CHIT FAI MOTORS CO LTD v. COMMISSIONER FOR TRANSPORT

HCAL 146/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO.146 OF 2002

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J U D G M E N T

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Introduction

1. In these proceedings, the applicant, an established operator of public light buses, seeks a declaration that the respondent, the Commissioner for Transport ('the Commissioner'), was under a duty in law to consult with it before he made a decision to issue licences to a third party to operate free shuttle bus services in competition with it. On behalf of the Commissioner it has been argued that he was under no obligation to consult with the applicant either as a matter of statutory implication or, in the circumstances, as a matter of fairness.

2. In respect of the licences to operate the free shuttle bus services, these were issued for a limited period of time, that time expiring some six weeks after the applicant had filed its notice of application for leave to apply for judicial review. In light of the fact that the licences are no longer valid, it has been contended on behalf of the Commissioner that there no longer remains a justiciable dispute and that the granting of a declaration would constitute no more than an advisory opinion.

3. Accordingly, two issues for determination-

(i) Whether the granting of a declaration is appropriate on the basis that there is no longer a lis to be decided or, to express in another way, on the basis that I am being asked to determine an academic argument, the issue of the licenses (which have now expired) being moot.

(ii) If, however, I determine that the granting of a declaration may be appropriate, whether a duty did or did not lie on the Commissioner to consult with the applicant prior to reaching a decision whether or not to grant the licences in question.

Factual background

4. The applicant is a commercial operator of public light buses. It is licenced to operate its buses in terms of franchises obtained in terms of the Public Bus Services Ordinance, Cap.230. Two of its licenses (numbers 3686C and 9101C) authorise the applicant to operate services that feed the Whampoa and Hung Hom areas of Kowloon. The licences restrict the applicant to specified routes at specified times. They also state the fares that may be charged.

5. As a commercial operator, it speaks for itself that the applicant has had to invest considerably not only in the purchase of buses but in the necessary infrastructure to ensure that the buses are kept running : the hire of managers, drivers, mechanical services and the like.

6. Not all public light bus services, however, need to obtain franchises under the Public Bus Services Ordinance in order to operate lawfully. In terms of s.27 of the Road Traffic Ordinance, Cap.374, the Commissioner may issue what are called passenger service licences. These licences augment franchised licences. Typically, they are limited in nature and, by way of example, provide for the operation of services which carry students, handicapped persons or employees of the operator. In addition, in terms of s.27(5)(d) of the Ordinance, the Commissioner may grant a passenger service licence for 'any' service which does not hold itself out for hire or reward.

7. In exercising his discretion under s.27 of the Road Traffic Ordinance to issue these non-franchised licences, the Commissioner is obliged to take into account a number of factors. These factors are detailed in s.28 of the Ordinance. They include such matters as the level of service already being provided, traffic conditions in the area, the need for the particular service being sought and the intended standard of any such service.

8. In or about August 1995, the applicant complained to the Commissioner that it was aware of a non-franchised service being operated unlawfully in the Whampoa and Hung Hom areas. According to the applicant, the service was operating ostensibly as an employee bus service but the operator was not ensuring that the buses carried employees only. Instead it was permitting members of the public generally to enjoy that service free of charge. Understandably, the applicant was concerned that its legitimate commercial interests in the area were being undermined by this service.

9. Protracted correspondence was entered into between the applicant and the Commissioner. A time was reached, however, when the applicant, frustrated at what it considered to be a lack of decisive action on the part of the Commissioner, placed the matter in the hand of the Ombudsman. In a report published in November 2000, the Ombudsman found that the applicant's claim had been established. The report concluded that the operator of the employee bus service had contravened the terms of its licence and that over an extended period of time the Commissioner had failed to act decisively in respect of the contravention. The Commissioner was criticised in the report for appearing to be weak in his handling of the problem.

10. The employee bus service ceased operations. However, in or about July 2001 the applicant became aware of a new non-franchised bus service operating in the Whampoa and Hung Hom areas. The applicant suspected that this new service was being run by the operator of the earlier service. This new service operated a free shuttle service to and from a large commercial development called Whampoa Wonderworld. The applicant complained to the Commissioner that this new service was operating along fixed routes and was attracting passengers who queued for the service at designated bus stops.

11. The Commissioner agreed to investigate the matter, promising that if evidence was obtained to support the applicant's new allegations then enforcement action would be taken. However, by the end of 2001 the applicant had not received what it considered to be a satisfactory response from the Commissioner and in late December of that year a letter of complaint was written to the Secretariat of the Legislative Council. The following extract from the letter illustrates the applicant's general sense of grievance in this matter :

" Throughout the year, the Department [the Commissioner] just repeatedly blocked our inquiry under the excuse of the Code to Access Public Information, the Public Bus Service Ordinance and passenger service license terms etc, instead of digging into the origin of the complaint and taking corresponding measures. Until November in 2001, we again wrote to the Department requesting it to take corresponding action and provide explanation for the complaint. However, until the present day we still do not see any follow-up action and feel helpless and frustrated."

12. In an attempt to resolve matters, the Commissioner arranged a meeting at which the applicant and the sponsor of the non-franchised shuttle service were both represented. The meeting took place on 12 March 2002. The exact purpose of the meeting and what transpired are matters of dispute.

13. The Commissioner has contended that, although he had no obligation to consult with the applicant, the meeting was called so that there could be full consultation about the issue of licences to the operator of the shuttle service and that this consultation took place at the meeting. The applicant has denied this, saying that it was not informed that any formal application had been made for licences. If it had been informed, it said, it would have put together representations that dealt with each of the factors required to be considered by the Commissioner under s.28 of the Road Traffic Ordinance.

14. On the probabilities, I must reject the Commissioner's contention that the meeting constituted a sufficient exercise in consultation. It may have allowed the Commissioner to spell out his policy; it may have allowed the parties to state their positions. But consultation implies that the person affected will be able to make worthwhile representations. That cannot be done without knowing at least the gist of the case to be answered and without giving the opportunity for the representations to be prepared and to be presented. There is no evidence that at the meeting the applicant had any knowledge that formal licence applications had been made by the operator of the shuttle service. In the circumstances, it is difficult to see how, ignorant of what was taking place, relevant representations could have been prepared and presented. By 'relevant' I mean representations which would relate to and bear upon the factors to be considered by the Commissioner under s.28 of the Road Traffic Ordinance.

15. Indeed, the evidence shows that it was only in early April 2002 that the applicant knew for the first time that an application for licences had been made. The evidence shows that on 25 April 2002 the applicant wrote to the Commissioner requesting information about the application.

16. As it transpires, on 28 February 2002 the operator of the shuttle service, a company called Kwoon Chung Motors Company Limited, had formally applied to the Commissioner for the grant of two non-franchised licences to it and both those licences were granted by the Commissioner on 13 April 2002. The first licence permitted Kwoon Chung Motors to operate a daily shuttle service between the commercial development known as Whampoa Wonderworld, Whampoa Gardens, Hung Hom and Homantin. The second licence permitted the operation of a daily shuttle bus service between Whampoa Wonderworld and Chun See Mei Chuen. The services, of course, were free to passengers.

17. It appears that the applicant only learnt of the issue of the two licences in a letter from the Commissioner dated 18 July 2002, a letter dated some four months after 12 March meeting. In that letter, although the Commissioner confirmed the date of formal application and the date of granting of the two licences, he did not state the relevant duration of each licence.

18. On 23 July 2002, less than a week after its solicitors had received the letter from the Commissioner, the applicant filed its notice of application for leave to apply for judicial review. In that application it sought orders of certiorari to quash the Commissioner's decisions to issue the non-franchised licences. As earlier indicated, it did so on the basis that, before making any decision, the Commissioner had been under an obligation in law to consult with licenced bus operators potentially affected by his decision. This duty to consult had arisen as a matter of statutory implication or, having regarded to the factual circumstances, as a matter of fairness.

19. On 9 October 2002, Mr Chan Siu Mui, a Senior Transport Officer, made an affirmation in opposition to the application for leave to apply for judicial review. In his affirmation Mr Chan said that the approval given by the Commissioner to Kwoon Chung Motors to operate the shuttle bus services had been given on a temporary basis only and had now come to an end. In a second affirmation made on 19 December 2002, Mr Chan confirmed that the approval had, in fact, come to an end on 12 September 2002. It was further confirmed that no new approval had been granted.

20. It was on the basis that the two non-franchised licences were no longer in operation and were not being renewed that the Commissioner contended that the applicant's proceedings for judicial review had become 'hypothetical or academic'.

21. The applicant then sought to amend its grounds of relief. It sought to substitute its claim for orders of certiorari with a single claim for a declaration framed in the following terms; namely, that -

"... the Commissioner for Transport was under a duty to consult the Applicant (being a public transport operator in the area and a person who would be affected), prior to granting the passenger service licences to Kwoon Chung Motors Company Limited on 13 April 2002 to operate free bus services in the Whampoa area."

22. In order to determine whether the application for leave to amend should be granted and whether leave itself should be granted, I directed that an inter partes hearing take place. At that hearing both parties were represented. Having heard argument, I granted the applicant's application to amend. I was considerably more troubled by the substantive application for leave itself. Having regard to the history of the matter, I was concerned that the court was being asked to give an advisory opinion in circumstances in which it was far from certain that the parties would be confronting the same problem in the foreseeable future. However, having considered the matter, I granted leave. I did so because I was satisfied that the material before me disclosed matters which on further consideration might demonstrate an arguable case for the grant of the relief sought. That patently is not a test which sets a high threshold; indeed, the opposite is the case.

Is it appropriate to grant a declaration?

23. The power to grant declarations is confined to matters that are justiciable in the courts. It is a discretionary power. As Stone J, sitting in the Court of Appeal, observed in the recent decision of Man Ping Nam v. Man Mei Kwai, unreported, CACV No.193/2002, it is a power to be approached with caution and is one which should not be lightly exercised.

24. In particular, care should be taken to avoid granting a declaration when there is no justiciable issue before the court and when in the result what is sought is in the nature of a purely advisory judgment.

25. This appears to be the settled common law position. In the Canadian decision of Cheslatta Carrier Nation v. British Columbia 193 DLR (4th), a decision of the Court of Appeal of British Columbia rendered in October 2000, the court accepted that (even in public law matters) declaratory relief is discretionary. The two factors which will influence a court in the exercise of its discretion are the utility of the remedy, if granted, and whether, if granted, the relief will settle the questions at issue between the parties. A declaration will not normally be granted 'when the dispute is over and has become academic, or where the dispute has yet to arise and may not arise'. In short, as I understand, it is required that there be a real and not a merely hypothetical dispute between the parties. Absent this, a declaration will only be granted if there is a good reason in the public interest to do so.

26. At the substantive hearing, although the licences had expired several months earlier, Mr Dykes, leading counsel for the applicant, argued that there was still a real question - as opposed to a theoretical one that arose for determination. That question, he said, was whether or not the Commissioner is under a duty to consult persons such as the applicant who would be affected by any further application for a non-franchised licence. Mr Dykes said that a further application could be lodged at any time. Given the Commissioner's stance, it was clear that he would continue to take the view that he need not consult affected persons. In the circumstances, the issue could not be said to be purely academic.

27. In support of his contentions, Mr Dykes cited the House of Lords decision in In re F (Mental Patient : sterilisation) [1990] 2 AC 1 in which Lord Goff, having looked to past authorities, concluded that the discretion to grant a declaration was limited by the following rules; namely, that it will not be granted where the question under consideration is not a real question, nor where the person seeking the declaration has no real interest in it, nor where the declaration is sought without proper argument. In that case, however, it was beyond dispute that there was a real question for determination. F, who resided in a hospital, was a mentally handicapped woman who had formed a sexual relationship with a male patient. Medical experts agreed that she would be unable to cope with the effects of pregnancy and, as other forms of contraception were unsuitable, the only alternative was sterilisation. A declaration that it would be lawful to carry out the sterilisation was sought by F's mother. Without that declaration the operation could not proceed and F remained in danger of falling pregnant.

28. But in the present case at the time of the substantive hearing was there such a real question for determination? The licences were no longer valid and there was no evidence of any application for new licences being considered by the Commissioner.

29. At best, therefore, the applicant had to put its case on the basis that at some time in the future it was more likely than not that an application would be made by some third party. That may well be the case. But when exactly that will be and what the nature of the non-franchised licence application will be are open questions.

30. No doubt a declaration made now that the Commissioner is under an obligation to consult with the applicant will be of considerable tactical advantage to the applicant as and when (and if) an application is made to the Commissioner for a non-franchised licence which affects the commercial interests of the applicant. But, in my opinion, the granting of any such declaration could only be made pursuant to what in reality is an advisory judgment; that is, a judgment which says that if in future the same position should arise again then and in that event the obligations of the Commissioner will be as declared.

31. In the circumstances, in my judgment, it would not be appropriate in this case to consider granting a declaration. Despite the elegance of Mr Dykes's arguments, I am satisfied that as at the date of the substantive hearing there was no real question which fell for determination.

32. I am fortified in my belief that the issues sought to be determined are essentially hypothetical by the fact that the non-franchised licences that made be granted by the Commissioner, while all of the same statutory genus, vary nevertheless quite considerably in their nature. An application for a non-franchised licence by an employer to transport its employees to their place of work will differ essentially from an application by the operator of a commercial centre to transport customers to and from that centre; equally an application to transport children to and from school will bring into place entirely different considerations. That being the case, I fail to see how a declaration arising out of the facts stated in this judgment can be said to have any real practical application to the Commissioner's obligations in law arising out of any possible future application for a non-franchised licence of an unspecified kind.

33. Nor do I see any matter of general importance arising which would justify proceeding to a consideration of the substantive issue. No evidence has been placed before me to suggest that the granting by the Commissioner of non-franchised licences pursuant to s.27 of the Road Traffic Ordinance has on a general basis materially undermined the profitable operation of franchised services nor that it is likely to do so. The factors to be considered by the Commissioner in determining whether a non-franchised licence should be granted include consideration of existing services provided to the public. It is clear, in my view, that the legislature has not intended non-franchised services to operate in open competition with franchised services. To the contrary, they are intended to be restrictive in nature and only to augment franchised services where a particular need is demonstrated. No suggestion has been made that the Commissioner has across the territory (or material parts of it) in any general sense stepped outside of the limitations placed upon him by statute and that declaratory relief is required to rectify such a general error of principle. While no doubt the obtaining of declaratory relief is subjectively an important matter for the applicant and while on the facts it appears that it may have been dealt with somewhat shoddily, I fail to see that the request for such relief has objectively the required general importance to warrant moving to a consideration of the substantive issues.

34. By way of a collateral argument, Mr Dykes contended that when judicial review proceedings were originally filed there was at that time a live issue to be determined. This arose out of two facts; first, that the licences in issue were then still valid and, second, that the Commissioner had failed to inform the applicant that the licences had been granted on a temporary basis only. As Mr Dykes put it, if the application had been heard early, that is, at the time when the licences were still valid, the question of this court being asked to give an academic or advisory judgment would not have arisen. In my opinion, however, while these matters may perhaps have gone to the question of costs, they cannot affect the substantive issue. When the inter partes hearing took place to determine whether leave on an amended basis should be granted, the applicant was well aware of the factual situation. Indeed, during the course of argument much emphasis was laid on the fact that by the time the substantive hearing took place the entire matter would be of historical significance only and essentially irrelevant to any possible future applications made to the Commissioner for the issue of non-franchised licences in areas where the applicant operates its franchised routes. It was therefore open to the applicant at that inter partes hearing to elect not to proceed further but to seek compensation in costs. It chose not to make that election. Instead the argument was made that it was entitled to proceed to a substantive hearing to seek a declaration. For the reasons given earlier, the applicant was granted leave. Nevertheless, it proceeded thereafter in full knowledge of the fact that the argument would be made by the Commissioner that it was seeking effectively a sterile order.

The substantive issue

35. In the exercise of my discretion, I have determined that it would not be appropriate to consider granting a declaration in the terms sought. But what if I am found to be wrong in the exercise of that discretion? With that possibility in mind, I have deliberated whether I should say something of the substantive issue. It has not been an easy matter to resolve. However, on balance, in the circumstances of this case I do not believe that I should do so. If I found that there was a duty to consult then I would, while not granting a formal declaration, nevertheless for all practical purposes be giving an advisory judgment that the basis is there in law to compel the Commissioner to consult should the same or a similar issue arise at any time in the future. But such an advisory judgment is exactly what I have found would be not appropriate in this case.

Conclusion

36. For the reasons given in the body of this judgment, the application for judicial review must be dismissed. There will be an order nisi awarding costs to the Commissioner, that is, the respondent. That order will be made final 30 days after the day of the handing down of this judgment unless the matter is set down earlier for argument.

Remarks: