WOOMERA CO LTD v. COMMISSIONER FOR TRANSPORT

HCAL 146/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 146 OF 2008

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REASONS  FOR  JUDGMENT

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The scheme:

1.  Under the provisions of the Road Traffic (Registration and Licensing of Vehicles) Regulations Cap 374 Sub Leg E, (the Regulations) the Commissioner for Transport (the Commissioner) administers a scheme whereby personalised vehicle registration marks (marks) may be issued.  Under the scheme vehicle owners can choose their preferred marks, and apply to the Commissioner for the issue of those marks.

2.  If an application meets the basic requirements, the applicant is required to pay a $5,000 deposit, and the mark is then offered for sale by auction on a date fixed by the Commissioner.  Consequently, the proposed mark will not necessarily go to the vehicle owner who has applied for the issue of the mark, but to the highest bidder.

The application:

3.  The applicant made application for two marks, V1NCE, and B0RDEAUX.  In the first, the letter “I” was replaced with the numeral “1”, and in the second, the letter “O” was replaced with the numeral “0”.  On 5 May 2007, a representative of the applicant attended the auction of the two marks, and was the successful bidder for both. 

4.  On that date, two “Memoranda of Sale of Registration Mark” documents were delivered to the applicant’s representative, once each mark.  The Memoranda contain the following two paragraphs, in both English and Chinese, under a heading “Conditions of Sale”:

“3  The allocation of the registration mark is subject to Regulation 9, 10, 12, 13 and 14 of the Road Traffic (Registration and Licensing of Vehicles) Regulations, Cap 374.

5  The Purchaser MUST within 12 months after the purchase, apply to the Commissioner for Transport for the registration mark to be assigned to a motor vehicle registered in the name of the Purchaser.  If the Purchaser fails to do so, allocation of the mark will be cancelled without notice to the Purchaser.” (Original emphasis)

5.  In addition, on that day, a standard document entitled “Notes to Purchaser” (the Notes) was handed to the applicant’s representative upon payment for the marks.  The Notes list the various documents which the successful purchaser needs to bring to the Transport Department when the application is made to assign the mark to vehicle registered in the purchaser’s name.  The Notes also provide:

“Within 12 months after the date of obtaining the registration mark by auction, the purchaser has to apply to assign the mark to a vehicle registered in your name, otherwise, the registration mark will be withdrawn without further notice by the Transport Department and may be put up for auction again.” (Original emphasis)

6.  The applicant did not apply to assign the two marks to vehicles within the 12-month period.  The application for assignment of the marks to two vehicles owned by the applicant was not made until 19 May 2008, 14 days late.  On that date the applicant was informed by the Transport Department that the marks had expired on 5 May 2008, and that they could not be assigned to the applicant’s vehicles. 

7.  Subsequently, on the same day, the solicitors for the applicant wrote to the Commissioner explaining the circumstances that had led to the delay, and, without saying so in terms, impliedly sought an extension of time to have the marks assigned.

8.  By letter dated 2 June 2008, the Commissioner refused to extend the period within which the marks may be assigned to a vehicle.  The Commissioner referred the applicant to the Notes, and also to r 12I(6) of the Regulations which provides:

“If, for whatever the cause, a personalized registration mark allocated under this regulation is not assigned to a motor vehicle within 12 months after the date of its allocation, the Commissioner may, without notice to the personalized registration mark holder, cancel that allocation and reallocate the personalized registration mark.”

The Commissioner then said:

“Given the above reminder and note, we consider that there are no grounds for the Commissioner to permit assignment of the (marks) ‘V1NCE’ and ‘B0RDEAUX’ to vehicles owned by your client, after the expiry of the 12-month allocation period.”

9.  Now, by judicial review, the applicant challenges the refusal of the Commissioner to extend the time for the assignment of the two marks, and the decision of the Commissioner to cancel the allocation of the two marks to the applicant.

The relevant regulations:

10.  In order that the circumstances may be properly understood, it is necessary to set out the regulations relevant to the issue.  They are rr 9(2) &(4), and 12I, (the emphasis is mine):

“9.  Allocation and sale of special registration marks

(2)  A person to whom a special registration mark has been allocated under subregulation (1) shall, within 12 months after the date of its allocation, apply to the Commissioner-

(a)  under regulation 5 for the registration of a motor vehicle of which he is the owner, and for assignment of the special registration mark to the vehicle; or

(b)  for assignment of the special registration mark to a registered motor vehicle of which he is the owner.

(4)  If, for whatever cause, a special registration mark allocated under subregulation (1) is not assigned to a motor vehicle within 12 months after the date of its allocation, the Commissioner may, without notice to the person to whom it was allocated, cancel the allocation of the special registration mark to that person and reallocate it under subregulation (1).

12I  Allocation and sale of personalized registration marks

(1)  Subject to subregulation (3) and regulation 12Q, a proposed personalized registration mark shall, before being assigned under regulation 6, be offered for sale by auction.

(2)  If a proposed personalized registration mark is allocated upon sale by auction to a person other than the applicant who applied to the Commissioner to make it available for allocation, the deposit paid by the applicant under regulation 12D(1) shall be refunded to him

(3)  If a proposed personalized registration mark remains unsold at the auction, it shall be allocated, at a special fee of $5,000, to the applicant.

(4)  For the purposes of subregulation (3), the deposit paid by the applicant under regulation 12D(1) shall be taken as payment of the special fee.

(5)  Regulation 9(2) and (3) shall apply in respect of personalized registration marks allocated under this regulation (whether allocated upon sale by auction or at the special fee of $5,000) in like manner as it applies in respect of special registration marks allocated under regulation 9(1).

(6)  If, for whatever cause, a personalized registration mark allocated under this regulation is not assigned to a motor vehicle within 12 months after the date of its allocation, the Commissioner may, without notice to the personalized registration mark holder, cancel that allocation and reallocate the personalized registration mark.”

The case for the Commissioner:

11.  The position of the Commissioner is plain from the Conditions of Sale and the Notes.  If application for the assignment of a mark to a vehicle owned by the purchaser is not made within 12 months the allocation of the mark will be cancelled without notice to the purchaser, and assignment of the mark to the vehicle refused.  The notices handed to the purchaser admit of no exception to that situation.

12.  It is immediately apparent why the Commissioner has taken the position now sought to be justified.  Regulation 9(2) requires a successful applicant for a mark to apply to the Commissioner for the assignment of the mark to a vehicle, within 12 months after the date of its allocation.  The word “shall” is used.  The Commissioner has read the word “shall” as being a mandatory requirement.  That was Ms Wu’s submission in her skeleton.

13.  But Ms Wu went further than the skeleton.  The case argued for the Commissioner was that there were two quite distinct steps, first, an application under r 9(2), by the person successful at the auction, and second, the act of assignment by the Commission. Ms Wu argued that the discretion contained in rr 9(4) and 12I(6) could only be available to be exercised if the assignment had not been made within 12 months after the date of allocation.

14.  Consequently, Ms Wu argued, there was no discretion at all to extend the 12-month period within which a person to whom a mark has been allocated may apply for assignment of that mark to a motor vehicle.

15.  The basis of the argument appeared to arise in two ways.  First, in both rr 9(2) and 12I(6), reference is made to the assignment of the mark, not the application for the assignment of the mark.  Second, the argument was mounted on the basis that application may be made at a time when the person to whom the mark has been allocated does not have a vehicle to which it may be assigned.

Two distinct steps:

16.  Ms Wu’s argument requires the recognition of two quite distinct steps in the process, first, the application, on the part of the applicant, and second, the assignment, on the part of the Commissioner.  Ms Wu acknowledged that the distinction between the two steps was “fine”. 

17.  In fact there is no distinction at all.  There is one process.  The process results in the assignment of a mark to a vehicle.  The process begins with the application and ends with the assignment of the mark.

18.  Ms Wu’s argument meant that the only circumstance in which the question of the exercise of discretion might arise would be when a proper application was duly made in time, but the administrative act on the part of the Commissioner in assigning the mark to a vehicle, prior to the expiry of time had not been completed within the time period. 

19.  I have not the slightest doubt at all that that situation was not contemplated by the legislature.  It is simply impossible to imagine a circumstance in which the Commissioner, having received a proper application within the 12 months, but failing himself to assign the mark within the 12 months, would not proceed simply to carry out his part of the process and assign the mark.

20.  Ms Wu said, and I have no reason to doubt it, that an application could be dealt with in a day.  But one only need contemplate the circumstance of an application being made in time, albeit at the last minute, and overlooked by the Commissioner’s staff and the assignment not been made well within time.  An alternative scenario is one in which an application is made within time, but the staff of the Transport Department, for some proper reason under the Regulations, refers the matter to a higher authority within the Department for decision, and that decision is not made within the 12-month period.  It is facile to suggest that in either of those circumstances the Commissioner would need to have resort to a statutory discretion in order to assign the mark. 

21.  Plainly, once a proper application is made, within the 12-month period, the process has been engaged and all that is then required is for the bureaucracy to undertake the appropriate steps and proceed to assign the mark to the vehicle the subject of the application, or, for proper grounds, to refuse assignment.

22.  That being so, it is abundantly plain that the purpose of the discretion is to deal with any situation where the application has not been made within the required 12-month period.

23.  If there were any doubt about that it is made clear by the use of the expression “for whatever cause” in both rr 9(4) and 12I(6).  That expression must plainly include a failure to make application for assignment of the mark within the 12-month period.  Were that not the intention of the legislature, a different expression would have been used, or failure to apply within the 12-month period excluded from the causes that might be relied upon by an applicant seeking an extension of time.

The meaning of “shall” in r 9(2):

24.  The error made by the Commissioner is to assume that the word “shall” is always mandatory.  It is right that on its face the word “shall” implies a mandatory requirement.  But that is not always the proper interpretation.  The word “shall” may also be interpreted as merely giving permission: see Stroud’s Judicial Dictionary of Words and Phrases, 6th Ed Vol 3 p 2427.  The following passage from Stroud, at p 2428 is instructive:

“Whenever a statute declares that a thing shall be done, the natural and proper meaning is that a peremptory mandate is enjoined.  But where the thing has reference to-

(a)  the time or formality of completing any public act, not being a step in a litigation, or accusation; or

(b)  the time or formality of creating an executed contract whereof the benefit has been, all but are their own act might be, received by individuals or private companies or private corporations,

the enactment will generally be regarded as merely directory unless there be words making the thing done void if not done in accordance with the prescribed requirements.”

In complete contradistinction to there being words “making the thing done void if not done in accordance with the prescribed requirements”, in the present case the Commissioner is specifically given a discretion to assign the mark after the expiry of the 12-month period.

25.  Ms Wu relied on Re Merck Sharp & Dohme Ltd [2002] 1 HKLRD 820, to contend that where a time limit is laid down by statute and no power is given to extend it, the time limit should be strictly observed and not even the court has power to extend the time limit. 

26.  The decision is not authority of the proposition that the word “shall” will always be mandatory.  The authorities relied upon by Kwan J for the conclusion reached, Petch v Gurney (Inspector of Taxes) [1994] 3 All ER 731, and R v Weir [2001] 2 All ER 216, were both decisions in relation to steps being taken in respect of litigation, Petch, as to the time limit required to transmit a case stated to the High Court, and Weir, as to the time limit for an application for leave to appeal. Plainly, in both cases, the time limit was a mandatory limit.  Kwan J properly recognised that the cases cited were very different.  They are so different that I am of the view that they are not applicable to the situation of a permissive or directory statement in a statute.  That is especially so when there is a specific power to extend the time.

27.  I am satisfied that in the context of this legislation the expression “shall” in r 9(2) merely gives permission to the successful applicant to make application for the assignment of the mark to a vehicle, within the required period.  The proper position at law is that if upon the expiry of the 12-month period application for the assignment of the mark has not been made, the Commissioner has a discretion to extend the time for assignment, or cancel the allocation of the mark to the late applicant, or to reallocate it to some other person, both of these latter steps, without notice to the applicant.

28.  However the Commissioner exercises the discretion, it must be properly exercised.

A fetter on the exercise of the discretion:

29.  Ms Wu was unable to point me to any statutory basis, other than rr 9(2) & (4) & 12I(6), upon which the Commissioner was justified in imposing a requirement that, if the application for the assignment of the mark was not made within 12 months, the allocation must be cancelled.  But that was the Commissioner’s position, as demonstrated by both the Memoranda, and the Notes. 

30.  The imposition of that requirement is a plain fetter by the Commissioner on the discretion granted to him under both rr 9(4) and 12I(6).  There is no such requirement in the legislation.

31.  The law is clear. 

“A decision-making body exercising public functions which is entrusted with discretion must not, by the adoption of a fixed rule policy, disable itself from exercising its discretion in individual cases.  It may not fetter its discretion.”

See De Smith’s Judicial Review 6^th Ed para 9-002.  By treating the time period in r 9(2) as mandatory, and determining, prior to the consideration of the relevant factual circumstances and the exercise of the discretion granted to him, that if application is not made within the 12-month period the allocation of the mark must be cancelled, the Commissioner has wrongly fettered the exercise of his discretion.  What the Commissioner must do if an application for the assignment of a mark is not made within the 12-month period, and an application for the exercise of discretion to extend the period is made, is to properly consider the grounds upon which the application is made, and then, exercise, or not, the discretion.

32.  It must follow that the position of the Commissioner that, upon the expiry of the 12-month period, an application for the assignment of the mark has not been made, the allocation must be cancelled, is wrong. 

33.  There will be an order for certiorari and an order quashing the decision of the Commissioner to cancel the allocation of the marks to the applicant.

The refusal to extend time:

34.  The question next arises as to whether or not the Commissioner’s decision dated 2 June 2008 to refuse the assignment of the marks is wrong.  The only reason given by the Commissioner for the refusal to extend time, is that the marks had been cancelled and there were no grounds to permit the assignment of the marks.  There is no suggestion at all that in any other respect, other than time, the applications for assignment of the marks were not proper.

35.  It is quite plain from the Commissioner’s letter that no consideration whatsoever has been given to the explanation offered by the applicant for not having made an application for the assignment of the allocated marks within the required time.  The mere reference in the Commissioner’s letter to the letter of explanation is not, in the light of the terms of the Memoranda and the Notes, and the plain grounds for refusal to extend time stated in the letter, a sufficient basis to say that the Commissioner has properly considered the explanation, or even considered it at all.

36.  That alone is sufficient to justify an order for certiorari in respect of the decision cancelling the allocation, an order quashing of the decision to refuse to extend time and an order of Mandamus, requiring the Commissioner to reconsider the application for the extension of time in accordance with law.

Discretionary relief:

37.  Ms Wu argued, correctly, that one of the fundamental principles of judicial review is that relief is discretionary.  That is plainly right. see de Smith’s Judicial Review, para 18-023:

“A distinctive feature of all these remedies is that the court has a discretion to withhold them from a claimant even if the defendant public authority is held to have acted unlawfully.”

And also Fordham, Judicial Review Handbook 4^th Ed, para 24.3:

“It is a first principle of judicial review that all remedies are discretionary.  This means that a claimant could win on every other point and still find that the Court refuses a remedy, in the exercise of its discretion.”

38.  If the decision-making body would have reached the same conclusion, had it correctly applied the law, then a procedural flaw, such as an error of law on the part of the decision-making body, arguably makes no difference at the end of the day.  In such circumstances the court has a discretion to withhold any remedy.

39.  That being the law, Ms Wu argued that the relief sought by the applicant, namely the return of the matter to the Commissioner of the decision, was an academic exercise in the light of evidence from the Commissioner that he would exercise the discretion in the same way, even after considering the applicant’s explanation.

40.  Two matters arise from consideration from the submission.  They are first, the assertions in the affidavits filed by the Commissioner as to the grounds upon which the applicant had sought to extend the time, and second the circumstances in which the court will withhold, in its discretion, a remedy on judicial review.

The grounds to refuse an extension:

41.  In the affidavit filed by the Commissioner, the deponent refers to steps that might have been taken by the applicant to enable it to make the application sooner.  Ms Wu sought to argue that the decision was justified on the basis that the failure to apply within the time period was as a result of neglect on the part of the applicant’s legal advisers. 

42.  That was not the basis upon which the decision was made, and it is not open now to the Commissioner to assert that as a justification for the decision.  Those were not proper matters to be included in the affidavit.  The plain, and only basis of the decision was simply that the 12-month period had expired.  The Commissioner having made his decision on that basis cannot now come to the court and offer other explanations in an attempt to justify the decision.

Circumstances in which refusal of relief is appropriate:

43.  As I have indicated, if an authority has made a decision upon particular grounds, it is not open to that authority to attempt to justify a decision upon other grounds.

44.  But where it is clear upon the factual circumstances upon which an applicant relies, that even if the authority had approached the exercise of making the decision in a wrong manner, the same decision would be reached upon a proper approach, then it is open to the authority to argue that relief ought to be refused.

45.  That is plainly not the case here.  Where an application for the extension of time is made, and an explanation for the delay is offered, bearing in mind that the mere fact of neglect alone will not be a proper basis to refuse extension, the delay is short, and no prejudice can be demonstrated to any person as a result of the applicant’s failure to apply within time, then it would plainly be proper to exercise the discretion in favour of an extension of time.

46.  It will be for the Commissioner to decide whether or not he should extend time.  I am not able to make that decision. 

47.  But it may assist the Commissioner if I were to say that I would have thought myself that a delay of only 14 days, explained in the way this delay has been explained, would fall well within the circumstances which may properly be the subject of a favourable exercise of discretion. 

48.  I am very surprised that a second affidavit should have been filed on the part of the Commissioner, in which he says that the explanation offered by the applicant would not constitute a legitimate reason justifying an extension of time.  First, as I have said, it is quite wrong for the Commissioner to make that assertion now, long after the proceedings have been commenced.  The reasons for the decision were contained in the letter of 2 June 2008, and it is not open to the Commissioner, now, to add to those reasons.  Second the statement made is a bald statement, with no proper explanation as to why the reasons proffered by the applicant are not sufficient.

49.  Ms Wu argued that the Commissioner could not be criticised as being either irrational or unreasonable in enforcing the 12-month time period.  The submission misses the point.  The only time in which the discretion will sought to be exercised will be after the 12 month time period has expired.  When a time period is permissive, the question of “enforcing” the time period simply does not arise.  What will arise for consideration in the exercise of discretion will be the reasons why the application was not made within the time period, the length of the delay, and whether or not any other person might have been prejudiced or adversely affected by the delay.

50.  Equally, it would be wrong for the Commissioner to refuse to extend the time solely on the basis that the applicant had neglected to make application for allocation within the time period.  Almost inevitably in any application for extension, there will have been neglect during the 12-month period during which application might have been made.  But I cannot see that neglect alone is a basis to refuse to extend the time.  When there is no prejudice demonstrated to any other person, and on the evidence put before me by the Commissioner, there plainly is none, the mere fact that an applicant has been neglectful is by itself not sufficient to justify the refusal of an extension of time.

51.  Ms Wu sought also to argue that the provisions of r 12F(2)(e) ought to be taken into account.  Regulation 12F relates to the preliminary determination that the Commissioner must make whether to accept or refuse an application for a personalised registration mark.  Regulation 12F(2)(e) provides:

“(2)  Without prejudice to the generality of the Commissioner’s discretion under subregulation (1), the Commissioner shall refuse an application if, in his opinion, the proposed personalised registration mark-

(e)  is confusing to the purposes of law enforcement.”

52.  With the greatest respect to Ms Wu, I was completely unable to follow her argument.  The argument appeared to be based upon the contention that because the mark would not be available to the public there would be confusion in law enforcement.

53.  There are only two possible scenarios.

54.  First, once the mark is allocated a particular person that mark, or a similar mark which might cause confusion, will not be available to the public.  That situation enures until the allocated mark is either assigned to a motor vehicle, or canceled.  No confusion arises in that situation.  There may be a period between the expiry of the 12 months within which application for assignment may be made, and the cancellation of the mark, upon the exercise by the Commissioner of the discretions referred to above, when a member of the public may not know whether or not the mark will become available.  The fact that another member of the public might have sought the mark could well be a relevant factor to take into account in the exercise of discretion as to whether or not to extend the time. 

55.  It is right that during that period, until the cancellation of the mark, the mark will not be available to any other member of the public. But that does not raise a matter of “confusion for the purposes of law enforcement”.

56.  Second, if upon the expiry of the 12-month period no application for assignment of the mark is made, and the mark is cancelled, the mark may then be the subject of application, and again put up at auction.  Again, no matter of confusion for the purposes of law enforcement arises.

57.  Plainly, the expression “confusing to the purposes of law enforcement”, relates to the likelihood of a mark being so similar to some other mark as to lead to confusion on the part of police officers or other law enforcement officers in distinguishing between particular marks.  In those circumstances it can be argued that to permit the mark to be allocated may lead to confusion for the purposes of law enforcement.  The submission bore all the hallmarks of the Commissioner clutching at straws.

58.  As to the exercise of the discretion I accept Mr Lee’s submission that this particular discretion is one which ought to be exercised by the Commissioner on a broad and generous basis. 

59.  An acceptable explanation for the delay of 14 days has been offered.  To reject the explanation as the delay would be to demand a level of perfection on the part of all applicants which would be quite unjustified, bearing in mind the fact that almost inevitably every application for extension of time will be consequent upon neglect on the part of an applicant, whether it be in simply filing the application, or the applicant putting himself in a position where he has a vehicle to which the mark may be assigned.  The important factor about the delay will be whether or not there is an acceptable explanation, and the length of the delay. 

60.  If no explanation for the delay is offered, or the length of the delay is long and unjustifiable, then plainly the Commissioner would be entitled to refuse the application.

61.  There is no suggestion on the part of the Commissioner that any person has been prejudiced by the delay.  The fact that the marks are not available to other members of the public during the 12-month period is not a matter of prejudice, but an inevitable consequence of the system that has been established.

62.  In all the circumstances there is every basis upon which the discretion ought to be exercised in favour of the applicant.

Costs:

63.  The application for judicial review has succeeded in all respects.  The Commissioner must pay the applicant’s costs of an incidental to the application, to be taxed on a party and party basis.