Tang Yee Yu v. 香港銅鑼灣社會保障辦事處

HCSA41/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO. 41 OF 2008

(ON APPEAL FROM SCTC66717 OF 2007)

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Before : Hon Yam J in Court

Date of Hearing : 13 September 2010

Date of Judgment : 13 September 2010

Date of Handing Down Reasons for Judgment : 19 November 2010

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REASONS FOR JUDGMENT

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1.On 13 September 2010 I allowed the appeal and gave judgment for the claimant Ms Tang Yee Yu (“Ms Tang”) in the sum of $2,397 with interest at judgment rates from 13 December 2007 up to the date of judgment. The respondent has also agreed to pay costs to the Bar Free Legal Service Scheme in the sum of $3,000[1] and to the claimant in the sum of $100 for each of her court attendance here and below. I now give reasons for my judgment.

Background

2.In October 2001, the Government announced that the rates for the 4 quarters in 2002 would be reduced by up to $2,000 to help relieve the burden of citizens.  The Housing Authority decided that as the rent for the Public Rental Housing (“PRH”) includes rates, the rent (and licence fees) should be lowered by the amount of rates waived.  In other words, tenants of the PRH flats would also benefit from the rates waiver just as any other land owners and tenants in Hong Kong.

3.In 2006, the Housing Authority announced that the rent for February 2007 would be waived.

4.The claimant Ms Tang was a resident in a PRH flat and a receipient of Comprehensive Social Security Assistance (“CCSA”) when the above measures were in place.  In Ms Tang’s case, the rent for the PRH flat was wholly covered by CCSA. For the sake of convenience, the portion of CCSA used for paying the rent for PRH flat is referred as “CCSA Rent Subsidies”.

5.The Social Welfare Department (“SWD”) claimed that as the amount of CCSA is based on the needs of the receipients, and because the amount of rents of the PRH flat was decreased, so should the CCSA Rent Subsidies be reduced accordingly.

6.Ms Tang claimed that, and that appears to be her only ground, she did not benefit from the rent reduction in 2002 and the rent waiver of February 2007.   In her opinion, the amount of CCSA Rent Subsidies should have been kept at the same level despite these measures.  The effect would be that after deducting the PRH flat rent there would be a surplus from the unused CCSA Rent Subsidies.  She claimed for the return of $2,397, being the amount of rent waived by the Housing Authority and saved by the Social Welfare Department (“SWD”).

7.Ms Tang initiated the present proceedings in the Small Claims Tribunal.  The claim was dismissed mainly on the ground that it did not arise from a contract, a quasi-contract or tort and thus the Small Claims Tribunal had no jurisdiction. Ms Tang appealed against this decision.

8.When Ms Tang was before me, I suggested to her that she should seek legal representation under the Bar Free Legal Service Scheme as this case involves some difficult points of law with public importance.  Mr Kwok Kam K. (“Mr Kwok”) and Ms Millie Chow (“Ms Chow”) of counsel agreed to represent Ms Tang in this matter.

Counsel submissions

9.The ground of appeal, as submitted by Mr Kwok and Ms Chow was essentially this : The Legislative Council approves the budget of the SWD every year by way of an Appropriation Ordinance (“AO”).  The SWD thus received a sum of money every year and held them by way of trust.  The beneficiaries of the trust include, inter alia, the CCSA receipients.  In their submissions, such an arrangement created a quasi-contractual liability.  They also submitted an alternative ground based on unilateral contract.

10.Mr Matthew Leung (“Mr Leung”) for the defendant/respondent submitted that there is no evidence the SWD did receive a fund from the AO and there was no trust created by the AO.  He also submitted that the issues in the instant case had been repeatedly raised in SCTC82832/2003 and SCTC26167/2004 against the same defendant.

11.I will first consider whether there was a quasi-contractual liability owed by the defendant to the claimant and then consider the alternative ground of unilateral contract.  The ground of res judicata will be discussed last.

Quasi-contract

12.The Small Claims Tribunal is empowered by the Small Claims Tribunal Ordinance to deal with any “monetary claim founded in contract, quasi-contract or tort where the amount claimed is not more than $50,000” with a few exceptions.

13.The first issue is whether the defendant had a quasi-contractual liability towards Ms Tang.  I agree with Mr Leung for the defendant that the trust argument submitted by Mr Kwok and Ms Chow is misconceived. Mr Leung is right in saying that there is no evidence that money had been received by the SWD after the AO was passed.  It is more likely that the SWD was empowered by the AO to charge its expenditures on the general revenue, up to the amount specified in the corresponding heading in the Appropriation Bill.  Thus the SWD did not receive money for the creation of a trust.  The ground “money had and received from a third party”, as raised by counsel for the claimant should also fail for the same reason.  However that does not mean the claimant’s case must necessarily fail for there are other types of “quasi-contract”. 

The scope and meaning of “quasi-contract”

14.The term “quasi-contract” is problematic and it is regrettable that it finds its way into the statute.  It is based on the now dismissed theory that the court can give remedy by way of an implied or partial contract that lacks some of the requirements of a contract.  The law has moved forward since then and there is no longer the need to strain the law of contract to achieve just results.  A separate branch of law of restitution, distinct from the law of contract is recognised in Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548.  Lipkin established that the law of restitution is founded on the principle that unjust enrichment should be reversed.

15.The development of the law of restitution came from both common law and equity.  There had been numerous attempts by academic writers to classify different cases of restitutions into an organised system, with various degree of acceptance by the courts.

16.The problem with the term “quasi-contract” lies in the scope of this term.  Can it be safely rewritten to “restitution” or does it include only those restitutionary remedies that are of common law origins?  Stoljar (infra) thought unjust enrichment is both a term too wide and too narrow for the purpose of replacing quasi-contract.  The scope of the term “quasi-contract” is not just a matter of academic debates as it is relevant to the Tribunal’s jurisdiction.

17.The grounds submitted by Mr Kwok and Ms Chow, namely “Money paid for the use of another” and “Money had and received from a third party” are phantoms of the past.  They were creations of the abolished “forms of actions” and even though they fit squarely with the language of “quasi-contract”, they should not be used nowadays[2] when the principle of unjust enrichment is enough to substantiate the law of restitution[3].

18.For the purpose of this appeal I have treated the word “quasi-contract” in the Schedule of Cap.338 Small Claims Tribunal Ordinance as “restitution”.  For the reasons below the defendant was unjustly enriched and there should be a restitution to the claimant.

Unjust enrichment

19.The first issue is whether the defendant was “enriched” at the expense of the claimant. Enrichment may take a positive form (the receipient of money) or a negative form (the saving of a necessary expenditure).  This case is only concerned with the negative form of enrichment.

20.Was the part of the CCSA payment in relation to the PRH flat rents a “necessary expenditure”? It is true that the CCSA scheme is not statutory and the SWD has wide discretion in assessing the amount of CCSA to be paid out.  Be that as it may, that does not mean the SWD can reduce the amount of CCSA of any receipient arbitrarily.  In the case of Ms Tang, the SWD had undertaken to subsidise the rent of her PRH flat in full with the CCSA.  In actual practice, the SWD cannot discontinue or reduce the amount for the CCSA Rent Subsidies short of a compelling reason.

21.In the case of Ms Tang, who is apparently without the necessary faculty to support herself, it may fairly be said that the payment of CCSA Rent Subsidies is virtually a “necessary expenditure”.  The SWD had undertaken to secure her housing needs and it is inconceivable that it would withdraw it in the ordinary course of events.  For the present appeal, the fact that the CCSA Rent Subsidies to Ms Tang was virtually unavoidable in fact is sufficient to qualify as a “necessary expenditure”.  The fact that the SWD may not be required by law to pay the CCSA Rent Subsidies does not mean that the CCSA Rent Subsidies to Ms Tang was not necessary.

22.At this point it should be reminded that the special fact of this case should not be overlooked.  The CCSA Rent Subsidies was considered as a “necessary expenditure” only because the receipient Ms Tang was seemingly without means to support herself, at least not without serious hardship. 

23.Once it can be established that the SWD paid a lesser sum for the CCSA Rent Subsidies, there can be no doubt that it was benefitted by a “saving of a necessary expenditure”.

24.The next issue is whether the reduced amount of CCSA Rent Subsidies was created at the expense of the claimant.

25.I accept the submission by Mr. Kwok and Ms Chow that the rent reduction in 2002 and rent waiver of February 2007 were given to the tenants, including Ms Tang in mind.  The announcements of the Housing Authority dated 17 December 2001 and 28 November 2006, respectively, show that the intended beneficiaries had always been the tenants.  It is not the case that the Housing Authority had the SWD in mind and intended that they too, should receive the benefit.  It is undeniable that the SWD received the benefit by means of stepping into the shoes of Ms Tang and thus it had obtained the benefit at the expense of her.

Injustice

26.The last issue is whether it was unjust that the SWD should be the one who benefits from the PRH rent reduction in 2002 and rent waiver in 2007.  The issue of injustice is not to be determined by the perception of the court.  Whether an enrichment is “unjust” is a legal, rather than a moral concept.  There are many categories of unjust enrichment, some of which involve a defendant who has done nothing morally reprehensible at all (e.g. : cases where there was a total failure of consideration).  A useful summary of the categories where injustice was found is contained in the Halsbury’s Law of Hong Kong[4].

27.The decision of the SWD to reduce the amount of CCSA Rent Subsidies and create a savings of its own expenditure, instead of returning the same to the claimant, fits squarely into the category of ultra vires action by a public authority.

28.The measures announced by the Housing Authority were intended to benefit the tenants, not those who pay for the tenants.  It is unjust for the SWD to assume the benefits of the reduced PRH flat rent to the exclusion of the claimant.

Miscellaneous matters

29.Near the end of the hearing, Mr Kwok asked this court to make a ruling on the alternative ground (unilateral contract) to facilitate a more effective discussion in the appeal (if any) of this judgment.

30.In my judgment, the fact that this ground was raised only in his written submission but not the notice of appeal is fatal.  Even if it could be saved, this ground would also fail for the SWD could not be said to have the intention of entering into a contract with every applicant.  Furthermore the lack of consideration on the part of applicant would mean that the supposed contract would be unenforceable.

31.In his written submission, Mr Leung submitted that the appeal should be dismissed because the same matters had been argued in SCTC26167/2004 and SCTC82832/2003.  In the hearing on 13 September 2010, Mr Leung was asked whether this appeal could be treated as a consolidated appeal of the two cases above and SCTC66717/2007 and leave could be granted to Ms Tang out of time in respect of the two previous cases.  Mr Leung had very fairly agreed that this appeal could be treated in such manner.  Accordingly, this court proceeded to hear this appeal as a consolidated appeal of three cases together and decide them on their own merits.

Conclusion

32.For the aforesaid reasons, I allowed the claimant’s appeal and gave judgment for her as aforesaid.

33.Lastly I would like to express my gratitude to the kind assistance of Mr Kam K. Kwok and Ms Millie Chow, appearing for the appellant on pro bono basis and Mr Matthew Leung for the respondent.

Mr Kwok Kam K. and Ms Millie Chow, instructed by the Bar Free Legal Service Scheme for the Claimant (Appellant)

Mr Matthew Leung, SGC of the Department of Justice, for the Defendant (Respondent)

Defendant's appeal to Court of Appeal allowed. Please refer to CACV207/2010 dated 22 December 2011