NG FUN SING AND OTHERS v. DIRECTOR OF FOOD AND ENVIRONMENT HYGIENE

HCAL 74/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 74 OF 2009

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BETWEEN

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REASONS  FOR  DECISION

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1.  The 1^st, 2^nd and 3^rd Applicants are applying for leave to apply for judicial review against the decisions of the Director of Food and Environmental Hygiene (“Director”) dated 11 November 2008 in:

(1)  termination of the tenancy with Mr Tam Sin-cheung (“Tam”) in respect of Stall P1 in Lai Wan Market (“Tenancy” and “Stall P1”);

(2)  repossession of Stall P1;

(3)  cancellation of the poultry seller’s permit for Tam (“Permit”).

2.  The Applicants requested an oral hearing. I invited assistance from the Director (by counsel) for clarification. I refused leave at the hearing, and now give my reasons.

Background

3.  On 1 September 1993, the former Urban Council entered into the Tenancy with Tam, and the Permit had been granted to Tam on 2 August 1995. Both the Tenancy and the Permit were extended until 30 June 2009 but for the early termination.

4.  Under s.30(2)(b) of the Food Business Regulation (Cap. 132X), the Permit was only valid for the duration of the Tenancy.

5.  Clause 4 of the Tenancy prohibited any assigning, sub-letting, transferring or otherwise parting with the benefits or obligations of the Tenancy.

6.  The 1^st, 2^nd and 3^rd Applicants are brothers.

7.  On 13 May 1995, the 1^st and 2^nd Applicant entered into a written agreement with Tam for the assignment of the operation of Cheung Fat Poultry and the rights of the Tenancy in consideration of $600,000 (“Assignment”).

8.  The 1^st and 2^nd Applicants orally agreed with Tam that Tam would continue to deal in the formalities of the Tenancy with the Food and Environmental Hygiene Department (“FEHD”). In order to ensure Tam comply with such term, a partnership was set up between Tam and the 1^st and 2^nd Applicants. However, Tam would not have any interest in the business despite the partnership.

9.  On 25 May 1995, Tam appointed the 2^nd Applicant as registered assistant to work at Stall P1 and the appointment was approved by the Director.

10.  On 26 May 1995, the partnership between the 1^st and 2^nd Applicants and Tam under the name of Cheung Fat Poultry with place of business at Stall P1 was registered at the Business Registration Office.

11.  On 9 May 2000, Tam appointed the 3^rd Applicant as registered assistant to work at Stall P1 and the appointment was approved by the Director.

12.  In 2001, FEHD required all registered assistants to submit fresh applications for registration and undertakings.

13.  On 7 December 2001, Tam, the 2^nd and 3^rd Applicants signed undertakings with the Director stating the 2^nd and 3^rd Applicants were servants/agents of Tam and not the owner, assignee, sub-lessee nor persons acquiring any legal status not approved by the Director.

14.  During registration, staff of FEHD explained the terms of the undertakings to Tam, the 2^nd and 3^rd Applicants and told them that the Tenancy would be terminated in the event the undertakings were breached.

15.  In 2008, FEHD instituted a Voluntary Surrender of Market Stall Tenancy Scheme which allowed stall tenants to surrender their leases in return for a lump sum payment.

16.  In July 2008, a complaint against illegal sub-letting of Stall P1 was made to FEHD. Tam and the Applicants were interviewed by FEHD in August and September 2008. FEHD found out the Assignment in 1995 for the first time.

17.  On 22 September 2008, Tam applied to FEHD for voluntary termination of the Tenancy and payment of the special allowance.

18.  On 26 September 2008, the Director issued a letter to Tam indicating his intention to terminate the Tenancy for breach of Clause 4 and invited him to make representations. The Applicants were orally notified of the same on the same day.

19.  Between September and November 2008, the Applicants made 3 separate representations to the Director. Tam did not.

20.  On 3 October 2008, the 1^st Applicant requested the Director to exercise the discretion to allow him and his brothers (including the 2^nd Applicant) to continue to carry on live poultry business at Stall P1 on compassionate grounds.

21.  On 11 November 2008, the Director wrote to Tam notifying him the decision to terminate the Tenancy with effect from 18 November 2008 and repossess Stall P1 by reason of breach of Clause 4 of the Tenancy by the tenant.

22.  Also on 11 November 2008, the Director posted at Stall P1 a letter addressed to the operator and all registered assistants of Stall P1 stating the decision to terminate the Tenancy with effect from 18 November 2008, to repossess Stall P1, and to revoke the Permit by reason of breach of Clause 4 of the Tenancy by the tenant.

23.  On 19 November 2008, the Applicants applied ex parte for an injunction against the Director from carrying into effect the decision on 11 November 2008 in recovering possession of Stall P1. The injunction was granted by A Cheung, J upon the undertaking, inter alia, that the Applicants do take out application for leave to apply for judicial review against the decision to recover possession upon termination the Tenancy and lodge an appeal with the Licensing Appeals Board (“LIAB”) before close of business that day.

24.  On the same day, the Applications took out application for leave to apply for judicial review in HCAL 144/2008.

25.  On 21 November 2008, A Cheung, J continued the injunction as varied upon, inter alia, the undertaking to pay mesne profit and to lodge an appeal against the termination of the Tenancy with the Municipal Services Appeals Board (“MSAB”).

26.  On 20 November 2008, the Applicants invited the Director to exercise his discretion to suspend the decision to revoke the licence pending the appeal against the licensing authority under s.125(10) of the Public Health and Municipal Services Ordinance (Cap. 132).

27.  On 5 December 2008, the Director agreed to suspend the operation of the decision to cancel the Permit to sell live poultry at the Stall until after the determination of the appeal to LIAB.

28.  On 5 December 2008, the Applicants appealed to MSAB against the Director’s decisions dated 11 November 2008 as being persons carrying on a poultry retail business under the name of Cheung Fat Poultry.

29.  In the Notice of Appeal to MSAB, the Applicants asked for, inter alia, the alternative relief that permission be granted to them under ss.5 and 6 of the Public Market Regulation (Cap. 132BO) (“PMR”) to continue to carry on poultry business at Stall P1.

30.  The Director, on an without prejudice basis to the Applicants’ locus to appeal to MASB, agreed to withhold the execution of the decision to terminate the Tenancy until after determination of the appeal upon the undertaking of the payment of the monthly occupation fee.

31.  On 16 March 2009, A Cheung, J discharged the injunction upon the Director’s undertaking to withhold execution until after determination of the appeal to MSAB, and granted leave to withdraw HCAL 144/2008 on costs.

32.  On 9 April 2009, MSAB (chaired by a retired District Judge and 2 other members) made the following decision:

(1)  The Applicants were not the tenants and lacked locus to appeal (see Director of Food and Environmental Hygiene v The Licensing Appeals Board and Wong Yim Fat HCAL 41/2003 (21 November 2003) per Chu J).

(2)  Even if there were locus, the appeal would be dismissed.

(3)  The Applicants’ request to continue to rent Stall P1 or that the Director be directed to grant a new tenancy was refused in that:

(a)  the Applicants’ allegation that a Health Inspector was informed of and condoned the assignment was rejected on the balance of probabilities;

(b)  the Applicants and Tam intended to deceive or conceal the Assignment and FEHD did not know about the truth.

33.  On 29 June 2009, the Applicants commenced the present proceedings. There is no application against the decision of the MSAB dated 9 April 2009.

Statutory framework

34.  Ss.5, 6 and 6A of PMR provide that:

“5.  (1)  No person shall carry on any business in a public market unless he-

(a)  is the tenant of a stall or the authorized servant or agent of such a tenant;

(b)  is the legal personal representative of such a tenant or the authorized servant or agent of such legal personal representative; or

(c)  has the permission in writing of the Director.

(2)  No person shall occupy any stall unless he is the tenant of that stall.

6.  The Director may let any stall to any one person at such rent and subject to such terms and conditions as he may determine.”

6A. A person to whom a shop, stall, shed, pen or standing is let under section 6 may appeal to the Municipal Services Appeals Board against any decision of the Director to terminate the lease, licence, permit or to adjust the rent, within 30 days of the notice of termination or adjustment.”

Grounds of the Applicants

35.  Miss Lam, for the Applicants, submitted that:

(1)  The appeal to MSAB was irrelevant since the Applicants lacked locus and the relevant decisions to be impugned are the original decisions of the Director given on 11 November 2008.

(2)  The apparent delay in instituting judicial review is explicable in that the MSAB decision was only delivered on 9 April 2009 and the Applicants were not out of time upon such reckoning.

(3)  The Director erred in:

(a)  committing himself to the policy of termination of the Tenancy simply on breach of a term in the Tenancy;

(b)  ignoring his power to grant a tenancy or to permit carrying on of business under ss. 5(1)(c) and 6 of PMR.

(4)  The Director’s decisions were Wednesbury unreasonable and/or he failed to properly take into account relevant matters:

(a)  adverse effect and financial implications on the Applicants (including investments made by them at Stall P1) and their families in not granting a tenancy;

(b)  personal circumstances of the Applicants and their dependants and that the 3^rd Applicant is handicapped;

(c)  the Applicants had been paying rent promptly;

(d)  there is no evidence that the Applicants had read or understood Clause 4 of the Tenancy and the oral agreement with Tam to deal in the formalities of the Tenancy does not necessary indicate knowledge of breach of Clause 4 on the part of the Applicants;

(e)  the 1^st Applicant had always regarded Tam as the “owner” and himself as “employer” and the Applicants’ understanding was that they hold the right to operate Stall P1 but not the rights under the Tenancy;

(f)  the undertakings of the 2^nd and 3^rd Applicants could not be imputed to the 1^st Applicant.

(5)  The Director failed to deal with the grant of the new tenancy and/or give adequate reasons for the decisions.

Submissions of the Director

36.  Mr Wong, for the Director, submitted that:

(1)  There has been delay in applying for leave against the Director’s decisions on 11 November 2008 given that the Applicants had no locus to appeal to MSAB and that appeal was misconceived and should not have been undertaken.

(2)  The alternative remedy of appeal to LIAB has not been exhausted.

(3)  There has been material non-disclosure of the pending appeal to LIAB in the present application.

(4)  The case against the Applicants is overwhelming:

(a)  there is a “joint enterprise” by the Applicants and Tam to breach the term of the Tenancy;

(b)  attempt to conceal the sham arrangement from FEHD;

(c)  deception by the 2^nd and 3^rd Applicants in signing undertakings of no ownership or assignment upon their application to be registered assistants;

(d)  the 2^nd and 3^rd Applicants were informed of termination of the Tenancy upon breach of the undertakings at the time of their registration;

(e)  unfair disadvantage to other applicants for market stalls by the practice of sham arrangement.

(5)  The reason of the decision of termination based on breach of Clause 4 of the Tenancy was obvious.

Discussion

37.  The appeal to LIAB on the revocation of the Permit is pending. Be that as it may, it is common ground that appeal would not resolve the matter as the Permit is grounded upon the subsistence of the Tenancy.

38.  In Director of Food and Environmental Hygiene v The Licensing Appeals Board & anor supra, Chu J held (at para. 22) that the right of appeal to MSAB under s.6A of PMR is only given to a tenant of the Director and only in relation to the determination of the grant or adjustment of rent, and an intended transferee of a market stall tenancy has no entitlement to invoke s.6A.

39.  As I see it, the substantive complaint is the refusal by the Director to grant a new tenancy or to permit the continued use of Stall P1. There has been ample opportunity to make representations to the Director.

40.  Although the Director did not expressly refuse the new grant and/or permission of continued use, such was implicit in the decision to terminate the Tenancy, and the reason was obvious in the nature of the very breach occasioning the termination, i.e. the unauthorized assignment or sub-letting by Tam to the 1^st and 2^nd Applicants.

41.  I see nothing untoward in strict compliance with tenancy and/or licensing conditions for poultry sale in public markets in aid of public health and municipal hygiene. Miss Lam could not argue otherwise, but submitted the Applicants’ circumstances and plight were overlooked in the application of the policy.

42.  I find overwhelming evidence of an under table assignment between Tam and the 1^st and 2^nd Applicants. There are deliberate lies by the 2^nd and 3^rd Applicants to conceal the assignment. It is derisory to delve into the nomenclature of “owner” and “employer” as they are contrary to the terms of the Assignment, and to gainsay the 1^st Applicant’s part as he was the proprietor of Cheung Fat. It would be grossly unfair to allow subterfuge of the system of letting and licensing notwithstanding the implications on the Applicants. They only have themselves to blame.

43.  Although the Applicants lacked locus to appeal to the MSAB, their submissions before it (insofar as they were not made to the Director) could only have affirmed the decisions of the Director. One could say with equanimity the result is bound to be the same upon proper consideration, and any more bite is futile.

44.  There is no prospect of success and leave was refused.

Costs

45.  I ordered costs summarily assessed against the Applicants. In HCAL 144/2008, the gross sum was $38,000. I discounted partially for preparation previously by Mr Wong, and accounted for the MSAB decision and proliferation of the bundles in this case, and allowed $35,000.