UNITED GRAND LTD v. TOWN PLANNING BOARD

cacv 398/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 398 of 2006

(on appeal from HCAL NO. 38 of 2005)

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J U D G M E N T

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Hon Rogers VP:

1.  I agree with the judgment of Le Pichon JA.

Hon Le Pichon JA:

2.  This is an appeal from the order of Chu J dated 25 October 2006 dismissing the applicant’s application for judicial review of the decision of the Town Planning Board (“the Board”) dated 11 March 2005.  By that decision, the Board in effect rejected the applicant’s objection to one of its proposed amendments to Draft Outline Zoning Plan No. S/TW/19 (“DOZP 19”).  At the conclusion of the appeal hearing, judgment was reserved which we now give.

Background

3.  The applicant is a property development company which entered into a sale and purchase agreement dated 23 June 2004 (“the agreement”) for the purchase of land consisting mainly of agricultural lots situated at Yau Kom Tau, Tsuen Wan (“the Site”).  Yau Kom Tau is an area of land lying between Tuen Mun Road which forms its northern boundary and Castle Peak Road which runs along the coast and forms its southern boundary.  Broadly speaking, both these roads run in an east-west direction although the relevant section of Tuen Mun Road is not straight but makes a semi-circular curve towards the north.

4.  The Site is located on the upper hill slopes in the northwestern part of Yau Kom Tau overlooked by and close to Tuen Mun Road from which the land slopes down to Castle Peak Road.  The southern and central parts of Yau Kom Tau especially the area close to Castle Peak Road which provides the main vehicular access contain various residential developments with a plot ratio of 2.1 except in one case where the plot ratio is 2.3 but the northern part of the area following the contours of and adjoining Tuen Mun Road is a different matter altogether.  As is apparent from the aerial photograph of the area, there the terrain is difficult, being steep and covered with dense vegetation and adjoins Tuen Mun Road, a major highway carrying heavy traffic.  There are four sites within the northern part of Yau Kom Tau, only two of which have been developed, namely Chiu’s Garden, a house built in 1981 with a plot ratio of 0.2 and Grandview Villa, a lowrise residential development built in 2001 with a plot ratio of 0.4.  The two undeveloped sites are situated on either side of Chiu’s Garden, the Site being one of them.  The Site is to the south west of Chiu’s Garden and is the westernmost of the four sites.

5.  Various statutory plans have been made over the years covering the Site.  Up to the date of the application, there are no less than 19 such plans consisting of 3 Outline Zoning Plans (OZPs) and 16 Draft Outline Zoning Plans (DOZPs).  (The term “statutory plans” is used in this judgment to refer to OZPs and/or DOZPs covering the Site.)  The whole of Yau Kom Tau including the Site was zoned Residential (Group B) (“R(B)”) in 1981 on the Tsuen Wan OZP and this zoning has remained in successive versions until DOZP 20.  No plot ratio control for the R(B) zone was specified in the Notes until about six months prior to the date of the agreement, when DOZP 19 was gazetted.   In the accompanying Notes which form part of DOZP 19, it was stated that on land designated R(B), “no new development … shall result in a total development … in excess of the maximum plot ratio of 2.1 …”.

6.  On 17 September 2004, the Board gazetted DOZP 20 containing proposed amendments to DOZP 19.  Those proposals included the rezoning of the 4 sites (including the Site ) on the upper hill slopes at Yau Kom Tau referred to in paragraph 4above from R(B) partly to Residential (Group C) (“R(C)”) with a maximum plot ratio of 0.4 and partly to Green Belt (“GB”).  Within the statutory period prescribed by the Town Planning Ordinance, Cap. 131, (“the Ordinance”), the applicant submitted an objection to the proposed rezoning of the Site.  After giving preliminary consideration to the applicant’s objection (which took place in the absence of the applicant as provided by the Ordinance), the Board informed the applicant of its decision not to propose any amendment to meet the applicant’s objection, stating its reasons and attaching the Board’s Paper No. 7161 as well as the minutes of its meeting on 26 November 2004.  As the applicant did not withdraw its objection, a hearing was held which culminated in the Board’s decision that forms the subject matter of the judicial review.

7.  As will become apparent, one of the main issues on this appeal is whether, as the applicant’s counsel Mr McCoy SC contended, the applicant having entered into the agreement acquired a right or entitlement by virtue of DOZP 19 to develop the Site at a plot ratio of 2.1 which it preserved by making a timely objection to the proposed re-zoning amendment.

The Ordinance

8.  The Ordinance provides for the establishment of the Board whose functions are prescribed by section 3 which, inter alia, requires the Board to “undertake the systematic preparation” of draft plans of such areas as the Chief Executive may direct, “with a view to the promotion of the health, safety, convenience and general welfare of the community”.

9.  The Ordinance also lays down detailed statutory procedures for the publication of statutory plans and when and how representations from the public are to be dealt with.  It is unnecessary, for present purposes, to deal with these aspects further since procedural unfairness is not one of the grounds of appeal although it was a point taken below.  Suffice it to mention that an “approved plan” is one that has been approved by the Chief Executive in Council and that section 13 of the Ordinance provides that approved plans “shall be used by all public officers and bodies as standards of guidance in the exercise of any powers vested in them.”

The Layout Plan

10.  Reference should now be made to layout plans.  From time to time, these are circulated among government departments concerned with land use including the Lands Department and the Planning Department.  Such plans are endorsed and adopted after internal agreement is reached.  They establish a departmentally agreed land use pattern and transport framework for the future development of the particular area dealt with in the relevant layout plan.  Unlike DOZPs, they have no statutory effect and are made internally by government departments although layout plans are available to the public and can be readily purchased.

11.  In February 1992, the Development Progress Committee (now known as the Committee on Planning and Land Development) approved a layout plan for the Yau Kom Tau area being Plan No. L/TWN6/2 (“the Layout Plan”).  This was adopted by the Secretary for Planning, Environment & Lands in March 1992.  The Layout Plan covers approximately 25 hectares of land.  This represents a little over 3% of the total planning scheme area of the relevant statutory plans of 740 odd hectares.  The Layout Plan corresponds to planning area number one in DOZPs 19 and 20.  It is to be noted that each of the relevant statutory plans contains well over 40 planning areas.  It is also to be noted that the Layout Plan was made a decade after Yau Kom Tau had first been zoned R(B) on the Tsuen Wan OZP in 1981.

12.  Sites 5, 6, 7, 8 and 9 on the Layout Plan are zoned Residential-Zone 4 (“R4”).  According to the Explanatory Statement accompanying the Layout Plan, for R4 zoning, a residential density with a maximum plot ratio of 0.4 and a maximum rate coverage of 20% and a height restriction to 3 storeys over carports would be considered appropriate.  Sites 5, 6,7, 8 and 9 substantially correspond to the four sites referred to in paragraph 4above.  The Site comprises nearly the whole of site 5 on the Layout Plan as well as land adjacent to the western boundary of the site 5 and lying between it and Tuen Mun Road which is zoned GB.  Site 6 corresponds to Chiu’s Garden while sites 8 and 9 together form what is now Grandview Villa.  Site 7 is the other undeveloped site in the northern half of the Yau Kom Tau area.  For the development of the Site, the Explanatory Statement referred to the need for a geotechnically feasible access road to be proposed as the Site lacked appropriate vehicular access.

The Board’s decision

13.  The Board stated the following reasons for refusing to propose amendments to DOZP 20 to meet the applicant’s objection to the re-zoning of, inter alia, the Site:

“	(a)	the objection site is situated at the upper hill slopes of the Yau Kom Tau area beside Tuen Mun Road.  It is subject to development constraints including steep topography of the area, lack of standard access road as well as adverse noise and air impacts from Tuen Mun Road.  It is more desirable to have a low-density development and the current “Residential (Group C)” zoning of the major part of the objection site is considered appropriate;
	(b)	it is the planning intention to minimize the landscape impact of the future developments on the objection site and the surrounding areas which are predominantly sloping areas covered by dense vegetation.  The current “Green Belt” zoning of the remaining part of the objection site is considered appropriate; and
	(c)	there is insufficient information in the submission to demonstrate that the proposed “Residential (Group B)” zoning of the objection site would not have adverse impacts on the landscape and natural environmental of the area, and would not have adverse visual impact as viewed from Tuen Mun Road.”

This appeal

14.  The applicant’s case below was based on three grounds, namely that the rezoning of the Site was contrary to its legitimate expectation, procedural unfairness, and finally that the decision was Wednesbury unreasonable.  In summary, on this appeal, Mr McCoy SC submitted that the judge was wrong in allowing the Layout Plan to “trump” the statutory plans; that the applicant had a “specific entitlement” under the statutory plans which at law constrains the Government’s decisions; alternatively if the statutory plans did not confer any “specific entitlement”, the applicant had a legitimate expectation that it was entitled to rely on the zoning of the Site made in a series of consistent decisions of the Board through its promulgation of the statutory plans; and finally that the decision under challenge, being inconsistent with the series of statutory plans gazetted during the decade between 1993 and 2003, “smacked of arbitrariness”.  In particular, Mr McCoy SC sought to impugn the judge’s findings that the statutory plans were intended to and did co-exist with the Layout Plan and that it was open to the Board to incorporate into the statutory plans the planning intention shown on the Layout Plan, including its development controls because the Layout Plan had become obsolete.

15.  As a matter of planning judgment, the Board’s reasons (set out in paragraph 13 above) are unexceptionable and support the re-zoning of the Site to a plot ratio of 0.4 and site coverage of 20%.  Prima facie, the Board’s decision was rational.  Whether there are valid reasons that undermine that conclusion will be considered under the headings below.

Whether statutory plans confer entitlement or right to plot ratio

16.  The applicant’s key contention was that a statutory plan confers on an owner of land falling within the boundaries of the plan the right or entitlement to use or develop his land in accordance with the relevant annotation on the plan without having to make any application to the Board.  It was submitted that as the Site fell with in an area designated R(B) on the statutory plan with the annotation permitting residential development up to a maximum plot ratio of 2.1, the applicant as owner of the Site was permitted as of right to develop it up to the permitted plot ratio without having to make any application to the Board so long as the use to which the Site would be put is one shown in the Notes to be a “Column 1 use”, that is to say “uses always permitted”.  A block of flats would thus be a “Column 1 use”.

17.  It was said that that was the effect of the pre-approval system and the right is conferred by any statutory plan whether or not it is an “approved plan” within section 13 of the Ordinance.  I apprehend it to be Mr McCoy’s submission that it matters not that DOZP 19 is not an approved plan because the identical area is designated R(B) on OZP 16 which is an approved plan and the applicant is entitled to rely on that in conjunction with the specification of the maximum plot ratio which appears in the Notes to DOZP 19.  It was said that the applicant therefore had an acquired or accrued right which is a status conferred by law.

18.  Mr McCoy further submitted that with such pre-approval, it was not open to the Director of Buildings, representing the enforcement arm of the town planning regime, to refuse approval under section 16(1)(d) of the Buildings Ordinance which provides as follows:

“	(1)	The Building Authority may refuse to give his approval of any plans of building works where –
		(d)	the carrying out of the building works shown thereon would contravene the provisions of this Ordinance or of any other enactment, or would contravene any approved or draft plan prepared under the Town Planning Ordinance”

As the Layout Plan does not fall within (d), it was said that it must be disregarded by the Building Authority and could not constitute a reason for refusing approval.  That being the case, it was argued that it had to follow that the applicant had an acquired or accrued right to develop the Site up to the maximum permitted plot ratio because any proposed development up to a plot ratio of 2.1 (as opposed to one exceeding 2.1) could not be refused under section 16(1)(d).

19.  By way of preliminary observation, as the court remarked in the course of the hearing, since Yau Kom Tau is an area of over 25 hectares, it is difficult to conceive of any “wall-to-wall” development of the entire area (save for such parts as may not be held under a Government lease) with a plot ratio of 2.1 or that the Board could have “pre-approved” such a development.  But that would be the effect if Mr McCoy’s proposition were correct.

20.  In this connection, it is to be observed that paragraph (2) of the standard Notes to statutory plans (which it is accepted form part of the relevant statutory plan) provides:

“	any use or development which is always permitted … must also conform to any other relevant legislation, the conditions of the Government lease concerned, and any other Government requirements, as may be applicable.”

The significance of that annotation is that it shows that statutory plans constitute but one aspect of development control and that full compliance with all other aspects is necessary.  Thus statutory plans interface or interact with “other relevant legislation”, for example, the Buildings Ordinance, and “conditions of grant” under which Government land is held and “any other Government requirements”, those constituting other levels or layers of development control.

21.  As the Deputy Director of the Planning Department explained in paragraphs 11-12 of her affidavit dated 12 July 2005:

“	11.	The system of development control in Hong Kong relies not only on the statutory OZP but also on other administrative means.  In general, for areas covered by statutory plans, developments should comply with the land uses permitted by the Board as per the zonings and the Notes of the concerned OZP.  Statutory Outline Zoning Plans are small scale plans, usually at a scale of 1:5000/1:7500/1:10000, which set out general land use zonings for an area.  Apart from statutory plans, there are other administrative departmental plans, such as Outline Development Plans (ODP) and Layout Plans (LP), which also provide guidance and control for developments.  ODP and LP are large scale plans (drawn at a scale of 1:2500 for the former and 1:1000/1:500 for the latter) which set out more detailed development restrictions (such as plot ratio, site coverage and building height) and layout for a local area.
	12.	Except in the rural areas where direct enforcement power is available under the Town Planning Ordinance, enforcement of planning control in the urban area is under the Buildings Ordinance and lease conditions.  Under the Building Ordinance, building plans may be rejected by the Building Authority if the proposed building works do not conform with the OZP.  When drafting new leases for land sale or when drafting conditions to modify a lease, the Lands Department may incorporate conditions restricting use, site coverage, plot ratio, building height and non-building area.  When drafting such conditions, the Lands Department will consider, inter alia, the relevant OZP, ODP, any relevant LP, and comments from other Government departments.”

22.  Even if the Building Authority may not refuse an approval under section 16(d) of the Building Ordinance because a development on the Site with a plot ratio of 2.1 would not contravene the relevant statutory plan, a lease modification would be required for the Site as it is mostly agricultural.  On the processing of land exchange or lease modification applications, the Estate Surveyor of the Tsuen Wan and Kwai Ching District Lands Office of the Lands Department has filed evidence to the effect that when such an application is received, all departments concerned are asked for their comments and a District Lands Conference (to which the Estate Surveyor would submit a recommendation) would be arranged to consider it.  One of the considerations that might be taken into account would be “any development control” shown on a layout plan.  Mr McCoy invited the court to disregard this evidence because it was said to lack a “statutory basis” but it is not suggested (much less shown) that such an administrative practice would be unlawful.  For my part, I can see no reason to disregard it.

23.  Mr McCoy also sought to draw a distinction between rights accruing from statutory plans which vest in the owner of the Site which was a matter of public law and an application to modify lease conditions which was strictly a matter of private law requiring negotiations between the owner of the Site qua tenant with the Government qua landowner.  It was said that the negotiations take place in the context of the owner having an entitlement under the statutory plan to develop up to the maximum plot ratio.

24.  In my view, the dichotomy that Mr McCoy seeks to draw between matters of public law and private law does not assist.  What is in issue is whether a statutory plan has the effect of conferring an entitlement or right as Mr McCoy contends.  As a matter of construction, and having regard to paragraph 2 of the Notes which is entirely consistent with the manner in which development control operates in Hong Kong, for my part, I am unable to conclude that a statutory plan has the effect contended for.  There is nothing that compels the conclusion Mr McCoy invites the court to reach.  Rather, it is a conclusion that would be at odds with the system of planning control in operation at various levels.  The fact that statutory plans under the Ordinance form but one aspect of development control cannot be ignored.  In my view, it would be highly artificial to view statutory plans as something self-contained as the system of development control in operation must be viewed as a comprehensive whole.

25.  There is also the fact that statutory plans are subject to amendment.  The Board has power to propose amendments to a DOZP prior to its becoming an approved plan.  So far as approved plans are concerned, the Chief Executive in Council may, inter alia, refer an approved plan to the Board for amendment as has occurred in the present case.  This is another reason why Mr McCoy’s submission on statutory plans conferring “rights” cannot be correct for it could constrain or fetter the exercise of the powers of amendment contained in the Ordinance.  I would add that although it was submitted that there had to be a material change of circumstance before the power to amend could be exercised, the basis of the alleged requirement is not entirely clear.

Do the statutory plans and the Layout Plan conflict?

26.  The thrust of Mr McCoy’s submission was that the Board had consistently ignored the Layout Plan in promulgating the series of plans from DOZP 6 of October 1993 (which was six months prior to the Layout Plan) to DOZP 19 of December 2003 such that it must be obsolete.  In fact, the Site has been zoned R(B) since 1981.  See paragraph 13 of the judgment and paragraph 13 of the affidavit of Wong Yuen Sheung, Ophelia, the Deputy Director of the Planning Department who made the affidavit referred to in paragraph 21 above.  The relevant inquiry is not whether the Layout Plan is obsolete or whether it had been “ignored” by the Board, but whether it conflicts with the statutory plans.

27.  The judge held that the Layout Plan and the statutory plans co-exist.  That conclusion appears to me to be correct.  What is immediately and indisputably striking when one compares the Layout Plan with what is actually on the ground is that development of the Yau Kom Tau area reflects, in all material respects, the planning detail that appears in the Layout Plan.  Mr McCoy had to accept that no development within the Yau Kom Tau area actually conflicts with the Layout Plan.  In particular, it is to be noted that Grandview Villa which is a lowrise, low-density residential development was completed relatively recently in 2001.  It has a plot ratio of not more than 0.4.  That cannot be explained away as Mr McCoy sought to do by speculating that the owner had “voluntarily” chosen to comply with the plot ratio laid down in the Layout Plan.  There would not appear to be any evidential basis for that assertion.  The fact remains that the plot ratio of both Chiu’s Garden and Grandview Villa do not exceed that specified in the Layout Plan.

28.  In paragraph 49 of her judgment the judge made reference to the standard provisions to be found in the Explanatory Statement accompanying statutory plans.  They are to the effect that the statutory plan provides a broad land use framework within which more detailed non-statutory plans are prepared and that these detailed plans are used for public works planning and site reservation within the Government and further that planning applications are assessed on individual merits and the Board will take into account planning considerations, which may include, inter alia, the departmental outline development plans and layout plans.  See paragraphs 11.2 and 11.3 in the Explanatory Statements in DOZP 19 and OZP 16.  As the judge correctly noted, an Explanatory Statement is a material document and could not be disregarded: see per Lord Lloyd in Henderson Real Estate Agency Ltd v Lo Chai Wan [1997] HKLRD 258 at 267.

29.  As noted above, the Layout Plan dealt with approximately 3% of the area covered by the statutory plans.  That it should “set out detailed development restrictions and layout for a local area” is hardly surprising.  By the same token, statutory plans which deal with an area 33 times that of the Layout Plan could be expected to lay out no more than general land use zonings.  The refinement of boundaries of development sites within a general land use zoning would be a gradual process achieved by way of amendment over time.

30.  It was accepted below that, in general, a layout plan provides guidance and recommendations for government departments.  I agree with the judge that although a Layout Plan does not have statutory status and is not binding on the Board, it nevertheless constitutes a relevant consideration that the Board may take into account when exercising its statutory functions.  I do not see how the mere fact that the Board has regard to the Layout Plan or indeed decides when exercising its statutory functions that there is good reason to incorporate the development controls in the Layout Plan would, of itself, frustrate the legislative intent of the Ordinance as Mr McCoy sought to suggest, still less would that be so when the development of the area in question has been entirely consistent with the Layout Plan.  Any amendment proposed under the Ordinance by the Board remains subject to what he referred to as “due process of public consultation”.  In my view, the judge’s findings are unimpeachable.

Legitimate expectation

31.  In view of the conclusions already reached, it is difficult to see what the applicant was entitled to expect.  It had no right or entitlement under the statutory plans to develop with a plot ratio of 2.1 and it had no right to a lease modification to build with a plot ratio of 2.1.  In any event, prior to entering into the agreement, at a meeting with the District Planning Officer for Tsuen Wan and West Kowloon, consultants representing the applicant were made aware of the likely development restrictions given the designation of the site as R4 on the Layout Plan.  In those circumstances it is difficult to see how any argument based on legitimate expectation can even get off the ground.

Conclusion

32.  I would dismiss this appeal.  I would also propose an order nisi that the costs be borne by the applicant.

Hon Suffiad J:

33.  I agree with the judgment of the Hon Le Pichon JA.

Hon Rogers VP:

34.  There will therefore be an order in terms of paragraph 32 above.