CALTEX OIL HONG KONG LTD. v. GOVERNOR IN COUNCIL

1994, No. MP1526

HEADNOTE

Administrative Law - decision by the Governor in Council on objection to major road works - duty to act fairly - objector must be given all relevant information as to the proposal so that a reasoned objection can be made - objector has a right to legitimately expect his detailed objection to be considered by the Governor in Council

1994, No. MP1526

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

____________________

____________________

__________________

_________

JUDGMENT

_________

1. Pursuant to leave of Mayo J., Mr. Neoh Q.C. moves on behalf of Caltex Oil Hong Kong Limited (Caltex) for an order of judicial review to quash a decision of the Governor in Council. It may be that this is the first time that a decision of the Governor in Council, which is the Executive Council (EXCO), has been sought to be challenged in the courts.

FACTS

2. On October 11, 1993, there was gazetted a proposal by the Secretary for Transport to execute roadworks known as the Smithfield extension. These consisted of a new 760-metre long district distributor road from Smithfield Road onto Pokfulam Road. The scheme and plan is annexed to Mr. CROFT's third affidavit. Caltex owned a large and busy petrol filling station on Pokfulam Road and the proposed road would go right through it and cause the business carried on there to cease.

3. On December 13, Caltex, through Prudential Surveyors International Limited (PSIL) lodged an objection, and they said, "We welcome an opportunity to discuss the subject matter with you with the view to exploring the possibilities of compromising the roadworks proposal to eliminate or to minimise their effect on the petrol filling station."

4. On December 15, the transport branch of the Government Secretariat said, "Your letter has been referred to the regional highway engineer who is responsible for the project for consideration and direct reply."

5. A meeting was held on January 31 at which the engineers who subsequently appeared for Caltex were absent and the minutes indicate that Caltex wished, if possible, to have an alternative site.

6. On February 2, they wrote, referring to the meeting, and said that they were going to ask a firm of engineering consultants to prepare a report containing modifications to the road scheme.

7. I would interpose by saying that it would appear that this was turning into a sophisticated type of objection. Most objections to major road schemes in Hong Kong are fairly simple in their nature. In England, of course, they are very complex with alternative routes being proposed. This appeared to be a new departure in Hong Kong.

8. A detailed submission of the objection was sent on February 17 putting forward 2 proposals. The first was for an alternative alignment which would pass to the west of the site; the second was that an alternative site should be provided in the area and three were identified. The Highways Department sent that alternative route to their consultants, Pypun, and also to the Traffic Department. Pypun replied on 22 February and said, and I paraphrase it, "Because of further cutting into the slope, the designed modification is not feasible." The Traffic Department, in a memorandum now disclosed as a result of these proceedings, said, "The proposed modification is unsafe to motorists." This of course was a very important objection as, from a public point of view, no one should permit unsafe roads to be built.

9. However, it was not until March 17 that the Highways Department informed Caltex that their scheme was objectionable from geotechnical and traffic engineering points of view. This is an important letter as the Highways Department had waited some three weeks before passing on their comments on the objection.

10. On March 23, the Transport Board received a draft Exco memorandum from the Highways Department and, from the evidence of Mr. CROFT, it is clear that the Caltex objection was rejected on two grounds, traffic and geotechnical. Meanwhile, Caltex, not knowing that their fate really was already sealed, was preparing modifications to overcome the points raised in the letter of March 17.

11. On March 30, Caltex submitted a revised scheme which satisfied the traffic criteria and therefore it was not an unsafe road. They further asserted that the scheme was geotechnically feasible.

12. On April 15, through a public relations firm, Caltex submitted a position paper and this was sent to all Exco members.

13. On April 20, the Highways Department asked Pypun to comment on the modified proposal who still maintained it was not geotechnically feasible.

14. On April 27, the Transport Board submitted the final paper to Exco which contained only a limited number of the relevant matters relating to the objection, and these are set out in Mr. CROFT's affidavit.

15. On May 2, the Highways Department wrote the applicant raising two matters which, prior to this letter, had not been made either to the applicant or indeed to Exco. These are that the gazetted alignment was the most cost effective and detailed site investigations had been carried out.

16. On May 3, the sub-committee of Exco recommended rejection of Caltex's objection. On May 9, Caltex replied. On May 10, Exco, approved the scheme and overruled the objection.

STATUTORY FRAMEWORK

17. Where the Secretary of Transport proposes to execute major road works, he must under Section 5 of the Roads (Works, Use and Compensation) Ordinance, Cap. 370 cause to be prepared a plan showing the works and a scheme which describes the general nature of the works. Section 10 permits persons to object and by sub-section (2) a notice of objection need only describe the interest of the objector and the manner in which he alleges he will be affected by the works.

18. Under Section 11 (2):-

"When the time for lodging of objections has expired and where any objection has been lodged under section 10, the Governor in Council shall consider the plan and scheme and objections and may

(a) decline to authorize the works and the use, or

(b) authorize the works with or without any modification ...".

19. Section 13 (1) gives the Governor power to resume land for the purposes of the work.

20. It is not in dispute that the Governor in Council (acting as the Executive Council)'s decision is amenable to judicial review in these courts on one or more of the well recognised grounds of challenge. Common law requires that whenever a body, domestic, administrative or judicial, has to make a decision which will affect the right of individuals, it has a duty to act fairly. (See Llovd v McMahon [1987] 1 AC 625 and Leech v Governor of Parkhurst [1988] 1 AC 533).

21. Although the Ordinance only says that the Governor in Council shall consider the objection, this involves the Governor in Council, that is, the members of Exco, knowing first the precise details of the objection, secondly the administration's answer to the objection and, thirdly, the objector's comments, if any, on the administration's answer of which the objector would not have been aware at the time of lodging his objection. It is only in this way that the Governor in Council can act fairly.

22. It is important to recognise the difference between the consideration of major highway proposals in England and Hong Kong. In England, such a proposal is the subject of an inquiry conducted in public by an inspector who hears detailed evidence from both the Department of Transport and the objector. The evidence is subject to cross-examination.

All information to support the proposal is given to the objector who therefore has a full opportunity to deal with any matters raised against him and also to develop his own case. At the conclusion of such an inquiry, the inspector reports to the Secretary of State.

23. In Hong Kong, the position is different. There is no public inquiry. The objector is not permitted to appear before Exco. The only persons who appear before Exco are the Secretary of Transport, or his representative, who puts forward the proposal. What actually goes on is unknown.

24. The decision-making process, therefore, in Hong Kong is of a different category. The Governor in Council must rely on the Secretary of Transport to provide him with the up-to-date details of the objection -- and with the justification for the rejection of that objection.

25. The objector, as a matter of law, is entitled to know the highway and engineering data or information which supports the Secretary of Transport's proposal. As was said by Lord Diplock in Bushell v Secretary of State for the Environment, [1981] AC 75, at page 96, "Fairness, as it seems to me, also requires that the objectors should be given sufficient information about the reasons relied on by the department as justifying the draft scheme to enable them to challenge the accuracy of any facts and the validity of any arguments upon which the departmental reasons are based". The Governor in Council has of course a wide discretion as to how he meets his statutory obligation under Section 11. What procedure he adopts is a matter for him.

26. However, as was said by Lord Justice Woolf, as he then was, in the Regina v Secretary of State for Transport, ex p Gwent County Council. [1988] IQB 429, he must not use that discretion to frustrate the purpose of the inquiry and he must give the objectors an adequate opportunity properly to present their objections to the proposal.

27. As I have pointed out, there is no inquiry in Hong Kong, but in my judgment the same principle applies that any objector must have an adequate opportunity to put forward his objections. Mr. CROFT, in his first and third affidavits, has listed the documents attached to the memorandum for Exco. The latest letter concerning the objection was the Highways Department letter of 17 March which, as I have said earlier, raised two objections.

28. Further, the analysis of objections (found at annex E) which the members of Exco would have read says for this objection, "The proposed realignment of the road to avoid the petrol filling station is considered not feasible or acceptable in traffic terms". It is not surprising, therefore, that the objection was dismissed. The assertion was that it was an unsafe alternative road and it could not be constructed. Unfortunately, the Secretary for Transport had not brought the details of the objection up-to-date.

29. I do not know the statutory basis for what is said to be a sub-committee of Exco, but it is clear that the papers prepared for Exco went first to the sub- committee. I am sure that the Department of Transport did not intend to omit a number of important factors from their report and it may have been solely due to inadvertence.

30. The position, therefore, at the Exco meeting was, as is now conceded, that the amended alignment put forward by Caltex was in highway terms safe and therefore the assertion by the department to the members that it was not acceptable in traffic terms was wrong.

31. Mr. Cooney submits that the presentation paper prepared by the public relations firm and which was sent to all members of Exco sufficiently sets out all the new details. I confess I do not know what the members made of some of these matters. For example, there is an annotation C which says, "The proposed revisions comply with transport planning and design manual, volume two." As all these matters are conducted behind closed doors, I do not know whether the members understood that to mean that this road was in traffic terms a safe road, or whether the Secretary for Transport said that his report that it was unsafe was wrong, but it appears to me that they were told categorically that the road was an unsafe road. As I have said before, they really had no option but to dismiss this objection. Although the geotechnical feasibility of the road was in dispute, no enquiry appears to have been made as to the conflicting opinions. I also do not consider that sufficient information was made available to the objector in time so that the recent response could be made to Pypun's assertion that there were engineering problems.

32. Further, in the letter of May 2, which is after the date when the sub-committee had recommended a rejection, and a few days before the Exco meeting, the department raised two new matters. They said the gazetted alignment is the most cost effective, although it is right that it was pointed out in the public relation exercise that the public would have to pay some hundred million dollars to compensate Caltex and that, therefore, it would appear that a substantial sum of money was going to be saved to the public. No information with regard to cost effective details was ever produced to the objector and I do not know, as it does not appear from the papers, whether any such information was given to EXCO members. Mr. Cooney submits that each Executive Council member was told categorically that there would be saving a hundred million dollars. However, if they thought that this was an unsafe road, as I have said earlier, it is no wonder that they dismissed the objection.

33. After the letter of May 2 was received, this was answered on May 9, setting out various points, and at the end it says this, "I should be grateful if you would consider the above comments. Alternatively please include the above comments in your submission to Exco." By the time that this letter was written, there had already been a decision by the sub- committee to reject the objection and it may be this letter was received after Exco met. One of the other problems that is raised in this case is that the objector was unaware of the date when Exco would consider its objection. I do not, therefore, consider that the objectors had been given sufficient opportunity to deal in detail with the points on which apparently the department were relying.

34. In Fairmount Investments v Secretary of State with Environment [1976] 2 AER 865, Lord Russell at page 874 said:

"All cases in which principles of natural justice are invoked must depend on the particular circumstances of the cases. I am unable in the instant case to generalise. I can only say that, in my opinion, in the circumstances I have outlined, Fairmount has not had - in a phrase whose derivation neither I nor your Lordships could trace - a fair crack of the whip."

35. In my judgment, on the facts of this case, Caltex has not been given a fair crack of the whip. They also had a legitimate expectation that their updated objection and the relevant correspondence and any other supporting material would (a) be dealt with and commented upon by the department; and (b) would have been brought to the attention of Exco. I consider that Caltex has, as a result, suffered serious prejudice.

36. Mr. Neoh raises a second ground which he does not strenuously argue but, under Section 11 (2), he submits the Governor in Council should have invited the Town Planning Board to consider the re-zoning of an alternative site to accommodate the petrol-filling station. I mean no disrespect if I deal with this matter shortly, but I can see no such duty cast upon the Governor in Council in these circumstances. Caltex have suffered no prejudice as they themselves can apply to the Town Planning Board. Further, this matter sounds more in compensation.

37. In my judgment, for the reasons I have set out, the decision reached by the Executive Council on the objection lodged by Caltex was in breach of the rules of natural justice in that their objection has not been considered fairly and I would therefore grant certiorari to quash the decision and I will hear, if necessary, further argument as to any consequential orders I should make.