MING KEE MANUFACTORY LTD v. MAN SHING ELECTRICAL MANUFACTORY LTD

1991 No. A4583

Headnote

Defamation - libel - distinguished from malicious falsehood burdens of proof - distinction in pleading between "true" innuendoes and ordinary innuendoes. Qualified privilege - criteria therefor - express malice contrasted with lack of genuine belief in truth.

1991 No. A4583

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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J U D G M E N T

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1. This is a libel action for a defamation said to be published in a letter from the defendant to mutual business associates of the parties. In its pleading, the defendant admits publication but denies malice and declines to admit falsity. The defendant moreover pleads that the letter was written on an occasion of qualified privilege.

2. The plea of qualified privilege seeks to furnish the lawful excuse for publication without which malice is presumed. The plaintiff has not pleaded express malice and the issues are therefore twofold; -are the words used defamatory, and if so was their publication privileged.

3. It is of course the plaintiff's burden to establish the defamation and the defendant's burden to prove qualified privilege if the plaintiff's initial burden is discharged. The defendant's pleaded denial of malice is therefore otiose, for unless the defendant proves lawful excuse for the publication, malice is conclusively presumed once the defamation is proved. Counsel for the plaintiff moreover conceeds that the falsity of the statements is no longer disputed.

4. The facts are relatively simple and none of the documents relied upon in the parties' bundles are disputed. The plaintiff manufactures for export to the United Kingdom electrical accessories under the trade mark PMS. These accessories include 2-way and 3-way adaptors,switches, and extension sockets. According to its Managing Director, Mr. Ip Tai Hoi, it has an average U.K. turnover of some H.K.$90-100 million annually and counts as its customers such well-known names as Hoover and Boots.

5. Mr. Ip said that during the past year the plaintiff has been supplying electric plug components in the form of brass plug pins to a local company by the name of Micromark H.K. This company is the buying agent for a U.K. company pleaded as BDC London, whose full name is Bridisco Ltd and for whom Micromark H.K. has been purchasing the plaintiff's components BDC London in turn delivers these components to its associate company in Ireland, referred to in the pleadings as BDC Ireland.

6. The defendant manufactures similar metal accessories, but without the PMS trademark, and has also been selling its products to BDC London through Micromark H.K. These goods are likewise delivered by BDC London to BDC Ireland for assembly.

7. Relevant to the dispute is a press release from the London Borough of Barnet in the United Kingdom. This document appears in the bundles of both parties and neither its provenance nor its truth are disputed. It reads:

4 June 1991

DANGEROUS ADAPTORS THE SEARCH WIDENS

Barnet Council's Trading Standards Officers have widened their investigation into a "potentially lethal" multi-socket adaptor.

A warning was issued last week to cover the East Barnet area. Council staff have now discovered that the white, four-socket adaptors were made up by a shop in East Finchley, but may have been available throughout the borough.

The adaptor carries the number PMS 8798. It is connected by about three yards of thick flex to a plug marked PMS 8191. The appliance was wired up locally from otherwise safe components so that the live wire was connected to the earth terminal.

Anyone who has bought a similar appliance should not use it and contact Barnet Council Trading Standards service on 081 202 8282 ext. 2064 immediately, so it can be tested.

ends

Marketing and Public Relations Contact, John Harrison.

8. The plaintiff does not dispute that the two electrical products mentioned as carrying its PMS trademark were its own products. However it relies on the clear implication that the PMS accessories were not faulted. This conclusion is derived from the indications that the end-products were

"made up locally by a shop in East Finchley",

and were

"wired up locally from otherwise safe components so that the live wire was connected to the earth terminal."

Although the defendant in pre-trial correspondence relied on this press-release as the source material for its plea of qualified privilege, it later emerged in evidence that reliance was placed elsewhere.

9. The letter of which the plaintiff complains was dated the same day as the press release and was written by the defendant to BDC London, with copies to BDC Ireland and to Mr. Ravin Melwani of Micromark H.K. Ltd. Its full text reads

"We had been informed by one of our customer in the U.K. that the Trading Standards officers in Salford had recently seized some of the "PMS" brand electrical products fitted with unapproved 13 Amps fuselinks and this was published in the newspapers. Also the Trading Standards Office had issued a directive that all "PMS" electrical accessories that are fitted with such fuselinks to be withdrawn from the market. We wonder whether you had heard (or read) anything with regard to this matter. If you have any information relating to this matter, we would be much appreciated if you could forward to us your comments."

The statements in the letter said to be defamatory are particularised at subparagraphs 3(a) (b) (c) and (d) of the Statement of claim.

    comparing the letter with the press-release, the plaintiff adduces significant discrepancies between them. The press-release does not mention the seizure of PMS products with unapproved 13 amp fuselinks. Moreover it does not indicate that the Trading Standards Office had directed the withdrawal of all PMS electrical accessories fitted with such fuselinks.

10. At paragraph 4 of its re-amended Statement of claim, the plaintiff pleads the defamation in these terms -

"4. Apart form the natural and ordinary meaning of the above, the Defendant further implied that:-

(a) the Plaintiff knowingly manufactures, sells and exports unapproved 13 Amps fuselinks;

(b) the Plaintiff dishonestly manufactures, sells and exports the unapproved products with the intent of deceiving its customers and to reap a dishonour profit;

(c) the Plaintiff dishonestly manufactures, sells and exports the unapproved products as manufacturers, sellers and exportersor otherwise for more than one occasion;

(d)there was lack of skill, capacity, judgment and competence on the part of the Plaintiff in the conduct of its trade and business activities as a manufacturer of electrical appliances of the trade mark "PMS";

(e) the Plaintiff is such kind of manufacturer or distributor whose activities were that of the distribution or manufacture of sub-standard and dangerous electrical appliances; and

(f) the Plaintiff was responsible for the manufacture or distribution of dangerous and sub-standard electrical appliances.

The amended sub-paragraph (d) was added late in the course of the trial and gave rise to an adjournment. The re-amended sub-paragraphs (e) and (f) were added on the resumption of the hearing after that adjournment.

11. Despite the opening words of paragraph 4 of its statement of claim, the plaintiff does not appear to be pleading the meanings in subparagraphs (a) to (f) as "true" innuendoes.A true innuendo, as discussed in Lewis v. The Daily telegraph [1963] 1 Q.B at 364, creates a separate cause of action and arises where the words bear a particular defamatory meaning from extrinsic facts known to the reader. It is also known as a "legal innuendo", and as a pleading requires particulars pursuant to 0.82 r.3(1) RSC.

12. In contradistinction, an "ordinary" or popular innuendo carries a meaning which is not clear or explicit from the words used but is nonetheless inherent within the ordinary meaning of those words. Such an innuendo should also be pleaded, but the pleading should expressly state that the meaning alleged is part of the natural and ordinary meaning of the matter complained of. Moreover, the pleading of this meaning does not require particulars pursuant to 0.82 r.3(1) RSC.

13. The plaintiff's introductory words to paragraph 4, as read with the following subparagraphs, confuse these two distinct forms of innuendo. The plaintiff seems to rely on the natural and ordinary meaning of the words, whilst expressly excluding this in the introductory sentence. Particulars have not been pleaded, but would not be necessary in the absence of reliance on extrinsic facts in the knowledge of the recipients.

14. This is not a matter of mere pedantry, as the failure to plead particulars would be fatal to the plaintiff if, as its own pleading initially implies, true innuendoes were intended.

15. The point has not however' been taken by the defendant, and the wording of the various meanings pleaded does not indicate dependence on extrinsic facts known to the recipients. The pleadings are adducing specific inherent meanings rather than pursuing special situations of innuendo based on,particular knowledge in the publishees. I accept the meanings pleaded in the subparagraphs of paragraph 4 as having that intention despite the anomalous introductory words. Particulars under 0.82 r.3(1) RSC are therefore unnecessary.

16. The first substantive issue for decision is whether or not the words used were defamatory of the plaintiff. Miss Lau for the defendant has contrasted libel with the tort of malicious falsehood as to goods, and argues that the words, if anything, amount to no more than that. Unlike libel, malicious falsehood requires proof of special damage, which is not pleaded.

17. The defence points out that the plaintiff is not named in the letter of 4th June. There are references to PMS brand products and accessories, but nothing more. From this it is argued firstly that the plaintiff is not identified, and secondly that the reference only to the products confines any disparagement to the plaintiff's goods and does not include its reputation.

18. The second of these points requires careful consideration and is fundamental to the issue of the defamatory nature of the words. I am however satisfied that the argument on identification has no substance. This argument is founded in the plaintiff's evidence that it did not actually manufacture the products discussed in the letter, 13 amp fuselinks, and that this was known to the recipients. From this it is argued that the recipients must have known that the plaintiff was not the manufacturer of the goods discussed and that the plaintiff could not therefore be defamed.

19. It is not disputed that mention of the PMS brand name identifies the plaintiff in the understanding of the letter's recipients. Given that identification, the fact that the plaintiff does not manufacture 13 amp fuselinks does not exclude the possibility suggested in the defendant's letter. The PMS products are said to be "fitted with unapproved 13 amp fuselinks", which could be achieved whether or not the fuselinks were manufactured by the plaintiff. It is in particular possible because the plaintiff does in fact manufacture 13 amp plugs. It does not therefore follow that the recipients of the letter would not understand the letter to refer to the plaintiff. On the contrary I find it probable that they did.

20. The defence argument that any disparagement related only to the plaintiff's goods supposes that the plaintiff's reputation could not be defamed by the words used. The evidence of Mr. Melwani of Micromark Hong Kong, the buying agent for BDC London, has established that the plaintiff enjoys a reputation in the United Kingdom market through its PMS trademark. As manager of his company and a recipient of the offending letter, Mr. Melwani also said he regarded the plaintiff as a reliable supplier of the electrical goods he purchases. This is the reputation which the plaintiff claims to be defamed.

21. It is part of the defamation pleaded that the fuselinks mentioned in the letter were said to be "unapproved". The precise meaning of this word has been canvassed and I have the relevant U.K. statutory instrument, entitled The Plugs and sochets etc (safely) Regulations 1987. It is produced by the defence without despuite as to its current validity. The word "approved" does not appear in the interpretation section, but Schedule 2 enpowers three organisations to give approval to "kinds of electrical devices".

22. These regulations are adduced by the defence to show that an "unapproved" fuselink is not to be confused with an illegal or prohibited product. The contention is that the word "unapproved" is innocuous and cannot be defamatory of the plaintiff. Pursuing this argument, the defendant's Sales Manager, Miss Rose Yau, testified that an electrical product could not be sold in U.K. if not upto British Standard. She added however that lack of approval under the Regulations may not necessarily mean that a product were in fact below British Standard. From this premise the defence argues that "unapproved" in this context is incapable of either defamation of the plaintiff or even disparagement of its goods.

23. I do not accept this argument. The word "unapproved", in particular considered with the supposed directive for withdrawal of the plaintiff's products, has implications beyond the mere formal approval contemplated by the Regulations. Moreover, the regulations themselves are presented to the court in isolation from their legislative context and without expert evidence as to their applicability. They may not be exhaustive, and parallel regulations may exist dealing with approval of fuselinks. I am unable on the basis of this document to confine the meaning of the word "unapproved" to whatever may be derived from these Regulations.

24. I do not however have to leave it there. Miss Yau in cross-examination agreed that the defendant had not used unapproved fuses since the commencement of what she described as "the British System". She also agreed that unapproved fuses were a little cheaper than approved ones. More importantly, in explaining why her company would not fit unapproved fuses into its products, she said -

"If an approved fuse is to be fitted in our electrical products, then our buyer would have more confidence in our products."

It is clear from this that in Miss Yau's own mind, an unapproved fuse in a product makes the product itself less acceptable to the customer. It is relevant that Miss Yau was the author of the June 4th letter and is presumed to have used the word "unapproved" therein in the sense explained in her evidence - namely, as inspiring less confidence in the product in which it was fitted. It is probable that the recipients of the letter, who are in the same trade, understood it in the same sense.

25. I am therefore satisfied that the offending terms of the June 4th letter are disparaging at least of the plaintiff's goods and are far from innocuous. I turn to the issue of whether or not they are disparaging also ofthe plaintiff's reputation and hence defamatory.

26. The cases cited by the defence in distinguishing defamation from malicious falsehood substantially concern the denigration of a product in the context of business rivalry. The recurring theme is that a man may disparage his rival's product in the course of promoting his own and that if he does so falsely it is only actionable, if at all, as a malicious falsehood. For the disparagement to take the issue into the area of defamation requires that the publication should be seen to attack the credit or reputation of the plaintiff.

27. The plaintiff is a manufacturer and seller of electrical products. In this context I am guided by the words of Lord Pearson in defining defamatory material in Drummond - Jackson v. British Medical Association [1970] 1 All ER 1094. At page 1104 his' Lordship said -

"words may be defamatory of a trader or businessman or professional man, though they do not impute any moral fault or defect of personal character. They can be defamatory of him if they impute lack of qualification, knowledge, skill, capacity, judgment or efficiency in the conduct of his trade or business or professional activity."

28. From the time of "hatred, ridicule and contempt" formulated by Parke B. in 1840, the nature of defamatory material has defied precise definition. Its scope has however been developed in modern times to cover modern situations, and I respectfully find Lord Pearson's analysis appropriate to the present case. It was probably with this in mind that the plaintiff alleged the meaning in subparagraph 4(d) of its statement of claim that -

"there was lack of skill, capacity, judgment and competence on the part of the plaintiff in the conduct of its trade and business activities as a manufacture of electrical appliances of the trademark "PMS"."

29. The offending words in the June 4th letter indicate the seizure by Trading Standards Officers of PMS brand electrical products fitted with unapproved fuselinks. They continue that this was published in the newspapers and that the Trading Standards Office had directed the withdrawal from the market of all PMS electrical products so fitted.

30. Mr. Melwani is the manager of Micromark Hong Kong, one of the recipients of the publication, and the buying agent for purchasing the plaintiff's products for BDC London. In his re-examination the following exchange occurred -

"Q. Assuming you are now purchasing plugs (not pins) and they are fitted with unapproved fuses, given your experience would you consider this as something affecting the plugs' safety.

A. Yes, definitely.'

Q. Would you expect a reputable plug manufacturer to have put into their products unapproved fuses?

A No.

Q. Would you call this a triviality or a defect of the gravest kind?

A. It would be a very serious defect.

Q.Does a manufacturer committing this sort of error, reflecting on the safety of the devices, be still considered by you as a reputable manufacturer?

A. No."

31. So Mr. Melwani, who is in an unusually good position to comment, regards the use of unapproved fuses as something a reputable manufacturer would not do. He would no longer in fact regard such a manufacturer as reputable. This evidence is moreover confined to the use of unapproved fuses. It does not comprehend the other offending contents of the defendant's letter concerning seizure of the products and the directive for their withdrawal from the market.

32. The necessary inference from the words used is that it is the fitting of the unapproved fuselinks which has caused the seizure and the directive for withdrawal. Given the undesirable consequences described in the letter, this fitting of the fuselinks could only have been understood to be deliberate or negligent. An innocent fitting of the fuselinks would at best be an improbable inference to be drawn from the words.

33. On this analysis, the disparagement contained in the defendant's letter goes well beyond merely that of the plaintiff's goods. It is a clear disparagement of the plaintiff's conduct and reputation in its trade and business of manufacturing electrical products and could not have been read otherwise by the recipients. I therefore find the words complained of to be defamatory of the plaintiff, in particular in the sense pleaded at subparagraph 4(d) of its statement of claim.

34. The meaning pleaded at subparagraph 4(a) cannot be substantiated as it turns on.the manufacturing, selling and exporting of 13 amp fuselinks.. The relevant words are used conjunctively in the pleading and do not represent a reasonable inference to be drawn from the letter.

35. Similarly, subparagraphs 4(b) and (c) must fail as they depend on a pleaded inference of dishonesty which cannot be drawn from the defendant's letter.

36. The meanings pleaded_.in subparagraphs 4(e) and (f) can be related to the inference from the supposed directive for withdrawal from the market. In regard to electrical goods a withdrawal ordered by the Trading Standards Office carries implications of lack of safety. This is supported by Mr. Melwani's own evidence of his reaction to the use of unapproved fuses. In its context, the word "unapproved" also has connotations similar to "sub-standard". I therefore find that the offending words are also defamatory in the meanings pleaded at subparagraphs 4(e) and (f).

37. Relating these findings to the earlier discussion of pleaded innuendoes, I find the meanings pleaded in subparagraphs (e) and (f) to be at least partially within the ordinary meaning of the defamatory words. This is particularly so with the use of the word "unapproved", which in the context of electrical goods carries obvious implications of "unsafe" and "substandard". To that extent, these meanings would not therefor strictly require pleading, although such is desirable to inform the court and the defendant of the precise nature of the plaintiff's case.

38. The publication of the defamation is the plaintiff's cause of action and it imports presumptions of both malice and falsity. The defendant does not allege the truth of the offending words and relies on the lawful excuse provided by the defence of qualified privilege. Without a plea of express malice, the defendant will succeed if it proves the occasion capable of the privilege and the communication to be made in the honest belief in its truth.

39. Lack of honest belief in the truth of the communication should be distinguished from express malice. Honest belief in the truth is, in all but a very few instances, a pre-requisite to the establishment of the defence and its burden of proof lies on the defendant. The exceptional situations outside this principle do not comprehend the present case. Express malice on the other hand is for the plaintiff to prove in destroying the qualified privilege which, but for its existence, would have been a good defence. Express malice has not of course been pleaded.

40. The defendant pleads an ongoing business relationship with the three recipients of the June 4th letter. It goes on to assert an implied contractual duty as well as a moral duty to advise the recipients of what it had been informed and believed to be true. A lack of malice is then averred, and "a common and corresponding interest in the subject matter and the publication of the said letter."

41. The "common and corresponding interest" pleaded relates to the reciprocity of interest which must exist between communicant and recipient before the defence may avail. There are several accepted categories of relationship which can give rise to an occasion of qualified privilege. It is apparent from the defendant's pleading that the category into which it seeks to place itself is that defined by Lord Atkinson in Adam v. Ward [1917] AC 309 at page 334 in these terms

"It was not disputed in this case on either side, that a privileged occasion is, in reference to qualified privilege, an occasion where the person who makes the 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."

Adopting a shorter definition by Scrutton L.J. in Watt v. Longsdon [1930]1 KB 130 at page 147, both counsel have agreed that the defence should succeed if the defendant proves -

"A duty to communicate information believed to be true to a person who has a material interest in receiving that information,"

namely the three recipients of the letter.

42. Applying these tests, which are different formulations of the same concept, I accept it to be the case, that the recipients each had a material interest in receiving the information. As purchasers of the plaintiff's products, their interest in the plaintiff's status as the manufacturer of those products is clearly perceived. It is however the defendants duty or interest in communicating the information which requires closer examination.

43. In cross-examination, Mr. Melwani agreed he would expect someone with whom he had an ongoing business relationship to advise him of things heard about the products of another supplier. He denied however that he would regard this as a duty.

44. What then is the precise nature of the duty'or interest which the defendant claims in communicating the information. It is clearly not a legal duty and to that extent the defendant's pleading of "an implied contractual duty" must fail. Moral or social duties or interests are less easily defined and Miss Yau herself had some difficulty in describing the nature of the duty she claimed to pursue.

45. In cross-examination, the plaintiff's counsel pointed out that in the last two sentences of the letter Miss Yau seemed to be seeking confirmation rather than conveying information. Asked how this could concern her or her company, she replied -

"Because I was trading with BDC London. BDC London is a U.K. importer; I thought I had a duty to inform them."

However, pressed as to why she wanted the information confirmed she then replied -

"Yes, I can say it is nothing to do with me, no matter if it is true or not."

46. The information was imparted by the defendant in the capacity of a volunteer. In other words, Miss Yau was not responding to an enquiry but was using her own initiative to make the communication. Whilst this does not create any separate category of defamation, the authors of Clerk and Lindsell, at paragraph 21-100,suggest that the officiousness of the intervention is one factor to consider .If I may presume to interpret,, I take this to mean that of a voluntary communication is clearly made in pursuance of a duty or interest, then its voluntary nature is irrelevant. However,in determining whether or not a communication is in fact made in pursuance of a duty or interest, its voluntary nature may be a factor.   In other words a man may more readily be permitted the protection of the privilege in responding to an enquiry than in initiating the process with gratuitous information.

47. I have no hesitation in agreeing with Mr. Melwani that the defendant did not have any duty, legal, social or moral, to discharge in publishing the June 4th letter. If the defendant , in the person of Miss Yau, had refrained from writing that letter, no one could reasonably contemplate this omission as a breach of amy form of duty The question remains however had the defendant an interest in writing the letter.  It certainly had the interest of a competitor in informing the recipients of the plaintiff's apparet fall from grace in the very field of their rivalry That is mot however the interest which the privilege protects. The privilege is for the legitimate protection of the defendant own interest. It is not to be used for the disparagement of a competitor interest when the interest of the defendant is not threatened by the subject matter communicated.

48. Interest is a milder concept than duty. A duty is usually clearly perceived, but an interest less so. This was evidently recognised by Miss Yau when she conceded that the confirmation she sought had nothing to do with her. The word "interest", as relating to the informant, was in fact omitted.by Scrutton L.J. from the very words in Watt V. Lonasdon relied on by both counsel as defining the issue. Lord Atkinson's, definition however includes the "interest" of the informant but confines it to a duty or interest in making the communication rather than merely an interest in the subject matter.

49. The only interest which I consider the defendant may arguably advance is that of assisting its commercial partners by giving market information of products in which those partners are interested. This would assume that the recipients of the information relied on suppliers such as the defendant to give them any such information coming to hand. It would extend the simple relationship of buyer/seller to one in which the seller had the additional duty or interest of an informant in the trade vis a vis the buyer. It would assume that the seller's relationship with the buyer could be adversely affected by its failure to pass such information to the seller in circumstances such as those arising here. This interest would be very close to a duty insofar as it would necessarily follow that a failure to impart this information would be poorly regarded by the commercial partner. Mr. Melwani has denied that he regarded the defendant as having a duty and equally I cannot find that the defendant had a legitimate interest to further in passing this information to its buyers. The interest the defendant was pursuing was essentially derogatory of the plaintiff rather than protective of itself. This must be at the defendant's peril in the event the information be false.

50. The test suggested by Lindley L.J. in Stuart v. Bell [1891] 2 Q.B. 341, approved and often quoted thereafter, is -

"would the great mass of right-minded men in the position of the defendant have considered it their duty under the circumstances to make the communication?"

Adding the word "interest" to that question, but confining its meaning to exclude the commercial interest in disparaging a business rival, I find the answer to be "no". The occasion was not a privileged one and the defendant is not therefore protected in its defamation of the plaintiff perpetrated through Miss Yau.

51. In reaching this conclusion, I do not rely on the voluntary nature of the communication. Even in response to a query from one of the addressees, I would find the communication unprivileged. I do however find that the gratuitous provision of this information emphasises the lack of duty or interest and is relevant in assessing damages.

52. I have considered the issue of qualified privilege on the assumption that the defendant establishes a probability of honest belief in the truth of what was communicated. Such belief is however a fundamental issue in itself and a failure to establish it would deprive the defendant of the privilege even had my recent finding been in its favour. As an essential element of qualified privilege the issue of honest belief should therefore be considered on its own.

53. The law in this regard was summarised by Lord Diplock in Horrocks v. Lowe [1975] A.C. at page 150 in these words -

"Apart from those exceptional cases, what is required on the part of the defamer to entitle him to the protection of the- privilege is positive belief in the truth of what he published or, as it is generally though tautologously termed, "honest belief""

His Lordship goes on to say that publication without caring about the truth is to be equated with publication with knowledge of falsity. However "carelessness, impulsiveness or irrationality" in reaching a positive belief will not on its own remove the protection afforded by the belief. In other it is the genuineness of the belief which is in issue and not the means by which it was reached.

54. Miss Yau has testified that she believed in the truth of the contents of the June 4th letter. The basis of her belief she said was a letter she received about the end of May 1991 from a company selling fuses in U.K. She went on to say -

"This told me that some unapproved fuses had been used in some electrical appliances."

This letter was not included in the defendant's bundle of documents and Miss Yau said in cross-examination that she did not know the reason. She did not seek to produce it to the court and it was not included in the defendant's discovery. Moveover, apart from saying that her informant was a national retailer in the U.K., Miss Yau has not sought to identify her source.

55. Miss Yau's difficulties increased when she was faced with the press release from Barnet Borough Council as incorporated in the defendant's solicitors' letter of 19th July 1991. This letter appears at item 8 of the plaintiff's bundle and was written in response to the plaintiff's solicitors' letter at item 3, and after the commencement of proceedings. The letter from the defendant's solicitors relies solely on the Barnet press release in refuting the plaintiff's claim, but does not explain the nature of the defence. Nowhere in this letter is mentioned the information Miss Yau said she received from the anonymous U.K. retailer.

56. In cross-examination it was pointed out to Miss Yau that her solicitors were relying on the Barnet press release as showing the truth of her letter of 4th June 1991. Her reply confused the issue even further -

"At the time I sent out the 4th June 1991 letter, I did not have the news of the release of Barnet Borough."

Despite this assertion, she confirmed in her next answer that the solicitors' letter of 19th July 1991 was sent with her approval.

57. Miss Yau had to be aware of the serious discrepancies between the Barnet press release and the defamatory contents of her own letter. If she were relying on the press release to establish her belief in the truth of what she wrote, these discrepancies presented an obvious difficulty. Miss Yau must therefore rely on a source other than the press release to support her evidence of her honest belief in the truth of the defamation. The anonymous U.K. retailer is the source on which she relies.

58. The source of Miss Yau's information is however unidentified even in oral testimony, and the defendant has failed to discover or produce the letter in question. Moreover, the defendant's solicitors as late as 19th July 1991 were relying solely on the press release, with Miss Yau's approval. Given all these factors, I do not find it proved that this letter existed and I find it likely to be no more than a convenient fabrication. I found Miss Yau to be evasive and unconvincing on this point and reach the reluctant conclusion that she was lying about the letter from the U.K. retailer.

    she has said in evidence that she believed in the truth of the defamation and this assertion must still be evaluated. However without the supposed letter from the U.K. retailer, Miss Yau's evidence lacks documentary support, for she said her own letter was written before she knew of the press release. Even if she had relied on the press release, its wording is far removed from the defamation. Finally the defamatory letter strangely concludes with a request for information on its contents.

59. I do not know where Miss Yau obtained the information for her belief, if indeed she did at all. Apart from the improbable letter from the anonymous U.K. retailer she has not told us, and we are left to rely for her belief on her own oral testimony. In all the circumstances, not least her discredited evidence of the letter from the retailer, I find it improbable that she had a genuine belief in the truth of the defamation.

60. For this reason also the defendant would fail to establish the protection of qualified privilege, had I not already found the occasion itself to be unprivileged.

61. There remains the issue of damages which I can deal with shortly as little help is derived from the inevitably different facts of other cases.Mr. Leong for the plaintiff has argued for an award of $50,000 and has pointed out that it was a libel by a competitor to potential customers in the trade It also occurred at a time calculated to harm the plaintiff namely when it was negotiating a supply agreement with the recipients of the letter.

62. Miss. Lau for the defendant argues that it was a minimal defamation It carried no apparent credence for the recipients as the plaintiff commenced supplying its products to them shortly thereafter. Miss Lau argues for a low or even nominal award.

63. General damages, even in circumstances of aggravation, are compensatory in nature. In the absence of likely pecuniary loss they will comprehend the plaintiff's anxiety at possible damage to its business reputation and fear of commercial repercussions with its purchasers. In this context I cannot accept that the libel was trivial, meriting only a minimal award. It was a serious libel in a situation of business rivalry which fortunately had consequences less serious than they might have been.

64. Considering all these factors I find that $50,000 is in line with the authorities insofar as comparisons assist. I also find it a suitable figure to compensate the plaintiff for the injury it has suffered and make the award accordingly. An injunction is granted in the terms prayed and interest will run on the award at the judgment rate from date of writ to payment.

65. I will hear the parties on costs as the late adjournment and amendments may call for argument.