KELLY CHENG KIT YIN v. DAVID JOHN KENNEDY AND ANOTHER

HCA4460/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4460 OF 2003

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J U D G M E N T

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1. I will allow the appeal.  I think it is a plain and obvious case that these three items in the Defence should be struck off.  The following is my reason.

The action herein

2. The plaintiff was formerly a Director of Wing Fai Construction Company Limited (“Wing Fai”) which has been in liquidation since 9 December 2002.  The 1^st defendant is the director of the 2^nd defendant, who was appointed as one of the joint liquidators of the company on 28 February 2003.  There was a private examination of the plaintiff pursuant to section 221 of the Companies Ordinance, Cap.52 on 24 November 2003.  

3. The defamatory action herein started in the following manner.  The plaintiff was and still is the Chairperson of the Board of Directors and Chief Executive Officer of Greater China Technology Group Ltd. 

The plaintiff alleged that on 24 November 2003, the 1^st defendant sent a letter, or caused the employees of the 2^nd defendant under his control to send a letter by fax to a number linked to a fax machine within the common office area of Greater China Technology.  Accordingly the plaintiff says that the defendants published the letter to two publishees, being the employees of Greater China Technology, and the letter is defamatory of the plaintiff.

4. Further on the next day 25 November, the said letter was sent by post to the plaintiff’s office address.  In accordance with established and common office practice in Hong Kong, including one company called China Rich Holding Ltd which is within the said Greater China Group, the letter was opened by its Human Resources Manager, and it is alleged that she was the 3^rd publishee.  The plaintiff is and was also at all material time the Chief Financial Officer and Director of China Rich.

The Defence

5. In the defence, the defendants pleaded fair comment in the publication, if there was such publication at all.  (The defendants of course denied such publication.)  Secondly they also pleaded qualified privilege.  The main defence of the defendants, however, is justification and they have included at length in their Defence all the evidence they are relying on.

6. The aforesaid three categories in the defence are now the subject matter of the striking out appeal before me.

The striking out before this court

7. The plaintiff applied to strike out the following three items of the defence :

(i)	paragraphs 62 and 63 which are in effect a plea of fair comment on a matter of public interest, on the ground that the same is frivolous, vexatious and discloses no reasonable defence;
(ii)	paragraph 64 which is a plea of qualified privilege, on the basis that the same is frivolous, vexatious and/or an abuse of process; and
(iii)	paragraphs 22, 23, 44, 54 and 58 thereof on the grounds that they are pleadings of evidence in support of the defence of justification and as such the same is oppressive, vexatious and/or embarrassing and are liable to be struck out.

I shall consider each one of them in the same order hereinbelow.

(i)  Fair comment

8. The plaintiff sought to strike out the defence of fair comment on the ground that the content of the letter being the content of the private examination could not be published according to rule 62(2) of the Companies (Winding-Up) Rules.  In fact, the rule provided that notes of the deposition of a person examined under section 221 of the Companies Ordinance shall not be filed or be open to the inspection of any creditor, contributory, or other person except the Official Receiver or liquidator, or any provisional liquidator other than the Official Receiver.

9. However Mr Horace Wong SC for the defendants, submitted that since the public has a general interest in the liquidation of Wing Fai, so there is a wider public interest, so to speak, attached to the content of the letter and therefore it is open to the defendants to plead fair comment.

10. I consider it plain and obvious that the question of public interest could not be employed in such a way.  If the defence submission is correct, then anything with public interest is open to publication to the general public, reporters of magazines and newspapers.  It is quite clear, according to rule 62(2), that it is not open to publication and there is no public interest as represented by the three alleged publishees that they should be informed of the content of the letter.  Thus, in my view, it is plain and obvious that it is not open to the defendants to plead the defence of fair comment on the ground that there is a wider public interest attached to the liquidation of Wing Fai and therefore it is extended to the letter which revealed extensively the evidence of the plaintiff in the private examination.  If the defence is right this would render rule 62(2) entirely nugatory.

(ii)  Qualified privilege

11. In respect of the defence of qualified privilege, I would start with the question of publication as stated in Pullman v. Hill & Co. [1891] 1 QB 524 (CA) at p.527 by Lord Esher MR as follows :

“If the statement is sent straight to the person of whom it is written, there is no publication of it; for you cannot publish a libel of a man to himself.  If there was no publication, the question whether the occasion was privileged does not arise.  If a letter is not communicated to any one but the person to whom it is written, there is no publication of it.” 

12. If the defence said this letter was intended for the plaintiff and they denied any publication to any of the three publishees, there is no question of publication and therefore there is no question of qualified privilege.  However when the defence pleads it in the alternative, the defence must plead that the publishees have a corresponding interest in receiving it.  In Pullman, Lopes LJ said at p.529 :

“The rule I think is this – that, when the circumstances are such as to cast on the defendant the duty of making the communication to a third party, the occasion is privileged.  So again, when he has an interest when making the communication to the third person, and the third person has a corresponding interest in receiving it.”

Further, Kay LJ said at p.530 :

“If A writes defamatory matter concerning B, and sends it straight to him, no privilege is needed.  But if A writes to B defamatory matter concerning C, then he needs privilege to protect him from liability for the libel.”

13. Thus, when the defendants wrote to the plaintiff and the defendants said they have a duty to write to the plaintiff and the plaintiff has a duty to receive the letter, then of course there is a duty to communicate, but there is no publication because it is a letter sent to the plaintiff concerning the plaintiff.  However the plaintiff says this letter was published to the three publishees.  In that case the defence must also establish that the defendants have a duty to inform these three publishees.  In any event the three publishees must also have a corresponding interest in receiving the letter.  Therefore, in failing to plead the above criteria in the defence, the question of qualified privilege does not arise.  (It might be just an incidental publication and I will come back to this kind of defence later.)  In short qualified privilege will only come into play when the defendants can establish that there was a duty on the defendants to communicate to these three publishees and they also have a corresponding interest to receive the communication.  There was no such allegation in the defence. 

14. In fact the defendants have taken the opposite position by not admitting that the letter was published to anybody else let alone the three publishees.  Therefore the defendants cannot say that the defendants have a duty to inform the plaintiff and the plaintiff has a corresponding interest to receive the letter and therefore if there is a publication to a third party, the defendants can claim qualified privilege.  That is a misconception of the legal situation.  One thing simply does not follow from the other. 

15. Now I come to the question of incidental publication. 

Mr Robert Whitehead, SC for the plaintiff, submitted that what the defendants were trying to say was that there were incidental publications to third parties. 

16. In this respect I shall start with the case of Osborn v. Thomas Boulter and Son [1930] 2 KB 226.  The headnote reads as follows :

“If a business communication is privileged, as being made on a privileged occasion, the privilege covers all incidents of the transmission and treatment of that communication which are in accordance with the reasonable and usual course of business ; and it is in accordance with the reasonable and usual course of business for a business man to dictate his business letters to a typist, even although these letters contain statements defamatory of a third person.

Pullman v. Hill & Co. [1891] 1 Q. B. 524 not followed.

Edmondson v. Birch & Co., Ld.. [1907] 1 K. B. 371 followed.

Per Scrutton L.J. : Pullman v. Hill & Co. (supra), where it was held that at the time of that decision it was not a usual and reasonable thing for a member of a business firm to dictate a letter containing defamatory statements to, and have it copied by, a clerk, was merely a decision of fact.”

Thus, the case of Pullman was not followed simply on the ground that the matrix of facts was distinguishable.

17. In the end Mr Whitehead submitted that the question of incidental publications have not been made out.  I accept his submission that as a matter of law, the following five items should be pleaded in order to establish a case of incidental publication, namely :

(i)	that there was publication to third parties;
(ii)	that the publishees were the employees of the plaintiff and not Greater China Technology nor China Rich;
(iii)	that the publication was a business communication made to the plaintiff which was incidentally read by her staff;
(iv)	that the plaintiff received the same in the ordinary course of her business in Wing Fai, as oppose to the business of Greater China Technology or China Rich; and
(v)	that the communication was made in a reasonable and usual business manner having regard to the subject matter of the communication, i.e. the liquidation of Wing Fai.

18. Two cases were cited by Mr Whitehead in support of the aforesaid contention : Roff v. British and French Chemical Manufacturing Co. [1918] 2 KB 677 and Edmondson v. Birch [1907] 1 KB 371.

19. However Mr Wong for the defence, whilst apparently did not argue to the contrary in respect of the aforesaid legal propositions, submitted that reading the Statement of Claim and the Defence as a whole, the defendants’ reliance on incidental publications has been made out. 

20. I agree with Mr Whitehead that it is not so.  It has been clearly stated by the plaintiff that she is and was the Chief Financial Officer and Director of China Rich and also the Chairperson of the Board of Directors and Chief Executive Officer of Greater China Technology Group Ltd.  It was also clearly stated that the letter was addressed to the plaintiff and that was a personal letter to her.  However the first two publishees were the employees and staff of Greater China Technology.  The third publishee, as I have said before, was the Human Resources Manager of China Rich. 

21. In paragraph 15 of the Statement of Claim, the complaint of the plaintiff was that the libelous matters complained of were communicated to employees at the plaintiff’s place of work.  That must be taken to mean the place of work of Greater China Technology and China Rich.  Further, it was pleaded that “in consequence [it] has humiliated her and lowered her in the estimation of members of her staff and generally undermined her authority within her office”.  That clearly is the office of Greater China Technology and China Rich and her staff means her staff in these two companies.  They have nothing to do with Wing Fai.

22. Therefore, the plea of incidental publication has not been made out even on the combined reading of the Statement of Claim and the defence as suggested by Mr Wong for the defence. 

23. The further question of whether the defendants could plead incidental publications by way of amendment is not a question before this court.  It has to be made by separate application with a proposed amendment.  The court cannot decide the question of whether it should grant leave to the defendants for such an amendment until and unless the court is seized of the matter with their proposed amendment.  Suffice it for me to say at this stage that the pleadings as relied on by the defendants, even by including those facts pleaded in the Statement of Claim, could not make out a case of incidental publication.  Again, to me this is plain and obvious.

(iii)  Pleading of evidence in support of justification

24. The third and the last items for striking out concerned with the defendants’ extensive pleadings in the Defence as to the evidence in support of justification.  Clearly, the defence has extensively cited the contents of the letter which in turn cited the evidence in the private examination in order to set up their case of justification.  The main complaint of the plaintiff was that the rule of pleadings clearly stated that pleadings should only plead facts and not evidence.

25. Mr Wong submitted that it would not be vexatious nor embarrassing.  If the defendants chose to pin themselves down by pleading extensively on the facts which would be relied on by them, the plaintiff should have no complaint.

26. Mr Wong also submitted that the important question to ask is “whether the allegation is truly embarrassing or in any other way is likely to impede the proper progress of the” action herein.  He further submitted that striking out should not be made “solely for the reasons of purity of pleadings as there is no real purpose for it”.  He cited paragraph 59 in the judgment of Rogers J (as he then was) in SFC v. Mandarin Resources, (CWU348/1996), unreported.

27. With respect, I entirely agree with the learned Vice-President (as he then was not).  If it is only a matter of purity of pleadings and the defendants chose to put the pleadings in such a way, it should not be a severe complaint of the plaintiff.  However, the nature of this case is quite different.  It is a defamation action and to my mind the main complaint of the plaintiff was that : “you should not publish the private examination and in citing extensively of the private investigation in the letter, you are again publishing the content of the private investigation before the trial.  The rule provided that in pleadings you should not plead the evidence but you pleaded extensively the evidence to be relied on and that is the content of the private investigation.” 

28. In my view in respect of this course adopted by the defendants, apart from offending the rules of pleadings, it also amounted to a kind of publication before trial.  It is because pleadings are open to a search by any member of the public including the press without leave, whereas affirmations and witnesses statements are not open to the search by any member of the public except parties to the action.  In that way, I think the plaintiff’s main complaint, as I have stated during the hearing, is that at this stage the evidence to be relied on by the defence should not be revealed to the public.  At the trial, of course the evidence will be revealed in open court but at that time, the plaintiff will have the right to cross-examine the defendants’ witnesses and also the right of giving evidence in support of her own case probably before the defence if she has the right and obligation to begin her case.  That will be something different.

29. Further, it is also irregular and embarrassing to the plaintiff and also oppressive to require her to plead her evidence in reply to such a defence now.

30. For the aforesaid reasons, this part of the Defence should also be struck out. 

CONCLUSION

31. I allow the plaintiff’s appeal and accordingly :

(1)	paragraphs 62 and 63 of the Defence in respect of fair comment are struck out;
(2)	paragraph 64 of the Defence in respect of qualified privilege is struck out;
(3)	paragraphs 22, 23, 44, 54 and 58 of the Defence in respect of evidence in support of justification are struck out;
(4)	the plaintiff shall file and serve her Reply to the Defence within 28 days hereof; and
(5)	costs of the appeal and before the Master be to the plaintiff and at the request of the plaintiff, to be taxed on gross sum assessment basis before a Master on a date to be fixed (with one hour estimated time reserved), if not agreed.