Following is a question by the Hon Cheung Kwok-kwan and a written reply by the Acting Secretary for Food and Health, Dr Chui Tak-yi, in the Legislative Council today (January 24):

Question:

     Under the law, restaurant operators are required to obtain a restaurant licence (full licence) issued by the Director of Food and Environmental Hygiene before commencement of business. They may apply for a provisional licence at the time of or after submitting an application for a full licence. Where the applicants have proved that the various basic requirements have been met, they may be issued a provisional licence with a validity period of six months so that their restaurants may open for business pending the issuance of a full licence. It is learnt that as the conditions for issuing a provisional licence are more lenient than those for a full licence, some operators of restaurants which fail to comply with the latter have made successive new applications for a restaurant licence under different names of operators, so that their restaurants may open for business continuously under a provisional licence (Loophole 1). Moreover, even if the Food and Environmental Hygiene Department (FEHD) has obtained from the court a closure order in respect of the premises of an unlicensed restaurant, the restaurant operator may nullify the closure order simply by changing the name of the operator. As a result, FEHD is unable to eradicate the restaurant through applying for a closure order, and it can only conduct regular inspections on and institute prosecutions against that restaurant (Loophole 2). It has been reported that a restaurant, which has been operating for two years but has never been issued with a full licence, was granted a liquor licence while it was holding a provisional licence. The restaurant has continued to operate after the expiry of its provisional licence and its operator has thus been prosecuted by FEHD for nearly 20 times for operating an unlicensed restaurant. Yet, by taking advantage of the aforesaid loopholes, the restaurant has succeeded in avoiding eradication and continued to operate till now. In this connection, will the Government inform this Council:

(1) of the number of restaurants in the territory which operated under a provisional licence as at December 31 last year; the number of restaurants in respect of which multiple applications had been made under different names for a full licence in respect of a restaurant operating in the same premises, and among such restaurants, the number of those in respect of which the earliest application for a full licence was submitted more than two years ago;

(2) of the number of prosecutions instituted by FEHD against the operators of unlicensed restaurants in the past five years; among such prosecutions, the highest number of prosecutions instituted against the operator(s) of restaurant(s) operating in the same premises; (i) a breakdown of the number of such restaurants by the number of times for which their operators were prosecuted and, (ii) among such restaurants, the number of those which had been eradicated (set out in the table below);
 

Number of prosecutions instituted	(i)	(ii)
Once
Two to five times
Six to 10 times
11 to 15 times
16 to 20 times
21 times or more
Total

(3) whether FEHD has formulated guidelines stipulating that unlicensed restaurants operating in the same premises should be eradicated after the operators concerned have been prosecuted by summons for a certain number of times in total; if so, of the criteria adopted by FEHD for determining such a number; if not, whether FEHD will consider formulating such guidelines;

(4) of the number of liquor licence applications made in the past three years by operators of restaurants issued with a provisional licence; whether it has plans to review the provisions under which such restaurants may be issued a liquor licence;

(5) of the new measures put in place to plug the two aforesaid loopholes; and

(6) whether it will examine raising the penalties for operating an unlicensed restaurant (e.g. increasing the maximum level of the fine), so as to avoid the fine being regarded by restaurant operators as part of their operating costs and hence being unable to achieve any deterrent effect?

Reply:

President,
     
     Under the Food Business Regulation (Cap 132X), restaurants must obtain appropriate licence(s), such as the General Restaurant Licence, Light Refreshment Restaurant Licence and Marine Restaurant Licence, before commencement of business. Any person who operates a food business without a licence commits an offence and is liable on conviction to a maximum fine of $50,000 and imprisonment for six months, and an additional daily fine of $900 should the offence persist.

     The Food and Environmental Hygiene Department (FEHD) is concerned about the operation of unlicensed restaurants. Apart from carrying out routine inspections and enforcement actions against the unlicensed premises, the FEHD also takes blitz prosecution actions or makes arrests from time to time. It will also increase the frequency of prosecution where necessary. Besides, the FEHD may consider applying to the court for a closure order under section 128B of the Public Health and Municipal Services Ordinance (Cap 132) to close an unlicensed restaurant.

     My reply to the various parts of the question is as follows:

(1) As at December 31, 2017, there were 981 restaurants operating with a provisional licence in Hong Kong. As these are commercial operations, the operator of the same premises may change from time to time for various reasons. Therefore, applications for transfer of a restaurant licence or new applications for a restaurant licence may be received in respect of the same premises at different times. The FEHD does not keep information on such applications. According to our record, none of these 981 restaurants operating with a provisional licence had its application for a full licence submitted for more than two years. It is mentioned in the question that a restaurant, which has not been issued with a full licence, has been operating for two years and continues to operate after the expiry of its provisional licence. The FEHD has enhanced prosecution actions and instituted 21 prosecutions against the operator concerned for operating a restaurant without a licence. The operator finally chose to withdraw his application for a restaurant licence, and a new application was submitted under the name of another operator. After receiving the new application, the FEHD requested, in accordance with the existing licensing policy, the applicant to submit documentary proof to demonstrate that he/she has no business connection with the former licensee or his/her business partner/proprietor, and provide proof as to when and how he/she would fully comply with the licensing requirements imposed by the relevant departments. The FEHD also made clear to the applicant that if the premises continued to operate without a licence, it would step up prosecution actions, which include applying to the court for a closure order to close the premises. During its recent inspections, the FEHD found that the restaurant was temporarily closed for renovation. The licence application in respect of the premises is still under consideration and being processed by the department.

(2) The number of prosecutions instituted against unlicensed restaurants by the FEHD over the past five years is set out in the table below:
 

Year	2013	2014	2015	2016	2017
Number of prosecutions against unlicensed restaurants	3,085	2,808	2,343	1,711	1,604

     The FEHD does not maintain the breakdowns of the number of prosecutions instituted against unlicensed restaurant operators and, amongst them, the number of unlicensed restaurants which have been eradicated.

(3) At present, the FEHD takes out prosecution against any person operating an unlicensed food premises in accordance with the Food Business Regulation. It will step up enforcement, which includes increasing the frequency of prosecution, arresting the offenders and seizing the articles involved, against food premises which persistently operate without a licence. It may also apply to the court for a closure order under section 128B of the Public Health and Municipal Services Ordinance to close an unlicensed food premises. After a closure order is made by the court, the FEHD will execute the order to close the premises in question and publicise through the media details of the unlicensed food premises thus closed.

     The prevailing guidelines of the FEHD do not determine the enforcement arrangements according to the number of prosecutions instituted. The priorities and types of enforcement actions to be taken against unlicensed food premises are determined by a host of factors including the hazards arising from their operation to environmental hygiene and public health (for examples, food poisoning cases, foodborne diseases or food incidents are involved), whether the operator has submitted an application for a food business licence, whether the premises in respect of the application can satisfy the essential licensing requirements (for examples, if there are flimsy structures, lack of safe drinking water supply or absence of sewage system), or whether the application cannot be further processed due to outright objection raised by relevant departments. Food premises which have submitted an application for a food business licence but operate without a licence will still be prosecuted under the Food Business Regulation. Where necessary, the FEHD will strengthen its enforcement actions, such as increasing the frequency of prosecutions/arrests and considering an application for a closure order from the court. Priority will be accorded to cases in which the operation of the unlicensed food premises is hazardous to environmental hygiene or public health, and the applicant could not provide reasonable explanations for failure to comply with the licensing requirements within a specified time.

(4) Pursuant to regulation 17(2) of the Dutiable Commodities (Liquor) Regulations (Cap 109B), the Liquor Licensing Board (LLB) shall not grant a liquor licence unless it is satisfied that: (1) the applicant is a fit and proper person to hold the licence; (2) the premises to which the application relates are suitable for selling or supplying intoxicating liquor, having regard to the location and structure of the premises and the fire safety and hygienic conditions of the premises; and (3) the grant of the licence is not contrary to the public interest. In general, a restaurant licence (provisional or full) will be issued to the premises subject to the compliance with the requirements on building structure, fire safety and hygiene standards imposed by a restaurant licence. In other words, if the premises applying for a liquor licence have been issued with a restaurant licence (provisional or full), it will normally be accepted as having fulfilled one of the relevant conditions for granting a liquor licence.
 
     To facilitate business operations, under the existing policy, the LLB accepts and considers applications for liquor licences from premises which have been issued with or are applying for a restaurant licence (provisional or full) issued by the FEHD. Nevertheless, the LLB will only issue a liquor licence to an applicant after the premises concerned have been issued with a restaurant licence (provisional or full). According to the existing policy, if the premises have obtained a provisional restaurant licence, the LLB will first issue a liquor licence with an expiry date being the same as the provisional restaurant licence. Subject to further issue of a valid restaurant licence in respect of the premises, the LLB will issue a liquor licence for the remaining approved period of the liquor licence.

      The FEHD does not maintain information for the past three years concerning restaurants issued with a provisional restaurant licence that applied for a liquor licence. 

      The LLB will review the relevant criteria/guidelines on a regular basis and make amendments when required, so as to ensure that its work keeps pace with the times, prevailing circumstances and operating situation of the trade.

      As mentioned in paragraph (3), the FEHD has established guidelines for eradication of food premises which persistently operate without a licence and are causing serious environmental hygiene nuisances or harm to public health. The corresponding measures include application for a closure order from the court.

(5) Regarding the comment that the conditions for issuing a provisional licence are lenient, under section 33C of the Food Business Regulation (Cap 132X), food premises shall meet all essential health, ventilation, building and fire safety requirements for the issue of provisional licences imposed by the government departments concerned, and report their compliance with submission of certificates of compliance by authorised professionals before the FEHD issues a provisional restaurant licence. This allows the applicants sufficient time to complete the remaining works for meeting the whole set of requirements for a full licence.  This licensing policy is formulated after discussion with the trade to facilitate business operation.

     To prevent applicants from abusing the provisional licensing system through repeated applications for a provisional licence by different operators, whereby a restaurant may continue to operate in the same premises without obtaining a full licence, under the existing licensing policy, the FEHD will not process any new application for provisional food business licence if it is submitted by the former licensee or his/her business partner/proprietor where the last provisional licence has lapsed and a full licence has not been issued to the former licensee within the past 12 months preceding the date of new licence application for the same nature of business in respect of the same premises. Moreover, upon receipt of a new application for provisional licence by the same premises for the same nature of business, the FEHD will request the applicant to submit documentary proof (for examples, tenancy agreement of the food premises, business registration certificate, company documents, etc.) in seven days to demonstrate that he/she has no business connection with the former licensee or his/her business partner/business proprietor before accepting the application. If the application is accepted, a non-standard licensing requirement will be imposed on the provisional licence, requiring the applicant to make a statutory declaration under the Oaths and Declarations Ordinance that he/she has no business connection with the former licensee or his/her business partner/business proprietor of the premises. By virtue of section 36(a) of the Crimes Ordinance, an applicant who knowingly and wilfully makes in a statutory declaration a statement which is false shall be guilty of an offence, and shall be liable on conviction to imprisonment for two years and to a fine. To enhance the deterrent effect, the FEHD may consider refusing the issue of a new provisional licence or cancelling any such provisional licence issued. As mentioned in paragraph (3) above, the FEHD has established guidelines to eradicate unlicensed food premises which are in operation and causing hazards to environmental hygiene or public health. The control measures include stepping up enforcement actions against unlicensed food premises and applying to the court for a closure order. With such measures and the above licensing policy in place, unlicensed restaurants cannot evade the FEHD's enforcement actions through application for a new licence by a new operator.

(6) Currently, adequate power is conferred on the FEHD by the law to deal with the operation of unlicensed food business. The maximum penalty for contravention of the legislation concerned bears sufficient deterrence.  When the court hears a case in which an offender has been repeatedly involved in the operation of an unlicensed food business, the FEHD will present to the court information about the offender's previous related convictions and the number of relevant complaints, so as to help the court mete out an appropriate sentence. According to our record, heavy penalties and imprisonment have been imposed for operating unlicensed food business.

     The FEHD will continue to closely monitor the operation of unlicensed food business and review the effectiveness of the enforcement strategies against unlicensed food premises from time to time. It will step up enforcement against irregularities as and when necessary.

Ends/Wednesday, January 24, 2018
Issued at HKT 17:13

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