HOI TIN TONG CO LTD v. CHOY KWOK KEUNG

HCA 1755/2013

[2021] HKCFI 2888

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1755 OF 2013

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J U D G M E N T

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1.  These are claims for defamation, malicious falsehood and conspiracy to injure. The subjects of these claims relate to the two video clips published on 12 September 2013 by “appledaily” on Youtube and the three articles also published on the same day in Apple Daily, The Sun and Oriental Daily respectively. The videos and articles concerned the quality of the Plaintiff’s products, i.e. turtle jellies (龜苓膏), and the alleged Plaintiff’s malpractices of cleaning and processing mouldy turtle jellies and transferring turtle jellies from plastic to pottery cups.

2.  Though pleaded, the Plaintiff is not pursuing the claim for unlawful interference with economic interests.

BACKGROUND

(i)  The parties and their relationship

3.  The Plaintiff was and is a Hong Kong company engaged in the business of producing and selling turtle jellies and related products under the brand name “Hoi Tin Tong (海天堂)” (“HTT”)  with retail shops in Hong Kong and the Mainland.  Mr. Ng Yiu Ming (吳耀明)  (“Ng”)  is the founder of HTT.  He is also a shareholder and director or otherwise known as the “boss” (老闆)  of the Plaintiff.  One of the Plaintiff’s retail shops was located at Shop No 6, Ground Floor, 579, Nathan Road, Mongkok (“the Mongkok Shop”).

4.  The Defendant was a businessman engaged in the business of advertising.  In about 1998, the Defendant was introduced to Ng and his cousin, Mr. Xu Xilong (吳錫隆)  (“Xu”), and was engaged as the advertising agent of the Plaintiff in Hong Kong until May 2013.

5.  There is no serious dispute about the following matters:

(i)  Apart from being just the advertising agent of the Plaintiff, Ng and the Defendant started to build up other business relationship in about 2003 and 2004.

(ii)  In about 2005, the Defendant operated 4 franchise shops of HTT in the Mainland in Dongguan and Zengcheng.

(iii)  By various joint venture agreements made between Ng and the Defendant from September 2004 to the end of 2006, they operated a number of shops in the Mainland under the brand name “Hoi Tin Tong” (“the Mainland HTT Shops”).  They agreed that they would own 70% and 30% of the interest in such business (“the Mainland HTT Business”)  respectively; that the shops would be registered as individual business under the name of Mr Lui Wai Bin (呂偉賓)  (“Lui”); and that the profits would be divided as follows: 63% to the Plaintiff, 27% to the Defendant and 10% to Lui.

(iv)  Since 1 September 2004 until 15 June 2013 when the Defendant withdrew from the Mainland HTT Business, they jointly operated 102 Mainland HTT Shops in the Mainland.

6.  I would refer the Plaintiff’s HTT business in Hong Kong and the Mainland HTT Business collectively as “the HTT Business” and all the shops operated under such business both in Hong Kong and the Mainland as “the HTT Shops”.

7.  Since 2000, all the turtle jellies sold under the HTT Business were produced in two factories in Huizhou: an old factory from about 1999 to the end of 2012 and a new factory from early 2013. The Defendant was the general manager (總經理)  of the old factory.

8.  The present case relates to the problem of moulding in the turtle jellies.  Turtle jellies in pottery cups (which were supposed to be freshly made (鮮製龜苓膏))  were found to be covered in mould from time to time after the turtle jellies were delivered to the retail shops.

9.  The problem was probably caused by the unsatisfactory storage conditions and the exposure during transportation from the factories to the HTT Shops.  After production, the freshly made turtle jellies in pottery cups would be placed in the refrigerating facilities in the factories for up to 1 to 4 days.  Due to the sharp difference in temperature, when the cups of turtle jelly were taken out from the refrigerating facilities, condensation would build up on the surface of the turtle jellies in the pottery cups.  If they were then left under direct exposure without air conditioning when the same were off-loaded from the Plaintiff’s vans outside the warehouse in Hong Kong or other cities in Guangdong before being collected for delivery at the HTT Shops, mould would develop on the surface of the turtle jellies.

10.  This is serious dispute between the parties as to how the Plaintiff and the HTT Shops would deal with this problem after the turtle jellies were delivered to the HTT Shops.  According to the Defendant, Ng and other senior staff instructed the employees in the HTT Shops to rinse or wash off the mould covering the turtle jellies in the pottery cups with tap water (“the Mould Malpractice”).  The senior management also instructed the staff to transfer turtle jellies produced in plastic cups to pottery cups before serving customers as if the jellies were freshly made (“the Transfer Malpractice”). I refer both malpractices collectively as “the Malpractices”.  The Defendant claims that he had complained about the Malpractices repeatedly.

11.  The Plaintiff denies the Malpractices or that its senior management had given any instructions to the front-line staff to adopt the Malpractices.  This remains the main factual dispute in the present case.

(ii)  The breakdown of the relationship

12.  It is common ground that there was a breakdown in the relationship between the parties in 2013.

13.  According to the Plaintiff’s case:

(i)  In about May or June 2013, the Defendant started his own business and sought the Plaintiff’s co-operation for a new business venture to sell Chinese traditional herbal products and other related goods in the Mainland. Ng was not interested in the Defendant’s proposal.

(ii)  In the meantime, the Plaintiff found out that the Defendant had registered the trade name “位元堂” (Wai Yuen Tong)  in the Mainland and started a rival business.

(iii)  In mid-June 2013, the Defendant gave up and offered to transfer to Lui his 18% interest in the Mainland HTT Business.

(iv)  In about July 2013, the Defendant made a telephone call to Xu during which the Defendant threatened to destroy the HTT brand if Ng’s cooperation in the Defendant’s proposed business venture was not forthcoming. They reported the incident to the police in September 2013.

14.  On the other hand, it is the Defendant’s case that:

(i)  In spite of his repeated complaints about the quality problem of the turtle jellies, the issue was always brushed aside and remained unresolved. There were miscellaneous complaints by customers.  In about May 2013, the new factory in Huizhou was investigated by the Mainland authority for one day and some products were seized.

(ii)  Hence, in about April 2013, the Defendant decided to sever his link with the Plaintiff and set up a new business selling Chinese traditional herbal products and other related goods.

(iii)  The Defendant asked Xu whether Ng would buy out his shares but Xu said Ng would not pay for the Defendant’s shares or allowed him to sell them to third parties.

(iv)  The Defendant invited Xu to join his new business.  Xu agreed initially and paid RMB 750,000 to the Defendant on 7 June 2013 as his share of the capital investment.

(v)  On 4 June 2013, the Defendant told Ng that he would withdraw from the Mainland HTT Business as from 15 June 2013, and that he intended to sell his interest in the Mainland HTT Business to Ng or third parties valued at about RMB 20 million.

(vi)  Ng ignored his offer and ceased to pay him dividends of the Mainland HTT Business from May 2013 which were due and payable in August 2013.

(vii)   On 8 July 2013, Xu sent the Defendant a photo showing Ng in hospital.  They then had a conversation.  Xu said Ng was unwell and faced tremendous pressures. The Defendant offered to assist the Plaintiff and Ng in the investigations by the Mainland authority if they could agree on the sale of his shares in the Mainland HTT Business.

(viii)  The Defendant had never invited Ng to join his new business.

15.  Xu had recorded the phone conversation he had with the Defendant in July 2013 covertly (“the Taped Phone Conversation”). According to the transcript of the Taped Phone Conversation, it appears that the Defendant had said on a number of occasions that he might “push the button” (㩒掣)  to damage the Plaintiff’s brand. On the other hand, the Defendant claims that the record might have been edited. Further, the transcript was garbled.  The record does not reveal what the Defendant’s demand was.  More importantly, the record does not show what actual step the Defendant intended to take or what he meant by “pushing the button”.  In the circumstances, the Defendant says that this conversation is wholly equivocal and has little probative value.

(iii)   The demonstrations and the publication of the two videos

16.  Then we come to the main subjects of the claims.  There were two videos published on 12 September 2013 by “appledaily” on Youtube (“the Videos”). There were two demonstrations shown in the respective Videos.  I would refer them as the “1^st Demonstration” and “2^nd Demonstration” respectively, and collectively as “the Demonstrations”.

17.  On 1 August 2013, the Defendant, Madam Lee Nga Man Ada (“Lee”)  who was a reporter of Apple Daily, and Madam Lam Yat Hung (林日紅)(“Lam”)  who was a Plaintiff’s employee working at the Mongkok Shop (employed since 19 October 2008), met at the said Shop.  Lee recorded a video of the 1^st Demonstration by Lam with the assistance of the Defendant in which pots of turtle jellies which appeared to be covered in mould were displayed.  Lam rinsed them with tap water and scrubbed the same with a sponge, and Lam said this was the standard practice of the Plaintiff for making mouldy turtle jellies fit for sale.

18.  In the 1^st Demonstration:

(i)  The Defendant pointed to the mould appearing on a cup of turtle jelly when Lam commented it was very mild and Lee would shiver if she saw the mould that resembled nasal discharge.

(ii)  The Defendant told Lam to contact him once severely mouldy turtle jellies were seen, and he would then ask Lee to visit the Mongkok Shop again.

(iii)  When Lam indicated to Lee that mouldy turtle jellies would be sold to customers once they were rinsed and cleaned, the Defendant acknowledged the same.

19.  By doing the things mentioned in the preceding paragraph, the Plaintiff claims that the Defendant published slanderous words and actions to Lee.  The Plaintiff alleges that the Defendant knew that Lee was recording the 1^st Demonstration with a view to publish the same to the general public.  The Plaintiff’s case is that the 1^st Demonstration was staged and was false.

20.  On the other hand, the Defendant claims that Lee covertly taped the 1^st Demonstration and their conversations.  Though the Defendant admitted that he could expect or anticipate that the 1^st Demonstration would be recorded, Lam did not know about such covert recording.  The Defendant’s case is that the 1^st Demonstration was a genuine reflection of the Malpractices.

21.  The Plaintiff alleges that, on a subsequent date unknown, Lam informed the Defendant that a mouldy batch of turtle jellies were available, and the Defendant arranged Lee to visit the Mongkok Shop for a similar demonstration, i.e. the 2^nd Demonstration.  As in the 1^st Demonstration, Lam was showing Lee how to rinse or wash off the mould from the turtle jellies by demonstration.   The 2^nd Demonstration was also recorded by Lee, which again appears to have been made covertly.

22.  According to the Defendant’s case:

(i)  On about 4 August 2013, the Defendant received a call from Lam that some turtle jellies had turned mouldy and she could demonstrate the Malpractices for Lee.

(ii)  The Defendant informed Lee who visited the Mongkok Shop again.  Without the knowledge of Lam, Lee secretly taped the 2^nd Demonstration of the actual steps or routines involved in the Malpractices.

(iii)  At that time, the Defendant was in the Mainland[1] and he had no knowledge or involvement in the making of the video clip on that occasion.

23.  Again, the Plaintiff claims that this demonstration was staged and was false, whereas the Defendant claims that it was a genuine reflection of the Malpractices.

24.  The Videos were published on 12 September 2013 by “appledaily” on Youtube.  The Videos or parts thereof were the news coverage by Apple Daily at pages A1 and A2 of the 12 September 2013 issue.

25.  One of the videos (“the 1^st Video”)  contained edited parts of the 1^st Demonstration.  It appears that only the following words said by Defendant at the 1^st Demonstration had been included in this video: “不過呢個好輕微” (but the problem for this one is slight), and “未發到鼻涕” (not developed to a state looking like nasal discharge).

26.  The other video (“the 2^nd Video”)  was a coverage by Apple Daily concerning, inter alia, a university study which revealed that turtle jellies sold by the Plaintiff contained almost no turtle shell.  It also contained a related interview of Professor Cheung Hon-yeung who conducted the said study.  It does not appear that this video included any words said by the Defendant at the 1^st Demonstration.   Indeed, the 2^nd Video is not related to the subject of mouldy turtle jellies at all.

27.  The Defendant claims that Lee and those authorized or instructed by Apple Daily published the Videos without his involvement or prior knowledge, and he had no actual involvement in the processing, making, editing, publication or uploading thereof.

(iv)  The alleged conspiracy

28.  It is the Plaintiff’s case that the 1^st and 2^nd Demonstrations were staged and the contents were false as a result of a conspiracy between the Defendant, Lee and Lam.

29.  The Plaintiff alleges that on a date unknown but before 12 September 2013, the Defendant came to an agreement or common understanding or otherwise combined with Lam and Lee, to perform in the presence of Lee and cause to be recorded a video recording intended for publication in the press which depicted a demonstration of cleaning and processing mouldy turtle jellies, purporting the same to represent the standard practice of the Plaintiff (“the Conspiracy”).  The Plaintiff claims that the real and predominant purpose of the Conspiracy was to cause damage to the Plaintiff, namely to injure both the business and reputation of the Plaintiff and its brand.

30.  The Defendant denies that there was any such Conspiracy:

(i)  The Defendant had merely related the Malpractices to a news reporter of Apple Daily who carried out her own investigation with the Defendant’s assistance.

(ii)  In about late July 2013, the Defendant related his concerns about the Malpractices to Lee.

(iii)  Lee decided to independently investigate into the quality problems regarding the Plaintiff’s turtle jellies as well as the Malpractices in order to find out the truth.

(iv)  At Lee’s request, the Defendant contacted Lam. He told Lam that he had withdrawn from the Plaintiff and established a similar business on his own, and he would like his “new employee” to learn more about the Plaintiff’s practices.

(v)  The Defendant therefore introduced Lee, as his “new employee”, to Lam who agreed that Lee could visit the Mongkok Shop for a brief demonstration of the actual steps involved in the Malpractices.

(v)  The publication of the three articles

31.  Three articles were published on 12 September 2013 in Apple Daily, The Sun and Oriental Daily (referred respectively as “the 1^st Article”, “the 2^nd Article” and “the 3^rd Article” and collectively as “the Articles”).

32.  The 1^st Article appearing on page A2 of Apple Daily was, in substance, a printed version of the 1^st Video.  Page A1 contained another article (not the subject matter of Plaintiff’s claim)  which was, in substance, a printed version of the 2^nd Video.

33.  On the other hand, the 2^nd and 3^rd Articles were virtually identical as they were published by newspapers belonging to the same group of companies, i.e. the Oriential Press Group Ltd.  They were all apparently prompted by or related to a press conference held by Ng in Guangzhou on 11 September 2013 (“the Press Conference”).  It appears that, at the Press Conference, Ng attempted to refute that some video clips about the Plaintiff’s products circulated in the Mainland were false, and that he had been framed up.  He had even prepared and distributed a script.  The Defendant suddenly appeared in the Press Conference and confronted Ng.  Apart from the mould problem, the Defendant referred to the other quality problems about the turtle jellies.  It was also revealed that the Plaintiff sold turtle jellies in plastic cups (which were much cheaper)  as if they were freshly made by putting them into pottery cups first, i.e. the Transfer Malpractice.  It appears that Ng had difficulties in answering questions raised by the press and the Defendant, and left the Press Conference abruptly after about 20 minutes.  The Defendant stayed behind to be interviewed by the press.  According to his travel records, he left Hong Kong before 7 am on 11 September 2013 and only returned at about 5 pm on 12 September 2013.

34.  In respect of the 1^st Article in Apple Daily, amongst the allegedly defamatory words (contained in four passages)  pleaded by the Plaintiff, only the following words in one passage were purportedly said by the Defendant:

“海天堂前高層蔡國強說，海天堂主打的瓦盅裝龜苓膏，因儲藏及運輸監控有問題，每當天氣濕熱便容易發霉變壞。近年海天堂生產大量密封式，保買期較久的膠杯裝龜苓膏，再由各分店店員換落瓦盅。”

([The Defendant], [HTT’s] former senior management, said that [HTT’s] main product is turtle jelly in pottery pot, due to storage and transportation supervision problem, mould would develop in turtle jellies every time when the weather is hot and humid. Recently, [HTT] produced a lot of turtle jellies put in sealed plastic cups with longer preservation period, and the staff of the various shops would then transfer them to pottery cups.)

35.  The other three passages relied on by the Plaintiff contain the observations of Lee made after her visits to the Mongkok Shops relating to the Malpractices.

36.  In respect of the 2^nd Article in The Sun, the Plaintiff pleads the following words purportedly said by the Defendant:

“蔡又指，部分龜苓膏在運送和冷藏過程中還會出現發霉，但海天堂亦不肯丟掉，近幾年來一直都是吩咐員工洗去龜苓膏表面的白色霉菌再賣給消費者食用。員工則是按照吩咐直接將歸零各方在自來水下用海綿抺洗，再放入雪櫃待售。

… 蔡國強又指有關產生是由海天堂在惠州的兩間廠房生產，該兩間廠房的產品會供應給廣州、佛山、東莞、和香港，不排除已有發霉龜苓膏流入香港。”

(According to [the Defendant], some of the turtle jellies developed mould due to the transportation and cooling process, but [HTT] refused to discard the products. Throughout the past few years, they instructed the staff to remove the white mould on the surface of the turtle jellies and sell the “cleaned” products to consumers.  The staff followed the instruction and rinsed the mouldy products with water and scrubbed the same with sponges and then put them in the refrigerator for sale.

Further according to [the Defendant], the relevant products were produced in the two factories in Huizhou. The products from these two factories would be supplied to Guangzhou, Foshan, Dongguan and Hong Kong.  It cannot rule out the possibility that some of the moudly turtle jellies had already been put on sale in Hong Kong.)

37.  In respect of the 3^rd Article in the Oriental Daily, the Plaintiff pleads that virtually identical words were purportedly said by the Defendant.

38.  The 1^st Article was expressly stated to be written by Lee and another journalist, Mr Hon Yiu Ting.  The 2^nd and 3^rd Articles were written by unidentified journalists of The Sun and Oriental Daily stationed in Guangzhou.  Insofar as the 2^nd and 3^rd Articles referred to words purportedly said by the Defendant, it is clear that those words were said by him during the Press Conference held by the Plaintiff in Guangzhou on 11 September 2013.

39.  The Defendant denies that he was involved in, or had procured or authorized the publication of any of the Articles.

(v)  Resignation of Lam

40.  The Plaintiff claims that Lam resigned on 14 September 2013.  According to a note written by Lam on 14 September 2013, she resigned on personal grounds (“私人理由辭職”).  On 15 September 2013, the Plaintiff intended to pay her the salary in arrears in the sum of $5,312.57 after deducting 7 days’ wages in lieu of notice, yet Lam did not collect such payment.

41.  Lam had conversations with Madam Shum Lai Wah (“Shum”)  (沈麗華)  (which had been covertly recorded by Shum), the supervisor of the Mongkok Shop, on 12 September 2013 before she resigned.  As the Plaintiff discovered that the staff member shown in the 1^st Video appeared to be Lam (based on the name tag seen in the video), Shum confronted her accordingly.  Lam admitted that she was the one shown in the video.  She said that she had been used, and she did not know that what she did and said had been recorded.

42.  One day after the publication of the Videos and the Articles, Xu made a report to the police about the Taped Phone Conversation he had with the Defendant in July 2013.  Ng made a police statement on 19 September 2013.  There is no evidence that the police have taken any action in respect of such complaint.

THE CLAIMS AND THE ISSUES

43.  The Plaintiff’s main claim is one for defamation.

44.  The Plaintiff pleads that the recordings and the visual images shown in the Videos and the pleaded words contained in the Articles (collectively referred to as “the Words”)  are defamatory of the Plaintiff.

45.  The Defendant’s defence can be summarised as follows:

(i)  the Defendant was not responsible for the publication of the Words;

(ii)  the Words were true in substance and in fact, i.e. the defence of justification;

(iii)  the Words consist of fair comment that the Plaintiff had little regard for the quality control of its products or whether the same were safe or hygienic for customers’ consumption or that the Plaintiff prioritized profit over product safety and quality;

(iv)  some of the Words complained of were apparently said by the Defendant in the Press Conference which was held in Guangzhou, and so the double actionability rule is applicable and the defamation claim in respect of those Words is not actionable in Hong Kong.

46.  It is clear that the main battleground between the parties is the defence of justification.  The availability of such defence depends on the court’s findings on: (i)  whether the Plaintiff’s shops had adopted the Malpractices; (ii)  whether the Plaintiff had instructed, encouraged or condoned its staff to adopt the Malpractices; and (iii)  whether the 1^st and 2^nd Demonstrations were staged demonstrations and the contents of which were false.  The court would have to make factual findings on these issues.

47.  There is a pleading issue as to whether the Defendant is entitled run the defence simply by justifying the fact that the Plaintiff encouraged or condoned its staff to adopt the Malpractices (as opposed to giving express instructions to them to do so), which I will address in details in the latter part of this Judgment.[2] For the purpose of the fact finding exercise, I will also deal with the issue as to whether the Plaintiff had encouraged or condoned its staff to adopt the Malpractices.

48.  It is clear that the defence of fair comment is quite irrelevant in the present case.  It is trite law that for such defence to succeed, the factual basis in support of the “comment” must be true.  If the court rules against the Defendant on the justification defence, it must mean that the court does not accept the existence of the Malpractices and that the 1^st and 2^nd Demonstrations were staged.  In such case, the defence of fair comment should likewise fail.   Hence, the defence of fair comment does not add any more weight to the Defendant’s case.

49.  Whether the Defendant was responsible for the publication of the Videos and the Articles and the application of the double actionability rule are issues in serious dispute, which I will address in the latter part of this Judgment after making the relevant factual findings.

50.  The Plaintiff’s second claim is for malicious falsehood, which to me is also a side-issue in the present case.  Unlike a defamation claim, it is the burden on the plaintiff in a malicious falsehood claim to prove the falsity of the relevant statement.  If the Defendant can prove the factual basis in support of the defence of justification, the Plaintiff’s claim for malicious falsehood must fail.  On the other hand, if the Defendant fails to prove such factual basis, the malicious falsehood claim becomes academic as the Plaintiff has already succeeded in the defamation claim.  The Defendant’s responsibility for the publication of the Videos and the Articles and the application of the double actionability rule are common issues for both claims, and so the malicious falsehood claim does not add any more weight to the main claim of defamation.

51.  The Plaintiff’s third claim is conspiracy to injure.

52.  There is no disagreement on the relevant legal principles.  As Ma CJHC (as he then was)  held in Pido v Compass Technology Co Ltd[3], the tort of conspiracy to injure is an economic tort resulting in (usually, if not invariably)  pecuniary damage.   There are two types of conspiracy to injure:

(i)  conspiracy to injure the plaintiff using lawful means, under which the requisite element of the tort is the predominant motive to injure; and

(ii)  conspiracy to injure by the use of unlawful means, under which the mental element is not the predominant motive to injure the plaintiff but merely an intention to do so.

53.  Further, a pleading on conspiracy must contain the following elements:[4]

(i)  the agreement between two or more persons and the means of carrying out the agreement, whether lawful or unlawful;

(ii)  the intention to injure the plaintiff, whether predominant (in the case of a lawful means conspiracy)  or merely an intention to injure (in the case of an unlawful means conspiracy);

(iii)  the acts that were carried out pursuant to the agreement and the stated intention; and

(iv)  the damage caused to the plaintiff.

54.  As confirmed by Mr Osmond Lam, counsel for the Plaintiff, in the opening submissions and the absence of a plea of “unlawful means” in the pleading, the Plaintiff’s case is one on conspiracy to injure by lawful means.

55.  If there was an agreement between the Defendant, Lee and Lam and the 1^st and 2^nd Demonstrations were staged ones as alleged by the Plaintiff, there is no serious dispute that their predominant intention was to injure the Plaintiff and damages would be caused to the Plaintiff by reason of the Conspiracy.

EVIDENCE AT THE TRIAL

56.  As demonstrated above, the main factual disputes I have to resolve in the present case are:

(i)  Whether the Malpractices were adopted in one or more of the shops operated by the Plaintiff?

(ii)  Whether the Malpractices, if adopted, were instructed, encouraged or condoned by the Plaintiff?

(iii)  Whether the 1^st or the 2^nd Demonstration was staged demonstration and the contents of which were false?

(iv)  Whether there was a conspiracy between the Defendant, Lee and Lam as alleged by the Plaintiff?

(i)  The Plaintiff’s witnesses

57.  The Plaintiff has called 8 witnesses to testify at the trial.

58.  The most important witness must be Ng who is the chairman and a director of the Plaintiff.  He gave the court an account of: (i)  the history of the HTT brand and its business; (ii)  his version of the business relationship between the Defendant and him; (iii)  how there was a breakdown of the relationship between the parties; and (iv)  why he said the 1^st and 2^nd Demonstrations were staged by the Defendant and Lam, in particular he relied on the contents of the Taped Phone Conversation.  He said firmly that the Plaintiff had not given any instructions to its staff to adopt the Malpractices, and he denied that the Defendant had raised any complaints about the moulding problem.  For the mouldy turtle jellies, the Plaintiff would instruct their staff either to return the products to the company or to discard the same, but he was not sure whether his staff had strictly followed such instruction.  He also told the court about the damages suffered by the Plaintiff as a result of the various negative reports about the quality of the Plaintiff’s turtle jellies.

59.  The Plaintiff’s second witness was Shum who was a shop supervisor employed by the Plaintiff.  She was also the shop supervisor of the Mongkok Shop at the material time.  She denied that the Plaintiff had ever given any instructions to the staff to adopt the Malpractices.  She confirmed that Lam was an experienced staff member who had been working for the Plaintiff for 5 years.

60.  After the publication of the Videos, she approached Lam and covertly taped the two conversations she had with Lam.  However, Shum was unable to explain satisfactorily why she suddenly started and, more importantly, stopped recording the first conversation with Lam.  Whilst her evidence is that she did not trust Lam after the first conversation, it is quite difficult to understand why she did not record the entire second conversation.  The second conversation was again not recorded from the beginning and it was again cut off towards the end.  Shum failed to give satisfactory explanations about these matters.  It is also strange that Shum did not ask Lam to clarify as to how long she had adopted the Malpractices and whether she knew that such practices were also adopted by other employees, etc.  One would therefore wonder whether the taped conversations contain the full contents of her conversations with Lam.

61.  The third witness was Mr Ng Chi Ming (吳志明)  (“CM Ng”)  who is Ng’s brother.  He joined HTT in 1992.  Prior to his transfer to the production department in June 2013, he worked as a shop supervisor.  When Lam joined the Plaintiff in October 2008, she worked under him.  Lam first started to work in the shop at Soy Street and was transferred to the Mongkok Shop in 2009.  By that time, CM Ng was the supervisor of the Mongkok Shop.  He testified as to the instructions given to the staff to deal with defective and mouldy products.  Shum replaced him as the shop supervisor of the Mongkok Shop in June 2013.

62.  The fourth witness was Madam Lam Yuk Kuen (林玉娟), who joined HTT in 1999 and held the post of the head of the personnel department since 2000. She told the court the employment history of Lam, the instructions given to the staff to deal with defective products including the filing of the defective products forms (“the Defects Forms”).  She confirmed that Lam had filed the Defects Forms during the term of her employment.   After the publication of the Videos and the Articles, Lam was transferred to work in another shop, but she tendered her oral resignation in the telephone conversation on 13 September 2013.  By that time, she indicated that she had to leave in a hurry to the Mainland.  She did not even collect her outstanding pay.

63.  The fifth witness was Madam Cheung Sui Ying who worked as an accounting staff for the Plaintiff.  She was a witness on quantum who testified on the damages suffered by the Plaintiff resulting from the incident.

64.  The sixth witness was Xu.  Starting from about 1998, Xu helped Ng to develop the HTT business in the Mainland.  According to Xu, the Defendant invited him many times to join his new business in 2013.  He refused.  He had lent a sum of RMB 750,000 to the Defendant for buying real property in the Mainland, but to date the Defendant had not repaid the loan. The Defendant told him that if Ng was not good to him, he could do something to destroy the HTT brand.  He also recorded one of the phone conversations he had with the Defendant in July 2013, i.e. the Taped Phone Conversation.  He had not heard that the Defendant had raised any complaints about the quality of the turtle jellies in any of the monthly meetings.

65.  The seventh witness was Lui who was a business partner of Ng in the operation of the Mainland HTT Business.  He told the court his version of the business relationships between the relevant parties at the material time.  In about 2005, because of certain incident, he and the Defendant made use of the difference between the trade mark laws in the Mainland and Hong Kong and registered the “恭和堂” (Kung Wo Tong)  mark in the Mainland.  They operated business in the Mainland using such mark for a short duration of time.  After the Defendant left the Mainland HTT business, the Defendant gave his interest in the business to him.

66.  According to Lui, the Defendant was afraid that Ng would mistreat him after the diminishment of his value to the business.  The Defendant told Lui that he had obtained a lot of confidential information about the HTT business, including the “ten crimes” (十宗罪)  of the business.  If Ng terminated their business relationship, the Defendant would expose the “crimes” so as to destroy the reputation of Ng.  The Defendant proposed two times to Xu for him to join the Defendant to start a new business but Lui refused.

67.  The last witness was Madam Chiu Choi Har (肖彩霞)  who is the wife of Lui.   She was responsible for managing the finances of the Mainland HTT Business. She told the court her version of the business relationships between the parties.  Her evidence does not contain any significant new materials not previously covered in the evidence of the other witnesses.

68.  The main points of the Plaintiff’s evidence can be summarised as follows:

(i)  the Plaintiff had not instructed, encouraged or condoned its staff to adopt the Malpractices;

(ii)  in the case of mouldy turtle jellies, express instructions had been given to the staff to return the jellies to the company or to discard the jellies on the spot;

(iii)  the Defendant had threatened to destroy the reputation of the Plaintiff;

(iv)  the 1^st and 2^nd Demonstrations were staged demonstrations and they suspect that Lam was involved in staging these demonstrations; and

(v)  the Defendant was a man of low commercial morality.

69.  All the Plaintiff’s witnesses are related to the Plaintiff, and so quite understandably, they are keen to protect its reputation.  Though they maintained that they regarded food safety as their priority, the fact that they had allowed vans with no refrigerating facilities to transport turtle jellies, which were prone to develop mould in hot and humid condition, undermines the credibility of their claim.  After all, it would be a matter of cost whether to acquire more vans with refrigerating facilities, and they had allowed cost consideration to compromise food safety which they said of top priority.  Under such circumstances, I have reservation about their allegation that express instructions had been given to the staff to discard mouldy turtle jellies no matter how minor was the moulding.  I would develop this point further in the latter part of this Judgment.

70.  The Plaintiff’s witnesses were also vague and evasive when they were asked about how to tackle the recurring mould problem. There was also confusion in their evidence about the details of the alleged “system” for the return of the mouldy turtle jellies and the filing of the Defects Forms.

71.  Further, Ng admitted that he was not certain whether the front-line staff had strictly followed the said Plaintiff’s “instruction”.  The issue here is whether the Plaintiff had properly supervised the procedures of the front-line staff in dealing with the recurring problem of moulding in the turtle jellies.  Having listened to the Plaintiff’s evidence, it is fair to say that the Plaintiff’s supervision was rather lax in this regard, and it was likely that the Plaintiff’s management, at the very least, was aware of or just turned a blind eye to the Mould Malpractice adopted by its front-line staff to deal with such problem.

72.  Considerable evidence has been given on the business relationships between the parties.  However, who was responsible for the breakdown of the relationship is not one of the main considerations in this case.  Indeed, I have great reservation about the evidence of Ng, Xu, Lui and indeed the Defendant on this particular issue.  Obviously, they all have their business interests to protect, and so the court should be cautious in approaching their evidence on such matter.

73.  In particular, I have strong reservation about the evidence of Xu.  He was evasive about the details of his conversations with the Defendant and why the recording of the Taped Phone Conversation suddenly stopped.  He also refused to provide more details about his role or his investment in the Defendant’s new business.  He was also evasive when he was asked as to why he had not taken any action to recover his alleged “loan” to the Defendant in the considerable sum of RMB 750,000 for such a long period of time. The same observation can also be made about the evidence of Lui.  He was evasive when he was asked about the “Kung Wo Tong” business that he operated with the Defendant for a brief period of time starting from about 2005.  The contents of the Taped Phone Conversation also indicate that Ng was in fact unhappy with Lui and his wife at that time, which both of them denied at the trial.  In my judgment, these witnesses had not told the court the whole truth about their relationships with Ng and the Defendant, and I have great reservation about the credibility of their evidence.

(ii)  The Defendant’s witnesses

74.  The most important witness for the Defendant’s case must be the Defendant himself.

75.  The Defendant had all along been working in the advertising industry.  He came to know Ng in 1998, and they had maintained and even developed their business relationship ever since.  He told the court his version of the business relationship with Ng and the Mainland HTT Business.

76.  According to him, there had been quality problems with the HTT turtle jellies since about 2006 including the development of mould in the jellies.  Starting from about the same year, Ng and the senior management of the HTT Business had given instructions to the front line staff both in Hong Kong and the Mainland to adopt the Mould Malpractice to remove the mould in the turtle jellies.  Further, the HTT Business subsequently started to produce turtle jellies placed in sealed plastic cups with longer preservation period.  However, they gave instructions to the front-line staff, after the arrival of the products in the shops, to transfer such turtle jellies from the plastic cups to the pottery cups pretending that they were freshly made products, i.e. the Transfer Malpractice.

77.  According to the Defendant, he had kept on complaining about the quality problems but was ignored by Ng and the senior management of the HTT Business.  In May 2013, the government authority closed down the new factory in Huizhou for inspection.  By reason of this and his suspicion that Ng intended to deny his interest and dividend in the Mainland HTT Business, the Defendant wanted to leave and start his own business in the Mainland.

78.  By then, he asked Ng to purchase his shares in the Mainland HTT Business.  Ng refused.  The Defendant then asked Xu to join his new business, Xu agreed and paid him the sum of RMB 750,000 as his capital contribution, which Xu said was the money lent to the Defendant for the purchase of Mainland property.

79.  The Defendant did not dispute that he had made complaints to Xu about Ng’s conduct.  Part of the conversations was recorded in the Taped Phone Conversation.  The Defendant however disputed that the tape contained the whole conversation.  By then, all he intended to do was to reveal the truth about the Malpractices to the public.

80.  He contacted Lee who was a reporter of Apple Daily.  He told her about the Malpractices and arranged Lee to visit the Mongkok Shop.  He told Lam that Lee was his “new employee” who wanted to learn more about the procedures of the Malpractices.  The Defendant was not in Hong Kong during the 2^nd Demonstration and he did not give any instruction to Lee as to how to make the reports about the Malpractices.

81.  The Defendant confirmed that: (i)  what had been shown in the Videos truly reflected the procedures of the Malpractices which were adopted in the HTT Shops; and (ii)  what he told the press in the Press Conference in Guangzhou were the truth.  He also denied the Conspiracy as alleged by the Plaintiff.

82.  For myself, I would not accept all the evidence of the Defendant on face value.  Apart from the reason given in §72 above, the ways in which the Defendant conducted his businesses are open to questions. For example, he tried to make use of the difference in the laws in the two jurisdictions to register the “Kung Wo Tong” mark in the Mainland.  He also used the “Wai Yuen Tong” mark for his new business in the Mainland.  Both marks had been used by established businesses in Hong Kong, and the Defendant was obviously trying to ride on the reputations of these established businesses for his own business purposes.  He cannot be regarded as a man of high commercial morality, and he was certainly an opportunist who would explore various ways to further his business interests.  Being a person who had been working in the advertising industry, he also knew about the influence of the media and how to make use of media pressure to further his interests.  But having said that, there is no reason for me to believe that he had in any manipulated the reports by Lee.  In fact, Lee carried out further investigation about the contents of the Plaintiff’s turtle jellies which apparently had nothing to do with the Defendant.  There is no evidence to suggest that the Defendant was anyone more than a “whistle blower”. 

83.  There is also no dispute that his relationship with Ng turned sour in 2013 at the latest.  As mentioned above[5], I do approach his evidence on such issue with great caution.  The way in which he handled the matter reveals that he had a deep sense of resentment against Ng personally, but it is also not surprising to have difference of opinions between business partners.  After all, this is a trial of the issues before the court and not the character or business ethnics of the Defendant.

84.  The crux of the matter in the present case is whether the Defendant staged the Demonstrations, or whether it was just that he knew about the Malpractices which in fact existed and sought to expose such scandal for his own commercial interests.  As further elaborated in the latter part of this Judgment, I find that it was the latter case.

85.  The next important witness[6] was Madam Lin Li Bing (林麗冰)  (“Lin”)  who was one of the ex-regional managers (區域經理)  of the Mainland HTT Shops at the material time.

86.  As Lin was a resident in the Mainland, she gave evidence via video-link facility.  She admitted that she worked for the Defendant in his new “Wai Yuen Tong” business from June 2013.   However, she quitted in July 2014. When she made her witness statement on 16 May 2015, she was already working as an administrative staff in a hospital which had no connection with the Defendant.  She has been a housewife since 2018.

87.  Lin joined the Mainland HTT Business in 2005 and was promoted to regional manager in 2009 responsible for supervising more than 40 shops in the Mainland.

88.  Ever since joining the Mainland HTT Business, there were recurring problems with the turtle jellies including moulding. Starting from 2006, she and other supervisors had received instructions from Xu and Lui to adopt the Mould Malpractice to remove the mould if it was not too serious and continue to sell the “cleaned” products to the customers.  If the moulding was too serious, subject to the consent of the relevant shop supervisor, the products would be returned to the factory with the completion of the Defects Forms.  She herself had orally passed on such instructions to the staff of the 40 shops under her supervision.

89.  Throughout the years, the front-line staff had made various complaints to her about the recurring moulding problem.  She confirmed that she had seen employees performing the Mould Malpractice during her inspections of the shops.

90.  I agree with Mr Paul Lam, SC, counsel for the Defendant, that Lin is the only independent witness who gave evidence at this trial.   She was a high-ranking staff member of the Mainland HTT Business and was familiar with the operation of the Mainland HTT Shops having worked from July 2005 to May 2013, i.e. a total of around 8 years. She was also aware of the work procedures of the Plaintiff’s shops in Hong Kong as staff from the Hong Kong’s management team also took part in the monthly meetings in the Mainland, for example “玲姐” (sister Ling), and they shared the same concern for various issues including moulding.  Even Ng agreed that Lin was a trustworthy staff.

91.  Lin gave direct answers to the questions without any hint of evasiveness.  There is also no basis to suggest that she has any connection with or interest in the Defendant’s business, or that she is anyone other than an innocent housewife.  There is no conceivable motive for her to fabricate evidence for the benefit of the Defendant.

92.  There was some suggestion that Lin had helped the Defendant to set up his new “Wai Yuen Tong” business.  However, there is nothing to show that she had done anything more than fulfilling her duty as employee in helping her new employer to establish his business.  It was not because of any ill-feeling against the Plaintiff which caused her to change her employment.

93.  As a further attempt to discredit Lin’s evidence, Mr Osmond Lam submits that it was odd Lin did not mention in her evidence that she had taught the front-line staff or demonstrated to them about the work procedures of the Malpractices.  Further, he argues it is incredible that Lin had only mentioned, for the first time in cross examination, that Ng taught everyone at a monthly meeting about how to rinse the turtle jellies.  Mr Osmond Lam submits that Lin was only fabricating her evidence to support the Defendant’s case.

94.  I disagree.  If Lin had grudges against Ng who is the “boss” of the Plaintiff, she could have made more specific allegations against him in her witness statement.  Yet she had not done so.  It is clear that a lot of things had been covered or discussed in the many monthly meetings throughout the years, and so it was very possible that the cross examination had refreshed her memory about certain details in a particular meeting.  Further, as Lin is not an interested party in the proceedings, one cannot expect her to have covered all the details in her witness statement.  In fact, Lin had not been asked about the details of her interactions with the front-line staff, and so it is unfair to criticise her for lack of details as to the specific instructions given to particular staff members about the performance of the Malpractices.  As I see it, Lin made no attempt to exaggerate her evidence, and she was only trying her best to recall what she perceived to be routine practices which originated from specific events which happened many years ago.

95.  Hence, I do not accept that these challenges would undermine the credibility of her evidence.

FACTUAL FINDINGS

96.  I then turn to the important factual issues that I have to resolve in this case.

(i)  Whether the Malpractices were adopted by the Plaintiff’s staff in one or more of the Plaintiff’s shops, in particular the Mongkok Shop?

97.  The first factual issue is whether the Malpractices were adopted by the Plaintiff’s staff in one or more of the Plaintiff’s shops, in particular the Mongkok Shop.

98.  It is indisputable that mould would develop in the Plaintiff’s turtle jellies from time to time.  As no preservatives were added, mould was prone to develop in the turtle jellies if they were not stored or transported in appropriate temperature between 4 to 8°C.  In fact, Ng and CM Ng agreed that prior to 2013, moulding in turtle jellies was a common problem.

99.  I agree with the submission of Mr Paul Lam that, even facing such recurring problem, the Plaintiff had not devised or implemented any effective means in place to resolve it whether in terms of transportation or storage.

100.  During the transportation of the products from the refrigerating facility in the factory in the Mainland to the refrigerators in the retail shops in Hong Kong, mould might develop if the products were not stored in the requisite low temperature.  This might happen if the products were: (i)  left on the ground outside the Fanling warehouse; (ii)  transported by vans without any refrigerating facilities; or (iii)  left in the shops without being immediately put into the refrigerators.  These were the problems revealed by the investigations carried out by Apple Daily.

101.  The only effective way to resolve the root problem was to ensure that the turtle jellies would be kept in the requisite low temperature continuously in transit.  Ng however admitted that the Plaintiff only switched to use vehicles or vans with refrigerating facilities for transportation of all the turtle jellies from the Fanling warehouse to the retail shops in Hong Kong after the material events in August or September 2013.

102.  Whilst Shum gave supplemental evidence in court that the Plaintiff acquired some vehicles with refrigerating facilities since 2008, there is no doubt that, up to August or September 2013, some of the turtle jellies were still transported or delivered by vehicles without such facilities, though such vans might have been used for shorter routes.   In the circumstances, it is hardly surprising that moulding remained a persistent and recurring problem, as evidenced by the Defects Forms submitted by the Mongkok Shop in the period between 2009 to 2013.  This was also a recurring problem in the Mainland HTT Shops as shown in the minutes of the monthly meetings from August 2009 to September 2013.

103.  As admitted by CM Ng, the problem became more acute if the relevant shop had over-ordered the products for its sales.

104.  According to Ng, usually more than one hundred pots of turtle jellies would be delivered daily to each shop in Hong Kong.   Under such circumstances, if some of them developed mould on the surface, the tendency would be that those in the same lot delivered at the same time during the same transit would likely to suffer from the same problem.  It might just be a matter of degree.  It was likely that some would be more mouldy than the others, and some might not be mouldy at all.

105.  Given such circumstances, it is important to know how the Plaintiff’s shops dealt with the problem.  According to Ng, the Plaintiff had given express instructions to the staff either to throw away the mouldy turtle jellies or to return them to the company.  On the other hand, the Defendant contends that there had been a prevailing practice in the Plaintiff’s shops to adopt the Mould Malpractice to remove the mould so that they could continue to sell the “cleaned” turtle jellies to the customers.

106.  In determining which version is the truth, one of the key considerations is whether the Demonstrations were staged.  As the Demonstrations were carried out by Lam herself, the issue is whether she was involved in staging the “false” Demonstrations possibly with a view to injure the Plaintiff.  If she was not so involved, what had been shown in the Videos would probably reflect the Malpractices adopted in at least the Mongkok Shop in removing the mould and transferring the turtle jellies from the plastic to pottery cups.

107.  In my judgment, the evidence does not support the serious allegation that the Demonstrations were staged.

108.  Lam joined the Plaintiff in 2008.  In March 2009, she was assigned to work at the Plaintiff’s shop at Soy Street.  Shortly after that, in late 2009, she was further assigned to work alone in the Mongkok Shop.  In other words, for almost 4 years, the Plaintiff saw fit to put Lam in charge of the shop alone. As confirmed by the Plaintiff’s witnesses, this shows that Lam was a competent and trustworthy staff.  There is no evidence or suggestion that Lam had ever failed to follow the Plaintiff’s instructions or breached any of its rules, or that Lam had any grudges against the Plaintiff or Ng.  There is also no evidential basis for the suggestion that Lam had received certain advantage from the Defendant and hence agreed to conspire with him to injure the Plaintiff. The absence of any motive on the part of Lam to injure the Plaintiff renders it most inherently improbable that Lam participated in the scheme to stage the Demonstrations.

109.  The Defendant’s invitation to Lam to do the Demonstrations can be explained by the simple fact that the Defendant’s office was close to the Mongkok Shop and they knew each other well.  The sheer number and length of the telephone conversations between the Defendant and Lam had during the period from 29 July to 5 August 2013 (i.e. a total of 5 calls spanning from 13 seconds to slightly over 1 minute) speak nothing about the contents of the conversations.  I have no reason to doubt the Defendant’s explanation that he was just making the arrangements for Lam to help his “new employees” to familiarize with certain work procedures operating in such kind of shops.

110.  The evidence also suggests that Lam did not know what she did in the two separate Demonstrations had been covertly recorded by Lee.  Obviously, Lee would not want Lam to know that she was a reporter to ensure that she could properly verify the information provided by the Defendant.  As one can see from the angle of the shootings in the unedited original raw videos of the 1^st and 2^nd Demonstrations (produced by Lee), the recording device must have been hidden somewhere most probably inside Lee’s handbag.  The 1^st Video uploaded and published by Apple Daily on youtube also stated expressly that the recording was made covertly.  This is consistent with the explanation given by Lam to Shum after the incident that she did not know about the covert shootings.  As Lam did not know that Shum was recording their conversations, Lam was probably speaking the truth by that time.  Further, if Lam had been a co-conspirator and had planned to be recorded, she would not have failed to remove her name-tag such that she could subsequently be identified by the Plaintiff.

111.  Under such circumstances, it is quite understandable that Lam also complained to Shum that what the Defendant did was premeditated and that she “had been put on the table” (擺佢上枱)  by the Defendant, meaning that the Defendant had put her in the spotlight causing her embarrassment and trouble.  This is also consistent with the unedited or original raw video recorded by Lee on 1 August 2013, which shows that the Defendant was trying to make Lam to believe that Lee was his “employee” who was about to start her job.  As she was “new” to the job, the Defendant just wanted Lam to show Lee about the procedures of the Malpractices. Apparently, in such belief, Lam was trying to teach and show Lee how various tasks should be performed, including but not limited to rinsing or washing mould off the turtle jellies.  Lee on other hand also pretended to be a “new employee” eager to learn how to do the tasks well.

112.  It can see from the unedited or original raw videos, including what Lam told Lee about the work procedures[7], that Lam was very natural and was genuinely trying to share her experience with whom she thought was an incoming staff of the Defendant’s new business.  I do not accept that she was “acting” in or “staging” the Demonstrations.

113.  Mr Osmond Lam tried to suggest to the Defendant that Lam must have known she was video-recorded or taped because of Lee’s “guarantee to the informant(s)  that their identity will not be revealed” (as referred to in §6 of Lee’s affirmation dated 2 April 2015).  According to Mr Osmond Lam, the guarantee must be one referring to Lam rather than the Defendant who had used his own name (實名舉報)  to report the Malpractices.  Hence when Lam explained to Shum that she was “being used”, she was merely complaining that her identity had been revealed and not that she did not know about the recording of the Demonstrations.

114.  I do not accept such suggestion as:

(i)  Such suggestion is flatly contradicted by the available recorded conversations secretly taped by Shum.  Lam made it clear that she did not know she had been recorded, which was also the understanding of Ng and Xu as stated in their statements made to the police.

(ii)  There is no evidence that Lee had in fact given any such personal guarantee or undertaking to Lam (which was improbable as Lee would not like Lam to know that she was a reporter).  The Defendant himself also denied that Lee had given such personal guarantee.

(iii)  The video recordings did not show Lam’s face (which was blurred)  and her voice was altered.  The reason why her identity was discovered was because of her name-tag, not because Apple Daily or Lee had breached any sort of undertaking of non-disclosure of identity.

(iv)  It would be unsafe for the court to rely on §6 of the said affirmation of Lee to draw such inference.  First, without the opportunity of asking Lee to clarify what she meant by “informant(s)”, it would not be safe for the court to say that such “informant” must have included Lam.  Second, Lee made the affirmation with a view to oppose the discovery application of what she considered to be journalistic materials.  In such context, confidentiality of the journalistic materials including the identity of the whistle blower (i.e. the Defendant)  would have been her main concern.  Hence, she might have had to emphasize such point, i.e. the confidentiality relating to the identity of the whistle blower, to oppose the discovery application.

115.  Further, if Lam and Lee had conspired with the Defendant to stage a false demonstration, one would expect that there should have been one instead of two demonstrations:

(i)  On 1 August 2013, it appears that they could not really find any significant mouldy turtle jellies, and so they had to arrange another visit to the shop.  If they wanted to stage a demonstration, they would and could have chosen a day when there were available significant mouldy turtle jellies, or even created artificially some mouldy turtle jellies for the purpose of the staged demonstrations.

(ii)  In fact, on 4 August 2013, the Defendant was not even in Hong Kong when Lee covertly recorded the 2^nd Demonstration.  The suggestion that the Defendant tried to distance himself from the 2^nd Demonstration by deliberately going to the Mainland on that day does not make sense at all.   First, if the Defendant would like to distance himself, why should he personally visit the shop with Lee to meet Lam on 1 August 2013?  The same could have been pre-set and arranged without him attending to the scene if there was indeed the Conspiracy.  Alternatively, the Defendant could have deliberately stayed out of the “screen” on 1 August 2013 if there was such the Conspiracy with Lee and Lam.  Conversely, if according to the Plaintiff, the whole demonstration was purely a script by the Defendant (and Lee)  and the Defendant was the director, he must have wanted to be present at the scene to ensure the recordings could capture what he “directed”.

116.  Indeed, there is no hint of any admissions by Lam confessing about the staging of any of the Demonstrations.  Quite on the contrary, Lam in effect admitted to Shum that she really adopted the Mould Malpractice as part of her work procedures when she said: “點解我話我可以幫老闆去澄清？係我自己做嘢疏忽嘅啫，就唔係你公司叫我甘樣做嘅，係我自己貪方便咁樣去做嘢嘅啫。” (Why I say I can help the boss to clarify?  It was my own omission.  Even if one says that the company instructed me [to adopt the Mould Malpractice], I can say I did it myself for my own convenience.)  As mentioned above, since Lam did not know that her conversations with Shum had been recorded, Lam was probably speaking the truth by that time.

117.  The fact that the Defendant asked Lam on 1 August 2013 whether the supervisor would come to inspect the shop at that time (as shown in the unedited version of the 1^st Demonstration)  does not support the allegation that the demonstration was staged.  If such was the case, Lam and the Defendant would have come to a prior arrangement to ensure that the Defendant and Lee would only visit the shop at a safe time.  In any event, it was natural for the Defendant to ask that question, as he had left the Mainland HTT Business and was by then in bad terms with Ng.  It would be odd if the supervisor walked into the shop seeing the Defendant bringing a stranger, i.e. Lee.  For sure, the supervisor would not want to see Lam demonstrating any work procedures to a stranger and a “traitor” of the Plaintiff.  During the conversation, they actually talked about the importance of hiding the Malpractices from the customers.

118.  In a further attempt to argue that the Demonstrations were staged, Mr Osmond Lam submits that the pretext given by the Defendant about Lee being his “new employee” does not hold any ground.  If Lee was his “new employee”, the Defendant should have asked Lam to show demonstrations of the other work procedures in the shop and not just the Malpractices.

119.  I do not find that such contention in any way undermines the credibility of the defence case.  It was possible that the Defendant had, in the couple of telephone conversations prior to 1 August 2013, already told Lam that he wanted her to show his “new employee” how to remove the mould and the way to transfer the turtle jellies from the plastic to pottery cups.  Indeed, as shown in the unedited raw videos, Lam was apparently working as usual and performing her works smoothly.  From time to time, she also asked Lee whether she would like her to teach her to do some specific steps (which would not have been necessary if the Demonstrations were staged), such as she had to be cautious in opening the cover of the plastic cups.  There is simply no hint that the Demonstrations were staged.

120.  As the Defendant was not certain whether Lee would make a report about the Malpractices, he himself made another recording of the demonstration of the Malpractices and passed it to a television station in the Mainland, i.e. “珠江台” (Zhujiang Channel).  Mr Osmond Lam submits that it was very unlikely that the Defendant was able to deceive Lam three times for performing the demonstrations.  However, as explained by the Defendant, there was no sufficient mould to show the Mould Malpractice the first time, and hence the need for the second visit.  For the third time, he told Lam that his “new employee” (i.e. Lee)  had left.  The Defendant and Lam knew each other, and Lam did not appear to be a sophisticated person.  Despite the suggestion by Mr Osmond Lam that the shooting did not appear to have been made covertly, the Defendant was able to explain how he managed to record the demonstration using his mobile phone without Lam noticing.  Again, there is no reason for me to doubt the credibility of the Defendant’s explanation in this regard.

121.  The Plaintiff also relies on the fact that Lam had purportedly completed the Defects Forms on both 1 and 4 August 2013.  This however does not and cannot support any inference that the demonstrations on those two days were staged.  It is perfectly consistent with the Defendant’s case that, the employees would rinse the turtle jellies if the mould was not too serious, but if it was serious, the same would be discarded.  On 4 August 2013, Lam stated in the Defects Forms that there were “很多，白色，１点点” (many white spots)  in 16 pots of turtle jellies.  This actually supports that, on that day, there were truly many pots of mouldy turtle jellies, and hence Lam informed the Defendant to tell Lee to come to observe how she rinsed off some of them.

122.  For these reasons, I find that the 1^st and 2^nd Demonstrations were genuine and not staged demonstrations, and what had been shown there truly reflect some of the practices (including the Malpractices)  adopted by at least Lam in the Mongkok Shop.

(ii)  Whether the Plaintiff had instructed, encouraged or condoned its staff to adopt the Malpractices?

123.  The second factual issue I have to deal with is whether the Plaintiff had instructed, encouraged or condoned its staff to adopt the Malpractices.

124.  The HTT Business had large number of shops (88 in Hong Kong and more than 100 in the Mainland)  and front-line staff (at least over 100 in Hong Kong)  at the material time.

125.  Given that moulding was a recurring problem, it was most probable that some directions would have been given by the management to the employees on how to tackle the problem.  At the very least, some practice with the approval or permission of the Plaintiff must have been in place.  Essentially, the court has to decide which of the two following alternatives was more likely to be true on a balance of probabilities:

(i)  to discard or return the turtle jellies to the company (or the factory)  whenever there was mould found on the surface irrespective of how minor the moulding was (as contended for by the Plaintiff); or

(ii)  to rinse off the mould by water if it was not serious, but in serious case, discard or return the turtle jellies to the company (or the factory)  (as contended for by the Defendant).

126.  I have great reservation about the Plaintiff’s version.  First, there were no written instructions to back up its allegation. The Plaintiff had employed a lot of front-line staff in operating its shops. It would be quite impossible to ensure that each staff would have obtained the same message unless there were something in writing.  In fact, express written instructions had been given as to how to deal other defective products such as bird nest and black fungus sesame tea (黑木芝麻茶), and it would be quite difficult to understand why there were no similar written instructions for the Plaintiff’s flagship products, i.e. turtle jellies.  Second, the system of returning or discarding mouldy products in Hong Kong was confusing and in any event not strictly enforced.  Different Defects Forms were used, very relaxed reporting procedures were adopted and there was no one to enforce or supervise the whole process of returning or discarding the mouldy turtle jellies.  No one had checked the returned defective products or had done anything to follow up on the problem.

127.  In my judgment, simply allowing the front-line staff to throw away the mouldy turtle jellies, no matter how minor was the moulding, without some kind of supervision does not make a lot of business sense.  It might open to abuse by employees as they could misappropriate the products for their own benefits pretending that they had been discarded. After all, moulding was a recurring problem by that time and the Plaintiff could not have just let the employees to throw away the products as they pleased, as it might not be easy to judge whether the moulding was serious to the extent that the turtle jellies had to be thrown away.  As the evidence suggests that the Plaintiff had not adopted a more stringent system to monitor the process, it was very unlikely that instructions had simply been given to the front-line staff to throw away the mouldy turtle jellies whenever such problem occurred.

128.  Further, it was unlikely that the 2 Demonstrations on 1 and 4 August 2013 were the first two occasions that Lam performed the Malpractices.  It must have persisted for some time judging the way how familiar and experienced she sounded and performed the routine during the demonstrations.  It was also unlikely that Lam was acting in defiance of the alleged standard instructions from the Plaintiff’s management.  The evidence suggests that Lam was a trustworthy and reliable employee.  Given that moulding was a recurring problem, it was more probable that she had obtained instructions from her supervisor as to how to deal with the problem, rather than devising a solution on a frolic of her own.

129.  In the 1^st Demonstration as recorded in the unedited video clip, Lam told Lee that her supervisor had taught her to use a spoon to get the mould off the surface of the jellies.  As Lam did not know about the covert recording, what she said by that time was likely to be true.  It showed that the Plaintiff had been exploring different ways to remove the mould from the surface of the jellies.

130.  Had Lam devised her own way of removing the mould, I find it odd why Shum did not try to find out more about the Malpractices from Lam during their conversations after the incident.  It would have been important for the Plaintiff to find out more information from Lam, such as how long the Malpractices had been adopted and whether such practices also existed in other shops.  Quite surprisingly, Shum did not bother to find out such information, or did not even ask Lam not to leave and to clarify the matter for the Plaintiff.

131.  I also find that Lam was not and could not be the only frontline employee who adopted the Malpractices.

132.  As mentioned above, Lam revealed that it was her supervisor (probably CM Ng)  who taught “them” how to remove the mould.  If that was case, it was most improbable that the supervisor only gave such direction or instruction to Lam.  He must have given the same instruction to other employees under his supervision.  It was likewise improbable that he would so instructed those under his supervision unless the same was approved by the senior management of the Plaintiff.

133.  More importantly, Lam’s evidence is corroborated by the evidence of Lin whom I find to be a truthful and reliable witness.  Lin said firmly that the Mould Malpractice was widely adopted by the Mainland HTT Shops.  Whilst she had never worked in the shops in Hong Kong, the indisputable evidence is that they encountered the same moulding problem. As admitted by Ng, the operations of the Mainland HTT Shops and the Plaintiff’s shops in Hong Kong were substantially similar and the turtle jellies they sold and served were all produced and delivered from the same Huizhou factory.  Senior management of the Plaintiff would also take part in the monthly meetings of the Mainland HTT Shops, and it is indisputable that both managements had close relationship.  Under such circumstances, it was very likely that the same Mould Malpractice had been adopted, as instructed by both senior managements, to tackle the same problem in the Mainland and Hong Kong albeit with some minor or immaterial variations.

134.  No reasonable man would agree that the Mould Malpractice was proper.  But it was hardly surprising that the employees would nonetheless follow the Mould Malpractice.  As pointed out by Lin, the staff, realistically, would have to follow the instructions given by the management.

135.  The Plaintiff contends that there was no good reason to adopt the Mould Malpractice as the “costs of discarding the mouldy turtle jellies are low as compared to the potential costs of any customers’ feeling unwell having consumed the mouldy products and complained which would be much higher”. However, I do not accept that such risk distribution analysis can assist the Plaintiff’s case in any way.

136.  First, there is no evidence that consumption of mouldy turtle jellies (in particular, the ones with minor mould)  would lead to serious, let alone, fatal health problems.  Apple Daily actually reported that its tests revealed that the mould was largely harmless although they might cause some symptoms or reactions to those who were allergic to the mould.  On the other hand, the Plaintiff’s witnesses admitted that they had never carried out any test or study or investigation into the mouldy products let alone any test on the harmful effect of the mould.  Their subjective opinions are of no weight as none of them purported to have any expert knowledge in this respect.  There is also no evidence that, at the material time, they had any genuine or serious concern that the mould would cause serious health hazards.

137.  In any event, as testified by Lin, she had never heard of any complaint made by customers about mouldy turtle jellies. In fact, most of the customers might not be able to notice the difference between the “cleaned” turtle jellies and the normal jellies.   These factors might lead to the Plaintiff and the Mainland HTT Business to believe that the Mould Practice was a low cost and a low risk method to deal with the moulding problem.  On the other hand, allowing the employees to discard minor mouldy products without supervision might lead to all sorts of problems including financial losses.  Hence, I do not accept that the Plaintiff’s risk distribution analysis can take its case any further.

138.  Mr Osmond Lam also seems to suggest that, if the Plaintiff had given instructions to the staff to adopt the Malpractices, there should have been some written records in the minutes of the monthly meetings or other written instructions.

139.  In my judgment, such kind of argument cannot assist the Plaintiff’s claim.  Moulding is a recurring problem.  If the Plaintiff had given the alleged express instructions to the front-line staff to return or discard the mouldy turtle jellies, one would also expect that there would have been some written records.  As the Plaintiff cannot likewise produce such written records, the absence of documentation is very much a neutral factor. In any event, it would be quite naïve to suggest that the Plaintiff and the Mainland HTT Business would have recorded something which might damage their reputations in writing.  In fact, I find the absence of written documentation in support of the Plaintiff’s alleged instructions to its staff more difficult to accept than the absence of written documentation for the instructions to adopt the Malpractices.

140.  At this stage, I am not certain whether Ng himself had given express instructions to engage the Malpractices.  However, as supported by the evidence of Lin, such instructions must have originated from the senior management of the Plaintiff and the Mainland HTT Business.  Even if they had not expressly done so, the fact that they had not adopted any effective way to tackle directly the moulding problem over the years leads me to believe that they had at least encouraged or condoned the Mould Malpractice which was widely adopted by the front-line staff.  Just like the Plaintiff knew full well that, from the food safety perspective, the turtle jellies had to be transported with vans with refrigerating facilities, and yet they did not tackle the problem right the way and took the risk of using ordinary vans to transport at least part of the products from 2009 to 2013.

141.  Turning to the Transfer Malpractice, the only party to benefit from such practice was the Plaintiff itself.  In fact, the engagement of such practice meant more work for the employees.  I cannot imagine any front-line staff would have adopted such practice without the express instructions from the senior management of the Plaintiff.

142.  For these reasons, I find as a matter of fact that the Plaintiff’s management did give instructions to its staff to adopt the Malpractices.  At the very least, they had encouraged or condoned its staff to do so.

(iii)  Whether there was the Conspiracy between the Defendant, Lee and Lam as alleged by the Plaintiff?

143.  The next question is whether there was the Conspiracy as alleged by the Plaintiff.  The answer is clearly in the negative.  There was simply no agreement or understanding between the said parties to injure the Plaintiff.

144.  On the part of Lee, she was just making a report of a piece of investigative journalism with a view to expose the Malpractices that she believed existed in the operation of the Plaintiff’s shops.  Though the report might affect the reputation of the Plaintiff, that is far from saying that Lee was a co-conspirator fabricating the story with the predominant intention of injuring the Plaintiff.  In fact, Lee and Apply Daily did not simply take the Defendant’s words on face value.   They had carried out their own investigations including the visit to the factory in Huizhou. They also followed the transportation of the turtle jellies from the Plaintiff’s warehouse to the retail shops.  In case they simply relied on the Defendant’s story without verifying it, it might expose them to serious potential legal liabilities.  Lee also separately covered the news concerning a university study which revealed the turtle jellies sold by the Plaintiff contained almost no turtle shell at A1 headline of the issue dated 12 September 2013, which the Plaintiff acknowledges has nothing to do with the Defendant.

145.  There is also no reason for the court to doubt the Defendant’s evidence that he had no control over the journalistic investigations carried out by Lee.  In fact, when the Defendant asked her when the report would come out, Lee simply told him that he had no right to ask.

146.  The fact that the Defendant had to record a third video, i.e. the one uploaded or broadcast by Zhujiang Channel in the Mainland, is also consistent with the Defendant’s evidence that Apple Daily or Lee would not let him have the recordings when he asked for the same after being informed on 5 August 2013 that Lee had recorded the demonstrations.  This reinforces that there was no conspiracy as between the Defendant and Lee or Apple Daily and that the Defendant had no control over their actions or their editorial or publication decisions.  Otherwise, Lee or Apple Daily would have simply handed over the relevant recordings and there was no need for the Defendant to record his own video clip.  Even Ng could not say whether Lee was involved in the Conspiracy.

147.  Further, the upholding of the Plaintiff’s allegation against Lee would mean that every reporter engaging in investigative journalism would be liable for the tort of conspiracy to injure if they make a report in the press based on the information provided by a whistle blower.  This simply cannot be right.

148.  On the part of Lam, I have already explained why she was not involved in any conspiracy.  The Demonstrations could not have been staged, and the only explanation as to why Lam performed the Malpractices is that, without knowing of being taped, she just wanted to show the procedures of the Malpractices to someone whom she believed was one of the new employees of a person who formerly was one of the senior management of the Plaintiff.  She did not even remove her name tag for the Demonstrations.

149.  The Plaintiff cannot put forward any direct or even circumstantial evidence to prove that Lam was somewhat involved in the Conspiracy.  Even Ng admitted that this was based on suspicion only.  He suspected that Lam sided with the Defendant and had grudges against the Plaintiff and himself, and yet all the circumstantial evidence suggests that Lam was a reliable employee who performed her job well.

150.  Based on the aforesaid factual findings, the Plaintiff’s claim for conspiracy to injure must fail because there was no agreement or understanding between the Defendant, Lam or Lee to report the Malpractices with the predominant intention of injuring the Plaintiff.

151.  In his submission, Mr Osmond Lam seems to suggest that, irrespective of whether the materials published in the Videos or the Articles were true or not, the Defendant is still liable for the tort because he had the predominant intention of injuring the Plaintiff.  This simply cannot be right.

152.  First, there was no agreement between the parties which is an essential element of the tort of conspiracy.

153.  Second, even if the Defendant had the predominant intention to injure the Plaintiff, the Plaintiff’s claim for conspiracy to injure will still fail unless the Plaintiff can also prove that Lee (or Apple Daily)  and Lam shared a predominant intention to injure the Plaintiff.  There is simply no factual basis to suggest such shared intention.

154.  There is an academic argument as to whether, by “pushing the button”, the predominant intention of the Defendant was to injure the Plaintiff or was just to protect or advance his own commercial interests, i.e. he was trying to force Ng to negotiate with him face-to-face on the disposal of his 20% interest in the Mainland HTT Business and the possible co-operation between them on his new business venture.

155.  I do not find it necessary to address the legal authorities submitted by the parties in great details.  Assuming that the Defendant was just trying to expose the Malpractices which in fact existed in the operation of the Plaintiff’s shops and that such Malpractices had been expressly instructed by the Plaintiff itself (which I find it to be the case), even if the Defendant’s intention was to settle his score with Ng or the Plaintiff, it would not make him liable for any tort.  There was no conspiracy involved, and malice would only be relevant in negating the defence of fair comment or qualified privilege in a claim for defamation.  If the Plaintiff’s argument is correct, any defendant speaking the truth, even if their intention in doing so was to settle their score with the claimant, would be liable for conspiracy to injure even if there is no liability for defamation.  In my judgment, this cannot be right and the Plaintiff’s claim for conspiracy cannot possibly succeed.

156.  Having made these essential factual findings, I then deal with the merits of the individual claims.

THE DEFAMATION CLAIM

157.  I first start with the defamation claim.  As mentioned above, the main issue here is whether the Defendant has discharged the burden of justifying the meanings of the Words pleaded by the Plaintiff.

158.  It is trite that the plea of justification will succeed if a defendant proves on a balance of probabilities that the sting or substance of the defamatory words is true.[8]  In other words, a defendant only has to prove that “the main charge, or gist of the libel” is true. A defence of justification would still succeed even if the publication was inaccurate in some minor respects provided that it is not one of material inaccuracy.[9]

159.  It is not in serious dispute that the sting of the libel and slander in issue is the imputation that the Malpractices were adopted in the Plaintiff’s shops and that the Plaintiff had instructed, encouraged or condoned the engagement of the Malpractices.  Though it is the Defendant’s primary case that there were instructions for employees working in the HTT Shops to adopt or engage the Malpractices, the Defendant would still succeed in his defence of justification if the Plaintiff had encouraged or at least condoned the Malpractices.  In the eyes of the consumers and the general public, the Plaintiff would still very much to be blamed if it had knowingly allowed the Malpractices to continue and did not make any attempt to stop the same.

160.  However, Mr Osmond Lam argues that the Defendant cannot run the defence based on justifying only the fact that the Plaintiff encouraged or condoned the Malpractices.  As pleaded in §14 of the Amended Defence, the Defendant’s case is all along based on the express instructions given by the Plaintiff.  There is no alternative plea for encouragement and condonation of the Malpractices.

161.  There is some force in such pleading argument. However, in the particulars of justification pleaded in §38(5)  of the Amended Defence, it is expressly pleaded that the Plaintiff “adopted” the Malpractices.  I agree with Mr Paul Lam that there are different degrees for the act of “adoption”.  In my judgment, “adopt” in the present context would also include the fact that the Plaintiff had encouraged or even condoned the use of the Malpractices in its shops, as these Malpractices were then performed in the course of the Plaintiff’s business with its knowledge and for its benefit.  In any event, since I find as a matter of fact that the Plaintiff had given express instructions to its staff to adopt the Malpractices, such pleading argument cannot assist the Plaintiff’s claim.  As the Defendant has discharged the burden of proving the facts in support of the defence of justification, the Plaintiff’s defamation claim must fail. 

162.  I also agree with Mr Paul Lam that s 26 of the Defamation Ordinance (Cap 21)  does not come into play in the present case as the Words do not contain two or more distinct charges against the Plaintiff.

163.  However, there are perhaps two more fundamental issues relating to this claim which need to be addressed:

(i)  Whether the Defendant was responsible for the publication of the Videos and the 1^st Article by Apple Daily and Lee and the 2^nd and 3^rd Articles by The Sun and Oriental Daily?

(ii)  Whether the Plaintiff can sue the Defendant for libel allegedly contained in the 2^nd and 3^rd Articles in respect of the statements made by him in the Press Conference which was held outside jurisdiction?

164.  In view of my ruling on the defence of justification, these issues now become academic.  But since the parties have made considerable submissions on them, I feel obliged to give my rulings on these matters as well.

(i)  Whether the Defendant was responsible for the publication of the Videos and the Articles?

165.  The first issue concerns the question as to whether a whistle blower would be ultimately responsible for the contents of a report of a piece of investigative journalism which was made based on the information provided by them.  Unlike many other cases, the Plaintiff is only suing the whistle blower, and not the media actually involved in the publication of the ultimate defamatory materials which would be much easier targets.

166.  In respect of the present factual context, the Plaintiff can possibly frame its defamation claim in the following two manners:

(i)  The Plaintiff is claiming for the alleged defamatory statements made by the Defendant to the reporters including Lee and the reporters present in the Press Conference.  In such case, the Videos and the Articles are treated as republications containing the original defamatory statements.  As demonstrated by the facts in Bawang International (Group)  Holding Ltd v Next Magazine Publishing Ltd[10], whether the Defendant is liable for the damages caused by the republications, i.e. the Videos and the Articles, turns on the questions of causation, foreseeability and remoteness of damages.  The court will not address the issue as to whether the Defendant had any control over the republications.  Further, the tort may be considered as completed at the place where the Defendant made the original statements and not the place where the republications were made.

(ii)  The Plaintiff can claim for the alleged defamatory statements made in the Videos and the Articles as original publications.  In such case, the court has to address the question as to whether the Defendant had any control over or participated in the publication of these original publications, or whether the publishers were acting as agents of the Defendant in the publication of these materials.  Causation, foreseeability and remoteness of damages are not the considerations here. Further, the tort may be considered as being committed at the place where these original publications, i.e. the Videos and the Articles, were made.

167.  I agree with Mr Paul Lam that the Plaintiff’s claim as pleaded is convoluted.  In the Endorsement of Claim, the Plaintiff refers to allegedly defamatory statements “published by [the Defendant] to and/or in the presence of members of the press on or before 12 September 2013, the same have been reported … in the newspaper and/or websites”.  It is not clear whether the Plaintiff is relying on the statements given by the Defendant to the press on the one hand, or the reports of his statements by the press (i.e. the Videos and the Articles)  on the other, as the original publications.

168.  The confusion may have been subsequently clarified in the pleading.  In the Amended Statement of Claim, the Plaintiff has expressly pleaded the audio recordings and visual images in the Videos and the words contained in Articles as the basis of its defamation claim against the Defendant. In other words, the Plaintiff is relying on the Videos and the Articles as the original publications and it seeks to hold the Defendant liable for the publication of the defamatory words contained in these publications.  This interpretation is also consistent with the submission of Mr Osmond Lam on the question of double actionability.  His stance is that the defamatory publications in the Sun and Oriental Daily were made in Hong Kong and so there is no issue of double actionability.  In other words, he is relying on the Articles themselves as the original publications, such that the locus in which the Defendant physically made the statements (i.e. Guangzhou)  is irrelevant.

169.  As the Plaintiff is formulating its claim applying the second approach mentioned in §166 above, the issues that require the adjudication of the court are: (i)  whether the Defendant had any control over or participated in the publication of the Videos and the Articles; and (ii)  whether the publishers were acting as agents of the Defendant in publishing the Words.  It is the Defendant’s case that he had no control over the composition, edition and publication of the contents of the final published materials.

170.  In law, to hold the Defendant liable for the contents in the publication of the Videos and the Articles, it is necessary for the Plaintiff to establish that either the Defendant had control over the publishing process; or he had assented to the formal form of the publication; or Apple Daily, the Sun and Oriental Daily were the respective agents of the Plaintiff in publishing the Videos and the Articles.  It is not sufficient that the Defendant had provided materials proactively to the press which had contributed (even substantially)  to the publication of the Videos.

171.  In the Australian decision of Dank v Whittaker (No 1)[11], the plaintiff intended to hold two defendants liable for the whole of the articles published in newspapers, not being restricted to words communicated by the defendants to the journalist as reported in those articles.  The plaintiff claimed that the first defendant knew that what he said would be republished in the newspaper and his statements were the rock on which the defamatory imputations were based.  He claimed it was well settled that all persons who procured or participated in the publication of a libel were jointly and severally liable for the whole damage suffered by the plaintiff.  His case was not that the defendant said every word of the article complained of, but that he published or materially contributed to the publication of the eight defamatory imputations.  As to the other defendant, the plaintiff claimed that, when he gave an interview, he impliedly authorised the newspaper to use the information he provided for whatever purpose they deemed appropriate, which included its use in the matter complained of in the quotes.  The information attributed to him was integral to the article.

172.  McCallum J rejected the argument.  She struck out the plaintiff’s pleading with leave to re-plead, as the plaintiff might choose to recast the claim by reference only to the words attributed to the defendants.  She held the following:

“22. Mr Richardson’s submissions were supported by a careful review of the authorities dealing with the issue of joint liability as a publisher. He submitted that those authorities hold that, in order to establish that a person is jointly liable as an original publisher of allegedly defamatory matter, it is necessary to establish either control or assent. Having reviewed the authorities relied upon, I accept that to be a correct statement of principle. The notion of control is comprehended within the role of a person such as the proprietor of a newspaper, an editor who determines what is published and, ordinarily, the author of the defamatory matter (although it is well recognized that a journalist, whilst responsible for the words written by him or her, is not necessarily liable for headlines or images added during the editorial process). Absent participation in a publication at that level of control, a person who merely contributes part of what is published will not be jointly liable as an original publisher of the whole unless he or she assents to its final form.”

(having reviewed the authorities)  … …

26.  In my view, the authorities relied upon by Mr Richardson establish that, where a person merely contributes material to an article but has no control over the publishing process, liability as a publisher will not ordinarily be established unless he or she has assented to its final form.”

173.  It is correct that the person who first spoke or composed the defamatory matter (the originator)  is liable provided they intended to publish it or failed to take reasonable care to prevent its publication.  However, this is not the case here.  At least for the Videos and the 1^st Article, the person who first composed and authored these materials was Apple Daily including its employees and not the Defendant.

174.  In Gatley on Libel and Slander[12], the learned authors seem to suggest that the persons who supplied the materials for the final publications, including the interviewees, may be liable for the publication of the ultimate defamatory publication.  However, McCallum J cautioned that law text (even a well-respected one like Gatley)  does not stand as authority (in the relevant sense)  for any legal principle, and it is always necessary to review and analyse closely the judicial authorities cited by the authors in order to understand correctly the statements in the text.[13]

175.  The decision of the Full Court of the Supreme Court of Queensland in Thiess v TCN Channel Nine Pty[14] was cited in Dank v Whittaker (No 1)[15]. In Thiess, the plaintiff claimed that 4 television programmes broadcast by the first defendant, which contained 21 specific defamatory imputations, were based in part on materials provided by the second defendant.  The jury found that the second defendant had not published the materials.  The Full Court of the Supreme Court of Queensland held that the jury were not acting perversely or unreasonably in reaching such conclusion.  There was evidence that the second defendant was the source of the “story” broadcast by the first defendant; he approached the other defendant with that story, and provided information about events and incidents, as well as supporting documents, and names of individuals who could be interviewed to corroborate it; he helped with the research and the interviewing of informants, and in that way became part of the TCN 9 “team”; in return, he contracted to receive AUS$50,000 to be paid subject to conditions in the event of the programme being broadcast; he himself appeared in one or more of the programmes and was “central” to its theme or structure; he knew when the first programme would be going to air and attended the studio to see it though he was distracted from doing so at the end.  The plaintiff claimed that he was liable as a person who participated in the publication of the defamatory matter.

176.  The court held that, if the second defendant had seen the script or viewed the programmes before publication, he would perhaps be liable but the evidence was that he did not do so.  It was not suggested that the second defendant was the principal of TCN 9 as author or publisher of the television programmes.  He was not shown to have exercised control over its final form.  At most he played a subsidiary and intermediate, if important, part in the creation of the product that in its finished state ultimately went to air.  It was true that the second defendant himself, or his visual image, appeared in one or more of the programmes and that he was visible and audible to viewers as saying words that might have formed part of the matter supporting the imputations.  But what the jury were asked to do was not to say whether he published some, but whether he published all, of the matter supporting the defamatory imputations. Unless he was a co-publisher of all, the jury were entitled and indeed bound to find that he was not a co-publisher with TCN 9.[16]

177.  The court also highlighted the fact that the plaintiff did not run a case of republication properly-so-called.  It held that it was important to notice that the defamatory imputations that were broadcast were not charged against him as a republication by TCN 9 of materials earlier published by him to TCN 9.  If that had been the case for the plaintiff, he would have been obliged to plead it in terms; for “if the plaintiff intends to complain separately of that republication, he must plead each such republication in haec verba as a separate paragraph in this statement of claim, to enable the defendant to plead to it whatever defence may be appropriate to that particular publication”.  In such event, the plaintiff would have been bound to prove that such republication was either intended by the second defendant or was a natural and probable result of his providing the information that led to it.  It would also have been necessary as part of that process for the jury to consider the extent to which the published matter corresponded with the information supplied.  For “the mere furnishing by one person of some of the materials used by another in the preparation of a libelous article does not constitute a publication of it by the former, if when printed, the article as a whole is something very different from the material so furnished by him”.[17]

178.  This case highlights the two different approaches that I mentioned in §166 above.  As demonstrated by the facts of the present case, the issues to be considered for each approach would be different, and so it is important for a plaintiff to formulate their case properly in the statement of claim.  In principle, there is nothing to prevent the plaintiff from relying on both formulations, but it is important for them to make it clearly in the pleading so that the defendant can properly understand the case they have to meet.

179.  In an attempt to make the Defendant liable for the pleaded contents in the Videos and the Articles, Mr Osmond Lam is relying on Berezovsky v The Russian Television and Radio Broadcasting Co[18] with a view to support the proposition that an interviewee in a television programme (or informant or source for an online video clip)  can be made liable not only for their own words uttered in the programme, but also to the underlying theme of the programme as a whole if they were party to the overall message conveyed by the programme.  Further, he is also relying on Parkes v Prescott[19] and R v Cooper[20] to argue that if a person requests another generally to write a libel, they must be answerable for any libel written in pursuance of their request.  In other words, the requestee is acting as the agent of that person in publishing the material. 

180.  In my judgment, the starting point in considering the liability of a whistle blower or an informant must be the plaintiff’s formulation of the claim, depending on what publications are to be sued as the original publications.  Though the two Australian decisions are not binding on the Hong Kong courts, the approach they adopted is based on sound principles of law supported by legal authorities.  Hence, they provide good guidelines on the approach that should be adopted by the court in considering liability in similar circumstances.  On the other hand, Berezovsky[21] is very much a case on its own facts.  The bulk of the judgment by Eady J dealt with the facts in that case and there was very little discussion on the relevant legal principles.  Further, Parkes v Prescott[22] and R v Cooper[23] are ancient decisions, and whether someone can be considered as an agent for another person for the publication of libelous material depends very much on the facts of each case.  Ultimately, the court has to analyze the facts in each individual case and then consider the question of liability based on the claim formulated by the claimant.

181.  Turning to the facts of the present case, on the basis that the Plaintiff is relying on the Videos and the Articles as the original publications, the Defendant should not be held liable for the publication of the pleaded Words contained in the Videos and the 1^st Article (“the Non-responsible Words”).  On the other hand, it may be argued that the Defendant is responsible for the publication of the pleaded Words in the 2^nd and 3^rd Articles (“the Responsible Words”).

182.  The Non-responsible Words were published by Lee and Apple Daily as a result of the journalistic investigation carried out by them.  The Defendant supplied the material for the investigation, and he made the arrangement for Lee to visit the Mongkok Shop for the demonstrations of the Malpractices.  Yet the Defendant did not have any control as to how the story contained in the Videos or the 1^st Article was to be reported.  In fact, Lee and Apple Daily carried out their own investigation, including visiting the Plaintiff’s warehouse in Hong Kong, tracing the transportation of the Plaintiff’s products in Hong Kong and commissioning the independent report about the contents of the Plaintiff’s turtle jellies.  There were hardly any statements made by the Defendant which were included in the 1^st Video.  The three passages in the 1^st Article mentioned in §35 above originated from Lee who made the observations after carrying out the investigation in the Mongkok Shops.  The Words in the 1^st Article referred to in §34 above might have been uttered by the Defendant to Lee.  However, the most important thing is that the Defendant had no control as to how the story was to be presented.  He did not even know whether Lee would publish the story at all.  Neither had he seen or assented to the reports in their final forms.  Under such circumstances, there is no basis to make the Defendant liable as the publisher of the Non-responsible Words, or to say that Apple Daily and Lee were publishing those words as agents for the Defendant.   

183.  On the other hand, I am of the view that the Sun and Oriental Daily can be considered as agents of the Defendant in publishing the statements made by him in the Press Conference.  First, it is not disputed that the 2^nd and 3^rd Articles accurately contained the statements made by the Defendant in the Press Conference.  Second, the purpose of a press conference is for someone to make statements to the general public through the press.  The maker of any statements in a press conference knows that their statements would be reported in the press, and that was exactly what happened in the present case.  The Defendant also knew that Hong Kong reporters would be present in the Press Conference.  Under such circumstances, even though the Defendant had not perused the final drafts before their publications, the Defendant should be held responsible for the publication of the 2^nd and 3^rd Articles provided that they accurately contained the statements made by him in the Press Conference.

184.  I must emphasize that all these discussions are obiter only.  As I find in favour of the Defendant on the justification defence, it is quite unnecessary for me to address these particular issues.  However, this case highlights the complications that may arise from different formulations of a defamation claim depending on which are the original publications to be sued.  In modern world where information passes through the internet and social media without borders, it would be important for claimants to focus on these issues when formulating their claims in the future.

(ii)  Whether there is room for the application of the double actionability rule?

185.  As the Plaintiff is relying on the 2^nd and 3^rd Articles as the original publications which apparently contained the statements made by the Defendant in the Press Conference in Guangzhou, there is no room for the application of the double actionability rule for the reason that the publications concerned (i.e. the 2^nd and 3^rd Articles)  were made in Hong Kong.  The issue is therefore whether the Defendant had control over or participated in the publication of these materials or whether the Sun and Oriental Daily were agents for the Defendant in the publication of the same, which has been addressed by me in the last section.

THE CLAIMS FOR MALICIOUS FALSEHOOD AND CONSPIRACY TO INJURE

186.  As mentioned above[24], it is quite unnecessary for me to address the malicious falsehood claim separately.  As I find in favour of the Defendant on the defence of justification, the Plaintiff’s claim for malicious falsehood must fail.

187.  For the reasons and the factual findings mentioned in §§143 to 155 above, the Plaintiff’s claim for conspiracy to injure likewise fails.

QUANTUM

188.  Based on my findings and rulings above, it is not necessary for me to address the issue of quantum.  In any event, the parties have not spent a lot of time canvassing such issue in their submissions, and the Plaintiff has only supplied the voluntary particulars listing out the quantum of the claim shortly before the trial.

189.  There is always a possibility that this case may go elsewhere and a contrary view may be taken on the issue on liability.  If this is the case, this court may have to deal with the question of quantum.

190.  Despite that, I find it inappropriate for me to give my ruling on quantum in this Judgement.

191.  It is trite that assessment of damages would have to be made based on the factual matrix of the case.  In this Judgment, I made various factual findings including that the Malpractices had been adopted by the front-line staff in the Plaintiff’s shops and that the Plaintiff had given express instructions to their staff to engage the Malpractices.  These findings would have serious implications in the assessment exercise.  In case of a successful appeal on liability, the appellate court would probably disturb some of my factual findings.  As I see it, different scenarios may arise depending on the judgment of the appellate court, and so it would be more prudent for me to make the assessment based on the appellate decision.  Hence, I decline to deal with the issue of quantum at this stage.

192.  For the above reasons, I dismiss the Plaintiff’s claims.  I also make a costs order nisi in favour of the Defendant with certificate for 2 counsel, which shall be made absolute 21 days after the date of the handing down of this Judgment.