Asia Television Ltd v Communications Authority (Successor Of The Broadcasting Authority

CACV 258/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 258 OF 2012

(ON APPEAL FROM HCAL NO. 77 OF 2012)

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J U D G M E N T

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Hon Kwan JA:

1. This is an appeal of the Communications Authority (“the Authority”, being the successor of the Broadcasting Authority) against the judgment of Au J on 19 October 2012 in which the judge granted an application for judicial review brought by Asia Television Limited (“ATV”) and ordered two decisions of the Authority be quashed. ATV brought the proceedings for judicial review to challenge the Authority’s refusal to disclose to it the identities of the persons the Authority had interviewed (“the Interviewees”) in an investigation against ATV and the transcripts of the interviews. The judge concluded there has been a breach of procedural fairness in the investigation justifying the order to quash the decisions under challenge. The hearing before the judge was held in chambers and was not open to the public. By an order made by this court (Cheung CJHC and Lam JA) on 28 February 2013, it was ordered that this appeal be heard in open court.

The background

2. The relevant background matters, taken largely from the judgment below, may first be stated as follows.

3. ATV is the holder of a domestic free television programme service licence granted under the Broadcasting Ordinance, Cap 562 (“BO”). As is well known, it holds one of the two free television licences in Hong Kong.

4. The Authority is an independent statutory body established under the Communications Authority Ordinance, Cap 616 (“CAO”) to regulate broadcasting and telecommunications industries in Hong Kong in accordance with the BO and the CAO. One of the principal responsibilities of the Authority is to handle the licensing, financial monitoring and regulation of television broadcasting licensees and to deal with complaints about broadcasting. It has the power to impose sanctions on broadcasters for contravening the statutory and licensing requirements imposed upon them.

5. The BO provides the regulatory framework governing the ownership and corporate control of domestic free television programme service licensees and any person exercising control of a licensee. These include the “fit and proper person” requirement (section 21), the residence requirement (section 8(4)), and restrictions on disqualified persons (section 8(4)).

6. Condition 10.1 of ATV’s licence provides that unless otherwise approved by the Authority, the licensee shall comply with the licensee’s proposal, which includes any statements and representations made regarding the control of the licensee.

7. Wong Ching (“Mr Wong”) has been a major investor in ATV but he does not meet the residence requirement in section 8(4). He is neither a director nor shareholder of ATV. He does not satisfy any of the requirements in the BO of a person who could exercise control over a domestic free television programme service licensee.

8. In June 2010, ATV sought the Authority’s approval of a shareholding change involving the acquisition of 52.4% of ATV’s voting shares by Wong Ben Koon. In support of the application, Mr Wong indicated to the Authority he had a strong commitment to provide financial support to ATV and confirmed that he would not be in a position to exercise any voting control over ATV once the shareholding change had been completed. As one of the approving conditions, the Authority asked Mr Wong to provide a fresh undertaking which was worded as follows:

“I undertake to the Broadcasting Authority that following Completion, I will not be entitled to exercise de facto control over ATV.”

9. On 1 September 2010, the Authority approved the new shareholding structure of ATV and on 19 October 2010 Mr Wong duly submitted an undertaking as per the draft required by the Authority. As this undertaking constituted part of the licensee’s proposal of ATV, ATV has an obligation to comply with it at all times and failure to do so would constitute a breach of condition 10.1 of ATV’s licence.

10. In June 2011, the Authority received an anonymous letter of complaint requesting it to investigate whether Mr Wong had been exercising control of ATV in contravention of the relevant statutory or licence provisions. It was alleged that Mr Wong had been actively participating in the day-to-day management and operations of ATV and that Wong Ben Koon held the voting shares of ATV as a nominee of Mr Wong.

11. In July 2011, the Authority decided to conduct an investigation under the BO into whether Mr Wong had been and was exercising de facto control of ATV, and the relevant regulatory consequences, amidst widespread public concern about the role of Mr Wong in the control and management of ATV. The Authority wrote to ATV on 21 July 2011 to inform the latter that it would critically examine whether Mr Wong had breached his undertaking to the Authority regarding de facto control of ATV, and enclosed media reports of a letter issued by a group of ATV staff on 27 June 2011 to major shareholders and directors of ATV, alleging that Mr Wong had interfered with the business in ATV’s news department, changed programming schedules and altered marketing and advertising plans. The Authority requested ATV to provide information and documents on a list of matters set out in an annex to its letter by the date specified.

12. It is a matter of public importance that the Authority should reach a decision on its investigation without undue delay whether ATV has been under the de facto control of an ineligible person and to make appropriate directions to address the situation as a result of its findings.

The investigation process

13. As the nature of the investigation process conducted by the Authority and what happened in the process are important for resolving this dispute which is about the fairness of the procedure adopted, it is necessary to give a more detailed description of these matters than in the judgment below.

14. In its initial representations to the Authority, ATV submitted inter alia that Mr Wong’s participation in the day-to-day business was only in the capacity of a personal consultant to James Shing (“Mr Shing”), the Executive Director of ATV, under a consulting agreement between Mr Wong and Mr Shing dated 15 April 2010, and that the participation of Mr Wong in the decision-making process was limited to his role as such. It was provided in the consulting agreement that Mr Wong should have no direct right to or responsibility for controlling and directing the management and staff of ATV and that his advice and recommendations might be accepted or rejected at Mr Shing’s sole discretion.

15. In response to the Authority’s request, ATV submitted documentary information which included the minutes of the weekly management meetings held in 2010 and 2011 (“Minutes Supplied by ATV”).

16. As part of the investigation, the Authority either requested voluntary provision of information or, where necessary, invoked its powers under section 26 of the BO, to obtain information from those whom it had reasonable grounds to believe would have information relating to the matters being investigated.

17. From October 2011 to May 2012, the Authority approached those whom it believed would have relevant information to invite them to attend for interview. Vincent Ming Kwong Liu (“Mr Liu”), the Deputy Director General (Broadcasting) of the Authority, gave this account[1] of the approaches to those who were asked to attend for interview and what happened at the interviews:

“26. … Some of the former staff of ATV declined the invitation for fear of retaliation or other adverse consequences. Some others expressed grave concern should their identity and the information to be provided by them be revealed. To encourage the Interviewees[2] to attend interviews, [the Authority] indicated in the invitation letter sent to them that all information and documents submitted to [the Authority] in confidence would be treated as strictly confidential. …

27. The Interviews were conducted by a panel consisting of the Chairman of [the Authority] and between two and three other members of [the Authority], accompanied by senior officers and staff of the Television and Entertainment Licensing Authority (“TELA”) which until the establishment of [the Authority] was the executive arm of [the predecessor of the Authority], who provided secretarial and logistical support to the Interview Panel.

28. Prior to the start of the interview, the Interviewees were invited to agree to recording of their interviews to ensure accuracy. Following the interview, a summary of each interview was prepared by the staff of TELA based on notes that they took during the interview and/or the recording. The summary was then provided to each Interviewee for comment.

29. At the interview, the Interview Panel assured each Interviewee that their identity and the information they provided would be kept confidential. By giving the assurance, the Interview Panel was confirming to the Interviewees that when they gave information in confidence to [the Authority] during the interview it would maintain that confidentiality, which was what [the Authority] was required to do in any event under section 27 of the BO. [The Authority] was keen to secure the full co-operation of Interviewees when it knew...