DR CHAN HIN KEUNG HENRY v. APPLE DAILY LTD AND OTHERS

DCCJ 1474/2013

[2019] HKDC 462

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1474 OF 2013

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DECISION

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Introduction

1.  On 22 March 2018, I handed down the judgment in this action dismissing the plaintiff’s claim for libel.  I held that the 2^nd article, when read against the articles as a whole, is defamatory of Dr Chan and carries the meaning that there are reasonable grounds to suspect that there is a nefarious connection between him and the CKB168 pyramid scheme and that he knowingly participated in it.  However, Apple Daily has made out the defence of Reynolds privilege and should therefore not be held liable.  I also made an order nisi that the defendants should have costs of the action.

2.  By summons dated 6 April 2018, Dr Chan applies to vary the costs order nisi. His primary position is that there should be no order as to costs of the action. Alternatively, his fall-back position is that at most he should only bear one-third of Apple Daily’s costs.

3.  Mr Lawrence Ng, appearing with Mr Victor Lui for Dr Chan, puts forward three grounds in support.  The first two grounds are based on principle no 3 set out in Re Elgindata (No 2) [1992] 1 WLR 1207.  The third ground is based on the conduct of the defendants.

4.  In this decision, I shall adopt the terms used and defined in the judgment.

Legal principles

5.  The plaintiff’s summons concerns the application of the general principles governing when a successful party may be deprived of his costs, whether in whole or in part.  I set out those principles which are relevant to the present discussion.

6.  First, costs are in the discretion of the court.

7.  Second, they should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made.  This is principle no 2 in Re Elgindata. 

8.  The modern approach in Hong Kong, as repeatedly emphasised by the Court of Appeal and the Court of First Instance, is not to regard the proposition that costs should follow the event as a general rule.  It is only a starting point and operates in shifting to the unsuccessful party the burden of showing why some different approach should be adopted on the particular facts of the case. See, eg, Wong Kam Tong v Tin Shing Court, Yuen Long (IO) No 2 [2012] 2 HKLRD 1128 at paras 11 to 13; and, more recently, Pfeiffer GmbH v Cheung Hay Kit trading as Sun Wai Construction CACV 245/2013, 29 October 2014 at para 20; and Ko Hon Yue v Chiu Pik Yuk [2018] HKCFI 1973 at para 15.

9.  Third, principle no 3 set out in Re Elgindata states that the above general rule or, as is now preferred, the starting point, does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings, he may be deprived of the whole or a part of his costs.

10.  The rationale for such deprivation of costs is that litigants should be mindful of possible costs implications and there might be costs consequences if they were not being selective about the issues they pursue and the points they take: see, eg, Wang Din Shin v Nina Kung CACV  67/2003, 19 April 2005 at para 40; Zhuhai International Container Terminals (Jiuzhou) Ltd v Lo Tong Hoi CACV 181/2011, 31 July 2012 at para 33.

11.  As authorities show, the principle should not be approached rigidly or mechanically.

12.  In Kam Leung Sui Kwan, Personal Representative of the Estate of Kam Kwan Sing, deceased v Kam Kwan Lai FACV 4/2015, 3 February 2016, at para 8:-

“As this Court has previously said, too inflexible an application of the rule that costs generally follow the event is to be avoided but the discretion to depart from the rule should be exercised with due circumspection since too ready a departure from the general rule encourages unnecessary argument.”

13.  On the other hand, it is however clear from recent authorities that post-CJR the courts are more ready to make costs orders that reflect the outcome of different issues.  It is well-recognised that it is no longer necessary for the successful party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed.  In this regard, Chu JA commented that principle no 3 in Re Elgindata “should be less generally followed”: Ko Hon Yue at para 16.

14.  Ultimately, how the court should exercise its discretion must depend on all the circumstances of the case.  Here, one must have regard to the special matters set out in Order 62, rule 5 of the Rules of the District Court.  Of close relevance to this application are the matters set out in rule 5(1)(aa), (e) and (f) and rule 5(2).

First ground

15.  Under this ground, the plaintiff’s primary contention is that Apple Daily failed on two issues.  First, the meaning of the words complained of.  Second, the justification defence.  Substantial time and costs, Mr Ng submits, were spent on the two issues.  These failed issues pursued by Apple Daily have caused significant increase in the length or costs of the proceedings.  Hence Apple Daily should be disallowed their entire costs or a substantial portion of them.

16.  At today’s hearing, Mr Ng submits that if the court does not agree with the above argument, his alternative position is that it was unreasonable for Apple Daily to pursue those two failed points, and by reason of such unreasonable conduct, they should be deprived of their costs.

17.  I do not agree that the basis of this ground has been made out.

18.  In order to assess whether the two issues caused a significant increase in the overall length and costs of the proceedings, naturally one needs to look at where time and costs were incurred in the action on an overall basis.

19.  The action was commenced in 2013 and the trial took place in 2017.  The trial lasted six days.  There were a number of factual disputes.  As observed in para 18 of the judgment, they mainly revolved around the investigation undertaken by Apple Daily, and the manner in which it had been done, when compiling the story.  That bore on the issue of responsible journalism.  A good part of the factual evidence compiled in the witness statements and tested in cross-examination was therefore about the defence of Reynolds privilege (on which Apple Daily succeeded at trial).  In addition to the factual disputes, there was of course time spent at trial on legal submissions on the issue of meaning and the scope and application of the defence of Reynolds privilege.  Extensive written and oral submissions were made by both sides.

20.  My present task is to assess, against the above background, the time and costs spent on the issue of meaning and the defence of justification and whether they are substantial and significant enough to deprive Apple Daily of any of their legal costs.

21.  On the issue of meaning, I accept the submission made by Mr Paul Shieh, SC, who appears with Ms Queenie Lau for the defendants, that it is a matter of objective interpretation and legal arguments.  The time spent is confined to the drafting of pleadings and submissions at trial.  In the overall scheme of things, the time could hardly have caused a significant increase in the time or length of the proceedings.  The resolution of the issue does not turn on the factual disputes.

22.  In any event, Mr Shieh submits, and I agree, that the issue of meaning was intertwined with the scope of the investigation which ought to be undertaken by the journalists in order for them to qualify for the defence of responsible journalism.  There was therefore a degree of overlap in the legal submissions between the issue of meaning and that defence.

23.  On the defence of justification, I do not share the plaintiff’s stance that it had caused a significant increase in the time and costs spent. 

24.  First, it was a very narrow defence based on the narrow and non-defamatory meaning pleaded by Apple Daily.  Not much time, if at all, was spent on that non-defamatory meaning.

25.  Secondly, while Mr Ng is correct in pointing out that a fair number of factual allegations were pleaded by Apple Daily in support of the defence, those same facts were relied upon by the latter in respect of the Reynolds defence.  Hence time spent on dealing with those factual allegations were not wasted and were in fact resolved in favour of Apple Daily in relation to the Reynolds defence. 

26.  I also reject the alternative contention under this ground, namely that it was unreasonable for Apple Daily to raise the two failed issues. 

27.  It is true that Apple Daily did lose on the meaning issue and the justification issue.  But that ruling by itself does not mean that it was unreasonable for the defendants to raise those issues in the first place.  In particular, in my view, the issue of meaning is not a straightforward one and there is no obvious or ready answer to what should be the single meaning of the articles.  See the extensive discussion in paras 144 to 173 of the judgment. In fact, I found that the meaning pleaded by the defendants was within the range of reasonable meanings of the articles.  The ruling which I reached ultimately turned on the application of the single meaning rule which is not itself a straightforward concept.

28.  Furthermore, here, Apple Daily were the defendants in this action.  They were effectively forced into this litigation.  The submissions made on their behalf on the failed issues (in particular, the issue of meaning) were reasonable.  Although they were ultimately rejected by this court, in my view, they were reasonable points for the defendants to take in order to defend their case.  In this regard, it is of note that the meaning pleaded by Dr Chan himself was also rejected by me as the single meaning.  This just serves to illustrate that the issue is a nuanced and difficult one.  There is nothing to suggest that the defendants were being indiscriminate in the points they took.

29.  In my view, the plaintiff has not been able to show unreasonable conduct on the defendants’ part or point to any circumstance of the case which justifies a deprivation of Apple Daily’s costs.  It would be recalled that the modern approach requires the court to be more prepared to make a costs order which suitably reflects the outcome of different issues canvassed in the action.  However, in the circumstances of the present case, I should not rigidly apply this issue-based approach just because Apple Daily did not succeed on all the points they pursued. 

30.  For the above reasons, the first ground fails.

Second ground

31.  Under this ground, the plaintiff says that Apple Daily belatedly abandoned two issues as late as the stage of opening submissions.  But by then these issues had caused a significant increase in the length or costs of these proceedings.

32.  The first issue is whether the three articles should be read in conjunction with each other.  From the pleading stage, Apple Daily had denied that to be the case.  Mr Ng submits that it was only after the plaintiff made extensive submissions in his opening that Apple Daily conceded the point.  But by then much time had already been spent on the issue.

33.  I do not agree with that submission.  Time spent on this issue was confined to the drafting of pleadings, a few paragraphs in Dr Chan’s witness statement (on which he was not cross-examined) and legal argument.  It was a short and discrete point.  When viewed in the overall context, it can hardly be said that the time spent was substantial or significant.

34.  The second issue is the defence of fair comment.  It was similarly abandoned when Apple Daily lodged their opening submissions shortly before trial commenced.  But, by then, substantial time and costs, Mr Ng submits, had been incurred. 

35.  I reject the submission for broadly the same reasons set out above in respect of the defence of justification.  First, the time spent was confined to the drafting of pleadings and hence were not substantial when the matter is viewed on the whole.  Secondly, the facts pleaded in support of the defence of fair comment were the same facts bearing on the defence of Reynolds privilege and as such cannot be said to have been wasted.

36.  In sum, the second ground is not made out.  At today’s hearing, Mr Ng also puts forward the alternative argument that it was unreasonable for the defendants to pursue the abandoned points in the first place.  I repeat the observation I made just now under the first ground and accordingly reject that oral submission.

Third ground

37.  This ground is entitled “Dr Chan had no choice but to come to this court to vindicate his reputation”.

38.  Dr Chan says that the content of the articles damaged his reputation. He, through his solicitors, sent two rounds of letters before action to Apple Daily but the latter never replied.  He therefore had no choice but to start this action to vindicate his reputation.

39.  Dr Chan is essentially complaining about the conduct of Apple Daily under this ground.  First, they failed to reply to the letters before action. Secondly, they failed persistently to accept that the articles were defamatory of Dr Chan.  The court should take into account such conduct and disallow some or all of their costs.

40.  As regards the failure to respond to the letters before action, this matter must be looked at in its proper context.  In the letters, it was pointed out that the articles were defamatory of Dr Chan and Apple Daily were demanded, amongst other things, to publish “a full and unreserved apology” and to undertake not to repeat the story.  The essence of the letters was that Apple Daily was wrong in publishing the story and that they should not have done it.

41.  In the judgment, I have reached the opposite conclusion.  In my view, Apple Daily were entitled to print the story, which I found to be a responsible piece of journalism and they were in fact discharging their function as a public watchdog in bringing to light a matter of public interest.  When viewed from this angle, the demands which Dr Chan made in the letters before action were not justified.  As such, no criticism can be made of Apple Daily’s failure to reply and such failure cannot possibly justify any deprivation of their costs in this action. 

42.  Furthermore, Mr Shieh submits that the mere failure to respond to letters before action does not amount to unreasonable conduct in itself or, in any event, conduct unreasonable to such an extent that part of the defendants’ costs should be deprived.  I agree.

43.  As regards the persistent failure to admit the defamatory nature of the articles, I have to say that the point is not entirely understood.  Dr Chan now says that it was one of the reasons why he had no choice but to come to court to vindicate his reputation.  In other words, he appears to be saying that if Apple Daily had admitted at some earlier stage that the words were defamatory of him, he would have let go of the matter.  However, on the materials before me, that was never the stance of Dr Chan in this action.  For instance, no without prejudice communication to that effect was produced at this hearing to substantiate that position.  On the contrary, all along Dr Chan was insisting that Apple Daily had no defence.  He sought injunctive relief, general and aggravated damages at the trial. 

44.  On the whole, there is therefore no merit in this ground as Dr Chan fails to point to any conduct of Apple Daily which would justify depriving them of their costs.

45.  Lastly, Dr Chan says he had no choice but to commence the action.  That sentiment may well be understandable.  But that is only one side of the story. Fairness would require the court to consider at the same time the other side of the story.  When it comes to choices, surely Apple Daily had even less choice but to spend time and money to defend the action.  They were proved right in the end.  It is only fair that they should be paid their costs.  Otherwise they would be out of pocket for proving that they were doing the right thing when they printed the story.

Conclusion

46.  None of the grounds put forward by the plaintiff are made out.  I therefore dismiss his application.  The costs order nisi which I made should now be made absolute.

( Submissions on costs )

47.  I order that the defendants do have costs of the application, with certificate for two counsel, to be summarily assessed.

48.  I direct that the defendants do lodge and serve their statement of costs within 28 days from today; the plaintiff do lodge and serve his list of objections, if any, within 14 days thereafter; and, the defendants do lodge and serve their reply, if any, within 7 days thereafter.  The costs will be assessed on the papers without an oral hearing.