Lam Kin Sum v. Hong Kong Housing Authority

HCAL000198A/2002

HCAL 174/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 174 OF 2002

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 198 OF 2002

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Coram: Hon Chung J in Chambers

Date of Handing Down Decision on Relief: 12 August 2003

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DECISION ON RELIEF

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Introduction

1.The details relating to the two applications for judicial review, such as the background leading to the same and the nature of the dispute involved, have been set out in the Judgment handed down on 11 July 2003 ("the Judgment"). In short, I found in the applicants' favour. As regards the relief sought in the applications, para. 64 and 65 of the Judgment read:-

"If necessary, I shall hear the parties as to the precise terms of the orders to be made in the applications in light of the conclusion reached above (and the reasons for the conclusion).

At the moment, I am minded to make an order in terms of:-

(a) para. 2 of the relief sought in HCAL 174;

(b) para. 2 of the relief sought in HCAL 198".

2.Para. 2 of the relief sought in HCAL 174 is:-

"An Order of Mandamus directing the Hong Kong Housing Authority to review the rent of Room 3311, Chau Kwai House, Kwai Chung Estate, New Territories so as to bring the rent of the said public housing unit to a level such that the Median Rent to Income Ratio does not exceed 10% as required by section 16(1A) of the Housing Ordinance, Cap. 283".

Para. 2 of the relief sought in HCAL 198 is in the same terms but related to the public housing unit of the applicant in that application (without expressly stating the address thereof).

Events Subsequent to Decision

3.From the correspondence passing between the court and the parties' respective solicitors, it became known that the parties could not agree on the terms of the orders to be made. The respondent requested to be heard in relation to (among other things) what relief should be granted. The respondent intended to address the court at the hearing scheduled for 26 August 2003. In a letter dated 18 July 2003 from the court to the parties, the following directions were given:-

"(1) [the] parties are to attempt to agree to the terms of the orders within 7 days;

(2) failing agreement, [the] parties are to lodge with the court within 7 days thereafter:-

(a) skeleton submissions regarding the terms of the orders;

(b) draft orders proposed to be made by the court;

(3) unless the court otherwise directs, [the] parties do not need to attend court to address the court on the terms of the orders".

No agreement was reached between the parties and the applicants lodged the documents referred to in the direction with court on 31 July 2003 whereas the respondent did so on 1 August 2003 (written submissions) and 2 August 2003 (draft orders).

The Parties' Respective Stance

4.The orders proposed by the applicants are the same in the two applications, namely:-

"the [respondent] do and is hereby commanded forthwith to review and determine the variation of the rent for [the addresses of the public housing units of the respective applicants as set out in the respective draft orders] pursuant to section 16(1A) of the Housing Ordinance, Cap. 283".

5.On the other hand, the orders proposed by the respondent in relation to HCAL 174 are:-

"it is declared that the Respondent is under a duty to review the rent of classes (whether determined by the nature of land or status of the lessee) of land in an estate for residential purposes (with the expressions 'estate' and 'land' being defined under the Housing Ordinance, Cap. 283) regularly (which means in a cycle of every three years)".

In relation to HCAL 198, the respondent proposes the following order:-

"it is declared that the decision of the Respondent, made on or about 31st October 2002, to defer the review of rent of estate for residential purposes (with the expression 'estate' being defined under the Housing Ordinance, Cap. 283) and to extend rent increase waivers corresponding to the relevant estates for residential purposes is not a 'determination of variation of rent' within the meaning of section 16(1A) of the Housing Ordinance (Cap. 283) and thus is also not a decision or determination subject to section 16(1A) of the same;

it is declared that the Respondent is under a duty to review the rent of classes (whether determined by the nature of land or status of the lessee) of land in an estate for residential purposes (with the expressions 'estate' and 'land' being defined under the Housing Ordinance, Cap. 283) regularly (which means in a cycle of every three years)".

6.The respondent's alternative argument is that, if the court is minded to order a mandamus in each of the applications, the terms of the order should rather be:-

"The [respondent] do and is hereby directed ... to review regularly (which means in a cycle of three years) the rent of [the public housing unit of the respective applicant]".

Re-Opening the Arguments on Relief

7.I must say that the arguments advanced by (and the declaratory orders proposed by) the respondent are surprising. In effect, the respondent is seeking to re-open the part of its case relating to relief. In order to understand this better, reference has to be made to what transpired at the hearing of the applications (which resulted in the Judgment). At the time of that hearing, the respondent's case regarding relief was set out in para. 81 to 83 of its outline of submissions. In short, the respondent argued:-

(a) whether to grant remedies or relief in applications for judicial review is a matter within the court's discretion;

(b) public interest is a significant consideration in the exercise of that discretion; also significant are the consequences of the decision under challenge;

(c) the respondent argued that no relief should be granted in the applications;

(d) the reasons given by the respondent in support of (c) were:-

(1) an Ad Hoc committee has been appointed by the respondent to review domestic rent policy;

(2) the respondent has a limited pool of resources;

(3) the respondent has acted positively to relieve the tenants' financial burden caused by the economic downturn;

(4) the provision of public rental housing was funded by substantial subvention from public funds;

(5) the respondent is operating in a structural deficit;

(6) rent review has always been undertaken in batches of housing estates, rather than territory-wide, or for individual housing units;

(7) rent review is a process which involves the consideration of various factors;

(e) by way of conclusion, the respondent submitted that the court should grant no relief: para. 82, outline of submissions (at p. 39). At para. 83 thereof, the respondent said:-

"Alternatively, the [respondent] submits that the Court should only grant limited remedies, or the declarations. The Applicants ought to be denied an order of mandamus for rent review to bring down the rent for their respective public rental housing unit ... Directing a rent review of individual public rental housing units is contrary to s. 16(1A), which envisages determinations of variation of rent 'in respect of any class ... of land in an estate for residential purposes'".

8.In short, I rejected the respondent's submissions regarding relief. At para. 66 of the Judgment, I also said:-

"The respondent also asks this court to exercise its discretion to refuse to grant any relief: para. 83, the respondent's outline of submissions. It claims that if the court grants the relief sought, the respondent would likely face an administrative difficulty, or even impossibility, because this may open a flood-gate of claims against it. The alleged problem is very probably over-stated. The applicants do not agree with this claim either".

9.The remarks at para. 64 and 65 of the Judgment were accordingly not intended to ask the respondent to re-open this part of its argument, but merely to enable the parties to address the court on the precise wording of the orders to be made. This may be necessary, for example, to avoid any difficulties which may be caused by the past practice of the respondent to review rent by batches of housing estates, rather than individual housing units. In relation to the last-mentioned point, as has been recorded at para. 55 of the Judgment:

"... in relation to whether rent should be reviewed in batches of public housing blocks/estates, the applicants do not dispute the respondent can follow its past practice ... ".

10.However, it is also trite law that before a court order is "perfected", it is open to the court to review its own decision: see, for instance, Lilik Andayani v. Chan Oi Ling [2000] 4 HKC 233 where the Court of Appeal said:-

"There must, of course, come a time in any proceedings when the court must be regarded as having completed its task. When that time is reached, the court is said to be functus officio. Once that stage has arrived, the court has no further jurisdiction over the case. But when does that stage arrive? The answer given by the common law is when the judge's order has been drawn up, entered or otherwise perfected. As Slesser LJ said in Millensted v. Grosvenor House (Park Lane) Ltd. [1937] 1 KB 717 at p. 722:

'It was not sought to be disputed... that it is within the power of a judge at any time before judgment is entered and perfected to alter its terms. This is the effect of two judgments, the case of In re St. Nazaire Company (1879) 12 Ch D 88, in which case it was held, following In re Australian Direct Steam Navigation Co., Millers' case (1876) 3 Ch D 661, that a judge can always reconsider his decision until the order has been drawn up, and the case of In re Suffield & Watts ex parte Brown (1888) 20 Q B D 693, to the effect that 'so long as the order has not been perfected the judge has a power of reconsidering the matter, but, when once the order has been completed, the jurisdiction of the judge over it has come to an end'... '

The view of the English Court of Appeal in Millensted was cited with approval by the English Court of Appeal in Pittalis v. Sherefettin [1986] 1 QB 868.

A perusal of the court file shows that the order made by the judge on 23 December was not drawn up. ... The steps to be taken to draw up and enter an order made in the Court of First Instance are set out in Ord. 42 r. 5. ... But Ord. 42 r. 5(5) does not provide for what is to happen when none of the parties draw it up - perhaps because, as here, none of the parties are represented. My practice has always been to draw up the order myself in those circumstances. Whether other judges do that, I do not know. Be that as it may, the fact that the order made by the judge on 23 December was never drawn up meant that he was not functus officio when he declined to rehear the application. His failure to exercise the discretion which he undoubtedly had now entitles the Court of Appeal to exercise that discretion in his place".

11.Since the orders in the applications have not been made, let alone perfected, despite what transpired during the hearing, it is well within my discretion to re-consider the matter in light of the parties' further submissions. Accordingly, I shall proceed to do so below.

Parties' Arguments Raised Herein

12.Apart from the matters set out above (which have been taken into re-consideration herein), in the written submissions dated 1 August 2003, the respondent also puts forth the following points:-

(1) the court has jurisdiction to grant a declaration in an application for judicial review: s. 21K(2), High Court Ordinance (Cap. 4). This point is the same as para. 7(a) above;

(2) the principal holding of the Judgment is that the respondent is under a duty to review rent regularly (which means, since the 1997 amendment (to Cap. 283; as that term was defined in the Judgment), a cycle of every 3 years). Accordingly, a declaration to such effect should be ordered;

(3) in addition to (2), it is just and convenient to order a declaration, rather than mandamus, against public bodies such as the respondent because public bodies are conscious of their obligations and will do their utmost to comply with any declaration of the court: R v. Liverpool City Corporation, ex p Ferguson [1985] IRLR 501, 504. Declarations may be more appropriate than mandamus (on the assumption that a responsible authority will remedy the consequences of a breach) at least in the first instance: Lewis: Judicial Remedies in Public Law (2000) 2nd Ed., para. 7-020. This point is similar to (if not the same as) para. 7(b) above;

(4) further, the court has not held in the Judgment that tenants of public housing units have an enforceable right against the respondent to have their rents reviewed;

(5) the respondent needs to consider and determine for itself how best to carry out the duty found by the court. Some flexibility should be given to the respondent "in the manner and extent of [its] performance of [its duties], particularly when resources are insufficient to satisfy all claims upon them": de Smith, Woolf & Jowell: Judicial Review of Administrative Action (1995) 5th Ed., para. 16-010. The respondent places emphasis on factors like its limited resources, timing of the rent review for different housing estates and details as regards the manner in which rent reviews are to be carried out. This point is similar to (if not the same as) para. 7(d)(2), (5), (6) and (7) above;

(6) the duty to review rent as found in the Judgment (at para. 36 thereof) is not the duty argued for by the applicants. Hence, to that extent, the respondent has not been called upon by the applicants to perform that duty as found by the court. Prior demand and refusal is a requirement to the grant of mandamus: Wade & Forsyth: Administrative Law (2000) 8th Ed., p. 615;

(7) the applications are not representative actions;

(8) directing the review of rent of an individual public housing unit so that its median ratio (as that term was defined in the Judgment, especially at para. 6 thereof) falls below 10% has no effect on the median ratio "in respect of all classes of land in all estates ... " (required by s. 16(1A)(b)). This point is the same as para. 7(d)(6) above.

Some of the above points are said to be relevant to the respondent's primary arguments (that no mandamus should be ordered) while others are said to be relevant to its alternative arguments (relating to the terms of the mandamus). Some are said to be relevant to both.

13.The respondent's alternative submissions relating to the terms of the mandamus orders are premised (apart from the points set out above) also on the following. Although the court has held that the respondent is under a duty to review rent regularly (which means every 3 years), the Judgment has not found that a review of rent is synonymous with a variation of rent. A review of rent does not necessarily mean the making of a determination to vary rent. In other words, the respondent's discretion not to vary the rent is recognised and preserved in the Judgment: see para. 25 and 26, the respondent's written submissions.

14.The applicants, on the other hand, submit that mandamus is the normal remedy: R v. Hanley Revising Barrister [1912] 3 KB 518, 529; Wade & Forsyth, p. 608. In the context of the applications, they further submit that the court has in the Judgment found that:-

(a) the respondent is under a duty to review rent regularly (on a cycle of every 3 years) under s. 16(1A): para. 36 thereof;

(b) the lengthening of the rent review cycle by the 1997 amendment and the imposition of a rent ceiling are not the goal but the means to the goal of enhancing the protection to tenants: para. 34 and 47 thereof;

(c) a rent review must not "thwart or run counter to the ascertained policy of the 1997 amendment" and "the 1997 amendment had intended that the respondent is under a duty to review rent, and when it does not, the s. 16(1A)(b) rent ceiling should be [abided] by": para. 57 thereof.

15.The applicants therefore submit that a mandamus order should be made in each of the applications. The respondent's arguments have been set out earlier and will not be repeated. In addition, the respondent criticises the applicants for erroneously relying on what in effect is an "out-dated" case decided in 1912, when public law was not well developed in England and the use of declaration as a remedy not well recognised. It is argued that the enactment of s. 21K(2), High Court Ordinance (Cap. 4) which empowers the court to grant declarations has changed the position.

Conclusion

16.Both the respondent's primary arguments as well as its alternative arguments (regarding the terms of the mandamus) are relevant to the manner of exercise of my discretion as to what relief should be granted. For this reason, both limbs have been considered together when I decide on the question of relief.

17.There may be much strength in the respondent's arguments that, generally speaking, the court will not in the first instance order a mandamus against a public body. However, there are special features in the applications which indicate that mandamus orders are more appropriate.

18.First, as has been recorded at para. 14 of the Judgment:-

"In a press release, the respondent admitted in January 2002 that the median ratio has exceeded 10%. The applicants' case (which is undisputed by the respondent) is that the median ratio exceeded 10% since the second quarter of 2000".

This background is crucial to a proper understanding of the Judgment. Further, as has been recorded at para. 13 of the Judgment, the last occasion when the respondent determined to vary rent was its decision to increase rent announced on 6 January 1999 (about 4-1/2 years before the date of the Judgment). The duty to review rent regularly is thus by now long overdue.

19.Secondly, the respondent has apparently taken an unduly narrow (or technical) view of some of the matters discussed in the Judgment in its written submissions dated 1 August 2003. I shall expand on this below.

20.The submission that the court has not held that tenants of public housing units have an enforceable right against the respondent to have their rents reviewed is astonishing. Insofar as this should mean there is no contractual right to do so, the submission is irrelevant to the applications which are applications made in a public law context. Insofar as this should mean that tenants have no locus standi to bring judicial review applications against the respondent, this may amount to an attempt to re-open the whole of the respondent's case, including its case on "liability". This may also amount to a contention that the applicants have no rights to lodge the applications based on the 1997 amendment.

21.The respondent's submissions relating to the formidability of the rent review exercise, details as to the manner in which it has to be carried out and the like are difficulties which may or may not in fact exist. Both the applicants and the court recognise that a rent review exercise is formidable and involves a sophisticated process: see, for example, para. 55 of the Judgment. When the applicants ask for orders of mandamus, I do not understand them to be seeking the court to coerce the respondent into abandoning all its past practice adopted when undertaking a rent review, or to make a hasty determination of variation of rent. They are quite prepared to accept the respondent can continue to adopt such practice.

22.The respondent's argument that there has not been any prior demand and refusal so as to permit a mandamus to be granted is unduly technical. Wade & Forsyth (relied on by the respondent) said:-

"It has been said to be an 'imperative rule' that an applicant for mandamus must have first made an express demand to the defaulting authority, calling upon it to perform its duty, and that the authority must have refused. But these formalities are usually fulfilled by the conduct of the parties prior to the application, and refusal to perform the duty is readily implied from conduct. The substantial requirement is that the public authority should have been clearly informed as to what the applicant expected it to do, so that it might decide at its own option whether to act or not" (emphasis supplied) (p. 615).

Hence, the emphasis is on a clear demand relating to the act the public authority is expected to do, rather than clarity as regards the true nature of (or the reasons for) the duty to act. There is also a passage in Wade & Forsyth about the court not always insisting on such requirement but I do not find it necessary to rely on it for present purpose.

23.But the most alarming matter is the respondent's submission that the Judgment has recognised and preserved the respondent's discretion in deciding not to vary rent even though the respondent has been found to be under a duty to review rent, in effect, every 3 years: see para. 13 above. This submission fails to recognise the context in which the Judgment was pronounced and ignores:-

(a) the observation at para. 14 of the Judgment relating to the rents having exceeded the 10% statutory ceiling quite some time ago;

(b) the failure of the respondent to comply with s. 16(1A), not only in failing to review rent every 3 years since at least 6 January 1999, but also in failing to bring the rent down to the level permitted by s. 16(1A).

The part of para. 57 of the Judgment which states:-

"I have found that the 1997 amendment had intended that the respondent is under a duty to review rent, and when it does so, the s. 16(1A)(b) rent ceiling should be [abided] by"

(which has also been ignored in this part of the respondent's written submissions: para. 25 and 26 thereof) has to be understood in the above context.

24.In view of the above matters, my discretion should be exercised in granting mandamus orders in the applications. To this extent, I agree with the applicants. Having said so, I recognise the force in the respondent's arguments that merely reviewing the rents of the housing units of the respective applicants is unlikely to comply with the requirements of s. 16(1A). The difficulty I face is, because the respondent has failed to approach the matter based upon a proper understanding of the Judgment, no proper assistance has been provided to the court regarding the appropriate wording of the mandamus orders. This matter has been outstanding for some time since the handing down of the Judgment. The respondent, as it is quite entitled to do at law, has already indicated an appeal will be lodged against the Judgment. The Judgment is of great importance to both parties and may have wide-ranging ramifications for the community. In these circumstances, rather than send the matter back to the parties for further submissions, I will make the following orders in each of the applications:-

"Without prejudice to the respondent's right to conduct the rent review ordered by the Court in the same manner as the respondent has adopted in previous rent reviews, the respondent do and is hereby commanded to forthwith review and determine the variation of rents of the class (or batch) of public housing units to which the applicant's public housing unit is part, according to the true meaning and effect of s. 16(1A), Housing Ordinance (Cap. 283)".

The order should contain in the recital (among other things) a reference to the background set out in para. 14 of the Judgment. I propose it should be along the following line:-

"The Court having found that the rents of public housing units have exceeded the statutory ceiling set out in s. 16(1A)(b)

and

The Court having also found that, at least since 6 January 1999, the respondent has failed to determine the rents of the said public housing units ... ".

In case of any further difficulties, there will be liberty to the parties to apply.

Other Matters

25.As stated above, the respondent has asked for an oral hearing. The request has been repeated in its written submissions. No reason has been given, however, as to why the respondent insists on being heard viva voce; in particular, the respondent has not explained whether, and if so how, it will be deprived of any benefits, or will suffer any prejudice, by merely given an opportunity to make representations in writing. I do not consider there should be any.

26.Furthermore, in relation to HCAL 198, the respondent also seeks a declaration in its favour: see para. 5 above. I do not consider there is any need to make such a declaration and therefore will not make any such order.

27.The respondent also seeks a stay of execution of the mandamus orders in its written submissions: see para. 31 to 33 thereof. I consider it more appropriate to deal with this matter at the hearing on 26 August 2003.

28.The respondent also relies upon the part of the applicants' earlier submissions where the applicants accepted a declaratory order to be an appropriate relief. The respondent has (correctly) not argued that the applicants have abandoned other forms of relief (especially mandamus), or that they are barred from arguing that mandamus should be ordered. I find that the applicants were only saying the court can also consider granting a declaratory order. The above conclusion was reached having taken that into account.

29.Although this Decision is pronounced in chambers, in view that the Judgment was pronounced in court, and that the matter has received, and is likely to receive, widespread attention in the community, I authorise the publication of this Decision.

Costs

30.The respondent asks the court to award only two-thirds of the taxed costs of the applications to the applicants on the ground that the applicants have failed in relation to part of their case relating to whether the respondent's decision made on about 31 October 2002 amounted to a determination of variation of rents (under s. 16(1A)).

31.In this connection, I refer to the principles set out in In re Elgindata Ltd (No. 2) [1992] 1 WLR 1207 at 1214 which read:-

"The principles are these. (i) Costs are in the discretion of the court. (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length of costs of the proceedings he may be deprived of the whole or a part of his costs. (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful part's costs. Of these principles the first, second and fourth are expressly recognised or provided for by rules 2(4), 3(3) and 10 respectively. The third depends on well established practice. Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party's costs. ... ".

I consider there is a policy reason behind these principles. If the Courts invariably order costs of the issues to be separately dealt with, much time and expenses will have to be spent in almost every case to determine this aspect. Soon the effort which needs to be spent on it may equal or exceed that spent on the substantive issues.

32.I find the following matters to be of particular importance:-

(a) the applicants are the successful parties in the applications and have to go to "trial" to achieve this;

(b) the issue on which the applicants failed may be independent of and separate from the other issues. However, the evidence related to them was also relevant to other issues;

(c) the length of time spent at "trial" was about one and half days in total. The time spent on that issue is not such as to justify a separate costs order.

In these circumstances, I do not consider a "split" costs order should be made.

33.For the above reasons, costs of the applications are to be paid by the respondent to the applicants to be taxed if not agreed. The applicants' own costs are to be taxed in accordance with the Legal Aid Regulations.

Representation:

Mr Philip Dykes,SC leading Mr Johannes Chan, SC, instructed by Messrs Ho Tse Wai & Partners, assigned by DLA, for the Applicants in both applications

Mr Gerard McCoy, SC leading Mr P Y Lo, instructed by Messrs Denton Wilde Sapte, for the Respondent in both applications