Pccw-hkt Telephone Ltd v. The Telecommunications Authority

CACV 108/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 108 OF 2011

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________________________

BETWEEN

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CACV 109/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 109 OF 2011

BETWEEN

________________________

CACV 110/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 110 OF 2011

BETWEEN

________________________

Before: Hon Tang VP and Fok JA in Court

Date of Hearing: 29 February 2012

Date of Judgment: 29 February 2012

Date of Handing Down Reasons for Judgment: 8 March 2012

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REASONS FOR JUDGMENT

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Hon Tang VP:

1.I have had the benefit of reading Fok JA’s judgment in draft. I agree with it and have nothing to add.

Hon Fok JA:

INTRODUCTION

2.By its decision dated 30 May 2011, the Telecommunications (Competition Provisions) Appeal Board refused applications to refer certain questions of law arising from two appeals to the Appeal Board to this Court by way of case stated.  By three notices of motion, we were asked to order, pursuant to RHC O.61 r.2(1), that the Appeal Board refer those questions of law to the Court of Appeal by way of the case stated procedure.

3.At the hearing, having heard submissions in support of the application in CACV 109/2010, we declined to make an order as sought in that application, as a consequence of which it was accepted by the parties that the applications in CACV 108/2011 and CACV 110/2011 became academic.  Accordingly, we made no order on those two appeals.  We indicated that we would hand down our reasons for dismissing the application in CACV 109/2011 in due course, which we now do.

4.In order to put the applications before us into proper context, it is necessary first to summarise the procedural history of this matter so far.

PROCEDURAL HISTORY TO DATE

Background

5.The factual background to this matter is the fixed mobile interconnection charge (“FMIC”) which is paid by a mobile network operator (“MNO”) to an interconnecting fixed network operator (“FNO”) for telephony traffic both from a fixed line customer to a mobile customer and from a mobile customer to a fixed line customer.  The charge is based on a mechanism known as “Mobile Party’s Network Pays” (“MPNP”).

6.PCCW is a FNO in Hong Kong and was entitled to charge MNOs for FMIC based on the MPNP.

7.On 17 April 2008, PCCW applied to the Telecommunications Authority (“TA”) under Special Condition 3.4 in its Fixed Carrier License No. 050 for approval to increase the FMIC from 4.36 cents per minute to 9.5 cents per minute.  The proposed increase was subsequently reduced, on 7 May 2008, from 9.5 cents per minute to 5.45 cents per minute.

8.On 23 May 2008, the TA published the FMIC Tariff Increase Statement announcing that PCCW’s application to increase FMIC was deemed to be approved by the TA pursuant to Special Condition 3.4.  The basis for the deeming of that approval was that the TA had not arrived at a definitive view that the tariff increase would, or would not, contravene ss. 7K, 7L or 7N of the Telecommunications Ordinance, Cap. 106 (“the TO”).

9.Those provisions of the TO are designed to promote fair competition in the telecommunications market and prohibit or restrict anti-competitive practices (s. 7K), abuse of a dominant position (s. 7L), misleading or deceptive conduct (s. 7M) and discrimination in respect of charges or conditions of supply (s. 7N).

10.On the same date, PCCW published in the Hong Kong Government Gazette that the FMIC would be revised to 5.45 cents per minute with effect from 1 June 2008.  This increased FMIC applied for a period of approximately 11 months until 28 April 2009, from which date the original FMIC of 4.36 cents per minute once again applied.

SmarTone’s complaint and the TA Decision

11.On 18 June 2008, SmarTone submitted a complaint to the TA requesting the TA to commence an investigation under ss. 7K, 7L or 7N of the TO into the FMIC increase from 4.36 cents per minute to 5.45 cents per minute.

12.The TA accepted the request and started its investigation in late 2008.  In June 2010, the TA issued a draft case summary to SmarTone, PCCW and other interested parties.  On 1 November 2010, the TA issued the final case summary in respect of its investigation (“the TA’s Decision”).

13.In the TA’s Decision, the TA investigated SmarTone’s complaint that PCCW’s increase of its FMIC tariff rate from 1 June 2008 to 28 April 2009 constituted a breach of ss. 7K, 7L or 7N of the TO.  It determined that PCCW was “dominant” in the relevant telecommunications markets during the period 1 June 2008 to 28 April 2009 within s. 7L(1).  However, the TA determined that PCCW did not abuse its dominant position in breach of s. 7L(4) by engaging in conduct which had the purpose or effect of preventing or substantially restricting competition in a telecommunications market.  The TA also determined that PCCW did not contravene s. 7L(1) by engaging in excessive pricing.  In investigating the allegation of excessive pricing, the TA considered PCCW’s actual costs and, in assessing those costs, different cost models were examined.  The TA concluded that the appropriate cost model was the FDC model, whereas SmarTone contended that the LRAIC model should be used and PCCW for its part contended that the SAC model should be used.  The TA determined that PCCW’s margin was a certain percentage[1] higher than its calculated cost and concluded that this was more than de minimis but that there was no material or sufficient evidence of consumer harm or of a material impact on competition.

14.In the result, the TA concluded that the FMIC increase in question did not constitute a breach of ss. 7K, 7L or 7N of the TO and dismissed SmarTone’s complaint.

The resulting appeals

15.By notice of appeal dated 12 November 2010, SmarTone sought to appeal the TA’s Decision.  That appeal is Appeal 29 to the Appeal Board.  In that appeal, the substantive relief SmarTone seeks is:

(1)  An order that the TA’s Decision be quashed;

(2)  A declaration that SmarTone is not liable to pay PCCW’s charges in accordance with the increased FMIC for the relevant period (being 1 June 2008 to 28 April 2009); and

(3)  An order that the complaint be remitted to the TA for reconsideration in accordance with guidance to be given by the Appeal Board.

16.For its part, on 16 November 2011, PCCW lodged a notice of appeal against the TA’s Decision.  Although SmarTone’s complaint to the TA was dismissed, as noted above the TA’s Decision included an opinion that PCCW was in a dominant position for the purposes of s. 7L(1) of the TO, which opinion PCCW considers is adverse to it and which it would like the Appeal Board to set aside.  That appeal is Appeal 30 to the Appeal Board.

The preliminary issues raised and their determination

17.Various preliminary issues were raised by the respective parties at the outset of Appeal 29 and Appeal 30.  In summary, the TA contended that PCCW’s appeal in Appeal 30 was out of time and that it did not have locus as it was not an aggrieved person within the meaning of s. 32N(1) of the TO for the purposes of bringing that appeal.  For its part, PCCW contended that it was entitled to intervene in Appeal 29 and to raise, in particular, the issue of whether the TA’s Decision that it was in a dominant position for the purposes of s. 7L(1) of the TO was correct.

18.Consequently, the Chairman of the Appeal Board made Procedural Order No. 1 on 8 December 2010, following a case management conference held on that date, in which directions were given for the determination of these, and other, preliminary issues.

19.Pursuant to those directions, PCCW filed a request for leave to intervene dated 7 January 2011, seeking to intervene in Appeal 29 in order to raise the issue of whether the TA was correct to hold that it had a position of dominance in the relevant market.  Although it did not object in principle to PCCW’s intervention, the TA objected to PCCW doing so otherwise than to support the TA in opposing SmarTone’s grounds of appeal.  This was initially also SmarTone’s position (although it eventually abandoned this at the hearing before the Chairman).

20.On 2 February 2011, the Chairman of the Appeal Board gave his decision rejecting the TA’s contention that PCCW’s appeal was out of time.  This has been referred to as the limitation issue.

21.On 7 April 2011, the Chairman of the Appeal Board gave his decision holding that PCCW was not a “person aggrieved” for the purposes of bringing an appeal against the TA’s Decision and therefore dismissed Appeal 30.

22.In that same decision, the Chairman considered the scope of PCCW’s intervention in Appeal 29 and, notwithstanding the TA’s objection, determined that PCCW should be entitled to raise the issue of dominance.  He therefore gave leave to PCCW to intervene in Appeal 29 and to raise the issue of dominance, subject to a direction that PCCW conduct itself so as to avoid unnecessary expenditure of time and effort in duplicating submissions whether oral or written.[2]

The Appeal Board’s refusal to state a case and the resulting applications

to this Court

23.On 28 April 2011, the TA indicated that, in the event PCCW applied for a case to be stated in respect of the “person aggrieved” issue in Appeal 30, he would apply to the Appeal Board to state a case to the Court of Appeal in relation to the limitation issue in that appeal.[3]  On the same date, the TA also applied to the Appeal Board to state a case to the Court of Appeal relating to the scope of PCCW’s intervention in Appeal 29.

24.On 25 May 2011, PCCW applied to the Appeal Board to state a case to the Court of Appeal relating to the issue of whether PCCW was a “person aggrieved” in Appeal 30.

25.On 30 May 2011, the Chairman of the Appeal Board issued a decision on the applications for leave to state a case, refusing all the applications.  It is that decision which has led to the three notices of motion in these appeals, namely:

(1)  CAQL 1/2011 (in CACV 108/2011) – this is PCCW’s application that the Appeal Board state a case to the Court of Appeal in respect of whether PCCW is a “person aggrieved” for the purposes of bringing the appeal in Appeal 30;

(2)  CAQL 2/2011 (in CACV 109/2011) – this is the TA’s application that the Appeal Board state a case to the Court of Appeal in respect of whether PCCW should be allowed to raise the dominance issue in Appeal 29; and

(3)  CAQL 3/2011 (in CACV 110/2011) – this is the TA’s application that the Appeal Board state a case to the Court of Appeal in respect of whether PCCW’s Appeal 30 is out of time.

26.By a letter to the Appeal Board dated 31 May 2011, PCCW stated that its position is that its request that the Appeal Board state a case in Appeal 30 in respect of the “person aggrieved” issue was made:

“… for the sole purpose of protecting its position in the event that the TA pressed its case stated requests in Appeals 29 and 30. It has always been, and remains, PCCW’s position that it is content with the rights of intervention that have been granted by the Chairman in Appeal 29 and PCCW would not wish to press its request for a case stated in Appeal 30 if the TA would withdraw her requests for cases to be stated in Appeals 29 and 30.”

27.This remained PCCW’s position at the hearing before us, as confirmed by its counsel, Mr Roger Beresford.

28.In short, in the event the Appeal Board’s decision in respect of the scope of PCCW’s intervention in Appeal 29 were not disturbed, PCCW’s request to state a case in Appeal 30 in respect of the “person aggrieved” issue would fall away and, in turn, the TA’s request to state a case in Appeal 30 in respect of the limitation issue would become academic.

THE CASE STATED PROCEDURE

29.The applications below to the Chairman of the Appeal Board were made pursuant to s. 32R of the TO, which provides that the Appeal Board may refer any question of law arising in an appeal to the Court of Appeal for determination by way of case stated.

30.It was common ground below that s. 32R gave the Chairman a discretion whether or not to state a case. However, there is nothing in s. 32R which indicates how the discretion conferred by that section is to be exercised.

31.It was also common ground below that, if the Chairman refused to state a case, either party could renew the application pursuant to O.61 r.2(1) which provides:

“Where any tribunal is empowered or may be required to state a case on a question of law for determination by the Court of Appeal, any party to the proceedings who is aggrieved by the tribunal’s refusal to state a case may apply to the Court of Appeal or a single judge of that Court for an order requiring the tribunal to state a case.”

32.No authority was cited to us as to the test to be applied by the Court of Appeal when determining whether to order a tribunal to state a case pursuant to O.61 r.2(1).  The wording of the rule makes it clear that there must be a question of law to be determined and that the applicant seeking an order for a case to be stated must be a person who is aggrieved by the tribunal’s refusal to state a case on that question of law.  However, it is also clear from O.61 r.2(1) that the Court of Appeal has a discretion whether or not to state a case and is not obliged to do so.  It will not be required to state a case, for example, if the question of law is academic or is so badly framed as to be meaningless.  See, in this context, the comments of Ma CJHC (as he then was) in PCCW-HKT Telephone Ltd v Telecommunications Authority, unrep., CACV 274/2003, 8.7.04 at §§28-30 addressing the circumstances in which the Court of Appeal might decline to determine a question of law in a case stated to it under s. 32R of the TO.[4]

33.In the present appeals, directions were given that, in the event the applications to state a case were granted, the Court of Appeal would proceed to hear and determine the substantive cases stated at the same hearing.  For this reason, full skeleton submissions were filed by PCCW and the TA respectively on the questions of law in respect of which we were asked to direct the Appeal Board to state a case.  In the circumstances, we were in a position to reach a conclusion on whether we would be prepared to answer the question of law sought to be stated in CACV 109/2011[5] in the manner proposed by the TA.  Since we concluded, for the reasons set out below, that we would not do so, we declined to exercise our discretion under O.61 r.2(1) to direct the Appeal Board to state a case on that question.

THE INTERVENTION ISSUE

The Chairman’s decision on the scope of PCCW’s intervention

34.Neither SmarTone nor the TA objected to an order permitting PCCW to intervene in Appeal 29.  Having initially taken the view that PCCW should not be permitted to raise the issue of dominance in Appeal 29, SmarTone’s position at the hearing before the Chairman of the Appeal Board was that it could not contend that PCCW should be prevented from raising the dominance point in that appeal.  The TA, however, maintained its objection to PCCW being so entitled.

35.The Chairman of the Appeal Board said:

“27. I cannot but feel that if PCCW were not allowed to raise this issue in this appeal, it would suffer a serious sense of injustice. Furthermore, it is always difficult at such an early stage of a case such as this (which will involve complex economic evidence) to form a view whether in fact the finding of dominance had any, and if so, what, effect upon the TA’s Decision. It would be an unfortunate position to find oneself in if, at the end of the day, it was clear that this finding influenced the TA’s Decision but there was no way in which the Appeal Board could alter it or the reasoning leading thereto.

28. It seems to me to be a wholly artificial approach to try and compartmentalise SmarTone’s appeal without having regard to the situation of PCCW which would be looming large in the background. It may well be that at the end of the day the Board finds that the decision on dominance was of no relevance to the ultimate finding [on] the subject matter of this Appeal. However, I cannot at this stage possibly foresee the result of this Appeal and it would seem to me to be unjust to force PCCW to intervene without being able to raise the very point which concerns it and which could possibly impact on the result of the Appeal. I have approached this matter from my overall feeling of the justice of the situation and I believe that by using the intervention route, justice can be done to all sides. If it means that this Appeal lasts longer and is more expensive, then that is something which the parties will have to accept. The Board, too, will have to accept facing a more complicated hearing than might otherwise be the case.

29. Accordingly, I grant leave to PCCW to intervene and to raise the issue of dominance, but at all times to obey the order set out in paragraph 24 above, that there shall be no unnecessary duplication of material as supplied in this Appeal. This order is without prejudice to PCCW’s right to raise the dominance issue. At a further CMC, I may consider taking more concrete steps to attempt to avoid this duplication.

30.       I have come to the above conclusion on the basis of what I consider to be a fair and just and efficient way to manage this dispute in the exercise of the discretion given to me by the TO.”

The Chairman’s refusal to state a case on the scope of intervention issue

36.In his decision on the applications for leave to state a case, the Chairman of the Appeal Board gave his reasons for refusing to state a case in respect of the scope of PCCW’s intervention as follows:

“8. The TA’s application relating to the scope of PCCW’s intervention seems to be somewhat wide of the mark. No party has challenged the Decision to permit PCCW to intervene in Appeal 29. Issues relating to the scope of that intervention are quintessentially matters of case management to be dealt with by the Chairman, Deputy Chairman or the Board and do not raise issues of law appropriate for determination by the Court of Appeal. I formed the view (shared by Counsel for SmarTone) that it would be unfair to refuse PCCW’s application to intervene on the dominance issue which Counsel for SmarTone considered was an important aspect of Appeal 29. The scope of intervention must depend on the facts of the case. There is no rigid ‘one size fits all’ formula for the scope of intervention. This case is clearly unusual given that PCCW is the party that will feel the financial effect if SmarTone’s appeal is allowed. Unfortunately for PCCW I was not able to find that they were a ‘person aggrieved’ without, as the TA forcefully submitted, doing violence to the language of the section. However I was in the exercise of my discretion as the case manager (and likely Chair of the merits hearing), able to achieve what appears to me to be a fair procedural result in all the circumstances of this case. I believe the Legislature intended that the affairs of this Board would be conducted informally and expeditiously and they left a wide degree of discretion with the Chair and Deputy Chair.”

The question in respect of which it was sought to state a case

37.The question on which the TA sought a case to be stated, as set out in the notice of motion, was:

“… whether or not there is a principle which limits the right of an intervener to address only those matters which arise out of the grounds of appeal between the Appellant and Respondent in proceedings before the Board; or alternatively whether the Chairman has a free standing discretion to permit grounds of appeal which are outside the scope of the matters expressly raised to be in dispute by the parties to the appeal and properly set out in a Notice of Appeal against the TA.”

The TA’s submissions in respect of the scope of intervention

38.Whilst accepting that PCCW was entitled to intervene in Appeal 29, it was the TA’s submission that the Chairman was wrong to direct that PCCW should be permitted to raise the dominance issue in its intervention in that appeal.

39.Ms Roxanne Ismail, counsel for the TA, submitted that the right of appeal under the TO was limited as was the jurisdiction of the Appeal Board on an appeal.

40.In respect of the right of appeal, s. 32N(1) limits who may appeal and in respect of what decision.  It is provided by s. 32N(1) that:

“Any person aggrieved by –

(a) an opinion, determination, direction or decision of the Authority relating to –

(i) section 7K, 7L, 7M or 7N; or

(ii) any licence condition relating to any such section; or

(b) any sanction or remedy imposed or to be imposed under this Ordinance by the Authority in consequence of a breach of any such section or any such licence condition,

may appeal to the Appeal Board against the opinion, determination, direction, decision, sanction or remedy, as the case may be, to the extent to which it relates to any such section or any such licence condition, as the case may be.”

41.It was the TA’s case that PCCW was not a person aggrieved by the TA’s Decision since the outcome of that decision was in its favour, namely that there was no contravention by it of any relevant section.  No sanction or adverse order was made against PCCW and so it had no cause for complaint, even against the finding that it was in a dominant position in the relevant market. So far as that finding was concerned, although it was a pre-condition to a finding of contravention of the prohibition in s. 7L, Ms Ismail pointed out that there is no prohibition against dominance in itself and submitted that the possession of a dominant position is a reward for success and is a state of affairs to which all companies aspire.

42.Since PCCW would, on that basis, have no entitlement to appeal to the Appeal Board in respect of the TA Decision, it is necessary to consider what issues the Appeal Board would have to address in Appeal 29 brought by SmarTone.

43.So far as the limits of the jurisdiction of the Appeal Board is concerned, Ms Ismail referred to s. 32O(4) of the TO, which provides:

“After hearing an appeal, the Appeal Board shall determine the appeal by upholding, varying or quashing the appeal subject matter and may make such consequential orders as may be necessary.”

44.The “appeal subject matter” is defined in s. 32L of the TO as follows:

“(a) in relation to an appeal under section 32N(1), means the opinion, determination, direction, decision, sanction or remedy referred to in section 32N(1) –

(i) to the extent to which it relates to section 7K, 7L, 7M or 7N or any licence condition relating to any such section; and

(ii) which is the subject of the appeal;

(b) in relation to an appeal under section 32N(1A), (1B) or (1C), means an opinion, direction or decision of the Authority published under section 7P(14);”.

45.It was submitted by Ms Ismail that, in Appeal 29, the Appeal Board would therefore not be entitled to substitute, for the TA’s Decision that there was no contravention of any of the relevant sections, a decision that there had been such a contravention, since such an order would not be one which upheld, varied or quashed the appeal subject matter as defined.  Ms Ismail therefore submitted that it was not possible that the outcome of Appeal 29 would be a finding that PCCW was in contravention of the relevant sections.  Even if SmarTone were successful, it was inevitable that the matter would have to be remitted to the TA for a final decision on the complaint of contravention.

46.Ms Ismail analysed SmarTone’s notice of appeal in Appeal 29 and made a number of observations on it.  She noted that seven grounds of appeal were advanced and in respect of the issues defined in those grounds PCCW had been successful before the TA.  The brunt of the appeal was concerned with cost models by reference to accountancy principles, the impact of a price increase and regulatory policy.  None of the grounds required an examination of market definition or dominance.  Most of the grounds if successful would lead to the Appeal Board finding the TA should have collected different information and would require the Appeal Board to ask the TA to do this, since it would not be for the Appeal Board to make a final assessment.  This was all consistent with SmarTone seeking a remittal.

47.So far as the basis for PCCW’s intervention was concerned, Ms Ismail submitted that intervention was not a statutory right.  Although s. 32U of the TO provides that the Secretary for Commerce and Economic Development may make rules to provide to the lodging of appeals and relating to the practice and procedure of the Appeal Board, no such rules have been made. Instead, under s. 32O(7) of the TO:

“The Chairman may determine any matter of practice or procedure relating to the hearing of appeals where no provision governing such matter is made in this Ordinance or in regulations made thereunder.”

Ms Ismail was therefore correct in submitting that intervention is a secondary right which arises as a matter of practice and procedure where another party is pursuing a right of appeal under s. 32N.

48.Ms Ismail submitted that the Chairman’s discretion in s. 32O(7) was limited to practice and procedure and could not be used to extend the ambit of an appeal.  Since the appeal subject matter in Appeal 29 was limited to the TA’s refusal to determine that there was a contravention of the relevant sections, the Chairman was not permitted to widen the ambit of the appeal by permitting PCCW to argue the dominance issue, when it was not itself entitled to appeal against that particular opinion as a person aggrieved.

49.As for the purpose of PCCW intervening in Appeal 29, Ms Ismail submitted that its participation would be proper in so far as it would seek to defend the TA’s determination that PCCW did not abuse its dominant position by engaging in conduct which had the purpose or effect of preventing or substantially restricting competition in a telecommunications market.  It would also be entitled to defend the TA’s choice of the FDC model for the purposes of computing its costs in order to determine the issue of excessive pricing or, alternatively, to persuade the Appeal Board that the SAC model was the appropriate approach for such purpose and to argue against SmarTone’s contention that use of the LRAIC model was the correct methodology.

50.Finally, in respect of pragmatic concerns, it was submitted that permitting PCCW to argue the dominance issue in Appeal 29 would considerably lengthen the hearing of that appeal.  We were told that Appeal 29 has been in the course of preparation for over one year and the hearing is scheduled for 11 days in November and December 2012.  That hearing has been fixed on the basis that it will deal with the issue of contravention only.  A first preliminary briefing for the Appeal Board has been fixed for July 2012 and the matter is on track for a substantive hearing.  On the other hand, if the dominance issue were to be argued, it was anticipated that this would possibly require the hearing to be doubled in length and consequently would increase the costs and affect the timetable for the appeal.

51.For these reasons, the TA sought to state a case on the question as set out above and invited this Court to conclude that the Appeal Board has no discretion to allow an intervener to raise matters outside the grounds of appeal between the appellant and respondent.

Was the Appeal Board wrong on the intervention issue?

52.In essence, the TA’s argument is that PCCW was not the losing party in respect of the TA Decision and has no right to argue points that would, in the context of ordinary litigation, constitute proper grounds to be raised by way of respondent’s notice.

53.In my judgment, the position adopted by the TA in respect of the intervention issue is unduly narrow and restrictive and is not one which the language of the relevant provisions of the TO requires the Appeal Board to adopt.

54.Whether PCCW is a person aggrieved by the TA Decision was a moot point before us.  It was PCCW’s position, in CACV 108/2011, that it is a person aggrieved by the TA Decision for the purposes of s. 32N(1) of the TO in respect of the TA’s opinion that it was in a dominant position.  However, I shall assume, for the purposes of the intervention issue in CACV 109/2010, that the TA is correct on the “person aggrieved” issue and proceed to consider the intervention issue on the basis that PCCW has no right of appeal under s. 32N(1) against the TA’s opinion that it was in a dominant position.

55.Even assuming PCCW is not a person aggrieved within s. 32N(1) and does not have a right of appeal against the TA’s Decision, there is no doubt that PCCW is an interested party in SmarTone’s appeal and would wish to support the TA’s Decision that there was no contravention of any of the relevant anti-competition provisions.  In the same way as a respondent in an appeal to which RHC O.59 applies might wish to support the judge below’s decision on grounds other than those relied upon by the judge, so too does PCCW have an interest in persuading the Appeal Board that the TA was wrong on the dominance issue, since if PCCW is successful on that point the proper result in Appeal 29 would be for the Appeal Board to uphold the TA’s Decision that there was no contravention of the relevant anti-competition provisions and dismiss that appeal.

56.It is true that there is no equivalent of the respondent’s notice procedure in O.59 r.6 in the express wording of Part VC of the TO (which governs appeals relating to ss. 7K, 7L, 7M, 7N and 7P).  On the other hand, I do not regard the restriction on the right of appeal which the construction of s. 32N(1) imposes (on the assumption that the Chairman’s view on the “person aggrieved” issue is correct) compels the conclusion that there is an implicit prohibition on the Appeal Board adopting a procedure which, in effect, allows the winning party before the TA to argue the points that would be open on a respondent’s notice in an appeal to this Court. Indeed, I would think it odd if the Legislature had intended the appeal procedure under the TO to be more technical than that under the RHC.

57.In my view, the jurisdiction of the Chairman under s. 32O(7) is sufficiently wide to enable him, in a proper case, to give leave to an interested party who has been given permission to intervene in an appeal to argue that the appeal should be dismissed on additional or alternative grounds to those relied upon by the TA, including grounds on which the TA has taken an adverse view to that interested party.  This flexible approach is consistent with the general approach adopted by courts that all relevant issues should be dealt with at the same time.

58.The formalistic approach of the TA on the scope of PCCW’s proper intervention in Appeal 29, in contrast, is demonstrated by the TA’s acceptance that the Appeal Board could not make a finding of contravention of any of the relevant sections without PCCW having an opportunity to challenge the TA’s opinion that it was in a dominant position in the relevant market.  It was the TA’s position therefore that whatever the Appeal Board decides in Appeal 29, the matter would have to be remitted to the TA for a further decision as to whether there was a relevant contravention.  If the TA then found a contravention, PCCW would be a person aggrieved within s. 32N(1) of the TO and would therefore have a right of appeal.  The TA’s position was that all this would be unnecessary if SmarTone’s appeal failed on the grounds raised in its notice of appeal.

59.There are a number of difficulties with this position. In the first place, any further hearing before the TA and any subsequent further appeal by PCCW would also be unnecessary if SmarTone’s appeal failed on the alternative ground that PCCW was not in a dominant position.  When this was put to her, Ms Ismail fairly accepted that she could not disagree with this.

60.Furthermore, it is not clear whether, on a remittal by the Appeal Board to the TA following a successful appeal by SmarTone in Appeal 29, all the issues originally ventilated in the complaint would again be open for argument or whether, on the remittal, the TA would proceed on the basis of those of its findings which had not been overturned by the Appeal Board and then proceed to make a decision on contravention in the light of the guidance given by the Appeal Board.  If the latter, there would be no reason for the dominance issue to be revisited even on the remittal.  Given the TA’s acceptance that PCCW could not be found to be in contravention without being given the opportunity to challenge the TA’s opinion on dominance, it would follow that the TA would expect all the issues in the complaint to be open for argument on the remittal.  But it is difficult to see how PCCW would then approach the dominance issue, since the TA has already decided against it on that issue and so, on the remittal, even if the dominance issue were a live issue, PCCW would in effect be put in the unattractive position of appealing the TA’s opinion on dominance to the TA himself.

61.The procedural difficulties may be exacerbated by the fact that it is by no means clear that SmarTone seeks only to have the matter remitted to the TA if it is successful in Appeal 29.

62.I have referred above to the relief sought by SmarTone in Appeal 29, which includes an order that the complaint be remitted to the TA for reconsideration in accordance with guidance to be given by the Appeal Board.  Although it is certainly clear that remittal to the TA is a relief sought by SmarTone, it does not follow that what it envisages upon the remittal is that the TA will not simply substitute, for its decision that there was no contravention of the relevant sections, a decision that PCCW was in fact in contravention of them.

63.Be that as it may, the declaratory relief sought by SmarTone, to the effect that it is not liable to pay PCCW’s charges in accordance with the increased FMIC for the relevant period, would appear to necessitate a conclusion on the part of the Appeal Board that the charges ought not to have been approved because they were in contravention of s. 7L. So there would appear to need to be a finding of contravention by the Appeal Board in Appeal 29 and it would also appear that SmarTone would be seeking a positive finding from the Appeal Board that PCCW had engaged in excessive pricing.  That this was SmarTone’s position in Appeal 29 was confirmed by Mr Edward Alder, counsel for SmarTone appearing before us on a watching brief.  If that is the case, this provides all the more reason for permitting PCCW to address the dominance issue in Appeal 29 so that the Appeal Board will be in a position to make suitable orders, to the extent it has jurisdiction to do so under s. 32O(4) following the hearing of the appeal.

64.On the basis that the Chairman has a discretion to permit a winning party to argue that a decision of the TA under appeal should be upheld on additional or alternative grounds, I share the Chairman’s view that the exercise of that discretion is quintessentially a question of case management.  In this regard, it is clear that the Chairman was well aware of the practical consequences of a decision to permit PCCW to argue the dominance issue in Appeal 29: see §§25 and 26 of his Decision dated 7 April 2011.  Notwithstanding the consequent additional time and costs likely to be involved in the appeal, the Chairman took the view, which in my opinion he was entitled to take, that the justice of the case required that PCCW should be allowed to raise the issue of dominance in its intervention in Appeal 29.

65.For these reasons, I am satisfied that the Appeal Board’s decision to permit PCCW to raise the dominance issue in Appeal 29 was not wrong.

CONCLUSION

66.Accordingly, we dismissed the TA’s application to state a case in CACV 109/2011 and made no order in respect of CACV 108/2011 and CACV 110/2011.

67.The TA could not resist an order that he pay PCCW’s costs in CACV 109/2011 and Ms Ismail also realistically accepted that the TA could not resist orders that the TA pay PCCW’s costs in CACV 108/2011 and CACV 110/2011 since, but for the appeal in CACV 109/2011, those appeals would not have been necessary.

Ms Roxanne Ismail, instructed by the Department of Justice, for the Applicant/Appellant in CACV 109 & 110/2011 and the Respondent in CACV 108/2011 (“TA”)

Mr Roger Beresford, instructed by Clifford Chance, for the Applicant/Appellant in CACV 108/2011, the 3^rd Respondent in CACV 109/2011 and the 2^nd Respondent in CACV 110/2011 (“PCCW”)

Mr Edward Alder, instructed by Laracy & Co., for the 2^nd Respondent in CACV 109/2011 (“Smartone”) (watching brief)

The Telecommunications (Competition Provisions) Appeal Board, the 1^st Respondent in CACV 109 & 110/2011 (attendance excused)