1. The Appellant was a supervised front desk employee at a guesthouse on Nathan Road (the “Guesthouse”) with responsibility for checking guests in and out and some associated duties. An officer of the Licensing Authority posed as a lodger to rent a room at the Guesthouse. The Appellant processed the check-in at the reception desk. The Guesthouse did not possess a certificate of exemption or a licence as required under section 5(2) of the Hotel and Guesthouse Accommodation Ordinance, Cap 349 (the “Ordinance”). 2. The Appellant was convicted by a magistrate of managing a guesthouse without a licence, contrary to section 5(1) of the Ordinance. The Appellant’s appeal against his conviction to the Court of First Instance was dismissed. The judge ordered him to pay the prosecution’s costs of the appeal (the “Costs Order”). The Appellant was granted leave to appeal to this Court against both his conviction and the Costs Order. 3. On the appeal against conviction, the question was whether on a proper construction of section 5(1) of the Ordinance, the Appellant could be regarded as someone who was managing the Guesthouse 4. The Court held that the Appellant’s acts did not constitute managing the Guesthouse within the meaning of section 5(1) for the following reasons: 5. First, the word “manage” in its ordinary meaning refers to the act of conducting or carrying on (a business, an undertaking, an operation etc.). It also means to direct the affairs of (a household, institution, state etc.). 6. Second, having regard to other provisions in the Ordinance giving the section its context, the prohibition under section 5(1) of the Ordinance extends only to management by persons who could and should have applied for a licence, 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. 7. Third, considering that the purpose of the Ordinance is to regulate hotels and guesthouses through a licensing regime and to ensure their compliance with fire and safety standards, 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. To criminalise such conduct seems at best marginally relevant to the statutory purpose. 8. In the light of the above, the Court held that the concept of “manage” under section 5(1) of the Ordinance does not extend to a person who carries out non-discretionary functions under the direct supervision of another on the premises. 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. They are the people who can answer “yes” to the question “are you in charge here?” In the present case, the Appellant was not shown to have the authority necessary to characterise him as one who was managing the Guesthouse and therefore the offence was not made out. Judgment on costs: 9. Since the main appeal is allowed, the Costs Order would in any event be set aside. Moreover, the prosecution conceded that the award had wrongly been made. Nevertheless, the Court went on to consider the principles to be applied in making costs orders in favour of the prosecution in magistracy appeals. 10. Costs should not be awarded in favour of the prosecution automatically whenever an appeal against conviction in the Magistrates’ Court fails. Convicted persons enjoy a statutory right of appeal and in order to give full effect to this right, costs orders in favour of the prosecution should only be made if the appeal was not reasonably arguable. 11. Additionally, in making costs orders in favour of the prosecution, the court must apply the principles laid down in section 15 of the Costs in Criminal Cases Ordinance, Cap 492. Any sum awarded must not be punitive but only compensatory of properly incurred expenses. The award must also be just and reasonable and one that the unsuccessful appellant is able to pay. However, there is no independent rule requiring the costs ordered not to be grossly disproportionate to a fine imposed. 12. Generally, the prosecution has to apply for costs and the court must give the appellant a proper opportunity to be heard as to whether the order should be made. 13. In the present case, the Costs Order was made without any prior notice to the Appellant. It had not been sought by the prosecution and the Appellant was not given any opportunity to be heard as to whether it should be made nor as to whether he can satisfy the award. As such, the Costs Order was made in breach of natural justice and was not made in accordance with the statutory principles. CONCLUSION: 14. The main appeal and the appeal on costs were both unanimously allowed. The conviction of the Appellant and the Costs Order were set aside. 15. Further, the Court ordered that the Respondent pay the Appellant’s costs of the main appeal and the appeal on costs before this Court and below.