CHU FUNG CHEE v. APPLE DAILY LTD AND OTHERS

HCA 888/2021

[2023] HKCFI 1318

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 888 OF 2021

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J U D G M E N T

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A.  INTRODUCTION

1.  At this hearing there are two summonses before the court. The first one is the summons taken out by the defendants dated 7 November 2022 (“Ds’ Time Summons”) for leave to file their Acknowledgement of Service and Defence within 7 days of the order to be made - effectively seeking an extension of time to do so. A draft Defence is attached to Ds’ Time Summons. Ds’ Time Summons was taken out under Order 3, rule 5 of the Rules of the High Court (“RHC”) and the inherent jurisdiction of the court.

2.  The second summons is the one issued by the plaintiff on 18 April 2023 (“P’s Amendment Summons”) to amend his earlier summons dated 20 August 2021 to enter judgment against the defendants in default of Defence (“P’s Default Judgment Summons”).

3.  Under paragraph 6 of the Consent Order made by Au-Yeung J dated 22 November 2022, it was ordered that the hearing of P’s Default Judgment Summons be adjourned to a date to be fixed for directions after the determination of Ds’ Time Summons.

4.  One can see that P’s Default Judgment Summons and Ds’ Time Summons are in reality two sides of the same coin. If time is extended to the defendants to file their Acknowledgement of Service and Defence, there will be nothing left to determine under P’s Default Judgment Summons, save for the question of costs. At the hearing, Mr Michael Leung, counsel for the plaintiff, sensibly accepted that if the court grants the time extension sought under Ds’ Time Summons and dismiss P’s Amendment Summons, then P’s Default Judgment Summons can also be dismissed although technically the same is not before the court pursuant to Au-Yeung J’s said Consent Order.

A1.  The nature of the plaintiff’s claim

5.  To summarise the plaintiff’s case which is relevant to this application, in the Writ of Summons issued on 10 June 2021, the Indorsement of Claim against the defendants is for (1) damages (including aggravated damages) for libel; (2) a declaration that the defendants are in breach of a Settlement Agreement with the plaintiff; (3) an injunction restraining the defendants from further publishing similar words containing the said libel; and (4) interest.

6.  The basis of the plaintiff’s case, as may be gleaned from the Statement of Claim, is that the plaintiff is a practising barrister. The defendants are related companies engaged in the business of news reporting by the 1^st defendant’s newspaper, which was printed by the 2^nd defendant. The 3^rd defendant is the publisher of the internet version of the newspaper for the 1^st defendant. On or about 21 May 2006, the 1^st defendant published alleged defamatory remarks of the plaintiff in its newspaper in an article (the “Article”) reporting the result of a court decision delivered the day before (ie 20 May 2006) in which the plaintiff was a party. The plaintiff pleaded in paragraph 9 of the Statement of Claim that the 1^st defendant published the following words (translated into English) in 3 places:

(1)  “a former Barrister claims legal costs to reduce tax and lost”.

(2)  “a former Barrister who ran and lost in the District Board Election claims legal costs to reduce tax was not accepted by the Court”.

(3)  “a former Barrister who ran and lost in the District Board Election...”

7.  The plaintiff claimed in paragraph 12 of the Statement of Claim that those words mean:

(1)  The plaintiff was no longer a member of the Hong Kong Bar;

(2)  The plaintiff is not eligible and or has been prohibited to practise law in Hong Kong; and

(3)  Insinuation that the plaintiff is unfit to practise law.

8.  At paragraphs 14(A), (B) and (C) of the Statement of Claim, the plaintiff further pleaded that the 1^st defendant was contacted and the 1^st defendant agreed to withdraw the Article and make a public apology statement promptly; and further, the 1^st defendant also undertook not to publish or causing further publishing of the Article (the “Undertaking”). However, importantly, at the beginning of paragraph 14 of the Statement of Claim, the plaintiff expressly pleaded that the above facts would be relied on “in aggravation of damages”.

9.  The plaintiff went on to plead that the plaintiff discovered that up to the time of the Writ in this action (10 June 2021), the Article continued to appear in the internet version published by the 3^rd defendant. And that two other web commentators/bloggers also published information derived from the Article including describing the plaintiff as “a former Barrister”, and disseminated the same since 2006.

10.  Consequently, it is pleaded in paragraph 13 of the Statement of Claim that “the plaintiff’s credibility, reputation and professional standing have been severely damaged”, and in paragraph 23 that the plaintiff has been “seriously injured in his reputation and has been brought into public scandal, odium and contempt”. The plaintiff also set out in the Statement of Claim certain instances of alleged losses and special damage.

B.  THE DEFENDANTS’ TIME SUMMONS

11.  Under Order 3, rule 5 of the RHC, there is very wide discretion in the court to extend time that accords with the justice of the case.

12.  In Astro Nusantara International BV v PT Ayunda Prima Mitra (2018) 21 HKCFAR 118, Ribeiro PJ stated as follows:

“53. It has often been emphasised that the discretion to extend time conferred by O.3 r.5 is broad and unrestricted, designed to enable justice to be done between the parties. Thus, in Kwan Lee Construction Co Ltd v Elevator Parts Engineering Co Ltd, Litton V-P in the Court of Appeal, stated:

‘The court’s jurisdiction to extend time, as conferred by O.3 r.5, is as broad as it can come and, in the exercise of that discretion, the court would, generally speaking, have some regard to what might ultimately be in issue.’

54. In Costellow v Somerset County Council, dealing with the equivalent provision in England and Wales, Sir Thomas Bingham MR noted that the discretion involves the intersection of two principles. The first promotes the enforcement of time limits for the expeditious dispatch of litigation in the public interest and the second recognises that a plaintiff should not ordinarily be denied adjudication of his claim on the merits because of a procedural default ‘unless the default causes prejudice to his opponent for which an award of costs cannot compensate’. His Lordship noted that the second principle ‘is reflected in the general discretion to extend time conferred by O.3, r.5, a discretion to be exercised in accordance with the requirements of justice in the particular case.’

55. The approach advocated on First Media’s behalf as formulated by the Court of Appeal in The Decurion, is in line with the foregoing authorities. Citing Costellow v Somerset County Council, Cheung JA acknowledged the intersecting principles and stated:

‘It is clear that the applicable principle in deciding whether time should be extended is to look at all relevant matters and consider the overall justice of the case. A rigid mechanistic approach is not appropriate...’” (Emphasis supplied)

And it was this approach that the Court of Final Appeal adopted in paragraph 64 of the Judgment.

B1.  The reasons for the delay

13.  The reason why the defendants defaulted in filing the Acknowledgement of Service and Defence has been fully explained in paragraphs 5 to 24 of the Affirmation of Man King Shing filed on 7 November 2022.

14.  The reason why the Acknowledgement of Service and Defence were not filed and served in time was due to the situation created by a series of law enforcement process since June 2021, which effectively disabled the operation of the defendants, and there has been “a state of management vacuum with no directors” from 5 September 2021 onwards, and “with no employees” from 8 October 2021 onwards. This only ended when the Provisional Liquidators were appointed and received notice of the existence of this action in late September 2022.

15.  In all the circumstances of this case, I accept the defendants’ submission that there has been no undue delay on the part of the Provisional Liquidators or Liquidators. Furthermore, the total disruption of the operation of the defendants by legal process beginning from June 2021 is by itself a sufficient reason for the court to grant an extension of time as prayed for in Ds’ Time Summons.

B2.  Merits of the defence

16.  As explained above, the plaintiff’s claim is firmly based on libel. The words alleged to carry defamatory meaning are a description of the plaintiff as a “former Barrister”. The proposed Defence of the defendants is one of denial that those words bear the defamatory meaning as alleged.

17.  In Samme Trading Co ltd v United Agencies (a firm), HCA 1402/1968, Briggs J in an application to strike out a Statement of Claim based on a claim of libel, accepted that the following passage in paragraph 68 of Chapter 2 of Gatley on Libel and Slander (6^th Edition) to be good law:

“It is not defamatory to publish of a tradesman that he has ceased to carry on his business or that his business has been or is about to be, acquired or absorbed by another firm, for such statement, though likely to injure him in his business, does not reflect on him in his conduct of it.”

18.  If one looks at Gatley on Libel and Slander (13^th Edn), which is the latest edition published in 2022, virtually identical passage appears in §2-032 at page 61. The law has not changed since the decision in Samme. One may also refer to the case of Irish Toys and Utilities Ltd v Irish Times Ltd [1937] IR 298, in which the submission of the counsel for the defendants was that, at page 300:

“Words cannot be libellous or defamatory unless they reflect upon the reputation. They must suggest something affecting a man’s character or capacity calculated to hold him up to hatred, ridicule or contempt…. To write or say of a person or a firm that he, or it, has ceased, or is ceasing, business cannot be defamatory.”

This submission were accepted by the court at page 301.

19.  The defendants submit that based on the same principle, the words “former Barrister” merely state that the plaintiff has ceased to practice. It is highly arguable that it does not reflect on the plaintiff’s reputation. That being the case, the defendants submit that they have a good defence to the libel action of the plaintiff, and it is just that they should be given an extension of time to file the Acknowledgement of Service and Defence.

20.  I agree. Whether the same principle indeed applies to the case of a barrister can only be determined at the trial of this action.

B3.  Plaintiff’s action not a libel case?

21.  In a desperate attempt to get round the defendants’ argument, the plaintiff has put forward a surprising claim that this is not a libel action at all. This is how he puts it at paragraph 22 of his Skeleton Submissions:

“22. The present action is not a libel case. The crux of P’s grievance is that Ds had already acknowledged libel in May 2006 and that the Settlement Agreement and Undertaking were reached between P and D1. P’s primary case is that Ds have breached the Settlement Agreement and Undertaking by continuing to publish the article with the Defamatory Words on their website from May 2006 until 2021.” (Emphasis supplied)

22.  To assert that the present action is not a libel case is not only wrong but also disingenuous. As far as the case against the 2^nd and 3^rd defendants is concerned, I need to do no more than to quote what the plaintiff himself had deposed to in his 1^st Affirmation filed herein on 20 August 2021 in support of P’s Default Judgment Summons:

“3. Secondly, the 1^st Defendant is in breach of a settlement agreement dated in June 2006. Details of such background can be found in the Statement of Claim. In brief, the 1^st Defendant has had breached a settlement agreement in not to publish the libelous article against me which we entered into in 2006. The 2^nd and 3^rd Defendant are not parties to that settlement agreement, nonetheless, they are liable for defamation since they, together with the 1^st Defendant, had continuously published or caused to publish the said defamatory article against me since 2006 up to 2021. I do not have a copy of the said settlement agreement on hand now. It was misplaced somewhere.” (Emphasis supplied)

23.  As regard the 1^st defendant, as explained in paragraph 8 above, in paragraph 14 of the Statement of Claim, the alleged breach of the Settlement Agreement was only pleaded as part of the circumstances why aggravated damages should be given, which in the context of paragraphs 6 to 13 in the Statement of Claim, are clearly for the alleged libel.

24.  While paragraph 16 of the Statement of Claim did plead the alleged breach of the Undertaking by the defendants, it was followed up by the alleged factual consequences of the breach in paragraphs 17 to 19 and 21 of the Statement of Claim. Paragraph 22 of the Statement of Claim then treated those matters as a ground for awarding Exemplary Damages against the defendants for “its contumelious conduct in failing to delete and continuously published the said Defamatory Article”. The alleged breach of contract was therefore never pleaded as a separate cause of action, but as part of the circumstances why damages/aggravated damages/exemplary damages should be awarded for the alleged libel committed by the defendants against the plaintiff.

25.  For the reasons stated above, I would grant the time extension sought by the defendants and make an order in terms of paragraph 1 of Ds’ Time Summons.

C.  THE PLAINTIFF’S AMENDMENT SUMMONS

26.  The plaintiff has belatedly taken out the P’s Amendment Summons to amend P’s Default Judgment Summons by seeking to turn it into a summons for summary judgment under Order 14, rule 1 RHC. As submitted by the defendants, this appears to be a “salvage operation” because in case an extension of time is allowed under Ds’ Time Summons, P’s Default Judgment Summons is bound to fail.

27.  The defendants have made two points which are fatal to the plaintiff’s application under P’s Amendment Summons.

28.  First, Order 14, rule 1(2)(a) RHC provides that: “… this rule applies to every action begun by writ other than - (a) an action which includes a claim by the plaintiff for libel, slander, malicious prosecution, false imprisonment or seduction”. (Emphasis supplied)

29.  As explained in Practice Note 14/1/1 of the Hong Kong Civil Procedure 2023, the actions specified in rule 1(2)(a) are those in which there is a right to trial by jury.

30.  As analysed in paragraphs 22 to 24 above, the present action clearly includes a claim by the plaintiff against the defendants for libel. Hence, the summary procedure under Order 14, rule 1 RHC simply is not available to the plaintiff.

31.  Second, Order 14, rule 2(1) provides that: “An application under rule 1 must be made by summons supported by an affidavit verifying the facts on which the claim, or the part of a claim, to which the application relates is based and stating that in the deponent’s belief there is no defence to that claim or part, as the case may be, or no defence except as to the amount of any damages claimed.” (Emphasis supplied)

32.  This statement is an essential part of the affidavit. The usual words used in the affidavit are, “I verily believe that there is no defence to this action” (see: Practice Note 14/2/8 of the Hong Kong Civil Procedure 2023).

33.  The affidavit evidence filed by the plaintiff in support of P’s Amendment Summons does not contain such a statement. At paragraph 6 of the plaintiff’s 3^rd Affirmation filed herein on 18 April 2023, the plaintiff stated thus:

“Finally, I would repeat what I said previously that the Defendants’ draft defence annexed to their summons fails to show any meritorious defence. This is, with the greatest respect, is [sic] a waste of time. I would be most grateful for the Court’s time and indulgence in this matter.” (Emphasis supplied)

34.  This is simply not good enough. The belief that must be deposed to is, not that the ground of defence relied upon is not good, or substantial or has been raised very late or will in all probability fail at the trial, but that there is no defence to that claim or part (see: Practice Note 14/7/3 of the Hong Kong Civil Procedure 2023).

35.  For the reasons stated above, I would dismiss P’s Amendment Summons.

D.  DISPOSITION

36.  For the reasons stated in paragraphs 11 to 25 above, I make an order in terms of paragraph 1 of Ds’ Time Summons.

37.  I order that P’s Amendment Summons and P’s Default Judgment Summons be dismissed.

38.  I further make the following order as to costs, such costs are to be taxed if not agreed:

(1)  Subject to sub-paragraph (3) below, the costs of and occasioned by Ds’ Time Summons and P’s Default Judgment Summons be paid by the defendants to the plaintiff;

(2)  The costs of and occasioned by P’s Amendment Summons be paid by the plaintiff to the defendants;

(3)  The costs of the argument at the hearing on 8 May 2023 on Ds’ Time Summons, P’s Amendment Summons and P’s Default Judgment Summons be paid by the plaintiff to the defendants.

39.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

40.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.