Park Lomen Inn Ltd v. Appeal Board (Hotel and Guesthouse Accommodation)

CACV 171/2015
and HCMP 486/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 171 OF 2015

(ON APPEAL FROM HCAL NO. 143 OF 2014)

AND

MISCELLANEOUS PROCEEDINGS NO. 486 OF 2015

(ON AN INTENDED APPEAL FROM HCAL NO. 143 OF 2014)

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REASONS FOR EXTENSION OF TIME
AND JUDGMENT ON THE APPEAL

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Hon Lam VP (giving the Reasons for Extension of Time and Judgment on the Appeal of the Court):

1.On 23 September 2014, the Appeal Board (Hotel and Guesthouse Accommodation) [“the Board”] upheld a decision of the Hotel Superintendent [“the Superintendent”] in cancelling the licence of the Applicant to operate a guesthouse at Flat B, 14th Floor, Kingland Apartments, Mongkok on the ground that the Applicant was convicted of an offence under s 21(3)(b) of the Hotel and Guesthouse Accommodation Ordinance Cap 349. That offence was in respect of the operation of a guesthouse at premises other than the licensed premises.

2.The Applicant applied for leave to commence judicial review against the decision of the Board. On 10 February 2015, after hearing counsel for the Applicant, Au J refused to grant leave.

3.Au J set out his decision in a CALL-1 Form, a copy of which was sent to the Board as putative respondent.

4.The Applicant intended to appeal against the refusal of leave. However, according to the affidavit of Mr Yeung, an assistant solicitor in the solicitor firm acting for the Applicant, when they attempted to “file” the Notice of Appeal on 24 February 2015, the Appeal Registry refused to accept the “filing” of the document because the order of Au J had not been sealed. However, the counter staff at the Registry told the filing clerk that the Notice of Appeal could be served and the order of Au J could be sealed and perfected within 7 days.

5.The Applicant served the Notice of Appeal on the Board as “proposed respondent” on 24 February 2015.

6.The order of Au J was perfected on 25 February 2015. On 26 February 2015, solicitors for the Applicant went to the Appeal Registry to “file” the Notice of Appeal together with the sealed order of Au J. Mr Yeung was told by the Listing Officer that the appeal was filed out of time and an extension of time was required.

7.In the circumstances, the Applicant issued the present application for extension of time on 2 March 2015.

8.Initially, the court considered dealing with the application for extension of time on paper and gave directions for the filing of submissions. On 16 March 2015, a Government Counsel acting for the Superintendent filed submissions opposing the extension of time. The Board did not file any submissions. On 31 March 2015, it indicated by a letter that it would not wish to make “further submissions” and asked for leave to be excused.

9.After reading the submissions, the court found that the major dispute between the parties was on the merit of the intended appeal. Bearing in mind that the intended appeal is one against the grant of leave to apply for judicial review and the matter could and should be dealt with expeditiously, the court therefore gave directions for a roll-up hearing for the application for extension of time and the substantive appeal to be heard together. The court also indicated that it would hear submissions on whether extension of time is required.

Procedural considerations for an appeal against refusal of leave to apply for judicial review

10.In Hong Kong, there is no procedure for renewing an application for leave to apply for judicial review before the Court of Appeal . Instead, Order 53 rule 3(4) envisages that there could be an appeal against the refusal of leave.

11.There is no specific rule for the bringing of an appeal against refusal of leave though Order 59 Rule 21(1)(g) makes it clear that such an appeal would not be regarded as interlocutory and as such leave to appeal is not required. Order 59 Rule 3 is the general provision governing the bringing of an appeal and in the absence of other provision for the bringing of an appeal against the refusal of leave to apply for judicial review, it is also applicable to such an appeal. Order 59 Rule 5 should also apply with necessary modifications.

12.Order 59 Rule 3(1) provides that an appeal shall be brought by a notice of appeal which in substance is a notice of motion. Order 59 does not contain any provision for the “filing” of the notice of appeal by a party (though Rule 5(2) provides for the filing by the Registrar of a notice of appeal lodged by a party). Instead it provides for the service of the notice of appeal on “all parties to the proceedings in the court below who are directly affected by the appeal”, see Rule 3(5). Time for appealing is generally reckoned by reference to the time of service of the notice of appeal, see Rule 4(1).

13.There is also a requirement for the lodging of copies of notice of appeal within 7 days after the service of the notice under Rule 5(1) in relation to the setting down of an appeal. However, as far as inter partes appeals are concerned the setting down of an appeal is not the same as the bringing of an appeal. In the scheme of Order 59, the appeal process commenced with the service of a notice of appeal. Thus, extension of time for the service of notice of appeal is conceptually different from an extension of time for complying with the requirements in Rule 5(1) in terms of the lodging of the sealed order and notice of appeal, see Keen Lloyd Holdings Ltd v Commissioner of Customs and Excise [2015] 2 HKLRD 909.

14.An appeal against a refusal of leave under Order 53 Rule 3(4) can be heard ex parte or, when the court below has heard the putative respondent or putative interested party, inter partes. It is difficult to envisage that the Court of Appeal will not hear a putative respondent or putative interested party if such parties had been heard below. The Court of Final Appeal recently described such appeals as “in practice proceeds on an inter partes basis”, see Leung Kwok Hung v President of the Legislative Council (No 2) (2014) 17 HKCFAR 841 at §17(8) .

15.Further, if an applicant seeks interim relief against a putative respondent or putative interested party, like what the Applicant does in the present case (in the Notice of Appeal, the Applicant seeks an interim stay of the cancellation of the licence), the appeal against refusal will also directly affect such parties. In such circumstances, even if such parties may not have been “parties to the proceedings in the court below”, the court may direct the notice of appeal to be served on them pursuant to Order 59 Rule 8.

16.As mentioned above, the CALL-1 Form setting out the decision of Au J had been sent to the Board as putative respondent. This is now a common practice because public authorities, whose decisions were challenged by way of application for leave for judicial review, have a legitimate right to be informed of the progress of the leave application as the public process or the implementation of the decision in question may be affected. Likewise, if there is an appeal against the refusal of leave, the public authorities should be informed in order to avoid any misunderstanding of finality arising from the sending of the CALL-1 Form.

17.Thus, if the circumstances of the case warrant a notice of appeal to be served on a putative respondent or putative interested party, there is nothing to stop an applicant in an appeal against an ex parte refusal of leave to serve his notice of appeal on such party. Once he has done so, the appeal becomes inter partes in nature. As such, the applicant should be able to take the benefit of Order 59 Rule 4 (read together with Order 53 Rule 3(4), viz serving the notice of appeal within 14 days) in respect of his compliance with the time limit for appealing.

18.There will still be cases where an appeal against refusal will remain ex parte in nature. That would be the situation where the court below had not heard from the putative respondent or putative interested party and the applicant does not seek any relief in the notice of appeal against them. The court may still direct for such putative parties to be notified (as opposed to being served) for the reason set out in §16 above. However, unless such parties apply to join in as parties to the appeal, the appeal can proceed on ex parte basis.

19.For ex parte appeals, obviously the process cannot be commenced by the service of the notice of appeal (as there is no need to serve the same). As the Applicant in the instant appeal had actually served the notice of appeal on the putative respondent, it had chosen to proceed on an inter partes basis and this appeal must be considered on that footing. Hence, we need not decide for the purpose of this appeal what should be the practice in an ex parte appeal. We understand the current practice of the Registry is to require an appellant to comply with Order 59 Rule 5(1) within the 14-day limit prescribed by Order 53 Rule 3(4). We express no view in this judgment on the legal basis for that practice. However, as we also understand that rules in this regard are under review by the Rules Committee, we would set out some relevant points for consideration at the end of this judgment.

20.Ms Lui, counsel for the Superintendent, brought our attention to Re Li Jing [2015] 2 HKLRD 933. What happened in that case was that leave to apply for judicial review was refused by the judge on 9 September 2013 (CALL-1 form was sent by post on the same date) and the sealed order was sent to the appellant by post after 13 September (and she claimed to have received it on 19 September). She only lodged the notice of appeal on 30 September 2013. The main issue was whether time should start to run from the date of the making of the order or the date when she received the same. For the reasons explained by Chu JA in that case, time started to run from date of order and the appellant was obviously out of time. There was no service of the notice of appeal on the putative respondent in that case. Hence, it could not assist us in the present appeal.

The Applicant was within time in serving the Notice of Appeal and extension of time for compliance with Order 59 Rule 5(1)

21.The Applicant was within time when the solicitor served the notice of appeal on 24 February 2015. In light of the seeking of interim stay, the Applicant was justified in serving the Notice of Appeal in accordance with the suggestion of the counter staff in the Registry. Once this was done, the appeal becomes inter partes in nature notwithstanding that the matter had proceeded on ex parte basis before the Judge.

22.In the circumstances, the Applicant had served the notice of appeal within time in accordance with Order 53 Rule 3(4) (read together with Order 59 Rule 3). Pursuant to Order 59 Rule 5(1), the Applicant had 7 days from 24 February 2015 to lodge the sealed order.

23.When the solicitor attempted to lodge the sealed order in compliance with Order 59 Rule 5(1) on 26 February, the lodging was done within time. However, due to the Registry’s refusal to accept the same, the documents were not actually lodged and the prescribed fee was not paid.

24.Mr Wu therefore accepted that he now needs an extension of time to comply with Rule 5(1).

25.Ms Lui opposed the extension of time primarily on the basis that the intended appeal has no merit.

26.Since this is an extension of time for compliance with Rule 5(1) where a notice of appeal had been served within time, this is precisely the situation in Keen Lloyd Holdings Ltd v Commissioner of Customs and Excise, supra. As held in that case, the relevant considerations are not the same as an extension of time for service of the notice of appeal. Given the unusual circumstances leading to the delay in lodging the documents through no fault on the part of the Applicant (as the lodging of the sealed order was rejected by the Registry though it was produced within time), we think the proper course is to grant the extension of time irrespective of our views on the merits.

27.We therefore extended the time for the Applicant to lodge the documents pursuant to Rule 5(1) to 23 July 2015.

28.In line with the spirit of the directions for a roll-up hearing, Mr Wu undertook on behalf of the Applicant to lodge the documents by that date and we proceeded to hear the appeal on the basis that the appeal was before us.

The appeal against refusal of leave

29.We can now turn to the appeal against leave.

30.Mr Wu, counsel for the Applicant, seeks leave to challenge the decision of the Board on these grounds:

(a)The Board failed to take account of relevant considerations: the Applicant had ceased renting the unlicensed premises; no prior breach by the Applicant; the transgression was relatively minor; the Applicant did not obstruct the investigation; the magistrate passed a lenient sentence in the prosecution for the breach; the Applicant undertook not to commit further contraventions; the punishment was too severe; and

(b)The Board took account of irrelevant considerations: the tightening of the policy of enforcement to deter operation of unlicensed guesthouse after an unfortunate incident in July 2009; the reminders by the Superintendent to licence holders of the serious consequences for breaches; the rejection of the arguments by the Superintendent; the safety risk associated with the use of the unlicensed premises.

31.With respect, we agree with Au J that these grounds are not reasonably arguable and on the Chan Po Fun test leave should not be granted. It is plain from the reading of the decision of the Board that relevant considerations had been taken into account. Actually, some of the matters Mr Wu relied upon are, in our view, not relevant. The fact that the Applicant had ceased renting the premises is neither here nor there. Likewise, in light of the circumstances under which the Applicant was caught, the fact that it did not obstruct the investigation is not a matter of any moment. Further, the Board (and the Superintendent) performed a different function from that of the magistrate. In terms of licensing control, the Superintendent and the Board are perfectly entitled to take a serious view on the safety risk associated with the use of unlicensed premises as the licensing authority has to uphold a stringent policy to protect those who stay in licensed guesthouses as due notice of such policy had been given to all licensees (including the Applicant). As the administration of the licensing regime is in the hands of the Superintendent and there are public safety and interest at stake, it is perfectly rational and legal for the Superintendent to adopt of more stringent policy of enforcement after the incident in 2009. The Board is quite entitled to take account of the fair enforcement of that policy by reference to other cases in the same building. It also follows that the Board did not take irrelevant consideration into account.

32.For these reasons, Au J was correct in refusing to grant leave. The appeal by the Applicant is dismissed accordingly.

33.On the costs of the summons for extension of time and of the appeal, as held by the Court of Final Appeal in Leung Kwok Hung v President of the Legislative Council (No 2) (2014) 17 HKCFAR 841 at §17(8) to (12), the normal starting point in an appeal of this nature is costs to follow the event. This is not a case where the Applicant could derive any mileage from the public interest factor. Mr Wu himself submitted that the Applicant brought this appeal to protect its own interest. The Superintendent as Interested Party appeared to oppose the appeal in view of the neutrality of the Appeal Board in accordance with the usual practice (see the discussion in Orrico, Philippe v Municipal Services Appeals Board CACV 5 of 2015, 16 July 2015). We see no reason why the Superintendent should not have his costs in these applications though we would discount the same by 10% on account of the unsuccessful attempt to oppose the extension of time. We order the Applicant to pay 90% of the costs of the Superintendent.

General points for consideration

34.We have already set out the existing practice in the Registry at §19 above. Pending any changes in the rules, a litigant and those acting for him will be well-advised to follow the practice in order to avoid any unnecessary applications for extension of time.

35.Having said so, it is fair to say that the existing rules do not set out a clear regime for the reckoning of time in an ex parte appeal. As we said, the rules are under review and one would hope to see the position being set out clearly in the new rules.

36.We take this opportunity to make the following observations for the Rules Committee to consider in the revision of the rules in this respect:

(a)An ex parte appeal, like other appeals, is brought by the notice of appeal, which is a motion, see Order 59 Rule 3. It is a document issued by a litigant or his solicitors instead of the Registry.

(b)In an inter partes appeal, a notice of appeal has to be served before it is lodged pursuant Order 59 Rule 5(1). At that stage, the document does not bear any appeal number. The service of a notice of appeal is sufficient to stop time from running. Thus, for an inter partes appeal, the appeal process commences with the service of the notice of appeal.

(c)As explained in Keen Lloyd Holdings Ltd v Commissioner of Customs and Excise, supra, in the context of an inter partes appeal, the setting down of an appeal pursuant to Order 59 Rule 5 (an act by the Registrar) is not the bringing of the appeal (an act by the appellant).

(d)Though it is not necessary for a notice of appeal to be served in an ex parte appeal, like other motions, it has to be lodged with the court. A notice of appeal, like a motion for judgment, has to be set down and the setting down process is governed by Order 59 Rule 5. The setting down of an appeal is done by the Registrar after the requisite documents are lodged.

(e)At the moment, Order 59 Rule 5 does not expressly prescribe that a motion cannot be lodged unless the other requirements of Rule 5(1) are also satisfied for the purpose of setting down at the same time.

(f)One possibility is for the rules to provide that for ex parte appeal, the time for appeal would stop running upon the setting down of the appeal (thus adopting a different approach as compared with inter partes appeal) though this would imply that an appellant will need to have a sealed order at hand within the appeal period which may not always be possible for a variety of reasons (some of which may not be solely within the control of the appellant, e.g. the situation in Keen Lloyd Holdings Ltd v Commissioner of Customs and Excise, supra, or the time taken up by the court to approve a draft order or to prepare an order in cases of litigant in person). This may necessitate applications for extension of time to be made by such litigants.

(g)One may also need to consider whether there is sufficient justification for adopting different approaches between ex parte appeal and inter partes appeal as regards the need to have a sealed order at hand before one can stop time from running in the bringing of an appeal.

37.No matter what approach is to be adopted, it is important that the revised rules should clearly state how time is to be reckoned for the purpose of deciding whether an ex parte appeal is brought within time. It is undesirable to let uncertainty in this part of the rules to generate unnecessary applications for extension of time, which can take up resources (including those of the litigant as well as those of the judiciary) that could be better deployed on other matters.

Mr Paul KN Wu, instructed by Phyllis KY Kwong & Associates, for the Applicant

Ms Ann Lui, instructed by the Department of Justice, for Hotel Superintendent (Interested Party)

Attendance of the Appeal Board (Hotel and Guesthouse Accommodation) was excused