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

CACV 1006/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1006 OF 2000

(ON APPEAL FROM HCA 3831 OF 1997)

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JUDGMENT

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Hon Woo JA (giving the judgment of the Court):

Background

This is an appeal against two Orders made by Madam Justice Chu, one dated 14 November 2000 and the other dated 15 November 2000. The Order of 14 November 2000 was the Judge's determination by way of preliminary issue that the words complained of by the plaintiff as being defamatory are not capable of bearing the defamatory meanings pleaded in paragraphs 10 and 11 of the Statement of Claim. The Order of 15 November 2000 was made pursuant to the application of the plaintiff to amend the Statement of Claim. The Judge allowed the amendment, save and except paragraph 11(5) of the proposed draft Amended Statement of Claim, on condition that the plaintiff paid the defendants the costs of the action incurred up to date and the costs of, occasioned by and thrown away by the amendment, including the costs of the application to amend, to be taxed and paid forthwith.

2. The alleged defamatory words ("the Words") were contained in an article in issue 325 of Next Magazine published on or about 31 May 1996 at page 84 ("the Article"). The Words were set out in paragraph 7 of the Statement of Claim, whereas the translation was pleaded in paragraph 8 of the Statement of Claim. The Chinese text and the certified English translation are as follows:

"中方欲買《 天天》

要員奔東方

....

原擁有《 天天》之文化傳信集團，高層亦有大變，行政壹哥關越強及左右手陳啟祥將於六月中過檔東方，幫馬主席打理集團業務。江湖消息話馬主席斟過鄭經翰做此位，但傾唔成，其後再斟關越强，他在一年前已有離心，故一拍即合，並曾往台灣面見老馬（馬主席之父），獲委以重任。" (emphasis added)

“Chinese Party Intends to Purchase Tin Tin

Oriental's Key Personnel Fled

...

The senior management of the CultureCom Group, which originally owned 'Tin Tin', is also heading for a big shake-up. Number one administrator, Kwan Yurk Keung, and his close assistant, Chan Kai Cheung, will be joining Oriental Press in mid June to assist Chairman Ma in managing the group business. Tabloid news reported that Chairman Ma had negotiated with Cheng King Han for this position but was not successful. Chairman Ma then contacted Kwan Yurk Keung who had, since last year, wanted to leave. It was therefore a match at the first instance. Kwan Yurk Keung had even been to Taiwan to see Old Ma (the father of Chairman Ma) and was appointed an important post." (emphasis added)

3. The translation of the sub-heading of the Article is obviously wrong, but that is irrelevant to the issues determined by the Judge and to be considered in this appeal. The alleged sting is contained in the last sentence of the Article which is underlined for the purpose of easy reference. Several paragraphs of the Statement of Claim were relevant to the alleged meanings of the Words, namely, paragraphs 2, 10 and 11 which are set out below:

"2. As is well known to the public:

(1) Mr Ma Sik Chun ('Ma') was one of the founders of the Oriental Daily News, one of the main publications of the Oriental Press Group;

(2) Ma left Hong Kong in 1978 while awaiting trial and has since been residing in Taiwan; and

(3) Since he left Hong Kong, Ma held no management position in the Plaintiff or any of its subsidiaries."

"10. The Article in its natural and ordinary meaning meant and was understood to mean that:

(1) the Plaintiff was not controlled or managed by its board of directors but by the father of its chairman, who was not a director of and held no management position in the Plaintiff;

(2) the Plaintiff was in fact controlled and managed by a fugitive from justice; and

(3) the Plaintiff's board of directors was in fact only a puppet of or front for Ma and had no real power over important affairs of the company, such as the appointment of senior personnel."

"11. Further or alternatively, if, which is denied, the matters set out in paragraph 2 are not matters of public knowledge, the Plaintiff contends that the Article bore or were understood to bear the meanings pleaded in paragraph 10 above by way of innuendo to those readers of Next Magazine who knew of such matters."

4. It can be seen that the facts pleaded in paragraph 2 were alleged to be well known to the public, and such facts as known to the public were pleaded to support the natural and ordinary meaning of the Words as pleaded in paragraph 10(1), (2) and (3). The plaintiff also argued before the Judge that there was a meaning less injurious than the meanings pleaded in paragraph 10(2) and (3). Paragraph 11 of the Statement of Claim was an alternative plea of a legal innuendo that if the facts pleaded in paragraph 2 of the Statement of Claim are not matters of public knowledge, the Words bore or were understood to bear the meanings pleaded in paragraph 10 of the Statement of Claim to those readers of Next Magazine who knew such facts.

5. The Judge held that the Words in their natural and ordinary meaning are not reasonably capable of bearing the defamatory meanings pleaded in paragraph 10 of the Statement of Claim. She also held that the Words are not reasonably capable of bearing the less injurious meaning. Similarly, she held that the Words are not reasonably capable of bearing the meanings set out in paragraph 10 by way of innuendo as pleaded in paragraph 11.

6. Indeed, the Judge dealt with the innuendo meanings in the light of the plaintiff's proposed amendment to the Statement of Claim. This is apparent from the following parts of the judgment:

" As to whether the words complained of are reasonably capable of bearing the innuendo meanings pleaded, the plaintiff proposed to amend the Statement of Claim by adding two averments on the additional facts: Firstly, Mr Ma Sik Chun is the father of Mr Ma Ching Kwan, the Chairman of the plaintiff at the material time. Secondly, Mr Ma Shik Chun was commonly referred to as "老馬”(Old Ma) in articles published in the Next Magazine, two of which are "東方馬遙控十五億企業”and“動用十五億東方馬鬥肥佬黎" appearing respectively in the 11 October 1991 and 15 December 1995 issues of the Next Magazine.

Clearly, the proposed amendment is a recognition of the missing gap presented by paragraphs 2 and 10 of the Statement of Claim. Without them, even if the matters in paragraph 2 of the Statement of Claim are additional facts known to a particular reader of the Next Magazine, he will not be able to read into the article the innuendo meanings pleaded in paragraph 10. Mr Chow for the defendants does not suggest that the proposed amendment presents prejudice that cannot be compensated by costs. I do not consider the defendants can realistically resist the proposed amendment, albeit made very late in the day. I will therefore deal with the preliminary issue in the context of innuendo on the basis of the proposed amendment.

Mr Cheng, S.C., indicated that the plaintiff will prove the two additional averments by reference to the two previous articles in the 1991 and 1995 issues of the Next Magazine. I accept that this is a course open to the plaintiff. But that does not solve the problem of proving the matters pleaded in paragraph 2 of the Statement of Claim being extrinsic facts known to any particular reader of the Next Magazine. The defendants do not accept that the matters pleaded in paragraph 2 are additional facts known to the readers to whom the article is published. The burden therefore remains on the plaintiff to prove that these additional facts were known to at least one of the readers to whom the words were published. In this context, it may be argued that the fact of Mr Ma being a fugitive who had fled to Taiwan is covered by the two previous articles, but the fact stated in paragraph 2(3), namely Mr Ma holds no management position in the plaintiff or any of its subsidiaries is clearly not covered by the two articles.

The plaintiff suggested that this can be dealt with by the evidence of Mr Yip Tak Fai. Mr Yip has since 1978 been working for the plaintiff and is currently the publisher of the Oriental Daily News. It is argued that Mr Yip is entitled to give evidence of knowledge of the matters pleaded in paragraph 2 of the Statement of Claim because he is also a member of the public. This in my view is not good enough. For the plea of innuendo, the knowledge of the additional fact is to be possessed by a potential reader to whom the words are published and not by just any member of the public. At any rate, Mr Yip can hardly be regarded as a member of the public in the true sense of the words. He has been an employee of the plaintiff for many years and his knowledge or understanding of the structure of the plaintiff and the composition of the management level of the plaintiff cannot be equated with that of an ordinary member of the public, still less a reader of the Next Magazine.

There is insufficient evidence to establish that the extrinsic facts pleaded in paragraph 2 are all within the knowledge of the readers to whom the words complained of are published so to support the plea of innuendo. Without knowledge of these additional facts, an ordinary reader would not come to read or understand the article or the words complained of as bearing the innuendo meanings pleaded in paragraph 10 of the Statement of Claim. The position is in fact no different from that analysed under the natural and ordinary meanings of the words complained of. I therefore also hold that the words complained of are not reasonably capable of bearing the innuendo meanings pleaded."

7. On 15 November 2000, the plaintiff sought leave to amend the Statement of Claim by deleting paragraphs 2, 10 and 11 altogether from the original Statement of Claim and put in new paragraphs 10, 10A and 11. During argument before the Judge, however, the plaintiff abandoned the proposed paragraphs 10 and 10A. These two paragraphs plead the natural and ordinary meanings of the Words and general knowledge in aid. Since they were abandoned, the plaintiff no longer relied on the natural and ordinary meanings. That was how the matter stood. The proposed paragraph 11, which was then the only proposed addition to the Statement of Claim, pleads a true innuendo, with particulars of innuendo meanings, particulars of extrinsic facts in support of the innuendo meanings and particulars of readers having knowledge of the extrinsic facts. Under the last mentioned particulars of readers, there is a sub-paragraph (5), which alleges that the article was published to Mr Yip Tak Fai who knew of the extrinsic facts. This sub-paragraph was disallowed by the Judge in granting the leave to amend. In this regard, the part of the judgment cited above on Mr Yip is relevant. When disallowing paragraph 11(5) of the proposed amendment, the Judge said:

"...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."

8. By the Notice of Appeal dated 5 December 2000, the plaintiff seeks an order that the Order of 14 November 2000 be set aside and that consequently the Order of 15 November 2000 be set aside. The plaintiff also seeks alternatively that the Order of 15 November 2000 be varied so that the leave to amend should apply to paragraph 11(5) of the Amended Statement of Claim, which sub-paragraph was disallowed by the Judge.

9. By a Respondents' Notice dated 20 December 2000, the defendants raise three grounds in support of the judgment. Grounds 2 and 3 deal with the innuendo meanings and Mr Yip Tak Fai in the context of pleadings, whereas ground 1 raises an estoppel against the appeal. We must first deal with the ground of estoppel, for if it succeeds we do not need to consider the merit of the appeal.

Estoppel by conduct

10. The factual basis of the estoppel is as follows. Upon the determination of the Judge on 14 November 2000 that the words complained of by the plaintiff as pleaded were not capable of bearing any of the meanings, natural and ordinary or innuendo, the plaintiff had three options: (i) to accept the determination and seek leave to amend the Statement of Claim to rely on other defamatory meanings of which the words are reasonably capable of bearing, (ii) accept the determination and abandon the claim altogether, or (iii) lodge an appeal against the determination. The plaintiff elected to adopt option (i) and sought and obtained from the Judge an adjournment of the trial to 15 November 2000 for the purpose of formulating amendments to the Statement of Claim. At the hearing on 15 November 2000, the plaintiff produced a draft Amended Statement of Claim and sought leave from the Judge to amend without any qualification. On 21 November 2000, the plaintiff filed and served its Amended Statement of Claim. By such conduct, so Mr Yu SC, for the defendants, contends that the plaintiff plainly accepted the Judge's determination. The defendants, induced by the conduct of the plaintiff, acted to their detriment in that (i) additional legal costs in respect of the hearing on 15 November 2000 were incurred, and (ii) prior to the service and filing of the Notice of Appeal, the defendants' legal advisors had already prepared, filed and served a Re-Amended Defence on the basis of the amendments to the Statement of Claim which had been allowed by the Judge, thereby incurring further costs.

11. Mr Yu relies on the case of Bowden's Patents Syndicate, Ltd v Herbert Smith & Co [1904] 2 Ch 86 & 122, and the fact that it has been cited in the Supreme Court Practice editions from 1971 to 1999 and in Hong Kong Civil Procedure 2002, para 20/8/12. At the trial of the action in that case, the plaintiffs' case was completed, the judge held that the plaintiffs were not entitled to maintain their action without adding the executors of the patentee as co-plaintiffs. The plaintiffs then asked for leave to amend their writ and statement of claim in accordance with this decision; leave to amend was granted upon terms of allowing the defendants to amend their defence and particulars of objection, the costs of the trial incurred up to that date and any costs thrown away by reason of the necessity of making the amendment to be the defendants' costs in any event. The plaintiffs appealed to seek to reverse the judge's order to let the trial proceed without the plaintiff's amending the writ and the statement of claim. The decision of the court was reported in the following manner: "The Court (Vaughan Williams, Romer and Cozens-Hardy LJJ), without calling on counsel for the respondents, dismissed the appeal. They were of the opinion that, in as much as the plaintiffs had elected to amend instead of having the action dismissed, there was no order against which they could appeal."

12. The report of the judgment is by any standard extremely brief. The only reasoning that was reported for the decision was "in as much as the plaintiffs had elected to amend instead of having the action dismissed, there was no order against which the plaintiffs could appeal." There was no analysis of the circumstances giving rise to the election. Mr Griffiths SC, for the plaintiff, submits that the whole tenor of the reported reasoning is that the plaintiffs in that case had accepted that the ruling of the trial judge was correct, and hence there was no order to appeal against. We think this view is probably correct.

13. Mr Griffiths also refers us to Spencer Bower & Turner on Estoppel, 3rd Ed, p 333, which states that for an estoppel to operate there must first be an election between two mutually exclusive courses of action open to the litigant, and secondly, prejudice to the opponent as a result of such election. He submits that the plaintiff's application to amend in the instant case following from the Judge's decision on 14 November 2000 and the appeal against her said decision are not mutually exclusive. It is not uncommon that an interlocutory decision is made in the course of a hearing, but the party against whom the decision is made does not have to stop everything in the tracks and appeal immediately: he has a statutory right to appeal and often can do so at the end of the entire hearing. Such a decision appealed against includes a ruling on the admissibility of certain evidence and discovery of documents during trial. The plaintiff's application to amend cannot and should not be treated as an unequivocal acceptance of the Judge's decision of 14 November 2000. He refers to Lissenden v CAV Bosch Ltd [1940] AC 412, at 420-421 and 429-430 and Moore v Cunard Steamship Co [1935] 28 BWCC 162 at 168-169 for support.

14. The facts of the cited cases are different from those of the case before us but we are persuaded that Mr Griffiths must be right on principle. The plaintiff's application to amend and his statutory right of appeal were options open to him after the Judge's determination on 14 November 2000, and in our view, they were not mutually exclusive options. As suggested by Chung J during argument, the matter can be tested in this way. If the plaintiff had upon the Judge's determination gone straight on to appeal, it would not be bound as having elected, if it fails on the appeal, to proceed with the action only on the basis of the original Statement of Claim. It could not have elected never to amend. In our judgment, the plaintiff's application to amend on 15 November 2000 cannot in the circumstances of this case be treated as an election so that it would not exercise its right to appeal. Looking at it from another angle, the defendants could not reasonably have taken the plaintiff's application to amend as a representation to them that it would not appeal.

15. In the result, we hold that the estoppel point has no merit. We turn now to the grounds of appeal. The other two grounds raised in the Respondents' Notice will be subsumed in the our judgment dealing with the plaintiff's grounds of appeal.

The natural and ordinary meaning

16. Paragraphs 1 to 5 of the grounds of appeal challenge the Judge's ruling on the natural and ordinary meaning of the words. These grounds can be summarized as follows. Since the plaintiff had pleaded that the facts in paragraph 2 of the Statement to Claim are within the general knowledge of the public, the Judge should not rule on whether such facts are or are not within the general knowledge of the public. The Judge should rule on whether the said facts are fairly capable of being within the general knowledge of the public. The Judge should have proceeded on the assumption that ordinary readers do possess general knowledge of those facts and then should proceed to consider whether the words are fairly capable of bearing the inferential meaning to such ordinary readers.

17. Mr Griffiths accepts that no evidence is admissible of the natural and ordinary meaning of the words complained of or the sense in which they were understood or of any facts giving rise to inferences to be drawn from the words used. See Charleston v News Group Newspapers [1995] 2 AC 65 at 70, per Lord Bridge and Lewis v Daily Telegraph Limited [1964] AC 235, at 281, per Lord Devlin. On the other hand, knowledge of special or extrinsic facts is required to be pleaded to support a true or legal innuendo.

18. It is clear that it is the function of the judge at trial to decide whether or not the pleaded meanings are those which the words are capable of bearing. In Slim v Daily Telegraph Ltd & Ors [1968] 2 QB 157 at 176B, Diplock LJ stated categorically:

"And it is for the judge to rule whether or not any particular defamatory meaning for which the plaintiff contends is one which the words are capable of bearing."

19. Regarding the judge's role in dealing with the general knowledge of the public, Mr Yu in his written submissions directs our attention to Lewis v Daily Telegraph, where Lord Devlin said at p 281:

"It was suggested in argument that the division of the innuendo into two paragraphs would be awkward for the pleader. It is said that it may not always be easy to decide whether an extrinsic factor relied on is a matter of special knowledge, or whether it is just general knowledge in the light of which the ordinary, though indirect, meaning of the words has to be ascertained. I do not think that this should present any difficulty in practice. The pleader must ask himself whether he contemplates that evidence will be called in support of the allegation: if he does, it is a legal innuendo; if he does not, it is not. If he is in doubt, he can plead in two paragraphs; and then if at the trial his opponent agrees or the judge rules that it is a matter of general knowledge, the legal innuendo can be dropped."

Also, in Fayn v Thompson Properties Pty Ltd (Supreme Court of NSW, 22 October 1991, unreported), Hunt J held that it was for the trial judge to determine whether any particular facts or circumstances are within the general knowledge of the community.

20. We proceed now to examine if the Words, taking into account whether the matters set out in paragraph 2 of the Statement of Claim, in particular those in paragraph 2(3), are as pleaded well known to the public. While whether or not these facts were at the material time well known to the public is within the functions of the jury and to be determined by them, the Judge as well as this Court need to consider if they are within the general knowledge of the public in order to decide on the natural and ordinary meaning that the Words are reasonably capable of bearing. That consideration includes whether the pleaded facts are fairly capable of being generally known to the public. The court cannot, as suggested by Mr Griffiths, merely assume that such facts are within general knowledge of the public. Without considering such pleaded knowledge, it would be quite impossible for the court to discharge its function of deciding whether or not the words complained of are reasonably capable of bearing the natural and ordinary meanings as pleaded.

21. In our judgment, none of the facts pleaded in paragraph 2 is well known to the public, except perhaps that the Oriental Daily News was one of the main publications of the Oriental Press Group and the facts pleaded in paragraph 2(2) which states: "Ma left Hong Kong in 1978 while awaiting trial and has since been residing in Taiwan". What the plaintiff is contending now, that those facts are fairly capable of being within the common knowledge and experience in worldly affairs of the public, is different from what was pleaded in paragraph 2, which was "well known to the public" . Be that as it may, we are also of the view that none of the facts pleaded in paragraph 2, with those exceptions, is fairly capable of being within the common knowledge and experience in worldly affairs of the public. We have also reached the same conclusion as the Judge did that the Words are not reasonably capable of bearing any of the natural or ordinary meaning as pleaded in paragraph 10 of the Statement of Claim.

22. Mr Griffiths submits that it was known to at least members of the legal profession or perhaps judges who are in their mid-forties that in 1978 Ma Sik Chun had jumped bail because the media extensively covered the matter at the time. Therefore, it is argued that it would at least be the general knowledge of this class of readers of the Next Magazine which has a wide circulation of 170,000 copies per issue that Ma is a fugitive from justice. Even if we accept this, paragraph 2(2) does not plead that Ma is a fugitive from justice. This fact is only pleaded in the proposed paragraph 11 (which has become paragraph 10) of the Amended Statement of Claim in respect of which leave was sought from the Judge.

23. Mr Griffiths asks us a rhetorical question: "To such members of the public, would it be within their common knowledge and experience in worldly affairs that a fugitive from justice could not hold any management post in a listed company?" This question in the context of this case consists of a number of questions: Would such members of the public know that Old Ma was a fugitive from justice? Would they know that the Oriental Press Group that owned the Oriental Daily News was a listed company? Would they know that such a fugitive could not hold any management post in a listed company? As Ma being a fugitive from justice was not pleaded in the original Statement of Claim, the questions posed do not fit the circumstances. Even if they are, while one may answer one or more of these questions in the affirmative, we remain of the view that the Words cannot reasonably be understood by readers of the magazine as to bear the natural and ordinary meanings as pleaded in paragraph 10 of the original Statement of Claim. A closer analysis of these meanings can be found below.

24. The grounds against the Judge's ruling in this regard fail.

The less injurious natural meaning

25. The less injurious meaning argued before the Judge was that "Mr Kwan Yurk Keung was awarded the important management post in the plaintiff by Old Ma, a fugitive from justice, after paying visit to him in Taiwan", which is less injurious than the meanings pleaded in paragraph 10(2) and (3) of the Statement of Claim, which is repeated below for examination:

"(2) the Plaintiff was in fact controlled and managed by a fugitive from justice; and

(3) the Plaintiff's board of directors was in fact only a puppet of or front for Ma and had no real power over important affairs of the company, such as the appointment of senior personnel."

26. Grounds 6 to 11 complain that the Judge erred in holding that the less injurious meaning does not come broadly within any one of the most injurious meaning pleaded in paragraph 10(2) and (3) and the two have "different themes". The plaintiff describes the two versions are only different in emphasis. It seeks to rely on the fact that the defendants have in their Defence sought to justify the lesser meaning.

27. By looking at the Article and especially the last sentence of it, without evidence of knowledge of particular matters as now pleaded in the Amended Statement of Claim, it is impossible for a reasonable reader to have any impression that Old Ma was a fugitive from justice. Such a reader may gather from the reference in parenthesis of the last sentence of the Article that Old Ma is the father of Chairman Ma and Mr Kwan Yurk Keung had Old Ma's blessing on his appointment. It is impossible for the reader to know the actual ownership of the Oriental Daily News or Oriental Press Group that was stated to own the newspaper. It is therefore far-fetched for the Article to reasonably bear the meaning of paragraphs 10(2) and (3) of the Statement of Claim or the lesser meaning as alleged. The defamatory part of the lesser meaning is that Old Ma is a fugitive from justice, but this was not pleaded as a known fact.

28. The defendants in their Defence deny that the Article is defamatory as pleaded, either bearing the meaning as alleged in paragraph 10 or the less injurious meaning. While it is true that they raise a justification of the less injurious meaning, it does not mean that they admit that the Article bears such a meaning. We do not agree that the plea of justification bolsters the plaintiff's grounds of appeal in this regard. These grounds fail.

Innuendo meanings

29. The innuendo meanings were pleaded as an alternative to the natural meanings. They are identical and contained in paragraphs 10(1), (2) and (3) of the Statement of Claim. Grounds of appeal 12 to 15 are devoted to this topic.

30 ． As said before, when dealing with the innuendo meanings, the Judge took into account two additional averments that were proposed to be included in the proposed amended Statement of Claim, namely Mr Ma Sik Chun is the father of Mr Ma Ching Kwan, the Chairman of the plaintiff at the material time, and Mr Ma Sik Chun was commonly referred to as "Old Ma" in two articles published in the Next Magazine, which articles were referred to in the first paragraph of the judgment cited in para 6 above.

31. Ground 13 in the Notice of Appeal complains that the Judge having found that "it may be argued that the fact of Mr Ma being a fugitive who had fled to Taiwan is covered by the two previous articles", she erred in failing to analyse whether any of the three pleaded meanings in paragraph 10 of the Statement of Claim could individually be sustained by the facts pleaded in paragraph 2(1) and (2) of the Statement of Claim alone.

32. After the Judge made reference to the fact that Old Ma being a fugitive who had fled to Taiwan might arguably be covered by the two articles, she continued: "but the facts stated in paragraph 2(3), namely Mr Ma holds no management position in the plaintiff or any of its subsidiaries is clearly not covered by the two articles". She then rejected that the plaintiff could call Mr Yip Tak Fai to give evidence of the extrinsic facts in support of the innuendo meanings. This is the subject of complaint under grounds 13(b) and 17 of the Notice of Appeal. We accept the submission of the plaintiff under these grounds that Mr Yip Tak Fai could properly be a witness possessing the knowledge of the extrinsic facts as pleaded in paragraph 2 and the two additional averred facts. He need not be a "member of the public" or a "potential reader of the Next Magazine" so long as the Words had been published to him. This is supported by the authorities cited by the plaintiff, namely, Cassidy v Daily Mirror Newspapers Ltd [1929] 2 KB 331 at 332, 337-338 and Hough v London Express Newspaper Ltd [1940] 2 KB 507 at 508-509 and 511-512. In these two cases, the plaintiff was allowed to and did call witnesses with knowledge of her particular marital circumstances in order to prove the innuendo meaning of the words from which it could be inferred that she was not lawfully married to her husband.

33. While the Judge may be correct to find that "the fact that Old Ma holds no management position in the plaintiff or any of its subsidiaries is clearly not covered by the two articles", this finding is of no consequence bearing in mind the specific plea of extrinsic fact in paragraph 2(3) of the Statement of Claim that "since he left Hong Kong, Ma held no management position in the plaintiff or any of its subsidiaries." As the plaintiff alleged that Mr Yip Tak Fai was able to give evidence of knowledge of this fact, we consider that the Judge erred in disallowing Mr Yip as a competent witness in this regard.

34. Nevertheless, the Judge was correct in holding that Mr Yip Tak Fai could not reasonably be considered as a member of the public or within any class of ordinary readers of the magazine. He had knowledge of the facts pleaded in paragraph 2 of the Statement of Claim because of his position in the plaintiff as described by the Judge in the penultimate paragraph of the passage of her judgment cited in para 6 above.

35. The crux of the innuendo meanings pleaded in paragraph 10 of the Statement of Claim is that the plaintiff was not controlled or managed by its board of directors but by Old Ma, who held no management position in the plaintiff and who was a fugitive from justice, and that the plaintiff's board was only a puppet of or front for Old Ma. The Words are to the effect that Kwan Yurk Keung had even been to Taiwan to see Old Ma and Kwan was appointed an important post in Oriental Press. The special or extrinsic facts pleaded in paragraph 2 of the Statement of Claim was that Old Ma was one of the founders of the Oriental Daily News, one of the main publications of the Oriental Press Group, that Old Ma left Hong Kong in 1978 while awaiting trial and has since been residing in Taiwan, and that since he left Hong Kong, he held no management position in the plaintiff or any of its subsidiaries. The additional averments referred to above that Old Ma was the father of Chairman Ma of Oriental Press and that Ma Sik Chun was commonly known as Old Ma do not add anything substantial to the facts already pleaded in paragraph 2 of the Statement of Claim. We are not able to see that an ordinary and reasonable reader of the magazine, even with knowledge of all these extrinsic facts, can reasonably understand the following innuendo meanings pleaded in paragraph 10 of the Statement of Claim, namely, that (a) Old Ma was a fugitive from justice, (b) Old Ma controlled or managed the plaintiff, (c) the plaintiff's board of directors did not control or manage the plaintiff, or (d) the plaintiff's board was only a puppet of or front for Old Ma and had no real power over important affairs of the company, such as the appointment of senior personnel.

36. We have reached our above conclusion after fully taking into account the rule as to how to construe the natural and ordinary meaning and innuendo meaning of words in defamation actions, as enunciated in Lewis v Daily Telegraph by Lord Reid, at p 258:

"There is no doubt that in actions for libel the question is what the words would convey to the ordinary man: it is not one of construction in the legal sense. The ordinary man does not live in an ivory tower and is not inhibited by a knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of worldly affairs."

At p 277, Lord Devlin also said:

"My Lords, the natural and ordinary meaning of words ought in theory to be the same for the lawyer as for the layman, because the lawyer's first rule of construction is that words are to be given their natural and ordinary meaning as popularly understood. The proposition that ordinary words are the same for the lawyer as for the layman is as a matter of pure construction undoubtedly true. But it is very difficult to draw the line between pure construction and implication, and the layman's capacity for implication is much greater than the lawyer's. The lawyer's rule is that the implication must be necessary as well as reasonable. The layman reads in an implication much more freely; and unfortunately, as the law of defamation has to take into account, is especially prone to do so when it is derogatory."

37. It is instructive to see how the defamatory meanings are now pleaded in the Amended Statement of Claim. The new paragraph 10 (which was paragraph 11 of the proposed amended version before the Judge) sets out the innuendo meanings and no natural and ordinary meaning is now pleaded. The innuendo meanings are:

(a) The decision to appoint Kwan Yurk Keung as a senior personnel in Oriental Press Group was confirmed or approved by a fugitive from justice.

(b) Further and/or alternatively, the appointment of Kwan Yurk Keung as a senior personnel in Oriental Press Group had to be confirmed or approved by a fugitive from justice.

(c) Further and/or alternatively, the appointment of senior personnel in Oriental Press Group had to be confirmed or approved by a fugitive from justice.

(d) Further and/or alternatively, a fugitive from justice had the final say in the appointment of Kwan Yurk Keung as a senior personnel in Oriental Press Group.

(e) Further and/or alternatively, a fugitive from justice had the final say in the appointment of senior personnel in Oriental Press Group.

38. All the references to control and management by Old Ma and the lack of control and management of the plaintiff's board have now been deleted. In our view, this is a wise decision made by the pleader of the Amended Statement of Claim, which has avoided all the meanings, natural or innuendo, that cannot reasonably be understood by the reasonable reader of the Words, despite his knowledge of the extrinsic facts pleaded previously and as at present.

39. In the circumstances, these grounds of appeal on the innuendo meanings fail.

The less injurious innuendo meaning

40. The less injurious innuendo meaning argued before the Judge is the same as the less injurious natural meaning, which is that "Mr Kwan Yurk Keung was awarded the important management post in the plaintiff by Old Ma, a fugitive from justice, after paying visit to him in Taiwan". With the assistance of the two articles referred to the Judge as being relied on by the plaintiff, showing that a reasonable reader could derive knowledge from them that Old Ma was a fugitive from justice, then we are of the view that this less injurious innuendo meaning can stand. The reason is that apart from this sting of Old Ma being a fugitive from justice which could be covered by knowledge of it derived from the articles, the rest of the alleged lesser meaning is within the natural and ordinary meaning of the last sentence of the Article. Without the sting, we do not consider the Words reasonably capable of bearing any defamatory meaning. The Judge was correct in refusing to allow the plaintiff to argue the less injurious meaning in front of the jury short of an application to amend.

The Order of 15 November 2000

41. We have dealt with the proposed amended paragraph 11(5) in relation to Mr Yip Tak Fai in paragraphs 32 and 33 above.

42. Regarding the Judge's costs order, which is challenged in ground 18 of the Notice of Appeal, we need say little save to re-state the following principles, namely, that the matter of costs is entirely within the Judge's discretion, and that this Court will not interfere with the exercise of a judge's discretion in the award of costs unless it was shown that he failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially (Choy Yee Chun v Bond Star Development Ltd [1997] HKLRD 1327 CA), or the exercise of discretion was demonstrably flawed (China Venturetechno International Co Ltd v New Century Chain Development Co Ltd, unreported Civ App No 20 of 1996, [1996] HKLY 1093). See Hong Kong Civil Procedure 2002, p 859, para 62/2/11. In Choy Yee Chun, where one member of this Court expressly stated that he would not make the same costs order as the judge below did (p 1339H), the Court agreed at p 1339J that "it would be wrong for an appellate court to substitute its discretion for that of the trial judge, unless satisfied that he was plainly wrong."

43. In his written submissions, Mr Yu draws our attention to the following facts:

(a) the application to amend by the plaintiff was made on the third day of the trial;

(b) without the amendment, the plaintiff had no case to proceed and the action is liable to be dismissed; and

(c) viewed in that light, although the causes of action remain the same, the amendments are substantial and fundamental.

44. The following passage of the Judge's judgment encapsulates her reasoning:

"... 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."

45. The Judge's reasoning in the circumstances of this case simply cannot be faulted. The appeal against the costs order fails.

Conclusions

46. Save that paragraph 11(5) of the proposed amended Statement of Claim pleading "the plaintiff avers the Article was published to Mr Yip Tak Fai who knew of the extrinsic facts" should have been allowed, the appeal fails.

47. The plaintiff only succeeding in the very limited scope on the pleading of paragraph 11(5), and for the reasons given above, the Judge's Order of 14 November 2001 and her costs order made on 15 November 2001 must stand.

48. The plaintiff has failed substantially in its appeal. Similarly the defendants have failed in the main thrust of their Respondents' Notice. Therefore, we feel it just to make the following order nisi as to costs:

(a) the costs of and occasioned by the Respondents' Notice be borne by the defendants in any event, and

(b) save as provided for in (a), the costs of the appeal be borne by the plaintiff in any event.