CHINA YOUTH DEVELOPMENT LTD. v. NEXT MAGAZINE PUBLISHING LTD. AND OTHERS

HCA 6206/1994

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6206 OF 1994

____________

_______________

J U D G M E N T

_______________

Introduction

1. The Plaintiff is a non-profit making charitable organization registered under the laws of the mainland. Since about 1989, it has run a renowned public educational programme called "Project Hope" (希望工程) which aims at providing subsidized education to impoverished children in rural areas in the mainland. In doing so, the Plaintiff would from time to time pledge for public support and donations, often in the form of promotional campaigns. Hong Kong has been one of the areas targeted for these campaigns. The subsidies provided by "Project Hope" include assisting students to pay for their fees and building/improving school buildings and related facilities.

2. D1 was at the material time the publisher of a weekly magazine published in Hong Kong (and also among the Chinese communities overseas) called "The Next Magazine" (壹週刋). D2 and D3 were respectively the editor and reporter of this magazine. It is undisputed that its average circulation in Hong Kong from January to June, 1994 came to some 152,000 copies.

3. A report relating to "Project Hope" was published in its Issue 202 on about 21 January, 1994. The report can be found on the Issue's cover, its editor's introductory remarks and its contents page. An article also appeared therein as a cover story. All the above are collectively called "the Article" below.

4. The Plaintiff commenced this action complaining that the Article is defamatory of the Plaintiff. The Defendants deny the claim and contend that:-

(a) the parts of the Article relied upon by the Plaintiff did not bear a defamatory meaning;

(b) they were not defamatory of the Plaintiff;

(c) if they were defamatory of the Plaintiff, the Defendant can "justify" those parts of the issue;

(d) further to (c), the Defendants can rely on the defence of "fair comments";

(e) further to (c) and (d), the Defendants can rely on the defence of "qualified privilege";

(f) in any event, the Plaintiff is unable to establish any loss or damage.

Preliminary Objection (1): Proof of the Pleaded Case

5. Further to the contentions set out under "Introduction" above, Mr Wong for the defence raises 2 preliminary objections. The first objection is related to the way in which the Plaintiff's case was pleaded in its Re-Re-Amended Statement of Claim.

6. The words complained of must be set out verbatim in a statement of claim in a defamation action: see Bullen & Leake & Jacobs Precedents of Pleadings (1990) 13th Ed., p. 623. To meet that requirement, the Re-Re-Amended Statement of Claim herein sets out in paragraphs 3, 4, 5 and 6 thereof the words in the Article which are the subject of complaint. All these paragraphs are set out in a similar manner as follows:-

"The [specified part of the Article] alleged in ... Chinese characters (the English translation whereof is set out in the Particulars below) ... that [the meaning or effect of the words is set out]" (emphasis supplied), or:-

"The [specified part of the Article] repeated in Chinese characters (the English translation whereof is set out in the Particulars below) the aforesaid allegations concerning [the meaning or effect of the words is set out]" (emphasis supplied).

7. The pleading then sets out by way of particulars the English translation of those Chinese characters. The Chinese characters concerned with the allegations set out in para. 3 to 6 thereof are set out in the Schedule attached to the Re-Re-Amended Statement of Claim. Certified English translation of Issue 202 was included in the document bundle used at the trial.

8. Mr Wong argues that the certified English translation relied on by the Plaintiff bears no reference to any of the words in the English translations in the particulars given in the Re-Re-Amended Statement of Claim. Since the Plaintiff must prove its case as pleaded in the Re-Re-Amended Statement of Claim (which the Plaintiff has chosen to plead in English) in order to succeed, Mr Wong contends that the Plaintiff must fail in this action for failing to prove its pleaded case; that is, the English words pleaded are not supported by the certified English translation.

9. This objection is highly technical, but what is important is it has no substance. The relevant paragraphs of the Re-Re-Amended Statement of Claim clearly complain about the Chinese characters. The actual characters themselves are set out in the Schedule attached to, and are expressly referred to in the body of, the Re-Re-Amended Statement of Claim. The action was set down for trial before a bilingual Judge (originally with a jury). It is therefore abundantly clear that the Plaintiff has always intended to prove that the Chinese characters in the Article were defamatory. Indeed, from time to time throughout the trial, counsel for both sides referred to the Chinese characters rather than the English translation (whether certified or not).

Preliminary Objection (2): the Plaintiff's Capacity to Sue

10. Mr Wong's second objection is related to an alleged lack of capacity by the Plaintiff to commence this action. He refers to The Supreme Court Practice 1999, Vol. 1, para. 18/19/39 (and the cases cited therein) for support:-

"Authority to sue―If the Court becomes aware that the plaintiff is incapable of giving a retainer, it will strike out the action at the trial without any formal application (Daimler Co. v. Continental Tyre Co. [1916] 2 A.C. 337). But if the defendant desires to question the authority to sue in the plaintiff's name, he must apply to strike out the plaintiff's name at an early stage; he cannot by his defence dispute the authority, nor can he do so at the trial ... ".

11. The factual basis on which this objection of Mr Wong is based is this. It is common ground that the Plaintiff is in substance a legal person similar to a Hong Kong limited company. Mr Wong contends that there is no provision in any of the documents adduced by the Plaintiff to confer capacity on its part to commence this action.

12. Daimler Co. v. Continental Tyre Co. [1916] 2 AC 307 is a case with very special facts. In short, an English company sued another English company in England at a time when there was war between Britain and Germany. All the directors of the plaintiff company were, however, Germans resident in Germany. The House of Lords concluded they were the enemies and incapable of exercising their powers as directors. Hence, the plaintiff's claim should fail for that reason.

13. In the present case, the Plaintiff's "Articles of Association" (章程) contain inter alia the following clauses:-

(a) Article 1: the Plaintiff is a non-profit making social organization with independent legal person status;

(b) Article 2: the Plaintiff's objectives are to obtain support and donation from local and overseas societies and persons who are concerned with the affairs of youth in China, to promote the development of the work and education .. and welfare of youth ... ;

(c) Article 22: the fund of the Plaintiff comes from the donations from societies, organizations and individuals within China and overseas ... and other legal income;

(d) Article 23: the Plaintiff shall apply the fund raised to the business which meets the objectives of the Plaintiff and to fund projects according to the wishes of the donors.

It is not suggested by the Defence (nor can it properly be suggested) that one of the Plaintiff's businesses was to commence or carry on legal actions.

14. Because the Plaintiff was registered in the mainland, strictly speaking this issue should be resolved by examining Chinese law regarding the Plaintiff's capacity to sue. No expert evidence on the relevant Chinese law has been adduced by either party. The parties do not dispute that in the absence of such expert evidence, I am to apply Hong Kong law in approaching this issue: see also Dicey & Morris on The Conflict of Laws (2000) 13th Ed., Vol. 1, Rule 18(2), para. 9-001 (p. 221) and para. 9-025 (p. 232). Sometimes this was stated as the courts will presume foreign law to be the same as Hong Kong law in the absence of satisfactory evidence on foreign law: see 8(1) Halsbury's Laws of England (1996) 4th Ed., para. 1093, text to n. 6.

15. The following provisions of the Companies Ordinance, Cap. 32 set out the powers of a limited company:-

"5A. Powers of a company

(1) A company has the capacity and the rights, powers and privileges of a natural person.

(2) ... a company may do anything which it is permitted or required to do by its memorandum or by any enactment or rule of law.

5B. Power limited by memorandum, etc.

(1) A company―

(a) whose objects are stated in its memorandum shall not carry on any business or do anything that it is not authorized by its memorandum to carry on or do; and

(b) shall not exercise any power which is expressly excluded or modified by its memorandum ... , contrary to such exclusion or modification.

...

(3) An act of a company ... is not invalid by reason only that it contravenes subsection (1)".

16. With respect to Mr Wong, I consider he has failed to distinguish between the rights, powers and privileges of a company as a (legal) person as opposed to the objects of a company. The former is governed by s. 5A of Cap. 32 whereas the latter by s. 5B thereof. It is of course trite law that a company can only transact businesses falling within its objects. However, this does not mean that there is a need to set out in a company's memorandum all the things incidental to the businesses which the company is authorized by its memorandum to transact, for example, to sue to enforce its legal rights or to employ staff to carry on its businesses and so on. In fact, I understand it is rare that this is done in relation to companies incorporated in Hong Kong. As was observed in the chapter dealing with "Advantages and Disadvantages of Incorporation" and under the heading "Suing and being sued" in the various editions of Gower's Principles of Modern Company Law:-

"[after referring to the problems with unincorporated bodies] Needless to say, none of these difficulties arises when an incorporated company is suing or being sued; the company as a legal person can take action to enforce its legal rights and can be sued for breach of its legal duties. ... " (p. 104 of the 4th edition and p. 92 of the 5th edition).

17. For the above reasons, I conclude that both the passages in The Supreme Court Practice 1999 and the Daimler case have no relevance to this action and find that the Plaintiff has the capacity to commence this action. Further, if in fact the Plaintiff's capacity to sue should fall within s. 5B of Cap. 32, such an act is still not invalid by reason of s. 5B(3) thereof.

Witnesses' Credibility and Findings of Fact

18. Only the Plaintiff called 2 witnesses to testify during the trial, the Defendant did not call any witness. The Plaintiff's 2 witnesses were Mr Xu Yong Guang (徐永光) ("Xu"), the Plaintiff's secretary general and legal representative, and Mr Yang Xiao Yu (楊曉禹) ("Yang"), the manager of the Plaintiff's overseas section.

19. Despite Mr Wong's thorough cross-examination, I am satisfied that the testimony of Xu and Yang is truthful and reliable in relation to the matters regarding liability. However, having considered the parties' submissions and the relevant materials, I find that that their testimony relating to matters relevant to quantum of loss cannot be relied upon because it is based more on personal opinion, projection and/or speculations.

Is the Article Defamatory of the Plaintiff?

20. For ease of reference, the passages in the Article which were referred to (and particularized) in para. 3 to 6 of the Re-Re-Amended Statement of Claim are attached to this Judgment as "Schedule 1". Further, all the points made in the parties' respective closing submissions have been considered even though some of them have not been expressly set out herein.

(a) Relevant Legal Principles

21. Having heard the parties' submissions, I do not find that there is any substantial difference or dispute between them as to the applicable law regarding how this issue is to be determined. The relevant legal principles include the following:-

(a) the matter complained of was calculated to hold the Plaintiff up to "hatred, contempt or ridicule";

(b) whether the words would tend to lower the Plaintiff in the estimation of right-thinking members of society generally or would cause it to be shunned or avoided;

(c) the defamatory nature of the publication depends upon the probabilities of the case and the natural tendency of the publication having regard to the surrounding circumstances;

(d) if a publication is defamatory in its ordinary meaning, it is irrelevant whether it was (or was not) actually not believed by some readers to be defamatory;

(e) the mere intention to vex and annoy will not make the language defamatory if it is not so in its own nature;

(f) in construing the publication, the whole document is to be taken into account, provided it all relates to the same defamatory meaning;

(g) words are to be taken in the sense it is most natural and obvious. The Plaintiff is not permitted to select any isolated passage(s) in an article and complain of that alone if other part(s) of the article throw a different light on the passage(s) in question;

(h) the purpose of the exercise is to ascertain the "sting" (if any) of the defamation.

By reason of the principle set out in (g) above, I disagree with Mr Wong's contention that passages in the Article not pleaded by the Plaintiff should not be looked at. They ought to be so as to ascertain the true meaning of the words complained of in their proper context.

22. There is also no dispute that a charitable organization has a reputation which the law will protect. Such an organization needs a reputation to carry on its charitable objects and defamatory statements may impair its ability to do so: see for example, Derbyshire County Council v. Times Newspapers Ltd [1993] AC 525, 547D-E and Hong Kong Polytechnic University v. Next Magazine Publishing Ltd (1997) 7 HKPLR 286.

(b) The Plaintiff's Case

23. According to the Re-Re-Amended Statement of Claim, the Article was defamatory of the Plaintiff in the following manner:-

(a) the cover headline asserted that funds accumulated by Project Hope to the extent of $70 million had gone missing;

(b) the editor's introductory remarks alleged that the charitable donations made to Project Hope had in fact disappeared and the Plaintiff was the party responsible for safeguarding such donations;

(c) the contents page repeated the allegation set out in (b) above;

(d) the cover story alleged the following:-

(1) charitable donations had disappeared;

(2) RMB460,000 earmarked by the Plaintiff and RMB180,000 donated by a Madam Lam of the construction of a primary school in Xianghai Village (向海鄕) in Jilin Province (吉林省) had not been received by the intended beneficiary;

(3) money intended to subsidize children attending school in Yougi Village (友誼鄕) in Zhejiang Province (浙江省) had been misapplied by the school in question depriving the school children of the educational benefits intended to be conferred on them, thus implying or casting an innuendo that the Plaintiff was incompetent or negligent in administering the charitable scheme;

(4) money intended to subsidize children attending other schools in the mainland had been misappropriated by those schools depriving the school children of the educational benefits intended to be conferred on them, thus implying or casting an innuendo that the Plaintiff was incompetent or negligent in administering the charitable scheme;

(5) there appeared to be no record in the Plaintiff's computer system of certain donations which had been made by D3 and some of her colleagues who were employed by D1;

(6) the Plaintiff misused the donations for share speculations;

(7) the Plaintiff purported to supervise and monitor the distribution of funds but ended up with the aforesaid mess.

24. The Plaintiff contends that there was a theme in the Article that charitable donations of Project Hope (namely, $70 million) have disappeared: see para. 4 to 8 of the "Plaintiff's Opening". The Plaintiff argues that this theme was illustrated by the Defendants by way of the following examples:-

(a) the matters set out in para. (d)(2) above relating to the missing RMB460,000 and RMB180,000;

(b) the matters set out in para. (d)(5) above relating to missing records;

(c) the matters set out in para. (d)(6) above relating to share speculation.

(c) The Defendants' Case

25. The following arguments are advanced by Mr Wong in relation to this heading:-

(a) the Article read as a whole does not suggest that the whole of the $70 million donation has gone missing;

(b) the derogatory remarks were not directed against the Plaintiff;

(c) the references to the Plaintiff were not derogatory.

(d) Decision on this Issue

26. As stated above, the whole document should be taken into account regarding this issue. However, Mr Wong's skeleton submissions refer to specific parts of the Article. For this reason, I propose to deal with them before considering the Article as a whole.

Did the Article Say that $70 Million was Missing?

27. Mr Wong further elaborates the above arguments as follows. First, the cover headline only said that donations of Project Hope were found missing, it did not say that the entire $70 million was found missing.

28. Having looked at the headline in isolation, I agree that the headline can either mean what Mr Wong contends, or that the whole $70 million was found missing. I consider the headline is capable of having the latter meaning because the sum of $70 million was expressly referred to in the headline, it may therefore give a reasonable reader the impression that "the missing donations" refer to the "$70 million". However, since the Article should be read and considered as a whole, the true meaning of the headline ought to be dealt with together with the other parts of the Article. This will be dealt with further under the sub-heading "The True Meaning of the Article".

29. Secondly, Mr Wong contends that the contents page also did not say that the whole $70 million was found missing. He relies on the following passage:-

"... 卻發現大筆捐款不知所踪".

In an earlier paragraph of the same part of the Article, however, the following passage can be found:-

"... 希望工程 ... 在香港搞了兩年, ... 共捐了七千萬元 ... 但這七千萬元最後去了那裏,卻仍然不清不楚".

Again, the true meaning of this part of the Article should be considered with its other parts. However, taking into account the passage quoted above, I find the contents page on its own meant that the whole $70 million has gone missing.

30. Thirdly, Mr Wong relies on the following passage in the editor's introductory remarks:-

" ... 記者往東北採訪時 ... 摸上吉林省其中一所希望小學,卻發現捐款果然不知所終[踪]",

and submits that these funds were the ones said to have gone missing.

31. Even if one were to limit one's consideration to this part of the Article, I consider that it is capable of meaning that other funds might have gone missing as well. The "introductory remarks" start by saying that some reporters have donated to Project Hope before but none of them received any information about the students. After the passage relied upon by Mr Wong, the "introductory remarks" continued to say that after an on-and-off investigation by D3 for some 5 months, clues were discovered by the reporter. The investigation (and the report) was finally completed after D3 has located and confronted the Plaintiff which was responsible for the whole project. The tenor of the "introductory remarks" was that the story unearthed by D3 was wider than the incident found in Jilin Province. As stated earlier, this part of the Article should also be considered together with the other parts.

32. Fourthly, Mr Wong says that the same applies to the incident regarding the donation of Madam Lam (found at p. 54 of the Article). Since the passage in question was part of the "cover story" itself, I find that it must be read and considered together with the other parts of the Article.

Were the Derogatory Remarks made against the Plaintiff?

33. At para. 7 of Mr Wong's skeleton submissions, he made the point that whenever criticisms were made, they were not made against the Plaintiff, but either against village representatives, the individual schools or their individual staff, or were general criticisms directed against no particular individual. In this connection, he draws my attention to the following parts of the Article: references to "鄉長" (at pp. 50 and 52 of the Issue), "謝校長" (at p. 54 thereof) and "學校" and "老師" (at p. 56 thereof). Further, possible reason for the delay in remitting the money has been given (referring to p. 54 of the Issue). I conclude that these references ought to be considered together with the rest of the Article.

Were the References to the Plaintiff Derogatory?

34. At para. 8 of Mr Wong's skeleton submissions, he contends that references to the Plaintiff in the Article were not derogatory remarks. On the contrary, the Article reported the Plaintiff would investigate the problems and therefore showed the Plaintiff as being responsible.

35. Mr Wong finally submits at para. 9 of his skeleton submissions that although a heading in the cover story says "Using the donations for share speculation", the contents of that part of the Article under that heading did not actually say that the Plaintiff speculated in shares.

36. Similar to the conclusion made under the earlier sub-heading, these should be considered in the context of the Article.

The True Meaning of the Article

37. Mr Wong argues that the Article merely reported the following findings of D3:-

(a) donations had disappeared for more than a year;

(b) some schools abusively charged a variety of fees;

(c) children of senior cadres were hogging school places.

No doubt the Article expressly stated the above matters. But whether the Article also carries in addition the meaning contended for by the Plaintiff (see the earlier paragraphs under the sub-heading "The Plaintiff's Case") is the issue over which the parties are engaged in this action.

38. As stated above, in order to determine this issue, I will have to consider the Article in the context in which it appeared in the Issue. Before turning to that aspect, the relevant legal principles should be stated first.

39. The test to be adopted to determine whether words convey a defamatory meaning to those to whom they were published is set out in Gatley on Libel and Slander (1998) 9th Ed.:-

"The essence of libel is the publication of written words to a person or persons by whom they would be reasonably understood to be defamatory of the plaintiff ... In the case of words defamatory in their ordinary sense it is not permissible to call evidence to prove that anyone did understand the words in a defamatory sense, but the question is simply whether reasonable people would have so understood them" (para. 3.13).

40. The fictitious "reasonable person" is described as one with the following temperament:-

"He is a sort of half way house between the unusually suspicious and the unusually na?ve. He is essentially fair-minded and reasonable and does not jump to hostile conclusions on flimsy evidence; but he may be guilty of a certain amount of loose thinking and does not read a sensational article with cautious and critical care ... and his capacity for implication or drawing inferences is greater than the lawyer's ... The layman reads in an implication much more freely, and ... is especially prone to do so when it is derogatory" (para. 3.23 of Gatley).

41. I have borne in mind the above principles when considering the true meaning of the Article. Further, the reasons why I concluded that the Article read as a whole conveyed the meaning contended for by the Plaintiff include the following:-

(a) the layout on the cover of the Issue and the way in which the heading on the cover was worded regarding the loss of donations was intended to be sensational and strongly suggested the discovery of a scandalous incident;

(b) in relation to the contents page, the words "卻發現大筆捐款不知所踪" appeared after the reference to "但這七千萬元 ... 去了哪裏,卻仍然不知所踪". The reference to "大筆捐款" in this context means a sum in the region of $70 million;

(c) there were express references to the Plaintiff in the editor's introductory remarks and the cover story itself. The Plaintiff was described as follows: (1) in the editor's introductory remarks, the Plaintiff was described as "負責整項計劃的 ... "; (2) in the cover story, the Plaintiff was described as "統辦希望工程的 ... " (p. 49 of the Issue), "掌管二億捐款的基金會 ... " (p. 52 thereof), "總部" and "... 基金會北京總部 ... " (p. 54 thereof), "民辦的中國青少年發展基金會三年多前開始搞希望工程 ... " (p. 54 thereof), "希望工程的善款,是由 [the Plaintiff] 負責收集,分發 ... ,並監察善款的運用 ... " (p. 58 thereof),;

(d) in the cover story itself, the contents were punctuated by headings printed in red. By and large, all the headings were derogatory in nature (except those which say "Artistes denying pocketing the fees" and "Hong Kong donated $70 million").

42. In relation to Mr Wong's argument that the Article did not convey the meaning that $70 million has gone missing, this sum has repeatedly appeared on the cover, the contents page, the first page of the cover story (p. 48 of the Issue) and at pp. 50 ("several tens of million") and 54 ("out of which $70 million came from Hong Kong donations"). The other parts of the Article referred to large sums having gone missing or astray, or remittances taking exceedingly lengthy time to arrive, a widespread phenomenon of peasants or students being required to pay for all kinds of "expenses", corruption and the loss of record of donations. In these circumstances, I agree with the Plaintiff that the Article conveyed the message that $70 million had gone missing.

43. In relation to Mr Wong's argument that the derogatory remarks were made against other parties and not the Plaintiff, I consider that the repeated express reference to the Plaintiff as being "in charge" of (one passage, at p. 58 thereof, actually said that the Plaintiff was responsible for "monitoring") the "Project Hope" funds conveyed the message that the Plaintiff was responsible for the flaws alleged in the Article, in particular the allegedly missing $70 million.

44. Mr Wong's contention that the references to the Plaintiff were not derogatory again has to be considered in context. The passages in the cover story regarding the Plaintiff would investigate the problems were short paragraphs placed at or towards the end (last page) of the cover story. In effect, an explanation given by Mr Yang of the Plaintiff was set out (but there is no independent verification of this explanation). This is to be contrasted with the other parts of the cover story about the various incidents of inadequacies in the management of the funds (which took up some 4 pages in total) which were purportedly discovered by the reporter from "independent" sources. The message it conveyed was that there was a self-serving statement being made by the Plaintiff to explain the inadequacies.

45. Mr Wong's argument that the contents (as opposed to the relevant heading) of the cover story did not accuse share speculation also has to be considered in context. I consider it shows (at least as far as that part of the cover story is concerned) at best a reckless disregard of the true position (set out in the passages under that heading) or at worst a deliberate attempt to "sensationalize" the topic.

46. For the above reasons, I agree the Article conveyed the meaning contended for by the Plaintiff, in particular,

(a) $70 million of the donated funds had gone missing;

(b) there were many incidents of chaotic or mis-management of the donations;

(c) the Plaintiff was responsible for the above because it was the body responsible for collecting, distributing and monitoring the donations;

(d) the loss was caused by the Plaintiff's incompetence or negligence.

47. To avoid any doubt, I have already taken into consideration the alternative meanings Mr Wong put forward (see the sub-headings above under this heading) when coming to this conclusion.

Defence (1): Justification

48. At least from a practical point of view, the burden of proof is on the Defendants to show that the defamation is substantially true: Gatley, para. 11.3. If the Defendants prove that "the main chare, or gist, of the libel" is true, they need not justify statements or comments which do not add to the "sting" of the charge: Gatley, para. 11.7 and para. 10.1 of Mr Wong's skeleton submissions.

49. By reason of my earlier findings on the true meaning of the Article, I do not consider there is any evidence or material to support such a defence. Therefore, insofar as the Defendants have the burden of proving this defence, I conclude that they have failed to do so.

50. In the part of Mr Wong's skeleton submissions dealing with this defence, he argues that this defence has been established in relation to the individual aspects set out therein. These were different from the "sting" of the charge which I found earlier and therefore it is strictly unnecessary for me to deal with them. For the sake of completeness, however, I shall deal with them below.

(a) Missing Remittance to Xianghai Village

51. In relation to the missing remittance sent to Xianghai Village, Mr Wong contends that this episode has been established. He refers to the different accounts given at various times in difference articles as supporting his contention that the Plaintiff's version of this incident is not credible. Having considered his contention, I find that the Plaintiff's evidence, especially Xu's testimony, is truthful and reliable regarding this. Hence, I find that:-

(a) Xianghai Village never applied for and the Plaintiff never approved the donation of RMB460,000;

(b) RMB180,000 (which was not donated by the Madam Lam referred to in the Article) was received and handed over to Xianghai Village on 29 July, 1993;

(c) the alleged conversation between Yang and D3 concerning RMB460,000 did not take place.

(b) Charging Fees in Yougi Village

52. Mr Wong argues that it was the Plaintiff who promulgated this incident in an attempt to put pressure on the local governments. Having considered the materials referred to by the parties, in particular the way in which it was reported in the China Youth Daily (on 16 November, 1993) and Ming Pao (on 27 November, 1993), I find that the student in question (Shen Fei Fung) could well have missed school for a short period. However, this does not warrant the criticisms levied against the Plaintiff in the Article (as I found above).

(c) Missing Computer Records

53. While it may be true that the Plaintiff's computer records did not contain all the detailed information and breakdown which would enable all individual donors (and the amount they donated) to be identified, I do not find this justified the derogatory imputations made by the Defendants in the Article.

54. Further, I agree with the following criticisms made in the Plaintiff's "Closing Submissions" against D3 when she interviewed Yang:-

(a) she did not tell Yang she donated through an intermediary but misled him into thinking she donated through Ming Pao;

(b) she told Yang not to continue the search after the initial check did not reveal her donation;

(c) she did not produce any receipt to the Plaintiff despite being requested to;

(d) she did not tell Yang the way in which her colleague made the donation.

(d) Share Speculation

55. Despite a heading to such effect in the Article, the Article did not assert the Plaintiff speculated in shares, nor does Mr Wong seek to justify the said heading in the Article. In the context of the Article, I do not find that this assists the Defence case. Quite on the contrary, I consider it shows a complete lack of proper basis for publishing such a sensational heading in the Article.

(e) Other Matters

56. In Mr Wong's skeleton submissions, he referred to matters like "The structure of the Plaintiff" and "The empty promises by the Hong Kong artistes". I do not regard that complaints have been made by the Plaintiff over these and therefore do not propose to deal with them.

57. However, at para. 10.7 of Mr Wong's skeleton submissions, he argues that (presumably when taken together with the other matters set out above) these 2 matters support the defence of justification. I will simply say that I disagree with this argument.

58. Other matters are referred to in the Plaintiff's "Closing Submissions" such as:-

(a) whether contributions from the local peasants can properly be regarded as "hacking the poor peasants";

(b) whether any funds have disappeared or been misapplied;

(c) whether the children of senior cadres have been given preferential treatment.

Incidents such as those set out in (a) to (c) above could well have occurred but there is insufficient evidence that they were widespread or common. Moreover, there is certainly no evidential or other legal basis for saying that the Plaintiff was (or should be) in any way responsible for any such instances. Further, I do not find that they should be taken into account in assessing damages in view of my findings on the imputations made in the Article, as well as the reasons given below.

(d) Partial Justification

59. Mr Wong submits that evidence adduced in a partial and unsuccessful defence of justification may go to reduce damage: relying on Gatley, para. 11.11.

60. As stated above, I am far from being satisfied that the incidents referred to in (a) to (c) above were common or widespread, or that the Plaintiff was (or should be) responsible for any such incidents. There is hence no evidence which tends to damage the Plaintiff's character such as would entitle me to reduce the quantum of damages: Gatley, para. 11.13 and 11.14.

Defence (2): Fair Comments

61. This part of Mr Wong's skeleton submissions is premised on the basis that I had found for the Defendants regarding the "sting" of the libel: see, for example, para. 12.5 and 12.6(b) and (c) of Mr Wong's skeleton submissions. As indicated earlier, I have found in the Plaintiff's favour over this point. This part of Mr Wong's skeleton submissions is therefore irrelevant.

62. Mr Wong also argues that the Defendants were entitled to make fair comments in their report. While this is in principle correct, the Article was not such a publication.

63. The findings made earlier regarding the individual matters set out in sub-headings (a) ("missing Remittance to Xianghai Village") to (e) ("Other Matters") under the heading "Defence (1): Justification" are relevant to this point. In view of the said findings, I do not consider there is sufficient factual basis for the Defendants to make any fair comment regarding the incidents in Xianghai Village. Similarly, in relation to the Yougi Village incident, by reason of the imputations which I found were made against the Plaintiff, I do not agree with Mr Wong that fair comments were made by the Defendants.

64. By reason of the above findings, it is unnecessary to consider the question of "malice" in relation to this line of defence.

65. Mr Wong argues that the Plaintiff's own conduct in using the media to publicize the incident in Yougi Village in order to exert pressure on the local governments should be taken into account (as regards quantum). However, it must be noted, first, the emphasis of the Plaintiff was on the impropriety of the local governments and not "Project Hope" or the Plaintiff, and secondly, this does not justify the way in which the Article imputes on the Plaintiff's reputation.

Defence (3): Qualified Privilege

66. The Defendants also rely on the defence of "qualified privilege": see para. 14.1 to 14.6 of Mr Wong's skeleton submissions.

67. I agree with the Plaintiff's submissions that the law does not recognize the press has a duty (in relation to this line of defence) to inform the public about public matters: Gatley, para. 14.27, text to n. 63 and 14.81, or that the public has a corresponding interest to receive such matters: Gatley, para. 9.13 and 9.14. The Article therefore does not fall within a "privileged" occasion.

68. In any event, even if the Article fell within an occasion of "qualified privilege", by reason of the earlier findings, it was not a fair and accurate report of the matters stated therein.

69. For these reasons, I do not consider this line of defence avails the Defendants.

Malice

70. The lines of defence "Fair Comment" and "Qualified Privilege" can be defeated by malice on the part of a defendant. I have already rejected both lines of defence in this action for the other reasons stated earlier. For the sake of completeness, I shall also deal with the question of whether there is evidence of malice on the part of the Defendants.

71. Mr Wong argues that there was a proper motive for D3 to commence her investigation into funds donated to "Project Hope". Further, the fact that D3 actually made trips to various places and interviewed Yang before compiling the report published in the Article indicates that there was no malice.

72. On the other hand, the Plaintiff contends that there was evidence showing that there was malice. One, the report made in the Article was inaccurate; in this connection, the Plaintiff refers to the discrepancies between the tape transcript and the purported record of the interview in the Article. Further, excessive language was used in the Article: see Gatley, para. 32.26.

73. The Court of Appeal decided in Tse Wai Chun Paul v. Cheng Gilbert and Anor., Civ. App. No. 170 of 1998, the test for "malice" should be the same whether the defence is "fair comment" or "qualified privilege". "Malice" is a fact to be decided in the circumstances of the case but "malice" can usually be proved by the following matters:-

(a) it is proved if the defendant knew or believed what was published was untrue;

(b) "malice" can also be inferred if the defendant did not care whether what was published was true or not but carelessness, impulsiveness or irrationality is insufficient;

(c) the defendant's knowledge or honest belief of truthfulness is insufficient if it can be proved that the words were published for some improper motive which was the dominant motive behind the publication;

(d) personal spite, ill will or a desire to injure the plaintiff is unnecessary.

74. Taking all circumstances into account, I agree with the Plaintiff's contention and if it had been necessary to determine the issue of malice (in relation to liability), I would have found that there is evidence to show that the Defendants published the Article with malice. In coming to such conclusion, I have taken into account (together with the matters relied on by the Plaintiff set out earlier under this heading) the lack of evidence from defence witness(es) to refute the Plaintiff's case, or to confirm that there was proper reason for making the libelous statements.

The Respective Liability of D1, D2 and D3

75. The Defendants did not testify and there is no evidence as to whether different Defendant was responsible for a particular part of the Article (and if so, which part(s)). Because of this, I raised the question of whether there is a need to differentiate between the liability of the 3 Defendants in the course of Mr Fung's final submissions. He pointed out that all the Defendants should be jointly liable and the Amended Defence does not seek to differentiate their respective liability: see para. 3 of the Amended Defence which admits para. 3 of the Re-Re-Amended Statement of Claim. That part of the Plaintiff's pleading avers in essence that the Article was published (or caused to be published) by the 3 Defendants.

76. Mr Wong does not raise any issue over this point either. In these circumstances, I only mention it here for the sake of completeness.

Damages (1): "General" Damages

77. Having decided in the Plaintiff's favour on liability and having concluded that none of the matters referred to above can reduce the quantum of damages, I now turn to consider the first limb of damages sought by the Plaintiff. I have already considered all the points made by the parties in their respective closing submissions although not all of them have been set out herein.

78. Before actually doing so, I should clarify the matter of terminology. Para. 26.27 of Gatley described "general damages" as:-

"'The law will presume some damage will flow in the ordinary course of things from the mere invasion of [the plaintiff's] absolute right to reputation', and he is entitled to such general damages as the court may properly award, although he neither pleads nor proves any actual damage".

This is in contrast to para. 26.28 and 26.29 of Gatley which described "special damage" as:-

"However, where the plaintiff claims to have suffered any injury going beyond the normal damages which is presumed to follow ... he must give particulars ... " and

"Where the plaintiff claims to have suffered financial loss, he must allege such damage, including a general falling-off of business, with reasonable particularity ... ".

The parties, however, have chosen to call the latter "general damages" or "compensatory damages" as well: see para. 15 of Mr Wong's skeleton submissions and para. 51 to 52 of the Plaintiff's "Closing Submissions". This is the reason why I decided to include it under this heading.

79. 2 types of loss are claimed under this heading:-

(a) "compensatory damages", that is, damages to "restore the plaintiff, as far as money can do so, to the position he would have been in if the tort had not been committed": see Hung Yuen Chan Robert v. Hong Kong Standard [1996] 4 H.K.C. 519, 533 and they "must be sufficient to publicly and demonstratively and absolutely vindicate the plaintiff and to compensate for seriously injured feelings": see Cheung Ng Sheong Steven v. Eastweek Publisher Ltd [1995] 3 H.K.C. 601, 613 citing Yu Kwong Chu v. Consolidated Newspapers Ltd, A258/86, unreported;

(b) damages by way of a loss of donations from Hong Kong.

These 2 types of loss will be dealt with separately below.

(a) General or Compensatory Damages

80. In relation to this type of damages, Mr Wong refers to about 10 cases in para. 15.2 of his skeleton submissions. The awards made in these cases range from $25,000 in 1987 to $2,500,000 in 1992. On the other hand, Mr Fung relies on the said award of $2,500,000 made in 1992 and submits that the present case is in a "class by itself". In assessing the award in this action, I have borne in mind the relevant principles set out above, and the circumstances of this case, in particular:-

(a) the Article was published in a magazine which has a circulation of about 150,000 copies at the time;

(b) the imputations made against the Plaintiff in the Article;

(c) the Article appeared therein as one of the cover stories and was given prominence therein as shown by the headline on the cover, the editor's introductory remarks and the contents page;

(d) my finding that the Defendants published the Article with "malice";

(e) the Plaintiff was a charitable organization which needs, among other things, a reputation and good public image in order to attract charitable donations.

I conclude that an award of $3,500,000 should be awarded under this heading.

(b) Damages for Loss of Donations

81. The evidence adduced and the arguments advanced regarding this issue makes it a difficult point to decide. The way in which the Plaintiff invites me to approach this issue is as follows.

82. The Plaintiff submits that a comparison should be made between the amounts donated in Hong Kong for the pre-publication period and the post-publication period, namely:-

(a) the 11-month period leading up to January, 1994;

(b) the 11-month period following January, 1994.

The total amount of donations for period (a) was RMB28 million whereas that for period (b) was RMB7 million. The loss was therefore the difference between the 2 figures, that is, RMB21 million.

83. The Defendant disputes the validity of this approach, pointing out:-

(a) there were other competing organizations or campaigns in Hong Kong during the post-publication period;

(b) a sponsored campaign could "run out of steam";

(c) in 1993, reports were published about abusive incidents in China, such as students' parents being asked to advance loans;

(d) there were indications that Ming Pao and Commercial Radio have decided to stop (or suspend) their promotional programme in July, 1993;

(e) similar charitable programmes have been set up by others in the mainland;

(f) there were minimal promotional activities in Hong Kong after the publication of the Article from about 1995 to 1997.

84. The Defence further argues that according to the Plaintiff's case, there were 2 main sources of donation in Hong Kong, namely, (1) donations from the Hong Kong Federation of Trade Unions and the Hong Kong Federation of Education Workers, and (2) those from Ming Pao. In relation to the 2 Federations, Mr Wong refers to the figures set out in exhibits "D1" and "D2" and points out the total amount donated in 1994 was in fact more than that for 1993. As regards the total amounts of donations for 1993 and 1994 from Ming Pao, Mr Wong submits that the decrease was probably caused by Ming Pao "suspending" its promotional support of "Project Hope" as from 19 July, 1993.

85. Apart from the said 2 main sources, there were also donations made by individuals from Hong Kong when they were in the mainland. There was a drop of this from RMB4,413,318 in 1993 to RMB992,385 in 1994.

86. Having considered the parties' submissions and the materials adduced in the trial, I consider the approach advocated by the Plaintiff to be overly simplistic. I agree with Mr Wong that there were numerous factors which may affect the amount of donations made to a certain charity. Having said so, however, I consider that the publication of the Article must have caused some damage to the Plaintiff.

87. Merely because an assessment is difficult by reason of the nature of the damage is no reason for awarding no damage or only nominal damages provided it is clear that some substantial loss has been incurred: see McGregor on Damages (1980) 14th Ed., para. 261 and 272. In the present case, although I consider it impossible to adopt an arithmetical approach to this type of loss, I am satisfied that the loss must have been substantial enough for an award to be made. Taking all things into account, I consider that a sum of $1,350,000 is appropriate. According to the table headed "Drop in Donation between Position Pre-January 1994 and Post-January 1994", the total amount of donations in Hong Kong in 1993 was about RMB26.98 million. The above award is about 5% of that total which I consider represents the approximate amount of reduction in donations caused by the publication of the Article.

88. Mr Fung accepts in his oral submissions that if any award for the loss of donations is made (assuming that the amount of the award is greater than that for the loss of reputation and injured feeling), the award for the loss of reputation and injured feeling is subsumed in the earlier award. Since I concluded that the award for the loss of donations is less than that for the loss of reputation and injured feeling, it appears to follow from Mr Fung's concession that no separate award ought to be made for the loss of donations. I will thus not do so unless there is indication to the contrary.

Damages (2): Exemplary Damages

89. In the Plaintiff's written "Opening", the Plaintiff relies on Cassell & Co. v. Broome [1972] AC 1027, 1079 in support of its claim under this heading.

90. Para. 9.15 of Gatley said: "Exemplary damages are intended to punish the defendant for the wilful commission of a tort or to teach him that tort does not pay. They are not, even in an attenuated sense, concerned with the compensation of the plaintiff". In the context of defamation, 2 conditions must be satisfied before such damages can be considered:-

(a) the defendant either knew the defamatory statements were untrue or was reckless as to whether they were true: Gatley, para. 9.16;

(b) the defendant must have acted in the hope or expectation of material gain. The mere fact that the defendant is engaged in a profit-making activity, such as publication of a newspaper or a television show, is not of itself sufficient: Gatley, para. 9.17.

91. Having considered the materials before me, I am not satisfied that the Plaintiff has been able to prove point (b) above. Thus, no award for exemplary damages will be made.

92. If it had been necessary to consider the quantum of exemplary damages, I would have awarded $1,000,000. In making this award, I have taken into account, among other things, the total amount of sale proceeds for the sale of the Issue ($18 x 152,000 copies = $2,736,000).

Costs Order Nisi

93. The parties agree that a costs order nisi can be made herein pursuant to RHC Ord. 42 r. B(6). There is no apparent reason not to follow the usual rule that costs should follow the event. Costs of this action are to be paid by the Defendants to the Plaintiff to be taxed if not agreed.

Other Matters

94. I shall hear the parties on the question of interest if this cannot be agreed between the parties.

SCHEDULE