CHONG KWONG MAN AND ANOTHER v. CHAN WING HONG

HCA 1675/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1675 OF 2007

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D E C I S I O N

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1.  This is an inter partes application for an interlocutory injunction by the plaintiff against the defendant.  The application is supported by an affirmation of the 1st plaintiff filed on 6 August 2007.  The writ of summons, the summons and the supporting affirmation have all been served on the defendant but he has not appeared today.

2.  The 1st plaintiff said in his affirmation that he and the defendant came to know each other back in 1982 when they were both civil servants.  The 1st plaintiff left the government in 1989 and started his own business of Man Kee Engineering Company.  The defendant left the government in 1997 and started working as a taxi driver.  They together purchased a taxi licence in the same year at the price of 3.25 million.  A sum of 3.05 million was raised on the mortgage of the licence.  Each of them had to contribute $8,000 per month for payment of the mortgage as the rental of the taxi licence was insufficient for such purpose.

3.  Sometime in 1998, the defendant told the 1st plaintiff that he had difficulty in affording the $8,000 per month.  Hence, the 1st plaintiff paid $16,000 for one month and thereafter increased his contribution to $12,000 per month. 

4.  On 14 August 1998, the defendant also joined the 1st plaintiff’s company, Man Kee, as the supervisor of a department.  In about 2000, all the staff of Man Kee, including the defendant, was transferred to the 2nd plaintiff. 

5.  In about 2001, the 1st plaintiff told the defendant that he did not want to keep the taxi licence which was then a negative asset as the market value was below the outstanding mortgage loan.  He proposed to sell the taxi licence and each of them would bear half of the shortfall.  The defendant however asked the 1st plaintiff to transfer all his interests in the taxi licence to the defendant as the defendant was confident in the taxi business.  The 1st plaintiff verbally agreed to this proposal but no documentation was made to evidence the transfer as they were good friends and trusted each other.

6.  In 2003, the defendant said he could not afford paying the mortgage of the taxi licence and he wanted to file a debtor’s bankruptcy petition for himself.  He was adjudged a bankrupt on 29 July 2003.  But his employment with the 2nd plaintiff continued.

7.  After the defendant’s bankruptcy, the defendant preferred to live in Shenzhen.  The 1st plaintiff said he felt sorry for the defendant as they were good friends and he therefore volunteered to assist the defendant by buying a flat in the Shenzhen Royal Court for the defendant’s use as his residence.  The 1st plaintiff also produced some evidence showing his payments for the mortgage of the Shenzhen flat.

8.  On about 10 April 2006, the defendant tendered a one month notice of resignation to the 2nd plaintiff. 

9.  On about 29 April 2006, the defendant sent the 1st plaintiff a letter demanding $793,194 as the plaintiff’s share for the loss incurred in the buying and selling of the taxi licence.  The 1st plaintiff then reminded the defendant that he had taken up all the interests in the taxi licence in 2001.  The 1st plaintiff also offered to make an ex gratia payment to the defendant if he was in need of money.

10.  When the defendant left the 2nd plaintiff, he was paid $300,000 which included his salary at $2,322.60.  The payment was pursuant to a settlement agreement he made with the 1st and 2nd plaintiffs.  He agreed in the settlement agreement that the $300,000 was for the final settlement of all his claims against the 1st and 2nd plaintiffs and he had to vacate from the Shenzhen flat within 10 days. 

11.  However, on 4 January 2007, the defendant sent the 1st plaintiff a letter alleging that the 1st plaintiff’s conduct in his business could land him in gaol and that the 1st plaintiff had also courted the female staff of the 2nd plaintiff.  He also alleged in the letter that the 1st plaintiff owed him a lot for the eight years’ work in the 1st plaintiff’s companies.  He ended the letter by saying that he would authorise his good friend(s) to get back from the plaintiff a fair deal.

12.  On 24 July 2007, the 1st plaintiff received a further letter from the defendant which alleged that the Shenzhen flat belonged to the defendant as the plaintiff had only allowed his name to be used by the defendant to purchase the flat.  The defendant also alleged in the letter that the 1st plaintiff owed him $700,000 for the loss in the taxi licence business and at least $2 million for business profits.  The defendant also alleged that the 1st plaintiff had an affair with a lady in the employ of the 2nd plaintiff.  He demanded the 1st plaintiff to telephone him by 8 August 2007 to agree on how much the 1st plaintiff owed him, failing which he would ask his good brothers in Shenzhen and Macau to approach the 1st plaintiff for what the 1st plaintiff owed him.  Furthermore, he would fax this letter to the 1st plaintiff’s friends and customers and report his affairs with two ladies to his wife.

13.  In fact, prior to this letter, the 1st plaintiff’s elder brother and one Mr Leung, an employee of the 2nd plaintiff, had both received telephone calls from the defendant who said something similar to the contents of the letter, including the alleged affair between the 1st plaintiff and the female staff of the 2nd plaintiff.  Also on 24 July 2007, one Mr Koon telephoned that female staff of the 2nd plaintiff and implicitly referred to the alleged affair between her and the 1st plaintiff.  The transcript of the telephone conversation has been exhibited.  Koon appeared to have been talking in a threatening tone to the lady.

14.  The 1st plaintiff denied all the defendant’s allegations in his affirmation.

15.  On the basis of these matters, the 1st and the 2nd plaintiffs claim the defendant for defamation and malicious falsehood (see paras. 24-9 to 24-16 of Clerk & Lindsell on Torts, 19th edition).  They also seek an interlocutory injunction to enjoin the defendant from distributing the letters aforesaid or any other defamatory material about the plaintiffs.  They also seek a quia timet injunction to enjoin the defendant from entering the 1st plaintiff’s residence or the 2nd plaintiff’s office as the defendant had threatened to ask people to approach the 1st plaintiff for a fair deal or what the 1st plaintiff owed the defendant.

16.  I find that there is a serious question to be tried on whether the defendant is liable to the plaintiffs as claimed.  If the plaintiffs should succeed, damages will not be an adequate compensation.  In the circumstances, I allow the plaintiffs’ application so as to preserve the status quo.  I also order that the costs of this application be reserved.