Tsang Shiu Tim Miranda Tsang and Others v. The Government of Hong Kong
Read the full judgment text of DCCJ 1/1970 on BabelCite. This District Court judgment.
1. In these proceedings brought under the Public Reclamation and Works Ordinance, Cap. 113, the two groups of Claimants claim compensation for the extinguishment of their rights resulting from the reclamation in front of a piece of land known as the Remaining Portion of Kowloon Marine Lot No. 57 which adjoins the Yau Ma Tei Typhoon Anchorage. The First Claimants are the registered owners of the land in question. The Second Claimants are a partnership business occupying the three-storeyed godown
Cited by 4 cases
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PUBLIC RECLAMATION AND WORKS COMPENSATION TRIBUNAL, HONG KONG CASE NO. 1 OF 1970 -----------------
----------------- Coram: District Judge Yang, assisted by W.D. Browne, Esq., and P.C. Cotton, Esq., As Assessers. ----------------- DECISION ----------------- 1. In these proceedings brought under the Public Reclamation and Works Ordinance, Cap. 113, the two groups of Claimants claim compensation for the extinguishment of their rights resulting from the reclamation in front of a piece of land known as the Remaining Portion of Kowloon Marine Lot No. 57 which adjoins the Yau Ma Tei Typhoon Anchorage. The First Claimants are the registered owners of the land in question. The Second Claimants are a partnership business occupying the three-storeyed godown thereon as the First Claimants' tenants on a monthly tenancy subject to the Landlord and Tenant Ordinance, Cap. 225. The rental is $4,400 per month. 2. The width of the land measures 103 feet from north to south and abuts on the sea on the west side. The depth measures 158 feet from west to east. The total area is therefore 16,274 square feet, and there is erected from the land a wooden pier stretching some 150 feet into the sea (vide Document 13). The water at that part of the typhoon anchorage is very shallow, largely because of silting. At low tide, about four feet of the seabed measuring from the land towards the sea is completely exposed. Fully loaded barges and lighters drawing about ten feet of water normally sail half way down the length of the pier for unloading, though they are able to get in much nearer at high tide. 3. The Second Claimants carry on business under the style and title of Siu Heong Yuen Godown Company. Their business interests cover three different spheres, namely, import and export, retail, and godown. The first and second business activities are conducted at Nos. 34-36, Hing Lung Street, Hong Kong, whilst the godown business is carried on in the three-storeyed godown referred to above. We are here concerned only with the godown business. 4. The evidence shows that about sixty-five per cent of the goods stored in the godown arrives by sea. Barges, lighters and junks, some of which are equipped with derricks which can reach a distance of fifteen to twenty feet from the vessels, frequently use the pier for loading and unloading. Because of the obvious advantage derived from its proximity to the sea, the Second Claimants are able to command higher storage charges than that chargeable in godowns without direct access to the sea. For rice the charge is 60 cents per bag per month, as compared with 40 cents demanded by inland godowns; for other commodities, the charge is 25 to 30 cents per cubic foot per month as compared with 20 to 23 cents. Customers are prepared to pay these higher charges because the access to the sea obviates the necessity of resorting to road transport for delivery of goods from or onto vessels. Business for the first six months of this year has been very good, and a not unreasonable forecast is that the net profit before tax for the calendar year of 1970 will be somewhere in the region of $260,000. The manager of the Second Claimants estimates that the income for future years will be approximately $240,000 per annum. In my view, this estimate appears to be over optimistic, mainly because a very successful year has been taken as the only basis for the forecast. A more realistic approach is to take the average over a period of say nine years ending 31st December, 1969, as the Government has done, which gives the average net profit before tax at $71,643.94. The average net profit after tax at fifteen per cent is $60,897.35 (vide Document No. 16). 5. This claim arises from the Government's decision to build a major road over the foreshore and seabed immediately in front of the Claimants' land so as to ease the traffic load of Nathan Road. On 28th June, 1968, by a notification in the Gazette in accordance with Section 2 of the Public Reclamation and Works Ordinance, Cap. 113, the proposed reclamation and public works over the foreshore and seabed adjoining the land in question was published (vide Document 3). By a letter dated 2nd August, 1968, the Claimants submitted to the Director of Public Works their objections and claims under Section 2(2)(b) of the same Ordinance. Despite the objections and claims, the Governor-in-Council authorized the proposed reclamation and public works without modifications. The authorization was duly published in the Gazette on 13th March, 1970, thereby resulting in the extinguishment of the Claimants' rights attaching to the foreshore and seabed and rights of access to the sea. The extinguishment of these rights is provided in Section 5, which reads : "Upon publication of the authorization of an undertaking, all public and private rights of navigation or fishing and all public and private rights of access, user, possession or occupation, and all other public or private rights (if any) in, upon or over the Crown foreshore, seabed and land occupied by the undertaking shall be extinguished and cease to exist." The Claimants' claim for compensation is referred to this Tribunal by His Excellency the Governor under Section 6 of the Ordinance. 6. The immediate consequence of the reclamation proposed by Government is that the land in question will no longer enjoy a direct access to the sea. It is contended on behalf of the First Claimants that land with access to the sea is more valuable than that without. The Second Claimants argue that as most of their customers come to them because of the facilities afforded by access to the sea, the absence of such access would result in a loss of business and loss of income. It would also require keener competition with other inland godowns. Greater advertising expenses would therefore have to be incurred so as to attract more customers. And a watchman has to be employed to ensure added security as the godown would be adjoining a street instead of the sea. 7. In this case I have to consider what, if any, were the private rights of the two groups of Claimants which have been extinguished. Mr. Keil, acting for the Government, contends that the First Claimants had no right of access to the sea. It is submitted that in the Crown lease of another piece of land, viz., Kowloon Marine Lot 85 (Document No. 18), specific mention was made of the lessee's rights over the foreshore and seabed, whereas the Crown lease of the land in question (Document No. 1) did not expressly give the First Claimants such rights. Section 12 of the Harbour of Refuge Ordinance, 1909, is mentioned to support the contention that an owner's right of access to the sea must be specifically granted. In this section, such an owner was by statute given the right to compensation by reason of his land's access to the sea being interferred with. He refers also to Section 2 of the Foreshores & Seabed Ordinance, Cap. 127, to support his argument that marine rights, unless specifically granted to a lessee, remain with the Crown. A passage in Halsbury has been cited under the heading of ownership; it reads "The soil of the seashore, and of the bed of estuaries and arms of the sea and of tidal rivers, so far as the tide ebbs and flows, is prima facie vested of common right in the Crown, unless it has passed to a subject by grant or possessory title (Vol. 39 Halsbury, 3rd Edition, para. 775). We are, however, not dealing with ownership but of riparian rights. The following passages taken from Halsbury, in my view, furnish the answer to Mr. Keil's contentions. Paragraph 675 reads :
Paragraph 680 reads :
Paragraph 681 reads :
8. These statements show clearly that the First Claimants as riparian owners had in Common Law an undeniable right of access to the sea. The Second Claimants as their tenants were equally entitled to that right. Mr. Litton, in his able and careful analysis of his case, relies on four authorities to support his contention that the Claimants had a right of access to the sea. 9. In the Att.-Gen. of the Straits Settlement v. Wemyss (1888) 13 App. Cas. 192, it was held that Wemyss by virtue of his tenement as a Crown lessee had the same right of access to the sea as a riparian proprietor to a tidal river. In Lyon v. The Fishmongers' Company (1876) App. Cas. 662, it was held that the right of a riparian owner to the use of the stream does not depend on the ownership of the soil of the stream. The third case cited is Att.-Gen. of Southern Nigeria v. John Holt & Co. (Liverpool). Ltd. (1915) App. Cas 599, where it was held, inter alia, that though the Crown was the owner of the foreshore, the respondent nevertheless had the rights of riparian owners over the foreshore. Lyon v. Fishmongers' Company (supra) was followed in North Shore Railway Co. v. Pion (1889) 14 App. Cas. 612. 10. Similar principles were laid down in Duke of Buccleuch v. Metropolitan Board of Works (1872) 5 L.R. App. Cas. 418. 11. On the authorities, I find that both groups of Claimants had a right of access to the sea and that this right has been extinguished. I must now turn to the question as to whether the Claimants have been or will be injuriously affected by the extinguishment of that right. 12. I begin with the First Claimants. Evidence is given by an expert in land valuation, Mr. de Ville, to the effect that land with direct access to the sea is worth more than land without such access. His assertion is based on a comparison of the rateable values per square foot of buildings erected in the neighbourhood but without direct access to the sea with the rateable value of the First Claimants' godown. The comparison reveals that the godown's rateable value per square foot is fifteen and a half per cent higher than that of the other buildings. Using that as a guide, Mr. de Ville comes to the conclusion that the difference in land value is therefore fifteen and a half per cent. This method of evaluation is in my view as well as that of the Assessors quite unacceptable, for rateable values are not necessarily related to land values. The Government's case is that the value of the land in question will be greatly enhanced when a major road is built in front of it. Before the proposed reclamation (which is due to begin in January, 1971) the land was classified by the Director of Public Works as a Class A site facing one street. On 3rd February, 1970, it was re-classified as a Class B site, which means that when the road is completed, the land will be facing two streets. Mr. de Ville concedes that this re-classification means an increased plot ratio of ten per cent, which in turn leads to an enhancement in the rentable value of the land in question. Mr. Roberts, the acting Senior Estate Surveyor of the Crown Lands Office, says in evidence that whilst it is not the reclamation itself which enhances the land value, the building of a major road will do so. His calculations (Document No. 14) show that in view of the increase of plot ratio, and taking into account the respective maximum development potentials, the value of the land as a Class B site is greater than that as a Class A site. Both assessors agree with Mr. Roberts' formula though they are not in entire agreement with the figures used in the calculations. The Assessors' advice to me, which I accept, is that whatever depreciation in land value due to the loss of access to the sea would be more than compensated by the enhanced value of the land resulting from the road being built on reclamation. 13. In this connection, I follow, with respect, the decision in George Wimpey & Co. Ltd. v. Middlesex County Council (1938) 3 All E.R. 781, the headnote of which reads :
14. My conclusion is further supported by the fact the land is now very much underdeveloped as a godown site. The present use is therefore uneconomical. Valuation of the property should not be based on the site being occupied simply as a godown site. It is not enough to take into account the effect of the reclamation on the land as a site for a godown (The Metropolitan Board of Works v. Howard (1889) T.L.R. 732 (infra)). It is nevessary also to consider the commercially practical uses or other possible uses to which the land may be put. 15. The Government also suggests that the access to the sea is of no value without the pier because of the shallowness of the water there. I will content myself, at this stage, with saying simply that I am unable to accept this proposition, and I will give my reasons for disagreeing when I consider the claim by the Second Claimants. In view of my findings in this and the previous paragraphs it will not be necessary for me to consider this issue in detail as regards the First Claimants. 16. Mr. Litton in his submission on behalf of the Claimants stresses that there is no certainty that a major road will in fact be built in front of their land. He argues that as long ago as 1960 the Governor-in-Council had already approved a recommendation by the Town Planning Board to build the road (vide Document No. 10), but the road up to now has not been constructed. The new plan approved by the Governor-in-Council in 1969 (vide Document No.4) does not render the situation any more certain. He further argues that a potential developer would, because of the 1960 approval, already have taken the major road into account when putting a value on the land, therefore the approval given in 1969 would do nothing to enhance the value further. This contention, attractive though it seems, is based on the false premise that the 1960 approval and the 1969 approval were the same. On the evidence of Mr. Roberts, which is not challenged, authority was not given to the Government in 1960 to reclaim inspite of the approval by the Governor-in-Council, but such authority has been given on 3rd February, 1970 by the Governor-in-Council in respect of the 1969 approval, thereby enabling the Director of Public Works to re-classify the land and build a road in front of it. The certainty lacking in 1960 is therefore found in the authority given to the new plan of 1969. 17. It is further stated that if the land is to be developed for residential purposes by the First Claimants, the seaview and sea-breeze afforded by the site in its present condition will render the site more attractive to residents than a site fronting a major road and possibly high blocks on the opposite side of that road. For this reason, it is argued, the land is now more valuable than it will be after reclamation. However, the table of comparisons produced by Mr. Roberts (Document No. 15) shows that some fourteen residential flats built on a comparable site adjacent to the Vehicular Ferry Pier in Jordan Road, Kowloon were sold at prices unrelated to such amenities as seaview and sea-breeze. 18. From the reasons stated above it is clear that the First Claimants have not been and will not be, injuriously affected by the extinguishment of their right. I would therefore dismiss their claim for compensation. 19. I now turn to the Second Claimants. Their commercial success in the godown business is largely attributable to the facilities offered by the pier. It is not entirely clear what, if any, are the legal rights of the Second Claimants respecting the pier, which forms the subject matter of an agreement to erect and maintain a temporary pier (Document No. 2), made between the Director of Public Works and Mr. Tsang Shiu Tim, one of the First Claimants and a partner of the Second Claimants. There is no evidence indicating that the Second Claimants are parties to any agreement giving them a legal right to occupy or use the pier. It would appear that Mr. Tsang entered into the agreement in his personal capacity and not as a partner of the Second Claimants. 20. Clause 1 of the agreement reads:
21. Clause 5 reads :
22. Legally speaking the Director of Public Works is of course quite entitled to terminate this agreement by giving Mr. Tsang Shiu Tim one month's notice, in which case the Second Claimants will have to seek other arrangements for loading and unloading. The Government maintains that because of the shallowness of the water there, the Claimants' access to the sea is valueless without the pier. This is however not entirely true, because by dredging the seabed, barges and junks and other vessels may well be enabled to come right up to the seawall. Or pontoons may be constructed, or the vessels may be installed with derricks capable of stretching a greater distance. All these alternatives are feasible and, according to the evidence of Mr. Roberts (which I accept) unlikely to be disallowed by the Government. It is therefore not beyond the realm of possibility that the Government would, if they should ever find it necessary to terminate the agreement with Mr. Tsang, permit some suitable alternative whereby the Claimants' access to the sea would be preserved. For this reason, I hold that the Second Claimants' right of access to the sea is not valueless. Consequently, the decision in Watson v. Secretary of State for Air (1954) 1 WLR 1477, cited by Mr. Keil does not apply in the present case. 23. Mr. Keil submits that the Second Claimants' interest is merely that of a monthly tenancy protected by the Landlord & Tenant Ordinance, but the demised premises may be excluded from that Ordinance by the payment of compensation ordered by the Tenancy Tribunal, in which case the amount of compensation payable will be the same with or without an access to the sea. It is therefore argued that the Second Claimants' claim is not one for loss of value to the land but interference of trade, that the Second Claimants' alleged loss of business and loss of income are unrelated to his interest in the land and as such these losses are not losses for which compensation is payable. In the course of his submission, he refers to Metropolitan Board of Works v. McCarthy (1875) 7 LR 243. 24. In that case the claimant was a lessee or occupier of a house in close proximity to a draw-dock which opened into the Thames. The house had two highways in front of it, the one highway being a street, and the other immediately beyond and abutting upon the street, being a highway by water, i.e. the Thames. The highway by water was taken away from him - the highway by land remained. He had no private right to the use of the dock, except as a member of the public; but his premises being in close proximity to it, his use of it for the purposes of his trade was very considerable. The dock was entirely destroyed by the works of the embankment along the foreshore of the Thames, carried out by the Metropolitan Board of Works under the Thames Embankment Acts. It was held that the claimant was entitled to compensation. 25. Whilst this was an action on public rights, the principles laid down therein are equally applicable in a case where private rights are affected. There Lord Cairns, L.C., said (at p.252) that to become entitled to compensation, the act done in carrying out the public works must be an act that would have given rise to a right of action if the works had not been authorized by statute. In the present case, there is no suggestion that either the First or the Second Claimants would not have had the rights of action described. And the same principle was followed by Judge Huggins (as he then was) in Li Ling Shi (No. 2) v. The Government of Hong Kong (1964) D.C.L.R. 428. Lord Cairns went on to hold (at p.253) that the embankment works caused permanent injury to the property in question, by whomsoever, or for whatsoever purpose, that the property may be occupied. He also adopted the test formulated by counsel for the claimant, and said (at p. 253) :
26. Lord Chelmsford observed (at p. 258) that this case was "clearly distinguishable" from R. v. Metropolitan Board of Works (1869) 4 L.R. 358. There the occupier of premises near the Thames had been accustomed to exercise a public right of drawing water from the river, and to use a right of way or access to the river for that purpose, and also to resort to and use a public draw dock for loading and unloading barges. In the execution of works authorized by the Thames Embankment Act, the defendants caused an embankment to be erected, by which the access to the river was practically cut off, and the access to the dock by barges was attended with difficulty and danger. It was held that the damage complained of was one for which the occupier of the premises was not entitled to compensation, that the injury was of a personal nature, the right interfered with being one which he possessed in common with the public, though, living near, he exercised it more frequently than others. Lord Che??msford held that that case was properly decided, as there was nothing to show that the rights obstructed were in any peculiar manner connected with the claimant's premises nor was there any finding that the premises were by the obstruction diminished in value. McCarthy's premises, however, abutted upon a highway, and his access from his premises to the river Thames, and from the river to his premises was by means of this highway, which was partly land and partly water. The Metropolitan Board of Works narrowed the highway by destroying that part of it which consisted of the dock and which was farthest from his premises, and by this narrowing of the highway by the distruction of the dock his premises were permanently damaged and diminished in value. With great deference and humility I venture to suggest that the difference between R. v. Metropolitan Board of Works and McCarthy's Case is perhaps more apparent than real though it has been suggested that Mellor, J., in the earlier case might probably have been influenced by the fact that the places from which the water was taken, and to which the goods were sent, were sufficiently distant from the premises of the claimant as to make it difficult to show what was the amount of injury he had sustained. In the circumstances now under consideration - in the light of the Claimants' direct access to the sea - the facts of the present case are more akin to McCarthy's Case than R. v. Metropolitan Board of Works. 27. It might be mentioned in passing that the case does not fall within the decision in Ricket v. The Metropolitan Railway Company (1867) 2 L.R. 175, where it was held that the claimant was not entitled to compensation as there was only a temporary interruption to his trade so that the claim was not a claim for injury to the property at all, but one in respect of loss suffered in carrying on a trade. 28. According to Mr. Litton's submission the Second Claimants are not claiming compensation for loss of business and loss of income. The injury to their interest is interference with their right of access to the sea. The basis of the claim, as he rightly points out, should therefore not be confused with the methods of calculating the damages flowing from the loss of their right of access to the sea. The damages flowing from such loss are the loss of business and loss of income. 29. I would resolve this very difficult problem by relying on the judgment of Lord Herschell in the House of Lords' case of The Metropolitan Board of Works v. Howard (1889) TLR 732 (supra). Howard was the tenant of a fully-licensed publichouse in Bridge Street, Fulham, some 250 feet distant from the old Putney Bridge.Bridge Street was the main street on the Middlesex side of the Thames leading to the old Putney Bridge. The Metropolitan Board of Works built a new bridge across the Thames at Putney, a short distance higher up the river, and made a new thoroughfare on the Middlesex side leading to the new bridge. The old bridge was then closed, and Bridge Street only led to the water, and in consequence the traffic which formerly went along Bridge Street past Howard's publichouse, was now directed at a point before his house was reached, passed along the new thoroughfare and so over the new bridge. Evidence was produced by Howard that in consequence of the diversion of the traffic the trade of the publichouse greatly diminished. It was contended that Howard's claim was based on a loss of profits of his trade which could not be the subject for compensation, the only subject for compensation being depreciation in the value of the premises. Denman, J., gave judgment for the plaintiff and the judgment was affirmed by the Court of Appeal as well as the House of Lords. It does not appear in the report that McCarthy's Case (supra) was referred to in Lord Herschell's judgment (in which Lord FitzGerald and Lord Macnaghten concurred). The judgment as reported is very short and for the purpose of these proceedings important enough to warrant citing in full :
30. It is clear from this decision that there must have been an injurious affection of the land, a deterioration in the value of it, and not a mere personal injury, though connected with the enjoyment of the land. Here the loss of access to the sea can hardly justify a finding that by reason of the taking away of the access, the land, as a land, is lessened in value. Indeed, it will result in an enhancement in value. In Howard's Case, the court was able to find that there was a decrease in the value of the house. Here there is no evidence that the house will diminish in value because of the reclamation. Accordingly I must reach the conclusion that the Second Claimants are also not entitled to compensation. 31. It might be desirable, in case I was wrong in reaching the above conclusion, to state my findings on the Second Claimants' loss of profits, and the compensation I would have awarded should they be entitled to it. The Senior Treasury Accountant, Mr. Blenkinsop, submits his computation (vide Document No. 17) based on the Second Claimants' evidence and their trading for the years 1961 to 1969, and arrives at the figure of $41,748 as the Second Claimants' annual loss of profits. Mr. Litton concedes that the method of computation is correct but is nevertheless unable to accept the result because only nine years of trading have been taken account. 32. There have been further submissions on matters such as capitalization and Minkmam's formula of computing damages. It has also been said that any compensation assessed by this Tribunal should be reduced by the amount of profits tax payable (West Suffolk County Council v. W. Rought Ltd. (1956) 3 All E.R. 216; British Transport Commission v. Gourley (1955) 3 All E.R. 796). 33. Fortunately my Assessors' expert advice relieves me of the need to consider these questions and also the questions relating to Mr. Blenkinsop's computation. The Assessors advance the following proposition, which I accept: 34. The Second Claimants occupy the premises under the protection of the Landlord and Tenant Ordinance at a very concessional rental of $4,400 per month, a figure which is substantially less than the true rental value of the premises as they stand. Were the premises to be removed from the provisions of the Ordinance or the Ordinance amended or annulled, the landlords would undoubtedly be able to charge a rental of over $8,000 per month. The value of the Second Claimants' interest in the property with access to the sea is therefore the capitalised value of the difference between the controlled rent now being paid and the true rental value. They consider that the true rental value of the godown building amounts to $8,137 per month based on a rental of 25 cents for the ground floor, 15 cents for the first floor and 10 cents for the second floor. This equates to $97,644 per annum which they have capitalised at eleven per cent over five years, the period of the remainder of the Crown lease at its present Crown Rent. This results in a capital value of $361,283. They also consider that the true rental value of the premises without sea access would be less and would amount to $6,509 per month based on a rental of 20 cents for the ground floor, 10 cents for the first floor and 10 cents for the second floor. This equates to $78,108 per annum which they have capitalised at the same figure as before, that is eleven per cent over five years giving a capital value of $288,999. The difference between the two capitalised figures for the premises with and without sea access of $72,283 is the measure of damage to the Second Claimants' interest. 35. The following table prepared by them shows:-
36. Summary
37. Capitalise at 11% over 5 years (x 3.7 years purchase) = $72,283 38. Both Mr. Litton and Mr. Keil have been invited to make further submissions on the table and to call further evidence if they so wished. Mr. Litton's comment is that capitalization at eleven per cent is a little ungenerous and suggests eight per cent, though he concedes that it is impossible to criticize the method of calculation. 39. Mr. Keil recalls Mr. Roberts, who says that (i) the Second Claimants do not have a tenancy for five years, the continuation of which being dependent on the "philanthropy" of the First Claimants who are losing a lot of money in potential income, (ii) that the rent of $4,400 may be reduced by twenty per cent by the Tenancy Tribunal when access to the sea is lost, in which event the Second Claimants' loss per annum would be further reduced, (iii) that the rentals per square foot under (1) and (2) of the table, i.e. 50 cents and 40 cents respectively, are only an estimate and the difference has no basis without the pier, and (iv) that capitalization at twelve per cent is more realistic. On Mr. Roberts' point (i), I would say that the Second Claimants have occupied the godown for a long time and would probably continue in occupation for many years if it were not for the reclamation, at least until the expiry of the First Claimants' Crown lease, when a very substantial increase in the Crown rent will be made, rendering it difficult if not impossible, for them not to increase the rent payable by the Second Claimants. The five-year period is therefore a reasonable estimate. On point (ii), I would say that this is a speculation unsupported by evidence. On point (iii), I would say that no evidence has been adduced, though the Government has been invited to do so, to rebut the Assessors' estimate. Finally on point (iv), again there is no evidence to rebut the Assessors' estimate. 40. For the forgoing reasons and on the Assessor's computation the compensation for the Second Claimants loss of profits which I would have assessed and awarded is $72,283.00. 41. Costs against the First and Second Claimants in favour of the Government to be taxed by the Registrar. Certificate for Counsel. 42. I would also like to place on record my gratitude and indebtedness to my Assessors, who have given me their invaluable assistance in patiently explaining to me the different methods of valuations and calculations in simple and non-technical language, thereby making it much easier for me to understand the problem.
Representation: Henty Litton Q.C. inst. by for ...(illegible) & Co. for both Cl. Keil, C.C. for Respt. |
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