LAM KIT SING v. CHUNGSHAN COMMERCIAL ASSOCIATION, HONG KONG AND OTHERS

HCA 2011/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2011 OF 2014

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D E C I S I O N

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1.  This is an appeal from the decision of Master S Lo made on 14 January 2016, on the 8^th defendant’s application to strike out parts of the plaintiff’s statement of claim. The action is brought by the plaintiff to pursue causes of action in libel and malicious falsehood.

2.  The background of the action concerns the affairs of Chungshan Commercial Association, Hong Kong (“the Association”), a company limited by guarantee without any share capital, one of the objects of which is to promote the welfare and protect the lawful interests of its members and Zhongshan natives resident in Hong Kong. 

3.  The 2^nd defendant is the current Chairman of the Association.  The 3^rd to 7^th defendants are and were at all material times Executive Directors of the Association.  The 8^th defendant is and was at all material times a Director of the Association. 

4.  The plaintiff joined the Association in 1985 or 1986, and became a Director in around 1996.  He was elected Vice-Chairman of the Association in 2007, and subsequently, its Chairman from 2011 to 2013. 

5.  The complaints in the action relate to the circumstances in which the plaintiff was expelled from the Association and a notice published of his expulsion subsequently. 

6.  The resolution to expel the plaintiff was passed by the Board of Directors at a meeting held on 30 May 2014.  It was apparently a tumultuous meeting resulting in police officers coming to the premises at which the meeting was held. 

7.  Paragraph 8 of the statement of claim pleads:

“On 30 May 2014, at the 11^th meeting of the 21^st board of directors (the “Board”) of the Association (the “30^th May Board meeting”), a resolution was purportedly passed to expel the Plaintiff as a member of the Association (the “Resolution”) on the basis that the Plaintiff was not of Zhongshan origin.”

8.  Paragraph 9 of the statement of claim pleads that the resolution (“Resolution”) reads as follows, taking for present purposes the English translation: 

“The 21^st Board of the Association has on 30 May 2014 held its 11^th Board meeting discussing the following topic:

‘As regards Mr Lam Kit Sing being complained of not being of Zhongshan origin, it has been confirmed after investigation that there is concrete evidence showing that Mr Lam Kit Sing is not of Zhongshan origin, and accordingly there is a need to handle such matter in accordance with article 7 of the Association’s Articles.’

Director Ma Po Chim [ie the 8^th defendant herein] proposed to expel Mr Lam Kit Sing from membership of the Association pursuant to article 7 of the Association’s Articles, and the voting results are as follows:

Agree: 53 votes; Disagree: 0 votes; Abstentions: 0 votes.

In accordance with the above board resolution, this Association now decides to publish the aforesaid resolution to expel Mr Lam Kit Sing from membership, and from this moment onwards, Mr Lam Kit Sing’s membership card is voided, and Mr Lam Kit Sing can no longer publish opinions or participate in any activity in the name of the Association or act in the capacity as a director or member of the Association.  Mr   Lam   Kit Sing’s conduct and activities shall not be associated with that of the Association, and the Association reserves its right against Mr Lam Kit Sing.”

9.  On 20 June 2014, the Executive Board of the Association held a meeting at which a resolution was passed to publish a notice of the “Resolution” as aforesaid in newspapers. 

10.  On 25 June 2014, the notice was published in the Association’s name in 4 Chinese newspapers in Hong Kong. 

11.  On 26 June 2014, the Association sent letters to various friendly associations about the “Resolution”. 

12.  On 6 July 2014, the notice of the “Resolution” was published in certain Zhongshan newspapers. 

13.  The plaintiff alleges that the sting of the words published was, inter alia, that he had, by false means, procured himself to be admitted as a member of the Association; that he had intentionally defrauded and caused loss to the Association; and that he had covertly sought to hold himself out untruthfully as being of Zhongshan origin, when he knew that that was false. 

14.  Paragraph 13(1) of the statement of claim pleads that the “Resolution” was proposed by the 8^th defendant, which was then voted upon in favour by the 2^nd to 7^th defendants, and issued in the name of the Association.

15.  Paragraph 14 of the statement of claim pleads:

“On 20 June 2014, the Association held the 11^th meeting of its 21^st board of executive directors (the “20 June Executive Board Meeting”).  In that meeting:-

(1)  The 2^nd Defendant, being the Chairman of the Association, proposed to publish the Resolution in a newspaper;

(2)  The proposed publication was to contain the entirety of the Resolution as pleaded in 9 above, which was originally proposed by the 8^th Defendant;

(3)  The 2^nd to 7^th Defendants all voted in favour of the Association publishing the Resolution.”

16.  There are subsequent averments in the statement of claim referring to the “Resolution”, the newspaper articles or newspaper notices, and the letters to friendly associations, together as “Complained Statements”, which are said to be false and defamatory of the plaintiff.  It is averred that the 1^st to 8^th defendants published the Complained Statements, knowing that the contents thereof were false, or recklessly not caring whether they were true or false.  It is said that as a result of the publication of the Complained Statements, the plaintiff has suffered injury to his reputation, distress and embarrassment, as well as financial loss. 

17.  The summons taken out by the 8^th defendant on 10 June 2015 seeks an order to strike out, first:

“(1)  Paragraph 13(1) of the Statement of Claim; and

(2)  the words ‘which was originally proposed by the 8^th Defendant’ under paragraph 14(2) of the Statement of Claim”

and, secondly, references to “Complained Statements” as against the 8^th defendant in paragraphs 17 to 21 of the statement of claim.

18.  Ms Catrina Lam, who has appeared with Mr Martin Ho on behalf of the plaintiff, argued that on a strike-out application, the factual allegations in the pleading in question must all be taken as true. While that may be the proper approach in most applications, Ms Lam’s proposition is in my view too widely stated.  There are authorities that show that the court’s power to strike out a pleading can be exercised where it is plain and obvious that the plaintiff’s case has no factual basis: Oh Jae-Hoon, Eugene v Richdale [2004] 4 HKC 315, at paragraph 15, or has no “solid basis capable of proof” and is a “myth” with “no substantial foundation”, per Lord Herschell in Lawrence v Lord Norreys (1890) 15 App Cas 210, 220, or presents “a tissue of improbabilities which ought not to be sent to proof”, per Lord Watson at page 222; see also Overseas Trust Bank v Coopers & Lybrand [1990] 1 HKLR 568 at 583.  Thus if a plaintiff pleads as a fact something which can clearly be shown to be incontrovertibly false, then on an application to strike out on that basis the court is not bound to accept the allegation as true and to proceed on a fictional basis. 

19.  The basis of the 8^th defendant’s application to strike out is that as a matter of fact, the resolution that he proposed and the Board passed at the 30 May Board Meeting was only “to expel Mr Lam Kit Sing from membership of the Association pursuant to article 7 of its Association’s Articles”, and did not (contrary to what is pleaded in the statement of claim) include all the other parts of the notice subsequently published or indeed any resolution to publish the notice.  In support of that contention Mr Bernard Man SC, who has appeared with Mr James Man for the 8^th defendant, referred to the minutes of that meeting as well as the video recording of it and the relevant transcript.  The 8^th defendant contended that since all that was alleged against him in the statement of claim was that he proposed the “Resolution” as quoted in paragraph 9 of the pleading, once that allegation was struck out, the entire claim as against him should be dismissed.

20.  On that basis it is, with respect, odd that the 8^th defendant is seeking to strike out paragraph 13(1) of the statement of claim and the words in question in paragraph 14(2).  Their complaint, as I see it, is not really about these two parts of the pleading but about paragraph 9.  This is evident from the fact that in paragraph 39 of the defence, the 8^th defendant has actually pleaded: “Paragraph 13 [of the Statement of Claim] is admitted”, and in paragraph 43, he has pleaded in response to paragraph 14(2) of the statement of claim: “It is admitted that the Resolution was originally proposed by the 8^th Defendant at the 30 May Board Meeting”.  This has given rise to the extraordinary situation where the 8^th defendant is seeking to strike out as untenable two passages in the statement of claim that he has admitted in his defence. 

21.  As I see it, what the 8^th defendant is really saying is that paragraph 9 of the statement of claim is inaccurate in including the last paragraph quoted there, that is to say, the decision to publish, as part of the “Resolution” passed on 30 May 2014.  Ms Lam has not sought to argue on this application that the Resolution on 30 May 2014 did, in fact, include a decision to publish the notice on newspapers or to friendly associations.  I think that in these circumstances, I should, of my own motion, under Order 18 rule 19(1), strike out the words in paragraph 9 of the statement of claim from “and the voting result are as follows” to “reserve its rights against Mr Lam Kit Sing”.  I decline to strike out paragraph 13(1) and the relevant words in paragraph 14(2). 

22.  The 8^th defendant’s summons also seeks to strike out references to “Complained Statements” as against himself.  The substance of the matter is the 8^th defendant’s liability for publication of the allegedly defamatory statements.  For present purposes, the proposition of law stated in Gatley on Libel and Slander (12^th ed, 2013) at paragraph 6.10 has not been challenged, namely: “... at common law liability extends to any person who participated in, secured or authorised the publication ...”.  Further, Eady J stated in Bataille v Newland [2002] EWHC 1692 (QB) at paragraph 25:

“To participate in a publication in such a way as to be liable in accordance with the law of defamation is not, I should emphasise, to be equated with being a source of the information contained within the relevant document. There are various acts that can give rise to legal responsibility, for example, encouraging the primary author, supplying him with information intending or knowing that it will be re-published, or, if one is in a position to do so, instructing or authorising him to publish it.”

Both authorities were applied by Deputy Judge Lok, as he then was, in Excel Concrete Limited v The Concrete Producers Association of Hong Kong Limited (unreported, HCA 938/2011, 14 February 2013). 

23.  On the statement of claim as pleaded, the case against the 8^th defendant is that he proposed a motion not only to expel the plaintiff, but also to publish that decision.  The question arises, on the basis that the motion proposed by the 8^th defendant at the 30 May Board Meeting concerned, in fact, only the expulsion of the plaintiff from the Association, but not the publication of that decision: is it plain and obvious that the 8^th defendant could have no liability for the subsequent publication of the defamatory statements complained of in the statement of claim? 

24.  The expulsion motion cannot, in my view, be looked at in a vacuum, divorced from its context.  It is necessary also to have regard to the notice of the 30 May Board Meeting issued on 22 May 2014 to all Directors, as well as the voting form used at the 30 May Board Meeting. 

25.  Further, in his affirmation filed in opposition to this application, the plaintiff said, at paragraph 7(1) that:

“... even though the 8^th Defendant was only a “director” instead of an “executive director” of the Association, he was always a key member of the camp of the 2^nd to 7^th Defendants. For instance, at the 30 May Board Meeting, I saw that the 8^th Defendant, during two adjournment sessions before the Resolution was passed, had been holding private discussions with the 2^nd to 7^th Defendants at the Chairman’s office, presumably to discuss the strategy to push for the passing of the Resolution. In other words, there is every reason to believe that the 8^th Defendant, whilst not an executive director by name, had been closely participating in the decisions made by the 2^nd to 7^th Defendants.”

26.  I also note that while the 8^th defendant said that he did not attend the 20 June Executive Board Meeting, and that it was at that meeting that the resolution to publish the expulsion decision in newspapers was made, the defendants have pleaded in their joint defence, at paragraph 51.2, that:

“... at all material times, in respect of important matters of the Association, eg election of directors, the Association would publish notices in newspapers”

and in paragraph 51.6.1, that:

“Insofar as it is necessary, it will be contended that the mode of publication (ie in newspapers) was the only possible and effectual mode of communication to all its members.”

In addition, the minutes of the 20 June Executive Board Meeting recorded that the publication of the expulsion decision in newspapers was being proposed “in accordance with established practice”.  The question, as became apparent from counsel’s submissions, may arise as to the intention, knowledge and foresight on the part of the 8^th defendant as at 30 May 2014 in respect of the subsequent publication of the resolution. 

27.  Furthermore, Ms Lam relies on the 25 June 2014 Board Meeting attended by the 8^th defendant, at which it was resolved to send the notice to friendly associations in Hong Kong and Zhongshan.  The plaintiff said that the 8^th defendant voted in favour of the resolution.  The 8^th defendant has not disputed it. 

28.  In the circumstances, I decline to strike out all references to the “Complained Statements”, which was sought as a consequential order based on the striking out of the relevant parts of paragraphs 13 and 14. 

29.  However, the problem remains that the plaintiff’s case as currently pleaded is based on the 8^th defendant proposing a motion to publish the expulsion decision.  The case canvassed in argument, based on knowledge or intention, subjective or otherwise, on the 8^th defendant’s part, in proposing the motion for expulsion, that it would or should be published, has not been expressly pleaded in the statement of claim.  Given that I have struck out part of paragraph 9, I think that as a consequence the plaintiff should be directed to provide a draft amended pleading within a specified period of time. 

30.  For all these reasons, technically I have not allowed the appeal, because none of the striking out orders sought in the summons is being granted, but I have, of my own motion, struck out part of paragraph 9 of the statement of claim, and directed the plaintiff to provide a draft amended pleading.  Accordingly, there will be an order in those terms, and I will now hear counsel on costs, as well as consequential matters. 

(Submissions on costs and directions)

31.  On the amendment, I will give 21 days for the plaintiff to provide to the 8^th defendant a draft amended statement of claim.  The 8^th defendant is to give his response within 14 days.  If there is no agreement between the parties, the plaintiff is to take out a summons for leave to amend, returnable before me.  

32.  On the question of costs, the 8^th defendant has not obtained the precise order he sought, but he has succeeded in the point that the case that the plaintiff has hitherto pleaded, namely that the 8^th defendant has proposed a motion to publish the expulsion decision, is untenable.  The application has also led to the striking-out of paragraph 9 in part, although that was not sought in the summons, and has led to a direction for an amended statement of claim to be provided.  So I think the starting point is some costs in the 8^th defendant’s favour.  But I take into account that there was no letter before application (at any rate none has been shown to me), the 8^th defendant did not get the order that he sought, he has sought orders to strike out paragraphs which he has himself admitted, and eventually the part of paragraph 9 that was struck out was struck out on the court’s own motion.  In all these circumstances, the order I make is that 50% of the 8^th defendant’s costs here and below be in the cause of the action.