RE TAI SANG WAI

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. This is an application by the District Land Officer of Yuen Long to set aside an order made ex parte by Mayo J. on the 20th August 1990 granting leave to Canadian Overseas Development Company Limited (C.O.D.C.L.) to apply for judicial review of decisions made by him on the grounds that the issues raised are matters of private rather than public law.

2. As the issue raised is one of public importance I have decided to hand down this judgment in Court.

3. The facts reveal that on the 20th June 1975, the Hong Kong Government (Government) agreed to grant a Crown lease of land known as "Fairview Park" to C.O.D.C.L. for the purposes of development subject to certain conditions set out in the Particulars and Conditions of Exchange. It was agreed that whilst C.O.D.C.L. remained in occupation of the land, they should be tenants of Government.

4. I shall now refer to some of the relevant conditions. By general condition 5, the fulfilment by C.O.D.C.L. of their obligations under the agreement was to be a condition precedent to the continuance of the tenancy. By general condition 6(a), if C.O.D.C.L. should fail or neglect to observe or comply with any of the conditions of the agreement, Government was contractually entitled to re-enter and take back possession of the land. By special condition 6, C.O.D.C.L. was required to develop the land over a period of eight years. By special condition 7 C.O.D.C.L. was required to submit for approval to Government a master layout plan of the development and under special condition 7(d), it was specified that buildings "designed and intended for occupation as flats" would not be erected without written consent. By special condition 7(e), written consent was required for alterations to the master layout plan. Special condition 8(b) specifies the site coverage and overall plot ratio. Special condition 9 provides for written consent to be given for the design, disposition and height of any building to be erected on the land. Building is restricted by special condition 15(a) for residential purposes or other non-industrial purpose.

5. The development has been completed except for an area of 78,335 square feet. Various proposals for the development of this area have been put forward by C.O.D.C.L., but each application and appeal has been rejected by the District Land Officer.

6. It has been emphasised by Mr Hay, the District Land Officer in his affidavit of the 20th November 1990 that the terms and conditions of the agreement do not allow Government to dictate what should be built on the land or with the exceptions of the provisions for plot ratio and site coverage how the land should be developed, but merely to stipulate what should not be built on the land. He states that the intention of Government as landlord is to permit the developer as much freedom as possible to develop the land to the most profitable advantage subject to the Government's rights under the agreement as owners of the land and reversioners under the lease to refuse to approve the design, disposition and height of any building or structure to be erected on the land. The general and special conditions applicable to Fairview Park are said to be worded similarly in documents where Government has agreed to grant a lease of land to other parties intending that it should be developed for residential and/or commercial purposes by private as opposed to public means.

7. Mr Hay further states that in order to consider the proposals of C.O.D.C.L., there is an established administrative procedure. He describes the procedure in paragraphs 13, 14, 15 and 16 of his affidavit which are as follows :-

"13.    In order to allow practical resolution of Government's contractual rights and powers reserved by the Special Conditions of the Agreement as against the Applicants right to develop a quantified constant amount of gross floor area, there existed an established administrative procedure whereby the Applicants made proposals which were considered by my Office and if it appeared something to which approval or consent might be given, were then, formally submitted to be considered separately by interested or concerned Government departments: culminating in a decision by the Secretary of the New Territories through the New Territories Building Conference.

 

14.    As in these present circumstances, it has always been open for the Applicants in the absence of any tentative agreement with the District Lands Office, to submit their formal proposals to what is now Building Committee III for approval or rejection. But in doing so Government would be doing no more than exercising its rights reserved by the Agreement.

 

15.    Since the Agreement allows for the Government and the Applicants to negotiate at arms length within the constraints imposed thereby, the possibility cannot be discounted of a subsequent Master Layout Plan or the Town Centre Block Plan reversing what had been approved or consented to by Government in a previous Master Layout plan. But in the absence of subsequent approval or consent that which had been agreed and evidenced by a signed and approved Master Layout Plan or the Town Centre Block Plan constituted a binding agreement between the parties enforceable by Government through the provisions for re-entry reserved under the Agreement.

 

16.    In so far as concerns these present circumstances it is respectfully submitted that where Master Layout Plan 6/1 and the Town Centre Block Plan evidence that all necessary consents and approvals have been given for any particular area of Fairview Park to be developed in a particular way or with particular buildings or type of buildings erected thereon for a particular use, that is binding upon the parties and enforceable under the terms of the Agreement by Government.

8. Mr Tang, counsel for C.O.D.C.L., drew an analogy between the Building Committee set up for this purpose and the Panel of Takeover and Mergers in England and cited R. v. Takeover Panel ex p. Datafin Plc [1987] 1 QB 815. In that case it was held that the panel perform public law duties which were subject to judicial review. He said that the Building Committee is part of Government's machinery in dealing with the conditions and that C.O.D.C.L. had a legitimate expectation to be entitled to be heard by the Building Committee and a legitimate expectation to be dealt with reasonably. Further, as the committee regulates all land in Hong Kong, it is public in nature. However, the committee in this case is neither a statutory body nor does it perform public duties, but merely acts to determine matters of policy in accordance with the terms of the agreement. It is further significant that the parties negotiated at arms length. As a result, I do not accept the analogy that was drawn.

9. Under the relief sought, C.O.D.C.L. applies for declarations that it is entitled to develop the balance of the land available and that the purported decisions of the District Land Officer, including the rejection of appeals, are of no effect and invalid, or alternatively, an order of certiorari to quash those decisions. In the amended grounds of relief, C. O. D. C. L. alleges that the District Land Officer acted in excess of his jurisdiction and unreasonably under the principles established in Associated Provincial Picture Houses Limited v. Wednesbury Corporation [1948] 1 KB 223.

10. Mr Tang, for his proposition that the imposition of conditions and their enforcement and implementation are activities of a public nature and subject to judicial review, relies heavily upon the judgment of Mayo J. in The Home Restaurant Ltd v. Attorney General [1987] HKLR 237. At page 244 of his judgment Mayo J. had this to say :-

"Mr Stock then went on to consider two Hong Kong cases where consideration had been given to the legal position of the Government in relation to land matters Hong Wah Chong Investment Co. Ltd. v. Attorney General of Hong Kong [1981] 1 WLR 1141 was considered by the Judicial Committee of the Privy Council and Yau Fook Hong Co. Ltd. and Another [1985] HKLR 42 was the judgment of Jackson-Lipkin, J. It appeared from both of these cases that when the Government was negotiating with a party in relation to terms to be embodied in a Crown lease the limb of Government undertaking the negotiations was acting as the Government's land agent and the transaction was of a private rather than a public nature."

Although Mayo J. indicated from this passage that private law was involved, he ultimately decided that it was arguable that Government was performing a public function when ha went on to say at p. 245 :-

"What I think is necessary in the present case is to analyse the nature of the functions which have been exercised by the Government. When the Government is making grants of land it is in a unique position. All land vests in the Crown. I do not think that it can be argued that the functions it exercises are analogous with those performed by a landlord in the private sector. This is particularly the case when the Government is determining as a matter of policy what conditions to impose in a grant. I have no doubt that it is at the very least arguable. that Government is performing a function in the public domain.

 

Any other conclusion would seem to me to be unsatisfactory. I do not think that simply because a party is the holder of a Crown lease and is negotiating with Government in relation thereto, it should be placed in a different situation to anyone else. The real test is not whether the function is a private one or public one but whether the claimant is able to establish that it has a sufficient public interest to maintain a claim under Order 53. I am accordingly satisfied that the respondent is not able to defeat C.O.D.C.L.'s claim on this ground."

However, the conclusions drawn by Mayo J. did not form part of the ratio decidendi so his observations were therefore obiter dicta. In fact the Privy Council in Hang Wah Chong Investment Co. Ltd. v. Attorney General of Hong Kong [1981] 1 WLR 1141, [1981] HKLR 336 held that the then Director of Public Works performed many roles, not only as the Building Authority, but also as the Government Land Agent. In the latter role, the Privy Council said there was no difference between a lease granted by the Crown or e public body and a private lease. Whilst accepting this authority, Mr Tang submitted that in that case, the tenant had accepted a modification of the conditions to the lease upon which basis the Government had no duty to act reasonably as it in effect had granted a favour and could therefore dictate such terms as it pleased and so was in the same position as a private landlord. However, in the instant case, he argued that C.O.D.C.L. does not require any modification of the conditions so that the refusal to approve its plan is unreasonable for they have a right to build. He therefore contended that one of the questions for decision is whether Government has an absolute discretion in granting or refusing permission.

11. In my judgment, the present case is indistinguishable from that of Hang Wah Chong, for Government is clearly acting in the capacity of a landlord and is in a contractual situation with C.O.D.C.L.. Whereas the public may be interested in the decision making of the Building Committee, the function that the committee exorcises is purely of a private nature. I am therefore quite satisfied that the issues raised by C.O.D.C.L. are not matters of a public nature, but amount to allegations of a breach of contract. Accordingly I reject the submission that was made by Mr Tang.

12. In the event that I held against him, Mr Tang urged me to allow the present proceedings to continue as if they had been instituted by writ. However, I agree with Mr Marshall, who appeared for the Crown, that the claim as at present drafted does not provide sufficient information to enable the Crown to know what case it has to meet. I am therefore unable to accede to Mr Tang's application.

13. In the result, the order of Mayo J. granting leave will be set aside and there will be an order nisi for costs to the Crown.