Leung Chow Public Car Co (A Firm) v. Attorney General

HCMP000749/1976

MISCELLANEOUS PROCEEDINGS NO. 749 OF 1976

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Coram: McMullin, J.

Date of Judgment: 30th June, 1977.

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JUDGMENT

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1. Mr. TSE Kai-chow is the managing partner of a firm called the Leung Chow Public Car Co. and I shall refer throughout to him as the applicant in the present proceedings. He had, it would seem, ambitions to run a fleet of some 200 public light buses. His solicitors on his behalf wrote to the Commissioner of Transport asking that their client be supplied with the necessary application forms. By a letter dated 11th of December some three weeks later the Commissioner replied to the effect that the applications could not be considered in view of the terms of Gazette Notice 420 dated 21st of February 1975. That notice, which was published pursuant to the Commissioner's powers under Regulation 18B of the Road Traffic (Registration and Licensing of Vehicles) Regulations had fixed the upper limit at 4,331 public light buses. Although the communication from the Commissioner did not indicate the number of vehicles which had actually been registered at the date of that letter the applicant does not seem to have sought any immediate clarification in relation to his application for 200 licences and nothing further seems to have happened until July of the following year when by a letter dated 15th July 1976 his solicitors submitted applications for registration of 25 public light buses in the prescribed forms in which were set forth the requisite details as to the actual vehicles involved. The letter was accompanied by the prescribed fees. The accompanying documentation also included a copy of the agreement with the motor dealer setting forth certain terms as to sale and purchase of the buses to which I must later refer. This application was ultimately refused by the Commissioner in terms set forth in a letter dated 22nd of July 1976 which stated that the applications were barred from consideration in consequence of Gazette notice 1065 of the 21st of May 1976 whereby the number of such vehicles registrable under the law had been limited to 4,350.

2. Since the present proceedings are a late, and one hopes a final, skirmish in an earlier campaign involving another party it will be useful to refer at this point, very briefly, to the history of those earlier proceedings which form the background to the present claim. In February 1975 Mr. WONG Kwong-shing, the proprietor of an unlimited company known as Ka Wah Motors had applied for the registration and licensing of 50 public light buses which he proposed to put upon the road. The Gazette notice limiting the numbers to 4,331 appeared on the following day the 21st of February. Those applications were refused by the Commissioner purporting to act under various powers conferred by regulations 18B, 17(2) and 17A(1) of the Registration and Licensing of Vehicles Regulations. Mr. Wong then sought a declaration from the High Court that the Commissioner had no authority to refuse to register his vehicles. The learned trial judge found that regulation 17A was ultra vires the rule making powers conferred by the parent Ordinance and he granted the declaratory order sought in relation to that regulation. That regulation is not directly in issue in the present case nor is regulation 18B(2) which drew critical comment from the judge in the former case and led him to question its validity. He was in no doubt that 18B(1) was intra vires and no argument was addressed against that view in the present case nor could have it been since that is the provision which permits the Commissioner to limit by published notice the numbers of motor vehicles in various classes which may be allowed upon the road at any time and the parent Ordinance clearly contains provision permitting the making of such a regulation. It was not questioned in the earlier case nor has it been in this case that the Commissioner has powers to limit the numbers in this way and it has not been questioned that when he imposes such a limitation he is not then entitled to register or license vehicles of the classes so limited beyond the numbers limited by the published notice.

3. It was argued on behalf of Mr. WONG Kwong-shing that once an application in the proper form under regulation 6 is presented, and provided it contains the proper information and is accompanied by the proper documents as laid down in the regulations and the schedule thereto, the officials concerned are obliged to accept such application and then, it was argued, there springs up a vested right in the applicant to have his vehicle registered. This contention was rejected by the learned trial judge who pointed out that under the regulations the Commissioner has still, after the presentation of an application, certain duties to carry out in respect thereof such as inspecting the motor vehicle etc. before he is entitled to register it. He also took the view that there was nothing preventing the Commissioner from applying to an application received just prior to the publication of a limitation notice the limit contained in such notice in derogation of the applicant's right to be registered and licensed. Nevertheless, the right to be registered upon the presentation of an application in proper form, provided a vehicle and its owner satisfy the other requirements of the legislation, was established in the case of A.G. v. TSANG Kwok-kuen ⁽¹⁾.

4. In WONG Kwong-shing's Case evidence was placed before the court by agreement of the parties to show that at the date of the Gazette notice (21st of February 1975) the number of vehicles appearing upon the register was 4,289. That meant that the registrable quota was 42 short of the upper limit established by the legal notice. When the case was taken upon appeal to the Court of Appeal the Attorney General made an unsuccessful application to adduce evidence to the effect that there had been a mistake in figures placed before the court and that in fact there had been only 15 available "vacancies" in the permissible quota. That application was refused and the appellate court dealt with the case on the basis that the learned trial judge had rightly regarded the basic figure of "vacancies" as 42. On the view which he had taken of the applicant's right he would have granted him a declaration as regards 42 of the 50 vehicles which were the subject matter of the application had it not been for one further consideration. It is this consideration which raises the matter directly in contention between the parties in the present case and which affords the present applicant the ground for his present claim which, as it will be seen, is a claim very greatly reduced below its original extent. In WONG Kwong-shing's Case it was accepted by counsel for the applicant that out of the 42 "vacancies" the Commissioner could rightly claim that 8 of those places were to be regarded as already "committed" to persons other than the applicant. For that reason the declaration which the learned judge gave related to only 34 of the original 50 public light buses which the applicant had wished to have registered and licensed. The appeal by the Attorney General in WONG Kwong-shing's Case was, as I have already indicated, dismissed by the Court of Appeal. So was a cross-appeal by the applicant. Judgment was given by the Court of Appeal on the 7th of April 1976. On the 21st of May 1976 the Commissioner published a further notice in the Gazette under regulation 18B limiting the number of public light buses to 4,350. That is a figure which is clearly intended to accommodate both result of the Court of Appeal's decision and the mistake by the Commissioner as to the actual number of "vacancies" at the time of WONG Kwong-shing's application. The reason for that mistake was never cleared up but it would appear likely that it must either have concerned a mistake as to the actual number of vehicles appearing upon the register at that time or, which seems more likely, a mistake as to the number of "vacancies" which were to be regarded by the Commissioner as "committed vacancies". At all events instead of there being 34 "free" places, as all the courts found upon the evidence before them, the Commissioner's position appears to be that there were in fact only 15 such "free" places. That meant that the Commissioner regarded the upper limit of 4,331 as being already exceeded by 19 as a result of the court's order. The legal notice of the 21st of May 1976 introduces a maximum increased from the former maximum by precisely 19.

5. In the WONG Kwong-shing case there was no discussion concerning the validity of what were referred to as "committed" applications. In the present proceedings the matter solely and directly at issue between the parties is the validity of that notion. The applicant's original contention was that by virtue of his right to registration upon the submission of clean applications and provided the subsequent formalities were successfully undergone and the appropriate fees paid he was entitled either to have registered such number of his 25 vehicles as would bring the total tally of public light buses up to the published maximum, if his applications were the only ones under scrutiny; alternatively to have all his 25 applications thrown in together with those of any other applicant, should there be such other applicant, for the purpose of having the remaining available places awarded by lot under regulation 18B(3). That was how the matter stood at the outset of the present hearing. At that stage the material upon the affidavits was not sufficient to disclose (a) how many vehicles had actually been registered and noted upon the register pursuant to proper applications made in due form prior to the applications made by the present applicant on the 15th of July and, (b), how many were regarded by the Commissioner as having in some manner pre-empted places though not yet duly registered. The plaintiff has of course no legitimate quarrel with any persons who have been registered as public light bus owners prior to him. His interest is to establish his right ahead of any other persons who, not having yet submitted due applications, have nevertheless been notionally allocated places on the register in preference to him. The situation was thus greatly clarified at the outset by the commendably full and prompt response by the Commissioner to queries made by Mr. Litton on behalf of the applicant shortly after the hearing in chambers commenced. It is now accepted common ground that the register shows 4,346 duly registered vehicles, the remaining four places below the limit of 4,350 being regarded by the Commissioner as "committed vacancies". These four are in fact four of the eight "committed vacancies" referred to in the WONG Kwong-shing case the other four having been duly registered following the result of that case and prior to the plaintiff's application in the present case. The reason why the other 4 had not been registered at the time of the present plaintiff's application is that the two owners concerned with those 4 vehicles had fallen into a dispute at law concerning the ownership thereof, a dispute which has not yet been resolved before the courts. The result has been therefore that these owners have never submitted applications under regulation 6 at all. It is also conceded that at the date of the present applicant's application there were no applications other than the "committed" ones for consideration by the Commissioner.

6. Thus, with the applicant's original sanguine expectations of running a fleet of 200 buses shrunk to a mere 4 hopeful applications what is left in the case is a simple question of principle. Mr. Litton's argument is founded on the patent fact that this legislation is addressed to the world at large. Outside the possibilities provided by regulation 17C to which I will return there is no accommodation within the terms of the Ordinance or the Regulations for the notion of any special privileged class of persons entitled to priority in making applications for licensing and registration of public light buses. The nature of these "committed" applications is now clear enough. It has emerged from the affidavits before the court and from the addresses of counsel, in particular the address of Mr. Wong who appeared on behalf of the Commissioner. As I understand it, the policy of the department stems from the fact that prior to the 1st of September 1969 a variety of vehicles, licensed and registered in various categories under the legislation existing at that time, were in free, enthusiastic and somewhat chaotic competition upon the roads in the Colony. These included dual purpose vans, New Territories taxis, 9-seater public cars, 9-seater private cars and various "minibus" type goods vehicles, a jungle profusion of which had sprung up and flourished somewhat anarchically since the disturbances of 1967. It was with the laudable purpose of introducing some degree of order into this competitive free-for-all that legislation was introduced on the 1st of September 1969 whereby those categories of vehicles were abolished and various other categories introduced including the present category of public light buses. The policy since 1969 has been in the main only to register and license as public light buses vehicles owned by persons who formerly were registered and licensed owners of vehicles of the abolished categories on a direct exchange basis. Mr. Wong concedes that that policy was not quite rigidly adhered to and he informed the court that there were certain light buses which were newly upon the road and not upon an exchange basis, citing, as examples, the present minibuses which ply the Peak Route on Hong Kong Island and certain tourist buses licensed for special purposes. In the main however this policy was adhered to. Mr. Wong informed me that the first major departure from it was constituted by the registration of the 34 buses belonging to Mr. WONG Kwong-shing following upon his successful a plication to the court for declaratory orders. Furthermore he maintained that it had been the opinion of the Commissioner that the original limit of 4,331 was already a limit which pressed too heavily upon the resources of the roads from the point of view of traffic control but that that limit had been fixed by reference to commitments already made. The raising of the limit to its present height was in his contention a dutiful but reluctant compliance by the Director with the decision in the WONG Kwong-shing case. The Director, it would appear, regards the four vehicles which are the subject of the ownership dispute as exhausting his commitments in this direction. In this regard Mr. Wong says that, if this dispute should never be resolved, so that no applications are ever made by any of the owners involved, these "committed" places would be left vacant. It is not very easy to understand that part of the argument. Regulation 17A(1) which purported to give a wholly unfettered and general discretion to the Commissioner to refuse to register or license a motor vehicle has been expressly declared ultra vires by a decision of the court which has not been appealed from or upset. In the WONG Kwong-shing case both my then brother Pickering and I were of the opinion that the Director's power under regulation 18B to limit the number of these vehicles was directly related to his powers under 17(1), Pickering, J.A. going so far as to say that the power to limit the number of vehicles had its root in the power to act under 17(1), in particular the power given by paragraph a(ii) of the same regulation whereby the Commissioner may refuse to register any motor vehicle if it appears expedient or necessary for the regulation of vehicular traffic in the Colony. In the present case the Commissioner, giving reasons for his refusal as he is required to do under regulation 17F of the Regulations, chose to make specific reference to the Gazette notice limiting the numbers and to his powers under regulation 17(1). It is conceded that the power to limit numbers under 18B is a power which, like all similar powers given by such legislation, must not be arbitrarily or unreasonably exercised. In fixing such a limit the matters which the Commissioner must normally consider are precisely those matters dealt with in 17(1)(a)(i) and (ii) i.e. the public safety and the regulation of vehicular traffic in the Colony. These are the matters of public concern which entitle him to use his powers under 18B. It has not been argued that the matters dealt with in the affidavits or other evidence establish any of the specific reasons for refusal to register any particular vehicle enumerated in the remaining sub-paragraphs of regulation 17(1) as grounds. The nub of Mr. Litton's argument therefore is that the Commissioner, never having contended that he objects to the registration of the plaintiff's vehicles on any of those grounds had having referred specifically to the Gazette notice, has restricted himself to the question of vehicular traffic control and public safety in relation to the upper limit of the number of vehicles to be permitted to use the roads. That being so, counsel says, then, since, in July 1976, the Commissioner had before him clean applications in due form by the plaintiff in respect of his several vehicles, and since at that date there were no other legitimate applicants within his purview, the Commissioner ought to have considered and entertained the applicant's applications. Then, having checked the form of them and carried out the necessary inspections, and collected the necessary fees he should, counsel says, have registered four of those vehicles without further demur. In postponing all the plaintiff's applications to the interests of other persons to whom he had made commitments the Commissioner was, Mr. Litton says, acting beyond the powers conferred on him by the legislation.

7. It is conceded on behalf of the applicant that the 25 vehicles which originally were made the subject of the applications have since been disposed of and there is no evidence to show that any other vehicles are immediately available in the possession of the applicant. What Mr. Litton says however is that since the action of the Commissioner was unlawful, and since the applicant has been prejudiced thereby, having been compelled to dispose of the vehicles when they were not registered as they should have been, he is now entitled to a declaration in terms that, if he should make application in respect of 4 similar vehicles then the Commissioner ought to entertain them without further regard to any commitments he may have made in the past to other persons.

8. The manner of applying this general departmental policy is further explained in the affidavit of Mr. Russell Johnson, Crown Counsel. There he explains that it had for some time been the practice in the department that any person who wished to be registered and licensed as a public light bus owner would approach the department for an "indication" that his application was likely to succeed. If he was one of the persons who was in the category of those who the Commissioner regarded as entitled to swap pre-existing vehicles for the newly registrable vehicles he would be given a letter of authority, if his means and other background data were satisfactory. He would be told various things such as the markings required to be on the vehicles and his attention would be drawn to the provisions of the regulations to which he would be expected to conform. The idea behind this was of a practical nature. A person so assured could then go and make the necessary financial arrangements to acquire the buses which he wished to run. One can readily appreciate that the Commissioner having made such commitment would be 10th to depart from it when the person so assured had, in his turn, committed his funds to the purchase of expensive vehicles. I have no doubt also that this was a policy which worked with considerable success and smoothness for a number of years. It remains true nevertheless that the policy itself, involving such commitments and letters of authorisation, is not provided for by the law. As for the reasonable concern of the Commissioner with regard to the possibility of financial disaster accruing to a person who, without receiving such authorisation or promise, approached the Commissioner with vehicles already purchased and with clean applications it would appear that the applicant in the present case had found a practical method around that difficulty. His contract with the dealer for the purchase of the vehicles contained a let-out clause which would come into operation if his application was for any reason legitimately refused. It is indeed that feature of the contract which affords the Commissioner one of the grounds for his opposition to the present application but to that I will come later. For the moment it is important only to note that the Commissioner's letter of the 22nd July 1976 expressly states his refusal of the applicant's 25 applications as being pursuant to his powers under regulation 17(1) with direct reference to the limitation of the numbers of the vehicles established by the legal notice published by the Commissioner in accordance with regulation 18B. In other words the Commissioner regarded the legal limit as already having been reached by reason of the existence of the already fully registered vehicles together with the four vacant places which he regarded as already committed. It is for that reason that all of the 25 applications were refused.

9. The Commissioner opposes the application upon 4 main grounds. The widest of those grounds I will deal with first although it was in fact the third point put forward by Mr. Wong. He says that even assuming that the applications are in proper form and none of the necessary formalities has been omitted in the making of the applications nevertheless the Commissioner still possesses a wide discretion under 17(1) to refuse. He does not dispute that the reason given by the Commissioner falls under 17(1)(a)(ii) but he says that the composite requirement of public safety and the need to regulate vehicular traffic embraces the reasonable application of departmental policy in deciding whether any current application conflicts with those needs. What this argument comes to, I think, is that if the court were to order the declarations now sought and if the applicant's four applications were later considered and found satisfactory and registration was granted the Commissioner would feel in honour bound to extend the existing limit by a further 4 at least in order to accommodate those owners to whom he has made his commitment. In doing this he would overstep a limit which he regarded as already unsafe and would therefore be acting against the interests of public safety and the need for proper regulation of vehicular traffic. Indeed, it is said that the Commissioner has already been compelled to act in a manner adverse to the public interests by reason of what he must regard as the unfortunate result in the WONG Kwong-shing case, for that decision in effect compelled him to raise the limit to a figure which he regarded as already 19 above the reasonable safety margin of the situation at the time. The courts are well aware that there are practical difficulties which may confront the Commissioner in implementing a reasonable departmental policy within the context of these regulations. Whether this part of departmental policy might have been clothed in law by a declaration as to who were "eligible persons" for the purposes of registration may now be open to doubt. Huggins, J.A. in WONG Kwong-shing appears to have considered regulation 17A bad in toto. The power to designate "eligible persons" is conferred by regulations 17A(2) and 17C. That part of his judgment which relates to regulation 17A was not contested upon the appeal and it was not argued in the court below that regulation 17A(2) might be valid and severable: the objection was taken only to the exercise of powers under 17A(1). It may be that the Commissioner still has and always had power to create a restricted and exclusive class of persons eligible for registration. I do not purport to decide that now. I mention the matter principally to note the fact that even before his rights under regulation 17A were called in question his powers under 17A(2) were not resorted to by the Commissioner in aid of policy. I accept without question that these 4 "reserved places" had featured in the Commissioner's overall plan for the regulation of this form of traffic long before the establishment of the original limit of 4,331. But this factor must be set over against the plain fact that the legislation is addressed to the public generally and that it gives no selective protection to the interests of any particular segment thereof. On the contrary it gives a right to any person to seek registration and to achieve it provided his application is in order and there is an available place within the legal limit placed upon the number of vehicles and provided the applicant has satisfied the Commissioner of his capacity and intention to run and maintain his vehicles and he has paid the requisite fees. If his application is made prior in time to that of some person who has received an assurance previously from the Commissioner his rights are not to be postponed to the private interests of any such other person merely because of such assurance. It has not been argued that the Commissioner could now simply refuse to register any further vehicles on the ground that even so small an additional number of new vehicles upon the road would constitute such an immediate and present danger to the public safety that he would be acting in derogation of his duty to permit them to be registered. It would be difficult in any case to believe that the registration of four additional vehicles would be capable of constituting such an egregious and immediate danger and the fact that the Commissioner himself does not take that view is shown by his willingness to register vehicles in respect of the four "committed vacancies" should the owners of those vehicles succeed in disentangling their legal difficulties.

10. A subsidiary contention to this first and widest proposition was that the courts have in any event recognised in the WONG Kwong-shing decision the validity of such "committed vacancies". That is not so. The question of "committed vacancies" was not raised and it was by agreement of the parties that such vacancies were taken into account by the court in that case in making its computation as to what the applicant was entitled to have from the Commissioner. It is evident from the judgment of Huggins, J.A. that he was not concerned to propound upon the validity of such a notion and indeed from the manner in which he refers to it it is clear that he accepted the parties own concession on the matter in a somewhat sceptical frame of mind.

11. Then it is said that these applications were not in any event "clean" applications at all. This is said to be so for two reasons. Firstly the Commissioner maintains that the form of agreement between the applicant and Messrs. Honest Motors, from whom he was purchasing the 25 public light buses, discloses that at the date of submitting the application the plaintiff was not yet the owner of these vehicles. The application was therefore imperfect in view of the terms of regulation 4 which are to the following effect:

Secondly, it is said that since the plaintiff by his letter of the 15th of July 1976 bases his claim on the contention that he had a right upon that date to be registered in view of the correct filling of the form and the accompanying documentation he must fail because the form is imperfect in that Part E was not filled in giving, amongst other matters, the details as to the factory cost of the vehicles which data are essential to enable the Commissioner to estimate the amount of road tax payable by the applicant under section 3 of the First Registration Ordinance Cap. 330. Until that figure has been assessed and until the tax has been paid the Commissioner is not entitled to register any vehicle. Mr. Litton strongly contests that his client is barred by virtue of the provisions of regulation 4 for, he says, the facts disclose that property in the vehicles, sufficient to support and fulfil the requirements of that regulation, had passed under the terms of the agreement between Messrs. Honest Motors and the applicant which was produced in evidence. As to the solicitors' letter of the 15th of July which accompanied the applications he concedes that not only is it couched in peremptory and distinctly untactful terms, but that in demanding registration forthwith it was asking for something that could not be granted. The Commissioner is never bound upon the receipt of "clean" applications to register forthwith and is not indeed able to do so, since he must first enquire as to the fitness of the vehicles and make certain other enquiries concerning the applicant's means and general capacity and intentions and, further, he must cause the vehicle to be road tested before any registration can be made. Counsel's basic complaint however is that these technicalities are being raised at this time by way of what might be termed a last ditch-stand by the Commissioner against the entertaining of these applications. Since the Commissioner has disclosed that his reason for refusing to entertain them is based on his attitude towards the "committed vacancies" he should not now, counsel says, be permitted to advance additional reasons even if they be, though this is not conceded, technically sound. To this Mr. Wong replies that the Commissioner is entitled to say to the applicant "you claim to be entitled to be registered: the burden is therefore upon you to show that you have complied with all the necessary formalities". I would think there was force in that contention if the applicant were now maintaining that four identified vehicles covered by 4 of the applications which were submitted on the 15th of July should now forthwith be registered. I think Mr. Litton's basic argument comes to the root of the matter and that the objections to the applications raised on the ground of ownership etc. are peripheral. It is common ground that there are no such vehicles now in the applicant's possession. What the applicant complains of is that he was shut out in limine by the Commissioner in adopting an attitude towards his applications which he was not entitled to take under the law. Had he not ruled them incompetent on policy grounds that the Commissioner would then have gone on the consider the other features of the applicant's case and one must suppose that if there had been substance in any of the objections based upon the question of ownership and in relation to the question of first registration tax these would simply have been cleared up between the parties by an exchange of views by letter or otherwise. In passing however I have noted earlier that the scheme of purchase worked out between the applicant and his motor dealers would seem to have been one practical way of overcoming the difficulty adumbrated in the Commissioner's responding affidavits wherein the need to protect applicants from financial ruin was referred to in explaining the procedure of giving letters of authorisation and provisional sanction to registration. Admittedly the written agreement between the applicant and Messrs. Honest Motors was made conditional upon the success of the applications for registration and licensing of the vehicles and in view of the letter of the 15th July 1976 in which the sellers purport to retain the right to sell to other persons at any time before the buyer takes delivery there was some room for dispute should a question have arisen between buyer and seller. That is by the way. I do not purport to settle any nice question as to ownership and I would think that on the terms agreed the applicant was justified, at least so far as the purpose of registration was concerned, in regarding himself and representing himself as the owner of 25 vehicles. And I think that the Commissioner would have been justified in so regarding him for that purpose. Had a dispute arisen after registration and had the seller been upheld in disposing the vehicles elsewhere that would clearly have been a good ground for de-registering the vehicles since the basic premiss of the applications would have fallen away. As it seems to me the applicant was entitled in July 1976 to have his applications entertained, together with any others that might have then existed, without reference to any prior assurance given to any other person on a personal basis by or on behalf of the Commissioner. It is plain that none of these 25 applications was entertained, and that this was so by virtue of what amounts to a pre-emptive disposition of all available places on grounds of policy commitments. I think the applicant is entitled to declarations in the terms of paragraphs (i) and (ii) of the summons and in addition a declaration to the effect that the applicant is entitled to have four applications for registration of 4 vehicles as public light buses entertained under the provisions of regulation 6 of the Road Traffic (Registration and Licensing of Vehicles) Regulations. He may also have, a declaration that, in the alternative, he is entitled to have applications for the registration of four vehicles as public light buses entertained together with other like applications by other persons, if any, such applications to be determined by lot under and in accordance with regulation 18B(3) of the Road Traffic (Registration and Licensing of Vehicles) Regulations.

Representation:

H. Litton, Q.C. & K.H. Woo (K.Y. Woo & Co.) for Applicants/Plaintiffs.

F. Wong, Senior Crown Counsel for Respondent/Defendant.

(1) (1971) H.K.L.R. 266.