RE WONG KOON KAU

IN THE HIGH COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. In this matter the applicant, Wong Koon Kau, made an application in writing dated 19th January 1985 for a Massage Establishment Licence for premises situated at Nos. 20-22 Boundary Street, 1st floor. The facts set out below are taken from an affidavit made by Chief Inspector Michael James McCully the officer to whom the Commissioner of Police who is the licensing authority had delegated his powers under the Massage Establishment Ordinance. This application (Ex. A) was received by the Licensing Authority on the 6th February 1985. A copy of the said application was sent to the District Officer, Mongkok on the 8th February asking him to advise whether he had any objection to the issue of such a licence in respect of the said premises, and on the 19th February 1985, the applicant was interviewed by WPC 15281 at the Mongkok Police Station.

2. The application form sets out a number of questions to which it requires answers but does not anywhere provide space for the applicant to make any statement as to his own suitability and intentions with regard to the proposed establishment.

3. The interview at which a statement was taken (Ex. B & C) was described by Mr. McCully as being "in accordance with the usual procedure". It is not suggested that this statement was in any way unfairly taken or that the applicant was in any way prevented from saying all that he wished to.

4. In the statement he said that the premises were situated in an 18-storey building which "is a mixed-use commercial and residential one. Residential flats start from the 2nd floor". He said that there was no separate access to the premises and that all occupants of the building share the same staircases and lifts. He stated that he intended to set up the business on a sole-proprietorship basis and to use $300,000 as capital. It is to be noted that he had submitted a photocopy of his savings book to the Licensing Authority which indicated that as at the 12th February 1985 his savings amounted to $92,039.95. He went on in his application to say that "the premises were formerly known as the 'Ka Po Recreation Club'. I use the name 'Ka Po' again in the belief that former customers of Ka Po Recreation Club would be attracted because of the similar name". He went on to say "I have never operated a massage establishment before. I am not familiar with provisions of the Massage Establishment Ordinance. I intend to employ a manager to take charge of the massage establishment after it has been set up. I have never applied for such a licence before, this is my first time. I am now a partner of the Tung Sing Club, holding 25% share, but I am not the licensee". The statement sets out, in the heading, that the occupation of the applicant is "Manager of Tung Sing Club". In the last paragraph of the statement the applicant said "the above two-page statement has been read over to me. All are true and correct and there is no need for amendment". Mr. McCully in his affidavit said that between 1980 and 1984 the premises had been operated as a "Fish Ball Stall" (or vice establishment) under the name of the "Ka Po Recreation Club". He also said that the majority of the residents at the address were against the grant of a massage establishment licence. This information came from the District Officer who, in a memorandum dated the 8th February 1985 (Ex. D), informed the Commissioner of police that "An opinion survey was conducted on 26 February 1985 at the premises under application so as to obtain the general views of the residents... Throughout a total of 22 residents contacted representing 22 households, two remained neutral while the rest opposed to the granting of a massage licence to the applicant. There is a total of 34 units in the building. The residents were afraid that the establishment of the Ka Po Steam and Sauna Bath would bring in undesirable elements to the building and would cause security hazard to their lives and properties. Some of them reflected their dislike attitude towards the vice establishments and were aware of its adverse influence on the youth generation''. Section 6(3) of the Massage Establishments Ordinance (Cap. 266) state:

Mr. McCully stated that the application had been rejected on two grounds: (i) that he was not satisfied that the applicant was a fit and proper person (paragraph 7); and (ii) that he was not satisfied that the massage establishment would not be operated in a manner contrary to the public interest (paragraph 8). He said that the evidence before him on the first ground was as follows:

The evidence, as to the second ground, was as follows:

The applicant now seeks orders of certiorari and mandamus on the grounds:

5. Mr. Chain, who appeared for the applicant, asked to be allowed to file two affidavits which dealt with matters which had not been placed before the Licensing Authority. One was from the applicant and one from the landlord of the premises. Mr. Chain submitted that natural justice required that the applicant be allowed to supplement his statement to the W.P.C. in this way otherwise the opportunity which he was given to be heard during which he did not state all of the facts in his favour worked unfairly against him. He submitted that, once the tribunal had adopted the procedure of taking a statement upon which it intended to rely in coming to its conclusion, it should, in any event, have afforded the applicant an opportunity to elaborate upon that statement and that this was particularly so where there was matter in the statement adverse to the interests of the applicant. Mr. Strawbridge, who appeared for the Respondent, referred to R. v Secretary of State ex parte Powis ⁽¹⁾ which sets out the categories of fresh evidence which are admissible on a judicial review and submitted 'that the evidence in the 2 affidavits was fresh evidence and that it did not fall into any of these categories. Mr.Chain then stated that he would not take his application any further but that he would still be contending that the failure to give an opportunity to elaborate upon the statement was contrary to natural justice.

6. Mr. Chain addressed himself first to Ground (d). He referred to Chan Yat San & others v The Attorney General ⁽²⁾ upon the authority of which he said that he was entitled to succeed if the Licensing Authority had relied upon any irrelevant matters in coming to its decision. He submitted further upon the authority of that decision, that, if this Court was left in a position where it could not be satisfied that irrelevant matters had not been relied upon, it should, even though there was other matter before the authority which would have justified it in coming to its decision, make the declaration sought. Mr. Chain then examined each of the matters set out in paragraph 7 and 8 of Mr. McCully's affidavit and submitted that each paragraph contained irrelevant matters and that it was clear that the authority had relied thereon.

7. As to Ground (a) Mr. Chain seemed to be suggesting that once the authority took a statement the rules of natural justice required that it go one step further and allow the applicant to be heard in elaboration thereon.

8. As to Ground (b) Mr. Chain submitted that there was nothing in the relevant evidence sufficient to support the conclusion of the authority. Mr. Chain's principal point, as regards Ground (c) was that reliance was placed upon the report from the District Officer. It was to this report that the ground refers when it speaks of a reliance upon "hearsay evidence of the most unsatisfactory quality". The authority also relied upon the fact that between 1980 and 1984 the premises had been operated as a vice establishment. There was however no suggestion made to me that the authority was not entitled to rely upon such information.

9. Mr. Strawbridge relied firstly on McInnes v Onslow - Fane & Another ⁽³⁾. This case was concerned with the refusal by the British Boxing Board of Control to grant a boxers' manager's licence. The court had to ask itself whether the Board had acted in breach of natural justice and unfairly when it refused the application without giving the applicant an oral hearing and without giving him any reasons for its refusal. The headnote states:-

"That since the case was, however, not one involving forfeiture of an existing right or deprivation of an existing position; and was equally not one where the Plaintiff had any legitimate expectation that his application for a boxers' manager's licence would succeed, the board, while under a duty to reach an honest conclusion without bias and not in pursuance of any capricious policy, were under no obligation to give the Plaintiff even the gist of their reasons for refusing, or proposing to refuse, his application, and similarly were under no obligation to grant the Plaintiff an oral hearing; refusal of a licence did not cast any slur upon the Plaintiff's character, and in the absence of any suggestion that the board had been affected by the dishonesty, bias, or caprice, or other impropriety, the Court ought not to interfere, since the board were the best judges of the desirability of granting the licence.''

10. Let it be said immediately that there was no suggestion in the present case of any dishonesty, bias, or caprice, or other impropriety on the part of the Authority. I am satisfied further that the present case is not one involving the forfeiture of an existing right or the deprivation of an existing position and it is not one where the Plaintiff had any legitimate expectation that his application would succeed. I am satisfied, upon the authority of the McInnes case, that the applicant was not entitled to a hearing and was not entitled to be given reasons for refusal of his application. Mr. Chain, however, argues that if reasons are given which show that the authority relied or might have relied upon irrelevant matter then the court is, upon the authority of Chan Yat San's case, required to interfere. He further argues that even though the authority may not be required to give a hearing that once it has adopted the course of taking a statement from the applicant it should have given him the opportunity to be heard fully thereon.

11. I'll deal firstly with the second point, it is true that a statement was taken from the applicant and that he was not given the opportunity to elaborate thereon. There is, however, no suggestion that the statement was taken in an unfair way, or that the applicant was not given the opportunity to make full disclosure in his own words of all that he wished to say at the time when the statement was being taken from him. Indeed, in the last paragraph of the statement he said "The above 2-page statement has been read over to me. All are true and correct and there is no need for amendment". Further there was no suggestion from the Applicant, until after the authority made its decision, that he wished to amplify any of the matters which he had referred to in his statement. I can see no merit in the argument that, where an authority which is not required to give a hearing does allow an applicant to make his statement, it must then go on and give him an opportunity to elaborate thereon. It might well be different if it was suggested that the statement was, in some way, unfairly taken or that the Plaintiff was not given the opportunity to say all he wished to at the time when it was being taken. There has however been no such suggestion in the present ease. I am satisfied therefore that there is nothing in this part of the argument of Mr. Chain.

12. I now turn to the first point. When examining this point it is necessary to look with care at the words used in paragraphs 7 and 8 of the affidavit of Mr. McCully. In each case the deponent set out evidence before him as to the issue with which the paragraph dealt. In paragraph 7, he said "The evidence before me as to whether or not the Applicant was a fit and proper person to operate a massage establishment was as follows" and in paragraph 8, he said "The evidence before me was as to whether or not a massage establishment would be operated in a manner contrary to the public interest was as follows". The deponent was in each case, saying that he considered that the facts set out were relevant evidence as to the matter in issue. One must proceed upon the basis that the deponent relied upon those facts when coming to his conclusion. Mr. Chain argued that some of the facts were irrelevant and should not have been relied upon. It is necessary, therefore, to look at each of the facts set cut.

13. The first fact set out in paragraph 7 was that the applicant had no previous experience in operating a massage establishment. Mr. Chain had to concede that this was a relevant consideration.

14. The second fact set out was that the applicant intended to employ someone to manage the massage establishment. It was clearly a relevant consideration but it was, Mr. Chain argued, one that told in favour of the applicant. It showed he said that the applicant intended to take steps to remedy any shortcomings in management that might occur because of his own inexperience. That may be so, however section 6(3)(b) requires that the "Applicant will adequately and personally supervise the massage establishment". It seems to me that the applicant, when he made the statement that he intended to employ a manager to take charge of the massage establishment after it has been set up, must be taken to have been that he was not going to take personal charge of the establishment. One must in this regard remember also that his occupation set out in the introduction to the statement was "Manager of Tung Sing Club". Such facts require the authority to refuse the application. There is, in such circumstances, no question of any discretion resting in the authority as section 6(3) requires that "The licensing authority shall not grant a licence unless it is satisfied that ... the applicant will adequately and personally supervise the establishment".

15. The third fact which the authority considered was that the Applicant intended to employ certain staff. Mr. Chain submitted this was quite irrelevant. I am unable to agree that it is. It is clearly relevant to consider the size and staffing of any establishment that is being set up and that surely is all that the authority was doing when it looked at that fact.

16. The fourth fact that the authority relied upon was that the premises had not been converted to meet the requirements of a massage establishment. Mr. Chain submitted that plans had been put before the authority and that this was all that need be done at that stage and that the fact that no conversion had yet taken place was irrelevant. This is not, it is true, a ground for refusing an application. The authority has not, however, suggested that the application was refused because of this fact. It has simply indicated that it was part of the evidence which it took into consideration when making its determination as to whether the applicant was a fit and proper person. Given the fifth fact, which was that the applicant had disclosed saving of less than $100,000, and given that he had not indicated in his statement how he intended to raise the sum of $300,000 which he estimated was the capital needed I have no doubt that the authority was entitled to take into consideration, when asking itself whether the applicant was a fit and proper person, that the premises had not been converted, that he had less than a third of the capital which he estimated would be needed for the project and that he had made no disclosure as to how he intended to raise the balance of the capital.

17. As to paragraph 8, the first three facts relied upon set out that the premises had previously been used, under the name Ka Po Recreation Club, as a vice establishment and that the applicant proposed to call the new establishment the Ka Po Steam and Sauna Bath. He was, on his own admission, using that name "again in the belief that former customers of Ka Po Recreation Club would be attracted because of the  similar name". Would this not be a relevant consideration for the Authority when determining whether or not the establishment would be operated in a manner contrary to the public interest? Here was an applicant saying that he intended when running his business, in the initial stages anyway, to try to attract customers who had formerly patronized a vice establishment. I am satisfied that this was a very relevant consideration.

18. The fourth fact considered was that the building was a mixed residential and commercial building, floors 2 to 11 being residential, and that there was no separate access to the first floor where the massage establishment was to be located. Mr. Chain did not seek to argue that this was not a relevant consideration.

19. The fifth fact considered was that the majority of residents in the address were against the granting of a massage establishment licence to the applicant. Mr. Chain argued .that the views of the residents were irrelevant to the consideration as to whether the establishment might be operated in a manner contrary to the public interest. He further criticized the information itself saying that it was not known who had been spoken to in the 22 households contacted and that the memorandum was not clear as to the total number of domestic units. I am satisfied from the memorandum that there were 34 domestic units, that representatives of 22 of these were contacted and that 20 of the 22 objected to the grant of a licence. Two-thirds, then, of the domestic units were contacted and almost ail of them objected to the grant of a licence. Is this a relevant consideration when asking whether the establishment might be operated in a manner contrary to public interest? Surely the Authority was entitled to ask itself whether it was in the public interest to foist a massage establishment onto a building which was for the most part domestic in circumstances where the majority of residents did not wish to have such an establishment in their building? It was Mr. Chain's further argument that the residents could not know whether the establishment would be operated in a manner contrary to the public interest as it had not started operation. I found this view much too narrow. The authority was I am satisfied, entitled to ask itself whether the operation in the manner proposed, i.e. in an essentially domestic building with only one access, where the majority of the domestic tenants did not wish to have such an establishment in the building, was likely to be an operation in a manner contrary to the public interest.

20. I am satisfied that the matters considered by the authority as set out in paragraphs 7 and 8 of the affidavit of Mr. McCully were relevant matters and that the authority was entitled in reliance thereon to come to the conclusion that it did.

21. This application must therefore be dismissed.

(1)     (1981) 1 All E.R. 788

(2)     (1975) H.K.L.R. 503

(3)     (1978) 1 WLR 1520