MORINDA INTERNATIONAL HONG KONG LTD. v. NEXT MAGAZINE PUBLISHING LTD. AND OTHERS

HCA 4471/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4471 OF 2000

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D E C I S I O N

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Introduction

1. This is the plaintiff's application for specific discovery of documents pursuant to RHC O. 24 r. 7. The documents sought to be discovered are set out in 3 paragraphs in the Schedule to the summons dated 13 September 2002. These documents will be set out and discussed in more detail under different headings below. Each heading will deal with each of the said 3 paragraphs of the Schedule.

2. This action was commenced on 4 May 2000. The plaintiff complains that the defendants published a libelous article in issue No. 527 of the "Next" magazine which was available to the public on about 13 April 2000. The defendants deny the article was libelous. They also rely on the defence of justification and fair comment.

3. It is undisputed that in order to succeed in this application, the plaintiff must at least establish a prima facie case that the documents sought to be discovered:-

(1) are, or have been, in the possession, custody or power of the defendants;

(2) are relevant in that they "relate to one or more of the matters in question in the cause or matter": see O. 24 r. 7(3).

The burden of proving that an order under O. 24 r. 7 is not necessary lies with the respondent to the application; in this application, that will be the defendants: O. 24 r. 8 and Hong Kong Civil Procedure 2002, para. 24/8/1.

Para. (a) of the Schedule

4. This asks for the specific discovery of:-

"published circulation figures together with audited circulation figures and all other audited accounts and underlying documents in relation to the circulation and sale of Next Magazine Issue No. 527 published on 13 April 2000 ("the Magazine"), including any back issues ordered since the date of publication and all correspondence including internal correspondence relating to circulation figures and sales of the Magazine".

5. The plaintiff argues that the documents sought are relevant to a number of issues including the extent of publication of the article and hence the question of general damages. Further, they may also be relevant to exemplary damages because the defendants should be deprived of the profits they obtained by the defamation.

6. It can be assumed (and this is undisputed by the plaintiff) that the defendants' accounts relevant to the time of publication of the article in question were not prepared with this action in mind. For this reason, it was pointed out to the plaintiff, during the hearing, that the documents sought are extremely difficult to identify and may well mean the defendants have to furnish the plaintiff with all of their accounting documents. The plaintiff then indicated that, at this stage, this part of the application should be limited to the following documents, namely, the defendants' audited accounts for the financial year which covered the publication of the libelous article, the management accounts for the month (or week) in which the libelous article was published and other documents relating to the income and expenditure and circulation figure of the article in question.

7. The more limited form of specific discovery proposed by the plaintiff at the hearing is of course not what this part of the summons seeks (unless amended with leave) and, for that reason alone, this part of the summons should be dismissed.

8. The defendants make the following further points in relation to, firstly, the accounting documents. In Gatley on Libel and Slander (1998) 9th Ed., para. 9.18 it was stated that:-

"... the practice is not to give evidence of the state of accounts of a newspaper but merely to put to the jury in a general way its size, circulation and apparent resources ... ".

At para. 9.21 of Gatley:-

"The sum awarded by way of exemplary damages should be the minimum necessary to punish the defendant, to show that tort does not pay and to deter others ... there is a complication in the other category of case because an exemplary award may be regarded as having at least in part the purpose of stripping the defendant of the gain he has made from his wrongful act. The amount of the profit actually made by the defendant is a relevant consideration but it is not determinative, for an award may be made even when no profit is attributable to the libel ... Though it will not necessarily be impossible in a case of libel to show what profit is attributable to the tort it will in practice be a rare case where this can be done with anything approaching precision and such issues would in any case be very unsuitable for trial by jury ... " (emphasis supplied).

9. The reasoning behind the above passages is obvious. An award of exemplary damages has to be assessed by the judge or the jury (as the case may be) but it is unlikely (if ever) the profits attributable to the libel can be ascertained with objective precision. Furthermore, juries should not be asked to engage in a detailed examination of complicated documents. This is reflected by the exception to the right to jury trial in defamation action set out in s 33A(1) of the High Court Ordinance (Cap. 4) the relevant parts of which read:-

"Where, on the application of any party to an action the Court of First Instance is satisfied that there is in issue-

(a) a claim in respect of libel, slander, ... ,
the action shall be tried with a jury, unless the Court is of the opinion that the trial requires any prolonged examination of documents or accounts or any scientific or local investigation which cannot conveniently be made with a jury" (emphasis supplied).

10. Secondly, in relation to the documents relating to circulation figures, the defendants submit (and the plaintiff does not dispute) that the 6-month average circulation figure appears on every issue of the magazine. The plaintiff contends that this is insufficient because the circulation of the issue containing the libelous article might have been substantially higher than the average. This contention is not supported by the "moving" 6-month averages because all the average figures show a more or less constant figure of circulation. Thirdly, even if there should be any substantial "increase" in the circulation of the issue in question, it would be too speculative to attach any weight to the "increase". The "increase" might have been caused by many other factors unrelated to the libelous article. It is not farfetched to infer (and this court's experience in dealing with litigations involving the "Next" magazine tends to confirm this) that each issue of the magazine would contain a cover story. To conclude that any change in circulation was only related to the cover story is very probably an over-simplification of matters. Further, even if the plaintiff's approach was to be adopted, in order for the jury to properly conclude that the "increase" in circulation was caused by the libelous article, it may be necessary for the jury to be shown the other issues and be asked to decide if they find the libelous article more interesting (and hence more "sellable") than the other issues. Leaving aside other potential difficulties which this may pose, such an exercise may prove to be too formidable for the jury which, in effect, is asked to determine what material would be more appealing to the market.

11. For the above reasons, I agree with the defendants that this part of the application should be dismissed.

Para. (b) of the Schedule

12. This seeks the specific discovery of:-

"web counters and any other documentation held in any medium showing details of access/number of visits and hits to the electronic version of the Magazine and/or the archived copy of the article appearing on pages 68 to 72 of the Magazine entitled "踢爆毛舜筠傳銷騙局 - 果汁醬紅斑狼瘡" ("the Article") published on the web site www.next.com.hk/mag ("the Web Site") and number of subscribers for the electronic version of the Magazine (including subscribers since the date of publication ordering back issues of the electronic version of the Magazine and/or the Article)".

13. The defendants' short answer to this part of the application is that they do not own or manage the web site. The plaintiff's case is that the owner and operator of the web site is the defendants' associated company: see, for example, para. 11A, Amended Statement of Claim. This is not admitted by the defendants: para. 15A, Re-Amended Defence. I agree with the defendants' argument that even if the company which owned and operated the web site was the defendants' associated company, this is per se insufficient to establish that the documents sought are, or have been, in their possession, custody or power.

14. Further, the defendants point out that:-

"... any other documentation held in any medium showing details of access/number of visits and hits to the electronic version of the Magazine and/or the archived copy of the article appearing on pages 68 to 72 of the Magazine ... "

is not a "class of document" within the meaning of O. 24 r. 7. In this regard, the defendants rely on the following passages in Deak & Co (Far East) Ltd v. NM Rothschild & Sons Ltd and Ors [1981] 1 HKC 78:-

"What is meant by 'a class of document'? There is no definition in the [former] Rules of the Supreme Court. ... In our judgment, 'a class of documents' must be classified by its nature. Thus, for example, in Seabrook v. British Transport Commission [1959] 1 WLR 509, it was held that the description of the documents of which discovery was required as 'correspondence between and reports made by the defendant's officers and servants relating to the accident' was a sufficient identification so as to form a class" (p. 82B-D).

For the above reason, the court of appeal in Deak held that:-

" "all documents that bear upon the knowledge of the plaintiffs of the identity of clients introduced by Ross", "any documents showing the extent to which clients introduced by Ross made payments into any bank account maintained by the plaintiffs in Hong Kong including relevant statements of accounts" and "any documents showing the extent to which clients introduced by Ross made payments into accounts maintained by the plaintiffs outside Hong Kong including statements of accounts" ",

not to constitute any "class of document". I agree with the defendants that this is also one of the flaws of this part of the application.

15. By virtue of the above matters, this part of the application should be dismissed as well.

Para. (c) of the Schedule

16. This asks for the specific discovery of:-

"audited accounts and underlying documents showing the revenue gained and sales made in relation to the publication of the electronic version of the Magazine and/or the Article on the Web Site and all correspondence including internal correspondence relating to the revenue gained and sales made in relation to the publication of the electronic version of the Magazine and/or the Article on the Web Site".

17. Further to the points made in relation to para. (b) of the Schedule, the defendants' evidence is that the web site was freely accessible at the relevant time. The plaintiff argues that although access to the web site was free, access to the libelous article may not be so. The plaintiff has however adduced no evidence to that effect. Moreover, this argument is based on an unduly restrictive reading of the defendants' affidavit evidence regarding this aspect.

18. By reason of the above matters, this part of the application should also be dismissed.

Costs

19. There is no apparent justification for departing from the usual rule that costs should follow the event. There is a costs order nisi that the costs of this application should be paid by the plaintiff to the defendants to be taxed in any event if not agreed. To assist taxation, the time of the hearing spent on this application was about 1 hour 50 minutes.