KOWLOON POULTRY LAAN MERCHANTS ASSOCIATION v. DEPARTMENT OF JUSTICE

HCAL 2630/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 2630 OF 2000

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D E C I S I O N

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1. This is an application for leave to apply for judicial review. The Applicant is an association representing 10 poultry wholesaler merchants (colloquially known as wholesale "laans") operating in Area B of the Cheung Sha Wan Temporary Poultry Market. The original "Form 86A" (that is the "Notice of Application for Leave to Apply for Judicial Review") was filed on 28 November 2000. Two decisions are under challenge:-

(1) the decision said to have been made on 24 January 1998 for segregating the supply, transportation, processing and sale of geese and ducks from that relating to chickens (which the Applicant called "the streaming policy" and the putative respondent called "the segregation policy". This will be called "the segregation arrangement" below);

(2) the decision said to have been made on 29 August 2000 confirming that no additional compensation would be paid to the Applicant's members as a result of the implementation of the segregation arrangement.

(The above dates were referred to by the Applicant in the Amended Form 86A).

The first decision was accordingly made about 2 years 10 months before this application whereas the second decision was made about 3 months before.

2. The factual background going back to the 1930's has been set out in the parties' affirmations in quite some length. For the purpose of this decision, it is unnecessary to recite the whole history save to set out the following. The majority of the Applicant's members have been in the wholesale business of chickens, ducks and geese for human consumption since the 1930's. They used to operate in Yau Ma Tei. In the early 1970's, the Applicant's members were relocated to the Cheung Sha Wan Temporary Poultry Market due to the construction work of the MTR in the Yau Ma Tei area. They have been operating there since then up to now.

3. In 1997, there was an outbreak of the Avian Influenza H5N1 epidemic (called "the chicken flu H5N1") which was found to infect not only birds but also human. Several cases of human having contracted the disease became known by December 1997.

4. On 28 December 1997, the Director of Agriculture, Fisheries and Conservation ("the putative respondent") declared the Cheung Sha Wan Temporary Poultry Market to be an infected place pursuant to r. 30, Public Health (Animals and Birds) Regulations, Cap. 139. A slaughtering of all birds in the market was subsequently ordered by the Director (pursuant to r. 35(1), Public Health (Animals and Birds) Regulations).

5. According to the affirmation of Ms So Lai Suk Vera, the Assistant Director of the putative respondent dated 26 March 2000, she met the Applicant and informed them of the need for the segregation arrangement on 13 January 1998. Ms So further deposed that during several meetings from about 13 January 1998 to about 11 February 1998 the putative respondent advised the Applicant (and other concerned wholesaler associations) of the segregation arrangement and invited the Applicant's members to apply for stalls in the Western Wholesale Food Market. In the meantime:

(a) on 24 February 1998, the Chief Executive in council enacted the Public Health (Animals and Birds) (Amendment No. 2) Regulation 1998. In essence, this provides for the segregation arrangement;

(b) on 26 February 1998, the (then) Provisional Regional Council enacted the Food Business (Regional Council) (Amendment) Bylaw 1998 providing for the segregation arrangement;

(c) on 4 March 1998, the (then) Provisional Urban Council enacted the Food Business (Urban Council) (Amendment) Bylaw 1998 providing for the segregation arrangement.

6. According to the affirmation of Mr Wong Kum Yiu, the Applicant's chairman, dated 28 November 2000, Ms So already announced the segregation arrangement on 30 December 1997. According to Mr Wong, the announcement was repeated by Government in a meeting with the Applicant on 24 January 1998. In effect, Mr Wong denies there was consultation regarding the segregation arrangement prior to its implementation.

7. By reason of the above, exactly when the decision to implement the segregation arrangement was made by Government is a matter in dispute. Be that as it may, it is undisputed that the segregation arrangement was actually implemented in either March 1998 (according to para. 7 of Mr Wong's affirmation) or April or May 1998 (according to para. 21 of Ms So's affirmation) when the trading and import of ducks and geese resumed under the segregation arrangement. By March 1998, the relevant amended Regulations and Bylaws were of course already in place.

8. The Applicant contended that its members have suffered loss as a result of the implementation of the segregation arrangement. It is unclear from the way in which the Applicant's case is presented in the Amended Form 86A and the supporting affirmations as to how that loss is said to have arisen. It appears that loss was said to have been caused because the implementation of the segregation arrangement entailed the removal of the operation of the Applicant's members relating to ducks and geese from the Cheung Sha Wan Temporary Poultry Market to the Western Wholesale Food Market (it is undisputed that the chicken operation of the Applicant's members remain in Cheung Sha Wan). Consequently:

(a) the size of the stalls allotted to the Applicant's members was reduced from about 3,000 sq. feet to about 300 to 600 sq. feet. There is insufficient space to accommodate their business;

(b) the Western Wholesale Food Market is far away from their customers which were mostly from Kowloon side;

(c) inadequate facilities were provided to the stall operators at the Western Wholesale Food Market.

9. It is undisputed that from about the beginning of 1998 to about October 1998, the Applicant and Government were engaged in discussions regarding the payment of (according to the Applicant) "compensation" or (according to the putative respondent) "ex-gratia sums". It is also undisputed that as a result of the said discussions:-

(1) the Applicant's members were paid compensation for the slaughtering of live chickens in accordance with s. 6 of the Public Health (Animals and Birds) Ordinance Cap. 139;

(2) additional ex-gratia payments and low interest loans were provided;

(3) the Applicant's members received about $750,000.00 by way of compensation and ex-gratia grants and about $10 million by way of loans.

10. The grounds of this application have been set out in the Amended Form 86A. They were summarized in para. 16 to 21 of the skeleton argument of Applicant's counsel:

(a) the decision to adopt the segregation arrangement is:

(1) irrational and Wednesbury unreasonable;

(2) in breach of the rule of natural justice in that the Applicant was not invited to take part in the making of this decision;

(b) the decision not to pay additional compensation is:

(1) irrational and Wednesbury unreasonable;

(2) in breach of the rule of natural justice (for the same reason stated in para. (a)(2) above);

(3) inconsistent with, or contravenes, Art. 105 of the Basic Law;

(c) the Applicant has a legitimate expectation that additional compensation would be paid to its members.

Although para. (a) above refers to the segregation arrangement, I understand from Applicant's counsel during the hearing that the real complaint in this regard is about the choice of location and layout of the Western Wholesale Food Market.

11. The validity of the amended Regulations and Bylaws is not under challenge. It is also not contended that the implementation of the segregation arrangement is unlawful or otherwise is ultra vires the said subsidiary legislations. In fact, para. 9 of Mr Wong's 2nd affirmation dated 25 April 2001 says:

"We accepted the decision of slaughtering the birds and the compensation thereof because we reckoned that this was necessary in the interest of the general public and the Government has the statutory power to do so."

12. This being the case, since the enactment of the relevant amended subsidiary legislations, not only did the putative respondent (as the responsible government department) have the power to implement the segregation arrangement, there is a duty on its part to do so.

13. Although Applicant's counsel argued in the course of her submission that there was a legitimate expectation that a suitable market would be provided to the Applicant in the near future, this argument has not been set out in the Amended Form 86A or skeleton argument; nor (more importantly) is there any evidential basis in support of such argument. The only reference to a promise of another market is set out in para. 11 of Mr Wong's affirmation which reads:

"During a meeting of the Legco in June 1998 [after the segregation arrangement has already been implemented] ... Mr Kwan Wing Wah of Economic Services Bureau ... promised ... to look for another place in Kowloon for the ... business in respect of ducks and [geese] ... Mrs Chau Leung Suk Yee ... said no matter how long, the Government has to assign a place to [the Applicant's members] and in the meantime, the Government needs to compensate them ...." (emphasis supplied).

I do not find the alleged "promise" to be a "promise" because of the vagueness as to the location, layout, suitability of the new market as well as the time when it will be available. There can accordingly be no legitimate expectation in the manner contended for by the Applicant now. In any event, there is no evidence that the putative respondent is not going to build a new market. In fact, the putative respondent's affirmations state that this is constantly under consideration.

14. Applicant's counsel (correctly) accepted that Government is not under a legal obligation to consult the people in the trade regarding the location and layout of a wholesale market. I consider that these are acts of Government for the relevant government department(s) to decide. Hence, since there is no right to be heard regarding these matters, the Applicant's argument that there has been a breach of the rule of natural justice is unarguable.

15. I also find the complaint that the choice of the Western Wholesale Food Market was irrational and unreasonable (the 2 words are used by the Applicant interchangeably) to have no substance. As Applicant's counsel fairly accepted, the outbreak of the chicken flu H5N1 was unexpected, all concerned (including the putative respondent) have to do their best to cope with the changes necessitated by such incident. It is not suggested (whether at the relevant time or in this application) that there was a more suitable place for segregating ducks and geese from chickens which ought to be chosen by the putative respondent. It is well known in Hong Kong that land is a valuable resource. The need for another market for the ducks and geese trade arose suddenly and this trade needed to resume as soon as possible to meet the demand of the population. In these circumstances, there is nothing irrational or unreasonable in choosing the Western Wholesale Food Market as the place for segregating the trade in ducks and geese from that in chickens (which is to remain in Cheung Sha Wan).

16. As regards the question of additional compensation, I also do not consider an arguable case has been established. The Applicant's case is that the decision not to pay additional compensation was made on 29 August 2000. The putative respondent disputed this and contended that the actual decision was made on 26 October 1998. Irrespective of which was the correct date, it is indisputable that whether prior to 29 August 2000 or 26 October 1998, there has been negotiation over the question of compensation in the course of which the Applicant has made its representations. The complaint that there has been a breach of the rule of natural justice is therefore unsustainable. In any event, if it should be necessary to do so, and by reason of the matters set out below, I find that the Applicant does not have a right to be heard regarding the payment of additional compensation.

17. The amounts paid to the wholesalers were:

(a) full payment of each bird slaughtered;

(b) ex-gratia payment of $40,000.00 for each stall;

(c) low interest secured and unsecured loans;

(d) rent waiver period for the market stalls and parking spaces.

18. Save as to the period of the rent waiver, the Applicant accepts that the said package is applied equally to all concerned.

19. The legislation scheme relating to the segregation arrangement does not provide for the payment of compensation (save under s. 6, Cap. 139 which relates only to the slaughtering of animals or birds). The Applicant has (correctly) not asserted that Government is otherwise liable in law to pay compensation for implementing any matter required to be implemented by subsidiary legislations. In these circumstances, I do not consider that the Applicant enjoys any right to claim compensation or damages. The complaint about the decision not to pay additional compensation is unarguable for this reason alone.

20. Applicant's counsel refers to 2 authorities in support of this part of her argument:

(1) de Smith, Woolf & Jowell: Judicial Review of Administrative Action (1995) 5th ed., para. 19-007 which reads:

"... Decisions as to whether to make payments of statutory or discretionary compensation, in practice an important source of compensation, may themselves be susceptible to judicial review";

(b) Ho Lee Chui Foon v. Director of Lands, HCAL 2167 of 2000.

The footnote to the above passage in de Smith states:

"... Reviewing residuary discretion to make ex-gratia payments is more difficult ... Lord Goff said, obiter, that the exercise of this type of discretion was not amenable to judicial review 'except on very narrow grounds such as bad faith'..."

The facts of Ho Lee Chui Foon are different. There the Director of Lands has been found to have acted unfairly in not affording the applicant therein a real opportunity to be heard on her claim for ex-gratia payment when that has not only been given to other people but (by mistake) people in similar position as the applicant therein.

21. In the present application, save as regards the rent waiver, the same payment was given to all concerned. The amount of "compensation" has been expressly provided for in s. 6, Cap. 139 and has been duly paid to the Applicant. The amounts of ex-gratia payments were within the putative respondent's discretion. There is no evidence to show why the amounts given were irrational or unreasonable. There is nothing inherently irrational or unreasonable about them either.

22. The Applicant complained that merchants of the Cheung Sha Wan Temporary Poultry Market were given a 6-month rent waiver whereas those of the Western Wholesale Food Market were given a 9-month rent waiver. However, those in Cheung Sha Wan were dealing in chickens whereas those in Western were dealing with ducks and geese. I agree with the putative respondent that because their businesses are different, no comparison can properly be made. Further, from the profits and loss accounts exhibited to the supporting affirmations, it can be seen that rents form a relatively minor part of the business expenses of the Applicant's members. The Applicant's claim for damages consists almost exclusively of the alleged loss of business of its members rather than the payment of rent.

23. The contention that the Applicant enjoys a legitimate expectation for the payment of additional compensation is based on 2 matters:-

(a) Mr Kwan of the Economic Services Bureau did not dispute Mrs Chau's request for compensation at the Legco meeting in June 1998;

(b) Legco has allocated a total of $104 million for the specific purpose of paying compensation/ex-gratia sums relating to the chicken flu H5N1 incident.

24. I do not consider point (a) above to have any substance. As has been stated above, the Applicant well knew at all times that Government refused to pay additional compensation. In these circumstances, even if Mr Kwan has not rhetorically refuted the request, I do not accept that this would lead the Applicant to legitimately expect Government would pay its members any sums. In fact, the Applicant's evidence has not so asserted.

25. Point (b) is equally unarguable. The fact that an amount has been allocated to Government cannot be a representation, let alone a representation by Government, to create a legitimate expectation that the sum allocated would be totally used up as Applicant's counsel argued to be the case at the hearing.

26. Applicant's counsel also relied on Art. 105 of the Basic Law which reads:

"The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property.

Such compensation shall correspond to the real value of the property concerned at the time and shall be freely convertible and paid without undue delay." (emphasis supplied)

Counsel argued that "property" in Art. 105 should include a business or trade. She submitted that by requiring the Applicant's members to move the ducks and geese operations to the Western Wholesale Food Market, Government has "deprived" them of their businesses, even though this was done in accordance with the amended Regulations and Bylaws. The putative respondent denied that the businesses of the Applicant's members have been deprived and contended that they could continue their businesses in the new market. Applicant's counsel accepted that in the light of this argument, the issue of whether the businesses of the Applicant's members had been deprived, turns at the end on whether it was reasonable for Government to move the ducks/geese operations to the Western Wholesale Food Market. I have already found against the Applicant on this point. In such case, even if "property" should include a trade or business, I do not consider that the Applicant has been deprived of its property.

27. For the above reasons, even though the Applicant only has to meet a low threshold at this stage, I find that no arguable case has been established. The application should therefore be refused.

28. Having so concluded, it is strictly unnecessary to decide whether the time for making this application should be extended. I shall do so for completeness. I agree with the Applicant that ultimately the discretion regarding whether to extend time is to be exercised in order that justice be done: s. 21K(6), High Court Ordinance Cap. 4 and RHC Ord. 53 r. 5(1). The reason given by the Applicant for the delay is in essence that it has tried to settle the case with the putative respondent. I do not accept this to be a valid explanation for the delay. The first decision under challenge is (as the Applicant admits) way out of time. The second decision under challenge was made in either 29 August 2000 (as the Applicant contended) or 26 October 1998 (as the Applicant contended).

29. Having considered the whole circumstance, in particular the letter dated 26 October 1998 from the putative respondent, I agree with the putative respondent that the decision was made on 26 October 1998. The 29 August 2000 letter (as the Amended Form 86A states) merely confirmed the earlier decision. The second decision was therefore about 2 years before the date of this application. Even if the points raised in this application were arguable (which I found them not to be), taking into account the merits of these points, the length of and reasons for the delay, this is an appropriate case to refuse to extend the time for making the application. The application for leave should be refused on this ground as well.

30. There is no reason to depart from the usual rule that costs should follow the event. There will be a costs order nisi pursuant to Ord. 42 r. 5B(6) that costs of this application are to be paid to the putative respondent to be taxed if not agreed.