Kong Wan v. Hong Kong Housing Authority

HCMP001972/1996

1996, Nos.MP965,
MP1927 & MP1972
(CONSOLIDATED)

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H E A D N O T E

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In 1950 several thousand refugees were settled in Rennie's Mill. In 1961, because of concern by the refugees over the Resettlement Ordinance 1958, a letter from the Commissioner for Resettlement said that "most of the residents in the area will be allowed to continue to reside in their existing buildings indefinitely". By a second letter, further promises were made to the refugees.

The Housing Authority served Notices to Quit on those still remaining on December 26th 1995.

On an application for judicial review to quash the notices :-

HELD

1. In view of the current redevelopment proposals the Court would not quash the notices,

But

2. The promises in June 1961 gave the residents legal rights to remain indefinitely and the Government's decision to issue the notices was an abuse of power
- In re Preston [1985]1 AC 835

3. That decision was justiciable as a public law matter, but the only remedy the Court could give was damages.

4. The promises were personal to those who resided there in 1961 and the extent of the Government's liability was limited to those persons who still resided at Rennie's Mill, and had been there since 1961.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

(MISCELLANEOUS PROCEEDINGS)

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1996, No.MP965

AND

1996, No.MP1927

AND

1996, No.MP1972

(CONSOLIDATED)

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Coram : Hon Sears, J. in Court

Dates of hearing : 25, 26 June 1996

Date of judgment : 27 June 1996

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J U D G M E N T

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Background

1. These applications for judicial review reveal an interesting but sad part of Hong Kong's history. After the end of the Civil War in China, large numbers of refugees, mainly nationalist soldiers and their families, came to Hong Kong. They were settled originally in Mount Davis and on June 26th, 1950, which is 46 years ago yesterday, they were taken to Rennie's Mill. The method of this has been described in detail by Mr Wong Pei Chun who is the lead applicant and now aged 78. They were loaded onto wooden boats and taken to a remote part of Hong Kong which was at that time a barren piece of land. It was called Tiu Keng Leng or, as it became known as Rennie's Mill by virtue of a disused flour mill that used to stand there. It was a remote inhospitable part of Hong Kong with no electricity or water. Some 20,000 or more people were taken there.

2. What happened, however, was that these people turned this barren piece of waste land into their own village. They built roads and schools and they dug wells. They governed themselves. There was no police there. The Government appeared to have abandoned them. The Government took no part in the administration of law and order in Rennie's Mill. From 1950 to 1961, the village was developed and, from the evidence I have seen, appeared to have caused no trouble to anybody. By 1961, there were some 30,000 refugees living there with some 4,000 children attending school. The barren waste land had now turned into a thriving, comfortable and attractive village. It was unusual in that it was really like a part of Taiwan in Hong Kong.

The Resettlement Ordinance

3. In 1958, because of the concern over refugees in Hong Kong and the number of squatters who were squatting in various parts of Hong Kong, there was passed a new law called the Resettlement Ordinance. This gave the Government great power to resettle people in various areas in Hong Kong, to cause buildings to be built or areas to be developed and a system of occupation permits for those refugees to be given.

4. These 30,000 odd persons were caused alarm. They feared that their village was going either to be redeveloped or that they would be moved away.

5. A press release was issued on Friday, June 2nd, 1961 which is set out in detail at p.88 of the Bundle and it announced that the Rennie's Mill camp was going to be administered as a resettlement area. After that, there were protests by the residents. The large number of persons involved no doubt caused the Government to become concerned. There was a Commissioner for Resettlement, under the Ordinance, called Mr Morrison and on June 5th, that is a few days after the press release, he caused to be distributed to the residents of Rennie's Mill a letter which has figured prominently in this case.

The Letter

" Recently there are rumours going around in Rennie's Mill that Government has planned to build multi-storeyed resettlement blocks in the area, which has caused some residents to become disturbed and to worry that once it is put into effect they will be forced to move away from their existing comfortable accommodations. Having learnt of this, the Commissioner for Resettlement hereby solemnly declares that the government will manage Rennie's Mill in the same manner as the other cottage resettlement areas (for example, Mount Davies Cottage Resettlement Area), and does not intend to build any multi-storeyed blocks within the area. Most of the residents in the area will be allowed to continue to reside in their existing buildings indefinitely. They will be required to pay a small amount of permit fee only. As regards those buildings which have to be removed to allow improvement of roads and traffic and for the good of the community, such removal will be carried out only as a last resort. The Commissioner for Resettlement further declares that the government for the time being has no plan to resettle any people from urban area to Rennie's Mill area thereby causing an increase in the population in the area.

In any event, our department has no plan for removal or resettlement of any buildings in the next 6 months."

What this letter is saying in effect is that rumours had caused residents to become disturbed to worry that they would be forced to move after from their existing "comfortable" accommodation. He allayed the residents' fears by saying : "Most of the residents in the area will be allowed to continue to reside in their existing buildings indefinitely."

6. On June 8th, the residents petitioned the Governor, Sir Robert Black and sent him a moving petition with regard to their particular plight. They set out how they had been taken to this desolate wilderness and had turned it into a village with roads, bridges and schools. There were at that time eight primary and middle schools with, as I have said, some 4,000 students.

The Second Letter

7. It is clear that the petition reached the Governor and on June 15th, Mr Morrison, the Commissioner, replied saying that :

" The Petition of 8th June this year addressed to His Excellency the Governor and signed by yourself and other residents at Rennie's Mill has been received and read. His Excellency has given most careful and sympathetic consideration to your representations, but he regrets that he cannot alter the government decision, which has already been announced, that Rennie's Mill is to become a resettlement area and to come under the administration of the Resettlement Department. In fact there is no need for the residents within the area to be disturbed or to worry about this decision, since His Excellency the Governor verily believes that there is no question of the future well-being of the residents of the area to be adversely affected. On the contrary, such well-being will be materially improved and strengthened. .....

...... Some residents have expressed extreme concern about the removal of existing buildings. I hereby solemnly assure you, as it has already been announced in public statement, that if it is necessary to remove any building, such removal is to be limited to the very minimum. In the few cases where such removal proves to be necessary, satisfactory arrangement will be made to rebuild a place of residence for the residents within the same area, so as to save them from the hardship of homelessness. I am able to further assure you that no domestic buildings will be relocated in the near future.

..............."

Later History

8. Further petitions occurred and on June 28th, 1963, that is two years later, a notice was gazetted that the village was to become what is called a "Cottage Resettlement Area" which it did on January 1st, 1964.

9. On April 1st, 1973 the Housing Authority became the statutory body concerned with the control and management of land in Hong Kong.

10. On May 26th, 1988, the Government gave the go-ahead in principle to what is called "Phase III Junk Bay New Town Development". This was a new town development in the area of Junk Bay which would of course have obliterated the village. On June 9th, residents petitioned LegCo members and ExCo and they said that the Commissioner had promised them that they could continue to occupy their cottages and they forwarded a copy of the letter of June 5th, 1961. This is important as it demonstrates better than anything that the villagers relied on this promise and considered it of value to them and that although the promise was made some 27 years ago, it was still effective.

11. No one appears to have addressed their mind to that matter. In a document on September 28th, 1990, the Housing Authority said that it was to clear the village and that the Government would make what are called ex gratia payments. That means that compensation would be paid because they had no legal obligation to pay it.

12. Although the petition of June 9th was sent to ExCo and LegCo, the Housing Authority must have known about it in order to brief both ExCo and LegCo members. Presumably by the use of the words "ex gratia", the Housing Authority considered that the promises of 1961 were not worth the paper they were written on.

13. In January 1992, the police station in the village was closed and there were newspaper reports, which appeared to have foundation, that the value of the village was now some $30 billion. So this barren piece of waste land in 1961 on which the Government was quite willing to let these villagers stay was now exceptionally valuable. The Government made proposals for compensation packages and the villagers moved out. By the summer of 1993, all the schools were closed. Further demonstrations took place in June and July of 1994 outside LegCo Building. The Government increased its offer for compensation and they said that the total clearance package would cost them $972,000,000. Of course, this must be seen in the context that they were obtaining land worth approximately $30 billion.

14. There were now some 100 families left. The village is virtually derelict. There are now open drains and I have had an opportunity of looking round the village and although I am sure people still obtain pleasure living there, the current living conditions are really insufficient for this day and age.

Many of the original villagers had been resettled at the Hau Tak Estate, not a far distance away. Notices to Quit on the remaining residents were served by the Housing Authority on December 26th 1995.

Redevelopment Proposals

15. The Government have proposals to redevelop the whole of this area. I have been kindly provided with full details of the redevelopment which will occur and the building of the New Junk Bay - Tseung Kwan O. There will be some 283,000 people living in this new development. It is very substantial and necessitates the infilling of part of the water area. The Mass Transit Railway will be brought into the development. There will be open land with parks, fountains and recreation areas. There will be modern shopping and schools. The redevelopment proposals have obviously been very carefully thought out and will provide substantial environmental benefit for many thousands of people. There is no doubt at all that the Rennie's Mill Village is urgently required to bring about this redevelopment.

Statutory Provisions

16. The original Resettlement Ordinance 1958 gave extensive powers for the clearance and resettlement of squatters. Part V established "cottage resettlement areas", and by s.51 provided for the occupation of buildings by the issue of occupation permits . Regulations set out the general conditions of an occupier's tenancy, which could be determined by one month's notice to quit.

17. The Housing Authority, from April 1st 1973, became the statutory authority for the control of cottage resettlement areas and by s.19 of the Housing Ordinance (Cap.283) notices to quit of one month's length can be served. By s.11 the Housing Authority has wide powers for the development of land for housing purposes.

The Applications

18. The applications for judicial review originally were by some 22 persons. Additional leave has been given for another 60, making a total of 82 applications. As the same points arise in all of these 82, I therefore deal with them together.

19. The lead applicant is Mr Wong Pei Chun. He is 78 years old and has been living in Tiu Keng Leng since early 1950s. He was a lieutenant in the Kuo Ming Tang Army. He has personally assisted, according to his affidavit, in a number of the improvements to the village. His account is a moving record of this unfortunate part of history. Originally, the applicants sought to challenge the validity of the Notices to Quit and prevent the Government acting on them and thereby frustrating the redevelopment proposals. It was recognised, however, by Mr Warren Chan, Q.C., appearing as he does for the applicants, that if the letters of 1961 amounted to a promise which gave the villagers certain legal rights, then the only remedy they have was one which gave them damages or, as it has been described, compensation. Furthermore, no court, faced with the substantial benefits which the redevelopment proposals give, could possibly have countenanced a remedy which would have prevented the Housing Authority exercising its statutory function of providing new housing which is much needed.

Issues

20. The issues are :

(1) What legal effect, if any, do the letters of June 1961 have?

(2) Is the Government's decision to issue the Notices to Quit justiciable in judicial review proceedings?

(1) The factual background and context of the letters in 1961 are important in that -

(a) The occupation of Rennie's Mill has always been lawful. The Government took the refugees there and left them there. No objection has ever been taken by the Government or any official to the buildings which have been erected, the schools and all the houses. From 1950 to 1961, some 11 years, the villagers ran their own lives. There was no police there. It was indeed a self-governing community. The 1958 Ordinance was intended to resettle squatters and control the many refugee camps then in existence. For the first time, the Hong Kong Government who had left these people alone with virtually no assistance now wanted to exercise control over them. Some of the measures they proposed such as new roads and sewage were benefits, but the villagers feared that their security was threatened and that was the reason for the demonstrations.

(b) It is clear from the opening words of the letter of June 5th that it was written essentially to make it clear that the Government had no intention to cause the villagers to lose their rights of occupation.

(c) This letter was no ordinary pronouncement by some junior official, this was from the Commissioner of Resettlement himself and it was strong language which he used. It describes the villager's accommodation as "comfortable" and the Commissioner makes a solemn declaration in it. It is as clear a statement of the Government's intention towards the villagers as one could find.

Nowadays statements of Government policy and future action are often hedged around with get-out clauses and vague phrases. I can find nothing difficult to construe in this letter. The words are simple. The residents can stay there "indefinitely". That word means what it says. It is not necessary to search for another meaning.

(d) After they petitioned the Governor, it is clear that he took, as one would expect, a personal interest in this unusual matter. Thousands of refugees who had caused no trouble to the Government and had been living without any interference from the Government feared for their future. The reply, as it is called, from the Hong Kong Government of June 11th only needs reading in full to show that it has the stamp of approval of the Governor. He is mentioned five times, two solemn assurances are given in the letter. This letter, in my judgment, on a fair reading, emanated from the highest authority in Hong Kong apart from the Queen. It is what it is, namely a solemn declaration as to the Government's intention and intended to be understood by the residents as such. Whilst, therefore, I have to examine them, or as Mr Ma Q.C. asks me to construe them, I should not expose these letters to a lawyer's microscopic examination, but must ask myself what was the Government's intention as expressed in the language and I must recognise that these letters were addressed to the villagers who would read them as ordinary people. In my judgment, the villagers must have understood in 1961 that the Government was giving a solemn promise that they could live there indefinitely, and where there was removal of any building which would be "limited to the very minimum", the Government would arrange the rebuilding within the same area. I also conclude that the Government of the day must also have known that they were giving a solemn promise because they acted upon it. No Notice to Quit, apart from one which was served, as I am told, for breach of conditions, was served between January 1961 and December 1995, some 35 years. In 1964, for example, when the fire station and post office were built, four families had to be moved and were relocated within the same area. All in accordance with the promises. In my judgment, these letters constituted a promise by the Hong Kong Government that the residents of TKL would not be moved away. In law, the Government was granting them a licence to use and occupy the land indefinitely subject only to them satisfying the terms and conditions imposed on them by the grant of Occupation Permits.

Law

21. Although Mr Chan has sought to argue that the general principle of "legitimate expectation" in administrative law applies to the promises given here, in my judgment that is reserved for a procedural as opposed to a legal right which might exist. See for example :

A.G. of Hong Kong v. Ng Yuen-shui [1983]2 AC 629; and

C.C.S.U. v. Minister for the Civil Service [1985]1 AC 374, at p.401 per Lord Fraser.

These persons, by virtue of the 1961 promises, have a legal right to remain on the land.

22. Lord Templeman said at pp.860-867, In re Preston [1985]1 AC 835 :

"... the authorities ... suggest that the commissioners are guilty of 'unfairness' amounting to an abuse of power if ... their conduct would, in the case of an authority other than a Crown authority, entitle the appellant to an injunction or damages based upon breach of contract or estoppel by representation. In principle I see no reason why the appellant should not be entitled to judicial review of a decision taken by the commissioners if that decision is unfair because the conduct of the commissioners is equivalent to ... a breach of representation. Such a case falls within the ambit of an abuse of power for which in the present case judicial review is the sole remedy and an appropriate remedy ..." (my emphasis)

23. In my judgment, the conduct of the Housing Authority by serving the notices to quit, in breach of the clear promises of 1961, amounts to an abuse of power.

24. The Government through the Housing Authority is not now permitted to break that promise. They are bound by it. The action they took in 1961 was not incompatible with their statutory duties then, and now they must keep their promise as long as the remedy imposed by the Court does not prevent them from carrying out their current statutory duties.

25. See also R. v. Liverpool Corporation ex p. Liverpool Taxi Operators [1972]2 QB 295 at p.308 per Lord Denning M.R. :

" The other thing I would say is that the corporation were not at liberty to disregard their undertaking. They were bound by it so long as it was not in conflict with their statutory duty.

It is said that a corporation cannot contract itself out of its statutory duties. In Birkdale District Electric Supply Co. Ltd. v. Southport Corporation [1926] AC 355 Lord Birkenhead said, at p.364, that it was

'a well established principle of law, that if a person or public body is entrusted by the legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties. They cannot enter into any contract or take any action incompatible with the due exercise of their powers or the discharge of their duties.'

But that principle does not mean that a corporation can give an undertaking and break it as they please. So long as the performance of the undertaking is compatible with their public duty, they must honour it."

26. The position now is simply this : if they wish to break the promise then they will be liable for the consequences which flow.

27. The Government have acted unfairly to the residents of this village and this amounts in law to an abuse of power. As I have said earlier, the only remedy the Court could possibly sanction would be one which sounds in money.

(2) I now turn to the second issue. The Housing Authority in issuing Notices to Quit would be the Government acting as a landlord. The Ordinance gives a right of appeal under s.20 and in normal circumstances, judicial review would not be available to challenge the validity of the notices.

28. Further, the issue of occupation permits is normally a private law matter between the Housing Authority and occupier. See for example :

Hung Wah Chong Investment Co. Ltd. v. A.G. [1981] HKLR 336;

Benbecula Ltd. v. A.G. [1994]3 HKC 238; and

In re an Occupation Permit [1991]2 HKLR 104.

29. Although the challenge here is to the Notices to Quit, the promise was made by a public official prior to the village becoming a cottage resettlement area. It was given not by the Government as landlord, but as a solemn assurance from the Hong Kong Government, and most probably the Governor. I am in no doubt that the issue of the Notices to Quit without either the acknowledgement of the promises, or the offer of damages for the breaking of the promise is amenable to judicial review.

Extent of the Government's Liability

30. The next important matter is what is the extent of the promise. In my judgment the legal right given to the residents was personal to them. It cannot be sold or transferred. It covers only those people who were residing there. It does not cover those people who inherited. The promises were to give assistance to the residents who were there and not to permit low cost accommodation to be available to anyone who later settled there. The qualification of the 82 applicants, therefore, for damages may be a matter for argument. If necessary, I shall hear argument at a later time as to who would qualify for an award of damages. The extent of the damages is also a matter for further debate. Subject to hearing submissions at a later time, it would cover such matters as the loss of the structure and the loss of the opportunity to live there at a reduced rent. I accept from Mr Ma that in certain respects those who live there now have been fortunate in that they are paying very low rent compared to the rest of Hong Kong, but that is factually what has happened and the extent of damages will be subject to further argument and if necessary evidence.

31. As I have said earlier, the Housing Authority in 1988 were probably wrong not to acknowledge the promises which had been made, but they have, in my judgment, acted perfectly responsibly in this matter. They have a difficult task to perform in that their statutory obligation and duty is to provide housing for people in Hong Kong which often necessitates older buildings being demolished and people having to be re-housed. They have been making payments to the residents, not only for their structures, but also on a price per square foot together with removal expenses and allowances. I do not know at the moment, because I have not heard any evidence, whether or not the current residents would obtain higher figures as damages rather than the ex gratia payments that the Housing Authority have offered them, for example, on certain flats, I think a figure of $288,000 has been offered. Some of the buildings have carried payments amounting to several million dollars. It must be understood therefore that although my duty is to declare what I consider to be the law, it is not to provide money on any terms to the residents. Mr Warren Chan said, in his opening, that the residents wanted $1.5 million each. I am sure they do. However, all that they would be entitled to in law is to what are called damages. What that figure will be is a matter for further determination unless the parties agree it.

32. As I said, despite the rulings I have made, I make no criticism whatsoever of the Housing Authority. They appear to have dealt with this very difficult matter with tact and they have provided the Court with all the information which was required for a proper determination of this matter. I will, if necessary, make an appropriate declaration that the Notices to Quit that were served were, in the circumstances, unfair as amounting to an abuse of power which gives the applicants the right to damages. That also would be a matter for further discussion if the parties do not agree it.

33. I would only like to finish by saying this. Those persons who are involved in this case - several hundred have appeared today - have strong emotional feelings over their village. It has been their life for many, many years. It has no doubt strong memories of how they arrived there. I am sure, however, that all the residents must now recognise that they must go. Modern housing is urgently required in Hong Kong and this land will provide the opportunity for many people to live there. I am told that it is hoped to clear the site in a few weeks' time. The Housing Authority have told me, through counsel, that elderly people will be moved to housing estates and I am sure the Housing Authority will do their utmost to ensure that disruption is kept to a minimum. I sincerely hope, however, that the villagers will leave peacefully. They have had their opportunity to air in Court their grievances. I have pronounced that they were right in coming to Court. Hopefully this will now be an end to all the problems over Rennie's Mill and I am sure the residents will recognise that the law which has given them the opportunity to come to Court must be obeyed. I do not therefore quash or interfere with the Notices to Quit which are valid. Their time for expiry has passed. What period of time the Housing Authority will now permit the families to move away no doubt will be a matter for discussion.

Representation:

Mr Warren Chan, Q.C. and Mr Anthony Chan, inst'd by M/s Liu Chan & Lam, for Applicants

Mr Geoffrey Ma, Q.C. and Mr Anderson Chew, inst'd by M/s Deacons Graham & James, for Respondent