CHAU HOI SHUEN, SOLINA HOLLY v. SEEC MEDIA GROUP LTD

HCA 1194/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1194 OF 2010

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J U D G M E N T

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The Action and the Parties

1.  This is an action by the Plaintiff against the Defendant for damages for defamation.

2.  By the Statement of Claim, it is pleaded that the Plaintiff is and was at all material times a prominent businesswoman and a well‑known philanthropist in Hong Kong and on the Mainland and that she has actively participated in charitable causes and activities, including those organised by the Li Ka Shing Foundation (a charitable foundation established by one of the richest men in the Asia Pacific region, if not in the world, Mr Li Ka Shing), and by the Chau Hoi Shuen Foundation (a charitable foundation established under the Plaintiff’s own name).

3.  By the Statement of Claim, it is also pleaded that the Defendant is and was at all material times a company incorporated under the laws of the Cayman Islands the shares of which are listed on the Stock Exchange of Hong Kong (Stock Code 205) and engaged in the business of, inter alia, providing advertising agency services and distribution of periodical magazines including a magazine known as ‘Caijing’ (“the Magazine”) in Hong Kong.

4.  After hearing the evidence, I have come to the conclusion that the abovementioned descriptions of the Plaintiff and the Defendant are by and large accurate.

The Subject-Matter of the Alleged Defamation

5.  The subject matter of the alleged defamation is contained in Issue No. 265 of the Magazine dated 7 June 2010 (being the 12^th bi-weekly issue of 2010) (“Issue No. 265”).

6.  Issue No. 265 contains 2 inter-related articles bearing the respective titles of “新貴之盟” (translated by the Plaintiff as “Alliance of the Nouveau Riche”) (“the 1^st Article”) and “中篇: ‘雙向收費站’” (translated by the Plaintiff as “Middle Chapter: Two-way Tollbooth”) (“the 2^nd Article”), copies of which are annexed as Schedules A and B to the Statement of Claim.

7.  The Plaintiff summarised the contents of the 1^st Article and the 2^nd Article in the Statement of Claim as follows : -

“(1) The 1^st Article refers to and describes the background of a number of officials and lawyers, including Deng Zhang (“Deng”) and Zhang Yu Dong (“Zhang”), who were respectively a senior official of the Department of Foreign Investment of the Ministry of Commerce of the People’s Republic of China (“PRC”) and a PRC lawyer at the material times.  The said officials and lawyers have been convicted in the PRC of offences involving bribery and corruption.

(2) The 2^nd Article purports to describe the means and process by which the aforesaid convicted persons were involved in bribery and corruption through inter alia the foreign investment approval process handled inter alia by the PRC Ministry of Commerce.”

8.  The Plaintiff further pleads her cause of action against the Defendant in paragraphs 7 – 12 of the Statement of Claim as follows : -

“7. In the 2^nd Article, the Defendant distributed and published, or caused to be distributed and published, of the Plaintiff the following words : -

(1) “李嘉誠好友、李嘉誠基金會董事周凱旋為感謝鄧湛在長江實業相關項目審批中的幫助，給了一筆共50萬美元的咨詢費，由張玉棟、鄧湛和王秀玲分配 …” (translated as “In order to express her gratitude to Deng Zhan in assisting in the approval of projects related to Cheung Kong (Holdings) Limited, Chau Hoi Shuen, a good friend of Li Ka Shing and director of the Li Ka Shing Foundation, paid a sum of US$500,000 as consultancy fee, the same being divided between Zhang Yu Dong, Deng Zhan and Wang Xiu Ling (‘Wang’)”).

(2) “據香港維港公司執行董事王秀玲介紹，其2004年4月告訴張玉棟，李嘉誠好友李嘉誠基金會董事周凱旋為感謝鄧湛在長江實業相關項目審批中的幫助，給了一筆共50萬美元的咨詢費，由張玉棟、鄧湛和王秀玲分配。” (translated as “Following the introduction by Wang Xiu Ling (Executive Director of Horizons Limited), Zhang Yu Dong was informed by her in April 2004 that, in order to express her gratitude to Deng Zhan for assisting in the approval of projects related to Cheung Kong (Holdings) Limited, Chau Hoi Shuen, a good friend of Li Ka Shing and director of the Li Ka Shing Foundation, paid a sum of US$500,000 as consultancy fees, the same being divided between Zhang Yu Dong, Deng Zhan and Wang Xiu Ling.”) (“the 1^st Defamatory Words”).

(3) “周凱旋接受警方調查時表示，根據其與張玉棟商定的協議，以項目為結算單位，每個項目的律師費以50萬元為上限。2003年，思峰律所給維港公司來賬單，周凱旋讓公司把律師費給了張; 2004年或2005年，張玉棟多次來電，稱其工作時間長、工作量大，周又支付了上述這筆50萬美元 ‘咨詢費’。” (translated as “When Chau Hoi Shuen was being investigated by the police, she stated that according to the agreement which she had reached with Zhang Yu Dong, each project would constitute a unit for the purpose of billing, and the legal fees for each project would be capped at US$500,000. In 2003, the law firm ‘Si Feng’ sent a bill to Horizons Limited, and Chau Hoi Shuen caused the company to pay the legal fees to Zhang. In 2004 or 2005, Zhang telephoned [her] many times, claiming that his working hours were prolonged and his workload was heavy. Chau further paid out the aforesaid sum of US$500,000 as ‘consultancy fee’.”) (“the 2^nd Defamatory Words”)

8. The 1^st and 2^nd Defamatory Words referred to and were understood to refer to the Plaintiff.

9. The 1^st Defamatory words, in the context of the 1^st and 2^nd Articles, in their natural and ordinary meaning and/or inferential meaning, or alternatively by way of innuendo, meant and were understood to mean that the Plaintiff had been engaged in an act of corruption by making a payment of US$500,000 by way of “consultancy fee”, part of which was intended by her to be distributed to Deng for assisting in the approval of projects related to Cheung Kong (Holdings) Limited by the PRC authorities.

10. The 2^nd Defamatory Words, in the context of the 1^st and 2^nd Articles, in their natural and ordinary meaning and/or inferential meaning, or alternatively by way of innuendo, meant and were understood to mean that the Plaintiff had admitted to the police that she did pay US$500,000 as “consultancy fee”, the same being the corrupt payment referred to in the 1^st Defamatory Words.

11. The 1^st and 2^nd Defamatory Words are false and untrue and defamatory of the Plaintiff.  The Plaintiff never paid any “consultancy fees” to Zhang, and has no knowledge of the alleged distribution of money between Zhang, Deng and Wang in connection with the approval of projects related to Cheung Kong (Holdings) Limited whether as alleged in the 1^st and 2^nd Defamatory Words or at all.  Moreover, during investigations, she never informed the investigator that she had paid “consultancy fees” to Zhang.  On the contrary, she had informed the investigator that she had never paid any money to Zhang for the purpose of being distributed to Wang or Deng or any PRC government official.

12. The Plaintiff has in consequence been seriously injured in her character, credit and reputation and has been brought into public scandal, odium and contempt.”

9.  It is to be noted that the cover of Issue No. 265 contains also the following titles which appear very prominently : -

“新贵之盟

74. 一群横跨高务, 工商, 外汇领域的青年技术官僚, 如何自

设外资审批 “双向收费站”. 牵涉华人首富李嘉诚, 内地首富

黄光裕以及西门子, 飞利浦, 首创等知名企业.”

“ 76. 上篇: “村委会” 买卖

81. 中篇: “双向收费站”

83. 下篇: 设租反垄断 ”

10.  It can thus be seen that the cover of Issue No. 265 make very prominent references to the 1^st Article and the 2^nd Article.

11.  It is to be noted further that the description of the 1^st Article (on page 74) on the cover as quoted in paragraph 9 above includes the words 「牽涉華人首富李嘉誠」(which can be translated to mean “involving the richest Chinese man Li Ka Shing”).

The Case Of The Plaintiff

12.  The case of the Plaintiff can be summarized as follows : -

(i) The 1^st Defamatory Words and the 2^nd Defamatory Words are defamatory of the Plaintiff.

(ii)  As a distributor of Issue No. 265 in Hong Kong, the Defendant is liable to the Plaintiff in damages for defamation.

The Case Of The Defendant

13.  The case of the Defendant can be summarized as follows : -

(i) It does not admit that the 1^st Defamatory Words and the 2^nd Defamatory Words are defamatory of the Plaintiff, although it does not plead justification.

(ii) Even if they are defamatory of the Plaintiff, the Defendant did not publish the same.

(iii) The Defendant did not know that Issue No. 265 contained material defamatory of the Plaintiff and had no reason to believe that it did.  The Defendant played only a very minor role in helping to distribute Issue No. 265 to subscribers in Hong Kong and overseas.

(iv) In the circumstances, the Defendant is not liable to the Plaintiff.

The Nature Of The Two Articles

14.  Having read Article 1 and Article 2, I am in no doubt that the 1^st Defamatory Words and the 2^nd Defamatory Words are defamatory of the Plaintiff in a serious way.  They suggest that she was involved in paying bribes to corrupt officials on the Mainland in her capacity both as a good friend of Mr Li Ka Shing and as a director of the Li Ka Shing Foundation in return for favours shown or facilities granted to the company or companies of Mr Li Ka Shing.

15.  Mr Shieh SC, leading counsel for the Defendant, has not sought to argue the contrary in any way.

The Main Issue

16.  The main issue which remains is therefore whether the Defendant should be held liable to the Plaintiff.

17.  Mr Mok SC, leading counsel for the Plaintiff, seeks to argue that the Defendant should be held liable because it actually knew that Issue No. 265 contained the two defamatory articles and the 1^st Defamatory Words and the 2^nd Defamatory Words before it helped to distribute the same to subscribers.  Further or in the alternative, it ought to have known that Issue No. 265 did contain the two defamatory articles and the 1^st Defamatory Words and the 2^nd Defamatory Words.

The Relationship Between The Defendant And The Publisher Etc.

18.  In dealing with the argument of Mr Mok SC and the defence of the Defendant, I shall first have to go into the relation between the Defendant as distributor and the publisher of the Magazine and their respective history and activities.

19.  The Magazine was founded in 1998.  Originally its publisher was an organisation in Beijing called the “Stock Exchange Executive Council” (“SEEC”) (also referred to as 「聯辦」or “Lianban”) which does not appear to have anything really to do with any stock exchange because there has never been any stock exchange in existence in Beijing.  SEEC was established by a Mr Wang Boming (“Mr Wang”) in 1988.

20.  Initially, the advertising matters of the Magazine were handled by SEEC itself.  Subsequently, SEEC transferred the exclusive advertising rights in the Magazine to a company and, on 22 March 2000, such rights were further transferred to another company called “Beijing Caixun Advertising Co. Ltd (“Beijing Caixun”).

21.  The Defendant was incorporated in the Cayman Islands originally under another name.  As a result of a reverse takeover in about 2002, 70% of the interest in two advertising companies, namely, Beijing Caixun and another company by the name of Shenzhen Caixun Advertising Co. Ltd (“Shenzhen Caixun”) were injected into the Defendant.  The remaining 30% in those two advertising companies was also acquired by the Defendant in late 2003.

22.  Thus, in effect, the Defendant came to possess the exclusive advertising rights in the Magazine.

23.  In 2003, the Defendant changed its old name to its present name, i.e., SEEC Media Group Limited.

24.  In about 2002, a company by the name of “Beijing Caijing Magazine Limited” (“the Publishing Company”) was set up in Beijing.  It took over the publishing business of the Magazine from SEEC.  From then onwards, the Publishing Company became the「出版單位」(publishing unit) and SEEC remained as the「主管單位」(governing unit) and「主辦單位」(managing unit) of the Magazine.

25.  Mr Mok SC both in cross-examination and in his submission has delved extensively into the close connection between the Defendant and the entities and departments in Beijing who are responsible for the publication of the Magazine.  For present purposes, I do not think that it is necessary for me to go into all the details.  I shall set out below the features which I regard as being more significant.

26.  The Defendant has four executive directors.  They are : -

(i) Mr Wang;

(ii) Mr Zhang Zifang (“Mr Zhang”);

(iii) Mr Dai Xiaojing (“Mr Dai”); and

(iv) Mr Li Shijie (“Mr Li”).

These four persons are also directors of the Publishing Company.

27.  As regards Mr Wang, it has been mentioned above that he established SEEC in 1988 and that it was SEEC which founded the Magazine in 1998.  Mr Wang is also : -

(i) the chairman and chief executive officer of the Defendant;

(ii) the chairman and legal representative of the Publishing Company;

(iii) the editor-in-charge of the “producer” of the Magazine; and

(iv) the chief executive officer of SEEC.

28.  The office premises used by the Defendant, the Publishing Company and SEEC in Beijing are all situated in the same building, namely, Prime Tower in the Chaoyang District, although on different floors.

29.  Regarding the role played by the Defendant in handling the subscriptions and distribution of the Magazine, it is convenient for me to set out verbatimthe relevant parts in the Witness Statement of Mr Tseung Sheung Shun Joseph (“Mr Tseung”), one of two witnesses called by the Defendant to give evidence on its behalf.

30.  Mr Tseung says that he has been the company secretary of the Defendant since the year 2000.  He further says that as a holding company the Defendant does not have any major business operation in Hong Kong.  It only employs two persons, namely, himself and a Ms Chan who assists him.

31.  He says in his Witness Statement as follows : -

“Role of the Defendant in Handling the Subscriptions of Caijing

11. As I have indicated under paragraph 5 above, the publisher of Caijing is not part of the Group, the Defendant’s major role is to act as the contact point for subscriptions of Caijing in Hong Kong and also for overseas subscribers except for the subscribers in China.

12. The Defendant maintains the information of subscribers of Caijing in Hong Kong, and collects the subscription money. At present, the Defendant has a database of around 180 subscribers subscribed Caijing through it.

13. The Defendant also deals with the dispatch of issues of Caijing to the subscribers.

The Roles of Ms Chan in Handling the Subscription and Dispatch of Caijing to the Subscribers

14. Ms Chan is the staff member of the Defendant responsible for subscription and dispatch of Caijing in Hong Kong.

15. According to Ms Chan, she will obtain information of the particular issue of Caijing such as weight and approximate delivery date from our contact in Beijing, normally three days before each issue of Caijing is released.

16. Ms Chan will prepare the address labels of the subscribers.

17. For subscribers located in non-commercial areas or for overseas subscribers, Ms Chan will put labels and appropriate postage onto the envelopes. For the local subscribers located in commercial areas, she will only prepare the address labels.

18. On the Mondays when the issue of Caijing is released every fortnight, Ms Chan will arrange for EDS Express Co. (the “Courier”) to come to the Defendant’s office in Hong Kong and collect the envelopes and labels.

19. 陳新記書報有限公司 (Chan Sun Kee Books And Newspaper Ltd) (“陳新記”), the distributor of Caijing in Hong Kong for the newsstands, will also receive the magazines on the release date. The Courier will then go to 陳新記 and collect the magazines after collecting the envelopes and labels from the Defendant’s office. They will put the magazines into the envelopes or paste the address labels onto the plastic wrappings of the magazines.

20. These tasks only form a very insignificant part of Ms Chan’s daily duties and it is estimated that she has spent approximately 11 hours for handling the subscription and dispatch of Caijing on a monthly basis.”

32.  In his oral evidence, Mr Tseung has supplemented his evidence as follows : -

(i) The Magazine would be printed by a printer in Shenzhen commissioned by the Publishing Company.

(ii) For every issue, the Shenzhen printer would deliver 400 – 500 copies to Chan Sun Kee in Hong Kong.

(iii) The Defendant would only be supplied with a few left-over copies of each issue by Chan Sun Kee 2 or 3 days after the bulk had been sent to newsagents for sale in the street and had been sent or posted to subscribers by    the Courier.

(iv) He and Ms Chan would only get to see copies of each issue after the distribution and not before.

(v) The Defendant does not charge the Publishing Company anything for handling the subscription and the distribution.

The Law

33.  The law is well summarized in Gatley On Libel And Slander (11^th ed) at page 183 para 6.19 as follows : -

“Distributors: special defence at common law. As has been said above, the common law gives some degree of protection to the person who publishes but who is not the author, printer, or the “first or main publisher of a work which contains a libel”, but has only taken “a subordinate part in disseminating it”, e.g. by selling, distributing or handing to another a copy of the newspaper or book in which it appears. Such a person will not be liable if he succeeds in showing:

(1) that he did not know that the book or paper contained the libel complained of; and

(2) that he did not know that the book or paper was of a character likely to contain a libel; and

(3) that such want of knowledge was not due to any negligence on his part.

On this basis news vendors and proprietors of libraries have escaped liability.

 The onus of proving such facts lies on the defendant and the question of liability is one for the jury.  In the case of a newspaper, this question depends to a great extent on the character and reputation of the paper.  The jury may rightly infer negligence from the fact that the defendant sold or distributed the newspaper after being warned of libellous matter in a former issue.  In the case of a book the jury may rightly infer negligence from the title or general nature of the book itself, or from the recognized propensity of the author or publishers to publish  libellous matter.  The mere fact that the defendant did not have the book read through before he offered it for sale or otherwise distributed it is not in itself evidence of such negligence.”

34.  Mr Shieh SC appears to argue in effect that the law is not quite as simple as appears on the face of the summary set out above.  I shall address such argument and the counter-argument by Mr Mok SC below.

35.  The footnotes to that part of the summary in Gatley (supra) quoted in paragraph 33 above which sets out the 3 conditions for exemption of liability on the part of a distributor of libellous material refer to 4 cases.  They are : -

(i)  Emmens v Pottle (1885) 16 QBD 354;

(ii)  Vizetelly v Mudie’s Library [1900] 2 QB 170;

(iii)  Sun Life Assurance v W H Smith (1934) 150 LT 211; and

(iv)  Goldsmith v Sperrings [1977] 1 WLR 478.

I shall go into these cases and other cases in due course below.

36.  In his written Closing Submissions, Mr Shieh SC submits at paragraph 13 as follows : -

“13. It is not entirely clear whether the defence will only be defeated if the distributor knew – (or was negligent as to the fact) – that the publication contained (i) a libel (i.e. a statement lowering someone else’s reputation, and as to which no defence, such as justification or privilege, is applicable) as opposed to (ii) merely a statement with a defamatory meaning, irrespective of whether he knew or ought to have known that there was no defence.”

37.  He further submits that “the better view is that a distributor should only be liable if he has actual or constructive notice of a libel rather than a mere defamatory statement” and that a distributor should not be put on inquiry lightly.

38.  He relies heavily on the dissenting judgment of Lord Denning MR in the case of Goldsmith v Sperrings (supra), particularly certain passages appearing at pages 486 – 488 of the report.  I set out below the relevant excerpts from those pages : -

“(a) The legal liability of the distributors

Both counsel before us conducted the case on the assumption that the distributors were prima facie liable. They were liable unless they could prove – and the burden was on them to prove – that they did not know that “Private Eye” was of a character likely to contain a libel. This assumption was based on Gatley on Libel and Slander, 7^th ed (1974), para 241. Since then, I have looked into the authorities for myself: and I venture to think that the law is not as counsel assumed it to be. I have been rebuked before for doing my own researches. ……………………………………………………

Let me first take the reputable newspapers and periodicals. The printers and publishers are, of course, responsible for every libel in them. But are the newsagents who sell them also liable to be sued? Is the burden on them to prove their innocence?

To show the problem, I take a recent case in this court. The city editor of “The Observer” led a campaign against some goings-on in the City of London. He wrote a series of articles condemning the way in which some men got big holdings of shares in public companies and squeezed out the private investors. In one article after another he mentioned the names of prominent citizens. None of them took action, so far as I know. But then the city editor went too far. He got his facts wrong. He headed an article: “The £25 Million Barranquilla Scandal” and named Lord Bernstein as being involved in it. Lord Bernstein sued the city editor and the publishers for libel and was awarded £35,000 damages: May 4, 1976; Bar Library Transcript No. 185A of 1976, Court of Appeal.

Now I ask the question: could Lord Bernstein have sued the distributors with any hope of success? From W.H. Smith & Son Ltd at the top, to the street seller at the bottom of Chancery Lane: alleging simply that they had published a libel on him: and putting on them the burden of showing that they were not negligent in not noticing the defamatory campaign? My answer is, No. Any such action should be struck out as disclosing no reasonable cause of action. “The Observer” is a highly respectable newspaper. Bundles of it come in and out very quickly. The distributors have no opportunity to read all the articles in it: and, if they did, they have no chance of inquiring whether the facts are true or the comment fair. Time does not permit. Speed is of the essence. Especially when there are many other newspapers going through their hands at the same time. The distributors of newspapers and periodicals are nothing more than conduit pipes in the channel of distribution. They have nothing whatever to do with the contents. They do not read them – there is no time to do so. Common sense and fairness require that no subordinate distributor – from top to bottom – should be held liable for a libel contained in it unless he knew or ought to have known that the newspaper or periodical contained a libel on the plaintiff himself; that is to say, that it contained a libel on the plaintiff which could not be justified or excused: and I should have thought that it was for the plaintiff to prove this. And the Restatement bears this out: see Restatement, Torts, 1965 Supplement, section 581, Comment. I have read every case cited in the textbooks on this subject and I find that a sub-ordinate distributor has never been held liable to a plaintiff except when prior knowledge of the libel has been brought home to him. There are these three cases in England: Batten v Pall Mall Deposit, The Times, June 24, 1927, where the defendants were warned a week beforehand that a libel might be published of the plaintiff and took no steps to check it. Sun Life Assurance Co. of Canada v W.H. Smith & Son Ltd (1933) 150 LT 211, where Smiths exhibited a poster, saying “More Grave Sun Life of Canada Disclosures.” And Hood v W.H. Smith & Son Ltd, The Times, November 4 and 5, 1937, where a magazine had on the front cover a large picture of Miss Hood depicting her as a lewd woman. Apart from these three cases, every distributor has been found by the jury, or the judges on appeal, not guilty of any negligence and not liable: see, for instance, in Weldon v “The Times” Book Co. Ltd (1911) 28 TLR 143 and Bottomley v F.W. Woolworth & Co. Ltd (1932) 48 TLR 521.

So much for publications which are sober and safe, such as “The Observer.” But what about publications which are contentious and controversial, such as “Private Eye”? It is said that a publication may have so bad a character – and be so likely to contain a libel – that anyone who distributes it, knowing of its character, is liable in damages to any person who is libeled in it. That proposition has been inferred from some words of Bowen LJ in Emmens v Pottle (1885) 16 QBD 354, 358. If this is correct, it means that any distributor who handles it does so at his peril, even though he knows nothing in particular of its contents or of the plaintiff who is mentioned in it. I have found no decision in which that proposition has been applied. If it were applied in the present case, it would mean that all the firms who distribute “Private Eye,” from the top to the bottom; all the bookstalls who sell it; all the public libraries who stock it; all the clubs and common rooms which take it – and there are many which do – and everyone who hands it to his neighbour to read – each and every one of them would be liable in damages to any person – to any member of the public at large who claims that he has been libeled in it. Even though it is a person of whom he has never heard before. If it is as bad as all that, it should be banned. I suppose there may be some publications which are so bad – so prone to libel anyone without just cause or excuse – that no distributor should handle them; or at any rate should only do so at his peril. But there would have to be very strong evidence before it reached that point. Short of that point, I do not think any distributor should be held liable simply because he distributed a newspaper or periodical. ……………………………………………………”

39.  Despite what Lord Denning said at page 487 F-G referred to above regarding the burden of proof being on the plaintiff, Mr Shieh SC has indicated that, for the purpose of this trial, he is content not to argue that the burden is on the Plaintiff.  Nevertheless, he submits that in the circumstances of the present case and on the authority of Lord Denning’s dissenting judgment, the Defendant should not be held liable.

40.  Mr Mok SC, on the other hand, points out that the dissenting judgment of Lord Denning should not be followed.  To begin with, the point was not argued by the parties and, as Lord Denning admitted himself, he went off and did research on his own.

41.  Furthermore, the other two members of the Court of Appeal, no less than Scarman and Bridge LJJ (as they both then were) disagreed with Lord Denning in very strong terms At page 508 B-I of the report, Bridge LJ said : -

“ Since writing the foregoing judgment I have had the opportunity to read in draft the judgment just delivered by Lord Denning MR. The nature and extent of my disagreement with him on both the facts and the law will largely be apparent from what I have already said; but on certain points I must make both the disagreement and my reasons for it explicit. I cannot avoid expressing myself emphatically, but I need hardly say that I do so with the utmost respect.

(1) The legal liability of the distributors

What Lord Denning MR says under this heading is unacceptable for four reasons. First, it amends the grounds of the appellants’ summonses.  They claim to have the actions dismissed or stayed as an abuse of process, not as disclosing no reasonable cause of action.  No one but the Master of the Rolls has ever suggested or considered this latter ground.  Secondly, it claims, in effect, that the Master of the Rolls’ private researches demonstrate the law, as stated in the leading text book, to be not only wrong but unarguable.  Such a claim is untenable.  Thirdly, whatever virtue there may be in private judicial researches in other circumstances, they can have no place in interlocutory proceedings for a summary remedy.  But the fourth and most important reason is that this part of the Master of the Rolls’ judgment decides against the plaintiff on a ground on which Mr Comyn never took the point, and the court did not put the point to Mr Hawser during the argument.  Hence there is a breach of the rule of audi alterem partem which applies alike to issues of law as to issues of fact.  In a court of inferior jurisdiction this would be a ground for certiorari; and I do not think that this court should adopt in its own procedure any lower standards than those it prescribes for others.”

42.  Earlier on in the report, at page 505 B-C, Bridge LJ had reiterated the principle of law as set out in the earlier edition of Gatley as follows : -

“ The legal background, with which all parties to the settlements must be taken to have been familiar, is that any disseminator of defamatory matter is liable to the party defamed, subject to the defence of innocent dissemination. To establish this it is for him to show that he did not in fact know that the publication contained defamatory matter and that he had no reason to believe that it was likely to contain defamatory matter Gatley on Libel and Slander, 7^th ed, para 241.”

43.  In the case of Vizetelly (supra), which is relied upon by Mr Mok SC, the proprietors of a circulating library circulated copies of a book which, unknown to them, contained a libel on the plaintiff.  In an action for libel against them, they failed to prove that it was not through negligence on their part that they did not know that the book contained the libel when they circulated it.  They were held liable as publishers of the libel.  It transpired that earlier on the plaintiff had started an action against the publisher of the book which was then settled.  The publisher thereafter inserted a notice both in the Publishers’ Circular, a recognized medium for trade advertisements of the kind, and the Athenaeum newspaper, a well-known medium of communication among literary people, calling for the return of copies of the book for the substitution of a page therein.  One of the managing directors of the defendants gave evidence to the effect that they did not know when they circulated and sold the book that it contained the libellous passage complained of.  He stated that the books which they circulated were so numerous that it was impossible in the ordinary course of business to have them all read.  He said that there was no one else in the defendant besides himself and his co‑director who exercised any control over the books.  The jury found against the defendants and they appealed.  All the three judges in the strong Court of Appeal (consisting of A.L. Smith, Vaughan Williams and Romer LJJ) stated the law as originally enunciated in the case of Emmens v Pottle (supra) very firmly.  I need only set out what is said by Romer LJ at pages 178 – 180 : -

“ The law of libel is in some respects a very hard one. In the remarks which I am about to make I propose to deal only with communications which are not privileged. For many years it has been well settled law that a man who publishes a libel is liable to an action, although he is really innocent in the matter, and guilty of no negligence. That rule has been so long established as to be incapable of being altered or modified, and the Courts, in endeavouring to mitigate the hardship resulting from it in many cases, have only been able to do so by holding that, under the circumstances of cases before them, there had been no publication of the libel by the defendant. The result, in my opinion, has been that the decisions on the subject have not been altogether logical or satisfactory on principle. The decisions in some of the earlier cases with which the Courts had to deal are easy to understand. Those were cases in which mere carriers of documents containing libels, who had nothing to do with and were ignorant of the contents of what they carried, have been held not to have published libels. Then we have the case of Emmens v Pottle (1), in which vendors of newspapers in the ordinary course of their business sold a newspaper which contained a libel. It was clear that selling a document which contained a libel was prima facie a publication of it, but the Court there held that there was no publication of the libel under the circumstances which appeared from the special findings of the jury, those findings being (1.) that the defendants did not know that the newspapers at the time they sold them contained libels on the plaintiff; (2) that it was not by negligence on the defendants’ part that they did not know that there was any libel in the newspapers; and (3) that the defendants did not know that the newspaper was of such a character that it was likely to contain libelous matter, nor ought they to have known so. Lord Esher MR in this Court was of opinion that, though the vendors of the newspapers, when they sold them, were prima facie publishers of the libel, yet, when the special findings of the jury were looked at, the result was that there was no publication of the libel by the defendants. Bowen LJ put his judgment on the ground that the vendors of the newspapers in that case were really only in the same position as an ordinary carrier of a work containing a libel. The decision in that case, in my opinion, worked substantial justice; but, speaking for myself, I cannot say that the way in which that result was arrived at appears to me altogether satisfactory; I do not think that the judgments very clearly indicate on what principle Courts ought to act in dealing with similar cases in future. That case was followed by other cases, more or less similar to it, namely, Ridgway v Smith & Son (1), Mallon v W.H. Smith & Son (2), and Martin v Trustees of the British Museum. (3) The result of the cases is I think that, as regards a person who is not the printer or the first or main publisher of a work which contains a libel, but has only taken, what I may call, a subordinate part in disseminating it, in considering whether there has been publication of it by him, the particular circumstances under which he disseminated the work must be considered. If he did it in the ordinary way of his business, the nature of the business and the way in which it was conducted must be looked at; and, if he succeeds in shewing (1.) that he was innocent of any knowledge of the libel contained in the work disseminated by him, (2.) that there was nothing in the work or the circumstances under which it came to him or was disseminated by him which ought to have led him to suppose that it contained a libel, and (3.) that, when the work was disseminated by him, it was not by any negligence on his part that he did not know that it contained the libel, then, although the dissemination of the work by him was prima facie publication of it, he may nevertheless, on proof of the before‑mentioned facts, be held not to have published it. But the onus of proving such facts lies on him, and the question of publication or non-publication is in such a case one for the jury. Applying this view of the law to the present case, it appears to me that the jury, looking at all the circumstances of the case, have in effect found that the defendants published the libel complained of, and therefore the defendants are liable, unless that verdict is disturbed.”

44.  I next look at the case of Sun Life Assurance Co. Of Canada v W.H. Smith & Son Ltd (supra).  In that case, a newspaper poster was displayed on which was printed in large letters the words : “More Grave Sun Life of Canada Disclosures” which were found by the jury at the trial to be libellous.  The poster was displayed by the defendants, who were newsagents, at railway station bookstalls under a contract between them and the proprietors of the newspaper.  The defendants gave evidence that at their head office newspaper poster contents bills arrived in such quantities and had to be dispatched to bookstalls with such speed that they had no time to open and consider them; the manager of a bookstall was granted no discretion whether or not he should display a poster if he thought it was libellous; there were district superintendents of bookstalls, but each had a large number of bookstalls to cover.  It was held by the Court of Appeal that there was no efficient supervision by the defendants of what was displayed at their bookstalls, if the manager of a bookstall had reasonable ground to believe that a poster contained a libel he should have been allowed to communicate that fact to the defendants; in those circumstances there was evidence on which a jury could find that there was negligence on the part of the defendants in not knowing that the poster contained libel.

45.  In the judgment of Scrutton LJ, he said at pages 435F – 436F :-

“But there appears to me to be in the system of W.H. Smith & Son Ltd, no efficient supervision of what they exhibit at their bookstalls for payment in the case of exhibition under the contract to which I have referred. It is obvious, without saying anything for the moment about the form of the questions asked of the jury, that, if it is a question for the jury whether a business carried on in this way is carried on negligently, there was evidence upon which the jury could answer the fourth question as they did – “Was there any negligence on the part of the defendants in not knowing that the poster or the newspaper contained a libel?” The jury may very well have thought: “It is true that you are not able in the rush of business at your head office to look at every newspaper and every poster, but when you send the posters to your responsible manager of a bookstall to display, if you cannot look at them yourself, it is obvious that you ought to give him instructions that if, on looking at the poster he is suspicious of the subject-matter which you have not seen, he should, at the least, at once communicate with you and not exhibit the poster until he has received your answer.” It is an easy matter in London to telephone: “Poster of ‘City Mid-Week’ contains these words, shall I accept it?” and there should obviously be some responsible person at W.H. Smith & Son, Ltd, who could say at once: “Yes,” or “No.”

If trouble has arisen, but I do not think it has, it has arisen from the second and third questions which were asked the jury.  The second question was: Were the defendants innocent of any knowledge of the libel in (a) the newspaper, or (b) the poster?” to which the jury answered “Yes.”  The exact bearing of that answer depends on who are “the defendants” spoken of in the question.  Of course, the company as such has no knowledge: the knowledge of the company is only that of some of its servants or agents.  If you limit the meaning of “the defendants” in the question to the defendants’ directors, no doubt they had not the slightest knowledge of any libel contained in the newspaper or poster.  If you limit the meaning of the word to those at the head office, who every morning are working at great speed to send out any number of papers and any number of posters, they also were innocent of any knowledge.  But if the question referred to the knowledge of the persons who in fact posted up the posters in such a way that they must look at them and see what was on them, as the knowledge of the defendants, then that matter was not, so far as I can see, explained to the jury, and I think counsel for the plaintiffs was right in saying that the principle which he quoted from MR BOWSTEAD’S DIGEST OF THE LAW OF AGENCY (8^th Edn), art 109 at p 365, is correct :

‘Where any fact or circumstance, material to any transaction, business, or matter in respect of which an agent is employed’

- stopping there for a moment, an agent here was employed for payment to post up, so as to publish, a poster; is it material to that transaction that he is asked to post up a libel?; obviously it is – “comes to his knowledge in the course of such employment” – that fact or circumstance did come to the knowledge of the manager of the bookstall in the course of his employment when he did what he was ordered to do, namely, post up these posters – “and is of such a nature that it is his duty to communicate it to his principal” – it seems to me clear that where a principal does not know that a publication is a libel and has not seen it, and the agent has reasonable ground to believe, on looking at it, that it is a libel, it is his duty to communicate that fact to his principal and to get further instructions – in that event

‘the principal is deemed to have notice thereof as from the time when he would have received such notice if the agent had performed his duty….’

I deal with the second question asked of the jury by saying that, if by “the defendants” was meant the head office of the defendants, the question was rightly answered, but was irrelevant.  If it was meant that all the servants of the defendants were innocent of any knowledge of any libel, it may be that the managers of the twenty-four bookstalls did not know it.  But the burden of proving innocence was on the defendants, and none of the managers of the twenty-four bookstalls was called before the jury.”

46. In the judgment of Greer LJ, he said at pages 439H – 440B : -

“With regard to the fourth question asked of the jury : Was there any negligence on the part of the defendants in not knowing that the poster or the newspaper contained a libel?, to which the answer was “Yes,” I agree that there is no ground for disturbing that finding, and that that finding is enough to support the judgment given by the learned judge. The effect of the evidence is that, by the system they have adopted, W.H. Smith & Son, Ltd, have made it next to impossible that they should exercise any care whatever in seeing whether posters they put up for reward for themselves contain defamatory statements against some other person. It seems to me to be a course of conduct that may be regarded as negligent, because “negligence” imports the neglect of a duty towards someone, and surely the people who issue and put up posters owe some duty to the public, to the people who read posters, and to the people about whom they are written. It is not sufficient for the defendants to say that it is inconvenient for them and difficult for them, having regard to their large business, to make any other arrangements than the arrangements which they have in fact made. If those arrangements result in a breach of the duty to exercise reasonable care towards persons who may be damaged by defamatory statements, then there is negligence within the rules which have been laid down with reference to the question of innocent dissemination.”

47.  The passages from the judgments quoted above are pertinent to the system adopted by the Defendant in handling the distribution of the Magazine which I shall examine in due course below.

48.  Finally, I come to the case of Metropolitan International Schools Ltd v Designtechnica Corporation [2011] 1 WLR 1743. The facts of the case are not important for present purposes.  Under the heading of “The common law defence of innocent dissemination” at page 1760 and after referring to counsel’s reliance on the case of Goldsmith v Sperrings (supra), Eady J said at para 69 as follows : -

“ 69. A good deal of steam seems to have been generated by this hearing in the Court of Appeal, as Scarman and Bridge LJJ expressed their disagreement with Lord Denning MR in unusually strong terms: see e g the observations of Bridge LJ, at p 508C-F. Mr White is quite right to emphasise that the remarks were obiter, since one of the reasons for their strong disagreement was that the point in question had not been argued properly before the court. At all events, the remarks of Bridge LJ in the particular context of innocent dissemination, at p 505, were as follows:

‘The legal background, with which all parties to the settlements must be taken to have been familiar, is that any disseminator of defamatory matter is liable to the party to be defamed, subject to the defence of innocent dissemination. To establish this it is for him to show that he did not in fact know that the publication contained defamatory matter and that he had no reason to believe that it was likely to contain defamatory matter …’

Mr White invites me to take the same view of the defence of innocent dissemination as that of Lord Denning MR and to hold that his client would not be liable unless it could be shown that he was positively aware that any defence would fail.  There is no other support for that view of the law available.  It depends entirely on adopting the reasoning of Lord Denning MR I should do so, says Mr White, because the common law is obviously uncertain and I should err on the side of protecting his client’s article 10 rights (and, for that matter, the rights of those who use search engines).  I have considerable difficulty with doing so, however, because it seems to me that the defence of innocent dissemination as interpreted by Lord Denning MR throws up more problems than it is likely to solve.  How could someone hoping to avail himself of the defence know that a defence of justification was bound to fail, save in the simplest of cases?  How is he/she to approach the (often controversial and uncertain) question of meaning?  How much legal knowledge is to be attributed to him/her in arriving at these conclusions?  What of a possible Reynolds defence?”

49.  In my judgment and with the greatest respect to Lord Denning, there is no valid basis for his statement of the law expressed in Goldsmith v Sperrings (supra).  I therefore decline to follow his dissenting judgment in that case.  I am of the view that the law is as summarized in the passage from Gatley quoted in paragraph 33 above and that each case is to be decided upon its own facts.

My Findings

50.  In my judgment, it is quite obvious that in acting as the contact point for subscriptions and in the distribution of issues of the Magazine to subscribers, the Defendant has been negligent in that the system adopted by it simply makes it impossible for itself to vet the issues in any manner, even in a most casual way, before they are sent out to subscribers.  To adopt the words of Greer LJ in the Sun Life case (supra), surely, the Defendant who helps to distribute issues of the Magazine to subscribers in Hong Kong and overseas owe some duty to the public, to the people who read the Magazine and to the people about whom they are written.  In coming to such conclusion, I have not even taken into account the fact that the directors of the Defendant are also directors of the Publishing Company and I have treated the Defendant as being run by just two persons, namely, Mr Tseung and Ms Chan.

51.  The position of the Defendant cannot be justifiably compared with that of a newsagent distributing or selling newspapers.  There is no suggestion that Mr Tseung and Ms Chan are overwhelmed with other work or that the number of publications they have to handle is huge. There is no suggestion that the issues of the Magazine must be sent out with great urgency, unlike newspapers in respect of which probably every minute counts.  There is no reason why the Defendant cannot obtain a copy of each issue in advance from the Publishing Company in some shape or form or in its final form just to have a look to make sure that there is nothing amiss.  This is against the background that, a few days before the issues of the Magazine are sent to Hong Kong, Ms Chan would already be able to get information of the weight and approximate delivery date from the Publishing Company.  The position is made worse by the fact that the Defendant and the Publishing Company have got common directors.  The directors of the Defendant as such should have been able to make and should have made it possible for the Defendant to have a system whereby the Defendant could at least have a look at the issues before they were sent out.  The directors of the Defendant could have devised a system of having checks on behalf of the Defendant in Beijing, even by entrusting such task to the editorial board of the Publishing Company. Unfortunately, there is no evidence of this.  Even assuming that this was indeed what happened, it would still mean that the Defendant should be liable because the people who did the checking for them should have discovered the libellous material and reported to the Defendant.  The Defendant should have then refused to take part in distributing Issue No. 265.

52.  In the present case, if anyone from the Defendant would just care to take a casual look at the cover of Issue No. 265, he or she would have noticed the words “involving the richest man Li Ka Shing”. This should at once ring an alarm bell and should have caused the Defendant to look at the relevant articles inside to make sure that there was nothing libellous about Mr Li Ka Shing.  In turn, the libellous material about the Plaintiff would have been discovered.

53.  I therefore find that the Defendant has at least been negligent and therefore cannot rely on the defence of innocent dissemination.

54.  Mr Mok SC further submits that I should find in fact that the Defendant had actual knowledge of the libellous matter before the distribution of Issue No. 265 to subscribers on the basis that Mr Wang and, perhaps the other directors of the Defendant, must have read Issue No. 265 before it reached Hong Kong.

55.  On this point, there has been a lot legal argument between Mr Mok SC and Mr Shieh SC on the authorities regarding the imputation of knowledge of a director to his company.  I do not think that I need to go into such legal niceties.  Assuming that Mr Wang did read a copy of Issue No. 265 in his office in Prime Tower in Beijing before the copies were sent to Hong Kong, he would not have read it whilst wearing his hat exclusively as the chairman and legal representative of the Publishing Company.  There is nothing in law to impose that restriction on him.  He would have read it as a person who happened to have a number of capacities, including being the chairman and chief executive officer of the Defendant.

56.  In the Witness Statement of Mr Li, the other witness who gave evidence on behalf of the Defendant, he says at paragraph 25 thereof : “I confirm that myself and the other members of the Board including Mr Wang have completely no knowledge of the content of the Particular Issue ……………………”.  I agree with Mr Mok SC that Mr Li may give such evidence on behalf of himself but not on behalf of his co‑directors. Such assertion by him on behalf of his co‑directors has no valid ground at all. He has not given the basis as to how he acquired such knowledge regarding his co-directors.

57.  There is also some argument on the point of the Defendant’s last-minute application to have the witness statement of Mr Wang admitted in evidence which application was disallowed by Deputy High Court Judge Lok on 6 August 2012.  Irrespective of whether the last-minute application was a tactical ploy by the Defendant as submitted by Mr Mok SC, the simple fact is that there is no evidence by Mr Wang as well as Mr Zhang and Mr Dai before this Court.

58.  In all the circumstances, I also find that the Defendant has failed to prove that it did not know that Issue No. 265 contained the libel complained of before it caused copies of the same to be distributed to the subscribers in Hong Kong and overseas.

59.  Mr Mok SC also submits that the Defendant should have been put on the alert on the basis that the Magazine was successfully sued for defamation twice on the Mainland in 2002 and 2003 and that all the directors of the Publishing Company were aware of those cases and also that the Magazine had been variously described by others as being one which dug into “corporate skullduggery with a zeal that puts Hong Kong and Singapore media to shame” or which specialized in exposing other people’s dirty and filthy dealings.

60.  I am not sure that two defamation cases which occurred 9 or 10 years ago or the descriptions by others as referred to above would be sufficient to put the Defendant into the “ought to have known” category.  In view of my findings above, it is not necessary for me to come to any conclusion on this point.

The Relief

61.  On the question of damages, I have been referred to a number of cases on the general principles and quantum.  See e.g., the case of Hung Yuen Chan Robert v Hongkong Standard Newspapers Ltd [1996] 4 HKC 519 where Le Pichon J (as she then was) at page 534 D‑E set out some of the factors to be considered in assessing damages.  At page 536 G-H, she also said as follows :-

“As the circumstances of each libel are likely to differ and the factors to be taken into account depend on the facts of each individual case, it is difficult to extrapolate from previous awards unless there are significant similarities.”

62.  According to Madam Wei Yu, one of the two witnesses who gave evidence for the Plaintiff whose evidence was not challenged, the Plaintiff had donated tens of millions of Renminbi for charity in the Mainland.  In view of the prominence of the Plaintiff as a businesswoman and a philanthropist in Hong Kong and on the Mainland (despite the fact that she is also described as a person of extremely low profile) and the nature and gravity of the defamation but taking into account the relatively small size of the circulation of Issue No. 265 for which the Defendant is responsible, I assess general damages in the sum of $650,000.00.

63.  Mr Mok SC also asks for aggravated damages on the basis that the Defendant has refused to issue an apology and that Mr Tseung in the witness‑box still maintained that he thought that the accusations against the Plaintiff were “right”.

64.  In fact, the Defendant did offer to issue a public apology in the middle of the trial, although it was not accepted by the Plaintiff because of the related question of costs.  Furthermore, I do not attach very much weight to the answer by Mr Tseung, the company secretary of the Defendant, to the abovementioned effect which was only given in answer to a question by Mr Mok SC in cross-examination.  I think that the remedy of aggravated damages should be reserved for more serious cases.

65.  Although in the Statement of Claim the remedy of an injunction is sought, the same is not vigorously pursued by Mr Mok SC.  I do not think that in the circumstances of the present case the libel is likely to be repeated.  I will therefore not grant any injunction.

Conclusion

66.  In the result, I order that there be judgment for the Plaintiff against the Defendant for damages in the sum of $650,000.00.

67.  I make an order nisi for the costs of the action to be paid by the Defendant to the Plaintiff, such costs to be taxed if not agreed between the parties.

68.  It remains for me to thank counsel for the parties for their very able assistance to the court.