RE REGAL RIVERSIDE HOTEL LTD

HCAL 94/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 94 OF 2008

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DECISION

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I.  Introduction

1.  Regal operates a hotel. The hotel has a general restaurant.  On 7 July 2004 there was a suspected case of food poisoning at the hotel.

2.  As a result, Regal was prosecuted under Public Health and Municipal Services Ordinance (Cap. 132) (PHMSO) s. 54(1)(a) for selling food unfit for human consumption.  Regal pleaded guilty and was convicted of the offence on 5 September 2005.  In consequence, Regal paid a fine of $3,000 and 15 demerit points were registered against its general restaurant licence.

3.  The Demerit Scheme applies to restaurant licences issued under the PHMSO.  Under the Scheme, the Food and Environmental Hygiene Department imposes demerits on an establishment for violations of the PHMSO and its subsidiary legislation.

4.  The incident which gave rise to the offence was apparently due to a mechanical fault and a broken thermometer of the refrigerators in which the relevant food (mostly sashimi and cold cuts) were kept.

5.  In late 2005 the Director of Food and Environmental Hygiene informed Regal that it intended to suspend its restaurant licence for 7 days.  This was because Regal had accumulated 15 demerits within the 12-month period between 7 July 2004 and 6 July 2005.  The intended suspension due to the 15 demerits was being imposed pursuant to the Demerit Scheme.

6.  Regal requested the Director not to suspend its licence.  By letter dated 25 October 2005 the Director rejected Regal’s request.

7.  Regal appealed against the Director’s decision to the Licensing Appeals Board. In April 2006, the Licensing Appeals Board (by a majority) confirmed the suspension, but reduced its length to 5 days.

8.  Regal then appealed to the Municipal Services Appeal Board (MSAB).  The MSAB dismissed the appeal in December 2006.  However, upon Regal’s application for judicial review, that decision was quashed.

9.  A differently constituted MSAB then heard Regal’s appeal. On 26 May 2008 that MSAB rejected Regal’s appeal by a majority.  On 24 July 2008 that MSAB ordered the suspension of Regal’s general licence for the 5 days from 22 to 26 September 2008.

10.  It is against those decisions of 26 May and 24 July 2008 that Regal now seeks leave for judicial review.  I have to decide whether Regal has a reasonably arguable case justifying the grant of leave for a judicial review.

II.  DISCUSSION

11.  Mr. Philip Dykes SC (appearing for Regal) first draws attention to the majority’s principal reason for upholding a suspension.  The majority stated (at Decision §22):

“The minority considers that a suspension would cause much inconvenience to hotel guests and substantial financial loss to [Regal].  The suspension is against the rule of proportionality and is not the aim of the legislature under such circumstances.  The majority of the Board is of a different view.  Having taken into account the seriousness of the food poisoning, though regarded as a one off event as described by Mr. Dykes, the majority thinks that the suspension is justifiable.  The System should in appropriate cases give a clear and strong signal to all that as long as public health is concerned, there should be zero tolerance of any irregularity.  It is of paramount importance to ensure that the proper high standard of hygienic condition of restaurants be maintained.  There is no good ground shown for departure from this general policy.”

12.  Mr. Dykes submits that such conclusion by the majority “rendered the suspension of [Regal’s] licence mandatory and in effect engendered a rigid implementation of the Demerit Scheme without any or any due regard to the merits of [Regal’s] case and the objects of the [PHMSO]”.

13.  I am unable to read Decision §22 as saying anything so extreme.  Instead, the majority went out of its way to limit the scope of its observations to “appropriate cases”.  I see nothing exceptional in the majority’s view that, in order to deter lapses in the hygiene standards of restaurants, it was appropriate in certain cases to send “a clear and strong signal” and impose a suspension.  The message is that lapses in standards will not be tolerated.  That is a far cry from saying that in every case of (say) 15 demerit points a suspension should be automatically imposed without exception.

14.  Second, Mr. Dykes argues that the Demerit Scheme as a whole is ultra vires.  He submits that the Scheme pre-determines the exercise of the power under PHMSO s. 125(1)(b).  This means that there is no consideration of the individual circumstances of a case.  That (Mr. Dykes points out) is the antithesis of the exercise of a discretionary power.

15.  Mr. Dykes suggests that many of the offences under the PHMSO and its subsidiary legislation “appear to be absolute offences where the state of mind of the offender is completely irrelevant to the offence”.  He submits that such a system for allocating sanctions does not promote the objects of the PHMSO.

16.  The preamble to the PHMSO identifies its purpose as “To make provision for public health and municipal services”.

17.  PHMSO s. 125(1) provides:

“Where, under the provisions of this Ordinance, any public officer (referred to in this section as the licensing authority) is empowered to require registration or to grant any licence or permit, such registration, licence or permit, as the case may be, shall, subject to the provisions of this Ordinance and regulations made thereunder:-

(a) be made, granted or renewed subject to such requirements, conditions or restrictions as the licensing authority may think fit to impose for the purpose of carrying out the objects of this Ordinance, and may, for the like purpose, include a declaration by the licensing authority waiving the application of any of the provisions of any regulation made under this Ordinance;

(b) be refused, suspended or cancelled at the sole discretion of the licensing authority for the purpose of carrying out the objects of this Ordinance, but no registration, licence or permit shall be suspended or cancelled for any cause other than the contravention of any of the provisions of this Ordinance or of any requirement, condition or restriction to which such registration, licence or permit was subject.”

18.  Regal’s case was that the incident was beyond its control, since it resulted from an unforeseen breakdown of Regal’s refrigeration machinery. 

19.  Prior to the incident, Regal had no record of conviction for similar offences.  On the contrary, it had received “numerous awards and commendations for achieving high hygiene and safety standards”.

20.  Following the incident, Regal had “further enhanced its internal measures to ensure that the food hygiene and safety of the hotel [were] maintained at an international standard”.  As evidence of this, Regal points to its passing of an ISO 22000 certification hygiene audit in July 2008.  Regal claims to be the first Hong Kong hotel to obtain such certification.

21.  Regal’s case is essentially then that the rigidity of the Demerit Scheme was such that its previous good record and its subsequent efforts at improvement were ignored by the MSAB majority.

22.  In my view, Mr. Dykes’ criticism is untenable.

23.  Simply as a matter of construction of the plain and obvious meaning of PHMSO s. 125(1)(b), the revocation or suspension of a licence due to an infraction of the PHMSO or its subsidiary legislation is plainly a discretionary power (“the sole discretion of the licensing authority”).  This applies equally to the Demerit Scheme which is operated pursuant to the licensing authority’s powers granted by the PHMSO.  The Demerit Scheme is not to be construed in a vacuum, but instead has to be read in the context of the PHMSO, especially s. 125(1)(b).

24.  As far as the statute is concerned, a suspension for an offence or as a result of demerit points is a matter of the exercise of a discretion.  There is nothing automatic about it.

25.  Further, the majority of the MSAB was plainly aware of this.  For instance, the majority pointed out that the minority favoured exercising (in Regal’s favour) a discretion against suspension.  But the majority disagreed that there was anything special about Regal’s case that warranted such exercise of the discretion in its favour. 

26.  The majority expressly acknowledged that the matter was “one-off”.  However, it thought that weight had to be given to the seriousness of the offence.  A suspension (the majority believed) would have a deterrent effect on restaurant operators generally. 

27.  Indeed, the incident itself appears to have spurred Regal to implement a more rigorous system of monitoring its refrigeration systems.  One might ask rhetorically why there had to be an incident of food poisoning before such improvements were instituted. 

28.  By upholding the suspension, despite being mindful of its potentially inconvenient financial consequences, the majority took the view that it was important to send a clear signal that restaurants should be ever vigilant.  They should be constantly monitoring and evaluating their hygiene standards without having to be prodded into doing so by the happening of a serious food poisoning.

29.  Accordingly, I do not think that the exercise by the majority of its power under the PHMSO can possibly be characterised as unreasonable.  The decision it seems to me is perfectly consistent with the declared objective of the PHMSO “to promote public health”.  In the words of PHMSO s. 56, the decision seems consonant with “securing the observance of sanitary and cleanly conditions and practices and wholesome methods in connection with … the sale of food for human consumption”.

30.  Third, Mr. Dykes says that the “zero tolerance” stance of the majority draws no distinction between “offenders who may have fallen foul of absolute or strict liability on just the one occasion and repeat offenders who deliberately disregard the law”.

31.  I do not think that this criticism is fair.  As I pointed out, the majority were fully conscious that this was a one-off situation.  But it also considered the seriousness of the food poisoning in coming to its conclusion.  I think that the seriousness of the incident, however one-off the situation, was something that the majority was entitled to take into account.

32.  Fourth, Mr. Dykes accuses the majority of being “opaque” in its reasoning.  This is because (according to Mr. Dykes) the majority did not say in what sort of “appropriate cases” a licensing authority could exercise its discretion against imposing a suspension.

33.  Again, I think that this complaint is untenable.  It is commonplace for statutes to grant a discretion without enumerating the situations in which it will or will not be exercised in a particular manner.  It is impossible for a statute comprehensively to cover all situations that may arise. 

34.  The majority was perfectly entitled to say that it did not see any special factor in this case meriting the exercise of its discretion in Regal’s favour.  The majority was not bound to explain what a special case might look like.  That would be a potentially futile task.  Each situation would have to be assessed on its own merits on a case by case situation.

35.  Fifth, Regal says that the majority ignored the remorse that it had shown.  In Decision §20, the majority states:

“The minority of the Board is of the view that [Regal] has taken positive measures to ensure public health not being at risk. The majority considers otherwise. The remedial measures should be the least that should have been taken by [Regal]. It is on account of the food poisoning that [Regal] has made such changes.  [Regal] had shown no sign of remorse but tried to play down the event.  It is a serious food poisoning case that [Regal] deserves the penalty.”

36.  I see nothing to fault in the majority’s stance. 

37.  The majority felt that Regal’s efforts at claiming the incident was a one-off matter which did not merit a suspension was a sign of a lack of remorse.  Regal in the eyes of the majority had not truly acknowledged the seriousness of the food poisoning incident.  The view may be hard and stern.  But I do not think that it can be regarded as unreasonable.

38.  Sixth, Mr. Dykes suggests that the majority’s decision was disproportionate.  Regal would (Mr. Dykes points out) suffer grave financial consequences as a result of a 5-day suspension, despite having improved the hygiene quality of its food outlet services.  The chance of re-offending (Mr. Dykes says) is low.

39.  I do not think that this objection is tenable.  It misses the majority’s point.  This was a serious incident.  The well-being of a member of the public was at stake. The majority obviously felt that, because of this, the incident here should not be tolerated and should not have happened.  For example, Regal’s improvements to its refrigeration system could have been implemented at a much earlier stage.  In the circumstances, the majority believed that the “clear signal” of a suspension would have a deterrent effect, not just on Regal but on the industry as a whole.

40.  The majority’s view may be a harsh one.  But I do not believe that it can be characterised as irrationally disproportionate.

II.  CONCLUSION

41.  The proposed 6 grounds of review are unarguable.  Leave to apply for judicial review is refused.