ANDERSON ASPHALT LTD AND OTHERS v. THE LANDS DEPARTMENT

cacv 163/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 163 of 2006

(on appeal from HCAL NO. 28 of 2006)

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J U D G M E N T

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Hon Rogers VP:

1.  This was an appeal from a decision of Reyes J given on 25 April 2006.  The judge had before him an application for leave to apply for judicial review.  The relief to be sought was certiorari to quash the decision of the Director of Lands made on 24 November 2005 to grant short term waivers which enabled the beneficiary of those waivers to carry out asphalt production on the land in question.  The judge below considered that the applicants lacked the requisit locus to bring judicial review proceedings and, furthermore, their alleged grounds were unarguable.  He therefore refused leave.  This appeal was brought against that refusal and at the conclusion of the hearing of this appeal judgment was reserved which we now give.

Background

2.  The applicants are all asphalt producers and the founding affirmation for this application states that they are all members of an association called the Asphalt and Macadam Association of Hong Kong (“the Association”).  As of the date of the affirmation, namely 23 February 2006, it was said that all asphalt used in Hong Kong was supplied by members of that Association.

3.  The land in question is in DD 134, which is located in the north-west New Territories, seemingly not far from the Castle Peak power station.  In 1998 a short term waiver in relation to one lot in DD 134 was granted for the storage of compressed industrial and medical gases and parking of vehicles.  In February 2003 the Lands Department granted short term waivers in relation to Lots 176 and 177 in DD 134 for a period of 12 months permitting the erection of buildings on the land for use in concrete production.  Those waivers have subsequently been renewed up to today.

4.  In the summer of 2005, the applicants became concerned that an application had been made for another short term waiver this time in Lot 185.  When they wrote to the Director of Lands in September of that year they were informed immediately that no application had been made in respect of that Lot but, following further enquiries, the Director confirmed that application had been made in respect of the Lots which are the subject of these proceedings.

5.  On 1 November 2005 the applicant’s solicitors wrote to the Director referring to their earlier letter in respect of Lot 185 and objecting to any grant of short term waivers in respect of the Lots the subject of these proceedings.  Taken together, objection was raised in the letters to the grant of any waiver of the lease conditions in the Block Grant, which provided that the land should be agricultural or garden ground.  It was acknowledged in those letters that there was no Outline Zoning Plan (“OZP”) in respect of the area but it was said that the subject Lots fell within areas designated in non-statutory administrative plans namely the Tuen Mun New Town Western Extension Area - Planning Guide and the North-West New Territories Sub-Regional Plan.  The Planning Guide indicated that the subject Lots were in an area which was designated for “Government/Institution and Community Use” and annotated as “Recreation Orientated Development”.  Such recreation was to be afforested hiking/walking trails, campsites, picnic areas and so forth.   The Sub-Regional Plan designated the area as “Countryside Conservation Area”.

6.  Complaint was made in the letter of 23 September that members of the Association had to bear substantially higher costs because their plants were erected on land which the Lands Department had leased on short term tenancies at substantial premium rentals whereas if short term waivers were granted the operators who would take the benefit of that would not have to bear the substantially higher rentals.  The letter of 1 November concluded with a request for confirmation that waivers would not be granted, in default of which the applicants would consider legal action.

7.  On 24 November 2005 the District Lands Office Tuen Mun held a District Lands Conference.  Notes for that meeting were prepared some 10 days before the meeting and minutes of the meeting were kept.  The applicants’ solicitors were informed by letter dated 7 December 2005 that the Conference had “considered the various aspects, including planning, environmental and grounds for objection etc.” and had decided that it was in order to approve the subject proposal.

8.  For some reason, that meaning was, apparently, not clear to the solicitors for the applicants who, on 13 January 2006 wrote to enquire whether the proposal had in fact been approved.  They were disabused of any misapprehension that they might have had in a letter of 23 January 2006 from the Director.  What is significant is that enclosed in that letter from the Director was a quotation from the minutes of the Conference which in turn referred to the objection letter received from the applicants’ solicitors and the grounds of objection which were described in paragraph 2.5 (i), (ii) and (iii) of the notes.

9.  It was apparently on 18 February 2006 that the applicants observed machinery being moved on to the subject Lots.  The formal offer letters of the short term waivers were dated 2 May 2006 and the waivers were for a period of one year certain from 1 May 2006 and thereafter quarterly subject to three months’ notice of termination by either party.  On 24 February 2006 the Form 86A in these proceedings was filed.

10.  On 22 March 2006 Chung J refused an application for judicial review made by the applicants in respect of a decision by the Town Planning Board which had granted an application in respect of land in Sha Ling for asphalt production on a temporary basis.  That land had been subject to an OZP.  Chung J refused the application for judicial review not only on the merits but on the basis that the applicants had no locus.

11.  The application in the present case came before Reyes J on 21 April and he delivered his decision on 25 April 2006.  Reyes J’s judgment goes into considerable detail as to the applicants’ objections on planning, environmental and commercial grounds.  In relation to locus he said at paragraph 39 and 40 of his judgment:

“	39.	The particular interest asserted is in effect the right to hinder competition by:-
		(1)	preventing others from using agricultural land for asphalt plants; and,
		(2)	compelling others to operate from industrial sites (as the Applicants decided to do) and incur the rentals and overheads to which the Applicants have subjected themselves as a result of their free decision.
	40.	To put it bluntly, the Applicants’ grievance is that, by the Director’s decision, persons occupying the relevant lots may conceivably be able in the short term to produce asphalt more cheaply than the Applicants.”

12.  Reyes J was obviously not impressed with that.  He considered that the applicants’ choice to use industrial land was one made of their own volition and nothing had prevented them in the past and nothing prevents them now or in the future from themselves leasing agricultural land and applying for waivers similar to those which had been granted by the Director in the present instance.  As the judge indicated, the decision to use land subject to short term waivers is a commercial choice with inherent risks.  In short, the judge considered that the applicants had not made out an arguable case on locus.  He considered that they were not directly affected by the decision which was sought to be impugned.

13.  The judge then went on to consider the substantive grounds, the first of which was that the alleged failure of the Director to give reasons for his decision to grant the waivers.  The judge considered that the Director’s letter together with the Lands Conference minute was plainly adequate in the present context.

14.  The second substantive ground was that the Director had failed to consider relevant matters.  Those included the failure to consider the Planning Guide, the Sub-Regional Plan and the long term nature of the waivers which might be involved because it was clearly the intention of the occupant of the land to continue manufacturing asphalt as long as possible.

15.  The other matter under this heading was the potential adverse environmental impact including the effect on the butterflies of the area.  Whilst noting that the Planning Guide was chopped “Subject to Alteration without Notice” the judge also stated that he was unable to see how the Director’s decision to allow temporary use of the relevant Lots for an asphalt plant could be said to contravene any long term intention manifested by the Planning Guide and the Sub-Regional Plan, which, in any event, did not have legal force.

16.  With regard to the argument that an asphalt plant required heavy initial capital investment which indicated that the occupants of the land would intend to continue the use for much longer than the initial one-year period, the judge pointed out that the occupiers could have no legitimate expectation that the waivers would be continued for as long as they wanted.  The occupants of the land took a commercial decision which might involve the waivers not being renewed at any time.

17.  As regards the potential adverse environmental impact, the judge pointed out that the applicants had no greater interest in that aspect than any other member of the general public.  The judge pointed out that it was not sufficient for counsel to suggest that the applicants were not in a position to assert matters until the Director articulated his reasons and made discovery of relevant documents because an application for judicial review could not be a disguised “fishing expedition”.  The judge pointed out that the Lands Conference minute and the Director’s letter of 7 December 2005 did state that environmental matters had been canvassed.  In the absence of any evidence or suggestion that such statements had been made in bad faith there was no ground for challenging that.

18.  Finally, the judge pointed out that the waivers which had been given in 1998 and 2003 were irrelevant.

19.  After the decision of 25 April 2006 the applicants filed notice of appeal on 4 May 2006.  However on 29 May 2006 the applicants’ solicitors wrote to the Registrar seeking deferral of the appeal until after the judgment in the appeal CACV 155 of 2006 in respect of Chung J’s judgment.  The reply was given on behalf of the Registrar on 6 June.  It was indicated that the applicants should comply with the necessary filing requirements when they were in a position to do so.

20.  It was apparently in June 2006 that the applicants became aware that the construction of the asphalt plant on the subject Lots had begun and on 6 July 2006 the applicants’ solicitors wrote to those who they considered were the operators of the asphalt production facilities on the subject Lots:

“

In this connection, our clients have on 24 February 2006 applied for leave to apply for Judicial Review against the Lands Department’s decision to grant the Waiver, on the ground, inter-alia, that the decision is against the planning intention for the area concerned and is unlawful.  We are presently listing the case for hearing in Court.  In view of your recent mobilization, we are instructed to put you on notice of the pending Judicial Review application/proceedings and that you proceed at your own risk.  In the event that our clients are successful in the proceedings against the Director of Lands, your right to operate an asphalt plant on the Site will be affected and we suggest that you suspend erection works pending the resolution of the matter.”

21.  It hardly needs to be said that markedly absent from that letter is any reference to the fact that the application for judicial review had been refused and that as things stood at that time the applicants were not pursuing any appeal with any vigour.

22.  On 10 July 2006 application was made to the Registrar for an “expedited” hearing of the appeal.  That application was supported by an affidavit in which it was said that the counsel would be available some 5 months later, from 14 November to 24 December 2006.  Clearly the applicants’ solicitors’ notion of expedition does not accord with my own.  Be that as it may, it appears from the court file that on 17 July 2006 a date was fixed.  It would also appear that the date of 10 October 2006 was offered but was declined on the basis that the applicants’ counsel was not available.  In the circumstances the date fixed for hearing was 29 November 2006 which accorded with the availability of the applicants’ counsel.

23.  However two weeks before the hearing was due to take place, on 14 November 2006 the applicants’ solicitors applied for an adjournment of the hearing of the appeal because they sought copies of the notes which had been referred to in the Lands Conference minutes as well it as a full copy of the minutes.  Again, it hardly needs to be observed that having been aware of the existence of those documents since receipt of the letter of the 23 January 2006, asking for those documents at such a late stage could scarcely arouse sympathy.  In any event, it would be surprising that if the Director had been willing to disclose those documents it could not have been done within the 14 days leading up to the original date for the appeal.  Be that as it may, the applicant’s request for vacation of the hearing date was acceded to.  As it transpired the Director was not willing to furnish the documents requested.

24.  The Court of Appeal heard the appeal in CACV 155 of 2006 in February 2007 and its decision was given on 30 March 2007.  In that case, as already indicated, that land was subject to an OZP which does have statutory force.  The court allowed the appeal from Chung J’s decision and held that the Town Planning Board had acted wrongly and that the applicants were entitled to complain in that case.  Correspondence with the Director seeking disclosure of the notes and minutes continued.

25.  On 21 June 2007, namely, 18 months after the decision sought to be impugned by these proceedings and 14 months after Reyes J’s decision, the applicants sought to fix a date for hearing this appeal.  Again, the notion that there might have been any urgency in the matter would be dispelled by the fact that apart from suggesting dates the 22 October to 2 November (except 29 October 2007) which would be convenient for their counsel, who, it might be said was not the counsel who appeared before Reyes J, the first available date which would be convenient to them would be 18 February 2008.  As it transpired, that request was acceded to and the applicants were allotted the first hearing date namely the 19 February 2008 after 18 February.

26.  After that the applicants applied for leave to bring judicial review proceedings in HCAL 98 of 2007.  That application was filed on 30 August 2007 and was in respect of a decision of the Director communicated to the applicants on 15 June 2007 refusing to terminate or to consider terminating the short term waivers.  That matter did not come before Hartmann J until 24 October 2007.  It is to be noted that although the applicants’ solicitors were directed by letter of 3 September from the Registrar to fix a 15 minute ex parte hearing, their solicitors did not respond until 3 October.  At the appointment on 8 October to fix a date, the hearing date selected was to suit the convenience of their London counsel who was only available on 22-26 October.  Be that as it may, this court has been shown a transcript of the proceedings.  The hearing was short at the end of which brief reasons were given for granting leave to bring judicial review proceedings.

27.  I have set out the history of this matter in some detail.  The purpose of that is to show that the applicants have, of their own choice, delayed so long in bringing on this appeal that in my view it would be an abuse to permit these proceedings to go ahead.  Order 53 rule 4(1) of the Rules of the High Court provides that:

“	An application for leave to apply for judicial review shall be made promptly and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is good reason for extending the period within which the application shall be made.”

28.  Whilst, of course, the initial application was made within three months of the decision sought to be impugned, this appeal has to be considered as part of the process.  Obviously, the date for hearing an appeal may have to be sometime in advance.  But the deliberate dilatory manner in which this appeal has been prosecuted must, in my view, debar the applicants from the right to any relief.  It is no argument that counsel is not available.  In this case the applicants had decided to change counsel.  But there are more than 1,000 counsel in Hong Kong, many of whom are qualified and competent to undertake an application such as this.  When the matter of delay in fixing the hearing of this appeal was put to counsel, the primary reason given for not wishing to have this appeal heard earlier was that the applicants wished to persuade the Director to terminate the short term waivers, in which event this appeal would not have been proceeded with.  That is no excuse.  If the applicants wished to challenge a decision they were required to do so promptly.

29.  As now transpires the short term waivers have been in effect for nearly 2 years.  Although the comment is made that the occupants of the land have not in fact signed the waivers, they have paid the necessary fees.  Thus the initial periods of the waivers have expired and the subsequent continuations of the waivers are in effect.  The applicants have brought proceedings in respect of the refusal to terminate the waivers.  Those proceedings will, no doubt, at the applicants’ chosen speed, go ahead.  But it would be quite wrong to permit these proceedings to go ahead, the effect of which would undoubtedly be to undermine the legitimacy of the occupation of the subject Lots which has hitherto been undertaken.  It can be pointed out that those who have occupied the Lots have had no control over the dilatory manner in which the applicants have elected to proceed.

30.  Turning to the other matters, whilst I recognise that another division of this court CACV 155 of 2006 came to the conclusion that the applicants did have locus in that case which concerned a decision by the Town Planning Board, in my view Reyes J’s reasons are cogent and I would not be disposed to disturb them.  The applicants can themselves occupy other land were they to obtain waivers.  No doubt they are not prepared to take the commercial risk of any such waivers being terminated.  But the fact that land can be occupied on different bases with different rents does not give those, who no doubt want to maintain their monopoly of being the only providers of asphalt in Hong Kong, the right to judicial review.

31.  In this respect, I would point out that the applicants’ evidence as to the commercial disadvantage to which they would be put is lacking in any proper and necessary particularity.  There is no indication as to the projected supply and demand situation for asphalt in Hong Kong.  In those circumstances, it is not obvious that the applicants would be put to any commercial disadvantage at all.  Furthermore, the argument that those who occupy land on the basis of short term waivers could price their asphalt at a price which would deprive the applicants of business is not supported by any calculations.  All that is said is that the asphalt that came from the occupants of the land could be cheaper than that of the applicants.  Whether that is so is again not made out in any evidence.  The applicants themselves state that there is a substantial capital cost involved in setting up the necessary plant for the manufacture of asphalt.  No consideration is given as to how that cost will be amortised by a prudent businessman who could operate the plant only by reason of a short term waiver.  It might be supposed that a prudent businessman would need to amortise the capital cost much quicker than a party, such as one of the applicants, who held land on a permanent basis.  Hence his total manufacturing costs might even be higher than that of the applicants.  Without evidence the matter remains simply an assertion without proper foundation.  As the Court of Final Appeal held in the case of a litigant in person who had suffered a manifest injustice, it is not sufficient that the applicant shows a potentially arguable case, the applicant must go further and show an arguable case at the application stage: see Peter Po Fun Chan v Winnie C.W. Cheung & another FACV 10 of 2007, 30 November 2007.

32.  The applicants are clearly a group of manufacturers seeking to protect the de facto monopoly which they enjoy.  In some jurisdictions that would be referred to as a cartel.  But it is no function of the common law to protect monopolies which since the 16^th century have been regarded as contrary to the public good and hence the common law, unless the monopoly can be shown to be in the public interest: see for example Clothworkers of Ipswich case, Coke’s Reps pt. X1 53a and Godbolt’s Reps. 253 and also generally Bacon Abridgement 7^th edition, VI p. 499, Hawkins Pleas of the Crown 1716, Bk I c.79, s.2 p.231.  This view of monopolies has manifested itself in statutory legislation going back as far as the Statute of Monopolies 1623 and more recently in legislation concerning monopolies and in the Restrictive Trade Practices Act 1956 and subsequent Fair Trading Legislation.  In the United States the same considerations have led to the anti-trust legislation.  The European Union is founded upon principles of competition.  What might be considered to be in the public interest is legitimate and healthy competition.  In this case the occupants of the Lots in question are doing nothing illegal and, unlike the situation that prevailed in CACV 155 of 2006, the mechanism by which the occupants were free to use the land for the manufacture of asphalt was not contrary to planning decisions which had the force of law.

33.  As regards the merits of the case, again, in my view, Reyes J was entirely correct.  Indeed, since the hearing before Reyes J the applicants have been provided with copies of the notes prepared for the Lands Conference and copies of the minutes of that Conference.  Those were provided in an affidavit filed in the HCAL 86 of 2007.  Two things very clearly emerge from that.  In the first place it would appear that the views of every conceivably relevant Government Department were sought including the relevant Planning Department and the Environmental Protection Department as well as a number of other departments.  None of these branches of the Government raised any objection to the grant of the waivers.  In the second place the notes accurately summarised the objections which had been made by the applicants’ solicitors.  Mr Litton, who appeared on behalf of the applicants, confirmed that there was no complaint that the objections which had been raised by the applicants had not been carefully summarised.  The minutes of the meeting show that the Lands Conference had specific regard to those objections.  In the light of that, I cannot see how it can be said that the decision to grant the waivers had not been properly taken.  Short of the applicants asserting that their views should have an overriding effect, there can be no complaint of the decision making process.

34.  As regards the communication of the decision reached at the Lands Conference it was the applicants’ views alone which were against the grant of the waivers.  The fact that their views had been taken into account was manifestly made clear right from the beginning.

35.  I would therefore dismiss this appeal.

Hon Le Pichon JA:

36.  I agree.