CHEUNG KONG (HOLDINGS) LTD. v. CHAN WAI YIP ALBERT

CACV 447/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 447 OF 2000

(ON APPEAL FROM HCA NO. 16790 OF 1998)

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J U D G M E N T

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Wong JA: (giving the judgment of the court)

Introduction

1. This is an appeal against the judgment of Waung J dismissing the plaintiff's summons to strike out part of the defendant's Re-Amended Defence in an action for defamation. There was a cross appeal in the Respondent's Notice that the judge erred in striking out paragraph 25(b)(viii) on the basis of a concession which the defendant did not make. In any event, the issue no longer exists as the defendant abandoned the cross appeal during the second day of the hearing of the appeal. Paragraph 25(b)(viii) was accordingly struck out and the cross appeal dismissed. Before this court, there is also an appeal by the plaintiff in a Supplementary Notice of Appeal against the order for costs made by the judge.

Background

2. The plaintiff, as pleaded, is and was at all times

(i) a well known public company, listed on the Hong Kong Stock Exchange; and

(ii) whose principal activities are property development, project management and investment holding.

It is public knowledge that the plaintiff, Cheung Kong (Holdings) Ltd. and Hutchinson-Whampoa Ltd. are synonymous with the household name in Hong Kong of Mr. Li Ka Shing. The defendant is and was at all material times a member of the Democratic Party, a member of the Tsuen Wan Provisional District Board and formerly and currently a member of the Legislative Council.

3. A subsidiary of Cheung Kong was the developer of a residential estate known as Kingswood Villa in Tin Shui Wai. From March 1997 a number of units in Maywood Court of Kingswood Villa were put on the market for pre-sale to the public. The economic downturn in Asia in the latter part of 1997 and 1998 had claimed many casualties and among them were a number of purchasers who had bought units in Maywood Court. In June 1998 when completion of the units was approaching, the purchasers found themselves unable to obtain banking facilities due to the decline of the value of their units in the midst of the economic downturn. Some purchasers of Maywood Court approached Cheung Kong to discuss their difficulty and on 15 and 16 June 1998 the developer published notices in Hong Kong newspapers offering to discuss and meet with the purchasers to see if any assistance could be given to them.

4. At this time, the defendant joined hands with the purchasers and championed their cause. In the course of the next several days, he made a number of statements through the media and orally during a demonstration that took place on 17 June 1998.

5. In due course, a writ was issued by the plaintiff for defamation against the defendant. A Statement of Claim was filed on 30 September 1998, which was amended on 3 October 1998 and re-amended on 31 May 1999. The Re-Amended Statement of Claim alleged that the defendant had made five defamatory statements which were succinctly summarised by the judge as follows :-

(i) Radio programme statement that the offer by Maywood developer of 2nd mortgage at prime plus 3% is like Li Ka Shing taking money from beggars.

(ii) Interview statement that Cheung Kong attempted to blacken and disparage the Maywood purchasers.

(iii) Press conference statement that the actions of Government and the largest property developers were to blacken the hard-pressed purchasers.

(iv) Demonstration slogan statement that the prime plus 3% offer of Cheung Kong was to take money from beggars and Cheung Kong was in fact taking advantage while saying it was helping.

(v) Press conference statement that the actions of Government and property developers were to blacken the hard pressed purchasers.

6. A defence was filed on 17 November 1998 and among the defences raised were justification and fair comment. On 8 October 1999, the plaintiff in an Amended Inter Parte Summons sought to strike out paragraph 21(4)(c); paragraph 25 and part of paragraph 27 l(e) of the Amended Defence. We are not concerned with paragraph 27 l(e). By the time of the hearing of the summons before Waung J, a draft Re-Amended Defence had been placed before the judge for leave to re-amend. It was on the amended paragraph 21(4)(c) and paragraph 25 that the hearing before us was focussed.

The "offending" pleading

7. For present purposes, it suffices to set out paragraph 21(4) and paragraph 25, and for the sake of clarity, also the corresponding paragraphs in the Re-Amended Statement of Claim. Paragraph 21(4) reads as follows :-

"the defendant avers that

(a) it was reported in the local newspapers on 18th June 1998 that Mr. Donald Tsang, the Financial Secretary, then Acting Chief Executive, had made a public statement on about 17th June 1998 to the effect that the Government would not use public funds to subsidise those property purchasers who suffered monetary loss due to the slump in the property market by giving interest-free second mortgagee loans with a buy-back guarantee ("the Acting Chief Executive's Statement");

(b) in June 1998 when the Defendant, acted on behalf of the aggrieved purchasers, had numerous contacts with the officials of the Housing Branch, he only asked the Government to provide them with low-interest second mortgages but did not ask the Government for interest-free second mortgage loans with a buy-back guarantee;

(c) in the premises, the Acting Chief Executive's Statement was false and/or misleading in substance and in fact in relation to the Defendant and the aggrieved purchasers and was defamatory of them.

The corresponding paragraph in the Re-Amended Statement of Claim is 12 and it is in these terms :

12. The 3rd statements referred, or were understood to refer to the Plaintiff.

Particulars

(1) As was widely known, the Plaintiff was one of the largest real estate developers in Hong Kong.

(2) The Plaintiff repeats the facts pleaded under paragraph 9 above.

(3) It was reported in the local newspapers on 18 June 1998 that the Financial Secretary made a public statement on about 17 June 1998 to the effect that the government would not use public funds to assist purchasers of pre-sold units who could not secure adequate mortgage.

(4) The press conference was convened by the Defendant, or by the Defendant together with a number of persons alleged to be purchasers of pre-sold properties who were unable to secure adequate mortgages, for the purpose of making public responses to the statement made by the Financial Secretary and the 18 June Notice.

Paragraph 25 is an answer to paragraphs 13 and 14 of the Re-Amended Statement of Claim. Paragraph 25, with the exception of particulars (b)(viii) which have been abandoned and dismissed, reads :-

"Further or in the alternative, the said interview or alternatively the 3rd statements meant that :-

(a) the Hong Kong Government/high-ranking Government official or officials and the Plaintiff had been acting together to advance the material interests of the Plaintiff; and/or

(b) the Hong Kong Government/high-ranking government official or officials and the Plaintiff had been acting together to blacken or disparage the purchasers of various properties pre-sold by or through the Plaintiff who were not able to secure adequate mortgages to complete the purchase of their properties; or

(c) in the alternative to (a) and (b), that there were reasonable grounds to suspect that there had been such acting together as is referred to in (a) and/or (b) above;

and were true in substance and in fact.

Particulars

(a) The Defendant repeats paragraph 21(4) and the particulars pleaded in paragraphs 15 and 24 above.

(b) The Defendant will rely on the following incidents :-

(i) In or about June to September 1998, despite the genuine complaints against the Plaintiff in relation to its failure to comply with the terms of the Consent Scheme in relation to the sale of the units in Maywood Court, the Government decided not to take any action against the Plaintiff but to proceed to issue its "Consent to Assign" to the Plaintiff to enable it to call for completion of the sale and purchase of the said units.

(ii) In or about November 1997, the Kowloon and Canton Railway Corporation, which was and is entirely beneficially owned by the Government, invited the Plaintiff to submit a tender to develop the site adjacent to Hunghom Railway Station by a process known as "single-tender" which was a departure from the normal practice of the Government and statutory bodies in Hong Kong by using the open tender procedure.

(iii) In or about August 1998, the Government invited three companies, including Hutchison International Terminals Ltd. which was and is a subsidiary of Hutchison-Whampoa group and a member of the Plaintiff's group, to negotiate amongst themselves to develop jointly Container Terminal No. 9, without inviting other interested operators to join in or to bid for the right of development by way of an open tender.

(iv) In or about March 1998, the Government accepted the tender offered by the Plaintiff to purchase a piece of land in Ma On Shan to develop a hotel at a price of HK$200.00 per square foot, which price was unreasonably low.

(v) In or about February 1989, the Government accepted the tender from the Plaintiff for the redevelopment of a commercial site at Garden Road which was restricted to 6 or 7 storeys only; but the Plaintiff subsequently developed a 31-storey commercial building thereon.

(vi) In or about March 1996, the Government accepted the tender of the Hutchison-Whampoa Ltd., a member of the Plaintiff's group, to develop the River Trade Terminal in Tuen Mun even though the terms of such tender were far less favourable than those offered by another competitor.

(vii) In or about 1996, the Government granted an exclusive right to the said Hutchison-Whampoa Ltd. to redevelop the government land at Nos. 4 and 4A Queen's Road Central and the adjacent Government Carpark Building jointly with the neighbouring land formerly occupied by the Hilton Hotel and owned by the Plaintiff."

Paragraphs 13 and 14 of the Re-Amended Statement of Claim are reproduced in full :

"13. In their natural and ordinary meaning, the 3rd statements meant or were understood to mean that the Plaintiff had been colluding or conspiring with the government or high ranking government officials to further its pecuniary benefits and/or to blacken or disparage those purchasers of properties pre-sold by or through the Plaintiff who were not able to secure adequate mortgages to complete the sale and purchase of the properties they had purchased.

14. Further or alternatively, the 3rd statements meant or bore the meanings pleaded in paragraph 13 above by way of innuendo to those attending the press conference who knew of the matters particularised under paragraph 12 above."

The authorities

8. A number of cases were cited by Counsel in argument and in particular Lucas-Box v News Group Newspapers Ltd. [1986] 1 WLR 147; Morrell v International Thomson Publishing Ltd. [1989] 3 All ER 733 and Prager v Times Newspapers Ltd. [1988] 1 WLR 77, all decisions of the English Court of Appeal, were read in extenso. We have carefully considered these decisions and need say no more than that the following principles can be derived, namely :-

(a) the defendant is not required to plead any meaning he attaches to the offending words;

(b) it is, however, open to the defendant if he chooses to plead the meaning that he contends that the offending words bear ("the defendant's meaning") and justifies such meaning; and

(c) if he chooses to plead the defendant's meaning, he has to plead it clearly and unequivocally and with sufficient particularity.

The appeal

(a) Pargraph 25

9. The bone of contention in this appeal is paragraph 25 of the Re-Amended Defence. In the words of the judge :

"The heart of the strike out application is the wholesale objection to paragraph 25 of the proposed Re-Amended Defence and in particular to the eight transactions whereby it is alleged by the defendant in justification that the government had shown special favouritism to Li and his Cheung Kong."

The defendant pleads four stings in the main part of paragraph 25, as follows :

(a) the plaintiff and Government had been acting together to further the material interests of the plaintiff ("the A Sting");

(b) the plaintiff and Government had been acting together to blacken and disparage the aggrieved purchasers ("the B Sting");

(c) there was reason for the defendant to suspect (a) ("the CA Sting"); and

(d) there was reason for the defendant to suspect (b) ("the CB Sting").

As pointed out by the judge in his judgment, there was no dispute that the four stings were within the spectrum of meanings of the offending words complained of in claims 3 and 5 of the Re-Amended Statement of Claim.

10. Before us, Mr Robert Tang SC, for the plaintiff, seems to argue that the alleged "acting together" 「官商勾結」is not within the spectrum of the meanings of those offending words, but understood properly, he is only contending that the "acting together" is not plain enough to be within the spectrum. Indeed, the main thrust of Mr. Tang's submissions is that the "acting together" as pleaded in paragraph 25 is not clear and the plaintiff does not understand what it means. He asks the rhetorical question whether that means "conspiracy", "collusion" with "bad faith" or "dishonesty"? He further questions if the "acting together" was caused by "negligence" or "incompetence" on the part of Government. On the other hand, Mr. Martin Lee SC, for the defendant, maintains that the words "acting together" mean exactly what they say, and there is no specific allegation of any of the six ways into which Mr. Tang has attempted to compel the defendant to slot the defendant's meaning. We agree with Mr. Lee. We think that "acting together" bear a sufficiently clear meaning in the natural and ordinary sense of those words. There can be no requirement that the meaning must be expressed in lawyers' terms such as "conspiracy" and "collusion", each of which has a particular purport requiring a particular form of plea and particular evidence to prove. Whether "bad faith" or "dishonesty" was involved in the "acting together" is not pleaded by the defendant, for obviously including either of them would elevate the hurdle of the proof required of him. Similarly, including a plea of the cause of "negligence" or "incompetence" would require particulars in support, and moreover, might take the sting out of the "acting together". The defendant is entitled not to be forced to accept the higher hurdle or the suggested causes. He is only required to prove that the plaintiff and Government had been acting together in respect of the A Sting or the B Sting, or if he fails in that score, to prove the CA or CB Sting. We do not accept that the plaintiff does not know what case it has to meet, which is that it and Government had been acting together in the manner as set out in the first two stings, and further that there were reasons for the defendant to suspect that the A Sting or the B Sting had occurred.

11. Mr. Tang argues that if the six cases postulated by him are not pleaded to qualify the "acting together", and in fact they have not been so pleaded, the offending words would no longer be defamatory, and the defendant is not entitled to set up a meaning which is not defamatory and proceeds to justify it. Like the judge, we are not persuaded that the "acting together" in the four stings could not arguably be defamatory absent the six postulated cases. If the "acting together" in the A Sting was to further the material interests of the plaintiff, albeit not by way of conspiracy or collusion, albeit not carried out "dishonestly" or in "bad faith", and if not caused by Government's "negligence" or "incompetence", it could still lower the plaintiff in the estimation of the public. The same view applies to the B Sting.

12. Mr. Tang also complains that the "acting together" without the qualification in any of the six postulated cases causes embarrassment to the plaintiff because it does not know the precise extent of discovery. He questions whether the plaintiff needs to discover documents relating to any of the six postulated cases or relating to "express agreements" between the plaintiff and Government or merely relating to a "tacit understanding" between the two. As the six postulated cases have not been pleaded, we do not see any justification for any document relating to any of them to be disclosed. Mr. Lee has maintained before us that he is not alleging any of the six postulated cases. If that is considered by the plaintiff not to be safe enough for it to rely on, then it can simply seek further and better particulars to tie the defendant's hands. And if the plaintiff wishes to seek clarification whether its discovery should merely be in respect of "tacit understanding" or should include "express agreements", that can be achieved simply by a request for further and better particulars of the "acting together". In our view, this is no justification for having the plea struck out.

13. We also accept Mr. Lee's submission that the seven items of particulars under paragraph 25(b) of the Re-Amended Defence are arguably capable of supporting the A and CA stings, and at least they are not totally irrelevant. Mr. Tang deals with some documents showing that there were reasonable explanations for the events set out in the seven items of particulars. But before discovery and indeed before cross-examination, it would not, in our view, be proper to have those particulars struck out purely because from some documents now available, without knowing what other documents are to be discovered and what cross-examination will produce (see McDonald's Corp v Steel [1995] 3 All ER 615) there appear to have been reasonable explanations for those events that could have occurred without any "acting together" between the plaintiff and Government in the manner as described in these two stings. It has not been shown to us that the judge erred in refusing to strike out the seven items of particulars under paragraph 25(b).

(b) Paragraph 21(4)(c)

14. Paragraph 21(4)(c) of the Re-Amended Defence is also attacked by Mr. Tang. The judge said:-

" It seems to me that paragraph 21(4)(c) must not be read out of context or read alone but must be read against not only paragraphs 21(4)(a) and 21(4)(b) but also the events in June which appear in the pleadings. Paragraph 21(4)(c) logically leads on from paragraph 21(4)(a) and (b) and although it made allegation against a high official of the Government, the allegation was directed at the falsity of the Acting Chief Executive's Statement and is part of the overall case of the defendant that the Government was on the side of the large property developers and against the small purchasers.

It is also to be noted that the relevance of what is pleaded in paragraph 21(4)(c) is not confined within the narrow limit of paragraph 21(4). In other parts of the re-amended defence, there are also references to paragraph 21(4) which of course includes 21(4)(c) (see paragraph 24(a), 25 Particulars (a), 25A(a), 27Q, 27R, 27S(a)). Paragraph 21(4)(c) as part of 21(4) is relied upon by the defendant for its various defences on fair comment, justification and qualified privilege and any striking out of paragraph 21(4)(c) will therefore affect all these defences and their related paragraphs in the pleadings.

I find no good reason why paragraph 21(4)(c) should be struck out and even if there are marginal reasons, I share the sentiment of what Kay J. said in Tomlinson v The South Eastern Rly Co. (No. 2) (1887) L.T. 358 at 360 'I cannot say that any part of the defence in the present case is so irrelevant that the rule ought to be applied'. Therefore I do exercise my discretion by refusing to order that paragraph 21(4)(c) of the amended defence be struck out."

15. In our judgment, the judge is correct. The B Sting is that the plaintiff and Government had been "acting together" to blacken or disparage the aggrieved purchasers. What Government did, besides what the plaintiff did, is certainly most relevant to the justification of this sting. While the plaintiff takes no objection to the defendant's plea that the plaintiff disparaged him by the open letter published in at least 8 local newspapers, one wonders what exactly can be the basis for the plaintiff to object to his plea that Government also disparaged him on or about the same day.

16. The defendant also relies on concepts such as "self-defence" and "provocation" for him to have published the offending words. This is allowed by the authority in Moore v Oastler (1836) Moo and Rob 451 cited in Gatley para. 33.45. On this ground alone, paragraph 21(4)(c) must be most relevant. We are unable to see any reason for this paragraph to be struck out. The judge was certainly right in refusing to strike it out.

The costs appeal

17. The plaintiff also appeals the order for costs made by the judge against it. The order was expressly to be that the defendant to have 90% of the plaintiff's application for striking out, and that the plaintiff to have the usual costs order in respect of the defendant's application to re-amend the defence save that the defendant to have 90% of the costs resulting from the plaintiff's opposition of the defendant's application. This was stated clearly in the written judgment handed down by the judge.

18. However, the plaintiff's solicitors misunderstood the judge's meaning and in the draft order presented to the court for approval, the costs orders were all expressed to be "in any event". When the order was sealed, "in any event" was adopted. That had not received any objection from the defendant. Eventually, it came to the knowledge of the judge and he expressed his intention that "in any event" should not have been included. The parties then took out a consent summons resulting in the costs order being rectified with the effect that "in any event" was deleted.

19. Both parties accept that without "in any event", the costs order means that the costs can be taxed and be sought to be paid forthwith. With "in any event", no taxation can be made and the costs will not be paid until after the final determination of the action by trial.

20. Mr. Tang argues that for interlocutory proceedings, the usual costs order is "in any event". However, he does not contend the judge did not have the discretion to order costs to be taxed and paid forthwith even in respect of interlocutory matters.

21. Mr. Lee, on the other hand, submits that since the plaintiff wished to object to the order for costs as eventually rectified, it should have gone back to the judge and made representations as to why "in any event" should be added. Even if the time of 14 days prescribed under Order 42 rule 5B for the purpose had expired the plaintiff could have sought an extension of time. We do not agree that an extension of time was required in these circumstances. The circumstances of this case simply justify an application to be made, if so desired, within 14 days after the order was rectified. Be that as it may, Mr. Lee does have a point that without going back to the judge regarding the costs order, this court is deprived of the reasons from the judge why he exercised his discretion to order costs forthwith. In the absence of such reasons, Mr. Tang can only say that there is no reason or sufficient reason for the judge to have exercised his discretion in the manner he did. We do not agree. We cannot assume that the judge had no reason or sufficient reason for making the costs order. It can readily be appreciated that the application for striking out was merely a skirmish in an expected long legal battle between the parties, and that alone justifies the judge's exercise of discretion.

Conclusion

22. In the result, the appeal, both relating to the striking out and the costs order, must be dismissed. We also make an order nisi that costs of the appeal be to the defendant. As the defendant has withdrawn his cross-appeal, we also make an order nisi that the costs of the respondent's notice, which was given mainly for bringing the cross-appeal, be to the plaintiff.