Tin Kung Investment Ltd v. Secretary for Transport

LDRW000016A/2001

LDRW 16/2001

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Railways Ordinance Application No. LDRW 16 of 2001

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Coram: H.H. Judge CHOW, Presiding Officer, sitting with Member C.Y. LAM, Member of Lands Tribunal

Dates of Hearing: 19 to 23 April 2004, 22 May 2004

Date of Judgment: 29 June 2004

Date of Decision: 27 August 2004

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D E C I S I O N

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The Background

1.The judgement in respect of the above application was handed down on 29th June 2004. The Respondent was required under an order in the judgement to pay the Applicant compensation in the amount of $4,683,000. for the resumption of the Applicant's two properties known as Unit A and B on the Upper Ground Floor, Block B of Wah Kai Industrial Centre in Tsuen Wan. The Applicant is not satisfied with the decision made and has lodged an application under section 11A of the Lands Tribunal Ordinance, Cap.17, for a review.

Grounds for Review

2.The application for review is made on a number of grounds, that is, the Tribunal in deciding the value of the properties resumed, had (a) failed to take into account the previous decisions of the Lands Tribunal in respect of the Secretary for Transport v. Poon Chi Man and Ho Sai Mui, LDMR 42 of 2000, Secretary for Transport v. Wong Bun LDRW 214 of 2001 and Secretary for Transport v. Leung Ka Tong and Leung Pun Ching Hang Cindy LDRW 13 of 2001, (b) failed to make use of the Investment Method advocated by the Applicant as a check for the selection of comparables and the final result of valuation, (c) failed to make use of the information in the Sale Brochure of Wah Kai Industrial Centre in determining the difference in values of higher floor and ground floor [or lower floor] industrial units, (d) erred in holding that Comparable (2) and (3) were not out of line but Comparable (6) was, and (e) erred in holding that the unit value of the two properties was the same no matter whether the two properties were sold in two separate units or as a combined one.

3.Apart from the above grounds for which the Respondent has given its submission [together with its expert witness's comment from valuation point of view], the Applicant disclosed in court that it had identified new comparable suitable for valuation purpose, for which its expert witness had analysed and provided the Respondent with the analysis on 3rd August 2004. The Applicant agreed that it was a sheer inadvertence on the part of its expert witness that this comparable was omitted from the original valuation. Taking the opportunity of the review, the Applicant had also adduced further evidence to support its arguments in respect of the Investment Method and the ratio of values for higher and lower floor industrial units.

The Opposition to Review

4.The Respondent objected to admitting the new comparable and other evidence on review. Should the comparable concerned and other evidence be admitted, it might constitute the introduction of new evidence and therefore a second bite of the cherry. The Respondent cautioned the Tribunal to exercise its discretion carefully so as not to disseminate the wrong message that litigation party's legal advisers/valuers need not be vigilant before reaching the stage of review. The Respondent reminded that the three limbs of Ladd v Marshall [1954] 1 W.L.R. (applied by HH Judge Cruden in China Light & Power v Commissioner of Rating and Valuation Department [1997] 4 HKC 500) ought to be adopted to test the admissibility of the new comparable evidence. These are: -

(a) The evidence could not have been obtained with reasonable diligence for use at the trial,

(b) The further evidence is such that, if given, it would not probably have an important influence on the result of the case, though it need not be decisive and

(c) The evidence is such as is presumably to be believed

5.The Respondent also dismissed the new evidence related to the Investment Method and used to establish the ratio of values for higher and lower floor industrial units of help to prove the Applicant's case.

Tribunal's Analysis

6.The new comparable is known as Units 11 and 12 on the 2/F of Sun Fung Centre which is the same building where Comparable (3) and 1(d) are housed. From the floor plan [Annex B of the Valuation Report dated 3rd August 2004] provided, the new comparable does seem to be a property unsuitable for retail or car repairing or the like purposes.

7.Based on the particulars provided by the Applicant in regard to the ceiling height and loading capacity, we noted that the ceiling height of the new comparable is the same as Comparable 1(d). The adjustment for this new comparable in this respect is similar to Comparable 1(d) The loading capacity is quoted not in pound per square foot as was done in the original valuation report but in a different system. Presumably, the new comparable is on the same floor of Comparable 1(d), the loading capacity should be the same. The adjustment made in this aspect is therefore acceptable.

8.The adjustment for building age is also acceptable as it is similar to those made for Comparable (3) and 1(d). The adjustment for size is not much departing from the norm adopted by the Tribunal but may need to be refined at a later stage. The adjustment for time appears in line with the same done for other comparables in the previous valuations of the two parties.

9.The resultant value after adjustment should be $12,734 per sq. m. but was amended in court as $11,846 per sq. m. The details as to how the latter value is derived has not been provided but be it $12,734 or $11,846, this should prima facie justify a re-think of the adjudged fair market value in respect of the properties resumed. Of course the final decision is subject to the Respondent's findings and views yet to be given. In the absence of such findings and views, we have to appraise, for the purpose of the "Ladd v Marshall" Test, the new comparable evidence on the face of the details given and in the manner as has been done.

10.We are not prepared to tackle other new evidence, particularly, those related to the Investment Method and the ratio of values for the higher and lower floor industrial units at this stage [when the Respondent has not yet given its findings and opinion]. The Applicant had emphasized in the trial for its application of 22nd September 2001 and the review on 9th August 2004 that these valuation methods are checks to the Direct Comparison Method used in the earlier trial. If the new comparable is not useful and cannot satisfy the second limb of the "Ladd v Marshall" Test, these two valuation methods cannot be the substitute of the Direct Comparison Method in the event of four comparables being available. In fact, it has never been the Applicant's argument that the two valuation methods above mentioned are more appropriate than the Direct Comparison Method in the present application. If the new comparable evidence is considered admissible, the Respondent will then give its full findings and views [not just for the new comparable but others, too] after investigation. By then, the Tribunal will be given the full picture of all issues concerned and in the position to adjudge for the whole case.

The "Ladd v Marshall" Test

11.In the trial for the application dated 22nd September 2001, the Applicant's expert witness (i.e. AW) had produced a large number of comparables, out of which he had selected the suitable ones for valuation. For each of the comparable selected, AW had to research into the Land Registry records and the relevant building plans to ascertain the title history, establish the relationship between the buyer and vendor [that is to ascertain whether it is a connected transaction] and calculate the unit price.

12.Apart from these, he had attempted to prove his arguments by the use of various valuation methods that are not found in the valuation of the Respondent's expert witness (i.e. RW). His work is no doubt not perfect, particularly, in his understanding regarding the premium payable for retail potential, the same for loading capacity and ceiling height and the implication of transportation cost. These, nevertheless, are not proof that he was not diligent. With such diligence overall, he still failed to identify the new comparable and include it in his original valuation. His failure therefore might be a mere omission sometimes out of a diligent man's control or a sheer bad luck that has nothing to do with his diligence.

13.In the earlier part of this judgement, we have pointed out that we certainly need the Respondent's findings and views before we can have the full picture of the issues involved but on the face of the details provided and the adjustments made in respect of the new comparable, the valuation result would highly likely be influenced. As such, the second limb of the Test is also satisfied.

Conclusion

14.We are concerned with the implication of giving the Applicant a second bite of the cherry. We are also concerned that the justice in the present case cannot be up-held because some useful evidence is barred from being disclosed. In this premise, we order that the Applicant be allowed to submit the new comparable evidence and other evidence contained in its valuation report of 3rd August 2004. The Respondent should be given sufficient time to prepare its findings and views in respect of the new evidence. Leave is hereby granted to the Respondent for filing of these findings and views [if any] with this Tribunal and to the other party within 21 days from the date hereof. The Assistant Registrar of the Lands Tribunal is to liaise and fix with the two parties the appropriate date(s) for the remaining part of the review hearing.

Representation:

Mr. Simon LUI instructed by M/S Simon C.W. Yung & Co., for the Applicant, present

Mr. Nelson MIU, Senior Counsel instructed by Secretary for Justice, for the Respondent, present