Compensation for loss of marine rights

Penny’s Bay Investment Co Ltd v Director of Lands (2010) 13 HKCFAR 287, CFA) concerned the method of calculating compensation for loss of ‘marine rights’ (right of access to the sea) under the Foreshore and Sea-bed (Reclamations) Ordinance (Cap. 127). PBIL owned a Government Lease of land at Lantau. In 1995 the Government published a notice of its proposed reclamation of the land as it was to be part of a scheme to build two container terminals. In fact, PBIL continued to use the land for its ship-building and repairing business (for which marine rights were essential) until 2001. The Government then paid it to surrender the lease. In the meantime, the Government had abandoned its proposed scheme for the container terminals and the reclaimed land was used for Hong Kong Disneyland. The question was whether events subsequent to 1995 affected the calculation of compensation for loss of marine rights or whether the sum payable crystallised as at the date of the 1995 notice. The CFA (Lord Hoffman NPJ giving the main judgment) decided that the amount payable crystallised in 1995. The scheme of the Ordinance (especially section 12) made it clear that the amount payable could be determined as at the date of the notice. The compensation was the difference between the Open Market Value of the land with the marine rights and without those rights. The case was remitted to the Lands Tribunal for it to consider the amount payable in the light of this guidance. In doing so, it should bear in mind that buyers and sellers in the market for the land in 1995 might have attached little importance to marine rights when valuing the land because their valuations might well have reflected other uses for which marine rights would be irrelevant.


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