The Home Restaurant Ltd. v. The Attorney General

HCMP002135/1986

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Head Note

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JUDICIAL REVIEW

A consideration of the role exercised by Government in offering re grants of Crown Leases and in particular whether this was in the Public Domain.

The extent to which it is permissable for the courts to consider the terms of the Joint Declaration.

Can the contents of the Joint Declaration taken in conjunction with announcements of Governments intention to implement it give rise to any legitimate expectations.

Held

1986, No. MP 2135

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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BETWEEN

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Coram: The Hon. Mr. Justice Mayo in Chambers

Date of Hearing: 24th and 25th November, 1986

Date of Delivery of Judgment:  9th December, 1986

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JUDGMENT

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1. The Respondent in these proceedings, The Attorney General, is applying for an order to set aside the leave which was granted by Mr. Justice Hooper on the 6th of October 1986 for the Applicant to apply for Judicial Review. The Respondent is also applying for the applicant's notice of motion to be struck out.

2. The grounds filed by the Respondent in support of this application are (1) that the Court has no jurisdiction to grant the relief sought (2) that the notice of motion discloses no reasonable cause of action (3) that the Notice of Application and the Notice of Motion is in abuse of the process of the Court and (4) that the same is frivolous and vexatious.

3. The Applicant held a Crown Lease of property at 20 Hanoi Road, Kowloon. The Crown Lease expired in December 1978. The Applicant remained in possession. At the time of the expiration of the Crown Lease, the Applicant entered into discussions with the Government for the renewal of the Crown Lease. No agreement was forthcoming.

4. The Crown made alternative proposals for the comprehensive re-development of the land together with adjoining land the Crown Leases of which expired at the same time. A large area of land was encompassed in the proposed re-development scheme and the land in question was bounded by 4 streets in the Tsim Sha Tsui area. As a result of circumstances which it is not necessary for me to deal with the re-development scheme was not proceeded with.

5. In March 1985 the Director of Lands intimated that he might be prepared to offer re-grants of the various Crown Leases and that the term of years granted thereunder would expire in the year 2047. No offers were made by the Director of Lands until December 1985. It will be appreciated that during this period the Applicant held the property as a tenant at will holding over.

6. During this period the British Government and the Chinese Government were entering into negotiations and discussions relating to the future of Hong Kong. The Joint Declaration of these Governments' intentions was deemed to come into effect on the 27th of may 1985. Annex III to the Declaration contained fairly detailed provisions concerning the manner in which grants of land would be dealt with in the future. Also at the time of the Joint Declaration, His Excellency the Governor announced that the proposals contained in the Joint Declaration would be implemented. Paragraphs 2 and 3 of Annex III read as follows :

7. Put in very simple terms, it is the Applicant's case that the Joint Declaration together with the accompanying announcement gave rise to a legitmate expectation that Crown Leases would be granted in accordance with the provisions contained in Annex III. They go on to argue that they come within the ambit of paragraph 2 above rather than paragraph 3.

8. A fresh offer was made by the Government to the applicant by a letter dated the 30th of June 1986. It is this offer which is in essence the subject matter of the notice of motion. It is the applicant's contention that the offer which has been made is not in conformity with the provisions contained in paragraph 2 above.

9. At this stage I consider it to be helpful to have regard to the terms of the notice of application for judicial review which has been lodged. The decision which is being attacked is "The decision made by the Governor and Council or alternatively by the Buildings and Lands Department and communicated by the letter dated the 30th of June 1986 from the re-grant section of the said Department to make a re-grant of a Crown Lease of premises to the Applicant upon payment of a premium". The terms of the letter are as follows :

"BY RECORDED DELIVERY

Tel. No. 5-26702707

Dear Sir/Madam,

Terms for the Grant of Lease

Lot No.    :     K. I. L. 574 s. J

Address    :    20 Hanoi Road

Further to my letter of 10th June, 1986, I now offer on behalf of Government the grant to you of a lease in respect of the above property on the following terms and subject to the conditions set out in this letter :-

Yours faithfully,    

Signed            

( C.H. So )                        

Chief Estate Surveyor/.                 

Property Management & Estate Management

c.c. R.G.(L.O. )"

12. It will be appreciated when this letter is considered in conjunction with the extracts I have referred to from Annex III that the bone of convention between the parties is whether the re-grant should be in accordance with the terms of paragraph 2 of the Annex or paragraph 3. If it is under paragraph 2 no premium is payable whereas if it is under paragraph 3 a premium is payable in respect of the period up to 1997.

13. The relief sought is either an order of certiorari quashing the said decision or alternatively a Declaration that the Applicant is entitled to renewal or re-grant of their lease without payment of any premium or that the Government should reconsider its decision in the light of the contents of the Joint Declaration.

14. There has been other litigation in relation to this matter. On the 6th of March 1986, Mr. Chan Wah Sun, one of the Applicants neighbours made an application for leave to apply for judicial review in Miscellaneous Proceedings No. 714 of 1986. Mr. Chan's action was a representative action and the Applicant was one of the parties being represented. The Applicant has however since then dissociated itself from this action.

15. On the 28th of April 1986 Deputy Judge Downey granted leave to Mr. Chan in accordance with the provisions contained in Order 53 of the rules. Deputy Judge Downey having heard representations on Mr. Chan's behalf granted the leave and wrote a judgment giving reasons why he was disposed to do so. This notice of motion is due to be heard next month. When Mr. Justice Hooper gave leave in the present case he did not give any written reasons for his decision. I think, however, that it is right to proceed upon the assumption that Mr. Justice Hooper gave the whole matter the most careful thought before granting leave.

16. However the fact remains that Mr. Justice Hooper's order was made ex parte and accordingly it is open to the Respondent to make application under Order 32 rule 6 to set aside the leave. It is also clearly open to the Respondent to apply to strike out the motion and it would seem to be convenient to consider this application on the basis of the principles set out in both Order 32 rule 6 and Order 18 rule 19 of the Rules.

17. Mr. Wright, who was representing the Applicants, drew my attention to the criteria which should be adopted in determining whether or not leave should be granted for a judicial review. He referred to. a passage from the speech of Lord Diplock appearing on page 105 of R. v. The Inland Revenue Commissioners Ex parte National Federation of Self-employed and Small Business Ltd.⁽¹⁾. The requirement to obtain leave is to "prevent the time of the Court being wasted by busy bodies with misguided or trivial complaints of administrative error, and to remove the uncertainty which public officers and authorities might be left as to whether they could safely proceed with administrative action while proceedings for judicial review ordered were actually pending even if they are misconceived".

18. It was only in a case which is "frivolous, vexatious or hopeless" that leave should not be granted. I accept that this is the case. I further accept in the context of the present proceedings that the Respondent must clearly establish that the Applicant's case is a hopeless one before the leave which was granted by Mr. Justice Hooper should be set aside. This is a very high threshold.

19. This burden however has also be considered in the light of the majority view of the Court of Appeal in Mckay v. Essex Area Health Authority ⁽²⁾ that

"if the Court is satisfied that the claim by the plaintiff does not disclose a reasonable cause of action, even though the Court is so satisfied after a relatively long and a complex hearing, the right course is to strike out that claim, even if the defendant has still to meet other valid claims by the plaintiff, since he is entitled under this rule to be relieved to having to meet a claim which disclosed no reasonable cause of action".

20. I accept that this is a correct statement of the law. Even if as in this case where there were almost two days of argument and submissions, if the conclusion at the end of the day is that the Applicant has no prospect whatever of success then the application should succeed.

21. Mr. Stock for the Respondent advanced four main contentions in support of his application. I think that it will be convenient to deal with each of these contentions in turn.

(1) Judicial review is confined to duties of a public nature. Although obviously the Government is a public body, the function it was exercising in connection with the Applicant was of a private nature. What it was doing was seeking to enter into a contract with the Applicant in connection with the Crown Lease it had held. The question to ask was not whether the parties or any of them were public bodies but what was the nature of the activity which was being undertaken. When Government granted leases, it was performing a function which was similar to that of any landlord.

22. I have no doubt that Mr. Stock is correct in his contention that remedies available under Order 53 of the rules of the Supreme Court are only relevant to situations within the public domain. The law on this is conveniently incapsulated in the headnote of R. v. The British Broadcasting Corporation Ex parte Lavell⁽³⁾. The headnote which seems to me to accurately embody Woolf J's Judgment reads:

"(1) Under RSC Ord 53, r1(1), as confirmed by s31(1)

of the Supreme Court Act 1981, certiorari and the other prerogative remedies were only available to impugn a decision of a tribunal which was performing a public duty, and were inappropriate to impugn a decision of a domestic tribunal such as an employer's disciplinary tribunal. Similarly, judicial review by way of an injunction or declaration under Ord 53, r1(2), or s31(2) of the 1981 Act, although wider in ambit than relief by prerogative order, was nevertheless confined to the review of activities of a public nature as opposed to those of a purely private or domestic character. Since the disciplinary procedure under which the applicant was dismissed arose out of her contract of employment and was purely private or domestic in character, the applicant was not entitled to relief by way of certiorari under Ord 53, r1(1) or an injunction or declaration under Ord 53, r1(2) (see p 248 ef, p 249 b to e and p 225 h, post); dictum of Denning LJ in Lee v. Showmen's Guild of Great Britian [1952] 1 AER at 1183 and R v Criminal Injuries Compensation Board, ex parte Lain [1967] 2 AER 770 applied".

23. Mr. Stock then went on to consider two Hong Kong cases where consideration had been given to the legal position of the Government in relation to land matters. Hang Wah Chong Investment Co. Ltd. v. Attorney General of Hong Kong⁽⁶⁾ was considered by the judicial committee of the Privy Council and Yau Fook Hong Co. Ltd. and another⁽⁷⁾ was the judgment of Mr. Justice Jackson-Lipkin. It appeared from both of these cases that when the Government was negotiating with a party in relation to terms to be embodied in a Crown Lease the Limb of Government undertaking the negotiations was acting as the Government's land agent and the transaction was of a private rather than a public nature.

24. Mr. Wright did not accept this. He referred to R. v. East Bershire Health Authority, Ex parts Walsh⁽⁸⁾ and R. v. Some Secretary Ex parts Benwell⁽⁹⁾ which illustrated a different approach. Both cases related to claims for wrongful dismissal. In Walsh's case, the claimant was a male nurse employed by a local authority whereas in Benwell the claimant, a prison warder, was a civil servant. It was held in the former case that the claimant could not invoke Order 53 as he had claims which could be enforced under his contract of service. The claimant in Benwell could not sue as he had no contract employment. This meant that unless he was able to obtain relief by way of judicial review he would be without redress. Mr. Justice Hodgson held in these circumstances that the claimant should be permitted to proceed by way of judicial review.

25. What I think is necessary in the present case is to analyse the nature of the functions which have been exercised by the Government. When the Government is making grants of land it is in a unique position. All land vests in the Crown. I do not think that it can be argued that the functions it exercises are analogous with those performed by a landlord in the private sector. This is particularly the case when the Government is determining as a matter of policy what conditions to impose in a grant. I have no doubt that it is at the very least arguable that Government is performing a function in the public domain.

26. Any other conclusion would seem to me to be unsatisfactory. I do not think that simply because a party is the holder of a Crown Lease and is negotiating with Government in relation thereto, it should be placed in a different situation to anyone else. The real test is not whether the function is a private one or public one but whether the claimant is able to establish that it has a sufficient public interest to maintain a claim under Order 53. I am accordingly satisfied that the Respondent is not able to defeat the Applicant's claim on this ground.

27. I consider it to be desirable to deal with Mr. Stock's second and third contentions together. The second contention is that the Joint Declaration should be treated as a treaty. A treaty is not justiciable in Municipal Courts unless it has been incorporated into the law. The third is that a treaty cannot give rise in law to a legitimate expectation justiciable in the Courts. It may give rise to expectations but that is different to legitimate expectations.

28. The main thrust of Mr. Stock's submissions under these contentions was that it was impossible for the Applicant to establish any claim for relief by way of judicial review unless the terms of Annex III were construed in detail. This necessarily would involve questions of construction. There was ample authority for the proposition that treaties are not justiciable in Municipal Courts unless they were incorporated into the law. This being the case it was not permissible to undertake any exercise which involved the construction of the Joint Declaration or its Annexes.

29. One of the best statements of the law in this connection was a passage from the judgment of Lord Denning at page 1039 in Blackburn v. Attorney General⁽¹⁰⁾ :

"Mr. Blackburn points out that many regulations made by the European Economic Community will become automatically binding on the people of this country. And that all the courts of this country, including the House of Lords, will have to follow the decisions of the European court in certain defined respects, such as the construction of the treaty.

I will assume that Mr. Blackburn is right in what he says on those matters. Nevertheless, I do not think these courts can entertain these actions. Negotiations are still in progress for us to join the Common Market. No agreement has been reached. No treaty has been signed. Even if a treaty is signed, it is elementary that these courts take no notice of treaties as such. We take no notice of treaties until they are embodied in laws enacted by Parliament, and then only to the extent that Parliament tells us. That was settled in a case about a treaty between the Queen of England and the Emperor of China. It is Rustomjee v. The Queen⁽¹¹⁾ Lord Coleridge C. J. said, at p. 74:

30. This question has also been considered in this court in the context of the Joint Declaration. I refer to the judgment of Mr. Justice Nazareth at page 8 of Tang Ping Hoi v. The Attorney General⁽¹²⁾

I must confess that I do not at all see any such implication. That the Lands Department sought to refute the defendant's solicitor's claim upon the simple ground that the Joint Declaration came into force upon a date later than the solicitor suggested, does not in my view carry into implication that upon the Joint Declaration coming into force, it must have effect as law. It is therefore not necessary for me to decide whether any admission that the Joint Declaration has effect as municipal law would produce that effect. Furthermore Mr. Wong did not address me on this point. Nevertheless I note that in Vajestingji's case (13), to which I have already alluded, at page 361 Lord Dunedin said of certain declarations made by the Government :

"The other point was that, in virtue of certain general declarations, the appellants became entitled to enforce the treaty. The general declarations will be subsequently examined. If they give a right of themselves well and good, but they can never have the effect of altering the law as above stated; that is to say, of making the appellants, so to speak, a party to the treaty with a right to enforce the conditions of the same in a municipal Court. "

Those declarations, unlike the letter in the present case, did suggest (albeit in very general terms) that existing rights would be respected. Even without Lord Dunedin's helpful words, it is difficult to see how a representation by the Lands Department that-the Joint Declaration had the force of law (assuming that such a representation had been made) could bestow that effect upon the Joint Declaration. I find no merit whatever in this limb of Mr. Wong's submission. "

31. I hope that I am not doing Mr. Wright an injustice when I say that I do not think that he has met the problems raised by these cases directly. He attempted with great-skill to circumvent the problems. He attempted to equate the situation which arises in the present case with the circumstances pertaining in H. T. V. Ltd. v. Price Commission⁽¹⁴⁾. In that case, the plaintiff complained that the Price Commission had not acted fairly and in accordance with the code which it had set down in accordance with statutory requirements. He placed particular reliance upon a passage in Scarman L. J. 's judgment appearing on page 189 of the report :

"But the supervision of the courts is not limited to the interpretation of statutes. Agencies, such as the Price Commission, must act fairly. If they do not, the High Court may intervene either by prerogative order to prohibit, quash or direct a determination as may be appropriate, or, as is sought in this case, by declaring the meaning of the statute and the duty of the agency".

32. Mr. Wright argued that this passage was directly relevant to the present case. He submitted that it was open to him to place reliance upon Government's announced intentions as well as the contents' of the Joint Declaration and its Annexes.  I regret that I do not accept the validity of this contention. A statutory code can in no way be equated with a treaty or a declaration such as the Joint Declaration and its Annexes. Equally I can see no justification for treating the accompanying announcement in a different manner.

33. Mr. Wright went on to argue that Government's announced intention to implement the Joint Declaration had given rise to a legitimate expectation that they would obtain a renewal of their Crown Lease in accordance with the terms of paragraph 2 of Annex III. He placed particular reliance upon The Attorney General v. Ng Yuen Siu⁽¹⁵⁾. In that case it was held by the judicial committee of the Privy Council that where the Hong Kong Government had made an announcement concerning its policy towards illegal immigrants  it must adhere to that policy. The effect of this was to require the Director of Immigration to give the A pplicant a fair hearing which included making representations that he was entitled to remain in the colony. The judicial committee based their advice on the principles propounded in Liverpool Corporation Ex parte Liverpool Taxi Fleet Operators⁽¹⁶⁾ and R. v. The Criminal Injuries Compensation Board, Ex parte Lain⁽¹⁷⁾.

34. Again a similar problem arises to the one I have referred to previously. An announcement by the Hong Kong Government of the way in which it will deal with applications by immigrants to Hong Kong is entirely different to the situation in the present case where Government is making a general statement of policy regarding its intention to implement the Joint Declaration. The main difference is that the statement made in Ng's case was of a very specific nature. In particular it referred to a procedure which would be followed if the terms of an Amnesty were complied with. Essentially it related to matters of procedure. In the present case it is impossible to glean what the Government's policy would be without a detailed examination of the Joint Declaration and its Annexes which necessarily would require the interpretation or construction of the treaty. Without undertaking such an exercise, the policy could not be ascertained. This brings one back to the inadmissibility of attempting to incorporate the treaty into the munipical law. Attractive as the proposition might appear I do not think that the Applicant has any prospect of extending the scope of Ng's case to the present situation.

35. It seems to me that the main litmus test to adopt to ascertain whether judicial review is applicable to the present case is to consider whether the relief which the Applicant is seeking can be brought within the principles laid down by Lord Diplock in CCSU v. The Minister for the Civil Service⁽¹⁸⁾. This passage seems to me to be the best up to date statement that there is on this developing area of the law

"My Lords, I see no reason why simply because a decision-making power is derived from a common law and not a statutory source, it should for that reason only be immune from judicial review. Judicial review has I think developed to a stage today when without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads of the grounds upon which administrative action is subject to control by judicial review. The first ground I would call "illegality", the second "irrationality" and the third "procedural impropriety". That is not to say that further development on a case by case basis may not in course of time add further grounds. I have in mind particularly the possible adoption in the future of the principle of "proportionality" which is recognised in the administrative law of several of our fellow members of the European Economic Community; but to dispose of the instant case the three already well-established heads that I have mentioned will suffice".

36. I am satisfied for the reasons I have given that it is not open to the Applicant to attack Government's announcement on the basis of illegality. Nor do I think the question of irrationality can arise. This then leaves us with procedural impropriety. I do not think that there can be any prospect of success. There is no complaint on the papers that the Applicants have not had a fair hearing.

37. Further to this I am satisfied that there can be no question of the Applicant being able to establish that they have a legitimate expectation. The circumstances which can give rise to this are considered by Lord Diplock at page 1194 of CCSU.

"To qualify as a subject for judicial review the decision must have consequences which affect some person (or body of persons). other than the decision-maker, although it may affect him too. I must affect such other person either :

(a) by altering rights or obligations of that person which are enforceable by or against him in private law; or

(b) by depriving him of some benefit or advantage which either (i) he had in the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational grounds for withdrawing it on which he has been given an opportunity to comment; or (ii) he has received assurance from the decision- maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn. (I prefer to continue to call the kind of expectation the qualifies a decision for inclusion in class (b) a "legitimate expectation" rather than a "reasonable expectation", in order thereby to indicate that it has consequences to which effect will be given in public law, whereas an expectation or hope that some benefit or advantage would continue to be enjoyed, although it might well be entertained by a 'reasonable" man, would not necessarily have such consequences. The recent decision of this House in In re Findlay (19) presents an example of the latter kind of expectation. "Reasonable" furthermore bears different meanings according to whether the context in which it is being used is that of private law or of public law. To eliminate confusion it is best avoided in the latter.)".

Government's announcement does not come within these considerations.

38. All of this leads me-to the inevitable conclusion that there is no way that relief can be obtained by the Applicant by way of judicial review. Put another way I am satisfied that the Applicant's case is a hopeless one. This brings it within the scope of the principles I have earlier referred to that the motion should be struck out and that the leave which has been granted by Mr. Justice Hooper should be set aside.

39. The result of my coming to this conclusion is that it obviates the necessity for my dealing with the other contentions which were advanced by Mr. Stock. I propose making an order in the terms sought by the Respondent. Subject to any submissions there may be by Counsel I propose ordering that the Respondent will have his costs.

(1) [1981] 2 AFR 93

(2) [1982] Q.B 1166

(3) [1983] 1 AER 241

(6) [1981] 2 1 WLR

(7) [1984] HKLR 42

(8) [1985] 1 QB 152

(9) [1984] 3 WLR 843

(10) [1871] 1 WLR 1037

(11) [1876] 2 Q.B.D. 69

(12) (unreported) being M. P. No. 2060 of 1985

(13) Vajesingji Joravarsingji v. Secretary of State for India (1924) I. R. 51 Ind. App. 357, 360-361.

(14) [1976] I.C.R. 171

(15) [1983] 2 AC 629

(16) [1972] 2 QB 299

(17) [1967] 2 QB 864

(18) [1984] 3 WLR 1174 at page 1196

(19) [1984] 3 W.L.R. 159 and [1985] 1 Ac 318

Representation:

Mr. Frank Stock, Q.C., & Mr. Peter Feenstra for respondent

Mr. Robert Wright, Q.C., & Mr. Benjamin Yu (F. Zimmern & Co.) for applicant