CHENG SUK YEE v. THE COMMISSIONER FOR TELEVISION AND ENTERTAINMENT LICENSING

HCAL 14/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 14 OF 2006

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J U D G M E N T

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I.       Introduction

1.  Ms. Cheng wishes to operate an Amusement Games Centre (AGC) at Aldrich Garden.  She seeks judicial review against the Commissioner’s refusal of an AGC license.  The Commissioner’s refusal is evidenced by letters of 16 and 21 December 2005.

2.  The Commissioner initially rejected Ms. Cheng’s application for an AGC at Aldrich Garden on 26 January 2005.  Ms Cheng then appealed to the Amusement Games Centre Appeal Board.  On 9 July 2005 the AGC Appeal Board allowed Ms. Cheng’s appeal and ordered that the Commissioner issue an AGC licence to Ms. Cheng subject to certain conditions.  The Commissioner did not seek judicial review of the AGC Appeal Board’s decision.

3.  By her 16 December 2005 letter the Commissioner indicated to Ms. Cheng for the first time that, despite the Appeal Board’s decision, an AGC licence would not be issued.  This was because (the Commissioner pointed out) Aldrich Garden fell within an area zoned as “Residential (Group A)” (R(A)) in approved Shau Kei Wan Outline Zoning Plan No.S/H9/14 (the OZP).  An AGC being a “Place of Entertainment” within the terms of the OZP, Ms. Cheng (the Commissioner argued) needed planning permission from the Town Planning Board (TPB) before she could run an AGC within an area zoned R(A).

4.  The Commissioner says that the AGC Appeal Board’s extant order is not a relevant factor.  By her 16 and 21 December letters and later correspondence, the Commissioner has reasoned that she cannot legally issue a licence when to do so will breach the OZP and the Town Planning Ordinance (Cap.131) (TPO).

5.  Ms. Cheng has not applied to the TPB for permission.  She contends that in refusing a licence the Commissioner erred in fact and law.  Ms. Cheng further alleges that the Commissioner acted unfairly, in abuse of discretion, and contrary to Ms. Cheng’s legitimate expectation.

II.      Background

6.  On 16 August 2004 Tanaka Company (which Ms. Cheng controls) entered into a provisional tenancy agreement for Shop 60, 1st Floor, Aldrich Garden (the premises).  The premises are located in the car park block of Aldrich Garden. 

7.  Ms. Cheng intended to operate an AGC to be known as “Space Zone” at the premises.  Accordingly, on 19 August 2004 Ms. Cheng applied for an AGC licence as required by the Amusement Games Centre Ordinance (Cap.435) (AGCO). 

8.  As noted above, the Commissioner refused that application.  The Commissioner did so on the basis that she was not satisfied that the premises were suitable for the operation of an AGC.  By AGCO s.5(4)(b)(ii), the Commissioner had to be so satisfied before she could issue a licence.

9.  The AGC Appeal Board, however, quashed the Commissioner’s refusal.  The AGC Appeal Board instead ordered that a licence ought to be granted subject to the following conditions:-

“(a) [Ms. Cheng] shall personally supervise the management and operation of the Proposed AGC.

(b) The licence shall have a restriction of opening hours up to but not beyond 10:00 pm on any day.

(c) Surveillance CCTV cameras shall be installed outside each entrance and/or exit of the Proposed AGC for monitoring purposes.

(d) [Ms. Cheng] shall employ 18 staff, 4 of whom shall be responsible for the maintenance of security.  There shall be at least 2 security staff in charge of security of the Proposed AGC at any given time during the operation hours and they shall be in uniform.

(e) Plainclothes staff shall be deployed to patrol the Proposed AGC to monitor customer behaviour.

(f) [Ms. Cheng] shall install 4 CCTV cameras inside the Proposed Premises in addition to the security cameras at the entrance and/or exit of the Proposed AGC.

(g) [Ms. Cheng] and her staff shall pay close attention to the behaviour of customers of the Proposed AGC and shall report to the police of any nuisance, disturbance and/or of any matter affecting in any way the security of the area and the public order.

(h) [Ms. Cheng] shall strictly adhere to all such other conditions as may be imposed by the Commissioner in the licence.”

10.  In coming to its decision, the AGC Appeal Board noted that strong objections had been lodged by organisations and residents in the Aldrich Garden area.  Objectors included the Aldrich Garden Owners Committee, and some 2,473 apparent signatories to a petition.  In addition, representations against the grant of an AGC licence had been received from 2 LegCo members, a District Board member and the Association for the Promotion of Mutual Assistance of Housewives.

11.  In essence, the opponents of the licence expressed concern that the AGC would attract undesirable elements to Aldrich Garden.  That (it was feared) could potentially corrupt the morals of children living in the area as well as disturb the security and tranquillity of the neighbourhood.

12.  Nevertheless, the AGC Appeal Board concluded as follows:-

“In balancing the opposing views and interests of [Ms. Cheng] on the one hand and those of the local residents on the other, we need to consider whether [Ms. Cheng’s] interest in commencing an AGC at the Proposed Premises is displaced by consideration of any reasonable local objection to an extent that makes the location unsuitable for an AGC.  The latter is not a mere numbers game.  In the exercise, we looked at the quantity and, more importantly perhaps, the quality of the local objections. In this particular case, whilst we accept that there were significant objections by people living and working in the neighbourhood, taking all the facts and circumstances of this case into the weighing scale, we do not consider that [Ms. Cheng’s] application should be rejected outright, but that she should be given a trial period of one year to make it work.”

13.  In the end, the AGC Appeal Board observed that the balance in the case was “a tight one” and it was “a matter which reasonable people, applying themselves to the question in all good faith, could come to different conclusions”.

14.  On 16 September 2005 Crown Stand Investment Ltd. (a company controlled by Ms. Cheng) entered into a Tenancy Agreement for the premises.

15.  Following the AGC Appeal Board’s decision, the Commissioner did not revert to Ms. Cheng about her AGC licence until a letter of 16 November 2005. 

16.  By that letter, the Commissioner stated that, if a licence were granted, it would only be for a trial period of 12 months.  In any event, before any licence could be issued, there had to be compliance with specific regulations.  The Commissioner identified those regulations as follows (in translation):-

“(a) the requirement and conditions of the sanitary and ventilation system;

(b) the standard conditions for licence holding;

(c) standard fire protection installation regulations;

(d) standard requirements of noise mitigation (together with good practices on Ventilation System/ Pumping System Noise Control);

(e) standard requirements for no smoking sign;

(f) standard requirements for lightings and signage of the front door; and,

(g) standard fire safety requirements for the mechanical ventilation system.”

17.  By her letter of 16 December 2005 the Commissioner, out of the blue, drew Ms. Cheng’s attention to the OZP.   The premises not having been previously used for an AGC, Ms. Cheng (the Commissioner wrote) had to obtain planning permission from the TPB before an AGC licence could be issued.

18.  On 17 December 2005 Ms. Cheng advised the Commissioner that she had complied with the terms of the 16 November 2005 letter.  Ms. Cheng requested that the Commissioner arrange for an inspection of the premises.

19.  By her letter of 21 December 2005 the Commissioner repeated that the TPB’s permission was needed before an AGC licence could be issued.

20.  The Commissioner accepts that the requirement of TPB planning permission was not raised prior to the 17 and 21 December 2005 letters.  She has explained in affidavit that this was because the officer handling Ms. Cheng’s file did not know of the restriction imposed by the OZP until about 9 December 2005.

21.  When processing applications for an AGC, the Commissioner’s staff normally consult the District Lands Officer (DLO) of the relevant area.  In this case, upon being consulted, the DLO for Hong Kong East (where Aldrich Garden is situated) did not advise of any necessity to consult the Planning Department.

22.  It was only later, when processing an unrelated AGC application involving Yuen Long, that the Commissioner’s officer became aware of the possibility of zoning restrictions in relation to Aldrich Garden.  At that point, the officer then made inquiries of the District Planning Officer of Hong Kong East.

23.  It is the Commissioner’s case that, although belated, now being cognisant of a need for planning permission, it would be unlawful to issue an AGC licence to Ms. Cheng.

24.  On the other hand, Ms. Cheng claims to have spent considerable sums of money in purchasing amusement machines and readying the premises for use as an AGC in compliance with the November 2005 letter.  She says that she is entitled to a licence without further reference to the TPB and claims damages resulting from the failure to issue an AGC licence to date.

III.     Discussion

A.      Error of fact

25.  As an area zoned R(A) (such as Aldrich Garden), the OZP requires the TPB’s permission to be obtained before some part of the area can be used as a “Place of Entertainment” (including an AGC).

26.  But that stricture is subject to the following note in the OZP:-

“In addition, the following uses are always permitted:-

(a) on the lowest three floors of a building, taken to include basements; or,

(b) in the purpose-designed non-residential portion of an existing building,

both excluding floors containing wholly or mainly car parking, loading/ unloading bays and/or plant room:-

...

Place of Entertainment

...”

27.  The premises are on the 1st floor of Aldrich Garden’s car park block, one the 3 lowest floors of the building structure.  Further, the car park block is a commercial (non-residential) portion of Aldrich Garden. 

28.  Thus, subject to a proviso, use of the premises as a “Place of Entertainment” is permitted under the OZP.  The proviso is that the 1st floor must not be “wholly or mainly car parking, loading/ unloading bays and/or plant room”.

29.  The parties disagree as to whether the 1st floor of the car park block is or is not caught by the proviso.

30.  The 1st floor consists (among other things) of:-

(1) 33 car park spaces with a total usable area of 420.75 sq. m.; and,

(2) the premises with a total usable area of 488.354 sq. m.

31.  Mr. Cooney (appearing for Ms. Cheng) submits that the 1st floor does not fall within the proviso as it is neither wholly nor mainly used for car parking.

32.  Mr. Wesley Wong (appearing for the Commissioner) points out that Mr. Cooney has failed to take account of “the area of the driveway which forms part of the car park and the area of the plant rooms on the same floor”.  Mr. Wong instead suggests that the total floor area of the 1st floor is about 2,867 sq. m. of which the premises only take up 488.354 sq. m.  In contrast, the car parking spaces, driveway and plant rooms (the Commissioner says) measure about 2,000 sq m (about 70% of the total area).  The remainder of the 1st floor consists of corridors, staircases, toilets, planters, escalators, lift lobbies and lift shafts.

33.  In my view, neither is wholly correct.

34.  A driveway is not part of a car parking space.  One cannot, for instance, park a car in a driveway.  To do so would create an obstruction in an area which is intended for the benefit of all, to pass and re-pass.  I therefore do not think that the Commissioner is right to include the driveway in her calculation of the area of the 1st floor devoted to car-parking, loading and unloading bays and plant room.  The Chinese text for “car-parking” (停車位) in the OZP supports this view.

35.  On the other hand, Mr. Cooney’s figure does not consider plant rooms.  The floor area of these should be added to that of car parking in order to determine whether the 1st floor falls within or without the proviso.

36.  A rough calculation suggests to me that car parking, loading and unloading bays, and plant room only make up some 30% of the 1st floor.  The premises (including its switch room) make up another 30%.  The driveway, lifts, toilets, etc. covers the rest of the 1st floor (about 40%).  If one adds the latter percentage to that of the premises, one arrives at about 70%.  This means that the 1st floor is not largely car-parking, loading and unloading bays and plant room.

37.  Consequently, the proviso is inapplicable.  It is open to Ms. Cheng under the note to the OZP to operate an AGC from the 1st floor without further reference to the TPB.  The Commissioner has erred in fact (in relation to the percentage uses of the 1st floor) in thinking otherwise.

B.      Error of law

38.  Assume that I am wrong in thinking that the OZP, properly construed, does not require the TPB’s permission to run an AGC out of the premises. 

39.  Even then Mr. Cooney submits, given the AGC Appeal Board’s order, the Commissioner was wrong to refuse to issue an AGC licence. 

40.  The AGC Appeal Board’s order, never having been set aside, remains in force.  The Commissioner has failed to comply with that order. 

41.  Had the Commissioner wished to take the planning permission point, she ought (Mr. Cooney reasons) to have raised it before the Appeal Board.  She did not.  The result (Mr. Cooney says) is that she is estopped by res judicata.

42.  That the Commissioner was unaware of the OZP requirement at the time of the AGC Appeal Board hearing is (according to Mr. Cooney) neither here nor there.  A mistake as to one’s legal rights is commonplace.  That is normally insufficient to displace the res judicata principle.  This is because there must be finality to litigation, including that before a statutory tribunal such as the AGC Appeal Board.

43.  It follows (Mr. Cooney concludes) that, as a matter of law, given the extant order to grant a licence, the Commissioner could not refuse the grant of a licence on the basis of the OZP.

44.  In response, Mr. Wong submits that the Commissioner has no discretion to issue a licence where there is a want of planning permission under the OZP.  Estoppel cannot (Mr. Wong stresses) confer upon a public officer an authority which such person does not have.

45.  I believe that Mr. Cooney is right.

46.  In my judgment, the Commissioner retains a residual discretion to override the requirements of the OZP.  This is apparent from Town Planning Ordinance (Cap.131) s.13 which stipulates:-

“Approved plans shall be used by all public officers and bodies as standards for guidance in the exercise of any powers vested in them.”

47.  The OZP merely serves as a “standard of guidance” for the Commissioner’s exercise of her power under AGCO s.5(4)(b)(ii).  The latter provision states:-

“The Commissioner shall not grant a licence unless he is satisfied in relation to the proposed operation of the amusement game centre, that:-

(a) ...

(b) the place of proposed operation is:-

         (i) ...

         (ii) located in an area suitable for the operation of an amusement game centre.”

48.  Mr. Wong contends that the wording (including the Chinese text) of AGCO s.5(4)(b)(ii) requires the Commissioner automatically to reject an AGC licence application where it offends against a draft or approved plan.  But I am unable to accept this.  The wording of s.5(4)(b)(ii) plainly leaves a discretion upon the Commissioner.  She must determine whether she is “satisfied”.

49.  Certainly, where an application contravenes a zoning plan, that would be a compelling factor which might justify the Commissioner in rejecting the proposed AGC in the exercise of her discretion.  That, however, is different from saying that the Commissioner has no discretion at all.

50.  Accordingly, a res judicata arising from the AGC Appeal Board’s order would not be conferring upon the Commissioner an authority to licence something which she could not legally approve.

51.  Mr. Wong submits that, if I am against him on the Commissioner’s jurisdiction, I should remit the question of Ms. Cheng’s AGC licence back to the Commissioner or (alternatively) the Appeal Board.  Either (Mr. Wong says) could then re-consider matters in light of the OZP.

52.  I cannot accept either suggested approach.

53.  Strictly, I have no jurisdiction to remit the matter to the AGC Appeal Board.  Its decision is not under review and indeed the time for re-visiting its order by judicial review is long past.  Nor do I see how I can remit the matter back to the Commissioner in the face of a valid, subsisting order of the AGC Appeal Board.

54.  Even if I had some discretionary power to set aside the AGC Appeal Board’s judgment, I would not exercise it in the present case. 

55.  It is true that judicial decisions may sometimes be set aside in exceptional circumstances.  The most typical situation is where a result has been procured by fraud.  But I do not think that there are exceptional circumstances here which justify setting aside the Appeal Board’s decision.

56.  A mere mistake by the Commissioner’s staff does not seem sufficient, especially in light of the time that has elapsed since the AGC Appeal Board’s decision.  Absent compelling reason such as fraud, the Commissioner cannot re-open binding decisions of the AGC Appeal Board on the basis of after-thoughts as to what better reasons she might have advanced in opposition to an AGC licence application had she only thought of them previously. 

57.  Of course, the AGC Appeal Board’s decisions may be judicially reviewed.  But, once the time limit for review has passed, a Court should be wary of re-visiting a regular decision of a statutory tribunal.

58.  Therefore, in my judgment, the Commissioner erred in law in believing that, despite the AGC Appeal Board’s order, she could nonetheless refuse to grant a licence.

59.  At this stage, it is convenient quickly to dispose of an argument raised by the Commissioner.  She boldly suggests that, by requiring that TPB permission be obtained, she was only implementing the AGC Appeal Board’s decision.

60.  Recall that the AGC Appeal Board imposed as a condition of the AGC licence to be issued that “[Ms. Cheng] shall strictly adhere to all such other conditions as may be imposed by the Commissioner in the licence”.   The Commissioner says that the requirement that TPB permission be obtained is simply a condition being imposed by her in accordance with the AGC Appeal Board’s order.

61.  I think that the point is untenable. 

62.  There is a difference between (on the one hand) being licensed to operate an AGC subject to such operation complying with specified regulations and (on the other hand) not being licensed to operate an AGC at all unless a specified permission is obtained. 

63.  In the former case, the continuance of a licence is predicated on the maintenance of measures (including fire and safety measures) needed to ensure that the AGC is properly run.  In the latter case, the licence is denied because a pre-condition of entitlement has not been met. 

64.  It may not always be easy to say in which category a term or condition falls. 

65.  But in this case I have no doubt that the condition sought to be imposed in relation to planning permission could not have been one that the AGC Appeal Board had in mind.  For one thing, the planning permission question was not raised by the Commissioner before the AGC Appeal Board.  Given further that it is doubtful whether the Commissioner is right in her reading of the OZP (including its Notes), it would be odd if the AGC Appeal Board envisaged the Commissioner withholding an AGC licence on the basis of a lack of permission.

C.      Miscellaneous grounds of review

66.  Mr. Cooney relies on other grounds in support of his argument (unfairness, abuse of discretion, legitimate expectation).  In light of my conclusions above, it is unnecessary for me to consider those grounds in detail.  In this section, I shall accordingly only comment briefly on Mr. Cooney’s alternative submissions.

67.  Mr. Cooney argues that the Commissioner has been unfair.  This is because (according to Mr. Cooney) she took a long time after the AGC Appeal Board decision before she issued her November and December 2005 letters.  As a result, Ms. Cheng spent money on improving the premises for the purpose of operating an AGC.  Mr. Cooney argues that the Commissioner could have raised the planning permission argument much earlier, as she would have realised from other AGC application cases that zoning plans might create an obstacle to running an AGC.  This (Mr. Cooney stresses) is a case of bad administration.

68.  I think that this argument is merely a restatement of the res judicata ground discussed above.  What Mr. Cooney is essentially saying is that it is not open to the Commissioner to reverse the AGC Appeal Board’s decision months later by raising a point not previously taken.  I do not think that this ground of unfairness adds to what has already been canvassed.

69.  Mr. Cooney says that there has been an abuse of discretion.  For this, he relies on much the same matters which he cites in support of his case on unfairness.  Again, I think that this ground is just another way of putting the error of law argument which I have already covered.

70.  Finally, Mr. Cooney suggests that Ms. Cheng had a legitimate expectation that her application would not be turned down on planning grounds.

71.  This is because (Mr. Cooney submits) the Guidelines for the grant of an AGC published by the Commissioner do not refer to the TPO, zoning plans or any need to refer to the TPB.  Further, Ms. Cheng was not advised until December 2005 of the possible need for TPB approval.

72.  I am not persuaded that this is a case of legitimate expectation.  Mr. Wong, for example, observes that the Guidelines expressly refer to the views of “other departments” being considered by the Commissioner when exercising her discretion in relation to an AGC licence.  Nothing in the Guidelines amounts to a clear representation that planning considerations can be ignored by an AGC applicant.

73.  As for the late notification of a potential need to comply with the OZP, that has already been dealt with in the discussion on error of law above.  Mr. Cooney’s point on the lateness of the December 2005 letters is at heart yet another way of arguing res judicata.

IV.     Conclusion

74.  The judicial review is allowed.  The decision exemplified by the Commissioner’s letters of 16 and 21 December 2005 is quashed.  There will be an order of mandamus directing the Commissioner to issue an AGC licence in accordance with the decision of the AGC Appeal Board.

75.  Ms. Cheng has sought damages in connection with her application.  By agreement, the parties have postponed to a later date any consideration of whether damages are payable by the Commissioner and (if so) what.

76.  I shall now hear Counsel on costs and consequential orders (including any directions in relation to the question of damages).