SABINANO II MARCEL R v. MUNICIPAL SERVICES APPEAL BOARD

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

___________________

___________________

__________________________________

REASONS FOR JUDGMENT

__________________________________

Introduction

1. In Hong Kong, the sale and consumption of liquor on premises is regulated under a licence system. It is this system that is at the very heart of this judicial review and how it should appropriately and effectively regulate liquor licensed premises.

Overview

2. On 20 December 2013, I granted leave to the applicant to apply for judicial review of the decision of the Municipal Services Appeals Board (“the MSAB”) dated 25 October 2013 which dismissed the appeal of the applicant against the decision of the Liquor Licensing Board (“the LLB”) to impose 3 additional 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”).  I ordered that the hearing of the substantive judicial review be expedited, and it was heard on 6 February 2014.  At the conclusion of the hearing, I granted the judicial review and ordered that the decision of the MSAB be quashed and that the appeal be remitted to a differently constituted MSAB, to hear it expeditiously and to determine it in accordance with the law.  I said that I would hand down my reasons later which I now do.

3. The premises are located in a commercial building within a commercial zone and in a known restaurant and bar district of Hong Kong.  The bar is located at the ground floor facing Wyndham Street which is a busy street with a constant flow of vehicular and pedestrian traffic both during the day and night.  The premises are modern with high quality furnishing and fittings.  It is essentially a bar with provision for recorded music.  However, it consists of a relatively small area of about 95 square metres.[1]  This is a factor that seems to have been overlooked by those involved in deciding the grant of the liquor licence.  I will deal with this and other factors later when addressing the grounds of judicial review.  At this stage, it should be briefly noted that the applicant applied for a new liquor licence for the premises on 7 January 2013 which was later granted by the LLB on 30 April 2013 with 3 additional conditions imposed.  The applicant appealed against the imposition of the conditions to the MSAB which affirmed the LLB’s decision.

4. The MSAB took a neutral stance in relation to this case and did not participate in the proceedings, whilst the LLB did participate as an interested party.  The applicant raised 9 grounds for judicial review.  At the substantive hearing of the judicial review, Mr Stanley Ng, counsel for the LLB, conceded two of these grounds on the basis that the MSAB erred when adjudicating the appeal as to the conditions on the liquor licence by taking into account an irrelevant consideration with respect to protecting customers and failing to take into account a relevant consideration with respect to soundproofing of the premises.  Consequently, Mr Ng conceded, in my view correctly, that the MSAB’s decision was flawed and should be quashed.

5. Upon leave to apply for judicial review being granted, Mr N Cooney SC,[2] counsel for the applicant, sought additional relief for an order that the LLB issue a 12 month liquor licence with respect to the premises without conditions imposed, within 7 days of the date of the order, or that the 3 additional conditions on the current liquor licence which expires on 16 July 2014 be removed.  I decided not to accede to his application for additional relief.  I was mindful of the function of the court on review is to check that the authority in question 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.  Although I do stress that there may be circumstances where an applicant has been treated unfairly or unreasonably, and the court should take appropriate measures to correct any wrong or injustice.[3]  I was of the view that the applicant’s appeal had not been properly dealt with, and that was reflected in my decision to quash the MSAB’s decision and to order an expedited hearing of the appeal before a differently constituted MSAB.  I considered that by ordering an immediate hearing of the appeal that would provide some measure of relief to deal with the mishandling of the applicant’s appeal.

6. I also ordered that costs be awarded to the applicant, up to and including 21 January 2014, to be taxed if not agreed, and the issue of costs after this date was to be addressed in my reasons.  It was on this day that the LLB had advised the applicant that it would concede the judicial review.  It was argued by the LLB that the applicant should only be awarded its costs up to and including that day but not thereafter.  The issue of the outstanding costs depends on whether the applicant had justification to proceed with the substantive hearing on the remaining grounds of judicial review.  As will be evident by my reasons that follow, I was of the view that the remaining grounds of judicial review were made out. 

The statutory regime

7. The grant of a liquor licence is governed by the Dutiable Commodities (Liquor) Regulations, Cap 109B.  The LLB is established as the licensing body under the Regulations.[4]

8. The LLB consists of a Chairman and a Vice Chairman and 9 other members who are appointed by the Chief Executive.[5]  A secretary and legal advisor to the LLB are appointed by the Secretary for Food and Health.[6]  No public officer can be a member of the LLB.[7]  This, however, stands in stark contradiction with the provision that provides that the LLB may delegate its power or function to a committee or member of the LLB or “a public officer”.[8]  A quorum for a meeting of the LLB requires at least half of its existing members and all questions are determined by a majority vote of the members present, with the presiding person having a second or casting vote.[9]

9. Any person seeking a new liquor licence, or an amendment to or renewal of a current liquor licence is required to make application to the LLB.[10]  In the case of an application for a new licence, the LLB may refuse it, or grant it without conditions or with such conditions as it thinks fit.[11]  A licence is valid for a period of 1 year, although the LLB may issue it for a lesser period if it so determines.[12]

10. The LLB’s discretion is subject to the limitation that it cannot 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.”[13]

11. These are important requirements and place special emphasis on the appropriateness of the person who is the holder of the licence; the suitability of the premises as to its location and structure, as well as being appropriately equipped to meet fire safety and health requirements; and that it is not contrary to the public interest to grant the licence.  They also provide an important guide to the LLB in the discharge of its statutory responsibilities under the Regulations in the processing of a new or current liquor licence.  This is also apparent in that the LLB may revoke or suspend, or refuse to renew a licence if: (i) it is proven that there has been a breach of the offence provisions under the Ordinance with or without a conviction; or (ii) in its opinion the licensee has failed to comply with the conditions on the licence, the licensee has ceased to be a fit and proper person, the licensed premises have ceased to be suitable, or the public interest requires it.[14]  I should add that the reference to the public interest requires that the responsibilities under the Regulations be discharged with the overall public good in mind.

12. The LLB has a general power to determine the procedure for meetings and applications, but this must accord with basic principles.[15]  The discretionary power of the LLB must be exercised in accordance with the objects and the policy of the Ordinance, and whilst the discretion as expressed under Reg 17(1) is wide, it is limited by Reg 17(2) which provides that a licence should not be granted unless the LLB is satisfied of the specific matters mentioned in paragraph 10 above.[16] When the LLB makes a decision in relation to an application, it must provide written reasons for it to the applicant and to any person who, or body which, has expressed an interest in the application.[17]

13. There is a right to appeal the LLB’s decision within 28 days and it is given to the applicant and curiously to “20 or more persons residing within a radius of 400 metres from the premises”.  This restricts the right of a third party appeal to a number of persons exceeding 20 or more who are residents in the immediate proximity of the premises subject to the appeal, that is, within a radius of 400 metres.[18]

14. An appeal of a decision of the LLB is heard by the MSAB.  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.”[19]

15. An appeal to the MSAB is by way of rehearing where it is required to consider the issues afresh and conduct an independent and impartial determination.[20] The conduct of the proceedings is governed by s 12 which provides that the MSAB can determine its own procedures and receive and consider material either formally or informally.  It is important to note that the LLB is a party to the appeal as a respondent, and that is a fact that should be borne in mind when an appeal before the MSAB takes place.

History of the liquor licence

16. Two licences are required to operate a licensed restaurant.  One is from the Food and Environmental Hygiene Department (“the FEHD”) for a restaurant licence.  In this case, the operators of iCON applied for a Light Refreshment Restaurant Licence.  The other is from the LLB for a liquor licence.  Even though there is a considerable degree of overlap in requirements and specifications, the two licences are made by separate applications to two different public bodies, although there is interaction between them over the issue of the licences.  The situation can arise where a commercial operator has a restaurant licence and has applied for a liquor licence with no certainty as to when and if such licence will be granted.  This can be a critical factor to the commercial viability of the proposed restaurant, bearing in mind that property holding charges and refurbishment costs can be substantial.[21] 

17. In this case, the applicant is an employee of the company that operates the restaurant and bar at the premises.  On 7 January 2013, he made an application to the LLB for the issue of a new liquor licence for the premises.[22]

18. A separate application was made for a Light Refreshment Restaurant Licence in relation to the premises with business and liquor selling hours from 8:00 am to 6:00 am the following day.  It was made to the FEHD which is regulated by the Director of the FEHD under the Public Health and Municipal Services Ordinance, Cap 132. The FEHD operates a provisional licensing system in which a provisional licence is issued to premises that have satisfied all essential health, building and fire safety requirements.  It is valid for 6 months, during which time the licensee has to complete any outstanding requirements for a full licence.[23]  The FEHD approved the application and issued a provisional licence on 17 July 2013 which was made a full licence on 17 January 2014.

19. As part of the LLB’s normal procedure when it receives a liquor licence application, it requested a report from the Police and the District Office on the suitability of the iCON application.  The Police in its report dated 22 February 2013 raised no objection to the application but stated “for the sake of public interest to avoid noise nuisance” the following additional licensing conditions were recommended:[24]

“(a) All doors and windows of the premises shall be kept closed between 11:00 p.m. and 8:00 a.m. the following day;

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

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

20. I should point out at this stage that the 3 additional conditions suggested by the police remained with the licence throughout the application and appeal processes. The District Office reported on 29 January 2013 that it had received an objection from a District Council member and an Area Committee member.  On 31 January 2013, the Police Licensing Office received an objection from a resident in the neighbourhood.[25]  Other resident objectors later came forward.[26]  The main complaint was the proliferation of bars along Wyndham Street and the noise nuisance that had been caused to the residents in recent years.  One of the resident objectors lived in the adjoining building to Parekh House where iCON was situated and he raised a number of complaints about the noise levels generally and with specific reference to the noise emanating from a bar located on the sixth floor of Parekh House, known as Bar6.

21. The LLB considered the application at an open hearing on 30 April 2013 where it granted the licence with the imposition of the 3 conditions.  On 3 May 2013, the applicant appealed to the MSAB against the LLB’s decision to impose the 3 conditions.  The MSAB considered the appeal on 19 July 2013 which was dismissed on 25 October 2013 without reasons but it later handed them down on 11 November 2013.

22. When an applicant appeals a decision of the LLB, the LLB is required to provide to the MSAB a statement together with relevant documents relating to its decision that: [27]

“(i) sets out the findings on material questions of fact;

(ii) refers to the evidence or other material on which those findings were based;

(iia) sets out the policy, if any, relied upon by the respondent when the administrative decision or first decision was made;

(iii) identifies all persons who had made representations to the respondent in relation to the subject matter of the administrative decision or the first decision; and

(iv) gives the reasons for the administrative decision or first decision.”[28]

23. The LLB submitted its statement which, amongst other things, set out the matters it considered, and in paragraph 11(o) gave the basis of its decision which read:

“The views of the Board to the application were summarized as follows:

(i)When considering the issue of public interest, the Board should bear in mind that most of the bars in the neighbourhood were required to keep their doors and windows closed after 11:00 p.m. or even earlier;

(ii) The Appellant’s legal representative claimed that some of the nearby premises were not subject to any additional licensing requirements. However, it was noted that in fact those premises free from additional licensing conditions had ceased operation at 11:00p.m. Therefore, when considering the application, the Board should not take on board such view of the Appellant’s legal representative; and

(iii)      The objectors pointed out at the hearing that there was only a common wall between the Premises and their building. The enquiries from Members and the representations of the objectors had clearly reflected the residents’ basic need for sleep.”

24. The MSAB considered the 3 conditions.  Condition (b) provided that no liquor was to be sold after 2:00 am.  It justified the imposition of the condition on the basis that it prevented round-the-clock drinking.  This was conceded by the LLB to be an inappropriate and irrelevant consideration by the MSAB.  Conditions (a) and (c) required all windows and doors to be closed, and the playing of music to be stopped at 11:00 pm.  The MSAB upheld the conditions by concluding that the conditions imposed by the LLB and the process of its decision making were “beyond reproach”.  In support of this conclusion, the MSAB highlighted several points; the relevant parts are quoted below.

“Re-zoning

41. It is relevant to consider the re-zoning of the locality in which “ICON” is situated from a “commercial/residential” zone to a “commercial” zone. This would mean that in the future, the area would be used for commercial purposes. However, it does not change the status quo that ICON’s neighbourhood remained populous and we unanimously find on balance that the neighbours’ right to be free from noise nuisance is not to be taken away by the re-zoning.

42. …We find that Mr SABINANO owes a duty of care to his neighbours which include the objectors, in not to interfere with their right to be free from noise nuisance.

43. Although the full compliance with licensing conditions is no defence to a claim in tort on noise nuisance, the removal of these conditions would risk opening a floodgate to claims by neighbours and we find on balance that these conditions should remain.

More stringent conditions

44. It is a ground of complaint that the LLB on this occasion imposed more stringent licensing conditions than what it previously did when issuing the liquor licence for a bar on the 6th floor of the same building and therefore, the present conditions should be removed or at least amended accordingly, in order to be fair to the Appellant.

45. This Appeals Board does not agree with this proposition and notes that “ICON” is an additional bar to the one already in existence in the same building. Therefore, Mr SABINANO cannot have any legitimate expectation to have an unconditional liquor licence or a licence in the same terms with the one on the upper floor.

46. The reason is obvious. “ICON” is an additional bar and would generate additional noise when it comes into business. It is not a replacing one and the LLB is perfectly entitled to take into account the noise to be emanating from two bars in the same building and to impose more stringent conditions on the new comer. “ICON” is on the ground floor having a 14.7 metre frontage towards Wyndham Street. This Appeals Board is satisfied that by imposing the present conditions, the LLB strikes a balance in protecting neighbours’ existing right without reducing “ICON’s” attractiveness to customers.

World Class Sound Proof

47. There is no dispute that “ICON” has been equipped with world class sound-proof devices. However, the rules in physics dictate to say that (i) any sound-proof device can only have its effect enhanced or in full with the premises’ doors and windows closed and (ii) even with world class sound-proof devices in force (which can insulate eg human noise), the stopping of another source of noise (eg music) would enhance tranquility.

48. We now turn to look at the additional liquor licensing conditions. Conditions (a) and (c) respectively requires for the closure of windows and doors, as well as stopping of music playing, both between 11:00 p.m. and 8:00 a.m. the following day. These conditions have the effect of enhancing tranquility during the time when a good majority of people are expecting to go to bed, without stopping the main business of ICON, which is the selling of liquor but neither opening of doors/windows or playing of music.

49. En passant, this Appeals Board also finds condition (b) which requires for no selling of liquor between 2:00 a.m. and 8:00 a.m. reasonable, because it is the period of time when a good majority of people would have gone to bed, because it creates a break to prevent round-the-clock drinking and because it protects both the customers and neighbours to “ICON”.[29]

Grounds of judicial review

(a)Ground 1: Mistaken fact

25. Ground 1 of the applicant’s review is that the MSAB was improperly influenced in making its decision by its erroneous conclusion that the conditions imposed by the LLB and the process by which it made its decision were “beyond reproach”.[30] It was argued that the MSAB was unduly influenced by the LLB’s findings and decision, and did not properly apply an independent and impartial mind to the issues when addressing the appeal by way of a rehearing of the licence application.

26. It is important to ensure that care is taken when determining and evaluating factors, and assessing their relevance to the matter to be decided. The factual basis for a decision is fundamental. This was emphasised by Lord Wilberforce in Secretary of State for Education and Science v Tameside Metropolitan Borough Council[1977] AC 1014[31] where he stressed that it is imperative to establish that the facts that are sought to be relied on exist, and that they are relevant to the decision.  If they do not exist, or are irrelevant, the decision is likely to be flawed.  In dealing with administrative decisions, it is not for a court of law to substitute its own opinion for that of an inferior tribunal; it is for a court of law to determine whether the inferior tribunal has directed itself properly in law and had in consequence taken into consideration the matters which upon the true construction of the relevant legislation under which it operates it ought to have considered, and excluded from its consideration matters that were irrelevant to what it had to consider.[32]

27. It was held in E v Secretary of State for the Home Department [2004] QB 1044[33] that a mistake of fact giving rise to unfairness is a separate head of challenge on a point of law which is satisfied when:

“First, there must have been a mistake as to an existing fact, including a mistake as to the availability of evidence on a particular matter. Secondly, the fact or evidence must have been “established”, in the sense that it was uncontentious and objectively verifiable. Thirdly, the appellant (or his advisers) must not have been responsible for the mistake. Fourthly, the mistake must have played a material (not necessarily decisive) part in the tribunal’s reasoning.”

28. It was submitted by the applicant that the MSAB relied on findings of fact by the LLB which were patently wrong.  Three factual errors were put forward in submission to support this contention.  They are taken from the views expressed by the LLB in paragraph 11(o) above.  The first was that most of the bars in the neighbourhood were required to keep their doors and windows closed after 11:00 pm or even earlier.  The second was that other licensed premises free from additional licensing conditions ceased operation by 11:00 pm.  The third was that Parekh House and the next door building where resident objectors lived shared a common wall.  As a consequence of accepting the LLB’s findings, it is argued, that the MSAB made mistakes of fact which it relied on when making its decision.

29. It was shown by the applicant that most of the licensed premises in the neighbourhood are not required to keep their doors and windows closed after 11:00 pm or even earlier.  It was submitted that within a radius of 125 metres, only 37 out of 118 licensed premises had such a requirement.  Even closer to iCON, within a radius of 75 metres, the number was 24 out of 57 bars.  It was also shown that there were licensed premises close by to iCON which were free from additional licensing conditions that operate after 11:00 pm and without a restriction on liquor selling hours.  Even allowing for the fact that the licensed premises under consideration operate different businesses, it was established to my satisfaction that the findings of fact by the MSAB were inaccurate and misleading, in that there are a significant number of similar businesses to that of iCON that were free of one or both of conditions (b) and (c).  I accept the position as submitted by the applicant to be generally correct, and the facts and figures submitted by him also confirmed inconsistent treatment of licensed premises. 

30. The other mistaken fact was that the wall between Parekh House and the building next door where resident objectors lived was common between them.  This was not the case.  I do not doubt that this had a bearing on the conditions as imposed on the licence, and out of concern for the residents in the building next door.  I should point out that iCON is on the ground level, but there is another bar in the building on the sixth floor that the residents of the adjoining property have particularly complained about with respect to excessive noise. 

31. The mistaken facts seriously flawed the MSAB’s decision.  They were mistakes as to existing facts which were objectively verifiable.  They played a material part in the MSAB’s reasoning for which the applicant was not responsible.  In my view, it gave rise to objective unfairness which makes it a mistake of law.

32. Whilst these mistaken facts may have incorrectly influenced the MSAB in making its decision, I should add that the MSAB was obliged to consider and address any concern about excessive noise emanating from licensed premises, and especially at an inappropriate time.  This requires bearing in mind all the facts and circumstances relevant to the particular premises under consideration.  It is not appropriate to impose a condition as suggested “for the sake of it” or “just in case”.  A licensing body should properly determine that a condition under consideration is necessary and proportionate in the particular circumstances of the subject application.  This requires taking into account relevant matters and putting them in their full and proper context.  If an applicant has addressed an issue of concern by the way he proposes to conduct his business, or by the implementation of specially designed measures, that should be taken into account and given appropriate weight.  The nature and size of iCON’s business and the implementation of soundproofing are issues on point. I will deal with this matter in more detail later. 

33. In my judgment, the MSAB accepted and adopted the reasoning of the LLB and inherited the factual errors that the LLB had made and relied on in its decision. There was, however, some independent deliberation by the MSAB which was an attempt to affirm the LLB’s decision and its reasoning.  As will become apparent from my reasons, that attempt did not succeed.

(b) Grounds 2 to 7: Irrelevant and relevant matters

34. Grounds 2 to 7 are that the MSAB took into account irrelevant matters and omitted to consider relevant ones.  I will deal with these grounds together.  The irrelevant matters were:

(i)         that the removal of the 3 conditions would risk opening a floodgate of claims from neighbours (Ground 2);[34]

(ii)       that as iCON would be an additional bar to one already operating in the same building, it could not expect to be granted an unconditional licence or a licence on the same terms as the other bar and required the imposition of more stringent conditions (Ground 3);[35]

(iii)      that restricting iCON’s selling hours was reasonable since it created a break to prevent “round-the-clock” drinking which would protect customers and neighbours of iCON (Ground 7);[36] and

(iv)      that iCON’s main business was selling liquor and imposing a condition to stop playing music would not affect its business (Ground 6).[37]

35. The relevant matter that was omitted from consideration by the MSAB was that iCON had been equipped with state-of-the-art soundproofing equipment (Grounds 4 and 5). 

36. It was argued 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 consider, if at all, iCON’s particular circumstances and that the premises had been equipped with high quality soundproofing devices.[38]  It was wrong in the first place to impose more stringent conditions simply because iCON was an additional bar in a building where another bar was located.  It is complained, and in my view with justification, that the MSAB gave little, if any regard to the particular circumstances of iCON and the installation of soundproofing which were highly relevant to its decision as to whether or not to impose conditions.  And if it decided to impose conditions, these matters were relevant to the nature and terms of such conditions, which should be specifically framed to address the particular problem of noise created by the premises.

37. The MSAB reasoned that: ““ICON” is an additional bar and would generate additional noise when it comes into business. It is not a replacing one and the LLB is perfectly entitled to take into account the noise to be emanating from two bars in the same building and to impose more stringent conditions on the new comer.”[39] The reasoning is illogical.  First by the fact that the other bar in the same building does not have restrictions on its liquor selling hours or playing of music.  Secondly, iCON was not operating at the time and there was no evidence before the MSAB to warrant the conclusion that iCON would generate additional noise.  Thirdly, as rightly pointed out by Mr Cooney, the MSAB by this reasoning seems to be suggesting that if iCON was replacing a bar, then there would be no need for more stringent conditions, notwithstanding that there would be two bars in the same building but because it is a new additional bar, more stringent conditions are warranted because there would be two bars in the same building. 

38. The finding by the MSAB that the removal of conditions would open up a floodgate of claims for noise nuisance from the neighbours of iCON is unsupported.  It presupposed, without any evaluation or analysis of the pertinent facts or circumstances, that iCON would generate excessive noise that would adversely impact on the surrounding environment.

39. The MSAB concluded that the main business of iCON was the selling of liquor and not the playing of music and by stopping the playing of music this would not affect iCON’s main business.  This conclusion was wrong.  Part of the business and ambience of iCON is to play music. This was supported by the evidence before the MSAB. This prevented the MSAB from further considering the issue of noise being generated from the playing of music, and whether the imposition of condition (a) would suffice to deal with it, or any other problem of noise that is properly assessed to exist. 

40. The MSAB’s decision that the condition restricting selling hours was reasonable since it created a break to prevent “round-the-clock” drinking which protected both customers and neighbours of iCON was conceded to be wrong. Bearing in mind that there are other bars in the vicinity which are permitted to sell liquor after 2 am, this proposition was not only wrong but also unfair.

41. It appears to me that the conditions, which were initially recommended by the police, are general prohibitive conditions that are sometimes imposed on licensed premises to broadly deal with the problem of noise.  They may be appropriate to deal with particular licensed premises, but that will depend upon the circumstances of the individual case.  A tendency to impose formulaic conditions without properly considering what is required with respect to the specific application should be avoided.  A general approach like this is not fair, and is not fulfilling the licensing body’s responsibilities entrusted to it under statute.

42. There is no dispute that the MSAB can and should consider representations from third parties that may be affected by the grant of a liquor licence.  It is clear that there is a genuine concern by residents in the locality of the noise levels that are generated by the activities of the restaurants and bars operating there. The interests of residents need to be appropriately considered and protected under the law. However, this requires taking into account all the facts and circumstances and considering the interests of all those involved, and getting the facts right in order to strike an appropriate balance between interests that compete or conflict with each other.

43. Putting things in context, there needs to be a proper assessment of the premises and its business on the question of generating unacceptable noise.  This includes considering internal factors, such as, the location, nature and size of the licensed premises, the type of business that will be conducted, the layout and equipment that has been installed to play music and to soundproof the premises; and external factors, such as, the general nature of the locality and the background and existing noise levels that occur there; the number and location of the residents affected by noise, including when and how this occurs, and whether the noise comes from the premises or elsewhere.

44. It would appear that the imposition of conditions must correspond to actual noise levels generated from the premises or, at least, a real risk that noise levels will be generated from the premises that will adversely impact on others, and at inappropriate times.

45. There should not be a blanket imposition of conditions on a licence purporting to address an issue that may not be real or applicable to the licensed premises.  A condition should be carefully thought through to deal with an actual issue in relation to the subject licensed premises.  It should not be imposed to deal with issues arising from other licensed premises unless there is an obvious need to address a general problem.  The latter is not achieved by imposing a condition on some, and not others who are in exactly the same circumstances.

46. The applicant installed high quality soundproofing devices to ensure that any internal noise would not be heard outside the premises.  This was effectively ignored by both the LLB and the MSAB. It stands to reason that this is something that should be encouraged in order to address the problem of noise in the locality.  The MSAB even acknowledged “there is no dispute that iCON has been equipped with world class sound-proof devices.”  However, it appears that the MSAB was dismissive of the soundproofing when it concluded, without justification, that it would enhance sound, not contain it.

47. It is clear to me that the MSAB did not give sufficient, or any, weight to this particular factor in the exercise of its judgment.

48. The MSAB seems to be making its decision to impose the conditions on two bases: (a) to deal with noise that is likely to be generated from iCON and the impact that would have on residents living in the area; and (b) to curtail people from socializing and drinking after 2:00 am.  The LLB has conceded that paragraph (b) is not a relevant and valid consideration when deciding on the issue as to whether or not to grant a liquor licence.  On the other hand, paragraph (a) is a relevant and valid consideration, but it is how both the LLB and the MSAB have gone about addressing it that has caused unfairness to the applicant.

49. It appears that the key issue concerning the liquor licence was the noise that the premises would generate at levels and at times that may have an adverse, and unacceptable, impact on the surrounding environment and associated amenities, in particular local residents.

50. The first issue that does not seem to be addressed is whether unacceptable noise levels would emanate from the operation of iCON and if so, to what degree and extent, and who would be affected, if at all, and if so, how and when would they be affected.  The second issue that follows is that if that is the case, then how it can be addressed by the imposition of conditions given all the circumstances.

51. Here we have a relatively small restaurant and bar.  It is located on the ground level of a busy street. There is, and will be, given the locality, background and existing noise levels that need to be considered and taken into account.  It is significant that the location of the premises is in a commercial zone that was previously a commercial/residential zone.  The commercial character of the area is recognized by the planning code.[40] This is important because different considerations apply to different zoned areas as to use.  I should stress, however, that no matter the use, it is not acceptable to create noise nuisance contrary to the law.

52. The MSAB stated that the rezoning did not remove the right of iCON’s neighbours to be free from noise nuisance and that the applicant owed a duty of care to them not to interfere with such a right.  It then considered “the removal of the conditions would risk opening a floodgate to claims by neighbours” and that on this basis the conditions would remain.  Two matters on which I need to comment.  The planning policy was given little or no consideration.[41]  It is a requirement to do so under s 13 of the Town Planning Ordinance, Cap 131 which provides that all public officers and bodies are to use approved plans as standards for guidance in the exercise of any powers vested in them.  It is stated that the legal adviser to the MSAB advised in effect to disregard this provision as it is contrary to articles under the Hong Kong Bill of Rights Ordinance, Cap 383,[42] and the Basic Law in relation to the right to privacy, family and home.  This is a valid statutory provision and should be applied. It does not constitute an arbitrary or unlawful interference of the right.

53. The MSAB gave consideration to the interests of local residents, which it should, but not to the exclusion of other interests, such as that of the applicant, who operates a place of entertainment which is always a permitted use under a commercial zone.  It should be noted that residential use under a commercial zone is permitted, but permission is required.  The floodgate comment presupposed that the applicant was, or at least would be, a habitual noise polluter, and did not consider the individual circumstances of the applicant.  It was a broad brush approach with seems to have been influenced solely by general matters and not the particular circumstances of the application. It required striking an appropriate balance by coming up with a solution where relevant interests are considered and given appropriate weight.

54. From my point of view, a commercial operator has the right to have his interest considered, and given appropriate weight, where what he is seeking to do is a permitted use under a commercial zone.  He is not permitted to break the law by engaging in excessive noise.  There are offence provisions under statute to deal with such wrongdoing.[43] However, having said that, the imposition of conditions may in the appropriate circumstances be warranted to deal with an actual issue of noise.  This does not mean that in a commercial zone, other land uses or views of other land users are ignored.  To the contrary, they should be taken into consideration and appropriately cater for within sensible and reasonable bounds. 

55. It appears that the MSAB has ignored consideration of the commercial zoning of the area on the assumption that the licensed premises will create noise nuisance.  Bearing in mind this was an application for a new licence, there was no actual information before the MSAB that iCON’s operations would create a serious issue of noise nuisance other than because of the nature of the business that was proposed at the premises.  As I have already mentioned, this required taking into account all relevant factors such as the nature of the restaurant and bar, the relatively small size of the premises and the soundproofing equipment that had been installed.  This was not done.

56. Another important factor that seems to have been overlooked by both the LLB and the MSAB is the terms of the 3 conditions, and whether with the imposition of condition (a) would the other two conditions need to be imposed. Condition (a) provides for the closing of all doors and windows of the premises after 11:00 pm.  It begs the question that in complying with condition (a), would there be a need for conditions (b) and (c)?  There are also the terms of the conditions both individually and collectively that appear to be general and far reaching without addressing the specific circumstances of the applicant.

Ground 8: Inconsistent and unequal treatment

57. The applicant argues that the 3 conditions imposed on the liquor licence for iCON is inconsistent with the way that the MSAB has treated other similar premises in the locality. This, the applicant complains, has resulted in unequal treatment.  A comparison is made to Bar6 on the sixth floor of Parekh House which does not have restrictions on its liquor licence.  The applicant makes the point that in relation to this bar, there are no restrictions on liquor selling hours or the playing of music.  I am informed that this bar closes at 2:00 am, but that is a matter of choice.  The noise from this bar has been the subject of strong objection from one of the residents in the adjoining building who lives on a high floor and alongside it.  I should add that it has been shown by the applicant that there are other bars in close proximity to iCON that do not have restrictions on liquor selling hours and the playing of music.

58. It was clear to me that there were other bars in the locality that had fewer restrictions on their licence compared with iCON’s licence.  But I acknowledge that comparisons of this type can be fraught with difficulties, especially when two situations being compared with each other are not exactly the same.

Ground 9: Wednesbury unreasonableness

59. The applicant argues that in light of the foregoing grounds of judicial review, the MSAB’s decision was Wednesbury unreasonable.  I have concluded that the MSAB’s decision was unreasonable for the reasons I have given.

Costs

60. On the issue of costs, it had been agreed by the LLB that the applicant should receive its costs up to and including 21 January 2014 on the basis that it conceded that the MSAB had failed to act fairly and reasonably in relation to the applicant’s appeal, and that this concession was conveyed to the applicant on that day.  The applicant, nevertheless, proceeded with the judicial review as there were other grounds it wished to advance and seek a decision from the court.  As I have set out in my reasons, I am satisfied that those other grounds had merit and accordingly the applicant should receive its full costs.  Accordingly, I make an order of costs to the applicant, to be taxed if not agreed. 

[1] Hearing Exhibit Bundle (HEB), 583-587, photographs taken of Parekh House and the licensed premises.

[2] Appearing with him was Ms Carol Shek.

[3] See my decision for the grant of leave in this case on 20 December 2013, paras 21-42.

[4] The Dutiable Commodities (Liquor) Regulations, Cap 109B, Reg 2A (1).

[5] Ibid, Reg 2A(2).

[6] Ibid, Reg 2A (5) and (6).

[7] Ibid, Reg 2A(3).

[8] Ibid, Reg 13A.

[9] Ibid, Regs 13B, 13C and 14.

[10] Ibid, Reg 15.

[11] Ibid, Reg 17(1).

[12] Ibid, Reg 20(3).

[13] Ibid, Reg 17(2).

[14] Ibid, Reg 23. Any decision under this regulation is subject to appeal to the MSAB.

[15] Ibid, Reg 14A.

[16] See Commissioner of Police and Anor v MSAB and Ors [2005] 1 HKC 170.

[17] Ibid, Reg 17(3) and (4). See also Reg 19(2).

[18] Ibid, Reg 17(5).

[19] The Municipal Services Appeals Board Ordinance, Cap 220, s 7(1).

[20] See Robert Mark Tai Sen Choy v MSAB, HCAL 1448/2001, unreported, Yeung J (as he then was) at para 26.

[21] See the affidavits of Anthony James Hatton, the Managing Director of the company that owns iCON who details the costs in establishing iCON and other expenditures. He provides a financial statement in relation to the running of the business which he claims due to the imposition of the conditions is incurring substantial losses.

[22] HEB, 57-65.

[23] Food Business Regulation, Cap 132, Part IV, Licensing of Certain Food Business, s33C, Provisional licence.

[24] HEB, 83-84.

[25] HEB, 81-82.

[26] HEB, 89-110.

[27] The Municipal Services Appeals Board Ordinance, Cap 220, s 9(1) (a) and (b).

[28] Where the MSAB considers that the statement does not contain adequate information, it may order the provision to the MSAB and the parties such other information as it may specify: s 9(2).

[29] HEB, at 620-623.

[30] HEB, 620, MSAB decision, para 40.

[31] At 1047 D-E.

[32] See Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 per Lord Greene MR at 229; Secretary of State for Education and Science v Tameside Metropolitan Borough Council[1977] AC 1014 per Lord Diplock at 1065A-B.

[33] See also Smart Gain Investment Ltd v Town Planning Board, HCAL 12/2006, unreported, per A Cheung J, 6 November 2007, paras 91-93.

[34] Ibid at para 43.

[35] Ibid at paras 45 and 46.

[36] Ibid at para 49.

[37] Ibid at para 48.

[38] Ibid at para 47.

[39] HEB, 621-622, MSAB’s decision, para 46.

[40] 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.

[41] See the Planning Statement in respect of the licensed premises at HEB, 144-151.

[42] Art 14(1): “No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence…”

[43] Noise Control Ordinance, Cap 400.