KING GLARE LTD v. SECRETARY FOR JUSTICE

HCAL 124/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 124 OF 2008

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J U D G M E N T

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1.  The Applicant seeks leave for application for judicial review in respect of the decision of the Building Authority to carry out the Building Order dated 17 August 2004 numbered C/TB/003299/04/HK.  That Building Order was served on Convey Advertising Company Limited [“Convey Advertising”].

2.  The Building Order was made in respect of building works carried out at the exterior walls of Hong Kong Mansion, No.1 Yee Wo Street.  Such works comprised of metal structures attached to the walls at the west of the building.  The structures provided the frameworks for advertising signage to be mounted thereon. 

3.  Originally, the Building Authority issued a similar building order against the registered owner of the exterior wall Bothlink Limited on 9 February 2004.  Bothlink wrote to the Building Authority on 18 February 2004 saying that the metal structures were installed and owned by Convey Advertising. 

4.  Convey Advertising wrote to the Building Authority on 12 March 2004.  In that letter, Convey Advertising admitted to be the owner of the signboard.  It went on to say,

“In accordance with the contractual arrangements existing for the signage modification purpose between the Owner and us and in particular the Agreement that we accept responsibility for any action required by your goodselves and take such action as necessary to deal with the matter as required by law.”

It then invited the Building Authority to serve the requisite notice under the Buildings Ordinance on it.  It also sought extension of time to appeal against the Bothlink building order.

5.  On 6 August 2004, the Building Authority revoked the Bothlink building order.

6.  17 August 2004, the Building Authority issued the Building Order the enforcement of which is the subject matter of the present proceedings.

7.  At the time when the Building Order was made, the applicable law was the Buildings Ordinance before the 2004 amendments came into operation.  The then Section 24 provided,

“(1)   Where any building has been erected, or where any building works’ or street works have been or are being carried out in contravention of any of the provisions of this Ordinance the Building Authority may by order in writing require-

(a) the demolition of the building, building works, or street works; or

(b) (Repealed 43 of 1993 s. 6);

(c) such alteration of the building, building works or street works as may be necessary to cause the same to comply with the provisions of this Ordinance, or otherwise to put an end to the contraventions thereof,

and in every case specify the time within which the demolition, alteration or work required by such order shall be commenced and the time within which the same shall be completed. (Amended 16 of 1966 s. 7; 43 of 1993 s. 6)

(2) An order made under subsection (1) shall be served, where -

(a) the building has been erected, on the owner thereof;

(b) the building works, other than a building, have been completed, on the owner thereof;

(c) the street works have been completed, on the frontagers; or

(d) the building works or street works have not been completed, on the person for whom such works are being carried out or his agent. (Replaced 43 of 1993 s. 6)

(3) If an order made under subsection (1) is not complied with, the Building Authority may demolish or alter or cause to be demolished or altered such building, building works or street works. (Amended L.N. 283 of 1986; 43 of 1993 s. 6)

(4) The cost of works carried out under subsection (3) may be recovered from the persons upon whom orders had been served under subsection (2); and where such an order had been served on frontagers the Building Authority shall apportion such cost-

(a) in the case of private streets, according to the frontages of the premises owned by such frontagers; or

(b) in the case of access roads, equally.

(5) (Repealed 43 of 1993 s. 6)

(Replaced 44 of 1959 s. 10)”

8.  Although the Building Order primarily requires Convey Advertising to demolish the building works in question within 60 days, its effect is not purely in personam.  By reason of Section 24(3), if the Building Order is not complied with, the Building Authority has the power to carry out the demolition works and recover the costs under Section 24(4) from the persons upon whom the order has been served. 

9.  Thus, in addition to being an order against Convey Advertising, the Building Order also constitutes the first step to direct enforcement action by Building Authority by way of actual demolition of unauthorized structures pursuant to Section 24(3).

10.  Convey Advertising appealed against the Building Order.  The appeal failed.  On 9 February 2006, the Buildings Appeal Tribunal dismissed the appeal. 

11.  Despite that, Convey Advertising did not comply with the Building Order.

12.  On 12 June 2006, the Applicant wrote to the Building Authority.  It referred to the Building Order issued against Convey advertising “as the agent for the Signboard Owner, [the Applicant]”.  It put forward a copy of the licence agreement and a writ issued by the landlord against it as evidence of the Applicant’s ownership of the signboards.  It invited the Building Authority to re-issue a new building order against it to supersede the Building Order. 

13.  The Building Authority did not issue any new building order.  Instead, it wrote to the Applicant on 16 February 2007,

“Since you have admitted as the owner of the subject unauthorized signboards, you should therefore be responsible for any actions taken against the unauthorized signboards by this Department.  I would take this opportunity to advise you to take immediate actions to remove the unauthorized signboards.  Failing which this Department may consider further enforcement actions against the captioned order under the provisions of the Buildings Ordinance.”

14.  On 21 December 2007, the Building Authority laid information in the Eastern Magistrates’ Courts against Convey Advertising to prosecute the latter for non-compliance with the Building Order pursuant to Section 40(1BA) of the Buildings Ordinance.

15.  Convey Advertising was convicted in the Magistracy on 3 September 2008.  It is appealing against the conviction.

16.  Given that no voluntary step had been taken to demolish the unauthorized structures, the Building Authority engaged a surveyor on 19 September 2008 to carry out the necessary investigation, design and supervision of the demolition works in respect of the unauthorized structures under the Building Order.

17.  Convey Advertising instructed a solicitor to write to the Building Authority regarding the engagement of the surveyor.  It said in a letter of 29 September 2008,

“We are instructed to write to inform you that at all material times, [Convey Advertising] was and yet is not the owner of the alleged metal structure(s) attached to the above-captioned Wall(s).  [Convey Advertising] therefore has no right to remove the same since such action will put our client liable to the owner in tort.”

18.  In a letter of 6 October 2008, the Building Authority indicated it would carry out the removal works.  On the same date, notice was given to the Applicant about the appointment of the surveyor and contractor and the intention to commence demolition works on 8 October 2008.

19.  The Applicant challenged the decisions of the Building Authority on several grounds.  After due consideration of submissions by counsel, I conclude that none of the grounds are reasonably arguable.  The threshold test laid down in Peter Po Fun Chan v Winnie Cheung [2008] 1 HKLRD 319 is not satisfied.

Illegality and irregularity

20.  The challenge based on illegality and procedural impropriety can be dealt with together.  The argument is that because the Building Order was not served on the Applicant, the requirement under Section 24(2) on service of the order has not been complied with.  Mr Fung SC relied on Re Pritchard, decd [1963] 1 Ch 502 to contend that in such circumstances, the Building Order is a nullity.

21.  Section 24(2)(b) requires the order to be served on the owner of the building works.  At the time when the Building Order was served on Convey Advertising, the materials before the Building Authority indicated that Convey Advertising was the owner, see the letter of 18 February 2004 from Bothlink and the admission in the letter of 12 March 2004.  Subsequent to the issue of the Building Order, Convey Advertising appealed against the same without stating that it was not the owner.

22.  It was only after the appeal failed that the Applicant asserted ownership of the signboards and described Convey Advertising as its agent in the letter of 12 June 2006.

23.  The Applicant had a close association with Convey Advertising.  Up to 27 June 2007, the two companies had common shareholders though the proportion of shareholding of each shareholder in each company is different.  There were also common directors up to July 2007 though each company also had directors not in the board of the other company.  Mr Fung quite properly accepted that the Applicant had knowledge of the Building Order even though it had not been served on it.  Despite that, the Applicant did not give any satisfactory explanation about why it stood by when Convey Advertising took it upon itself to represent to the Building Authority that it was owner and acted as if it was the owner in the Buildings Appeal Tribunal proceedings. 

24.  Notwithstanding that the Building Order was not served on the Applicant, Mr Fung did not dispute that it could appeal against that order as a person aggrieved under Section 44 of the Buildings Ordinance.  But counsel said it was not obliged to do so.

25.  In the Form 86A, verified by Affirmation of Raymond Mak, the project director of the Applicant (who prior to 2 July 2007 was also a director of Convey Advertising), only minimal information was given regarding the relationship between the Applicant and Convey Advertising and the role of the latter in respect of the unauthorized works.  At para.5, the following was said regarding Convey Advertising,

“At all material times its principal business consisted of introducing potential advertisers to owners and occupiers of exterior walls of buildings with a view to their reaching agreement for using the exterior walls for advertising purposes.  In addition, Convey Advertising also offers a service collecting from such advertisers rents or monthly payments due to the owners and occupiers of such exterior walls.”

26.  Regarding the arrangements between the Applicant and Convey Advertising, it was said at para.6 of the Form 86A,

“Since about 1994, Convey Advertising has been continuously introducing advertisers to rent advertising signage boards from the Applicant.”

27.  Mr Fung confirmed at the hearing before me that Convey Advertising collected rent for the Applicant from the advertisers.

28.  Counsel sought to draw a distinction between the metal structures and the advertising signage at the hearing.  He said the Applicant’s ownership was confined to the metal structures but not the signage.  Though the Applicant had a commercial interest in terms of receiving rent for use of the metal structures by the advertisers, the Applicant had no proprietary interest on the signage.

29.  As pointed out by Mr Lam SC, the point was not canvassed in the Form 86A.  More importantly, that seems to be contradictory to what was said at para.6 of Form 86A quoted above.

30.  Be that as it may, even assuming that the Applicant’s ownership is confined to the metal structures, on its own case Convey Advertising had been acting as its agent in terms of introduction of advertisers and collection of rents from them.

31.  Section 2(1) of the Buildings Ordinance has a wide definition for “owner”.  It includes “any person holding premises direct from the Government … any mortgagee in possession and any person receiving the rent of any premises, solely or with another, on his own behalf or that of any person, … and where such owner as above defined cannot be found or ascertained or is absent from Hong Kong or is under disability, the agent of such owner.”

32.  Mr Fung submitted that as a matter of law an owner is a person who possesses bundle of rights over property: the rights of exclusive enjoyment, of destruction, alteration and alienation, and of maintaining and recovering possession of the property from all other persons.  Thus, since Convey Advertising did not have such rights over the metal structures, it could not have been the owner.

33.  In my judgment, it depends on the purpose and the context in which one uses the expression “owner”.  For the purpose of Section 24 of the Buildings Ordinance, prima facie the definition in Section 2(1) is applicable.  Does the context require otherwise?

34.  We are dealing with enforcement actions regarding unauthorized structures.  On the one hand, one can see that primarily a building order should be served on a person who has the power to comply with it and usually it would be the owner.  On the other hand, it must be appreciated that the determination of legal ownership, especially when one is talking about legal ownership of an unauthorized structure, can on some occasions involve fine points of law and questions of fact the answer of which may not be apparent to the Building Authority.

35.  Take the present case as an example, the Applicant claims to be the owner of the metal structures.  But even assuming it can be established that the Applicant had commissioned and paid for the installation and maintenance of the metal structures (as opposed to merely obtaining a licence from the owner of the exterior wall for such purpose), there can be debate as regards whether by reason of the legal principle discussed in Elitestone Ltd v Morris [1997] 1 WLR 687, the legal ownership of the same vested with the owner of the exterior wall or the Applicant.

36.  Even in a more straightforward case, ascertaining the ownership of a structure can be difficult.  The Land Registration Ordinance only provides for registration of instruments.  As things stand, we do not have a registered title system in Hong Kong.  It is even more difficult for chattel.  The determination of ownership must depend on evidence put forward by persons who claimed to have an interest in it.  Since title is relative under our property law, difficult questions of law may arise.

37.  I allude to these matters not with a view to provide answers to such questions in the present context.  Rather I am trying to illustrate it could not have been the intention of the legislature to require the Building Authority to resolve all these questions before the latter can issue a building order under Section 24.

38.  It is pertinent to note that under Section 26 of the Buildings Ordinance regarding enforcement action in dangerous buildings, the order is again to be served on “the owner”, see Section 26(1); though in emergency situation such service is not a prerequisite for action in terms of carrying out the necessary works, see Section 26(4).

39.  As discussed above, a building order serves not only as an order against the person to whom the order is served, it also operates as the first step in enforcement action by way of undertaking the demolition works by the Building Authority under Section 24(3).

40.  Further, one must not assume that only a legal owner can comply with a building order.  An agent with authority to manage the property may have implied authority to do such necessary acts to comply with a building order.

41.  Moreover, a person who is not the legal owner but coming within the wide definition of “owner” under Section 2 and has no power to comply with the order is likely to take the following steps,

(a) To inform the legal owner or some other person who has the power to comply with the order about the building order;

(b)    To inform the Building Authority that he did not have the power to comply with the order and provide information on identity of person or persons who can comply with the order.

42.  Bearing in mind the power of the Building Authority under Section 24(3), upon being so informed, one would expect the person having the power to comply with the order (whether the legal owner or otherwise) to put forward representations to the Building Authority if he has any valid grounds of objection to the making of the building order or to lodge an appeal as an aggrieved person.

43.  Thus, giving an extended meaning to “owner” under Section 24 will not cause any prejudice to the legal owner.

44.  Giving a purposive interpretation to Section 24, I do not think the context requires a definition other than that laid down under Section 2 for the expression “owner”.  The legislature has chosen a wide definition of “owner” under Section 2(1) extending the same beyond the general meaning of legal ownership and this is necessary to facilitate enforcement action against unauthorized structures.  A restricted definition would frustrate the operation of Section 24.

45.  Since Convey Advertising acted as the agent for the Applicant in respect of the metal structures and collected rent on behalf of the Applicant, it falls within the definition of “owner” for the purpose of Section 24.

46.  Hence, there is no question of the Building Order not having been served in accordance with the section.  The illegality and procedural impropriety grounds are not reasonably arguable.

Estoppel

47.  Mr Lam also relied on estoppel.  It is contended that because the Applicant knowingly stood by without taking steps to correct the misrepresentation by Convey Advertising and to challenge the Building Order, it is bound by the results in the Buildings Tribunal Appeal and is estopped from raising the present challenge because of excessive delay.  He cited Nana Ofori Atta II v Nana Abu Bonsra II [1958] AC 95 and House of Spring Gardens Ltd v Waite  [1991] 1 QB 241 for the estoppel proposition and Lo Siu Lan v Hong Kong Housing Authority CACV 378/2004, 17 December 2004 for the delay proposition.

48.  Mr Fung basically repeated his submissions on the construction of Section 24 and contended that since the Building Order had not been validly served on an owner, the Applicant was not obliged to challenge it.

49.  Given my conclusion on the meaning of “owner”, that is no answer to Mr Lam’s argument on estoppel and delay.  In Nana Ofori Atta II v Nana Abu Bonsra II [1958] AC 95, the Judicial Committee of the Privy Council held that the following principle, being founded on justice and common sense, should not be confined to wills and representative actions.  The principle was stated by Lord Penzance in Wytcherley v Andrews (1871) LR 2 P & M 327 at 328,

“if a person, knowing what was passing, was content to stand by and see his battle fought by somebody else in the same interest, he should be bound by the result, and not be allowed to re-open the case.”

50.  In House of Spring Gardens v Waite [1991] 1 QB 241, that principle was considered by Stuart-Smith LJ in conjunction with the doctrine of estoppel on account of privity of interest.  His Lordship referred to the test propounded by Megarry VC in Gleeson v J Wippell & Co [1977] 1 WLR 510 at 515,

“[T]here must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was a party should be binding in proceedings to which the other is party.”

51.  On the facts of Waite, the issue was whether an earlier judgment was liable to be set aside on the ground of fraud.  Two defendants had unsuccessfully applied in an Irish court to do so and when the judgment was enforced in England, a third defendant tried to raise the same ground as his defence.  It was held that he was estopped from so doing because he was well aware of the Irish proceedings.  At p.253H to 254A, Stuart-Smith LJ said,

“He could have applied to be joined in them, and no one could have opposed his application.  He chose not to do so and he has vouchsafed no explanation as to why he did not.  Mr Swift says he was not obliged to do so … he could wait till he was sued here. … he was content to sit back and leave others to fight his battle, at no expense to himself.  In my judgment that is sufficient to make him privy to the estoppel; it is just to hold that he is bound by the decision…”

52.  These observations seems to me to be equally apposite in the present context.  Mr Fung submitted that the relationship between the Applicant and Convey Advertising is not relevant.  With respect, that cannot be correct.  Given the representation of ownership by Convey Advertising to the Building Authority and the absence of action on the part of the Applicant despite knowledge of the Building Order and the Buildings Tribunal Appeal, their relationship and the arrangement between them are highly relevant to the question of privity of interest.

53.  On the materials before the court, both the Applicant and Convey Advertising had an interest in overturning the Building Order.  On the Applicant’s case, it would have a much greater interest than Convey Advertising: the latter could only have pursued the appeal against the Building Order as an agent.

54.  The question is whether there is a sufficient degree of identification between the two to make it just to hold the Applicant to be bound by the outcome of the Buildings Tribunal Appeal.  Based on what I have been told, it is difficult to see why the Applicant should not be held to be bound.  Either Convey Advertising was acting as its agent in pursuing the appeal or the appeal was pursued and the representation of ownership by Convey Advertising was made as a decoy to delay the enforcement action by the Building Authority.  In both instances, the answer to the question is affirmative.

55.  Judicial review is a discretionary remedy.  In my view, against the aforementioned background, to allow the Applicant to re-open issues already determined in the Buildings Appeal Tribunal on the ground that it has not been served with the Building Order would in substance facilitate the Applicant to misuse the judicial process to achieve the collateral purpose of delaying enforcement action.  That would be an abuse.

56.  The Buildings Appeal Tribunal made its determination in February 2006.  There had not been any application for judicial review in respect of that determination.  The only excuse for non-action on the part of the Applicant is a repetition of the argument on the meaning of “owner”.  Once that is shown to be invalid (as I have done in the earlier part of this judgment), the Applicant must be seriously out of time insofar as it seeks to challenge the propriety of the Building Order.

57.  Mr Fung submitted that the Applicant is not only challenging the Building Order, it is also challenging the recent actions by the Building Authority under Section 24(3).

58.  I do not think that submission takes the Applicant’s case further.  All the grounds raised in the Form 86A are in substance challenges against the Building Order.  There is no independent ground that is only applicable to the decision to enforce the Building Order under Section 24(3).  If the Applicant cannot succeed in the challenge against the Building Order, there is simply no viable ground for attacking the Building Authority on the recent actions which are merely further steps down the road under the enforcement regime laid down in Section 24.

Irrationality and legitimate expectation

59.  I turn to the arguments on irrationality and legitimate expectation.  As I understand, Mr Fung did not pursue irrationality as a free-standing ground.  It was premised upon the alleged legitimate expectation that no enforcement action will be taken against existing signage insofar as it had been adequately maintained and posed no imminent danger to the public.

60.  The Applicant based its case of legitimate expectation on two documents,

(a) The last paragraph of a letter dated 10 May 2004 from the Building Authority at Hearing Bundle B p.81;

(b)    The remarks of the Housing, Planning and Lands Bureau in a paper submitted to the Legislative Council at Bundle B p.84.

61.  As regards (b), the Applicant had not produced the whole document.  Counsel informed the court that it only had the three pages of the documents included in the exhibit since only those three pages were copied to Hong Kong Advertising Signage Manufacturing Association.

62.  Both parties took the law on legitimate expectation from the judgment of the Court of Final Appeal in Ng Siu Tung v Director of Immigration (2002) 5 HKCFAR 1.  At paras.103-4, it was clearly stated that a representation must be clear and unambiguous before it can establish a legitimate expectation.  Further, the majority of the court said the following in respect of a case where a representation is susceptible of competing constructions,

“In such a case, far from adopting the construction which is most favourable to the person asserting the legitimate expectation, the correct approach is to accept the interpretation applied by the public authority, subject to the application of the Wednesbury unreasonableness test.”

63.  The short answer put forward by the Building Authority is that there had never been any clear and unambiguous representation by the Building Authority that existing signage would not be subject to enforcement actions unless it is not properly maintained.

64.  I agree.  To start with, the two documents relied upon by the Plaintiff did not contain a clear representation to that effect.  In the letter of 10 May 2004, though there was reference to inspection as to the structural safety of existing signage and issue of building orders against unsafe works, at the end of the same paragraph it also referred to increase in inspection with a view to take demolition actions regarding large signage with potential danger.

65.  In the same letter, it was also stated that erection of advertising signage was not exempted from the scope of the Buildings Ordinance and prior approval needed to be sought from the Building Authority.

66.  The letter did not say in unambiguous terms that no enforcement action will be taken against an existing signage provided it is properly maintained.  At paragraph 11 of the affirmation Yu Kwok Hung, an explanation was given as to why the Building Authority regarded the signboards in question poses a serious threat to public safety.  As such it falls within the scope of the last sentence of the letter.  I do not consider that to be Wednesbury unreasonable.

67.  As regards the other document relied upon by the Applicant, it would be wrong to read the part quoted by the Applicant in isolation.  One must read that together with what was said at row 11 at Bundle B p.83.  It was clearly stated in the remark at row 11 that for existing signboards which were unauthorized works, they needed to be demolished progressively in accordance with priority assigned.  Thus, there was no clear and unambiguous representation that such signboard can be exempted from enforcement action provided that they were properly maintained.

68.  Further, these documents must be considered in the light of other published statements of the Building Authority on enforcement policy against unauthorized works.  In particular, the Buildings Department issued an Enforcement Policy statement in 2001 in which priority of enforcement actions was accorded to, amongst other things, major individual items.  The Building Authority regarded the signboards and metal structures in question falling within this category.

69.  In the circumstances, there cannot be any legitimate expectation on the part of the Applicant that the metal structures would not be subject to any enforcement action so long as they are properly maintained.  Therefore, the challenges based on irrationality and legitimate expectation fail.

Basic Law challenges

70.  The Applicant also relied on Articles 27 and 39 of the Basic Law together with Article 16 in the Hong Kong Bill of Rights Ordinance.  These are constitutional guarantees for freedom of speech.  Relying on Casado Coca v Spain (1994) 18 EHRR 1 at para.35, Mr Fung submitted that freedom of speech includes freedom to advertise for commercial purposes.  I have no quarrel with that.

71.  But the Building Order does not prohibit those who want to advertise from advertising.  As submitted by Mr Lam, the order does not even prevent one from advertising at the exterior wall in question.  That can be done without the approval of the Building Authority if the advertisement is simply done by painting the contents of the same on the wall.  It can also be done by erecting a signage in accordance with the Buildings Ordinance, viz. with the submission of building plans for approval before the works are done.

72.  Freedom of expression, though guaranteed, is not absolute.  One cannot use an unlawful means to communicate his message and then claims immunity from prosecution on the basis of freedom of expression.  Unless the legislation creating the offence is successfully challenged, the fact that the unlawful act was done to further one’s freedom of expression is neither here nor there.  Mr Lam correctly highlighted that the Applicant did not mount any challenge to the constitutionality of the Buildings Ordinance.  As presently advised, if there were such a challenge, it is unlikely that it has any reasonable prospect of success.

73.  Mr Fung also relied on Article 6 of the Basic Law.  The protection of private ownership of property under that article is to the extent that it is in accordance with the law.  Given that there is no challenge to the constitutionality of the Buildings Ordinance, and it is my conclusion that the Building Order had been made in accordance with that ordinance, there is no question under Article 6 that calls for consideration.

Result

74.  For all these reasons, leave for application to seek judicial review is refused.

75.  I also make a costs order nisi that the Applicant shall pay the costs of the putative respondent, such costs to be taxed if not agreed.