LDMR23F 1999

A
LDMR 23/1999
B
IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS REFERENCE APPLICATION NO. 23 OF 1999

D
_________________
E
BETWEEN
Pennys Bay Investment Company Limited
and
Director of Lands
Applicant
Respondent
H
_________________
I
LDMR 1/2005
K
IN THE LANDS TRIBUNAL OF THE

L
HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS REFERENCE APPLICATION NO. 1 OF 2005
_________________
N
BETWEEN
O
Pennys Bay Investment Company Limited
and
Director of Lands
__________________
Applicant
Respondent
-2-
Before: Deputy Judge KOT, Presiding Officer, Lands Tribunal and

Mr K K CHIU, Temporary Member of the Lands Tribunal
Date of Hearing: 19 December 2014

C
Date of Decision: 16 January 2015

D
_________________
DECISION
__________________
G
Background
H
1.
This is the cross application for leave to appeal by the parties
in this case against the judgment handed down by this Tribunal on 15

October 2014 (Main Judgment).
abbreviations used in the Main Judgment.
2.
We shall adopt the same
used
In the Main Judgment, we have found that Lot 22 can be

for
shipbuilding
and
mid-stream
operation
before
the
extinguishment of its marine rights (Before Value). The Before Value
is enhanced by the prospect of the Container Terminal Scheme going

N
ahead.
It is also our finding that after the marine rights being
extinguished with more certainty that the Container Terminal Scheme
would go ahead, Lot 22 can be used for industrial purpose, which is the
P
highest and best use when compared to the mid-stream use (After
Value).
3.
It is our conclusion that since the Before Value is in excess
of the After Value, the applicant is entitled to receive compensation for
the extinguishment of its marine rights in the sum of $10,952,500.

T
-3-
Leave to Appeal
B
4.
Section 11(2) of the Lands Tribunal Ordinance (LTO)
provides that :
C
Subject to section 11AA and the provisions of any Ordinance

relating to appeals from the Tribunal, any party to proceedings
before the Tribunal may appeal to the Court of Appeal against a
judgment, order or decision of the Tribunal on the ground that
such judgment, order or decision is erroneous in point of law.
5.
(6) Leave to appeal shall not be granted unless the Tribunal,

the Court of Appeal or the registrar hearing the application for
leave is satisfied that
(a) the appeal has a reasonable prospect of success; or
(b) there is some other reason in the interests of justice why

the appeal should be heard.
Section 11AA(6) of the LTO provides that :
6.
Reasonable prospect of success involves the notion that the
prospects of succeeding must be reasonable and therefore more than

L
fanciful without having to be probable (SMSE v KL [2009] 4

HKLRD 125 at 17). And if a finding of facts is perverse or irrational;
or there was no evidence to support it, or it was made by reference to

N
irrelevant factors or without regard to relevant factors, the decision may

be quashed (Edwards v Bairstow [1956] AC 14).
7.
Bearing in mind these legal principles, we shall deal with
each ground of appeal raised by the parties in seriatim.
-4-
Applicants Application
B
Ground 1
8.
This Tribunal erred in adopting inconsistent approach in
reflecting the uncertainty as to whether the Container Terminal Scheme

D
might proceed in the Before and After Value.
Whilst the Tribunal
accepted that there is a risk factor in the Before Value to reflect the
E
uncertainty inherent in the factual expectation as to whether the Container

F
Terminal Scheme might proceed at all, it had failed to do the same in the
After Value when the Tribunal also acknowledged that there was still
remained a degree of uncertainty for the scheme not proceeding at all.

H
9.
The Tribunal erred in law in holding that artificial
assumption about marine rights had any impact, or even significant

J
impact upon the factual expectation as to whether the Container Terminal

Scheme might proceed at all.
10.
It is beyond argument that this Tribunal had not applied the
same formula to reflect the uncertainty inherent in the factual expectation
as to whether the Container Terminal Scheme would proceed in the

N
Before and After Value. This Tribunal has given 50% discount to the
hope value in the Before Value to reflect the uncertainty whilst there is
none awarded in the After Value. This is because as one can see from
P
Section F.(7) and H.(4) to H.(6) of the Main Judgment, it is the finding of
this Tribunal that since the marine access had already extinguished, the
only uncertainty in the After Value is the delay involved, hence there is
R
no hope value to be reflected in the After Value and the formula adopted
in the Before Value is not applicable.
-5-
11.
B
Having said so, we do agree that Ground 1 raised by the
applicant did involve a legal issue as to whether the artificial legal
assumption about marine rights had any impact upon the factual
C
expectation which cannot be said to be without any reasonable prospect

D
of success. Leave to appeal should be granted under this ground.
Ground 2
F
12.
The Tribunals findings that the Container Terminal Scheme
and its associated roadworks were expected to proceed is perverse. The
Tribunal failed to take into account the industry view back in 1995 which
H
is not in dispute but instead based on the pure speculation that all the
factors relied upon by the applicant should have been considered by the
Government before the proposal was first published in 1994 and that the
J
Government and the Governor in Council should have already approved

in principle to proceed with the Container Terminal Scheme.
13.
The industry view had been considered by this Tribunal in
112-118 of the Main Judgment and the findings at 114 are not
speculation but are reasonable inferences to be drawn from the fact that
N
the proposal was being published and authorized. We do not agree that
such a finding of fact is in any way perverse and amounts to an error in
law.
P
14.
We found the applicant had failed to establish any
reasonable prospect of success or there is any reason in the interests of

R
justice that this ground should be heard. Leave to appeal under this
ground is refused.
-6-
Ground 3 and 4
B
15.
The Tribunal failed to give full and proper recognition to the
intent and effect of the Before-assumption about marine rights in the

C
Before Value and adopted the value of Industrial Development which

D
wholly dependent upon the existence of road access, ie a Before Value
for the Godown/Industrial Area based on a new use without marine

E
access, contrary to its own findings in 26 of the Main Judgment.

F
16.
The Tribunal has not considered or discussed at all or in any
details the applicants case on its Scenario 3 which assessed the

H
Godown/Industrial Area with marine access and reflect the enhancement

value arising from the anticipated road access brought by the expectation
of road access without detracting from the Before-assumption about

J
marine rights.
17.
L
The Tribunal has already considered the new use of Lot 22
with marine access (i.e. mid-stream use value) but the Tribunal has also
considered the expectation which the prospective purchaser would have
in mind to reflect the enhancement value if the OZP and the Container
N
Terminal Scheme were to proceed.
18.
P
In the formula P=[(H-L)xR]+L adopted at 408 of the Main
Judgment, L is the value of the subject property for mid-stream use with
marine access whilst the value of the subject property with the
expectation of the Container Terminal Scheme going ahead is H. The

R
difference between L and H reflects the enhancement value resulted from

the anticipated road access brought by the Container Terminal Scheme.
-7-
19.
B
Having said so, we do agree that Ground 3-4 raised by the
applicant did involve a legal issue as to the interpretation of the CFA
Judgment in assessing the enhancement value which cannot be said to be

C
without any reasonable prospect of success. Leave to appeal should be

D
granted under this ground.
Ground 5
F
20.
The Tribunal erred in its adjustment made to the NKML
Comparables in relation to the Lease Term Adjustment by first
performing a time adjustment and then applying the 1995 Yield. This has
H
in effect applied statistical data which were indices for capital values to
the leases.
21.
Yield reflects the investment return in the market. A 1993
Yield does not reflect the situation in 1995 so a time adjustment must be
performed before applying the 1995 Yield. We found the applicant had
L
failed to establish any reasonable prospect of success or there is any

reason in the interests of justice that this ground should be heard. Leave
to appeal under this ground is refused.

N
Ground 6
22.
The Tribunal failed to consider the rental value suggested by
the applicants industry expert Kong.
23.
R
It is not a must that this Tribunal has to accept the rental
value suggested by Kong when such evidence is not being challenged by

the respondent. This Tribunal has adopted the unit rate derived from the
STT Comparables which are transaction prices that the Tribunal found to
T
be more reliable.
-8-
24.
B
C
ground is refused.
D
Ground 7
E
25.
F
The Tribunal erred in making a -35% adjustment on account
of Height Restriction when the evidence showed that the operation

contemplated on Lot 22 would be on the basis of 3 tiers and the
Tribunal wrongly assumed or speculated that having a higher height

H
restriction would be of substantial benefit.
26.
J
This attacks our findings at 243-245 of the Main Judgment.
As found at 244, AW also admitted that 8 layers of containers are

possible for the storage of empty containers. With the height restriction,
Lot 22 must be disadvantaged in the storage of, at least, empty containers.

L
With a higher height restrictions allowed, it allows more flexibility for the
operators and can be considered a benefit.
27.
We found this is just a matter of opinion and the applicant
had failed to establish any reasonable prospect of success or there is any
P
Ground 8
R
28.
of Quay Length based on the wrong assumption or speculation that
having a more than optimal quay length would be of substantial benefit.

T
-9-
The fact that the quay length can be split into 3 should not be a
B
disadvantage which warranted a downward adjustment.
29.
D
E

F
Ground 9
30.
of Location and an additional -15% adjustment on account of Remoteness

which is wrong in principle and against the evidence.
31.
L
Ground 10 and 11
N
32.
The Tribunal erred in finding that the KCTL Comparables
are appropriate comparables ignoring all matters and contentions raised
by the applicant. And the Tribunal proceeded on the erroneous basis that
P
the only difference between Lot 22 and the KCTL Comparables was
location, lack of road access and time. The Tribunal also speculated that
the KCTL Comparables were conducted on the basis that the bidder
R
would consider that marine rights would continue undisturbed for the
entire 50 year lease.
- 10 -
33.
B
C

D
Ground 12
E
34.
F
The Tribunal erred in rejecting the evidence of Kong on a
false premise and speculated there were hidden reasons rendering Lot 22
unattractive and wrongly assumed that the owners of Lot 22 were keen to
lease out the lot.

H
35.
As stated in 331 of the Main Judgment, this Tribunal came
to the conclusion that there were hidden reason because the owner was
J
willing to accept a rental substantially below the rental of $8/sq ft which

Kong believed to be the market rental. This is a reasonable inference to
be drawn from the evidence. And the fact that there were the China
L
Merchants offer to lease the Lot and upon the falling through of it,
another tenancy agreement with the CLP, this Tribunal is entitled to come
to the conclusion that the owners were keen to lease out the Lot.
N
36.

P
ground is refused.
Ground 13
37.
The Tribunal erred in not valuing the Non-Shipbuilding Area
at a rate at least no less than the properly adjusted rate for the
T
- 11 -
Shipbuilding Area since the Non-Shipbuilding Area is found to be

B
capable for use for ship repairing purpose.
38.
D
By the Non-Shipbuilding Area, this is termed as the
Industrial/Godown Area of Lot 22 in the Main Judgment. It is never the
parties case that the Industrial/Godown Area can be used for shipE
repairing purpose and should be valued as such. The applicant and the
F
respondent
have
contended
that
the
optimum
use
of
the
Industrial/Godown Area should be for mid-stream and industrial
developments respectively. In any event, it is the finding of this Tribunal

H
that the optimal use of the Industrial/Godown Area is mid-stream use.
39.
J
Furthermore, it is our findings at 176 of the Main Judgment
that most of the comparables were less than 64,583.4 sq ft and it is

unlikely and unreasonable that the entire remaining lot of over 1,725,000
sq ft at Lot 22 will be used for ship repairing purpose. Taking into

L
account the marketability and the unreasonably large in area for ship
repairing use, it is not reasonable to apply the rate for the Shipbuilding
Area on the remaining portion of Lot 22.

N
40.

P
ground is refused.
Ground 14
41.
The Tribunal erred in failing to take into account the set up
costs for covered or warehoused storage based on the wrong assumption

T
that there was no evidence adduced.
- 12 -
42.
B
It is not the finding of this Tribunal that the set up costs need
not be taken into account because there was no evidence in this regard.
Instead it is the finding of this Tribunal at 228 of the Main Judgment

C
that the mid-stream use is for open storage so no covered or warehouse

D
storage is involved, hence no set up costs is required to be considered.
43.
F


H
Respondents Application
Ground 1
J
44.
This Tribunal erred in failing to make allowance for a period
of demolition of unauthorized structures on Lot 22 based on the finding
that such demolition could take place whilst construction work

L
commenced on the unbuilt areas of Lot 22. However, this is inconsistent

with the findings of the Tribunal that the construction of industrial
structure on the unbuilt area was not expected to commence for some
N
years after the valuation date. Under such circumstances, it does not
make sense to say that there should be no period allowed for the
demolition.
P
45.
Since it is the finding by this Tribunal that there should be a
deferment of 6 years in the construction work to commence, no additional

R
period of demolition is required.
46.
T
- 13 -
B
Ground 2
D
47.
The Tribunal erred in adopting a wrong figure in the
assessment of demolition costs.
Whilst the Tribunal accepted the
estimate of demolition costs of $11,091,798 suggested by Mok (the

F
respondents expert), the Tribunal had adopted a figure of $8,049,200

without any apparent addition for professional fees or development profit.
48.
The Tribunal admitted that we made a mistake for not
accounting for professional fees of 6% and development profit of 30% in
345 and leave to appeal should be granted.

J
49.
If professional fee and development profit is taken into
account, the value of Lot 22 for mid-stream use will be as follow:

L
(a)
(b)
Less
P
Shipyard Value
285,000 sq ft @751.6/sq ft
Mid-stream Use
1,725,000 sq ft @200/sq ft
$214,206,000
$345,000,000
$559,206,000
Demolition Costs (excluding canteen as $11,091,798
only illegal structures would be
demolished)
$8,049,200
R
Fee @6%
Development Profit @30%
x1.06
x1.3
$548,114,202
Say $548,114,000
- 14 -
50.
B
For the benefit of the appeal hearing, the following figures in
the respective paragraphs of the Main Judgment stated below would also
be affected:
C
408
So, applying the assessed figures to the formula:
= [(H-L) x R] + L
= [($841,828,000 - $548,114,000) x 0.5] + $548,114,000
= $293,714,000 x 0.5 + $548,114,000
= $694,971,000
The Before Value of Lot 22 is $694,971,000.
480
The amount of compensation is the amount of Before
Valuation in excess of After Valuation.
Before Valuation
After Valuation
Amount of Compensation
$694,971,000
$685,540,000
$9,431,000
Ground 3
O
51.
The Tribunal erred in making no downward adjustment for
the limited use within the shipyard area based on the incorrect factual
P
premise that ship repairing use as well as godown use can occur at the
Q
same time at the remaining portion of Lot 22.
52.
S
Ship repairing and godown uses are permitted uses under the
lease condition.
Taking into account the huge size of the remaining
portion of Lot 22, the Tribunal cannot exclude the possibility that both
- 15 -
uses can practically occur at the same time. As the optimum use of the
B
site was found to be mid-stream uses for open storage , it is possible that
the occupier can use part of the remaining portion which is adjacent to
C
shipbuilding area with marine frontage for ship repairing, if necessary.

D
With this flexibility for using portion of the remaining lot for ship
repairing use, whenever necessary, we do not think there is a need to

E
make any adjustment for the limited use within the Shipyard Area.
F
53.

H
Ground 4
54.
The Tribunal erred in finding that the stacking of containers
in the open air as part of their transit was a godown use in line with
L
Special Condition 3(a).
55.
N
We accept this ground involved the interpretation of the
terms of the Special Condition which is a point of law and leave to appeal
should be given for the same to be considered by the Court of Appeal.
Ground 5
56.
The Tribunal erred in adopting a unit rate of $1,200/sq ft for
open storage use whilst it is found by AW (applicants expert) and

R
accepted by the Tribunal that the godown use is for open storage use and
the unit rate for such use should be $1,000 only.
- 16 -
57.
B
As we have found in 227-229 of the Main Judgment, we
should consider the optimum use and this explains why we pick the
higher figure of $1,200/sq ft in the assessment.

C
58.

E
F
Ground 6
H
59.
The Tribunal erred in failing to make a downward
adjustment of 20% on the length of quay for the KCTL Comparables
which, like Lot 22, had quay lengths which were satisfactory by reference
J
to the optimum standard.
60.
L
The Tribunal agreed that adjustment should be made on the
length of quay for the KCTL comparables to reflect the optimum

standard. As the valuers of both parties have not touched on the quay
length of KCTL comparables, the Tribunal has not clearly stated in the
N
judgment that a downward adjustment should be made on KCTL479 and

an upward adjustment should be made on KCTL481 to reflect the
optimum standard of quay length. Actually, on the Layout Plan (page

P
2145-2147 of Bundle E1), the quay length of KCTL479 is better than that
of Lot 22, so a downward adjustment is needed. However, the shape and
quay length of KCTL481 is poorer than that of Lot 22, an upward

R
adjustment is needed.
61.
T
To be clear, the adjustment table on 305 of the Main
Judgment should be as follows:
- 17 -
Lot No
KCTL481
KCTL479
Adjusted Unit Rate

159
240
Adjustment
+30%
-20%
Revised unit rate

207
192
62.
The average unit rate was about $199.5/sq ft.
63.
The Tribunal agreed that the judgment on this section is
unclear, however this does not affect the resultant figure of unit rate
F
adopted for assessment of the KCTL Comparables.
64.
H


J
Ground 7
65.
The Tribunal erred in failing to make equivalent deferment
of 2 years to the KCTL Comparables for the time needed to prepare the
M
ground at Lot 22 for godown use as it had done for the STT Comparables.
66.
O
This Tribunal agreed that there should be no deferment for
the STT Comparables as well as for the KCTL Comparables.
The
Tribunal has clearly stated in 229 of the Main Judgment that the STT
P
comparables are for open storage purpose and AW has also not reflected
Q
any superstructure to be erected. As no superstructure is erected and no
deferment is necessary for STTs, the Tribunal, as stated in 229, took the
R
highest value as the optimum development (i.e. $1,200/sq ft).

S
- 18 -
67.
B
Since the KCTL Comparables are being found to be the
appropriate comparables, the fact that no deferment made cannot be
considered an error and would not affect the end figure found by this
C
Tribunal.
D
68.

F
Ground 8
69.
The Tribunal erred in finding that there will be a
compensation for the resumption of land for the construction of a road to

J
link Pennys Bay area and the proposed North Lantau highway. Such a
finding is inconsistent with the declaration made by the CFA that in the
Before Value, it is based on the assumption that Lot 22 enjoyed access to

L
the sea as it had done up to the valuation date. With the marine rights
remained, no container port would or could have been built and no road
would have been constructed.

N
70.
We agree that this is plainly a point of law depending on the
construction and application of the CFA Judgment and we cannot say that
P
there is no reasonable prospect of success in the appeal. So leave should

be granted in this regard.
Ground 9
71.
The Tribunal erred in adopting the higher value between a
combined shipyard and godown value on the assumption that the

T
Container Terminal Scheme did go ahead and on the assumption that it
- 19 -
did not go ahead.

B
Given the uncertainty between the 2 different
scenarios, the finding that the purchaser would pitch his bid on the higher
value is erroneous without basis.

C
72.
The term, Market Value, as defined by the International
Valuation Standard and followed by the Hong Kong Institute of

E
Surveyors is the estimated amount for which an asset or liability should

F
exchange on the valuation date between a willing buyer and a willing

seller in an arms-length transaction after proper marketing where the
parties
had
each acted
knowledgeably,
prudently and
without
compulsion. Whether the prospective purchaser would pitch his bid on

the higher value or on the lower value depends on whether it is a buyer
market or a seller market. As at 1995, the market was going up and the
J
vendor had a larger bargaining power and it is unlikely that the owner
would accept a lower value between 2 different scenarios. That is why
the Tribunal has decided to take the higher value between a combined
L
shipyard and godown value.
73.
N

to appeal under this ground is therefore refused.

P
Ground 10
74.
The Tribunal erred in failing to reflect the existence of the
sub-tenancy of Cheoy Lee Shipyards Limited in the valuation of the midstream use on the assumption that the Container Terminal Scheme would
go ahead whilst such factor had been taken into account in the assessment
T
- 20 -
of the mid-stream use value on the assumption that the Container

B
Terminal Scheme would not go ahead.
75.
D
The Tribunal stated clearly at 343 of the Main Judgment
that assuming the Container Terminal Scheme goes ahead, the area would
be developed in accordance with the OZP. Therefore, in our assessment,

E
we have taken account of the area to be resumed for road purpose, the
F
area zoned for GI/C etc. The most important thing is the marine frontage
should be resumed for Container Terminal Scheme and the sub-tenancy
should be terminated and a 3-month notice is required.

H
76.
However, if the Container Terminal Scheme does not go
ahead as stated in 345 of the Main Judgment, the sub-tenant can

J
continue to operate its shipbuilding use on the shipyard area and the
remaining portion will be used for mid-stream purpose. Therefore, no
deferment is required.
treatment as suggested by the respondent.
77.
This explains why there had been a different
We found the respondent had failed to establish any

ground is refused.
P
Ground 11
78.
The Respondent contended that for the reasons submitted
above, the value of Lot 22 for mid-stream use found at 345 of the Main
Judgment is faulted.
- 21 -
79.
B
This is just a catch all ground and the reasons behind this
had already been dealt with above under respective grounds.
Ground 12
D
80.
The Tribunal erred in its finding of the ultimate Before
Value based on a radical misconception of law and was fundamentally

E
contrary to the declaration stated by the CFA, namely the Before Value
F
found is based primarily on the prospect of an industrial development of

the non-shipyard area of Lot 22 with a 50% discount for the uncertainty.
81.
The reason for our findings is based on the requirement
stated in the CFA Judgment that prospect of new uses of the land would
have entered into the valuation both with and without access to the sea.
J
82.
Having said so, we agree that this point involved a point of
law which cannot be said that there is no reasonable prospect of success

L
on appeal, so leave should be granted.
Ground 13
N
83.
The Tribunal erred in finding that in the After Value, the
reclamation work and the Container Terminal Scheme or the construction
of the linked road had not even commenced. This is inconsistent with the
P
CFA Judgment which declared that the reclamation must be taken to have
been completed by the valuation date.
The Tribunal also erred in
speculating as to the timing and the uncertainty of the Container Terminal

R
Scheme which is specifically disallowed in the CFA Judgment (at 41).
- 22 -
84.
B
We agree that this involved a point of law concerning the
interpretation of the CFA Judgment and one which may arguably have a
reasonable prospect of success, hence leave should be granted.

C
Conclusion
85.
According to Section 11AA(5) of the LTO, leave to appeal
may be granted in respect of a particular issue arising out of the

F
judgment, order or decision. Hence, we made the following orders :
(a) Leave to appeal is granted to the applicant on Ground 1,

H
3 and 4 stated in the Grounds of Appeal whilst leave to

appeal on all other grounds are dismissed.
(b) Leave to appeal is granted to the respondent on Ground

J
2, 4, 8, 12 and 13 stated in the Grounds of Appeal

whilst leave to appeal on all other grounds are
dismissed.
L
(c) Costs of this application for leave to appeal be costs in

the cause of the appeal.
Deputy Judge KOT
Mr K K CHIU
Presiding Officer
Temporary Member
Lands Tribunal
Lands Tribunal
Mr Denis Chang SC, Mr Johnny Ma and Mr Jeremy Chan, instructed by

Wilkinson & Grist, for the applicant
Mr Valentine Yim, instructed by the Department of Justice, for the

T
respondent

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A

IN THE LANDS TRIBUNAL OF THE

MISCELLANEOUS REFERENCE APPLICATION NO. 23 OF 1999

Pennys Bay Investment Company Limited

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Pennys Bay Investment Company Limited

Before: Deputy Judge KOT, Presiding Officer, Lands Tribunal and

Date of Hearing: 19 December 2014

Date of Decision: 16 January 2015

This is the cross application for leave to appeal by the parties

in this case against the judgment handed down by this Tribunal on 15

abbreviations used in the Main Judgment.

We shall adopt the same

In the Main Judgment, we have found that Lot 22 can be

extinguishment of its marine rights (Before Value). The Before Value

is enhanced by the prospect of the Container Terminal Scheme going

It is also our finding that after the marine rights being

extinguished with more certainty that the Container Terminal Scheme

It is our conclusion that since the Before Value is in excess

of the After Value, the applicant is entitled to receive compensation for

the extinguishment of its marine rights in the sum of $10,952,500.

Section 11(2) of the Lands Tribunal Ordinance (LTO)

Subject to section 11AA and the provisions of any Ordinance

(6) Leave to appeal shall not be granted unless the Tribunal,

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why

Section 11AA(6) of the LTO provides that :

Reasonable prospect of success involves the notion that the

prospects of succeeding must be reasonable and therefore more than

fanciful without having to be probable (SMSE v KL [2009] 4

or there was no evidence to support it, or it was made by reference to

irrelevant factors or without regard to relevant factors, the decision may

Bearing in mind these legal principles, we shall deal with

each ground of appeal raised by the parties in seriatim.

This Tribunal erred in adopting inconsistent approach in

reflecting the uncertainty as to whether the Container Terminal Scheme

might proceed in the Before and After Value.

Whilst the Tribunal

uncertainty inherent in the factual expectation as to whether the Container

remained a degree of uncertainty for the scheme not proceeding at all.

The Tribunal erred in law in holding that artificial

assumption about marine rights had any impact, or even significant

impact upon the factual expectation as to whether the Container Terminal

It is beyond argument that this Tribunal had not applied the

same formula to reflect the uncertainty inherent in the factual expectation

as to whether the Container Terminal Scheme would proceed in the

Having said so, we do agree that Ground 1 raised by the

applicant did involve a legal issue as to whether the artificial legal

expectation which cannot be said to be without any reasonable prospect

of success. Leave to appeal should be granted under this ground.

The Tribunals findings that the Container Terminal Scheme

and its associated roadworks were expected to proceed is perverse. The

Government and the Governor in Council should have already approved

The industry view had been considered by this Tribunal in

We found the applicant had failed to establish any

reasonable prospect of success or there is any reason in the interests of

The Tribunal failed to give full and proper recognition to the

intent and effect of the Before-assumption about marine rights in the

Before Value and adopted the value of Industrial Development which

wholly dependent upon the existence of road access, ie a Before Value

for the Godown/Industrial Area based on a new use without marine

access, contrary to its own findings in 26 of the Main Judgment.