Pccw Hkt Telephone Ltd and Another v. The Secretary for Commerce and Economic Development and Others
Read the full judgment text of HCAL 51/2013 on BabelCite. This High Court CFI judgment was delivered on 11 August 2015.
1. This judicial review is concerned with the proper interpretation of Trading Funds Ordinance, Cap. 430 (“ TFO ”), Telecommunications Ordinance, Cap. 106 (“ TO ”) and Communications Authority Ordinance, Cap. 616 (“ CAO ”) and their interaction with each other.
Cited by 3 cases
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HCAL 51/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 51 OF 2013 ___________________
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_______________ JUDGMENT I. Introduction 1.This judicial review is concerned with the proper interpretation of Trading Funds Ordinance, Cap. 430 (“TFO”), Telecommunications Ordinance, Cap. 106 (“TO”) and Communications Authority Ordinance, Cap. 616 (“CAO”) and their interaction with each other. 2.The Communications Authority (“Authority”), the 2nd Respondent in these proceedings, is a body corporate established on 1 April 2012 under section 3 of CAO. As its long title suggests, the CAO was enacted inter alia to establish the Authority and to transfer the functions of the former Broadcasting Authority and Telecommunications Authority (“TA”) to the Authority. Its principal role is to regulate the telecommunications and the broadcasting sectors in Hong Kong. 3.The Office of the Communications Authority (“OFCA”) is the executive arm of the Authority. Its predecessor, the Office of the Telecommunications Authority (“OFTA”), was an independent government department established on 1 July 1993 as the executive arm of the TA. Like its predecessor, OFCA is and has at all material times been operating on a trading fund basis as a self‑financing accounting entity under the TFO. The income of the OFTA/OFCA Trading Fund (“Fund”) was and is derived mainly from fees payable by various licensees as defined under section 2 of the TO, including the Applicants and the Interested Parties. 4.The Applicants have been the joint holders of a unified carrier licence (“UCL”) pursuant to which they provide public internal and external telecommunications services in Hong Kong. The 2nd Applicant has also been the holder of a UCL. In addition, various affiliated companies of the Applicants hold services-based operator (“SBO”) licences. 5.The 1st Respondent (“Secretary”) is responsible for overseeing the Commerce and Economic Development Bureau (“Bureau”), an agency of the Hong Kong SAR Government. The Secretary is the “Secretary” referred to in section 7(2) of TO. 6.On 29 June 2012, the Respondents jointly issued a consultation paper to invite members of the public to make representations on the proposed “Licence Fee Reductions for Unified Carrier Licences, Public Radiocommunications Service (“PRS”) Licences and Services‑Based Operator Licences” issued under the TO (“Proposal”). 7.In relation to UCLs, the Proposal was to reduce, beginning 1 March 2013, the customer connection fee from HK$800 to HK$700 for each 100-customer connection; in other words, a reduction from HK$8 to HK$7 per customer connection per year. The other items of fees payable by holders of UCLs, including the annual flat rate fee of HK$1 million, were to remain unchanged. In relation to PRS and SBO Licences, the Proposal was to reduce the mobile station fee for PRS Licences (Paging) and SBO Licences (Class 3) from HK$800 to HK$700 for each 100 mobile stations, in tandem with, and subject to, the implementation of the proposed reduction of customer connection fee for UCLs. 8.Written comments were submitted by the Applicants and some of the Interested Parties. The preponderance of the written comments was, for one reason or another, to request a further, and immediate or backdated, reduction in licence fees than that set out in the Proposal. There were also requests for a refund of licence fees paid and/or a fee/tax holiday and a review of licence fees on an annual basis. 9.In an 8-page Joint Statement dated 27 November 2012 entitled “Licence Fees Reduction for Unified Carrier Licences, Public Radiocommunications Service Licences and Services-Based Operator Licences Issued under the Telecommunications Ordinance” (“Joint Statement”), the Respondents published their responses to the submissions received and their decision on licence fees reduction (“Decision”) as follows:
10.In essence, the Decision was that the Respondents did not accede to the request of the Applicants and others in the industry to further reduce the licence fees, refund any licence fees paid or to grant a fee/tax holiday. Nor did the Respondents agree to implement the fees reduction stated in the Proposal earlier than 1 March 2013. 11.For ease of reference, the most up-to-date financial projections of the Fund prior to the making of the Joint Statement were these:
12.According to these projections, the actual rate of return on fixed assets would drop to 2.2% in 2017/2018, about one-third of the target return of 6.7% set by the Financial Secretary. 13.On 27 February 2013, the Applicants sought leave to apply for judicial review against the Decision. After hearing the Applicants ex parte, this court granted leave on 12 July 2013. 14.In the amended Originating Summons filed herein on 29 July 2014, the Applicants sought the following reliefs from this court:
II. The Statutory Regime (1) TO 15.The Long Title of TO reads:
16.Sections 7(2) and (6) of TO provide:
(2) TFO 17.The TFOcame into operation on 12 March 1993. Its object can be glimpsed from its Long Title:
18.The relevant provisions of the TFO, for the present purposes, are as follows:
(3) CAO 19.The functions of the Authority are set out in section 4 of the CAO:
20.Section 20(1) of the CAO provides for payments to the Authority:
III. The Fund 21.The nature of a trading fund was explained in a Legislative Council Brief (“1992 Brief”) when the Trading Funds Bill was introduced in November 1992. The 1992 Brief stated:
22.The Fund, then known as the OFTA Trading Fund, was established on 1 June 1995. 23.The financial implications of the setting up of the OFTA Trading Fund was stated in a paper prepared by the Economic Services Branch dated 17 February 1995 (“ESB Paper”):
24.As it turned out, the Fund has been managed with considerable financial “success”, so to speak. As shown in a ten-year summary of the Fund’s financial performance prepared by the Respondents (2002/2003 – 2011/2012) (“Summary”), the Fund has consistently made a “profit from operations” ranging from HK$32,652,000 in 2002/2003 to HK$97,193,000 in 2011/2012. The Summary also records that the Fund had interest and other miscellaneous income in each of those years. 25.During the same period, the target rate of return on fixed assets was reduced from 14.5% p.a. in 2002/2003 to 8.5% since 2006/2007. [1] Its actual rate of return on fixed assets increased from 17.3% in 2002/2003 to 24.3% in 2006/2007[2] to 48.8% in 2011/2012. 26.As far as reserves are concerned, the general manager is authorised by section 5(3) of TFO to establish reserves in the accounts of the Fund. A Development Reserve was indeed set up in 1995 and has been accumulated from the surpluses of the Fund. The purpose of the Development Reserve is to reduce the need for future fee increases, as undertaken by the then Secretary for Economic Services in his speech to the Legislative Council on 10 May 1995. 27.In its Annual Report for the year 2008/2009, OFTA announced that, as at 1 April 2008, the Development Reserve stood at HK$690.2 million, that this amount should be sufficient to provide a cushion against the need for licence fee increases in the foreseeable future and that no transfer would be made to the Development Reserve starting from 2008/2009. IV. Grounds of Review 28.In the amended Form 86, the Applicants have set out four grounds in support of the present application. It is not necessary to set them out in any detail here. This is because, in the course of the hearing, Mr Yu, for the Applicants, has condensed the grounds of review into three points of law, the common thread of which is that, in coming to the Decision, the Respondents have acted unlawfully or ultra vires. The three points of law are:
29.At the heart of the three points of law is the Applicants’ dissatisfaction with OFCA’s past practice and, more importantly, financial projections which provided for payments of the Fund’s surpluses to the general revenue in each of the five years from 2013/2014 to 2017/2018. 30.As a slight variant to these three points of law, Mr Yu, in his reply submissions, maintains that the Applicants are also relying on Wednesbury unreasonableness in impugning the Decision. The unreasonableness consists of the Respondents’ failure to take into account relevant consideration and taking into account irrelevant consideration, the relevant consideration being the cost recovery principle, and the irrelevant consideration being purposes outside the ambit of the TFO ie the provision for the payment of surpluses to the general revenue. V. Constitutionality Point 31.The Applicants’ submissions go like this. It is a fundamental principle of English law that no minister of the Crown has power to demand the payment of money from any subject for any purpose unless authorised to make that demand by express plain words of a statute or other legislative enactment: Attorney-General v Wilts United Dairies Ltd (1921) 37 TLR 884; affd (1922) 38 TLR 781; Congreve v Home Office [1976] QB 629; Vestey v Inland Revenue Commissioners [1980] AC 1148, 1172E. 32.In Attorney-General v Wilts United Dairies Ltd supra at 885 ‑ 886, Scrutton LJ said:
33.At 886, Atkin LJ said:
34.Mr Yu submits that, in line with constitutional principles, the HKSAR Government has no power to demand payment of money from a subject for any purpose unless authorised to do so expressly by the Legislative Council. This is a principle of constitutional importance. He further submits that, in the present case, the Government is effectively saying to the Applicants (and other licence holders) that they can have a licence but they have to pay a fee which is calculated on the basis of a budget which seeks to channel very substantial sums of money to the general revenue. That, in his submission, is impermissible. 35.Ms Cheng, for the Respondents, does not dispute the validity of the principles stated above but submits that they do not invalidate the Decision. 36.I agree with Ms Cheng. In the view of this court, the constitutional principles stated in the authorities do not at all undermine the lawfulness of the Decision, for three reasons. 37.First, in the present case, the Legislative Council has indeed expressly required the obtaining of a licence before anyone can offer, in the course of business, a telecommunications service: section 8 TO. The Legislative Council has also expressly authorized (i) the Secretary to prescribe, by regulation, the licence fees payable for the grant and renewal of a carrier licence (other than an exclusive licence) and by way of annual fees: section 7(2) TO, reg. 5 and Schedule 3 of Telecommunications (Carrier Licences) Regulation, Cap. 106V; and (ii) the Authority to determine the licence fees payable for the grant and renewal of licences (other than exclusive licences and carrier licences) and by way of annual fees: section 7(6) TO. 38.As far as section 7(2) TO is concerned, the Secretary can only prescribe the licence fees payable by regulation. Under section 34 of Interpretation and General Clauses Ordinance, Cap. 1 (IGCO”), such regulation must be laid on the table of the Legislative Council after publication in the Gazette and subject to its scrutiny by a process commonly known as “negative vetting”. On the materials before this court, the Decision to reduce the customer connection fee for UCLs from HK$800 to HK$700 for each 100-customer connection was implemented by way of amending regulation which was indeed laid on the table of the Legislative Council. The Legislative Council supported the reduction and chose not to exercise its power of amendment under section 34(2) IGCO. In consequence, the amending regulation came into effect on 1 March 2013 as proposed. 39.It is therefore clear in the present case that the levy of the licence fees in question and the determination of their amounts are expressly authorized by the Legislative Council. In the words of Atkin LJ in Attorney-General v Wilts United Dairies Ltd supra, “Parliament has authorized the particular charge”. 40.Second, under section 6(5) of TFO, the Financial Secretary may issue directions to the general manager for the control and management of the Fund and the general manager must comply with such directions. One of the directions expressly authorised by the TFO is the treatment of the Fund’s surpluses. Under section 10 (1) of TFO, the Financial Secretary is expressly authorised to direct the transferof the Fund’s surpluses into the general revenue. 41.Hence, as far as legislative authority for the transfer of surpluses to the general revenue is concerned, this court is satisfied there is ample authority for the general manager of the Fund to do so upon the direction of the Financial Secretary, and the Respondents have not erred in taking into consideration the provision for such a transfer in coming to the Decision. 42.Just as the levy of money, by whatever name it is called, for the use of the Government without authority from the Legislature is unconstitutional, the reverse is also true for the levy of money, by whatever name it is called, for the use of the Government with authority from the Legislature. In my judgment, if the transfer of the Fund’s surpluses to the general revenue is authorized by the Legislature and is constitutional, which this court concludes it is, then it should not matter by whatever name these surpluses are called - whether they are described as “notional profits tax”, “dividends” or, using the language of section 10 (1) of TFO, “distributable profits”. The substance and effect of the arrangement is the same – the Fund’s surpluses are earmarked for transfer to the general revenue, and are so transferred. 43.Third, at this juncture, one might as well bear in mind a thing or two about the nature of a trading fund. 44.By definition, a trading fund is merely “an accounting entity within the Government”: section 2 TFO – it is not a separate legal entity which can earn income, incur liabilities and accumulate assets in its own right. Further, the establishment of a trading fund is for the purpose of managing and accounting for the operation of a Government service: section 3(1) TFO. On a strict legal analysis, payments to a trading fund for the operation of a Government service are payments to the Government for the provision of that service. The crediting of such payments to a trading fund is merely an accounting exercise authorized and required by TFO; so is the transfer of a trading fund’s surpluses into the general revenue if the Financial Secretary so directs. 45.In the present context, the levy of licence fees is to pay for the operation of a service provided by OFCA. There is no suggestion from the Applicants that OFCA should provide the service for free or that the charging of a fee for the provision of a service is unconstitutional or unlawful. The fees paid to the Fund are strictly speaking payments to the Government for that service but treated separately as a matter of accounting. The transfer of surpluses from the Fund to the general revenue is also simply a matter of accounting – rather like the transfer of money from one’s left pocket to the right. In these circumstances, this court does not accept that the actual or projected transfer of the Fund’s surpluses into the general revenue, authorized as it is by the TFO, offends any constitutional principles as suggested by the Applicants. 46.For the above reasons, this court rejects the Constitutionality Point. VI. Padfield Point 47.Of course, the existence of legislative authority to levy licence fees and determine their amount does not preclude the court from examining whether such authority has been abused. In Reg. v. Secretary of State for the Environment, Ex parte Nottinghamshire County Council [1986] 1 AC 240 at 250D-F, Lord Scarman, in an application to challenge the Secretary of State’s differentiated guidance to local authorities in his Rate Support Grant Report, summed up the legal position as follows:
48.In R v Secretary of State for the Environment, Transport and the Regions, ex parte Spath Holme Ltd [2001] 2 AC 349 at 396D‑G, Lord Nicholls of Birkenhead said:
49.Mr Yu has also cited a number of authorities to illustrate the circumstances under which the Courts had held that fees and charges set by local councils were for an improper purpose and, for that reason, ultra vires: R v Manchester City Council ex p King (1991) 89 LGR 696; Cran v Camden Borough Council [1995] RTR 346; R (Attfield) v The London Borough of Barnet [2013] EWHC 2089 (Admin); [2014] 1 All ER 304. These cases are no more than illustrations of the Padfield principle as applied to the particular governing statutes and facts of the cases and do not really assist the resolution of the present application. 50.Mr Yu submits this court has to ascertain the purpose and object of the power conferred by section 7 of TO on the Respondents to levy and determine the licence fees payable by various licence holders. He submits that it is certainly not one of the objects and purposes of the TO to confer on the Respondents the power to levy licence fees with a view to providing for a surplus for transfer to the general revenue. 51.Mr Yu further submits that this court also has to construe the TFO in order to ascertain the policy and object of the establishment of a trading fund. In essence, the policy and object of a trading fund is to enable certain services provided by the Government to be self‑financed pursuant to the terms of the Ordinance, and no more. There is nothing in the TFO which supports the proposition that one of the objects of establishing a trading fund is to hive money off for general revenue. 52.This court agrees, as a general proposition, that the power conferred by the TO on the Respondents to grant and renew licences and to levy and determine licence fees is to enable them to better control the provision of telecommunications services, as suggested in its Long Title. The imposition of the requirement of licences and the payment of licence fees as one of the means to control the provisions of telecommunications services cannot be doubted. Indeed, the Applicants do not dispute that the imposition of licence fees is within the policy, object and purpose of the TO – they only dispute the amount so imposed. 53.The question is: should the court interfere with the Respondents’ determination of the amount of licence fees? In order to answer this question, one must firmly bear in mind the supervisory role of the court in judicial review proceedings in the context of public finance. 54.In Reg. v. Secretary of State for the Environment, Ex parte Nottinghamshire County Council supra at 248E-249A, Lord Scarman said:
55.The same can be said of the Decision. 56.By the TO, the Legislative Council has entrusted the tasks of determining the level of licence fees to the Respondents. There is no express limit on the discretionary power so conferred, for sound reasons. The exercise of the discretionary power to determine the amount of licence fees is essentially a matter of economic, and, to some extent, political judgment for the Respondents. Certainly, it is not simply a matter of arithmetic calculation of the income and expenditure of OFCA and balancing one against the other as far as humanly possible. The Legislature could in theory have imposed such a rigid formula when it approved the setting up of the Fund. But it has not. As can be seen from the Joint Statement itself, the economic arguments for and against a further reduction of the licence fees were varied. At the risk of stating the obvious, the weight to be attached to each economic argument is a matter of value judgment upon which there is room for reasonable people to differ. 57.Given that the Legislative Council has conferred the discretion on the Respondents, this court in its supervisory function should refrain from intervening in the exercise of such discretionary judgment unless it is demonstrably outside the policy object and purpose of the TO (or is Wednesbury unreasonable). On the materials available, this court is not satisfied that setting the licence fees in question at lower than HK$700 for each 100‑customer connection / 100 mobile stations would be within the policy object and purpose of the TO in better controlling the provisions of telecommunications services in Hong Kong, but setting them at HK$700 would not. 58.It is true that setting the licence fees at HK$700 for each 100‑customer connection / 100 mobile stations might result in a surplus in the next five years commencing 2013/2014. According to the Fund’s financial projections quoted verbatim above, it would result in a surplus. But no serious argument has been put forward by the Applicants as to why creating a surplus in the Fund is outside the policy object and purpose of the TO in better controlling the provision of telecommunications services in Hong Kong. 59.The Applicants’ complaint is focused notso much on the creation of the surplus as such, but on the application of the surplus ie its transfer to the general revenue. It seems to this court the validity of their argument cannot be resolved by a proper construction of the TO which is silent on the application of the Fund’s surpluses. Rather it is a matter of ascertaining the intention of the Legislative Council in enacting the TFO and, by resolution, approving the setting up of the Fund. The power conferred on the Respondents by the TO only affects the revenue/ credit side of the Fund. It is the TFO which governs the expenditure/ debit side of it. 60.That leaves the Applicants with the argument based on the proper construction of the TFO. 61.The first difficulty faced by the Applicants concerns the subject matter of these judicial review proceedings. The Applicants, no doubt advisedly, are not seeking to challenge (i) the Fund’s past practice of transferring surpluses to the general revenue, or (ii) the Fund’s financial projections for the five years commencing 2013/2014 which envisaged such a transfer. Instead, they are challenging the Decision which was to set the licence fees in question at HK$700 per 100‑customer connection/100 mobile stations starting from 1 March 2013, and not some lower figure. However, the power conferred on the Respondents to set licence fees is not contained in the TFO. It is contained in the TO. As far as the Padfield Point goes, this court has already concluded that the Decision to set the licence fees in question at HK$700 for each 100‑customer connection/100 mobile stations is within the policy object and purpose of the TO in better controlling the provision of telecommunications services in Hong Kong. 62.The second difficulty faced by the Applicants is that, even if the Respondents’ power to determine the licence fees in question is somehow fettered by the TFO, in my judgment, it would still be within the policy object and purpose of the TFO for the Fund to make provisions for a surplus in preparing its financial forecast and for such a surplus to be transferred to the general revenue. If so, the Respondents were not acting ultra vires in setting the licence fees in question which might or would result in a surplus and which in turn would end up in the general revenue. Nor was it Wednesbury unreasonable for the Respondents to have done so. The reasons are these. 63.Under section 3 of TFO, a financial objective of a trading fund is that the operation of the Government service in question shall fund itself from the income generated from such a service. This is reiterated in section 6(6)(b). If that objective is in accordance with the policy object and purpose of the TFO, which the Applicants do not challenge, it is inconceivable the intention of the Legislative Council was such that the Fund must not achieve a better financial result than simply meeting expenses out of its income or, putting it in another way, balancing its budget. 64.One must bear in mind that meeting expenses out of its income is not the only policy object and purpose of the TFO. Sections 6(6)(a) and 6(6)(c) of the TFO set out two further objectives for the general manager of the Fund ie to provide an efficient and effective operation that meets an appropriate standard of service and to achieve the target rate of return set by the Financial Secretary. All three objectives point to one common thread: the general manager of the Fund has to be financially prudent in providing an efficient and effective operation. That means the Fund must not, at least over a reasonable period of time, operate on a budget deficit so as to require further funding from the Government. But the concept of being financially prudent is certainly apt to cover scenarios in which the Fund is able to (i) just balance its budget and achieve the target rate of return or (ii) operate on a budget surplus over and above the target rate of return. 65.The fact that the general manager of the Fund is expected to provide an efficient and effective operation that meets an appropriate standard of service means inter alia it should deploy sufficient resources to provide the requisite standard of service. The fact that the Fund is expected to meet expenses out of its income means it should not incur expenditure more than its revenue, over a reasonable period of time. Lastly, the fact that the Fund is expected to achieve the rate of return on fixed assets set by the Financial Secretary does not mean that it cannot exceed the Financial Secretary’s expectation. 66.Under a trading fund accounting framework, the Fund is required to adopt accounting and management practices of the private sector like a quasi-commercial operation. This is borne out not just by the 1992 Brief and ESB Paper quoted above, but also by the provisions of the TFO. Section 10(1) of TFO contemplates the Fund’s operation may result in surpluses “in the nature of distributable profits”.[3] In my judgment, section 10(1) is the clearest indication in support of the proposition that, under the TFO regime, it is permissible for a trading fund to operate with a budget surplus which, if materialized into actual surplus, can be distributed to its investor ie the Government by transferring it into the general revenue. 67.All financially prudent organizations, commercial or quasi‑commercial, set targets as a motivation for its staff or as a benchmark by which their performance is measured. The same goes for governmental or quasi-governmental organizations. The difference between the two is that the targets for commercial or quasi-commercial organizations are usually financial whereas the targets for governmental or quasi‑governmental organizations are usually performance‑based. These organizations are expected to reach the set target. But if they can exceed the target, so much the better. 68.It is inconceivable that the intention of Legislative Council in enacting the TFO was such that a trading fund was permitted to achieve the target rate of return set by the Financial Secretary, but was not permitted to exceed it. Had that been the intention of the Legislative Council, one would expect some indication to that effect in the TFO – none can be found. Paraphrasing the words of Lord Nicholls of Birkenhead in ex parte Spath Holme Ltd supra, this court is unable to impute to the Legislative Council in respect of the language used in the TFO an intention to preclude the Fund from achieving a surplus which exceeds the Financial Secretary’s target rate of return. 69.For these reasons, this court rejects the Padfield Point. VII. Cost Recovery Principle Point 70.Mr Yu submits that, as a matter of construction of the TFO, the manager of the Fund must adhere to the so-called cost recovery principle. In the present context, it means The Fund’s budget should provide for income which will cover expenses and the target return specified by the Financial Secretary and no more. If the manager of the Fund were to budget for something over and above that and seek to make a profit, he would be going outside the terms of the TFO. If so, the Respondents would also be going outside the terms of the TFO in setting licence fees at a level which would result in such a profit. 71.It should be readily apparent that this cost recovery principle Point is just another way of formulating the Padfield Point with regard to the proper construction of the TFO. To be fair to Mr Yu, he admitted as much when opening his case to this court on the first day of the hearing when he told this court this point was “basically a different route in coming to the same conclusion”. In the view of this court, the reasons given above for rejecting the Padfield Point apply with equal force to rejecting this point. 72.Further, this court agrees with Ms Cheng that the Applicants have grossly overplayed the cost recovery principle. 73.To start with, there is nothing in the language of TFO which suggests cost recovery is the only guiding principle in the management of a trading fund or that it must assume prime importance over and above any other considerations. On the Applicants’ own case, the cost recovery principle is derived primarily from the wording of section 6(6)(b) of TFO. While recovery of cost is an important objective which must be taken into consideration in making any financial projections for the Fund, other factors i.e. the objectives set out in sections 6(6)(a) and (c), the financial needs of the Fund in the near future ie the next five years commencing 2013/2014, the financial viability and sustainability of the Fund in the longer run, the need to maintain a “cushion” against any licence fees increase, the maintenance of a predictable licence fee environment for the telecommunications industry and so on are also relevant in the weighing exercise. These factors have been taken into account by the Respondents in coming to the Decision, as evident from the Joint Statement, and there is no suggestion from the Applicants that any of these are irrelevant considerations. 74.In my judgment, the proposition that the Respondents’ hands are completely tied by the cost recovery principle is not supported by the language of the TFO (or the TO for that matter) and is incompatible with the flexibility under which a trading fund is supposed to be managed. 75.If the factors which the Respondents have actually taken into account in coming to the Decision are relevant considerations, which this court rules they are, then it is for the Respondents to decide how much weight to be attached to each of them in arriving at the proper level of licence fees - this court would not lightly substitute its own view for that of the Respondents. 76.In R v. The Director General of Telecommunications, ex parte Cellcom Ltd & Ors [1999] ECC 314, Lightman J observed at [26] and [27] as follows:
77.This court would gratefully adopt and echo the sentiment of Lightman J. 78.For the above reasons, this court also rejects the Cost recovery principle Point. VIII. Wednesbury unreasonableness 79.This is pleaded in various paragraphs in the amended Form 86, including paragraph 107 as Ground 3 of the judicial review, but can be dealt with briefly. 80.As stated earlier, Mr Yu maintains the Applicants’ reliance on Wednesbury unreasonableness to this extent: in coming to the Decision, the Respondents have (a) wrongfully failed to take into account a relevant factor ie the cost recovery principle, and (b) taken into account an irrelevant factor ie the provision for surpluses and to pay them into the general revenue. 81.In the view of this court, point (a) is a slightly different way of formulating the Cost recovery principle Point, while point (b) is just another way of saying the Respondents have acted unlawfully in levying licence fees with a view to making payments to the general revenue ie the Constitutionality / Padfield Point. 82.For the reasons given above, this court is unable to accept the contention that the Decision should be impugned as Wednesbury unreasonable. Further, point (a) is factually incorrect. As evident from paragraph 8 of the Joint Statement, the Respondents have certainly not overlooked the cost recovery principle. Where they differed from the Applicants was the weight to be attached to it. IX. Disposition and costs order nisi 83.The application for judicial review is hereby dismissed. 84.There shall be an order nisi that costs of and occasioned by the application be to the Respondents, to be taxed if not agreed, with certificate for two counsel. 85.I would like to thank counsel for their detailed and helpful submissions.
Mr Benjamin Yu SC and Mr Roger Beresford, instructed by Baker & McKenzie, for the applicants Ms Teresa Cheng SC and Mr Adrian Lai, instructed by the Department of Justice, for the respondents The 1st to 9th Interested Parties were not represented and did not appear [1] In passing, it was further reduced to 6.7% in 2013. [2] The year from which interest income was excluded from the calculation of actual rate of return on fixed assets. [3] Similarly, section 10(2) of TFO contemplates the fees charged by a trading fund may be structured so as to recover more than the costs of the provision of the government service in question plus a reasonable return set out in section 6(6)(c). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Further hearings and rulings under HCAL 51/2013