OpenNet Pte Ltd v Info-communications Development Authority of Singapore

Woo Bih Li J:

[1] OpenNet Pte Ltd (“OpenNet”) filed the present application to seek leave from the court to apply for a quashing order against a decision of the Info-communications Development Authority of Singapore (“IDA”) communicated by letter dated 22 September 2011 in:

(i) determining that NetLink Trust and/or its trustee-manager, CityNet Infrastructure Management Pte Ltd (“CityNet”) meet the Control and Ownership Requirements specified in the Deed of Undertaking between the IDA and Singapore Telecommunications Limited (“Singtel”);

(ii) granting CityNet a Facilities-Based Operating Licence (“FBO licence”); and

(iii) designating CityNet as a Public Telecommunications Licensee.

[3] IDA is a statutory body constituted under the Info-communications Development Authority of Singapore Act (Cap 137A, 2000 Rev Ed) (“the IDA Act”).

[4] On or about 7 April 2008, IDA issued a Request for Proposal (“RFP”) for a passive network operator to design, build and operate the passive infrastructure of Singapore’s Next Generation Nationwide Broadband Network (“NGNBN”).

[5] A consortium was formed to respond to the RFP. This consortium comprised:

(a) Singtel;

(b) Singapore Press Holdings Ltd;

(c) Axia NetMedia Corporation; and

(d) SP Telecommunications Pte Ltd.

[6] The consortium’s response or bid was initially submitted to IDA on or about 5 May 2008. The bid was eventually successful and OpenNet was incorporated in Singapore as the passive network operator.

[7] OpenNet’s present concerns arose from developments before and after the award of tender to the consortium.

[8] As mentioned above, the consortium submitted its bid on or about 5 May 2008. The bid took the form of a certain financial model with OpenNet as the lessee and Singtel as the lessor of the fibre infrastructure. However, IDA was of the view that such a model did not satisfy the Control and Ownership Requirements stipulated in the RFP. Under such requirements, OpenNet could not be under the “Effective Control” of any other telecommunications licensee (“the Neutrality Requirement”). Singtel is a telecommunications licensee. It is unnecessary for me to elaborate on the definition and elaboration of “Effective Control” under the requirements.

[9] To address IDA’s concern, the consortium submitted a revised bid on 20 August 2008. It proposed that OpenNet would own the fibre infrastructure instead of Singtel, and following from that, OpenNet entered into four agreements with Singtel. One of the agreements was an agreement which was referred to as “the Duct Use Agreement”.

[10] The revised bid included a draft deed of undertaking from Singtel to IDA not to compete with OpenNet using fibre-based services in the residential market.

[11] At this point, there is a slight divergence between OpenNet and IDA on the formal facts. According to para 57 of an affidavit of Leong Keng Thai of 28 March 2012 filed on behalf of IDA, IDA was satisfied with the revised bid and the draft deed of undertaking.

[12] According to paragraphs 14 and 15 of the Statement filed by OpenNet pursuant to O 53 r 1(2) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), IDA was still of the view that Singtel would still have some form of “Effective Control” over OpenNet as Singtel owned the ducts and related assets. Accordingly, IDA informed the consortium that the ducts and related assets would have to be owned either by OpenNet or another party which met the Neutrality Requirement. Singtel then provided another deed of undertaking to IDA that it would divest the ducts and related assets to another company (“AssetCo”) which would meet the Neutrality Requirement.

[13] It appears from paragraph 58 of the said affidavit of Leong Keng Thai that, in any event, the consortium was awarded the tender before a signed deed of undertaking dated 20 October 2008 from Singtel was submitted (“the Deed of Undertaking”).

[14] OpenNet said that it was contemplated that, with the consent of OpenNet, Singtel would novate the Duct Use Agreement and some, or part, of the other three agreements (referred to at [9] above) to AssetCo so that AssetCo would take over some of Singtel’s obligations to OpenNet under those agreements.

[15] OpenNet’s complaint was that it had expected to be included in discussions relating to the formation of AssetCo as AssetCo would affect OpenNet’s own commitments to IDA on the Neutrality Requirement and OpenNet’s commercial position. It was not consulted. OpenNet alleged that on or about 22 July 2011, it was made aware by a Singapore Exchange announcement that AssetCo was to be established as Netlink Trust, a business trust to be managed by CityNet. It also alleged that subsequent to IDA’s letter dated 22 September 2011 (referred to at [1] above), it had requested documents relating to AssetCo from IDA and Singtel and Singtel’s solicitors. Its request was not successful until 16 October 2011 when Singtel’s solicitors provided six documents of which five were already publicly available. The six documents were not helpful in assisting OpenNet as to how AssetCo would operate independently of Singtel.

[16] Accordingly, OpenNet filed this application. I would clarify that the letter from IDA dated 22 September 2011 was addressed to all facilities-based operations licensees and not to OpenNet only. Also, the letter provided information on AssetCo and on IDA’s decision in respect of AssetCo. It did not appear to be IDA’s decision itself. However, the parties in this action initially proceeded on the basis that that letter comprised IDA’s decision. A copy of the letter and its annexure is enclosed herewith as Annexure A.

[LawNet Admin Note: Annexure A is viewable only to LawNet subscribers via the PDF in the Case View Tools.]

[17] OpenNet’s application was essentially for leave to seek judicial review of the decision of IDA of 22 September 2011. IDA resisted the application on one ground only, ie, that OpenNet had not pursued alternative remedies which would otherwise have been available to it. For present purposes only, IDA did not dispute that OpenNet might have some merit in its complaint.

[18] IDA’s objection was based on another piece of legislation, ie, the Telecommunications Act (Cap 323, 2000 Rev Ed) (“the TA”). IDA submitted that it had granted OpenNet a licence to provide facilities-based operations under s 5 of the TA. Under the TA, a telecommunication licensee aggrieved by a decision of IDA had to seek recourse under the regime set out in s 69 of the TA. I adopt paragraphs 31 to 33 of IDA’s first submissions dated 21 February 2012 on the salient TA provisions:

[19] IDA referred to various authorities for the proposition that the courts will not normally grant public law remedies if an applicant has not exhausted alternative remedies available to him save in the most exceptional circumstances. It was undisputed that OpenNet had missed the deadline under s 69(1) of the TA to pursue the alternative remedies therein. However, the authorities IDA relied on also established the proposition that the fact that the deadline to pursue an alternative remedy has expired was not an exceptional circumstance. IDA submitted that this had to be so, otherwise an applicant who had defaulted in meeting the deadline would be in a better position than one who could still meet the deadline.

[20] OpenNet did not dispute the above propositions of law. Neither did it allege any exceptional circumstance (other than the one referred to below) to justify its present application. Instead, OpenNet broke down IDA’s decision of 22 September 2011 into the following three decisions:

(a) determining that NetLink Trust and/or CityNet meets the Control and Ownership Requirements specified in the Deed of Undertaking between the [IDA] and [Singtel] (“IDA Determination);

(b) granting CityNet a FBO licence (“IDA FBO Decision”); and

(c) designating CityNet as a Public Telecommunications Licensee (“IDA PTL Decision”).

[21] OpenNet submitted that IDA’s Determination was made by IDA under the IDA Act and not under the TA. The recourse under s 69 of the TA was not available to a decision made by IDA under the IDA Act. Also, there was no provision in the IDA Act for recourse against a decision of IDA. While OpenNet conceded that the IDA FBO Decision and the IDA PTL Decision were made by IDA under the TA, it submitted that those two decisions were dependent on the IDA Determination. If the IDA Determination was quashed, the other two decisions would not stand.

[22] OpenNet also submitted that because the statutory remedy under the TA could not afford it an adequate remedy (since the IDA Determination was made under the IDA Act and not under the TA), this constituted an exceptional circumstance to justify the court granting it leave to seek judicial review against the IDA Determination.

[23] In my view, the above argument about an exceptional circumstance was a non-starter. If the IDA Determination was not covered by the TA, then there was no alternative remedy available to OpenNet in the first place. There would then be no need for it to rely on the exceptional circumstance argument. If the IDA Determination came under the TA, then OpenNet could not argue that the statutory remedy under the TA was never available to it.

[24] The “real” argument of OpenNet was that the IDA Determination was made under the IDA Act.

[25] Relying on Parliamentary debates, OpenNet submitted that when IDA was established, it was Parliament’s intention for IDA to perform three key functions:

(a) To promote and facilitate the growth and development of an efficient and internationally competitive Info-communications technology sector in Singapore (“First Function”).

(b) To carry out licensing and regulatory functions, and help maintain effective competition in the Info-communications technology sector (“Second Function”).

(c) To promote an Information Society in which Info-communications technology is readily accessible and available to all Singaporeans (“Third Function”).

(a) (see Singapore Parliamentary Debates, Official Report (23 November 1999) vol 71 at cols 457-458).

[26] As regards IDA’s argument that the IDA Act constituted the IDA and that the functions and powers of IDA were exercised under the TA and not the IDA Act, OpenNet submitted that the IDA Act was more extensive than a mere constitutive document as it was the IDA Act, and not the TA, which conferred statutory functions and powers on IDA. For example, under s 7(1) of the IDA Act, IDA could exercise various powers specified in the Second Schedule of the IDA Act. Those powers included the granting of licences under the TA.

[27] OpenNet submitted that the RFP was issued by IDA pursuant to its First Function and Third Function as the design, building and operation of the NGNBN were obviously aimed at the “development and expansion of the information and communications industry in Singapore” as opposed to the operation and regulation of the telecommunications sector. This was affirmed by s 6(1)(m) of the IDA Act which empowered IDA with the function and duty to “encourage, promote, facilitate, invest in and otherwise assist in the establishment, development and expansion of the information and communications industry in Singapore ...”.

[28] OpenNet also submitted that it was required to meet the Neutrality Requirement under the RFP when it submitted its bid in response to the RFP. Its bid preceded its own application for an FBO licence. Also, IDA’s acceptance of OpenNet’s bid under the RFP also preceded IDA’s grant of an FBO licence. As the Neutrality Requirement was a requirement under the RFP and not under OpenNet’s application for an FBO licence, the TA did not apply.

[29] OpenNet also relied on paragraph 4.2.1(e) of the RFP which stated:

[30] OpenNet’s argument was that because IDA had reserved the right to determine “in its sole and absolute discretion” if the Neutrality Requirement was met, this must mean that the RPF stemmed from the IDA Act, which did not provide for recourse to the Minister.

[31] OpenNet further submitted that IDA had in fact determined that OpenNet had met the Neutrality Requirement on 6 June 2011 (and not 22 September 2011) when one of OpenNet’s shareholders received a letter from Singtel suggesting that IDA had determined that AssetCo had met the Neutrality Requirement. Paragraph 3 of the letter stated:

[32] OpenNet concluded that therefore there were two distinct processes. The first was IDA’s decision that AssetCo met the Neutrality Requirement, ie, the IDA Determination and the second was the IDA FBO Decision and the IDA PTL Decision.

[33] On the other hand, IDA submitted that the IDA Act constituted the IDA. IDA’s functions and power extended to both the telecommunications service sector and the postal service sector. Every exercise of IDA’s regulatory powers in the telecommunications service sector fell under the TA. Every exercise of IDA’s regulatory powers in the postal service sector came under another legislation, ie, the Postal Services Act (Cap 237A, 2000 Rev Ed) (“Postal Services Act”).

[34] IDA explained the background to the IDA Act. The predecessor of the IDA Act was the Telecommunication Authority of Singapore Act (Cap 323, 1993 Ed) (“the TAS Act”). Likewise, the Telecommunication Authority of Singapore (“TAS”) was the predecessor of IDA.

[35] Technology changes led to a convergence of the telecommunications, information technology and broadcasting sectors. To address these developments, the Government announced its intention in 1999 to merge the TAS with the National Computer Board and to form a new statutory board, ie, IDA.

[36] The TAS Act was repealed and three new statutes were enacted in its place, namely, the IDA Act, the TA and the Postal Services Act. The IDA Act merely constituted IDA and the meat of IDA’s powers were found in the other two Acts. The Minister for Communications and Information Technology, Mr Yeo Cheow Tong, explained during the Second Reading of the Info-communications Development authority of Singapore Bill on 23 November 1999 (see Singapore Parliamentary Debates, Official Report (23 November 1999) vol 71 at col 457) as follows:

[37] I quote paragraphs 30 and 31 of the submissions for IDA dated 8 May 2012:

[38] Under the TAS Act, there were provisions for an appeal to the relevant Minister (see for example, ss 26(6), 28(4) and 29(2)). No such provision is found in the IDA Act. Instead the provision for recourse is found in s 69 of the TA which has been discussed (see [18] above).

[39] IDA stressed that during the Second Reading of the Telecommunications Bill (Singapore Parliamentary Debates Official Report (23 November 1999) vol 71 at col 469), Mr Yeo Cheow Tong said:

[40] IDA submitted that it was not Parliament’s intention to have some decisions of IDA in the exercise of any discretion vested in it subject to s 69 but others not.

[41] IDA pointed out that the structure where one statute constitutes a statutory authority and sets out its broad functions, duties and powers and another statute contains detailed provisions including a provision for recourse was not unique. Two examples were given but I would mention one only. According to IDA, the Energy Market Authority of Singapore Act (Cap 92B, 2002 Rev Ed) (“the EMA Act”) establishes the Energy Market Authority of Singapore (“the EMA”). Sections 6 and 7 of the EMA Act set out the EMA’s broad functions, duties and powers like ss 6 and 7 of the IDA Act for IDA. Other statutes detail EMA’s regulatory powers, for example, the Electricity Act (Cap 89A, 2002 Rev Ed) and the Gas Act (Cap 116A, 2002 Rev Ed). The EMA Act, like the IDA Act, does not contain any provisions for recourse against EMA’s decisions. Such a provision is found in other statutes.

[42] On this point, OpenNet submitted that statutory bodies are established in a variety of ways and it was not uncommon for all or part of a statutory body’s regulatory powers to be contained within the same statute which constitutes that body. Various examples were given in paragraph 15 of its reply submissions but I do not need to set them out here.

[43] IDA also relied on s 3 of the TA which states:

[44] IDA submitted that s 3 of the TA gave it the exclusive power to operate and provide telecommunication systems and services in Singapore whereas OpenNet submitted that s 3 did not give IDA such a power but only the exclusive privilege to do so.

[45] IDA also relied on the 2005 Code of Practice for Competition in the Provision of Telecommunication Services which it said introduced the concept of “Effective Control”. Recent amendments to the TA which came into force on 1 February 2012 have included the concept of “Effective Control” into Part VA of the TA. IDA submitted that these developments demonstrated that the TA was the source of IDA’s power to make the IDA Determination.

[46] IDA submitted that the IDA Determination was part of the IDA FBO Decision and the IDA PTL Decision. The IDA Determination was a step in the process of making the other two decisions.

[47] IDA also submitted that any bidder in response to the RFP was already required to apply for a FBO licence to be issued under the TA. The Neutrality Requirement would be part of the terms of the licence to be issued. In fact, the terms of the RFP stipulated that documents submitted for the RFP were to be deemed as the bidder’s application for the FBO licence subject to such exclusions as the bidder notified to IDA. Paragraph 8 of Part B Volume 1 of the RFP provided:

IDA’s point was that the above provisions demonstrated that any bid in response to the RFP was governed by the TA which dealt with, inter alia, the issue of licences.

[48] OpenNet’s response to this argument was that changes could be made to its application for the FBO licence.

[49] As for OpenNet’s reliance on para 4.2.1(e) of the RFP (see [29] above), IDA submitted that s 69 of the TA did not derogate from IDA’s discretion to determine if the Neutrality Requirement had been met.

[50] As regards OpenNet’s submission (see [31] above), that IDA had in fact determined that OpenNet had met the Neutrality Requirement on 6 June 2011 (and not 22 September 2011), it seemed to me that this was not OpenNet’s approach when it filed its application in court. At that time it had proceeded on the basis that IDA’s letter of 22 September 2011 was, inter alia, IDA’s determination that CityNet had met the Neutrality Requirement specified in the Deed of Undertaking (see prayer (i) of its application as set out at [1] above). Yet in the midst of submissions, OpenNet sought to distance itself from the letter of 22 September 2011, presumably because that letter was dealing with the issuance of licences which might in turn mean that the entire letter was issued under the TA and not under the IDA Act.

[51] This twist by OpenNet revealed a flaw in its approach. It had assumed that the IDA Determination (that CityNet had met the Neutrality Requirement) pertained to CityNet only. In my view, the IDA Determination pertained to OpenNet as well. Indeed that was what OpenNet itself had thought when it framed prayer (i) of its application.

[52] I was of the view that in deciding that CityNet met the Neutrality Requirement, IDA was determining that OpenNet had complied with its own undertaking under its revised bid to IDA and also determining that CityNet was eligible to be granted the licences which were issued to it. Whether the IDA Determination was reached on 6 June 2011 or 22 September 2011 was immaterial for present purposes. It was a single decision.

[53] The second flaw in OpenNet’s submission was its attempt to differentiate between its response to the RFP and its own application for an FBO licence. The reason for the attempt to differentiate was because it knew that the latter would come under the TA. If its response to the RFP was connected with its application for an FBO licence, then its argument that the RFP was covered by the IDA Act and not the TA would be weakened.

[54] As mentioned above at [47], it was already a term under the RFP that the bidder would have to apply for an FBO licence. Indeed the documents submitted for the RFP were to be deemed as the bidder’s application for the FBO licence subject to any exclusion as the bidder might notify IDA. The point was not so much that the bidder could make changes when it came to its application for the FBO licence but that it knew that it had to apply for such a licence as part of its response to the RFP.

[55] Accordingly, it was clear to me that the RFP was an integral part of the process leading to the granting of an FBO licence to the bidder. Therefore, even if OpenNet was correct in placing the First Function and Third Function of the IDA under the IDA Act and only the Second Function under the TA, s 69 of the TA would still apply to OpenNet because the RFP was part of the Second Function.

[56] In any event, there was a short answer to OpenNet’s attempt to split the three functions between these two pieces of legislation. While it was correct that IDA was and is to have three functions, this did not mean that some were to be executed under the IDA Act and others under the TA. I agree that the IDA Act is the constituent instrument. Its functions in respect of the telecommunications sector are to be executed under the TA. As the Minister for Communications and Information Technology said during the Second Reading of the IDA Bill on 23 November 1999 and I reiterate:

[57] OpenNet’s attempt to place one function of the IDA under the TA and two functions under the IDA Act would result in a chaotic situation. It would mean that one would have to interpret every decision of IDA in respect of the telecommunications sector and conclude whether it comes under the IDA Act or the TA before deciding whether s 69 of the TA applies. That cannot be right. It would also mean that Parliament intended that some decisions of IDA would be subject to s 69 of the TA while others would not. In the absence of clear words to that effect, such a conclusion should be resisted. Furthermore, as mentioned at [39] above, s 69 of the TA is meant to apply to any decision of the IDA in the exercise of any discretion vested in it. In my view, every decision of IDA which can be the subject of recourse is governed by s 69 of the TA.

[58] As for OpenNet’s reliance on paragraph 4.2.1(e) of the RFP (see [29] above), it was clear to me that that provision did not intend to and could not oust s 69 of the TA. Neither did it mean that the TA does not apply. I agree with IDA’s submission that s 69 of the TA does not derogate from IDA’s right to decide whether the Neutrality Requirement has been met, before s 69 of the TA kicks in.

[59] In the circumstances, it is unnecessary for me to comment on other provisions in the TA and the IDA Act or the 2005 Code of Practice for Competition in the Provisions of Telecommunication Services.