In the lap of the gods

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Protests, sit-ins, discussions with legislators – Homebuyers of high- end residential project Pearl Hori- zon have exhausted every means in the past year to uphold their rights after the government reclaimed the land plot in Areia Preta – where the unfinished develop- ment was being built – in December 2015. Their latest attempt has been to seek help from the ancient Chinese deity at Temple Bao Gong.
“We’re worried that [the land of] Pearl Horizon will have a similar fate to [the land of] STDM, losing an appeal against the government with legitimate reasons,” said Kou Meng Pok, president of the Pearl Ho- rizon Homeowners United Association, a group representing some of the 3,000 pre- sale buyers of the residential development.
He refers to gaming-cum-entertain- ment conglomerate Sociedade de Turismo e Diversões de Macau, SA which recently lost its appeal to overrule a government decision to reclaim its land plot in the wake of a new land law, which has been at the centre of controversy for the past year. A gordian knot that all sides across the political spectrum say the government has failed to resolve, with a potential new round of actions by the developers as investments of tens of bil- lions of patacas are on the line.
All the disputes began with a de- cision by the authorities to recover the land parcel on which the Pearl Horizon homes were being built in December 2015: the justification was that its 25- year temporary land concession had expired without the development of the site being completed. According to the latest version of the Land Law, coming into force in March 2014 to replace a 1980 version, the status of any land con- cession could only be converted from temporary to permanent once develop- ment of a concessionary site had been completed, and that any temporary con- cession – which cannot be renewed or extended – must be invalidated by the authorities upon expiration.
But some land concessionaires, such as Polytec Group, developer of the Pearl Horizon project, and STDM, have
objected and consequently pursued le- gal action against the government dis- patches invalidating their concessions because they claim the authorities were to blame for development delays.
No discretionary power
STDM – a flagship conglomerate found- ed by local gaming magnate Stanley Ho Hung Sun – appealed the government’s decision in 2015 to repossess its 968 square metre land parcel on the Macau Peninsula at the expiry of its temporary concession in 2013. The company al- leged in its filing that the Administra- tion had miscalculated the construction area of the parcel, preventing it from building a 3-storey villa on the site within the established construction pe- riod and the concession period.
Although the Court of Second In- stance agreed with the rationale of STDM that the government was at fault, it rejected the appeal last November, ruling that the conditions of the 25- year concession period mandated by the Land Law prevail over other factors.
The Land Law provided ‘no dis- cretionary powers’ for the government to renew the temporary concessions,
which would be immediately deemed invalid upon lapse of the stipulated 25 years – with or without any declaration by the authorities, the 110-page ruling read. The judges stressed that the Land Law is ‘a public law’ rather than a ‘pri- vate law’, meaning the public interest should also be considered in the case.
Angela Leong On Kei, legislator and STDM director, did not comment upon whether they would appeal to the Court of Final Appeal, only saying that the legal team of the company would study the matter. “Every company will strive to keep its business reputation [in- tact],” she noted.
She also did not comment on how many STDM land plots would be sub- ject to recovery due to the expiry of their concessions. In November, the authorities announced that the conces- sion of a 1,420 square metre land plot of Mr. Ho’s flagship company in the NAPE area had been voided, following 25 years of non-development.
Slim chance
Whether the STDM scenario will af- fect other cases – in which developers like Polytec Group are attempting to overrule the official decision – depends upon the ruling of the Court of Final Appeal, according to two legal sources, speaking on condition of anonymity.
“A l h o u g h i t ’ s s t i l l n o t k n o w n whether STDM will appeal to the final court, I don’t see a high chance of its success as the terms of the Land Law – per the ruling of the Court of Second Instance – clearly mandates any land parcels [will] be taken back upon the expiry of 25 years regardless of the re- sponsibilities of any parties,” concluded one legal source.
The same source said other ongoing cases would not be bound by the STDM ruling, according to local laws although it would be used as a reference. “All the similar cases in the lower courts only abide by the ruling of the Court of Final Appeal if a request for a uniform judi- cial interpretation is filed in case of any discrepancies [between the rulings of similar cases],” the source added.
“If the Court of Final Appeal sus- tains the ruling of the lower courts [in the case of STDM], in which any temporary land concessions will be automatically nullified upon expiry of the 25 years, all other cases basically
have [only a] slim chance to [get] the invalidation of their concessions over- ruled,” another legal source said. The same source added that the land conces- sionaires could only file another case against the authorities for compensation should the reasons for non-development of the plots lie with the government.
Due process
The government has not provided data on the exact number of land plots whose temporary concessions have expired without development, following en- forcement of the 2014 Land Law.
It only announced in 2011 that there were 113 idle land plots in Macau with uncompleted development, of which 48 land concessionaires were liable, while 65 were not. The authorities later clari- fied that the concessionaires for 16 of the 48 land plots were blameless, bring- ing the total number of idle land plots to which blame could not be attributed to the concessionaires to 81.
According to Land, Public Works and Transport Bureau figures, five of the 81 non-blameable land plots were taken back due to the expiry of the concession, while the government is in the process
of invalidating 13 more land plots, two of which expired in 2016. Most of the plots are located close to Avenida de Vale das Borboletas in Seac Pai Van.
It is known that companies linked to developer William Kuan Vai Lam – a business partner of prominent Macau entrepreneur Ng Lap Seng, recently ar- rested in the United States on charges of corruption – hold three such plots in Seac Pai Van. He was not immediately available for comment.
There are also another 18 plots among the non-liable parcels, the con- cessions for which expired in 2016. The Bureau has yet to launch the process to recover the plots, mostly found in Seac Pai Van and Nam Van with interests linked to Nam Van Development Com- pany Ltd., transport-cum-entertainment conglomerate Shun Tak Holdings Ltd., and Hong Kong-listed developer Kerry Properties Ltd.
Nam Van Development Company Ltd., which has subsidiaries holding 13 parcels in the area – Nam Van Zone C and D – did not respond to queries for comment on this story: it hosted a semi- nar last July criticising the government and the 2014 Land Law.Kerry Properties – the largest share- holder of which is the family of Malay- sian Chinese business magnate Robert Kuok Hock Nien – owns a 9,650 square metre plot for residential development in Nam Van Zone C with the expiry of the concession July 30, 2016. ‘The Group has sought advice from a legal advisor in Macau… [and it] would have a right to pursue a claim for its damages and loss of profits should the [government] repossess the land without any compen- sation,’ it said in its latest interim report.
Shun Tak Holdings Ltd. – also founded by Stanley Ho – entered into an agreement with Sai Wu Investment Ltd. in 2004 to purchase land rights in Lot D2 and D5 valued at HK$640 million and HK$1.43 billion, respectively – in Nam Van. The Hong Kong-listed firm said in a statement that the land pur- chase agreement with Sai Wu has been extended to 2026, and that it would
represent Sai Wu to ‘directly engage in negotiations with the Macau Govern- ment’ on the two plots, the concessions of which also expired on July 30, 2016.
Developers’ union
On the verge of losing land plots worth possibly tens of billions of patacas in to- tal, more than 40 developers in Macau and Hong Kong affected by the Land Law will form a union to unite their voices to protect their property rights, said Phileas Kwan Po Lam, Executive Director of Hong Kong-listed Asia Standard International Group Limited. It holds an 185,000 square foot land plot in Seac Pai Van, the concession of which expired by the end of 2015 and was on the list of 81 non-blameable par- cels unveiled in 2011.
He said that the development of the site – originally zoned for industrial us- age but now residential usage – could
not proceed due to the lack of urban planning in the area and permits by the authorities. He said the company would lodge a lawsuit against the government as the repossession of the land plot was in contravention to Macau’s Basic Law, the city’s mini-constitution.
“It’s no different to robbery,” he said. “We have received a lot of legal advice, including from Mainland Chi- na; they all say the recovery [of land plots by the Macau Government] was groundless.”
If all legal means in the city are exhausted, the company would “seek justice” in Beijing or in the interna- tional courts, he said: his comments were first reported by Hong Kong newspapers Ming Pao and Hong Kong Economic Times.
Apart from legal action, some de- velopers and legal scholars have pur- sued other means. One of them is government-appointed legislator and legal scholar Gabriel Tong Io Cheng, who filed a bill last June about the “interpre- tation” of the Land Law with regard to temporary land concessions.
His bill gives the city’s Chief Ex- ecutive discretionary powers to decide whether a temporary concession could be extended should the concessionaires not be liable to the lack of development on their site. Describing his action as “upholding justice”, the legal profes- sor maintains that the 2014 Land Law does not protect the property rights of individuals in the city, which “is not the original purpose of the law” when it was discussed by the Legislative Assembly in 2013. Mr. Tong did not respond to calls for comment on this story.
His bill was deemed by the leg- islature as an amendment to the Land Law rather than an interpretative bill, meaning an approval from Chief Execu-
tive Fernando Chui Sai On is required before the Legislative Assembly can proceed with the bill. Under the legal framework of the territory, legislators may only table a new law or amendment to an existing law for the discussion of the legislature with a green light given by the city’s top official.
As Mr. Tong has rejected seeking approval from Mr. Chui, the Legisla- tive Assembly is now analysing the re- cordings of the 45 meetings in which the Land Law was deliberated upon in 2013 to analyse the original purpose of the law. The legislature has not given a deadline whether all the analysis could be completed by August this year, when the Assembly is dissolved for the up- coming elections.
Political quagmire
Legislator Zheng Anting has been vocal in pressing the authorities for solutions
during different sessions of the Policy Address for this year. “It’s a political problem – [the government] knows the Land Law is not perfect but still acts in accordance with the defect law,” railed Mr. Zheng.
The authorities now only wait for affected developers to take legal action, which “will increase the pressure upon the judicial system with an increasing number of cases,” he predicted.
Justice Sam Hou Fai, President of the Court of Final Appeal, said at the opening ceremony of the 2016/17 ju- dicial year that the Court of Second Instance had registered 182 cases in regard to appeals to the administrative decisions and 34 cases in regard to in- junctions against the administrative decisions in the 2015/16 judicial year, representing a 20 per cent increase and an 88 per cent hike from the previous judicial year.Attributing the rise to the enforce- ment of the new land law, Justice Sam noted: “The court cannot solve every- thing and the judicial procedure is only the last means to resolve different types of disputes… but [it’s] not the most ef- ficient and most economical means.” He also noted the administrative, leg- islative and judicial organs should “all fulfil their own roles and obligations” to resolve any disputes.
The government has so far reiter- ated it has no intention of amending the law. The Secretary for Transport and Public Works, Raimundo do Rosário, said in one Legislative Assembly ses- sion in December that he saw no other solution at the time, adding the law was not approved during his tenure starting end-2014.
With mounting pressure from the public – who will link any changes in the Land Law or decisions to take back the land plots to collusion between de- velopers and officials – there is nothing the government can do apart from wait- ing for the outcome of legal actions, said a political source, speaking on condi- tion of anonymity. “With the Legislative
Assembly elections upcoming in Sep- tember, no-one wants to do anything in haste,” the source said.
Heed calls
But legislator Au Kam San does not see room for changing the Land Law and there have yet to be any final rulings on the cases of STDM and the Pearl Hori- zon project. He added that the judicial process of the STDM case highlighted some faults of the authorities in the land grant process.
The pan-Democrat legislator also criticised the government for inaction in invalidating the land concessions, namely the parcels in Nam Van and Seac Vai Van. “It’s unreasonable for the authorities to take such a long time to declare the concessions invalid when some plots close to Avenida de Vale das Borboletas in Seac Pai Van have ex- pired since 2014,” he said. “I’ve asked Secretary [Raimundo do] Rosário, who responded they were overloaded with work, but it’s not acceptable.”
Legislator Kwan Tsui Hang, who is president of a subcommittee of the Legislative Assembly that deliberated
upon the 2014 Land Law, emphasised that both the 2014 and 1980 versions of the law state any temporary land con- cessions could not be renewed once 25 years had lapsed. “It’s not a novel idea… Some plots had been repossessed by the authorities after expiry under the [1980] law,” she said.
“Tightening the discretionary pow- ers of the officials” in the land grant process has been strongly called for by the public since the handover, and the 2014 law heeds to such needs, she noted. Understanding the difficulties of the Pearl Horizon buyers, the legislator noted the authorities could help the buy- ers pursue compensation from Polytec Group but should not open a door in the Land Law to allow all land plots to re- new their temporary concessions with- out their development completed on site.
Following a protest on the city’s handover anniversary on December 20, the representative of Pearl Horizon homebuyers, Kou Meng Pok, expressed a solitary wish.: “We just hope the au- thorities can come up with a proposal to protect our rights before Chinese New Year [end-January].”