PACIFIC LONG DISTANCE TELEPHONE CORPORATION LTD v. NEW WORLD TELECOMMUNICATIONS LTD

HCA 1688/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1688 OF 2006

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D E C I S I O N

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1.  This is the Defendant’s application for the discharge of the interlocutory injunction order granted ex-parte on 4 August 2006 and continued on 11 August 2006.

2.  The background leading to this application can be summarised as follows.

3.  Both litigants are telecommunication service providers.  It is common ground that :

(a)     the Plaintiff does not hold a licence for fixed telecommunication network service;

(b)    the Plaintiff, as is known to the Defendant, has been using the Defendant’s fixed line service to carry out the Plaintiff’s long- distance telecommunication service.

4.  The precise contractual basis on which the above service has been provided by the Defendant is disputed: the Plaintiff pleads that the service has been provided pursuant to a written agreement dated 21  May  2003 (“the May 2003 Agreement”); the Defendant, on the other hand, pleads that it has been provided pursuant to :

(1)     the Integrated Digital Access Service Application Forms;

(2)     a Letter of Agreement dated 4 July 2003;

(3)     the Defendant’s General Terms and Conditions of Service.

5.  The action was commenced in August 2006.  On 4  August  2006, the Plaintiff applied ex-parte for an injunction order compelling the Defendant to continue to provide the Integrated Digital Access lines to the Plaintiff.

6.  The Plaintiff’s complaint to the Court on 4 August 2006 was in gist that :

(a)     on about 3 August 2006, the Defendant wrongfully suspended the provision of all services to the Plaintiff without advanced notice;

(b)    Clause 10 of the May 2003 Agreement provided that the Defendant should endeavour to give the maximum period of service practicable before suspending the services.

7.  The ex-parte order was continued after a hearing on 11  August 2006.

8.  No written judgment has been given by the Court on either 4  August 2006 or 11 August 2006.  But judging from the history of the proceedings, the injunction order must have been granted and continued on the basis that :

(1)     there was a serious question to be tried as regards the Plaintiff’s complaint of wrongful suspension of the services by the Defendant on 3 August 2006;

(2)     the balance of convenience was in favour of granting and continuing the injunction.

9.  Subsequent to the said hearings, on 7 March 2007, the Defendant served a written notice on the Plaintiff in the following terms :

“We refer to [the May 2003 Agreement] made between you and us which, you claimed, governs the provision of Integrated Digital Access Service and Local Access Service by us to you.  Without prejudice to our position in HCA No. 1688 of 2006 that [the May 2003 Agreement] has ceased to be in force since 2005, we hereby give you notice, pursuant to Clause 11.2 of [the May  2003 Agreement], terminating [the May 2003 Agreement] on 10  June 2007.

Service of this notice is without prejudice to our defence or counterclaim in HCA No. 1688 of 2006 or any other rights of claims which we may have against you.”

Clause 11.2 of the May 2003 Agreement provided that :

“Either party may terminate this Agreement at any time after the first twelve (12) months after the Commencement Date without cause by serving 90  days written notice on the other.” 

The 90-day period therefore expired by 6 June 2007.

10.  This application, which was taken out on 1 June 2007, is brought on the basis that, even on the Plaintiff’s own case, the May 2003 Agreement (which is the corner-stone of this action) has been brought to an end by 10 June 2007 (see para. 9 above).  Accordingly, there is no basis for the injunction to be continued.

11.  Several arguments have been put forth by the Plaintiff to oppose this application.

12.  The first argument is that the injunction order is somehow “free-standing”.  And therefore the Defendant should have applied to Court to bring the May 2003 Agreement to an end, instead of serving a written notice of termination for that purpose.  In short, I find no substance in this argument and reject it.

13.  The second argument is based on a complaint that, since the service of the notice of termination, the Defendant has refused to co-operate with the Plaintiff to release the telephone numbers and port them out to another service provider. The Plaintiff argues that a term should be implied into the May 2003 Agreement to the effect that the Defendant must co-operate with the Plaintiff to do so and that, during the period when the Defendant fails to co-operate, the notice period is “suspended”.

14.  There are at least two problems with the Plaintiff’s second argument :

(a)     the alleged implied term suffers from uncertainty;

(b)    more importantly, as the Plaintiff fairly admits, the release and porting out of telephone numbers was not something which existed at the time of the May 2003 Agreement.  Hence, that aspect could not have been within the parties’ contemplation at the time.  Consequently, neither would such an implied term be within their contemplation.

15.  The Plaintiff then argues that there has been a variation of the May 2003 Agreement for the incorporation of the above term.  The variation was asserted by counsel (without evidence) to have taken place in about April 2004, around the time when a direction was given by the Telecommunications Authority to the Defendant (among other things) to facilitate the portability of telephone numbers for customers of fixed telecommunication network services.

16.  I agree with the Defendant that the Telecommunications Authority’s direction can at most amount to imposing a statutory duty on the Defendant’s part.  But there is no evidential basis to support the Plaintiff’s argument that there has been a contractual variation of the May 2003 Agreement at the same time.  The Plaintiff’s further argument, based on the Supply of Services (Implied Terms) Ordinance (Cap. 457), suffers from the same difficulty as those set out above.

17.  The final argument, which was only raised in the course of today’s hearing and not before, is that the notice of termination has not been served in accordance with Clause 16.1 of the May 2003 Agreement.  Clause 16.1 reads :

“A party giving notice or notifying under this Agreement must do so in writing, hand delivered, sent by pre-paid post or by facsimile transmission to the recipient’s address specified below or such other address as the other party may notify.”

The address in the Defendant’s notice was indeed not that stated in the May 2003 Agreement.  However, it is unknown if the Plaintiff has notified the Defendant of some other address(es) for service (and, if so, where).

18.  The Plaintiff has not adduced any evidence of non-compliance with Clause 16.1, even though an affirmation has been filed on 7  June  2007 to oppose this application.

19.  In these circumstances, I do not consider there is any proper evidential basis (nor do I consider it fair) to permit the Plaintiff to advance this argument.

20.  By reason of the matters set out above, I agree with the defence that an order in terms of paragraph 1 of the summons should be made.