TANG SHUK CHUN v. DIRECTOR OF FOOD AND ENVIRONMENTAL HYGIENE

HCAL 18/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 18 OF 2013

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J U D G M E N T

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1. This is an application for judicial review of a decision made by the Director of Food and Environmental Hygiene in late October 2012 (“the director"). The decision was to approve seven applications by tenants of market stalls in Cheung Chau Market (“the Market”) for change of trade from “food related dry goods” (“food trade”) to “non-food related dry goods” (“non-food trade”) pursuant to regulation 6 of the Public Markets Regulations, Cap 132BO. The applicant seeks an order of certiorari for the decision to be brought up and quashed.

The background

2. The Market is a public market designated by Schedule 10 to the Public Health and Municipal Services Ordinance, Cap 132. Its operation is governed by the Public Markets Regulations.  It has two floors.  This application concerns the stalls on the 1/F.  The 1/F is divided into two zones with one for wet goods and one for dry goods.

3. As at 8 October 2012, there were 81 stalls in the dry goods zones.  They were let out by tenancies entered into between the director on the one hand and the stallholders on the other.  By the tenancies, 59 stalls were prescribed to carry on the “non-food trade” and 22 stalls to carry on the “food trade”.  The trade for each stall was prescribed in the 2nd schedule to the tenancy.  The tenancies also prohibited any trade other than the prescribed one.  The “non-food trade” included clothes, stationary and toys. 

4. The applicant was the holder of stall no. D140. Her first tenancy was dated 27 August 2003.  It was for three years.  After the three-year term had expired, her tenancy was renewed on a yearly basis until now.  Her tenancy prescribed her trade to “non-food trade”.  She sold underwear, shoes, umbrellas and other “non-food trade” goods.

5. Every public market has a Market Management Consultative Committee.  The committee’s purpose is to strengthen the communication between the Department of Food and Environmental Hygiene (“the department”) and the stallholders and to promote better market management.  It discusses in its meetings various issues including the letting and use of stalls.

The First Applications

6. On divers dated between 22 and 28 March 2012, the department received nine applications from holders of nine stalls in the dry goods zone on the 1/F for change of the prescribed trade from “food trade” to “non-food trade” (“the First Applications”).  The stall numbers were D24, D101, D129, D131, D135, D138, D141, D152 and D153.  They were all made on the same printed letter and stated the same ground.  The ground was that the stallholders of these applications were selling goods in the “food trade” and, because of poor business, they could not make ends meet.  They therefore wished to have the director’s approval to change to the “non-food trade”.

The consultation in the May meeting

7. The department has an Operational Manual.  M18 of the manual stipulates the procedure for approving the change of trade of a market stall.  It provides:

“18. Conversion of market stall from one category to another in existing stall

(1) The authority to approve the conversion of a market stall from the sale of one commodity to another is delegated to Superintendent (Market) 1.

(2) District should seek views from the Market Management Consultative Committee on the proposed change of trade before putting up the case to Superintendent (Market) 1 for consideration. Each case should be considered on its own merits.

(3) The conversion is normally only approved when:

(a) The stall has stood vacant for some time;

(b) The commodities which the stallholder intends to sell are compatible with those being sold in the immediate vicinity of the stall concerned;

(c) The changes are for the public interest and for the proper management of the market;

(d) The decision is rational, reasonable and proportionate and is one which a reasonable decision-maker could reach; and

(e) Irrelevant considerations have not been taken into account.

(4) Upon approval being given for a stall to sell other commodities, its rent should be revised by obtaining fresh Open Market Rent from the Rating and Valuation Department.”

8. In line with paragraph 2 of the procedure in M18, the officers of the department consulted the Cheung Chau Market Management Consultative Committee (“the Committee”) on the First Applications in a meeting held on 16 May 2012 (“the May meeting”). 

9. As shown in the minutes of meeting, the officers of the department advised the Committee at the May meeting that the department had an open mind regarding the First Applications. 

10. There were however some people attending the meeting opposing the First Applications on the ground that there should be diversity in the Market as the approval of the First Applications would reduce the number of food trade stalls and hence diversity. 

11. There were also three District Councillors attending the meeting.  They suggested that there were some vacant poultry stalls on the G/F which could be converted into six “non-food trade” stalls. There was also certain vacant stall on the 1/F which could likewise be converted.  There was no opposition to this suggestion.

Rejection of the First Applications

12. After the consultation in the May meeting, Ms Lee Suet Luen, Health Inspector, who was the secretary of the meeting prepared the internal file minutes on 6th June for the consideration of her seniors.  Ms Lee analysed in the minutes the percentage of stalls in the two prescribed trades in the dry goods zone.  Her conclusion was that if the First Applications were approved, the number of stalls of the “food trade” in the Market as a whole would be reduced from 26 to 17 or from 10.97% of stalls to 7.17%.  She opined that the reduced proportion was inappropriate for the Market.  Furthermore, to approve the change of trade was unfair to the public as there might be members of the public who would like to bid for these stalls to conduct the existing “food trade” (if the stallholders of the First Applications should forgo their stalls).  She therefore did not recommend the First Applications for approval by the Superintendent pursuant to M18 of the Operational Manual.  She further suggested that a letter be issued to the applicants informing them about the rejection of their applications.

13. Ms Lee’s was accepted by her seniors and nine letters all dated 7 June were issued to the applicants of the First Applications advising them that the department “could not accept” their applications for change of trade.  The letters also advised the applicants that if they should have any enquiry on the contents of the letters, they could contact Ms Lee.  But the letters did not ask the applicants for further information in support of the First Applications.  There was also nothing to suggest that the First Applications had not been rejected but were merely put on hold or held in abeyance as the director now suggests in these proceedings.

14. Judging from the contents of Ms Lee’s internal minutes dated 6 June, and her suggested action having been endorsed by her seniors, it is clear that the First Applications had been rejected and not put on hold for further review or consideration.  I therefore reject the director’s suggestion that the First Applications had been held in abeyance after the May meeting and the issuance of the 7 June letters to the applicants.  In any event, whether the First Applications had been rejected or were merely held in abeyance would make no difference to my decision as will be demonstrated below.

The complaint letter, the August meeting and the new grounds

15. After the department had sent out its letters of 7 June, the holder of stall no. D135, one Madam Wong through her representative one Mr Chan wrote the department a complaint letter dated 7 August.  Mr Chan said that Madam Wong had been selling clothes and shoes in a stall in Cheung Chau since 1970s.  In 1991, she was relocated into the Market and she continued to sell the same goods when operating in the Market until then.  Despite her doing so, which was not in conformity with the prescribed trade in her tenancy, she had never been warned or served with a summons.  Furthermore, the staff of the department had confirmed repeatedly that she had not sold prohibited goods in her stall on the occasions when her tenancy was renewed.

16. However, the department began warning her in November 2012 for selling goods contrary to the tenancy.  Mr Chan complained that the department was penalizing her unreasonably for the departments’ own mismanagement problems.  Mr Chan also accused the department of having repeatedly reneged on its previous promise of letting Madam Wong sell “non-food trade” goods.  Mr Chan demanded an investigation into the truth and a satisfactory resolution of Madam Wong’s worry.

17. On 16 August, there was a meeting between Ms Lee and two of her seniors on the one hand and the representatives of eight stallholders (seven of the applicants of the First Applications which included stall no. D135 plus another stallholder no. D24) and a District Councillor, Ms Amy Yung on the other (“the August meeting”).

18. From the internal file minutes of this meeting prepared by Ms Lee and dated 16 August, it can be seen that these stallholders had advised the officers that six of them (excluding no. D24) had been carrying on the “non-food trade” in the Market since 1991.  They however did not understand and nobody had explained to them the contents of their tenancies which were in English.  They strongly urged the department to amend the prescribed trades in their tenancies to the “non-food trade”.

19. Regarding the proposal by the three District Councillors at the May meeting for conversion to and public auction of six “non-food trade” stalls on the G/F, these stallholders said that such proposal could not solve their problems as the stalls to be converted were next to wet fish stalls and the water in these stalls would make the dry goods wet easily.

20. The officers’ view of the matter as shown in Ms Lee’s minutes was that the department would continue to pursue the proposal of conversion of six stalls to “non-food trade” and would not tolerate any violation of the terms of tenancy by the stallholders.  The department would however consider if there was any other possible proposal for solving the issue.  The minutes however made no mention about the rejected First Applications or that they should be revived for fresh or further consideration. 

21. In any case, amongst the eight stallholders that were represented at the August meeting, stallholder of no. D24 was not one of the applicants in the First Applications.  The application of this stallholder had not been considered by the Committee in the May meeting.  This stallholder had also commenced business in the Market only in 2011 and her tenancy was not in English but in Chinese.

22. After the August meeting, six of the eight stallholders (stallholder D135 had already written in on 7 August and stallholder D138 did not write in and withdrew later the application) wrote letters to the department and enclosed documentary evidence proving that they had been selling “non-food trade” at their stalls for years.  They also asked the department to let them sell “non-food trade”.

Approval of seven applications

23. On 11 October, the Chief Health Inspector (Islands) wrote a memo to the Assistant Director recommending the change of the prescribed trade to “non-food trade” for the eight stalls.  The ground relied on by the stallholders for change was said to be the stallholders’ claims that they had been selling “non-food trade” in the Market for years. 

24. The recommendation was approved sometime in late October, but the stallholder no. 138 withdrew the application on 21 November and surrendered the stall on 31 December 2012.  For the remaining seven stalls, new tenancies with the prescribed trade being “non-food trade” were entered into in November and they commenced on 1 December 2012.  They were for a term of three years expiring 30 November, 2015.  They had provisions allowing termination by either side with one month notice and no compensation could be claimed by the stallholders because of the termination.  The department then advised the Committee of the approvals in a meeting on 29 November 2012.

The judicial review and its grounds

25. However, the applicant complained that the director, in deciding to approve the change of trade, had failed to consult the Committee and not followed M18 of the Operational Manual.  She applied for leave to commence judicial review of the director’s decision.  Her application was allowed by the Court of Appeal on 24 December 2013.

26. Mr Pun, counsel for the applicant, submitted that the applications approved by the director in October 2012 were not the First Applications.  This is certainly correct in relation to the application made for stall no. D24 as it was not one of the nine stalls in the First Applications. Even for the remaining seven stalls (or six as stall no. D138 withdrew its application on 21 November), Mr Pun said that their First Applications had been rejected by the director and they had been advised of the rejection by the director’s letters dated 7 June.  Even if the First Applications had not been rejected, Mr Pun said that their bases had assumed a fundamental change before they were approved by the director in late October 2012.  Such fundamental change would have engendered the need for a fresh consultation.  Hence, regardless of whether the seven applications (including that of stall no. D24) were newly made in August to October, the director should have consulted the Committee in line with M18 before deciding to approve them.  Mr Pun further submitted that the position at common law is the same even without M18.

27. Ms Lui, counsel for the director, did not dispute that the director had the duty to consult the Committee before approving the change of trade for the stalls.  But she submitted that the director had already discharged such duty as there was already consultation in the May meeting for the nine First Applications.  It was therefore not necessary to have another round of consultation before approvals could be given in late October.  This was so even for stall no. D24 which was not among the First Applications.  Ms Lui’s reason being that the consultation in the May meeting was for the change of trade from the “food trade” to “non-food trade” for nine stalls.  The director in the end approved the change for seven stalls only (including stall no. D24 but excluding stall no. 138).  Hence the number of stalls approved was less than the number of stalls that the Committee had been consulted on.  Mr Lui also did not accept that the seven applications approved were new applications or that their bases had assumed a fundamental change since the May meeting.  Hence, she submitted that the director had not defaulted on the duty to consult either under M18 or the common law.

The authorities

28. Mr Pun disagreed.  He submitted that the duty to consult must be discharged fairly.  He referred to Pearl Securities Ltd v Stock Exchange  of Hong Kong Ltd [1999] 2 HKLRD 243 at 251H to J where Keith J said:

“The role of the court

Whenever a public function is being performed there is an inference, in the absence of an express requirement to the contrary, that the function is required to be performed fairly: de Smith, Woolf & Jowell, Judicial Review of Administrative Action (5th ed), para 8-011.

This reflects what Lord Mustill said in R v Secretary of State for the Home Department, ex p Doody [1994] 1 AC 531 at p. 560D in relation to the exercise of powers conferred by statute:

… where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances.”

29. Regarding what fairness requires in the conduct of consultation, Mr Pun further referred to Doody at 560D to G, where Lord Mustill said:

“What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often-cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well lnown. From them, I derive that (1) where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances. (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. (4) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal and administrative system within which the decision is taken. (5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. (6) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer.” (Emphasis added)

30. Mr Pun also referred to R v North and East Devon Health Authority ex parte Coughlan [2001] QB 213 at 258C to D where the English Court of Appeal described how a consultation could be conducted properly:

“F. Consultation

     108  It is common ground that, whether or not consultation of interested parties and the public is a legal requirement, if it is embarked upon it must be carried out properly.  To be proper, consultation must be undertaken at a time when proposals are still at a formative stage; it must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken: R v Brent London Borough Council, Ex p Gunning (1985) 84 LGR 168.”

31. Mr Pun also referred to R (on the Application of Robin Murray & Co) v Lord Chancellor [2011] ACD 103 at para 37(4) where Beatson J referred to Gunning on the need to make known to the consultee the basis of the proposal being consulted:

“(4) As far as the second of the requirements in ex-parte Gunning (enabling intelligent consideration and an intelligent response) is concerned, ‘it is important that any consultee should be aware of the basis on which a proposal put forward for … consultation has been considered and will thereafter be considered …’: per Silber J in the Capenhurst case at [46]. Silber J also stated that this means that the person consulted should be informed or be aware of what criterion would be adopted by the decision-maker and what factors would be considered decisive or of substantial importance by the decision-maker in making his decision at the end of the consultation process.”

32. In support of the argument for the need of a fresh consultation when there is a fundamental change on the basis or ground of the application, Mr Pun also referred to para 112 of the judgment in Coughlan where the English Court of Appeal said:

“112. … It has to be remembered that consultation is not litigation: the consulting authority is not required to publicise every submission it receives or (absent some statutory obligation) to disclose all its advice. Its obligation is to let those who have a potential interest in the subject manner know in clear terms what the proposal is and exactly why it is under positive consideration, telling them enough (which may be a good deal) to enable them to make an intelligent response. The obligation, although it may be quite onerous, goes no further than this.”

33. He also referred to Edwards v Environmental Agency [2007] Env LR 126 at para 103 for the same purpose:

“103 In general, in a statutory decision-making process, once public consultation has taken place, the rules of natural justice do not, for the reasons given by Lord Diplock in Bushell, require a decision-maker to disclose its own thought processes for criticism before reaching its decision. However, if, as in United States Tobacco (see per Taylor L.J., as he then was, at 370-371, and at 376, per Morland J.), and in Interbrew (see per Moses J. at pp.33-35 of the transcript), a decision-maker, in the course of decision-making, becomes aware of some internal material or a factor of potential significance to the decision to be made, fairness may demand that the party or parties concerned should be given an opportunity to deal with it. …”

Analyses and decision

34. I agree with Mr Pun’s submissions.  In this case, there is no evidence of what the Committee had been apprised of in the May meeting about the ground of the First Applications.  But the only ground that was stated in them was that the stallholders in question were selling “food trade” and, because of poor business, they could not make ends meet.  If the Committee should have been apprised of the ground of application, that was it.

35. The opposition by some of those attending the meeting was that there should be diversity in the Market.

36. However, when the seven applications (including that of stall no. D24 but not stall no. 138) were considered for approval in late October, their grounds were that they had been carrying on the business of “non-food trade” for years with six of them (excluding D24) since the commencement of business in the Market in 1991 and that was to the knowledge of the staff of the department.  These six stallholders also claimed that the director should amend the prescribed trade in their English tenancies. 

37. These grounds, if based on true facts, might well be an answer to the objection raised in the May meeting.  The reason being that the diversity sought to be maintained by those opposing the First Applications in the May meeting had in fact been reduced for years and the approval of the First Applications would regularize the status quo for at least six of the nine stalls in the First Applications.  These grounds are fundamentally different from the ground of the First Applications when they were before the Committee in the May meeting.  These grounds do not say that the applicants were carrying on the “food trade” and could not make ends meet.  They say that the stallholders had in fact been selling “non-food trade” goods which had satisfied the needs of the public for years and they want their business to be regularised.

38. If the proposal or reason for change of trade - which is the ground of the application - should be made known to those being consulted so that they could give intelligent consideration and an intelligent response (Gunning), then the Committee should be apprised of the new grounds in the applications before they were approved by the director in late October 2012. 

39. If consultation is to let those with potential interest in the matter know in clear terms of the proposal or the gist of the case they have to answer (Doody and Robin Murray), then the Committee should be told of the new grounds and be consulted on them.

40. Even if the First Applications had not been rejected but were merely put on hold for further consideration, when the new grounds were presented to the department in August to October, the officers should have taken the new grounds as new factors of potential significance to the decision on the applications and the Committee should be consulted on them. 

41. Furthermore, if the new grounds should have warranted a change of the department’s attitude on the applications from “rejection” or “non-acceptance” to “approval”, I cannot see why these grounds should not have warranted a re-consultation of the Committee. 

42. This case is not one of those that the further consultation with the Committee will result in numerous changes to the grounds of the application which will engender consultation from afresh or that the further consultation will result in consultation never coming to an end (R v Shropshire Health Authority & Ors ex parte Duffus [1990] The Times 16 August 1989).

43. I also note that the applicant is not saying that the director should obtain the consensus or agreement of the Committee on the decision that the director was going to make on the applications (R (Maureen Smith) v East Kent Hospital NHS Trust [2002] EWHC 2640 para 61).

44. M18 of the Operational Manual also requires each case to be considered on its own merits.  In the case of stall no. D24, the Committee had never been consulted about its application.  I do not think the director can argue there it was just like one of the First Applications for the same change of trade so that the director could assume that the Committee would have responded in the same way or even that there was no need to consult the Committee.  Despite the nature of change sought by the stallholder no. D24 being the same as that in the First Applications, the stall had a different location and the Committee was entitled to be consulted on its application.

Order

45. In the premises, I hold that the director had failed to consult the Committee in accordance with M18 of the Operational Manual and the common law in deciding to approve the seven applications for change of trade in late October 2012.  I order the decision to be quashed.  I further make a costs order nisi that the director do pay the applicant the costs of the judicial review and the costs for the application for leave to commence judicial review and that the applicant’s own costs be taxed in accordance with the Legal Aid Regulations.