Anglo Starlite Insurance Co. Ltd. v. The Insurance Authority

HCMP003845/1991

Miscellaneous Proceedings No. 3845 of 1991

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H E A D N O T E

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Together the process by which challenged executive decisions were reached and the process by which they would be implemented amount to "proceedings" within the meaning of Order 53, rule 3(10)(a).

Miscellaneous Proceedings No. 3845 of 1991

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Bokhary J. in Chambers

Date of hearing: December 27, 1991

Date of delivery of judgment: December 27, 1991

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J U D G M E N T

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1. On the 18th of this month, I granted the applicant, an authorised insurer, leave to apply for judicial review of - quoting from the Amended Notice of Application for Leave:-

"(1)    The decisions by the Insurance Authority contained in its letter to the Applicant's solicitors, Messrs. Johnson, Stokes & Master, dated 8th November 1991, whereby the Insurance Authority refused:-

(a)     to vary the existing limitation on gross premium income of HK$65 million per annum, which it imposed on the Applicant on 6th December 1989; and

(b)     to rescind its requirement that the Applicant increase the value of  its assets maintained in Hong Kong under trust arrangements with the Hong Kong Bank Trustee Limited from HK$33 million to HK$45 million, by 1st November 1991.

(2)    The decision of the Insurance Authority refusing to give any or any reasonable notice to the Company of any decision it may make,to impose a notice on the Applicant requiring the Applicant to cease writing new or renewal business, which refusal is contained in the Insurance Authority's letter to the Applicant's said.solicitors dated 27th November 1991."

At the same time, I directed that the grant of such leave do operate as a stay of those decisions and of their implementation or enforcement until the determination of an inter partes application for such a stay until the determination of the application for judicial review itself. I so directed under Order 53, rule 3(10)(a) which - here as in England - provides that where leave to apply for judicial review is granted, then:-

"if the relief sought is an order of prohibition or certiorari and the Court so directs, the grant shall operate as a stay of the proceedings to which the application relates until the determination of the application or until the Court otherwise directs."

2. This is the inter partes stay application. Although he proposes to oppose the application for judicial review when it comes on for hearing eventually, the Insurance Authority accepts that leave to apply for judicial review was rightly granted. But it is submitted on his behalf that no stay can, or should, be ordered.

3. That submission is not based on any suggestion that the process by which challenged executive decisions were reached and the process by which they would be implemented do not together amount to "proceedings" within the meaning of Order 53, rule 3(10)(a).

4. That they do amount to.proceedings is the effect, as I understand the position, of the decision of the Court of Appeal in England in Reg. v. Education Secretary, Ex p. Avon C.C. [1991] 2 WLR 702. For the Insurance Authority, Mr Hamlin declines to challenge the correctness of the Court of Appeal's decision. He so declines notwithstanding the decision- of the Privy Council in Minister of Foreign Affairs v. Vehicles & Supplies Ltd [1991] 1 WLR 550; the headnote of which reads:-

"    Section 13(2) of the Crown Proceedings Act provided that civil proceedings against the Crown, defined in section 18(2), should be instituted against the Attorney-General.Section 564B(4) of the Judicature (Civil Procedure Code) Law provided that the grant of leave to apply for an order of prohibition or certiorari should, if the judge so directed, operate as 'a stay of the proceedings in question until the determination of the application or until otherwise ordered and section 686 provided that in the absence of express provision the practice of the English Supreme Court should be followed. In the exercise of statutory powers the minister instructed the sole specified importer of approved motor vehicles to order certain vehicles for importation into Jamaica and to distribute them to motor dealers in accordance with the minister's allocation. After having been notified of their allocations of vehicles for the year 1988-89, which were for substantially fewer vehicles than in the previous year the applicants, who were dealers, applied ex parte pursuant to section 564B of the Judicature (Civil Procedure Code) Law for leave to apply for an order of certiorari to quash the minister's allocation, or an order of prohibition prohibiting him from implementing it, or an order of mandamus directing him to make a fair allocation. Clarke J. in chambers granted leave and ordered that all allocations as of quotas and proceedings consequent on the allocations be stayed pending a final determination of the matter. The minister applied for the order to be set aside, the summons being supported by an affidavit stating that the allocation had already been made and instructions given to the importer, and that irreparable damage would be caused to the economy if the importation were delayed. Clarke J. was unavailable, and so the application was heard by Ellis J., who set aside the stay. The Court of Appeal allowed the applicants' appeal and restored the stay.

5. On the minister's appeal to the Judicial Committee:-

Held, (1) that the proceedings for judicial review of the minister's exercise of his statutory powers were not 'civil proceedings ... against the Crown' within the Crown Proceedings Act and so the action had properly been brought against the minister not the Attorney-General.

(2) Allowing the appeal, that, in the absence of express provision in Jamaica in relation to the discharge of ex parte orders, R. S. C. Ord.32, r.6 applied by virtue of section 686 of the Judicature (Civil Procedure Code) Law so that Ellis J. had jurisdiction to set aside the stay on the basis of new material before him, and no ground had been shown for interfering with his exercise of discretion; but that, in any event, the minister's executive decision as to allocation which had already been made did not constitute 'proceedings' capable of being stayed under section 564B(4) of the Judicature (Civil Procedure Code) Law, nor under that subsection could the importer, which was not a party to the action, be prohibited from implementing the minister's determination; and that, accordingly, the stay had properly been set aside.

6. Decision of the Court of Appeal of Jamaica reversed."

7. That course adopted by Mr Hamlin is understandable. The situation with which the Privy Council had to deal - and with which it dealt without having the Court of Appeal's decision Reg. v. Education Secretary, Ex p. Avon C. C.(supra) cited to it - was somewhat unusual. That is apparent from this observation; at p.553F, by Lord Oliver of Aylmerton, who delivered the advice of their Lordship's Board:-

"It will thus be seen that in making the determination the minister, though no doubt acting within a discretion which must be properly exercised, performs a purely executive function which is exhausted once the determination has been made. The responsibility for implementing the determination then devolves upon the specified importer to whom the communication has been issued."

That fact must be borne carefully in mind when considering this passage in the Board's advice at pp.556D-557D, since judicial pronouncements, even when couched in general terms, always fall to be read in the matrix in which they are made:-

"This by itself is sufficient to dispose of the appeal but it has to be remarked that, quite apart from the factual material adduced in support of the minister's application for the variation of the order, and regardless of any question whether the evidence adduced in support of the applicants' application to Clarke J. provided even prima facie ground for the grant of the 1eave sought, there was every ground for challenging the order for a stay as a matter of law. It seems in fact to have been based upon a fundamental misunderstanding of the nature of a stay of proceedings. A stay of proceedings is an order which puts a stop to the further conduct of proceedings in court or before  a tribunal at the stage which they reached, the object being to avoid the hearing or trial taking place. It is not an order enforceable by proceedings for contempt because it is not, in its nature, capable of being 'breached' by a party to the proceedings or anyone else. It simply means that the relevant court or tribunal cannot, whilst the stay endures, effectively entertain any further proceedings except for the purpose of lifting the stay and that, in general, anything done prior to the lifting of the stay will be ineffective, although such an order would not, if imposed in order enforce the performance of a condition by a plaintiff (e.g. to provide security for costs), prevent a defendant from applying to dismiss the action if the condition is not fulfilled: see La Grange v. McAndrew (1879) 4 Q.B.D. 210. Section 564B of the Code provides, in subsection (4):

'The grant of leave under this section to apply for an order of prohibition or an order of certiorari shall, if the judge so directs, operate as a stay of the proceedings in question until the determination of the application or until the court or judge otherwise orders.'

This makes perfectly good sense in the context of proceedings before an inferior court or tribunal, but it can have no possible application to an executive decision which has already been made. In the contest of an allocation which had already been decided and was in the course of being implemented by a person who was not a party to the proceedings it was simply meaningless. If it was desired to inhibit J.C.T.C. from implementing the allocation which had been made and communicated to it or to compel the minister, assuming this were possible, to revoke the allocation or issue counter-instructions, that was something which could be achieved only by an injunction, either mandatory or prohibitory, for which an appropriate application would have had to be made. The minister's apprehension that that was what was intended by the order is readily understandable, but if that was what the judge intended by ordering a stay, it was an entirely inappropriate way of setting about it. He had not been asked for an injunction nor does it appear that he considered or was even invited to consider whether he had jurisdiction to grant one. Certainly none is conferred in terms by section 564B. An injunction cannot be granted, as it were, by a sidewind and if that was the judge's intention it should have been effected by an order specifying in terms what acts were prohibited or commanded. As it was there were no 'proceedings' in being upon which the 'stay' could take effect. One is left with only two possibilities. Either Clarke J. was granting relief which was entirely inappropriate and inapplicable to the circumstances before him or he was seeking to enjoin the activities of J.C.T.C., which was not a party to the action, and to do so by wholly inappropriate machinery. In either event, the order was meaningless."

There the process of implementation was not encompassed in the matter to be challenged by way of judicial review. Therefore, what the application for judicial review related to did not amount to proceedings. So no question of a stay of proceedings could arise. But in the present case - as in Reg. v. Education Secretary, Ex p. Avon C.C. (supra) - the process of implementation is thus encompassed. And     that, in my judgment, makes all the difference. Together the process by which challenged executive decisions were reached and the process by which they would be implemented amount to "proceedings" within the meaning of Order 53, rule 3(10)(a). "Proceedings" - as Taylor L.J. said in R v. Licensing Authority, Ex p. Smith Kline (No. 2) [1990] 1 QB 574 at p.604E - "include any procedure by which a decision challengeable on judicial review is reached and implemented."

8. I have dealt with this matter at some length notwithstanding the stance taken by Mr Hamlin because it is for me to satisfy myself that I have jurisdiction to direct the stay sought. Jurisdiction cannot be arrogated to itself by the court or conferred upon it by the agreement of the parties. I am happy to reach the conclusion that the courts are able to direct such stays whenever it is appropriate so to do. Where a right may be made out, there should be preserved an effective remedy by which to enforce it if it is eventually made out. And it should be, and I trust will be, clearly understood that - the power to direct such stays being discretionary - the existence of the power will not paralyse administrative action rather it will ensure that such action conforms with the law. That is the essence of judicial review.

9. I turn now to the basis on which Mr Hamlin does oppose a stay.

10. As far as the decisions contained in the letter of November 8, 1991, are concerned, Mr Hamlin's argument is that what is being sought is a stay of a refusal, and that the applicant is seeking - by way of a stay - an alteration of the status quo in its favour. Put that way, the idea of a stay does seem somewhat strange. But in truth the matter is not so simple.

11. I do not propose to recite the argument advanced by Mr Thomas, who leads for the applicant. Basically, what he has done is to underline this. The $65 million limit under decision (1)(a) is an annual limit. In a few days time the new year will be upon us, and the actual figure will revert to zero. There appears to be no danger that $65 million will be reached let alone exceeded before this matter can be dealt with by way of judicial review. If, for any reason, such a danger develops, it will be possible for the matter to be brought back to the court afresh on that basis.

12. As things now stand, what the applicant is really concerned about are steps against it for exceeding the $65 million per annum limitation for this year.

13. I do not think that the general public would be put at serious, or indeed any, risk if this insurance company could not be prosecuted right away for exceeding that limit for this year.

14. So it is not really a case - as far as the reality of the matter is concerned - of an alteration of the status quo in favour of the applicant by means of a stay granted to it.

15. As far as decision (1) (b) is concerned, the present position is that the assets maintained stand at $33 million. So a stay of the refusal to rescind the requirement of an increase to $45 million would be to preserve rather than to disturb the status quo, It seems to me therefore that as far as decisions (1) (a) and (1) (b) are concerned, it would be right to direct a stay of them and their implementation or enforcement until the determination of the application for judicial review or further order in the meantime. I direct such a stay. This leaves decision (2).

16. Decision (2) is not in fact a decision,in respect of which prohibition or certiorari is sought. So a stay under Order 53, rule 3(10)(a) may not be possible in any event. It is not, however, necessary to decide that, because this particular problem - that is to say the one relating to s.27 of the Insurance Companies Ordinance, Cap.41 - has been resolved by the giving, and the acceptance, of an undertaking. The undertaking given on behalf of the Insurance Authority is that it will not issue a notice under s.27 of the Insurance Companies-Ordinance, Cap.41, prohibiting the applicant from renewing existing contracts of insurance without giving the applicant three clear working days notice of its intention so to do. That undertaking is of course subject to the Insurance Authority's right to come before the Court to seek release from its undertaking. Therefore, the problem in regard to s.27 is disposed of without any need for a stay. In light of the undertaking, no stay in respect of decision (2) is now pursued; and I direct none in respect thereof.

17. I thank counsel on both sides for their assistance, and now invite them to address me on the question of costs and any other ancillary matters which may remain outstanding.

[Submissions on costs and ancillary matters]

18. The one ancillary matter apart from costs which arises has to do with the dates of the hearing of the application for judicial review. Obviously, this is a matter of considerable urgency. As things stand, it would appear that the earliest dates which the parties have been offered by those responsible for listing in this building are the four working days commencing Tuesday, April 21, 1992. Mr Thomas tells me that those responsible for listing have indicated to those instructing him that the application could be listed before me on those dates if I were to reserve the case to myself; and he invites me to do that. Obviously, if that is what the parties want, I would be happy to reserve the case to myself for hearing on those dates. I am not sure that I understand why it is necessary for me to do that before the case can be thus listed before me. But if that is what is required, I would certainly do that if that is what both parties want. The problem is this. At the moment, Mr Hamlin asks me not to reserve the case to myself on those dates, because those dates create some difficulty for his client, who faces other judicial review proceedings to be heard at round that time. Mr Hamlin is anxious to see whether or not some other dates acceptable to.both parties and more convenient to his client can be obtained. To obtain such alternative.dates would - he believes - become more difficult if I were to accede to Mr Thomas's invitation at this stage. What I propose to do, therefore, is not to accede to that invitation at this stage. I will give liberty to restore this matter before me on the question of dates. And I will say at this stage no more than this: that if both parties were at any time to go before those responsible for listing and say that they want those dates for a hearing before me, then they are fully authorised by me to tell those responsible for l isting that I am, for my own part, perfectly happy to take the case on those dates.

19. There remains only the question of costs. As far as the costs of and incidental to the application before me on the 18th of this month are concerned, both parties are agreed that those costs should be reserved to the judge hearing the application for judicial review whoever that judge may turn out to be. As far as the costs of and incidental to the application before me today are concerned, Mr Thomas asks for those costs while Mr Hamlin asks that they be in the cause. My suggestion in the course of the argument was that making those costs the applicant's costs in the cause would seem to be the appropriate course; and neither counsel has sought to argue against the reasonableness of that course. I propose to follow it, making an order accordingly.

20. I also give liberty to apply generally; and that liberty to apply generally will encompass of course these two things. First of all, there are other directions which Mr Thomas's client may wish to seek but which they have not thought necessary to pursue today. The liberty to apply would include a liberty to it to come back in regard to those directions. Secondly, it would also include liberty to the Insurance Authority to come back to me to seek a lifting of the stay or part thereof if it appears to him that the public interest so requires. Mr Thomas has very properly indicated that if the Insurance Authority were to seek a lifting of the stay or part thereof in the public interest, filing evidence for that purpose, then his client would not seek to have that course shut out simply on the basis that such evidence, although not put before the court today, could in fact have been put before the court today. That is a proper concession to make; and I mention it merely to eliminate the possibility of any misunderstanding later on.

Representation:

Mr    Michael Thomas Q.C. & Mr Aarif Barma (instructed by Messrs Johnson, Stokes & Master) for the applicant insurers

Mr P.R.P. Hamlin (of the Attorney General's Chambers) for the respondent Insurance Authority