Who is “Managing” the Guesthouse?
Introduction
In the recent decision HKSAR v Chui Shu-Shing FACC No.19 of 2016, the appellant brought an appeal against a criminal conviction under section 5(2) of the Hotel and Guesthouse Accommodation Ordinance for “managing” an unlicensed guesthouse in the Court of Final Appeal (“the CFA”). This appeal raises a general question on the proper construction of the term “manage” in the context of what amounts to managing a hotel / guesthouse.
Fact
The appellant was a supervised front desk employee who was responsible for check-in and out formalities alongside other associated duties such as dealing with guest requests and complaints at a guesthouse (“the Guesthouse”). The Guesthouse did not possess a certificate of exemption or licence as required under section 5(2) of the Hotel and Guesthouse Accommodation Ordinance (Cap. 349) (“the HGAO”). As such, the appellant was convicted by the Kowloon City Magistrates’ Court of managing a guesthouse without a licence, resulting in a breach of section 5(1) of the HGAO. The appellant’s appeal to the Court of Appeal (the “CA”) failed and subsequently, the appellant’s applications for leave to appeal to the CFA against his conviction and costs were granted.
Law
Under section 5(1) of the HGAO, any person who on any occasion operates, keeps, manages or otherwise has control of a hotel or a guesthouse in respect of which neither of a certificate of exemption nor a licence has been issued under the HGAO commits an offence and is liable on conviction to a fine of $200,000 and to imprisonment for 2 years and to a fine of $20,000 for each day during which the offence continues.
Analysis
The main issue was whether on a proper construction of section 5(1) of the HGAO, the appellant could be regarded as someone who was “managing” the Guesthouse.
On a proper construction of the HGAO, the CFA ruled that the text of the HGAO does not support a narrow reading of the term “manage”. The word “manage” shall in its ordinary meaning refers to the act of conducting or carrying on (a business, an undertaking, an operation etc.). It also covers the act of controlling and directing the affairs of, for instance, a household, institution, state.
As such, the concept of “manage” according to its ordinary meaning read in the context of the HGAO and having regard to its purpose should not extend to a person who merely carries out essentially non-discretionary functions under the direct supervision of another on the premises. From a comprehensive and holistic view of other provisions in the HGAO, the prohibition under section 5(1) of the HGAO shall extend only to management by persons who could and should have applied for a licence under the HGAO, and to persons delegated by them to manage the premises. Persons who merely do acts in connection with the management of a hotel or guesthouse do not, on that basis alone, manage the hotel or guesthouse.
Having considered that the purpose of the HGAO, which is to regulate hotel and guesthouse business through a licensing regime and to ensure their compliance with fire and safety standards, the CFA held that the term “manage” should not be read so broadly as to pick up conduct of a purely functional character which does not show managerial authority. A person “manages” a hotel or a guesthouse only if he or she has assumed, or has conferred upon them, an authority to carry out the business or undertaking of the hotel or guesthouse.
Conclusion
The appellant, being a mere a supervised front desk employee whose only duties were processing check-in and check-out formalities for guests, dealing with complaints and responding to guests’ requests, was not shown to have been clothed with the authority necessary to characterise him as one who was “managing” the Guesthouse within the meaning of section 5(1) and therefore the offence was not made out. In light of a lack of sufficient evidence to establish that the appellant was “managing” the premises in the relevant sense, the CFA unanimously overruled the appellant’s conviction under section 5(1) of the HGAO.
Implication
This case draws our attention to the particular question of whether a non-manager employee or any general staff hired by a hotel or guesthouse business with main responsibility of checking guests in and out, can be regarded as “managing” a guesthouse within the meaning of section 5 of the HGAO. It could be surprising that a front-desk employee had to risk sacrificing all of his life savings and fight all the way up to the CFA for the justice which may be seen as common sense to the general public.
This case also has important guiding reference to third party services providers as certain functions or services of a hotel or guesthouse might be outsourced to third parties. Applying the CFA’s reasoning in this case, if the third party service providers are not conferred with any managerial authority in relation to the hotel or guesthouse but merely provide goods and services to the guests, then there is no violation of the HGAO.
The employers engaging in the hotel and guesthouse business should be more cautious about the regulatory compliance requirements under the HGAO, a breach of which could attract criminal conviction. On the other hand, their supervised employees could insist on having more detailed job descriptions stated in the employment contracts, which may help delineate more clearly their work nature from the management staff.
For enquiries, please contact our Litigation & Dispute Resolution Department:
W: www.onc.hk
T: (852) 2810 1212
F: (852) 2804 6311
19th Floor, Three Exchange Square, 8 Connaught Place, Central, Hong Kong
Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.
