MULTI WINNER INVESTMENT LTD AND ANOTHER v. LAU MING YEE

HCA 880/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 880 OF 2011

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REASONS FOR DECISION

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The application

1.  The hearing of the plaintiff’s summons dated 17 April 2014 for leave to amend their reply dated 18 February 2012 was heard on 1 September 2014.  I granted the application in favour of the plaintiff, I now give my reasons.

Background

2.  The present action is a defamation action where the 1^st plaintiff is the owner of an entire floor in a building and the 2^nd plaintiff is the director and shareholder of the 1^st plaintiff.  The defendant is the chairman of the Owners Incorporated of the Building.

3.  Certain dispute arose as to how the maintenance costs of the Building should be shared.  The 1^st plaintiff commenced an action in the Lands Tribunal LDBM 2360/2010.  Mediation meeting took place, the same was unsuccessful.

4.  Later, the defendant issued a letter dated 24 February 2011 to all owners of the Building stating, amongst other things, that the defendant queried why the 1^st plaintiff would offer monies to induce the Owners Incorporated to betray most registered owners of units of the Building, with a chance that the monies if accepted, the members of the Owners Incorporated may be invited by the ICAC to drink coffee.

5.  Plaintiffs said these words were defamatory.  Defendant pleaded fair comment and qualified privilege in her defence.

6.  The proposed amendments sought by the plaintiff are essentially to express their denial of the defence of fair comment and also to plead malice on the part of the defendant in making the defamatory statement to defeat the defence of fair comment and qualified privilege.

Unexplained delay

7.  It is submitted by Mr Lawrence Ng, counsel for the defendant that the plaintiffs had not filed any affidavit evidence to explain why they had waited for 26 months i.e. since the time they filed the reply, before they took out the present application.

8.  He said that there were already 3 case management conferences before the present application was taken out by the plaintiffs and that had there not been such application, the case would be ready for setting down.

9.  Mr Bernard Man, counsel for the plaintiffs admitted that there is no good reason for the delay save that the legal team had earlier omitted to plead malice in their reply.

10.  He submitted however that the present application was taken out within the time frame imposed by the order of Master Ho dated 6 February 2014 when conducting the case management conference prior to the present application.

11.  This court noticed that the exchange of witness statements took place at the end of December 2013 i.e. 2 months before the last case management conference on 6 February 2014 before the present application.

12.  Mr Man cited the case of Li Shiu To v Li Shiu Tsang and others HCA 416/2003 whereby DHCJ Lok allowed the amendment application although the plaintiff there failed to give a satisfactory explanation as to why the amendment application was taken out late.

13.  DHCJ Lok in that case stated that

“ 14. The principles under which the court exercises its discretion to allow or refuse amendments to pleadings can be summarized into 4 prepositions (see: Ketteman v Hansel Properties Ltd [1987] 1 AC 189, per Lord Brandon at p 212F-H):

(i) first, all such amendments should be made as are necessary to enable the real questions between the parties to be decided;

(ii) second, amendments should not be refused solely because they have been made by the honest fault or mistake of the party applying for leave to make them: It is not the function of the court to punish parties for mistakes which they have made in the conduct of their cases by deciding otherwise than in accordance with their rights;

(iii) third, however blameworthy (short of bad faith) may have been a party’s failure to plead the subject-matter of a proposed amendment earlier, and however late the application for leave to make such amendment may have been, the application should, in general, be allowed, provided that allowing it will not prejudice the other party; and

(iv) fourth, there is no injustice to the other party if he can be compensated by appropriate orders as to costs.”

14.  He adopted the stance taken in the post CJR case of 厦門新景地集團有限公司 v Eton Properties Ltd, unreported, HCMP 13, 15, 18, 21/2012 (decision of the Court of Appeal on 3 February 2012) where whilst acknowledging that there was delay in the making of the amendment application and lack of explanation for such delay, the court nevertheless allowed the application on the ground that the “primary aim” in exercising the case management (or other) powers of the court is to secure “just resolution of disputes in accordance with the substantive rights of the parties” Order 1A rule 2(2) of the RHC.

15.  It was said that delay without explanation in making the amendment application should only be one of the many factors that the court should take into consideration in deciding whether to grant an amendment application.

16.  This is in fact the approach I adopted in considering the present application.

17.  Although Mr Ng attempts to distinguish the Li Shiu To case from the present case by saying that the plaintiffs here failed to adduce any affirmation evidence to explain whereas in Li Shiu To case, they did offer affirmation evidence.  In my view, when one offered explanation for the delay but was found not to be good reasons, as in the Li Shiu To case, the same equated the lack of explanation for the delay.  The Li Shiu To case is not distinguished.  In any event, the legal principle enunciated therein is good law.

Late allegation of malice

18.  Mr Ng also opposed the present application on the ground that the plaintiffs now seek to make, for the very first time in these proceedings  and only after long period of delay, a very serious allegation against the defendant, namely that in publishing the article complained of by the plaintiffs, the defendant was acting “maliciously”.

19.  Mr Ng argued that as malice is a very serious allegation to make against anyone, being tantamount to dishonesty, they must be scrutinized with particular care to see whether it complies with the minimum standards laid down in the authorities to ensure that there is sufficient evidential basis for alleging dishonesty.  The test he said is whether the facts alleged are more consistent with the presence of malice than with its absence.  Also, allegations of malice should not be made formulaically by way of bare assertion.  The court should be wary of the risk of such allegations being used as a tactical weapon to try to bludgeon people into submission or compromise.  Dorset Flint Sone Blocks Ltd & others v Moir & others [2004] EWAC 2173 (QB) Eady J, Jonthan Lu & others v Paul Chan Mo Po HCA 270/2012 paragraph 29 per To J.

20.  Mr Ng invited this court to consider the case of Associated Leisure Ltd (Phonographic Equipment Co Ltd) and others v Associated Newspapers Ltd [1970] 2 QB 450 where Denning MR says at p 456: -

“But when the defendant seeks to plead justification at a late stage, his conduct will be closely inquired into. The court will expect him to have shown due diligence in making his inquiries and investigations. The court may well refuse him application if he has been guilty of delay or not make proper inquiries earlier.”

21.  Mr Ng also asked this court to consider the case of Dias Sandra Mary Elizabeth v Cathay Pacific Airways Ltd HCA 2372/2002 where DHCJ Muttrie queried why the defendant elected not to plead theft allegations as part of the misconduct in their defence two year earlier.

22.  Paragraph 33 of his judgment reads: -

“33. Leave to amend late is readily granted, on payment of costs, unless the opponent will be placed in a worse position than he would have been if the amended pleading had been served in the first instance. But there may be difficulty if there is ground for believing that the application is not made in good faith. Thus, if either party seeks to amend by introducing for the first time allegations of fraud, misrepresentation or other such serious allegation, the court will ask why this was not pleaded originally, and may require to be satisfied as to the truth and substantiality of the proposed amendment. See Lawrence v Norreys (1890) 39 Ch D 213.”

23.  Mr Ng says it is an elementary principle of defamation law that a plea of qualified privilege or fair comment on a matter of public interest, if established, can only be defeated by a plea of malice.  He said if there is evidence of malice or dishonesty on the part of the defendant, one would expect the plaintiffs to plead it in the original reply.  This elementary principle of defamation law could not have escaped the attention of the plaintiff’s then solicitors Messrs Orrick, Herrington & Suteliffe (“OHS”), a reputable law firm who was responsible for preparing the reply or Messrs K&L Gates, another reputable law firm who took over this case from OHS since 26 February 2013.

24.  Mr Ng submitted that as there is no proper evidence of malice, that similar to the case of Leung Kwai Ling L v Carmel Chow and others HCA 1784/2011, the plaintiff’s application here must be dismissed.  He says that the plaintiffs’ plea of malice fails to comply with the minimum standards laid down in the authorities.  There is insufficient evidential basis for making the allegation of malice.

25.  In court however, Mr Ng conceded that the allegation of malice, as pleaded in this case, is not one that is bound to fail.

26.  One can safely infer from the concession by Mr Ng that the minimum standards laid down in the authorities was met.

27.  Further in court when asked, Mr Ng for the defendant seemed to agree that should the plaintiffs filed the reply back in year 2012 with malice being pleaded, as presently pleaded in the proposed amendments, they would not take issue.

28.  The main reasons for their opposition to the amendment application is therefore really and mainly the unexplained delay and lateness.

29.  Mr Man for the plaintiff pointed out that the proposed amendments at issue are really paragraph 7.2 of the draft amended reply, in particular subparagraphs (viii) and (ix) which read: -

“ (viii) The Court will be asked to infer that the Defendant published the Words without belief that they were true or justified, or was reckless as to whether they were so.

(ix) The Court will further be asked to infer that the dominant motive of the Defendant in publishing the Words and the Article was to attack and/or give vent to her personal ill will towards the Plaintiffs and those who supported the Plaintiffs.”

30.  Mr Man argued that in fact in the witness statement of the 2^nd plaintiff dated 30 December 2013, paragraph 20 reads: -

“ 20. Lau knew that the defamatory statements were untrue and baseless and/or she was reckless as to the same because:

(a) as the chairwoman of the Management Committee, Lau was involved in handling the building management disputes regarding the Building, including the disputes which were the subject matters of the Lands Tribunal Case between the Incorporated Owners and Multi-Winner;

(b) the so-called “seducement” related to the settlement offer made by Multi-Winner in the Lands Tribunal Case in the course of the mediation;

(c) throughout the Lands Tribunal Case and during negotiations leading to the medication meeting, both the Incorporated Owners and Multi-Winner were represented by their own lawyers;

(d) it was absolutely obvious that in the settlement negotiations parties were offering terms which were intended to achieve an amicable settlement, and there could be no suggestion that there was anything giving rise to any suspicion of bribery. Nothing was ever offered to any representative of the Incorporated Owners personally.”

31.  He contended further that this part of the witness statement, very similar to the draft paragraph 7.2(viii) of the draft amended reply has not been struck out and that matters raised in the proposed amendments therefore cannot be said to be newly raised.  I agree.

32.  Further, this court noted that in the Statement of Claim filed on 18 January 2011, under Section C, Aggravated Damages, paragraph 11(4) reads: -

“ 11. Further the Plaintiffs will rely on the following facts and matters to support their claim for aggravated damages against the Defendant.

. …

(4) In the circumstances, the Defendant know that the words against the Plaintiffs are untrue and baseless and/or was reckless as to whether the words were untrue or baseless.”

33.  This paragraph remains after the Statement of claim was re-amended.  The allegation of “the defendant knowing the words against the plaintiffs are untrue and baseless and/or was reckless as to whether the words were untrue or baseless” are therefore not new to the defendant.

34.  I also agree with Mr Man that the improper motive under paragraph 7.2(ix) is possible inference with reference to matters complained of in the original paragraph 11(4) of the Statement of Claim.

Vague and unprecise

35.  Mr Ng also criticized some of the proposed amendments to be vague and unprecise as they referred to “those who supported the Plaintiffs” and “persons believed by the Defendant to be associated to or share similar interests with the Plaintiffs”.

36.  This court takes the view that the same could always be clarified, if need be, at a later stage by request for further and better particulars.

Prejudice

37.  Mr Man says that the prejudice to the defendant, if the application is allowed could be compensated by costs.  He said no trial date has been fixed and therefore even if amendment application was allowed, no milestone date would be disturbed.

38.  Save for delay in setting down the case for trial, Mr Ng raised no further submissions in this respect.

Plea of malice in reply

39.  Mr Ng also commented that malice should be pleaded in the Statement of Claim and not the reply.

40.  Mr Man says it is clear that the plea of malice, which deals with the defences of fair comment and qualified privilege, should be introduced in the Reply rather than in the Statement of Claim.  See Excel Concrete Ltd v The Concrete Producers Association of Hong Kong Ltd & Ors (CACV 233/2013, 25 June 2014) §17 (Lam VP).

41.  I agree.

Conclusion

42.  In defamation action, where the qualified privilege is pleaded in the defence, the onus is thrown upon the plaintiffs of proving the existence as a fact of the malice necessary to maintain the action.  The plaintiff is not entitled to go outside the particulars of facts and matters pleaded in the reply in support of the allegation of malice (Lo Ki Chung v Hong Kong Nam Hoi (Sha Tau District) Association Ltd, unreported HCA 39/2003, July 22, 2004) Hong Kong Civil Procedure 2014 para 82/3/1.

43.  In the Court of Final Appeal case of Chung & Another v Tse Wai Chun, the Court of Appeal held that a plaintiff would defeat the defence of fair comment by proving that the comments were actuated by “malice”.

44.  Malice was said to cover the case of the defendant who did not genuinely hold the view that he expressed.  It was subjective and looked to the defendant’s state of mind.  Honesty of belief was the touchtone.

45.  It is said that “malice” did not bear the same meaning for the defences of fair comment and qualified privilege.  In the case of qualified privilege, the defence was defeated by proof that the defendant used the occasion for some purpose other than for which the occasion was privileged.

46.  The defendant in this case pleaded fair comment and qualified privilege and the proposed amendments was directed to defeat these defences.

47.  In Gatley on Libel and Galanela Twelveth Edition, Chapter 32 paragraph 32.35 on p 1245, it reads: -

“No honest belief. In whatever context malice is raised, evidence tending to show, or from which it can be inferred, that the defendant had no honest belief in the truth of the defamatory statement will usually be powerful evidence of malice.

“If it be proved that (the defendant) did not believe that what he published was true this is generally conclusive evidence of express malice, for no sense of duty to protect his own legitimate interests can justify a man in telling deliberate falsehoods about another, save in the exceptional case where a person may be under a duty to pass on without endorsing, defamatory reports made by some other person”.

There is a division of view as to whether it is absence of honest belief (as suggested by Lord Diplock in the above passage) or improper motive which is definitive of malice, though the better view is probably the latter. As was pointed out by Gray J. in Rackham v Sandy, the point will usually be of limited practical significance, since knowledge of falsity will in nearly every instance establish the existence of an improper motive. So also in the context of comment,

“A comment which falls within the objective limits of the defence of fair comment can lose its immunity only by proof that the defendant did not genuinely hold the view he expressed. Honesty of belief is the touchstone.””

48.  Paragraph 32.36 reads: -

“32.32  Recklessness.  Recklessness as to the truth of a defamatory statement, not caring whether it be true or false, is treated as equivalent to knowledge that it is false.  Thus evidence may be led which indicates such a disposition on the part of the defendant, that, e.g. he deliberately abstained from availing himself of means of information readily to hand which would have shown the imputation to be groundless.  Recklessness is not, however, to be equated with “carelessness, impulsiveness, or irrationality”.  Thus, if the defendant honestly believed his statement to be true, it may not matter that he failed to investigate it beforehand.  Omission to make any inquiry in such circumstances is not itself evidence of malice.  It has been suggested that malice could arise if the defamatory charge was made, not on the evidence of the defendant’s own senses, and a slight inquiry would have shown that the charge was unfounded.  Wilful blindness to the real facts has been said to be a test by which a jury may be led to consider whether the defendant did or did not really believe his statement to be true; recently, it has been treated as effectively synonymous with indifference to the truth and as pointing clearly to malice.”

49.  Order 1A rule 2(2) RHC demands that in giving effect to the underlying objectives of these rules, the court shall always recognize that the primary aim in exercising powers of the court is to secure the just resolution of the disputes in accordance with the substantive rights of the parties.

50.  That said, I do not think it appropriate to deny the right of the plaintiff to attempt to defeat the defences of the defendant by pleading malice just because they omitted so to do earlier, though without good reasons.

51.  Bearing in mind all the factors relevant in considering such an amendment application, I therefore exercised my discretion to allow the amendment application.

Costs

52.  Generally, in amendment application, necessitated by the applicant, the applicant has to pay all costs of and incidental to the application.  In the present case, save for the cost of hearing of the application, I see no good reason to depart from such rule.

53.  It is a fact that there has been substantial delay on the part of the plaintiff to amend the reply and that no explanation was offered for such delay.  Although this is but one of the factors to be considered, the defendant could not be said to be unreasonable in contesting the application.

54.  The plaintiff here is seeking the indulgence of this court and considering the circumstances of this case and bearing in mind that costs is always a matter of discretion for the court, I make an order nisi that all costs of and incidental to the amendments and the cost of the present application (save the cost of the hearing of the application) be to the defendant, and that the costs of the hearing of the application be costs in the cause, with certificate for counsel, the same to be taxed if not agreed.