KOWLOON CHUNG MOTORS CO LTD v. COMMISSIONER FOR TRANSPORT

Date of Hearing: 22 June 2006

Date of Judgment: 22 June 2006

Date of Handing Down Reasons for Judgment: 10 July 2006

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J U D G M E N T

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1.  The Applicant was holder of passenger service licence No. 3658A [“the PSL”] and operated non-franchised public bus services.  It provided free bus services between Whampoa Wonderful Worlds and Ho Man Tin / Tokwawan Chun Seen Mei Chuen.  Under the PSL conditions, if a free bus service was operated for more than 14 days either consecutively or intermittently during a continuous period of 12 months, prior approval from the Commissioner of Transport was required.  The Applicant obtained approval and had such approval renewed from time to time since 1999.

2.  On 27 July 2002, when the relevant approval was about to expire on 12 August, the Applicant wrote to the Transport Department for extension of the approval.

3.  On 12 August 2002, the Commissioner informed the Applicant that he did not consider there was a sufficient need to justify the continuation of the free bus services.  He however granted a one month's extension to allow the Applicant to prepare for cessation of the services. The relevant parts of the letter are as follows,

“Free bus service are normally approved as temporary expedients to cater for some short-term promotional needs such as the sale of new housing flats or opening of new shopping malls.  Services which are required for longer periods have to be operated by regular public transport modes such as franchised buses and green minibuses.  Approval for these two free bus service routes was first given on 13 April 2002 and was valid until 12 July 2002.  It was then extended for one month to 12 August 2002.  We granted the approval and the extension on grounds of business promotion at the Wonderful World, having also considered all the factors listed under section 28 of the Road Traffic Ordinance, Cap. 374 and other specific circumstances associated with your applications.  So far, these factors and circumstances have remained unchanged and hence there are no new grounds for this Department to grant further approval to these free bus services.

Nevertheless, I would appreciate your need of time to prepare for cessation of the free bus service routes in question and the effect possibly caused to the passengers if the service stop operation immediately in mid-August 2002.  On this basis, this department has no objection to extending the current approval for one month until 12 September 2002.  The extended approval will fully cover the summer holiday and should be sufficient for business promotion at the Wonderful World in this period.  Upon cessation of the free bus services, passengers may make use of existing public transport services for shopping at the Wonderful World.  However, the approval for extension on this occasion should not be construed as a precedent.”

4.  On 13 August 2002, the Applicant signed a letter indicating that it understood and accepted the conditions in the letter of 12 August 2002.

5.  Instead of making any preparation for cessation or negotiating with the Commissioner for a longer extension to prepare for cessation, the Applicant wrote on 9 September 2002 seeking renewal of approval “for a further period of, say twelve months [from 13 September 2002]”

6.  The Commissioner replied on 14 September 2002 rejecting the request for renewal and reiterating the position in the letter of 12 August 2002.  The letter ended with the following paragraph,

“As the approval for the services has already lapsed on 13 September 2002, I would like to remind you to cease their operation.  According to Section 52 of the Road Traffic Ordinance Cap. 374, it is an offence to operate an unauthorized public bus service.  Besides, under Section 30 and 31 of the Road Traffic Ordinance, Cap. 374, the Commissioner for Transport may suspend, cancel or vary the passenger service licence due to non-compliance with passenger service licence conditions.”

7.  Despite of that, the Applicant continued to operate the free bus services for 15 days between 13 September and 7 October 2002.  The Commissioner informed the Applicant by a letter of 8 January 2003 that there would be an inquiry pursuant to Sections 30 and 31 of the Road Traffic Ordinance [“the RTO”].  The inquiry was held on 30 January 2003 and 27 February 2003 with the attendance of the Applicant together with its lawyers.  The Applicant was found to be in breach of the licence conditions.

8.  On 25 May 2004, based on the inquiry report, the Commissioner exercised the power under Section 31 to suspend the PSL in respect of 4 buses for two months.  The penultimate paragraph of the letter of 25 May 2004 said the following,

“I hereby inform you that when the Commissioner in deciding the renewal of your passenger service licence or other applications, apart from taking into consideration of other facts, the result of this inquiry will also be taken in (sic.) account.”

9.  The Applicant applied for a review of the decision.  The review was heard by the Transport Tribunal.  The Tribunal affirmed the decision of the Commissioner on 13 May 2005.

10.  The suspension had been implemented.  However, the Applicant was concerned about the implication of the decision towards its future renewal application.  The Applicant applied for leave to apply for judicial review seeking to quash the decision of the Tribunal.  Leave was granted on 14 September 2005.  For reasons set out in my Judgment of 14 September 2005, Only one ground was permitted to be canvassed,

“The Transport Tribunal failed to give effect to the Applicant's legitimate expectation that no enforcement action under Sections 30-31 of the RTO would be taken by the Commissioner for Transport against the Applicant before the appeal procedure set by the Commissioner for Transport was exhausted or alternatively before its application for further extension of 9 September 2002 was properly disposed of”

11.  The chronology of events show that the 9 September 2002 application for further extension had been disposed of on 14 September 2002.  Further, as I would explain below, when the Applicant made the 9 September 2002 application, it should have known that it was doomed to fail.  The only point that merits further consideration is the withholding of enforcement action pending appeal.   

12.  Having heard the parties, I dismissed the application for judicial review on 22 June 2006.   The following are my reasons.

The reasons given by the Transport Tribunal

13.  The Applicant had raised the same point before the Tribunal.  The Tribunal dealt with it in Paras.10 to 13 of its Reasons for Decision.  In particular,

“11. The Tribunal finds itself unable to agree to the Applicant's contention in this respect.  It is true that, at the initial period of operation of the Services, a relatively relaxed attitude was adopted by the parties.  Thus, the Applicant was able to operate the Services pending the Commissioner's consideration of its applications (which sometimes took months).  At one stage, the Applicant was able to continue with its operation despite expiry of the approval period and despite rejection of its application for renewal of approval, pending negotiation and reconsideration of the application.  The history of the parties' transactions, however, clearly reveals a gradual tightening of enforcement policy on the part of the Commissioner from February 2001…

12. Upon receipt the Commissioner's aforesaid letter dated 12^th August 2002, there ought to be no doubt in the Applicant's officers' mind that the approval would not be further extended and that the Commissioner had become serious about the enforcement of Condition 1.  That was probably why the Applicant did not make further applications for extension of approval or for reconsideration of the application after August 2002.  There was no way in which the Applicant could expect the Commissioner to adopt the same relaxed attitude previously exhibited.”

14.  In the second quoted passage, the Tribunal made a factual error in saying that the Applicant did not make further applications for extension after August 2002.  As stated above, the Applicant made an application on 9 September 2002. 

15.  Ms Ng submitted that this mistake tainted the decision of the Tribunal.  Mr Kwok argued that this mistake was immaterial since the result would inevitably be the same in the light of the overall circumstances of the case.

The legal principles on legitimate expectation

16.  The Court of Final Appeal examined the doctrine of legitimate expectation at length in Ng Siu Tung v Director of Immigration (2002) 5 HKCFAR 1.  The majority judgment discussed the relevant principles of law at Paras.87 to 104 and Bokhary PJ discussed the same at Paras.348 to 366.

17.  In the present context, the more pertinent points to note are as follows.  First, legitimate expectation arises as a result of a promise, representation, practice or policy made, adopted or announced by a public authority (see Paras.92 and 357 of Ng Siu Tung).  Second, to be legitimate, the expectation must be reasonable in the light of the official conduct giving rise to the expectation.  (Paras.101 and 360).  Third, generally, a representation must be unambiguous and unqualified if it is to give rise to a legitimate expectation (Paras.104 and 360).

18.  Ms Ng also asked this court to bear in mind that whilst a public authority is free to change its policy, the legitimate expectation of a person affected has to be taken into account in making and implementing the change. 

19.  But before one comes to the question of how a public authority could properly effect a change upsetting a legitimate expectation, one must consider whether there is any legitimate expectation in the first place.

No legitimate expectation that no enforcement actions would be taken

20.  In my judgment, the Applicant's case fails at the first hurdle, viz. it fails to show that there is any legitimate expectation regarding the withholding of enforcement actions by the Commissioner during an appeal period.  I would even go further.  The Applicant fails to show that there is any legitimate expectation of any right of appeal.  As a matter of fact, the Applicant did not attempt to exercise any right of appeal.  There is simply no factual basis to support any argument of legitimate expectation in the present case. 

21.  The Applicant also complaint about enforcement action being taken before the disposal of the 9 September 2002 application for extension.  However, the Commissioner did not decide on the holding of a Section 30 inquiry until January 2003.

22.  The letter of 12 August 2002 informed the Applicant unequivocally that the services had to be ceased.  The one month extension was granted as a grace period to the Applicant to arrange for orderly cessation.  In other words, the Commissioner was telling the Applicant that no further extension would be granted.

23.  There was no evidence of any attempt by the Applicant to negotiate for a longer grace period.  On the contrary, on 13 August 2002, the Applicant accepted in writing the conditions in the letter of 12 August.

24.  Against such background, I do not regard the letter of 9 September 2002 (without any supporting arguments or evidence against the reasoning of the Commissioner in the letter of 12 August) as a bona fide attempt to seek extension.  The Applicant should have known that such request was bound to be rejected. 

25.  In any event, the reply of the Commissioner on 14 September 2002 was a categorical rejection.  The last paragraph in the letter clearly warned the Applicant of the potential consequences, including actions under Sections 30 and 31. 

26.  Although the survey undertaken by the Commissioner started on 13 September 2002, I do not regard this as a matter of great moment in the present circumstances.  Had the Applicant ceased the services immediately after 14 September 2002 and notwithstanding that the Commissioner still took actions under Sections 30 and 31, the picture would be different.  But that is not the scenario here.  Of the 15 days' contraventions relied upon in the Sections 30 and 31 proceedings, only one contravention was pre-14 September.  The Applicant continued to operate the services without any regard to the clear warning in the letter of 14 September. 

27.  Irrespective of whether any action is to be taken under Sections 30 and 31, the Commissioner was quite entitled to monitor the operation of the Applicant after 12 September 2002.  In the light of the conducts of the Applicant after the letter of 14 September 2002, I do not see any legitimate complaint on the part of the Applicant in respect of the starting of the survey on 13 September and the Commissioner's taking the contravention on 13 September into account in deciding to commence proceedings under Sections 30 and 31 in January 2003.

28.  Coming back to the Applicant's primary case on legitimate expectation, I do not see any valid basis for asserting that in August and September 2002 the Applicant had any legitimate basis to expect there would be any grace period to facilitate an appeal by the Applicant.

29.  In fact, the evidence does not support any representation or promise by the Commissioner that an appeal would be entertained.  The statutory scheme does not provide for any right of appeal.  Ms Ng relied on past dealings.  In the application for review placed before the Tribunal, the Applicant said the following in Paras.6 to 9,

“Approval for the current free shuttle bus service was applied for first in September 1997 with the contract with Hutchison Estate Agents appended, and approval was given in March 1998.  No time limit was prescribed for the approval.  The practice was that the Applicant renewed his application when the old contract term came to an end and a new contract was signed.

In September 1998, while extending his approval the Commissioner set a period limit of 3 months.  However, though approval for extension was withheld on occasion, in practice the Commissioner provided a channel for reconsideration upon the Applicant's request in writing within 21 days to the Assistant Commissioner for Transport (see letter of 21^st September 2001).

It had been the invariable practice for the bus service to continue to operate pending the Commissioner's reconsideration on the extension of approval.  It would have been unreasonable to require the service to be suspended, the bus put into disuse and the drivers dismissed in this period, and then resumed and restored when the Commissioner gives his approval upon reconsideration.  It would be against reasonable business operation and inconvenient to the public, and moreover have implications on the contract of hire.  These practical considerations were no doubt within the contemplation of the Ordinance since in many instances where reviews are provided, the decision reviewed is held in abeyance pending the outcome of the review.

This practice gave rise to a legitimate expectation on the part of the Applicant that Condition 1 would not be strictly enforced while the Applicant was in negotiation with the Commissioner.  The Commissioner well appreciated the difficulty his refusal to grant approval placed the Applicant into.”

30.  At the judicial review hearing, Ms Ng placed more emphasis on the letter of 21 September 2001.  In that letter, the Commissioner rejected the Applicant's application of 30 August 2001.  It then went on to say,

“Should you wish us to reconsider the above decision, you could write to this department … within 21 days from the date of this letter to make such a request, with supporting reasons.  Late request would normally not be entertained.”

31.  Subsequently, the Applicant did make a request for reconsideration and the Commissioner approved two free bus services to be operated. 

32.  Ms Ng submitted that the Applicant understood this as an appeal procedure applied to all applications generally. 

33.  With respect, I do not see how the Applicant could have reasonably arrived at such understanding.  To start with, that paragraph in the letter of 21 September 2001 did not contain any unequivocal representation by the Commissioner that an appeal or review was available for every case.  Nor do I regard what happened in 1997 and 1998 to be of much assistance to the Applicant.  There is no evidence to relate those events with any general right of appeal or review.  In my view, the matters relied upon by the Applicant were not sufficient to generate any reasonable belief or expectation that there is a general mechanism for review.  As shown below, in September and October 2002 the Applicant did not act with such a belief.  

34.  The circumstances under which the letter of 21 September 2001 was written were materially different from those relating to the letter of 14 September 2002.  As mentioned, it should have been crystal clear to the Applicant from the letter of 12 August 2002 that the services had to be ceased.  In that letter, unlike the letter of 21 September 2001, there was no reference to review on request within 21 days.  Neither did the Applicant make any request for review.  There was no negotiation between the Applicant and the Commissioner in August and September 2002.  Whatever expectation the Applicant might have whilst the parties were negotiating, the Applicant could not expect the same applied when there was no negotiation.

35.  The letter of 14 September 2002 was also categorical in terms.  Again there was no reference to any possibility of review.  In these circumstances, it was unreasonable for the Applicant to expect that there is any room for administrative review.  As a matter of fact, the Applicant did not apply for any administrative review.

36.  It follows from the lack of legitimate expectation of a right of review or appeal that there cannot be any legitimate expectation of withholding enforcement action pending the exercise of such right. 

37.  In my judgment, the Applicant could not have any legitimate expectation in September 2002 that no enforcement action would be taken by the Commissioner.

38.  Further, even if the Applicant misguidedly harboured such misapprehension, the letter of 14 September 2002 was clear in terms and should have disabused the Applicant regarding any possibility of enforcement action being withheld.

39.  One can cross-check the merit of the Applicant's argument by asking this question: in the light of the intimation in the letter of 12 August 2002 and the warning in the letter of 14 September 2002 and the absence of any negotiation, for how long could the Commissioner be reasonably expected to withhold enforcement action? I have great difficulties in specifying any particular period.  Was the Commissioner supposed to withhold enforcement action indefinitely? What else should the Commissioner wait for? Such difficulties, in my view, are indicative that there cannot be any legitimate expectation on the part of the Applicant for any withholding of action.

40.  At the inquiry, the Applicant's representative told the chairman that the Applicant had continued to operate the services.  In other words, the Applicant continued to operate the services at least up to 27 February 2003 despite the letter of 14 September 2002 and the commencement of inquiry under Section 30.  There was also a warning letter issued by the Commissioner on 10 October 2002.  The Applicant was not relying on any appeal or review or any legitimate expectation stemming from any appeal or review.

41.  I regret to say it is quite plain to me that the Applicant acted recklessly, to say the least, in choosing to continue with its services despite the clear lack of approval from the Commissioner and the warning as to the consequences.  The case is miles away from a proper claim of legitimate expectation. 

42.  Even though the Tribunal made a factual error in its Reasons, I agree with Mr Kwok that it is inevitable that the same result should follow had the Tribunal considered the correct factual matrix.

43.  In the circumstances, as the court does not act in vain (applying by way of analogy the principle of inevitability set out by Bokhary PJ at Para.352 in Ng Siu Tung), there is no ground for this court to exercise its discretion to grant any remedy by way of judicial review. 

Results

44.  The application was therefore dismissed. 

45.  I also make a cost order nisi that the Applicant shall pay the Respondent's costs in these proceedings, such costs to be taxed if not agreed.

Ms Margaret Ng, instructed by Messrs George Tung, Jimmy Ng & Valent Tse, for the Applicant

Mr Kwok Sui Kay, instructed by Department of Justice for the Respondent