MAN TAK PHARMACY O/B MAGNUM (INVESTMENT) CORPORATION LTD v. THE PHARMACY AND POISONS BOARD

HCMP 1315/2018

[2019] HKCFI 2075

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1315 OF 2018

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J U D G M E N T

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Introduction

1.  This is the applicant’s appeal against the findings and direction (the “Decision”) made by the Disciplinary Committee of the respondent (the “Committee”) on 30 July 2018.

2.  On 14 December 2016, Mr Wong Wai Man (“Wong”), the then employee of the applicant, was arrested in Shop C, G/F, Shun Loong Mansion, 84-90 Bonham Strand East, Sheung Wan, Hong Kong (the “Premises”).

3.  On 16 October 2017, Wong was tried before the Eastern Magistrates’ Courts in ESCC 2146/2017, and on 13 November 2017, Wong was convicted of 3 offences under the Pharmacy and Poisons Ordinance, Cap. 138 (“PPO”), namely:

(1)  Selling Part 1 poison without proper supervision;

(2)  Selling a 3^rd Schedule poison without prescription; and

(3)  Selling pharmaceutical product which was not registered.

4.  On 17 April 2018, the respondent issued a Notice of Inquiry to the applicant under section 15 the PPO.  The hearing of the Committee was fixed for 30 May 2018.

5.  In the cover letter dated 26 April 2018 issued by the respondent to the applicant, it was stated that:

“Unless you notify us on or before 18 May 2018 [ie 12 days before the hearing] that you have any questions for any statement makers of the documents in the bundle of documents, we will not call them to give oral evidence in the Inquiry and shall rely on their statements in the bundle.”

6.  By agreement between the applicant and the respondent, the hearing was re-fixed for 30 July 2018.

7.  On 17 July 2018, ie 13 days before the rescheduled hearing, counsel for the applicant wrote to the respondent requesting for Wong and two officers, whose statements were included in the respondent’s bundle, to be tendered for cross-examination.

8.  On 30 July 2018, the hearing took place.  The secretary to the respondent (the “Secretary”) did not tender any witnesses, and confirmed to the Committee on multiple occasions that the respondent would only rely on Wong’s conviction and the relevant brief facts at the hearing: see, in particular, transcript of the hearing at page 26 of the Appeal Bundle, lines 14 to 22, where the Legal Officer on behalf of the Secretary said this:

“Ms Chairlady, I would like to make one clarification that we are not just relying on the conviction itself, we’re also going to rely on the basis for the conviction, namely the brief fact, which have explained in details the particulars and the operation of the test purchase etc. It’s our view that that would be sufficient to support the present disciplinary hearing. The conviction itself.” (Emphasis supplied)

9.  During the hearing, the applicant made submissions that insufficient evidence was adduced upon which the Committee could find that the charge had been proved.  The Committee found that there was “enough substance”: §2 of Decision.

10.  Mr Kwok Kai Fat then gave evidence for the applicant.  On the same day, the Committee decided that the applicant “ought to be regarded as responsible for” Wong’s conviction, and gave the Direction dated 30 July 2018.

11.  On 23 August 2018, the applicant filed the Notice of Originating Motion dated 23 August 2018 and set out 4 grounds of appeal.  At the hearing, the applicant only relied on grounds 1 to 3.

The nature of the inquiry by the Committee

12.  The Committee was appointed under section 15 of the PPO, on the ground that an employee of the applicant was convicted of an offence under the PPO.

13.  As correctly emphasised by the applicant, the employment relationship and the conviction are merely the reasons for commencing the inquiry, and are never, by themselves, a sufficient reason to find the applicant liable for its employee’s offence.  This is clearly stated in section 17 of the PPO:

“(1) In any case under section 16, where the person convicted of an offence or guilty of misconduct is an employee of the authorized seller of poisons, the Disciplinary Committee shall not give any direction unless proof is given to its satisfaction of some one or more of the facts specified in subsection (2), and it is of the opinion that having regard to the facts so proved the authorized seller of poisons ought to be regarded as responsible for the offence or misconduct.

(2) The facts as to some one or more of which the Disciplinary Committee must be satisfied before giving any such direction as is mentioned in subsection (1) are—

(a) that the offence or misconduct in question was instigated or connived at by the authorized seller of poisons or in the case of a body corporate, by an officer of that body corporate or in the case of an unincorporated body of persons, by any member of such body;

(b) that the authorized seller of poisons or any person employed by him, or, in the case of a body corporate or an unincorporated body of persons, any officer or member of such body, as the case may be, had been guilty, at some time within 12 months before the date upon which the offence or misconduct in question took place, of a similar offence or misconduct and that the authorized seller of poisons had, or ought reasonably to have had, knowledge of that previous offence or misconduct;

(c) if the offence or misconduct in question was a continuing offence or continuing misconduct, that the authorized seller of poisons had, or reasonably ought to have had, knowledge of the continuance thereof;

(d)    in the case of an offence mentioned in section 15(1)(c), that the authorized seller of poisons had not used due diligence to enforce the execution of the relevant Ordinance.”

(Emphasis supplied)

14.  There is no evidence supporting the facts specified under section 17(2)(a) to (c) of the PPO.  The issue in this case is whether the respondent can prove that the applicant “had not used due diligence to enforce the execution of the relevant Ordinance” under section 17(2)(d).

15.  In Fu Ning Dispensary v Pharmacy and Poisons Board [1995] 3 HKC 497, Rogers J (as he then was) noted that “because of the wording of the Ordinance, it would seem that the onus was on the complainant to show that due diligence had not been used…and it was not a question of the onus being upon the defendant to show due diligence” (p. 499G-I) (emphasis supplied).

16.  In Lee Hong Dispensary Superstore Co Ltd v Pharmacy and Poisons Board [2007] 3 HKC 608, the court confirmed this position by emphasising that “due diligence” is in fact “an essential element of the secretary’s case” (p. 616H).  A Cheung J (as Cheung PJ then was) expressed thus at p. 616B:

“Strictly speaking, it is therefore a misnomer to call due diligence, the subject matter of s 17(2)(d), a ‘defence’”.

Ground 1: insufficient evidence had been adduced

17.  The applicant submitted that the Committee had erred in law in rejecting the applicant’s submission that insufficient evidence has been adduced upon which the Committee can find that the charge has been proved.

18.  The right to make such submission is provided under regulation 6(3) of the Pharmacists (Disciplinary Procedure) Regulations, Cap. 138E.

19.  In Hong Kong Institute of Certified Public Accountants v Disciplinary Committee, Price Waterhouse & Ho Chi Keung (unreported, HCAL 135/2005, Decision of Reyes J dated 11/11/2005), the court has found similarities of the standard to be applied for such kind of submission and that to be applied in a “no case to answer” submission in criminal proceedings (§§53-65).  In particular, the following test applied by the Disciplinary Committee was approved:

“In our view, the test at this stage is this: assuming that the respondent adduces no evidence in his own defence, is the evidence of the complainant sufficient to prove the charge to the requisite standard? If the answer is ‘yes’, there is a case to answer. If the answer is ‘no’, there is no sufficient evidence that can prove the charge. The very essence of a submission of no case to answer is to test the sufficiency of the complainant’s case. That exercise cannot be substituted by one which requires the consideration of the possible evidence of the respondent, which evidence he may or may not lead, and which by definition would not have been properly tested by adversarial cross-examination at that stage of the proceedings.”

20.  On the date of the hearing, the Legal Officer on behalf of the respondent informed the Committee that they had not asked the three specified persons to attend the hearing.  Upon the applicant’s counsel’s objection to include the transcript of and the materials used in ESCC 2146/2017 without the opportunity to cross-examine the said three persons, the Legal Officer repeatedly confirmed with the Committee that the respondent would not rely on any evidence other than Wong’s conviction and the brief facts in ESCC 2146/2017: see paragraph 8 above. 

21.  I agree there must be no case to answer if the respondent was only relying on Wong’s convictions and the brief facts.  As submitted by the applicant:

(1)   The brief facts of the case only contained the conduct of Wong and the investigation.  There is no reference to whether the applicant as the authorised seller of poisons had used “due diligence” to enforce the execution of the PPO.  There is no reference to any steps or lack of steps taken by the applicant.  This is not surprising because ESCC 2146/2017 was a prosecution of Wong for his own misconduct, regardless of whether he had any relationship with the applicant;

(2)   As has been held in Fu Ning Dispensary, supra(at p. 500F) and Lee Hong Dispensary, supra (§29), the conviction and the employment relationship between Wong and the applicant (as might be inferred from the brief facts) were merely starting point of the inquiry.  The respondent still had the burden to prove, which they did not adduce any evidence to prove, that the applicant did not use due diligence.

22.  At the stage of no case submission, it is clear that there is insufficient basis for the Committee to find that there is sufficient evidence upon which the charge may be proved. The applicant highlighted the absence of evidence proving:

(1)   the offences were conducted “in the course of and for the purpose of” the applicant’s business; and

(2)   the lack of steps taken by the applicant in fulfilling its duty of due diligence.

23.  I agree the Committee’s decision that “there is enough substance upon which the charge may be proved and a prima facie case is established for the Dispensary to meet” (§2) is wrong in law.  Accordingly, the Decision and the Direction should be quashed.

Ground 3: Committee’s duty to give reasons

24.  Ground (3) of the applicant’s grounds of appeal provides as follows: “The Committee failed to give reasons for concluding that ‘Mr WONG’s conviction of the offenses is directly associated with the Dispensary [ie the applicant]’, that the applicant ‘failed to implement a proper and effective system of control over the sales of Part I and Third Schedule poisons at the material time’,and that the applicant ‘also failed to prevent the sales of unregistered pharmaceutical products at the material time’”.

25.  The purported “reasons” given by the Committee is found at paragraph 6 of the Decision: “As an authorized seller of poisons, the Dispensary is under a duty to ensure that its retail pharmacy business is conducted properly in accordance with the law.  The conviction of the offences by Mr WONG shows that the Dispensary failed to carry out such duty …”.

26.  As submitted by the applicant, the finding that “The conviction of the offences by Mr WONG shows that the Dispensary failed to carry out such duty” is obviously wrong in law, as explained above by reference to the Fu Ning Dispensary case and the Lee Hong Dispensary case.

27.  In common law, there is generally no obligation imposed on tribunals to give reasons on administrative decisions.  However, where the circumstances of the case require, there is an implied duty to give reasons: Dr Ip Kay Lo Vincent v Medical Council of Hong Kong[1998] 4 HKC 257, pp.267H-268A.  It is particularly the case if “the way in which [the case] was prosecuted and the way in which the [tribunal] reached their findings of fact cried for a reasoned decision without which an appeal would be difficult” (p.268G).

28.  As submitted by the applicant, the present case is very similar to Fu Ning Dispensary, supra, where Rogers J held that:

“… I regret the Committee has at best made only bare findings in relation to what lay before them. The only facts said to be found were those as to the convictions and employment which were the starting point of the inquiry. The statement that the authorized seller had not used due diligence to enforce the execution of the Ordinance is simply a repetition of the words of the Ordinance. It is true that the opening words of s 17(2) refer to that as being a fact necessary to be found by the Committee but it is in truth a conclusion based on primary facts, which are not stated, and opinion. The primary facts on which such conclusion could be based have not been stated by the Committee however briefly, or ‘barely’ to use the words of Lord Hailsham. Self evidently, when the Committee said ‘the defendant, Fu Ning Dispensary, ought to be regarded as responsible for the employee’s offences’, it was stating a matter of opinion.” (p.500F-H) (Emphasis supplied)

29.  Absent any evidence from the respondent apart from Wong’s conviction and the brief facts, the only remaining evidence available was the oral testimony of Mr Kwok Kai Fat and the Defence Bundle.  No “primary facts”, however “briefly or barely”, was mentioned or relied upon by the Committee in arriving at the conclusion at paragraph 6 of the Decision, and the Committee was, similarly, only “stating a matter of opinion”.

30.  The Committee has failed to provide any reasons as to how they arrived at the conclusion by reference to primary facts.  If they did not consider what Mr Kowk Kai Fat testified with regard to the steps he had taken as being a proper and effective system, the Committee could have said so by evaluating the steps.  If the Committee rejected the evidence of Mr Kwok, the Committee should say so.  What has now been said is only a matter of opinion, and therefore, does not amount to proper reasons.

31.  In the context of the PPO, Rogers J had in Fu Ning Dispensary, supra analysed and emphasised the importance of the Committee giving reasons for their decisions: see p.502A-F.  Rogers VP later in Dr Sin Chung Yin Ronald & others v The Dental Council of Hong Kong (unreported, CACV 1211/2001, Judgment dated 18/12/2002) referred to Fu Ning Dispensary and reiterated the importance of giving reasons in the context of the PPO: “… Because of the absence of reasons it was not clear whether the tribunal in that case had ruled against the appellant on the basis that the steps, even if taken, were insufficient or that it was not satisfied that the steps had been taken” (paragraph 3). This is similar to the position in the present case.

32.  I agree with the applicant’s submission that the Decision of the Committee is deficient, in that insufficient reasons based on primary facts was given by the Committee.

Conclusion

33.  For the reasons set out above, I make an order allowing the applicant’s appeal and reversing the decision of the Committee.  I further make an order setting aside the direction for the disqualification of the applicant as an authorized seller of poisons made by the Committee.

34.  At the hearing, parties agreed that costs of this appeal should follow the event.  I therefore order that the costs of this appeal be paid by the respondent to the applicant.  Such costs are to be taxed if not agreed.

35.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.