THE INCORPORATED OWNERS OF TUNG LO COURT v. TSUI WAI YIP

CACV 27/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 27 OF 2015

(ON APPEAL FROM DCCJ 3333 OF 2011)

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JUDGMENT
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Hon Poon J (giving the Judgment of the Court) :

1.  This is an appeal against the judgment of Deputy District Judge B Mak dated 4 August 2014 (“the Judgment”), delivered after a 9‑day trial of cross‑claims of defamation, whereby he ordered the defendant to pay the plaintiff damages of HK$400,000.00; the plaintiff to pay the defendant damages of HK$450,000.00; and the defendant to pay the plaintiff 55% of the costs of the action.

2.  The background facts may be summarized as follows.

A. BACKGROUND FACTS

A1. The parties

3.  The plaintiff is the Incorporated Owners (“IO”) of Tung Lo Court (“the Building”), a residential building erected more than 50 years ago.  The Building has 352 residential units, 45 shops on the G/F and 60  car park spaces on the basement.  Like other IOs, the plaintiff’s day‑to‑day business and affairs are conducted by a management committee.  The decision to commence the proceedings below against the defendant was made by the 29^th management committee.  By the time when the action was actually commenced, the 30^th management committee had already taken office.  The chairman of the 30^th  management committee was林武照先生 (“the Chairman”).  The secretary was林文龍先生 (“the Secretary”).  The Lams are brothers.

4.  The defendant is the owner of Flat 4, 12/F, Block B of the Building.

5.  The parties and some owners who sided with the defendant were embroiled in hot disputes about various matters including renovation of the Building, management of the Building and non‑payment of management fees.

A2. Defamatory statements

6.  In the course of the disputes, the parties published what the learned Judge below found to be defamatory statements against each other openly to the owners of the Building.  On the defendant’s part, he issued four letters (D1 to D4[1]). On the plaintiff’s parts, it issued nine letters (P1, P3[2] to P5, and P7 to P11), displayed one banner (P2) and posted a copy of the bill of costs prepared by a firm of solicitors (P6).[3]

A2.1 The first round – P1 to P3 and D1

7.  On 25 October 2010, the plaintiff put up P1 alleging, among other things, that the defendant and another owner had failed to pay management fees for more than 10 years, that they were men of no integrity; and that they were malignant tumours of the Building that need to be removed.

8.  Between 26 November 2010 and April 2012, the plaintiff displayed P2, warning the defendant and two other owners not to throw waste papers into the owners’ letterboxes.

9.  On 7 March 2011, the plaintiff issued P3 to all the owners.  P3 alleged that the defendant and his gang had failed to pay the management fees since October 2010 and that they were rubbish.  P3 urged the owners to attend the annual meeting of the owners to be held on 20 March 2011 to condemn them so that they would have no face to stay in the Building messing around.

10.  In response to P3, the defendant issued D1 to all the owners on 11 March 2011 :

“請用雪亮眼睛看清我們黑箱作業的現任管委會，為了維護巨大私利，狂耍污糟手段。

…

如果讓他們奸計得逞，那東廬大樓假正義的假業主可不惜法團代價，用八十萬，甚至一百萬或更多的業主血汗錢去請律師剷除異己，一於東廬大樓真業主死而他得益。” (Accusation 1 and 2)

(Translated as “Please look with your discerning eyes at our current Management Committee that launches a black box operation and plays dirty tricks repeatedly for the sake of protecting their huge private gain.

If their evil plot should succeed, then the hypocritical and bogus owner of Tung Lo Court would, at the expense of the Incorporated Owners, spend eight hundred thousand or even one million dollars or more of the owners’ hard‑earned money to engage lawyers to eradicate dissidents so that the genuine owners of Tung Lo Court would die while he would benefit.”)

A2.2 The second round – P4, P5 and D2

11.  In response to D1, the plaintiff issued P4 to all the owners on 14 March 2011.  P4 repeated the allegation that the defendant and his gang did not pay management fees and further accused them as shameless.

12.  On 23 March 2011, the plaintiff put up P5, repeating the allegation that the defendant and his gang had not paid management fees and they wanted to take over the IO so as to cancel the outstanding fees; and that the defendant was shameless and wanted to take advantage of the owners.

13.  In response to P5, the defendant issued D2 to all the owners on 24 March 2011 :

“ 只是貴管委會向來黑箱，為不讓業主知悉濫花律師費對付反對者，從不依法把訴訟文件張貼出來。” (Accusation 3)

(Translated as “It’s just that Your Management Committee has all along been launching a black box operation.  In order not to let the owners know about its squandering the legal costs to deal with the opponents, it has never posted up any litigation documents as required by the regulations.”)

A2.3 The third round – P6 and D3

14.  The plaintiff followed up on D2 by posting P6, a copy bill of costs issued by Tang, Wong & Chow for the professional charges in connection with the preparation and registration of the memorandum of charge in the Land Registry against the defendant’s property.  On P6 was a handwritten note addressed to the defendant, notifying him that the charge was registered against his property because he failed to pay management fees and that management fees for October, November and December 2010 and January, February and March 2011 were outstanding.

15.  The defendant responded by issuing D3 to all the owners on 28 March 2011 :

“ 本人在此收回頒給他們的「黑箱」名銜，因為無論黑箱、黑暗、黑手、黑心都不足以表達，可能只有一個「黑」字可勉強合適，因為只要黑法團仍然存在，我們都黑仔。” (Accusation 4)

(Translated as “I hereby withdraw the title ‘black box’ that was given to them because whether it is black box, blackness, black hand (evil backstage manipulator), black heart (evil mind), it can hardly express (the fact) fully.  Perhaps only the single word ‘black’ may sound barely suitable because as long as the black (wicked) Incorporated Owners is here, we are all black sons (unlucky guys).”)

A2.4 The fourth round – P7 to P10 and D4

16.  What followed were P7 to P10 displayed by the plaintiff on 6, 11, 13 and 26 April 2011, in which defamatory remarks, old and new, were made.

17.  The defendant responded by issuing D4 to all the owners on 27 April 2011 :

“ 老作了連3歲小孩也不相信的理由，去為失職的林主席和林秘書辯護，企圖把挪用公帑合理化。” (Accusation 5)

(Translated as “An excuse that couldn’t even convince a 3‑year‑old child was made up for the sake of defending Chairman Lam and Secretary Lam who breached their duties and attempting to rationalize the misappropriation of public funds.”)

A2.5 The last letter – P11

18.  On 19 August 2011, the plaintiff put up P11 against the defendant.

19.  These exchanges of defamatory materials cumulated in the action below.

B. THE JUDGMENT BELOW

B1. The plaintiff’s claim

20.  Dealing with the plaintiff’s claim, the Judge first rejected the defendant’s preliminary point[4] that the plaintiff had no locus to sue for defamation.[5]  Relying on Leung Tsang Hung & Another v Incorporated Owners of Kwok Wing House,[6] the Judge held that the rights and obligations of all the co‑owners of the Building could be exercised and discharged by the plaintiff as the IO.  Since all the co‑owners have their reputation, the plaintiff, as their embodiment, has the corporate reputation representative of the co‑owners.  He specifically referred to the evidence of the Secretary that after the defendant issued some of his defamatory letters, various estate agents had asked him if the defendant’s allegations were true.  The Judge concluded that from the perspective of outsiders, the plaintiff had a reputation.  If there were any negative news, that would affect the outsiders’ evaluation of the plaintiff’s reputation.  Thus, the plaintiff needed to protect its reputation.  Finally, the Judge held that the plaintiff was entitled to invoke section 18(2)(g) of the Building Management Ordinance (“BMO”)[7] to sue the defendant for defamation.

21.  After discussing the law, the Judge identified the meanings of each of Accusations 1 to 5[8] and held that they were all defamatory of the plaintiff.[9]

22.  Turning next to the defence, the Judge first rejected the defendant’s plea of justification for D1 to D3.[10]  In gist, he found that the defendant had failed to plead with sufficient particularity the meaning that he relied on as justification, citing Lucas‑Box v News Group Newspaper Ltd,[11] Prager v Times Newspapers Ltd (CA)[12] and Order 82, rule 3(2) of the Rules of the District Court (“DCR”),[13] and had failed to justify the Accusations on evidence anyway.[14]

23.  The Judge next rejected the defence of fair comment for D1,[15] principally on the ground that the defendant had failed to plead what was the fair comment that he relied on.[16]

24.  On the defence of qualified privilege, the Judge observed that in its Amended Reply and Defence to Counterclaim (“ARDCC”), the plaintiff did not dispute that D1 to D4 were published on qualified occasions but contended that they were published with malice.[17]  The Judge then noted that the plaintiff had failed to plead the particulars of malice.[18]  However, he went on to hold that since each of D1 to D4 had gone well beyond the response to the charge made by the plaintiff, they were retaliation and were not protected by qualified privilege, citing Gately on Libel and Slander, 12^th edition, at [14.51][19] in support.

25.  The Judge awarded damages in the sum of HK$400,000.00 against the defendant.

B2. The defendant’s counterclaim

26.  As this appeal does not concern the counterclaim, it is sufficient for present purposes to state that the Judge found that P1 to P11 were all defamatory of the defendant; that P5 to P7, P9 to P11 were protected by qualified privilege,[20] that P1, P2 and P8 were published with malice, thereby rejecting the defence of qualified privilege.  The Judge therefore concluded that the plaintiff defamed the defendant by P1 to P4 and P8.  He then awarded damages in the sum of HK$450,000.00 against the plaintiff.

B3. Costs

27.  On costs, the Judge took into account the fact that the plaintiff succeeded in defending six out of P1 to P11 in the defendant’s counterclaim and that the defendant failed in defending all of D1 to D4 in the plaintiff’s claim.  He considered it fair in the circumstances to order the defendant to pay the plaintiff 55% of the costs of the action.  And he so ordered.

C. GROUNDS OF APPEAL

28.  On 24 November 2014, the Judge refused to grant the defendant leave to appeal.

29.  On 27 January 2015, the Court of Appeal[21] granted the defendant leave to appeal on those grounds of appeal as now set out in the Notice of Appeal dated 10 March 2015.[22]  Broadly, the defendant contended that :

(1) The plaintiff has no locus to sue because the matters in question do not concern common parts or any common interest of the owners.

(2) The defamatory acts are not referrable to the plaintiff or the IO, both as a matter of fact and law, as the target of the defamatory statements and the plaintiff are separate legal persons.

(3) The Lucas‑box argument was a pleading point which the plaintiff had not taken; in other words the plaintiff was under no difficulties in understanding the defendant’s case on justification.

(4) The plaintiff had not pleaded particulars of malice in relation to D1 to D4, and the Judge had applied the wrong test by holding that merely because the contents of D1 to D4 have gone beyond a response to the charge made by the plaintiff, then this was retaliation and not protected by qualified privilege.

(5) The plaintiff as the IO has no reputation to be protected and no plea was made on general damages and no plea nor proof was made for special damages.

(6) If the appeal is allowed, this is a case for indemnity costs, as those in control of the plaintiff had ulterior motive to pursue the interests of members of the management committee who were allegedly defamed.

30.  These contentions are examined in turn below.

D. DISCUSSION

D1. The plaintiff’s locus to sue

31.  Whether the plaintiff, as an IO, has the locus to sue for defamation is a question of law.  In the proceedings below, the court had already determined it against the defendant once before trial.  By a summons dated 21 July 2012, the defendant applied to strike out the plaintiff’s claim under Order 18, rule 19 of the DCR.  One of the grounds that he relied on was that the plaintiff, as an IO, had no locus to sue for defamation.  That was rejected by Deputy District Judge Clement Lee (as the Chief Magistrate then was) in the Decision handed down on 24 September 2012, holding that as a matter of law, the plaintiff as an IO did have the locus to sue for defamation.[23]  The defendant did not appeal against his ruling.  In the circumstances, the doctrine of issue estoppel applies and debars the defendant from re‑opening this question before us.

32.  That said, for completeness and in deference to counsel’s arguments, we will deal with the question of locus briefly as follows.

33.  An IO is created by the BMO to be “a body corporate with perpetual succession and shall in the name of the corporation specified in the certificate of registration be capable of suing and being sued” : section 8(2)(a).  Given its special legal attributes, an IO is capable of suing and being sued not because it has or is given by statute any rights or liabilities separate from those that are vested in the co‑owners, but to facilitate the exercise and enforcement of those very rights and liabilities, avoiding the cumbersome procedure and the incidental cost and inconvenience by naming each of the co‑owners as a party : Leung Tsang Hung & Another v Incorporated Owners of Kwok Wing House.[24]  Within the context of the BMO, two provisions are pertinent for present purposes : section 16 and section 18(2)(g).

34.  Section 16 provides :

 “When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly-

(a) any notice, order or other document which relates to any of the common parts of the building may be served upon the corporation at its registered office; and

(b) any proceedings in the tribunal in respect of any of the common parts of the building may be brought and pursued by or against the corporation.”

35.  Section 16 only applies to vest the right of suit, in relation to the common parts of the building, in the IO, in respect of causes of action that accrued to all of the co‑owners.  It does not apply where those causes of action accrued only to some, but not all, of the co‑owners : One Beacon Hill (IO) v Match Power Investment Ltd.[25]

36.  Mr Mak, for the defendant, argued that the cause of action of defamation is not “in relation to the common parts”, thus section 16 does not apply.  Because of the limited applicability of section 16 as explained in the case law, we agree with Mr Mak’s argument.

37.  Section 18(2)(g) provides :

“(2) A corporation may, in its discretion-

…

(g) act on behalf of the owners in respect of any other matter in which the owners have a common interest.”

38.  Section 18(2)(g) primarily deals with management matters and does not by itself confer on the IO any power to sue when none exists.  Even if it can be a source of such power, it only applies where a common interest in the sense of a legal right common to all of the co‑owners is involved : One Beacon Hill (IO) v Match Power Investment Ltd.[26]

39.  Mr Mak argued that the cause of action of defamation is not in respect of a matter in which “the owners have a common legal interest”.  So Section 18(2)(g) does not apply.  We have doubt about this argument.  In our view, whether section 18(2)(g) can be invoked to supply the IO with the necessary locus to sue for defamation depends on the actual circumstances.  If, for example, the defamatory statement is directed against all the co‑owners, it may be arguable that all of them have a common legal interest which may entitle the IO to invoke section 18(2)(g) to sue the person publishing the defamatory statement.  For the purpose of this appeal, we need not form a definitive view on this.  For as will be seen shortly, on the facts of this case, the common law provides the necessary locus to the plaintiff to sue the defendant for defamation based on D1 to D4 to protect its own reputation.

40.  It is trite that at common law, a corporation may have a reputation which the law protects and can therefore sue for defamation : Hong Kong Polytechnic University & Others v Next Magazine Publishing Ltd & Another.[27]  In our view, there can be no doubt that an IO does have its own reputation that the law protects.  The primary function of an IO is to perform its duties and to exercise its functions under the BMO and the deed of mutual covenants concerning the building.  When a defamatory statement is made against the IO, depending on the actual words used, it might well have the effect of discrediting its integrity as an IO or its ability in discharging its duties and functions as an IO, such as to lead people of ordinary sense to the opinion that it conducts its affairs in a way which is inefficient, improper or even dishonest.  Plainly, the IO can sue for defamation to protect its own reputation.  We can see no objection, whether based on the BMO or legal policy,[28] to deny the IO such a right to sue for defamation to protect its own reputation.[29]

41.  Here, assuming that the requirement of reference is satisfied, the contents of D1 to D4, as found by the Judge, are clearly defamatory of the plaintiff IO.  The plaintiff is perfectly entitled and has the necessary locus to sue the defendant for defamation to protect its own reputation.

42.  To the question of reference we now turn.

D2. Reference to the plaintiff

43.  Of all the four open letters published by the defendant, only D3 expressly named the plaintiff.  D1 expressly named the current management committee, that is, the 30^th management committee, the Chairman, the Secretary and 黃世平 (described as 保安頭, the head of security).  D2 expressly named the management committee.  So did D4.  In none of D1, D2 or D4 was the plaintiff expressly named.

44.  The Judge did not deal with reference in his judgment.  In the decision dated 10 November 2014 refusing the defendant leave to appeal, the judge cited section 29 of the BMO and said that the management committee is not an entity separate and distinct from the plaintiff.[30]  It seems that for the purpose of reference, he had simply equated the plaintiff with the management committee and its office bearers.  Mr Cheung, for the plaintiff, supported the Judge’s approach.  He submitted that the management committee is not an independent legal entity : The Incorporated Owners of Kwai Wan Industrial Building v Kwai Fung Industrial Ltd.[31]  The contents of D1 to D4 clearly referred to the conduct, manner and integrity of the way in which the management committee, the Chairman and the Secretary discharged their duties and did not concern their personal life. Thus D1 to D4 referred to the plaintiff.  With respect, the Judge’s approach is wrong.  So is Mr Cheung’s submission.

45.  It is important to bear in mind that an action for defamation is a purely personal action.  The proper person to sue as plaintiff is the person defamed.  Nobody else can sue for such defamation in his own name or on behalf of another person defamed.  Thus if a corporation is defamed, only the corporation can sue for defamation.  Its board of directors or office bearers cannot.  If the directors or office bearers are defamed, they can sue for defamation.  The corporation cannot.  Likewise, if an IO is defamed, only the IO can sue for defamation.  Its management committee or the office bearers cannot.  If the management committee or an office bearer of the management committee is defamed, then members of the management committee or that office bearer can sue for defamation.  The IO cannot.  The position does not change because of section 29 of the BMO or for some other particular purposes the management committee is not regarded as a separate entity from the IO.

46.  Section 29 of the BMO provides :

“Subject to this Ordinance, the powers and duties conferred or imposed by the Ordinance on a corporation shall be exercised and performed on behalf of the corporation by the management committee.”

It has no application to a personal right to sue for defamation conferred on the IO by common law.

47.  In The Incorporated Owners of Kwai Wan Industrial Building v Kwai Fung Industrial Ltd, the court was dealing with taxation arising from proceedings commenced in the Lands Tribunal commenced by the management committee of an IO.  One of the questions that Chu J had to decide was whether in law the management committee is a distinct entity from the IO for the purpose of commencing proceedings.  Her Ladyship said :

“21. For my part, I am unable to agree that in law, a management committee of an incorporated owners is a legal entity distinct from the incorporated owners. …

22. I will additionally point out that a management committee is in essence a body of natural persons who are the officer bearers of the incorporated owners.  Their appointments are regulated by the Building Management Ordinance.  They are appointed for the purpose of carrying out the powers and duties of, and to make collective decisions for the incorporated owners, through and under the name of the management committee.  Insofar as they are intra vires, decisions and acts taken by the members of a management committee are not only the decisions and acts of the management committee, but also those of the incorporated owners.  It follows that the mere inclusion of a management committee as one of the persons competent to commence proceedings in the Lands Tribunal under section 45 of the Building Management Ordinance does not make a management committee a legal entity.  It is therefore difficult to see the legal basis for a management committee being regarded as a legal entity independent from the incorporated owners.”

48.  For the question before her, what Chu J said made perfect sense and was entirely correct.  However, it does not mean that in the context of defamation against the management committee or its office bearers, which is purely personal to them, the IO can be regarded as the person being defamed.

49.  On the proper approach, Mr Mak submitted that all the defamatory statements published by the parties should be considered as a whole.  We disagree.  In our view, each of D1 to D4 must be considered individually against the overall circumstances to see if the plaintiff might reasonably be understood to be referred to by the words used in each of them.

50.  Having considered each of D1, D2 and D4 in the overall circumstances, we do not think they referred to the plaintiff. Although they were made in response to the defamatory statements published by the plaintiff, the defendant chose not to direct them against the plaintiff as IO.  Instead, he directed them against the management committee, the Chairman, the Secretary and the head of security, as the case may be, that is, those who were in the eyes of the defendant responsible for the plaintiff’s wrongdoings. In other words, D1, D2 and D4 drew a clear distinction between the plaintiff and those who were behind the plaintiff’s wrongdoings.  They targeted not the former but only the latter.

51.  The case is different for D3 in which only the plaintiff was named.  Mr Mak submitted that when read in the overall circumstances, D3 targeted the management committee only.  We disagree.  The management committee is nowhere to be found in D3.  The only target of attack is the plaintiff.

52.  For the above reasons, the Judge erred when he found that D1, D2 and D4 referred to the plaintiff.  He ought to have found that only D3 referred to the plaintiff.

D3. Lucas‑Box particulars

53.  This contention can be disposed of shortly.  We agree with the Judge entirely on this point.  We can see no merits in Mr Mak’s submissions to the contrary.[32]

D4. Qualified privilege

54.  As said, the Judge observed in [96] of the Judgment that in its pleadings the plaintiff did not object to the defendant’s assertion that D1 to D4 were published on qualified occasions. This observation is in fact wrong.  The plaintiff did in the ARDCC[33] deny that D1 to D4 were published on qualified occasions.

55.  That said, the Judge was right to consider if D1 to D4, which were made in reply to the defamatory attacks by the plaintiff, are protected by qualified privilege having regard to the principle set out in Gatley, at [14.51].  In short, the general principle is that provided that the response is reasonable, proportionate and relevant, and is made bona fide without malice, it is protected by qualified privilege.

56.  Because of what we have decided on the issue of reference, we only need to look at D3.  The Judge dealt with D3 thus:[34]

“Document D3

109. On 25 March 2011 the plaintiff put up document P6, in which it was said that a note was registered against the defendant’s title deed again due to his failure to pay management fees.

110. The defendant gave his response in document D3 and attached to it receipt/receipts for the management fees to prove that he did not owe any payment. In addition, the defendant made the following comments:-

(1) ‘Therefore I ask you landlords do not resist, because no expenses will be spared in taking action against you’

(2) ‘It is nothing but the use of our own money by our black box owners’ corporation against ourselves’

(3) ‘Otherwise, whether it is successful or unsuccessful, the people who will suffer the loss are ourselves and furthermore, if all money is spent, there will be another excuse to increase the management fee, so their mentality is ‘Wh (sic) should we not be happy to do it?’

(4) ‘Whether it is ‘black box’, ‘darkness’, ‘black hand’, ‘black heart’, it is not sufficient to be a full description. Perhaps only the word ‘black’ is barely enough to be the suitable description’

(5) ‘Because as long as the black owners’ cooperation remains in existence, we shall be guys in black luck’

111. Everywhere in the defendant’s comments signified that he was trying to arouse among the owners of the building a feeling of disgust against the plaintiff. It is obvious that the comments in document D3 went beyond the scope of a reasonable response to document P6.

112. Therefore, I find the comments in document D3 not protected by qualified privilege.”

57.  In the light of these findings, which have not been challenged, the Judge was correct in concluding that D3 was not protected by qualified privilege under the general principle summarized above.

D5. Quantum

58.  We reject Mr Mak’s submission that the plaintiff as an IO has no reputation to be protected and hence is not entitled to damages.  As said, the plaintiff as an IO has its own reputation which the law of defamation protects.  It is entitled to damages.

59.  Since it is our conclusion on liability that the plaintiff only succeeds on its claims based on D3, the damages awarded by the Judge must be reduced accordingly.

60.  Mr Mak submitted that an arithmetical approach should be adopted.  There are four statements and based on the Judge’s award of HK$400,000.00, the damages for D3 should be (HK$400,000.00 ÷ 4=) HK$100,000.00.  We disagree.  As a matter of principle, a mechanistic approach for assessment of damages is always wrong.  As Gatley explained at [9.5]:

“Damages are ‘at large’ in the sense that they cannot be assessed by reference to any mechanical, arithmetical or objective formula and they are peculiarly the province of the jury (where there is a trial by that method). The jury (or judge if sitting alone) is entitled to take into consideration a wide range of matters including the conduct of the claimant, his credibility, his position and standing and the subjective impact that the libel has had on him, the nature of the libel, its gravity and the mode and extent of its publication, the absence or refusal of any retraction or apology, and the conduct of the defendant from the time when the libel was published down to the verdict. …”

61.  Here, as found by the Judge, by attacking it as a “black” IO, the defendant is accusing the plaintiff of behaving like a triad society.[35]  As a response to P6, it is totally irrational, disproportionate and went well beyond the permitted scope of a reply.  The allegation is serious.  This is a wholly inexcusable attempt to undermine the plaintiff’s integrity.  We think it should be visited with an award of damages in the sum of HK$200,000.00.

D6. Costs

62.  In our view, even based on how the Judge disposed of the claim and counterclaim, he should have made no order as to costs for the action.  He erred when he ordered the defendant to pay to the plaintiff 55% of the costs.  But that does not matter now.  Having regard to the overall result of the appeal, we think there should be no order as to costs for the trial below.

63.  Costs of the appeal should follow the event.  So the defendant should have the costs of the appeal.  But we do not think we should, as contended by Mr Mak, award a higher basis than the usual party and party basis.

E. DISPOSITIONS

64.  We allow the appeal to the extent that the award made by the Judge against the defendant on the plaintiff’s claim be reduced to HK$200,000.00.

65.  We further make an order nisi that :

(1) the costs order made by the Judge be replaced by an order that there shall be no order as to costs; and

(2) the defendant shall have the costs of the appeal, to be taxed on a party and party basis if not agreed.