Chief Justice Ma: 1. I agree with the judgment of Mr Justice Gummow NPJ and with the orders proposed. Mr Justice Ribeiro PJ: 2. I agree with the judgment of Mr Justice Gummow NPJ. Mr Justice Tang PJ: 3. The 1st and 2nd appellants are holders of carrier licenses[1] issued by the 2nd respondent, the Communications Authority (“the Authority”) under s 7(6) of the Telecommunications Ordinance (“TO”) (Cap 106). The 1st respondent is the Secretary ultimately responsible for the 2nd respondent. 4. This appeal concerns licence fees which may be levied by the Authority under TO s 7(6)(e). The appellants’ complaint is that in budgeting for and determining the licence fees payable, the Authority has included profits in that it had budgeted for dividend as well as profits tax. 5. As was apparent during the hearing of the appeal, I prefer to approach the certified questions by asking what I regard to be the more fundamental question, namely, whether licence fees levied under TO may include any profit.[2] 6. Ms Teresa Cheng SC for the respondents rightly accepts that TO is not a fiscal measure and that the level of licence fees overall must be related to the cost to the Authority of discharging its function.[3] As Barwick CJ explained in Marsh v Shire of Serpentine-Jarrahdale:[4] “ … in general a fee is a payment for or in respect of services rendered whereas a tax is not, but rather a means of obtaining revenue for governmental purposes. … What is authorized under the description of a fee may very well be a tax and yet within the actual authority given. The question remains one of interpretation of the statute, bearing in mind its relevant purposes and the part the issue of a licence plays in them or with respect to them.” 7. I see nothing in TO to authorize the inclusion of a tax in any licence fee levied under TO s 7(6)(e). This is not disputed and the respondents accept that TO was intended to operate taken from year to year on a cost recovery basis. Ms Cheng accepts that in determining the fees payable under TO s 7(6)(e), the Authority was not entitled to budget for a profit. She accepts such profits which she calls intentional profits are not permitted. They would be an unauthorized tax. But she contends since financial prudence justifies budgeting for contingencies or buffers as she calls them, any resulting surplus, which she calls unintentional or incidental profit, should belong to government beneficially.[5] 8. Ms Cheng relies on the Trading Fund Ordinance (“TFO”) “to manage and account for the operation of a government service for which the Government has the financial objective that the service shall fund itself from the income generated from the government service … ” 9. TFO s 5 provides the income received shall be paid to the trading fund and that: “(2) The expenses incurred in providing the government service and the financing of liabilities of the trading fund are to be paid out of the trading fund.” 10. TFO s 6(6) provides: “The general manager[6]shall manage a trading fund with the objectives (a) providing an efficient and effective operation that meets an appropriate standard of service; (b) within a reasonable time, meeting expenses incurred in the provision of the government service and financing liabilities of the trading fund out of the income of the trading fund, taking one year with another; and (c) achieving a reasonable return, as determined by the Financial Secretary, on the fixed assets[7] employed.” 11. By resolution of the Legislative Council on 10 May 1995 (“the Resolution”), the Office of the Telecommunications Authority Trading Fund, the OFTA Trading Fund(“the Fund”)[8]was established. Naturally, notwithstanding the establishment of the Fund the licence fees should continue to be determined on a cost recovery basis. TFO s 6(6)(c) is consistent with cost recovery since it was designed merely to remove any government subsidy by requiring payment for fixed assets provided by Government. 12. It may be helpful to note that in the Legislative Council Brief for the Trading Funds Bill 1992, it was stated that a number of government departments provide services on a quasi-commercial, cost recovery basis and a trading fund is a financial and accounting framework established by law to enable a department, or part of a department, to adopt certain accounting and management practices common in the private sector while remaining part of the government and that one of the major benefits for establishing trading funds is “greater efficiency and cost consciousness by exposing the service to competition or to quasi- commercial pressure”. TFO as enacted is consistent with the Brief. 13. Ms Cheng however submits that Government is beneficially entitled to any unintended or incidental profits because the Financial Secretary is authorized by TFO s 10(1) to direct: “any surpluses in the nature of distributable profits (which) are in excess of the reasonable requirements for the provision of (the operation of the government service undertaken by trading fund to) be transferred into the general revenue”. 14. Ms Cheng relies also on the fact that TFO s 7(4) requires a trading fund to submit annual accounts “prepared in accordance with generally accepted accounting principles”. She submits that under such accounting principles, in the case of a commercial entity, the surplus of income over expenditure would be regarded as profits and be shown as such in its financial statements. That being the case any surplus of income over expenditure in the operation of the Fund should also be regarded as profits. With respect, the analogy with a commercial entity is inapt because the Authority is not a commercial enterprise and was not intended to make profit. 15. Moreover, even if the surplus may properly be called a profit, the language of TFO s 10(1) does not help the respondents. The surplus has to be in the nature of “distributable profits”. In context, the profits must be profits distributable to government. Moreover, TFO s 10 (2) provides: “If fees authorized by an Ordinance are structured so as to recover more than the cost of the provision of a government service, including a reasonable return as set out in section 6(6)(c), the Financial Secretary may direct that the whole or part of the fees as determined by the Financial Secretary to be more than the cost of the provision of the service, including a reasonable return as set out in section 6(6)(c), shall, after collection, be paid from the trading fund into the general revenue.” (My emphasis). The italicized words do not apply because the TO does not authorize recovery in excess of cost.[9] If the profits are not authorized under TO such that they cannot come within TFO s 10(2), I see no basis for saying that they could be distributable profits under TFO s 10(1). 16. TFO s 5(3) provides that: “With the approval of the Financial Secretary, the general manager may establish reserves in the accounts of the trading fund and may make transfers into and out of those reserves.” 17. By 31 March 2008, the Fund has accumulated reserves of $690,165,000. The reserves were called development reserve in the financial statements supplied to us which covered the years 2002/2003 to 2013/2014. From these accounts one can see the steady build-up of the reserves by “transfer from profit and loss account”.[10] In the Joint Statement of the Secretary for Commerce and Economic Development and the Communications Authority (the 1st and 2nd respondents respectively) dated 27November 2012,[11] they said: “The reserve ... accumulated over the past years has the function of acting as a cushion against any need for licence fee increases.” 18. The reserves were called development reserve in the financial statements and in the notes to the accounts, one finds the statement “This is a reserve serving as a regulating mechanism to meet the target return.” It is unnecessary to deal with this possibly ambiguous statement since if I am right that unintended surpluses or profits do not come within TFO s 10, these reserves also would not. 19. I turn now to the certified questions: “ (1) Whether projections for notional tax and/or payment of dividends may be lawfully included in the budget of the OFCA Trading Fund for the purpose of determining licence fees under the Telecommunications Ordinance, or whether projecting the payment of notional tax and/or dividend to the Government would be ultra vires the Telecommunications Ordinance and/or was unlawful and irrational in a public law sense; (2) Whether in the management of the OFCA Trading Fund (renamed the OFTA Trading Fund), it was lawful to make provision for notional tax and/or dividends or amounts in excess or significantly in excess of the projected expenses and target return under s.6(6)(c) of the Trading Funds Ordinance.” 20. My answer to the first question is that on the proper construction of TO it does not authorize a tax, it is ultra vires TO to include any profit, whatever it is called, when determining licence fees payable thereunder. As for the second question, it follows from my answer to the first question, that, having regard to the substantial and long unused reserve built up, it would not be lawful to make further provision for contingencies when determining licence fees unless it is shown that there is a real risk of the reserve being inadequate. 21. Since writing the above, I have had the advantage of reading the judgement of Gummow NPJ, and with respect, I agree with his Lordship’s conclusions and reasons. Mr Justice Fok PJ: 22. I agree with the judgment of Mr Justice Gummow NPJ. Mr Justice Gummow NPJ: Introduction 23. The appellants (respectively “PCCW – HKT” and “HKT”) in this appeal from the Court of Appeal are incorporated in Hong Kong and are licensees under the Telecommunications Ordinance (Cap 106) (“the TO”). As joint holders of a unified carrier licence (“UCL”) they provide, under the brand name “HKT”, public internal fixed telecommunications services and public external telecommunications services in Hong Kong. The second appellant has also been the holder of a UCL. Various affiliated companies of the appellants hold service–based operator (“SBO”) licences. Also, nine telecommunications companies have been Interested Parties, but they did not appear on the appeal to this Court. 24. In the High Court the appellants sought judicial review of the decision (“the Decision”) of the respondents contained in a document (“the Joint Statement”) which is dated 27 November 2012 and headed “Joint Statement of the Secretary for Commerce and Economic Development [“the Secretary”, who is the first respondent] and the Communications Authority [“the Authority” which is the second respondent]”. 25. The Joint Statement announced the Decision of the respondents to adhere to a proposal to reduce the customer connection fee level for the UCL from $800 to $700 for each 100 customer’s connections and to reduce the mobile station fee for other licences, including the SBO licence, from $800 to $700 for each 100 mobile stations or less, in tandem with and subject to implementation of the UCL proposal, and to do so without any further downward adjustment as sought in representations by interested parties. 26. The Joint Statement noted that the proposal made therein had been worked out “with due consideration” both of financial results “for the past few years” and of the financial forecasts for the coming five years. These materials are in evidence. 27. Annexure 2 to the reasons of the Court of Appeal shows that in each of the eight years from 2006-2007 to 2013-2014 substantial sums, under the headings “Dividend Paid” and “Notional tax paid”, were transferred to the general revenue and that these sums had been included under “Profits before tax” and were distinct from the “Development reserve”. The term “general revenue” identifies moneys raised or received for the purposes of the Government, to be dealt with in accordance with the Public Finance Ordinance (Cap 2). 28. The most up-to-date financial projections prior to the making of the Joint Statement were for the five years from 2013-2014 to 2017-2018. The projections made provisions in total of $420.1 million under the headings “Surplus after taxation” and “Surplus after dividend”. 29. It is common ground that there was no liability under the Inland Revenue Ordinance (Cap 112) in respect of the “notional tax”. 30. The issue of the Joint Statement had been preceded by a Consultation Paper dated 29 June 2012. Its stated purpose was to explain the rationale behind the proposed licence fee reductions and to seek views from members of the public. 31. HKT and other interested licensees had responded to the Consultation Paper by seeking a further downward adjustment of the licence fees. In particular, HKT submitted that it was not consistent with the governing legislation to set licence fees that “generated consistently high and excessive profits”, and that it would be appropriate to refund past licence fees “and/or to create a fee/tax holiday”. 32. HKT contended that there was no legal justification to extract from users a level of licence fees that would significantly exceed the costs of the licensee, and to do so would be “a form of tax” and be beyond the scope of the applicable laws. These contentions, particularly with respect to dividends and notional tax, are at the heart of the subsequent litigation. 33. The Decision, however, was implemented with effect from 1 March 2013 by the Telecommunications (Carrier Licences) (Amendment) Regulation 2012 (“the 2012 Regulation”). This had been preceded by the “negative vetting” by the Legislative Council, as required by s 34 of the Interpretation and General Clauses Ordinance (Cap 1). The appellants’ initiating process for judicial review of the Decision is dated shortly before, namely 27 February 2013. The appellants, correctly, emphasise that the “negative vetting” could not overcome any lack of statutory authority in the fixing of the licence fees[12]. The litigation 34. The principal relief sought by the appellants was certiorari to quash the Decision or a declaration that the Decision was ultra vires. No relief was sought respecting the 2012 Regulation itself. Senior Counsel indicated in this Court that the reasoning of the appellants had been that they did not wish to lose such fee reduction as it provided. If the Decision is to be set aside it would be for the respondents (if so minded) to set in train processes for a fresh proposal for decision and implementation by regulation. 35. However, the application for judicial review was dismissed for reasons given by Ng J on 11 August 2015, and an appeal was dismissed by the Court of Appeal (Cheung, Kwan, Chu JJA) for reasons delivered on 17 May 2016 by Cheung JA. 36. In this Court, the appellants complain that the Court of Appeal erred in not accepting their submissions that the reductions proposed by the Joint Statement and effected by the 2012 Regulation did not go far enough. In particular, the appellants assert that the respondents committed errors of law when they had (a) determined upon fixing the level for licence fees receipts by budgeting for what they identified as “notional tax” and “dividends” as terms of apparent expense or liability, and (b) failed to take into account the amounts of “past excesses” which were liable to be refunded to licensees because they had been derived in this manner. 37. To appreciate what these submissions entail, it is necessary first to consider the provisions of the legislation for the establishment and operation of the regulatory structure in which the licence fees are an element. There are three relevant Ordinances, the first is the TO and the others are Communications Authority Ordinance (Cap 616) (“the CAO”) and the Trading Funds Ordinance (“the TFO”) (Cap 430). The TO was first enacted in 1963, but substantially amended in 2000, the CAO was enacted in 2011 and the TFO in 1993. The TO 38. The starting point is the licensing scheme established by the TO. Part 3 (ss 7-13) of the TO is headed “Control of Telecommunications”, and Part 5 (ss 20-32C) is headed “Offences, Enforcement and Penalties”. 39. Section 8 of the TO prohibits, among other activities, a person, without the appropriate licence granted or created by the Authority, from establishing or maintaining any means of telecommunications (s 8(1)(a)) or offering a telecommunications service in the course of business (s 8(1)(aa)). Section 20 creates an offence of contravention of s 8(1). Section 7 provides for the issue of licences. Thus, the TO creates a regulatory regime by the not unfamiliar means of imposing a bar upon engagement in specified activities, the bar being supported by the criminal law but relaxed by a licensing scheme. 40. Section 7 of the TO confers powers upon the first respondent, the Secretary. In particular, s 7(2) states: “(2) The Secretary may by regulations prescribe— (a) the general conditions, including the period of validity, for a carrier licence other than an exclusive licence; and (b) the fees payable including for the grant and renewal of a carrier licence other than an exclusive licence and by way of annual fees.” (emphasis supplied) Section 7(2) provided the source of the power to make the 2012 Regulation. 41. The exercise of power under s 7(2) is preconditioned by the taking by the Secretary of the steps specified in s 7(3). This subsection provides: “(3) Before making a regulation under subsection (2), the Secretary shall— (a) by notice in the Gazette invite members of the public who are interested to make representations by a date not less than 21 days after the notice is published and as specified in the notice; and (b) consider the representations received by the date.” The Consultation Paper dated 29 June 2012 and the Joint Statement dated 27 November 2012 evidenced, for this litigation, the respective operations of paras (a) and (b) of s 7(3). The CAO and the TFO 42. The Authority, the second respondent, is established as a body corporate by other legislation, namely by s 3 of the CAO. The Authority has, as one of its functions provided by s 4 of the CAO, the tendering of advice to the Secretary on any legislative proposals and regulatory policies (s 4(3)). 43. It is accepted that licence fees are payable to the Authority and that pursuant to s 20(1) of the CAO, they are credited to the account of what since 2011 has been styled the OFCA Trading Fund. What was originally titled the OFTA Trading Fund was established in 1995 by resolution of the Legislative Council under s 3 of the TFO. The TFO had commenced on 12 March 1993. The preamble to the TFO states: “An Ordinance to enable certain services of the Government of Hong Kong to be financed under trading funds established by resolution of the Legislative Council on the recommendation of the Financial Secretary and for related matters.” 44. Section 2(1) of the TFO defines “government service” as meaning any activity the Government of the Hong Kong SAR may undertake. The subsection also defines “trading fund” as “an accounting entity within the Government (but not having a separate legal existence) established under section 3(1)”. This definition makes it inaccurate to attribute to a trading fund those legal attributes of a trading corporation concerned with liability to profits tax and declaration of dividends payable to shareholders. 45. Section 3(1) of the TFO provides: “3 (1) The Legislative Council may, on the recommendation of the Financial Secretary, by resolution establish a trading fund to manage and account for the operation of a government service for which the Government has the financial objective that the service shall fund itself from the income generated from the government service whether it is a service provided to the Government, to public bodies or to persons other than the Government. (2) In considering whether to recommend the establishment of a trading fund for a government service the Financial Secretary is to have regard to the capability of the provider of the government service— (a) to provide an efficient and effective operation that meets an appropriate standard of service; and (b) to have the capacity, within a reasonable time, to meet expenses incurred in the provision of the government service and finance liabilities to be specified in the resolution out of the income of the proposed trading fund.” (emphasis supplied) 46. It is apparent from the definition of “trading fund” in s 2(1) of the TFO that the OFTA Trading Fund is an accounting entity which does not have a separate and distinct legal existence. Further, and consistently with the preamble, the emphasised portions of s 3 of the TFO indicate the objectives for establishment of a Trading Fund are directed to self-funding from income generated by the Trading Fund; there is no mention, as a purpose of the trading fund, of the generation of profits to be paid into the general revenue of the Government. 47. In the Court of Appeal, Cheung JA correctly emphasised (contrary to what appeared to have been the view of the primary Judge) that the TO, TFO and CAO are to be read together, such that when the Secretary exercises the power under s 7 of the TO with respect to the prescribing of fees regard must be had to the financial objectives and constraints for trading funds which appear from s 3 and other provisions of the TFO. 48. The general manager of the OFTA Trading Fund is the Director-General of Communications. Section 15 of the CAO requires the Director-General to do all acts and things necessary for implementing decisions of this Authority. Section 6(6) of the TFO states the objectives of managing a trading fund, as follows: “(6) The general manager shall manage a trading fund with the objectives of— (a) providing an efficient and effective operation that meets an appropriate standard of service; (b) within a reasonable time, meeting expenses incurred in the provision of the government service and financing liabilities of the trading fund out of the income of the trading fund, taking one year with another; and (c) achieving a reasonable return, as determined by the Financial Secretary, on the fixed assets employed.” (emphasis supplied) 49. Sections 5, 9 and 10(1) of the TFO are of central importance for this appeal, dealing respectively with the establishment and operation of “reserves” in the accounts of a trading fund, and with the transfer of “surplus funds” to the general revenue. 50. Section 5 states: “5 (1) Notwithstanding any provision of another Ordinance, the income received for the provision of a government service in respect of which a trading fund is established under section 3 is to be paid into the trading fund. (2) The expenses incurred in providing the government service and the financing of liabilities of the trading fund are to be paid out of the trading fund. (3) With the approval of the Financial Secretary, the general manager may establish reserves in the accounts of the trading fund and may make transfers into and out of those reserves. (4) In this section, “income” includes a grant from the general revenue [of the Hong Kong SAR].” (emphasis supplied) 51. In para 12 of the Joint Statement the respondents noted that the reserve of the OFTA Trading Fund which had accumulated over the past years “has the function of acting as a cushion against any need for licence fee increases”. 52. In addition to the power conferred by s 5(3) to create reserves, s 9(1) provides that money of a trading fund that is surplus to its immediate requirements may be invested by the general manager in a manner approved by the Financial Secretary. 53. Section 10 is headed “Surplus funds” and subsection (1) provides: “(1) If, after having regard to estimated future requirements of the operation of the government service undertaken by a trading fund, the Financial Secretary is satisfied that any surpluses in the nature of distributable profits disclosed in the certified statements are in excess of the reasonable requirements for the provision of the service including the repayment of loans, the Financial Secretary may direct that the surpluses or a part of the surpluses be transferred into the general revenue.” (emphasis supplied) Administration of trading funds 54. The TFO commenced on 12 March 1993. On 21 June 1994 the Secretary to the Treasury wrote to the Clerk of the Legislative Council Panel on Finance, Taxation and Monetary Affairs in terms which the appellants submit indicate the understanding on which provisions of the TFO have been administered. In response to a query by Members of the Panel “whether trading funds actually pay tax” the Secretary wrote: “[G]iven its commercial nature, a trading fund is required to make a payment to Government in lieu of profits tax calculated on a notional basis, i.e. by applying the prevailing profits tax rate to the net trading fund profits.” On 5 July 1994, in reply to another query by the Panel, the Secretary indicated that trading funds were required “as a matter of financial policy to allow in these accounts for a payment to Government in lieu of profits tax.” 55. In its response, dated 30 July 2012, to the Consultation Paper, HKT referred to past accounts of the OFCA Trading Fund in which provision had been made for “profits tax” and “dividends”. With reference to the terms of s 6(6) of the TFO, HKT stated that: “Thus, it is clear that the trading fund is only intended to cover OFCA’s expenses and liabilities, along with a reasonable rate of return which is set at 8.5%. It is not intended to make substantial profits or earn a high rate of return.” The Appeal to this Court 56. On 27 April 2017, leave to appeal was granted on two questions of great general or public importance, namely: “(1) Whether projections for notional tax and/or payment of dividends may be lawfully included in the budget of the [OFCA] Trading Fund for the purpose of determining licence fees under the [TO], or whether projecting the payment of notional tax and/or dividend to the Government would be ultra vires the [TO] and/or was unlawful and irrational in a public law sense; (2) Whether in the management of the [OFCA Trading Fund], it was lawful to make provision for notional tax and/or dividends or amounts in excess or significantly in excess of the projected expenses and target return under s.6(6)(c) of the [TFO].” 57. These questions focus upon the proper construction of the TFO. However, in the course of argument on the appeal it became apparent that the decisive issue between the parties was whether the Decision to proceed with the proposal respecting the fixing of licence fees which had been proposed in the Consultation Paper, had been made upon an error of law concerning the ambit of the power under s 7(2) of the TO, which in turn had proceeded from errors of law in the construction of provisions in the TFO. If the appellants made good this part of their case, there would not arise an issue respecting “irrationality” in the sense attributed to the reasons given by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation[13]. 58. It also became apparent that the appropriate remedy if the appellants were successful would not be certiorari to quash the Decision, but declaratory relief tailored to indicate the errors of law which had been made in framing the Decision. Certiorari may be appropriate to set aside a decision representing a distinct step in a continuing administrative process[14]. However, the relevant process culminated with the making of the 2012 Regulation, and, as indicated above, its validity is not challenged by the appellants. Nevertheless, the issues between the parties respecting the proper construction of the relevant legislation remain and are matters of continuing public importance. In these circumstances, the appropriate remedy would be by declaration. Any declaratory relief, however, would not enter upon any other questions arising from the conduct of any other litigation which the appellants have on foot or may propose to undertake. Principles of Construction 59. In general, where used in public law a “fee” identifies a payment for or in respect of services rendered or for the administration of a legislatively based licensing scheme to control particular activities by licensees, whereas a tax is rather a means of obtaining revenue for governmental purposes. When the power to license is an element in a regulatory scheme, the power does not extend to authorise the imposition of a fee which in substance is a tax upon the activity to be conducted under cover of the licence[15]. If the licensee as a practical matter has no choice in the conduct of its affairs as to whether it acquires the licence and there is an insufficient relationship between the “fee” for the licence and the administration of the scheme, then, at least to the extent of the excess, the “fee” may properly be seen as a tax[16]. 60. No doubt, as Barwick CJ emphasised in Marsh v Shire of Serpentine-Jarrahdale[17]: “The question remains one of interpretation of the statute, bearing in mind its relevant purposes and the part the issue of a licence plays in them or with respect to them.” 61. However, a legislatively conferred power to impose a “fee” for a licence is not readily construed as authorising an impost which bears more than a reasonable relationship to the cost of administration of the licensing scheme and yields significant amounts of general revenue. Rather, it is established by a long line of authority that such a legislative design should appear in plain and unmistakable terms, rather than from ambiguous words[18]. This is so even where the licensee has no legal obligation to engage in the activity which is permitted only on payment of the licence fee, so that it may be said that the system operates on a “take it or leave it” basis[19]. Conclusions 62. It is convenient to begin by returning to the relevant provisions of the TFO and CAO which may bear upon the meaning to be given to the term “fee” in s 7(2) of the TO. 63. As noted at para 28, the provisions in s 3(1) of the TFO respecting the establishment of trading funds are directed to self-funding and do not mention the generation of profits to be paid into the general revenue of the Government. Further, s 6(6) of the TFO specifies as objectives of management of a trading fund the meeting of expenses and achieving a reasonable return, as determined by the Financial Secretary, on the fixed assets employed. Section 5(3) provides for the establishment of reserves in the trading fund and for the general manager to make transfers in and out of those reserves. 64. Counsel for the respondents referred to the requirement imposed by s 7(4) of the TFO that the general manager submit to the Director of Audit annual accounts of the trading fund “prepared in accordance with generally accepted accounting principles”. From this the respondents sought to draw a false analogy respecting the treatment under those principles of surplus income over expenditure as profits of a commercial entity. 65. It was at one stage contended by the respondents during submissions that the surplus could be regarded as some sort of financial “buffer” directly referable to the expenses of providing the service or the financing of liabilities. This was demonstrably not the case. The budgeting for notional tax and dividends was to create a surplus that was designed to be transferred to the general revenue. 66. The respondents placed considerable reliance upon a broad reading of s 10(1) of the TFO. If the Financial Secretary, after having regard to estimated future requirements of the operation of the relevant government service, is satisfied (a) that there are surpluses “in the nature of distributable profits” and (b) that these are in excess of the reasonable requirements for the provision of the service (including the repayment of loans), then the Financial Secretary may direct that all or part of the surpluses be transferred into the general revenue. It should also be noted from s 5 of the TFO that grants to a trading fund may be made from the general revenue. 67. The respondents submitted that the legislative scheme thus permitted the fixing of licence fees at a level designed to be high enough to produce excess funds which might be directed into the general revenue. Further, to cavil at the use in the accounts of a trading fund of terms such as “notional tax” or “dividend” to describe transfers under s 10(1) into the general revenue was to follow a “red herring”. 68. The appellants responded that the authority given to the Financial Secretary by s 10(1) to direct the transfer of surpluses into the general revenue (a) was designed to deal with any actual “windfall” from the budgeted administration of the trading fund, and (b) did not authorise, in the necessary plain and unmistakable terms required by the case law, the fixing of fees at a level designed to raise surplus funds for application as if raised by taxation. In other words, any surplus had to be “fortuitous” (counsel’s word), not designed. 69. By way of analogy, the appellants relied upon a line of English cases dealing with the statutory authority conferred upon local government bodies to impose various fees. The cases[20] were reviewed recently in R (on the application of Attfield) v Barnet London Borough Council[21]. With respect to a statutory power to charge for parking permits and visitor vouchers, Lang J held: “In conclusion, I accept the claimant's submission that the [Road Traffic Regulation Act 1984] is not a fiscal measure and does not authorise the local authority to use its powers to charge local residents for parking in order to raise surplus revenue for other transport purposes funded by the general fund. I have already concluded that the local authority's purpose in increasing the charges for resident parking permits and visitor vouchers on 14 February 2011 was to generate additional income to meet projected expenditure for road maintenance and improvement, concessionary fares and other road transport costs. The intention was to transfer the surplus on the special parking account to the general fund at year end, to defray other road transport expenditure and reduce the need to raise income from other sources, such as fines, charges and council tax. This purpose was not authorised under the 1984 Act and therefore the decision was unlawful.” 70. The submissions of the appellants should be accepted. They also are consistent with the context in which the licensing scheme was constructed. This is not one of those instances, discussed by Mason J in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd[22] , and by Lord Millett NPJ in Ho Choi Wan v Hong Kong Housing Authority[23] where a general term is constrained by its “context”, using that expression in the broad sense advocated by Viscount Simonds in Attorney-General v Prince Ernest Augustus of Hanover[24] . The contrary is the case. That is to say, the meaning of “fee” in s 7(2) of the TO, as discussed earlier in these reasons, is confirmed rather than expanded by recourse to the further legislative provisions. 71. The evidence included a paper published in 1989 by the Efficiency Unit of the Government entitled “Public Sector Reform February 1989”. This identified as one type of executive agency, trading fund departments “established on a quasi-commercial basis with revenue accruing to the fund”. The Legislative Council Brief when the Bill for the TFO was introduced in November 1992 stated that “[b]roadly speaking, the intention is that the creation of trading funds would have a neutral effect on the existing pattern of revenue and expenditure.” 72. In the Court of Appeal, Cheung JA (although ultimately finding against the appellants) expressed his conclusions respecting the operation of the TFO as follows: “10.2 The financial objectives of the OFCA Trading Fund are set out in section 6(6) of the TFO. In my view the provision of an efficient and effective operation under section 6(6)(a) does not point towards a full scale profit maximizing purpose. In any event, this provision must be read subject to the two other objectives. Section 6(6)(b) means that it is intended to be self-financing, meeting expenses out of the income and allowing the financial objectives to be met over a financial planning period of more than one year. Section 6(6)(c) allows a surplus over and above the trading fund by way of a specific target return prescribed by the Financial Secretary on the fund’s fixed assets. 10.3 These financial objectives point towards a cost recovery principle which underpins the financial management of the OFCA Trading Fund. As a matter of common sense and practicality, it must be accepted that budgeting is not an exact science and allowance must be given for human errors. Financial contingencies must also be built into the budget. That, of course, is within the province of the administrators and the Court will not interfere unless unconstitutionality, unlawfulness or Wednesbury unreasonableness are engaged. 10.4 But what is not permitted is for the administrators to set out to achieve an excessive surplus which goes far beyond meeting expenses by its income and achieving the target return rate together with a reasonable cushion, so much so that a legitimate complaint can be raised that the budgeting goes beyond the financial objectives and is intended to raise funds for the general revenue in the form of hidden taxation.” 73. That, with respect, correctly stated the position of the OFCA Trading Fund. The corollary is that the legislation associated with trading funds, on its proper construction, does not expand the meaning of the terms “the fees payable” in the basal provision, s 7(2) of the TO, respecting the power of the Secretary. 74. The evidence discloses that contrary to this construction of the legislation, in framing the financial projections to which regard was had in preparing the proposal by the respondents in the Joint Statement reliance was placed upon there being sufficient revenue raised by license fees to provide payments into the general revenue of substantial sums identified as “notional tax” and “dividends”. A striking indication of this approach appears in Note 17 to the Financial Statements in the OFTA Trading Fund Report for the year ended 31 March 2012. In Note 17, in conjunction with the identification of $115,224,000 as “Dividend Proposed”, the following appears: “The proposed dividend to the Government is based on the total comprehensive income for the year and the target dividend payout ratio of 100% (2011: 100%) stated in the annual business plan approved by the Secretary for Financial Services and the Treasury.” 75. However, the Court of Appeal dismissed the appeal. It appears to have done so in §10.31, §10.34 of the reasons on the erroneous footing that any “excessive surplus” could be identified as a matter of degree and without regard to the inclusion of “notional profits tax” and “proposed dividends”, whereas quite clearly these elements had been specifically budgeted for. Orders 76. As indicated earlier in these reasons, the appropriate relief for the appellants is by way of declaration to the effect that in formulating the Decision reached in the Joint Statement the respondents fell into specified errors of law respecting the relevant legislation for the prescription by the Secretary of licence fees under s 7(2) of the TO. 77. Accordingly, the appeal should be allowed and orders made as follows namely that:- (1) The appeal be allowed and the orders of the courts below be set aside. (2) There be a declaration that:- (a) the decision of the Respondents expressed in their Joint Statement dated 27 November 2012 to proceed with the proposed fixing of licence fees in exercise the power conferred by s 7(2) of the Telecommunications Ordinance (Cap 106) (“the TO”) was made upon the errors of law specified below. (b) it was an error of law to fail to construe s 7(2) of the TO as not permitting the prescribing of a licence fee which included an element of what in substance was a tax upon the licensee. (c) it was an error of law to construe the Trading Funds Ordinance (Cap 430) (“the TFO”) as permitting the inclusion in budgets of the OFTA Trading Fund of projections for notional tax or dividends to be treated as surplus funds under s 10(1) of the TFO. (3) There be an order nisi that the respondents do pay to the appellants the costs of this appeal and of the proceedings in the courts below, such costs to be taxed if not agreed. Should any party wish to vary this order for costs, such party, or parties should within 14 days of this judgment lodge with the Registrar and serve on the other parties written submissions, with liberty on the other parties to reply by way of written submissions within 14 days thereafter by lodging them with the Registrar and serving on the other parties. In the absence of written submissions seeking to vary the order nisi, this order will become absolute upon the expiry of the time permitted for such submissions. Chief Justice Ma: 78. For the above reasons, the appeal is unanimously allowed with the consequent orders set out in para 77 above. Mr Benjamin Yu SC and Mr Roger Beresford, instructed by Baker & McKenzie, for the 1st & 2nd Applicants (Appellants) Ms Teresa Cheng SC and Mr Adrian Lai, instructed by the Department of Justice, for the 1st & 2nd Respondents (Respondents) The 1st to 9th Interested Parties, unrepresented, absent [1] As are the interested parties. [2] Counsel have had an opportunity to deal with this question during their submissions. [3] See Nolan LJ in R v Manchester City Council ex p King (1991) 89 LGR 696 at 712. [4] (1996) 120 CLR 572 at 580. [5] If correct, this may give rise to serious conflict of interest when determining the necessary or desirable buffer. [6] The general manager is designated by the Financial secretary “to control and manage a trading fund and who is accountable to the Financial Secretary for the operations of the trading fund.” Section 6(2). [7] See for example fixed assets in the balance sheet of the trading fund report 2002/03, note 9 in the notes to the accounts. Schedule 2 to the Resolution set out the assets appropriated to the trading fund under para (c) of the Resolution. [8] Since renamed OFCA Trading Fund. [9] Such costs may include provisions for contingencies but they do not become authorized profits when unspent. Note also the objective under TFO s 6(6)(b) to cover expenses “taking one year with another”. [10] See for example, OFTA Trading Fund Report for 2007/2008 at p 67. [11] The immediate trigger to these proceedings see Gummow NPJ’s judgment at para 24. [12] F Hoffmann – La Roche Co AG v Secretary of State for Trade and Industry [1975] AC 295 at 354 (per Lord Wilberforce), 365 (per Lord Diplock). [13] [1948] 1 KB 223 at 234. See “Halsbury’s Laws of Hong Kong” 2nd Ed, 2017, Vol 1, 10.076. [14] R v Boycott Ex parte Keasley [1939] 2 KB 651 at 660; R v Criminal Injuries Compensation Board Ex parte Lain [1967] 2 QB 864 at 884-885, 887; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 580-581, 594-596; [1992] HCA 10; R v Employment Secretary, Ex parte Equal Opportunities Commission [1995] 1 AC 1 at 26-27, 35-36. [15] Marsh v Shire of Serpentine-Jarrahdale (1966) 120 CLR 572 at 580-581; [1966] HCA 77. [16] Air Caledonie International v Commonwealth (1988) 165 CLR 462 at 467; [1988] HCA 61. [17] (1966) 120 CLR 572 at 580. [18] The Oriental Bank Corporation v Wright (1880) 5 App Cas 842 at 856 per Lord Blackburn; Brunton v The Commissioner of Stamp Duties [1913] AC 747 at 760 per Lord Parker; A-G v Wilts United Dairies Ltd (1921) 37 TLR 884 at 885 per Scrutton LJ, 886 per Atkin LJ; Greenwood v FL Smidth & Company [1922] 1 AC 417 at 423 per Lord Buckmaster, 424 per Lord Wrenbury; The Commonwealth and the Central Wool Committee v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 443-444, 462-463 per Isaacs J, 473-474 per Higgins J; [1922] HCA 62; Congreve v Home Office [1976] QB 629 at 652 per Lord Denning MR, 654-655 per Roskill LJ, 662 per Geoffrey Lane LJ. [19] McCarthy & Stone (Developments) Ltd v Richmond upon Thames London Borough Council [1992] 2 AC 48 at 74-75. [20] They included R v Manchester City Council, Ex parte King (1991) 89 Knight’s Local Government Reports 696 at 709-711, 711-712; R v Camden London Borough Council, Ex parte Cran (1995) 94 Knight’s Local Government Reports 8 at 21-22, and Djanogly v Westminster City Council [2011] RTR 102 at [12]-[13]. [21] [2014] 1 All ER 304. [22] (1985) 157 CLR 309 at 315; [1985] HCA 48. [23] (2005) 8 HKCFAR 628 at [109]-[115]. [24] [1957] AC 436 at 461.