Charles Sin Cho Chiu v. Tin Tin Publication Development Ltd. and Another

HCA6662/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6662 OF 1997

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Judgment on Damages

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1. I have already by a judgment handed down on 3rd December 2001 found for the Plaintiff against the 1st Defendant on liability. I am now concerned with the measure of damages vis-a-vis the 1st Defendant.

The Relevance Circumstances

2. For present purposes, it is necessary to set out the factual basis and relevant circumstances :-

(i) The court accepted the professional status of the Plaintiff as a senior solicitor and a leading member of the securities industry and his good reputation.

(ii) The court found that the 1st Defendant published materials containing imputations against the Plaintiff of corruption, of being a tainted and disreputable element and of being unfit to represent the stock broking industry.

(iii) At the trial, the 1st Defendant contested four issues as per its pleadings: reference, defamatory meanings, justification and fair comment.

On the "Reference" issue, the court easily found direct and clear reference on the corruption imputation. On the tainted element imputation, the court had little difficulty in finding reference. On the unfit imputation, no separate proof of reference was required.

On the "Defamatory Meaning" issue, the court found that the corruption imputation was well engraved in the Article. On the tainted element imputation, it was no longer argued in final submission for the 1st Defendant that the relevant parts of the Article were not defamatory. The unfit imputation flowed from the tainted element imputation.

As to the issues of justification and fair comment, they were abandoned by the 1st Defendant through its counsel at the stage of final submission.

As Mr. Pow for the Plaintiff quite rightly pointed out, the entire defence case was unmeritorious. Persisting in defending on fallacious grounds until almost the end of trial is litigious conduct deserving condemnation. Further, such conduct necessarily added to the anxiety and distress of the Plaintiff. It also generated unnecessary publicity of the matter through trial in open court and refreshed the public's memory of the libel.

(iv) The court found that the Article was grossly misleading in several respects. For want of evidence and explanation from the 1st Defendant, the court was entitled to infer that the 1st Defendant recklessly failed to verify the alleged facts stated in the News Report and the Article. This is equivalent to a finding of malice in the publication of the Article.

(v) Further, the court found that the reference to criminal proceedings against the Plaintiff that occurred years ago in the final paragraph of the News Report was clearly actuated by malice to smear the Plaintiff. The court also found that to be aggravating conduct on the part of the 1st Defendant that should be reflected in damages. In addition, since the Article was juxtaposed next to the News Report, the Court found malice in the sense that there was a calculated effort to smear the Plaintiff.

(vi) The 1st Defendant did not tender any apology as demanded by the Plaintiff or at all. The court further found the response from the 1st Defendant in terms of the Without Prejudice letter to be desultory and fell short of even a perfunctory gesture. It is thus wholly ineffective as mitigation of damages.

(vii) The wide circulation of the Article is well-recognized as an important factor governing the quantum of damages. In this case, the 1st Defendant averred that Tin Tin Daily enjoyed a circulation of 110,358 copies per day. The figure for readership would be even bigger.

Heads of Damages

3. The Plaintiff claims for 2 types of damages herein :-

(i) General damages or Compensatory damages

This is to compensate the Plaintiff for the effects of the defamatory statements. It has 3 functions :-

(a) to act as consolation to a plaintiff for the distress he suffers from the libel;

(b) to repair the harm to his reputation; and

(c) as vindication of his reputation.

(ii) Aggravated damages

The conduct of the Defendant, its conduct of the defence in court; and its state of mind are all matters on which the Plaintiff can rely on as aggravating the injury done to the Plaintiff. The following matters give rise to aggravated damages :-

(a) failure to make any or any sufficient apology and withdrawal;

(b) persistence in defending the libel which resulted in further publicity of this matter;

(c) putting up a plea of justification and fair comment which were withdrawn at the last minute;

(d) publication actuated by malice; reckless disregard as to the truth/falsity of the article; and lack of honest belief in the truth of the article.

4. On quantum, Mr. Pow relies on three fairly recent comparable cases: Hung Yuen Chan Robert v. Hong Kong Standard Newspapers Ltd. [1996] 4 HKC 519, Hung Yuen Chan Robert v. Sing Tao Ltd. [1996] 4 HKC 539 and Chu Siu Kuk Yuen, Jessie v. Apple Daily Ltd. HCA 17103 of 1998.

5. The two cases involving Mr. Robert Chan concerned publications by two associated newspapers about the same libelous matter. The two newspapers then had a combined circulation of 117,000 among English and Chinese readers. In the instant case, Tin Tin had the same circulation but among Chinese readers who may or may not be English readers. Mr. Robert Chan, also a solicitor, was libelled with imputations of being corrupt. Le Pichon J., as she then was, found the articles published by the newspapers to be "irresponsible and grossly negligent" and "callous and wanton" but there was no express finding of malice. The damages awarded in the two cases totalled $1.6 million. Presumably, the awards were for general damages only.

6. The defamatory imputation against Madam Jessie Chu, a solicitor in sole practice, was that she cheated clients' funds. The Apple Daily had a circulation of 415,000 per day. There was immediate retraction and apology by the newspaper. Yuen J. awarded $3 million in general damages which in fact included $470,000 as special damages for loss of profits. Madam Jessie Chu also suffered psychological and physical illnesses as a result of the defamatory publication. So presumably the general damages awarded also reflected the injury to the health of Madam Jessie Chu.

7. Having regard to the said 3 cases, Mr. Pow suggested that the Plaintiff is entitled to damages in the range of $2 million to $3 million.

8. The 1st Defendant was unrepresented by counsel at the hearing and made no submission whatsoever.

9. In my view, the reputation of every professional person, junior or senior, is just as valuable. In fact, it may be argued that the more junior the person in the profession, the more likely that his or her damaged reputation may scuttle an otherwise promising career for many years to come. A senior professional, perhaps, may be able to withstand a defamatory attack because of long standing and well-rooted reputation. On the other hand, it may also be argued that a senior professional presumably with a substantial practice may suffer more since a defamatory attack may scale back the practice thereby causing greater loss of income. However, in the absence of specific evidence on loss of income, I treat the reputation of persons in the same profession as equally valuable. Thus, a convenient starting point for general damages, taking Mr. Robert Chan's cases as good comparables, is $1.6 million.

10. The starting figure should perhaps be adjusted for inflation or deflation as appropriate. Mr. Robert Chan was defamed in 1994. The Plaintiff herein was defamed in October 1996 when the Hong Kong economy was heading to its peak of all times. Thus an upward adjustment is justified. Mr. Robert Chan was defamed in connection with his office as honorary consul, a kind of representative capacity, for a distant foreign country although the defamation had repercussions on his practice as a solicitor. The Plaintiff herein was attacked on his fitness to represent the securities industry of Hong Kong with repercussions also on his practice as a solicitor. I think the attack on the Plaintiff herein was more serious and more damaging. Taking all factors and circumstances into account, I hold that general damages for the Plaintiff herein should be at $2 million which is also comparable to damages awarded to Madam Jesse Chu after making deductions for special damages for loss of profits and damages for injury to health.

11. On aggravated damages, there is no reliable base figure or mathematical formula. The aggravated damages in this case arise from the conduct of the 1st Defendant after the Article and the News Report were published. Such conduct resulted in repeated publicity caused by the present proceedings over a number of years. In a sense, it has been like having the Article and the News Report published several times more over several years. Whilst it is not appropriate to measure aggravated damages in terms of multiples of the amount of general damages, I think I cannot be far wrong to fix aggravated damages at $1 million, which is 50% of the amount of general damages. However, I emphasize that the amount of aggravated damages is not determined as a percentage of general damages. It merely happens to be half the amount of general damages.

12. In the premises, I give judgment for the Plaintiff for $2 million as general damages and $1 million as aggravated damages.

Costs

13. On the question of costs, Mr. Pow for the Plaintiff made an extraordinary application. He seeks an order that solicitors for the 1st Defendant personally bear wasted costs. Counsel draws my attention to Count Tolstoy-Miloslavsky v. Lord Aldington [1996] 2 All ER 556. The headnote of that case is sufficient to illustrate the principle applicable to the present case:-

"The plaintiff's solicitors, acting without fee, issued a writ against the defendant, seeking to set aside an award of libel damages which he had obtained against the plaintiff on the ground of fraud. The writ was not preceded by any letter before action; nor was legal aid for the plaintiff (who appeared to be impecunious) applied for. The statement of claim was served, apparently settled by and bearing the signatures of leading and junior counsel, who also provided their services to the plaintiff free of charge. The defendant's subsequent application to strike out the statement of claim as an abuse of process was successful, the judge having determined that there was no reasonable possibility that the new evidence might be relevant to the fraud allegation. The defendant thereafter applied for an order that the plaintiff's solicitors pay his costs, on the grounds (i) that the costs which he had incurred were 'wasted costs' within the meaning of s 51 (6) and (7)a of the Supreme Court Act 1981 which the solicitors should be ordered to bear due to their 'improper' and 'unreasonable' conduct in bringing the fresh proceedings, and (ii) that by agreeing to act without fee the solicitors had put themselves in the position of 'third party funders' of the litigation and should therefore be ordered to pay his costs pursuant to the general discretion conferred by s 51 (1) and (3) of the Act. The judge rejected the first ground but accepted the second, and ordered the solicitors to pay 60% of the defendant's costs. The solicitors appealed. The defendant sought to affirm the judge's order on the additional ground that he should have made a wasted costs order.

Held - (1) The court had no jurisdiction under s 51 (1) and (3) of the 1981 Act to make an order for costs against legal representatives when acting as legal representatives. There were only three categories of conduct which could give rise to an order for costs against a solicitor: (i) if it was within the wasted costs jurisdiction of s 51 (6) and (7); (ii) if it was otherwise a breach of duty to the court such as could found an order (eg f he acted, even unwittingly, without authority or in breach of an undertaking); and (iii) if he acted outside the role of solicitor (eg in a private capacity or as a third party funder for someone else). The judge had accordingly erred in founding jurisdiction on, and ordering costs pursuant to, s 51 (1) and (3) and of the 1981 Act (see p 563 h to p 565 h and p 570 b to d f to j, post); Aiden Shipping Co Ltd v Interbulk Ltd, The Vimeira [1986] 2 All ER 409 distinguished.

(2) The jurisdiction to make a wasted costs order under s 51 (6) and (7) of the 1981 Act had to be exercised with care and the question whether a solicitor had properly discharged his duty to the court to conduct litigation with due propriety depended on the circumstances of the particular case. Acting without fee and doing so in a hopeless case or even in a case struck out for abuse of process was not conduct which itself would justify the making of a wasted costs order. In the instant case, the solicitors' conduct in instituting the proceedings could properly be characterised as unreasonable and clearly constituted the unjustifiable conduct of litigation against which the wasted costs regime was aimed. Moreover, counsel's role in signing the pleading did not exonerate the solicitors from their obligation to exercise their own judgment to consider whether the plaintiff's claim could properly be pursued. The order for costs made against the solicitors was therefore correct and the appeal would be dismissed accordingly."

14. Furthermore, Counsel places before the court a "without prejudice save as to costs" letter dated 5th November 2001 written by those acting for the 1st Defendant to solicitors for the Plaintiff:-

Without prejudice save as to costs

Dear Sirs,

High Court Action No. HCA6662/97

We refer to the above action and the hearing due to start before the Honourable Deputy Judge Z.E. Li this morning.

We have taken instructions on the question of settlement of the action out of Court. We are instructed that although the Defendant company does not face a petition for winding up, because the previous proceedings brought against it for a court winding-up order has been dismissed or otherwise withdrawn, the fact remains that the company is insolvent and does not have any resources to meet any judgment involving expenses on its part. Even if your client obtains judgment of a monetary nature, it is unlikely that such judgment will bear any fruit.

Our client is perfectly happy to cause to be published an apology in such terms as may be reasonable or as the court may direct. However, it does not have the means to pay even the publication costs.

Our client believes that it is within its discretion, as a package deal and if the matter can be settled, to waive costs already awarded, without any fear of being accused of prejudice against its creditors in general. Anything beyond that would, given its present situation, be improper.

In conclusion, therefore, the best that our client is capable of doing are as follows:-

(1) it will cause to be published, at your client's expenses, such notice or notices of apology as your client wishes, in such newspaper or other written media that you client chooses, of contents that are true and reasonable;

(2) it will waive all claims for costs even where its has obtained costs in its favour;

(3) your client will contribute a sum of $20,000 for the Defendant's costs for the present hearing which is actually not sufficient to cover the entire amount involved but will help to reduce the Defendant's liability in that respect; and

(4) save as aforesaid, there be no order as to costs.

We are instructed to stress that the truth of the matter is not that our client does not want to settle the court action, or to apologise to your client for that matter, but its hands are tied and it is beyond our client's ability to come to any better terms.

15. According to Mr. Pow, as the letter from those acting for the 1st Defendant reveals, those acting for the 1st Defendant launched into a trial on liability, originally fixed for 4 days but actually concluded after two days, and briefed counsel to contest every ground pleaded in the Defence, knowing full well that the 1st Defendant was insolvent. Moreover, as indicated by counsel for the 1st Defendant at the trial on liability, the 1st Defendant had no intention of calling any witness to support the grounds of justification or fair comment and those acting for the 1st Defendant knew about this. The stance taken by those acting for the 1st Defendant at the trial, albeit on client's instructions, was patently unreasonable and improper and resulted in wasted costs. And those solicitors had the audacity to ask for $20,000 contribution from the Plaintiff towards their 'costs'. Mr. Pow, therefore seeks an order that those acting for the 1st Defendant bear, say, half of the Plaintiff's costs for the trial on liability.

16. An order for wasted costs, which is within the jurisdiction of the court to make under the Rules of the High Court, Cap. 4 and within the discretion of the trial judge, should be made not only as a matter of principle, but for the practical reason that, since the 1st Defendant being insolvent and may well not be able to satisfy any costs order made against it (not to mention judgment on damages), the Plaintiff should be able to recover a portion of his costs against the 1st Defendant's solicitors.

17. I am not making any decision on this application yet because Mr. Pow, quite properly, advises me that I should give those acting for the 1st Defendant time and opportunity to make representation before deciding. I, therefore, hereby call upon those acting for the 1st Defendant to show cause why a wasted costs order should not be made against them personally. Those solicitors should make submissions in writing within 30 days after handing down of this judgment or, if they prefer, apply for a date to come before me (with notice to those acting for the Plaintiff) to make oral submissions and/or tender evidence.

18. Finally, I should also observe that at the hearing to determine quantum for damages in open court, whilst the 1st Defendant had solicitors on record as acting for it, counsel was not briefed to act for the 1st Defendant and solicitors attended the hearing on "watching brief". I do not understand how solicitors on record as representing a party in proceedings in the Court of First Instance can hold a "watching brief". Those solicitors should be acting rather than watching. In any event, whether they were acting or watching on behalf of their client on 4th January 2002, since solicitor have no right of audience in open court at the Court of First Instance, I could not recognize their "presence" except as members of the public in the gallery.