DATA KEY LTD v. DIRECTOR OF LANDS

bjbj HCAL 146/2014 [2018] HKCFI 440

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 146 OF 2014 ____

BETWEEN DATA KEY LIMITED Applicant and DIRECTOR OF LANDS Respondent ____ Before: Hon Au J in Court Date of Hearing: 19 October 2015 Date of Judgment: 2 March 2018

J U D G M E N T A. INTRODUCTION

AUTONUMOUT The applicant was the registered owner of a ground floor corner s value at the time of resumption. The Director of Lands ( the Director ) paid the applicant the compensation.

AUTONUMOUT In this judicial review, the applicant seeks to challenge the Director s decision ( the Decision ) said to be made on or about 18 s of the date of the offer, or does not submit a claim within the stipulated time (if he is served with a notice to require him to submit a claim), the owner or the Director may refer the matter to the Lands Tribunal for determination of compensation to be paid (section respectively of the sums $4,724,000 and $5,036,000 (for twice). Each of these offers consisted of a sum representing what the Director regarded to be a fair and reasonable open market value of the Shop (respectively, $4,502,000 and $4,814,000) together with the sum of $222,000 (which equalled to the rateable value of the Shop) as solatium.

AUTONUMOUT The applicant, assisted by professional surveyors, rejected the offers and claimed for a higher sum respectively of $9,130,000 plus the solatium of $222, 2014, the applicant sought leave to judicially review the Decision. Leave was granted to the applicant on paper.

THIS JUDICIAL REVIEW C1. Grounds of judicial review

AUTONUMOUT As I mentioned above, the applicant raises three grounds of judicial review: The Decision is ultra ant was not paid the solatium.

AUTONUMOUT All these grounds in substance turn on the applicant s contention as to what the Policy is. In gist, it is the applicant s fundamental case that the Policy as formulated is that upon resumption of a tenanted or vacant commercial property, the owner would be paid by the Government as ex gratia allowance a solatium that equals to the property s rateable value. The payment is an independent one and not unconditional upon acceptance by the owner.

AUTONUMOUT On the other hand, in opposing this judicial review, the Director contends that the Policy as formulated is only that the Director will make an offer to compensate the owner of a resumed tenanted or vacant commercial property, and the offer as a whole should comprise of the offered open market value of the property and an ex offers to the applicant which included the solatium payment. Since the offers were not accepted by the applicant, there is no question that the applicant should still be paid the solatium.

AUTONUMOUT In light of the above principal contentions raised by the parties, the core question that the court is required to determine in this application is what is the meaning of the Policy. This is a purely question of proper construction.

AUTONUMOUT ourse for the provision of guidance in the exercise of an administrative decision. What is the meaning of a policy is a matter for the court to construe objectively in accordance with the language used and in its proper context, and should not be construed as if they were statutory or contractual provision. An administrative decision made in departure from a stated policy by the decision-maker s misinterpretation of its meaning or misunderstanding of the policy itself is defective and unlawful and may be quashed in a judicial review.

AUTONUMOUT Bearing these principles in mind, I now look at the contentions raised in relation to the construction of the meaning of the Policy in the present case.

AUTONUMOUT It is common ground that the Policy in its present form was formulated in 2001 as a revision and improvement to the then existing Government policy in land resumption to offer compensations to affected owners and tenants. The proposals to so revise and improve the then existing policy were set out and explained to the Panel on Planning, Lands and Works ( the PLW ) of the Legislative Council ( the LegCo ) in the paper ( the 2001 PLW Paper ) entitled Proposed Ex Gratia Allowances for Property Owner and Tenants Affected by the Resumption of Land dated February follows: Introduction During the consideration of the Urban Renewal Authority Bill, some Legislative Council (LegCo) Members asked the Administration to review the proposed compensation package for owners and tenants affected by the resumption of land, in particular the proposed basis for calculating the Home Purchase Allowance (HPA) and to bring the Urban Renewal Authority Ordinance into operation only after the revised package has been endorsed by the Finance Committee of LegCo. The Bill was passed by LegCo on 27 June 2000. The Administration has now reviewed the current ex gratia allowances and our proposals are set out below. Background 2. To arrest the problem of urban decay and to improve the living conditions of residents in old dilapidated areas, the Government will adopt a proactive and people-oriented approach to urban renewal. Our approach to urban renewal will be guided by three underlying principles (a) affected property owners should be offered fair and reasonable compensation; (b) affected tenants should be provided with proper rehousing; and (c) the community at large should benefit from urban renewal.

3. If the ex gratia compensation package proposed below is approved by the Finance Committee of LegCo, the Urban Renewal Authority (URA) will be set up. It will be tasked to implement a 20-year urban renewal programme, consisting of 200 urban redevelopment projects and 25 uncompleted projects of the Land Development Corporation (LDC). Proposals 4. Having reviewed the existing ex gratia compensation policy, the Administration proposes that (a) the basis for calculating the HPA be revised from a replacement flat of about ten years old to a replacement flat of about seven years old; (b) the HPA for owners of a tenanted flat (or tenanted area) be retitled as the Supplementary Allowance (SA) to avoid confusion or misunderstanding; (c) the eligibility criteria for the new HPA/SA and the amount payable, as set out in paragraph 12 below and at Annex A, be adopted; (d) owner-occupiers of commercial properties be offered an ex gratia allowance of four times the amount of the rateable value of the resumed properties, partly in lieu of the right to claim disturbance payments consisting of loss or damage to the business conducted in the resumed properties under section 10(2)(d) of the Lands Resumption Ordinance (Cap. 124), removal costs under section 10(2)(e)(i) and professional fees in relation to the claim for business loss under section 10(2)(e)(ii) of the same Ordinance (disturbance

payments), and partly as a solatium (Note 1 ); (e) tenants of commercial properties be offered an ex gratia allowance of three times; the amount of the rateable value of the resumed properties in lieu of the right to claim disturbance payments; (f) owners of tenanted or vacant commercial properties be offered an ex gratia allowance of the amount of the rateable value of the resumed properties as a solatium; and (g) the revised HPA for owner-occupiers of domestic properties and owners of domestic properties which are occupied by their immediate family members; the new SA for owners of tenanted/vacant domestic properties, and the new ex gratia allowance for owners and/tenants of commercial properties be applicable to all land resumption exercises under any ordinance. Review (i) Background 5. We have reviewed the ex gratia allowances for owners and tenants affected by the resumption of land, taking into account the practices of the LDC, the current compensation policy of the Government for resumed land and the views of LegCo Members. A number of improvements to the existing package are recommended. The details of the proposed package are set out below in the following paragraphs. (iii) Proposed new ex gratia allowance for owners and tenants of commercial properties 14. At present, owner-occupiers of commercial properties resumed by the Government are offered the following compensation to facilitate clearance and to help finance their move from the property resumed (a) the open market value of their properties, pl e, they have the right to make statutory claims for business loss, removal costs and professional fees.

16. In negotiations for the acquisition of land in recent projects, the LDC has offered the following compensation package to owners and tenants of commercial properties (a) for owner-occupiers of ground floor shops the open market value of their properties, plus an ex ss loss (if substantiated); and (e) for tenants three to five times the Government s ex gratia allowance as set out at Annex B. This package, which is offered during the acquisition stage of the LDC land assembly process, is more generous and flexible than the compensation currently offered by the Government. However, if the LDC is unable to acquire some properties for a project and if these remaining properties are resumed under the Lands Resumption Ordinance for the project, the Government's compensation terms are used.

17. Owner-occupiers and tenants of commercial properties (mostly shopkeepers) may be entitled to claim business loss, removal costs and professional fees under the Lands Resumption Ordinance. However, many may find it difficult to produce documentary evidence to prove business loss. When compared with owner-occupiers and tenants of domestic properties who are entitled to the HPA and rehousing respectively, the amount of ex gratia compensation for owner-occupiers and tenants of commercial properties is relatively modest. The existing ex gratia allowance for owner-occupiers and tenants of commercial properties should be rationalized and enhanced.

18. In our review, we have looked at the possibility of using the rateable value as the basis for calculating the ex gratia allowance for owners and tenants of commercial properties. The rateable value of a property is the reasonable annual rental value of that property as assessed by the Rating and Valuation Department. Rateable values are reviewed annually. The rateable value is a reliable measure of the commercial worth of a property.

19. Having reviewed the existing ex gratia payment policy, we propose that owner-occupiers of commercial properties be offered the open market value of their properties, plus an ex le value) and partly as a solatium rateable value (set at the amount of the rateable value).

20. In the case of tenants of commercial properties, we propose that they be offered the open market value of their lesser interest in the properties, if any (for example, long term lease at below market rent), plus an ex gratia allowance of three times the amount of the rateable value of the resumed properties they are occupying in lieu of the right to claim disturbance payments.

21. We also propose that owners of rary loss of rental income as a result of the resumption and partly to make up for the fact that the owner is forced to give up his property.

22. The proposed ex gratia allowance for owners and tenants of commercial properties is generally more generous than the current ex gratia allowance.

23. If the above proposals are adopted, both affected owner occupiers and tenants of commercial properties would continue to be offered the choice of either making a statutory claim for business loss, removal costs and professional fees, or receiving the new ex gratia allowance. The proposed ex gratia allowance would replace the existing one. (iv) Application 24. Resumption of land for both URA and non-URA projects are conducted under the Lands Resumption Ordinance. It would not be fair to offer different compensation terms in respect of URA and non-URA projects. We therefore propose that the new HPA and SA and the new ex gratia allowance for owners and tenants of commercial properties be made applicable to all land resumption exercises under any ordinance to ensure equity. The Way Forward 27. Subject to LegCo Members views, we intend to make a submission to the Finance Committee of the LegCo for approval of the proposals. (emphasis added)

AUTONUMOUT As stated at paragraph a revision to the basis for calculating the Home Purchase Allowance payable to owners of domestic properties affected by land resumption and the eligibility criteria for the Home Purchase Allowance; the retitling of the Home Purchase Allowance for owners of a tenanted flat (or tenanted area) as Supplementary Allowance; and revision to the basis and eligibility criteria for the Supplementary Allowance; and a revision to the ex gratia allowance payable to owners, owner-occupiers and tenants of commercial properties affected by land resumption.

PROBLEM The current Home Purchase Allowance (HPA) and the ex gratia allowance (EGA) for commercial property owners and tenants affected by land resumption are perceived as being inadequate by many owners and residents in older urban areas. (B) Proposed new EGA for owners and tenants of commercial properties 7. At present, owner-occupiers of commercial properties resumed by the Government are offered the open market value of their properties plus one of the following additional payments (a) an EGA based on a formula consisting of the rental cost for the removal period (during which no business is conducted), removal costs, decoration costs, stamp duty, legal fees and agent s fees. This EGA package was last approved by the Finance Committee of this Council on 9 December 1988, vide FCC(88-89)21; or (b) the right to claim business loss (if substantiated) under section 10(2)(d) of the Lands Resumption Ordinance, removal costs under section 10(2)(e)(i) and professional fees undersection 10(2)(e)(ii) of that Ordinance (disturbance payments).

8. Just like owner-occupiers, tenants of commercial properties resumed by the Government have the right to make statutory claims for disturbance payments under the Lands Resumption Ordinance as described in paragraph 7(b) above. They may also receive the same EGA as set out in paragraph entary evidence to prove business loss. Second, when compared with owner-occupiers and tenants of domestic properties who are entitled to the HPA and rehousing respectively, the amount of EGA for owner-occupiers and tenants of commercial properties is relatively modest.

10. Having reviewed the existing ex gratia payment policy, we propose that owner-occupiers of commercial properties be offered the open market value of their properties, plus an EGA equivalent to four times the amount of rateable value of the resumed properties. The new EGA would be paid partly in lieu of the right to claim disturbance payments (deemed to be equivalent to three times the amount of the rateable value) and partly as a solatium (set at the amount of the rateable value). 11 We also propose that owners of tenanted or vacant commercial properties be offered the open market value of their properties, plus an EGA of the amount of the rateable value of the resumed properties as a solatium. This EGA is partly to cover any temporary loss of rental income as a result of the resumption and partly to make up for the fact that the owner is forced to give up his property.

12. For tenants of commercial properties, we propose to pay the open market value of their lesser interest in the properties, if any (for example, long term lease at below market rent), plus an EGA equivalent to three times the amount of the rateable value of the resumed properties they are occupying. The new EGA would be paid in lieu of the right to claim disturbance payments.

13. The proposed EGA for owners and tenants of commercial properties is generally more generous than the current EGA. (C) Application 14. We expect that most of the future resumption of land under the Lands Resumption Ordinance would be carried out for projects of the URA. However, there would be other cases of resumption for public works, rail or other non-URA projects. For equity reasons, we propose that the new HPA and SA and the new EGA for owners and tenants of commercial properties should be made applicable to all land resumption exercises under any relevant ordinance.

FINANCIAL IMPLICATIONS 15.

BACKGROUND INFORMATION 18. The URA Bill was passed by the Legislative Council on 27 June 2000. Members had views on our earlier proposed compensation package for owners and tenants affected by land resumption. Accordingly, we undertook to review the package and to invite the Finance Committee to approve a revised proposal before bringing the URA Ordinance into operation.

19. We briefed the Legisla ernment will offer the owner a compensation package which consists of what the Government regards as the open market value of the property and a solatium equalling the property s rateable value. The Policy is not that the owner is entitled to and will be paid a solatium whether or not the offer is accepted. I s that the person making the offer is to present something so that it may be accepted, rejected or considered. It does not denote the meaning that what is contained in the offer is something the offeror is bound to give to the offeree in any event even without an acceptance by the offeree.

AUTONUMOUT This meaning of the word offer as used in the 2001 the acquisition of land for development projects. It then compared that with the offer made by the Government under the then existing compensation package (which was less generous than the URA offers) when the land had to be resumed under the LRO as the Land Development Council was not successful in its negotiation. It was in that context the Bureau considered it necessary to rationalize and enhance the ex-gratia allowance to be offered by the Government when resuming land. In this context, it is clear that when the Bureau used the word offer in the paper, it was intended to mean what it is understood ordinarily but not something which the offeree is entitled to have without the need to accept it.

AUTONUMOUT Further, one of the underlying contexts of the Policy is resumption of land under the LRO. As mentioned above, under section t it is to present the compensation package to the offeree for its consideration and acceptance. It does not mean that what is contained in the offer amounts to the offeree s unconditional entitlement.

AUTONUMOUT This is even more so given that under the Policy, it is stated in the 2001 the word offer is to refer to both the Government s assessed open market value of the property and the solatium as a one and complete offer. It cannot be seriously suggested that, objectively and properly understood, when the Bureau used that word offer in the same reference, it intended to use the same word to describe the open market value as an offer as ordinarily understood, but to the solatium as the offeree s entitlement not conditional upon acceptance.

AUTONUMOUT It is also important to note itled to any of the offered payments without the need of an acceptance. In the circumstances, when describing the proposed changes or additions to the policy by reference to and use of the same word offer , objectively, the Bureau must have intended to adopt the same policy of making an offer to the affected persons albeit with an improved content of the offer.

AUTONUMOUT Moreover, it is common ground that solatium is not a compensation that a party is entitled to under the LRO or other ordinances. In that case, it would be objectively very unusual for the Government to have intended to provide these owners a solatium effectively as a matter of right and absolute entitlement (under the applicant s construction) by way of a policy. If the Government did intend to do so, objectively, she would have to set it out in the clearest term instead of simply including this as part of an offer for compensation together with the open market value of the property.

AUTONUMOUT Finally, this construction is als that the word ex gratia can also be understood to mean only that it is payment outside any statutory entitlements. However, leading counsel also fairly accepts that given the express use of the words ex gratia allowances to refer to the solatium and that there is no statutory entitlement or right to it, there must indeed still be a discretionary element in it. The problem I have with this submission is, when asked as to what is left in the discretion if his construction of the meaning of the Policy vi fore unable to accept this submission.

AUTONUMOUT In the premises, on an objective, proper and practical reading of these documents in their proper context, it clearly shows that the Policy is that the Government will make a compensation offer to owners of resumed tenanted or vacant commercial properties, and such offer as a whole will comprise of the Government s assessed open market value of the property and an d parcel of an offer including the open market value. This is so because if the owner does not agree with the Government s valuation of the property, and decides to refer it to the Lands Tribunal for proper assessment, something which he is entitled to do so under the LRO, he would never get the solatium, even if at the end of the day he is successful (as in the present case) to secure a higher assessment than the Government s valuation. In other words, if the owner decides to refer the compensation assess se a right he or she is entitled to do under the statute.

AUTONUMOUT Although Mr Chan s argument has initial attraction, on reflection, I am not persuaded by it.

AUTONUMOUT The fallacy (if I may say so) of this argument is that it presupposes that the policy concerned is one which is to provide an affected owner a guaranteed and unconditional item of compensation. In other words, it presupposes that the applicant s own construction of the Policy to be correct in the first place. This however is i the then existing compensation policy, the affected owner was provided with any guaranteed and unconditional payment. It was a policy to make an offer to compensate.

AUTONUMOUT Hence, under the then existing policy, the owner-occupiers and the owners of tenanted (or vacant) commercial properties were not offered any item of compensation when there was no equivalent alternative statutory claim. The revised policy proposed (ie, the Policy) in the 2001 d a solatium (whatever that value may be). All they are entitled to as a matter of rights, is they have a right to be paid the open market value of the properties resumed and a right to have that value assessed by the Lands Tribunal. Hence, they are not worse off (and therefore not punished) if they decide not to accept the Director s offer (which includes the solatium and the open market value of the properties) as they would still be able to get the open market value as assessed by the Lands Tribunal as e offer of certain items of compensation (ie, three times the rateable value of the resumed properties) as in lieu of the right to claim various statutory compensations. However, it did not describe the solatium as in lieu of any alternative rights to compensation, which must be correct since under the LRO, the affected parties have no right to claim any statutory payments in the nature of a solatium.

AUTONUMOUT Mr an item of compensation has no relevant alternative equivalent statutory compensation which the offeree can make a claim to, it is not only unnecessary but also inappropriate to use the term in lieu of to describe that offered item of compensation, as there is nothing for that offer if accepted to substitute or replace with (hence made in lieu of ). The absence of the use of the term in lieu of in referring to the offer of a solatium is thus neither here nor there. It certainly does not then logicall o the word offer as used in construing these documents and the use of the word offer would in these circumstances include the meaning of entitlement . Leading counsel further says his above submissions are buttressed by the following.

AUTONUMOUT The Bureau at Note h8!_ hflL h8!_ m_W_P hvs4 hvZF h8!_ hvs4 h8!_ h(:& hvZF h(:& e[TI hES hZ\# hvZF h8!_ h(:& hZ\# yt_@8 hwqB hF,d hF,d hF,d hwqB h S| h S| h36P h S| h S| h S| h S| htW" h S| h S| gdtW" hx/A htW" hXi1 hXi1 hXi1 hXi1 hXi1 hXi1 h!{ h!{ h!{ h!{ hTJ) h[mo htW" h/:F hJg; h=oh h=oh gdJg; h/:F htW" hTJ) h/:F h/:F h/:F hCi! hCi! htW" h/:F h/:F h/:F htW" hrGl h0T5 h0T5 hrGl h/:F h/:F h/:F hrGl h/:F h/:F h/:F htW" htW" h/:F h/:F h'#; htW" 3e land resumed in Urban Area (defined as Hong Kong Island, Kowloon and New Kowloon). Resumption proceedings are instituted under the relevant Ordinances for different purposes. As the procedures and compensation provisions of various Ordinances differ, the following paragraphs only intend to give a general guideline on resumption matters. Any person whose interest is affected by a land resumption project is advised to refer to the provisions of the respective Ordinances for details or consult professional consultants.

2. LAND RESUMPTION The Government may acquire private land by resumption for the implementation of public projects such as a road scheme, a public housing development, an urban renewal project, an open space, a drainage improvement project, a new market, a school or any item in the Public Works Programme. According to the purpose of public projects, resumption proceedings may be instituted mainly under the provisions of:- (a) the Lands Resumption Ordinance, Chapter 124; (b) the Roads (Works, Use and Compensation) Ordinance, Chapter 370; (c) the Railways Ordinance, Chapter 519; (d) the Land Acquisition (Possessory Title) Ordinance, Chapter 130; (e) the Land Drainage Ordinance, Chapter 446; (f) the Urban Renewal Authority Ordinance, Chapter 563; (g) The Mass Transit Railway (Land Resumption and Related Provisions) Ordinance, Chapter 276. The Director of Lands is given the authority to implement resumption and compensation provisions of these Ordinances.

4. OFFER OF COMPENSATION When the private land is resumed or otherwise adversely affected by the actions of the Government, the Ordinance under which the legal interest is extinguished or affected provides for the payment of compensation. The former owner or persons having an interest in the land such as the tenant, will be entitled to statutory compensation for the value of the land and building (if any) or other land interests resumed in accordance with the provisions of the Ordinance. For land resumed under the Lands Resumption Ordinance (Chapter 124), the Government will make an offer of compensation in respect of the resumption to the former owner and to any person having an estate or interest in the land immediately before reversion under an instrument registered in the Land Registry or invite claims for compensation from them within 28 days from the date of reversion. Any person who considers that he has a compensatable interest in the land resumed, and who has not been offered compensation nor been invited to claim compensation may, within one year from the date of reversion, submit a claim stating the nature of his estate or interest in the land and the amount of compensation which he claims for the resumption of that estate or interest. (c) The amount of compensation will be assessed on the basis prescribed in the respective Ordinances. Upon acceptance of the amount of compensation offered and the proof of title to the satisfaction of the Government, the claimant is required to sign necessary documents. Thereafter, the release of compensation will be arranged accordingly. In straightforward cases, cheques for the amount of compensation offered will be made available for collection within 4 weeks following receipt of acceptance and proof of title.

6. STATUTORY AND EX-GRATIA COMPENSATION TO DIFFERENT PARTIES The type of compensation to a party affected by a land resumption scheme may vary according to the type of property in question and the legal interest held by the party in the property. The details are set out in the following paragraphs. 6.2 COMMERCIAL PROPERTY (a) Compensation to owner-occupiers Legal owner-occupiers of commercial properties are entitled to the existing use value of the resumed properties as at the date of reversion, plus one of the following additional payments: (i) an ex-gratia allowance equivalent to four times the amount of rateable value of the resumed properties prevailing as at the date of reversion and where appropriate, severance payments to employees under the Employment Ordinance, Chapter 57; or (ii) where an owner believes that his business loss is greater than the amount of the ex-gratia offer, he has the right to claim business loss (if substantiated by documentary evidence) under section 10(2)(d) of the Lands Resumption Ordinance, removal costs under section 10(2)(e)(i) and professional fees (also see paragraph 10 below) under section 10(2)(e)(ii) of that Ordinance. With regard to paragraph 6.2(a)(ii) above, owner-occupiers may submit statutory claims for business loss and related loss and expenses as a result of total extinguishment or removal of the business from the resumed

property. The various heads of claim for statutory compensation may include :- (I) Permanent or temporary loss of business profit; (II) Loss on forced sale of fixtures & fittings and stock; (III) Loss of business goodwill; and (IV) Severance payments to employees under the Employment Ordinance, Chapter 57. The above items may not be taken as exhaustive and each case will be considered on its own merits. In appropriate cases where the redevelopment value for the land resumed is higher than the existing use value as at the date of reversion, the former will be offered as a statutory compensation. However, the owner-occupier is not entitled to claim compensation as referred to in paragraph 6.2 (a)(ii) above if the land resumed is assessed on redevelopment value. (b) Compensation to owners (not in occupation) Legal owners of tenanted or vacant commercial properties will be offered the higher of (i) the redevelopment value of the resumed properties as at the date of reversion (if established) and (ii) the existing use value of the resumed properties plus an ex-gratia allowance of the amount of the rateable value of the same prevailing as at the date of reversion. (c) Compensation to tenants Legal tenants are entitled to the open market value, if any, of their interest in the commercial properties (for example, the value of an unexpired lease term subject to an existing rent below

the prevailing open market rent), plus one of the following additional payments:- (i) an ex-gratia allowance equivalent to three times the amount of the rateable value of the resumed properties prevailing as at the date of reversion and where appropriate, severance payments to employees under the Employment Ordinance, Chapter 57, or (ii) the right to make statutory claims for compensation under the Lands Resumption Ordinance as described in paragraph 6.2 (a)(ii) above. (emphasis added)

AUTONUMOUT Mr o the ex-gratia allowance equivalent to four times the rateable value of the property, which included the allowance of solatium). Thus, it shows not only that the Government used the words offer and entitlement flexibly in these documents, but also that the solatium was indeed intended to be an entitlement.

AUTONUMOUT With respect, I am not convinced by these contentions.

AUTONUMOUT As I have explained above, in construing the documents to find the objective meaning of the Policy, I have not at e context of explaining the meaning of a solatium . In that context, plainly the word paid is used to describe what is the use and purpose of a solatium payment. Used in that context, it is certainly not inconsistent with the use of the word offer in the main text to explain the proposal that the Government would make an offer to pay a solatium as part of the offered package of compensation.

AUTONUMOUT Insofar as the use of the word entitled is concerned in the 2001 intended to give a general guideline on resumption matters. This was not intended to give and be read as detailed and technical descriptions and explanations of the relevant matters, including offers and claims for compensations, relating to land resumption.

AUTONUMOUT One therefore must read the 2001 pensation package that the Government would provide to them. This package included the solatium. This is clearly consistent with the meaning that the Government will make an offer to compensate the owners which included an offer to pay a solatium.

AUTONUMOUT For all the above reasons, I reject all of Mr roperly construed, under the Policy, the solatium is not intended to be an unconditional and independent payment which the owners are entitled to receive even if they do not accept the offer as a whole because they disagree with the open market value of the properties as offered by the Director.

AUTONUMOUT With this conclusion on the meaning of the Policy, I can now quickly deal with specifically the grounds of judicial review below. C3. The ultra vires ground

AUTONUMOUT This ground must fail given the above construction on the meaning of the Policy. The Decision to refuse to pay the applicant the solatium is not inconsistent with the Policy, as the applicant had already been offered the solatium as part of the offered compensation. It however refused to accept the offers, and the offers had lapsed after the time stated for acceptance (as respectively set out in the offer letters and provided under section h comprises of a solatium. The applicant in the present case had been so offered. It had refused to accept the offer. There is thus no question of any breach of the legitimate expectation. C5. Lack of reasons

AUTONUMOUT Again, there is no substance in this ground. In light of the meaning of the Policy as now properly construed, the reason for the Decision is an obvious one. The applicant had refused the offers of compensation which included the ex gratia allowance of a solatium, and the offers had lapsed. For that reason, it would not be paid the solatium.

AUTONUMOUT The applicant therefore fails on all its grounds of judicial review. C6. Application to set aside the ex parte leave

AUTONUMOUT Other than opposing the merits of this application, the Director has also asked the court to set aside the ex ve the applicant a substantive reply once he was in a position to do so. Viewed as such, it must be objectively reasonable for the applicant to regard that the Director was still seriously considering its claim for a solatium at this stage. This is further underlined by the fact that the Director even in his subsequent letter dated 18 h/:F h/:F h/:F htW" h'#; gd;2 hV]8 hV]8 hV]8 h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F h/:F homas Au) Judge of the Court of First Instance High Court Mr Chan Chi Hung SC and Ms Jo Siu, instructed by Lui & Law, for the applicant Mr Anthony Ismail, instructed by Department of Justice, for the respondent The ground floor property was at the relevant time sub-divided into three smaller shops which were rented out. For convenience, I would collectively refer the property as the Shop in this judgment. Made in the LandsD s letters respectively dated 22 g proposal was prompted by the demands of members of the Legislative Council when they passed the URA Bill for setting up the URA to replace the then Land Development Council. LC Paper No CB(1)630/00-01(02) Note 1 A solatium is a sum of money paid over and above the open market value as a solace for injured feelings or for being compelled to part with the resumed property. Mr h S| h S| h S| wf[SD8 htW" h S| h S| gdtW" gd S| o^SKS ubstantive hearing depending on the circumstances of each case.

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