HONG KONG CABLE TELEVISION LTD v. THE TELECOMMUNICATIONS AUTHORITY

HCAL 62/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO.62 OF 2003

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J U D G M E N T

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Introduction

1. The subject of this application for judicial review is a direction dated 7 May 2003 issued by the respondent (‘the Authority’) pursuant to s.36B(1)(a)(i) of the Telecommunications Ordinance, Cap.106 (‘the Ordinance’).

2. The direction required the applicant, the holder of a pay television broadcasting licence (‘the television broadcasting licence’), to take certain action which the Authority considered necessary in order for the applicant to comply with the terms and conditions of its licence.

3. It is the applicant’s contention that the direction was unlawful.  In the result, the applicant seeks, first, an order of certiorari to bring up and quash the direction and, second, a declaration that the direction is unlawful and of no legal effect.

The applicant

4. The applicant, as I have indicated, is a licensed ‘pay’ or ‘subscription’ television broadcaster.  The service it provides is by way of what is commonly called a ‘cable television’ system.  At or about the time when the direction was issued in May 2003, the applicant was providing television programming to over 600,000 subscribers in Hong Kong.  It is the nature of Hong Kong, of course, that by far the greatest number of its subscribers were residents of high-rise buildings.

5. The applicant is also licensed to provide a public fixed telecommunications network service, the licence being a fixed telecommunication network services licence (‘the FTNS licence’).

6. In respect of its licensed cable television services, the applicant has at all times operated in a competitive market.  At or about the time when the direction was issued, I am told that high-rise buildings were capable of receiving three different types of television programming :

(i)      terrestrial television services; that is, free television services provided by Television Broadcasts Ltd. (‘TVB’) and Asia Television Ltd. (‘ATV’);

(ii)      satellite television services, usually distributed to apartment blocks through what is called a satellite master antenna television system (‘SMATV system’), and finally

(iii)     pay television services, often referred to as ‘cable television’, the type of service offered by the applicant.

7. In terms of its television broadcasting licence, the applicant is obliged to make its services available to a minimum number of subscribers who reside in what are described as ‘premises passed’ : see clause 23.1 and 23.2 of its television broadcasting licence.  It may only do so of course if it is technically feasible to do so and if the provision of its service is otherwise in accordance with the licence.

8. In particular, in providing its service, the applicant is prohibited in terms of its television broadcasting licence from obstructing any other telecommunication service; for example, satellite television services.  In this regard, clause 54 of the licence states that :

“… the Licensee shall not in providing, establishing, operating, adjusting, altering, replacing, removing or maintaining any telecommunication line or telecommunication installation in, over or upon any land for the purposes of this licence, obstruct, interfere with, or cause or permit damage to, any other telecommunication line or telecommunication installation, or means of telecommunication or telecommunication service or any … any tube, casing, duct, wire or cable for the carriage of electrical current.”

9. Clause 54 lies at the heart of this application for judicial review.  The direction of 7 May 2003 issued by the Authority was brought about by an alleged failure on the part of the applicant to comply with clause 54.

The Authority

10. The Authority is a public officer appointed by the Chief Executive in terms of s.5 of the Ordinance with the responsibility of regulating the telecommunications industry in Hong Kong.  The Authority’s executive arm is the Office of the Telecommunications Authority (‘OFTA’).

11. One of the Authority’s statutory duties is to ensure that those who hold telecommunication licences, which include television broadcasting licences, comply with the terms and conditions of those licences.  To ensure compliance, the Authority may issue directions.  The power of the Authority to issue directions is, in terms of the Ordinance, contained in s.36B which, in so far as it is relevant, reads :

“      (1)   … the Authority may issue directions in writing—

               (a)    to a licensee requiring it to take such action as the Authority considers necessary in order for the licensee to—

                       (i)    comply with any of the terms or conditions of its licence; or

                       (ii)   comply with any provision of this Ordinance or any regulation made thereunder

               …

and the licensee … shall give effect to such direction.”

12. In exercising his powers, including his powers under s.36B, the Authority is obliged to act reasonably.  In this regard, s.6A(3)(a) of the Ordinance directs that :

“      In exercising his powers under this Ordinance, the Authority when—

       (a)    forming an opinion or making a determination, direction or decision under this Ordinance shall only do so on reasonable grounds and having regard to relevant considerations.”

Installing telecommunication services in high-rise buildings

13. In order to distribute various forms of telecommunication services through high-rise buildings, one or more ‘vertical drop cables’ are used.  As the name implies, the cables, which carry telecommunication signals, drop vertically floor by floor.  So that the residential units on each floor may receive the services, ‘horizontal drop cables’ connect to the vertical cables and, again as the name implies, run horizontally across the floor to each residential unit.  The difficulty, as I understand it, is that there is normally only one horizontal drop cable for each residential unit and, without special measures being employed, that single horizontal drop cable may only be connected to a single vertical drop cable.

14. What then happens if, for example, a satellite service (a SMATV service) is distributed via one vertical cable while cable television is distributed via another?  In his affirmation of 18 June 2003, Mr Chan Ka Yiu, a Vice President of the applicant, explained that, in the absence of an interconnection arrangement, it would mean that the subscriber would not be able to receive satellite and cable services concurrently; a choice of one or the other would have to be made.

15. Mr Chan explained it thus :

“There is normally only one drop cable for each residential unit.  In cases where the applicant’s services and the SMATV services inside a building are distributed through two different vertical cables, and where the drop cable has already been connected to a SMATV cable of a residential unit, the drop cable has to be disconnected from the SMATV cable so that it can be connected to the applicant’s cable to allow transmission of the applicant’s signals to the residential unit.”  [my emphasis]

16. Mr Chan continued :

“in cases where a subscriber wants concurrent reception of both the applicant’s services and SMATV services, interconnection between the two separate cable systems, for example by way of a combiner, will have to be carried out.”

[my emphasis]

17. But as Mr Chan explained, interconnection is not a simple matter :

“Since interconnection involves the provision of facilities to enable two networks to communicate with each other and transfer signals across their boundaries, the operators of the different networks and the owners of the building will need to come to an agreement before any interconnection may be carried out.  For instance, the parties will have to resolve issues such as the SMATV channel frequency allocation at the in-building coaxial cables, the signal interference on the applicant’s system from the SMATV system, the allocation of physical space for installation of interconnection equipment and the arrangement of the four local terrestrial television channels when carrying out interconnection.  Moreover, the parties will have to sign an agreement to govern the parties’ rights and obligations and provide for the costs of the interconnection.

Since the circumstances of each residential estate are different from those of the others, the applicant has to negotiate with the SMATV operators and/or building owners on a case by case basis.”

18. In his affirmation of 18 June 2003, Mr Chan said that, while interconnection was ‘under consideration’ in respect of many high-rise buildings, there were some 1,350 residential estates and/or individual buildings where interconnection had not been put in place and where, accordingly, subscribers had to make a choice between one service and another.

Matters leading up to the issue of the direction

19. In a letter dated 2 August 2002, the Authority (through OFTA) wrote to the applicant to inform it that 13 complaints had been received, all but one of them apparently coming from building management companies representing groups of subscribers in residential developments.  The complaints were to the effect that, without being warned of any such consequence, the subscribers, in receiving the applicant’s service, had been deprived of services already in place, mainly satellite (SMATV) services.  In this regard, the letter read :

“In summary, the complainants complained that [the applicant] had during and in the course of offering its cable television or causing its affiliated company i-CABLE Webserve Ltd (‘i-CABLE’) to offer or provide its broadband internet access service to them removed or disconnected the horizontal drop cable from its original connection with the vertical drop cable installed by other In-building Coaxiel Cable Distribution System (‘IBCCDS’) operator (e.g. SMATV operator) and re-connected it to the IBCCDS of [the applicant] without the express consent of the concerned complainants.  As a result of which, the complainants could not receive the television signals carried by the original vertical drop cable installed by the IBCCDS operator.  According to the complainants, at no time during the course of disconnection and reconnection, your staff had informed them of the consequence of losing the satellite television, closed circuit television signals and other telecommunications services currently provided via the vertical drop cable of the other IBCCDS operator.”  [my emphasis]

20. As to the 13 complaints received, a schedule attached to the Authority’s letter gave details of the complainants and the residential developments in question.  Three of those developments were : Regentville, Bo Shek Mansion and Vista Paradiso.

21. The applicant disputed any contention that, when a subscriber was forced to make a choice, its technicians installed cable without making it clear that it would result in the loss of any existing satellite service.  As a matter of practice, said the applicant, the consequences would be explained and, after installation, the subscribers given an opportunity to say whether they were satisfied or not.

22. Detailed and contentious correspondence took place between the parties.  During the course of this correspondence, the Authority was persuaded not to pursue possible infractions of the Ordinance itself.  However, the Authority remained of the view that there may have been a failure by the applicant to comply with clause 54 (cited in para.8 above) of its television broadcasting licence.

23. So that the applicant’s various challenges to the lawfulness of the direction may be considered in context, a brief overview of the correspondence leading up to the issue of the direction needs to be given.

24. In a letter dated 29 August 2002, the applicant set out the history of its dealings with the various complainants.  This history revealed that, when it had received reports that the installation of its own service had cut off reception of satellite and/or closed circuit television, even though the result had been occasioned knowingly by subscribers, it had initiated or attempted to initiate negotiations for a concluded interconnection agreement of the type described in para.16 of this judgment.  The applicant’s letter concluded by saying that it had made a ‘genuine effort’ to reach agreement with satellite television providers and the building management companies representing subscribers.  The costs it charged were reasonable, it said :

“… the one-off $6,000 connection charge is calculated on a cost recovery basis and the $2 carriage and maintenance charge per annum is the consideration for the service connection agreement.  The service connection agreement has been drafted in accordance with industry practice, and in our opinion, does not contain any anti-competition provisions.”

25. In a letter dated 15 November 2002, the Authority (through OFTA) informed the applicant that, as part of its investigations, it had prepared questionnaires and received statements from three complainants in Regentville.  In the letter, the Authority said that, when the three complainants subscribed to the applicant’s cable television service, they were already receiving satellite (SMATV) services.  At no time were the complainants informed that, as a result of the installation of the applicant’s services, other television services would be lost.  After installation of the applicant’s services, all three complainants lost their satellite services.  In addition, one complainant lost access to the closed circuit television system operating in the building.  In light of these complaints, the Authority said the following :

“The act of [the applicant] installing [its] service without completion of interconnection arrangements with Satellite Master Antenna Television (‘SMATV’) licensees and thereby obstructing the SMATV services might have constituted a breach of Clause 54 …

       …

During the inspection of the In-building Coaxial Cable Distribution System (‘IBCCDS’) conducted by this office at Regentville, we found that there are two separated vertical cables.  One of the two vertical cables is used by [the applicant] to carry [its] service and the other is to carry SMATV and signals.  No interconnection of [the applicant’s] system and the SMATV system has been arranged.  The horizontal cables of the three complainants were connected to the vertical cable of [the applicant].

It used to be a practice that [the applicant] would complete the interconnection with the SMATV system before they provide service to the residents and hence the problem as mentioned [above] would not happen.  In your letter of 29 August 2002, you did not deny the fact that, without the interconnection in place, [the applicant’s] subscribers will not be able to receive the signals, which are being conveyed in the SMATV systems.  [The applicant] is required to explain why [it] proceeded to provide service to the residents in Regentville in the full knowledge that, without the completion of the interconnection, services provided by other licensees (e.g. SMATV services) will be blocked.

Judging from the fact that no interconnection agreement has been reached between [the applicant] and the SMATV licensee and that the three complainants were able to receive satellite television signals before installation of [the applicant’s] services but lost the satellite television signals after completion of the installation, it is evident that in establishing, operating or maintaining telecommunications installation in Regentville … [the applicant] has obstructed the telecommunications service provided by SMATV operators in contravention of Clause 54.”

26. In its reply of 4 December 2002, the applicant protested that little or no reliance could be placed on the questionnaires.  In addition, the applicant said that the failure of the Authority to disclose the identity of the individual complainants who completed the questionnaires made it difficult to investigate the complaints.  In this regard, the applicant said :

“Without knowing the identity of the complainants or the residential units involved, it is difficult for [the applicant] to carry out its internal enquiry in order to ascertain the relevant facts like the time when the relevant installation took place and the technician(s) involved … While [the applicant] is willing to cooperate with the Authority in its enquiry, we regret to say that the Authority’s withholding of this material information about the identity of the complainants is hampering our fact-finding effort and hence causing delay in the enquiry.  The rule of natural justice requires a Government department to set out its allegations of wrongdoing against an accused person and that person must be given a fair opportunity to correct or contradict them.  The complainants are the existing customers of the applicant and this is not the exceptional case where the Government department needs to protect the source of information, that is the identity of the complainants.  In short, [the applicant] cannot see justification for the Authority to withhold information on the identity of the complainants.

…

[The applicant] maintains that its customers can make an informed decision because a customer is advised and has a chance to check immediately after the installation whether he misses or loses the signal of television channel(s) which the customer is originally able to view.  Unfortunately, the Authority did not provide information on the identity of the complainants or the specific residential units at Regentville involved.  As a result, [the applicant] cannot identify the technician(s) involved in these three cases and is not able to provide specific response on the three cases.”

27. As to the Authority’s interpretation of clause 54, the applicant said in its letter of 4 December 2003 that the clause placed no obligation upon it to effect interconnection with other television services.  Nor was the ‘novel application’ of clause 54 by the Authority in the public interest :

“… the Authority’s interpretation of clause 54 of the Licence deprives a customer freedom of choice of service before the completion of interconnection arrangements.

…

[The applicant] has always maintained that customers can make an informed decision because the customer has a chance to check immediately after the installation whether he misses or loses the signal of television channel(s).  At a building where [the applicant] is negotiating with, for example, the building management office for connection with SMATV licensees, a customer, as in the case of the second complainant, can opt for cable television service after making an informed decision.  However, if the Authority adopts the interpretation of clause 54 of the Licence referred to in his letter, [the applicant] would have to decline the request of prospective customers to install cable television service even though these customers may be indifferent to the loss of SMATV signals.  In other words, if World Cup or a major sports event is shown on [the applicant’s cable service] in the future and a resident at a building where connection negotiation is still ongoing requests for cable television service, [the applicant] may have to explain to him that his request is to be rejected in view of the Authority’s interpretation of clause 54.  Given that the negotiation for connection with the building management office is sometimes beyond the control of [the applicant], the Authority’s interpretation of clause 54 in effect deprives customers of a free choice of service even though they are capable of making an informed decision.

In his letter, the Authority asked [the applicant] to explain why [it] proceeded to provide service to the residents in Regentville with the full acknowledge that, without the completion of the interconnection, services provided by other licensees would be blocked.  As mentioned above, [the applicant] provided cable television service upon the request of these residents who had made an informed decision …”  [my emphasis]

28. In the correspondence that followed, the Authority did not accept — on the facts as he had found them — that all customers had made an informed choice to give up one or more forms of television reception in order to receive the applicant’s service.  In this regard, for example, in a letter dated 7 May 2003 (the one accompanying the direction) the Authority said the following :

“There is the category of customers to whom the provision of SMATV services has been obstructed by [the applicant] establishing or operating a telecommunications installation in contravention of Condition 54.  You attempted to argue that these customers have ‘given up’ the SMATV services consciously.  The Authority is not satisfied on evidence that these customers have ‘given up’ the SMATV services consciously, as alleged by you.”

29. In any event, as to the meaning and extent of clause 54, in a letter dated 29 January 2003 the Authority was of the view that the clause placed ‘an unequivocal obligation’ on the applicant not to obstruct ‘any other telecommunication services’.  Despite this, so it was said, the applicant had proceeded to install its cable television services with ‘full knowledge of the consequence’ that satellite (SMATV) services would be blocked.  The Authority continued in that letter by saying :

“Whether the subscriber has made an ‘informed decision’ is not a defence which can exonerate or derogate [the applicant] from its obligations under Condition 54 … If commercial negotiation with regard to interconnection fails, the parties may refer the matter to the Authority for determination under section 36A of the Telecommunications Ordinance.”

The Authority went on to say :

“Measures such as interconnection at the headends or adding combiners at horizontal drop cables are viable options that [the applicant] may adopt in order to comply with Condition 54.  There is no evidence, and in fact it is not your submission, that any of these measures had been taken by [the applicant].”

30. Being of the view that the applicant had been guilty of a breach of clause 54, in his letter of 29 January 2003, the Authority said :

“Pursuant to sections 36C(7) and 36B(2), I am now offering you a reasonable opportunity to make further representations which have not been addressed previously in writing to the Authority by 12 February 2003 as to why the Authority should not issue a notice under section 36C, including the amount of financial penalty, and a direction under section 36B requiring you to make good any obstruction of SMATV telecommunications services caused by you.  The Authority shall consider all representations, if submitted by the deadline, made before him before he decides whether or not to impose such regulatory sanctions.  The draft notice and direction are attached for your reference.”

31. In an extensive reply dated 26 February 2003, the applicant set out why, in its opinion, the Authority had fundamentally misinterpreted the nature and extent of clause 54, more especially in respect of the assertion that clause 54 placed a ‘positive obligation’ on the applicant to carry out acts in order to perform its obligations when, on a true reading of the clause, it imposed a ‘negative obligation’; that is, an obligation only to refrain from certain acts.  That being the case, nothing in clause 54—

“… can be validly construed as a positive obligation requiring [the applicant] to carry out headend interconnection or combiner-installation for the purposes of establishing its system.  It is therefore wrong for the Authority to say that [the applicant] has breached clause 54 because it did not carry out headend interconnection or combine-installation when swinging its subscribers’ drop cables from the SMATV system to the [applicant’s] system.”

32. By letter dated 11 April 2003, the Authority (through OFTA) informed the applicant that in furtherance of its investigations, it had obtained a further ten questionnaires and statements from complainants, making for a total now of 13.  This second group of ten came from residents of Bo Shek Mansion and Vista Paradiso.  The Authority sought representations from the applicant in respect of these further ten questionnaires.

33. The applicant replied by letter dated 25 April 2003.  In that letter, the applicant took exception not only to the content of these new questionnaires but also to the fact, as it saw it, that the Authority had not informed it of these questionnaires at any earlier date.

34. In respect of the Bo Shek Mansion questionnaires, the applicant made the following complaint; namely, that the Authority—

“… has chosen to conceal the existence of these questionnaires from us throughout the investigation process until we have pointed out the flaws of his findings which were based on the Regentville questionnaires.  The Authority’s said deprivation of our right to be fully and timely informed of all the details about his case against us further substantiates our earlier submission that the Authority has failed to comply with the due process requirements, which renders his decision unlawful.”

35. As to the content of the questionnaires, the applicant complained that they were as ‘fallacious and dubious’ as the questionnaires obtained from residents of Regentville and were devoid of any evidential value.

36. In respect of the Vista Paradiso questionnaires, these were also said to be devoid of evidential value, this being compounded by the fact that two of the questionnaires concerned the connection of the applicant’s broadband service, an issue outside the constraints of clause 54 of the applicant’s television broadcasting licence.

37. The applicant’s letter of 25 April 2003 concluded :

“… the ten further questionnaires have not substantiated the allegations that the Authority has made against us.  On the contrary, they support our assertion that the Authority has failed to comprehend the true meaning of clause 54 and to observe the due process requirements in his investigation and determination of the case.”

The direction itself

38. The Authority remained of the view that there had been a breach of clause 54 by the applicant and that his investigation of that breach had been fair.  He therefore issued the direction dated 7 May 2003, stating that he was doing so in the exercise of his powers under s.36B(1)(a)(i) of the Ordinance (cited in para.10).

39. As to the direction itself, by way of a preamble, it contained a number of assertions, these being set out under the heading of ‘Background’ :

“Between April 2002 to September 2002, the Authority received a number of complaints from a number of property management companies/incorporated owners representing the relevant residents against the Licensee that the Licensee’s installation had interrupted the residents’ reception of SMATV signals.

       The Authority has conducted investigations and has invited the Licensee to make representations as part of the investigations.  Having considered the findings of the investigations, including the Licensee’s representations, the Authority has concluded that the Licensee had failed to comply with Condition 54 of the Licence with particulars listed below …”

40. The listed particulars were as follows :

“That the Licensee had in providing, establishing, operating, adjusting, altering, replacing, removing or maintaining a telecommunications installation for the purposes of its Licence, obstructed the telecommunications service of the SMATV licensees.

In concluding the above, the Authority has taken into account that measures such as interconnection at the headends or installing combiners at the horizontal drop cables are viable options that the Licensee may adopt in order to comply with Condition 54.  There is no evidence that any measure had been taken by the Licensee to comply with Condition 54.”

41. The document then went on to direct the applicant pursuant to the Authority’s powers under s.36B(1)(a)(i) of the Ordinance to take four courses of action.  It is the first of these directions to which the applicant took most exception, the remaining three, while also challenged, being essentially consequential.  The first direction read :

“the Licensee shall within 14 days from the date of this Direction submit for approval by the Authority a plan (the ‘Plan’) (and shall revise or amend the Plan to the satisfaction of the Authority) with respect to taking remedial action to restore the reception of SMATV services by all the affected subscribers in all buildings in the territory with the effect that the subscribers can receive the Licensee’s services and SMATV services concurrently without any derogation of the service quality of both services (referred to as the ‘Remedial Action’).”

42. As to the word ‘restore’ appearing in that first direction, there was a definition given earlier in the document :

“ ‘restore’ means to restore reception of the SMATV services which have been obstructed by the Licensee in providing, establishing, operating, adjusting, altering, replacing, removing or maintaining a telecommunications installation in breach of Condition 54 of the Licence.”

43. The remaining directions, those that I have described as being essentially consequential were as follows :

“(ii)    the Licensee shall carry out the Remedial Action as approved by the Authority mentioned in (i) and in the course of carrying out the Remedial Action to restore the SMATV services, if there is interference to the terrestrial television reception and/or CCTV signals carried by the SMATV systems, the Licensee shall take action to remove the interference;

(iii)    the Licensee shall promptly provide the Authority with such evidence or information in such manner as the Authority may from time to time require to satisfy the Authority that Remedial Action is being carried out in strict compliance with this Direction;

(iv)    the Licensee shall immediately cease to obstruct any telecommunications services in the course of providing, establishing, operating, adjusting, altering, replacing, removing or maintaining any telecommunications installation in breach of Condition 54 of the Licence.”

Matters following the issue of the direction

44. In a letter to the Authority dated 28 May 2003, the applicant’s solicitors asserted that the direction was ultra vires.  They invited the Authority to set aside the direction.

45. In a letter of the following day (29 May 2003), the Authority said that, in his opinion, the terms of the direction were lawful.  However, in an attempt to clarify any misunderstanding, the Authority wrote the following :

“(i)    The Direction does not have the effect, as you alleged, to compel [the applicant] to provide services.  It is plain from the Direction that [the applicant] is only directed to restore SMATV services, which have been affected by [the applicant’s] telecommunications installation established or maintained in breach of Condition 54.  In effect, the Direction is only applicable to buildings with respect to which [the applicant] has made a commercial decision to provide subscription television services by establishing or maintaining a telecommunications installation.”

The Authority continued :

“(ii)   Although combiners and headend interconnection are mentioned in the Direction as viable options, the Authority has not prescribed, or ruled out the feasibility of, or any other options as remedial measures.  [The applicant] is offered an opportunity to propose whatever options in a plan (the ‘Plan’) it considers feasible for the Authority’s approval under paragraph (i) of the Direction (including the suggestion of approaching the affected subscribers to make a conscious choice as mentioned in your letter) …

(iii)As explained, the Direction is only applicable to SMATV services obstructed by [the applicant] in breach of Condition 54.  Section 36B is to ensure that necessary action shall be taken by [the applicant] to comply with Condition 54.  The Direction thus has to be applicable to all affected buildings …”

46. On 11 June 2003, a meeting of representatives of the applicant and members of OFTA was held to see if any form of agreement could be reached.  However, in the result, the applicant remained under an obligation to submit a plan to the Authority in compliance with the direction.

47. One of the matters discussed at the meeting was whether, if individual subscribers made an unequivocal choice to retain the applicant’s service with the loss of satellite (SMATV) reception, that should be accepted and, similarly, if they made a choice to return to satellite, with the loss of the applicant’s service, that too should be accepted.  This had been one of the matters which the Authority, in the letter of 29 May 2003, had said he would consider : see sub-para.(ii) in para.45 above.  The Authority, however, while not rejecting the idea, was still not prepared to commit himself for fear that it may be inconsistent with the government policy, as he understood it, that the Hong Kong public should have ‘unrestricted choice’ of services.  In a letter of 13 June 2003, the Authority said the following in this regard :

“OFTA mentioned in the Meeting that a proposal not to restore Satellite Master Antenna Television (SMATV) service to [the applicant’s] subscribers after [the applicant] had obtained positive confirmation from it’s subscribers that they do not require SMATV service could be included in the plan to be submitted by [the applicant] to the Authority for approval pursuant to the Direction dated 7 May 2003 (the Direction).  The Authority would consider whether such an arrangement would be consistent with the government policy that the public in Hong Kong should have unrestricted choice of TV services and that interconnection of the networks of [the applicant] and SMATV should be provided.  OFTA would have to conduct internal discussion as to whether this option would be acceptable.”

48. A few days later, on 19 June 2003, in the absence of agreement, the present judicial review proceedings were instituted.

The grounds of complaint

49. The applicant argued six grounds of complaint.  They fell under three broad assertions of unlawfulness : first, that the direction was ultra vires the powers of the Authority; second, that it was Wednesbury unreasonable and, third, that it was in any event vitiated by procedural unfairness.  The individual grounds may be described as follows :

(i)      The direction was ultra vires the Authority’s powers under s.36B(1)(a)(i) in that the acts directed by him went beyond ensuring compliance with clause 54 of the applicant’s television broadcasting licence.  Clause 54 did not require that the applicant, in providing its services, must ensure concurrent provision of SMATV services.

(ii)      The direction was Wednesbury unreasonable in that, in issuing the direction, the Authority had regard to and incorporated an irrelevant consideration; namely, an asserted government policy that the Hong Kong public should have an unrestricted concurrent choice of television services and hence that there should be interconnection between cable television and satellite (SMATV) television services.

(iii)     The direction was Wednesbury unreasonable in that, in issuing the direction, the Authority failed to have regard to the fact that concurrent reception of the applicant’s service and SMATV service required the negotiation of an interconnection agreement between all concerned parties, a matter not wholly, or even necessarily substantially, within the applicant’s powers.  In the result, the direction had the potential effect of compelling the impossible or, if not the impossible, of placing a burden so onerous on the applicant that it was oppressive.

(iv)     The direction was ultra vires in that, the Authority’s powers under 36B(1)(a)(i) must be read in conjunction with s.24(2) of the Broadcasting Ordinance, Cap.562.  In the result, the Authority’s jurisdiction to issue directions pursuant to s.36B(1)(a)(i) is limited to matters of technical standards.

(v)     The direction was ultra vires and/or Wednesbury unreasonable in that it extended beyond the provision of remedial measures in respect of the residential units of a limited number of complainants (only 11) and purported to encompass all residential units in all high-rise buildings.

(vi)     The direction was vitiated by procedural unfairness and was itself Wednesbury unreasonable in that it failed to identify with sufficient clarity those subscribers who had lodged complaints.  In the result, if the applicant was to comply with the direction, the burden was placed on it not only of creating remedial measures but of first identifying those subscribers in respect of whom the measures were to be created.

50. Before considering the individual complaints, it is important at the outset to appreciate that the direction under challenge concerned only those subscribers who did not benefit from an interconnection agreement; that is, an agreement which enables satellite and cable television services to be received concurrently.

The first complaint : clause 54 does not require provision of concurrent services

51. It was the applicant’s complaint under this heading that, in directing the provision of concurrent services to subscribers who did not benefit at the time from an interconnection agreement, the Authority acted ultra vires the powers in terms of which he purported to act.

52. The Authority issued the direction pursuant to s.36B(1)(a)(ii) of the Ordinance; that is, pursuant to his power to require the applicant to take such action as may be necessary to comply with the terms and conditions of its licence; in this instance, to comply specifically with clause 54 of the licence.

53. The alleged breach of clause 54 relied on by the Authority was the obstruction of satellite (SMATV) services to subscribers.  The obstruction, as Mr Shieh SC, leading counsel for the applicant, described it, took the form of disconnection of satellite signals from the horizontal cables of ‘affected subscribers’.  In order to remedy that obstruction, on a true reading of clause 54, said Mr Shieh, two courses of action were permitted.  First, if the subscribers so wished, the applicant could be directed to reconnect the satellite connection or, if the subscribers did not wish, the applicant could be directed to obtain evidence of the subscribers’ consent to its cable service remaining connected.  However, the direction, said Mr Shieh, went beyond those two permitted courses and was therefore ultra vires.

54. The direction required the applicant to submit a plan.  That plan, said Mr Shieh, while it would be subject to discussion and amendment, would have to be an appropriate plan.  It would therefore have to attempt reasonably to meet the imperatives of the remedial action demanded by the Authority.  That remedial action was to restore the reception of satellite (SMATV) reception to all ‘affected subscribers’; that is, to restore the reception to all those subscribers from whom it had been removed in breach of clause 54.  But the restoration of satellite reception to those subscribers was not, however, the end of it.  The direction went on to demand that satellite reception should in all instances be restored so that the subscribers would be able to receive both cable and satellite services concurrently without the quality of either being diminished.  In this regard, the direction in part, to cite it again, reads :

“… to restore the reception of SMATV services by all the affected subscribers in all buildings in the territory with the effect that the subscribers can receive the Licensee’s services and SMATV services concurrently without any derogation of the service quality of both services (referred to as the ‘Remedial Action’).”

55. The plan of course was not to be a purely academic document.  The remedial action set out in the plan had to meet the demands of the direction and do so in a rational manner.  Once approved, the plan was to be executed under the supervision of the Authority.  That is part of the ambit of the direction.  The plan was therefore the blueprint for intended action, that intended action being the restoration of satellite television services to all ‘affected subscribers’ so that they would receive both satellite and cable in a manner which ensured premium quality of both services.

56. It was Mr Shieh’s submission that clause 54 did not provide for provision of concurrent services, either directly or as an incidental of its intent and purpose.  Accordingly, to direct the applicant to provide concurrent services in order to remedy a breach of clause 54 was a power not available to the Authority.

57. The meaning and extent of clause 54 is therefore fundamental.  To cite it again, the clause reads :

“… the Licensee shall not in providing, establishing, operating, adjusting, altering, replacing, removing or maintaining any telecommunication line or telecommunication installation in, over or upon any land for the purposes of this licence, obstruct, interfere with, or cause or permit damage to, any other telecommunication line or telecommunication installation, or means of telecommunication or telecommunication service or any … any tube, casing, duct, wire or cable for the carriage of electrical current.”

58. In my judgment, in the circumstances of this case; that is, in so far as it concerns the supply of television services, the clause must be read to the following effect; namely, that, in providing its cable television service to a subscriber, the applicant is prohibited from obstructing or interfering with any other telecommunication service already provided to the subscriber.  The clause does not contemplate potential obstruction of a service not yet in place.  It follows that, if there is no existing service provided to the subscriber, then, in so far as the supply of its cable service is concerned, the applicant does not breach clause 54.  If, however, there is an existing service provided to the subscriber then the applicant may only supply its service if, in so doing, it does not obstruct or interfere with that existing service.  In each case, therefore, the core issue, it seems to me, must be whether the subscriber is the recipient of an ‘existing’ service.

59. Subscribers, of course, within the constraints of any relevant contract, are free to choose.  They may take up a service and they may later cancel it.  When, and if, that service is cancelled, it is no longer an existing service.  The fact that the provider’s hardware may remain in place is not the issue.  The subject of the direction was not related to hardware but to the provision of services.

60. On my reading of clause 54, therefore, if a subscriber who is receiving a telecommunications service, such as satellite or closed circuit television, wishes to obtain the applicant’s television service and, with no interconnection agreement in place, makes an informed choice to cancel the existing service in order to obtain the applicant’s service then, with the existing service cancelled, I fail to see how it can be said that the applicant, in providing its service, has obstructed or interfered with any telecommunication service.  There is now no service which may be the subject of any obstruction or interference.

61. Whether in each case a subscriber has made an informed choice of the kind to which I have just referred is a matter of fact.

62. If, of course, a subscriber is not called upon first to make an informed choice and, in providing its cable service, the applicant thereby obstructs or interferes with the service already being received by the subscriber, then a breach of clause 54 does occur.

63. It seems to me therefore that, in the absence of any interconnection agreement; that is, when a subscriber has no option but to choose between one service or the other, if the subscriber makes an informed choice by cancelling the one service, he may thereafter receive the other service without any danger of the provider of the second service breaching clause 54.

64. Read on its own, therefore, clause 54 is, in my view, limited in its application.  It essentially imposes a negative obligation only, one that prohibits the applicant from providing its services if, in so doing, it obstructs or interferes with other services already provided.  Even on a purposive interpretation, I fail to see how it can be read so as to impose any obligation on the applicant to ensure that means are found to enable it to provide its service concurrently with other services.

65. It is apparent, however, that the Authority read clause 54 as enabling him to direct the applicant to put forward a viable plan in terms of which concurrent services would have to be provided.  The Authority, while reserving the right to consider the effectiveness of evidence of informed choices by subscribers, did not consider that such informed choices met the provisions of clause 54.  In the letter of 29 January 2003 — sent to the applicant before the issue of the direction — it was asserted on behalf of the Authority that an informed choice by a subscriber did not excuse the applicant from meeting its obligations under clause 54.  In the letter of 13 June 2003 — sent to the applicant after the issue of the direction — it is apparent that the Authority still reserved his position as to whether an informed choice would meet the requirements of any plan that the applicant submitted.

66. In the communications that followed the issue of the direction the Authority attempted to clarify ambiguities.  But those clarifications, in my view, did not modify the essential demand contained in the direction that the applicant must submit a rational plan, in order to remedy its breach of clause 54, for the supply of concurrent services to all affected subscribers or, at the least, to those affected subscribers who wished to obtain both satellite and cable television services.

67. At the meeting which took place on 11 June 2003, the minutes record Mr Au Man Ho, the then Deputy Director-General of OFTA, saying that any proposal by the applicant to withdraw its cable services, if subscribers so wished, and to restore satellite services to those subscribers would have to be considered by the Authority to ensure that it met with Government policy and that the issue would therefore have to be left open for the time being.  Later however, in an apparent conflict with this statement, the minutes record Mr Au saying that, if a subscriber opted for the discontinuance of the applicant’s cable service and the restoration of a satellite service in its place, then that subscriber would no longer fall into the category of an ‘affected subscriber’ as stated in the direction.  Accordingly, the requirement to provide concurrent reception would only apply when the subscriber opted for both cable and satellite services.

68. Ignoring the apparent conflict for a moment, it is, in my view, quite apparent that the Authority remained of the view that the demand contained in the direction to put forward a plan for the supply concurrent services remained of force and effect at least in respect of the limited number of subscribers who wanted concurrent reception.

69. But, as I have said earlier, on my reading of clause 54, in order to comply with its provisions the applicant is under no obligation to ensure the provision of concurrent services.  The clause goes no further than demanding that if, in seeking to provide its cable television service, the applicant would obstruct or interfere with existing services then, it must refrain from doing so.

70. While I accept that the plan to be provided was open to negotiation, it is apparent that, if the applicant was to comply with the direction, that being its statutory duty, then it was forced to come up with rational proposals for the supply of concurrent services.  It was under that obligation because the Authority deemed it necessary to remedy breaches of clause 54.  But, as I have said, clause 54 does not encompass any obligation on the part of the applicant to supply concurrent services.  Accordingly, in my judgment, the direction, being based on the requirements of clause 54, went beyond what the wording of the clause permitted.  As such, the applicant was required to make provision for the supply of services when not obliged to do so by clause 54 or indeed any other clause in its licence.  As such, the Authority’s direction sought to make demands on the applicant which it had no obligation in law to meet.  It follows, in my view, that the direction was in this regard outside of the powers of the Authority and thereby ultra vires.

The second complaint : the direction was unreasonable in that, in issuing the direction, the Authority incorporated the requirements of

Government policy

71. In a letter dated 13 June 2003, dealing with matters that had been raised at the meeting of 11 June 2003, OFTA, on behalf of the Authority, looked to the suggestion by the applicant that it would be acceptable to include in its plan a scheme in terms of which subscribers to its cable services could supply “positive confirmation” that they were happy to receive the applicant’s service only and did not require a concurrent supply of satellite services.  In this regard, the following was said :

“The Authority would consider whether such an arrangement would be consistent with the government policy that the public in Hong Kong should have unrestricted choice of TV services and that interconnection of the networks of [the applicant] and SMATV should be provided.  OFTA would have to conduct internal discussion as to whether this option would be acceptable.”

72. Counsel for the Authority, Mr Ismail, submitted that the letter, when read with earlier correspondence, especially a letter of 29 May 2003, does not contain a decision subject to review.  The applicant’s complaint is therefore premature.  Mr Ismail argued that, unless and until a concrete plan had been formulated by the applicant and submitted for consideration, how the Authority would respond to that plan had to be hypothetical.  The letter of 13 June 2003, said Mr Ismail, said no more than that the Authority “would consider whether such an arrangement would be consistent” with Government policy and that there would have to be a future discussion as to whether this option was acceptable.

73. In so far as the letter of 23 June 2003 is concerned, I agree with Mr Ismail that it does not contain a decision which itself is subject to review.  The Authority in that letter was doing no more than indicating a future intention to consider the representation of the applicant and at some future time to come to a resolution in respect of that representation.  In any event, the application for judicial review has not sought to review any decision contained in the letter of 23 June 2003.  It is only the direction which is challenged.

74. In respect of the direction itself, Mr Ismail submitted that there was no evidence to show that the Authority had taken existing Government policy into account when issuing it.  While I agree that there is no direct evidence, in my judgment, it must be inferred — and there can be no other reasonable influence — that the requirement contained in the direction concerning the supply of concurrent television services must have come from the Authority’s understanding that Government policy — as opposed to the requirements of the applicant’s licence — sought unrestricted choice of services.  That, I believe, explains why this requirement in the direction, which I have found rendered the direction itself ultra vires, was made integral to the direction.

75. On behalf of the applicant, Mr Shieh said that the ambit of the Authority’s powers in issuing the direction was restricted to s.36B(1)(a)(ii) of the Ordinance and the wording of clause 54.  The direction after all was issued for the single purpose of remedying a supposed breach of clause 54 of the applicant’s licence.  Accordingly, there was no warrant for taking Government policy into account so that it dictated the contents of any plan prepared in terms of the direction and that to do so amounted to imposing an impermissible gloss on the direction.

76. In my judgment, Mr Shieh must be correct.  The primary purpose of the direction was to ensure that remedial measures be taken to rectify a supposed breach of clause 54 of the applicant’s licence.  As such, any plan that rationally (and lawfully) met that purpose had to be considered by the Authority whether or not it accorded with the broader imperatives of existing Government policy.  That being the case, in so far as the Authority looked to Government policy not simply to colour or influence the contents of any plan but to dictate those contents, I am of the view that it integrated into the direction an impermissible consideration.  On that basis, I am satisfied that the direction was Wednesbury unreasonable and must be set aside.

77. That is not to say, of course, that, in looking to the best way to remedy any breach of the applicant’s licence, the Authority was not entitled to take Government policy into account.  As a statutory body responsible for the promotion of Government policy, in so far as it accords with the terms of the Ordinance and other relevant legislation, the Authority was clearly entitled to do so.  But it was not entitled to impose Government policy when clause 54 of the applicant’s licence did not allow for such imposition.

78. In respect of the first two complaints, in my judgment, the application for judicial review must be granted.  However, as four other complaints were made, and in the event that I am incorrect in respect of the first two, something briefly should be said of these other complaints.

The third complaint : the direction was oppressive in demanding that

the applicant supply concurrent services when that was not a matter solely within its power

79. I find no substance in this complaint.  The direction did not require the applicant to conclude interconnection agreements.  The direction required the applicant simply to submit a rational plan in terms of which, in appropriate circumstances, concurrent services could be supplied by means of interconnection agreements.  Such a plan, being rational, would protect the applicant’s own interests.  As the Authority made clear on a number of occasions, certainly at the meeting on 11 June 2003, the direction did not compel the applicant to provide physical interconnection.

80. Mr Shieh, for the applicant, conceded that the direction did not compel interconnection.  He submitted, however, that the direction placed the applicant “under pressure” to conclude interconnection agreements on terms which might be contrary to the applicant’s commercial best interests.  This, he said, was plainly oppressive and onerous.  I reject that submission.  As I have said, the direction required no more than a rational plan, one that looked equally to the applicant’s interests as well as the interests of subscribers and providers of satellite television services.  I do not see how the making of any such plan would place the applicant under pressure to act against its own reasonable interests.

The fourth complaint : the direction was ultra vires in that any such direction must be limited to’ technical standards’ only

81. The Broadcasting Ordinance, Cap.562, provides for the licensing and regulation of broadcasting services which include pay or subscription television services such as the service provided by the applicant.  S.24(2) of that Ordinance gives power to the Authority to issue directions.  It reads as follows :

“The Telecommunications Authority may issue directions in writing to a licensee requiring it to take such action specified in the notice with regard to technical standards as the Telecommunications Authority considers necessary in order for the licensee to comply with any requirement under a prescribed Ordinance, any licence condition or any provision in a Code of Practice applicable it.”  [my emphasis]

82. The Ordinance itself; that is, the Telecommunications Ordinance also empowers the Authority to issue directions, this jurisdiction being contained in s.36B(1)(a)(ii), cited in para.11 of this judgment, which, to cite it again, reads :

“(1)   … the Authority may issue directions in writing—

(a)    to a licensee requiring it to take such action as the Authority considers necessary in order for the licensee to—

(i)    comply with any of the terms or conditions of its licence; or

(ii)   comply with any provision of this Ordinance or any regulation made thereunder …”

83. It is not disputed that, in respect of the applicant’s television broadcasting licence, the Authority has jurisdiction under both the Broadcasting Ordinance and the Telecommunications Ordinance, to issue directions.  In this regard, s.2(2) of Schedule 8 of the Broadcasting Ordinance states that a television broadcasting licence of the kind held by the applicant shall be deemed to be a licence issued under both statutes.

84. The clear difference is that the power to issue directions under s.24(2) of the Broadcasting Ordinance is limited to matters of ‘technical standards’ while the powers under s.36B(1)(a)(ii) of the Telecommunications Ordinance is not, on its face, subject to any such limitation.

85. In light of this, Mr Shieh, for the applicant, submitted that, despite the absence of any limitation in s.36B(1)(a)(ii) of the Telecommunications Ordinance, the draftsman (and through him, the legislature) must nevertheless have intended s.36B(1)(a)(ii) to be subject to the same limitation contained in s.24(2) of the Broadcasting Ordinance.  If this was not the case, as he put it, the limitation concerning technical standards in s.24(2) of the Broadcasting Ordinance would be otiose; the Authority always being able to exercise far broader powers in respect of the same subject matter pursuant to s.36B(1)(a)(ii) of the Telecommunications Ordinance.  That being the case, said Mr Shieh, s.36B(1)(a)(ii), in terms of which the direction under challenge was issued, should be read as if limited to matters concerning technical standards.

86. The direction, said Mr Shieh, may have related to technical matters but it plainly did not concern technical ‘standards’ only.

87. In my judgment, this submission has no substance.  S.24(2) of the Broadcasting Ordinance and s.36B(1)(a)(ii) of the Telecommunications Ordinance are independent provisions contained in separate statutes, these statutes dealing largely with distinct matters.  It so happens that, in terms of s.2(2) of Schedule 8 of the Broadcasting Ordinance, the applicant’s licence is deemed to be a licence issued under both statutes.  But it does not follow from this single event that the sections contained in the two statutes concerning the power of the Authority to issue directions are to be somehow read, for all purposes, as being subject to the same limitations.

88. Different statutes may give different — sometimes overlapping — powers to the same public authority.  The legislature may have its own reasons for doing so.  I know of no principle of interpretation that allows the courts to reduce the broader powers contained in one statute so that they meet and do not exceed the lesser powers contained in the other.  In my judgment, in the present case, and on an ordinary reading of the two sections, to attempt to do so would go further than is permissible in interpreting the intention of the legislature.

The fifth complaint : the direction was ultra vires in that it went beyond the provision of remedial measures in respect of buildings or apartments which had been the subject of complaints and purported to extend to all affected subscribers in all buildings in Hong Kong

89. On behalf of the applicant, it was submitted that the direction, being based on a limited number of complaints, should have been restricted to the provision of remedial measures in respect of those complaints only and not to remedial measures in respect of all affected subscribers in all buildings in Hong Kong.  If there was no identified breach there was no identified need to provide a remedy.  The Authority, said Mr Shieh, had no grounds for believing that there must have been further breaches in respect of other subscribers in other buildings.

90. In my judgment, however, the Authority, in looking to ensure that the applicant complied with its licence in respect of all its subscribers, was entitled in law to seek proposals from the applicant which would satisfy him that there were no other affected subscribers and, if there were, that those subscribers would also benefit from any suggested remedial measures.  It must be remembered that the Authority was seeking no more than a plan; that is, a set of rational proposals, to deal with an identified problem.  It is apparent that the Authority considered, in light of the complaints received, that the problem may be widespread.  I do not think that finding on the part of the Authority can be condemned as unreasonable.  It is apparent that the applicant had available to it a number of means (both rational and proportional) through which other affected subscribers, if any, could be notified to submit their complaints.

91. In the circumstances, I do not see how it can be said that the direction was either ultra vires or vitiated by irrationality because the Authority sought proposals from the applicant as to how it could be ascertained whether the problem was more widespread than the complaints actually received and, if so, how that problem was to be rectified.

The sixth complaint : the refusal of the Authority to reveal the identities of the ‘affected subscribers’

92. The sixth complaint goes to two matters; first, that of procedural fairness and second, that of the reasonableness of the direction itself.

93. The purported breach of clause 54 of its licence by the applicant arose out of information received from a number of subscribers.  The information, formally recorded in a series of questionnaires, was to the effect that the subscribers had obtained the applicant’s cable service at the cost of losing their existing satellite service but had not been informed that this would be the result.

94. While broad details of the source of the complaints were given to the applicant; for example, of the residential building and the management company, the Authority refused to divulge the identities of the individual subscribers.  The Authority’s refusal was based on what it described as reasons of ‘confidentiality and privacy’.  From this, it must be taken, I believe, that in completing their questionnaires the subscribers had been assured that their identities would, so far as possible in law, be kept confidential.

95. The applicant, however, was of the view that the information contained in the questionnaires was unreliable and open to criticism in a number of respects.

96. It was, of course, the applicant’s case that, if at the time its cable services were provided, its technicians explained that it would result in the loss of existing satellite service, and the subscribers made an informed choice in that regard, then there was no breach of clause 54.  However, whether in each case, there was an informed choice made by the subscriber was a matter of fact.  That matter of fact, however, could not be resolved unless the applicant was made aware of the identity of each affected subscriber.  Only with that identity ascertained could the applicant’s technicians be asked to recall what was said and done at the time of installation.

97. The applicant effectively rejected the contention that issues of confidentiality prevented the Authority from revealing the names of the subscribers.  The subscribers were the applicant’s own customers : not people whom the applicant would wish to make the subject of any adversarial process.

98. No doubt the applicant would wish to protect the continued custom of its own customers.  But it seems to me that if, in the public interest, the Authority had assured affected subscribers of confidentiality then he was obliged to respect that bond of confidentiality.  While affected subscribers may not have been sued by the applicant, they may nevertheless have been placed at the centre of contentious administrative proceedings in which their recollection of events was being disputed by the applicant’s employees.

99. The Authority was of the view that no unfairness had been visited on the applicant.  The substance of the complaints had been given and, while the identity of individual subscribers had been withheld, the applicant had been informed of the individual buildings involved and the management companies which represented the residents and invariably negotiated on their behalf.

100. In the result, said Mr Ismail, for the Authority, when viewed in practical terms, the applicant knew the case it had to meet and had no difficulty in meeting it notwithstanding that it did not know the identity of each subscriber.  The essential issue, said Mr Ismail, was one of fairness.  Had the Authority treated the applicant fairly, enabling it adequately to prepare its case and submit a plan in terms of the direction, while at the same protecting the identities of the individual affected subscribers?

101. Mr Ismail pointed to the fact that the applicant itself had recognised that there were a number of viable procedures open to it to ascertain who persisted with their assertion that they had not been given an opportunity to make an informed choice when the applicant had installed its service so that matters could be rectified in a satisfactory manner.

102. As to the need to protect bonds of confidentiality, Mr Ismail relied on the dictum of Lord Denning MR in In re Pergaman Press Ltd (1971) Ch 388.  In that case, inspectors appointed by the Board of Trade were required to conduct an investigation into the affairs of a company.  As to the manner of their investigation, Lord Denning said :

“The inspectors can obtain information in any way they think best, but before they condemn or criticise a man, they must give him a fair opportunity for correcting or contradicting what is said against him.  They need not quote chapter and verse.  An outline of the charge will usually suffice.

That is what the inspectors here propose to do, but the directors of the company want more.  They want to see the transcripts of the witnesses who speak adversely of them, and to see any documents which may be used against them.  They, or some of them, even claim to cross-examine the witnesses.

In all this the directors go too far.  This investigation is ordered in the public interest.  It should not be impeded by measures of this kind.  Witnesses should be encouraged to come forward and not hold back.  Remember, this not being a judicial proceeding, the witnesses are not protected by an absolute privilege, but only by a qualified privilege : see O’Connor v. Waldron [1935] A.C. 76.  It is easy to imagine a situation in which, if the name of a witness were disclosed, he might have an action brought against him, and this might deter him from telling all he knew.  No one likes to have an action brought against him, however unfounded.  Every witness must, therefore, be protected.  He must be encouraged to be frank.  This is done by giving every witness an assurance that his evidence will be regarded as confidential and will not be sued except for the purpose of the report.  This assurance must be honoured.  It does not mean that his name and his evidence will never be disclosed to anyone.  It will often have to be used for the purpose of the report, not only in the report itself, but also by putting it in general terms to other witnesses for their comments.  But it does mean that the inspectors will exercise a wise discretion in the use of it so as to safeguard the witness himself and any others affected by it.  His evidence may sometimes, though rarely, be so confidential that it cannot be put to those affected by it, even in general terms.  If so, it should be ignored so far as they are concerned.  For I take it to be axiomatic that the inspectors must not use the evidence of a witness so as to make it the basis of an adverse finding unless they give the party affected sufficient information to enable him to deal with it.”

103. In the same case, Sachs LJ emphasised that in administrative investigations it was not possible to lay down a precise set of rules.  If natural justice; that is, fair play in action, was to be assured, it had to be left to the discretion of the inspectors to proceed “with that fairness of procedure that is appropriate to the particular circumstances of the case”.  Natural justice, said the judge, required flexibility.  In respect of that flexibility, Sachs LJ recognised, as Lord Denning had done, that confidentiality may well be an issue to be taken into account in administrative investigations :

“In the course of that investigation confidential information may have to be sought and may have to be examined.  In such a case the inspectors are entitled to take into account that many men have deep-seated fears of becoming involved as defendants in defamation actions, for which there is no legal aid, at the suit of somebody with a long purse who may wish to stifle criticism.  That is a general observation and is not intended to refer to any person concerned in the present case : it is simply something which has to be taken into account in view of the fact that statements made by witnesses to these inspectors are not the subject of absolute privilege.  It is often difficult enough to persuade a citizen to give evidence in road accident cases.  How much more reluctant may they well be to risk becoming themselves involved in litigation as the result of coming forward in the course of their public duty at an investigation unless they can be given protection.”

104. For the applicant, however, Mr Shieh argued that, with there being no possibility of involving affected subscribers in litigation, the refusal of the Authority to divulge the names and addresses of the individual subscribers constituted a manifest procedural unfairness in preventing the applicant from preparing its case and, in respect of the issue of the direction itself, subjected the applicant to an unnecessarily onerous infringement of its interests to the extent that the direction itself became oppressive and thereby unreasonable in the public law sense.

105. Mr Shieh emphasised the duty of the Authority to make adequate disclosure.  If prejudicial allegations are made against a person, he said, that person must be able to controvert, correct or comment on the information which supports those allegations.  In order to do that, the person who is the subject of the allegations must receive adequate information.  As a broad principle, I have no quarrel with Mr Shieh’s submission in this regard.  But there can be no hard and fast rule on the matter.  The essential principle is one of fairness.  In the present case, it was the Authority’s position that fairness in the exercise of the administrative investigation demanded that the names of affected subscribers be kept confidential.  In light of this, other information had been supplied to enable the applicant to adequately represent its own interests and prepare the plan made necessary by the direction.

106. Mr Shieh also argued that, as it was the Authority who asserted a breach of clause 54, it was for the Authority to identify the extent of that breach.  In my opinion, however, that goes too far.  As I have said, the essential principle is one of fairness and that is to be assessed in the context of all relevant circumstances.  The investigation conducted by the Authority was an administrative investigation.  It was not judicial.  The Authority was under no obligation to proceed on the basis that somehow the rules of a court proceeding were to apply.

107. During the course of submissions, a great deal of evidence was referred to in respect of the protestations of the applicant and the counter protestations of the Authority concerning the lack of disclosure of the identities of affected subscribers.  I have gone through the evidence.  It is plain that the refusal on the part of the Authority to divulge the names of affected subscribers made matters more difficult for the applicant.  But, having said that, I am satisfied that, in the circumstances, viable options were open to the applicant to both prepare its own case and meet the requirements of the direction without being given the names of the affected subscribers.  That being so, I am not satisfied that the proceedings leading up to the issue of the direction were vitiated by procedural unfairness resulting from a failure to divulge the names.  Nor, in my view, can it be said that the refusal to divulge the names made the direction itself so onerous as to be oppressive.

108. In my judgment, the Authority had the difficult task, in discharging his public trust, of protecting the bond of confidentiality made with affected subscribers and in giving adequate disclosure to the applicant so that the applicant could be assured of fair treatment.  As I have said patently, the applicant faced certain difficulties (although far from insuperable) in not having the identities divulged.  But that is not really the question.  The question is whether, on the facts and in the circumstances of this case, the Authority, in the exercise of his discretion complied with the rules of fairness.  In my opinion, the Authority has not been shown to have fallen short of this obligation by declining to divulge the identities of affected subscribers.

Conclusion

109. For the reasons contained in the body of this judgment, I am satisfied that the direction must be quashed.  In the result, there will be an order of certiorari and a declaration as sought.

Costs

110. During the course of submissions, Mr Ismail, for the Authority, criticised what he described as the ‘overloading’ of the applicant’s case with challenges of no substance.  Judicial review, he submitted, should not be allowed to run riot and the practice of searching for every possible challenge, no matter how frail its legal substance, should be discouraged.

111. It is apparent from my review of the challenges made in this case that, in my view, a number were without substance.

112. While the general rule is that costs should follow the event and a failure by a successful applicant in a number of issues should not prevent that applicant from receiving costs, nevertheless the court does have a discretion and that discretion may be exercised against a successful party if a number of its challenges found to have no substance have significantly added to costs and/or time taken.

113. In the present case, without the benefit of submissions, I am of the view that the applicant’s unsuccessful challenges have not so significantly added to costs or the length of the trial that it should be deprived of any of its costs.  But, as I have said, I have reached this conclusion without the benefit of argument.

114. There will therefore be an order nisi awarding costs to the applicant, that order to be made final in 30 days from the date of handing this judgment unless the matter is set down within that time for argument.