Former judge believes right of appeal to Lands Tribunal against assessments

PUBLISHED : Wednesday, 01 September, 1999, 12:00am
UPDATED : Wednesday, 01 September, 1999, 12:00am

The Lands Department has been inundated with criticism over the way it assesses land premiums.

The criticisms have revealed growing concern about the lack of transparency in the assessment procedures and in particular as to whether or not an independent arbitration system should be put in place to help resolve premium disputes.

The current debate was triggered by a dispute over the $2.8 billion premium the department assessed for the Kowloon Station phase three residential project.

The project was withdrawn amid claims that the premium was excessive and was nearly double the average amount paid for phases two and four at the same station early this year.

Lands Department officials held a briefing last month to make public for the first time the way it assesses land premiums in a bid to increase transparency and remove misunderstanding.

They stood by existing assessment methods and fended off allegations they had turned too aggressive recently by saying their offers were market value.

The officials expressed reservations about the effectiveness of any system of external arbitration on disputed land premiums, which they said would be time-consuming.

However, the Government's unusual move in going public failed to convince critics who continued to press for reform.

Gordon Cruden, a former judge in Hong Kong, has joined the chorus of support for the introduction of an appeal system on land-premium valuations. He said a right of appeal to the Lands Tribunal against assessments should be introduced.

Arguments about the 'delay' and 'time-consuming' nature of an appeal system were misconceived, he said.

The tribunal acted expertly and expeditiously and had heard hundreds of appeals on compulsory resumption of land compensation, he said.

Mr Cruden was one of the earliest advocates for reform of land-premium assessments.

He was presiding officer of the tribunal for 15 years and was deputy chairman of the government-appointed Special Committee on Compensation and Betterment which in 1992 delivered its findings and expressed concern over the secrecy relating to premium assessments.

'For many years, there has been strong criticism that the assessment of premiums is not judicially reviewable and that the Lands Department's confidential internal review procedures simply make it a judge in its own cause,' he said.

Land premiums are charged by the Government, under its private government-lease contractual powers. They are charged on the grant of new leases and when existing government leases are modified contractually to permit more intensive redevelopment.

Mr Cruden said increased concern relating to the Government's confidential internal assessment and reconsideration of land premium had more recently been supported by the courts.

In his proposal, a right of appeal to the tribunal would be a course of last resort only and would not prevent existing settlement negotiations continuing.

'In the exceptionable, not easily resolvable disputes, or where a party felt it was being unfairly treated, it would provide a just and fair improvement and safeguards to the existing inadequate system,' he said.

The tribunal includes a High Court judge and two other judges, assisted by two valuation surveyors.

Mr Cruden said tribunal members were employed full-time by the Judiciary and were unconnected with the parties involved, so no conflict of interest could arise.

The existing right under the Home Ownership Scheme to appeal to the tribunal against assessment of premiums provided a useful drafting basis or precedent for land-premium appeal rights.

According to Mr Cruden's proposal, if an owner wanting to redevelop his property considered the premium required by the Lands Department exceeded market value, he could appeal.

If the premium determined by the tribunal was lower and economically viable, the owner could elect to pay it and proceed.

This would resolve the pre-existing deadlock with the Lands Department in the owner's favour and allow him to proceed with his development, he said.

If the tribunal determination was higher, or for a lower but still unacceptable sum to the owner, he might fully protect his private property rights by electing not to proceed with that particular proposed modification.

The owner was not obliged to appeal. However, if he was anxious to proceed with the development, an appeal at least gave him the opportunity to obtain a potentially acceptably lower valuation, binding against the Government, that would enable him to proceed.

Lands Department deputy director John Corrigall said arbitration procedures tended to be lengthy, and introduction of any external appeal system would require careful consideration and consultation.

If it were to go down the trail of independent review, the arbitration results had to be binding on both the Government and the applicants, he said.

Analysts said it would be difficult to introduce an external appeal system unless the Government and the private sector could reach a compromise on maintaining their interests and rights.

Major developers, who often faced government officials on the negotiating table for premiums payable for property redevelopment or new land grants, so far have not taken a public stand on the issue.

Some property company executives privately said they would prefer to maintain the status quo, apparently out of fear that changes could worsen the process.

S K Pang Surveyors & Co managing director Pang Shiu-kee said the Lands Department apparently was afraid an external appeal system would tie its hands on its handling of land-premium talks.

An arbitration procedure could provide a channel for developers to push their case a step closer to success, he said.

However, they would have reservations if they were bound by the appeal's result to pay the redetermined premium, whether it was higher or lower.

Analysts said it was arguable that the private property rights could be infringed if the arbitration ruling was binding against the applicants or the developers.

However, a ruling binding against the Government only seemed not to be satisfactory to the Lands Department.

While legislation was considered too rigid by many, analysts said any arbitration probably needed to be implemented on a voluntary basis with both parties - the Government and the applicant - to agree to the terms and conditions beforehand.

The Lands Department's confidential internal review procedures simply make it a judge in its own cause