WONG KAM WAH v. FISHERMEN CLAIMS APPEAL BOARD AND ANOTHER

HCAL 96/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO. 96 OF 2011

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J U D G M E N T

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I. INTRODUCTION

1. This is a judicial review of the Board’s decision to uphold the refusal by an Interdepartmental Working Group (IWG) to designate Cheung Chau as an “endorsed homeport”.  Had the IWG designated Cheung Chau as an “endorsed homeport,” the fishermen there (including Wong) would have been able to register for a Government ex gratia allowance in respect of disruption caused by marine works to their fishing around Lamma Island.

II.  BACKGROUND

A.  Wong

2. Wong is a fisherman living in Cheung Chau.  He owned a small fishing boat at the material time.  He is a member of the Tai A Chau Fishermen Association (the Association).

3. For many years, like other Cheung Chau fishermen, he fished in the West Lamma Channel.  If the catch there was insufficient, he would head his boat to Lamma Island to see if he might have better luck.

4. Unfortunately, as a result of marine works along the foreshore and seabed of Lamma Island in 2008 and 2009, fishing stocks around that location became depleted.  Fishermen working in the waters of Lamma Island thus sustained significant losses of revenue.

5. Given the limited size of his fishing boat, Wong has not been able to go beyond Lamma Island to (say) the Ninepin Group (the Kwok Chau Islands).  He has therefore had to content himself with fishing around Cheung Chau despite the poor quality and quantity of the catch in those waters.

B.  Government’s ex gratia allowance scheme

6. The scheme is ex gratia in the sense that it is not statute based.  Under the scheme Government pays an allowance to fisherman affected by marine works.

7. In the normal course of events, fishermen would not be entitled to statutory compensation for works that affect the catch in their habitual fishing areas.  That is because, even though they may suffer a substantial loss of income as a result of such works, they have no legal right or interest within the meaning of any statute over any part of Hong Kong waters.  The scheme of ex gratia allowances addresses in a practical manner this lack of a strict legal basis for claiming compensation.

8. Where works (such as reclamation) lead to permanent loss of fishing grounds, the allowance is based on a notional value of the fish catch in the affected area over 7 years.  Where works (such as sand dredging or mud disposal) only lead to a temporary loss of fishing grounds, the allowance corresponds to a notional value of the fish catch over 3 years.  Additional allowance is payable where successive marine works occur in the same place, provided that 3 years have elapsed since completion of previous works.

9. The notional value of fish catch in an area is based on a Port Survey conducted by the Agricultural, Fisheries and Conservation Department in 1989/91.  But Port Surveys have also since been conducted in 1996/97, 2001/02 and 2006.

10. A Port Survey involves interviewing fishermen from a homeport (such as Cheung Chau) for information on the geographical distribution of their fish catch, on the amount of time (effort) required to obtain their catch, and on the value of their catch.  Typically, survey results are presented in 2 parts, one for small vessels (not exceeding 15 m in length) and another for large vessels (exceeding 15 m).

11. Note that, exceptionally, the 1989/91 Port Survey did not involve interviews with large vessel owners.  But it had a sampling rate of over 90% for small vessels.  The latest Port Survey in 2006, in contrast, involved interviews with more than 30% of owners of small and large vessels.

12. From the Port Survey data, Government has mapped out a spatial distribution of the notional annual production values of different fishing areas in terms of $ per hectare.  To calculate the total allowance attributable to a disruption in some particular area, the notional value for that area derived from the mapping is multiplied by the requisite number of years (for example, 3 or 7 years, depending on whether the disruption suffered has been temporary or permanent).

13. In determining the allowance payable to an individual fisherman, the Government also distinguishes between small and large vessel operators.  In the former (but not the latter) case, the Government calculates the relevant fisherman’s “dependency” on an adversely affected area by reference to the fisherman’s homeport.

14. The thinking behind the distinction in treatment is that small vessels are less mobile than large ones.  So when a regular fishing area has been adversely affected, small (as opposed to large) vessel operators are less able to seek better areas further afield.

15. Small vessel operators are accordingly assumed to be restricted to fishing around their homeport or not too far from there. The greater their “dependency” on an area, then the more likely they are to suffer significant loss where the catch in that area is depleted, since they are not much able to go elsewhere.

16. The dependency rate of a homeport H is the average fishing time or production value per vessel operated by H’s fishermen in an affected area divided by the total fishing time or production value per vessel operated by H’s fishermen in the entire of Hong Kong’s waters.

17. The dependency rate for Cheung Chau calculated on the basis of the 1989/91 Port Survey is thus 0.1051%.  The equivalent rates for Yuk Shue Wan, Luk Chau and Sok Kwu Wan (all on Lamma Island) are 6.4735%, 4.1893% and 3.9295%.  Those for Aberdeen and Yau Ma Tei are 0.6565% and 0.1576%.  The average rate for the 1981/91 Port Survey is 1.5314% and, relative to all homeports, Cheung Chau has a dependency rate of 0.677%.

18. The dependency rate for Cheung Chau calculated on the basis of the 2006 Port Survey is 0.2156%.  The aggregated rate for Yuk Shue Wan, Luk Chau and Sok Kwu Wan is 2.3315%.  The rates for Silver Mine Bay, Aberdeen and Yau Ma Tei are 0.8405%, 0.7552% and 0.5628%.  The average rate for the 2006 Port Survey is 0.4058% and, relative to all homeports, Cheung Chau has a dependency rate of 4.087%.

19. Within Hong Kong there are 6 water zones.  This case concerns marine works in water zone D around 2008 and 2009.  Of the six works, two were private and four public projects.  95% of the total allowance available for distribution in connection with those works came from a private project proponent (not identified in the evidence).

20. The Lands Department monitors the accumulation of allowance amounts payable in respect of marine works.  Where the total amount of allowance in a water zone reaches an amount which justifies a registration exercise, an IWG of representatives from the Lands; Marine; Home Affairs; and the Agriculture, Fisheries and Conservation Departments is set up.

21. The IWG so convened conducts a fishermen claims registration exercise.  The IWG invites fishermen from “endorsed homeports” to register their claims.  In deciding whether a homeport is to be designated as an “endorsed homeport,” the IWG considers a range of factors including the homeport’s dependency rate and the distance between the homeport and an affected area.

22. It will be noticed that the greater the number of “endorsed homeports” for a registration exercise, the greater the number of fishermen who can register for compensation.  The allowance being a fixed sum, this could mean that an individual fisherman will receive less than what one might otherwise obtain.

23. For the registration exercise relevant to this case, the IWG endorsed 4 homeports: Yung Shue Wan, Sok Kwu Wan, Luk Chau Wan (including Lo Tik Wan) (all at Lamma Island) and Aberdeen.  The IWG came to this decision in 2009.  Cheung Chau not having been endorsed, its fishermen were not invited to register for an allowance.

24. According to the evidence adduced by the IWG, where a fisherman from a non-endorsed homeport believes that he or she has been affected by the relevant works, the individual may still apply to the IWG or to the Board for compensation.  Such application will be considered on a case by case basis in light of the evidence adduced by the individual.

C.  Decision under challenge

25. The Board was established in November 2010.  It heard the appeal by members of the Association (including Wong) against the IWG’s refusal to designate Cheung Chau as an endorsed homeport in 2011.  There were altogether appeals by some 250 Cheung Chau fishermen.

26. On 21 June 2011 the Board rejected Wong’s appeal.  It is against this rejection that Wong seeks judicial review.

27. In a letter to Wong dated 12 August 2011 giving reasons for the rejection of the Association’s appeal, the Board stated (in translation):-

“[The Board] has carefully considered the information supplied by the [IWG] and you/your representative, including ‘the percentage of the degree of influence of the subject marine works projects upon the qualified homeports’ fishermen and other homeports’ fishermen’ calculated based on the [Port] Survey conducted by the Government in 2006 on fishing; the information supplied by the IWG regarding the amount of the ex gratia allowance received by each of the fishing vessel; and the grounds of appeal submitted by you/your representative. Having considered and weighed the procedure and time required in the claim for ex gratia allowance against the cost of opportunity spent by the Applicant, [the Board] is f the view that even Cheung Chau is considered as an endorsed homeport in the present application for ex gratia allowance, the amount of the ex gratia allowance to be granted to the Cheung Chau fishermen (according to the size of the fishing vessels) will be approximately in the range of $300 to $1,300 due to the fact that there are numerous Cheung Chau homeport’s fishing vessels. The anticipated amount of the ex gratia allowance that might be received by the fishermen would be lower than the cost of opportunity of time (approximately two working days) the fishermen spent on making the application for ex gratia allowance. Cheung Chau homeport’s fishing vessels are mainly P4 mechanised sampans and such type of fishing vessels may be granted the ex gratia allowance in the sum of $300. Hence, inviting all Cheung Chau fishermen to spend the cost of time and money in registering their claim would end up with no real benefit to the Applicant.

In light of the aforesaid reasons, [the Board] has decided not to include Cheung Chau as an endorsed homeport in the present application for the caption ex gratia allowance.  Therefore, your appeal is dismissed.”

28. The minutes of the Board’s meeting on 21 June 2011 shed light on the Board’s reasoning in its letter of 12 August 2011.  The minutes state:-

“3.2 The Board … examined the estimated minimum EGA [ex gratia allowance] and maximum EGA payable to eligible fishermen in the homeports with relative dependency rates according to 2006 Port Survey… The Board had heard the suggestion by IWG that an EGA of less than $2,000 to $3,000 should be a minimum payout to a fisherman in order to justify his registering for the payout. The Board had also heard suggestion by a fisherman that he would be willing to register for a lesser sum. The Board opined that common sense dictated that there should be a minimum EGA level to justify the registration exercise for the fishermen. It did not make sense to pay out EGA of $1 to $2 to fishermen at the homeport of Sai Kung … having a relative dependency rate of 0.004%. The Board viewed that a homeport of a dependency rate of less than 1% was insignificant for the compensation exercise by applying the de minimis rule.

3.3 The Board viewed that at the individual vessel level, the opportunity costs of a fisherman in submitting a claim for the EGA should be considered as the minimum EGA level. The registration exercise will involve obtaining a booking on day 1, having an inspection on day 2 and obtaining an EGA cheque on day 3. The Board assumed that the vessel would be laid idle for 2 working days and assumed that the smallest vessel (non‑mechanised sampan) would only require one man to operate and the largest vessel (15-metre vessel) would require 2 men to operate. Therefore, the costs of 2 man-days and 4 man‑days would be respectively incurred by them in submitting a claim of fishermen EGA. The Board assumed that their costs would be pegged at the minimum wage level of $28 per hour. Therefore, their costs would be as follows:-

(a) non-mechanised sampan case: $28 x 8 hours x 2 man-days = $448;

(b) 15-m vessel case: $28 x 8 hours x 4 man-days = $896.

3.4 Regarding those homeports with relative dependency rates higher than 1% …, the vessels in … Cheung Chau would attract much less EGA comparatively. In order to assess their merits in submitting a claim of fishermen EGA, Assistant Secretary obtained the information of distribution of different types of vessels in [Cheung Chau] from IWG through telephone during the meeting as below:-

…

(b) Cheung Chau:	Non-mechanised sampans	(21)
	P4 mechanised sampans	(291)
	5m vessel	(1)
	5m - below 10m vessels	(6)
	10m - 15m vessels	(48)
	Total:	(367)

….

3.5  From the above information, the Board observed that majority of the vessels in … Cheung Chau were sampans and EGA payable for these vessels, if any, would range from about $200 to $300 only.  As the amount of EGA payable to the owners of vessels in … Cheung Chau would be much less than the opportunity cost of submitting a claim of fishermen EGA, the Board decided not to include [Cheung Chau] in the endorsed homeport list.  As such, the appellants from Cheung Chau would be ineligible for the EGA registration accordingly.”

III.  DISCUSSION

29. In my judgment, the Board’s basis for rejecting Wong’s appeal against the IWG was unreasonable.

30. First, the Board’s calculation of the opportunity cost to a typical Cheung Chau fisherman of registering for compensation makes unwarranted assumptions.

31. It is unclear why the Board should assume that it would take the whole of two to four man-days to apply for and obtain compensation.  It should certainly not take a whole day to make a booking.  Nor should an inspection of a small vessel of up to 15 m last a whole day.

32. It is also unclear why the Board should assume that the opportunity cost of a man-day should be equal to $28 times 8 hours. For example, a self-employed fisherman operating one’s own boat may not regard the time taken for registration or inspection (whatever that may be) as equivalent to losing $28 per hour.  Because such fisherman might not be paying anything to one’s self, the person might reasonably regard almost his entire cost as capital in nature.  If that fisherman habitually ventures out to an affected area and earns little or nothing on a given day due to fish stock having dwindled, such person might plausibly regard the benefit from registering for an allowance as greater than the cost of going fishing on a given day.

33. The figure of $28 per hour and the estimation of two to four man-days therefore strike me as arbitrary.  There is no valid justification for the numbers taken.

34. Second, assume that for some (possibly many) fishermen the opportunity cost of obtaining an allowance outweighs the allowance to be obtained.  As Mr. Erik Shum (appearing for Wong) points out, it is up to those fishermen to decide whether to apply for compensation in the circumstances.  It cannot be for the Board to decide what would or would not be cost-effective in the eyes of a given fisherman.

35. If the Board is saying that a Cheung Chau fisherman would not regard an allowance of between $300 and $1,300 as worth the effort of registering, I do not see how the Board reasonably could come to such a conclusion.  In difficult economic times, it is perfectly conceivable that a typical fisherman would regard compensation within that range to be welcome financial assistance.

36. Third, the opportunity cost to a fisherman of applying for compensation (whatever that might be) does not have a logical bearing on the rationale behind the scheme.  The object of the scheme is to provide compensation to fishermen adversely affected by marine works.  I do not see how the opportunity cost to a fisherman of applying for compensation is a relevant consideration in determining whether the fisherman should be compensated by Government for adverse effects due to marine works.  As Mr. Shum submits, logically, the criteria for endorsing a homeport should focus on the degree of to which fishermen from there have suffered due to marine works in an area.

37. In short, by taking into account a consideration (opportunity cost) which it ought not to have taken into account, the Board acted arbitrarily and unfairly.  It did not deal with the substance of the Cheung Chau fishermen’s claim that their homeport should be endorsed because as a class they have suffered income loss from relevant marine works.

38. Mr. Jenkin Suen (appearing for the IWG) submits that the judicial review should be rejected because Wong lacks standing.  This is untenable.  Wong has affirmed that at the material time he was a fisherman living in Cheung Chau and owning a boat.  There has been no hint of a suggestion anywhere that he was never what he claims to be.

39. Mr. Suen submits that a decision to grant or refuse an allowance is not amenable to judicial review because the scheme is ex gratia.  This, too, is untenable.

40. The making of ex gratia payments is a Government prerogative at common law.  Provided (as here) the scheme has been sanctioned by the legislature and (as here) funds have been authorised for the scheme, the decision to grant or refuse an allowance must be amenable to judicial review.  The Government is accountable for the use of public monies. The Court must therefore have jurisdiction to ensure that the scheme is not administered in an irrational manner and that the decision‑making process adopted is fair.  See In re McFarland [2004] 1 WLR 1289 (HL), at paras. 40-41 (Lord Scott).

41. Mr. Suen submits that Wong’s Notice of Application for Judicial Review criticises the Board for taking into account the cost to Government as a reason for not designating Cheung Chau as a homeport.  Mr. Suen notes that, in the minutes of its deliberations, the Board expressly stated that it would not take account of the cost to Government of administering the scheme.

42. The point is likewise untenable.  Fairly read, paras. 52 and 53 of Wong’s Notice squarely challenge the Board’s decision insofar as it was based on opportunity cost.  The decision in that respect is characterised as one which was “so irrational or perverse that no reasonable decision-maker could ever make”.

43. Mr. Suen suggests that there is no utility to this judicial review, since an individual fisherman may still apply for an allowance even though the person’s homeport has not been endorsed.  That may or may not be the case.  But even if that were the case, that could not excuse the Board from acting unreasonably or arbitrarily in deciding not to endorse Cheung Chau as a homeport.  Whether a fisherman is still entitled to apply for an allowance is a different question from that which the Board was being asked to determine.

44. Finally, Mr. Suen argues that, despite literally referring to opportunity cost, in reality the Board’s decision was premised on the Cheung Chau fishermen’s low dependency on fishing around Lamma Island.  The Board’s decision (Mr. Suen suggests) merely reflects a policy that for a homeport to be endorsed, the allowance payable to fishermen from that port has to meet a certain minimum benchmark (suggested by the IWG to be around $2,000 to $3,000).

45. But I am unable to accept that gloss of the Board’s letter of 12 August 2011.  The lack of dependency was not the reason which the Board stated.  If it were the reason, it should have been stated expressly.  It would also have been incumbent on the Board cogently to explain the basis on which it found there to be insufficient dependency on the part of Cheung Chau fishermen.  By the same token, if some sort of policy was the reason underlying the decision, then fairness requires that such policy be explicitly stated as the reason and an explanation be given as to why the policy is being strictly applied here.

IV.  CONCLUSION

46. The judicial review succeeds.  The Board’s decision upholding the IWG and refusing to endorse Cheung Chau as a homeport is quashed.  The question of endorsement is to be remitted to the Board for reconsideration.

47. I will now hear counsel on costs and consequential matters.