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Following is a question by the Hon Albert Chan and a written reply by the Secretary for Planning and Lands, Mr Gordon Siu, in the Legislative Council today (December 13):

Question:

Given that some factory operators of Wah Kai Industrial Centre in Tsuen Wan who were affected by the land resumption of the Government had to move out or close down their factories before the compensation issue was duly resolved, will the Government inform this Council how it will improve the land resumption procedure and the calculation method for compensation so that factory operators affected in the future will have sufficient preparation time to vacate the site and to do so only after having received reasonable compensation?

Reply:

Madam President,

A number of ordinances provide for compensation for land resumption and for claims for business loss, removal costs and professional fees. Industrial property owners whose properties are resumed by the Government will receive statutory compensation based on the open market value of the resumed properties. Industrial operators, including owner-occupiers and tenants, who run their business out of the resumed properties, are entitled by law to make claims for business loss, removal costs and professional fees.

The Government also offers an ex-gratia allowance to owner-occupiers and tenants of industrial properties in lieu of the right to make statutory claims for loss or damage to the business conducted out of the resumed properties. This ex-gratia allowance is based on a formula which consists of the rental costs for the removal period, removal costs, decoration costs, stamp duty, legal fees and estate agents' fees.

Once a decision to resume land is made under the relevant Ordinance, the Lands Department will publish a resumption notice in the Government Gazette and serve notice on the owners within the resumption area. The Lands Department will issue statutory compensation offers for the interest in the land to owners within 28 days from the date on which the land reverts to the Government. It will also make offers to owner-occupiers and tenants as soon as possible in respect of disturbance payments for loss or damage to their business.

If an owner-occupier accepts the Lands Department's offer of compensation for the interest in the land and the ex-gratia allowance for disturbance, he will normally receive 90 per cent of the agreed statutory compensation and 75 per cent of the ex-gratia allowance in the first instance, with the balance being paid upon vacating the premises. In case an owner-occupier does not accept the Lands Department's offer of statutory compensation and ex-gratia allowance, he will normally receive 90 per cent of the statutory compensation offer and 75 per cent of the ex-gratia allowance in the first instance, but he still has the right to put forward a claim for a higher statutory compensation for the interest in the land and make statutory claims for business loss, removal costs and professional fees. If an agreement cannot be reached between Lands Department and the owner on the open market value of the property or the amount of statutory claim, either party may refer the matter to the Lands Tribunal for a ruling.

In carrying out future land resumption exercises, the Government will draw reference from the experience of the Wah Kai Industrial Centre resumption. We are also reviewing the resumption procedures for industrial properties.

The Government is conducting a comprehensive review on ex-gratia allowances, including the ex-gratia allowance for industrial operators. As a result of changes in Hong Kong's economy, the resumption of industrial properties might result in some cases in the partial or total extinguishment of the business operations concerned. We will take these factors into account when reviewing the allowance. We will report to the Legislative Council Panel on Planning, Lands and Works on the results of our review in due course.

End/Wednesday, December 13, 2000

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