WONG HING KONG v. URBAN RENEWAL AUTHORITY

HCAL 34/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 34 OF 2009

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REASONS  FOR  JUDGMENT

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1.  On 5 October 2009, the Court dismissed the present application for judicial review with costs, including all costs previously reserved.  The Court also refused leave to amend the Form 86A to introduce further grounds of challenge.  The Court gave brief reasons for its refusal.

2.  The Court now gives its reasons for dismissing the application and for refusing leave to amend. 

Background

3.  The application for judicial review related to the redevelopment of the Kwun Tong Town Centre.  The applicant is the registered owner of a property known as Flat C, 1/F, Wah Yee Building, Nos 2-8A Yan Oi Court, Kowloon, Hong Kong, situated within the Kwun Tong Town Centre and is thus affected by the redevelopment.

4.  Redevelopment of the Kwun Tong Town Centre was first announced by the former Land Development Corporation (“the LDC”) in January 1998.  However, the LDC was replaced by the Urban Renewal Authority (“the Authority”) upon its establishment on 1 May 2001 pursuant to the Urban Renewal Authority Ordinance, Cap 563 (“the Ordinance”), which was enacted in the previous year to provide a new framework for carrying out urban renewal.

5.  At the time of the replacement of the LDC by the Authority, the redevelopment of the Kwun Tong Town Centre had not been implemented at all.

6.  Section 36(7) of the Ordinance provides that where at the date of commencement of Parts II to VIII of the Ordinance, a development scheme has been prepared in accordance with section 13(1) of the repealed Land Development Corporation Ordinance, Cap 15 (“the LDC Ordinance”), the development scheme may be continued and completed by the Authority as if the LDC Ordinance had not been repealed and the powers and the duties of the LDC shall be exercised and performed by the Authority.

7.  The redevelopment of the Kwun Tong Town Centre was commenced formally by the Authority in March 2007.  The Authority has since acquired some of the affected properties according to the acquisition principles specified by it.  An offer to acquire the applicant’s property in accordance with those principles has also been made to the applicant.

8.  However, the applicant was not satisfied with the acquisition principles based on which the offer was made to him.  He pointed out that under the Authority’s acquisition principles, for domestic premises, the ex gratia payment to be made (known as the home purchase allowance) if the owner occupies his property as his sole residence is calculated as the difference between the market value of the property being acquired and the value of a notional replacement flat, ie a 7-year-old flat of similar size and in similar locality.  Importantly, if the owner does not reside in his property (like the applicant) he will be offered an ex gratia payment known as supplementary allowance, which is a percentage of the home purchase allowance, and in the applicant’s case, it is 50% of the home purchase allowance.  The applicant was not satisfied with the supplementary allowance that he was offered with because, as he pointed out, under the acquisition principles of the former LDC, he would have been offered a full home purchase allowance (instead of a 50% allowance), although the value of the notional replacement flat would be a 10-year-old flat instead of a 7-year-old flat under the Authority’s acquisition principles.

Applicant’s (original) argument

9.  In the Form 86A prepared by the applicant when he was acting in person, he essentially relied on one ground of challenge, on which he was given leave to apply for judicial review.  In short, he contended that the redevelopment of the Kwun Tong Town Centre by the Authority was a continuation by the Authority of a development scheme prepared formerly by the LDC under section 13(1) of the repealed LDC Ordinance before Parts II to VIII of the Ordinance came into effect, pursuant to the Authority’s power to so continue and to complete previous development schemes under section 36(7) of the Ordinance.  That being the case, the applicant argued, the redevelopment ought to be continued and completed by the Authority as if the LDC Ordinance had not been repealed and the powers and the duties of the LDC ought to be exercised and performed by the Authority.  Importantly, that included the acquisition principles formerly applied by the LDC. 

10.  In other words, the applicant argued that the Authority ought to have made to him an offer in accordance with the LDC’s more generous acquisition principles, rather than the Authority’s own acquisition principles.

Discussion

11.  This argument faced several factual hurdles.  First, in order to rely on section 36(7), there had to be a finalised scheme prepared by the LDC under section 13(1) of the repealed LDC Ordinance.  Section 13 of the repealed Ordinance reads:

“(1)  The Corporation may with the approval of the Secretary either generally or in a particular case, prepare in accordance with this section, development schemes for any area within which the Corporation may acquire property.

(2)     A scheme referred to in subsection (1) may contain such matters as the Corporation considers relevant and shall-

(a)   comprise a plan which may contain any thing that a draft plan may contain under section 3 or 4 of the Town Planning Ordinance (Cap 131);

(b)   set out how the Corporation intends that the scheme will be implemented, including whether implementation will be by the Corporation alone or the Corporation in association with another person and in relation to land within the boundaries of the scheme, what portion of the land is owned or leased by the Corporation and what arrangements have been made or are contemplated by the Corporation for the acquisition of any land not so owned or leased;

(c)   contain an assessment by the Corporation as to the likely effect of the implementation of the scheme including, in relation to the residential accommodation of persons who will be displaced by the implementation of the scheme, an assessment as to whether or not, insofar as suitable accommodation for such persons does not already exist, arrangements can be made for the provision of such residential accommodation in advance of any such displacement which will result as the scheme is implemented.

(3)     Without prejudice to the generality of subsection (2)(a), a plan prepared thereunder may provide for the grant of permission under section 16 of the Town Planning Ordinance (Cap 131), for all purposes or for any purpose, and may prohibit any development not compatible with any development scheme prepared under subsection (1).”

12.  It is true that according to the correspondence exhibited, one might get the impression that by the time of the replacement of the LDC by the Authority, the development scheme relating to the Kwun Tong Town Centre had already been finalised.  What was left to be done was the submission of the relevant development scheme plan to the Town Planning Board for approval pursuant to section 14 of the LDC Ordinance.  Thus, according to the letter dated 22 July 1999 from the Secretary for Planning, Environment and Lands to the Deputy Chief Executive of the LDC:

“        We are inclined to agree that it would not be appropriate for the LDC to start the captioned project now, given the project’s heavy financial commitment and implications on the URA.  That being the case, the draft Development Scheme Plan attached to your letter of 11 December 1998 will not be submitted to the Town Planning Board for approval.”

13.  Mr Earl Deng, appearing for the applicant, agreed that this letter represented the high water mark of the applicant’s case that there had been prepared a finalised scheme under section 13(1) of the repealed LDC Ordinance.  However, even according to this letter, the development scheme plan in question was referred to as a “draft” one only.

14.  But not only that: According to the evidence filed on behalf of the respondent, the development scheme plan merely constituted a draft scheme which had not been finalised, in view of the imminent replacement of the LDC by the Authority at the time.

15.  Mr Wong Wai Kuen was the Deputy Director of the Property Division of the former LDC before it was dissolved on 1 May 2001 and replaced by the Authority.  He has since been employed by the Authority and has become the Head of the Acquisition and Clearance Division.  In his first affirmation filed on 9 June 2009, he detailed the work that had been done by the LDC prior to its dissolution:

“18.   In January 1998, the LDC announced 26 urban renewal projects in Kowloon and Hong Kong Island. One of the said 26 projects was the redevelopment of the Kwun Tong Town Centre in which the Property was situated.

19.    By a letter dated 11th December 1998, … the LDC submitted a development scheme for Kwun Tong Town Centre (“the LDC’s Draft Scheme”) to the then Secretary for Planning, Environment and Lands (“the SPEL”). By the said letter, the LDC further requested the SPEL to submit the draft development scheme plan (“the LDC’s Draft Plan”) to the TPB for approval under Section 14(1) of the LDCO. …

20.    By a letter dated 23rd March 1999, … the Planning Department provided the LDC with a summary of comments from the relevant Government departments on the LDC’s Draft Scheme.

21.    By a letter dated 30th March 1999, … the SPEL requested the LDC to work out a feasible implementation programme for the scheme and a financial assessment based on the programme before a decision was taken to submit the scheme plan to the TPB.

22.    By a letter dated 31st March 1999, … the LDC supplied the Planning Department with its responses to the comments from the relevant Government departments.

23.    By a letter dated 29th June 1999, … the LDC enclosed an implementation program and the associated financial assessment in respect of the scheme to the SPEL. In the said letter, the LDC also stated that bearing in mind the URA would be established in the near future, it did not consider it appropriate for the LDC to start the project and leave a heavy financial commitment to the URA, irrespective of what the implementation method would be.

24.    By a letter dated 22nd July 1999, … the SPEL indicated its agreement that it would not be appropriate for the LDC to start the project and that the LDC's Draft Plan would not be submitted to the TPB for approval. As a result, no further step has been taken since then regarding the LDC's Draft Scheme, and the LDC’s Draft Plan has never been submitted to the TPB.

25.    In summary, as at 1st May 2001 (the date on which the LDC was dissolved), the LDC's Draft Scheme had not yet been finalized; in particular it might still needed to be revised in light of comments from the relevant Government departments.”

16.  In light of Mr Wong’s elaboration, there was no question of the development scheme in question having been finalised by the LDC prior to its dissolution.  In this regard, it should be pointed out that there was no application for further discovery of documents or for leave to cross-examine Mr Wong on his affirmations.  What Mr Wong explained was not something extraordinary or wholly incredible that the Court should reject even in the absence of cross-examination.  See Chu Woan-chyi v Director of Immigration, CACV 119/2007, 4 September 2009.  In fact, on a fair reading of the correspondence, it is plain that after the initial development scheme was prepared by the LDC, comments were obtained by the Secretary from various departments concerned, and in relation to those comments, the LDC provided responses.  There was never a second round of comments from the various departments concerned in relation to the LDC’s responses.  As Mr Wong pointed out, had it not been for the dissolution of LDC, further comments on those responses by the LDC might have been sought and received, which might have led to further revisions of the redevelopment scheme.

17.  In those circumstances, it was quite impossible for the Court to find that despite the positive evidence of Mr Wong to the contrary, there had been prepared and finalised a development scheme under section 13(1) of the LDC Ordinance. 

18.  This was fatal to the applicant’s case. 

19.  But there were other insurmountable difficulties.  Even assuming that there had been prepared a finalised scheme under section 13(1) of the LDC Ordinance, section 36(7) of the Ordinance would only come into play if the development scheme had been, as a matter of fact, “continued” by the Authority.  In other words, it was up to the Authority whether to adopt and continue the former development scheme prepared by the LDC.

20.  Again, in this regard, the factual evidence was all one way.  According to Mr Wong’s first affirmation:

“29.   Regarding the Kwun Tong Town Centre project, the Respondent decided to implement the project by way of a fresh development scheme in accordance with section 25 of the URAO [ie the Ordinance]. The Respondent announced the commencement of its scheme for the redevelopment of Kwun Tong Town Centre in March 2007. The redevelopment consists of two sites, namely the Main Site and the Yuet Wah Street Site. The Property is situated within the Main Site. There are now produced and shown to me marked “WWK-11” true copies of (i) a Notification of Commencement of the Kwun Tong Town Centre - Main Site Development Scheme, and (ii) a Notification of Commencement of the Kwun Tong Town Centre - Yuet Wah Street Site Development Scheme (collectively “the Notifications”) published in the Gazette on 30 March 2007 pursuant to section 23(1) of the URAO.

30.    The Respondent submitted to the TPB for consideration in April 2007 in accordance with section 25(5) of the URAO two draft development scheme plans for Kwun Tong Town Centre - Main Site and Kwun Tong Town Centre - Yuet Wah Street Site (collectively “the URA's Draft Plans”).

31.    In July 2008, the URA’s Draft Plans were approved by the Chief Executive-in-Council under section 9(1)(a) of the Town Planning Ordinance, Cap. 131.  There are now produced and shown to me marked “WWK-12” true copies of (i) approved Urban Renewal Authority Kwun Tong Town Centre - Main Site Development Scheme Plan No.S/K14S/URA1/2, and (ii) approved Urban Renewal Authority Kwun Tong Town Centre - Yuet Wah Street Site Development Scheme Plan No.S/K14S/URA2/2 (collectively “the URA's Plans”).”

21.  There were many differences between the LDC’s (draft) development scheme and the section 25 development scheme prepared by the Authority for submission to the Town Planning Board for approval, in terms of the number of the development scheme plans, the site boundary, the development scheme area, the CDA zone area, the maximum gross floor area, the maximum plot ratio, the maximum building height, the public open space, and the technical assessments required.

22.  In his second affirmation, Mr Wong shed more light on the reasons why the Authority decided to implement the Kwun Tong Town Centre project by way of a fresh development scheme in accordance with section 25 of the Ordinance:

“27.   In fact, the Respondent decided to implement the Kwun Tong Town Centre project under Section 25 of the URAO because it would like to propose 2 DSPs, viz the Yuet Wah Street DSP and the Main Site DSP (instead of 1 DSP as in the LDC's Draft Scheme) in order to reduce the risk of delay to the Yuet Wah Street Master Layout Plan, which covered a property solely owned by the Government, which may be caused by arguments by affected parties over the Master Layout Plan in respect of the Main Site which is owned by private interest. Moreover, the zoning boundary of the comprehensive development area (“CDA”) has also been changed after extensive discussions between the Respondent and the Planning Department. The smaller CDA zones form the basis for the calculation of plot ratio and site coverage which were material considerations in a development scheme.”

23.  As regards a survey notice dated 13 May 2005 which referred to a survey carried out in 2005 by the Authority as a survey done pursuant to section 16 of the repealed LDC Ordinance, again, there was evidence from Mr Wong to the effect that the survey notice and the survey did not evidence any decision by the Authority to adopt and to continue the former LDC project.  In his second affirmation, Mr Wong explained the matter in some detail:

“9.     First, the Survey Notice and the survey in 2005 did not arise as a result of any decision by URA to continue any development scheme of LDC in respect of Kwun Tong Town Centre pursuant to Section 36(7) of URAO. As deposed to in paragraph 29 of My 1st Affirmation, the Respondent decided to implement the project by way of a fresh development scheme in accordance with section 25 of the URAO and the Respondent announced the commencement of the scheme only in March 2007.

10.    As at the date of the Survey Notice and when the survey in 2005 was being conducted, the Respondent had not yet decided on how to implement the Kwun Tong Town Centre project.

11.   In actual fact, the survey in 2005 was necessitated by the Landlord and Tenant (Consolidation) (Amendment) Bill 2003 (“the Bill”).

12.    The Bill sought to remove security of tenure and statutory compensation under the Landlord and Tenant (Consolidation) Ordinance. It further provided that a landlord of an existing tenancy was required to serve on his tenant after the expiration of the contractual term a transitional termination notice of at least 12 months if he wished to terminate the tenancy. The Bill was passed and as a result, the Landlord and Tenant (Consolidation) (Amendment) Ordinance 2004 (“LTO 2004”) came into operation on 9 July 2004.

13.    During deliberations of the Bill by the Bills Committee of the Legislative Council, the Respondent had undertaken that in respect of remaining projects announced by LDC in January 1998 but not yet commenced (“ex-LDC Projects”), which included the Kwun Tong Town Centre project, the Respondent would continue to adopt the previous formula in force before the LTO 2004 in respect of compensation arrangements for affected domestic tenants.

14.    In drawing up proposals for compensation payments to affected domestic tenants in the ex-LDC Projects, the Respondent decided that affected domestic tenants as at 9 July 2004 and who would stay in the premises when the Respondent processed their re-housing/cash compensation should receive payments based on the previous formula in force before the LTO 2004. Even if they were required to leave by their landlords prior to the commencement of the project, provided they had fulfilled their obligations under their tenancy agreements, particularly the payment of rent, up to that point, they would also be entitled to receive the same payment.

15.    There is now produced and shown to me marked “WWK-16” a true copy of The Legislative Council Panel on Planning Housing, Lands and Works Paper No. CB(1) 263/04-05(02) (“the Paper”) which set out, inter alia, the compensation arrangements of the Respondent for domestic tenants in its development projects after the enactment of the LTO 2004 on 9 July 2004. Paragraphs 7 to 12 of the Paper described the compensation payable by the Respondent to domestic tenants of ex-LDC Projects.

16.    Paragraph 10 of the Paper was a summary of the compensation payable to 3 categories of domestic tenants, depending on whether they were tenants before or after the LTO 2004 took effect. Taking into account the requirement for the service of a 12 months transitional termination notice by the landlord, under the LTO 2004, the earliest date when a tenant would be required by his landlord to vacate the premises was 9 July 2005. In order to ascertain which category a tenant of ex-LDC Projects belonged to for the purpose of compensation arrangement, it was necessary for the Respondent to conduct a survey on domestic tenants no later than 9 July 2005.

17.    There was power for the Secretary to authorise a survey for the purpose of assessment of the likely effect of the implementation of the project including re-housing requirement under section 16 of the LDCO.

18.    As at that time, the Kwun Tong Town Centre project had not yet commenced under URAO, the Respondent obtained the authorisation of the Secretary to conduct the survey pursuant to Section 16 of LDCO and issued notices to affected parties in terms of the Survey Notice notifying them of the survey.

19.    This is the reason why the Survey Notice made reference to Section 16 of the LDCO and it specifically mentioned that the purpose of the survey was to update information on the area affected by the project, “in particular with respect to domestic tenancies” and that the information collected would be used by the URA for assessing re-housing requirement. It was also mentioned in the Survey Notice that “conducting the survey should not be taken to mean that URA is about to implement the project immediately.””

24.  In the light of such evidence, there was no question of the Authority having decided to adopt and continue the relevant development scheme of the LDC under section 36(7) of the Ordinance.  Rather, the present redevelopment project has been commenced and carried on by the Authority pursuant to the provisions in Part V of the Ordinance, including in particular section 25 thereof (preparation of development scheme). 

25.  This was also a fatal objection to the applicant’s case. 

26.  Thirdly, even if one were to assume that the redevelopment of the Kwun Tong Town Centre had been continued pursuant to section 36(7) of the Ordinance, it would not follow that the Authority had no power under the repealed LDC Ordinance to change the relevant acquisition principles.  Mr Deng fairly conceded that the LDC, and thus the Authority pursuant to section 36(7), had the power to change the relevant acquisition principles.  That being the case, the challenge of the applicant must also fail for this reason.  During argument, Mr Deng sought to argue that before the Authority decided to change the relevant acquisition principles, it ought to take into account various relevant matters.  On final analysis, this was an attempt to challenge the decision to change the relevant acquisition principles on its merits (in the public law sense).  Put another way, it was an attempt to challenge the change in acquisition principles on the Wednesbury unreasonableness ground.  As Mr Deng frankly admitted, this was not a ground relied on in the Form 86A.  Nor was it a ground included in his proposed amendments (which I will presently turn to).

27.  For all these reasons, the application for judicial review, as framed in the Form 86A, failed and it was accordingly dismissed. 

28.  For the sake of completeness, I should also record that Mr Anderson Chow SC, appearing for the Authority, also raised the further argument that the offer made by the Authority to acquire the applicant’s property on a voluntary basis was not a decision amenable to judicial review.  It was a commercial offer made by the Authority.  The remedy of a property owner lies in the Lands Resumption Ordinance (Cap 124), if and when the Chief Executive-in-Council decides to resume his property compulsorily under that Ordinance.  Mr Chow relied on Wong Tak Woon v Secretary for Planning, Environment and Lands, CACV 339/1999, 11 January 2000; Re Tsang Kam Lan & Yook Tong Estates Limited, HCMP 325/1997, 6 June 1997, Sears J; Leung Man Cheung v Secretary for Planning and Lands, HCAL 274/2007, 14 September 2000, Cheung J.

29.  For my part, I would prefer to rest my decision on the reasons I have given and express no view on this further point made by Mr Chow, on which I have not heard detailed arguments from Mr Deng.

Application to amend the Form 86A

30.  Mr Deng applied at the substantive hearing to amend the Form 86A.  It related to four matters.  The first matter was simply a fine-tuning exercise of the original ground already relied on in the Form 86A.  It proceeded on the assumption that what had been prepared by the LDC prior to its dissolution was a finalised development scheme under section 13(1) of the repealed LDC Ordinance.  The applicant was perfectly entitled to run this point and I did not see any need for the applicant to amend the Form 86A in order to fully ventilate his argument.

31.  Secondly, the proposed amendment sought to raise an alternative argument.  Mr Deng sought to argue that in case what had been prepared by the LDC was merely a draft scheme, that draft scheme had been adopted and continued by the Authority under section 36(7) and thus the powers that the Authority could exercise in implementing the development scheme were those set out in the repealed LDC Ordinance.  I disallowed this amendment on its merits.  In my view, it turned on the proper construction of section 36(7).  It is plain to me that the subsection only empowers the Authority to adopt a finalised scheme prepared under section 13(1) of the repealed LDC Ordinance.  It does not empower the Authority to continue and adopt a draft scheme which has not been finalised.  Such a draft scheme is simply not a “development scheme [which] has been prepared in accordance with section 13(1) of the repealed [LDC] Ordinance”.  There was therefore no question of the Authority adopting such a draft scheme.

32.  The third and fourth grounds sought to be introduced by Mr Deng by way of amendment were that there was an implied duty on the part of the Authority to consult the stakeholders before deciding not to adopt and continue the previous development scheme prepared by the LDC but to proceed with the redevelopment by a new section 25 development scheme under the Ordinance, and that there was a corresponding implied duty on the part of the Authority to give reasons for its decision.

33.  I rejected the proposed amendments for two reasons.  First, as a matter of merits, I rejected Mr Deng’s argument that the suggested duties could be implied into the Ordinance.  Section 36(7) is wholly silent on the suggested duties.  Section 25 which provides for the preparation of development schemes by the Authority does not require any consultation.  This is wholly understandable because section 20 in the same Part (Part V) has already provided for consultation by the Secretary for Development when preparing a relevant urban renewal strategy for the purposes of Part V.  Since consultation has already been carried out when preparing the relevant urban renewal strategy, when the Authority prepares a development scheme falling within that strategy, section 25 does not provide for the carrying out of consultation again.  That being the case, it is difficult to see how the suggested duty to consult could be implied into the Ordinance in the context of the Authority deciding to proceed with a redevelopment by way of a new development scheme prepared under section 25 of the Ordinance, instead of adopting and continuing an old development scheme of the former LDC.

34.  For similar reasons, the suggested duty to give reasons must be rejected. 

35.  Secondly, the proposed challenge went to the decision in March 2007 to proceed with the redevelopment by a fresh section 25 development scheme.  The decision was duly gazetted.  The applicant was wholly out of time in seeking to challenge the relevant decision.  There was no explanation given for the delay, despite the applicant’s heavy involvement in the redevelopment of the Kwun Tong Town Centre as a property owner and an active member of some relevant concerned groups.

36.  Given that the development scheme has been carried on for some time, a belated challenge to the lawfulness of the scheme would have great implications.  Mr Deng sought to limit the scope of his challenge by asking for relief restricted to the proposed acquisition of the applicant’s property only.  But that would not do.  Such a restrictive approach would only give rise to unfair and unequal treatment amongst property owners affected by the redevelopment, including those who had already sold or agreed to sell their properties to the Authority.  More importantly, it would still call into question, put at the lowest, the lawfulness of the Authority’s actions in future in relation to the redevelopment project, and give rise to confusion regarding its acquisition principles.

37.  For these reasons, the third and fourth proposed grounds of challenge were also refused.

38.  The applicant having wholly failed in his substantive application as well as application to amend, costs were awarded against him. 

A reminder

39.  The Court also takes this opportunity to remind the profession of what Litton PJ said a decade ago in Lau Kong Yung v Director of Immigration (1999) 2 HKCFAR 300, 340E/F to G, relating to applications to amend the grounds of challenge after leave to apply for judicial review has been granted:

“… Grounds for quashing the exercise of administrative power by the court if well founded should be capable of being stated clearly and succinctly, in a few numbered paragraphs.  I would emphasise the word few.  Once leave to apply for judicial review is granted, amendment of the grounds should rarely occur.  All too often applications are made for amendment after leave to issue proceedings has been granted, as if Order 53 r.3 were simply the portals to a playground of infinite possibilities where the administrators could then be made to leap through more and more hoops of fire.  It is up to the Judges of the High Court to stop this kind of extravaganza.”

40.  These observations are as pertinent as ever.