Fung Ping Sum Connie v. Appeal Panel (Estate Agents Ordinance)
Read the full judgment text of HCAL 514/2021 on BabelCite. This High Court CFI judgment was delivered on 27 January 2022.
1. This is the first case in which the Court has had to consider and construe the licensing regime for estate agents under Part III of the Estate Agents Ordinance 511 (“Ordinance”).
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HCAL 514/2021 [2022] HKCFI 277 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 514 OF 2021 ________________________
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________________________ Before: Hon Coleman J in Court Date of Hearing: 20 January 2022 Date of Judgment: 27 January 2022 _______________ J U D G M E N T _______________ A. Introduction 1.This is the first case in which the Court has had to consider and construe the licensing regime for estate agents under Part III of the Estate Agents Ordinance 511 (“Ordinance”). 2.The matter comes before the Court in the form of judicial review proceedings, by which the Applicant seeks to challenge the decision dated 19 July 2019 (“Decision”) made by a tribunal of the Appeal Panel under the Ordinance (“Panel”), together with the later reasons for decision dated 21 January 2021 (“Reasons”). By the Decision, as explained in the Reasons, the Panel confirmed the decision of the Estate Agents Authority (“Authority”) dated 27 December 2018 and made under section 24 of the Ordinance, refusing to grant or renew a licence to the Applicant. 3.Directions were given for the application to be dealt with at a ‘rolled-up’ hearing, which was heard before me on 20 January 2022. At the hearing, the Applicant was represented by Mr Foster Yim and Mr Jasper Wong of Counsel, and the Authority was represented by Mr Abraham Chan SC, leading Mr John Cheung of Counsel. As would be expected, the Panel was not represented, and its attendance had been excused. 4.This is my Judgment. B. Registration and Licensing Regime 5.It may be helpful first to set out the relevant statutory provisions. 6.The Ordinance’s definition section, section 2, contains the following material definitions (bold and italics in original):
7.Part II of the Ordinance, headed ‘Estate Agents Authority’, provides for the establishment of the Authority (section 4), its principal functions (section 5) and general powers (section 6). The Authority’s principal functions include the regulation and control of the practice of estate agents and sales persons, and taking such action it considers appropriate or necessary to promote integrity and competence amongst, or maintain or enhance the status of, estate agents and salespersons. The general powers are broadly drawn, permitting the Authority to do such things as are expedient for or conducive to the performance of its functions or which, in its opinion, are necessary to facilitate the proper performance of those functions. 8.In the context of the public importance accorded to the proper regulation and control of the estate agency industry, reference can also be made to section 7, which empowers the Chief Executive to give to the Authority such written general directions as to the performance of any of its functions as the Chief Executive considers appropriate. 9.Part III of the Ordinance, headed ‘Registration and Licensing’, sets out the relevant regime. Section 13 requires the establishment and maintenance of a register for the purpose of the Ordinance, containing particulars as regards every licence granted. Section 14 requires every licensee to have a registered address. 10.Focusing on the licensing of estate agents (as opposed to salespersons), the following provisions are material:
11.The argument in this case turns to an extent on whether the applicable section for consideration of the Applicant’s application for a licence was section 18 or section 19. Further, the form of the application is governed by either section 22 or section 23. For the purposes of the specific challenge now sought to be mounted, it is section 24 which provides for refusal of application for licence or renewal. That is the section invoked by the Authority in its decision. 12.Part IV of the Ordinance, headed ‘Investigations and Discipline’, includes section 31 relating to ‘Appeals’, granting a right of appeal where, amongst other things, an application for the grant or renewal of a license is refused under section 24: see section 31(1)(a). 13.Such appeals are heard by a tribunal consisting of not less than three members of the Panel established under section 32. In relation to an appeal under section 31, the appointed tribunal may confirm, vary or reverse any of the decision to which the appeal relates: see section 32(8). It is common ground that such an appeal is a de novo hearing. 14.Section 56 of the Ordinance relates to the making of Regulations, by which the Authority (with the approval of the Secretary for Transport and Housing), may, amongst other things:
15.The Estate Agents (Licensing) Regulation Cap 511A (“Regulation”) was created pursuant to section 56 of the Ordinance. Amongst its provisions is section 7, which materially provides as follows (bold and italics in original):
16.Note can be taken of the various references in section 7 of the Regulation to steps which might be taken on or before 31 December 2001 and on or after 1 January 2002. C. Material Facts 17.The material facts can be traversed economically. 18.The Applicant was convicted of possession of dangerous drugs on 8 June 2007, and was fined HK$5,000. 19.The Applicant was granted an estate agent’s licence (“Licence”) by the Authority on 3 March 2009. There is no suggestion that, when applying for the Licence, the Applicant was in any way at fault for failing to report her conviction to the Authority between 2009 and 2011. 20.Between 2011 and 2016, the Applicant submitted seven application forms to the Authority to apply for the renewal of the Licence. Though some of the detail on the forms was in fact filled in by colleagues, the Applicant signed each application form. Though the Applicant submitted Chinese language forms, I shall refer to the English language version. 21.The particular application form, ‘Form 11 – Application for Renewal of Estate Agent’s Licence (Individual)’, is a statutorily prescribed form under the Regulation. The content of Form 11 is materially identical to that of ‘Form 2 – Application for the Grant of Estate Agent’s Licence (Individual)’. Therefore, as to the Form, there was and is no material difference between application for grant or for renewal. 22.In each application Form 11, the Applicant was asked to tick ‘yes’ or ‘no’ to the questions:
23.As can be seen from the statutory provisions set out above, those five questions track, in the same order, the five matters identified in section 19(2)(a) to (e) of the Ordinance. 24.For present purposes, the focus is on questions 4 and 5. In all the application forms the Applicant ticked the ‘no’ box to those questions. The answer ‘no’ was correct; the Applicant has never been convicted either (a) on the basis of any fraudulent, corrupt or dishonest act, or (b) under the Ordinance. 25.However, in addition to the prescribed Forms, the Authority required applicants for grant or renewal of licences to complete a supplementary form. Though it differed in content over the years, it broadly consistently: (1) stated that the provisions for rehabilitation under the Rehabilitation of Offenders Ordinance (commonly referring to “spent” convictions) did not apply to questions 4 and 5 in the Forms; (2) explained that in considering whether the applicant is a suitable person to holder continue to hold a licence, apart from questions 4 and 5, the Authority would consider other criminal records; and (3) asked the applicant to answer the question whether he or she had been convicted of any criminal offence (apart from certain minor offences) in Hong Kong or elsewhere. 26.The Applicant points to the particular difference between the supplementary form filled out by her in 2011, and the other subsequent supplementary forms. The factual difference between the versions of the forms is said to give rise to one of the intended grounds of judicial review (see below). 27.The potential answers to the relevant question about any previous convictions were boxes providing for ‘yes’, ‘no’ and ‘not sure’. In each of the supplementary forms, the Applicant ticked the ‘no’ box to that relevant question – save for one form, in 2016, which was originally ticked ‘not sure’, but later substituted with ‘no’. The material application (later refused) was made in 2017. 28.On 30 October 2017, the Authority wrote to the Police to seek the Applicant’s criminal record. The Police replied on 2 November 2017, disclosing the Applicant’s previous conviction in 2007. Accordingly, in December 2017, the Authority invited the Applicant to give further explanation and to give a cautioned statement. She did so on 21 May 2018, explaining that she was under the mistaken belief that she did not have a criminal record because she only paid a fine upon pleading guilty. 29.The Authority reported the Applicant’s non-disclosure to the Police on 11 June 2018, as potentially evidencing the commission of an offence under section 55(1)(c) of the Ordinance, relating to the making of any statement or furnishing any information which is false or misleading in a material particular in connection with any application for the grant or renewal of an estate agent’s licence. However, no further action was taken by the Police. 30.In its decision dated 27 December 2018 (notified to the Applicant on 3 January 2019), and though expressly stating that (a) the Applicant’s conviction does not belong to the category of those in section 19(2)(d) of the Ordinance and (b) the Authority placed no weight on the Applicant’s criminal record from some 11 years previously, the Authority nevertheless refused the Applicant’s application for renewal of Licence on the basis that the Applicant failed to report her conviction in application forms submitted between 2011 and 2017. 31.The Applicant appealed to the Panel, and the hearing was held before the tribunal of the Panel on 16 July 2019. On 29 July 2019, the Panel dismissed the appeal, but no reasons were provided. Eventually, after various requests for reasons, the Panel provided the Reasons on 13 January 2021 (approximately one and a half years after the hearing of the appeal, and the Decision). 32.In the Reasons, the Panel held that the Authority could rely on section 19(1)(c), permitting the Authority to take into account any factor it thinks appropriate in deciding whether the Applicant is a fit and proper person to hold an estate agent’s licence. Reference was also made to section 5 of the Ordinance, relating to the principal functions of the Authority. D. Intended Grounds of Review 33.In the Form 86, drafted by Mr Yim and Mr Wong, the following broad intended grounds of judicial review are identified:
34.It is fair to say that the focus of oral submissions by Mr Yim at the hearing was very much on Ground 1. 35.It is also to be noted that there is no Wednesbury unreasonableness challenge. E. Ground 1: Error of Law 36.The error of law put forward is the Panel’s reliance on section 19(1)(c) of the Ordinance, as permitting the Authority to take into account various factors when considering whether the Applicant was a fit and proper person to hold an estate agent’s licence. Mr Yim submits that:
37.Mr Yim submits that this reflects the legislative intention that there is a higher threshold for denying an existing estate agent’s licence renewal application, as compared with a fresh application for an estate agent’s licence. 38.Mr Yim notes the contention advanced in the evidence put forward on behalf of the Authority that section 18 was intended to be applicable only to a “transitional period of three years”, so as to allow the trade to meet the full licensing requirements. But, Mr Yim points out there is nothing in the section itself to suggest that section 18 is intended for a transitional period only and is now inoperative. Rather, by reference to the “relevant period” provided for in section 18(3), one can find a reference to “relevant period” in section 7(4E) of the Regulation, namely the period of 24 months following the expiry of the previous licence. 39.Mr Yim says the Applicant did apply within that period, so section 18 was the applicable section. On that basis, when considering fitness and properness, the Authority should have dealt with the matter under section 18(1), section 18(2)(a)(i) and section 18(2)(b)(i), and therefore should have had regard only to the matters set out in section 19(2)(a), (c) and (d) – and not to section 19(1)(c) or the other paragraphs of section 19(2) which might have been applicable under section 19(1)(c). 40.Mr Chan submits that – even leaving aside that the root question before the Authority and the Panel was simply whether the Applicant was a fit and proper person to hold a licence – it is section 19 which is the operative provision. Under section 19, an individual shall not be eligible to be granted or hold or continue to hold a licence unless certain requirements are fulfilled. Those requirements include possession of the relevant educational qualifications or experience, and that the Authority “otherwise considers him a fit and proper person to hold an estate agent’s licence”: section 19(1)(c). On that basis, Mr Chan submits, an applicant who is either re-applying for or renewing a licence must satisfy the conditions contained in section 19, including section 19(1)(c), before he or she may be eligible to be granted or hold or continue to hold a licence. 41.Further, Mr Chan submits that in so far as Mr Yim suggests that the “relevant period” in section 18 is to be equated with the “relevant period” of 24 months applicable to section 7(4E) of the Regulation, that is simply fallacious. 42.Further, Mr Chan says that the Applicant’s reading of section 18 flies in the face of its clear legislative history. The Authority introduced the licensing system on 1 January 1999, which amongst other things made it a requirement for practitioners to have completed an educational level of Form five of secondary education or its equivalent. However, whilst the aim was to raise standards, it was recognised that the new educational requirement would cause problems for existing practitioners in the short-term. Hence, section 18 was introduced as a “grandfather provision” for the right to a grant of a licence during a three-year transitional period. 43.In support of that submission, Mr Chan refers to:
44.I accept that those statements show that there was at least discussion – though no clear decision – on a potential transitional arrangement of the sort which might be regarded as a “grandfather provision”. The reference to a three-year period ending 31 December 2001 – and the idea that it is transitional – also has some echo in section 7 of the Regulation: see section 7(1)(b), (2), (3) and (4), together with the definition of “existing practitioner” to be found in section 2 of the Regulation. 45.On the other hand, I agree with Mr Yim that there is nothing on the face of section 18 itself which suggests that it is transitional. 46.What can be noted is that section 18 is a provision relating to “right” or “entitlement” to the grant of a licence. This is in distinction to section 19, which is dealing with the matter of “eligibility”. Certainly, the two sections appear to be dealing with separate concepts, and the introductory words to section 18 identify that its provision is intended to apply “notwithstanding sections 19, 20 and 21”. 47.If necessary to find it, there is also some possible logic in the apparent limitation for the purpose of considering whether a person is fit and proper to hold a licence under section 18(2)(a)(i) and (b)(ii) to those matters described in section 19(2)(a), (c) and (d) – but not (b) and (e). Paragraphs (b) and (e) relate respectively to prior disqualification and conviction under the Ordinance, which may have been temporally irrelevant to the intended operation of section 18. 48.Of course, it is also right that section 18 itself has some express intended temporal limitation. Any relevant application under the section is one made “within the relevant period” and is further to be an application for the grant of a licence to take effect both (1) at any time after the grant thereof (though this is somewhat odd wording, because it is unusual to think of a licence taking effect before it is granted), and (2) “within the relevant period”. Therefore, the “relevant period” is relevant to both the making of the application for the grant of the licence and the timing of its taking effect. 49.But ultimately the debate about section 18 seems to me to be utterly sterile. This is because the section is only operable when applications are made “within the relevant period”, where “the relevant period” is specifically intended to be defined for the purposes of section 18 as meaning the period determined by the Authority with the prior approval of the Secretary and specified in a notice published in the Gazette. However, it is common ground that no such determination of “the relevant period” was ever made by the Authority with the prior approval of the Secretary and published in the Gazette. 50.Therefore, as a matter of both law and fact, no person could ever have made an application under section 18. Quite simply, the section never became operable. 51.The debate also seems to me to be sterile because the relevant consideration under either section was simply whether the Applicant was to be considered a fit and proper person to hold an estate agent’s licence. 52.As to the proper approach to what became section 19(2)(a) to (e) of the Ordinance, Mr Chan refers to a letter dated 22 July 1996 from the Government Secretariat Housing Branch to the clerk to the Bills Committee to study the Estate Agents Bill, which includes the following (bold and underlining in original):
53.But, even absent that material, it seems to me to be plain and obvious from the provision and the context of it – including the description of the principal functions of the Authority set out in section 5 of the Ordinance – that the list of matters to which the Authority shall have regard is a non-exhaustive list of the (minimum) matters to which the Authority is mandated to have regard. In other words, the Authority cannot consider a person to be fit and proper without having regard to those listed matters; but, when considering whether a person is fit and proper the Authority is not limited to having regard only to those listed matters. Fitness and properness is a broad concept, requiring an assessment of moral worth. Albeit that it is understandable that the consideration might require certain specific factors to be taken into account, it would be anathema to limit the matters which might be taken into account, at least absent clear wording that account can be taken only of those matters listed. I reject Mr Yim’s submission that there is a ‘hard edge’ to the consideration, delineated by the matters specifically listed in the section. 54.I also reject Mr Yim’s submission as to the proper interpretation of section 19(2)(d). That part of the section relates to convictions as regard which it was necessary to find that the person acted fraudulently, corruptly or dishonestly. In other words, it relates only to those convictions where fraud, corruption or dishonesty was a necessary element to the conviction. It does not extend to convictions where there may have been some contextual fraud, corruption or dishonesty but where those matters were not a necessary element of the crime. It is easy to think of crimes where fraud, corruption or dishonesty is not a necessary element to a conviction, but where the fact of conviction might be relevant to an assessment of fitness and properness: for example, crimes of sexual assault or other violence. 55.Lest it be thought that a broad approach to the consideration of fitness and properness gives the Authority entirely free rein, there is of course the supervisory jurisdiction of the Court in judicial review. If the Authority or Panel were to take something into account which was plainly irrelevant to the consideration, or fail to take into account something which was plainly relevant to the consideration, an illegality or Wednesbury unreasonableness challenge might be mounted. 56.In cases involving someone with a previous conviction, the core question on the consideration of fitness and properness is whether, despite that prior conviction, the person has now shown himself or herself to be fit and proper for the purpose of the application. To an extent at least, consideration might be given to whether there has been a change of character or reformation. In those circumstances, the repeated failure by the Applicant properly to disclose her 2007 conviction – which can be viewed as a failure to give full and honest disclosure – was potentially material to the Authority’s consideration of her fitness and properness at the time of her last application for a licence, and the Authority and Panel cannot properly be criticised for taking it into account. 57.There may be many who would think that the decision to refuse to renew the licence was ‘harsh’ in the circumstances, but the weighing exercise in the assessment of fitness and properness is by statute to be performed by the Authority, and on appeal by the Panel. In this case, there was no error of law and there is no public law justification for interfering in the decision of the Authority or the Panel. 58.I do not think Ground 1 is reasonably arguable. F. Ground 2: Error of Fact 59.Ground 2 focuses on the question whether the Applicant’s answer to the supplementary form question about previous convictions – sent with her application dated 20 June 2011 – was or was not correct. 60.The argument proceeds on the basis that the proviso in the form stated that the rehabilitation provisions as to “spent” convictions did not apply to questions 4 and 5 under the declaration in the Form – but did not suggest that the rehabilitation provisions did not apply to the relevant question asked outside the Form itself, but in the supplementary form. 61.Mr Yim then submits that the error of fact was a material part of the Panel’s reasoning, so that all four of the matters ordinarily required for the court to intervene to correct an erroneous conclusion on a question of fact – see §§38-39 of my decision in He Wei v Director of Immigration [2020] 2 HKC 648 – are satisfied. 62.First, I am not sure that the error is so clear as Mr Yim suggests. The 2011 supplementary form told the Applicant to disclose “ALL conviction records” (emphasis in original), because the Authority was going also to consider convictions in addition to those specified in questions 4 and 5. 63.But, in any event, I agree with Mr Chan’s submission that the Panel in fact made no “finding” as such that the Applicant had failed to disclose a conviction in the 2011 supplementary form. The relevant factual matter founding the Authority’s decision and the Panel’s Decision was the repeated and multiple non-disclosure over a number of years. Repeated, multiple non-disclosure was not controversial. I do not think it material to the decision whether the non-disclosure was on six or seven occasions. 64.Put shortly, I do not think there is any reasonably arguable suggestion that there might have been a different decision but for the alleged factual error. There is no merit in this proposed ground. G. Grounds 3A and 3B 65.I can deal with both these grounds quickly. Neither was pressed by Mr Yim at the hearing. Neither has any merit. 66.Ground 3A fails at the first hurdle. A licence under the Ordinance is not “property” for the purposes of Articles 6 and 105 of the Basic Law. It is not transferable, nor marketable, nor obtained at market price. Further, even if property rights are engaged, the Applicant accepts that the first and second stages of the proportionality test are satisfied, but made no real attempt to identify why the third and fourth stages of the proportionality test are not satisfied. It can also be noted that it was open to the Applicant to have made a fresh application for a licence on any date on or after 27 December 2019 (and I do not think she needed the Reasons for the Decision to be able to make such an application). 67.Ground 3B is illogical. As Mr Chan submits, it is paradoxical to say that the Panel should have somehow taken into account its own apparent delay in providing reasons for the decision it had already made some time earlier, so as to reverse its decision by reason of its delay. H. Result 68.In light of my above views, I dismiss the application for leave to apply for judicial review. 69.Further, even had I thought that any of the grounds advanced were reasonably arguable, I would obviously have dismissed the substantive application. 70.I see no reason why costs should not follow the event. In the circumstances, I order the Applicant to pay the Authority’s costs, to be taxed if not agreed. The Authority properly appeared as an interested party, and its submissions were of genuine assistance to the Court. However, as I have not actually heard any costs argument, I will first make the costs order on a nisi basis, to become absolute if no application for variation is made within 14 days. Any variation application will be dealt with on paper. I. Postscript 71.I have reached the firm conclusion that, whatever its original intended purpose, section 18 of the Ordinance never became capable of being operated – as a matter of law and fact. Its presence in the Ordinance is of no effect. 72.That is not to say that position was necessarily understood. It may be that for a period of time the Authority accepted and dealt with applications as though they had been properly made under a properly operable section 18 (Mr Chan was unable to obtain instructions at the hearing to give a clear answer to that possibility), and because of the Authority’s understanding as to the intended purpose of the section. But, even if that were so, that would have been by reference to a “relevant period” or other transitional period almost certainly ending as long ago as 31 December 2001 (over 20 years ago). 73.In the overall circumstances, I think it would be best to make clear now that section 18 can be ignored for all current and future purposes of regulation and licensing under Part III of the Ordinance. Section 18 can be treated as having been deleted, and (unless some reason is identified for breathing life into the section at this late stage) it may be that it would be only sensible for a future amendment to the Ordinance formally to make that deletion so as to avoid any possible confusion.
Mr Foster Yim and Mr Jasper Wong, instructed by Tam, Pun & Yipp, for the applicant The putative respondent was excused from court attendance Mr Abraham Chan, SC, and Mr John Cheung, instructed on direct access, for the interested party | ||||||||||||||||||||||||||||||
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