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

HCA3831/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3831 OF 1997

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D E C I S I O N

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1. This is an application to amend the Statement of Claim made after the commencement of the trial. The application came after I made a determination by way of preliminary issue that the words complained of are not reasonably capable of bearing the defamatory meanings pleaded in the Statement of Claim.

Proposed Amendment

2. The proposed amendments seek to delete paragraphs 2, 10 and 11, which deal with matters of general knowledge and/or extrinsic fact and the ordinary and natural and/or innuendo meanings of the words complained of, and to replace them by the new paragraphs 10, 10A and 11. By the new paragraphs, the plaintiff sought to introduce new and different defamatory meanings which it says the subject article bears. At the same time, these paragraphs also set out new mattes which the plaintiff says are either within the domain of general knowledge of ordinary readers or extrinsic facts known to the readers to whom the article was published. Particulars to support such allegations are also set out.

3. Initially the plaintiff, as was previously, had pleaded in the alternative and was relying on both the ordinary and natural meanings of the words complained of as well as innuendoes. The same set of meanings were adopted for both causes of action. Also, the same set of matters are relied upon for the averments of general knowledge and of extrinsic facts.

4. The defendants, while not consenting to the application, indicated that they did not propose to take issue on the averment that the matters pleaded in the new paragraph 10 are capable of being matters within the public knowledge, but asked that the plaintiff made an election on the two separate causes of action, namely, defamation arising from the ordinary and natural meaning of the words complained of, and defamation based on innuendo, relying on the judgment of Lord Devlin in Lewis v. Daily Telegraph Ltd [1964] 1 AC 234, 281. The plaintiff then indicated it elected to proceed with the cause of action based on the natural and ordinary meanings of the words complained of. The plaintiff was apparently under an impression that the defendants had conceded that the particulars of general knowledge pleaded in the proposed amendment are matters of general knowledge without the need to prove them. In the course of counsel's further submissions, it became clear that the defendants' position is no more than what is set out in the beginning part of this paragraph. The plaintiff then made it plain that it will proceed on the innuendo cause of action, hence only the new proposed paragraph 11, and will abandon the new paragraphs 10 and 10A.

Reasons for the Decision

5. The defendants do not consent to the proposed amendment. Their objections are two-fold. The first is directed at the new paragraph 11(5) which pleads that the extrinsic facts are known to Mr Yip Tak Fai to whom the article was published. Mr Yip is the publisher of Oriental Daily News. I had in my preliminary ruling indicated that Mr Yip cannot be regarded as a member of the public. That is immaterial because in the context of innuendo, we are not concerned with the knowledge of the members of the public, but with that of the readers of the article to whom the words are published. But I had also indicated in my preliminary ruling that the knowledge of Mr Yip cannot be equated with that of a reader of the Next Magazine to whom the article is published and I had given the reasons for coming to that view. Paragraph 11(5) of the proposed amendment is therefore objectionable and should not be allowed.

6. The second objection and indeed the primary position of the defendants is that if the amendment is to be allowed, it should be on terms that the plaintiff pays all the costs of the defendants incurred up to date. This is because it is a substantial amendment without which the plaintiff's claim is bound to fail. The plaintiff concedes that it is liable to pay the costs of the first two days of the trial, being costs thrown away. The plaintiff, however, says that it should not bear the costs incurred prior to that and a number of reasons had been advanced.

7. I accept entirely the cardinal principles governing leave to amend as set out in The Supreme Court Practice 1999 Vol.1 para.20/8/6 (p.379). I also agree that the question of amendment as well as the question of costs are matters of judicial discretion and that the primary consideration in the exercise of judicial discretion is to do justice to the parties according to the circumstances of the case.

8. There can be no doubt that this application to amend came very late, being on the 3rd day of the trial and after the ruling on a preliminary issue. In such a case, it is to be noted that leave to amend is sometimes given as opposed to readily given : The Supreme Court Practice 1999 Vol.1 para.20/8/11 (p.383). The reason is plain. There are bound to be prejudice to an opposing party where an amendment is made so late when most part of the proceedings have gone underway.

9. As a result of the ruling on the preliminary issue I delivered yesterday, the plaintiff is effectively left with no case to proceed with. The action is liable to be dismissed because the very substratum of the case is gone in that the words complained of do not give rise to the defamatory meanings pleaded and relied on by the plaintiff. Seen in this light, there can be no doubt that the amendment sought is both fundamental and substantial. It is in effect a new case, albeit the action remains as a libel action concerning the same article and perhaps the same group of witnesses. It is true also that the cause(s) of action remain(s) the same, but the substance and the basis in support of the cause(s) of action are wholly different. It must be a substantial amendment. It does not necessarily have to be a new cause of action that an amendment is to be viewed as substantial.

10. The plaintiff argues that the purpose of awarding costs on amendment is not punitive, but compensatory. That I entirely agree. It has been recognized in a number of authorities that where an amendment is a substantial one, such that the plaintiff could not succeed without it, he will in a proper case only be allowed to amend at the trial on payment of all costs incurred up to date and any costs thrown away by reason of the amendment : The Supreme Court Practice 1999 Vol.1 para.20/8/12 (p.383).

11. In my view, the present case is one of those proper cases. Without this proposed amendment, the plaintiff's action stands to be dismissed. A natural consequence where the action is dismissed is that the plaintiff will be ordered to bear the costs of the whole action. Put it in another way, the defendants will stand to recover from the plaintiff the costs of the action upon judgment being entered in their favour. When allowing the plaintiff to amend, justice therefore demands that the defendants be compensated in terms of the costs they stand to recover from the plaintiff but for the amendment. It is not punitive, but compensatory. It is the price the plaintiff has to pay. The plaintiff is at pain to stress that much of the defendants' preparations for the action will not be wasted. That may or may not be true because, as Mr Chow put it, the defendants, faced with the fundamental change in the plaintiff's case, have yet to consider the new pleaded case and the new evidence proposed to be put in by the plaintiff. At any rate, that is not a material concern when one approaches the issue from the point of compensating the prejudice occasioned to the defendants, as opposed to considering the costs thrown away.

12. The plaintiff refers to the case of Kaines (UK) Ltd [1993] 2 Lloyds Report 1 as presenting an exception to the proposition that a plaintiff will only be allowed to make a substantial amendment without which the plaintiff's claim cannot succeed on condition that he pays all costs incurred up to date. In that case, the plaintiff claimed damages for repudiation of a sales contract. Both liability and quantum were in issue. In the course of the trial, the plaintiff amended the statement of claim to include an alternative claim for damages based on the difference in price between the contract date and the date of repudiation. The trial judge gave judgment in favour of the plaintiff with damages based on the alternative claim. The defendant then argued that the plaintiff ought not to be awarded the full costs of the action, relying on the fact that the plaintiff only put in the alternative claim by way of amendment in the course of the trial. The trial judge rejected that on the basis that the plaintiff's claim would still have been vigorously resisted even if the amendment had been made earlier. It is plain that the circumstances of that case is very different from the one under consideration. What is more, the context in which the issue of costs arose for consideration is also very different. The judge in that case was essentially being asked to depart from the normal rule that costs of an action should follow event because the plaintiff succeeded on an alternative claim introduced at the trial. In such a case, it is appropriate and necessary to consider what impact the amendment had brought on the conduct of the case. In other words, was there an element of wasted or unnecessary costs. In the present case, we are measuring the prejudice occasioned by the amendment to the defendants because the primary objective of a costs order on granting leave to amend is to compensate the defendants for the prejudice they suffer. I do not regard the case cited to be of assistance to the plaintiff.

13. The defendants, on the other hand, refer to an old case of Jacobs v. Schmaltz (1890) 62 LT 121 which is a slander case based on innuendo. At the close of the plaintiff's case, the defendant submitted that the plaintiff should be non-suited on the ground that the statement of claim did not plead a sufficient cause of action in innuendo because it had not been pleaded that the plaintiff was guilty of a criminal offence. The trial judge accepted the submission and refused leave to amend except on terms that the plaintiff paid all costs incurred to the date of trial because the amendment sought was a substantial one. The case is relevant in that it shows that whether an amendment is substantial does not necessarily depend on whether a new cause of action is involved or whether the defendant's preparation for the case would have been different. The objection taken in that case is a pure pleading point, but it is vital to the plaintiff's claim and the action stood to be dismissed without the amendment. The amendment was considered to be substantial. The rationale applies to the present case with full force.

Conclusion

14. By reason of the matters aforesaid, there will be leave to the plaintiff to amend the Statement of Claim as per the proposed draft, save and except paragraphs 10, 10A and 11(5) thereof, on condition that the plaintiff pays the defendants the costs of the action incurred up to date and the costs of and occasioned by and the costs thrown away by the amendment, including the costs of the application to amend, to be taxed and payable forthwith.

15. I also make the following consequential directions :

(1) The Amended Statement of Claim be filed and served within 7 days from the date hereof.

(2) The defendants be at liberty to file and serve within 14 days from the date hereof a Re-Amended Defence.

(3) The plaintiff do have leave to file and serve within 14 days thereafter a Re-Amended Reply, if any.

(4) The parties do have leave to exchange supplemental witness statements, if any, within 14 days after close of pleadings.

(5) The trial be re-fixed before a bilingual judge sitting with a jury with 6 days reserved.

(6) A pre-trial review be fixed on a date no longer than 4 weeks before the scheduled trial date with the estimated time of the pre-trial review to be agreed between the parties.