GOODWELL PROPERTY MANAGEMENT LTD v. LEE HUNG SING AND OTHERS

CACV 126/2019

[2019] HKCA 634

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 126 OF 2016

(On appeal from DCCJ 1886/2016)

___________________________

___________________________

___________________

J U D G M E N T

___________________

Hon Lisa Wong J (giving the Judgment of the court):

Appeal before court

1.  Before the court is an appeal by Goodwell Property Management Limited (“Goodwell”), the plaintiff in DCCJ 1886/2016, a defamation action, against the decision made by Deputy District Judge K C Chan on 29 November 2018 (“Decision”)[1]:

(1)   allowing, in part, Goodwell’s application (“Expunction Application”) to expunge paragraph 74 (“Statement Paragraph 74”) of each of the supplemental witness statements dated 13 March 2018 (“defendants’ supplemental statements”) of the 1^st, 2^nd and 4^th defendants[2] (“defendants”); and

(2)   allowing, also in part, the defendants’ application (“Amendment Application”) for leave to re-amend paragraph 3  of their amended defence (“Defence Paragraph 3”).

The alleged defamation

2.  p>2.   Goodwell, a property management company within the Cheung Kong Property Group, is and was at the material times the manager of The Apex, 33 Wo Yi Hop Road, Kwai Chung, New Territories (“Estate”), an estate made up of 2 blocks of flats with a total of 924 units.  Goodwell was appointed by the Deed of Mutual Covenant dated 21 December 2007 and presumably began to manage the Estate approximately from that time.

3.  The defendants were, at the material times, residents of the Estate and, with the exception of the 1^st defendant, members of the owners’ committee of the Estate.

4.  Goodwell’s claim in defamation arose out of the publication of 4 letters in Chinese, respectively dated 21 January 2016, 26 January 2016, 21 February 2016 and 26 February 2016 (“Letters”) by the defendants to the owners of the Estate (“Owners”) by insertion into the letter boxes of the 924 units.  Goodwell contended that the contents of the Letters carried the defamatory meanings that Goodwell (1) caused and/or contributed to unexplained and inexplicable deficits (“Deficits”) in the Estate’s accounts; (2) was not truthful to the Owners in respect of the cause of the Deficits; (3) was not acting in the best interests of the Owners; (4) was acting against the Owners in a high-handed, condescending and/or uncooperative manner; (5) abused its position as manager of the Estate; (6) was not competent and/or failed to discharge its duty in a professional manner in acting as the manager of Estate; (7) increased the management fees of the Estate without giving proper reason or following proper procedure; (8) was not a company worthy of respect; (9) deliberately concealed matters of importance from the Owners; (10) was exploiting the Owners for its own gain; and (11) was guilty of harassing and misleading the Owners.

Relevant procedural history

5.  It is necessary to go into the following procedural history to put the Expunction Application and the Amendment Application in context and to explain the costs order nisi that we are going to make.

6.  The view could be taken that it all started with paragraph 1(d) of the statement of claim, by which Goodwell asserted that it was and is “a company enjoying good reputation in that, inter alia, [Goodwell] in December 2007 successfully obtained the “Integrated Management System” (IMS) accreditation, becoming the first property management company that received such recognition with the most properties” (emphasis added).  We have a few observations about this averment.

7.  First, the good reputation of the claimant in a defamation action, or more precisely, the injury caused to the claimant’s reputation by the defamation is presumed until the contrary is proved.  It is thus unnecessary for the claimant in a defamation action to prove, or assert, that he has a good reputation in order to recover substantial damages.  See Gatley on Libel and Slander, 12^th Edition (2013), p 1265, §32.62 and Duncan and Neill on Defamation, 4^th Edition (2015), p 268, §25.19, footnote 1[3].

8.  Second, the IMS accreditation may, at most, tend to suggest that Goodwell ought to have a good reputation at the time.  It is not, and cannot be regarded as, evidence of actual good reputation.  The accreditation itself does not prove whether and, if so, how it had actually or relevantly affected Goodwell’s reputation, if at all.  See further the exclusionary principle discussed in paragraphs 31(2) and 32(2) below, which applies with equal force to evidence of good reputation. Just as a defendant cannot cite particular instances of the claimant’s misconduct to diminish damages, a claimant cannot give evidence of particular facts in support of his claim to have a good character.  See Hobbs v Tinling (CT) and Co Ltd [1929] 2 KB 1, per Greer LJ at 39.

9.  Third, one is concerned with the claimant’s reputation or character at the time of the publication of the defamation.  The publication of the Letters, and the presumed damage to Goodwell’s reputation, took place in January and February 2016.  What should therefore matter is Goodwell’s reputation in early 2016.

10.  Fourth, we are not here dealing with a libel in a national newspaper or other territory-wide publication.  The Letters were published just, and could only have damaged Goodwell’s reputation, to the Owners.  So, to be precise, at least insofar as quantum of damages is concerned, what is material is Goodwell’s reputation to the Owners in early 2016.  An accreditation regarding how the systems, processes and/or components of Goodwell’s business integrated into one framework (as the description “integrated management system” suggested) back in December 2007 seems to us to be of little, if not, no relevance.

11.  Unfortunately, the matter did not stop there.  To compound the indulgence in the unnecessary and/or the irrelevant on pleading, on 11 September 2017, Goodwell filed a witness statement dated 23 May 2017 by its deputy/assistant general manager, a Mr Mak Kam Chuen (transliteration) (“Mak’s statement”).  Apart from repeating and embellishing on the averments in paragraph 1(d) of the statement of claim in paragraph 5, under paragraph 6 of Mak’s statement are 2 tables that run to a total of 6½ pages (pages 3 to 9), setting out the numerous awards and accreditations received by Goodwell throughout the whole year of 2016, many of which do not seem to us to have anything to do with Goodwell’s estate management services or the quality thereof.

12.  We repeat paragraphs 7 to 10 above.  In addition:

(1)   First, as in the case of the IMS accreditation, the various awards and accreditations listed in paragraph 6 of Mak’s statement do not constitute evidence of actual good reputation.  They may, at most, tend to show that Goodwell ought to have a good reputation.

(2)   Second, evidence of the claimant’s reputation after the publication of the defamation in question should not be admitted.  See Gatley on Libel and Slander, supra, p 1291, §33.34.  This paragraph deals with evidence of subsequent bad reputation.  However, we do not see why the same principle should not govern evidence of subsequent good reputation.  The great majority of the awards and accreditations enumerated in paragraph 6 of Mak’s statement namely, those listed from the last row on page 3 to the end of the second table at page 9, were all subsequent to the publication of the last of the Letters in February 2016.  They are, for this reason alone, immaterial.

(3)   Third, as for the awards and accreditations obtained by Goodwell in or before February 2016, as stated above, the question to be asked is Goodwell’s reputation to the Owners in early 2016.  It is not known if any of the Owners were aware of, and had further formed a view or impression of Goodwell’s reputation based on, any such awards or accreditations in early 2016.

13.  Regrettably, Mak’s statement provoked the filing and service of the defendants’ supplemental statements on 13 March 2018.  It was stated in paragraph 2 of each of these depositions that they were made to rebut Mak’s statement and his supplemental witness statement (which is not before us).

14.  Insofar as it is material, one of the matters that the defendants seek to refute was the good reputation asserted by Goodwell.  In particular, section XV of each of the defendants’ supplemental statements was headed “About Goodwell’s reputation” (“有關高衛的聲譽”).  Under such heading, apart from questioning the relevance or weight of the various awards and accreditations referred to and relied on by Goodwell, Statement Paragraph 74[4] (i.e. the subject-matter of the Expunction Application) stated that the conduct of Goodwell as a management company had been widely reported and criticised amongst citizens and owners of small properties (“市民和小業主”). 

15.  In support, the defendants listed in a table comprising 11 rows under Statement Paragraph 74:

(1)   a report by the Apple Daily on 14 March 2009 on an incident in which Goodwell allegedly prevented the owners of another estate from entering the venue of an owners’ meeting (1^st row);

(2)   3 reports by the Apple Daily, all in September 2010, on the successful attempts by the owners of 2 other estates in removing Goodwell as manager (2^nd, 3^rd and 5^th rows);

(3)   2 reports by the Apple Daily on 26 September 2010 and 28 March 2011 and 1 report by Ming Pao on 11 June 2011 covering the failed attempts by the owners of 2 other estates to remove Goodwell as manager (4^th and 6^th rows);

(4)   a report by the Apple Daily in March 2016 on an incident in which the owners of another estate “expressed dissatisfaction” with Goodwell’s management and took steps to establish an owners’ corporation so as to monitor Goodwell (10^th row);

(5)   a report by the Apple Daily on 2 May 2016 concerning Goodwell’s management of the Estate, including the incurrence and accumulation of the Deficits, its proposal in January 2016 to increase the management fee of the Estate by 6% against the opposition of the Owners and a meeting to be held that Friday by some of the Owners to vote on a resolution to form an owners’ corporation to check and balance Goodwell’s powers as manager (11^th row);

(6)   a report by Ming Pao on 6 December 2011 on complaints by the owners of 2 other estates, one of which was managed by Goodwell, about the inclusion in the management fees of Hutchison broadband charges which might potentially be against competition law (8^th row); and

(7)   a report by the Oriental Daily on 3 August 2013 on the commencement of legal proceedings for relief for disability discrimination by a resident of another estate against the 2 managers of that estate (not named but presumably included Goodwell) (9^th row).

16.  On 10 April 2018, Goodwell issued the summons for the Expunction Application.  The hearing of such application and the defendants’ application by summons dated 11April 2018 for specific discovery of certain documents (“Discovery Application”) (with which we are not concerned) could not finish on 17 September 2018 and was adjourned part-heard to 5 October 2018.

17.  In the meantime, on 28 September 2018, the defendants took out a summons for leave to re-amend the amended defence (“Earlier Amendment Application”).  The defendants so applied with a view to overcoming one of the points made by Goodwell in support of the Expunction Application, which was that the matters set out in Statement Paragraph 74 had not been pleaded by the defendants.

18.  By agreement of the parties, the Deputy Judge heard the Earlier Amendment Application first on 5 October 2018.  He dismissed it with costs against the defendants, with reasons given orally.  The ground for dismissal was essentially that that round of proposed re-amendments completely lacked the requisite particulars.  The Discovery Application was also disposed of (with reasons to be given later) on 5 October 2018.  As for the Expunction Application, it was again adjourned part-heard to 26 October 2018.

19.  In the meantime, the defendants re-formulated the re-amendments to the amended defence (“Objected Amendments”)[5] and took out the summons for the Amendment Application on 19 October 2018. 

20.  To put the Objected Amendments in context, the original Defence Paragraph 3 contained a simple non-admission of paragraph 1 of the statement of claim, including the averment of Goodwell’s good reputation in paragraph 1(d).

21.  By the Objected Amendments, the defendants sought to (1) specifically deny that Goodwell had or has a good reputation; (2) positively assert that Goodwell had and has a general bad reputation in the real property management sector; and (3) plead in 10 sub-paragraphs the said media reports on incidents involving other developments managed by Goodwell set out under Statement Paragraph 74.

22.  The substantive hearing of the Expunction Application and the Amendment Application was completed on 26 October 2018 with judgment reserved. 

The Decision and the consequential changes to the defendants’ pleading and evidence

23.  The Deputy Judge dealt with the Amendment Application and the costs thereof at [77]-[105], ruling as follows:

(1)    granting the defendants leave to re-amend as per the Objected Amendments but without sub-paragraphs (i), (iv) to (x) thereof provided that the following particulars be added to each of sub-paragraphs (ii) and (iii):

(a)    the name of the estate involved in the reported incident;

(b)   the name of the media making the report; and

(c)   all other particulars necessary for identifying the report; and

(2)   ordering, on a nisi basis, Goodwell to have the costs of the application with certificate for counsel “save and except that there is no order as to costs of its hearing”, such costs to be summarily assessed.

24.  The re-amended Defence Paragraph 3 reads as follows:

“3. Paragraph 1 is not admitted except it is denied that the Plaintiff previously had and currently has good character or reputation. The 1^st, 2^nd and 4^th Defendants aver that the Plaintiff previously had and currently has a general bad reputation in the sector real property management. In particular:-

(i) it was reported that the Plaintiff was removed from the position of manager of Ronsdale Garden (龍華花園), 25 Tai Hang Drive, Tai Hang, Hong Kong, because of its poor management services.

PARTICULARS OF THE REPORT

Date of Report	25th September 2010
Media	Apple Daily
Title of Report	屋苑管理差兩法團響應起義 反長實星火燎原
Internet Hyper Link (as of 07/12/2018)	http://hk.news.appledaily.com/local/daily/article/20100925/14487565

(ii)    it was reported that owners of One Beacon Hill (畢架山一號), at 1 Beacon Hill Rd, Kowloon Tong, Kowloon, Hong Kong, were dissatisfied with the management services and subsequently removed the Plaintiff by an extraordinary meeting of owners.

PARTICULARS OF THE REPORT

Date of Report	29th September 2010
Media	Apple Daily
Title of Report	畢一小業主勝利！起義成功踢走長實
Internet Hyper Link (as of 07/12/2018)	http://hk.news.appledaily.com/news/art/20100929/14500361

25.  The Deputy Judge considered the Expunction Application and the costs thereof at [106]-[114], ruling as follows:

(1)   expunging just the 1^st, 3^rd, 4^th and 6^th to 11^th rows of the table under Statement Paragraph 74, thereby leaving the table with the 2^nd and 5^th rows intact; and

(2)   ordering, on a nisi basis, Goodwell to have 80% of the costs of the application with certificate for counsel to be summarily assessed.

26.  Statement Paragraph 74, without the expunged rows, reads as follows: 

“74. 最重要的是，高衞作為管理公司的行為，早就在市民和小業主中被廣泛批評和報導。以下是相關新聞的列表：

時間	報導
2010年9月 蘋果日報	大坑龍華花園業主立案法團舉行特別業主大會，決定罷免長實旗下高衞物業管理，原因為業主不滿高衞管理質素差劣，當中停車場長期滲水無人理會以及管理員永遠開啟入口大門任由訪客出入屋苑等等。於同年年中罷免長實旗下高衞物業管理，高衞須於2010年9月30日撤出屋苑。
2010年9月29日 蘋果日報	畢一小業主勝利！起義成功踢走長實 九龍塘畢架山一號業主立案法團昨晚在會所舉行特別業主大會，大比數通過罷免長實旗下高衞物業管理公司的議案。這次豪宅起義引起高度關注，公民黨及民主黨立法會議員均有出席，其中涂謹申形容是「小業主團結的勝利」，但昨晚只是一個開始，業主仍需努力維護良好屋苑管治。

＂

Leave to appeal to Court of Appeal

27.  Goodwell’s application to the Deputy Judge by summons dated 12 December 2018 for leave to appeal against the Decision to the Court of Appeal was heard on 9 January 2019 and dismissed with costs against Goodwell on 14 January 2019.

28.  Goodwell’s application to the Court of Appeal by summons dated 23 January 2019 for leave to appeal was originally set down for hearing on 12 March 2019.  After considering the parties’ respective written statements in support of/in opposition to leave, to save time and costs, on 6 March 2019, this court granted Goodwell leave to appeal on paper with costs of the leave application to be costs in the cause of the appeal; vacated the hearing on 12 March 2019; and set the appeal down for hearing on 8 May 2019. 

Ground of appeal

29.  Goodwell’s primary ground of appeal is that the media reports (or the incidents covered thereby) pleaded in Defence Paragraph 3 and to be adduced through Statement Paragraph 74 are inadmissible as evidence of Goodwell’s alleged bad reputation.

Relevant legal principles

30.  That the claimant in a defamation suit is of a bad reputation or poor character is material to the extent to which the libel or slander had damaged his reputation and therefore to the quantum of damages.  As stated by Cave J in Scott v Sampson (1882) 8 QBD 491 at 503:

“Speaking generally the law recognizes in every man a right to have the estimation in which he stands in the opinion of others unaffected by false statements to his discredit; and if such false statements are made without lawful excuse, and damage results to the person of whom they are made, he has a right of action. The damage, however, which he has sustained must depend almost entirely on the estimation in which he was previously held. He complains of an injury to his reputation and seeks to recover damages for that injury; and it seems most material that the jury who have to award those damages should know if the fact is so that he is a man of no reputation. “To deny this would,” as is observed in Starkie on Evidence, “be to decide that a man of the worst character is entitled to the same measure of damages with one of unsullied and unblemished reputation. A reputed thief would be placed on the same footing with the most honourable merchant, a virtuous woman with the most abandoned prostitute. To enable the jury to estimate the probable quantum of injury sustained a knowledge of the party’s previous character is not only material but seems to be absolutely essential.”

…

On principle, therefore, it would seem that general evidence of reputation should be admitted…”

31.  Having established the admissibility of “general evidence of reputation”, Cave J then held inadmissible:

(1)    firstly, evidence of rumours and suspicions to the same effect as the defamatory matter complained of; and

(2)    secondly, evidence of particular facts and circumstances tending to show the character and disposition of the claimant.

32.  His Lordship explained:

   (1)   the exclusion of rumours and suspicions to the same effect as the defamatory matter complained of at 503-504:

“As to the second head of evidence or evidence of rumours and suspicions to the same effect as the defamatory matter complained of, it ould seem that on principle such evidence is not admissible, as only indirectly tending to affect the plaintiff’s reputation. If these rumours and suspicions have, in fact, affected the plaintiff’s reputation, that may be proved by general evidence of reputation. If they have not affected it they are not relevant to the issue. To admit evidence of rumours and suspicions is to give any one who knows nothing whatever of the plaintiff, or who may even have a grudge against him, an opportunity of spreading through the means of publicity attending judicial proceedings what he may have picked from the most disreputable sources, and what no man of sense, who knows the plaintiff’s character, would for a moment believe in. Unlike evidence of general reputation, it is particularly difficult for the plaintiff to meet and rebut such evidence; for all that those who know him best can say is that they have not heard anything of these rumours. Moreover, it may be that it is the defendant himself who has started them.”

2)   the exclusion of evidence of particular facts and circumstances tending to show the character and disposition of the claimant at 504-505:

“As to the third head or evidence of facts and circumstances tending to shew the disposition of the plaintiff, both principle and authority seem equally against its admission. At the most it tends to prove not that the plaintiff has not, but that he ought not to have, a good reputation, and to admit evidence of this kind is in effect … to throw upon the plaintiff the difficulty of shewing an uniform propriety of conduct during his whole life. It would give rise to interminable issues which would have but a very remote bearing on the question in dispute, which is to what extent the reputation which he actually possesses has been damaged by the defamatory matter complained of.”

33.  Focusing on evidence of particular facts and circumstances tending to show the character and disposition of the claimant, it can be seen that the justifications for the exclusion are two-fold: (1) that such evidence tends only to prove that the claimant ought not to have a good reputation and not that he does not actually have a good reputation; and (2) that the trial should not become roving inquiries into the claimant’s reputation, character or disposition. 

34.  With regard to the second concern, Lord Guest commented in Plato Films Ltd v Spiedel [1961] AC 1090 (in which an attempt to persuade the House of Lords to modify the decision in Scott v Sampson failed)at 1148, that if allegations of specific instances of misconduct were allowed:

“It would inevitably prolong trial and tend to confuse the minds of the jury by distracting their attention from the main issue. The result might be that a trial in which the truth or falsity of one allegation was being investigated might degenerate into trials of the truth or falsity of a dozen of other allegations, whether or not relevant to the subject matter of the libel, introduced by the defendants for the purpose of mitigating damages.”

35.  However, it must not be forgotten that civil procedure law has undergone multiple reforms, both in England and Wales and in Hong Kong, after the decisions in Scott v Sampson and Plato Films Ltd v Spiedel.  The courts are now better equipped in terms of its case management powers to deal with the risk of having “trials within a trial”, which in the first place justified the exclusion of evidence of particular facts and circumstances tending to show the character and disposition of the claimant.  As observed by May LJ in Burstein v Times Newspapers Ltd [2001] 1 WLR 579 at [40] at 597H:

“It will, generally speaking, normally be both unfair and irrelevant if a claimant complaining of a specific defamatory publication is subjected to a roving enquiry into aspects of his or her life unconnected with the subject matter of the defamatory publication. It is also in accordance with the overriding objective that evidence should be properly confined, both in its subject matter and its duration, to that which is just directly relevant to the subject matter of the publication. Thus under the Civil Procedure Rules, the court now has ample power to deal justly with the problems which, in the main, gave rise to the first and third limbs of decision in Scott v Sampson…”

36.  Anyway, the inadmissibility of particular facts and circumstances tending to show the character and disposition of the claimant is not absolute.  This particular exclusion has been qualified by Burstein v Times Newspapers Ltd, in which the claimant brought libel proceedings over an article, stating that he had organised hecklers to wreck performances of modern atonal music.  In defence, the defendant newspaper raised fair comment.  In support, it was alleged, inter alia, that 3 years before the publication of the article, the claimant had co-founded a group of campaigners against modernist atonal music which styled itself “The Hecklers”; that The Hecklers had encouraged the public to boo and hiss at the end of the performance of an opera; and that the claimant had been present at the performance and had booed.  The judge at first instance struck out the defence and ruled that the said facts pleaded in support of it relating to the claimant’s alleged bad conduct were inadmissible evidence in mitigation of the claimant’s damages.  Following such decisions, the assessment of damages proceeded before the jury on limited evidence.

37.  The English Court of Appeal dismissed the defendant’s appeal.  May LJ gave the main judgment. Both Aldous LJ and Sir Christopher Slade agreed with him.  May LJ held that:

(1)   The evidence which Scott v Sampson excludes is “particular evidence of general reputation, character or disposition which is not directly connected with the subject matter of the defamatory publication”.  What is objectionable and inadmissible is specific conduct leading to the alleged general bad reputation of the claimant.  See [30] at 593H and [42] at 598H.

(2)   Scott v Sampson does not exclude directly relevant background facts that explain the context in which the defamatory publication came to be made and which might be thought capable of reducing the claimant’s damages, even though they might include matters that were not causally connected with the publication of the defamation.  See [24] at 589G-590A, [28] at 592H, [30] at 593H and [36] at 596G,

(3)   There was a background context to the defamatory publication.   To keep them away from the jury was to put them in blinkers, in ignorance of background context directly relevant to the damage that the claimant claims has been caused by the defamatory publication.  See [41] at 598B, [47] at 600F and [48] at 600H.

38.  What constitutes directly relevant background “will vary from case to case” and the courts have been urged to proceed with some caution in applying the Burstein modification of the long-standing rule in Scott v Sampsonand to guard against extending too creatively the concept of “directly relevant background.  Given the rationale is to avoid jurors having to assess damages while wearing blinkers, to qualify under the Burstein modification, the evidence has to be so clearly relevant to the subject matter of the libel or to the claimant’s reputation or sensitivity in that part of his life that there would be a real risk of the jury assessing damages on a false basis if they are kept in ignorance of the facts to which the evidence relates.  See Turner v News Group Newspapers Ltd [2006] 1 WLR 3469, per Keene LJ at [56]. May LJ himself stressed in Bursteinat [41] at 598B-D that “[t]o determine the relevant background context and to confine it properly, it is necessary to start with the defamatory publication itself”.

The Deputy Judge’s reasoning

39.  The Deputy Judge, after setting out the relevant legal principles, dealt with the admissibility of the 2 Apple Daily reports now set out in the re-amended Defence Paragraph 3 and in the retained rows in the table under Statement Paragraph 74 in [100]-[103] and [109] of the Decision:

“100.   I take a different view as to the 2 incidents pleaded in sub-paragraphs (ii) and (iii).  In these 2 incidents, the plaintiff was actually being voted out and removed as the manager by the owners.  These were concerted acts by the respective owners of these 2 estates; they are not rumours or suspicions.  I think it very arguable, that by the acts of voting the plaintiff out, these owners were saying “we do not want the plaintiff to be the manager of our estate”; that these acts were expressions of the estimation in which the plaintiff stood in the opinion of those owners who belonged to a relevant sector of the public, namely owners of estates who used the service of building managers.  In my view, they are therefore directly relevant contextual background within the Burstein’s case as matters so clearly relevant to the plaintiff’s reputation.

101.   In relation to these 2 incidents, I think the practical concern of introducing “trials within a trial” or roving inquiries is relatively minor.  It is unlikely that the fact that the plaintiff was removed would be contested.  There may be some examinations as to the reasons for such removal and the percentage of the votes and so on – matters that clearly could be managed by the trial judge.

102.   I also bear in mind that this is an application to amend pleadings to facilitate the determination of the real question in controversy, and should be allowed unless there is an obviously good reason not to do so or that the amendment is not necessary for disposing fairly of the matter.

103.   By the above reasons, I do not hold the incidents pleaded in sub-paragraphs (ii) and (iii) inadmissible.

…

109.   In relation to the contents of the 2^nd and 5^th rows of the table in Paragraph 74, they relate presumably to the incidents particularized in sub-paragraphs (ii) and (iii) of the proposed paragraph 3.  Having carefully considered them, I do not think they are scandalous, oppressive or embarrassing and I decline to expunge them on this ground.”

Discussion

40.  With respect, we do not agree with the Deputy Judge’s analysis. 

41.  Following May LJ’s approach in Burstein, one starts with the defamatory publication itself, in this case, the Letters.   The subject matter of the Letters was the quality of the management services provided by Goodwell to the Owners in respect of the Estate from 2007 to early 2016.  Their publication was a result of the defendants’ dissatisfaction with Goodwell’s management of the Estate.  On the other hand, the incidents covered by the 2 news reports in question were the removal of Goodwell as manager by the owners of 2 other different estates namely, Ronsdale Garden in Tai Hang and One Beacon Hill in Kowloon Tong, at completely different times in 2010.  

42.  Although evidence of “directly relevant background facts” admitted under the Burstein qualification might include matters that are not causally connected with the publication of the defamation, as stressed by counsel for the defendants, in this case, we simply do not see how the historical removal of Goodwell as the manager of Ronsdale Garden and One Beacon Hill in 2010 could or might explain the context in which the Letters came to be published in 2016.

43.  Nor do we think ignorance of the removal of Goodwell as the manager of Ronsdale Garden and One Beacon Hill in 2010 would lead to damages being assessed in this case under a false perception as to Goodwell’s reputation.  In our view, the defendants cannot possibly say that such past records of Goodwell is directly relevant to the damage that Goodwell could claim has been caused by the publication of the Letters.  As noted in paragraph 10 above, the instant case does not involve a territory-wide publication of a libel.  The publication of the Letters was confined to the owners of the 924 units in the Estate.  Logically, such alleged defamatory publication could only have harmed Goodwell’s reputation amongst the Owners.  In this connection, Goodwell’s pleas in paragraph 11(a) and (b) of the statement of claim that it has been lowered in the estimation of right thinking persons “generally” and that it has been injured in its credit and reputation as a prestigious management “in Hong Kong”, though standard in a defamation action, seem to us to be much overstated on the facts of this case.  In short, there does not appear to us to be any or any plain connection between the removal of Goodwell by the owners of Ronsdale Garden and One Beacon Hill and Goodwell’s reputation in the sense material to this case.

Disposition

44.  For these reasons, we:

(1)   allow Goodwell’s appeal in relation to both the Expunction Application and the Amendment Application;

(2)   allow the Expunction Application in whole and expunge what is left of Statement Paragraph 7; and

(3)   dismissed the Amendment Application in its entirety.

45.  Turning then to costs, it should be apparent from the above discussion that we take the view that Goodwell started this protracted interlocutory argument with paragraph 1(d) of the statement of claim and paragraph 6 of Mak’s statement which seem to us to be as, if not more, problematic, as the re-amended Defence Paragraph 3 and Statement Paragraph 74.  So although Goodwell has succeeded before us, we believe the fair order as to costs in the circumstances is that the costs of both this appeal (including Goodwell’s 2 applications for leave to appeal) and the Expunction Application and The Amendment below should be costs in the cause of the action below.  And we so order, on a nisi basis.

Postscript:

46.  For the avoidance of any misunderstanding, what we have said in the course of this judgment, particularly, in paragraphs 7 to 10, 12, 43 and 46, is certainly not intended to be, and it would be extremely regrettable if it should be, read as encouraging any further interlocutory applications over matters that could and should have been resolved simply by robust case management by the judge trying the action below. 

47.  Goodwell’s causes of action arose in January-February 2016.  Although the writ of summons was promptly issued in April 2016, the subsequent progress of the action has been far from expeditious.  In particular, we note that more than a year (from April 2018 to date) has been wasted on the prosecution and opposition of the Expunction Application, the Amendment Application, the applications for leave to appeal and this appeal, which have also taken up considerable judicial time and resources (4 hearings before the Deputy Judge and 1 before this court). 

48.  Further, we have been told that Goodwell and the defendants have incurred legal costs estimated to be in the ranges of HK$800,000-HK$1,000,000 and HK$500,000-HK$600,000 respectively up to and including the hearing of this appeal.  While we are mindful that we have seen only a fraction of the evidence and therefore have an incomplete picture of the case, given the nature, scope and duration of the allegedly defamatory publications giving rise to these proceedings, we strongly suspect that the costs that the parties have reportedly incurred up-to-date would have already well exceeded the amount of recoverable damages even if Goodwell should prevail at the end of the day.

49.  Failing any settlement, it would be in the parties’ best interest for them to cease indulgence in any further interlocutory manoeuvres and to just proceed to trial and for the judge to manage the trial with a firm hand.