FAR EAST ENGINEERING SERVICES LTD v. CHOY YAU CHIU t/a PROFESSIONAL AIR-CONDITION CO

HCA2146/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.2146 OF 2004

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J U D G M E N T

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1. This is the trial of a defamation action brought by the plaintiff, Far East Engineering Services Limited, a reputable contractor and a subsidiary of New World, against the defendant, Choy Yau Chiu trading as Professional Air-Conditioning Company, in relation to defamation contained in two letters, each dated 23 July 2004, sent respectively by the defendant to the Education and Manpower Bureau and to Mr Tung Chee Hwa, the then Chief Executive, HKSAR.

2. The reason why these two defamation letters were sent was because the Government, in the form of Education and Manpower Bureau, was the ultimate employer of a building contract in relation to five schools in Tuen Mun, and in relation to which the defendant was a sub-sub-sub-contractor.  The main contractor in question was Wan Chung Construction Co. Ltd (“Wan Chung”).  The involvement of the defendant with the building work was in relation to air-conditioning.  The involvement of the plaintiff with the building work in the five schools was restricted to fire services.  Therefore, there was no question at any time that the plaintiff could be said to be directly or indirectly involved in the employment, or payment, of the defendant as a sub-sub-contractor in relation to air-conditioning.

3. What had happened was obviously a huge crossing of wires by the defendant.  The defendant was not obtaining proper payment from his immediate employer, Lite Best Engineering Co. Ltd (“Lite Best”), although it would appear that Lite Best had obtained substantial payment from the contractor further up the line, namely from Powerful Base Development Ltd (“Powerful Base”) and Powerful Base in turn from Young’s Engineering Co. Ltd (“Young’s”).  The line of employment in relation to air-conditioning was from Wan Chung, the contractor to Young’s, to Powerful Base, to Lite Best and then to the defendant.  The crossing of wires by the defendant was obvious because the plaintiff was not involved in any way with the employment of sub-contractors in relation to air-conditioning.  

4. The defamation contained in the two letters are set out in paragraphs 5 and 6 of the Amended Statement of Claim and are the following :

「本公司（專業冷氣工程公司），承接力賢工程有限公司屯門五間學校加建工程…. 合約款項共HK$1,350,000.  而力賢與遠東工程有限公司合約款項為HK$1,750,000.  Payment以工程進度作準，由（遠東）支付後再由（力賢）批出，所謂(back to back) ….. 因支出龐大，入不敷支，致拖欠員工兩個月薪金…. 本公司發覺（力賢）原來已收取（遠東）HK$1,400,000，根據工程進度，本公司理應收取80%之合約工程費，而他已超收其實際利潤 (HK$400,000)。本公司有感此含詐騙成份，其後質問（力賢）負責人何顯華先生，他說他所收取的，用以派餅仔給遠東（即是派錢）。本人欲知教統局轄下所有學校承判工程，是否要必須派餅仔給承判商？！或是教統局亦參與其中？！本人有感于理不合，希望教統局能關注此事並就此作出回應！！！」[paragraph 5]

「本公司（專業冷氣工程公司），承接力賢工程有限公司屯門五間學校加建工程…. 合約款項共HK$1,350,000.  而力賢與遠東工程有限公司合約款項為HK$1,750,000.  Payment以工程進度作準，由（遠東）支付後再由（力賢）批出，所謂(back to back) ….. 因支出龐大，入不敷支，致拖欠員工兩個月薪金…. 本公司發覺（力賢）原來已收取（遠東）HK$1,400,000，根據工程進度，本公司理應收取80%之合約工程費，而他已超收其實際利潤 (HK$400,000)。本公司有感此含詐騙成份，其後質問（力賢）負責人何顯華先生，他說他所收取的，用以派餅仔給遠東（即是派錢）。本人欲知教統局轄下所有學校承判工程，是否要必須派餅仔給承判商？！….. 本人有感于理不合，希望董先生能還我真理！！！」[paragraph 6]

5. The key words of defamation are : “用以派餅仔給遠東 (即是派錢) 。”  The allegation was that there had been giving of the cakes to the plaintiff which of course in Hong Kong has a peculiar colloquial meaning with the implication of corruption. 

6. When the plaintiff found out about these two letters with their defamation contained therein, the plaintiff by its solicitors wrote to the defendant denying the allegations and sought retraction of these allegations.  The letters were dated 20 August 2004 and 26 August 2004 (pages 27 and 29 of the Bundle).  There was no reply to those two letters.  There was no retraction, and action then was brought by the Writ issued on 17 September 2004.  It was defended by defences of fair comment and justification. 

7. At the trial of this action, the plaintiff’s two witnesses gave evidence and they were not challenged in any way by the defendant who was absent.

8. I am satisfied, on the totality of the material put before the Court, that the case for defamation had been made out, and I accept that the natural and ordinary meaning in both letters meant and were understood to mean as pleaded in paragraph 7 of the Amended Statement of Claim.  I also accept the case of the plaintiff that there was innuendo meaning as pleaded in paragraph 8 of the Amended Statement of Claim.  I am also of the view that these two letters cannot be considered as fair comment because, as said in the case of Cheng Albert & Anor v. Tse Wai Chun Paul [2000] 4 HKC 1, at page 8 by Lord Nicholls of Birkenhead, that the comment must be recognisable as comment as distinct from imputation of fact.  In my view (I believe counsel for the plaintiff was correct), these two letters contained imputation of fact and not fair comment.  Therefore, I reject any defence of fair comment.  I also take the view that the defence of justification has wholly failed.  There is no evidence put before the Court, or can possibly put before the Court, that would qualify as a defence of justification.  I believe what really happened was that the defendant got it totally wrong, he misunderstood the connection of the plaintiff with the chain of air-conditioning contracts and, quite wrongly, had made imputations against the plaintiff of corruption and wrong doing when the plaintiff got nothing to do with the air-conditioning side of the contracts. 

9. The case of the plaintiff, therefore, of defamation has been established.  The question therefore is “What would be a fair award for the defamation?”  I think this is a case where we have to remember that it was not a publication to the public.  It was a very restrictive publication to the Education and Manpower Bureau because it happened to be the employer of the contract, and to the Chief Executive because, I imagine, the Chief Executive being the Big Boss of the Government.  It was not published generally to the Government or other departments which might be awarding contracts to the plaintiff in future.  Nor was it published to the ICAC.  Nor can it be shown that the Government might take a serious view of the matter because the evidence shows that there was nothing done by the Government to inquire about this, to refer the matter to ICAC.  The plaintiff did not even see fit to dispel alleged wrong doing by either sending copies of the Writ in this action or copies of the letters before action requiring the defendant to retract to the two recipients of the defamation letters, namely the Chief Executive and the Education and Manpower Bureau. 

10. I accept the allegation is serious.  But when analysed, the letters carried something of a stupid allegation.  The Court ought to award fair damages, taking into account that the defendant did not offer any apology, had gone to the length of pleading fair comment and justification which had wholly failed and had therefore prolonged the process of this litigation.  In my view, doing the best I can and I hope without unfairness to the plaintiff, an award of $50,000 would be a fair award in all the circumstances.

11. So far as injunction is concerned, it seems to me that this is wholly unnecessary.  This was an one-off publication and it was not repeated by any follow-up publication.  The defendant disappeared from the scene and has gone underground.  It is unlikely that he is going to do any further publication.  So, I think in all the circumstances an injunction is not necessary. 

12. So far as costs is concerned, of course the plaintiff must be given the costs of the action, including all costs reserved and all costs where costs orders were in the cause.  However, on the matter of scale of the costs, I do take a strong view.  It had been submitted to me by counsel for the plaintiff, very forcefully, that in the past practitioners had always started defamation actions in the High Court and the High Court costs had always been given even when the award of damages were in amount within the jurisdiction of the District Court.  It seems to me the fact that the point of scale of costs was never taken is neither here nor there.

13. The question is really that in respect of defamation action where the award of damages is below $1.2 million (and therefore well within the jurisdiction of District Court) whether costs should be awarded on the District Court scale.  I see defamation action in no way different, or having a special privileged position in relation to other actions brought by a plaintiff against a defendant.  Solicitors should be encouraged or compelled to bring proceedings in the right court, and this is important in relation to what type of business should be brought to what court.  In my view, this is a case where at no stage could it ever be said that award of defamation damages of anywhere like $1.2 million could ever be reached.  It is a case where from the very beginning award of damages is not likely to exceed more than a few hundred thousand dollars at its best.  As it is, the award is for $50,000.  In my view, the proper scale of costs should be costs to the plaintiff of the whole action but on the District Court scale.  This is my judgment on costs.