CHAU HOI SHUEN, SOLINA HOLLY v. SEEC MEDIA GROUP LTD

Press Summary (English)

Press Summary (Chinese)

FACV No. 7 of 2015

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 7 OF 2015 (CIVIL)

(ON APPEAL FROM CACV NO. 275 OF 2012)

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REASONS FOR JUDGMENT

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Chief Justice Ma:

1.  I agree with the judgment of Mr Justice Fok PJ.

Mr Justice RibeiroPJ:

2.  I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Tang PJ:

3.  I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Fok PJ :

4.  This appeal arose out of an action for libel brought against a distributor of a periodical magazine and raised an important question as to the ambit of the defence of innocent dissemination in the law of defamation.  The appellant sought to rely on that defence to avoid liability to the respondent but the courts below held that it did not avail the appellant in this case.

5.  After hearing counsel for the appellant,[1] the court dismissed the appeal with costs and indicated that it would hand down its reasons for doing so in due course.

A. The facts

6.  The action, being for libel, concerned words printed in a fortnightly magazine known as “Caijing” (“the Magazine”).  The Magazine was founded in 1998 and originally published in Beijing by an entity established by a Mr Wang Boming known as the “Stock Exchange Executive Council” (“SEEC”).  By the time of the publication giving rise to the action, the Magazine was published in Beijing by a company known as “Beijing Caijing Magazine Limited” (“the Publisher”) and SEEC continued to have a role in relation to the governing and management of the Magazine.

7.  The respondent is a prominent businesswoman and well-known philanthropist in Hong Kong and the Mainland.  She participates in charitable activities organised by the Li Ka Shing Foundation and also by a foundation bearing her own name.

8.  The words giving rise to the respondent’s action for libel appeared in two articles contained in Issue No.265 of the Magazine dated 7 June 2010.  The articles were respectively entitled (in translation) “Alliance of the newly appointed officials (or VIP)” and “Middle Chapter: Two-way Tollbooth” and the issue in question carried a cover which bears a banner title reading (in translation): “Alliance of the newly appointed officials (or VIP).  How did a group of young technocrats who stretched across business, commercial-industrial and forex sectors set up the two-way tollbooth on foreign investment approval, involving the richest Chinese man Li Ka Shing, the richest man in China Huang Guang Yu and also famous enterprises such as Siemens, Philips and Capital Group.”  The second article referred to the respondent by name and alleged that she had engaged in corruption by paying US$500,000 by way of a “consultancy fee”, part of which was intended by her to be distributed to a senior government official in Mainland China for assisting in the approval of projects related to Cheung Kong (Holdings) Limited by the Mainland authorities.  That article also alleged that the respondent had admitted to the police that she had paid the US$500,000 “consultancy fee”.

9.  The appellant is a company incorporated in the Cayman Islands whose shares are listed on the Hong Kong Stock Exchange.  It is a holding company of a group of subsidiaries, including the company having the exclusive advertising rights for the Magazine.  There is a close connection between the appellant and the Publisher.  Its four directors, who include Mr Wang, are also directors of the Publisher.  Mr Wang is the chairman and chief executive officer of the appellant, the chairman and legal representative of the Publisher and the editor-in-charge of the Magazine and chief executive officer of SEEC.  The offices used by the appellant, the Publisher and SEEC in Beijing are all located on different floors of the same building.

10.  In Hong Kong, the appellant handled the subscriptions of the Magazine here and overseas (excluding China) and its distribution to such subscribers, of which there were about 180.  Distribution of the Magazine by the appellant occurred in the following manner:

(1) At the material time, the appellant had a small office in Hong Kong with two employees.  For each issue of the Magazine, one of the appellant’s employees, a Ms Chan, would prepare envelopes with address labels and postage for subscribers overseas and for those in non-commercial areas of Hong Kong.  For the local subscribers in commercial areas, Ms Chan prepared address labels.

(2) Ms Chan would then give all the envelopes and labels to a courier company, EDS Express Co., who in turn would collect a number of copies of the Magazine from a newspaper distributor, Chan Sun Kee Books And Newspaper Ltd. (“Chan Sun Kee”), to whom copies were delivered directly from the printer in Shenzhen.  The courier company would then put the subscribers’ copies of the Magazine into the envelopes prepared by Ms Chan or stick the address labels she had prepared onto the plastic wrapping of the Magazine.  The courier company would then deliver or post the subscribers’ copies of the Magazine.

(3) The appellant’s two employees in Hong Kong would only receive copies of each issue of the Magazine after they had been distributed by the courier when Chan Sun Kee would return the left-over copies about two or three days after the bulk of the copies of the Magazine had been dispatched to newsagents for sale, or delivered or posted to subscribers by the courier.

B. The proceedings below

11.  At trial in the Court of  First Instance,[2] the appellant did not contest the defamatory nature of the words complained of and the Recorder found that those words were defamatory of the respondent “in a serious way” in that they suggested that she was involved in paying bribes to corrupt officials on the Mainland in her capacity both as a good friend of Mr Li Ka Shing and as a director of the Li Ka Shing Foundation in return for favours shown or facilities granted to Mr Li’s companies.[3]

12.  Instead, the main issue at trial was whether the appellant, as a distributor of the Magazine, was liable to the respondent for the libel or whether it could avail itself of the defence of innocent dissemination.  The Recorder rejected the appellant’s argument that the defence was only defeated where a subordinate publisher distributed with knowledge that the material contained an actionable libel on the plaintiff to which there was no defence.[4] He held that the appellant was not entitled to rely on the defence of innocent dissemination because he found that its ignorance of the “libellous material” was due to its negligence in adopting a system whereby it did not vet the issues of the Magazine distributed by it in any manner.[5]  He also held that the appellant failed to prove that it did not in fact know the relevant issue of the Magazine “contained the libel complained of” before it caused copies to be distributed to the subscribers in Hong Kong and overseas, so that the defence of innocent dissemination failed regardless of any negligence.[6]

13.  The Recorder gave judgment for the respondent and awarded damages in her favour in the sum of HK$650,000.

14.  On appeal to the Court of Appeal,[7] the only issue was whether the defence of innocent dissemination relieved the appellant of liability for the libel.  The appellant contended, as it had at trial, that a subordinate distributor should not be held liable for a libel unless he knew or ought to have known that the material distributed contained an actionable libel on the plaintiff to which there was no defence.

15.  Cheung JA, delivering the only reasoned judgment (with which Yeung VP and Chu JA agreed), rejected the appellant’s contention as to the ambit of the defence of innocent dissemination and concluded that the defence was not available because, upholding the Recorder, he held that the appellant’s lack of knowledge “of the defamatory content” was due to its negligence.[8] Having held the appellant to have been negligent, Cheung JA dismissed the appeal and declined to address the issue of whether the appellant had actual knowledge of the defamatory matter through attribution of Mr Wang’s knowledge of the libel.[9]

C. The question of law for which leave to appeal was granted

16.  The Court of Appeal dismissed the appellant’s application for leave to appeal to this Court[10] and the appellant renewed its application to the Appeal Committee which granted leave to the appellant to appeal to this Court on the following question of law of great general or public importance, namely:

“What is the nature of the knowledge possessed by a secondary publisher or which, taking reasonable care, a secondary publisher would have acquired, which suffices to exclude such secondary publisher from relying on the defence of innocent dissemination? In particular, must it be knowledge simply that the publication contains a statement which carries a defamatory meaning; or must it be knowledge that the publication contains an actionable libel subject to no valid defences?”[11]

17.  As can be seen, the question posits two alternative states of knowledge for the defence of innocent dissemination, namely: (i) knowledge that the publication contains a statement carrying a defamatory meaning; and (ii) knowledge that the publication contains an actionable libel subject to no valid defences.  It was the appellant’s case that the correct answer to the question is (ii) and that, since the courts below did not exclude reliance on the defence on the basis of such knowledge, the judgments below must be set aside and a re-trial ordered. Alternatively, the appellant invited us to go further and hold that, on any view of the evidence, it could not be said that the appellant was negligent in not knowing that the Magazine contained an actionable libel to which there was no defence and that, whatever Mr Wang’s state of knowledge, this could not be attributed to the appellant.  On that basis, the appellant invited us to set aside the judgments below and dismiss the action altogether.

18.  To put the question into its proper context, it is useful to review some of the general principles applying to the law of defamation relating to libel and publication and the defence of innocent dissemination.

D. Libel and publication

19.  Subject to the balance that needs to be struck to protect freedom of expression, the law of defamation seeks to protect a person’s reputation, it being recognised that it is necessary to afford such protection against untrue statements which lower that person in the estimation of right-thinking members of society generally.[12] In Hong Kong, the law of defamation is governed by the common law as modified by the provisions of the Defamation Ordinance.[13]  A defamatory statement may be made orally, in which case it constitutes the tort of slander, or in writing, in which case it constitutes the tort of libel.  One of the necessary elements of either tort is publication of the defamatory matter complained of.

20.  In Oriental Press Group Ltd v Fevaworks Solutions Ltd,[14] Ribeiro PJ (with whom the other members of the court agreed) comprehensively reviewed the law relating to what constitutes publication of a libel.[15]  As there pointed out (at [19]), until mitigated by the common law defence of innocent dissemination, liability for publishing a libel was strict:

“A person was held liable for publishing a libel if by an act of any description, he could be said to have intentionally assisted in the process of conveying the words bearing the defamatory meaning to a third party, regardless of whether he knew that the article in question contained those words.” (Emphasis added)

21.  At common law, as a matter of general principle, the person who first spoke or composed the defamatory matter, who may be called the originator, is liable provided he intended to publish it or failed to take reasonable care to prevent publication.  Liability extends to any person who participated in, secured (e.g. by encouraging or procuring) or authorised the publication, including the printer of a defamatory work.[16] These persons may all be referred to as the first or main publishers (to distinguish them from subordinate publishers, which are addressed below) and, in a newspaper or magazine setting, the journalist, editor, printers and (vicariously) the newspaper proprietor are all treated as the first or main publishers.[17]

22.  Liability for the publication of defamatory material at common law is strict and so a first or main publisher is liable for the tort of libel unless, broadly, he establishes a defence such as justification or honest comment or demonstrates that the publication was on an occasion of privilege or establishes one of the specific defences available under the Defamation Ordinance.

23.  It was in order to mitigate against the harshness of the publication rule as it applies to first or main publishers that the common law developed the defence of innocent dissemination.[18] This defence is available to a person who is not the author, printer or first or main publisher of a work which contains a libel but who only takes a subordinate part in disseminating it, for example by selling, distributing or handing to another a copy of the newspaper or book containing it.[19]  Such distributors, or subordinate publishers, can avoid liability for the publication if they establish the elements of the defence (addressed below).

24.  Apart from the first or main publishers and subsidiary publishers, the common law also recognises that persons may be involved as intermediaries in the publication of defamatory matter but simply as mere conduits that do no more than fulfil the role of a passive medium for communication.  A telephone carrier is an example of this type of intermediary, which may be referred to as a mere facilitator.[20] Such an intermediary does not publish at all and therefore has no need for the mitigating defence of innocent dissemination.

25.  In the present case, it was accepted by the appellant that it was a subordinate publisher of the Magazine and it was not contended (by the respondent) that the appellant was either a first or main publisher, who would be strictly liable for publishing the defamatory statements complained of, or (by the appellant) that it was a mere facilitator, who would not have published them at all.

E. The defence of innocent dissemination

E.1 The elements of the defence as identified in Fevaworks

26.  As a subordinate publisher, the appellant could avoid liability if it were able to establish the elements of the defence of innocent dissemination. In Fevaworks, Ribeiro PJ identified those elements by reference to the judgment of Romer LJ in Vizetelly v Mudie’s Select Library Ltd,[21] namely the subordinate publisher must show:

(1) that he was innocent of any knowledge of the libel contained in the work disseminated by him;

(2) that there was nothing in the work or the circumstances under which it came to him or was disseminated by him which ought to have led him to suppose that it contained a libel; and

(3) that, when the work was disseminated by him, it was not by any negligence on his part that he did not know that it contained the libel.

The onus lies on the subordinate publisher to prove the elements of the defence.  Where he does so, Ribeiro PJ held that, although he will have published the libel, he will not be responsible for it.[22]

27.  Ribeiro PJ drew attention to two important features of the defence: first, that it is not available to the first or main publisher but only to persons who, in the ordinary course of business, play a subordinate part in disseminating it; and secondly, that, for this class of persons, it replaces the strict liability rule with one which imposes liability on the basis that the person playing the subordinate role knew or ought by the exercise of reasonable care, in the circumstances in which the work came to him or was disseminated, to have known that the article disseminated contained defamatory material.[23]

28.  In this appeal, it was accepted by both parties that the defence of innocent dissemination is correctly stated in Fevaworks and it was not suggested that the Court should depart in any way from its decision in that case as to the nature and elements of the defence.  Instead, the question of law which is raised by the appellant’s case in this appeal relates to an aspect of the defence not directly addressed in Fevaworks.

E.2 The question of law posed and the parties’ respective positions

29.  The question of law for which leave to appeal was granted is set out at paragraph 16 above and, as noted in paragraph 17 above, the appellant’s case in answer to the question posed is that the state of knowledge required to exclude the defence of innocent dissemination is knowledge that the publication contains an actionable libel subject to no valid defences.

30.  The appellant’s case, as further clarified by Mr Shieh in his oral submissions, was that the true rule is that the subordinate publisher is only excluded from the defence of innocent dissemination if it knew or ought reasonably to have known:

(a) that the material distributed contained the statement complained of;

(b) that such statement bore a defamatory meaning; and

(c) that there was no defence against an action for defamation.

Reformulated to reflect the appellant’s acceptance that it bears the burden of proof, it was the appellant’s case that it is only excluded from the defence if it is unable to show on a balance of probabilities that it did not know, and could not reasonably have been expected to have known the matters in (a), (b) and (c).  In the course of argument, knowledge extending to all three of these matters was referred to as “Type C knowledge” and I shall adopt that description in this judgment.

31.  For the respondent, Mr Johnny Mok SC[24] invited us to reject the appellant’s contention as to the requisite state of knowledge.  However, he rightly pointed out that the first alternative posed in the certified question, namely knowledge that the publication contains a statement carrying a defamatory meaning, itself posited two alternatives:

(1) The respondent’s first alternative was that the defence is excluded unless the subordinate publisher can show that it did not know of and could not reasonably have discovered the existence and gist of the content complained of in the article distributed, it being irrelevant whether the defendant knew that such content had a defamatory meaning.  It will be seen that this is the same as knowledge limited to (a) in the appellant’s formulation above and, for convenience, it was referred to as “Type A knowledge”.

(2) The respondent’s second alternative was that the defence is excluded unless the subordinate publisher can show that it did not know of and could not reasonably have discovered the existence and gist of the content complained of in the article distributed, or that it knew of such content but did not know of and could not reasonably have discovered that such content had a defamatory meaning.  This is the same as knowledge that extends to (b) in the appellant’s formulation above and was referred to as “Type B knowledge”.

32.  Strictly, the question of whether the requisite knowledge to defeat the defence of innocent dissemination is Type C knowledge might be said not to arise on the facts of the case.  It was not suggested in the appellant’s evidence at trial that, prior to publishing the words complained of, it had considered them but had formed a reasonable belief that an action for libel could be successfully defended.  However, the courts below fully considered and rejected the appellant’s contention that, as a matter of law, proof of Type C knowledge was required to defeat the defence of innocent dissemination.  Moreover, in deciding the case, the courts below clearly did not apply that test of knowledge to the facts in arriving at their conclusion that the appellant had not established the defence.  It is therefore appropriate for this Court to resolve the question of whether the appellant’s contention that proof of Type C knowledge is required is correct.

E.3 Lord Denning’s judgment in Goldsmith v Sperrings

33.  The appellant’s assertion of the need for proof of Type C knowledge to defeat the defence is solely based, as Mr Shieh candidly accepted, on a view expressed by Lord Denning in his judgment in Goldsmith v Sperrings.[25] That case involved multiple actions against the publishers of the satirical magazine “Private Eye” which led to an application by a group of retail distributors of the magazine for an order that the actions against them should be stayed or struck out as an abuse since they were being pursued not to protect the plaintiff’s reputation but, instead, for the collateral purpose of destroying the magazine by cutting off its retail outlets.  The parties had argued the appeal on the assumption that the distributors were prima facie liable and the majority of the Court of Appeal (Scarman and Bridge LJJ) dismissed the distributors’ appeal on the basis that, at an interlocutory stage, there was no sufficiently clear evidence to establish that the action was being pursued for an illegitimate collateral purpose.

34.  The third member of the court, Lord Denning MR, took a very different view.  He disagreed with his brethren on the issue of abuse but, additionally, he held, in effect, that the action did not disclose a reasonable cause of action because there was no liability on the part of the distributors.  This was based on his view of the law that:

“Common sense and fairness require that no subordinate distributor – from top to bottom – should be held liable for a libel contained in it unless he knew or ought to have known that the newspaper or periodical contained a libel on the plaintiff himself; that is to say, that it contained a libel on the plaintiff which could not be justified or excused: and I should have thought that it was for the plaintiff to prove this.”[26]

35.  It will be seen that this dictum of Lord Denning, which was clearly obiter, posits proof of an absence of Type C knowledge for the defence of innocent dissemination; hence, the appellant’s reliance on his judgment.  As already noted, however, the appellant did not go so far as to adopt Lord Denning’s suggestion that the burden should be on the plaintiff to prove that knowledge on the part of the distributor.

36.  Lord Denning’s view of the law on this point does not appear to have been embraced by any other common law court.  It was considered at first instance by Eady J in Metropolitan International Schools Ltd (trading as Skillstrain and/or Train2Game) v Designtechnica Corpn (trading as Digital Trends) and others[27] in the context of an action against an internet search engine (Google) in respect of allegedly defamatory comments appearing in a “snippet” of information generated on a search.  He held that Google had no responsibility for the publication and set aside the grant of leave to serve the writ on it out of the jurisdiction.  Of relevance to this appeal is that he rejected Lord Denning’s view on the ambit of the defence of innocent dissemination (for the reasons addressed below).[28]

37.  Academic commentators have taken mixed positions on this issue.  The editors of Gatley set out the elements of the defence at [6.30] where they adopt the formulation that the defendant must show[29] “that he did not know that the book or paper contained the libel complained of”.  In footnote 254, reference is made to Bridge LJ’s judgment in Goldsmith v Sperrings at p.505 where he refers to knowledge that the publication contained “defamatory matter” (suggesting Type A or Type B knowledge but not Type C) and then contrasts Lord Denning’s dissenting judgment quoting the passage cited above.  The editors of Duncan and Neill on Defamation (4^th Ed.) also note the difference of opinion between Lord Denning and Bridge LJ[30] but do not offer a view as to which is correct.  Support for Lord Denning’s view is, however, forthcoming in Carter-Ruck on Libel and Privacy where it is suggested his is the “better view” although it is noted that the position is “not without doubt”[31] and in Collins on Defamation, which appears to favour Lord Denning’s view and criticises Eady J’s rejection of it in Metropolitan International Schools.[32]

E.4 Is Type C knowledge required?

38.  This is the critical question on which the appeal turns and, for the reasons which follow, the appellant’s contention that proof of Type C knowledge is required in order to defeat the defence must be rejected.

39.  First, as a matter of principle, the rationale of the defence of innocent dissemination is to mitigate against the harshness of the strict publication rule, which does not require the first or main publisher to be aware of the defamatory nature of the material he is publishing.[33] Instead, the criteria which affix him with liability as the first or main publisher are knowledge and control.[34]  As to the nature of the knowledge required, Ribeiro PJ’s judgment in Fevaworks demonstrates clearly that it is knowledge of the contents of the publication.[35]  Whilst this analysis is material to the antecedent, and different, question of whether someone is a first or main publisher, and as such subject to the strict publication rule, there is no logical basis for importing a different test of knowledge for the subsequent question of whether a person who is not a first or main publisher, because he does not exercise any control over the content published,[36] can bring himself within the requirements of the defence of innocent dissemination.

40.  In this context, it is highly material that Ribeiro PJ equated the knowledge criterion that identifies a distinguishing characteristic of a first or main publisher with the first requirement of the defence of innocent dissemination.[37] It is also noteworthy that Ribeiro PJ considered that the same standard of reasonableness should apply to the situation of acquired knowledge.  Where a subordinate publisher had unwittingly published defamatory matter, he would be protected by the defence of innocent dissemination.  Ribeiro PJ held that he should be afforded the continued protection of the defence, “if he proves that upon becoming aware of such content, he promptly took all reasonable steps to remove the offending content from circulation as soon as reasonably practicable”.[38]

41.  To make the defence dependent on proof of an absence of Type C knowledge would therefore be to put the defence on a very different footing to its underlying rationale of mitigating the harshness of the strict publication rule.

42.  Secondly, in his judgment in Goldsmith v Sperrings, Lord Denning does not cite any authority for his formulation of the knowledge element of the defence.  To the contrary, none of the leading cases in which the defence was developed support the requirement of proof of Type C knowledge to defeat the defence.

(1) In Emmens v Pottle,[39] Lord Esher MR held that the defendant vendor of a newspaper was “primâ facie liable” for having sold a newspaper containing “a libel on the plaintiff” and therefore required to demonstrate facts which showed they did not publish the libel.[40]  Similarly, in Vizetelly v Mudie’s Select Library Ltd (supra), Romer LJ referred to dissemination of the defamatory material as resulting in “primâ facie publication of it” and hence liability unless the elements of the defence of innocent dissemination were established.[41]  Prima facie liability in defamation is necessarily subject to positive defences such as justification, honest comment or privilege.  There is no reason to suppose that Lord Esher or Romer LJ were contemplating Type C knowledge for the defence of innocent dissemination since prima facie liability necessarily suggests a liability which stands until defeated by some positive defence and in neither case did they suggest that the respective defendants would have avoided liability if they merely proved they believed such a defence existed.

(2) Nor is Type C knowledge suggested as relevant to the defence of innocent dissemination in Sun Life Assurance Co. of Canada v W.H. Smith & Son Ltd.[42] In that case, the defendant newspaper vendors were held to have been negligent in failing properly to supervise the display of posters at their bookstalls.  In Scrutton LJ’s formulation of the elements of the defence of innocent dissemination, he referred to negligence in respect of the “publication of the libel” and, when referring to the finding of the jury, his Lordship appears to have referred to this as meaning that the statement was found to bear “a libellous meaning”.[43]  Greer LJ found liability established on the basis of the jury’s finding that the relevant poster “contained statements which were defamatory of the plaintiffs” since the stall manager “must have known its contents”.[44]  Neither Scrutton LJ nor Greer LJ’s judgments lend any support for the need to establish Type C knowledge to defeat the defence of innocent dissemination.

43.  Thirdly, there are significant practical difficulties in determining how the defence will operate.  These were identified by Eady J in the following terms:

“… it seems to me that the defence of innocent dissemination as interpreted by Lord Denning MR throws up more problems than it is likely to solve. How could someone hoping to avail himself of the defence know that a defence of justification was bound to fail, save in the simplest of cases? How is he/she to approach the (often controversial and uncertain) question of meaning? How much legal knowledge is to be attributed to him/her in arriving at these conclusions? What of a possible Reynolds defence?”[45] (Emphasis in original)

Notwithstanding the criticism to which this passage is subjected in Collins on Defamation (supra), these practical difficulties are very real and call into question the soundness of the appellant’s contention that proof of Type C knowledge is required to defeat the defence.  It is true, as the appellant submits, that the question of meaning applies whether proof of Type B or Type C knowledge is required but, if so, that may simply be a reason for preferring to regard proof of Type A knowledge (where meaning does not arise) as the requisite mental state for the defence.

44.  In this context, the appellant’s reliance on Regulation 19 of the Electronic Commerce (EC Directive) Regulations 2002 in the United Kingdom[46] is overstated.  The appellants seek to rely on that Regulation by way of example of another context in which a defence depends on a party assessing the strength or weakness of potential defences.  However, such an assessment is in respect of various forms of unlawfulness including crimes such as hate speech or incitement to violence where the unlawfulness may be self-evident.  In the context of defamation, the imposition of such an assessment may be problematic or unworkable.[47]  Moreover, the specific and limited context of that Regulation is the protection of Internet service providers from liability for storage of information on their servers and there is no reason to conclude that the policy decision underlying the Regulation reflects the common law defence of innocent dissemination.

45.  Fourthly, contrary to the appellant’s submission that imposing a requirement of proof of Type C knowledge to defeat the defence strikes a proper balance between freedom of expression on the one hand and reputational protection on the other, an acceptance of the appellant’s case would skew that balance very heavily in favour of a subordinate publisher.  Given the practical difficulties identified above, requiring proof of Type C knowledge to defeat the defence will make it virtually impossible successfully to sue a subordinate publisher.  Such publishers will in practice have near immunity against suit for passing on defamatory statements and, unlike first or main publishers who are subject to the strict publication rule, will be relieved of the need to establish one of the traditional defences such as justification or privilege in order to avoid liability.  Whilst it may be desirable to protect small newsvendors and distributors against litigation for material originated by others, it must not be forgotten that it is through the acts of these newsvendors and distributors that a plaintiff’s reputation will in fact be harmed and there is no assurance that an action against the first or main publisher will be possible or effective.  If such protection is required, this would seem to be more appropriately achieved by means of legislation, rather than the adoption of an unprincipled or problematic test as part of the common law defence.

46.  Fifthly, in none of the following common law jurisdictions in which the defence of innocent dissemination has been put on a statutory basis is it required to prove an absence of Type C knowledge.  Instead:

(1) In the UK, s.1(1) of the Defamation Act 1996 provides that it is a defence for a defendant to show, among other things, that: “(c)  he did not know, and had no reason to believe, that what he did caused or contributed to the publication of a defamatory statement”;

(2) The legislation in Australia[48] consistently provides that the defence is available where a defendant shows, among other things, that “(b) the defendant neither knew, nor ought reasonably to have known, that the matter was defamatory”;

(3) In New Zealand, s.21 of the Defamation Act 1992 provides that the defence is available where a person shows, among other things, “(a) That that person did not know that the matter contained the material that is alleged to be defamatory”; and

(4) In Ireland, s.27(1) of the Defamation Act 2009 (which expressly replaces the common law defence[49]) provides that the defence is available where the defendant proves, among other things, that “(c) he or she did not know, and had no reason to believe, that what he or she did caused or contributed to the publication of a statement that would give rise to a cause of action in defamation.”

47.  Although the absence of any statutory support for Type C knowledge as an element of the defence of innocent dissemination is not conclusive, it lends some support to the view that its adoption was seen in those jurisdictions as problematic and not striking the right balance between free speech and the right to protection of reputation.  It also lends support to the view that, in those jurisdictions, insofar as the statutory provision was to codify the common law defence, it was not thought that the common law defence required proof of an absence of Type C knowledge.

48.  In this context, in respect of the UK Defamation Act 1996, submissions were made to us (as they had been to the Court of Appeal[50]) by reference to the Parliamentary debate concerning what became s.1 of that Act.  It is unnecessary to explore that debate or to consider those submissions at length.  The statutory defence in s.1 of the 1996 Act was clearly intended to afford protection to those subordinate publishers (at least[51]) to whom the common law defence of innocent dissemination would be available. Although the 1996 Act did not expressly abolish the common law defence, it has been held to have effectively superseded it.[52] But since it cannot be demonstrated conclusively whether the s.1 defence codified the common law or provided for a narrower defence (as some academic commentators suggest[53]), a consideration of the Parliamentary debate does not assist in answering the question posed in this appeal.

49.  Similarly, comments made in the context of the consideration of the bill that became the UK Defamation Act 2013 do not assist.  Mr Shieh referred us, for example, to the views of the Joint Committee on the Draft Defamation Bill and of the Booksellers Association on their understanding of the ambit of the common law defence, suggesting that proof of Type C knowledge was required to exclude the defence.[54] These comments are not authoritative and it remains for the court to determine the true ambit of the common law defence as a matter of principle.

50.  S.10(1) of the UK 2013 Act[55] affords greater protection than the common law for subordinate publishers in that such a publisher cannot be sued unless it is not reasonably practicable to sue the author, editor or publisher, i.e. the first or main publisher.  In the same way, as noted above, s.1 of the 1996 Act had extended the statutory defence to printers and live broadcasters, to whom the common law defence might not apply. These are examples of legislation seeking to strike a particular balance between free speech and the right to protection of reputation and there may be strong arguments for adopting such a balance in this jurisdiction.  But if so, that is a balance that must be struck by the Legislature since it is different to the balance struck by the operation of the common law defence of innocent dissemination.

E.5 The consequence of rejecting Type C knowledge

51.  Mr Shieh accepted that, if the Court rejected his submission that proof of Type C knowledge was required to defeat the defence of innocent dissemination, it would follow that the appeal must be dismissed.  As demonstrated in Section F below, on the Recorder’s finding of negligence, upheld by the Court of Appeal, the appellant could not bring itself within the defence of innocent dissemination and thereby avoid liability to the respondent for the defamatory statements contained in the Magazine.

E.6 Is it necessary to resolve whether the defence is excluded by Type A knowledge or by Type B knowledge?

52.  Mr Mok confirmed, in answer to an inquiry from the bench, that it did not matter to the respondent’s case in this appeal whether it was proof of Type A knowledge that was required in order to defeat the defence of innocent dissemination or proof of Type B knowledge.  This must be correct.  As shown in Section F below, the courts below held that the appellant’s negligence consisted in not inspecting the Magazine at all.  They held that, had the appellant done so, it would have discovered the libellous material about the plaintiff.  This must at least equate to an absence of proof of Type B knowledge and so whether the true basis of the defence is an absence of proof of Type A knowledge as opposed to Type B knowledge is immaterial to the outcome of this case.

53.  Whether the correct mental state for the defence is absence of proof of Type A knowledge or Type B knowledge is not an easy question.  It involves the difficult balance between freedom of speech and the right to protection of reputation.  As such, it may engage a debate about the constitutionality of the defence of innocent dissemination, an issue which has not been raised in this appeal but which could be raised in a case where the distinction between Type A and Type B knowledge were material to the outcome of the case.  In the circumstances, it is preferable not to answer that question in the context of this appeal but instead to leave the issue open to await determination in a suitable case.

F. Applying the law to the facts

54.  In view of Mr Shieh’s correct acceptance that the appeal must be dismissed if he lost on the point of law raised in the appeal, it is not strictly necessary to analyse the facts of the case and to apply the law to those facts.  However, there is some value in doing so in order to demonstrate how the defence of innocent dissemination works.

55.  Here, it will be recalled, in seeking to bring itself within the defence, the appellant accepted that it bore the burden of showing that there was no negligence on its part in not knowing that the relevant issue of the Magazine contained statements defamatory of the respondent.  As shown in Section A above, in particular in paragraph 10, the appellant’s employees in Hong Kong did not actually see the Magazine until after it was distributed by them via Chan Sun Kee and the courier and there was no evidence of any employee of the appellant elsewhere having seen it.  It may be thought that a denial of the defence of innocent dissemination in these circumstances is harsh. However, for the reasons given by the Recorder, and developed by the Court of Appeal, the banner heading on the cover of the relevant issue of the Magazine was clearly such as to put any reader of it on notice to the possibility that the related articles in the Magazine might contain defamatory statements.  In these circumstances, even a cursory inspection of the issue in question would have put the appellant distributor on notice of the possibility or likelihood that the Magazine about to be disseminated contained defamatory material.  The Respondent and Court of Appeal were entitled to find that to adopt a system which eliminated even a cursory inspection was negligent.  That finding of negligence is not challenged by the appellant, quite realistically, since it is a concurrent finding by the courts below.

56.  On the basis of that finding, the common law defence of innocent dissemination is not available to the appellant, since it cannot show that its lack of knowledge of the defamatory statements in the Magazine was not due to its negligence.  Accordingly, no other defence being asserted, it is liable to the respondent for damages for the tort of libel.

57.  That is not to say, however, that an omission to look at a publication before distribution in every case will be sufficient to establish the necessary degree of negligence to defeat the defence of innocent dissemination.  This is a question that is fact and context sensitive and will depend on all the circumstances of the particular publication.  What will be negligent in the case of a distributor of a print publication with features putting any reader on alert as to the possible defamatory content, will not necessarily be negligent in the very different context of an Internet web host which receives many thousands of posts from different sources to a web forum.  As Ribeiro PJ pointed out in Fevaworks, there is a qualitative difference between the “one-to-many” publications of the more traditional print and broadcast publications and the “many-to-many” communications that are involved in Internet publications[56] and what is needed to satisfy the standard of reasonable care will vary according to the circumstances.[57]  In the latter context, there are strong reasons of principle and policy to set the relevant negligence standard at a level that only exposes the distributor to liability when there has been a failure to respond appropriately after defamatory material is drawn to its attention.[58]  Whether that also applies to a distributor of a newspaper or magazine will depend on the facts of the given case.  The present appeal is not such a case.

G. Conclusion

58.  For these reasons, I would dismiss this appeal with costs.

Lord Collins of Mapesbury NPJ:

59.  I agree with the judgment of Mr Justice Fok PJ.