APPLE DAILY LTD v. ORIENTAL PRESS GROUP LTD AND OTHERS

HCA1396/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1396 OF 2009

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BETWEEN

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REASONS FOR DECISION

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1.  By the Decision dated 30 November 2010 (“the Decision”), I dismissed the 2^nd to 4^th defendants’ application to strike out the Statement of Claim and dismiss the action as against them and made an order nisi that they pay the plaintiff 80% of the costs of the application, to be taxed if not agreed with a certificate for two counsel.

2.  By summons dated 14 December 2010, the 2^nd to 4^th defendants apply for:

(1)   Leave to appeal against the dismissal of their striking out application;

(2)   An order dispensing with the service of the Defence pending final determination of their application for leave to appeal or the final determination of the substantive appeal or further order; and

(3)   Variation of the costs order nisi to the extent that the plaintiff be ordered to pay the 2^nd to 4^th defendants 90% of their costs of the striking out application, to be taxed if not agreed.  

3.  At the conclusion of counsel’s submissions, I refused to give leave to appeal, granted the application to vary the costs order nisi and gave directions on the filing of pleadings.  My reasons appear below.

Leave to appeal

4.  Section 14AA(4) of the High Court Ordinance, Cap.4, provides that for interlocutory appeals, leave to appeal shall not be granted unless the court hearing the application for leave is satisfied that: (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard.   

5.  Counsel have no disagreement on the applicable test under section 14AA(4)(a).  They have referred to two judgments of the Court of Appeal on what amounts to “reasonable prospects of success”.  In SMSE v. KL [2009] 4 HKLRD 125, 129 at para.17, le Pichon JA held that leave to appeal is not to be lightly granted, and that “reasonable prospect of success involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’”.   In a later judgment in Ho Yuen Ki Winnie v. Ho Hung Sun Stanley & Another, unreported, HCMP 1009/2009 (24 August 2009) at para.16, Her Ladyship went further and held that “merely showing that the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient” and that “‘reasonable prospects’ requires something more and, in that regard, some assistance may be derived from the test applied when setting aside a default judgment.”  These judgments are binding on this court.

Intended grounds of appeal

6.  The draft Notice of Appeal contains six grounds, which had been elaborated in details by Miss Tam SC.  Without being disrespectful to counsel’s helpful submissions, the essence of the intended appeal is that insofar as the claim is based on compilation of news information, the Statement of Claim has failed to identify what parts of the plaintiff’s Articles are subject matter of copyright protection and in what ways are the defendants’ Articles said to have infringed the plaintiff’s copyright. 

7.  It is, however, clear from the submissions that the 2^nd to 4^th defendants do not seek to argue that the action should be dismissed.  The thrust of their contentions is that the Statement of Claim should be struck out so that the plaintiff be put to the task of pleading its case from afresh.  It is said that, without a new pleading, they do not know how to plead their Defence.

8.  As indicated in the Decision, I accept the plaintiff’s case on compilation is not plainly unarguable.  While accepting that the Statement of Claim is inadequate, I do not consider it to be incurable.  A new Statement of Claim is not necessary for the case of compilation of news information, including particulars on the skill and judgment relied upon, identification of the part of the plaintiff’s Articles that attract copyright and particulars of infringement, to be pleaded.   

9.  The court has a discretion on whether to order a new Statement of Claim or to allow the plaintiff to amend the existing pleading.  Other than costs, there does not appear to be any practical difference in having the case of compilation pleaded by way of amendments to the existing Statement of Claim or by way of a new Statement of Claim. 

10.  Thus viewed, I am not persuaded that the 2^nd to 4^th defendants’ intended appeal enjoys reasonable prospect of success.  Leave to appeal is therefore refused.

Application to vary the costs order nisi

11.  I turn to the application to vary the costs order nisi on the striking out application. The 2^nd to 4^th defendants’ argument is that the striking out application was mounted on the basis of the claim as pleaded in the Statement of Claim and that the plaintiff had at the hearing effectively abandoned the original claim and raised a new claim of compilation.  Hence, applying Order 62 rule 5(1)(aa), (e) and (f) of Rules of the High Court, Cap.4A, the plaintiff should be ordered to bear their costs, but reduced by 10% to reflect the failure on the argument that the claim should be struck out for abuse of process. 

12.  As a result of the amendment to Order 62 rule 3(2) and the new Order 62 rule 3(2A), the principle that costs follow event is no longer the usual rule, but is one of the options in the exercise of the court’s discretion as to costs: Hong Kong Civil Procedure 2011 vol. 1 paras.62/3/3A & 62/3/3B.  At the same time, the special matters set out in Order 62 rule 5, to the extent they are applicable, are relevant as to how the court will exercise the discretion in interlocutory applications.

13.  In the present case, the Statement of Claim has not properly pleaded the plaintiff’s claim.  The case on compilation is not apparent from the pleadings; it was only explained in counsel’s written submissions.  As such, it is understandable that the 2^nd to 4^th defendants made the striking out application on the basis that the plaintiff claims copyright in the news and information contained in the plaintiff’s Articles.  Further, the plaintiff could have clarified the basis of its claim in the affirmations in opposition, but did not do so.  The 2^nd to 4^th defendants were therefore justified in proceeding with the application.

14.  In the circumstances, the costs of the application should be borne by the plaintiff, subject to a one-third reduction, which is to reflect the failure on the abuse of process argument and also that, despite the clarification of the plaintiff’s claim in its counsel submissions, the 2^nd to 4^th defendants had proceeded with the striking out application in a full-fletch manner.  The costs order nisi is varied accordingly.    

Service of the Defence

15.  As leave to appeal was refused, the application for dispensing with the service of the Defence pending the appeal falls away. However, since the plaintiff has indicated that the Statement of Claim would be amended, it would be appropriate to extend the time for the 2^nd to 4^th defendants to file and serve their Defence until after the service of the Amended Statement of claim. 

Costs of the summons

16.  The plaintiff and the 2^nd to 4^th defendants had respectively succeeded in some part of the summons, but failed in other part of it.  Since the arguments on the leave application and the variation application are inter-related, it would be appropriate to make no order as to costs. And I so order.