HO MAN KAY v. THE HONG KONG HOUSING AUTHORITY

HCAL 158/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO.158 OF 2004

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REASONS FOR JUDGMENT

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Introduction

1. On Saturday, 18 December 2004, outside of normal court hours, the applicant in this matter made an urgent application for leave to apply for judicial review pursuant to O.53, r.3(1) of the Rules of the High Court.

2. This was a second application for judicial review made within a matter of days arising out of the same factual circumstances, indeed challenging the same decision by the respondent, the Authority, on the same basis of law.

3. The factual circumstances applying to both this and the earlier application may be briefly described as follows :

(a)      In or about July 2003, facing a large deficit in its operating costs, the Authority, a statutory body established in terms of the Housing Ordinance, Cap.283 (‘the Ordinance’), resolved to raise capital by selling off part of the commercial infrastructure contained within the majority of its housing estates.  Specifically, this infrastructure consisted of retail outlets (shops) and car parking spaces (its ‘commercial assets’).

(b)     The Authority determined to divest itself of its commercial assets by selling them to an incorporated real estate investment trust.  The public would be invited to invest in this trust by purchasing units in a unit trust authorised in terms of the Securities and Futures Ordinance, Cap.571.

(c)     The public offering of units in this unit trust — the Link Real Estate Investment Trust — was, I am told, opened in early December 2004.  Trading in the units, after they had been allocated to successful applicants, was due to commence on Thursday, 16 December 2004.

4. The first application for judicial review, made by two tenants in the Authority’s housing estates, was narrow in its focus.  It sought to challenge the sale by the Authority of its commercial assets on the basis that the Authority had no power to make such a sale in terms of the Ordinance; in short, that it was acting ultra vires.  The application which is the subject of this judgment, as I have indicated, has sought to challenge the same decision on the same basis.

5. The first application for judicial review was determined by myself, also as a matter of urgency, in a consolidated hearing as to both the granting of leave and the substantive determination of the merits of the challenge.  In a judgment given on 14 December 2004 (with reasons handed down the following day), I granted the application for leave.  However, in looking to the substantive merits, I found that the Authority did have the power to sell its commercial assets.

6. My decision in respect of this first set of proceedings was appealed by the applicants to the Court of Appeal.  On 16 December 2004, the Court of Appeal dismissed their application.  In so doing, the Court of Appeal confirmed that the Authority did have the power in terms of the Ordinance to sell its commercial assets : see Lo Siu Lan and Another v. The Hong Kong Housing Authority (unreported) CACV 378/2004.

7. Aggrieved by the decision of Court of Appeal, one of the two applicants in this first set of proceedings sought leave to appeal to the Court of Final Appeal.  The Authority, not wishing to have to delay or cancel its listing, sought an order from the Court of Final Appeal to abridge procedural time limits so that any appeal before it could be heard as a matter of urgency.  However, the Court of Final Appeal ruled that it had no jurisdiction to order an abridgement of time in the manner sought by the Authority when the applicant was not agreeable to an order by consent that the matter be brought on early : in this regard, see FAMP No.2 of 2004 dated 17 December 2004.

8. It was against this background that the second application for leave to apply for judicial review — the application which is the subject of this judgment — was made to me on 18 December 2004.

9. Counsel for the applicant, Mr Lawrence Ng, conceded that, by reason of the decision of the Court of Appeal in the first judicial review application (Lo Siu Lan and Another v. The Hong Kong Housing Authority cited in paragraph 6 above), I would be constrained in all probability to refuse leave to the applicant.  However, Mr Ng submitted that, if leave was to be refused, I should nevertheless grant a certificate pursuant to s.27C of the Hong Kong Court of Final Appeal Ordinance, Cap.484 (‘the CFA Ordinance’) to the effect that a point of law of great general or public importance was involved in the application.  This would enable my refusal to be taken by way of appeal directly to our highest court, by-passing the Court of Appeal.

10. Having heard submissions from Mr Ng, I refused both the application for leave and the application to grant a certificate in terms of s.27C of the Ordinance.  Although leading counsel for the Authority, Mr Daniel Fung SC, was present, I saw no need to call upon him.  As I made plain in dismissing both applications, I found them to be misconceived.

11. At the time of my ruling, I said that, if an appeal was to be made as a matter of urgency, then I would hand down my written reasons the following morning; that is, on the Sunday morning.  Failing that, reasons would be given as soon as possible in the new week.  I now give my reasons.

12. Before turning to a statement of my reasons for dismissing both applications made by the applicant in this matter, something needs to be said of the applicant’s own circumstances because they are materially different from those of the applicants in the first set of proceedings.

The circumstances of the applicant

13. The applicant in this case is neither a resident in one of the Authority’s housing estate nor a tenant or operator of any of its commercial assets.  The applicant described her interests in a supporting affidavit as follows :

“I am an investor of The Link Real Estate Investment Trust (‘The Link Reit’) which was scheduled to list on the Stock Exchange of Hong Kong Limited on 16^th December 2004.  I have been allotted 1,500 units of The Link Reit … I have paid $109,398.01 to my stockbroker for the allotment of the units.”

14. The applicant’s concerns, which are the basis upon which she has sought her remedy, have been described by her in the affidavit in the following terms :

“I am an interested party in the listing of The Link Reit.  I intended to purchase and hold the units as long term investment.

However, my investment in the units is now in jeopardy in view of the uncertainty of the lawfulness of the sale of the retail and car park facilities by the Housing Authority to The Link Reit.”

My reasons for refusing leave

15. I refused leave to the applicant for two reasons.  First, I did not consider her claim to be one that should properly be subject to public law remedies.  Second, as Mr Ng, her counsel had conceded at the outset, the very issue which was the subject of her application for leave had been determined by the Court of Appeal against her and I was bound by that determination.

16. The applicant instituted her application for leave as an investor.  In applying for her units she had entered into an agreement with the Manager and Joint Global Coordinators of the trust, themselves representing the Hong Kong Underwriters.  In applying for her units and being allocated them she had not dealt directly or indirectly with the Authority, a statutory body exercising public functions.  To the contrary, her dealings throughout had been with persons unconnected to the Authority, with managers, trustees and corporations exercising functions in accordance with private law and not public law.  In my judgment, it was plain that the applicant’s rights in respect of the allocation of the units were therefore rights to be governed by private and not public law.  If, having been allocated the units, the applicant had grounds in law to question whether those units lawfully represented a share in what had been the Authority’s commercial assets, her remedy lay against those with whom she had contracted to obtain the units.

17. It was Mr Ng’s submission that behind this set of private law dealings lay the divestment by the Authority of its commercial assets, a matter subject to public law, those being the assets in which the applicant had sought to acquire an interest.  That underlying fact by itself, said Mr Ng, was sufficient to give the applicant the right to proceed directly against the Authority, seeking a public law remedy against it : that public law remedy presumably including the right to seek a refund of her investment directly from it.  While I accepted that there can never be a rigid dichotomy between public and private law — for example, there may be circumstances in which private bodies carry out functions subject to public law just as there may be circumstances in which public bodies carry out functions subject only to private law — in the present case it seemed to me to be plain that the entire context of the applicant’s complaint was restricted to private law.  The applicant, as an investor only, had entered into a private contractual arrangement to obtain unit trusts.  Any rights she may have in law to seek redress in respect of those units are therefore against those with whom she contracted.  They are not against the Authority.

18. In any event, if I am wrong in this regard, as Mr Ng had conceded, the Court of Appeal had already ruled unanimously that the Authority did have the power to sell its commercial assets in the manner it proposed.  There was therefore no basis for granting leave.  The issue challenged was an issue which had already been determined by the Court of Appeal.  The fact that an aggrieved party had lodged an appeal against that decision to the Court of Final Appeal, while it may have constituted a risk for investors as to the future value of unit trusts in the Link Reit, did not alter the law as it stood at the time the application for leave was made to me. 

The s.27C application

19. As I understood it, the real remedy being sought by the applicant in this matter —the essential reason for making the application — was the granting of a certificate by myself pursuant to s.27C of the CFA Ordinance enabling her to take my refusal directly to the Court of Final Appeal, by-passing the Court of Appeal.  I presume that, by this mechanism, the applicant sought not only to have the issue of leave, a preliminary issue only, determined by the Court of Final Appeal but the substantive issue of whether, in terms of the Ordinance, the Authority was acting intra vires or ultra vires in selling its commercial assets.

20. On the basis, however, that, in my judgment, any rights accruing to the applicant in this matter were rights in private law and not public law, I did not see that she would have any locus standi to mount a challenge concerning the powers of the Authority which the Court of Final Appeal would be able to determine upon the merits.

21. Failing that, even if the point of law in issue was one of great general or public importance, I failed to see why I should grant a certificate to this applicant to proceed directly to the Court of Final Appeal when there was already an appeal lying before that court in respect of the very same issue.  Mr Ng did not enlighten me as to why the applicant in the present case would wish to have the matter determined on the merits by the Court of Final Appeal either before, after or at the same time as the appeal already in process.

22. It is not for me to speculate as to the possible motives that may have been behind this application.  Mr Ng, on behalf of the applicant, chose not to inform me of any possible motives.  I have therefore determined the merits of the application on the basis only of the reasons given in this reasons for judgment.  However, by way of postscript, it needs to be said that the courts are not entirely naïve and I am constrained to observe that the circumstances in which this application was made, following as it did in the wake of the earlier proceedings, gave rise to a concern on my part that it had been made for tactical purposes which may perhaps have had a real bearing on the exercise of my discretion in determining the issues before me.  I need say no more.

23. As the application for leave was made ex parte although on notice, no costs were sought and no costs ordered.