WONG CHI MAN v. DIRECTOR OF FOOD AND ENVIRONMENTAL HYGIENE AND ANOTHER

HCAL 93/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 93 OF 2013

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J U D G M E N T

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Introduction

1.  This is an application made by the Applicant (“Wong”) for judicial review of a decision made by the Director of Food and Environmental Hygiene (“Director”) as 1^st respondent, and the decision made by the Municipal Services Appeals Board (“Board”) as 2^nd respondent, relating to the termination of the Tenancy Agreement (“Agreement”) made between the Director and Wong for Market Stall No 1MN 35 at Smithfield Market (“Stall”).

2.  By its decision made on about 9 March 2012, the Director decided to terminate the Agreement on 16 March 2012.  Wong appealed against the Director’s decision, and on 26 February 2013, the Board decided to dismiss Wong’s appeal.

3.  On 7 August 2013, leave was granted to Wong to apply for judicial review, upon Wong’s application made under Form 86 filed on 27 May 2013.  Wong claims that in respect of the Director’s decision to terminate the Agreement, the Director had made errors of law in his construction of clause 4 of the Agreement, when he determined that, in breach of clause 4 of the Agreement, Wong had parted with or abandoned the rights or benefits of the Agreement or had failed to comply with the obligations of the Agreement, by failing to manage the Stall, and by assigning or transferring the Stall and the management of the Stall to his sisters.  Wong further claims that the Director had made errors of fact in finding that Wong had assigned or transferred the Stall to his sister Oi Lun (“Lun”).

4.  In respect of the Board’s decision in dismissing Wong’s appeal, Wong claims that it had made errors of fact in finding that Lun had no motive to lie, and that Wong had abandoned or given up the Stall by permitting Lun to register the business carried on at the Stall in her name.  It is also claimed that in deciding that Wong had abandoned or given up the management of the Stall in breach of clause 4 of the Agreement, the Board had made errors in its findings of fact and errors of law in its interpretation of clause 4, and had failed to take into consideration relevant factors that Wong had authorized Chun and Lun to manage the Business on his behalf, as he was authorized so to do under the Agreement and under regulation 5 (1) of the Public Markets Regulation (“Regulation 5”) made under the Public Health and Municipal Services Ordinance (“Ordinance”).

Background

5.  Wong’s father (“Wong Senior”) had carried on a business of selling shoes (“Business”) in the 90s, under the name “黃穩記鞋檔 (Wong Wun Kee Shoes)”.  On 24 April 1996, Wong moved the operation of the Business into the Stall, upon execution of the original tenancy agreement with the Director.  Wong Senior had apparently been assisted in his management of the Business by his 2 daughters, Lun as the elder daughter, and Oi Chun (“Chun”) as the younger daughter.

6.  Wong Senior died on 6 March 2001.  On 1 May 2002, Wong as the son of the family succeeded the tenancy made between Wong Senior and the Director, and on 30 October 2002, the Agreement was formally entered into between the Director and Wong as tenant, in respect of the Stall at which the Business was carried on.

7.  Under clause 1 of the Agreement, the Stall was let to Wong for a term of 3 years commencing 1 May 2002.  By virtue of clause 3 of the Agreement, Wong agreed that upon the commencement date of the Agreement, “any hawker licence held by Wong shall forthwith be surrendered to the Government”.

8.  Clauses 4 and 5 of the Agreement provide as follows:

“4. The Tenant shall not assign, sub-let, transfer or otherwise part with any of the benefits or obligations of this Agreement.

5. The Tenant shall not use the stall for any purpose other than specified in this Agreement.”

9.  Clause 8A and 8B in turn provide:

“8A. The Tenant shall not permit, cause or suffer any person, other than a person authorized in accordance with Section 5 (1) of the Public Markets Regulation, (Cap 132 sub leg) to carry on any business at the stall.

8B. The Tenant shall register with the Government all persons authorized in accordance with Section 5(1) of the Public Markets Regulation (Cap 132 sub-leg) who are carrying on any business at the stall and shall cause and ensure that such authorized persons lodge a declaration with the Government certifying:-

(a) their status as such authorized persons in respect of the stall; and

(b) that they claim no rights whatsoever in respect of this Agreement and acknowledge that all such rights vest solely in the Tenant.”

10.  As the tenant named in the Agreement, Wong further covenanted as follows:

“9. The Tenant shall not sell, offer or expose for sale or permit or suffer to be sold or offered or exposed for sale at the stall:-

(a) any commodity which is not specified in a permit issued to the Tenant under the Food Business Regulation, (Cap 132, sub leg), in respect of the stall or any commodity otherwise than with approval in writing of the Government…

10. The Tenant shall observe and comply with such conditions and requirements as may be made from time to time by the Government in respect of the use of the stall.

11. The Tenant shall not, without the prior consent in writing of the Government, cease to carry on business at the stall for 14 days or more in a month.

…

14. The Tenant shall keep the stall in a clean and tidy condition and be responsible for any damage to or loss of the stall or any fixtures and fittings.

15. The Tenant shall not make any alteration or addition to the stall without the written consent of the Government.”

11.  It is not disputed that the commodities for which Wong had been permitted under clause 9 of the Agreement to sell at the Stall were “non-food dry goods” (“Permitted Goods”). 

12.  Clause 16 of the Agreement provides that the Government may, by notice in writing to the Tenant, immediately terminate the Agreement “for any breach of the Tenant or his agent of this Agreement or of any provision in the Public Health and Municipal Services Ordinance, Cap 132”. On the determination of the Agreement, clause 18 provides that the Tenant shall yield up vacant possession of the stall and the Government may enter into possession of the stall without further notice.

The Decisions

13.  The Director decided to terminate the Agreement, relying on its finding that Wong had transferred the tenancy of the Stall “將攤檔租約轉讓” (as stated in the Director’s letter of 2 February 2012) and/or had transferred the tenancy under the Agreement “將租約轉讓” (as stated in the Director’s letter of 9 March 2012) to third parties, in breach of clause 4 of the Agreement.

14.  In affirming the Director’s decision and dismissing Wong’s appeal, the Board referred to the findings made by the Director, that Wong had not managed the Business at the Stall (apart from a period of a few months in 2000), that this was admitted by Wong, that the Business was registered in Lun’s name as sole proprietor since August 1999, that the Stall had been transferred from Wong (to Lun and Chun), and that accordingly, by transferring the right of management of the Stall, Wong had failed to comply with his obligations under the Agreement and was in breach.  The Board considered that if Wong had not abandoned the management of the Stall, he could not have permitted Lun to become the proprietor of the business registration of the Business.  The Board found that as Wong had abandoned the management of the Business at the Stall since 2000, he was in breach of clause 4 of the Agreement.

15.  The Director and the Board based their decisions on Wong’s breach of clause 4 of the Agreement, by virtue of his having abandoned the management of the Business at the Stall (paragraph 14 on the Decision of the Board), and his having transferred or assigned the right of management of the Stall to others (paragraph 9 and 10 of the Decision of the Board, and their references to the Board’s decision).

16.  Clause 4 prohibits the assignment, subletting, transferring and parting with “the benefits or obligations of (the Agreement)”. Wong complains that the Director and the Board erred in law in finding that there was a breach of clause 4, by failing to make a distinction between the benefits and obligations of the Agreement, and the right and obligation to manage the Business, and by confusing the benefits under the Agreement with the management of the Stall.

17.  It should be pointed out that in the Chinese version of the Agreement signed by the parties, clause 4 reads as follows, with the additional provision for the tenant “not performing its obligations”:

“承租人不得轉讓、分租、頂讓或放棄本租約所賦予的權益或不履行義務。”

Whether error of law and/or fact

18.  Construed in its context, the Agreement does not impose any obligation on the tenant to personally manage the Business at the Stall.  Nor is there any covenant by the tenant as to the ownership of the Business carried on at the Stall.  The only obligations imposed on the tenant are that, under clause 8A, it will not “permit, cause or suffer” any person, other than a person authorized in accordance with Regulation 5 (“Authorized Person”), to carry on any business at the Stall; and under clause 8B, it will register all Authorized Persons who are carrying on any business at the Stall, and ensure that such Authorized Persons lodge a declaration with the Government (“Declaration”). The Declaration requires each Authorized Person to certify its status in respect of the Stall, and that it has no rights in respect of the Agreement which rights vest solely in the tenant.

19.  Read in conjunction with clause 8A and 8B, the reference in clause 11 of the Agreement to the carrying on of business at the Stall can only be a reference to the carrying on of the Business by the tenant or by an Authorized Person.

20.  There is of course the covenant by the tenant, under clause 5 of the Agreement, that it will not use the Stall for any purpose other than that specified in the Agreement, and the covenant under clause 9 that the tenant will not sell or permit the sale of any commodity other than the Permitted Goods.  There is no complaint by the Director of any breach of clause 9 of the Agreement.

21.  The undisputed facts are that shortly after Wong Senior’s execution of the tenancy agreement with the Director in April 1996, Chun and Lun were respectively registered under Regulation 5 as Authorized Persons, specifically, as registered assistants (登記助手).  After Wong Senior’s death and the commencement of the tenancy under the Agreement in May 2002, Lun was registered as an Authorized Person of the Stall in September 2005, again as a registered assistant.  Chun had been registered as Wong’s authorized agent (法定代理人).  The relevant Declarations were duly filed in accordance with Regulation 5, by which Chun (as Wong’s registered authorized agent) certified that Lun was employed as an assistant to manage the Business at the Stall, and that Lun was not the owner, assignee or sub-tenant of the Stall.  Lun herself certified in her Declaration of 26 September 2005 that she was employed by Chun, on behalf of Wong, as a registered assistant of the Stall, and that she was neither the owner, assignee nor sub-tenant of the Stall.

22.  I agree with Ms Chung, counsel for Wong, that the Agreement and Regulation 5 permit the tenant under the Agreement to carry on the Business at the Stall by employees or agents so long as they are Authorized Persons and registered as such under Regulation 5.  Wong’s admission, and any evidence as found by the Director, that he had not managed the Business at the Stall since 2000, and had left such management to Lun, do not by themselves constitute evidence of Wong’s breach of clause 4 of the Agreement.  As recorded in paragraph 5 (d) of the Decision of the Board, Wong claimed that he had left the Stall to Lun to manage it “for him”.

23.  The Board referred (in paragraph 9 (f) of its Decision) to the Director’s reliance on Wong’s transfer or assignment of the Stall to Chun and Lun.  There is no evidence to support such transfer.  The Director sought to rely on the registration of the Business in Lun’s name, as evidence of Lun’s proprietorship of the Business.  This, however, took place in August 1999, at a time when Wong Senior was the tenant of the Stall.  If this was considered as evidence of the transfer or assignment of the Stall, then such transfer or assignment was made by Wong Senior, and there is no question of Wong’s transfer or assignment in 1999.  The Board considered that Wong could not have permitted Lun to be the registered proprietor of the Business if he had not abandoned the management of the Business, but there is no evidence of Wong’s knowledge of Lun’s registration of the Business in her name.  The application for registration of the Business in November 1999 is a claim made by Lun only (and not by Wong) that she carried on the Business at the Stall, as proprietor.

24.  Construed in its proper context, the Agreement confers on Wong as the tenant the benefit and corresponding obligation to use the Stall for the licensed purpose of the sale of the Permitted Goods at the Stall, and the carrying on of the Business at the Stall by Wong as tenant, or by an Authorized Person registered in accordance with Regulation 5.  The obligation on Wong as tenant under clause 8B is only to register all Authorized Persons and to cause the Declarations to be lodged.

25.  Bearing in mind the fact that Lun was a registered Authorized Person since 2005, there is no breach of clause 4 by virtue only of the fact that it was Lun who had been managing the Business at the Stall, as the Director so found.  As the Agreement does not confer on Wong the obligation to personally manage the Business, there is no failure on Wong’s part to comply with the obligation to manage the Business, nor any “abandonment” of any benefit or right to manage or carry on the Business at the Stall.

26.  There was no other, or no adequate, evidence to support any other finding of Wong’s breach of the Agreement.  The Director never complained of the breach of clause 8A or 8B, nor did he seek to rely on Wong’s breach of clause 8A or 8B to terminate the Agreement.  Wong was not given the opportunity to address the question of whether he had knowledge of the fact that (contrary to the Declarations lodged pursuant to clause 8B) Lun was not in fact managing the Business as an employee or agent and on his behalf, but as the sole proprietress of the Business as she claimed and in her own right.

27.  The Director made reference to Lun’s claim that she had made payment of rent to Wong for lease of the Stall, but Wong had denied receiving such payment, and the only evidence of Lun’s alleged payment of rent is her payment of a monthly sum to the mother of the siblings, which is obviously equivocal.

28.  For the above reasons, I consider that the Director, and the Board in affirming the Director’s decision, had failed to direct themselves correctly as to the law, in finding that there was a breach of clause 4 of the Agreement so as to entitle the Director to terminate the Agreement.  The Director and the Board had erroneously found as a matter of fact that Wong had transferred the Business or the Stall to Lun or Chun, which was material to the decision to terminate the Agreement on the ground of breach of the Agreement.  The Director and the Board had failed to take into account the fact that Lun had registered the Business in 1999 at a time when Wong Senior was the tenant.  For these reasons, the decisions of the Director and the Board may be impugned as irrational, or perverse, and unreasonable in the Wednesbury sense.

29.  On behalf of the Director, it was argued that as a matter of fact, the Stall was managed not by Wong as tenant, nor by any employee, servant or agent of Wong, but by Lun in her own right as the owner and registered proprietor of the Business, in breach of Regulation 5.  It was accordingly open to the Director to terminate the Agreement on the basis of Wong’s breach in failing to manage the Business as a benefit under the Agreement, and failing to perform his obligations under the Agreement.

30.  The Director had not complained of breach of Regulation 5 and clause 8A of the Agreement, nor relied upon these provisions to terminate the Agreement.  Nor was there any, or any adequate, evidence to support any finding that Wong had knowledge of and consented to Lun’s registration of the Business in her name, and had permitted Lun to carry on the Business at the Stall in her own right, and not on behalf of Wong as he claims, and contrary to the certification made by Lun and Chun (on Wong’s behalf) in the Declarations. 

Whether decisions amenable to judicial review

31.  Under s 83 (1) of the Ordinance, the management and control of public markets is vested in the Director, who has power (inter alia) to provide for the licensing of hawkers.  It seems clear to me that the Director’s decision is amenable to judicial review.  In deciding to terminate the Agreement, the Director was not merely exercising a contractual right under the Agreement, but discharging his statutory duty and exercising his power of managing and controlling public markets.  This is in fact acknowledged by the Director who, in justifying his decision to terminate the Agreement, referred to and relied on the general policy and practice of dealing with tenancies of stalls in public markets, the maintenance of order in public markets, and the public policy of preventing loss of government revenue and the protection of public interests.  There are clearly public elements underpinning the Director’s exercise of rights under the Agreement (Wan Yung Sang v Hong Kong Housing Authority HCAL 135/2009, 6 July 2011, and the cases cited therein).

Conclusion and orders made

32.  For the above reasons, I grant the relief sought by Wong, to quash the decisions of the Director and of the Board to terminate the Agreement, and order the Director to consider afresh the matters affecting the tenancy under the Agreement and its termination, with costs to Wong.