HKSAR v. Uniglobe Telecom (Far East) Ltd.

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No. 104
(Criminal)

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J U D G M E N T

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Mayo, J.A.:

1. The Applicant was convicted of two offences under S.8 of the Telecommunication Ordinance, Cap. 106 and fined $20,000 on the first charge and $5,000 on the second and ordered to pay costs of $20,000. The first charge alleged that the Applicant contravened S.8(1)(a) of the Ordinance and was in this form.

"1st Charge
Statement of Offence

Maintaining a means of telecommunication without a licence, contrary to s.8(1)(a) of the Telecommunication Ordinance, Cap. 106.

Particulars of Offence

Uniglobe Telecom (Far East) Limited, between 26th November and the 6th day of December 1996 inclusive, in Hong Kong, maintained a means of telecommunications, namely an external public telephone service between Hong Kong and China, without a licence.

and the second charge:

2nd Charge
Statement of Offence

Using radio communication apparatus without a licence, contrary to s.8(1)(b) of the Telecommunication Ordinance, Cap. 106.

Particulars of Offence

Uniglobe Telecom (Far East) Limited, on or about the 6th day of December 1996, used radio communication apparatus installed in Flat 1215, Landmark North, Sheung Shui, to transmit telephone calls originating from Hong Kong to recipients in China without a licence."

2. The Judge who tried the case, handed down his Reasons for Verdict on the 21st November 1997.

3. The Applicant did not lodge any appeal within the prescribed period for doing so. It now seeks leave before us to lodge an appeal out of time.

4. Mr. Albert CHAN, the managing director of the Applicant has lodged an affirmation in support of the application. Put succinctly the reason he gives for not lodging an appeal timeously is that when he discussed the question of an appeal with his legal advisors, it became apparent to him that the cost of prosecuting an appeal would be out of proportion to the fines and costs which were ordered to be payable by his company. Also the Judge had not found his company to be guilty of any collusion with Bestlong the company which actually transmitted the communications.

5. However on the expiration of the time for lodging an appeal his company was notified by the Office of the Telecommunication Authority that it was considering cancelling the licence they presently hold. Indeed complaint is made that the company was never informed prior to the expiration of the time limit that it was their intention to consider doing this. It is not easy to see why the Authority should be in any way obligated to inform the company of its intentions.

6. This was certainly not a meritorious application. We were however persuaded by Mr. YU, S.C. that there were important issues raised on this appeal which may have far reaching implications and this being the case we agreed to hear the application de bene esse.

7. At the hearing before Judge Davies in the District Court, most of the evidence was agreed pursuant to S. 65C of the Criminal Procedure Ordinance, Cap. 221.

8. The Applicant holds a public non-exclusive telecommunications service licence ('PNET licence'). Under the terms of the licence it can provide:

"An automatic personal identification number validation and telephone call routing service which enables its customers to make outgoing international telephone calls by accessing the computerised PIN validation and telephone system ('the System') operated by the licensee. Access to the System and connection to the gateway of the international public switched telephone service are made by way of the local public switched telephone networks operated under a Fixed Telecommunication Network Services Licence granted under the Telecommunication Ordinance. All connections for traffic to and from destinations outside Hong Kong are made through the international public switched telephone service provided jointly by HKTI and overseas carriers."

9. For the purposes of this application it is relevant to observe that access to the international gateway has to be through a system operated by the holder of a Fixed Telecommunication Network Services Licence.

10. The licence was granted by the Governor in Council pursuant to the powers which are conferred by S.7 of the Telecommunication Ordinance, Cap. 106.

"7. Power of Governor in Council to grant licences

(1) Subject to Part IIIA, the Governor in Council and, subject to regulations made under section 37, the Authority may, in accordance with this Ordinance, grant to such persons as they think fit licences to establish and maintain any means of telecommunication and to possess and use apparatus for radiocommunication or any apparatus of any kind that generates and emits radio waves.

(2) Where a licence has been granted under this section, whether granted by the Governor in Council or by the Authority and is for the time being in force, to any person to establish and maintain any means of telecommunication the Authority may in addition during the period of validity of the licence authorize that person to establish and maintain such ancillary or associated telecommunication services as the Authority thinks fit and the licence shall thereupon be deemed to have been also granted in respect of those services."

11. The Applicant entered into an Agreement with Bestlong International Ltd. on 15th May 1996 whereby it was agreed that Bestlong would provide the Applicant a global long distance call system.

12. Bestlong did not hold a Fixed Telecommunication Network Services licence and accordingly it was the prosecutions case that if the agreement was implemented this would constitute a contravention of the terms of the Applicant's licence.

13. Between 26th November and 3rd December 1997 test calls were made using calling cards issued by the Applicant. About 2.8% of the calls were found to have been routed through Bestlong's unlicensed microwave radio communication system in a building at Landmark North, Sheung Shui which was connected to a microwave radio transceiver with an antenna pointing to a high rise building in Shenzhen. Some of the messages sent were received in China.

14. The Judge made findings of fact in this way on p. 6 of his Reasons for Verdict.

"Having considered all the evidence I am not satisfied that it shows conclusively that the defendant company, as represented by its management staff, was aware that any of UTI's calls to Bestlong were 'bypassing' HKTI's gateway enroute to China, nor that it must have known of the existence of the microwave radio transceiver at Bestlong's premises in Landmark North, Sheung Shui. There is insufficient evidence to prove beyond reasonable doubt that UTI had knowledge of what happened to its calls after they reached Bestlong. Nor am I satisfied that the prosecution evidence proved there was 'a turning of a blind eye' to the obvious. I feel the situation was far from obvious on the evidence I have been asked to consider.

In this regard I would remind the prosecution that the opinion of an expert witness needs to be supported by convincing evidence demonstrating the validity of that opinion and the doctrine of 'res ipsa loquitur' (the facts speak for themselves) has no application to a criminal case and the evidence adduced by the prosecution in the present case does not prove conclusively that the defendant company must have had knowledge of those matters alleged. I find that the prosecution's first contention is not well founded and now turn to its second contention, that these are strict liability offences."

15. He then went on to consider whether S.8(1)(a) and S.8(1)(b) were strict liability offences. S. 8(1)(a) and 8(1)(b) are as follows:

"8. Prohibition of establishment and maintenance of means of telecommunication, etc., except under licence

(1) Save under and in accordance with a licence granted by the Governor in Council or with the appropriate licence granted by the Authority, no person shall in Hong Kong or on board any ship, aircraft or space object that is registered in Hong Kong -

(a) establish or maintain any means of telecommunication; or

(b) possess or use any apparatus for radiocommunication or any apparatus of any kind that generates and emits radio waves notwithstanding that the apparatus is not intended for radiocommunication; or ..."

16. On the basis of the criteria referred to by Lord Scarman in Gammon (Hong Kong) Ltd. v. Attorney General [1985] AC 1 and Bokhary, J.A.'s (as he then was) judgment in the Attorney General v. FONG Chin-yue & others [1995] HKCLR 193, he was satisfied that the offences were strict liability offences. He then went on to consider whether the Applicant had succeeded in proving that it had a reasonably held honest belief that it had not committed the offences under S.20 of the Ordinance which refers to S.8. He had this to say at p.8 of his Reasons for Verdict:

"That said, it is also clear by the decision in FONG Chin-yue's case that even where liability is strict, proof on balance of a reasonably held honest belief is a defence. Accordingly, I now view the defence evidence as to whether UTI, through its managing director, believed for good and sufficient reason, although erroneously, that its international telephone calls had exited Hong Kong in accordance with the terms of its licence, that is by way of the HKTI gateway. In this regard UTI's evidence, as given by its managing director, reveals that only commercial considerations were given to the arrangement between UTI and Bestlong while no regard whatever, so far as I can see, was paid to whether such an arrangement might prejudice UTI in respect of the routing of its calls after they had reached Bestlong.

Even a request to have sight of the licence under which Bestlong purported to operate would at least have signified some concern. In the event of no licence being produced one would like to believe that UTI would have had second thoughts before proceeding further. Also I do not find acceptable, under these circumstances, the defence evidence that no enquiry could be reasonably made with regard to the FTNS licence holders which Bestlong used or proposed to use for such calls, that is on the grounds of trade secret or confidentiality. There was more at stake here than mere commercial advantage. There was the legal requirement that UTI and Bestlong operate this service within the terms of a licence and within the provisions of the Telecommunication Ordinance. Consequently, I cannot be satisfied even on the balance of probabilities that reasonable steps were taken to ensure, insofar as was possible, that this operation carried out in conjunction with Bestlong, was within the terms of a licence."

17. It was on this basis that the Judge convicted the Applicant on the two charges.

18. The 1st perfected ground of appeal is that:

"1. On the facts found to be proved by the learned Judge, the Appellant could not in law be convicted of the offences upon which he convicted him and that the learned Judge erred in law in so convicting him. The learned Judge ought to have held as follows, namely: -

(1)	(a) The 1st Charge particularises the 'means of telecommunications' complained of as 'an external public telephone service between Hong Kong and China'; and (b) The 2nd Charge particularises 'the radio communication apparatus' complained of as the 'radio communication apparatus installed in Flat 1215, Landmark North, Sheung Shui', namely, the premises of one Bestlong International Limited ('Bestlong')."
(2)	'Means of telecommunication' means physical telecommunications installations and not a 'service' as particularised in the 1st Charge. See:- - Telecommunication Ordinance, Cap 106 ('TO'), sections 2, 8(1) and (2). - Telecommunication Regulations, Cap 106. - 'Licencing of Telecommunication Services in Hong Kong: Statement by Telecommunications Authority, 22.3.95'. - 'The Interpretation of the Exclusivities of Hong Kong Telecom International Limited: Statement by Telecommunications Authority, 23.6.96'. - 'The Regulatory Status of Call-Back Service: Statement by the Telecommunications Authority, March 1995'.
(3)	The learned Judge not being satisfied that Appellant had colluded with Bestlong in maintaining or using the telecommunication equipment seized at Bestlong's premises, he could not have held that such equipment was 'maintained' or 'used' by the Appellant within the meaning of section 8(1)(a) and (b) of TO.
(4)	Further, the learned Judge not being satisfied that the Appellant had actual knowledge of the existence or use of the said equipment by Bestlong, or that it had turned a blind eye to the obvious, he could not have held that the Appellant was responsible for 'maintaining' or 'using' the said equipment of which the Appellant was not aware."

19. It will be appreciated that for this ground of appeal to be successful it is necessary for the Applicant to satisfy the court that the establishment or maintenance of a "means of telecommunication" refers to the establishment or maintenance of a physical telecommunication system which enables the transmission, etc. of signals, images and sounds, etc.

20. Mr. YU submitted that the definitions of "telecommunication" and "telecommunication service" in S.2 of the Ordinance assisted him to this end.

"telecommunication" means any transmission, emission or reception of signs, signals, writing, images, sounds or intelligence of any nature by visual means or by wire or radio waves or any other electromagnetic system;

"telecommunication service" means the provision of facilities for use by members of the public or by any person for the transmission or reception of messages or the provision on loan, lease or hire to members of the public or to any person of apparatus for telecommunication either within Hong Kong or with any place outside Hong Kong."

21. He also called in aid the provisions contained in S.23 which he submitted supported his contention that a physical system was envisaged by the legislature.

"23. Transmitting or receiving messages, etc., by unlicensed means of telecommunication

Any person who, knowing or having reason to believe that a means of telecommunication is being maintained in contravention of this Ordinance, transmits or receives any message by such means of telecommunication or performs any service incidental to the transmission or reception of any such message or delivers any message for transmission by such means of telecommunication or takes delivery of any message sent thereby shall be guilty of an offence and shall be liable on summary conviction to a fine of $50,000."

22. He argued that it was not possible to equate "telecommunication" with "telecommunication service". Providing a service was an entirely different matter to maintaining a system. Following from this he contended that a person who provides a service using someone else's transmission/emission/reception set up could not be said to be "maintaining the means by which any signs, signals, etc are transmitted or received by visual means, wire, radio or any other electromagnetic system".

23. It is noteworthy that "means of telecommunication" is not defined in the Ordinance. It is therefore necessary to consider the words in the context of the sections where the words are used. It is clear from S.7 that what is contemplated by the section is something over and above physical apparatus. Were this not so the words "means of telecommunication" would be redundant. It is also clear from the section that the provision of a "telecommunication service" is included in the ambit of the section.

24. The wording of S.8 is consistent with this. The reference to "establishing or maintaining any means of telecommunication" is entirely consistent with the provision of "telecommunication service" as defined in S.2.

25. It should be added that this interpretation accords with common sense. S.8(1)(a) deals with the provision of services of the type provided by the Applicant and S.8(1)(b) deals with the unauthorized possession of physical apparatus.

26. Rather than being of assistance to the Applicant's contentions, S.23 militates against the construction they seek. It deals with both the provision of services and the use of physical apparatus.

27. I can see no justification for the restrictive interpretation of the words "means of telecommunication" contended for by the Applicant.

28. As a fall back argument Mr. YU submitted that the Judge had been in error in applying strict liability in a global manner. This was particularly the case having regard to his finding of fact that the Applicant did not even have knowledge of the existence of Bestlong's apparatus and equipment. He placed reliance upon a passage from the Court of Appeal's judgment at p. 1173 of R. v. Blake [1997] 1 WLR 1167:

"We think that the proper approach to this subsection is closely akin to the approach adopted to the absolute offence of possessing a firearm without a certificate contrary to section 1 of the Firearms Act 1968, which Mr. Davies cited to us for the purposes of comparison. This is described in Archbold's Criminal Pleading, Evidence & Practice, 1997 ed., p. 1959, para. 24.6. Section 1(1) provides:

'Subject to any exemption under this Act, it is an offence for a person - (a) to have in his possession, or to purchase or acquire, a firearm to which this section applies without holding a firearm certificate in force at the time, or otherwise than as authorised by such a certificate; ...'

The Archbold commentary is as follows:

'Section 1(1) creates absolute offences. In Reg. v. Hussain (Iftikhar) [1981] 1 W.L.R. 416 (a case concerning section 1(1)(a)), the court held (applying Reg. v. Warner [1969] 2 A.C. 256, a drugs case) that if the prosecution prove that the defendant knowingly had in his possession an article which in fact is a firearm as defined in the Act of 1968 (see section 57(1) ...), then the offence is committed, and the fact that the defendant did not know that the article in his possession was a firearm within the Act for which a certificate was required is immaterial. ... Similarly, in Reg. v. Waller [1991] Crim. L.R. 381, following Reg. v. Hussain (Iftikhar), the defendant was held to have been rightly convicted under section 1(1) where he took possession of a friend's bag which, unknown to him, contained a firearm and not, as he thought it might, a crowbar; and in Reg. v. Steele [1993] Crim.L.R. 298, following Reg. v. Waller, a conviction was upheld where the defendant had custody of the bag for only a matter of minutes and could not reasonably have been expected to know that it contained a firearm. ... Accordingly, an honest and reasonable belief that a modern reproduction is an antique firearm ... is no defence to a charge of possessing a firearm without a certificate contrary to section 1(1)(a): Reg. V. Howells [1977] Q.B. 614 ...'

So here, by analogy, it is incumbent upon the prosecution to establish that the defendant knew he was making use of the apparatus, but they need not show that he was doing it with a guilty mind. Thus, for example, if a remark made by a bystander near the studio was accidentally picked up by the microphone and broadcast the bystander would not be liable."

29. The facts of Blake were entirely different to the facts in the instant case. What is necessary is to have regard the principles which were enunciated in Gammon. The purpose of the present legislation is to regulate and control telecommunications. This is clearly a matter of social concern. Strict liability is required to prevent the commission of the offences referred to. If this liability could be avoided simply on the basis that it could not be proved that a defendant had knowledge of the existence of equipment, the whole rationale of strict liability would be negated.

30. Even if leave were to be granted to the Applicant, this ground would fail.

31. Ground 2 complains that:

"2. The learned Judge wrongly directed himself on the law by failing to ask the proper question which was whether the Appellant could, in law, be said to have 'maintained' or 'used' the said equipment when there was no master-servant relationship between the two parties and the Appellant did not select the said equipment or the routing of telephone calls handled by Bestlong."

32. There is nothing in this ground. As indicated earlier in this judgment the Applicant entered into a contract with Bestlong. It was clearly incumbent upon them to satisfy themselves that the contract would be performed in conformity with the licence they held.

33. Ground 3 is in the alternative to ground 2. Complaint is made that:

"3. Alternatively to 2 above, the learned Judge erred in law in holding that the offences under both the 1st and 2nd Charges are strict liability offences in that 'proof of mens rea is not ... a requirement'. He ought to have held that the offence of 'maintaining' or 'using' requires at least a degree of mens rea. On the facts of this case, this would require the prosecution to prove that the Appellant had at least the knowledge of the manner or means adopted by Bestlong in conveying the telephone calls complained of, even though it was not proved that the Appellant also knew that such means or manner of handling the calls was not authorised by a licence held by Bestlong."

34. This reverts back to the question of strict liability. It is clear from S.8(2) that it embraces both the physical apparatus and services such as are provided by the Applicant. The simple fact of the matter is that the Applicant's licence did not extend to the activities which were undertaken by Bestlong. This ground also would have no prospect of success.

35. For the reasons which have been given I would not be disposed to grant the leave which has been sought.

Stuart-Moore, J.A.:

36. For the reasons given in the judgment of Power V.-P., I am also in agreement with the conclusion that has been reached.

Power, V.-P.:

37. I agree with the conclusions reached by my brother Mayo but arrive thereat by a somewhat different route.

38. Section 7 of the Telecommunication Ordinance provides that the Governor in Council may grant licences-

(1) to establish and maintain any means of telecommunications;

(2) to establish and maintain such ancillary or associated telecommunication services as the authority thinks fit.

The Licence allows the applicant to provide -

"an automatic personal identification number validation and telephone call routing service" ("the service")enabling its customers to make international calls by accessing "the system" operated by the licence. The licensee required it when operating the service to use a local public switched telephone network operated under a F.T.N.S. licence.

39. The applicant in the present case was, as allowed by its licence, providing the service using Bestlong amongst others to transmit calls. Bestlong had no F.T.N.S. licence.

40. Whether it was, by using Bestlong, in breach of its licence is, however, not the issue as the applicant was charged not with a breach of licence but with maintaining a means of telecommunication without a licence (Charge 1) and using radio communication apparatus without a licence (Charge 2). As regards Charge 1, the question to be asked is whether the applicant was maintaining a means of telecommunication, as the prosecution alleges, or was, as the defence contend, providing a telecommunication service which did not involve the maintenance of a means of telecommunication.

41. It was unarguably providing the service whereby its customers made international telephone calls by accessing the system which, at times, routed their calls to Bestlong.

42. A "service" as defined is the provision of facilities for use by the public for the transmission of messages. It is submitted that the applicant simply provided those facilities which were not means of telecommunication.

43. "Telecommunication" as defined involves the transmission of sounds by wire or radio waves or any other electromagnetic system and the applicant contends that it was not transmitting anything but was doing no more than providing the service, as it was allowed to by its licence, and that the transmission was done by Bestlong.

44. A service can, however, only be provided by utilizing means of transmission, i.e. by engaging and paying for the services of a person or company who has such means.

45. What we must ask is whether a provider, by such engagement and payment, maintains those means. "Maintain" as defined in the New Shorter Oxford English Dictionary, means, inter alia, "to give one's support to" and "to support by expenditure".

46. I have no doubt that the applicant was, when it engaged and used Bestlong, maintaining a means of telecommunication.

47. I have also no doubt that this was an offence of strict liability. Mr. Yu argues, relying upon R. v. Blake (1967) 1 W.L.R. 1107, that, even if this be so, the applicant has not committed an offence as it had no knowledge what equipment, if any, was being used by Bestlong.

48. In Blake, the court, when dealing with the use of a radio transmitter, held "it is incumbent upon the prosecution to establish that the defendant knew he was making use of the apparatus, but they need not show that he was doing it with a guilty mind". It is argued that the applicant had no knowledge (i) whether Bestlong had any transmission apparatus, or passed the calls to another operator, or (ii) whether or not Bestlong, if it had such apparatus, had a FTNS licence which allowed its use. That being so, it is argued that the applicant is in the position of the defendant in Blake. This argument is not sustainable. The position is very different from that which obtained in Blake. Blake was knowingly using unlicensed apparatus and it was held that he could not escape liability by saying that he thought it was not transmitting. In the present case it is true that the applicant itself was not using the apparatus but Bestlong, who it had engaged, was.

49. In an offence of strict liability such as the present one, it is no defence to say - I engaged someone to do the work, I gave him carte blanche, I don't know what he did, I am not liable. To paraphrase Blake it was, in the present case, "incumbent upon the prosecution to establish that the defendant knew that he was making use of Bestlong but they need not show that he was doing it with a guilty mind". If Bestlong transmitted without a licence, as it did, the applicant was liable and was properly found guilty of the first charge.

50. As regards the second charge, the question to be asked is whether the applicant was using a radio communication apparatus without a licence. The reasoning set out above has equal application. The applicant used Bestlong. Whatever the state of the applicant's knowledge of Bestlong's apparatus, as it was knowingly using Bestlong it was liable if Bestlong used apparatus without a licence. The applicant was properly found guilty of the second charge.