MCGETTIGAN, BRIAN KEVIN v. MUNICIPAL SERVICES APPEAL BOARD (“MSAB”) AND ANOTHER

HCAL 168/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 168 OF 2013

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D E C I S I O N

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Introduction

1. This is an application for leave to apply for judicial review of the decision of the Municipal Services Appeals Board dated 7 November 2013 refusing to renew the liquor licence in relation to the premises situated at 1/F, Kinwick Centre, 32 Hollywood Road, Central, Hong Kong.

2. The 1^st applicant is the licensee of the premises and the 2^nd applicant is the corporate vehicle through which a restaurant and bar is operated at the premises under the trade name of “Coast”.

3. Having considered the Form 86 and the supporting affirmation of the 1^st applicant, I directed that a copy of the application be served on the Municipal Services Appeals Board (“the MSAB”) as the Putative Respondent and the Liquor Licensing Board (“the LLB”) as Putative Interested Party and that the application be dealt with by way of hearing to which they were asked to attend.  The MSAB indicated that it took a neutral stance in relation to the application and would not participate in the proceedings.  The LLB on the other hand filed written submissions opposing the application and was legally represented at the hearing.

4. My task is to deal with two matters.  One follows the other.  I am required to decide whether this application for leave to apply for judicial review should be granted on the basis that there is a reasonably arguable claim which enjoys realistic prospects of success[1],and if I so decide, whether interim relief can or should be granted pending the determination of the application.[2] 

History of the licence

5. The premises in question are located on the first floor of a commercial building at the corner of Hollywood Road and Shelley Street in the Soho area which has become a locality for restaurants and bars.  The premises operate under a General Restaurant Licence issued by the Food and Environmental Hygiene Department.  The business hours of the premises are from 8am to 3am, and the selling of liquor hours are from 8am to 2am.  The entrance to the premises is on Shelly Street.  This street is free of vehicular traffic and is intermittently lined on either side of it with restaurants and bars, and residential buildings.  Also running along Shelley Street is the Central/Mid levels escalator.

6. On 10 November 2009, the LLB first granted a liquor licence to the premises for a period of 12 months with the following two conditions:

“(a) All doors and windows of the premises shall be kept closed after 11:00p.m.

(b) No liquor shall be sold or supplied for consumption on the premises after 2:00a.m.”

7. In November 2010, the licence was renewed for 12 months.  On 6 September 2011, the licence was transferred to the present licensee with the following additional condition:

“(c) The licensee shall be on duty on the premises from 9:00p.m. to 3:00a.m. every Friday, Saturday and the day preceding general holidays.”

8. On 8 November 2011, the licence was renewed by the LLB for a further 12 months with the following additional condition:

“(d) The licensee shall with due diligence ensure that the liquor sold or supplied is to be consumed on the premises only.”

9. The licensee appealed to the MSAB against the imposition of condition (d) which was heard on 3 August 2012 and its decision was handed down on 21 August 2012.  The MSAB allowed the appeal and ordered the removal of condition (d) from the liquor licence.

10. At the renewal of licence hearing on 6 November 2012, the LLB granted a renewal of 6 months (until 6 May 2013) with the reinstatement of condition (d) and the addition of condition (e).  Condition (e) provided:

“(e) No music shall be played and no sound amplification device shall be used at the premises after 11:00p.m.”

11. The licensee appealed to the MSAB against the imposition of condition (e).  On 8 March 2013, the MSAB allowed the appeal and removed the condition from the liquor licence.  A cross appeal by a District Councillor and a group of residents residing some distance away from “Coast” opposing the renewal of licence was also heard and disallowed.  The reasons for the decision were handed down on 20 May 2013.

12. On 19 April 2013, the licensee applied to renew the licence which was due to expire on 6 May 2013.  At the renewal hearing of the licence on 7 May 2013, the LLB approved the renewal of the licence for 3 months (until 9 August 2013) and reinstated condition (e).

13. The licensee appealed to the MSAB against the reinstatement of condition (e) and the short duration of the renewed licence. It was heard by the MSAB on 24 June 2013 which it dismissed on 25 September 2013 except it amended condition (e) as follows:

“(e) No sound amplification shall be used at the premises after 11:00p.m.”

The reasons for the decision were handed down on 4 November 2013.

14. On 24 May 2013, the licensee applied for a renewal of licence as the 3 months was due to expire on 9 August 2013.  The application was heard by the LLB on 16 July 2013 which refused to renew the licence.  The licensee appealed to the MSAB against the refusal of licence.

15. On 19 July 2013, the licensee made application for an interim renewal of the liquor licence issued on 7 May 2013.  It was heard on 2 August 2013 and reasons were handed down on 13 September 2013.  The MSAB made the following order:

“Subject to any order the Board may make in MSAB Appeal No.39/2013, there be granted an interim renewal of the current Liquor Licence pending the final determination of the appeal of the MSAB Appeal No.53/2013 with the same conditions as the current Liquor Licence granted by the LLB on 7 May 2013.”

16. The appeal was heard by the MSAB on 26 September 2013 and its decision was handed down on 7 November 2013.  The MSAB dismissed the appeal and affirmed the decision of the LLB.

17. At each of the appeal hearings before the MSAB, the LLB was the respondent and represented by government counsel.

The issue concerning the licence

18. The issue that seems to have plagued these licensed premises is the noise level emanating from it after certain hours in the night.  This is a problem one would expect, and needs to be addressed, in a mixed residential and commercial area.  It would appear that the conditions attached to the liquor licence were done so with this in mind.  I note that the location of the premises has never been an issue for the LLB or the MSAB in the sense that the licence was inappropriate for these premises. Nor has there been any contravention of the offense provisions under Part IV of the Dutiable Commodities (Liquor) Regulations.  However there has been an issue with respect to the noise emanating from the premises which has been the subject of complaint.

Leave application

19. In the notice of application for leave to apply for a judicial review, the applicants seek relief against the decision of the MSAB dated 7 November 2013 to dismiss the 1^st applicant’s appeal against the LLB’s decision not to renew the liquor licence in respect of the premises made on 16 July 2013.  The relief sought is an order of certiorari quashing the decision.  During the course of the hearing, it arose that the relief sought should also include an order of mandamus for the MSAB to rehear and determine the appeal.

20. Upon leave being granted, the applicants also seek a stay of the decision which would bring into effect the interim licence granted by the MSAB on 2 August 2013.

21. Mr Lewis Law, who appears for the LLB, argues that the applicants did not make full and frank disclosure to the court in the papers for leave to apply for judicial review.  I do not agree.  There was a page missing in the decision in question but it was an obvious omission.  The notes of proceedings and police schedules were not included but the contents were generally addressed by the papers submitted and in certain respects the documents in question could be viewed as containing information that the applicants could rely on in their application.[3] An explanation has been provided by the solicitor on record that page 13 of the decision and the notes of proceedings had not been received by him when he took over the case.  I accept that explanation.

Grounds for review

22. I have decided to grant the applicants leave to apply for judicial review of the decision.  I set out my reasons as follows.

23. The applicants raised two grounds for review in the papers.  The first ground is that the MSAB took into account past infractions by the licensee with little or no consideration of the operation of the premises by the licensee during the 3 months renewal period which was granted to closely monitor his performance and the operation of the premises.  I do not consider there is any basis for the complaint that it was irrelevant for the MSAB to take into account past infractions by the licensee in its overall determination of whether or not he is a fit and proper person to hold a liquor licence.  It is, however, reasonably arguable that the MSAB may not have given any or sufficient consideration to the performance of the licensee and the operation of the premises in the 3 months renewal period.  This relates to an additional ground raised in the hearing, which I will come to later, in relation to the failure to give adequate reasons.

24. The second ground is that the MSAB took into account irrelevant considerations by placing emphasis on unsubstantiated complaints.  Under this ground, it is argued that the way the LLB considered and viewed the complaints in relation to the premises was inconsistent and unfair. It is argued that the MSAB relied on the views of the LLB and dealt with the complaints in the same way.  Implicit in this ground is the issue of the procedural history of the renewal of the licence and the appeal against conditions which were removed or amended by the MSAB but later reinstated by the LLB.  It therefore requires consideration of the procedures of the LLB and the MSAB and the interrelationship between them.  I am of the view that this ground is reasonably arguable.

25. Two additional grounds were raised in the course of the hearing for which notice and leave have been given.  The third ground concerns the failure by the MSAB to give adequate reasons for its decision.  I note that under Regulation 17(3) (b) of the Dutiable Commodities (Liquor) Regulations, Cap 106, the LLB must give reasons in writing for a decision to refuse an application and under Regulation 23(1) (1A) and (2) the secretary to the LLB must give notice in writing together with reasons, of a decision to refuse to renew a liquor licence to the person concerned.  This is relevant to the LLB’s decision of 16 July 2013.  The MSAB is governed by the Municipal Services Appeals Board Ordinance, Cap 220.  The conduct of proceedings is provided for under section 12.  The MSAB under section 15 is obliged to give reasons in writing for its decisions and these reasons must include its findings on material questions of fact and a reference to the evidence or other material on which these findings were based. 

26. The decision of the MSAB sets out the background and a recital of the LLB’s reasons for refusal of the renewal of the licence which appear to have been taken from the LLB’s statement under section 9(1) (a) of the Municipal Services Appeals Board Ordinance, Cap 220.  The decision includes a reference to Regulation 23 of the Dutiable Commodities (Liquor) Regulation and a statement that appeals to the MSAB are by way of a rehearing and that Board members exercise their discretion according to materials before them.  There follows a discussion which consists of five paragraphs.  In the last paragraph, the chairman of the MSAB stated that they were driven to conclude that the licensee was not a fit and proper person to hold a liquor licence and the granting of a licence in the circumstances was not in the public interest.  It is argued that the nature and degree of the reasoning and analysis was inadequate with respect to the MSAB’s key conclusions.  I am of the view that this ground is reasonably arguable.

27. The fourth ground is that the reasoning of the decision in paragraph 24 was internally inconsistent and logically flawed.  It concerned briefly the licensee’s performance during the period under review.  To some extent, it relates to the reasonably arguable point I have mentioned under the first ground.  Accordingly, I am of the view it is reasonably arguable.

Interim relief

28. The next issue I need to address is the question of interim relief.  In accordance with Order 53, rule 3(10) (a), the grant of leave shall operate as a stay of the proceedings to which the application relates until the determination of the application or until the court otherwise orders.  This means that in the meantime the final determination of the MSAB made on 7 November 2013 is stayed and, in my view, the interim order made by the MSAB on 2 August 2013 comes into effect.  This involves the grant of an interim renewal of the liquor licence to the licensee pending final determination of the appeal.

29. Mr Law opposes the interim relief, staying the decision and bringing into effect the MSAB order of 2 August 2013.  He makes three points against it.  First, he argues that the court should consider the retrospective effect the interim relief will have from the date of the decision on 7 November 2013 to the date of the order granting the interim relief.  I do not see this as an issue.  The interim liquor licence granted by order of the MSAB on 2 August 2013 will take effect as at the date the court grants leave and so orders.

30. Secondly, he argues that the refusals to renew the liquor licence by the LLB and the MSAB are not “proceedings” within the terms of Order 53, rule 3(10) (a).  He refers to the decision of Bokhary J (as he then was) in Anglo Starlite Insurance Co Ltd v The Insurance Authority [1992] 2 HKLR 31 who in examining the advice of the Board in Minister of Foreign Affairs, Trade and Industry v Vehicle and Supplies Ltd and Anor [1991] 1 WLR 550, distinguishes it, and makes the point that in that case the process of implementation was not encompassed in the matter to be challenged by way of judicial review and what the application for judicial review related to did not amount to proceedings. Bokhary J held that the process of implementation of the decision under review was encompassed in the matter to be challenged, and taken together the process by which challenged executive decisions were reached and the process by which they would be implemented amounted to proceedings within the meaning of Order 53, rule 3(10) (a).  The MSAB decision of 7 November 2013 is a decision of an appeal, conducted pursuant to section 12 of the Municipal Services Appeals Board Ordinance Cap 220.  The decision and its implementation are encompassed in the matter to be challenged and in my view constitute proceedings within the meaning of Order 53, rule 3(10) (a).

31. In PCCW-HKT Telephone Ltd v Telecommunications Authority, (unreported) HCAL No 63 of 2004, Hartmann J (as he then was) granted leave to apply for judicial review of decisions by the respondent concerning local access charges.  He also granted an interim stay, prohibiting the respondent from imposing the charges until the challenge to the lawfulness of the decisions had been determined.  The interim stay, however, was granted subject to the condition that the respondent be entitled to apply to set aside the stay.[4] The basis for this condition is to cater for any change of circumstances that would warrant a lifting of the stay and the revoking of any related orders in the interests of justice.

32. Thirdly, he argues that even if the court is satisfied that it has the power to grant a stay or an interim order it should balance the commercial interests of the applicants against public interest considerations as represented by the factors taken into account by the LLB and the MSAB in making their respective decisions including the licensee’s prior record and the representations of interested parties.  It seems to me that it is the very purpose for the judicial review and I am of the view that in all the circumstances the interim relief sought should be granted.

33. It was also argued that the court does not have power to grant relief or direct a grant of a liquor licence.  It is well acknowledged that judicial review is the means by which the court exercises a supervisory jurisdiction over inferior courts, tribunals and other bodies performing a public function.  Mr Law argues that whilst the MSAB can exercise all the powers and discretions of the LLB[5], the court cannot.

34. Mr Law refers to the judgment of Godfrey JA in Cheung Kwok Hung v Liquor Licensing Board [1995] 2 HKLR 456 who questioned whether a court can make an interim order which has the effect of granting or extending a licence.  He highlighted the dilemma of the court in such circumstances, and the need to protect the position of an applicant who had been unfairly treated, and went on to explain:

“Having regard to the state of the legislation, which does not provide for continuance of the licence pending an appeal, an expedited appeal is necessary to protect the position of an applicant who has or may have been unfairly treated. It seems to me unsatisfactory that the court should be absolutely unable to interfere in order to put such a matter right before it is too late and the licensee’s business has been ruined by a refusal to renew the licence. The failure to renew a licence is so serious in this sort of case that the applicant is justified in suggesting that its business will in fact be ruined if the licence (if it ought to be renewed at all) is not renewed before it is too late. It is not for me to judge today whether the applicant deserves that fate. My only concern is to indicate what might be done to do justice between the parties. ”[6]

35. In Paul Baynham and Cristina Ltd v The Municipal Services Appeals Board, (unreported) HCAL No 38 and 71 of 2010, Reyes J referred to the comments of Godfrey JA and reasoned he had power to make an order that had the effect of extending a licence until the determination of the judicial review.  In that case, Reyes J had granted leave to apply for judicial review and further directed that there would be a stay of the effect of the cancellation of the licence such that the licence would be deemed to remain valid until the determination of the judicial review or further order.[7]  He explained that his direction was within the court’s inherent jurisdiction to take measures to safeguard its procedures and preserve the status quo pending the substantive determination of a dispute and that his direction had the effect of precluding the LLB from treating the licence as expired which was deemed to continue until such time as the judicial review is resolved.  As he rightly points out, not to do so, to the extent the LLB acted wrongly, the court’s procedures would be circumvented.  After all, the courts are there to ensure that appropriate measures are taken to protect the position of an applicant who has or may have been unfairly treated by the decision, the decision-maker or the decision making process.

36. In Anglo Starlite Insurance Co Ltd,Bokhary J made it abundantly clear that the courts have the power to stay under Order 53, rule 3(10) (a) and that it was an important measure in order to preserve a party’s position to provide an effective remedy if the claim is eventually made out. He said:[8]

“I am happy to reach the conclusion that the courts are able to direct such stays whenever it is appropriate so to do. Where a right may be made out, there should be preserved an effective remedy by which to enforce it if it is eventually made out. And it should be, and I trust will be, clearly understood that – the power to direct such stays being discretionary – the existence of the power will not paralyse administrative action; rather it will ensure that such action conforms with the law. That is the essence of judicial review.”

Orders

37. Mr Law submits that if the court should consider it appropriate to grant leave to apply for judicial review and interim relief in favour of the applicants such that they can operate the premises under a liquor licence pending the substantive hearing of the judicial review, he invites the court to specify the commencement and duration of such a licence and to fix a substantive hearing for the judicial review.  I can understand the underlying concern of such an invitation which I will bear in mind in the orders I make.

38. I grant leave to the applicants to apply for judicial review of the decision for which relief is sought.  I grant a stay of the proceedings under Order 53, rule 3(10) (a) and I order that this stay does not apply to the order of the MSAB made 2 August 2013 which should be given effect as of the date of this decision.  I note that the order of the MSAB dated 2 August 2013 will come into effect by my order to stay the proceedings of the final determination of the MSAB and its decision of 7 November 2013. For the avoidance of any doubt, in staying the decision, I direct that the terms of the order of the MSAB on 2 August 2013 be given effect pending the final determination of the judicial review.  I note that the stay can be revoked by the court if there are circumstances warranting such an order.  I accordingly make it a condition of the stay that the respondent or the interested party be entitled to apply to set aside the stay.  I order an expedited hearing that will be fixed by the court.  I finally order that costs be in the cause.

[1] Po Fun Chan v Winnie Cheung (2007) 10 HKCFAR 676.

[2] RHC, Order 53, rule 3(10).

[3] Affidavit of Mr Christopher John Dundon dated 2 December 2013.

[4] At paragraph 8, Hartmann J (as he then was) held that the Court of First Instance has the jurisdiction to order a stay of an executive decision of the kind under challenged in that case. He relied on Anglo Starlite Insurance Co Ltd as authority. See also paragraph 14.

[5] Section 7(1) of the Municipal Services Appeal Board Ordinance, Cap 220.

[6] At 460 line 5 to 15.

[7] Paragraph 20.

[8] At 36 lines 5 to 10.