Sunevision Holdings Ltd v. Hong Kong Science and Technology Parks Corporation

HCAL 1890/2018

[2019] HKCFI 1253

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
 1890 OF 2018

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Before: Hon G Lam J in Chambers

Date of Hearing: 3 April 2019

Date of Decision: 9 May 2019

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D E C I S I O N

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Background

1.This is an application by the applicant (“SUNeVision”) for leave to amend its Notice of Application for Leave to Apply for Judicial Review (Form 86) in these proceedings.

2.SUNeVision is a company within a group which has been providing data centre services in Hong Kong.  It operates 5 data centres, including one in Tseung Kwan O. 

3.The respondent, the Hong Kong Science and Technology Parks Corporation (“Corporation”), is a statutory body established by the Hong Kong Science and Technology Parks Corporation Ordinance (Cap 565).  Under s 6(1) of that Ordinance, its purposes are to facilitate the research and development and application of technologies and support the development, transfer and use of new or advanced technologies in Hong Kong, and also to “establish or develop premises” where activities related to the above purposes are or are to be carried out, and “to manage and control the land and other facilities comprised in such premises”.

4.The Corporation operates 3 industrial estates in Hong Kong, in Tai Po, Yuen Long and Tseung Kwan O respectively, on land granted by the Government at a nominal premium.  It is therefore in a position to, and does, grant parts of the industrial estates to specific persons, including data centre operators, at rates much lower than the market rates for equivalent space elsewhere in Hong Kong.  These proceedings concern the industrial estate in Tseung Kwan O (“TKOIE”). 

5.Global Switch Hong Kong Ltd (“Global Switch”) is a company within a group that uses the brand name “Global Switch” which develops and operates data centres in Europe and Asia-Pacific.  In 2012 Global Switch successfully tendered for, and became the Corporation’s lessee of, Site C of TKOIE.[1] SUNeVision also tendered through a subsidiary but its bid was unsuccessful.  Global Switch intends to operate a data centre comprising 5 buildings at Site C.  Buildings 1 and 2 were completed in December 2017 and currently serve a customer, Daily‑Tech Hong Kong Co Ltd (“Daily‑Tech”).  The other buildings are under construction.

6.A data centre is a building or space within a building used to house information and communication technology equipment and is generally equipped with the necessary infrastructure such as power supply, cooling facilities and security systems.  According to SUNeVision, data centres fall into one of two colocation models: the “wholesale colocation model” and “retail colocation model” (though it should be noted that this description of and distinction between the two models are not accepted by either the Corporation or Global Switch, who consider that it mis‑characterises the data centre industry in Hong Kong).

(1)  In the wholesale colocation model, the data centre operator designates specific space within the centre for the use for a customer, and grants control over that space to the customer.  This model is typically preferred by large customers who have the internal resources to manage and maintain their equipment in their own dedicated space.

(2)  In the retail colocation model, different customers’ equipment is housed in the same shared space, such in racks or cages, and no customer would have the exclusive use or control of any space in the data centre.  This model generally caters for customers who need only limited space to set up network Point‑of Presence or to house IT equipment.  The data centre operator will also provide “managed services” such as internet connectivity and bandwidth, network monitoring, and system management.  As their “MSP” (managed services provider), the data centre operator requires unrestricted access to the customers’ IT equipment.

7.It is not in dispute that the Corporation has, so far as relevant for present purposes, 2 published policies in respect of its industrial estates, as follows:

(1)  The first policy applies to lessees of land in the industrial estates generally (and therefore also to lessees who are data centre operators) and is a policy against subletting or parting with possession.  This policy is reflected in clause B(11)(a) of the Corporation’s standard lease which requires the lessee

“ not to assign mortgage charge demise underlet or part with possession of the said premises or any part thereof or any interest therein or enter into any agreement so to do nor to permit any other party by way of a licence or otherwise to occupy the said premises or any part thereof.”  (“Lease Restrictions”)

(2)  The second policy is the admission policy for data centre operators (“Data Centre Policy”) adopted at the meeting of the Business Development and Admission Committee (“BDAC”) of the Board of the Corporation at its meeting on 9 February 2010.  This has the following elements:

(a) Exclusion possession shall be retained by the grantee.

(b) The provision of managed services shall be the dominant element of the operation in the premises.

(c) Right of access to the premises shall remain within the exclusive control of the grantee at all times.

(d) The approved use for data centre in the lease shall be “to operate a data centre to provide colocation services as well as Internet connectivity and other networking services, managed and outsourcing services on facilities, data centre management and system management”.

8.On the basis and as a result of the policies, SUNeVision says that it has since 2010 had the legitimate expectation (the “Legitimate Expectation”) that:[2]

(1)  “ Grantees who are data centre operators in the Industrial Estates are NOT allowed to sublet or part with possession of the leased premises or to license or allow third parties to occupy part of the premises”.

4 examples of prohibited acts have been set out in the Form 86: (i) sublet buildings, floors or caged spaces in the leased premises to as third parties; (ii) let the parties have control on who can access the leased premises including by implementing their own security measures; (iii) let the parties station their staff or have office space or set up office in the leased premises; (iv) let third parties provide managed services; and

(2)  the Corporation will enforce the Lease Restrictions and will not tolerate or condone any breach of them.

9.SUNeVision says that relying on its Legitimate Expectation, it acquired through a subsidiary in 2013 a plot of land in Tseung Kwan O at a full market price of HK$428 million to construct a data centre there which can include subletting or licensing part of the premises to its customers and in January 2018 another plot of land in Tsuen Wan again at full market price for developing a similar data centre. 

10.SUNeVision says that by reason of events over the past few years, it has become concerned that the Corporation has not been enforcing the Lease Restrictions against what SUNeVision suspects to be breaches thereof.  Six events that took place between September 2011 and January 2018 are then set out in the Form 86 (§§35‑45).  Essentially SUNeVision alleged that several of the Corporation’s lessees in TKOIE had been acting in breach of the Lease Restrictions:

(1)  In January 2018, NTT Com Asia Ltd (“NTT”) offered services to a cloud computing enterprise that amounted to subletting or licensing part of its premises.

(2)  In April 2017, Global Switch entered into an arrangement with Daily Tech and China Telecom Global Ltd that was or was highly likely to be in breach of the Lease Restrictions.

(3)  In late 2012, HKCOLO.NET Ltd (“HKCOLO”) entered into an arrangement with IBM that was or was likely to be contrary to the Lease Restrictions.

(4)  In September 2011, HKCOLO successfully bid for the provision of data centre services to a public authority on terms which suggested HKCOLO would not retain exclusive possession — an arrangement that was or was highly likely to be contrary to the Lease Restrictions.

(5)  In October 2011, HKCOLO successfully bid for the provision of data centre services to a financial institution on terms which suggested HKCOLO would not retain exclusive possession — an arrangement that was or was highly likely to be contrary to the Lease Restrictions.

(6)  In March 2015, NTT won a bid to provide data centre services to a financial institution on terms which suggested the financial institution would be in control of access within the designated space — an arrangement that was or was highly likely to be contrary to the Lease Restrictions.

11.SUNeVision had set out the same events in a pre‑action letter from its solicitors to the Corporation dated 6 April 2018, which stated it had to conclude that there had been a change in policy or a continuous policy of condonation in respect of the Lease Restrictions, and demanded that the Corporation take immediate steps to stop the change in policy or the policy of condonation by publicly reaffirming its relevant policy and taking reasonably effective measures to ensure the discontinuation of all existing breaches of the Lease Restrictions.

12.In addition, the solicitors’ letter stated that SUNeVision was aware that Global Switch and the Corporation were in advanced negotiations for an increase of plot ratio for Global Switch’s site in TKOIE. It was said that if, as a result of a change in policy or a policy of condonation, the Lease Restrictions were no longer taken into account in deciding whether more space should be granted to Global Switch, then SUNeVision would contend that the decision was irrational and in breach of the Corporation’s statutory duties and SUNeVision’s Legitimate Expectation and liable to be challenged under judicial review.

13.The Corporation replied by its solicitors’ letter dated 28 May 2018 (“28 May 2018 Letter”) to the effect that:

(1)  There had been no change in the relevant policies and no policy of condonation of breaches.

(2)  In the data centre industry

“ some customers may place the equipment in the data centre to make themselves avail of the services provided by the data centre operators, the latter being the dominant element of the operation of the data centre. Under such model, our client considers that these customers on the industrial estates do not have exclusive possession of the space in the data centre where the equipment is placed; nor are they licensed to occupy the space and has made it clear to all potential applicants accordingly. Such trade practice or to be distinguished from the subletting, licensing and/or sharing of space as a service such as the provision of space by Grantees to their customers for the storage of unpowered equipment, servers or racks for a rental.”

(3)  The intended Grantees are required to provide a pro forma draft service agreement between the Grantees and their potential customers, which the Corporation examines to ensure that the Grantees retain exclusive possession and that the arrangements do not amount to subletting, licensing and/or occupation of space as a service.

(4)  After the commencement of operation, regular inspections are carried out by the Corporation and any suspected breach of the Lease Restrictions is promptly dealt with.

(5)  As regards the specific cases mentioned by SUNeVision:

“ Based on [the Corporation’s] regular site inspection at the industrial estates, [the Corporation] is unaware of the alleged breach of the Restriction by the Grantees. … [The Corporation] shall continue to carry out regular inspections to the industrial estates to ensure compliance with the Agreement and Lease. If and when our client becomes aware of any irregularities in the industrial estates through the regular site inspection, our client would immediately take steps to investigate into the irregularities, including but not limited to seeking explanations from the Grantees, industrial operators and/or data centre operators. If it is confirmed that a Grantee is in breach of the Agreement and/or the Lease, our client would take appropriate enforcement actions accordingly.”

(6)  The Corporation denied that it had acted in contravention of any alleged legitimate expectation of SUNeVision.

14.The Form 86, dated 10 September 2018, specified the decision in respect of which relief is sought to be:

“ The decision of [the Corporation] by letter dated 28 May 2018 … from Messrs Wilkinson & Grist not to take immediate steps to rectify the failure or refusal to take reasonable steps to enforce restrictions on leases against subletting, parting with possession and/or sharing of occupation in the Tseung Kwan O Industrial Estate …, the reasons therefor being provided in the 28 May 2018 Letter.”

15.The grounds for challenge are set out in §§69‑97 of the Form 86.  First, it is said that the Corporation had not in fact been enforcing the Lease Restrictions and had therefore breached SUNeVision’s Legitimate Expectation, which led to substantial unfairness to SUNeVision.[3]  Secondly, it is said that the Corporation erred in law in considering that the Lease Restrictions would not be breached so long as services had been provided, and that exclusive possession would be retained as long as the data centre operator had the right to “allocate different areas in the granted site for the installation of their customers’ servers or to relocate the same”.  It is said that it would be a misdirection insofar as the Corporation assumed that the provision of colocation of services in the data centre industry necessarily required the operator to part with possession.[4]  Thirdly, it is said that the Corporation misconstrued its own policy and failed to appreciate that the policy was in effect to allow the Grantees to operate under the retail colocation model but not the wholesale colocation model, and failed to take into consideration the terms and conditions between the Grantees and their customers which conferred right to possession and/or right of occupation.[5]  Fourthly, it is said that despite SUNeVision had drawn attention to the specific alleged breaches by NTT, Global Switch and HKCOLO, the Corporation failed or refused to take steps to inquire into the facts and to take necessary actions.[6]  Fifthly, it is said that the grant of an increase of plot ratio and extra gross floor area to Global Switch in circumstances where Global Switch would be using such extra gross floor area in effect for subletting would not be an exercise of power for the purposes sanctioned by the Ordinance and would be a breach of the Legitimate Expectation or Wednesbury unreasonable.[7]

16.Leave was granted based on consideration of the papers alone on 9 October 2018.

17.On 29 October 2018, SUNeVision issued a summons for a stay of the Corporation’s decision to grant an increase in plot ratio to Global Switch pending the determination of the application for judicial review. Subsequently, after being informed on 28 January 2019 that the Lands Department have provided a notification letter to the Corporation for execution, on 4 February 2019 SUNeVision issued a summons for an interim injunction to prevent the Corporation from executing documents for granting increased plot ratio to Global Switch pending the application for stay.  The application for interim injunction was dismissed by Chow J on 21 February 2019.  I shall return to that decision below.  As a result, SUNeVision abandoned its application for stay.

18.In the course of the application for interim injunction, SUNeVision sought leave to amend its Form 86 in accordance with a draft annexed to its summons dated 19 February 2019 (“1^st draft amended Form 86”).  On 6 March 2019, SUNeVision issued another summons effectively seeking leave to amend its Form 86 in accordance with a revised draft (“2^nd draft amended Form 86”).  The various proposed amendments will be discussed below.  The paragraphs referred to are those in the 2^nd draft amended Form 86.

Proposed amendments to Form 86

19.As to the approach to amendments in judicial review proceedings, counsel who appeared for the Corporation and Global Switch referred me to AA and Another v Securities and Futures Commission (unrep, HCAL 41/2016, 16 June 2017) where Zervos J (as he then was) stated:

“ 3. Once leave to apply for judicial review is granted, a line in the sand is drawn as to the terms and scope of the proceedings. Bearing in mind the nature and ambit of the judicial review jurisdiction, dealing with issues relating to public administration brought on before the courts within a strict time frame, a material amendment of the grounds for review should rarely occur.[8]

4. In deciding whether to grant leave to amend a Form 86, will ultimately turn on what is fair and appropriate in all the circumstances so that the real dispute between the parties can be determined.[9] However, where the application is late the threshold is high, although the reason for it being late would be a relevant factor.[10] Other factors that may be taken into account, are the nature and substance of the amendment (including whether it is a pure point of law or a mixed point of fact and law, or a pure factual point), the lack of merit of the amendment, the relevance or significance of the amendment to the key issue of the judicial review upon which leave was granted, and the existence of an alternative procedure to deal with the matter.[11]” (original footnotes)

20.It is relevant in the present case to note that, while Order 53 rule 6(2) confers on the court a general power to allow amendment of the Form 86, where the amendments seek to impugn a different decision, they are to that extent effectively an application for leave to apply for judicial review of that different decision, and should be subject to the strictures attendant upon an application for leave.

21.The proposed amendments, except stylistic and minor changes, fall into 3 main groups which will be discussed in turn below.  The Corporation opposes all 3 groups, while Global Switch opposes only the amendments relating to the decision to grant additional plot ratio, taking a neutral stance on the other amendments.

Amendments to attack the decision to grant extra plot ratio

22.First, SUNeVision seeks to add a new decision to be challenged, namely, the decision of the Corporation to grant Global Switch an increased plot ratio from 2.5 to 3.3, representing gross floor area of 17,213 m², for its leased premises in TKOIE (“the plot ratio decision”).  I have no doubt that this attempt must be rejected.

23.No leave has previously been given to challenge the plot ratio decision.  As stated above, the Form 86 as originally filed only named the decision in the 28 May 2018 Letter.  It is incumbent on an applicant to set out precisely the decision it seeks to attack.  Leave was given ex parte on consideration of papers alone to apply for judicial review, and must properly be regarded as restricted to the decision expressly made the subject matter of the intended judicial review. 

24.The decision to grant additional plot ratio to Global Switch (from 2.5 to 3.3, equivalent to GFA of 17,213m²) was in fact made by BDAC on 21 November 2016, in response to Global Switch’s application dated 24 June 2016.  On 6 March 2017 the Corporation wrote to Global Switch stating the BDAC had approved the proposed increase of plot ratio subject to Lands Department’s approval and 3 conditions: (i) to carry out a technical study if required by the Lands Department or the Corporation; (ii) to pay land premium of over $127m; and (iii) to execute the necessary lease modification documents at its expense.  Global Switch was asked to signify its acceptance by countersigning and returning a copy of the letter together with two cheques for $80,000 and $52,300 respectively failing which the approval indicated would become null and void.  On 4 May 2017 Global Switch countersigned in acceptance of the terms and conditions offered.

25.In October 2017 the Corporation submitted a consolidated modification proposal to the Lands Department seeking approval for an increase of the plot ratio for 8 sites.  This was approved at the District Lands Conference on 29 March 2018, subject to final scrutiny by Legal Advisory & Conveyancing Office.  On 21 November 2018 the District Lands Office proposed basic terms to the Corporation for lease modification, which were accepted by the Corporation on 18 December 2018.  On 28 January 2019 the Corporation’s solicitors wrote to SUNeVision’s solicitors stating that the Corporation intended to execute the modification letter with DLO on 11 February 2019 and only then would the Corporation be in a position to execute a lease modification with Global Switch.

26.Despite the processes involving the Lands Department, it is clear that as far as the Corporation was concerned, the decision had long been made, more than 2 years ago, pending only the formal approval of the Director of Lands.  The proposed attack on it now is hopelessly out of time. 

27.Moreover, Global Switch has acted on the decision for some 2 years already.  Not only has it given the two cheques to the Corporation upon acceptance of the offer, it has also entered into a construction contract with Gammon in August 2018 (with a preceding letter of agreement dated 25 July 2017) for Buildings 4 and 5 (which were designed on the basis of and make use of the additional plot ratio).  Construction works had commenced for these buildings in July 2018, with a contract sum of approximately $2.5 billion.  The Corporation’s approval of increased plot ratio for Global Switch was clearly not a provisional arrangement but, to all intents and purposes, a done deal subject to formal “sign‑off” by the Lands Department of the increase of plot ratio for a number of sites in the TKOIE.

28.SUNeVision said it was “kept in the dark”.  This is in my view not an accurate way of putting it, for SUNeVision was not a party concerned with the transaction and there was nothing to require the Corporation or Global Switch at the time to disclose the plot ratio negotiations or decision to SUNeVision.  Further, SUNeVision knew enough to assert in its original Form 86 (at §95) that the Corporation “has entered into advanced negotiations” with Global Switch for an increase of the plot ratio for Global Switch’s site at TKOIE.  It was further stated in the Form 86 there that:

“ It appears from the Chief Executive’s Statement in 2017 Annual Report and the 2017 Base Prospectus of Global Switch’s group of companies that [the Corporation] may have already decided to grant the increased plot ratio to Global Switch.”

That relevant part of the 2017 Annual Report dated 6 April 2018 read:

“ I am pleased to announce that this week the District Land Council of Hong Kong has approved the application by the Hong Kong Science and Technology Park Corporation to increase the plot ratio of some of the sites within the Tseung Kwan O Industrial Estate, including our site, thereby allowing Global Switch to increase the size and scale of its development.”

29.In any event, time starts to run for the purposes of judicial review not from the date when an applicant knows of the ground, but from the time when the ground for challenge arises: Order 53 rule 4(1); Lo Siu Lan v Hong Kong Housing Authority (unrep, CACV 378/2004, 17 December 2004), at §40.

30.Although there was a mention of the increase of plot ratio in the body of the original Form 86, SUNeVision consciously confined the decision challenged to the 28 May 2018 Letter as set out in §14 above and did not include any decision on plot ratio (which it inferred had been made) in its application for leave to apply for judicial review.

31.It was only in the 1^st draft amended Form 86 placed before Chow J in connection with the interim stay application heard in February 2019 that SUNeVision first sought to attack the plot ratio decision.  It is notable that in that draft, the plot ratio decision sought to be impugned was described as the decision of the Corporation through its BDAC made on 21 November 2016 to grant Global Switch an increased plot ratio.  As part of his reasons for refusing an interim injunction on 21 February 2019,[12] Chow J noted that “the Plot Ratio Decision was made a long time ago (on 21 November 2016)” and “much has happened since that decision was made” (§35).

32.In the 2^nd draft amended Form 86, without any explanation the decision attacked has been changed to the “decision to execute a lease modification agreement or document with Global Switch … communicated to the Applicant by letter dated 28 January 2019 from Messrs Wilkinson & Grist”.  This is, with respect, simply a device to bring the date of decision forward to a more recent time.  There was in fact no further substantive decision in January 2019.  The execution of a modification document was only to complete what was already decided by the Corporation in November 2016 and agreed with Global Switch in May 2017.

33.I reject the submission that there was no challengeable decision until 2 January 2019 because the 2016 decision was unreviewable for being conditional.  Plainly there was a substantive decision which, albeit conditional on Lands Department’s approval, was neither provisional nor tentative.  Moreover, the increase was offered to and accepted by Global Switch.  The submission is also flatly contradicted by the stance taken in the 1^st draft amended Form 86 placed before Chow J (signed by leading and junior counsel) which sought judicial review of the decision made on 21 November 2016.  Affirmations and submissions were put forward on behalf of SUNeVision at that stage in support of the proposed attack on the 2016 decision.  Chow J did not reject that attack on the ground that the 2016 decision was not amenable to judicial review for being conditional or provisional.

34.In Lo Siu Lan v Hong Kong Housing Authority (unrep, CACV 378/2004, 17 December 2004), at §39, Stock JA said that even where the latest decision may itself be amenable to challenge, that is not to be looked at in isolation when the court comes to consider the issue of leave.  “It must be looked at in the round, with due regard of course … to the nature of the earlier decisions and to the framework as a whole”.

35.When the process for the increase in plot ratio is looked at in the round, it is plain that the decision had been made in November 2016 and an agreement made in May 2017.  SUNeVision cannot circumvent the reality by seizing upon the final link which followed inexorably by way of fulfilment of the decision and agreement.

36.Furthermore, the proposed attack lacks substantive merits.  The central plank of SUNeVision’s case is its alleged Legitimate Expectation that data centre operators in the TKOIE would not be allowed by the Corporation to sublet or part with possession of the leased premises or to license or allow third parties to occupy them.  On this point, Chow J held in his decision refusing an interim stay:

“ 27. … I do not see how it can be argued that Sunevision has any legitimate expectation that the Corporation would not grant increased plot ratio, or permissible gross floor area, to its lessees in respect of sites currently occupied by them. It is significant that the Corporation’s position is that it remains committed to its policy of maintaining the Lease Restrictions in respect of sites which it grants to its lessees in the TKO Industrial Estate. The principal difference between the parties, as I see it, lies in the proper interpretation and/or application of the Lease Restrictions. Should Sunevision ultimately succeed in this judicial review on those issues, it is to be expected that the Corporation, as a statutory body, would act in accordance with the court’s judgment as regards the true interpretation and proper application of the Lease Restrictions against the lessees. What it means is that Global Switch will not be permitted to conduct its business at the GS Site, including any additional gross floor area acquired under the Lease Modification Documents, in a manner which is inconsistent with the Lease Restrictions. I do not, however, see any basis for the court to find the Lease Modification Documents to be invalid, or the increased plot ratio granted in respect of the GS Site to be unlawful.”

37.SUNeVision also alleges in the proposed amendments that Global Switch “had used and was likely to use the GS Site with the increased plot ratio” in breach of the Lease Restrictions.  (In the original Form 86 it was stated that Global Switch “would be using [the] extra floor space” in breach of the Lease Restrictions.  In the 1^st draft amended Form 86 placed before Chow J, it was stated that Global Switch “has been using and will continue to use the GS Site” in breach of the Lease Restrictions.)  As to this, Chow J stated:

“ 30. … I agree with the submissions of Ms Sit and Mr Man, SC on behalf of Global Switch and the Corporation respectively that there is simply no basis to support the supposition that Global Switch will continue to use the GS Site in a manner in breach of the Lease Restrictions after this matter has been ruled by the court. On the contrary, both of them have made it clear that their clients would act in accordance with the court’s determination at the substantive hearing of this application for judicial review regarding the interpretation and application of the Lease Restrictions, although I should add that as a matter of public law, there is no principle that a policy once fixed must remain immutable forever.”

38.The evidence shows:

(1)  Buildings 4 and 5 are being constructed.  The additional floor space will not be fully operational until end of 2020.  How that floor space (and indeed the space within other data centres in TKOIE) may be used will depend on the Corporation’s and the lessees’ actions in the light of the outcome of these proceedings.

(2)  There is nothing to suggest that, assuming SUNeVision prevails in the judicial review, Global Switch will not abide by the determination of the court or that the Corporation will not take enforcement action if it acts in breach.  On the contrary, Global Switch has stated that it will abide by the court’s eventual determination and, if necessary, amend their business model and operations accordingly. 

(3)  Global Switch says that the operating model currently used in the GS Site is specific to the existing customer, Daily‑Tech, and that Global Switch intends to have a wide spectrum of customers with different operating models, and therefore that it is not correct to say the existing model will necessarily apply to the entire facility.

39.Mr Yu SC, who appeared for SUNeVision on the present application but not before Chow J, submitted that Chow J only dealt with an application for a short interim injunction pending the determination of SUNeVision’s application for stay, and therefore his decision was provisional and not reached with the benefit of full evidence or argument.  But his Lordship plainly gave his considered views on the merits on the particular point, and concluded that SUNeVision had not shown a “serious issue to be tried”, still less a reasonably arguable case, in relation to the plot ratio decision. I respectfully agree with Chow J’s reasoning.

40.Mr Yu further submitted that Chow J focused on the issue of legitimate expectation but SUNeVision’s case is also based on error of law or misdirection in law on the part of the Corporation in that it had misconstrued or misapplied its own policy in making the decision to grant additional plot ratio to Global Switch.  In fact, Chow J also dealt with that point, as follows:

“ In respect of the first matter [referring to SUNeVision’s case of an error of law on the part of the Corporation and/or a misapplication of the Corporation’s policy in making the decision], it is important to appreciate that the alleged error of law or misapplication of policy relates to the “use” of the increased plot ratio, or gross floor area, of the GS Site, not the “grant” of such increased plot ratio, or gross floor area. It is by no means clear to me that the alleged error or law or misapplication of policy should have the effect, in public law, of vitiating the grant itself. In any event, the court has a discretion whether to grant remedy even where a ground of judicial review has been made out, and I do not at the moment see why the court would exercise its discretion to quash the Plot Ratio Decision, or declare it to be unlawful, in circumstances where the increased gross floor area can be used by Global Switch in a manner consistently with the Lease Restrictions.”

41.With this I also respectfully agree.  In the 2^nd draft amended Form 86, SUNeVision has added complaints about failure to take a relevant fact into account and failure to make reasonable inquiries, but in my view these do not take the matter further.

42.In the 2^nd draft amended Form 86, SUNeVision seeks a declaration that the plot ratio decision is unlawful, an order of certiorari to quash it, and an order of mandamus that the Corporation reconsider the plot ratio decision.  It is not shown, however, how this can have any effect on the concluded agreement with Global Switch to grant plot ratio and the lease modification which are binding upon the Corporation in private law.  Mr Yu suggested that as possible relief, if SUNeVision prevailed at the end, the Corporation could be asked to sell by tender the additional plot ratio.  This seems to be a suggestion that, even though SUNeVision failed to obtain any interim stay, Global Switch could somehow be deprived of the plot ratio already granted, and then forced to demolish a few floors from one or more of the buildings on its site, and the plot ratio could then somehow be put out by the Corporation to tender — a theory that was wholly unexplained. 

43.In fact, SUNeVision’s solicitors’ letter of 6 April 2018 asked the Corporation to confirm that any increased gross floor area should only be granted through open tender or that the premium should be paid at full market rate, and in response, the 28 May 2018 Letter had stated in response that it was not possible to grant the increased GFA by way of open tender:

“ … we are instructed by our client that it is legally and practically impossible to grant the increased GFA by way of open tender. The plot ratio of an industrial estate is fixed under the land grant of the same. Subject to Government’s approval, our client may re—allocate the unused GFA to a site when the maximum plot ratio of such industrial estate has not been exhausted. Such shifting of GFA cannot be granted in respect of the land outside industrial estate which is under a separate land grant or twin entity which is not a Grantee.”

There was no mention of thisin the Form 86.  The lack of prospect of such relief is a matter that can be taken into account in refusing lave: Shek Lai San v Securities and Futures Commission [2010] 4 HKC 168, §44.

44.Furthermore, SUNeVision is not a lessee of any site in TKOIE, and cannot receive any additional plot ratio whether taken from Global Switch or otherwise.  Its standing in this judicial review is derived from the alleged Legitimate Expectation regarding the use of space in the TKOIE against the Lease Restrictions.  Thus even if the Corporation’s decision to allow additional plot ratio was made in a way that was deficient as alleged, in the absence of any viable complaint that the additional floor spare would be used in breach of the Lease Restrictions, there is nothing that SUNeVision can, with sufficient interest, complain about the grant of space.

45.In my view SUNeVision has not passed the requisite threshold for leave.  This amendment must therefore be rejected.

The February 2010 Paper for BDAC

46.The second group of amendments (paragraphs 17A, 17B and 73A) relate to the BDAC meeting of 9 February 2010.  At a previous meeting held in July 2009, the BDAC had considered that if a lessee of the Corporation was to provide data centre access to an entity which was not itself an end-user but which in turn provided data centre services to its customers, there would be a breach of the Lease Restrictions. Accordingly, the BDAC at that stage considered that the user of a site within the industrial estates for data centre should be:

“ to operate a data centre to provide collocation services (as well as Internet connectivity and other networking services, managed and outsourcing services on facilities, data centre management and system management) to end‑users.” (emphasis added)

At its meeting on 9 February 2010, the BDAC, after taking legal advice and after further deliberation, decided to remove the phrase “to end‑users” from the policy to be promulgated.  

47.SUNeVision seeks to rely on the paper relating to the 9 February 2010 meeting to suggest that the Corporation’s policies, properly construed, had the effect of restricting customers of data centres to end‑users only.  SUNeVision seeks to argue that in deciding to remove the end‑users limitation at that meeting, the BDAC and hence the Corporation misconstrued the Lease Restrictions or misdirected itself in relation to their effect.

48.This seems to me to be misconceived.  SUNeVision has not advanced any case based on a policy of an end‑users limitation.  The only policy alleged to exist based on the Lease Restrictions does not expressly contain the end‑users limitation.  There is no suggestion that the previous resolution that included the end‑users limitation had been published.  It was simply part of the ongoing deliberation process within the Corporation.  It was open to the Corporation to decide what policy to adopt provided they made no error of law.

49.It was SUNeVision’s case that the Corporation erred in law in construing and applying its own policies as promulgated and the Lease Restrictions, and that their meaning is a matter for the court: Shiu Wing Steel Ltd v Director of Environmental Protection and Airport Authority (No 2) (2006) 9 HKCFAR 478, §§26‑30.  On that case it is not useful to refer to an internal, temporary position previously taken by the BDAC, which is not relevant to the court’s determination of the question of law.  It seems to me the proposed amendments would simply lead to obfuscation of the real issues.  Accordingly, these amendments should also be rejected.

Amendments concerning the 6 specific instances

50.The third group of amendments appear in the section of the Form 86 dealing with the 6 specific instances of alleged breach of the Lease Restrictions by 3 different Grantees.

51.The proposed paragraph 37A pleads extracts from a document submitted by Global Switch to the Corporation in April 2012, which consisted of clarification of information in relation to the Global Switch’s application for land in TKOIE submitted in February 2012.  However, whether or not there were breaches of the Lease Restrictions by Global Switch depends on the arrangements with the customers as appear to the Corporation, not on the particular wording of a 2012 document.

52.The proposed paragraph 37B(1) pleads extracts from an article from the Sky News website dated 10 January 2019.  Such statements are of little value.  Paragraph 37B(2) pleads a news release published by Global Switch dated 3 July 2018 in which it described its business, but it is a general description that does not assist in the examination of the actual arrangements in Hong Kong.  Paragraph 37B(3) pleads a disclosure document published by a Mainland Chinese company which is a major shareholder of Global Switch dated 15 November 2018 containing certain general description of Global Switch’s business.  Again, such general description of the business of Global Switch which is an international company with at least 8 data centre campuses worldwide is of no assistance in the present case.  The proposed paragraph 37B(4) pleads the current FAQ page of Global Switch’s website which suggests that Global Switch cannot access the dedicated areas that house customer servers.  All 4 documents post‑date the Decision, which means they could not have been relevant to the decision‑making process.

53.Paragraph 37C pleads an agreement entered into between Global Switch, Daily‑Tech and Daily‑Tech HK and another agreement entered into between Global Switch and Daily‑Tech HK both dated 22 January 2016.  These agreements have been disclosed in the evidence filed.  Insofar as SUNeVision seeks to say that they were permitted by the Corporation even though (on SUNeVision’s case) they involved breaches of the Lease Restrictions, this is without basis because the uncontroverted evidence is that the Corporation did not have knowledge of these agreements until these proceedings.  The Corporation has not yet made a decision on what position and steps to take in relation to these agreements.  Accordingly, paragraphs 37F, 46(2), 73B(2) and 90A(2), which seek to impugn a non-existent decision not to raise objection to these agreements, should be rejected.  Mr Yu’s further amendment to paragraph 37F, proposed orally during his submission, cannot salvage these paragraphs whose gist is an attack on a decision that in fact has not yet been made.

54.Provided the above is clearly borne in mind, however, I do not think paragraph 37C should be excluded since it sets out the actual agreements entered into between Global Switch and Daily‑Tech.  The proposed paragraph 46(2) also refers to the agreements to say that the arrangements are continuing, while the proposed paragraph 46(1) says the tender terms accepted by NTT and HKCOLO would suggest the arrangements are also continuing.  It seems to me these paragraphs should be allowed.

55.The proposed paragraphs 37D, 73B(1), 80A and 90A(1) relate to the pro forma services agreement provided by Global Switch to the Corporation, which was approved by the Corporation in November 2012.  This seems to me to be a relevant part of the material to be considered because it was on the basis of, inter alia, this form of agreement that the Corporation concluded there had been no relevant breach of the Admission Policy or Lease Restrictions.  Ms Sit who appeared for the Corporation submitted that it is clear that the terms of the pro forma agreement are in no way inconsistent with the Corporation’s policies or the Lease Restrictions. However, in the circumstances of this case, when in particular there is still argument on the scope of the evidence that may be relevant to the interpretation of the policies, this is in my view a matter for the substantive hearing of the judicial review.

56.I consider therefore that paragraphs 37C, 37D and 37E[13] and paragraphs 46(1) & (2), 73B(1), 80A and 90A(1) should be permitted, but not paragraphs 37A, 37B, 37F, 73B(2), and 90A(2).

Conclusion

57.There will therefore be an order giving leave to SUNeVision to amend its summons of 19 February 2019, and to amend its Form 86, limited as set out above as well as in terms of the unopposed minor amendments proposed in the 2^nd draft amended Form 86.  Subject as aforesaid, the application to amend the Form 86 is dismissed.

58.As an order nisi, SUNeVision is to pay (i) the costs of and occasioned by the amendments; (ii) 80% of the Corporation’s costs of and relating to the application to amend (ie SUNeVision’s summonses dated 19 February 2019 and 6 March 2019 respectively); and (iii) Global Switch’s costs of and relating to the application to amend.  There will be a certificate for two counsel.

Mr  Benjamin Yu SC, Ms Sara Tong and Ms Bianca Yu, instructed by Woo, Kwan, Lee & Lo, for the Applicant

Miss Eva Sit, instructed by Wilkinson & Grist, for the Respondent

Mr Bernard Man SC, instructed by King & Wood Mallesons, for the Interested Party