FONG CHI YUNG AND ANOTHER v. TRANSPORT TRIBUNAL AND ANOTHER

HCAL 62/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 62 OF 2008

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J U D G M E N T

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The background:

1.  On 11 September 1997, Ms Fong, a public bus operator, applied for a Passenger Service Licence (PSL) under s 27 Road Traffic Ordinance, Cap 374 (RTO).  On 15 October 1997, the licence was granted to her in respect of, inter alia, two buses, KN 7243 and KX 7170. 

2.  On 7 March 2001, Ganfield, also a public bus operator, applied for a PSL under the same provision.  On 30 March 2001, the licence was granted to Ganfield in respect of, inter alia, bus JW 3299.

3.  A public bus is defined by s 2 RTO as:

“a bus, other than any private bus, which is used or intended for use for hire or reward”

4.  Both PSLs are described in their terms as being for, inter alia, “A08 Contract Hire Service”.  The explanatory notes to the licenses contains the following statement:

“A01-A07 services for carriage of passengers at separate fares. A08 service is for carriage of passengers other than at separate fares.”

5.  The issue in these proceedings is the interpretation of the expression “other than at separate fares”, as it is used in the PSL.

6.  Two statutory provisions govern the use of a private bus.  First, by s 27 RTO a PSL is issued:

“in respect of one or more public buses……for use in accordance with this Ordinance.”

Second, s 52(4) RTO provides:

“No person shall-

(a)  drive or use …. a public bus other than one operated under a franchise granted under the Public Bus Services Ordinance (Cap 230); or

(b)  suffer or permit such a vehicle to be driven or used,

for the carriage of passengers unless a passenger service licence is in force in respect of the vehicle.” (emphasis added)

A license in respect of a public bus operated under a franchise is governed by the terms of the Public Bus Services Ordinance, Cap 230 (PBSO).  Other public bus licenses, PSL’s, are governed by the provisions of the RTO.  It is quite clear, from the words in s 52(4) RTO, emphasised above, that the issue of a PSL to a particular person or company, governs not only the use of the bus by the licence holder, but also any other user of the bus.  In simple terms, the conditions of the PSL go with the bus.  I note that the same conclusion was reached by A Cheung J in Man Yee Transport Bus Co Ltd v Transport Tribunal & Anor, (unreported, HCAL 122/2008, 23 October 2008).

The investigation:

7.  On 9 August 2005, officers of the Transport Department (TD) conducted an investigation into suspected unauthorised services being provided by the Applicants.  In relation to Ms Fong’s licence, the survey was conducted on two buses, KN 7243 and KX 7170.  In respect of Ganfield the survey was conducted on one bus, JW 3299. 

8.  It is common ground that on that day all three buses were being used to provide an A08 service, that is a contract hire service for the carriage of passengers other than at separate fares.  As a result of the investigation the TD took the view that the evidence established that the vehicles were being used for the carriage of passengers at separate fares, contrary to the terms of the PSL.

The Inquiry:

9.  Pursuant to s 30 RTO the Commissioner for Transport, (the Commissioner), appointed a public officer to conduct an Inquiry to see whether there was a breach of the licenses.  The Inquiries were held, separately, on 22 December 2005.

10.  At the Inquiries, neither Ms Fong nor Ganfield challenged the factual basis established in the reports of the investigators.  In respect of each bus the Inquiry found that intending passengers approached a person on the street from whom they purchased a ticket.  On boarding the bus the ticket was handed to the bus driver.  Passengers were then taken to a destination.

11.  Mr Chan argued before me that on that evidence the inference could not be drawn that the evidence demonstrated that tickets had been purchased for travel on the bus.  He said that there was insufficient evidence to show that the payment of money was for a ticket to ride on the bus.  He said that the inference was open that what was given to the person paying money by the person who received that money was merely a piece of paper.  He said further that there was insufficient evidence to say that the drivers knew that there was any relationship between the exchange of money for the piece of paper and the delivery of the piece of paper by the passenger on boarding the bus.

12.  Ancillary to this argument was a contention that as the drivers had not been involved in the collection of fares, that is the collection of money, but merely the receipt of a piece of paper, the Applicants were not involved in any collection of separate fares.

13.  The argument that was one which did not befit senior counsel.  It was facile, and doomed to failure.

14.  The unchallenged evidence established that persons who became passengers on the bus had given money to another person on the street, and received from that person a piece of paper.  Upon boarding the bus, the passenger handed to the driver of the bus that piece of paper.  The driver subsequently drove the passenger to a destination.

15.  There being no challenge to the evidence, the inference was quite overwhelming that the passengers had purchased tickets from the person on the street.  It is right that the tickets were not produced in evidence, but in the absence of any challenge to the evidence the only inference that was open on the facts was that the paper constituted a ticket to ride on the bus.  The inference was equally overwhelming that the delivery of the paper received by the passenger from the person on the street to the driver, employed by the Applicants, was understood by the driver to constitute a ticket entitling the person to ride to the destination on the bus.  Any other conclusion on the evidence would have been quite perverse.

16.  The way the case for both Ms Fong and Ganfield was presented was that they had merely hired the buses, as they were entitled under the A08 provision in the licences, to tour companies who had been responsible for the operation of the service, and who had undertaken the collection of fares.  Consequently, it was argued, neither the Applicants, nor their drivers had received any reward or separate fares.  It was argued that the operation of the services were provided by the tour company on that day, and that the means by which fares were charged was totally beyond their control.

17.  The TD did not challenge the contention that the Applicants’ buses had been rented out, thereby providing an A08 contract hire service.  The case for the TD was that as tickets were sold on street, and drivers of buses collected tickets from passengers when they boarded, separate fares had been charged for the service, contrary to the licence conditions, and that it did not matter that the Applicants might not have been directly aware of the fact that a separate fares had been charged.

18.  On 1 April 2006, the Reports of the Inquiries were issued.

19.  In both cases the Applicants’ argument was rejected.  In both cases the Inquiry concluded that an unauthorised bus service had been operated because separate fares had been charged for each passenger on the bus service.  In the interpretation of the expression “separate fares”, the public officer conducting the Inquiry, in each case, relied upon the provisions of s 4(4) PBSO, which provides:

“For the purposes of this Ordinance, a payment made by a person entitling him to be carried as a passenger in a bus shall be treated as a separate fare notwithstanding that it is made in consideration of other matters in addition to the journey and irrespective of the person by or to whom it is made.”

20.  On 26 June 2006, pursuant to s 31 RTO, and acting upon the findings made in the Inquiry, the Commissioner decided to suspend Ms Fong’s PSL for three months, and to cancel Ganfield’s PSL, because each had accepted separate fares in breach of both licence conditions and provisions of the RTO.

Review by the Transport Tribunal:

21.  On 6 July 2006, pursuant to s 33 RTO, both Applicants applied to the Transport Tribunal to review the decision of the Commissioner.  On 7 May 2008, the applications for review were heard, together, by the Tribunal.  The Tribunal, affirmed the decision of the Commissioner. 

22.  The Tribunal subsequently issued formal reasons for its decision.  On that review both Applicants had maintained the position that they had merely provided a contract hire service to a tour company, and that neither the Applicants, or any of their staff, accepted separate fares.  It is plain from the record of the proceedings that the central issue was whether the licensees were in breach of the condition attached to the licenses in relation to the acceptance of separate fares.  Although the Transport Tribunal did not examine in detail the interpretation of the relevant expression, it is plainly accepted the interpretation applied to the expression by the Inquiry, and subsequently adopted by the Commissioner.

The grounds for the judicial review:

23.  Three grounds were raised by the Applicants to justify judicial review of the decisions impugned.  First, it was said that there was an error of law in that the definition contained in the PBSO was applied to a licence issued under the RTO.  Second, it was argued that if the definition in the PBSO is applicable there is an ambiguity between the conditions of the PSL and the definition in the PBSO.  It is then submitted that the interpretation most favourable to the Applicants should be adopted.  Third, it is argued that the Transport Tribunal failed to rule on the issue whether the definition in the PBSO should apply and whether the payment of a separate fare to a third party contravened the conditions of the PSL.  The essence of this argument is that the Transport Tribunal failed to give proper reasons for its decision.

24.  At the heart of all the three points is a contention that the definition contained in s 4(4) PBSO is not applicable to a PSL, and that in the whole of the circumstances the Inquiry, the Commissioner and the Transport Tribunal were wrong in law to rely upon that definition.  The argument is then made that the correct interpretation of the condition of the licence is that in circumstances where the holder of a PSL hires a bus to an external operator, there is no breach of that licence by the holder of the PSL, if separate fares are accepted by the operator.

25.  Mr Chan, sensibly recognising that the contention in relation to the interpretation of the expression at issue would be determinative of the three grounds originally advanced, confined his submissions to that issue and did not advance separate argument under each of the three grounds.

Discussion:

26.  First, it is quite clear that the definition contained in s 4(4) PBSO is a definition that is confined to licenses issued under that Ordinance, that it is, in relation to franchised public bus services, and is not a definition that is applicable to a PSL issued under the RTO.

27.  That is absolutely plain from the opening words of s 4(4) PBSO which reads: 

“For the purposes of this Ordinance…”

Those words are quite plain, and need no special assistance in interpretation.  The legislature has determined that in relation to licenses issued under the PBSO, a special interpretation shall apply to a particular circumstance.  Both the Inquiry and the Transport Tribunal were plainly wrong in law to rely upon that definition to justify their decisions.

28.  If any authority is required for the contention that the words “For the purposes of this Ordinance”, limit a definition to a particular Ordinance, it may be found in decisions such as Re Britford Common [1977] 1 All ER 532, or Saulle (by Saulle his sister and litigation friend) v Nouvet [2007] EWHC 2902 (QB).

29.  Ms Chow mounted a somewhat convoluted argument beginning with the definition of “public bus service” in the PBSO in order to justify reliance upon s 4(4) PBSO, in the interpretation of a PSL issued under the RTO.  Just because an A08 contract hire service falls within the meaning of the expression “public bus service” as defined in the PBSO, it cannot be argued that the provisions of s 4(4) PBSO apply to that contract hire service.  It is clear from the opening words to s 4(4) PBSO that it is intended by the legislature that that definition should be restricted to operations under that Ordinance.  I am satisfied that it is neither right nor necessary to have the resort to the PBSO to resolve the issue in this case.

30.  When interpreting a PSL issued under the RTO, the Tribunal must confine itself to the precise words to be interpreted.  The gloss to the expression “separate fares” contained in the words in s 4(4) PBSO: “irrespective of the person by or to whom is made”, is a gloss that may be applied only in case of a franchised bus service under the PBSO.

31.  I am accordingly satisfied that the Inquiry and the Tribunal were wrong in law in applying the definition of the expression “separate fares” contained in s 4(4) PBSO to the interpretation of that expression in a PSL issued under s 27 tea.

The correct interpretation:

32.  That conclusion does not resolve the issue in favour of the Applicants.

33.  The only argument the Applicants are able to mount to say that the undisputed facts do not fall within the prohibition on operating the buses upon the acceptance of separate fares, is to say that they themselves did not accept those fares. 

34.  But, it necessarily follows from the fact that the terms of the PSL bind not only the operator, but also the particular bus itself, that any person who operates the bus, be it the PSL holder or a contractor or external operator from the PSL holder, may not accept separate fares.  It cannot be the case that the holder of a PSL can avoid the separate fares restriction in the licence applicable to a contract or hire service, simply by contracting out, or hiring the bus to some other person.

35.  The fallacy in the argument may be seen when it is understood that on Mr Chan’s argument a man holding a PSL for an A08 service in which carriage of passengers may not be undertaken for separate fares can be evade the restriction in the licence simply by contract hiring the bus to his wife who then undertakes the service on separate fares.  That cannot be right.  On the evidence there can be no other conclusion than that the passengers carried by the bus were carried on the payment of a separate fare, in breach of the terms of the PSL.

36.  Consequently, although for the wrong reasons, the Inquiry, the Commissioner, and the Tribunal all reached the correct conclusion that the buses had been used to operate an unauthorised service, because separate fares had been accepted in respect of carriage of passengers on each of the three buses.  The undisputed facts admit to no other conclusion.

The Applicants’ knowledge of the breach:

37.  Mr Chan then argued that there was no evidence that either Ms Fong or Ganfield had any knowledge that the buses were used for the carriage of passengers at separate fares in breach of the licence conditions.  In those circumstances, he said there was no breach of the licence.

38.  This argument was raised by the solicitors in the Inquiry, when it was argued that it was unreasonable, and against the spirit of law to impose strict liability on the Applicants to ensure that the buses were not used by anyone to whom the bus was hired to operate an unauthorised service under the contract hire arrangement, (See Fong Inquiry report para 5.2(b) and Ganfield Inquiry Report para 3.2(iv)).

Is the condition one of strict liability:

39.  It must necessarily follow, if the PSL binds the bus as well as the operator, for there to be a breach of the PSL if the bus is used for the carriage of persons at separate fares, that no direct knowledge on the part of the holder of the PSL is required.  Quite simply, if the holder of a PSL which restricts the use of the bus to an A08 service in which the carriage of passengers must be other than at separate fares, hires out the bus to some other person, and that other person conducts the service at separate fares, there has been a breach of the licence.

40.  The presumption which would normally arise that knowledge on the part of the holder of the PSL is required, is rebutted by necessary implication from the fact that the PSL conditions apply not only to the holder of the PSL, but also to the bus.

41.  The Inquiry, (in the Fong Report in para 6.1 to 6.6, and in the Ganfield report in para 6.1 to 6.5) set out its reasons for the conclusions it reached.  Although of the Inquiry did not directly address the issue of strict liability it is plain from those reasons, and particularly the fact that the Inquiry correctly found that the conditions on the licence attached to the vehicle itself, that absence of knowledge on the part of the PSL holder was no answer to a contention that the bus had been used to operate an unauthorised service.  That was the only conclusion to which the Inquiry could have properly reached.

42.  Equally, the Tribunal, although not directly addressing the issue, plainly accepted the submission made by the Commissioner for Transport: see Decision para 29.  It did so plainly for the reasons contained in the submission made.  Again, the conclusion reached, that there had been a breach of the condition in the PSL, could only be reached because no knowledge on the part of the PSL holder was required in circumstances where the conditions of the PSL attach to the bus itself.

43.  I am satisfied that there has been no error of law on the part of either the Inquiry or the Tribunal in this respect.

44.  In order to avoid a breach of the licence the obligation must be on the holder of the PSL to take appropriate steps when making the bus available under an A08 contract hire service to ensure that the PSL is not breached by the carriage of passengers at separate fares.  I have no doubt at all that if a holder of the PSL established that it had taken appropriate steps against a breach, but that notwithstanding those steps, someone to whom the bus had been hired accepted separate fares, then the Commissioner, in the exercise of his discretion in imposing any penalty for the breach of the licence, would properly take that powerful mitigating factor into account.

The appropriate remedy:

45.  The Applicants have succeeded in establishing that the Inquiry and the Tribunal proceeded upon an error of law in wrongly applying the interpretation of the expression “separate fares” contained in s 4(4) PSBO to a PSL issued under the RTO.  The question then arises as to the appropriate remedial orders.

46.  The starting point in respect of final remedial orders in judicial review is that all remedies are discretionary; see de Smith’s Judicial Review, para 18-023:

“A distinctive feature of all these remedies is that the court has a discretion to withhold them from a claimant even if the defendant public authority is held to have acted unlawfully.”

And also Fordham, Judicial Review Handbook 4^th Ed, para 24.3:

“It is a first principle of judicial review that all remedies are discretionary.  This means that a claimant could win on every other point and still find that the Court refuses a remedy, in the exercise of its discretion.”

47.  If the decision-making body would have reached the same conclusion, had it correctly applied the law, then a procedural flaw, such as an error of law on the part of the decision-making body, arguably makes no difference at the end of the day.  In such circumstances the court has a discretion to withhold any remedy. 

48.  Care must be taken in this respect that the court does not substitute its opinion for that of the authority constituted by law to decide the matter in question.  It was eloquently put by Staughton LJ in R v Ealing Magistrate Court ex p Fanneran (1996) 160 JP 409, in the following terms:

“... the notion that when the rules of natural justice have not been observed, one can still uphold the result because it would not have made any difference, is to be treated with great caution.  Down that slippery slope lies the way to dictatorship.  On the other hand, if it is a case where it is demonstrable beyond doubt that it would have made no difference, the court may, if it thinks fit, uphold a conviction even if natural justice has not been done.”

In the context of judicial review of an administrative decision, for the word “conviction”, the word “decision” may properly be substituted.

49.  A number of illustrations of cases where the “no difference” proposition has been applied are set out in de Smith’s Judicial Review, 6^th Ed para 8-050.

50.  There has been no challenge by the Applicants to the evidence submitted to the Inquiry, and consequently there can be no challenge to the only conclusion that follows from that evidence, namely that separate fares were accepted in the course of the operation of an A08 contract hire service.  It matters not who accepted those fares, as the buses in question, when used for an A08 contract hire service, were not permitted to be used for the carriage of passengers upon the basis of separate fares. 

51.  It is quite clear that, if the matter were to be remitted to the decision-making bodies for the correct application of the law as I have found it, precisely the same decision would be reached.  In this respect I  note that there has been no complaint on the part of the Applicants that if it were found that there had been a breach of the terms of the PSL, then the sanctions imposed by the Commissioner were not appropriate.

52.  In these circumstances, notwithstanding that an error of law has occurred which would otherwise entitle the Applicants to a writ of certiorari, I am satisfied that this is an appropriate case to exercise my discretion against relief.  The application for judicial review must accordingly be dismissed, and the decisions of the Commissioner and the Tribunal stand.

Costs:

53.  The Applicants have failed in their application for judicial review, although the grounds for review were established.  In those circumstances there will be an order nisi that each party must bear their own costs.