SILVER MOUNTAIN INVESTMENTS LTD. AND ANOTHER v. ATTORNEY GENERAL AND ANOTHER

1992, No. 197
(Civil)

IN THE COURT OF APPEAL

(On Appeal from High Court Case No. M.P.1744/92)

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J U D G M E N T

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Nazareth, J.A.:

1. In these appeals the two appellants appeal against the judgment of Mayo J. dismissing their applications for judicial review. Having heard Mr S.C. Poon for the appellants, we dismissed the appeals without calling upon counsel for the respondents and awarded the respondents their costs of the appeal. We now give our reasons.

2. The factual background to the appeals in the event, as will be seen, need only be briefly stated. The appellants, both of whom have the same controlling shareholder, were the owners of properties within the area of a Land Development Corporation Scheme of redevelopment and urban renewal on Hong Kong Island (the Scheme). The Land Development Corporation (the Corporation) established by the Land Development Corporation Ordinance (Cap.15) (the Ordinance) for purposes concerned with urban renewal, duly sought and obtained the approval of the Secretary, i.e. the Secretary for Planning, Environment and Lands, before preparing the Scheme, which was gazetted on the 13th May 1985. Except in respects that will be mentioned, it was not in dispute that the requirements prescribed by the Ordinance and the Town Planning Ordinance were complied with and that in due course a plan reflecting the Scheme emerged as a plan under the Town Planning Ordinance, upon the basis of which the Secretary was empowered to recommend resumption under the Crown Lands Resumption Ordinance, of land within the plan area. In the result, resumption orders were made by the Governor in Council in respect of the appellants' properties and gazetted on 16th April 1992. The appellants petitioned the then Governor against resumption and upon the failure of the petitions, lodged notices of application for judicial review and the quashing of the decision of the Governor in Council and the resumption orders, which applications were ultimately rejected by Mayo J.

3. The appellants' notice of appeal lists some eight grounds, but these are concerned with and were pursued by Mr Poon on the basis of two main complaints. First and primarily that the Corporation did not discharge the relevant duties imposed upon it by law; and second, that the Secretary likewise failed to discharge the duties imposed upon him.

4. The grounds concerned with the first complaint although carefully and elaborately developed, can be sufficiently described in the following way. Section 13(1) of the Ordinance is in these terms :-

"13. Development schemes

(1) The Corporation may with the approval of the Secretary either generally or in a particular case, prepare in accordance with this section, development schemes for any area within which the Corporation may acquire property."

5. Subsection (2) requires such a scheme to contain an assessment as to the likely effect of the implementation of the scheme. Mr Poon submits upon the strength of the foregoing and of authorities he cited, that there is a duty upon the Corporation in exercising and discharging its powers and functions, to consider the interests of those who may be adversely affected. That in my view is clearly right (see Westminster Corporation v London & North Western Railway [1905] AC 426 at 433; Stringer v Minister of Housing & Local Government [1970] 1 WLR 1281 at 1295; and Westminster Council v Great Portland Estates Plc [1985] 1 AC 661 at 670).

6. Mr Poon then referred to s.15 of the Ordinance, which is the statutory provision that is most central to this appeal. Its material provisions are as follows :-

" 15. Power of Secretary to recommend resumption

(1) The Corporation may in the circumstances specified in subsection (2) apply in writing to the Secretary requesting him to recommend to the Governor in Council the resumption of land under the Crown Lands Resumption Ordinance (Cap.124).

(2) The circumstances referred to in subsection (1) are-

(a) that the Corporation has been unable to acquire any land within the area of a plan which is deemed to be a draft plan by virtue of section 14(3) of this Ordinance; or

(b) that the Corporation has been unable to acquire any land which it requires to implement a development proposal authorized under section 5(2)(b) of this Ordinance.

(3) The Secretary shall not make a recommendation in pursuance of subsection (2)(a)-

(a) unless application is made to him not later than 12 months after the approval by the Governor in Council under section 9 of the Town Planning Ordinance (Cap.131) of such plan or such further period as the Secretary may allow; and

(b) unless he is satisfied that the Corporation has taken all reasonable steps to otherwise acquire the land including negotiating for the purchase thereof on terms that are fair and reasonable.

(4) The Secretary shall not make a recommendation in pursuance of subsection (2)(b)-

(a) unless the development proposal may lawfully be implemented by virtue of the provisions of any draft or approved plan for the purposes of the Town Planning Ordinance (Cap. 131) and, in the case where by virtue of such plan, permission under section 16 of that Ordinance is required for that implementation, the permission required has been obtained;

(b) unless the application for resumption is accompanied by a statement-

(i) setting out how the Corporation intends that the proposal will be implemented, including whether implementation will be by the Corporation alone or the Corporation in association with another person and in relation to land within the boundaries of the proposal, what portion of the land is owned or leased by the Corporation and what arrangements have been made or are contemplated by the Corporation for the acquisition of any land not so owned or leased;

(ii) containing an assessment by the Corporation as to the likely effect of the implementation of the proposal, including, in relation to the residential accommodation of persons who will be displaced by the implementation of the proposal, an assessment as to whether or not, insofar as suitable accommodation for such persons does not already exist, arrangements can be made for the provision of such residential accommodation in advance of any such displacement which will result as the proposal is implemented; and

(c) unless he is satisfied that the Corporation has taken all reasonable steps to otherwise acquire the land including negotiating for the purchase thereof on terms that are fair and reasonable.

(5) For the purpose of this section, in considering whether or not the Corporation has negotiated for the purchase of the land on terms that are fair and reasonable, the Secretary may consult any person not being a public officer whom he considers may be able to assist him in forming an opinion on which to base his decision in respect of that negotiation.

(6) ...."

Mr Poon submitted that the effect of subsections (1), (2)(b) and (3)(b) in particular, is that unless the Corporation was unable to acquire land it required to implement a development proposal under the Scheme, resumption could not be resorted to. "Acquire" he submitted is not restricted to purchase, but includes all other means of acquisition e.g. gift, exchange and so on, and not just of the entire estate of the owners, but lesser interests also which might provide the Corporation with the use it intended to make of the land, in the light of the definition of "land" in s.2 of the Ordinance. That definition is as follows :-

"'land' means land of whatever description and includes a building erected thereon and where an undivided share of a leasehold interest in land has appurtenant to it rights to the exclusive use and occupation of a building or part thereof erected thereon, includes such share in the land and all rights appurtenant thereto, and any estate, right, share or interest in land."

Resumption, Mr Poon went on to urge, is draconian and clearly intended to be the last resort.

7. Notwithstanding the elaborate way in which the submission was advanced, its principal plank, and more to the point, a plank which is essential to the success of the submission, was that the Corporation had not met the s.15 requirement that it was unable to acquire the "land" or interest it required.

8. In my judgment, there is a short answer to that essential part of the appellants' submissions. Even if those submissions are accepted in their entirety, and I cannot say that I am persuaded that they can, in the ordinary way the presumption of regularity would apply and meet the point in the absence of evidence to the contrary. Mr Poon sought to meet that situation by submitting that there was evidence that established that the Corporation had set its sights on outright purchase of the land from the very outset and did not address its duty to have regard to the interest of the appellants and to consider other means of acquisition. The evidence, he said, was that the Corporation procured valuations of the properties and commenced negotiations to purchase even before requesting the Secretary on 23rd May 1990 to recommend resumption. In my view, that evidence, which is equally consistent with forward planning and action, does not show that the Corporation did not consider any means of acquisition other than purchase of the properties, and does not displace the presumption of regularity.

9. Besides, as to other means of acquisition, Mr Poon was unable to point to any such means other than the acquisition of a right of way. However on the appellants' own evidence, their first suggestion of a right of way (which the Corporation denies was ever made) could not have been made before early 1991, almost a year after the Corporation had, on 23rd May 1990, requested the Secretary to recommend resumption of the properties under s.15(1) of the Ordinance. Moreover, that crucial fact apart, the Town Planning Board in September and November 1990, again before any suggestion of a right of way could have been made to the Corporation, had already refused the appellants' requests to take the properties out of the Scheme area on the basis that the appellants would provide a right of way. Clearly it would be fanciful to have expected the Corporation to address such means of acquisition; a fortiori, given that the evidence, such as there was, indicated that the Corporation's requirements would not have been met by a right of way. What the Corporation saw as its requirements was the acquisition of the properties, and there is no evidence that anything less would have sufficed. The main complaint plainly failed and with it the associated grounds of appeal.

10. In the result it is difficult to see how any failure by the Secretary to enquire into and satisfy himself, to use Mr Poon's words, that the Corporation was unable to acquire the land could be a valid ground for granting judicial review. However that may be, Mr Poon pointed to an affirmation of the Deputy to the Secretary which recorded the Secretary's concern that regard be had not only to the market value of the property, but also the package of statutory compensation, ex gratia allowances and rehousing. It recorded also that the Secretary was satisfied that the Corporation had taken all reasonable steps to acquire the properties on terms that were fair and reasonable. Such reference to market value and acquisition only, Mr Poon submitted, demonstrated the Secretary's failure to address other means of acquisition. I do not accept that submission, nor, for reasons similar to those I have already given in relation to the Corporation, the suggestion that the Secretary was under any duty to consider other means of acquisition. The second main complaint and the grounds of appeal associated with it, therefore also failed.

11. It remains only to mention that Mr Poon submitted that the judgment of Mayo J. was flawed because he relied upon the rejection by the Town Planning Board of the appellants' offer of a right of way, confusing that with the Corporation's different function of implementation of the Scheme or plan. In my view, a fair reading of the judgment does not support Mr Poon's contention.

12. In the result no good reason was shown why the application for judicial review should have been granted or that the decision of the Governor in Council should be quashed.

13. The foregoing reasons, in my view, required the appeal to be dismissed.

Macdougall, J.A.:

14. I agree. In my view there was no evidence to support the appellants' contentions that the Corporation had acted in disregard of its duty to assess the likely effect of the implementation of the proposed development scheme on the appellants, and that the Secretary had failed to satisfy himself that the Corporation had taken all reasonable steps to acquire the land otherwise than by resumption.

15. There is no duty cast on the Corporation by the Ordinance to state every conceivable way in which a development scheme might be implemented, and to then give its reasons for eliminating each and every possibility other than the method of implementation upon which it decides. There is no reason to think that the Corporation came to any conclusion than that outright purchase of the land was the most effective, if not the only feasible, means of carrying out the scheme which it had in mind.

16. During the court of negotiations by the Corporation with the appellants for purchase of the land conducted prior to its request to the Secretary to recommend resumption, it is significant that the appellants did not come forward with a counter proposal that they would grant a right of way over the land.

17. Had they done so, it would have been incumbent on the Corporation to consider that method of implementing the development scheme. Even then, a rejection by the Corporation of that proposal could not successfully be challenged unless it was shown that the decision to reject was so unreasonable that no sensible body that had applied its mind to the matter could properly have come to it.

18. I therefore agreed that this appeal should be dismissed.

Godfrey, J.:

19. I agree.

20. Under s.13(2) of the Land Development Corporation Ordinance, Cap.15 ("the Ordinance"), the Land Development Corporation ("the Corporation") is empowered to prepare, in accordance with s.13, development schemes in any area within which the Corporation may acquire property. Such a scheme must set out how the Corporation intends that the scheme will be implemented : see s.13(2)(b). The scheme must also contain an assessment by the Corporation as to the likely effect of the implementation of the scheme : see s.13(2)(c).

21. The appellants submit (and, rightly, it was not disputed) that, when the Corporation prepares a development scheme, including its proposals for the implementation of the scheme, it is under a duty to have regard to the interests of owners of land whose interests may be adversely affected.

22. But the appellants go on to argue that in the present case the Corporation could not lawfully have discharged that duty unless it considered a method of implementation other than the simple method of acquiring the necessary land by private treaty (and, failing that, resumption); i.e., the acquisition, not of the appellants' land, but of rights of way over that land.

23. I can see no warrant for this. There is no provision in the Ordinance, and no general principle of law, which requires the Corporation to do so. Its power to consider the infinite variety of ways in which its scheme might be implemented must not be confused with a duty to do so. No such duty exists. If it did, a failure to consider, say, one out of a hundred different possibilities would necessarily make the scheme ultimately proposed an illegal scheme; a conclusion the absurdity of which requires no demonstration.

24. The appellants say that the Corporation could have implemented its scheme by accepting from the appellants a right of way over their land (which the appellants were prepared to grant) instead of acquiring the land itself, and that the Corporation should have considered this. In my judgment, the Corporation would indeed have had power to consider such a method of implementation; but it was most certainly not under any duty to come up with such a proposal of its own motion. If the appellants had themselves submitted such proposals to the Corporation, it could have considered them; but, even then, a rejection of the proposals (or even a failure or refusal to consider them) could not have been impugned unless (bearing in mind the Corporation's duty to have regard to the interests of owners of land within the scheme area) such a decision (or failure or refusal) would have been so unreasonable that no sensible person who had applied his mind to the question could properly have arrived at it.

25. But in fact there was nothing unreasonable at all in the Corporation's approach. It took all reasonable steps to acquire the appellants' land and it was unable to do so, otherwise than by resumption. The Secretary for Planning, Environment and Lands was therefore entitled, under s.15 of the Ordinance, to recommend the resumption of the land. The argument that his decision to do so was flawed because the "reasonable steps" which the Corporation had to satisfy him it had taken should have included steps to acquire, not the appellants' land itself, but a right of way over that land, must be rejected. Again, it had power to approach the matter in this way but it was not under any duty so to do. The point is the same point as that rejected already.

26. Furthermore, it is clear that the Town Planning Board would not in fact have accepted this approach anyway; so that even if the Corporation had adopted it, it would have failed.

27. For these reasons I concurred in the dismissal of this appeal.