GCGC LTD v. FRANK YE JUN AND ANOTHER

HCA 565/2023

[2025] HKCFI 1987

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 565 OF 2023

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BETWEEN

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DECISION

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A. Introduction

1.  In these proceedings, the plaintiff (“P”) says that the defendants (“D1” and “D2”) have published via emails various defamatory words against it. On 13 April 2023, on P’s ex parte application, Anna Lai J granted an injunction restraining D1 from publishing defamatory statements as specified therein (the “ex parte Injunction Order”). The ex parte Injunction Order was subsequently on 21 April 2023 continued by Wilson Chan J.

2.  On 8 March 2024, D1 took out a summons (the “Summons”). He seeks in essence to challenge the jurisdiction of the Hong Kong Court in the matters. More specifically, he seeks:

(a) under §1 of the Summons, for an order to set aside:

(i) the leave granted by Anna Lai J in §8 of the ex parte Injunction Order for service out of that Order (“§8 Leave”), and

(ii) the leave granted ex parte by Master D To on 26 July 2023 for issue of Concurrent Wirt and service out of the same (the “26/7 Leave”, and the 2 ex parte applications collectively as the “ex parte Applications”);

(b) under §2, for an order that service out of the Concurrent Writ issued on 21 August 2023 pursuant to the 26/7 Leave (the “Concurrent Writ”) be set aside;

(c) under §3, for a Declaration that this Court does not have or should not exercise jurisdiction over the matters herein; and

(d) under §4, alternatively for a stay on the basis of forum non conveniens;

or alternatively to the all of the above,

(e) under §5, for discharge of the ex parte Injunction Order.

3.  This is the substantive hearing of the Summons.

4.  Mr Douglas Lam SC leading Ms Tinny Chan appeared for D1. Mr Mike Lui SC leading Mr Alexander Burg appeared for P.

B. The relevant affidavits and affirmations

5.  In support and in reply, D1 has filed his 1^st and 2^nd affirmations (“D1/Aff1” and “D1/Aff2” respectively).

6.  For P, there are the following main affidavits:

(a) The 1^st affidavit of Mr Brian Chung Bon Pong (“Pong”, and “Pong/Aff1”) filed in support of the application for the ex parte Injunction Order. Pong is the General Counsel of EY Greater China region and Asia Pacific Area;

(b) The 1^st and 2^nd affidavits of Mr Wong Yiu Pong (“Wong”, and “Wong/Aff1” and “Wong/Aff2”) filed in support of P’s application for the 26/7 Leave, and Wong’s 3^rd affidavit (“Wong/Aff3”) filed in support of P’s application to join D2 as the 2^nd defendant herein. Wong is a solicitor with DLA Piper Hong Kong (“DLA”) who act for P;

(c) Pong’s 2^nd affidavit (in opposition of the Summons, “Pong/Aff2”) and 3^rd affidavit (in response to D1/Aff2, “Pong/Aff3”).

C. The core facts

7.  Parties have placed before me a chronology of events. Save certain items in red or blue, the contents are agreed for the purpose of this application. I have considered the same. I set out below the core facts.

8.  Ernst & Young is an accounting firm with a global network of member firms.

9.  P is a Hong Kong Company limited by guarantee. It is the overall umbrella governance company of the EY China practice (which includes Hong Kong) (“EY”)[1]. One company under that umbrella is Ernst & Young (China) Advisory Limited (“EYCAL”). As described by Pong at §4 of Pong/Aff1[2]:

Ernst & Young is a ‘Big 4’ accounting firm, consisting of a global network of member firms providing professional services in multiple jurisdictions. [P] is the overall umbrella governance company of the EY China practice (which includes Hong Kong) (“EY”) and is a Hong Kong company limited by guarantee. The Memorandum and Articles of Association of GCGC Limited is at pages 1 to 27 of “BP-1”. The directors of GCGC Limited include senior management of EY China and Hong Kong, including Mr Jack Chan[3], Ms Erica Su, Ms Helen Wang, Ms Effie Xin, Ms Vickie Tan, etc., whom are the subject of [D1’s] Complaint and Intended Defamatory Statements, which I will both explain below. Mr. Albert Ng, who is also the subject of [D1’s] Complaint and Intended Defamatory Statements, was a former director of GCGC Limited until his retirement from EY on 30 June 2020. All current PRC and Hong Kong based individuals who are permitted to call themselves as a partner of EY and share in the profits of EY are members of GCGC Limited, which has regulations to govern and regulate its members. As a partner of the EY China practice, [D1] was stationed and worked in the PRC and pursuant to the laws of the PRC, he had a labour contract with Ernst & Young (China) Advisory Limited, which is a PRC entity.

10.  D1 first joined EY in 2014 as a partner of the Strategy and Transactions (“SaT”) service line. He was based in Shanghai. His labor contract was with EYCAL. He was also a member of P.

11.  D2 is D1’s father. He has never been employed by P or EY. D2 was joined in these proceedings because of what he has said in the Shanghai Proceedings (defined below), that the 11 April Email (also defined below) was issued by him.

12.  Some time in December 2020, the SaT leadership at EY commenced discussions on D1’s performance. The SaT leadership included Ms Erica Su, Mr Jackson Wei and Mr Stanley Chan. D1 became involved in those discussions. There had been extensive subsequent correspondence between them and others. The intention was to resolve the issues so as to achieve an amicable separation. Those discussions turned out to be protracted and unfruitful. Of particular relevance is that amid those discussions, and on about 24 September 2021, D1 sent an email to Mr Jack Chan and made a complaint against Ms Erica Su (the “Complaint”). The Complaint concerned her purchase in 2019 of a property in a residential estate in Haikou, Hainan (the “Haikou Development”). The Haikou Development was developed by CR Land (HaiNan) (华润置地开发(海南)有限公司, “CR Land”). CR Land is in the China Resources group, a member of which was China Resources Land Ltd, which had been an audit client of EY since 15 June 2018. Allegations were made thereby against Ms Erica Su that she had obtained unlawful or unfair advantages from the Hainan Government in making the purchase at below market price, such that she had acted in breach of independence principles and the applicable codes of conduct (the “Allegations”).

13.  Upon receipt of the Complaint, EY initiated an internal investigation. In the meantime, between December 2021 and June 2022, EY’s management continued their discussions with D1 with a view to achieving an amicable separation.

14.  On 10 August 2022, EY sent D1 a Notice of Termination to D1 by email (the “Notice of Termination”). D1 appealed against the same.

15.  Within 24 hours after receiving the Notice of Termination, D1 sent a complaint email to EY’s Global Chairman and CEO, Carmine Di Sibio regarding his Complaint, and indicated that he “will simultaneously submit the reasoning, evidence/facts as tips to SEC whistle blower program”. That constituted a report via EY Ethics Hotline (“Ethics Issue Report”) and led to investigation by the General Counsel’s Office.

16.  On 12 August 2022, D1 sent an email to Jack Chan stating that the Notice of Termination was not totally in line with what had been discussed between them on 20 June 2022, and instead proposed terms for “an alternative friendly settlement”. Those terms included one that “I clear all unresolved complaints in system”.

17.  On 30 August 2022, D1 sent an email to a number of EY’s representatives and partners (including Carmine Di Sibio) regarding his Ethics Issue Report. He mentioned the Complaint. He stated his “in-depth analysis” of the same. He concluded by saying that:

I am at your disposal to fully cooperate with the investigation team you are about to assemble. I further assume that if the investigation does reveal that there were independence breaches together with retaliatory actions towards me, the notice of termination I received on Aug 15 should be cancelled immediately and my partnership rights restored without appealing ...

18.  P’s case is that after investigation, EY had found the Complaint and the Allegations unsubstantiated. D1 was notified of that conclusion by Ms Claire Cardno (EY Asia-Pacific Risk Management Leader) via an email of 21 February 2023 (the “21 Feb Email”). She said further therein that “we believe it is appropriate to now bring this complaint and investigation to a close. There is the matter of your outstanding appeal which needs to be progressed now that the investigations are over.”

19.  In response, D1 issued a number of emails. He continued to pursue the Complaint, and continued to make the Allegations, latest not just against Ms Erica Su, but also against a number of EY’s partners. In particular, he between 22 February and 9 April 2023 sent 5 emails from his personal email account to a number of officers, partners, principals and employees of member firms within the Ernst & Young global network. Those 5 emails are dated 22 February, 24 February, 31 March, 4 April and 9 April 2023 (the “22 Feb Email”, “24 Feb Email”, “31 Mar Email”, “4 Apr Email” and “9 Apr Email” respectively, and the “Feb – Apr Emails” collectively). D1 says that the recipients were all senior management of EY[4]. He set out therein what he said to be the events that led to the Complaint. He alleged illegal or professional misconduct (including implication of contravention of s.9 of the Prevention of Bribery Ordinance Cap 201), and loss of independence on their part, on the basis that they had acquired properties within the Haikou Development at undervalue. He alleged also that Jack Chan “was fully aware of the group purchase … And he tried to delay the investigation and managed to retaliate me by excercising [sic] his discretion to terminate my membership in [P]”. There are specific statements amongst the Feb – Apr Emails which P takes particular exception to. Those statements have been excerpted and reproduced in §25 of Pong/Aff1 (the “Specific Statements”).

20.  In relation to the Feb – Apr Emails, it is also relevant to note that D1 indicated in some of them his readiness to reveal the Allegations to the public and the media. Specifically, he said (and the following paragraphs are amongst the Specific Statements):

(a) in the 24 Feb Email, inter alia, that:

If Claire still insists the price they paid was at arm’s length. I am ready to hire some finance KOLs to post and circulate the following survey to the public (especially haikou residents) on weibo:

1) A group of senior EY partners, led by Albert Ng and Erica Su, approved by RMP Jack Chan, managed to each purchase an apartment at HaiKo China Resource Park View Manor at CNY17200 per square meter in 2019. EY is the auditor of the developer (a HK listco). Do you think the price was at arm’s length or CR Land is tunneling profit and sell state-owned assets at lower price so that SaSaC[5] should locate who is responsible?[6]

(b) in the 31 Mar Email, inter alia, that:

Even though I don’t believe we can have a friendly seperation [sic.], I always hope we can do it in the most professional and decent way thru arbitration or court. It seemed Jack much enjoyed the social media impacts like Steven’s sexual harrassment [sic.] case. In fact, I am equally open to bring all the above facts to the public and letting our clients/peers/journalists to comment whether the group purchsae [sic.] of discount apartments was in compliance with EY codes of conduct or independence rules. Also I trust our staffs/alumnus/clients will have a fair assessment whether Stanley Chan fired me for performance reasons is a joke...[7]

(c) in the 9 Apr Email, inter alia, that:

If you thought I am lying in front of so many gentlemen/woman, please instruct GCLT to launch my appeals next week (according to GCO) asap. Once getting the result, I believe I would have sufficient grounds to have a press conference in China to openly discuss why I believe this group pruchase [sic.] behaviours by the EY GCLT was directly against EY global codes of conducts as well as constitues [sic.] a material breach of the independence requirements in the 12 listed companies under China Resource Group in HK/China/US.

21.  On 11 April 2023, P via DLA issued a demand letter[8] to D1 and complained about D1’s acts (the “11 April Demand Letter”). D1 was requested to confirm that he would stop. The concluding paragraphs of that letter specifically warned D1 that “Our client specifically reserves its right to take legal action in Hong Kong and Mainland China and any other relevant jurisdiction, including applying for appropriate injunctive relief.”

22.  On 11 April 2023, shortly after the dispatch of 11 April Demand Letter, P’s attention was drawn to an anonymous email (the “11 April Email”). It contained accusations similar to the Allegations. It had been sent to some 43 recipients. According to the list of recipients[9], the email addresses of quite some of them end with “.com.hk”. There were non-EY recipients, which included EY’s clients (CR Land), a regulatory body in Hong Kong (Accounting and Financial Reporting Council), financial institutions (including JP Morgan, HSBC, UBS and Morgan Stanley), and a news agency (Wall Street Journal). P says that the 11 April Email contains words defamatory of it.

23.  On 12 April 2023, EYCAL commenced legal proceedings in the Shanghai Xuhui District People’s Court (the “Shanghai Court”, and the “Shanghai Proceedings”) against D1:

(a) EYCAL requested thereby that D1 be ordered to withdraw the 11 April Email, and to stop making any defamatory statements against it. EYCAL further sought damages and costs;

(b) D1 defended the Shanghai Proceedings. His defence is dated 27 April 2023. Amongst other matters, he denied having issued the 11 April Email. He however did not plead who actually issued it;

(c) Subsequently, on 22 September 2023, EYCAL applied to joined D2 as the 2^nd defendant in the Shanghai Proceedings;

(d) On 1 December 2023, D2 filed his defence in the Shanghai Proceedings. He pleaded therein that it was him who issued the 11 April Email;

(e) 2 hearings had taken place. EY subsequently decided to withdraw the proceedings. The reasons are explained in Wong/Aff3[10]. The gist is that the Shanghai Proceedings could only lead to limited relief in assisting EY to achieve its objective of preventing further defamatory statements being made, the differences in the law and procedure between Shanghai and Hong Kong, and the desire to focus on the prosecution of the present action in Hong Kong.

24.  On 13 April 2023, P obtained the ex parte Injunction Order:

(a) The ex parte Injunction Order has 4 Schedules. Relevantly, Schedule 3 sets out the Specific Statements, and Schedule 4 sets out the meanings of any statement which are within the scope of the ex parte Injunction Order.

(b) The main paragraph of the ex parte Injunction Order is §1. It is intended to be read in conjunction with Schedules 3 and 4. It is in the following terms:

Prohibition on publication of defamatory statements

1. [D1] (whether himself or through his servants or agents or otherwise) be restrained from:

(a) publishing or disseminating, or causing the publication or dissemination of [the Specific Statements], as reproduced in Schedule 3 hereto, by any means;

(b) publishing or disseminating, or causing the publication or dissemination of, the contents of the [11 April Email], by any means;

(c) publishing or disseminating, or causing the publication or dissemination of, any statement carrying any of the defamatory meanings …, as reproduced in Schedule 4 hereto, by any means, in reliance on the Advantages as defined in paragraph 1 of Schedule 4 hereto.

25.  P accepts that the §8 Leave does not entitle it to issue or serve any Concurrent Writ upon D1 in the Mainland. The §8 Leave in any event does not conform to the mode of service set out in Order 11, rule 5A.

26.  P took steps to seek leave for issue of a concurrent writ and service out. It made an ex parte application before Master D To and obtained the 26/7 Leave on 26 July 2023. Pursuant to that leave, the Concurrent Writ was on 21 August 2023 issued.

27.  In relation to the service of court documents, D1 accepts the following:

(a) On 10 October 2023, an officer of the Shanghai Xuhui District People’s Court attempted to serve on him court documents in this action. He refused to accept the same. He gave the on-going Shanghai Proceedings as the reason for his refusal;

(b) On 2 November 2023, an officer of Pudong District Court again attempted to serve court documents, including the sealed Concurrent Writ, on him. D1 accepted service with reservation of right to challenge jurisdiction.

28.  D1 subsequently issued the Summons.

D. The Summons – a closer look

29.  It is useful to look at the Summons more closely at this stage.

30.  When challenging jurisdiction and forum, it is important not to over-complicate and over-load the applications. The following reminders by Lord Neuberger in VTB Capital plc v Nutritek International Corp [2013] 2 AC 337 (which arose from an application to set aside leave to serve out), which Mr Lui cites and relies on, are apposite:

82. The first point is that hearings concerning the issue of appropriate forum should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self-defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost. There is also a real danger that, if the hearing is an expensive and time-consuming exercise, it will be used by a richer party to wear down a poorer party, or by a party with a weak case to prevent, or at least to discourage, a party with a strong case from enforcing its rights.

83. Quite apart from this, it is simply disproportionate for parties to incur costs, often running to hundreds of thousands of pounds each, and to spend many days in court, on such a hearing. The essentially relevant factors should, in the main at any rate, be capable of being identified relatively simply and, in many respects, uncontroversially. There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial.

84. This concern is not new. In Cherney v Deripaska (No 2) [2010] 2 All ER (Comm) 456, paras 6, 7, Waller LJ said that whilst he “appreciate[d] that litigants do often feel strongly about the place where cases should be tried … disputes as to forum should not become state trials”. He also lamented the “mountain of material” the court faced in that case, and suggested that it “would have been better for both parties and better use of court time if they had expended their money and their energy on fighting the merits of the claim”.

31.  I accept Mr Lui’s submissions that the following issues raised by the Summons are in fact not engaged, or stand or fall with others, or substantially overlap with other issues:

(a) The §8 Leave concerns only the service of the sealed ex parte Injunction Order. It does not authorise P to issue any concurrent writ, nor any service of the same outside jurisdiction. Nor does P rely on the same for those purposes. Whilst D1 seeks as part of §1 of the Summons to set aside the §8 Leave, the focus of §1 of the Summons should be the 26/7 Leave. If the 26/7 Leave is discharged, any service of the ex parte Injunction Order goes with it. If not, whilst it may still be open to D1 to argue that the §8 Leave may independently and separately be discharged, Mr Lam in the course of the hearing confirmed that that is not a course which D1 would pursue;

(b) In terms of §2 of the Summons, subject to D1’s jurisdictional challenge, D1 has in facts accepted service of the Concurrent Writ. §2 hence stands or falls with D1’s application to set aside the 26/7 Leave;

(c) In terms of §3, again the focus goes back to validity of the 26/7 Leave. The Declaration sought adds little to the consideration of the Summons; and

(d) In terms of §4, the issue of forum non conveniens is part and parcel of the test for the validity of the 26/7 Leave. There is a substantial overlap amongst the 2 issues. As accepted by Mr Lam in the course of the hearing, §4 in fact does not have a life of its own.

E. Interim injunction to restrain defamation

32.  As freedom of speech is engaged, there are specific principles which are applicable to the grant of interim injunction in defamation cases. They are explained and summarised by Deputy Judge Jeremy Poon (as the CJHC then was) in Chan Shui Shing Andrew v Ironwing Holdings Ltd [2001] 2 HKC 376, as follows:

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 Co 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 IPC Magazines Ltd [1986] 1 WLR 1412 (CA); see also Gatley on Libel and Slander (9th Ed) 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 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 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 399.

33.  However, when reading Chan Shui Shing, it is relevant to bear in mind 2 subsequent cases:

(a) In Tsang Kwong Chiu Kevin v Tang Wing Hang [2018] HKCFI 1479, Anthony Chan J, having cited Chan Shui Shing, observed at §21 that:

To begin with, there is authority from the Court of Appeal that the American Cyanamid criteria are applicable to the grant of an interlocutory injunction in a defamation case, although “special considerations” are to apply: see Cheng Chi v Chan Hok Man [1984] HKC 35 at 41G, per Roberts CJ;

(b) In X v Z [2020] HKCFI 826, Coleman J observed as at §43 as follows:

[Counsel for the defendant] also referred to defamation cases, where in Hong Kong the freedom of expression is engaged, and (he said) the higher threshold for interim interlocutory relief is adopted: see, for example, Tsang Kwong Chiu Kevin v Tang Wing Hang [2018] HKCFI 1479 at §§17-23. But, actually, Anthony Chan J specifically noted Court of Appeal authority that the grant of an interlocutory injunction in a defamation case triggers the American Cyanamid principles, although “special considerations” are to apply. The justification for those special considerations is the importance of free speech. This seems to me to be simply a requirement to give appropriate weight, when weighing the grant or refusal of an interlocutory injunction in a defamation case, to the potential impinging on the freedom of expression.

F. Duty to make full and frank disclosure

34.  There is no dispute that P had the duty to make full and frank disclosure when seeking the ex parte Injunction Order and the 26/7 Leave.

35.  Counsel have cited to me a substantial number of cases on the principles and considerations relevant to material non-disclosure (“MND”), the courts’ discretion to discharge ex parte orders when MND is established, and the discretion upon discharge to make (or not to make) a regrant. They include Kayden Ltd v SFC (2010) 13 HKCFAR 696 at §§35-38 per Ribeiro PJ, 匯力(天津)股權投資基金管理有限公司 v Sunfund Investment & Management Co Ltd [2020] 1 HKLRD 828 at §§20-24 per Mimmie Chan J, Fong Chak Kwan v Ascentic Ltd [2020] HKCFI 679 at §§59-65 and 68-75 per Marlene Ng J, Charles C Spackman v Sang Cheol Woo [2020] HKCFI 2748 at §§31, 51-53, 70 and 72 per G Lam J (as he then was), Hong Kong Civil Procedure 2025 at §§11/4/21-11/4/24, 11/4/29-11/4/33 and 29/1/51, SFC v A [2008] 1 HKC 89 at §40 per Kwan J (as the VP then was), G v X [2022] 3 HKC 625 at §29 per Mimmie Chan J, Xie Li Xin v Law Ka Yan, Thompson [2018] HKCFI 1096 at §60 per Deputy Judge R Ismail SC, Sky Motion Holdings Ltd v China Create Capital Ltd [2019] HKCFI 2408 at §88 per Coleman J, Cheer Signal Development Ltd v Wong Siu Fan (HCA 780/2015, 26 October 2015) at §§48-49 per Queeny Au-Yeung J, Gee: Commercial Injunctions (7^th ed.) §§9-020 and 9-024, AMD Pack Rack Ltd v The Barrons Group Ltd [1992] 2 HKLR 50 at p.53 per Bokhary J (as he then was), Excel Courage Holdings Ltd v Wong Sin Lai [2014] 3 HKLRD 642 at §§56-58 per Kwan JA giving the judgment of the Court, Civil Jurisdiction & Judgments (7^th ed.) §24.04, and Ellinger v Guinness, Mahon & Co [1939] 4 All ER 16 at 25H per Morton J (cited in Ren Yun Liang v China Merchants Bank Co Ltd (HCA 1456/2005, 29 January 2007) at §26).

36.  Despite the number of authorities cited, there is in fact no dispute between parties on those principles. A lot of them are also facts sensitive. I will not recite them here. The difference between the parties is, understandably, principally one of emphasis. D1 stresses the importance and wide scope of the duty to make full and frank disclose, and that an application for leave to issue a writ for service out ought to be make with great care and looked at strictly. P, whilst not disputing those, on the other hand emphasises that the principles should not be carried to extreme length, that common sense should prevail, and that the Court should guard against “counter-abuse” by the defendant, and should not allow the principles to be used as a refuge of last resort for litigants when the substantial merits of the case and the balance of convenience strongly favour maintaining the relief which has been granted. Mr Lui further emphasises the power to discharge upon establishment of MND and whether to make a regrant in such eventuality are discretional in nature, to be exercised on the full facts of the case – Excel Courage at §§56-58.

G. Whether P the right entity to sue

37.  I deal first of all with one fundamental challenge made by D1.

38.  Before proceeding any further, I say immediately that any views I express on the issue in this and subsequent sections of this judgment are necessarily preliminary in nature, in the light only of the evidence before this Court – see VTB Capital, §83.

39.  D1 says that P is not the appropriate plaintiff (the “Wrong Plaintiff Objection”). As submitted and summarised by Mr Lam on D1’s behalf[11]:

“EY” is the umbrella brand of the well-known accounting organisation, consisting of a global network of member firms providing professional services in multiple jurisdictions. The present action, however, is brought by GCGC Limited – a “governance company” whose name bears no resemblance to the EY brand, and which itself does not conduct any business, hold any assets or liabilities, or generate any income or revenue – this directly calls into question whether [P] is the right entity to sue, yet [P] did not at all address the nuances of this developing area of law, and instead relied on the bare assertion that [P] held the goodwill of the EY brand;

40.  There are two limbs to the Wrong Plaintiff Objection:

(a) Limb#1 – that P does not conduct any business, or generate income or revenue:

(i) In his written submissions, Mr Lam originally referred this Court to §§160-165 of the judgment in The Incorporated Owners of Hiu Tsui Court v Lai Sing On (DCCJ 1008/2012, 5 August 2014), wherein it was held that an owners’ incorporation under section 8(2)(a) of the Building Management Ordinance (Cap. 344) could not bring a claim in defamation because, inter alia, it had no trading reputation and no customers. Mr Lam submitted further that P’s nature “bears greater resemblance to that of the incorporated owners as explained in The IO of Hiu Tsui Court”;

(ii) However, in Tung Lo Court (IO) v Tsui Wai Yip [2015] 4 HKLRD 397, the Court of Appeal held otherwise. In that case, Jeremy Poon J (as the CJHC then was) observed at §40 that:

It is trite that at common law, a corporation may have a reputation which the law protects and can therefore sue for defamation: Hong Kong Polytechnic University v Next Magazine Publishing Ltd. In our view, there can be no doubt that an IO does have its own reputation that the law protects. The primary function of an IO is to perform its duties and to exercise its functions under the BMO and the deed of mutual covenants concerning the building. When a defamatory statement is made against the IO, depending on the actual words used, it might well have the effect of discrediting its integrity as an IO or its ability in discharging its duties and functions as an IO, such as to lead people of ordinary sense to the opinion that it conducts its affairs in a way which is inefficient, improper or even dishonest. Plainly, the IO can sue for defamation to protect its own reputation. We can see no objection, whether based on the BMO or legal policy, to deny the IO such a right to sue for defamation to protect its own reputation.

Footnote 29 was inserted at the end of the last sentence cited above. In that footnote, the Court of Appeal noted the IO of Hiu Tsui Court, and made reference to [160] to [165] thereof (exactly the paragraphs which Mr Lam relied on). The Court of Appeal then observed that “In light of our decision, the decision can no longer stand”;

(iii) Quite clearly, this limb of the submissions is contrary to IO of Tung Lo Court. The fact that P carries on no trading and yields no profits itself does not prevent it from suing on defamation. Indeed, in his supplemental written submissions, Mr Lam withdraws his submissions made on the strength of the IO of Hiu Tsui Court;

(iv) The following 2 authorities are also against this limb of the Wrong Plaintiff Objection:

(1) Oriental Press Group Ltd v Fevaworks Solutions Ltd [2012] 1 HKLRD 848, where Hartmann JA explained at §§12-14 that:

12. That is not to say that the reputation of a corporate body is a thing of no value. Lord Scott of Foscote expressed it thus in [Jameel v Wall Street Journal Europe SPRL (No 3) [2007] 1 AC 359] (para.120):

The reputation of a corporate body is capable of being, and will usually be, not simply something in which its directors and shareholders may take pride, but an asset of positive value to it.

13. For that reason, a libel is actionable at the suit of a corporation as it is at the suit of an individual without the need to prove that actual damage has been caused: see South Hetton Coal Co Ltd v North Eastern News Association Ltd [1894] 1 QB 133, CA.

14. Damages being at large, it is for the court to award such amount as it thinks fit having regard to the circumstances of the case.

(2) In Jameel, Lord Scott explained further at §125 that:

… I can see no good reason why your Lordships should now disqualify corporations from bringing libel actions unless able to allege and prove actual damage caused by the libel. Every corporation is incorporated for some purpose. In the constitution of every corporation its principal objects will be set out. A trading company’s principal object will be to carry on trade. A charitable corporation’s principal object will be the promotion or pursuit of some charitable object. Some companies are incorporated as holding companies, holding subsidiary companies or other assets for the benefit of the group of which they form part. Whether publications containing disparaging or derogatory remarks about a company can be complained of by the company as being defamatory will depend upon the nature of the remarks and the nature of the corporation’s objects and reputation. It might be quite difficult to defame a holding company. But a holding company’s reputation might be indistinguishable from that of the corporate group to which it belonged. If, however, the conclusion can be reached that the remarks in question were indeed defamatory, damaging to the reputation of the company and apt to damage its ability to pursue its trading or charitable or other objects, I can see no reason of principle why the long-standing rule of law enabling the company to pursue a remedy in a defamation action without the need to allege or prove actual damage should be changed.

(b) Limb#2 – that P’s name bears no resemblance to the EY brand:

(i) Pong has explained in Pong/Aff1 that P is the overall umbrella governance company of EY;

(ii) He has explained the structure of EY further in Pong/Aff2. He makes reference to the objects clause in P’s Memorandum of Association, which makes clear its extensive and important role in EY’s practice in the Mainland, Hong Kong and Macau, and the furtherance of interests of member firms of the GC Network. He explains that EY’s global network is neither a multinational company nor a global partnership. It is a worldwide network of member firms, each of which being a separate legal entity, connected through a global entity providing co-ordination, governance and strategy. He explains further at §§11(b), 11(c) and 15 of Pong/Aff2 that:

11.(b) Being a global network, EY has different set ups to identify and differentiate different segments of the business and also how member firms are associated within the organisation. The term “EY Greater China” is merely a construct, officially recognised within the EY network. It is a “region” which consists of member firms in Mainland China, Hong Kong, Macau, Taiwan and Mongolia. The term “EY China” is another construct and depending on the context and its user, I have seen it used to refer to member firms in Mainland China, or in Mainland China and Hong Kong (and sometimes Macau) …

11.(c) Because of the differences in laws and different regulatory requirements, EY does not have a single legal entity that “is” or represents “EY Greater China”. There is no single entity to which partners in “EY Greater China” all belong. Hence, My 1^st Affidavit has referred to [P] as the overall umbrella governance company of the EY China practice (including Hong Kong) and this construct has been defined as “EY”, which I will continue to use in this Affidavit. [P’s] members are partners based in Mainland China and Hong Kong. The entitlement of [P’s] members to share in the profits of EY is effected through trust arrangements, whereby the admission as a beneficiary of a trust is a condition to becoming a member of [P]. Partners are therefore EY's equity partners due to the equitable stake they hold, but their stake is not in “EY Greater China”.

…

15. Each member of the [P] (including [D1]) has entered into non-competition and non-solicitation covenants with [P] — this is only because in the overall design of EY’s business structure [P] was intended to and does have a vested interest in the business with the ability to enforce restrictive covenants for the protection of such business. There is a mechanism for the valuation of goodwill in the context of change in the [P’s] membership. [P] has been licensed also to use the “EY” brand name through a licensing agreement with the appropriate EY network entity, which arrangement further reinforces it carries EY’s goodwill.

In Pong/Aff3 at §8, Pong produces the licensing agreement. He further explains therein that:

… [P] has never claimed (nor have I ever said in [Pong/Aff2]) that it is the only entity that carries the goodwill of the “EY” brand, to the exclusion of other EY entities including EYCAL … [P’s] position has been that at all material times it carried and still carries the goodwill of the “EY” brand and has the standing to sue in defamation to protect its reputation; and it is the proper plaintiff since it is the overall umbrella governance company of the EY China practice (including Hong Kong)…

(iii) As explained by Nicklin J in The Hut.com v Trinity Mirror plc [2018] EWHC 2480 (QB) at §§13-15:

13. … [Counsel for the claimant] has referred me to Gatley [on Libel and Slander], para.7.2[12], which, in relation to claimants that are corporations, makes the point that:

“A corporation may be defamed and its business damaged even though the persons to whom the words are published have no idea of its formal legal name.”

14. A quote is taken from the Australian case, Channel Seven Sydney Pty Ltd v Parras & Ors [2002] NSWCA 202, in which the Court of Appeal of New South Wales said:

“… a person’s reputation adheres to more than his, her or its name. It is an attribute of (legal) personality itself. It would be anomalous that, if it were said falsely that a David Jones store was riddled with cockroaches, David Jones Pty Ltd could recover substantial damages in defamation (if it were the owner) but ACN 346 Pty Ltd could not (if it were the owner) absent evidence that a reader knew the obscure name of the corporate owner of the well known business.”

For those not familiar with Australian retailing, David Jones is possibly the equivalent of John Lewis in Australia and, therefore, would be recognised as a retailer.

15. The purpose of that, however, is to make clear that in defamation the question is whether or not the ordinary, reasonable reader would understand the words to be referring to a particular company. It is perfectly possible that it can, depending on the facts, end up referring to more than one company. It is not an exclusive exercise.

(c) I have considered the other authorities which Mr Lam has cited in section C1 of his written submissions. But on the evidence before me, and on the strength of the cases discussed above, I am of the view that P is clearly an appropriate plaintiff. I do not accept Mr Lam’s submissions that it is not, or that the nuances of the law in the above regards had to be specially addressed.

H. The challenge to the 26/7 Leave

H.1. The legal requirements

41.  The 26/7 Leave was granted under Order 11 of the Rules of the High Court.

42.  The requirements necessary for grant of leave under Order 11 have been canvassed in many previous authorities. As summarised by Cheung JA in Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD 454 at §§29 and 56:

29. In order to obtain leave under O.11 r.1, the plaintiff must satisfy the court that:

(a) There is a good arguable case (in the sense that there is a good prospect of success at trial …) that his case comes within [one or more of the gateways under O.11 r.1].

(b) The discretion should be exercised in its favour in that:

(i) There is a serious issue to be tried on the merits of the case;

(ii) Hong Kong is the appropriate forum under the principle governing forum conveniens for the trial of the action …

56. When [the topic forum conveniens] is considered in the context of service out of jurisdiction under O.11, it is important to bear in mind three matters which are distinct from an application to stay Hong Kong proceedings based on forum non conveniens.

(a) The burden in O.11 cases is on the plaintiff, whereas in cases in respect of stay of proceedings the burden is on the defendant.

(b) In O.11 cases the plaintiff is seeking to persuade the court to exercise its discretionary power to permit service on the defendant outside the jurisdiction. Order 11 r.4(2) expressly provides that the Court will only do so if the case is “a proper one” for service outside jurisdiction.

(c) The jurisdiction exercised under O.11 may be “exorbitant” in the sense that the jurisdiction is extraordinary in that under conflict of law rules, a Hong Kong court will not recognize that a similar power is possessed by a foreign court over a Hong Kong litigant in the absence of some treaty providing for such recognition. The effect is not merely that the burden of proof rests on the plaintiff to persuade the court that Hong Kong is the appropriate forum for the trial of the action, but that he has to show that this is clearly so. In other words the burden is the opposite of that applicable where a stay is sought of proceedings started in Hong Kong as of right …

43.  If certain matters go to both jurisdiction and discretion, the threshold of “good arguable case” remains applicable to those which go to jurisdiction, even though they go also to merits.

44.  In its application for the 26/7 Leave, P relied on gateway (b)[13] and gateway (f)[14]. It only needed one.

H.2. D1’s stance

45.  Mr Lam’s analysis of matters is set out in section D2 of his written submissions. Paragraph 56 thereof summarises D1’s stances, that in respect of P’s ex parte application for the 26/7 Leave, there was serious material non-disclosure.

H.3. P allegedly not the right plaintiff – section D2.1 of Mr Lam’s written submissions

46.  Based on the Wrong Plaintiff Objection, Mr Lam submits that the P’s reliance on either of the gateways must fails, or that in any event, P was guilty of material non-disclosure during the ex parte Applications[15].

47.  Defamation is a tort. As observed by Queeny Au-Yeung J in Atara Sivan v Jannick Jacques Simeray (HCA 1149/2011, 22 September 2011) at §22:

An alleged defamation is to be regarded as having been committed in the place where the publication comes to the attention of the reader of an internet posting and not where the web server is located: Dow Jones & Co. Inc. v. Gutnick [2002] HCA 56, High Court of Australia; Hong Kong Civil Procedure 2011, para 11/1/28A.

48.  There can be no dispute that at least some of the recipients of the Feb – Apr Emails and the 11 April Email received them in Hong Kong. In relation to the 11 April Email, see in particular the list of recipients discussed above.

49.  I have dealt with the Wrong Plaintiff Objection above. In my view, P is the appropriate plaintiff. It clearly has a reputation of its own, has interest in the EY brand, and would suffer damage as a result of any defamation against that brand and its goodwill.

50.  I have considered the contents of the Feb – Apr Emails and the 11 April Email. I am of the view that P has demonstrated at least a good arguable case that they are defamatory in nature, and that it has a good arguable case for an injunction against D1. I will deal with the merits more when considering §5 of the Summons.

51.  On the issue of MND, Pong explained P’s interest in Pong/Aff1. Pong/Aff1 was before Anna Lai J. Pong/Aff1 was also before Master D To when P sought the 26/7 Leave (as part of the exhibits produced via Wong/Aff1). Wong further explains P’s interest and locus in Wong/Aff1 (and in particular at §§3, 13, 19 and 23 of Wong/Aff1). The fact that EYCAL had been the plaintiff in the Shanghai Proceedings does not mean that only EYCAL could be the plaintiff. P’s position as the overall umbrella governance company of EY makes it in my view the more appropriate party. The disclosure has been in my view adequate. D1 in D1/Aff1 challenges P’s standing to sue. This challenge triggers the further evidence adduced in relation to P’s standing. However, in my view, given P’s clear interest in the matters, noting in particular the contents of its Memorandum of Association, and given the law discussed above, the specific challenge could hardly be anticipated. The adducing of further evidence on P’s locus does not mean that the disclosure was inadequate to start with.

H.4. The alleged omission of the defence of qualified privilege – section D2.2 of Mr Lam’s written submissions

52.  In his written submissions[16], Mr Lam submits that P “completely fail to mention the potential defence of qualified privilege”. He points to the Internal FAQ leaflet of EY. He submits that D1 had an interest and duty to report the Allegations. He submits that the recipients of the Feb – Apr Emails were executives of EY who had the duty or interest to receive D1’s report. He submits further that the recipients of the 11 April Email similarly had the interest or duty to receive the same.

53.  It is relevant to note at the outset that D1 is complaining of P’s failure to mention a potential defence of his. In such context, it is important to consider the test to be applied when considering, in the context of MND, what anticipated defence is required to be addressed. In Tremendous Success Holdings Limited v Sinosoft Technology Group Limited (HCA 2345/2013, HCA 1613/2013 and HCA 2423/2013, 11 July 2016), cited by Marlene Ng J in Fong Chak Kwan, Deputy Judge Anita Yip SC observed at §195, which I agree, as follows:

In the context of anticipating a defence which may affect the question of serious issue to be tried, it is not necessary, indeed inappropriate, for the applicant to come to his own conclusion on the merits of the defence. The test is if on a fair assessment of the case, the defence is very likely to affect the claim to the extent that there may be no serious issue to be tried, he should make the disclosure.

54.  I have considered the authorities which have been cited to me on qualified privilege:

(a) As explained in Duncan & Neill on Defamation (5^th ed.) at §17.05:

The test to be applied in every case may therefore be stated as follows: having regard to the subject matter of the communication, did the publisher have a duty or interest to make it and the publishee(s) a corresponding interest or duty to receive it?

(b) In the words of Lord Atkinson in Adam v Ward [1917] AC 309 at 334:

… a privileged occasion is, in reference to qualified privilege, an occasion where the person who makes a communication has an interest or a duty, legal, social, or moral, to make it to the person to whom it is made, and the person to whom it is so made has a corresponding interest or duty to receive it. This reciprocity is essential.

(c) In the context of a whistleblower, the position is explained in Whistleblowing: Law & Practice (4^th ed.) at §20.23, that:

… a whistleblower, acting in good faith and in accordance with the whistleblowing regime, should be able to rely on the defence of qualified privilege. However, the whistleblower will need to demonstrate that the matters raised in any disclosure can properly be said to be matters that concern the mutual interests of, for example, the worker and the employer to whom the disclosure is made. It will also be necessary to show some relationship of proportionality between the worker’s duties, the common interest in play, and the nature of the publication. This defence is subject to malice, as discussed at 20.24 below.

(d) In Umeyor v Nwakamma (Rev 1) [2015] EWHC 2980 (QB), Jay J explained at §86 the concept of “relationship of proportionality”, that:

… Further, upon closer examination of the Treasurer’s duties under the Constitution, whereas it is clear that the Defendant was entitled to raise concerns and pursue the Claimant for an explanation, it was no part of his responsibilities to call him a forger. The Defendant clearly acted under the misapprehension that it was his duty to reach a conclusion on the issue. It was not; this was for the General Meeting of the Union. In any event, I consider that there has to be some relationship of proportionality between the Defendant’s duties, the common interest in play, and the nature of the publication made. Put another way … the Defendant has to prove that the statement was “fairly warranted by the occasion”. In my judgment, it plainly was not. By asserting that the Claimant was guilty of forgery, the Defendant exceeded the bounds of what was fairly warranted. The Defendant may have been entitled to inform Members that the Claimant had been given every opportunity to explain himself, and provide further evidence, but he had failed to avail himself of it; yet the Defendant went considerably further than that.

(e) As Mr Lam puts it and which he accepts, the defence of qualified privilege may be vitiated by excessive and unnecessary publication, and that the ultimate question to be asked is whether the manner of publication goes beyond the exigency of the occasion. In other words, the publication must be proportionate to the necessity of the occasions;

(f) As has been mentioned in the passage from Whistleblowing, the defence is subject to malice. In this regard:

(i) As explained at §20.24 in Whistleblowing:

The defendant will have acted maliciously in this context if the privileged occasion was used for some purpose other than that for which the occasion was privileged.

(ii) According to Clerk & Lindsell on Torts (24^th ed.) §§21-213 and 21-216:

21-213 Direct evidence of ill-will A claimant may be able to show from extrinsic facts that the defendant harboured feelings of spite and ill-will towards him, and it may be fairly inferred that the publication in question was prompted by such feelings and consequently not by a legitimate motive …

It by no means, however, follows that this inference must necessarily be drawn.

21-216 General want of good faith Lesser evidence of malice will suffice in the case of an officious and purely voluntary communication. Where the defendant, after appearing against the claimant in a county court, spontaneously sent a report of the proceedings to a newspaper, this was held sufficient to justify a finding of malice; the evidence of a bad motive was small, but the probability of a good motive was smaller.

55.  In considering whether P ought, as part of its duty to make full and frank disclosure, to have anticipated and addressed any potential defence of qualified privilege (or indeed other potential defences of justification and fair comments), the factual context is important. D1’s performance was under discussion. D1 had made the Complaint and the Allegations. The Notice of Termination was on 10 August 2022 issued, which D1 soon later lodged an appeal. D1 made the Ethics Issue Report. The clearing of “all unresolved complaints in system” was one of the conditions he mentioned for any settlement. In the Feb – Apr Emails, he expressed his readiness to reveal the Allegations to the public and the media. This is no dispute that the term “KOLs” he used in the sentence “I am ready to hire some finance KOLs to post and circulate the following survey to the public (especially haikou residents) on weibo” in the 24 Feb Email means “key opinion leaders”, such that he was actually saying that he was ready to cause the Allegations to be circulated on the internet. In the 31 Mar Email, he mentioned the “social media impacts”, and said that he was “equally open to bring all the above facts to the public and letting our clients/peers/journalists to comment…” In the 9 Apr Email, he threatened to hold a press conference to “openly discuss” the Allegations. Then immediately after the 11 April Demand Letter, the 11 April Email emerged. I accept Mr Lui’s submissions that it is clear from all the circumstances that D1’s communications were made with his self-interest of gaining leverage for his own benefit. That was clearly his dominant purpose. The threatened communications (to KOL, via social media, and by press conference in particular) are clearly excessive. The 11 April Email was an escalation of what D1 had done. Outside recipients became included. As Mr Lui has submitted, D1 has not even explained why and how he had a duty or interest to make the statements against those EY partners to the targeted audience. There was hardly any relationship of proportionality.

56.  In my view, on a fair assessment of the case, the defence of qualified privilege was not likely to affect the claim to any extent that there might be no serious issue to be tried. That was so at the time when P made the ex parte Applications, and remains so on the evidence as now before this Court. It could hardly have been reasonably anticipated.

57.  In my view, no MND in connection with the defence of qualified privilege is made out.

H.5. Alleged non-disclosure in relation to the identity of the issuer of the 11 April Email – section D2.3 of Mr Lam’s written submissions

58.  I record that Mr Lam has withdrawn his submissions (§§76-78 of his written submissions) on this topic. There is no need for this Court to consider it further.

H.6. D1’s case on forum non conveniens and regrant – section D2.4 of Mr Lam’s written submissions

59.  Mr Lam submits that on the basis of what he has submitted (as discussed above), the 26/7 Leave should be discharged with no regrant. One main reason he puts forward against any regrant is forum non conveniens[17].

60.  As discussed above, the issue of forum conveniens is one of the issues relevant to the discretionary part of the test as explained in Dynastic Line. I consider the issue in this context.

61.  Mr Lam submits that “Notwithstanding that part of the alleged tort had been committed in Hong Kong (i.e. some of the readers of the Subject Emails appear to be based in Hong Kong), the natural forum for resolving the dispute remains to be Shanghai.” He submits that one key issues of the trial is whether the purchases in Haikou were made at arm-length. He submits that, in relation to that issue, the “taking of testimonies or the production of relevant documentary evidence in Hong Kong is not a straightforward matter at all”. He points to the time and costs if the trial is to be conducted in Hong Kong. He also points to the Shanghai Proceedings and certain further legal proceedings that are ongoing in Shanghai between some of the parties (and in particular a defamation claim made by D2 against EYCAL, and an award made by the Shanghai Xuhui District Labour Arbitration Commission in partial support of D1’s claims regarding employment dispute against EYCAL).

62.  I have considered the law above. I have also considered SPH v SA (2014) 17 HKCFAR 364 at §51 which Mr Lam discusses in the context of the stay application (§4 of the Summons).

63.  For the reasons set out below, I am of the view that Hong Kong is clearly and distinctly the appropriate forum for this action:

(a) As explained by Wong[18], EY has a significant and extensive practice in Hong Kong, and has the reputation locally as one of the largest and most renowned accounting firms;

(b) Xu Ying v Xu Weihong [2021] HKCA 1416 is engaged, and is applicable. As Cheung JA explained at §39:

39. In our view, Hong Kong is clearly the appropriate forum. The tort was committed in Hong Kong where the plaintiff carries on his business and activities. He is entitled to have his reputation being vindicated in Hong Kong. Gatley at [24.28] summarized the position as follows:

‘The starting-point for ascertainment of the appropriate forum is to identify the place where the libel has been committed, which by definition will be England in a case where permission to serve out has been given on the basis of publication here. Although the burden is on the claimant (in seeking permission to serve out) to show that England is clearly the appropriate forum in which the case should be tried in the interests of the parties and the ends of justice, regard must be had to the principle that the jurisdiction in which the tort was committed is prima facie the natural forum for the dispute.’ (emphasis added )

Hence Peter Gibson LJ held in Schapira v Ahronson & Ors [1999] EMLR 735 at 749:

‘On the contrary, like the judge, I am of the view that England, where the plaintiff lives and carries on business and where he wishes his reputation to be vindicated, is the appropriate forum for the actions.’

(c) The relevant emails were (at least partly) received and read in Hong Kong. P is entitled to have its reputation (and that of its partners) defended here;

(d) I note Mr Lam’s reliance upon the location of witnesses and documents. The effects of those factors have in my view been exaggerated. As summarised at §§11/1/118 and 11/1/119 of Hong Kong Civil Procedure 2025:

“…It is clear that the fact that documents and even witnesses are located in mainland China will now often count for very little before the Hong Kong courts …

Mainland witnesses nowadays give evidence almost daily in Hong Kong with little in the way of logistical difficulties … (visa requirement “no longer a consideration”) and even if they cannot, evidence can be taken on commission on the mainland … or by videolink …”

64.  The above also deals with §4 of the Summons, which I refuse.

H.7. Conclusion on D1’s application to discharge the 26/7 Leave

65.  For the reasons set out about, D1’s application to discharge the 26/7 Leave fails.

66.  Given my conclusion above, the issue of regrant does not arise. But on that question, I am prepared to say this. On the questions of the Wrong Plaintiff Objection and qualified privilege, even if there had been any MND, I would have been satisfied that it had been an innocent one made on the basis of P’s assessment of the evidence then available to it. I would not have in any event accepted Mr Lam’s submissions that P was “highly culpable” in respect of the MND. I have also expressed my view on the issue of forum conveniens. On the evidence now before me, even if D1 had established any MND such that the 26/7 Leave may be discharged, I would exercise my discretion and make a regrant in the same terms.

I. D1’s application to discharge the ex parte Injunction Order

67.  I have set out above the legal principles and considerations applicable to interim injunctions in defamation cases.

I.1. P abused by going ex parte?

68.  Mr Lam first submits that P has abused the ex parte procedure, and that it was plainly wrong for it to have gone ex parte without notice.

69.  I do not accept those submissions. I have set out the core facts above. I have set out the threats made by D1 in the Feb – Apr Emails to reveal the Allegations to the public and the media. In the 11 April Demand Letter, D1 was asked to desist. He was warned of the possibility of P seeking an injunction. Then the 11 April Email surfaced. It was an escalation of what D1 had done. Outside recipients became involved. If necessary, I would make the preliminary finding on the facts that it was D1, but not D2, who was responsible for the issue of the 11 April Email. The circumstances and time proximity when the 11 April Email emerged (vis-à-vis the issue of the 11 April Demand Letter) render the defendants’ version (that it was D2 who issued it) incredible. But there is in fact no need for me to make any such preliminary findings. On the facts, it was in my view reasonable and indeed justified for P to make the contemporaneous inference that it was D1 who had issued the 11 April Email despite the warning in the 11 April Demand Letter, and for P to have further formed the view that unless D1 was to be immediately restrained by an ex parte order, there was real likelihood that D1 would issue, even during the notice period, further defamatory statements to P’s detriment.

70.  In my view, and on the facts known to P, P was justified in seeking the ex parte Injunction Order on an ex parte without notice basis.

I.2. Whether the Specific Statements defamatory

71.  I have considered the Feb – Apr Emails and the 11 April Email. I have considered the Specific Statements. I have summarised their gist, and set out above some of them. I have considered the criteria for deciding whether a statement is defamatory, and in particular Gatley §§2-001, 2-003, 2-031, 3-017 and 3-018. I am of the view that the Specific Statements are plainly and unarguably defamatory.

I.3. Alleged MND

72.  D1’s complaints are again based principally on the allegations of MND. Several heads have been raised:

(a) Three heads of complaints are again based on P’s status and nature (ie the Wrong Plaintiff Objection), D1’s potential defence of qualified privilege, and the identity of the sender of the 11 April Email. I have dealt with the first 2 above. The 3^rd one has been withdrawn. In my view, none of them are made out;

(b) 2 further complaints of MND have been made: one in relation to the alleged potential defence of justification (§§105 – 113 of Mr Lam’s written submissions), and one in relation to that of fair comments (the latter if which Mr Lam raises for the first time in his written reply at §§19 – 20);

(c) In relation to those 2 alleged potential defences, Mr Lam’s complaints are not so much that P had failed to mention them, but that P, having done so, “briskly dismissed”[19] or “immediately dismissed”[20] them;

(d) I have discussed Fong Chak Kwan above, which equally applies here. I have also discussed, when considering the potential defence of qualified privilege, the factual context in which the matters should be assessed. That same factual context is also relevant here. On the facts, I am of the view that the existence of the 2 further potential defences of justification and fair comments are more theoretical than real. I accept specifically Mr Lui’s submissions that the Allegations of EY partners having received unauthorised/unlawful benefits at RMB17,300/ft² could not be justified. The far-fetched and convoluted nature of the alleged defence of fair comment is also reflected by the submissions which Mr Lam has made, to the effect that “D1’s allegations, inferred from the substantially undisputed factual material (i.e. the acquisitions) in the Subject Emails, at least arguably qualify as fair comment”[21];

(e) In my view, on the facts, the 2 alleged further potential defences could hardly be anticipated. In any event, they have been addressed, and given the factual context, adequately addressed;

(f) In so far as Mr Lam seeking to rely on Chan Shui Shing to submit that the 2 alleged potential defences might succeed, so that the ex parte Injunction Order should be dismissed on the basis of merits, I do not accept those submissions. On the facts, I have form the preliminary view that they might not;

(g) I have also considered the various other miscellaneous heads of MND which D1 has complained about – the alleged “misleading submissions on leave for service out” in relation to the §8 Leave (§§114 – 115 of Mr Lam’s written submissions) and those various factual matters mentioned in §24 of D1/Aff1). They do not in my view individually or collectively support any MND. They are at best finer details which may need be considered on other occasions in the future. As explained in Gee: Commercial Injunctions (7th ed.) §9-024:

The principle should not be carried to extreme lengths, and it is important that the court should consider the practical realities of the case, and not allow the principle to be used as a refuge of last resort for litigants when the substantial merits of the case and the balance of convenience strongly favour maintaining the relief which has been granted, and when the likely consequences of setting aside the order could be very severe for the claimant. Such litigants should not be encouraged “to search ingeniously for facts” which might be viewed as relevant, in order to mount an application to discharge the order for non-disclosure.

(h) In his written reply, Mr Lam raises for the first time another point on the issue of arbitration:

(i) At §34 of Wong/Aff1 (dated 26 June 2023)[22], Wong discloses the fact that D1 requested an appeal against his termination of membership in P. He further reveals that in the course of correspondence in May 2023 for that purpose, D1 indicated that he might consider seeking an arbitration pursuant to the Regulations of P;

(ii) P has disclosed a redacted version of the Regulations (by the 3^rd affirmation of Choi Yan Tung Sapphira dated 19 April 2023);

(iii) In relation to the Regulations:

(1) Clause 6.10 contains provisions on “Non-disparagement”, that:

Non-disparagement

No Member or Former Member shall make any statement or comment (whether to the media or otherwise) that disparages or is detrimental to the reputation of the Company, any Associated Firm or any part of the EY Network except where such statement or comment is made:

6.10.1 to his professional advisers with a view to obtaining advice;

6.10.2 in the course of presenting bona fide evidence to any court or arbitral or other tribunal; or

6.10.3 as required by law.

(2) Clause 10 bears the heading “Termination of Members”;

(3) Except the heading, the entire Clause 10 has been redacted;

(4) Clause 22 of the Regulations is a dispute resolution clause. It provides inter alia that:

22.1.1 Any dispute arising out of or in connection with the Organisational Documents of the Company (including the validity, scope and enforceability of this arbitration provision) (a “Dispute”) which cannot be settled amicably (other than a Dispute which has already been heard pursuant to Regulation 10.4) shall be submitted to the Area Managing Partner or his nominee for mediation. The Area Managing Partner or his nominee may conduct such mediation in any way and at any location he deems appropriate, but must at a minimum allow the parties to the Dispute to make their case before him. The Area Managing Partner or his nominee shall seek to resolve the Dispute within 60 days of such submission (or such longer period as the parties to the Dispute and the Area Managing Partner or his nominee shall agree). Any such mediation by the Area Managing Partner or his nominee shall be confidential and without prejudice to any subsequent reference to arbitration.

22.1.2 If the Area Managing Partner or his nominee fails to negotiate a mutually acceptable settlement of the Dispute within that time, or in relation to a Dispute relating to Regulation 10.4, the Dispute shall be finally settled by arbitration pursuant to the then-existing rules of arbitration of the International Chamber of Commerce (the “ICC”) before one arbitrator jointly appointed by the parties within 30 days of receiving notice that such arbitration procedure is being followed.

(iv) Mr Lam submits that P’s claim herein is within the Non-disparagement provision under Clause 6.10 of the Regulations, so that it is caught by the dispute resolution clause;

(v) The Regulations, albeit redacted, was first produced in April 2023. D1 was clearly aware of its contents, and in particular the dispute resolution clause. He himself expressed his intention to seek arbitration in correspondence conducted in May 2023. Yet, complaint of MND in relation to the arbitration has never been raised on affirmation, and was only raised for the first time in Mr Lam’s written reply;

(vi) Mr Lui objected to D1’s reliance on any MND of the dispute resolution clause. He submitted during the hearing that the clause is not straightforward, and could be facts sensitive. D1 had failed to raise the point. Allowing him to rely on the same at this late stage would deprive P of any opportunity to properly deal with it. Mr Lui invited this Court not to receive the point;

(vii) Mr Lui has in his written submissions referred to G v X where Mimmie Chan J explained and observed in §29 as follows (with emphasis added for ease of presentation):

As important as the duty to make full and frank disclosure to the Court in an ex parte application, is the need for a party seeking to discharge the order to state clearly, in its application to discharge, the ground of material non-disclosure and the matters relied upon for the discharge. This is in view of the reminders issued by the Courts that applications to discharge for material non-disclosure should not be abused, to become a rambling and roving investigation of what should have been disclosed, but was not. Fairness and natural justice also require timely disclosure of the matters relied upon as alleged material non-disclosure, to give the other party the fair and necessary opportunity to respond to the allegations of breach of duty owed to the Court.

(viii) Those reminders have with respect not been heeded. D1 has made no timely disclosure/indication that the dispute resolution clause would be relied upon in support of MND. And on the facts of the case, I see no reason why timely disclosure/indication of the same could not have been given or made;

(ix) In my view, it would not be grossly unfair to allow D1 to rely on the point now. I accede to Mr Lui’s invitation and decline to receive the point.

I.4. Intention to repeat

73.  For completeness, I come back to the approach discussed in Chan Shui Shing. On the evidence, there is clear evidence of an intention to repeat or publish the defamatory statements.

I.5. Conclusion on the application to discharge the ex parte Injunction Order

74.  For the reasons set out above, I refuse D1’s application to set aside the ex parte Injunction Order.

75.  As said, Wilson J on 21 April 2023 continued the ex parte Injunction Order. His Lordship ordered it to “be continued to remain in force until trial of this action or further order of the Court.” On that basis, there is no need for this Court to make any further order for continuation.

76.  Given my conclusion above, the issue of re-grant is not engaged. But in that regard, I say the following:

(a) My discussions in section H.7 above equally apply. If it had been necessary, I would on the evidence before me and in exercise of my discretion regrant the ex parte Injunction Order;

(b) In the context of regrant, Mr Lam submitted during the hearing that the terms of the ex parte Injunction Order are too wide, so that if the issue of regrant is engaged, the terms of the order to be regranted should be restricted;

(c) I have considered Schedules 3 and 4 of the ex parte Injunction Order. I do not find the terms too wide. There are bound to be words which put the defamatory statements in context. There is further Schedule 4 which delineate the defamatory meanings.

J. Overall conclusion

77.  For the reasons set out above, I dismiss the Summons in its entirety.

78.  On costs, I make a costs order nisi, absolute within 14 days from the date hereof, that D1 shall bear the costs of and occasioned by the Summons, with certificate for 2 counsel, to be summarily assessed on the papers. Unless there is any application to vary, in which case further directions will be handed down, P shall file its statement of costs within 21 days from the date hereof, D1 may file its statement of objections within 14 days of receipt of the same, and P may file its response within 7 days thereafter.