The Hong Kong School of Motoring Ltd v. Commissioner of Rating and Valuation
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LDRA 418 OF 2004 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION RATING APPEAL Application No. 418 of 2004 _______________ BETWEEN
_______________ Coram: Mr. W. K. LO, Member of the Lands Tribunal Dates of Hearing: 29, 30 and 31 January 2007, 1 February 2007 and 20 April 2007 Date of Judgment: 22 May 2007 ________________ J U D G M E N T ________________ Background 1.This is an appeal rating made by the Appellant against the Respondent in respect of the rateable value of the appeal tenement situated at 138 Sha Tin Wai Road, Siu Lek Yuen, Shatin (“the Appeal Tenement”) for the year of assessment 2004/2005. In recent years, The Hong Kong School of Motoring (“the Appellant”), has been operating and using the Appeal Tenement as a driving school. The Appellant, a private enterprise, is the major driving school in Hong Kong. It operates two other driving schools in Wong Chuk Hang and Yuen Long, apart from this one in Shatin. Before its operation in the Appeal Tenement, it used to operate another driving school in Tai Wai of Shatin, which site was required by the Government for other uses. 2.By a Short Term Tenancy Agreement dated 20 August 1999 STT No. 1061 (STT 1061), awarded as a result of an open tender, the Government leased the land area of the Appeal Tenement to the Appellant for a term of 5 years commencing on 17 May 1999 at the yearly rent of $7,080,000 for the following purposes: -
3.It was not in dispute that the land area of the Appeal Tenement was, prior to occupation by the Appellant, used as a fee-paying open car park. After the commencement of STT 1061, the Appellant was responsible for the construction of the presently existing Buildings and Improvements before the Tenement could actually be put to the intended use as a driving school, plus ancillary uses. The bulk of the construction works of the Appeal Tenement completed by the end of 2000 after which the Appellant commenced its operation as a driving school. The tenancy STT 1061 was renewed by a Supplementary Agreement dated 9 December 2004 for a period of 5 years from 17 May 2004 at a renewed rent of $5,430,000 per annum. History of assessments of the Appeal Tenement 4.The Appeal Tenement has the following assessments since the year of assessment 2000/2001: -
5.It was not in dispute that the first demand note for rates was not received by the Appellant until 11 July 2003, which covered the rateable values of Appeal Tenement for the years 2000/2001 to 2002/2003. After some negotiation, the rateable values for those years were altered as above. The Appellant stated that they had intended to object the assessment for the year 2003/2004 but had missed the deadline for the lodging of the appeal. 6.The rateable value of the Appeal Tenement for the year 2004/2005 was assessed at $7,560,000. It was gazetted in the Valuation List under G.N. 1826 dated 19 March 2004. The Appellant submitted a proposal under the Rating Ordinance, Cap. 116 (“the Ordinance”) on 18 May 2004. The Commissioner of Rating and Valuation (“the Respondent”) confirmed on 30 November 2004 that the assessment should remain the same as a result of which the Appellant appealed to this Tribunal on 15 December 2004 on the ground that the rateable value is “unreasonable and overwhelming (sic) high”. Summary of valuation by the experts called by the parties 7.The Appellant called Mr. Wong Yung Shing (“Mr. Wong”) as the expert witness. Mr. Wong prepared a valuation report dated 1 December 2005, which concluded that the rateable value of the Appeal Tenement should be $4,142,000. Mr. Wong’s report (pages 49a to 122 of the trial bundle) together with his revised valuation of $3,860,000, at Exhibit A1, was adopted by the Appellant as its expert evidence. 8.The Respondent called for the evidence of Ms. Hui Chiu Chi (“Ms. Hui”), a valuation surveyor of Rating and Valuation Department as the expert witness. She prepared a valuation report dated 1 December 2005, which was adopted as the expert evidence of the Respondent. The report provided 3 valuations: Valuation (I), her primary valuation and Valuations (II) and (III), her check valuations. During the hearing, she produced a revised valuation, namely Valuation (IV) that was marked as Exhibit R1, which was based on her primary valuation, Valuation (I) but the costs and professional fees figures were based on the figures shown in Mr. Wong’s valuation report. She also added that she would abandon the use of Valuations (II) and (III) as check valuations. She concluded that the rateable value of the Appeal Tenement for the year 2004/2005, at $7,596,000, was well supported by her Valuation (IV), which gave a valuation figure of $10,320,000. 9.I have compiled in the following Table 2 the different valuations prepared by the two experts. Table 2 - Summary of valuation by the experts for different portions of the Appeal Tenement
Facts not in dispute 10.The following facts were not in dispute: -
Costs of construction and professional fees for the construction of the Buildings and Improvements 11.Before the hearing of appeal, the Respondent did not have any information from the Appellant on the exact costs of construction and professional fees on the Buildings and Improvements of the Appeal Tenement. The Respondent decided to rely on (a) the figures shown in the Building Department’s statistical returns in estimating the costs of construction, and (b) the opinion of Ms. Hui, the expert surveyor in estimating the professional fees incurred by the Appellant. However, after receiving the valuation report prepared by Mr. Wong, the Respondent became aware of the actual cost figures as reported by Mr. Wong, who had in turn obtained these figures from the Appellant. Ms. Hui decided to adopt these figures in her revised primary valuation, i.e. her Valuation (IV) as shown in Exhibit R1. 12.During the hearing, there were further disclosures from the Appellant’s factual witness, Mr. Lo Kwok Ying (“Mr. Lo”) on these costs and professional fees figures. The Respondent did not object to the use of the revised figures. Subsequently, in responding to my direction made on 1 February 2007 that “the Appellant do file to the Tribunal and serve on the Respondent the documents supporting the professional fees on construction expenditure by 7 February 2007”, the solicitor for the Appellant wrote to the Tribunal producing a number of documents in support of the professional fees incurred by the Appellant in the construction of the Buildings and Improvements of the Appeal Tenement. Therefore, based on the latest information provided by the Appellant, the construction costs and professional fees expended by the Appellant are as follows: -
13.As a result of these changes in the figures of construction costs and professional fees of the various Buildings and Improvements completed on the subject site, there will be consequential minor changes in the valuations of Mr. Wong and Ms. Hui. I have set out the revised valuations in Tables 4 and 5 below, using the revised figures of the above Table 3 and otherwise the original valuation inputs of Mr. Wong and Ms. Hui as shown in their respective valuations at Exhibits A1 and R1.
Valuation Method 14.It was not in dispute that there was no direct rental evidence of similar driving school tenement comprising land, buildings and improvements forming a single entity as at the date of valuation. Both parties agreed that the rateable value of the Appeal Tenement should be the summation of (1) the annual rental value of the land element arrived at by the “Comparison Method” of valuation and (2) the annual rental value of the buildings and improvements element arrived at by the “Contractor’s Method” of valuation. Summary of valuations of the two experts 15.Using the same methodology adopted by the two experts, I have set out below their estimates of the rateable values for the Appeal Tenement, as follows: - Table 6 - Summary of valuation by the two experts for different portions of the Appeal Tenement
* The rateable value of the Appeal Tenement for the year 2004/2005 was assessed at $7,560,000 which is the subject matter of this appeal The relevant provisions of the Rating Ordinance (Cap. 116) 16.Section 7 of the Rating Ordinance reads as: -
17.Also, Section 7A(4) of the Rating Ordinance reads as: -
Issues between the parties 18.The parties have the following main issues that have to be determined by this Tribunal: -
19.As we can see from Table 6, the difference in the valuation of Mr. Wong (at $6,843,099) (before he allowed for an overall adjustment of –43% for his so-called special factors) and the rateable value of the Appeal Tenement for 2004/2005 (at $7,560,000) is only about 10%. So, the bulk of the very large difference between the valuations of the two experts really rests on the adjustments for the special factors identified by Mr. Wong! Also, the estimated annual rents for the land element of the Appeal Tenement between Mr. Wong and Ms. Hui differ by about 70%. This is due to the difference in the choice of comparable rent(s). Rental value of the subject site – for use as a driving school or as an open car park 20.The Respondent submitted that by virtue of the statutory provisions of section 7A(4) of the Ordinance, the Respondent must value the Appeal Tenement as at the relevant date, i.e. 1 October 2003 on the assumption that the Appeal Tenement was in the same existing state as at 1 April 2004, i.e., the effective date of valuation.” Therefore, the Respondent submitted that, “the Appeal Tenement must be assessed in the actual subsisting use as a driving school and not in other possible uses as suggested by Mr. Wong.” 21.In Mr. Wong’s valuation report, which was confirmed by his oral testimony, there are several reasons for the adoption of the alternative use as an open fee-paying car park as to be the highest and best use of the subject site for which an assessment of the annual rent, using the Comparison Method of valuation, is required as part of the formula for computing the rateable value of the Appeal Tenement, the other part being the assessment of the annual rent of the Buildings and Improvements by the Contractor’s Method of valuation. 22.Mr. Wong stated that the comparables having the most similar mode and character of occupation as the subject site were the comparable lettings of open fee-paying car parks he identified and set out in Appendix V of his valuation report. During the hearing, he said that firstly, the subject site was used for the similar purpose of open car parking before it was put to the present use as a driving school. Secondly, when the business of the driving school closed at night, the cars used by the driving school were actually parked there. Hence, the mode of occupation would be very much similar to the open fee-paying car parks. Thirdly, he opined that whilst the subject site could be put to various alternative beneficial uses such as fee-paying car park, fleas market, carnival site, and market gardening, the best alternative use for the subject site was for the use as fee-paying car park. 23.Therefore, in his valuation, Mr. Wong took the rental evidence of the open car park comparables and adjusted the differences between the comparables and the subject site in terms of various factors of adjustments. 24.On the other hand, Ms. Hui accepted that there was no rental evidence of land for use as a driving school at or very close to the relevant date. She instead set out in Appendix S of her Report dated 1 December 2005 the comparable rents of 2 other driving schools (Comparable L2 – STT SHX 13 at Ocean Park Road and Comparable L3 – STT 1215 at Kwong Sin Street) as well as the actual rents of the Subject, STT 1061, i.e. both the rent of $590,000 p.m. (or $ 7,080,000 p.a.) from 17 May 1999 and the renewed rent of $452,500 p.m. (or $5,430,000 p.a.) from 17 May 2004. Having considered the rental evidence of the subject site and the secondary evidence of Comparables L2 and L3, Ms. Hui was of the opinion that the actual rent passing of the subject site covered by the Supplementary Agreement of STT 1061 provided the best evidence of rental value for the subject site as at the relevant valuation date. Ms. Hui was also of the opinion that the rent for land for use as a driving school has been stable between the date of renewal of rent for STT 1061 (i.e. 19 May 2004) and the relevant valuation date of the subject site (i.e. 1 October 2003) so that no time adjustment would be warranted. There was also no evidence that the renewed rent was not at market level. Therefore, Ms. Hui opined that the actual rent of the subject site under the Supplementary Agreement should be adopted as it provided the best evidence of market rental value of the land element of the Appeal Tenement as at the relevant valuation date. 25.In the Respondent’s final written submission, the Respondent cited a number of authorities in support of its contention that it was wrong in law to assess the Appeal Tenement not on the basis of its actual subsisting use as a driving school but on other alternative uses, such as the open car parking use as suggested by Mr. Wong. The Appellant did not attempt to reply the Respondent at all on this legal point in the final submission. 26.The Respondent cited that in Fir Mill, Ltd. v. Royton U.D.C. [1960] 7 RRC 171 at p. 185, the English Lands Tribunal said,
27.The Respondent also cited the case of Scottish & Newcastle Retail Ltd. And another v. Williams (VO) [2001] EWCA Civ 185 in which the Court of Appeal in England decided that the Lands Tribunal was plainly right in law to recognise that the “mode or category of occupation” was a material factor in valuation for rating purposes, confirming that the “rebus sic stantibus” rule had a second limb, user, in addition to its first limb, physical condition. 28.The Respondent further submitted that in the absence of other direct rental evidence of land for the premises in question, it is possible to regard the present occupier (i.e. the Appellant) as a possible hypothetical tenant, one who is willing to pay the actual rent for the land element of the Appeal Tenement (Ho Tang-fat v Commissioner of Rating and Valuation [1978] HKLTLR 287 at 296refers). 29.Hence, the Respondent submitted that, in the absence of direct comparable properties, properties which are dissimilar in type, quality, construction, size, location can only be considered if they are clearly within the same mode or character of occupation of the premises in question (Sotheby Park Bernet and Co. v Perrett (VO) and Westminister City Council referenced LVC/91/1983 at 155 refers). On the contrary, the Respondent added, if dissimilar properties not within the same mode or character of occupation of the premises in question were to be relied upon in assessing the rateable value of the Appeal Tenement, there would be unfairness to other ratepayers (Chilton v. Price (VO) referenced LVC/117/1998 refers). 30.Lastly, the Respondent pointed out that even Mr. Wong had admitted that if the restrictive covenants of STT 1061 were removed, the Appellant would have paid a higher actual rent for the subject site. The Respondent therefore suggested that this admission by Mr. Wong would not support his earlier argument that the actual rent of the land of the Appeal Tenement should not be considered as relevant evidence in assessing the market rent of the said land. 31.I agree with the Respondent that the mode of occupation of the subject site as a driving school was different from that of the open fee-paying car parks. We cannot say that since the subject site was previously used for open car parking purpose in the past, it necessarily follows that its present mode of occupation is the same as that of its previous use. Also, we cannot say that since the use of the subject site over-night was the same as the open car parks, the mode of occupation of the subject site is the same as the open car parks. Otherwise, for instance, all ground floor shop premises could be treated as to be in the same mode of occupation as storage premises. 32.After considering all the evidence adduced by the two experts and the authorities cited by the Respondent, I decide that it is inappropriate to use the comparable rents of open car parking sites for assessing the annual rent of the land element of the Appeal Tenement. In the absence of better direct rental evidence from other comparable sites used for the same use as a driving school and in the absence of any evidence that the renewed rent of the subject site under the Supplementary Agreement was not negotiated at arms length between the actual landlord and tenant (who could be regarded as possible hypothetical landlord and tenant under the rating hypotheses), and finally, because of the closeness of the time of renewal and the relevant valuation date, I decide that it is far better to use the actual rent of the renewed STT 1062 (at $5,430,000) as the basis of the rental value of the land element of the Appeal Tenement. The various stages of the Contractor’s Method of valuation 33.The Appellant submitted that, in Ryde on Rating and the Council Tax, it has become the practice to apply the following 5 stages in the Contractor’s Method of valuation: -
34.Obviously, the above stages (3) and (4) do not apply to the land element in the present case because it is common ground that the rental value of the land is valued by the Comparison Method. 35.The Appellant further submitted that according to Ryde on Rating and the Council Tax, there is also “a possible stage 6” for adjustments made on other factors. Mr. Leung, counsel for the Appellant, in his final written submission did not elaborate whether the present case falls into the category of cases that warrants “a possible stage 6”. He also did not elaborate further in his oral submission on 20 April 2007. However, in case the reference to “a possible stage 6” in his written submission may mean that this authoritative work on rating lends support to Mr. Wong’s valuation, which includes very substantial adjustments for 3 types of “special factors” (i.e. –30% for “high risk of flying-object accidents”, -8% for restrictive covenants due to Clauses 38 & 42 of the STT 1061 and –5% for restrictive covenants due to some other clauses of the STT 1061), I find that I should cite the passage under [564] of Ryde on Rating and the Council Tax below: -
36.However, I do not find that the facts in the present case are even remotely close to the case cited above and decided by the Lands Tribunal and the Court of Appeal in England. Adjustments for “special factors” by Mr. Wong 37.Mr. Wong allowed for several adjustments before arriving at what he considered to be the effective annual rent for the purpose of determining the rateable value of the Appeal Tenement. His calculations at Exhibit A1 (as revised to reflect the latest construction costs and professional fees figures) are summed up below: -
The special factor of “high risk of flying-object accidents” 38.Mr. Wong saw it fit to adjust his estimated annual market rent of the Appeal Tenement downwards by as much as 30% to account for the special factor of “high risk of flying-object accidents” even though he cited neither legal nor factual basis for the said adjustments. Mr. Wong still stuck to his estimate after being challenged by the Respondent in the hearing. 39.Firstly, he actually agreed upon cross- examination that there was no legal basis for his downward adjustment of 30%. Counsel for the Appellant also did not cite any authority in support of Mr. Wong’s adjustment other than a reference to “a possible stage 6” in the contractor’s method of Valuation as set out in Ryde on Rating and the Council Tax. 40.Secondly, the factual evidence from Mr. Lo confirmed that the flyovers above the subject site were in existence prior to the commencement of the original tenancy term of STT 1061. Also, Mr. Lo agreed that the location of the subject site was suitable for use as the Appellant’s driving school. 41.Thirdly, the tenancy term of STT 1061 had been renewed for another term of 5 years commencing from 17 May 2004 with the renewed rent agreed, at the reduced sum of $5,430,000 per annum, between the Government as the landlord and the Appellant as the tenant. The renewed rent should have, in the absence of any evidence to the contrary, reflected all the terms of the renewed tenancy for the subject site, including the location of the subject site and its inherent characteristics – for example, the risks of incidents of falling objects from the flyovers and the users of the flyers. The Appellant adduced no evidence that the renewed rent was not negotiated at arms length between the Government and the Appellant. 42.Fourthly, Mr. Lo gave evidence that there was an increase in the number of such incidents in the past, and the corresponding increase in the number of complaints made to the relevant Government department by the Appellant. He also mentioned that the increase in the insurance levy payable by the Appellant might have been caused by the increase in the number of such incidents. There was, however, no evidence at all as to the amount of any such increase in the insurance levy. Certainly, I do not think that it could be close to a small fraction of the adjustment of 30% (or $6,943,099 x 30%, equivalent to $2,052,930 per annum in quantum) allowed for by Mr. Wong in his valuation. 43.Finally, I disagree with Mr. Wong that he could use his example of the reduction in the market price of a domestic unit in Kornhill, Quarry Bay, that was blighted by the incident of a murder in the unit back in 1999, to support his adopting 30% for this adjustment factor. Since the adjustment figure is so substantial, it should not simply be based on the vague recollection of Mr. Wong’s memory as to what happened to the market price of the said flat. Even if one were to base on the downward adjustment to a domestic flat that suffered from the disadvantage of having a murder taking place within the flat, one should have collected a larger sample size of similar transactions before one could arrive at an adjustment factor that could be applied, for instance, to a similar flat if the owner wishes to assess its open market value. Such evidence of transactions should have been known to real estate agents and valuation surveyors familiar with particular sectors of the domestic market. Therefore, it would not be difficult to find such evidence of values. Yet, Mr. Wong failed to undertake any such exercise in the present case but instead, suggested to adopt an adjustment of 30% that was based on his memory. 44.More importantly, there are other logical reasons that no adjustment at all should be given for this so-called “special factor”. As rightly submitted by the Respondent, since the Appeal Tenement is non-domestic in use, “any information relating to domestic property market sales shall play no place in assessing the rateable value, i.e., the annual rent of a non-domestic property”. This distinction between domestic property and non-domestic property is, for example, one of the reasons that motorists still drive on the same highway (e.g. Tuen Mun Highway) even if there have been several fatal accidents in the past. Buying and living in a domestic property or learning to drive in a driving school are quite different experience in life. People react differently when they know that there was an accident in either of this property. Moreover, the Appellant did not have any such similar “experience” of having a fatal accident that resembled remotely a murder as in the case cited by Mr. Wong. For these reasons, it is inappropriate to compare the hitherto possible problem of incidents of falling object for the subject site with that faced by an owner or a prospective purchaser of a domestic flat caused by the actual existence of a murder in the flat in the past. 45.Therefore, in summing up, I decide to reject Mr. Wong’s estimate of a downward adjustment of 30% entirely. The special factor of “restrictive covenant” of Clauses 38 & 42 of STT 1061 46.Mr. Wong also opined that because of the existence of Clauses 38 & 42 in STT 1061, a downward adjustment should be made to his estimated annual market rent before arriving at the rateable value for the Appeal Tenement. 47.The rationale of Mr. Wong is that STT 1061 contains these restrictive covenants, which grant to the Government (i) the rights of entry to the subject site for repairing the drainage reserve and the underground facilities (Clause 38) and (ii) the rights of entry to the Cairn’s Tunnel Company for the maintenance and repair of the overhead highways. These covenants restrict the use of the whole subject site by the Appellant at all times during the duration of the STT as a result of which the Appellant ought to make a certain deduction to account for these drawbacks. This he estimated to be -8%. 48.The Respondent in the final written submission cited a few passages by HH Judge Cruden from Lau Kit Lau Mutual Aid Committee and Commissioner of Rating and Valuation [1984] HKLTR 31 in support of her contention: -
49.The Respondent submitted that although the Appellant was one of the possible hypothetical tenants of the Appeal Tenement, it was plainly wrong in law to assume that “the additional liability, financial or not, of the Appellant under the STT” was the same as the hypothetical tenant’s liability under Section 7 of the Ordinance. The Respondent pointed out that even Mr. Wong had agreed upon cross-examination that under the Ordinance, there would be no need to stipulate in the hypothetical tenancy for the Appeal Tenement that the hypothetical tenant undertook not to erect structures on a tenement (such as what was stipulated under Clause 38 of STT 1061). So, there is simply no basis for Mr. Wong to assume, again for the same hypothetical tenancy for the Appeal Tenement, that his assessed market rent should be adjusted further downward to reflect the onerous requirements of Clause 38 etc. of the STT 1061. 50.To conclude, in the subject valuation exercise, the Appeal Tenement should be valued according to the provisions of the Ordinance. Therefore, I must restrict myself to the assumptions under the hypothetical tenancy but not to jump from the rating assumptions to the open market valuation assumptions that Mr. Wong appeared to have done in his valuation. 51.The Appellant did not reply the above submissions on law by the Respondent in the final submission. There was no legal challenge to the Respondent’s submissions. Under the circumstances, I decide in favour of the Respondent that there were both neither legal nor factual basis for Mr. Wong to allow for this downward adjustment for the “existence” of Clauses 38 & 42 in STT 1061. The special factor of “restrictive covenants” of Clauses 7, 14, 22, 29, 37, 39, 45, 47, 49, 50, 51 and 52 of STT 1061 52.Similarly, Mr. Wong opined the downward adjustment of 5% should be given for the existence of the other restrictive covenants (i.e. Clauses 7, 14, 22, 29, 37, 39, 45, 47, 49, 50, 51 and 52). 53.Mr. Wong explained that by virtue of the existence of these restrictive covenants, the hypothetical tenant would have to spend extra money, which sums would otherwise have to be borne by the Government as the landlord. 54.However, on cross examination, even Mr. Wong himself agreed that under section 7(2) of the Rating Ordinance, the hypothetical tenant did not have to accept such terms in the hypothetical tenancy. 55.Therefore, for reasons similar to the special factor of “restrictive covenant” of Clause 38 and 42, I decide in favour of the Respondent and do not allow the adjustment as suggested by Mr. Wong. Other minor issues between the two experts 56.Apart from the two main issues of the valuation of the land element and whether discounts should be allowed for various special factors before arriving at the rateable value of the Appeal Tenement, several minor issues still existed between the two experts. These include several items of adjustments (i.e. the finance charges, the indexing to adjust for the timing of the expenditures and the discounting for depreciation) that have to be made in order to arrive at the “effective capital value” of the Buildings and Improvements, as well as the choice of the de-capitalization rate in the Contractor’s Method of valuation. These differences are detailed below.
57.These differences account for only a small percentage of the overall difference in the valuation estimates arrived at by the two experts. However, for completeness of this Judgment, I will cover these minor issues below. Finance charges for construction costs and professional fees 58.Mr. Wong did not allow for any finance charges for the construction costs and professional fees. The rationale for this was that the Appellant actually did not need to resort to borrowing to finance the construction. 59.On the other hand, Ms. Hui included in her valuation the finance charges for the construction costs and professional fees. As rightly submitted by the Respondent, the Tribunal has to consider the situation of the hypothetical tenancy of the Appeal Tenement. Therefore, the actual financial situation of the actual occupier does not remove the need to provide for this item of cost. In the circumstances, I agree to use the figures as estimated by Ms. Hui. Indexing for the replacement costs of the Buildings and Improvements to October 2003, the relevant valuation date 60.Similarly, I find that it was plainly wrong in Mr. Wong’s valuation that he did not consider it necessary to allow for the differences between the dates of completion of the various Buildings and Improvement works and the relevant valuation date for the Appeal Tenement. Technically, Ms. Hui’s basis of indexing the costs to October 2003 was correct. I therefore also agree to use the figures as estimated by Ms. Hui. Discount allowance for depreciation 61.Both experts agreed that it would be appropriate to allow for deprecation for different types of Buildings and Improvements but they did not agree on the quantum. There was no evidence from either expert except that they had different opinion. Having considered the evidence of both experts in this case as a whole, I find that Ms. Hui’s evidence is more credible. I therefore also agree to use her estimates. De-capitalization rate adopted in arriving at the annual rent of the Buildings and Improvements 62.Similarly, both experts agreed to apply a de-capitalization rate to the Depreciated Replacement Costs of the Buildings and Improvements before arriving at the annual rental value figures. Mr. Wong adopted 10% for the Buildings and Improvements completed in August 2000, 20% for the Petrol Filling Station completed in August 2001 and 10% of the Shelter for motor cycle mandatory courses center completed in mid 2004 whilst Ms. Hui chose a uniform 12.9% for all the Buildings and Improvements. Mr. Wong failed to identify even the rental information of the three to four industrial properties from which he computed the yield that formed the basis of his 10% de-capitalization rate. On the other hand, Ms. Hui gave evidence that her source of information was from her department’s “Hong Kong Property Review”. In the circumstances, I agree to adopt Ms. Hui’s figures. Summary of findings for these minor issues between the two experts 63.To summarise, I find in favour of the Respondent for all these minor issues. Conclusion 64.For reasons stated above, I find in favour of the Respondent. The Appellant failed to show that the rateable value of the Appeal Tenement was not assessed in accordance with the provisions of the Rating Ordinance. I therefore make the following orders: - Orders The Appeal by the Appellant be dismissed. I also give the costs order nisi that the Appellant shall bear the costs of the Appeal, to be taxed at District Court scale, if not agreed, and with Certificate for counsel. The costs order shall become absolute if no application is made by either party to vary the order within 14 days from today.
Mr. Richard Leung, instructed by M/S T. H. Wong & Co., for the Appellant. Mdm. Jess Y. C. CHAN, Government Counsel for the Department of Justice, for the Respondent. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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