BILLBOARD ADVERTISING MANAGEMENT LTV v. BUILDING AUTHORITY

HCAL 114/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 114 OF 2013

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D E C I S I O N

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1.  These 3 applications for leave to apply for judicial review are heard together as they involve a common core issue, namely, after the Building Authority (“BA”) has issued a building order for demolition of a signboard against a person whom it regarded as “person for whom a signboard was erected”, does it have a duty to issue further building orders against a person who subsequently emerges and claims to be the owner of the signboard? The applications for interim injunction in HCAL 114 of 2013 will be determined upon resolution of this core issue.

BACKGROUND

2.  The applicants (“BAML” and “GACL” respectively) and the relevant building orders are set out below:

Table 1

Case number	Applicant	Location of signboard	Date of building orders	Addressee of building orders
HCAL 114/2013	BAML (previously known as Easy Crème Management Ltd)	2 signboards erected on the external wall of Heung Hoi Mansion, Nos. 28-32 O’Brien Road (“the O’Brien Road Signboard”)	18.5.2011 27.9.2011	Easy Groups Ltd (later changed its name to HKTAL)易通集團有限公司
HCAL 147/2013	BAML	signboard erected on the external wall of Nos. 72-74 Percival Street (“the Percival Street Signboard”)	10.12.2011	Easy Group Ltd 易通集團有限公司
HCAL 148/2013	GACL	signboard erected on the external wall of Nos. 26-30 Canal Road West (“the Canal Road Signboard”)	3.12.2010	Easy Groups Ltd 易通集團有限公司

3.  Pursuant to investigations, BA found that the Signboards had the following inscriptions/logos on them:

Table 2

Location of signboard	Graphic Logo	Inscription
O’Brien Road Signboard 3/F signboard After the 2/F signboard was erected, it merged with the 3/F signboard to become an integrated signboard	“Easy Groups”  “EASY GROUP”	“AD HERE HOTLINE 2988 8348” “Planning by: 易通集團 AD HERE HOTLINE 2988 8348”
Percival  Street Signboard	“EASY GROUPS”	“易通集團2988 8348”
Canal Road Signboard	Small tag attached to scaffolding during construction bearing the graphic logo “EASY GROUPS” Email complaint letter and photo showing same logo	Small tag attached to scaffolding during construction bearing the inscription “易通集團2988 8348” Email complaint letter and photo showing inscription “AD HERE HOTLINE 2988 8348”

4.  BA’s investigation showed that Easy Groups Limited (“EGL") was marketing signboards on its website (www.eghk.com).  The “contact us” page on the website showed the telephone number of the Hong Kong headquarter of Easy Groups Ltd to be 2988 8348, matching that on the Signboards.  On such bases, BA verily believed that EGL was the party “for whom” the Signboards had been/was being erected within the meaning of section 24(2)(c)(i) of the Building Ordinance (“BO”).  BA accordingly issued the Building Orders in Table 1.

5.  EGL lodged appeals to the Buildings Appeal Tribunal (“BAT”) in respect of the Building Orders on the ground that it only did taxi advertisement business and had nothing to do with the Signboards or the names of Easy Group, Easy Groups or 易通集團 at all.  To avoid receiving letters and orders from BA all the time, EGL changed its name to Hong Kong Transport Advertising Limited (“HKTAL”).

6.  In relation to the O’Brien Road and Percival Street Signboards, one Mr Wong Pak Keung (“Donald Wong”) appeared before BAT to give evidence on behalf of HKTAL. He initially denied but eventually admitted that the contact information (including the telephone number and address on the website www.eghk.com) was that of EGL.  The details printed on the envelop enclosing the letter from EGL/HKTAL dated 19 May 2011 also corresponded to the details inscribed on the Signboards and that website.  The 2 appeals were unanimously dismissed by the BAT on 8 November 2012 after preliminary hearings.  There was no challenge by judicial reviews. The net result was that the O’Brien Road and Percival Street Building Orders remained valid and enforceable. 

7.  The appeal in relation to the Canal Road Signboard was later withdrawn by EGL/HKTAL on 15 September 2011 upon legal advice, six days before the preliminary hearing at BAT.  Accordingly, the Canal Road Building Order also remained valid and enforceable.

8.  BA sent the last round of reminders for demolition of the 3 sets of Signboards to HKTAL in early January 2013.  A few days later, BAML and GACL suddenly emerged and claimed to be owners of the Signboards and were at all material times responsible for their construction and marketing. 

9.  Having purportedly provided proof to BA of their ownership, BAML and GACL asked BA to issue building orders on them. BA refused. The relevant letters of BA which form the subject of these leave applications are as follows:

Case number	Date of BA’s letters	Due date for demolition
HCAL 114/2013	5, 11 and 18 July 2013	22 July 2013
HCAL 147/2013	9 July 2013	26 July 2013
HCAL 148/2013	12 July 2013	31 July 2013

10.  Three days before the O’Brien Road Signboard was due to be demolished, BAML in HCAL114/2013 applied, ex parte, for an injunction restraining BA from demolition.  At that time, the draft papers for the leave application for judicial review were not even prepared.  The application was adjourned pending service on the putative respondents.

11.  The Applicants have since filed Forms 86 seeking orders of mandamus requiring BA to serve the Building Orders or new building orders on them; injunctions restraining BA from demolishing the Signboards until such service; and declarations that BAML and GACL were at all material times the owner of the relevant Signboards.

12.  In HCAL 114/2013, BAML pursues its application for an interim injunction.  Upon the undertaking of the BA not to demolish the O’Brien Road Signboard and upon fulfilment of conditions imposed by this court, the demolition was suspended.

THE APPLICANTS’ CASE

13.  According to one Mr Sam Chan, BAML and GACL have at all material times been engaged in the business of signboard marketing.  Since the end of 2010, Sam Chan has undergone a series of takeover in the signboard advertising industry in Hong Kong.  He acquired:

(i) BAML on 10 November 2010;

(ii) EAGL (ie Easy Advertising Group Ltd) on 14 July 2011 through Ultimate Depth Limited (“UDL”), another company of Sam Chan; on 22 April 2013, EAGL changed its name to Outdoor Advertising Group Limited;

(iii) GACL through Easy Crème Management Ltd (now known as BAML) on 15 July 2011; on 7 September 2011, GACL was transferred to UDL.

14.  Sam Chan claims not to know the previous owners of these companies before the takeover.  The business of EGL/HKTAL was all along related to taxi advertisement.  Even though EGL/HKTAL might have common owners with BAML, EAGL and GACL before the takeover, EGL/HKTAL was a separate entity and there had been no business transactions between EGL/HKTAL and BAML/GACL.

15.  According to Sam Chan, service of the O'Brien Road and Percival Street Building Orders took place after the new owners came into the picture.  In respect of the Canal Road Building Order, after EGL/HKTAL withdrew its appeal, there had been 13 months’ inaction between the last 2 reminders of BA on 10 November 2011 and 2 January 2013.  Before BA sent its reminder on 10 November 2011, the acquisitions of EAGL and GACL had taken place in mid July 2011.

16.  The Applicants claimed that they did not have knowledge of the Building Orders at the time they were served on EGL/HKTAL.  It was by the end of 2012 of early 2013 when Donald Wong reviewed the signboards with Sam Chan that the latter was told that the O'Brien Road and Percival Street Signboards were recognized by Donald Wong as having some associated building matters.  After seeking approval from EGL/HKTAL, Donald Wong disclosed the matters relating to those 2 Signboards to Sam Chan for his immediate action. 

17.  Sam Chan also claimed that the business of BAML, EAGL and GACL was once marketed under a Mega Brand before and within the 2 years’ transitional period after his acquisition.  The Mega Brand was “Easy Group” or in Chinese 易通集團 for outdoor advertising.  Easy Group represented the short form of EAGL and 易通集團 corresponded to the Chinese name of EAGL. EAGL had a name similar to HKTAL’s previous name (Easy Groups Ltd). Different companies were allowed to use the same marketing and contact information on their products, whilst the “central controller” of the brand would relate individual marketing enquiry back to the relevant company.  The business of EGL/HKTAL might have been marketed under the Mega Brand before Sam Chan’s acquisition.  BAML and GACL were allowed to show the logos and inscriptions seen by BA on their signboards. 

18.  The Applicants complain that BA decided to enforce the Building Orders even though it accepted that there was a possible relationship between BAML/GACL and the relevant Signboard, and that there was another possible person (BAML/GACL) for whom the relevant Signboard has been erected.  They accuse BA for breaching its statutory duty of service or had otherwise acted unlawfully or irrationally in refusing to issue building orders to them. 

THE ISSUES

19.  The issues identified by Ms Carol Lee, counsel for the Applicants, are as follows:

A. Failure of BA to perform statutory duty;

B. Mistake of facts;

C. Deprivation of the applicants’ right of appeal;

D. Taking irrelevant considerations into account; and

E. Irrationality in the decisions.

The legal principles for granting leave

20.  The court will refuse leave unless a reasonably arguable case which enjoys realistic prospects of success can be shown: Po Fun Chan v Winnie Cheung (2007) 10 HKCFAR 676, per Li CJ at para 15.

21.  The test is not a very high one.  In Re Cheng Kar Shun HCAL 79/2009, 14 July 2009, the Court stated that:-

“3. … [The test of reasonable arguability is] not a particularly high threshold. As the Court of Final Appeal, in setting the test, has explained, it is a test designed to screen out unmeritorious, frivolous, vexatious and purported challenges that are not reasonably arguable…

4. The test does not mean that leave should be refused if there appears, as the materials before the Court, respectable counter-arguments to those relied on by the applicant. The focus is really on whether the applicant has shown, by the materials he or she has chosen to place before the Court, contentions that are reasonably arguable … the Court can readily see counter-arguments, and even significant counter-arguments, pointing to the contrary conclusion. But that is really a matter for the substantive hearing…”

22.  In the following analyses, it will be apparent that the Applicants are unable to challenge the validity of BA’s service on EGL/HKTAL; that even if ownership is established, the Applicants will fail as a matter of law; and that the Applicants have no substantive defence even if they are served with the Building Orders.

A. FAILURE OF BA TO PERFORM ITS STATUTORY DUTY

A1. The Applicants’ case

23.  The Applicants’ case is that they were at all material times and are the owners of the signboards and the persons “for whom” the signboards were erected within the meaning of section 24(2)(c)(i) BO.  Once a further person who satisfies section 24(2)(c)(i) is discovered subsequent to service of a building order, BA is obliged to act in accordance with its statutory duty under section 24(2)(c)(i).  There is nothing in the BO which restricts BA from serving building orders on such further persons.  Nor is there any timeline specified in section 24(2)(c) to bar subsequent service of the building orders issued earlier in respect of a signboard.   

24.  Ms Carol Lee further contends that where several parties are identified as possible parties under section 24(2)(c)(i), the BA should issue and serve the building orders on all such persons.

25.  In respect of the Canal Road signboard, BA alleged that one Mr Hung was the director of EGL/HKTAL and the shareholder of GACL when the Canal Road Building Order was served.  Ms Carol Lee submits that regardless of the roles of Mr Hung or others, it would not exempt BA from the mandatory requirement of serving the Building Order on GACL.

26.  The Applicants contend that in refusing to serve the Building Order on the applicants, BA has failed to perform its statutory duty. 

A2.  The legal framework under section 24(2)(c)(i) BO

27.  In King Glare, Lam J held (at §39) that a building order serves not only as an order against the person to whom the order is served, but it also operates as the first step in enforcement action by way of undertaking the demolition works by the Building Authority under Section 24(3).  I agree.

28.  I am informed that there is as yet no decision regarding service under section 24(2)(c)(i).  It will be apt first to examine the legislative history to this section and some authorities prior to 2004.

29.  Prior to 2004, section 24(2)(b) provided that a building order was to be served on the owner of the building works.

30.  In 2004, section 24(2)(c)(i) was amended to its current form, with a special provision for signboards:

“ (1) Where any building has been erected, or where any building works or street works have been or are being carried out in contravention of any of the provisions of this Ordinance the Building Authority may by order in writing require—

(a) the demolition of the building, building works, or street works;…

(2) An order made under subsection (1) shall be served on—

…

(c) in the case of building works the subject matter of which is a signboard—

(i) the person for whom the signboard has been erected or is being erected; or

(ii) if that person cannot be found, the person who would receive any rent or other money consideration if the signboard were hired out or the person who is receiving such rent or money consideration; or

(iii) if the persons referred to in subparagraphs (i) and (ii) cannot be found, the owner of the land or premises on which the signboard has been erected or is being erected.”

(emphasis added)

31.  According to the Legislative Council Brief dated 11 April 2003 in respect of the Buildings (Amendment) Bill 2003, it was recognised that,

“in serving removal orders under the BO, [the Buildings Department] sometimes encountered difficulties in identifying the responsible owners, especially when the UBWs (unauthorised building works) were erected in common parts of buildings. There have also been delays in securing compliance with an order if there is change in ownership because of the need to serve orders on the new owner.”

The current version of section 24(2) BO is to alleviate these difficulties.   

“[It] will specify the person responsible for the removal of UBWs and reduce the number of superseding orders to be issued, thus expediting the enforcement work against UBWs”.

32.  Moreover, in King Glare Limited v Secretary for Justice [2008] 6 HKC 450, (a case on the old section 24(2)(b)) Lam J acknowledged (at para 34-37) the difficulty in ascertaining legal ownership of a structure/chattel and held that it could not have been the intention of the legislature to require BA to resolve this difficult issue before it could issue a building order.  Lam J also said that a restrictive definition of “owner” would frustrate the operation of section 24 (at para 44).   These words would apply with stronger force after the amendment.

33.  It could not have been the legislative intent, having amended section 24(2), to revert to the old position of insisting that the BA do serve the owner. To hold otherwise would defeat the very purpose of the amendment.  BA could be burdened with an endless task of updating ownership and serving building orders if ownership changes constantly to evade enforcement. 

34.  It is true, as Ms Carol Lee submits, that there are no provisions in the BO restricting BA from serving multiple orders on multiple persons known to them at the time of issue of the building orders. The question, however, is whether BA is obliged to do so after one order has been effectively served.  The answer is no.

35.  In Kok Chong Ho v Double Value Development Ltd [1993] HKLR 423 (CA), the purchaser rescinded the sale and purchase agreement on the ground that the existence of the UBWs (being extra flats constructed for the building) would leave the purchasers at risk of forfeiture of the government lease.   No evidence had been proffered by the vendor to show that the practice of BA was only to exercise its powers against the owner of the share of the building containing the UBWs.  The Court of Appeal held that the requisition was not satisfactorily answered and the purchaser rightly rescinded the transaction.

36.  At page 433, line 15, Clough JA held that under the pre-2004 version of section 24, service of a notice on any joint owner or owner of an undivided share in a multi-storey building in respect of unauthorized structures was sufficient to trigger enforcement.

37.  By analogy, under the current section 24(2)(c) the building order need only be served on any person, and not necessarily on every person, falling within either sub-paragraphs (i), (ii) or (iii) (in that order of priority) before the BA can take enforcement action. Any other construction would create an onerous duty on BA to serve one notice after another.  Accordingly, section 24(2) should not be construed to mean that every person falling within the applicable sub-paragraph has a right to be served with the notice or that BA has a duty to serve on all such persons after a notice has been validly served.

38.  Ms Carol Lee’s submission is, without disrespect, rejected.

A3. The proper interpretation of section 24(2)(c)

39.  Having heard submissions on both sides and considered the authorities, I agree with Ms Tong, counsel for BA, that one should adopt a purposive approach when interpreting sub-section 24(2)(c).  I hereby summarize what I consider to be its proper interpretation.

40.  Firstly, section 24(2) makes service of a building order mandatory before BA can proceed to have it demolished.

41.  Secondly, there are 3 categories of persons who may be served with a building order as laid down in section 24(2)(c):

· Category (i) person is one for whom the signboard has been or is being erected;

· Category (ii) person is one who would receive or is receiving rent/money consideration if the signboard were hired out;

· Category (iii) person is the owner of the land or premises on which the signboard has been or is being erected. 

42.  Thirdly, sub-paragraphs 2(c)(i) to (iii) prescribe the priority in which the 3 Categories of persons are to be served, so that a Category (ii) or (iii) person is served only if the prior Category “cannot be found”.

43.  Fourthly, under Category (i), it is not necessary for BA to be satisfied as to ownership of the signboard.

44.  Fifthly, BA is to act according to information available to it at the time of service of the order, and in accordance with the priority laid down in section 24(2)(c)(i).  It should not be required to do an exhaustive search for all persons who might come under the ambit of section 24(2)(c)(i) and effect service on all of them.

45.  Sixthly, once BA has validly served a building order on a person within Category (i), BA will be entitled to enforcement. 

46.  Seventhly, other person(s) who falls within Category (i) and would have been entitled to be served with a building order in the first place may subsequently emerge. Section 24(2)(c) does not restrict BA from effecting service on multiple persons.  However, the important thing is that it will not create any duty on BA to serve all such additional person(s) with a copy of the building order or a fresh building order before BA can proceed to enforcement. 

47.  Eighthly, if a Category (ii) person was served with a building order because a Category (i) person could not be found, it could not have been the intention of the Legislature that the Category (i) person or all of them who subsequently emerges shall be served.  The same logic will apply where a Category (iii) person was served in circumstances where Categories (i) and (ii) could not be found.

A4. Application to the facts

48.  Having effectively served the Building Orders on EGL/HKTAL, there was no duty on BA to serve BAML/GACL afresh.  This is all the more so when the Building Orders have been upheld by BAT or not appealed against.  The fact that there had been change in ownership of the Signboards or that BA has delayed in enforcement does not affect BA’s entitlement to enforcement as ownership is irrelevant and the Signboards have all along remained where they are. BA has not failed in its statutory duty.  Ground A is not reasonably arguable.

B. MISTAKE OF FACTS

B1. The legal principles

49.  The court in judicial review is concerned with the law and not merits of a case and the court will not normally interfere with a public authority’s assessment of the evidence or the facts.  In general, the court in judicial review should leave the assessment of the evidence and facts to the primary decision-maker, who is in any event in a better position than the court to accurately evaluate the facts of a case and to decide the merits: De Smith’s Judicial Review, 7^th ed, para 11-041, 11-056.

50.  In Puhlhofer v Hillingdon LBC [1986] 1 AC 484, 518 (HL), it was held that:

“Where the existence or non-existence of a fact is left to the judgment and discretion of a public body and that fact involves a broad spectrum ranging from the obvious to the debatable to the just conceivable, it is the duty of the court to leave the decision of that fact to the public body to whom Parliament has entrusted the decision-making power save in a case where it is obvious that the public body, consciously or unconsciously, are acting perversely.”

51.  A mistake of fact giving rise to objective unfairness can be made the subject of challenge in judicial review proceedings if that mistake is obvious and of such importance that the decision might well have gone the other way if the decision maker had not been mistaken about it: Chan Sau Mui and ors v Director of Immigration (1992) 6 HKPLR 479, 488 (CA), per Bokhary J (as he then was); Nguyen Ho v Director of Immigration [1991] 1 HKLR 576, 583D, per Cons VP.

52.  In E v Secretary of State for the Home Department [2004] QB 1044, at para 66, Carnwath LJ states that the ordinary requirements for a finding of unfairness are that:

(i) There must have been a mistake as to an existing fact, including a mistake as to the availability of evidence on a particular matter;

(ii) The fact or evidence must have been established in that it was uncontentious and objectively verifiable;

(iii) The appellant or his adviser must not be responsible for the mistake; and

(iv) The mistake must have played a material (not necessarily decisive) part in the tribunal’s reasoning.

B2. The Applicants’ case

53.  The Applicants claim that BA has mistaken EGL/HKTAL as the party “for whom” the signboards have been erected when in fact the applicants were and are the owners.  It should have been “uncontentiously clear” to the BA at the time of the service of the Building Orders that BAML/GACL were the owners of the Signboards. A mistake of fact forming the basis of BA’s decision in refusing to serve the building orders on the applicants created unfairness.

B3. Analyses

54.  In assessing whether there has been a mistake of fact on the part of the BA, the Court should look at the facts available to the BA at the time the Building Orders were served on EGL/HKTAL.  At that time, many of the documents upon which the Applicants now rely were not available to the BA at all, eg the exclusive agreements with the purported owners of the external walls, the agreements with non-exclusive agents to promote the signboards, leasing agreements between the agents and clients, quotations and invoices in relation to construction of the Signboards and records of rental payments made by BAML/GACL, which were not documents in the public domain obtainable by BA.  Some documents relevant to the Canal Road Signboard were not even served on BA until after the leave application has commenced, eg First License Agreement, quotations and invoices in relation to construction of the Canal Road Signboard, and debit notes to GACL for rental payment to the owners of the external wall.

55.  Mr Kan (Senior Structural Engineer/Mandatory Building Inspection 1-D) of the Buildings Department has already explained in his affirmations the matters which the BA took into account at the relevant time in determining that Easy Groups Limited /HKTAL was a person “for whom” the Signboards were erected (see paras 3 and 4 above).  Such conclusion could not be faulted on the evidence then available to BA.  BAML/GACL has failed to provide any evidence to show that the BA had made any obvious factual mistake in that conclusion. 

56.  Further, that conclusion had not been overturned on appeal to BAT and hence remained valid and enforceable.

57.  Even if the Applicants were truly owners and persons for whom the Signboards were erected, that did not mean that EGL/HKTAL could not also be a Category (i) person.  There was no requirement for the BA to show that EGL/HKTAL was the “owner” of the Signboards. 

58.  Assuming ownership was/is relevant to BA’s consideration before issuing the Building Orders, the Applicant’s evidence was full of discrepancies and there was insufficient objectively verifiable evidence to determine that they were/are in fact owners.  See under Section E below. 

59.  Marketing under the Mega Brand was not an assertion raised before BAT.  Till now, it remained a bare assertion.  There was no identification of who the “central controller” of the Brand was, who no doubt would have relayed the existence of the Building Orders to BAML/GACL under the alleged referral arrangement if they were indeed the owners of the Signboards.

60.  In the premises, no arguable case under Ground B has been shown.

C. DEPRIVATION OF THE APPLICANTS’ RIGHT OF APPEAL

61.  Section 44(1) BO provides that “a person aggrieved” by any decision made by the Building Authority in the exercise of a discretion conferred on him under this Ordinance may appeal from that decision.

62.  Ms Carol Lee submits that service of a building order is a necessary and mandatory procedure for bringing in the aggrieved person for the purpose of invoking the statutory appeal process under sections 44 and 47 BO: De Smith’s Judicial Review, 7^th ed (2007) at pp. 254-255 at §§5-056 to 5-057.  Without being served, the Applicants had no standing and hence no right to appeal to BAT. 

63.  In the grounds attached to Form 86, it was stated that an appeal to BAT under section 44 BO was not an alternative remedy to an application for judicial review because such an appeal was only available for a person aggrieved by any decision made by BA in the exercise of a discretion conferred on him under the BO.  The subject decisions not to serve the building orders were not discretionary in nature but an exercise of statutory duty conferred on BA by the BO.

64.  With respect, on a proper construction of section 24(1) BO, BA may (ie has discretion) by order in writing require demolition of building works, including signboards.  If it does exercise the discretion it must (ie mandatory) serve the building order on the correct Category of persons: section 24(2)(c).  The decisions of whether to serve and whether it was served on the right Category are open to appeal under section 44.

65.  The words “person aggrieved” should be given a non-restrictive meaning.  There is no decided case on the meaning of “person aggrieved” within the context of BO but reference can be made to authorities in other context. 

66.  In Ex parte Sidebotham (1880) 14 Ch D 458, 465, James LJ says,

“By the words ‘person aggrieved’ do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made. A ‘person aggrieved’ must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.”

67.  The test was criticized by Lord Denning as being unduly narrow in AG for Gambia v N’Jie [1961] AC 617, 634 (PC)

“The words person aggrieved are of wide import and should not be subjected to a restrictive interpretation. They do include a person who has a genuine grievance because an order has been made which prejudicially affects his interests.”

68.  King Glare Ltd provides an example of where the alleged owner of a signboard appealed, as a person aggrieved, against a building order even though it had been served on the agent (at para 24). 

69.  Having regard to these authorities, the Applicants’ contention that a building order had to be served on them before they could appeal to BAT as persons aggrieved is plainly unsustainable.  Ground C is unarguable.

D. TAKING IRRELEVANT CONSIDERATIONS INTO ACCOUNT

70.  In Associated Provincial Picture House Ltd v Wednesbury Corporation [1948] 1 KB 223, 233-234, Lord Greene observed,

“The Court is entitled to investigate the action of the local authority with a view to seeing whether it has taken into account matters which it ought not to take into account, or conversely, has refused to take into account matters which it ought to take into account.”

71.  Ms Lee submits that in refusing to serve the building orders on BAML and GACL, BA took irrelevant considerations into account, namely, that the building orders had been validly served on EGL/HKTAL. It should simply have asked itself the question of whether BAML/GACL were persons also satisfying section 24(2)(c)(i).  The Applicants contend that BA should not be prevented from serving a building order on multiple persons who have the same priority under section 24(2)(c)(i).

72.  Having regard to the analyses in Section A above, it cannot be said that BA had taken into account irrelevant considerations. In fact, BA was duty bound to consider the prior valid service on EGL/HKTAL to avoid delaying the enforcement process and avoid abuse by people who have no valid bases to require BA to serve them.

E. IRRATIONALITY IN THE DECISIONS

E1. The legal principles

73.  The determination of whether a decision is irrational is a matter of law to be determined objectively: R v Secretary of State for the Environment, ex. p Hammersmith & Fulham LBC [1991] 1 AC 521, per Lord Bridge at p. 93E.  That is by no means the same as inviting the court to substitute its own “objectively reasonable” decision: R v Secretary of State for the Home Office, ex. p Brind [1991] 1 AC 696 per Lord Ackner at pp. 757H-758B).

E2. The Applicants’ case

74.  The Applicants claim that BA has acted irrationally in rejecting their evidence on ownership which was of “higher quality than that placed before BA” when it first issued the Building Orders.  They claim that with the “cogent and sufficient” evidence made before it, BA should have reached no other reasonable conclusion but that BAML/GACL were the owners of the relevant Signboards.

E3.  Quality of the applicants’ evidence as to “ownership”

75.  I am unable to agree with Ms Carol Lee. 

76.  Firstly, the evidence of “ownership” is full of doubts.  BAML, GACL, HKTAL, Easy Group (Hong Kong) Limited all carried a previous name with the word “Easy”, ie Easy Crème Management Limited, Easy Advertising Agency Limited, Easy Groups Limited, Easy Groups (Hong Kong) Limited. The names of Hung Ka Hang (“Hung”), Cheng Wing Yau (“Cheng”), Sam Chan, Donald Wong, surfaced at various stages when EGL/HKTAL, BAML and GACL were involved. 

77.  Insofar as BAML and EGL/HKTAL were concerned, Cheng had been their common shareholder.  Hung was the shareholder of BAML and, together with Cheng, were directors of EGL/HKTAL.

78.  Insofar as GACL, EGL/HKTAL were concerned, Hung had been the sole director and shareholder of GACL.  His directorship was changed to BAML on 1 August 2008.  His shareholding was transferred to Easy Crème (now known as BAML) on 15 July 2011.  Hung was also the director and company secretary of EGL/HKTAL up till 14 September 2011.  At a meeting[1] on 18 February 2013 with the Buildings Department, Hung (who introduced himself as Mr Lee) took an active part in the meeting and threatened to institute judicial review proceedings although he did not have any interest in BAML according to corporate records.  Also Hung (who had resigned as a director by then) instead of Cheng (who was summoned) appeared before BAT on behalf of EGL/HKTAL.

79.  Secondly, BAML, GACL and EGL/HKTAL had had the same registered address at Langham Place. 

80.  Thirdly, there was the dubious consultancy arrangement that BAML, GACL and EGL/HKTAL all had with Donald Wong Ltd (with Donald Wong as the sole director and shareholder).  Donald Wong claimed to be an employee and gave evidence on behalf of EGL/HKTAL at the preliminary hearing before BAT.  Although Donald Wong was consultant of BAML, Sam Chan claimed to know about the Building Orders through him only at the end of 2012 or early 2013.

81.  Fourthly, on ownership of the external walls, all the external wall owners of the O’Brien Road and Percival Street Signboards had been invited by BA to attend interviews.  Save that one Mr Wong Kwok Kwan of the purported owner of the Percival Street Signboard had given a statement admitting that he had signed the 2/F Exclusive Agency Agreement, the purported owners have not responded to BA’s invitation. 

82.  Fifthly, business-wise, EGL/HKTAL’s had a presence or closeness in relationship with BAML:

(i) The Langham Place address (being the registered office of EGL/HKTAL) was printed on the 3/F agency agreement as being BAML’s address when the registered office of BAML at that time was at New Trend Centre.  BAML claimed that it was a typo.

(ii) Hung’s name was printed as the authorized signatory of BAML in the 3/F Exclusive Agency Agreement although it was signed by Sam Chan.  BAML claimed that it was another typo.

(iii) In re GACL, the 1^st licence agreement between GACL and C&N dated 26 October 2010 was actually signed by Hung and witnessed by Cheng.  Hung was the sole shareholder of GACL as of that date.

(iv) The quotation dated 18 July 2011 issued for construction of the Percival Street signboard and the quotation and invoices dated 2010 for the Canal Road West signboard were addressed to T. Hung and D. Wong.

(v) In two invoices of BAML, the end clients were required to make cheques payable to Easy Group (Hong Kong) Ltd or Rainbow Decoration Engineering Ltd (“Rainbow”)but not BAML.  Easy Group (Hong Kong) Ltd had Hung and Cheng as directors before 14 September 2011 and was owned as to 50% by Cheng before 19 September 2011.  BAML explained that the payment clause was a commercial arrangement with Rainbow internally which BAML did not care, so long as Rainbow forwarded the payment to BAML.

(vi) The envelop of EGL by which the notice of appeal was sent to BA dated 19 May 2011 showed that the graphic logo and telephone number matched with those printed on the O'Brien Road signboard and the website. 

83.  Strangely, contact details of BAML and GACL’s marketing agents (Rainbow and Ample respectively) were not shown on the Signboards, whilst those of EGL/HKTAL (said to be an unrelated company) were.  Sam Chan explained that Rainbow was its non-exclusive marketing agent so it was up to BAML to decide whether to put Rainbow’s contact on the O'Brien Road Signboard.

84.  Sixthly, the Applicants’ answers to BA’s questions at interviews also cast doubt in their case.  In Sam Chan’s statement for BAML, Answer no. 13, he admitted that the inscription and the information displayed on the O’Brien Road Signboard belonged to EGL and BAML permitted EGL to display its information there to attract customers.  This contradicted BAML’s present assertion that “Easy Group” at the material time represented the short form of EAGL.  It also contradicted his present allegation that he had no knowledge as to the existence and scope of business of EGL/HKTAL at the material time. 

85.  Similarly, in HCAL 147/2013, Mr Tam of Rainbow claimed at the interview that the contact person of Easy Crème was Donald Wong.  The inference was that Donald Wong was the person who represented BAML from the very beginning since construction of the Percival Street Signboard. Donald Wong told BAT that EGL/HKTAL had nothing to do with the Percival Street Signboard but hid from BAT the fact that that Signboard belonged to BAML which he also represented.   

86.  In HCAL 148/2013, in his statement to BA, Sam Chan denied GACL’s ownership and involvement in the construction of the extended Canal Road signboard but said that CACL was one of the “intermediaries” involved in the chain of agency relationship in marketing this signboard.  He said he did not know when the extended signboard was constructed or how the electricity was supplied, nor was GACL liable for the repair and maintenance fees.  This contradicted the quotation, invoices and maintenance reports which he now produces. 

87.  In the present leave application, Sam Chan has given inconsistent explanations as to why the inscriptions and logo of Easy Groups appeared on the signboards:

a. In BAML and GACL’s letters to the BA dated 11.1.2013, they alleged that the inscriptions of 易通集團 on the Signboards was a reference to its related company EAGL (ie a company owned by Sam Chan through UDL) and not EGL.  It is alleged that the BA had misunderstood the names.  No evidence has been provided to prove the reference to EAGL.

b. At the interview with the BA on 26.6.2013, Sam Chan stated that the inscription and logo belonged to EGL/HKTAL but BAML allowed EGL/HKTAL to put its name thereon in order to “attract customers” (招收廣告).  

c. In the Form 86 filed in the 3 proceedings, it is alleged that “Easy Group” represented the short form of EAGL and 易通集團 corresponded to the Chinese name of EAGL 易通集團廣告集團有限公司, and BA had misunderstood the 2 names. 

d. The Applicants now appear to allege that there was no misunderstanding by BA, but that the Applicants put forth the version about marketing under the Mega Brand (see para 17 above). Sam Chan even stated that if the business of HKTAL was also marketed under the Mega Brand, it would be of no surprise that they had common contact information at the material time.

88.  These matters are highly suggestive of an intricate corporate web designed to obstruct enforcement under the Building Ordinance. They also throw in doubt Sam Chan’s alleged late knowledge of the Building Orders through Donald Wong. BAML would have knowledge of the order through Donald Wong who, at the time he was defending EGL/HKTAL, was a consultant of BAML.  GACL would have similar knowledge through Hung, who was a director and company secretary of EGL/HKTAL and sole shareholder of GACL at the same time. 

89.  The agency agreements between BAML/GACL and the external wall owners required the latter to forward all complaints received from the government to BAML/GACL.  As the advisory letters and Building Orders were posted up on the subject premises and copied to the occupants or licensor, those documents ought to have been forwarded to the Applicants for handling.

90.  In King Glare, Lam J, has observed, as a matter of practicality, that if a person served with a building order was not the owner of the UBWs or otherwise had no power to comply with it, he would no doubt take steps to inform those who have such power:

“41. Moreover, a person who is not the legal owner but coming within the wide definition of “owner” under Section 2 and has no power to comply with the order is likely to take the following steps,

(a) To inform the legal owner or some other person who has the power to comply with the order about the building order;

(b) To inform the Building Authority that he did not have the power to comply with the order and provide information on identity of person or persons who can comply with the order.

42. Bearing in mind the power of the Building Authority under Section 24(3), upon being so informed, one would expect the person having the power to comply with the order (whether the legal owner or otherwise) to put forward representations to the Building Authority if he has any valid grounds of objection to the making of the building order or to lodge an appeal as an aggrieved person.”

91.  Although section 24(2) has since been amended, I cannot see why the logic of Lam J in King Glare should not equally apply.  The Signboards were clearly erected for commercial purpose.  If BAML or GACL were truly their owners, one would expect their close associates, EGL/HKTAL, to have informed them of the building orders if EGL/HKTAL had no power to comply with those orders. 

92.  The brief analyses show that the Applicants’ evidence fall far short of being “cogent and sufficient” as described by Ms Carol Lee.  It is of course not the purpose of these hearings to assess the quality of evidence on ownership.  I can only say that even on the most charitable view that “ownership” can be established, the Applicants will still fail as a matter of law.   Aside from that, the Applicants have not put forth any substantive defence.  Ground E is not reasonably arguable.

CONCLUSION

93.  BA has validly served the Building Orders on EGL/HKTAL.  It had no duty to ascertain ownership of the Signboards before service.  The Building Orders have been upheld by BAT or, in relation to the Canal Road Building Order, not appealed against.  They are valid and enforceable.  The Applicants are unable to show that the decision to serve Building Orders on EGL/HKTAL was wrong in the first place.  Even if the Applicants, who emerged subsequently, can establish that they are the owners of the Signboards, BA has no duty to serve them.  The Applicants have no substantive defence.  The applicants have failed to meet the test in Chan Po Fun.  The applications for leave are therefore dismissed.  The application for interim injunction in HCA 114/2013 falls together and  BA’s undertaking not to enforce the Building Orders as stated in the order dated 22 July 2013 is discharged.

COSTS

94.  The usual order for costs in an unsuccessful leave application is no order as to costs.  The court would only award costs against an unsuccessful applicant for leave where there are unusual or exceptional circumstances to justify doing so. In TVB Ltd v Communications Authority & anor (No.2) [2013] 5 HKC 606, Au J sets out a non-exhaustive list of factors as follows:

(1) The “hopelessness” of the application, in particular, where the applicant should have been aware of that.

(2) Whether the applicant has sought to pursue the judicial review to advance principally his own interest or in the interest of the public.

(3) Whether the unsuccessful applicant has substantial resources which it has used to pursue the unfounded claim and which are available to meet the costs.

(4) Whether the putative parties attended the leave hearing only upon the court’s invitation or direction, provided helpful assistance and refrained from conducting themselves in an unreasonable manner that would lead to increase in costs. In this respect, whether the hearing is in nature ex parte or otherwise is not determinative of the question of costs.

(5) Whether the applicant was seeking interim injunctive relief against any putative party.

(6) Whether the applicant had to apply for an extension of time on which the putative party is entitled to be heard.

(7) Whether the applicant in effect had a rolled-up substantive hearing of his judicial review application.

95.  Apart from item (6) which is inapplicable, all the factors work in favour of the putative respondents.  The Applicants should have been aware that all 3 applications for leave are hopeless.  Apart from challenging service of the Building Orders, the Applicants have not put forth any arguable defences were BA to issue building orders to them.  The obvious inference is that they simply want to delay enforcement.  These leave applications are to advance their own commercial interest rather than the interest of the public.  As it turns out, this application is an abuse of process that has enabled the applicants to gain about 13 more months (re the O’Brien Road and Percival Street Signboards) and 27 months’ time (re the Canal Road Signboard) to make profit from the signboards since resolution of the BAT appeals.  To allow the Applicants to re-open issues already determined at the BAT on the ground that it has not been served with the Building Order would in substance facilitate the Applicants’ further abuse of the judicial process to achieve the collateral purpose of delaying enforcement action: King Glare, at para 55, Lam J; Lei Chaohui v Registration of Persons Tribunal & ors, HCAL 97/2011, 23 May 2013, per Au J, at para 47.

96.  That the Applicants have resources to meet the costs can be inferred from their commercial activity of leasing out the signboards.  DOJ attended the leave hearing only upon the court’s directions and provided very helpful submissions.  There was no conduct on the part of DOJ or the BA which has caused costs to increase.  There were quite full arguments at the hearing before me and the Applicants have had the benefit of a rolled-up substantive hearing of their applications.

97.  I therefore make an order nisi that the respondents are to have their costs, to be summarily assessed on the papers on 17 January 2014.  The respondents are to file and serve their costs statements by 7 January 2014 and the applicants are to file and serve their grounds in opposition by 15 January 2014.

98.  I thank Ms Tong and Ms Carol Lee for their thorough preparation and assistance to the court.