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DCCJ 1445/2013
[2021] HKDC 590
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 1445 OF 2013
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| BETWEEN |
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PAC-FUNG FEATHER COMPANY LIMITED
(北豐有限公司) |
Plaintiff |
and |
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THE INCORPORATED OWNERS OF HOI LUEN INDUSTRIAL CENTRE
(開聯工業中心業主立案法團) |
1st Defendant |
| |
HUANG HUI QIONG (黃慧琼) |
2nd Defendant |
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Before: His Honour Judge Leung in Court
Date of Hearing: 20-23 & 27-30 October and 17 December 2020
Date of Judgment: 16 June 2021
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JUDGMENT
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1. The plaintiff (“Pac-Fung”), owner of various units on the 9/F of Hoi Luen Industrial Centre, Kwun Tong (“the Building”), sues the 1st defendant, the Incorporated Owners (“IO”), and the 2nd defendant, chairperson of the management committee of the IO (“Huang”), for libel and malicious falsehood as well as breach of duties on their parts in connection with their exercise of the powers under the Building Management Ordinance, Cap 344 (“BMO”) and the relevant deed of mutual covenants (“DMC”).
A. BACKGROUND
2. The Building comprises two blocks, A and B. Pac-Fung was at the material times and still is the registered owner of all the units[1] on the 9/F of Block B except for 3 units[2]. It also owns another unit on the 14/F together with 3 car parking spaces of the Building. Pac-Fung carried and still carries on the business of design and manufacturing of home textiles. The units on the 9/F were and are used for office and storage.
3. The IO was incorporated in September 1990. Huang has been the chairperson of the IO since January 2010. Her company, Konco (HK) Investment Limited (“Konco”), was and is the registered owner of two units on the 7/F of Block B.
4. At the material times, the management company of the Building was Synergis Management Services Limited (“Synergis”). Its property manager in charge of the Building was Mr Fong Chan Ming (“Fong”). In December 2012, Hong Yip Services Company Limited (“Hong Yip”) took over as the manager of the Building. Fong joined Hong Yip in January 2012 and remained in his position as the property manager.
5. The present dispute arose out of the unauthorized building works (“UBW”) of Pac-Fung on its floor. Back in 1991, Pac-Fung caused to be constructed 2 walls across the common corridor of its floor. One wall was outside workshops B8 and B9 (“Wall A”) while the other wall was outside workshop B6 (“Wall B”). By these walls, Pac-Fung enclosed parts of the common corridor to its exclusive occupation and use. There is no dispute that the common corridor was a common part of the Building.
6. The part of the common corridor enclosed by Wall B also included where the fire exit to one of the staircases (Staircase No 6) is located. Pac-Fung caused to be erected a metal sliding gate at that exit so that access from the floor to the fire exit and the staircase as well as that from the staircase to the fire exit to the floor became restricted exclusively to Pac-Fung.
7. Where appropriate, Walls A and B will be collectively referred to as the Walls.
8. In August 2011, the IO received a letter from Lee Mark & Associates (“Lee Mark”). Lee Mark was the architect firm appointed by the Buildings Department (“BD”) in connection with the department’s enforcement of the clearance of UBW. By the letter, Lee Mark informed the IO that the Building was targeted by the BD for the clearance of UBW.
9. In March 2012, Synergis issued warning letters to a number of units of Block A in relation to their respective UBW.
10. In May 2012, Synergis issued a letter to Pac-Fung. It referred to the recent inspection of the Building by the Fire Services Department (“FSD”). Pac-Fung was requested to take appropriate action concerning the blocking of the common corridor and the access to the fire exit mentioned above.
11. In mid-September 2012, Synergis took further action by posting two copies of a Chinese notice on the Walls respectively urging Pac-Fung to remove the Walls and the obstruction of the fire exit (“the 9/2012 Notice”).
12. In late September 2012, the IO through WK To & Co, solicitors, issued a letter to Pac-Fung repeating the complaint about the Walls and the obstruction of the fire exit. A sketch floor plan with photographs identifying the UBW was enclosed. The parts of the common corridor enclosed by Walls A and B was said to be about 5 and 22 square metres respectively (or a total of a little less than 300 square feet). Pac-Fung was demanded to remove the UBW and to reinstate the affected common parts in 10 days.
13. In early October 2012, a similar written demand in Chinese was sent by SK Lam, Alfred Chan & Co, solicitors, for and on behalf of the IO to Pac-Fung.
14. In early October 2012, the IO resolved that the government departments should be notified and legal action should be taken in case Pac-Fung failed to rectify.
15. In the same month, Fong on behalf of Synergis informed the FSD and the BD of the situation of the 9/F under the occupation of Pac-Fung and requested for necessary action.
16. In the meantime, the IO also instructed WK To & Co to issue letters to the owners of those units in Block A, to which previous warning letters had been sent in March 2012 as mentioned above, demanding the removal of their respective UBW within 10 days.
17. On 29 October 2012, copies of a printed Chinese notice were posted on the Walls respectively (“the 29/10/2012 Notice”), which said:-
通告
此牆乃違例加建物及封閉消防走火通道，為免對業戶在火警逃生時構成危險，請立即拆除此違例加建障礙牆及還原以便在緊急時逃生。”
18. Essentially, the notice was addressed to Pac-Fung, pointing out that the Walls were UBW that had blocked the fire exit. To prevent danger in case of fire and escape, Pac-Fung was requested to remove the Walls and reinstate the premises forthwith.
19. Along with the above notice, the following Chinese words were written in cursory style and red paint on Wall B (“the Red Paint Words”):-
“通告 此牆是僭建物 阻塞走火 請立即拆除
管理處示”
The Red Paint Words repeated the key message of the 29/10/2012 Notice that the Wall was UBW that obstructed fire escape, and the demand that it be removed forthwith. Together, they constituted what is defined as “the 1st Warning” in the present action.
20. Aggrieved by the way the 1st Warning was put on Wall B right next to its entrance, Pac-Fung complained to the IO and allegedly reported the matter to the police.
21. Apparently, Synergis had made enquiry consequential upon Pac-Fung’s complaint. The written reply by the IO to Synergis in early November 2012 revealed that the Red Paint Words were the works of the IO’s secretary. However, the IO defended its right to do so on what was considered to be the common parts of the Building[3].
22. Discovering that the 29/10/2012 Notice had been removed and the Red Paint Words had been painted over, the IO, on 15 November 2012, caused to be posted on the Walls respectively another notice in Chinese similar to the 29/10/2012 Notice, save that it was added that sabotage of the notice would be held accountable criminally. Further, the following Chinese words, this time printed in red on A4 sized paper, as warning about the unauthorized erection of the wall and demand for its removal, were posted (“the Printed Red Words”):-
Together they constituted what is defined as “the 2nd Warning” in the present action.
23. Discovering that the 2nd Warning had been removed, the IO again reported the matter to the police.
24. In mid-November 2012, the FSD apparently inspected the premises under the control of Pac-Fung. This led to the department’s subsequent letter dated 23 November 2012 to Pac-Fung. What it demanded was the rectification of the overhead fire extinguishing sprinklers which had apparently been obstructed by the false ceiling.
25. In the meantime, Pac-Fung wrote to WK To & Co. While complaining about the manner in which the 1st Warning and the 2nd Warning had been put up on the Walls, Pac-Fung represented that it had consulted professional and undertook to commence the necessary work as soon as practicable. Pac-Fung demanded that the IO ceased what it considered to be harassment.
26. About two weeks later, on 29 November 2012, WK To & Co wrote in Chinese to Pac-Fung, and demanded that the Walls be removed and the common corridor reinstated within 14 days (“the WK To Letter”).
27. A week later, on 5 December 2012, the IO posted on Wall B the following Chinese notice printed on A3 sized paper (“the 1st Notice”):-
“通告：譴責北豐被廠（公開信）
北豐被廠霸佔公眾地方，違法僭建並封閉消防通道，阻礙逃生危及在本樓出入人士的生命安全，多次損毀管理處張貼的告示及律師信，目無法紀。為了私利行為狂妄置本廈各人士的安全不顧。北豐在警署已有三宗刑事毀壞案件在處理中，請各業主引以為鑑，切記遵守公契及法例，我們才可有安全的營商及工作的環境。”
Together with the 1st Notice, a copy of the WK To Letter mentioned above and another Chinese notice pointing out the right of the IO and the management office to post notices on common parts of the Building were also posted.
28. As its title suggested, the 1st Notice served as an open letter condemning the conduct of Pac-Fung. Essentially it said:-
(1) Pac-Fung erected UBW that had occupied the common parts and blocked the fire escape. This jeopardized the safety of the visitors of the Building.
(2) Pac-Fung had repeatedly damaged the notices and solicitors’ letters posted by the management office without regard to the law and the safety of others in the Building. The police were handling three reports of criminal damage against Pac-Fung.
(3) The owners were urged to abide by the DMC and the law so as to maintain a safe business and working environment.
29. On 7 December 2012, Pac-Fung, through its solicitors, wrote to the IO complaining about, amongst other things, nuisance and defamation by the IO, and threatened legal action.
30. By mid-December 2012, Pac-Fung had complied with the written demand by the FSD for rectification of the overhead fire extinguishing sprinklers inside its premises. However, no rectification work as earlier indicated to the IO had been carried out to the Walls.
31. Discovering that the 1st Notice had been removed, the IO again reported the matter to the police.
32. The IO also put up further notice, only that the location of the notice changed from the 9/F to the G/F. On 19 December 2012, the IO caused a Chinese notice, together with a copy of the WK To Letter mentioned above, to be posted on the G/F of the Building. The notice (“the 2nd Notice”) read:-
僭建違規危害生命安全
通告各業戶：
開聯中心B座9樓6室之北豐被廠（北豐有限公司），非法違規僭建霸佔公家地方並阻塞消防通道，法團及管理處已多個月前不斷發出通知，要求清拆還原。可是北豐被廠的負責人不斷損毀管理處張貼之通告，目無法紀！現已有四宗刑事毀壞案件在警署處理中。
現由於北豐被廠的行為極度卑劣，僭建霸佔公地近千尺，封閉消防逃生出口，嚴重影響走火安全，拖延回答管理處妄圖維持僭建，故法團及管理處正商討要向北豐被廠採取法律行動，特此通告，如有進一步的消息將會向各業戶交代進展。”
33. Essentially, the 2nd Notice said:-
(1) For Pac-Fung’s erection of UBW in occupation of common parts and blockage of fire exit, the IO and management office had issued notices in the past months demanding their removal and reinstatement. However, Pac-Fung repeatedly damaged the notices without regard to the law. So far, four criminal damage cases had been reported and were being handled by the police.
(2) The conduct of Pac-Fung was extremely despicable/contemptible in that it had erected the UBW in occupation of the common parts of about a thousand (square) feet, blocked the fire exit and thereby seriously affecting safe fire escape, as well as delayed in responding to the demand of the management office with a view to maintaining the UBW.
(3) Because of that, the IO and management office were considering taking legal action against Pac-Fung. The owners would be informed of the development.
34. Copies of the 2nd notice was posted on (i) the notice boards at the lift lobbies of the two blocks of the Building; and (ii) the corridor wall of the G/F opposite the entrances to the lift lobbies of the two blocks of the Building. The 2nd Notice should be visible to the people along the corridor (and the units there) and those using the corridor to get to the lift lobbies.
35. On the following day, 20 December 2012, Pac-Fung through solicitors wrote to the IO repeating its complaint contained in its letter dated 7 December 2012 mentioned above.
36. In the meantime, the 2nd Notice and the WK To Letter were said to have been removed.
37. On 27 December 2012, the IO and the management office posted another notice (“the 3rd Notice”), which said:-
霸佔公家地方、封閉消防通道危害生命安全
通告各業戶：
開聯中心B座9樓6號室（北豐被廠有限公司），霸佔公家地方並封閉消防通道，危害業主生命財產安全。法團幾個月前發出通知要求清拆還原。可是北豐被廠有限公司的負責人不斷損毀張貼的通告，目無法紀！現已有四宗刑事毀壞案在警署處理中。
由於北豐被廠（B座9樓6號室）的行為極度卑劣，霸佔公家地方近二千呎，封閉消防通道逃生出口，嚴重影響走火的安全，妄顧我們業主的生命財產安全，拖延回應妄圖維持非法利益，故法團正商討向北豐被廠有限公司（B座9樓6室）採取法律行動。”
38. The 3rd Notice bore similar content as the 2nd Notice.
39. The 3rd notice measured 1.4 metres x 2 metres in size. Two copies were posted at the corridor wall on the G/F of the Building, and one copy was posted at the exterior wall of the Building on the G/F facing the vehicle driveway leading to the car parking spaces and the loading/unloading area of the Building.
40. On 7 January 2013, a copy of the 3rd Notice was also posted on the common corridor wall adjacent to the entrance to the office of Pac-Fung on the 9/F.
41. On the same day, WK To & Co, on behalf of the IO, also gave an ultimatum for the removal of the Walls and reinstatement in 7 days or else they had instruction to commence legal proceedings.
42. On the following day, 8 January 2013, the IO issued their second edition of Chinese newsletter (dated 4 January 2013) (“the Newsletter”), which said:-
……
《工作匯報》
個別業主的僭建問題嚴重：
現時有為了私利不顧人命安全的業主，即B座9樓6號室北豐被廠有限公司，霸佔公眾地方估計約二千呎侵害公眾利益，嚴重構成了危害生命安全問題。故大廈特別重視並將有關的責任提醒北豐被廠有限公司，他們現時封閉了消防逃生通道，草菅人命不顧公眾的生命安全，使在大廈出入的公眾人士危在旦夕，當有意外發生大廈會負上賠償的責任，但北豐被廠有限公司是要負上最終的全部責任，賠償大廈的損失。
管理已經向現時已知的僭建業戶進行勸籲，行動包括：管理處發出的勸籲信及通告、律師信及向相關的政府部門反映，管理處採取了相應的措施是要保障眾業主的共同利益。因為萬一發生意外導致傷亡，死傷者及其親屬有權控告大廈疏忽索取賠償所以管理處不可掉以輕心。
B座9樓『北豐被廠有限公司』僭建霸佔公共地方封閉消防逃生出口：
管理處在幾個月前發現B座9樓擁有多個單位的北豐被廠有限公司，霸佔了兩段面積估計近二千呎的消防通道，而且在消防走火出口加建鐵閘，將逃生的消防通道封閉，管理處在僭建處張貼警示通告提醒公眾安全，亦根據香港法例第344章《建築物管理條例》第26A之規定張貼法律文件（請參閱背後），但北豐被廠有限公司目無法紀竟派人撕毀，大廈已經四次報警作刑事追究，現正等候警方的辦理。
------------------------------ 〈回條〉---------------------------------
回條填妥後請交回B座地下管理處
意見調查：
管理處呼籲各位業主勿僭建以身試法，管理處必定會嚴謹執行公契及法例，特別涉及霸佔公地、阻礙走火逃生及影響結構安全會優先處理。
如有任何關於管理上的意見歡迎向我們表達，管理處會嚴謹處理？
意見如下： _____________________________________ …”
43. Essentially, the Newsletter contained the following report of the IO to all the units of the Building:-
(1) Pac-Fung was criticized for encroaching on about 2,000 square feet of common parts for its own benefit and jeopardising the safety of others. The blockage of the fire exit put the lives and safety of the visitors in the Building at risk. In case of accident, the Building would be held responsible for making compensation, which the Building would hold Pac-Fung to be ultimately responsible.
(2) The management office had taken various steps, including issuing letters, notices and lawyers’ letters as well as complaining to relevant government departments, with a view to protecting the common interest of the owners. As the Building could face claims in case of accident causing death or injuries, the management office could not take the matter lightly.
(3) The management office discovered a few months ago that Pac-Fung’s encroachment included two sections of the fire escape estimated to amount to 2,000 (square) feet. It had also installed an iron gate at the fire exit and thereby blocking the fire escape. The management office had posted up legal documents, but Pac-Fung had repeatedly caused them to be torn away. For that, the police were handling four complaints lodged by the Building.
44. The reply slip part of the Newsletter contained an invitation for views regarding the management of the Building. The IO urged the owners to refrain from erecting UBW. The IO would strictly enforce the law and the DMC, and cases where the UBW encroached on the common parts, obstructed fire escape or affected structural safety would be addressed with priority.
45. There is dispute as to when the management office removed the 3rd Notice from its posted locations.
46. On 8 April 2013, the IO commenced proceedings in the Lands Tribunal against Pac-Fung, seeking an order to compel it to remove the UBW (“LDBM 95/2013”).
47. In the same month, Pac-Fung commenced the present action.
48. In September 2013, the BD issued building orders in respect of various UBW in the Building. Amongst others, Building Orders[4] were respectively issued against Pac-Fung in respect of the Walls and the metal sliding gate obstructing the fire exit.
49. The proceedings in LDBM 95/2013 were contested. When the matter was heard in early 2015, the proceedings were disposed of by Pac-Fung’s undertaking to complete the necessary rectification work by the end of July 2015. After argument, the Tribunal also ordered costs of the proceedings against Pac-Fung on an indemnity basis[5].
50. In late September 2015, the BD issued letters of withdrawal upon satisfaction of the compliance by Pac-Fung of the two BO against it.
B. THE CLAIM AND THE DEFENCE
51. Pac-Fung has pleaded three causes of action: defamation, malicious falsehood and breach of duty of the IO and Huang in the exercise of their power under the DMC and the BMO.
B1. Defamation
52. The alleged defamation concerns the 2nd Notice and the 3rd Notice. The following parts of these publications are said to be defamatory:-
Of the 2nd Notice:
“… 現由於北豐被廠的行為極度卑劣，僭建霸佔公地近千尺…”
Of the 3rd Notice:
“由於北豐被廠（B座9樓6號室）的行為極度卑劣，霸佔公家地方近二千呎…”
53. The impugned statements referred to the conduct of Pac-Fung as extremely despicable in that it encroached on nearly 1,000/2,000 (square) feet of the common parts.
54. In defence, the IO and Huang contend as follows:-
(1) The natural and ordinary meaning of the statements in the 2nd Notice and the 3rd Notice, of which the impugned statements merely formed part, conveyed a common and general imputation on Pac-Fung which was not defamatory.
(2) Alternatively, the general charge of the impugned statements could be justified as a matter of fact.
(3) The impugned statements, even if untrue and constituting distinct charges, did not cause material injury to Pac-Fung, and therefore the defence of justification still does not fail by virtue of section 26 of the Defamation Ordinance, Cap 21 (“DO”).
(4) In any event, the statements in the 2nd Notice and the 3rd Notice were published on an occasion of qualified privilege.
55. In reply, Pac-Fung contends:-
(1) The impugned statements indeed conveyed a distinct charge which the IO and Huang fail to justify as a matter of fact.
(2) The IO and Huang lost the protection of the qualified privilege as the publications of the impugned statements exceeded the reasonable limit of the privilege and were actuated by malice.
B2. Malicious falsehood
56. The impugned words in the 2nd Notice and the 3rd Notice are also said to have constituted malicious falsehood. So are the following parts of the Newsletter:-
“…霸佔公眾地方估計約二千呎侵害公眾利益…
…
…霸佔了兩段面積估計近二千呎的消防通道…”
57. Again, the alleged falsity lies with the mention of the area of encroachment by Pac-Fung’s UBW being about 2,000 (square) feet.
58. The alleged malice on the part of the IO and Huang is founded on similar factual basis alleged in reply to the qualified privilege defence. It is contended that the IO and Huang either knew the falsity or were reckless as to whether or not the mention was true or false.
59. Pac-Fung denies the claim, and contends that the claim also fails to sustain for the absence of allegation and proof of special damage.
60. In reply, Pac-Fung contends that allegation or proof of special damage is not necessary pursuant to section 24 of the DO.
B3. Breach of duty
61. Pac-Fung contends that it is an implied term of the DMC that its provisions should only be enforced and applied in a bona fide, reasonable and fair manner. The IO and Huang were likewise under such duty pursuant to sections 18(1)(c) and 29A of the BMO.
62. The conduct of the IO, including the alleged repeated defamation and malicious falsehood, is said to have been oppressive, unreasonable and an abuse of its power. The IO is therefore said to have been in breach of such duty in its enforcement action against Pac-Fung, while Huang, in her capacity as the chairperson of the management committee, was in breach of her duty for procuring and causing the IO to apply and to enforce the DMC in such abusive manner.
63. In defence, the IO and Huang deny the existence of the alleged actionable duty on their part. The alleged breach, in any event, is denied in the circumstances of the case.
C. THE WITNESSES
64. Pac-Fung called the following witnesses:-
(1) Ms Wong Yuen Han (“Wong”), shipping manager of Pac-Fung;
(2) Mr Tse Wai Man (“Tse”)[6], human resources and administration manager of Pac-Fung; and
(3) Madam Wong Mei Mei (“Wong MM”), then owner of as unit in Block A of the Building, and the vice-chairperson of the 10th management committee of the IO.
65. Mr Kwong Shu To, then office assistant of Pac-Fung, did not testify. His witness statement was thereby disregarded.
66. On behalf of the IO and Huang, Fong and Huang herself testified.
D. DEFAMATION
D1. Reading the impugned statements
67. The statements in a publication are defamatory if they expose the claimant to contempt and ridicule by others and cause others to shun him. They are defamatory if they lower the claimant’s estimation in the eyes of right-thinking members of society and adversely affect his reputation: see Multi-Winner Investment Ltd v Lau Ming Yee [2017] 1 HKLRD 328 (at §43).
68. A corporate body may not suffer injury to its feeling but its goodwill. It has an actionable cause for libel for any defamatory statement which tends to damage it in the way of its business: see Gatley on Libel and Slander (12th ed) (at §8.16).
69. Whether a statement is defamatory is a matter of construction, not evidence: see Hung Yuen Chan Robert v Hong Kong Standard Newspaper Ltd & Ors [1996] 4 HKC 519 (at 526F).
70. In Multi-Winner Investment Ltd, the court explained (at §42) the following principles of construing the impugned statement in a libel action:-
“(i) Words in an article are normally construed according to their natural and ordinary meaning, ie the meaning in which reasonable people of ordinary intelligence, with the ordinary person’s general knowledge and experience of world affairs, would be likely to understand them.
(ii) The natural and ordinary meanings include implied, inferred and indirect meanings.
(iii) Although the same words in an article may bear different meanings to different readers for the purpose of defamation litigation, the words have only one single meaning, and the court has to determine what that single meaning is.
(iv) For purposes of ascertaining the single meaning, the court puts itself in the position of a fictitious ordinary reader.
(v) The fictitious ordinary reader is described as … “being a sort of halfway house between the unusually suspicious and unusually naïve. He is essentially fair-minded and reasonable and does not jump to hostile conclusions on flimsy evidence; but he may be guilty of a certain amount of loose thinking and does not read a sensational article with caution and critical care, and his capacity for implication or drawing inferences is greater than the lawyer’s…The layman reads in an implication much more freely, and…is especially prone to do so when it is derogatory…”
(vi) The hypothetical reader is taken to be the representative of those who would read the publication in question.
(vii) In delimiting the range of permissible defamatory meanings, the court should rule out any meaning which “can only emerge as the product of some strained, or forced, or utterly unreasonable interpretation”.
(viii) The context and circumstances of the words in an article must be taken into consideration, and the article must be taken as a whole.
(ix) Where the alleged libel is contained in a letter, the whole of the correspondence would form part of the context, for it may be assumed that the other party to the correspondence is aware of its contents.
(x) Where there is disagreement as to what should count as context, it has been suggested that the test is what, having regard to all the circumstances, a reasonable person would be regarded as having read or seen.”
71. Of all the statements in the two notices, Pac-Fung complains only about the statement that its conduct was extremely despicable in that it occupied the common parts measuring nearly 1,000/2,000 square feet in area.
72. There should be no real dispute about the natural and ordinary meaning of these impugned words.
73. Mr Pow SC (appearing with Mr Alexander Tang) for the IO and Huang stresses that it would be wrong to pick the impugned statements and read them on their own. He cites Gatley (at §3.31), which says:-
“… the context and circumstances of the publication must be taken into account, that the claimant cannot pick and choose parts of the publication which, standing alone, would be defamatory. This or that sentence may be considered defamatory, but there may be other passages which take away their sting. In this regard, the reasonable reader is assumed to have read the whole article complained of.”
74. Mr Pow also submits that the court should ask what overall impression the impugned words when read in their context make on the fictitious reader. Gatley says (at §3.14):-
“Where a judge has to determine meaning it has been said that the correct approach is to ask himself what overall impression the material made on him and then to check that against the detailed textual arguments put forward by the parties.”
75. It is said that a reasonable ordinary reader of the 2nd Notice would understand the charge against Pac-Fung to be founded on a number of components mentioned in the notice, namely: (i) the erection of the UBW was unlawful; (ii) the UBW occupied the common parts; (iii) the UBW obstructed the fire exit and created serious risk of danger in case of fire; (iv) Pac-Fung had deliberately delayed in acceding to the demands for the removal of the UBW; and (v) such conduct of Pac-Fung was extremely despicable. The same may be said about the 3rd Notice. Mr Pow submits that the mention of the area in both notices was of relative insignificance in terms of impression on the reader about the charge against Pac-Fung.
76. Mr Wong SC (appearing with Mr Mak and Miss Au) for Pac-Fung does not dispute the above cited legal principles. He accepts that the impugned statements must be read in the context. He also accepts an impressionistic approach in the construction of the impugned statements. However, he argues that such principles, properly understood, would not support the construction of the impugned statements contended by the IO and Huang.
77. Mr Wong submits that the importance of reading the impugned statement in the context and the entirety of the publication lies where the sting of what appears to a defamatory statement, when read on its own, may be neutralised when read in the context and together with the rest of the publication: see Gatley (above) (at §3.31). This happens when reading the impugned statement or passage complained of in the context of the publication may throw a different light on what otherwise appears to be defamatory if read on its own: see also Duncan and Neill on Defamation (5th ed) (at §5.32).
78. Mr Wong submits that what the IO and Huang contend is not to ascertain if reading the impugned statements in the context may cast light on any “antidote” to the sting, but to ignore the mention of the area of the encroachment as if it had lesser meaning. This, he argues, is not supported by the principles mentioned above.
79. In my judgment, how the 2nd Notice and the 3rd Notice would appeal to a reasonable ordinary reader must be considered realistically in the circumstances. So approached, a number of features of the notices would be readily noted by the reader.
80. First, the publications were notices to all the units of the Building. The headings spoke for themselves.
81. Second, each of the notices started with a succinct caption referring to UBW and the risk to safety posed by the UBW.
82. Third, no part of the notices was highlighted for the readers’ attention, except for the underlined captions mentioned above and the bold print of the name of Pac-Fung in the 2nd Notice.
83. Fourth, the notices by their nature were relatively short.
84. In the circumstances, an ordinary reader who cared to know the details would indeed read the notices as a whole instead of somehow picking any statement to read.
85. That way, an ordinary reader of the 2nd Notice would gather from the first paragraph the following message:-
(1) Pac-Fung had by its UBW occupied the common parts and obstructed the fire exit on its floor.
(2) The IO and the management office had in the past months posted repeated notices demanding for the removal of the UBW. However, Pac-Fung had unlawfully and repeatedly damaged the notices. Reports for criminal damage had been made to the police.
86. The ordinary reader would come across the impugned statements only if he read the second paragraph. If he did, he would gather the following message:-
(1) The conduct of Pac-Fung was said to be extremely despicable in that (i) it erected UBW in occupation of nearly 1,000 square feet of common parts; (ii) the UBW had obstructed the fire exit and seriously affected safe escape in case of fire; and (iii) it delayed in responding to the demands of the management office with a view to maintaining the UBW.
(2) Because of that, the IO and the management office were considering taking legal action against Pac-Fung. The owners and occupiers would be informed of the development.
87. An ordinary reader of the 3rd Notice will gather similar messages as those from the 2nd Notice, except that the area of encroachment was said to be about 2,000 instead of 1,000 square feet.
88. In other words, whether or not the reader chose to read the entirety or merely the second paragraph of the notices, his or her impression would be that the IO and the management office were condemning the conduct of Pac-Fung not merely for its occupation of the common parts by the UBW, but also their obstruction of the fire exit and how Pac-Fung behaved in response to the demands for the removal of the UBW.
89. The comment about the despicable conduct of Pac-Fung, as a matter of literal reading and overall impression on the reader, did not relate solely to the encroachment but also to these other features of the complaint against Pac-Fung made in the notices. The notices literally informed the readers that because of all those, the IO and the management office were considering taking legal action against Pac-Fung.
D2. Whether the impugned statements were defamatory
90. A fair-minded and reasonable member of society would consider the encroachment on the common parts of nearly 1,000 or 2,000 square feet by an owner as unlawful, selfish and inconsiderate conduct at the expense of others in the Building. The actual condemnation in the notices of such conduct as extremely despicable added to such impact on the reader.
91. That said, the condemnation of the conduct of Pac-Fung related to all the features of Pac-Fung’s conduct in connection with the UBW set out in the notices. That was the impression that the people would form about the imputation against Pac-Fung. This also gives rise to the parties’ arguments as to what it is that the IO and Huang need to justify in defence.
D3. Justification
92. Gatley has this to say (at §11.7) on what of a statement that needs to be justified in defence of a claim for defamation:-
“For the purpose of justification, only the ‘substantial’ truth of the imputation must be proved. The defendant can rely on the defence of justification if he proves that ‘the main charge, or gist, of the libel’ is true…If the gist of the libel can be proved, then there is no need also to prove peripheral facts that do not add to the sting of the charge or introduce any matter that is separately actionable: ‘it is sufficient if the substance of the libellous statement be justified…as much must be justified as meets the sting of the charge, and if anything contained in a charge which does not add to the sting of it, that need not be justified. Hence, when considering substantial truth it is important to ‘isolate the essential core of the libel and not to be distracted by inaccuracies around the edge…however substantial…Publishers can be permitted a degree of exaggeration even in the context of factual assertions, and provided the sting of the libel has been established…The whole context of the imputation complained of is relevant to the determination of meaning and can provide the basis for the defence of truth. The nature of the sting can be shaped by the context of the publication as a whole. This can be particularly important, eg should a claimant seek to sue on one allegation only when it might be argued that this comprises only part of a wider imputation.”
(at §11.8):
“The requirement that the defendant need prove only the substantial truth of what has been published entails that a defence of truth may succeed even though the publication was inaccurate in a number of respects. If the defendant can prove the main charge or gist of the libel is true, a slight inaccuracy in one or more of its details will not prevent him from succeeding in a defence of truth.”
93. What needs to be justified is the imputation of the libel or, to be precise, the main charge or gist of that as the fair-minded and reasonable people of society would understand upon reading the impugned statement in the context of the publication.
D3.1 The charge against Pac-Fung
94. An ordinary reader would be given the impression that the condemnation of Pac-Fung, both literally and in the context of the notices, did not relate solely to the occupation of the common parts by the UBW but also to the other features of Pac-Fung’s conduct in connection with the UBW. This was the general charge against Pac-Fung.
95. The key difference between the two sides lies in whether the mention of the area of encroachment on the common parts stood out as a separate and distinct sting. If it did, proof of the truth of the other imputations in the same context will not justify the distinct sting: see Duncan and Neill on Defamation (at §12.14).
96. Whether or not an impugned statement constitutes a distinct charge is a question of fact and degree. In Polly Peck (Holdings) Plc v Trelford [1986] QB 1000 (CA), the court said (at 1020E):-
“ The first principle is that where a plaintiff chooses to complain of part of a whole publication, the jury is entitled to see and read the whole publication…
…
The second principle is that where a publication contains two distinct libels, the plaintiff can complain of one and the defendant cannot justify that libel by proving the truth of the other. The difficulty with this apparent self-evident proposition is in deciding whether the two libels are indeed distinct in the sense that the imputation defamatory of the plaintiff’s character in the one is different from the other…
…Whether a defamatory statement is separate and distinct from other defamatory statements contained in the publication is a question of fact and degree in each case. The several defamatory allegations in their context may have a common sting, in which event they are not to be regarded as separate and distinct allegations…”
97. Various authorities are cited for illustrations.
98. In Rothschild v Associated Newspapers Ltd [2013] EWCA Civ 197, the court said:-
(at §17)
“It must be obvious that a publication may contain a specific allegation, but also a more general charge. And there are bound to be cases – this is one – in which the publisher, sued in defamation, seeks to justify his publication by reference to the general charge, even though he cannot justify the specific allegation taken on its own.”
(at §18 citing Warren v Random House Group Ltd [2009] QB 600))
“… a defendant is entitled to justify a common sting derived from parts of a publication, taken as a whole, of which the claimant does not complain, in so far as they are relevant to the meaning of the words complained of and to the sting of the alleged libel. The claimant is not entitled to use a blue pencil on the words published of him so as to change their meaning and then prevent the defendant from justifying the words in their unexpurgated form. Whether a defamatory statement is separate and distinct is a question of fact and degree in each case.”
(at §24)
“These authorities establish a series of interlocking principles. They are: (1) A justification defence will run if the defendant shows that what he has alleged is substantially true. This general rule is given more concrete effect by the other principles. Thus it is limited by principle (2): a libel cannot be justified by proof of obliquity on the claimant’s part which is unconnected with the accusation complained of. (3) However a defendant is entitled to justify a common sting derived from parts of a publication, taken as a whole – but there must be a common sting. (4) An instance of (3) arises where a general charge is justified by proved examples, even where the published example is unproved. But (5) in such a case the sting of the instance or instances which are proved must in essence be as sharp as the published, unproven libel: so that the claimant has no more reputation to lose by force only of the published, false accusation.”
99. The court in Rothschild further illustrated the above principles by the following example (at §§62-63):-
“Take the example of a claimant who was accused of being an embezzler and, for good measure, an instance was cited relating to £10,000. At trial, however, he is only proved to have taken £5,000. The general charge would surely have been satisfied. It should be open, for that reason, for the court to conclude with regard to the unproved specific charge of taking £10,000 that no reputational damage falls to be compensated…
In the example of the “embezzler”, his claim in respect of the £10,000 allegation would no longer be “worth the candle” – because he has been proven ex hypothesi to have been an embezzler.
I would thus conclude that a defence of justification to a general charge should not necessarily have to fail merely because a supposed example of it, contained in the published article, happened to have been more serious than that ultimately proved at trial (and might even, correspondingly, have merited a more severe penalty in criminal proceedings).”
100. In Alexander v NE Railway Co (1865) 6 B&S 340, the publication was libellous in that the plaintiff was convicted and sentenced to 2 instead of the stated 3 weeks’ imprisonment. The court found that the gist of the libel was the conviction and sentence of imprisonment. The inaccurate statement as to the term of imprisonment did not negative the defence of justification.
101. In Khashoggi v IPC Magazine [1986] 1 WLR 1442 (at 1447E), the publication was libellous in that the plaintiff had affairs with a number of men but not including the stated foreign head of state. The court found that the common sting of the article that the plaintiff was generally promiscuous was nevertheless justified.
102. In Turcu v News Group Newspapers Ltd [2005] All ER 34, the magazine article was libellous in stating that the plaintiff was a party to a conspiracy to kidnap a celebrity. The statements that the plaintiff was said to have been on the brink of violently kidnapping the celebrity and her sons and demanding a £5 million ransom as well as prepared to kill if the ransom was not paid were not proved. Not even the plot was proved. However, the plaintiff was found to have been willing to participate in criminal activities and to make contribution to the discussions about the proposed kidnap, that, the court found, would be thought by most onlookers to be sufficient to support the sting of the libel, namely that he was a member of a dangerous gang and was involved in a plot to the kidnap.
103. In the example given in Peck (Polly) Holdings Ltd (above) as well as the circumstances of Alexander and Khashoggi, the alleged facts in the publications that were not proved were instances of the gist of the charge against the plaintiff. In these cases and Turcu, the imputation of the statements in the publication that were not proved shared the same nature and character of the imputation of those that were proved. Hence all within the general charge.
104. The circumstances were different in Cruise v Express Newspaper plc [1999] QB 931. There the plaintiffs complained of imputations that they were, amongst other things, hypocrites, frauds and liars. The newspaper sought to justify that by reference to the other parts of the article that alleged that the plaintiffs were members of the Church of Scientology, which was said to be a dangerous cult and notorious for its ridiculous doctrines and its policy and practice of ensnaring and exploiting gullible believers for the financial gain of its leaders. The court held that it could not do so. If it was defamatory to say of the plaintiffs being members of that church, which they did not complain of, such allegation was unconnected with the matters of which they did complain, which related to their arrogance, perfidiousness about the true state of their marriage, etc. as a matter of fact. Hence no common sting between what was complained of and what was not.
105. The court encountered not too dissimilar consideration in United States Tobacco International Inc & Anor v British Broadcasting Corporation [1998] EMLR 816. There the defendant’s publication made two broad allegations against the plaintiffs. One was the sales campaign of tobacco aimed at children, which amounted to breach of the agreement with the health department. The other was the marketing of potentially carcinogenic substance. The plaintiff complained of the first allegation whereas the defendant sought to justify the other. The court found that trading in a product attended with health risk was one thing while aiming such product at children in breach of the agreement with the health department was another as a matter of fact. Hence the rejection of the defendant’s contention that proof of the former would justify the latter.
106. In the present case, the complaint in the notices consisted of the occupation of the common parts by the UBW, the obstruction of the fire exit that caused risk of safety in case of fire and Pac-Fung’s response to the demand for the removal of the UBW. It may be said that one did not necessarily follow the other. However, the issue is not whether any of those founded a separate sting.
107. What Pac-Fung advocates is much narrower than that. It does not complain about the statement as to the fact or the manner of its occupation of the common parts by its UBW. It says that within the statement as to the occupation by its UBW, the mention of the area of such occupation gave rise to a size imputation that was distinct.
108. In support, Mr Wong cites the judgment of Weaver v Lloyd 107 ER 535. In Weaver, the plaintiff was charged with brutal treatment of a horse. The publication in question said that the horse “presented a most shocking spectacle, having one eye literally knocked out, besides being dreadfully lacerated and injured in various parts of its body”. It was said that he had also ordered the carer of the horse not to let anyone enter the stables so as not to excite attention. The defendant managed to prove the allegations in the publication except that the horse’s eye, albeit much injured, was not literally knocked out, and that the plaintiff had not ordered the prohibition of entry of people to the stables to see the horse. The appellate court rejected the defendant’s contention that proof of the much injured eye of the horse justified the substance of the libel. The court considered that the statement that the plaintiff literally knocked out the horse’s eye imputed a much greater degree of cruelty than a charge of beating the horse on the other parts of the body. Therefore, such statement had to be specifically justified.
109. In the present case, the IO did not mention the area of the encroachment in the 1st Notice. The IO added the mention of the area in the 2nd Notice which was much larger than that previously alleged. It further amended that in the 3rd Notice to two times as that stated in the 2nd Notice. The evidence of Huang in court suggested that such mention of the area of encroachment was added consciously. That said, an ordinary reader of the notices would not know such background. Nor was his attention specifically drawn to the mention of the area amongst all the features of Pac-Fung’s conduct that caused the IO to comment that such conduct was extremely despicable.
110. It is said that people in Hong Kong are generally sensitive to the square footage of landed properties because of the value it represents. Even assuming that this is accepted, I am not impressed that a fair-minded reasonable person would regard that encroachment by the UBW of hundreds of square feet of the common parts was insubstantial and for that reason take a different or relatively more favourable view about Pac-Fung. In terms of imputation against Pac-Fung, the mention of the area occupied by the UBW, in my judgment, would not impact on the reader as sharply and distinctly as the imputation from the fact of substantial occupation and the other features of Pac-Fung’s conduct in connection with the UBW as stated in the notices.
111. The same perhaps cannot be said about Weaver. To begin with, the publication literally sought to impress upon the readers that “the horse presented a most shocking spectacle, having one eye literally knocked out” amongst other injuries. The alleged extraordinary infliction on the eye of the horse and its striking appearance represented the character of the cruel treatment being conveyed. The court was entitled to find that if the allegation was not proved, the imputation, and thus the substance of the libel, could not be said to have been justified, even though the other injuries were proved.
112. I am not satisfied that the mention in the notices of the area of encroachment on the common parts by Pac-Fung’s UBW found a distinct charge against it.
D3.2 Proof of the charge
113. In the present case, that the Walls were UBW and encroached upon the common parts were undeniable facts. So were the incidental enclosure and obstruction of the fire exit as well as the installation of a metal sliding gate at the fire exit.
114. The evidence suggests that Pac-Fung took issue as to the posting of notices on the Walls. Tse also testified as to his understanding that his boss did cause the notices to be removed after they had been posted. In this respect, the other witness for Pac-Fung, Wong, doubted if the notices might have fallen off or been lost by themselves. Wong did not impress me as possessing the relevant knowledge that could compromise the rather fair evidence of Tse in this respect.
115. The first written demand by the manager came in as early as May 2012. Whilst Pac-Fung at one stage indicated its willingness to remove the UWB, the work did not commence until after the BD issued the BO in respect of the UBW in September 2013. As at the date of the hearing of LDBM 95/2013 at the end of April 2015, such work was still in progress. The proceedings in LDBM 95/2013 were eventually disposed of by Pac-Fung’s undertaking to complete the work by the end of July 2015.
116. The issue of delay on the part of Pac-Fung in addressing the UBW was considered by the Lands Tribunal in LDBM 95/2013 for the purpose of determining the disputed incidence of liability for costs of those proceedings. In her decision dated 24 July 2015, the Tribunal found that Pac-Fung had been given ample opportunity to remedy the UBW before the commencement of those proceedings. The conduct of Pac-Fung was paying lip service to the IO’s demands, and minded to procrastinate the matter. Coupled with the finding of unreasonable conduct of the litigation, the Tribunal awarded against Pac-Fung costs on an indemnity basis. Between the parties, these findings are final and binding.
117. Mention of the area of encroachment on the common parts aside, all the other features of the conduct of Pac-Fung stated to give rise to the comment of extremely despicable conduct on its part, I find, are proved. Whether or not the ordinary fair-minded people would share the same extent of condemnation of Pac-Fung, their impression about the selfish and inconsiderate conduct on the part of Pac-Fung at the expense of the others in the Building must exist and is justified.
118. The IO and Huang go further and contend that even the statements in the 2nd Notice and the 3rd Notice as to the area of encroachment can be justified as a matter of fact. In view of the above discussion, this is not necessary. In any event, I am not convinced that they could really prove the area mentioned.
119. The same plan enclosed with the above letters from the IO’s solicitors to Pac-Fung back in September and October 2012 graphically showed the area enclosed by the UBW to the exclusive use and occupation of Pac-Fung. Essentially, those were the parts of the common corridor so enclosed, which the IO then measured to be about 294 square feet.
120. According to the IO and Huang, the adjustments in the estimated area came about after views had been expressed about the impact of the obstruction by the UBW of Pac-Fung. Further measurement was taken by the IO’s secretary and engineering staff of the manager. The results were reported to the management committee, before the adjustments were made for the publication of the two notices.
121. In the adjustments, further parts were counted into the area so affected by Wall B. They included the area behind the fire exit that was blocked by the metal sliding gate, namely the area between the two pairs of smoke door and the staircase landing behind the smoke doors. They also included the flights of staircase (No 6) up to the 10/F and down to the 8/F. In their explanation, the IO also brought in the concept of construction area.
122. Mr Wong criticises such understanding and measurement of the area encroached by Wall B as artificial and an afterthought. The evidence of Huang and Fong in this respect was not impressive. That said, I am prepared to find that such revised measurements did take place, and were adopted by the IO for the notices. This was also manifested by how the IO worded the Newsletter in this respect as mentioned above. In the last paragraph of the Newsletter (right above the reply slip part), it said Pac-Fung had encroached on approximately 2,000 square feet “of fire exit/passage”.
123. That said, this does not mean that the IO was right about the revised area as a matter of fact. It is true that a person at the common corridor did not have access to the fire exit without first entering the premises of Pac-Fung. It is also true that a person at the staircase did not have access through the fire exit, which was guarded by the sliding gate installed by Pac-Fung. However, the area between the smoke doors behind the fire exit, the staircase landing and the flights of staircase between the floors were otherwise accessible by a person using the staircase from any floor. In my judgment, the understanding and measurement adopted by the IO was objectively wrong.
124. Therefore, had the statement as to area of encroachment of the common parts by Pac-Fung in the 2nd Notice and the 3rd Notice constituted a separate and distinct charge, I would have found that the charge is not justified.
D3.3 Section 26 of the DO
125. If I am wrong above, so that the mention of the area of encroachment in the 2nd Notice and the 3rd Notice constituted a distinct charge, which is not proved, the IO and Huang then argue that section 26 of the DO nevertheless saves their defence of justification from failing.
126. The section provides:-
“In an action for libel or slander in respect of words containing 2 or more distinct charges against the plaintiff, a defence of justification shall not fail by reason only that the truth of every charge is not proved if the words not proved to be true do not materially injure the plaintiff’s reputation having regard to the truth of the remaining charges.”
127. The question under section 26 is not whether the impugned words in question found a distinct charge. The question is whether the words, albeit distinct and not proved to be true, materially injure the plaintiff’s reputation having regard to the truth of the other charges.
128. In Dr Yip Chi Him Roger v Lee Kwok Leung, HCA 356/2009 (30 June 2015), the defendant managed to justify the general imputation of fraud but failed to substantiate the truth of the specific assertion that the plaintiff had a fake degree. The court applied section 26 and found that the statement as to the specific fraud that the defendant failed to prove did not materially injure the plaintiff’s reputation, in view of the truth of the general imputation of fraud.
129. As discussed, I accept that the statements in the two notices as to the encroachment on the common parts (of the stated area) cast imputation of unlawful, selfish and inconsiderate conduct of Pac-Fung as an owner at the expense of the rights and safety of others. However, a fair-minded reasonable person would have come to such view about Pac-Fung on the basis of the other proved features of its conduct in relation to the UBW that founded the condemnation in the notices, even though the area of encroachment was in fact a little less than 300 square feet.
130. I do not find that the charge founded on the statement as to the area of the encroachment has caused material injury to Pac-Fung that it did not already suffer, particularly when the actual area so occupied by it was substantial as a matter of fact. In other words, the IO and Huang can still avail themselves the defence of justification, even assuming that the size imputation constituted a distinct charge.
131. This very much puts an end to the claim for defamation.
D4. Qualified privilege
132. The IO contends that the 2nd and the 3rd Notices, even if defamatory, were in any event defensible as they were published on a privileged occasion.
133. A privileged occasion is one where the person who makes a communication has an interest or duty, legal 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. The reciprocity in publishing and receiving the information is essential: see Adam v Ward [1917] AC 309 (at 334).
134. In terms of duty, the IO and Huang (in her capacity in the management committee) were expected to carry out the duties and, for that, to exercise the powers conferred by the BMO reasonably necessary for the proper management of the Building. Amongst others, section 18(1)(a) provides that the IO shall maintain the common parts, and section 18(1)(c) provides that the IO shall:-
“do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building.”
The power of the IO under section 18(2) includes the discretion to:-
“(g) to act on behalf of the owners in respect of any other matter in which the owners have a common interest.”
135. The IO may not acquiesce breach. It should take proper and expeditious action if there is indication of malfunction to remove the problem: see Rainbow More Ltd v The Incorporated Owners of the Arcadia, LDBM 141/2015 (8 May 2018) (at §46).
136. In my judgment, the IO were undoubtedly under the duty, and had the power, to take all reasonable steps incidental to the management of the common parts of the Building. Such steps must include communication of information and warning in respect of the state of and safety risk in any part of the Building. Likewise, the owners and occupiers must have the reciprocal interest to receive such information.
137. Mr Wong accepts the existence of such duty on the part of the IO. His major argument is that the publication of the impugned statements in the 2nd and the 3rd Notices had exceeded the necessary and reasonable limit of the privilege, and was actuated by malice.
D4.1 Whether the notices were excessive
138. Whether or not the 2nd Notice or the 3rd Notice had exceeded the reasonable limit of the privilege can be considered in three aspects, namely the target recipients, the content and the manner of publication.
139. The 2nd Notice and the 3rd Notice were expressly addressed to all “業戶”, meaning all the units of the Building. They served to provide the IO’s account of the conduct of Pac-Fung in connection with its UBW, and to inform all the units that the IO was therefore considering taking legal action against Pac-Fung. Indeed, the notices on the G/F were posted up together with WK To Letter threatening legal action against Pac-Fung.
140. Clause 1(34) of Part B of Section V of the DMC empowered the manager to post the name of any owner in default or in breach of the terms and conditions of the deed together with particulars of the default or breach on notice boards or other prominent spaces within the Building. For the such purpose, I see no reason why a publication of this nature should be confined to the units of Block B instead of all the units of the Building.
141. Pac-Fung argues that the notices were excessive in terms of their size, number and exposure.
142. I am not satisfied that objectively viewed, the sizes of the notices readily deserve criticism. If attention was intended, such attention related to the entire notices instead of the specific parts of them that Pac-Fung complains about.
143. The criticism about the number and exposure of the notices also has to do with where they were posted. In particular, issue is taken as to the necessity of posting the notices on the G/F corridor wall when the same were also posted on the notice boards at the G/F lift lobbies. Issue is also taken as to the necessity of posting the 3rd Notice on the external wall of the Building on the G/F facing the driveway to the car parking area.
144. Mr Wong submits that the notices posted at those locations could be seen and read by all persons entering the Building. These people included patrons of the restaurant, canteens and shop on the G/F, visitors to the upper floors but not the 9/F, those who attended the loading and unloading area as well as those who used the hourly parking spaces in the car park. He submits that the IO had no duty to communicate, and those people had no corresponding interest to receive, the information in the notices.
145. In the circumstances of this case, the reality was that any prominent location in the common parts within the Building for posting materials and imparting the information to the owners and occupiers of all the units might entail the sight of the same by mere visitors. However, the mere fact that the defamatory matter may be exposed to to persons who may have no legitimate interest in its subject matter does not necessarily avoid the privilege: see Gatley (at §14.76). Each case depends on its facts.
146. In 劉燎煇v林其東 [2018] HKCFI 10, posters with the impugned content concerning building management in a housing estate were posted in public places such as bus stop and MTR station, and pamphlets containing similar contents were distributed to the public in the neighbourhood.
147. In Mok Kam Kwai v Lam Mo Fat, HCA 1868/2010 (6 March 2014), banners with the impugned content concerning the integrity of village representatives that measured square metres in size were erected, which were visible to the public on their way to and from a nearby railway station as well as the occupants of two nearby buildings and a shopping complex.
148. It is not difficult to see why the manner and thus the exposure of the publications being impugned exceeded the reasonable limit of the privilege in the above cases.
149. In the present case, the posting of notices began on the G/F only after the posting of the previous notices on the Walls on the 9/F proved to be liable to sabotage by Pac-Fung and was therefore ineffective. More relevantly, unlike the previous notices on the 9/F, the target recipients of the 2nd Notice and the 3rd Notice were all the units of the Building. It followed that they could legitimately be posted at the common parts of both Blocks including the G/F.
150. The notices in question were posted for the attention of the target recipients and within the area under the control of the Building. There is no factual basis for expecting their exposure to mere visitors would be substantial, compared to that to the named target recipients.
151. The IO and Huang also seek to justify the notices by reference to their purpose as general warning, which therefore also concerned mere visitors of the units in the Building. The stance that the IO emphasized, and so did Huang in her evidence, was that it was under the duty to warn the people of the safety risk occasioned by the obstruction of the fire exit by the UBW erected by Pac-Fung on the 9/F.
152. Mr Wong does not necessarily dispute the legitimacy of warning of risk of safety in the Building to mere visitors. However, he argues that the risk projected by the IO was unfounded in fact. In the course of the trial, it was suggested that the risk of danger created by the effective monopolization of the fire exit by Pac-Fung was not real, as this was merely one of six fire exits and staircases that could be used. As Pac-Fung owns and occupies all except for three units on the floor, it argues that there were more than adequate fire exits for the safe escape of the people outside its units on that floor in case of fire.
153. It is difficult to commend such attitude of Pac-Fung, especially in the absence of the perspective of the FSD that would endorse that. One can only proceed on the basis that no one could foresee how fire might break out and what situation the floor might become in case of such fire. On that basis, the perception of the existence of risk on the part of the IO should not be rejected as artificial or less than genuine.
154. Then it is argued on behalf of Pac-Fung that the content of the notices was not directed to enabling the readers to know what to do about the risk of safety created by the UBW on the 9/F. However, the notices were addressed to all the units of the Building primarily for their information regarding the UBW of Pac-Fung on its floor and the IO’s consideration of legal action against Pac-Fung. The impact of the UBW on safety in case of fire, which might concern the units as well as their visitors, was but one of the features in the notices. That the element of warning about the risk to safety was only in general terms, in my judgment, does not show that this was artificial.
155. In Horrocks v Lowe [1975] AC 135 (at 151), the court said:-
“Logically it might be said that matter [which is irrelevant because it is not necessary for the fulfilment of the particular duty or the protection of the particular interest upon which the privilege is founded] falls outside the privilege altogether. But if this were so it would involve the application by the court of an objective test of relevance to every part of the defamatory matter published on the privileged occasion; whereas, as everyone knows, ordinary human beings vary in their ability to distinguish that which is logically relevant from that which is not and few, apart from lawyers, have had any training which qualifies them to do so. So the protection afforded by the privilege would be illusory if it were lost in respect of any defamatory matter which upon logical analysis could be shown to be irrelevant to the fulfilment of the duty or the protection of the right upon which the privilege was founded.”
156. Bearing in mind the above principle and considering the circumstances of this case, including those discussed above, I do not find that the notices exceeded the reasonable limit of the privilege.
D4.2 Malice
157. If the dominant purpose for which the defendant had made the communication by the publication was other than that for which the privilege was accorded by law, he loses the protection of the privilege: see Jonathan Lu v Paul Chan & Anor (2018) 21 HKCFAR 94 (at §16); Gatley (at §17.7).
158. Where the defendant had published what he believes to be true, it is only where his desire to comply with the relevant duty or to protect the relevant interest covered by the privilege plays no significant part in his motives that express malice may properly be found: see Jonathan Lu (at §18).
159. However, where the defendant knew that the matter published was false at the time when he communicated it, or was reckless as to whether it was true or false, that will generally be conclusive evidence that he did not make the communication by the publication for the purpose protected by the privilege: see Jonathan Lu (at §22).
160. Knowledge about or recklessness to the truth or falsity of the communication is a subjective state of mind, though this could be inferred from the objective circumstances. However, subjective recklessness (and thus lack of honest belief) cannot be lightly inferred from mere fact that the belief was objectively unreasonable.
161. In Horrocks (above), the court explained (at §150) (which was also cited in Jonathan Lu (at §28)):
“In ordinary life it is rare indeed for people to form their beliefs by a process of logical deduction from facts ascertained by a rigorous search for all available evidence and a judicious assessment of its probative value. In greater or in less degree according to their temperaments, their training, their intelligence, they are swayed by prejudice, rely on intuition instead of reasoning, leap to conclusions on inadequate evidence and fail to recognise the cogency of material which might cast doubt on the validity of the conclusions they reach. But despite the imperfection of the mental process by which the belief is arrived at it may still be ‘honest’, that is, a positive belief that the conclusions they have reached are true. The law demands no more.”
Gatley (at §17.17) also says:
“If the defendant honestly believed his statement to be true, he is not to be held malicious merely because such belief was not based on any reasonable grounds; or because he has done insufficient research or was hasty, credulous, or foolish in jumping to a conclusion, irrational, indiscreet, stupid, pig-headed or obstinate in his belief.”
D4.2.1 Knowingly false or reckless
162. As found above, the IO and Huang were factually wrong in their statement in the 2nd Notice and the 3rd Notice as to the area encroached and occupied by Pac-Fung’s UBW. Pac-Fung argues that the IO and Huang must have known that such statements were false or alternatively have been reckless as whether they were true or false.
163. The area said to be encroached upon by Pac-Fung’s UBW was first alleged back in late September 2012. The area so affected was identified in a sketch plan together with the specific measurements of the area affected. Such plan and measurement were adopted and attached to the letters from the IO’s two different solicitors to Pac-Fung then.
164. The IO came up with the revised measurements in the notices in December 2012. However, they were not seen to be asserted by the IO’s solicitors in the claim against Pac-Fung in LDBM 95/2013. That said, insofar as the IO’s claim in those proceedings was concerned, it was the fact and manner of the UBW that mattered.
165. As mentioned, the evidence of Huang was that the new measurement was initiated pursuant to views about the impact of the UBW of Pac-Fung, and was taken by the IO’s secretary and engineering staff. The new measurements were reported to the management committee of the IO. Huang admitted in court that she had no idea how the measurements were actually taken. She also admitted that the accuracy of the measurements could have been but were not verified by reference to the building plans.
166. It is argued on behalf of Pac-Fung that blind acceptance of the revised measurements was dereliction of the duty on the part of the IO and Huang to supervise the work of the management company. It is therefore argued that the IO and Huang either knew or were reckless as to whether the new measurements were true or false.
167. As a witness, Huang was by no means impressive. She demonstrated herself to be a person putting up appearance that exceeded her actual knowledge and competence in her role. Even Mr Pow had to indicate his readiness to accept that his client was unsophisticated. That said, and as mentioned above, I accept as fact that she and the management committee were given the new measurements taken before the 2nd Notice and the 3rd Notice. She did not doubt if it would be correct for the new measurements to be published in the notices. Were they therefore malicious in going ahead to publish them?
168. The IO and Huang were, and they knew they were, right about statements in the notices condemning the conduct of Pac-Fung in relation to its UBW. That included Pac-Fung’s occupation of substantial area of the common parts by its UBW. Whilst they were minded to let people know the area of the common parts so occupied by Pac-Fung’s UBW, such idea, in my judgment, did not drive Huang or the IO to perceive falsifying that piece of information for the desired effect. Nor was there any sign of their seeking to highlight the mention of the area, notwithstanding the revised measurements. In the circumstances, I would not say that the IO and Huang did not even possess the belief that the mention of the area of encroachment by Pac-Fung’s UBW would be right. They were just objectively wrong and careless. That does not suffice as malice.
D4.2.2 Vengeance
169. Pac-Fung contends that express malice may also be inferred first from the circumstances surrounding the publication of the notices in question, and second, from the manner of the publication. It says both suggest that the IO and Huang targeted it for vengeance.
170. The background dispute in respect of the affairs and the election of the management committee of the IO in 2012 becomes relevant. While the dispute serves as the backdrop for the alleged malice on the part of the IO and Huang, counsel are ad idem that it is not really necessary for this court to determine who was actually right or wrong in such background dispute for the present purpose. While substantial oral evidence was elicited in this respect, the assessment of such evidence goes more to the issue of general credibility.
171. What happened was this. Upon receipt of the warning letter of the manager to Pac-Fung dated 11 May 2012, Tse contacted Fong, and the two subsequently met and discussed at Pac-Fung’s office. There is dispute as to whether Fong on that occasion solicited and collected proxies from Pac-Fung in blank and undated for the forthcoming annual general meeting of the owners, when the new management committee would be expected to be elected. The idea, according to Tse, was that Fong needed sufficient votes for the election of the management committee so as to secure the continuation of the manager before Fong could help in Pac-Fung’s case. By then, Pac-Fung had not been involved in or keen at the affairs of the IO. Yet Tse allegedly did as requested by Fong.
172. What was clear by then was the disagreement between two camps of management committee members, one led by Huang and the other one by the vice-chairperson Wong MM and the then treasurer Madam Chan Lai Chun (“Chan”).
173. Evidence was adduced, documentary and oral, of the chaos during the management committee meeting attended by these persons at the end of May 2012. In early July 2012, the IO commenced proceedings in the Lands Tribunal against Chan and Wong MM respectively, the former for unlawful detention of the books and properties of the IO and the latter for having wrongfully convened and held a purported IO meeting. This was then followed by newspaper report of the corrupt practice and misuse of the funds of the IO under Huang’s steer. Such report was said to be based on information sourced from Huang’s opposite camp.
174. The notice of the annual general meeting of the IO was eventually issued in early July 2012. One of the businesses to be transacted was the election of the management committee. The two camps mentioned above competed for the positions.
175. By then, Wong MM had apparently obtained the support of Pac-Fung. Because of such turn, Pac-Fung had to retrieve the proxies previously given to Fong back in May 2012. There is dispute in respect of Tse’s such attempt made with Fong. That aside, Pac-Fung in fact signed new proxies together with a written explanation suggesting that:-
(1) Pac-Fung had been led to sign the previous proxies for unknown person(s); and
(2) new proxies were then signed appointing Tse or alternatively Wong MM as its representative to attend and to cast votes in the forthcoming annual general meeting of the IO.
176. There is no dispute that Tse was denied his vote as representative of Pac-Fung on the basis, rightly or wrongly, that its proxies signed in May 2012 were counted instead. There is dispute in respect of whether those proxies in blank were actually filled out and dated against Pac-Fung’s intention in support of Huang’s camp in the election regardless of Pac-Fung’s attempt to override them with new proxies as mentioned above. Such dispute aside, the election of the management committee resulted in favour of Huang’s camp.
177. In the following month, a concern group by the name of 開聯工業中心反貪腐大聯盟 (transliterally Hoi Luen Industrial Centre Anti-corruption Alliance) was formed. It consisted of a number of owners and its chairperson was Wut Yung Tak (“Wut”), who was the registered owner of a unit in Block A of the Building. The group called for investigation into the conduct of the annual general meeting just held. Apparently, report had also been made to the Independent Commission Against Corruption (“ICAC”).
178. In September 2012, Wut requisitioned an extraordinary general meeting of the owners with a view to moving for the removal of the newly elected management committee members. Pac-Fung joined the requisition. On the other hand, the IO issued an open letter to all the units accusing Wut of impersonating as an owner, and claiming that report had been filed with the police against him. Huang and Fong admitted that the accusation about Wut then was a mistake. Even the reference to the police report in this respect was doubtful.
179. In any event, the above conflicts in the affairs of the IO came to certain results in 2013.
180. First, the Lands Tribunal proceedings against Chan were settled upon her return of the IO’s properties to the IO and her payment of legal costs.
181. Second, ICAC wrote to the IO and Huang reporting that the complaint against them in respect of the 2012 meeting and election was not substantiated, and that investigation had concluded.
182. Third, the IO obtained judgment (by consent) in the Lands Tribunal proceedings against Wong MM so that the meeting purportedly held by her in May 2012 was declared null and void.
183. Now Pac-Fung essentially contends that against the above backdrop composed of the dispute between the parties by late 2012, in which Pac-Fung was viewed as having sided with Huang’s opponents, the IO’s enforcement action and publications concerning Pac-Fung since then were actuated by vengeance and malice.
184. Pac-Fung links the dispute between the parties in respect of the affairs and election of the management committee of the IO to the IO’s enforcement action against it in respect of its UBW. One therefore needs to consider first, how the issue of the UBW of Pac-Fung actually came about; and second, how the IO and the manager approached the enforcement against Pac-Fung in respect of its UBW.
185. Pac-Fung had not been involved in or keen at the IO affairs until close to mid-2015. That was after it had received Synergis’ letter of warning relating to the UBW dated 11 May 2012. Therefore, Synergis’ letter was issued in the circumstances quite independent from Pac-Fung’s involvement in the dispute in respect of the IO affairs.
186. In the evidence on behalf of the IO and Huang, reference was made to the serious fire that broke out in Tokwawan, Kowloon in June 2011, which led to loss of life and limb. That happened in a residential building where the notorious practice of carved units existed. Coupled with the gross lack of attention to safety, the serious fire risk turned into reality. One may say that such incident was not the most proximately relevant lesson for the IO to learn for the purpose of the management of the Building. However, the attention of the IO to such serious incident was not incredible or unreasonable.
187. What cannot be disputed is that in as early as August 2011, the IO had received the letter from Lee Mark, and was informed that the Building was targeted by the BD for clearance of UBW. It seems that Mr Wong takes that as a letter concerning Block A only, as it was addressed to Block A. However, it was addressed to the IO at that address while the premises targeted was clearly stated in the caption as “No 55 Hoi Yuen Road” which meant the Building. The IO indeed circulated that letter to all the units of the Building.
188. Apparently, the FSD had also inspected various parts of the Building. That caused Synergis to issue warning letters to various units in Block A regarding their respect UBW in March 2012. Synergis’ letter to Pac-Fung in May 2012 regarding the Walls and the obstruction of the fire exist by metal sliding gate was issued with express reference to those as findings of the FSD upon such inspection. Hence the contact between Tse and Fong.
189. The whole episode of Pac-Fung’s proxies and its subsequent change to support Wong MM came about after mid-2012. It will therefore be factually incorrect to suggest that Pac-Fung was from the outset picked for vengeance by IO because of such episode.
190. Likewise, against the background of attention by the relevant authorities to the UBW in the Building, it will be factually incorrect to suggest that because of the longstanding UBW and monopolization of the fire exit since the 1990s, there would have been no fair reason for the IO or the manager to conceive enforcement action against Pac-Fung but for the ulterior motive to take revenge. It is trite that the IO and the manager could not acquiesce breach notwithstanding past tolerance or inaction. They were expected to act particularly after the UBW of the Building had been put under the radar of the authorities.
191. In the circumstances, what really calls for consideration is the approach of the IO and the manager in their enforcement action against Pac-Fung since mid-September 2012, ie after the dispute between the parties in respect of the IO affairs had surfaced.
192. Whichever was the right side in the background dispute, the animosity that has developed between the parties since then is obvious. Huang’s camp did not lose the election or suffer any legal consequence as a result of the challenge of Wong MM’s camp which Pac-Fung supported. However, Huang admitted that she was not pleased about the episode. That, Pac-Fung suggests, drove Huang and the IO to pick on it.
193. In the context of the defence of qualified privilege, Gatley (at §17.7) says this (also citing Horrocks (above)):-
“Mixed motives. People commonly act from a mixture of motives and it will be impossible to attribute any precise degree of causative effect to one or another. However, for this purpose the improper purpose must be the dominant motive and it is only where the defendant’s desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives for publishing what he believes to be true that malice can properly be found.
“[T]o destroy the privilege the desire to injure must be the dominant motive for the defamatory publication; knowledge that it will have that effect is not enough if the defendant is nevertheless acting in accordance with a sense of duty or in bona fide protection of his own legitimate interests.”
“Qualified privilege would be illusory, and the public interest it is meant to serve defected, if the protection it affords were lost merely because a person, although acting in compliance with a duty or in protection of a legitimate interest, dislike the person whom he defamed or was indignant at what he believed to be that person’s conduct and welcomed the opportunity of exposing it.””
194. In Robert v Bass [2002] HCA 57 (at 76), the court had this to say:-
“…leaving aside the special case of knowledge of falsity, mere proof of the defendant’s ill-will, prejudice, bias, recklessness, lack of belief in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill-will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication”
195. Prior to the 2nd Notice and the 3rd Notice, the IO and the manager took the following steps in relation to the UBW of Pac-Fung:-
(1) posting the 9/2012 Notice on the Walls;
(2) causing letter to be sent by WK To & Co to Pac-Fung on 25 September 2012;
(3) causing letter to be sent by SK Lam Alfred Chan & Co to Pac-Fung on 3 October 2012;
(4) requesting the FSD and the BD for taking action in October 2012;
(5) posting the 1st Warning on Wall B on 29 October 2012;
(6) posting the 2nd Warning on the Walls on 15 November 2012; and
(7) posting the 1st Notice on Wall B on 6 December 2012.
196. Globally viewed, the repeated posting of notices and issuing of solicitors’ letters by the IO (and the manager) as well as the subsequent elevation to information to the relevant authorities for enforcement action could fairly be interpreted as putting pressure on Pac-Fung to address the UBW issue. Mr Pow acknowledges that. The question is what drove the IO and the manager to do that.
197. The evidence of Tse reflected the attitude of his company towards the issue of its UBW. At the outset, Pac-Fung sought to explore if there could somehow be lenient treatment in relation to its UBW. Eventually, his company had to proceed to obtain quotation for the rectification work in late 2012. However, Tse had received no further instruction from his boss to proceed afterwards. There was no progress and Tse had ceased to follow up with the matter altogether since November 2012.
198. The first letter from Pac-Fung to the IO indicating its readiness to act came in mid-November 2012. As nothing was seen to have taken place since then, the WK To Letter and the 1st Notice were issued and posted towards the end of November and early December 2012 respectively. First taken issue of was the 1st Warning and the 2nd Warning. To be precise, it was the Red Paint Words in the 1st Warning and the Red Printed Words in the 2nd Warning.
199. Wong MM testified as to her observation that the 1st Warning followed the requisition of her camp for meeting to remove Huang’s camp from the re-elected positions in the management committee. However, I am impressed that her evidence in respect of the causal link between the two was more personal speculation, especially in view of the indisputable existence of the factual basis for the IO then to act in relation to Pac-Fung’s UBW.
200. That said, the 1st Warning, or particularly the Red Paint Words, probably called for attention. By then, Pac-Fung had already been put on notice of the IO’s complaint and demand. Printed notice was also put on Wall B. That the IO (or the secretary) saw fit to put up the Red Paint Words in addition to such printed notice was evidence of intention to catch attention. As to that, Wong testified as to her alarm upon seeing the Red Paint Words for the first time. She associated that with the image of the notorious practice of debt collectors.
201. Wong’s reaction to the Red Paint Words is perhaps understandable in the circumstances of Hong Kong. The written reply in early November 2012 by the secretary of the IO to Synergis in defending the Red Paint Words as a problem with the calligraphy, I find, was unnecessary sarcasm. That said, the content of the Red Paint Words, albeit redundant, was not abusive.
202. Upon that, the printed notice was removed and the Red Paint Words painted over. Tse testified as to his understanding that it was the boss of Pac-Fung who instructed the notice, and in fact subsequent notices, to be removed from the Walls. As mentioned, I prefer his evidence to that of Wong in this respect.
203. That also set the vicious cycle of the parties’ counter-measures, including the posting of the subsequent notices by the IO and their removal caused by Pac-Fung. For those, both sides had complained to the police.
204. Pac-Fung contends that it had been singled out whereas the other owners in breach, including Huang’s company Konco, were spared. For a co-owner in a multi-storey building, who is admittedly in breach of the law and the deed of mutual covenants concerning the common parts, to question “why do you not do the same to the other owners who are also in breach?” never starts off as an attractive argument.
205. As set out in the background, the issuing of the first warning letter by Synergis to Pac-Fung in May 2012 was duly explained. Importantly, prior to that, Synergis had also issued warning letters to various owners in Block A regarding UBW. In terms of timing and substance, all those responded to the indication of attention on the part of the authorities to the UBW of the Building.
206. This was followed by the posting of the 9/2012 Notice on the Walls and the letters of demand from the IO’s solicitors to Pac-Fung in September to October 2012. However, in October 2012, and after the IO meeting, the manager touched base with the authorities regarding enforcement action against Pac-Fung at about the same time when the IO’s solicitors also issued letters of demand to the various owners in Block A regarding their respective UBW previously warned.
207. Even assuming that there were other cases of UBW in the Building yet to be targeted at the time, it is factually incorrect to suggest that Pac-Fung had been singled out for enforcement. In his evidence, Tse fairly accepted that his company did not have the factual basis for making such accusation at the time of the publication of the notices.
208. Malice could exist, but whether or not that could be inferred from what is said to be selective enforcement still depends on all the circumstances, including the explanation of the owners’ corporation of its approach. In the present case, the IO and Huang explain that by reference to prioritisation of cases.
209. Pac-Fung focuses on the manner in which the IO had issued and posted the various notices and newsletter since October 2012 that targeted Pac-Fung. Nothing of the sort, Pac-Fung argues, had been done regarding other owners in breach.
210. What Pac-Fung observed, as a matter of fact, was true. However, it was equally true that the approach of the IO regarding Pac-Fung since October 2012 objectively was part of a vicious cycle contributed to by Pac-Fung’s delay in taking concrete steps in response and its sabotage of the notices on the Walls on the 9/F. Such did not happen in the other cases.
211. Objectively, the available evidence of the UBW of Pac-Fung and the other owners differed in terms of scale and impact. The evidence tends to show that those of Pac-Fung could be viewed as relatively more serious. The question is not whether they absolutely were, but whether there was basis for the IO to form the view that they were. If there was such basis and the IO did form such view of the matter, it cannot be said that proper and legitimate motive played no significant part in the decision to take those steps against Pac-Fung.
212. Quite apart from Tse’s acceptance in his evidence that the IO and the manager was entitled to prioritise the enforcement amongst the units with UBW problems, whether or not the actual prioritisation may meet with the approval of the majority of the owners concerned, in my judgment, is not the test of whether the IO and the manager were legitimately exercising its power or malicious.
213. The underlying animosity between the parties might have caused the IO and Huang not to hesitate about escalating the enforcement action against Pac-Fung. However, that did not obliterate the basis on which the IO targeted Pac-Fung as a priority case for action. As mentioned, the Newsletter specifically spelt out the prioritization approach of the IO and the criteria.
214. Reference is made to how Huang herself handled the UBW of her company, Konco. The point made essentially is that Konco was no better, if not worse, in terms of proactive response to address its UBW issue. Other cases such as Units 217 and 220 are also cited for comparison.
215. Konco received building orders in respect of the UBW at its two units in respect of (i) the sealed original unit entrance[7]; (ii) the removal of fire resisting doors, sealing of original door opening and installation of a door with inadequate fire rating[8]; and (iii) the sealed original unit entrance, and the making of a door opening on the common corridor wall installed with a door with inadequate fire rating and a roller shutter[9].
216. The evidence shows that Konco did engage the BD and reported the rectification work in December 2014 in response to one of the building orders against it. The letters of withdrawal of the addressed building order was issued to Konco in September 2015. It continued to do so in respect of the other two orders to be complied with, and the correspondence between it and the BD cast light on the hiccups in the course of that. Letter of withdrawal was issued in respect of one building order whereas those in respect of the other two were issued only in early 2017 after much liaison in 2016-2017.
217. In the case of Unit 217 in Block A, the UBW involved the installation of glass door across and thus occupying part of the common corridor outside the unit. No fire exit was obstructed. The management office discovered such work being carried out in April 2017. The manager issued written warning to it in the same month. The owner of the unit also responded in the same month. While it sought to explain the work, it also promised to address the problem after the current tenant had moved out. Pac-Fung pointed out that such promise had yet to be honoured as of the date of the present trial. If that was the case, the IO and the management company would indeed be under the duty to take follow up action.
218. As far as the evidence revealed, the scale of the encroachment and enclosure of the common corridor by walls and the monopolization of fire exit were not seen in other cases. Nor was the approach and response taken by Pac-Fung in addressing its UBW problem. The animosity between the parties might be in play. But that did not suggest that the IO acted without reference to any objective basis for prioritisation amongst the cases in breach.
219. All perspectives in the circumstances of the present case considered, individually and collectively, I am not satisfied that it will accord with the relevant legal principle to infer malice on the part of the IO as alleged in their enforcement action against Pac-Fung.
E. MALICIOUS FALSEHOOD
220. The claim for malicious falsehood covers the 2nd Notice and the 3rd Notice as well as the Newsletter. Of the statements contained in these publications, the complaint of Pac-Fung concerns the mention of the area of its encroachment on the common parts.
221. The basis for the revised measurements that led to the statement as to the area of encroachment in the IO’s publication was more detectable from the Newsletter. It was stated in the last main paragraph of the Newsletter (right above the reply slip part) that the management office discovered that Pac-Fung had encroached upon two sections of fire escape amounting to nearly 2,000 square feet.
E1. Falsehood and malice
222. As mentioned, I am not prepared to accept the revised measurements of the area of encroachment on the common parts by Pac-Fung suggested by the IO and Huang as correct. The alleged area of such encroachment in these publications were false as a matter of fact.
223. Other than the statement as to the area, I find that the content of the rest of the Newsletter reporting the conduct of Pac-Fung in connection with the UBW and the enforcement action of the IO was substantially true as a matter of fact. The reply slip section of the Newsletter expressly set out the criteria for the IO’s prioritisation of the enforcement action depending on whether the UBW encroached upon the common parts, obstructed fire exit or affected structural safety.
224. The issue of malice behind the statement of area encroached upon by Pac-Fung has to be considered in the context of the publication. The discussion in the preceding section applies in the context of malicious falsehood: see Chang Wa Shan v Esther Chan Pui Kwan [2017] 5 HKLRD 57 (at §161). I am not satisfied that Pac-Fung manages to establish that the falsity of the statement as to the area in the Newsletter was actuated by malice.
E2. Special damage
225. For claim for malicious falsehood to sustain, there must be special damage as the direct and natural result of the tort: see Hong Kong Wing On Travel Service Ltd v Hong Thai Citizens Travel Services Ltd [2001] 2 HKLRD 48. Special damage means pecuniary loss.
226. Section 24(1) of the DO provides:-
“In an action for slander of title, slander of goods or other malicious falsehood, it shall not be necessary to allege or prove special damage-
(a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form; or
(b) if the said words are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication.”
227. “Calculated to” in section 24(1) refers to “likely or probable in any objective sense”: see Chan Yau v Chan Calvin [2014] 5 HKLRD 304 at §117.
228. The section replaces the obligation to plead and prove special damage with a need to prove that the alleged offending words would more likely than not cause pecuniary damage. Only when it is established that the claimant’s case falls within such situation prescribed by this section would he or she be absolved from having to allege and to prove special damage.
229. In Tesla Motors v BBC [2011] EWHC 2760 (QB), the court in considering the application of section 3 of the Defamation Act (similar to section 24(1) of the DO) had this to say (at §66):-
“In my judgment if a trader, such as each of the Claimant in this case, makes a claim for malicious falsehood and, as he is entitled to do, he relies not on actual damage, but on probable such as is referred to in the 1952 Act section 3, the Claimant must nevertheless give particulars of the nature of the allegedly probable damage and the grounds relied on for saying that it is more likely than not. For example, if what is relied on is the probability of such a trader having to incur expenses in advertising and other forms or publicity in order to counter the effects of the alleged falsehoods, then the Particulars of Claim should identify that probable damage. On the other hand, the damage which, it is said, is more likely than not to be a consequence of the alleged falsehood, may be delay in sales of a given number of vehicles, or loss of sales of a given number of vehicles, or the difference between the price at which vehicles will be saleable following publication of the falsehood complained of and the higher price at which it is said that would probably have been saleable but for the publication of the falsehood complained of. In such cases, then the Particulars of Claim should likewise identify that probable damage.”
230. Agreeing with the above, the court in Janful v Sinosoft Technology Group, HCA 1613/2013 (11 July 2016) (at §275) referred to Gatley (at §26.42):-
“Finally, the claimant must allege either that the words were calculated to cause pecuniary damage and must give particulars of the nature of the alleged probable damage and the grounds relied on for saying that damage is more likely than not or that they did in fact cause such damage and again particularise that loss.”
See also Clerk & Lindsell on Torts (23rd ed) at §22.16; Xu Ying v Xu Weihong [2020] HKCFI 1955 (at §25).
231. Mr Wong submits that the applicability of the principle in Tesla should be qualified by the special facts of that case. The court there explained the particular difficulties in the absence of a proper plea of probable damage in that case in the paragraphs (ie §§67-68) following the paragraph cited above. On the appeal ([2013] EWCA Civ 152), the appellate court noted (at §31) that at the heart of the judge’s concern lay the question of causation, and explained that:
“… Although for the purposes of a claim under section 3 it was not necessary for Tesla to identify how much damage had been caused by the actionable falsehood, it was for those reasons necessary in this case for it to describe in general terms the nature and extent of the loss said to be likely to result from the publications which were the subject of the action.”
232. The particular circumstances of Tesla, that accounted for the decision that the claimants there should nevertheless plead the nature and the basis of the alleged probable pecuniary damage notwithstanding the statutory provision, were acknowledged by the court in Haven Solicitors Ltd, Ronald Martin Thompson v Police Federation of England and Wales, Craig Hewitt [2020] EWHC 2233 (QB) (at §43).
233. Reference is also made to the Hong Kong case of Chang Wa Shan. In the first instance ([2015] 5 HKLRD 389), the court (at §80) did not regard pecuniary damage by the false statement in question was probable, and therefore section 24(1) did not apply. On appeal ([2017] 5 HKLRD 57), the appellate court (at §160) took a different view, and therefore section 24(1) applied to absolve the plaintiff from having to plead and to prove such special damage. On further appeal (2018) 21 HKCFAR 370, the Court of Final Appeal (at §§20; 137-138) overturned the decision of the Court of Appeal that section 24 applied, on the ground that any pecuniary damage would have to be premised on an innuendo that was not proved.
234. The judgment on final appeal (at §20) cast light on how such defamatory meaning was pleaded. It was pleaded that the impugned words suggested that the plaintiff was not someone to be trusted in his business dealings and thereby made it less likely that people would be willing to enter into any kind of business dealings with him. The basis for alleging the pecuniary loss in respect of the plaintiff’s business was therefore pleaded, though not proved.
235. The above authorities show that section 24 applies only if the alleged falsehood brings about what the section provides. Otherwise, the general principle applies so that any claim for pecuniary damage must be made clear.
236. The pleaded case of Pac-Fung in this respect[10] is that given the nature, frequency, manner and duration of publication of the false statements (as to the area of encroachment on the common parts), the statements were calculated to cause it pecuniary loss damage in respect of its trade and business; further or alternatively, it should have been reasonably foreseen that such publication would likely result in pecuniary damage to it in respect of its trade and business. Such pleading effectively repeated the wordings of the provision. This works only if the impugned statements in the two notices and the Newsletter indeed had such effect without saying more.
237. Pac-Fung confines its complaint to the mention of the area of encroachment on the common parts. It is not readily apparent how the nature of the falsity of such information alone would more likely than not cause pecuniary damage to Pac-Fung in its line of business, namely home textile.
238. In the evidence of Wong, it was suggested that the mention of the area might have adverse effect on the people’s perception about Pac-Fung, ie that it was greedy, so that people might be put off from doing business with it. However, if Pac-Fung requires that specific or extra understanding on the part of the people to found its claim for the probable pecuniary damage, such basis, in my judgment, would need to be pleaded.
239. With the claim for probable pecuniary damage so formulated, section 24, in my judgment, could not be invoked to absolve Pac-Fung from having to properly plead the nature and basis of its alleged damage.
240. In any event, it is not readily apparent how the falsity of the mention of the area would have its own bearing on the alleged impact on the business opportunity of Pac-Fung that it would not have already suffered as a result of the fact of its occupation of the common parts and the other conduct in connection with that, which were undisputed or substantiated.
241. All matters considered, I find the claim for malicious falsehood fails as well.
F. BREACH OF DUTY
242. The claim is based on the alleged general duty of the IO and Huang (in her capacity as the chairperson of the management committee) to exercise the power and to perform the duties under the DMC and the BMO in a bona fide, reasonable and fair manner. The alleged duty is said to be implied to the DMC.
243. The IO and Huang are said to have been in breach of such duty. The conduct of breach covered not merely the two notices and the Newsletter being impeached for the purpose of the causes of action discussed above, but the entire approach of the IO in its enforcement action against Pac-Fung starting from targeting Pac-Fung and the 1st Warning. It is contended that the IO and Huang are so liable for being unreasonable and unfair even in the absence of malice.
F1. The alleged duty
244. The basis for the alleged duty is disputed.
245. As opposed to the owners, the owners’ corporation is not a party to the DMC. The corporation acts and is liable for and on behalf of all the owners. By virtue of section 16 of the BMO, the corporation becomes entitled to the rights and powers of the owners, and liable for the liabilities of the owners (in relation to the common parts), under the DMC. The corporation steps into the shoes of all the owners. That does not render the corporation a contracting party to the DMC.
246. As to Huang, her company, Konco, as a registered owner is most likely a party to the DMC. But Huang is not. Nor is she in her capacity as the chairperson of the management committee of the IO. The management committee, like the IO, is empowered by the BMO to exercise the power under the BMO and the DMC as well as to enforce the DMC. This is how the duty of the management committee, including Huang, came about.
247. Further, in the contractual context, it is trite that implication of a term to a contract must be based on necessity, business efficacy or custom. The general principle is that except for specific types of contracts, the general duty of good faith has no place in the performance of the contract: see Chitty on Contracts (33rd ed) at §1.58; Shek Kin Pong v FT Life Insurance [2019] HKCFI 1781 (at §58).
248. Section 18(1)(c) of the BMO provides:-
“The corporation shall …
…
(c) do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building.”
249. An owner may take issue as to whether the corporation has discharged its duty by exercising its power to do what was reasonably necessary for the enforcement of the obligations in the DMC for the control, management and administration of the building. He or she may also take issue as to whether the corporation has committed any tort in the exercise of its power. Pac-Fung contends that there was an additional general duty of good faith and reasonableness in doing what was reasonably necessary and without committing any tort. I do not see the basis for that.
250. In Lee Yin Hong v Serenade Cove [2011] 5 HKLRD 660, the court said (at §11):-
“Although the duties and powers of the IO are specified by s.18 of the [BMO], which include, among other things, to do all things reasonably necessary for the enforcement of the obligations contained in the DMC for the control, management and administration of the Estate, I am not convinced that one can import wholly the long-established principles regarding the exercise of discretionary powers by public bodies or tribunals to what is essentially a contractual dispute between the parties…The Court’s task is to adjudicate whether there has been a breach of the contractual terms and not to exercise a supervisory function over the decision of the IO as if it is hearing a judicial review application on whether a discretionary power by a public body or tribunal has been lawfully exercised.”
251. Likewise, in 383HK Limited v The Incorporated Owners of Tak Bo Building, CACV 99/2017 (21 March 2018), the court said (at §36):-
“…I am not aware of any authorities that impose, by way of statutory construction, a requirement of reasonableness on the management committee’s grant or refusal of consent by resolution in relation to the use of a common part of a building under section 34I(1)(a). In my view, such a construction would only serve to introduce a substantial element of uncertainty to building management, and give rise to wholly unnecessary disputes amongst co‑owners and management committee. Put in simple terms, the Ordinance provides for the orderly discussion and resolution of issues relating to management of the building and, particularly, the common parts of the building. It provides for the management of the building by an elected management committee on behalf of the incorporated owners. It provides for the holding of meetings and the procedures to be followed. It provides for the passing of resolutions by a simple majority present at a management committee’s meeting. It also provides for the means and procedure to elect and replace members of the management committee. To impose on that elaborate design an additional requirement of reasonableness relating to a management committee’s resolution is, in my view, a recipe for uncertainties and disputes.It would also add an unnecessary, burdensome role to the courts and the Lands Tribunal regarding the use of common parts of buildings. I can see no justification for adopting such an interpretation under a purposive construction.”
252. The power conferred by the DMC and exercisable by the owners’ corporation on behalf of all the owners may be unqualified, such as where the right of the owners is subject to the consent or approval of the manager/corporation. Lee Yin Hong (above) was one of those cases. There the court, apart from stating the above principle, explained (at §11) that the IO in the exercise of the contractual provisions of the DMC is subject to the established principles such as that:
“…it must exercise a discretion reasonably and where the IO is required to give consent, the consent must not be unreasonably withheld…”
253. The court in 383HK (above) also noted that the above point was made in relation to the exercise of a discretion specifically conferred on the owners’ corporation under the DMC, and (at §34):
“As a matter of contractual interpretation, one can see the good sense and justification for implying the requirement of reasonableness into the exercise of the discretion vested in the incorporated owners or manager under the DMC.”
See also Tadjudin Sunny v Bank of America, CACV 12/2015 (20 May 2016); Additech Ltd v Tai Cheung Management Co Ltd [2019] HKLDT 48; Chitty on Contracts (33rd ed) (at §14.12).
254. However, the present case does not involve the exercise of such discretion. The DMC provides (at clause 1 of Part B of Section V) that:-
“The Manager will manage the land and the Building in a proper manner and in accordance with this Deed and, except as otherwise herein expressly provided, the Manager shall be responsible for and shall have full and unrestricted authority to do all such acts and things as may in its opinion be necessary or requisite for the proper management of the land and the Building.”
255. The authority of the manager was full and unrestricted. However, it was exercisable only to do what may be necessary or requisite for the proper management of the land and the Building. Notwithstanding the wordings of the provision, whether certain acts or things done was necessary or requisite for the proper management of the Building is not purely subjective but assessed objectively. One may also take issue if the manager commits tort in the exercise of its power. However, none of these is the same as holding the manager under the general duty of good faith and reasonableness on top of doing what was necessary or requisite for the management and not tortious.
256. As for Huang, reference is also made to section 29A of the BMO, which reads:-
“No member of a management committee, acting in good faith and in a reasonable manner, shall be personally liable for any act done or default made by or on behalf of the corporation – (a) in the exercise or purported exercise of the powers conferred by this Ordinance on the corporation; or (b) in the performance or purported performance of the duties imposed by this Ordinance.”
257. It is argued that Huang was thus under the duty to act in good faith and reasonably.
258. In my judgment, what section 29A does is to exempt the members of the management committee from becoming personally liable for what the IO (for which the management committee members act) may be liable for its act or default. The provision does not impose a general duty of good faith and reasonableness on the individual members of the management committee so that any breach would constitute an actionable tort against them personally.
259. Reference is made to Woo Tak Yan v Lam Sik Chuen, DCCJ 5381/2009 (21 December 2011) in support of Pac-Fung’s contention that Huang in her capacity as the chairperson of the management committee of the IO is liable for having caused or taken part of authorising or procuring the relevant publication. That part of the judgment (§§27-31) focused on whether a person in the capacity of a member of the management committee may be sued.
260. Insofar as Huang is concerned, that she was the chairperson of the management committee and viewed as the prime driving force behind the enforcement against Pac-Fung did not bring about her personal liability for the acts of the IO. In this respect, the case of Tam Heung Man v The Incorporated Owners of Lung Poon Court, DCCJ 4380/2014 (26 March 2019) was cited on behalf of Pac-Fung. However, the specific findings against the chairperson in respect of his state of mind that could be attributed to the IO must be noted. Similar circumstances of effective dictation of the IO by the chairperson without reference to the management committee did not exist in the present case.
F2. Breach
261. In view of the above discussion, I could be brief about the alleged breach.
262. Not only did the IO have the power, but it was also under the duty to do what was reasonably necessary to maintain and manage the common parts of the Building pursuant to section 18(1) of the BMO and the DMC. The specific complaint of Pac-Fung relates to the specific step and manner of enforcement action against it in relation to its UBW.
263. As mentioned, the DMC empowered the manager to post the name of any own in default or breach of the terms of the DMC together with particulars of the default or breach on the notice boards and other prominent spaces within the Building. Pursuant to that and the general power of doing what would necessary for the proper management of the Building, posting of notices in the Buildings was a deployable step to alert the owners, occupiers and visitors of the Building to the situation of the 9/F and the incidental fire safety concern. That the same was taken to exert pressure on Pac-Fung to respond to the IO’s demand regarding the UBW in a concrete manner was not an ulterior purpose.
264. Putting aside the detectable ill feeling and animosity behind, the repetition of and the strongly worded statements in the notices and the Newsletter formed parts of a vicious cycle to which Pac-Fung also contributed. The mention of the area of the encroachment on the common parts by Pac-Fung, amongst all the other statements that are not complained about, did not possess such significance that the exercise of the power could be questioned as abuse.
265. Failure or delay to enforce against other infringing owners, as opposed to Pac-Fung, may be a cause for complaint or requisition for resolution in accordance with the BMO and the DMC to compel the IO to act. However, that does not afford an actionable tort by an owner against the IO or Huang for lack of good faith or unreasonableness.
266. All circumstances considered, I find that this cause of action fails as well.
G. CONCLUSION
267. All matters considered, including those specifically discussed above, I find that Pac-Fung fails to prove its claim against the IO or Huang personally.
H. QUANTUM
268. In the event that I am wrong above and Pac-Fung should somehow succeed on liability, I proceed to consider the quantum for completeness.
269. By pleading, Pac-Fung claims damages to be assessed. Damages in the sum of HK$500,000 is suggested.
270. Gatley (at §9.17) says:-
“While substantial damages may be awarded to a corporate entity notwithstanding a failure to prove any specific damage, in practice, in the absence of at least a general loss of business, a limited company unlikely to be entitled to a really substantial award of damages. As was made clear by Lord Reid in Lewis v Daily Telegraph Ltd, ‘A company cannot be injured in its feelings; it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money”. Whilst Lord Reid went on to say, ‘The injury need not necessarily be confined to loss of income; its goodwill may be injured’, a company which is unable at trial to point to the slightest hiccup in its trading figures may be hard pressed to persuade a court that even an unpleasant libel has seriously injured its reputation. Unlike a personal claimant, it cannot tug the jury’s heartstrings by describing its distress and humiliation on reading the defamatory words. This presents a problem for a limited company which has been defamed, since it is often difficult to prove that the publication caused either a specific or a general loss of business.”
271. As a corporate body, Pac-Fung needs to particularise and establish by evidence how its reputation came to have been damaged and how such damage has manifested in financially assessable terms. As discussed in Niche Products v MacDermid Offshore Solutions [2013] EWHC 3540 (at §§36-37), liability cannot be established unless the requirement for pecuniary damage is met at the stage when the court is enquiring into liability. There is no proper, if at all, factual basis for assessing any pecuniary damage suffered by Pac-Fung.
272. The impugned statement was confined to the area of encroachment of the common parts, while the fact, manner and impact of the encroachment could not be disputed. The publication lasted for a limited period of time, and I prefer the evidence of the IO and Huang in this respect. The publication was within the Building, and the evidence does not suffice to support any reasonable belief that the majority of the readers were not the target recipients. The conduct of Pac-Fung in response to the demand of the IO for the removal of its UBW must also be relevant.
273. The cases cited by the parties as comparable are considered.
274. In the circumstances of this case, I am of the view that a sum of HK$50,000 would have sufficed if an award were to be made.
275. There is no basis for considering aggravated damages: see Oriental Daily Publisher v Ming Pao Holdings Ltd (2012) 15 HKCFAR 299 (at §125).
I. ORDER
276. The claim is dismissed.
277. Following the event, I make a nisi order that Pac-Fung shall pay the costs of the IO and Huang of this action, including any costs reserved. For the avoidance of doubt, I give certificate for two counsel. Costs shall be taxed if not agreed.
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( Simon Leung )
District Judge |
Mr Horace Wong, SC leading Mr Paul Mak, Ms Astina Au, instructed by James P Y Lam & Co, for the plaintiff
Mr Jason Pow, SC leading Mr Alexander Tang, instructed by Paul W Tse, for the 1st & 2nd defendants
[1] Workshops B1 to B10.
[2] Workshops B11 to B13.
[3] Such written reply by the IO was copied by Synergis to Pac-Fung in late January 2013. By then, the allegedly libelous conduct of the IO and Huang had taken place.
[4] UBCSI/03-07/0089/11 and UBCSI/03/07/0090/11.
[5] Written decision dated 24 July 2015.
[6] Who gave evidence from a remote location via video-link.
[7] UBCSI/03-07/0151/11.
[8] UBCSI/03-07/0151/11.
[9] UBCSI/03-07/0061/11 (“BO-0061”)
[10] §16(e) of the re-re-re-amended statement of claim.
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