Television Broadcasts Ltd. v. Asia Television Ltd.

CACV000014/1988

BETWEEN

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Coram: Silke, V.-P. Fuad, V.-P. & Clough J.A.

Dates of Hearing: 14 - 17 March 1988

Date judgment handed down: 24 March 1988

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J U D G M E N T

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Fuad, V.P.:

1. This is an appeal by the unsuccessful Plaintiff, Television Broadcasts Ltd. ("TVB") in an action for breach of contract against the Defendant, Asia Television Ltd, ("ATV") heard by Nazareth J. over 14 days in November 1987. The hearing concluded on 26th November and the judge delivered his reserved judgment on 11th December,

2. TVB was represented by Mr. Martin Lee, Q.C. and Mr. Ronny Wong. ATV's counsel were Mr. John Swaine, Q.C., Miss Audrey Eu and Miss Audrey Eu and Miss Juliana Chow. Miss Chow did not  appear before us, and TVB's team on the appeal was led by Mr. Christopher Bathurst, Q.C. (of the English Bar) and also includes Miss Queeny Au Yeung.

3. The parties are the only TV stations operating in Hong Kong. Until comparatively recently ATV went under the name Rediffusion Television Ltd. and until August 1978 there was a third TV station broasdcating in Hong Kong. We are not concerned with that station.

4. The evidence showed that there was a pattern of co-operation between Hong Kong's television stations dictated by considerations of common interest and brought about by the adverse results of the fierce competition to acquire broadcasting rights between the three TV stations during 1977 and 1978.

5. As a result of this spirit of co-operation between ATV and TVB the rights to broadcast the 1980 Moscow Olympics were acquired jointly (although later cancelled for political reasons); the rights in relation to the 1982 World Cup in Spain were shared equally, as were the rights for the Asian Games of the same year; TVB was allowed the exclusive rights to broadcast the 1984 U.S.A. Olympics.

6. The co-operation continued, and the rights to broadcast the World Cup in the years 1986, 1990, 1994 and 1998, and the Asian Games in 1986 were acquired jointly by the two stations. By arrangement they shared the rights equally for the 1986 Asian Games and for the World Cups in 1990, 1994 and 1990, while TVB was given exclusive rights for the 1984 Olympics and the 1986 World Cup;

7. In approaching the organisations which had television rights to sell, in relaton to all the events I have mentioned above, the parties employed the services of the Asia-Pacific Broadcasting Union ("ABU")'even though in some cases after ABU had entered into negotiations with such organisations the negotiations did not result in the successful acquisition of broadcasting rights.

8. TVB and ATV are members of ABU in company with television stations in many other countries in the region it covers, including China, India, Indonesia, Malaysia, New Zealand and Singapore. The principal function of ABU is to act for its members in negotiating terms for the right to major international sporting events so that individual members are not put in the position of bidding against each other thereby pushing up the price of the rights intended to be acquired.

9. It was the pleaded case for TVB (paragraphs 3 and 4 of the Re-amended Statement of Claim) that the arrangements made between them and ATV in connection with the 1980 and 1984 Olympics, the 1982 World Cup and the 1982 Asian Games were the result of an oral agreement made between 12th September and 5th. October 1978 by their representatives at meetings and during telephone conversations ("the 1978 Agreement") to the effect that:

(a)     neither station would bid against the other in relation to major International sporting events including the Olympic Games and World Cup football:

(b)     they would make a joint bid for those events;

(c)    if joint rights were successfully acquired they would agree who should have the exclusive broadcasting rights in Hong Kong and if s they could not agree then the rights would be shared equally;

(d)    as to the 1982 World Cup and the 1980 Olympic Games, they would make their joint bids through ABU.

10. TVB also averred that it was implicit in the 1978 Agreement that during the subsistence of that Agreement neither party would seek to secure broadcasting rights exclusively for themselves or alternatively that neither would do this without giving reasonable notice of their intention to the other Party.

11. TVB went on to plead (paragraphs 5 and 6) that the arrangements made between the Hong Kong stations for the joint acquisition of the rights and their subsequent disposition or sharing in relation to the 1986, 1990, 1994 and 1998 World Cups, and the 1986 Asia Games, were as a result of the implementation of the 1978 Agreement as confirmed by an oral agreement reached on behalf of the parties at a meeting held on 16th July 1984 at the Kowloon Tsai Owners Association ("the 1984 Agreement"), TVB being represented by Messrs Robert Chan and Clarence Chang and ATV by Mr. Deacon Chiu, or alternatively pursuant to the 1984 Agreement standing on its own.

12. The 1984 Agreement was, it was averred, in the following terms:

"(a)    The existing arrangement under the 1978 Agreement whereby rights to telecast the Events would he acquired jointly for the two stations of Hong Kong was to continue.

(b)    The existing arrangement whereby rights so acquired would be shared equally between the two stations in default of any agreement to the contrary was to continue.

(c)    In the event that either station should no longer wish to be bound by the aforesaid arrangement, notice would be given to the other prior to any unilateral attempt to secure such telecast rights.

(d)    The two stations would submit a joint bid for the telecast rights of the 1988 Olympic Games to be held in Seoul."

13. It is then pleaded that pursuant to the 1978 Agreement as confirmed by the 1984 Agreement, or under the 1984 Agreement, in July 1984 the parties submitted a joint bid to acquire the broadcasting rights to the 1988 Seoul Olympic Games in the sum of US$350,000, the joint hid being increased successively to US$406,250 on 4th January 1985 and US$455,000 on 11th December 1986.

14. The pleading goes on to say that by virtue of the agreements, ATV owed TVB a duty not to make any unilateral approach to, or to negotiate with, the 1988 Seoul Olympic Organizing Committee ("SLOOC") or to enter into any agreement to acquire the telecast rights to the 1988 Olympic Games without giving advance notice to TVB, and that in breach of the Agreements, ATV, without the knowledge or consent of TVB, unilaterally approached or negotiated with, and obtained from SLOOC the exclusive right to telecast in Hong Kong the 1988 Olympic Games.

15. TVB claimed the following relief: (a) a declaration that the 1978 Agreement, as confirmed by the 1984 Agreement, or alternatively the 1984 Agreement, was still in effect; (b) an injunction to restrain ATV from telecasting in Hong Kong the 1988 Olympic Comes or selling advertising sponsorship of any such programme without affording to TVB equal telecasting rights; (c) a mandatory injunction requiring ATV to procure the agreement of SLOOC to the telecast rights of the 1988 Olympics being shared jointly or alternatively to procure the cancellation of the existing agreement between ATV and SLOOC whereby ATV acquired the right to telecast the Seoul Olympics, or alternatively damages for breach of contract.

16. ATV denied any of the agreements pleaded and their case was in substance that all the arrangements that were made between the parties were the result of informal discussions not intended to have any legal effect. While they admitted that they had acquired the exclusive rights to broadcast the 1988 Seoul Olympics, they were not in breach of contract and TVB were not entitled to share those rights or to any other relief.

17. ATV counterclaimed for damages for injurious falsehood, in that by instituting this action and by various announcements in the press etc., TVB had made false and malicious assertions that ATV were in breach of an agreement to share the broadcasting rights to the 1988 Olympics and that ATV's exclusive right to do this was in question. The counterclaim was dismissed by the judge and ATV do not seek to challenge that decision.

18. The learned judge, in his careful judgment, set out the background of the controversy, and reviewed the oral and documentary evidence. He heard the evidence of only three witnesses. Mr. Kevin Lo gave evidence for TVB about the alleged 1978 Agreement. TVB also called their present General Manager, Mr. Robert Chan, who, the judge noted, was not directly concerned with discussions with ATV at the material time - when he was Deputy Manager. The only witness for ATV was Mr. Deacon Chiu, their chairman who came into the picture in 1982 when his family group of companies, in two stages, acquired the shareholding of RTV (which, as we know, later became ATV).

19. Regarding his assessment of the reliability of the witnesses who gave evidence before him, the judge said, for the reasons that he gave, that he was not impressed by Mr. Lo's testimony. He had given the impression of "treading very warily, and, not unnaturally, could not remember clearly the events of ten years or more ago". His account of the 1978 Agreement relied upon "was so deficient that in my view the lapse of time does not explain that". Doubts about the very existence of that agreement were compounded by the documentary evidence and the conduct of the parties he had exhaustively reviewed earlier in his judgment.

20. Mr. Chan had left him with the impression that he was consciously or unconsciously presenting and even slanting certain evidence to fit TVB's case.

21. In contrast, the judge said, Mr. Deacon Chiu's prompt and even impetuous answers seemed much more credible. The judge noted that he had given his evidence in chief in Chinese, but in cross-examination had very quickly opted for English (and somewhat rashly, he thought, dispensed with the services of the interpreter.) As he himself had admitted, his English was not very good. In consequence he felt Mr. Chiu had done himself and ATV less than justice. He had been remarkably candid and had readily made numerous concessions in cross-examination. Upon the basis of both demeanour and also content, generally he preferred his evidence to that of Mr. Chan, and generally he accepted his evidence as truthful.

22. I now summarise the learned judge's conclusions on the evidence led before him, the reasons for which he fully explained:

(a)    the evidence relied upon by TVB fell far short of establishing the 1978 Agreement, but in the context of all the related circumstances the probabilities were overwhelming that a binding, legal agreement was not intended;

(b)    the 1978 Agreement put forward would also fail for lack of certainty or completeness;

(c)    as to the 1984 Agreement he had preferred Mr. Deacon Chiu's evidence and also accepted that it did not occur to him that he was entering a general agreement;

(d)    in relation to that Agreement, there was therefore no credible evidence regarding the pleaded agreement to the effect that the existing arrangements previously agreed in 1978 would continue so that rights would only be acquired jointly, and if acquired they would be shared equally, if no other agreement as to their disposition was reached, and that prior notice would be given of any unilateral attempt to secure broadcasting rights;

(e)    the documentary evidence was not only weak and inconclusive but entirely consistent with an understanding or gentleman's agreement which ATV did not dispute. The conduct of the parties was more consistent with separate agreements to bid the three increasing amounts as Mr. Chiu asserted;

(f)    as to the arrangements I have summarised in paragraph (d) above, the judge said that they were dependent on the existence of the 1978 Agreement and fell with it;'

(g)     the 1984 Agreement relied upon would in any event fail as uncertain and incomplete.

23. In view of the nature of this appeal it is necessary to review in much more detail what the judge had to say about paragraph 5(d) of the Re-amended Statement of Claim: "The two stations would submit a joint hid for the telecast rights of the 1988 Olympic Games to be held in Seoul."

24. The judge summarised the submissions made respectively by Mr. Martin Lee for TVB and by Mr. John Swaine for ATV. About one contention put forward by Mr. Swaine, the judge said:

"For ATV Mr. Swaine says that ATV could, in the context of its relationship with either ABU or TVB, withdraw its bid at any time prior to ABU becoming committed to SLOOC on the basis of the bid. I think that must be so having regard to the very limited nature of what was agreed between the parties, to the surrounding circumstances, to ABU procedures which, in the present context, were at a very preliminary and even tentative stage when ATV withdrew, and, above a11, to the absence of any discernible term restricting withdrawal. Once it is accepted that either party, (inter se) was free to withdraw its participation in those bids, then I think it must follow that the agreements to make those joint bids could not be binding and that the parties were free to make unilateral bids."

25. The judge, in dealing with one of Mr. Lee's submissions, said that he was far from persuaded that into the agreement pleaded in paragraph 5(d) could be implied or deduced the express terms pleaded in paragraphs 5(a), (h) and (c), including the implied term that the parties were required to give reasonable notice to each other if either of them decided unilaterally to acquire the rights to broadcast the 1988 Olympic Games. Even if they could be implied, "they would not avail him for they are not pleaded and specially the requirement to give such notice is not pleaded in relation to the agreement averred in paragraph 5(d)".

26. About the agreement averred in that sub-paragraph, the judge went on to say:

"Furthermore, a bare agreement that the two stations would submit a joint bid for the telecast rights of the 1988 Olympic Games seems to me to be uncertain. At what price was the bid to be made? And how was that to be determined? How were the rights to be shared when secured? Were the parties to be bound to bid jointly even if it became clear that a joint bid was not going to succeed? And if indeed a requirement to give reasonable notice of unilateral action can be implied, what length of notice would be reasonable?

Such a bare agreement seems to me to be not only uncertain but incomplete in not providing for so fundamental a term as the determination of the price at which joint bids were to be made ...."

27. The judge added that it was clear from the terms of paragraph 5(d) of the Re-amended Statement of Claim that the agreement claimed to have been made on 16th July 1984 to submit a joint bid was a general agreement and not a specific agreement related to a particular bid at a particular price. It followed that TVB could not succeed solely upon the averment in paragraph 5(d), nor had they succeeded in establishing the agreement pleaded in that paragraph.

28. By their appeal, TVB do not challenge the judge's conclusions that the two wide and general agreements of 1978 and 1984 they had pleaded and sought to prove had not been established. Nor do they seek to disturb the findings of fact made by the judge in relation to the evidence which he rejected and accepted. The essence of their appeal is that on the evidence accepted by the judge they were entitled to a finding that ATV was in breach of an obligation not to make an unilateral approach to or negotiate with SLOOC in relation to the 1988 Olympic Games or to enter into any agreement to acquire the broadcasting rights to those Olympic Games without giving advance notice to TVB. They also submit that although their pleading may not have been perfect, and although the wider agreements were rejected, it was perfectly adequate and they should not be denied justice on the facts admitted by ATV.

29. Before turning to the evidence of Mr. Deacon Chiu, so central to TVB's appeal, I will refer to the documents which explain the background of the controversy as it remains before us.

30. On 22nd June 1984 ABU sent a circular letter to its members about the 1988 Seoul Olympic Games. One of the points raised was the maximum amount each organisation was prepared to pay for the TV rights. A questionnaire was enclosed and a response was called for by 31st July 1984. This prompted Mr. Robert Chan to suggest a meeting to discuss the response of the Hong Kong TV stations, and this is one of the reasons why the parties met at the Kowloon Tsai Owners Association on 16th July 1984.

31. TVB's primary interest was the arrangements for the World Cup for which they had the first contribution. They wanted to get TVB to take over this commitment and repay ATV the amount they had advanced because they could not afford the later instalments. At the meeting, agreement was reached about the 1990 World Cup and a formal agreement was later drawn up. I will have to return to what was said at that meeting regarding the Seoul Olympics but as a result of the meeting each Hong Kong station returned the questionnaire about the Olympic Games. They each indicated their agreement that their station would acquire the TV rights only through ABU, but while TVB replied in the affirmative to the question ".... does your organisation agree not to negotiate independently with IOC/SLOOC or any third party for the rights concerned?", ATV left the answer to that question blank, Mr. Deacon Chiu telling the Court that his instructions to his staff had in fact been to answer "no" to that question. Each questionnaire recorded in different language that ATV and TVB had agreed that their joint maximum contribution should be not more than US$350,000 or not more than 2% of their share (of the ABU contract) whichever was the less.

32. An ABU report dated 31st October 1984, of a meeting attended by some of their members including TVB and ATV, shows that increased bids were sought and that the Hong Kong representatives had indicated that they might be able to agree on a compromise increase.

33. On 31st December 1984 ATV and TVB sent a joint telex asking for the deadline to reply to the relevant questionnaire to be extended to 10th January 1985 and by another joint telex of 4th January 1985, the two Hong Kong stations jointly advised that they were prepared to offer US$406,250 as the maximum Hong Kong contribution for the acquisition of the TV rights of the Seoul Olympic Games.

34. On 2nd June 1986 SLOOC sent telexes individually to ATV and TVB asking them to get into contact if they were interested in the TV rights for the Olympics. This was the first approach direct from the Organising Committee. TVB expressed interest, but in their letter dated 4th September 1986 it was said: "I would be most happy to contact you while I am in Seoul. However, I hasten to point out to you that TVB as a member of [ABU], normally negotiate for TV rights through the Union. In any event it would be a pleasure for me to establish contact with you."

35. After the meeting in Seoul attended by the Manager, International Affairs, of TVB, SLOOC was sent the following telex on 19th November 1986 on behalf of TVB:

"It was a fruitful meeting in Seoul' during the WBU meeting. We welcome the opportunity to discuss arrangement for the above broadcast.

As I told you earlier Hong Kong has decided to support the ABU in its negotiations for the rights of the 88 Olympics. I am sure you understand our position in this at the moment. You have also indicated that SLOOC is happy to negotiate with the union as long as the amount of money for the right is to your satisfaction. In any event, could you give me an indication what SLOOC forsees as the amount of Hong Kong's share in the Olympic Games."

36. The Seoul Organizing Committee replied somewhat evasively on 21st November 1986:

"I am very sorry to advise you that it is very difficult for me to give you an indication on the amount of Hong Kong's share in the Olympic Games as long as we negotiate with ABU. As far as we negotiate with the union, each organization's share has to be decided among yourselves. If you are willing to negotiate directly with us, we will of course request you the amount."

37. Meanwhile, on 26th November 1986, ABU had circulated its members asking for a further increase in their contribution for the Olympic Games rights to 40% over the 1984 figures. Specifically the Hong Kong stations were asked if they agreed to their previous proposal for a maxmum of US$406,250 being raised to a maximum of US$455,000. A joint response to ABU was sent by a telex dated 11th December 1986 in these terms:

"This is to confirm that Hong Kong agrees to a 40% increase of its maximum amount over 1984, by US$48, 750 to US$455,000. The formal questionnaire is on its way."

The two completed questionnaires re-confirming this stand were separately sent to ABU very shortly afterwards.

38. The next letter to which I will refer is one dated 26th January 1987 from Mr. Deacon Chiu for ATV' to SLOOC, marked "Private, and Confidential". This is what was said:

"We write to confirm our appointment of Tele Sports Limited as our consultants in the area of sports programming.

We further confirm that we have appointed Tele Sports Limited, to act as our representative, in negotiating the rights to televise 1988 Summer Olympic Games in Hong Kong. Mr. Lawrence Lo of Tele Sports Limited has been authorized to negotiate and sign all agreements relating to such rights.

We further confirm and undertake that in the event that Mr. Lawrence H. Y. Lo of Tele Sports Limited shall be able to acquire the exclusive television rights for the 1988 Summer Olympic Games, we shall provide television airtime to broadcast the Olympic programmes as per the terms and conditions which have been agreed with Tele Sports Limited."

39. The terms and conditions referred to are set out in an elaborate and detailed document running to some 11 pages. It is dated 27th January 1987. There was also a Letter of Intent dated the next day, between ATV and SLOOC which contained the paragraph: "No announcement to be made to any other parties before mutual agreement between ATV and SLOOC, no later than signing of main full agreement.

40. The formal agreement was signed on 7th February 1987. Under it ATV obtained the exclusive TV rights in relation to Hong Kong for the sum of US$900,000. On 8th May 1987 ATV informed ABU that they were withdrawing from the ABU pool for the 1988 Olympics. TVB were informed the day before.

41. ATV's action in going ahead alone and acquiring these exclusive rights resulted in protests by TVB followed by the institution of this action.

42. I turn to address the evidence given by Mr. Deacon Chiu, the true effect' of which founds this appeal. This is how the learned judge summarised it:

"... Deacon Chiu's evidence was that Robert Chan phoned him and called the meeting on the 16th July 1984 at the Kowloon Tsai Owners Association Club to discuss the 1988 Olympics. He in turn said he would like to discuss the 1986 World Cup to obtain a refund on the instalment already paid by ATV. At the meeting, he agreed to a joint bid of US$350,000 for the 1988 Olympics, and also agreed the allocation of the 1986 World Cup and the F. A. Cup for two years and the refund to ATV of the 1st instalment of the World Cup. He denied there was any mention of a general long-term agreement between the two stations or that it occurred to him that he was committing ATV to a long-term agreement. He agreed that subsequently the amount of US$350,000 was increased to US$406,250 about 6 months after the first meeting, and that about a year later increased yet again to US$455,000. He added that it was very difiicult to say if he thought he was entering into a binding commitment with TVB over the 1988 Olympics. If ABU succeeded in getting the rights he would carry on together. If ABU did not then ATV would try to get it in their own way. He accepted that it was agreed that at that time the two stations would not bid against each other and that that meant making a joint bid, but that this was only agreed for the 1988 Seoul Olympic Games." He denied any general agreement, although he recalled that expression being used, which he understood to mean an agreement in principle. His evidence was that sporting events were dealt with event by event."

43. I now propose to examine precisely what Mr. Deacon Chiu said and to quote from parts of the verbatim transcript. He was asked by Mr. Swaine, in chief, whether at the end of 1986 (when the joint Hong Kong bid had been increased to its final figure) he had considered whether he was obliged to continue with TVB to get the telecast rights for the 1988 Olympics and answered that he did not have much hope of getting it. The question was repeated in a slightly different form and he replied "No".

44. Later Mr. Swaine referred him to the questionnaire in which no reply on behalf of ATV had been given to the question "Does your organisation agree not to negotiate independently with IOC/SLOOC or any third party, for the [1988 Olympics] rights concerned?" The following exchange then tools place between counsel and Mr. Chiu:

Q.     Now, when you had your discussions with Mr. Robert Chan at the Kowloon Chai meeting on 16th July did you think you were entering into any binding commitment with TVB over the 1988 Olympics?

A.     It is very difficult to say as to the questionnaire, we or both of us agreed to offer a price.

Q.     And what did you think you were doing by offering that price?

A.      Assuming that ABU could achieve, then we could carry out together with them.

Q.    And if ABU were to succeed. what would be the position between ATV and TVB about telecasting the Olympic Games; would it be telecast exclusively by ATV or exclusively by TVB or would it be shared?

A.     Of course both will carry out together, that means to say, to share.

Q.     And what would be the position if ABU did not succeed in getting the telecasting rights?

A.     Then we would try to get it in our way."

45. Mr. Swaine was obviously not too happy about these answers and returned to the matter right at the end of the examination in chief. After questions about filling in the questionnaire, this is the exchange in which counsel permitted himself, and was permitted, to put what can only be regarded as leading questions to his witness:

Q.    At the 16th July meeting did you agree to do anything more than send this questionnaire with that agreed amount?

A.      No.

Q.     And that was all you agreed?

A.      Right.

Q.    And when on two subsequent occasions, when you approved the amount being increased --

A.     Yes.

Q.      First of all to $406,250 and the second time to $455,000 --

A.     Yes.

Q.    Did you intend anything more than to increase the amount notified to ABU, other than to increase the amount?

A.      No."

46. I will interpose here to say that Mr. Chiu frankly admitted in cross-examination that since TVB were the "richer station" and had "plenty of money" in competition with ATV they would be successful in securing any particular broadcasting rights if they wanted them.

47. Mr. Chiu told Mr. Martin Lee in cross-examination that he felt that under the existing arrangements, although the joint bids had been made and twice increased, TVB were quite free to do what they wanted - to go after the rights through ABU or directly.

48. There was later the following exchange between Mr. Martin Lee and Mr. Deacon Chiu:

Q.    Yes, I follow you. Now, when Mr. Chan (of TVB) said to you, how good it was that the two stations did not have to compete financially and that the two stations could go ahead together, he was really saying , was he not, that there would be no competitive bidding between the two stations. Is that right?

A.    Yes. For this one.

Q      For this one. And that you could make a joint bid through ABU?

A.     Yes.

Q.     And that you would be sharing the telecasting rights subsequently. Yes?

A .    Yes.

Q.    Mr. Chiu, I have got to tell you sometimes you nod your head or shake your head - but that is no good for the shorthand writer. You have got to say something.

A.    All right. Yes.

Q.     Now, you keep on saying 'for this one', why are you so positive that it is only this one?

A.    Well, because so far I can remember with Robert, mainly we deal with business. Very few times make individual, joint together, bids or join together on price. Otherwise it is always conversation for other things.

Q .    Yes. But, you see, you are suggesting, are you not, that Mr. Robert Chan and you had only agreed to make a joint bid for the 1988 Moscow Olympic Games. Right?

A.     Not Moscow.

Q.    Seoul - I'm sorry. The Seoul Olympic Games in 1988. Right?

A.    Yes.

Q.    And that you would not bid against each other. Right?

A.    Well, we answer the questionnaire. We agree with the price when Mr. Robert Chan ask we fulfil $350,000.

Q.    US?

Q      So you would make a joint bid. Right?

A.      Yes.

Q.     That means you would not bid against each other. Right?

A.    Well, at that time, yes. Three hundred and fifty, then afterwards they rectify the price and again we do the new confirmation again.

Q.    So, at that time, it was agreed that you would not bid against each other, right? At that time, yes?

A.    Yes."

49. Later Mr. Chiu emphasised his belief that either TVB or ABU could change their minds. When asked: "If ABU had not failed [in the negotiation] and TVB had not changed its mind, then you would go on?" He answered: "Go on, of course."

50. Sometime later in the cross-examination occurred the following exchange, after he had agreed that he had approved the first increase in the joint bid:

Q.     So you were still happy to leave it to ABU, to handle the negotiations for ATV and TVB jointly?

A.    Yes.

Q.     And so long as ABU had not failed to negotiate for those rights and so long as TVB had not decided to negotiate and contract alone with SLOOC then you, or ATV, would be quite happy to let ABU to deal with it. Right?

A.     Yes.

Q.    And you would still be happy to share the cost of those rights?

A.    Yes."

51. Mr. Chiu's attention was then drawn to the questionnaire where ATV (as well as TVB in their questionnaire) had agreed to the final increase in the bid. Then Mr. Martin Lee asked: "So the position at that point of time [11th December 1986) was still this - that so long as ABU had not failed to get those rights for ATV and TVB jointly, and so long as TVB did not deal directly with SLOOC, then you would he quite happy to remain with ABU?" Mr. Chiu replied: "Yes" and that he would let ABU deal with it.

52. Later Mr. Chiu repeated that he did not think that the two Hong Kong stations were committed to ABU together over the rights to telecast the 1988 Olympics.

53. Whatever may be the true effect of the substance of Mr. Chiu's answers to Mr. Martin Lee in cross-examination, there was, as I read the transcript, nothing in his re-examination that detracts from that effect.

54. Regarding his decision to go it alone in January 1987 to acquire the TV rights for the 1988 Olympics for ATV, Mr. Chiu in effect said that he had taken this course because he believed what he had been told by a Mr. Lawrence Lo of Tele Sports Ltd. that SLOOC would not deal with ABU. He felt that if TVB got to know about this move he would have no chance of getting the rights because TVB could always beat them to it. When asked why he had not even send a telex to ABU to enquire whether ABU had any real prospects of acquiring the rights for them from SLOOC, Mr. Chiu replied: "I am sorry, I never thought about it in those terms."

55. It is clear that in the light of Mr. Chiu's views (no doubt honestly held) that ATV and TVB were not legally committed together with regard to the acquisition of rights to broadcast the 1988 Olympic Games he felt it perfectly proper to act as he did with notice to no one. He did not think it was necessary to seek legal advice on the matter.

56. Leaving aside for the moment a "pleading point", and the suggested denial by Mr. Martin Lee of any reliance on the limited agreement for the rights of the 1988 Olympics on their own, so heavily pressed upon us by Mr. Swaine, I am fully persuaded that Mr. Bathurst is right when he contends that having found the primary fact, which are not now challenged, the learned judge did not come to the right conclusion.

57. With respect, as regards the evidence, where I think the learned judge went wrong was when he accepted Mr. Swaine's submission that there could be no binding agreement between ATV and TVB that neither would go it alone to seek to get the telecasting rights for the 1988 Olympics since either station could withdraw their bid at any time before ABU became committed to SLOOC. I have already read the passage in the judgment where the judge reaches this conclusion. The relatively tentative relationship between the parties and ABU at the material times did not govern the legal relationship between the parties themselves at those times. The fact that the parties were free to withdraw before ABU became committed to SLOOC does not to my mind, mean that their agreement to make the joint bids (maintained over a period of some 21 years without any reservations as between the two TV stations) could not be binding or that it left the parties free to make unilateral bids. I can discern no uncertainty in the agreement which was made when one takes the accepted evidence of Mr. Deacon Chiu into account.

58. Reading Mr. Chiu's evidence as a whole against the background of the previous arrangements between the parties, and their conduct immediately after the 14th July 1984 agreement continued and maintained for over two years, there is no doubt in my mind that a legally binding agreement was concluded. It was that the stations would bid jointly through ABU for the broadcasting rights to the 1988 Olympics and there would be no unilateral attempt to acquire those rights while these arrangements subsisted. This must involve an implicit agreement that neither would seek to obtain the rights to the exclusion of the other station without withdrawing on notice from the agreement. With respect to the judge's views, this was no mere gentlemen's agreement. It was a strictly business arrangement dictated by bitter experience of the consequences of the Hong Kong TV stations bidding against each other, a course which really benefited only the organisers of the events they wished to televise.

59. In my judgment the terms to be implied are not merely necessary to give business efficacy to the agreement established by the evidence and confirmed out of Mr. Deacon Chiu's own mouth. They must be implied, unless utter nonsense is to be made of the arrangements agreed to, because they were so obviously stipulations in the agreement that it would have been idle to express them in specific words. Once TVB's evidence was rejected and Mr. Chiu's evidence accepted, I am bound to say that I am satisfied that the failure to mention, that unless and until either party had indicated to the other that they had withdrawn from the arrangements, they could not go it alone must have been simply due to the fact that it was felt quite unnecessary to stipulate what must have been quite obvious at the July 1984 meeting to everyone involved. It seems to me, with respect, that any other view of what took place and had been agreed at that meeting would be wholly unrealistic, objectively viewed by every business man or woman in Hong Kong.

60. Mr. Swaine complains (as he did before the judge) that the specific agreement with the terms essential to the case now put forward by TVB was not adequately pleaded. I will not burden this judgment with an exposition of the purpose of pleadings, except to say that, of course, a party is entitled to know precisely the case, he has to meet. As we have seen, TVB attempted to prove, on their pleadings that there had been a general 1978 agreement, confirmed by an agreement in 1984. However there are two important passages in Mr. Martin Lee's opening which, any pleading defects apart, surely made it perfectly clear to ATV what case they had to meet with particular reference to the rights to telecast the 1988 Olympics.

61. Mr. Martin Lee at one stage, said about the Kowloon Tsai Owners Assocation meeting:

"It was an important meeting because if we go to paragraph 5 of the Statement of Claim, you can see how we put the case. We also talked about the World Cup 1990. It was agreed that they would send a joint telex to ABU accepting the 10% of a total ABU fees which had been allocated to Hong Kong and also accepted the rate of 1% being Swiss Francs 107,800. They agreed at that meeting that in respect of the Seoul Olympics, they would make a joint bid; they would not compete against each other. The maximum contribution would be US$350,000 or 2% of the total ABU commitment to Moscow. They also talked about the Broadcasting Review Board which was going on at that time.

This Agreement we pleaded in paragraph 5, of course, can succeed without the 1978 Agreement. We have pleaded on the basis that the 1978 Agreement would continue. But even if you find at the end of the trial that there was no General Agreement as I submitted, at the end of the day, so long as Your Lordship find that there was an agreement in 1984 at the Kowloon Tsai that each Station would not bid against each other but would submit a joint bid, then we would still win."

62. And later, Mr. Mactin Lee is recorded as having said.

"In relation to the Seoul Olympic Games, a much shorter way of looking at it, the ultimate question is: was or was there not a binding agreement to make a joint bid which in itself must mean that neither party would go behind the back of the other and to negotiate direct with SLOOC in order to get exclusivity. The documents show that the parties have made concerted efforts, not in relation to one bid, initially by Questionnaire, but 2 subsequent increases by joint telexes. If there was this Agreement which we say there is, indeed partially implemented as indicated by the 3 bids, then it must be wrong for ATV to go behind our back and negotiate direct with SLOOC."

63. I entertain no doubt that all this was fully investigated at the trial as both counsel's submissions and the examination of the witnesses, particularly Mr. Deacon Chiu plainly shows. I will also refer to a part of the transcript when Mr. Martin Lee was re-examining his witness Mr. Chan which seems to me  to show plainly that it was appreciated by everyone what the issues before the Court were in relation to the joint bid for the 1988 Olympics:

"Q. And once the joint bid was made, would it be proper for TVB to take up the invitation of SLOOC and negotiate with SLOOC in order to get exclusive rights without ATV?

64. Mr. Swaine:

My lord, I have not objected to questions which asked the witness to draw conclusions but this is, of course, the vital question for your Lordship and, if the witness wants to express an opinion - for what it's worth - the record can show it; but this is not, I suhmit, a proper question for the witness. It is the very thing which your lordship has to determine." [Emphasis supplied]

65. With due respect to Mr. Swaine's submissions, I for my part, an unable to appreciate what prejudice ATV suffered by what must be regarded as an imperfect pleading in the sense that it did not spell out in precise terms the agreement limited to the 1988 Olympics in TVB's efforts to plead and establish something wider. What further evidence could have been given? What further submissions advanced? Most of Mr. Deacon Chiu's evidence was about the 1984 meeting. How could what he said have been any different?

66. The facts pleaded in paragraph 5(d) of the Re-amended Statement of Claim ("The two stations would submit a joint, hid for the telecast rights of the 1988 Olympic Games to be held in Seoul") do not necessarily indicate that no specific bid had been agreed. If there were any ambiguity then, there could have been no possible misunderstanding, because when particulars of paragraph 8(b) were sought the following were given:

"(b) It was expressly agreed at the 16th July, 1984 meeting that a joint bid he made by the two stations for the TV rights for the 1988 Seoul Olympic Games at US$350,000.00 or 2% of the total ABU Contract whichever is less."

67. As regards the implied terms upon which I have already commented, Mr. Chiu's own evidence showed what these terms were. And I think it would have been a counsel of perfection, not now fairly to be insisted upon in the interests of justice, to have required the pleader to say in paragraph 5(c) that if it were not an express terms that notice would be given to the other party before any unilateral attempt to secure the telecast rights, then it was an implied term. I think it is necessary in this context to remember that by paragraph 10 it is pleaded, inter alia, that by virtue of the agreement pleaded in paragraph 5 ATV owed a duty to TVB not to make a unilateral approach to or to negotiate with SLOOC without giving advance notice to TVB. I do not see why TVB should be denied appropriate relief in respect of the clearly established agreement relating to the 1988 Olympic Games rights because they were seeking to prove more. It could make no difference if the consequences and obligations of making a joint bid related only to the 1988 Olympics or to more or all sporting events to he televised in Hong Kong.

68. I must say, again with very great respect, that I see nothing in the point about the absence of an answer by ATV to one of the questions in one of ABU's questionnaires. Whether or not ATV was legally committed to ABU does not govern the decision whether or not ATV and TVB were legally bound to each other. Surely the emphasis on making a "joint" bid, without more, bears with it the strongest possible implication that unilateral bids were not contemplated or permitted. It seems to me quite unreal to seek to persuade us that an objective assessment of what was said and done would support a conclusion that as soon as an agreement had been made to put forward a joint bid at a certain sum, either party was free to go off and bid for the rights on their own without telling the other party. I must accept that Mr. Deacon Chiu genuinely thought that this was the position but I venture to say that such a view, relevant to his conduct but not to the legal issues arising on this appeal, must be regarded as bizarre in the extreme and out of touch with the realities of the business world in Hong Kong.

69. Mr. Bathurst sought leave to amend the Statement of Claim if this Court felt it was necessary. His formulation was as simple as can be. I agreed with my Lords that the pleading did not require amendment in relation to the specific agreement for the 1988 Olympics. If I had felt that an amendment was necessary I would unhesitatingly have granted leave so that the pleading technically complied with the facts found by the judge. For my part, I can conceive of no possible disadvantage to ATV had such a course been necessary. I would mention in passing that it has to be borne in mind that any form of agreement reached at the 14th July 1984 meeting was denied in the Defence.

70. We heard considerable argument from Mr. Swaine contending that Mr. Martin Lee had abandoned or disowned the agreement limited to the 1988 Olympics. Mr. Swaine relied mainly on a statment made by Mr. Lee to the judge after Mr. Swaine was, unusually, it must be said, allowed to address the Court again after his closing address. Mr. Swaine raised the matter by saying, inter alia:

"Yes, I apologise for raising my voice. I'm afraid it's been the end of a very long day and it's been the end of a very long trial. I apologise to my learned friend and I apologise to you, my lord. My Lord, if your lordship were to come to that view on the evidence, your Lordship may well ask: 'What path do I take? I've not found the agreement argued for the plaintiff but I have found a lesser agreement of a quality and of a nature different from that for which the plaintiff contends.' My Lord, if that be your Lordship's finding, then I submit your Lordship must dismiss the action. Because your Lordship would have found against the plaintiff on the agreement for which the plaintiff contends."

And later he said:

"My lord, I embarked on this course becuase my learned friend late this morning said that this was Mr. Chiu's evidence and he said it in the context of not intending legal relations. Your lordship may find - and this is all conjecture - that there was an intention to enter into legal relations, but that intention was to enter into an agreement of a very different kind from that which the plaintiff pleads.  If that be the case, your lordship would have made a finding against the defendant on the intention to contract but it would be finding against the plaintiff on there being an agreement of the kind pleaded. And the pitfall, if I may say so with respect, in making any finding in favour of the plaintiff on that sort of special agreement is that your Lordship has not had that case argued before your Lordship as to what implied terms might then arise on that sort of specific agreement as to whether what was done in the context of the surrounding circumstances amounted to fulfilment of that specific contract. So my point is simply, my lord, to place before your lordship the feature that if this specific agreement is found, neverthelsss your Lordship would dismiss the case against the defendant on the pleaded case."

71. It is true that in response to this intervention Mr. Lee said: "I have not invited your Lordship to make a finding, limited in that way. That is a specific agreement merely to put in a bid at $350,000 dollars U.S. period. That is never my case", but earlier he had observed: "We say of course that the two stations agreed not to bid against each other but would put in a joint bid and if successful would either share or decide on exclusivity."

72. As I understand Mr. Martin Lee's statement in response to Mr. Swaine, all he was saying was that it was not TVB's case that all that had been agreed at the meeting in July 1984 was that they would put in a joint bid at a certain sum through ABU for the 1988 Olympic Games rights. I certainly do not read what he said as retracting anything he had said in his opening about the limited agreement he would rely upon if the general agreement were not established to the satisfaction of the Court. The judge certainly did not take the view urged upon us by Mr. Swaine for he dealt with the limited agreement at considerable length. I am not persuaded that there is anything in this point.

73. For the reasons I have attempted to give, I would allow the appeal and hold that ATV was in breach of the contract entered into with TVB at the 14th July 1984 meeting in relation to the acquisition of the telecasting rights of 1988 Olympics in securing the rights unilaterally while the agreement was still subsisting and without notice to TVB.

Silke, V.P.:

74. I am persuaded that there did exist and was, albeit somewhat obsecurly, pleaded the narrow agreement regarding the 1988 Seoul Olympic Games contended for by TVB.

75. TVB was attempting to establish a much broader general or general limited agreement and in this they failed. But the action concerned basically the 1988 Games and the unilateral acquisition by ATV of the Hong Kong rights to those games after a period of some two and one half years during which the two television stations had maintained a joint bidding status vis a vis the Asian Broadcasting Union and its negotiation with the organisers.

76. I can fully understand Mr. Deacon Chiu's anxiety once he was told by Tele Sports Limited that, true or false, the organising committee was no longer prepared to allow the rights for this region to go through ABU. As he said TVB being a more monied station could easily out bid him were TVB to go it alone. But to give any effect to that which was, in law, much more than a mere gentleman's agreement there must, in my judgment, be implied a term that neither station would go it alone without reasonable notice to the other. This is not to ignore Mr. Swine's strongly made point that there must first be found a legally binding agreement.

77. My Lord Fuad V.P. has dealt with the agreement point extensively and I do not think that I can usefully add to that which he has set out.

78. I too would allow the appeal and would wish to hear counsel on the order which we should make both on the appeal itself and on costs.

Clough J.A.:

79. I agree that the appeal should be allowed for the reasons given by Fuad V.P.

Silke, V.P.:

80. We have handed down this Judgment so that we can hear argument, on a date to he fixed in consultation with counsel, on the orders to be made as a result of our conclusions.

Representation:

Mr. Christopher Bathurst, Q.C. Mr. Martin Lee, Q.C., Mr. Ronny Wong and Miss Queeny Au Yeung (Deacons) for the Plaintiff/Appellant

Mr. John Swaine, Q.C. and Miss Audrey Eu (Woo, Kwan, Lee & Co.) for the Defendant/Respondent