LEE CHUEN v. THE COMMISSIONER FOR TELEVISION & ENTERTAINMENT LICENSING

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMINISTRATIVE LAW LIST NO.2 OF 1998

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JUDGMENT

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1. On 2^nd January 1998 the Applicant herein, the operator and licensee of an amusement parlour in Johnston Road, Wanchai, issued an application for leave to apply for judicial review under Order 53 rule 3. Consequent upon an inter partes hearing held on 25^th February 1998, leave so to apply was granted by this Court, and this, therefore, is the judgment upon the Applicant's substantive application.

The Primary Facts

2. These are in relatively short compass, and there is, I think, no dispute between the parties as to the sequence of events.

3. The Applicant herein is and was at all material times the licensee of an amusement game centre at G/F, Hong Chiang Building, 141-147 Johnston Road, Hong Kong; indeed, I understand that he is the current licensee, the licence of the centre having been renewed for the period 6^th February 1998 to 5^th August 1998.

4. Be that as it may. The factual genesis of this application occurred in late March and early April 1997. The Television and Entertainment Licensing Authority ("TELA"), which has the statutory responsibility of overseeing the administration of such game centres pursuant to the Amusement Games Centres Ordinance Cap.435, was in receipt of various complaints from members of the public with regard to the operation of this particular Centre. Accordingly, an inspection was made by TELA officers on 11^th April 1997 and breaches of licensing conditions were found. The precise details do not, perhaps, greatly matter, suffice to say that pornographic and indecent video games were found to be in operation, and in addition the position of the machinery did not conform to the Centre's designated layout.

5. The day following this inspection, that is, 12th April 1997, TELA received a letter from the Applicant. It is a fairly lengthy letter and I will not here set it out in full, but I think it is fair to say that it amounted both to apologia and excuse; problems had indeed arisen with the Applicant's business partners, in particular fellow directors of a company known as Luxe Gold Limited, the lessee of the premises, with whom the Applicant had fallen out and who had been primarily responsible, maintained the Applicant, for the unsavoury turn of events which had occurred. This letter concluded with the somewhat unusual request for the licence of the game centre to be "temporarily freezed (sic) for two to three months and the validity of the licence retrieved" when the Applicant had been able to gain control of the tenancy of the premises; in addition a request for an interview with the Authority was made.

6. This latter request was granted; in fact, the evidence is that Mr Lee Chuen was interviewed by TELA staff on 15^th and 18^thApril 1997, and a warning letter was also sent to him on 15^th April. The TELA message was tolerably clear : Mr Lee Chuen, as licensee, bore the responsibility of the correct administration of the Centre, and he was told to rectify the irregularities as soon as possible, absent which consideration would be given to suspending, revoking or refusing to renew his licence.

7. A subsequent inspection on 17^th April 1997 still revealed games with unapproved content, there remained difficulties with the layout of the Centre, and the licence itself was unavailable for inspection. Accordingly, a second warning letter was issued on 3^rd May 1997, another inspection was made on 20^th May, which revealed that the problems had still not been rectified, which in turn stimulated a third warning letter of 28^th May 1997.

8. The Authority took a serious view of the failure to take remedial action, notwithstanding the warnings which had been given, and on 3^rd June 1997 TELA issued what they describe as a "intention letter" announcing an intention to consider "suspension of your licence for 14 days by invoking section 9(1)(b) of Cap.435 on the ground that the Commissioner is satisfied that the licence has been contravened, whether or not any person has been convicted of an offence (Section 9(2)(c) refers)".

9. Written representations from Mr Lee were invited, and on 16^th June 1997 Mr Lee responded. Once again this was a relatively detailed letter, which inter alia indicated that fault lay with his business partners, that the management and business of the Centre had been handed to him on 5^th June 1997, and that he guaranteed "that the occurrences over the last month would not recur again inside my game centre and that the game centre would be renovated so as to satisfy your authority and comply with the existing law". Mr Lee further expressed the hope that the Authority would take into account his good management record of the Centre over the past 10 years and that "all contravention of the licence is stopped right now". He further added that he hoped that the Commissioner would take into account section 19(3)(b) of the Ordinance (namely, that an offence is committed by the licensee unless he proves that, by exercise of reasonable diligence, he could not have prevented the relevant circumstances arising), and he also highlighted his recent consultation with TELA staff and his request to terminate the licence for a period so that all breaches would cease. I have given detailed reference to this representation letter because its contents received high profile in Mr Pirie's submissions.

10. But to continue with the story. The Authority did not find the explanation 'justifiable'; and under section 9 of the Ordinance the Commissioner had the power to suspend the licence for such a period as he may think fit on the ground that he is satisfied that a condition of the licence has been contravened, whether or not there had been any conviction for an offence. Accordingly, in accordance with section 9(1)(b) of the Ordinance, on 27^th June 1997, an Order suspending the licence for 14 days (from 14^th to 27^th July inclusive) was issued. A covering letter advised Mr Lee of his right to appeal and enclosed the prescribed appeal form, which I note in passing provides relevant details as to the manner of an appeal, together with the relevant telephone number of the Secretary to the Appeal Board.

11. What thereafter happened was this. On 3^rd July 1997 TELA received a letter from Mr Lee which did not refer to the Suspension Notice dated 27^th June, and which confined itself to enclosing revised layout plans for the forthcoming renovation works, which works were said to last for 60 days from 20^th July to 20^th September 1997. In turn, this letter was apparently followed by a telephone call from a Mr Wong Kwok-hung, who identified himself as a new partner of the Centre and requested the withdrawal of the Suspension Order on the principal grounds, I understand, that they were closing voluntarily anyway for renovation, that the Order was wrong in law, and that in any event that the licensee had taken all necessary steps to prevent the relevant contraventions. This request, which on the evidence was made to Mr William Yam of TELA, was rejected, and Mr Wong was apparently informed that if the licensee was aggrieved, he could lodge an appeal to the Appeal Board before the Order became operative, so that there would be a suspension of the Order pending appeal. I pause to add that Mr Wong was apparently a director of the new company leasing the premises, one Magician Development Limited.

12. Subsequent to Mr Wong's efforts to intervene, the Authority received a further letter from the Applicant dated 12^th July 1997 stating that he would indeed suspend the operation of the Centre in compliance with the Suspension Order, but that he reserved all his rights in respect thereof.

13. An appeal against the Suspension Order was lodged on 23^rd July 1997, with the hearing before the Appeal Board being held on 22^nd October 1997. This appeal was dismissed.

14. That is really the end of the story, for present purposes at least. A further contravention of the approved layout plan was revealed by another inspection on 17^th November 1997, and a warning letter issued. Thereafter Mr Lee's licence was renewed for six months from 6^th February 1998 instead of the normal 12, and there the matter stands in terms of the current licensing situation.

The Decisions Under Attack

15. Mr Pirie, who argued Mr Lee's case before the Appeal Board, and who again appears in this Court on behalf of Mr Lee, has made it clear that in these judicial review proceedings, he attacks two decisions : the Suspension Order of the Commissioner of 27^th June 1997 and second, the dismissal of the appeal by the Appeal Board, which dismissal actually took place on 22^nd October 1997, although the reasons for the decision of the five member Appeal Board were not handed down until mid-December 1997. Since the adequacy of these reasons are in dispute, it would, I think, assist if I were to reproduce them here :-

Reasons for the Decision

The Grounds of the Application

16. In his wide-ranging address, Mr Pirie made, at bottom, three main points, and I propose to deal briefly with each in turn. The first two of these points deal with the validity of the Commissioner's decision to suspend the licence, and the third exclusively with the decision of the Appeal Board in dismissing the appeal.

17. This is Mr Pirie's term, which I adopt if only to identify the argument. In this regard, Mr Pirie's central thesis was that the Amusement Games Centre Ordinance makes a sharp demarcation between the business of regulation, vested in the Commissioner for Television and Entertainment Licensing, who has the power to regulate, and the business of punishment and sentence, wherein the magistrate's court has the power to deal with persons who commit offences under the Ordinance. The Applicant could have been charged with a section 19 offence, but was not, said Mr Pirie. Moreover, the imposition of a suspension de facto caused a significant monetary loss to the Applicant. The power of the Commissioner to suspend under section 9(2)(c) is intended to deal with a situation where there is a continuing breach, so that if, as here, the relevant breaches had been cured, subsection (c) effectively drops away, and indeed, Counsel submitted, if it did not so cease to be relevant, the Commissioner would effectively be sentencing, not regulating - hence the appellation "extra-judicial sentencing".

18. I hope that I have done justice to the main strand of this argument because it seems to me, with respect, that as I have understood it, this point is demonstrably bad. Section9(2)(c) of the Ordinance says what it means and means what it says; the Commissioner has the power, inter alia, "to suspend a licence for such period of time as he thinks fit" if, in the words of subsection (c), he "is satisfied that a condition of the licence has been contravened, whether or not any person has been convicted of any offence under section 19(1) or (3)". There is, and can be, no warrant to read into a perfectly simple legislative provision a reference to consequent financial loss to the licensee, or to restrict it to continuing breaches of the licence.

19. The Commissioner undoubtedly had the power to do what he did, and I do not accept the argument that in these circumstances he had no jurisdiction to issue the relevant Notice of Suspension. This argument fails in limine. I did not ask Mr Whitehead, appearing in this Court on behalf of the Commissioner, to respond thereto, and I dare say that if I had appreciated the true import of this argument at the time of giving leave, this may have influenced my decision on that issue. Be that as it may. The point is rejected.

20. This is Mr Pirie's second broad head, and it contains within it three points.

21. The argument here is that, in suspending the licence for the 14 day period between 14^th and 27^th July 1997 inclusive, the Commissioner was wrong in law, since the suspension was designated to take place within the 28 day appeal period allowed under the Ordinance. Mr Pirie accepted, of course, that the lodging of an appeal had the general effect, pursuant to section 11(2) of the Ordinance, of suspending the operation of the decision appealed against until the disposal of the appeal, but nevertheless he maintained that it was unfair that the full appeal period had not been permitted to run its course before the suspension began to 'bite', so to speak. Mr Whitehead disputed this contention, pointing out that there was no statutory requirement that this should be the case, and commenting that as a matter of legislative policy, one could clearly see why a delay of suspension pending expiry of an appeal period had not been specifically laid down in the Ordinance.

22. On reflection, if I had to decide the point, I am inclined to agree with Mr Whitehead's argument, at least as a matter of legislative construction. But in the event it seems to me to matter not one jot on the facts of this case. Whilst the Applicant had written to the Commissioner on 12^th July stating that he "would follow the written Order of the Commissioner to suspend the business of the game centre from 14^th July to 27^th July", he nevertheless did so to "reserve all my legal rights". The plain fact is that, on his own case, he intended to (and did) close the Centre for renovation works during part at least of the relevant period of suspension; indeed this fact was precisely one of the arguments which had been deployed on his behalf by Mr Wong in requesting the Commissioner to withdraw the Suspension Order. And this is presumably why, also, the Applicant agreed to abide by this Suspension Order under protest, and not to assert the statutory stay of the Suspension Order for the four day balance of the suspension which remained as at the date of the formal lodging of the appeal on 23^rd July 1997.

23. So in my view there is nothing in this point either. Indeed, a detailed perusal of the papers subsequent to the hearing leads me to the impression that the sequence of events, and in particular the timing and tenor of the correspondence with the Commissioner, reflects a clear and well thought out strategy on the part of the Applicant. But I say no more. This point fails.

24. This argument seems to me to be effectively a continuation of the last point. Mr Pirie complains that in his covering letter of 27^th June 1997 accompanying the formal Notice of Suspension, the Commissioner failed to draw the provisions of section 11(2) to the attention of the Applicant. With respect, in the particular circumstances and given the history of events, this point seems to me to stretch credulity, even if it had any basis in law, which in my view it does not. As Mr Whitehead pointed out, there is no such legal obligation upon the Commissioner, and in fact when one looks at the final paragraph of the Commissioner's letter of 27^th June, it is clear that the Commissioner went out of his way to provide relevant information; indeed, I am given to understand that the prescribed form enclosed with that letter contains a note advising the licensee to read the Ordinance and the Regulations prior to lodging a Notice of Appeal. Albeit in this particular case, such information was unlikely to be required. As Mr Whitehead suggested, I apprehend correctly, in his correspondence the Applicant had demonstrated a working knowledge of the Ordinance itself, and in my judgment it is verging upon the disingenuous to suggest that the absence of specific reference to section 11(2) should somehow serve to invalidate the Notice issued by the Commissioner.

25. Mr Pirie submitted that, in all the circumstances, the Commissioner's decision to suspend was "Wednesbury unreasonable". In his argument he laid heavy stress upon the good record of the Applicant and the attempts by this Applicant to right the undoubted wrongs as existed, and he reviewed again the full sequence of events. In essence, Mr Pirie submitted that his client was not given a fair crack of the whip to see whether his reconstituted arrangements could or would serve to keep his house in order.

26. Was the action of the Commissioner in issuing the Notice suffused with the irrationality which is the fundamental benchmark before Wednesbury unreasonableness properly can rear its head? In my judgment, the answer to this rhetorical question is clearly and obviously 'No'. In my view, on any rational analysis, this suggestion does not get off the ground.

27. Under this third and final broad head, the focus moves from an attack upon the Commissioner's actions to those of the Appeal Board, to whom the Applicant had launched an appeal against the Suspension Order on 23^rd July 1997. At the hearing on 22^nd October 1997, the decision of the Board dismissing the appeal was orally given, which decision was supported by the reasons set out earlier in this judgment, but which were not published until mid December 1997.

28. Mr Pirie complains that the reasons given are not proper reasons at all, and in particular he isolates paragraph 2 thereof. In this connection, I was referred to the cases of Lau Tak Pui & Ors v. Immigration Tribunal [1992] 1 HKLR 374, and Oriental Publisher Limited v. The Commissioner for Television and Entertainment Licensing Authority [1997] 1 HKC 93, and to the learned judgments therein.

29. It has always seemed to me that the validity of this type of argument moves with the circumstances of each individual case - there may, for example, be a more pressing requirement in the eyes of our law to condescend to fuller reasons when dealing with matters of individual freedom and liberty than when considering the promulgation of indecent videos in Wanchai. The question is essentially one of balance and perspective in light of the particular facts forming the backdrop to the argument. And in this regard, as a statement of principles, I can do no better than reproduce part of the judgment of Mr Justice Chan, Chief Judge of the High Court, in Oriental Daily Publisher Ltd v. Commissioner for Television and Entertainment Licensing Authority, op. cit., at page 105:-

30. In the same case, McCowan LJ said at 323c:

31. Leggatt LJ also said at 326d:

32. In Lau Tak Pui & Ors v Immigration Tribunal, Kempster JA remarked at 380:

33. Sir Derek Cons VP said at 383:

34. Applying the insights within this passage, in my judgment the reasons given by the tribunal are not inadequate in these particular circumstances. It is clear that the facts of the matter have been reviewed by the Board - indeed Mr Pirie tells me that he put in a detailed skeleton argument for their consideration - and in the circumstances it seems to me that criticism does not validly lie for not elaborating their conclusion that the period of suspension was justified "in view of the seriousness of the breaches committed by the Appellant", which seems to me to be perfectly adequate reference to the primary facts underlying the dismissal of the appeal. As Mr Whitehead pointed out, at issue was not, for example, whether the contraventions of the licence conditions had actually occurred at all, or whether Witnesses A or B were or were not capable of belief, and it is difficult in the circumstances of the case to see what further reasons should have been given: the facts were in, the argument propounded, and the appeal was dismissed.

35. I therefore reject this ground also. And I would add in this connection that I see little merit in Mr Pirie's collateral complaint that the Appeal Board did not know, and should have been told, of the then pending prosecution of Luxe Gold Limited, the tenant of the premises, and arguably on the Applicant's case the real architect to the problems that had occurred; in fact, on 7^th November 1997 Luxe Gold was, I understand, fined $40,000. In my view, however, this is nothing to the point. The Appeal Board was seized with an appeal from the Applicant, with regard to the Suspension Order. It was his licence, and it was that licence that had been ordered to be suspended. In the event, the Appeal Board dismissed the appeal, and its decision in so doing does not, in my judgment, command relief by means of judicial review.

Order

36. It will be clear from this judgment that none of Mr Pirie's criticisms and arguments have found favour with this Court. It follows, therefore, that the present application is dismissed, and that the various categories of relief (declaration, certiorari and remission to the Appeal Board for a rehearing of the appeal) prayed for in the amended application (as amended with leave at the conclusion of the hearing) are refused.

37. In the circumstances, it seems to me that there can be little argument on costs, and, subject to any submissions Counsel may wish to make, my order is that the Respondent is to have the costs of and occasioned by these proceedings, to be taxed if not agreed.

[Counsel respond]

38. I thank Counsel for their assistance. As might have been anticipated, the costs order is not resisted in the circumstances of this judgment, and accordingly it stands in the terms ordered.