Land law — Compulsory Sale Application Dismissed for being unjustified for Redevelopment on the Age and State of Repair
Ross Yuen and Eunice Lui acting for the 6th Respondent (“R6”) successfully opposed the application for compulsory sale in Precise Lucky Limited v Walkerfield Limited & Ors [2025] HKLdT 63 made under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“the Ordinance”).
It was a sad story though.
Mr. Lee was the owner of the R6’s unit in a single block building aged over 60 years situated in Happy Valley (“the Building”).
In late 2021, he sold his unit to the Applicant and both parties executed a provisional sale and purchase agreement. At the same time, the Applicant also executed similar provisional agreements with most other owners of the Building for the purpose of redevelopment of the Building.
In early December 2021, the parties orally agreed to extend the completion day to February 2022. About 2 weeks later, the Applicant sent a supplemental agreement for time extension to him for signature. Mr. Lee could not sign it as he unfortunately passed away even before the supplemental agreement was sent out. In grief and in shock, his parents and his brother who were living overseas rushed back to Hong Kong amid Covid. In quarantine, they managed to get hold of the solicitor acting for their beloved son and brother, and in early January 2022, the solicitor informed the Applicant of the demise of Mr. Lee and requested for time extension to allow the family to apply for probate to complete the sale.
The request was not entertained. Nonetheless, the Applicant proceeded with the transaction with most other owners. Though leaving out R6’s unit, by then the Applicant has acquired sufficient units to entitle it to apply for compulsory sale.
Then, in about June 2022, the Applicant attempted to acquire R6’s unit again. The offer price has dropped by 32.6% from the original purchase price.
Section 4(2) of the Ordinance provides that the Tribunal shall not make an order for sale unless it is satisfied that that the applicant has taken “reasonable steps” to acquire all the undivided shares of the lot, and that redevelopment is justified on the “age or state of repair” of the building.
On the question as to whether the Applicant has failed to take reasonable steps when it could have easily acquired the R6’s unit by granting time extension, the Tribunal took the view that the Applicant had “acted within its legal rights and the previous conduct does not negate subsequent reasonable steps”. That said, the Tribunal has gone on to say that “the decent or honourable thing to do may have been to extend time in the circumstances” [542] (emphases added).
More importantly, on the conduct of the Applicant when it was in control of the management of the Building during the pendency of the compulsory sale application, the Tribunal commented that the Applicant, in suspending the lift service, knowing that R6 and R7 relied heavily on such lift service “at best adopted a laissez faire approach if not oppressive means in acquiring the interest of R6 and R7” [546]. It went further to give a word of warning that “the Tribunal will not countenance any form of oppressive means to be enlisted by a majority owner to acquire all the undivided shares of the minority owner” (emphases added).
Nonetheless, the Tribunal did not dismiss the application on the test of reasonable steps, but on the “age and state of repair” of the Building. It accepted a significant portion of the expert evidence of the respondents’ jointly appointed building surveyor and structural engineer. Of particular importance is that the Tribunal made the following findings that are of useful guidance in future cases.
In considering the state of repair of the Building, the Tribunal considered the repair costs. It bears emphasis that the Tribunal held that “the finishing of internal units should be irrelevant as it is a matter of personal choice of the owner or tenant” [400] (emphasis added). Therefore, the Tribunal disregarded the repair costs for the flats and shops internally.
The Tribunal then concluded that the total repair costs would be HK$5.5M, which is just 1.1% of the Existing Use Value (EUV) of the Building [452]. According to the Tribunal, the ratio of repair costs to the EUV is a useful indicator [449].
The Tribunal further held that any reasonable landlord would weigh up the likely level of income and the prospect of receiving this over time as compared to the necessary expenditure on repairs. In considering the proportion of repair costs, the Tribunal will have regard to the style of and demand for the property [454].
Finally, the Tribunal said at [456] that “… As compared with modern buildings, the Building’s design may be to a degree dated in certain aspects. That notwithstanding, the Building is still maintained in tenantable condition with modern installations and well-maintained facilities serving its occupants satisfactorily. Despite its age, the Building as a whole is not in a poor physical state nor is it so obsolete, physically or functionally, as to justify a complete pull-down and immediate redevelopment. Most of the so-called defects are repairable to “tenantable standards” at affordable costs relative to the Building and owners tolerance. Regardless of the length of its design life, with adequate repair and maintenance, the Building can likely stand well and continue to serve its residents satisfactorily for some years to come…”.
The Tribunal then concluded that redevelopment is not justified based on the age and state of repair of the Building.
In reaching its conclusion in the above analysis, Tribunal considered and addressed some disputes between the two sides’ experts, including disputes over the structural framing plans, protective barrier requirements under the Building (Construction) Regulations, and issues relating to Right-of-Way under the Building (Planning) Regulations and Practice Note for Authorised Persons, Registered Structural Engineers and Registered Geotechnical Engineers (“PNAP”) APP-73 on the calculation of site coverage and plot ratio.
The Tribunal also considered the interplay between various building construction rules and regulations, including the Code of Practice for Fire Safety in Buildings 2011 (regarding compliance with fire safety requirements, such as provision of Ultimate Place of Safety, Means of Escape and Means of Access), Code of Practice for Minimum Fire Safety Installations and Equipment 2022, Code of Measuring Practice issued by the Hong Kong Institute of Surveyors (on calculation of floor area), Codes of Practice for Structural Use of Concrete 2004 and 2013 (on chloride content), and the Code of Practice for the Electricity (Wiring) Regulations (on electrical safety installations).
It is worthy of note that after considering the applicability of the aforementioned rules regulations, the Tribunal accepted a large portion of the Respondent experts’ evidence.
Conclusion
This case highlights the importance of good preparation in dealing with expert evidence, be it on the discipline of valuation, building surveying, structural engineering and authorized person alike.
Another key takeaway would be that the Tribunal will not countenance oppressive means to acquire all undivided shares of the building for the purposes of applying for an order for sale under the Ordinance.
Authors: Ross Yuen, Eunice Lui.
Ross Yuen
This is the second case in which Ross has successfully opposed compulsory sale application on the grounds of age and state of repair. He has an active practice in land law (including chancery, trust and probate). He has been recently appointed Chairman of the Appeal Tribunal Panel (Building).
Visit Ross’s profile for more details.
Eunice Lui
Eunice was called to the Bar in 2024 and joined Chambers in the same year. Eunice is developing a broad civil practice, with particular emphasis on land-related matters. Eunice has recently appeared in two compulsory sale cases with Ross, in which one case concerns a building in Wong Nai Chung Road, and the other case being Tai Chung Property Ltd v Chen Lan Sum Irene (LDCS 4000/2023) [2025] HKLdT 40, which involves a building erected under the old Civil Servants’ Cooperative Building Society Scheme. Eunice accepts instructions in all areas of Chambers’ work.
Visit Eunice’s profile for more details.
This article was first published on 30 October 2025.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.