THE INCORPORATED OWNERS OF TAK FAN LAU v. THE BUILDING AUTHORITY

HCAL 2206/2020

[2021] HKCFI 902

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 2206 OF 2020

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D E C I S I O N

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INTRODUCTION

1.  This is an application for leave to apply for judicial review of the decision (“the Decision”) of the Building Authority (“BA”) on 7 October 2020 refusing to withdraw the Building Order No CUC/109-11/0001/15 dated 14 December 2018 (“the Building Order”).

BASIC FACTS

2.  The Applicant is the incorporated owners of Tak Fan Lau (“the Building”), at Nos 2-20, Tak Wah Street, Tsuen Wan, New Territories, Hong Kong, erected upon Lot No 2149 in Demarcation District No 449 (“the Lot”).  The Applicant was incorporated on 8 July 1987.

3.  Adjacent to the Building, on one side within the Lot, is a private lane (“the Lane”) which, apparently, has been adversely possessed since around 1966.  At present, the Lane is occupied by Wing Fat Aluminium & Steel Gate Limited (“Wing Fat”) carrying on business in the name of Wing Fat Metal and Sanitary Ware under a tenancy granted in 2018 by Tse Choi Chun (“Madam Tse”), the widow of the late Chong Kong Sing, deceased (“the Deceased”), who first erected a structure on the Lane and carried on business there as adverse possessor in 1966.  The Deceased passed away in 2014.

4.  It is not in dispute that, (i) subject to the issue of adverse possession, the Lane is a “common part” of the Building, and (ii) the structures on the Lane constitute unauthorised building works for the purpose of the Buildings Ordinance, Cap 123 (“the Ordinance”).  In what follows, references to “Section” or “s” shall be to the Ordinance.

5.  On 14 December 2018, BA issued and served the Building Order on the Applicant requiring it to (i) demolish the structures on the Lane, and (ii) reinstate the parts of the Building so affected in accordance with the plans approved by BA, such works to be commenced within 30 days, and completed within 60 days, of the date of the Building Order.

6.  On 9 May 2019, an inspection of the Lane by BA’s consultant revealed that the structures complained of remained intact.  By a letter dated 18 September 2019, BA informed the Applicant that, in view of its failure to comply with the Building Order, he was contemplating the institution of prosecution of the Applicant under s 40(1BA).

7.  According to the Applicant:

(1)  When it received the Building Order, it did not know that the Lane was within the boundary of the Lot[1].

(2)  On 1 March 2019, the Applicant instructed Ho & Tam, its current solicitors, to assist in dealing with the Building Order.  On or about 24 April 2019, Ho & Tam engaged a professional surveyor to ascertain whether the Lane was within the boundary of the Lot.  On or 28 July 2019, the surveyor advised the Applicant that the Lane was within the boundary of the Lot[2].

8.  On 30 August 2019, the Applicant commenced an action in the District Court (DCCJ No 4712 of 2019, “the DC Action”) against Wing Fat to (i) recover vacant possession of the Lane, and (ii) require Wing Fat to dismantle and remove the structures thereon and reinstate the Lane to its original condition, with a view to complying with the Building Order.  Subsequently, Madam Tse was joined as the 2^nd Defendant in the DC Action.

9.  By a letter to the Buildings Department (“BD”) dated 3 October 2019, Ho & Tam informed BD of the DC Action and requested BD to withhold taking action under the Building Order until the completion of the civil action.

10.  In their respective Defence / Defence and Counterclaim filed on 11 October 2019 and 31 October 2019, Wing Fat and Madam Tse raised the defence of adverse possession of the Lane for over 12 years since the 1970s/1966, and contended that the paper owner’s title to the Lane had been extinguished by virtue of ss 7, 8 and 17 of the Limitation Ordinance, Cap 347.

11.  By a letter to BD dated 5 November 2019, Ho & Tam informed BD of the defence of adverse possession of the Lane raised by Wing Fat and Madam Tse, and stated that the Applicant “might admit adverse possession of the subject land by [Madam Tse], and hence the subject land no longer forms part of the common area of [the Applicant’s] building, [the Applicant] may not have the power to evict the Defendants, nor liable under the captioned Building Order”.  Ho & Tam further stated that they urgently needed to know BD’s position in respect of the Building Order in view of the defence of the adverse possession, and threatened to take legal action against BD to determine the validity of the Building Order unless a reply was received within 14 days.

12.  By a letter in reply dated 6 November 2019, BA informed Ho & Tam that the request to withhold taking action under the Building Order could not be acceded to, and that failure to commence/complete the works as required by the Building Order would amount to non-compliance, thereby entitling BA to take action under ss 24(3) and 40(1BA).  BA repeated the same in a further letter to Ho & Tam dated 21 April 2020.

13.  On 3 March 2020, Wing Fat and Madam Tse’s solicitors (Kent Tam & Co) provided various documents to the Applicant to support their claim of adverse possession.

14.  The Applicant considered that it had no evidence to dispute the defence of adverse possession raised by Wing Fat and Madam Tse.

15.  By a letter dated 5 August 2020, Ho & Tam (i) sent copies of the aforesaid documents received from Kent Tam & Co to BD, (ii) stated, in reliance upon the judgment of the Court of Appeal in Wong King Lim v Incorporated Owners of Peony House [2013] 4 HKC 295, that “an incorporated owners had no right to enforce against squatter after extinguishment of title”, and (iii) demanded BD to withdraw the Building Order and vacate the registration of the same in the Lands Registry against the Building within 21 days, failing which judicial review proceedings would be instituted against it.

16.  In a letter to Ho & Tam dated 19 August 2020, Kent Tam & Co expressed their willingness to deal with the matter concerning the Building Order directly with BD.  Ho & Tam informed BD of the same by letters dated 28 August 2020 and 31 August 2020.

17.  By a letter to Ho & Tam dated 7 October 2020, BA refused to accede to the Applicant’s demand that the Building Order be withdrawn (ie the Decision).  BA’s letter stated as follows:

“ I refer to your letters dated 5 August 2020, 28 August 2020 and 31 August 2020 requesting to withdraw [the Building Order] which required the work specified therein to be completed on 11 February 2019.

After considering the circumstances of this particular case, I write to inform you that your request above cannot be acceded to. The document you submitted as provided by the 1^st and 2^nd Defendants of the legal proceeding of District Court Civil Action No. 4712/2019 cannot be considered as a proof of ownership of the concerned lane under the Buildings Ordinance. Please provide solid evidence for the confirmation of change in ownership of the concerned lane, entitling me to issue Order to the new owner under section 24(2)(a) of the Buildings Ordinance.

Please also note that neither the 1^st, 2^nd Defendants nor their solicitor had contacted me for dealing with the captioned Order.”

APPLICATION FOR LEAVE TO APPLY FOR JUDICIAL REVIEW

18.  By a Form 86 dated 3 November 2020, the Applicant made the present application for leave to apply for judicial review of the Decision.  The Applicant’s grounds of judicial review are stated in §20 of the Form 86, as follows:

“(a)  As their title to the Lane has been extinguished, the owners of the Building are not the owner of the Lane within the meaning of section 24(2)(a) of the Buildings Ordinance. The Building Authority erred in law, alternatively acted unreasonably, in refusing to withdraw the Building Order against the Applicant.

(b)  In demanding the Applicant to provide ‘solid evidence’ for the confirmation of change in ownership of the Lane, the Building[s] Department ignored the fact that the extinguishment of the Building owners’ title, and the acquisition by [Madam Tse] of the title, to the Lane is by the operation of the law of adverse possession, and as such there is no title document to confirm the change in ownership. The Building Authority is demanding for the impossible, and as such, has acted unreasonably.

(c)  As [Madam Tse] has acquired title to the Lane and is prepared to deal directly with the Building Authority, the Building Authority should have withdrawn the Building Order against the Applicant, and instead sought to serve on [Madam Tse] the Building Order.”

19.  In the Form 86, the Applicant seeks an order from the court that BA should withdraw the Building Order served on the Applicant.

THE APPLICANT HAS FAILED TO EXHAUST ALTERNATIVE REMEDY

20.  Generally speaking, where there is an available statutory appeal procedure to challenge a decision made by a public body, the court would not permit judicial review to be used to challenge the appealable decision.  This principle is well established in Hong Kong (see Stock Exchange of Hong Kong Ltd v New World Development Co Ltd (2006) 9 HKCFAR 234, at §§110, 114-117; Lee Chick Choi v The Director of Legal Aid [2019] HKCA 275, at §16; Canray International Ltd v Commissioner of Inland Revenue [2012] 4 HKLRD 792, at §26; and Koo Ming Kown v Commissioner of Inland Revenue, CACV 182/2013 (9 June 2014), at §11).

21.  On behalf of the Applicant, Mr Cheung argues that ‘[t]here is no provision in the Buildings Ordinance which is concerned with the withdrawal of an order made under section 24(1) of the Buildings Ordinance.  The Applicant is concerned whether its challenge of the Building Authority’s refusal to withdraw the Building Order is within the ambit of section 44(1) of the Buildings Ordinance.  The Applicant is of limited means and is concerned about the waste of costs if its challenge of the refusal to withdraw the Building Order is not within the ambit of section 44(1).”[3]

22.  S 44(1) states as follows:

“A person aggrieved by any decision made by the Building Authority in the exercise of a discretion conferred on him under this Ordinance may, except where this Ordinance provides otherwise, appeal from that decision in accordance with this Part and regulations made under section 38(1B).”

23.  Mr Cheung, while maintaining that BA has the power to withdraw the Building Order, submits that such power is an inherent power and not one conferred under the Ordinance, and thus it is unclear whether the Applicant can lodge an appeal against the Decision under s 44(1).

24.  Under s 46 of the Interpretation and General Clauses Ordinance (Cap 1):

“Where any Ordinance confers power upon any person to make, grant, issue or approve any proclamation, order, notice, declaration, instrument, notification, licence, permit, exemption, register or list, such power shall include power -

(a)  to amend or suspend such proclamation, order, notice, declaration, instrument, notification, licence, permit, exemption, register or list;

(c)  to withdraw approval of any proclamation, order, notice, declaration, instrument, notification, licence, permit, exemption, register or list so approved”.

25.  In my view, it is clear that BA has power under s 46 of Cap 1 to withdraw the Building Order.  Further, such power is “included” within the power of BA to issue the Building Order under s 24(1), and can properly be regarded as a power conferred on him under the Ordinance.  It follows that the Decision is appealable under s 44(1).

26.  The Applicant’s concern about wasted costs if its challenge to BA’s refusal to withdraw the Building Order is not within the ambit of s 44(1) cannot be a good reason for the Applicant to proceed with the challenge by way of judicial review.  There is equally a risk of wasted costs should the true position be that the Decision is appealable under s 44(1). The fact that the Applicant may now be out of time to appeal the Decision under s 47 is also not a good reason to grant leave to apply for judicial review.

27.  In all, I am of the view that the Applicant could, and should, have challenged the Decision by way of an appeal under s 44(a). There are no exceptional circumstances in the present case to justify the Applicant’s failure to proceed under the statutory appeal avenue to challenge the Decision.  For this reason, I would not grant the Applicant leave to apply for judicial review of the Decision.

28.  In passing, I should mention that the statutory appeal procedure under s 44(1) was also available to the Applicant to challenge the Building Order issued by BA on 14 December 2018.  I shall come back to the relevance of the Applicant’s failure to challenge the Building Order later when I consider the question of delay.

THE APPLICATION FOR LEAVE TO APPLY FOR JUDICIAL REVIEW IS SUBSTANTIALLY OUT OF TIME

29.  An application for leave to apply for judicial review of a decision of a public authority must be made promptly and in any event within three months from the date when grounds for an application first arose (Order 53, r 4(1) of the Rules of the High Court).  BA issued the Building Order on 14 December 2018.  That was the date when grounds for an application to challenge the Building Order first arose, and the 3-month period for making an application for leave to apply for judicial review of the Building Order began to run as from that date.  Instead of challenging the Building Order, the Applicant now seeks to challenge the subsequent decision of BA made on 7 October 2020 refusing to withdraw the Building Order.  It is well established that an applicant cannot avoid the time requirement by the device of seeking a “new” decision from the decision-maker, such as by requesting him to “reconsider”, “withdraw” or “cancel” an earlier decision (see Lo Siu Lan v Hong Kong Housing Authority, CACV 378/2004 (unreported, 17 December 2004), at §39; Super Lion Enterprises Ltd v Commissioner of Rating and Valuation, HCAL 71/2005 (unreported, 6 October 2006), at §128; Martin Tao Ming Lee v Secretary for Civil Service, HCAL 82/2010 (unreported, 8 August 2011), at §8; and E T Investment Limited v Director of Health, HCAL 13/2015 (unreported, 3 February 2016), at §§17-18; and Nisa Azizan v Director of Immigration, HCAL 203/2015 (unreported, 15 April 2016), at §29).

30.  In my view, the time for making an application for judicial review in this case commenced to run from 14 December 2018.  The application ought to have been made promptly and in any event on or before 13 March 2019.  The present application was not made until 3 November 2020, which was more than 19 months out of time.

31.  There has undoubtedly been delay in the present application.  Where there has been delay in applying for leave to apply for judicial review, the court’s approach in deciding whether to grant an extension of time to the applicant to make the application is well established (see AW v Director of Immigration [2016] 2 HKC 393).  The court should take into account the following non-exhaustive list of factors: (i) length of delay, (ii) explanation for the delay, (iii) merits of the substantive application, (iv) prejudice, and (v) whether any question of general public importance is raised in the application.

(i)  Length of delay

32.  The delay in the present case is more than 19 months.  As stated by the Court of Appeal in AW, ante, at §37(3)(iii), “[w]here an applicant is many months out of time, leave may be refused ‘however strong the complaint might otherwise be’… An Applicant who sleeps upon his rights may be barred from pursuing them in judicial review even though he may have a meritorious case”.

(ii)  Explanation for the delay

33.  The Applicant’s explanation for the delay is that it did not know that the Lane was within the boundary of the Lot when it received the Building Order in December 2018.  However, quite apart from the fact that the Applicant has been the incorporated owners of the Building for over 30 years by the time that it received the Building Order, I do not see that it was a complicated, or time consuming, exercise for the Applicant to engage a building surveyor to find out the true position.  It would appear, form the matters stated in §7 above, that (i) the Applicant did not instruct solicitors to deal with the Building Order until 1 March 2019, by which date the time for the Applicant to complete the works as required by the Building Order had already expired, and (ii) it took the solicitors more than 4 months to obtain a building surveyor’s advice on 28 July 2019 that the Lane fell within the boundary of the Lot.  The Applicant then commenced legal action against Wing Fat to recover vacant possession of the Lane in August 2019, and was met by the defence of adverse possession raised by Wing Fat and Madam Tse.  However, the Applicant had been the incorporated owners of the Building since 1987, and must have appreciated that a third party or third parties had physically occupied the Lane ever since it became the incorporated owners.  It should have been obvious to the Applicant’s solicitors, and thus to the Applicant, that the occupier(s) might claim adverse possession of the Lane.  The Applicant did not ask BA to withdraw the Building Order until 5 August 2020, received BA’s reply on 7 October 2020, and made the present application for leave to apply for judicial review on 3 November 2020.

34.  In my view, the Applicant has failed to offer a good explanation for the delay.

(iii)  Substantive merits

35.  When considering the merits of an intended application for judicial review in the context of determining whether to grant an extension of time to apply for leave to apply for judicial review, the court is not required, and often is not in a position, to form a definitive view. All that is required is for the court to make a provisional assessment of the merits of the intended application.

36.  My provisional views on the 3 grounds of judicial review are as follows.

37.  In respect of ground (a) referred to in §20 of the Form 86:

(1)  The question of whether the Building Order could be served on the Applicant depends on the true construction of the word “owner” in s 24(2)(a).

(2)  S 24(2)(a) provides that an order made under subsection (1) shall be served on “in the case of a building or building works … the owner of the land or premises on which the building has been erected or on which the building works have been or are being carried out”.

(3)  The expression “owner” is defined in s 2(1) to include “any person holding premises direct from the Government whether under lease, licence or otherwise …”.

(4)  This definition of “owner” is applicable to s 24: see King Glare Ltd v Secretary for Justice [2008] 6 HKC 450, at §44, per Lam J (as he then was) -

“Giving a purposive interpretation to Section 24, I do not think the context requires a definition other than that laid down under Section 2 for the expression ‘owner’. The legislature has chosen a wide definition of ‘owner’ under Section 2(1) extending the same beyond the general meaning of legal ownership and this is necessary to facilitate enforcement action against unauthorized structures. A restricted definition would frustrate the operation of Section 24.”

(5)  The co-owners of the Building hold the relevant premises direct from the Government under the relevant Government lease, and are therefore the “owner” of the Lane under the said statutory definition.

(6)  Section 16 of the Building Management Ordinance, Cap 344, provides that -

“When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly -

(a) any notice, order or other document which relates to any of the common parts of the building may be served upon the corporation at its registered office”.

(7)  Hence, the Building Order was properly served on the Applicant.

(8)  Mr Cheung argues that since the title of the co-owners of the Building to the Lane has been extinguished by adverse possession, it ceases to be a common part of the Building, and the Applicant does not have any right over the Lane which it can exercise. Hence, it is an error of law for BA to serve the Building Order on the Applicant as it is “neither the owner of the Lane within the meaning of the Buildings Ordinance nor the person who can exercise the right of the owner of the Lane under section 16 of the Building Management Ordinance”[4]. I do not accept this argument. The Director had no knowledge of the claim of adverse possession raised by Wing Fat and Madam Tse at the time of the issue of the Building Order. It could not have been the intention of the legislature to require BA to resolve an issue of adverse possession (which often requires resolution of complicated issues of fact going back many years) before he can issue and serve a building order (see the observation of Lam J in King Glare Ltd, ante, at §37).

(9)  Anyhow, it is well established that “a squatter does not succeed to nor take over the title of the paper owner whom he has dispossessed … In Fairweather, the majority of the House of Lords held that the paper owner’s title was only extinguished vis-à-vis the squatter. It remains as a title as between the paper owner and his lessor and it could be surrendered, and upon such surrender the lessor’s right of possession started to accrue and basing on that right the lessor could recover the land from the squatter. This outcome vividly demonstrates the proposition that a squatter does not acquire the title of the paper owner and the Limitation Ordinance does not operate as a statutory conveyance of that title to the squatter” (Wong King Lim v Incorporated Owners of Peony House [2013] 4 HKC 295, at §37 per Lam JA).

(10)  Accordingly, the co-owners of the Building remain the Government lessee for the purpose of the definition of “owner” in s 2(1), and it was correct for BA to serve the Building Order on the Applicant.

(11)  As to the question of whether BA should, in the exercise of its discretion, withdraw the Building Order upon proof to his satisfaction that the title of the co-owners of the Buildings to the Lane has been extinguished by adverse possession vis-à-vis Wing Fat/Madam Tse, that is a matter which ought properly to be ventilated in an appeal before the Appeal Tribunal (Buildings), not in an application for judicial review. To succeed in an application for judicial review on the Wednesbury unreasonableness ground, the Applicant will have to overcome a high hurdle. On the facts of this case, I have considerable reservation as to whether this hurdle can be overcome.

38.  In respect of ground (b) referred to in §20 of the Form 86, I consider that it is primarily a matter for BA to decide what evidence he would regard as satisfactory or sufficient to show that Wing Fat and/or Madam Tse have successfully extinguished the title of the co-owners of the Building to the Lane by adverse possession.  A court declaration to that effect will no doubt suffice.  Whether some weaker evidence (such as the pleadings, electricity bills, business registration records, old photographs, and tenancy agreement provided by the Applicant) is good enough is for BA to decide.  I do not consider BA to have acted unreasonably in the Wednesbury sense in not accepting such documents as sufficient proof of adverse possession in the present case.

39.  Lastly, in respect of ground (c) referred to in §20 of the Form 86, I do not see that it adds anything to the Applicant’s case that Wing Fat and/or Madam Tse are prepared to deal directly with BA.

40.  Overall, leaving aside the question of alternative remedy, I consider that the Applicant’s intended application for judicial review is, at best, arguable.  On any view of the matter, I do not consider the merits of the intended application to be strong.

(iv)  Prejudice

41.  If the Applicant is indeed unable to recover vacant possession of the Lane from Wing Fat and Madam Tse by reason of their claim of adverse possession, the Decision, if allowed to stand, will undoubtedly cause it prejudice.

42.  On the other hand, the Director will also suffer prejudice if time is extended for the Applicant to make the present application for leave to apply for judicial review.  As stated by the Court of Appeal in Wong Ho Tong v Director of Lands [2018] HKCA 330, at §71: “The undue delay on the part of the applicant in seeking leave is detrimental to good administration because it caused substantial delay to the process of removal of the unauthorized structures on the land”.

(v)  No question of general public importance

43.  The issue of law raised in the intended application for judicial review concerns the proper construction of the word “owner” in s 24(2).  I consider it to be clear that the co-owners of the Building remain the “owner” of the Lane for the purpose of service of the Building Order under s 24(2) even if their title to the Lane has been extinguished by adverse possession vis-à-vis Wing Fat/Madam Tse.  No question of general public importance which is reasonably arguable arises for determination in the intended application for judicial review.

CONCLUSION

44.  Having come to the view that the Applicant should not be granted leave to apply for judicial review because it has failed to exhaust alternative remedy, I would not be prepared to grant any extension of time to the Applicant to apply for leave to apply for judicial review.

45.  Even if, contrary to my view, leave to apply for judicial review should not be denied merely on the ground that the Applicant has failed to exhaust alternative remedy, the substantive merits of the intended application are not strong.  The delay in the present case is very substantial, and there is no good explanation for the delay.  The Applicant would suffer prejudice if time to apply for judicial review is not extended, but BA would also suffer prejudice if time to apply for judicial review is extended. There is no question of law of general public importance to be determined in the intended application for judicial review.  Overall, I would decline to exercise my discretion to grant any extension of time to the Applicant to make the present application for leave to apply for judicial review.

DISPOSITION

46.  The application for leave to apply for judicial review is dismissed.

47.  The principles governing an award of costs in an unsuccessful application for leave to apply for judicial review are well settled (see Leung Kwok Hung v President of the Legislative Council (No 2) (2014) 17 HKCFAR 841, at paragraph 17), and do not have to be repeated here.  I consider that the Applicant should pay the costs of BA in this case, because (i) BA filed evidence and attended the inter-partes leave hearing pursuant to the court’s directions, and has provided substantial and helpful assistance to the court; (ii) the Applicant has failed to exhaust alternative remedy, and (iii) the Applicant has substantially delayed in making the present application.  I make an order that the Applicant shall pay BA’s costs of this application, including the costs of the hearing on 30 March 2021 and all reserved costs (if any), to be taxed if not agreed.