Sunevision Holdings Ltd v. Hong Kong Science and Technology Parks Corporation
Read the full judgment text of CACV 80/2020 on BabelCite. This Court of Appeal judgment was delivered on 31 May 2022.
1. The applicant, SUNeVision Holdings Ltd, is a company within a listed group that operates five data centres in Hong Kong. It is a major player in the Hong Kong data-centre market.
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CACV 80/2020 [2022] HKCA 763 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 80 OF 2020 (ON APPEAL FROM HCAL 1890 OF 2018) ________________________ BETWEEN
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________________________ J U D G M E N T ________________________ Hon Au JA (giving the judgment of the court): A. INTRODUCTION 1.The applicant, SUNeVision Holdings Ltd, is a company within a listed group that operates five data centres in Hong Kong. It is a major player in the Hong Kong data-centre market. 2.This is the applicant’s appeal against the judgment of G Lam J (as he then was) (“the Judge”) dated 26 March 2020 (“the Judgment”) whereby the Judge dismissed its application for judicial review against the Hong Kong Science and Technology Parks Corporation (“the Corporation”). In the judicial review, the applicant seeks to challenge the Corporation’s decision made on 28 May 2018. It is the applicant’s case that the decision amounts to the Corporation failing to take steps to enforce its own policy relating to the leases that it has granted to grantees to operate data centres at the Corporation’s industrial estate. 3.The Judge has usefully and comprehensively set out the background leading to the challenges in the Judgment at [1] - [51], and we do not intend to repeat the same. However, in order to properly understand the challenges made by the applicant in the judicial review and the issues raised in this appeal, it is still necessary to set out in some detail the following material background facts. B. BACKGROUND 4.The Corporation is a statutory body that was set up in 2001 under the Hong Kong Science and Technology Parks Corporation Ordinance (Cap 565) (“the Ordinance”) to stimulate and promote local technology businesses. It owns three industrial estates in Tai Po, Yuen Long, and Tseung Kwan O. The lands on which these estates are situated are granted to the Corporation by the government for a nominal premium for the purpose of facilitating its mission to stimulate the growth of local technology businesses through intensive research and development activities, and to attract new technology-based investments, with a view to facilitating and broadening Hong Kong’s economic base and upgrading its technology levels. 5.Under the Ordinance, the Corporation in discharging its functions has powers, among others, to sell, let, sublet or otherwise dispose of land or any facilities in any specified premises on such terms and conditions as its Board of Directors considers appropriate[1]. 6.In this respect, the Corporation leases land on its industrial estates (usually at preferential rates) to firms to construct facilities and operate their technology related businesses at rates which are generally much lower than the market rates for land elsewhere in Hong Kong. Applications for tenancies and grants on these estates are approved by the Corporation’s Business Development Admission Committee (“the BDAC”). 7.It is common ground that, in relation to the leasing of land, the Corporation has a general policy against its grantee lessees parting with possession or permitting third parties to occupy premises within an industrial estate (“the Lease Restriction Policy”)[2]. 8.This policy is reflected in the Corporation’s standard lease for individual sections in the industrial estates, which provides in Clause B(11)(a) (with the marginal note “alienation”) (“No Alienation Clause”) as follows:
9.Hence, under the Lease Restriction Policy, the grantee is not permitted to:
10.The Possession Restriction and the Occupation Restriction are collectively referred to as “the Lease Restrictions”. 11.As noted by the Judge at [21] of the Judgment, the rationale behind the Lease Restriction Policy is that land in the industrial estates, granted at a preferential rates for the purpose of fostering the lessees’ development of industries or businesses which the Corporation has seen fit to promote, should be dedicated to such purposes and not used for rental gain[3]. 12.In about 2009, in furtherance of the government’s policy objective of promoting Hong Kong as a data centre hub in the region[4] and following a consultancy report completed in 2009[5], the Corporation considered inviting applications for leasing buildings in the Tseung Kwan O Industrial Estate (“TKOIE”) to operate data centres. 13.In very simple terms, a data centre is a building or dedicated space within a building used to house the data centre operator’s customers’ information and communication technologies (“ICT”) equipment. These typically are computer systems and associated components such as telecommunications, computing system and electronic data-storage systems in a secure and controlled environment. In this respect, for the customers, it is critical to ensure that their IT operations (a) are uninterrupted, and (b) have information security. Hence, data centres will provide essential services (“DC Services”) to IT operations by providing them with an ultra-secure and fault-proof environment, equipped with redundant facilities including power, cooling, data connection, to protect against risks of power failure, fire, temperature fluctuations, as well as security risks such as damage, hacking or leakage of data, with round-the-clock real-time surveillance, monitoring and servicing, so that the highest standards in integrity and functionality of the ICT equipment hosted there can be attained[6]. 14.As also pointed out by the Judge at [10] of the Judgment, a data centre is not an ordinary building or a warehouse. A data centre would typically be developed with special electrical and mechanical infrastructure to provide a reliable physical environment required for the operation of ICT equipment. The sophistication level of the technology involved depends on the level, or “tier” of the data centre in question. For example, according to the “Tiers Classification System”[7], the tier classification between Tier I to Tier IV is determined on the level of reliability of a data centre. The higher the tier, the more reliable the data centre infrastructure is, and the more substantial the investments and resources required to maintain that high level of fault tolerance and round-the-clock connectivity. In order to achieve the higher tier classification, a data centre operator has to invest very substantially not just on the plant and infrastructure, but also on manpower and technology upgrades. As a matter of fact, all of the data centre tenants in TKOIE are at least Tier III if not Tier IV[8]. 15.There are also other ways of classifying data centres. What we are concerned with in these proceedings is based on what is known as a “colocation” business model. “Colocation” simply refers to data centres that, instead of providing equipment solely for self-use by the operator, make the services available to their customers. Under this model, the data centre operator provides space for the customer to house or “colocate” its own ICT equipment with a range of services in respect of this equipment, which invariably include the DC Services and any other additional services that a data centre offers to its customers over and above the DC Services. It is up to the customers to decide, according to their own needs, whether to subscribe to these additional services offered by the data centre (“Subscribed Services”), or to outsource them to other service-providers, or to do them in-house[9]. 16.For present purposes, in brief, colocation data centres may operate in different models depending on the level of services, extent of space, and the degree of exclusivity and control of that space that are to be provided to their customers:
17.Given the very nature of the colocation model of operation, before inviting applications for leasing buildings in TKOIE to operate data centres, the Corporation was aware of the concern that the grantees of the lease might be considered as being in breach of the Lease Restrictions. This is so as colocation operation involves the accommodation of multiple users, and the occupancy of spaces on the premises by persons other than the grantee through placing their equipment within the data centre. This might be considered as amounting to sub-letting or licensing of occupation of the data centre or part thereof. As a result, it was once suggested by the Government to the Corporation that it might have to consider amending or relaxing its Lease Restriction Policy before inviting tenders from data centre operators[11]. 18.After seeking legal advice and having various discussions, at its meeting on 9 February 2010, the BDAC resolved that it did not need to relax or amend the Lease Restriction Policy and it would adopt the admission policy that applicants for operating data centres at the Corporation’s industrial estates (designated for that purpose) must meet the following three criteria (together with the other normal admission criteria) to be considered not in breach of the Lease Restriction Policy:
19.Further, the “approved use” for data centre in the lease shall be “to operate a data centre to provide collocation (sic) services as well as internet connectivity and other networking services, managed and outsourcing services on facilities, data centre management and system management” (“the Approved Use Requirement”). 20.The above three criteria (“the Three Criteria”) and the Approved Use Requirement as the “Data Centre Policy” has since been adopted by the Corporation as part of its admission criteria for evaluating applications by data centre operators for leasing premises in the Corporation’s industrial estate[13]. 21.The Corporation’s said adoption of the Data Centre Policy in considering applications for operating data centres at its industrial estates and the TKOIE is evidenced by and explained in various documents[14]:
22.In early 2012, the Corporation decided to make available three contiguous vacant pieces of land[15] on the waterfront of TKOIE[16] for application for leasing them to operate as date centres. As in the Judgment, for convenience, two of these pieces of land shall be referred to as “Section B” and “Section C” in this judgment. 23.The Corporation issued an invitation for tenders to various potential tenderers including the applicant. In the invitation for application for Site C, the Corporation reminded the potential tenderers of the restrictions in the Lease Restriction Policy and the Three Criteria under the Data Centre Policy:
24.There were four conforming bids for Site C. One bid was submitted by Wealth Up Development Ltd, the applicant’s subsidiary. Another was submitted by Global Switch (“GS”). The Corporation asked the tenderers several questions when considering the bids. One of the questions, addressed to both the applicant and GS, was this:
25.Further, it was the Corporation’s policy to request all grantees to submit a pro forma service agreement for approval. This was to ensure that the terms on which a grantee engaged a customer would be consistent with the terms of the lease. 26.On 25 May 2012, Site C was granted to GS. On 9 November 2012, the Corporation approved a (revised) pro forma services agreement that was submitted by GS (“GS Pro Forma Services Agreement”). The GS Pro Forma Services Agreement was the standard services agreement that GS would adopt when contracting with its customers. 27.On 13 November 2012 the Corporation and GS entered into the formal agreement for the lease for Site C. The lease for Site C (“Site C Lease”) was annexed to the formal agreement. The Second Schedule for the Site C Lease contained various material terms. 28.First, Clause B(14)(a) sets out the permitted user:
29.Clause B(14)(b) further explicitly recognised the status of the GS Pro Forma Services Agreement:
30.There are other data centre operators who also became lessees on TKOIE, namely, HKCOLO.NET Ltd (“HKCOLO”) and NTT Com Asia Ltd (“NTT”). The applicant’s subsidiary was not however successful in its application. It is the applicant’s position they had put in an application which was based on a retail colocation model but not wholesale colocation model (which would have involved a much more substantial proposed investment level) as it was the applicant’s understanding that the Lease Restrictions under the policy would only permit the former operation model but not the latter[17]. 31.After having lost the bid for Site C, in 2013 the applicant acquired a piece of land in Tseung Kwan O to construct a data centre. In January 2018 the applicant acquired another piece of land in Tsuen Wan for a similar purpose. The applicant acquired all these lands at substantial cost. 32.Since November 2012, the applicant frequently wrote to the Corporation complaining that various data centre grantees on TKOIE were violating the No Alienation Clause. The gist of the complaints was that these grantees were operating the data centres on a “wholesale” model of colocation, which was in breach of the No Alienation Clause, and hence the Lease Restrictions. This resulted in a chain of correspondence between the applicant and the Corporation. 33.The applicant’s complaints were not only directed against GS. They were also directed against some of the other data centre operators who were tenants on TKOIE, such as HKCOLO and NTT[18]. 34.On 16 November 2012, the applicant instructed its solicitors, Messrs Woo Kwan Lee and Lo (“WKLL”), to make an anonymous complaint to the Corporation that HKCOLO was violating the No Alienation Clause. On 5 December 2012, Mayer Brown JSM (“JSM”) replied on behalf of the Corporation that they were looking into the case already (“the 5 December 2012 Letter”). 35.On 13 August 2013, WKLL complained that the breaches set out in the 16 November 2012 letter were continuing and further complained that HKCOLO was violating the No Alienation Clause by subletting to IBM. On 21 August 2013, JSM asked WKLL to disclose the name of its clients. WKLL refused. On 27 December 2013, JSM said that the Corporation had always taken lease enforcement very seriously and would continue to actively monitor compliance (“the 27 December 2013 Letter”). 36.On the other hand, in respect of the complaints relating to IBM, the Corporation did eventually take enforcement action and the breaches were rectified by July 2014. 37.In 2018, the applicant again instructed WKLL to lodge a complaint with the Corporation. This resulted in a comprehensive letter of complaint dated 6 April 2018 (“WKLL 2018 Letter”). 38.The WKLL 2018 Letter alleged that there had been an apparent change of policy or a policy of condonation by the Corporation in relation to the Lease Restriction Policy. WKLL listed six incidents as evidence of its complaint. These incidents concerned, inter alia, HKCOLO, NTT, and GS. In essence, the applicant complained that all these data centre operators operated on a “wholesale” colocation model, which effectively parted possession of their leased space to their customers or licensed their customers to occupy the space of premises. These actions were not permitted under, and thus were in breach of, the Lease Restriction Policy. The applicant therefore stated that the Corporation had either changed their relevant policy or had a policy of condoning such breaches. It further demanded the Corporation to take enforcement actions. 39.The Corporation’s solicitors, Messrs Wilkinson and Grist, replied to the complaint by a letter dated 28 May 2018 (“the 28 May 2018 Letter”). In gist, the Corporation replied that it did not notice any breaches by the grantees as alleged by the applicant. In this respect, it further emphasized that there was no change of any policy and there was also no policy of condonation. It maintained that the Corporation had been regularly carrying out inspections of the operation of those centres and was of the view that there had not been any breaches of the relevant policies by the grantees. It reiterated that the Corporation would continue to carry out regular inspection and would take enforcement action if and when necessary. The relevant parts of the 28 May 2018 Letter are as follows:
40.Dissatisfied with this reply, on 10 September 2018, the applicant applied for leave to apply for judicial review. 41.The judicial review seeks to challenge the Corporation’s decision (“the Decision”) as contained in the 28 May 2018 Letter not to take immediate steps to rectify the failure or refusal to take reasonable steps to enforce restrictions in leases against subletting, parting with possession and / or sharing of occupation in TKOIE, the reasons therefor being provided in the letter[19]. 42.In the Amended Form 86, the applicant contended that the reasons provided in the 28 May 2018 Letter showed that insofar as the Lease Restrictions were concerned[20]:
43.Premised on these contentions, the applicant advanced its grounds of judicial review as categorised by the Judge at [66] - [69] of the Judgment as follows[21]. 44.Ground 1: Breach of the applicant’s legitimate expectation that the Corporation would enforce the Lease Restrictions under the Lease Restriction Policy:
45.Ground 2: The Corporation made certain errors of law or misdirected itself in law in construing the Lease Restriction Policy:
46.Ground 3: The Corporation failed to appreciate that its policy was in effect to allow the grantees to operate a typical “retail colocation model” but not under a typical “wholesale colocation model”, and failed to take into consideration the terms between the grantees and their customers which conferred right to possession or right of occupation as well as the fact that the grantees had allowed their customers possession or occupation of the premises. 47.Ground 4: Despite the applicant drawing attention to the specific alleged breaches by NTT, GS and HKCOLO, the Corporation, in breach of its Tameside duty, failed or refused to take reasonable or necessary steps to inquire into the facts and to take necessary actions. 48.The applicant hence sought an Order of certiorari to quash the Decision, and an Order of Mandamus to direct the Corporation to reconsider the Decision in accordance with the law[22]. 49.In opposing the judicial review, other than contending that the applicant’s grounds of review are without merits, the Corporation further argued that the application should be dismissed for the applicant’s undue delay in taking out the application and / or that the court should refuse to exercise its discretion to grant the relief sought as that in effect would amount to directing the Corporation to come to a fresh decision that would have the effect of asking GS to impugn or repudiate the GS Pro Forma Services Agreement. C. THE JUDGMENT 50.As mentioned above, by the detailed and comprehensive Judgment, the Judge rejected all the grounds of judicial review. His detailed reasons for rejecting these grounds can be summarized as follows (unless otherwise stated, all the paragraph references below are references to the Judgment). C1. Ground 1 – breach of legitimate expectation and misconstruction of the relevant policy by the Corporation 51.As the Judge observed, these complaints are premised on the applicant’s principal contentions as to what it says to be the proper meaning of the Lease Restriction Policy and that the Corporation has misconstrued the same. 52.In relation to these contentions, the Judge first found that an examination of the services agreement, in the context that GS’s data centre (which like all other data centres admitted to TKOIE) is of Tier III or higher, shows that the placement of the equipment in the customer space is not for the purpose of storage, but for the purpose of utilizing and receiving the services provided by GS (the data centre operator) through the use of highly sophisticated electrical and mechanical infrastructure with round-the-clock security and monitoring. See: [97]. 53.The Judge then further found that on a proper reading of the services agreement (which is the same form of the GS Pro Forma Services Agreement):
54.The Judge therefore also concluded that in approving the GS Pro Forma Services Agreement, there was no departure from or misapplication of the Data Centre Policy. See: [112]. 55.The Judge did not allow the applicant to argue that the Corporation has departed from its policy as GS has allowed or permitted its customer to occupy the premises by licence or otherwise in breach of the No Alienation Clause and thus the Lease Restrictions. The Judge was of the view that this complaint based on occupation was not properly pleaded in the Amended Form 86 and did not constitute part of the complaints under the various grounds of judicial review. The Judge was of the view that this was an afterthought. See: [119] - [126]. 56.However, in any event, the Judge went on to conclude that the Corporation did not misinterpret its own polices vis-à-vis the complaint that GS had allowed its customer to occupy the premises:
57.The Judge therefore concluded that the applicant’s case that the Corporation has erred in treating the Data Centre Policy as sufficient for ensuring compliance with the Lease Restriction Policy is not established. See: [131]. C2. Ground 2 – errors of law 58.The Judge dismissed Grounds 2(1) - (4) for the following reasons. 59.Under Ground 2(1), the applicant says the Corporation treated the question of whether customers were granted exclusive possession as a question of discretion or policy or on the basis of an alleged “trade practice”, since it adopted the words such as “considers” and “trade practice” etc in explaining its decision. The Corporation also took into account irrelevant consideration in taking into account “trade practice”. 60.The Judge rejected this complaint:
61.Under Ground 2(2)(a), the applicant contends that the Corporation erred in law in considering that the Lease Restrictions would not be breached as long as any services other than the provision of space were provided by the data centre operator to its customers. The applicant says this is wrong as the material question should be the degree of control over the premises and their use retained by the grantee. 62.The Judge accepted that if that was the case, it would be an error of law. But he rejected the complaint as the 28 May 2018 Letter properly read did not suggest that that was the Corporation’s position, as it stated expressly that this depended on three factors “(i) exclusive possession shall be retained by the grantees, (ii) the provision of managed services shall be the dominant element of operation in the premises, and (iii) rights of access to the premises shall remain within the exclusive control of the Grantees at all time…”. He also noted that the dominant services required to be provided do not mean any services, but high-value services such as Facility Management, System Management and Network Management. See: [144] - [146] 63.Under Ground 2(2)(b), the applicant contends that the Corporation erred in law in considering that the Lease Restrictions would not be breached as long as the grantee as 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”. 64.The Judge rejected this complaint as this was taking words from the letter out of context. On any proper reading of the letter, it does not say that this alone would be treated by the Corporation as a sufficient condition for compliance. It is only one of the factors that the Corporation is (properly and undisputedly) entitled to take into account in considering whether exclusive possession has been granted by the grantee to the customer. See: [147] - [148]. 65.Under Ground 2(2)(c), the applicant contends that the Corporation erred in law in considering that the Lease Restrictions would not be breached as long as the relationship between a grantee and its customers is governed by terms essentially in the form set out in the GS Pro Forma Services Agreement. 66.The Judge rejected this ground on the basis that it would not be an error of law for the Corporation to take into account the pro forma services agreement and take the view that the Lease Restrictions would not be breached so long as the relationship between GS (or the other grantees, NTT and HKCOLO) and its customer is governed by terms substantially in the form of the pro forma services agreement already approved. This is so since it could not have been intended by the parties that an agreement conforming to that which had been expressly approved by the lessor would nevertheless be regarded as a breach of the lease. See: [150] - [158]. 67.Under Ground 2(3): the applicant says the Corporation erred in law in assuming that the provision of colocation services in the data centre industry necessarily required the operator to part with possession of the premises. This is wrong, as the typical retail colocation model would be compatible with the policy and not be in breach of the No Alienation Clause. The Judge accepted that such an assumption would be a misdirection but rejected the complaint as there was no such assumption made by the Corporation in the 28 May 2018 Letter or otherwise. See: [160]. 68.Under Ground 2(4): the applicant says the Corporation in stating in the letter that it would only take action against breaches if the grantee refused to take remedial actions, erred in law in thinking that all breaches of the lease were capable of remedy as subletting would constitute fundamental breach incapable of remedy. The Judge rejected this as:
C3. Ground 3 – the Corporation misunderstood its own policy and failed to appreciate that it was in effect to allow the grantees to operate a data centre under a typical retail colocation model but not a typical wholesale colocation model 69.The Judge rejected this ground:
See [175]-[177]. C4. Ground 4 – failing to discharge its Tameside duty 70.The Judge concluded that there was no breach of Tameside duty as the Corporation had taken reasonable steps to inquire into any potential breaches of policy or the lease as complained of:
See: [180] - [197]. C5. Question of delay and exercise of discretion 71.After refusing the judicial review on merits upon rejecting all the grounds of judicial review:
D. THIS APPEAL D1. Grounds of appeal 72.In its 26-page long Notice of Appeal, the applicant effectively challenges all the essential reasons of the Judge in rejecting the grounds of judicial review and, if necessary, his conclusion on the question of delay[23] and refusing to exercise the discretion to grant reliefs. 73.However, as summarized by Mr Yu SC (leading Ms Sara Tong) in their written submissions for the applicant, the main grounds of the appeal are these:
74.At the hearing, Mr Yu has further made it clear that the principal focus of his arguments on appeal is that the Corporation had misconstrued its policies, as this forms the fundamental underlying basis of all the grounds of review. He says that the Corporation’s interpretation of the policies, as shown by the 28 May 2018 Letter, had the effect of allowing customers of data centres to occupy (part of) the data centre, which violated the No Alienation Clause and therefore contravened the Lease Restriction Policy. 75.Mr Yu has further accepted and emphasized in his oral submissions that his complaints in this appeal are based principally on a breach of the Occupation Restriction. His focus is not on the restriction against the parting of possession. 76.In this respect, his primary complaints are that the Judge has erred in concluding that (a) the contentions based on occupation had not been properly pleaded by the applicant, and (b) in any event, there is no merit in them as the Lease Restriction Policy must be read subject to the Data Centre Policy, which inherently permits occupation by the customers of the grantee’s premises which have been designated as the customer’s space. 77.Mr Yu further submits that the Corporation’s misconstruction of its policies is further evidenced and shown by its approval of the GS Pro Forma Services Agreement. He submits that the GS Pro Forma Services Agreement in effect allowed customers to occupy the data centre in contravention of the Lease Restriction Policy. 78.In light of Mr Yu’s above clarifications and indication as to the focus of his contentions, the following core issues arise in this appeal:
79.We will look at these issues in turn. D2. Is the judicial review challenge based on a complaint of sharing of occupation sufficiently pleaded? 80.This issue arises as follows. 81.It is common ground that under the No Alienation Clause, the grantee is not permitted to “part with possession of the said premises” or “permit any other party by way of a licence or otherwise to occupy the said premises or any part thereof”. As mentioned above, Mr Yu has confirmed that in this appeal, the applicant would focus on its complaint that the grantees in question have permitted their customers to “occupy” the customer space in the relevant data centres, and the Corporation has, in misconstruing the relevant policies, failed to enforce the Occupation Restriction. 82.However, insofar as the complaint based on the Occupation Restriction is concerned, the Judge ruled that this point was not open to the applicant as this was not sufficiently pleaded. Indeed, the Judge was of the view that the arguments based on the breach of the Occupation Restriction were an afterthought. See: [126] of the Judgment. 83.With great respect to the Judge, we are of the view that, as submitted by Mr Yu, the applicant has sufficiently pleaded in the Amended Form 86 a complaint also based on the Occupation Restriction. In particular, we note the following specific pleas in the Amended Form 86:
84.When all these specific pleas are read together, we find that the applicant has sufficiently pleaded its case relying also on the Occupation Restriction in support of its grounds of judicial review. 85.We therefore disagree with the Judge and consider that this contention is open to the applicant to rely on in its judicial review. Thus, the applicant is entitled to rely on this in support of this appeal. 86.This takes us to the next issue. D3. The proper construction of the Lease Restriction Policy and the Data Centre Policy 87.As both Mr Yu and Ms Sit agree, the question of the proper construction of the Lease Restriction Policy is the core issue that underlies the judicial review application and the appeal. In particular, given Mr Yu’s clarification on the focus of his submissions in this appeal, it is the proper construction of the meaning of the Occupation Restriction that features most importantly. 88.In this respect, Mr Yu submits that the Judge has not arrived at a conclusion on the proper construction of the meaning of the Lease Restrictions in the context of data centres. Instead, the Judge effectively concluded that the Corporation has a policy of enforcement that the Lease Restriction Policy would be read subject to the Data Centre Policy, and thus so long as a grantee has met the requirements under the Data Centre Policy, it would be taken to have also complied with the Lease Restriction Policy. The Judge has explained this at [129] of the Judgment as follows:
89.Seizing on this part of the Judgment, Mr Yu has also submitted at the hearing that the Judge committed a fundamental and overarching error in concluding that there is a “policy of enforcement” that once the criteria in the Data Centre Policy have been met, the Corporation would also treat the Lease Restriction Policy as having been complied with. Mr Yu says this is plainly wrong as (a) it is clear from the Feb 2010 BDAC Paper that the Data Centre Policy is about admission criteria and thus has nothing to do with enforcement, and (b) none of the parties, including the Corporation, in these proceedings had ever sought to argue that there is a separate policy on enforcement. Mr Yu therefore submits that, on this basis alone, the appeal should be allowed. In any event, Mr Yu also submits that it was not open to the Judge to rely on the Feb 2010 BDAC Paper to construe the published policy as that paper was an internal document and not published to the public. 90.In our view, this “fundamental error” argument would not take Mr Yu’s appeal much further without considering the proper construction of the meaning of the Occupation Restriction. This is so as the Judge’s reference to a “policy of enforcement” would not have much effect on the outcome of the application if, on a proper construction of the Lease Restrictions in the Lease Restriction Policy in the context of data centres, they bear the same meaning as the Three Criteria and the Approved Use Requirement. 91.On this basis, we would turn to consider the question of the proper construction of the Lease Restriction Policy, in particular the meaning of the Occupation Restriction. 92.Before we consider the contentions raised by the parties in this issue, it is important to set out what is not in dispute for this purpose. 93.First, it is common ground that the construction of policy is a question of law for the court, which is to construe the subject policy objectively and in its proper context. 94.Second, the meaning and the scope of the restrictions in the relevant policy may change depending on the context, though one cannot construe one part of the policy out of existence because of a different context. 95.Third, the Lease Restriction Policy and the Data Centre Policy are not inconsistent with each other and the Lease Restriction Policy is also not subsumed into the Data Centre Policy. A grantee data centre operator must comply with both the Lease Restrictions under the Lease Restriction Policy and the Data Centre Policy. 96.As mentioned above, the focus now in this appeal is about the meaning of the restriction against sharing or licensing occupation in the Lease Restriction Policy. We will therefore focus on this below. 97.In this respect, we do note that Mr Yu’s primary contentions are however that it is unnecessary for him or the court to come to a firm view on the meaning of the Occupation Restriction. This is so as the central plank of the judicial review grounds is that the Corporation had clearly misconstrued its own policy since it had purportedly decided that there could not be any breach of this restriction simply on the basis that (a) it is a trade practice in a colocation operation of data centres that the customers’ equipment has to be placed in the space provided in the premises by the grantee, and (b) the placing of the equipment is for the purpose of receiving services provided by the data centre operator. This cannot be correct, says Mr Yu, as whether there is indeed a breach of a restriction under the relevant policy is a mixed question of fact and law, and must be something which is dependent on the factual circumstances and the degree and extent of the matters. That cannot possibly be determined by simply looking at the trade practice and saying that (solely by reference to the terms of the relevant pro forma service agreement) the customer is placing the equipment in the designated space for the purpose of receiving the services to be provided by the grantee. 98.Further, Mr Yu also submits that the Corporation had similarly plainly misconstrued the Lease Restriction Policy by reference only to the compliance with the Data Centre Policy as a satisfactory compliance with the Lease Restriction Policy as well, since it is clear that the Data Centre Policy has made no reference to the restriction against sharing of occupation. In the premises, in the 28 May 2018 Letter, in misconstruing the Lease Restriction Policy, the Corporation has plainly failed to address the question of the Occupation Restriction and whether on the facts of the complaints, the grantees were in breach of that restriction. 99.However, when pressed by the court on what he submits to be the meaning of “occupation” the sharing of which is intended to be prohibited under the Lease Restriction Policy, Mr Yu submits that the word “occupation” in the restriction, when construed in the context of data centres, does not refer to the mere fact that the customer’s equipment is placed in (and thus “occupying”) part of the premises, but refers to the position where the customer would have primary control of access to the designated area where it puts the equipment, and the data centre operator has only a limited access to it. However, whether as a matter of fact there is a breach would depend on the actual circumstances relating to matters such as the size of the designated space the customer has, the degree and extent of the primary control of access to that space that has been granted to the customer, and the extent and degree of the limit of access that the grantee has retained. These, Mr Yu submits, are however not a question of construction. 100.At the same time, Ms Sit SC (leading Ms Esther Mak) for the Corporation also submits that the word “occupation” in the Lease Restriction Policy in the context of data centres cannot be intended to mean the mere placing of equipment by the customer in the relevant space of the premises. She also submits that it cannot be intended to include the kind of data centre operation that would meet all the criteria set out in the Data Centre Policy. This is so as:
101.In other words, Ms Sit effectively submits that the Occupation Restriction under the Lease Restriction Policy, construed in the context of Data Centre Policy, cannot objectively be intended to cover the kind of operation where the data centre operation model has met all the criteria under the Data Centre Policy. 102.In our view, the construction of the Lease Restriction Policy should take place in the following proper contexts:
103.Once construed in these contexts, objectively, it is plain that the Possession Restriction and Occupation Restriction imposed respectively against parting of possession and licensing or sharing of occupation serve the purpose of ensuring that the grantee operates at the premises a data centre satisfying the Approved Use Requirement as provided for in the lease, by prohibiting any operation in a manner which renders its exclusive possession, occupation or control of the premises non-exclusive; or its managed services as the dominant element of arrangement with its customers subservient. 104.In the premises, to achieve these purposes, the Possession Restriction and the Occupation Restriction should be construed in such a way as to prohibit a grantee from running or operating a business in the Corporation’s property that amounts to in substance subleasing or subletting and a business that would not foster and facilitate the growth of local technology through intensive research and development activities. 105.In this respect, the primary or principal purpose of the customer’s occupation of the grantee’s space is relevant to determining whether that amounts to “occupation” that is intended to be prohibited under Lease Restriction Policy. As Mr Yu himself also submits, if a shop is leased to a tenant to carry out a computer repair business, with a restriction of sharing occupation in the lease, the fact that tenant’s customers have to place their computers in the shop for the purpose of being repaired would not amount to a breach of the Occupation Restriction. In other words, if the “occupation” by the customer’s equipment or belongings of the space or place is for a purpose consistent with the carrying out of the business for which the place is leased to the tenant in the first place, this could not be intended to be restricted or prohibited under the Occupation Restriction in the lease. This must be correct, as otherwise, the restriction would have defeated the intended or permitted user of the rented premises. 106.Thus, when the word “occupation” in the Occupation Restriction is read together with the Approved Use Requirement in the Data Centre Policy, it is intended to prohibit a data centre operator grantee from permitting its customer to use the designated space primarily not for the purposes approved by the Corporation as set out in the relevant lease. 107.Further, as submitted by the applicant, although possession is not the same as occupation in law, sometimes, the distinction between the two is technical and elusive: Akici v LR Butlin Ltd [2005] EWCA Civ 1296 at [23]. On the other hand, they are clearly two different concepts. As commented by the learned author in Gray & Gray, Elements of Land Law (5th ed) at paragraph 4.1.63:
108.Moreover, the courts have frequently emphasized that the word “occupation” is not a legal term of art and does not have a single meaning. Its meaning depends on context and purpose: PCCW-HKT Telephone Ltd v Link Properties Ltd [2019] HKCA 82 at [33]. 109.On the other hand, despite this, the word “occupation” still has a core natural meaning. In Graysm Holdings Ltd v P&O Property Holdings Ltd [1996] AC 329, Lord Nicholls remarked at 335F - 336C as follows:
110.Hence, the word “occupation” connotes a degree of presence over the relevant space, and the “occupier’s” power to exclude other persons from that space. The degree of presence and exclusion that would amount to “occupation”, however, depends on the facts of each individual case and on matters such as “the nature of the premises, the use to which they are being put, and the rights enjoyed or exercised by the persons in question”. 111.In the premises, one of the essential elements in determining whether there is “occupation” is the degree of the power of the purported occupier to exclude others, including the person granting the occupier’s right to use that place or space, from that place or space[28]. 112.In this respect, when the word “occupation” is read in the context of and consistently with the Exclusive Control Criterion under the Data Centre Policy, the Occupation Restriction would mean that a data centre grantee operator must not permit the customer to have such primary control of access to the designated space as would result in the grantee not having exclusive control of access to the customer space[29]. 113.Hence, taking the above computer repair shop as an example again, there may well be a question of whether the tenant is in breach of the prohibition against occupation under the lease say if he does not only allow the customer to place its computer in his shop for the purpose of repair, but also designates a specific area in the shop for a particular customer to place its computer and agrees that he can only access that designed area with the permission of that customer and / or upon giving reasonable notice to the customer. 114.When considered in the light of all of the above, and given the mode of operation of a data centre which almost invariably involves the customer placing its equipment in the grantee’s premises, we are of the view that meaning of the Occupation Restriction in the Lease Restriction Policy construed in the context of the Data Centre Policy refers to the occupation by the customer of the grantee’s space or premises which is not for the primary purpose of receiving the relevant data centre services provided by the grantee and / or where the customer’s control of access to the space or place designated for the customer would render the grantee not having exclusive control of access. D4. Whether the Corporation has misconstrued the policies as shown in the 28 May 2018 Letter 115.The applicant’s primary complaint about the Corporation’s misconstruction of the Lease Restriction Policy, even viewed in the context of data centres, is in relation to the following parts of the reply at paragraphs 3 and 4 of the 28 May 2018 Letter:
116.Objectively read, what the Corporation was stating in these paragraphs is that under the Lease Restriction Policy, properly understood in the context where the premises have been granted to the grantee to operate a data centre, the Occupation Restriction (and Possession Restriction) do not prohibit the placing of the equipment by the grantee’s customer in the premises for the dominant purpose of receiving the data centre services provided by the grantee. 117.Given our above conclusion on the meaning of the Occupation Restriction in the Lease Restriction Policy understood in the context of Data Centre Policy, the problem with the Corporation’s above interpretation is that it has not taken into account the element of whether the grantee has exclusive control of access to the place within the premises which is designated for the customer’s use. 118.This may raise a further problem as to whether, for example, the fact that it is provided in the GS Pro Forma Services Agreement that GS has the right to access to the customer space by giving reasonable notice and only for the stated purposes only amounts to rendering GS not having exclusive control of access and thus infringes the Occupation Restriction. 119.GS’s right of access to the customer space is provided at clause 2.2(b) of the GR Pro Forma Services Agreement as follows:
120.Ms Sit submits that the stated purposes for access in the clause effectively cover all aspects of GS’s operations as a data centre operator, and thus it is almost without restriction. On the other hand, Mr Yu contends that the contractual restrictions requiring giving reasonable notice and on the purposes of access show plainly that GS’s right of access to the customer space is circumscribed, leaving the customer effectively with control over the access to the space. This is particularly so if the designated customer space is, as in the case of GS, of enormous size. 121.The Judge has in fact dealt with the effect of this clause at [103] - [109] of the Judgment and concluded that these restrictions to GS’s right of access to the customer space did not result in GS granting exclusive possession of the customer space to the customer. His reasons are as follows:
122.Without determining whether the Judge’s analysis is a correct one, it must however be noted that that was made (a) in the context of the Possession Restriction and whether “exclusive possession” had been granted by GS to its customer after considering the limitations provided in clause 2.2(b) and (b) on the basis of the fact that GS had indeed been allowed access by some of its customers in the absence of reasonable notice. The conclusion may well be different when considered in the context of “occupation”[30]. 123.But in any event, in our view, it is unnecessary and inappropriate for this court to deal with this question for the purpose of the appeal. This is so as, as explained above, in making the Decision and in considering whether the Lease Restrictions had been breached as alleged, the Corporation did not in fact consider the question of the grantee’s control of access to the customer space because of its misconstruction of what would amount to compliance with the policy. This therefore did not form part of the reasons for the Decision. 124.Further, as also explained above, and indeed reflected in the Judge’s reasons as quoted above, whether or not GS’s control of access to the customer space is so limited as to render it not having exclusive control of access to it (and thus amounting to a breach of the Occupation Restriction) is very much a question of degree and extent depending on the actual facts and circumstances of the case. As noted by the Judge at [106] and [107] of the Judgment, the actual circumstances as to whether GS in fact had free access to the particular customer space may well also be different from what is provided in the clause[31]. 125.In the premises, the court should not venture into this issue in a vacuum without knowing what the Corporation’s evaluation and position on this is. D5. Are the grounds of judicial review established
126.The Corporation has not disputed that the applicant has a legitimate expectation that grantees who are data centre operators in the relevant industrial estates are prohibited by the Corporation to sublet or part with possession of the leased premises, or to license or allow third parties to occupy any part of the premises, as these are restrictions expressly stated in the Corporation’s published policy[32]. 127.In the premises, we agree with the applicant that once the Decision made was based on a wrong construction of the Lease Restriction Policy on the meaning of the Occupation Restriction in the context of data centres as explained above, it was made in breach of the applicant’s legitimate expectation, as the Corporation would not be properly enforcing its policy in relation to this restriction. 128.The applicant should therefore succeed on Ground 1(1). 129.The applicant has also complained that by approving the GS Pro Forma Services Agreement, the Corporation has similarly breached the applicant’s legitimate expectation since “the terms of the GS Pro Forma Services Agreement itself offend” the Lease Restrictions as they “permit Global Switch’s customers to have possession of or to occupy” the customer space, “do not allow Global Switch to retain absolute and exclusive control, access and possession” of the customer space, and “do not require Global Switch to provide managed services as the dominant element of its operation on the leased premises”[33]. 130.Mr Yu at the hearing has confirmed that the applicant is not seeking to challenge the approval of the GS Pro Forma Services Agreement in this judicial review, since (as rightly held by the Judge) it is simply too late for it to do so. Counsel has made it clear that this is relied on as an additional or alternative piece of evidence or facet to show that the Corporation has misconstrued the Lease Restriction Policy. He emphasises that he does not need to rely on this complaint if the court accepts his primary contention that in making the Decision for the reasons set out in the 28 May 2018 Letter, the Corporation had misconstrued the Lease Restriction Policy. 131.On that basis, and for the reasons we set out at [123] - [124] above, we agree with the Judge that the applicant has not established Ground 1(2).
132.As explained by the Judge, under Ground 2 of the judicial review, the applicant contends that the Corporation in making the Decision has committed the following errors of law or has misdirected itself in law:
133.The Judge rejected Ground 2(1) for the reasons at [137] - [141] as follows:
134.We agree with these reasons. It is clear from a proper reading of the letter that the Corporation did not make the Decision on the basis that it treated it as a matter of discretion or purely based on the stated “trade practice”. 135.Insofar as Grounds 2(1)(a) - (b) and (3) are concerned, for the reasons we have explained above as to why the Corporation had misconstrued the Lease Restriction Policy in making the Decision, we agree that the Corporation has committed those errors of law in treating the grantee data centre operator as having complied with the Lease Restrictions without considering the question of the grantee’s control of access to the customer space. 136.The Judge’s rejection of these grounds was based on his reading of the restrictions under Lease Restriction Policy being subject to the Data Centre Policy as explained at [129] of the Judgment without, with respect, considering the Corporation’s failure to consider the question of control of access. In the premises and for the above reasons, we find that the Judge has erred in this respect. 137.Ground 2(1)(c) relates to an alleged error of law insofar as the Corporation relied on the approval of the GS Pro Forma Services Agreement as a basis for making the Decision. The complaint under this ground is the same as what the applicant has set out at paragraph 37D of the Amended Form 86[34]. For the same reasons we have explained at [129] - [130] above, the applicant has failed to establish this ground, and we would uphold the Judge’s rejection of the same. 138.As to Ground 2(4), the Judge rejected this ground for the reasons given at [161] - [164] of the Judgment as follows:
139.We agree entirely with the Judge’s reasons. We do not think Mr Yu seriously challenges this part of the Judgment in this appeal. We therefore would uphold the Judge’s dismissal of Ground 2(4).
140.Again, as summarized by the Judge, the applicant complains under Ground 3 that the Corporation failed to appreciate that its policy was in effect to allow the grantees to operate a typical retail colocation model but not a typical wholesale colocation model, and failed to take into consideration the terms between the grantees and their customers which conferred right to possession or right of occupation as well as the fact that the grantees had allowed their customers possession or occupation of the premises. 141.Insofar as the applicant relies on what it describes as the distinction between a “retail colocation” and “wholesale colocation” business models in support of this ground, we do not think it is correct. We think Mr Yu also accepted at the hearing that, as the evidence shows, there is no universally accepted classification of the so-called “retail” and “wholesale” colocation models. All that the evidence shows is that colocation data centres may operate in different ways depending on the level of services, extent of space, and the degree of exclusivity and control of that space that are to be provided to their customers. See [15] above. Whether a grantee is in breach of the Lease Restrictions is thus a question to be determined on the factual circumstances of the operation by looking at the various factors we have explained above. This is also the position advanced by Mr Yu. See [97] above. Indeed, we do not think Mr Yu in his oral submissions insists on contending that there is such a clear distinction between the wholesale and retail colocation models. 142.Once this is understood, it seems to us that the applicant is incorrect to submit that the Corporation has misconstrued the policy in effectively not recognising that the Lease Restrictions would not permit a “wholesale colocation” model but only “retail colocation” model. We will therefore also uphold the Judge’s dismissal of this ground.
143.It is trite that the decision-maker has a Tameside duty to take reasonable steps to acquaint itself with the relevant information to enable it properly to perform the function in question. It is however for the decision-maker, not the court, to decide upon the manner, extent and intensity of the inquiry, though its position could be challenged if it is Wednesbury unreasonable[35]. 144.Given our above conclusion that the Corporation in making the Decision had misconstrued the policy in failing to take into account the element of the grantee’s extent and degree of control of access to the relevant customer space, it is clear to us that the Corporation had also breached its Tameside duty, as it had failed to ask the relevant questions concerning access and control in performing its duty to enforce the relevant policy in response to the applicant’s complaints that there were data centre operator grantees who were in breach of the Possession and / or Occupation Restrictions. 145.The applicant therefore should also succeed under Ground 4. D6. Delay and relief 146.The relief sought by the applicant is an order to quash the Decision on the basis of the correct interpretation of the Corporation’s policies, and an order to direct the Corporation to reconsider its decision not to take enforcement action against its grantees. 147.Ms Sit submits that even if the applicant succeeds on the merits, the reliefs should be denied because (a) there was substantial delay by the applicant in bringing these proceedings, and (ii) the relief sought by the applicant would in effect impugn the approval of the GS Pro Forma Services Agreement, prejudicing GS’s position. 148.Section 21K(6) of the High Court Ordinance (Cap 4) provides that where there has been undue delay in making an application for judicial review, the court may refuse any relief sought if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration. 149.For the present purpose, it is not sufficient for the Corporation to simply establish that there was delay. It has to show that granting the reliefs despite the delay would cause hardship or prejudice to third parties, notably GS and other data centre grantees.
150.The Judge considered that there was considerable delay in the applicant commencing these judicial review proceedings. He examined the applicant’s correspondence with, inter alia, the Corporation, and considered that there was delay in relation to a considerable number of matters and allegations. The Judge’s reasoning on delay is set out in [198] - [199] of the Judgment. 151.Before this court, Ms Sit submits that the Judge was correct in finding delay. She refers to two letters by JSM issued on behalf of the Corporation in 2012 and 2013. She submits that, in light of these letters, the applicant ought to have commenced judicial review proceedings at that time. 152.The first letter is the 5 December 2012 Letter by JSM on behalf of the Corporation. It was written in reply to an anonymous complaint by the applicant (through WKLL) that HKCOLO was operating a data centre in breach of relevant Lease Restrictions. JSM’s reply read:
153.The complaint against HKCOLO continued into 2013. JSM asked WKLL to disclose the name of its clients. WKLL refused. In the 27 December 2013 Letter, JSM wrote to WKLL on behalf of the Corporation, stating that:
154.Ms Sit says, having received these two letters, and having seen that the Corporation was not taking any enforcement action against its data centre operator grantees, there was ample ground for the applicants to commence judicial review. 155.Mr Yu disagrees. He submits that these two letters only show that the Corporation was refusing to enforce its Lease Restrictions. It does not show that the basis for such refusal was the Corporation’s misconstruction of their own policies. 156.We agree with Mr Yu. It is well established that time does not count against an applicant if the applicant lacks essential information for (a) ascertaining the basis for the public body’s decision, or (b) formulating the grounds of judicial review: R v Licensing Authority, ex p Novartis Pharmaceuticals Ltd [2000] COD 232, at 235. 157.Based on the 5 December 2012 and 27 December 2013 Letters, there was no indication that the Corporation failed to take into account the data centre grantee’s right of access over all areas of the data centre in considering the question of whether there was any breach of the Lease Restrictions. In fact, if one looks at the correspondence between JSM (on behalf of the Corporation) and HKCOLO, the Corporation did consider the importance of the data centre grantee’s right of access. In JSM’s 5 December 2012 Letter to HKCOLO’s solicitors, JSM said at §20:
158.As such, based on the two letters, the applicant could not have commenced judicial review proceedings on the basis that the Corporation had failed to take action to enforce the Lease Restriction Policy as it had misconstrued it. 159.The Judge referred to an enquiry made by Dr Elizabeth Quat, a Legislative Council member, as to allegations of subletting on TKOIE. The Corporation responded as follows:
160.This response mentioned the control of access right, consistent with the Data Centre Policy. There was no indication that the Corporation is departing from the Three Criteria in the Data Centre Policy. It was only when the Decision was made and conveyed by the 28 May 2018 Letter that the applicant became aware of the Corporation’s misconstruction of the Lease Restriction Policy as discussed above. 161.In light of the above, we are satisfied that there is no undue delay on the part of the applicant in bringing these judicial review proceedings on the ground that the Corporation had misconstrued the Lease Restriction Policy. In any event, as further explained below, even if there was delay, we are further of the view that the reliefs sought would not prejudice GS or other lessees on TKOIE by reason of the delay.
162.Ms Sit submits that, if this court were to grant the reliefs to quash the Decision and direct the Corporation to reconsider the Decision in light of the court’s construction of the Lease Restriction Policy, in particular the Occupation Restriction, it would be tantamount to impugning the approval of the GS Pro Forma Services Agreement, which is what the applicant has expressly assured the court it is not seeking to do. This would be highly prejudicial to GS, who in reliance on the said approval had since invested a substantial amount of money to construct data centres on TKOIE. 163.Mr Yu on the other hand submits that, in granting those reliefs based on what the court says as to the true meaning of the Corporation’s policies, the court would not be impugning the approval of the GS Pro Forma Services Agreement. Whether the No Alienation Clause should be enforced against GS is a matter for the Corporation, and GS may have valid defences based on waiver and estoppel. 164.We agree with Mr Yu. As we have stressed above, the court is not making any specific declaration or finding in relation to the GS Pro Forma Services Agreement. In particular, we have not decided, as it is not necessary for us to do so, that the Corporation departed from its own policies when approving the GS Pro Forma Services Agreement. 165.Indeed, Mr Yu has hastened to point out that, all that the Corporation is required to do is to reconsider the Decision in accordance with the proper construction of the policy as now found by the court. If, in so doing, the Corporation comes to the view that the approval of the GS Pro Forma Services Agreement is inconsistent with the Lease Restrictions, it does not necessarily mean that it has to revoke that approval or to terminate the formal lease it has entered into with GS based on the pro forma agreement. As a matter of private law, if the Corporation seeks to revoke its approval of the GS Pro Forma Services Agreement or terminate the formal lease, it may well be met with defences such as waiver / estoppel. As a matter of public law, it may also be open to GS to contend that the Corporation is breaching its legitimate expectation in impugning the approval. These matters are however not the concern of this judicial review and thus the court at this stage. 166.In the premises, we do not find that the granting of the reliefs sought will prejudice GS as it will not necessarily lead to a revocation of the previous approval of the GS Pro Forma Services Agreement. 167.For completeness, it is however appropriate to mention that in making his submissions under this issue, Mr Yu seeks also to rely on R v Oxby [1997] EWCA Civ 2960 for the proposition that GS (and other lessees on TKOIE) would in any event not be prejudiced by this court’s declaration of the correct interpretation of the Corporation’s policies, because GS and other lessees on TKOIE would only be deprived of something that they should never have had in the first place – the benefit of an erroneous policy. 168.With respect, we do not think R v Oxby supports the contention in the present case. 169.R v Oxby concerned an elderly couple, the Howcrofts, who owned agricultural land. The Howcrofts entered into an agreement with a man named Coney, whereby Coney would assist the Howcrofts to apply for planning permission regarding their agricultural land. Once planning permission was granted and the land sold, Coney would take 25% of the price sold, while the Howcrofts would retain the remaining 75%. Subsequently, it was discovered that Coney had substantial connections with a local council member, and the local council decided to review various planning permissions that were granted upon the application of Coney. A report was published and concluded that these planning permissions were wrongfully granted because of bias or apparent bias. The council therefore applied for judicial review to set aside these planning permissions. 170.In relation to the Howcrofts, planning permission was in fact granted for two pieces of land, known as Parrymore 1 and Parrymore 2. By the time the case came to court Parrymore 1 had been sold, the Howcrofts and Coney had split the benefit, and houses had since been built on the land. Parrymore 2 was different. Although planning permission was granted in respect of Parrymore 2, it had yet to be sold and remained undeveloped. 171.In relation to Parrymore 1, the council, acting on legal advice, decided to take no further action. On the other hand, the council applied for judicial review to set aside the planning permission granted over Parrymore 2. 172.It was in the context of Parrymore 2 that Hobhouse LJ said that it would be just and appropriate to revoke the planning permission:
173.Nevertheless, Hobhouse LJ remarked in Oxby at [23], that:
174.In this respect, GS and other lessees on TKOIE may well be able to show that their position is more akin to Parrymore 1 rather than Parrymore 2. Each case would of course depend on its own circumstances. Take GS as an example. Acting on the faith of the approval of the GS Pro Forma Services Agreement, it had invested over HK$6 billion to construct five buildings as data centres. It would appear to be open to GS to contend that it would be unfair and prejudicial to GS for the court to invalidate the approval of the GS Pro Forma Services Agreement. E. CONCLUSION 175.For the above reasons, we would allow the appeal and set aside the Judge’s orders. The applicant is successful in this judicial review on Grounds 1(1), 2(2)(a), (b), and 4. We would further grant the order of certiorari to quash the Decision and direct that the Corporation should reconsider the applicant’s complaints in accordance with the meaning of the Occupation Restriction in the Lease Restriction Policy as found by this court. 176.As to costs, there is no reason why we should depart from the usual rule that costs should follow the event. We would therefore make an order nisi that costs of this appeal and below be to the applicant, with certificate for two counsel. 177.Lastly, we thank counsel for their assistance in this matter.
Mr Benjamin Yu SC, leading Ms Sara Tong, instructed by Woo, Kwan, Lee & Lo, for the applicant Ms Eva Sit SC, leading Ms Esther Mak, instructed by Wilkinson & Grist, for the respondent The attendance of the interested party excused [1] Subject to the terms and conditions contained in the land grant. [2] See Affirmation of Siu Chik Hung Patrick, paragraph 41. [3] See also Affirmation of Siu Chik Hung Patrick at paragraph 41(1). [4] Upon the recommendation by the Focus Group on Professional Services, Information & Technology and Tourism established by the Chief Executive of Hong Kong in 2007. [5] Commissioned by the Innovation and Technology Commission. [6] See Affirmation of Siu Chik Hung Patrick, paragraphs 16 - 21. [7] One of the systems adopted in the market classifying data centres according to the level of services they provide. [8] See Affirmation of Siu Chik Hung Patrick, paragraph 25. [9] “Subscribed Services” may include provision of telecommunication, network, cloud, data centre management and system management services. See Affirmation of Siu Chik Hung Patrick, paragraphs 28 - 29. [10] See Affirmation of Siu Chik Hung Patrick, paragraph 22. [11] See Affirmation of Siu Chik Hung Patrick, paragraph 47. [12] The managed services include the DC Services and any additional internet connectivity and other networking services, managed and outsourcing services on facilities, data centre management, system management and the like. See paragraph 38(b) of the Feb 2010 BDAC Paper (as defined below). [13] See also Affirmation of Siu Chik Hung Patrick, paragraphs 42 - 48. [14] See the more detailed summary of the relevant parts of these documents by the Judge at [26] - [28] and [30] - [37] of the Judgment. [15] They are Sections B, C and RP of Sub-Section 5 of Section Q of Tseung Kwan O Town Lot No 39 and Extensions thereto. [16] TKOIE is situated at Tseung Kwan O Town Lot No 39 and the Extensions thereto. [17] See 3rd Affirmation of Chan Man Yuen Martin, paragraph 74. [18] These exchanges do not go to the substance of this judicial review. However, they relate to the issue of delay. It is the Corporation’s contention that the applicant could have commenced judicial review proceedings based on these exchanges, and that they should not have waited until 2018 to do so. [19] See Amended Form 86. [20] See Amended Form 86, paragraph 58. [21] It is noted that after leave to apply for judicial review was granted by the Judge on 9 October 2019, the applicant had made various interlocutory applications seeking, inter alia, an interlocutory injunction, leave to amend its pleadings, and leave to adduce expert evidence. The procedural history is recorded in the Judgment at [56] - [59]. It is not necessary to recite those decisions as they are not pertinent to this appeal. The only point to note is that some amendments to the Form 86 were allowed, which now forms the applicant’s pleaded case in the Amended Form 86. [22] It is pertinent to note that the applicant is only seeking an order to quash the Decision, but not asking an order that the Corporation should withdraw any grants of land made to data centre operators, nor is it seeking to impugn any approvals granted over pro forma service agreements, such as the GS Pro Forma Services Agreement. [23] The Corporation has in any event filed a Respondent’s Notice seeking to affirm the Judge’s decision in dismissing the judicial review on the ground of delay. [24] As stipulated under the Approved Use Requirement in the Data Centre Policy. See [19] above. [25] See: [13] - [16] above. [26] See: [17] - [18] above. [27] See: [20] above. [28] See also Affirmation of Siu Chik Hung Patrick, paragraph 50. [29] See also the Corporation’s invitation for application for Site C of the TKOIE issued in January 2012 to data centre companies quoted at [23] above, which also emphasized the requirement that the grantee shall always retain, among others, the control of access right. [30] See [108] - [109] above. [31] See also [53(1)(d)] and [71(2) & (3)] above on the Corporation in fact finding that HKCOLO was in fact not having exclusive control of access to the customer space designated to its customer IBM after investigations. [32] See Amended Form 86, paragraph 27. [33] See paragraph 37D and 73B of the Amended Form 86. [34] See paragraph 80A of the Amended Form 86. [35] See: Smart Gain Investment Ltd v Town Planning Board (unreported, HCAL 12/2006, 6 November 2007), at paragraph 87; R (Khatun and others) v Newham London Borough Council [2005] QB 37, at paragraph 35. In Deng Suet Yan v Hong Kong Housing Authority [2017] 4 HKLRD 73 at paragraph 19, the Court of Appeal referred with approval to the principles set out by Hallett LJ in R (Plantagenet Alliance Ltd) v Secretary of State for Justice [2015] 3 All ER 261 at paragraph 100. |
Cases cited in this judgment
Further hearings and rulings under CACV 80/2020