Shun Fung Ironworks Ltd v. Director of Buildings and Lands

LDLR000018D/1987

HEADNOTE

Lands Tribunal - claim for compensation arising from resumption of land --- In Interlocutory Proceedings formal admissions made by Respondent's counsel and noted down by the Tribunal become part of the Tribunal records --- Amendments to those admissions cannot be made by Respondent as of right but by leave of the Tribunal (Rule 12(3) of Lands Tribunal Rules Cap. 7) --- Registrar of Lands Tribunal is under no duty to accede to Claimant's request not to allow the filing of an Amended Formal Admission by Respondent --- Amendment can be granted by the Tribunal on Respondent's convincing explanation on the ground of mistake.

IN THE LANDS TRIBUNAL OF HONG KONG

CIVIL JURISDICTION

CROWN LAND REFERENCE NO. 18 OF 1987

______________________

IN THE MATTER OF THE APPLICATION

BETWEEN:

_______________________

Coram: Presiding Officer, Judge H. Wong in Chambers.

Dates of Hearing: 10, 11, 14 - 17, 23, 30 & 31 March, 1988, 11 & 12 April 1988

Date of Judgment: 26 May 1988

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J U D G M E N T

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1. On 10th March 1988 there were before the Lands Tribunal (the Tribunal) four summonses, the first two dated 12th and 29th February 1988 coming from Director of Buildings & Lands (Respondent), and the remaining two of 1st and 2nd March 1988 having been issued by Shun Fung Ironworks Ltd. (Claimant),

2. At the beginning of the hearing the parties reached a compromise on the first three summonses and left the fourth, claimant's summons of 2nd March 1988 to be determined by the Tribunal.

3. It is appropriate that the following summary of the chain of events, so far as it is pertinent to these interlocutory proceedings, be stated at the outset so as to provide a brief picture of the matters in dispute.

4. 1) On 25/10/85 Government served a Notice on Claimant to resume its land situated at Junk Bay (the resumed land) for new town development.

5. 2) On 30/7/86 reversion of the land involved to Government took effect.

6. 3) On 30/7/87 the issue of compensation resulting from the said resumption was referred to the Tribunal for determination.

7. 4) On 9/11/87 three applications for directions, one dated 11/9/87 from Claimant and two dated 2/11/87 and 4/11/1987 from Respondent were heard together. Discussion between parties' legal representatives took place and the hearing was, on 11/11/87, brought to a temporary end with the production of two documents:-

a) Formal Admissions (FAs), consisting of paragraphs A, B and C, were signed by Mr. R. Carnwath, Q.C. for and on behalf of Respondent. These were noted down by the Tribunal at Respondent's request.

b) A consent from the parties leading counsel that the said three applications be adjourned sine die with liberty to restore and that the agreement annexed thereto, which was signed by those counsel and contained terms on exchange of documents and supply of required information, be made an order of the Tribunal. This consent was approved by the Tribunal.

8. 5) On 25/2/88 Respondent filed an Amended Formal Admission (AFA) which is in fact a new paragraph in substitution for para. (B) of FAs. The original para. (B) of FAs and its proposed replacement are reproduced below.-

Formal Admissions, paragraph (B)

Any items covered by Heads 2 and 3 not authorized under the Buildings Ordinance or the Crown Lease were "tolerated structures" or, where not, the Respondent acquiesced in their existence and took no enforcement action either under the Buildings Ordinance or the Crown Lease.

Amended Formal Admission -

In respect of any items covered by Heads 2 and 3 not authorized under the Buildings Ordinance or the Crown Lease the Respondent took no enforcement action under either the Buildings Ordinance or the Crown Lease.

9. As a result of the filing of the Claimant took out the said 4th summons of 2/3/88, the subject matter of this hearing, in which it seeks an order that:-

1. The AFA filed by Respondent on 25/2/88 purportedly under Rule 12 of the Lands Tribunal Rules, Cap. 17 (Lands Tribunal Rules) be taken off the Tribunal file on the grounds that that filing is an abuse of process and/or would otherwise tend to prejudice embarrass or delay the fair trial of the claim herein.

2. ............................................

10. Mr. Kat, Respondent's counsel, advances these grounds of argument in support of the amendment to FAs:

(a) FAs and AFA are statements or documents that fall within the ambit of Section 10(6) of Lands Tribunal Ordinance, Cap. 17 (the Ordinance) which says:

" The Tribunal may admit in evidence any statement, document, information or matter, whether or not it would otherwise be admissible in evidence and attach such weight to it as may be appropriate in the circumstances."

(b) Based on (a) above Respondant can, as provided by Lands Tribunal Rules, make amendments to FAs as of right (Rule 12(1)) just as pleadings can be amended pursuant to Order 20/3/1, or on application (Rule 12(3)). These rules and Order are set out below:-

"Rule 12.(1) Subject to paragraph (2) a party may, before the hearing, make an amendment to a document filed or lodged in any proceedings, and make any amendments consequential thereon.

(3) The Tribunal may at any time amend any document upon the application of a party or of its own motion.

Order 20/3(1) "A party may, without the leave of the court, amend any pleading of his once at any time before the pleadings are deemed to be closed and, where he does so, he must serve the amended pleading on the opposite party"."

(c) In addition, the Tribunal is not bound to follow the rigidity of the normal court rules of evidence by virtue of Section 10(5)(a) which reads:-

"The proceedings of the Tribunal shall be conducted with as much informality as is consistent with attaining justice and, for this purpose, the President may give directions as to the manner and form in which proceedings shall be conducted."

(d) Alternatively, the Tribunal may invoke Section 10(1) which: (i) provides a list of specific powers vested in the High Court that can be exercised by the Tribunal and (ii) gives a general authority to the effect that "so far as the Tribunal thinks fit, it may follow the practice and procedure of the High Court in the exercise of its civil jurisdiction".

11. For his part, Mr. Neoh, Claimant's counsel contends, among other things, that:-

(i) the AFF.ought to be taken off the Tribunal file because its filing by Respondent had deprived Claimant of an opportunity to be heard and consequently amounted to an abuse of process;

(ii)     although the High Court has jurisdiction to allow withdrawal of an admission, it is doubtful whether the Tribunal has a similar power;

(iii) even if the Tribunal is empowered to grant withdrawal of an admission, the Respondent should, unless they could put forward cogent reasons, be estopped from withdrawing FAs. Furthermore, it is because FAs form part of an agreement between the parties that Claimant, in consideration of the FAs being made, would not proceed with its application for discovery.

(iv) unless the FAs were withdrawn, there would be two sets of admission in existence at the time of trial of the general issue.

12. In the present case, I endorse both counsel's view that the FAs are evidence. Support of this standpoint is also derived from the following passages in Phipson on Evidence.

Chapter 19 - Paragraph 19-02

"In civil cases, statements made out of court by a party to the proceedings or by any person connected with him by any of the relationships considered in Chapter 20 are admissible in evidence against but not usually in favour of such party".

Chapter 19 -_Paragraph 2-03

"An admission. made by counsel at the trial for the purpose of dispensing with proof has been held to preclude any evidence on the point ("Urquhart v. Butterfield" 37 Ch. D 357, C.A.)

13. As regards the first limb of the summons now before the Tribunal on the removal of document from the Tribunal records it is to be noted that Order 41/6 provides that:-

" The Court may order to be struck out of any affidavit any matter which is scandalous, irrelevant or otherwise oppressive."

Order 41/6/1 goes on to say:-

"If the whole affidavit is ordered to be taken off the file and destroyed, it is the practice in the filing department to keep the affidavit and the Office copy for six months before destroying them; but the Court can and will since it has complete jurisdiction over its own record in a proper case order immediate destruction (Re F. [1913] W.N.4)."

Order 18/19/18 supplements order 41 with this note:

"Apart from all rules and Orders and notwithstanding the addition of para. (1)(d) the Court has an inherent jurisdiction to stay all proceedings before it which are obviously frivolous or vexatious or an abuse of its process (see Reichel v. Magrath (1889) 14 App. Cas. 665.....and removes from its files any matter improperly placed thereon (Nixon v. Loundes [1909] 2 Ir.R.1). And this jurisdiction is in no way affected or diminished by this rule."

14. An abuse of the process, as stated in Halsbury's, 4th Edition, Vol 37, paragraph 434, occurred in the following circumstances:-

"An abuse of the process of the court arises where its process is used, not in good faith and for proper purposes, but as a means of vexation or oppression or for ulterior purposes, or, more simply, where the process is misused."

15. In the present case I hold that since Claimant now has an opportunity to raise its objection to the filing of AF1. the topic of removing that document from the Tribunal file has consequently become academic. Nevertheless, I feel that it may be worthy of note that I should make some remarks on the issue, both on point of fact and matter of procedure:-

(a) the AFA does not belong to the type of document envisaged by law that could be removed from the Tribunal file or destroyed, (Re F. (1913) W.N.4).

(b) although the Registrar of the Tribunal was asked by Claimant not to let Respondent file the AFA, he is under no duty to comply with that request. By contrast, it is his responsibility not to allow a document to be taken off a Tribunal file without an order from the President or Presiding Officer of the Tribunal.

16. As far as the FAs are concerned, I say that since they are in writing, signed and given by the party making them to the Tribunal for registration, they are to all intents and purposes no different from an oral admission uttered by that party and recorded by the Tribunal In those circumstances the, FAs have become part of the Tribunal records and cannot be deemed "a document filed or lodged" within the meaning of Rule 12(1) aforesaid. From this finding I hold that the Tribunal has jurisdiction to consider the question of amendment to FAs in pursuance of Rule 12(3) of Lands Tribunal Rules. For the present purpose an alternative option would appear to be that where a point of practice or procedure is not specifically covered by the Ordinance or the Lands Tribunal Rules, the Tribunal may by virtue of Section 10(1) follow the practice and procedure of the High Court which has provision for amendment to admission made by mistake (Order 20/5 - 8/16).

17. A sudden turn of event that occurred while the hearing was in progress is that on 15/3/88 Respondent applied by way of a summons for an order that, in the event the Tribunal struck out the AFA as not being a document within the provision of Rule 12(1), the FAs be amended pursuant to Rule 12(3) and in terms of the AFA.

18. It is not in dispute that discussion between parties' counsel led to an agreement on 11/11/87 whereby, on the basis of FAs, Claimant would not pursue its application for production of documents by Respondent.

19. However, it seems that the nature and range of documents is now in issue, with Respondent saying that as a result of FAs, discovery in relation to approval of structures on Claimant's site would not be necessary, while Claimant maintains that by that agreement Claimant would refrain from pursuing its application for production by Respondent of documents relevant to matters admitted in FAs.

20. Respondent does not deny that at the said discussion the expression "tolerated structures" was introduced into FAs paragraph (B) by Mr. Kat, their counsel. However, they maintain that he was labouring under a mistaken belief as to its scope, that is to say, that it was used to describe unauthorized structures in the existence of which the relevant department of Government acquiesced. It was subsequent to the agreement of 11/11/87 and while Respondent was preparing proof of evidence that it became apparent to them that the term "tolerated structures", which was not legally defined anywhere, was a term of art restricted to the use by the Housing Department in the context of control of houses on unleased Crown land and was not relevant to control of premises under the Buildings Ordinance. Respondent thus says that the said assertions on "tolerated structures" were relied upon in good faith by their leading and junior counsel in formulating the FAs and that that reliance had given rise to a misunderstanding of facts which would, without amendment, mislead the Tribunal.

21. It appears, from affidavits, that at the discussion which resulted in Respondent making the FAs, Mr. Wood, Claimant's solicitor stated that according to Mr. Roy Leung, Claimant's director, the District Officer Sai Kung had carried out annual visits to the Claimant's site and that that statement might have contributed to the additional term "Respondent's acquiescence to the existence of tolerated structures" in the FAs. Halsbury's Vol. 16 para 1473, p.994 says that the term acquiescence:

"is properly used where a person having a right, and seeing another person about to commit or in the course of committing an act infringing upon that right, stands by in such a manner as really to induce the person committing the act, and' who might otherwise have abstained from it, to believe that he assents to its being committed; a person so standing by cannot afterwards be heard to complain of the act."

22. It has also been said that -

"Acquiescence involved no more than a passive standing by without objecting to a breach of covenant, whereas, by contrast, 'consent' required a positive, affirmative act accepting the breach, such as a written or oral acceptance or even an implied acceptance by conduct."

23. Respondent now argues that the said additional term cannot be substantiated (a) in fact because there is no evidence that the Buildings Ordinance Office or the District Office Sai Kung had knowledge of the unauthorized structures being at Claimant's site (Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd. (1920) 2 All E.R. p.871) and (b) in law under the doctrine of estoppel because the Buildings Ordinance Office is under a statutory duty to issue an Occupation Permit to a building only after the builder has duly complied with the provisions of the Buildings Ordinance or the District Office has to be satisfied that the conditions of Crown Lease are observed, in respect of a structure under their respective control.

24. Authority on performance of a statutory duty, of which parties are of the same mind, can be obtained from this passage of Halsbury's:

"No person can by his conduct or otherwise waive or renounce a right to perform a public duty, or estop himself from insisting that it is right to do so ("Southend-on-sea Corporation v. Hodgson (Wickford) Ltd." (1962) l Q B 416)

25. The principle laid down in Southend-on-sea's case was followed in "Re an application by Ho King-kwan for Judicial Review", Miscellaneous Proceedings No. 385 of 1986 in which May J. held that "the Building Authority had no power to undertake or agree not to enforce Regulations made under the Buildings Ordinance" This decision went to appeal and was confirmed in Civil Appeal No. 61 of 1986.

26. As regards the inclusion, at the insistence of Claimant's leading counsel, of the term that the Respondent took no enforcement action under the Buildings Ordinance or the Crown Lease, Respondent says that that matter arose out of an erroneous assumption by both parties' legal representatives that the relevant authorities knew that the tolerated structures in question were unauthorized but took no action nor intended to take action in respect thereof. Respondent thus places reliance on the decision of "Bill v. Lever Brothers Ltd." (1932) A.C. 161 that where it is to be inferred from the terms of contract or its surrounding circumstances that the consensus has been reached upon the basis of a particular contractual assumption, and that assumption is not true, the contract is avoided.

27. On the issue of lack of enforcement action Respondent chooses to refer to a statement of Mr. Cheng Wei-dart, Government Building Surveyor (annexed to Mr. Wood's affidavit of 7th March 1968) at para. 7 which reads:-

"Between 1968,and august 1975 the Building Ordinance Office's approach towards unauthorized building works was that because of constraints of resources, enforcement would, as a general rule, only be taken in cases where there was a hazard to life and limb."

28. It is advanced on Claimant's behalf, through Mr. Wood's affidavit, that during the said discussion the two counsel for Respondent were under no misapprehension "that they were conceding that such of the structures on the lot, which were neither authorized under the Buildings Ordinance nor the own Lease, were either "tolerated structures" in the sense that their existence has been known to Government and were tolerated, or that the Government had acquiesced in their existence and in both cases acknowledged that no enforcement action had been taken from the time of their erection up to date of resumption."

29. Mr. Neoh, for Claimant, submits that the term "tolerated structures" has prima facie to be construed in its ordinary and natural meaning and that if Respondent seeks to give it a technical construction they should provide evidence as to such usage other than in the context of enforcement under the Buildings Ordinance or the Crown Lease. It is also Claimant's case there was no mistake on Respondent's part and that even if there was, it would not vitiate the FAs.

30. Claimant contends that FAs (paragraph B) is part of a binding contract and therefore cannot be withdrawn by Respondent or set aside by the Tribunal unless there has been fraud, mistake or misrepresentation ("Wong Wai-chun v. Chan Yuet-wah & another" (1976) H.K.L.R. 69 at p.72).

31. So far as Claimant's allegation of acquiescence to the existence of its unauthorized structures is concerned, Mr. Neoh argues that the Buildings Ordinance Office had, even from Respondent's own records, since 1968 caused an inspection of Claimant's canteen once in 1981 by Mr. Tang, its Building Surveyor Mr. Neoh thus says that Mr. Tang is deemed to have knowledge of other buildings on Claimant's site and that that inspection, coupled with the annual visit of the District Officer Sai Kung and that of officers of other Government departments concerning the issue of certificates on machine operation, had established the presumption of knowledge of and acquiescence to the existence of Claimant's unauthorized structures.

32. In the present case there is no dispute that the negotiations in November 1987 of the parties legal advisers had in part led to an understanding which was not included in the written consent jointly put up by the two sides, but took the form of FAs unilaterally signed by Respondent.

33. On this point I believe that Mr. Kat, for Respondent, had been induced into making the FAs that was signed by his leader by his mistaken belief as to the meaning of the term "tolerated structures" as well as by representations by Mr. Wood and Mr. Neoh, from Claimant's side, that (1) Claimant's site had been annually inspected by the District Officer Sai Kung (2) all necessary operation certificates from the relevant departments had been obtained and (3) the Building Authority had a policy since 1975 that no enforcement action would normally have been taken against unauthorized structures which were in existence prior to that policy being implemented.

34. In my view, if FAs were deemed to be a contract or a result of a consent order between the parties as illustrated in "Wong, Wai-chun v.Chan Yuet-wah & another" (1976) H.K.L.R. 69, the Tribunal could not interfere or set them aside. In WONG Wai-chun's case an admission was put forth in the defence and later an amendment was made by consent which included a withdrawal of that admission. It was held that since there was a consent order the court could do nothing about it. However, it was held that "leave to amend will be granted where a slip appears in the pleadings, but not so as to raise a fresh cause of action" ("Clark v.Yorke"(1882) The Weekly Reportar Vol. XXXl p.62) and that an admission made inadvertently may be withdrawn and the pleading amended accordingly ("Hollis v. Burton" (1892) 3 Ch. 226. It can be seen that the Order granting leave to withdraw the admission made in Hollis case was not a consent order, whereas in Wong Wai-chun's case the leave to file an Amended Defence involving the withdrawal of admissions was by consent and so complete was that consent that the Plaintiff's solicitors did not even attend upon the summons.

35. The principle on amending an admission made in error was enunciated by Lord Denning, 61.R. in "H. Clark (Doncaster) Ltd. v. Wilkinson" (1965) 1 All E. R. 934 when he said at p.936:-

"In my opinion it is stated too widely. An admission made by counsel in the course of proceedings can be withdrawn, unless the circumstances are such as to give rise to an estoppel. If the other party has acted to his prejudice on the faith of it, it may not be allowed to be withdrawn, see Clifton (the Ship) (2); but otherwise an admission can be withdrawn. For instance, an admission is often made by error in a pleading. It can be withdrawn if the other party has not been prejudiced, or, indeed, if any prejudice can be cured by compensation in costs. Another illustration is to be found in R.S.C., Ord 17 r.2 (2); under which even a formal admission in a pleading can be withdrawn at any time on such terms as may be just."

"Cases have arisen in which the courts have pronounced a contract void on the ground of mistake. These cases fall generally into two categories. First, "cases in which the parties, though genuinely agreed, have both contracted in the mistaken belief that some fact which lies at the root of the contract is true." This category of mistake is traditionally referred to as "mutual" mistake, for both parties have contracted under the same misapprehension. Secondly, "cases where, although to all outward appearances the parties are agreed, there is in fact no genuine agreement between them, and the law therefore does not regard a contract as having come into existence." This category of mistake is usually known as "unilateral" mistake, for only one of the contracting parties is mistaken, but in principle it makes no difference if both are mistaken so long as they do not share the same mistake. In the event, as noted above, the case is classified as one of mutual mistake."

36. In my view the mistake in the present can also be said to fall within the ambit of the above definition of "mutual mistake".

37. As far as acquiescence is concerned it is defined in Shorter Oxford Dictionary as "silent or passive assent to, or compliance with, proposals or measures". However, before there is assent there should be notice, actual or constructive, of the subject matter. It was said in "Espin v, Pemberton" (1859) 20 Digest 5294 that.-

"Notice of a matter will not be imputed to a party ("Constructive Notice") unless there is "a presumption so strong of the existence of the knowledge, that it cannot be allowed to be rebutted, either from his knowing something which ought to have put him upon further inquiry, or from his wilfully abstaining from inquiry, to avoid notice" "Constructive notice, properly so called, is the knowledge which the courts impute to a person upon a presumption so strong of the existence of the knowledge, that it cannot be allowed to be rebutted, either from his knowing something which ought to have put him upon further inquiry, or from his wilfully abstaining from inquiry, to avoid notice. I should therefore prefer calling the knowledge which a person has, either by himself or through his agent, actual knowledge; or if it is necessary to make a distinction between the knowledge which a person possesses himself, and that which is known to his agent, the latter might be called imputed knowledge (Lord Chelmsford C.).

Espin v. Pemberton (1859) 3 De G&J 547." As regards the expression "ought to know, it was held that it is not enough of itself to fix constructive notice and that the courts are reluctant to extend the doctrine of constructive notice, (See 16 Halsbury (4th Ed.) para. 1326) The dicta in Ware v. Lord Egmont (1854) at 20 Digest 5299 show this."

"Even when a landlord has actual notice of a breach of a term of a lease and takes no action, his consent is not automatically presumed and he is not estopped from relying on that breach. (West Country Cleaners v. Saly [1966] 3 A.E.R. 210). The Respondent "must stand by in such. a manner as really to induce the person committing the wrong and who might otherwise have abstained from it, to believe that he assents to its being committed." (See 16 Halsbury (4th Ed.) para. 1473)."

"Acquiescence in the strict sense implies either that the party acquiescing has abandoned his right, or that he is estopped by his conduct from asserting it (Lightwood, Time Limit on Actions, 1.253) "If a party having a right stands by and sees another dealing with the property in a manner inconsistent with that right, and makes no objection while the act is in progress, he cannot afterwards complain ..... That is the proper sense of the word 'acquiescence'" (per Cottenham L.C. in Duke of Leeds- v. Earl of Amshurst, (1846) 2 Ph. 117, ht p. 247. Acquiescence in this sense is no more than an instance of estoppel by words or conduct (De Bussche v. Alt, (1877) 8 Ch. D. 286), and the essential conditions for its application are thus laid down by Fry L.J: -- "A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights."

38. It is clear that permission must be obtained from the authorities for the erection of certain types of building. In this connection I hold that not only must Claimant have wrongly believed that it had the legal right to construct the unauthorized structures, but Respondent must have known of Claimant's said mistaken belief ("Kammins Ballrooms v. Zenith" (1970) 2 A.E.R. 871 at p.895). Here, I find support from the statement of Cheng Wei-dart, Government Building Surveyor that there is no such policy called "toleration of unauthorized structures" or that he would not take enforcement action. As far as the provision of statutory duty under the Buildings Ordinance is concerned, there is no quarrel that "no body space corporate can be bound by estoppel... to refrain from doing what it is its duty to do..." (Southend on Sea Corporation v. Hodgson [1961) 2 A.E.R. 46). It was also held that ''no person can by his conduct or otherwise waive or renounce a right to perform a public duty, or estop himself from insisting that it is right to do so". See (Commissioners of Customs & Excise v. Hebson-& Blaiber [1953) 2 Lloyds Rep. 382 at 386).

39. The ratio decidendi in the above cases of Southend on Sea Corporation and Commissioners of Customs & Excise has been applied in Hong Kong to the Buildings Ordinance provisions in relation to unauthorized structures: Ho King-kwan [1986] H.K.L.R. 931 (HC); Civil Appeal No. 61 of 1986. Extending the principle in Ho King-kwan's to the present case, I say that Respondent and various relevant authorities are without the power to agree not to enforce the provisions of the Buildings Ordinance or the Crown Lease against the Claimant."

40. I accept that there was an inadvertent mistake on Respondent's part in making the FAs (see Hollis v. Burton referred to earlier) and that Respondent has put up a "convincing and credible explanation of the circumstances in which the FAs were made". (Tse Yuk-tin v. Chee Cheung Ring & Co. Ltd. & another" (1984) H.K.L.R.391).

41. In the light of the foregoing I grant, by virtue of Rule 12(3) of Lands Tribunal Rules, leave to Respondent to amend, which means to withdraw FAs (para. B) and have the AFA substituted therefor.

42. The next question is upon what terms such leave ought to be given?

43. In considering what is fair and just between the parties I must see whether costs of the application ought to be the only term or whether the amendment has caused prejudice that justifies other remedial measures.

44. Claimant says that it relied on FAs to its detriment in that its experts prepared reports on the basis of those admissions, e.g. in valuing property without differientating between authorized and unauthorized buildings and buildings and plants. It cited passages of the reports of the valuers, Messrs. Chesterton Petty and American Appraisal, which say:-

Chesterton Petty

"There is some uncertainty as to whether all of the buildings and structures were authorized. Such uncertainty is quite usual for industrial developments of this type and I do not believe that in practice a purchaser would have adjusted his bid in any way and I have therefore made no adjustment. However if a discount is to be made I do not believe it should exceed 10% of the depreciated replacement cost of the structures concerned."

American Appraisal

"It would appear to me that an intending purchaser of such structures would expect a substantial discount from their 'open market value' to reflect the possibility that notice may be served to demolish them. However, what such discount might be is a subjective guess - based more on common sense and general feeling for values than on any observed market conditions."

45. In addition Claimant maintains that the amendment would cause a delay and hence a loss between the commercial rate that it could have earned and the lower rate of interest that would be paid by Respondent. It therefore applies, as an alternative to its application for the AFA to be taken off the Tribunal file, for an order to the effect that if the Tribunal allows the said AFA to remain in the Tribunal file, then Respondent be ordered to give discovery in terms of Claimant's summons of 11/9/87 but with a reduction in scope, as set out below:-

"The Respondent within 14 days disclose to the Tribunal the existence of any document of the following nature which is within the power of the Respondent to produce and produce to the Tribunal a copy of the same within 28 days and afford to the Claimant an opportunity to examine any such document or copy thereof and to take copies thereof:-

(a) (Not required)

(b) All documents held by the Crown relating to the application for the consents and approvals given to all building works on the resumed land.

(c) All documents held by the Crown relating to the administration of the Special and General Conditions of Grant (save and except demand and payment of Crown rent) of the resumed land, including any amendments to the said Conditions of Grant and/or notices of requirements of the Crown whether oral or written or whether given pursuant to the said Conditions of Grant or relating to the construction of buildings erected or to be erected thereon."

46. For their part Respondent's stand is that, in order to substantiate its claim that the amendment tends to prejudice, embarrass or delay a fair trial, Claimant is required to prove that the prejudice complained of should be grave and would tend to go further than merely prejudicing a fair trial. Respondent further says that both valuers have already considered the effect of lack of approval by the authority for certain structures so that discovery would be of little assistance to the calculation or resolution of compensation.

47. In my judgment, by placing reliance on FAs and thereby not differientating between authorized and unauthorized structures, Claimant has suffered some detriment because one of the ways compensation will be assessed is the risk of enforcement action by the authorities on unauthorized structures. I therefore hold that Claimant ought to be entitled to costs and to discovery which it did not pursue on account of those admissions. However, I am of the view that discovery, as required by Claimant in its summons i.e., "of all documents held by the Crown .....", is too wide in nature because the Crown includes all Government departments, as to make such discovery impractical, if not impossible, of performance. On this aspect, it is noted that Claimant had rejected Respondent's previous offer of discovery that was limited to correspondence and notes of meeting, but not on records of site visits or internal notes of Buildings Ordinance Office and District Office, Sai Kung: In the final approve analysis I approve the terms of amended para. 2 of Claimant's summons of 11/9/87 on discovery but subject to these variations:-

1) In the paragraph "the Respondent within 14 days ......................... to take copies thereof", 21 days and 35 days are to be substituted for 14 days and 28 days.

2)In sub-paragraph (b) "All documents held by the Crown .............. resumed land", the words "The Buildings Ordinance Office, the District Office Sai Kung and its predecessor in title, the office of the District Commissioner of New Territories Administration and the Fire Services Department are to be substituted for the word "the Crown".

3) In sub-paragraph (c) "All documents held by the Crown .................... to be erected thereon", the words "The Buildings Ordinance Office and the District Office Sai Kung and its predecessor in title, the office of the District Commissioner of New Territories Administration" are to besubstituted for the word "the Crown".

To sum up, I make the following order:

(1) Claimant's summons of 2/3/88:

(3)    The question of costs is to be determined at a later date.

Representation:

Mr. Anthony Neoh, instructed by Messrs. McKenna & Co. for Claimant.

Mr. Nigel Kat, instructed by Messrs. Lovell White & Durrant (formerly Messrs. Lovell White & King) for Respondent.