CHING CHUNG TAOIST ASSOCIATION OF HONG KONG LTD v. DIRECTOR OF LANDS

HCAL 87/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW PROCEEDINGS

NO 87 OF 2014
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D E C I S I O N

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Introduction

1. This is an application for leave to apply for judicial review.  It was taken out by the applicant in July 2014.  The applicant complains in short that the putative respondent wrongfully made two excessive assessments of the amount of premium.

Background

2. The said premium assessments arose in the following manner.  The applicant was set up in 1950 and has been a religious and charitable organization.  It is now the registered owner of land situated in Tuen Mun (“the applicant’s lot”). The user of the applicant’s lot has been restricted to temples or buildings for religious purposes.  Breach of the conditions of grant (including the user restriction) will give rise to the right of re-entry by the putative respondent.

3. The applicant applied to the putative respondent in 2009 for another land grant for use as a multi-storey multi-purpose community services building.  The putative respondent granted a new lease in April 2009 (“the new lot”).  The new lot is subject to the same conditions as the applicant’s lot.  A further condition requires the applicant to commence operating the building proposed to be erected thereon within 4 years from April 2009.

4. The construction work of the applicant’s contractors encountered difficulties.  As a result, in February 2013, the applicant sought a 24-month extension for complying with the further condition.  The putative respondent in late April 2013 demanded a premium payment of about $1.5 million for a 6-month time extension for “[commencing] to operate” the building required by the further condition (to late October 2013).

5. Further, in early March 2014 the putative respondent demanded another premium of $1.286 million for another 6-month extension.

6. The applicant paid the above premium sums under protest in May 2013 and mid-March 2014 respectively.

7. In the meantime, from about May 2013, the applicant corresponded with the putative respondent about the putative respondent’s basis and assumptions for the calculation of the premium sums, and the applicant provided to the putative respondent its own valuation report for the same.

8. On 12 June 2014, the putative respondent provided her basis for the assessment of the premium sums, namely, at a concessionary rate equal to 2/3 of the full market value of the new lot.  The applicant, on the other hand, opines that there is no commercial value for the new lot and disagrees with such a rate.

This application

9. The principal ground of the putative respondent’s objection to this application is that the dispute belongs to the private law regime, and hence should have been brought by way of ordinary process rather than by judicial review.

10. Several authorities were relied on by the putative respondent in support of this ground.  In particular, reliance is placed on Chau Tam Yuet Ching v Director of Lands [2013] 3 HKLRD 169 where the court of appeal observed:

“… Au J refused leave [to apply for judicial review]. … In essence, Au J held that the 1st Decision [to cancel Government Land Lots on the ground of failure to rectify breaches of the licensing conditions] was not amenable to judicial review as the Director was merely exercising the right of the Government as a licensor … and as such was performing a purely private and commercial function” (para 3 thereof);

“… what Au J meant when the learned Judge held that the 1st Decision is the performance of a private function … and not amenable to judicial review is that … [it] should be litigated by way of a private law action … ” (para 10 thereof);

“[The applicant] contemplated the possibility of a private law action … [The applicant] however said that such action would very much resemble a judicial review.

With respect, I do not agree with the last observation … In a judicial review, the court would not usurp the role of the decision-maker [other than] the legality, rationality and fairness of the decision. On the other hand, in a private law action, the court would need to go into the merits to decide whether there was a case for the determination of the GLLs for breach of the licensing conditions. The roles of the court are different” (para 11 and 12 thereof);

“I shall now turn to the key issue: whether the 1st Decision is amenable to judicial review. … it is beyond argument that decisions to grant and to cancel (on the ground of the breach of the terms of the licence) a licence for the occupation of unleased land are not susceptible to public law challenges. Such decisions are, like decisions to grant, modify or terminate a Government lease, the grant or modification or termination of a short-term waiver, ‘commercial decisions’ … ” (para 22 thereof);

“The mere presence of some public element in the Government’s decisions is not sufficient to transform such decisions into public law decisions. … Even if one confines oneself to the consideration of the quantum of the premium for a modification of a term of the lease (a classic case of commercial decision), the money received will go to the general revenue and as such have an impact on public finance” (para 23 thereof).

(emphasis supplied)

11. The putative respondent also referred to:

(a) Hang Wah Chong Investment Co Ltd v Attorney General [1981] HKLR 336, 341-2 (grant of approval for redevelopment upon payment of premium; no difference could be drawn between a lease granted by a public body and a private lease);

(b) Anderson Asphalt Ltd v Secretary for Justice [2009] 3 HKLRD 215, para 38 to 57 (grant of short-term waivers was a matter of private law);

(c) Rank Profit Industries Ltd v Director of Lands [2009] 1 HKLRD 177, para 24 to 38, and 47 to 48 (lease modification upon payment of modification premium was an act in private capacity as landlord).

12. In brief, the applicant has no valid answer to the above ground of objection.

13. The applicant refers to The Hong Kong and China Gas Co Ltd v Director of Lands [1997] HKLRD 1291.  That decision was commented on subsequently by the higher courts.  In the Chau Tam Yuet Ching decision, the court of appeal referred to the Court of Final Appeal’s comments to the effect that it was a case (as was another earlier decision also mentioned therein) involving special purpose lease set in the context of the New Territories Leases (Extension) Ordinance (Cap 150) and the government’s related publicly announced policy.  The public law element was said to have arisen in such context (the Hang Wah Chong decision, para 11).

14. The applicant also argues that the putative respondent’s decisions regarding the amount of premium sum would also affect other lessees in a position similar to the applicant’s.  That may well be true, but such a possibility is insufficient to move any such dispute into the public law realm.  This argument is in essence no different from the argument unsuccessfully raised in the Chau Tam Yuet Ching decision (para 22 and 23 thereof (quoted in para 10 above)).

15. The applicant further contends that leave to apply for judicial review should be refused only if the application should amount to an abuse of the court process (which this application is not): Mercury Communications Ltd v Director General of Telecommunications and another [1996] 1 WLR 48, 57.  With respect, those comments were made by the House of Lords in the context of an application to strike out an originating summons for being frivolous or vexatious or otherwise an abuse of the process of the court.  The classic test for determining such kind of applications is trite and needs no repetition (see also pp 58A-B and 59H-I, the Mercury Communications decision).

16. Finally, the putative respondent submits that the part of this application concerning the two demands for premium payment respectively in late April 2013 (para 4 above) and in March 2014 (para 5 above) was taken out outside the 3-month period prescribed by RHC Ord 53.

17. The applicant denies this and claims that the time for taking out this application should run only from the time when the putative respondent gave her reasons for decision in June 2014 (para 8 above).

18. I disagree with the applicant.  There is no justification for “lumping” the said demands for payment together with the reasons for such demands; the said demands, by themselves, were the decisions (this must also have been how the applicant has understood to be the case in view of its payments (para 6 above)).

Conclusion

19. This application is refused.

Other matters

20. The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decison and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

Costs order

21. There is no sufficient reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order that the costs of this application be paid by the applicant to the putative respondent.

22. I consider summary assessment of costs to be appropriate.  The above costs shall thus be so assessed.  For this purpose:

(1) the putative respondent be at liberty to lodge with court and serve a statement of costs within 14 days from today;

(2) the applicant be at liberty to lodge with court and serve a statement of objections within 14 days thereafter.