Owners of agricultural land taken back by the government are entitled to be paid compensation according to what they could potentially have done with their land, the city's highest court has ruled.
The Court of Final Appeal ruled after hearing arguments in a dispute between the secretary for transport and Delight World International over how much compensation the firm should receive for land resumed in 2000.
At issue was whether or not the government, in calculating compensation, needed to take into consideration the fact some potential uses of land depended on the granting of planning permission.
The issue dates back to restrictions imposed in 1991 on the use of land where building is not allowed.
The restrictions - under section 16 of the Town Planning Ordinance - were a reaction to the proliferation in the New Territories of open storage facilities for unused shipping containers, building materials and the like. Such uses were referred to as 'Melhado use' after the 1983 court ruling that overturned the licensing system for open storage operations previously in place. That ruling created a loophole allowing non-agricultural uses that did not involve building. The land in question was one such site.
The Secretary for Transport in September 2000 resumed part of the land to build the Kam Tin bypass. Delight did not accept the compensation offered and the matter was referred to the Lands Tribunal, which in June 2003 awarded the company HK$15.9 million.
The tribunal had considered that Melhado use could be taken into account when determining an award, but that there was no justification for such an approach in this case. Delight requested a review and the tribunal then awarded it HK$52.5 million on the basis that Melhado use could be taken into account regardless of the need for approval under section 16 of the ordinance. An appeal to the Court of Appeal was dismissed and the government appealed to the top court.
If the need for approval was taken into account, the government argued, the price would be much lower. But in a unanimous decision, the court found section 16 was not intended to be considered when calculating compensation.
'Halting despoliation does not require that landowners receive less resumption compensation than they would have received if their freedom of land use had not been curbed by the introduction of the [Town Planning Ordinance] permission scheme,' said Mr Justice Kemal Bokhary, reading the judgment of the court.