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The proposed listing of the Housing Authority's (HA) shopping centres and car parks through the Link Real Estate Investment Trust (REIT) is lawful, the Court of Final Appeal (CFA) ruled yesterday.
All the five judges were unanimous in their decision, and thus the dismissal of public housing tenant Lo Siu-lan's appeal.
In a written judgment, CFA said the heart of the appeal lied in section 4(1) of the Housing Ordinance, which says HA should exercise its powers and discharge its duties so as to secure the provision of housing and ancillary amenities.
Significantly the statutory object does not use the phrase "to provide", said Chief Justice Andrew Li. Such a phrase would have become a powerful argument for HA itself to make the provision and mandatory for it to retain control, he said.
"To secure provision of the facilities does not mean HA itself must be the direct provider. HA secures the provision of the facilities as long as the facilities are available, even though they are not provided by the authority but by Link REIT, a third party over which HA has no control," the chief justice said.
"Accordingly, the sale of the retail and car park facilities by HA to Link REIT is consistent with the statutory object of securing the provision of the facilities. The sale is therefore within the capacity of HA. It is intra vires of HA as a corporation," CFA said.
Referring to the cost, the court ordered the parties to submit written submissions within 21 days with full details.
Though he agreed with the other judges, Justice Kemal Bohkary said he respected the view of persons living in public housing estates, too, who preferred HA retaining rather than selling off the facilities.
HA needs money to provide public housing to those still on the waiting list, he said. But the question before the top court was a matter of legal interpretation and "it is a question worthy of careful consideration after fully prepared and presented arguments".
HA decided to list the shopping centres and car parks to overcome the shortage of funds, especially after the moratorium on construction and sale of flats under the Home Ownership Scheme in 2002. It hoped to raise up to HK$30 billion to ease its fiscal position. But on the eve of the proposed listing in December 2004, Lo Siu-lan challenged its decision and initiated a judicial review of the Link REIT.
Lo opposed the listing because she feared it would shoot up the rent and thus infringe on the benefits of public housing tenants.
Her judicial review was rejected by the Court of First Instance. She then appealed to the Court of Second Appeal and lost again within a couple of days.
Not eager to take any chances, the government wanted the matter to end once and for all before the listing, and thus waited for the outcome of the final appeal. The final hearing was held on July 5-6, but CFA had reserved its judgment, delivering it yesterday.
Trust to be floated as soon as possible, says housing secretary
The government welcomed yesterday's Court of Final Appeal (CFA) verdict on the Link Real Estate Investment Trust (REIT) case and said it make arrangements for the listing as soon as possible.
"I am very pleased that CFA this morning affirmed the legitimacy of the divestment," Secretary for Housing, Planning & Lands Michael Suen said after a rather straight-forward judgment.
"We will prepare for Link REIT to be listed as soon as possible, but I don't have any idea how much time it'll take... (though) the current market situation is as good as last year," said Suen, who is also the Housing Authority (HA) chairman. "Our lawyers will learn from this matter (CFA judgment) and will make more disclosures (about the risk of legal challenges in the new prospectus)."
Financial Secretary Henry Tang said the government believed in the "small government, big market" concept and would continue to sell its assets according to plan.
Mark Daly, lawyer for appellant Lo Siu-lan who had sought a legal review of Link REIT, didn't comment on the verdict outside the court. But he defended his client, saying she had not abused the legal system by challenging the HA decision to list its shopping centres and car parks.
Legislator Sin Chung-kai, who is also a member of HA's Link REIT Steering Committee, said the listing would help improve the authority's financial position. But he reminded HA to read the judgment carefully to see if there were any parts that could give rise to further legal arguments.
"Besides, more disclosures must be made and the assets need to be revaluated, Sin said. "This will take some time but there is no pressing need for the listing. I am confident that it will be listed within the current financial year."
Associate professor of finance at the Chinese University of Hong Kong Raymond So said the valuation and share price of Link REIT could rise by 10 per cent if it was floated at the end of the year.
Given a rate of return of 6 per cent for the aborted offering last year, he said, individual investors looking for long-term profits would still find Link REIT attractive.
Disappointed with the court ruling, Lo Siu-lan protested in front of the court in the afternoon. She was accompanied by about 50 public housing tenants.
She said that she lost the case despite having a solid ground. She urged the people from the grassroots to remain united and oppose the government's attempt to sell any more public assets.
Independent lawmaker Albert Chan, who had been assisting Lo with the lawsuit, too, was disappointed. "If (HA) applies the logic used by the court, it could sell all public housing units in the form of REIT to a consortium and ask it to provide housing to the people."
"That," he said, "would trigger a lot of problems. You cannot seek the glory of achieving the biggest REIT in the world at the expense of the welfare of the Hong Kong people."
(China Daily HK Edition July 21, 2005)
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