MAK SHIU TONG v. YUE KWOK YING AND ANOTHER

CACV 199/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 199 OF 2002

(ON APPEAL FROM HIGH COURT ACTION NO. 3758 OF 1998)

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D E C I S I O N

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1. This is an application by the Plaintiff for security for costs of an appeal by the 1st Defendant against an order of Chung J striking out the 1st Defendant's Amended Defence on the grounds that it contained no triable defence and/or that it was frivolous and vexatious and/or that it was an abuse of the process of the Court, and giving the Plaintiff liberty to enter judgment against the 1st Defendant for the Plaintiff's claims in HCA 3758/1998 as set out in the Statement of Claim, and ordering that the costs of the action up to the date of that order including the costs of the strike-out application and any related reserved costs be paid by the 1st Defendant to the Plaintiff.

Background

2. By way of background, in HCA 3758/1998 the Plaintiff sued the 1st and 2nd Defendants for defamation for certain statements made by the 1st Defendant and published in "Eastweek" about the non-completion of buildings on the Mainland of which the Plaintiff (or companies associated with him) was the developer.

3. The 1st Defendant was employed by the 2nd Defendant. The 1st Defendant filed a Defence but the 2nd Defendant did not. Judgment was entered against the 2nd Defendant in default, and an application to set it aside was dismissed by Findlay J.

4. The action against the 1st Defendant continued. His case was set out in an Amended Defence and Counterclaim signed by solicitors. Two sets of Further and Better Particulars signed by counsel were given of that pleading.

5. By a summons filed in December last year, the Plaintiff sought to strike out the 1st Defendant's defence and counterclaim. The first hearing was aborted due to the 1st Defendant's illness, and the summons was heard in February and March this year, a month before the trial was scheduled to start. The judge struck out the 1st Defendant's Amended Defence and Counterclaim and entered judgment for the Plaintiff.

6. In his Notice of Appeal, the 1st Defendant had sought an order that " (1) 案件繼續進行，從速另訂新日期審訊 (2) 任何上訴法庭認為公平，合理的命令" but it was submitted by his counsel at this hearing that the appeal would only be against the striking out of the defence, not the striking out of the counterclaim.

Application for security for costs

7. The 1st Defendant has on affirmation admitted that he is impecunious and his counsel did not dispute the Plaintiff's allegation that he (the 1st Defendant) would be unlikely to be able to satisfy any costs order against him should he fail in his appeal. Nor did the 1st Defendant's counsel dispute the quantum of the costs sought by the Plaintiff.

8. It was also common ground that the law governing the exercise of this court's discretion in an application for security for costs of an appeal is as stated by Ribeiro JA in Chan Sai Lun Henry v Chan Wai Wah, Lily-Ann CACV 143 & 205/1998):- whilst the impecuniosity of the appellant would normally entitle the respondent to get security for costs of an appeal, the Court may in some circumstances decline to order security notwithstanding the appellant's impecuniosity where, for instance, it is satisfied that the appeal raises real and substantial issues and that the appeal bears a sufficiently good chance of success to justify exposing the respondent to the injustice of having to bear his own costs even if he successfully resists the appeal.

9. It was submitted on behalf of the 1st Defendant that his appeal bears a sufficiently good chance of success such as to justify a departure from the normal situation.

10. The Notice of Appeal, which was drafted by the 1st Defendant in person, contained only the following bare grounds of appeal:-

"(1) 鍾安德法官完全沒有充份考慮上訴人呈交的錄音紀錄。

(2) 鍾安德法官沒有充份考慮上訴人之呈交文件和証人証供。

(3) 鍾安德法官在考慮上訴人的辯護理由時，錯誤地解識事實証明和公平評論的法律意思。"

11. At the hearing, the 1st Defendant's counsel put forward the following new grounds of appeal:-

"(4) the learned judge erred in ruling that the 1st Defendant had admitted that [sic] the Plaintiff's statement of claim pertaining to defamatory meaning and imputations pleaded in paragraphs 9 and 10;

(5) the learned judge misdirected himself by taking into consideration the judgment of Findlay J in Findlay J's judgment against the 2nd Defendant;

(6) the learned judge erred in taking as evidence the Further and Better Particulars filed herein by the 1st Defendant, putting too strict an interpretation and too much weight on the said particulars".

12. As no date has yet been fixed for the appeal, leave was not required for the amendment of the Notice of Appeal by the addition of the above grounds and the hearing proceeded on the basis that those grounds had been added.

Original grounds of appeal

13. In relation to the merits of the appeal, the original grounds of appeal were stated so rudimentarily that it is difficult to see what the precise grounds are, let alone consider what their chances of success would be on appeal. It is not satisfactory to have general grounds of appeal (Hong Kong Civil Procedure 2002 Vol.1, para 59/3/8).

Ground No. (4)

14. I then turn to the new grounds. In relation to ground No. (4), the 1st Defendant's counsel submitted that the "most glaring mistake" made by the judge was to find that the 1st Defendant was deemed to have admitted the defamatory meanings and imputations of the words in the article.

15. The meanings had been pleaded in paragraphs 9 and 10 of the Statement of Claim. In his Amended Defence (paragraph 4), the 1st Defendant pleaded only that:-

"The 1st Defendant denies paragraphs 7, 8, 9, 10 and 11 of the Claim in that the 'someone' mentioned in the Words referred to the relevant company. Save that the Plaintiff's name was specifically referred to, those Words have no connection with the Plaintiff" (emphasis supplied).

There was no specific denial or non-admission of any of the defamatory meanings contained in paragraphs 9 and 10 of the Statement of Claim.

16. The 1st Defendant's counsel submitted that the judge was wrong to have found that there was a deemed admission of the defamatory meaning, but the only ground for this submission was that there was a general traverse in the Amended Defence.

17. At this stage, it is not appropriate for me to say any more than that it is generally understood that:-

(a) a denial or non-admission of an allegation in a pleading must be specific. Order 18 rule 3(3) RHC provides that "every allegation of fact made in a statement of claim which the party on whom it is served does not intend to admit must be specifically traversed by him in his defence ... and a general denial of such allegations ... is not a sufficient traverse of them";

(b) whilst a general traverse may be adequate for immaterial allegations (Hong Kong Civil Procedure 2002 Vol 1 para. 18/13/5), in a pleading where defamation is the cause of action, the meaning of the words is a most material allegation; and if the defendant wishes to challenge the meaning alleged, it would be necessary for him to specifically deny (or at least, not admit) it.

18. In light of the above, it is difficult to see how it can be said that the judge had made a "glaring mistake" in holding that in the Amended Defence (which was signed by the 1st Defendant's legal representatives), the 1st Defendant did not deny the defamatory meaning alleged. I do not consider that this submission, whether taken singly or together with the other points raised by the 1st Defendant's counsel, has a sufficiently good chance of success on appeal as to justify exposing the respondent to the injustice of bearing his own costs in resisting the appeal.

Ground No. (5)

19. The 1st Defendant's counsel submitted that the judge had been misguided and unduly influenced by the judgment of Findlay, J who had refused to set aside the default judgment given against the 2nd Defendant. It was submitted that Findlay J's judgment had been given when the 1st Defendant had "not gathered together his documents and his witnesses".

20. It would appear from a reading of the judge's Decision however that he was aware that Findlay J's judgment did not bind the 1st Defendant, and that he (the judge) had reached his decision independently on the grounds stated in his Decision. Accordingly, I do not consider that this submission has a sufficiently good chance of success on appeal as to justify exposing the respondent to the injustice of bearing his own costs in resisting the appeal.

Ground No. (6)

21. The last ground involves the pleas of justification and fair comment. By way of preamble, the 1st Defendant's counsel submitted that Further and Better Particulars should not be treated as evidence, and the judge interpreted them too strictly. They are of course not evidence, but they are meant to set out the material facts on which the party relies for his defence.

22. Paragraph 7 of the Amended Defence pleaded:-

"What I had told the reporter of Eastweek at the interview are true in their entirety, can be proved by facts and are extremely fair news commentary. They are not defamatory of the Plaintiff. Particulars:

A. Whilst the relevant persons/companies were demanding payment of arrears, they already knew that works and construction of the whole project had been suspended since April 1995 and would not be resumed.

B. The Plaintiff promised to pay interest by way of compensation and to complete the works by 1996, but did not fulfil such promises in their entirety.

C. The small properties owners had applied to the China International Economic and Trade Arbitration Commission, Shenzhen, for arbitration and have won.

D. Some of the relevant persons/companies bought rights in respect of certain shares without making payment and, at the outset, planned to use public money to purchase a listed company".

23. In Further and Better Particulars given by the 1st Defendant in January 1999 of the "relevant persons/companies" said to be demanding payment of arrears even though they already knew that works had been suspended (in paragraph 7A), the 1st Defendant pleaded that he was referring to "中翹發展有限公司" the Plaintiff's company.

24. In another set of Further and Better Particulars given by the 1st Defendant in April 1999 of the dates when such demands were made even though the Plaintiff's company already knew that works had been suspended since April 1995 and would not be resumed, the 1st Defendant pleaded that "the oral demands were made in June, November 1993 and July 1994", i.e. before April 1995.

25. By reason of the disparity in dates, the judge found that the defence was untenable.

26. The 1st Defendant's counsel submitted that paragraph 7A was a "grammatical mistake" and that it should read:

"whilst the relevant person/companies were demanding payments (throughout 1993, 1994, 1995, 1996) of arrears, they already knew that works and construction of the whole project had been (would have to be) suspended since (by) April 1995 and would not be resumed".

27. Insofar as it is suggested by the above submission that when the Plaintiff's company made demands for payment in 1993 and 1994, it already knew that construction would be suspended in 1995, this is of course a different case from that pleaded and which was before the judge. The 1st Defendant had been given a skeleton of the Plaintiff's counsel's submissions in both English and Chinese some 6 weeks before the hearing, and no attempt to meet the point (by way of an application to amend the Amended Defence and/or the Further and Better Particulars) had been made.

28. Insofar as it is suggested by the above submission that the Plaintiff's company made demands for payment in 1995 and 1996, after the works had been suspended in April 1995 to its knowledge, the 1st Defendant's counsel referred to three letters in 1996 at D/1003, D/1114 and D/1134. However, these were not demands for payment made by the Plaintiff's company, these were demands for completion of the works or for repayment of money made to the Plaintiff's company from Gilbert Tan Kok Kwang, Hee Theng Fong & Co. Solicitors, and Edward Ng Kwok Choy, respectively.

29. It is therefore difficult to see how the 1st Defendant has a sufficiently good chance of success on appeal as to justify exposing the respondent to the injustice of bearing his own costs in resisting the appeal. Even if he were to be given leave at the appeal to further amend his case along the lines set out in paragraph 26, it is difficult to see how that would be allowed without his having to pay the costs of the appeal, since he would be putting up a different case from that before the judge.

30. In relation to paragraph 7B, the judge held that even if it were assumed to be true that the Plaintiff did promise to pay interest and to complete the works by 1996 and had not fulfilled those promises, that would not be justification of the defamatory meaning of the words, which was that the project was a scam devised by the Plaintiff, that he had swindled money from investors under the pretence but with no intention of building or developing any property and that the money so obtained by swindling was then used by the Plaintiff privately to purchase listed companies in Hong Kong. There could be genuine reasons for non-fulfilment of those promises.

31. That would be so reading paragraph 7B independently of paragraph 7A. The 1st Defendant's counsel has suggested however that the particulars were a "grammatical mistake" and that paragraph 7B should be taken together with paragraph 7A as amended in the way set out in paragraph 26 above, to the effect that the Plaintiff's knowledge that the works would not be resumed preceded his promise to resume or complete the works.

32. However that would entail the 1st Defendant having to be given leave at the appeal to so amend his case, and it is difficult to see how that would be allowed without his having to pay the costs of the appeal.

33. In relation to paragraph 7C, the judge had come to the same conclusion as that for paragraph 7B, i.e. that even if it were assumed to be true that the small properties owners had succeeded in an arbitration against the Plaintiff's company, that is not justification of an allegation of a scam or a swindle with connotations of dishonesty.

34. The 1st Defendant's counsel submitted that the judge should not have dismissed paragraph 7C without hearing evidence from witnesses. However the judge had assumed the truth of paragraph 7C as pleaded.

35. It would only be if the arbitrator had correctly found that the Plaintiff had perpetrated a scam or swindle in undertaking the project that there would be justification. That however had not been pleaded as a material fact.

36. In the circumstances, it is therefore difficult to see how the 1st Defendant has a sufficiently good chance of success on appeal as to justify exposing the respondent to the injustice of bearing his own costs in resisting the appeal.

37. Finally I come to paragraph 7D, which reads "some of the relevant persons/companies bought rights in respect of certain shares without making payment and, at the outset, planned to use public money to purchase a listed company".

38. Further and Better Particulars were sought in Request 7.2 of the "name of the company the rights in respect of which certain shares had allegedly been purchased", and separately in Request 7.4 of the "name(s) of the alleged relevant persons/companies who had at the outset allegedly planned to use public money to purchase a listed company".

39. In the April 1999 Further and Better Particulars, the 1st Defendant supplied the same answer in relation to both requests, viz. "譚建生"，黃錦輝" ("Tam Kin Sang", "Wong Kam Fai").

40. No allegation has been made of any connection of the Plaintiff with this company (if "Tam Kin Sang", "Wong Kam Fai" is a company, which has been disavowed by the 1st Defendant's counsel) or persons. As such, it is difficult to see how paragraph 7D could be justification of the alleged defamation of the Plaintiff.

41. In respect of this, it has been submitted by the 1st Defendant's counsel that the judge was wrong because these answers "have to be canvassed at the trial as to what they meant". I must say that submission is surprising, whether in its audacity or candour.

42. Insofar as it has been submitted in the alternative that this was pleaded to support the 1st Defendant's case that the allegedly defamatory words were not spoken of the Plaintiff but of someone else, then it should in any event be struck out as it is not a particular of justification or fair comment.

43. As to fair comment, the 1st Defendant had in his Further and Better Particulars pleaded that the words "無諗住起已經唔係好事" were fair comment, the words "唔係好事" being comment. The judge read the preceding words to mean that the Plaintiff never intended to construct the buildings. The 1st Defendant's counsel submitted that was too literal an interpretation and what was meant was that the Plaintiff "never thought of building up to the finish".

44. However even if the plan was never to finish the construction of the buildings, the sting of the alleged defamation is that the Plaintiff "never" thought of constructing or completing the buildings. This is seen from the words "有人收咗錢就無諗過起樓" so it is difficult to see how the difference in interpretation between the judge and the 1st Defendant makes any difference.

Order

45. That disposes of all the additional grounds of appeal. Given the circumstances set out above, whilst I am mindful of the fact that this is an appeal against a strike-out and not after a trial, I cannot see how it can be said that any of the points raised by the 1st Defendant, whether singly or cumulatively, has or have a sufficiently good chance of success on appeal as to justify exposing the respondent to the injustice of bearing his own costs in resisting the appeal. I would therefore give an order in terms of the Plaintiff's summons with an order nisi that the 1st Defendant bear the costs of this application to be taxed if not agreed.