CHEUNG SHING KI v. THE HOUSING APPEAL PANEL AND ANOTHER

HCAL 66/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATION LAW LIST
NO. 66 OF 2000

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J U D G M E N T

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1. This is a judicial review application by the Applicant Cheung Shing Ki against the decision of the Hong Kong Housing Authority (HKHA) to terminate the tenancy in respect of the unit at Flat 2819, Tung Shing House, Lei Tung Estate, Ap Lei Chau, Hong Kong (the said flat) and the decision of the Appeal Tribunal upholding such termination.

2. The Applicant is a retired police officer and the said flat was offered to him and his children to replace his police quarters when he retired in 1988.

3. Two of his four children had since moved out of the said flat and at the material time, only the Applicant and his two sons occupied it.

4. Since August 1996, the Applicant had not been punctual in paying rent for the said flat and on 31 December 1997, the tenancy in respect of the said flat was terminated by HKHA.

5. At the request of the Applicant, HKHA re-granted a new tenancy of the said flat to him. Clause II (1) of the new tenancy agreement dated 10 February 1998 expressly provides that the Applicant was to pay the rent in advance on the first day of every calendar month. Clause IV (2) further provides that "if the rent payable hereunder or any part thereof shall be unpaid for fourteen days after becoming payable (whether formally demanded or not) ............... it shall be lawful for the Landlord at any time thereafter to re-enter upon the said flat or any part thereof in the name of the whole and thereupon the tenancy hereby created shall absolutely determine."

6. Since September 1998, the Applicant again failed to pay rent punctually. Despite repeated warnings, both verbal and written, the Applicant had failed and/or refused to pay the rent for the months of January and February 1999.

7. A letter dated 26 February 1999 issued by HKHA to the Applicant warned the Applicant that unless he paid up all outstanding rent before 11 a.m. on 27 February 1999, a Notice to Quit (NTQ) would be issued against him after 11 a.m. the same day. Prior to that, there were in fact warning letters, with a final one issued on 22 February 1999.

8. The warning letter was ignored. HKHA issued a NTQ dated 27 February 1999 to the Applicant terminating the tenancy of the said flat with effect from 31 March 1999.

9. The Applicant through his son wrote a letter to HKHA which was received on 4 March 1999. In the letter it was stated:-

"On 27th February 1999, I received a Notice to Quit from Housing Authority requesting me to deliver up vacant possession of the aforesaid premises. I fully understand that it was the result of my failure to pay two months' rent. This incident was wholly caused by my family disputes. I hope your department can continue my tenancy."

10. The explanation failed to persuade HKHA to cancel the NTQ and the Applicant appealed to the Appeal Tribunal. The Appeal Tribunal upheld the NTQ. In its written decision, the Appeal Tribunal stated the following: -

"The appellant has habitually (been) paying rent late since August 1996. During the period, the Housing Authority has issued 68 letters of demand of paying rent. This is also the 2nd time for the Housing Authority to terminate his tenancy. The members of the committee are of the view that the Appellant fails to and without intention to oblige his obligation to pay rent on time and is in breach of section II (1) of the Tenancy Agreement. Therefore, the committee of the Appeal Tribunal unanimously decided to uphold the Notice to Quit issued by the Housing Authority to the Appellant."

11. The Applicant's major complaint rests on a Management Branch Circular No.19/97 (Circular 19) which was issued to Housing Managers/Estates in October 1997.

12. The relevant section of Circular 19 is its Part B relating to enforcement action against rent arrears and it provides the following: -

"14. To sustain the good works in substantially reducing domestic rent arrears since end of last year, and with the goal to further reducing rent arrears eventually, the existing practice of serving NTQs on tenants incurring two months' rent arrears and against habitual late payers should continue. Actions to be taken after system implementation are elaborated below -

NTQs Against Two Months' Rent Arrears

15. Should the rent arrears remain unpaid four days after the issue of the Final Warning Letter, recommendation should be made by HMs to DSHMs to terminate the tenancy by giving one month's notice. NTQs Against Habitual Late Payers

16. At the RMD Weekly Session held on 29 September 1997, it was decided with immediate effect that tenants who pay their monthly rent in arrears for a consecutive period of four months should be classified as habitual late payers and their tenancies should also be terminated by serving NTQs in the fifth month. The new computer system will start building up records upon implementation and estate staff may start utilizing the computer-generated list of habitual late payers from March 1998 onwards for action. Until then enforcement action against this category of rent defaulters should continue by using existing records. For cases of this category a separate final warning letter, as per sample at Annex 8, should be served on the 15th of the fourth month. If the warning is not taken heed by the tenant who still pays the rent for the fourth consecutive month in arrears, NTQ should be issued on the last working day of the fourth month. In this connection a covering letter which goes together with the standard NTQ is provided at Annex 9 for reference."

13. It is the Applicant's case that HKHA had not given its reasons for terminating the tenancy in accordance with the grounds in Circular 19 as the NTQ issued to the Applicant on 27 February 1999 did not specify whether it was issued because there was two months' rent arrear or whether the Applicant was a habitual late payer.

14. The suggestion is that the Applicant was not an habitual late payer within the meaning of Circular 19 as he had only paid his rent late for three consecutive months and not four and there were not yet two months' rent arrears as the Applicant was in default of payment for rent from 1 January to 27 February 1999 only.

15. It is also suggested that the final warning letter was issued on 26 February 1999 and the NTQ was issued the next day and not four days after the final warning letter. In any event, the final warning letter was not in the form sampled at Annex 3.

16. Mr Lam, on behalf of the Applicant suggests that where a public body publishes certain procedure or a set of policies, a citizen has a legitimate expectation that the procedure would be implemented and the policy would be adhered to unless and until a new set of policy has been properly drawn up and published. He relies on R. v. Secretary of State for the Home Department, Ex parte Ruddock & Others [1987] 1 WLR 1482, R. v. Secretary of State for the Home Department, Ex parte Asif Mahmood Khan [1984] 1 WLR 1337, Attorney General of Hong Kong v. Ng Yuen Shiu [1983] 2 AC 629.

17. In Re Westminster CC [1986] 668, Lord Bridge said at p.692,

"The courts have developed a relatively novel doctrine in public law that a duty of consultation may arise from a legitimate expectation of consultation aroused either by a promise or by an established practice of consultation."

18. Mr Lam does not suggest that there had been a promise by the HKHA to the Applicant that the content of Circular 19 will be adhered to in dealing with failure to pay rent punctually. He suggests that an inference can be drawn of such an established practice as it was a circular issued to all Housing Managers of Estates in Hong Kong and they were expected to follow such practice.

19. But before a person can have any expectation, legitimate or otherwise, he must be aware of the facts which reasonably give rise to such an expectation.

"Whether an expectation exists is, self-evidently, a question of fact. If a person did not expect anything, then there is nothing that the doctrine of legitimate expectation can protect. So a person unaware of an undertaking made by a public authority, cannot expect compliance with that undertaking .............. Although a person who seeks to rely upon an expectation must be aware of it, the better view is that he need not have relied to his detriment upon it for what would be to assimilate legitimate expectations to estoppel. But a taxpayer, it seems, must rely upon a representation from the Revenue before his expectation will be protected." (Wade and Forsyth, Administrative Law 8th Edition Pages 496-497.)

20. In R. v. Jockey Club, ex p RAM Racecourses [1993] 2 All ER 225, Stuart-Smith LJ describes legitimate expectation in the following terms at p. 236:

"........... The law in relation to legitimate expectation created by a public body was concisely stated by Bingham LJ in the recent case of R v Board of Inland Revenue, ex p MFK Underwriting Agencies Ltd [1990] 1 All ER 91 at 110....... Bingham LJ said:

'In so stating these requirements I do not, I hope, diminish or emasculated the valuable developing doctrine of legitimate expectation. If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. If in private law a body would be in breach of a contract in so acting or estopped from so acting a public authority should generally be in no better position. The doctrine of legitimate expectation is rooted in fairness. But fairness is not a one-way street. It imports the notion of equitableness, of fair and open dealing, to which the authority is as much entitled as a the citizen.'

The doctrine has many similarities with the principles of estoppel in private law. In my judgment the matters that the applicant has to prove in this case are these.

(1) A clear and unambiguous representation (see per Bingham LJ in Ex p MFK Underwriting Agencies Ltd [1990] 1 All ER 91 at 110 .........

(2) That since the applicant was not a person to whom any representation was directly made it was within the class of persons who are entitled to rely upon it; or at any rate that it was reasonable for the applicant to rely upon it without more (see A-G of Hong Kong v Ng Yuen Shiu [1983] 2 All ER 346 at 351, .........

(3) That it did so rely upon it.

(4) That it did so to its detriment. While in some cases it is not altogether clear that this is a necessary ingredient, since a public body is entitled to change its policy if it is acting in good faith, it is a necessary ingredient where, as here, an applicant is saying, 'You cannot alter your policy now in my case; it is too late'.

(5) That there is no overriding interest arising from their duties and responsibilities for the proper conduct or due encouragement of horse-racing as required in their charter which entitled the Jockey Club to change their policy to the detriment of the applicant."

21. Circular 19 is clearly an internal circular setting out the policy of the HKHA pertaining to late payment or non-payment of rent by tenants. It is not disputed that the Applicant was not aware of such circular until the hearing before the Appeal Tribunal. There is no suggestion that the Applicant could rely on the circular, let alone did rely upon it and/or to his detriment. A case of legitimate expectation simply has not been made out.

22. Indeed Circular 19 could not have been intended to be made known to nor acted upon by any tenant or else tenants of public housing estates could have delayed in the payments of rent for two months and/or could have failed to pay rents punctually for three consecutive months without any consequence. If any public housing tenants were to act according to Circular 19, the tasks of HKHA would be rendered intolerable. It will not be possible for the HKHA to perform its duties and functions properly.

23. Even if a case of legitimate expectation had been made out, I am persuaded that HKHA had in fact complied with Circular 19 in dealing with the Applicant's case.

24. Despite the suggestion by the Applicant, the letter accompanying the NTQ sent to the Applicant clearly stated that the reason for issuing the NTQ was because the Applicant had not paid the rent since January 1999 and was in breach of Clause II (1) of the tenancy agreement.

25. The Appeal Tribunal also clearly spelt out in its decision that the Applicant "failed and without intention to oblige his obligation to pay rent on time and was in breach of section II (1) of the tenancy agreement" before deciding to uphold the NTQ issued by HKHA to the Applicant.

26. The Appeal Tribunal was perfectly entitled to refer to the fact that the Applicant "has habitually (been) paying rent late since August 1996". After all the Appeal Tribunal must have regard to the entire background of the case, including the past behaviour of the Applicant as a tenant before it could decide whether to confirm, amend, suspend or cancel the NTQ under section 20(3)(b) of the Housing Ordinance.

27. The suggestion that the Applicant had not been informed of the reason for the termination of the tenancy is unfounded and there can be no doubt that he was perfectly clear as to why his tenancy had been terminated.

28. Under the tenancy agreement in question, rent was payable in advance on the first day of every calendar month. I agree with Mr Ng's submission that as on the 2nd day of February 1999, there were already arrears of rent for two months and in accordance with Circular 19, HKHA could have issued a NTQ.

29. The fact that HKHA issued the NTQ on 27 February 1999, which was the last working day of the month could not give rise to any legitimate compliant, particularly when HKHA between 8 January 1999 and 26 February 1999 had issued no less than 8 warning letters to the Applicant urging him to pay up his rent in arrears.

30. There was a final warning letter delivered on 22 February 1999 and in the letter dated 26 February 1999, the Applicant was again reminded that unless he paid up the arrears of rent before 11 a.m. on 27 February 1999, a NTQ would be issued. The suggestion that as on 27 February 1999, there were arrears of rent for only one month and 27 days is artificial and wrong.

31. The Applicant also argues that his son had attempted to pay up the arrears of rent in the morning of 27 February 1999 but HKHA somehow refused to accept it. I do not wish to say too much about this aspect except that having heard the evidence of the Applicant's son, Cheung Sau Yee and that of HKHA's staff Leung Tsui Yan, I have not the slightest hesitation in concluding that the Applicant's assertion is a complete fabrication.

32. There was no conceivable reason for HKHA to refuse to accept the rent from the Applicant. The Applicant had not before the commencement of the present judicial review application suggested that HKHA refused to accept his payment of rent on 27 February 1999.

33. The matter was not raised in the letter received by the Appeal Tribunal on 4 March 1999. It was also not raised in a letter dated 10 July 1999 to a District Board Councillor. Indeed in the letter, the Applicant accepted that there was a non-payment of rent for 2 months. In a statement of complaint to the Ombudsman's office dated 16 July 1999, the Applicant expressly stated that his son only attempted to settle the arrears of rent on 1 March 1999.

34. I find it slightly disturbing that the Applicant's son who is a serving police officer would appear in court and lied about such matter on oath.

35. The applicant also complains that the decisions by HKHA and the Appeal Tribunal to terminate the tenancy were too harsh and were totally out of proportion to the "misconduct" of the Applicant. I do not agree.

36. Under the tenancy agreement, a delay in the payment of rent for 14 days may result in the termination of the tenancy and the Applicant should be aware of it. The undisputed facts indicate that between August 1996 and February 1999, the Applicant delayed in the payment of rent on more than 20 occasions and he had been warned for over 60 times. His tenancy was terminated in December 1997 when the Applicant failed to pay rent punctually. At the request of the Applicant, HKHA re granted a new tenancy to the Applicant and he expressly agreed that he would pay rent punctually in the future.

37. It is indeed difficult to think of a more serious and obvious breach of the tenancy agreement. The Applicant suggests that he had to travel to China frequently due to his illness or perhaps the new family that he had started there. But those matters are not explanation let alone justification for his blatant breach of the tenancy agreement. It is in my view perfectly reasonable for HKHA to terminate the tenancy agreement and for the Appeal Tribunal to confirm such termination.

38. It is perhaps worth mentioning that the court has a very limited role to play in judicial review case against the decisions of administrative tribunals. It is not for the court to say if a particular decision is a good or a bad decision and it is not for the court to usurp the duties and functions of such tribunals. The court can only interfere if the decisions of the tribunals are irrational and are ones that no reasonable tribunal could reasonably have come to.

39. The Applicant also complains that he had been treated unfairly in the hearing before the Appeal Tribunal. In particular it is suggested that he was given voluminous documents shortly before the hearing and he could not therefore properly digest the documents to enable him to properly address the tribunal. He also suggests that representatives of HKHA entered the hearing room before him and left after him which gives rise to suspicions of improper conducts of such representatives and that the Appeal Tribunal was misled about the Applicant's entitlement to interim housing.

40. At the hearing before the Appeal Tribunal, the only statement made by HKHA on mid-way housing is as follows: -

"If Mr Cheung would really have no place to live in by reason of our taking possession of the unit, HA would consider arranging him to move to the mid-way transitional housing in the New Territories."

41. There can be no doubt that the Appeal Tribunal was fully aware of the family income of the Applicant. Under the new policy on interim housing which was effective as from 15 April 1999, tenants of terminated tenancy would have to subject to means test, i.e. they would only be entitled to stay at the interim housing for 1 year and have to pay license fee equivalent to market rent if their family income exceeds the level of income specified in the circular. Prior to the change, tenants were not subject to the means test.

42. Apparently at the hearing before the tribunal, representatives of HKHA were not aware of the change of policy. But there was no question of the Appeal Tribunal being misled when it was simply told that HKHA would consider mid-way housing for the Applicant and such arrangement would have to be subjected to the relevant rules and regulations.

43. The voluminous documents referred to by the Applicant are in fact the schedule of the rent payment record of the Applicant, the bundle of reminders and warning letters and Circular 19. The Applicant should be aware of all the documents except Circular 19 to which the Applicant could not have made any response anyway.

44. The court have been supplied with a full transcript of the hearing before the Appeal Tribunal. It clearly demonstrates that the Applicant had been given a full and fair hearing.

45. There is no universal standard of fairness or "fair procedure". If there is no prescribed procedure for a decision, the court will imply such safeguards as may be necessary in order to achieve fairness in the circumstances of the particular case. As Lord Bridge expressly in Lloyd v. McMahon [1987] AC 625 at 702: -

"...the so called rules of natural justice are not engraved on tablets of stone. To use the phrase which better expresses the underlying concept, what the requirements of fairness demand when any body, domestic, administrative or judicial, has to make a decision which will affect the rights of individuals depends on the character of the decision-making body, the kind of decision it has to make and the statutory or other framework in which it operates. In particular, it is well established that when a statute has conferred on any body the power to make decisions affecting individuals, the courts will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduce by way of additional procedural safeguards as will ensure the attainment of fairness."

46. In law, there is no technical procedural irregularity or breach of natural justice. Actual injustice or a real risk of it must be shown. Cumming Bruce LJ succinctly stated the principle in George v. Secretary of State [1979] PCR 609 at 621: -

"........I do not for a moment accept that, on the authorities, there is any ground for the view that there is such a concept known to the law as a technical breach of natural justice. 'A breach of natural justice' means that because of what has happened....either somebody has actually suffered injustice, or there is a real risk that somebody has suffered injustice."

47. Similar observation has been made in R. v. The Chief Constable of the Thames Valley Police ex parte Cotton [1990] IRLR 344 by Stocker LJ at 351: -

"..I agree that there can be no such thing as a 'technical breach of natural justice'. In my view natural justice is to be equated in this regard to 'fairness' and it is only if there is a real risk of injustice or unfairness that a procedure adopted can be properly stigmatized as a procedural impropriety. Whether or not there is a real risk of unfairness must depend on the fact of each case."

48. And by Bingham LJ on the same page:-

"....A test of fairness is to be preferred because, being very general, it can better embrace the almost infinite variety of situations which fall for consideration. The minimum that fairness demands in one case may be much more than fairness requires in another ......... I would readily accept the view........ that there can be no such thing as a technical breach of natural justice ......... since (always assuming the absence of a prescribed statutory procedure) the court is concerned with matters of substance and not mere form, a procedure cannot be unfair in purely technical sense ....."

49. I have considered carefully the entire background of the case and the issues involved in the dispute. I have also examined the record of the appeal hearing together with the complaints of the Applicant. I am not persuaded that there was any procedural irregularity. There was no injustice or unfairness, perceived or actual. The procedure adopted was as fair as it could possibly be.

50. There was no suggestion that the decisions of the HKHA and that of the Appeal Tribunal were unlawful. Such decisions were not Wednesbury unreasonable. The suggestion that there was procedural impropriety and unfairness had not been made out. There was no basis upon which the court could legitimately interfere with those decisions.

51. Quite apart from the significant delay of 9 months from the decision of the Appeal Tribunal to the time when the Applicant applied for judicial review, the application was completely without merit.

52. The application must therefore be dismissed and I so order. I also make an order nisi that the Applicant is to bear the costs of HKHA to be taxed if not agreed. The Applicant's own costs are to be taxed in accordance with Legal Aid Regulations.