CHANG WA SHAN v. CHAN CHUN CHUEN

HCMP1101/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1101 OF 2009

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BETWEEN

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D E C I S I O N

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Introduction

1.  The applicant is a well-known figure in the securities and property investment industry. In about 1985 or 1986, he came to know Mr Gilbert Leung Kam Ho (“Mr Leung”), a qualified land surveyor who had experience in acting as agent for the acquisition and development of land properties in Hong Kong. Sharing a common business interest, they had since become good friends and close business associates.

2.  In the early 1990s, Mr Leung was elected a legislative councilor. One day, he arranged a lunch meeting with the applicant at the Legislative Council Building. Mr Chan Chun Chung (“Mr Chan”), whom the applicant had not seen before, also joined. Mr Leung introduced Mr Chan as his feng shui master. That was the only occasion when the applicant met with Mr Chan.

3.  As widely reported in the media, Mr Chan and Chinachem Charitable Foundation Limited (“CCFL”) were recently embroiled in the fight over the estate of the late Ms Nina Kung in HCAP8/2007 (“the Probate Action”).

4.  One of the witnesses called by CCFL at the trial of the Probate Action was Mr Leung. On 21 May 2009, Mr Ian Mill, QC, representing Mr Chan, showed a document prepared by Mr Leung (“the Document”) for the purpose of attacking his independence as CCFL’s witness and credibility. The Document was an investment proposal for a land development project in Tai Po, which Mr Leung had shown to potential investors. Mr Chan’s case is that it came into the possession of his legal representatives shortly before the hearing on that day. Lam J, the trial judge, asked Mr Mill as to the provenance of the Document. Mr Mill replied :

“Yes, I can, my Lord.  The individual who provided it to us is a Mr Edmund Tsang [a reference to the applicant].  He says that he was given that by Mr Gilbert Leung.”(“Mr Mill’s Address”)

5.  What Mr Mill told Lam J added further fuel to the sensational trial. On the following day, it was widely reported in the newspapers that Mr Mill had submitted in open court during his cross-examination of Mr Leung that the applicant had provided a copy of the Document and other information to Mr Chan and his legal representatives to discredit Mr Leung. The applicant, who did not provide the Document or indeed any information as alleged and in fact does not have any interest whatsoever in any of the matters in or the outcome of the Probate Action at all, was taken aback and extremely upset by the news reports. He received telephone calls from family members, business associates, clients of his security brokerage firm and friends regarding his alleged involvement in the Probate Action. They asked the applicant about the accuracy of what had been reported. Some of them queried why he sided with Mr Chan. Worse still, some accused him as “二五仔”, that is, “traitor” or “backstabber”.

6.  The applicant was most disturbed. He considered that he had been defamed. He wanted to take action against the true informant. His solicitors wrote to Mr Chan’s, asking them to disclose his/her identity. The request was, however, refused. The applicant then took out this application for a Norwich Pharmacal order compelling Mr Chan to disclose his/her identity and the contents of his/her communication with Mr Chan or his legal representatives to the effect that it was the applicant who provided the Document.

Mr Chan’s stance

7.  Mr Chan readily accepted that the applicant did not provide the Document to his legal representatives. Somebody else did. As to why Mr Mill told Lam J that it was the applicant who provided the Document, Mr Midgley of Haldanes, solicitors acting for Mr Chan in the Probate Action had this to say :

“4.  On day 9 of the trial in High Court Action no. 8 of 2007 between Chinachem Charitable Foundation Limited and the Respondent, who is the 1^st Defendant in that action, Mr Ian Mill Q.C. as the 1^st Defendant’s Counsel was asked by the trial judge, the Honourable Mr Justice Lam, as to the provenance of a document in Chinese, a copy of which is exhibited to this Affidavit marked ‘JNM-1’ (‘the document’).  Mr Mill replied as follows : ‘The individual who provided it to us is a Mr Edmund Tsang.  He says he was given that by Mr Gilbert Leung’.  The learned judge then asked Mr Mill about his knowledge of Mr Tsang.  Mr Mill replied that, as he understood it, Mr Leung was trying to interest Mr Tsang in an investment, but that this was the extent of his understanding.  (As to the spelling of the name ‘Tsang’, Mr Mill informs me that, although this does not appear in the transcript, he recalls Mr Leung giving this spelling of the surname to the transcriber when asked for it.  That is how the name appears in the transcript of the proceedings for that day).

5.  No reference at Court was made to any other information having been provided to the Respondent or his lawyers by Mr Tsang.

6.  I understand that the Applicant contends in these proceedings that the reference to Edmund Tsang was a reference to him.

7.  The information that the document had been provided by Mr Tsang was not information provided to the Respondent’s legal team by the Respondent.  It was provided by a third party.  Moreover, it was provided directly to the Respondent’s legal team and not to the Respondent himself.  The same applies to the document itself.  I can also confirm that the document was put to Mr Leung without any advice or instructions having being sought about it from the Respondent.  I should explain that the document was used in the course of cross-examination of Mr Leung as to his credit.  Neither the document nor the questions relating to the transaction with which the document was concerned were relevant to any issue in the action.  Accordingly, the document had not been disclosed in the action and was merely shown to the witness when he was giving evidence.

8.  The circumstances in which Mr Mill came to understand that the document had been provided by Mr Tsang are as follows. On the day in question, I spoke on my mobile telephone shortly before Court to a representative of the persons who had provided us with certain information concerning Mr Leung. To the best of my recollection, I asked the representative where the document had come from. The representative responded that it was a Mr Edmund Tsang. Unfortunately, due to the haste in taking instructions, I assumed and did not check that what I was being told was that Mr Tsang (whose name had been unknown to me) was not only the person to whom Mr Leung had given the document but also the person who had made it available to us. This was the basis upon which Mr Mill addressed the Court in the way that he did.

9.  I have subsequently talked to the representative again. In fact, the representative (whose mother tongue is not English) had understood my question to have been simply as to the identity of the person to whom Mr Gilbert Leung had given the document with which we had been provided. Further, so the representative has now told me, whereas it was correct that Mr Leung had handed the document to Mr Tsang, it is not correct that it was Mr Tsang who had provided the document to the Respondent’s legal team. It therefore appears that the identification of Mr Tsang in Court as the provider of the document to the Respondent’s legal team was incorrect, as the result of an unfortunate but innocent mistake.

10.  I should add that Mr Leung was asked in cross-examination about Mr Tsang. He confirmed that he had indeed spoken to Mr Tsang in the middle of 2007 about the acquisition or potential development of the plots of land referred to in the document. He also confirmed that he had prepared the document in order to encourage investors in the land and in its development and that as a development consultant he would normally provide information to clients. However, he was unable to recall whether he had given the document to Mr Tsang.

11.  The information which was volunteered to the Court in answer to the Judge’s question contained in part, as explained above, an innocent error and the Respondent has asked me to extend his apologies both to Mr Tsang and to the Court for the fact that this occurred (although of course he bears no personal culpability in relation thereto). Mr Mill and I extend the same apologies.”

8.  Mr Chan thought that the informant had rendered assistance to him in connection with the Probate Action on the understanding and in the expectation that his or her involvement would be kept confidential.  Mr Chan considered that it is incumbent on him to protect that confidentiality so far as he reasonably could.  He has therefore not been willing to provide the name voluntarily.  He should only do so if the court so orders, having had the relevant issues properly ventilated according to the applicable principles.

9.  To those principles I now turn.

The law

10.  The applicable legal principles are well-settled.  They were admirably summarized by Ma J (as he then was) in A Co. v B Co. [2002] 3 HKLRD 111 at paras. 10-13, cited by this court in Cinepoly Records Co. Ltd & Others v Hong Kong Broadband Network Ltd & Others [2006] 1 HKLRD 255, at pp. 261H-264e thus :

“The Norwich Pharmacal principles

17.  Norwich Pharamacal discovery as an equitable relief was firmly established by the House of Lords in Norwich Pharmacal Co. & Others v. Customs and Excise Commissioners [1974] 4 AC 133.  It has since been consistently applied in Hong Kong.

18.  A helpful summary of the principles can be found in A Co. v. C Co. [2002] 3 HKLRD 111 at pp.116F–118C where Ma J (as he then was) said :

‘10. Where innocent parties are caught up or have become involved in the tortious or wrongful activities of others, thus facilitating the perpetration(or continuation) of such activities, justice may require (and therefore the court may order) that such innocent persons come under a duty to assist the victim of the tort or wrongful activities, by the provision of full information even though such innocent persons cannot be shown to incur any personal liability at that stage.  The foundation of the court’s jurisdiction here is its equitable jurisdiction.  The court’s ability to make such orders was confirmed by the House of Lord’s decision in Norwich Pharmacal Co v Customs and Exercise Commissioners [1974] AC 133: see in particular the speech of Lord Ried at pp. 173F-175E.  The principles and approach established by that decision have consistently been applied in Hong Kong.

11.  The jurisdiction is a wide one.  It is not restricted, as was at one time thought, to the disclosure of the names of wrongdoers only.  In particular, where a plaintiff wishes to investigate the passage of monies in and out of bank accounts in aid of a tracing claim, discovery can be ordered of a bank’s books and documents; see Bankers Trust Co v. Shapira [1980] 1 WLR 1274 at pp.1281F-1282F.

12.  Though founded ultimately on notions of justice, nevertheless, it is important to emphasise the extraordinary nature of this relief because it is not a usual order and is not one that a court would lightly grant in the absence of powerful factors. I emphasis the following characteristics of this type of order:

(1)  It is made against an innocent party whose only involvement is to become mixed up in the tortious or wrongful activities of others.  There is, at that stage, no evidence of any wrongdoing on the part of the innocent party.

(2)  Instead, whatever wrongdoing there is, exists only on the part of a person or persons against whom no relief may be sought at that stage and indeed against whom there is probably insufficient evidence to found an action.  In order words, this person or these persons will most probably not be before the court and would not be able to answer what are often very serious allegations made against them.

(3)  Usually, there will, moreover, exist a legal relationship between the innocent person against whom a discovery order is sought and the alleged wrongdoer and this relationship may involve strict duties to be observed on the innocent party’s part.  The present case offers what is a common scenario: the innocent defendant is a bank and the alleged wrongdoers its customers.  In this situation, any discovery to be made by the innocent party may well, apart from a court order, expose that innocent party to liability, both civil and possibly even criminal.  At the very least, a breach of confidentiality is involved.

(4)  The court, accordingly, in applications for Norwich Pharmacal relief must, in its discretion, balance the competing interest of the victim of the alleged wrongdoing and an innocent party caught up in the wrongdoing.

13.  Given these characteristics as I have outlined, such orders are therefore not lightly made as I have said. In my view, it is essential for the court to bear the following in mind before a Norwich Pharmacal order is made:

(1)  There must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place.  And where fraud or similar serious allegations are made, the degree of proof must correspondingly be high: see Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 at p.586C–H.  All the more so when the alleged wrongdoer is not and will not likely be before the court.

(2)  It must also be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff.  Where, as in the present case, the plaintiff is likely to make a tracing claim, there must be a serious possibility that the discovery sought must either allow the plaintiff to preserve what may well be his assets or realistically lead to the discovery of such assets: see Arab Monetary Fund v. Hashim (No. 5) [1992] 2 ALL ER 911 at pp. 916D–E, 918J–919A.

(3)  The discovery sought must not be unduly wide.  There is no entitlement to general discovery (by general discovery is meant discovery in the Compagnie Financière et Commerciale due Pacifique v. Peruvian Guano Co (1882-83) LR 11 QBD 55 sense): see Arab Monetary Fung v Hashim (No. 5) [1992] 2 ALL ER 911 at pp.918D-E, 919H.  It follows therefore that not only must any order be specific, it must also be restricted to those or those classes of documents that are necessary to enable the plaintiff to preserve or discover assets.  This is not to say that discovery orders cannot be wide; what is important is that the discovery, whether wide or narrow, is necessary.’

19.  In my view, the application of the above principles requires an applicant for Norwich Pharmacal discovery of the identity of an alleged wrongdoer to first establish the following essential elements :

(1)  Serious tortious or wrongful activities have been committed.

(2)  The alleged wrongdoer is a person whom the applicant bona fide believes to be infringing his rights in the sense that he can reasonably be assumed to be the wrongdoer vis-à-vis the applicant : see Norwich Pharamacal, supra, per Lord Kilbrandon at p.205G–H and Lord Morris at p.179B–C.

(3)  The innocent party, against whom discovery is sought, has caught up or has become involved in such activities, thus facilitating the perpetration or continuation of the same.

If the applicant fails to establish any of these elements, his application must fail at this stage.

20.  After establishing the above elements, the applicant needs to go further and demonstrate that it is just and convenient in all the circumstances of the case for the court to exercise its discretion to grant the relief.  The factors that the court will take into account may vary from case to case.  For example, the court may consider if the innocent party is the only practical source of information : see Norwich Pharmacal, supra, per Lord Kilbrandon at p.205H.  If the innocent party is subject to a duty of confidentiality, imposed by contract or otherwise, not to disclose the information, the court will bear in mind the competing interests in ordering or refusing disclosure.”

11.  I would add one more point.  The courts have extended the application of the basic principles, Norwich Pharmacal relief being a flexible remedy capable of adaptation to new circumstances : Mitsui & Co. Ltd v Nexen Petroleum UK Ltd [2005] 3 All ER 511, per Lightman J at paras. 19 and 20 at pp. 517f-j.  Its application is no longer confined to cases (like the Norwich Pharmacal case itself) where the applicant had been able to demonstrate that a wrong had been committed.  It may be invoked if the applicant is able to show a prime facie case of a wrong having been committed in the sense that the case must not be hopeless of just “trumped up for the sake of the application” : see Attorney General v Wellcome Foundation Ltd [1992] 1 HKC 158, per Cons VP at p. 164H.  Or where the applicant has shown reasonable grounds to support his belief that a wrong had been committed against him : P v T Ltd [1997] 1 WLR 1309, per Sir Richard Scott VC at pp. 1318c-1319A.

12.  Further, it should be noted that in P v T Ltd where the applicant’s complaint was based on libel, the matters ordered to be disclosed included not only the identity of the wrongdoer but also the precise details of the allegations made by him : see p. 1315D.

Discussion

13.  With these principles in mind, I first consider if the applicant has discharged the requisite burden to enable the court to exercise the jurisdiction.

14.  Generally speaking, a person committed defamation against another when he published matters, usually words, of the latter conveying a defamatory imputation, that is, an imputation that tends to harm his reputation so as to lower him in the estimation of right-thinking members of society generally. See Gatley on Libel and Slander, 11^th Edn, para. 2.7 at p. 46.

15.  For present purposes, it will be sufficient if the applicant can show a prima facie case of or reasonable basis for claiming that defamation had been committed against him arising from Mr Mill’s Address and the news reports based on it. Three requirements need to be established :

(1)  the words complained of referred to the applicant;

(2)  the words complained of are defamatory; and

(3)  the informant published the words complained of.

16.  First, on reference, it is accepted by Mr Chan, and rightly so in my view, that Mr Mill’s Address and the ensuing news reports did refer to the applicant.

17.  Second, on defamatory meaning, Mr Mill’s Address and the ensuing news reports plainly carried the defamatory meanings as contended by the applicant.

18.  Third, on publication, when the representative of the informant had the telephone conversation with Mr Midgley as to who provided the Document, it must be reasonably obvious to both of them that Lam J would inquire as to the source of the Document, which was produced for the first time in the course of cross-examination of Mr Leung to discredit him. It follows that it must be within their reasonable contemplation that the identity of the person who provided the Document had to be revealed to the court and, given the immense publicity the Probate Action had attracted, would be widely reported in the press. If the representative did tell Mr Midgley that it was the applicant who provided the Document, the informant, who acted through the representative, would be liable for Mr Mill’s Address and the subsequent publications in the press. Even if, as Mr Midgley now said, the representative had misunderstood him, and what he meant was that the Document was given by Mr Leung to the applicant, it is reasonably arguable that he must be intending Mr Midgley to infer that the Document came from the applicant. Arguably, the informant would still be liable for Mr Mill’s Address and the subsequent publications in the press.

19.  Mr Harris, SC, for Mr Chan argued that what the applicant complained of is slander, which is not actionable in the absence of special damage. But as I have endeavourered to demonstrate, I think the applicant has a prima facie case or reasonable grounds to support his claims based on libel arising from the news reports on Mr Mill’s Address to Lam J.

20.  For the above reasons, I am satisfied that the applicant has discharged the initial burden.

21.  I next consider if it is just and covenant to order disclosure. Mr Harris submitted that it is not by taking essentially two points.

22.  He first submitted the identity of the informant is protected by legal professional privilege. However, even if that is the case, as rightly submitted by Mr Tong, SC, for the applicant, the privilege must have been waived when Mr Mill revealed, albeit mistakenly, to Lam J in open court who provided the Document. It does not lie in Mr Chan’s mouth now to say the identity of the true informant should be kept confidential by privilege.

23.  Mr Harris next submitted that no real or substantial benefit would be gained by ordering disclosure because Mr Chan had offered to issue a joint statement with the applicant to clarify the mistake in Mr Mill’s Address and the news reports. I disagree. The applicant is quite entitled to sue the informant who had harmed his reputation. The proposed joint statement with Mr Chan, a supposedly innocent person who had unwittingly become involved in the tortuous act, is simply insufficient.

24.  In my view, in the circumstances of the present case, justice demands that a disclosure order should be made to arm the applicant with the information necessary for the bringing of an action of defamation against the true informant.

Orders

25.  I will make an order in terms of paragraphs 1 to 3 of the originating summons dated 12 June 2009.

26.  On costs, the normal order is that the applicant should pay the innocent party costs, including the costs of providing the information.

27.  Mr Tong submitted that while the applicant should pay the costs of taking out the originating summons, compliance with the disclosure order and the first hearing on 30 June 2009, he should not be held liable for the costs thereafter. Mr Chan, counsel complained, had acted unreasonably in opposing the application after 30 June 2009. I agree. The reasons advanced in both Mr Midgley’s affidavits and Mr Harris’s submissions are plainly untenable. Mr Chan should have provided the information sought after 30 June 2009. In the circumstances, he should not be entitled to costs thereafter. I will order the plaintiff to pay Mr Chan costs of the action up to and inclusive of the hearing of 30 June 2009 and the costs of complying with the disclosure order on an indemnity basis, to be taxed if not agreed.