CHAN NOI HEUNG AND OTHERS v. THE CHIEF EXECUTIVE IN COUNCIL

CACV 197/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2007

(ON APPEAL FROM HCAL NO. 126 OF 2006)

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DECISION  ON  COSTS

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Hon Ma CJHC :

1.  The matter for determination is whether an unsuccessful applicant in judicial review proceedings should be ordered to pay costs where it is asserted that a public interest challenge is involved, that is, where there are proceedings that have been brought in the public interest, rather than proceedings merely furthering private interests.

2.  In a judgment handed down on the 8 May 2008, this court dismissed an appeal brought by the 3rd Applicant against the judgment of Hartmann J (handed down on the 16 May 2007) which had dismissed his application for judicial review.  Before Hartmann J, there were three applicants.  Only the 3rd Applicant appealed.  For present purposes, I shall continue to refer to him as the Applicant.

3.  Apart from dismissing the appeal, we also made a costs order nisi that the Applicant should pay the costs of the Respondent in the appeal, such costs to be taxed if not agreed.  By a letter dated 16 May 2008 (from his solicitors), the Applicant indicated his wish to vary this costs order.  Written submissions were subsequently provided by the parties in June.  Since then, the Applicant has applied for leave to appeal to the Court of Final Appeal and this was refused on 5 September 2008.  The only outstanding matter therefore in this litigation is the question of costs.

4.  The letter dated 16 May 2008 did not indicate the order for costs for which the Applicant contended, but in the written submissions (of counsel), this was clarified: the Applicant seeks an order that there be no order as to costs for both the appeal and the proceedings below.

5.  I dispose quickly of the question of the costs below.  As Mr. Alexander Stock (for the Respondent) has pointed out, Hartmann J made an order nisi as to costs that costs should be to the Respondent.  However, an application was made on 16 August 2007 by the Applicant to vary that order.  Hartmann J directed that there be a hearing of the application to vary but, as yet, this has not taken place.  In these rather odd circumstances, this court should not deal with the question of the costs of the proceedings below until Hartmann J has resolved the issue.

6.  I now move on to the question of costs in the appeal proper.  Here, the essence of the Applicant’s submissions is that as the appeal (indeed the whole of the judicial review proceedings) involved matters of public interest, and was necessary to resolve or clarify a number of important legal and factual issues, this was sufficient to enable the court not to make the usual order of costs following the event (see RHC Order 62 rule 3(2)).  In short, the present proceedings involved a public interest challenge which, in many previous cases, had resulted in the court making no order as to the costs.

7.  It was emphasized that the public interest did not lie in the stifling of such proceedings, and in the present case, it was all the more relevant that the Applicant is a well-known member of the Legislative Council who had often in the past made significant challenges in the public (as opposed to his private) interest.  The matter is thus put in the written submissions lodged on his behalf :-

“Chilling Effect and Disparity in Resources

(35)     The Applicant is a person with limited resources.  He is residing in a public housing estate in Kai Yip Estate ….  He is a member of a political society “April Fifth Action” and his funding depends on donations and his limited income as a legislative councillor.  If he is asked to pay for the legal costs of the CEIC, he will be made bankrupt and will not be able to properly perform his public duties as a legislative councillor.”

It is said that if the Applicant had to pay the costs of the appeal, not only would this be against the public interest, he may be deprived of the right of access to justice (see here Article 35 of the Basic Law).

8.  The correct approach as to costs in public law litigation — and this includes of course cases brought in the public interest (a public interest challenge) — has been discussed in a number of cases.  It is not necessary in the present case to embark on an extensive examination of the applicable legal principles.  Among the cases that have considered this facet of costs are the decisions of Lam J in Chu Hoi Dick v Secretary for Home Affairs (No. 2) [2007] 4 HKC 428 and of the High Court Australia in Oshlack v Richmond River Council (1998) 193 CLR 72.  Important statements of principle are contained in these two judgments going to the question of costs in public law litigation and as to when it may be appropriate to depart from the usual order of costs following the event.

9.  In my judgment, it is clear from the cases (not to mention as a matter of plain commonsense) that, however important the subject matter of the relevant litigation or however important any particular legal point may be, it is highly relevant for a court (when considering the incidence of costs) to evaluate the merits of the failed challenge before it.  In other words, the court has to ask itself: how meritorious were the issues raised before it?  If the issues that were raised by the unsuccessful applicant were, upon analysis, really quite hopeless, then it is difficult to conceive of a court making any order other than costs following the event.

10.  Not surprisingly, this is borne out by the cases.  In Chu Hoi Dick, notwithstanding the subject matter of the application for judicial review there being a matter of interest to the public (the designation of Queen’s Pier as a monument under the Antiquities and Monuments Ordinance (Cap. 53)), the usual order for costs was made.  In paragraph (21) of the Judgment , Lam J (referring to Oshlack) mentioned the need to have regard to the merits of the challenge.  He then continued :-

“(23)     In R (Coroner House Research) v Secretary of State for Trade and Industry [2005] 4 All ER 1, the English Court of Appeal gave guidance on the making of pre-emptive costs orders to protect an applicant from exposure of costs in public law cases.  Merits is one of the criteria and the test set by Lord Phillips MR is that the applicant’s case has to have a real prospect of success, viz the case is properly arguable (see para 73).  It is a higher threshold than the grant of leave for judicial review under Ho Ming Sai.  I think this is the minimum that an applicant must satisfy before he can contend that the canvassing of his arguments in court is in furtherance of public interest.  It cannot be in the public interest of the community as a whole to require the use of public fund to pay for the costs of the legal proceedings for resolution of an argument which has no real prospect of success.  In fact it would be against public interest to deploy judicial and public resources in such manner.

(24)     In Oshlack at para 68, McHugh J considered the usual costs order could ‘instill in a party contemplating commencing … litigation a sober realization of the potential financial expense involved’.  Mr Lee submitted that potential liability for costs could have a chilling effect on future applicants pursuing public interest litigation.  I accept that liability for costs can be an inhibitive factor.  However, it would be wrong and disproportionate to over-emphasize that factor such that public fund has to be deployed to underwrite litigations that only have little prospect of success.  It is equally wrong to dictate that the public purse must pay for the court proceedings when the proper venue for the ventilation of the underlying issues should be elsewhere.”

11.  I respectively agree with these observations.  I wish, however, to expand on one facet, that is, the argument (often deployed) that it must be relevant for the court to take into account the fact that leave to commence judicial review proceedings had been granted to the unsuccessful applicant.  Put simply, the argument runs along the following lines: why should an unsuccessful applicant be ordered to pay costs where a public interest challenge is made, particularly when leave to commence review proceedings has been given at an earlier stage?

12.  In my judgment, the position is this :-

(1)  The starting point is of course the general rule that even in public law litigation, costs should follow the event.  This reflects the notion that a successful party should be compensated for the costs incurred in successfully pursuing or defending a claim.  This is of equal application where public funds are involved (as in the present case).

(2)  Where a public interest challenge is made, this can be a powerful factor in displacing the general rule.

(3)  However, in order for the public interest litigation factor to bite, the challenge must be sufficiently meritorious.  As to what is meant by this, I would adopt the test in the passage referred to above in Chu Hoi Dick (which in turn referred to the English Court of Appeal Case of R (Coroner House Research) v. Secretary of State for Trade and Industry), namely, that the Applicant’s case must have had a real prospect of success.  Only then would it be properly arguable.  Clearly, a case that has no real prospects of success or is in reality quite hopeless, will be insufficient.  As Lam J stressed in Chu Hoi Dick, this is the minimum an unsuccessful applicant must satisfy before the usual order for costs is departed from.  It is unnecessary for me in this judgement to deal with any other factors that may be relevant.

(4)  The fact that leave has been granted to bring judicial review proceedings is insufficient to prevent the usual order of costs being made.  It is no real answer for an unsuccessful applicant to pray in aid of this fact.  When granting leave, the court is doing no more than looking at the merits at the most preliminary of stages in the proceedings.  By contrast, in determining the question of costs of an unsuccessful application, the court will obviously be examining the matter at the final stage, after all the arguments have been fully developed, considered and determined.

(5)  The threshold test in the granting of leave is now definitively stated in the decision of the Court of Final Appeal in Po Fun Chan v Winnie Chung [2008] 1 HKLRD 319: the judicial review challenge must be reasonably arguable, meaning that it must enjoy a realistic prospect of success (see paragraph 15).  This test appears to be the same as the test referred to earlier in sub-paragraph (3) above (the case must have been properly arguable, having a real prospect of success).  Indeed it is, but as I have emphasized, the determination by the court of, on the one hand, whether or not leave to commence judicial review proceedings should be granted and, on the other, where the incidence of costs should lie arises at two quite different stages.

(6)  Lastly, I ought to in this context just make reference to Practice Direction SL3 (which applies to all proceedings in the Constitutional and Administrative Law List).  Paragraph 1.8 of that Practice Direction, headed “Review of merits”, states :-

“Counsel and solicitors instructed by the applicant should give further careful consideration to the merits of the application once they have received the respondent’s evidence, even though leave to apply for judicial review has been obtained.  CALL—1 reminds the applicant’s advisors of this obligation.”

In my view, this reinforces the point that the granting of leave cannot be taken as a weighty factor at all in determining whether or not at the conclusion of the relevant proceedings, costs should follow the event.

13.  With these principles in mind, I now consider the question of costs in the present appeal.

14.  In my judgment, the Applicant ought to bear the costs of the unsuccessful appeal.

15.  For present purposes, I accept that the Applicant brought proceedings without any private gain in mind and that (to quote what was asserted in the written submissions of Mr Philip Dykes SC) he did so “out of his concern about the very real — and present — plight of cleaners and security guards, and protect the dignity of the labourer”.  I also accept that the whole issue of whether minimum wages should be imposed in Hong Kong is a matter of public interest.

16.  Notwithstanding this, the one factor that leads me to the conclusion that the Applicant ought to bear the costs of the appeal is that the appeal simply did not have the requisite (or indeed any) merits.

17.  Our judgment dated 8 May 2008 identified the two real issues in the appeal, namely :-

(1)  Was the Respondent entitled to refuse to apply under any circumstances the provisions of the Trade Boards Ordinance, Cap.63, in another words, effectively to renounce its existence?

(2)  If not, did the evidence show that this was in fact the view taken by the Respondent?

18.  On the first issue, it was, with respect, never contended by the Respondent that he was entitled to renounce the existence of the Trade Boards Ordinance.  No appeal, therefore, needed to be brought for the purpose of obtaining a declaration to this effect.

19.  As for the second issue, the facts relied on by the Applicant fell very far short of supporting the argument made.  Our earlier judgment stated (at paragraph 27) that the “evidence really goes nowhere near the requisite threshold to found a case along the lines run by Applicant”.

20.  I recognize that on 5 December 2006, the Applicant did obtain leave from Hartmann J to commence judicial review proceedings.  However, this fact, for the reasons already gone into, is insufficient to disturb what otherwise is the appropriate order for costs.  I also note that at the time leave was granted, the court applied the previous (now inapplicable) test of potential arguability (see Ho Ming Sai v Director of Immigration [1994] 1 HKLR 21).  That test, I would just observe, underlines even more just how preliminary the consideration is by the court of the merits at the leave stage.

21.  Finally, in respect of the submission (referred to paragraph 7 above) that the Applicant is a person of limited means and that if an order for costs were made against him, this would bankrupt him and prevent him from properly performing his public duties, assuming all this to be true (as to which in fact there is really very little evidence), I would only say this.  These points may be relevant in determining the question of costs where a meritorious public interest challenge is made.  They carry, in my view, little or no weight when there are insufficient merits.  Where there are simply insufficient merits, there is no question of the right of access to justice being in any way undermined either.

22.  For the above reasons, I would dismiss the application to vary the costs order nisi.  Accordingly, I would make the order that the Applicant do pay the costs of the Respondent in this appeal, such costs to be taxed not agreed, absolute.

Hon Tang VP :

23.  I agree.  I say nothing about the costs before Hartmann JA.  We are concerned with the costs of the appeal.  The appeal was wholly unmeritorious and should not have been pursued.

Hon Lam J :

24.  I agree and have nothing to add.

CACV 197/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2007

(ON APPEAL FROM HCAL NO. 126 OF 2006)

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J U D G M E N T

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Hon Ma CJHC :

Introduction

1.  The Trade Boards Ordinance, Cap.63 (“the TBO”), enacted in 1940, has its roots in the Treaty of Versailles 1919, itself made in the aftermath of the First World War.  Under the Treaty, there was created the International Labour Organization (“the ILO”), now an agency within the United Nations.  In 1928, as part of the ILO’s objective of promoting social justice and international labour rights, the International Labour Convention No.26 came into existence.  Article 1 of this Convention called on Member States (of which the United Kingdom was one) to have in place machinery for the fixing of minimum wages where they were reasonably low in any given trade.  Hong Kong, then a colony, became subject to this Convention.

2.  The Minimum Wage Ordinance was passed in 1932 to fulfill the obligations imposed by the International Labour Convention No.26.  This Ordinance was superseded in 1940 by the TBO.

3.  Relevant to the present case are the provisions of section 2 of the TBO : -

“2.  Trade Boards and minimum wages

    (1)  The Chief Executive in Council may, at any time he thinks fit, by Government notification published in the Gazette, fix minimum rates of wages for any trade in Hong Kong either generally or in any specified area or district in any case in which he is satisfied that the minimum rates of wages being paid to any persons employed in any such trade are unreasonably low.  Every notification fixing minimum rates of wages may be varied from time to time or revoked.

    (2)  For the purpose of instituting, making, and conducting any inquiry that may be deemed advisable in connection with fixing any minimum rates of wages in any trade under this Ordinance, and for reporting thereon, the Chief Executive may at any time establish for any trade, or for any branch of work in a trade, a Trade Board, consisting of members representing employers and members representing workers, in this Ordinance referred to as representative members, in equal proportions, and of appointed members, provided that the number of appointed members shall be less than half the total number of representative members.  Where a Trade Board has been established for any branch of work in a trade, any reference in this Ordinance to the trade for which the Board is established shall be construed as a reference to the branch of work in the trade for which the Board has been established.”

4.  The 3rd Applicant in the present proceedings (I shall simply refer to him as the Applicant) is a Legislative Councilor.  It is his contention that the Respondent, the Chief Executive in Council (in other words, the Government) (“the CEIC”), has failed and continues to fail to even consider using the Ordinance.  His argument before us proceeded on the factual basis that the CEIC has effectively indicated that he will never under any circumstances utilize the powers given to him under the TBO; in other words, the CEIC has renounced the TBO (the reason for this being, according to the Applicant, that the Government takes the view that the Ordinance is obsolete).

5.  It is on this factual premise that the Applicant therefore seeks in this appeal (and this is taken from the written submissions of Mr Philip Dykes SC (for the Applicant)) the following relief : -

“(1)  A declaration that CEIC has a constitutional duty under Article 48(2) of the Basic Law (“BL”) to implement TBO in accordance with its provisions and underlying policy, insofar as it is required by, or is consistent with, BL and may not decline to exercise a relevant power only on the ground that the ordinance is obsolete or that it reflects a policy with which CEIC disagrees;

 (2)   Further or alternatively, a declaration that, as part of the aforesaid constitutional duty and/or as part of his functions under TBO, CEIC is at least bound to consider, from time to time, exercising the power conferred on him by s.2(1) of TBO to fix minimum rates of wages for trades, either generally or in specified areas or districts.”

6.  Both the relief and the arguments in support were pitched on a different basis to those maintained in the Court below.  It is unnecessary to detail the arguments that were pursued before Hartmann J but the following passages from his judgment provide an indication of them : -

“19.    Expressed in the broadest of terms, the applicants contend that the Chief Executive in Council, notwithstanding any economic policy he may wish to espouse, has a constitutional duty to exercise his powers under the Trade Boards Ordinance.  The Chief Executive has recognised that cleaners and security guards receive unreasonably low remuneration.  He is therefore constrained to exercise his powers under s.2 of the Ordinance to fix minimum wages rather than leaving persons employed in these two sectors to the mercies of the free market.

…..

21. The applicants have therefore sought a declaration to the following effect; namely, that Chief Executive in Council has a constitutional duty under arts.48(2) and 64 to implement and enforce the Trade Boards Ordinance in accordance with its provisions and underlying policy insofar as it is required by or is consistent with the Basic Law.”

7.  The reference in the above passage to cleaners and security guards is a reference to those persons who appear, in recent years, to have been the recipients of low wages.  The judicial review proceedings were initially commenced by three applicants : the 1st Applicant was a cleaner, the 2nd Applicant was and is another Legislative Councilor who has for years advanced the cause of minimum wages in Hong Kong; the 3rd Applicant I have already introduced.  The 2nd Applicant (Mr Leung Yiu Chung) withdrew his application before the substantive hearing in the Court below.  The 1st Applicant withdrew her appeal from Hartmann J’s decision, thereby leaving only the Applicant to pursue the appeal.  As can be seen from the declarations now sought, the Applicant’s arguments are now pitched on a much more general and vague basis.  In the Court below, as shown by the passages in the judgment quoted in the previous paragraph, the Applicant was contending that the CEIC had a positive duty actually to impose a minimum wage in accordance with the TBO.

The issues on appeal

8.  The issues on appeal can, in my view, be condensed into two parts : -

(1)    Is the CEIC entitled to refuse to apply under any circumstances the TBO; in other words, effectively to renounce its existence?

(2)    If not, does the evidence show that this is in fact the view of the CEIC?

9.  Before dealing with these issues, it would be convenient first to identify the statutory framework and secondly, to set out the relevant decisions of the Respondent that have led to the present proceedings.

The statutory framework : section 2 of the TBO

10.  Two important matters must be emphasized at the outset purely upon a true reading of that provision.  First, section 2 of the TBO (see paragraph 3 above) does not impose any obligation on the CEIC to fix minimum wages for any trade.  Secondly, the TBO does not constitute the only way of dealing with any perceived problem of unreasonably low wages.

11.  The statutory scheme can be summarized as follows : -

(1)    It is of course only when the wages paid to any persons employed in a trade in Hong Kong (whether generally or in any specified area or district) are “unreasonably low” that the mechanism for imposing minimum wages can even be considered by the CEIC to be used.

(2)    However, the existence of unreasonably low wages does not automatically trigger off any obligation to fix minimum wages on the part of the CEIC.  The CEIC is given a discretion to do so - “may, at any time he thinks fit”.  He is in no way bound to do so even he is of the view that wages are unreasonably low.

(3)    This discretion is a wide one (although for reasons I shall elaborate on, it is not an absolute one).  It is wide in that it is entirely up to the CEIC to decide when, if at all, minimum wages should be imposed using the section 2(1) mechanism (that is, publication in the Government Gazette).

(4)    This freedom to decide when the section 2(1) mechanism should be used allows the CEIC to take into account prevailing circumstances and indeed to consider whether the problem of unreasonably low wages can be or is being addressed by other means.  As stated above, the TBO does not purport to be the only means by which the question of low wages can be addressed.  For example, on the assumption that there exist unreasonably low wages in any sector but this problem is being specifically addressed by the Government or by the Legislative Council or even by the relevant employers, the CEIC can in my view quite legitimately decide not to use the section 2(1) mechanism at all.  In other words, he can ‘wait and see’.  Or, if the CEIC is of the view that advice is required, he may decide to set up a Trade Board under section 2(2) of the Ordinance.

(5)    The crucial point to bear in mind is that nothing in section 2 obliges the CEIC to use the section 2(1) mechanism to fix minimum wages and that he is given the liberty of considering all available options open to the Government in dealing with any problem caused by low wages.  This liberty is a wide one and must, I think, include the right not to impose any system of minimum wages where the CEIC is of the view that better options exist.

12.  Earlier (in paragraph 11(3) above), I mentioned that the discretion vested in the CEIC, wide though it is, is not absolute.  It is not absolute in the sense that the CEIC cannot irrationally refuse to use it or to consider using it.  It must be accepted that a decision-maker such as the CEIC cannot exercise a discretion so as to frustrate the policy and objects of a statute : - see Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997.  An unreasonable refusal to use powers under a statute or even to consider using such powers is a classic instance of frustrating the policy and objects of the enactment.  However, in order to determine the policy and objects of a statute and the extent of the duties and responsibilities owed by the relevant decision-maker, one must of course primarily look at the true construction of the relevant statute.  In a very well-known passage in his speech, Lord Reid said at 1030B-D : -

“ It is implicit in the argument for the Minister that there are only two possible interpretations of this provision – either he must refer every complaint or he has an unfettered discretion to refuse to refer in any case.  I do not think that is right.  Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole and construction is always a matter of law for the court.  In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the Act or for any other reason, so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court.  So it is necessary first to construe the Act.”

13.  In the context of the limits to the exercise (or non-exercise) of a power, I would also draw attention to section 39 of the Interpretation and General Clauses Ordinance, Cap.1 : -

“39.  Exercise of powers

  (1) Where any Ordinance confers any power or imposes any duty, then the power may be exercised and the duty shall be performed from time to time as occasion requires.

 (2)  Where any Ordinance confers any power or imposes any duty on the holder of any public office as such, then the power may be exercised and the duty shall be performed by the holder for the time being of that public office.”

14.  The policy and objects of the TBO are evident : to deal with the problem of unreasonably low wages.  However, the discretion in the CEIC to tackle this problem is, for the reasons stated above, a wide one.

15.  I did not understand Mr Dykes to be contending otherwise than the above in relation to the true construction of section 2 of the TBO.  Rather, it was the Applicant’s case that the CEIC has indeed frustrated the policy and objects of the TBO by renouncing it in the way I have described.  In his written submissions, Mr Dykes said this : -

“No other relief is sought.  It will be clear from the arguments below that the case on appeal is simply that CEIC has either totally ignored TBO, or has unreasonably downgraded its significance on the basis of supposed obsolescence.  If the court grants the declarations, the Government, when dealing with the problem ‘unreasonably low wages’, would have to factor into its decision-making TBO as a practical means of addressing the problem.  This is important if the problem does not go away.”

In the Court below, on this aspect, the Judge identified the argument in the following way : -

“Mr Pun has contended that, on all the evidence, it is apparent that the Chief Executive in Council has turned his back on the exercise of the power vested in him because, as a matter of economic principle, he is opposed to fixing minimum wages.  That, he has said, amounts to frustrating the policy and object of the Ordinance.”

16.  As I have already indicated, the crucial factual issue that has to be determined is whether the CEIC has indeed renounced the TBO.

The relevant decision

17.  In the Form 86A in these proceedings, two letters dated 11 October 2006, sent behalf of the CEIC, are identified as containing the relevant decisions not to implement or perform the duties imposed on him under the TBO.

18.  These letters were in response to letters from Mr Leung Yiu Chung (the former 2nd Applicant) and the Applicant.

19.  In a letter dated 6 October 2006 to the Chief Executive, Mr Leung made essentially the following points : -

(1)    He described the plight of a number of types of workers such as cleaners in terms of the low salaries some of them received.

(2)    He then referred specifically to the TBO and to what the Secretary for Economic Development and Labour had said earlier in the year about that Ordinance being outdated and containing some provisions that might breach the Bill of Rights.

(3)    The letter then pressed the Chief Executive to use the mechanism in the TBO to fix minimum wages and generally address the problem of low wages.

20.  The letter also dated 6 October 2006, from the Applicant made essentially the same points as Mr Leung and demanded a reply, failing which it was indicated judicial review proceedings would be instituted.

21.  The Office of the Chief Executive replied to Mr Leung (and the Applicant) on 11 October 2006 in the following way : -

(1)    The point was made that many of the provisions of the TBO were outdated and could not meet the needs of modern-day Hong Kong.

(2)    It was also pointed out that some of its terms may also breach the Bill of Rights; specific reference was made to section 5(5) wherein was stated that in any prosecution for failure to pay minimum wages, the burden was on the accused to prove his innocence (rather than on the prosecution to prove his guilt).

(3)    Reference was made to the Policy Address made by the Chief Executive that same day in which the Government announced an initiative – that the Wage Protection Movement (“the WPM”) – for cleaners and security guards whereby these types of workers would receive minimum wages.  This was an initiative that was launched by the Government, the business community and the labour sector.

(4)    The letter ended (as translated) : -

“We believe this is a positive and pragmatic approach.  We will review the effectiveness of the Wage Protection Movement two years after implementation.  If the review finds that the Movement has failed to yield satisfactory results, we will set out to prepare for the introduction of legislation for a minimum wage in the two sectors of cleansing and guarding services.”

22.  Given these replies from the CEIC, can it be said that he has renounced the TBO?  I now deal with the two issues set out in paragraph 8 above.

Is the CEIC entitled to refuse to apply under any circumstances the TBO; in other words, effectively to renounce its existence?

23.  The answer is clearly No.  I have already dealt with the limits of the discretion of the CEIC as far as the TBO is concerned : see paragraphs 12 to 14 above.  If the CEIC has indeed made it clear the Government will never under any circumstances use or contemplate using the TBO, this would be an unreasonable and indefensible position to take.  This would, if true, indeed frustrate the policy and objects of that Ordinance.

If not, does the evidence show that this is in fact the view of the CEIC?

24.  As I have explained earlier, the Applicant’s stance has moved from one of insisting that the Chief Executive should now be compelled to exercise his powers under the TBO to fix a minimum wage (this being the position in the Court below) to a much watered down approach in seeking the declarations identified in paragraph 5 above.  However, in order to establish his entitlement to the relief sought, the Applicant must demonstrate that the CEIC has actually indicated that the Government will forever refuse to utilize the TBO; in other words, effectively renounced it.

25.  The Applicant faces a not inconsiderable hurdle here.  The evidence in support of this contention must, necessarily, given the quite extraordinary and extremely far reaching nature of its effect, be compelling.  It is one thing for the Government (or the Chief Executive) of the day to question the effectiveness of a statute but quite another to renounce its applicability altogether.

26.  The Applicant relies on the following facts to support his case : -

(1)    At no stage since its enactment has the TBO ever been used by the Government.

(2)    The Government has consistently over the years been very much against the implementation of any system of minimum wages in Hong Kong.  We were taken to numerous statements in the Legislative Council made by Government officials rejecting as a matter of principle the idea of the implementation of a minimum wage.  For example, in a debate on minimum wages in the Legislative Council on 24 April 2002, the Secretary for Education and Manpower said the following : -

“ As to the issue of minimum wage, it was put up for debates held in 1999 and 2000 and I believe Honourable Members are very familiar with the pros and cons.  The stand of the SAR Government in this has been very clear and we oppose any form of a statutory system of minimum wage, for this will make the labour market less flexible and affect its adaptability to changes.  A system of minimum wage will not only distort the wage structure in the labour market, but also impede the development and restructuring of our economy.  The system will also make those low-skilled and low-income workers less enthusiastic about making improvements to and upgrading the quality of their work, hence denying economic development the impetus.”

(3)    This erstwhile policy of the Government was confirmed in the affidavit in these proceedings of the Permanent Secretary for Economic Development and Labour.  I say ‘erstwhile’ because, as the Secretary makes clear, this reflected the previous position and the present position is rather more receptive to the idea.

(4)    The Government has also, on numerous occasions stated that the TBO is obsolete.  References were made to statements from officials over the years that the TBO was a historical leftover (as the Judge below observed, the TBO has remained in existence notwithstanding that the International Labour Convention No.26 (see paragraph 1 above) has ceased to apply in Hong Kong since 1986) and that serious consideration was being given to its being repealed.

(5)    The Applicant also relies on the statement made by the Chief Executive on 12 October 2006 in the Legislative Council in response to a question about the application of the TBO.  It is useful to set out in full the following brief exchange (again, as translated) : -

“MR KWONG CHI-KIN (in Cantonese): Chief Executive, everybody knows that wages in the guarding and cleansing service trades are very low.  Some employees are earning as little as $10 an hour.  They can only earn a monthly income of around $3,000 by working 30 days a month.  I am sure the Chief Executive will agree that wages in these two trades are below the reasonable level, otherwise, he would not have singled out these two trades and said in the policy address that something needed to be done for them.

To put it simply, under the Trade Boards Ordinance (TBO) (Cap.63), if the Chief Executive considers that the wage of a certain trade is below the reasonable level, he may appoint a board to formulate the minimum wage for the trade.

Chief Executive, my question is very simple.  Will you invoke the Chief Executive’s power under the TBO to appoint two trade boards in order to formulate the minimum wages for these two trades?

CHIEF EXECUTIVE (in Cantonese): As far as I know, the TBO you mentioned was enacted 60 years ago.  It was about 1940 when the TBO was enacted in response to the situation then prevailing.  But it has never been applied after enactment.  Having gone through some provisions of the TBO, I found that many are outdated and incompatible with the current needs and standards of our society.  So, its applicability is very low.  If we invoke the TBO, it will be very difficult for us to do anything.  Moreover, we cannot just do so in a straightforward manner because we will face a lot of legal challenges.  So, after deliberation, my colleagues and counsel have come to the view that it is impossible to formulate a minimum wage for a particular trade by virtue of the TBO without facing legal challenges.”

It is the reference to ‘impossibility’ that is particularly emphasized although, on a fair reading, this was a reference to the problem of legal challenges.  It is also to be noted that it was said that the applicability of the TBO was “low”, not non-existent.

27.  In my judgment, the evidence really goes nowhere near the requisite threshold to found a case along the lines run by the Applicant.  At no stage has the CEIC committed the Government to a position in which the TBO has been renounced for all or (indeed, for any) time : -

(1)    The response of the CEIC on 11 October 2006 to the letters from Mr Leung Yiu Chung and the Applicant (see paragraph 21 above) indicates the present approach of the Government in launching the WPM.  As stated, if this initiative does not work out, then it is said that legislation might be introduced.

(2)    Mr Jat Sew Tong SC (for the Respondent) pointed out in the course of his submissions to another exchange during a debate involving the Secretary for Economic Development and Labour in the Legislative Council on 3 May 2006 in which the applicability of the TBO was again directly raised (as translated) : -

“MR LEUNG YIU-CHUNG (in Cantonese): President, I believe the Secretary will also agree that given the prevailing economic situation in Hong Kong, the earnings of some workers are extremely low, the establishment of minimum wage is thus called for and the discussion of the issue by the LAB is required.  This principle is actually the same as the one adopted in enacting the TBO in 1940.  May I ask the Secretary, since the principle of the two are the same, whether he will refer the Ordinance to the LAB for discussion, so that the LAB can identify any imperfection in the enforcement details and make amendments?  Since the principle is already there now, we should no longer drag on the discussion of principle but should focus on the enforcement details.

SECRETARY FOR ECONOMIC DEVELOPMENT AND LABOUR (in Cantonese): President, I have in fact stated that in my reply to Mr KWONG Chi-kin’s supplementary question earlier; I will give the same answer to Mr LEUNG Yiu-chung’s supplementary question.  I think all proposals, so long as they are conducive to solving the problem, are absolutely welcome to be brought up for discussion, and that includes the proposal just made by LEUNG Yiu-chung.

 However, I have to point out that all along the Government has actually been moving ahead and putting in a lot of effort in this respect.  I believe Members are also aware of that.  For instance, the Census and Statistics Department has now adopted an average wage rate for cleansing and guarding services.  The Government has taken the lead.  Many public organizations, subvented agencies and schools have now followed suit.  And this is good news that the MTRCL has recently adopted the same practice.  At present, about 26,000 employees can benefit from this practice.  We will definitely continue discussing this at the LAB with a view to working out a solution.  In the meantime, we will continue encouraging other organizations but not only public organizations to adopt this practice.  We hope that all companies will follow suit.

MR LEUNG YIU-CHUNG (in Cantonese): The Secretary merely stated in his earlier reply that proposals were welcome and all proposals could be discussed, but he did not say whether enforcement details under the Ordinance would be discussed.  If those details cannot be enforced, amendments may as well be proposed.

SECRETARY FOR ECONOMIC DEVELOPMENT AND LABOUR (in Cantonese): President, I have in fact answered the question.  All proposals, whether they are provisions of the Ordinance or other options, can be discussed so long as they are acceptable to both the employers and employees.”  (emphasis added)

Clearly then, the TBO would be considered as a viable option if the circumstances merited it.

(3)    In that same debate, the Secretary referred to the Government’s position being an “open-minded” one and this has been confirmed in his affidavit before us as well.

(4)    As for the statements that the TBO is in parts obsolete, this is hardly indicative of a position that the Government has effectively renounced its application.  The present position is that there are provisions in the TBO that might breach the Bill of Rights (see paragraph 21(2) above).  Other provisions can be said to be outdated : for example, the level of fines set out in section 5(4) of the TBO, while effective in 1940, can hardly be said to have kept up with modern times.

(5)    As for the assertion that the Government has been against the idea of the imposition of minimum wages in Hong Kong as a matter of principle, two points have to be made.  First, as can be seen from the evidence, it is, with respect, not right to say that the Government will always reject this as an option.  Reference can be made to the statements of the CEIC and the Secretary for Economic Development and Labour referred to in paragraphs 21(4) and 27(2) above.  Secondly, the CEIC is at liberty, as part of the discretion vested in him under the TBO, to look at solutions other than the imposition of a minimum wage structure in Hong Kong to deal with any problem regarding low wages (see paragraph 11 above).

Conclusion

28.  For the above reasons, I would dismiss the appeal.  I would also make an order nisi that the Applicant do pay the costs of the Respondent in this appeal, such costs to be taxed if not agreed.

Hon Tang VP :

29.  I agree.

Hon Lam J :

30.  I agree.

Hon Ma CJHC :

31.  The appeal is accordingly dismissed.  We also make an order nisi that the Applicant do pay the costs of the Respondent in this appeal, such costs to be taxed if not agreed.