FAN CHUN KEUNG v. THE SECRETARY FOR THE ENVIRONMENT, TRANSPORT AND WORKS

FAN CHUN KEUNG v. THE SECRETARY FOR THE ENVIRONMENT, TRANSPORT AND WORKS

The Tribunal found the existing use to be a container vehicle park, concluded there were suitable sale comparables so the direct sale comparison method must be used rather than the investment approach, adjusted five nearby sale comparables to derive an adopted unit market value of $1,750 per sq.m., applied that unit rate to the resumed area of 3,835 sq.m. to get $6,711,250 and assessed severance diminution on 2,412.8 sq.m. at 30% of that unit rate ($525/sq.m.) giving $1,266,720, and ordered total compensation of $7,980,000 (rounded).

Citation
FAN CHUN KEUNG v. THE SECRETARY FOR THE ENVIRONMENT, TRANSPORT AND WORKS
Parties
Applicant (registered Owner): Fan Chun Keung; Respondent (government): The Secretary for the Environment, Transport and Works
Court
Lands Tribunal
Jurisdiction
Hong Kong
Judgment Date
15 July 2005
Case Number
LDMR5/2004
Procedural Posture
Miscellaneous Reference Application No.5 of 2004 (compensation Under Roads (works, Use and Compensation) Ordinance, Cap.370) / Judgment on Determination of Compensation (professional Fees, Interest and Costs Adjourned)
Outcome
Respondent ordered to pay Applicant compensation of $7,980,000 for resumed land and severance; professional fees, interest and costs adjourned.
Legal Topics
Assessment of Compensation, Severance Loss, Valuation Methodology (direct Sale Comparison Vs Investment Approach), Existing Use / Melhado Issue, Interpretation and Application of Section 12(aa) LRO
Source Language
EN
Land Law Compulsory Acquisition / Resumption Valuation Law Town Planning Law Assessment of Compensation Severance Loss Valuation Methodology (direct Sale Comparison Vs Investment Approach) Existing Use / Melhado Issue +1 more

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Parties

Fan Chun Keung

Applicant (registered Owner)

The Secretary for the Environment, Transport and Works

Respondent (government)

Procedural Posture

Miscellaneous Reference Application No.5 of 2004 (compensation Under Roads (works, Use and Compensation) Ordinance, Cap.370) / Judgment on Determination of Compensation (professional Fees, Interest and Costs Adjourned)

Legal Issues

  1. 1 What was the existing use of the resumed land
  2. 2 Whether to adopt investment (capitalisation of rent) approach or direct sale comparison for valuation
  3. 3 Which sale comparables are suitable and what adjustments to apply

Ratio Decidendi

The Tribunal found the existing use to be a container vehicle park, concluded there were suitable sale comparables so the direct sale comparison method must be used rather than the investment approach, adjusted five nearby sale comparables to derive an adopted unit market value of $1,750 per sq.m., applied that unit rate to the resumed area of 3,835 sq.m. to get $6,711,250 and assessed severance diminution on 2,412.8 sq.m. at 30% of that unit rate ($525/sq.m.) giving $1,266,720, and ordered total compensation of $7,980,000 (rounded).

Court Disposition

Respondent ordered to pay Applicant compensation of $7,980,000 for resumed land and severance; professional fees, interest and costs adjourned.

Orders

  • Respondent to pay Applicant compensation in the sum of $7,980,000
  • Professional fees, interest and costs to be determined on a date to be fixed