Swire loses appeal on $4.5b land premium
Swire Pacific faces paying an estimated HK$4.5 billion to the government after Hong Kong's top court threw out an attempt by the conglomerate to quash a ruling over Taikoo Shing land premiums.
The company is 'deeply disappointed' but says it supports the judgment. It will now either negotiate further with the government over the exact amount of premium and premium interest due, or return to the arbitration table.
The dispute centred on agreements struck with the government in 1985 and 1986 over the exact amount of commercial gross floor area (gfa) Swire was permitted to develop at its Cityplaza development.
The government sought land premiums - paid for the right to develop projects - for Swire's Cityplaza One, Three and Four office towers, and the Horizon Gardens residential complex.
Swire contended it was entitled to build the 3.2 million gfa, given a maximum permitted area of 7.7 million square feet. It claimed to have forfeited 1.9 million sqft in return for being allowed to develop more residential space.
The government put the Cityplaza maximum commercial space limit at 1.6 million sqft.
The two parties locked heads during arbitration in 2001. Swire lost and appealed the decision at the High Court, taking its case to the Court of Final Appeal, where it again failed yesterday.
The court supported the government's argument that the limit was 1.6 million sqft in gfa.
Mr Justice Kemal Bokhary noted that putting a limit of 1.6 million sqft 'is not the same as saying that Swire could never under any circumstance build more commercial gfa than that on the land.
'All that such a construction would mean is that they could not do so without paying a modification premium'.
The exact premium and interest have not been determined, but Swire made a provision of $4.5 billion in its 2000 accounts as an estimate of the company's exposure.
A Swire spokesman said the ruling gave little conclusion in terms of the actual premium and interest due.