SKY ACE ENTERPRISES LTD v. APPEAL TRIBUNAL (BUILDINGS)

CACV 126/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 126 OF 2015

(ON APPEAL FROM HCAL 157 OF 2014)

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

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

_________________________

REASONS FOR JUDGMENT

_________________________

Hon Barma JA (giving the Reasons for Judgment of the Court):

1. This was an appeal by the applicant, Sky Ace Enterprises Limited, against the Order of Au J dated 13 May 2015 refusing the applicant’s application for leave to apply for judicial review of the determination of the respondent (the Appeal Tribunal (Buildings)) dated 29 August 2014. The Building Authority was joined in that application, and in this appeal, as an interested party. However, in the event, neither the respondent nor the interested party took part in the appeal, having indicated at an early stage that they did not wish to be heard.

2. At the outset of the appeal, we indicated to Mr Ismail, counsel for the applicant, that we were minded to allow the appeal and to grant leave to the applicant to apply for judicial review of the respondent’s determination, limited to the second, third and part of the fourth grounds on which the application was based.  So far as the fourth ground was concerned, we indicated that we were not minded to give leave for the applicant to pursue the contention that adequate reasons had not been given for the determination.  Having taken instructions, Mr Ismail informed us that his client was content with that, and that he would not therefore seek to pursue the appeal in relation to the first ground, or the part of the fourth ground just mentioned.  We accordingly allowed the appeal in the manner indicated, and ordered that the costs of the appeal be in the cause of the judicial review to be taken out by the applicant.  These are our reasons for allowing the appeal to that extent.  The delay in handing down these reasons is regretted.

3. The proceedings concern a proposed redevelopment of property owned by the applicant at 1, 3, 5 and 7 Hei Wo Street, in North Point.  At present, a part of Hei Wo Street is used as a private carpark by the applicant, with vehicular access restricted by the installation of a metal gate and drop bar to control access to it.  A security guard booth has also been placed by the gate.  The broader issue for consideration by the respondent was whether or not this area (which was referred to as the “Yellow Portion”, having been shaded in that colour in Drawing SK-001 (Rev 1) placed before the respondent), should be treated for the purposes of calculating the site area of the proposed development, which would affect the development potential of the site.  In order to determine this, it was necessary for the respondent to determine whether or not the Yellow Portion was a “street” within the meaning of Regulation 23(2)(a) of the Building (Planning) Regulations (Cap 123F) (“the Regulations”), and if so, whether an exemption from or modification of Regulation 23(2)(a) should be granted pursuant to section 42(1) of the Buildings Ordinance (Cap 123) (“the Ordinance”).

4. It was common ground in the proceedings before the respondent and in the court below that in order to determine whether or not the Yellow Portion was a “street” for the purposes of the relevant regulation, it was necessary to consider whether or not the area under consideration had the physical appearance of a street, and if so, whether there was some third party right of way over the area - these being the relevant legal requirements as established by Building Authority v Appeal Tribunal (Buildings) & Estoree Ltd (unreported, HCAL 147/2002, 25 July 2003).  The respondent held that the Yellow Portion constituted a street for the purposes of calculating the site area.  It further held that no exemption should be granted as there were, in its view, no special circumstances as would justify doing so.

5. By its Form 86, the applicant sought to challenge those determinations on the following four grounds:

(1)  Mistake of fact amounting to an error of law or Wednesbury unreasonableness in the respondent’s finding that the Yellow Portion constituted a “street” in terms of physical appearance.

(2)  Error of law in the respondent’s finding that the Government did not abandon its right of way over the Yellow Portion.

(3)  Error of law in the respondent’s finding that the Incorporated Owners of Hollywood Court (a neighbouring building, also on Hei Wo Street, who also had a right of way over Hei Wo Street) did not abandon their right of way over the Yellow Portion.

(4)  Failure to give adequate reasons, to have regard to relevant factors and/or to place appropriate weight on relevant factors in coming to the conclusion that there were no special circumstances to justify the grant of an exemption under section 42 of the Ordinance.

6. Au J refused leave to apply for judicial review.  In the CALL‑1 Form by which he provided brief reasons for his decision, the judge concluded that the grounds on which the applicant sought to rely were not reasonably arguable, holding that (apart from the second ground) the grounds put forward sought to challenge findings of fact based on no more than disagreement as to the weight attributed by the respondent to the matters relied upon when the respondent assessed those matters.  The judge further explained that he did not consider that there was any lack of evidence to support the respondent’s findings, or that such findings were Wednesbury unreasonable, and expressed the view that adequate reasons had been given, in that it was possible for the applicant to understand why its application had failed.

7. As far as the second ground was concerned, the judge appears to have regarded it as reasonably arguable.  However, he declined to grant leave for judicial review on the basis that even if the Government had arguably abandoned its right of way over the Yellow Portion, this would not assist the applicant, as the respondent had also found that the Incorporated Owners of Hollywood Court had not done so, and that this was a finding of fact which was not challengeable, for the reasons the judge had given.

8. Mr Ismail’s skeleton argument set out in some detail his submissions on each of the four grounds.  As we have noted, at the hearing, Mr Ismail did not seek to pursue the first ground.  In essence, the argument on the first ground, as adumbrated in the skeleton argument, was that in concluding that the Yellow Portion had the physical appearance of a street, the respondent had failed to take account of the element of control that the applicant was able to exercise over the Yellow Portion by means of the gate and barrier, and the stationing of a security guard at the entrance, and that these matters were not usually to be found on a street.  However, it seems to us that all of these matters were clearly things of which the respondent was aware.  The respondent also had regard to the actual appearance of the yellow portion, which was paved and had raised pavements, as commonly found in the case of a street.  The parking spaces delineated were also broadly similar to roadside parking spaces (albeit they also had removable metal bollards, which might be less common).  It seems to us that the respondent had considered all of these matters before coming to the conclusion that the Yellow Portion had the physical appearance of a street, and that this was a conclusion which was open to the respondent.  We therefore did not regard this ground as reasonably arguable, and were not prepared to give leave to the applicant to bring judicial review proceedings relying on this ground.

9. We shall now deal briefly with the other grounds relied upon by the applicant.  As we consider each of them to be reasonably arguable, it is neither necessary nor appropriate for us to examine them in depth, as their ultimate success or failure is a matter to be considered in the substantive judicial review proceedings.  Nothing that we say below should be taken as being an expression of a view as to their actual merits.

10. The judge recognised that the second ground was arguable.  We think he was right to do so.  One matter relied upon by the applicant to suggest that the Government had abandoned the right of way over Hei Wo Street (including the Yellow Portion) which it had reserved to itself in the Government lease in respect of the site was the fact that the Government (admittedly through a different department) had charged rates for the use by the applicant of the Yellow Portion as a car parking facility.  But as the applicant pointed out, it also relied on the very long use of the Yellow Portion as a car park, and the consequent obstruction of the right of way for some 50 years, a state of affairs in which the Government would appear to have acquiesced, as evidence of such abandonment.  We agree with Mr Ismail that this argument, as well as his argument that the charging of rates could be regarded as evidence of abandonment of the right of way by the Government, is sufficiently arguable to justify the grant of leave to apply for judicial review.

11. The judge’s reason for declining to grant leave, notwithstanding that he thought that this ground was arguable, was that this ground would not be sufficient on its own, since it would also be necessary for the applicant to demonstrate a reasonably arguable case for saying that the respondent had also erred in relation to the right of way in favour of the Incorporated Owners of Hollywood Court, and in his view, the applicant could not show this.  As noted above, the judge characterised this issue as a finding of fact, in respect of which he considered that there were no reasonable grounds of challenge.  This brings us to the third ground relied upon by the applicant.

12. As Mr Ismail submitted, in order to determine whether or not the Incorporated Owners of Hollywood Court had abandoned their right of way over the Yellow Portion, it was necessary for the respondent to examine the arrangement entered into by the parties to that arrangement.  The respondent concluded that the arrangement was one by which the owners had agreed amongst themselves to “forbear the blocking off of part of the Yellow Portion in return for a share of the rentals from the parking spaces”.  However, we are satisfied that it is reasonably arguable that the effect of the arrangement was not one whereby the Incorporated Owners retained a right of way (which they forbore from enforcing) but was rather one under which they gave up the right of way in exchange for the rental payments in respect of the use of the Yellow Portion as a car park.  This involves a consideration of the legal effect of the arrangements, and thus the question at issue is not one of pure fact, but is one of mixed fact and law.  Having regard to the evidence before the tribunal, we consider that it is reasonably arguable that the effect of the arrangement was as suggested by the applicant, and that leave to seek judicial review should therefore be granted on this ground also.

13. In relation to the fourth ground, Mr Ismail suggested that a number of factors had not been given proper consideration by the respondent in rejecting the applicant’s submission that there were special circumstances to support the grant of an exemption under section 42 of the Ordinance.  These factors included the fact that the Yellow Portion would be converted into a wider and better pedestrian passageway and vehicular access, which would (among other things) provide better access for emergency vehicles; that the development would be in the public interest as it would improve the immediate area; that the development would remove all unauthorised building works on the site; and that the development potential would be substantially curtailed (by a reduction of some 30%) if the Yellow Portion were not included in the site area calculation.  He contended that the reasons given by the respondent for rejecting the contention that there were special circumstances were flawed.  He submitted further that the refusal to recognise the existence of special circumstances was Wednesbury unreasonable.  He also contended that the reasons given were inadequate, in that the respondent simply referred to factors adverse to the applicant’s case, and did not explain why the matters relied upon by the applicant did not suffice to establish the existence of special circumstances.

14. We agree with Mr Ismail that the first two of these points are reasonably arguable.  That is not to say that they will succeed at the end of the day, but merely that they should be permitted to be raised in judicial review proceedings.  Accordingly, we give leave to the applicant to rely on them as well.  However, we do not consider that the argument based on inadequate reasons being given has reasonable prospects of success.  The respondent clearly explained its reasons for coming to the conclusion that there were no special circumstances, in a manner that was sufficient to convey to the applicant the basis on which that conclusion had been reached.  The reasons given were therefore not inadequate in the sense required to justify a challenge by way of judicial review.  Whether or not they were sufficient to justify the determination is a matter that the applicant can pursue under the other arguments that it wishes to put forward in respect of the alleged flaws in the reasoning, and the alleged Wednesbury unreasonableness of the determination that no special circumstances existed.

15. For the foregoing reasons, we considered that the appeal should be allowed to the extent that we indicated, and that the costs of the appeal should be in the cause of the substantive judicial review proceedings.