TSE'S FOREX INVESTMENT CO. LTD. v. MAN YUK LAN and Another

IN THE COURT OF APPEAL

1995, No. 154

(Civil)

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________________

J U D G M E N T

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Liu JA:

1. The 1st defendant is a customer of the plaintiff. It is alleged that her account had been improperly managed or mis-managed and that as a result she lost her entire life savings of approximately $180,000. The 1st defendant was unsuccessful in her demand for compensation from the plaintiff, and she turned to the 2nd defendant for assistance. What transpired thereafter can be gleaned from paragraph 6 of the Statement of Claim.

2. The 1st and 2nd defendants communicated, both by letters and in person, with the plaintiff. Paragraph 6 of the Statement of Claim sets out these communications.

"6. (1)By a letter dated 6 June 1995 addressed to 'Mr Tse, Tse's Forex Investment Co. Ltd' and posted to the plaintiff the 1st defendant wrongfully alleging (sic) that she had suffered the loss of money due to incompetence and recklessness of the said Mr Wong - [Mr Wong was at the material time the staff member in charge of the 1st defendant's account] - and the 1st defendant further demanded to have a meeting with Mr Tse of the plaintiff and claimed that the 2nd defendant was authorised by her 'to take charge of this matter'.

(2) Further on 9 June, 1995 1st defendant by facsimile sent to the plaintiff a letter dated 8 June, 1995 addressed to 'Tse Sui Lun' who was and is one of the shareholders of the plaintiff.

(3) The said letter dated 8 June, 1995 apart from making a demand to see Mr Tse purportedly for the purpose to resolve the claim of the 1st defendant further contained firstly the following messages in Chinese:

(Chinese Messages)

(4) a literal English translation of the above messages is as follows:

'May we enquire from you if you have invested money with Tse's Forex Investment Co. Ltd? If so may we enquire from you if you are satisfied with its service or not?'

'If you are feeling dissatisfied or you have suffered great financial loss please contact me or Miss Man promptly.'

'George W. Beattie (Fax No. 2651 7796)'

'Miss Man (Tel No. 2524 7564) on Mon - Friday after 6:30 pm'

(5) secondly the following message in English:

'TARGET:

SFC
ORIENTAL DAILY
MING PAO
SCMP
WINDOW MAGAZINE
SING TAO
EASTERN EXPRESS
HK ECONOMIC JOURNAL

FLYERS FOR STREET DISTRIBUTION IN CENTRAL & WANCHAI'

(6) At a meeting held at the office of the plaintiff amongst a Mr Tse Tak Ching, Mr Anthony Yu, Mr Johnson Wood of the plaintiff and the 2nd defendant the 2nd defendant gave a letter dated 12 June, 1995 to Mr Yu and demanded Messrs Tse, Yu and Wood to read his letter and to pay money to Miss Man in 7 days time; by the said letter the 2nd defendant -

(a) claimed that he had been appointed by the 1st defendant to represent her; and further

(b) claimed that the defendants 'wish to settle this matter without resorting to the types of measures outlined in Miss Man's letter dated 8 June, 1995' and that the defendants were prepared to accept a sum of not less than $500,000 in full settlement of their claim.

(7) the plaintiff through their solicitors Messrs Kwan & Kwan by a letter dated 15 June, 1995 protested the aforesaid wrongful acts of the defendants; by a letter dated 16 June, 1995 in reply to the said letter the 2nd defendant threatened -

(a) that the defendants 'intend to use American style methods to determine how serious problem of people losing their money at Tse's Foreign Investment really is';

(b) that the plaintiff may regard the threatened publication of the Chinese messages as a survey;

(c) that it was 'probably about time' publication of the Chinese messages 'was done in Hong Kong'.

(d) that the defendants had offered to accept payment of over $500,000 'to end the matter' and that since the offer had not been accepted 'the consequences must be faced' by the plaintiff now;

and the 2nd defendant further claims (sic) that there had been a similar case in Australia in the early 1980's where 'a client used similar methods to bring about the eventual collapse of a Forex Investment Co.' "

3. The said letter dated 16 June 1995 at p. 129 of the Appeal Bundle reads:

"16 June 1995
To :Mr Eddie Law
Of :Kwan & Kwan Solicitors
Fax :27830085
From :George W. Beattie
Fax :26517796 (Tel 25247564)

Re :Complaint of Man Yuk Lan against Tse's Foreign Investment Co Ltd

____________________________________________________

Dear Mr Law

I refer to your letter of 15 June 1995, (ref 20266/95/RPS/EL) and have to inform you that from the substance of your letter it appears that either you are not properly briefed on the substance of Miss Man's complaint or you are ignorant of the legal avenues open to someone who, like Miss Man, has suffered untold hardship as a direct result of the mismanagement of her account by Tse's Forex Investment Co.

Unfortunately in Hong Kong there are too many instances where people commit suicide because of their loses at the hands of incompetent brokers whose negligence in handling their clients' accounts is all too apparent to a trained investigator. The fact that Miss Man's instructions were not carried out according to her wishes is reason enough for her to seek reparation.

You can instruct your client as you see fit. But I can assure you that we intend to use American style methods to determine how serious the problem of people losing their money at Tse's Foreign Investment really is. You can regard it as a survey if you want. It's probably about time something like this was done in Hong Kong.

I recall a similar case in Australia in the early 1980's where a client used similar methods to bring about the eventual collapse of a Forex Investment Co. The company, at the time, tried desperately to get a court injunction to stop the angry client from pursuing the matter using the type of tactics that Americans call CLASS ACTION. But the Australian courts ruled in favour of the client claiming it was in the Public interest to know whether incompetency and mismanagement of funds by staff were factors in people losing their money.

We intend to vigorously pursue this matter in a manner which is perfectly legal. We have offered your client an alternative way for the matter to end. Our offer has apparently not been accepted and so now the consequences must be faced.

Yours sincerely

 

(Signed)

_______________________

George W. Beattie (Dr).

cc:	Mr Johnson Wood, President Marketing, Tse's Forex Investment Co Ltd
	Mr Anthony O.L.Yu, Responsible Director, Tse's Forex Investment Co Ltd"

4. That is in total what had gone on between the plaintiff and these defendants. It was claimed by the plaintiff that the defendants' actions, both in personal approach and by the letters I have referred to, were actionable when the primary or predominant purpose of the defendants was clearly to injure the plaintiff. Lonrho Plc v. Fayed & Others, [1992] 1 A.C. 448 was relied upon by the plaintiff before the judge, Mr Justice Patrick Chan, to whom the observation of Simon L.J. in Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch & Another, [1942] A.C. 435 at p. 445 was also advanced for the preposition. In a cause of action founded on an alleged conspiracy to injure, a predominant intention to injure is required to be shown. It is settled law that a combination of two or more persons willfully to injure another person in his trade is unlawful and that if the intended actions are expected to cause damage, their actions would be actionable. The defendants were restrained by Mr Justice Patrick Chan in these terms:

"that the defendants whether by themselves, their agents or servants, or otherwise howsoever be restrained from advertising or publishing or procuring or permitting advertisement or publication of any material or message by written words or in any other form in or through any public media or channel such as newspapers, magazines, television and/or radio or by communicating to the public any material or message whether by distributing or publishing flyers to them or otherwise howsoever all or any of which is calculated to harm or damage the plaintiff's business including but not limited to the same or similar messages pleaded in paragraph 6(3) and (4) of the Statement of Claim, be continued until the trial of this action or until further order provided that this order does not prohibit the defendants from launching any complaint to the Police or any relevant authorities such as SFC, nor prohibiting the defendants from instituting any legal action against plaintiff."

5. The grievances of the defendants as highlighted in the submissions made through the 2nd defendant may be shortly stated as follows:

(1) The questions and the circulation of questions in the questionnaire set out earlier in this judgment are lawful;

(2) Since the answers and reactions (if any) to these questions in the said questionnaire are necessarily unpredictable, it would be speculative of the plaintiff company to complain that the circulation of the questionnaire would adversely affect it;

(3) The deployment of a lawful means by conducting a survey on the questions in the said questionnaire or circulating those questions, which might or might not bring about adverse side-effects, cannot be a proper matter for an injunction order;

(4) The recorded reaction and answers (if any) to the questions in the said questionnaire would become the personal property of the 2nd defendant who would in due course further approach the plaintiff with a view to discussing their possible application or dissemination.

6. Consequently, it is submitted by the 2nd defendant for both defendants that the judge was wrong in acceding to the application of the plaintiff and granting the injunction. In particular, the defendants are critical of the silence of the judge who, they say, should have quizzed the defendants about the contents of the questionnaire so as to give them at least an opportunity of re-formulating it. It is fair to say that neither to the judge nor to us today have the defendants produced a re-formulated version of the said questionnaire.

7. Mr Justice Barnett granted ex parte the injunction which was continued by Mr Justice Patrick Chan. We have been supplied with a transcript of proceedings before the judge. Mr Justice Patrick Chan held that there was a good arguable case in the right the plaintiff claimed and sought to protect. The asking of these questions itself would likely have the effect of injuring the plaintiff's trade and preventing persons from resorting to the plaintiff's place of business, resulting in loss of trade. That is itself actionable. "It is of little consequence whether the wrong is libellous or whether it is a statement of any other nature ....." Riding v. Smith (1876) 1 Ex.D. 91 at p. 94 per Kelly, C.B. Whilst a bad motive does not by itself turn an otherwise lawful act into an unlawful one, an otherwise actionable wrong would not be rendered legally unaccountable by any good motive. The judge was virtually driven by the events together with the defendants' avowed intention to form the view he did. The judge further concluded that there was a serious question to be tried. The defendants are not represented. I really must not comment on the validity or otherwise of their contentions, which should best be left to the trial judge. Mr Justice Patrick Chan had regard to matters canvassed on behalf of the defendants as well as the unusual features brought to his attention by counsel for the plaintiff. On the balance of convenience, in his discretion the judge saw fit to continue the injunction subject to the reservations which would leave the defendants free to launch legitimate complaints or pursue their legal remedies. The judge reviewed the situation and exercised his discretion in accordance with the trite principles enunciated in America Cyanamid Co v. Ethicon Ltd. [1975] A.C. 396. Legal practitioners would be well advised to bear in mind the observations of Sir Alan Huggins, as he then was a judge of the High Court, made in J.C. Penny Co. Incorporated & Another v. Pennys Ltd & Another [1975] HKLR p. 598 at p. 603 - 604. The exercise of his discretion by the judge on what is universally known as "the balance of convenience" was clearly within these principles.

8. A judicial discretion has been exercised and there are limits within which it can be interfered with. In Hadmor Productions Ltd. v. Hamilton and Another [1983] 1 A.C. 191 at pp. 220 Letters B - C, E, Lord Diplock had this to say:

"Upon an appeal from the judge's grant or refusal of an interlocutory injunction the function of an appellate court, whether it be the Court of Appeal or your Lordships' House, is not to exercise an independent discretion of its own. It must defer to the judge's exercise of his discretion and must not interfere with it merely upon the ground that the members of the appellate court would have exercised the discretion differently. The function of the appellate court is initially one of review only. It may set aside the judge's exercise of his discretion on the ground that it was based upon a misunderstanding of the law or of the evidence before him or upon an inference that particular facts existed or did not exist, which, although it was one that might legitimately have been drawn upon the evidence that was before the judge, can be demonstrated to be wrong by further evidence that has become available by the time of the appeal; or upon the ground that there has been a change of circumstances after the judge made his order that would have justified his acceding to an application to vary it. Since reasons given by judges for granting or refusing interlocutory injunctions may sometimes be sketchy, there may also be occasional cases where even though no erroneous assumption of law or fact can be identified the judge's decision to grant or refuse the injunction is so aberrant that it must be set aside upon the ground that no reasonable judge regardful of his duty to act judicially could have reached it. It is only if and after the appellate court has reached the conclusion that the judge's exercise of his discretion must be set aside for one or other of these reasons, that it becomes entitled to exercise an original discretion of its own."

9. None of the factors which would allow an appeal court to interfere with the exercise of judicial discretion exists here. I am satisfied that in entertaining this interlocutory application the judge was right to grant the interim injunction to preserve the status quo pending trial. I would dismiss the appeal.

Bokhary JA:

10. The defendants say that their interest lies in finding out whether any other customers of the plaintiff were in the same position as the 1st defendant. In doing that, they say, they would be doing no more than exercising their right of free speech. And, they say, it is speculative whether what they propose to do would harm the plaintiff.

11. It seems to me, however, that the judge was entitled to take the view that there was at least a serious questions to be tried whether the predominant purpose of what the defendants in combination proposed to do was to injure the plaintiff and that the plaintiff would be injured thereby. That is enough to give rise to a discretion to intervene by way of injunctive relief. In fact, the judge thought - for that is what he said - that the plaintiff even had a good arguable case.

12. The survey in question was by its nature at least likely to shake the confidence of a substantial number of customers or potential customers in the plaintiff. And such a loss of confidence was by its nature at least likely to cause the plaintiff loss which would be considerable but difficult to quantify.

13. In his letter of June 2, 1995, to Mr Tse of the plaintiff, the 2nd defendant said, among other things, this:

"We wish to settle this matter without resorting to the types of measures outlined in Miss Man's letter of 8 June 1995. We are prepared to accept a sum of not less than $500,000 in full settlement of our claim. Miss Man has suffered untold mental anguish no amount could compensate for."

Included among the outlined measures is the proposed survey.

14. It is one thing to make something public. It is another thing altogether to threaten to make something public unless you are paid.

15. In my judgment, there is no basis for rescinding the judge's order. He had a discretion to make it; and in making it he had acted within the bounds of that discretion. Accordingly, I would dismiss this appeal.

Nazareth V-P:

16. I agree with my Lords that the appeal must be dismissed for the reasons they have given.

17. What the appellants are seeking is that the injunction continued by Chan J be set aside, and instead that they be permitted to carry out the survey mentioned. The scope and questions in that survey, they say, are limited to asking people whether they have invested funds in Tse's Forex Investment Co. Ltd, whether they have lost funds in that company, and whether they believe that they lost their funds due to the fault of Tse's investment broker. The appellants say that the wording of the questions is such that in themselves they are neither defamatory nor could be regarded as such. Second, the appellants ask for an order that "the plaintiff and the defendants hold a meeting prior to the commencement of the survey to try and resolve their differences". The second order sought is entirely misconceived. It is not for this Court to order people to have meetings and agree to things.

18. However, coming to the first, the appellants have, as my Lords have indicated, first of all to show that the judge was wrong. The principles on which interlocutory injunctions are granted are well established; see the American Cyanamid case to which my Lord, Liu JA, has already referred. To succeed, the appellants have to show that the appellants have not met the requirement for interlocutory injunctions or that the discretion exercised by the judge was wrong. The requirement we are concerned with here, is whether the plaintiffs have shown a good arguable case. In the present circumstances, this boils down to whether the questionnaire is arguably calculated to injure.

19. Dr Beattie has said that theirs are simply questions; they cannot injure; it is only that the responses that might injure. Those responses would come to him and there is no evidence that they would be published or released, or of what use he would make of them. That is a facile and unrealistic submission. The mere receipt of those questions, particularly on such a broad scale as it was proposed to circulate, would must immediately raise doubts in the minds of some of the recipients as to whether Tse's Forex investment services were to be trusted, whether they were competent, and whether people should continue to have their accounts with them, or even open new accounts. Clearly, it is arguable that Tse's Forex Investment Co would be likely to be injured. The judge addressed the matter in his Notes of Proceedings in the following way:

"For present purpose, ... 1st Question to be asked:

Whether P has shown a good arguable case that these letters [were] capable of and did show predominant purpose on Ds to injure P. If no, injunction should not be granted/continued."

20. As I have just stated, it is clearly arguable that the plaintiff's would be injured and that is the view the judge took. In my opinion, he cannot be faulted. That does not mean that is how the issue will ultimately be decided. But at this stage this Court is only concerned with whether there is a good arguable case and, as I have said, there is clearly a good arguable case.

21. The judge next proceeded to the balance of convenience. Again, that is well established as the next matter to be considered (see American Cyanimid). This has not been seriously questioned by Dr Beattie, save that he raises the matter of freedom of speech, with which my brother, Bokhary JA, has already dealt with. But taking the balance of convenience itself, in my view, the judge was clearly right in concluding that it requires the injunction to be continued. For one thing, as he observed, damages would be difficult to quantify. That is quite plain and was brought out by Dr Beattie himself. It will never be known who might have opened an account and who might have withdrawn an account. Damages, therefore, would be difficult to quantify and would not be an effective remedy.

22. Speaking for myself, even if Chan J had been faulted on the principles he applied, (and clearly he has not) it would have fallen to this Court to exercise that discretion afresh. For myself, I would have had no hesitation whatsoever in exercising it in precisely the same way.

23. In my judgment, there is no merit whatever in the appeal which is dismissed.