FACC No. 5 of 1998
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NO. 5 OF 1998 (CRIMINAL)
(ON APPEAL FROM CACC No. 104 OF 1998)
||UNIGLOBE TELECOM (FAR EAST) LIMITED
||HONG KONG SPECIAL ADMINISTRATIVE REGION
Court: Chief Justice Li, Mr Justice Litton PJ, Mr Justice Ching PJ, Mr Justice Bokhary PJ and Lord Nicholls of Birkenhead NPJ
Date of Hearing: 11 and 12 March 1999
Date of Judgment: 22 March 1999
J U D G M E N T
Chief Justice Li:
1. I agree with the judgment of Mr Justice Litton PJ.
Mr Justice Litton PJ:
2. On 21 November 1997 the appellant Uniglobe Telecom (Far East) Ltd was convicted in the District Court (Davies DJ) of two offences under s. 8(1) of the Telecommunication Ordinance, Cap. 106. The charges were:
" 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.
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."
3. On 17 July 1998 the Court of Appeal (Power V-P, Mayo and Stuart-Moore JJA) dismissed the appellant's application for leave to appeal against conviction. The Appeal Committee having granted leave on 10 November 1998 the appellant now appeals against conviction to this Court.
4. The appellant provided for its subscribers what is called an international calling card service under licence granted by the Telecommunication Authority under the Telecommunication Ordinance, Cap. 106. The service enabled subscribers' telephone calls in Hong Kong to be routed to parties overseas. The licence, called a public non-exclusive telecommunications service licence ("PNET licence") permitted, and in effect limited, the appellant to providing a service as described in the First Schedule to the licence. This service comprised three elements:
(i) The system operated by the appellant at its own premises which validated their subscribers' calls and enabled their outgoing international calls to be routed overseas, by the interconnections described in paragraphs (ii) and (iii) below.
(ii) Interconnection with the local public switched telephone networks operated by licensed carriers under fixed telecommunication network services licences ("FTNS licences") which were the means by which access to the gateway overseas was attained.
(iii) The gateway itself operated by Hong Kong Telecom International Ltd (HKTI), through which all overseas calls must exit.
5. All overseas calls must exit through that gateway as HKTI had exclusive rights in respect of overseas calls. The service provided by the appellant is also described in the First Schedule to the licence as a telephone call routing service. In practice, what happened was this: A subscriber wishing to gain access to the appellant's service dialled 30023777 and an automatic computerized answering device located at the appellant's premises in Causeway Bay asked the subscriber for his personal identification number (PIN). Once the PIN number was validated by the computer, the pre-recorded voice asked the subscriber to dial the overseas number which was then recorded in the appellant's computer. The computer automatically routed the call directly to one of three FTNS carriers (Hong Kong Telecom Co. Ltd, New World Telephone Ltd and New T&T HK Ltd) with whom the appellant had accounts and the call would then be carried by the FTNS carrier to the gateway operated by HKTI under its exclusive licence. Through the gateway the call would then be transmitted overseas.
6. A piece of detail, referred to at trial but irrelevant for the purposes of the analysis on this appeal, is the "call back service". This enabled an outgoing overseas call to be converted automatically into an incoming call, as if generated by the overseas party. Not all overseas destinations had such a facility. Where such facilities existed and if the overseas rates were cheaper than the local rates, the cheaper rates would be charged to the calling card service provider who would therefore be able to charge its own subscribers a rate lower than that charged, say, by Hong Kong Telecom Co. Ltd on its International Direct Dialling ("IDD") service.
Facts giving rise to the charges
7. In June 1996 the appellant entered into a contract with a company called Bestlong International Ltd ("Bestlong"). The services to be rendered by Bestlong are stated in clause 1.1 of the contract to be:
"A global long distance call service which allows users to place long distance calls on a global basis via Bestlong long distance network and system."
8. Bestlong had no telecommunication licence. Between 26 November and 6 December 1996 test calls were made to Mainland China by Telecommunication Authority officials, using the appellant's service. It was discovered that 2.8% of such calls were made without going through HKTI's gateway, in breach of HKTI's exclusive rights. The calls were transmitted to Mainland China by means of an unauthorized microwave radio transceiver located at Bestlong's premises at Sheung Shui. The radio waves were beamed from those premises to a high-rise building in Shenzhen and then onward transmitted to other parts of Mainland China.
9. This gave rise to the two charges against the appellant, the subject of the present appeal. Bestlong's managing director was also charged with offences under s.8(1)(a) ["maintaining a means of telecommunication" without a licence] and s.8(1)(b) ["possession of radio communication apparatus" without a licence] to which he pleaded guilty.
10. At trial the prosecution's primary case was that the appellant had colluded with Bestlong to maintain a means of telecommunication without a licence, namely an external public telecommunication service which bypassed HKTI's gateway, and likewise had colluded with Bestlong to use the communication apparatus at Sheung Shui without a licence. This primary case failed. The trial judge, in his Reasons for Verdict, said:
" Having considered all the evidence I am not satisfied that it shows conclusively that the [appellant] company, as represented by its management staff, was aware that any of [the appellant'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 [the appellant] 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."
11. The judge then turned to the prosecution's alternative case which was that the two offences as charged were ones of strict liability; the appellant was upon the primary facts guilty as charged without proof of guilty knowledge in accordance with the principles set out in Gammon (HK) Ltd v. Attorney-General of Hong Kong  AC 1. The judge found for the prosecution on its alternative case, and also found that the defence had failed to prove on a balance of probabilities that the appellant company, through its directing minds, had a reasonably held belief that Bestlong had a licence to maintain the means of telecommunication and to use the apparatus at Sheung Shui. The appellant accordingly stood convicted. As mentioned earlier, the Court of Appeal dismissed the application for leave to appeal.
12. There are, in essence, two main issues:
(i) Do the facts as found and as proved against the appellant at trial amount to the offence of maintaining a means of telecommunication without a licence as averred in charge 1, and using a radio communication apparatus without a licence as averred in charge 2?
(ii) If the answer in each case is No, that is the end of the matter. The appeal must be allowed. If, in respect of either charge, the answer is Yes, we must then turn to the issue of strict liability.
"Maintaining a means of telecommunication"
13. The expression "maintaining a means of telecommunication" is not defined in the Ordinance. This is not surprising, having regard to the wide range of activities which comes within that expression, as evidenced by the scheme for the grant of licences set out in the Telecommunication Regulations. As things stand today there are 33 items in Schedule 1 to those Regulations for which licences to establish and maintain means of telecommunication may be granted, of which a PNET licence is one. This list has grown over the years, from the 21 items seen in the original 1963 Regulations.
14. The power of the Telecommunication Authority to grant licences is derived from s.7 of the Ordinance. Subsection (1), as relevant, reads :
" (1) ... the Authority may, in accordance with this Ordinance grant to such persons as...