MOK KWONG CHING v. SECRETARY FOR CIVIL SERVICE and Another

1996, NO. MP 4100

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. The Hong Kong Government provides housing benefits for her employees. As far as local civil servants are concerned, prior to 1981, such housing benefits took the forms of Non-Departmental Quarters (NDQ), Departmental Quarters (DQ) and Private Tenancy Allowances (PTA). NDQ was available for officers on the Master Pay Scale (MPS) Point 45 and above, DQ for disciplined services staffs or other officers on a service need basis and PTA for officers on MPS Point 34 and above. Officers on MPS Point 33 or under were not entitled to any housing benefits other than DQ.

2. In 1981, the Government introduced the Home Purchase Scheme (HPS) as an additional form of housing benefit to benefit more civil servants in order to maintain a more contented and stable work force. At the same time it was hoped that the commitment of the Government to provide the more expensive housing benefits such as NDQ and PTA could be reduced.

3. Under the HPS, officers on MPS Point 22 and above or those with 20 or more years of service are eligible to apply. A monthly allowance relating to the salary of the officer is payable for a maximum aggregate of 120 months to assist the officer with repayment of mortgage loans for the purchase of residential property in Hong Kong. A downpayment loan is also available to meet downpayment expenses to be repaid within 10 years at concessionary interest rates. In order to limit the commitment of the Government, a quota system was introduced as part of the scheme.

4. In 1990, the Government introduced yet another form of housing benefits, namely Home Financing Scheme (HFS), for officers on MPS Point 34 and above. Similarly to HPS, the HFS provides a monthly allowance payable for a maximum of 10 years and a downpayment loan repayable with a concessionary interest rate. The monthly rates of the HFS are substantially higher than that of the HPS in order to attract officers on MPS Points 34 and above to give up their entitlement to NDQ or PTA. Part of the monthly allowance is not accountable and there is no limit to the number of officers who can join the scheme.

5. Officers appointed after the introduction of the HFS are not eligible for NDQ or PTA. Those who were appointed before and had not joined the HPS are given an option to join the HFS by giving up their entitlement to NDQ or PTA. The option, once exercised, was irrevocable.

6. A one-off concession was given to those officers who had joined the HPS before the introduction of the HFS because when they joined the HPS, they had no knowledge of the HFS. If they were already on MPS Point 34 or above at the time when HFS was introduced or reached MPS Points 34 thereafter, they might claim a special higher HPS rate for the remainder of their ten-year entitlement. Such concession was not granted to officers who joined the HPS after the introduction of the HFS as they knew the HFS rates before they decided to join the HPS.

7. As HFS, HPS and other housing benefits are fringe benefits provided to officers according to criteria including salary point, date of first appointment, date of current appointment, date of joining the schemes and family situation, officers in the same rank may not receive the same benefits.

8. It is common ground that the applicant, Ms Mok Kwong Ching first joined the civil service in November 1971. In 1991, she received salary at MPS Point 30 and was therefore entitled to receive housing benefit in the form of HPS. She applied for and did receive HPS payments between June 1991 and July 1992 when she resigned from the civil service. There was a period between June 1991 and July 1992 when the applicant was on no pay study leave and the HPS payment was suspended. Under the HPS, the applicant had only received a total sum of about $46,000.00. It is not disputed that as a participant of the HPS, the applicant was fully aware of the terms and conditions of the HPS and was bound by them. The relevant terms and conditions are as follows:

"12. (2) (a) An officer who is granted a loan under the scheme and who leaves the Government service and subsequently rejoins shall not be eligible for assistance under the Housing Loan Scheme on re-appointment.

(b) An officer who has commenced to receive an allowance under the scheme and who leaves the Government service and subsequently rejoins shall not be eligible for assistance under other housing benefits on re-appointment.

(c) If the total amount of the allowance received by him is for a period of less than 120 months, upon rejoining the Government service he may apply to receive the allowance for the period equivalent to the difference between 120 months and the period of allowance received. Each application will be considered on its merits."

9. The applicant acknowledges that she understood those terms and conditions and agreed to abide by them. She was also reminded of the same when she withdrew from the HPS in 1992 when she resigned from the Government service.

10. Between 1992 and 1995, the applicant pursued further studies and obtained professional legal qualifications.

11. The applicant, rejoined the civil service and became a legal aid counsel of the Legal Aid Department on 18th September 1995. When she started as a legal aid counsel, she received salary at MPS Point 33. In June 1996, the applicant reached the MPS Point 34 and she applied to join the HFS. Her application was refused by the Secretary for the Civil Service (the Secretary) on 2nd September 1996.

12. A further application to the Director of Accounting Services (the Director) for him to exercise his discretion under para. 1741 (d) of the Civil Service Regulations ("CSR 1741(d)") to give exceptional approval for the applicant to join the HFS also failed.

13. The applicant now seeks a judicial review of the decisions of the Secretary and the Director. The applicant claims that she is entitled to join the HFS in accordance with the criteria laid down in Civil Service Regulations 1602(b) ("CSR 1602(b)") or alternatively under the discretion of the Director under CSR 1741(d) to be granted exceptional approval.

14. The parties agreed that for the purpose of the present application, the Secretary and the Director should be treated as the same person as the Director was delegated with the power to implement the HFS by the Secretary.

15. At the time when the applicant applied to join the HPS, the applicant was not entitled to the HFS as she was not yet on MPS Point 34. The Secretary/Director argues that under the relevant Civil Service Regulations, an officer who has joined the HPS is not eligible for the HFS and that an officer's eligibility for the HFS will be forfeited once he has joined the HPS.

16. It is also suggested that when the applicant was re-appointed in 1995, the aforesaid limitation and eligibility criteria for the HFS were brought to her attention and she accepted all such terms.

17. CSR 1602(b) provides the followings:-

"An officer who meets the following eligibility criteria may apply for the Home Financing Scheme-..........

(b) the officer or his spouse has not joined the Home Purchase Scheme or Housing Loan Scheme..................."

18. The applicant contends that the interpretation by the Secretary of the term "has not joined" to mean "has not ever been a member of" the HPS was wrong. It is argued that its true meaning should be "is not now a member of". As the applicant was not a member of the HPS at the time of her application to join the HFS, the Secretary was wrong to reject her application. The decision of the Secretary is being challenged as being unlawfully made.

19. The decision of the Secretary/Director is also being challenged on the basis that they have refused to consider the exercise of the discretion in favour of the applicant and/or that their decision in the exercise of the discretion was unreasonable in that they have not taken relevant matters into consideration and/or have taken into consideration irrelevant matters.

20. I do not find the issue pertaining to the proper interpretation of the Civil Service Regulations difficult to resolve. As I have observed in the course of Counsel's argument, if the term "has joined the HPS" means "has joined and is currently a member of the HPS" as contended by Counsel for the applicant, an officer who has joined the HPS can avoid the restriction by simply withdrawing from the HPS for a short period. He can then claim to be entitled to the other housing benefit as he is no longer a member of the HPS.

21. Such approach, clearly does not reflect the intention of the regulations in question. Apart from the regulations defining eligibility, there are also provisions pertaining to the forfeiture of other housing benefits on joining the HPS as follows:-

"............, the eligibility of an officer for any other housing benefits shall be forfeited as from the effective date of commencement of the payment of the allowance........."

"An officer who has commenced to receive an allowance under the scheme and who leaves the Government service and subsequently rejoins shall not be eligible for assistance under other housing benefits on re-appointment."

"As from the date an officer commences to receive Home Purchase Allowance under the HPS, Home Financing Allowance under the HFS.........his eligibility for the following civil service housing benefits and civil service housing related benefits is immediately and irrevocably forfeited."

22. I cannot ignore that under CSR 1602(b), "receipt of allowance under the Home Purchase Scheme .............. is deemed as having joined the Home Purchase Scheme."

23. The applicant had received allowance under the HPS, be it just for a few months and she is deemed to have joined the HPS.

24. I have considered the full text of the regulations in question. Taking also into consideration one of the terms and conditions of the HPS that an officer who has commenced to receive an allowance under the HPS shall not be eligible for assistance under other housing benefits and the other provisions relating to the forfeiture of other housing benefits, in my view, the intention of the regulations governing the HFS is that anyone who has at any time in the past joined the HPS is not eligible to apply to join the HFS.

25. The phrase "has not joined the HPS" is a simple English phrase. It does not mean "is not presently a member of HPS" as suggested by Counsel for the applicant.

26. In Edwards v. Griffiths [1953] 1 W.L.R. 1199, in construing an insurance certificate which covered a person "who holds or has held a licence", the Court held that a driver who had previously held a licence was insured, although at the time when he was driving he had no licence because he had been unable to renew it owing to mental disability.

27. In my view, "has not joined" in the context of the regulations in question carries the meaning of "had not joined" as well and is only meant to cover any one who "has not at any time in the past joined". Under CSR 1602(b), the applicant is not eligible to apply for the HFS because she "has joined" the HPS in 1991.

28. The applicant's contention on the interpretation of CSR 1602(b) fails.

29. CSR 1741(d) gives the Director the "absolute right and discretion to ..... give exceptional approvals" to an officer to join the HFS.

30. In connection with her application to join the HFS, the applicant has had a number of correspondence with the Secretary and the Director between July and September 1996. Initially, she argued that she was eligible to join the HFS. She set out various matters to support such contention and it may not be necessary to go into such matters in details.

31. In a memo dated 29.7.1996, the applicant again set out in details why she claimed to be eligible to join the HFS. It was only in the last paragraph of such memo that she mentioned the exceptional approval for the first time as follows:-

"I appeal to you in exercising your discretion under CSR 1741 (d) in giving exceptional approval to my application."

32. The Director almost gave an immediate reply on 30.7.1996 in which the Director stated:-

"........regret that your request for joining the Home Financing Scheme cannot be acceded to under the existing policy. Hence, it would be inappropriate for me in this case to exercise the authority under CSR 1741(d)."

33. There were then further correspondence and in a memo dated 10.8.1996, the applicant detailed the circumstance to justify her claim that her case was exceptional and that the discretion under CSR 1741(d) should be exercised in her favour.

34. The Secretary then dealt with the points raised by the applicant in a reply memo dated 14.8.1996. The Secretary concluded by saying, "As explained to you above, your eligibility for the HFS has clearly been ruled out by all the relevant rules. You will appreciate that any discretion to give exceptional approval under CSR 1741(d)(sic) must be fully justified. I regret that we do not see any grounds in your case which justify such discretion."

35. It is well established that an authority cannot close its mind to a case and thus fail to exercise its discretion lawfully, by blindly following a policy laid down in advance. It is a fundamental rule for the exercise of discretionary power that discretion must be brought to bear on every case: each one must be considered on it own merits and decided as the public interest requires at the time.

36. Templeman L.J. in Att.Gen. ex rel. Tilley v. Wandsworth L.B.C [1891] 1 W.L.R. 854 had the following to say at P. 858:-

"On well recognised principles public authorities are not entitled to fetter the exercise of discretion or to fetter the manner in which they are empowered to discharge the many duties that are thrust on them. They must at all times, in every particular case, consider how to exercise their discretion and how to perform their duties."

37. When the applicant raised the question of the discretion under CSR 1741(d) for the first time in her memo dated 29.7.1996, the Director responded the next day by saying that it would be inappropriate for him to exercise the authority under CSR 1741 (d)(sic) as the application to join the HFS could not be acceded to under the existing policy.

38. I appreciate that the Director might be eager to give as early a reply as possible to the applicant and that the applicant had not at that stage set out the detailed grounds in her request for the exercise of the discretion, the Director was obliged to consider the applicant's case on its own merits. In so far as the Director refused to consider the exercise of his discretion because it was contrary to the existing policy as demonstrated in his memo dated 30.7.1996 to the applicant, the Director was in error.

39. Having made such a finding, it is still within my discretion to refuse to grant relief in judicial review proceedings despite the flaw in the decision making process of the Director. (see R. v. Secretary of State for the Environment, Ex parte Walter reported on The Times Law Reports 2.9.1997.)

40. It is clear that the Secretary/Director had again considered the applicant's case after she had advanced the various matters to support her claim that the discretion under CSR 1741(d) should be exercised in her favour. The earlier decision made on 30.7.96 cannot in the circumstances be of too much significance.

41. It falls upon me to consider if the refusal to exercise the discretion in favour of the applicant was unreasonable, unreasonable in the sense of the often quoted passage of Lord Greene M.R. in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1948] 1 K.B. 223 at pp. 233-234:

"The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority it may still be possible to say, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere .......................

........... The power of the court to interfere in each case is not as an appellant authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority have contravened the law by"- and I emphasise the next words- "acting in excess of the powers which Parliament has confided in them."

42. Diplock L.J. made similar observation in Luby v. Newcastle-under-Lyme Corporation [1964] 2 Q.B. 64 at p. 72:

"The court's control over the exercise by a local authority of a discretion conferred upon it by Parliament is limited to ensuring that the local authority has acted within the powers conferred. It is not for the court to substitute its own view of what is desirable policy in relation to the subject-matter of the discretion so conferred. It is only if it is exercised in a manner which no reasonable man could consider justifiable that the court is entitled to interfere."

43. CSR 1741(d) confers upon the Director the absolute right and discretion to 'give exceptional approvals' to an officer to join the HFS.

44. Mr. Merry, on behalf of the applicant points out that the background of the applicant is special or perhaps unique in that she had served the Government for a long time in a modest job. She then left the service and spent years in improving her qualifications and experience before she rejoined the Government as a professional officer which is completely different from her previous job.

45. The applicant's background may be unusual. Her effort to improve herself is admirable. But is the decision of the Secretary that her background did not justify her being granted exceptional approval a decision which no reasonable man could consider justifiable?

46. As pointed out by Mr. Kwok on behalf of the Secretary, the rates of the allowance under the HPS are provided up to the highest ranking civil servant and the scale of the allowance remain the same throughout the career of the officer. The allowance is payable within a maximum aggregate period of 120 months during an officer's service irrespective of whether such service is broken. The allowance will be suspended when the officer is on no-pay leave.

47. The HPS also expressly provided that an officer who has commenced to receive an allowance under the scheme and who leaves the Government service and subsequently rejoins shall not be eligible for assistance under other housing benefits on re-appointment. If the total amount of the allowance received by the officer is for a period less than 120 months, upon rejoining the Government service he may apply to receive the allowance for the period equivalent to the difference between 120 months and the period of allowance received.

48. It is also clear that the terms and conditions of HPS have made provisions for officers with long service and have anticipated the promotion of the officers to the highest possible ranking within the civil service. They have also provided for officers leaving the service and subsequently re-joining the service.

49. The "unusual" or "unique" background and circumstances of the applicant are all within the contemplation of the HPS and cannot be described as "exceptional" at all.

50. There is, in my view nothing unreasonable about the decision of the Secretary not to grant exceptional approval to the applicant.

51. The applicant complains that the Secretary had taken into consideration that when she joined HPS in 1991, she already owned a property and she re-mortgaged it to cash in. The property was sold in 1994. It is suggested that she should not be penalised for her thrift or astuteness.

52. It must be remembered that when the applicant re-mortgaged her property in 1991, she used the HPS allowance to pay off the mortgage instalments. Bearing in mind that one of the objects of the government housing benefits policy, including the HPS is to encourage home ownership, the fact that the applicant had used the HPS allowance to pay off the mortgage of her property and then sold it is certainly a factor that the Secretary is entitled to take into consideration on the issue of exceptional approval.

53. The applicant knew or should have known that when she joined HPS, her eligibility for other housing benefits, including HFS would be forfeited. When she resigned in 1992, she was reminded of the same and that should she rejoin the civil services she might apply to rejoin the HPS only.

54. When the applicant was offered re-appointment to the civil service in 1995 after a break of over three years, it was again pointed out to her that she would not be eligible to join HFS as she "has joined the HPS". It was with all such knowledge that the applicant rejoined the civil service in September 1995.

55. I am not persuaded at all that the decision not to grant exceptional approval to the applicant to join the HFS can be said to be unreasonable in the "Wednesbury" sense.

56. The application must therefore be dismissed.

57. I also make an order nisi that the applicant is to pay the costs of the respondents to be taxed if not agreed. The order nisi on costs will be made absolute 14 days after the handing down of the judgment.

58. The applicant's own cost is to be taxed in accordance with the Legal Aid Regulations.