ORIENTAL PRESS GROUP LTD AND ANOTHER v. NEXT MAGAZINE PUBLISHING LTD AND OTHERS

HCA 11900/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11900 OF 1995

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R U L I N G

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INTRODUCTION

1. This is the ruling on the Defendants' following applications:

(a) an application that there is "no case to answer" in respect of P1;

(b) an application that the following 2 issues should be withdrawn from the jury:

(1) the issue relating to "exemplary damages";

(2) the issue relating to "malice".

2. The above applications are made at the close of the Plaintiffs' case of a defamation action tried by me together with a bilingual jury. The alleged defamation is related to a magazine article admittedly published by the 3 Defendants in June 1995.

3. Because this article is relatively short and its contents are important to the matters raised in these applications, I propose to set it out in full. The Chinese text is as follows:

"馬社長沽清東方

東方日報社長馬程發（主席程坤之胞弟）本來持有四千二百萬股東方報業，但在本月上旬，馬社長郤分開三次，把這批股票悉數沽清，一股不留。這趟沽貨大行動雖然價錢越沽越低，但總算為馬社長套現一億四千三百萬，袋袋平安。

馬社長話晒都係東方的內幕人仕，佢沽東方的股票沽得咁狼，內中又有乜玄機呢？耐人尋味也。"

4. The Plaintiffs' certified English translation of the article is as follows:

"Publisher Ma sold all his stock of Oriental

Oriental Daily publisher Ma Ching Fat (younger brother of chairman Ching Kwan) originally held 42 million shares in Oriental Press Group Limited but in the early part of this month, publisher Ma on 3 occasions sold all of such shares not leaving one unsold. Although the price in this big sale exercise went lower and lower, the sale nevertheless realised one hundred and forty-three million for publisher Ma who pocketed the proceeds. Publisher Ma is after all an insider of Oriental, his sale of Oriental shares had been so fierce. What is the mystery behind this? It gives one much food for thought."

5. Before turning to the applications, I should state for the record that since the Defendants ask for a ruling:

(a) of "no case to answer" in respect of P1;

(b) on the withdrawal of issues from the jury,

the tests to be applied are as follows. In relation to the "no case to answer" application, the test is whether the subject article is capable of being understood by a reasonable person to refer to P1 such that the issue ought to be left to the jury to consider. In relation to the application for withdrawing issues from the jury:

(a) the proper test is whether there is sufficient evidence for the issues in question to be placed before the jury;

(b) I am to approach the application on the basis of the evidence which most favours the Plaintiffs relating to the issues in question.

6. The present applications cover 3 distinct and separate areas. I will therefore deal with them under separate headings below.

The "No Case to Answer" Application Relating to P1

7. The Plaintiffs set out the defamatory meaning they contend for in this action in paras 6(a) to (e) of the Re-Re-Re-Amended Statement of Claim ("the Statement of Claim"). The averments at paras 6(d) and (e) are relevant to the alleged defamation in respect of P1. They read:

"(d) The 1st Plaintiff had consented or connived the breach of fiduciary and statutory duties on the part of the 2nd Plaintiff by causing, allowing, permitting or conniving the 2nd Plaintiff using the said relevant insider information obtained in his privilege capacity in the course of his discharge of the aforesaid duty to his own personal advantage;

(e) the 1st Plaintiff was guilty of consenting or conniving to the 2nd Plaintiff's breach of duty and/or insider dealing within the meaning of section 34 of the Securities (Insider Dealing) Ordinance."

8. After hearing the submissions of Mr Shieh for the Defendants regarding this aspect, Mr Pow for the Plaintiffs indicates that those 2 paragraphs will be further amended so that para. 6(d) will read as follows:

"The 1st Plaintiff had consented or connived the breach of fiduciary duty and contravention of section 9 of the Securities (Insider Dealing) Ordinance on the part of the 2nd Plaintiff by causing, allowing, permitting or conniving the 2nd Plaintiff using the said relevant insider information obtained in his privilege capacity in the course of his discharge of the aforesaid duty to his own personal advantage." (underline supplied).

Paragraph 6(e) is deleted altogether.

9. I will deal with this application on the basis of the latest version of para. 6(d) of the Statement of Claim.

10. Having heard the parties and considered the evidence adduced by the Plaintiffs, I agree with Mr Shieh's submissions that even on the latest version of para. 6(d) of the Statement of Claim, the subject article is incapable of being understood by a reasonable person to refer to P1. Not only is it clear that the subject article focused on P2, it is clear that it focused merely on him.

11. Mr Pow relies, among other things, on the colourful and excessive language of the article as a reason for arguing that reasonable readers may understand it to refer to P1. With respect, I do not agree with this argument. No matter how colourful or excessive the language used in the article has been, the worst meaning of the subject article is that the article imputes that the 2nd Plaintiff:

"(a) being a director and an officer of the P1, P2 had abused his position in that he had used relevant insider information obtained in his privilege capacity in the course of discharging his duty as a director and officer of P1 to his personal advantage;

(b) the sale of P2's 42 million shares in P1 held by him was a direct result of P2:

(1) breaching his fiduciary duty as a director and officer of and owing to P1; and

(2) using the said relevant insider information obtained in his privilege capacity in the course of discharging his duty as a director and officer of P1.

(c) P2 was guilty of insider dealing within the meaning of section 9 of the Securities (Insider Dealing) Ordinance." (see para. 6(a) to (c) of the Statement of Claim).

12. To this extent, the imputations of the subject article are no different from, for example, a news report which expressly states that a chairman and/or director of a listed company has in fact been found (by the Insider Dealing Tribunal or other competent authorities) to have been an insider dealer. I do not consider that such a news report can properly be said to impute on the reputation of the listed company concerned in the manner set out in the latest version of para. 6(d) of the Statement of Claim. Indeed, I do not consider such a news report, even if it uses colourful or excessive language, can have such imputations, provided the focus is on the company's chairman and/or director.

13. In the context of this case, it is not (nor can it properly be) suggested that P1 somehow has a duty (whether statutory or otherwise) to ensure that insider dealing by P2 would not take place. The Plaintiffs' case regarding P1 is in effect that the article suggested that P1 must have known about P2's wrongful acts imputed by the article. Alternatively, it was P1's mismanagement or mal-management which enabled P2 to carry out the wrongful acts set out in paras 6(a) to (c) of the Statement of Claim. Again, with respect to Mr Pow, I do not find that the article is capable of any such imputation.

14. Mr Pow refers to Morgan v. Odhams Press Ltd [1971] 1 WLR 1239 for the proposition (and as an example) that although the publication in question expressly refers to an individual, that publication can also be defamatory of another individual: see p. 1243 thereof regarding the right to bring an action in defamation by a person and his mother when that person was expressly accused of being an illegitimate child. Mr Pow also relies on Morgan for the proposition that "ordinary sensible men" read articles with much less deliberation and concentration than lawyers or businessmen scrutinising an important document. When I concluded that the subject article is incapable of being understood to refer to P1, I have already taken this into account.

15. Mr Pow submits that although the latest version of para. 6(d) of the Statement of Claim has not pleaded such a defamatory meaning, it is open to P1 to ask the jury to find in its favour on the following meaning:

The subject article was a report that a sizeable number of P1's shares had been dumped by P2 because of P2's insider information. This would or may cause the investing public to shun or avoid P1 by not buying and/or selling P1's shares.

Mr Pow argues that this is because such a meaning is a less injurious meaning which is (in Mr Pow's words) "not remote from the events giving rise to the pleaded defamatory meaning".

16. There are a number of decisions regarding the importance of the pleaded defamatory meaning, including:

(a) Slim v. Daily Telegraph [1968] 2 Q.B. 157 at 185B to C:

"I am inclined to think that the Plaintiff is bound by his pleading - otherwise, it may prove to be nothing but a snare for the Defendant. I do not mean, of course, that the Plaintiff is strictly confined to the very shade or nuance of meaning which he has pleaded but what he sets up at the trial must come broadly within the meaning he has pleaded."

(b) Allsop v. Church of England Newspaper Ltd [1972] 2 Q.B. 161, at 167D to E:

"Those are the views of experienced petitioners both at the bar and on the bench, to which I would add my own. It is very desirable to have the Plaintiff set forth what he says is the defamatory meaning borne by the words. The reasons are: in the first place, so that the defendant should know the case which he has to meet and to decide whether to plead justification or fair comment, or to apologise: and, in the second place, so that the trial can be properly conducted.

Mr Hartley agrees that at the trial the plaintiff's counsel will suggest to the jury the meanings which he says the words bear. The judge will have to rule then and there whether the words are reasonably capable of those meanings. It is much better for those meanings to be set down beforehand, so that everybody should know where they stand and, in particular, the judge should be able to give his ruling as to the meanings."

17. I consider that Mr Pow's argument regarding the so-called "lesser" meaning is inconsistent with the principles stated in Slim and Allsop. Bearing these principles in mind, the so-called "lesser" meaning should more properly be described as a "different" meaning. This has not been pleaded and therefore should not be allowed to be left to the jury.

18. For the above reasons, I will decide in the Defendants' favour over this point.

The Application to Withdraw "Exemplary Damages"

19. The claim for exemplary damages is set out in para. 9 of the Statement of Claim. Para. 9(d) thereof reads:-

"The court will be asked to infer that the 1st-3rd Defendants published the said words in the knowledge that they were libellous and/or with a reckless disregard as to whether or not they were libellous. And having established that the prospect of material advantage to themselves by reason of their publication outweighed the prospect of material lost. Further, the court will be asked to infer that the said words were published with a view to injuring the 1st and 2nd Plaintiffs, and the 1st Plaintiff's trade and business reputation and thus to injure Eastweek's reputation and image, and to adversely affect Eastweek's circulation and boost that of the Next Magazine."

20. The first limb of Mr Shieh's argument is that there is no evidence adduced by the Plaintiffs for this issue to be left to the jury. He contends that it is insufficient for the Plaintiffs merely to prove:

(a) the Defendants were motivated by a desire to injure or ruin the Plaintiffs; or

(b) the Defendants were engaged in an activity aimed at profit.

In this connection, he refers to Gatley on Libel & Slander (1998) 9th Ed., para. 9.17 which states:-

"The fact that the Defendant is engaged in an activity aimed at profit ... does not of itself justify an award of exemplary damages, there must be something more specific than that; but it is not necessary that there should have been a detailed calculation. There must be something in the nature of what is described in one direction approved by the Court of Appeal: 'Well, it will help the circulation of our newspaper, he may sue, he may not. If he does not so much the better. If he does we will try to settle and get out as quickly as we can. If we cannot do that and it goes to court we still think that the total costs to us, adding everything, damages ... and the legal costs, all the lot, will make it worth the gain for us to publish it. So we will go ahead.'"

21. Mr Pow responded to this argument as follows:-

(a) there is sufficient evidence that the Defendants are and were P1's keen competitors and rivalries;

(b) there is also sufficient evidence that there was an intention on the part of the Defendants to injure the reputation of P1 and/or its director(s). In connection with this point, he refers to the last sentence of para. 9(d) of the Statement of Claim.

Even with these in mind (and even assuming that Mr Pow is correct), I do not find that there is evidence that the Defendants have weighted the possible loss against the possible gain to warrant this issue to be left to the jury. The legal requirement that there must be a weighing exercise by the Defendants means that there must be evidence that they must have considered that the wrongful act is (but for the award of exemplary damages) still advantageous even after a verdict in the Plaintiffs' favour has been returned. A mere intention to injure is different because the injury to the Plaintiffs' reputation and/or business is (and continues to be) suffered by the Plaintiffs only before such a verdict is returned. This is because, in theory at least, damages awarded for defamation are intended to fully compensate the Plaintiffs for their loss.

22. I also agree with the second limb of Mr Shieh's submissions on this point. He argues that the settled principle relating to exemplary damages is that:

"An award of exemplary damages where a number of Defendants is sued in respect of the same publication should reflect only the lowest figure for which any of them can be held liable. 'The jury ... must consider each defendant separately. If any one of the defendants does not deserve punishment or if the compensatory damages are in themselves sufficient punishment for anyone of the defendants, then they must not make any addition to the compensatory damages. If each of the defendants deserves more punishment than is involved in payment of the compensatory damages, then they must determine which deserves the least punishment and only add to the compensatory damages such additional sum as the Defendant ought to pay by way of punishment.' It may therefore be important that the Plaintiff does not cast the net of his claim too widely.": see Gatley, para. 9.24

The authority for such a principle also comes from Broome v. Cassell [1972] A.C. 1027 at pp. 1063E to G, 1089G to 1090F, 1105D to G, 1118G to H, 1122A to B and 1134G to 1135A.

23. Mr Shieh states that it is not the Plaintiffs' case that D3, the printer of the article, should be liable for exemplary damages. In such circumstances (Mr Shieh argues) even if I were to leave this issue to the jury, I am bound in law to direct them not to make any award for this type of damages.

24. Mr Pow frankly does not dispute the strength of the principle propounded in these authoritative sources nor does he argue that D3 should be liable for exemplary damages. However, he asks me in effect to ignore the principle and depart from the practice of directing the jury to assess one sum for the 3 Defendants in this case.

25. I agree with Mr Shieh's reply submissions that the above principle reflects a long-standing practice at common law dating back a long time. It is both too late to depart from the practice and also inappropriate for me as a judge of first instance to do so: see OTB v. Coopers & Lybrand [1991] 1 HKLR 177 at p. 182E.

26. Furthermore, as this long-standing practice ought to be known to litigants (especially legally represented litigants), it could have been overcome by taking the appropriate procedural steps. I therefore also agree with Mr Shieh that the justice of the case does not require this court to depart from the practice.

27. For the above reasons, I will also rule in the Defendants' favour over this point.

The Application to Withdraw "Malice"

28. The Plaintiffs' averments regarding the Defendants' "malice" can be found in para. 9 of the Statement of Claim and para. 2(2) of the Re-Re-Re-Amended Reply ("the Reply"). In essence, the following matters are relied upon:-

(a) the affiliated companies of D1 and D2 are and were keen competitors and rivalries of the affiliated companies of P1;

(b) the existence of numerous court actions between the 2 groups;

(c) "Next" Magazine, Apple Daily and other publications are and were "sister" publications;

(d) the editorial management of the said publications held regular joint meetings every month;

(e) the lack of honest belief as to the truth of the facts stated in the subject article or the correctness/ fairness of the comment;

(f) it can be inferred that the Defendants intended to harm/injure the Plaintiffs.

29. Mr Shieh accepts that in approaching this part of the application, I should assume that the Plaintiffs have been able to establish the defamatory meanings pleaded in para. 6 of the Statement of Claim. Further, I should consider the evidence most favourable to the Plaintiffs over this issue.

30. To summarize Mr Shieh's arguments, he contends that each of the matters relied upon by the Plaintiffs in support of the "malice" issue is as consistent with the presence of malice as with its absence. In particular, in relation to the number of legal actions between the 2 groups; he argues that this is entirely irrelevant to the question of "malice". There are 3 possible conclusions which the jury may reach as regards this matter:-

(a) these legal actions do not show any "malice" on the part of the Defendants;

(b) these legal actions show that the Defendants' group has on other occasions defamed the Plaintiffs' group;

(c) these legal actions show that there has been ill-will, ill-feeling or hatred between the 2 groups.

The conclusion at (b) above may not be a proper one to be reached by the jury in the absence of proper or sufficient materials enabling them to do so. This, however, can be taken care of by a proper direction being given asking the jury not to reach such a conclusion. Mr Shieh contends that the conclusion at (c) above cannot properly be made in relation to D1 or D2 because the number of actions commenced by their group against the Plaintiffs' group is small and far less than that commenced by the Plaintiffs' group. Contrary to his contention, the conclusion at (c) above is not necessarily dependent upon or reflected by the number of legal actions instituted by 1 group against the other. If ill-will, ill-feeling or hatred did exist between them, this can just as well be reflected by the commencement of legal actions (well founded or not) as by the publication of adverse article.

31. Further, I do not agree with Mr Shieh's approach which in effect is to analyse each of the matters relied upon by the Plaintiffs' separately. As pointed out in McKenzie v. Mergen Holdings Pty Ltd [1990] 20 NSWLR 42 at p. 51D to E:-

"Proof of malice involves, in almost every case, the drawing of inferences from proven facts. What the plaintiff seeks to persuade the jury is that because of the defendant's conduct prior to and following the publication of the defamatory statement or, in some cases, because of the exaggerated terms of the defamatory statement itself, or a combination of both, the inference should be drawn that the defendant was actuated by malice in defaming the plaintiff. The case is not unlike one in which a jury is invited to infer negligence from purely circumstantial evidence..."

A matter may have a neutral appearance when considered on its own. However, a different complexion may be cast on the matter if a sufficient number of such matters are considered together.

32. For those reasons, I disagree with Mr Shieh's contention that the Plaintiffs are only able to adduce a scintilla of evidence which is not reasonably capable of supporting an inference of "malice". I also consider that the present case is therefore different from the cases referred to by Mr Shieh, namely:-

(a) Godfrey v. Henderson (1944) 44 SR (NSW) 337, at 454;

(b) Walton v. Deaton (1930) 31 SR (NSW) 393, at 399-400;

(c) McKenzie v. Mergen Holdings Pty Ltd (1990) 20 NSWLR 42, at 47F to 52E.

I rather agree with Mr Pow's submissions over this point.

33. For the above reasons, I will rule in the Plaintiffs' favour regarding this issue.