HONG KONG CABLE TELEVISION LTD v. TELEVISION BROADCASTS LTD AND ANOTHER

HCA1171/2005
HCA1256/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS.1171 AND 1256 OF 2005

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(HEARD TOGETHER)

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D E C I S I O N

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The Injunction

1. This Decision should be read together with the Decision that I delivered on 9 July 2005 (“the July Decision”).  For present purposes, I will adopt the abbreviations used in the July Decision.

2. In the July Decision, I allowed the Program Application taken out by Hong Kong Cable in the 1^st Action and granted an interim injunction (“the Injunction”) restraining Galaxy, until trial or further order, from including the Program as part of the Service as defined in the Galaxy Licence within 12 months of the last date on which TVB included the Program as part of its domestic free television programme service, unless otherwise approved by the Broadcasting Authority pursuant to Condition 36.5 of the Galaxy Licence (“Condition 36.5”).  And I refused the Channels Application.

Development since the grant of the Injunction

3. At the time when I heard the Applications, the Broadcasting Authority was considering the various complaints lodged by Hong Kong Cable relating to the Program and the 4 TV Channels.  It had not come to a determination yet.

4. Eventually on 20 August 2005, the Broadcasting Authority made a ruling on the complaints (“the BA’s Ruling”), which was published in a press release.  The parties were formally notified of the BA’s Ruling by letter dated 22 August 2005.

5. On the Program, the Broadcasting Authority ruled that TVB and Galaxy had not breached the relevant firewall provisions in that it was not substantially produced by TVB.  On TVB’s exclusive supply of the 4 TV Channels to Galaxy without going through an open bidding process, the Broadcasting Authority ruled that it constituted a breach of the relevant firewall provisions.  On TVB’s non-exclusive supply of the 4 TV Channels to Galaxy, the Broadcasting Authority ruled that it was in breach of the firewall provisions which required TVB to make available the Channels to other licensees on no less than favourable terms than Galaxy’s in that it had given Galaxy an unfair head start over other licensees.  The Broadcasting Authority further ruled that no case had been made out that there was undue preference between TVB and Galaxy with respect to licence fee payable as the same fee structure was offered to all licensees.

6. On 20 August 2005, TVB responded to the BA’s Ruling by issuing a press release (“the Press Release”) in these terms :

“[TVB] accepts the ruling of the Broadcasting Authority (BA) on the supply of six channels by TVB to [Galaxy].

TVB has acted in good faith with the interest of the public in mind and the belief that its acts, which are the subject of the present complaints, were in compliance with its licence conditions.  The findings of the BA in these cases have provided guidance to TVB on how it should handle future transactions between TVB and Galaxy groups.  With the BA findings, we now have a clearer directive on how to ensure compliance with the firewall provisions.

Regarding [the Program], we are glad to know that BA finds the complaint not substantiated.  We shall provide a copy of the BA findings to the court for the judge’s consideration on whether [the Injunction] should be lifted.  Once [the Injunction] is lifted, we shall arrange [the Program] exhibited on our channel as soon as possible.”

7. Dissatisfied with the BA’s Ruling relating to the Program, Hong Kong Cable has since lodged an appeal to the Chief Executive in Council pursuant to section 34 of the Ordinance, which is still pending.

Applications

8. The above development prompted the parties to make the following applications :

(1) An application by TVB and Galaxy by summons dated 24 August 2005 to discharge the Injunction (“the Discharge Application”).

(2) Applications by Hong Kong Cable by two summonses, one for each of the 1^st and 2^nd action, dated 29 August 2005 seeking partial interlocutory judgment in each action against TVB pursuant to Order 27, rule 3, Rules of the High Court (“the O27 Applications”).

(3) Two summonses, one for each of the 1^st and 2^nd action, dated 13 September 2005, seeking partial interlocutory judgment in each action against TVB pursuant to Order 14, rule 1, Rules of the High Court (“the O14 Applications”).

I will first look at the Discharge Application.

The Discharge Application

(1)     Basis upon which the Injunction was granted

9. It is, I believe, convenient to reiterate briefly the reasons why I granted the Injunction.

10. In the July Decision, I first dealt with the statutory regime under the Ordinance and noted that one of the primary aims of the Ordinance which is pertinent to these actions is to ensure a fair competition and a level playing field in the television programme service market : sections 13, 14 and 15 of the Ordinance.  Section 15(2), in particular, confers a statutory cause of action upon persons who claim to have suffered loss and damage as a result of a licensee’s breach of section 13(1) or 14(1) or a licence condition relating to that section.  I then summarized the effect of the relevant firewall provisions in the TVB Licence and the Galaxy Licence.  On the Program Application, I was satisfied that there was a serious question to be tried as to whether the Program was substantially produced by TVB within the meaning of Condition 36.5.  I was further satisfied that on a balance of convenience it was just to grant the Injunction.

11. One of the factors that I took into account when considering balance of convenience is the mischief that Condition 36.5 seeks to address.  In paragraph 40 of the July Decision, I said this :

“…If an injunction is not granted, Galaxy will have a head start over other competitors, including Hong Kong Cable.  Such an unfair head start, I believe, is the mischief that Condition 36.5 aims to tackle.”

12. On reflection, I do not think what I have said about the mischief is entirely correct, although it does not affect my conclusion that the Injunction should be granted.  I was then influenced by senior counsel’s submissions on the effect of the firewall provisions pertaining to the Channels Application.  Those provisions plainly seek to tackle unfair head start by Galaxy.   Condition 36.5 seeks to deal with another form of mischief, namely unfair competition and possible abuse of dominant market position.  It is thus related to sections 13(1) and 14(1) of the Ordinance.  To tackle the mischief, Condition 36.5 imposes a 12 months’ window period within which Galaxy may not include as part of its service any television programme wholly or substantially produced by the TVB group, unless otherwise approved by the Broadcasting Authority in the public interest.  The 12 months’ window period starts from the last date on which TVB included such television programme as part of its domestic free television programme service.

(2)     The court’s jurisdiction

13. I next look at the court’s jurisdiction to discharge the Injunction.

14. In principle, the court has jurisdiction to entertain and, if satisfied, to allow an application to discharge an injunction even following upon a full inter partes hearing.  The court will exercise this jurisdiction :

(1) when the sole, or at least the main, basis for seeking the discharge is that there has been a material change of circumstance since the injunction was first granted, i.e. a crucial new factual development; or

(2) when after the injunction is granted it become apparent that it was founded on an erroneous view of the law.

See London Underground Ltd v. National Union of Railwaymen (No.2) [1989] IRLR 343 at p.344.

(3)     Admissibility of the BA’s Ruling

15. Here, TVB and Galaxy invoke the court’s jurisdiction by asserting that the BA’s Ruling, which confirmed that there was no breach of Condition 36.5 pertaining to the Program, constitutes a material change of circumstance that justifies the discharge of the Injunction.  Mr Smith, SC, appearing for TVB and Galaxy, contends that the BA’s Ruling is admissible in these proceedings to prove that there was no breach of Condition 36.5.  The BA’s Ruling is indeed binding on the parties in this regard.

16. Mr Yuen, SC, appearing for Hong Kong Cable, argues that the BA’s Ruling is inadmissible to show that there was no breach of Condition 36.5.  He relies on the well-established principle that the judgment, verdict or award of another tribunal is not admissible evidence to prove a fact in issue or a fact relevant to the issue in other proceedings between different parties : Hollington v. Hewthorn & Co. Ltd [1943] 2 All ER 35.  For a chronological survey of the cases that applies Hollington, see Secretary of State for Trade and Industry v. Bairstow [2004] Ch. 1, see paras.15–27 at pp.7–11.

17. Mr Smith submits that the above principle does not apply because the parties here were the same parties involved in the BA’s Ruling.  Alternatively, he relies on the exception to the Hollington principle as propounded in Symphony Group plc v. Hodgson [1993] 4 All ER 143.  There, Balcombe LJ held that in the summary procedure for the determination of the liability of a non-party to the proceedings to pay costs, the judge’s findings of fact in the proceedings are admissible.  This departure was justified on the basis that the non-party with the original proceedings was so close that he would not suffer any injustice by allowing this exception to the general rule : at p.153f–g.

18. For my part, I will first look at the nature of the BA’s Ruling and then consider the extent of its admissibility, if at all, by reference to the Ordinance and the general principles relating to admissibility of evidence.

19. In the BA’s Ruling, the Broadcasting Authority first referred to the submissions and representations made by the parties on each of the complaints, then set out its reasoning and finally came to its decisions.  And it is the Broadcasting Authority’s decision that there was no breach of Condition 36.5 that is chiefly relied on by TVB and Galaxy for present purposes.  In my view, the Broadcasting Authority’s said decision on Condition 36.5 is an opinion that it arrived at after considering the parties’ submissions and representations.

20. The general principle is that opinion is inadmissible in proof of facts.  Thus in principle, the BA’s Ruling, as no more than the Broadcasting Authority’s opinion, will not be admissible in these proceedings to prove that there was in fact no breach of Condition 36.5.  This objection to admissibility on principle, in my view, can be overcome only if the BA’s Ruing is admissible for such purpose by (a) the operation of the Ordinance; or (b) the doctrine of issue estoppel. 

21. I first look at the Ordinance.  Under section 15(2) of the Ordinance, a person sustaining loss or damage from :

(1) a breach of section 13(1); or

(2) a breach of section 14(1); or

(3) a breach of a licence condition, determination or direction relating to that section,

may bring an action against the licensee who is in breach.

22. The first two scenarios concern a breach of the relevant statutory provisions.  The 3^rd concerns not a breach of the statutory provisions but a breach of, among other things, a licence condition relating to those provisions.

23. Where the case concerns a breach of section 13(1) or 14(1), section 15(4) of the Ordinance provides :

“(4)     For the avoidance of doubt, it is hereby declared that a breach of section 13(1) or 14(1) occurs when the Broadcasting Authority forms the opinion referred to in section 13(1) or 14(4) respectively.”

The Broadcasting’s opinion is plainly admissible to prove that not only did it form such opinion but also that in fact there is a breach of the relevant statutory provision.

24. Where, however, the case concerns a breach of the relevant licence condition, as is the present case, nothing in section 15 or indeed in the Ordinance provides for the admission of the Broadcasting Authority’s opinion (if there is one) as evidence in the court proceedings to show that there is in fact a breach of the licence condition or not.  Absent such specific provision, the Broadcasting Authority’s opinion will not, by operation of the Ordinance, be rendered admissible in the court proceedings for such purpose.  It follows that the BA’s Ruling will not be admissible by virtue of the Ordinance in these proceedings to prove that there was no breach of Condition 36.5.

25. As to issue estoppel, Mr Smith has advanced no argument that the BA’s Ruling constituted an issue estoppel and has thus become admissible and binding on the parties in these proceedings.

26. In my view, the BA’s Ruling is inadmissible for present purposes to prove that there was no breach of Condition 36.5.  It is only admissible to prove that the Broadcasting Authority ruled that there was no breach of Condition 36.5.  Whether in these proceedings there was a breach of Condition 36.5 is a matter for the court to decide after considering all the relevant evidence and submissions.

27. For completeness, I wish to briefly deal with the cases relied on by counsel.  The Hollington line of cases cited by Mr Yuen is arguably not applicable because the parties involved in the present proceedings are the same as those in the complaint procedure before the Broadcasting Authority.  Mr Smith’s submissions and his reliance on the Symphony Group case do not alter the fact that the BA’s Ruling remains merely an opinion of the Broadcasting Authority which, as I have ruled, is inadmissible for the purpose that he contends for.

(4)     Any material change of circumstances

28. I now turn to consider if the BA’s Ruling constitutes a material change of circumstances.

29. Mr Smith argues that it does by taking four points.  He first submits that in light of the BA’s Ruling, there is no serious question to be tried on the breach of Condition 36.5.  I have already ruled that the BA’s Ruling is inadmissible to prove that there was no breach of Condition 36.5.  This argument is plainly untenable.  On the materials before me, the evidence on the question of breach of Condition 36.5 remains very much the same as at the time when I granted the Injunction.  This has not been changed by the BA’s Ruling.

30. Mr Smith next argues that the 12 months’ window period imposed by Condition 36.5 will soon expire in a few months time.  If the Injunction is not lifted, Hong Kong Cable will effectively get what it wants and it will be meaningless for TVB and Galaxy to bring the matter to trial.  He thus asks me to consider Hong Kong Cable’s likelihood of success, bearing in mind the fact that the Broadcasting Authority has ruled that there was no breach of Condition 36.5.  This argument is plainly based on the admissibility of the BA’s Ruling to prove that there was no breach of Condition 36.5.  (The mere fact that the 12 months’ window period will soon expire is not sufficient.)  The basis is now gone.  This contention must fail.

31. Mr Smith then submits that the BA’s Ruling tilts the balance of convenience in favour of not continuing the Injunction.  The wording of the Injunction specifically provides that Galaxy may, with the Broadcasting Authority’s approval, broadcast the Program within the 12 months’ window period.  The BA’s Ruling constitutes de facto approval by the Broadcasting Authority to broadcast the Program.  For having ruled that there was no breach of Condition 36.5, the Broadcasting Authority would most likely give such approval had an application been made on the assumption that there was a breach of Condition 36.5.  I am unable to accept this submission.  Under Condition 36.5, the Broadcasting Authority may give approval in the public interest.  On the evidence before me, it does not follow from its ruling that there was no breach of Condition 36.5 that the Broadcasting Authority will most likely give approval in the public interest.  Making the ruling and giving approval in the public interest are simply two different matters.  The BA’s Ruling in no way constitutes any de facto approval.

32. Mr Smith then advances an alternative argument.  If the Injunction is maintained, then Galaxy would be prevented from broadcasting the Program because it could not obtain approval from the Broadcasting Authority where, from its perspective, no issue of approval even arises.  This would effectively put Galaxy in an even worse position than if the Broadcasting Authority found that the Progamme was substantially produced by TVB, where Galaxy could at least the apply for approval to broadcast the Program and would most likely get it.  In my view, this argument does not take the matter any further for the simple reason that it is purely speculative to suggest that the Broadcasting Authority would give the approval in the public interest even if an application were made on the assumption that the Program was substantially produced by TVB within the meaning of Condition 36.5.

33. For the above reasons, I do not find that the BA’s Ruling constitutes a material change of circumstances that would justify the discharge of the Injunction.  The Discharge Application is dismissed accordingly.

O27 Applications and O14 Applications

34. I now turn to the O27 and O14 Applications, which can be conveniently dealt with together.  For it is Mr Yuen’s submission that they stand or fall together.

35. Mr Yuen submits that the TVB Press Release constitutes a clear and unambiguous admission on the part of TVB that it had breached the firewall provisions pertaining to the 4 TV Channels.  Partial judgment by such admission under Order 27 should be entered : Chung Wong Kit (a bankrupt) [1999] 1 HKC 684, at pp.686E–687A.  Alternatively, by making the admission, TVB can no longer maintain any meaningful defence contrary to it.  Summary judgment under Order 14 should be entered.

36. The Press Release must be understood in its context.  It was couched in careful terms.  TVB did not admit that it had breached the relevant licence conditions.  It reiterated that it had acted in good faith and with the belief that the acts complained of were in compliance with its licence conditions.  It then went on to state that the BA’s Ruling provided guidance on how it should handle future transactions with Galaxy.  Accepting the BA’s Ruling without appealing in the circumstances does not amount to any clear and unambiguous admission as contended by counsel.  I will therefore dismiss the O27 and O14 Applications.

Costs

37. Costs should follow the events.  I will therefore make an order nisi that Hong Kong Cable shall have the costs of the Discharge Application in any event, to be taxed if not agreed; and that TVB shall have the costs of the O27 and O14 Applications in any event, to be taxed if not agreed.