KWOON CHUNG MOTORS COMPANY LIMITTED v. COMMISSIONER FOR TRANSPORT AND ANOTHER

HCAL11/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 11 OF 2010

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BETWEEN

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REASONS FOR JUDGMENT

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A.   Introduction

1.  The Applicant is a Hong Kong company holding various passenger service licences issued by the Commissioner for Transport (“the Commissioner”) for the purpose of operating non-franchise buses.

2.  As will be explained in greater detail below, the Applicant was suspected by the Commissioner to be in breach of various conditions of the passenger service license numbered PSL No. 3658A (the subject matter under HCAL 11/2010 and HCAL 13/2010) and PSL No. 9396A (under HCAL 12/2010) in providing certain services by the subject buses registered under these two licences in April and May 2008.  

3.  After considering the reports of inquiries held in relation to these suspected breaches, by his three respective decisions all dated 5 January 2009, the Commissioner decided that the Applicant was in breach of, inter alia, Condition 1 of these licences and that the services provided by these buses were unauthorized services. He further decided to cancel (a) these passenger service licences relating to the subject buses and (b) the vehicle licences of these buses.

4.  The Applicant applied to the Transport Tribunal (“the Tribunal”) to review the Commissioner’s above decisions.

5.  After hearing the respective review application lodged by the Applicant against each of the Commissioner’s decisions, the Tribunal by its decision respectively dated 28 October 2009, 30 October 2009 and 2 November 2009, confirmed the Commissioner’s above decisions, save that it varied one of the Commissioner’s decisions to suspending the passenger service licence of the subject buses instead of cancelling it.

6.  In January 2010, the Applicant sought leave to apply for judicial review against respectively each of the Commissioner’s decisions and the related Tribunal’s decisions. The Applicant asked the Court to quash these decisions.

7.  Leave was granted by this Court on 24 February 2010 with the direction that all the three judicial reviews be heard together as the facts and grounds of judicial review are similar.

8.  On 10 October 2011, after hearing the parties, I dismissed the applications with costs.  I indicated that I would hand down my reasons for the judgment.  This is what I do now. 

B.  The relevant legal context

9.  In Hong Kong, the operation of public bus services are governed and regulated by the Road Traffic Ordinance (Cap 374) (“the RTO”) and the Public Bus Services Ordinance (Cap 230) (“the PBSO”).

10.  Public bus services can only be operated either as a franchised service under a franchise granted under the PBSO or any other enactment, or a non-franchised service in the case of the following specific public bus services:

(1)  A tour service (as defined by s. 4(3)(a) of PBSO) (known as ‘A01 service’).

(2)   An international passenger service (as defined by s. 4(3)(b) of PBSO) (known as ‘A-05 service’).

(3)   A hotel service (as defined by s. 4(3)(c) of PBSO) (known as ‘A02 service).

(4)   A student service (as defined by s. 4(3)(d) of PBSO) (known as ‘A03 service’).

(5)   An employees’ service (as defined by s. 4(3)(e) of PBSO) (known as ‘A04 service’).

(6)   A residents’ service (as defined by s. 4(3)(f) of PBSO) (known as ‘A06 service’).

(7)   A multiple transport service (as defined by s. 4(3)(g) of PBSO) (known as ‘A07 service’).

(8)   A public bus service approved by the Commissioner and not required to be operated under a franchised under the PBSO (s. 27(4) of the RTO).  Included in this category is non-scheduled contract hire service known as ‘A08 service’.

11.  The operation of non-franchised bus services requires a passenger service licence (“PSL”) granted by the Commissioner under the PBSO authorising the licence holder to operate one or more of the eight public bus services outlined above.

12.  A person proposing to operate a public bus service may apply to the Commissioner for issuing a PSL in respect of one or more public buses under s. 27 of RTO.

13.  The licensee would have specific buses registered under each particular PSL and their operation must be subject to and in compliance with the conditions provided in the PSL.

14.  Under s. 30 of the RTO, the Commissioner may appoint a public officer to hold an inquiry if he suspects that there is a breach of the relevant PSL in the operation of the service or that any vehicle has been used otherwise than for the purposes of the service authorised by the relevant PSL under which the vehicle has been registered.

15.  If the Commissioner upon considering a s. 30 report made by a public officer is satisfied that there is unauthorised use of the vehicles under a PSL or there is a breach of the PSL condition, he may under s. 31 of the RTO penalise the licensee with the statutory sanction provided therein.

16.  The licensee may apply to the Tribunal under s. 33 of the RTO to review the Commissioner’s decision made under s. 31.  Under s. 35 of the RTO, the Tribunal on hearing such a review may confirm, reverse or vary the Commissioner’s decision.

C.  The facts

17.  The facts underlying these applications are very similar and not disputed.  They can be summarised as follows.

HCAL 11/2010

18.  At the material times, the Applicant was the holder of PSL No. 3658A issued by the Commissioner under s. 27 of the RTO.

19.  PSL 3658A authorised the Applicant to operate a public bus service through public buses registered under it.  There were 300 odd vehicles including the buses (“the Subject Buses”) with registration marks LA5173 and KF3809 registered under this licence.

20.  Both the Subject Buses were authorised to operate A01(tour service), A02 (hotel service), A03 (student service), A04 (employee service) and A08 (contract hire) services.

21.  PSL 3658A was subject to, inter alia, the following conditions:

“1. The operation of any service, either solely or with other Passenger Service Licence holder(s), whether jointly or otherwise, by any bus specified in this licence or under the control of the same licensee, other than any type of public bus services specified in Section 4(3) of [the PBSO], with the same origin and destination areas, for more than 2 days either intermittently or consecutively in a period of 30 days, shall be subjected to the prior approval of the Commissioner for Transport in writing.

...

9. No bus service other than those permitted by this licence shall be operated by the licensee.

10. The licensee is required to comply with all conditions set out in this licence and any other licence(s) which a non-franchised bus may be subject to.

11. The licensee shall ensure that all services provided by the bus(es) under this licence are operated in compliance with the conditions of this licence.

12. The licensee shall be vigilant in ensuring that the bus(es) operated under this licence are to be used for the services and routes as approved by the Commissioner for Transport only. To comply with this condition, the licensee shall take measures including but not limited to giving clear instructions and proper training to his staff, conducting frequent inspections and monitoring the operation of the bus services, etc. to safeguard against misuse of the bus(es) for unauthorized purpose.

...”

22.  By reason of Condition 10 of the said licence, the following conditions imposed by the Transport Department for a non-franchised bus in 1998 were also applicable to the licence:

“...

2. A bus must be used exclusively for the purpose(s) approved by [the Commissioner]. Any change in the use of the vehicle must be reported to the Commissioner immediately.

...

13.   A bus is also subject to any other conditions as detailed in the passenger service licence and the letter offering the licence.”

23.  Thus, under Condition 1 of PSL No. 3658A, the Applicant had to apply for prior approval of the Commissioner before it could operate a bus service plying for the same origin and destination “for more than 2 days either intermittently or consecutively in a period of 30 days”.

24.  Investigations by the Commissioner revealed that the Subject Buses were used to provide service plying the same origin and destination between Millennium City 5 (APM) and Laguna City on 10 April, 30 April and 9 May 2008.

25.  The Commissioner thus wrote to and informed the Applicant the findings of these investigations, and said that the Subject Buses were therefore suspected to have been used to provide an unauthorised bus service and in breach of, inter alia, Condition 1 of the licence.

26.  Pursuant to s. 30 of the RTO, the Commissioner then appointed a public officer to hold an inquiry in relation to the said suspected breaches.

27.  The inquiry was held on 5 August 2008, after which, the public officer submitted his report to the Commissioner in September 2008.

28.  After considering the report, the Commissioner was satisfied that the Subject Buses had been used otherwise than for the purpose of the services authorised by PSL No. 3658A and that Conditions 1, 9, 10, 11 and 12 of the said PSL, and Conditions 2 and 13 of the Licensing Conditions for a non-franchised bus had not been complied with.

29.  The Commissioner decided to cancel the Applicant’s PSL 3658A in respect of the Subject Buses pursuant to s. 31 of the RTO, and to cancel the vehicle licences in respect of the Subject Buses pursuant to s. 25(1) of the RTO accordingly (“the Commissioners’ 1^st Decision under PSL3658A”).   In arriving at this decision, the Commissioner had taken into account of the Applicant’s previous breach (“the Applicant’s Previous Breach”) under PSL 9396A, which is another PSL held by the Applicant. 

30.  The Commissioner notified the Applicant the Commissioner’s 1^st Decision under PSL3658A by his letter dated 5 January 2009.

31.  On 15 January 2009, the Applicant applied for a review by the Tribunal of the Commissioner’s 1^st Decision under PSL3658A.

32.  The review was heard before the Tribunal on 28 October 2009.  The Tribunal confirmed the Commissioner’s decision after the hearing (“the Tribunal’s 1^st Decision under PSL3658A”)^[1]. It gave its written reasons for the decision on 11 November 2009.

33.  On 28 January 2010, the Applicant applied for leave to judicial review the Commissioner’s and the Tribunal’s 1^st Decisions under PSL3658A.

HCAL 13/2010

34.  The Applicant’s buses respectively with registration number GT5737 and MA6548 were also registered under PSL 3658A (i.e., the same PSL relating to HCAL 11/2010).

35.  The Commissioner conducted surveys on the operation of these two buses on 27 April, 17 and 18 May 2008.  These surveys revealed that these two buses were involved in the provision of A08 service on these three days with the same origin and destination without prior approval from the Commissioner.

36.  The Applicant was thus suspected of having contravened, inter alia, Condition 1 of the said PSL.  Pursuant to s. 30 of the RTO, an inquiry was held by a public officer on 5 August 2008 in relation to this suspected breach of the licence.   Subsequent to the inquiry, the public officer submitted a report to the Commissioner for his consideration.

37.  Having considered the report, the Commissioner concluded that the Applicant had breached, inter alia, Condition 1 and those two buses were used to provide services otherwise than for the purpose of the service authorised by the PSL. 

38.  On 5 January 2009, the Commissioner decided to cancel PSL 3658A in respect of these two buses and their vehicle licences (“the Commissioner’s 2^nd Decision under PSL 3658A”).  In coming to this decision, the Commissioner had again taken into account the Previous Breaches by the Applicant.

39.  The Applicant applied to the Tribunal to review the Commissioner’s 2^nd Decision under PSL 3658A. 

40.  On 2 November 2009, the Tribunal decided to uphold the Commissioner’s 2^nd Decision under PSL 3658A but to vary it to the extent that the PSL in relation to these 2 buses was suspended for 15 months instead of cancelling it, and their vehicle licences were cancelled during this period (“the Tribunal’s 2^nd Decision under PSL 3658A”).

41.  On 28 January 2010, the Applicant applied for leave to judicial review the Commissioner’s and the Tribunal’s 2^nd Decisions under PSL 3658A.

HCAL 12/2010

42.  The Applicant operated the buses with registration number HV5865 under PSL 9396A.  At the material times, there were 20 odd vehicles registered under this licence.

43.  PSL 9396A contained the same conditions as PSL 3658A quoted above.

44.  The Commissioner’s surveys revealed that this bus was suspected to have been used in breach of, inter alia, Condition 1 to provide unauthorised A08 service plying the same origin and destination between Millennium City 5 (APM) and Hui Lai Court/Sau Mau Ping on 17 April, 6 and 8 May 2008.

45.  On 5 August 2008, a public office appointed by the Commissioner under s. 30 of the RTO held an inquiry in respect of the suspected breach under the licence.

46.  On 28 October 2008, the public officer submitted his report to the Commissioner. 

47.  After considering the report, the Commissioner informed the Applicant on 5 January 2009 that he was satisfied that this bus (a) had been used otherwise than for the purpose of the service authorised by PSL 9396A, and (b) the Applicant had been in breach of, inter alia, Condition 1 of the licence.

48.  The Commissioner decided to (a) cancel PSL9396A in respect of this bus pursuant to s. 31 of RTO, and (b) cancel the vehicle licence of this bus (“the Commissioner’s Decision under PSL9396A”).

49.  Again, in arriving at this decision, the Commissioner had taken into account of the Previous Breaches.

50.  On 15 January 2009, the Applicant applied to the Tribunal to review the Commissioner’s Decision under PSL9396A. 

51.  The review was heard before the Tribunal on 30 October 2009.  After the hearing, the Tribunal decided to confirm the Commissioner’s Decision under PSL 9396A (“the Tribunal’s Decision under PSL 9396A”).

52.  On 28 January 2010, the Applicant applied for leave to judicial review the Commissioner’s and the Tribunal’s Decisions under PSL 9396A.

D.     The present judicial review

53.  Mr Yeung for the Applicant confirms at the hearing that the Applicant now relies only on two grounds in support of these three judicial review applications^[2].

54.  First, he submits that on a proper construction of Condition 1, the Applicant was not in breach of it in all three cases.  The relevant decisions were based on an incorrect construction of Condition 1, and are thus illegal (‘the illegality ground”).

55.  Secondly, even if the Applicant was in breach of Condition 1, Mr Yeung says that, under a proper construction of ss. 30 and 31 of the RTO, it was ultra vires for the Commissioner and the Tribunal to consider the Previous Breaches in deciding the appropriate penalty for the Applicant’s breach under the relevant PSL (“the ultra vires ground).

56.  I would discuss these two grounds in turn as follows.

The illegality ground

57.  Condition 1 provides as follows:

“The operation of any service, either solely or with other Passenger Service Licence holder(s), whether jointly or otherwise, by any bus specified in the licence or under the control of the same licensee, other than any type of public bus services specified in Section 4(3) of [the PBSO], with the same origin and destination areas, for more than 2 days either intermittently or consecutively in a period of 30 days, shall be subject to the prior approval of [the Commissioner] in writing.” (emphasis added)

58.  Mr Yeung for the Applicant contends that as it has not been provided under Condition 1 as to how “a period of 30 days” is to be determined, nor is there any specification as to when or on what day/date a period of 30 days commences, it is proper to construe Condition 1 in the following two ways.

59.  First, in determining whether the “more than 2 days” limit has been invoked, it is proper and permissible to calculate and divide two adjourning 30-days periods in between the 3 or more than 3 days of bus service provided by the Applicant under a PSL.  In other words, this calculation would permit say “dividing” the two periods between on the one side a 2 days of service and on the other side a 1 day (or 2 days) of service. 

60.  This is what Mr Yeung describes as the “period approach” in interpreting Condition 1.  Construed as such, the Applicant was not (Mr Yeung submits) in breach of Condition 1 under all the scenarios as found by the surveys under these three applications.

61.  Secondly, s. 71(1)(a) of the Interpretation and General Clauses Ordinance (Cap 1) provides that “in computing time for the purposes of any Ordinance a period of days from the happening of any event or the doing of any act or thing shall be deemed to be exclusive of the day on which the event happens or the act or thing is done.” (emphasis added)

62.  Applying this section (says Mr Yeung), on a proper construction, for the purpose of determining the commencement day of “the period of 30 days” under Condition 1, it shall be the day immediately following the first day on which the subject “service” (as the event) was provided.  As a result (Mr Yeung further submits), there were no services provided on more than 2 days in the 30 days period in the present cases, and the Applicant was not in breach of Condition 1 in any of the scenarios under these applications.  Mr Yeung describes this as the “commencement approach” in interpreting Condition 1.

63.  With respect to Mr Yeung, I reject his submissions on the construction of Condition 1.  My reasons are as follows.

64.  In construing Condition 1, and the phrase of “for more than 2 days either intermittently or consecutively in a period of 30 days”, the starting point is always what is the objective and ordinary meaning of the phrase. 

65.  In my view, on a proper reading, by using the word “in” after the words “for more than 2 days either intermittently or consecutively” to refer to “a period of 30 days”, the objective meaning of this phrase is clearly that the “period of 30 days” is to describe and refer to the period within which the “more than 2 days” constitute.   In other words, if the 3 or more days together constitute a period which is equal to or less than 30 days, Condition 1 is invoked.  

66.  This objective and clear meaning therefore does not permit the “period approach” interpretation as submitted by Mr Yeung.

67.  Further, I accept the submission of Mr Chan made for the Commissioner that the underlying purpose of Condition 1 is to permit public bus service (A08 service) to be provided for ad hoc needs without prior approval of the Commissioner. However, the Applicant’s construction, if correct, would permit a licence holder to choose the starting day to start the count of the 30 days period.  This would therefore easily allow abuse by a bus operator to turn the ad hoc service into a regular one without the Commissioner’s prior approval[3].  The said construction is thus contrary to and inconsistent with the underlying purpose and objective of Condition 1.

68.  On this basis, I would also reject the Applicant’s “period approach” construction of Condition 1.

69.  With regard to the “interpretation approach”, it is also clearly not applicable.  S. 71(1)(a) of Cap 1 is only applicable to the construction of Ordinances.  Condition 1 is not part of an Ordinance nor is it provided by any Ordinances.  This statutory section simply has no application to its proper construction.

70.  For the above reasons, the illegality ground of the judicial review must fail, and I so hold.

The ultra vires ground

71.  Ss. 30 and 31 of the RTO provide as follows:

“30. Inquiry where passenger service licence is contravened

(1) If the Commissioner has reason to believe in respect of any vehicle in respect of which a passenger service licence is in force that-

(a) the vehicle has been or is being used otherwise than for the purpose of the service authorized by the licence; or

(b) any condition of the licence or any provision of this Ordinance has not been or is not being complied with,

he may appoint a public officer to hold an inquiry.

(2) An officer appointed under subsection (1) shall fix a time and place for the inquiry and shall give 21 clear days' written notice thereof to the licensee.

(3) An inquiry may be postponed if the officer conducting it thinks fit and where an inquiry is postponed the officer shall cause a notice to be served on the licensee specifying the date to which the inquiry has been postponed.

(4) At an inquiry the officer conducting the inquiry shall consider-

(a) any evidence received by him, whether tendered on behalf of the licensee or otherwise, and any representations made by or on behalf of the licensee or otherwise;

(b) representations in writing by or on behalf of the licensee.

31. Commissioner's power to cancel, suspend or vary a

passenger service licence

If after considering the report of an officer who has conducted an inquiry under section 30 the Commissioner is satisfied as to the matters set out in subsection (1)(a) or (b) of that section he may-

(a) suspend or cancel the passenger service licence;

(b) suspend or cancel the passenger service licence in respect of particular vehicles; or

(c) vary the passenger service licence in respect of-

(i) routes;

(ii) approved purposes;

(iii) the number of vehicles included in the licence,

and shall notify the licensee of his decision.”

72.  Mr Yeung’s submissions on this ground run as follows:

(1)   S. 31 of the RTO provides that the Commissioner may, after considering the report of an inquiry under s. 30, suspend or cancel THE (Mr Yeung’s emphasis) passenger service licence or suspend or cancel the passenger service licence in respect of particular vehicles and shall notify the licensee of his decision.

(2)   S. 30 provides that “If the Commissioner has reason to believe in respect of any vehicle in respect of which a passenger service licence is in force that the vehicle has been or is being used otherwise for the purpose of the service authorised by the licensee or any condition of the licence or any provision of this Ordinance has been or is not being complied with, he may appoint a public officer to hold an inquiry”.

(3)   The power in s. 31 can only be exercised on THE (Mr Yeung’s emphasis) passenger service licence in respect of which a vehicle or vehicles was the subject matter of an inquiry under s30. There is no provision to allow the Commissioner, or for that matter, the Tribunal to consider breaches revealed in inquiry reports on vehicle(s) under a different passenger service licence.

(4)   Further, the Commissioner can only exercise his s. 31 power on THE(Mr Yeung’s emphasis) s. 30 report relating to “THE [Mr Yeung’s emphasis] vehicle [which] has been used otherwise than for the purpose of the service authorised”.  It would be therefore ultra vires if, when exercising his power under s. 31, the Commissioner takes into consideration breaches of vehicle(s), even under the same passenger service licence, revealed in inquiry reports other than the one that immediately relates to the exercise of his power under s. 31 in that particular instance.

73.  It is therefore Mr Yeung’s submissions that in exercising his statutory power under s. 31 of RTO, the Commissioner can only look at matters that relate to and concern with the subject matter PSL and matters contained in the s. 30 report.   The Commissioner is thus not entitled under the statutory power to take into account of the Previous Breaches which relate to another PSL and are also breaches not contained in the report.   

74.  I do not agree.

75.  In my view, on a proper construction:

(1)   S. 31 deals with the nature and kind of penalty that the Commissioner can give in relation to a PSL, when the breach of which has already been established.  Hence, the use of the word “the” is necessary when referring to the penalty of cancellation or suspension of the breached licence, so that these penalties are only to be made to “the” PSL which has been breached or which the subject matter vehicle has been registered under.   I cannot see how this could be construed objectively (as submitted by Mr Yeung) to reflect an intention of the legislature to limit the matters of which the Commissioner could take into account in determining what is the appropriate penalty to impose.

(2)   Similarly, the words “If after considering the report of an officer who has conducted an injury under section 30 the Commissioner is satisfied as to the matters set out in subsection (1)(a) or (b) of that section he may…” used in s. 31 of the RTO are clearly referring to the requirement that the Commissioner has to satisfy that there is a breach of a PSL in the ways as provided under s. 30, before he may exercise his discretion to impose a penalty.  Properly and objectively construed, the reference to the s. 30 report in s. 31 is only to describe how the Commissioner may be satisfied as to whether the matters under s. 30(1)(a) or (b) are established.  This has nothing to do with what matters the Commissioner may consider in determining the penalty after he is satisfied that a breach in the manner as described under s. 30(1) has been established.   I therefore also do not accept that this reflects objectively a legislative intention to limit the Commissioner’s consideration only to matters contained in the report when considering the appropriate penalty.

76.  Further, on the question of whether it was legitimate for the Commissioner to take into account of the licensee’s other previous breaches in another PSL in determining the appropriate penalty for a breach of a subject matter PSL, I would also respectfully adopt Poon J’s observation at paragraphs 34 and 35 of his judgment in Kwoon Chung Motors Co Ltd v Commissioner for Transport & another (unrep., HCAL 67/2009, 5 March 2010) as follows:

“34. Mr Li [for Kwoon Chung, the applicant] contended that the Tribunal erred in failing to treat the applicant as a first offender. He argued that section 31 of RTO, which deals with sanction, is directed against the licence only and not its holder. Thus the Tribunal should not have taken into account the applicant’s previous conviction under PSL3658A [which was another PSL]. I disagree.

35.    The Commissioner must impose an appropriate sanction that is commensurate with the gravity of the offence and the circumstances of the case before him.  He must take into account all the relevant factors, both mitigating and aggravating. So must the Tribunal when it reviews the sanction imposed by the Commissioner. Although the sanction imposed under section 31 is directed against the licence, the Commissioner and the Tribunal are entitled to indeed should take into account the licensee’s conduct.  As part of his conduct, a previous conviction under the same or other public service licence held by the same offender is plainly a relevant aggravating factor that both the Commissioner and the Tribunal should have regard to in considering what the appropriate sanction should be.”

77.  For the above reasons, the ultra vires ground also fails.

E.  Conclusion

78.  These applications for judicial review therefore failed.  Costs should also follow the event[4].