RUSSELL PETER BROWN AND OTHERS v. EDWARD EUGENE LEHMAN

HCA 959/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 959 OF 2010

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D E C I S I O N

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1. There are three summonses. The 1st summons was issued by the plaintiffs on 15 November 2011. It seeks from the defendant specific discovery and provision of copies of certain e-mails and letters referred to by the defendant in one of his affidavits under O 24 r 10 and 11A of the Rules of the High Court (“RHC”). The 2nd summons is issued by the plaintiffs on 12 December 2011. It seeks an unless order that the defendant’s expert do comply with an order of Master de Souza dated 3 November 2011 to prepare a joint report with the plaintiffs’ expert. The 3rd summons is issued by the defendant on 14 December 2011. It seeks the setting aside of the default interlocutory judgment entered on 3 December 2010, the striking out of the general indorsement of claim and the dismissal of the action. In the alternative to the striking out and dismissal, certain parts of the indorsement of claim be struck out and the action stayed.

2. The defendant has not raised any argument against the plaintiffs’ 2nd summons for an unless order.  If the defendant should fail on his summons, there is no objection to the unless order as sought by the plaintiffs save that the defendant would want 21 days for compliance which period the plaintiffs do not object.

3. If the defendant should succeed on his summons, it will also be unnecessary to deal with the plaintiffs’ discovery summons.  I therefore deal with the defendant’s summons first.

Service of the concurrent writ

4. The plaintiffs’ writ of summons was issued on 28 June 2010.  It was indorsed with an indorsement of claim.

5. Master Lung gave leave on 2 July 2010 for a concurrent writ to be issued and served on the defendant out of jurisdiction at his address in Beijing.

6. Master Lung’s order required the defendant to file and serve the acknowledgment of service within 28 days from the date of service of the concurrent writ on him.

7. According to an affidavit by a Miss Greene, an assistant solicitor of the plaintiffs’ solicitors, filed on 12 November 2010, the concurrent writ was first served on 7 July 2010 to the defendant by email to his usual business email account.  It was also sent on the same day by courier to the defendant’s usual address in Beijing.  The courier’s tracking system shows that it was delivered to that address at 4.19 pm on 8 July 2010.

8. On 16 September 2010, a Mr Meng of the Beijing office of the plaintiffs’ solicitors personally served the concurrent writ and accompanying documents on the reception staff at that address with an explanation to the staff of importance of the documents.  The reception staff told Mr Meng that the documents would be drawn to the attention of the defendant.  Mr Meng also made an affirmation confirming his service of the documents.

9. There is no dispute that the concurrent writ has been properly served on the defendant.

The indorsement of claim

10. The gravamen in the indorsement of claim on the writ is in para. 4.  It reads:

“4.  During 2009 and 2010, the Defendant has made (i) untrue defamatory statements about the 1st plaintiff, the 2nd plaintiff in the Company (LehmanBrown Limited ) in emails, letters, web posting and press releases published to third parties and (ii) untrue slanderous statements about the 1st plaintiff, the 2nd plaintiff and the Company to third parties (collectively, “Defamatory Statements”).”

11. The plaintiffs seek damages for the defendant’s publication of these defamatory statements.  In addition, they also seek a permanent injunction to restrain the defendant from making these statements to third parties.

The interlocutory judgment for damages to be assessed

12. The defendant did not file any acknowledgement of service.  The plaintiffs applied for default judgment on 12 November 2010 with the above-mentioned affidavit of Ms Greene in support thereof. Interlocutory judgment for damages to be assessed was entered for the plaintiffs on 3 December 2010.  But no injunction as prayed for in the indorsement was sought or granted.

The interlocutory injunction

13. I should also mention that the plaintiffs had on 16 July 2010 issued a summons for an interlocutory injunction to restrain the defendant from making untrue defamatory statements about the 1st and 2nd plaintiffs and/or the company LehmanBrown Limited by any means to third parties.  The summons contains no particulars of the defamatory statements against which the plaintiffs complained.

14. To, J. dealt with the summons on 23 July 2010 and granted an interlocutory injunction, not in terms of the summons, but to enjoin the defendant from publishing some specific letters to third parties.  The letters are those referred to in a demand letter from the plaintiffs’ solicitors to the defendant and dated 21 June 2010.  The demand letter was annexed to the injunction.  The demand letter mentioned the subject headings/titles and addressees of 22 letters or emails sent out by the defendant.  Many of the subject headings/titles are prima facie defamatory.

15. On 26 October 2010, the plaintiffs’ solicitors obtained leave to apply for an order against the defendant on the ground that the defendant had infringed the interlocutory injunction.

The first application to set aside the default judgment

16. On 20 January 2011, the defendant’s solicitors issued a summons to set aside the default judgment on the ground of alleged irregularity in the service of the writ on the defendant.  This summons was however withdrawn by a consent summons filed on 14 February 2011.

The committal proceedings

17. On 16 March 2011, the defendant through his solicitors conceded to his having breached the injunction.

18. The hearing for his committal for contempt of court took place before To, J. on 19 April 2011.  The defendant gave the following evidence on oath to the learned Judge:

“Q. Is there anything that you want to say to his Lordship?

A.  Yes.  First, good morning, your Lordship.  I would like to say I apologise unreservedly.  What I had done was foolish and – and I apologies without question and unreservedly about anything that might have been against your wishes or this court’s wishes.  I also would like to apologise unreservedly and without hesitation to the plaintiffs in this matter for anything that I might have done that would be considered not in alliance with this court.”

19. I should also mention that when cross-examined by counsel for the plaintiffs, the defendant appeared to have backtracked when he said the emails he sent out were not defamatory but true.

20. To, J. in sentencing him took into account of his withdrawal of the application to set aside the default judgment, his prompt indication not to contest the proceedings after receiving legal advice and his apology.  For these reasons, he was not sent to jail but was only fined.

The attempt to stay/strike out the action

21. After the committal proceedings, the parties continued with their preparations for the assessment of damages. 

22. The defendant on 11 October 2011 issued a summons for an order to require the plaintiffs to file a point of claims.  On 31 October, he issued a further summons to amend this summons to include a relief for stay of the action under the courts inherent jurisdiction and/or O.18 r.19 of the Rules of the High Court.

23. On 3 November 2011, the summons of 11 October was adjourned sine die and no order was made on the summons to amend this summons.

Judgment in HCCW 377/2010

24. On 15 November 2011, Harris J gave judgment in HCCW 377/2010 which was a shareholders dispute between the 1st and 2nd plaintiffs on the one hand and the defendant on the other in relation to their company LehmanBrown Limited.

The three summonses

25. Also on 15 November 2011, the plaintiffs issued the summons for specific discovery.  On 12 December 2011, the plaintiffs also issued the summons for an unless order that the experts should prepare the joint report.  On 14 December 2011, the defendant issued the set aside summons.

The first ground of attack by the defendant

26. The defendant’s first ground to set aside the default judgment is under O 13 r 9.  Mr Tracy, counsel for the defendant submitted that the plaintiffs’ claim included a permanent injunction enjoining him from making the defamatory statements to third parties.  The plaintiffs should have therefore abandoned this relief when they applied for default judgment under O 13 r 2.  Alternatively, the plaintiffs should have served a statement of claim on the defendant under O 13 r 6 before proceeding for a default judgment that included the permanent injunction under O 19 r 7.  However, as Mr Tracy submitted (in para 3.3 of the defendant’s skeleton), the claim to the permanent injunction had not been abandoned clearly and expressly, the plaintiffs should have therefore served a statement of claim on the defendant and then only to proceed further after the expiry of the period for the defendant to file and serve his defence.  The plaintiffs’ failure to do so deprived the defendant the right to serve his defence.  The default judgment so obtained is therefore irregular and should be set aside.

27. I would mention that the parties do not take the interlocutory injunction by To, J. as relevant to the question of whether the claim for permanent injunction is still pending though they differ on whether the interlocutory injunction has lapsed automatically upon entry of the interlocutory judgment.

28. This attack on the default judgment is thus based on whether the plaintiffs had abandoned the claim to a permanent injunction upon their application for interlocutory judgment for damages to be assessed.  To resolve this question, I have to consider the said affidavit of Miss Greene file on 12 November 2010 in support of the application for default judgment.  Miss Greene said in paras 5 to 7:

“5.  Pursuant to the Order of Master Lung dated 2 July 2010, the Plaintiffs issued a Concurrent Writ of Summons on 7 July 2010 for service upon the Defendant out of the jurisdiction (“Concurrent Writ”).

6.  On 23 July 2010, The Honourable Mr Justice To granted an injunction order inter alia restraining the Defendant from publishing, republishing or making Defamatory Statements about the Plaintiffs and the Company until after the trial of this action or until further order (“Injunction Order”).

7.  The Plaintiffs are now only left with their claim for unliquidated damages under the Writ of Summons and are hereby applying to this Honourable Court for interlocutory judgment against the Defendant for damages to be assessed and costs.”

29. Miss Greene referred in para 6 to the granting of the interim injunction by To, J.  She then said in para 7 that the plaintiffs were then left only with their claim for unliquidated damages under the writ of summons.  Upon first reading, one may easily be led by these paragraphs to think that the interim injunction by To, J. had satisfied the plaintiffs’ claim for injunction in the indorsement of claim.  The drafting of these paragraphs is indeed lax and has room for improvement on clarity.

30. However, clarity of thought dictates that the claim for permanent injunction could not have been satisfied by the interlocutory injunction as that injunction was stated to last until trial or further order. The defendant also did not take that the interlocutory injunction as a satisfaction of the claim for permanent injunction.  Therefore, a reasonable reading of these paragraphs must mean that there was no other relief pending save the claim for damages to be assessed.  That must also be a clear implication or indication that the claim for a permanent injunction had been abandoned.

31. I therefore hold that the plaintiffs’ application for default judgment for damages to be assessed under O 13 r 2 was not contrary to O 13 r 6 as the claim for permanent injunction had been abandoned.  There was also no need to serve a statement of claim before proceeding with the application for default judgment.  This attack by the defendant therefore fails.

The second ground of attack by the defendant

32. The defendant’s next attack is the defect in the indorsement of claim.  There is a want of particulars contrary to O 6 r 2(1)(a) and O 82 r 2.  These rules provide:

“(O 6 r 2)

(1) Before a writ is issued it must be indorsed –

(a) with a statement of claim or, if the statement of claim is not indorsed on the writ, with a concise statement of the nature of the claim made or the relief or remedy required in the action begun thereby;

(O 82 r 2)

Before a writ in an action for libel is issued it must be indorsed with a statement giving sufficient particulars of the publications in respect of which the action is brought to enable them to be identified.”

33. The defendant also referred to the commentaries in para 82/2/1 and 18/12/22 of the Hong Kong Civil Procedure 2012 which say:

“‘Sufficient particulars of the publications’ —

The word ‘publications’ is used here in the sense of the ‘published documents’ complained of. The indorsement on a writ needs to identify the document complained of.” (82/2/1)

“(21) Libel … In the statement of claim, the precise words complained of must be set out (Harris v. Warre (1879) 4 C.P.D. 125; Collins v. Jones [1955] 1 Q.B.564); the newspaper or other document containing these words must be identified, and the date given of each publication which is relied on as a cause of action.

…

… In the case of a letter or other private communication, the name of each person to whom publication is alleged must be stated in the pleading, or, if his name be unknown, he must be indicated in some manner that will identify him. If this is not done, the plaintiff, in the absence of exceptional circumstances, will not be allowed to prove at the trial publication to any such person (Davey v. Bentinck [1893] 1 Q.B. 185 at 186; British Legal and United Provident Assurance Co. v. Sheffield [1911] 1 Ir.R.69; Russell v. Stubbs Ltd [1913] 2 K.B. 200n.; Barham v. Land Huntingfield [1913] 2 K.B. 193). ” (18/12/22)

34. I have already referred to para 4 of the indorsement which contained the gravamen of the plaintiffs’ complaint.  The defendant submitted that the indorsement is incoherent, incomprehensible and unjusticiable. It does not identify at all the publications allegedly defamatory of the plaintiffs.  It does not satisfy the requirements of O 6 r 2(1)(a) and O 82 r 2.  It is so defective that the default judgment founded thereon is fundamentally irregular. 

35. I must say that the defendant’s criticisms though harsh are not out of place.  However, these are criticisms on the merits of the claim as stated in the indorsement.  They do not suggest procedural irregularity in the obtaining of the default judgment.  If these criticisms were made at or before the application for default judgment, they could have prevented judgment from being entered unless the necessary particulars were supplied. 

36. However, if default judgment has already been entered and there is no suggestion of procedural irregularity in the entering of the judgment, then the defendant will have to set it aside on the basis of the merits of the defence.  I think the reason for this is plain.  If there is no suggestion of procedural irregularity, which usually is on the service of the writ, then the defendant should, within the time for acknowledgment of service and filing of defence, raise the disputes on the merits of the claim and to seek further and better particulars, if need be.  He should not wait until after default judgment has been entered and then attack the judgment for want of merits in the claim instead of relying on the merits of his defence.

37. Since the defendant does not suggest any procedural irregularity in the service of the writ on him and is not seeking to set aside the default judgment on the merits of his defence, I do not consider this attack on the merits of the indorsement of claim viable one.

The exercise of discretion against the defendant

38. In case I were wrong on my view of the defendant’s ground based on the defects of the indorsement of claim, I would also consider the plaintiffs’ submissions that despite the irregularity, which they do not admit, I should exercise my discretion against the defendant.

39. The defendant’s application to set aside is made pursuant to O 13 r 9 and O 2 r 2(1) of the RHC.  O 2 r 2(1) provides:

“(1) An application to set aside for irregularity any proceedings, any step taken in any proceedings or any document, judgment or order therein shall not be allowed unless it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.”

40. Mr Manzoni, counsel for the plaintiffs, submitted that the defendant had taken many fresh steps in this action after he had become aware of all the facts that gave rise to his argument of irregularity of the judgment and after the lapse of a period much longer than a reasonable time before he applied to set aside the default judgment. 

41. Counsel referred to the following steps:

(a)  20 January 2011: D’s 1st Summons under RHC O 13 r 9 to set aside the Interlocutory Judgment on the basis of an “irregularity” in the service of the Writ upon D in the PRC.

(b)  20 January 2011: D’s 1st Affidavit.

(c)  11 February 2011: Consent Summons granting D leave to withdraw his 1st Summons to Set Aside.

(d)  4 March 2011: D’s List of Documents.

(d)  8 March 2011: D’s solicitor’s 1st Affidavit.

(e)  30 March 2011: D’s Witness Statement.

(e)  1 April 2011: D’s solicitor’s 2nd Affidavit.

(f)  29 April 2011: D’s 2nd Supplemental Affidavit.

(g)  16 July 2011: D’s Expert Report.

(h)  11 October 2011: D’s Summons under RHC O 37 for an Order that Ps file and serve a Points of Claim in compliance with RHC O 82 r 3.

(i)  31 October 2011: D’s Summons under RHC O 20 r 8 for leave to amend his Summons dated 11 October 2011 for a (permanent) stay of the action upon the grounds that the claims are frivolous or vexatious, as such would tend to prejudice, embarrass or delay the fair trial of the action and are an abuse of process.

(j)  3 November 2011: D’s Summons filed on 11 October 2011 was adjourned sine die.

42. Mr Manzoni further submitted that the defendant was fully aware of what were the defamatory statements he had made and to whom he had addressed them.  He had made what purported to be an affidavit to comply with To, J.’s injunction by disclosing the addressees of some 9,000 defamatory communications despatched by him.  He admitted of contempt of court by infringing the injunction.  I also note that he had tendered on oath an unreserved apology to the plaintiffs for what he had one.  Indeed the parties have also made many preparations for the conduct of the assessment of damages and are nearly ready for it.  In the premises, the plaintiffs asked me to exercise my discretion against the defendant. 

43. I consider that the defendant has received the indorsement of claim as indorsed on the writ of summons at the latest sometime in the latter half of September 2010.  Upon service of the indorsement on him, all the facts from which he made his complaint of irregularity were before him. It is therefore clear that he had taken many fresh steps in the proceedings after becoming aware of the facts giving rise to the irregularity.  He has therefore lost any right to set aside the default judgment under O 2 r 2(1) of the Rules of High Court.

44. In the light of the many fresh steps taken by the defendant since January 2011, the withdrawal on 11 February 2011 of his summons to set aside the judgment on irregularity of service of the writ on him, his admission of contempt of court on 16 March 2011 and the long lapse of time since the latter half of September 2010 till 14 December 2011 when he issued the setting aside summons, I take the view that it will be extremely unfair on the plaintiffs if I should now set aside the default judgment on the ground of irregularity or deficiency in the indorsement of claim.  I therefore dismiss the application to set aside also as a matter of exercise of my discretion.

The defendant’s alternative relief of stay or dismissal of action

45. In addition to the relief of setting aside the default judgment, the defendant’s summons also seeks to strike out the indorsement of claim and dismiss the action or alternatively to strike out certain parts of the indorsement.  Since I have declined to set aside the default judgment, I also dismiss these alternative applications on the same grounds.

The plaintiffs’ Summons for specific discovery

46. I now deal with the plaintiffs’ application for specific discovery.  The defendant made a purported affidavit dated 21 February 2011 to comply with To, J.’s injunction.  He said in para 2 of the affidavit:

“2. Pursuant to the Injunction Order, I hereby disclose a complete list of the identity of the recipients of the emails and letters referred to in paragraph 1(a) of the Injunction Order, including all addresses, email addresses and other contact details and of the identity of the individuals referred to in paragraph 1(b) of the Injunction Order from 1st January 2010 until the date of the Injunction Order (and more).”

47. The plaintiffs now seek specific discovery and provision of copies by the defendant of the emails and letters referred to in para 2 of the affidavit under O 24 rr 10 and 11A.

48. O 24 r 10 provides:

“(1) Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings, affidavits or witness statements served under Order 38, rule 2A, or experts’ reports, reference is made to any document requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies thereof.”

The defendant’s first ground of opposition

49. The first ground of opposition is that the so-called affidavit is not an affidavit as it does not contain a jurat before a solicitor or a commissioner of oath.  However, that is an omission by the defendant.  The defendant has used that document as his affidavit in compliance with To, J.’s injunction.  This document has the heading of HCMP 2204 of 2010. He has however provided a letter of confirmation dated 7 March 2011 saying that this affidavit was “sworn” by him for this action and the correct title should have been that of this action.  His then solicitor, a Ms Lai also confirmed in an affidavit filed on 7 March 2011 that the heading of HCMP 2204 of 2010 in the defendant’s affidavit was erroneous and the correct heading should be that of this action.  Hence, the defendant had repeatedly tendered that document and used as his affidavit in this action. 

50. I will not allow him to withdraw from that position simply because of his error and omission in not swearing it before a solicitor or commissioner of oath.  I will not let him take advantage of his own wrong.  The argument that this document is not his affidavit therefore fails.

The defendant’s second ground of opposition

51. The next argument is that the defendant merely referred to some 9,000 addressees and each address did not refer to a document that falls within O 24 r 10.  The defendant thus submitted that the plaintiffs had misunderstood the position.  Furthermore, the said addressees could have only received copies of the 22 letters referred to in the letter of the plaintiffs’ solicitors dated 21 June 2010.  These 22 letters were already in the plaintiffs’ possession.  The application for specific discovery is therefore unnecessary.

52. However, O 24 r 10 stipulates that the document that has to be produced for inspection is the document that “reference is made to” in affidavits.  The defendant has in para 2 of his affidavit clearly made reference to “the emails and letters” that were given to the recipients in the lists he produced.  This ground of opposition therefore fails as well.

The defendant’s third ground of opposition

53. The next ground of opposition is that these emails and letters were published after the date of the writ and no damages can be recovered in respect of their publications.  The plaintiffs also cannot obtain them for starting a new action against the defendant. 

54. However, a study of the lists produced by the defendant in his affidavit shows that many of the emails were sent out prior to the date of the writ though quite a number of them were described as “failed, filtered/excluded” communications and hence were not published and need not be disclosed.  I therefore hold that this ground has only a partial success.  It fails for the emails and letters that were sent out prior to the date of the writ that were not described as “failed, filtered/excluded”.

The defendant’s fourth ground of opposition

55. Lastly, the defendant relies on the immunity against self-incrimination.  Section 5 of the defamation Ordinance, Cap 21 provides:

“5. Any person who maliciously publishes any defamatory libel, knowing the same to be false, shall be liable to imprisonment for 2 years, and, in addition, to pay such fine as the court may award.”

56. Regarding this ground, the plaintiffs’ solicitors have already made it clear to the defendant’s solicitors that the plaintiffs will not undertake any private prosecution in respect of the emails and letters sought to be disclosed.

57. Secondly, the privilege against self-incrimination has been held by the English Court of Appeal not to apply to a document or thing which has an existence independent of the will of the person relying on the privilege (see C plc & Anor v P (Attorney General Intervening) [2007] 3 WLR 437 at para 34).  Since the emails and letters sought by the plaintiffs are not going to be made by the defendant in compliance with the order sought but are already in existence independently of such order, they are independent evidence and not subject to the privilege.  The defendant therefore cannot rely on this ground. 

58. The plaintiffs also argued that the chance of the defendant being prosecuted is remote and the defendant should not be allowed to rely on this privilege (see AT&T Istel Ltd & Anor v Tully & Anor, AC [1993] 45 at 67G to 68B).  I however would not want to rule on this ground as too little has been canvassed about the circumstances and contents of the publications.

59. Finally, the plaintiffs submitted that the defendant has already waived the privilege because he has published these letters to third parties.  I do not agree.  The publications made by the defendant were not pursuant to his conduct in this action.  I do not think he has waived the privilege vis-à-vis the plaintiffs.

60. In the light of my analysis above and my decision that the privilege against self-incrimination does not apply to the emails and letters, I order the defendant to produce and provide the plaintiffs with copies of all those emails and letters that he had sent to the addressees in the lists that he disclosed in his affidavit for compliance with To, J.’s order to the extent of those emails and letters that predated the writ and their deliveries were not described as “failed, filtered/excluded”.

The plaintiffs’ summons for an unless order

61. I now deal with the plaintiffs’ summons for an unless order relating to the experts.  The defendant has not raised any specific objection to it and merely objects to it as part and parcel of the setting aside exercise.  The defendant has further agreed that if I should refuse the setting aside summons, then I may make an order in terms of this summons subject to providing for 21 days for compliance which period the plaintiffs do not object.  The defendant has lost the setting aside summons, I therefore make an order in terms of this summons and provide a period of 21 days for compliance.

Costs orders nisi

62. Finally, I make three costs orders nisi that the defendant do pay the plaintiffs the costs of these three summonses.