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LCQ20: Compensation for factory operators of the former Wah Kai Industrial Centre

Following is a question by the Hon Leung Yiu-chung and a written reply by the Secretary for Development, Mr Michael Wong, in the Legislative Council today (November 15):
 
Question:
 
In 1999, the Government invoked, on the ground of building the West Rail, the provisions of the Railways Ordinance (Cap. 519) to resume a land in Tsuen Wan on which Wah Kai Industrial Centre (Wah Kai) was located, affecting more than 500 factory operators. It has been reported that the Government subsequently sold some lots of the site to private developers for building residential buildings, and the prices of some of the residential units fetched as high as $8,500 to $10,000 per square foot, which are equivalent to 28 to 30 times (per square foot) of the amount of compensation received by Wah Kai factory operators at the time. Recently, some Wah Kai factory operators have indicated that they have not yet reached any compensation agreement with the Government. In this connection, will the Government inform this Council:
 
(1) of the number of claims for compensation received to date by the authorities from Wah Kai factory operators, and set out in a table a breakdown, by type of compensation (i.e. land interest compensation and business loss compensation), of the number of cases in respect of which:
(i) compensation agreement has been reached and full amount of compensation paid;
(ii) compensation agreement has been reached but full amount of compensation has not yet been paid;
(iii) compensation agreement has not yet been reached; and
(iv) compensation was not awarded because of ineligibility;
 
(2) regarding the two types of compensation, namely land interest compensation and business loss compensation, of the respective (i) total amounts of compensation awarded to date by the authorities, (ii) criteria adopted by the authorities for processing compensation claims, (iii) reasons for the authorities' failure to reach agreements with the claimants of some cases, and (iv) reasons why the authorities have assessed the claimants of some other cases as ineligible for the award of compensation;
 
(3) how the authorities will handle those cases in which compensation agreement has not been reached at present; whether any task force is currently tasked to follow up such cases; if so, of the composition and duties of the task force;
 
(4) of the income derived by the authorities from the sale of the lots concerned to private developers, and a breakdown of such income (including revenues from land sales, land premiums and other proceeds); and
 
(5) of the respective total amounts of fees paid directly and indirectly by the authorities and the Kowloon-Canton Railway Corporation to consultants and other private organisations in connection with the handling of the aforesaid issues relating to land resumption, compensation, etc., together with a breakdown of such amounts (set out in a table), during the period:
 
(i) in or before June 1999;
(ii) between July 1999 and April 3, 2000;
(iii) between April 4, 2000 and September 25, 2000; and
(iv) on or after September 26, 2000?

Reply:
 
President,
 
My reply to the various parts of the question is as follows:
 
(1) In 1999, the Government resumed Wah Kai Industrial Centre under the relevant provisions of the Railways Ordinance (Cap. 519). As at October 31, 2017, the position with regard to compensation cases of that project processed by the Lands Department (LandsD) is set out as follows:

  No. of cases where  compensation agreement has been reached (Note 1) No. of cases where the amount of compensation has not yet been fully accepted
Land interest compensation cases 514 63
(61 cases had collected provisional payment
(Note 2))
Business loss compensation cases 327 50
(48 cases had collected provisional payment
(Note 3))

Note 1: Full amount of compensation had been paid in all cases with compensation agreement reached.
Note 2: The claimants of the remaining two cases did not contact the LandsD for collecting the provisional payment offered.
Note 3: The claimants of the remaining two cases did not contact the LandsD for collecting the provisional payment offered.

The Government has readily available statistics only on eligible cases (including cases where compensation agreement has been reached and cases where such agreement has not yet been reached). The Government does not have readily available statistics on the number of cases not awarded with compensation because of ineligibility over the past years.
 
(2) As at October 31, 2017, compensation and related fees amounting to some $770 million have been paid in respect of the resumption of Wah Kai Industrial Centre.
 
Affected factory operators who wish to make claims for the land titles resumed are required to provide relevant information to prove the loss or damage suffered or incurred as a result of the resumption of the land. Upon receipt of claims, the LandsD will process the cases in accordance with the provisions under the Schedule to the Railways Ordinance (Cap. 519). The Schedule stipulates matters for which compensation may be claimed; basis on which compensation is to be assessed (such as open market value); and period within which the claim must be served on the Secretary for Transport and Housing. The Schedule also contains provisions on persons who may claim compensation for their losses (such as business losses). Those who do not meet the requirement stipulated in Column 3 of Item 1 in Part II of the Schedule are not entitled to claim compensation.
 
The LandsD will, after considering the claim reports submitted by claimants and their professional representatives, assess and approve the amount of compensation payable. The amount of compensation payable is assessed based on claimants' losses and not on value of developments subsequently taken place on land reverted to the Government. Generally speaking, the major reason for cases with the amount of compensation not yet fully accepted is due to the fact that claimants have not provided proof that may enable the LandsD to satisfy their claimed amount of compensation is reasonable. If the claimants do not accept the amount assessed, they may continue to negotiate with the Government through their professional representatives. In general, provisional payment will also be offered to claimants who are entitled to compensation even if they do not fully accept the amount of compensation offered. Separately, claimants may also choose to submit their claims to the Lands Tribunal for final determination.
 
(3) The Railway Development Section of the LandsD is a dedicated team tasked with handling land matters in relation to new railway development projects. Led by the Chief Estate Surveyor (Railway Development), the Section comprises surveying and accounting professionals, executive and supporting staff. The compensation cases of Wah Kai Industrial Centre come under its purview.
 
For compensation cases that have yet to reach agreement, the Railway Development Section maintains liaison with the claimants and their lawyers or surveyors, handles compensation claims and the information submitted, makes requests for further details as necessary for consideration of their claims, submits cases for approval by the LandsD's Headquarters, and follows up with the claimants and their professional representatives, etc.. The Section is also responsible for handling applications referred to the Lands Tribunal for resolution as a result of no compensation agreement being reached.
 
(4) Topside property developments were made on the lot by the Kowloon-Canton Railway Corporation (KCRC). The Government was not involved in selling of the lot by KCRC to any private developer.
 
(5) As at October 31, 2017, the Government has expended about $1.3 million on commissioning consultants in handling compensation cases of Wah Kai Industrial Centre. The Government does not keep statistics on consultancy fees spent chronologically.

Ends/Wednesday, November 15, 2017
Issued at HKT 14:30

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