The government owes the public an explanation for an out-of-court settlement reached over the Grand Promenade affair with former buildings chief Leung Chin-man, a Democratic Party legislator said. A judge announced the settlement yesterday. A DAB legislator warned that the Legislative Council was not done with the controversy over the housing development in Sai Wan Ho. Court of First Instance judge Michael Hartmann yesterday consented to Mr Leung dropping his judicial review challenge to last year's Audit Commission report on the then buildings chief's granting of bonus floor area to Henderson Land in return for the construction of a bus terminal and police base. Mr Justice Hartmann said he had been informed Mr Leung and the Director of Audit had reached an out-of-court agreement. Director of Audit Benjamin Tang Kwok-bun welcomed the decision to drop the case and hoped it had put an end of the controversy, which led to a Legco inquiry that backed the commission's findings and an independent inquiry that cleared Mr Leung of misusing his powers. Mr Leung launched his challenge in November. He had been asking the court to quash three of the report's findings: that the Buildings Department should have sought clarification from other government departments before classifying the site; that the department may have misled other tenderers; and that it should have consulted relevant departments before granting bonus floor area and setting the plot ratio. Henderson Land paid a premium of just $6 million for the extra 10,700 square metres granted, which allowed it to nearly double the number of flats and earn an extra $3.23 billion. The cost to the government in lost revenue was an estimated $125 million. Democratic Party legislator Andrew Cheng Kar-foo said: 'The government has to explain how it could accept Mr Leung's mistake as reasonable. It also owes the public an explanation why it reached an out-of-court settlement. 'The government seems to have compromised with Mr Leung and some of the department management. The public has the right to know the rationale [behind this].' Legislator Lau Kong-wah, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said: 'The issue has yet to be resolved in Legco since the Public Accounts Committee has written to the administration asking it to clarify whether there was a financial loss [to the government]. 'The government still needs to look into how the Building Authority's discretionary power will be exercised, so as to avoid the same thing happening again.' Mr Leung could not be reached for comment.