HEAD STEP LTD. v. BUILDING AUTHORITY

1994, MP No. 2491

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is an application for judicial review pursuant to leave, which I gave myself, in relation to the development of certain land in Hong Kong. It raises a point of some importance, particularly having regard to the fact that there have been two earlier decisions regarding similar matters which have been decided by Mayo J. and myself last year. I was told that one of them was going to appeal but neither has gone to appeal.

FACTS

2. There is building at 15-19 Luk Hop Street in San Po Kong and the Applicant here wishes to redevelop the site. It submitted an application to the Building Authority on the 22nd September 1993 which was refused on the 19th November. The general ground for the refusal was that the building did not comply with certain fire construction codes, that there was an excessive carparking area and a number of fairly minor matters relating to building details.

3. At the time the application was submitted, the building was some 27 storeys high and was in accordance with the Outline Zoning plan (OZP) which is called No. S\K11\5. That permitted a development of a plot ratio of 15, or the existing plot ratio whichever was the greater.

4. On the 13th December, another application was submitted. This was refused on the 12th January 1994 for a number of minor detailed matters, but one was of some importance in that, it was said that the building did not now comply with the plot ratio in respect of the current OZP which had been gazetted on the 24th December. There was a fresh submission made by solicitors which was subsequently withdrawn and the final submission made on the 13th May 1994 which was also refused. It was refused on the basis that the building contravened the draft zoning plan and that there was no discretion on the Building Authority to consider the application. The new OZP was S\K11\6. That is a brief history of the matter.

STATUTORY PROVISIONS

5. The statutory provisions have been set out in a decision of mine Heland Investment v. Attorney General and the Building Authority (1994) M.P. 684 and also in a decision of Mayo J. (as he then was) Ex parte Super Mate (1994) M.P. 200. The general statutory provisions give the Building Authority power under Section 16 either to approve or refuse consent to carrying out of building work in Hong Kong.

6. The position had been that appeals could be made, but the Appeal Tribunal appeared to have no powers which had been commented on by me in the Heland case. I am grateful to Mr. Cooney who has drawn my attention to the new recent statutory provisions brought into being on 16th November of last year regarding a change in the law. As far as appeals are concerned, the Appeal Tribunal panel, as it is now to be known, hears appeals from decisions of the Building Authority and is given power to make such orders as the Building Authority itself could have made which is found in the new Section 50(2) :

"In determining an appeal, the Appeal Tribunal may make an order confirming, varying or reversing the decision that is appealed against, or substituting therefor such other decision or make such other order as it thinks fit."

This is a completely different position than had prevailed before and is an important factor when one is considering applications for judicial review of decisions of the Building Authority.

7. The short issue, which is raised in this case, is whether or not the Building Authority can rely on a change of the law after the submission of an application to it. Generally speaking, of course, the position in law is that the Building Authority considers an application as at the date of its consideration. For example, if an application is considered on January 1st 1995, then the Building Authority must consider it in the light of the development law in Hong Kong as at that date. That has been made clear by a decision of the Privy Council which is binding on me - see Attorney General of Hong Kong v. Firebird Ltd. Privy Council Appeal (No. 1) of 1992. That, of course, is the general duty.

8. Plot ratio is an important matter in Hong Kong. Buildings are built in accordance with a plot ratio, so, for example, on a small piece of land with a high plot ratio a building can rise to a substantial height. It is, of course, well known how valuable land is in Hong Kong, because it is in such short supply, and the determination of value of a piece of land is generally made by reference to the plot ratio. In other words, a developer would want to know what he can get on to a piece of land. If he is buying a small piece of land with a high plot ratio, he knows, for example, he can build so many storeys high. So plot ratio itself is a most important factor.

9. The Government not only sets the plot ratio, but it also sells the land. So when a piece of land is sold by the Government to a private developer, he has to look at the OZP to discover what is the plot ratio, in other words, what is the density of development he can get on the site. When he knows that, he can make calculations according to what he thinks is the prevailing market conditions in the years ahead, when it would be built, as to the amount of money he is prepared to buy it from the Government. The value of land sold at auctions is determined by the plot ratio which the land bears. What happens then to a developer who buys land from the Government knowing that the plot ratio is X and when he comes to submit his plans, it suddenly has been lowered? Of course, there is no guarantee that OZPs are not changed. However, in my judgment, the Government must always be very careful about lowering plot ratios when there are current development applications before it, otherwise, the developer is making his calculations on one basis, and when his application is considered the basis has completely changed.

10. The Applicants engaged architects and no doubt spent considerable sums of money on drawing up plans for this large industrial building of some 27 storeys high. They submitted their application, it was turned down because there were building contraventions, such as fire regulation matters, over-provision of carpark, the sort of matters that are gone into in detail when a large development to take place. When they re-submitted the same plans, they are suddenly told they cannot build this anymore, because the law has changed. That, on any view, would appear to be an unfair position. However, if the law is such, then the courts must unfortunately follow it.

11. I had made certain comments in my decision in Heland as to the meaning of Section 16(1), "Grounds on which approval or consent may be refused". I had indicated, although it was 'obiter' to my decision, that the word "may" could mean "must". Mayo, J. had taken a contrary view and there had been a different approach by Leonard, J. who had also thought that "may" meant "must". When I made those remarks, I had not been given the report of the Hong Kong Legislative Council when this had brought into being. Mr. Cooney has kindly brought this to my attention. Indeed the Government has now accepted that, although it had thought differently, there is a discretion in the Building Authority in refusing approval, and this is referred to by the then Mr. Inglis, the important person in the Government, when he stated the Building Authority's power to refuse is to become discretionary and includes any case where the plan submitted showed a contravention of either a draft or an approved plan. This is an important concession the Government has now made, because it may well cover those cases where developers buy land from the Government on one plot ratio, and then it is suddenly changed. It may be the Government in those cases will grant permission. I am told here that it is not going to grant permission at any rate, because it does not want the plot ratio exceeded.

12. As I have said when I made those remarks, they were 'obiter', but I must accept that I was wrong. It would appear now that under s. 16(1)(d) that if the Building Authority does not exercise its discretion, there is now a right to appeal, and therefore a different statutory framework governing this application is present then when I decided the case of Heland, and that is a factor I must obviously take into account.

13. The position in my judgment, as a matter of law, however, is to see whether or not a submission which is made for building approval is a new submission, or is really a re-submission of the same matter. Both in Heland and the Super Mate cases, the submissions had started and they were re-submitted and, Mayo J. and I both held that the new submissions were substantially the same as the earlier ones.

14. Mr. Cooney is right to draw to my attention in both of those decisions, that the Building Authority had been in error in approaching its first application, which is a matter which I commented on as well and the earlier decisions were wrongly made. I have no doubt at all that the first refusal that has been made here was a valid refusal. It was within the powers of the Building Authority who dealt with matters that it had to deal with and was properly refused.

15. The second and indeed the fourth applications to be made, in my judgment, were re-submissions of identical plans. It has been conceded by the Government that there is no real difference between the plans apart from certain building details, but to all intents and purposes it is the same building that has been submitted for approval. In my judgment, therefore, I follow my own decision and that of Mayo J., and I consider that the Building Authority is under a duty when considering the re-submission of identical plans to have regard to the law as at the date of their first consideration, in other words, a plot ratio of 15. It may well be now that this will be hopefully the last judicial review for this sort of problem because, first of all, it is now accepted that the Building Authority does have a discretion under Section 16(1)(d). and secondly, it can be appealed. The general principle is, of course, that judicial review will not be granted when the appeal procedure has not been completed. However, in this particular case, judicial review is appropriate because the stance taken by the Building Authority was that it had no discretion and it had to refuse these plans and the Applicants lodged appeals which have been held in abeyance.

16. The outcome therefore, in my judgment, on this case is in similar terms to that of the two earlier decisions that the Building Authority must consider the fourth submission, which I think is the only one I need deal with, which is dated the 13th May with the matters set out in the OZP No. SK\11\5 that is the earlier OZP. Of course, they are perfectly entitled to refuse consent if they consider it contravenes any matter in Section 16. They are perfectly entitled to do that, but they must have regard to the plot ratio of 15 which was set out in the OZP.