JOHN RAYMOND LUCIW v. WOLFGANG DERLER AND OTHERS

HCA 2148/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2148 OF 2011

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J U D G M E N T

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Background:

1. Mr Luciw has brought these proceedings consisting four causes of action against Mr Derler, WP Engineering Ltd. They are:

(1)against Mr Derler, for damages for reckless and/or negligent misstatement and for inducing WP Engineering in the breach of a renovation contract with Mr Luciw in respect of an apartment in Tuen Mun,;

(2)against Mr Derler for defamation;

(3)against WP Engineering for breach of the renovation contract;

(4)against Mr Cheng for defamation.

2. Mr Luciw came to know of Mr Derler and his company through Mr Derler advertising on the Internet on a website, Asiaexpat.com, which is owned by Mr Luciw’s employer.  Mr Cheng and Mr Derler apparently reside together.

3. After being served with the proceedings, none of the defendants took any steps at all.  On 7 February 2012, pursuant to RHC O 19 r 3, an interlocutory judgment was entered against all defendants in respect of all causes of action.  On 29 August 2012, the Master set aside the judgment against Mr Derler and WP Engineering in relation to the alleged negligent misstatement and breach of contract actions, and against Mr Cheng in the defamation action against him.  Leave was given to the defendants to file a defence to those actions and to Mr Derler, a counterclaim.  However the interlocutory judgment in respect of the defamation action was maintained, with damages to be assessed.

4. The assessment of damages was set down to be heard by me on 24 July 2013.  I am not concerned with the negligent misstatement or the breach of contract action, or the defamation claim against Mr Cheng in this judgment.  When the matter came before me on 24 July 2013, Mr Derler did not appear, and the matter proceeded in his absence.  I am quite satisfied from the evidence before me that Mr Derler was given full and proper notice of all matters, including the hearing date.

The factual circumstances:

5. In September 2009, Mr Luciw entered into a contract for the renovation of an apartment in Tuen Mun with WP Engineering, a company operated by Mr Derler.  Unfortunately all did not go well in respect of the contract.  In about September 2010, when the relationship between the parties broke down, Mr Luciw posted critical comments on the Internet about the quality of the workmanship of WP Engineering.  The posts also referred to Mr Derler.  In order to post those comments Mr Luciw used a nom de plume. 

6. Mr Luciw also created a Facebook group called “Consumers against WP Engineering Ltd Hong Kong.”  Mr Luciw also created a website using the URL “www.bewareofwp.com”.  Mr Luciw created a video which was posted on You Tube.  The counterclaim filed by Mr Derler does not reveal the content of either the website or the video.  The website is now off-line, and the video has been removed.  Mr Luciw’s purpose in the postings, the website and the video appears to have been to warn people against using the defendants for renovation work.

7. Mr Derler contends that the various postings by Mr Luciw are defamatory of both himself and his company.  In his defence to the proceedings, Mr Derler included a counterclaim seeking damages for that alleged defamation. As Mr Derler did not seek to have the counterclaim in respect of that alleged defamation brought before the court at the same time as the assessment of damages, I cannot take into account the allegations contained in the counterclaim, other than to note the nature of those allegations and that in the proceedings with which I am concerned, they have not been proved.

The Facebook page:

8. In late July 2011, Mr Derler created a Facebook page in the name of Mr Luciw.  He placed a photograph of Mr Luciw and his wife on the Facebook page.  The Facebook page contained accurate details of Mr Luciw’s name and employment. 

9. Mr Clark asked that this judgment not set out the exact words of the allegations made by Mr Derler on the Facebook page, so as not to perpetuate the defamation further.  Because of the specific nature of the allegations and the relevance of that nature to the question of damages, it is not sufficient simply to say that I am satisfied that the allegations were defamatory.  Is necessary that I should at least describe the defamatory allegations in general generic terms.

10. The Facebook page purported to describe Mr Luciw as both a homosexual and a paedophile.  Using the Facebook page Mr Derler sent messages to a female “Facebook friend”, in the name of Mr Luciw, seeking a sexual encounter.  While in control of the Facebook page Mr Derler sent a Facebook message to Mr Luciw’s wife purporting to admit to a desire for homosexual paedophilia.  While in control of the Facebook page, Mr Derler sent Facebook messages of a paedophilic nature to Mr Luciw’s nephews, aged 12 and 9, and an identical message to a friend of theirs, aged 12.

11. The Facebook page remained online until sometime during September 2011, a period of approximately 2 months.

12. In his statement of defence to the defamation claim Mr Derler did not admit that any of the material that had been posted on the Facebook page was defamatory.  However, he admitted creating the Facebook page.  He asserted, apparently as a reason for the creation of the Facebook page, the various posts made by Mr Luciw in respect of their contractual dispute.  He asserted that he believed that the statements made of Mr Luciw on the Facebook page created by him were true in substance.

13. The statement of claim pleaded that the assertions in relation to Mr Luciw’s personal life were false and defamatory in their natural and ordinary meaning.  That must be right.  There was not a shred of evidence upon which any submission could be made that the assertions were truthful or justified.

The dissemination of the defamation:

14. The “Facebook friend” to whom Mr Luciw sent a message has 201 “Facebook friends” herself.  The settings for the Facebook page created by Mr Derler were such that the page had no restrictions upon access. Any of those 201 friends accessing her Facebook page would be able to link directly to the offending Facebook page without difficulty.  It is not possible to say how many of them did this, but I infer that it is more likely than not that at least some of them did follow that link.  The nature of the message posted by Mr Derler was such that it is inevitable that some would follow the link to find out who would post such a message. 

15. Facebook has many millions of users and it is not unusual for Facebook users to look for people with similar interests, or by name, or simply to encounter a particular page and read the material on that page.  By including details of Mr Luciw’s employment it was easier for persons who knew him to locate the Facebook page if they wished to find out if Mr Luciw had a Facebook page.  Asiaexpat.com is a well-known website in Hong Kong and throughout Asia.  It has 15 different city/country sections covering virtually all of the countries in south-east Asia.  It claims 950,000 visits per month and 400,000 registered users.

16. Facebook has become ubiquitous.  It is quite common today for persons dealing with other persons to check to see whether or not they have a Facebook page.  It would not be at all unusual; indeed it would be likely, that anyone dealing with Mr Luciw through Asiaexpat.com would check to see if he had a Facebook page.  If they did so during August and September 2011, they would have gone to the page created by Mr Derler. 

17. I am satisfied that it may properly be inferred that a large but unquantifiable number of users are likely to have read the Facebook page.  I am satisfied that the defamation has been widely disseminated and that it is more likely than not that many persons have seen it.

An apology:

18. At no stage at all was any apology offered by Mr Derler.  Instead, on his pleadings, although not ultimately supported at trial, Mr Derler persisted in the position that his statements were true and justified by that truth.  There is no evidence at all to say that the statements were true.  I accept completely Mr Luciw’s evidence that they were entirely false in all respects.

The evidence of the effect of the defamation:

19. Both Mr Luciw and his wife gave evidence.  Mr Luciw said that that he had suffered embarrassment, considerable stress, and distress by the content of the Facebook page.  He felt that his personal and professional reputation had been damaged.  It is clear that a good deal of that stress and distress would have come from the message that had been sent to his wife.  It must be very stressful situations for a person to have linked to his employment allegations such as were made on this Facebook page. 

20. Mrs Luciw’s evidence was that when she received the message she was shocked, angry, outraged, upset and heartbroken.  She said that she was already under considerable stress, and close to collapse, by reason of the difficulties in dealing with the defective building work.  Her initial reaction was to believe that it was her husband who had sent the message to her.  It must have been extremely stressful for Mr Luciw to have to explain the circumstances to his wife.  Mrs Luciw’s evidence serves to substantiate the extent of her husband’s stress.

21. Evidence of the receipt of the Facebook messages by the young children in Canada was given by Mr Luciw’s brother, the father of the two nephews, by way of written statements produced pursuant to a hearsay notice. 

22. None of the evidence was subject to challenge. I accept the evidence that as a result of the defamation Mr Luciw has suffered considerable embarrassment, stress and distress, both personally and professionally.  I accept that the defamation would have damaged Mr Luciw’s reputation with any person who has happened to see the Facebook page.

Damages for defamation:

23. Damages for defamation are compensatory, to restore the claimant, as far as money can do so, to the position he would have been an if the defamation had not been committed. General damages serve the three functions of acting as a consolation to the claimant for the distress he suffers from the publication of the statement, to repair the harm to his reputation including, where relevant, his business reputation; and as a vindication of his reputation; see Gatley on Libel & Slander, 11^th edn., at 9.2.  There is necessarily substantial subjective element in an award of such damages, because neither mental distress or damage to a reputation are readily convertible by the use of any yardstick into a sum of money; see Duncan and Neill on Defamation, 3^rd edn, 2009, at 23.04. 

24. The courts in England have over the years endeavoured to set a ‘ceiling’ for the highest award for compensatory damages.  In 2004, this was set at £200,000, (HK$2.4 million): see Gleaner Co Ltd v Abrahams [2004] 1 AC 628 at [49].  By 2009, that sum had risen to £215,000, (HK$2.56 million): see Gur v Avrupa Publishing Ltd [2008] EWCA Civ 594, and Duncan and Neill, at 23.05.  Although the Hong Kong courts do not appear to have established such a ceiling it seems clear from the decision of the Court of Final Appeal in Campbell & Ors v Cathay Pacific Airways Ltd & Ors [2013] 3 HKC 185, at 211-217, where an award of HK$3 million in Chu Sik Kuk Yuen v Apple Daily Ltd & Ors [2002] 1 HKLRD 1, was subject to some comment, that a sum in that order would constitute a ceiling at the present time.

Comparable damage cases:

25. Mr Clark cited four relevant cases by way of comparables.  They are Campbell & Ors; Court v Aiken [2006] NZAR 619; Yaqoob v Asia Times Online [2008] 1 HKC 589; and Chu Sik Kuk Yuen.

26. In Campbell & Ors, a defamation award to Cathay pilots at first instance of HK$3 million was reduced to HK$700,000 by the Court of Appeal, a decision that was upheld in the Court of Final Appeal. The pilots had suffered damage to their professional reputations and it was particularly for this, for which they were compensated.  The Court of Appeal had taken into account the character of the pilots, described as “troublemakers upon whom Cathay could not rely”; the fact that the defamation was published on an occasion of qualified privilege, and that there was no plea of malice, in reducing the award; see Court of Final Appeal at §81.

27. In New Zealand, in Court v Aiken [2006] NZAR 619, Hansen J increased an award of NZ$20,000, (HK$124,000), to NZ$40,000, (NZ$248,000).  Just as with this present case, that case involved a defamatory allegation of paedophilia.  The plaintiff and defendant were both taxi drivers and were involved in a heated exchange outside the entrance to a small city airport.  On two occasions approximately 30 minutes apart, the defendant said that the plaintiff was a paedophile and a person who looked a paedophilic websites.  Two other taxi drivers heard the first assertion, one heard the second assertion.  There may have been some passengers present.

28. In fixing the level of damages, the judge specifically took into account the limited nature of the dissemination of the defamation, but noted that the allegation was one of serious criminal behaviour that is viewed with total disgust and disdain by the community: see §§56 & 59.

29. In Yaqoob, the defamation related to Internet accusations by a person described as an investigative journalist, against the claimant, an international trader in gold and jewellery and in the business, on an international scale, of subscription television broadcasting.  The accusations were of criminal money-laundering, terrorist financing and drug trafficking.  The award made to Mr Yaqoob was HK$1 million.  The award was referred to, but not criticised, by the Court of Appeal, see [2011] 3 HKC 186, at §§41-44; and the Court of Final Appeal, see [2013] 3 HKC 457; at §103 in Oriental Daily Publishing Ltd & Anor v Ming Pao Holdings Ltd & Others.

30. In Chu Sik Kuk Yuen, the defamation constituted of allegations against a solicitor which were wholly inaccurate. It was said of her that she had absconded with substantial amounts of her clients’ funds.  She had subsequently suffered from a significant bout of depression and prematurely gave birth to a baby who suffered from a life-threatening condition for some time.  In Campbell & Ors, the Court of Final Appeal said that was hard to think of a more serious attack on a solicitor’s professional reputation and her feelings than such a report, see §85.  That Court noted also that the sum of HK$3 million effectively included special damages amounting to HK$470,000 loss of income; see §86.

31. I not too, from the decision of the Court of Appeal, in Oriental Daily Publishing Ltd & Anor, at §52,that awards to a corporate claimant are significantly lower than awards to an person.

Discussion:

32. Having regard to these comparables, Mr Clark sought an award of HK$1 million.  This was a particularly nasty defamation.  I agree entirely with Hansen J that an allegation of paedophilia is an allegation of criminal behaviour that is of the most reprehensible nature and behaviour that is viewed with total disgust and disdain by the community.  It is an allegation that falls within the same class of allegations that were made in Yaqoob.

33. The direct linking of the allegations to Mr Luciw’s employment was intended to, and must have, damaged not only his personal reputation but also his professional reputation.  The defamation in Campbell & Ors was essentially a defamation of the claimants’ professional reputation only.

34. Unlike the claimant in Chu Sik Kuk Yuen, Mr Luciw does not say that he has suffered any loss of income.  Like that claimant, he has suffered mental stress, but I have to say that the evidence does not establish that stress to the level that was established in Chu Sik Kuk Yuen.

35. In Court v Aitken, Hansen J noted that while the defamation was undoubtedly very serious, it had been the subject of only very limited dissemination. The defamation in this case was widely disseminated through the use of Facebook, one of the most widely used websites in the world today.  It is reasonable to infer that the dissemination of the defamation by the use of Facebook meant that the publication of the defamatory statements were both inside and outside Hong Kong.  In Yaqoob, Reyes J held that general damages can be awarded against a Hong Kong defendant for the publication of a defamatory statement both inside and outside Hong Kong: see §151.

36. Weighing all of these factors, I have come to the conclusion that the appropriate award in this case is HK$1 million.

Aggravated damages:

37. Mr Clark sought aggravated damages in the sum of $500,000.  The conduct of a defendant, his conduct of the case, and his state of mind are all matters upon which a claimant may rely to justify an award of aggravated damages: see Gatley at 9.14.  Aggravated damages are not designed to punish the defendant, although there is an inbuilt punitive element in such damages.  The true purpose of aggravated damages is to compensate a claimant for the additional hurt has suffered from the way in which the defendant has conducted himself and his case.

38. Mr Clark sought to justify an award of aggravated damages by arguing that Mr Derler was activated by malice towards Mr Luciw in the publication of the defamation.  Malice had not been pleaded.  In the absence of a plea of malice, I place no weight upon whatever Mr Derler’s state of mind may have been in creating the Facebook page or tin the actions that followed that creation.

39. In determining whether or not to award aggravated damages I am entitled to take into account the way in which Mr Derler has conducted his case.  He has pleaded that his statements were both truthful and justified, but when the matter came to trial he not only failed to produce a shred of evidence to support those pleadings, but failed even to come to court.  By his refusal to resolve the matter in any way, Mr Derler has forced Mr Luciw to come to court to clear his name and reputation.

40. Mr Derler has failed to offer any apology at any stage of the proceedings.

41. Taking those matters into account I award the sum of HK$100,000 by way of aggravated damages.

Costs:

42. Mr Luciw has been wholly successful in his action.  Having regard to the seriousness of the defamation it cannot be suggested that Mr Luciw as in any way exaggerated his claim.  Mr Derler has not only pleaded justification and truth, without offering any evidence at all to substantiate those pleas, but has failed to offer any apology.  No payment into court was made, there was no offer of settlement, and Mr Derler simply failed to appear at the trial.

43. I am satisfied that this is a case for indemnity costs.  Mr Clark has put before me a statement of costs for summary assessment under O 62 R9A.  I am satisfied that those costs are fair and reasonable.  Mr Derler must pay Mr Luciw’s costs which I fix in the sum of solicitors fees, HK$189,425, counsel’s fees, HK$166,667, and disbursements HK$10,376.30, a total of HK$366,468.30.