Cheung Kwok Hung v. Liquor Licensing Board

HEADNOTE

[If a licensing authority has illegally, irrationally, or improperly refused an application for the renewal of a licence, the court may order the licensing authority to re-hear the application; but it cannot properly order the licensing authority to renew the licence]

IN THE COURT OF APPEAL

1994, No. 222
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

1. This is an application for interim relief in proceedings for judicial review, brought by one CHEUNG Kwok Hung ("the applicant") against the Liquor Licensing Board ("the Board"). The applicant's complaint is that the Board has unjustifiably refused to renew his liquor licence in respect of a karaoke lounge on the 3rd floor, Cambridge Building, 26-28 Cameron Road, Kowloon, Hong Kong known as the "Domus Club".

2. The 2nd floor of the same building is occupied by a similar lounge known as "Paris By Night". The reasons why the applicant's liquor licence was not renewed by the Board were (in effect) that these two lounges were under one management; that underage girls were employed in the business carried on there; and that drinks were being served in the Paris By Night lounge which came from the Domus Club lounge, and this was unacceptable because the Paris by Night premises were unlicensed premises. The Board's decision was much influenced by serious objections taken by the police to the renewal of the applicant's licence and based on these considerations.

3. The application for renewal was made in April 1994. On 21 June 1994 the police formulated their objections, and on 7 July 1994 the applicant was notified of those objections. On 21 July 1994, pending a hearing of the matter by the Board, the applicant was granted a licence for a further 3 months.

4. After a brief hearing on 28 July 1994, the matter was adjourned to come on again on 22 September 1994. The objections raised by the police to the renewal of the applicant's licence were sustained and on 28 September 1994 the Board wrote to the applicant to inform him that the Board had decided to refuse his application for a renewal of a liquor licence. It set out in its letter what were in effect its reasons for its decision. These read as follows:

"The Board noted the report from the Police that your club and the Paris by Night Lounge one floor below your club were actually run by one and the same management. Although Paris by Night was unlicensed, liquor was found to be provided by your club to the unlicensed premises. The Board considered that this showed blatant contempt for the law and for the authority of the Liquor Licensing Board. The Board also noted the report from the Police that both premises had record of employing underage girls. Given the above factors, the Board decided that you are no longer a fit and proper person to hold a liquor licence and therefore refused your application."

5. The applicant was entitled to appeal from that decision. Indeed, under cover of its letter of 28 September 1994 the Board helpfully provided the applicant with an appeal form. However, the applicant has as yet launched no such appeal (which would, of course, be an appeal on the merits). What the applicant did instead was to institute proceedings for judicial review, by applying on 19 October 1994 for leave to apply for a judicial review. The next day, 20 October 1994, Mr. Justice Mayo granted him such leave. It must, I suppose, have appeared to the judge on the material before him at that (ex parte) stage that the applicant had shown a case fit for further consideration of the matter.

6. But Mr. Justice Mayo did not stop there. He went on to order the Board to:

"renew the liquor licence of the applicant after 21 October 1994 pending the outcome of the hearing of the application for judicial review".

7. On 21 October 1994, the next day, the licence granted on 21 July 1994, which I have already mentioned, expired. So the Board was placed in a difficult, indeed, impossible position. Its statutory duty is to implement the licensing scheme laid down by the legislation under which it is constituted, that is to say, the Dutiable Commodities Ordinance, Cap. 109 (and the subsidiary legislation relating thereto; I refer in particular to the Dutiable Commodities Liquor Regulations). The Board cannot properly grant licences to people simply because somebody, even a judge, tells it to do so, without regard to its statutory duties. (I do not think Hunter J.A., in Chan Fai v. Television and Entertainment Licensing Authority, CA No. 69 of 1989, 28 June 1989, unreported, intended to suggest otherwise; but, if he did, he was plainly wrong.) Yet the Board would be at risk of proceedings against it for contempt of court if it failed to comply with an order made against it.

8. Mr. Justice Mayo dealt with the matter ex parte and it is clear that his attention was not drawn to this difficulty. Be that as it may, he did order the Board to renew the applicant's licence and so it did so. The new licence, for 3 months, will not expire until 20 January 1995 and will remain in force until it is revoked pursuant to the provisions relating to revocation and suspension of licences which are contained in regulation 23 of the Dutiable Commodities Liquor Regulations or until the court declares, if it ever does, that the licence is invalid.

9. The Board, not content to wait for the review to take place, applied by inter partes summons on 28 November 1994 to set aside the leave granted by the order of 20 October 1994.

10. At the inter partes hearing held on 8 December 1994, Mr. Justice Mayo set aside the leave he had granted and further ordered as follows:

"That the order made by the Honourable Mr. Justice Mayo on 20 October 1994 ordering the Liquor Licensing Board to renew the liquor licence of the applicant after 21 October 1994 pending the outcome of the hearing of the application for judicial review be discharged."

11. That further order again created considerable difficulty. So far as the licence granted by the Board on 21 October 1994 was concerned, there could be no turning back of the clock. Discharging the order of 20 October 1994 did not have the effect of, at the same time, automatically discharging the licence. But, once again, it is clear that the judge's attention was not directed to this difficulty.

12. The judge went on to grant a stay of his order of 8 December 1994 for 7 days. I suppose this was intended to give the applicant a seven-day breathing space before losing, in some unexplained way, the licence which the Board had already granted on 21 October 1994.

13. The applicant has appealed to this court asking it to restore his leave so that he can get on with his proceedings for a judicial review. But, in the meantime, he has a practical problem. He wants to be able to continue in business until such time as his application for judicial review is resolved. But even if he succeeds, the court can only order that there be a re-hearing of his application to the Board; it cannot order the Board to grant him a new licence.

Since it cannot do so on a final basis a fortiori it cannot do so on an interim basis.

14. There being no question of any order for mandamus being made here by the Court of Appeal ordering the Board to grant the applicant a new licence (which is the interim relief for which the applicant has asked) that is the end of the present application. But, as Mr. Rodway Q.C., for the applicant, submitted, in a case in which it was plain that the decision of the Board had been vitiated by illegality, irrationality or procedural impropriety, it would be essential for the court to be able to step in and do something. The legislation ought of course to provide that a licence the subject of an appeal from a refusal should continue until the appeal is heard, as is the case in England and Wales. But failing that, the court must, I agree, have the power to act to protect an applicant who is being treated by the Board illegally, irrationally, or improperly.

15. As it seems to me, the only course the court can take would be to grant an order (1) for certiorari to quash the illegal, irrational or improper decision of the Board and (2) for mandamus to re-hear and determine the application. (It would be possible, I suppose, to short-circuit this by leaving out the certiorari stage, on the basis that the order for mandamus would have the result of quashing the earlier decision anyway.)

16. However, s.23(i) of the Supreme Court Ordinance, Cap.4 provides that any order of mandamus must be final. There is no question of making an interim order. It may be that the substantive appeal here can be expedited so as to accelerate a (possible) grant of leave to the applicant to pursue his application for a judicial review. But I am in no position, sitting as a single judge of this court dealing with an application for interim relief, to grant the application such leave.

17. Is there then any other order I can or should make on an interim basis to assist the applicant? He has, as I have mentioned, the existing licence, which protects his position until 20 January 1995. There is accordingly no immediate threat to the applicant's business which he is seeking to protect. It does not appear that the Board is proposing to take steps to have this licence nullified. Certainly, it has made no such application to the court. If an application is made to the court designed to take away from the applicant the licence granted to him on 21 October 1994, the court will have to deal with that matter when it arises. But it has not arisen yet. The position of the applicant is accordingly, as I have said, protected until 20 January 1995 or until some such application is made. So there is nothing which in my judgment I could or should do to assist the applicant at this stage other than to indicate that I believe that the applicant's appeal from the order of 8 December 1994 ought to be expedited.

18. To justify my decision to give that indication, I must say something of the merits of the applicant's case.

19. The applicant accepts that if all the facts asserted against him were true, then plainly the Board were quite entitled to refuse to renew his licence. What he says is that they are not true; and that he can demonstrate they are not true. The court is not the decision maker; it does not have to review the evidence and decide where the truth lies. It has only to see whether the statutory procedure has been legally, rationally and properly followed. The applicant challenges the evidence given by the police but has had no opportunity of cross-examination. While I do not, for a moment, suggest that ultimately, this will be held to be unfair, I do think it is a fit matter for consideration by way of a judicial review.

20. For those reasons, what I propose to do is this. I propose to indicate that in my view the Court of Appeal should consider as soon as possible whether leave for a judicial review ought to be granted here. Whether it will be possible for the applicant to obtain an expedited hearing of his appeal, so that the matter can be resolved before 20 January 1995 (when the current licence, on the footing that it is valid, would expire) I do not know; that must be dealt with through the usual channels. 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.

21. I will now hear counsel as to the form of the order I ought to make and as to any other matter which falls for further debate.