RE WONG CHIK WAI

HEADNOTE

                    Judicial review of refusal to issue a massage establishment licence

IN THE SUPREME COURT OF HONG KONG

MISCEILANEOUS PROCEEDINGS NO. 2282 OF 1985

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JUDGMENT

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1. Having obtained the requisite leave to do so, the applicant applies for the following relief:-

2. The facts emerge primarily from the affidavit made by Chief Inspector McCully the officer to whom the Commissioner of Polices, who is the licensing authority, has delegated his powers under the Massage Establishments Ordinance, and from the statement and affirmation filed by the applicant pursuant to Order 53 rule 3(2)(a) of the Rules of the Supreme Court. By written application dated the 19th June 1985 the applicant, Wong Chik Wai, applied for a massage establishment licence for premises at office F, 1st floor, Shing To Building, Nos. 32-36 Tai Po Road, Kowloon. On 10th July 1985 in accordance with the usual procedure, a copy of the application was sent to the Secretary for City and New Territories Administration with a request that he advise whether he had any objection to the issue of a massage establishment licence in respect of the premises.

3. By a memorandum dated 7th August 1985 the District Officer, Shamshuipo, advised that a survey was conducted by his staff amongst the residents of the Shing To Building and that 27 of the 35 interviewees objected to the granting of a massage establishment licence for the premises.

4. On 12th July 1985 the Licensing Office, Royal Hong Kong Police Headquarters, received 2 anonymous letters objecting to the grant of a massage establishment licence for the premises.

5. On 12th August 1985 the Licensing Office received a further letter dated 8th August 1985 from one James T.C. Chan.

6. When considering whether or not to grant a massage establishment licence, Chief Inspector McCully made reference to the following documents:-

7. According to Chief Inspector McCully "the evidence he had regard to in considering whether or not the massage establishment would be operated in a manner contrary to the public interest was as follows:-

On that evidence Chief Inspector McCully was not satisfied that the massage establishment would not be operated in a manner contrary to the public interest.

8. On 30th August 1985 he wrote to the applicant informing her that he had decided to refuse the application under section 6(3)(d) of the Massage Establishments Ordinance, Cap. 266.

9. On 14th October 1985 Chief Inspector McCully received a letter in Chinese from the applicant dated 10th September 1985.The rough translation which he presumably acted upon, and which was not disputed by the applicant's Counsel, is as follows: -

"Wong claimed that she was a medical student and aimed at promoting Chinese medicine. She objected the use of massage for vice activities. She expressed that 2 months ago, a licensee of a Chinese massage establishment warned her not to open an establishment in Sham Shui Po District. As regards the citizens' complaints, she said that she had not started decorating the premises, no signboard was put up and no business was started at all. She wondered how the residents could be affected. She even suspected the so-called citizens were merely conspiring against her. She requested to have her application re-considered."

10. On 18th October 1985 Chief Inspector McCully received another letter from the applicant repeating her request for a review of his decision. This letter was also in Chinese and a rough translation upon which Chief Inspector McCully presumably also relied, and which again was not objected to by Counsel for the applicants, is as follows: -

"Wong requested to have her application re-considered and insisted that he was qualified to be issued the licence with her 16 years' experience in medical field. Copies of her graduation certificate and document issued by the H.K. Chinese Herbalist Association Ltd. recognising her professional acupunctural skill were already submitted to this office. She further expressed that prior approval had been obtained from the landlord to use the promises as a massage establishment before the tenancy agreement was made. As stated in her last letters, Wong again suspected the licensee of 'Lai Wah'  having trumped up charges against her and requested for investigation. Finally, she urged the licence to be issued soon as five months' rental had been paid for the vacant premises since the application was submitted.''

11. According to his affidavit, Chief Inspector McCully considered the further information supplied by the applicant and came to the conclusion that it did not affect his previous assessment of the evidence nor did it satisfy him that the massage establishment would not be operated in a manner contrary to the public interest. Accordingly on 21st October 1985 he wrote to the applicant informing her that after having carefully considered her comments he had decided to abide by the decision contained in his letter of 30th August 1985.

12. Thereafter, as indicated, the applicant obtained the requisite leave to apply for judicial relief. The grounds upon which she seeks relief are detailed in her statement filed pursuant to Order 53 rule 3(2)(a) and are as follows:-

13. It remains to set out the provisions of section 6(3) of the Massage Establishments Ordinance before I proceed to consideration of the foregoing grounds: -

14. Mr. Clement Luk for the applicant sought to rely upon the whole of the applicant's affidavit, but upon Miss Hartstein's objection on the ground that captain parts of it were irrelevant or new matters, he agreed to omit the parts objected to.

15. Proceeding then to the procedural grounds upon which the relief was sought, Mr. Luk made it clear that he relied primarily upon these although not abandoning his grounds of substance. He quickly reduced his procedural grounds to the following two:-

16. Mr. Luk drew attention to the judgment of Megarry V.C. in McInnes v. Onslow-Fane [1978] 1 WLR 1520, which he said appeared to be against him on both the foregoing grounds, and to the judgment of Power J. in the case of Wong Koon Kau (Miscellanceous Proceedings No. 1523 of 1985) which followed the judgment of Megarry V.C. in respect of the first ground. He submitted that the present case could be distinguished and that the more recent judgment of Glidewell J. in Regina v. Huntingdon District Council [ 1984] 1WLR 501, ought to be followed.

17. It is not disputed that the present case is one in which the Court is entitled to intervene to enforce the appropriate requirements of natural justice. I need not therefore concern myself with that matter.

18. In McInnes the British Boxing Board of Control refused to grant the Plaintiff a boxing manager's licence. He complained that the Board had acted unfairly and in breach of natural justice in that the declined to:-

19. Megarry V.C. held that where the Court is entitled to intervene, the type of decision in question must be considered. At page 1529 he discerned 3 categories of cases: -

"First, there are what may be called the forfeiture cases. In these, there is a decision which takes away some existing right or position, as where a member of an organisation is expelled or a licence is revoked. Second, at the ether extreme there are what may be called the application cases. These are cases where the decision merely refuses to grant the applicant the right or position that he seeks, such as membership of the organisation, or a licence to do certain acts. Third, there is an intermediate category, which may be called the expectation cases, which differ from the application cases only in that the applicant has some legitimate expectation from what has already happened that his application will be granted ..... It seems plain that there is a substantial distinction between the forfeiture cases and the application cases ..... The distinction is well-recognised, for in general it is clear that the courts will require natural justice to be observed for expulsion from a social club, but not on an application for admission to it.''

20. I pause these to note that in my finding the present case is clearly an application case. Mr. Luk suggested that because the premises were formerly occupied by a licensed massage establishment, the applicant had a legitimate expectation. I do not accept that;   indeed the evidence is that the former occupant has simply moved his massage establishment to other premises.

21. Returning then to McInnes, Megarry V.C. then proceeded to consider what the requirements of natural justice or fairness would be in applications such as that before him, which was also an application case. In particular he considered the alleged obligation of the Board to give the Plaintiff information as to the case against him, or about what was troubling the Board.

22. He noted that in Reg. v. Gaming Board for great Britain Ex parte Benaim and Khaida [1970] 2 QB 417 CA, the Court of Appeal "held that the board were under a duty to act fairly which required the board to give the applicants a sufficient indication of any relevant objections raised against them to enable the applicants to meet them". He also noted that the gaming board were under a statutory obligation to have regard to only certain criteria.

23. He then considered In re H.K. (An Infant) [1967]  2 QB 617 in which Lord Parker C.J. held that an immigration officer was under a duty to give the immigrant in that case an opportunity of satisfying him of relevant matters in the statutory provisions concerned, and for that purpose to let him know what his immediate impression was so that the immigrant could disabuse him.

24. Megarry V.C. distinguished those 2 cases from the case before him on the following grounds. Firstly, that in each there was a statute which conferred the power and duty to decide upon some defined issue. That, it may be observed, is the position in the present case, under section 6(3) of the Massage Establishments Ordinance, which cannot therefore be distinguished upon this ground.

25. Second, that in the Gaming Board case the character, reputation and financial standing of the applicants were in issue, so that refusal would be a slur. This does not in fact arise in the present case, though it could have if the authority had acted under section 6(3)(a) which turns on whether the applicant is a "fit and proper person".

26. Third that In re H.K. (An Infant) the question was whether the immigrant had a statutory right of entry. No similar statutory right arises in this case.

27. Megarry V.C. then observed at page 1532 that there might be many reasons for refusal, or even no "case against" the applicant. And that "in most cases, the more demanding and responsible the occupation for which the licence is required, the greater will be the part likely to be played by considerations of the general suitability of the applicant, as distinct from the mere absence of moral blemishes. The more important these general considerations are, the less appropriate does it appear to be to require the licensing body to indicate to the applicant the nature of the case against him". He concluded that that applied in the case before him. To what extent it would apply in the present case is, in my view, complicated by the nature of massage establishments in Hong Kong. But that is of no great moment, since it is not possible in my view to distinguish the present case on the second of the foregoing grounds i.e. that there is in the present case a statute which provides mandatory criteria upon which a licence may not be granted.

28. Megarry V.C. then considered the submission of the Plaintiff's counsel that if the board reached a provisional decision to inject the application, they should have adjourned, then notified the Plaintiff of the gist of the reasons for their provisional decision and then afforded him an opportunity to be heard. That 2 stage procedure understandably did not find favour with him. But, it is to be noted that he considered it in the context of non-statutory "licensing" authorities, and that it was upon statutory requirements that he distinguished the Gaming Board case. In the present case the licensing authority is a statutory authority subject to statutory requirements.

29. Since the present case is concerned only with refusal to license the particular premises the question does not arise of my "right to work" a factor that was of some concern to Megarry V.C. And even if that question had arisen, it is to be noted that he doubted "how far the 'right to work' can be said to include the 'right' to begin a new career of the worker's choice, as distinct from continuing with an existing mode of employment."

30. Megarry V.C. made his finding in the following way:-

"Looking at the case as whole, in my judgment there is no obligation on the board to give the plaintiff ever the gist of the reasons why they refused his application, or proposed to do so."

31. The case of Wong Koon Kau (Miscellaneous Proceedings 1523 of 1985), which was also an application for judicial review of a refusal to grant a massage establishment licence, was remarkably similar to the present case. However the question of failure to give the applicant an indication of objections made or the nature of the case against him was not raised.

32. At page 7 of his judgment Power J. referred to the following part of the headnote to McInnes:-

"Let it be said immediately that there was no suggestion in the present case of any dishonesty, bias, or caprice, or other impropriety on the part of the Authority. I am satisfied further that the present case is not one involving the forfeiture of an existing right or the deprivation of an existing position and it is not one where the Plaintiff had any legitimate expectation that his application would succeed. I am satisfied, upon the authority of the McInnes case, that the applicant was not entitled to a hearing and was not entitled to be given reasons for refusal of his application."

33. The part of the headnote quoted comprises the second paragraph of the matters held; the first paragraph makes it clear that the case was not one governed by any statute. Nonetheless that second paragraph is misleading in that in holding that the board were under no obligation to give the Plaintiff the gist of their reasons for refusing or proposing to refuse his application, Megarry V.C. relied, in addition to the reasons specified, upon the absence of any statutory criteria. In distinguishing the decisions in the Gaming Board case and In re H.K. he stated that "in each these was a statute which governed the power and the duty to decide upon some defined issue".

34. Notwithstanding that massage licence cases involve the mandatory statutory criteria in section 6(3), the foregoing does not affect the adoption by Power J. of the McInnes case for he was concerned with the duty to give reasons for the decision, and that issue did not arise in either of the cases of the Gaming Board or In re H.K. But of course the requirement to give notice of objections or, to put it another way, of the case against the applicants was an issue in those cases and in that context they cannot be distinguished from the present case on the absence of statutory criteria.

35. The case of Regina v. Huntingdon District Council [1984] 1 WIR 501 is of no assistance upon Mr. Luk's first ground i.e. that no reasons were given for the decision, since it does not deal with that issue. In respect of that issue Megarry  at page 1531 of McInnes said: -

"I think it is clear that there is no general obligation to give reasons for a decision. Certainly in an application case where there are no statutory or contractual requirements but a simple discretion in the licensing body, there is no obligation on that body to give their reasons."

I think that by "statutory or contractual requirements" Megarry V.C. meant requirements to give reasons for a decision. Certainly no authority was cited to me requiring reasons to be given. I would according adopt the foregoing dictum of Megarry V.C. I do not myself see why in the absence of statutory or contractual requirements, natural justice or fairness require the applicant in the present case to be given reasons for refusal of her application. I therefore reject the first of Mr. Luk's two procedural grounds.

36. I proceed then to Mr. Luk's second ground and in that context to consideration of the Huntingdon case. In that case, a brewery company purchased the lease of premises for which there was in existence a liquor licence and a music and dancing licence. Although those licences were renewed in 1980, 1981 and 1982, there was no music and dancing at the premises during that period. In December 1982 the company decided to open a discotheque and for that purpose it required an entertainments licence for the premises under the provisions of the Local Government (Miscellaneous Provisions) Act 1982, which came into effect on 1 January 1983. The applicants, on behalf of the company, applied to the local authority for the licence but the local authority, having received observations from the police and fire authority and a petition from members of the public, refused to grant the licence. The applicants had neither been informed that any objections had been received nor been given an opportunity to comment or put their case. The applicant sought judicial review by way of orders of certiorari and mandamus. Strangely the attention of the judge, Glidewell J., was not called to McInnes and at page 508 he observed, "I am told - one is always glad to be told whether one is making law for the first time - that this is a matter which has not hitherto been decided." A few lines further on he said: So I go back to the substantive question. The exercise of a licensing function, in my judgment, by any authority, is one to which the rules of natural justice - including the requirement of giving notice of the substance, at least, of objections, and giving some opportunity for the applicant to respond to these objections - would normally apply."

37. It is clear from his judgment that Glidewell J. relied upon the Gaming Beard case, which was considered by Megarry V.C., and upon the Barnsley Metropolitan ease [1976] 1 WLR 1052, a forfeiture case, which was referred to, by Megarry V.C. in McInnes. The question of whether applicants should be informed of objections was not only exhaustively considered by Megarry V.C., but argued likewise. He said at page 152C: -

"The board admittedly did not inform the plaintiff of the 'ease against him', nor did the board agree to give him an oral hearing. In so doing, did the board act either in breach of natural justice, or unfairly? That was the question argued for most of three days, with citation of over a dozen authorities."

38. In contrast, the matter seems to have been somewhat superficially presented to Glidewell J. who, notwithstanding his conclusion that there was a requirement to give notice of objections, carefully qualified the requirement by saying it "would normally apply". On the other hand Megarry V.C. leans towards confinement of the requirement to the particular circumstances in which it has been held to apply e.g. where there was a statutory provision from which it flowed. For myself, I would favour the mere detailed approach adopted by Megarry V.C. to the extent of any divergence that may be of significance. But I do not see that a great deal of difference will in practice result from the two approaches, for the particular circumstances indicated by Megarry V.C., including statutory requirements, forfeiture cases and possibly legitimate expectation cases, will be the exceptions in which the requirement will apply.

39. Reverting to the present case, notice of the objections received would not require disclosure of their sources; that is clear from both McInnes and Huntingdon. Furthermore I do not think that in the way the authority deals with applications, the two stage procedure Megarry V.C. thought unduly onerous would be necessitated by a requirement to give notice of objections. In the light of all the foregoing consideration particularly the existence of the statutory criteria, it would seem that notice of the objections or adverse information received ought to have been given to the applicant.

40. Nevertheless, I am satisfied that the applicant in her two letters to Chief Inspector McCully seeking a review of his decision, dealt with all the matters he took into consideration in rejecting her application. I am also satisfied that Chief Inspector McCully took into consideration her two letters in coming to the conclusion that their contents did not affect his previous assessment of the evidence nor satisfy him that the massage establishment would not be operated in a manner contrary to the public interest. I am therefore not disposed to grant the application on the ground that no indication of the objections made or the "case against her" was given to the applicant.

41. I proceed then to the applicant's grounds of substance which I will set cut again for convenience. While not abandoned, they were not pressed to any degree by Mr. Luk and may be disposed of quite shortly.

42. One other point that I should mention which emerged at the hearing, is the wording of section 6(3)(d) of the Ordinance. This suggests that it is the manner of operation that is of concern rather than e.g. the premises and situation thereof (which are dealt with in paragraph (a) of that subsection). It would seem to be particularly relevant where the premises are in a mixed residential commercial building, with residents who object, as in the present case. I think the point is met by the consideration that the authority may well take the view that in a mixed residential commercial building a massage establishment would have to be operated in a very special manner before he could be satisfied that it would not be operated contrary to the public interest.

43. In conclusion I would record in the terms of McInnes adopted by Power J. in Wong Koon Kau, that there is no suggestion in the present case of any dishonesty, bias, or caprice or other impropriety on the part of the authority.

44. For the foregoing reasons the application is dismissed.