King Prosper Trading Ltd v. Urban Renewal Authority

HCAL56/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 56 OF 2009

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Before : Hon Poon J in Court

Dates of Hearing : 22-23 December 2009 and 2-3 September 2010

Date of Judgment : 17 December 2010

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J U D G M E N T

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A. TWO QUESTIONS OF LAW

1.This application for judicial review raised two questions of law :

(1) Whether the decision made by the Urban Renewal Authority (“URA”) refusing to purchase a property for the purpose of implementing a re-development scheme under the Urban Renewal Authority Ordinance, Cap.563 (“the Ordinance”), because upon legal advice it is not satisfied that the vendor has a good title, is amenable to judicial review. This question arose for the first time for the court’s determination since the Ordinance came into force in May 2001.

(2) Whether once an owner having the exclusive right to possession of a specified part of a building in multiple co-ownership disposed of all his undivided shares, that exclusive right would become extinguished and revert to all the co-owners. A line of cases[1] has consistently answered the question in the affirmative. But the applicant here, King Prosper Trading Limited (“King Prosper”), contends that as a result of the recent decision by the Court of Final Appeal in Kung Ming Tak Tong Co. Ltd v Park Solid Enterprises Ltd (2008) 11 HKCFAR 403, this line of authorities should not be followed.

2.The present proceedings arose in this way.

B. BACKGROUND

3.The Kwun Tong Town Centre is one of the urban areas identified by URA to be in need of comprehensive re-development.  On 30 March 2007, URA published in the Government Gazette GN2085/2007 a “Notification of Commencement of the Kwun Tong Town Centre—Main Site Development Scheme by the Urban Renewal Authority”. Draft development scheme plans were then submitted and approved by the Town Planning Board.  On 15 July 2008, the Chief Executive in Council approved the draft scheme plans.  URA then proceeded to acquire the properties within the affected areas for the purpose of implementing the re-development scheme.

4.One of the affected areas is Yue Man Square where Mido Mansion is situated[2].  Developed in the 1960s, Mido Mansion is a 6-storey mixed commercial/residential building (from the ground to fifth floors).  Part of the building is used as a cinema, which extends from the ground to the fifth floors.  The rest of the building consists of shops on the ground floor and residential units on the upper floors.  Access of the upper floors and the roof is by way of staircases.  These proceedings concern Shop Nos.2, 6-11 (“Property 1”) and New Shop 3A and 3B (“Property 2”) on the ground floor and the roof and the external wall (“Property 3”).

5.King Prosper is the registered owner of Property 1, 2 and 3, having acquired them on 18 January 2005.  Fairwood Fast Food Limited (“Fairwood”) is King Prosper’s monthly tenant of Property 1 and 2 and runs a fast food restaurant there.  In fact, it had been renting the Properties from King Prosper’s predecessors-in-title since December 1984.

6.By two letters dated 29 December 2008, URA offered to King Prosper on a subject to contract basis to purchase Property 1 with occupancy status described as “wholly tenanted” for the market price of HK$62,458,000 plus allowance of HK$6,246,000 totalling HK$68,704,000; and Property 3 with occupancy status described as “vacant” for the market price of HK$1,058,000 plus allowance of HK$106,000 totalling HK$1,164,000.  URA refused to purchase the Property 1 and 2 together or King Prosper’s interest in Property 1 and 2 as a whole or Property 2 for the reason that King Prosper had failed to show a good title to Property 2.  By a letter dated 26 March 2009, URA varied the original terms of offer in respect of Property 1 by imposing two additional conditions, namely, that King Prosper would be required to deliver vacant possession of Property 1 and that the existing occupier of Property 2, that is, Fairwood, would have to vacate Property 2 upon completion. 

7.So effectively, URA had decided to refuse to make any offer to King Prosper for the acquisition of Property 1 and 2 or its interest in them as a whole (“Decision A”); and to impose as part of the conditions of its offer to King Prosper that Property 1 and 2 as a whole is required to be reduced to a state of vacant possession (“Decision B”).

8.URA so decided because it took the view that King Prosper did not have a good title to Property 2.  While accepting that King Prosper had good title to Property 1, URA asked for delivery of vacant possession of Property 1 and requiring King Prosper to procure Fairwood to vacate Property 2[3] :

“… so as to avoid any risk of litigation (whether commenced by Fairwood or other owners asserting their rights over Property (2) or liability if Property (2) was in fact a common right of way. The tenancy agreement between the Applicant and Fairwood covers both Property (1) and Property (2). If the URA acquires Property (1) subject to the said tenancy and other owners who have a right of way over Property (2) assert their rights over Property (2), the URA would not be able to give quiet enjoyment and exclusive possession of Property (2) to Fairwood and would be exposed to potential claims by Fairwood.”

9.Further correspondence between the parties’ solicitors ensued but to no avail. Eventually, no sale and purchase was concluded for Property 1 or Property 2 individually or collectively.

10.On 3 April 2009, King Prosper signed and returned to URA an acceptance form duly accepting the offer for Property 3.  However, on 6 May 2009, URA verbally informed King Prosper that it would not proceed with the acquisition because it took the view that King Prosper did not have a good title to Property 3 (“Decision C”).

C. GROUNDS FOR JUDICIAL REVIEW

11.In the Form 86A, King Prosper relied on the following grounds of challenge.

12.First, Decision A is in breach of URA’s duty to commence the process of negotiation for acquisition of Property interests in properties affected by a development scheme in that :

(1) it is based on URA’s erroneous view that King Prosper did not have good title to Property 2; or

(2) if King Prosper does not have a good title to Property 2, URA had wrongly failed to take into account of the alternatively scenario that it has in any event acquired a possessory title to Property 2.

(3) the quality of title to Property interests would affect the price thereof, and it is wrong and against the principles of natural justice for URA, who takes in interest in the outcome, to act as a judge in its own cause in pre-judging the title of King Prosper rather than leaving it to be decided by the court;

(4) in pre-judging title of King Prosper, URA unfairly and unlawfully pre-empts its rights to compensation in accordance with the terms of URA’s policies, thus depriving King Prosper of its entitlement to compensation (more generous than that on resumption) in accordance with URA’s policies;

(5) URA had wrongly failed to take into account that King Prosper would suffer serious prejudice : premises in the vicinity of Property 1 and 2 would soon become vacant at one go as a result of URA’s one-off acquisition policy in implementing the development scheme; and such very act of URA would seriously undermine the market value of Property 1 and 2 as a retail shop and Property 3 as non-domestic property by the time of resumption (“the First Ground”).

13.Second, Decision A is in breach of URA’s duty to acquire property interests affected by the development scheme through reasonable negotiations with the respective owners without resort to resumption (necessitated in cases of bad title and it being not possible to negotiate or conclude acquisition agreements with the owners concerned) in that :

(1) it wrongly failed to take into account that the question of title (other than for obvious bad title), in the case of disagreement, ought not be a bar to URA’s performance of its duty to commence negotiations with King Prosper by making an offer to it with different prices and allowances applicable to different scenarios and to proceed to the stage of a formal agreement for sale and purchase; and

(2) it wrongly ignored that the question of possible defective title or quality of title ought to be determined by the court after the parties have entered into a binding agreement for sale and purchase by way of a vendor-purchaser’s summons in the usual way (“the Second Ground”).

14.Third, Decision B is wrongful in that :

(1) it is ultra vires because URA does not have the power to compel King Prosper to alter the nature of its reversionary interest in Property 1 and Property 2 by requiring it to terminate its existing monthly tenancy of Fairwood and hence convert its Property interest in them into an interest in possession;

(2) it is mala fide because it harbours an unlawful or improper intention of defeating Fairwood’s accrued entitlement, as a business tenant-operation, to ex-gratia allowances under URA’s policies and it would contravene URA’s policies and unlawfully avoid URA’s public duty to compensate business tenant-operators according to the terms of its policies (“the Third Ground”).

15.Fourth, Decision B is wrongful in that it would unfairly and unlawfully deprive King Prosper of its right to payment of rent between the time when vacant possession of Property 1 and 2 is to be obtained by it to meet URA’s requirement and the completion date of the sale of Property 1 and 2 to URA (“the Fourth Ground”).

16.Fifth, Decision B is wrongful in that it would unfairly and unlawfully impose on King Prosper the risks as particularized (“the Fifth Ground”).

17.Sixth, Decision C is based on URA’s erroneous view that King Prosper does not have a good title to Property 3.  If King Prosper does not have a good title, URA had failed to take into account the alternative scenario that King Prosper has in any event acquired a possessory title to Property 3 (“the Sixth Ground”).

18.Finally, the Decisions are otherwise Wednesbury unreasonable (“the Seventh Ground”).

19.The breadth of the grounds of challenge has been narrowed by the evidence and submissions presented before me.  The Third Ground alleged mala fide against URA.  That is flatly denied by URA[4].  King Prosper has adduced no evidence to substantiate its allegation or to counter URA’s denial.  The challenge based on mala fide or bad faith on the part of URA must fail.  Further, the Sixth Ground alleged that King Prosper had acquired a possessory title to Property 3.  But as will be seen in a moment, the main thrust of the submissions of Mr Chan, SC, for King Prosper, is that King Prosper has a good title to Property 2 and 3 or in any event a possessory title to Property 2.  He made no submission that King Prosper has a possessory title to Property 3.  The Sixth Ground is accordingly refined.

20.King Prosper sought declarations as to title of Property 1, 2 and 3; an order of certiorari to quash Decision A, B and C and an order of mandamus to compel URA to (a) make an offer and negotiate with King Prosper for the purchase of Property 1 and 2 and (b) proceed with the purchase of Property 3.

D. URA’S POSITION

21.URA contended that :

(1) The Decisions are not amenable to judicial review as they are essentially commercial transactions albeit undertaken by a statutory body;

(2) URA has no obligation to purchase Property 2 and Property 3 because King Prosper’s title is defective or doubtful, or it has not demonstrated that it has a good title, or URA reasonably comes to the view, based on legal advice, that its title is defective or doubtful;

(3) in respect of Property 2, King Prosper has failed to show that it has a good possessory title against the other co-owners of the building, and in any event URA has no obligation to purchase a mere possessory title; and

(4) the relief sought is not proper relief that could or should be granted by the court in an application for judicial review against URA.

E. TWO MAIN ISSUES

22.The parties’ contentions boiled down to two main issues.

23.First, whether the Decisions are amenable to judicial review.  This is precisely the first question of law that I have identified in Part A.

24.Second, whether King Prosper has a good title to Property 2 and Property 3. A number of subsidiary but important issues on title emerged, which I will address in Parts G to J.  It is in the context of the submissions on title that the second question of law referred to in Part A arose.

25.I will dispose of the two main issues and then return to deal with the outstanding grounds of challenge.  I first look at the question of amenability.

F. AMENABILITY

F.1. The principles

26.It is trite that not every decision made by a statutory or public body is amenable to judicial review.  The court will exercise its supervisory jurisdiction in judicial review only if the decision falls within the public law domain.  How to determine amenability is the subject matter of a considerable volume of case law developed in recent years[5]. The principles derived from the authorities may be stated as follows.

27.First, the source of the body’s power in making the decision remains a relevant consideration and may, depending on the circumstances, provide a good starting point for the enquiry into the question of amenability.  Indeed sometimes the source of power alone may determine amenability : see Lee Shing Yue Construction Co. Ltd v Director of Architectural Services & Another [2001] 1 HKLRD 715, per Hartmann J (as he then was) at p.727F-G.

28.Second, the court is not confined to considering the source of the body’s power alone but also looks to the nature of the function being exercised by that body when making the decision under challenge.  If it is a public function, then the decision will be susceptible to judicial review : see R v Panel on Take-overs and Mergers, ex p Datafin Plc [1987] 1 QB 815.

29.Third, where the decision being challenged is in reality a commercial decision, then it is not amenable to judicial review in the absence of fraud, corruption, bad faith or breach of law : Matteograssi SpA v The Airport Authority [1998] 2 HKLRD 213, Ngo Kee Construction Co. Ltd v Hong Kong Housing Authority [2001] 1 HKC 493, Lee Shing Yue Construction Co. Ltd v Director of Architectural Services & Another [2001] 1 HKLRD 715.

30.Fourth, the mere presence of some public element may not be sufficient to render the decision a public law one.  For a public body, like the government, is expected to exercise its powers and discretions in the public interest and for the public’s benefit : Anderson Asphalt Ltd v Secretary for Justice [2009] 3 HKLRD 215, per A. Cheung J at para. 40.  The mere presence of some public element may not be sufficient to render the decision a public law decision.  The crucial question is whether some additional public elements of sufficient weight are present in the decision-making process to render the decision a public one : Anderson Asphalt Ltd, ibid, at para. 57(k).  See also De Smith’s Judicial Review, 6^th Edition, para. 3-060 at p.140.

31.Fifth, what is sufficient is a matter of fact and degree, depending on individual cases.  No hard and fast rule can be laid down.  In a borderline case, it is very much a matter of overall impression and one of degree : Anderson Asphalt Ltd, ibid, at para. 57(e) and (l).

32.With these principles in mind, I now consider if the Decisions are amenable to judicial review.

F.2. If the Decisions are amenable

33.By virtue of the Decisions, URA exercised its discretion not to purchase Property 1-3.  To trace the source of such discretion and to properly understand its nature, a closer look of the relevant provisions in the Ordinance, which created URA, and URA’s acquisition policy is necessary.

34.URA is established for the purpose of carrying out urban renewal and connected purposes : see the title of the Ordinance.  It replaced the Land Development Corporation as the body corporate established by statute having the responsibility of improving the standard of housing and the built environment of Hong Kong by undertaking, encouraging, promoting and facilitating urban renewal : section 5(a) of the Ordinance.  One of URA’s purposes is to improve the standard of housing and the built environment of Hong Kong and the layout of built-up areas by replacing old and dilapidated areas with new development which is properly planned and, where appropriate, provided with adequate transport and other infrastructure and community facilities : section 5(b) of the Ordinance.

35.Section 6(1) of the Ordinance enables URA to do anything which is expedient for or conducive or incidental to the attainment of the purposes declared in or permitted or assigned under section 5 and to exercise that power so as to improve the standard of housing and built environment of Hong Kong.  In addition to such general power, URA is specifically empowered by section 6(2)(c) to :

“… purchase or otherwise acquire and hold land of any description in Hong Kong for the purpose of … undertaking development …”

36.When URA proposes to implement a re-development project by way of a development scheme, section 25(3) of the Ordinance prescribes the contents of the scheme thus :

“A development scheme shall contain such matters as the Authority considers relevant and shall –

…

(b) set out how the Authority intends that the development scheme will be implemented, including whether implementation will be by the Authority alone or the Authority in association with another person and in relation to land within the boundaries of the development scheme, what portion of the land is owned or leased by the Authority and what arrangements have been made or are contemplated by the Authority for the acquisition of any land not so owned or leased;

…”

37.As already seen above, URA may purchase a property within the scheme area under section 6(2)(c).  Or it may apply to the Secretary for Development requesting him to recommend to the Chief Executive in Council for resumption pursuant to the Lands Resumption Ordinance, Cap.124 : section 29(1) of the Ordinance.  Thus acquisition of a property for the purpose of implementing a development scheme may be by way of a sale and purchase agreement between the owner and URA or through resumption by the government.

38.To exercise its power under section 6(2)(c) responsibly, URA must, by necessary implication, have the discretion to or not to purchase a property. After all, it has a statutory duty to exercise due care and diligence in the handling of its finances under section 10(4) of the Ordinance.  And in deciding whether to purchase or not, URA must give due regard to and act in accordance with prudent commercial principles[6].

39.Although the discretion whether to purchase a property affected by a development scheme is implied in the Ordinance, it does not determine conclusively if the discretion is a public law one.  That brings me to the nature of the discretion.

40.The discretion whether to purchase should be viewed in the wider context of URA’s acquisition policy.  Briefly stated, under the policy, URA will first attempt to purchase a property affected by a development scheme by agreement with the owner.  The price that URA offers is essentially based on the market value with an additional ex-gratia payment.  If the attempt fails, URA will apply for resumption as a last resort.

41.The acquisition policy is detailed in URA’s paper entitled “Urban Renewal Authority Acquisition Policy and Related Matters”, which was presented to the Legislative Council Panel on Development dated 20 November 2007.  The more pertinent parts are reproduced below :

“II. CURRENT URA ACQUISITION POLICY

2. The URA’s acquisition policies are based on the Government’s resumption policy which was debated and agreed by the Legislative Council’s Finance Committee, after considerable discussion. However, URA’s policies include more generous incentives than Government’s resumption policy, such as an ex-gratia Incidental Costs Allowance (ICA), so as to encourage early acceptance of URA’s offers.

…

5. The policies applicable to non-domestic owners and tenants are based on the Market Values (MV) and [the Rateable Values] of their respective premises. Business owner-operators receive compensation equal to the MV plus the higher of either 35% x MV or 4 x RV. Alternatively, owner-operators can make Business Loss Claims (BLC) in lieu of the above mentioned ex-gratia compensation. Business landlords receive compensation of the MV plus the higher of either 10% x MV or 1RV. Business tenant-operators receive compensation of either BLC or 3RV.

…

III. RESPONSES TO QUESTIONS

a) Whether apart from the standard cash compensation offers, URA would consider other options of acquisition offers for affected property owners and tenants

7. URA’s cash compensation policies are well tried and tested, generally well accepted, effective, fair and some would say generous, as well as being flexible, providing freedom of choice and being in line with Government policies and market practices.

8. Nevertheless, URA does keep its overall policies under review and does, through its extensive community engagement activities, listen to the views which it receives from the community in this regard, especially from those directly affected by its redevelopment projects and key stakeholders. These have included calls to help property owners to maintain social networks, to help owners meet their relocation costs, to help tenants with special relocation needs, to help maintain the local characters of certain neighbourhoods, and to help alleviate the disruption caused to local businesses.

9. On 19 November 2007, the URA announced a new package of enhancement policies for the benefit of residents and business operators affected by its redevelopment projects. These new initiatives, which were designed under the existing policy framework, respond to aspirations and concerns of the affected residents and the community. They have three important objectives, namely, to help retain the social networks of residents as much as practicable, to assist long-time business operators in re-establishing themselves in the locality and to preserve retail trades that are considered to have a special character in a district. The enhancement package comprises :

…

(iii) additional ex-gratia business allowance for business operators; and

…

12. The third enhancement policy, in the form of an additional payment of ex-gratia business allowance (EGBA) is designed to enhance the overall amount payable to all businesses operating out of non-domestic properties within a redevelopment project area i.e. owner-operators and tenant-operators. This new allowance is payable in addition to the existing compensation whereby owner-operators receive cash payment equivalent to the MV of their properties plus the higher of either 35% x MV or 4 RV of their properties, and tenant-operators receive cash payment of 3 RV. EGBA will be paid at a rate of 0.1 times the RV per year for a maximum of 30 years so that a business with 30 years’ history or more will enjoy a maximum of three times the RV. The maximum amount of allowance payable is capped at $500,000. To ensure that businesses operators occupying small units or with a not-so-long history would also benefit to some extent, the policy provides a minimum allowance of $70,000 to any eligible business operator.

…

14. These enhancements have been devised in response to the community’s changing needs and aspirations, taking into account existing practical and resources constraints. They have been introduced on the basis of the compensation policy for land resumption approved by the Legislative Council’s Finance Committee in 2001. In this context, the 2001 policy, which has been tried and proven effective in many redevelopment projects in the past six years, must remain as the URA’s fundamental policy.

…

e) Whether URA would always resort to invoking the Lands Resumption Ordinance for acquisition of properties in implementing redevelopment projects; if not, what are the relevant considerations

23. URA has to apply for resumption as its last resort in cases where not all of the affected property interests can be acquired through reasonable negotiation by URA with their respective owners. Reasons for resumption being necessary include it not being possible to trace the owners, succession problems, bad titles and it not being possible to negotiate or conclude acquisition agreements with the owners concerned.

…”

42.I digress here to deal with a point raised by Mr Chan on para. 23 of the URA’s paper, which is this.  He submitted that “a bad title” is not the same as “not a good title”.  A title is not a good title if the title shown is not one that the court will force upon an unwilling purchaser in an action for specific performance.  A bad title means that the vendor is shown with certainty not to have the full ownership he contracted so sell.  Under the stated policy in para. 23, URA can only resort to resumption when King Prosper has a bad title to Property 2 and 3.  URA has now changed its stance by asserting that King Prosper has failed to show a good title.

43.With respect, I do not think the URA’s paper, given its nature, should be read as if it is a legal document.  The term “bad title” in para. 23 should not be given the technical meaning as understood by reference to the case law.  Properly read, it is but a short hand description for cases where there are doubts on the title.

44.The reason why URA will not purchase property with a doubtful title is further explained thus[7] :

“The URA has no obligation to purchase any property with a doubtful title. The URA is under a statutory duty to exercise due care and diligence in the handling of its finances under Section 10(4) of Part IV of the URA Ordinance. Therefore, the URA would only purchase properties with good title. Further, the URA will not enter into a binding sale and purchase agreement for the purchase of any property in circumstances where it already knows that the title is or may be defective and then incur further legal expenses in legal proceedings, whether by way of vendor and purchaser summons or other forms of originating process, with the hope of obtaining a declaration of good title from the court.”

45.Mr Chow, SC, for URA, argued that URA, like any ordinary purchaser, is entitled not to enter into any contract for the purchase of a property where it is not satisfied that the vendor has a good title to it.  The decision not to purchase because of doubtful title is plainly commercial in nature and is not one made in the public domain, amenable to judicial review.

46.Mr Chan, SC argued that URA is fundamentally different from an ordinary purchaser.  It has no discretion to depart from the development scheme, which it is duty-bound to implement.  It is not open to URA to make a “commercial decision” to abandon any property affected by the scheme even if it does not like the vendor’s title.  It must either acquire it by agreement or through resumption.  The decision whether to acquire the property therefore forms an integral part of the process which URA has to carry out in discharging its statutory function to acquire all the properties within the scheme area.  There is accordingly statutory underpinning for public law principles to be invoked.  I agree with Mr Chan but not entirely.

47.As already alluded, section 25(3)(b) of the Ordinance mandates URA to set out in a development scheme how it intends to implement it, including what arrangements are contemplated for acquisition.  For a comprehensive development scheme and if URA intends to implement it alone, as is the present case, it must then acquire all the properties within the scheme area, either by agreement or through resumption.  According to URA’s acquisition policy which applies here[8], it will acquire the properties by agreement first and will resort to resumption if that option fails.  In the circumstances, the decision whether to purchase a property is indeed an essential step in the acquisition process.

48.However, it does not necessarily follow that as a general proposition of law, every URA’s decision not to acquire a particular property for the purpose of implementing a development scheme must fall within the public law domain.  Whether it is a public law decision is fact-sensitive, to be determined by the specific circumstances of individual cases.  And different scenarios with different results may arise.  Two extreme examples are sufficient to make good the point.  If on the one hand URA decides, as a general policy, not to purchase any property but will apply for resumption in every case, that decision is amenable to judicial review.  If on the other hand the owner is only willing to sell his property at an exorbitant price and rejects all reasonable offers by URA, URA’s decision not to purchase is a commercial decision, not amenable to judicial review.  So whether a decision not to purchase a property is amenable to judicial review must depend on the special characteristics of that decision viewed in the relevant factual matrix of the case.

49.Here, URA decides not to purchase Property 1-3 because, upon legal advice, it is not satisfied that King Prosper has a good title to Property 2 and 3.  The Decisions, based purely on conveyancing law, do not involve any or any consideration of public element at all.  They are essentially commercial in nature.  In the absence of fraud, corruption, bad faith[9] and breach of law, they are not amenable to judicial review.  Accordingly, this application for judicial review must fail in limine.

50.For completeness and in deference to senior counsel’s learned submissions, I will proceed to consider the issues on title and the remaining grounds of challenge on the basis that the Decisions are amenable to judicial review.

G. THE ISSUES ON TITLE

51.To put the issues on title in context, I need to set out the relevant conveyancing dealings in greater detail.

52.The area occupied by Property 2 on the ground floor was depicted in the original approved building plan dated 13 December 1965 as “Arcade” and in the plans attached to various assignments of the shops as “Right of way”.  A copy of the approved plan for the ground floor is annexed to the end of this judgment for easy reference.  It is not in dispute that throughout the years, no undivided share had ever been allocated to Property 2 or Property 3 until 4 October 1997.

53.On 10 May 1966, the developer, Shun Chong Enterprises Ltd (“Shun Chong”) as vendor and Grand Amusement Company Ltd (“Grand Amusement”) as the first owner entered into an assignment in respect of the cinema (“the 1966 Assignment”).  Shun Chong assigned to Grand Amusement 100 of the 176 undivided shares in respect of the land and building.  Shun Chong further granted to Grand Amusement :

“… the full right and privilege to hold use occupy and enjoy ALL THAT [of the cinema] more particularly shown and coloured Pink on the Plans hereto annexed”.

54.And Grand Amusement granted to :

“[Shun Chong] and others the co-owners other than [Grand Amusement] from time to time of the said premises (if any) full right and privilege to hold use occupy and enjoy ALL THOSE the open yards on the Ground Floor and the outer walls and the roofs and flat roofs (if any) of the said premises and the remaining self-contained portions shops and other portions (not otherwise intended to be used for the common enjoyment of the co-owners and co-occupiers for the time being of the said messuages or buildings) comprised in the said messuages or buildings save and except [the cinema]”.

55.Shun Chong and Grand Amusement also executed a Deed of Mutual Covenants (“DMC”) on the same date. It did not contain any plan but referred to the plans annexed to the 1966 Assignment.  Under Clause 1 and the First Part of the Second Schedule, Shun Chong granted to Grand Amusement exclusive possession of the cinema.  By Clause 2, Grand Amusement granted to Shun Chong exclusive possession of the premises as set out in the Second Part of the Second Schedule, which read :

“ALL THOSE the remaining self-contained portions and shops including the open yards on the Ground Floor and the outer walls and all the roofs and flat roofs (if any) thereof and other portions (not otherwise intended to be used for the common enjoyment of the co-owners and co-occupiers for the time being of the said messuages or buildings) comprised in the said buildings save and except [the cinema]”.

56.Between 28 July 1966 and 3 March 1973, Shun Chong sold all the shops on the ground floor to various purchasers save and except Shop 11.  By an assignment dated 10 September 1974 (“the 1974 Assignment”), Shun Chong sold Shop 11 (with 1 undivided share allocated) to Au Ping Chung and Tam Pui Ching (“Au and Tam”).  Thereafter, Shun Chong ceased to be a co-owner of Mido Mansion.

57.Two important points are to be noted from each of those assignments referred to above.  First, they are all expressly subject to the DMC.  Second, they all contained provisions of mutual grant between Shun Chong and the purchaser similar to those in the 1966 Assignment as set out above, with the necessary modification on the description of the shop(s) being sold.  Thus, in the course of disposing of the shops throughout the years, Shun Chong continued to enjoy exclusive possession of Property 2 and Property 3.  That remained the case after the 1974 Assignment even though by then Shun Chong no longer held any undivided shares in Mido Mansion.

58.By an assignment dated 12 January 1984 (“the 1984 Assignment”), Au and Tam sold Shop 11 to Linkfast Company Limited (“Linkfast”).  Significantly, under the 1984 Assignment, Au and Tam “[reserved] unto [Shun Chong] and the other co-owners from time to time … the full right and privilege to hold use occupy and enjoy ALL THOSE the open yards on the Ground Floor and the outer walls and the roofs and flat roofs (if any) … save and except Shop 11”.  So Shun Chong purportedly continued to have the exclusive possession of Property 2 and Property 3.

59.The matter took a further turn in late 1984.  By an agreement for sale and purchase dated 17 December 1984, Pay-In agreed to sell its 1 undivided share to Shun Chong.  By another agreement for sale and purchase dated the following day, Shun Chong agreed to sell that undivided share to Pay-In together with the exclusive possession of Property 2 and Property 3.  The transactions cumulated in an assignment dated 16 February 1985 executed by Pay-In, Shun Chong and 3 confirmors, who were the registered owners of various shops that comprised Property 1 and the mortgagee (“the 1985 Assignment”).  The overall effect of the 1985 Assignment was to transfer to Pay-In 1 undivided share from Shun Chong and 8 undivided shares from the 3 confirmors together with the exclusive possession of Property 1, Property 2 and Property 3.

60.Recital (11) of the 1985 Assignment stated that Pay-In and the 3 confirmors, as owners of their respective shops, were the only person who were entitled to “the right of way to go pass and repass over along [the area occupied by Property1] for the purpose of access to and egress from their respective Shops.” Recital (12) then went on to state that it had been agreed by and between the parties that the said right of way should be extinguished in the manner expressed.  As to that, the 1985 Assignment provided that Pay-In, the mortgagee and the 3 confirmors agreed to release unto Shun Chong the right of way over the area occupied by Property 1 to the intent that the same shall be henceforth cease determine and be extinguished.

61.By virtue of the 1985 Assignment, Pay-In held 9 undivided shares, all of which were allocated to the shops comprising Property 1, and was purportedly entitled to exclusive possession of Property 1, Property 2 and Property 3.

62.On 4 October 1997, Benseas Ltd, the then owner of Property 1 to 3, executed a deed poll whereby 1 undivided share was sub-divided into 4 with 1/4 share allocated to Shop 3A, 2/4 share allocated to Shop 3B and 1/4 share allocated to Property 3.  In November 1997, Benseas assigned 3 undivided shares together with the right to the exclusive possession of Shops 2, 7 and 8 and 1/4 undivided share together with the exclusive possession of Shop 3A to Talent Castle Development Ltd, which was further assigned to King Prosper on 18 January 2005.  It was also on the same day that Benseas assigned the remainder of its interest to King Prosper.  Since then, King Prosper has become the owner of the shares allocated to Property 1, Property 2 and Property 3.

63.Four issues on title emerged from the parties’ submissions :

(1) Whether Property 2 is a common part within the meaning of the DMC.

(2) If Property 2 is not a common part, and Shun Chong was at all material times entitled to exclusive possession thereof, whether such right ceased to exist as a result of the 1974 Assignment.

(3) Whether Shun Chong’s right to exclusive possession of Property 3 ceased to exist as a result of the 1974 Assignment.

(4) Whether in any event, King Prosper has a possessory title to Property 2 by virtue of Fairwood’s continuous occupation since December 1984 to date.

I will deal with them in turn.

H. WHETHER PROPERTY 2 IS A COMMON PART

64.The parties agreed that the critical question is whether, on a proper construction, Property 2 falls within “other portions (not otherwise intended to be used for the common enjoyment of the co-owners and co-occupiers for the time being of the said messuages or buildings)” in the Second Part of the Second Schedule of the DMC.  If it does, then it is a common part over which King Prosper does not have any right to exclusive possession.

65.As a preliminary point, counsel differed as to whether the DMC is a bilateral agreement between Shun Chong and Grand Amusement or a multilateral agreement to which all subsequent owners became parties thereto.

66.Mr Chan argued that it is a bilateral agreement.  Mr Chow argued that although the DMC was, at the time of its execution, a bilateral agreement between Shun Chong and Grand Amusement, the parties plainly intended to set out or define the mutual rights and obligations of not just themselves but also all the subsequent purchasers (and their successors and assigns) of the shops and flats who would in due course become co-owners of the land and building.  As and when the shops were sold off by Shun Chong to the purchasers, they would one by one become parties to, and be bound by the provisions of the DMC such that it would become a multilateral agreement.  I think Mr Chan is correct.  The DMC is a contract to which Shun Chong, as developer, and Grand Amusement, as first purchaser, are parties.  Although, as will be seen in a moment, Shun Chong and Grand Amusement intended that the DMC would bind all subsequent owners, that does not turn the DMC into a multilateral agreement.

67.Turning to the meaning of the Second Part of the Second Schedule, Mr Chan submitted that the DMC should be construed with reference to the time of the contract, that is, 10 May 1966.  Thus “the co-owners and co-occupiers for the time being” referred to in the Second Part refers to those who were co-owners at the time of the DMC, which could only mean Shun Chong and Grand Amusement. When the Second Part is so construed, Property 2 cannot have intended to be used for the common enjoyment of Shun Chong and Grand Amusement, because Grand Amusement could hardly benefit from Property 2, which clearly does not serve the cinema.  Referring to the description of Property 2 as “Right of Way” in the plans, Mr Chan submitted that a right of way is an easement.  This presupposes that the owner of the right of way is the owner of the dominant tenement and the land to which the right of way is appurtenant to is owned by the owner of the servient tenement.  The description in a conveyancing document of a right of way presupposes that the people enjoying the right of way do not have the right to possess or occupy the land.  It also follows that prima facie if certain area is described as “right of way” on a plan, this would imply that that area is not one to which there is common right to use and occupation shared amongst several co-owners.  He relied on Kung Ming Tak Tong Co. Ltd v Park Solid Enterprises Ltd, ibid, and contended that in the present case, a quasi easement was created over Property 2 in favour of the shop owners.

68.Mr Chow submitted that the DMC should be read as a document setting out a general framework governing the mutual rights and obligations amongst all the co-owners.  It would be a wrong approach, when construing the DMC, to just focus on the position of the original parties, that is, Shun Chong and Grand Amusement. Mr Chow’s submissions are supportable by two general points.  First, Shun Chong and Grand Amusement plainly intended that the DMC shall bind all the subsequent owners : see Clauses 17[10] and 18.[11]  Second, common parts, by its necessary meaning, are to be enjoyed by all owners, some of whom would become co-owners only upon the subsequent sales of units by Shun Chong after the DMC.  Viewed in light of these two general points, Mr Chan’s reading of “co-owners and co-occupiers for the time being” in the Second Part, which confined to Shun Chong and Grand Amusement, is too restrictive.

69.Mr Chow went on to submit that having regard to the description of the Arcade and the staircases as a “right of way” in the plans as well as the layout of the shops on the ground floor and other flats on the upper floors of Mido Mansion, it is clear that Property 2 was intended to serve as a passageway for all the shops on the ground floor and the flats on the upper floors although the flat owners do not have direct access, and to be maintained at the expenses of all the owners (other than the owner of the cinema) in accordance with the provisions of Clause 9(h)[12] of the DMC.  It is therefore a common part, well covered by the Second Part.  I agree.  I further reject Mr Chan’s submissions based on quasi-easement, which I find artificial.

70.It follows that Shun Chong did not have any right to exclusive possession of Property 2.  Neither does King Prosper.

71.Assuming that Shun Chong did have exclusive possession of Property 2, I next consider the effect of the 1974 Assignment, which will also dispose of the question if King Prosper has a good title to Property 3.

I. EFFECT OF THE 1974 ASSIGNMENT

72.As already alluded to above, Shun Chong disposed of its last share in Mido Mansion in favour of Au and Tam under the 1974 Assignment.  But it purportedly retained the right to exclusive possession of Property 2 and 3.  According to the extant authorities, such right had since the 1974 Assignment become extinguished.  So irrespective of the subsequent conveyancing dealings, none of the successors in title could have any right to exclusive possession of Property 2 and 3.  It follows that King Prosper does not have a good title to Property 2 and 3.

73.Mr Chan disagreed.  Broadly, he argued that at the time of the 1974 Assignment, Shun Chong’s right to exclusive possession to Property 2 and 3 was annexed to the last share allocated to Shop 11, which was passed to Au and Tam together with the share.  By way of the re-grant, Au and Tam granted a licence to Shun Chong to exclusively occupy Property 2 and 3.  By virtue of the 1985 Assignment, Pay-In acquired that together with the undivided share assigned to it.  Pay-In had thus acquired a good title to Property 2 and 3, which was passed to King Prosper eventually.  The effect of the 1974 Assignment is pivotal in Mr Chan’s argument, which calls for a closer analysis.

74.Under the concept of unity of possession, prima facie, the co-owners of land have the right of possession in common to every part of the land.  In relation to a multi-storey building there cannot be a proprietary right to the exclusive possession of part of the building except as an incident to the common ownership in the land and the building : Lai Wing Ho & Another v Chan Siu Fong [1993] 1 HKLR 319, per Godfrey J (as he then was) at pp.323-324; Jumbo King Ltd v Faithful Properties Ltd & Others (1999) 2 HKCFAR 279, per Litton PJ (as he then was) at p.290.

75.The right to exclusive possession of a specified part in a multi-storey building is a matter of mutual covenants made between the co-owners under the deed of mutual covenants governing the land and the building : Jumbo King Ltd v Faithful Properties Ltd & Others [1999] 3 HKLRD 231, (Court of Appeal), per Rogers JA (as he then was) at pp.245-246.  Such covenants are binding contractually between the parties and run with the undivided shares in the land so as to ensure for the benefit of and be binding on successors-in-title : Jumbo King Ltd v Faithful Properties Ltd & Others (1999) 2 HKCFAR 279, per Lord Hoffmann NPJ at p.295.

76.The difference between the proprietary nature of the assignment of an undivided share on the one hand, and the contractual nature of the mutual covenants governing the right to exclusive possession on the other, is authoritatively reaffirmed by the Court of Final Appeal in Kung Ming Tak Tong, ibid.  The Court held that the apparent grant by the deed of mutual covenants to the occupier of a specified part of the exclusive possession is properly regarded as a separate contractual undertaking by every other co-owner not to exercise the right of possession which he otherwise be able to do so as co-owner over parts other than his own.  It does not result in the creation of a legal interest in the land : per Li CJ at para. 34.  Likewise, the purported grant of exclusive possession in the assignment should be read as a reference to the product—purely as a matter of contract—of the mutual covenants simultaneously being entered into, rather than of any proprietary grant under the assignment : per Li CJ at para. 36.

77.It is now beyond doubt that in an assignment concerning a unit in a multi-storey building, the proprietary grant is the assignment of the undivided share allocated to the unit.  The right to exclusive possession of the unit is based on mutual covenants running with the land normally to be found in the deed of assignment or the deed of mutual covenants.

78.It should however be firmly borne in mind that the right to exclusive possession of a specified part in a multi-storey building is an incident to the ownership of an undivided share in the land and the building.  While the owner is free to dispose of the undivided share and the right of exclusive possession attached to that share as he sees fit, how he does so, as the authorities demonstrate, will lead to different results.  If he wishes to bind the other co-owners, the owner cannot assign the exclusive right of possession on its own, but has to assign it together with an undivided share : Jumbo King Ltd v Faithful Properties Ltd & Others [1999] 3 HKLRD 231, (Court of Appeal), per Rogers JA (as he then was) at pp.245-246[13].  If the owner purports to assign the right to exclusive possession without any assignment of an undivided share at the same time, that purported assignment of exclusive possession is at best a personal licence enforceable between the immediate parties but not binding on the successors-in-title : Lai Wing Ho, ibid, per Godfrey J at p.324; Modern Sino Ltd v Art Fair Co. Ltd [1999] 3 HKLRD 847, per Yuen J (as she then was) at p.854.  If he only assigns the undivided share without also assigning the right to exclusive possession at the same time, such right falls away as being incapable of existence other than an incident to the ownership of an undivided share : Incorporated Owners of Cheong Wang & Cheong Wai Mansion v Government of the HKSAR [2001] 1 HKLRD 483, per Deputy Judge Woolley at p.487; followed in Goldenwick Ltd v Standard Chartered Bank (Hong Kong) Ltd [2008] 3 HKLRD 266, at para. 74; and approved in Incorporated owners of No.27A Chatham Road, Kowloon v Mr Lee and Others, CACV2238/2001, unreported, per Cheung JA at para. 13.

79.Mr Chan’s submissions on the effect of the 1974 Assignment involves two components : (a) annexation of Shun Chong’s right to exclusive possession of Property 2 and 3 to the share allocated to Shop 11; and (b) transmission of such right to Au and Tam under the 1974 Assignment.

80.I have no qualm about Mr Chan’s scholarly submission on annexation, which I need not repeat here.  Simply put, his submission states, with the support of an admirable analysis, the obvious position that the benefit of the mutual covenants concerning Shun Chong’s right to exclusive possession of Property 2 and 3 was attached to the last share that it held in Shop 11 immediately before the 1974 Assignment.

81.However, I am unable to accept Mr Chan’s submission that the right to exclusive possession of Property 2 and 3 was transmitted to Au and Tam under the 1974 Assignment.

82.Placing heavy reliance on Kung Ming Tak Tong, ibid, Mr Chan argued that the right to exclusive possession of Property 2 and 3 is conferred by covenants, which binds all the co-owners.  He next relied on Megarry & Wade on The Law of Real Property, 7^th Edn, at para. 32-067 :

“(d) Transmission. Once the benefit of the covenant is annexed to land, it passes with the land to each successive owner, tenant or occupier, even if he knew nothing of it when he acquired the land, a hidden treasure which may be discovered in the hour of need.”

Thus, he argued that there would be no need for any express assignment or grant of the benefit of the covenant, that is, the right to exclusive possession of Property 2 and 3, to Au and Tam. The 1974 Assignment which assigned the undivided share allocated to Shop 11 alone would suffice.

83.With respect, I think the reliance on Kung Ming Tak Tong is misplaced.  As rightly submitted by Mr Chow, Kung Ming Tak Tong, ibid,reiterated and reaffirmed what were the established principles at the time of the decision, which remain good law to date.  It has not laid down any principle that the disposal of the last undivided share by the owner must carry with it all the rights, including the right to exclusive possession of a specified unit, attached to the share, in favour of the purchaser.

84.The application of the proposition in Megarry & Wade to the right to exclusive possession attached to an undivided share must be subject to the actual agreement reached by the parties.  Otherwise irrespective of what the parties had agreed, a transmission of the right will automatically take place whenever there is an assignment of the share.  That cannot be right in light of the extant authorities.  In my view, whether the right to exclusive possession attached to the share has been transmitted must depend on the proper construction of the instrument which governs the actual dealings between the parties.

85.In the present case, the instrument is of course the 1974 Assignment.  Under the mutual grant provisions in the 1974 Assignment, properly construed, Shun Chong only granted exclusive possession of Shop 11 to Au and Tam and no more.  It had never purported to grant any exclusive possession of Property 2 and 3 to Au and Tam at all.  Given the clear and express intention of the parties, I am unable to accept that the 1974 Assignment had the effect of transmitting Shun Chong’s right to exclusive possession of Property 2 and 3 to Au and Tam.  Such right must  have been extinguished when Shun Chong ceased to hold any undivided share.  It follows that irrespective of the subsequent conveyancing dealings, King Prosper does not have a good title to Property 2 and 3.

86.To complete the discussion on this topic, I need to deal with Mr Chan’s attack on the line of authorities which established the proposition that once an owner having the exclusive right to possession of a specified part of a building in multiple co-ownership disposed of all his undivided shares, that exclusive right would become extinguished. The primary point that Mr Chan took is that in none of those cases, there was any analysis of the effect of the last assignment.  It was only assumed that the exclusive right attached to the share was not assigned to the purchaser.  He argued that in light of Kung Ming Tak Tong, ibid,if the right is attached to the share, there would be no need for a separate assignment or transfer to grant the exclusive right to the purchaser.  However, as observed above, I do not think Kung Ming Tak Tong, ibid, has laid down any principle that all the rights attached to the last undivided share must have been transmitted to the purchaser upon the assignment of the share.  Insofar as the right to exclusive possession is concerned, it is really a matter of contract between the parties as to how that right is to be disposed of.

87.The line of authorities that Mr Chan attacked begins with Modern Sino, ibid. There, the developer every house in a development was allotted three undivided shares.  No shares were allotted to the car parks.  X had three shares with exclusive possession of the house in question.  Y had three shares with exclusive possession of another house and the car parks in question.  X assigned his shares and exclusive possession of the house to Z.  Later, Y purported to assign the right to exclusive possession of the car parks to Z without assigning any shares.  Z then purported to assign his shares and exclusive possession of the house and the car parks to the vendor.  The purchaser claimed that the vendor had not title in the car parks to convey.  Applying Lai Wing Ho and Jumbo King (Court of Appeal)[14], Yuen J held that the purported assignment by Y to Z in relation to the car parks was at best a licence and not an interest in land that Z could assign to the vendor.  Thus the vendor had no exclusive possession of the car parks which it could convey to the purchaser.

88.Mr Chan argued that Yuen J had failed to appreciate, as a matter of principle, that unless there is some restriction, co-owners can always vary their right inter se by contract.  And if the necessary requirement of the passing of the benefit and burden of the covenant applies to what they have contracted for, it will become binding on their successors-in-title.  I disagree. Mr Chan’s argument ignored the important point that exclusive possession of a specified part in a multi-storey building is an incident to the ownership of an undivided share in the land and the building.  As observed by Rogers JA in Jumbo King, ibid,[15] that right cannot be assigned on its own but has to be assigned together with a part interest in the legal estate in order to bind all the other co-owners and their successors-in-title.  If the contractual arrangement of the co-owners does not involve any assignment of undivided shares between them, the purported grant of exclusive possession remains a personal licence at best and no more.

89.Modern Sino was followed in Incorporated Owners of Cheong Wang & Cheong Wai Mansion, ibid.  There, the buildings were divided into equal undivided shares under the deed of mutual covenants under which the developer, as first owner, reserved to itself the exclusive rights to, inter alia, use the yard.  The developer then assigned all the units and undivided shares in the buildings without retaining any for itself, but did not assign the said right to use the yard.  At issue was whether that right had become extinguished and reverted to the common owners of the buildings.  Deputy Judge Woolley held that since there was no transfer to any of the rights upon assignment of the shares, such rights fell away as being incapable of existence other than as an incident to the ownership of any such shares.

90.Mr Chan argued that the Deputy Judge appeared to have considered that apart from transferring the undivided share, it would need a separate transfer to the benefit of the covenant on exclusive possession, which is really not necessary in light of Kung Ming Tak Tong.  Properly understood, I do not think the Deputy Judge had approached the matter in the way as contended by Mr Chan.  He did not say that there must be a separate instrument for the granting of the right to use the yard.  He was simply saying that the developer had not by the assignment of the undivided shares granted that right to the purchaser.  As there was no automatic transmission of that right by virtue of the assignment of the undivided shares, the Deputy Judge was correct in his finding that that right was incapable of existence as an incident to the ownership of the undivided shares when the developer ceased to hold any shares.

91.The next case is the Court of Appeal’s decision in Incorporated Owners of No.27A Chatham Road, ibid.  Cheung JA held that upon the sale of their last undivided shares in the building, the owners’ right to exclusive possession of the roof top, to which no share had been allotted, had become extinguished.  Mr Chan argued that there was no analysis of the wordings of the assignment of the last shares to support the decision.  However, it seems to me that there is nothing before the Court of Appeal to suggest that the last assignment would have the effect of transferring the exclusive possession of the roof top to the purchaser.  I fail to see how Cheung JA’s conclusion can be flawed.

92.Next is my decision in Goldenwick, ibid.  I need not set out the facts here which are rather complicated.  The pertinent point to note is that the vendor’s predecessor-in-title derived title from a mortgage over the exclusive possession of the unit in question without any unaccompanied undivided share.  I held that the mortgage was not a mortgage of land.  In dealing with counsel’s alternative submission that no adverse claim could be raised by the vendor’s predecessor-in-title over the parts in question, I referred to Incorporated Owners of Cheong Wang & Cheong Wai Mansion, ibid and observed that after the disposal of all its shares, the predecessor-in-title’s right to exclusive possession would become extinguished and reverted to all co-owners.  It was therefore open to the co-owners to assert their right to possession against the purchaser. My observation is obiter.  Understandably, Mr Chan did not say much about it.  I do not think it really takes the matter any further.

J. POSSESSORY TITLE OF PROPERTY 2

93.Mr Chan contended that even if Property 2 is a common part from the outset or from the 1974 Assignment, King Prosper must be considered as having at least a good possessory title in respect of Property 2 because of the clear evidence that Property 2 had since 1984 been occupied by Fairwood as a fast food restaurant without any interruption.

94.Mr Chow submitted that in relation to a common part, adverse possession must be proved against each of the co-owners for the full limitation period : Incorporated Owners of Chungking Mansions v Shamdasani [1991] 2 HKC 342 at pp.352A-355E.  There is no evidence to that effect.  I agree and hold that King Prosper has not established a good possessory title to Property 2.

K. DISPOSING OF THE GROUNDS OF CHALLENGE

95.Having dealt with the main issues on title, I now return to dispose of the remaining grounds of challenge.

96.The First Ground is premised on the assertion that King Prosper has a good title or possessory title to Property 2.  The plank is now gone.  The First Ground must collapse.  I would just add three points.

97.First, contrary to what is contended in the First Ground, URA is entitled to make sure that the vendor has a good title to the property before it acquires it for the purpose of implementing a development scheme.  In the course of dealing with the vendor, URA, with the benefit of legal advice, is entitled to formulate its own view on matters pertaining to title. It does not mean that URA has acted as a judge in its own cause as alleged by King Prosper.

98.Further, contrary to King Prosper’s contention, URA is not under a duty to first enter into a contract of sale with a purchaser when it has doubt about title and then leave the matter to be decided by the court.  URA should not be compelled to expose itself to the risks of litigation and costs.

99.Third, URA is not obliged to purchase a mere possessory title. 

100.The Second Ground is in substance a repetition of King Prosper’s assertion that URA should first into a contract of sale and leave the doubt on title to the court.  As I have said, this assertion is wrong.

101.The allegation of ultra vires in the Third Ground, the Fourth and Fifth Grounds attack Decision B, which asked, as part of the condition for an offer to purchase Property 1, King Prosper to give vacant possession of Property 1 on completion of the sale and to require Fairwood to vacate Property 2.  URA had already explained why it was necessary to impose such condition[16].  In my view, URA was entitled to impose the condition, which was wholly justified.  These Grounds must fail.

102.The Sixth Ground, as refined, fails because King Prosper does not have a good title to Property 3.

103.The Seventh Ground adds nothing to the other Grounds.  It must also fail.

104.In short, none of the Grounds succeeds.

L. CONCLUSION

105.For the above reasons, this application for judicial review is dismissed. 

106.Costs should follow the event.  I will make an order nisi that King Prosper do pay URA costs of these proceedings, to be taxed if not agreed.

Mr Edward Chan, SC, leading Mr Michael Yin, instructed by Messrs Wong Hui & Co., for the Applicant

Mr Anderson Chow, SC, instructed by Messrs Deacons, for the Respondent