Re Yiu Wing Kwai

HCMP000970/1982

Certiorari - Revocation of licence to conduct massage establishment - Grounds for revocation misstated by authority - charge in law after service of grounds - Should authority's error be regarded as formal - Was applicant's conduct such that Court should exercise its discretion and refuse to grant remedy.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDING

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Coram: Full Bench (Hon. Power, J. & Mr. Commissioner Clough)

Date: 5 November 1982

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JUDGMENT

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1. This is an application for an Order of Certiorari quashing the decision of the Commissioner of Police to revoke a licence in respect of the Sun Majestic Bath House at No. 10-18 Saigon Street, Kowloon. Originally an order for prohibition was also sought, however, the applicants did not, in the event, pursue that remedy. The Commissioner of Police has been appointed as the Licensing Authority by the Governor in Council under the Miscellaneous Licences Ordinance (Cap. 114) and has, as regards the present case, delegated his power to Chief Inspector Edward Perkins who by a letter dated the 14th May 1982 informed Mr. Yiu Wing-kwai, the licensee, that his licence would be revoked with effect from the 30th June 1982.

2. The licence was originally granted to Mr. Yiu on the 21st March 1980. Mr. Perkins in his affidavit said that on the 24th May 1980 a police visit revealed that massage was being given after 8 p.m., contrary to Regulation 32(b) of the Miscellaneous Licences Regulations; that non-approved assistants were being employed, contrary to Regulation 26, and that male persons were being treated by female persons, contrary to regulation 32(b). He stated that summonses were issued against the person in-charge of the premises but that they were subsequently not proceeded with. He said that on the 2nd June 1980 and on the 15th August 1980 police visits revealed that further breaches of the Regulations were being committed. He stated that on the 23rd September 1981 it was found that further breaches of the regulations were being committed and that 7 males and sixty eight female were found upon the premises whose names did not appear on the list of approved assistants and who did not claim to be customers. On the 4th November 1981 Mr. Ratcliffe, the predecessor of Mr. Perkins, sent a letter to the applicant detailing what the Police said they had discovered on the visit on the 23rd September and stating that he was mindful of exercising his powers of revocation under Section 5(2) of the Miscellaneous Licences Ordinance (Cap. 114).

3. Section 5(2) reads as follows:-

"Such officer may revoke a licence granted to any person on proof to his satisfaction of an offence against this Ordinance or other mis-conduct by such person."

4. Mr. Ratcliffe went on to state that before making any final decision he invited the applicant to make representations in writing or, if he preferred, in person.

5. On the 2nd December 1981 Messrs. Haldane Midgley & Co., the applicant's solicitors wrote to the Commissioner of Police stating that their client was not present and was not aware of the matters which occurred on the 23rd September 1981. The letter went on to say that their client had now read the relevant regulations and gave his assurance that no further breaches would occur. On the 15th December 1981, Mr. Ratcliffe wrote to the applicant saying that in view of his promise to ensure that there would be no further breaches he had decided, on that occasion, not to revoke the licence.

6. Mr. Ratcliffe also asked the applicant to have his solicitors explain to him the implications of the decision in Criminal Appeal No.193 of 1981. In that decision a single judge on appeal from the decision of a magistrate had held that offences under regulation 30(b) of the Miscellaneous Licences Ordinance, which deals with the giving of massage outside the hours between 8 a.m. and 8 p.m., were offences of strict liability for which the licensee would, therefore, be liable whether or not he was on the premises and whether or not he knew that the infringing massage was being given. It is clear from the letter that Mr. Ratcliffe considered that, once such an offence had been shown to have been committed on the premises, he had power to revoke the licence.

7. The next letter was written on the 16th March 1982 by Mr. Perkins who had, by then, taken over from Mr. Ratcliffe and in this letter he stated that he was prepared, because of the shortness of time, to renew the licence which expired on the 20th March 1982 but that his preparedness to renew was not to be taken as indicating that he was satisfied with the manner in which the licensed premises were being operated. In this letter Mr. Perkins suggested that further infringements of the regulations had taken place on the 5th February 1982 and on the 17th February 1982. He stated that during the latter visit 40 unapproved assistants had been found on the premises. Mr. Perkins referred to the letter of the 15th December saying: "(in that letter) I made it quite clear that Section 5(2) of the Miscellaneous Licences Ordinance empowers me to revoke a licence on proof to my satisfaction of an offence on the premises against either the Ordinance or Regulations. From these events which I have described above, I am satisfied that such offences have occurred inside the Sun Majestic Bath House and I now invite you to submit within 21 days of the date of this letter any representations you might have as to why I should not revoke your massage establishment licence."

8. On the 15th April, Haldane Midgley & Co. replied on behalf of the applicant stating that the applicant did not admit the offences alleged in the letter of the 16th March and that he was not present on the premises on the 17th February. The letter went on to that the applicant would at all times use his best endeavour to ensure that the regulations were observed, and he asked to be allowed to maintain his licence.

9. It is to be noted at this stage that the letter from Mr. Perkins inviting the applicant to show cause why his licence should not be revoked refers to the commission of offences on the premises which it was alleged had occurred on the 5th and 17th of February. It is clear that Mr. Perkins was proceeding upon the basis of those offences for he states in his letter, “From those events which I have described above I am satisfied that such offences have occurred inside the Sun Majestic Bath House". The reply from Haldane Midgley & Co. stated that the applicant did not admit the offences and that he was not present at the premises on the 17th February 1982. It seems to me to be clear beyond argument that, as at the time of the reply on the 15th April, the applicant was being asked to show cause why in the light of the offences of the 5th February and the 17th February, his licence should not be revoked and that he sought to show cause by saying that he did not admit the offences, that he had not been present on one of the days indicated and that in the future he would see that the Regulations were observed.

10. On the 14th May 1982 Mr. Perkins communicated his decision to revoke the licence to the applicant. In that letter Mr. Perkins said, "On the 20th April 1982 I received a letter dated 15th April 1982 from Haldane Midgley & Co., solicitors, which contained representations on your behalf as to why I should not revoke your massage establishment licence. I have since considered most carefully the contents of both this letter and the other letters I have received in the past from the same solicitors on your behalf. I have also studied at considerable length the entire contents of my file on the premises you operate as a massage establishment. The conclusion I have reached is that you are not a fit and responsible person to continue to operate a licensed massage establishment and, as empowered to do so under Section 5(2) of Chapter 114, I have today decided to revoke your licence". It is conceded that Mr. Perkins was purporting to act under the first alternative in s.5(2) i.e. proof to his satisfaction of offences against the Ordinance.

11. On 1st September 1982 the Full Court, in Criminal Appeal No.384 of 1982, held, overruling the decision of the single judge in C.A.No.193 of 1981, that offences under Regulation 30(b) of Miscellaneous Licences Regulation i.e. the giving of massage outside the authorized hours were not offences of strict liability. This judgment was handed down well after the events with which all have been dealing above. Mr. Barlow, who appeared for the Crown, conceded that Mr. Perkins, acting on the first of the alternative grounds in s.5(2) and proceeding upon the basis that he was dealing with offences of strict liability had taken the view, understandably in the light of the law as it then appeared to be, that he was entitled, given that such offences had been committed, to proceed to revoke the licence upon the basis that the offences had been committed by the licensee if no satisfactory reasons were advanced why he should not. Mr. Barlow conceded that, as the law now stands, this view was wrong and that he could not support it. In the outcome it was not contested that the authority had proceeded upon the basis of an error in law. What he argued was that the grant of the relief sought was discretionary and that this Court-should, given the series of breaches of the Regulations, that the police state they are satisfied have been committed on the premises, exercise its discretion and refuse to interfere. He argued that there was clear evidence of misconduct by the licensee, which is the second of the alternative grounds for revoking set out in Section 5(2), and that given such clear evidence of misconduct, this Court should refuse to exercise its discretion.

12. The matter is, however, in our view, not as simple as that for, although in the opening paragraph of the letter of the 14th May Mr. Perkins referred to his earlier satisfaction that offences had taken place in the licensee's premises he did not go on specifically to find either that the offences had been committed by the licensee or that there had been misconduct by him. Moreover he stated that the conclusion he had reached was that the licensee was "not a fit and responsible person". Why he saw fit to introduce that criterion is difficult to understand. It was conceded by the Crown, quite rightly, that, for the purposes of this application, there were only two grounds upon which the officer could have acted, either the commission of an offence was by the licensee or other misconduct by him.

13. Mr. Cheung who appeared for the respondent was, understandably, quick to point out that there was no ground for revocation upon the basis that the licensee was not a fit and responsible person.

14. He submitted that the officer had arrived at his decision in a way that was clearly contrary to a number of the rules of natural justice.

15. His primary contention was, as we have indicated, that the ground was one which was not known to the legislation. He argued further that even if it had been a proper ground the decision would have been bad as the ground stated to have been used was never communicated to the applicant. Mr. Cheung while submitting that these grounds were sufficient to warrant the quashing of the decision went on to point out that the matter was made more objectionable because the Court could not know what the officer thought it was proper for him to consider when determining whether or not a licensee was a fit and proper person.

16. We consider there is considerable force in all of the submissions made by Mr. Cheung, we do not, however, intend to consider them in detail as we have come to the conclusion that Mr. Cheung's primary submission must succeed. Indeed, as we have already indicated, Mr. Barlow conceded that there had been an error in law and did not seek to justify the decision as it stood but contended rather that, as there was overwhelming evidence that a number of offences had been committed in relation to the premises, the licensee was, clearly, not conducting the premises properly. He submitted that the licensee must have been aware that it was being alleged that he was guilty of misconduct in the running of the premises and that, despite this, he had nowhere satisfactorily answered this allegation. Mr. Barlow, while conceding that the officer had no right to revoke upon the ground which he used, submitted that he would, unquestionably, have been entitled to revoke on the alternative ground, i.e. misconduct by the licensee, and that given this the Court should exercise its discretion and refuse to interfere. He referred to the judgment of Lord Denning in Selvarajan v. Race Relations Board ⁽¹⁾ where he said when dealing with the principles of natural justice which require that no man should be condemned unheard or without having an opportunity of being heard:-

"The fundamental rule is that, if a person may be subjected to pains or penalties, or be exposed to prosecution or proceedings, or deprived of remedies or redress, or in some such way adversely affected by the investigation and report, then he should be told the case made against him and be afforded a fair opportunity of answering it. The investigating body is, however, the master of its own procedure. It need not hold a hearing. It can do everything in writing. It need not allow lawyers. It need not put every detail of the case against a man. Suffice it if the broad grounds are given. It need not name its informants. It can give the substance only. Moreover it need not do everything itself. It can employ secretaries and assistants to do all the preliminary work and leave much to them. But, in the end, the investigating body itself must come to its own decision and make its own report."

17. Mr. Barlow argued that although the officer had indicated that he was proceeding upon the basis of offences committed by the licensee, it would have been open to him to proceed on the ground of misconduct and, indeed, that the real complaint against the licensee was that he had not been properly conducting the premises. Mr. Barlow relied upon the words in the judgment set out above where it states: "Suffice it if the broad grounds are given". He submitted that the broad grounds of misconduct had been quite clearly indicated to the licensee in the letter of 16th March and that the error of the Licensing Authority, which occurred when it attempted to specifically characterize the ground, was formal only. He submitted that the letter of revocation had made it plain that the officer was satisfied that the licensee had been misconducting himself and was, therefore, no longer a fit person to hold a massage establishment licence.

18. We find ourselves unable to agree with these contentions. It is true that Lord Denning says that it is sufficient if "the broad grounds are given”. However, this cannot be taken to mean that a licensee may be required to answer one ground and that a different ground can then be given for revocation. It seems to us clear beyond argument that the authority must not in any way mislead the licensee as regards the ground. Certainly the grounds car be broadly stated but they must not be mis-stated. Further Lord Denning pointed out that the authority must “come to its own decision”. This must mean a proper decision upon the basis of the grounds given. This was not done in the present case. The decision as stated, was not based upon the grounds and, indeed, was not coincident with any ground known to the Ordinance. In such circumstances it can be hardly said that the authority, in any proper way; came to its own decision. We are asked to overlook these breaches of natural justice and to take the view that the licensee has so misconducted himself that we should not interfere.

19. Mr. Barlow appeared to be suggesting that it would be proper for this Court to treat the authority's error as merely formal or, if we considered that we could not so regard it, to say that, even though there had been a breach of the principles of natural justice, it was one that we could properly set at nought because of the conduct of the applicant.

20. As to the first alternative we wish to make it quite clear that in the absence of any admissions by the licensee to the authority of any offences or misconduct by him we do not consider that the error of law of the authority in this case can properly be treated as one of misnomer or formality.

21. As to the second alternative we are satisfied that there have been serious breaches of the rules of natural justice and that should we overlook or, in any way, countenance them we ourselves would be acting contrary to natural justice. We would be endorsing the revocation of his licence upon the basis that he was guilty of misconduct without the nature of the misconduct ever having been stated to him and without his ever having been given the opportunity to show cause thereon. We are quite satisfied that we must refuse to exercise our discretion in favour of the authority in these circumstances.

22. For all of the above reasons we are satisfied that this is a proper case in which to grant an Order of Certiorari and we, therefore, so do directing the Commissioner of Police to quash his decision to revoke the licence of their applicant.

23. The Crown is ordered to pay the applicant's costs to be taxed. There will be liberty to be heard as to this order.

(1)    (1976) 1 ALL E. R. 12

Representation:

Mr. Oswald Cheung, Q.C. and Mr. Sanguinetti (Haldane Midgley & Co.) for Applicant.

Mr.Barlow and Mr. John Leung for Crown.