LAM HEI YING v. HONG KONG HOUSING AUTHORITY AND ANOTHER

HCAL 2299/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 2299 OF 2000

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J U D G M E N T

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1. The applicant, Lam Hei Ying was a tenant of the public housing unit at Flat 3314, 33/F, Kwai Ching House, Kwai Fong Estate, Kwai Chung, N.T. (the said flat) which is under the management of the Hong Kong Housing Authority (HKHA).

2. The applicant occupied the said flat with her husband, two daughters and two sons who were Listed Members under the Tenancy Agreement executed between the applicant and HKHA on 8 March 1997.

3. Under Clause II (11) of the Tenancy Agreement, the applicant "Agrees not to use or cause or permit the said flat to be used for any illegal or immoral purpose."

4. Clause IV (7) of the Tenancy Agreement further provides that "For the purpose of this Agreement any act, neglect or default of the tenant's family or of any servant of his shall be deemed to be the act, neglect or default of the Tenant."

5. It is not disputed that on 30 March 1998, the said flat was searched by officers of the Customs and Excise Department and a plastic bag containing 6.56 grammes of a mixture with 5.15 grammes of heroin was found under a mattress in the bedroom of one of the sons of the applicant, Chung Yuk Fai.

6. Chung Yuk Fai admitted that the heroin belonged to him. He subsequently pleaded guilty to a charge of possession of the dangerous drugs found in his bedroom. He was also convicted of two charges of trafficking in dangerous drugs which were unrelated to the said flat. Chung Yuk Fai was sentenced to a total of nine and half years' imprisonment.

7. On 31 July 1999, HKHA served a Notice to Quit on the applicant under section 19(1)(b) of the Housing Ordinance on the basis that the applicant's son had used the said flat for an illegal purpose in breach of Clause II (11) and IV (7) of the Tenancy Agreement.

8. It was the case for the HKHA that the applicant had permitted Chung Yuk Fai to use the said flat for an illegal purpose and even if the applicant had no knowledge of her son's illegal act, his act would be regarded as the act of the applicant under Clause IV (7) of the Tenancy Agreement.

9. The applicant appealed against the decision of HKHA to the Appeal Tribunal under section 20 of the Housing Ordinance.

10. The Appeal Tribunal confirmed the Notice to Quit on 29 March 2000.

11. The applicant now applies for a judicial review of the decision of the HKHA serving the Notice to Quit on her and the decision of the Appeal Tribunal confirming such decision, leave having been granted on 12 October 2000.

12. There are certain salient features of the case, which need to be highlighted.

1. According to the current policy of the Housing Authority, if any public housing tenant, including the persons approved in the Tenancy, committed illegal activities in the public housing unit, the tenancy shall be terminated once there is a conviction by Court.

2. Such policy was set out in a certificate issued by the Secretary of the Housing Authority under section 20(2A)(a) of the Housing Ordinance which certificate the Appeal Tribunal clearly acknowledged in its reason for decision.

3. The Appeal Tribunal had great doubts about the applicant's claim that she did not know that her (son) possessed dangerous drugs inside the premises. The Appeal Tribunal further found that the applicant knew about it.

4. The Appeal Tribunal further concluded that the applicant and her family Members were of full age and should be capable of being independent. Since there is no special reason for clemency in this case, the Appeal Tribunal considered that there was no basis to exercise discretion.

13. One of the reasons for the Appeal Tribunal's refusal to exercise the discretion in favour of the applicant was because the Appeal Tribunal found that the applicant knew about the illegal activities of Chung Yuk Fai.

14. But I have great difficulty in understanding and accepting the Appeal Tribunal's reasons for such conclusion. It is perhaps necessary to set out its reasons in full: -

"The panel members felt that, on the one hand, the Appellant said that Chung Yun Fai did not go out often, and therefore she did not suspect that her son was involved in illegal activities. But on the other hand, Chung Yuk Chun, the Appellant's daughter said that Chung Yuk Fai often go out and seldom stayed at home. As there were discrepancies in the statement of the Appellant and her daughter in the hearing, the committee had great doubts about the Appellant's claim that she did not know that her (son) possessed dangerous drugs inside the premises. Besides, the Appellant and her daughter said that their family depended on Chung Kam Chuen's earnings in a construction site and the Appellant's part time job at home throughout, but they stressed that their income was very unstable. The panel members doubted how the Appellant's family of six (including payment of monthly rent of $2,000.00) could depend solely on such how and highly unstable income. The Committee was of the view that for over a year after Chung Yuk Fai had completed Form 3, he did not have a job. On the date of the incident, dangerous drugs were found inside the premises by Customs and Excise Officers and Chung was charged with and convicted of trafficking in dangerous drugs. The panel members suspected that the Appellant would know about Chung Yuk Fai's involvement in dangerous drug related illegal activities before the incident. Based on the aforesaid reasons, the panel members were of the view that the statement of the Appellant was not full and frank and not telling the whole truth. The panel members did not accept that the Appellant did not know that her son Chung Yuk Fai, possessed dangerous drugs inside the premises. The panel members were of the view that the Appellant knew about this."

15. I must say, with respect, the reasoning of the Appeal Tribunal is impossible to comprehend.

16. The Appeal Tribunal suspected and then found that the applicant was aware of her son's illegal activities because of the alleged discrepancies in her evidence and that of her daughter on whether Chung Yuk Fai often or seldom stayed at home and because they had doubt as to how the income of the family could support six members. The suggestion was that the earning of the family was unstable and they had to pay a monthly rent of over $2,000.

17. Whether Chung Yuk Fai often stayed at home was a matter of opinion and was quite innocuous. At the hearing of the appeal, the applicant was simply saying that her son "would go out when he felt bored, but he did not go out often and he did not always leave home at night." Even if the applicant was lying on such matters, it is not proof of any knowledge of her son's illegal activities. She might well be an indulging and protective mother.

18. The applicant's family depended on the earnings of her husband as a construction site worker and her part-time job. They were earning about $10,000 a month when the rent was about $2,000. But there was evidence that the family was financially assisted by relatives even before Chung Yuk Chun started earning about $7,000 a month.

19. Even if their earnings were unstable and inadequate to support the family, the implication that the family relied on the income of Chung Yuk Fai's dangerous drugs activities was pure conjecture and far-fetched.

20. There was simply not enough evidence to support the finding that the applicant was aware of the illegal activities of her son.

21. After all, Chung Yuk Fai was only 17 years old at the time when he committed the dangerous drugs offences. He had no previous conviction and the quantity of dangerous drugs found in the said flat was very small, contrary to what the Chairman of the Appeal Tribunal thought.

22. The findings of the Appeal Tribunal that the applicant was aware of illegal activities of her son were irrational and entirely unsupported by evidence. In so far as the Appeal Tribunal refused to exercise the discretion in favour of the applicant based on such irrational findings, the discretion was not properly exercised.

23. The Appeal Tribunal, in confirming the Notice to Quit issued by HKHA against the applicant, clearly had in mind the policy as contained in the certificate issued by its secretary under section 20 of the Housing Ordinance which provides:-

"2) An appeal under subsection (1) shall be in writing and shall state the ground of appeal.

(2A)(a) Paragraph (b) shall apply in relation to any policy of the Authority which is stated and specified as being such in a certificate in writing issued for the purposes of this subsection by the Authority's secretary and as regards which the certificate also certifies that the policy was both considered and applied by the Authority when deciding to terminate the lease or, where appropriate, to issue the notice to quit to which the appeal relates.

(b) In considering an appeal under subsection (1)-

(i) if the tribunal concerned is satisfied that at the time of making the decision to which a certificate mentioned in paragraph (a) relates, the appellant was aware of the policy or could reasonably be expected to have been so aware, the tribunal shall have regard to such policy; and

(ii) if such tribunal is not so satisfied, it may, where it consider it appropriate so to do, have regard to such policy."

24. Again, there is no evidence at all to indicate that the applicant was aware of the policy or could reasonably be expected to have been so aware. The Tribunal should not have had regard to the policy.

25. If the Appeal Tribunal consider it appropriate to have regard to such policy when the applicant was not aware of the policy and could not reasonably be expected to have been so aware, the Tribunal must make clear its reasons.

26. The Appeal Tribunal is a statutory body and in the exercise of its powers granted under the relevant statute, it must comply with the requirements stipulated therein. Any failure would constitute procedural irregularities and render it decisions impugnable.

27. There could be no doubt that the said flat had been used for illegal purpose and by the operation of the deeming provision under Clause IV(7), the applicant was clearly in breach of the Tenancy Agreement.

28. But the Notice to Quit was not served by HKHA in the exercise of its contractual right. The Notice to Quit was served under section 19(1)(b) of the Housing Ordinance by giving 1 month's Notice to Quit.

29. Section 19(1) of the Housing Ordinance gives HKHA the discretion, notwithstanding the terms of the lease, to terminate the lease in appropriate circumstances. The discretion must be properly exercised and not dictated by a fixed rule of policy.

"A decision-making body exercising public functions which is entrusted with a discretion must not, by the adoption of a fixed rule of policy, disable itself from exercising its discretion in individual cases. It may not 'fetter' its discretion. A body does fetter its discretion in that way may offend against either or both of two grounds of judicial review: the ground of legality and the ground of procedural propriety. It offends against legality by failing to use its powers in the way they were intended, namely, to employ and to utilize the discretion conferred upon it. It offends against procedural propriety by failing to permit affected persons to influence the use of that discretion. By failing to keep its 'mind ajar', by 'shutting its ears' to an application, the body in question effectively forecloses participation in the decision-making process ......

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The rule against fettering discretion by no means forbids bodies upon which discretionary power has been conferred to guide the implementation of that discretion by means of a policy or a rule. It directs attention to the attitude of the decision-maker, who must simply be prepared to make an exception to that rule or policy in a deserving case. Nor does the rule against fettering discretion focus upon the content of the hearing which must be afforded to persons interested in changing the decision-maker's mind. The decision-maker must allow interested individuals the opportunity to persuade him to amend or deviate from the rule of policy.............."

(de Smith, Woolf & Jowell's Principles of Judicial Review (1999) P.395-396)

30. HKHA received a memo from the Commissioner of Customs and Excise on 17 May 1999 and the Notice to Quit was issued on 31 July 1999. There is no indication that HKHA had considered the applicant's case when on the face of it, it was not the applicant who used the said flat for an illegal purpose. She was only made liable by reason of the deeming provision under Clause IV(7). It is also not disputed that the applicant had not been given any opportunity to persuade HKHA to deviate from the policy.

31. HKHA had indeed, "by the adoption of a fixed rule of policy, disable itself from exercising its discretion in individual cases."

32. Mr Wong, on behalf of HKHA argued that legal advice had been sought before issuing the Notice to Quit and that upon receipt of the grounds of appeal submitted by the applicant, HKHA reconsidered the applicant's case.

33. With respect, such matters are not indication of the proper exercise of the discretion by HKHA at all.

34. In Chan Ming Yan v. Hong Kong Housing Authority and another HCAL 100 of 2000, unreported 13 July 2000, the court held:-

"It is not open, in my view for the HKHA to take the position that as a matter of policy, once the flat has been used for an illegal purpose, a NTQ will be issued whether the tenant is himself in breach of the tenancy agreement or whether he is liable only by reason of clause 4(g).

The NTQ was issued under section 19(1) of the Housing Ordinance which gives the HKHA discretion to terminate a lease. It is a fundamental rule for the proper exercise of discretion that each case must be considered on its own merits and decided as the public interest requires at the time.

If an authority blindly adheres to a policy laid down in advance without applying its mind to the special circumstances of an individual case, it is not exercising its discretion lawfully. (Bromley L.B.C. v. Greater London Council [1983] 1 AC 768, per Lords Diplock and Brandon.)

It is not open for the HKHA to take the stance as it did that an unlawful use of the flat would invariably lead to the issue of a NTQ even when the tenant himself had done no wrong. Such a decision could well be Wednesbury unreasonable."

35. I am not persuaded that the aforesaid approach is wrong.

36. There are, in my view, procedural irregularities in the decisions of HKHA and the Appeal Tribunal. The decision of the Appeal Tribunal that the applicant knew about the illegal activities of her son was also irrational.

37. But should the court quash their decisions or grant any relief to the applicant ?

38. Under Order 53 of the Rules of High Court, the granting of any relief in judicial review proceedings is discretionary.

39. The Notice to Quit was served on 31 July 1999 and the Appeal Tribunal confirmed the Notice to Quit on 30 March 2000. The applicant only took out an application for leave to apply for judicial review on 5 October 2000, over 6 months after the grounds for the application first arose. There was a delay although extension of time had been granted.

40. The applicant in fact vacated the said flat on 29 April 2000 and moved to the Kwok Shui Road Transit Centre with her family. They have been staying there free of charge.

41. The said flat was let to another family of five members on 25 August 2000. There is no question of the applicant getting back the said flat without undue impact on another family.

42. Leave to apply for judicial review out of time was of course granted ex parte on the ground that good reason for extending the time had been shown. Mr Pun was right in his submission that the question of delay should not be reopened on the substantive hearing. (see R. v. Criminal Injuries Board, Ex p. A. [1999] 2 W.L.R. 974.)

43. But in the ex parte application dated 5 October 2000, the applicant had not disclosed the fact that she had moved out of the said flat on 29 April 2000. There was a complete absence of such material facts both in the application itself and the affirmation of the applicant verifying the facts relied on.

44. There is a duty on an applicant for leave to apply for judicial review to make full and frank disclosure. The decision in R. v. Criminal Injuries Board, Ex p. A (supra) has no application where ex parte leave was obtained on false statements or a suppression of material facts. Not only is the court entitled to reopen the question of delay, the court can also refuse to make an order on the ground of material non-disclosure.

45. Viscount Reading C.J. in Rex v. Kensington Income Tax Commissioners, ex p. Plignac [1991] 1 K.B. 486 said at page 495:-

"Before I proceed to deal with the facts I desire to say this : Where an ex parte application has been made to this Court for a rule nisi or other process, if the Court comes to the conclusion that the affidavit in support of the application was not candid and did not fairly state the facts, but stated them in such a way as to mislead the Court as to the true facts, the court ought, for its own protection and to prevent an abuse of its own process, to refuse to proceed any further with the examination of the merits........."

46. If the applicant had disclosed the facts that she had moved out of the said flat, the court certainly would not have granted the ex parte application on paper without allowing the HKHA to make representation. There is an acute shortage of public housing in Hong Kong and once the applicant and her family vacated the said flat, it would no doubt be allocated to another family. Such matter had significant impact on the issue of whether the Notice to Quit should be quashed.

47. The delay in question, in the light of the background of the case, has been detrimental to good administration. The interest of entirely innocent third parties may be affected if the court were to grant the reliefs sought by the applicant, namely the quashing of the decision of HKHA to serve the Notice to Quit on the applicant and the decision of the Appeal Tribunal confirming such Notice to Quit.

48. I have considered carefully the facts of the case and submissions by counsel. I am not persuaded that it is a proper exercise of my discretion in granting any of the reliefs sought by the applicant.

49. If HKHA considers appropriate, in the light of the findings of this court on the issues of "procedural irregularities" and "irrationality" that the applicant and her family should be granted another unit, that is a matter for HKHA and the applicant to work out.

50. But on the application before me, I am of the view that no relief should be granted. The application is dismissed. I also make an order nisi that there will be no order as to costs. The order nisi on costs will be made absolute 14 days after the handing down of this judgment.

51. The applicant's own costs are to be taxed in accordance to Legal Aid Regulations.