LAM KAI HING v. THE HONG KONG HOUSING AUTHORITY

1990 No. M.P.1923

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HEADNOTE

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JUDICIAL REVIEW - TENANCY APPEALS COMMITTEE APPOINTED UNDER HOUSING ORDINANCE (CAP. 283) - DECISION TO CONFIRM NOTICES TO QUIT - NOTICES TO QUIT SERVED BECAUSE BUILDING CONSIDERED TO BE BEYOND ECONOMIC REPAIR - NO MATERIAL OF PROBATIVE VALUE BEFORE COMMITTEE TO JUSTIFY CONCLUSION THAT BUILDING BEYOND ECONOMIC REPAIR - TENANTS ALSO EXCLUDED FROM MATERIAL PART OF HEARING WHEN FURTHER SUBMISSIONS MADE BY RESPONDENT - BREACH OF RULES OF NATURAL JUSTICE

1990 No. M.P.1923

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is an application for judicial review of the decision made on 25th May, 1990, by the Tenancy Appeals Committee constituted under Section 7(2) of the Housing Ordinance (Cap.283), to confirm the notices to quit served under Section 19(1)(b) of the Ordinance:

2. The matter arises in this way.  The applicant represents himself and all those tenants of Block 1, Cheung Sha Wan Factory Estate who are more particularly described in the schedule attached to the notice of application for leave to apply for judicial review.   I shall refer to all of them as "the tenants". The tenants are all tenants of the Hong Kong Housing Authority ("the Authority") of factory units in Block 1 of Cheung Sha Wan Factory Estate.  On 20th April, 1990, notices to quit were served by the Authority on the tenants requiring them to quit their units on 31st May, 1990.  This had the effect of terminating the leases held by the tenants.  It is common ground that the notices to quit were given under Section 19(1)(b) of the Ordinance.

3. The Authority, which was established under the Ordinance on 1st April, 1973, took over from the Government a number of estates including factory estates and the Cheung Sha Wan Factory Estate was one such estate. In 1988, the Authority decided to carryout structural surveys of some of its older estates and engaged consultants to carry out an appraisal. Block 1 was found to be inadequate to carry its actual floor loading and would require internal strengthening. Block 1 was the most affected as 54.5% of the units therein required local strengthening inside the block: The Department considered the practical problems associated with the remedial work involved in respect of this Block and concluded that the best approach was to deem Block 1 as beyond economic repair and to vacate its tenants. It transpires that the proposal for demolition of Block 1 was formally approved by the Building Committee on 20th April, 1989.  The tenants were notified of this decision in May 1989 and for about a year, attempts were made by the Department to arrive at a satisfactory solution with the tenants of Block 1. They were, in effect, given about a year to vacate and were offered ex-gratia compensation. They were also given every opportunity by the Department to negotiate over the question of ex-gratia compensation and to seek further clarification about the reasons for the demolition. some of the tenants of Block l did reach agreement with the Authority, but finally, on 20th April, 1990, as the tenants had not arrived at any agreement with the Authority, it was decided that notices to quit should be served on them. The Authority was keen to evacuate Block 1 for demolition before the next typhoon season. Section 20 of the Ordinance gives a right of appeal to the tenant who has received a notice to quit under Section 19(1)(b) to "the committee, appointed by the Authority under Section 7(2)". Appeals were lodged by the tenants and after a hearing on 25th May 1990, the Tenancy Appeals Committee decided to confirm the notices to quit.

4. Mr. Litton Q.C., for the tenants, challenges that decision on two separate grounds which can be summarised as follows:

(1)	that insofar as the decision to confirm the notices to quit was based on the ground that Block 1 was beyond economic repair, this was done on the bare assertion of the Housing Department and without evidence;
(2)	that the tenants were excluded from taking part at a material part of the hearing when the Tenancy Appeals Committee heard further submissions from the representatives of the Respondent.

5. I shall deal with each of these in turn.

6. Counsel for the tenants helpfully took me through the relevant provisions of the Ordinance.   The Authority is established under Section 3 and the powers and duties of the Authority are set out in Section 4. These are wide-ranging. Committees are appointed so as to enable the Authority to carry out its functions. Thus, Section 7(1) provides as follows:-

"Subject to subsection (2), the Authority may appoint committees for the better discharge of its functions under this Ordinance."

The committees appointed under Section 7(1) are committees which are appointed for the better discharge of the Authority's functions under the Ordinance.

7. It is clear that the Authority delegates its functions under the Ordinance to various Committees. The various committees are set out in the document headed "Terms of Reference for the Hong Kong Housing Authority and its Committees".  Thus, for example, there is the Buildings Committee with terms of reference, inter alia, "to advise the  Authority on the most efficient and cost-effective means of implementing its construction and maintenance programmes and to monitor progress on these programmes," and the Commercial Properties Committee with terms of reference, inter alia, "to determine ex-gratia allowance and compensation for commercial premises including flatted factories in connection with redevelopment, repairs and other operational activities".

8. Section 7(2) also provides for the appointing of a committee. This provides as follows:-

"The Authority shall appoint a committee ... for the purpose of hearing appeals under Section 20(1) ..."

9. The terms of reference of the Tenancy Appeals Committee as set out in the said document are "to exercise the powers and functions of the Authority to hear appeals under section 20 of the Housing Ordinance".  It is plain to me that the committee appointed under Section 7(2) is different from those committees appointed under Section 7(l) and that the Tenancy Appeals Committee appointed under Section 7(2) is a statutory tribunal appointed for the sole purpose of hearing appeals under Section 20(1):

10. Section 20 of the Ordinance deals with appeals against termination of leases and what the Tenancy Appeals Committee can do is contained in Section 20(3) which provides as follows:-

"The committee in determining an appeal against a termination - ... (b) under Section 19(1)(b), may confirm, amend, suspend or cancel the notice to quit."

11. The Ordinance does not lay down the procedure for the determination of appeals by the Tenancy Appeals Committee.  All it requires by Section 20(2) is that the appeal shall be in writing and shall state the grounds of appeal.  Rules of procedure have, however, been formulated by the Authroity. These are designed to ensure fairness in the determination of appeals.  In accordance with the rules of procedure, there was a hearing on 25th May 1990 and a decision was reached after that hearing. No reasons were given for that decision and indeed, there is no requirement that the committee gives reasons. Save for the matters which form the subject matter of the second ground of complaint, no exception is taken to the conduct of the members of the Tenancy Appeals Committee who, in my view, tried their best to ensure fairness in the proceedings.   The tenants were given every opportunity to put forward their submissions and to call evidence.

12. In proceedings of this kind, the Court is not, of course, concerned with the merits of the decision reached by the Tenancy Appeals Committee. It does not sit as a Court of Appeal against the decision of the Tenancy Appeals Committee and the Court does not substitute its own view for that of Tenancy Appeals Committee. It is the decision-making process that is being reviewed by the Court and the Court is, of course, concerned to see that the rules of natural justice have been observed in the reaching of the decision. Where there has been a breach of the rules of natural justice, the Court will, in a proper case, intervene:

13. What is clear from the evidence filed in these proceedings is that the only paper placed before the Tenancy Appeals Committee by the Respondent was Paper No.  AC9/90, a copy of which was supplied to the tenants before the hearing.  This sets out the background to the matter leading up to the service of the notices to quit and makes reference to a number of papers by other committees of the Authority, in particular Paper No. MOC6/89, by the Management and Operations Committee, Paper No. BC68/89 by the Buildings Committee and Paper No. CPC25/89, by the Commercial Properties Committee.   These other papers were not placed before the Tenancy Appeals Committee. Paper No.   AC9/90 also contained submissions by the Respondent and by paragraph 5a. thereof, it was submitted that Block 1 was beyond economic repair and should be demolished taking into account the age and structural deficiency of Block 1. The tenants complain that there was no evidence placed before the Tenancy Appealss.Committee to support that view and that in confirming the notices to quit, the decision was based on the bare assertion of the Housing Department.

14. Counsel for the Respondent submitted that the Tenancy Appeals Committee does not go into the matters in detail behind the notices to quit, it being concerned only with whether the notices to quit were issued on a reasonable basis: She further submitted that it was for the tenants to bring to the attention of the Tenancy Appeals Committee any matter in the notice to quit they considered to be bad and that they had been given every opportunity to make submissions and to call evidence.

15. True, the tenants were given every opportunity to present their case but it must not be overlooked that the Tenancy Appeals Committee was there to perform a statutory function, i.e. to determine appeals against termination of leases. In reaching its decision to confirm the notices to quit, it had, in effect, determined that the underlying reason why the leases were being terminated by the service of the notices to quit was made out. The only reason put forward by the Respondent for the issue of the notices to quit was that Block 1 was beyond economic repair:

16. It is evident that the Tenancy Appeals Committee was not going to question the reason why the notice to quit was issued.  This is demonstrated by paragraph 35 of the minutes of the proceedings which states as follows:-

"In reply to a question from Mr.  Luk Shek-tim (representative of the applicant) the Chairman explained that the decision to demolish Cheung Sha Wan Block 1 was made by the Building Committee collectively on the advice of the consultant and the Department's professional staff.  It was not a personal decision. She said that the TAC would not go into the details of the structural survey etc. at the hearing, since it could relay any queries to the Building Committee and the Department later if necessary. However, she could appreciate that, as public money was involved, the cost of repairing a structural deficient block should be evaluated against the alternative of demolishing it."

17. There was, I think, a failure to properly appreciate its duty under Section 20.  The Tenancy Appeals Committee was not there to refer matters to another committee of the Authority as is suggested by the Secretary of the Tenancy Appeals Committee,  Mr. Hillman Chow Chung Yin, in paragraph 3 of his affirmation of 25th September; 1990.   It was there for the sole purpose of determining appeals against termination of leases under Section 20. In order to reach a decision on whether to confirm, amend, suspend or cancel the notices to quit, the Tenancy Appeals Committee must examine the reasons why the leases were being terminated by the notices to quit.  The Department had put forward the view, as a justification for the termination of the leases, that Block 1 was beyond economic repair. As I have said, in confirming the notices to quit, the Tenancy Appeals Committee had, in effect, determined that the reason put forward for the termination of the leases was made out: This must be based on some evidence and by this, I do not mean evidence which is admissible in a court of. law: In this context, I was referred to the judgment  of Diplock L.J. (as he then was) in R. v Deputy Industrial Injuries Commissioner. Ex parte Moore (1965)1 Q.B. 456 at 487:-

"where, as in the present case, a  personal bias or mala fides on the part of the deputy commissioner is not in question, the rules of natural justice which he must observe can, in my view, be reduced to two.  First, he must base his decision on evidence, whether a hearing is requested or not. Secondly, if a hearing is requested, he must fairly listen to the contentions, of all persons who are entitled to be represented at the hearing.

 

In the context of the first rule, 'evidence' is not restricted to evidence which would be admissible in a court of law. For historical reasons, based on the fear that juries who might be illiterate would be incapable of differentiating between the probative values of different methods of proof, the practice of the common law courts has been to admit. only what the judges then regarded as the best evidence of any disputed fact, and thereby to. exclude much material which, as a matter of common sense, would assit a fact-finding tribunal to reach a correct conclusion: cf. Myers v. Director of Public Prosecutions.

 

These technical rules of evidence, however, form no part of the rules of natural justice.  The requirement that a person exercising quasi-judicial functions must base his decision on evidence means no more than it must be based upon material which tends logically to show the existence or non-existence of facts relevant to the issue to be determined, or to show the likelihood or unlikelihood of the occurrence of some future event the occurrence of which would be relevant.  It means that he must not spin a coin or consult an astrologer, but he may take into account any material which, as a matter of reason, has some probative value in the sense mentioned above. If it is capable of having any probative value, the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of deciding the issue. The supervisory jurisdiction of the High Court does not entitle it to usurp this responsibility and to substitute its own view for his."

18. There may well have been sufficient material of a probative value to justify the conclusion that Block l was beyond economic repair if the Tenancy Appeals Committee had before them the various papers referred to in the Paper AC9/90 and the report of the Department's structural engineers. But it is clear from the 2nd affirmation of Mr. Simon Li Pak Ho that no such material  was placed before it.  I am satisfied that there was no material of a probative value before the Tenancy Appeals Committee to justify the conclusion that Block 1 was beyond economic repair. Natural justice requires that it be based on some material of a probative value and I am satisfied that the tenants' first ground of complaint is well founded.

19. I turn now to the second ground which is a separate ground of complaint.  The tenants were seeking cancellation of the notices to quit and as an alternative, a further grace period of one year before quitting their untis in Block 1. I would observe that under Section 20(3)(b), the Tenancy Appeals Committee may do only one of four things, namely, confirm, amend, suspend or cancel the notice to quit.  In effect, the tenants were seeking cancellation of the notices to quit alternatively, a suspension of the same for one year. Thus, the question of a one year grace period was an important matter for the tenants. The tenants complain that they were excluded from a material part of the hearing before the Tenancy Appeals Committee when the representatives of the Respondent were invited to attend and make further submissions.

20. Counsel for the Respondent submitted that the Tenancy Appeals Committee had no power to grant grace periods and that having decided to confirm the notices to quit, it had no power to deal with the question of grace period or suspension of the notice to quit. In short, she submitted that having decided to confirm the notice to quit, the Tenancy Appeals Committee could not then decide to suspend the notices to quit. She said that what happened in the absence of the tenants were matters occurring only after the decision had been made to confirm the notices to quit and although it was unfortunate, these were not matters prejudicial to the tenants.

21. I accept that once a decision is made to confirm the notices to quit, the Tenancy Appeals Committee has no power to suspend the same for any period.   It is, however, important to see when the decision to confirm the notices to quit was made.

22. Paragraph 41 of the minutes of the proceedings before the Tenancy Appeals Committee states as follows:-

"The Committee initially agreed that, while the notices to quit should be confirmed, the possibility of granting a longer grace period for the affected tenants should be explored.  (On the invitation of the Committee, relevant Housing Department staff returned to the meeting."

I would add, in the absence of the tenants.

23. Paragraph 42 states as follows:-

"Upon the Chairman's announcement of the Committee's initial decision, Mr. Simon Li re-iterated that the assessment made of the structural condition in April 1989 was such that a deadline of May 1990 should be set for evacuation. Mr. Victor So (who was one of the members of the Tenancy Appeals Committee) added that the Department had, in its submission to the CPC (Paper No. CPC22/90), reaffirmed the risk of structural failure and considered it imperative for this building to be cleared as soon as possible."

And finally, paragraph 44 states:-

"After further deliberations the Committee decided to confirm the notices to quit served on the 98 factory tenants of Block 1, Cheung Sha Wan Factory Estate as lised in the paper."

24. On an examination of the minutes, I am satisfied that the Tenancy Appeals Committee did not reach a final decision to confirm the notices to quit until after it had heard further submissions in the absence of the tenants. What had been reached, as is clearly shown in paragraphs 41 and 42 of the minutes set out above, was only a tentative or initial decision when the representatives of the Respondent were invited to make further submissions to the Tenancy Appeals Committee. It was only after hearing the further submissions and after further deliberation that the Tenancy Appeals Committee finally decided to confirm the notices to quit.

25. Quite clearly, the tenants were deprived of the opportunity of hearing and commenting on the further submissions of the Respondent.  Further, the Paper No. CPC22/90 referred to in paragraph 42 of the minutes was never brought to the tenants' attention. The tenants may well have tried to persuade the Tenancy Appeals committee not to finalise their tentative or initial decision to confirm the notices to quit but instead, to grant them a suspension of the same for some period. They may or may not have succeeded.  That is not the point. The point is they were deprived of the opportunity of hearing the further submissions and of being heard thereon.  They should have been given such an opportunity. Fair play demands. this. In my judgment, there was a clear breach of the rules of natural justice which seriously flaws the decision made by the Tenancy Appeals Committee.

26. In the exercise of my discretion, I grant the tenants the relief they seek and make an order of certiorari to remove into the High Court and quash the decision made by the Tenancy Appeals Committee on 25th May, 1990.  I direct that there be a fresh hearing of the tenants' appeal under Section 20 of the ordinance by a differently constituted Tenancy Appeals Committee appointed under Section 7(2) of the ordinance. I will hear Counsel on the question of costs.