CENTA-CITY INDEX COMPANY LTD AND OTHERS v. HONG KONG ECONOMIC JOURNAL COMPANY LTD AND ANOTHER

HCA 237/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 237 OF 2011
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J U D G E M E N T

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1. The plaintiffs bring this action for libel against the defendants.

INTRODUCTION

2. The 1^st plaintiff, Centa-City Index Company Limited, computes, compiles and owns Centa-City Index (“CCI”) and Centa-City Leading Index (“CCLI”) (collectively “the Indices”).

3. The 2^nd plaintiff, Centaline Property Agency Limited (“Centaline”) carries on real estate agency business in Hong Kong.

4. The 3^rd plaintiff, Centanet Company Limited, manages the website in which CCI and CCLI are published.

5. The 1^st defendant, Hong Kong Economic Journal Limited, is the proprietor and publisher of Hong Kong Economic Journal (“HKEJ”).

6. The 2^nd defendant, Chan King Cheung, is the editor-in-chief of HKEJ.

7. The plaintiffs’ claim against the defendants for libel concerns two articles in the Chinese language entitled “Compiling property prices? Pack up!” (“the First Article”) and “Index can manipulate the market” (“the Second Article”) published by HKEJ on 16 and 17 December 2010 respectively relating to CCI and CCLI.

BACKGROUND

8. In 1998, Centaline jointly with City University of Hong Kong (“City U”) developed CCI and CCLI to reflect the residential property price movement in Hong Kong.

9. CCI is a monthly index of property prices. It is based on data obtained from transactions of constituent housing estates registered in the Land Registry.

10. CCLI is a weekly index of property prices based on data from provisional agreements in transactions of constituent housing estates handled by Centaline.

11. CCI and CCLI are published in Centaline’s website, the newspaper AM730, Centaline’s branches, television screens in taxis and press releases in newspapers including Sing Tao Daily, HKEJ and Wen Wei Po.

12. In mid-2008. City U sold the intellectual property rights of the Indices to Centaline. Two professors from City U became Centaline’s consultants in relation to the Indices.

13. At the material time, the Indices were based on 86 constituent estates.

14. On 19 November 2010, the Hong Kong Government announced new administrative measures which included a special stamp duty (“SSD”) to be effective from 20 November 2010 to curb property speculation of the residential property market in Hong Kong.

15. It was the general expectation/sentiment that property prices would drop as a result of the new administrative measures.

16. However, contrary to popular expectations, the trend of the CCLI during the 2-3 weeks period following the Government’s announcement showed property price increase.

17. On 14 December 2010, Ming Pao published an article entitled “The Centa Index rose rather than fell – Government made enquiry” which reported that the CCLI was increasing contrary to market conditions. It was stated that:-

“The Centa-City Leading Index, which is always “considered” to be the most capable of reflecting the instant property market condition, shows a 1.33 % “accumulated increase” in secondhand property prices for 2 consecutive weeks after the Government has imposed tough measures by levying special stamp duty, its performance was quite contrary to the general public’s understanding.”

18. On the same day, Shih Wing Ching (“Shih”) of Centaline and Chan Yan Chong of City U each published an article on AM730 and Apple Daily respectively. In short, Shih said that the trend shown by CCLI was indeed correct because front-line agents actually observed price increase. On the other hand, Chan Yan Chong indicated that he was unable to provide any explanation for the anomaly.

19. On 15 December 2010, an article was published in the Apple Daily entitled “Data of secondhand property prices has been lagged for at least 3 weeks the Centa-City Index did not reflect the current conditions”. The article:

(a) Referred to the aforesaid anomaly;

(b) Stated that even the Government was concerned as to why CCLI could not reflect the effectiveness of the new administrative measures and inquired from the plaintiffs on CCLI’s methodologies;

(c) Referred to a number of ambiguous and inconsistent explanations for the anomaly provided by the plaintiffs and City U at different times;

(d) Pointed to the fact that a new qualification was added in the plaintiffs’ website on 10 December 2010 stating that CCLI was “based on anticipated dates of formal agreements for sale and purchase, whereas there is usually a 14 days’ time lag between the formal agreements for sale and purchase and the preliminary agreements for sale and purchase”; and

(e) Referred to an interview with Shih in which he said that he expected that increases in the CCLI figures for the next 2 weeks would more likely be slowing down but there would be no chance that they would stop. He reiterated (from what he learnt through his estate agents) that property prices did not drop in the market and that the Indices accurately reflected the situation.

20. As was stated in the Centaline’s website, the CCLI, published every Friday, reflected the secondary residential property prices for the two weeks period ending five days before the publication date. Thus from the CCLI published on 7 January 2011 it was stated that it reflected the secondary residential property prices from 27 December 2010 to 2 January 2011 (based on scheduled formal agreement date). In view of the usual 14 day average time lag between provisional and formal agreements, the relevant provisional sale and purchase agreements would have been concluded a few weeks before, some time further back.

21. The above explanation as to the timing of the data used had been widely reported in the 14 December 2010 edition of Ming Pao and 15 December 2010 edition of Wen Wei Pao.

22. It is also the explanation given by the plaintiffs and pleaded in para 4 of the Amended Reply with a table setting out –

(i) the dates of publication of the relevant CCLI;

(ii) the scheduled period in which formal agreement was expected;

(iii) the period in which the provisional sale and purchase agreement was entered into;

(iv) the actual index.

pleaded in para 4(7) thereof.

23. On 16 December 2010, HKEJ published the First Article the certified translation of which reads:

“Compiling property prices? Pack up Law Gang Finance DNA

<Ming Pao> on Tuesday reported that “The Centa-City Leading Index, which is always “considered” to be most capable of reflecting the instant property market condition, showed a 1.33% “accumulative increase” in secondhand property prices for 2 consecutive weeks after the Government has imposed tough measures by levying special stamp duty, its performance was quite contrary to the general public’s understanding. Insiders revealed to our newspaper that in fact the Transport and Housing Bureau telephoned Centaline Property Agency last Friday to enquire about the calculation methodology of the Index with a vew to being able to know why the Index was different from the market trend”.

The Index was set up jointly by Centaline and City University. On the same day Shih Wing Ching of Centaline stated in <am 730> <C View> “Concerning how the “Centa-City Index” is calculated, ‘professors from City University have explained clearly in the website, interested readers can take a look on the website.” However, Chan Yan Chong of City University who was involved in founding the Index, stated on the same day in <Apple Daily> <Chan Yan Chong’s Column>: “several reporters asked me why? I am also unable to provide a reasonable explanation…”

It seems that everyone is passing the buck to each other and prevaricating. I always consider these indices in the market not reliable. I therefore visited City University’s website to check out for this “clear explanation”. In fact the Index only covers 50 estates. How many estates are there in Hong Kong? Just grab a book of maps and flip it through, I am afraid there are not only 500 [estates]. Even if the 50 [estates] are all large estates, then how representative could this be? Not mentioned; what kind of 50 [estates]? Also not mentioned. It is surprising that a university do things in such a way and there is not even a single word mentioned about the samples.

What is more ridiculous is that, on the compilation methodology, there is surprisingly only one sentence ‘Regression models are used’. What regression? As for me even I am [only] writing in newspaper, I would still set out the entire regression formula. A professor did regression and yet it could not be revealed to the public. Pack up.

Note: The so-called Centa-City Leading Index calculation methodology of City University:

http://fbweb.cityu.edu.hk/ms/cci/content.htm

lawgang@gmail.com”

24. This was followed by the Second Article published also by HKEJ the following day, i.e. 17 December 2010, the certified translation of which reads as follows:

“Index can manipulate the market Law Gang Finance DNA

To tell people to pack up, [one] doesn’t lightly say so. Yesterday’s article mentioned that Centaline and City University had jointly set up a property price index, when it was found that the the data were dubious, the persons-in-charge of both sides passed the buck to each other. The one surnamed Shih of Centaline told you to contact City University, the one surnamed Chan of City University said he had no idea, and the compilation methodology stated in City University’s ‘Centa Index Special Page’ is ambiguous in its expressions, and there is even a link which brings you ‘back to Centaline’, really really interesting.

This Index, its status in the property market is equivalent to Hang Seng Index in Hong Kong stock [market]. If that the Hang Seng Index company prevaricated as such, what do you think the consequences would be? Would it be accused of manipulating the market? The Hong Kong Government monitors the financial [market] well, but when faced with cheating in the property market, [it] immediately becomes an inept loser.

To say that they are cheating is not lightly said. ‘This stall’ has also made an affordability ratio. Myself of course took a suspicious attitude, I calculated the affordability ratio according to international practice, dividing the Rating and Valuation Department’s property price index by the median household income of private properties (not including public housing) in the Census and Statistics Department’s General Household Survey (both being public information), and then multiplying it by a factor (40000/3), thereby arriving at an affordability ratio similar to that of ‘this stall’. If you believe in them, [that means the] current property prices are merely equivalent to the Year 2000’s, and one would be stupid not to purchase; but if you believe in the official data, current property prices are in fact equal to the level in May 1997, just a few months before reaching the peak. You would groan stupid only if [you] purchase.

Such discrepancies cannot possibly be errors. No matter it was so done intentionally or unintentionally, these data have already had the effect of manipulating the market.

lawgang@gmail.com

·    Centaline and City University have jointly set up a property price index, when it was found that the data were dubious, the persons-in-charge of both sides passed the buck to each other. (online pictures)”

THE  PRESENT  ACTION

25. Due to the publication of the First Article and the Second Article, the plaintiffs, on 10 February 2011, commenced the present action against the defendants for libel. The plaintiffs’ claim being put on the footing of the ordinary and natural meaning as well as the innuendo meanings in both articles.

26. By way of defence, the defendants alleged the meanings of the words in the First Article and the Second Article to be true in substance and in fact, and pleaded justification. The defendants further relied on the defence of fair comment.

27. In reply thereto, the plaintiffs pleaded positive facts to dispute the applicability of these defences and, in connection with the plea of fair comment for the Second Article, pleaded “malice” to rebut it.

THE  ISSUES

28. Firstly, identification is not in issue as the defendants have accepted, despite what is in the pleadings,  that both the First Article and the Second Article refer to the plaintiffs.

29. There remains therefore 4 main issues:

(1) What are the natural and ordinary meaning of the words in the First Article and the Second Article;

(2) Are they defamatory of the plaintiffs;

(3) If the words in question are defamatory of the plaintiffs, whether

(a) The defendants can establish the defence of justification

(b) The defendants can establish the defence of fair comment

(4) If the court finds against the defendants on the aforesaid issues, what are the appropriate remedies?

PLAINTIFFS’  CASE

30. It is the plaintiff’s case that words contained in the First Article and also in the Second Article bear the following natural and ordinary meanings.

31. In the First Article:

(a) CCLI was compiled and published by the plaintiffs without a proper basis and was invalid and unreliable;

(b) The plaintiffs were incompetent in computation and compilation of CCLI and should cease doing so;

(c) The plaintiffs were evasive as well as prevaricated about the compilation method of CCLI and sought to shift the responsibility to City U.;

(d) The plaintiffs unjustifiably concealed information material to the computation of CCLI.

32. In the Second Article:

(a) The plaintiffs have manipulated the property market by means of the Indices;

(b) The plaintiffs had intentionally sought to manipulate or manipulated the property market by publishing the Indices which did not truthfully reflect the conditions in the market;

(c) The Indices were compiled and published by the plaintiffs without a proper basis and were invalid and unreliable;

(d) The plaintiffs were evasive as well as prevaricated about the compilation method of CCLI and CCI and sought to shift the responsibility to Ctiy U.;

(e) The plaintiffs unjustifiably concealed information material to the computation of CCLI and CCI;

(f) The plaintiffs were involved in “cheating in the property market”;

(g) The plaintiffs had intentionally sought to manipulate or manipulated the property market by computing and publishing a home purchase affordability ratio which substantially differed from data obtained from the Government;

(h) To benefit the estate agency business of Centaline, the plaintiffs had sought to create an impression that the property market was rising, and thereby encourage the public to purchase property, despite the introduction of the special stamp duty on certain transactions recently announced by the Hong Kong Government.

33. It is therefore the plaintiffs’ primary case the above normal and ordinary meaning of the words of the First Article and also the Second Article were statement of facts and were defamatory of the plaintiffs.

DEFENCE

34. Firstly, the defendants take issue with the meaning given to the words in the First Article and in the Second Article by the plaintiffs.

35. The defendants say that it is indisputable that the First Article is commentary in nature and contains the author’s points of view on a matter that had generated keen public interest and attention.

36. The main defence relied on by the defendants in respect of the First Article is fair comment, but the defendants have also included a Lucas Box defence of justification.

37. For the purpose of the Lucas Box defence, it is the defendants’ case that the natural and ordinary meanings to be ascribed to the words in the First Article should be as follows:

(a) The CCLI was the product of the co-operation between Centaline and City U.;

(b) CCLI does not seem to reflect the actual secondhand property market condition following the Government’s imposition of the new administrative measures;

(c) When Shih talked publicly in respect of the said anomaly, he did not provide any explanation and simply referred readers to City U website for the computation methodology of the CCLI;

(d) On the other hand,  Chan Yan Chong stated publicly that he could not provide reasonable explanation for the said anomaly;

(e) Explanatory notes in the City U website relating to the calculation methodology of CCLI were too brief and insufficiently clear and open. They referred to “Regression models” having been used without setting out the entire regression formula.

38. By way of justification, the defendants say that if the court agrees with the defendants’ pleaded meanings as stated above, the defendants will seek to justify and prove the truth of the words with such meanings. In this respect, the defendants rely on the matters set out in paras. 15 (6) to 15 (15) of the Defence and it is the defendants’ submission that the matters raised in those paragraphs cannot be seriously disputed.

39. As for the defence of fair comment, it is the defendants’ case that if the court finds that the First Article bore the more serious defamatory meanings advocated by the plaintiffs, the defendants will proceed to rely on the defence of fair comment. It is also submitted by the defendants that the defamatory imputations complained by the plaintiffs were all generated from the author’s expression of his views in the First Article and include the following:

(1) “Compiling property prices? Pack up!”

(2) “It seems that everyone is passing the buck to each other and prevaricating”.

(3) “What is more ridiculous is that on compilation methodology, there is surprisingly only one sentence: ‘Regression models are used.’ What regression? As for me, even I writing in newspaper, I would still set out the entire regression formula. A professor did regression and yet it could not be revealed to the public? Pack up.”

40. The salient points relied on by the defendants in the defence of fair comment concerning the First Article are that :-

(a) It cannot be disputed that the words identified are comments which is apparent from the nature of the First Article;

(b) Matters concerning the accuracy and reliability of the Indices are matters of public interest, which is not denied by the plaintiffs, and at the material time, the “anomaly” had generated huge public concern, including that of Government;

(c) The author was entitled to express his views and comments on the subject, because –

(i) The new administrative measures were announced on 19 November 2010 and took effect the following day,

(ii) For two to three consecutive weeks, CCLI showed property price increase rather than decrease. That was contrary to public expectation and also prompted Government queries;

(iii) media hounded both Shih and Chan Yan Chong, but they were unable to provide cogent, coherent, or consistent explanation for the anomaly;

(iv) On or about 14 December 2010, Lai Ming Kai, (Vice-Chairman of Centaline) provided yet a third version of explanation for the anomaly;

(v) Upon checking the City U website, the author discovered that the Indices were calculated using 50 constituent estates which the author considered to be insufficiently representative. Moreover, there was no identification of these 50 constituent estates, let alone their locations and features;

(vi) The author noted that ‘regression models’ were used in the calculation of the Indices but the formula for such regression model was not set out in the website, contrary to the practice of established indices producers.

(d) It was under those circumstances that the author criticized the Indices for lack of transparency and clarity, hence questioning their reliability;

(e) In an attempt to rationalize the ‘lack of transparency’, the plaintiffs argued that they enjoyed intellectual property rights in relation to the Indices and that neither the plaintiffs nor City U could reasonably be expected to have published the entire regression formula in the plaintiffs’ website. The defendants say such explanation can be dismissed outright because:

(i) Various examples of compilers of indices have customarily provided the public with their calculation methodology including regression formula;

(ii) Whilst raw data gathered by the plaintiffs might involve intellectual property rights, it is difficult to see why the formula itself would involve intellectual property rights. In any event, the plaintiffs cannot have their cake and eat it. If they want to jealously guard their calculation methodology, they cannot gag public criticism of ‘lacking in transparency’;

(iii) The plaintiffs on the one hand suggested that it was unreasonable to expect them to publish their calculation methodology, yet on the other hand, they criticized the defendants for not contacting City U for clarification and relied on the statement in the website to the effect that for further information of the indices one is asked to contact Property Research Team, Department of Management Science, City University of Hong Kong.

(f) It was under those circumstances that the author criticized the Indices for lack of transparency and clarity, hence questioning their reliability;

41. As for the defence raised in respect of the Second Article, the defendants’ case is that it was a follow-up commentary from the First Article and began with reminding readers of why the author questioned the reliability of the Indices in the First Article. The author stressed the importance of reliability in property indices, drawing an analogy with the Hang Seng Index vis-à-vis the financial market. The author then proceeded to question the reliability of another product of the plaintiffs’ published in their website, namely the ‘affordability ratio’. In so doing, the author set about compiling his own version of ‘affordability ratio’ using data in the public domain. He then contrasted his own product with that of the plaintiffs to demonstrate their noticeable discrepancies. Lastly, the author pointed out that potential house buyers may take diametrically opposite decisions depending on which product they choose to rely upon. This was to demonstrate his conclusion that irrespective of one’s intention, indices or analyses could have the objective effect of market-rigging.

42. For the purpose of the Lucas Box defence of justification, the defendants submit that the words in the Second Article bore the  following lesser defamatory meanings :

(a) The CCLI was  the product of co-operation between  Centaline and Ctiy U.;

(b) Reliability of the said index was put in question as it did not seem to reflect the actual secondhand property market condition following the Government’s imposition of administrative measures to curb property speculations;

(c) When Shih talked publicly in respect of the said anomaly, he did not provide any explanation and simply referred readers to City U website for the computation methodology of the said index adopted by professors of Ctiy U.;

(d) On the other hand, on the same day, Chan Yan Chong stated publicly that he could not provide reasonable explanation for the said anomaly;

(e) Explanatory notes in the City U website relating to the calculation methodology of  CCLI were too brief and insufficiently clear and open. It is interesting to note that there was a hyperlink bringing one back to the plaintiffs’ website;

(f) The Hang Seng Index was subject to scrutiny by the Government but the same does not apply to property price indices;

(g) The plaintiffs’ website also published “affordability ratios” basing on data taken from the Indices. Reliability of these affordability ratios was questionable because they did not tally with affordability ratios derived from internationally adopted methodology and public data obtainable from the Rating and Valuation Department and the Census and Statistics Department;

(h) The two sets of  “affordability ratios” gave rise to substantial discrepancies which were too large to be explainable as mere deviations;

(i) Irrespective of whether it was intentional or not, the affordability ratios published in the plaintiffs’ website could have the effect of price rigging.

43. Once again, in so far as the defence of justification goes, the defendants say that if the court agrees that the Second Article merely bore the meanings as suggested by the defendants above, the defendants will attempt to justify and prove the truth of the words in those meanings by relying on the matters set out in paras. 18 (10) to 18 (21) of the Defence. Once again it is also submitted by the defendants that those facts and matters cannot seriously be disputed.

44. As for the defence of fair comment in respect of the Second Article, if the court finds that the Second Article bore the more defamatory meanings advocated by the plaintiffs, the defendants would proceed to defend the Second Article by the defence of fair comment by relying on the following salient points:

(a) There are considerable overlaps between the First Article and the Second Article, the subject matter being the same, with the Second Article as a follow-up;

(b) One of the new and main topics raised in the Second Article was the ‘affordability ratio’ published in the plaintiffs’ website which was calculated with reference to the Indices, the reliability of which the author had already questioned in the First Article;

(c) The plaintiffs did not set out the calculation methodology of their ‘affordability ratio’ in the plaintiffs’ website. The author set about constructing his own ‘affordability ratio’ using data obtainable in the public domain. He plotted his own graph, then compared it against another graph produced using the plaintiffs’ ‘affordability ratio’;

(d) The author was at pains to highlight the discrepancies between his own product and that of the plaintiffs’. That was the factual basis for the various expressions of opinions in the Second Article. The author did the following:

1. Used a graph to display the trend of affordability ratio over time plotted using affordability ratios published in the plaintiffs’ website compared with an affordability ratio graph compiled by the author using data from Rating and Valuation Department and data of household income from the Census and Statistics Department, using internationally accepted methodology.

2. By such comparison, demonstrated that the plaintiffs’ affordability ratio was significantly different from one compiled by the author. As such, the author put the reliability of the plaintiffs’ affordability ratio into question.

(e) It is the defendants’ case that the author was entitled to make not only such comparisons but to make honest comments. This matter was of great interest to the public:

1. If the affordability ratios published in the plaintiffs’ website is accepted, the level of property prices in December 2010 equated with that of year 2000 in terms of affordability which meant that it was a good time to buy;

2. However, if the graph plotted by the author is accepted, the level of property prices as of December 2010 equated with that of just several months prior to the peak in May 1997 in terms of affordability. It follows that it was risky and possibly foolish to enter into the market at that point.

3. The public interest in pointing out the aforesaid is obvious. The public could be misled into buying properties if the plaintiffs’ figures were relied upon. They could also be misled into thinking that the new administrative measures were unable to curb speculation and that property prices were likely to continue with an upward trend.

(f) The plaintiffs therefore say that the comments of the author clearly fall within the very wide and tolerant ambit of the defence of fair comment. Even if one considers them to be irrational, obstinate, exaggerated or simply too harsh, that is beside the point. They would still be covered by the defence of fair comment which is the embodiment of free speech.

(g) The court does not have to resolve the debate as to whose affordability ratio is more reliable. Once it is accepted that the debate was a genuine one, and that the concerns raised by the author were petinent, being his honest views, the burden will be on the plaintiffs to prove otherwise.

THE EVIDENCE

45. The plaintiffs called two witnesses, Professor Kelvin Yau Kai Wing (“Professor Yau”) of the Department of Management  Sciences at City University, and Ms. Roen Yeung Ming Yee, (“Ms. Yeung”) a manager of the Market Statistics Department  of Centaline Group Management Ltd.

46. Professor Yau gave evidence relating to two matters:

(a) The methodology for compiling the Indices & Regression Models; and

(b) The methodologies for constructing house price index.

47. In relation to the first matter, Professor Yau’s evidence was that the Indices were based on 86 constituent estates which included about 275,000 housing units. After the sale and purchase prices from the 86 constituent estates are collected either by the 2^nd plaintiff (on a weekly basis) or from the Land Registry (on a monthly basis) their prices per sq. foot will be worked out and adjusted according to the developed statistical models.

48. Professor Yau, together with 6 other professors from his department of City University had developed Regression Models to adjust the unit price of each constituent estate since the qualities of properties may vary considerably. In making the adjustment, factors such as floor ares, age of building, location, direction, view, floor level and proximity to transportation will be taken into account.

49. Then the average of the adjusted prices of all transacted properties in an estate will be worked out and fit into a designed formula which will then generate the Indices.

50. The Regression Models used consist of confidential commercial information, thus City University cannot reasonably be expected to publish the entire Regression Formula used.

51. As for the methodologies for constructing house price index, Professor Yau had perused the article “S&P/ Case-Schiller Home Price Indices (Index Methodology)” referred to by the defendants. The methodology used there was the repeat sales model which makes use of information of repeated sales of the same property within the observation period.

52. However, the Indices were based on a different model called the Hedonic Price Model which makes adjustment by including available quality variables in the manner described by him.

53. Both approaches were widely accepted methodologies for compiling property price indices.

54. In cross examination, Professor Yau accepted that the CCLI was liable to give a wrong impression and could be misleading since the actual dates of the relevant transaction would be some 3 weeks old. He agreed that the word “most recent” could give a wrong impression without elaboration, but added that on or about 10 December 2010, Centaline did add on an annotation on its website giving that explanation.

55. As for the anomaly, Professor Yau said that although Ms. Yeung did call him up and spoke to him about it, his duty was only to compile the CCLI. At that time, he did not come to any conclusion as to the anomaly, but was of the view that there might be different reasons for it.

56. Professor Yau also agreed that the City U website was intended to give an overview or a broad idea as to how the CCLI was compiled, but not a full explanation as to the methodology used. He further said that after the IP rights in relation to the Indices were sold by City U to Centaline in about 2008 for HK$2.8 million, and because of the need to protect the intellectual property rights, City U would not be able to and would not have given the calculation methodology and database to a third party, even if asked. He went on to say that if the Indices had remained as a pure academic product, he would have published the methodology and results similar to the 3 examples shown to him.

57. Professor Yau further agreed that after the sale of the Indices to Centaline, the calculations and data collection were all done by Centaline, an interested party. Before the sale, City U would be in a position to avoid “undue influences” to the calculation results. However, he was not in a position to prevent possible unreliable data in the collection process.

58. Professor Yau was also cross examined as to his evidence that the CCLI was based on 86 constituent estates but in the City U website, reference was made to only 50 constituent estates. Professor Yau admitted that the City U website was not brought up to date and that although at one time the CCLI was based on 50 constituent estates, it has since been increased to the present 86 constituent estates.

59. In cross examination, Professor Yau also accepted that the regression formula was not set out in the City U website and agreed that however one wished to trust the Indices, there was no sufficient information to scrutinize how City U conducted the calculations and a third party would be unable to be satisfied that the Indices were reliable.

60. As for the affordability ratio, Professor Yau accepted that Ctiy U and his team had no part to play in its calculation and that he cannot say what formula was used by Centaline to work out the affordability ratio.

61. Ms. Yeung was the second witness called by the plaintiffs. Her evidence can be summarized as follows.

62. She holds a B. A. (Economics) degree from Simon Fraser University (Canada) and joined Centaline in 1996, thereafter being promoted to Head of Market Statistics Department. Her department is responsible for data analysis and statistics.

63. She gave evidence relating to the identities of the parties and much of the background facts which is not in dispute. Those matters will not be repeated here as they have already been set out above in this judgment.

64. She also gave evidence that in 2008, City U sold the intellectual property rights in respect of the Indices to Centaline and thereafter Professor Yau became one of the consultants for Centaline in respect of the Indices. Professor Yau also taught the Market Statistics team of Centaline how to build the regression model after which Centaline stated to build models for new constituent estates. New housing estates were added to the calculation of the Indices which were increased to 86 in 2007 and to 100 in 2011.

65. She also gave evidence as to the status and reputation of the Indices as well as their compilation.

66. It was her evidence that the plaintiffs hold the intellectual property rights in regard to the Indices and that the manner in which the Indices are calculated and the Regression Formulae used are valuable and confidential commercial information. Thus neither the plaintiffs nor City U can reasonably be expected to publish the entire Regression Formula in their websites.

67. As for the affordability ratio used by Centaline, it measured the ratio of the actual monthly cost of the mortgage to household income by taking into account the change in mortgage interest rate, price level and household income, and thus represent the ratio of the actual monthly cost of the mortgage to household income. That has always been the basis of the affordability ratio published by Centaline and this basis is expressly set out and explained in Centaline’s website.

68. The methodology used by Centaline in calculating the affordability ratio is the same method used by Sun Hung Kai Properties and is widely used in the industry. It also complies with international standard.

69. She defends that methodology used by Centaline for its affordability ratio as being one which takes into account the cost of the mortgage as being a much more realistic measure of the ability of household to afford housing than the crude price to income ratio. That is supported by the article “Real Estate Bubble” referred to by the defendants.

70. Ms. Yeung refers to the First Article and the Second Article. She says that the CCLI referred to in the First Article was the CCLI published on 10 December 2010 on the plaintiffs’ website. On the plaintiffs’ website there is a hyperlink which can direct the reader to a page in Centaline’s website. There, apart from setting out the selection criteria for the constituent estates used, it was also stated that the CCLI published on 10 December 2010 was based on property prices derived from transactions with an expected date of formal sale and purchase agreement within the previous week of 29 November to 5 December 2010.

71. Ms. Yeung goes on to say that on average, formal sale and purchase agreement is signed within 14 days after preliminary sale and purchase agreements. Therefore the CCLI published on 10 December 2010 was a reflection of transactions entered into by way of provisional agreements dated some 14 days before 29 November to 5 December 2010, i.e. between 15 and 21 November 2010.

72. The SSD was only announced on the evening of 19 November 2010 to be effective the following day.

73. As such the CCLI published on 10 December 2010 was largely based on data from transactions where the price was agreed before the announcement or imposition of the SSD and could not reasonably be expected to reflect the effect of the SSD on the property market.

74. This phenomenon was also explained by Lai Ming Kai, then Vice chairman of Centaline group in an article published in Ming Pao on 14 December 2010 and in another article published in Wen Wei Po on 15 December 2010.

75. She then referred to Shih’s column in AM730 on 14 December 2010 and the explanation he put forward for the anomaly as well as Professor Chan Yan Chong’s article in the Apple Daily on 14 December 2010 in which Professor Chan stated that he could not provide a reasonable explanation for the anomaly.

76. Ms. Yeung went on to say that the author of the Second Article used a different method for calculating affordability ratio and which was based on simply the price to income ratio, but toodkno account of the cost of mortgage and changes in mortgage rate. Furthermore the author of the Second Article not only sought to compare the two affordability ratios which were based on different methodologies, but also drew highly defamatory conclusions against the plaintiffs and the Indices.

77. Ms. Yeung criticized the Second Article for:

(a) Failing to mention the basis of calculation of Centaline’s affordability ratio which had been set out in its website;

(b) Wrongly and misleading suggested that the two affordability ratios were calculated on the same basis and therefore directly comparable;

(c) Wrongly and misleading suggested that the difference between the two ratios were not explainable by difference in the basis of their calculation;

(d) Wrongly and misleadingly suggested that under international standard practice, an affordability ratio should only be calculated on a price to income ratio;

(e) Wrongly and misleadingly suggested that Centaline’s affordability ratio was not calculated in accordance with or is contrary to international standard practice.

78. The defendants called only one witness, Law Ka Chung (“Law”), being the author of the First Article and the Second Article. He graduated from City U in 2002 with a Ph D degree in Economics as well as an M Sc. in Mathematics in 2005 from the Chinese University of Hong Kong. He is a freelance writer for the 1^st defendant as well as other newspapers including Hong Kong Economic Times, Apple Daily and iMoney.

79. He gave evidence that at the material time before the publication of the First Article and the Second Article, the property market in Hong Kong was hitting a record high and the Government had to impose the new administrative measures to curb property speculation. However, the published CCLI figures ran contrary to objective observations. As a result, there was widespread media coverage and enquiries on this anomaly.

80. In an article in Ming Pao on 14 December 2010, the plaintiffs confirmed that government officials had enquired as to how the CCLI was calculated and why it was different from the market observations.

81. The defendants further discovered that the plaintiffs’ website on 10 December 2010 giving the CCLI figures for the period 29 November to 5 December 2010, an annotation qualifying the Indices had been added to the effect that there was a 14 days time-lag between the formal agreements for sale and purchase and the preliminary agreements.

82. On the same day, Shih wrote an article in AM730 but did not give any explanation for this anomaly, nor did he suggest that it could be explained by the 14 days time-lag as stated in the said annotation. Shih merely stated that the Indices were compiled in a scientific way and referred readers to the City U website for the computation methodology, giving the impression that a clear and thorough explanation could be obtained from that website. Shih concluded by saying that the Government measure could not effectively bring about a price drop in the property market.

83. On the same day, Chan Yan Chong in his article in the Apple Daily said he could not provide any reasonable explanation for the anomaly.

84. The next day, Apple Daily ran an article which referred to the plaintiffs’ insertion of the said annotation to the Indices at the plaintiffs’ website and pointed out that prior to the said annotation, the plaintiffs had given inconsistent answers to queries on the reasons for such anomaly. It then referred to an interview with Shih who said that he expected that increases in the CCLI figures for the next two weeks would likely slow down but there would be no chance that they would drop.

85. After reading these articles, Law searched and browsed the website of City U in an attempt to study the computation methodology of the Indices but found no formula for the regression models stated in the City U website. The 50 constituent estates stated in the City U website were not identified. There was no indication as to the relative weight/importance/attribution represented by those constituent estates in the overall construction of the Indices which are all crucial information to meaningfully understand and assess the reliability of the Indices which had been compiled using a regression model.

86. Law formed the view that the presentation of the methodology was unsatisfactory, brief and unclear. Readers could not know how the Indices.

87. Under such conditions, he wrote the First Article followed by the Second Article, both of which were published in the HKEJ on 16 December and 17 December 2010 respectively.

88. Law said that although the First Article did refer to the plaintiffs, not every statement therein concerned the plaintiffs. The comments were principally directed at the insufficiency of information provided by City U at its website and the incomprehensiveness of their exposition on the computation methodology adopted for the compilation of the Indices. In particular, Law commented on the failure of City U to provide the formula for the regression model used in the City U website. The City U website address was given for the readers’ reference. Two graphs were also given in the First Article to compare the trend in the property market over time using data from the Indices on the one hand, and using data from the index given by Rating and Valuation Department on the other hand.

89. Law took issue with the plaintiffs saying that they enjoyed intellectual property rights in relation to the Indices and neither the plaintiffs nor City U could be expected to have published the entire regression formula in the website. Law contended that it is common practice for the compiler of an index to provide the entire regression formula to the public so that the public can know the basis of its compilation and can make appropriate judgment on its reliability.

90. If the plaintiffs or City U chose not to disclose the regression formula on the basis of ‘intellectual property rights’, then they could not justifiably prevent or gag the public from commenting on the lack of transparency and openness which can fairly lead to queries upon the accuracy or reliability of the Indices.

91. Law further said that his comment on the lack of transparency and openness as shown in the City U website could not be said to be dishonest or unfair because of the general statement in the plaintiffs’ website that “for further information on the indices, please contact Property Index Research Team, Department of Management Sciences, City University of Hong Kong”.

92. Law also said that he could not be challenged for not seeking further information from the City U due to the stance now taken by the plaintiffs that the regression formula, even if asked, would not have been given due to its guarding of the intellectual property rights.

93. In respect of the Second Article, Law’s evidence was that he repeated that the calculation methodology of the Indices were too brief and insufficiently clear and open. There was a hyperlink at the City U website bringing one back to the plaintiffs’ website. He then made a comparison with the Hang Seng Index which was subject to Government scrutiny and raised the rhetorical question as to the likely consequences if the Hang Seng Index was ambiguous and commented on why the Government did not see fit to monitor property price indices.

94. Law said that these comments were prompted by the plaintiffs boasting the status of the Indices as being “Hong Kong’s Definitive Property Price Indices” and that the Indices are superior to other property prices indices based on Land Registry’s sale and purchase data. They were also prompted by what Shih and Chan Yan Chong had said on the anomaly and from what was (or was not) available at the Ctiy U website.

95. In the second Article, Law also commented on the “affordability ratio” published on the plaintiffs’ website which was based on data taken from the Indices. The plaintiffs did not set out the underlying formula but Law understood them as relying on both the Indices as well as mortgage interest rates. Law then prepared a graph over time based on public data of property prices obtained from the Rating and Valuation Department and data of household income from the Census and Statistic Department and adopting a methodology commonly used by pundits. Law gave detail of the methodology used by him and came up with a graph which he compared with a graph prepared on the basis of the plaintiffs’ affordability ratio to show the discrepancies between the two over time. Law’s graph was coloured blue and the plaintiffs’ graph coloured red. Law set out the formula on how his graph showing the affordability ratio was prepared to let readers see and consider same on an informed basis.

96. According to the plaintiffs’ affordability ratio in its website, the level of property prices in December 2010 equated with that of year 2000 in terms of affordability which meant that it was a good time to acquire property in December 2010.

97. On the other hand, according to the graph prepared by Law, the level of property prices as of December 2010 equated with that of just several months prior to the property market peak in May 1997 in terms of affordability which meant that it would be risky and indeed foolish for someone to decide on acquiring property in December 2010.

98. Law therefore made the comments in the Second Article because if the public relied on the plaintiffs’ affordability ratio they were likely to be misled into thinking that the affordability of acquiring a property as of December 2010 was comparable to the affordability of acquiring a property in September 2000 when the property market at that time was in low tide, and were likely to be motivated into buying properties.

99. Further, if the public relied on the Indices, they would likely be misled into thinking that the new administrative measures were unable to curb property speculations and that property prices were likely to continue their upward trend.

100. In making his comments, Law relied on 3 articles –

(a) “Regression analysis” which deals with the internationally accepted explanation and methodology of ‘Regression models’ computation;

(b) “Real Estate Bubble” setting out the internationally accepted methodology for the calculation of housing affordability; and

(c) “S&P Shiller Home Price Indices (Index Methodology)” for the general and internationally accepted methodology in the construction of property indices.

101. Law went on at some length in defence of the methodology used by him in working out the affordability ratio and to attack the criticism of the plaintiffs as to the methodology used by Law.

102. Law then concluded by saying that as the plaintiffs have not set out their calculation methodology in its website, Law was still unable to see any basis for the plaintiffs’ assertion that the plaintiffs’ affordability ratio was calculated in compliance with international standard.

103. Law denied he had, in the Second Article, misleadingly omitted mentioning the plaintiffs’ methodology by saying that he had referred readers to his First Article and the plaintiffs’ website since the plaintiffs had claimed in their pleadings that the website “conspicuously set out the basis of calculation of the plaintiffs’ affordability ratio”. Readers could thus see for themselves the basis of the plaintiffs’ own calculation.

104. Law further pointed out that he had stated that his graph was compiled using international practice. In that he said he was supported by the article “Real Estate Bubble” which clearly stated that the “price to income approach” is still more commonly used by pundits.

105. Law also pointed out that the discrepancies between the two graphs could not have been “errors” meaning errors in calculations.

106. Both at that time and even now, Law still believed that he was entitled to use a methodology commonly adopted by pundits internationally to compile an affordability ratio graph and present it to readers for their comparison, that being the very right to make honest comments as guaranteed by freedom of expression.

107. Law honestly believed that the plaintiffs’ affordability ratio was not reliable in the light of the very special prevailing economic environment as explained and that he was entitled to question the reliability of the plaintiffs’ affordability ratio in the Second Article.

108. Lastly, Law says he did not impute dishonesty on the part of the plaintiffs but merely stated the objective likelihood that the plaintiffs’ affordability ratio could have the objective effect of affecting the property market.

DECISION

109. There is a minimal, if at all, of disputed facts in this case between the parties.

110. The background mattes which lead up to this dispute arising from the publication of the First Article and the Second Article are by and large common grounds and not disputed.

111. The main dispute between the parties revolve around the meanings, connotations and imputations generated by the words in both the First Article and the Second Article.

112. I shall start with the First Article.

113. It is the plaintiffs’ case that there are three main stings in the First Article:

(a) The use of the words “Pack up” which connoting invalid and unreliable and should cease doing so;

(b) The words “pass the buck” connoting shifting of blame or burden; and

(c) The words “cannot be revealed” connoting knowing concealment of matters that could not see the light of day.

114. As already stated, the main defence of the defendants is fair comment albeit that the defendants also rely on the defence of justification.

115. The main principles relating to the defence of fair comment are:

(1) The comment must be on a matter of public interest;

(2) The words used are comment and not fact;

(3) The facts on which the comment is based are substantially true or protected by privilege; and

(4) The comment is one that any man, however prejudiced and obstinate, cold honestly hold.

116. The defence of fair comment is an important element in the freedom of speech as was stated by Li C.J. in the case of Cheng Albert v Tse Wai Chun Paul (2000) 3 HKCFAR 339 at 345D:

“The freedom of speech (or the freedom of expression) is a freedom that is essential to Hong Kong’s civil society. It is constitutionally guaranteed by the Basic Law (art. 27). The right of fair comment is a most important element in the freedom of speech. In a society which greatly values the freedom of speech and safeguards it by a constitutional guarantee, it is right that the courts when considering and developing the common law should not adopt a narrow approach to the defence of fair comment. See Express Publisher Ltd. v Mo Man Ching Claudia [1999] 4 HKC 425 at 440, (1999) 2 HKCFAR 264 at 278. The courts should adopt a generous approach so that the right of fair comment on matters of public interest is maintained in its full vigour.”

117. It should also be noted what was said by Lord Nicholls of Birkenhead in the same case at page 353B:

“Liberty to make such comments, genuinely held, on matters of public interest lies at the heart of the defence of fair comment. That is the very object for which the defence exists. Commentators, of all shades of opinion, are entitled to ‘have their own agenda’. Politicians, social reformers, busybodies, those with political or other ambitions and those with none, all can grind their axes. The defence of fair comment envisages that everyone is at liberty to conduct social and political campaigns by expressing his own views, subject always, and I repeat the refrain, to the objective safeguards which mark the limits of the defence.”

118. As for the first element, there can be no question but that subject matter of the First Article related to a matter of public interest. The topic of the anomaly arising from the CCLI published on 10 December after the imposition of the SSD had caused concerns and raised all sorts of question not only in the financial and property sector, the media, but even amongst the general public as well as those relevant government departments.

119. Even Professor Yau in his evidence admitted there was such public interest generated in the media from that anomaly.

120. Coming to deal with the second element, namely, whether the words used are comments and not facts, I take note that the First Article was a commentary article published in a commentary section of the newspaper, thus readers are likely to understand the words as being comments made by the author.

121. The criteria for deciding that the words are comment and not fact can be found in #10.19 of  Carter-Ruck on Libel and Privacy, 6^th ed. where it reads:

“Although there is no single test articulated in the case law as to how the distinction between a statement of fact and a comment is to be drawn, a statement of fact has been said to be something that is susceptible of objective proof; it is something that ‘can be weighed, tested, dissected or analysed and conclusions drawn as to whether it accurately reflects the thing it purports to represent or the statement which the author has made’. A comment by way of contrast is something ‘which is or can reasonably be inferred to be a deduction, inference, conclusion, criticism, remark or observation. As such, it is something that is not capable of being verified or proved by reference to objective criteria.”

122. The words which form the heading of the First Article, namely, “Compiling property prices?  Pack up”. These words are definitely not facts. They may be said to be criticism, remark or observation, but certainly not facts. As such I am satisfied that they are comment.

123. Secondly, those words complained of , namely, “It seems that everyone is passing the buck to each other and prevaricating”, is a conclusion drawn by the author arising from Shih stating in AM730 that the City U website gives a clear explanation as to how the CCLI is compiled,  Professor Chan Yan Chong saying he had no explanation for the anomaly when asked, the City U website failing to give any formula for the methodology in calculating the CCLI but giving a hyperlink referring back to the Centaline website. Moreover, those words stated with “it seems..” which clearly showed it to be a conclusion or an inference.  As such it can only be comment and not fact.

124. Thirdly, the last paragraph of the First Article beginning with the words “What is more ridiculous”  and ending with the words “Pack up” are the criticism or observation by the author of the failure to set out the compilation methodology used in the regression model.  As such it can only be comment and not fact, albeit that the fact that the compilation methodology is not set out whether by City U or by Centaline is not in dispute, and in fact admitted.

125. As for the third requirement, namely, that the facts on which the comments are based are substantially true, this can be seen to be so in that the factual background leading to the First Article (and for that matter also the Second Article) are not in dispute and cannot be disputed. The factual background set out above forms also the factual matters upon which the First Article and the Second Article was based, and as such also objectively true.

126. The fourth requirement is that the comment is one that any man, however prejudiced and obstinate, could honestly hold.

127. In this context, Lord Nicholls said in Albert Cheng v Paul Tse

“Finally, the comment must be one which could have been made by an honest person, however prejudiced he might be, and however exaggerated or obstinate his views…It must be germane to the subject matter criticized. Dislike of an artist’s style would not justify an attack upon his morals or manners. But a criticism need not be mealy-mouthed in denouncing what he disagrees with. He is entitled to dip his pen in gall for the purpose of legitimate criticism…”

128. Based on this requirement, the plaintiffs contend that the comments were ‘not germane to the sting’ since criticism of  the plaintiffs’ deliberate concealment and/or the motivation were not germane to reliability or transparency of the Indices.

129. I do not accept that contention of the plaintiffs.

130. While it is true that Lord Nicholls did say that the comment must be germane to the subject matter criticized, in so saying, Lord Nicholls made it clear what those words meant by giving the example that the dislike of an artist’s style would not justify an attack upon his morals.

131. In the present case, the author’s criticism in the First Article was on the reliability of the CCLI. Intrinsically connected thereto was the lack of transparency in the failure to disclose the calculation methodology for the regression model used in compiling the CCLI, a matter which has now been cleared up by the evidence of Professor Yau saying that even if he was asked he would not have been able to disclose the methodology used due to the need to protect the intellectual property rights which rested with Centaline. In the same way, the shifting of responsibility between City U and Centaline with each referring the reader to the other for a full explanation of the methodology used when neither would have revealed it is also a matter which is steadfastly connected to the reliability of the CCLI.

132. If the plaintiffs are not prepared to disclose to the public the methodology used in the calculation of the regression model, but at the same time indicate on the plaintiffs’ website that the Indices are calculated based on a regression model ( but the details of which they would not reveal), then the plaintiffs cannot blame others including the author of the First Article for criticizing them for lack of transparency.

133. In all the circumstances, the only conclusion that I can come to on the First Article is that Law honestly held the views that :

(a) The CCLI were not reliable;

(b) That Shih and Chan were shifting responsibility to one another and prevaricating with neither willing to disclose the details of the methodology used in the regression model for calculating the CCLI; and

(c) There was a lack of clarity and transparency in the calculation methodology for the CCLI.

134. It should also be noted that while the words “Pack up” in the First Article may be thought to be overly harsh, however, having come to the conclusion that the author of the First Article did honestly believe that he was making a fair criticism of the lack of transparency and therefore reliability of the CCLI, he was entitled, in the words of Lord Nicholls to “dip his pen in gall”.

135. For the reasons given above, I find that the defendants’ defence of fair comment to have been sustained and proved in respect of the First Article.

136. Should it become necessary, I am also prepared to accept the contention by the defendants as to the natural and ordinary meaning ascribed to the words in the First Article which is set out in paragraph 37 of this Judgment and which can be justified by the matters pleaded in paras. 15(6) to 15(15) of the Defence.

137. I turn now to deal with the Second Article.

138. The Second Article was a follow up of the First Article. All that has been said above in relation to the First Article would be applicable to the Second Article.

139. However, having said that, the Second Article goes further than the First Article. It is therefore necessary for me to deal with those matters in the Second Article which goes further and beyond the First Article. It is not necessary for me to repeat those matters which have already been dealt with when dealing with the First Article.

140. One of the further matter in the Second Article which was not dealt with in the First Article relate to the affordability ratio.

141. A lot of time had been spent in this trial in dealing with the evidence and argument in relation to the two different affordability ratios put forward by the plaintiffs and Law respectively.

142. It is not the purpose of and not necessary in this judgment to come to any finding or  conclusion as to which of the two affordability ratios is the more accurate or reliable and it is therefore not my intention in this judgment to deal with them in detail or to come to any finding in that respect. It is sufficient for the determination of this case to keep in mind only that both the approaches adopted for the affordability ratio are generally and internationally accepted, and as with any system, there would be pros and cons pertaining to each.

143. The first sting complained of by the plaintiffs which goes further in the Second Article concerns the word “Manipulation” which the plaintiffs say connotes deliberately creating misleading impression of the property market.

144. The second sting complained of arises from the word “Cheating” which the plaintiffs say connotes deliberately creating misleading impression of the property market.

145. The context in which the word “Cheating” appears in the Second Article was that it was stated by the author of the Second Article that “The Hong Kong Government monitors the financial market well, but when faced with cheating in the property market, it however immediately becomes an inept loser….To say that they are cheating is not lightly said.”

146. Law, the author of the Second Article, was cross examined on the use of the word “cheating” in the Second Article and had this to say in cross examination.

Q.  Who was cheating

A.  In context of this article referring to Indices or affordability ratio

Q.  Index or affordability ratio could not do anything, it’s the people who could do things

A.  Yes

Q.  Cheating means putting forward something false knowingly

A.  Not necessarily false

Q.  Misleading

A.  Could be

Q.  But knowingly

A.  Not necessarily knowingly. He may not know he had misled others. I can only see the result of misleading, but not whether intentional or unintentional

Q.  You did not actually believe anyone had knowingly engaged in misleading conduct?

A.  I deeply believed in it but I have no proof, as I have said, I cannot see the intent or motive behind. This is mentioned in the last sentence.

Q.  “whether intentional or not”

A.  Yes

……..

Q.  Did you believe the compilers to be dishonest?

A.  Yes. In fact in my last article I did not impute dishonesty on them, that was what I myself thought.

Q.  What you wrote did not accuse the plaintiffs of dishonesty but that was what you believed deeply in your own mind?

A.  Not deeply. Yes, in my heart yes, but not deeply.

147. Firstly, the words “when faced with cheating in the property market” as well as the phrase “To say that they are cheating” I accept the submission of leading counsel for the plaintiffs that that those words constitute statements of fact and not a comment. It is a direct accusation that “they” are cheating. To a reader, “they” can only mean the compilers of the CCLI. Moreover, the defendants have already accepted that the plaintiffs as being the parties referred to in the First Article and the Second Article which is not an issue in dispute.

148. In his evidence, Law attempted to shy away from the gravamen of the word ‘cheating’ by saying that he only meant “misleading” and that the person may not even know he was misleading others.  However, the word used by him in the Second Article was “cheating”. The natural and ordinary meaning of “cheating” would, as suggested by leading counsel for the plaintiffs to knowingly mislead.

149. Even if Law had intended to convey a lesser meaning of ‘unintentionally misleading others’ that intention of his would not assist him as he had chosen the word “cheating” which carries with it a very different and stronger meaning. He had therefore overstepped the line.

150. When viewed in conjunction with the word “manipulating” the tone that is conveyed to the reader in the Second Article must be that the plaintiffs had by their “cheating in the property market” in the compilation of the CCLI, that in turn had the effect of manipulating the property market to their advantage.

151. It was also argued by way of defence that Law did hold such a personal view of cheating/misleading by the plaintiffs, but that the reader was asked not to ponder of Centaline’s intention, but only to focus on the objective effect of the Indices on the market.

152. The short answer to that argument is that the Second Article had gone beyond what was permissible and had overstepped the line by accusing the plaintiffs of cheating and manipulation of the property market. The fact that Law may have taken such a personal view of the plaintiff’s dishonesty is neither here nor there since on the totality of the evidence before me, there can be no evidential basis for justification of such a view taken by Law or to justify that accusation by him of the plaintiffs in the Second Article. Indeed, Law had admitted in cross examination that although he had believed the plaintiffs to have “knowingly engaged in misleading conduct”, he had no evidence to prove it. A similar admission was made by Law in re-examination.

153. For the reasons given, the defence of fair comment in respect of the Second Article must fail.

154. Likewise the defence of justification cannot be sustained in respect of the Second Article since there is no evidence to justify the accusation that the plaintiffs ‘cheated’ in compiling the CCLI and which had the effect of manipulating the property market.

155. I find the words used in the Second Article to be defamatory of the plaintiffs’ reputation and the plaintiffs’ claim in defamation against the defendants has been established.

DAMAGES

156. Damages in libel is compensatory in nature. The sum which is awarded is to compensate the plaintiff for the wrong he has suffered, by compensating him for the damage to his reputation, to vindicate his good name, and to take account of the distress, hurt and humiliation which the defamatory publication has caused.

157. In arriving at the award, I must take into account all the relevant circumstances of the case.

158. In this respect I would note that the claim in respect of the First Article did not succeed and the defendants were found to be justified in all that had been said by them in the First Article as being fair comment given the background of the matter.

159. The Second Article is a follow up of the First Article. However, if the author had kept himself within the four corners of the criticism made in the First Article, he would likely not have been liable for defamation. But he overstepped the line and accused the plaintiffs of ‘cheating’, an accusation which did not appear in the First Article.

160. I also take into account that the HKEJ has a wide publication and readership in Hong Kong dealing mainly with current financial and property matters and that the subject written in both the First Article and also the Second Article had caused wide public interest at the time.

161. I also take into account the fact that Centaline’s business is that of a property agency. However, the libel to the plaintiffs in this case concerns the reliability of the publication of the CCLI and in that sense is not directly aimed at its business and reputation as a property agency, although the word “cheating” and “manipulation” carries with it a dishonest imputation.

162. Having been referred to a number of awards previously made by the courts in Hong Kong in respect of libel and defamation cases, and using them as a guide, I would assess damages at HK$300,000.00.

163. In so assessing the amount of damages, I have also taken into account absence of any malice, but rather that the offending words came about because the author overstepped the line in making what would have been a legitimate criticism. It would therefore follow that the sum assessed does not include any aggravated damages.

CONCLUSION

164. Accordingly, there will be judgment for the plaintiffs for HK$300,000.00.

165. I decline to grant the injunction prayed for in paragraph 2 of the Prayer for Relief as contained in the Statement of Claim on the basis that it is unlikely for the words complained of to be repeated by the defendants in future, the matter being now water under the bridge.

COST

166. The plaintiffs has failed in their claim on the First Article but has succeeded on the claim in respect of the Second Article.

167. However, the Second Article was a follow up of the First Article.  Even if the plaintiffs had only sued on the Second Article alone, very likely to complete the full picture the parties would still have had to refer the court to the First Article as well as all the background matters. Nevertheless, some of the trial time would still have been saved, although not as much as half, if the claim had been brought only on the Second Article. Accordingly, looking at it in the round, the plaintiffs should only be entitled to only a part of the full costs.

168. Therefore there will be a cost order nisi that the defendants do pay the plaintiffs’ two-thirds of their cost of this action to be taxed if not agreed.  There will be certificate for 2 counsel, both sides having been represented by leading counsel at the trial.