In Hong Kong, laws against carrying passengers for hire or reward actually pre-date the automobile by two years

Citing laws and judgements as diverse as Hong Kong’s 1883 transport law and a 2015 case between Uber and Transport for London, the Court of Final Appeal has thrown out an appeal by 24 Uber drivers caught carrying passengers without hire car permits.

The 24 drivers were nabbed in a 2018 sting operation and convicted and fined between HK$3,000 and HK$4,500 each. Their first appeals were dismissed in 2019, and passed to Hong Kong’s top court in March 2020.

The unanimous judgment by five judges, ending the matter, was handed down on 1 September, but the court has only now published the reasoning behind its verdict.

Lawyers for the 24 drivers had argued four key points attacking the letter and context of the law under which the drivers were charged, the Road Traffic Ordinance, Cap. 374 s.52(3), which states that no person shall drive “a private car for the carriage of passengers for hire or reward” without a proper licence.

A brief history of hire cars in Hong Kong

In explaining the court’s reasoning behind the rejection of other arguments, judge Joseph Fok first gave a history of the transport issues at hand, citing section 2 of the Vehicles and Public Traffic Ordinance of 1883, which provided that “no vehicle shall ply or be let for hire for the carriage of passengers, unless the owner thereof has obtained a licence for the same.”

The law had been updated in 1912, nine years after Henry Ford founded the Ford Motor Company, distinguishing between “public” and “private” vehicles, and allowing only public vehicles to ply for hire. No significant changes were made for sixty five years until, in 1977, the Road Traffic Ordinance was used to crack down on two citywide issues: the illegal hung pais – public vehicles posing as taxis; and illegal pak pais – illegal private cars, most similar to the Ubers of today.

In the 1977 law, the concept of public cars was abolished, and all public vehicles were required to either register as taxis, or revert to being private cars barred from carrying passengers for hire or reward. Pak pais were addressed by the introduction of the Hire Car Permit, which would allow a certain number of private cars to carry passengers for hire or reward – it is this permit that is missing on almost all Uber cars today and the issue at the heart of whether Uber is legal or not.

As the Secretary for the Environment said in his 1977 speech announcing the new law, there were still social issues to address.

“Nevertheless, the success of these illegal operations demonstrates a real public demand for the services which they provide. Having reviewed the situation, therefore, the Government has decided that public hire car operators should be given the opportunity to convert their vehicles to taxis on payment of a premium,” he told lawmakers at the bill’s second reading.

Over 40 years later, these social issues are still awaiting a proper resolution, with lawyers for the convicted Uber drivers moving that the whole legislative purpose of the relevant law was to prevent illegal taxis or pak pais from plying for hire on the streets, something Ubers don’t do – and that, unless the law was viewed in this way, other drivers under contract, such as chauffeurs driving under employment contracts, would fall foul of the law when carrying friends or family of their employers, for example.

But judges said the legislative purpose was not merely to prevent non-taxis plying the street but also included revenue generation, administrative regulation and road safety. The law forms part of the Road Traffic Ordinance, which regulates all forms of city transport, they said.

“Vehicular passenger carriage in Hong Kong is intended to be operated on a strictly controlled basis, and a comprehensive statutory regime has been established for the regulation and control of the operational standards, safety and quality of the various services in question.”

The story of Quick

On the question of a chauffeur taking his employer’s family or friends would fall afoul of the law under the government’s reading of it, the judges cited a 1972 decision by the British House of Lords, articulated by Lord Pearson, in a case where a dock worker, named Quick, gave lifts to his colleagues for money.

When Quick crashed his car and killed one of his passengers, the passenger’s wife successfully sued Quick, who was not insured and could not pay out. The wife then sued the Motor Insurers’ Bureau (MIB), which was required by law to pay on behalf of any person who ought to have insured their vehicle: but she lost the case, as the MIB argued that Quick’s arrangements with his passengers were too informal to amount to binding contracts.

One cannot fail to observe that a private motor car has passenger seats. The owner-driver of a private motor car can very easily be helpful and obliging to friends and acquaintances by giving them lifts in his car. He may himself like to have company on his journeys, but still he is conferring a favour. The passengers may, especially when this happens frequently, think it fitting that they should in return for the favour confer some benefit on the owner-driver. Many co-operative or reciprocal arrangements, which are natural uses of a private motor car, were suggested in the course of the argument.

For instance, A and B may for their weekly game of golf travel to the golf course in A’s car driven by A, and B make his contribution by paying for A’s lunch or green fee or for the petrol that is bought on the journey.

So long as such arrangements do not acquire the character of business arrangements they should be regarded as natural ways of using a private car as such and should not be regarded as involving the carriage of passengers for hire or reward.”

The judges in Hong Kong’s Court of Final Appeal, nearly half a century later, said such “natural” uses of a private car can be contrasted with the Uber case, where the appellants were providing a service to the public of on-demand pick-up of passengers and carriage to a destination of their choice, in return for payment from Uber for that carriage.

“This transportation service had the clear character of a separate business arrangement for carriage and was not merely ancillary to some other form of employment as a driver,” said the judges.

Letter of the law

Lawyers dug into the nitty-gritty of the language, arguing the sentence construction made such activities only illegal when the driver and the passenger had a direct agreement between themselves.

Judges threw this argument out – while the law as written does require a link between the carriage of passengers and the hire or reward, “it does not follow that the link must take the form of a single bipartite contract between the driver and his passenger,” said the judges

In fact, such a reading would make no sense in the case of a public bus driver, since the contract for carriage would be between the passenger and the bus company, not the driver himself, they said.

Technology contention

Technology brought a new line of argument for the drivers’ lawyers: they contended the business model of the Uber App could not have been in the contemplation of lawmakers when the law was created, so it cannot have been the legislative intent to criminalise such conduct.

The judges threw out the technology argument, saying that if, for example, a pak pai driver had used a third party dispatcher to receive requests for rides and to act as an accounting middleman in the commercial arrangement, this would have been an offence under that law.

While the appellants’ lawyers brought up a 2015 case from London that had hinged on a technology issue, the judges said that case had swung on the very specific point on whether a smartphone running the Uber app could be conceived of as a “taximeter”, which would be illegal in London.

The London case found that a smartphone was merely a device for recording time and distance, and not calculating a fare, and therefore was not a taximeter. But this did not apply in Hong Kong – and the judges rejected the technology question outright.

“Notwithstanding that smartphone applications enabling the Uber business model were not specifically in contemplation when the relevant statutory prohibition was enacted, the activities of the appellants constituted “carriage of passengers for hire or reward” within the meaning of s.52(3) and were well within the mischief that the statutory scheme seeks to address.”

In summary the judges said it was right to dismiss the case, which, they said, was a pure question of the law.

But they remained silent on the broader issue. “Whether ride hailing services should be permitted to operate in Hong Kong, on the other hand, is a question of transport policy, not a question of law, and is not a matter for the Court to determine,” they concluded.

The case was heard by Chief Justice Geoffrey Ma, R A V Ribeiro, Joseph Fok, Andrew Cheung and Lord Sumption. Jonathan Caplan QC, instructed by Haldanes, acted for the drivers, while William Tam SC, DDPP, Marcus Lee SPP and Cherry Chong PP of the Department of Justice acted for the government.

The appelants seeking an appeal to their convictions were: Yuong Ho-cheung, Yip Wai-ming, Yip Ka-shing, Alan Chow Kwok-kwong, Andrew Chan Pak-kay, Lam Yan-ming, Wong Wai-keung, Tsang Kwok-ming, Hui Kwok-wai, Gary Lee Hing-lung, Bosco Lau Kin-fung, Tse Kee-bo, Tong Po-hin, Wong Sai-ming, Li Sui-leung, Ivam Chung Tze-chun, Adrain [sic] Cheung Yuk-fung, Wong Siu-pong, Wong Tak-ming, Kong Cheuk-lai, Fan Wing-yau, Lam Kin-fat and Chick Wai-ho.