XCHRX YING HO CO. LTD. AND OTHERS v. THE SECRETARY FOR JUSTICE

HCA 10834/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10834 OF 1998

--------------------

----------------------

------------------

D E C I S I O N

------------------

Background

1. The Plaintiffs are companies belonging to the China Chem Group of Companies, a property developer in Hong Kong.

2. The Secretary for Justice represented the Government and according to the Plaintiffs, the case involved the Secretary for Planning, Environment and Lands ("SPEL"), the Director of Lands and the Director of Civil Aviation. In October 1991, the Plaintiffs successfully acquired through tender Tsuen Wan Lot No.353 ("the Lot") which is situated in Tsuen Wan overlooking the Rambler Channel. By this time the Government has already announced the construction of the Chek Lap Kok Airport in October 1989.

3. The Plaintiffs alleged that there was no height restrictions in respect of the Lot and the Plaintiffs intended to construct on the Lot the tallest building in the world, up to 522 metres Principal Datum ("mPD"), to be named "Nina Tower". This was announced on 24 March 1994. On 19 May 1994, the Plaintiffs' authorised person submitted to the District Land Office a single office tower, and thereafter a number of other master layout plans for the said development, each of the same height of 468 metres with an attached mast of 50 metres, the total height being 518 metres or 522 mPD.

4. The Plaintiffs alleged that wrongly in breach of the implied terms, the Government unilaterally sought to and did impose the height restriction of 324 mPD on the proposed Nina Tower.

5. It is common ground that the Government did make a final decision on the height restriction of 324 mPD on Nina Tower on or about 9 April 1996, and the then Director of Lands informed the Plaintiffs' consultant of his decision. The imposition of the height restriction was said to be connected with "Aviation safety .... in order to protect the Instrument Landing System ("ILS") and safeguard the operations of the Chek Lap Kok Airport."

The Issue

6. Thus the Plaintiffs submitted that one of the issues to be tried is as follows :

"2(a) Whether the construction of a building exceeding the height restriction of 324 mPD on the Lot would render the Instrument Landing System ("ILS") and the operation of the Chek Lap Kok Airport unsafe from the point of view of aviation safety as alleged by the Hong Kong Government.

2(b) Whether the Hong Kong Government, having stated on numerous occasions that the height restriction of 324 mPD on the Lot was imposed for aviation safety purposes, has to prove that the said height restriction of 324 mPD was both necessary and reasonable."

7. Mr Martin Lee, SC, for the Plaintiffs, submitted that the aforesaid issues to be tried would involve the Government disclosing its expert evidence in respect of the aviation safety and the effect of the tall Nina Tower on the ILS, and they, in turn, would have their own experts, three in total, to dispute that.

8. The Defendant disagreed with the Plaintiffs' contention and, instead, submitted that the following issues inter alia are the proper issues to be tried :-

"2. The Defendant disagrees that sub-paragraphs (a) and (b) are relevant issues. The Defendant would suggest the following issues :-

2(a) Whether as a matter of law it is an implied term of the Agreement that the Hong Kong Government should not refuse or withhold the Plaintiffs' applications for approval of MLPs and other building and planning plans save on reasonable grounds.

2(b) If so, whether the Hong Kong Government in deciding whether or not to approve the Plaintiffs' application for construction of Nina Tower on the Lot, the Hong Kong Government is entitled to have regard to height restriction which would be imposed by legislation under Section 3(1AA) of the Hong Kong Airport (Control of Obstructions) Ordinance, Cap. 301."

9. The question before me in this decision is whether the Plaintiffs' framing of the issues is correct, which would involve more documents on discovery and experts' evidence at the trial, or the Defendant's submission on the issues to be tried are correct.

The Plaintiffs' Submission

10. The Plaintiffs submitted that at the time of acquisition of the said lot of land, there was no statutory restriction on height and it is therefore an implied term that the Plaintiffs are entitled to construct the tallest building in the world thereon. Further, it is an implied term that the Government shall not refuse or withhold approval of such application for the aforesaid construction save upon reasonable grounds.

11. Since the Government imposed such a restriction on the ground of aviation safety, the Government should justify its reasonableness, and the Plaintiffs are also entitled to attack the reasons therefor.

The Defendant's Submission

12. Mr Johnny Mok, SC, Counsel for the Defendant, submitted that Special Condition 9(e) provides that "the design, disposition and height of any buildings to be erected on the Lot shall be subject to the prior written approval of the Director of Lands and no building works (other than site formation works) shall be commenced on the Lot until such approval shall have been obtained". This is commonly known as "the DDH Clause". Mr Mok submitted that the only power for the Director of Lands to impose a height restriction is pursuant to Special Condition 9(e), i.e. the DDH Clause. In imposing height restriction, the Director of Lands is entitled to have regard to height restriction which would be imposed by the SPEL under s.3(1AA) of the Hong Kong Airport (Control of Obstructions) Ordinance, Cap.301. In short, the Director of Lands learned that the SPEL would be taking the advice of the Director of Civil Aviation pursuant to the aforesaid s.3(1AA).

13. Section 3(1) and (1AA) provide as follows :

"3. Orders by Governor in Council relating to heights of buildings

(1) Where in the opinion of the Governor in Council the safety of aircraft so requires, he may by order-

(a) prescribe areas within which all buildings are prohibited;

(b) (Repealed 88 of 1994 s. 3)

(c) require to be demolished any building erected within an area in which all buildings have been prohibited by an order under paragraph (a), or require to be reduced in height, or, where reduction in height is not feasible, to be demolished, any building which does not conform with an order under subsection (1AA).

(1AA) Where in his opinion the safety of aircraft so requires, the Secretary may, on the advice of the Director of Civil Aviation, by order prescribe areas within which no building shall exceed the height specified in the order."

14. In pursuance thereof, the SPEL made the Hong Kong Airport (Control of Obstructions)(No.2) Order 1997 which was formally gazetted to take effect on 20 June 1997. One of the prescribed areas and restriction of heights of buildings involved the Lot with a height restriction of 324 mPD.

15. Thus Mr Mok submitted that the only reasonableness the Court will have to consider is whether the Director of Lands was reasonable to impose such a height restriction, learning at that time the Director of Civil Aviation would be advising the SPEL that such a height restriction would be imposed. Otherwise the Tower, when built, would have to be either demolished or required to be reduced in height pursuant to s.3(1)(c) of Cap.301. In that event, the Plaintiffs would be the first one to complain that it is unreasonable of the Director of Lands not to inform or to impose a height restriction on the Plaintiffs' said Lot earlier.

16. Further the Privy Council in Hang Wah Investment Co. Ltd. v. AG [1981] 1 WLR 1141 held that the Director of Lands' refusal or withholding of approval under such a DDH Clause need not be upon reasonable grounds, although when called upon, the Director of Lands could justify his reasons as aforesaid, as per Lord Edmond Davis at 1143H-1144C, 1144G-1145D and 1145H-1145C.

17. If the Plaintiffs are challenging the Director of Civil Aviation in respect of advising, and the SPEL in respect of ordering height restriction of 324 mPD to be imposed by legislation pursuant to s.3(1AA), it must be done by way of judicial review instead of a High Court action. This was decided in the case of Lee Miu Ling v. AG [1996] 1 HKC 124. Litton V-P, as he then was, at p.135 said :

" Order 53 r 3(2) requires the proceedings to be commenced in the statutory form - Form 86A - which refers to the 'judgment, order, decision or other proceeding in respect of which relief is sought' (emphasis added). Without perhaps fully realizing it, the 'proceeding' which the plaintiffs were in fact seeking to impeach was the Governor's act in assenting to the Legislative Council (Amendment) Ordinance 1994, on 7 July 1994, which contained Sch 2 with the 29 functional constituencies (including the nine new ones). The plaintiffs' case, in essence, although it was never formulated as such, was that the Governor had acted unconstitutionally in making that law (with the advice and consent of the Legislative Council). I have no doubt that the only proper proceeding was by judicial review, as the judge himself was inclined to think, until he was persuaded otherwise."

18. Mr Lee for the Plaintiffs confirmed that they are not challenging the decision of the Director of Civil Aviation in terms of Cap.301.

19. I should add here that Mr Mok has accepted the Defence might not have spelt out those facts to be relied on by the Defendant. However, it has been agreed between the parties that the Plaintiffs shall be amending their Statement of Claim and the Defendant shall be amending her Defence by which time those defences shall be spelt out clearly.

Decision

20. I must say I accept the Defendant's submissions. It is clearly provided in the Special Condition in the DDH Clause that the Director of Lands has the power to impose height restrictions. In fact such an imposition can only be done pursuant to the DDH Clause. It is not unreasonable for him to impose such a height restriction upon the advice of the Director of Civil Aviation which advice was never challenged by the Plaintiffs, and least of all not by way of a judicial review.

21. Thus the Defendant is right in submitting that the first issue under this heading is only whether as a matter of law, there was an implied term of the agreement that the Government should not refuse or withhold the Plaintiffs' application for approval of MLPs and other building and planning plans save on reasonable grounds. Further, the issue is whether the Director of Lands is entitled to have regard to height restriction which would be imposed by legislation under s.3(1AA) of Cap.301.

22. Accordingly, the issue to be tried is not for the Government to justify that it is reasonable to impose the height restriction of 324 mPDh on the Lot on aviation safety or effect on the ILS. In short, it is not for the Government in this case to justify that such a height restriction was both necessary and reasonable. Consequently, it is not necessary for the Defendant to disclose its Aviation Safety Report or documents connected thereto and there is no issue to be tried in respect of expert evidence on aviation safety or the effect of the tall tower on the ILS.

23. Since I find this issue in favour of the Defendant, the normal costs order shall follow the event and the Defendant is entitled to an order nisi on costs against the Plaintiffs in any event.