EXCEL CONCRETE LTD v. THE CONCRETE PRODUCERS ASSOCIATION OF HONG KONG LTD AND OTHERS

HCA 938/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 938 OF 2011

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DECISION

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1.  This is an application by the 3^rd, 5^th and 6^th defendants to strike out certain parts of the Statement of Claim. Before the hearing, the parties have already agreed for the claims against the 5^th and 6^th defendants be struck out, and so it only leaves the claim against the 3^rd defendant.

Background

2.  This is a dispute between certain concrete producers and suppliers in Hong Kong, and the plaintiff’s claim is one for damages and other relief for libel and malicious falsehood in respect of the following 3 letters published in 2010:

(i)  letter dated 13 October 2010 (“the 1^st Letter”) published under the letterhead of Hong Kong Construction Materials Association (“HKCMA”), the 2^nd defendant herein, and signed by Mr Leung Ying Wah Lambert (“Mr Leung”), the 3^rd defendant herein, addressed to MTR Corporation Ltd (“MTRC”);

(ii)  letter dated 14 October 2010 (“the 2^nd Letter”) published under the letterhead of the solicitors’ firm Mayer Brown JSM (“JSM”), which was acting for Concrete Producers Association of Hong Kong (“CPA”), the 1^st defendant herein, addressed to the Buildings Department; and

(iii)  letter dated 21 December 2010 (“the 3^rd Letter”) published under the letterhead of CPA and signed by its chairman, Mr Frank Lo (“Mr Lo”), addressed to MTRC.

3.  It is the plaintiff’s case that Mr Leung is personally liable, together with the other tortfeasors, for the publication of all 3 Letters.  In this application, Mr Leung is asking the court to strike out the claim against him in respect of the publication of the 2^nd and 3^rd Letters.  It is Mr Leung’s case that there is no basis for the plaintiff to substantiate the assertion that he had authorised or participated in the publication of these 2 Letters, and so the claim is clearly hopeless and should be struck out.

4.  By way of background, the following matters are not in dispute:

(i)  CPA is an association of concrete producers in Hong Kong, and it is an affiliate member of HKCMA; and

(ii)  Mr Leung is the chairman, a director and the secretary of HKCMA; and

(iii)  Mr Leung is a director of Anderson Concrete Limited (“ACL”), the 7^th defendant herein, and 4 other related companies, including Ready Mixed Concrete which is a member of CPA.

5.  The alleged defamatory statements in the 3 Letters are related to complaints against the plaintiff about the unlawful erection and operation of a concrete batching facility in a construction site in Yuen Long and the supply of substandard concrete.  The plaintiff claims that these statements were false and therefore brings the present proceedings against the defendants, who were allegedly involved in the publication of the 3 Letters, to claim for, inter alia, damages and injunction restraining the publication of similar statements.

Legal principles

6.  It is trite law that it is only in plain and obvious cases that the court should exercise its summary power to strike out a statement of claim.  There should be no trial upon affidavit, and disputed facts are to be taken in favour of the party sought to be struck out (see: Hong Kong Civil Procedure, vol 1, §18/19/4).

7.  On the other hand, the general principles applicable to the responsibility for the publication in libel are stated in Gatley on Libel and Slander, 11 ed, at §6.4:

“The person who first spoke or composed the defamatory matter (the originator) is of course liable, provided he intended to publish it or failed to take reasonable care to prevent its publication. However, at common law liability extends to any person who participated in, secured, or authorized the publication … … …”

8.  In Bataille v Newland [2002] EWHC 1682 (QB), Eady J held at p 8 as follows:

“There are various acts that can give rise to legal responsibility, for example, encouraging the primary author, supplying him with information intending or knowing that it will be re-published, or, if one is in a position to do so, instructing him or authorising him to publish it.”

9.  In Duncan and Neill on Defamation (3 ed), it is also stated that “[every] person who knowingly takes part in the publication of the defamatory matter is prima facie liable in respect of the publication” (at p 76).  However, the mere receipt of the draft publication by e-mail does not amount to authorisation or participation in the publication (see: Underhill v Corser [2010] EWHC 1195 (QB) at §§105-111).

10.  It is therefore clear that responsibility for publication will attach to a person who participated in, secured, or authorised the publication and to one who encouraged the primary author, or supplied him with information intending or knowing that it would be re-published.

11.  As the approach on a striking-out application where the issue of responsibility to publish is challenged, Eady J held in Bataille, supra., that:

“The next question is whether, on the facts assumed, a properly directed jury could draw the inference for which the claimant contends. In this case, of course, the inference is that the second defendant was, in some sense, a participant in the publication of the letter. I should only rule out the case against the second defendant if I am satisfied that a jury would be perverse to draw that inference.” (at p 6)

“If the defendant’s case is so clear that it cannot be disputed, there would be nothing left for a jury to determine. If, however, there is room for legitimate argument, either on any of the primary facts or as to the feasibility of the inference being drawn, then a judge should not prevent the claimant having the issue or issues resolved by a jury. I should not conduct a mini-trial or attempt to decide the factual dispute on first appearances where there is the possibility that cross-examination might undermine the case that the second defendant is putting forward.” (at p 7)

12.  In some cases, it may not be possible for a plaintiff to adduce direct evidence to prove that that a particular defendant had participated in, secured, or authorised the publication of the alleged defamatory statement.  However, it is always open to the plaintiff to adduce circumstantial evidence and to ask the court to make certain inferences about the defendant’s role in the publication.  In a striking-out application, the court has to put the plaintiff’s case and evidence at the highest and to ask the question as to whether there is some basis for the court to infer that a particular defendant had participated in, secured, or authorised the publication.  If the answer is in the affirmative, it is not appropriate for the court to exercise the summary power to strike out the plaintiff’s claim.

Analysis

13.  I now examine the materials put forward by the plaintiff in support of the claim against Mr Leung in respect of the publication of the 2^nd and 3^rd Letters.

14.  Firstly, the documentary evidence in the present case shows the following:

(i)  on 2 September 2010, a letter was sent by JSM on behalf of CPA to the Buildings Department in relation to certain unauthorised structures alleged to have been erected in Yuen Long;

(ii)  on 11 October 2010, Mr Lo, who is the chairman of CPA, sent to Mr Leung and Mr Hogan David James (“Mr Hogan”), the 4^th defendant herein, copies of complaint letters from JSM to various Government authorities, including the letter dated 2 September 2010 from JSM to the Buildings Department;

(iii)  on 12 October 2010, Mr Hogan sent a draft of the 1^st Letter to Mr Lo, with Mr Leung copied on the e-mail, asking him to check and then to put the draft on the letterhead of HKCMA;

(iv)  on 12 October 2010, the draft letter was eventually forwarded to the secretary of Mr Leung, and Mr Leung signed the 1^st Letter on 13 October 2010 on the letterhead of HKCMA;

(v)  on 13 October 2010, Mr Lo then circulated the 1^st Letter as an attachment to an e-mail to various persons for their perusal;

(vi)  on 14 October 2010, JSM sent the 2^nd Letter to the Buildings Department, which was a follow-up to the letter dated 2 September 2010 since there was no reply to that letter from the Buildings Department;

(vii)  on 18 October 2010, Mr Leung sent to Mr Lo and Mr Hogan a copy of MTRC’s response to the 1^st Letter.  In that e-mail, Mr Leung stated that MTRC was “very sympathetic towards the illegal operation”;

(viii)  on 18 October 2010, Mr Hogan replied to Mr Leung and Mr Lo stating that this was a “very interesting level of support from the MTRC” and that he would also pass the matter to the handling partner of JSM;

(ix)  on 21 December 2010, Mr Lo, through his secretary, circulated a draft of the 3^rd Letter to various persons with Mr Leung specifically copied on this e-mail.  The e-mail stated that “[this] is the final draft, if I do not receive your comments by 12:00 noon tomorrow, your acceptance of the consent is assumed”;

(x)  on 21 December 2010, one Mr Alfred Ho and one Mr Ricky Wong replied with comments, and Mr Leung was copied on these replies; and

(xi)  on 22 December 2010, Mr Lo circulated a copy of the 3^rd Letter for the reference of the recipients and Mr Leung was copied on this e-mail.

15.  Secondly, the plaintiff alleges in the Statement of Claim that there is a cartel in the industry of the supply of ready-mixed concrete in Hong Kong whose combined market share is about 80%.  The plaintiff is not a member of this cartel.  One of the purposes of this cartel is to maintain market entry barriers or to take actions against new market entrants.  ACL, of which Mr Leung is a director, is an active member of the cartel, which asserts a decisive influence on the steps to be taken by CPA.

16.  As this is a striking-out application, I have to put the plaintiff’s case at the highest and to proceed on the basis that the plaintiff can substantiate these allegations at the trial.  Further, from the documentary evidence mentioned above, it is fair to say that at least some of the leading players in the industry had taken concerted action against the plaintiff, which was described in the 3^rd Letter as “a new company”, by lodging the complaints relating to the unlawful erection and operation of concrete batching facility and the supply of substandard concrete to the government authorities and MTRC, which might have the effect of preventing the plaintiff from entering the market.  At this stage, the court cannot simply ignore the plaintiff’s allegation about the existence of the cartel.

17.  Are these materials sufficient for the purpose of the striking-out application?  Mr Pao, counsel for the plaintiff, submits that the court can, based on these materials, draw the inference that Mr Leung had participated in, secured, or authorised the publication of the 2^nd and 3^rd Letters.  Firstly, there was a cartel to protect the interests of the major players in the industry.  As the plaintiff was a new company and not a member of the cartel, the lodging of the complaints in the 3 Letters can be regarded as attempts by the members of the cartel to drive the plaintiff out of the market.  Mr Leung is the chairman of HKCMA and he was somewhat involved in the concerted action of the lodging of the series of complaints against the plaintiff.  Further, being the director of a number of major companies in the industry which compete with the plaintiff, Mr Leung also had a vested interest in making such complaints to the regulatory authorities and interested commercial entities.

18.  Secondly, Mr Leung signed the 1^st Letter on behalf of HKCMA which explicitly states that “ ... … … we have also written to the Lands Department, the Planning Department and the Buildings Department to ensure enforcement action is taken.”  Mr Pao submits that the use of the word “we” means that Mr Leung, together with other persons of  CPA and HKCMA, were taking collective responsibility for the lodging of the past complaints to the Buildings Department.  Further, given the short time frame and the similar nature of the complaints in the 1^st and 2^nd Letters, Mr Leung should have known that the 2^nd Letter was going to be issued soon since this dealt with the same subject matter.  Just days previously, he had been provided with copies of the former complaint letters, and he should have known that the response from MTRC was going to be forwarded to JSM as well.

19.  Thirdly, Mr Leung must have had, prior to 11 October 2010, discussions with Mr Lo and Mr Hogan of CPA about the complaints lodged against the plaintiff.  Further, Mr Leung was in regular communication, by e-mail, with Mr Lo and Mr Hogan as to the progress and status of these complaints.  It was certainly not the case that Mr Leung just received a copy of the draft 3^rd Letter.  He was asked to comment on the draft with a view to final approval and publication and also on their replies.  The 3^rd Letter dealt with a complaint to MTRC, which was the same recipient as the 1^st Letter, which he personally signed.  Although he was only copied on the list, if he had truly raised an objection or had commented on the draft, it would be reasonable to believe that those views would have been taken on board and at least considered, if not adopted, before the 3^rd Letter was sent.

20.  I agree with Mr Pao that these observations, viewed collectively, support the plaintiff’s case that Mr Leung had participated in or encouraged he publication of the 2^nd and 3^rd Letters, or had otherwise supplied information with the intent that it would be published in those Letters.  There is at least some basis to suggest that Mr Leung played a leading role in lodging the series of complaints against the plaintiff, and he played this role together with Mr Lo and Mr Hogan of CPA.  The court will need to hear evidence at the trial as to what had been discussed between the said 3 key persons prior to mid-October 2010 to form an informed view as to whether Mr Leung had participated in, encouraged the publication or supplied information relevant to the 2^nd and 3^rd Letters. Although the trial judge may refuse to draw such inference after hearing the evidence at the trial, I do not consider this a plain and obvious case that the plaintiff’s claim against Mr Leung in respect of the publication of the 2^nd and 3^rd Letters should be struck out.

21.  There is also another reason why Mr Leung’s responsibility for the publication of the 2^nd and 3^rd Letters, if any, is a matter which should be properly investigated at the trial.  Since the claim against Mr Leung in respect of the 1^st Letter is still intact, the court has to examine the role played by Mr Leung in the publication of the 1^st Letter.  In the case that the court is to strike out the claim relating to the 2^nd and 3^rd Letters at this stage, it would be very embarrassing and unfair to the plaintiff if later at the trial, there is evidence to show that Mr Leung was somewhat responsible for the publication of the 2^nd and 3^rd Letters.  Further, to the extent that the issues in the 2^nd and 3^rd Letters overlap with that of the 1^st Letter, the court may find that Mr Leung was the supplier of information for the purposes of the latter 2 Letters.

22.  To oppose the application, Mr Leung has filed 2 affirmations with a view to deny his involvement in the publication of the 2^nd and 3^rd Letters.  Mr Pao points out that his evidence lacks creditability.  Mr Leung initially maintained in his 2^nd affirmation that he only became aware of the 2^nd and 3^rd Letters after the commencement of the present proceedings.  But when faced with the evidence that he was copied on e-mails which attached the drafts and the final version of the 3^rd Letter, Mr Leung then had to qualify his evidence in his 3^rd affirmation by saying instead that he never read the attachments.

23.  Since this is a striking-out application, it is not appropriate for the court to conduct a mini-trial to assess the creditability of Mr Leung’s evidence.  It is a matter for the trial judge.  At this stage, it is suffice for me to say that, based on the existing materials supplied by the plaintiff and its allegations in the Statement of Claim, there is some basis for the court to infer that Mr Leung had participated in or encouraged the publication of the 2^nd and 3^rd Letters, or had otherwise supplied information with the intent that it would be published in those Letters. In such circumstances, it is not appropriate for the court to strike out the claim relating to the publication of the 2^nd and 3^rd Letters against Mr Leung and I therefore refuse his application in this regard.

24.  I also make an order nisi that, in respect of the application of to strike out the claim against Mr Leung relating to the 2^nd and 3^rd Letters, the costs be the plaintiff’s costs in the cause of such claim (ie the claim relating to the 2^nd and 3^rd Letters), which shall be made absolute 14 days after the handing down of this Decision.