Administrative Decisions Must Come with Reasons: Building Authority’s Refusal of Registration Set Aside in Landmark Ruling

In Aggressive Construction Company Ltd v. Director of Buildings (in his capacity as the Building Authority) and Another [2026] HKCFI 337, a significant judgment handed down on 21 January 2026, the Court of First Instance has allowed the appeal of Aggressive Construction Company Limited (ACCL), a registered general building contractor, against two decisions of the Building Authority (BA) that had refused its application for (i) renewal of registration; and (ii) the addition of a technical director and authorised signatory.

The ruling, which sets aside both decisions of the BA, marks a significant protection of our client’s rights and operations while reinforcing fundamental principles of administrative fairness, transparency, and lawful decision-making in Hong Kong’s regulatory landscape.

This victory is the direct result of meticulous case preparation and robust, principled advocacy by the legal team, consisting of Senior Counsel Benjamin Yu SC and Counsel Thomas Wong from Temple Chambers, together with Partner May Ng and Associate Joshua Lee from DLA Piper.

 

Background

ACCL applied for renewal of its registration as a general building contractor in March 2023 to under the Buildings Ordinance (Cap. 123). During the prolonged processing period, ACCL also applied to the Buildings Department to add a new technical director and authorised signatory (TD/AS) – a key appointment required for compliance and operational continuity.

On 22 May 2025, 2 years after ACCL’s application, the BA issued a decision letter refusing the renewal application on the grounds that it was “no longer satisfied” that ACCL was suitable for registration. In the same letter, it dismissed the parallel application to add the new TD/AS, stating it would “not be processed” because the renewal had been refused.

Faced with the potential removal of its registration and the inability to refresh its leadership team, ACCL instructed DLA Piper to appeal under section 13A of the Buildings Ordinance.

 

The decision

The Court, in a detailed and carefully reasoned judgment, upheld several of ACCL’s legal arguments, finding that the BA’s decisions were materially flawed and unlawful.

1. Failure to Give Adequate Reasons

The Court first found that the BA had breached its statutory duty under section 8E of the Buildings Ordinance to provide written reasons for its refusal.

The Court found that the decision letter contained only a “conclusory statement” that the BA was not satisfied with ACCL’s suitability, without any explanation of why that conclusion had been reached. The Court emphasized that merely stating an outcome is not a reason.

The Court rejected the BA’s attempts to rely on internal minutes, press statements, or affidavit evidence filed later in the litigation to “cure” this fundamental defect. It held that a disappointed applicant should not have to embark on a “paperchase” through internal documents or initiate costly litigation to uncover the rationale behind a decision that significantly affects its business.

This finding underscores a vital principle: transparency and clarity in administrative decision-making are not optional but are legal requirements that enable proper accountability and meaningful recourse.

2. Unlawful Fettering of Discretion by an Unpublished Policy

The Court also found that the BA’s internal, unpublished policy whereby applications for addition of TD/AS would be automatically put “on hold” if submitted after a renewal application was made was an unlawful fetter of the BA’s discretion.

The Court found this internal policy was applied rigidly, without any genuine consideration of exceptions or the individual merits of ACCL’s case. The Court also found that there was no evidence that ACCL’s application was abusive or dilatory; to the contrary, it was a necessary step following the resignation of an existing signatory.

The Court further held that such a rigid, exceptionless policy unlawfully fettered the BA’s statutory discretion. Authorities may adopt policies for consistency, but they must always retain the flexibility to respond to unusual circumstances and do justice in the individual case. The failure to even consider ACCL’s addition application on its merits was a fatal procedural flaw.

3. Failure to Consider a Material Factor

The Court also agreed that the BA’s failure to properly consider the TD/AS application tainted the renewal decision itself. The BA had placed significant weight on the fact that two authorised signatories of ACCL had failed interviews. However, it simultaneously refused to process the application for a new, potentially qualified candidate.

The Court held that the qualifications of this proposed new appointee were a “material consideration” in the holistic assessment of ACCL’s suitability for renewal. By refusing to process the addition application based on an inflexible policy, the BA failed to take this relevant factor into account, rendering the renewal decision legally erroneous.

This matter has now been remitted to the BA for a fresh, lawful reconsideration. It is important to note that the Court did not rule on the ultimate question of ACCL’s suitability for registration as this is a matter for the BA to determine.

 

Key Takeaways

This landmark ruling reinforces that regulatory decisions must be made with transparency and fairness. The Court held that the Building Authority’s refusal letter, which only stated conclusions without explaining its reasoning, breached statutory duties. Authorities cannot rely on internal documents or after-the-fact justifications to cure inadequate reasons – clarity must come at the point of decision.

The Court’s decision sends a clear message to regulators: power must be exercised fairly, reasons must be given clearly, and policies must not be applied so rigidly as to strangle discretion.

This judgment also serves as a vital reminder that internal policies cannot be applied rigidly; decision-makers must retain genuine discretion to consider individual circumstances and material facts, particularly when those facts – like the qualifications of proposed key personnel – directly impact the assessment of suitability.

For the full judgment, please see here.