of 989.4 square metres of the subject property. This produced a valuation of $22,083,408.

43. Mr. Pannach allowed a 6% deduction for the effect of the irregular shape of the subject property on usable factory space and building costs as well as for the inferior access by the right-of-way through the adjoining buildings to Chai Wan Kok Street. After making this deduction he arrived at a final figure of $20,780,000. Mr. Kan did not consider the right-of-way access to be detrimental reminding us that the subject property had previously been used for goods handling. He pointed out that traffic to and from an industrial building would be no greater than that for the previous goods handling, which use had presented no traffic problems. However, he did concede that the irregular shape of the site could increase building costs and finally made a lesser overall adjustment to the rate per square metre of 3% compared with Mr. Pannach's 6%.

44. After considering the evidence of the two valuers we find, taking into account the relative size and triangular shape of the subject property together with the right-of-way access, a 5% deduction should be applied to a rate of $22,320. For the subject property's 989.4 square metres 95% of $22,320 per square metre, equals the sum of $20,979,000 which we round up to $21,000,000.

45. The respondent shall therefore pay to the applicant compensation in the sum of $21,000,000 together with interest in terms of Section 17(3) of the Crown Lands Resumption Ordinance from the 12th day of June 1981 to the date of payment. Payment of those sums shall, of course, be subject to the deduction of $5,297,040 already paid in terms of the arrangement between the parties. The respondent shall also pay the applicant's costs on the Supreme Court scale as prescribed by R.S.C. Order 62. There will be a certificate for two counsel. Liberty to apply is reserved.

DATED this 14th day of December, 1982.

Representation:

Mr. Michael Ogden, Q.C. with him Miss Maria Yuen instructed by Gallant Y.T. Ho and Co., Solicitors for the applicant.

Mr. Robert McCallough, Senior Crown Counsel, for the respondent.