Hkk v. N

HCCT 45/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 45 OF 2012

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J U D G M E N T

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1.The plaintiff is the copyright licensing body for k-server licences for reproduction of KMVs. It represents a number of record companies. It has been the licensing body for these companies since 1 July 2010. The defendant engages in operating the N Group of karaoke outlets. The defendant handles licensing issues for the N Group.

2.In June 2010, the defendant applied to the plaintiff for a karaoke server licence under a KMV licensing scheme operated by the plaintiff.  However, when the same was offered, the defendant contended that the terms were unreasonable.  On 9 August 2010, the defendant applied as the Originator to the Copyright Tribunal under CT 2/2010 seeking relief under section 156(3) of the Copyright Ordinance. 

3.Since CT 2/2010 is still pending, the defendant has not taken out a licence with the plaintiff.  The defendant and the N Group have also not made any payment of licence fees to the plaintiff since 1 July 2010. The N Group of karaoke outlets, however, have been since 1 July 2010 and still are having and using copies of the plaintiff’s KMVs in and from their servers in the course of their business.

4.The plaintiff issued this originating summons for interim payment by the N Group of companies of licence fees at HK$94,410,000 or such sum as the court may think just on account of their reproduction and use of the plaintiff’s karaoke music video repertoire since 1 July 2010.  It also prays for an alternative remedy of payment of the said sum into court or a further alternative that the defendant do comply with the terms of the plaintiff’s licensing scheme, pending the determination of CT 2/2010.

5.This application is made under Rule 22 of the Copyright Tribunal Rules, Cap 528C and section 45(2) of the Arbitration Ordinance, Cap 609.

6.Rule 22 of the Copyright Right Tribunal Rules provides:

“Sections 45(2), (4), (9) and (10), 47(3), 55(2) and (5), 56(1)(a), (b) and (c), (2), (3), (4), (8) and (9), 60(1), (2), (9) and (10), 61(1), (3), (4) and (5), 69(1) and (2) (in so far as it relates to the correction, other than the application of the provisions on the form and contents of an award to the correction, of an award), 71 and 84(1), (2) and (3) of the Arbitration Ordinance (Cap 609) apply, with the necessary modifications, to proceedings before the tribunal as they respectively apply to arbitral proceedings.”

7.Section 45(2) of the Arbitration Ordinance as applied by rule 22 above provides:

“(2) On the application of any party, the Court may, in relation to any arbitral proceedings which have been or are to be commenced in or outside Hong Kong, grant an interim measure.”

The scheme and the interim payment sought therein

8.The royalty payable by a karaoke shop under the scheme in question is calculated per a tariff table (pp 401 to 403).  There are different types of tariff for different licensing schemes.  The tariff in question is for a scheme that allows the licencee the use of a back catalogue plus up to 150 new releases of karaoke music videos (KMVs) per annum.  The back catalogue is comprised of KMVs that are not new release nor concert videos nor excluded titles and are confirmed by the plaintiff to be covered by the licence. A new release KMV for a particular scheme year means a KMV first commercially published at any time during the scheme years for karaoke-entertainment usage in Hong Kong as may be confirmed by the plaintiff in writing but does not include any concert title.

9.The exact tariff payable by a particular shop per year is calculated by the unit rate for a room in the shop multiplied by the number of rooms in that shop.  But the unit rate may vary depending on the total number of rooms in the shop.  For example, if there are no more than 10 rooms in the shop, the unit rate per room per year is HK$28,500.  If there are 11 to 15 rooms in the shop, the unit rate per room per year is HK$26,900.  By the licensing scheme in question, the plaintiff seeks to charge the defendant a total royalty at HK$31,470,000 per year from 1 July 2010 for all the outlets represented by the defendant.

10.Under a previous scheme operated by a different licensing body, the defendant had paid HK$5 million for old songs for each of the annual periods of 1 July 2008 to 30 June 2009 and 1 July 2009 to 30 June 2010.  The defendant had also sought a renewal of the HK$5 million per year scheme for the old songs.  They had also tendered HK$15 million for 150 new KMVs per annum.  Mr Liao, SC therefore suggested that the defendant might be ordered to pay the plaintiff HK$20 million per year as interim payment from 1 July 2010 onwards till the resolution of CT 2/2010.

Interim payment

11.Mr Yan, SC however submitted that this court does not have any jurisdiction to order interim payment by the defendant to the plaintiff pending determination of CT 2/2010.  His reason being that section 164(1) of the Copyright Ordinance expressly provided a power for the Copyright Tribunal to order interim payment in references made under sections 162 and 163 to the tribunal, but there is no provision for making interim payment for references made under sections 155, 156 and 158 of the Ordinance. Hence, the legislature obviously did not intend that there should be jurisdiction to order interim payment in applications made to the tribunal other than those made under sections 162 and 163.  This court should therefore not accede to the plaintiff’s application for interim payment under Rule 22 of the Copyright Tribunal Rules as the defendant’s reference was made under section 156(3).  To do so would amount to ordering interim payment through the back door and contrary to the legislative intent.

12.Mr Liao however referred me to Performing Right Society Ltd v Working Men’s Club and Institute Union Ltd [1988] FSR 586, a decision by Mr Andrew Park QC, and submitted that the defendant should in fact pay the plaintiff HK$94,410,000 as calculated per the tariff table applicable to the scheme in question for the four years since 1 July 2010 pending the determination of CT 2/2010.

13.Before going into Mr Park’s decision, I would refer to the following sections in our Copyright Ordinance which are similar to the sections in the Copyright Act 1956 which are discussed in the decision. They are section 145(1) (the definition of a licensing scheme) and sections 156(1), (2) and (3):

“145.  (1) In this Part a “licensing scheme” (特許計劃) means a scheme setting out –

(a)  the classes of case in which the operator of the scheme, or the person on whose behalf he acts, is willing to grant copyright licences; and

(b)  the terms on which licences would be granted in those classes of case,

and for this purpose a “scheme” (計劃) includes anything in the nature of a scheme, whether described as a scheme or as a tariff or by any other name.

…

156.  (1) If while a licensing scheme is in operation a dispute arises between the operator of the scheme and –

(a)  a person claiming that he requires a licence in a case of a description to which the scheme applies; or

(b)  an organization claiming to be representative of such persons,

that person or organization may refer the scheme to the Copyright Tribunal in so far as it relates to cases of that description.

(2)  A scheme which has been referred to the Tribunal under this section remains in operation until proceedings on the reference are concluded.

(3)  The Tribunal shall consider the matter in dispute and make such order, either confirming or varying the scheme so far as it relates to cases of the description to which the reference relates, as the Tribunal may determine to be reasonable in the circumstances.”

14.The relevant parts of Mr Park’s decision are at pp 588 to 593 and are as follows:

“The substantive point at issue concerns the level of royalties payable by clubs to the PRS pending the outcome of a reference to the Performing Right Tribunal, about which more later. The PRS has sought to introduce higher levels of royalties payable by clubs for the performance of musical works in the clubs in place of lower rates previously in force. The question is whether under the scheme of the Act the clubs must for the time being pay the higher rates, as the PRS contends, or whether they are entitled to go on paying the previous lower rates as the CIU contends. I agree with the PRS and in the remainder of this judgment will try to explain why.

I must first describe the general way in which the PRS operates under the broad scheme of the Act before focussing on the precise point in dispute. The practice of the PRS is now, and I think quite obviously also was before the Act, to publish from time to time the terms on which it is currently willing to grant licences to particular categories of users. This practice was recognised by the Act and encapsulated in the term “licence scheme.” Section 24(4) gives a definition:

‘In this Part of this Act ‘licence scheme,’ in relation to licences of any description, means a scheme made by one or more licensing bodies, setting out the classes of cases in which they, or the persons on whose behalf they act, are willing to grant licences of that description, and the charges (if any), and terms and conditions, subject to which licences would be granted in those classes of cases; and in this subsection ‘scheme’ includes anything in the nature of a scheme, whether described therein as a scheme or as a tariff or by any other name.’

“Licensing body” is defined in section 24(3) and undoubtedly covers the PRS. … One of the tariffs is a tarriff for clubs. It is known as Tariff J. There are many others; … On the other hand, there is not a tariff applicable to every significant use of copyright music and I was told, for example, that there is no tariff governing the reproduction of music by the BBC; royalties of broadcast music are presumably a matter of negotiation between the PRS and the BBC.

Before 1956 users of copyright music who disliked the terms in a tariff issued by the PRS could do nothing about it except by not playing the music. The Act of 1956 introduced a form of statutory redress whereby persons aggrieved by a tariff, or a licence scheme in the Act’s terminology, could refer it to a Performing Right Tribunal which had wide powers to regulate the matter, including in particular powers to confirm or vary the scheme as it might determine to be reasonable.

The present case is basically concerned with what happens in the meantime when a reference to the tribunal has been made and has not been determined. I will now refer more particularly to certain provisions of the Act.

…

Section 25 deals with references to the tribunal. Section 25(1) reads as follows:

‘Where, at any time while a licence scheme is in operation, a dispute arises with respect to the scheme between the licensing body operating the scheme and:

(a) an organisation claiming to be representative of persons requiring licences in cases of a class to which the scheme applies, or

(b) any person claiming that he requires a licence in a case of a class to which the scheme applies,

the organisation or person in question may refer the scheme to the tribunal in so far as it relates to cases of that class.’

This case concerns a reference within section 25(1)(a) by an organisation, the CIU, claiming to be, and of course being, the representative of persons, i.e., the clubs, requiring licences in cases of a class to which the scheme applies.

… Sections 25(5) and (6) read as follows:

‘(5) Subject to the last preceding subsection, the tribunal, on any reference under this section, shall consider the matter in dispute, and, after giving to the parties to the reference an opportunity of presenting their cases respectively; shall make such order, either confirming or varying the scheme, in so far as it relates to cases of the class to which the reference relates, as the tribunal may determine to be reasonable in the circumstances.

…

Section 25(7) is particularly important since it purports to deal with the transitional case:

‘Where a licence scheme has been referred to the tribunal under this section, then, notwithstanding anything contained in the scheme:

(1) the scheme shall remain in operation until the tribunal has made an order in pursuance of the reference,

…

The PRS issued a Tariff J to take effect from 6 August 1986 (which I shall refer to as “the old Tariff J”).

…

… The correct position, in my judgment, is that the tariff or scheme continues until the PRS revokes it or replaces it by a new tariff. That is what the PRS has sought to do and, in my judgment, has done, subject to course to the eventual outcome of any proceedings on a reference to the tribunal.

What happened was that on 6 May 1987 the executive council of the PRS, in the terms of an affidavit before me, “resolved that the new tariff be promulgated.” In the circumstances and giving effect to section 24(4) of the Act, I think it plain that the new Tariff J was a “licence scheme” and that it was “made” by the PRS.

The new Tariff J is recognisably the same sort of document as the old Tariff J but there are several differences. Of major concern to the CIU and its members, the royalty rates area a lot higher. …

The new Tariff J had been discussed in advance with representatives of the clubs, including the CIU, who were not prepared to accept it. On 5 August 1987, the day before it was due to commence, the CIU purported to make a reference to the tribunal under section 25(1)(a). Their complaint is that what they call “the amended royalty rates” are unreasonable and excessive. In those circumstances Mr. Jeffs says that under section 25(7)(a) the old Tariff J remains in operation and the clubs pay royalties at the rates in it. Mr. Buxton, for the PRS, says that the old Tariff J has been superseded by the new Tariff J and the clubs must pay royalties at the new rates for either of two reasons:

…

(2) If the licence scheme has been referred to the tribunal under section 25, it is clearly the new Tariff J and not the old Tariff J which has been referred. In the circumstances, if section 25(7) applies, what section 25(7)(a) secures is the payment of royalties at the rates in the new tariff scheme, not the old tariff.

I agree with Mr. Buxton and make the following observations.

First, the new Tariff J, assuming for the moment that it takes effect, is, in my judgment, in itself a complete and self-contained “licence scheme” within section 24(4). Contrary to what I understand Mr. Jeffs to suggest, it would not operate as a mere modification of the old Tariff J which would otherwise go on as a continuing licence scheme. …

Secondly, Mr Jeffs suggests that the new Tariff J cannot be a licence scheme within the section 24(4) definition because it has not been accepted by the users to whom it is directed. I cannot agree. What section 24(4) contemplates as a “licence scheme” is something in the nature of a standing invitation to treat: a setting out of the terms on which the PRS is willing to grant licences. Setting out those terms is a unilateral act of the PRS for which the acceptance or agreement of users, like the clubs, is unnecessary. To the same effect section 24(4) in effect provides in this case that “licence scheme” in relation to licences of musical copyrights to clubs means a scheme made by the PRS. There is no reference to anyone else participating in the making of the scheme. If the clubs dislike the terms enough they may not apply for licences, in which case there will be no licences. There will still, however, have been a licence scheme. …

…

… The new Tariff J did not propose to modify the old licence scheme. It proposed to replace it by a new licence scheme.

Fifthly, if the new Tariff J, being a licence scheme in itself, has been referred to the tribunal at all, then section 25(7)(a) applies, but it applies to make payable royalties at the new increased rates. “… the scheme” referred to at the start of section 25(7)(a) is obviously the scheme which has been referred and is not the scheme which was, or may have been, in existence before the scheme which has been referred.

Sixthly, while I accept that on either view, the scheme of the Act is less than perfect, I would take the view that the policy arguments slightly favour the PRS’s analysis.  The thinking of section 25(7) seems to me to be that, if a new tariff is sought to be introduced by a licensing body such as the PRS, users of the copyright should not be able to get an automatic postponement of the new scheme by initiating a reference to the tribunal in every case.  Parliament might reasonably have thought that to be a greater danger than the countervailing danger that societies like the PRS would introduce irresponsibly high tariffs with a view to securing excessive royalties pending the tribunal’s decision.  For those reasons I agree with the PRS’ interpretation of the Act.”

Sections 145(1) (the definition of a licensing scheme) and 156(1), (2) and (3) in our Copyright Ordinance are similar to sections 24(4) and 25(1), (7a) and (5) of the Copyright Act 1956 respectively.

15.I agree with the analysis and reasoning of Mr Park and Mr. Liao.  The reasoning also explains why the Copyright Tribunal has no power to order interim payment in references made to it under sections 155, 156 and 158 of the Ordinance.  The reason being that these references are of the terms of a proposed licensing scheme or a licensing scheme already in operation and the tariff in the scheme as referred to the tribunal is payable pending the determination of the reference (section 156(2)).  There is therefore no need for interim payment.

16.The Copyright Tribunal has power under section 164(1) to order interim payment in pending references that are made to it under sections 162 and 163 of the Ordinance.  Section 162 is to deal with references of terms of proposed licences and section 163 is to deal with references of licences about to expire.  However, section 161 makes it plain that the proposed licences or licences already granted as covered by sections 162 and 163 are to be granted or should have been granted otherwise than in pursuance of a licensing scheme.  These are individual licences for which no tariff in any licensing scheme is applicable, but the royalties payable would have to be negotiated individually.  I note that section 163(3) also provides that the licence in respect of which a reference has been made to the tribunal under that section shall remain in operation until the proceedings are concluded. However, this is subject to the tribunal’s power under section 164(1) to order interim payment of royalties.

17.For the above reasons, I decide that I have no jurisdiction to order interim payment in this application.

Full payment of royalty according to the scheme referred to the tribunal

18.Despite my agreement with Mr Liao’s submissions on the meaning and effect of section 156(2) of the Ordinance, I still cannot order the defendant to pay the plaintiff the full royalties per the tariff table of the licensing scheme in question from 1 July 2010.  The first reason is that Mr Park’s decision is given in an application for a declaration of whether the licensing scheme referred to the tribunal was in operation pending the decision of the tribunal on the reference.  It is not a decision made on an application for interim payment.  But the clear thrust of the plaintiff’s application as shown in the terms of the originating summons and the supporting affirmations is for interim payment or interim measure under section 45(2) of the Arbitration Ordinance. It is not for a declaration as in the case before Mr Park.  This is so despite an alternative remedy sought in the originating summons for an order that the defendant do comply with the terms of the licensing scheme. 

19.I told Mr Liao at the hearing of my provisional view above and invited him to amend the originating summons to pray for a declaration of the meaning and effect of section 156(2) of the Ordinance and an order for payment by the defendant of the royalty according to the applicable tariff table, but he declined my invitation as Mr Yan, SC for the defendant was threatening to seek an adjournment to consider the defendant’s position on its evidence in the event that such amendment be made.  Mr Yan took this stance because the defendant has only prepared to argue against an application for interim payment or interim measure, not for a declaration on the effect of section 156(2) on the facts of this case. 

20.The 2nd reason for my refusal to order royalties per the tariff table is the existence of some evidence proffered by the defendant that may go to show that the plaintiff is not administering the licensing scheme in the same terms for all licencees.  The evidence suggests that the plaintiff or its agents are giving the smaller operators more favourable terms on royalties.  If that is true, it may be held that the plaintiff is not administering the licensing scheme in accordance with the published terms including the tariff table.  In that case, I doubt if the plaintiff can insist that the defendant should pay royalty according to the tariff table.

21.The 3rd reason is that the plaintiff since 1 July 2010 has not provided the defendant one single new KMV that should have been given pursuant to the licensing scheme in question.  The royalty calculated per the tariff table is for the back catalogue plus 150 new KMVs per year.  There is no separate royalties for the back catalogue and the new KMVs. Since the plaintiff has not provided any new KMV to the defendant since 1 July 2010 and the royalty for the new KMVs can be several times of that for the back catalogue, I am unable to decide how much should be paid by the defendant according to the tariff table from 1 July 2010 pending the tribunal’s decision on CT 2/2010.

Is interim payment an interim measure?

22.Apart from the above reasons for not ordering interim payment or full payment per the tariff table in the licensing scheme, Mr Yan further submitted that no interim payment can be ordered under section 45(2) of the Arbitration Ordinance as it is not an interim measure contemplated in that section.

23.Mr Yan referred to article 17(2) of the UNCITRAL Model Law, for which effect is given by section 35(1) of the Arbitration Ordinance.  Article 17(2) defines the interim measure that the court may grant in section 45(2) of the Ordinance.

24.Sections 35(1) and (2) provide:

“35. (1) Article 17 of the UNCITRAL Model Law, the text of which is set out below, has effect—

‘Article 17. Power of arbitral tribunal to order interim measures

(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures.

(2) An interim measure is any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to:

(a) Maintain or restore the status quo pending determination of the dispute;

(b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;

(c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or

(d) Preserve evidence that may be relevant and material to the resolution of the dispute.’

(2) An interim measure referred to in article 17 of the UNCITRAL Model Law, given effect to by subsection (1), is to be construed as including an injunction but not including an order under section 56.”

25.On the interpretation of article 17, and more particularly on what is comprised in interim measure, both sides asked me to consider the travaux preparatoires (preparatory works) which led to the adoption of the amendments to the Model Law in 2006.  The travaux preparatoires are the reports and notes of the UN Secretariat to the Working Group on Arbitration (“the Working Group”) and the reports of the Working Group on its work.  The Working Group had the task of considering and proposing how the Model Law of 1985 should be amended.  The amendments were made in 2006.

26.Mr Liao referred to various parts of the travaux preparatoires and submitted that the Working Group had not taken any clear stance on whether an order for interim payment should be within the scope of interim measure to be provided in the Model Law. 

27.Mr Yan however submitted that the Working Group had decided that interim measure in the Model Law should not include an order for interim payment.  Hence the court cannot order interim payment under section 45(2) of the Arbitration Ordinance.

28.Mr Yan referred to a report dated 14 January 2000 by the UN Secretariat for the consideration of the Working Group at its 32nd section to be held between 20 to 31 March 2000.  Paras 105, 106 and 108 of the report said:

“105. The Working Group may wish to consider whether it would be desirable to prepare a harmonized text dealing with the issuance of interim measures by arbitral tribunals. …

106. If it is considered that work should be undertaken in this direction, some inspiration may be drawn from the Principles on Provisional and Protective Measures in International Litigation, which were adopted in 1996 by the Committee on International Civil and Commercial Litigation of the International Law Association (ILA). The Principles, reproduced below in paragraph 108, are limited to provisional and protective measures that may be issued by courts; however, a number of ideas underlying the Principles appear to be relevant, mutatis mutandis, also to interim measures ordered by arbitral tribunals.

…

108. The text of the ILA Principles on Provisional and Protective Measures in International Litigation is as follows:

Scope of Principles

…

Interim Payments

22.  The procedure in domestic law under which the court may order an interim payment (ie an outright payment to the plaintiff which may be subsequently revised on final judgment) is not a provisional and protective measure in the context of international litigation.”

29.In the report of the Working Group on the work in its 32nd session and dated 10 April 2000, it is stated in para 65 as follows:

“65. It was noted that under the procedures used in some jurisdictions the arbitral tribunal might order a party to make an “interim payment” or “interim partial payment” to the other party (insofar as it was beyond doubt that the amount of the interim payment was due) and that such payment was to be merged into the final award. There was general agreement that such orders for interim payment were not to be considered interim measures of protection as discussed by the Working Group and were not to be a subject matter of any uniform provisions to be prepared.”

30.From the above, it is clear that the Working Group had decided not to include interim payment by the defendant to the plaintiff as one of the interim measures in article 17 of the Model Law.  I therefore agree with Mr Yan that I have no jurisdiction under section 45(2) of the Arbitration Ordinance to order interim payment to be paid by the defendant to the plaintiff.

Payment into court

31.Mr Yan accepts that I do have jurisdiction under article 17 to order payment into court.  But he opposes such an order.  He submitted that the plaintiff has to satisfy the conditions in article 17A of the Model Law before the defendant can be ordered to make payment into court.

32.Article 17A, for which effect has been given in section 36 of the Arbitration Ordinance, provides:

“36. Article 17A of the UNCITRAL Model Law, the text of which is set out below, has effect—

‘Article 17A. Conditions for granting interim

measures

(1) The party requesting an interim measure under article 17(2)(a), (b) and (c) shall satisfy the arbitral tribunal that:

(a) Harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and

(b) There is a reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination.’”

33.Mr Yan submitted that the plaintiff will get the royalties as may be determined by the Copyright Tribunal in CT 2/2010 and it will suffer no harm.  There is therefore no need for any payment into court.

34.He also submitted that the defendant had never been in default of payment in previous schemes administered by other licensing bodies. 

35.He also referred to the delay of the plaintiff in making this application.

36.I do not think any of these reasons can deter me from ordering the defendant to make payment into court.  The scheme in question commenced operation on 1 July 2010.  It has already entered the 4th year of operation. The royalty is payable within 7 days upon the plaintiff’s notice to the licencee of acceptance of the application for licence (p 383).  That means payment should be made at the commencement of the licence.  The defendant has not made any payment since 1 July 2010.  The longer it takes for CT 2/2010 to reach its conclusion, the greater will be the outstanding sum.  I note that many of the karaoke operators represented by the defendant do not have substantial paid up share capital.  There is also no information about the financial well-being of these operators.  The plaintiff will suffer harm if any of these operators should cease business and not pay up.  With the amount of outstanding royalty growing, the risk of default by some of the operators also grows. 

37.I also see no reason why these operators should be allowed to make use of the plaintiff’s repertoire for profit without having to secure the royalties that may be payable by them to the plaintiff. 

38.I therefore consider that the defendant should make payment of a reasonable sum into court to secure what it will have to pay the plaintiff per the licensing scheme as may be ordered by the Copyright Tribunal in CT 2/2010.

39.On the question of how much to pay, I consider that HK$5 million per annum should be paid for the back catalogue and HK$15 million should be paid for 150 new KMVs per annum.

40.Since the plaintiff has not provided a single new KMV to the defendant from 1 July 2010, I do not think the defendant should be required to pay into court any money to secure the royalty for the new KMVs from that date up to 31 October 2013. 

41.Mr Liao submitted that despite no new KMVs had been delivered by the plaintiff to the defendant, the operators represented by the defendant had still used the new KMVs in their business.  Nevertheless, I do not think such use of the new KMVs by those operators could be regarded as legitimate pursuant to the licensing scheme.  It was also usage without the plaintiff’s consent. 

42.I therefore order the defendant to pay into court within 2 weeks a sum of HK$20 million for the back catalogue for 4 scheme years from 1 July 2010 to 30 June 2014.  I further order the defendant to pay into court also within 2 weeks another sum of HK$10 million in respect of the new KMVs to be furnished from 1 November 2013 to 30 June 2014.

43.I further order that the defendant should pay another sum of HK$20 million into court no later than 14 of July of each of the years to come commencing from 2014 unless CT 2/2010 should be decided on or before 1 July of that year.

44.I stress that the sums I order to be paid into court do not represent what may be payable under the scheme in question.  That is for the tribunal to decide.  I come to the said figures simply by reference to what had been paid in previous years.

Costs order nisi

45.I now consider the issue of costs.  Though the plaintiff has lost some important points in the arguments, it nevertheless obtained some security of what it will obtain at the resolution of CT 2/2010.  This is also one of the reliefs sought in the originating summons.  I therefore make an order nisi that the defendant do pay the plaintiff the costs of this application with certificate for two counsel.

Mr Andrew Liao, SC and Mr Norman Hui, instructed by Cheung & Choy, for the plaintiff

Mr John M Y Yan, SC and Mr Philips B F Wong, instructed by Tony Au & Partners, for the defendant

(This judgment is published with the agreement of the parties.)