BAWANG INTERNATIONAL (GROUP) HOLDING LTD AND ANOTHER v. NEXT MAGAZINE PUBLISHING LTD

HCA 1109/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1109 OF 2010

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R E A S O N S   F O R   D E C I S I O N

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1. On 30 April 2013, I allowed the defendant’s application for amendment of its defence and counterclaim and gave directions for filing of expert evidence on PRC law. I had indicated that I would give my reasons in writing, which I now do.

2. The 1^st plaintiff is a publicly listed company in Hong Kong.  The 2^nd plaintiff is based in Guangzhou.  The defendant is the publisher of Next Magazine, a widely circulated and popular magazine in Hong Kong.

3. On 14 July 2010, Next Magazine published an article stating that the Bawang shampoo, the plaintiffs’ products, sold in Hong Kong contained a carcinogen.  The plaintiffs considered the article defamatory and commenced the present action on 21 July 2010.  In paragraph 9 of the re-amended statement of claim, the plaintiffs pleaded :

“9A Moreover, the defendant knew and/or intended that the Words, or their gist, should be republished in the PRC[1] media, or should reasonably have anticipated that they would be so republished, and the defendant’s publication of the Words did lead to extensive media coverage, repetition and republication of the Words or their gist in PRC newspapers and internet sites. Within one day of the publication of the Words (by 15 July 2010), the Words or their gist had been republished in at least 53 PRC newspapers and internet sites, and within a week of the publication of the Words (by 21 July 2010), the Words or their gist had been republished in over 200 PRC newspapers and internet sites, a substantial number of which had nationwide circulation.”

4. The plaintiff claimed, among other things, loss of business and profits as a result of the publication and republication of the Words for the period between 15 July 2010 and 30 June 2011 in the tune of RMB448 million suffered by the 1^st plaintiff out of which some RMB415 million is attributable to the 2^nd plaintiff.  As particularized, the bulk of the plaintiffs’ loss occurred in the Mainland.

5. At the hearing before me, Ms Sit, for the plaintiffs, confirmed that the plaintiffs relied on the republications in the Mainland as a consequence of the original publication in Hong Kong for the purpose of recovery of damage.  They do not seek to rely on the republications as separate causes of action. 

6. The defendants applied to amend the defence in order to raise an issue of PRC law relating to the recoverability of damage arising from the republications in the Mainland in these terms :

“11A. As to paragraph 9A:

(1) The second sentence of paragraph 9A is not admitted.

(1A) Even if, which is not admitted, there was extensive media coverage, repetition or republication of the Words or their gist in PRC newspapers and internet sites (hereinafter referred to as the ‘Republications’) (for the purpose of this pleading, the expression ‘PRC’ shall exclude Hong Kong and Macau) :

(a) The Republications took place in the PRC, and the bulk of any loss or damage which the plaintiffs might have suffered in consequence of the Republications (including expenses incurred to counteract and redress the effect of the Words as alleged in paragraph 10 and loss of business and profits as alleged in paragraph 11) would also have occurred in the PRC.

(b) Under PRC law :

(i) the Republications by persons or parties other than the defendant (hereinafter referred as the ‘Republishers’) constitute separate and independent causes of action for which the Republishers are legally liable to the plaintiffs :

(ii) the defendant is neither jointly, nor jointly and severally, liable with the Republishers to the plaintiffs in respect of the Republications :

(iii) in circumstances where the original publication of the Words by the defendant and the Republication by the Republishers together cause the same damage but the act of either could not or would not on its own be sufficient to cause the entire loss and damage suffered by the plaintiffs in the PRC, the defendant would only be liable to the plaintiffs for its own original publication of the Words and the extent of its liability would only be for a proportional share of such loss and damage as may be determined by the People’s Court in the PRC (taking into account matters such as the degree and extent of fault, considerations of causation and remoteness, principle of fairness and policy considerations), and the defendant is entitled to rely on this principle to limit its liability even if the plaintiffs choose to sue only the defendant but not the Republishers.

(c) It is noted that the plaintiffs are suing only in respect of the original publication of the Words in Hong Kong and are not seeking to claim in respect of the Republications in the PRC as separate causes of action.

(d) To the extent that the plaintiffs are suing the defendant in respect of the original publication of the Words but seek to recover as a consequence of that original publication the loss or damage which they have allegedly suffered in the PRC by reason of the Republications, the extent of the defendant’s liability for such loss or damage would be matters of substance and not procedure and thus is governed by PRC law as being the lex loci delicti or as having the most significant relationship with the occurrence and the parties.

  (2) Save as aforesaid, paragraph 9A is denied.”

7. Mr Chow, SC, for the defendant, argued that doubt has been cast on the proposition that the claimant has a choice between suing on the further publication as a separate cause of action or treating the further publication as increasing the damage flowing from the first : Gatley on Libel and Slander, 11^th Edn, para 6.36.  Slipper v BBC [1991] 1 QB 283 is usually regarded as the authority in support of the above proposition, where Bingham LJ (as then was) treated the further publication as increasing the damage flowing from the first as a legitimate claim even though in that case, the film reviews in question could not amount to publication or republication of the libel and therefore could not found a separate cause of action.  Bingham LJ’s view is now open to doubt : see Bautrina v Times Newspaper Ltd [2010] EMLR 18, per Eady J at paras 51-53 :

“51. Mr Barca raises a fundamental point of principle in relation to how the law now appears to treat claims for additional damage where the later publications have not been sued upon as giving rise to a separate cause of action. He referred, in particular, to the words of Bingham L.J. (as he then was) in Slipper, which was concerned with damage flowing from the reviews of the television programme. At p 296G-H, his Lordship accepted that the plaintiff could not found a cause of action on the film reviews as amounting to publication or republication of the libel by the BBC. Nevertheless, he went on to acknowledge the legitimacy of a claim in respect of the damage caused by those reviews as part of the damage alleged to flow from the libelous publication itself.

52. Mr Barca queries the juridical basis of the proposition that a claimant can recover damages flowing from a publication in respect of which he could not establish primary liability on the part of the defendant. It is difficult to reconcile these two propositions as a matter of causation. Attention is drawn by the learned editors of Gatley (in fn 281 on p 203) to observations made in the Queensland case of Timms v Clift [1998] 2 Qd R 100 Qd CA, at 108:

‘If, as was held, the plaintiff had no right to recover in respect of the cause of action for the second publication, that in the magazine, it is difficult to understand why the cause of action in respect of the first to damages in respect of the second publication.’

53. It may be, as Mr Barca suggests, that what the Court of Appeal in Slipper was recognizing implicitly was that it would have been open to the plaintiff to sue on any of the reviews, as distinct causes of action, insofar as they simply republished the words of the libel itself. ... He cited particular passages in the judgments of Stocker LJ, at pp 295G-296E and Slade LJ, at pp 300F-300H and 302D-303A.  The latter made reference to the BBC being in a position reasonably to foresee that newspaper reviews would repeat the defamatory sting.  It seems as though the analysis should be in terms of foreseeability and novus actus interveniens.  If this were not so, submits Mr Barca, all a claimant would ever need to do in respect of ‘republications’ would be to claim damages by way of aggravation. There would never be any need to go through the disciplines of establishing a separate cause of action in its own right.”

8. Mr Chow further submitted that the doubt expressed by Eady J is consistent with the reasoning by Gray J in Collins Stewart Ltd v The Financial Times Ltd (No 2) [2006] EMLR 5, at paras 26-27 :

“26. Such is the relatively generous ambit of recovery of compensatory damages in a libel action. What is the position where a claimant is the subject of a series of articles? There are various possibilities. Assume that the defendant publishes three defamatory articles referring to the claimant, articles A, B and C. If articles B and C add to the damage caused by the publication of the original article A and are not defensible, then I think that articles B and C should in principle generally be made the subject of separate complaint as separate causes of action. To do so would make matters simpler and clearer for the jury (or judge) if and when it comes to assessing damages. If on the other hand articles B and C, whilst defamatory of and damaging to the claimant, do not repeat the libel which was contained in article A, it appears to me to be objectionable in principle to allow the claimant to rely on articles B and C in connection with damages recoverable for the publication of article A. Articles B and C would be separate torts giving rise to separate claims for damages. If on the other hand articles B and C consist in part of the repetition of the libel contained in article A and in part of other distinct libels on the claimant, formidable problems will in my opinion arise in disentangling the recoverable and the irrecoverable damage in respect of article A.

27. My starting point is therefore that there are sound reasons both of principle and of practice why a claimant, whether an individual or a corporation, should not be permitted to seek to recover increased damages in respect of the publication by the defendant of article A by reasons of the publication by that defendant of subsequent articles B and C which are not themselves the subject of complaint.”

9. Now is not the occasion for me to come to a definitive view on these seemingly conflicting authorities.  It would be sufficient for the purpose of the defendant’s application if the view of Eady J is reasonably arguable.  And I think it is.

10. Mr Chow next submitted that if it is permissible for the plaintiffs to seek to recover, as a consequence of the original publication, the loss or damage which they have allegedly suffered in the Mainland by reason of the Republications (rather than as separate causes of action), PRC law, being the lex loci delicti, is the law with the most significant relationship with the occurrence and with the parties in relation to the issue of damage allegedly sustained by the plaintiff in the Mainland : Boys v Chaplin [1971] AC 356, per Lord Hodson at pp 377, 378 and 382 and per Lord Wilberforce at pp 391-392; Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190, per Lord Slynn at p 206.

11. I agree with Mr Chow that it is reasonably arguable that the extent of the defendant’s liability for the plaintiffs’ loss and damage suffered mostly in the Mainland is governed by PRC law as the lex loci delicti.

12. For the above reasons, I allowed the defendant’s amendment application.  It follows that its application for expert evidence on PRC law should be allowed.  And I so ordered.