WONG CHEONG WORK v. THE COMMISSIONER OF POLICE

Headnote

    [Massage Establishments - Sections 6(3)(b) and 8(1)(c) of the Massage Establishments Ordinance (Cap.266) - meaning of "adequately and personally supervise" - meaning of "operated on any occasion"]

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS NO.2938 OF 1991

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J U D G M E N T

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1. On 10th September, the Commissioner of Police decided to refuse the Applicant's application to ranew his licence to operate a massage establishment. The Commissioner had acted through the Chief Staff Inspector (Licensing to whom he had, under Section 7(2) of the Police Force Ordinance (Cap. 232), delegated his powers as the Licensing Authoritv with regard to licences to operate massage establishments. The Applicant now applies, with the leave of Mayo J., for judicial review of that decision.

2. The renewal of a licence to operate a massage establishment is governed, as is the grant of such a licence, by the Massage Establishments Ordinance (Cap. 266). Section 7(3) provides:-

"An application by a licensee for the renewal of a licence shall --

(a) be made not more than 3 months and not less than 2 months prior to the expiration of the licence or within such other period prior to the expiration thereof as the licensing authority may in writing permit:

(b) be made to the licensing authority in the prescribed form and in the prescribed manner."

The grounds on which the renewal of a licence may be refused are set out in Section 8(1), which provides:-

"The licensing authority may revoke, suspend, or refuse to renew any licence if in the opinion of the licensing authority --

(a) the Licensee has been in breach of any conditions of the licence;

(b) the licensee has ceased to satisfy any conditions relating to the operation of the massage establishment in respect of which the licensing authority is required to be satisfied under section 6(3); or

(c) the massage establishment the subject of the licence has been operated on any occasion since the date on which the licence was granted in any manner contrary to the public interest."

Section 6(3) referred to in Section 8(1)(b) provides:-

"The licensing authority shall not grant a licence unless he is satisfied that --

(a) the applicant is a fit and proper person to operate a massage establishment;

(b) the applicant will adequately and personally supervise the massage establishment;

(c) the premises and the situation thereof are suitable for the operation of a massage establishment; and

(d) the massage establishment will not be operated in a manner contrary to the public interest."

Finally, Section 10 provides:-

"Any person who is aggrieved by a decision of the licensing authority under sections 6, 7, 8 and 9 may appeal by way of petition to the Governor in Council."

3. The Applicant's current licence was due to expire on 12th July. He was required, therefore, to apply for its renewal between 12th April and 12th May. In fact, his application for its renewal in the prescribed form was dated 15th May and it was not received by the Licensing Office until 28th May. On 5th July, the officer to whom the Commissioner had delegated his powers, Mr. Richard Kent, warned the Applicant in writing that he was concerned about the operation of the establishment and of the Applicant's suitability to be the licensee of a massage establishment, and he invited the Applicant to make representations as to the renewal of his licence by noon on 11th July. Mr. Kent subsequently extended that deadline at the request of the Applicant's solicitors. They made detailed representations in writing by a facsimile transmission and a letter dated 20th August, and after considering those representations, Mr. Kent made the decision now under challenge.

4. The facts which were before Mr. Kent on 10th September are not in dispute. The Applicant was one of the two registered partners of the Kam Din Sauna House in Wanchai. He had first been granted a licence to operate a massage establishment in 1984, and that licence had been annually renewed ever since. It had last been renewed for 12 months from 12 July 1990. Condition 4 of the licence provided:-

"The licensee shall not employ any person on the premises other than persons approved in writing by the Licensing Authority."

And Condition 7 provided:-

"In order that the licensee may adequately supervise the massage establishment treatment of males by females or vice versa shall only be carried on in those parts of the licensed premises open to general view. No such treatment shall be carried on in seclusion."

The establishment was a sizable one, occupying two floors and employing a large number of employees.

5. On 2nd May 1986 and 14th May 1987, the Applicant had been convicted of the offence of employing an assistant not approved by the Licensing Authority. He was fined $1,000.00 and $3,000.00 respectively. Moreover, since the licence was first issued, the establishment had been visited by the police on 76 occasions. The Applicant was only found to be present on eight of those occasions. Finally, on 28th November 1990, police officers visited the establishment. The Applicant was not there at any time during that visit, but as a result of that visit five employees at the establishment were prosecuted. The prosecution subsequently offered no evidence in relation to two of those employees. Moreover, the three other employees were acquitted by the magistrate on the footing that the prosecution had not proved that the establishment was kept as a vice establishment within the meaning of Section 139(b) of the Crimes Ordinance (Cap. 200). However, the magistrate did find that two of the police officers, who were acting under cover, were each masturbated in the course of being massaged, in circumstances, I imagine, in which Condition 7 of the licence was being contravened.

6. On these facts, Mr. Kent concluded (and I quote directly from paragraph 9 of his Affirmation made in opposition to the relief sought) that:-

"the massage establishment had been operated in a manner contrary to the public interest and on this basis alone was sufficient for me to exercise my discretion to refuse to renew the licence. I further considered that the Applicant had not adequately and personally supervised the massage establishment: This view was reinforced by the Applicant's record of previous convictions for employing assistants not approved by the Licensing Authority and by his absence during police inspections."

It is to be noted that Mr. Kent did not take account of the fact that Condition 7 of the licence had been contravened, i.e. Section 8(1)(a), but that he based his opinion on section 8(1)(b) and Section 8(1)(c). Mr. Pirie for the Applicant attacks the decision on five grounds.

7. First, Mr. Pirie contends that the Commissioner's decision was made in breach of the rules of natural justice in that Mr. Kent had prejudged the issue before he had had the benefit of the Applicant's solicitors' representations. It is, of course, the case that the rules of natural justice apply to decisions as to whether a licence to operate a massage establishment should be renewed. The licensee's livelihood is invariably at stake, and I have no doubt that Mr. Kent must have known that the Applicant's livelihood depended on his decision. It is also the case that a person charged with the responsibility of making a decision to which the rules of natural justice apply must keep an open mind until such time as he is in a position to make an informed decision, and if he has invited representations from a person likely to be affected by his decision, he must keep an open mind until such time as he has had the opportunity of considering whatever representations such a person has chosen to make.

8. However, on the facts of this case, I do not see any basis for contending that Mr. Kent had prejudged the issue. Mr. Pirie relied on the last paragraph in the letters which Mr. Kent sent to the Applicant and to his solicitors on 5th July and 11th July respectively. In the letter of 5th July, Mr. Kent wrote:-

"Before I will consider whether or not to renew your licence which is due to expire on the 12 July 1991 I require you to hereby submit written representation to me on or before noon on the 11 July 1991 as to why I should not exercise my discretion under Section 8(1) of the Massage Establishment Ordinance Cap. 266 Laws of Hong Kong. Should I not receive any representation from yourself I will make my decision accordingly."

In the letter of 11th July, Mr. Kent wrote:-

"Should I not hear further from or receive representation from the licensee or his appointed representative on or before noon on the 29th July 1991 I will proceed to determine the application for renewal accordingly."

Mr. Pirie says that Mr. Kent was saying in those two passages that if no representations were received, he would refuse to renew the licence. In my judgment, that is a grossly unfair reading of what Mr. Kent was saying. In my view, Mr. Kent was doing no more than saying that if no representations were received, he would have to decide without the benefit of such representations whether to renew the licence.

9. Mr. Pirie relied on three other passages in the two letters in support of his contention that the issue had been prejudged by Mr. Kent. In the letter of 5th July, Mr. Pirie relied on this passage:-

"Although those individuals concerned were not convicted of the said offences, I am however satisfied that there are sufficient grounds for me to be concerned as to the operation of your establishment and your suitability to be the licensee of such an establishment."

And the two passages in the letter of 11th July on which Mr. Pirie relied were these:-

"There are therefore cogent reasons for the Commissioner to consider not renewing the licence."

"... the Commissioner is therefore in a position to consider non renewal of the licence."

However, in those three passages, Mr. Kent, in my view, was merely informing the Applicant and his solicitors of the considerations which might cause him to decide not to renew the Applicant's licence and which, prima facie, justified non renewal. In my judgment, it is just not possible to infer from the careful language which Mr. Kent chose to use that his mind was already made up. Indeed, had I thought that it was possible to draw the inferences which Mr. Pirie asked me to draw from the language used by Mr. Kent, or if I thought that it was possible to construe the language which Mr. Kent used in the way in which Mr. Pirie contended, I would have invited Mr. Logan for the Commissioner to consider whether he wanted Mr. Kent to make a further Affirmation explaining why he couched his letters in the language which he did. After all, the point taken by Mr. Pirie was not pleaded in the statement under Ord.53 r.3(2)(a) drafted by his predecessor, and it is only before me as a result of an application to amend which I allowed on the first day of the hearing.

10. Secondly, Mr. Pirie contended that Mr. Kent's decision was made in breach of the rules of natural justice in that of the three sets of facts which Mr. Kent took into account in reaching his decision (the Applicant's previous convictions, the Applicant's absence from the premises, and the incident on 28th November 1990), only one (the incident on 28th November 1990) was referred to in the correspondence as giving rise to the concern as to whether the Applicant's licence should be renewed.

11. It is true that Mr. Kent's letters of 5th July and 11th July referred only to the incident on 28th November 1990, but what Mr. Pirie's submission ignores is that in the Applicant's solicitors' letter of 20th August, Mr. Kent was urged to renew the licence, among other reasons, because the establishment had never been the subject of a prosecution for any offence prior to the incident of 28th November 1990, and because the Applicant, with the exception of a few periods of unavoidable absence, had personally supervised the operation of the establishment throughout the term of the licence. It was inevitable that Mr. Kent was going to check those assertions of fact, and it was equally inevitable that if on enquiry those assertions turned out to be untrue, Mr. Kent would rely on the results of that enquiry. The Applicant cannot complain about Mr. Kent's consideration of his previous record and his absences since those issues had been expressly raised by the Applicant's solicitors in the representations which Mr. Kent had sought.

12. But once Mr. Kent had learnt of the previous convictions and the Applicant's history of absence from the premises, should he have informed the Applicant's solicitors of those facts, and invited their representations on them before reaching his decision? I do not think that he needed to have done that. The Applicant had already had his opportunity to make representations, and the process could have gone on indefinitely if every time the Applicant said something which turned out on enquiry to be untrue, Mr. Kent had had to defer his decision until the Applicant had had the opportunity to comment on what that enquiry had revealed.

13. Thirdly, Mr. Pirie relied on the fact that the refusal to renew the Applicant's licence was made after the Applicant's licence had expired, and, therefore, any appeal to the Governor in Council which might have been lodged, and this application for judicial review, are having to be made at a time when the Applicant's licence is no longer in force. That is correct, but I do not see where it gets the Applicant. I do not spe how any appeal that he may lodge to the Governor in Council, or his application for judicial review, would or could have had a better chance of success if the appeal had been considered, or the application had been heard, prior to 12th July. Moreover, it hardly lies in the Applicant's mouth to complain about Mr. Kent's delay in not deciding his application for renewal until 10th September. The Applicant applied for the renewal late, and it was only by an indulgence that it was considered at all. I simply do not see how (a) the Applicant's solicitors could have made their representations, (b) Mr. Kent could have considered those representations, and (c) an appeal to the Governor could have been considered, or this application for judicial review could have been heard, in the six weeks between 28th May and 12 July.

14. In the course of argument, Mr. Pirie modified his submission by saying that if Mr. Kent had warned the Applicant earlier of his concern, the application for the renewal of the licence could have been determined well before 12th July, and both the proposed petition to the Governor, and this application for judicial review, could have been heard soon after 12th July, so that the establishment would have been closed for a shorter time than the time which has elapsed since 10th September. The short answer to that somewhat refined argument is that Mr. Kent could not have been expected to warn the Applicant of his concern until such time as the Applicant had formally applied for the renewal of his licence. And even if Mr. Kent had written to the Applicant on 5th June rather than on 5th July, it is inconceivable that Mr. Kent could have come to his decision before 12th July, let alone well before 12th July having regard to his laudable wish to seek representations from the Applicant and to the fact that it took almost seven weeks for those representations to be made.

15. Fourthly, Mr. Pirie contends that Mr. Kent erred in law in that he took into account a consideration which was wholly irrelevant, namely the Applicant's two previous convictions. Those convictions are said to be irrelevant because they occurred long before the last licensing period, and if they had not prevented the renewal of his licence in 1987, 1988, 1989 and 1990, they should not have prevented the renewal of his licence in 1991. I reject that argument. The fact that the previous convictions did not justify the non-renewal of his licence in 1990 does not mean that they did not justify the non-renewal of his licence in 1991, when in 1991 they were to be considered with the additional factors of the 28th November 1990 incident and the evidence of his absence from the establishment. By themselves, the two previous convictions might have been regarded as irrelevant having regard to the fact that his licence had been annually renewed since the convictions were recorded, but in my view they could not be said to be irrelevant when they fell to be considered in conjunction with the new material.

16. Mr. Pirie also submitted that the two previous convictions were irrelevant because they were administrative in nature. On his instructions, and Mr. Logan agrees, the employees concerned were all subsequently approved. I reject that argument as well. I do not regard the fact that the offences were administrative in nature as being irrelevant. Those convictions went to the question as to whether the Applicant had adequately and personally supervised the establishment.

17. Finally, and this is the principal ground relied upon, Mr. Pirie argues that Mr. Kent's decision was one which no Licensing Authority, properly directing itself as to the relevant law and taking account only of the relevant facts, could reasonably have reached. I deal first with Mr. Kent's first ground for his decision, namely that the establishment had been operated on 28th November 1990 in a manner contrary to the public interest. Realistically, Mr. Pirie does not submit that the masturbation of customers by masseuses is not contrary to the public interest. And Mr. Pirie cannot get away from the fact that acts of indecency took place notwithstanding the acquittal of the employees. What Mr. Pirie submits is that the language of Section 8(1)(c), in particular the verb "operate", connotes a continuing state of affairs, and what Mr. Pirie described as the trivial and de minimis nature of a single incident in the context of a large establishment which had been operating for a number of years could not have justified the conclusion that the establishment had for a continuous period been operated in a manner contrary to the public interest.

18. I reject that argument. It gives no weight to the words "on any occasion" in Section 8(1)(c). In my view Section 8(1)(c) has to be contrasted with Section 8(2) which provides:-

"Where a person is convicted of an offence contrary to section 139 of the Crimes ordinance --

(a) the licensing authority shall revoke any licence that was held by the convicted person at the time the offence was committed and which is still in force;

(b) where the convicted person does not hold the licence but the conviction was for an offence which was, in the opinion of the licensing authority related to or connected with premises specified in the licence, and was committed whilst the licence was in force the licensing authority may revoke the licence."

As the magistrate found, Section 139 of the Crimes Ordinance does connote a continuing state of affairs: premises have to have been kept as a vice establishment. The words "on any occasion" in Section 8(1)(c) show that, unlike Section 8(2), something other than a continuing, state of affairs is contemplated by section 8(1)(c). In my judgment, it was open to Mr. Kent to conclude, subject to one point to which I shall come in a moment, that the single incident of 28th November 1990 was sufficient for the establishment to have been operated on any occasion since 12th July 1990 in a manner contrary to the public interest.

19. However, the Applicant is on surer ground, in my view, in an alternative argument deployed by his solicitors. In their letter of 20th August, they wrote:-

"Our clients acknowledge that on one occasion the premises have been used in a manner contrary to the public interest, but it is our considered opinion that such use by members of the staff without the knowledge of the licensee or owners of the business does not amount to 'operating' or 'keeping'."

In my view, the word "operating" in Section 8(1)(c) means "to run" or "to manage".The word appears in other sections of the Ordinance, and it is a recognised principle of statutory construction that where an enactment uses the same language in different sections, the sections should, if possible, be given the same construction. The only sensible construction to be given to the word "operate" in Section 6(3)(a) is to treat the word as meaning "run" or "manage", and in my view that is how its use in Section 8(1)(c) should be construed. I do not see how it could possibly be said that the estabishment was run or managed on 28th November 1990 contrary to the public interest, merely because two customers were masturbated by masseuses when there was no evidence that those responsible for managing the establishment either consented to or knew what the masseuses were doing. Such consent or knowledge could be inferred if it occurred a few times, but not if there was no evidence that this was anything other than a single isolated occasion. Accordingly, I conclude that the first ground on which Mr. Kent refused to renew the Applicant's licence was not a ground which Mr. Kent could reasonably have relied upon if he had directed his mind to what seems to me to be the proper construction of Section 8(1)(c).

20. I turn to the second ground for Mr. Kent's decision, namely, that the Applicant had ceased to satisfy him that he would adequately and personally supervise the establishment. It is common ground that if Mr. Kent's decision could have been sustained on either of the two grounds upon which he relied, then, subject to issues of procedural unfairness, this application must fail.

21. In my view, there was ample material before Mr. justify the conclusion which he reached on this The incident on 28th November 1990 could properly have been regarded by Mr. Kent as evidencing lack of supervision by the Applicant, and that lack of supervision could properly have been regarded by Mr. Kent as both serious and continuing when seen in the context of the Applicant having been present at the establishment on only eight of the occasions on which it was visited by the police. Mr. Pirie rightly reminds me that there is no evidence that Mr. Kent knew the times or dates of those 76 visits, and that they may well have been at times of the day when the Applicant might have been justified in not being there, and on dates some time ago. I take that into account, but in my view Mr. Kent could properly infer that there were many occasions when the Applicant was not at the premises at times when he ought to have been there consistent with his obligation to supervise the establishment personally. That is not to say that I regard the Applicant's obligation to supervise the establishment personally as having required him to be at the premises at all hours of the day and night. But it was not enough for him simply to appoint a day manager or a night manager and hope that they ran a smooth ship. The requirement of personal supervision by the licensee requires the licensee to be at the premises for a sufficient time to ensure that the establishment is properly managed. With that proposition, which I formulated in the course of argument, both counsel agreed. In my judgment, Mr. Kent was entitled to infer that the frequency of the Applicant's absences placed his supervision below the standard which could reasonably be expected of him.

22. Mr. Pirie took another point in relation to the visits. The majority of those visits must have occurred before the renewal of the Applicant's licence in July 1990. However, his absences from the premises on those occasions had not been regarded as amounting to a sufficient lack of personal supervision as to justify the non-renewal of the licence. Those absences, though, were regarded by Mr. Kent in September 1991 as sufficient to justify the non-renewal of the licence. Mr. Pirie argued that this showed a change of policy: whereas the Applicant's absences in the past had not justified the refusal of the licence, now it did. And, so went the argument, if the decision not to renew was based on a change of policy, the Applicant should have been informed of it, it represented an unreasonable fetter on Mr. Kent's discretion, and the new policy was, in any event, unreasonable in the Wednesbury sense. I do not accept that argument. Even if Mr. Kent had been aware of the Applicant's absences from the premises when he had in the past decided to renew the Applicant's licence, I see no change of policy in 1991 at all. Mr. Kent would have been entitled to change his attitude to the Applicant's absence from the premises if the consequence of that absence, the lack of personal supervision, had resulted in the incident of 28th November 1990. But in any event Mr. Kent had not been aware in the past of the Applicant's absence from the premises. He discovered that for the first time when he caused an enquiry to be made about the accuracy of the assertion in the letter of 20th August that the Applicant had personally supervised the operation of the establishment. That is what I allowed Mr. Logan to tell me on instructions (in view of the fact that this point had not been relied on in the original statement under Ord.53 r.3(2)(a)), and Mr. Pirie did not seek to challenge the accuracy of Mr. Logan's instructions.

23. Finally, Mr. Pirie argued that a licence could only be refused under Section 8(1) if the Applicant had been convicted of an offence under Sections 4 or 13 of the Ordinance. This argument was based on an esoteric analysis of the structure of the Ordinance, and I intend no disrespect to the argument when I say that, in my view, its fallacy is to read words into Section 8(1) which simply are not there. Not only does the Section not expressly provide for the condition precedent for which Mr. Pirie contends, but I see no rational basis whatever for implying such a condition either.

24. For these reasons, I reject Mr. Pirie's five grounds for attacking the decision under challenge, though in deference to the arguments addressed to me, I should add two final points. First, since Mr. Kent made his decision, he has become aware from the movement records supplied to him by the Immigration Department that the Applicant was absent from Hong Kong for a total of 175 complete days between 1st July 1990 and 1st July 1991. I have, of course, not taken that fact into account because it was not known to Mr. Kent when he made his decision. However, it was referred to by Mr. Kent in his Affirmation to support the proposition that, if I had come to the conclusion that his decision was flawed on the material he then had, I should, nevertheless, refuse the Applicant the relief he seeks on the footing that if the matter was considered by Mr. Kent afresh, the new material would inevitably have required him to refuse the renewal of the licence. I would have rejected that proposition. If I had acceded to it, I would have been evaluating the importance of the evidence myself. That I cannot do. The responsibility for determining whether the Applicant's licence should berenewed is placed on the person duly delegated to do so by the Commissioner. I would be upsurping his function if I evaluated the importance of the evidence myself, unless his conclusion would inevitably have been to refuse to renew the licence.

25. Mr. Logan grasped that mettle, and submitted that Mr. Kent's conclusion would inevitably have been that, if only because for a period of five and a half months during the last licensing year, the Applicant was continuously out of Hong Kong, and had taken no steps to apply for a transfer of his licence to someone else pursuant to Section 9(2). I would have rejected that submission. I do not know why the Applicant was out of Hong Kong. It is possible to envisage circumstances which might have explained that state of affairs, but which would not have reflected adversely on the Applicant. I put some of them to Mr. Logan in argument. In those circumstances, I would not have thought that it was possible to say that if the issue had had to be considered by Mr. Kent afresh, it would have been an exercise in futility.

26. Secondly, Mr. Pirie submitted that if I had come to the conclusion that Mr. Kent's decision was flawed, I should, as part of the relief to which the Applicant would have been entitled, award him damages to be assessed. Ord.53 r.7(1)(b) permits the court to award damages on an application for judicial review, if it is satisfied that "if the claim had been made in an action begun by the applicant at the time of making his application, it could have been awarded damages." It is common ground that that means that it is only if the claim for damages could have been made in an action begun by writ that damages can be awarded on an application for judicial review. At present, the ordinary law of negligence does not apply to discretionary administrative decisions.

"The decisions of licensing authorities, for example, may be held ultra vires and quashed if proper attention is not given to the case. But there is no indication that actions for damages will lie for any resulting loss, merely because negligence can be shown": Wade, Administrative Law, 6th ed., p.767.

In those circumstances, the only cause of action relied on by Mr. Pirie is the tort of misfeasance in public office. However, the detailed discussion of that topic in Wade, op. cit., pp.777-783, suggests that the tort is one in which the necessary ingredients for its proof include either malice in the sense of bad faith, or knowledge that, in making the decision alleged to constitute the tort, the Defendant knew that it was acting beyond its powers. Mr. Pirie expressly disavowed such an allegation against Mr. Kent. I would not have thought that it was sufficiently arguable that the tort could be established in the absence of those ingredients to justify including an order for damages to be assessed in the relief, had I found Mr. Kent's decision to have been flawed and that it should be quashed.

27. For the reasons that I have endeavoured to give, therefore, this application is dismissed.