INGLORY LTD v. THE DIRECTOR OF FOOD AND ENVIRONMENTAL HYGIENE

HCAL 87/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 87 OF 2011

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J U D G M E N T

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1. There is a newspaper stall [“the Stall”] on a pedestrian pavement at Queen’s Road Central in front of a building [“the Building”] at Nos 118-120 of the road. The Stall has been operating there since 1988. The permitted stall area is prescribed by the licence condition and it is 0.45 m x 1.8 m. The Applicant acquired ownership of the Building in 2002. The Applicant was upset by the fact that the operator of the Stall frequently occupied areas of the pavement beyond the limits of the permitted stall area. The Applicant believed that such activities had caused financial loss to it in terms of loss of rental income. This was highlighted at paras 10 to 13 of a letter dated 24 June 2011 from the Applicant’s solicitors to the Director.

2. The licensing authority for the Stall is the Respondent Director [“the Director”].  The statutory authority of the Director to grant such licence is the Public Health and Municipal Services Ordinance Cap 132 [“the Ordinance”] and the Hawker Regulation made thereunder.

3. From time to time, the Director took enforcement actions against the operator of the Stall in respect of her encroachment beyond the permitted stall area.  Such actions included interviews, verbal and written warnings and prosecutions.

4. The Applicant had complained to the Director many times regarding the Stall since 2008.

5. Despite the enforcement actions on the part of the Director, there were still occasions where the Stall was found to be operating beyond its permitted area.  In mid 2009, the Applicant complained to the Office of the Ombudsman about the Director’s handling of the matter.  After investigation, the Ombudsman made a reply to the Applicant on 25 November 2009.  After noting the enforcement actions by the Director, the Ombudsman opined that there should be more stringent actions.

6. In a letter of 6 January 2010, the Director informed the Applicant that he had stepped up the frequency of inspection and prosecution regarding the Stall.  The Director’s staff observed some improvement in the situation.

7. On 9 April 2010, the Applicant made a second complaint to the Ombudsman.  It specifically alleged that there was sufficient ground to warrant the cancellation of the hawker licence of the stall operator. On 12 April 2011, the Ombudsman issued a report.  In view of the reliance placed by the Applicant on that report, I will set out the last few paragraphs of that report,

“Recommendation of this Office

23. Based on the result of review above, this Office urges FEHD to :-

(1) stringently strike at offending conduct of Newspaper Stalls in extending fixed installations; and if there are offenders, (it) must order immediate dismantling and removal; and

(2) closely patrol and monitor the Newspaper Stall. If display of goods outside the prescribed areas is found, (it) must immediately institute prosecution.

24. Besides, although FEHD says that in the licence conditions and the present hawker policy, the Department will not cancel its licence (Paragraph 10 above) because the fixed installation or the sales area exceeds the prescribed area, this Office notes on the one hand, the licence conditions contain the prescribed area for the fixed pitch; and on the other hand, it stipulates that the Licensee must observe the Hawker Regulation. Hence, the Department did not cancel the licence of the Newspaper Stall in respect of the above situation of contravention of the law not because it cannot do so, just that it did not. This Office opines that the Department should not unconditionally abdicate part of its law enforcement power vis-à-vis recalcitrant offenders. This Office recommends that the Department seriously consider amending the relevant policy : in respect of Newspaper Stalls which still illegally extend its fixed installations or still display (goods for) sale outside the prescribed area notwithstanding repeated warnings or prosecutions, the Department should cancel the licence under suitable circumstances as a deterrent.

Response of FEHD

25. Upon receiving the preliminary investigation report of this Office, FEHD had in March, 2011 again seriously warned the Licensee of the Newspaper Stall in question not to add installations of temporary coverage and not to extend the sales area of the Newspaper Stall, otherwise the Department will take law enforcement action without (prior) warning. After the warning, the stall owner had dismantled and removed part of the extension installation mentioned in Paragraph 15 above.

26. FEHD has undertaken that it will closely monitor the Newspaper Stall in question and enforce the law. If the stall still operates against the law, the Department will consider suspending or canceling the licence.

27. In December, 2011, FEHD had amended its action guidelines for hawkers causing obstruction : If the Licensee repeatedly contravenes the law, the staff of the Department will seize and take away the operating installations causing obstruction.

28.  This Office is pleased to note that FEHD has by and large responded positively to the recommendations of this Office and (will) consider to cancel the Licence when the Newspaper Stall in question persisted in operating against the law.  However, the extension installation of the Newspaper Stall had not been entirely dismantled and removed (Paragraph 25 above).  In the past, it had incessantly conducted sales against the law even after being warned or prosecuted (Paragraph 3 above).  Under such circumstances, this Office reiterates that FEHD must order the Newspaper Stall to immediately dismantle and remove the extended fixed installation and not to condone, (but) to immediately institute prosecution in respect of sales conducted outside the prescribed area.”

8. On 24 June 2011, solicitors for the Applicant wrote a letter to the Director.  After referring to the Ombudsman’s Report, it was suggested on behalf of the Applicant that the encroachment of the Stall had caused the Applicant substantial loss in revenue by way of rents and the enforcement actions of the Director were “superficial, half-hearted and futile attempts”. At the end of the letter, solicitor for the Applicant demanded as follows at paras 14 and 15,

“14. With a view to mitigating its damage, restoring the full market rental value of the Property and preserving its full capital value in line with the prevailing market values, our client will, quite apart from addressing the issue of damages, seek effective measures to have the nuisances abated for good. If you are willing to co-operate and honour your undertaking to the Ombudsman as per the Ombudsman’s Review Report (please also see Paragraph 6 above), the licence of the Newspaper Stall can be cancelled and terminated without further ado. This is well within the power and authority of your department, only that up till now, you do not appear to have the will to do so despite the findings and recommendations of the Ombudsman.

15.  What our client wants to ensure is that this Newspaper Stall must quickly go.  Our client sincerely hopes that the matter may be satisfactorily resolved without resort to legal proceedings.  Given the licensee of the Newspaper Stall is a recalcitrant and incorrigible offender, and a small business operator unlikely to have substantial means, our client shall have to look to Government for such remedies as it deems necessary.”

9. On 18 July 2011, the Director gave a substantive reply.  The substance of the reply was set out at the following paragraphs,

“In the light of the recommendations made by The Ombudsman in his report of 12 April 2011, our staff have stepped up enforcement actions against the Stall. Since April 2011, we have taken 6 prosecutions against the Stall for causing obstruction. As a result, the obstruction caused by the Stall has been appreciably reduced. On 9 and 27 June 2011, our staff found that the canopy of the Stall was trimmed down to an acceptable size and detected no undue obstruction caused by the Stall. During follow-up inspections to the Stall thereafter, we also found the improved condition sustained.

Our present departmental policies do not provide for the cancellation of Fixed-pitch (Newspaper) Hawker Licences due to conviction of offences relating to obstruction. We are now actively reviewing the relevant policies in canceling a hawker licence under justified circumstances.

Our staff will continue to closely monitor the situation and take stringent enforcement actions against the Stall should the aforesaid irregularities be detected.”

10. By these proceedings, the Applicant challenged that decision by the Director.  In the Form 86, the decision was said to be a refusal by the Director to cancel the hawker licence of the operator of the Stall.  In the original Form 86, the Applicant sought an order of certiorari to quash that decision and an order of mandamus to direct the Director to cancel the licence.

11. At the hearing of the application for leave, Mr Pun accepted on behalf of the Applicant that an order of mandamus directing the cancellation of the licence is not appropriate.  Irrespective of the merits of the Applicant’s complaint, the operator is entitled to be heard and the Director must offer her an opportunity to be heard before reaching any decision on the termination of the licence.

12. Instead Mr Pun contended that the Director should not shut himself out from the option of cancellation of the licence as he did in the letter of 18 July 2011.

13. Before the leave hearing, evidence was filed on behalf of the Director in the form of the Affidavit of Do Yee Man of 11 November 2011.  In that affidavit, Ms Do (the author of the letter of 18 July 2011) explained that there was no specific provision in the Departmental Policy for cancellation of the hawker licence due to repeated convictions, the Policy also reiterated that the Director has discretion to cancel a licence under Section 125 of Cap 132 and the Director could exercise that power to carry out the objects of the Ordinance.  As such, the Departmental Policy does not prevent or impede the proper discharge of the Director’s statutory duties.

14. Ms Do made a Second Affidavit on 18 January 2012 giving more background information regarding the enforcement actions taken by the Director against the stall operator.  Paras 11 to 15 dealt with the second complaint by the Applicant to the Ombudsman.  In particular, she said at paras 13 to 15,

“13. In addition, the Ombudsman commented that the Newspaper Stall had added temporary coverage on both sides, opening a big umbrella and hanging plastic canopy to extend the area of the Newspaper Stall in paragraph 15 of the 2^nd Ombudsman Report. In response to the 2^nd Ombudsman Report, the Respondent had, on 22 March 2011, again seriously warned the Licensee not to add installations of temporary coverage and not to extend the sales areas of the Newspaper Stall; and undertaken to closely monitor the Newspaper Stall and enforce the law. If the Newspaper Stall still operated against the law, the Respondent would consider suspending or cancelling the licence of the Newspaper Stall.

14. In 2010 and 2011, HCT continued to place the Newspaper Stall under frequent inspections (i.e. instead of monthly inspections, a total of 40 inspections were made in 2010 and 179 inspections in 2011) and take stringent enforcement actions against the Licensee or her assistant when obstructions were found. The Respondent prosecuted the Licensee or her assistant for a total of 12 times in 2010 (5 summonses under section 48 of the HR and 7 summonses under section 4A of the Summary Offences Ordinance, Cap. 228) and a total of 14 times in 2011 (12 summonses under section 48 of the HR and 2 summonses under section 4A of the Summary Offences Ordinance, Cap. 228). Moreover, the officers of HCT also gave verbal warnings to the Licensee or her assistant when minor obstructions were detected. As mentioned in paragraph 5 hereinabove, the prosecution pursuant to section 48 of the HR is a more stringent enforcement action because the Licensee, having been previously convicted of a similar offence under the HR, may be subject to a suspension or cancellation of licence if it is so recommended by the Magistrate convicting her.

15.  On 6 July 2011, the officers of HCT interviewed the Licensee in the presence of Central/Western District Council Member Mr. Sidney Lee Chi-hang and his assistant Ms Winnie WAI Pui-shuen upon their request.  After discussion, the Licensee also agreed to keep the diminished size of the canopy of the Newspaper Stall and not to cause obstruction.”

15. At paras 16 and 17, Ms Do deposed the situation of the Stall in the second half of 2011.  On the whole, the Director regarded the situation as acceptable even though there were still occasions where there were some obstruction and prosecutions were instituted.  She set out the assessment of the Director at para 19 which explained why it was deemed inappropriate to adopt the draconian option of cancelling the licence,

“… the [Director] has duly considered the merits of the case raised by the Applicant and has stepped up the enforcement actions. Based on the observation of officers of HCT from July to December 2011, as a result of sustained stringent enforcement actions, the obstructions of the Newspaper Stall did not affect the flow of pedestrians at most of the time and/or endanger public health. … Moreover, the extended areas in connection with the prosecutions against the Newspaper Stall from July to December 2011 ranged from 0.25 to 0.8 square metre which was considered not substantial and would not cause undue obstruction. …”

16. In her Third Affidavit of 8 March 2012, Ms Do deposed to the circumstances leading to the reply in the letter of 18 July 2011.  She explained the different considerations for different enforcement options.  At paras 7, 9 to 11, she explained how the Director had assessed the option of cancelling the licence in the wake of the Applicant’s complaint.

“7. In deciding not to cancel the Licence pursuant to the repeated requests from the Applicant, I and several other officers of the Department took into account the fact that most of the extensions beyond the prescribed area in the Licence previously prosecuted against were minor as deposed to above. Further, as a result of the efforts then made by the Licensee to trim down significantly the extensions complained of by the Applicant, we then formed the view that the Newspaper Stall in its then dimension did not cause any undue obstruction to pedestrian flow on the pedestrian path in question. As to whether there was undue obstruction caused by the Newspaper Stall, we were aware and considered it relevant to bear in mind further that the Newspaper Stall was located on the pedestrian path and it must have been assumed at the time of the grant of the Licence that the authority had in mind partial obstruction of the pedestrian path in question. Certainly, it did not mean that obstruction posed by the Newspaper Stall could be ignored but we were at the time concerned not with whether there was strict technical compliance with the conditions of the Licence but whether there was undue obstruction to such an unacceptable extent that the Licensee ought to be severely punished with the cancellation of the Licence.

…

9. Moreover, when deciding not to cancel the Licence in July 2011, the Department was mindful of the fact that cancellation of licence under section 125 of the Ordinance was, and still is, a very serious form of punishment for hawkers because fixed pitch hawker licences will not be reissued save in exceptional circumstances, such as where the ex-licensee has successfully appealed against the decision to cancel the licence before the Licensing Appeal Board. However, even in that case of a successful appeal, the hawker concerned would still have to spend much time to pursue the appeal and that must also affect his livelihood. Given the efforts then of the Licensee and her cooperative attitude; the enforcement actions then taken (including verbal and written warnings and prosecutions) were effective; the residual and occasional illegal extensions did not constitute significant and undue obstruction of the pedestrian path and seemed to be necessitated on some occasions by practical needs in operating the Newspaper Stall (e.g. opening an umbrella on rainy days), we did not find it appropriate or necessary to punish Madam Tang by cancelling the Licence.

10. After all, the Department was then cognisant of the fact that notwithstanding the repeated prosecutions under section 125 of the Ordinance, none of the Magistrates deciding the cases had ever suggested or recommended suspension or cancellation of the Licence (see paragraph 5 of My Second Affidavit). We considered at the time that this was a factor in favour of adopting a more tolerant administrative stance against the Licensee and not visiting her with the most serious form of punishment.

11.  For the above reasons, in July 2011 the Department did not consider it was reasonable to insist on absolute compliance with the pitch-size restrictions stipulated in the Licence regardless of the practical or operational needs of the Licensee.  We also did not see any valid ground for concluding that Madam Tang had deliberately flouted the law or the licence conditions without any intention to comply with them.  She and her assistant were not then in our view incorrigible in the sense as now suggested by the Applicant.”

17. Though the Third Affidavit was filed late, Mr Pun had dealt with it in his skeleton submissions.  I do not see any reason why I should not admit it as evidence.  Insofar as it is still necessary, I make an order in terms of the summons of 27 March 2012.

The grounds for judicial review

18. Mr Pun advanced three grounds to attack the decision of the Director on 18 July 2011.  First, counsel said the decision was illegal in that the Director had failed to discharge his constitutional duty under Article 64 of the Basic Law and his statutory duty to promote the policy and objects of the Ordinance.  He said the Director, by refusing to cancel the licence, acted in a way which frustrated the policy and objects of the Ordinance.

19. Second, Mr Pun said the decision of the Director was unlawful because he had fettered his discretion.  This submission was advanced on the premise that the Director had disabled himself from giving any consideration to the option of cancelling the licence by reason of his policy.

20. Third, Mr Pun submitted that the decision was unreasonable in the Wednesbury sense having regard to the poor track record, the inefficacy of the previous enforcement actions and the rejection of the offer of relocation by the stall operator.

Did the Director consider the option of cancellation?

21. Before I address these grounds, I need to deal with a point of fact.  As set out above, the evidence filed on behalf of the Director indicated that he had indeed given consideration to the option of cancellation but decided that it was not appropriate to do so.  Mr Pun’s arguments were advanced, however, on the basis that the Director did not do so.  Counsel relied on the wording of the letter of 18 July 2011, in particular the second paragraph quoted at para 9 above [“the Paragraph”].

22. Mr Pun asked this court to read the evidence of Ms Do with caution.  He said her evidence is an “ex post facto justification” which surfaced only after the commencement of the judicial review proceedings. Insofar as the reasons given in her affidavit evidence fundamentally alter or contradict the reasons given in the letter of 18 July 2011, Mr Pun invited the court to disregard the same.  He referred this court to the judgment of A Cheung J (as he then was) in Popular Signs Ltd v Radiation Board HCAL 53 of 2008, 12 Jan 2010, para 78.  In that case, the court admitted the evidence of a board to explain its decision for the purpose of elucidation and confirmation instead of fundamentally altering or contradicting its decision.

23. Whilst the letter of 18 July 2011 could be better worded to explain the Director’s decision, one should not read the Paragraph in isolation.  Reading the letter as a whole, I do not think the Director said that he would not exercise his statutory power to cancel the licence apart from those circumstances specifically provided for expressly in the departmental policy.  What was said was that there had been improvement in the situation and the departmental policy did not provide for cancellation simply by reference to the number of convictions (which is correct).  Having regard to all the evidence, it is clear to me that the Director was aware of the possibility of exercising his power of cancellation and he promised to continue to monitor the situation.  He did not rule out cancellation as an option in his armoury of stringent enforcement actions.

24. This is abundantly clear from the contemporaneous document.  In the Ombudsman Report, at para 26, the Response of the Director expressly referred to the possibility of suspending or cancelling the licence if the Stall continued to operate against the law.

25. I do not see any reason for disbelieving or rejecting the evidence of Ms Do as to the consideration given by the Director in July 2011 on the option of cancellation of the licence.  In my view, such evidence is not a fundamental alteration or contradiction of what was stated in the letter of 18 July and they provide elucidation instead.

26. Thus, on the evidence before this court, the Director did give consideration to the option of cancellation.  The option was rejected because the Director took into account of the improvement of the situation and the trimming down of the Stall to acceptable size and lack of undue obstruction.  Ms Do’s evidence explained how the Director came to such view.

Failure to discharge constitutional and statutory duty

27. Mr Pun relied on Article 64 of the Basic Law, which reads,

“The Government of the Hong Kong Special Administrative Region must abide by the law and be accountable to the Legislative Council of the Region: it shall implement laws passed by the Council and already in force …”

28. Counsel said it was not open to the Director to adopt a position which has the effect of not implementing a law.  That is correct.  As said by Ma CJHC (as he then was) in Chan Noi Heung v The Chief Executive in Council CACV 197 of 2007, 8 May 2008 at para 12,

“Earlier … I mentioned that the discretion vested in the CEIC, wide though it is, is not absolute. It is not absolute in the sense that the CEIC cannot irrationally refuse to use it or to consider using it. It must be accepted that a decision-maker such as the CEIC cannot exercise a discretion so as to frustrate the policy and objects of a statute: see Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997. An unreasonable refusal to use powers under a statute or even to consider using such powers is a classic instance of frustrating the policy and objects of the enactment. However, in order to determine the policy and objects of a statute and the extent of the duties and responsibilities owed by the relevant decision-maker, one must of course primarily look at the true construction of the relevant statute.”

29. Thus, one must examine the relevant statute to determine the policy and objects before one can consider whether a decision-maker has acted in a manner which can be characterized as frustrating the same.

30. Further as the Chief Judge pointed out at para 8 of that judgment, two issues were involved,

(a)  Is the decision-maker entitled to refuse to exercise a statutory power under any circumstances; in other words, effectively to renounce its existence?

(b)  If not, does the evidence show that the decision-maker had in fact taken such a stance?

31. On the facts of that case, the Chief Judge answered the first question in the affirmative.  That is a question of law and the reasoning was set out in para 12 of the judgment quoted above.  At para 23, His Lordship formulated the proposition as follows,

“If the CEIC has indeed made it clear the Government will never under any circumstances use or contemplate using the TBO, this would be an unreasonable and indefensible position to take. This would, if true, indeed frustrate the policy and objects of that Ordinance.”

32. On the second question, which is a question of fact, the Chief Judge answered in the negative.  As His Lordship pointed out, the evidential threshold is high,

  At para 24,

“However, in order to establish his entitlement to relief sought, the applicant must demonstrate that the CEIC has actually indicated that the Government will forever refuse to utilize the TBO; in order words, effectively renounced it.”

  At para 25,

“The Applicant faces a not inconsiderable hurdle here. The evidence in support of this contention must, necessarily, given the quite extraordinary and extremely far reaching nature of its effect, be compelling. It is one thing for the Government (or the Chief Executive) of the day to question the effectiveness of a statute but quite another to renounce its applicability altogether.”

33. In other words, on this level of challenge, an applicant has to show that the decision-maker has effectively renounced the existence of the power conferred upon him by the statute.  This may overlap with the next level of challenge where the focus is on the unlawful fettering of statutory discretion: both instances can be described as the frustration of the policy and objects of the statute.  However, there is a qualitative difference: on the first level, it is the wholesale renunciation of the statutory power (and that was the contention which the court has to deal with in Chan Noi Heung) whilst on the second level, it is the adoption of a policy which unduly fettered the exercise of the statutory discretion (which was the situation in Padfield ). 

34. The statutory power in question is section 125(1)(b) of the Ordinance to refuse, suspend or cancel of the licence.  The subsection stipulates that the power is vested “at the sole discretion of the [Director] for the purpose of carrying out the objects of [the Ordinance]”.  But there is also a rider because the subsection continues,

“but no … licence … shall be suspended or cancelled for any cause other than the contravention of any of the provisions of this Ordinance or of any requirement, condition or restriction to which such … licence was subject.”

35. It should be noted that though the power of cancellation is available for the furtherance of the objects of the Ordinance, there is nothing in the Ordinance which says that this is the only mode of enforcement measures to further the objects of the Ordinance in cases of repeated contraventions.  Therefore it is wrong to suggest that the Director did not exercise his constitutional duty to enforce the Ordinance simply because he did not deem fit to exercise this power by way of enforcement for repeated contraventions.  Actually, the evidence shows that the Director did exercise his power of cancellation in other specific situations (as provided in the Departmental Policy) and those instances can also be regarded as an exercise of power in furtherance of the objects of the Ordinance.  The evidence also shows that the Director did take other enforcement actions in respect of the Stall.  These immediately cast doubt as to the validity of Mr Pun’s challenge based on Article 64.

36. As stated in the preamble of the Ordinance, the object of the Ordinance is to make provision for public health and municipal services.  Citing the Privy Council decision in Ng Enterprises Ltd v The Urban Council [1996] 2 HKLR 437 at p 444, Mr Pun submitted that one of the policy and objects of the Ordinance is the regulation and control of hawkers in the interests of traffic, health and environmental considerations and to make law enforcement effective.

37. My attention was also drawn to Section 83B of the Ordinance, section 39(1) of the Interpretation and General Clauses Ordinance and Regulations 22, 48 and 53 of the Hawker Regulations.  Mr Pun submitted that in light of these statutory provisions, there is a statutory duty on the part of the Director to either suspend or cancel the licence or at least not to renew the licence annually in view of the repeated and wilful contraventions of the stall operator.

38. Counsel submitted further that the following matters, in addition to the response in the letter of 18 July 2011, show that the Director had failed to discharge his duty,

(a)  The Director has not cited any precedent to show that any licence has been cancelled due to contraventions of the Ordinance, the Hawker Regulations or the licensing conditions or the Summary Offences Ordinance;

(b)  The Director has not indicated that he will revoke the licence of the Stall operator;

(c)  The Director has provided no good reason why the licence was renewed every year despite repeated and wilful contraventions. 

39. With respect, reading all the statutory provisions with due regard to the objects and policy of the Ordinance, I do not think there is any statutory prescription that the Director must cancel or suspend a licence when there were repeated contraventions on the part of a stall operator.  Actually, the argument of counsel demonstrates the point.  He was not able to pin down his argument on one particular option which he said the Director should have adopted: suspension (and if so, for how long); cancellation; or refusal of annual renewal (and if so, should there be half-yearly renewal or quarterly renewal).  This highlights the difficulty in the contention that the Director must mechanically impose a particular form of sanction to deal with repeated contraventions under the statutory scheme.

40. Once it is accepted that it must be a matter of discretion, which is plainly the case in view of the wording of section 125(1)(b), unless the Director had intimated that he would never give consideration to the exercise of his power of cancellation or suspension no matter what the circumstances are, the so-called constitutional challenge (or the challenge at the first level) must fail.

41. The Applicant cannot meet this threshold.  The evidence of Ms Do clearly rebutted the suggestion that the Director had shut his mind from his power of cancellation.  The Director acknowledged the existence of such option in his response to the Ombudsman as set out in para 26 of the Ombudsman Report.

42. The fallacy of Mr Pun’s argument on this level of challenge is to extrapolate from the refusal of the Director to cancel on this occasion a general proposition that he refused to give any consideration to such option without regards to the circumstances of the case.  As illustrated by Chan Noi Heung, the non-exercise of a statutory power (even for a long period of time) does not necessarily lead to the conclusion that the decision-maker has renounced the power.

43. Mr Pun relied on the deficiency of the reasons given by the Director in the letter of 18 July.  I must disagree with counsel’s suggestion that the only reason given for refusing to cancel the licence was the lack of provision in the departmental policies.  First, the Director had referred to the sustained improvement of the situation after stepping up of enforcement actions in the letter.  Second, the Director’s comment on departmental policies was confined to cancellation solely due to conviction of offences relating to obstruction.  It did not say anything with regard to cancellation due to persistent and serious obstruction.  As explained in the evidence of Ms Do, there are different degrees of obstruction.  Under the statutory scheme, I agree that the Director should take into account of the seriousness of obstruction and the response of a licence holder to other enforcement actions in considering whether the draconian statutory power of cancellation should be exercised.

44. The first level of challenge cannot succeed.

Fettering of discretion

45. It is well-established that though a decision-maker can set policy on the exercise of a statutory discretion, such policy should not be permitted to fetter the discretion.  The relevant principle is set out in de Smith’s Judicial Review 6^th edn para 9-004,

“The principle against fettering discretion does not prevent public authorities upon which a discretionary power has been conferred guiding the implementation of that discretion by means of a policy or a rule that is within the scope of its conferred powers. The principle directs attention to the attitude of the decision-maker, preventing him from rigidly excluding the possibility of any exception to that rule or policy in a deserving case.”

46. It is also relevant to bear in mind the underlying rationale of the principle as explained at para 9-005,

“The underlying rationale of the principle against fettering discretion is to ensure that two perfectly legitimate values of public law, those of legal certainty and consistency … may be balanced by another equally legitimate public law value, namely, that of responsiveness. While allowing rules and policies to promote the former values, it insists that the full rigour of certainty and consistency be tempered by the willingness to make exceptions, to respond flexibly to unusual situations, and to apply justice in the individual case.”

47. In substance, Mr Pun’s submission under this head is that the Director, as indicated by the letter of 18 July, refused to cancel the licence because departmental policies did not provide for the same. Counsel also referred to paras 10 and 24 of the Ombudsman Report to support this contention.

48. Citing para 9-017 from de Smith, Mr Pun invited the court to scrutinize closely the conduct of the Director in assessing whether or not he has unlawfully fettered his discretion.  He placed emphasis on the following sentence,

“A course of conduct involving the consistent rejection of applications belonging to a particular class may justify an inference that the competent authority has adopted an unavowed rule to refuse all.”

49. Whatever might have been the position prior to the second complaint to the Ombudsman, it is plain from para 26 of the Ombudsman Report that the Director recognized that he should give consideration to the exercise his statutory discretion to cancel or suspend the licence.  That was the position of the Director in April 2011.

50. I have already explained why I do not read the letter of 18 July as indicating that the Director had rigidly adhered to a policy of not exercising his power of cancellation.  And I do not see any inconsistency between that letter and the evidence of Ms Do.

51. In so saying, I must not be taken as accepting the evidence of Ms Do too readily.  Actually, I could understand the Applicant’s misgivings about her evidence.  The explanation for the decision culminating in the letter of 18 July was not set out at great length with supporting details in the letter.  Neither was it documented in any contemporaneous records (and this court, as in all judicial review, proceeded on the basis that the relevant internal records, if any, have been produced in accordance with the duty of candour expounded in Chu Woan Chyi v Director of Immigration [2009] 6 HKC 77 at paras 11 to 14).

52. However, having given careful consideration to the matter, I decide on the facts of the present case the court can place reliance on the evidence of Ms Do, she being the author of the letter of 18 July.  It would be a serious matter if a public officer were found to be deliberately misleading the court, particularly when misleading statements were made under oath.  It goes without saying that the duty of candour must permeate the making of statements in an affidavit of a public officer in judicial review proceedings.  As a matter of principle, the obligation of a public authority to place before the court the relevant facts and the reasoning behind a decision challenged should guide not only the public officer who make the affirmation or affidavit, but also those assisting and advising him or her, including their lawyers.  There are at least two facets in such obligation: the duty of candour and the duty of due diligence.  And it should be emphasized that the obligation is a continuing one, lasting throughout the continuation of the proceedings.  At any stage of the proceedings, if it is discovered that there were statements in the evidence of a public authority which are inaccurate or misleading, the court expects the mistake be revealed and explained as soon as practicable.

53. Having regard to the matters canvassed above, I do not believe there is any ground to doubt the veracity of Ms Do.  Mr Pun, very properly, did not go that far in his submissions.

54. The evidence of Ms Do clearly shows that the Director has not adopted a policy of not considering the option of cancellation on account of contraventions.  Instead, it shows that a flexible approach was adopted, having regard not only to the number of contraventions, but also the seriousness of the contraventions, the response of the stall operator to less drastic form of enforcement actions and the up-dated position of the Stall.

55. In my judgment, having regard to the facts and the evidence, the complaint of fettering of discretion is not established.

Wednesbury unreasonable

56. Putting aside the submission that the court must consider the evidence of Ms Do with caution (which I have already dealt with), Mr Pun’s challenge on the third level based on Wednesbury unreasonableness can be summarized as follows,

(a)  As a matter of fact, the Director was wrong in saying that the Stall had been kept in an acceptable condition causing no undue obstruction;

(b)  Frequency of prosecutions against the stall has not been significantly decreased;

(c)  It is unreasonable to set the threshold at “undue” obstruction or “unacceptable” condition;

(d)  Due to the record of contraventions, the road condition in the vicinity, the potential dangers caused to pedestrians, it is unreasonable not to exercise the power of cancellation;

(e)  The making of an offer to the Stall operator to relocate shows that the Director was also of the view that the location is not suitable for having a stall there.

57. I can dispose of the last point quickly.  The making of the offer of relocation is not relevant for present purposes because there is no evidence before the court as to the reason behind such offer.  It may very well be that the offer was made as a gesture of compromise.  The offer and the suitability of the location for a newspaper stall has neither been raised in the amended Form 86 nor in the evidence of the Applicant.  Mr Pun is not entitled to rely on it.

58. As regards the other matters, the Applicant and the Director placed before the court evidence regarding the condition of the Stall obtained at different points in time.  Having considered the evidence, I do not think one can say that the opinion formed by the Director as to the acceptability of the condition and the improvement is Wednesbury unreasonable. The Director had to make decision on the basis of the information and observation made by his officers.  Based on their evidence (and there is no suggestion that the officers had deliberately conducted their inspections in a manner to present a misleading picture), the Director’s decision cannot be faulted.

59. Whilst there were still prosecutions against the Stall in 2011, the Director was entitled to take account of other relevant factors as mentioned above in coming to a decision on the proper measures of enforcement.  It can be seen that the Director has approached the case with proportionality having regard to the prevalent circumstances.  In the letter of 18 July, reference was made to the prosecutions against the Stall since April 2011 and inspections on 9 and 27 June 2011.

60. As regards the road condition, having considered the photographs produced by both sides, I do not think Mr Pun can gain any mileage out of this argument.

61. In my judgment, there is no merit in the challenge based on Wednesbury unreasonableness.

Result

62. The application for judicial review is dismissed.  I also make a costs order nisi that the Applicant shall pay the Director’s costs, such costs to be taxed if not agreed.