HKSAR v. ART SEA LTD

HCMA29/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.29 OF 2005

(ON APPEAL FROM KTS 17126 OF 2004)

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REASONS  FOR  JUDGMENT

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1. The appellant company was convicted after trial of one charge of ‘carrying on the business of a restaurant without licence', contrary to sections 31(1)(b), 35(1)(a) and 35(3)(a) of the Food Business Regulation made under the Public Health and Municipal Services Ordinance (Cap.132).  The appellant company was sentenced to a fine of $20,000, plus a daily fine of $900 for four days.  It now appeals against the conviction.

Prosecution's case

2. Quoting from the magistrate's Statement of Findings, this is what the prosecution alleged — 

“2.  The facts are simple.  The parties did not dispute that Deft Co was an incorporated company, that it was the proprietor of the relevant restaurant, and that a licence had never been granted.  The defence case was that the refusal to grant a licence was an error of law.  I will address this legal argument below.

PW1 and FEHD inspector Ms LAM.  From the 13^th July 2004 to the 10^th August 2004 she made 5 visits to the Deft Co's restaurant.  Each time there were customers seated, ordering food, eating, and calling for bills, cooks preparing food inside the kitchen, waiters attending to customers, and ladies washing up dishes.  A male staff Mr WONG who claimed to be the manager accompanied PW1 during the inspections, and admitted to PW1 the restaurant had no licence.  On the first occasion PW1 warned Mr WONG that if the restaurant continued to trade without a licence the proprietor (Deft Co) might be liable for a daily fine”

Defence case

3. Next, there is the defence case — 

“3.   Deft Co elected to testify via a company representative Mr CHOY.  He said other people had been granted licences, and the Licensing Authority was acting ultra vires by refusing to grant a licence ‘because the Building Authority considered the premises to be a risk to public safety'.”

Magistrate's conclusions

4. In the end, the magistrate found the charge proved against the appellant.  He explained — 

“4.  I bear in mind the burden of proof to be on the prosecution and the required standard.  PW1 answered questions in a straightforward manner and without exaggeration, and her testimony contained no inherent improbability or impossibility.  I find her honest and to have told the truth.

5.   I have not heard about Deft Co's background but assume it has no previous criminal record and so I bear in mind the legal implication in its favour.  Its defence was based on legal issues, to which I will now turn.

6.   Deft Co, citing inter alia the English case of Boddington v. British Transport Police, says the Licensing Authority acted ultra vires.  Boddington's case was about an invalid or possibly invalid railway by-law, and Heland Investment Ltd HCMA 684/1994 was about the Building Authority wrongly saying it had no discretion, but in our case today Deft Co does not say the statute itself is invalid, or that the Licensing Authority wrongly claimed it had no discretion to grant a licence.  In other words I have not found these cases helpful in deciding what Deft Co is really asserting.

Deft Co said it had a ‘deemed licence' because Cap.123 (not Cap.132) s.15 deems an approval to be given if an application is not refused after the prescribed time.  I do not agree that Cap.123 s.15 has any application to our case today, because s.15 is in relation to an application under the Buildings Ordinance, not the present Ordinance. 

It is absurd to say that any application for a licence in Hong Kong is, by virtue of Cap.123, is ipso facto deemed to be approved unless the authorities notify an applicant his application is unsuccessful.  Furthermore, Cap.123 s.15 mentions a ‘prescribed period' which is not something we see in Cap.132 s.125 or Cap.132X R.31.

Cap.132X R.125(9) provides statutory avenues of appeal to the Licensing appeals Board and a higher appeal to the Municipal Services Appeals Board.  In Ngan Lung Café and Noodles Restaurant Ltd HCMA 18/2003 the Court found that the Authority had been reasonable, but that was a decision of the High Court.  The power of a judicial review nature on questions of reasonableness, relevant-irrelevant considerations, bad faith, bias, etc, can only be exercised by the High Court, not by a court of a lower level.  A lower court can pronounce a statute ultra vires if for example the enactment is unconstitutional, but a lower court has no power to declare an administrative decision to be ultra vires or unreasonable.

If a person is not satisfied with an administrative decision, he should pursue the statutory avenues of appeal or seek a judicial review in the High Court.  The person is not entitled to say ‘In my view the government is unreasonable or acted ultra vires, therefore I will continue to trade without a licence' then proceeds to trade.  A Magistrate's Court has no power to say that the government should or should not issue a licence.  If a person trades without a licence, he commits an offence.

6. I have also considered the common law defence under FONG Chin-yue's case, but Deft Co does not rely on this defence.  In any event there is no evidence to show ‘an honest belief for good & sufficient reason'.

7. Because of the abovestated reasons, I find: (1) Deft Co was the proprietor of the relevant restaurant, (2) Deft Co at the relevant times was carrying on the business of a restaurant, and (3) a licence had never been granted.  I can find nothing in law which says the relevant statute was invalid.  I therefore find the charge proved beyond reasonable doubt, and Deft Co is convicted accordingly.”

Present appeal

5. The appeal has a checkered history with full submissions heard before the late Gall J.  Because of his sad and untimely death, however, no judgment has yet been given and the matter is re-listed before the court for fresh arguments.

6. As it is, Mr Choy, the company representative, has indicated to me that, irrespective of the arguments he had previously advanced, the appellant company is now confining its appeal to the ground that the magistrate has erred in law in stating the following (see paragraph 4 above) — 

“If a person is not satisfied with an administrative decision, he should pursue the statutory avenues of appeal or seek a judicial review in the High Court.  The person is not entitled to say ‘In my view the government is unreasonable or acted ultra vires, therefore I will continue to trade without a licence' then proceeds to trade.  A Magistrate's Court has no power to say that the government should or should not issue a licence.  If a person trades without a licence, he commits an offence.”

7. It is argued that the magistrate was wrong, the point of vires not properly considered, and the conviction must therefore be quashed and the matter remitted to the magistrate for fresh determination.

8. In response, government counsel submits that Boddington v. British Transport Police [1998] 2 All ER 203, and the other cases Mr Choy referred to at trial but not in this appeal, are but products of their own facts and have no meaningful application to the matter at hand.

9. Having read the House of Lords' decision in Boddington, I am not sure that the situation is as simple as the magistrate and the respondent make out.  It would appear that the validity or otherwise of an administrative act (in our case the Licensing Authority's refusal to grant a licence) to bring the relevant legislative provision into operation (the one that criminalizes the carrying on of business of a restaurant without one) is capable of amounting to a defence.  It would appear that that is the true ratio of the decision.

10. Be that as it may, I see no imminent need to rule on the point.

11. Making sense of what Mr Choy said to the best I can, both here and the court below, the defence of the appellant company seems to be as follows : the Department of Food and Environmental Hygiene refused to grant a licence because the Building Department detected unauthorized building works in the restaurant and claimed that they posed a threat to public safety; the building works concerned could not have posed such a threat because they had been there for years and had not resulted in any incidents; other restaurants having similar building works on site had been granted licences; Mr Choy knows because he has personal knowledge of these other cases; the documents produced at trial (Exhibits D1 and D2) provide the proof; the Department of Food and Environmental Hygiene was therefore acting unreasonably or ultra vires against the appellant company.

12.  Such reasoning, however, can never invoke the defence in Boddington even if the defence is available.  It is based on conjecture and the documents are but normal correspondence between the departments and their applicants.  The appellant company would have failed even if the magistrate had considered the point and applied it.  It is therefore not unjust to uphold the conviction : Ching Kwok Yin v. HKSAR (2000) 3 HKCFAR 387.

Judgment

13. The appeal is dismissed.