Companhia De Engenharia E Construção Weng Fok, Limitada v. Hong Kong Accreditation Services and Another

HCAL 1153/2019

[2020] HKCFI 1181

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 1153 OF 2019

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DECISION

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Application

1.By a Notice of Application for Leave to Apply for Judicial Review issued herein on 30 April 2019 (“Form 86”), Companhia de Engenharia e Construção Weng Fok, Limitada (“Weng Fok”), seeks leave to apply for judicial review to:  

(1)     quash the decision (“Decision”) made by the Hong Kong Accreditation Services (“HKAS”) on 1 February 2019 that the accredited organisation complained against by Weng Fok[1] (“interested party”) was found in conformity with the accreditation standards and Weng Fok’s complaint was closed; and

(2)     direct HKAS to provide the details of the investigation conducted into such complaint and the reasons for the Decision and to re-open the investigation in view of the new information provided by the letter dated 11 March 2019 by Weng Fok’s solicitors, Lui & Law (“LL”).

2.On 2 May 2019, after a consideration of Weng Fok’s ex parte application on the papers, Mr Justice Anderson Chow directed, inter alia, that there be a rolled-up hearing of (1) the application for leave to apply for judicial review (“Leave Application”) and (2) the application for judicial review (“Substantive JR”) in the event of the grant of the Leave Application (“May 2019 Direction”).  

3.Subsequently, the papers by which Weng Fok made the ex parte Leave Application was served on HKAS and the Innovation and Technology Commission (“ITC”) of the HKSAR Government (“respondents” collectively) on 15 May 2019.  A timetable for the filing and service of evidence in opposition by the respondents and evidence in reply by Weng Fok and for the lodgement of hearing bundles and the filing and service of skeleton arguments for the rolled-up hearing was agreed, as reflected by a consent order dated 13 June 2019.  The respondents’ evidence in opposition in the form of an affidavit of Dr Tang Chi Kong (“Dr Tang”), the Accreditation Officer of HKAS, was filed on 29 August 2019.

4.The rolled-up hearing was originally set down before this court on 17 March 2020, which fell within the General Adjournment Period (“GAP”) and was therefore adjourned.  It is now re-fixed before this court for 17 July 2020[2], with 1 day reserved.

5.Before me now is the respondents’ summons dated 8 April 2020[3], issued pursuant to Order 25 rule 1B(1) and Order 53 rule 3 of the Rules of the High Court (Cap 4A) and the inherent jurisdiction of the court, applying for variation of the May 2019 Direction such that there be a separate inter partes oral hearing of the Leave Application on 17 July 2020, which is estimated to require 3 hours (“Split Hearing Application”).

Matters giving rise to intended judicial review

6.Weng Fok is a Macau company, engaging in the business of building and construction.

7.The interested party is a Hong Kong provider of laboratory testing services and accredited under the HOKLAS system[4], which is administered by HKAS, a section under ITC and an accreditation body offering recognition to competent conformity assessment bodies (“CAB” or “CABs” as appropriate) (e.g. laboratories) which meet international standards.

8.According to the Form 86, in about October 2012, the interested party was commissioned by the Lands, Public Works and Transport Bureau (“Bureau”) of the Macau SAR Government (“Macau SAR”) to carry out concrete sampling and testing works relating to an incident (“Incident”) on 10 October 2012 in which a reinforced column located on the 2^nd floor of the carpark of Sin Fong Garden (“Building”), a residential building at Rua da Ribeira do Patane 129-135, the construction of which was completed by Weng Fok in December 1994, was found burst, which resulted in the evacuation of all the residents of the Building and the closure of the Building by the Bureau.

9.Based on the sampling and testing works by the interested party, a team of 3 academics from the University of Hong Kong commissioned by the Bureau to investigate into the Incident submitted a report (“HKU Report”) on 28 January 2013.  The HKU Report concluded that the Incident was attributable to the inferior quality of the concrete works within the structure of the Building, rather than the demolition and piling works of the redevelopment of the site adjoining the Building on the western side since about March 2011.

10.However, based on the further investigation by the University of Macao commissioned by the Bureau and the review by the experts appointed by Weng Fok, 4 additional reports were compiled.  These reports consistently expressed serious doubts as to the correctness of the HKU Report’s conclusions and findings.  In particular, the sampling and testing methodology adopted by the interested party, which formed the basis of the analysis contained in the HKU Report, were found incompliant with the commonly accepted and recognised standards and practices.

11.Nevertheless, because of the findings in the HKU Report, the Public Prosecution Office and the Social Work Bureau of the Macau SAR named Weng Fok as a defendant in 2 actions initiated by them in Macau.

12.To cut a long story short, it suffices at this stage to say that on 11 July 2017, Weng Fok made a complaint to HKAS about the poor quality of the interested party’s works in the investigation of the Incident (“Complaint”).  In support of the Complaint, by a letter dated 14 September 2018 from LL to HKAS, Weng Fok provided to HKAS a report dated August 2018 (“Chan Report”) by Ir Professor Sammy Chan, an engineering expert appointed by Weng Fok, pointing out various mistakes and non-compliances in the interested party’s report.

13.Based on the evidence so far filed on behalf of the respondents, in processing the Complaint, HKAS had required the interested party to provide it with an investigation report, failing which HKAS may take actions as appropriate.  While reminding the interested party HKAS was obliged to inform Weng Fok of the outcome of its investigation, HKAS assured the interested party it will try its best to protect the confidentiality of the information provided by the interested party.  In response, on 16 January 2019, the interested party submitted to HKAS an investigation report, which HKAS “considered as acceptable” (see the email dated 21 February 2019 from HKAS to the interested party) and which satisfied HKAS that the interested party “was in conformity with HKAS Accreditation requirements” (see HKAS’ letter dated 1 February 2019 to LL). 

14.By the last-mentioned letter, HKAS communicated the Decision to Weng Fok.  Since such letter did not provide any details of the investigation HKAS had conducted, nor the reasons for its finding that the interested party’s works were in compliance with the HOKLAS accreditation requirements, by LL’s letters dated 2 February 2019 and 11 March 2019, Weng Fok requested HKAS to provide details of its investigation of the Complaint and the reasons of the Decision.  The second of such letters also enclosed a report (“Siu Report”) by Dr Siu Yin Wai appointed by the Macau court in the Macau Public Prosecution Office’s action, which contained observations of irregularities and non-conformities found in the sampling and testing works by the interested party.  The letter also highlighted that in view of such new information (i.e. the Siu Report), HKAS should in any event re-open the investigation of the Complaint.  Apart from 2 holding replies dated 6 and 15 March 2019, Weng Fok has not received any substantive response from HKAS.

Proposed grounds for judicial review

15.It is Weng Fok’s case that the Decision is reviewable on the following 5 grounds:

(1)     Procedural improprieties: there had been unreasonable delays in dealing with the Complaint and the procedures adopted by HKAS in handling the Complaint have not been made known to Weng Fok and the general public;

(2)     Failure to provide any or any adequate reasons for the Decision;

(3)     Frustration of Weng Fok’s legitimate expectations arising from the provisions of the Regulations for HKAS Accreditation – HKAS 002 (5^th Ed) published by HKAS in October 2016 (“HKAS Regulations”) in respect of the Complaint against an organisation accredited by HKAS under the HOKLAS Accreditation System;

(4)     Wednesbury unreasonableness in declaring the investigation into the Complaint closed without giving any reasons or justification, instead of giving due consideration to the Chan Report and upholding the Complaint; and

(5)     Wednesbury unreasonableness in not re-opening the investigation into the Complaint in view of the Siu Report which represents the analyses of an expert appointed by the Macau court independently of Weng Fok.

Respondents’ grounds for split hearings

16.In seeking to split the rolled-up hearing, the respondents put forward the following:

(1)     There is an issue in relation to the disclosure of confidential information which was not known to Chow J at the time he made the May 2019 Direction, which fundamentally affects the basis on which such direction was made.

(2)     The interests of justice demand that the rolled-up hearing be split. 

(a)     At present, the respondents are precluded by their confidentiality obligation from disclosing confidential information relating to the interested party.  If leave is granted, depending on the grounds, it may be necessary for the just disposal of the Substantive JR for the respondents to file additional evidence to adduce such confidential information. 

(b)     Proceeding with both the Leave Application and Substantive JR at the same hearing would deprive the respondents of the chance to adduce, and the court the benefit of considering, such full evidence as required in the just and proper determination of the Substantive JR.

(c)     Further, to the extent that the rights and interests of third parties are affected, fairness requires that the interested party and such further third parties be provided with an opportunity to be heard before any disclosure is made.

(3)     Dealing with the Leave Application first in the circumstances is both logical and conducive to increasing cost-effectiveness.

(a)     The logical order would be to first determine whether leave should be granted and if so on what grounds, before venturing into the third party confidentiality issue if necessary.  In this regard, the respondents submit that decisions made by HKAS within the scope of its accreditation services are not amenable to judicial review which, if accepted by the court, would be a complete answer to the entire application.  Should the court decide to refuse leave, considerable time and costs would be saved.

(b)     Conversely, a rolled-up hearing would not save time and costs in the circumstances.  Even if the court were to come to the view that leave should be granted, the consideration and determination of the Substantive JR may have to be adjourned in any event to allow the respondents to file additional evidence, as well as to provide the interested party (and possibly other affected third parties) with an opportunity to make representations on disclosure.

Discussion

17.In judicial review proceedings, where the court cannot, on a quick perusal of the papers for the ex parte application for leave, form an instant view on whether the application for judicial review is reasonably arguable or not, the two stages of leave and the substantive judicial review can procedurally be dealt with in either one of two manners:

(1)     by having a separate oral hearing to consider the question of leave only, to be followed by a substantive hearing of the application for judicial review if leave be granted; or

(2)     by having a rolled-up hearing to determine both the question of leave and the substantive judicial review application.

18.The choice between these two courses is a case management decision.  In most cases, especially cases of some complexity, the latter course of having one composite hearing as opposed to two separate hearings may achieve greater cost-effectiveness and procedural economy and is therefore more often to be preferred.  See Kwok Cheuk Kin v 律政司刑事檢控專員梁卓然 [2019] HKCFI 2215, per Chow J at [8] to [14].[5]

19.And, no doubt, in most cases, such directions can be complied with by both parties, e.g. by the filing and service of evidence addressing both the question of leave and the substantive judicial review in one go without any prejudice to either party.

20.While I have no wish to encourage applications for split hearings in a tactical manoeuvre after the court has directed a rolled-up hearing, one size does not always fit all.  As a case management decision, more often than not made only on a quick perusal of the papers lodged on behalf of the applicant ex parte without notice to the respondent, a rolled-up hearing direction may be varied under Order 25 rule 1B(1) by the court either of its own motion or on the application of a party, although such power and discretion would not be exercised casually but has to be justified by a good reason: Marasinghe v Director-General of Civil Aviation [2019] 5 HKLRD 661 at [34] and [35].  

21.A competing case management consideration can be a good reason.  In the present context, the underlying objective of the Civil Justice Reform under Order 1A, rule 1(d) to “ensure fairness between the parties” is pertinent.  

22.This case presents a somewhat unusual situation where to proceed with the rolled-up hearing would result in the court, should leave be granted, having to decide the issues of the Substantive JR without all the material evidence that the respondents could otherwise have adduced. 

23.This is so because HKAS is under an obligation to the interested party to keep confidential all the material and information provided by the interested party to HKAS in the course of HKAS’ investigation into the Complaint (“Investigation Material”). 

24.First, as an accreditation body, HKAS is bound by the “Conformity assessment – General requirements for accreditation bodies accrediting conformity assessment bodies” (2004 Ed) (“ISO/IEC 17011”) issued by the International Organisation for Standardisation (ISO) and the International Electrotechnical Commission (IEC).  Clause 4.4 of this document provides:

“The accreditation body shall have adequate arrangements to safeguard the confidentiality of the information obtained in the process of its accreditation activities at all levels of the accreditation body, including committees and external bodies or individuals acting on its behalf. The accreditation body shall not disclose confidential information about a particular CAB outside the accreditation body without written consent of the CAB, except where the law requires such information to be disclosed without such consent.” (emphasis added)

25.Second, the HKAS Regulations which governs the relationship between HKAS and the CABs accredited by it stipulates:

(1)     by clause 2.3:

“HKAS Executive will keep confidential all information provided by an organisation in relation to preliminary enquiries or to an application for accreditation and all information obtained in connection with an assessment of an organisation, such that only personnel who require the information for the assessment will be given access to such information … Without written consent of an organisation, HKAS Executive will not disclose confidential information of an applicant or accredited organisation outside of HKAS Executive except as allowed in this document … Where the law requires any information to be disclosed to a third party, HKAS Executive will, where possible and permitted by the law, inform the organisation concerned. Furthermore, HKAS will comply with the provisions under the Personal Data (privacy) Ordinance (Cap 486) and the rules under the Code on Access to Information of the Government.” (emphasis added)

(2)     by clause 5.10:

“An … accredited organisation shall pay due regard to the confidentiality of its customer’s information … Confidential information about a particular customer shall not be disclosed to a third party without the consent of the customer, except where the law requires such information to be so disclosed. …” (emphasis added)

26.According to the respondents, HKAS had written to the interested party on 12 April 2019 and 23 March 2020 respectively to seek its consent to disclose the Investigation Material in these proceedings.  On both occasions, the interested party withheld such consent.  On the second occasion, the interested party stressed the obligation of confidentiality that it in turn owes, under clause 5.10 of the HKAS Regulations, to its customers, except where the law requires such information to be disclosed.  Such obligation of confidence and the interested party’s refusal to waive the same has prevented the respondents from adducing full and accurate evidence to defend the Substantive JR, as stressed in Dr Tang’s affidavits. 

27.The applicant did not contend or suggest that the Investigation Material does not fall within clause 4.4. of the ISO/IEC 17011 or clause 2.3 of the HKAS Regulations.  For the sake of completeness, I did consider the question.  According to paragraph 23 of Dr Tang’s 1^st affidavit, in processing a complaint against a CAB, the HKAS does not focus on the specific incident referred to by a complainant. Rather, HKAS assesses whether the CAB still conforms to the HKAS Regulations and/or the accreditation criteria.  That being the case, the Investigation Material does appear to me to fall within the words “all information obtained in connection with an assessment of an organisation” in clause 2.3 of the HKAS Regulations.

28.One may then ask, assuming that leave is to be granted, how the separate prior disposal of the leave question would remove the limitation that is currently curtailing HKAS’ evidence in opposition to the Substantive JR.  The answer lies in the duty of candour put upon a respondent in judicial review proceedings to assist the court with full and accurate explanations of all the facts and circumstances relevant to the issues which the court must decide once leave has been obtained by the applicant to commence judicial review proceedings.  See Chu Woan Chyi v Director of Immigration [2009] 6 HKC 77 (CA), per Ma CJHC (as the Chief Justice then was) at [14(1)] and Hong Kong Telecommunications (HKT) Limited v Secretary for Commerce and Economic Development & Communications Authority [2019] HKCA 44, per Kwan VP at [38][6].

29.I therefore cannot accept Weng Fok’s suggestion that HKAS has already been in breach of the duty of candour.  Nor do I see the distinction drawn in paragraph 40 of Weng Fok’s written submission between information that assists the applicant in advancing the judicial review proceedings and information that assists the respondent to meet the case raised by the applicant.  The duty of candour is not confined to the disclosure of documents and information beneficial to the applicant’s case.

30.I agree with HKAS that the duty of candour to the court (and to the applicant), once arisen, would create a requirement by the law, within the meaning of clause 4.4 of ISO/IEC 17011 and clauses 2.3 of the HKAS Regulations, to permit HKAS to disclose the Investigation Material, such as the interested party’s said report of 16 January 2010 to HKAS.

31.In the circumstances, fairness between the parties requires the court to hear and determine the Leave Application first so that if leave for judicial review is granted, HKAS shall become free to adduce the Investigation Material in answer to the Substantive JR in fulfilment of its duty of candour to the court (and Weng Fok).

Delay in making the Split Hearing Application

32.The only criticism that I make of the respondents is the time they have taken in making the Split Hearing Application.  As stated in [26] above, HKAS first wrote to the interested party on 12 April 2019 for its consent to disclose the Investigation Material, which means that HKAS should realise the difficulty it would face in preparing its evidence for a rolled-up hearing as soon as it received the interested party’s negative reply.  Yet, the respondents did not make the Split Hearing Application until 8 April 2020, after first raising this procedural issue with Weng Fok on 23 March 2020.  It is incumbent on every party who has become aware of any circumstances affecting the propriety of any case management direction to inform the court and the opposite party of the situation without delay, so as to avoid any wastage of costs and/or court resources.  The respondents should have made the Split Hearing Application within a reasonable time after the first time the interested party declined to agree to the disclosure of the Investigation Material, instead of allowing the rolled-up hearing to be set down.  Indeed, the respondents did not make the Split Hearing Application until after the original date of the rolled-up hearing (i.e. 17 March 2020).  While I think it is relatively of greater importance that the court should decide the issue of the Substantive JR (if the Leave Application succeeds) on full and complete evidence, there should be costs penalty for the respondents’ lack of procedural discipline.

Disposition

33.For these reasons, I allow the Split Hearing Application and direct that the hearing fixed for 17 July 2020 (with 3 hours reserved) be used to deal with the Leave Application only.

34.I also make an order nisi that the Weng Fok shall pay half of the respondents’ costs of and occasioned by the Split Hearing Application on a party and party basis, to be taxed if not agreed, with certificate for counsel.  I apply a 50% deduction of the respondents’ costs to reflect the court’s disapproval of the respondents’ delay in leaving the Split Hearing Application even past the original date of the rolled-up hearing.

Mr Vincent Li, instructed by Lui & Law, for the applicant

Ms Catrina Lam instructed by the Department of Justice and Ms Leona Cheung, Deputy Law Officer (Civil Law) (Ag) of the Department of Justice for the putative respondents

[1] Which has been made an interested party to these proceedings.

[2] The rolled-up hearing was initially re-fixed to 29 April 2020, which also fell within GAP and therefore had to be adjourned again.

[3] Due to the imposition of GAP, the Department of Justice (“DOJ”) originally placed this summons and the supporting 2^nd affidavit of Dr Tang before the Duty Judge under a “Certificate of Urgency” on the same date.  The summons was eventually formally filed after GAP on 6 May 2020.

[4] Hong Kong Laboratory Accreditation System.

[5] This is a convenient point to deal with Weng Fok’s repeated assertions (7 times in paragraphs 4(1), 17, 18, 20, 22, 35 and 56 of Weng Fok’s written submission) that its case is “not unmeritorious” or has “arguable merits” and that Chow J directed a rolled-up hearing because of this.  Without respect, it is cleared from Chow J’s decision in Kwok Cheuk Kin that the highest that the applicant could put it is that its case is not clear on a quick glance of the papers to be not reasonably arguable.  See Kwok Cheuk Kin at [9].

[6] For English authorities for the same principle, see R v Lancashire County Council, ex parte Huddleston [1986] 2 All ER 941, per Sir John Donaldson MR at 945b-c; Belize Alliance Conservation of Non-governmental organisations [BACONGO] v Department of Environment [2004] UKPC 6, per Lord Walker at [85]; Larry Winslow Marshall v The Deputy Governor of Bermuda [2010] UKPC 9, per Lord Phillips at [30] (where the Privy Council recorded, and did not question the correctness of, a concession made by counsel that the duty of candour did not arise until after permission to apply for judicial review had been granted); and Hoareau & Bancoult v Secretary of State for Foreign and Commonwealth Affairs [2018] EWHC 1508 (Admin), per Singh LJ at [13].  One can find a contrary statement in De Smith’s Judicial Review, 8^th Ed, §16-027 at p 929 where the learned authors said, “The duty arises as soon as the public authority becomes aware that someone is likely to challenge a decision affecting them and continues until the proceedings are resolved.”  No authority has been cited for such proposition.  And it is against the weight of the authorities.  See also Judicial Review: Principles and Procedure, §25.122.  Anyway, this court is bound by the Hong Kong Court of appeal authorities.