LDMR000001/1982
Statutory Electricity Easements - compensation for diminution in value of property - revocable modification of agricultural lease permitting residential use - whether residential user to be taken into account in assessing open market value of land - evidential value of owner’s asking sale price for property - affect on comparables of New Town layout - whether oversails affect value - whether danger to human and animal health - risk of future loss or damage - Held: 1. registration of easement and existence of oversails diminished open market value of property entitling owner to compensation; 2.  no compensation payable for risk of future loss or damage but remedies for persons suffering actual loss available at common law and under statutory cause of action by way of damages and not by way of compensation - Sections 10, 11 Electricity Networks (Statutory Easements) Cap. 357, Section 12(c) Crown Lands Resumption Ordinance, Cap. 124.

IN THE LANDS TRIBUNAL OF HONG KONG

	Miscellaneous Reference No.1 of 1982

	IN THE MATTER of the Electricity Networks(Statutory Easements Ordinance, Cap.357

BETWEEN	CHOW CHI KEUNG	Applicant

AND	CHINA LIGHT & POWER COMPANY LIMITED	Respondent

JUDGMENT

TRIBUNAL:	His Honour Judge Cruden, Presiding Officer and
M.W. Phillips, Esq., Member.

	This is the first application for compensation under the Electricity Networks (Statutory Easements) Ordinance Cap. 357 which was enacted on the 11th day of July, 1980.  The applicant is the registered Crown lessee of all that parcel of land containing 2178 square feet (202.34 square metres) being Lot 998 in Demarcation District 130, New Territories, Hong Kong.  The lease was for a term, including renewals, of 99 years from the 1st day of July 1898 less the last 3 days thereof.
	In 1981 the respondent commenced to construct a 400 KV transmission network in the New Territories.  One of the reasons for the enactment of this new Ordinance was to facilitate the construction of the transmission line and to enable owners of land which suffers a diminution in value as a consequence of the construction of the network, to apply to the Tribunal for Compensation.
	Under the Ordinance statutory easements may be created in favour of a power company, in the terms of a scheme approved by the Secretary of Lands and Works, to enable the power company to carry out works in accordance with the approved scheme.  The respondent is a “power company” as defined in Section 2.
	The respondent’s scheme to construct a 400 KV network was approved by the Secretary, under his earlier designation as Secretary of the Environment, and deposited in the Land Office on the 5th day of March 1981.  Subsequently on the 25th day of March 1981 the Governor in Council ordered, pursuant to Section 3, that the provision’s of the Ordinance should apply to the approved scheme.  Notice of the Order was published on the 27th day of March 1981 in No. 13 Volume CXXIII Hong Kong Government Gazette under L.N. 80 of 1981.

	The applicant’s property is situated near Lo Fu Hang Village which is south-east of To Yuen Wai, To Yuen Wai is on the main road between Tuen Mun and Yuen Long.  There is no vehicular access to the appellant’s property which is about 30 minutes walking distance from To Yuen Wai along partly paved footpaths.
	The Crown lease describes the property as a “padi lot” and we find that it is at present lawfully used for residential and agricultural purposes.  The property is beyond the Tuen Mun New Town Layout Plan.  We were informed that the property falls within an area zoned Lowland Rural Area on the Government’s internal department plans.  At present pigs and chickens are reared and some vegetables are grown on the property.  A house of two stories and an adjoining kitchen, used for residential purposes, are occupied by the applicant’s parents.  There are also two pigsties with a total area of 51.68 square metres and chicken sheds of a total area of 38.99 square metres.
	The right to compensation is contained in Section 10 which provides :-

	”10.(1)	Where an order made under this Ordinance affecting any land is registered by a power compensation under the Land Registration Ordinance, the company shall be liable to pay company to the person who, at the date of registration of the order is the owner of the land in respect of any diminution of the value of his estate or interest therein attributable to the registration of the order.”

	We are satisfied that the Order has been duly registered and that the applicant was at the date of registration the Crown lessee of the land.  Section 10 goes on to give the Lands Tribunal jurisdiction to determine the amount of compensation, if any, payable in the case of a claim and Sub-section 6 provides that:

	”(6)	For the purposes of this section “value”, in relation to any land affected by an order made under this Ordinance, means the open market value of the land assessed as at the date of registration of the order.”

	However, the Section also provides that in determining the compensation payable thereunder, no compensation shall be paid for:

	”(a)	any expectancy or probability of the grant or renewal or continuance by the Crown or any person of any licence, permission, lease or permit whatsoever;

(b)	any use of the land which is not in accordance with the terms of the Crown lease under which the land is held.”

	At the hearing evidence was given as to the status of the house and related buildings used for domestic premises.  In accordance with New Territories agricultural land practice the applicant is the holder of a Modification of Tenancy permitting him to maintain the residential buildings we have referred to on this agricultural land subject to the conditions appearing on the modification document.  These conditions include:
	1.	The permission may be cancelled on 1 month’s notice or where there a breach of the conditions forthwith.
2.	The permission is not transferable.
3	The annual permit fee is $12.
	In practice a purchaser of the property may, upon the existing Modification of Tenancy in favour of the vendor being cancelled, apply for a new Modification of Tenancy in his name.  In a letter from the Principal Government Land Agent/Acquisition of the Lands Department dated the 30th day of July 1982 to the respondent, that officer confidently asserts that as the permit is of a temporary nature and is subject to cancellation in the case of breach of conditions:

“ … no compensation shall be given under Section 10 of the Electrcity Networks (Statutory Easements) Ordinance 1980,”

	The respondent adopted that view in its submissions and contended that any valuation of the property must be on the basis that it is bare agricultural land without any buildings erected thereon.  The respondent pointed out that Section 10(5) provides:

”10.	(5)	In the determination of the amount of compensation, if any, payable under this section, no compensation shall be given in respect of -
	(a)	any expectancy or probability of the grant or renewal or continuance by the Crown or any person of any licence, permission, lease or permit whatsoever;”

	Our attention was drawn to the fact that Section 10(5) appears to have been modelled on Section 12(c) of the Crown Lands Resumption Ordinance, Cap. 124 which provides:

	”12	In the determination of the compensation to be paid order this Ordinance -

	(c)	no compensation shall be given in respect of any expectancy or probability of the grant or renewal or continuance by the Crown or any person of any licence, permission, lease or permit whatsoever;
Provided that this paragraph shall not apply to any case in which the grant or renewal or continuance of any licence, permission, lease or permit could have been enforced as of right if the land in question had not been resumed; and ”

	We are satisfied that the applicant could not have enforced any right to have the Modification of Tenancy renewed or continued.  So had this been a resumption under the Crown Lands Resumption Ordinance, his position would not have been protected by the proviso to Section 12(c).  We are further satisfied that the provisions of Section 10(5) and Section 12(c), are, for practical purposes, identical.

	The affect of Section 12(c) when land is resumed under the Crown Lands Ordinance was considered by the Court of Appeal in Ching Chun-Kau v. Director of Lands and Survey (1978) H.K.L.R. 320.  In that case the land resumed was held under a Crown lease which at the date of resumption had an unexpired term of 22 years.  However, the sole permitted use under the lease was for the purposes of a dairy.  A dairy required an annual licence from the Director of Agriculture and Fisheries.  The annual licence in that case had 6 months to run at the date of resumption and the grant of a new annual licence was within the discretion of the Director of Agriculture and Fisheries.  The Lands Tribunal, relying on Section 12(c), held that the value of the unexpired term of the lease was not to be calculated on the basis of 22 years but merely on the 6 months remaining under the annual licence.

	The Court of Appeal had little difficulty in rejecting that approach and held that the land should be valued on the whole of the unexpired term of the lease of 22 years.  On appeal Huggins J.A., thought Section 12(c) was irrelevant and would have been prepared to dispose of the appeal on that basis:

“The short answer appears to me to be that the Claimant is not seeking compensation in respect of any expectancy or probability of the grant of a licence but in respect of the unexpired term of the Crown lease. …
	The Tribunal felt constrained to limit the compensation to the period of six months, a period entirely unconnected with the unexpired term in respect of which the claim was made and dependant solely upon the relationship between the date of resumption and the date of expiry of the current dairy licence.  It was, no doubt, a pure matter of chance that the resumption order was not made either on the day on which that licence was granted or on the day on which it expired.  Had it been the latter day the Tribunal would presumably have awarded no compensation at all.  Such an extraordinary result is not one which I could endorse unless driven by the clearest possible language.  It was the force of the words of s. 12(c) which so impressed the Tribunal that they thought they were driven to that result.  As I have said, I think that paragraph has no relevance to the case before us.”

	The Court of Appeal emphasised that the application for compensa-tion was for the unexpired 22 years of the Crown lease.  The application was not for compensation for the expectancy of the renewal or continuance of the dairy licence.  If the dairy licence were not renewed Huggins J.A. went on to point out that certain action could in any event have been taken against the Director of Agriculture and Fisheries or alternatively there were other remedies under the Crown lease.

	There are, of course, important differences between the instant facts and those in Ching Chun-kau V. Director of Lauds and Survey.  In the latter case the claim was for compensation upon a resumption, while here we are concerned with compensation for diminution of value of land.  The Lands Tribunal appealed from, attempted to limit the assessment of compensation to the 6 months remaining under the annual licence when the interest being resumed was the much longer term under the lease.

	The respondent here makes a far less ambitious submission.  For it recognises that any valuation is to be based on the whole unexpired term of the Crown lease.  It simply submits that in that valuation the buildings not authorised under the lease, but permitted by the Modification of Tenancy, should not be included.  We recognise that Ching Chun-kau’s position against the Crown as lessor, was very different and more power-ful than the present applicant’s position as grantee under the Modification of Tenancy and as Crown lessee.

	However, the Court of Appeal’s judgment in Ching Chun-kau V. Director of Lands and Survey remains most helpful in indicating the limited extent of the perhaps otherwise apparently wide provisions of Section 12(c) and by analogy in this particular case Section 10(5).  In view of the several factual differences it may be helpful if we return to the relevant provision of the Electricity Networks (Statutory) Easements Ordinance relating to compensation, namely Section 10.  Under Section 10, as we have seen, the applicant is entitled to compensation for “any diminution of the value” of his land.  Further the value of his land is the “open market value of the land” as at the date of registration of the order.

	Any accurate assessment of any diminution of value will usually include an assessment of the value of that land to provide a base.  If there has been any diminution we must then quantify that diminution.  The first task would require the open market value of the subject property to be determined.

	What then comprises the subject property for the purposes of this valuation? It is undisputed that it at least includes the bare agricultural land.  We are equally satisfied that some of the buildings are incidentally used for agricultural purposes, namely the pigsties and chicken sheds.  The respondent’s objection to buildings being included seems to have overlooked the fact that it is only the residential buildings which are referred to in the Modification of Tenancy.  The Modification of Tenancy is also, to some extent, a misnomer for under that document, as the body of that document declares:-

	“ … the Crown hereby permits the modification of the Crown Lease … “

	The modification is, of course, subject to the terms therein set out but it is far more than merely a modification of a tenancy.  In terms of the document it is a modification by the Crown of the Crown lease.  The modification permits the applicant to maintain on the land contained in the lease the private residence, porch and kitchen at present situate on the property.

	From a consideration of the whole of the evidence including the Crown lease and the modification thereof, we are satisfied that the other buildings used for pig and chicken farming are lawfully erected and used for agricultural purposes in terms of the lease.  We have not overlooked that, as was typical for leases of this vintage, the permitted use is described as a “padi” lot.  We hold that such a use includes not merely the growing of rice but general agricultural purposes.  Such buildings must necessarily be included in any valuation.  So the subject property clearly includes at least the land and those agricultural buildings.

	We accept that the residential buildings are only permitted under the Modification of Tenancy.  However, it is equally clear that those residential buildings are lawfully erected on the land for residential purposes pursuant to the Crown lease as modified by the Crown under the modification document.  We recognise that the modi-fication in respect of those residential buildings may be cancelled by the Crown on 1 month’s notice and is not transferable.

	However, we also remind ourselves that the established practice in the New Territories is for residential modifications to enure in favour of the grantee subject to payment of an annual fee.  We note that the modification in favour of the applicant has continued on payment of an annual fee since he purchased the property in 1977.  We further accept that upon a property, subject to a modification in favour of the vendor, being sold the new owner will normally have no difficulty in obtaining a new Modification of Tenancy, in relation to existing residential buildings included in the purchase.  The new modification too, in the normal course, will continue subject to the annual fee being paid.

	For these reasons we are well satisfied that the open market value of the subject property will include an element for the residential buildings.  The present residential occupancy is clearly lawful and in the context of Hong Kong’s relatively high residential property values, even in the New Territories, these particular residential buildings must have value.

	In ascertaining the open market value of the subject property we therefore hold in accordance with Ching Chun-kau v. Director of Lands and Survey that no deduction for residential buildings is to be made under Section 10(5).  On the basis of the evidence available to us, we now turn to consider the open market value of the subject property.  We would con-firm that the subject property includes the bare land, the buildings used for pig farming, the buildings used for chicken farming and the residential buildings referred to in the Modification of Tenancy.

	We would also confirm that under Section 10 the relevant date for assessing the open market value of the subject property is at the date of registration of the order.  In this case the order was registered against the subject property in the Tuen Mun District Land Registry on the 30th day of March, 1981 as Memorial No. 202470.

	The applicant did not call a chartered surveyor or other expert to give evidence of value.  However, he informed the Tribunal that he purchased the property after negotiations were conducted by a village elder on his behalf on the 16th day of May, 1977.  We were informed that the consideration formally expressed in the assignment was $20,000.  There were suggestions that the total cost to the applicant may have been in excess of that sum but the evidence was not sufficiently clear for us to make any contrary finding on this issue and we are left with the stated consideration of $20,000.

	The applicant also stated that in 1980 he attempted to sell the property through a village elder for $350,000.  He was offered $250,000 which he rejected.  No sale was effected.  In January 1982, by which time the pro-perty was subject to the statutory electricity easement, he reduced the sale price to $200,000, to take into account the effect of the easement on the property, but was unable to find a purchaser.

	It is trite law that an offer to buy or sell at a certain price is not direct evidence of value.  Often it may merely be an estimate by the offeror of the value of the property to him.  Depending on the circumstances it may not even be evidence of that fact.  For an offer may also reflect the financial position of the offeror and his estimate of his bargaining position against the other party, rather than his estimate of the real value of the property.  A variety of other factors, not directly related to value, may also influence the calculation of the offer.  Generally little or no weight should be given to evidence of this kind as was emphasised by the High Court of Australia in McDonald v. The Deputy Federal Commissioner of Land Tax for New South Wales (1915) 20 C.L.R. 231, 237, where in a taxation appeal Isaacs J., pointed out:-

“ … it is plain that the mere fact of a statement by an owner to a stranger that he would be willing to sell at a given figure, and that offer was not accepted, for some reason undisclosed, is not evidence of what the Statute requires, namely the price which a willing buyer would give, supposing the seller announced reasonable conditions.  At most, it is evidence of the owner’s bona fide belief at the time as to the value of his land.  Nor is the refusal of the person to whom the offer was made to accept it, even if specifically on the ground of excessive amount, any more than an expression of his opinion on the point … When the matter has reached the point of a concluded contract, there has been a definite concrete fact established, which not only evidences value, but to some extent helps to create or modify it.  Where an owner has actually parted with his land for a fixed sum and a buyer has parted with his money for the land, a clear event has arisen, which, based on the ordinary instincts and impulses of human nature, indicates a consensus of opinion between two adverse parties in the community respecting the value of similar lands.  Some advantage to justice is therefore manifestly possible from considering it, and the law presumes that up to that point the disadvantages of having to undertake the collateral inquiries as to comparison do not outweigh the possible advantages.

But if the negotiations do not end in a concluded bargain, the field is at once open to a multitude of other considerations before the same point of opinion is reached.  Excursions into the realm of collateral circumstances would be endless. ”

	We have been unable in this application to refer, if only for background purposes, to current rateable values.  For the subject property is exempt from rates under the Rating Ordinance, Cap. 116.  Section 36(1)(a) exempts from assess-ment agricultural land while Section 36(1)(b) exempts any dwelling house in the New Territories (except New Kowloon) which is occupied in connexion with agricul-tural land.  The Commissioner of Rating and Valuation has therefore not been obliged to value the property.

	However, we did have the assistance of the evidence of Mr. T. Lo, Chartered Surveyor, who was called by the respondent.  Mr. Lo was of the opinion that there had not been any diminution in value attributable to the registration of the order.  In coming to that conclusion, he disregarded the existence of the residential buildings treating the property as agricultural land.  Turning to possible comparables he stated that there was no record of any comparable transactions for similar properties before and after orders were registered.  So there was no direct evidence of any possible diminution in value as reflected in actual sales.  As far as sales generally in the immediate locality were concerned, he stated that these suffered from the disadvantage that they were either in or near the Tuen Mun New Town Layout.  He was of the opinion that sales in both of these areas reflect a speculative element arising from the Crown’s practice of making generous ex-gratia payments to owners of resumed land.

	We have already considered this issue in Hofei Estates Limited v. Secretary for City and New Territories Administration C.L.R. No. 1/82.  We accept that prices paid within layouts tend to exceed the true value of those properties for agricultural use.  However, we are not satisfied that principle can properly be extended to properties outside a layout.  If there is a pattern of sales of comparable agricultural land outside a layout, those sales should not be rejected solely because of the possibility that they may include a speculative element arising from the hope that, at some indeterminate time in the future, an existing layout maybe extended to include such properties.

	In Appendix XI of his report, Mr. Lo set out details of sales of Properties Nos. 1, 2, 3 and 4 all of which are within the Tuen Mun New Town Layout and quite properly rejected by him as comparables for that reason.  He then went on to give details of Properties Nos. 5, 6 and 7 all of which are not only outside the layout but are situated in the same locality as the sub-ject property.  However, he also rejected these latter three properties on the ground that, while they were outside the layout, their sale prices were also inflated due to the vicinity of the layout.  Yet, in relative terms, they were no closer to the layout than the subject property.  To overcome this self-imposed restriction, Mr. Lo went far beyond the locality of the subject property and preferred to rely on much larger agricultural properties in more remote areas.  The procedure he followed, he explained, was that he:-

“ … gathered sales evidence of land lying in the more remote part of the New Territories where there is little or no prospect of resumption or development. ”

In March 1981, sales of agricultural land in those remote areas ranged from as low as $43 to $80 per square metres for properties ten to twenty times larger than the subject property.  The subject property is 202.34 square metres.  The area of Mr. Lo’s preferred comparables were 4694.31 square metres, 4532.44 square metres and 2630.43 square metres.  On the basis of those very different transactions he adopted a rate of $80 per square metres for the subject pro-perty producing a value of $16,187.  Having considered the particulars of those much larger and more remote properties, which are referred to Appendix XII of his Report, we are satisfied that they are not sufficiently comparable to be used as a sound basis for valuing the subject property.  Indeed, they would be well below the market value of the subject property as, conversely, agricul-tural land within a layout, would be above the value of the subject property.

	We note in passing, that the Crown’s ex-gratia zonal rate for resump-tion of agricultural land within the Tuen Mun Layout, being 75% of $89 per square foot, is very much higher.  Indeed it equals $718.50 per square metre compared to the $80 per square metre used by Mr. Lo for his valuation of the subject property.  We understand that the zonal rates are for bare agricultural land without buildings.  If the subject property were within the layout, that would produce a figure of $145,000 plus an allowance for buildings.

	Notwithstanding Mr. Lo’s hesitancy, we are satisfied that greater weight should have been given to Properties Nos. 5, 6 and 7 in Appendix XI.  Of these Property No. 7 appears most closely to relate to the subject property.  Property No. 7 is similar in size comprising 228.17 square metres compared with the subject property’s 202.34 square metres.  The property was sold for $98,240 on the 30th day of May 1981 which also is very close to the date at which we have to assess compensation, namely the 30th day of March 1981.  This property also appears to be a similar if not even a further distance inland, from Castle Peak Road and to lack vehicular access.  It is likewise outside the Tuen Mun Town Layout.  Unfortunately, we were not told whether Property No. 7 was bare agricultural land or whether it includes any buildings.

	Nevertheless, even after taking into account Properties Nos. 5, 6 and 7, the evidence remains insufficient for us to make any precise finding as to the actual open market value of the subject property as at the 30th day of March 1981.  We are satisfied, however, that it is worth less than the applicant’s suggested valuations which varied from $350,000 to $200,000.  Equally it is worth very much more than the respondent’s value of $16,187.  Some of our difficulties may not have arisen if the applicant had called a valuer.  In the circumstance’s we can only estimate that the open market value of the property as at the 30th day of March 1981, may have been somewhere in the region of $100,000 to $200,000.  We would emphasise that we have not arrived at those figures as the open market value of the property but merely record them as parameters within which the actual open market value would probably fall.

	We must now proceed, as best as we are able, subject to all the foregoing qualifications, to ascertain the diminution, if any, in that value of the land “attributable to the registration of the order”.  We hold that any such diminution necessarily includes not merely the registration of the Order in terms of the Ordinance but also the construction of the transmission line which includes the pylons and the lines themselves.  The normal method of ascertaining any diminution would be to compare the value of properties, as reflected in actual sales, which are subject to such orders with similar pro-perties which are not encumbered by such orders.  It was common ground that as this is the first major transmission line affecting privately owned pro-perties there simply is, as yet, no record of any such sales.

	However, we have had the advantage of inspecting the property.  No pylons are constructed on the property but the transmission lines pass over the property.  This particular transmission line appears physically to be of a much larger kind than is commonly seen elsewhere in Hong Kong.  The pylons are major steel structures carrying 6 transmission lines at a height of about 100 feet above the residential buildings of the subject property.  The subject property itself is largely covered by the buildings we have already described.  The buildings take up 65% of the total area.  The balance of 35% comprises paths and a small garden.  So this is not an example of the more common case of electrical transmission lines covering large areas of remote bare agricultural land.

	Before proceeding to consider the effect of the order on the subject property it may be helpful, particularly as this is the first application under our new Ordinance, to consider the position in countries overseas where for much longer, statutory provision has been made for the erection of electrical trans-mission lines over private property.  In England the empowering legislation is the Electricity (Supply) Act 1919 and the Electricity Acts 1947-1958.  Where “way-leaves” are acquired a right of compensation arises.  Compensation is determined under the Land Compensation Act 1961 so the general principles relating to the compulsory acquisition of land by the Crown are applicable.  A “way-leave” is defined in Volume XII Oxford English Dictionary 211 as:-

”way-leave: permission to make and use a way for conveying coal from the pithead across a person’s land; the rent or royalty for such permission; the way or road constructed for the purpose.  Also, permission to carry telephone wires over or along buildings, or to lay waterpipes or drains across private land, and the charge or rent payable therefor.”

	The first cited use of “way-leave” goes back to 1427.  With the development of electricity and the necessity to reticulate it over long distances “way-leave” has also been used, to mean the right to carry electri-cal transmission lines over or under land.  In ’Modern Methods of Valuation of Land, Houses and Buildings’ (6th Edn.) 413 it is stated that in England:-

	’The acquisition of “way-leaves” ... may include the following:

	(a)	The carrying of overhead conductors across land by means of supports erected on the land;

	(b)	the carrying of overhead conductors across land without any supports being erected on the land itself - sometimes referred to as “oversails”;

	(c)	the carrying of conductors underground.

	The extent of the injury suffered by owners and occupiers will obviously differ according to the nature of the wayleave.’

	In this particular case the species of wayleave affecting this pro-perty is that categorised in paragraph (b) as “oversails”.  As to the diminution in value caused by oversails the authors go on to state:

”In (b) there is no actual occupation of the land itself, and in the case of purely agricultural land the presence of the oversail may have little, if any, effect on value, although the minimum height at which the conductor crosses the land is always a matter for consideration.”

	In England compensation is paid either by way of annual rent or by way of lump sum payment.  Under Section 10 the power to award compensation seems to be wide enough to cover both alternatives.  In this claim, the applicant sought a lump sum payment.  “Modern Methods of Valuation”, after referring to actual loss suffered to owners by damage to crops and the like, observes that normally electricity conductors cross open country and that if it were proposed to carry a line over ripe building land the better course for an owner would be to make representations for an alternative route.  This implicity recognises that a loss may be suffered by the mere presence of an oversail, even though there is no physical damage to crops or other property.  Express reference to the affect of oversails on bare land with development potential is made at page 415:

”If the original proposal were persisted in, then the effect on the value of the state of the erection of pylons on certain plots and the presence of high-voltage cables over other plots would have to be considered.  In such a case a claim for depreciation in the value of the land affected could be made.”

	Reference is also made to the decision of the English Lands Tribunal in Radnor Trust Ltd. v. Central Electricity Generating Board (1960) 12 P. & C.R. 111 which was a claim for compensation due to the erection of pylons and oversails.  £220 was awarded for the value of the land taken for the pylons and £750 for depreciation in the value of the house.  However, the depreciation appears to have been allowed because of the pylons and no separate provision was made for the oversails.  The Tribunal was satisfied that the pylons and the wires depreciated the property’s value stating at page 114:

”I have viewed the property and in the light of that view I am satisfied that the existence of the pylons and wires does not materially detract from the enjoyment of the very attractive property.  At the same time I am satisfied by the evidence that it would prove a deterrent to some, and form a strong bargaining point in the case of all prospective purchasers.”

	So the Tribunal found that the pylons, together with the transmission wires, would affect the bargaining position of all prospective purchasers.  A less generous view seems to have been taken by a differently constituted Lands Tribunal in Pryor v. Central Electricity Generating Board (1968) 206 E.G. 1143.  In that case compensation was allowed for the potential interference with aerial cultivation, annual cleaning, converging of double lines and injurious affection to the farmhouse.  But on the facts of that particular case a claim that future sales would be impaired was rejected.

	The present applicant places the affect of the transmission lines on a future sale in the forefront of his claim for $200,000.  He submitted that the erection of the transmission lines had affected his enjoyment of the pro-perty by their physical presence above the property; their affect on fung shui; their danger to human and animal health; and their affect on television reception.  All these factors, it was submitted, would result in a lower resale value of the property.

	As to loss of resale value, the applicant cited his first offer to sell the property before the transmission lines were erected for $350,000 com-pared with his reduced subsequent offer of $200,000.  Now he expected to be able to sell the property at about $150,000.  He therefore assessed his loss of value on resale at $200,000 being the difference between the earlier $350,000 and the present $150,000.  In the New Territories he stated that fung shui is a dominant factor in ascertaining land values.  The installation of the transmission lines, in his opinion, had reduced the fung shui value.

	The applicant produced a newspaper article in the ’Oriental Daily News’ of 3rd September, 1981 apparently prompted by the construction of these trans-mission lines, raising fears of the danger to human life.  On whether high voltage lines cause danger to human and animal life the respondent called its Environmental Protection Officer Dr.C.J. Muskett.  Dr Muskett holds the degrees of Bachelor of Science (Honours) and Doctor of Philosophy in Applied Biology from the University of London and is a Member of the Institute of Biology.  For 8 years he has been employed as a professional environmental scientist.  We accept he is an expert in these fields.  He produced reports on the effects of high voltage transmission systems on animals and humans, supporting his opinion by reference to 27 authorities.  Dr. Muskett’s evidence was most interesting and revealed that for some years research studies have been carried out to investigate the effect of high voltage transmissions on animals and humans.  His evidence included the following observations:

”Overhead transmission lines affect the surrounding environment in a number of ways.  In addition to the electric and magnetic fields generated; small arc discharges, air ions, low frequency noise, ozone nitrous exide and radio interference are also characteristically produced.  Hence the environment in the vicinity of transmission lines can be in chemical and physical terms, extremely complex ... research studies carried out in America and Western Europe into the possible effects of transmission lines on human health ... none of these studies was able to indicate a significant effect of electric fields on humans number of Soviet studies and more recently Spanish studies have been carried out on persons occupationally exposed to high voltage electric fields in switchyard environments.  Before proceeding with a review of the research results from these studies, it is important to consider the differences in environmental conditions prevalent in switchyards as opposed to those in the vicinity of transmission lines.  In contrast to the studies conducted in America and Western Europe, Soviet studies have indicated adverse effects of high voltage transmission.  In a report by Krivova for example, in which 319 men aged up to fifty years exposed to switchyard environments rated at 220,330 and 500 kV were tested, it was concluded that the electric field caused a nonspecific disturbance to the central nervous system.  Another Soviet study, by Asanova and Rakov carried out on workers employed on 400 and 500 kV installions found multiple functional disorders of the neurological, cardiovascular and digestive systems.  Sazonova followed up these disorders and found comparable results in further studies ... Much criticism has been levelled at the Russian studies, principally with regard to methodology ... However, as a result of the Russian work, exposure standards have been set for occupationally exposed persons in the USSR ... Based on this review of available data, it appears that there is no conclusive evidence to support the hypothesis that there may be significant biological effects from exposure of the public to EHV transmission systems.  The effects that have so far been reported are confined to occupational exposure situations (switchyards) and are non-specific.  Persons working in switchyards would be expected to be exposed to greater electric field intensities than would be the case for members of the public in the vicinity of transmission lines.  In addition occupationally exposed workers would be subject to additional environmental influences such as low frequency noise, small arc discharges, vapours from transformer oils and oxidants (ozone).  These additional factors are unlikely to be significant to members of the public.  The overall conclusion resulting from a review of the relevant literature is that 400 kV transmission systems have not been shown to be in any way hazardous to the general public.”

	Dr. Muskett was of the opinion that the high voltage electricity transmitted in the wires would not affect the health of either the persons living at the property or the pigs and chickens reared for sale.  He therefore equated their position with that of the general public.

	The complaint in respect of television reception seemed credible.  It was consistent with Dr. Muskett’s concession that the transmission lines could cause radio interference.  Yet when we visited the property and the television was put on, for demonstration purposes, it did not appear to be affected by the high voltage transmission lines.

	We were informed by the respondent that if one of the wires should break and fall to the ground it would be automatically neutralised posing no danger.  The pylons and the wires had been designed to withstand a wind force several tines greater than the maximum recorded winds in this area during the past 50 years.  Many of the applicants’ fears were either ungrounded or speculative.

	At the same time we sympathise with his obvious concern.  A layman’s fears caused by these transmission lines is certainly understandable.  As to the speculative nature of some of these fears, a similar issue arose in Wood & Anor v. Taranaki Electric-Power Board (1927) N.Z.L.R. 392.  The Board had erected a transmission line along the common boundary of the claimants farm and an adjoining major drain.  The claimants claimed compensation for diminu-tion in the value of their land caused by the proximity of the lines which rendered more costly the regular cleaning of the drain.  The Court of Appeal held that the Board was by statute responsible to clean the drain and no duty devolved on the claimants.  However, as to the possible damage to land or animals from falling wires, the Chief Justice observed:

“On the argument before us counsel for the claimants admitted that the claimants could only recover compensation in respect of losses sustained in consequence of what the respondent Board has lawfully done or might lawfully do under its statutory powers.  If it exceeds those powers, either by committing an act not authorized or by doing an authorized act in a negligent manner, the person injured would have a remedy by action and would not be entitled to compensation.  The respondent Board contended that no injuries of any kind mentioned were proved to be necessarily incidental to the proper use of such transmission-line, or to its use without negligence; and that if any injury can be suggested to be necessarily incidental to the proper use of the transmission-line the happening of the same is too uncertain and speculative to be the subject of compensation.  The claim therefore is based entirely upon an anticipated injury to the land of the claimants not due to negligence on the part of the respondent Board.  The risk, it is suggested, may arise from the breaking of one or more of the transmission-wires by tempest, accident, or some unforeseen cause bringing the wires into contact with the lands through which they run, and so causing fires on the lands and to the fences and injury to the live-stock.  It was shown however, by the evidence that the transmission-lines of the respondent Board are supplied with what is ordinarily known as an overloading device, and in addition with a leakage relay device.  The effect of these safety devices, according to the evidence, is that directly a transmission-line comes off the insulator or makes contact with the earth the line is deadened automatically ... After considering the evidence we hold as a fact that there is no reasonable probability of injury to the land or the live-stock of the claimants by reason of the accidental fall to earth of the transmission-wires.  The possibility of such a fall of wires is wholly uncertain and quite incapable of estimation.  It may never happen.  If it should happen it appears clear from the evidence that there is no reasonable probability of injury to the land ... It is impossible to hazard or guess whether some such accident would ever happen, or whether, if it should happen, what injury would be sustained by the workmen.  The whole matter is in the region of mere speculation.  For these reasons we determine that the claimants are not entitled to compensation in respect of the injurious affection claimed for risk of damage to their lands by fire and injury to workmen and stock, and generally to the lands, through the escape of electrical energy from the said works.”

	We have also considered the English Court Appeal decision in West Midlands Joint Electricity Authority v. Pitt & Ors. (1931) 2 K.B. 2 which considered wayleaves; the power to place electric lines across land; land-owners right to compensation; and the procedure by which it was determined.  The power to place transmission lines over private land in England was introduced in 1919 by the Electricity (Supply) Act.  Among several issues resolved by the Court of Appeal which are of interest in the present claim, is that it was undisputed that the wayleave was “land” within the meaning of the English Acquisition of Land (Assessment of Compensation) Act 1919.  The easement constituted an interest in land and was therefore “land” for compensation purposes.  The narrow question was whether compensation was to be determined judicially or decided administratively by the Minister of Transport.

	The rental offered for the wayleave was calculated on the basis of the number of towers with different rates depending whether they were erected on arable, grass or other land together with a different rate for underground cables.  The length of oversails was not an element expressly taken into account.  However, the judgments of the Court of Appeal were emphatic that, apart from statutory rights under the Electricity Acts, the Crown had no right to enter upon private land to erect pylons or carry electric lines across such land.  Romer L.J. at page 54, referring to the effect of a wayleave over private property, observed:-

“But an electric line cannot be so placed without taking away some of the rights of property of the owner or occupier of the land … But he does obtain a legal right to compensation as I understand those words.  The compensation to which the statement of Lord Atkinson refers is surely compensation commensurate with the invasion of his property that the land owner has incurred, and not a compensation commensurate with the sense of justice possessed by the Minister of Transport for the time being.”

	In Hong Kong a right to compensation arises pursuant to Section 10 in favour of a claimant, upon the registration of an order under the Electricity Networks (Statutory) Easements Ordinance against his property.  In the event of a dispute it is to be determined judicially by this Tribunal.  Section 10 further provides that the measure of compensation is the diminution in the open market value of the property attributable to the registration of the order.

	Before proceeding to determine if there has been any diminution in value, there is one other matter which arose in evidence which we should refer to at this stage.  We were informed that the route of the wayleave affecting many properties was determined after consultations with at least some of the parties affected.  An arrangement was also made between the Government and the respondent whereby the Government, as agent for the respondent, would make ex-gratia offers to the various owners whose properties were affected by the wayleave.  The offers were conditional upon the owners waiving and surrendering all their rights against the respondent.  A letter from Government to the applicant dated the 4th day of August, 1981 included this provision:

	“4	However, Government on behalf of China Light and Power Company Limited is prepared to offer you for the land affected an ex-gratia cash allowance of $10,346.  This offer is subject to the following conditions:

	(a)	that you waive and surrender to China Light and Power Company Limited all your rights to and interest in the compensation payable to you in respect of the said lot(s) under Section 10 of the Ordinance; and

(b)	that you accept this offer in writing by signing the acceptance part of this letter and returning it to me before 3rd August 1982.”

	The Government is not a party to these proceedings for under the Ordinance the parties are the owner of the property as applicant and the China Light and Power Company Limited as respondent.  In Hong Kong the production and sale of electricity is not a Government function but is the business of public limited liability companies.  The Government may have considered that it was in the public interest for the technicalities in relation to the way-leave to be resolved expeditiously and offered assistance.  In any event it undertook the task of negotiating with the owners on behalf of China Light and Power Company Limited.  We are not concerned with that decision.  What does concern us in this claim, however, is the preceding paragraph of that letter which concluded:

“The Tribunal must, under Section 10 of the said Ordinance, determine the compensation for your estate or interest strictly in accordance with the lease conditions and is precluded from awarding any compensation in respect of any expectancy or possibility of a grant of land exchange or licence and must discount any evidence which shows that the land values have been enhanced by expectation of development or of a modification of lease conditions.  If you are not sure of your rights you should enquire from the District Office, Tuen Mun or seek independent professional advice.”

	No doubt that paragraph was written in the utmost good faith.  It includes a statement of what the Tribunal “must” do in determining compensation which might be thought to be an unhappy choice of words.  What is more important is the reference to the Tribunal having to discount the expectancy or possibility of a grant of land exchange or licence or any enhancement by expectation of development or of a modification of lease conditions, which enters a difficult area of law.  In certain circumstances that statement of law in the letter apparently limiting a claim for compensation is wrong.  A similar statement was included in a subsequent letter from the respondent to the applicant dated 14th April 1982.  An example of where such an expectancy or possibility, to the contrary, is not to be discounted has already been referred to in Ching Chun-kai v. Director of Lands and Survey (supra).

The very same issue arose in this application when we came to consider the Modification of Tenancy.  We have held the mere expectancy of the annual renewal of the modification of tenancy is not to be a discounting factor.  In many compensation claims a variety of delicate questions may arise.  If the Government ventures to inform the parties with whom it is negotiating of the legal limit of their right to compensation, care should be taken to ensure that such information is accurate.  Here the Government informed this applicant that, as a matter of law, his right to compensation was in one particular limited, when in fact it appears to be not so limited.

	We now return to the question whether there was any diminution of value.  We have already seen that due to the fact that the wayleave had just been completed and is the first of its kind to be built in Hong Kong affect-ing private land, that there simply are no comparables of affected and unaffected similar properties from which we could arrive at a figure by that method.

	In those circumstances Mr. Lo adopted what he described as a notional method of valuation.  He discounted the possibility of the annual renewal of the modification of tenancy.  He accepted that the lines are inherently safe and that there was no substantiated health hazard to humans or to livestock.  On that basis he concluded that the registration of the Order would not diminish the agricultural value of the land.

	We have already held that in assessing the value of the property the existing permitted residential use is to be taken into account, as well as the agricultural user.  We accept, however, that the oversails are inherently safe and following Wood & Anor v. Taranaki Electric Power Board no compensa-tion is presently payable for the possibility that they may become unsafe or cause damage in the future.  This finding in no way prejudices the applicant.  For if in the future the lines became unsafe and the applicant were to suffer damage he would then, depending on the circumstances, have a claim not for compensation but an action for damages.  In particular we would point out that Section 11 not only preserves a party’s common law rights but, in addition, creates a separate statutory cause of action in favour of persons suffering loss or damage.

	From our view of the property we are satisfied that the oversails do not affect television reception.  Nor on the evidence has it been established that there is any health hazard caused by their presence.  If any of these factors were established then, while they are not separate statutory heads of compensation, it would be open to us to infer that their presence would diminish the open market value of the property.

	Similarly, if the adverse fung shui effect of the transmission lines was reflected in a reduced open market value, weight would also have to be given to that factor.  It matters not whether fung shui is a separate head of compensation or recognised by the statutory or common law, if in fact it affects the open market value.  The position might well be the same even if the open market value was not the test and we had to consider loss or damage generally.  For Section 3 of the Application of English Law Ordinance, Cap. 88 provides that the common law shall be in force in Hong Kong so far as it is applicable to the circumstances of Hong Kong and its inhabitants and “subject to such modifications as such circumstances may require.” Under that provision Hong Kong Courts have, for example, long recognised as separate common law heads for damages in personal injuries actions, claims for extra nourishment and bonesetters fees, which would not be allowed in England.

	If the need arose there is no reason why the courts in Hong Kong, in appropriate compensation cases, might not recognise fung shui.  However, in this case we do not need to consider fung shui as a separate head of com-pensation for if it is, as alleged, a factor in the price of land in the New Territories, it would be reflected in the open market value.  The only evidence on fung shui was from the applicant himself.  He was a relatively young man, who did not claim any expertise in fung shui, but merely made the general assertion that fung shui is a dominant factor in land transactions among villagers in the New Territories and that the fung shui of his property had been adversely affected.  On that evidence, alone, if it were necessary we would be unable to find that the order has diminished the value of the pro-perty because of the alleged detrimental fung shui effect.

	The ownership of property at common law includes, of course, not only the surface of the earth, but as stated by Pollock C.B. in Electric Telegraph Co. v. Salford Overseers (1855) 11 Ex.  181 everything under and over the surface of the land.  However, those rights are only to everything immediately above and immediately below the surface.  On the other hand we accept the respondent’s submission, citing William Aldred’s Case 9 Co. Rep. 57b, that an owner of land enjoys no right of prospect.  As Wray C.J. declared at page 58b:

	“ … the law does not give an action for such things of delight. ”

On this point we were also referred to Megarry & Wade “Law of Real Property” (3rd Edn.) 812.  We therefore ignore the fact that the pylons and transmission lines on at least one adjoining property may have effected the applicant’s view.  For loss of view beyond his property he is not entitled to any compensation.

	As to the right of ownership of everything above and below the surface the only restriction on that common law right is where legislation has intervened to impose modifications or restrictions.  The enactment of the Electricity Networks (Statutory Easements) Ordinance as recently as 1980 is an implied recognition of that common law right in Hong Kong.  For the respondent had to obtain the statutory power, not merely to construct pylons on private land, but also to carry electric lines across private property.  The exercise of that power, whether described in the terms of Romer L.J. in West Midlands Joint Electricity Authority v. Pitt & Ors. (supra) 54, as an “invasion” of the applicant’s property rights, is certainly an interference with the applicant’s estate or interest in the property which, but for that exercise, would not have occurred.

	On the basis of the evidence and our inspection, we are satisfied that in applications under the Electricity Networks (Statutory Easements) Ordinance, it will be important for each affected property to be considered on its own particular facts.  Properties necessarily vary one from another.  In some cases an affected property may be bare agricultural land; others may include residential buildings; still others may consist solely of residential buildings.  In large properties the effect of a wayleave may be less than in the case of smaller properties.  These and other differences will be among the factors which will inevitably result in different amounts of compensation being awarded Certainly these differences make it impossible to evolve a simple formula, statistical, by way of percentage or otherwise, which could directly be applied to all affected properties.  In this particular case, we considered it necessary to view the property.  We found our inspection invaluable.  In the light of the differences we have adverted to, it would seem to be necessary and certainly desirable, for the Tribunal to view each property involved in similar applications under the Ordinance before compensation is determined.

	The easement registered against the subject property is in relation to 144 square metres or approximately two-thirds of the total area of the pro-perty.  The respondent contended that as only two-thirds of the property was immediately under the 6 transmission lines compensation was payable for a maximum sum equal to the diminution of two-thirds only, of the total area of the subject property.  We reject that contention.  Where an affected property is relatively small, if it is crossed by transmission lines of this size, then probably the whole of the property will be detrimentally affected.  In this particular case we are satisfied that while the transmission lines are immediately over only two-thirds of the property, their presence affects the whole of the property.  It would be artificial and misleading to attempt to limit their affect by partition, severance or other means.  We are well satisfied that while the transmission lines cross directly over two-thirds of the property, the whole property is affected.

	What we also find from our view of the property is that the sheer size of the lines together with manner in which they are strung, materially detracts from the visible appearance and enjoyment of the property.  We are satisfied that if there were an otherwise identical property in this area, not subject to the wayleave, then it would be preferred by a willing buyer to the applicant’s property subject to the wayleave.  The presence of the wayleave to the detriment of the owner would certainly, to apply the words used in Radnor Trust Ltd. v. Central Electricity Generating Board, page 114, “form a strong bargaining point in the case of all prospective purchasers”.

	Against this background we hold that the value of the applicant’s property has diminished but the real difficulty is to quantify the amount of the diminution.  We have already observed that this is not a case where com-parables indicating diminution in value are available or where unit rates or before and after methods of valuation, are appropriate.  We share the view expressed in ’Modern Methods of Valuation’ at page 413, that generally over-sails will have little effect or no effect on value.  In this particular case we are not concerned with a major diminution of value but we are satisfied there has been some diminution.

	We have already dwelt on the fact that in some areas we have, to some extent, been inhibited by a lack of detailed evidence.  However, on the basis of the evidence that has been adduced and in accordance with the principles we have mentioned, we determine the compensation payable to the applicant under Section 10, by way of lump sum, at $20,000.  The applicant is also entitled to interest since the 30th day of March 1981.  Leave to apply is reserved in respect of interest, costs and any other incidental matters.

	DATED this 11th day of March, 1983.




	(Judge G.N. Cruden)	M.W. Phillips
	Presiding Officer	Member


Representation:
The applicant in person.
Mr. C.N. Ingham, by leave, for the respondent.