Mediation fails to resolve rowson forced sales

PUBLISHED : Wednesday, 28 March, 2012, 12:00am
UPDATED : Thursday, 11 June, 2015, 4:33pm

Mediation was touted as a quick, cheap way to resolve disputes arising from a controversial law making it easier for developers to buy old buildings, but only two deals have been reached in the past year.

And one homeowner who tried the process described it as little more than a formality.

Two years ago next month, rules changed on the enforced sale of buildings more than 50 years old, allowing a developer that owns 80 per cent of a block to apply to the Lands Tribunal for compulsory purchase of the rest to make way for redevelopment; previously they had to own 90 per cent to do so. The 90 per cent threshold still applies to newer blocks.

Secretary for Development Carrie Lam Cheng Yuet-ngor announced a pilot mediation scheme last year, saying it would 'save minority owners the burden of litigation'.

But, according to Development Bureau figures released to the Legislative Council, only two out of 31 cases taken to mediators produced a result. While one of the successful cases was completed in a month, the other took seven months.

A flat owner who identified herself as Mrs Wu said mediation failed to help her fight for a better price for her 700 sq ft flat in Tang Fung Street, Aberdeen, in which she lived with her husband, her parents and her son.

'The developer just didn't care and showed no sincerity. The mediator was a young lawyer and he could not handle the situation. It was a waste of time,' Wu said.

She said she wanted a better price so she could buy a new home in the same district. But the mediation lasted about two hours and did not go anywhere.

'The other side simply said 'this is all we'll offer. It's up to you to take it or leave it'. It's all a formality. We then walked out,' she said.

Eventually, the developer took Wu's case to court late last year and the amount awarded to Wu was only enough for her to afford a flat in the New Territories.

So far this year the Lands Tribunal has received 23 applications for compulsory sales order, compared with 46 in the whole of last year and 21 in 2010.

Of the 23 applications, 14 are below the 90 per cent threshold.

Of the 29 cases in which mediation did not bear fruit, parties in 15 cases 'resolved their differences' on their own. In five other cases, one side refused to participate in mediation. In another case, both sides failed to reach a settlement. Eight other cases are still being processed.

The government said it did not have information on why the cases failed because mediation was a private and confidential process.

A mediator who has taken part in the scheme and other kinds of commercial negotiations said the resolution method still needed time to gain currency in Hong Kong.

In one of the cases he handled, an elderly homeowner wanted to bargain for a better price to buy a home in a new building. The owner also knew that his flat, in a building that was crucial to the developer's plan to redevelop a whole street, should not be valued just as a stand-alone property.

'The frontline manager sent by the developer to the negotiating table understood the elderly man's standpoint, but his boss back in the office just wouldn't give him any room for bargaining. The developer may have thought all elderly people were ignorant and there was no need to bargain,' the mediator said.

'It takes time for developers to change their mindset and agree that spending more time in mediation can save more money and time than in litigation.'

Democratic Party lawmaker James To Kun-sun said three homeowners had contacted him about the mediation process, but they were all too scared to enter negotiations. 'They were afraid because no one assisted them. There's no surveyor advising them on what's a reasonable price to fight for.'


applications for compulsory sale have been received already this year

- In the whole of last year 46 were sought


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