BEIJING TELEVISION v. BRIGHTEC LTD. AND OTHERS

CACV 314/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 314 OF 1998

(ON APPEAL FROM HCA NO. 9084 OF 1997)

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J U D G M E N T

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Liu, JA:

1. The plaintiff (TV Station) is a television station. It sues the 1st defendant as the publisher, the 2nd defendant as the printer and the 3rd defendant as the distributor of "The Front-Line Magazine", a monthly magazine having a circulation in Hong Kong and elsewhere. In its issue of June 1995, an article (the article) appeared under the section "China Report". The article was entitled "Big Character Posters Appearing in Four Universities in Beijing" and its author was "The Front-Line Magazine special reporter Chang Chuan". The article contained, inter alia, the following words under a heading conspicuously referable to the TV Station. The translation of the article is not in dispute, which reads:

"ADULTEROUS SCANDAL COMING OUT OF BEIJING TELEVISION

..... the Beijing Television also met with bad luck ......the Television's popular lady program-in-charge Du Yu and the Deputy Minister of Broadcast and Television, head of Central People's Broadcasting Station Tung De Rong had their adulterous affair exposed, and they were caught at the scene during their adulterous acts in bed. This scandal caught the leaders of Beijing Television with great embarrassment."

2. In the Amended Statement of Claim, the Television Station as plaintiff pleads:

"7. The Libellous Article was widely published to members of the public who were readers of the Magazine.

8. The words complained of referred and were understood to refer to the Plaintiff.

PARTICULARS

(a) Express references were made to the Plaintiff in the Article.

(b) Du Yu was at the material time a highly popular female anchor person in charge of a Chinese-language programme called 'Open the Door of Your Heart' ('the Programme') which was broadcast by the Plaintiff to a wide audience in Beijing and other parts of China.

9. In their natural and ordinary meaning, or by way of inference, the words complained of meant and were understood to mean that:-

(1) The Plaintiff was struck or smeared by an adulterous scandal involving a highly popular female anchor person, Du Yu, and Tung De Rong, Deputy Minister of Broadcast and Television and head of Central People's Broadcasting Station.

(2) The said scandal was uncovered and exposed in a most disgraceful manner when Du Yu and Tung De Rong were caught in adulterous acts in bed together.

(3) Such scandal and/or the manner in which it was exposed caused extreme embarrassment to the Plaintiff and those in charge of its television station.

10. Further or alternatively, by way of innuendo the words complained of meant or were understood to mean that:

(1) The Plaintiff broadcast a highly popular television programme hosted by Du Yu (the Programme's popular female anchor person) about personal, family and emotional life and relationships, the success and continued popularity of which depended on the moral integrity and healthy image of Du Yu.

(2) The latters were shattered when an adulterous scandal concerning Du Yu and Tung De Rong, a high-ranking official of the Ministry and the Central People's Broadcasting Station, was uncovered and exposed in a most disgraceful manner, namely, when they were caught in adulterous acts in bed together.

(3) Such a scandal and/or the manner in which it was exposed caused extreme embarrassment to the Plaintiff and gravely undermined its reputation and credibility and those of the Programme.

PARTICULARS PURSUANT TO RHC ORDER 82 RULE 3(1)

(a) At the material times, the Plaintiff broadcast the Programme which was hosted by Du Yu (the Programme's female anchor person) comprising live discussions on personal, family and emotional life and relationships and offering views and advice on healthy ways of resolving problems in these areas, the success and continued popularity of which depended on Du Yu's moral integrity and healthy image.

(b) The Programme enjoyed a wide viewership and coverage in Beijing and other parts of China.

(c) At the material times, Du Yu was a highly popular anchor person in charge of the Programme.

(d) The Plaintiff is and was at all material times a state-owned commercial enterprise in China.

(e) Tung De Rong was a high-ranking official of the Ministry.

(f) Adultery was viewed as immoral and socially unacceptable conduct in China, particularly where this involved a high-ranking government official.

11. The Defendants maliciously published, printed and circulated or caused to be published, printed and circulated the words complained of and the same were calculated to, and did injure and disparage the business reputation and goodwill of the Plaintiff and the reputation and goodwill of the Programme.

12. The words complained of were wholly untrue and constituted serious libel and seditious defamation against the Plaintiff and opened the Plaintiff to public ridicule, odium and contempt.

13. As a result of the publication, printing and circulation of the Libellous Article and the words complained of, the Plaintiff has suffered serious loss of reputation and goodwill and has suffered financial losses by way of special damages.

PARTICULARS OF SPECIAL DAMAGES

(a) After publication of the Libellous Article, the Plaintiff as well as Miss Du Yu received numerous enquiries and reprimand from the public, both from China and overseas, regarding the matters contained in the Libellous Article, and such reaction demonstrated grave discontent and disapproval against Miss Du Yu and the Plaintiff on the basis of the contents of the Libellous Article.

(b) As a result of great public pressure and psychological burden suffered by Miss Du Yu as a result of the Libellous Article, Miss Du Yu was unable to carry on conducting the Programme and the Plaintiff had no alternative but to stop the Programme.

(c) By reason of the aforesaid, the advertisers which previously placed advertisements with the Plaintiff as a result of the Programme and commercial sponsors of the Programme had withdrawn or discontinued their advertisement and sponsorship, wherefor the reputation and image of the Plaintiff were adversely affected and its loss in revenue from advertisement and business goodwill is estimated to exceed RMB5,000,000.

(d) In view of the hitherto great success of the Programme, the Plaintiff had intended to expand the scope and scale of the same and to arrange for Miss Du Yu to take charge of other television programmes which were expected to attract substantial revenue through sponsorships and placing of advertisements. However, because of the adverse publicity caused by the Libellous Article, the said proposals had to be revoked and the Plaintiff thereby suffered further losses in revenue and goodwill.

(e) The public good image and esteem of the Plaintiff was injured by the Libellous Article and as a result of the publication of the Libellous Article, other advertisers have also withdrawn their sponsorship of other programmes of the Plaintiff."

3. The printer, the 2nd defendant, applied to a Master to strike out the TV Station's Amended Statement of Claim for disclosing no reasonable cause of action. The printer failed. Its appeal to Barnett, J. was also unsuccessful, and from the decision of the judge, the printer now appeals to this court.

4. Mr Bleach, leading counsel for the printer, is not mounting a piecemeal attack on the Amended Statement of Claim. Counsel's determined efforts converse upon the striking out of the plaintiff's pleading in its entirety, which is said to have disclosed no sustainable cause of action. Counsel submits that the allegedly offending article was published of or concerning merely an employee of the TV Station. Counsel implores this court to bring to bear the trite law that what is written about an employee of a company or its product cannot be libellous of the company itself unless what is written reflects on the company in its way of business. See The Empire Typesetting Machine Company of New York v. Linotype Company, (1898) 79 LT 8; D&L Caterers Limited and Jackson v. D'Ajou, [1945] 1 KB 364 at p. 366, per Lord Goddard. But of course, a libellous statement published of or concerning a director or officer of a company "may in many cases reflect also upon the company itself and whether it may or does must depend upon the part that director or officer is alleged to have played in the operations of the company and upon the extent to which the one is identified with or considered to be the alter ego of the other." Bargold Pty Limited v. Mirror Newspapers Limited & Another, [1981] 1 NSWLR 9; Gatley on Libel and Slander, 9th edn p. 183 paragraph 8.17. A defamatory statement of or concerning a corporation's employee or officer would not generally reflect in the way of its business unless the allegation made is one imputing dishonesty, impropriety or inefficiency to its under-supervised staff or calling in question the manner in which the corporation affairs are said to have been conducted by them. Allegations such as those implying neglect, mismanagement, corrupt practices, credit squeeze, insolvency, albeit published of or concerning an employee or officer of a corporation, would also likely damage its trading or corporate reputation. The same principle applies to what is published about the goods which a corporation manufactures or in which it deals. The test is whether the statement is such as would import some unwholesome inadequacy in the conduct by a company of its affairs or business. I have endeavoured to summarise broadly the position without making any reference to counsel's extensive citation of authorities. I would accept Mr Bleach's submission that subject to what I am about to say, there is nothing in the article and the pleaded circumstances to reflect in the business of the TV Station, but this appeal does not rest on this narrow contention.

5. In paragraph 8 of the Amended Statement of Claim, it is, inter alia, alleged that the words in the article referred to the TV Station. The TV Station relies on express reference to it made in the title of the article and, twice again, in its contents. The title of the article does read that an "Adulterous Scandal Coming Out of Beijing Television". The title itself is perhaps not unambiguous but is, nevertheless, reasonably capable of an innocent as well as a libellous meaning adverse to the TV Station itself. What comes next is a jury question. See Gatley on Libel and Slander, 9th edn p. 88 paragraph 3.21; Slim v. Daily Telegraph Limited, [1968] 2 QB 157 at pp 171&172. At least, therefore, a possible defamatory meaning of the title in the article should be left to the jury or the jury part of the judge at the trial. It is sought, so Mr Chang for the plaintiff argues, to impugn the TV Station, not obliquely through its employee. Further, paragraph 9 of the Amended Statement of Claim also pleads that the TV Station was "smeared" by the publication. It is another alleged direct attack on the TV Station, not its anchor lady. I will deal specifically with paragraph 10(3) of the Amended Statement of Claim later in this judgment, which raises a further complaint that the TV Station was "gravely undermined" in its "reputation and credibility".

6. In this appeal, legal innuendoes are much debated. Defamatory words may have innuendoes or indirect meanings in two sense: first, in addition to their nature and ordinary meaning, they may have secondary meanings; these are called proper innuendoes. But if an indirect defamatory meaning only arises because there are other facts known to a class of the recipients, that is called a legal innuendo. Legal innuendoes are, therefore, founded on extrinsic facts to import an additional or altered meaning of the published words. They would depend on facts falling outside the alleged libel. Lord Denning MR described these two forms of indirect meanings with usual clarity in Fullam v. Newcastle Chronicle and Journal Limited, [1977] 1 WLR 651 at pp.654H-655D. The Master of the Rolls spoke of legal innuendoes as giving rise to separate and distinct causes of action in these terms:

"First, the cause of action based on a popular innuendo. If the plaintiff relies on the natural meaning of the words (pleading what is called a 'popular' innuendo so as to show what, in his view, is the natural and ordinary meaning) he must, in his statement of claim, specify the person or persons to whom they were published: save in the case of a newspaper or periodical which is published to the world at large, when the persons are so numerous as to go without saying - or book, I would add.

Secondly, the cause of action based on a legal innuendo. If the plaintiff relies on some special circumstances which convey (to some particular person or persons knowing these circumstances) a special defamatory meaning other than the natural and ordinary meaning of the words (pleading what is called a 'legal innuendo' so as to show what is that special defamatory meaning), then he must in his statement of claim specify the particular person or persons to whom they were published and the special circumstances known to that person or persons. For the simple reason that these are the 'material facts' on which he relies, and must rely, for this cause of action. ............. In this second cause of action there is no exception in the case of a newspaper: because the words would not be so understood by the world at large; but only by the particular person or persons who know the special circumstances."

7. Mr Chang, leading counsel for the TV Station, maintains that in paragraph 10 of the Amended Statement of Claim, the TV Station has pleaded and seeks to rely on a legal innuendo. I turn then to consider what, if any, special circumstances and who the particular persons who had knowledge of them are. The special circumstances as pleaded in this case seem to be the type of the programme, the personality of Du Yu, the lady anchor, the popularity of her programme, the expected clean image of Du Yu in a programme for personal, family and emotional life and relationships, the PRC audience it catered for, Du Yu's gratuitous guidance given on the air thereon, the expectation of its audience and advertisers and the stricter moral and social standards observed on the mainland. As to the persons who allegedly had knowledge of such special circumstances in the particulars given pursuant to Rules of High Court, O 82 r 3(1), particulars (b) to paragraph 3 of the Amended Statement of Claim portray them as "a wide viewership in Beijing and other parts of China". In my view, the alleged damage to the TV Station's reputation and credibility are sufficiently pleaded as a legal innuendo in paragraph 10. The pleaded legal innuendo founds a separate cause of action which calls for, on its own, an adjudication.

8. It is sought to be contended that the closeness of relationship with the TV Station and the prominence of her programme arguably put Du Yu in the position of an alter ego of the TV Station. Mr Bleach directs our attention to paragraph 9(3) of the Amended Statement of Claim, where the TV Station would seem to segregate Du Yu from "those in charge of (the plaintiff's) television station". That said, nevertheless the alleged closely-knit relationship and the acclaimed prominence of Du Yu's programme are primarily, insofar as they do or may form part of evidence of her control over the TV Station, jury questions. All this would ultimately hinge upon the role Du Yu played in the operations of the TV Station in her capacity of an anchor lady in that particular programme, its popularity and upon the extent to which she could be reasonably identified with or regarded as the alter ego of the TV station. The pleading cannot be said to be wholly precise but this is not a plain and obvious case for striking out.

9. Moreover, paragraph 10(3) of the Amended Statement of Claim categorically avers that the TV Station's "reputation and credibility" were "gravely undermined". On the above pleaded circumstances, the assertion in paragraph 10(3) would have to be taken as true in an application to strike out. The printer is thus left with a right to seek particulars or a determination of the averment as a preliminary point of law under O. 33 r. 3. This is a procedural technicality and it would be unproductive to be more vigorous in my analysis.

10. It is also unnecessary for me to be involved with the abstract academic question as to whether the law of libel on the matters at issue is fast developing and whether the court should thus look upon these allegations with benevolence.

11. In conclusion, the TV Station has sufficiently raised arguable issues on its pleading. These issues can in no way be said to be plainly unsustainable. The Master and the judge were, in my view, right in reaching the decision they respectively did. I would dismiss this appeal with an order nisi for costs against the printer, the 2nd defendant.

Leong, J.A.:

12. This case involves essentially a pleading question in an application for striking out. The allegations cannot be said to be obvious, and the legal innuendoes need be analysed with circumspection. I share the reasons given by Liu, J.A. and reach the conclusion that the plaintiff's claim is not wholly incontestable. There seems to be nothing to justify a departure from the conventional rule that costs is to follow the event. I, too, agree that this appeal should be dismissed with an order nisi for costs proposed by Liu, J.A.

Nazareth V-P:

13. I gratefully adopt the outline of the facts given by Liu JA. From the translation of the material part of the article complained of, it can be seen it was the lady in charge of the programme and the Deputy Minister who were directly defamed. The plaintiff ("the TV station") comes into the matter in a less usual way, as the corporate employer whose reputation and credibility, it is claimed, were gravely undermined. This aspect of the claim attracted a number of powerful submissions made by Mr John Bleach SC for the appellant/2nd defendant.

14. That said, it has to be borne in mind that this is an appeal by the 2nd defendant against the dismissal of its O18 r19(1) summons seeking the striking out of the TV station's claims as pleaded, inter alia upon the ground that they disclose no reasonable cause of action. That matter is to be decided upon the pleadings alone. It is a drastic remedy and no court should give effect to it unless it is satisfied that the legal basis of the claim is unarguable or almost incontestably bad (Yue Xiu Finance Co Ltd v Agnew and Ors [1996]2 HKC 122).

15. In the face of Mr Bleach's submissions Mr Denis Chang SC refined the submissions made on the TV station's behalf, focusing upon that "part of the pleaded case that the words complained of contain an implication that there was a scandal involving the person in charge of the Programme which gravely undermined Beijing Television Ltd's reputation and credibility ..." (para. 10 of the Amended Statement of Claim).

16. In addressing that submission an overview of the legal position is of assistance. This conveniently can be taken from the following passages in paragraphs 8.16, 8.17, 8.18 and 8.19 commencing at p.181 of the 9th Edition of Gatley on Libel and Slander:

"8.16 Trade corporations. A trading corporation ... may maintain an action of libel or slander for any words which are calculated to injure its reputation in the way of its trade or business ... the injury need not be confined to accrued loss of income, for the company's goodwill may be injured. Thus an action will lie for an imputation that a trading company is in an insolvent condition, or that the company or its directorate is composed of alien enemies. ... Similarly, a false statement about a company's treatment of its workers may hamper its ability to recruit staff. But a company can only sue for defamation if the words reflect on its trading reputation or in the way of its business. The company must therefore be actually engaged in business.

8.17 Defamatory statements against company's officers. ... A company cannot ... maintain an action for defamation in respect of words which reflect solely upon its individual officers or members and not upon the company itself....Where the imputation concerns a 'business' matter more difficult questions of degree will arise, but the extent to which the person directly defamed controls the company and can therefore be regarded as its alter ego will be a relevant consideration. ...

8.18 Imputations actionable by company. ... It is submitted ... that a trading corporation or company could not maintain an action of libel in respect of an imputation of ... wrongful conduct, if such imputation is calculated to injure it 'in the way of its business', which may simply mean that people are, as a result of the libel, reluctant to deal with it....

8.19 Non-trading corporations .... Where a corporation, though not engaged in business for profit, is authorised to acquire property which may be the source of income or revenue, the transaction of the business incidental thereto creates a reputation similar to that of a corporation engaged in business for profit, and entitles the non-profit corporation to maintain an action for libel in respect of charges which tend injuriously to affect its property or financial position. In the case of a charity, for example, defamatory statements may discourage subscribers or otherwise impair its ability to carry on its charitable objects."

17. On behalf of the TV station, reliance is placed particularly upon the following authorities. First Lord Keith's speech in Derbyshire County Council v Times Newspapers Ltd [1993] AC 534, at 547B-E:

"It is to be observed that Browne J. did not give any consideration to the question whether a local authority, or any other body exercising governmental functions, might not be in a special position as regards the right to take proceedings for defamation. The authorities cited above clearly establish that a trading corporation is entitled to sue in respect of defamatory matters which can be seen as having a tendency to damage it in the way of its business. Examples are those that go to credit such as might deter banks from lending to it, or to the conditions experienced by its employees, which might impede the recruitment of the best qualified workers, or make people reluctant to deal with it. The South Hetton Coal Co. case [1894] 1 Q.B. 133 would appear to be an instance of the latter kind, and not, as suggested by Browne J., an authority for the view that a trading corporation can sue for something that does not affect it adversely in the way of its business. The trade union cases are understandable upon the view that defamatory matter may adversely affect the union's ability to keep its members or attract new ones or to maintain a convincing attitude towards employers. Likewise in the case of a charitable organisation the effect may be to discourage subscribers or otherwise impair its ability to carry on its charitable objects. Similar considerations can no doubt be advanced in connection with the position of a local authority. Defamatory statements might make it more difficult to borrow or to attract suitable staff and thus affect adversely the efficient carrying out of its functions."

18. Second, the following passage from the judgment of Litton V-P (as he then was) in Hong Kong Polytechnic University v Next Magazine Publishing Ltd [1997] 7 HKPLR 286 at 290C-E:

"The House of Lords at the same time re-affirmed the principle that 'a trading corporation is entitled to sue in respect of defamatory matters which can be seen as having a tendency to damage it in the way of its business' (see p547B, per Lord Keith of Kinkel).

This principle is, of course, not confined to trading corporations: non-trading corporations, though not engaged in business for profit, may have reputations which the law protects: for example trade unions and charitable organisations referred to at p547D to E in Derbyshire County Council. As regards charitable organisations Lord Keith said that the defamatory statements may impair their ability to carry on their charitable objects: Hence their capacity to sue for defamation."

19. As to the passage from Lord Keith's speech in Derbyshire, Mr Bleach submits that this has to be put in the context of Lord Keith's review of cases in all of which the corporation concerned was itself defamed or the matters defamatory were in respect of the corporation. However that may be, the point is one of law which would require serious discussion not merely of those cases but of others that might bear on the point. It is not appropriate to a strike-out action; see paragraph 18/19/6 at p.348 of the Supreme Court Practice 1999 Vol. 1.

20. As to the passage in Hong Kong Polytechnic University v Next Magazine Mr Bleach points to the close involvement of the University in the matter. Again this seems to me a matter that would be better resolved in the context of an actual trial in which that sort of submission can be tested against the actual evidence as it would emerge at the trial. For the present, the matter can only be addressed on the pleadings, which do not seem to me to exclude close involvement of the TV station, but rather to point to such.

21. As to the necessary factual averments, I have no difficulty in concluding that these sufficiently emerge from the particulars. It is averred not implausibly that the programme which Du Yu, the lady in question, hosted, was a wholesome family programme which had a wide viewership and coverage in China, that she is the highly popular anchor person, that the other named party was a high-ranking official of the Ministry concerned, and that adultery is viewed as immoral and socially unacceptable in China, particularly where a high-ranking official is involved. It was also averred that the allegation of adultery was false and that it was calculated to and did injure the business reputation and goodwill of the plaintiff and of the programme. Finally, it is averred that as a result of the publication of the libellous article, the TV station has suffered serious loss of reputation and goodwill.

22. Upon the foregoing I am far from satisfied that the claim is unarguable or that this is plain and obvious. In the light of that conclusion I do not find it necessary to examine the other matters relied upon on behalf of the TV station and would prefer to say nothing upon those submissions. I would dismiss the appeal, but for my part would make an order nisi that the costs of the appeal be in the cause of the action.

23. The appeal is accordingly dismissed. By a majority, there will be an order nisi that the respondent is to have its costs of the appeal.