SZE NING HUNG v. DIRECTOR OF FOOD AND ENVIRONMENTAL HYGIENE AND ANOTHER

CACV 160/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 160 OF 2014

(ON APPEAL FROM HCAL NO. 58 OF 2013)

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REASONS FOR JUDGMENT

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Hon Cheung JA :

1.  The applicant was granted a General Restaurant Licence (‘the licence’) by the 1^st putative respondent, the Director of Food and Environmental Hygiene (‘the Director’), on 28 March 2011 in respect of the premises situated on the ground floor of a building in Mei Fong Street, Kwai Chung, New Territories.

2.  The licence was cancelled by the Director on 9 February 2013.

3.  The applicant appealed against the Director’s decision to the 2^nd putative respondent, the Licensing Appeals Board (‘the LIAB’), but her appeal was dismissed on 4 June 2013.

4.  Nearly a year later, on 30 May 2014 she sought leave to apply for judicial review against the decision of the Director.  Au J refused leave on 16 July 2014.  The applicant appealed.  We dismissed the appeal at the conclusion of the hearing.

Statutory scheme

5.  Under section 125(1)(b) of the Public Health and Municipal Services Ordinance (Cap 132) (‘the Ordinance’), the Director has the sole discretion to suspend or cancel a licence for contravention of any provisions of the Ordinance, or of any requirement, condition or restriction to which the licence was subject.

6.  Pursuant to section 56 of the Ordinance, the Food Business Regulation (Cap 132 sub. leg X) (‘the Regulation’) was enacted for the regulation and licensing of food business. Section 34C of the Regulation provides that :

‘ No licensee shall, save with the permission in writing of the Director, carry on or cause, permit or suffer to be carried on a food business at or from any place beyond the confines of the food premises as delineated on the plan approved under section 32 in respect of his licence.’

7.  Section 35 of the Regulation provides that any person in contravention of, among other things, section 34C shall be guilty of an offence.

8.  When a suspension or cancellation is to be enforced against a licensee, the licensee will be given the right to make representations to the Director.  The licensee will be issued a letter of intended suspension or cancellation, and will be given seven days to make representations regarding such intended suspension or cancellation.

9.  If the Director decides to proceed with the cancellation, the licensee will be issued with a Notice of Cancellation of Licence. As stated in such a notice, if the licensee is dissatisfied with the Director’s decision he may appeal to the LIAB pursuant to section 125(9) of the Ordinance within 14 days of the Director’s decision.

10.  If a licensee has appealed to the LIAB and is dissatisfied with the decision of the LIAB, he may further appeal to the Municipal Services Appeals Board (‘MSAB’) pursuant to section 125B(4) of the Ordinance within 14 days of the LIAB’s decision.

The Policy

11.  In exercising his power under Section 125(1)(b) of the Ordinance in respect of food business licences, the Director has adopted a policy on suspension and cancellation of licence/permit as embodied in a paper entitled ‘Current Policy on Suspension and Cancellation of Full Licence/Permit’ (‘the Policy’) which sets out the enforcement system.  The Policy includes Annex A which is the ‘Procedural Guide for Demerit Points System’ (‘DPS’) and Annex B which is the ‘Schedule of Demerit Points’.

12.  Under the DPS, a prescribed number of demerit points ranging from 5 to 15 (depending on the nature and severity of the offence as specified in Annex B) will be registered against a licensee upon conviction of an offence in relation to food hygiene and control of food premises under the Ordinance and its subsidiary legislations which includes the Regulation.

13.  The prescribed demerit points for a particular offence will be doubled and trebled respectively if the same offence is committed for the second and third time within a period of 12 months.  After each suspension, the points pertaining to that suspension will be cancelled.

14.  Generally, under the DPS, a licence will be suspended for seven days if 15 points are accumulated within a period of 12 months (‘1^st Suspension’) and 14 days if another 15 points are accumulated within 12 months from the date of the last offence that led to the 1^st Suspension (‘2^nd Suspension’).  Thereafter, if another 15 points are accumulated within 12 months from the date of the last offence that led to the 2^nd Suspension, the licence may be cancelled.

15.  In addition, if the contravention is considered, amongst other things, very serious in nature, the Director may exercise his discretionary power to suspend or cancel the licence with immediate effect. This is expressly stated in the Policy as follows :

‘ In addition to the above, if the breach of the law or licensing requirement/condition is considered of public health or safety significance or very serious in nature, the Director of Food and Environmental Hygiene may exercise his power to suspend or cancel the licence/permit with immediate effect in accordance with section 125(1)(b) of the Public Health and Municipal Services Ordinance, Cap. 132.’ (emphasis added)

16.  Copies of the Policy together with the two annexures were supplied to the applicant at the time of the granting of the licence.

The suspension

17.  Between 13 April 2011 and 18 July 2011 the applicant was prosecuted twice for contravention of section 34C of the Regulation. She was convicted on 8  September 2011 for both offences.  The first conviction attracted 10 demerit points while the second conviction attracted 20 demerit points making a total of 30 demerit points.

18.  On 21 September 2011, the Director wrote to the applicant informing her of the Director’s intended decision to suspend her licence for seven days.  She was invited to make representations to the Director if she wished to do so.  No representations were received.  On 10 October 2011, the Director informed the applicant that her licence would be suspended for seven days from 15 to 21 November 2011. 

19.  The applicant lodged an appeal to the LIAB on 26 October 2011 against the Director’s decision to suspend her licence.

20.  The appeal was dismissed by the LIAB on 19 March 2012.

21.  On 25 March 2012, the applicant lodged an appeal against the LIAB’s decision to dismiss her appeal.  The appeal was dismissed by MSAB on 20 September 2012.

22.  Subsequent to the decision of the MSAB, on 3 October 2012, the Director informed the applicant that her licence would be suspended from 20 to 26 October 2012.

Further offences

23.  Subsequent to the first conviction on 8 September 2011, the applicant continued to commit contraventions under section 34C of the Regulation on 7 October 2011, 14 October 2011, 19 October 2011 and 9 November 2011.

24.  According to the Policy, after the 1^st Suspension, the two further offences committed on 7 October 2011 and 14 October 2011, would result in an accumulation of 30 demerit points upon convictions.  This would in principle warrant a 2^nd Suspension.  As the applicant had committed offences on 19 October 2011 and 9 November 2011, this would make a total of four offences which would attract 90 demerit points.  This would warrant a cancellation of the licence under the Policy. 

25.  But that is not all.  The applicant continued to commit more section 34C offences.  Further to the last offence on 14 October 2011 the applicant committed 31 more offences between 19 October 2011 and 9 November 2012 resulting in further accumulation of 930 demerit points.

26.  In view of these offences, the Director decided to cancel the licence immediately and on 29 November 2012, issued a Notice of Intended Cancellation of Licence informing the applicant of the intended immediate cancellation of her licence and inviting her to make representations to the Director, if any, within the next seven days.  No representation from the applicant was received.

27.  On 9 January 2013, a Notice of Cancellation of Licence was served on the applicant.  The Notice informed the applicant that her licence would be cancelled on 9 February 2013 and that she had 14 days to appeal to the LIAB against the Director’s decision.

28.  On 11 January 2013, the applicant submitted a notice of appeal to the LIAB.  However, since no application to the Director was made seeking suspension of the operation of his decision pending the determination of the appeal under section 125(10) of the Ordinance, the Director by letter of 21 January 2013 informed the applicant that he would proceed with the cancellation of her licence on 9 February 2013.

29.  On 29 January 2013, the Director informed the applicant that her licence had been cancelled and if she wanted to make representations to the cancellation, she must do so within the next seven days.

30.  The LIAB heard the applicant’s appeal on 14 March 2013, and dismissed the appeal on 4 June 2013.

31.  Unbeknown to the Director, the applicant lodged an appeal out of time to the MSAB on 29 July 2013.  MSAB refused her appeal on 12 August 2013.  The applicant twice requested the MSAB to reconsider its decision. They were refused by the MSAB on 3 and 11 September 2013 respectively.

Joinder of LIAB

32.  The applicant acted in person when she applied for leave to apply for judicial review.  Her only challenge was against the decision of the Director to cancel her licence.  The applicant is now legally represented on appeal.  In her notice of appeal, she expanded her challenge to the decision of LIAB as well.  A summons was issued recently by her to join the LIAB as a respondent.  The LIAB has indicated that it would not attend the hearing. 

33.  Although the decision of the LIAB was not identified in the Form 86 application, the Judge did consider that decision.  Hence we allowed the applicant to join the LIAB as the 2^nd putative respondent.  The practice in judicial review proceedings is that appeal tribunals like the LIAB and MSAB would take a neutral stance in the matter and for the relevant government department to be the sole respondent to argue the case on their behalf as well.

Grounds of challenge

34.  The challenges to the decision of the Director and LIAB can be gathered from the notice of appeal :

1)     The LIAB was wrong in law to take into account irrelevant considerations in its decision, namely the conduct of the applicant after her licence had been cancelled. (paragraphs 19(g) and 23 of the decision), (paragraph 2c of the notice of appeal)

2)     The LIAB was wrong in law to hold that the Director had sufficient reason to cancel the applicant’s licence on the basis that the applicant had repeatedly breached the law of the same nature. (paragraph 19(d) of the decision), (paragraph 2b of the notice of appeal)

3)     The Director and/or the LIAB failed to adhere to the Policy in the cancellation of the applicant’s licence.  (paragraph 2a of the notice of appeal)

Adherence to the published Policy

35.  In my view as the fundamental basis of the challenge is against the Director’s cancellation of the licence, one must consider that decision first and this involves the issue of whether the Director had adhered to the Policy.

36.  Mr Law, counsel for the applicant, submitted that under the Policy, a licence can be cancelled under and only under two circumstances. First, the ‘three steps approach’ under the DPS.  After the 1^st and 2^nd Suspensions of licence, the licence can be cancelled if another 15 points were registered (the ‘Three Steps Approach’).  Second, if the breach of the law is of public health or safety significance or very serious in nature, the Director may suspend or cancel the licence with immediate effect (the ‘Very Serious Approach’).  He submitted that the Director seemed to justify the cancellation of the applicant’s licence on an administrative measure called a ‘direct cancellation’ of the licence without execution of the 1^st and/or the 2^nd Suspensions.  He submitted that this administrative measure is in stark contradiction with the Three Steps Approach.  It departs from the published Policy and violates the legitimate expectation of the applicant. 

37.  I disagree.  An immediate cancellation of the licence due to, amongst other things, ‘the breach of the law… is serious in nature’ is expressly stated in the Policy which was drawn to the attention of the applicant when she was granted the licence.  The background facts clearly identified the repeated offences of the applicant up to the time when the Director decided to cancel the licence.  This clearly falls within the ambit of the immediate cancellation approach of the Policy in that her breach of the law is serious in nature.  I fail to see how it can be seriously argued that the Director had not adhered to the Policy.  Further in view of the express statement in the Policy that the Director has the power to effect an immediate cancellation, the applicant could not possibly have any legitimate expectation that the Director would only resort to the Three Steps Approach.

Taking irrelevant consideration into account

38.  Mr Law referred to paragraphs 19(d), (g) and 23 of the LIAB’s decision which showed that the LIAB had considered the following matters :

1) the repeated breach of the law in the same nature by the applicant seriously affected the public health (19(d));

2) the applicant operated restaurant without licence and was prosecuted and convicted for eight times in total (19(g)); and

3) the applicant unscrupulously still operated her business without licence, this conduct of blatantly ignoring the law cannot be tolerated and the Director should consider how to strengthen law enforcement (23).

39.  Mr Law argued that the licence of the applicant was cancelled on 9 February 2013 but the matters stated in paragraphs 19(g) and 23 all happened after the licence had been cancelled and they are strictly irrelevant to the decision of whether the Director was correct in cancelling the licence of the applicant in the first place.  They also cannot substantiate the finding of the Judge and the LIAB in relation to the seriousness of the applicant’s breach or her intention to abide by the law during the time before the licence was cancelled.  More importantly, it cannot be said that these matters were immaterial or non-influential in the decision-making process of the LIAB or the Judge. 

40.  Despite the submission of Ms Lui, counsel for the Director, to the contrary, I agree that the events that took place after the cancellation of the licence are irrelevant considerations.  However even without these further events, the LIAB could clearly affirm the decision of the Director’s immediate cancellation of the licence.  The context of the case shows that :

1)     The Director decided to suspend the licence for the first time on 10 October 2011, although this suspension was not actually executed until 20 October 2012 by reason of the applicant’s appeal against the decision first to the LIAB and then to the MSAB.

2)     On as early as 14 October 2011, the applicant had further committed four offences under section 34C and accumulated 90 demerit points.  This already warranted the 2^nd Suspension under the Three Steps Approach, although such a suspension was not executed.  By 9 November 2011, the applicant had contravened more section 34C offences and accumulated 150 demerit points.  This already warranted a cancellation of the licence under the Three Steps Approach.

3)     By the time the Director decided to cancel the licence in November 2012 the applicant had further to the last offence on 14 October 2011 committed 31 more offences between 19 October 2011 and 9 November 2012 resulting in further accumulation of 930 demerit points.

41.  As Ms Lui correctly pointed out, it would have been meaningless and of no practical effect to suspend the licence, and cancel it immediately afterwards.  There was also an appeal mechanism in place if the applicant felt aggrieved by the cancellation of the licence (which she did, in fact, make use of).  The non-execution of the 2^nd Suspension would not have caused any prejudice or harm to the applicant.

42.  Mr Law submitted that it may be immaterial that an authority has considered irrelevant matters in arriving at its decision if it has not allowed itself to be influenced by those matters.  However, if the influence of irrelevant factors on the decision-maker is established, it does not appear to be necessary to prove that they were the sole or even the dominant influence.  As a general rule it is enough to prove that their influence was material or substantial (De Smith’s Judicial Review, 7^th Edition, 5-121).

43.  In my view the proper approach is that the taking into account of an irrelevant consideration (or the failure to take into account a relevant consideration) will not automatically result in a decision being quashed for illegality, if the outcome would have been no different had the decision-maker acted correctly.  The position is stated by May LJ in R v Broadcasting Complaints Commission, Ex-parte Owen [1985] 1 QB 1153 (DC) at 1177 :

‘ Where the reasons given by a statutory body for taking or not taking a particular course of action are not mixed and can clearly be disentangled, but where the court is quite satisfied that even though one reason may be bad in law, nevertheless the statutory body would have reached precisely the same decision on the other valid reasons, then this court will not interfere by way of judicial review. In such a case, looked at realistically and with justice, such a decision of such a body ought not to be disturbed.

……

Another approach to the same problem in such circumstances, which really reflects the same thinking is this: the grant of what may be the appropriate remedies in an application for judicial review is a matter for the discretion of this court. Where one is satisfied that although a reason relied on by a statutory body may not properly be described as insubstantial, nevertheless even without it the statutory body would have been bound to come to precisely the same conclusion on valid grounds, then it would be wrong for this court to exercise its discretion to strike down, in one way or another, that body’s conclusion.’

Seriously affecting the public health

44.  Mr Law submitted the LIAB and the Judge’s decision that the act of the applicant ‘seriously affected the public health’ is wrong in law for two reasons.  First, it failed to take into account relevant considerations; and, second, it is unsupported by substantial evidence.

45.  Mr Law submitted that the breach was in respect of section 34C of the Regulation and this section is essentially related to the unauthorised extension of food business outside the licenced area.  It logically follows that if a decision-maker has to determine whether the applicant’s breach under this section seriously affected public health, it should at least have regard to the following relevant considerations :

1) the actual area and size of the unauthorised extension;

2) the size of the unauthorised extension comparing to the size of the licenced area;

3) what was the unauthorised extension used for;

4) whether the applicant extended her food premises 24 hours a day or only at a particular time during the day;

5) the neighbourhood of the area, whether it is commercial, residential or others; and

6) how did the unauthorised extension actually affect the public health of the neighbourhood, etc.

46.  Mr Law submitted that, instead of adopting this approach, the decision-maker, on the contrary, based his decision significantly, if not solely, on the number of repeated breach and previous convictions of the applicant.  This is an unsafe and misleading factor.  For continuous breach such as the present one, the number of convictions to a very large extent depends on the attitude of the Director in prosecuting cases in a particular area at a particular period of time.  This is arbitrary.

47.  I disagree.  The Director had explained to the LIAB that his department received various complaints from residents in the vicinity of the applicant’s restaurant in relation to the illegal extension of business area by the restaurants nearby with their tables and chairs placed on the pavements. This would obviously cause obstructions to pedestrians using the pavements, deterioration of the street environment in general, and noise problems to residents in the neighbourhood.  Accidents might also be caused by such obstructions on the pavement.  The seriousness of a contravention of section 34C has been expressly recognised in the Policy which attracted 10 demerit points.

48.  The stark fact is that the applicant had committed numerous section 34C offences when the Director decided to cancel her licence. This serves as concrete and cogent evidence that she had acted in serious breach of the law and licensing condition.  The Policy states that if the breach is considered (1) of public health significance, or (2) of safety significance, or (3) very serious in nature, the licence may be cancelled.  The reference to public health which is a separate basis for cancellation was not the only basis relied upon by the Director for cancelling the licence.  In any event, as Ms Lui submitted, the repetitive breach clearly constitutes a significant negative impact on the public health and safety of the vicinity.

49.  The applicant did not allege bias on the part of the Director in prosecuting her for the section 34C offences.  I cannot see how the act of the Director can be described as arbitrary.

Out of time application

50.  Ms Lui had submitted that the application was made out of time.  I do not need to deal with this as it would not carry the matter further in the light of the lack of merits of the applicant’s case.

Conclusion

51.  In my view the applicant has not raised any reasonably arguable point in support of her application for leave to apply for judicial review. The Judge was correct in his refusal to grant leave. 

52.  Accordingly the appeal was dismissed.

Costs

53.  Application for leave to apply for judicial review is an ex-parte application. Likewise for an appeal when leave is refused.  The Director took part in the appeal because the Court had previously so directed, no doubt for the purpose of giving assistance to the Court.  While we appreciate the Director’s assistance, there is no reason why the applicant should be asked to bear the costs of the Director whom she had no desire to join in the appeal in the first place.  Accordingly, there should be no order as to costs of the appeal.

Hon Yuen JA :

54.  I agree with Cheung JA’s Reasons for Judgment.

Hon Chu JA :

55.  I agree with the reasons given by Cheung JA and the costs order proposed.