LISTER ASSETS LTD AND OTHERS v. THE CHIEF EXECUTIVE IN COUNCIL

CACV 172/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 172 OF 2012

(ON APPEAL FROM HCAL NO. 78 OF 2012)

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REASONS FOR JUDGMENT

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Hon Fok JA:

Introduction

1.  On 20 July 2012, Lam J (as he then was) refused the applicants leave to apply for judicial review of the decisions of the Chief Executive in Council (CEIC) not to give reasons for, or provide copies of documents relied upon in reaching, his decision pursuant to s. 11(4) of the Railways Ordinance (Cap. 519) (the RO) to authorise the railway scheme for the construction by the MTR Corporation Limited (MTRC) of the Shatin to Central Link.

2.  This was the applicants’ appeal against that refusal pursuant to RHC O.53 r.3(4).  At the conclusion of the hearing, we dismissed the appeal indicating that we would hand down our reasons for doing so in due course, which we now do.

The facts

3.  The facts out of which the intended judicial review application arises may be shortly stated.

4.  The applicants are owners of various flats in a residential building called The Harbourview, which is located at 11 Magazine Gap Road, Hong Kong.

5.  In late November 2010, the Secretary for Transport and Housing (the Secretary) indicated that it was proposed to resume the sub-strata some 225 metres under The Harbourview in order to construct railway tunnels and other facilities.  Under s. 6 of the RO, the Secretary must publish a scheme to construct or modify a railway so that members of the public may inspect it.

6.  On 25 January 2011, the applicants objected in writing to the proposal and also asked the Secretary to provide all relevant information to enable them to make a more focused objection.  Under s. 10 of the RO, they were entitled to raise objections to the scheme as published.

7.  Further correspondence between the applicants and the Secretary ensued in which the applicants pressed for further information and documents.

8.  On 31 January 2012, a Panel Hearing took place at which a summary of the views expressed by the applicants, as objectors to the proposed railway scheme, and the response of the Administration were ventilated.

9.  By a letter dated 24 February 2012, the applicants submitted a “Preliminary Geotechnical Assessment Report – Shatin to Central Link” of their expert consultant, Fugro (Hong Kong) Limited (Fugro).

10.  By a report dated 27 February 2012, the MTRC’s expert, Arup, provided its response to Fugro’s report.

11.  Fugro responded to Arup’s report by a letter dated 29 February 2012, to which Arup in turn responded by a further report dated 3 March 2012.

12.  Under ss. 11(2) and (3) of the RO, the Secretary and CEIC were respectively obliged to submit and to consider the Railway Scheme together with any objections lodged under s. 10(1).

13.  On 27 March 2012, the CEIC approved the implementation of the Railway Scheme, as announced by a press release of that date.  Formal notice, pursuant to s. 13(4) of the RO, of the CEIC’s authorisation of the Railway Scheme under s. 11(4) was gazetted (as G.N. 2368) on 13 April 2012.

14.  On 30 May 2012, the applicants’ solicitors wrote to the CEIC requesting the CEIC to provide the written reasons for rejecting the applicants’ objections to the Railway Scheme and a list of the documents which the CEIC took into account when making the decision to reject the applicants’ objections.

15.  By letter dated 6 June 2012, the Clerk to the Executive Council replied to the applicants’ solicitors stating:

“At the meeting on 27 March 2012, having considered all relevant information and materials including your objection to the subject railway scheme made on behalf of your client, the Government’s response to your objection and your response made on behalf of your client to the Government’s response, the Chief Executive in Council decided that the Shatin to Central Link scheme should be authorized under section 11(4) of the Railways Ordinance.

            As documents considered by the Chief Executive in Council are confidential, your request for a list of documents which the Chief Executive in Council had taken into consideration when making the decision is declined.”

16.  Dissatisfied with this response, the applicants then commenced judicial review proceedings by a Form 86 Notice dated 26 June 2012.  Although the Form 86 Notice identifies three decisions as the target of the proposed judicial review application,[1] it is clear from the relief sought that the decisions for which an order of certiorari is sought are the Reasons Decision and the Documents Decision, not the Objections Decision.  The relief sought in respect of the Objections Decision is limited to a declaration that the time for challenging that decision shall not start to run until the CEIC has provided reasons for the Objection Decision and supplied copies of the documents taken into account in reaching that decision.

17.  Lam J considered the application for leave at an inter partes hearing on 20 July 2012 and refused leave.  He made no order as to costs.

Duty to give reasons

18.  The principal basis on which it is contended that leave to apply for judicial review should be granted is that the CEIC had a duty to give reasons for the Objections Decision.

19.  It was common ground that the RO does not mandate that the CEIC must give reasons for authorising a scheme under s. 11.

20.  Moreover, there is no general duty at common law to give reasons for an administrative decision.  Instead, the duty may arise as a matter of fairness in the particular circumstances of the decision. The general position is stated in R v Home Secretary ex p Doody [1994] 1 AC 531 at p. 564E and R (Hasan) v Secretary of State for Trade and Industry [2009] 3 All ER 539 at §19.

21.  There are two situations in which, by way of exception to the general rule, reasons may be required for an administrative decision.  The first is where the decision appears aberrant, so that the reasons for reaching that decision should be made known to the recipient so that he may know whether the aberration is a legal one (and so challengeable) or apparent.  The second is where the decision engages an interest such as personal liberty that is so highly regarded by the law that fairness requires that reasons be given as of right.  See, R v Higher Education Funding Council ex p Institute of Dental Surgery [1994] 1 WLR 242 at p. 263.

22.  In Hong Kong, that general position has been affirmed in relation to the CEIC or the Chief Executive in various contexts and fairness is, ultimately, the test of whether the CEIC must give reasons in a particular case: see Canadian International Hospital Foundation Ltd v Secretary for Justice, unrep., HCAL 131/2006, 4.5.07 at §97 and Smart Gain v Chief Executive in Council, unrep., HCAL 12/2006, 6.11.07 at §§121-122.

23.  It was accepted below that the decision is not aberrant on its face and, on this appeal, the contrary was not suggested on behalf of the applicants.  The first exception to the general rule does not therefore apply.

24.  Mr Philip Dykes SC, appearing for the applicants on the appeal, contended that the Judge below, in concluding that there was no duty to give reasons, erred in assuming that a property owner objecting to the proposed inclusion of his property in a development scheme is sufficiently protected by being able to litigate in a court of law about compensation for the resumption of his land or diminution in value.  In substance, that is a contention, relying on the second exception to the general rule, that fairness dictates that the applicants should have been given reasons for the CEIC’s decision.

25.  As to that, I consider that the Judge was right to hold (Judgment §9) that the decision to authorise the Railway Scheme does not engage the applicants’ fundamental rights or interests in a way such that fairness mandates the giving of reasons.

26.  In this regard, as Mr Benjamin Yu SC, leading counsel appearing on behalf of the CEIC submitted, context is important.  The substance of the applicants’ complaint is that the tunnel to be constructed as part of the Railway Scheme will run approximately 225 metres below The Harbourview and will impact on its redevelopment potential.  That is the only impact that it is contended the Railway Scheme will have and issues such as safety do not arise.  So far as there may be an impact on the value of the applicants’ properties arising from the Railway Scheme, the RO contains a detailed compensation scheme in Parts III and IV.  It was not suggested that the compensation scheme is flawed or inadequate.  Given the existence of the compensation scheme, I accept that it cannot reasonably be argued that the applicants’ interests were so affected by the CEIC’s decision that fairness required a departure from the general rule that reasons were not required for the administrative decision in question.

27.  There are a number of other factors which, in my view, support this conclusion.

28.  First, as noted above, there is no statutory duty under the RO for the CEIC to give reasons for a decision under s. 11(4).[2]

29.  Secondly, the CEIC’s task under the RO is one of broad macro-economic policy.  It is an exercise of weighing potential disruption and harm to private interests, for which compensation may be payable, against the public benefit from the new railway scheme.  Such broad macro-economic policy considerations do not obviously lend themselves to the giving of reasons: see Canadian International Hospital Foundation Ltd v Secretary for Justice (supra) at §§92-93 and CP Ships USA LLC v Chief Executive of the Hong Kong Special Administrative Region, unrep., HCAL 124/2006, 11.5.07[3] at §§80-82.  This is consistent too with the administrative and policy based nature of the CEIC’s decision-making process under the RO, as reinforced by the provisions of s. 64(4) of the Interpretation and General Clauses Ordinance (Cap. 1).[4]

30.  Thirdly, at an early stage of the matter, after the applicants had indicated their objections to the Railway Scheme, the Secretary notified the applicants, by way of a flow chart, of the procedure that would be adopted for dealing with objections.  One of the stages in the procedure was an administrative arrangement to have a panel of independent persons hold a hearing session “to hear views of the unwithdrawn objectors and the Administration”.  A panel report would then be compiled, the relevant part of which would be sent to the objector for comments.  The railway scheme, objections, panel report together with the views of the objectors would then be submitted to the CEIC for decision.

31.  In the present case: the Panel Hearing was duly held; the relevant part of its report sent to the applicants for their comments; the applicants’ comments on that report were taken into account and the report amended in the light of those comments.  The applicants’ expert was given an opportunity to address issues relevant to the objections and to make reports and comment on the MTRC’s expert’s report.  The inclusion of all these relevant materials in the submission to the CEIC was confirmed in a letter dated 29 May 2012 from the Secretary to the applicants’ solicitors.  As the flow chart indicated, this process was all for the purpose of ensuring that an objection “is dealt with in an open, fair and transparent manner”.

32.  Fourthly, it is clear from the Form 86 Notice that the objections raised issues of a technical nature, which are matters on which a court will generally speaking be slow to intervene in a judicial review: see e.g. Popular Signs Ltd v Radiation Board, unrep., HCAL 53/2008, 12.1.10 at §§34-37 and Chu Yee Wah v Director of Environmental Protection [2011] 5 HKLRD 469 at §§30, 115-118.

33.  It was submitted on behalf of the applicants that the right to property was not just a right to be compensated when it is expropriated.  However, in this case there was no expropriation of property in the conventional sense.  The applicants did not lose their properties.  If there is a diminution in the value of their properties by reason of the Railway Scheme, there may be a right to compensation calculated under the RO.

34.  Mr Dykes relied on the decision in In re Caltex Oil Hong Kong Limited [1995] 1 HKLR 122 in support of the duty on the part of the CEIC to act fairly towards an objector to a railway scheme.  Caltex involved the manner in which the Governor-in-Council had dealt with objections to a proposed roadworks scheme.  In that case, the basis of the objector’s case (that an alternative route was viable) was misstated by the Secretary for Transport to the Executive Council meeting considering the proposed scheme in that it was told the alternative route was not safe.  In those circumstances, fairness dictated that the correct position be taken into account, namely that the alternative route was safe.  I do not consider the applicants are assisted by Caltex which is distinguishable on its facts: in the present case, there is no suggestion that the basis of the applicants’ objection was not correctly stated to the CEIC.

35.  For these reasons, like the Judge, I am satisfied that the matters set out in paragraphs 68 to 84 of the Form 86 Notice do not raise a reasonably arguable case for the existence of a duty on the part of the CEIC to give reasons.

Proposed amendment to Form 86

36.  The applicants propose to amend the Form 86 to raise an argument based on Article 35 of the Basic Law (BL35).  It is suggested that reliance on the constitutional right of access to the courts fortifies the argument already addressed in the Form 86 (at paras. 74 to 76) that, where the only redress for administrative action is judicial review, a failure to give reasons effectively prevents the court from inquiring into a decision.  Reliance is placed on Judicial Review Handbook by Michael Fordham QC (6^th Ed.) at §62.1.6.

37.  I do not accept that reliance on BL35 assists the applicants in the present case.  The applicants could have applied for judicial review of the Objection Decision and as such their access to the courts was safeguarded: see Koon Ping Leung v Director of Lands [2012] 2 HKC 329 at §§33-35.  I do not agree that the complaint concerning the absence of reasons for the CEIC’s decision prevented the applicants from instituting judicial review proceedings to challenge that decision if they had wished to do so.

38.  In the course of such a judicial review, it may well have been the case that the “cards on the table” requirement arising from the duty of candour placed on a respondent in a judicial review would have led to the reasons for the CEIC’s decision in question being explained in the evidence but that does not, in my view, give rise to an independent duty to give reasons if the decision itself is not aberrant or if such a duty is not required on the grounds of fairness.

39.  In addition, in his oral submissions, Mr Dykes indicated that, if leave to apply for judicial review were granted, the Form 86 Notice would be further amended to challenge the Objections Decision.  It is not appropriate to deal with the appeal on the basis that such an amendment will be made.  In the first place, this point was not raised in the Notice of Appeal and no properly formulated amendment was put before us.  Secondly, the time limit for an application for judicial review of that decision prima facie expired long ago.  Thirdly, as explained above, the application to the Judge below was limited to one for leave to challenge the Reasons Decision and the Documents Decision and it was dealt with by the Judge on that basis.  It would be wrong to permit the applicants to expand the basis of the proposed challenge when the matter is now before this Court on appeal. In any event, I would add that, on its face, the submission that the Form 86 Notice could be amended to challenge the Objections Decision would appear to be inconsistent with the intended reliance on BL35.

Separate challenge to non-disclosure

40.  The applicants separately seek to challenge in the intended judicial review proceedings the decision of the CEIC to refuse to provide a description of or copies of the documents which were taken into account in reaching the decision to authorise the Railway Scheme.  This decision is constituted by the last paragraph of the letter from the Clerk to the Executive Council dated 6 June 2012 quoted above.

41.  It is suggested that until the evidence is filed on a “cards on the table” basis, it will not be known whether it may be open to the applicants to challenge the CEIC’s decision on the basis that other documents had wrongly been included in the decision-making process.  It was submitted, relying on Fordham at §10.4.3, that this duty of candour extended to disclosing materials which might equip the applicants with new grounds that were latent in the application.

42.  I do not think this argument takes matters any further.  As I have already noted, there was nothing to prevent the applicants launching judicial review proceedings to challenge the Objections Decision if they considered that decision was amenable to review.  For the reasons I have given, I am not satisfied there was a duty to give reasons for that decision and so there was no proper basis to delay instituting judicial review proceedings prior to the provision of such reasons.

43.  Similarly, I am not satisfied that there was any duty on the part of the CEIC to disclose the documents relied upon in reaching the Objections Decision.  That is simply another way of suggesting that the reasons for the decision should be given.  For the same reasons that lead to the conclusion there was no duty to give reasons, namely that the decision was not aberrant and fairness does not dictate a need for reasons, I see no substance in this point.

44.  As Mr Yu rightly pointed out in his submissions, it would be very odd if, having decided that fairness did not require reasons to be given, it were then to be held that the duty of candour required the disclosure of documents which formed the basis of the decision.

Conclusion

45.  Rather than seeking to challenge the substantive decision reached by the CEIC in respect of the Railway Scheme, i.e. the Objections Decision, the intended judicial review seeks to isolate matters on the periphery of the dispute.  For the reasons set out above, I do not think there is a reasonably arguable basis for these peripheral challenges.

Costs

46.  The Judge made no order for costs below.  That was a proper exercise of discretion and there was no cross-appeal against that costs order.

47.  At the conclusion of the hearing, we ordered that the applicants should pay the CEIC’s costs of the appeal, to be taxed if not agreed, with a certificate for two counsel.

48.  Although generally speaking an applicant will not be ordered to pay the costs of a putative respondent on an inter partes application for leave unless there are good reasons to do so, it does not follow that there is any such general rule in respect of the costs of an appeal: see Sky Wide Development Ltd v Building Authority [2011] 5 HKLRD 202 at §34.  Here, the applicants were not making the application for leave to apply for judicial review in the public interest.  The Judge explained his reasons for refusing leave and the appeal raised no new matter of substance.  For broadly the same reasons, we reached the same conclusion as the Judge that the applicants’ case did not satisfy the threshold requirement for leave.  In the circumstances, an order that the applicants pay the costs of the appeal is appropriate.

Hon Barma JA:

49.  I agree with the Reasons for Judgment of Fok JA.

Hon McWalters J:

50.  I agree with the Reasons for Judgment of Fok JA.