DR CHAN HIN KEUNG HENRY v. APPLE DAILY LTD AND OTHERS

DCCJ1474/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1474 OF 2013

---------------------------------

---------------------------------

-------------------------

DECISION

-------------------------

Introduction

1.  Before me were three matters:-

(1)   Whether leave should be refused to the 1^st to 3^rd defendants (the “defendants”) to plead paragraph 15A(4)(l) of the draft Amended Defence annexed to their Summons dated 29 August 2014 on the ground of irrelevance;

(2)   whether paragraphs 39-42 of the Witness Statement of Ng Nga Him (“Ng’s Witness Statement”) filed on 31 July 2014 on behalf of the defendants should be struck out on the ground of irrelevance[1]; and

(3)   whether leave should be granted to the plaintiff to file Amended Reply to the Amended Defence of the defendants as per the draft annexed to the plaintiff’s Summons dated 14 January 2016.

2.  In respect of the third matter, Ms Queenie Lau, acting for the defendants, sensibly did not oppose the plaintiff’s application to amend his reply.  I therefore granted leave for the amendments.  I also ordered that costs of and occasioned by the amendments to the defendants’ defence be to the plaintiff in any event.

3.  Thus, the outstanding matters are the first and second matters, which, as shall be explained below, are interlinked in that if leave is refused to plead paragraph 15A(4)(l) of the draft Amended Defence on the ground of irrelevance, then paragraphs 39-42 of Ng’s Witness Statement should be struck out also on the ground of irrelevance.  The converse is also true.

4.  These two matters are in fact matters remitted to the District Court for determination by the Court of Appeal (comprised of Cheung and Yuen JJA) in its judgment on 7 December 2015 in CACV No 100 of 2015.  In their judgment, they allowed the defendants’ appeal against Deputy District Judge J Chow’s Decision of 19 January 2015, in which she refused leave to the defendants to amend their defence as per the draft Amended Defence and file Ng’s Witness Statement on the ground of delay alone, without deciding the relevance or irrelevance of paragraph 15A(4)(l) of the draft Amended Defence and paragraphs 39-42 of Ng’s Witness Statement.  While the Court of Appeal, in allowing the appeal, granted leave in respect of other parts of the draft Amended Defence and other parts of Ng’s Witness Statement, it remitted the matter to the District Court for the determination of the relevance or irrelevance of paragraph 15A(4)(l) of the draft Amended Defence and paragraphs 39-42 of Ng’s Witness Statement.

Background

5.  For background, I refer to paragraphs 3 – 21 of the Court of Appeals’ judgment.  For the present purpose, suffice to say that (1) by Writ of Summons issued on 25 April 2013 specifically endorsed with the Statement of Claim, the plaintiff claims the defendants for damages and other relief based on libel arising from the publication of certain words (the “Words”) of the three articles published in Apple Daily and also uploaded on the Apple Daily Website on 26 November 2012; and (2) the defendants plead, inter alia, the defence of justification.  The Lucas-Box meanings for the justification, relevant for the present purpose, are set out in paragraph 15A(1) – (3) of the draft Amended Defence:-

“(1)   Pyramid selling schemes have emerged in Hong Kong.

(2)   Some people have complained about investment plans concerning a company known as CKB168. One particular complaint is that CKB168 operated a pyramid selling scheme.

(3)   A number of companies in Hong Kong have registered names containing references to CKB168 and/or “嘉高賓尼”, and it cannot be ruled out that one company sells the courses and the company which the outsiders invest in is another company.”

6.  One of the particulars in support of this justification is pleaded in paragraph 15A(4)(l), the subject matter before me:-

“(l) Further, on or about 17 October 2013, the Securities and Exchange Commission in the United States announced charges and asset freezes against the operators and promoters of a worldwide pyramid scheme that falsely promised exponential, risk-free returns to investors in a venture that purportedly sells Internet-based children’s educational courses. Five entities based in Hong Kong, Canada and the British Virgin Islands, namely, WIN168 Biz Solutions Limited, CKB168 Limited, CKB168 Holdings Limited, CKB168 Biz Solution Inc., and Cyber Kids Best Education Limited which operated under business name “CKB” and “CKB168” are at the centre of the scheme.”

7.  Paragraphs 39-42 of Ng’s Witness Statement refer to these actions taken by the Securities and Exchange Commission (“SEC”) in the United States and paragraph 41 exhibits the relevant documents in support, namely, (1) a complaint filed by the SEC with a District Court of New York on 9 October 2013 (the “Complaint”); (2) Press Releases issued by SEC on 17 October 2013 in relation to the Complaint; and (3) a Litigation Release also issued by SEC on 17 October 2013 in relation to the Complaint.  The latter two are simply summaries of the Complaint. The plea of the particular in paragraph 15A(4)(l) of the draft Amended Defence and the evidence in paragraphs 39-42 of Ng’s Witness Statement are in effect saying that there had been pyramid selling schemes involving CKB168 starting prior to the publication of the Words (“pre-publication”) and continuing thereafter (“post-publication”) until the filing of the Complaint.

Issue in dispute

8.  Mr Victor Lui, for the plaintiff, contends that the evidence of SEC’s actions, notably, the Complaint filed on 9 October 2013, taking place after the publication of the Words on 26 November 2012, is irrelevant and inadmissible.  Ms Lau takes a completely opposite stance, contending that such post-publication evidence is relevant and admissible.  Ms Lau further contends that in any event, most of the contents of the Complaint concern pre-publication events.  At the hearing, the parties addressed me on the relevance or irrelevance with reference mainly to justification.

9.  The main cause of this dispute between the parties, in my judgment, is due to the different imputations accorded to paragraph 15A(1) – (3) of the draft Amended Defence: while the plaintiff accords an imputation that there were grounds to suspect that the plaintiff is guilty of or involved in the operation of a pyramid selling scheme, the defendants accord an imputation that there were complaints that the plaintiff is guilty of or involved in the operation of a pyramid selling scheme.  Before I discuss further, it is convenient at this juncture to set out the relevant legal principles.

Relevant legal principles

10.  In general, there are three levels of different meanings of which the sting of a libel is capable, namely, (1) “a claimant has in fact committed some serious act”; (2) “there are reasonable grounds to suspect that he/she has committed such an act”; and (3) “there are grounds for investigating whether he/she has been responsible for such an act”: see Chase v News Group Newspapers [2003] EMLR 11 at §45 per Brooke LJ delivering the unanimous judgment of the English Court of Appeal consisting also of Rix and Keene LJJ.  They are often referred to as “Chase level 1”, “Chase level 2” and “Chase level 3” meanings respectively.

11.  While whether subsequent events may be relied on in support of a plea of justification depends on the nature of the libel and the nature of the subsequent event, it has been held that in respect of Chase level 2, it is a:-

“rule of general application that a defendant may not rely on matters which occurred after the date of publication complained of in order to support a plea that there were, objectively speaking, reasonable grounds for suspecting that the claimant performed the actions attributed to him/her in that publication”, “subject to a necessary gloss in appropriate cases (for example, where the circumstantial evidence to be relied upon by the defendants is compelling)”:

see Chase v News Group Newspapers, supra at §§52, 54 & 64.

12.  In respect of Chase level 1, “a plea of justification may include reliance on subsequent events if they happen within a reasonable time from the date of publication”.  The reason is obvious – “English law does not permit a claimant to recover damages in respect of an injury to a character which he/she does not possess, or ought not to possess”: see Chase, supra at §33.  These subsequent events must of course be relevant to whether the “claimant has in fact committed some serious act”.  For this purpose, as a matter of common sense, evidence of such subsequent events includes evidence of similar facts: see Gatley on Libel and Slander (12^th ed) §11.10.  For example, a person was accused of running a particular scheme bearing some unique features on Day 1.  Then on Day 15, that person was found to be running a scheme bearing the exact unique features.  In such a situation, what happened on Day 15 is evidence of similar facts, and is admissible.  On the contrary, if the person was accused of running a run-of-the-mill scheme many people had been running, then in general any post-publication evidence of that person running such a scheme is of little, if any, probative value and may be inadmissible.

13.  In this regard, I note that in Duncan and Neill on Defamation (4^th ed), footnote 3 to §12.18 thereof suggests that the cases have not delineated how far similar facts evidence of post-publication events might be admissible.  However, in my view, this is a matter of degree of the probative value of the similarities balanced against any countervailing factors such as prejudicial effect, like in criminal proceedings.  I do not think that any exact delineation would be helpful.  Each case is decided on its own facts and circumstances.

14.  Before I leave the topic of post-publication events, I should say that following the rationale of the defence of justification set out in paragraph 12 above, not concerning the state of mind of the publisher but what character the plaintiff has, any evidence of matters which took place pre-publication but were discovered only post-publication can also be relevant.

15.  Lastly, it is a well-established rule that where a person repeats a defamatory statement made by another person, generally the person is liable as if he is the author of the statement.  This rule was put by Lord Devlin in Lewis v Daily Telegraph Ltd [1964] AC 234 at 283-4, cited in Chase, supra at §39, as follows,

“...... you cannot escape liability for defamation by putting the libel behind a prefix such as ‘I have been told that ......’ or ‘It is rumoured that ......” and then asserting that it was true that you had been told or that it was in fact being rumoured. You have ...... to prove that the subject matter of the rumour was true.”

Analysis

16.  Having considered counsel’s submissions, I have no difficulty concluding that the meanings for the justification fall in Chase level 1 as contended by Ms Lau, but not Chase level 2 as contended by Mr Lui. I come to this conclusion for the following reasons:-

(1)   No “grounds for suspicion” is pleaded in paragraph 15A(1) - (3).

(2)   Reading paragraph 15A(1) - (3) in context against the Words which were not worded along the terms of “suspicion” or “grounds for suspicion”, at least paragraph 15A(1) - (2) cannot be taken to fall within Chase level 2.

17.  In respect of paragraph 15A(2), I raised the questions to both parties whether the repetition rule applies so that what the defendants have to prove are, inter alia,

(1)   there were investment plans concerning a company known as CKB168; and

(2)   CKB168 operated a pyramid selling scheme.

18.  Mr Lui reserved his position in this respect.  Ms Lau contended that what she will have to prove are simply as what are pleaded in paragraph 15A(2), namely, there were complaints about investment plans concerning CKB168 and CKB168 operating a pyramid selling scheme.  However, Ms Lau also said that she did not have the chance to consider how the repetition rule would apply here.

19.  Given that the Court of Appeal has allowed, among others, paragraph 15A(1) - (3) in as they are, and not wishing to pre-empt the trial judge to determine this issue with the benefit of full arguments at trial, I do not think it appropriate for me to express my view, since irrespective of what the defendants have to prove at trial, paragraph 15A(4)(l), as I will explain, is relevant.

20.  As mentioned above, the plea of the particular in paragraph 15A(4)(l) of the draft Amended Defence and the evidence in paragraphs 39-42 of Ng’s Witness Statement are in effect saying that there had been pyramid selling schemes involving CKB168 starting pre-publication and continuing post-publication.  They are plainly and obviously relevant to proving that CKB168 operated a pyramid selling scheme.  They are also plainly and obviously relevant to proving that there were complaints at the time of the publication, as the existence of such a scheme involving CKB168 as mentioned in the Complaint, consistent with the complaints as pleaded in paragraph 15A(2), would tend to prove the existence of such complaints.

21.  They are equally relevant even though the meanings for the justification may be taken to make specific reference to the situation at the time of the publication, as (1) most of the contents of the Complaint concern pre-publication events; and (2) in any event, the post-publication events, also in relation to the pyramid scheme in which businesses operating under the name “CKB” and “CKB168”, will shed light on whether CKB168 did operate a pyramid selling scheme as alleged, since these post-publication events set out in the Complaint were illustrations of how the scheme had been run as a whole from the time prior to the publication until the time of the filing of the Complaint.  For the sake of completeness, I add that following from this analysis, even if paragraph 15A(1) – (3) fell within Chase level 2, such evidence would still be relevant, relevant to demonstrating that at the time of publication, there did exist such a scheme involving and/or operated by CKB168 and thus there were grounds for suspicion of CKB168 operating such a pyramid selling scheme.

22.  Mr Lui contends that since at the time of the publication, the defendants did not know the matters mentioned in the Complaint, the defendants cannot rely on the same for the purpose of justification.  I disagree.  As mentioned in paragraphs 12 and 14 above, since the rationale of the defence of justification is not concerned with the state of mind of the publisher but with what character the plaintiff has, the defendants’ knowledge at the time of publication is irrelevant.  Thus, hypothetically, if at the time of the publication, CKB168 did operate the scheme or there were complaints that CKB168 did so, and if statements to that effect were found defamatory of the plaintiff, the plaintiff could not complain that his reputation was damaged, as he simply had not had the reputation in the first place because of the operation or the complaints.

23.  Lastly, I note that paragraphs 16A and 16B (concerning the defence of fair comment) of the draft Amended Defence refer to paragraph 15A(4)(l).  Mr Lui has not argued on whether post-publication events are relevant to the defence of fair comments, and thus I refrain from expressing any view on this.  In exercising my discretion, as paragraph 15A(4)(l) certainly is relevant to the defence of justification and should be allowed, I will also allow any references to paragraph 15A(4)(l).

Conclusion and order

24.  In conclusion, I find that paragraph 15A(4)(l) of the draft Amended Defence and paragraphs 39-42 of Ng’s Witness Statement are relevant.  Thus, I give leave to the defendants to file the draft Amended Defence including paragraph 15A(4)(l) and I dismiss the plaintiff’s application to strike out paragraphs 39-42 of Ng’s Witness Statement.

25.  I shall hear submissions on costs.

[Counsel’s submissions on costs]

26.  Having heard counsel’s submissions, I make the following order:-

(1)   Leave be granted to the defendants to file the draft Amended Defence including paragraph 15A(4)(l) annexed to the defendants’ summons dated 29 August 2014, with costs to the 1^st to 3^rd defendants in any event with certificate for one counsel, to be taxed, if not agreed.

(2)   The plaintiff’s summons dated 29 August 2014 to strike out paragraphs 39-42 of Ng’s Witness Statement be dismissed, with costs to the 1^st to 3^rd defendants in any event with certificate for one counsel, to be taxed, if not agreed.