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Sunevision Holdings Ltd v Hong Kong Science And Technology Parks Corporation

Judgment Cited authorities 22 Cited in 1 Precedent Map Related
Vincent
Judgment Date26 March 2020
Neutral Citation[2020] HKCFI 548
Judgement NumberHCAL1890/2018
Subject MatterConstitutional and Administrative Law Proceedings
CourtCourt of First Instance (Hong Kong)
HCAL1890F/2018 SUNEVISION HOLDINGS LTD v. HONG KONG SCIENCE AND TECHNOLOGY PARKS CORPORATION

HCAL 1890/2018

[2020] HKCFI 548

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 1890 OF 2018

____________

BETWEEN
SUNEVISION HOLDINGS LTD Applicant

and
HONG KONG SCIENCE AND TECHNOLOGY PARKS CORPORATION Respondent

and
GLOBAL SWITCH HONG KONG LIMITED Interested Party

________________________

Before: Hon G Lam J in Court

Dates of Hearing: 16‑19 December 2019

Date of Judgment: 26 March 2020

_________________

J U D G M E N T

_________________

Table of contents Paragraphs
A. Background 1
A1. The parties
A2. Data centre business
A3. The Corporation’s policies
A4. Correspondence with participants in the industry
A5. Tender of Site C
A6. Other data centres in TKOIE
A7. SUNeVision’s acquisition of land outside industrial estates
A8. Further correspondence with the Applicant and others in the industry
A9. Increase of plot ratio for Site C
A10. The decision challenged 		1
9
19
30
36
44
46
47
51
52
B. The judicial review proceedings 55
C. The pleaded case for judicial review. 60
D. Ground 1(1) — legitimate expectation 74
E. Ground 1(2) — failure to adhere to policies 75
E1. No application to impugn approval of pro forma service agreement
E2. Whether departure from policy
E3. New allegation based on occupation
E3(a). The allegation
E3(b). The point is not open to SUNeVision
E3(c). The Corporation did not misinterpret its own policies 		76
81
113
113
119
127
F. Ground 2 — errors of law. 136
F1. Ground 2(1)
F2. Ground 2(2)
F2(a). Ground 2(2)(a)
F2(b). Ground 2(2)(b)
F2(c). Ground 2(2)(c)
F3. Ground 2(3)
F4. Ground 2(4) 		137
142
143
147
149
159
161
G. Ground 3 165
H. Ground 4 178
I. Delay 198
J. Relief and discretion 202
K. Unfairness 212
L. Conclusion 213

A. Background

A1. The parties

1. These judicial review proceedings concern the policies of the respondent and their enforcement in relation to data centres in industrial estates. The applicant, SUNeVision Holdings Ltd (“SUNeVision” or “Applicant”), is a company within a group that operates five data centres in different districts in Hong Kong outside the industrial estates.

2. The respondent, the Hong Kong Science and Technology Parks Corporation (“Corporation”), is a statutory body established in 2001 by the Hong Kong Science and Technology Parks Corporation Ordinance (Cap 565), merging and thus replacing the Hong Kong Industrial Estates Corporation, the Hong Kong Industrial Technology Centre Corporation and the Provisional Hong Kong Science Park Company Limited.

3. The Corporation’s purposes are set out in s 6(1) of that Ordinance as follows:

“ (a) to establish or develop any premises where activities related to the purposes prescribed in paragraph (b), (c) or (d) are, or are to be, carried out, and to manage and control the land and other facilities comprised in such premises;

(b) to facilitate the research and development and application of technologies in manufacturing and service industries in Hong Kong;

(c) to support the development, transfer and use of new or advanced technologies in Hong Kong;

(d) to engage in such activities or to perform such functions as the Chief Executive in Council may, after consultation with the Corporation, permit or assign to it by order published in the Gazette.”

4. The Corporation’s mission is to stimulate the growth of local technology businesses through intensive research and development activities and to attract new technology‑based investments, with a view to facilitating the broadening of Hong Kong’s economic base and upgrading its technology levels.

5. By s 7 of the Ordinance, the Corporation is to conduct its business according to prudent commercial principles. For the purpose of discharging its functions, the Corporation is conferred wide powers under s 8, which include the power to sell, let, sublet or otherwise dispose of land or any facilities in any specified premises (subject to the terms and conditions contained in the land grant) on such terms and conditions as its Board of Directors considers appropriate.

6. The Corporation is governed by its Board of Directors, which is empowered to establish and delegate functions to such committees as it considers appropriate. The Business Development and Admission Committee (“BDAC”) is one such committee established by the Board of Directors with the function, inter alia, to approve or reject applications for admission as tenants or grantees into the Corporation’s premises, and to approve or reject requests from tenants or grantees for the renewal or modification of relevant agreements.

7. The Corporation owns land at three industrial estates in Tai Po, Yuen Long and Tseung Kwan O respectively, on which it allows firms to construct facilities and operate their businesses at rates which are generally much lower than the market rates for land elsewhere in Hong Kong. These proceedings concern the Tseung Kwan O Industrial Estate (“TKOIE”).

8. The interested party, Global Switch Hong Kong Ltd (“Global Switch”), is a company within a group trading under the brand name “Global Switch” which develops and operates data centres in Europe and Asia‑Pacific. It is building and operating a data centre in a site in TKOIE.

A2. Data centre business

9. Information technology (“IT”) operations are a crucial aspect of most organisational operations around the world today. For most IT operations, business continuity and information security are critical. Since installing the necessary equipment within their own premises is not viable for many companies (not least because of the power requirements and the need for presence of fuel for generator and cooling agent which might be dangerous for ordinary buildings), the business has emerged of providing data centre service.

10. A data centre is a building or dedicated space within a building used to house information and communication technologies (“ICT”) equipment, typically computer systems and associated components such as telecommunications, computing system and electronic data-storage systems in a secure and controlled environment. But it is not an ordinary building or a warehouse. A data centre would typically be developed with special electrical and mechanical infrastructure to provide a reliable physical environment required for the operation of ICT equipment. The sophistication level of the technology involved depends on the level, or “tier” (see §14 below), of the data centre in question.

11. There are different ways of classifying data centres. The kind of data centres with which these proceedings are concerned is based on a “colocation” model, whereby the data centre operator provides space for the customer to house or “colocate” its own ICT equipment with a range of services in respect of this equipment. This may be distinguished from a data centre set up by a company purely for its own IT purposes, as well as a model (called “managed hosting”) in which the data centre operator supplies dedicated servers and associated hardware to a customer and then manages those systems on the customer’s behalf.

12. In these proceedings, SUNeVision contends that colocation data centres fall into one of two models: the “wholesale colocation model” and “retail colocation model”.

(1) In the wholesale colocation model, the data centre operator designates specific space within the centre for use by a customer, and grants control over that space to the customer. This model is typically preferred by large customers who have the internal resources to manage and maintain their equipment in their own dedicated space. SUNeVision says that the major part of its own data centre business follows the wholesale model and involves the provision of designated space to customers giving them absolute control over the premises.

(2) In the retail colocation model, different customers’ equipment is housed in the same shared space and no customer would have the exclusive use or control of any space in the data centre. This model generally caters for customers who need only limited space to set up network Point‑of‑Presence[1] or to house ICT equipment. The data centre operator will also provide “managed services” such as internet connectivity and bandwidth, network monitoring, and system management. As their “MSP” (managed services provider), the data centre operator requires unrestricted access to the customers’ ICT equipment.

13. This description of and distinction between the two models are not accepted by either the Corporation or Global Switch, who consider that it mis‑characterises the data centre industry in Hong Kong. As explained in a previous interlocutory decision and in section G below,[2] this classification is in my view not helpful in the context of determining whether a particular arrangement in a data centre infringes the Data Centre Policy (defined below) or the lease.

14. Data centres may also be classified according to the level of services they provide. One such system is the “Tiers Classification System”, which divides data centres into four tiers (Tiers I to IV), from the most basic to the most sophisticated and reliable. A Tier III data centre, for example, in addition to having all the Tier I and Tier II capabilities, requires no shutdowns for equipment replacement and maintenance, with N+1...

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