RANK PROFIT INDUSTRIES LTD v. DIRECTOR OF LANDS

HCAL 126/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 126 OF 2005

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J U D G M E N T

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Introduction

1. The applicant is a property developer.  At the heart of this application for judicial review is its assertion that, if Government exercises its public authority in order to gain an advantage for itself in private litigation instituted against it, specifically to bring an end to those proceedings, it abuses that authority.  More particularly, it acts in contravention of both common law and Basic Law guarantees of right of access to the courts.

2. On behalf of the Government, it is said that the application is entirely misplaced.  Government was not exercising any public authority.  It was at all times acting as a landlord, and therefore subject to private law, attempting to resolve a number of matters with the applicant, its lessee.  Those matters included on-going civil litigation instituted against it by the applicant.  In any event, so it is said, the so-called decisions which are the subject of this application are not reviewable decisions, being no more than offers made in the course of settlement negotiations.

3. The issues which arise in this application do so in a reasonably complex factual context.  Accordingly, something must first be said of the history of this matter.

Background

4. In 1998, the applicant successfully tendered to acquire from the Government an undeveloped piece of land in Kowloon Bay described as North Kowloon Inland Lot No. 6268 (‘the Lot’).  The premium was $361 million.  In the result, a contract was entered into described as an agreement for grant but being of the nature of a lease agreement for a period of 50 years, the Government being the landlord, the applicant the lessee.

5. The lease agreement was subject to a number of special conditions.  Two are of particular relevance and must be cited :

(i) That, as to user, the Lot was restricted to use for non-industrial purposes; that is, commercial purposes.  In this regard, Special Condition (7) of the lease agreement read :

“Subject to these Conditions, the lot or any part thereof or any building or buildings erected or to be erected thereon shall not be used for any purpose other than for non-industrial (excluding godown, hotel, residential, cinema and petrol filling station) purposes.”

(ii) That, as to the principal non-industrial use, the Lot was be developed and managed as a multi-storey car park.  To this end, Special Condition (17) provided that the applicant must, by the end of June 2002, build a car park providing spaces for a minimum of 320 vehicles.  As to the general type of building to be built, Special Condition (8) read :

“The Purchaser shall not erect, construct or maintain or permit or suffer to be erected, constructed or maintained upon the lot any building or buildings other than a building or buildings comprising a multi-storey car park … provided the Purchaser may, in addition … erect, construct and maintain upon the lot accommodation for other non-industrial (excluding godown, hotel, residential, cinema and petrol filling station) purposes.”

6. In terms of the lease agreement, the applicant was therefore bound – by contract – to the landlord; that is, the Government, to develop the Lot in a particular manner and to exploit its commercial possibilities; that is, to use it, in a particular manner.

7. However, when development of the Lot was in its early stages, fundamental changes to the planning framework of the Kowloon Bay Industrial Area meant that a multi-storey public car park was no longer commercially viable.  The applicant therefore suspended work on the Lot and entered into negotiations with the Government’s land agent, the Director, seeking to modify the special conditions of the lease agreement.  What the applicant sought was a deletion of any requirement to build a public car park on the Lot.  At an early stage it also sought and obtained hotel rights but, as I understand it, later abandoned that in favour of office; that is, general commercial rights.

8. The negotiations – described as being ‘long and tortuous’ by the applicant’s leading counsel, Mr Anthony Neoh SC – endured for some four years before resulting in a partial settlement which liberated the applicant from the requirement to build any sort of public car park and enabled it to proceed to construct a commercial development.

9. The issues to be determined in this application for judicial review arise out of these negotiations.

10. Expressed broadly, it is the applicant’s case that in two letters written during the course of negotiations the Director presented the applicant with ‘ultimatums’ which constituted an abuse of his powers.  The two letters were dated 14 May and 2 August 2005.  Their contents constitute the decisions challenged in this application.

11. For the applicant to successfully assert that the Director, in drafting and sending the two letters, abused his powers, it must of course be demonstrated that the nature of the function being performed by the Director at the time was a public function.  On behalf of the Director, leading counsel, Mr Benjamin Yu SC, disputed this.  Mr Yu submitted that, in deciding whether to grant a modification of the lease agreement and, if so, on what terms, the Director was not exercising a public law function but was acting in his private capacity as agent for the landlord; that is, Government. 

12. To understand how it is that the two letters have been condemned as constituting an abuse of power on the part of the Director, it must be understood that in May 2004, during the course of negotiations, the applicant had instituted proceedings by way of writ against the Government in the Court of First Instance (‘the writ action’).  The writ action was not based on an entirely unconnected matter.  To the contrary, its focus was the lease agreement itself.  The applicant sued the Government, as landlord, for derogation from grant.

13. According to the applicant, among the several factors it took into account when it submitted its tender in 1998, were the following :

(i) That studies published by Government had indicated that fundamental land use changes would not be brought about in relatively new industrial areas such as the Kowloon Bay Industrial Area.

(ii) That, in support of this published stance, Government had consistently opposed applications made to the Town Planning Board for conversion of ‘industrial’ lots within the Kowloon Bay Industrial Area to ‘non-industrial’ and had done so successfully, the Board refusing all such applications.                                               

14. The writ action was based on the assertion that these, and other factors, were not simply matters of public knowledge influencing a commercial decision but went beyond that and constituted implied terms of the lease agreement.  These implied terms, it was asserted, included the following :

(i)        That the scheme of development and/or pattern of land use set down in the lease conditions of the other lots within the Kowloon Bay Industrial Area would be maintained for the 50-year duration of the lease agreement in order to maintain what the applicant described as ‘the commercial justification; namely, the efficacy of the bargain’ between the applicant and Government.

(ii)       That the Government, as the landlord in equity, was bound to afford the applicant the same underlying conditions for quiet enjoyment of the Lot until the termination of their agreement, the underlying conditions demanding that the scheme of development and/or pattern of land use be maintained.

(iii)       That the Government would not do anything to destroy the efficacy of the bargain entered into with the applicant.

15. It was the applicant’s case that the Government, in bringing about a rezoning of the Kowloon Bay Industrial Area, had not only caused it a loss running into ‘hundreds of millions’ of dollars but had breached the implied terms of the lease agreement.  That breach, it was asserted, had amounted to a repudiation of the agreement.  In the writ, the applicant sought alternative remedies.  First, on the basis that it was entitled to terminate the agreement, it sought a return of its $361 million premium together with associated expenses and, second, in the alternative, if it should be held that it had elected to keep the lease agreement ‘on foot’, it sought damages for the losses suffered as a result of the rezoning.

16. The writ action was defended, the Government asserting, as a first line of defence, that the claim was frivolous, vexatious and an abuse of process.

17. Despite the institution of the writ action, the applicant continued to seek finality concerning the modification of the lease agreement.  The alternative claim sought in the writ action – the claim for damages – was, of course, premised not on the termination of the agreement but on its continuance.   Some three months after the commencement of the writ action, in August 2004, consultants representing the applicant wrote to the Director, specifically to the District Lands Officer for Kowloon East, seeking the Director’s assessment of a premium.  Lease modifications of the kind under negotiation invariably attracted a premium payable to Government.  The applicant, however, was anxious not to pay a premium, or at least to keep it to a minimum, on the basis that the rezoning of the Kowloon Bay Industrial Area had already caused it substantial loss and it was seeking modification to mitigate that loss.

18. The Director replied to the effect that, if the modification process was to be continued, it would have to be without prejudice to the assertion pleaded in the writ action that the applicant had itself repudiated the lease agreement.  This was agreed.

19. As to the physical development of the Lot, the delay in concluding the negotiations for a modification of the special conditions of the lease agreement had resulted in a delay in commencing construction.  In the result, it was not possible for the applicant to comply with the building covenant in the lease agreement; that is, the requirement to have building works completed within four years.  As the negotiations dragged on, however, the applicant became more anxious to commence building work of a development that did not include a public car park and it appears – in the view of Director at least – that it took precipitous steps in this regard.  Warnings as to wrongful building works and threats by the Director of re-entry were therefore a feature of the later negotiations.

20. It appears that by 2005, the terms of modification of the lease agreement had (for all intents and purposes) been agreed, the Director accepting that a public car park was no longer a public interest requirement.  By May of that year, therefore, three matters only remained in substantial contention.  First, was the issue of the amount of the premium, if any, that should be paid to Government for the lease modifications.  Second, was the desire of the applicant to proceed with construction work without further delay set against the demand on the part of the Director that no work be commenced unless an extension of the building covenant be obtained, that extension also being subject to payment of a premium.  Third, was the on-going litigation in the writ action, both parties inter alia asserting that the other had repudiated the lease agreement.

21. It was against this background that the settlement ‘ultimatums’, as they have been described, were sent to the applicant.

22. The first was in a letter of 14 May 2005 marked ‘without prejudice’ written by the District Lands Officer for Kowloon East.  The letter constituted a formal offer to settle all outstanding issues.  It was stipulated, however, that the offer had to be accepted in its entirety.  The offer was to the following effect :

(i)        A premium of $678,000 was to be paid for modification of the lease agreement, removing the requirement for a public car park.

(ii)       A premium of approximately $11.833 million was to be paid for an extension of the building covenant.

(iii)      The applicant was to withdraw the writ action and pay the Government’s costs in respect of that action on a ‘full indemnity’ basis.

23. In response, the applicant, through its consultant, MY Wan and Associates, sent two letters.  The sum of those two letters was to the following effect :

(i)       That, without prejudice to its rights under the writ action, the applicant (under protest) was prepared to pay the premiums demanded for both the lease modification and the extension of the building covenant.

(ii)      That, however, the Government was not entitled, as one of the terms of granting a lease modification or extending the building covenant, to impose a requirement that the applicant must discontinue its writ action.  To put it another way, the Government was not entitled to link the granting of a lease modification with the discontinuance of the writ action.

24. That there was a link of the kind alleged was not in doubt.  In the letter of 14 May 2005, the District Lands Officer had written :

“Time shall be of the essence of this agreement.  I must stress that this offer is made on a without-prejudice basis to the ongoing [writ] action and that if the offer contained in this letter is not accepted in entirety, Government shall not be obliged to make any other offer in respect of the proposed modification of the Lot.”  [my emphasis]

25. In substance, therefore, even if grudgingly, the applicant accepted all of the terms of the offer contained in the letter of 14 May 2005 with the exception of the requirement that it discontinue its writ action and tender costs.  It was the applicant’s contention that its way forward offered the fairest way of proceeding.  As MY Wan and Associates put it :

“It is our client’s belief that delinking the lease modification from the ongoing litigation and the contentions between the parties, would at least enable the Lot to be developed and avoid further losses to our client.  This creates no prejudice to Government whose right to contest the litigation and the contentions of our client are not affected.”

26. While MY Wan and Associates reiterated that the applicant had suffered severe losses due to the ‘sudden and fundamental change of the planning framework’ in the Kowloon Bay Industrial Area, this being compounded by the Director’s delay in agreeing terms of modification and assessing a premium, it emphasised that a settlement of the writ action itself still remained open.

27. There appears thereafter to have been some assumption on the applicant’s part that matters were now settled : with the exception, that is, of the writ action.  In this regard, in June 2005 the applicant’s solicitors wrote to the Director seeking permission to enter into ‘off-the-plan’ agreements for the sale of units and parking spaces in the building being constructed on the Lot.  This was on the basis that agreement had now been reached on modifying the special conditions of the lease agreement.  The Director replied that there had not as yet been any concluded agreement.  The offer made to the applicant by the District Lands Officer in his letter of 14 May 2005, said the Director, had been part of a package deal and that package had not been accepted.  At best, the letters from the applicant had constituted a counter-offer which had not been accepted.

28. In a letter dated 2 August 2005, the Director sent a further offer to the applicant.  This was the second settlement ‘ultimatum’.  Effectively, it was a repetition of the first offer subject to an increased premium for modification of the lease agreement, an increase of some $37,000.

29. In a reply dated 5 August 2005, MY Wan and Associates again protested that the Director was not entitled, as part of the terms of lease modification, to require the applicant to discontinue the writ action and pay costs :

“In order that our client can press forward with development of the Lot on a basis upon which there is already agreement in principle as to user and against a background which already showed that it would be inequitable to insist upon the building of the public car park, our client is willing to accept the offer set out in your letter of 2^nd August 2005, except that our client does not agree that it should discontinue the High Court Action.”

30. In the letter, the applicant sought again to settle the matter on the basis that the writ action be dealt with as an entirely independent issue, all other terms and conditions offered by Government being accepted.

31. However, as no response was received from the Director in respect of this new offer, on 12 October 2004 the applicant instituted the present judicial review proceedings.  On 19 October 2005, I granted leave.

32. On 15 November 2005, the Director wrote to MY Wan and Associates expressing surprise that the applicant had made application for leave to apply for judicial review on an ex parte basis without disclosing that in its letter of 5 August 2005 it had effectively made a fresh counter-offer.

33. The Director continued by saying that the Government had now decided that approval of the lease modification should not be conditional upon the applicant discontinuing the writ action.  There would, however, have to be a further increased premium for modifying the special conditions of the lease agreement.

34. By letter dated 18 November 2005, MY Wan and Associates, acting for the applicant, accepted the Director’s offer subject to the applicant’s rights in both the writ action and the judicial review proceedings.

35. The necessary legal documentation to give effect to the terms of settlement was duly executed and I understand that the applicant has been able to continue with its development of the Lot.

The relief sought

36. The applicant has sought various forms of relief.  In the round, they may be described as follows :

(i) Declarations that the ‘ultimatums’ spelt out in the two letters unlawfully interfered with the applicant’s right of access to the courts under both the common law and art.35 of the Basic Law.

(ii) Declarations that the ‘ultimatums’ contained in the two letters were in any event unlawful, constituting an abuse of power by the Director, in that they were unfair, Wednesbury unreasonable and made on the basis of improper or irrelevant motive.

(iii) An order of certiorari to bring up and quash the two decisions.

(iv) An order of mandamus – now effectively redundant – directing the Director to process the applicant’s application for modification of the lease agreement in accordance with law.

The amended relief sought

37. In September 2006, shortly before the hearing, the applicant made it known that it would apply to amend the relief originally sought by seeking alternative declarations.

38. These declarations, it seems, were to be added to oppose the Director’s contention that, the modification of the lease agreement having been agreed and the applicant still able to prosecute the writ action, the application had been rendered academic.  The Director opposed the application to amend.

39. I shall refer to the proposed amended declarations later in this judgment.

Preliminary challenges

40. On behalf of the Director, Mr Yu asserted that the decisions of the Director contained in the two letters were simply not amenable to judicial review.  This was so, he submitted, on one or more of the following three grounds :

(i) That the decisions were not subject to public law, being made in the private domain.

(ii) That they were not susceptible to challenge because they did not affect any substantive right and lacked the quality of finality.

(iii)            That in any event, the applicant and the Director having agreed on terms of modification, the matters being raised were now academic.

Was the Director exercising a public function susceptible to judicial review?

41. In the present case, if the Director, in attempting to reach a negotiated settlement with the applicant (the lessee under the lease agreement), was not exercising a public law function but was instead acting in a private capacity as the agent of Government (the landlord under the lease agreement) then, in respect of his actions, he is not subject to judicial review.  As the Court of Appeal observed in Canadian Overseas Development Co. Ltd v. Attorney General [1991] 1 HKC 288, at 294C, this does not put the Government (and its agents) above the law.  It merely gives it equality before the law.  The equality in the present context being with other landlords, some of whom – here and abroad – are large and powerful.

42. The issue of whether the Director was exercising a public function or acting in a private capacity is therefore decisive.

43. In negotiating with the applicant, the Director was at all times discharging the responsibilities of his office, a public office bestowing on him certain executive and administrative powers.  But of course the holder of public officer, in the discharge of that office, may act in the private domain as well as the public.  In Matteograssi SpA v. Airport Authority [1998] 2 HKLRD 213, the Court of Appeal recognised that, in exercising a ‘purely commercial function’, a public authority performs a ‘private’ function governed by private and not public law.  In this regard, the Court cited with approval the obiter dicta of Lord Templeman in the Privy Council’s judgment in Mercury Energy Ltd v. Electricity Corp of New Zealand Ltd [1994] 1 WLR 521 (at p.524B) :

“It does not seem likely that a decision by a state enterprise to enter into or determine a commercial contract to supply goods or services will ever be the subject of judicial review in the absence of fraud, corruption or bad faith.”

44. There is, however, no universal test to determine whether the actions of a public body are, or are not, governed by public law.  If the formal source of power is not determinative – and I do not consider it determinative in the present case – then what invariably falls for examination is the nature of the power being exercised.  In this regard, see : R. v. Panel on Take-overs and Mergers, ex p Datafin Plc [1987] 1 All ER 564, the headnote of which reads (in part) :

“In determining whether the decisions of a particular body were subject to judicial review, the court was not confined to considering the source of that body’s powers and duties but could also look to their nature.  Accordingly, if the duty imposed on a body, whether expressly or by implication, was a public duty and the body was exercising public law functions the court had jurisdiction to entertain an application for judicial review of that body’s decision.”

45. In a number of first instance judgments, our courts have determined whether the actions of a public body are subject to judicial review by identifying the true nature of the function being exercised.  For example, in Ngo Kee Construction Co. Ltd v. Hong Kong Housing Authority [2001] 1 HKC 493, at 507, Cheung J, as he then was, concluded :

“In my view, one must look at the function that is being challenged.  If the function is a commercial one, then the matter is not subject to judicial review.  The fact that the Housing Authority has adopted rules for the administration of the list of contractors does not create a liability for judicial review.”

46. In my judgment, in this present case the issue falls for determination in the same manner.  What then was the true nature of the Director’s function in respect of the two decisions under review?

47. On behalf of the Director, Mr Yu submitted that there was well established jurisprudence, binding on this court, to the effect that, in the circumstances prevailing in this case, when considering the modification of a lease agreement, the Government was as free as any private landlord to look to its own interests only, those interests, of course, being the interests of the public.

48. The principle was set in Hang Wah Chong Investment Co. Ltd v. Attorney-General [1981] 1 WLR 1141, a judgment of the Privy Council.

49. As to the facts of that case, the appellant was the lessee of a piece of land which it held as successor in title to a company which had purchased the right to 75-year lease from the Crown (i.e. from Government).  The lease was subject to special conditions.  These conditions specified the type of building permitted on the land and provided that the consent of the Director of Public Works had to be obtained for the erection of apartments including the nature of their design, their height and diposition.

50. When the appellant applied for modification of the special conditions to allow for its chosen form of redevelopment, the Director of Works, while agreeing to the requested modifications, demanded payment of a premium which the appellant considered to be excessive.  It was asserted that the Director of Public Works, also by definition the building authority, was, when he demanded the premium, acting in the public domain.  Lord Edmund-Davies described the nature of the challenge in the following question :

“Was the Director, ask the applicants, not operating in the public domain when saddling his approval of the applicants’ building plans in 1976 with a demand for an extremely high premium which bore no apparent relation to the terms of the appellants’ application?  And, in consequence, was he not therefore imposing an insupportable condition on his compliance amounting to an abuse of power?”

51. The question was answered in the following manner, to the conclusion, that is, that the Director was not acting in the public domain :

“The various Conditions of Sale well illustrate the wide range of roles played by the Director in exercising his discretion.  As regards some of the conditions, the Director’s role may, almost certainly, be that of protector of the public interest.  The vital question is whether for the purposes of special conditions 6 and 7 he can properly be regarded as being entitled to act in his capacity of land agent for the Crown.  It is not open to serious doubt that those conditions relate directly to the landlord’s interests, economic and otherwise, and their Lordships conclude that the Director was entitled to act, and did act, in that role when granting his qualified approval to the applicants’ plans in 1976.  On that view, can it properly be said that it is for the Crown to establish the reasonableness of the demand for a premium?  In the light of Viscount Tredegar v. Harwood [1929] A.C.72, their Lordships are of the opinion that the question requires a negative answer.  … It is sufficient, for present purposes, simply to say that, the applicants’ seeking a concession from their landlords in relation to the development of land leased, the landlords were entitled to make the granting of that concession conditional upon the payment of a premium.”

52. A further judgment of particular relevance is that of the Court of Appeal in Canadian Overseas Development Co. Ltd v. Attorney General (cited in para.41).  The headnote sets out the necessary factual context :

“      The appellant (the developer) held land from the Crown in the form of a new grant by way of exchange, plus a premium.  Under the agreement, building, save in accordance with a master layout plan approved by the Crown, was prohibited.  The developer submitted a new master layout plan but approval was refused by the Crown.  Leave to apply for judicial review on the ground of Wednesbury unreasonableness was obtained by the developer ex parte, but set aside inter partes as the Crown contended that the matter was one of private, rather than, public law.  The developer appealed, contending that the Crown, in deciding whether or not to approve the plan, was performing an executive duty or function governed by public law.”

53. The argument advanced by the appellant was described by Bokhary J (as he then was) in the following terms :

“Essentially, its contention comes to this.  When a master layout plan or any alteration thereto is submitted to the Crown for its approval under an agreement such as the one here in question, then the Crown, in deciding whether or not to approve such plan or alteration, is performing an executive duty or function governed by public law, rather than performing a contractual obligation and exercising a contractual right governed by private law.  That, it is said on the developer’s behalf, is at least arguable so that, having regard to the test at the leave to apply stage of an application for judicial review, the leave which had been granted and then set aside should be restored.”

54. The judge, however, found the contention to be ‘incontestably bad’.  There was clear authority directly against it; namely the judgment of the Privy Council in Hang Wah Chong.

55. In dismissing the appeal, the court rejected the contention that the Privy Council decision was to be narrowly interpreted and did not apply to the appellant’s case.  It also rejected the contention that developments in the field of public law had overtaken the decision.  In respect of this second contention, Kaplan J (as he then was) said :

“Mr Tang [counsel for the appellant] attempted to circumvent the Hang Wah Chong case by reminding us that, since 1980, there have been substantial developments in the field of public law.  And, indeed, there have been.  But perhaps one of the most significant of these has been the sharper focus on the distinction between public and private law.  I agree with my Lord that, whichever way one looks at the present case, it falls distinctly on the private side of the line … The Crown is entitled to enter into contracts and leases and to have its rights and duties, thereunder, determined in accordance with private law.”

56. More recently, the principle has been underscored by the Court of Final Appeal in Director of Lands v. Yin Shuen Enterprises Ltd and Another (2003) 6 HKCFAR 1, at 14E, per Lord Millet :

“Two further considerations are relevant at this point.  First, the user covenants in the Crown leases are absolute.  They are not qualified by any requirement that the Crown’s consent is not to be unreasonably withheld; and the statute law of Hong Kong does not subject user covenants in leases to any such requirement.  Secondly, in deciding whether to grant or withhold its consent to a modification of the terms of a lease, the Government does not exercise a public law function but acts in its private capacity as landlord: see Hang Wah Chong Investment Co Ltd v A-G [1981] HKLR 336 (PC). It thus has an absolute right if it chooses to demand a premium, however large, for granting a modification of the terms of the lease, or to withhold its consent altogether, however unreasonably: see Lord Tredegar v Harwood[1929] AC 72.”

57. One final authority of more recent vintage requires mention, that is the judgment of the Court of Final Appeal in Ying Ho Ltd and Others v. Secretary for Justice [2005] 1 HKLRD 135, at 171, in which Ribeiro PJ observed that the Government did not act as a fiduciary vis-à-vis land developers in respect of any discretion reserved to itself under conditions of grant.  In that context, it had been authoritatively decided in Hang Wah Chong that the Government acted in the capacity of a landlord and was entitled to exercise its powers for its own benefit – that is, for the benefit of the public.

58. For the applicant, Mr Neoh emphasised that the principle set down in Hang Wah Chong was not to be widened to the extent that it applied to all cases concerning government leases whatever the true function being performed.  In this regard, he referred to Hong Kong and China Gas Co. Ltd v. Director of Lands [1997] 3 HKC 520, at 526, in which Keith J (as he then was) emphasised the importance always of identifying the true nature of the power or function being exercised :

“The mere fact that the decision challenged relates to a Crown lease which is governed by the law of contract is not decisive.  The true question is whether the making of the particular decision in question relating to a Crown lease amounts to the performance of a function within the public domain.  Some decisions, such as those which the Director of Public Works and the Secretary for the New Territories had to make in the Hang Wah Chong and Canadian Overseas cases, did not amount to the performance of a function within the public domain.  Other decisions, as the Privy Council in the Hang Wah Chong case recognised, may ‘almost certainly’ amount to the performance of a function within the public domain.  That is entirely in accordance with the decision in R. v. Panel on Take-overs and Mergers, ex p. Datafin Plc. [1987] 2 WLR 699, namely that the true demarcation line between public and private law involves focusing on whether the decision-making body took the decision challenged in the course of its public functions.”

59. In Hong Kong and China Gas, Keith J held that the Director of Lands, in deciding whether to extend the lease of the Hong Kong and China Gas Company, had to look beyond the Government’s interests as landlord and – in that case – take into account a host of competing interests going to matters of public planning, land use and administration which, if only indirectly, would affect other leases in the area.  As such, the true nature of the function being exercised by him was not a private one under contract but a public one.

60. In Kam Lan Koon and Others v. Secretary for Justice [1999] 3 HKC 591, the Court of Appeal approved of this approach.  The relevant portion of the headnote reads :

“The Government in exercising rights in respect of leases was exercising the same powers as an ordinary landlord.  For the most part, decisions made in this regard were not judicially reviewable.  However, the policy statement expressed the Government’s policy.  Those affected had a legitimate right to expect the implementation of the Government policy in relation to the extension of leases.  To this extent, the decision to extend leases for special purposes in the New Territories was not simply a decision of a private landlord but was one which the Director of Lands took as part of his public function.  Any such decision was amenable to judicial review.” 

61. As will be seen from the headnote, the Court of Appeal took into account the fact that Government had published an extensive policy document dealing with the introduction of new legislation concerning leases in the New Territories, the lease in question in the judgment being very much subject to what was proclaimed in the policy document.

62. In my opinion, in the light of the jurisprudence to which I have referred, attempting to determine when, even though acting on the basis of contract, Government performs a private or public function can be an elusive task.  On occasions – such as the present – the task cannot be avoided.  But, by way of a general comment, administrative law, in my opinion, is better served by some degree of certainty.  The more will-o-the-wisp the task of identification, the greater the uncertainty for all parties involved.  Whatever the position may be in other jurisdictions, it seems to me that a degree of certainty has been brought into our law by the adoption of what I will call ‘the Hang Wah Chong principle’ and its consolidation in our jurisprudence.  And while obviously on each occasion the true nature of a function must be identified, I am not permitted to undermine that degree of certainty.

63. During the course of submissions, Mr Neoh relied on a judgment of Elias J in the Queen’s Bench Division; namely, R. (on the application of Molinaro) v. Royal Borough of Kensington and Chelsea [2001] EWHC Admin 896, 29 October 2001, unreported.  In that case a lessee had challenged the decision of the landlord, a local authority, to refuse to change the purpose for which the premises was leased; that is, from retail to restaurant.

64. In his judgment, Elias J held that the refusal to grant a change in use, albeit involving the exercise of discretion under contract, was taken for the purpose of giving effect to the local authority’s planning objectives and this, he said, injected a sufficient public law element into the decision to justify it being made subject to public law principles.  Public bodies, he said, are different to private bodies in that their powers are given to them to be exercised in the public interest and the public has an interest in ensuring that the powers are not abused.  Public bodies should not therefore be free to abuse their powers by invoking the principle that private individuals can act unfairly without legal redress.

65. As attractive as that statement of principle may sound, I have difficulty accepting that it reflects the law in Hong Kong.  If that was the law, it would follow that any assertion of abuse of power, provided it was found to be prima facie arguable, even though concerning purely contractual issues, and for all other purposes therefore clearly in the private domain, would be elevated into the public domain.

66. I notice that, in coming to his judgment, Elias J found it necessary to distinguish a case in which the Divisional Court had found that a government department had acted unfairly in a tendering process but had nevertheless found its action not subject to judicial review, that case being R. v. The Lord Chancellor, ex parte Hibbit and Saunders (a firm) and another [1993] COD 326, The Times 12 March 1993.  In distinguishing that decision, Elias J said :

“In that case the Divisional Court held that although the Lord Chancellor’s Department had acted unfairly in the tendering process it adopted in relation to a proposed contract for certain court reporting services, its decision was not amenable to judicial review.  However, the power to contract was not there conferred by statute.  The Lord Chancellor’s Department was exercising a common law power.”

67. In my view, however, it is now well established in Hong Kong law that, absent the applicability of some specific statutory provision, a public authority’s source of power is not per se determinative.

68. Certainly, in the present case, there was no suggestion that the Director, in negotiating modification of the lease agreement, was acting pursuant to specific statutory authority.

69. In the present case, the applicant and the Government entered into a contract of lease.  The applicant sought to change the terms of that contract.  It sought to do so in two respects; first, as to the use to which the Lot could be put and, second, as to the type of building that could be built on the Lot.  The basis of negotiations was contractual.  Leaving aside the issue of economic self-interest, the applicant was free to reject Government’s demands and let the terms of the lease agreement remain unchanged.  How then is it suggested that in the present case Government (through its agent) was exercising a public function and was therefore constrained by the principles of public law?

70. As I have understood Mr Neoh’s submissions, they are to the following effect.  The Government, as landlord, being constrained only by the principles of private law, was free to refuse to modify the terms of the lease agreement.  In short, no matter how arbitrarily, it was as free as any private landlord would be to say : “No, there will be no change.”  However, once the Government agreed to make modifications, the decisions that flowed from that agreement became subject to various public policies and published practices.  In the result, those consequential decisions, being so materially influenced by public matters, became decisions made in the discharge of a public function.  To put it another way, Government, in negotiating the terms of settlement and eventually laying down those terms, was doing more than looking to its own interests as landlord, it was taking into account various matters going to public planning and land use and, as to calculation of financial advantage, was bound by its own published practices.  In short, it was furthering public policy.

71. On what basis, was it suggested that Government was furthering public policy?  As an underlying factor, Mr Neoh observed that, in terms of art.7 of the Basic Law, Government discharges a public responsibility in granting or leasing land in order for that land to be used or developed.  Art.7 reads :

“The land and natural resources within the Hong Kong Special Administrative Region shall be State property.  The Government of the Hong Kong Special Administrative Region shall be responsible for their management, use and development and for their lease or grant to individuals, legal persons or organizations for use or development.  The revenues derived therefrom shall be exclusively at the disposal of the government of the Region.”

72. I pause to say that, in my view, even on a purposive and liberal interpretation, while Government has a constitutional obligation under art.7 to manage Hong Kong’s land, which includes the leasing of the land, art.7 does not constrain the type of lease agreement that Government may wish to execute.  Nor is art.7 to be read to mean that all lease agreements entered into by Government are to be governed by public law principles.  Mr Neoh himself did not suggest that art.7 had such far-reaching effect.  He fully accepted that Government qua landlord is as free as any private landlord to refuse to modify a condition of lease even if the refusal, in public law terms, is arbitrary or frustrates a legitimate expectation.

73. In the present case, said Mr Neoh, the original conditions of lease restricting the use to which the Lot could be put and the type of building that could be constructed on it were manifestly the product of public planning.  Equally, the agreement to modify those terms would have been based on public planning considerations.  Mr Neoh emphasised that the Director consulted other government departments – the Transport Department and the Police – in order to seek their views.  Those views of course would have been formulated on a perception of what the public interest required.

74. In addition, said Mr Neoh, in respect of the level of premiums to be charged for modifying land leases, in 1997 Government published a policy document entitled ‘Provisional Legislative Council Brief – Land Leases and Related Matters’.  In that document, Government held out that, in accordance with the provisions of the Joint Declaration, premiums for modification would be equivalent to the difference between the value of the land under the previous conditions and its value under the modified conditions.  The policy was, in fact, in line with long-established Government practice.  But Mr Neoh made the point that now it was published policy and, as such, public policy.  Government, he said, had chosen to take an established but nevertheless internal practice and place it in the public arena. 

75. In my judgment, nothing is advanced by saying that in the present case the original conditions of lease were dictated by planning considerations and the modifications too.  In Canadian Overseas Development (cited in para.52), it was contended that the Government, as landlord, in deciding whether or not to approve a master layout plan, was in reality exercising a public function.  Clearly, the original terms of the lease requiring approval in terms of a master layout plan would have been inserted on the basis of planning considerations and equally any modification of the terms would have been influenced by planning considerations.  Yet the Court of Appeal rejected the contention that the Director in that case was exercising a public function.

76. What is to be emphasised is that when the Government, as landlord, looks to its own interests it is, of course, looking to the public interest.  That was said in specific terms by Ribeiro PJ in Ying Ho Ltd (cited in para.57).  It may, as a broad observation, be said that Government exists for the benefit of the public.  But that fact alone does not elevate all actions by government officials into the realm of public law.

77. In my judgment also, the fact that Government had published its policy as to the methodology to be employed in calculating premiums did not, in the present case, elevate the actions of the Government from the private domain into the public.  If that was the case, for example, published policies as to tendering conditions would transform all commercial tendering operations by the Government into a public function subject to judicial review.

78. In my view, the policy document taken into account by the Court of Appeal in Kam Lan Koon (cited in para.60) was of a materially different nature.

79. In Polorace Investments Ltd v. Director of Lands [1997] 1 HKC 373, the appellant developer sought various remedies against the Director for his alleged representation with respect to a restrictive covenant in a Government lease.  The covenant provided that the lessee should obtain the approval of the Director for the design, disposition and height of any building to be erected on the lot.  The appellant’s case was that it had suffered detriment in reliance on the Government’s land administration policy.  In dismissing the appeal, the Court of Appeal held that, notwithstanding the existence of a land administration policy —

“… the Director acted as the agent of the Crown in its capacity as landlord.  The matter of charging a premium under covenants in the lease is clearly governed by private and not public law, and is not susceptible to judicial review.”

80. I appreciate, of course, that Mr Neoh based his submissions on the cumulative effect of the various ‘public elements’ he advocated.  But even viewed in totality I do not see that they advance his submissions.

81. I would add that, in being sued for breach of contract by the applicant and in defending that action, in my opinion the Director was quite clearly acting – in the context of private litigation – in the private domain.  As such, he was as entitled as any other private litigant to attempt to settle matters to his – that is, the public’s – best advantage.

82. By way of summary, I remind myself that, in determining whether the Director in this case acted in the private or public domain, no single factor is determinative.  As Lord Woolf CJ observed in Poplar Housing Association Ltd v. Donoghue [2001] 3 W.L.R. 183 at 202, para.66 :

“While these are the most important factors in coming to our conclusion, it is desirable to step back and look at the situation as a whole.  As is the position on applications for judicial review, there is no clear demarcation line which can be drawn between public and private bodies and functions.  … the decision is very much one of fact and degree.”

83. In my judgment, however, for the reasons I have given, I am satisfied that in negotiating the terms of modification of the lease agreement with the applicant and in putting forward offers of settlement, the Director, as agent for Government, was not exercising a public function constrained by public law.  As such, his actions (in that exercise) are not susceptible to judicial review.

84. On the basis that the Director was not exercising a public function, this application for judicial review must be dismissed.

The remaining issues

85. If, however, I am wrong in this regard, I will, relatively briefly, consider the remaining two issues going to jurisdiction.

Did the nature of the Director’s decisions make them susceptible to judicial review?

86. It is not every decision made in the area of public law which is susceptive to judicial review, said Mr Yu.  For any public law act or omission to be susceptible to judicial review it must be imbued with certain qualities.  The so-called ‘decisions’ contained in two letters did not contain those qualities.  The two letters under challenge were no more than offers made in the course of on-going negotiations, he said.  As such, they did not contain any substantive determination touching on; that is, affecting the rights or interests of the applicant.

87. In support of his submission, Mr Yu relied on the observations of Litton NPJ in Financial Secretary v. Wong (2003) 6 HKCFAR 476, at 510 :

“It is not every decision by a decision maker which is susceptible to review: were it otherwise the functioning of the executive arm of government and of statutory bodies and tribunals would be ensnared in multiple applications in the courts.  As put by the authors of Wade and Forsyth, Administrative Law (8th ed., 2000) pp.600-601:

As the law has developed, certiorari and prohibition have become general remedies which may be granted in respect of any decisive exercise of discretion by an authority having public functions ...

94.  The emphasis here is on the decisive nature of the exercise of power.  An example given in Wade and Forsyth, Administrative Law (8^th ed., 2000) at p.600 is R. v Statutory Visitor of St Lawrence’s Hospital, ex p. Pritchard [1953] 1 WLR 1158 where the court refused to grant the remedy to quash a mere report, being a report as to the need for continued detention of a mental defective: The report was an intermediate step to detention: The body that made the report had no power to make the detention order.”

88. In drafting and sending the letters, said Mr Yu, the Director did not carry out any decisive exercise of discretion.  Put another way, his exercise of discretion did not finally decide or determine the outcome of the negotiations.  The offers contained in the letters may have been worded as suggesting they were final offers but they were still offers and, as such, could be accepted in whole or in part or refused in whole or in part.  As such, as offers, they did not constitute any form of substantive determination on the part of the Director.  This, said Mr Yu, was revealed by what, in fact, did happen.  After the first so-called ‘ultimatum’ given to the applicant, the applicant responded with what amounted to a counter-offer.  That counter-offer was considered and resulted in a second so-called ‘ultimatum’ which was again refused and answered with another form of counter-offer.  Advice was being taken in respect of that counter-offer when the applicant instituted the present judicial review proceedings.

89. Negotiations, until finalized, constitute a fluid, on-going process, said Mr Yu.  It is not for the courts to monitor and regulate the performance of a public authority in the course of such negotiations, not until a decision is made or an action taken which finally determines those negotiations.  As Munby J expressed it in R (on the application of W) v. Essex County Council [2004] EWHC 2007 :

“Although I am, in a sense, concerned with the future welfare of very vulnerable children, I am not exercising a ‘best interests’ or ‘welfare’ jurisdiction, nor is it any part of my functions to monitor, regulate or police the performance by the County Council of its statutory functions on a continuing basis.  A judge of the Family Division exercising the wardship jurisdiction has a continuing responsibility for the day to day life and welfare of the ward … The function of the Administrative Court is quite different: it is … to review the lawfulness of a decision, action or failure to act in relation to the exercise of a public function.  In other words, the Administrative Court exists to adjudicate upon specific challenges to discrete decisions.  It does not exist to monitor and regulate the performance of public authorities.”  [my emphasis]

90. For the applicant, Mr Neoh argued that, by the time the first letter of 14 May 2005 was written, negotiations had effectively broken down.  There was no further basis for negotiations of any meaningful kind.  In the result, both letters contained what can only be described as ‘take it or leave it’ offers; in short, ultimatums.

91. Both letters, said Mr Neoh, contained a decisive exercise of discretion on the part of the Director in that, in both letters, the Director threatened that, if his offer was not accepted in its entirety, he would pursue ‘appropriate enforcement action’ against the applicant.  In the second letter, the Director said that this enforcement action —

“may include an injunction to require your client to cease construction … to demolish any contravened structure already constructed, and may also include re-entry of the lot …”

92. The applicant was under direct threat, said Mr Neoh, one which, if enforced, would very much effect its rights and interests.  The responses it made were the best it could do in the circumstances.  All it could reasonably do was to pay the monetary demands made without prejudice to its rights of recovery, if any, in the writ action.  It stood its ground in respect of its constitutional right to prosecute the writ action but had to concede all else.  There was, said Mr Neoh, simply no ‘mutuality’, the hallmark of genuine negotiation.

93. Mr Yu responded, for the Director, by saying that of course the negotiations were adversarial.  That is often the nature of negotiations.  Rarely are offers couched in language which implies an invitation to refuse and seek a better offer.  As to the inevitable nature of negotiations, Mr Yu referred to the observations of Lord Ackner in Walford v. Miles [1992] 2 AC 128, at 138E :

“The concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations.  Each party to the negotiations is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations.  To advance that interest he must be entitled, if he thinks it appropriate, to threaten to withdraw from further negotiations or to withdraw in fact, in the hope that the opposite party may seek to reopen the negotiations by offering him improved terms.”

94. At this juncture, I record that during the course of submissions much was made of how the correspondence from the Director should have been headed; whether, for example, it should have carried the phrase ‘without prejudice’ or ‘subject to contract’.  In my judgment, however, in the circumstances of this case, the fundamental issue of whether the letters were written in the course of on-going negotiations or constituted final ultimatums after the breakdown of genuine negotiations is to be determined by taking all relevant factors into account.  As Lord Woolf CJ put it in Poplar Housing Association (cited in para.82) it is very much a matter of fact and degree.

95. In my judgment, a threat of future action may constitute a reviewable act.  The issue is whether, in the circumstances of this case, even with that sting in their tail, the letters were no more, at best, than intermediate steps; in short, threats that, unless there was some meaningful response, not necessarily full compliance, then action would have to be taken.  In my judgment, the letters were not decisive; they did not finally determine anything.  They were intermediate steps.  As such, the contents of the letters did not constitute reviewable decisions.

96. In the present case, in my view, even if the applicant felt itself to be very much on the back foot, it continued to negotiate; that is, to respond to the Director’s two offers with what amounted to counter-offers.  In this regard, the letter from MY Chan and Associates in response to the Director’s second letter is revealing.  In part, it reads :

“We are instructed to reiterate our client’s position to you, namely that you are not entitled to impose upon our client as part of the terms of lease modification the discontinuance of High Court Action No. 1076 of 2004.  We are also instructed to say that our client has already accepted the Basic Terms of the proposed modification set out in DLO/KE’s letter of 14^th May 2005, without prejudice to our client’s right to pursue to its conclusion High Court Action No. 1076 of 2004 and as to our client’s right to seek declarations and appropriate remedies.  In fact, our client has paid the premium of $678,220,000 and the sum of $145,000 being the balance of the administrative fee demanded by you for the proposed modification.  Regrettably these were not accepted by you.

We have explained in our letter to you dated 29^th July 2005 as to why it is not justified to tie the litigation to the terms of the modification.

Upon your reply that our acceptance of your offer is acceptable to you, our client within 48 hours pay to you the premium of $715,490,000 and the sum of $145,000 being the balance of the administrative fee.”  [my emphasis]

97. That final paragraph clearly constituted a counter-offer and was read as such by the Director.  In his response – albeit written after the institution of this judicial review – the Director wrote :

“In fact, Government had been carefully considering your client’s request that approval of the application for a lease modification should not be conditional upon the requirement for your client to discontinue High Court Action No. 1076 of 2004 and had indeed decided that it was prepared not to insist upon that requirement.  Your client’s application for leave to apply for judicial review, launched as it was before Government could communicate its decision to you, had necessitated further consideration and legal advice.”

98. In my view, this evidences the fact that at no stage did either party firmly ‘draw the line’.  There was no unambiguous evidence that either party had brought the negotiations to a close.  Critically, in my view, the applicant itself did not do so before instituting its application for judicial review.  Its final letter, as I have said, clearly constituted a counter-offer which appears still to have been open.

99. For the reasons given, I am satisfied that the decisions challenged by the applicant were not decisions subject to judicial review.  On this ground too the application must be dismissed.

Has this application become purely academic?

100. For the Director, Mr Yu submitted that, by as early as December 2005, some nine months before the hearing commenced, the issues in this application had become academic.  By that date the parties had agreed all matters concerning modification of the lease, payments had been made and legal documents executed.  Importantly, the applicant had been left entirely free to continue the writ action.

101. Accordingly, the primary relief sought; namely, declarations that the Director’s decisions had unlawfully interfered with the applicant’s right of access to the courts had been rendered redundant.  The secondary relief sought; namely, that the decisions of the Director had been unfair, Wednesbury unreasonable or wrongly motivated, constituting an abuse of power, had also been rendered of historical value only.

102. Prerogative writs, of course, are discretionary and, absent good reason, this court does not pronounce on abstract questions of law when there is no dispute before it to be resolved.

103. For the applicant, however, Mr Neoh advanced two grounds why it was proper to persist with the application.

104. The first ground was dependent on this court agreeing to an amendment to the relief sought by the addition of two alternative declarations.

105. These alternative declarations were to the effect that the Director ought not to have provided terms in his two letters which interfered with the applicant’s rights of access to the courts and therefore ought to have accepted the terms and conditions set out in the applicant’s letters in response (i.e. those dated 23 June and 5 August 2005).

106. If the alternative declarations were permitted, said Mr Neoh, they would give rise to substantive consequences.  If relief under them was granted, it would mean that Government had not been entitled to raise its premiums in the manner it did.  To illustrate, if Government ought to have accepted the terms and conditions set out in the applicant’s earliest letter; that is, the letter of 23 June 2005, the premium due would then have been at its lowest.

107. Mr Neoh accepted that in Hong Kong, while the courts have the power in judicial review to award damages, they do not have the power to make restitutionary awards.  Nevertheless, said Mr Neoh, if relief was granted under the alternative declarations, it would assist the claim of the applicant in separate proceedings – presumably the writ action – to obtain a refund of what this court will have found to be excessive premiums paid as a result of the unlawful actions of the Director.

108. In summary, as I understood it, the applicant sought to maintain the utility of these judicial review proceedings on the basis, first, that there would have to be a substantive amendment to the grounds of relief sought and, second, if successful under those amended grounds, that would assist it in other proceedings to obtain a restitutory award.

109. I must add that it was not suggested that the matters canvassed in this judicial review to obtain the amended relief could not also be canvassed in other proceedings – presumably the writ action – and indeed canvassed with better efficiency and less cost in those other proceedings.  It is to be remembered that the hearing of this application for judicial review ran for its full allotted span of three days and had to be adjourned for approximately three weeks so that a further day could be found.  In terms of case management, if nothing else, it seems wasteful to have two sets of proceedings when one will suffice.

110. There are no doubt cases in which a remedy properly sought and granted against a public authority in judicial review assists in later private proceedings against that authority.  Indeed, Mr Neoh referred to just such a case, that of Woolwich Equitable Building Society v. Inland Revenue Commissioners [1993] AC 70.  I also accept that a judicial review application may properly be brought with the specific intent, in appropriate circumstances, of underpinning future private litigation.

111. But each case must be considered on its own facts.  In my view, it is one thing to obtain a public law ruling as a necessary pre-condition to a private law claim.  It is, however, another thing to needlessly invoke this court’s jurisdiction to establish a matter which not only can – but can more conveniently – be established in another court if eventually the facts so require.  In my judgment also, obtaining a declaration in this court is of little or no value if the matter effectively has to be evidentially established again in the court dealing with the private claim.

112. For myself, therefore, if only to guard the integrity of process and to ensure efficient case management, I think that courts exercising judicial review jurisdiction should not, without very good reason, determine matters which can equally, or must, be determined in private civil proceedings already under way.

113. I do not think it is possible to lay down any more specific principle.  The range of possible factual circumstances does not make it possible.  But the view I have taken is not entirely without precedent.  In R. v. Secretary of State for the Home Department, ex parte Vafi (unreported, 2 August 1995) the English Court of Appeal said the following :

“The matter came before Harrison J on 16 May.  He discharged the leave to move for judicial review and he refused the application to amend the Form 86A.  The essence of what he decided was that the matter, as originally complained of, had become academic, and the complaints which it was now sought to raise were essentially private law complaints which were made with a view to establishing private law remedies against the Home Department or persons acting on its behalf.  He declined to entertain that approach to the case.  He examined the merits of the complaints and came to the conclusion that factually they were not justified in any event.

The renewal of the application before this Court has been fully argued with a full skeleton argument.  In my judgment, the question remains the same as it was before Harrison J, and his conclusion remains correct.  The original complaints are now wholly academic.  It is accepted that the decision to remove was an entirely lawful one.  It is accepted that the refusal of asylum cannot be challenged.  The only complaints that can be pursued are the allegations which relate to the manner in which the removal directions were carried out; if there is anything in them, they are capable of being the subject of civil law remedies.  In my judgment the judge was perfectly entitled to form the view that that was the course which Miss Vafi should pursue, if she thought and was able to persuade others that there was any merit in the complaints which she was wishing to make.”

114. In the present case, I see no good reason why the course proposed by Mr Neoh should be accepted.  If this application had not already been decided, I would not have been prepared to agree to the amendments sought in order to resuscitate the utility of those proceedings; resuscitate them, it must be said, for a collateral purpose only.                                            

115. However, as I said earlier, Mr Neoh advanced two grounds why the utility of this application had not been stripped away.  The second was to the effect that, even if the issues had been rendered academic, there was an important public interest to be served.  As Mr Neoh put it, the courts can give guidance that will assist public decision-makers to exercise their powers lawfully.  In particular cases, the courts have recognised that there is a role for them to give guidance in circumstances where that guidance will not produce an immediate benefit for the particular claimant.

116. I accept that in rare instances it may be appropriate, for the sake of the general law, for a court to take on an application that has become academic.  The issue, of course, is whether in the present case there is a good reason in the public interest for doing so.

117. Mr Neoh suggested that the public interest lay in setting the legal limits for the process by which Government modifies the conditions contained in land leases.  I do not agree.  There is already a body of jurisprudence in Hong Kong.  In this case it was a question of determining, in an essentially factual context, how the jurisprudence was to be applied.

118. In my judgment, an issue of greater potential public interest was the issue going to the heart of the substantive relief sought : if a public authority, such as Government exercises its public law powers in order to gain an advantage for itself in private litigation proceedings, does that constitute an abuse of power in the various ways alleged by the applicant; more particularly, does it constitute a breach of art.35 of the Basic Law?  If the applicant had been able to overcome the jurisdictional objections raised on behalf of the Director, I may well have thought it appropriate to determine that issue even though it was no longer a live issue.

119. On that basis, therefore, I am not prepared to say that the relief sought although academic, was entirely sterile, its determination being of no public value.

The substantive issues

120. I have considered whether I should say something concerning the substantive challenges raised by the applicant in this case but have decided not to do so.  The issues raised by the applicant, all going essentially to the assertion of abuse of power, are fact specific.  Fundamental to the applicant’s factual assertions are the assertions, first, that the Director was performing a public function and, second, that the decisions made by him were substantive decisions touching upon the applicants rights and interests.  But I have found both of these assertions to be incorrect.  In the result, there is simply no basis for the assertion of abuse of power.  For me nevertheless to proceed on the assumption that there is a basis for the assertion results in an entirely, theoretical and artificial analysis, one which, being so fact specific, demands a distortion of the facts as I have found them to be.  I have given the matter careful consideration but have decided that nothing of value could arise from any such analysis.

Conclusion

121. For the reasons contained in this judgment, I am satisfied that the actions of the Director were not subject to public law.  As such, there was no basis for bringing the application for judicial review.  The application must therefore be dismissed.  I see no reason why costs should not follow the event and costs are awarded in favour of the Director.