TELEVISION BROADCASTS LTD v. ASIA TELEVISION LTD

1987 No. A3660

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The parties to this action are the only 2 commercial television stations in Hong Kong. Their earnings depend very largely upon their revenue from their "airtime" advertising, which in turn depends upon the popularity of their programmes. Understandably they are arrivals, even fierce competitors in the words of one of their senior executives. Their competition extends to the purchase and acquisition of programmes produced by others. That competition was particularly fierce in 1977 and 1978 when there were 3 television stations in Hong Kong, the Plaintiff (TVB) the Defendant (then RTV, and now re-named ATV) and CTV, a third station that went out of business in August 1978.

2. The parties to this action were thereafter able to co-operate, and did so in the acquisition of rights to telecast major international sporting events like World Cup Soccer, the Olympic Games and the Asian Games. Thus the parties acquired the rights to various international sporting events and shared or allocated them exclusively by mutual consent. However, in May 1987 ATV announced that it had secured exclusive rights to televise in Hong Kong the 1988 Seoul Olympic Games. The Plaintiff complained that that was done in breach of agreement and by paragraph 3 of its Statement of Claim dated the 15th June 1987 claimed that between 12th September and 5th October, 1978, it was orally agreed between Mr. Kevin Lo for and on behalf of the Plaintiff and Mr. Steve Huang for and on behalf of the Defendant in a number of telephonic exchanges and meetings that (i) neither station would bid against the other in relation to major international sporting events including the Olympic Games and World Cup Soccer; (ii) both stations would make a joint bid for the Olympics and World Cup Soccer; (iii) upon the stations being successful in obtaining the joint rights to telecast the Olympics and World Cup Soccer, they would agree between themselves to allocate exclusivity to telecast the same in Hong Kong or in default of such agreement, such telecast rights would be shared equally by the stations, and (iv) that it was implicit in the foregoing agreement that during the subsistence of the agreement neither station should seek to secure such telecast rights for itself to the exclusion of the other or alternatively neither station should do that without reasonable notice of such intention being given to the other station. I will refer to that as the 1978 Agreement.

3. The Plaintiff also claims in paragraph 5 of its Statement of Claim that there was another oral agreement (the 1984 Agreement) reached some 6 years later at a meeting held on 16th July, 1984, at the Kowloon Tsai Owners Association Club and attended by Robert Chan and Clarence Chang for the Plaintiff and Deacon Chiu and Jermyn Lynn for and on behalf for the Defendant; and that at that meeting it was orally agreed between the Plaintiff and the Defendant that (a) the existing arrangement under the 1978 agreement whereby rights to telecast the Olympics and World Cup Soccer would be acquired jointly for the two stations was to continue; (b) the existing arrangement whereby rights so acquired would be shared equally between the two stations in default of any agreement to the contrary was to continue; (c) in the event that either station should no longer wish to be bound by the foregoing arrangement, notice would be given to the other prior to any unilateral attempt to secure such telecast rights; and (d) the two stations would submit a joint bid for the telecast rights of the 1988 Olympic Games to be held in Seoul.

4. The Plaintiff says that in breach of those agreements the Defendant without the knowledge or consent of the Plaintiff unilaterally approached or negotiated with and obtained from the Seoul Olympic Organising Committee ("SLOOC") the exclusive right to telecast in Hong Kong the 1988 Seoul Olympic Games and that as a result it will suffer loss and damage. The Plaintiff's claims - (i) a declaration that the 1978 Agreement as confirmed by the 1984 Agreement or alternatively the 1984 Agreement is still in effect; (ii) an injunction to restrain the Defendant from telecasting in Hong Kong the 1988 Seoul Olympic Games or selling advertising sponsorship of any such programme without affording to the Plaintiff equal telecasting rights for the same; (iii) a mandatory injunction requiring the Defendant to procure the agreement of SLOOC to the telecast rights of the 1988 Seoul Olympics being shared jointly or alternatively to procure the cancellation of the existing agreement between the Defendant and SLOOC whereby the Defendant acquired the right to telecast the 1988 Seoul Olympics, or alternatively damages for breach of contract.

5. The Defendant denies that any such agreements were entered into and says there were only informal discussions with no intention to enter into binding legal relations. It goes on to counterclaim damages for injurious falsehood alleging that by these proceedings, by announcements to the press and by statements by its advertising sales representatives, TVB made false and malicious claims that the Defendant was in breach of an agreement to share telecast rights to the 1988 Olympics and that ATV's exclusive telecast right for the 1989 Olympics was doubtful. TVB denies the counterclaim.

6. Upon the joint request of both parties the issues of quantum of damages have been deferred and I am concerned only with those of liability.

7. As I have said, in August 1978 CTV ceased business. The Managing Director of RTV at that time was Steve Huang, a former employee of TVB, and Kevin Lo was the General Manager of TVB. Subsequently in 1982 Kevin Lo became an Executive Director of TVB and was replaced as General Manager by Robert Chan, his former deputy. In his days at TVB, Steve Huang formed a close friendship with Kevin Lo, a friendship which endured after he moved to ATV.

8. In May 1977, Mr. James Hawthorne, the Government Director of Broadcasting, tried to get the three television stations to agree not to unilaterally acquire television broadcasting rights to the Olympic Games, specifically the next Olympics in Moscow in 1980. It is common ground that such unilateral action unnecessarily inflated procurement costs. The matter advanced to the stage of the circulation of a draft agreement under which rights to telecast successive Olympics would be rotated between the three stations, though in the event that agreement was not actually signed. It was envisaged in the context of the agreement that the rights to the 1980 Olympics would be acquired through the Asia-Pacific Broadcasting Union (ABU). This is a union of broadcasting stations within whose geographical area Hong Kong falls, and which negotiates television telecasting rights upon favourable terms for its members.

9. On 31st May, 1978, Steve Huang (who in the previous year had suggested that the proposed agreement should be extended to horse racing to save acquisition costs) wrote to Kevin Lo suggesting some kind of arrangement on the coverage of international sporting events. Correspondence followed not only between the stations, but between them and ABU. To turn to Kelvin Lo, it is clear from his evidence and from the documentary evidence that about that time, ABU was pressing the Hong Kong stations for a decision on the matter of exclusivity i.e. which station would have exclusively in Hong Kong the telecasting rights that ABU might obtain. There was pressure from ABU for resolution of the problem by bidding. That could only have benefited ABU and not the Hong Kong stations. There was also pressure for an early decision and successive dead lines were set in relation to World Cup Soccer. There can be no doubt that early resolution of the exclusivity problem between the Hong Kong stations was necessary. In August 1978, when CTV ceased business, agreement was facilitated, for the reservations Kevin Lo had about CTV's capacity disappeared with its demise. Kevin Lo says that as a result of ABU pressure, he had discussions with Steve Huang. These were over the telephone and at meetings with Steve Huang on a one to one basis at the Carlton Hotel or elsewhere. The outcome of the discussions was that they would stand by their idea of ending exploitation by programme sellers and between the two stations try and resolve the exclusivity problem or whatever domestically. Differences on exclusivity would be solved by give and take.

10. The Moscow Olympic Organising Committee tried to pressure the two stations to deal directly with them but was resisted and ultimately the rights were obtained through ABU and the two stations decided to share their rights. The general principles of the general agreement were all along advocated by RTV and he, Kevin Lo accepted them.

11. As to World Cup Soccer the pressure came from ABU and was in respect of the 1982 World Cup. This was also resolved along the same lines as the Olympics, based on the general agreement established by then - no unilateral bidding and also obtaining rights through ABU. The matter of exclusivity would likewise be resolved by either rotation or sharing equally.

12. Now they can be no doubt, and it was not disputed by ATV, that there was a pattern of co-operation and, indeed, an understanding between the two stations at least to consult in the acquisition of some international sporting programmes. The issues in this regard are i) whether that understanding was certain enough to form the basis of a legally binding agreement, and ii) whether there was an intention to create legal relations.

13. To establish the two agreements TVB relies upon oral evidence, documentary evidence, and conduct prior to and after the two agreements. As to oral evidence, only three witnesses gave evidence at the hearing, and of these, only the first, Kevin Lo was able to testify to the 1978 Agreement. The second witness, also called by the Plaintiffs was Robert Chan, the present General Manager of TVB. He was deputy General Manager at the time and was not directly concerned with the discussions with RTV at that time. The third witness called was the only witness for the Defendant, Deacon Chiu, Chairman of ATV, who came into the picture in 1982 when his family group of companies acquired the shareholding of RTV in two stages. He was not concerned with the 1978 Agreement and his evidence is of no assistance in that context.

14. Kevin Lo was not able to say precisely how or when the 1978 Agreement was entered into, other than that it resulted from telephonic and personal discussions with Steve Huang. He was no more precise about the terms of the Agreement; rather he raised doubts by the vague generalities he adopted in referring to the Agreement and his omission of the sort of specific terms one would expect. He spoke of the idea of "being exploited" to which I have already adverted, and also made reference to the "wish to reduce programme costs, as to the ABU", "the attitude was to work together" and said that by "general agreement" he meant "offer our bid for international sporting events through ABU or anybody that can get at lowest prices and to resolve (telecast) rights domestically." He was hopelessly unsure about the scope of the Agreement and to which international sporting events it applied. Of course those events took place about 10 years ago, but even generous allowance for normal loss of memory left me with grave doubt as to the certainty of the terms alleged and even as to whether they were agreed. The fears that presumably prompted the circumspect and circumlocutory manner in which it was chosen to lead Mr. Lo's evidence, were in the event proved entirely justified; but that choice simply compounded my doubts about his evidence. It fell far short of what I would regard as the bare minimum that would be reguired in the circumstances.

15. There was also the evidence of Robert Chan, although he was not directly involved in the exchanges and discussions as I have said. Kevin Lo said he had briefed Robert Chan on the 1978 Agreement. This was confirmed by Robert Chan who proceeded to testify far more precisely and elaborately to the 1978 agreement, including at least one term i.e. providing for sharing of telecast rights in default of agreement, which Kevin Lo had not said he had mentioned to Robert Chan, and which itself does not emerge clearly from Kevin Lo's evidence. Notwithstanding Mr. Martin Lee's not unreasonable submission on the Plaintiff's behalf that as an executive whose ability was not disputed, and who was primarily concerned with the matters in question whereas Kevin Lo had moved to other duties, Robert Chan was in a better position to remember, I do not accept Robert Chan's testimony as evidence of the existence and terms of the 1978 Agreement. I formed the impression that he had embellished what Kevin Lo had told him, perhaps unconsciously elevating to the standard of an agreement, the practice and co-operation of the two stations in fact, although not necessarily in pursuance of any agreement or the agreement alleged.

16. I proceed then to consider the documentary evidence, of which there was a considerable quantity, consisting in the main of friendly or businesslike correspondence between the two stations, particularly between Kevin Lo and Steve Huang, between ABU and the two stations, and of some internal records particularly the minutes and notes of TVB board and management meetings and reports. I do not regard it as necessary or indeed helpful to detail the documentary evidence. In general it is as consistent with the existence of an understanding or gentleman's agreement or statement of intentions, as with a binding agreement. But there is some documentary evidence that upon the probabilities actually militates against the existence of the agreement contended for by TVB. For instance, the lack in all the documents of any record of the Agreement or its terms. Having reviewed the evidence and given careful consideration to the circumstances and to the powerful submissions urged upon me on behalf of both parties, it seems to me that such lack of reference does point strongly to the absence of a binding agreement.

17. Notwithstanding some suggestions to the contrary, the alleged Agreement would have been a very important one. It is common ground that TVB could with its vastly superior financial position, out bid RTV on the acquisition of any programme it desired. While, therefore, the agreement was likely to reduce procurement costs, it also involved sharing the rights with RTV. On the other hand, for RTV, in addition to lower procurement costs, there was the assurance of shared rights to programmes which, otherwise, it could not hope to obtain if TVB sought them exclusively. It seems to me that on both sides, but particularly that of RTV, clear records would certainly have been maintained and indeed the agreement, if intended as a binding legal agreement, would have been enshrined in a memorandum of agreement or exchange of letters as were so many other specific and less important matters of agreement between the two stations.

18. Quite apart from any record of the agreement, the first, only and somewhat oblique reference to the agreement (if it be such) in the minutes was in the minutes of the TVB board for the 21st Hovember, 1979, meeting more than a year later. It was in those equivocal terma:

"In order to reduce costs of some programmes, the company will be sharing broadcasting rights with RTV, especially short programmes such as the Olympic Games and the World Cup, through the negotiation of the ABU"

The foregoing minute is equally consistent with an understanding or gentleman's agreement and indeed, it is hardly an accurate description of the agreement contended for. Then, for example, there was a letter on 5th November, 1979, a year after the alleged agreement, from Steve Huang to Robert Chan assuring him that RTV would not act unilaterally; and also an internal TVB note dated 24th March, 1982 of matters to be discussed with RTV listed in relation to the 1984 Olympic rights in the following way:

"(a) whether we will negotiate jointly or separately and exclusively.

(b) if jointly, what percentage should we increase over the 1980 Olympic rights i.e. US$85,510, 10% of total ABU cost of US$450,000."

These are quite inconsistent with the existence of the agreement alleged. Clearly the documentary evidence falls far short of supplementing Kelvin Lo's evidence. Indeed, the documentary evidence, if anything, in my view points to the probability that there was no such agreement as TVB contends for.

19. I come then to the final category of supporting evidence relied upon by TVB i.e. prior and subsequent conduct. In part this consists of the documentary evidence I have already adverted to. Since October 1978, when the 1978 Agreement is claimed to have been concluded, all major international sporting events have been jointly acquired and, except where otherwise agreed, have been equally shared. Likewise, ATV seems to have indulged in some secrecy in their recent acquisition of the 1988 Olympic rights. But all that is equally consistent with an undertaking or gentleman's agreement, which the Defendant does not dispute, and so does not take Mr. Lo's evidence any further in establishing the existence of the claimed 1978 binding agreement. Likewise the absence of any action by TVB and by senior staff within RTV to bring to the attention of the successive new owners of RTV the existence of the 1978 Agreement, points to the absence of such an agreement. So, too, does the failure of TVB and its legal advisers to make reference to the 1978 Agreement in numerous letters of protest sent out by them when the dispute between the stations broke out in May 1987 upon ATV's unilateral acquisition of the 1988 Olympics rights. Indeed there was a suggestion in at least one of those letters that the agreements did not go back beyond 1984.

20. I turn then to the 1984 agreement. In mid 1984, Robert Chan wanted to get on with the acquisition of rights to telecast the 1988 Seoul Olympic Games. ABU had sent out questionnaires seeking to ascertain by 31st July 1984 the maximum sum each station was prepared to pay for the rights. For his part Deacon Chiu was anxious to obtain a refund of the 1st instalment ATV had paid for the 1986 World Cup Rights, particularly as a demand had been received from ABU for the second instalment, which ATV did not then have funds to meet. He wanted TVB to take over the rights and pay to ATV the amount of its first instalment. So a meeting was held at the Kowloon Tsai Owners Association Club House in Kowloon about 11 a.m. on the 16th July 1984. Robert Chan and Clarence Chang attended for TVB, and Deacon Chiu and Jermyn Lynn for ATV. Robert Chan says he opened with a general briefing to the effect that they had been working very well in the past with this agreement of not bidding against each other and jointly acquiring rights in respect of major international sporting events such as the Olympic Games, World Cup Soccer and the Asian Games, and dealing with ABU. He says that he persuaded Deacon Chiu to agree to a joint bid of 10% by Hong Kong for the 1990 World Cup and to a bid of US$350,000 or 2% of the totally ABU bid for the 1988 Seoul Olympic Games. Then they talked together of the 1986 World Cup and Robert Chan suggested a "barter deal" whereby TVB would have exclusive rights to the 1986 World Cup and ATV the rights to the F. A. Cup. The ATV representatives said they would go back and think about it. The Broadcasting Review Board was also discussed.

21. Two days later, Clarence Chang produced an aide memoire of the meeting. Surprisingly he did not record any agreement about not bidding against each other nor, despite the details it contained, the discussion or briefing on the long-term agreement mentioned.

22. The bid of US$350,000 was increased to US$406,250 and subsequently in December 1986 to US$455,000 by TVB and ATV jointly. In 1987, Robert Chan learned that ATV had unilaterally obtained exclusive rights to the 1988 Olympic Games.

23. Deacon Chiu's evidence was that Robert Chan phoned him and called the meeting on the 16th July 1984 at the Kowloon Tsai Owners Association Club to discuss the 1988 Olympics. He in turn said he would like to discuss the 1986 World Cup to obtain a refund on the instalment already paid by ATV. At the meeting, he agreed to a joint bid of US$350,000 for the 1988 Olympics, and also agreed the allocation of the 1986 World Cup and the F. A. Cup for two years and the refund to ATV of the 1st instalment of the World Cup. He denied there was any mention of a general long-term agreement between the two stations or that it occured to him that he was committing ATV to a long-term agreement. He agreed that subsequently the amount of US$350,000 was increased to US$406,250 about 6 months after the first meeting, and that about a year later increased yet again to US$455,000. He added that it was very difficult to say if he thought he was entering into a binding commitment with TVB over the 1988 Olympics. If ABU succeeded in getting the rights he would carry on together. If ABU did not, then ATV would try to get it in their own way. He accepted that it was agreed that at that time the two stations would not bid against each other and that that meant making a joint bid, but that this was only agreed for the 1988 Seoul Olympic Games. He denied any general agreement, although he recalled that expression being used, which he understood to mean an agreement in principle. His evidence was that sporting events were dealt with event by event.

24. The US$350,000 bid was increased to US$406,250 and then to US$455,000 in December 1986. Shortly after that, in January 1987, a Mr. C. S. Wong and Mr. Lawrence Lo of Telesports came to see him and told him that SLOOC would not discuss with ABU at all, but that they could get him the exclusive telecast rights to the 1988 Seoul Olympic Games. According to Deacon Chiu, Mr. Lawrence Lo was a former employee of TVB and an expert on sporting events; he had dealt with him previously. He did not think he had a binding legal agreement with TVB and without consulting the senior management of ATV or his legal advisers, he entered into an agreement with Telesports and later SLOOC.

25. I pause at this stage to review the creditability of the three witnesses. Both Mr. Lo and particularly Mr. Chan were obviously able executives. However, as I have already indicated, I was not impressed with the former's evidence. He quite obviously was treading very warily and not unnaturally, could not remember clearly the events of ten years and more ago. But his account of the alleged 1978 agreement was so deficient that in my view the lapse of time does not explain that; on the contrary it calls into question the very existence of that agreement, and as I have indicated those doubts are compounded by the documentary evidence and the conduct of the parties.

26. Robert Chan was even more cautious and careful about his evidence, asking for several of Mr. Martin Lee's questions to be repeated. He was also much more precise and positive about the 1978 general agreement than Kevin Lo was, notwithstanding that his source of knowledge was what Kevin Lo had told him. Why he should have felt it necessary to recount the agreement to deacon Chiu some two years after Deacon Chiu came into the picture and the agreement was allegedly working well is not at all clear. It may be that Robert Chan derived his version of the general agreement from the way in which international sporting events were dealt with in practice. It is not necessary for me to speculate upon that. Suffice it to say that I was left with the impression that Robert Chan consciously or unconsciously was presenting and even slanting his evidence to fit the Plaintiff's case, when he claimed to have briefed Deacon Chiu on the 1978 general agreement which he says the latter then agreed to continue. His revealing references to a spirit of cooperation I think were far more indicative of the actual situation.

27. In contrast, Deacon Chiu's prompt and even impetuous answers seemed to me much more credible. He gave his evidence in chief in Chinese, but in cross-examination very quickly opted for English, and somewhat rashly, I thought, dispensed with the interpreter. As he himself admitted, his English was not very good. In consequence I think he did himself and ATV less than justice. He was also remarkably candid and readily made numerous concessions in cross examination. Upon the basis of both demeanour and also content, generally I prefer his evidence to that of Robert Chan, and generally I accept his evidence as truthful particularly in respect of the latter's alleged briefing and any agreement on his part to continue the 1978 Agreement or arrangements, where they were clearly at odds.

28. Accordingly it is plain that the 3 categories of evidence relied upon by TVB fall far short of establishing the 1978 general agreement, but before making a finding to that effect regard must be had to the decision in Edwards v. Skyways Ltd (1964) 1 WLR 349, upon which Mr. Martin Lee placed considerable reliance. The judge on that case, Megaw J., as he then was, held that where an agreement is reached in the course of business relations, and there is an intention to agree, there is a heavy onus on the party alleging that it is not intended to give rise to legal obligations. But in quoting a passage from the judgment of Scrutton L.J. in Rose and Frank Co v. J.R. Crompton and Bros. Ltd, Megaw J., accepted that an intention that an agreement is not to give rise to legal relations may be implied from the subject-matter of the agreement.

29. Reverting to the present case, the 1978 Agreement was not reached entirely or even predominantly in the course of busimess relations. On the contrary it was reached in the course of the personal relationsip and resulted from the close personal friendship of Kevin Lo and Steve Huang. Nevertheless, assuming that a heavy onus does lie upon the Defendant, in my judgment it has been amply discharged by the vague and incomplete nature of the subject-matter, particularly the unclear limits of the range of international sporting events to which it was to extend and the absence of machinery to determine the amounts of the bids to be made. And set in the context of all the related circumstances the probabilities are overwhelmingly that a binding legal agreement was not intended.

30. So that notwithstanding any presumption that might arise from Edwards v Skyways, the probabilities that arise from the evidence stand and in my finding the Plaintiff has failed to establish the 1978 Agreement pleaded.

31. I should add that in my view the 1978 Agreement would also fail for lack of certainty and completeness, particularly in respect of the two matters I have just mentioned as demonstrating the vague and incomplete nature of the subject matter of the agreement. I shall return to aspects of this matter in the context of paragraph 5(d) of the Statement of Claim.

32. Proceeding to the 1984 Agreement, for the reasons I have already given, I do not accept Robert Chan's evidence that he recounted the 1978 arrangements or agreement and that Deacon Chiu agreed to continue those arrangements or the agreement. I prefer Deacon Chiu's evidence in that regard and also in regard to his claim that it did not occur to him that he was entering a general agreement. It follows that there is no credible oral evidence of the first 2 terms of the 1984 general agreement pleaded in paragraph 5(a) and (b) of the statement of claim i.e. that the arrangement under the 1978 Agreement to jointly acquire telecasting rights, and the arrangement under that Agreement to share those rights equally in default of agreement would continue. Nor for that matter is there any credible evidence of the third term in paragraph 5(c) i.e. that prior notice would be given of any unilateral attempt to secure telecasting rights.

33. The documentary evidence, such as it is, is not only weak and inconclusive, but equally consistent with an understanding or gentleman's agreement which the Defendant does not dispute. As to the conduct of the parties, it is more consistent with the specific agreements to bid at the 3 specified amounts testified to by Deacon Chiu. Moreover Deacon Chiu's instruction to Jermyn Lynn to reserve ATV's negotiating position is, so far as it goes, more consistent with an intention not to be bound to a general agreement not to compete or to bid jointly for the 1988 Olympic Games telecast rights. And as in the case of the 1978 general agreement, in my view any presumption that could have arisen under Edwards v Skyway had there been any general agreement of the sort contended for, would have been displaced by the uncertain and incomplete nature of that agreement.

34. Furthermore in the way the first 3 terms of the 1984 Agreement are pleaded in paragraph 5(a), (b) and (c) of the Statement of Claim, it is clear that they are dependent upon the existence of the 1978 agreement; accordingly they fail with it, given the absence of any agreement to continue it or any corresponding arrangements.

35. Finally I would add that in my judgment the agreement contended for would also fail as uncertain and incomplete for reasons similar to those that apply to the 1978 Agreement.

36. Given my findings that the Plaintiff has failed to establish the 1978 Agreement and that part of the 1984 Agreement pleaded in sub-paragraphs (a), (b) and (c) of paragraph 5, it is only sub-paragraph 5(d) of the Statement of Claim that remains to be considered i.e. that it was agreed that the 2 stations would submit a joint bid for the telecast right of the 1988 Olympic Games in Seoul. Mr. Suaine using the analogy of a stool that has lost three of its four legs submits that the 1984 Agreement cannot stand. But Mr. Lee responds that the intention of the parties to obtain the telecast rights to the 1988 Olympic Games is unquestionable, as indeed it is. He argues that once the parties agreed to make a joint bid, they are bound to accept its successful conclusion i.e. the joint acquisition of the rights. But that is not the same as not being able to withdraw before then. In the present case, of course, it is not disputed that before ABU commenced negotiations on the basis of the final joint bid of US$455,000, Deacon Chiu in January, 1987, acquired exclusive rights and withdrew ATV's participation in the joint bid. For ATV Mr. Swaine says that ATV could, in the context of its relationship with either ABU or TVB, withdraw its bid at any time prior to ABU becoming committed to SLOOC on the basis of the bid. I think that must be so having regard to the very limited nature of what was agreed between the parties, to the surrounding circumstances, to ABU procedures which, in the present context, were at a very preliminary and even tentative stage when ATV withdrew, and, above all, to the absence of any discernible term restricting withdrawal. Once it is accepted that either party (inter se) was free to withdraw its participation in those bids, then I think it must follow that the agreements to make those joint bids could not be binding and that the parties were free to make unilateral bids.

37. But that is far from being the only obstacle to the Plaintiff succeeding upon the extremely narrow foundation afforded by paragraph 5(d) of the Statement of Claim. By reference to the intention of the parties and the elimination of credible alternatives, Mr. Martin Lee ingeniously endeavoured to project the narrow agreement pleaded to almost the full width of the general agreement, including the requirement to give reasonable notice prior to taking unilateral action to acquire telecasting rights. I am far from persuaded that he is right. I do not consider that all the additional terms he contends for can be implied or deduced. And even if they could, they would not avail him for they are not pleaded, and specifically, the requirement to give such notice is not pleaded in relation to the agreement averred in paragraph 5(d).

38. Furthermore, a bare agreement that the two stations would submit a joint bid for the telecast rights of the 1988 Olympic Games seems to me to be uncertain. At what price was the bid to be made? And how was that to be determined? How were the rights to be shared when secured? Were the parties to be bound to bid jointly even if it became clear that a joint bid was not going to succeed? And if indeed a requires to give reasonable notice of unilateral action can be implied, what length of notice would be reasonable?

39. Such a bare agreement seems to me to be not only uncertain but incomplete in not providing for so fundamental a term as the determination of the price at which joint bids were to be made (see, for example, Courtney & Fairbairn Ltd v. Tolaini Brothers (Hotels) Ltd & Another (1975) 1 WLR 297 in which the Court of Appeal held that since there had been no agreement upon such a fundamental matter as the price in a building contract, or the method by which it was to be calculated, there was not contract; also Loftus v. Roberts (1902) XVIII TLR 532 in which the defendant agreed to engage the actress plaintiff at a salary to be mutually arranged between them. Darling J. held there was no concluded contract until the parties had agreed upon the salary).

40. Finally it is clear from the terms of paragraph 5(d) of the Statement of Claim, that the agreement claimed to have been made on 16th July 1984 to submit a joint bid was a general agreement and not a specific agreement related to a particular bid at a particular price. This was confirmed by the submissions made by Mr. Lee. However the only three "agreements" that were established in my finding were the three specific agreements to make joint bids through ABU at the three specified amounts I have mentioned, of which the last and most material was concluded about 1? years later in 1986, when the final increase to US$455,000 was agreed.

41. It follows in my judgment that the Plaintiff cannot succeed solely upon the averment in paragraph 5(d), nor has it succeeded in establishing the agreement pleaded in that paragraph. I am, of course, not concerned with any justification the plaintiff may have in terms of honour or morals in suggesting that the Defendant went behind its back and acquired the 1988 telecasting rights from Telesports while the joint bid at US$455,000 was still on foot. Upon the legal criteria that I have to apply, the Plaintiff's claim fails altogether for the reasons I have given.

42. I proceed then to the Defendant's counterclaim, which I have already outlined. It is common ground that the claim is one of injurious falsehood. It is stated at p. 371 of the Seventh Edition of Street on Tort that the Court of Appeal has defined the tort of injurious falsehood as follows:

"That an action will lie for written or oral falsehoods ...... where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce actual damage ......"

43. And in Clerk and Lindsell on Torts (15th Ed., para 19-08), under the heading "Essentials of the Action" it is said of the same tort that:

"Lord Davey in Royal Baking Powder Co. v Wright Crossley and Co. [1901] (18 RPC 95, 99) (quoted by McCardie J in British Railway Traffic, etc. Co. v CRC Co. [1922] 2 K.B. 260, 268) said: 'To support such an action it is necessary for the plaintiffs to prove (1) that the statements complained of were untrue; (2) that they were made maliciously - that is, without just cause or excuse; (3) that the Plaintiffs had suffered special damage thereby .....'."

44. And under the heading of malice in para. 19 - 11 it is said that :

"In the form of action now under consideration good faith is always a defence. And it is no evidence of malice if a defendant persists in asserting his claim after he had been informed that it was groundless. A statement published bona fide does not give a cause of action even though the statement causes damage. On the other hand, however, an unfounded claim of right made maliciously supports a cause of action. In the case of Greers Ltd v Pearman and Corder Ltd. Scrutton L.J. said 'Honest belief in an unfounded claim is not malice; but the nature of the unfounded claim may be evidence that there was not an honest belief in it. It may be so unfounded that the particular fact that it is put forward may be evidence that it is not honestly believed'."

Those statements of the law were not disputed and I accept them. I proceed accordingly to consider the 3 elements of injurious falsehood, beginning with the falsity of the Plaintiff's claims or, in the other words used, that they were unfounded. In normal circumstances my findings that the Plaintiff has failed to establish the agreements pleaded would suffice. But in the present case it was not disputed and it clearly emerged particularly from the evidence of Deacon Chu that there were 3 specific agreements to make th successive bids at US$350,000, US$406,250 and US$455,000. Moreover he readily conceded that the first agreement which was adopted in relation to the 2 later bids, extended beyond agreement merely to make a joint bid at the specific amount. Because those agreements were not pleaded (being regarded by the Plaintiff as specific agreements made in pursuance of earlier general agreements), nor addressed by counsel as to whether they were binding agreements, I have not examined that latter aspect. However it seems to me that the Defendant has not established the falsity of the Plaintiff's claims (as announced to the press and as made by its advertising sales representatives) that the Defendant was in breach of agreement with the Plaintiff to share the 1988 Olympic Games telecast rights and that the Defendant's exclusive telecast right to those Games was doubtful, having regard particularly to the last of the 3 specific agreements.

45. Proceeding to malice in the sense of a lack of honest belief in the claims, or of the claims being made without just cause or excuse, the Defendant in its counter-claim pleaded that the Plaintiff knew or ought to have known that there never were any such agreements as alleged and that the Plaintiff's claims were made maliciously.

46. As to the averment that the Plaintiff had knowledge of the falsity of its claims, in the particulars of such knowledge, the Defendant pleaded the following: First, that a draft agreement circulated in 1978 by RTV was never signed. That in fact is so, but the Plaintiffs have not relied upon that document as having been signed. Second, that in the ABU questionnaire on the acquisition of telecast rights for the 1988 Olympic Games, which was completed and signed immediately after the 16th July 1984 meeting, Deacon Chiu instructed Jermyn Lynn to reserve the Defendant's position and not to bind the Defendant to negotiate for such rights solely through ABU; and that such reservation was known to the Plaintiff. Having regard to the terms of the questionnaire in particular the very clear authority to ABU to negotiate for those rights, I do not think that omission of any particular signifance. Nor do I accept or would I attach any significant weight to the Defendant's imputation of Jermyn Lvnn's knowledge to the Plaintiff on the basis that Jermvn Lynn subsequently left ATV and joined TVB. Third, the Defendant relied on a remarkable number of changes of front on the part of the Plaintiff, which I need not detail. Mr. Martin Lee in his submissions for the Plaintiff stated that while there was clearly a general agreement between the parties, the Plaintiff found some difficulty in determining the exact time when the agreement was entered into. It seems to me from the evidence of Kevin Lo and Robert Chan and the numerous changes of front which continued into the hearing of this action when the Plaintiff abandoned its averments of a joint venture agreement, and also of an additional general agreement made in or about December 1986 between Jermyn Lynn for and on behalf of the Plaintiff and Yip Wai Kong for and on behalf of the Defendant, that the Plaintiffs had obvious difficulty in deciding exactly what agreements if any were entered into. Needless to say I took that into consideration in arriving at my findings on the general agreements. In the present context, those changes of front and, for that matter, the delay by the Plaintiff in pointing to the claimed existence of an agreement when the dispute first surfaced, are suggestive of a lack of belief in the agreements, but of themselves they do not go all that far.

47. On the other hand, there was a highly effective understanding and spirit of cooperation that has endured for about 10 years and achieved joint action and sharing or exclusive allocation by agreement in relation to all major international sporting events. There were numerous specific agreements. Above all there were the 3 specific agreements to make joint bids through ABU for the 1988 Olympic Games at the specific amounts I have mentioned, the last of which was still on foot which ATV made its unilateral acquisition. The legal niceties of the law of contract would not necessarily have been appreciated by the lay management of TVB; in relation to the amorphous evidence of ten years of cooperation, consultation and specific agreements, the matter apparently occasioned even their legal advisers no little difficulty. Having regard to all the evidence and the considerations I have mentioned, I am far from persuaded that the Plaintiff did not in fact honestly believe in the claims in question. In my judgment the evidence does not establish that the Plaintiff did not have an honest believe in the claims it made. It follows on the law that the counterclaim must fail.

48. Having arrived at that conclusion, with reference to the third element of special damage, I will simply state quite shortly that the evidence shows clearly that the Defendant has suffered some damage; how minimal, of course, matters not in the present context of liability.

49. Also, having arrived at the conclusion mentioned, it is unnecessary and I do not propose to deal with the other submissions of the Plaintiff, including the submission that the Defendant's pleading of the claims alleged to be false was deficient.

50. Accordingly I dismiss the counterclaim and will now hear counsel on costs.