HONG KONG HOUSING AUTHORITY

.HA 13/2002

PAPER NO

THE HONG KONG HOUSING AUTHORITY Memorandum for the Housing Authority Report on the Work of the Special Committee on Clearance of Kowloon Walled City PURPOSE To report on the work of the Special Committee on Clearance of Kowloon Walled City (Special Committee) and to seek Members’ views on the way forward of the Special Committee.

BACKGROUND 2.

The Special Committee was established by the Housing Authority (HA) to advise on the clearance and on the rehousing and compensation arrangements arising from clearance of Kowloon Walled City on 15 January 1987.

Subsequently, the Special Committee set up the Assessment Review Board (ARB) and the Appeals Tribunal (AT) which mainly review the amount of compensation and the eligibility of applicants for rehousing and compensation respectively.

3.

The clearance of the Kowloon Walled City was completed on 2 July 1992. At present, the Special Committee remains in existence mainly to oversee the handling of appeals submitted by clearees.

4.

Pursuant to HA Standing Order No. 20(3), an ad hoc committee should, as soon as it has completed its mission, report to the HA thereon and the committee should thereupon be dissolved.

5.

As ample time and opportunities had been given to the clearees to lodge their appeals in the past 15 years, the Special Committee Members agreed at its last meeting on 23 January 2002 that (a)

not to accept any new out-of-time appeal applications with effect from date of meeting (23 January 2002);

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(b) a report on the work of the Special Committee should be submitted to the HA; (c)

should the HA dissolve the Special Committee, the ARB and the AT would be dissolved on the same day; and

(d) the administrative arrangements to handle the residual cases after the dissolution of the Special Committee.

REPORT ON THE WORK OF THE SPECIAL COMMITTEE 6.

A final report on the work of the Special Committee is enclosed at the Annex for Members’ information.

VOTE OF THANKS 7.

The HA wishes to record its sincere thanks for the invaluable and remarkable contributions made by Members of the Special Committee, the ARB and the AT. Through their dedicated effort and continued hard work over the past 15 years, the clearance of the Kowloon Walled City has been achieved smoothly and successfully.

THE WAY FORWARD 8.

It is considered that the Special Committee has fulfilled its mission. At the meeting to be held on 14 March 2002, Members are invited to consider to dissolve the Special Committee.

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File No. : HA/COM/14/4 Date : 7 March 2002

Annex

REPORT ON THE WORK OF THE SPECIAL COMMITTEE ON CLEARANCE OF KOWLOON WALLED CITY

INTRODUCTION The Hong Kong Government announced the clearance of the Kowloon Walled City on 14 January 1987 and asked the Housing Authority (HA) to establish a special committee to oversee all aspects of the clearance of the Walled City and to advise on the rehousing and compensation arrangements. Pursuant to Section 7 of the Housing Ordinance, the HA established the Special Committee on Clearance of Kowloon Walled City (Special Committee) on 15 January 1987. Its terms of reference and Membership are at Appendices A and B respectively.

Subsequently, the Special Committee set up two appeal boards, namely the Assessment Review Board (ARB) and the Appeals Tribunal (AT) to review the amount of compensation and the eligibility of applicants for rehousing and compensation respectively. Their terms of reference and Membership are at Appendices C, D, E and F respectively.

WORK DONE IN THE PAST 15 YEARS Report on Clearance of the Kowloon Walled City Rehousing Arrangements The Kowloon Walled City clearance was no ordinary clearance of land because of its historical background. There were some 28,200 occupants in 8,800 structures. Occupants of Kowloon Walled City held no leases from the Government and an occupancy survey was carried out right after the announcement of the clearance in 1987.

For rehousing eligibility criteria, the Special Committee had applied the then clearance policy for redevelopment clearances to determine the eligibility for public rental housing (PRH), i.e. majority of the household members must have been in continuous residence in Hong Kong for seven years. Additionally, genuine residents would be eligible for rehousing if they were living in the Walled City on and since 14 January 1987, i.e. before the announcement of the clearance. Those who were eligible for PRH and

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had a minimum of two related persons in the household could opt to buy a Home Ownership Scheme (HOS) flat by using the priority green status, or alternatively they could apply for a loan under the Home Purchase Loan Scheme (HPLS) to purchase a flat in the private sector. Those who did not meet the eligibility criteria would be offered temporary housing (TH).

The occupants were asked to surrender their premises since late 1987 by four phases. The first phase was completed on 29 November 1991 with 2,621 families comprising 7,624 persons rehoused. Phase IIA, the second phase commenced in December 1988. Upon completion on 3 March 1992, another 2,212 families comprising 6,765 persons were rehoused. Phase IIB, the third phase which commenced in December 1989, was completed on 7 April 1992 with 2,316 families of 6,994 persons rehoused. Phase III, being the fourth and the final phase was completed on 2 July 1992, with 2,271 families comprising 6,815 persons rehoused.

In sum, 9,420 households comprising 28,198 persons were rehoused under these four phases. Of these households, 3,541 (38%) bought HOS flats, 4,804 (51%) moved to PRH or TH and 1,075 (11%) made their own housing arrangements. In addition, 32 households comprising 65 persons were rehoused after the completion of the clearance.

Compensation for Property Owners HOS based and same compensation for resident owners and absentee owners It was the policy on the resumption of post-war domestic premises to pay the Home Purchase Allowance to both resident and absentee owners, making payment to the former was conditional on their giving up any PRH entitlement and buying replacement premises in the private sector. It was considered that the same principle should apply to the clearance of Kowloon Walled City i.e. all owners were to be offered the fair market value (FMV) of their premises plus a Home Purchase Allowance to enable them to buy alternative premises elsewhere, preferable within the same district. Given the low values of the Kowloon Walled City premises, the Home Purchase Allowance on this basis would be much higher than in a normal clearance and there was also inadequate supply of private sector flats in the adjacent areas of Kowloon Walled City, the Special Committee therefore adopted a compensation scheme based on HOS prices payable to all owners, unless they were resident owners who opted for rehousing in PRH estates.

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Same compensation for domestic or non-domestic usage As premises in the Walled City were not governed by any lease conditions on user restrictions and consequently it was difficult to classify them according to usage. No distinction was therefore made on the basis of cash compensation for premises used as domestic, non-domestic or mixed.

The HOS based rate was applied to all premises, be they used as shops, factories or homes.

Resident Owners get HOS based formula compensation if they give up PRH entitlement Another feature of this compensation package was that resident owners of the premises with established PRH eligibility would receive the HOS based formula compensation if they gave up their PRH entitlement.

They could then choose to purchase a HOS flat with priority green status or opt to purchase a private sector flat by making use of the HPLS. If they opted for PRH, they would only be entitled to receive the FMV of their premises as their rehousing need has been met by the provision of PRH. Compensation for Business and Industrial Occupiers Ex-gratia Allowance Statutory compensation was payable to legal occupiers of commercial and industrial properties. To overcome the resistance to clearance arising from the necessary lead time to assess and pay statutory compensation, the Special Committee had adopted the payment of ex-gratia allowance to legal business and industrial occupiers along the following guidelines(i)

the rates should take account of rental for the period required for fitting-out, removal costs, basic fitting-out (decoration) costs, and fees payable to agents for finding alternative premises, legal fees and stamp duty;

(ii)

a sliding scale of rates should apply depending on the location of the premises to be cleared; and

(iii) the ex-gratia allowance receivable by a legal commercial or industrial tenant should not be less than the ex-gratia allowance payable to squatters.

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Compensation for Medical/Dental Proprietors/Practitioners Medical and dental proprietors/practitioners might opt for a lump sum payment of $342,000 i.e. $9,500 per month of a medical and dental technician’s salary for three years.

Clearance Problems The clearance of the Kowloon Walled City was completed on 2 July 1992. Due to the sizable scale of the operation which involved about 8,800 premises and 9,452 households, together with the special historical and political background of the Kowloon Walled City, the Government encountered great difficulties and problems during the clearance. Firstly, there was active participation from the concern groups who opposed the clearance and organized demonstrations. Some ex-clearees from the previous clearance phases even returned as street-sleepers to express their dissatisfaction with the compensation package. Secondly, the large number of households that did not accept compensation or rehousing formed bulk of difficult cases and required eviction on D-day. Thirdly, some clearees challenged the legality of the Government’s eviction under the then Crown Land Ordinance. Such legal action to claim possessory title in the form of Injunction or Judicial Review caused delay to the clearance exercise. Last but not the least, the difficulties of the operations were also attributable to the crowded and congested environment of the Walled City which rendered the maintenance of law and order difficult during eviction operations. Despite the above difficulties, the clearance was successfully completed. The land resumed was turned into the Kowloon Walled City Park which seeks to preserve the heritage of the Kowloon City’s fabled walled city.

Assistance from Kai-fong Leaders The successful completion of the clearance was mainly attributable to the sufficient planning and preparation before the operations and full support from various departments. However, the contributions made by the Kai-fong leaders and members of the Kowloon Walled City Residents’ Association, which helped smooth the clearance were undeniable.

Throughout the clearance period, they had maintained an effective dialogue with the Special Committee and the Government officials by way of attending meetings actively. Through these meetings, clearees’ problems and demands could be clearly reflected and identified. As a result, much of the expected resistance was greatly reduced.

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Report on the Work of the Appeals Tribunal The AT was set up to consider complaints and appeals arising out of clearance of Kowloon Walled City except those related to the conduct and behaviour of civil servants or the basis and value of assessment for compensation.

To date, 77 cases were referred to the AT. The AT heard 71 cases, five cases were settled before hearing and one case was transferred to ARB. These cases mainly concerned disputes in ownership, eligibility for rehousing, business loss compensation, belated offer of property compensation, measurement of qualified floor area; reimbursement of severance payment; and valuation date of the property and number of businesses eligible for compensation. Of the 71 cases heard, 25 were ruled in favour of the appellants.

Report on the Work of the Assessment of Review Board The ARB was set up to consider, upon application, having regard to the Rules of Assessment, whether the offer made by the Government to the claimant is fair; and should it not be regarded as fair, to determine the amount regarded as fair by the Board.

By now, the ARB has handled 112 cases applying for review of the amount of compensation. For over 70% of the 112 cases completed, ARB awarded compensations in excess of the government’s original offers.

OVERALL POSITION The clearance of the Kowloon Walled City was completed in July 1992. At present, the Special Committee remains in existence mainly to oversee the handling of appeals submitted by clearees.

To date, over 99% of the households affected by the clearance of the Kowloon Walled City have accepted the Government’s compensation and rehousing offers. 9,452 households comprising 28,263 persons have been rehoused and the total compensation paid out so far amounts to $3.1 billion.

There remain 26 residual cases in which the households did not accept the government’s offers. Of them, nine cases were already heard by the ARB/AT despite the clearees have not collected the compensation, in

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whole or in part. While the remaining 17 households have never filed any formal appeal to the Special Committee despite the Special Committee’s repeated persuasion and reminders to them. Some of these clearees are already out of contact with the Special Committee and the Departments concerned.

Despite the expiry of the deadline of 10 October 1992 for appeals to be filed with the AT and/or the ARB, the Special Committee has considered out-of-time appeals on a case-by-case basis and exercised its discretion to refer them to the AT and ARB for processing. The Special Committee has kept the door of the appeal channel open for a further nine years.

Pursuant to HA Standing Order No. 20(3), an ad hoc committee should, as soon as it has completed its mission, report to the HA thereon and the committee should thereupon be dissolved. In view that after years of operation, only a small number of cases are yet to be settled, and that the Special Committee has given the clearees ample time and opportunities to lodge their appeals, it is considered that the Special Committee has fulfilled its mission.

Subject to the HA’s endorsement, the Special Committee will be dissolved with immediate effect and the AT and ARB will be dissolved at the same time.

Handling of Residual Cases after the Dissolution of the Special Committee The Special Committee has agreed on the handling of residual cases after the dissolution of the Special Committee during its meeting on 23 January 2002. Should there be any enquiries from the clearees about compensation offers, the clearees can approach the Director of Lands, who will, if he receives new evidence or arguments from the clearee, consider claims for a review of compensation and make a final determination of the amount to be paid having regard to precedent decisions of the AT or the ARB. For cases relating to rehousing arrangement, the Housing Department will consider the rehousing claims when approached to ensure that the rehousing needs of these applicants are well catered for should they appear at any time.

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Should there be any clearees who claim to have sustained injustice as a result of mal-administration in connection with the decision of the Director of Lands or the Director of Housing, they may lodge complaints through various established channels such as the Ombudsman or seek judicial review. They may also lodge complaints on rehousing arrangements to the Complaints Committee of the Housing Authority.

Vote of Thanks The Special Committee wishes to record its appreciation of the invaluable contributions made by Members of the AT and the ARB, as well as officers of the Housing Department, the Lands Department and the Home Affairs Department, in bringing the clearance of the Kowloon Walled City to a successful close.

Appendix A

SPECIAL COMMITTEE ON CLEARANCE OF KOWLOON WALLED CITY Terms of Reference To exercise the powers and functions of the Housing Authority (i)

to oversee all aspects of the clearance of the Walled City;

(ii)

to advise on compensation rates and rehousing policies for those affected by the clearance;

(iii) to consider the particular problems arising from the clearance, including the treatment of unregistered doctors and dentists, water suppliers, etc; and (iv)

to receive and consider representations from those with grievances arising out of the clearance.

Appendix B

Membership and Composition of the Special Committee on Clearance of Kowloon Walled City since its Establishment on 15 January 1987 Chairmen : * Mr. HU Fa-kuang, CBE, JP * Mr. PAO Ping-wing, JP * Ms LEUNG Wai-tung, MBE, JP * Mr. CHAN Kam-man, BBS, JP * Mr. Anthony WONG Luen-kin, JP * Ms SIU Yuen-sheung, JP

15.1.1987 – 31.3.1994 1.4.1994 – 31.3.1995 1.4.1995 – 4.11.1996 5.11.1996 – 31.3.1999 1.4.1999 – 31.3.2001 1.4.2001 – present

Non-official Members : * Mr. PAO Ping-wing, JP * Ms LEUNG Wai-tung, MBE, JP * Mr. CHAN Kam-man, BBS, JP * Mr. Anthony WONG Luen-kin, JP * Ms SIU Yuen-sheung, JP * Mr. CHAN Bing-woon, SBS, JP Mr. Peter CHAN Chi-kwan Mr. KAN Fook-yee Mr. TANG Tai-chuen Mr. CHAN Hip-ping

15.1.1987 – became Chairman on 1.4.1994 15.1.1987 – became Chairman on 1.4.1995 1.4.1994 – became Chairman on 5.11.1996 1.4.1996 – became Chairman on 1.4.1999 1.4.1999 – became Chairman on 1.4.2001 1.4.2001 – present 15.1.1987 – present 15.1.1987 – present 15.1.1987 – deceased in July 1999 15.1.1987 – present

Official Members : * Director of Housing * Secretary for District Administration * Secretary for Home Affairs * Secretary for Lands & Works * Secretary for Planning, Environment & Lands * Director of Lands Deputy Regional Secretary (H.K. & Kowloon) Deputy Director of Home Affairs (2) Deputy Director of Lands (Legal) Assistant Secretary for Planning, Environment & Lands (Lands) 3 Assistant Secretary for Planning and Lands (Lands) (2) Principal Solicitor of the Legal Advisory and Conveyancing Office

Secretary : Assistant Committe Secretary/3 * HA Member

15.1.1987 – present 15.1.1987 – 1989/90 1989/90 – 1991/92 15.1.1987 – 1989/90 1989/90 – 1991/92 1994/95 – present 1992/93 – 1993/94 1994/95 – present 1989/99 – present 1992/93 – 1998/99 1999/2000 - present 1993/94 – 1997/98

Appendix C

ASSESSMENT REVIEW BOARD Terms of Reference To consider, upon application by either the Government Land Agent/Special Duties or a claimant, having regard to the Rules of Assessment, whether(i)

the offer made by Government Land Agent/Special Duties to the claimant is fair; and

(ii)

should it not be regarded as fair, to determine the amount regarded as fair by the Board, and to give reasons for that decision.

Appendix D MEMBERSHIP OF THE ASSESSMENT REVIEW BOARD Chairman : Mr KAN Fook-yee Alternate Chairpersons : Miss LEUNG Wai-tung Mr Peter CHAN Chi-kwan Mr PAO Ping-wing Other Appointed Panel Members : Accountants : Mr CHAN Kai-nang Mr Charles CHAN Wai-dune Mr David CHU Kwok-ching Mr Stuart HO Sik-lan Mrs Fanny LAI IP Po-ping Mr Ambrose LAM Shiu-kong Mr Francis LAU Mo-kaye

Mr Louis LEUNG Kent-ning Mr Michael LI Hung-kwan Mr LUK Shu-kuen Mr Patrick WONG Lung-tak Mr William YIP Che-man Mr Simon LAM Shiu-lun

Surveyors: Mr Charles Nicholas BROOKE Mr Paul Lougher BROWN Mr Wyatt CHOY Mr E Trevor FARNWORTH Mr Keith John HEALY Mr Edmund HO Hin-kwan Mr Hermann HUI Kay-cheong Mr Francis LAU Shiu-kwan Mr LEUNG Chun-ying

Mr LEUNG Hay-man Mr Gordon H MOFFOOT Mr Victor NG Sai-hee Mr W R ROBINSON Mr Edwin TSANG Ching-lun Mr R Gareth WILLIAMS Mr Memfus WONG Hoi-ki Mr Alan Charles HILL Mr D W MAHONEY

Appendix E

APPEALS TRIBUNAL Terms of Reference (i)

to receive and consider all complaints and appeals arising out of the clearance of Kowloon Walled City except those which relate to the conduct and behaviour of civil servants or the basis and value of assessment of compensation;

(ii)

to decide on those appeals or complaints and present the decision in writing. The decision shall be final subject only to a review on a point of fact by the Appeals Tribunal within two weeks, if requested, or appeal to the Special Committee on a point of principle; and

(iii) to report to the Special Committee on its work.

Appendix F

MEMBERSHIP OF THE APPEAL TRIBUNAL

Chairperson : Miss LEUNG Wai-tung Alternate Chairpersons : Mr TANG Tai-chuen Mr Peter CHAN Chi-kwan

(deceased in July 1999)

Members: Mr KAN Fook-yee Mr PAO Ping-wing Mr CHAN Hip-ping Mr Steve NG Siu-pang Mr LAM Yau-kwong Dr Albert LI Sze-bay

Mr LEE Cheuk-fan Mr LUK Wai-kong Mr HUI In-ying Mr CHAN Shan-ho Mr TANG Kwong-fat Mr Patrick WONG Lung-tak