BUILDING AUTHORITY v. APPEAL TRIBUNAL (BUILDINGS)

HCAL 45/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 45 OF 2012

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J U D G M E N T

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Background

1.  This case is about a development project at 45-47 Pottinger Street, 1-5 Tung Lo Lane and 4-7 Erza’s Lane [“the Site”].  The owner of the Site is Long Winner Development Limited.  The project involved the construction of a 31-storey composite commercial/ residential building at the Site.  Of the 31 storeys, there would be a tower of 25-storey domestic units above a 1-storey club house and 5 storeys for restaurant use.

2.  The Site was described as follows at para 5 of the Form 86, which is not disputed,

“The Appeal Site is not directly adjacent to any public road and is only accessible by foot. To the south and north, it is bounded by Ezra’s Lane and Tun Wo Lane respectively, which are narrow back lanes serving the neighbouring lots. To the east, it is bound by Pottinger Street which is an old stone paved footpath. To the west, the Appeal Site is about 15m away from a staircase linking Lyndhurst Terrace and Hollywood Road.”

3.  As the matter stood in 2003, the available site coverage and plot ratio calculated in accordance with the Building (Planning) Regulations was not enough to provide for such a development.  But the Building Authority [“BA”] may grant a modification under section 42 of the Building Ordinance.

4.  In support of an application for modification under s42, in 2003 the developer commissioned a consultant to prepare a proposed pedestrian enhancement scheme with regard to the use of the Site.  The study, based on the then available information, referred to the linkage with the planned Central West Station of the Shatin-Central Link [“the Station”].  The proposal involved the surrender of 158.769 sq m of the site area for footpath widening and the dedication of 58.608 sq m of site area for public passage.  Such surrender and dedication would be made in exchange for bonus site coverage and plot ratio to allow the proposed project to be approved.

5.  That proposal was considered by various government departments.  In 2004, the Transport Department advised the Building Department that the proposed surrendered and dedicated areas and the associated upgrading works would provide a 4.5m wide comfortable and convenient walkway which would be essential for improvement of local pedestrian network having regard to the envisaged pedestrian increase arising from the Station.

6.  There were events between 2004 and 2007 concerning the project which this court was not given any information.  From the papers, apparently there had been submissions of some plans to the BA which were not approved[1].  For present purposes, it suffices to refer to the submission of plans in September 2007.  Before that submission, the developer had already executed the following documents in furtherance of the proposed surrender and dedication,

(a)  A letter of Undertaking to Surrender of Land dated 25 May 2007 executed in favour of the BA[2];

(b)  A letter of Undertaking to Dedication of Land dated 25 May 2007 executed in favour of the BA[3].

7.  On 19 September 2007, an authorized person submitted a set of General Building Plans [“the GBP”] in respect of the proposed development to the BA for approval.  The GBP included floor plans for all the floors in the project and contained all the calculations regarding plot ratio and site coverage.

8.  In a document called Justification for the Surrender/Dedication dated 19 September 2007 written on behalf of the developer submitted to the Building Department, it was said,

“Departmental supports from Hong Kong District Planning Office, Planning Department Headquarters, Tourism Commission and Transport Department were received when presentations were conducted at their offices on 27^th January 2003, 12^th June 2003, 13^th June 2003 and 16^th June 2003 respectively. As well, our proposal has been well received by the District Lands Office, Hong Kong West, and the Acquisition Division of the Lands Department when we met with them on 18^th September 2003 and 16^th September 2003 respectively. Indeed, we understand that our proposal fits wells into the latter’s intended acquisition of private streets within the Central District which acquisition, is ranked fairly high in the priority list.”

9.  That document was submitted in support of two applications dated 19 September 2007 for modification/exemption under Section 42 of the BO, one in respect of the surrender and one in respect of the dedication[4].

10.  On 17 October 2007, the BA granted a permit under Section 42 [“the Permit”] and approved the GBP.  The Permit was a modification of and/or exemption from various provisions in the BPR in respect of the proposed development in the GBP.  For our purposes, the relevant provisions identified in the schedule to the Permit for which modification and/or exemption was granted were,

“(ii) Building (Planning) Regulations 20 & 21 to permit the site coverage and plot ratio to be exceeded by an amount calculated in accordance with B(P)R22(1), which plans indicate the dedication of an area of the lot for public passage.

(iii) Building (Planning) Regulations 20 & 21 to permit the site coverage and plot ratio to be exceeded by an amount calculated in accordance with B(P)R22(2), which plans indicate an undertaking to surrender an area of the lot for street widening.”

11.  The Permit was granted subject to conditions.  The relevant ones for our purposes are as follows,

“(a) The said works are to be carried out in accordance with the plans approved on 17 October 2007 under our ref no. BD 2/2021/98 Pt. V].

(b) (Please see attached conditions) …

(b) Regarding Item (ii)

(1) This modification is given in recognition of the dedication referred to above and the separate letter of undertaking to dedication of land for use as public passage dated 25 May 2007 submitted by the owner.

(2) The dedication is to be embodied in a Deed of Dedication to be signed by the building owner and the Government and registered at the Land Registry.

(3) This modification will be revoked if an application for an occupation permit or temporary occupation permit is submitted before the Deed of Dedication is executed.

(c) Regarding item (iii)

(1) This modification is given in recognition of the surrender referred to above and the separate letter of undertaking to surrender dated 25 May 2007 submitted by the owner.

(2) The undertaking is to be embodied in an Agreement to Surrender to be signed by the building owner and the Government and registered at the Land Registry.

(3) This modification will be revoked if an application for an occupation permit or temporary occupation permit is applied for before the Agreement to Surrender is executed. …”

12.  The effect of the Permit was described at para 13 of the Form 86 as follows,

“…bonus site coverage of 3.48% and bonus plot ratio of 976.435 sq m were allowed by the BA under the s42 Permit in return for the proposed surrender and dedication.”

13.  Construction works under the project had proceeded.  On 8 October 2008, the BA gave consent to the commencement of “Foundation (Mini-Piles with Structural Case) works” for the project.  On 24 September 2009, the BA gave approval for the proposals in respect of “Excavation and Lateral Support (including Channel Planking, Pipe Pile, Shear Pile and Soldier Pile)”.  The developer carried out foundation works in accordance with these proposals.  Such works commenced on 10 September 2009 and progressed steadily since then.  By Feb 2011, piling work had been completed.  According to the evidence of Alexis Wong, the Deputy Managing Director of the Authorized Person acting for the developer, 10% of the piles would be over-used if the bonus GFA is withheld[5].

14.  In 2008, the Government decided to defer the construction of the Station and it would be located elsewhere.  With such change in circumstances, the Transport Department took the view that there might be change in pedestrian demand and there was no justification from traffic point of view for the increased width of Ezra’s Lane as set out in the proposed development.  That advice was given by the Transport Department to the BA in January 2009.

15.  In a letter dated 16 February 2009, the BA communicated such view to the Authorized Person of the developer in disapproving a set of building plans with major revision.

16.  The traffic consultant of the developer submitted further reports to the Transport Department and further study was conducted by the latter[6].  The conclusion of the Transport Department was, as stated at para 11 of a statement of Sunny Fu,

“Having considered the said reports and information supplied by the traffic consultant of the 1^st Appellant, and the latest development of the proposed Sha Tin Central Link, TD considered that the pedestrian flow on Ezra’s Lane would unlikely increase significantly in the foreseeable future. Nonetheless, taking into account the development will itself attract more pedestrian traffic, TD considered that for the sake of improving, the accessibility to the buildings and also the environment of the existing Ezra’s Lane, dedication (instead of surrender) of a 2m wide footpath at ground level within the southern frontage of the lot for public passage is desirable (but not essential) and advised BD accordingly in August 2009.”

17.  Such view was communicated to the Authorized Person when another set of amendment plans submitted on 9 October 2009 were disapproved by the BA in a letter of 5 November 2009.   

18.  Paragraphs 7 and 8 of the letter of 5 November 2009 set out the reasons why the BA took the view that the Superstructure Plans were fundamentally unacceptable.

“7. Under Buildings Ordinance section 16(1)(d), the site coverage (SC) under Building (Planning) Regulations (B(P)R) 20 and plot ratio (PR) under B(P)R 21 of the proposed development have exceeded the permissible limits laid down under the First Schedule of B(P)R. In this connection, your attention is drawn to the comment in paragraph 8 below.

8.  The proposed surrender/dedication areas for widening of Ezra’s Lane to 4.5m wide are considered not essential by Government.  In this connection, the Assistant Commissioner for Transport/Urban has advised that a dedication of a 2m wide footpath along Ezra’s Lane within the southern frontage of the lot for public passage is desirable.  Hence, the Government does not accept the proposed surrender/dedication now and as such, the circumstances for granting bonus PR/SC do not arise and the proposed building exceeds the permissible SC/PR.”

19.  On 30 Nov 2009, the Registered Structural Engineer of the developer submitted a set of Superstructure Plans (corresponding to the approved GBP) [“the Superstructure Plans”] to the BA for approval.  By a letter dated 27 January 2010, the BA disapproved the Superstructure Plans [“the Disapproval”].  The reasons for the disapproval were set out at paras 7 and 8 of the letter,

“ 7. Under section 16(1)(a) of Buildings Ordinance, the corresponding building plans are in contravention of section 16(1)(d) of Buildings Ordinance that the Government does not accept the proposed surrender/dedication as shown on plans now and as such, the circumstances for granting bonus site coverage/plot ratio do not arise and the proposed building exceeds the permissible site coverage and plot ratio under the Building (Planning) Regulations 20 and 21 respectively.

8. It is noted that building amendment plan submitted on 9 October 2009 was disapproved under section 16(1)(d) of Buildings Ordinance that the site coverage and plot ratio of the proposed development has exceeded the permissible limits laid down under the First Schedule of Building (Planning) Regulation.”

20.  The developer and the engineer appealed against the Disapproval.  The appeal was heard by the Appeal Tribunal (Buildings) [“BAT”] in March, June and July 2011.  By a decision of 18 January 2012 [“the Decision”], the BAT reversed the Disapproval and directed the BA to approve the Superstructure Plans.

21.  In these proceedings, the BA sought to challenge the Decision by way of judicial review on the grounds that the BAT erred in law in failing to find that the Superstructure Plans are fundamentally unacceptable and that the Decision is Wednesbury unreasonable.

Errors of law

22.  The submission of Mr Chow SC on behalf of the BA on this ground is that the BAT mistakenly failed to regard that the carrying out of the works as shown on the Superstructure Plan did not contravene Regulations 20 and 21 of the BPR and as such fundamentally unacceptable.  That submission proceeds on the premise that the BA was entitled to disregard the effect of the Permit.  Mr Chow submitted that the BA was entitled to do so because by the time when he considered the Superstructure Plans, the BA was aware of the change in policy regarding the Station and the Government’s decision not to accept the surrender and dedication.  Ergo, the conditions for the modification/exemption under the Permit could not be fulfilled and the BA should revert back to the original position under the BPR.

23.  Another way of presenting the same argument is set out at paras 51 to 55 of the Form 86.  It is contended there that by directing the BA to approve the Superstructure Plans, the BAT in effect pre-empt the Government from not accepting the surrender and dedication. However, the decision with regards to the acceptance or non-acceptance does not vest in the BA, but some other authority.  In the course of his oral submissions, Mr Chow identified that usually the Director of Lands is the authority for making decision of this nature. 

24.  Section 42 of the BO is in the following terms,

“(1) Where in the opinion of the Building Authority special circumstances render it desirable he may, on receipt of an application therefor and upon payment of the prescribed fee, permit by notice in writing modifications of the provisions of this Ordinance. (Amended 44 of 1959 s. 22; 68 of 1993 s. 20)

(2) Every application for an exemption under this section shall be in the specified form, and shall be considered on its own merits by the Building Authority who shall not be required to take account of exemptions granted in the past. (Amended 44 of 1959 s. 22; 68 of 1993 s. 20)

(3) A permit granted under this section may contain such conditions as the Building Authority shall deem necessary.

(4) No such permit shall be granted to the prejudice of the standard of structural stability and public health established from time to time by regulations.

(5) This section shall not apply to section 14. (Replaced 44 of 1959 s. 22)

(6) The breach of or failure to perform or to consent to any condition attached to a modification or exemption granted under this section shall render such modification or exemption invalid, and thereupon the purported grant of such modification or exemption shall be no defence to any proceedings for non-compliance with the provisions of this Ordinance.”

25.  In the present context, this section should be considered together with BPR 22(1) and (2) which reads as follows,

“(1) Where, between ground level and a height of not less than 5.5 m or, where the Building Authority is satisfied that there will be no obstruction to vehicular traffic using the street, 3.3 m above ground level, a building on a class A, B or C site is set back from a boundary of the lot on which it is erected, being a boundary that abuts on a street, and, with the consent of the Government, the part of the lot that is thereby not built upon is dedicated to the public for the purposes of passage- (L.N. 406 of 1987; L.N. 57 of 1988)

(a) the site coverage for the building or for any one part of the building may exceed the permitted percentage site coverage, so, however, that the site coverage therefor does not exceed that percentage of the area of the site equal to the sum of the permitted percentage site coverage for the building or for that part of the building, as the case may be, and the figure obtained by dividing the product of 1500 and the area of the lot so dedicated to the public by the product of the area of the site and the height of the building; and

(b) the plot ratio for the building or, if the building is a composite building, for the domestic part of the building may exceed the permitted plot ratio, so, however, that the plot ratio therefor is not greater than the permitted plot ratio for the building or for that part of the building, as the case may be, by more than 20 per centum or does not exceed the sum of the permitted plot ratio for the building or for that part of the building, as the case may be, and the figure obtained by dividing the product of 5 and the area of the lot so dedicated to the public by the area of the site on which the building is erected, whichever is the less. (L.N. 294 of 1976)

(2) Where part of a lot, being a part that abuts on a street, is acquired by the Government, either by agreement or by resumption under the Lands Resumption Ordinance (Cap 124), for the purpose of street widening, the Building Authority may permit-

(a) the site coverage for a building erected on that lot, being a class A, B or C site, or for any one part of the building to exceed the permitted percentage site coverage, so, however, that the site coverage therefor does not exceed that percentage of the area of the site equal to the sum of the permitted percentage site coverage for the building or for that part of the building, as the case may be, and the figure obtained by dividing the product of 1500 and the area of the part of the lot so acquired by the Government by the product of the area of the site and the height of the building; and (L.N. 294 of 1976)

(b) the permitted plot ratio for the building or, if the building is a composite building, for the domestic part of the building to exceed the permitted plot ratio, so, however, that the plot ratio therefor is not greater than the permitted plot ratio for the building or for that part of the building, as the case may be, by more than 20 per centum or does not exceed the sum of the permitted plot ratio for the building or for that part of the building, as the case may be, and the figure obtained by dividing the product of 5 and the area of the part of the lot so acquired by the Government by the area of the site on which the building is erected, whichever is the less. (29 of 1998 s. 27)”

26.  I have already referred to the terms and conditions of the Permit granted in October 2007.  It is common ground that the Permit was (and still is) extant when the Superstructure Plans were disapproved in Jan 2010.

27.  Thus, without any revocation of the Permit, the modification to/exemption from the usual limits for site coverage and plot ratio under BPR 20 and 21 is still in place.  As contended by Mr Yu SC (who appears together with Mr Ismail for the Interested Party), it is not necessary for this court to consider in these proceedings what would have been the position if the BA sought to revoke the Permit.  I would only observe that in case the BA does so, there could be issues as to whether the BA has such power of revocation as a matter of law and whether it is proper for the BA to exercise such power in the circumstances of the present case as a matter of discretion.  Also Mr Chow did not dispute that the developer would have a right to be heard before the BA exercises such power.

28.  Mr Chow submitted that in the processing of the application in respect of the Superstructure Plans the BA was not constrained by the Permit even though it had not been revoked.  As mentioned, his submission is that the BA was entitled to take into account the fact that the Government would not accept the Dedication and the Surrender due to the change of plans regarding the Station, as such the conditions for the modification/exemption could not be fulfilled.

29.  With respect, I cannot accept this submission. In my judgment, unless and until the BA revokes the Permit (which may or may not be possible), the BA is legally bound to exercise the power under s16(1)(d) of the BO on the basis that there are modifications/exemptions in place in respect of that particular development project (in the present case in respect of the project as set out in the GBP approved in Oct 2007). Though there were conditions set out in the Permit, the modifications/exemptions were not withheld until the conditions have been satisfied. The modifications/exemptions were effective upon the issue of the Permit.  This is reflected in the BA’s approval of the GBP. Without the modifications/exemptions taking effect, the BA could not approve the GBP in 2007.  Insofar as Mr Chow contended otherwise, I reject his submission.

30.  As for the conditions, they should be regarded as condition subsequent rather than condition precedent.  I agree with the submission of Mr Yu that the only time limit prescribed for the execution of the Deed of Dedication and the Agreement to Surrender is that these should be done before the application for occupation permit or temporary occupation permit.  The BAT found (and there is no challenge to such finding) that the general practice was that execution of these documents could be done after the completion of the project[7].  Thus, it is not open to the BA to hold the non-execution of these documents at this stage as a breach of conditions on the part of the developer.  Mr Chow did not contend otherwise.      

31.  What Mr Chow relied upon is the Government’s own unwillingness to facilitate the compliance with these conditions due to the change in plans for the Station.  Mr Chow’s contention is based on the premise that the non-acceptance of the surrender and dedication is merely a matter of fact, which the BA must take cognizance in processing the Superstructure Plans.  But is the non-acceptance a mere matter of fact?            

32.  In my judgment, it is not simply a question of whether the Government now wishes to continue with the surrender and dedication.  It involves the consideration of whether the Government has already bound itself and if so, whether the Government can renege on the acceptance of the surrender and dedication as long as the Deed of Dedication and the Agreement to Surrender have not been executed.  With regard to the former, it involves the consideration of whether the BA had ostensible authority to bind the Government.  These questions involved complicated issues of fact and law which the BA was not (and could not be) in a position to decide.  They can only be decided by a court of law.  Mr Chow accepted in the course of the hearing that these issues could not be resolved in the context of these proceedings.  

33.  If the true legal position were that the Government is not free to renege from accepting the surrender and dedication, the mere fact that it had changed its mind is neither here nor there.

34.  Just as it is outside the BA’s role in an application under s.16(1) to adjudicate private right disputes between a third party and the developer (see Re Ho Mei Ling [2011] 6 HKC 1), the BA should not decide unilaterally in favour of the Government that the latter was free to renege on accepting the surrender and dedication in dealing with the Superstructure Plans.

35.  Faced with the change of position on the part of the Government regarding the Station, the BA could either,

(a) process the Superstructure Plans in accordance with the Permit and leave it to the Government or the developer to seek legal redress in terms of the execution of the Deed of Dedication and the Agreement to Surrender before the application for occupation permit; or

(b) if he considers he has the power to revoke the Permit, he should start the process of revocation and follow the course of such process through before reaching a decision on s16(1) on the Superstructure Plans.      

36.  In view of the time constraint under s.15 of the BO and without any information as to how long the process of revocation would take, I do not know whether there was sufficient time to complete that process before the BA was obliged to give reasons for disapproving the Superstructure Plans.  However, assuming he has the power of revocation, there was nothing to prevent the BA from taking the initiative to revoke the Permit even without any submissions of plans by the developer.  In effect, a revocation of the Permit would also involve the revocation of the approval given to the GBP.

37.  What the BA could not lawfully do was to ignore the effect of the Permit on the modification of the plot ratio and site coverage in respect of a development in accordance with the GBP without any revocation.

38.  Therefore, the BA erred in law in the Disapproval on the basis that the Superstructure Plans were in contravention of BPR when the Permit was still extant. It follows that the BAT did not commit an error of law when it held that the Superstructure Plans were not fundamentally unacceptable.

39.  Mr Chow relied on my decision in Building Authority v Dobrowen Investment Ltd HCAL 20 of 2011, 20 Dec 2011 para 50 to support his contention that the BA should examine each submission of plans by reference to prevailing circumstances.  The facts of that case are clearly distinguishable from our case.  That case did not concern about the effect of a s.42 permit which had not been revoked.  On the crucial issue that we have to deal with, I do not think that case assists Mr Chow.

40.  Mr Chow submitted that the BAT did not find that the Government was not entitled to refuse to accept the surrender and dedication.  But neither did it find that the Government was entitled to do so.  It is not surprising because it was not an issue raised before the BAT.  In the Opening Submissions dated 11 March 2011 placed before the BAT, the BA took the stance that the Government’s decision not to accept the dedication and surrender could not be an issue before the BAT as it was outside its jurisdiction[8].  The same stance was maintained in BA’s Final Submissions[9] before the BAT.

41.  Without any consideration of the legality of that Government’s decision, for reasons canvassed above, it would not be correct for the BAT (and likewise the BA) to act on the basis that the conditions under the Permit would not be fulfilled[10].

42.  Mr Chow further submitted that in directing the BA to approve the Superstructure Plans, the BAT effectively took over the position of the Government to accept the surrender and dedication. Counsel said this was beyond the jurisdiction of the BAT.

43.  With respect, I do not think the approval of the Superstructure Plans has such effect.  If anything done by the BA would have the effect of binding the Government, it would be the granting of the Permit.  If the granting of the Permit does not have such effect as a matter of law, I cannot see how the approval of the Superstructure Plans could have such effect in view of s14(2) of the BO.

44.  In this respect, there is inherent inconsistency in Mr Chow’s position.  On the one hand, he contended that the BA could not bind the Government in accepting the surrender and dedication by granting the Permit.  On the other hand, he contended that the approval of the Superstructure Plans would bind the Government.  As Mr Yu submitted, the BA cannot blow hot and cold.

45.  For these reasons, I am of the clear view that the BA was wrong in law in rejecting the Superstructure Plans on the grounds as stated in the letter of 27 January 2010.  The BAT was correct in reversing that decision.

46.  Once I reach this conclusion, it is not necessary for me to consider the challenge of the BAT decision on the ground of Wednesbury unreasonableness.  Mr Chow agreed that the court should dismiss the application for judicial review if I held against him on the non-revocation of permit point.  The inevitable result is the reversal of BA’s Disapproval.

Disposition

47.  The application for judicial review is dismissed. I also make an order nisi that the BA shall pay the costs of the Interested Parties, with certificate for two counsels.  Such costs are to be taxed if not agreed.