KO CHUN KWEI and Another v. THE AMUSEMENT GAME CENTRES APPEAL BOARD and Another

1996 M.P. No.3487

Headnote

[The power of the Commissioner for Television and Entertainment Licensing under section 9(1)(b) of the Amusement Game Centres Ordinance (Cap.435) to suspend an amusement game centre licence relates not merely to licences in existence but also to such licences as may be granted in the future.]

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

---------------------

J U D G M E N T

---------------------

INTRODUCTION

1. This is an application for judicial review. It concerns licences for four amusement game centres. A number of decisions of the Amusement Game Centres Appeal Board ("the Board") are challenged. So is a decision of the Commissioner for Television and Entertainment Licensing ("the Commissioner"). On 17th January, I quashed the various parts of the decisions of the Board which were challenged, but I dismissed the application for judicial review of the Commissioner's decision. I said that I would give my reasons at a later date. This I now do. All references in this judgment to sections of an ordinance are references to the Amusement Game Centres Ordinance (Cap. 435).

THE FACTS

2. The Applicants' licences. The Applicants are the holders of licences relating to four amusement game centres. The 1st Applicant, Ko Chun Kwei, is the holder of a licence relating to an amusement game centre in Queen's Road Central. The 2nd Applicant, Chow Po Bor, is the holder of licences relating to three amusement game centres in To Kwa Wan, Castle Peak Road and Queen's Road West. Mr. Ko's licence was due to expire on 9th December 1994, and Mr. Chow's licences were due to expire on various dates in February and March 1995. They therefore applied to the Commissioner for the renewal of their licences for a further period of 12 months.

3. Mr. Ko's licence. No decision had been made in relation to the application to renew Mr. Ko's licence by 9th December 1994 when it expired. Accordingly, the licence continued to remain in effect for the time being: see section 8(5). In due course, the Commissioner decided not to renew Mr. Ko's licence. She notified Mr. Ko of that decision on 9th January 1995, though she deferred its operation until 6th February 1995. On 25th January 1995, Mr. Ko lodged an appeal against that decision with the Board. Accordingly, the Commissioner's refusal to renew the licence was suspended for the time being, and the licence continued to remain in effect until the appeal was disposed off : see section 11(2).

4. Mr. Chow's licences. Mr. Chow's three licences received slightly different treatment, but the effect was the same. Unlike Mr. Ko's licence, Mr. Chow's three licences had not expired by the time when the Commissioner considered the applications to renew them. What she decided to do was to revoke the licences. That made it unnecessary for her to consider whether they should be renewed. She notified Mr. Chow of those decisions on 30th January 1995, though she deferred their operation until 9th February 1995. On 3rd February 1995, Mr. Chow lodged appeals against those decisions with the Board. Accordingly, the Commissioner's decision to revoke the licences was suspended for the time being, and the licences continued to remain in effect until the appeals were disposed off: see again section 11(2).

5. The appeals. All four appeals were heard together on 27th September 1996. At the conclusion of the hearing, the Board announced its decisions. They were identical in each case. When reduced to writing, they each read as follows:

" The decision of the Appeal Board was unanimous. In view of the special circumstances of the case, the decision of the Commissioner for Television and Entertainment Licensing was set aside and the Board decided to suspend the appellant's licence for a period of three months. Such suspension should take effect two weeks from the grant of a new licence. The appellant must apply for a licence within one week from the date of the issue of the decision. The Appeal Board also awarded to the Commissioner the costs involved in the appeal and the appellant was to pay a sum of $15,000.00."

6. The Commissioner's reading of the decisions. The Commissioner took the view that the licences which the Board was requiring the Applicants to apply for were new licences. Once the Applicants had received written notice of the Board's decisions, section 11(2) ceased to operate, and until the applications for new licences had been granted, the centres would have to close. That is what she informed each of the Applicants on 27th September 1996. The Applicants could open the centres again when the applications for new licences had been granted, but within two weeks of the grant of new licences they would then have to close down again for the period of three months covered by the suspension. The effect of the Commissioner's reading of the Board's decisions was that the centres would be closed, not merely for the three months following the grant of the new licences, but also for the period from 4th October 1996 (when written notice of the Board's decisions was received) until such time as the new licences were granted.

7. The Applicants' solicitors' reading of the decisions. The Applicants' solicitors took a different view. Their experience in the licensing of amusement game centres had led them to believe that it was likely to take a considerable time for applications for new licences to be processed. They believed that the process could take as much as nine months. They did not think that the Board could have intended the centres to be closed for that long. They believed that the Board had merely required the Applicants to apply for a renewal of their previous licences. Two consequences were said to follow from that:

(i) The applications would be processed much quicker, i.e. it would take a much shorter time for the Commissioner to decide whether to renew the Applicants' previous licences than to decide whether to grant the Applicants new licences.

(ii) The centres would not have to close down in the meantime. That was said to be the effect of section 8(5).

Accordingly, the effect of the Applicants' solicitors' reading of the Board's decisions, when coupled with what they said was the effect of section 8(5), was that the centres would be closed merely for the three months following the renewal of the previous licences.

8. The subsequent applications. Accordingly, on 3rd October 1996, the Applicants' solicitors applied on the Applicants' behalf for the renewal of the Applicants' previous licences. The application in respect of Mr. Ko's licence did not specify the period to which the renewal related, but the applications in respect of Mr. Chow's licences specified the period as being from 27th September 1996 (the date of the Board's decisions) to 26th September 1997. However, as a precaution, and without prejudice to their contention that it was unnecessary for them to do so, the Applicants' solicitors also applied on 3rd October 1996 on the Applicants' behalf for new licences.

9. The grant of new licences. In the event, the Applicants' solicitors' fears about the time it would take for the applications for new licences to be considered proved to be ill-founded. New licences were granted to the Applicants by the Commissioner towards the end of November 1996. They were for 12 months, except in the case of Mr. Chow's licence for the centre in Queen's Road West, where the new licence was granted for 6 months only. The licences which were granted were for the following periods:

The Commissioner did not process the Applicants' new applications for the renewal of their previous licences, presumably because she believed that the Board had required the Applicants to apply for new licences. What she did was to process the original applications for the renewal of the licences. Those applications were granted on 11th October 1996, though they were of little use to the Applicants because Mr. Ko's renewed licence expired on 9th December 1995, and Mr. Chow's renewed licences expired in February and March 1996.

10. The consequence of the grant of new licences. Two consequences flowed from the grant of the new licences. First, the periods during which the centres had had to be closed prior to the granting of the new licences could then be identified. Secondly, the periods of suspension which the Board had ordered could also be identified. Those periods were:

THE APPLICANTS' CASE AGAINST THE BOARD

11. The renewal of the licences. Mr. Philip Dykes for the Applicants did not seek to argue that the Board had required the Applicants to apply merely for the renewal of their licences. That was a realistic stance to adopt. The language of the decisions of the Board was unambiguous and unequivocal. They required the Applicants to apply for "a licence" within one week of the decisions. The previous sentence made it clear what the nature of that licence was: it talked of "the grant of a new licence", not "the renewal of the previous licence". Indeed, the issue was put beyond doubt by a recent affirmation from the Chairman of the Board, who was the Chairman of the panel which heard the Applicants' appeals. He has confirmed that it was new licences which the Applicants were being required to apply for, and not the renewal of their previous ones.

12. The power to suspend licences not yet in existence. What Mr. Dykes contended was that the Board erred in one important respect. The licences which it purported to suspend on 27th September 1996 were licences which had not yet come into force. It was said that the Board has no power to suspend licences which may or may not come into force, and whose existence in the future is dependent on the exercise of a discretion by the Commissioner.

13. The Board has very wide powers. It can "confirm, vary or reverse the decision that is appealed against or substitute therefor such other decision or make such other order as it may think fit": section 13(4)(f). However, its power to make "such other order as it may think fit" does not enable it to order whatever it likes. It is limited to orders of the kind which the Commissioner could have made. Thus far, I go along with Mr. Dykes' argument.

14. The Commissioner has the power to "suspend a licence for such period of time as he may think fit": section 9(1)(b). Where I part company with Mr. Dykes' argument is whether that power relates only to licences which are currently in force. I see no reason why the power should not relate to such licences as the Commissioner may grant in the future. It is true, as Mr. Dykes pointed out, that the powers conferred on the Commissioner by section 9(1) can only be exercised on the grounds mentioned in section 9(2). Most (though not all) of those grounds relate to matters which took place in the past. But even if all the grounds related to matters which took place in the past, that does not mean that the power of suspension could not relate to licences which were to be granted in the future. Indeed, the power to reflect past contraventions by suspending a new or renewed licence for a short period is a useful power for the Commissioner to have.

15. Take the case of a licence which has only a couple of weeks to go before it expires. Suppose that the Commissioner wants to close the centre down for three months. Without the power to suspend such licence as she might grant in the future, she would have to choose between permitting the centre to operate without interruption, or to close it down altogether by refusing to renew its licence. She could not simply defer the renewal of it for three months, because section 8(6) provides that the renewal of a licence takes effect "on the date following the day upon which the licence would have expired". It follows that, in my view, the Board had the power to suspend the new licences which it required the Applicants to apply for.

16. Alternative ways of closing the centres immediately for three months. The affirmation of the Chairman of the Board shows that the Board had originally thought that the three months' suspension which it was imposing would take effect immediately. That was because it believed that the Applicants were holding valid licences. The Board was persuaded that because the Applicants did not hold valid licences the suspensions could not take effect immediately, but could only take effect whenever the Applicants had valid licences in the future. Mr. Dykes argued that the Board erred in law in reaching that conclusion, because it could have achieved its intention of closing the centres for three months with immediate effect. He suggested three possible routes:

(i) Since the Applicants' licences had continued to remain in effect until 27th September 1996 by virtue of section 11(2), those licences could have been suspended for three months then. I disagree. Section 11(2) provides for the suspension of the operation of the decisions which are being appealed from "entil such appeal is disposed of". Since the appeals were disposed of on 27th September 1996, the original licences could not have continued thereafter by virtue of section 11(2).

(ii) Alternatively, if the Applicants' original licences ceased to be in effect once the appeals had been disposed of, the Board could have ordered that the applications for the renewal of the original licences should be granted, and could then have suspended those licences for three months. Again, I disagree. It is true that the Board could have granted the original applications for the renewal of the licences, i.e. Mr. Ko's original application which the Commissioner refused, and Mr. Chow's original applications which the Commissioner did not consider because she had decided to revoke his licences. But the Board could not have suspended their operation. That was because those applications could not have been granted for more than 12 months: see section 8(1). Accordingly, even if the Board had granted them, they would already have expired.

(iii) Alternatively, the Board could have granted new licences there and then, and could have suspended those licences for three months. However, I do not think that that was possible either. New licences can only be granted in accordance with the provisions of section 5. Thus, the Board had power to grant new licences, but only after the requirements of section 5 had been satisfied. It could, I suppose, have adjourned the appeals for the Applicants to apply for new licences, but why should it have done that if, as we shall see, another route existed by which the Board could have achieved its purpose of closing down the centres for a period of three months, albeit by two periods totalling three months in all?

17. However, in one respect, Mr. Ko was arguably in a better position than Mr. Chow. Like Mr. Chow, he could no longer rely on section 11(2) to argue that his original licences continued to remain in effect after 27th September 1996. But he could rely on section 8(5) for that purpose. The setting aside by the Board of the Commissioner's refusal to renew Mr. Ko's original licence meant that the Commissioner had to reconsider the application to renew it. Pending the reconsideration of the application to renew Mr. Ko's original licence, the original licence remained in effect. It follows that the Board could have brought about the immediate closure of Mr. Ko's centre by suspending his original licence while the Commissioner decided whether or not to renew it. The fact that the Commissioner could not have renewed it beyond 9th December 1995 is irrelevant: that is because the application of section 8(5) is not limited to the period during which the renewal of the previous licence operates.

18. I make two comments about this argument:

(i) At first blush, this argument cannot help Mr. Chow. That is because in his case the original licences were revoked. He cannot rely on section 8(5) because, by section 8(2), section 8 does not apply to a licensee whose licences have been revoked. On the other hand, Mr. Dykes argued that section 8(2) should be construed as disapplying section 8 to a licensee whose licence has been revoked prior to an application being made for its renewal. If that construction is correct, Mr. Chow's position is no different from that of Mr. Ko. However, I do not need to consider that because of (ii).

(ii) At the end of the day, this argument cannot help either Mr. Ko or Mr. Chow. That is because the suspensions could not in the event have lasted for long: they could only have continued until 11th October 1996, which was the date when the Commissioner granted the original applications for the renewal of the licences.

19. An alternative way of closing down the centres for periods totalling three months. It follows from what I have said that the Board cannot be criticised for deciding to effect the closure of the centres by suspending the operation of such new licences as the Applicants may have been granted in the future. In his affirmation, the Chairman of the Board has confirmed three important things. First, the Board had it in mind to close the centres for three months. Secondly, the Board realised that, if it suspended the new licences for three months, the centres would be closed for an additional period while the applications for the new licences were being considered. Thirdly, the Board thought that it would take the Commissioner 1 or 2 weeks to consider the applications.

20. The problem with the approach which the Board adopted was that the centres would inevitably be closed for more than three months. Moreover, although the Board believed that that additional period would be no more than a couple of weeks, it could not have known how long it would actually take the Commissioner to process the applications. In fact, it took the Commissioner about seven weeks to process them.

21. In my view, there was a way in which the Board could have effected the closure of the centres for three months and no more. That was by suspending the operation of such new licences as the Commissioner granted, not by three months, but by three months less the period during which the centres would be closed pending the granting of the new licences. That would, of course, have meant that the centres would be closed for two periods, and not just one. But it would have had the inestimable advantage of ensuring that the centres would only be closed for a total of three months. This possibility was not addressed in the Notice of Application. It was necessary, therefore, for the hearing on 6th January to be adjourned to enable the Board to file evidence to deal with the argument if it wished to. As it is, the Chairman of the Board accepts that the Board did not consider this possibility. I do not blame the Board for that. It had not been mentioned to the Board at all. But the fact remains that the Board did not consider it, and in not considering it the Board failed to take into account a relevant consideration. For that reason alone, the decisions of the Board suspending for three months such new licences as the Applicants may have been granted had to be quashed.

22. Relief. In the normal course of events, the quashing of the decisions would be accompanied by an order under Ord.53 r.9(4) remitting the appeals to the Board with a direction to reconsider them in the light of my findings. That is because the court in judicial review proceedings cannot substitute its own decision for that of the decision-maker. I do not propose to do that in this case. That is because by the date on which I quashed the decisions challenged, the centres had been closed for periods totalling exactly three months. I cannot pretend that that was a coincidence. I deliberately selected 17th January as being the date to which the hearing of the application should be adjourned for that reason. Accordingly, the purpose which the Board wanted to achieve, i.e. the closure of the centres for three months and no more, was achieved by my merely making orders of certiorari quashing the decisions of the Board of 27th September 1996 to the extent that the Board suspended for periods of three months any new licences for the centres which the Applicants may be granted. That is not to say, of course, that suspensions were inappropriate. In not remitting the applications to the Board for the Board to decide how long the period of suspension should be, I merely took into account that what the Board had wanted to achieve had been achieved by the dates of the orders of certiorari.

THE APPLICANTS' CASE AGAINST THE COMMISSIONER

23. The decision of the Commissioner which the Applicants have leave to challenge is her decision, communicated to the Applicants by her letters of 4th October 1996, "refusing to consider and process the applications of the Applicants ... for the renewal of" their original licences. That is how the decision challenged is described in the Notice of Application. However, it does not accurately spell out what the Commissioner was and was not prepared to do. She was prepared to process the original applications for the renewal of the original licences. What she was not prepared to do was to process new applications for the renewal of the licences, so that the renewals took effect from 27th September 1996. Since the Commissioner was prepared to process the original applications for the renewal of the original licences, the only part of the decision which was capable of being challenged was her refusal to process new applications for the renewal of the licences.

24. The challenge to that decision is no longer maintained. First, it was mounted at a time when it was being argued that the Board had required the Applicants to apply merely for the renewal of their licences. As I have said, that argument is no longer advanced. Secondly, Mr. Dykes accepted that this challenge could not be pursued if, contrary to his primary argument, the Board had power to suspend licences which had not yet been granted. As it is, I have ruled that the Board had such a power.

25. That is not to say that the Commissioner made no decisions which are susceptible to challenge. In my view, her requirement to Mr. Ko, communicated to him by her letter of 27th September 1996, to close down his centre when he received the written notice of the Board's decision was susceptible to challenge. That is because his original licence continued to remain in effect until such time as his original application for the renewal of his original licence was processed. She should only have required him to close down his centre when that application had been processed. As a result, he was required to close down his centre a week earlier than he needed to. The same argument applies to Mr. Chow if Mr. Dykes' construction of section 8(2) is correct. However, leave to challenge these decisions has never been sought, and I therefore say nothing further on the topic. Apart from anything else, her requirement to Mr. Ko to close down his centre when written notice of the Board's decision was received would only have had the effect of delaying the periods during which the centre would have been closed.

THE COSTS OF THE APPEALS

26. Section 13(4)(g) enabled the Board to "make an award to the Commissioner or to the appellant of such sum, if any, in respect of the costs involved in the appeal as is just and equitable in all the circumstances of the case". In addition, section 13(5) gave the Board "the powers which are vested in the High Court in the exercise of its powers under subsection (4)". Mr. Dykes argued that that shows that the Board is obliged to act not merely fairly, but judicially as well. He reminded me that Ord.62 r.3(2) of the Rules of the Supreme Court requires a Judge of the High Court to make an order for costs which follows the event, unless it appears that there exist circumstances which warrant the making of some other order. He suggested that that should have been the Board's approach to the question of costs.

27. I cannot go along with that argument in its entirety. Section 13(5) relates to the Board's "powers", not its duties. It was not therefore obliged to approach the question of costs in the way in which the High Court is required to, although I accept that the Board could do worse than to follow the practice of the High Court when it comes to costs.

28. Stripped of these technicalities, though, the fact remains that the Applicants succeeded on their appeals. Had the Commissioner's original decisions stood, the Applicants would have been left without licences at all. As it was, her decisions were set aside, and the Applicants had every prospect of their applications for new licences being granted by the Commissioner. The only price which they had to pay for the conduct on their part which had caused the Commissioner to make the original orders was to have such new licences as they were granted suspended for three months, and for their centres to remain closed until they were granted.

29. In those circumstances, I do not think that there was any rational basis for the Applicants to have been ordered to pay sums towards the Commissioner's legal costs. The fact that the licences had not been restored to the Applicants without qualification could not properly have been regarded as a rational ground for making orders for costs in favour of the Commissioner. There was a wide range of orders for costs which it might have been appropriate for the Board to make, but the orders which it decided to make were not, in my view, within the range of reasonable orders which it was open to the Board to make. Accordingly, the orders for costs must be quashed, and I make orders of certiorari quashing them.

30. Again, I do not propose to remit the matter of costs for reconsideration by the Board. If I simply quash the orders, the Applicants and the Commissioner will have to pay their own legal costs of the appeals. That is the most favourable order which the Commissioner could reasonably have hoped for, and it is the order which the Applicants would have been content with. I do not think that by declining to remit the matter of costs to the Board, I am taking a course of action which has the practical effect of substituting my own decision for that of the Board. What I am doing is giving effect to what the parties would have settled for if, as I have found, an order for costs in favour of the Commissioner was not appropriate.