Annex D
Legal Position
(1) Civil Liability
(A) the contractual relationship between HKCC and the
Government :
(i)
(ii)
-
By a letter dated 28 July, 1989, HKCC offered to supply a cable TV system, which offer was accepted by the Administration's letter dated 1 August 1989. The relevant exchange of correspondence is at Annex A.
The contractual obligation of the Administration is to use reasonable efforts to introduce the necessary drafting to procure the grant of the Licences by the Governor in Council.
(iii) One of the obligations of HKCC is to commence the
necessary work as soon as possible in order to meet the time-table.
(iv)
(v)
(vi)
In the penultimate paragraph of the letter dated 28 July, 1989 (see Annex A), a statement of comfort was made that the Administration recognised the immense investment required for the project and would be mindful of the need to maintain the operating environment necessary to ensure that the heavy investment is not jeopardised.
It is the view of the Attorney General's Chambers that the statement of comfort, for a number of legal reasons including its vagueness and imprecision and the absence of the intent to create legal obligations, will not be an obstacle to the proposed deregulation of TVROS and SMATV systems. Furthermore, TVROS and SMATV systems were not, and are not, intended to form part of HKCC's exclusive franchise, as it seems HKCC well knew.
The Administration, upon performing the obligation set out in (ii) above, would be entitled to recover damages from HKCC if it fails to perform. The quantification of damages however is likely to be a matter of the utmost contention, time-consuming and demanding upon resources. Furthermore, since it was decided at a high level in the Administration not to seek legally binding guarantees, the Administration may have to rely on the company's willingness and reputation to honour the contract.
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