KIU WAN PUBLIC LIGHT BUS (SCHEDULED) SERVICE CO LTD v. TRANSPORT TRIBUNAL AND ANOTHER

HCAL103/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 103 OF 2004

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J U D G M E N T

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1.  This is the applicant’s application to judicial review the decision of the Transport Tribunal (“the Tribunal”) dated 10 May 2004 whereby the Tribunal allowed the applicant’s application for a review of the decision of the Commissioner for Transport (“the Commissioner”) to grant a passenger service licence (“PSL”) to Rich Success Transportation Limited (“Rich Success”), and directed that the Commissioner to reconsider its decision.  The subject matter of the applicant’s complaint in this judicial review is that the Tribunal’s decision contained no direction to the Commissioner to accord extra marks for such matters as low fares, high frequency of services and provision of brand new and better equipped vehicles, in the selection process and to terminate the temporary PSL granted to Rich Success.   Rich Success had appeared and made submissions at the hearing to oppose the judicial review application as a party interested in the outcome of the application.   

Background facts

2.  By Gazette Notice No. 5240 published on 1 August 2003, the Transport Department invited tender applications for the issue of PSL for the operation of three packages of public light bus (scheduled) routes in the New Territories.  Package No.1, with which the present application is concerned, consists of 4 Green Minibus (“GMB”) routes. 

3.  The details of the packages of public light bus (scheduled) routes as gazetted contained (i) the journey distance, (ii) the maximum fare, (iii) the minimum vehicle requirement and (iv) the proposed basic service frequency for each of the routes of the three packages.

4.  Among the tender documents distributed to interested applicants was a “Guidance Notes for Tenderers” (“the Guidance Notes”).  Paragraph 6 of the Guidance Notes inform the applicants that the Commissioner, when making the selection, would give emphasis to the six factors set out in the paragraph.  They were:

(a) The applicant’s management ability,

(b) The quality of the vehicles proposed to be used by the applicant,

(c) The applicant’s financial resources,

(d) The passenger facilities proposed to be used by the applicant,

(e) Whether the applicant was a newcomer to GMB routes; and if it is already an operator, the size of its present operation, and

(f) If it is a GMB operator, its record of services in the past two years.

5.  Under assessment factor (b), the quality of the vehicles proposed to be used covers the age of the vehicles, vehicle inspection records for the past three years, facilities for people with disability, the number of environmental protection vehicles and the safety facilities installed on the vehicles.   As for assessment factor (d), the passenger facilities considered included fare concessions for elderly people, installation of handrails and other facilities on the vehicles and other innovative and practical proposals.

6.  Six applications, including those of the applicant and Rich Success, were received for Package No.1.

7.  A Green Minibus Operators Selection Board (“the Board”) was set up to recommend to the Commissioner the most suitable operators to operate the GMB routes under tender.  The Board comprised representatives from the Transport Advisory Committee, the Environment, Transport and Works Bureau, Home Affairs Department and Transport Department together with an observer from the Independent Commissioner Against Corruption. 

8.  Before the Board carried out its assessment and made recommendation to the Commissioner, the Transport Department had conducted a preliminary assessment of the applications for the purpose of short-listing applicants for consideration of the Board.  The criteria for the preliminary assessment were those set out in paragraph 6 of the Guidance Notes.  These criteria were agreed by the Board before tender applications were invited.  

9.  On 7 October 2003, the results of the preliminary assessment for Package No.1 were submitted to the Board for consideration.  Rich Success scored the highest mark of 94.5 and the applicant scored the second highest mark of 93.5.  They had scored equal marks under all assessment factors except for “facilities for people with disability”.  Under this assessment factor, Rich success scored one mark more than the applicant because it had proposed to provide Braille plates and non-slippery floor in addition to giving priority for boarding/ seating to the disabled whereas the applicant only offered to give preference to the disabled for boarding/seating. 

10.  After consideration, the Board recommended awarding the PSL of Package No.1 to Rich Success. 

11.  After considering the recommendation, the Commissioner decided to award the PSL to Rich Success.  By letter dated 8 October 2003, the Commissioner informed Rich Success the following matters:

(1)	Rich Success had been selected to operate the four GMB routes under Package No.1.
(2)	As the unsuccessful applicants may within 21 days from the date of the decision applied for a review of the decision, the PSL could only be formally issued to Rich Success after the expiration of the review period or if there is an application for review, after the determination of the application by the Tribunal.
(3)	Since the current operator of the GMB routes under Package No.1 would terminate its service on 5 November 2003, a temporary PSL would be granted to Rich Success to operate the GMB routes so as to not to affect the services to the passengers.  The temporary PSL was initially for the period from 5 November 2003 to 4 May 2004.  Whether it would be extended depended on whether there was any review application against the Commissioner’s decision and if there was, the determination of the Tribunal.
(4)	Rich Success was required to indicate its acceptance of the grant of temporary PSL and the accompanying conditions of operation before 14 October 2003.

12.  On 10 October 2003, Rich Success accepted the grant of temporary PSL and the accompanying conditions of operation. 

13.  By a letter dated 15 October 2003, the Commissioner informed the applicant that it had not been selected to operate the GMB routes under Package No.1 and advised it of its right to apply for a review of the Commissioner’s decision under section 33(1)(c) of the Road Traffic Ordinance.

14.  By letter dated 22 October 2002 to the Transport Department, the applicant applied for a review by the Tribunal of the Commissioner’s decision.  The Tribunal heard the application on 5 March 2004 and reserved its decision.  Pending the determination of the Tribunal, the Commissioner extended the temporary PSL of Rich Success to 4 November 2004.  On 10 May 2004, the Tribunal gave its decision, setting aside the decision of the Commissioner not to select the applicant to operate the GMB routes under Package No.1 and directing the Commissioner to review and reconsider the applications of the applicant and Rich Success.

15.  On 9 August 2004, the applicant filed an application for leave to judicial review.  Leave was granted on 12 August 2004.  On 25 August 2004, the applicant filed the Notice of Motion, which was amended on 8 September 2004 to add the Commissioner as the 2^nd respondent.  Pending the determination of the judicial review application, the temporary PSL granted to Rich success had been further extended.

Road Traffic Ordinance, Cap.374

16.  Section 27(1) and (3) of the Road Traffic Ordinance (“RTO”) provide that the Commissioner may, on application made in the prescribed manner, issue a PSL authorizing the holder to operate a public light bus service.

17.  Section 28 of RTO sets out the matters that the Commissioner must take into account in considering an application for a PSL.  They include:

(1) the need of the services to be provided by the applicant,

(2) the level of services already provided or planned by other public transport services,

(3) traffic conditions in the areas and on the roads where the services are to be provided, and

(4) the standard of service to be provided by the applicant.

18.  Section 29(1)(b) of RTO provides that the Commissioner may issue a PSL subject to conditions, which shall include, inter alia, the following:

(1) the number and types of vehicles that the licensee may use,

(2) the fares to be charged, and

(3) the frequency at which and the period on each day during which the service shall be operated on routes specified in the licence.

19.  Under section 33(1) of RTO, where the Commissioner refuses to issue a PSL to an applicant, the applicant may, within 21 days of being notified of the decision, apply in writing to the Commissioner for a review of the Commissioner’s decision by a Transport Tribunal.

20.  Section 17(1) of the RTO provides that the Chief Secretary for Administration may appoint such Transport Tribunals as may from time to time be necessary for the purposes of the RTO.

21.  Section 35 of the RTO deals with the determination of a review by a Transport Tribunal. Section 35(1) sets out the matters that the Tribunal shall consider on a review.  Section 35(2), which is pertinent to this judicial review application, prescribes the power of the Tribunal on a review as follows:   

“The Transport Tribunal may confirm or reverse a decision of the Commissioner under section 24, 25 or 26 and may confirm, reverse or vary a decision of the Commissioner under section 29 or 31.”

Section 35(4) provides that the decision of the Transport Tribunal on a review shall be final.

The applicant’s application for review and the Tribunal’s decision

22.  As is apparent from the applicant’s letter dated 22 October 2003 and paragraph 3 of the Notes of Proceedings before the Tribunal, the subject matter of the applicant’s application for review is the decision of the Commissioner to reject its application for PSL in respect of Package No.1 of the GMB services gazetted on 1 August 2003.  The applicant’s review did not extend to the issue of a temporary PSL to Rich Success to cater for the review period and the period before the determination of any review.  In the course of the hearing before the Tribunal, however, the representative of the Transport Department did inform the Tribunal that, having taken legal advice, a temporary PSL had been granted to Rich Success.

23.  The gist of the applicant’s arguments before the Tribunal is that the services it proposed are of better quality in that the minibuses are more comfortable and better equipped, the fares are lower by 7.69%-13.16% and the frequency of services is higher by 14.3%-25%.  It was said that in making the selection, the Commissioner had failed to have regard to sections 28 and 29 of RTO and the passengers’ and public interest.  The applicant also argued that the Commissioner committed “jurisdictional error and mistake” and acted ultra vires in not awarding additional marks to the applicant for offering lower fares and higher frequency of services.

24.  In its Reasons for Decision, the Tribunal did not accept the applicant’s criticisms of the Commissioner’s decision to award extra marks to Rich Success on account of the Braille plates and non-slippery floor.  However, the Tribunal considered that Braille plates and non-slippery floors appeared to be relatively minor improvements. The Tribunal said “[it] felt uneasy that, where the marks scored by the applicant and [Rich Success] were so close, the success or failure of the applications was decided on the basis of such relatively minor improvements.”  In paragraph 8 of the Reasons for Decision, the Tribunal also made observations on the vehicles the applicant proposed to use and the adherence to a pre-determined marking system.  In paragraph 9, the Tribunal concluded by saying:

“The Tribunal therefore decides to set aside the Commissioner’s decision in refusing the applicant’s application for a passenger service licence.  This however does not mean that the applicant succeeds in their application.  The Commissioner is required to look into, compare, consider and review the case of the applicant and that of the presently successful applicant again.  In so doing, the Commissioner is requested not to apply the usual selection criteria as a strait jacket, but to look at all the circumstances of the case to select an operator who can best serve the public.  For the avoidance of doubt, the Tribunal is not expressing any view on which of the applicants is the better one.  The Tribunal does not have sufficient material before it to arrive at such a view.  The Tribunal is merely asking the Commissioner to reconsider the case applying suitable flexibility and common sense.”  

The grounds for judicial review and the relief sought

25.  In the Form 86A, the applicant raised the following grounds for judicial review:

(1)	There is procedural impropriety in that the Tribunal had failed to rule on whether it was mandatory for the Commissioner to have regard to sections 28 and 29 of RTO and to allocate marks for fares and frequency of services.
(2)	The Tribunal acted in breach of the rules of natural justice and fairness in failing to direct on how the marking system should be corrected and to direct the Commissioner to award additional marks to the applicant on account of its better services when reconsidering the applications.
(3)	The Commissioner was biased in favour of Rich Success in issuing the temporary PSL to it.  It was a procedural impropriety and breach of rules of natural justice for the Tribunal not to decide on the propriety of the issue of the temporary PSL or to give no reasons for not making a decision.

26.  In counsel’s written submission, an additional ground of Wednesbury unreasonableness was raised.  In the course of his oral submissions, Mr Chan rightly accepted that he could not advance any argument on the new ground as no leave was sought and given for arguing it.

27.  As appeared by its Amended Notice of Motion, the applicant seeks the following relief:

(1)	A declaration that for the sake of public interest and in accordance with sections 28 and 29 of RTO, fares and service frequency are relevant factors that the Commissioner should consider and allocate marks so as to achieve a fair assessment.
(2)	An order of mandamus requiring the Tribunal to give directions to the Commissioner that on selection of licensee of Package No.1, extra marks should be given to provision of longer and brand new vehicles, installation of wireless communication system, lower fares, higher frequency of services, more minibuses and employment of more station managers and staff.
(3)	A declaration that the continuance of the temporary PSL when the Commissioner’s decision had been quashed and the new assessment has not been completed is unreasonable and unfair and affects the propriety of the new assessment.
(4)	Further or alternatively, an order of mandamus ordering the Tribunal to direct the Commissioner to cease the temporary PSL pending the conclusion of the new assessment.

Direction on allocation of marks

28.  There is a fundamental problem in the applicant’s complaint about the Tribunal’s failure to give direction to the Commissioner on the allocation of marks in the selection process.  Under section 35(2) of the RTO, the Tribunal’s power on a review is confined to “confirm, reverse or vary” the decision of the Commissioner.  Unlike the court in a judicial review, the Tribunal has no power to compel or direct the Commissioner to perform or withhold from performing certain act.  Neither can the Tribunal mandate or dictate the manner in which the Commissioner discharges his statutory powers and functions.  The Tribunal may reverse or vary the Commissioner’s decision if it is of the view that the Commissioner has not properly perform his functions and duties, but the Tribunal has no power and cannot issue directions to the Commissioner on whether to perform certain acts, or on how he should carry out his functions and duties. 

29.  The issue of a PSL is a matter falling within the Commissioner’s discretion.  Inasmuch as the Tribunal cannot exercise the discretion for the Commissioner, it cannot give directions to the Commissioner on how the discretion on whether to grant or refuse to grant a PSL should be exercised.  All that the Tribunal can do as a matter of law is to reverse or vary the decision of the Commissioner if it disagrees with it.  As Mr Kwok submits, if the Tribunal feel strongly about certain matters or the manner in which the Commissioner made his decision, it may make comments and remarks when giving its decisions.  But the comments and remarks are not binding on the Commissioner in law.  Given that he Tribunal has no legal power or duty to issue directions to the Commissioner on the selection of operators and /or the issue of PSL, it cannot amount to any illegality or procedural impropriety or unfairness for the Tribunal not to do so.    As pointed out by Mr Kwok, it would probably be ultra vires and illegal for the Tribunal to have given to the Commissioner the directions that the applicant contends ought to be given.    

30.  Quite apart from the point on the Tribunal’s power and jurisdiction, there is, in my view, no impropriety or unfairness in the Tribunal’s decision and approach upon a proper and objective analysis of the circumstances of the case.  In the affidavit of Choy Chik Sang Mario filed on behalf of the Commissioner, an account was given as to how the various factors that the applicant says should be given extra marks were dealt with in the entire process. 

31.  Firstly, it was pointed out that the operational details for each tendered GMB route, including the routeing, fare, basic service frequency and the number of vehicles required, were gazetted as the details of the packages for tender.  They were planned and stipulated as tender requirements that had to be complied with and were not selection criteria.  As such, they would also form the licensing conditions.  Accordingly, fares, service frequency and the number of vehicles and staff to be provided were not selection criteria and marks were not allocated to them in the assessment process.

32.  Secondly, in relation to the proposed use of brand new vehicles and installation of wireless communication system, the applicant had been accorded full mark under the “age of vehicle” factor for the former, and appropriate marks were given for the latter under the “innovative and practical proposals” factor.  Further, appropriate marks were also given for the proposed long wheel-based types of vehicles, installation of built-in high back seats and seat belts and the provision of luggage rack.  The Commissioner had therefore taken these attributes into account and marks had been allocated for them according to the marking scheme in the selection process.

33.  Mr Choy’s affidavit further pointed out that the assessment factors considered by the Commissioner in the selection process had been set out in paragraph 6 of the Guidance Notes, which was part of the tender documents and published to all tender applicants.  It would therefore be unfair to the other tender applicants not to apply these criteria or to apply other criteria in the assessment process.  Rich Success makes the same point in affirmation and in submissions.

34.  Plainly, the applicant’s complaint that the Commissioner had failed to have regard to the matters stipulated in sections 28 and 29 of RTO is not supported by the facts before the court.  It should also be noted that the Ordinance while requires the Commissioner to consider the matters set out in section 28 and to include in the licensing conditions matter set out in section 29, contains no stipulation on what weight the Commissioner should give to the matters to be considered.  The balancing and assessment exercise is a matter of discretion for the Commissioner.  So is the design and planning of the tender package and the marking system for the purpose of the preliminary assessment.  

35.  As for the complaint that the Commissioner ought to have awarded additional marks for lower fares, higher service frequency and provision of more vehicles and staff, the fact is these factors did not fall within the marking scheme.  But this does not mean that the Commissioner had ignored these factors, as the applicant seems to suggest.  On the contrary, they were made the conditions for the tender and would in turn become the licensing conditions, in compliance with section 29 of the RTO.  The applicant ’s complaint, stripped of its outer garment, is in truth a challenge to the design of the assessment factors, and in turn the tender package and conditions.  However, it must not be overlooked that there was never any complaint or objection to the tender package as gazetted and the assessment factors set out in the tender documents.  All tender applicants made their bids relying on the terms and conditions as set out in the package gazetted and in the tender documents, including the Guidance Notes.  When the applicant submitted its tender application, it ought to have known that maximum fares, basic service frequency and the number of vehicles provided for are mandatory tender conditions and not part of the assessment factors.  It cannot be heard to complain about the design of the tender package and conditions when the tender was closed and a result declared.  It will also not be right for it to seek to vary the package and conditions of tender after the tender was closed.  Not only is this grossly unfair to other applicants who submitted their applications in reliance of the tender package and conditions, as observed by the Commissioner and Rich Success, but it also involves the Commissioner acting in breach of the tender documents, which are contractual documents.

36.  In Mr Choy’s affidavit, it was explained that the reason for stipulating the maximum fares and the basic service frequency as mandatory requirements, instead of making the level of fares and service frequency as selection criteria, was to avoid unfair and wasteful competition that tend to work in favour of large operators.  It was pointed out that large operators would have the financial ability to offer very low fare and high service frequency in its bid to win the tender, and after commencement of its service, might apply for fare increase and/or frequency reduction.   The applicant criticized the Commissioner’s consideration as being speculative and indicative of a bias against the applicant for proposing high service frequency and low fares.  It was also said to be inconsistent with the inclusion of an applicant’s financial ability as an assessment factor. 

37.  In my view, the sustainability of and the risks associated with a very low fare and high service frequency proposal as well as the avoidance of unfair competition in tendering for GMB routes are proper considerations for the Commissioner when exercising his general duty of overseeing the transportation system and network in Hong Kong and his discretion to issue PSL, in particular.  The scenario and risks alluded to in Mr Choy’s affidavit are neither unreal nor unlikely.  There is also no inconsistency between, on the one hand, awarding more marks to an applicant with better financial ability and, on the other hand, designing a tendering process that will avoid unfair advantage to applicants with strong financial resources.  

38.  After all, the merits of higher service frequency and provision of more vehicles cannot be judged in isolation, but have to be assessed against considerations such as the level of public transport services already available and the traffic condition in the areas, being matters that the Commissioner is obliged by section 28 of the RTO to consider in connection with PSL applications.  The level of fares and service frequency proposed by other applicants for Package No.1 is also a relevant consideration.  Thus viewed, the Tribunal is correct to take the stance that it does not have sufficient materials before it and is not in a position to say who is the operator that can best serve the public.  For the same reason, the Tribunal is not in a position to conclude that low fares, high service frequency or provision of more vehicles is without doubt factor of merits and ought to be awarded extra marks in the selection process.  Therefore, independent of the points on the Tribunal’s power and the design of the tender package and conditions, the Tribunal’s decision to refrain from commenting on the merits of these factors or directing the Commissioner to award extra marks to them cannot be faulted as being unreasonable or not serving the public interest.

39.  Accordingly, the applicant’s first challenge that the Tribunal failed to give direction to the Commissioner on allocation of extra marks for low fares, high service frequency, provision of more vehicles, use of brand new long wheel-based vehicles, installation of wireless communication system and engaging more drivers and staff fails.  There is no room for granting any of the relief sought in connection with this challenge.            

The issue and continuation of temporary PSL licence

40.  The applicant’s second challenge that the Tribunal erred in not directing the Commissioner to cease the temporary PSL issued to Rich Success is misconceived.  As noted above, the issue of the temporary PSL to Rich Success was not the subject matter of review before the Tribunal.  Mr Chan for the applicant accepted this when his attention was drawn to the Notes of Proceedings before the Tribunal.  That being the case, the Tribunal has no power under section 35(2) of the RTO to reverse or vary the Commissioner’s decision on the issue of temporary PSL, let alone to direct the Commissioner to terminate the temporary PSL.  The Tribunal committed no error in not dealing with the issue of temporary PSL in its decision.  This second challenge by the applicant falls to be dismissed on this ground alone.

41.  That aside, as explained in Mr Choy’s affidavit, the temporary PSL was to avoid service gap and to ensure continuity of service.  When the Commissioner deliberated on the issue of the temporary license, Rich Success was the successful applicant and the Commissioner could not have foreseen that the applicant or any other applicant would challenge the selection result.  The Commissioner cannot be criticized for issuing the temporary PSL to Rich Success.  The suggestion that the applicant should be consulted is also unsustainable.  When the temporary PSL expired on 4 May 2004, the decision of the Tribunal on the applicant’s application for review was pending.  It was logical and reasonable for the Commissioner to extend the temporary PSL so as to avoid disruption to the services.  The same goes for the extensions pending the outcome of the present judicial review application.  

42.  The applicant is sceptical of the fact that the result of the reconsideration of the applications by the Commissioner as directed by the Tribunal has been pending since 14 May 2004.  It is said that this has conferred unfair advantage to Rich Success, who is operating the GMB routes in the meantime.  Mr Kwok explains that the Commissioner must await the outcome of these proceedings before carrying out the re-assessment since the applicant is challenging the marking system and seeking an order of mandamus, which if granted, will require the Commissioner to allocate extra marks to a number of factors. 

43.  Clearly, the outcome of these judicial review proceedings may impact upon the conduct of the re-assessment of the tender applications.  There is no impropriety or unfairness for the Commissioner to defer the re-assessment process after the conclusion of these proceedings.  In the interim period, it is within the Commissioner’s power and duties to extend the temporary PSL issued to Rich Success to avoid disruption to the services.                    

Conclusion

44.  For all the reasons set out above, the application for judicial review is dismissed.  Costs should follow event.  I make an order nisi that the applicant pays the costs of the Commissioner and Rich Success to be taxed if not agreed