Re Profit Success Development Ltd

CACV 87/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 87 OF 2014

(ON APPEAL FROM HCAL 158/2013)

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REASONS FOR JUDGMENT

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Hon Cheung CJHC:

1.At the conclusion of the hearing, we dismissed the applicant’s appeal from Au J’s refusal of leave to apply for judicial review against the determination of the Appeal Tribunal (Buildings) dated 31 July 2013. We now give our reasons.

The facts

2.On 21 August 2009, the Building Authority issued a building order under section 24(1) of the Buildings Ordinance (Cap 123) against the applicant:

“Owner(s) of the premises at:

2 Bucket Elevator Rms. On G/F, 1/F & Ramped Driveways from G/F to 1/F Safety Godown Industrial Building No.56 Ka Yip Street, Hong Kong

on (Lot Number) C.W.I.L. 112 & C.W.I.L. 115

It has been brought to my attention that the following building works have been carried out in or at the above premises;

(i) A structure erected at the 1/F carpark, and used as a control room; and

(ii) Metal platforms and staircases erected above the ramped driveway from G/F to 1/F and near Kerry Godown (Chai Wan).

2. For the said building works:

(a) The building works at items (i) & (ii) above has been carried out without having first obtained from me the approval of building plans and consent for the commencement of such building works required by section 14 of the Buildings Ordinance.

3. In exercise of the powers vested in me under section 24(1) of the Buildings Ordinance, I hereby order you to :-

(a) demolish the said building works described under items (i) & (ii) above; and

(b) reinstate the parts of the building so affected by the building works under items (i) & (ii) above in accordance with the plans approved by the Building Authority.

Adequate precautionary measures to ensure public safety should be provided prior to and during the course of works.

4. You are required to commence the works ordered by me in paragraph 3 above within 90 days and complete such works within 120 days of the date of this order, all to the satisfaction of the Building Authority.

5. You are required under the Buildings Ordinance to appoint a Registered General Building Contractor or Registered Specialist Contractor in the demolition category to carry out the works in paragraph 3 above, and an Authorized Person or a Registered Structural Engineer to advise on the details of the required demolition including the precautionary and other protective measures. Prior to the commencement of the demolition works, the appointed Authorized Person is required to submit plans in respect of the demolition works and protective measures to the Building Authority for agreement before commencement of the works.

	(H. T. LEUNG)
	Senior Building Surveyor
	for Building Authority

c.c. Land Registrar

Your attention is drawn to the provisions of sections 24(3), 24(4A) and 33 of the Buildings Ordinance.

BD 109 (Type b) (Rev. 12/2005)”

3.On 3 August 2011, the Tribunal dismissed the applicant’s appeal from the building order.

4.On 8 November 2012, Au J granted the applicant’s application for judicial review against the Tribunal’s decision.  Quashing the decision, the judge remitted the matter to the Tribunal for reconsideration on two questions.  The first question concerned the failure of the Tribunal to explain why the structures involved were building works.  The second question related to the “invalidity ground”.  In short, the judge took the view that the demolition and reinstatement works ordered to be carried out under the building order were subject to section 14 of the Ordinance which requires the obtaining from the Building Authority of his approval in writing of the building plans and his consent in writing for the commencement of any proposed building works – which, as a matter of definition, include demolition and reinstatement works.  The judge apparently accepted the argument that a section 24 building order cannot override the requirement for approval and consent under section 14 (where applicable).  The judge accepted the possibility that in some cases – depending on the demolition and reinstatement works involved, no further plans (to the original approved plans) need be submitted under section 14 for the purposes of the works, and the building order issued by the Building Authority could be regarded as his consent in writing given under section 14.  Yet, on the evidence placed before him, the judge was not sure about the plans in the present case:

“55. However, as to whether (as a matter of fact) the demolition and reinstatement works specifically required to be carried out under the present Order need no further submission of any plans other than the previously ‘approved’ plans, I do not know, as this relates to evidence. This is particularly so as demolition works themselves are ‘building works’ under the BO, while at the same time the previously ‘approved plans’ may be relevant only to the reinstatement works required under the Order. I have not been shown evidence which shows whether the previously ‘approved plans’ can be properly regarded to cover and be relevant to the ‘demolition works’ as well. This court is therefore not in a position to come a conclusion one way or the other as to whether (as a matter of fact) the necessary and relevant ‘approval’ and ‘consent’ under s 14(1) can be regarded as having already been given by the BA at the time of the Order.”

5.On that basis, he remitted the two questions to the Tribunal for reconsideration and decision.

6.The matter therefore went before the Tribunal a second time.  By a determination dated 31 July 2013, the Tribunal decided both questions against the applicant. The Tribunal found that structures 1 and 2 (as work items (i) and (ii) in the building order were called) were building works.  As regards the second question, the Tribunal essentially read paragraph 5 of the building order as requiring the applicant, through its appointed authorized person, to submit plans and obtain the necessary approval under section 14 for the demolition works and protective measures associated therewith.  The Tribunal also found that so far as the reinstatement works were concerned, they would be covered by the previously approved building plans.

The proceedings below

7.The applicant sought leave to apply for judicial review against the Tribunal’s determination on both questions.

8.By his judgment dated 7 April 2014, Au J refused leave.  The judge decided that the Tribunal had fully explained why it found the two structures were building works, and its findings could not be challenged.  In relation to paragraph 5 of the building order, the judge said:

“26. Finally, the applicant says the Tribunal’s construction of paragraph 5 of the Order to include a s 14 approval application cannot be correct, since the use of the language (such as the use of the words ‘for agreement’) does not match or track the words used under s 14.

27. I am also unable to accept this submission.  The Demolition Order is not a statute and the language used therein should not be read as if it were a statute.  It is clear to me that, in their ordinary and reasonable meaning understood in context, what paragraph 5 is saying is that the applicant must through its qualified professional apply and obtain all the necessary permissions that are legally required from the BA to commence the demolition work.  They include, if applicable, a s 14 approval under the BO.”

The appeal

9.In its notice of appeal, the applicant challenged the judge’s conclusion both in relation to the building works and as regards the judge’s reading of paragraph 5 insofar as it concerned approval under section 14.

10.At the hearing before us, Mr Benjamin Yu SC (Mr Anthony Ismail with him), for the applicant, argued that the Tribunal had failed either to make any finding whether the structures concerned were “plant or machinery” (rather than building works) or give any adequate reasons as to why these structures were not plant or machinery but building works.

11.As regards paragraph 5, the essence of counsel’s submissions was captured in paragraph 23 of their written submissions:

“With great respect to Au J, the requirement of obtaining ‘agreement’ is not the same as requiring the applicant to obtain a statutory approval. Agreement is plainly not the same as approval pursuant to a statutory framework. It should be noted also that at the bottom of the notice, attention was drawn to various provisions of the BO, but those provisions did not include BO s.14. It would thus appear that the use of the word ‘agreement’ was deliberate, and that the BA did not have in mind the obtaining of a statutory approval under BO s.14. It is, of course, only a statutory approval that engages the deeming provision in BO s.15. Also, the grounds for refusing to approve are those set out in BO s.16; whereas the Order would, if valid, confer the right on the BA to reject the proposal put forward by the Authorized Person without having regard to BO s.16.”

The 1^st ground

12.As regards whether the Tribunal had decided that the two structures concerned were building works as opposed to plant or machinery, and whether it had given adequate reasons for its findings, in my view, the issue of building works versus plant or machinery was squarely before the Tribunal right from day one: see paragraphs 19 to 40 of the Tribunal’s first decision dated 3 August 2011 which recited the parties’ respective arguments and the case law relied on in great detail.  In particular, in paragraph 35 of the decision, the Tribunal mentioned Leung Lai So v The Building Authority, Appeal Tribunal (Buildings) Case No 44‑2005, 31 October 2008, a case heavily relied on by the Building Authority in opposing the appeal:

“The view of the Respondent is of course different from the Appellant. The Respondent all along holds the views that Structures 1 and 2 are not plant, machinery or equipment but are ‘building works’. The Respondent draws this Tribunal’s attention to Leung Lai So’s case. In Leung Lai So’s case (paragraph 17), it says :-

‘ … firstly, that there is no precise or exhaustive definition of ‘building’ or ‘building works’ … Instead, in determining whether a structure falls within the definition of ‘building’, and whether its construction or erection involves ‘building works’, the Court or Tribunal has to look at all the circumstances of the case. Relevant factors may include the followings :-

(a) the degree of fixation of the structure;

(b) the degree of permanence of the structure;

(c) the size of the structure;

(d) the intended use of the structure;

(e) whether the structure is provided with facilities such as power and water;

(f) the ease with which the structure may be removed or dismantled;

(g) the ease with which the structure was constructed and ensembled.’”

13.In paragraph 64 of the decision, the Tribunal took the view that the definition of plant, machinery and equipment derived from the tax cases relied on by the applicant was too narrow.  Rather, it agreed with the Building Authority’s submission that to decide whether something amounted to building or building works for the purposes of the Buildings Ordinance, one not only had to look at the facts and circumstances of the case, but also had to consider all the relevant factors as set out in Leung Lai So.

14.Read in that context, in my view, it is clear that when the Tribunal referred to Leung Lai So and the relevant factors set out in that decision, it was adopting those factors to decide the very issue in question, namely, building works versus plant or machinery, even though Leung Lai So itself did not involve any argument based on plant or machinery as such.

15.Where the Tribunal fell into error in its first decision was that after taking into account all the circumstances of the case and the relevant factors set out in Leung Lai So and coming to the conclusion that the structures were building works rather than plant or machinery, the Tribunal failed to explain how and why those circumstances and factors had led it to reach that conclusion.  And that was why Au J in the earlier judicial review proceedings quashed the Tribunal’s determination for failing to give adequate reasons for its findings.

16.All this formed a crucial part of the context when reading the Tribunal’s subsequent determination under challenge.  In the Tribunal’s subsequent determination, it set out in detail, from paragraphs 5 to 28, how and why it considered the two structures were building works, by reference to the circumstances of the case and, in particular, the factors set out in Leung Lai So.

17.In my view, considered in its proper context, the Tribunal was there dealing squarely with the issue of building works versus plant or machinery, and eventually it came to clear findings that the two structures were building works, rather than plant or machinery.  Moreover, the Tribunal gave very full and clear reasons for coming to that conclusion in paragraphs 5 to 28 of the determination.  By way of summary, in paragraph 19 of the determination, the Tribunal explained why it had come to the conclusion that structure 1 was a building work:

“As said, this Tribunal has the benefit of a site inspection and careful inspection of Structure 1 with its size, heavy weight and degree of permanence. Structure 1 cannot be easily removed, dismantled constructed or ensembled. This Tribunal cannot ignore the functional aspect of Structure 1. However, all in all, Structure 1 gives this Tribunal an impression that it cannot be said to be mobile, it has a considerable disagree of permanence, its considerable size and weight, it cannot be removed easily, it is supplied with cable and electricity, it is used as an office as well. The loading of Structure 1 would no doubt structurally affect the integrity of the Building, i.e. the 1/F Carpark. Thus, this Tribunal arrives at its decision given on paragraph 66 of its Decision that Structure 1 is building works and falls within the definition of the Buildings Ordinance.”

18.Likewise, the Tribunal summarised its reasons for concluding that structure 2 was also a building work in paragraphs 26 to 28 of its determination:

“26. This Tribunal accepts the intended use of Structure 2 is for loading and unloading purpose. But this will not mean for this very factor, it will fall outside the definition of building.

27. Structure 2 itself is 400,000 lb in weight and it gives this Tribunal an expression that it is a huge and complex structure consisting of a number of substantial size metal elements connected, if not welded together. It is anchored and bolted to the Building and cannot be moved around. The degree of permanence is apparent. Further, it is supplied with electricity. The water tanks thereon are connected to the water mains of the Building. It cannot be moved to another location without dismantle the whole structure. No doubt its erection and dismantling require operations normally associated with normal building works.

28.  That is why this Tribunal says in its Decision that taking into consideration all the circumstances of the case and the Relevance Factors in Leung Lai So’s case, Structure 2 is a building works and falls within the definition of building.”

19.In my view, the first ground of challenge against the Tribunal’s determination must fail.

The 2^nd ground

20.Turning to the validity of the building order in terms of paragraph 5, I accept that a section 24 building order is not immune from the requirements of section 14 in terms of approval and consent.  However, whilst it must depend on the facts of each case, the building order itself would normally constitute the necessary consent by the Building Authority to the commencement of the work ordered to be done under the building order, insofar as such work falls within the scope of section 14.  And if such work does fall within the scope of section 14 and is not covered by any plans already approved under that section, plans should be prepared and submitted under section 14 for approval.

21.However, it does not follow from the above that a building order which does not say that the work ordered to be done in the building order is subject to the requirements of section 14 where applicable, is therefore invalid.  Far from it.  A building order must be read and understood in the context not only of section 24, but also of all other relevant provisions in the Buildings Ordinance and its subsidiary regulations which everyone is presumed to know.  It does not have to recite the requirements under section 14 in order to be valid.  Indeed, there is no obligation on the part of the Building Authority to mention each and every provision in the Buildings Ordinance or regulations which may have a bearing on the work ordered to be done in the building order in order for the building order to be valid.

22.What the law really requires of a building order is that it must tell the recipient clearly what he had done wrong and what he must do to remedy it.  If, on the true construction of the order, it was “hopelessly ambiguous and uncertain”, so that the owner or occupier could not, for example, tell with reasonable certainty what steps he had to take to remedy the alleged breaches, the order would be a nullity: London Borough of Hounslow v Secretary of State for the Environment and the Indian Gymkhana Club Ltd [1981] JPL 510, 511, per Ackner LJ.

23.When making a building order, the Building Authority cannot impose conditions or requirements that he has no power to impose whether under section 24 or other relevant provisions in the Ordinance or its subsidiary legislation, or under the law.  Any such condition or requirement which he has no power to impose is invalid, and, depending on the facts, it could affect the validity of the building order itself.  But whether the Building Authority has really imposed any such condition or requirement is a matter of proper construction of the building order.  The judge was right in saying that a building order is not a statute, and its language should not be read as if it were contained in a statute.  Rather, as the Tribunal observed, it must be read with commonsense and in context.

24.Turning to the present building order, it is plain that paragraph 5 simply requires the applicant to obtain the Building Authority’s approval of all relevant plans under section 14 regarding the demolition work ordered to be carried out.  The suggested distinction between “approval” and “agreement” is simply too fine to be accepted in the context of the building order in question.

25.Section 24 only gives the Building Authority the power to fix the times for commencement and completion of works.  It does not give the Building Authority the power to impose the requirement for obtaining his agreement to plans (independent of section 14).  Read in the context of the Ordinance, paragraph 5 must be reasonably understood as referring to the approval procedure laid down in section 14.

26.The supposed differences between an application for approval under section 14 (which would automatically trigger the operation of the related provisions in sections 15 and 16) and a requirement to reach agreement with the Building Authority become irrelevant once “agreement” is read simply to mean the approval procedure in section 14.

27.As for the further argument that if that were the correct reading of paragraph 5, Au J should not have remitted the second question to the Tribunal for reconsideration and determination in his earlier judgment, I have already explained what I think the law requires or does not require of a building order in paragraphs 21 and 22 above.  However, what was at issue in this appeal was whether the judge was right in refusing leave to apply for judicial review against the second determination of the Tribunal, rather than whether he was right in remitting the second question to the Tribunal for reconsideration in the earlier judicial review proceedings.

28.In any event, counsel’s argument overlooked the fact that when the matter was before the judge for the first time, there was no or insufficient evidence before the court as to whether the approved plans already covered either of (or both of) the demolition and reinstatement works, a matter which, in the judge’s view (accepting the applicant’s argument), could affect the validity of the building order.  It was only when the matter went back before the Tribunal that it was decided by the Tribunal that so far as the reinstatement work was concerned, it was covered by the approved building plans.  That conclusion of the Tribunal left the demolition work, and paragraph 5 therefore assumed prominence.

Disposition

29.For these reasons, the intended challenge was not reasonably arguable with a realistic prospect of success. The appeal was dismissed accordingly.

Hon Cheung JA:

30.I agree.

Hon Kwan JA:

31.I agree with the Reasons for Judgment of the Chief Judge.

Mr Benjamin Yu SC and Mr Anthony Ismail, instructed by Mayer Brown JSM, for the applicant