THE HONG KONG CANADIAN INTERNATIONAL HOSPITAL FOUNDATION LTD v. THE SECRETARY FOR JUSTICE

HCAL 131/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 131 OF 2006

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J U D G M E N T

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Facts

1.  The applicant, a charity foundation, was the grantee under an Agreement and Conditions of Grant dated 12 October 1995 (Conditions of Grant) for a piece of land situated at Aberdeen Inland Lot No 433.  The purpose of the grant was to enable the applicant to erect and maintain on the land a non-profit-making hospital with a medical technology exchange centre of not less than 280 beds.  A building covenant under the Conditions of Grant required the applicant to build and commence operation of the hospital within 36 months after possession of various portions of the land was given to the applicant.  The government says that such possession was given in March 1996, whereas the applicant says that it was only given in September 1997.  Under either version, no hospital was built by the end of the 36-month period.  Instead, the applicant obtained 4 successive extensions of time from the government, the last one of which expired on 13 September 2001.

2.  Following the rejection of a fifth application for extension, the government decided to re-enter the land on 19 August 2002.  By then, only site formation works and some piling works had been completed on site.  The re-entry was effected by the registration of a memorial of an instrument of re-entry in the Land Registry against the land pursuant to section 4(1) of the Government Rights (Re-entry and Vesting Remedies) Ordinance, Cap 126 (the Ordinance).

3.  On 18 February 2003, the applicant petitioned the Chief Executive to grant it relief against the re-entry, pursuant to section 8(1)(a) of the Ordinance.  Both the applicant and the relevant departments in the government put in submissions and counter-submissions in relation to the petition.  The process took a lengthy period of time.

4.  Eventually, the matter was placed before the Office of the Executive Council for the Chief Executive in Council’s consideration.  The matter was considered on 26 September 2006.  The Chief Executive in Council decided to dismiss the petition.

5.  The applicant was duly notified of the decision.  No reasons for the decision were given.  Pursuant to a request for reasons made by the applicant, the Deputy Clerk to the Executive Council replied by letter dated 14 November 2006 elaborating on the circumstances under which the Chief Executive in Council reached his decision.

Application for judicial review

6.  Having obtained leave from the Court to do so, the applicant launched the present application for judicial review of the decision of the Chief Executive in Council dismissing its petition for relief against the re-entry.  The applicant relies on two main grounds.  First, the re-entry was unlawful in the first place because time under the building covenant never began to run.  Secondly, the Chief Executive in Council failed to give reasons for his decision.  During the hearing, the applicant vaguely suggested that in any event, the Chief Executive in Council ought to have granted it relief against the re-entry as a matter of discretion in the circumstances of the case.

7.  The government takes issue with the applicant on all these points.  In addition, Mr Joseph Fok SC, Mr Abraham Chan with him, argues on behalf of the government that the lawfulness of the re-entry was never a subject matter that the Chief Executive in Council could look into under the petition pursuant to section 8(1)(a) of the Ordinance.  The Chief Executive in Council did not decide on the issue, which therefore did not affect his ultimate decision in dismissing the petition.  Counsel argues no judicial review of the Chief Executive in Council’s decision can therefore be sought on the ground of the lawfulness of the re-entry.  This argument brings into focus the “jurisdiction” (used here in a very loose sense) of the Chief Executive in Council in considering a petition made under section 8(1)(a) of the Ordinance.

8.  I will now consider these issues in turn.

Can lawfulness of re-entry be raised in a petition?

9.  The long title of the Ordinance, which came into effect on 1 June 1970, reads:

“To make provisions enabling certain interests in land and connected rights and obligations to be vested in The Financial Secretary Incorporated in circumstances where the Government is entitled to exercise a right of re-entry under a Government lease or default is made in the payment of Government rent or premium, and to consolidate those provisions with the provisions set forth in the repealed Crown Rights (Re-entry) Ordinance (Cap. 126, 1964 Ed.), and for connected or incidental purposes.”

10.  Part II of the Ordinance deals with the exercise of a right of re-entry by the government by the registration of a memorial of an instrument of re-entry.  Part III primarily deals with an analogous situation where the interest of an individual owner in a multi-storey building is liable to be re-entered.  The re-entry is effected by the registration of a vesting notice in the Land Registry against the relevant interest in favour of The Financial Secretary Incorporated.  Sections 3 and 4 in Part II of the Ordinance read as follows:

“3.     Exercise of right of re-entry by the Government

When a right of re-entry upon lands or tenements has accrued to the Government, such right may be exercised or enforced without any actual re-entry being made on the premises.

4.       Memorial of re-entry

(1)     Whenever it is necessary to enforce a right of re-entry by the Government upon any lands or tenements for the breach of any covenant in the Government lease thereof, or for the breach of any condition or stipulation of any tenancy thereof, a memorial of an instrument of re-entry, under the hand of any public officer authorized by the Chief Executive to sign such instruments, may be registered in the Land Registry.

(2)     Immediately on the registration of such a memorial, the Government shall be deemed to have re-entered upon the lands or tenements described therein and in respect of which the right of re-entry has accrued, and the said lands and tenements shall thereby become re-vested in the Government as fully as if the Government lease thereof had determined, or, as fully as if the tenancy had determined, as the case may be.”

11.  Part IV of the Ordinance is concerned with relief against re-entry by the government or vesting in favour of The Financial Secretary Incorporated.  Sections 8 to 10 under that part read as follows:

“8.     Right to apply for relief against re-entry or vesting

(1)     Subject to subsections (3) and (4), where a memorial of re-entry has been registered under section 4 in the Land Registry, the former owner may –

(a) petition the Chief Executive to grant him relief against the re-entry;

(b) apply to the Court of First Instance in its equitable jurisdiction for relief against the re-entry –

(i) if he disputes the right of the Government to re-enter; or

(ii) if the circumstances are such that he would have been entitled to apply for relief against re-entry had the lessor been a private party and exercised his right of re-entry.

(2)     Subject to subsections (3) and (4), where a vesting notice has been registered under section 7 in the Land Registry, the former owner of a relevant interest which is the subject of the vesting notice may –

(a) petition the Chief Executive to grant him relief against the vesting;

(b) apply to the Court of First Instance in its equitable jurisdiction for relief against the vesting –

(i) if he disputes the right of the Government to proceed under section 7; or

(ii) if the circumstances are such that he would have been entitled to apply for relief against re-entry had the lessor been a private party and exercised his right of re-entry.

(3) A petition or application under subsection (1) or (2) may be made within 6 months from the registration of the memorial of re-entry or vesting notice, as the case may be, but in the case of a petition to the Chief Executive the Chief Executive may extend this period where he considers it just.

 (4) A petition to the Chief Executive under subsection (1)(a) or (2)(a) shall be a bar to any subsequent application to the Court of First Instance under subsection (1)(b) or (2)(b).

9. Power of Chief Executive or Chief Executive in Council to order cancellation of memorial of re-entry or vesting notice

(1) Upon consideration of a petition under section 8, the Chief Executive may –

(a) order the cancellation of the memorial of re-entry so far as it affects the lands and tenements in respect of which the petition was made or the cancellation of the vesting notice so far as it affects the relevant interest in respect of which the petition was made, upon such terms as to costs, expenses, damages, compensation, penalty or otherwise as he shall in his discretion think fit; or

(b) direct that the petition be referred to the Chief Executive in Council.

(2) The Chief Executive in Council, upon considering a petition referred to him under subsection (1) may –

(a) order the cancellation of the memorial of re-entry so far as it affects the lands and tenements in respect of which the petition was made or the cancellation of the vesting notice so far as it affects the relevant interest in respect of which the petition was made, upon such terms as to costs, expenses, damages, compensation, penalty or otherwise as he shall in his discretion think fit; or

(b) dismiss the petition.

10.    Powers of Court of First Instance in respect of application for relief

On the hearing of an application to the Court of First Instance under section 8, the Court may exercise the same powers and make the same decree or order as in an action between private parties for the same relief and may order the cancellation of the memorial of re-entry so far as it affects the lands and tenements in respect of which the application was made or the cancellation of the vesting notice so far as it affects the relevant interest in respect of which the application was made.”

12.  It is common ground that if a former owner seeks relief against a re-entry, he may petition the Chief Executive or alternatively, commence proceedings in the Court of First Instance: section 8(1)(a) and (b).  A petition to the Chief Executive shall be a bar to any subsequent application to the Court of First Instance for relief against re-entry: section 8(4).

13.  However, Mr Fok argues that if the former owner wishes to challenge the lawfulness of the re-entry in the first place, he must commence proceedings in the Court of First Instance: section 8(1)(b)(i).  He cannot petition the Chief Executive for relief on that ground.  Lawfulness of the re-entry is a matter only for the court in its equitable jurisdiction, not the Chief Executive or Chief Executive in Council, counsel submits.

14.  Mr Barrie Barlow, counsel for the applicant, submits that a petition to the Chief Executive and an application to the Court of First Instance in its equitable jurisdiction for relief involve two “parallel jurisdictions”.  Both are for “relief against the re-entry”, which phrase must bear the same meaning when used in section 8(1)(a) and (b).  As section 8(1)(b)(i) specifically refers to disputing the government’s right to re-entry in an application to the court “for relief against the re-entry”, and since a petition to the Chief Executive is a parallel (quasi-judicial) jurisdiction, counsel argues, the Chief Executive may also entertain a dispute over the government’s right to re-enter in the petition for “relief against the re-entry” made under section 8(1)(a).  Mr Barlow supports his submission that the two avenues for relief are parallel jurisdictions by reference to section 8(4), which bars any subsequent application to the court for relief once a petition to the Chief Executive has been made.  He contends that the bar must be premised on the assumption that one may challenge the government’s decision to re-enter in a petition to the Chief Executive.  Were it otherwise, the bar would constitute a denial of the former owner’s right of access to the courts, in contravention of article 35 of the Basic Law.

15.  I agree with Mr Fok.

16.  I can see the logic of Mr Barlow’s argument that the phrase “relief against the re-entry” used in section 8(1)(a) and (b) should, as a matter of normal statutory construction, be given the same meaning.  However, that is, in my view, merely one of the many considerations here.

17.  For my part, as a matter of wording, I would attach more importance to the specific reference to disputing the right of the government to re-enter in section 8(1)(b)(i), under an application to the Court of First Instance for relief.  If Mr Barlow’s construction be correct, that specific reference would be quite redundant.  The other side of the same coin is that the absence of a similar reference in the context of a petition to the Chief Executive would look very odd, if Mr Barlow’s argument should be correct.  The relief that the Chief Executive or the Chief Executive in Council may grant under section 9(1)(a) or (2)(a) is plainly predicated on the imposing of terms as to costs, expenses, damages, compensation, penalty or otherwise as the Chief Executive or Chief Executive in Council “shall in his discretion think fit”.  The assumption here is clearly that relief is granted as a matter of indulgence and terms may properly be imposed by the Chief Executive or Chief Executive in Council in granting such indulgence.  If the Chief Executive or Chief Executive in Council has the power to deal with a dispute on the right to re-enter in the first place and where the same is resolved in favour of the former owner, there can be no conceivable reason for imposing terms as a condition for cancelling the memorial of re-entry.  Yet qualifying words such as “if any” or “where appropriate” do not appear in conjunction with the reference to the terms that the Chief Executive or Chief Executive in Council may in his discretion impose.  Of course, I bear in mind the contrary argument that words like “if any” or “where appropriate” can be read into the section by way of construction.

18.  For the sake of completeness, I should also add that a perusal of the precursor of the Ordinance, namely the Crown Rights (Re-entry) Ordinance first enacted on 26 August 1870 has not proven to be particularly helpful.  The relevant sections can be found in sections 3, 4 and 11 of that repealed Ordinance.

19.  Leaving aside these linguistic considerations, more substantially, I take the view that the construction placed by Mr Fok on the relevant provisions makes more sense.  Given what is in issue, ie a dispute between the former owner and the government itself over its right of re-entry, the Chief Executive, as the head of the government, is by definition not in a good position to determine the dispute.  That is so not only because the Chief Executive may well not be legally trained to decide such a question, which is very often a question of law or mixed law and fact.  Nor is it only because the Chief Executive in Council is not a court of law.  More fundamentally, in my view, it is the nature of the dispute, ie a dispute between the former owner and the government itself, which makes neither the Chief Executive nor the Chief Executive in Council the most satisfactory forum to adjudicate on the dispute, particularly when section 8(4) provides that a petition to the Chief Executive shall bar a subsequent application to the court – leaving aside for the time being the question of judicial review.  Juxtapose the Chief Executive or the Chief Executive in Council with the Court of First Instance.  The latter is a court of law which sits to decide disputes – whether legal or factual.  It is impartial and independent from both the government and the former owner. It is best placed to decide any dispute over the government’s right to re-enter.  Furthermore, the decision of the Court of First Instance on any such dispute is subject to the usual appeal procedure to the Court of Appeal, and ultimately to the Court of Final Appeal if leave to appeal is obtained.

20.  Mr Barlow argues that even though the Chief Executive may well lack legal training to decide the dispute, he can always refer the matter to the Executive Council for advice and the Secretary for Justice is an ex-officio member of the Council.  He is in a good position to render legal advice to the Chief Executive.  That may well be so.  But that does not diminish at all Mr Fok’s point that the Chief Executive in Council is not a court.  Moreover, one may safely assume that in a situation of dispute, the relevant departments (like the Lands Department) must have taken legal advice from the Department of Justice before seeking to exercise the disputed right of re-entry.  If such advice has been given, what advice, one may ask rhetorically, can one expect the Secretary for Justice to give to the Chief Executive or the other members of the Executive Council, regarding the lawfulness of the decision to re-enter, other than the same advice that his department has previously given to the relevant government department(s) for deciding to re-enter in the first place?

21.  Moreover, construing the relevant provisions in such a way as to give the Chief Executive or Chief Executive in Council the power to entertain a dispute on the government’s right to re-enter would create many difficult or undesirable procedural difficulties, some of which are well illustrated by the facts in the present case.

22.  First, the question of judicial review.  Mr Barlow argues that the Chief Executive or the Chief Executive in Council has power or jurisdiction to entertain the dispute over the right of re-entry.  He further argues that the decision of the Chief Executive or the Chief Executive in Council reached on that question is amenable to judicial review.  And in fact, that is why this particular question is now before the Court, sitting in its public law jurisdiction.  Counsel argues that the question falls within the public law domain by reason of illegality: Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, 410E/F-F/G.

23.  This argument, in my view, goes contrary to the obvious intention of section 8(4) that a petition to the Chief Executive shall be a bar to any subsequent application to the Court of First Instance for relief, which can, by the express provisions in section 8(1)(b)(i), deal with a dispute over the government’s right of re-entry.  Put another way, counsel’s argument would open a back door to the court via the judicial review route, even though the door at the front is expressly closed by section 8(4).

24.  A second procedural complication, also illustrated by what has happened in the present case, is this.  Section 8(4) bars a subsequent application to the court for relief against the re-entry, including an application to the court to dispute the government’s right to re-enter.  If a petition can raise the question of the lawfulness of the re-entry, a former owner who has failed to persuade the Chief Executive or the Chief Executive in Council that the government lacked the right to re-enter may nonetheless, despite the bar in section 8(4), raise in a subsequent court action the lawfulness of the re-entry, so long as he does not seek relief against the re-entry, ie he does not ask for the re-entered land back, but only some other relief, such as damages for breach of contract or restitutionary relief.  On top of that, he can also apply for judicial review of the Chief Executive in Council’s decision on the right to re-enter.

25.  This is illustrated by what has happened.  By a High Court action commenced on 27 June 2003 (HCA 2379/2003), the government sues the applicant for recovery of over $5 million of government rent and surcharges in respect of the subject land for the period between July 1997 and August 2002.  By a defence and counterclaim filed on 3 October 2003 – ie after the petition to the Chief Executive on 18 February 2003, the applicant challenges the government’s right to re-enter the land and claims damages for breach of contract for over $4 million.  Apparently the justification for making the counterclaim notwithstanding the bar in section 8(4), challenging the government’s right of re-entry, is that the counterclaim, though made after the petition, does not seek any relief against the re-entry but only claims damages for breach of contract.  The upshot of all this is that there are now before the Court of First Instance, in its respective public law jurisdiction and private law jurisdiction, two sets of proceedings raising the same question, namely the lawfulness of the government’s re-entry.  Moreover, as per the applicant’s argument, that question has already been raised before the Chief Executive and Chief Executive in Council by means of the petition, which the applicant says can deal with the question of the lawfulness of the re-entry.  All this has arisen notwithstanding the clear bar in section 8(4) that a petition to the Chief Executive shall bar any subsequent application to the Court of First Instance for relief.  (I should, however, add that Mr Barlow seems to suggest in paragraph 15.2 of his addendum to his opening submission that the section 8(4) bar “necessarily applies” to the counterclaim made by his client in the High Court action – whether he is conceding that the counterclaim should therefore be struck out is not clear.)

26.  A third and related procedural difficulty may be briefly described as follows.  A former owner challenged the lawfulness of the re-entry before the Chief Executive by means of a petition.  He failed to persuade the Chief Executive or the Chief Executive in Council that the re-entry was unlawful. He then commenced a High Court action against the government, raising exactly the same issue, but asking for different relief, such as damages for breach of contract.  Since relief against the re-entry is not sought, the section 8(4) bar is (prima facie) avoided.  Moreover, notwithstanding the previous adverse decision reached by the Chief Executive or the Chief Executive in Council regarding the lawfulness of the re-entry, he is free to litigate again the same issue against the government, this time before the court.  This is because the Chief Executive or the Chief Executive in Council is not a court.  Therefore, no res judicata or issue estoppel has arisen from the earlier decision rejecting his challenge to the re-entry.  He is free to raise the argument again before the court, notwithstanding the bar in section 8(4).

27.  In my view, all these procedural difficulties will disappear if one adopts Mr Fok’s construction of the relevant provisions.  If the Chief Executive or the Chief Executive in Council has no power to deal with a dispute over the right of re-entry, any such dispute must then be brought before the Court of First Instance for adjudication.  Moreover, if the former owner seeks any further or other relief, then by the well-established principles of issue estoppel (in the wider sense), he is obliged to seek the same in the same proceedings before the court against the government.  The decision of the Court of First Instance will be subject to the normal appeal procedure.  In that way, multiplicity of proceedings and the risk of inconsistent decisions can be avoided.  Put another way, I would be very slow to ascribe to the legislature an intention to enact provisions that could give rise to such undesirable results.

28.  Moreover, the above construction would help avoid requiring this Court sitting in its public law jurisdiction to adjudicate on what is essentially a private law dispute, namely whether the government had the right to re-enter the land under the relevant government lease or conditions of grant.  Such a question is basically a question of contract – a question of law or more probably a question of mixed law and fact.  The proper place for resolving such a dispute is in a private law action, but not in judicial review proceedings which are particularly not suitable for resolving factual disputes.

29.  Mr Barlow refers this Court to a passage from the judgment of Ribeiro PJ delivered in Ying Ho Co Ltd v Secretary for Justice (2004) 7 HKCFAR 333, 386 (para 147) where his Lordship has said:

“Liability to a re-entry is triggered, in the present case, by breach of the building covenant if it can be shown that the Developers failed to complete within the time stipulated by that covenant.  The fact that the Government may (hypothetically) be found to have contributed to part of the period of delay which has run beyond the stipulated completion date does not affect the incidence, nature or extent of that liability.  If the Government was partly responsible, that fact might of course be highly relevant on a petition to the Chief Executive or on an application to the court for relief against forfeiture brought under the Government Rights (Re-Entry and Vesting Remedies) Ordinance (Cap. 126)”

30.  I do not think the passage quoted above, when read in its proper context, supports Mr Barlow’s construction of the relevant provisions.  I do not believe that his Lordship was saying in the passage quoted that a dispute over the government’s right to re-enter could be brought before the Chief Executive for determination by means of a petition.  Rather, on my reading of the passage, the learned judge was simply saying that if the government was partly responsible for the period of delay which eventually led to a breach of the building covenant by the developer and thus the re-entry decision, that fact could be brought before the Chief Executive on a petition as a relevant consideration in deciding whether relief, in the sense of indulgence, should be granted in favour of the developer on terms.  In other words, that fact was one of the many considerations that the Chief Executive could take into account in deciding whether to grant relief.  What the passage does not say or mean, in my view, is that the Chief Executive has the power to determine whether the government had the right to re-enter in the first place.  That question did not arise at all in the cited passage because it was premised on the liability to a re-entry having been triggered “by breach of the building covenant”, notwithstanding that the government had (hypothetically) partly contributed to the period of delay.

31.  For all these reasons, I conclude that on a proper construction of the relevant provisions, a petition to the Chief Executive for relief cannot raise a dispute on the government’s right to re-enter.  Such a dispute can only be raised by way of proceedings before the Court of First Instance for relief.  Having said that, in my view, there is nothing to stop a former owner from first applying to the Court of First Instance to challenge the government’s right to re-enter, and if the result is unfavourable, then lodging a petition with the Chief Executive for relief based on wider considerations.  In this regard, there is no bar to a subsequent petition analogous to that provided in section 8(4).  If an extension of time to make the petition is required, the Chief Executive has the necessary power to extend the time: section 8(3).  The Chief Executive is expected to favourably consider the application for an extension of time if the prior application to the Court of First Instance for relief was only limited to resolving the dispute over the lawfulness of the re-entry.

32.  I do not accept Mr Barlow’s argument that the government’s construction would infringe article 35 of the Basic Law.  In my view, the former owner’s right of access to the courts is preserved by the option of going to the court pursuant to section 8(1)(b)(i) to challenge the lawfulness of the re-entry.  It is his own choice whether to seek relief from the court or to abandon his challenge to the lawfulness of the re-entry and simply seek discretionary relief from the Chief Executive pursuant to section 8(1)(a).  Put another way, he must make an election. I do not see that as interfering with his constitutional right of access to the courts. 

33.  Mr Barlow vaguely suggested during oral argument that as a matter of fact, the question of the lawfulness of the re-entry had been raised by the applicant in its petition and it had been dealt with by the Chief Executive in Council (as per counsel’s reading of the Deputy Clerk of the Executive Council’s letter).  Counsel therefore argued that the lawfulness of the re-entry formed part of the reason for the decision under challenge, and the Court could deal with it in the present judicial review proceedings.

34.  I reject the argument.  Either the Chief Executive (or the Chief Executive in Council) has the power to entertain the dispute over the lawfulness of the re-entry or he does not, as a matter of law.  If he does not, a former owner cannot give him the jurisdiction that he lacks.  And taking a step further, even if (hypothetically) the Chief Executive or the Chief Executive in Council had attempted to decide the question of the lawfulness of the re-entry, that decision must be a nullity, and so far as that decision is concerned, there is nothing that a court sitting in its judicial review function need to do except to ignore it – unless that decision has led to the cancellation of the re-entry memorial as of right, which is not the case here.  As it has happened in the present case, the petition has been dismissed.  In those circumstances, any purported determination on the lawfulness of the re-entry by the Chief Executive in Council does not matter in the present case.  Any such determination is simply to be ignored.  It does not mean that this Court is seised of the question of the lawfulness of the re-entry by way of judicial review.

35.  The above conclusions of mine are, by and of themselves, sufficient to dispose of the present judicial review application in so far as it is based on the challenge to the lawfulness of the re-entry.

36.  However, in deference to counsel’s very detailed submissions and bearing in mind the fact that this is the first case, so the Court has been told, in which the relevant provisions in the Ordinance are examined by the court, I will move on to deal with the dispute over the government’s right to re-enter on its merits.

Does Special Condition 44 bar commencement of general building works?

37.  It is necessary to set out a number of conditions in the Conditions of Grant:

General Conditions

“11.   (b)   The fulfilment by the Grantee of his obligations under these Conditions shall be a condition precedent to the grant or continuance of the tenancy, and in the event of any default by the Grantee in complying therewith such default shall be deemed to be a continuing breach and the subsequent acceptance by or on behalf of the Government of any rent or rates or other payment whatsoever shall not (except where the Government has notice of such breach and has expressly acquiesced therein) be deemed to constitute any waiver or relinquishment or otherwise prejudice the enforcement of the Government’s right of re-entry for or on account of such default or any other rights, remedies or claims of the Government in respect thereof under these Conditions which shall continue in force and shall apply also in respect of default by the Grantee in the fulfilment of his obligations under these Conditions within any extended or substituted period as if it had been the period originally provided.

12.    (a)   Upon any failure or neglect by the Grantee to perform, observe or comply with any of these Conditions the Government shall be entitled to re-enter upon and take back possession of the lot or any part thereof and all or any buildings, erections and works thereon or on such part, and thereupon this Agreement and the rights of the Grantee hereunder shall absolutely cease and determine (in respect of such part if the re-entry is upon a part only) but without prejudice nevertheless to the rights, remedies and claims of the Government in respect of any breach, non-observance or non-performance or any of these Conditions.”

Special Conditions

“(7) (a)     The Grantee shall in accordance with these Conditions erect and maintain upon the lot a non-profit-making hospital with a medical technology exchange centre of not less than 280 beds together with such training and ancillary facilities as shall be approved by the Director of Health (hereinafter collectively referred to as “the Hospital”).

….

(12)          The Grantee shall within 36 months from the date of which possession of the Pink and Pink Hatched Black Area is given open and commence to operate the Hospital on a scale satisfactory to the Governor, and shall conduct the Hospital in accordance with all Ordinances, Regulations and By-laws relating to the Hospital which are or may at any time be in force in Hong Kong and in all respects to the satisfaction of the Director of Health.

….

(44) (a)    The Grantee shall within 6 months from the date of this Agreement submit to the Director for his approval in writing proposals to mitigate environmental problems identified by the Director of Environmental Protection who shall as soon as practicable after the execution of this Agreement notify the Grantee in writing full details of such problems, and upon receipt of the Director’s approval to the said proposals the Grantee shall at his own expense implement the approved proposals in all respects to the satisfaction of and within the time limits stipulated by the Director.

(b)   No building or other works (except site formation works) shall be commenced on the lot until the proposals referred to in sub-clause (a) of this Special Condition shall have been approved in writing by the Director.”

38.  The government’s case on re-entry is that the applicant has failed to complete building the hospital and start operating it in breach of the building covenant set out in Special Conditions 7 and 12, despite the repeated extensions.

39.  In essence, Mr Barlow’s argument for the applicant is that time has not started to run for the 36 months stipulated in the building covenant.  This is because Special Condition 44 provides that the Director of Environmental Protection shall as soon as practical after the execution of the Conditions of Sale notify the applicant in writing full details of environmental problems that require the applicant to mitigate.  However, as the Director of Environmental Protection has failed to do so, the applicant has not yet submitted to the Director of Lands for his approval written proposals to mitigate such environmental problems.  As a result, no building or other works, except site formation works, can be commenced on the land, as the written approval by the Director of Lands has not been given, pursuant to Special Condition 44(b).

40.  Counsel therefore concludes that in the light of the prohibition against building works set out in Special Condition 44(b), the 36 months building period stipulated in Special Condition 12 has not yet started to run.  Counsel argues that this is the true effect of the bar in Special Condition 44(b), rather than the earlier position taken by the applicant during the petition stage, namely that the time for building has become “at large”.

41.  In case any reader of this judgment should feel surprised by this argument of the applicant given the repeated extensions of time that it has successfully obtained from the government, which quite plainly do not sit very well with the present argument that time has not even started to run, the historical answer is that the argument was never raised by the applicant until well after the decision to re-enter the land.  As mentioned, the government’s position has throughout been that vacant possession of the relevant parts of the land was given on 13 March 1996.  Therefore the 36-month period expired on 13 March 1999.  That quite obviously was also the understanding of the applicant at the time.  Indeed the applicant accepted that possession of the relevant parts of the land was given to it on 14 March 1996 in its original petition dated 18 February 2003 (page 1, point 3).  By successive applications, the applicant applied for and obtained no less than 4 extensions, extending the deadline to 13 September 1999, 13 September 2000, 13 March 2001 and 13 September 2001 respectively.  There was a fifth application for an extension of time for 36 months after 13 September 2001, which was subsequently reduced to a shorter period of 12 months.  The application failed and thus the re-entry decision was made on 19 August 2002.  A petition for relief was filed on 18 February 2003.  The petition admitted that the applicant was in the wrong and asked for indulgence from the Chief Executive.  It did not challenge the lawfulness of the re-entry by reference to Special Condition 44. 

42.  Indeed, in the counterclaim filed in HCA 2379/2003 on 3 October 2003, the applicant did not challenge the lawfulness of the re-entry by reason of Special Condition 44 (but rather on another Special Condition which is not relied on in these proceedings).  The present argument based on Special Condition 44 only surfaced in a letter dated 31 October 2003, which was followed shortly by an amended defence and counterclaim filed in the action on 5 November 2003 pleading the point for the first time.

43.  All this led Mr Fok to raise the arguments of estoppel by convention as well as waiver as further answers to the applicant’s reliance on Special Condition 44 in the present proceedings.  I will deal with those arguments in due course.  I will presently focus on the question of construction of the Conditions of Grant, particularly Special Condition 44.

44.  Here again, I am with Mr Fok.  Counsel submits that Special Condition 44 is only relevant where environmental problems have been notified to the applicant by the Director of Environmental Protection, in which event the applicant will have to submit written proposals to mitigate those environmental problems to the Director of Lands for his written approval.  And before such written approval is obtained, no building works, other than site formation works, may be commenced.

45.  Mr Fok submits that given the timetable set out in the Special Conditions, particularly Special Conditions 12 and 44(a), the Director of Environmental Protection must notify the applicant the environmental problems, if any, he has in mind as soon as practicable after the execution of the Conditions of Grant, but in any event no later than 6 months from the date of the Conditions of Grant – that being the time limit for the submission by the applicant to the Director of Lands its written proposals to mitigate the environmental problems so notified.  In the meantime, no building works, other than site formation works, may be commenced.  In case no such notification has been made within the 6-month period, the applicant is free to commence general building works after the lapse of that period.  In other words, Special Condition 44 has a life span of 6 months.

46.  I agree.  Special Condition 7(a) imposes the obligation to build and operate the hospital.  Special Condition 12 imposes a building period of 36 months from the date when possession of the relevant parts of the land is delivered.  It is not expressed to be subject to Special Condition 44.

47.  Special Condition 42 imposes an obligation on the part of the grantee to comply with and observe legislation and rules for the time being in force governing control of any form of pollution, including air, noise, water and waste pollution and for the protection of the environment.  It is a general obligation not restricted to time.  Nor is it pegged to the commencement or carrying out of building works.

48.  Likewise, Special Condition 43 prohibits the installation of any equipment or use of any process in the building to be erected which might result in the discharge of any pollutants without the Director of Environmental Protection’s prior consent.

49.  Furthermore, Special Conditions 45 to 47 specifically impose restrictions on the use of fuel on the land or in the building to be erected, removal of waste matters and discharge into sewers.

50.  None of these prohibitions or restrictions are restricted to time, or pegged to the commencement or any stages of building works.

51.  Special Condition 44 is found amongst these Special Conditions.  In my view, both from the context and its own wording, it is meant primarily for the benefit of the government to further strengthen its control over environmental protection.  It gives the Director of Environmental Protection a power to notify the applicant all environmental problems that he may have in mind, so as to require the applicant to submit written proposals to address them.  And such written proposals must first be approved by the Director of Lands before building works, other than site formation works, may be commenced.  It is plainly there primarily for the benefit of environmental protection and control.  It is really up to the Director of Environmental Protection whether to make use of the provisions to set out any particular environmental concerns for the applicant to address.  If he does, the applicant is obliged to address them and no building works, other than site formation works, can be carried out until the applicant’s written proposals to mitigate the problems are approved by the Director of Lands.

52.  However, in my view, the Director of Environmental Protection is not obliged so to do – he may have no environmental problems in mind to notify, or he may already have informed the applicant of all those problems prior to the execution of the Conditions of Grant (which is indeed the case of the government).  Or he may be content with the environmental control provisions set out in the other Special Conditions in the Conditions of Grant already outlined above, or he may have other reasons not to notify.  The consequence of his not so notifying the applicant of any environmental problems is, in my view, that the applicant is relieved of its duty to submit written proposals to address them.  In that event, whether as a matter of construction or commonsense, the applicant must be free to commence building works and not be restricted to site formation works only.

53.  The applicant has by evidence suggested that the building (and running) of a modern hospital would raise various important environmental considerations, which need to be addressed by both the applicant as well as the government/Director of Environmental Protection.  It is inconceivable that the Director of Environmental Protection would have no environmental problems in mind to notify the applicant.  Therefore, so the argument runs, Special Condition 44(a) cannot possibly have a life span of 6 months only.  If the Director of Environmental Protection does not notify the applicant of any environmental problems within 6 months, the applicant must wait until such notification is forthcoming – in the meantime, no building works, other than site formation works, can be commenced.

54.  Mr Barlow supplements his argument by contending in his reply submission that even if the Director of Environmental Protection is to tell the applicant that he has no environmental problems in mind to notify, the applicant must still submit to the Director of Lands for his approval in writing “proposals that no mitigation works are required and seek or require the Director to provide his written approval to those mitigation proposals – whereupon, once the Director has provided his “approval in writing” to those proposals, building works can lawfully commence within the terms mandated by the Conditions of Grant” (para 3.16 of the points of reply).

55.  With respect to counsel, that submission illustrates the artificiality of the applicant’s argument.

56.  Grant the importance of environmental considerations in the building or operation of a modern hospital, it does not follow that all those concerns must be addressed by the Director of Environmental Protection and thus the applicant at the outset, failing which no building works, other than site formation works, may be commenced.  Nor is Special Condition 44 the only condition in the Conditions of Grant giving the government control in environmental matters.  There are other Special Conditions providing such control, not to mention the general legislation and practices of the Environmental Protection Department pertinent to the subject.  They are not restricted as to time nor the commencement or stages of construction.  The fallacy of the applicant’s argument is that it looks at Special Condition 44 in isolation as if it were the only source of environmental control open to the government or the Director of Environmental Protection.

57.  As I said, reading the Conditions of Grant as a whole generally and examining the wording of Special Condition 44 in particular, the Special Condition is primarily there to enhance the position of the government in relation to environmental protection.  In those circumstances, the construction put forward by Mr Fok – that it is really up to the Director of Environmental Protection whether to notify the applicant of any environmental problems within 6 months after the execution of the Conditions of Grant, failing which in effect Special Condition 44 will lapse and the prohibition against commencement of building works (other than site formation works) will come to an end – makes good sense.  Looked at from another perspective, the government cannot indefinitely put things on hold by withholding the notification.  After the lapse of 6 months, the prohibition against building works will lapse.

58.  In any event, even if, which is not my primary view, the Director of Environmental Protection is under an obligation (as opposed to having a right) to notify the applicant of environmental problems, it does not follow from his (hypothetical) failure to do so within 6 months after the execution of the Conditions of Sale, that the building period of 36 months stipulated in Special Condition 12 will not begin to run – the consequence contended for by the applicant.  As a matter of construction, one could simply construe the Conditions to mean that in such event, the prohibition against commencement of general building works in Special Condition 44(b) will lapse.  And one might further construe the Conditions to mean that in such (hypothetical) event, the government is liable to pay damages to the applicant for its wrongful failure (through the Director of Environmental Protection) to so notify the applicant of environmental problems within 6 months after the execution of the Conditions of Sale.  Such damages may be in respect of any loss or damage that may flow from the government’s wrongful failure to notify, such as wasted or additional construction costs in case any future requirement by the Director of Environmental Protection which could and should have been notified earlier under Special Condition 44(a) should result in the wastage of any building expenses or incurring of additional construction costs.  There is, in short, no necessity to construe the Conditions of Sale to mean that in case no notification is received within 6 months, the applicant must wait and wait until the notification is forthcoming and in the meantime no building works can be commenced – which is, if nothing else, quite contrary to the express wordings in and the obvious intention behind Special Conditions 7 and 12 to complete construction of the hospital and start operation within 36 months after possession of the relevant parts of the land is given. 

59.  As I have already noted, neither Special Condition 7 nor 12 is made subject to Special Condition 44(b).  Nor does Special Condition 44 provide that it is a condition precedent to time starting to run in relation to the building period laid down in Special Condition 12.

60.  In conclusion, I reject the applicant’s construction of Special Condition 44.  In my view, time has started to run.  Indeed that was – at least on the face of it – the understanding of both parties at all material times prior to 31 October 2003, and thus the repeated extensions.

Estoppel by convention

61.  This leads me conveniently to Mr Fok’s alternative arguments based on estoppel by convention and waiver.

62.  In short, counsel argues that in case Special Condition 44 should be construed in the way contended for by the applicant, the applicant is estopped from denying that there were no outstanding matters required under Special Condition 44 preventing commencement of general building works.  That was a common assumption of the parties, as is well evidenced by the contemporaneous documents and conduct.  In particular, counsel relies on the repeated applications for an extension of time of the building period, and the repeated extensions given.  Furthermore, counsel points out that besides the site formation works carried out by the applicant, piling works have also been done, which cannot be classified as site formation works.  As to this latter argument, the parties are in disagreement.

63.  Counsel further points out that the government has in the contemporaneous documents, including the extensions granted, repeatedly warned the applicant of its right to re-enter the land if the construction is not completed within the time extended or no sufficient progress is shown to justify a further extension.  On the other hand, the applicant has also pledged in its applications for time and the supporting documents that the construction of the hospital will be completed soon.  Thus, for instance, in a powerpoint presentation dated 22 June 2000 prepared by the applicant in connection with its application for a third extension of time (and possibly in relation to its fund-raising exercise as well) it was represented that “the hospital is expected to be open at the beginning of 2002” (page 9).  There was no mention whatsoever of the applicant still awaiting the notification from the Director of Environmental Protection of the relevant environmental problems pursuant to Special Condition 44(a) or the fact (as per its present contention) that in the meantime no construction works, other than site formation works, could be commenced.

64.  I accept Mr Fok’s arguments.

65.  It is plain from the contemporaneous documents that the applicant’s present contention based on Special Condition 44 is an afterthought.  At the material times, Special Condition 44(b) was never considered by either side to be an impediment to the commencement of general building works.  There can be no other way to read the contemporaneous documents or understand the parties’ conduct at the time.

66.  There was never any express reference to Special Condition 44 in the correspondence after the execution of the Conditions of Grant.  There was never any request by the applicant to the government or the Director of Environmental Protection for notification of details of environmental problems that the Director might require the applicant to address.  There was never any complaint that the failure to provide such notification had been holding up the commencement of general building works.  As I said, reliance on Special Condition 44 as an argument only surfaced in late October 2003, more than 8 months after the petition to the Chief Executive was made in which the applicant unreservedly acknowledged “failings” including its “failure to comply with Special Condition Nos (7)(a) and (12)” (page 1 of the original petition dated 18 February 2003).

67.  The first application for an extension of time, it may be noted, was in fact written by a firm of solicitors on behalf of the applicant.  Ignorance of the law can hardly be relied on as an excuse in the present case.

68.  On the question of whether piling works are general building works rather than site formation works, I tend to agree with the government’s position.  After all, the applicant’s own registered contractor and registered structural engineer regarded the piling works done as building works in certifying that the piling works had been carried out in accordance with the provisions in the Buildings Ordinance and Buildings Regulations and in accordance with plans approved by the Building Authority previously.  The works were certified to be worth $19 million.

69.  The carrying out of the piling works further strengthens Mr Fok’s argument that neither party to the Conditions of Grant regarded Special Condition 44(b) as an impediment to the carrying out of general building works at the material times.

70.  The applicant has in the evidence it has filed in these proceedings asserted that environmental concerns were always on its mind and there was indeed correspondence between the parties on environmental matters even after the lapse of the initial six months.  The gist of the applicant’s point is that Special Condition 44 and the prohibition against commencement of general building works under Special Condition 44(b) had throughout been on the applicant’s mind and there could not be any waiver or estoppel.  In this connection, some very hostile allegations were made against the deponents of affidavits filed on behalf of the government in the proceedings.  I do not wish to make any unnecessary criticisms against anybody involved in these proceedings, although I have seldom found an over-hostile attitude displayed in affidavit evidence particularly helpful in resolving factual, and still less, legal, disputes.

71.  All I wish to say is that I find the factual assertions in the applicant’s evidence flying in the face of the contemporaneous documents, insofar as they relate to whether the applicant really had kept Special Condition 44 and particularly the prohibition against commencement of general building works under Special Condition 44(b) in mind at the material times prior to 31 October 2003.  If nothing else, the wholly unqualified statement and representation that the hospital was expected “to be open at the beginning of 2002” made on page 9 of the powerpoint presentation referred to above could not have been honestly and responsibly made by the maker of that presentation if he or she really had kept Special Condition 44 and the prohibition in Special Condition 44(b) in mind.  At the very least, the statement called for very material qualifications to be set out in the presentation.

72.  To his credit, Mr Barlow did not see fit to deal with this aspect of the government’s case in his reply submission, after Mr Fok had taken the Court to the contemporaneous documents to support his argument on waiver/estoppel.

73.  As I said, I do not doubt that environmental protection was on the minds of both the government and the applicant at various stages during the material times.  But it is a quantum leap to say that all those concerns were referable, and only referable, to Special Condition 44.  As mentioned, there were other Special Conditions in the Conditions of Grant concerning environmental control, not to mention the general legislative framework and the requirements and practices of the Environmental Protection Department concerning environmental protection and control.

74.  In particular, the letter dated 5 January 2001 written by the applicant’s then architect to the Environmental Protection Department, which was relied on in the applicant’s affidavit evidence as showing that the applicant had always kept Special Condition 44(a) in mind, was, when read in context, concerned with the insertion of proper pollution control clauses in the construction contracts concerned, as may be clearly seen from the reply letter dated 16 January 2001 from the department.  As I say, the fact that the parties conferred with each other on environmental matters does not mean that they were thinking about Special Condition 44(a).  For with or without that Special Condition, environmental issues would still arise from time to time that would require the parties’ attention.

75.  Mr Fok argues that the common assumption of the parties at the time was very clear: there was simply no document to suggest that either party claimed or even thought that Special Condition 44(b) was a bar to proceeding with the construction.  It would be unjust for the applicant to depart from the common assumption now to suggest that Special Condition 44(b) was the reason it did not comply with Special Conditions 7(a) and 12 and the respondent would suffer detriment if this were so – for example, in not notifying the applicant that the Director of Environmental Protection had no environmental problems for the applicant to address.  Mr Fok submits that the common assumption that gives rise to an estoppel by convention can go to law or fact, or a mixture of both.

76.  For the law on estoppel by convention, counsel refers this Court to the very recent judgment of the Court of Final Appeal in Unruh v Seeberger, FACV 9 & 10/2006 (9 February 2007), para 129 et seq.

77.  On the facts of the present case, I am satisfied, as I said, that there was an assumption shared by or common to both parties to the Conditions of Grant, which was manifested by words and conduct, that there was no impediment to commencement of general building works under Special Condition 44(b).  The parties clearly proceeded with the transaction on the basis of the same shared assumption.  Moreover, the assumption was clear.  What was stopping the commencement or the carrying out of the building works was, so it would appear from the evidence available, very much removed from environmental concerns – namely adequate funding.

78.  I have no doubt that in case my construction of Special Condition 44 is incorrect, the applicant is nonetheless estopped from asserting that it was prevented by Special Condition 44(b) from carrying out general building works, so that the building period of 36 months laid down in Special Condition 12 did not begin to run.

Waiver

79.  I can deal with Mr Fok’s second alternative argument based on waiver very briefly.  Counsel’s argument is that Special Condition 44 is primarily for the benefit of the government.  It is up to the government to waive it by not notifying (through the Director of Environmental Protection) the applicant of any environmental problems (and a fortiori, by requiring the applicant to proceed with the building works).  In that case, the prohibition against commencement of general building works in Special Condition 44(b) will lapse and there will no longer be anything to stop the building period of 36 months from running – even according to the applicant’s construction of the relevant conditions (which I do not accept).

80.  On the facts as outlined above, I agree with Mr Fok’s argument.  I agree that primarily Special Condition 44 is there for the benefit of the government.  Once waived, time will begin to run.  The contemporaneous documents, particularly the repeated applications for an extension of time which were partially granted, were more than sufficient to show that the government must have waived Special Condition 44, well to the knowledge of the applicant.

81.  Indeed, one can take the argument one step further.  Even if (which is not my primary view) Special Condition 44 were there for the benefit of both parties, in the light of the contemporaneous documents and conduct of both parties, both sides must be taken to have waived Special Condition 44, with the result that the 36 months building period has long begun to run and thus the need for the repeated applications for an extension of time. 

82.  Mr Barlow submits that the building covenant in the Conditions of Grant cannot be waived orally or by conduct because they are central to the grant, the Special Conditions are inter-related and Special Condition 44 specifically requires the obligations laid down there to be performed “in writing”.

83.  Mr Barlow has cited no authority in support of his proposition.  I do not accept it.  In my view, the obligations imposed in Special Condition 44 can be waived, just like any other contractual obligations.  And in particular, the waiver can cover the requirement in the Special Condition that the obligations be performed “in writing”.

In conclusion …

84.  On these two alternative grounds submitted by Mr Fok, I am of the view that even if, contrary to my construction, Special Condition 44(b) constitutes an indefinite prohibition against commencement of general building works so that the time under the building covenant does not begin to run whilst the prohibition lasts, the applicant is estopped from so asserting given the common assumption of the parties at the material times that there was no impediment to the commencement or carrying out of general building works.  Alternatively, the prohibition has been waived by the government or both parties and time has long begun to run (and expired).

85.  Mr Barlow argues that estoppel and waiver were never argued as such before the Chief Executive in Council.  It is not open to the government to rely on them in these judicial proceedings.

86.  I am not sure if I follow the logic of the argument.  Certainly all the facts material to the arguments based on estoppel and waiver were placed before the Chief Executive in Council.  Moreover, in the present context, what is important is whether the Chief Executive in Council has come to the right conclusion on the lawfulness of the re-entry, on the hypothesis that it was a question that he could decide.  I do not see why the government cannot raise arguments based on estoppel and waiver in these judicial proceedings to support the lawfulness of the re-entry – a conclusion which, ex hypothesi, the Chief Executive in Council must have reached.

87.  In conclusion, I reject the applicant’s argument based on the lawfulness of the re-entry.

A failure to give reasons?

88.  Turning to the failure to give reasons, the first question is whether the Chief Executive in Council has any duty to give reasons for his decision to dismiss the petition in the first place.  Despite development of the law, there is as yet no general duty, applicable across the board, for a decision-maker to provide reasons for his decision.  Certainly, the Ordinance does not specifically require the giving of reasons.

89.  There have been previous cases in our courts dealing with similar questions but in different contexts: for instance, Hussain v The Chief Executive in Council, HCAL 163/2002, a decision of this Court (18 November 2003), paras 16 to 32; Cheng Chui Ping v The Chief Executive of the HKSAR, HCAL 1366/2001, Hartmann J (7 January 2002), paras 92 to 99, affirmed on appeal: CACV 138/2002 (10 September 2002).

90.  In the present case, all that the Deputy Clerk of the Executive Council has said in his reply letter dated 14 November 2006 is as follows:

“Having considered the background, the land grant, the policy on granting time extension for development, the re-entry decision, the petition launched, and the submissions advanced by the respondent and the petitioner, the Chief Executive in Council dismissed the petition on 26 September 2006.  You were so informed on 5 October 2006 vide a letter of the Housing, Planning and Lands Bureau.  We have nothing further to add to that.

You are also aware that, following the submission of your client’s petition, both the petitioner and the respondent department had been given chances to submit their comments and responses on the petition, with the former given the opportunity to provide the “final comments”.  The petition and the comments put forward by the two parties were submitted to Members of the Executive Council for consideration.  The Chief Executive in Council determined the petition at one of its weekly meetings, on 26 September 2006.”

91.  In determining whether the Chief Executive in Council has the duty to give reasons in the present case, I bear in mind a number of matters.  First, the decision of the Chief Executive in Council is clearly meant to be final given the bar against subsequent action, save for the limited recourse available to an unsuccessful former owner by means of judicial review.  No appeal is provided for.  The need for providing reasons, particularly detailed reasons, in order to facilitate the prosecution of an appeal is non-existent. 

92.  As regards the need to provide reasons to facilitate an application for judicial review based on the substantive merits of the decision (in the public law sense) – eg Wednesbury unreasonableness, capriciousness, arbitrariness, irrationality etc, it should be pointed out that the grant of relief (in the sense of indulgence) by the Chief Executive in Council involves a consideration of extra legal or non-justiciable policy grounds (something which the court in its equitable jurisdiction cannot do).  Indeed this is a common ground of the parties.  The petition invokes the exercise of a wide discretion to grant a former owner relief against the re-entry.  By the nature of things, it is a policy decision not really suitable for judicial scrutiny or intervention, whether in terms of scope or content.

93.  Neither the Chief Executive nor the Chief Executive in Council is a court of law or a tribunal.  A petition requires the Chief Executive or the Chief Executive in Council to exercise essentially a purely administrative function and make an administrative decision based on policy considerations as well as the particular facts of a given case.

94.  By definition, the re-entry and thus the petition arose out of a breach by the former owner of a condition or covenant in the relevant government lease or conditions of grant (or the like), which gave rise to a right of re-entry in the first place.  The Ordinance, despite its detailed provisions, merely provides for a simplified and convenient way of effecting forfeiture of the relevant lease or tenancy, in the form of a deemed re-entry.  It does not change the substance of the matter.  The provision of an option to petition the Chief Executive in Council does not provide anything new.  In its private capacity as the freeholder of land in Hong Kong, the government as represented by the Chief Executive may always be approached by the former owner for relief/indulgence in relation to the re-entry.  It is up to the government as represented by Chief Executive in its private capacity as freeholder to decide whether to grant such indulgence.  Indeed it is the applicant’s own submission that under the petition route, the Chief Executive has the power to overrule his subordinates on policy or non-justiciable grounds.  Thus analysed, it is essentially a private matter between the government/Chief Executive as freeholder and the former owner. The fact that because of the statutory framework within which everything is placed, the ultimate decision of the Chief Executive in Council is now amenable to judicial review (as Mr Fok has conceded) does not really, in my view, alter the nature of the Chief Executive in Council’s decision in relation to the petition.

95.  In those circumstances, the need for the provision of reasons so as to enable the court to judicially review the decision to dismiss the petition on its substantive merits is militated against by the fact that the decision itself is very much a decision on private and policy considerations, which the court will very rarely interfere with.

96.  I have already concluded that such a petition cannot deal with the question of the lawfulness of the re-entry.  That reduces the need for the provision of reasons.  It would have been otherwise if the Chief Executive in Council were competent to deal with the question of lawfulness.  The other side of the same coin is that if an applicant wants reasons, he should go to the Court of First Instance for relief, which will be bound to supply reasons for its decision.  So will the Court of Appeal and Court of Final Appeal, if the matter should reach there.

97.  Ultimately the question is one of fairness.  In my view, if the former owner should seek to invoke the wide discretion of the Chief Executive in Council to grant him indulgence, a discretion going beyond the equitable jurisdiction of the Court of First Instance in granting relief, not getting reasons for the decision of the Chief Executive in Council in relation to his petition is not an unfair price to pay.

98.  On the facts of the present case, I do not find the decision to dismiss the petition to be so aberrant as to call for the giving of reasons.

99.  Moreover, very full and detailed submissions have been gathered by the Chief Executive in Council in relation to the question of relief (indulgence).  In the absence of any suggestions to the contrary, the decision dismissing the petition may be taken as an endorsement by the Chief Executive in Council of those reasons advanced by the Lands Department (and other relevant government departments) in opposition to the application for relief.  In any event, in the circumstances of the case, I am of the view that the very brief explanation of the circumstances under which the Chief Executive in Council has reached his decision in dismissing the petition given in the letter of reply by the Deputy Clerk of the Executive Council is sufficient for the purposes of explaining the decision in question. 

100.  In any event, I agree with Mr Fok’s submission that the appropriate relief in respect of a (hypothetical) failure to give reasons in the present case is the grant of an order of mandamus to require the Chief Executive in Council to give reasons for his decision.  It is the only proper relief.  Quashing the decision would be an over-reaction.

101.  I do not agree that the decisions of the English Court of Appeal in R v Immigration Appeal Tribunal, ex parte Khan [1983] 1 QB 790 and R v Civil Service Appeal Board, ex parte Cunningham [1991] 4 All ER 310, where the respective decisions were quashed against the background of a failure to give reasons, support the very sweeping proposition advanced by Mr Barlow that whenever there is a failure to give reasons, the proper remedy must be to quash the relevant decision.  I do not agree with such a general proposition.  In the present case, if it had been my decision that the Chief Executive in Council had failed to give adequate reasons for his decision, all I think the circumstances and fairness of the case would require the Court to do would be the making of an order directing the Chief Executive in Council to provide such reasons.  I would not be prepared to quash the decision simply for the failure to give reasons.

102.  In conclusion, I also reject this ground of judicial review.

Relief ought to be granted?

103.  As regards the vague suggestion that on the facts of the present case, the Chief Executive in Council ought to have acceded to the petition and granted relief (on terms), not only is this particular ground not specifically relied on in the form 86A which is a serious failing (see Cathay Pacific Airways Flight Attendants Union v The Director-General of Civil Aviation, CACV 324/2005, 23 March 2007), it is also without substance.  The Court does not sit here on appeal from the decision of the Chief Executive in Council.  Unless it can be demonstrated that the decision is Wednesbury unreasonable, irrational etc – which has not even been seriously attempted, the Court will not interfere with it, other public law grounds not being in issue (apart from the question of giving reasons).

Unjust enrichment

104.  Paragraph 19(3) of the form 86A argues that the government should not be “unjustly enriched” by obtaining the benefit of the site formation and piling works that have already been completed on the land without reimbursing the applicant for the same.  The point has not been pursued at the hearing.  In those circumstances, I need say no more about it save to observe that section 9 of the Ordinance makes no provision for the payment of reimbursement or the like to the former owner, particularly in a case where the re-entry is upheld by the Chief Executive in Council.

Outcome

105.  For all the above reasons, the present application for judicial review must be dismissed.  I so order.  I further order that the applicant pay to the respondent the costs of these proceedings, to be taxed if not agreed.

106.  I thank counsel for their assistance.