CHIT FAI MOTORS CO LTD v. COMMISSIONER FOR TRANSPORT

CACV142/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 142 OF 2003

(ON APPEAL FROM HCAL NO.146 OF 2002)

_________________________

_________________________

__________________________________________________

REASONS  FOR  JUDGMENT  AND DECISION  ON  COSTS

__________________________________________________

Hon Ma CJHC :

Introduction

1. Operators of any type of bus in Hong Kong must do so under franchise or licence. In the case of buses having a passenger capacity of over 16 persons, in order to operate a public bus service for which charges are made, either a franchise has to be obtained under the Public Bus Services Ordinance, Cap.230 ("the PBSO"), with only certain exceptions (see in particular sections 4 and 5 of the PBSO) or a passenger service licence ("PSL") must be granted under the provisions of sections 27 to 29 of the Road Traffic Ordinance, Cap.374 (" the RTO"). For the operation of public light buses (buses not exceeding 4 tonnes carrying no more than 16 passengers: see section 2 of the RTO)("PLBs"), no franchises are granted. Instead, operators of PLBs must have a PSL granted also under sections 27 to 29 of the RTO.

2. The Applicant ("Chit Fai") is a commercial operator of PLBs, being licensed to run a number of fixed PLB routes in Hong Kong. The buses used on these routes are known colloquially as green top PLBs. It has been in operation as a licensed PLB operator since 1980. Two of the routes for which PSLs have been granted to Chit Fai are routes K2 and K6 and they centre around the Hung Hom and Whampoa districts. The present application for judicial review relates to these routes.

3. Kwoon Chung Motors Company Limited ("Kwoon Chung") holds a PSL under which it is authorized to operate various types of non-franchised bus services. One type of such services provided by Kwoon Chung is what is known as a contract hire service whereby Kwoon Chung contracts with another person to provide bus services. In 1997, it would appear that Kwoon Chung contracted with Hutchison Estate Agents Limited to provide free shuttle bus services between a shopping centre in Hung Hom (called Wonderful Worlds of Whampoa ("WWW")) and certain residential areas in Homantin and Tokwawan. The provision of free bus services is not expressly mentioned in either the PBSO or the RTO but it is clear that permission from the authorities is required. Where a person without any existing licence wishes to operate a free bus service, a PSL will be required. Section 27 of the RTO applies regardless of whether the bus service (whether provided by a bus or light bus, public or private) is for reward or not. The PBSO has no application to free bus services since a public bus service, as defined in that Ordinance, means only a service for which passengers are carried for reward. Where a person like Kwoon Chung already has a PSL, the requisite permission to operate free bus services is governed by the terms of its licence. It would appear from the terms of Kwoon Chung's PSL that only where it was intended to operate a free bus service for a period in excess of 14 days in any one year would permission from the Respondent ("the Commissioner") be required. In the case of what Kwoon Chung was contracted to provide for WWW, permission from the Commissioner was required.

4. It appears that the Commissioner has, since 1998, been granting Kwoon Chung permission to operate free bus services from WWW. A renewal was granted in February 2001. On 13 April 2002, the Commissioner gave permission to Kwoon Chung to operate a free shuttle service from WWW to Homantin and Chun See Mei Chuen in Tokwawan. After an extension granted in July, the period of approval was extended until 12 September 2002. Kwoon Chung has applied for a further extension but this was apparently refused by the Commissioner on 14 September 2002.

5. Chit Fai regarded the operation of free bus services in Hung Hom as materially and adversely affecting the routes it was operating there. As a PLB operator, it had made substantial investment in terms of the provision of buses and staff in order to be able to run a regular and reliable service. It has been making complaints to the Transport Department since at least July 2001 and there has been lengthy correspondence on this matter. On 12 March 2002, a meeting took place between Chit Fai, the Transport Department and Hutchison Whampoa Properties Limited.

6. According to Chit Fai, it was not until July 2002 that it was informed by the Commissioner that he had in fact granted permission for the operation of free bus services in the said area and that this permission was granted on 13 April 2001. This is the permission granted to Kwoon Chung referred to in paragraph 4 above.

The application for judicial review and the judgment below

7. On 23 July 2002, Chit Fai took out an application for leave to apply for judicial review. Leave was granted by Hartmann J on 29 July 2002. The original relief sought was to quash the decision of the Commissioner made on 13 April 2002 granting approval to Kwoon Chung to operate the WWW free bus services. The basis for the application for judicial review was essentially that in the consideration and grant of the permission or approval to Kwoon Chung to operate the said free bus services, the Commissioner had failed to consult Chit Fai and abide by previous stated policies.

8. The Commissioner served affirmations to oppose Chit Fai's application. In them, the Commissioner's position was clear. Since the relevant approvals to Kwoon Chung had expired on 12 September 2002, Chit Fai's application for judicial review and the relief sought by it were therefore said by the Commissioner to be academic and ought not to be entertained by the court. In addition, it was claimed that the 12 March 2002 meeting, referred to paragraph 5 above, constituted sufficient consultation in any event. The deponent of these affirmations also referred to the fact that subsequent to his refusal in September 2002 to extend further the permission granted to Kwoon Chung, the Commissioner began taking enforcement action against the continued operation of the free bus services.

9. After learning of the fact that the permission given to Kwoon Chung had expired on 12 September 2002, Chit Fai sought leave to amend the Form 86A application by deleting the original relief of certiorari to quash the 13 April 2002 decision, instead claiming a declaration in the following terms:-

"A declaration that the Commissioner for Transport was under a duty to consult the Applicant (being a public transport operator in the area and a person who would be affected), prior to granting the passenger service licences to Kwoon Chung Motors Company Limited on 13 April 2002 to operate free bus services in the Whampoa area."

There is a slight inaccuracy in the formulation of this declaration in that a PSL was not granted to Kwoon Chung on 13 April 2002 (since Kwoon Chung already had one), merely permission or approval to operate free bus services.

10. The hearing before Hartmann J took place over the course of 28 and 29 January 2003. In a judgment handed down on 17 April 2003, the judge dismissed Chit Fai's application for judicial review on the ground that it was academic since the relevant approval had expired on 12 September 2002. He rejected Chit Fai's submission that since a further application could be lodged at any time, the question for determination (namely, ought the Commissioner have consulted Chit Fai before deciding to grant the approval to Kwoon Chung to operate the free bus services in Hung Hom?) was still relevant. The learned judge said this:-

"28. But in the present case at the time of the substantive hearing was there such a real question for determination? The licences were no longer valid and there was no evidence of any application for new licences being considered by the Commissioner.

29. At best, therefore, the applicant had to put its case on the basis that at some time in the future it was more likely than not that an application would be made by some third party. That may well be the case. But when exactly that will be and what the nature of the non-franchised licence application will be are open questions."

11. The judge concluded in these circumstances that while Chit Fai had been treated "shoddily", to decide the substantive issue before him was tantamount to giving an advisory opinion and would only serve to give Chit Fai a "tactical advantage". I should add that the judge also rejected the Commissioner's said argument that in any event, the meeting held on 12 March 2002 constituted sufficient consultation (see paragraph 8 above).

12. Before dealing with the question whether the judge's decision was right, I should first mention an important event that took place after the hearing, albeit before judgment was handed down.

Kwoon Chung's application for judicial review: HCAL 25/ 2003

13. On 4 March 2003, in HCAL 25/2003, Kwoon Chung applied for leave to apply for judicial review seeking to quash the decision of the Commissioner made on 14 September 2002 refusing to extend his approval allowing it to operate free bus services between WWW and Homantin and Chun See Mei Chuen. The other relief sought is an order of mandamus requiring the Commissioner to reconsider and properly determine Kwoon Chung's application for an extension. Leave was granted for Kwoon Chung's application.

14. At once, it can be seen that, first, the provision of free bus services in the Hung Hom area is still an on-going matter and secondly, if Kwoon Chung is successful in its application, the Commissioner will have to consider again any application by Kwoon Chung for the provision of such services in relation to WWW, the very subject matter of the 17 April 2003 decision attacked by Chit Fai.

15. The hearing of HCAL 25/2003 is to take place in February 2004. Pursuant to RHC O.53 r.5(3), Chit Fai has been served and made a party to these proceedings. We understand that similarly, Kwoon Chung was served with the papers in the present action.

16. Much of the information about Kwoon Chung in the Introduction is derived from the facts set out in its Form 86A application in HCAL 25/2003. This was exhibited to an affirmation from Chit Fai's solicitors, for which leave was sought so that it could be used in this appeal. We granted leave at the outset of the appeal and this was not really opposed by the Commissioner. Although the facts contained in the Form 86A application have not formally been agreed by the Commissioner, I did not understand them to be disputed either.

The appeal

17. In this appeal, Mr Philip Dykes SC and Mr Jeremy Chan appeared for Chit Fai, Mr S H Kwok for the Commissioner. After hearing submissions from Mr Kwok for the Commissioner (whom we asked to open the appeal), we made the following order:-

(1)	Chit Fai's appeal be allowed.
(2)	Chi Fai's application for a declaration "that the Commissioner for Transport was under a duty to consult the applicant (being a public transport operator in the area and a person who would be affected), prior to granting the passenger service licences to Kwoon Chung Motor Company Limited on 13 April 2002 to operate free bus services in the Whampoa area" to be heard by the same judge hearing HCAL 25/2003, with liberty to the parties to apply for directions.

18. We also said that the reasons for our judgment in this appeal would be handed down at a later date together with an order nisi as to costs.

Reasons for allowing the appeal

19. I have already in paragraph 10 above set out the question for determination before Hartmann J. The judge, however, took the view that it was not necessary to determine that question. In his judgment, he said this regarding his approach, "In short, as I understand, it is required that there be a real and not a merely hypothetical dispute between the parties."

20. Where it is contended, as the Commissioner has maintained in the present appeal, that the question before the court is academic or hypothetical, the following factors will feature in the court's approach (they are by no means exhaustive since this question can arise in a number of different contexts):-

(1)	Where a question is purely hypothetical or academic in the sense that there are simply no events that have occurred that form the basis for the question to be answered, a court will not entertain it. However relevant or even important the question may be, the court will not give an advisory opinion on hypothetical facts. There are principally two reasons for this: first, the court's function is to adjudicate on real disputes, not imaginary ones and secondly, to decide on points of law or principle when there are no facts before the court is not only undesirable, it can have unfortunate or even dangerous consequences. In this situation, the court will not have any jurisdiction to determine the question.
(2)	Sometimes, however, and the present case is one, the question before the court is said to be hypothetical or academic only because the real dispute that drove the parties to litigation (sometimes called the lis) happens no longer to be in existence at the time of the hearing, even though the relevant facts giving rise to the dispute were real and had actually taken place. For example, in a civil dispute, where the defendant has openly made an offer to a claimant giving him all he is entitled to and this has been accepted, the dispute no longer exists even though it once did. The learned judge thought the question for determination to be academic in the present case since the permission granted to Kwoon Chung to operate the free bus services had expired on 12 September 2002.
(3)	In the type of situation referred to in the previous paragraph, the court does have jurisdiction to hear and determine the question in issue. However, in deciding whether or not to do so (and this can be said to be a matter of discretion), the court will closely examine the relevance or utility of any decision. In the public law sphere, this may be easier to demonstrate than in relation to private rights. This is because very often in public or administrative law cases, the duties of public bodies fall to be exercised on a continuing basis not only in relation to the parties before the court but also perhaps to others in the future. In R v Secretary of State for the Home Department, ex parte Salem [1999] 1 AC 450, the House of Lords reviewed the relevant authorities and stated that the court had a discretion whether or not to determine the question before it even though there was no longer a lis:- see 456 G-H. However, the discretion was to be exercised with caution and the court should only do so where there was good reason in the public interest. At 457 A-B, Lord Slynn of Hadley said this:
	"The discretion to hear disputes, even in the area of public law, must, however, be exercised with caution and appeals which are academic between the parties should not be heard unless there is a good reason in the public interest for doing so, as for example (but only by way of example) when a discrete point of statutory construction arises which does not involve detailed consideration of facts and where a large number of similar cases exist or are anticipated so that the issue will most likely need to be resolved in the near future."
	To Lord Slynn's words, I would add this. Where the same point is likely or may well arise as between the same parties, this is, if anything, an a fortiori situation for the court to proceed to determine the question in controversy. In Eastham v Newcastle United Football Club Ltd [1964] Ch 413 (in many respects a public law case although it appears to have been a private litigation), Wilberforce J determined a question involving the use of restraint of trade clauses in the English Football League, even though the player in question (the famous player, George Eastham) had already moved from his former club Newcastle United (whom he sued) to Arsenal. The footballer's complaint against the transfer system was one that was likely to arise again, if not to him, then in relation to other players. A similar situation arose in R v Canons Park Mental Health Review Tribunal, ex parte A [1995] QB 60, where the Court of Appeal held that the issue there should be determined even though the lis had disappeared since there was a real possibility that the same issue could arise again in relation to the applicant in that case:- see 68 B-F.
(4)	In other public law contexts, the court may consider determining issues where, for example, there are conflicting decisions:- see R v Birmingham City Juvenile Court, ex parte Birmingham City Council [1988] 1 WLR 337.

21. In the present case, the question for determination identified above should in my view be decided by the court:-

(1)	While the impression given to the judge was that the impugned decision of 13 April 2002 was "one off", the real position was quite different. The facts revealed by Kwoon Chung's application for judicial review showed that the 13 April 2002 decision was but part of a series of decisions in which Kwoon Chung had been permitted by the Commissioner to run free bus services in the Hung Hom area for periods commencing from 1998. None of this emerges from the evidence before Hartmann J and indeed it was surprising that the Commissioner's evidence did not allude to it. For its part, Chit Fai was unaware of what was going on exactly between the Commissioner and Kwoon Chung. On the evidence before us, it is perhaps an understatement to say that the information provided by the Commissioner to Chit Fai was somewhat sparse. The controversy surrounding the provision of free bus services and how this may affect Chit Fai's established PLB routes in the Hung Hom area, was thus an on-going one. At no stage did the Commissioner say that no future approvals would be granted to Kwoon Chung or anyone else to operate such services.
(2)	And indeed he cannot because if Kwoon Chung were to be successful in HCAL 25/2003, by necessity, the question of its providing free bus services in the Hung Hom area will actually arise again for decision by the Commissioner. If this were to take place, the question whether Chit Fai should be consulted, and if so to what extent, becomes extremely relevant. This might perhaps explain why Chit Fai was joined in HCAL 25/2003.
(3)	It is important to bear in mind that while one of the issues for determination in HCAL 25/2003 is the extent to which Chit Fai was or ought to have been consulted in any decision by the Commissioner as regards the provision of free bus services by Kwoon Chung, the actual decision which is challenged in those proceedings is that made on 14 September 2002 in which the Commissioner refused to extend his permission to allow Kwoon Chung to operate free bus services. It is not the 13 April 2002 decision as such. Yet, the decision is part of the history of the various approvals given to Kwoon Chung over the years and it is important, in my view, that questions of consultation between the Commissioner and Chit Fai in relation to that decision should be fully explored and argued. It may be that the most appropriate time to hear such arguments will be the same time as the hearing of HCAL 25/2003. Accordingly, as our order reflects, the parties are at liberty to seek directions from the judge hearing both applications.
(4)	Quite apart from HCAL 25/2003, good reasons exist for the question for determination in the present proceedings to be decided by the court. I have earlier mentioned the on-going nature of the provision of free bus services in the Hung Hom area. The possibility, not to say probability, of this is sufficiently strong as a reason to justify by itself the court deciding the issue of consultation. However, there is, in addition, a more general point that can be made. The juxtaposition of free bus services alongside existing bus services is not an uncommon one in Hong Kong. The present case involves the provision of free bus services to attract shoppers to WWW. Similar bus services may, I perceive, exist in relation to residential projects or developments to attract buyers. There may be other situations. There is therefore much to be said for the court determining the question whether existing bus operators should be consulted by the Commissioner and if so, to what extent. As stated above, the duties of public bodies may fall to be exercised on a continuing basis not only in relation to the individual complainant bringing the proceedings but also to others in a similar position. In this context, I derive assistance from cases such as Salem and Eastham (referred to in paragraph 20(3) above). Thus analyzed, it can readily be seen that were the court to determine the question in the present proceedings, it is far from just rendering an advisory opinion or merely giving Chit Fai some sort of tactical advantage. I would, therefore, with respect, differ from the views expressed by the learned judge in paragraph 32 of his judgment.
(5)	It was suggested by Mr Kwok that a determination by the court in the present proceedings would provide little value or guidelines for the future since whatever the court might determine would have to be seen in the context of the particular facts before it. Coupled with this submission was the proposition that since each case should be decided in accordance with its own facts, Chit Fai (or any other applicant) should await a future decision in which the point arises. I accept the basic submission that a court's decision and views on the law should be seen against the facts before it, but this provides no justification not to deal with the question in the present case:-
	(a) The point may well actually arise again as between the same parties:- see the points made above in relation to HCAL 25/2003.
	(b) The question of consultation in the context of the facts in the present case is a sufficiently general one for any determination by the court to provide at least some useful guidance for the future.
	(c) If Chit Fai were to wait for the next decision affecting its interests to be made before it is permitted to launch proceedings, it may well find itself in the same position as in the present case, namely, that it launches proceedings only after the relevant decision has been made and implemented. Where the Commissioner takes the view, as he seems to have done in present case, that Chit Fai is not entitled to be told of any decision he has made or is about to make, then Chit Fai's predicament is plain to see. An applicant in the position of Chit Fai may find himself facing an argument either that his application is academic or that he is not entitled to the relief sought (say, certiorari) as a matter of discretion since this may, for example, be unfair to innocent third parties who have benefited from impugned decision. It is because of such difficulties that it is desirable in the present case, in circumstances where there remains the very real possibility of a recurrence, for the court to adjudicate on the question asked to be determined by Chit Fai.

22. For the above reasons, the appeal was allowed. The judge below did not have the benefit of the additional evidence that was before us. If he had, I am in little doubt he would have arrived at a different conclusion.

23. Out of completeness, I should deal with Mr Dykes' submission that it was a mere accident of timing that the permission granted to Kwoon Chung had expired before the matter was heard by the court. He argued that had the hearing taken place before the expiration of the permission granted to Kwoon Chung, the whole issue of whether or not the hearing was academic would not arise and this therefore somehow should have persuaded Hartmann J to deal with the matter. I fail to see the logic of this argument. The fact that the court would have dealt with the matter if the permission granted to Kwoon Chung was not spent by the time the application for judicial review came on for hearing, is quite irrelevant to the situation the court actually found itself in, namely, that the permission was in fact spent. In dealing with the fact that the proceedings may have become academic or hypothetical, the court could not have been influenced by what might have happened had the circumstances been different. It had to deal with the situation as it existed. Reliance was placed by Mr Dykes on Eastham but in that case, the court dealt with the question asked to be determined not so much on the basis on an argument of accident of timing as on the ground that the question was one that was important and ought to be determined for the future.

24. Lastly, I would just note that Mr Dykes also referred us to numerous cases on the circumstances in which it may be appropriate for the court to make declarations in public law cases. I find it unnecessary to deal with these authorities as they will no doubt be canvassed at the hearing which is now to take place.

Costs

25. It is of course correct that HCAL 25/2003 only came into existence after the hearing before Hartmann J in the present case had been concluded. For that reason, it may be suggested that the correct course would be, as Mr Kwok hinted, to make no order as to costs.

26. However, quite apart from HCAL 25/2003, I am of the view that in any event, the judge ought to have determined the question before him. I refer to the matters set out in paragraphs 21(1), (4) and (5) above.

27. Furthermore, the Commissioner ought in the present application for judicial review to have fully disclosed all the salient facts for the court to consider. Not to have dealt comprehensively with the history of the granting of permission to Kwoon Chung nor the on-going dispute with that company, was an unfortunate omission and gave the judge below the impression that the 13 April 2002 decision was "one off" when it clearly was not. In public law cases, it is incumbent on the Government and its departments to treat judicial review as "a process which falls to be considered with all the cards face upwards on the table and the vast majority of the cards will start in the authority's hands":- see R v Lancashire County Council ex parte Huddleston [1986] 2 AER 941, at 945 per Lord Donaldson of Lymington. As the case makes clear, the rationale is to assist the court to ascertain whether the relevant decision can be allowed to stand. This approach, consistent as it is with the high standard of public administration expected of the Government, does not enable an applicant to fish for a case or an argument he has hitherto not advanced (see the judgment of Parker LJ at 947 F-G), but in the present case, it would have been better for the Commissioner to have given more details than he has, particularly when the affirmations served on behalf of the Commissioner purported to deal with the relevant events leading up to the decision made on 13 April 2002.

28. For the above reasons, I would make an order nisi that the Commissioner should pay to Chit Fai the costs of the appeal and below, such costs to be taxed if not agreed.

Hon Rogers VP :

29. I agree.

Hon Le Pichon JA :

30. I agree.