Wharf Holdings Ltd

Mall sued over public space rents

PUBLISHED : Wednesday, 18 June, 2008, 12:00am
UPDATED : Wednesday, 18 June, 2008, 12:00am

Government seeks damages from Times Square for 'excessive profits'

In the first action of its kind, the government is suing the operators of Times Square for allegedly profiting by charging exorbitant rents for the use of public space.

A High Court writ alleges that for 15 years the company has been charging up to HK$124,000 a day for use of space reserved for the public in its ground-floor piazza.

The writ, filed on Monday, seeks damages from Times Square - a key asset of the Wharf group - for excessive profits from renting out two piazza sites. Times Square generated an operating profit of HK$968 million last year, according to Wharf (Holdings)'s 2007 annual report.

Times Square said yesterday it had done nothing it was not entitled to do under an agreement struck with the government in 1992.

Sources in the property trade said the move would send shock waves through the sector.

The lawsuit is the first legal action by the government after a row broke out over developers renting out or denying access to areas supposed to be public open space and for which they had been granted valuable floor space concessions.

The government claims Times Square charged rents far exceeding what was allowed by the agreement under which the 3,017 square metre piazza was dedicated to public use.

'It is an express term of the deed that the dedicated area, though it remains the property of [Times Square], is dedicated to the public for the purposes of pedestrian passage and passive recreation,' the writ states.

Times Square was permitted to mount temporary exhibitions and displays in the area only if it complied with certain restrictions, including one that it 'only charge third parties for their use of electricity, water or related facilities and other services'.

The writ says: 'On diverse days since 1993 ... [Times Square] has levied charges in excess of the permissible charges ... and has accordingly made an unauthorised profit out of the use of the dedicated area.'

The writ also says Times Square admitted to the government in February this year that it charged HK$28,000 and HK$40,000 from Mondays to Thursdays for the two sites, referred to as Open Piazza I and Open Piazza II, respectively.

Those charges rose to HK$100,000 and HK$124,000 respectively for Fridays, weekends and public holidays.

It is understood that Times Square has suspended further activities on the piazza pending the outcome of the case.

A spokesman for the company said last night that the rents charged for the sites were in line with the contract.

'Obviously the deed does provide for such charges to be levied on third parties, but there is a difference in the interpretation of the clauses,' he said. 'For us this issue has been dragging on and this action does present a very good platform for resolving these issues. It will clear the air, so to speak, so that we can have certainty in our business dealings.'

A government spokeswoman said last night that she was unable to comment on the writ because legal action had begun.

She would not say whether or not there would be a review of how the alleged breach went undetected for so long, pointing instead to a wider review being carried by a Legislative Council panel into the provision of open spaces across the city.

The government is seeking damages and an accounting of the profits made on the sites since Times Square began renting them out 15 years ago.