Lands Tribunal using shaky logic, judge says

A Court of Appeal judge has cast doubt on the decisions of the Lands Tribunal to issue compulsory sale orders in previous cases.

In a recent judgment handed down by the Court of Appeal, the judge said a concept that the tribunal formulated to rule that a developer can force a minority owner to sell his property after acquiring the majority of a building's ownership 'did not feature' in the law.

The judgment comes two months after the Legislative Council passed a notice that lowered, from 90 per cent to 80 per cent, the threshold of ownership in a building older than 50 years at which a developer can force the compulsory sale of the remaining properties in the building.

The notice was passed with the backing of functional constituencies but opposed by the pan-democratic camp, which said the law failed to protect private property rights.

In deciding sale orders in at least five past cases, the tribunal used its 'economic lifespan test': if the repair cost of the building exceeds the enhancement in market value brought by the work, the tribunal considers redevelopment justified.

But Court of Appeal Justice Doreen Le Pichon said this reasoning, which was repeatedly cited by government officials when urging lawmakers' earlier this year to lower the threshold, might be an error of law.

'I have some reservations as to their correctness [of the economic lifespan tests]. Admittedly, this is no more than a preliminary view ... but it would not be inappropriate to highlight the fact that the concept of economic lifespan does not feature in the ordinance,' Le Pichon wrote in the judgment.

'The tests ... should be approached with a degree of circumspection and should not be applied as if they were part of the ordinance itself,' she said, adding that it would be left to a higher court to determine because the present case was not concerned with the issue.

The judge was responding to the argument of Russell Coleman SC in an appeal by a Causeway Bay shop owner for more cash compensation for the loss of his shop to a developer in 2008 under the Land (Compulsory Sale for Redevelopment) Ordinance.

Coleman, chairman of the Bar Association, said the concept was an error of law and asked the court to put it right, even though it would have no impact on his appeal.

Solicitor James To Kun-sun, a Democratic Party lawmaker, said it was the first time a Court of Appeal judge had stated the view and he believed the Lands Tribunal would be likely to change its reasoning when considering applications in future.

'The judgment has also given hints to property owners who may be affected and want to appeal against a sale order,' To said.

Icarus Wong Ho-yin, an activist leading an alliance of property owners concerned with the law, said the government had a duty to amend the ordinance. The alliance has submitted to the Development Bureau and Law Reform Commission a raft of proposals to amend the ordinance.

It says the acquisition process has to be more transparent and a developer must tell flat owners the number of flats in the block it has bought.

It suggests the developer should pay the fees for the surveyor's valuation report for the minority owners if it is to take the case to court.