SABINANO II MARCEL R v. MUNICIPAL SERVICES APPEAL BOARD (“MSAB”)

HCAL 170/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 170 OF 2013

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D E C I S I O N

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Introduction

1. This is an application for leave to apply for judicial review of the decision of the Municipal Services Appeals Board (“MSAB”) dated 25 October 2013 which dismissed the appeal of the applicant against the decision of the Liquor Licensing Board (“LLB”) to impose three conditions on the newly issued liquor licence in respect of the premises known as “iCON” situated at the ground floor, Parekh House, 63 Wyndham Street, Central, Hong Kong (“the premises”).

2. Having considered the relevant papers, I directed that a copy of the application be served on the MSAB as the Putative Respondent and the LLB as the Putative Interested Party and that the application be dealt with by way of a hearing with notice to the MSAB and the LLB.  The MSAB advised in writing that it took a neutral stance in relation to the application and would not participate in the proceedings.  The LLB attended the hearing and filed written submissions opposing the application.

3. At the hearing, the applicant sought leave to amend the Form 86 to include an application for interim relief.  The amendment was granted.

Liquor licence process

4. The applicant is an employee of the company that operates a restaurant and bar at the premises.  The premises are situated at the ground floor of a commercial building within a commercial zone area and a locality known for its restaurants and bars.

5. The applicant applied to the LLB for a new liquor licence for the premises on 7 January 2013.  It was heard by the LLB in an open hearing on 30 April 2013 which issued a liquor licence for 12 months subject to the following three conditions:

(a)  All doors and windows of the premises shall be kept closed between 11:00 pm and 8:00 am the following day;

(b)  No liquor shall be sold or supplied for consumption on the premises between 2:00 am and 8:00 am; and

(c)  No music or loudspeaker or other sound amplification device shall be played or used on the premises between 11:00 pm and 8:00 am the following day.

6. On 3 May 2013, the applicant appealed to the MSAB against the LLB’s decision to impose the three conditions.  The MSAB considered the appeal on 19 July 2013, which it dismissed on 25 October 2013 without giving reasons.  Reasons were later handed down on 11 November 2013.

7. It appears that the issue concerning the liquor licence was whether the proposed restaurant and bar would generate noise at levels or at times that needed to be addressed by means available under the licensing scheme laid down by the legislation.[1]  This required taking into account all the facts and circumstances, and if necessary, striking an appropriate balance between relevant interests that are shown to compete or conflict with each other.

Grounds for judicial review

8. The applicant makes his application on several grounds in order to show that there is a reasonably arguable claim which enjoys realistic prospects of success.[2]

Mistakes of fact

9. The applicant argues that the MSAB was improperly influenced in its decision by its erroneous conclusion that the three conditions and the process by which the LLB made its decision were “beyond reproach”.[3]  In submissions, it was argued that the MSAB may have been unduly influenced by the LLB’s decision and may not have properly applied its own mind to the issues by way of a rehearing.[4]

10. By relying on the LLB’s decision, it is argued that the MSAB made mistakes as to the fact (i) that most of the bars in the neighbourhood were required to keep their doors and windows closed after 11:00 pm or even earlier; (ii) that premises free from additional licensing conditions ceased operation at 11:00 pm; and (iii) that Parekh House and the building of one of the objector’s shared a common wall.  It is further argued that these mistaken facts played a material role in the MSAB’s decision.

11. The applicant also argues that the MSAB wrongly concluded that iCON’s main business was selling of liquor and not playing music which justified the imposition of the conditions (a) and (c).[5]  It is argued that the playing of music was part of iCON’s business as a place of entertainment. 

12. The LLB submitted that the MSAB did not rely on any mistaken facts or adopt the findings of the LLB.  It was argued that the factual matters were neither mistaken nor material but the points made in response fuelled the applicant’s arguments and satisfied me that the applicant’s complaints are reasonably arguable.

Irrelevant considerations

13. The applicant argues that the MSAB took into account irrelevant considerations in that:

(i)  it stated in its reasons that a removal of the three conditions would risk opening a floodgate to claims by neighbours when there was no basis for such a statement;[6]

(ii)  it concluded that since iCON would be an additional bar already operating in the same building more stringent conditions should be imposed when the other bar was located on the sixth floor and there was no evidence that iCON would generate additional noise;[7] and

(iii)  it decided that restricting iCON’s selling hours was reasonable since it created a break to prevent “round-the-clock” drinking which would protect customers when other bars in the vicinity were licensed to sell liquor after 2:00 am.[8]

14. The LLB submitted that references by the MSAB to these matters were only a different way of presenting the relevant considerations of the impact of noise levels on the neighbourhood, and in any event did not play a significant part in the MSAB coming to its decision. Nevertheless, I am of the view that the complaints are reasonably arguable.

Relevant considerations

15. The applicant argues that when the MSAB concluded that iCON would generate “additional noise” requiring more stringent conditions than those imposed on the other bar in the same building, it failed to properly consider, if at all, that iCON’s premises had been equipped with high quality sound proofing devices.[9]  It was urged upon me that the MSAB should have fully addressed and considered this factor as it was highly relevant, but instead gave it little, if any, regard.  I am of the view that the ground is reasonably arguable.

16. In the course of the applicant’s submissions, it was also stressed that the premises are located in a commercial zone which was not given any or sufficient consideration by the MSAB.[10]  The LLB argued that the MSAB gave weight to the planning code, and in any event it did not remove the MSAB’s powers to consider representations from residents and impose additional licensing conditions.  There is no dispute that the MSAB can and should consider representations from third parties that may be affected by the grant of the licence and that the MSAB has the power to impose conditions on the licence.[11] This response misses the point and does not address the complaint made by the applicant as to whether, if at all, the MSAB took into account the commercial zoning and what weight, if any, it gave to it when considering the imposition of conditions to a permitted use where there were other interests to consider, such as the interests of nearby residents.  This required the MSAB to strike an appropriate balance between the relevant interests. 

17. The LLB also argues that how these interests “should be balanced is solely a matter within the MSAB discretion.”[12]  But if an interest has been considered to the exclusion of another, this is not balancing the interests concerned and that is the complaint of the applicant. 

Inconsistent and unequal treatment

18. The applicant argues that the three conditions imposed on the liquor licence to iCON is inconsistent with the grant of licence with or without conditions to other licensed premises in the vicinity of the premises, and this has resulted in unequal treatment.

19. The LLB submitted that there was no inconsistent or unequal treatment of the applicant by the MSAB in its decision.  There were detailed submissions made by LLB on the grant of liquor licences and conditions imposed on the numerous other entertainment establishments in the vicinity of the premises and to my mind it raised the question as to whether the appropriateness of the conditions on the liquor licence to the applicant had been fairly and reasonably considered.

Leave granted

20. In light of the foregoing, I am of the view that the test is satisfied for leave to apply for judicial review of the decision of the MSAB and accordingly I grant the leave sought by the applicant.

Interim relief

21. On leave being granted, the applicant seeks an order for an expedited substantive hearing and an interim order staying the operation of the second and third conditions imposed on the liquor licence pending determination of the judicial review or alternatively, an interim order to remit the appeal to the MSAB with a direction to exercise its power under section 7(1) of the Municipal Services Appeal Ordinance, Cap 220, to grant a liquor licence in respect of the premises without any conditions as to liquor selling hours or music playing hours pending determination of the judicial review.

22. The liquor licensing system is established under the Dutiable Commodities (Liquor) Regulations, Cap 109.  The LLB may grant a liquor licence application without conditions or subject to such conditions as it thinks fit, or refuse such an application.[13]  Under regulation 17(2):

“(2) The Board shall not grant a liquor licence unless it is satisfied –

(a) that the applicant is a fit and proper person to hold the licence;

(b) that the premises to which the application relates are suitable for selling or supplying intoxicating liquor, having regard to –

(i) the location and structure of the premises; and

(ii) the fire safety and hygienic conditions in the premises;

(c)  that in all the circumstances the grant of the licence is not contrary to the public interest. ”

The applicant or 20 or more persons residing in a radius of 400 metres from the premises may appeal to the MSAB against the decision.[14]

23. In determining an appeal the MSAB:

“(a) may exercise all the powers and discretions that are conferred on the person who made the administrative decision or the first decision, as the case may require;

(b) shall affirm, vary or set aside the administrative decision or the appeal board decision and, where it sets aside the administrative decision or the appeal board decision, it shall substitute its own decision.”[15]

24. The appeal hearing before the MSAB is a rehearing.[16]  It takes the role and function of the decision maker whose decision is being appealed and it makes a new decision.  It is required to decide all over again whether or not to grant a licence or to impose conditions on the licence if granted.

25. When an aggrieved party applies for leave to apply for judicial review of the MSAB’s decision, Order 53, rule 3(10) (a) may take effect. It provides that where leave to apply for judicial review is granted and if the relief sought is an order of prohibition or certiorari, the court can direct that the grant of leave operate as “a stay of the proceedings to which the application relates” until the determination of the application or until the court otherwise directs.  The court has therefore power to stay the proceedings which are the subject of the application for judicial review.

26. A similar provision was examined by the Judicial Committee of the Privy Council in Minister of Foreign Affairs, Trade and Industry v Vehicles and Supplies Ltd and Anor.(“Minister of Foreign Affairs”).[17] In that case, the Judicial Committee was concerned with the power under section 564B (4) of the Judicature (Civil Procedure Code) Law, which is similarly worded to Order 53, rule 3 (10)(a), and whether a minister’s decision made in the exercise of statutory powers for the allocation of the importation of vehicles could be stayed under this provision.  The Judicial Committee held that the minister’s executive decision as to allocation which had already been made did not constitute “proceedings” capable of being stayed under section 564B (4). The Judicial Committee said that the wording of the provision made perfectly good sense in the context of proceedings before an inferior court or tribunal, but that it could have no possible application to an executive decision which had already been made.  It further observed that in the context of the allocation which had already been decided and was in the course of being implemented by a person who was not a party to the proceedings it was simply meaningless. It was held that there were no “proceedings” in being upon which the “stay” could take effect.

27. This Judicial Committee’s decision was addressed in light of Order 53, rule 3(10) (a) by Bokhary J (as he then was) in Anglo Starlite Insurance Co Ltd v The Insurance Authority.[18]  In that case, the applicant had applied successfully for leave to apply for judicial review of certain decisions of The Insurance Authority.  At the same time, the judge directed that the grant of leave operate as a stay of these decisions and of their implementation or enforcement until the determination of an inter partes application for such a stay. Bokhary J in his analysis of the advice of the Judicial Committee in Minister of Foreign Affairs explains that the situation that the Judicial Committee had to address was somewhat unusual which he highlighted by reference to the following observation by Lord Oliver of Aylemton, who delivered the advice of the Judicial Committee:

“It will thus be seen that in making the determination the minister, though no doubt acting within a discretion which must be properly exercised, performs a purely executive function which is exhausted once the determination has been made. The responsibility for implementing the determination then devolves upon the specified importer to whom the communication has been issued.”[19]

28. Bokhary J adopted the definition of “proceedings” as stated by Taylor LJ in R v Licensing Authority, ex parte Smith Kline (No 2)[20] to “include any procedure by which a decision challengeable on judicial review is reached and implemented.”  He observed that in Minister of Foreign Affairs the process of implementation was not encompassed in the matter to be challenged by way of judicial review and therefore what the application for judicial review related to did not amount to proceedings and no question of a stay of proceedings could arise.  He noted that the case before him, the process of implementation was encompassed in the decision under judicial review.  He stressed that together the process by which challenged executive decisions were reached and the process by which they would be implemented amount to proceedings within the meaning of Order 53, rule 3(10)(a). 

29. It is important to understand what is the nature of a stay of proceedings and this was explained by Lord Oliver of Aylemton in Minister of Foreign Affairs as follows:[21]

“A stay of proceedings is an order which puts a stop to the further conduct of proceedings in court or before a tribunal at the stage which they have reached, the object being to avoid the hearing or trial taking place.”

30. A stay of proceedings imposes a halt on proceedings.  The proceedings that are stayed by an order under Order 53, rule 3(10) (a) in the circumstances of this case are the processes by which the decision of the MSAB was reached and implemented.

31. In the present case, the MSAB dismissed the appeal which by implication and its reasons affirmed the decision of the LLB to grant to the applicant a 12 months liquor licence subject to the three conditions.  In this instance, “a stay of the proceedings to which the application relates” is a stay of the proceedings of the MSAB which includes the implementation of the decision to grant the liquor licence with the three conditions.  The effect of such an order would mean that the decision of the LLB to grant a licence to the applicant would still be operative until the MSAB’s decision was resolved by judicial review which may result in the decision being either maintained or reheard.

32. Can the court do more in order to protect the position of an applicant who has or may have been unfairly or unreasonably treated?  I considered this question in McGettigan and Anor v MSAB.[22]

33. But in that case, the MSAB had previously made an order granting an interim renewal of the liquor licence to the licensee pending final determination of the appeal.  The grant of leave in that case was ordered to operate as a stay of the proceedings to which the application related which was the final determination of the appeal.  This stayed the processes by which the decision was reached and implemented and hence

the final determination of the appeal was still pending until the judicial review was determined and the order granting the interim liquor licence was still operative in the meantime.  I note the issue as to whether the MSAB has the power or discretion to grant an interim stay pending the appeal was considered and affirmed by Au J in Siano, Clare Podsok v LLB (“Siano”), [23] which I will address in more detail later.

34. In Cheung Kwok-hung v LLB (“Cheung Kwok-hung”), [24] the renewal of a liquor licence was refused by the LLB and the applicant appealed the decision of a judge to set aside a previous order he made directing the LLB to renew the licence pending the hearing of an application of judicial review of the refusal to renew the licence.  Godfrey JA made the point that the LLB is under a statutory duty to implement the licensing scheme laid down by the legislation under which it is constituted and it cannot properly grant licences to people simply because somebody, even a judge, tells it to do so without regard to its statutory duties.  He explained that by not extending the liquor licence to the applicant in the meantime, a practical problem arose until such time as the applicant’s application for judicial review was resolved.  He noted that even if the applicant succeeded with his application, “the court can only order that there be a re-hearing of his application to the Board; it cannot order the Board to grant him a new licence.  Since it cannot do so on a final basis a fortiori it cannot do so on an interim basis.”[25]

35. Godfrey JA concluded that he had no power to provide the interim relief of an order for mandamus ordering the LLB to grant the applicant a new licence.  He noted that section 23(i) of the Supreme Court Ordinance, Cap 4[26] provided that any order of mandamus must be final and therefore no interim order could be made.  He expressed concern that there was a lacuna in the law in that it did not provide a licence, the subject of an appeal from a refusal, to continue until the appeal was heard.[27]  Godfrey JA did not have the benefit of the decision of the Court of Final Appeal in PCCW-HKT Telephone Ltd v Telecommunication Authority (“PCCW-HKT”). [28]  As a consequence, Godfrey JA’s concern has been to some extent now addressed in Siano where Au J held that the MSAB had an implied power to grant an interim stay of the operation of the appealed decision.  He did not need to resolve whether the MSAB has an implied power to extend a liquor licence beyond its expiry date or grant an interim liquor licence pending determination of the appeal but I am of the view that the MSAB has such an implied power for the same reasoning that he decided that the MSAB had an implied power to grant an interim stay.

36. I respectfully adopt the reasoning of Au J in Siano at paragraph 23:

“Applying the principles in PCCW-HKT to the present case, subject to there being a provision in the enabling statute expressly prohibiting it, I am of the clear view that a discretionary power to grant a interim stay is reasonably required for the Appeal Board’s effective exercise of its power to determine an appeal. This is because:

(1) The powers conferred to the Appeal Board by s7(1) of the MSABO enable it to mount a full review on merits of the relevant decision under appeal.

(2)  It is thus obvious that a suspension of the relevant decision or order may in some cases be essential if the Appeal Board’s powers for disposing of the appeal are effectively to be exercised upon determining the appeal.  There can accordingly be no doubt that it is reasonably necessary to imply such a power to enable the Appeal Board effectively to carry out its statutory appellate function.”

37. The principles laid down in PCCW-HKT provide that the power will be implied where it can be shown that it is necessary in the sense of “reasonably required” for the effective exercise of the statutory jurisdiction expressly conferred on the inferior court or tribunal concerned and the enabling statute does not expressly prohibit such a power.  It is my view that a discretionary power to grant an extension of the liquor licence or an interim liquor licence pending final determination of an appeal is reasonably required for the MSAB’s effective exercise of its power to determine an appeal. 

38. There may be circumstances where it would be contrary to the objects of the licensing scheme laid down by the legislation if a licensee is without a licence awaiting a decision of the MSAB.  For example, where a licence under appeal has or is about to expire and the MSAB has not yet made its decision.  It should be stressed this would be an interim measure pending the final determination of the matter under appeal.

39. In Baynham Paul and Anor v LLB (“Baynham”),[29] Reyes J had granted leave to apply for judicial review of the decision of the LLB refusing to transfer a liquor licence to another where the current licensee sought to cancel the licence with effect from 1 April 2010.  The licence was due to expire on 4 May 2010.  Reyes J had directed that there be a stay of the effect of the cancellation of the licence such that the licence would be deemed to remain valid until the determination of the judicial review or further order.[30]  It was argued that the court could not make an order which had the effect of extending a licence beyond the expiry date fixed by a licensing authority. Godfrey JA’s comments in Cheung Kwok-hung were cited in support.  Reyes J disagreed and noted Godfrey JA’s comment on the unsatisfactory situation which would arise if the court was unable to extend a liquor licence pending the resolution of a judicial review.  He held that his direction was within the court’s inherent jurisdiction “to take measures to safeguard its procedures and preserve a status quo pending the substantive determination of a dispute.”[31]

40. It is also particularly significant that under Order 1A of the Rules of the High Court, rule 2 provides that the court is obliged to give effect to the underlying objectives of the rules when it exercises any of its powers, whether under its inherent jurisdiction or given to it by the rules or otherwise.  To this end, the court must always recognize that the primary aim in exercising the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.  When the court exercises its supervisory jurisdiction over inferior courts, tribunals and other persons and bodies that perform public duties or functions, it can in my view take measures under its inherent jurisdiction and under the rules, to protect the position of an applicant who has or may have been unfairly or unreasonably treated.  I agree with Reyes J that this may include a direction that the licence remain in force until the determination of the judicial review, given that the MSAB has an implied power to stay a decision under appeal, and to extend a liquor licence or to grant an interim liquor licence the subject of the appeal, until the final determination of the appeal.

Stay of conditions or remit for a grant of licence

41. I have been asked to make an interim order staying the operation of the second and third conditions of the licence pending determination of the judicial review.  As I have already discussed, I have the power to stay the proceedings to which the application relates, and I am of the view that I can stay the proceedings in whole or in part in doing justice to the matter.  I have also been asked to make an order directing the MSAB to grant a liquor licence without conditions pending the determination of the judicial review.  I am mindful however that the function of the court on review is to check that the authority has been properly exercised and not to review the merits of the matter for that is the function of the person or body under review. That said, a judicial review is the means by which judicial control of administrative action is exercised [32] and there may be circumstances where the court in the exercise of its inherent jurisdiction makes an order to achieve justice or to prevent an injustice.

42. I have carefully considered the applicant’s position and I am of the view that the most appropriate relief in the circumstances is to direct that there be an expedited hearing.

Orders

43. In light of the foregoing reasons, I grant leave to the applicant to apply for judicial review of the decision of the MSAB dated 25 October 2013.  I order an expedited hearing for the substantive application for judicial review.  I also order that costs be in the cause.

[1] Dutiable Commodities Ordinance, Cap 109, the Dutiable Commodities (Liquor) Regulations.

[2] Po Fun Chan v Winnie Cheung (2007) 10 HKCFAR 676.

[3] MSAB decision at paragraph 40.

[4] See Robert Mark Tai Sen Choy v MSAB, HCAL 1448/2001

[5] MSAB decision at paragraph 48.

[6] Ibid at paragraph 43.

[7] Ibid at paragraph 46.

[8] Ibid at paragraph 49.

[9] Ibid at paragraph 47.

[10]Draft Sai Ying Pun & Sheung Wan Outline Zoning Plan No 2/H3/28 gazetted 12 October 2012. The premises are located within a “commercial (4)” zone which is primarily for commercial developments. See also section 13 of the Town Planning Ordinance, Cap 131.

[11]The Regulations recognise the rights of third parties for regulation 17(5) provides that 20 or more persons residing within a radius of 400 metres from the premises may appeal to the MSAB against a decision of the LLB.

[12]The LLB’s written submission dated 17 December 2013.

[13] Regulation 17 of the Dutiable Commodities (Liquor) Regulations, Cap 109.

[14] Regulation 17(5).

[15] Section 7(1) of the Municipal Services Appeal Board Ordinance, Cap 220.

[16] Robert Mark Tai Sen Choy v MSAB, HCAL 1448/2001, 15 October 2001, (unreported) at paragraphs 15-22, and 26, per Yeung J.

[17] [1991] 1 WLR 550.

[18] [1992] 2 HKLR 31.

[19] At page 553F.

[20] [1990] 1QB574 at 604E.

[21] At 556 E-G.

[22] HCAL 168/2013, 5 December 2013, (unreported) at paragraphs 28-36.

[23] HCAL No 97 of 2012, 17 August 2012, unreported, at paragraphs 13-40. Au J applied the principles laid down by the Court of Final Appeal in PCCW-HKT Telephone Ltd v Telecommunication Authority (2005) 8 HKCFAR 337.

[24] [1995] 2 HKLR 456

[25] At pages 458 line 45 to 459 line 5.

[26] See section 21I of the High Court Ordinance, Cap 4 which provides the same.

[27] Godfrey JA also expressed in strong terms that the court should have the power to act to protect an applicant who has been or may have been treated by the LLB illegally, irrationally or improperly. See also the remarks of Reyes J in Baynham at paragraph 29 and myself in McGettigan Brian Kevin at paragraph 35.

[28] (2005) 8 HKCFAR 337 at paragraphs 35-50 per Bokhary PJ and paragraphs 60-62 per Ribeiro PJ.

[29] HCAL No 38 of 2010, 25 August 2010

[30] Ibid at paragraphs 4-22.

[31] Ibid at paragraph 20. See also McGettigan Brian Kevin at paragraph 35.

[32] Council of Civil Service Unions v Minister for Civil Service [1985] AC 374.