XCHRX CHAN SHUI SHING ANDREW AND OTHERS v. IRONWING HOLDINGS LTD.

HCA1396/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1396 OF 2001

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REASONS FOR JUDGMENT

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Introduction

1. On 30 March 2001, I refused the plaintiffs' application for an interim injunction restraining the defendant from, inter alia, publishing three statements, the subject matter of dispute, and an order that the defendant do forthwith remove and stop displaying the said statements at its retail outlets. These are my reasons.

2. The 2nd and 3rd plaintiffs carry on the business of supplying building materials and ceramic tiles under the trade name "Hop Hing Lung". The 1st plaintiff is their director. The defendant is a business rival. It used to be an agent appointed by a Mainland supplier. Recently, that supplier has appointed the 2nd and 3rd plaintiffs to replace the defendant. This gave rise to a hot business dispute between the parties. Since 16 March 2001, the defendant had displayed the said statement at its retail outlets. One of them had been subsequently withdrawn on 19 March. The plaintiffs complain that all these statements are defamatory against them. Hence the present proceeding and this application.

Proper approach

3. The proper approach to be adopted in dealing with an application for interim injunction in defamatory cases is well established. The relevant principles may be summarized as follows :

(1) The practice established in American Cynamid v. Ethicon Ltd [1975] AC 396, of not considering the merits of the case once it had been shown there was a serious issue to be tried, but determining where the balance of convenience lay between the parties as regards the imposition of a restraining order, is inappropriate : Khashoggi v. I.P.C. Magazines [1986] 1 WLR 1412, CA ; see also Gatley on Libel and Slander (9th Edn), para 25.2 at p.634.

(2) The jurisdiction to grant interlocutory injunctions in defamation cases is of a delicate nature which ought only to be exercised in the clearest cases : Coulson v. Coulson [1887] 3 TLR 846, per Lord Esher, MR, approved in Bonnard v. Perryman [1891] 2 Ch 269, CA at p.284, where Lord Coleridge CJ said :

"... the importance of leaving free speech unfettered is a strong reason in cases of libel for dealing most cautiously and warily with the granting of interim injunctions."

(3) Thus, the court will only grant an interim injunction where :

(a) the statement is unarguably defamatory;

(b) there are no grounds for concluding the statement may be true;

(c) there is no other defence which might succeed;

(d) there is evidence of an intention to repeat or publish the defamatory statement :

see Gatley, supra.

(4) Where the defendant contends that the words complained of are true, and swears that he will plead and seek at trial to prove the defence of justification, the court will not grant an interlocutory injunction unless, exceptionally, the court is satisfied that such a defence is one that cannot succeed : Bonnard v Perryman, supra, followed in Fraser v. Evans [1969] 1 QB 349, per Lord Denning MR at p.360.

(5) The position is similar where the intended defence is fair comment : Fraser v. Evans, supra.

(6) The burden is on the plaintiff to show that the defence of justification will not succeed : Crest Homes Ltd v. Ascott [1980] FSR 396, CA, per Lane LJ at p.399.

4. The plaintiffs are grounding their application on the American Cynamid principle. It is apparent from the supporting affirmation filed by the 1st plaintiff and the written submission of Mr Szeto, counsel for the plaintiffs. Mr Szeto contends that the present case can be distinguished from the authorities. They are concerned with the freedom of press, which is a public matter. Here, it is the individual freedom of speech arising from a private dispute. He therefore submits that the American Cynamid principle is applicable. With respect, I disagree. The authorities are concerned with the freedom of speech, whether it is exercised by an individual in a private setting or by the press in the public domain. The importance for leaving the freedom of speech in both cases unfettered is just the same. I will therefore approach this application according to the principles which I have endeavoured to summarize above.

The plaintiffs' complaint

5. Mr Szeto submits that all the statements clearly referred to the plaintiffs and are defamatory.

6. For present purposes, I will not set out the contents of the statements in detail. One of the statements purportedly refers to a telephone conversation made by the 1st plaintiff to Mr Shu of the defendant. The other two refer to his visit to one of the defendant's outlets. It is the plaintiffs' case that the statements contain allegations that the plaintiffs have associated with an unscrupulous manufacturer in the mainland to cause intimidation, nuisance and defamation to the defendant's retail outlets; that the plaintiffs are referred to as an illegal element and barbarian trader; and that the 1st plaintiff acted as if he was a triad member and bullied others because of the wealth of his father. Counsel further submits that it is not possible for the defendant to raise the defence of justification on fair comment.

The defendant's position

7. Ms Wong, counsel for the defendant, argues that the defendant has already sworn that it will seek to justify and establish the defence of fair comment; that it is not necessary at this stage for the defendant to give full particulars of the intended defence; and that in any event, the defendant has given the factual basis on which the intended defence of justification and fair comment will eventually base. In Mr Shu's affirmation, he confirmed the truth of the telephone conversation as described in the statement. He also deposed to how Mr Chan behaved when visiting the defendant's outlet and how he had caused disturbances and unpleasant feelings there.

8. I have carefully considered the evidence before me. In my view, whether the defence of justification and fair comment may succeed or fail cannot be resolved on affidavits. It obviously depends on a fuller investigation of the facts, the actual contents of the telephone conversation, how Mr Chan behaved and what he had said and done while visiting the defendant's outlet. I agree that the defendant has already laid down the factual basis. I also agree with Ms Wong that the 1st plaintiff, as a director, was at all material times acting for the interest of the other plaintiffs. I am therefore not satisfied that the plaintiffs have shown that the defence of justification or fair comment is bound to fail.

9. Accordingly, I refuse the application. In light of my decision, I do not propose to address counsel's submissions on other matters including the timing of this application.

Costs

10. Having heard the parties on the question of costs, I am of the view that the usual costs order should apply. I therefore order that costs of this application be in the cause.