HEUNG YUK WING v. DIRECTOR OF FOOD AND ENVIRONMENTAL HYGIENE

HCAL 109 / 2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 109 OF 2010

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D E C I S I O N

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A. Introduction

1.  The Applicant is the owner of a live poultry stall (“the Stall”) at Ground Floor, 1019 Canton Road, Mongkok, Hong Kong.  He was granted a fresh provision Shop licence (“the Licence”) by the Putative Respondent in March 2010 for a year.  Under the Licence, the Applicant is permitted to sell chilled poultry and live poultry and fresh poultry carcass but excluding live water birds and live quails.

2.  He says he runs the Stall with his two brothers and a relative, and the income of the Stall thus has been supporting the livelihood of these four families.

3.  Regulation 30AA of the Food Business Regulation requires such licence holders to slaughter all live poultry remaining unsold at the stalls each day before 8pm and to ensure that there is no live poultry at the stalls between 8 pm each day and 5am the next day. These measures are required for the purpose of public health in guarding against the spread of Avian flu.

4.  It is common ground that the Applicant was in breach of this regulation, as on 14 February 2010 (which was the first day of the Chinese New Year), there were 11 live chickens kept at the Stall after 8 pm.   He was subsequently convicted on a guilty plea at the magistracy of this breach and fined HK$6,000.00.

5.  On the other hand, after considering the written submissions made by the Applicant regarding what he said to be an innocent breach of the regulation, the Putative Respondent decided to revoke the Licence pursuant to s 125(1)(b) of the Public Health and Municipal Services Ordinance (Cap 132) (“the Ordinance”) which was to take effect on 13 October 2010.   The Applicant was informed of this revocation decision (“the Revocation Decision”) by a letter dated 29 September 2010.

6.  The Applicant lodged an appeal of the revocation decision to the Licensing Appeal Board (“the Appeal Board”) on 11 October 2010, and at the same time applied to the Putative Respondent to stay the revocation decision pending appeal.  On the same day, the Putative Respondent refused to stay the execution of the Revocation Decision (“the Refusal”).

7.  On 12 October 2010 (i.e., one day before the revocation of the Licence was to take effect), the Applicant applied ex parte before me for an interim injunction to restrain the Putative Respondent from implementing the Revocation Decision, under his intention to issue an application for leave to judicial review the Refusal.

8.  The main ground of the application for the interim injunction at that time was that if the Decision was not stayed pending the appeal, it would affect the Applicant’s right to livelihood.   For the ex parte application, the Applicant has filed an affirmation to say that he and the other three families’ livelihood depended heavily on the income of the Stall, which would be significantly reduced if the Licence was revoked.  He has disclosed in the affirmation that he also operated another stall (“the Pork Stall”) selling pork, but as it is running at a loss, it is his evidence that the only income effectively comes from the Stall.

9.  On the authority of Yu Wing Chang v Director of Food and Environmental Hygiene Department, (unrep., HCAL 10/2009, 13 February 2009, A Cheung J)^[1] and the evidence then filed, I granted the ex parte interim injunction.

10.  This is the hearing of the Applicant’s application to continue the injunction, and the Putative Respondent’s application to set aside the ex parte injunction on the basis of material non-disclosure and that there is no sufficient evidence to show hardship as alleged.

B. Background

11.  After being served with the ex parte injunction, the Putative Respondent has filed affirmations to show that the Applicant is in fact also a holder of 2 other licences granted by the Putative Respondent:

(1) A food factory licence (“the Food Factory Licence”) granted to him from 1 October 2010 to 30 September 2011 for operating a food factory shop (“the Food Factory Shop”) at G/F, 24 Thistle Street, Mongkok, Kowloon. The Applicant has been holding the Food Factory Licence since 13 March 1995.

(2) A fresh provision shop licence (“the Fresh Provision Shop Licence”) has been granted to him from 1 April 2010 to 31 March 2011 to carry on the business of a fresh provision stall (“the Fresh Provision Stall”) at G/F, 1025 Canton Road, Kowloon. The Applicant has been holding the Fresh Provision Shop Licence also since 13 March 1995.

12.  In reply, the Applicant has filed a further affirmation (his 5^th Affirmation) to explain why he has not disclosed these 2 licences at the ex parte application.  His explanations can be summarized as follows:

(1) In relation to the Fresh Provision Shop Licence:

(a) he says he closed down the business of this fresh provision shop in 2005 as it was running at a loss, and had left the shop vacant between 2005 and 2007.

(b) In 2007, he was approached by a Mr Man and Mr Ling of one Garful Development Ltd (“Garful”) whereby they said they were interested in setting up a branch business with the trading name of Lee Fung at the shop. He accepted the offer and received HK$180,000.00 from Garful, and in return he agreed to deal with the formalities of the renewal of the Fresh Food Licence and to hold the same on behalf of Garful. Other than this HK$180,000.00, he has not received any other monetary benefit from Garful or the Fresh Provision Shop.

(c) The company search documents show that the Applicant is neither a shareholder nor director of Garful.

(2) In relation to the Food Factory Licence:

(a) he says he had between 1995 and 2005 operated the Food Factory to prepare roasted meat for sale in the Fresh Provision Shop. It was closed down since 2005 when he also closed down the business of the Fresh Provision Shop.

(b) In 2008, one Mr Yu Wan asked him to let the Food Factory to him at HK$10,000.00 per month, and he agreed to do so. However, he has been treating this HK$10,000.00 rental income as part of his income under the Stall and the Pork Stall when filing his tax return.

(3) For these reasons, he has never regarded that there are any income coming from the Fresh Provision Shop and the Food Factory. As result, he has not disclosed the same in the ex part application. He says that the materials are irrelevant to the ex parte application. But in any event, he emphasizes that the non-disclosure was not intentional or with bad faith.

13.  At the inter parte hearing on 27 October 2010, I raised certain queries on the evidence filed by the Applicant regarding his allegations that since 2005 he had not been receiving any income from the Fresh Provision Shop and the Food Factory.  In particular, I was concerned with (a) the lack of any documentary evidence, such as business registration records to support the Applicant’s allegations, and (b) the lack of explanations as to why he was prepared to continue to hold the two licences respectively for two allegedly entirely independent third parties, risking his own liability for any non-compliance with the terms and conditions attached to these licences. 

14.  In light of Counsel’s submissions based on instructions on the explanations to my queries, I adjourned the matter to 29 October to enable the Applicant to file a further affirmation to confirm what Counsel’s had submitted on instructions.

15.  The Applicant filed on 28 October his 6^th Affirmation seeking to give explanations to address my queries. I am not going to summarize this part of his evidence for the present purpose.

16.  At the hearing on 29 October, Mr Philip Dykes, SC appeared for the Applicant for the first time.  With his usual clarity and frankness, he raised for the first time a more fundamental issue of the application, which is in fact not favorable to the Applicant’s own application. He submitted that there might well be an argument that the Appeal Board should have an ancillary power to stay the Refusal pending appeal, and thus there existed an alternative remedy to this judicial review application. 

17.  If this jurisdictional obstacle is however removed, Mr Dykes then said his primary ground in support of an interim injunction was that, under the principle of cases must be treated alike, and in light of the previous decisions of the Appeal Board for similar situation, there was a real likelihood the Decision would be replaced by an order for suspension of the Licence between 4 to 6 weeks.  If that was the case, the Applicant would be likely to suffer a prejudice if the Decision was not stayed by an injunction between now and the determination of the appeal if, and there was the likelihood that it would, that period was more than 4-6 weeks.   He emphasized that although the hearing of the appeal before the Appeal Board was now tentatively fixed on 29 November, it was not of any degree of certainty that a decision would be made on that day or soon thereafter.  He cited the case of Yu to demonstrate his point.  In that case, the Appeal Board’s decision was only handed down some 5 months after the hearing.

18.  Mr Dykes would also as a further alternative rely on the ground of hardship and right to livelihood to support the application for injunction.

19.  However, in light of the two new points raised by Mr Dykes, I adjourned the hearing to today (4 November) to allow Ms Chui, Government Counsel for the Putative Respondent, to have sufficient time to respond to them. 

20.  Since then, both parties have filed further skeleton submissions dealing with the issues, of which the Court is grateful.

21.  I will now deal with these issues.

C. Discussion

C1. Whether the Appeal Board has an ancillary discretionary power to stay the Decision

22.  The Appeal Board is established by statute under s. 125A of the Ordinance.  Its power are set out in s. 125B as follows:

“Functions and powers of the Board and appeals from its decisions

(1) The function of the Board is to hear and determine any appeal which lies to the Board under section 125.

(2) In determining an appeal, the Board may exercise all the powers and discretions that are conferred on the person who made the decision appealed from.

(3) In determining an appeal, the Board may affirm, vary or set aside the decision and, where it sets aside the decision, it shall substitute its own decision. The Board may also extend the time specified, if any, for complying with the requirement of any notice issued, or an order made by the licensing authority referred to in section 125.

(4) A person who appeals to the Board, if dissatisfied with the decision of the Board may appeal to the Municipal Services Appeals Board within 14 days after receiving notice of the decision.

(5) If an appeal is made under subsection (4), the Board may, in its discretion, suspend the operation of the decision to which the appeal relates, pending the determination of the appeal.”

23.  It is obvious that s. 125B does not expressly provide a power or discretion to the Appeal Board to stay the operation of the decision from which an appeal has been lodged against.

24.  The question before me is whether such a discretion should be implied to it as a matter of law.

25.  The principle applicable has been laid down by the Court of Final Appeal in PCCW-HKT Telephone Ltd v Telecommunication Authority (2005) 8 HKCFAR 337.    The law would imply such a power to grant a discretionary stay in relation to a body set up by statute if:

(1) The enabling statute does not expressly prohibit such a power for the body; and

(2) That power is reasonably required for the effective exercise of the statutory jurisdiction expressly conferred on the inferior court or tribunal concerned.

See: Paras 35 to 43 per Bokhary PJ, and paras 59 to 60 per Ribeiro PJ.

26.  In the PCCW-HKT case, the body concerned is the Telecommunications (Competition Provisions) Appeal Board created under the Telecommunications Ordinance (Cap 106), and the relevant provision concerned is s. 32O(4), which provides as follows:

“(4) After hearing an appeal, the Appeal Board shall determine the appeal by upholding, varying or quashing the appeal subject matter and may make such consequential orders as may be necessary.”

27.  After coming to the conclusion that the Telecommunications Ordinance does not expressly prohibit any implication of a power to grant a stay by that appeal body, the Court of Final Appeal went on to hold that such an ancillary power should be implied under s. 32O(4).  The reasons given by the Bokhary PJ (at paras 44 to 50) and Ribeiro PJ (at paras 61-63) are respectively as follows:

“44. The question before the Court in the present case concerns those matters which can be appealed to the Appeal Board but do not attract automatic suspension pending appeal. It boils down to this. Section 32O(4) expressly confers upon the Appeal Board jurisdiction to determine appeals by upholding, varying or quashing appeal subject matters and by making such consequential orders as may be necessary. Is a discretion to suspend such matters pending appeal an ancillary power, derivable by statutory implication, that the Appeal Board requires for the effective exercise of the jurisdiction expressly conferred upon it?

45. Where an order has been rightly made, considerable disadvantage can result from its suspension pending an eventually unsuccessful appeal against it. On the other hand, considerable loss can be caused by an order that was wrongly made but operated until set aside on appeal. An avenue of appeal against a regulator’s orders is not meant to paralyse the regulator’s activities. But it is meant to provide an effective remedy for appellants. Where suspension pending appeal is not automatic, any discretion to suspend pending appeal would be exercised by an appellate tribunal with both of those considerations kept carefully in mind.

46. One extreme would be to say that a discretion to suspend pending appeal is always an ancillary power, derivable by statutory implication, that every appellate tribunal requires for the effective exercise of the jurisdiction expressly conferred upon it. The opposite extreme would be to say that such a discretion is never an ancillary power, derivable by statutory implication, that any appellate tribunal requires for the effective exercise of the jurisdiction expressly conferred upon it. Neither extreme is acceptable. Whether a power to suspend pending appeal is to be implied must depend on the entire context of each situation.

47. If an appeal subject matter has not been suspended pending appeal, failure to act in conformity with it pending appeal can have serious consequences. The present case itself illustrates that well. As we have seen, it is provided at the end of s.36B(1) that where the Authority has issued a direction to a licensee or other person “the licensee or such person shall give effect to such direction”. Failure to do so would therefore be a contravention of the Ordinance. And under s.34(4) contravention of the Ordinance by a licensee can result in his licence being suspended for up to 12 months or even being cancelled.

48. The matters appealable to the Appeal Board, including those which do not attract automatic suspension pending appeal, can have a heavy impact. They can involve complex issues of law and fact. The Appeal Board has power to receive oral evidence. Considerable time can elapse before the Appeal Board reaches a decision. And although appellate, the hearing by the Appeal Board would be the first hearing that an appellant gets.

49. Judicial review of a refusal by the Authority to suspend under s.46 of the Interpretation and General Clauses Ordinance would not fulfil the function of a discretion in the Appeal Board to suspend pending appeal. The Ordinance provides for a full merits appeal to the Appeal Board. It would be cumbersome and less efficient for suspension pending appeal to be decided by a body other than the one which will hear the appeal. It is the appellate tribunal itself that would be best placed: to take a view of the appeal’s prospect of success; to balance all relevant considerations for and against suspension pending appeal; and to work out any terms on which such suspension is to be ordered.

50. The foregoing represents the context in which the Court has to answer the question of whether a discretion to suspend pending appeal is an ancillary power, derivable by statutory implication, that the Appeal Board requires for the effective exercise of its express jurisdiction of a full merits appeal. Answering this question in its context, I answer it in the affirmative. So PCCW succeeds before one reaches its submission on unconstitutionality.

……

61. The relevant powers in the present case are those conferred on the Board by s.32O(4) for disposing of appeals. They are powers enabling it to mount a full merits review of the Authority’s decision :

“After hearing an appeal, the Appeal Board shall determine the appeal by upholding, varying or quashing the appeal subject matter and may make such consequential orders as may be necessary.”

62. It is obvious that a suspension of the Authority’s direction or order may in some cases be essential if the Board’s powers for disposing of the appeal are effectively to be exercised upon determining the appeal. There can accordingly be no doubt that it is reasonably necessary to imply such a power to enable the Board effectively to carry out its statutory appellate function.

63. The only policy cited against the Board having such a power is the avoidance of abuse of the appellate process. But since the implied power to suspend is discretionary, it may be assumed that the Board will refuse any stay application that is abusive. Prevention of abuse as a policy makes sense in relation to automatic stays. Section 32N(2) aims to exclude such abuse by making it clear that (with the s.36C exception) merely lodging an appeal does not give rise to any automatic stay. But a discretion in the Board to suspend operation of an Authority direction pending appeal does not facilitate such abuse.”

28.  I agree with Mr Dykes that these observations and reasoning apply equally in the present case to s. 125B of the Ordinance.  I may further add that given that the Appeal Board is empowered under this provision to extend time for complying with the requirement of any notice issued or order made by the licensing authority, it is more so the case that it is reasonably required for the effective exercise of the statutory jurisdiction expressly conferred on the Appeal Board to have such a power to grant a stay in appropriate cases.  There is also no statutory prohibition in the Ordinance for the implication of such a power.

29.  I do not think Ms Chui for the Putative Respondent is seriously submitting otherwise.

30.  In the premises, I conclude that it is reasonably necessary to imply a power to grant a stay to enable the Appeal Board effectively to carry out its statutory appellate functions. 

31.  In the circumstances, there exists an alternative remedy to the intended judicial review, which has not been exhausted.   I also do not accept that the Applicant’s failure to exhaust that remedy because of his knowledge of another occasion where the Appeal Board had refused to accept jurisdiction to grant a stay amounts to a good reason for his failure to make an application himself.  I therefore refuse to grant leave to the Applicant to commence the intended judicial review.

C2. Should the ex parte injunction be set aside

32.  In light of my refusal to grant leave for the intended judicial review, it follows that I would set aside the ex parte injunction on the basis that there is no serious issue to be tried under the subject matter in reviewing the Refusal.

33.  Further, it is trite that the Court would set aside an ex parte injunction if the applicant is guilty of material non-disclosure, although the Court retains a discretion to re-grant the relief if it thinks just to do so.  The test as to whether the materials that have not been disclosed is a material one has been reiterated in Citibank v Express Ship Management Services Ltd [1987] HKLR 1184 at 1190 that “it is not simply whether, if the non-disclosure had not occurred, the ex parte judge would, nevertheless, have made the order, but whether the facts not disclosed, being relevant, should have been in the scales”.

34.  In my judgment, the facts that the Applicant has been and is still holding the Food Factory Licence and the Fresh Provision Shop Licence are matters clearly relevant to the core question of whether he would suffer hardship and therefore his right to livelihood would be affected if the Revocation Decision is not stayed.  They should be disclosed at the ex parte application and the Applicant is guilty of material non-disclosure in failing to do so.

35.  On this basis also, I would set aside the ex parte injunction.

36.  As to whether I would have re-granted the injunction again on merits, if I am wrong above on the issue of alternative remedy, I do not think it is appropriate for me to express my views at this stage.  This is so because when the Applicant applies, and I assume he would do so, to the Appeal Board for a stay pending the appeal, the Appeal Board would have to consider these grounds independently, and I should not express any views which may affect the Appeal Board’s decision one way or the other. 

D. Conclusion

37.  For the above reasons:

(1) I refuse leave for commencing the intended judicial review.

(2) I set aside the ex parte injunction.

38.  It remains for me to thank Counsel for both sides for their helpful assistance in this matter.  In particular, I would again like to express the court’s compliment of the exemplary fairness Mr Dykes has demonstrated in this case.