A landmark ruling on the definition of 'industry' for leasing purposes is being challenged by the Government amid fears it could open the floodgates for companies seeking to slash rents. The case is likely to have implications for the property market if the appeal court upholds the decision, which deems a pager service 'industrial' and thus liable to pay lower government rent. Hong Kong's 1998 Young Industrialist of the Year, Yau Wah-yau, took court action against the Government in March to prove his business was strictly industry. Mr Yau, managing director of Raider, a company which includes pager service Realink Group, was threatened with eviction for breaching lease conditions: although he made pagers, the service side of his business was seen as 'commercial'. He won his challenge to the Government's insistence that his business - in a Ngau Tau Kok high-rise - was not an industry, in the form of a judgment which dubbed existing policies 'destined to drive industries from our shores'. Mr Justice James Findlay ruled the Government was imposing 'totally unreasonable restrictions' on land owners. He said the Government 'just wants the plaintiff to pay a lot of money for the privilege of conducting business in this sensible, coherent way'. Although Mr Yau could have moved the service side of his business to different premises, 'from an economic or practical point of view, this would make no sense at all'. The ruling could affect many companies in similar positions, by legitimising sites in industrial buildings for those previously excluded as non-industrial users. Companies opting to move to industrial sites would face lower government rent if they fell under the same definition of industry as defined by the judge. Justice Findlay said although the pager service could be separated from the production side, there was no reason to conclude it was not an industrial purpose. Counsel for the Government, barrister Robert Tang SC, told the Court of First Instance yesterday the case was 'likely to have wide implications'. He gave the example: 'One may ask . . . is a laundry an industry?' The appeal judges have reserved their decision. COURTS
