CHAU TAM YUET CHING v. DIRECTOR OF LANDS

CACV 170/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 170 OF 2012

(ON APPEAL FROM HCAL NO. 66 OF 2012)

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JUDGMENT

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Hon Stock VP :

1.  I respectfully agree with the judgment of Lam JA.

Lam JA :

2.  The Applicant was the licensee under two Government Land Licences (Nos T20089 and T20134) [“the GLLs”] in respect of two plots of land at DD 208, Wong Chuk Yeung, Sai Kung. She applied for leave to challenge two decisions of the Director of Lands :

(a) The decision of 19 March 2012 cancelling the GLLs immediately on the ground of failure to rectify breaches of the licensing conditions before the expiry of the deadline set out in earlier notices [“the 1^st Decision”]; and

(b) The decision of 2 May 2012 to issue a notice under s 6 of the Land (Miscellaneous Provisions) Ordinance Cap 28 [“LMO”] requiring cessation of occupation of the land [“the 2^nd Decision”].

3.  On 18 July 2012, after hearing counsel for the Applicant and counsel for the putative Respondent, Au J refused leave.  Reasons for refusing leave were set out in the judgment handed down on 18 July 2012. In essence, Au J held that the 1^st Decision was not amenable to judicial review as the Director was merely exercising the right of the Government as a licensor in the cancellation of the GLLs and as such was performing a purely private and commercial function.  Further, as there was no independent ground for challenging the 2^nd Decision other than that for challenging the 1^st Decision, leave was also refused with regard to the 2^nd Decision.

4.  The Applicant appealed against the refusal of leave.  Mr Dykes SC (appearing with Mr Matthew Chong for the Applicant) submitted that the judge erred in holding that the 1^st Decision is not amenable to judicial review.  He contended that since the enactment of the LMO, the grant of GLLs is governed by the statutory regime under the LMO and likewise the determination of GLLs is the performance of a statutory function.   He drew attention to the following features of the statutory scheme and argued that the GLLs could not simply be regarded as private contracts :

(a) The grant of a GLL is the exercise of a statutory discretion under s 5(1) of the LMO;

(b) Non-compliance with the terms of the licence is a ground for termination of the licence (under s 6 of LMO) as well as a criminal offence under s 11(2) of LMO;

(c) The power to grant GLL is circumscribed by the LMO and the regulations made under the LMO. In particular, the licence fees are to be determined under the Land (Miscellaneous Provisions) Regulations; and

(d) The Director could resort to the power under the LMO to demolish structures and remove structures on unleased Government Land without any court orders, see ss 12 and 18 of LMO.

5.  Counsel also contended that even if the 1^st Decision is not amenable to judicial review, the 2^nd Decision could be challenged by way of judicial review due to the peculiar features of LMO which relieves the Government of the need to get a court order in an ordinary civil action in recovering possession of the land.

6.  In the Form 86, the underlying disputes between the parties were identified at para 41A, which Mr Dykes somewhat ironically contended were issues which the court is not equipped to deal with by way of judicial review.

7.  Further, the Applicant contended that the cancellation of the GLLs was a determination of her rights and obligations in a suit at law and as such the right to a fair and public hearing by a competent independent and impartial tribunal under Article 10 of the Hong Kong Bill of Rights is engaged.

8.  Mr Dykes therefore submitted that if the issues in para 41A can be determined in court and resolved in favour of the Applicant, the 1^st Decision should be quashed by a certiorari.  If the issues cannot be determined in court, there is an apparent breach of Article 10 and a declaration should be granted accordingly.

9.  I accept it is reasonably arguable that a licensee should have the right to challenge a decision to cancel a GLL in court.  However, it does not follow that such challenge can be brought by way of judicial review. Neither does it follow that such challenge can be brought on public law grounds.

10.  In my judgment, what Au J meant when the learned judge held that the 1^st Decision is the performance of a private function as licensor and not amenable to judicial review is that insofar as there are disputes concerning the validity of the determination of the GLLs, they should be litigated by way of a private law action.  If the 1^st Decision is in the nature of a “commercial decision”[1], it is not a breach of Article 10 to exclude any challenge by way of judicial review on public law grounds.

11.  Mr Dykes contemplated the possibility of a private law action at para 25 of his skeleton submissions.  He however said that such action would very much resemble a judicial review.

12.  With respect, I do not agree with the last observation of counsel.  In a judicial review, the court would not usurp the role of the decision-maker in determining whether the GLLs should be cancelled in terms of merits. The court would confine itself to a review of 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.

13.  In the course of the hearing of the appeal, when Mr Dykes was asked about the issues set out in para 41A, counsel candidly accepted that those issues did not give rise to any viable private law grounds for challenging the 1^st Decision.  He however submitted that in view of the public character of the 1^st Decision, the Applicant was in a better position than a licensee of land in the context of private license-licensor situation.  In addition to possible challenge on ordinary private law grounds, it is also open to her to challenge the decision to cancel the GLLs on public law grounds.  Mr Dykes submitted that the 1^st Decision was Wednesbury unreasonable in light of the matters set out in para 41A and the weather condition at the material time and other practical difficulties in remedying the alleged breaches.

14.  That was not the position of the Applicant when the matter was heard by Au J.  The Wednesbury complaints at paras 47 to 52 in the Form 86 were deleted by the amendments placed before the judge and she only relied on the Article 10 ground, see paras 27 to 29 of the judgment below. 

15.  Be that as it may, the crucial issue before us is whether the 1^st Decision is amenable to public law remedies.  Before I deal with this issue, I can dispose of the argument based on Article 10 shortly. 

16.  Whilst there are provisions in the LMO catering for the recovery of unleased Government land from wrongful occupants without the need of going through a judicial process, I cannot find any provision in that Ordinance which excludes a licensee’s right to issue private law proceedings to challenge the decision of the Director in the cancellation of a licence.  In aid of such challenge, a licensee might seek injunctive relief in the private law proceedings to restrain the Director from resorting to the self-help remedy in the LMO pending the determination by the court as to the validity of the cancellation.

17.  The position does not change even after the issue of a s 6 notice.  A s 6 notice can only be issued in respect of unleased land occupied otherwise than under a licence.  If the licence has not been validly cancelled, the s 6 notice would be invalid. Thus, pending a court’s determination on the validity of a cancellation when it is challenged, the Director cannot rely on s 6 to oppose the grant of injunction.

18.  Of course, whether the court will grant an injunction in the private law action depends on the usual consideration for grant or refusal of injunction in a private law context.  The merit of a private law challenge is a relevant consideration.

19.  In the present case, as mentioned, Mr Dykes accepted that there is no viable private law challenge to the 1^st Decision. Thus, the reason why the Applicant did not pursue a private law challenge was not because of the lack of access to court.  Rather, it was due to her perceived lack of merit of such challenge.

20.  As regards the criminal offences created under the LMO, any prosecution of such offences would have to be brought in court. In such criminal proceedings, the Applicant can raise her legal challenges to the 1^st Decision in court by way of defence.  Actually, the section cited by Mr Dykes is not applicable in the present context.  Section 11(2) referred to structures erected by a person other than the licensee, see s 11(1). The sections which might be relevant in the present context are s 6(4) and (4A) of the LMO.  Section 6(4) only applies when the occupation of the unleased land is otherwise than under a licence and the occupation is without reasonable excuse.  Thus, if the cancellation of licence is genuinely disputed on bona fide grounds, section 6(4) is not engaged.  As regards s 6(4A), whether a structure is authorized by the terms of a licence can be litigated in a criminal prosecution.

21.  Hence, there is no question of her Article 10 rights being infringed by the regime under the LMO.

22.  I shall now turn to the key issue: whether the 1^st Decision is amenable to judicial review. But for the statutory regime under the LMO, 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 modify or termination of a short term waiver, “commercial decisions” which are guided by the interest of the Government as landowner or landlord and governed by private law such as the law of contract, the law of landlord and tenant and land law: see Hang Wah Chong Investment v Attorney General [1981] HKLR 336; Canadian Overseas Development v Attorney-General [1991] 1 HKC 288; Polorace Investments v Director of Lands [1997] 1 HKC 373; Rank Profit Industries v Director of Lands [2009] 1 HKLRD 177 (CA) and FAMV 7 of 2009; Anderson Asphalt v Secretary for Justice [2009] 3 HKLRD 215. 

23.  The mere presence of some public element in the Government’s decisions is not sufficient to transform such decisions into public law decisions. After all, the Government administers land in Hong Kong, whether qua landowner or landlord or covenantee, for the benefit of the general public and it is difficult to imagine a case where a public official can make such decision without affecting the public interest either directly or indirectly.  Even if one confines 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 having an impact on public finance.

24.  This point can be highlighted by Canadian Overseas Development v Attorney-General [1991] 1 HKC 288 where the Court of Appeal disapproved a dictum of Mayo J in an earlier case of Home Restaurant v AG [1987] HKLR 237 at p.245A-D.  Mayo J said by way of obiter that in making a decision on conditions to be included in a grant the government was performing a function in the public domain and susceptible to judicial review.  In Canadian Overseas Development at p.292F to C, Bokhary J (as he then was, giving the lead judgment of the Court of Appeal) disagreed and held that such view was against the decision of the Privy Council in Hang Wah Chong.  He said at p.293C,

“The decision was that the Crown was in the same situation as other landlords so that its lessees were in the same situation as other landlords’ lessees.”

And that means, at p.294C,

“The position in the present case … is governed by contract. The Crown is not above the law. It merely enjoys equality before the law.”

25.  Further, at p.294E to H, Bokhary J further referred to the disagreeable conclusion if decisions of such nature are susceptible to judicial review,

“Even as a refusal by the Crown to approve a master layout plan … would be susceptible to judicial review at the instance of the developer … so an approval of the same by the Crown would be susceptible to judicial review at the instance of persons like the Owners’ Association … and possibly even at the instance of organizations like the World Wildlife Fund …

I am unable to view … so serious an inroad into the freedom of contract enjoyed by the Crown and those dealing with it as desirable or … the product of our law.”

26.  In Rank Profit Industries v Director of Lands [2009] 1 HKLRD 177 (CA), a submission advanced before the Court of Appeal was that there was sufficient public element in the Director’s decision on modification of lease by virtue of the constitutional underpinning for the right of the Government to grant lease in Article 7 of the Basic Law, the established policy and procedures in processing applications for modification, the decision being made upon good public policy considerations balancing interests of different persons, including members of the public other than the leaseholder, consultation with relevant Government departments. The submission was rejected (see paras 43 to 48). At para 47, Tang VP (as he then was) said,

“It is true that modification would be granted only after the relevant Government departments have been consulted and indicated their consent to the application. But, even in the absence of binding authorities, I would not agree that this is sufficient, when taken with all other relevant circumstances, to make modification of leases reviewable. As Ribeiro PJ pointed out in Ying Ho Co Ltd v Secretary for Justice, the government, when it acts in the capacity of a landlord, is entitled to exercise its powers for the public’s benefit. Performance pledges and open and accountable decision making process are conducive to greater efficiency, and serve the public interest. The consultation of the relevant Government departments is consistent with the exercise of its powers as landlord for the public’s benefit. …”

27.  Rank Profit applied for leave to appeal to the Court of Final Appeal.  The application was refused by the Appeal Committee in FAMV 7 of 2009, 25 June 2009[2] .  In holding it is not reasonably arguable that the government is subject to judicial review as a matter of public law in relation to the terms it seeks as landlord to extract in return for lease modifications on the basis that its published guidelines give rise to legitimate expectations on the part of government lessees in general, the Committee reaffirmed the Hang Wah Chong line of cases. 

28.  It is noteworthy that Ribeiro PJ commented on the two Hong Kong cases where decisions[3] on renewal of special purpose leases were held to be judicially reviewable at para 11,

“We do not consider it necessary to express a view in these Reasons as to whether those two cases were or were not correctly decided. It is however important to note that they were both cases involving special purpose leases, that is, leases granted by the government for defined special purposes subject to a permanent prohibition against assignment. Both cases arose out of the passage of the New Territories Leases (Extension) Ordinance and the government’s stated policy of considering extensions of such special purpose leases on a case-by-case basis, with the decision whether to extend being dependent on investigation into whether the land was no longer being used for its original purpose or unlikely to be so used for the full period or whether the land was required for a different public purpose. The decisions relating to the grant and extension of special purpose leases in the aforesaid context were therefore strongly coloured by public purposes.”

29.  In Anderson Asphalt v Secretary for Justice [2009] 3 HKLRD 215, A Cheung J (as he then was) had to deal with a challenge in respect of the grant of a short-term waiver to an asphalt production plant.  The decision was challenged by the plant’s competitor on public law grounds. The challenge was held to be unsustainable because the decision was not amenable to judicial review.  After reviewing the authorities, A Cheung J summarized the relevant principles at para 57 of his judgment.

30.  Though His Lordship referred to the reviewability of the decision of a Government official acting in the role as a protector of the public interest at para 57(f), that has to be understood in light of what was said at para 57(h) to (l) which emphasized that the mere presence of town planning considerations (or for that matter, some other public interest considerations) in the decision making process is not enough to render a decision on land administration qua landowner or landlord reviewable.

31.  Subject to the above, I respectfully agree with what was said by the Chief Judge at para 57 of Anderson Asphalt.

32.  In my judgment, for the purpose of determining whether a decision on land administration is amenable to judicial review, there is no material distinction between a licence and a lease or a short term waiver. The mere fact that a licence is granted pursuant to the express authority of s 5 (1) of the LMO does not take the matter further.  As submitted by counsel in Rank Profit, the power of the Government to deal with land in Hong Kong is underpinned by Article 7 of the Basic Law.  That was not sufficient to persuade the court to hold that a decision on modification of lease is reviewable as a matter of public law.  One must examine the statutory regime in question to see whether such regime instilled a sufficient public character into the decision in question to render it judicially reviewable.

33.  As discussed above, I cannot find anything in the LMO to suggest that a decision on the cancellation of a licence would be immune from challenge on private law grounds.

34.  At the same time, I cannot find anything in the LMO to suggest that the legislature intended to confer rights on a licensee to challenge such a decision on public law grounds.  It would be surprising that in enacting a piece of legislation for the purpose of streamlining the process of evicting unlawful occupation of unleased land the legislature unwittingly conferred additional rights on a licensee to challenge a decision to cancel a licence other than those permissible challenge under private law grounds.  I said “unwittingly” because there is simply no express provision in the LMO to that effect.

35.  Yet this is the effect of Mr Dykes’ contention. Counsel submitted that once the Government secured the benefit of the LMO (in terms of the powers to evict unlawful occupation and to restore the land to its original state without the need for judicial proceedings) it must also be subject to the burden which is to subject the relevant decision to judicial review.   

36.  I do not think this argument can assist the Applicant. The benefit conferred by the LMO has nothing to do with a decision on cancellation of the licence which is the 1^st Decision.  At its highest, Mr Dykes’ submission only go to the reviewability of the decisions on the exercise of such statutory powers in the evicting of unlawful occupation and the restoration of the land, viz. the 2^nd Decision in the present case.

37.  Mr Mok SC (appearing together with Mr Anthony HK Chan for the Director) accepted that the exercise of those powers is amenable to judicial review.  In that connection, counsel agreed with the approach adopted in Wong Wai Hing Christopher v Director of Lands HCAL 95 of 2010, 24 Sept 2010.

38.  But that does not render a decision to cancel a licence reviewable on public law grounds.  Though the level of licence fee is prescribed, LMO does not regulate other terms to be stipulated in a licence. There is no statutory provision specifying the grounds for the termination of a licence.  Instead s 5(3) refers to “the giving such notice as may be specified in the licence”.  The clear implication is that termination of a licence is to be governed by the terms of a licence and the validity of a termination must be adjudicated according to the private law of contract or land law as in the case of a lease or a short term waiver.

39.  As regards the creation of offences under the LMO, Mr Dykes was incorrect on his submission that LMO made the breach of licence conditions a criminal offence. As mentioned, s 11(2) does not say so. It only refers to the duty of a lessee or licensee to notify the Government of unlawful structure erected by somebody else. Neither s 6(4) nor (4A) subject a breach of licence conditions generally to criminal sanction. 

40.  Whilst it may be possible to prosecute a licensee for erecting a structure on  licensed land  otherwise than in accordance with the terms of a licence under s 6(4A), that is a very specific situation which has no direct nexus with the cancellation of licence. It is simply a case where the doing of a single act attracts more than one consequence: one in terms of the cancellation of the licence, the other in terms of criminal liability.  In my judgment, that does not turn the decision to cancel a licence into a decision susceptible to judicial review.

41.  As regards the statutory powers given to the Director to resort to some self-help measures instead of recovering possession through court process, I have already explained how these statutory features are perfectly consistent with a decision of cancellation being governed by private law and the adequacy of protection to a licensee in terms of access to court.

42.  On the whole, notwithstanding the features in LMO identified by Mr Dykes, I do not think such features turn the decision of the Director in cancelling the GLLs into a decision with sufficient public element such that it could be challenged by way of judicial review.

43.  Mr Dykes placed great reliance on two authorities: R (Data Broadcasting International Ltd and Anor) v The Office of Communications [2010] EWHC 1243 (Admin) and Fung Siu Kam v Lo Shun Cheung [1984] HKC 107. I do not think these authorities are germane to the issues with which we are dealing.  Whilst Huggins VP in Fung Siu Kam did refer to the prohibition against occupation of Crown land being intended for the benefit of the public at large instead of merely for the benefit of the Crown as a land owner, His Lordship was not dealing with the amenability of a decision of the Government over land administration matter under a lease or licence to judicial review.  As the later authorities explained (cited above), the mere existence of some public interest considerations in the decision making process would not per se render it amenable to public law remedies. 

44.  R (Data Broadcasting International Ltd and Anor) v The Office of Communications [2010] EWHC 1243 (Admin) was not a decision over land administration.  It concerned a decision made under the Broadcasting Act 1990 which contained specific provision governing the exercise of the power of variation, see s 3(4) and (5) cited at para 36 of the judgment. Completely different considerations apply in such context and I do not think one can extract from that judgment a general proposition that a decision is amenable to judicial review once it has some statutory underpinning.  As far as the position in Hong Kong is concerned, in respect of decision on land administration, such a proposition cannot stand in light of the authorities already discussed.   

45.  I conclude that the 1^st Decision is not amenable to judicial review and Au J was correct in coming to the same conclusion.

46.  In respect of the 2^nd Decision, whilst (as accepted by Au J and Mr Mok) it could be amenable to judicial review, one must examine what are the grounds relied upon in this case to challenge the 2^nd Decision.  As I see it, the Applicant does not raise any independent ground for challenging the 2^nd Decision apart from the intended challenge to the 1^st Decision on public law grounds.

47.  Therefore, once the court comes to the conclusion that there is no arguable challenge to the 1^st Decision, the challenge to the 2^nd Decision must also fail.

48.  For these reasons, the appeal must be dismissed and, in line with the recent decision by another division in Lister Assets Ltd v The Chief Executive in Council CACV 172 of 2012, 25 April 2013, I see no reason why costs of this appeal should not follow event with certificate for two counsel.

Hon McWalters J:

49.  I agree with the judgment of Lam JA.

Hon Stock VP :

50.  Accordingly the appeal is dismissed.  There will be a costs order nisi that the costs of the appeal be to the respondent, with a certificate for two counsel.