HKSAR v. MACKAY RORY THOMAS HUGH

HCMA 428/2018

[2019] HKCFI 1700

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 428 OF 2018

(ON APPEAL FROM ESS NO 17261 OF 2018 & ESS 17262 OF 2018)

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J U D G M E N T

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1.  The appellant was the sole proprietor of “Wild Hong Kong”. He was convicted after trial of two summonses by a Deputy Magistrate (“the Magistrate”). He was fined HK$5,000 and HK$1,000 respectively. The appellant now appeals against both convictions.

2.  The allegations made against the appellant were as follows:

(a)  Under ESS 17261/2018, on or about 23 November 2017 in Hong Kong, the appellant carried on business as a travel agent without a licence, contrary to sections 9(a) and 48(1)(a) of the Travel Agents Ordinance, Cap 218 (“the Ordinance”). 

(b)  Under ESS 17262/2018, on or about 23 November 2017 in Hong Kong, the appellant published advertisement referring to the provision of a travel service by a person required to be licenced under the Ordinance, contrary to section 47(1) and (2) of the Ordinance.

Prosecution case

3.  The prosecution relied on the Admitted Facts (Exhibit P1) and exhibits produced therein.  No prosecution witness was called.

4.  It was not disputed that the appellant was the sole proprietor of Wild Hong Kong, which was a sole proprietorship registered in Hong Kong providing local adventure tours.  He was not the holder of a travel agent licence at the material time.

5.  On 23 November 2017, a police constable browsed the website of Wild Hong Kong which contained advertisements that local sightseeing tours could be provided.  For some of the tours, the price charged for each person would include “transport”, “bicycle & helmet rental” or “lockers and equipment rental”. The “Frequently Asked Questions” section also says “All tours include transportation to and from the given meeting point”.  The officer took screenshots of several of the web pages (Exhibit P3).

6.  On 14 December 2017, the appellant participated in a Record of Interview with the police. The appellant admitted that he was the person in charge of Wild Hong Kong and he escorted customers to places of interest, with focus on hiking in the countryside.  He answered Questions 9 and 10 (“Answers 9 and 10”) as follows:

“Question 9: When you take visitors to have sight-seeing, do you arrange any accommodation, meals transport and shopping for them? If yes, please explain details respectively.”

Answer 9: Yes.   Accommodation- No.   Meals- No.   Shopping- No.   Transport-  we use public transport’

Question 10: Do you or the participants pay the fare for the public transport?

Answer 10: Usually the participant. On occasions, we may assist payment on a casual basis if the attendee of the tour is unable to pay the fare. ” (emphasis added)

7.  It was not in dispute that the appellant, though an owner and operator of a business providing sightseeing and adventure tours, was not regarded as a travel agent in that regard because he was “exempted” (a word that the parties used) under s. 4A(2)(c) of the Ordinance.

8.  The prosecution case was that by providing public transport to his customers (including visitors to Hong Kong) in the tours, the appellant was “obtaining local transport (a prescribed service) in connection with sightseeing or visit to local places of interest”.  Therefore, the appellant was carrying on business as an “inbound travel agent”.  The provision of transport was not exempted under s. 4A(2)(c) because the appellant was not the owner or operator of public transport. Therefore, the appellant had to obtain a travel agent licence for his business.  

Defence case

9.  The appellant elected not to testify.  No defence witness was called.  There was no dispute that the appellant has a clear record.

10.  At trial, the defence relied on the explanations given by the appellant at Answers 9 and 10 – he used public transport and he only assisted customers to pay the fares on a casual basis.  It was argued that the appellant was not a travel agent as he did not “obtain” local transport for the visitors.  To become a travel agent for transport, pre-arrangement and pre-existing contractual agreement between the appellant and the transport provider must exist.  The appellant could not “obtain” public transport which was readily provided to the public.  In the context of s. 4A, “local transport” does not include public transport.

11.  The defence also contended that there was no evidence for an irresistible inference to be drawn that on the specific date particularized in the charges that the appellant was carrying on the business of obtaining transport for visitors.

12.  It was also submitted that the requirement to apply for a travel agent licence would limit the liberty of movement of the guide and the visitors and therefore infringe their constitutional right of liberty of movement.  

The Magistrate’s reasons for conviction

13.  The Magistrate said she gave no weight to Answers 9 and 10.

14.  The Magistrate found that the appellant was an inbound travel agent for these reasons:

(a)  The prescribed service of transportation obtained by the appellant for visitors to Hong Kong in connection with sightseeing or visits to local places of interest was constituent part of the package tour services provided by Wild Hong Kong.  It was part of a business carried on for the purpose of gain.

(b)  There is no difference for a tour operator to use public or private transport in connection with the tour service.

(c)  The appellant “obtained” public transport within the definition of s. 4A(1)(c) of the Ordinance by way of planning “which type” and “which route” of public transport were to be used.

(d)  The Magistrate rejected the appellant’s argument that public transport did not constitute local transport.

(e)  She drew irresistible inference that the appellant carried on business as travel agent on or about 23 November 2017.

(f)  The appellant’s constitutional argument was rejected.

The appellant was thus convicted of both summonses.

Grounds of appeal

15.  The appellant is represented by Mr John Reading, SC, leading Mr Thomas Martin (both of them appeared below as well).  The appellant raised 7 grounds of appeal.  One of the grounds relating to duplicity was properly withdrawn at the appeal hearing.  The remaining points can be categorized into 3 main grounds.

16.  Firstly, the Magistrate erred in finding as a fact that the appellant had carried on business as a travel agent on the date specified in the summonses. The reasons are: (i) the element of “obtaining” was not proved, (ii) there was no evidence of actual conduct of provision of tours and transport.  Senior counsel prays in aid the concept of agency in common law.

17.  Secondly, the appellant argued that the Magistrate wrongly treated answers 9 and 10 of the Record of Interview as wholly exculpatory rather than mixed statements, and wrongly rejected them as being inconsistent with statements made on the appellant’s website.  The Magistrate should instead have taken into account the exculpatory explanations when examining the inculpatory part of the statements.

18.  The third ground was that imposing a licensing requirement when the appellant used public transport would infringe upon the appellant and his customers’ liberty of movement under the Bill of Rights.

19.  In respect of the second summons for the advertisement, the complaint was that the appellant did not need a licence to advertise as he was not operating as a travel agent.

Respondent’s position

20.  The respondent’s position is that “travel agent” is defined in the Ordinance and the word “obtain” should be given its natural meaning.  Mr Kuan, for the respondent, submits that reliance on the common law principles on agency is misconceived and wholly unnecessary. The transport obtained by the appellant for his customers was a constituent part of the package tour service.  As the appellant used public transport and was not owner nor operator of it, he was therefore not exempted under s. 4A(2)(c). 

21.  Alternatively, in the case that the appellant used private transport, there was no evidence to prove that he owned the private transport in order to rely on the exemption under s. 4A(2)(c).  Mr Kuan submits that it is not necessary to have evidence of actual tours provided on the date of offence to prove that the appellant “carried on business” on the date.

Discussion

22.  Mr Reading complains that the Magistrate did not properly deal with Answers 9 and 10 in the appellant’s Record of Interview, which was a mixed statement.  She should not have rejected the two answers simply because they were regarded as exculpatory part of the mixed statement. Moreover, the appellant’s answers were not inconsistent with the statements in the website.

23.  At paragraph 47 of her Statement of Findings, the Magistrate stated:

“…the legal argument and constitutional argument put forward by the Defence was based on the exculpatory part of the Record of Interview in Answers 9 and 10 that ‘he used public transport and he might assist payment on a casual basis if the attendee of the tour is unable to pay the fare.’I should give no weight in that regard for the reason that it was contradictory with what was stated in the screenshots, capture of the website of “Wild Hong Kong” as shown in P3…” (emphasis added)

24.  At the appeal hearing, I raise with counsel what the “exculpatory part” was that the Magistrate rejected.

25.  Mr Reading says the Magistrate rejected both answers as a whole when she should have accepted the answers.

26.  In his oral submission, Mr Kuan submits it is the prosecution case that the appellant was carrying on business of obtaining public transport.  He refers me to the exchange between the Magistrate and the prosecuting counsel on fiat during the closing submission of the parties. Mr Kuan submits that the exchange indicates the prosecution relied on the admission with regard to the use of public transport as the “most incriminating part according to the prosecution’s case”[1]. Therefore, when the Magistrate said she attached no weight to “the exculpatory part”, she was only referring to the latter part of the appellant’s explanation, i.e. he only assisted payment of fare on a casual basis. Based on the admission of the appellant that he used public transport, Mr Kuan argues, the appellant could not rely on the exemption under s. 4A(2)(c) as he was not the owner or operator of any public transport that he used.

27.  I will begin the discussion on the aforesaid prosecution basis to decide whether the appellant carried on business of obtaining local transport by using public transport to escort his customers during the tours.  It was indeed also the defence case.

28.  Section 9(a) of the Ordinance states that no person shall carry on business as a travel agent without a licence.  “Travel agent”, as defined in s. 2, includes an inbound travel agent and an outbound travel agent, which are further defined in s. 4 and s. 4A respectively.

29.  Section 4A of the Ordinance provides:

“(1) Subject to subsection (2), a person carries on business as an inbound travel agent if, in Hong Kong, he carries on the business of obtaining for a visitor to Hong Kong—

(a) carriage, by any means of conveyance, on a journey which is to commence outside Hong Kong and which either—

(i) terminates in Hong Kong; or

(ii) involves the visitor passing through immigration controls before departing from Hong Kong;

(b) accommodation in Hong Kong for which payment is, or is to be, made to that person by or on behalf of the visitor of an amount on account of the cost of that accommodation; or

(c) one or more prescribed services.

(2) A person does not carry on business as an inbound travel agent—

(a) under subsection (1)(a) in respect of carriage by means of conveyance if the means of conveyance is one of which he is an operator;

(b) under subsection (1)(b) in respect of accommodation if the accommodation is intended to be occupied by the same person for a period exceeding 14 days;

(c) under subsection (1)(c) if he is the owner or operator of the service being provided to the visitor.

(3) In this section “operator” (營運人), in relation to a means of conveyance, means the person who alone or with others has for the time being the management of that means of conveyance.” (emphasis added)

30.  “Prescribed services” under s. 4A(1)(c) are defined under s. 18 (“reg. 18”) of the Travel Agents Regulations (“the Regulations”):

“For the purposes of section 4A(1)(c) of the Ordinance, the following services are prescribed—

(a)  sightseeing or visits to local places of interest;

(b)  restaurant meals or other catered meals;

(c)  shopping trips;

(d)  local transport in connection with an activity referred to in paragraph (a), (b) or (c).”

(emphasis added)

31.  It can be seen that the licensing regime of the Ordinance does not cover a person carrying on sightseeing tour business if he is himself the owner or operator of the sightseeing service.  While the appellant’s business of providing sightseeing tours was a prescribed service under reg. 18(a), as the appellant was the owner of the business providing the tour service, he was not to be regarded as carrying on business as a travel agent, as explained by s. 4A(2)(c).  Moreover, the appellant would not be regarded as carrying on business of obtaining local transport service for his customers if he was the owner or operator of the transport service he provided.

32.  The prosecution case is that, although the appellant was not required to hold a travel agent licence for his tour business, he was caught by reg. 18(d) as he used public transport as a means of transport to escort his customers to scenic spots.  Mr Kuan argues that the appellant “obtained” local transport when he received fees for the tours from his customers, part of which he then used to pay for public transport during the tours.

33.  As a starting point, I agree with Mr Kuan that the meaning of “travel agent” is defined in the Ordinance.  It would be unnecessary to rely on the common law principles of agency.  

34.  To decide whether the appellant was an inbound travel agent, the essential elements are whether he (i) “carried on the business”, (ii) of “obtaining” a prescribed service, (iii) “for” visitors to Hong Kong. The core issue in this case is the meaning of the word “obtaining” in the context of s. 4A of the Ordinance.

Obtaining a prescribed service

35.  There is no definition of the word “obtaining” in either the Ordinance or the Regulations.  Therefore, the ordinary and natural meaning of the word must be considered.  Mr Kuan most helpfully provides the court the meaning of “obtain” in dictionaries:

“(a)  Black’s Law Dictionary (10^th ed., 2014) defines ‘obtain’ as ‘1. To bring into one’s own possession; to procure, esp. through effect <to obtain wealth>. 2. To succeed either in accomplishing (something) or in having it be accomplished; to attain by effect <to obtain a loan>…’; and

(b)  Shorter Oxford Dictionary (6^th ed., 2007, p.1975) defines ‘obtain’ as ‘come into the possession or enjoyment of; secure or gain as the result of request or effort; acquire, get’.” (emphasis provided by this court)

36.  The relevant part of the Chinese version of s. 4A(1)(c) may also be of assistance: “代任何到港旅客獲取…訂明的服務”.  The Chinese character “代” in my view is of significant importance to understand the meaning of the English word “obtain”.  In Chinese Dictionary Xian Dai Hanyu Cidian 7^th edition (商務印書館現代漢語詞典第七版), the Chinese character “代”, when used as a verb, means “代替、代理”, which can be literally translated as “to replace, to handle for / on behalf of someone”.

37.  Mr Kuan has also provided me with information relating to the legislative history of the Ordinance.  When the Ordinance was first enacted in 1985, it established a licensing regime which then only covered travel agents serving outbound travellers.  The Ordinance was formulated in response to incidents where travel agents had, after receiving money in advance from customers, absconded or become insolvent.  The Ordinance established a licensing regime to regulate travel agents, and created a reserve fund to compensate customers in the event of default by travel agents.  The Ordinance was further amended in 2002 to extend the licensing regime to travel agents serving inbound travellers. 

38.  As Deputy High Court Judge Woo explained in HKSAR v Chu Lai Ming Kathy [2014] 1 HKLRD 1042, a decision on the definition of an “outbound travel agent” under section 4 of the Ordinance, the ultimate purpose of the Ordinance is to protect the interests of consumers.

39.  Mr Kuan accepts that the object of the licensing regime is the regulation of travel agents only.  To give effect to this legislative intent, an exemption was created under s. 4A(2)(c), whereby a person who is the owner or operator of a prescribed service being provided to a visitor is not regarded as an “inbound travel agent” and needs not apply for a licence.  

40.  In the present case, the appellant was apparently not in the business of booking transport, accommodation or meals for or on behalf of customers.  As he was the owner of the business of sightseeing tours he provided, he was not carrying on sightseeing business as a travel agent, as explained in s. 4A(2)(c).  The rhetoric question to be asked is: When a person is not required by law to have a travel agent licence to run his tours business, why should he need the licence simply because he uses public transport to escort his customers to the sightseeing spots?

41.  The respondent argues that the appellant “obtained” public transport because he used it to provide his tour guide service, having collected the fee in advance and paid the fares for them.  In my judgment, the respondent’s contention cannot sit easily with the ordinary meaning of the English word “obtain” and the Chinese characters “代…獲取 “in the context of a public transport.

42.  A public transport is readily and directly provided to its users.  It is usually provided on a schedule decided and fixed by the provider of the public transport without prior arrangement and agreement with its users.  The appellant needed not and indeed could not book for it in advance.  

43.  There was no evidence in this case that the appellant had made pre-arrangements of any kind with the providers of any public transports.  He was also not in any contractual relationship with the provider.  Before he used the public transport together with his customers, he did not procure or request for the transport service, which was readily provided to the general public. He did not request for the transport on behalf of his customers. It is irrelevant that the appellant paid the fares for his customers.  In my view, it is against common sense and the understanding of ordinary people that the appellant can “obtain” the MTR, a bus or a ferry, for instances, for his customers. 

44.  In my judgment, the appellant could not “obtain” public transport for his customers.

45.  I have not ignored the legislative history and the purpose of the Ordinance being to protect the interests of consumers.  However, it is clear that the Ordinance targets at travel agent, not a tour guide or an owner or operator of sightseeing tours.

46.  When the law does not require the appellant to hold a travel agent licence for his tours business, I do not see any benefit in achieving the objective of the Ordinance by requiring him to have a travel agent licence simply because of his using public transport as a means to escort his customers.  The use of transport to escort customers was only a means ancillary to the appellant’s principal business as a provider of tours, for which the appellant was not required to be licensed.

47.  In my view, it would be an affront to common sense to regard the appellant as carrying on business as a travel agent because he escorted his customers by means of public transport.

48.  In conclusion, on the prosecution case that the appellant obtained public transport, I do not find that the appellant was carrying on business of obtaining local transport for customers. 

49.  I now return to the finding of the Magistrate as to the weight she attached to Answers 9 and 10 of the Record of Interview.  Answer 9 (use of public transport) was the defence of the appellant. Mr Reading complains that the defence was wrongly rejected.

50.  I agree with Mr Reading’s submission that the Magistrate in fact attached no weight at all to both Answers 9 and 10.  She rejected the defence that the appellant used public transport for the reason that it was “contradictory with what was stated in…the website”.  Such a finding was against the prosecution case. The reason given by the Magistrate was also unconvincing as the webpages with references to “transport included” did not exclude public transport as the means of transport.  Answer 9 did not contradict the information stated in the website.

51.  In my judgment, there was no sufficient basis for the Magistrate to reject the defence case that only public transport was used.

52.  In any case, if the admission that public transport being used was rejected, what then was the means of transport used by the appellant?  The Magistrate made no finding. She only said “as I decided that the transportation obtained by (the appellant) was constituent parts of the tour service provided…which (the appellant) did gain benefit and profit from them.  Therefore, I did not see any significant difference for a tour operator to use public or private transport in connection with his sightseeing tour services.”  It appears to me that the Magistrate’s analysis was too simplistic, lacking consideration of the word “obtaining” as an essential element of the offence and placing undue emphasis on the benefit the appellant could get from the tour service he provided.

53.  Mr Kuan argues as an alternative prosecution basis that the appellant is guilty even if he used private transport.  It is contended that s. 4A(2)(c) is a “negative averment” provision, and the appellant had the burden to prove that he was the owner or operator of the private transport he used.  There was however no such evidence in the case. 

54.  I have not been assisted with any authorities on this proposition of law. To be fair to both parties, I should mention that the issue was not raised at trial.

55.  The Court of Final Appeal states in HKSAR v Tong Yiu Wah [2]that s. 94A (“s. 94A”)of the Criminal Procedure Ordinance is invoked only after it has been ascertained that the statutory provision has created not only an offence but also an exception, exemption or qualification to the offence.

56.  In my view, the wording of s. 4A(2) is not expressed as creating an exception to the offence. It only seeks to explain the meaning of “obtaining” in s. 4A(1), demonstrating the intention of the Ordinance not to cover people who are owners or operators of the prescribed services.  Section 94A has no application in the context of s.4A.  It remains for the prosecution to prove that the appellant “obtained” local transport for visitors as his business, being an element of the offence in respect of which the burden of proof lies with the prosecution from start to finish.  The burden does not shift to the appellant.

57.  One does not obtain something which he owns.  When “obtaining” has to be proved, the prosecution must prove what means of private transport was provided and that, if indeed provided, it did not belong to the appellant.

58.  In my view, the Magistrate seemed to have failed to properly consider the element of offence expounded by the use of the word “obtaining”.  Her emphasis on the transport service being a constituent part of the appellant’s tour business for purpose of gain was misplaced.

59.  Looking at the evidence in the round, I am of the view that the prosecution would be unable to prove beyond reasonable doubt that the appellant had provided private transport; and if such transport was provided, it was not owned by him.

60.  In my judgment, it cannot be proved that the appellant carried on obtaining local transport service as his business.

61.  As regards the second ground that there was insufficient evidence to support the Magistrate’s finding of fact that on or about 23 November 2017 the appellant carried on the business of obtaining local transport for visitors, I also agree with the submission of Mr Reading.

62.  The Magistrate’s finding was apparently based on the facts that the appellant admitted he had designed and published the website of Wild Hong Kong and there was advertisement in the webpage that tours could be provided, with transport included.  The Magistrate therefore drew as an irresistible inference that the appellant carried on business as travel agent on or about 23 November 2017. 

63.  That was probably one of the inferences that could be drawn, but not necessarily the only reasonable inference.

64.  The website of Wild Hong Kong was in the public domain and available to both local residents and visitors.  While the website was holding out that tours could be provided, there was no evidence that any sightseeing tours were actually provided or even negotiated on or about the specific date of offence; and even if there were such tours, that the participants were visitors to Hong Kong and the transport provided by the appellant was not owned by him.  The appellant’s admission did not refer to any specific activities or any specific dates.  The ambiguous admission at best goes to the carrying on of business of sightseeing tour, not the obtaining of transport for visitors on the specified date.  In my judgment, there could be other reasonable inferences to be drawn, other than that the appellant carried on business of obtaining transport for visitors on the date specified in the charges.

65.  In respect of the summons for the advertisement offence, I do not think that by promoting his tours (which included transport) on his website, the appellant was publishing advertisement of the provision of local transport. As the appellant was not a person required to be licensed for his tour business, he did not commit an offence by publishing his advertisement for his tours.  

66.  By way of rehearing of the evidence before the trial court, I am not satisfied that the prosecution proved the two charges beyond reasonable doubt.  It is therefore unnecessary for me to discuss on the ground of appeal relating to the constitutionality argument.

The result

67.  For the above reasons, the appeals must be allowed with the convictions and sentences set aside.