NG WOON KING v. CHENG KAM WAH AND ANOTHER

DCCJ 2235/2017

[2019] HKDC 1662

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2235 OF 2017

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JUDGMENT

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INTRODUCTION

1.  This is the trial of the plaintiff’s claim for libel based on two alleged publications.  The first comprises words in a letter dated 20 March 2017 from the 1^st and 2^nd defendants to Shun Fung Trading Co (“Shun Fung”).  The second comprises words in a subsequent letter between the same parties dated 13 April 2017.  I shall refer to the letters as “the first letter” and “the second letter” below.

2.  This case revolves around the late Mr Cheng Man Yuk and a property located at Ground Floor, Si Toi Commercial Building, Nos 62 and 63 Connaught Road West, Hong Kong (“the Property”).  It had been sub-divided physically into “Shop A” and “Shop B”.  In this action, we are primarily concerned with Shop A.  Shun Fung was its tenant pursuant to a tenancy agreement dated 3 June 2014 for a three-year term from 1 July 2014 to 30 June 2017 (“the Tenancy Agreement”).

3.  Cheng was married and had five children, including the 1^st defendant, his son, and the 2^nd defendant, his daughter, and a son named Cheng Kam Wing Philip.  Cheng was a businessman carrying on wholesale and retail sale of rice in Hong Kong.  He owned a number of real properties.

4.  He passed away in November 2016, aged 93.

5.  The plaintiff says that she was Cheng’s girlfriend since the early 1990’s and they were living together since late 2013 and until Cheng’s death. 

6.  According to the land search records, the legal title of the Property had undergone some changes during Cheng’s lifetime.

(a) It was purchased in 1986 and registered in the sole name of Philip.

(b) In 1994, the legal title was held jointly by Philip (3/10), Cheng (4/10), the 1^st defendant (2/10) and the 2^nd defendant (1/10).

(c) In 2011, Philip assigned his share to Cheng.  As a result, Cheng and the 1^st and 2^nd defendants co-owned the Property as tenants-in-common and their respective shares were 7/10, 2/10 and 1/10.

(d) On 26 May 2014, Cheng gifted his share to the plaintiff and Ms Chan King Chun.  The latter was Philip’s girlfriend and they have a son.  (One should make a mental note of the gift and its date as it, as well as the Tenancy Agreement, go to the crux of the parties’ cases.)  As a result of the gift, the Property was co-owned by Chan, the plaintiff, the 1^st and 2^nd defendants in shares of 4/10, 3/10, 2/10 and 1/10.

(e) The Property was eventually sold in November 2017 at $34,430,000.

7.  Shortly after the gift was made by Cheng, he signed the Tenancy Agreement to lease out Shop A to Shun Fung.  At that time, Cheng was no longer the legal owner.  Nonetheless, he purported to sign the agreement on behalf of the plaintiff, Chan and the 1^st and 2^nd defendants.  As we shall see, this has given rise to challenges subsequently raised by the 1^st and 2^nd defendants over the legality of the lease.  It is effectively the root cause of the present libel action.  Shun Fung paid a monthly rent of $38,000.

8.  The lease was due to expire on 30 June 2017.  It was during the period leading up to its expiry that the first and second letters were sent to Shun Fung, among other correspondence exchanged between the plaintiff and the 1^st and 2^nd defendants.

9.  The plaintiff claims general damages in the sum of $100,000 and aggravated damages in the sum of $100,000.  In opening, Mr Patrick Chong, appearing with Mr Lai Chun Ho for the plaintiff, confirmed that the plaintiff no longer seeks any injunctive relief as the Property has been sold.  The defendants deny liability.  All three parties testified at trial.

THE PLAINTIFF’S CASE

10.  Mr Chong opened the plaintiff’s case with this summary – the defendants have maliciously published two defamatory statements concerning the plaintiff in order to pressure her to sell her interest in the Property at an undervalue to them.

11.  The plaintiff’s evidence discloses the following case.

12.  She had known Cheng since the early 1970’s.  They were friends back then.  From the early 1990’s, they were in a relationship.  In December 2013, after an eye operation, Cheng, then aged 90, moved to live with the plaintiff. She accompanied and took care of him until he passed away in November 2016.

13.  The plaintiff has known the 1^st defendant since the 1990’s. She used to eat out with Cheng in a restaurant in Sai Ying Poon.  The 1^st defendant would sometimes join them.

Cheng was the head of the family

14.  Cheng was a successful businessman.  He invested in and owned a number of real properties.  In view of his old age, he made arrangements for the distribution of his properties to his family, including the Property.  Up to the time of his death, he remained mentally alert and sound, although he would feel tired more easily during his last few years.  The plaintiff added in cross-examination that Cheng remained smart and played mahjong every day.

15.  During his lifetime, Cheng would often arrange for his children to hold the legal title of the real properties.  However, all along, he was regarded as the head or patriarch of the family, having the power over the use of the properties and the rental income derived from them.  All his children were well aware of, and agreed to, this arrangement.  Even after properties had been transferred to under the children’s name, Cheng would continue to decide what to do with the properties.  As far as the plaintiff knows, there had never been any objection or complaint about this arrangement from any family member, including the 1^st and 2^nd defendants, during Cheng’s lifetime. 

16.  The Property was one of such properties under the control of Cheng.  In about May 2014, Cheng told the plaintiff that he would transfer to her some of his interest in it so as to make sure that she would have something to rely on after his death.  At the same time, he also wanted to make provision for the son of Philip and Chan.  Since the son was still a minor, he decided to gift some of his interest in the Property to Chan for her to hold on behalf of the child. 

17.  The gifts of 4/10 and 3/10 of the interest in the Property to Chan and the plaintiff were effected against this background. 

18.  The Property had previously been used for Cheng’s rice business.  After the cessation of the business, Cheng had the Property sub-divided into Shop A and Shop B in early 2014, as it would be easier to lease it out.  At that time, the defendants were already legal co-owners of the Property but Cheng did not consult them regarding the sub-division.  That was because Cheng considered that he had absolute power over the Property and that his children agreed to it.

The lease of Shop A

19.  On 3 June 2014, Cheng signed the Tenancy Agreement to lease Shop A to Shun Fung.  The plaintiff was present when he signed.  The agreement was a four-page document and appeared to be on the standard terms of an estate agent called “金暉物業”. There are two notable features.

20.  First, Cheng’s signature appeared three times in the space where the landlord should sign.  And, under the signatures, three Hong Kong identity card numbers were stated.  They belonged to the 1^st and 2^nd defendants and Cheng.  Second, there were a few handwritten clauses appearing at the end.  One of them provided that the tenant agreed that all rents should be paid to Cheng and that the tenancy agreement should be signed by Cheng.

21.  Shop B was later leased out to another tenant at a monthly rent of $30,000.  The tenancy agreement was dated 28 February 2015.  This time, the plaintiff and Chan signed as landlord.  They did so following Cheng’s instruction.  It was expressly provided that the rent should be paid into a bank account held in the name of Cheng.

22.  In cross-examination, the plaintiff was asked if she knew whether the defendants at that time knew about the lease of Shop A.  Her answer was that after the signing of the Tenancy Agreement, Cheng mentioned to her that he would go back and tell the defendants.  But the plaintiff did not know or find out whether Cheng in fact did so afterwards.  She repeated that as always Cheng had all the say about the properties which all belonged to him.  She said, “話事權都係文叔”; “佢話點，我地就聽佢點”; “佢話晒事”; “全部由文叔揸哂fit嘅”; “啲嘢係佢嘅”.

23.  Cheng received the rental deposits under the leases of Shop A and Shop B and, prior to September 2016, he had been receiving the rents under both leases.

The defendants’ knowledge of the Shop A lease

24.  On 27 August 2015, Cheng paid a total sum of $5,000,000 to his five children in cash.  The distribution included, partly, the rental income from the Property.

25.  In about August 2016, Cheng felt that it was about time to further distribute his assets, given that he was then over 90.  He decided that from September 2016 onwards, after deducting a sum of $8,000, the rents received from Shop A and Shop B would be distributed each month to Chan, the plaintiff and the 1^st and 2^nd defendants in accordance with their respective shares.

26.  At his birthday banquet on 15 August 2016, Cheng informed the defendants of his decision.  To implement this, the plaintiff and Chan opened a bank account for the specific purpose of receiving the rental income and distributing it to the owners. 

27.  It is common ground that an undated sheet was given to the 1^st and 2^nd defendants at the birthday banquet (“the distribution sheet”).

28.  It was a one-page typed up document.  It stated that from 1 September 2016, the total rent received from the Property in the sum of $68,000 would be distributed to Chan, the plaintiff and the 1^st and 2^nd defendants in the ratio of 40%, 30%, 20% and 10%.  A sum of $8,000 would be retained each month for maintenance.  It spelt out that the 1^st and 2^nd defendants were to receive a monthly sum of $12,000 and $6,000 respectively.

29.  In fact, the defendants requested distribution of the rental income for the month of September 2016 at the banquet.  But at that time the rents were not yet due.  Hence Cheng paid the rent for the month to them by his own personal cheques.  The 1^st and 2^nd defendant received cheques in the respective sums of $12,000 and $6,000.

30.  Based on the above sequence of events, the plaintiff says that the defendants should know about, first, the gift from Cheng of his interest in the Property to the plaintiff and Chan and, second, the lease of Shop A latest by August 2016 when they attended the birthday banquet.  Since that time and up to Cheng’s death, they had not expressed any doubt about the validity of the leases and made no complaint about the arrangement.

The defendants’ attempt to buy the plaintiff’s share

31.  To the plaintiff’s dismay, the defendants’ position about the Tenancy Agreement abruptly changed after Cheng passed away.  In about January 2017, the defendants expressed their interest to buy the plaintiff’s share in the Property and made an offer of $3,000,000.  The plaintiff told them that she would consider to sell but the offer was far too low.  The defendants subsequently raised their offer to $4,800,000 and $5,000,000 in February and March 2017.  The plaintiff still considered the offer too low.  In fact, the Property was eventually sold in November that year and the plaintiff received over $10,000,000 for her share.

32.  The plaintiff and the defendants were engaged in a series of correspondence by letter in March 2017 concerning the leases of the Property. By letter dated 7 March from the defendants to the plaintiff and Chan, the former stated that they had not been consulted prior to the signing of the leases and considered that there was an issue of illegality (“現有租約存在不合法問題”).  They further said that they would bank in the cheques drawn by the plaintiff and Chan from October 2016 onwards for the distribution of the monthly rental income but their action was without prejudice to their legal right in respect of the legality of the leases.

33.  The plaintiff was puzzled by the allegations made in the letter, because the defendants had never raised them before.  Also, the lease was signed by Cheng and the defendants had been well aware of it and agreed to Cheng’s action.  She and Chan replied by letter dated 13 March, saying that they did not understand what the alleged illegality was and demanding an explanation.

The first and second letters

34.  The next letter in the series was the first letter.  Its content is reproduced in full below:-

“

租約糾紛通知函

物業地址： 香港 干諾道西 62-63號 時代商業大廈 地下A商鋪 近皇后街側（簡稱 “本物業”）

租客/租戶： 順豐貿易公司

租約期： 固定期（俗稱“死約”）2014年7月1日至2017年6月30日

本物業業權持有人：

陳景珍；吳煥瓊；鄭錦華；鄭慧珍。

本物業租客/租戶請注意：

鄭錦華先生及鄭慧珍女士（簡稱“我兩者”）是本物業的部份業權擁有人。現因我兩者在本物業租約簽訂時未有被預先咨詢本物業租約合同內容，認為現有租約存在不合法問題，將共同入禀法院向其他本物業權持有人追討觸犯或侵犯簽訂租約權問題，並會研究追討租約合同制訂之地產物業代理公司及相關人士。特此通告貴 租客或寶號在收到本通知函應在死約期滿日後遷出本物業，如有需要貴 租客或寶號可向本物業租約經辦人陳景珍及吳煥瓊女士尋求解決方案，如貴 租客或寶號對本通知函置之不理或不經我兩者同意下續簽本物業任何方式租約，貴 租客或寶號必須自行承擔所有相關法律責任及後果。

祝商褀！

本物業部份業權人：

 

        ［簽署］

_________________

鄭錦華先生 及 鄭慧珍女士

2017年3月20日

抄送：吳煥瓊女士 及 陳景珍女士” (underline added)

35.  The plaintiff says that the underlined words (“the first words”) are defamatory of the plaintiff.  She pleads that they bear the meaning that she (and Chan) had acted in an illegal, unlawful and/or illegitimate manner by infringing the right of the 1^st and 2^nd defendants to enter into the Tenancy Agreement.

36.  Mr Ho, the representative of Shun Fung, wrote a letter dated 21 March and addressed to the owners.  He asked for a renewal of the lease on the same terms upon the expiry of the original term in June. 

37.  On 30 March, the plaintiff and Chan wrote to the defendants complaining that the first letter amounted to libel.

38.  Then followed further exchange of letters between the two sides.  The plaintiff and Chan expressed their wishes to renew the lease to Shun Fung on the existing terms.  On the other hand, the defendants alleged that certain matters needed to resolved prior to the renewal, including a missing sum of $114,000 from the rent account.

39.  The defendants then sent the second letter dated 13 April.  Same as the first letter, it was signed by the 1^st and 2^nd defendants and addressed to Shun Fung, with a copy to the plaintiff and Chan.

40.  I reproduce below the relevant parts of the second letter:-

“

租約糾紛通知函 (續一)

…

本物業業權持有人：陳景珍；吳煥瓊；鄭錦華；鄭慧珍。

本物業租客/租戶請注意：

根據貴 寶號在2017年3月21日來函，得知貴 寶號有意願延續現有租約，但因本物業租約合同合法性問題，鄭錦華先生及鄭慧珍女士（簡稱“我兩者”）不認同現有租約是可在法律上有效地延續，因此我兩者已對本物業的其他業權擁有人提出解決方案，並有四項要求條件，而其中對貴 寶號有影響的一項是：(1) 須簽定新六年租約合同，三年生約及三年死約；(2) 須繳交新合同協定的租金，即每月現時的租金再加30%。

… 請貴 寶號不要自行在我兩者不同意下與本物業的其他業權擁有人私下簽定本物業任何租約，否則貴 寶號自行承擔所有損失和法律后果。如貴 寶號否決我兩者以上要求，請務必在我兩者2017年3月20日所發出的限期內遷離以上物業，我兩者將會在五月期間共同入稟法院向其他本物業業權持有人追討觸犯或侵犯簽訂租約權等問題及終止現有租約，希望貴 寶號在我兩者入稟法院申請前有所決定及通知本物業所有業權擁有人。

… ” (underline added)

41.  The plaintiff says that the underlined words (“the second words”) are defamatory of her.  They bear the same meaning as the first words.

42.  Through her solicitors, the plaintiff sent a demand letter dated 21 April 2017 to each of the defendants, asking for, among other things, an apology in respect of the defamatory statements.

43.  After the issue of the demand letter, by letter dated 4 May, the defendants wrote to the plaintiff and Chan.  On this occasion, the defendants’ stance on the alleged illegality shifted and they stated that Cheng was responsible.  In respect of the lease of Shop A, they wrote:

“本物業合同(1) 是我們父親鄭文玉先生在我兩者（即鄭錦華先生及鄭慧珍女士）不知情及沒有業權下代簽合同，在法理上是冒簽及侵犯業權，這行為是不合法。＂

44.  The plaintiff says that the defendants had never genuinely believed that she had committed any illegal act in respect of the lease of Shop A.  They made the allegation against her solely with the motive to apply pressure on her so that she would sell her share in the Property at a low price.  In cross-examination, she added that she did not want to sell her share.  However, as the defendants kept harassing her by issuing the letters, approaching the tenant and the estate agents, she felt very upset and did not want to endure such ordeal.  Therefore, she was prepared to sell her share.

45.  Notwithstanding the demand letters, the defendants refused to apologise. 

46.  The plaintiff contends that the first and second words are libellous of her.  They were published to Shun Fung, causing damage to her reputation.  The defendants did so not believing the truth of what they said, but with a motive to pressurise her to sell her interest in the Property at a low price just when the lease was about to expire.

47.  The plaintiff claims general damages of $100,000.  She says that she is also entitled to aggravated damages.  She was distressed by the first and second words.  The defendants knew that they were untrue but nonetheless published them.  They repeated the untrue statements in the form of the second words.  Despite the demand letters, they refused to tender any apology and continued to maintain their untenable position throughout these proceedings. The plaintiff claims a sum of $100,000 for aggravated damages.

THE DEFENDANTS’ CASE

48.  The 1^st and 2^nd defendants filed their witness statements in March 2018.  The 2^nd defendant’s statement is a short one.  She adopted those parts of the 1^st defendant’s witness statement as relating to her and added further matters which were mainly known to her.  Shortly afterwards, the 1^st defendant filed a supplemental witness statement in May 2018.  He stated that he was authorised by the 2^nd defendant to do so to supplement their previous statements.  And he did so “in view of the new information which reminds us more about the course of events in the past”.  I shall have to set out specifically what was stated in the original witness statement, which was subsequently corrected in the supplemental statement.

49.  The defendants’ case is as follows.

Cheng’s mental state

50.  To their knowledge, Cheng was illiterate and could not even recognise some Arabic numeral.  However, as accepted by the 1^st defendant, Cheng was a successful businessman.

51.  In or about 2012, he was observed to have onset of Alzheimer’s disease and dementia.

52.  The 2^nd defendant said in her witness statement:-

“I knew that around 2012, our Deceased Father always talked about nonsense over the window, jumped up and down, made noises at night, gave out money to taxi driver without getting the balance in return, scolded his family members without a reason, signed blank cheques and so forth.”

53.  At that time, the defendants felt that Cheng had poor memory because of his old age.  They did not suspect that he was suffering from Alzheimer’s disease or dementia.

54.  In about 2014, they knew that Cheng had moved out of the family home after a quarrel with their mother.  They did not know if the plaintiff had an affair with Cheng as he never mentioned it to them during his lifetime.

55.  The 1^st defendant might have met the plaintiff once or twice when he came across Cheng having tea in a restaurant.  The 2^nd defendant had never met or spoken to the plaintiff during Cheng’s lifetime.

56.  Between 2014 and 2016, the 1^st defendant worked in mainland China and returned to Hong Kong during weekends.  But he would attend family gatherings on special occasions, such as birthdays and Chinese festivals. 

57.  After Cheng passed away, the plaintiff came and had a quarrel with their mother over the funeral.  It was then that the defendants heard of the relationship.  And it was the first time the 2^nd defendant met the plaintiff in person.

58.  While the family sorted out Cheng’s papers, they came across his medical records and found out that he was seen by a Dr Yu Yuk Ling on 16 May 2012.

59.  According to a letter issued by Dr Yu dated 24 May 2012, Cheng attended the clinic “with his wife”.  But Cheng’s mother told the defendants that she had not done so.  (The plaintiff said in cross-examination that at that appointment, Cheng told the doctor that she was his wife.)  Dr Yu continued:-

“He presented with a 5-month history of progressive memory loss of recent events and increased irritability. …

…

The clinical picture is compatible with Alzheimer’s disease. …”

60.  According to the medical records subsequently retrieved by the 2^nd defendant, Cheng was admitted to Queen Mary Hospital on 21 June 2016 for fever.  He was discharged on the following day.  The medical records noted: “patient’s daughter requested transfer to private hospital for further management”.  However, none of Cheng’s daughters had done so.  Cheng was later admitted to St Paul’s Hospital.  The family members had paid him a visit there.  He passed away on 4 November 2016 at the plaintiff’s flat.  The defendants believe that Cheng had been denied of immediate or proper medical treatment before his death and his family were being kept in the dark about his condition and could not give him proper care.

The defendants’ knowledge of the gift and the lease

61.  As regards the Property, it was purchased by Cheng for the whole family in the name of Philip in 1986.  Then in 2011, the defendants understood that the Property was registered in their name and Cheng’s name.

62.  The Property was used to run the family business of wholesale and retail sale of rice.  In terms of its daily management, Cheng was the head.  The 2^nd defendant handled documentary matters in the shop until 2012.  The 1^st defendant worked on computer-related matters until 2010.  The business ceased in about December 2012.  The Property was then left vacant.

63.  As regards their knowledge of (1) the gift from Cheng to the plaintiff and Chan in May 2014, and (2) the lease of Shop A in June 2014, the defendants’ evidence has undergone some changes in the course of these proceedings.

64.  In his witness statement, the 1^st defendant stated:-

“When I returned to Hong Kong on one day in or about October 2016, Philip suddenly gave us an undated sheet telling us that the Property (both Shop A and Shop B) was leased out and we would have our own shares in the rent received from the tenants relating to the Property (both Shop A and Shop B) starting from 1^st September 2016 with retrospective effect …” (underline added)

65.  The “undated sheet” referred to is the distribution sheet mentioned in para 27 above.

66.  In his supplemental statement, the 1^st defendant amended the above paragraph by replacing “Philip” with “Cheng Kam Ho”.

67.  Later on in the supplemental statement, when the 1^st defendant referred to the occasion on which he received the undated sheet, he stated that it happened at the birthday banquet held on 15 August 2016.  So it would appear that the reference to “October 2016” in the original statement is also wrong.  It should have been to “August 2016”.  He added that he did not want to make any enquiry or raise any objection about it at the banquet as it would spoil the event and make his mother unhappy.

68.  In his witness statement, the 1^st defendant continued to say:-

“At that time we were shocked as the undated sheet showed that the Plaintiff and Chan got all the shares of our Deceased Father, and the Property was leased out without our authority or consent. Then, we began to make enquiries about the Property and see what had happened.” (italics added)

69.  The 1^st defendant added:-

“For avoidance of the doubt, prior to October 2016, the 2^nd Defendant and I did not know about the deed of gift, the change of ownership of the Property, the lease of the Property or the existence of any tenancy agreement relating to the Property. Nor had we received any deposit or rent in relation to the leases of the Property.

…

On 11^th November 2016, a land search on the Property was conducted and we discovered a change of registered owners, that is, a deed of gift dated 26^th May 2014 was registered on 6^th June 2014 …” (underline added)

70.  In his supplemental statement, the 1^st defendant amended both underlined dates in the above quote to “26^th May 2015”.  He explained that they had actually conducted a land search on 26 May 2015 (for a reason that he could not recall) which revealed the gift.

71.  As summed up by Ms Kitty Tsang, counsel for the defendants, in her closing submissions, as regards the defendants’ knowledge of the gift and the lease:-

(a) They had not been aware of the Tenancy Agreement prior to its execution.  Nor had they given their consent.

(b) On 26 May 2015, ie the date of the land search conducted by the defendants, they discovered the gift.

(c) On 15 August 2016, ie the date of Cheng’s birthday banquet, they knew of the lease of Shop A (and Shop B).

72.  It is common ground that the defendants received two cheques in the sum of $12,000 and $6,000 at the birthday banquet.  At that time, the 2^nd defendant thought that it was a red packet given by Cheng for his birthday.  She has disclosed a copy of the cheque in these proceedings.  It was drawn on Cheng’s personal account and was dated 1 September 2016.  There was a handwritten note stating, among other things, “2016 8月15日贈送”.

73.  The defendants then started to make enquiries and informally consulted friends who are lawyers in relation to their rights in the Property.

74.  The defendants did not make any enquiry with Cheng during his lifetime about the gift and the lease.  On this point, in cross-examination, the 1^st defendant said that he did not generally know what Cheng did with the Property during the latter’s lifetime.  He seldom applied his mind to it.  Even after he learnt of the gift in May 2015, he did not ask his father about it.  He mentioned two reasons.  First, he was often on business trips.  Second, it was his father’s decision and own idea. 

75.  Similarly, he never raised the issue of the lease with Cheng even after he learnt of it at the birthday banquet.  His reason for not asking was in the same vein as why he did not enquire with Cheng about the gift.  He said that he would not ask his father about what he did with the Property.  Since he respected his father, he would not ask. 

76.  It was only after Cheng passed away and the family found out about his mental condition that the 1^st defendant started to make enquiries about the lease.  He needed to find out if his father had been cheated in relation to the Property.

77.  The 1^st defendant now says that the lease was made without the defendants’ authority or consent as they were unaware of its existence when it was entered into.  From the commencement of the lease and up to before September 2016, they did not receive their share of the rental deposit and the monthly rents.  They were only given a copy of the Tenancy Agreement after Cheng passed away.

78.  In about February 2017, the 1^st defendant lodged a complaint with the Estate Agents Authority against the estate agent in relation to the alleged irregularity or illegality of the Tenancy Agreement.  On 3 April 2017, the 2^nd defendant lodged her complaint. 

The first and second letters

79.  It is against the above background that the correspondence among the parties and Shun Fung was exchanged commencing from March 2017.  Since the defendants did not know Shun Fung and did not have their telephone number. They resorted to sending a letter to Shun Fung by post in connection with the lease and its illegality.  That would be the first letter.  As to the second letter, it was just one of a series of replies relating to the tenant’s request for the renewal of the lease.

80.  The defendants stress that the two letters had nothing to do with any person’s character and were not a publication of defamatory statements.  In any event, they honestly believe that the Tenancy Agreement was entered into improperly because it was signed without their consent or authorisation.

81.  In cross-examination, the 2^nd defendant said that when they sent the first letter, she did not intend to suggest any improper conduct on the part of the plaintiff or Chan.  She was only concerned with the lease.  On the face of it, Cheng was wrong to sign and the estate agent was also wrong. Both defendants said in their oral testimony that they did not know the circumstances surrounding the execution of the Tenancy Agreement and what role or part the plaintiff had in it.

82.  The 2^nd defendant obtained a report from a Dr Walter Chen, a specialist in cardiology, in July 2017.  Dr Chen remarked that in 2012, Cheng “was noted to be agitated and his memory worsened”.  He was referred to Dr Yu and the diagnosis was Alzheimer’s disease.  Dr Chen last seen Cheng in September 2016, who was noted to have difficulty in walking and poor memory.

83.  The defendants believe that from 2012 to 2016, the plaintiff “must have dominated and controlled [Cheng], physically and mentally as he was such a vulnerable old man at his late 80 and 93 by the time he died”.  They point out that Cheng made the gift in May 2014, which was within five months after Cheng allegedly moved in to live with the plaintiff.  And then the Shop A lease was signed in June, shortly after the gift was made.  They say that the chronology shows that Cheng “was influenced and caused to dispose of his wealth including the Property shortly after alleged cohabitation and within 3 years of his death”.

84.  According to the 1^st defendant, when he visited Cheng at St Paul’s Hospital, Cheng told him that he regretted making the gift to the plaintiff since she had not been treating him well.  The defendants also point out that Cheng died in the plaintiff’s flat and that shows that the plaintiff did not send Cheng to hospital for proper care “but left him die there without immediate medical care or resuscitation”.

85.  As to the mistakes in the dates in the 1^st defendant’s witness statement, he tried to explain how they came about in his supplemental statement:-

“It was only after last hearing on 2^nd May 2018, I read the date and time of exhibit C-4 (copy land search) again and recall that we had actually conducted a land search on 26^th May 2015 for a reason which I cannot recall now. At that time (not on 11^th November 2016), I personally knew that all our Deceased Father’s interests had been transferred to two females (the Plaintiff and Chan). As I did not have any reason to doubt about our Deceased Father’s mental condition, I did not ask him and did not take any action either. At that time, I honestly believed that our Deceased Father was a capable person with sound mind and should be able to make judgment in disposing his own assets at his wish while we were the children who should not influence his free will. However, if we had learned that he had begun to suffer from some mental diseases which would adversely affect his decision-making, we would have asked or even stopped him in 2015 by revoking his decision/reversing any course of event (like transfer all his interests in the Property back from the Plaintiff and Chan to him) immediately during his lifetime, not voiding it with great costs or uncertainties after his death.”

86.  Exhibit C-4 referred to in the above quote is the land search result of the Property and shows the following entry:-

“SEARCH DATE AND TIME: 26/05/2015 16:08”

87.  As regards the defendants’ complaints lodged with the Estate Agents Authority, the complaint in respect of the lease of Shop A was not established. The finding was that Cheng had borrowed the standard form tenancy agreement from the estate agent, who had not played any role or received any commission in the transaction.  The complaint in respect of Shop B was upheld on the ground that the estate agent had failed to ensure that the two signing co-owners had the authorisation of the two absent co-owners to sign.  The estate agent was disciplined.

88.  In reply to the defendants’ allegation that Cheng was suffering from some mental condition in the few years before his death, the plaintiff has disclosed three medical notes in these proceedings.  Two were issued in 2015. They certified that Cheng was medically fit to travel by plane.  The plaintiff explained that these notes were obtained to make sure that Cheng could get on board the flights as some airline companies might not allow him to do so in view of his old age.  The third one was a letter issued by Cheng’s dentist in July 2017.  He certified that Cheng had been his patient from February 1997 to October 2016 and that he was mentally alert at all times.  Cheng’s last visit was on 16 October 2016.  He had a molar extracted.  The dentist recalled having a conversation with Cheng and his mental state was fine.

Summary of the defendants’ case

89.  In summary, the defendants deny that the first and second words are defamatory of the plaintiff.  But even if they are, they are true as there was indeed an issue of illegality concerning the Tenancy Agreement since they had not been consulted about it and had not given their consent or authorisation as co-owners for its execution.  The defendants also rely on the defences of fair comment, qualified privilege and protection of proprietary interests.  The latter is regarded as a type of qualified privilege.

FACTUAL FINDINGS

90.  The plaintiff and the defendants have put forward conflicting versions of events.  Most notably, was Cheng mentally sound when he executed the gift and the Tenancy Agreement?  What was the subjective state of mind when the defendants sent the first and second letters to Shun Fung?  Did they genuinely believe that the Tenancy Agreement was tainted with an illegality issue in which the plaintiff had played a part?  For what purpose did they send out the two letters?  The latter questions are material as the issue of malice would turn on the answers to them.

91.  The resolution of the factual disputes primarily turns on the credibility of the witnesses, who have at times given conflicting accounts of the same events.  My task is to evaluate the competing evidence against the backdrop of undisputed and indisputable facts.  I am to weigh the inherent probabilities of the parties’ cases.  Contemporaneous documents should be given due weight in the assessment exercise.  The internal consistency (or inconsistency) of the witnesses’ evidence should be taken into account.  The court would also be guided by its overall impression of the characters and motivations of the witnesses: see, eg, Re B (Children) [2009] 1 AC 11, para 31, per Baroness Hale, cited in Standard Chartered Bank v Li Wai Ping HCA 10587/2000 and 3573/2003, 17 February 2011, para 19.

92.  On the whole, I find that the plaintiff’s evidence is more credible than the defendants’.  I consider that the following matters are material considerations in the evaluation exercise.

First, the defendants’ evidence is tainted with inconsistencies

93.  First, the defendants’ evidence is tainted with inconsistencies.  Their position on when they first found out about the gift and the lease has been shifting and evolving in these proceedings.  Worse still, their evidence is at times contradictory.  This seriously undermines the reliability of their evidence.

94.  As regards their knowledge of the gift:-

(a) In the defence filed in June 2017, it was pleaded that in or about October 2016, the defendants were given the distribution sheet showing how the rent received from the Property would be divided and thereafter they began to make enquiries of their interests in the Property.  The plea continued to state that on 11 November 2016, either the 1^st or 2^nd defendant caused to conduct a land search and discovered a change of the registered owners resulting from the gift.

(b) This plea was supported by the 1^st defendant’s witness statement filed in March 2018 – see paras 64, 68 and 69 above.  The 1^st defendant stated there that he (and the 2^nd defendant) were “shocked” upon seeing the distribution sheet and finding out that Cheng’s share had been transferred to the plaintiff and Chan by way of a gift.

(c) The position of the defendants then abruptly changed when the 1^st defendant made his supplemental witness statement two months later in May 2018 – see para 70 above.  From then onwards, the defendants’ position is that they knew about the gift when they conducted a land search on 26 May 2015.  He was prompted to make the correction because the copy of the land search results exhibited to his original statement in fact bear the “26 May 2015” date as the search date.

95.  Bearing the above chronology in mind, one is simply at a loss as to why the defendants were “shocked” about the gift when they were handed the distribution sheet at the birthday banquet on 15 August 2016.  According to their latest version of events, they had already known about the gift more than one year before, ie on 26 May 2015.  There was no reason why they should be shocked by something which they had already known.  In cross-examination, when confronted with this issue, the 1^st defendant was not able to give a coherent answer explaining why they would be “shocked” as described in the witness statement.

96.  It is not uncommon for a witness to make mistakes about dates.  But, here, the mistake is not merely over different dates.  It is about the reaction of the defendants upon learning of the gift.  According to their defence, it was after they discovered the gift in October 2016 that they started to make enquiries. And in November 2016, they found out about the change of the registered owners.  On its own, this sequence of events makes sense.  However, the sequence does not make much sense now that the date of the land search was corrected and replaced by a much earlier date in May 2015. 

97.  As regards their knowledge about the entering of the lease, the inconsistencies in the defendants’ evidence are more damning.

98.  In their pleading and the 1^st defendant’s witness statement, the defendants said that they first found out about the lease in October 2016. In the supplemental statement, the 1^st defendant changed the date to 15 August 2016, ie the date of Cheng’s birthday banquet.  That change does appear to be a genuine mistake about dates.  In his supplemental statement, he said:-

“… on 15^th August 2016, at the birthday banquet of our Deceased Father, we first learned of the existence of leases of the Property and were informed of our respective shares of rent stated in the sheet … Indeed the event was so sudden that we did not know how to react at that moment. Unfortunately, our Deceased Father soon passed away.” (italics added)

99.  However, earlier on, when the 1^st defendant gave a statement to the Estate Agents Authority in February 2017, he said that he discovered the lease of Shop A and Shop B in late 2016 and upon a physical inspection of the Property.  He said:-

“約於2016年年尾（我不記得有關日期），我親身視察上述物業，才發現上述物業已被出租，我遂即時問租客的職員，而有關職員（我不記得有關職員的姓名）指示我直接聯絡有關立約的人士陳景珍女士有關事宜。… 我留意到臨訂／租金支票的收票人為我的爸爸的名字，我估計我爸爸是知悉有關租賃的事宜。…” (underline added)

100.  The two statements on when the 1^st defendant found out about the lease of Shop A for the first time are simply irreconcilable.  In cross-examination, the 1^st defendant was unable to give any satisfactory explanation as to the stark inconsistencies between them.  He admitted that the statement he made to the Estate Agents Authority was not accurate. He said that he had not communicated his message clearly at that time.

101.  The same inconsistency appeared in the 2^nd defendant’s evidence.  In addition to adopting the 1^st defendant’s witness statement as concerning her, the 2^nd defendant also emphasised in her own witness statement that she and the 1^st defendant did not know about the lease until October 2016 (which must now be taken to mean August 2016).  Yet, she told the handling officer of the Estate Agents Authority in February 2017 that it was only after Cheng passed away that she found out about the lease for the first time.  She was recorded as having said:-

“鄭女士表示，她及鄭錦華先生（“鄭先生”）於她的父親過世辦理承繼遺產時，才獲得該物業的租約，並得知該物業曾被出租。她及鄭先生於事前不知悉該物業被出租，因她及鄭先生沒有簽署任何租約，亦沒有授權任何人士簽署租約。… 當我爸爸過世後，鄭女士才知道有此兩份合約存在。事先鄭女士不知道該物業於何時出租及收租之事。” (underline added)

102.  Lastly, in the first and second words, the defendants stated unequivocally that they would commence legal action against the other co-owners of the Property in respect of the infringement of the right to enter into the Tenancy Agreement.  However, when asked in cross-examination, the 1^st defendant confirmed that at the time when they sent the first letter, he did not intend to do so against the plaintiff and Chan.  This goes to cast doubt on the reliability of his statements in general.

103.  At the end of her testimony, the 2^nd defendant produced a medical certificate.  It reveals that she had diffused subarachnoid hemorrhage and underwent an operation on 31 December 2017.  After that, she was suffering from cognitive impairment with poor memory.  Ms Tsang did not make any submission arising from this disclosure.  In any event, as far as the 2^nd defendant is concerned, the main inconsistency in her evidence lies in the statement she made to the Estate Agents Authority back in March 2017.  It was before her operation.

Second, some aspects of the defendants’ case are against inherent probabilities

104.  The defendants’ case is that that they discovered that Cheng’s poor mental condition only after he passed away and when they came across the letter from Cheng’s doctor.

105.  The 1^st defendant’s evidence in this regard was that during the years between 2014 and 2016, he worked in the mainland and only returned to Hong Kong at weekends.  He did not have much time paying attention to his father’s medical condition.  But he would see him at family gatherings, especially at birthdays or Chinese festivals.

106.  On the other hand, in her witness statement, the 2^nd defendant stated that since around 2012, her father was observed to behave abnormally (“always talked about nonsense over the window, jumped up and down” etc).  Her further evidence was that after Cheng moved out, he would return home to have dinner with his wife and the 2^nd defendant on Sundays.  Against such background, it seems to be against inherent probability that after she learnt of the gift in May 2015 when Cheng was already behaving abnormally, the 2^nd defendant would take no step at all to make enquiries with her father about the circumstances of the gift and see whether there was anything improper about it.

107.  Mr Chong submitted that the defendants’ failure to take any step prior to Cheng’s death to enquire about the propriety of the gift is telling.  It goes to corroborate the plaintiff’s case that Cheng was in fact all along mentally alert and sound when the gift and the lease were effected.  I accept that there is much force in this submission.

Third, the plaintiff’s factual case is inherently plausible and consistent with background facts

108.  On the whole, the plaintiff’s factual case is coherent and inherently plausible.  In essence, her case is premised on the background fact that Cheng was regarded as the head of the family, having the power to determine how the family properties were used.  That was the case, even where the properties were vested in the names of his children.

109.  This factual allegation is in effect corroborated by some of the defendants’ own evidence.

110.  Further, the plaintiff’s allegation is consistent with the objective conduct of the defendants.  After they learnt of the lease, neither defendant made any enquiry with the father.  Nor did they complain about the lease which they now say was illegal because it had not been authorised by them as legal co-owners.

111.  Most notably, the 1^st defendant repeatedly stated that he would not enquire with his father what he did with the Property.  He would not ask because he respected his father.  It was only when they suspected that Cheng was not mentally sound before he passed away that they needed to find out whether Cheng had been cheated.  Implicit in this statement is that the 1^st defendant would not interfere with what Cheng did with the Property so long as Cheng was of sound mind and was making his own decision.  This is entirely consistent with the long established family practice as alleged by the plaintiff and supports the plaintiff’s evidence that Cheng had all the say over the real properties.

Findings

112.  For the above reasons, I prefer the plaintiff’s evidence to the defendants’ where they are in conflict or are inconsistent.  I accept the plaintiff’s factual case on the whole.

113.  More specifically, I find as follows:

(a) During his lifetime, when Cheng acquired real properties, he had the practice of purchasing them in the name of his children while retaining control over the properties.  He was regarded as the head of the family.  The children accepted this arrangement and Cheng’s role in it.  This applied to the Property.

(b) Cheng was mentally sound when he executed the deed of gift and signed the Tenancy Agreement and continued to be so until he passed away. 

(c) It was Cheng who signed the Tenancy Agreement on behalf of the defendants.  Apart from accompanying him at the signing, the plaintiff had played no part in the execution.

(d) Prior to Cheng’s death, the defendants had been aware of both the gift and the lease of Shop A. 

(i) Latest by 26 May 2015, they knew about the gift as they conducted a land search on the Property on that day. 

(ii) Latest by 15 August 2016, they knew about the Shop A lease as they were given the distribution sheet and the cheques for the month of September 2016 at Cheng’s birthday banquet on that day.

(iii) Prior to Cheng’s death, the defendants had never complained about or objected to the gift and the lease.

(e) When they sent the first and second letters to Shun Fung, the defendants had already seen a copy of the Tenancy Agreement and therefore knew that Cheng alone had signed it for the landlord.    

(f) Further, when they sent the letters:

(i) The background fact was that they had always accepted Cheng’s authority to decide on matters relating to the Property in accordance with the long established family practice.  They were well aware that Cheng had signed the Tenancy Agreement against this background.

(ii) Apart from that, they did not know of the exact circumstances in which the Tenancy Agreement was signed and the plaintiff’s role in it, if any. Hence at that time, they did not believe and could not have believed that the plaintiff had committed anything illegal in relation to the signing.  In fact, in their letter dated 4 May 2017, they complained that Cheng was the wrongdoer (see para 43 above).

(iii) The defendants had no intention to commence any litigation against the plaintiff concerning the Tenancy Agreement.  The 1^st defendant expressly admitted that to be so in cross-examination.  As a matter of fact, the defendants did not subsequently bring any such action.

(g) In the circumstances, they sent the two letters with a view to applying pressure on the plaintiff so that she would sell her interest in the Property at an undervalue to them.  They first approached the plaintiff in January 2017 with an offer of $3,000,000.  They later made a higher offer of $5,000,000 in March 2017.  It was about this time that the allegation of illegality was raised and the first letter sent to Shun Fung.

DISCUSSION

114.  On the facts as found, I shall proceed to consider the following issues:-

(a) Were the first and second words published?

(b) Do the first and second words refer to the plaintiff?

(c) Do the first and second words bear the meaning pleaded by the plaintiff?

(d) Is the pleaded meaning defamatory of the plaintiff?

(e) If so, does the defence of justification apply?

(f) Alternatively, does the defence of fair comment apply?

(g) Further or alternatively, does the defence of qualified privilege apply?

(h) If the defendants are liable for libel, what should be the damages?

Publication

115.  No civil action can be maintained for libel unless the words complained of have been published.  In order to constitute publication, the matter must be published by the defendant to a third party, that is to say, at least one person other than the plaintiff.  Since publication to one person will suffice, it is clearly not necessary that there should be a “publication” in the commercial sense, though the scale of the publication will of course affect the damages: Gatley on Libel and Slander, 12^th ed at para 6.1

116.  Ms Tsang submitted that there was no publication.  There is no evidence to show that the first and second letters had been read by unrelated third parties or the public.  They were sealed in an envelope and sent out by registered and ordinary post.  The communication of these letters to the contractual parties of the Tenancy Agreement, Ms Tsang argued, did not amount to publication of any defamatory statements.

117.  I do not agree.  In the present case, the first and second letters were sent to Shun Fung, who is a party other than the plaintiff herself.  It follows that the first and second words were published to Shun Fung as a matter of defamation law since communication to one person will suffice.

Meaning

118.  In determining the meaning, words of an article are normally construed according to their natural and ordinary meaning.  The meaning is the one which the words would convey to the mind of an ordinary, reasonable, fair-minded reader.  The article must be read as a whole.  The context and circumstances of the publication must be taken into account.  In some circumstances, the defamation does not lie in the actual words used, but in an inferential or implied meaning that the words are capable of bearing without the need to have recourse to extrinsic facts: see, eg, BaWang International (Group) Holding Ltd v Next Magazine Publishing Ltd HCA 1190/2013, 23 May 2016, paras 26-33.

119.  Ms Tsang contended that the first and second words are neutral expression.  They simply state the facts and do not bear the plaintiff’s pleaded meaning.  They concern a civil dispute among the co-owners of the Property over the signing of the Tenancy Agreement.  Their natural and ordinary meaning is that there existed questions of illegality surrounding the Tenancy Agreement as the defendants had not been consulted about it prior to its execution.  They do not say that the plaintiff had acted illegally. The focus of the communication was on the dispute concerning the legality of the agreement, rather than the reputation of any person.  Furthermore, the purpose of the first and second letters was to send a notice to the tenant that for this time the lease could not be renewed without the defendants’ consent.

120.  In my view, it is clear that the first and second words refer to the plaintiff (and Chan).  This is because in both the first and second letters, the names of the four legal owners were expressly stated.  The defendants were two of the legal owners.  In the mind of a reasonable reader, the reference to “other legal owners” (“其他本物業權持有人”) must be a reference to the plaintiff and Chan.

121.  As to the meaning of the first and second words, I am of the view that they do bear the meaning pleaded by the plaintiff.

(a) The first words should be read in its context.  The second sentence in the body of the first letter states the defendants had never been consulted on the content of the Tenancy Agreement before its signing and that was cited as the reason why they regarded that the lease was tainted with an illegality issue.

(b) The paragraph continues to state that the defendants would commence a court action against the other legal owners in respect of the infringement of the right to enter into a lease. 

(c) Joining these two threads together, given that the letter earlier refers to the plaintiff and Chan as the other co-owners, a reasonable reader would naturally take the words to mean that the plaintiff (and Chan) had failed to consult the defendants over the Tenancy Agreement when they ought to have done so and that is why the defendants intended to take legal action against them. The imputation of the words is clear, namely that the plaintiff (and Chan) had acted in an illegal manner and infringed the rights of the defendants when the Tenancy Agreement was entered into. 

(d) This is a case where although the words do not directly and expressly say that the plaintiff had acted illegally, that would be an imputation which would readily come to the mind of a reasonable reader.

(e) The same can equally be said of the second words.  The content of the second words is in essence the same as the first words and they were published not long after the first words.  The context surrounding the making of the first words is therefore the same as when the second words were published.

Is the pleaded meaning defamatory?

122.  It is generally accepted that an imputation is defamatory if it lowers the plaintiff’s estimation in the eyes of right-thinking members of society and adversely affect his reputation: see, eg, BaWang at para 24; Gatley at 2.1.

123.  It has also been said that an imputation is defamatory if it involves imputation of what is “illegal, or unethical or immoral, or socially harmful”. Even “imputations which are less serious than that” may be defamatory, so long as it would “deter third persons from associating or dealing with him”: Thornton v Telegraph Media Group Ltd [2011] 1 WLR 1985, para 34, per Tugendhat J.

124.  Here, it is plain and clear that the pleaded meaning, which contains an allegation of an illegal act on the part of the plaintiff, is defamatory of her.  Ms Tsang accepted that to be so at closing.

125.  Accordingly, I hold that the first and second words were published by the defendants and the words are defamatory of the plaintiff.  Unless the defendants can bring themselves within any of the pleaded defences, they are liable to the plaintiff for libel.

Justification

126.  On the facts as found, and in light of my ruling on the meaning of the first and second words, the defendants’ plea of justification must fail.  The burden is on the defendants to show that the plaintiff was acting in an unlawful manner infringing the defendants’ rights when the Tenancy Agreement was entered.  It was Cheng, not the plaintiff, who entered into the Tenancy Agreement on behalf of the defendants.  I have held that apart from being present at the signing, the plaintiff had played no part in it.  Hence the plaintiff was not acting unlawfully and did not infringe the defendants’ rights. 

127.  Ms Tsang sought to argue that the plaintiff, as a co-owner of the Property, had allowed Cheng to sign when she had not obtained the consent of the other co-owners.  In such circumstances, her act or omission is deemed to amount to an illegal act of infringing the defendants’ right.

128.  I am unable to accept this submission.  It is doubtful as to whether a co-owner can be said to be acting illegally due to her inaction in this type of situation.  In any event, on the facts as found, Cheng signed the Tenancy Agreement in accordance with the long established family arrangement.  In the course of his doing so, there is nothing to suggest that the plaintiff had done anything illegal.

Fair comment

129.  In a defence of fair comment, a defendant needs to meet five elements (Cheng v Tse Wai Chun (2000) HKCFAR 339, paras 347A-348A; Gatley at para 12.2):-

(a) The word must be on a matter of public interest.  While public interest is not to be confined within narrow limits, it must be a matter such as to affect people at large, so that they may be legitimately interested in, or concerned at, what is going on: London Artists Ltd v Littler Grade Organisation Ltd [1969] 2 QB 375, 391B.

(b) The word must be recognisable as comment, as distinct from an imputation of fact.

(c) The comment must also be based on facts which are true or covered by privilege.

(d) The comment must explicitly or implicitly indicate, at least in general terms, the facts on which it is based.

(e) The comment must be one which could have been made by an honest person, however prejudiced he might be, and however exaggerated or obstinate his views.

130.  I am not satisfied that the first and second words satisfy the first element.  Mr Chong submitted that they related to a private dispute among the co-owners of the Property when the existing lease was about to expire.  It did not touch upon any matter of public interest.  It did not affect the public or any sector of the public at large.

131.  On the other hand, Ms Tsang contended that the first and second words were made “on a matter of public interest relating to proprietary rights of the Property as a co-owner and professional standard, integrity and conducts of the estate agents involved in the conclusion of the two Tenancy Agreements”.  She further submitted that real properties are invaluable assets and owners’ rights are protected against infringement under the Basic Law.  Hence proprietary interests and their protection are matters of public interest.

132.  I agree with Mr Chong.  Even though the modern approach is not to confine matters of public interest within narrow limits, a private dispute over a tenancy agreement which has no implication to anyone other than the contractual parties (and perhaps the estate agents involved) would not qualify.

133.  For this reason alone, the defence must fail.  It is therefore not necessary to consider whether the other requirements are met.

134.  In any event, the defence would be defeated by malice on the facts.

135.  In the context of fair comment, a defendant cannot avail himself of the defence if he did not genuinely hold the view he expressed.  Honesty of belief is the cornerstone.  Even where the defendant made the comment out of some other motive, that does not by itself defeat the defence: Cheng v Tse at 360I-J; Gatley at para 12.36.

136.  On the issue of honest belief, I hold that the defendants knew that the first and second words were not true.  My reasons are as follows.

137.  Ms Tsang repeatedly emphasised that all the defendants were saying in the first and second letters was that they considered that there existed an illegality issue concerning the Tenancy Agreement.  The issue arose because only Cheng had signed on it as landlord when he no longer owned any interest in the Property.

138.  I accept that solely based on this fact, there was at least a prima facie ground to challenge or impugn the Tenancy Agreement, given that there was a legal question mark over the capacity of the signer; in theory, there might be potential ground for the defendants to seek legal relief from the “culprit”.  Hence, in that sense, it was open to the defendants to contend that they genuinely believed that there was an illegality issue.

139.  On the other hand, however, it must be borne in mind that, as between Cheng and the defendants, there had been an understanding and acceptance on the latter’s part that Cheng could decide on matters concerning real properties, including the Property, in accordance with the long established family practice. Cheng had the final say. 

140.  Against such background, and in the absence of any knowledge of the exact involvement, if any, of the plaintiff in the Tenancy Agreement, the defendants plainly could not have believed that the plaintiff was acting in any unlawful manner concerning the Tenancy Agreement.  Nonetheless, the defendants expressly stated without reservation that they would shortly take out legal action against the other owners, which reference must include the plaintiff. They said so without in fact intending to do so.  All these point to the conclusion that they did not believe in the truth of the first and second words at the time.

141.  For the above reasons, even if the defence of fair comment applies, it would be defeated by malice.

Qualified privilege

142.  Where a communication is made by someone with an interest in the subject-matter to someone who has a corresponding interest in receiving the communication it is made on a privileged occasion.  Such a situation is often referred to as one in which the parties have a common interest.  A publication made on a particular occasion may even be privileged notwithstanding that the person was acting solely in pursuit of his own interests, provided that the communication is made to someone who has a legitimate interest to receive the communication: Gatley at para 14.45.

143.  Ms Tsang contended that the first and second letters were protected by qualified privilege.  All the legal co-owners and the tenant of the Property had a common interest relating to its management and leasing out.  Where there was a dispute over the legality of the lease, all these parties had an interest to know about it and be told about it, so that they could deal with the matter which would affect the substantive interest of each of the parties.

144.  Ms Tsang further pointed out that the first letter was in fact a response to the plaintiff and Chan’s earlier request for an explanation of the alleged illegality, and that the second letter was a reply to the tenant’s earlier letter requesting a renewal of the lease on the same terms. 

145.  I accept Ms Tsang’s submission and hold that the communication of the first and second letters was a privileged occasion.  The surrounding circumstances were that an issue was raised with regard to the legality of the existing tenancy agreement.  Further, the lease for Shop A was about to expire and there was discussion among the parties on renewal.  The issue of illegality, which would not only affect the original lease but also any renewal, must be a matter which clearly affected the substantive rights of all the legal owners and the tenant.  The purpose of the communication was for the parties concerned to be aware of the issue, resolve it or consider what respective actions they should take in respect of the alleged illegality.  It would therefore give rise to a privilege protecting any communication which was made in respect of the subject-matter and for that purpose and circulated only among the parties concerned.

146.  Hence, prima facie, the defendants are entitled to raise the defence of qualified privilege in respect of the first and second words.  The real bone of contention turns on whether the defence would be defeated by malice, as alleged by the plaintiff.

147.  The principles governing the role of malice in the defence of qualified privilege are authoritatively set out in Jonathan Lu v Paul Chan Mo Po (2018) 21 HKCFAR 94, paras 17-24:-

(a) In order to decide whether a communication was published maliciously, for the purpose of rebutting a defence of qualified privilege, it is necessary to decide two questions, which arise sequentially.  First, was the occasion privileged, and if so, for what purpose?  Secondly, was that the defendant’s purpose when he published the communication in question?

(b) The critical question is whether the dominant purpose for which he made the communication was one other than the purpose for which the occasion was privileged.

(c) The dominant purpose for which a person published defamatory matter can only be inferred from what he did or said or knew and from the circumstances surrounding the making of the relevant communication.

(d) Where the purpose for which the privilege is accorded is consistent only with the communication of a matter which is believed to be true, the defendant’s knowledge that the matter was false at the time when he communicated it, or his recklessness as to whether it was true or false, will generally be conclusive evidence that he did not make the communication for a proper purpose: normally, that is the only inference which can reasonably be drawn.

148.  The burden rests on the plaintiff to prove malice.  She needs to demonstrate that the dominant purpose for which the defendants published the first and second words was one other than the purpose for which the communication was privileged.

149.  On the facts as found, I am satisfied that the plaintiff has demonstrated malice on the part of the defendants.  First, I have held that the defendants in fact did not believe in the first and second words.  This is conclusive evidence that they did not make the communication for its proper purpose.  Secondly, and in any event, I have found that they were making use of the letters to apply pressure on the plaintiff so that she would sell her interest at an undervalue.  That was not the purpose for which the communication was privileged.  For both these reasons, I hold that malice is established. 

150.  The defence of qualified privilege therefore fails.

151.  None of the defence is made out.  I hold that the defendants are liable for libel in respect of the first and second words.

Quantum

152.  As a matter of general principle, in cases of libel, a plaintiff is entitled to look to an award of damages sufficient to vindicate his reputation according to the seriousness of the defamation, the range of its publication and the extent to which the defendant has persisted with the charge: Gatley at para 9.4.

153.  The plaintiff is entitled to general damages in respect of the first and second words.  I take into account the following matters when assessing quantum.  The first and second words were published only to one person, namely Shun Fung.  Hence the damage to the plaintiff is much more limited than in cases of a wider distribution.  On the other hand, they convey the meaning that the plaintiff was acting illegally and this amounts to a serious defamation.

154.  The plaintiff asks for $100,000 as general damages for both words whereas the defendants contend that only nominal damages should be awarded if liability is established.  On the whole, having considered the authorities cited by counsel, I would make an award of $70,000.

155.  As regards the claim for aggravated damages in the sum of $100,000, it should be borne in mind that such claim is part of the compensatory award and may be granted to compensate for additional injury caused to the plaintiff’s feelings by the defendant’s conduct of the action, as when he persists in an unfounded assertion that the publication was true, or refuses to apologise, or cross-examines the plaintiff in a wounding or insulting way: Oriental Daily Publisher Ltd v Ming Pao Holdings Ltd (2012) 15 HKCFAR 299 at paras 112-113; Gatley at para 9.18.

156.  I agree that the plaintiff should be entitled to aggravated damages.  On the facts as found, she has suffered additional injury to her feelings, given that the defendants repeated the defamatory imputation in the second words and they failed to apologise but proceeded to defend the libel claim all the way through to the conclusion of these proceedings.

157.  I would award a sum of $50,000 as aggravated damages.

CONCLUSION

158.  I order that there be judgment in favour of the plaintiff in the sum of $120,000, with interest at judgment rate from the date of writ to payment.

159.  I also make an order nisi that the 1^st and 2^nd defendants do pay the plaintiff’s costs of the action, to be taxed if not agreed, with certificate for one counsel.