Getinge Hong Kong Co Ltd v. Honeyclave Medical Ltd and Others
Read the full judgment text of DCCJ 3967/2012 on BabelCite. This District Court judgment was delivered on 14 October 2016.
1. Both the Plaintiff and the 1 st Defendant are companies selling (and providing related services for) medical equipments for cleaning, disinfection and sterilization for health care institutions, such as hospitals, in ong KongHong Kong. They have, in the present action, made cross claims against each other for certain alleged defamatory statements published in different letters sent to a number of different health care institutions. The 2 nd Defendant is a shareholder and director of the 1 st
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DCCJ3967/2012 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 3967 OF 2012 --------------------
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-------------------- JUDGMENT -------------------- The Parties and the Alleged Defamation 1.Both the Plaintiff and the 1st Defendant are companies selling (and providing related services for) medical equipments for cleaning, disinfection and sterilization for health care institutions, such as hospitals, in ong KongHong Kong. They have, in the present action, made cross claims against each other for certain alleged defamatory statements published in different letters sent to a number of different health care institutions. The 2nd Defendant is a shareholder and director of the 1st Defendant and the 3rd and 4th Defendants are employees of the same. The Plaintiff alleges that the 2nd, 3rd and 4th Defendants are also responsible for the libel as they have personally approved them. 2.The alleged defamatory statement made by the Plaintiff was contained in a letter dated 7 June 2010 sent by the Plaintiff to the Hong Kong Baptist Hospital, namely
3.The 1st Defendant argues that the natural and ordinary meaning, or alternatively, the inferential meaning of the statement is defamatory and this is, in fact, the subject matter of the 1st Defendant’s counterclaim. It is not in dispute that, apart from the Hong Kong Baptist Hospital, the Plaintiff sent the same letter to many other hospitals and health care institutions in Hong Kong. 4.Later, on the other hand, the Plaintiff discovered that there were at least two letters (in Chinese) dated 29 June 2012 and 3 July 2012 respectively sent by the Defendants to a number of different hospitals, including the Hong Kong Baptist Hospital, containing the following statements:-
5.According to the Statement of Claim, this is the English translation of the Defendants’ Statements:-
6.The Plaintiff, similarly, argues that the natural and ordinary meanings, or alternatively, the inferential meanings of these statements made by the Defendants are defamatory and this is the subject matter the Plaintiff’s claim. 7.Both the Plaintiff and the 1st Defendant ask for injunctive reliefs, prohibiting the other side to further publish the statements or some similar libelous remarks, and damages as compensation. There is no dispute that these statements from both sides were widely published to the health care institutions in Hong Kong but both sides deny each other’s allegations that they are defamatory. Apart from denying they are defamatory, both parties also raise the defence of justification. For the Plaintiff’s defence against the counterclaim, it is further argued that if this Court finds that the Plaintiff’s Statement is defamatory, the Plaintiff is entitled to the defence of qualified privilege. Background 8.There is no dispute that the Plaintiff is a member of a global medical technology company with its headquarters in Sweden called “Getinge” who has a Far East Regional Office in Singapore. Getinge specializes in supplying medical equipments and providing solutions for cleaning, disinfection and sterilization of medical instruments for health care institutions, such as hospitals and other related bodies, such as universities for heath care education. 9.In 1997, Getinge acquired a company in New York, USA, known as “Castle Rochester USA Inc” (“Castle”) who was also in the business of supplying medical equipments, including sterilizers. The 1st Defendant in fact had a long history of business relationship between Castle (and later, Getinge, after the acquisition took place in 1997) for selling Castle’s / Getinge’s products in Hong Kong. The 1st Defendant has all along been the exclusive distributor and sales agent for Getinge. During that time, since Getinge had no office in Hong Kong, the exclusive distributor appointment was made by the Far East Regional Office of Getinge in Singapore. However, in about mid-2009, Getinge intended to establish its own sales office in Hong Kong and decided not to renew the exclusive distribution arrangement with the 1st Defendant. Getinge therefore set up the Plaintiff, which was originally known as “Getinge Castle Asia Limited”, later changed its name to “Getinge International (Asia) Limited”, and further changed its name to the present one in 2012. The exclusive distribution agreement between Getinge and the 1st Defendant eventually expired on 31 December 2010. 10.The Plaintiff only started to take part in the sales and marketing of the Getinge’s products in Hong Kong after the expiry of the exclusive distribution agreement between Getinge and the 1st Defendant in the beginning of 2010. 11.The Plaintiff, in the course of discussion with the 1st Defendant about the transitional arrangement for dealing with the end-users and customers of Getinge’s products, the Plaintiff issued many letters to them, including the Hong Kong Baptist Hospital, containing the Plaintiff’s Statement clarifying the future arrangements in relation to the after sales services of the products. With such background, it was stated in those letters that the Plaintiff would not provide either spare parts or technical support to the 1st Defendant from 1st January 2011 onwards. The 1st Defendant was unhappy about the publication of the Plaintiff’s Statement and alleges that it is defamatory. 12.There is no dispute that, since the expiry of the exclusive distribution agreement, the 1st Defendant continued to purchase Getinge’s products, including sterilisers, from the Plaintiff just as any other ordinary customers for re-selling purposes in Hong Kong but, of course, no longer as an exclusive distributor. To certain extent, the Plaintiff and the 1st Defendant are therefore business partners, but on the other hand, since the 1st Defendant is also entitled to sell other products from other companies, the Plaintiff and the 1st Defendant are also competitors too. Later in 2012, the Defendants issued the letters containing the Defendants’ Statements to various health care institutions, hospitals and universities, including the Hong Kong Baptist Hospital expressing their discontent with the conduct of the Plaintiff in conducting its affairs. On this occasion, the Plaintiff complained that the Defendants’ Statements are defamatory and it therefore brings the present action against the Defendants asking for redress. 13.The above gives a brief account of the events leading up to the making of the respective alleged defamatory statements. The Law on Defamation 14.The law on defamation is not in dispute. Both Counsel agree that this Court must, first of all, look at the natural and ordinary meaning of the passages or words used in the alleged defamatory statements. I am referred to Gatley on Libel and Slander, 12th Edition, Sweet & Maxwell at para. 3.17, namely :-
15.Secondly, the natural and ordinary meaning are not to be explained by witness as explained at para. 32.26 in Gatley on Libel and Slander, 12th Edition, Sweet & Maxwell that:-
15. The test of defamation is helpfully summarized at para. 1.7 in Gatley on Libel and Slander, 12th Edition, Sweet & Maxwell that :-
16.Thirdly, in light of the natural and ordinary meaning of those passages or words used in the alleged defamatory statements, this Court has to determine, applying the above test, whether or not they are defamatory. This is an objective test and the intention and knowledge of the makers are irrelevant. (Gatley on Libel and Slander, 12th Edition, Sweet & Maxwell, para. 3.15) 17.Fourthly, if this Court finds any of the statement(s) is (are) defamatory, the defending parties may rely on the defence of justification. “It is a defence for a defendant to establish that the imputation in respect of which he or she is sued is substantially true.” (Gatley on Libel and Slander, 12th Edition, Sweet & Maxwell, para. 11.1). This is a question of fact. 18.For reasons which I am about to give in this judgment, it may not be necessary for me to deal with the law on the defence of qualified privilege. I therefore do not intend to go into it. The 1st Defendant’s Counterclaim 19.Chronologically speaking, the Plaintiff’s Statement was published before the Defendants’ Statements. I will therefore deal with the 1st Defendant’s counterclaim first. 20.Mr Law, Counsel for the 1st Defendant, put forward several arguments which I shall deal with them one by one. 21.The 1st Defendant argues that the Plaintiff’s Statement means that the services offered by the 1st Defendant were substandard or in bad quality. 22.In my judgment, I fail to see the logic behind the 1st Defendant’s submissions. According to its argument, if Getinge Group or the Plaintiff ceases to supply spare parts and technical support to the 1st Defendant, the Getinge “sterilizers could not function” when they “need to be repaired”. This argument is simply illogical. Even if this statement were to make any sense (which I fail to see it does), I fail to see how it would be defamatory. On the contrary, the Plaintiff’s Statement, if one takes the meaning of which the 1st Defendant submits above, it would in fact damage the future reputation of the Getinge products and could lead to an adverse impact of Plaintiff’s own business prospects. This is against common sense at all. I do not accept the submissions that the Plaintiff’s Statement means deterioration of quality of the products, particular the Getinge products, sold by the 1st Defendant. 23.Mr Law further argues that firstly, there is a continuation of contractual obligations for the Plaintiff to provide spare parts and technical support to the 1st Defendant after January 2010 because of the usual 10-year warranty for the chambers of the sterilizers and 12-month warranty for the accessories. And secondly, the 1st Defendant has purchased products directly from the Plaintiff after January 2010 as one of the Plaintiff’s customers. And according to his submissions, the Plaintiff must therefore have given the 1st Defendant the usual warranties. In doing so, the Plaintiff must have provided spare parts and technical support to the 1st Defendant for the sterilizers. Mr Law therefore submits that the Plaintiff’s Statement is misleading, incorrect and untrue. 24.Mr Law also criticizes the Plaintiff’s witness, Mr Alex Wong, in giving evidence, has denied the fact that after January 2010, Getinge actually continued to offer or make available the supply of spare parts and technical support of its products to the 1st Defendant through the Plaintiff. The 1st Defendant therefore argues that the Plaintiff’s Statement was so inaccurate and untrue that it causes harm to its reputation. 25.The 1st Defendant argues that the Plaintiff’s Statement means that the 1st Defendant has adopted unscrupulous practices and dishonest approaches in obtaining contracts and orders from customers despite its inability to provide spare parts or technical support to the hospitals. 26.There is no dispute that since the beginning of the 2010, the 1st Defendant was no longer the exclusive distributor for Getinge’s products. It is natural for the Plaintiff to clarify the matter with the customers and potential customers, namely the hospitals and other health care and related institutions for the new arrangement by writing the letter dated 7 June 2010, of which I now recite the whole contents as follows:-
27.The Plaintiff’s Statement never suggests that the 1st Defendant could not become a customer of the Plaintiff for reselling the products to the end-users and the Plaintiff would not provide the usual warranties of the Getinge’s products. On the contrary, the Plaintiff actually promised to fulfil its contractual requirements in providing warranties and other after sales services to the end-users directly. I am unable to see how this would lower the 1st Defendant in the estimation of right-thinking “customers of the 1st Defendant” generally. The letter dated 7 June 2010 is obviously about the new arrangement after expiry of the exclusive distributorship of the 1st Defendant and not about the quality of products and services provided by the 1st Defendant. In my judgment, the Plaintiff’s Statement is definitely not defamatory against the 1st Defendant at all. 28.I also fail to see why the Plaintiff’s Statement suggests that the 1st Defendant has adopted a dishonest approach and has made use of unscrupulous practice to mislead the customers. The Plaintiff’s Statement in fact gives an impression to the recipients that the Plaintiff would take over the services and maintenance responsibilities from 1st Defendant. This may, of course, reduce some future business opportunities of the 1st Defendant as the Plaintiff would offer maintenance services directly to the end-users of the Getinge’s products. But I am unable to see how the statement is defamatory at all for this reason. 29.On the natural and ordinary, or alternatively the inferential, meaning of the Plaintiff’s Statement, I am unable to see the statement is defamatory as is understood by the recipients. The meaning of the words is plain and clear. Any right-thinking person would understand, with no doubt, that the purpose of the statement is to inform the recipients a new arrangement, and in the present case, they are the customers or potential customers of both the Plaintiff and the 1st Defendant. 30.In my judgment, when Mr Law fails to convince this Court that the Plaintiff’s Statement is defamatory, accuracy or truth of the statement will not become relevant at all. The test on whether a statement is defamatory or not was not about how accurate or true it is. It is all about whether or not the statement causes harm to the reputation of another person or company. A statement could be so inaccurate and untrue but still not defamatory at all. 31.The above is more than sufficient for me to dispose of the counterclaim and I hereby dismiss it. 32.The 1st Defendant, in fact, put forward some other arguments on the accuracy and truthfulness of the Plaintiff’s Statement, but given my findings above, I do not intend to deal with them one by one. Further it is not necessary for me to deal with other defences raised by the Plaintiff as the 1st Defendant fails to show that the Plaintiff’s Statement is defamatory at all. The Plaintiff’s Claim 33.I now move on to the Plaintiff’s claim against the Defendants. 34.The Defendants’ Statements include 3 separate statements contained in the same letter. I agree with Mr Lo, Counsel for the Plaintiff, that they should be looked at and understood together. 35.In the Re-amended Defence and Counterclaim, the Defendants deny that the Defendants’ Statements are meant to refer to the Plaintiff. I find this argument difficult to accept as the background of this case has revealed that since the expiry of the exclusive distribution agreement, the Plaintiff and the 1st Defendant have been in direct competition in the market of Hong Kong. In my judgment, the word “Getinge” in the Defendants’ Statements must therefore mean the Plaintiff and nobody else. 36.Mr Lo submits that the plain reading of the Defendants’ Statements must give a reasonable reader an impression that the Plaintiff has been conducting its business improperly and dishonestly. 37.I agree with Mr Lo. The words, “以威逼利誘的手段” (“uses threaten[ing] measure”) (translation), “以恫嚇式的信件” “by issuing intimidating letter”) (translation) and “誤導客戶” “to mislead the customers” (translation) in Defendants’ Statements are strong and derogatory comments suggesting the Plaintiff that it had used unscrupulous measures in conducting its business. They are obviously defamatory. 38.After those defamatory remarks, the Defendants continue to criticize the Plaintiff with the following words:- “滅菌設備因遲遲未能維修好，引致醫院部門運作大受影響”(“the disinfection equipment could not be repaired in time and the operation of the hospital was seriously affected.”) (translation) and “醫院管理局的內聯網客戶間投訴及責罵GETINGE聲音不絕，多間醫院及大學客戶被GETINGE維修後，都引致部門運作大受影響，客戶最後均以他們不能達到最低要求及服務態度差劣而拒絕續約” (“non-stop complaints and grumbles about GETINGE were found in the customer’s intranet of the Hospital Authority. After the maintenance services rendered to its customers including hospitals and universities by GETINGE, the operations of their departments were seriously affected, all the customers eventually refused to renew the maintenance contract for the reason they could not reach minimum requirement and their poor quality of services”) (translation). 39.I agree with the Plaintiff’s submissions that the words give a reasonable person a strong impression that the Plaintiffwas totally incompetent in providing the maintenance service to its customers and the standardof the maintenance service was poor. The statements also carry a meaning thatthe Plaintiff was using threatening and intimidating measures, including sending letters with misleading information to its customers, to secure business opportunities. In my judgment, the Defendants’ Statements cause harm to the Plaintiff’s reputation within the trade and business of supplying medical equipmentsand other related services. I agree that any reasonable reader, upon reading the Defendants’ Statements, will come to a conclusion that the words would tend to lower the Plaintiff in the estimation of right-thinking members of society generally. The Defendants’ Statements particularly affect those who have interest or are interested in the Getinge’s products. I therefore find that the natural and ordinary, or alternatively the inferential, meaning of the Defendants’ Statements is defamatory. 40.The Defendants raise the defence of justification, namely the Defendants argue that, despite the Defendants’ Statements are defamatory, they are true or substantially true. 41.In support of the argument on justification in making the comments of using threatening measures by issuing “intimidating letters’ to mislead the customers of the 1st Defendant, Mr Law, for the Defendants submits that the Plaintiff’s Statement contained in the letter dated 7 June 2010 sent to many of the 1st Defendant’s customers was misleading and not entirely true. But given my findings above, I do not see any merits of this argument at all. As I have already found in my judgment above that sending the letters was a reasonable move to inform the customers of the 1st Defendant that after the expiry of the exclusive distribution agreement, the Plaintiff, as a member of the Getinge group globally, would take over the maintenance responsibilities of the Getinge’s products from the 1st Defendant in Hong Kong, I cannot see how the Plaintiff’s letter dated 7 June 2010 was misleading at all. Further, although one might suggest that the Plaintiff’s letter dated 7 June 2010 did not contain all the necessary information that the Plaintiff ought to have provided, it was, by no means, intimidating. I therefore reject the Defendants’ argument on this point. The Defendants fail to justify in making the relevant comments and remarks in the Defendants’ Statements. 42.As to the Defendants’ remarks that the Plaintiff’s failure to repair the medical equipments in time causing serious disruption to the operation of many hospitals, Mr Lo, for the Plaintiff, submits that except the 2nd Defendant’s depositions contained in his witness statement and the admission by the Plaintiff that a Ms Cindy Lee from The University of Hong Kong making a complaint about delay in repair of a Getinge’s equipment, the Defendants fail to adduce any documentary evidence, such as complaint letters from other hospitals or health care institutions, to corroborate the assertions of the 2nd Defendant. 43.To further its argument, the Plaintiff submits that the contents of the Defendants’ Statements are in contradiction with the contemporaneous documents adduced by the Plaintiff. For example, the contracts for supplying sterilizers to the Chinese University of Hong Kong as evidenced by the Purchase Orders dated 23 May 2011, 4 August 2011, 22 August 2011 respectively clearly show that the confidence of a Plaintiff’s customer placing orders with the Plaintiff with no complaint. 44.All in all, the Plaintiff argues that its evidence, on balance of probabilities, is more reliable on this issue and should be preferred. 45.Mr. Law, for the Defendants, however argues that as the 2nd Defendant’s oral testimony (including the adopted witness statements) is not specifically challenged on this aspect, his evidence should be believed instead, although there is no documentary evidence in support. 46.I tend to think Mr Lo’s submissions are more persuasive. 47.First of all, I disagree that the 2nd Defendant’s evidence is unchallenged. In civil trial, it would be sufficient to challenge the evidence of other side by exchange of the witness statements and documentary evidence. In doing so, it gives sufficient opportunity to the other side to deal with the differences in the evidence. In the present case, the Plaintiff’s witness, Mr. Alex Wong, has expressly in his testimony challenged the Defendants’ stance that their remarks are true. 48.Secondly, on balance of probabilities, it seems that the Plaintiff’s oral evidence is more consistent with the documentary evidence shown at the trial than the oral evidence of the Defendants. But, on the other hand, there is not a single piece of documentary evidence in support of the Defendants’ version. According to the Defendants Statements, they said that these unhappy customers, because of the poor service quality of the Plaintiff, have switched the maintenance service contracts from the Plaintiff to the 1st Defendant. If this is true, it should not be difficult for the 1st Defendant to produce a few of these “switched” contracts to prove that the statements are true. I find that, it is more like than not that, except the University of Hong Kong, no other hospitals or institutions have made any complaint regarding the delay in repair of the Getinge’s equipments. And there is no documentary evidence to show that the operation of any hospitals was seriously disturbed by the fault of the Plaintiff. The assertions in the Defendants’ Statements are simply not true. The customers of the Plaintiff were generally happy with the products and services provided. 49.By reasons of the above, I find that the Defendants fail to provide any basis or give any satisfactory explanation for justifying them to make such serious accusations in the Defendant’s Statements against the Plaintiff. The Defendant’s Statements are defamatory and, on balance of probabilities, there is no sufficient evidence to show that they are true or even substantially true. I find that the Defendant’s Statements are libelous and the Plaintiff has succeeded in its defamation claim against the Defendants. Injunction 50.It is not in dispute that if I find for any party for the libel, the said party should be entitled to the injective relief sought in the pleadings. I hereby grant the injunction in favour of the Plaintiff against all the Defendants as pleaded in the Statement of Claim. Damages 51.Besides injunctive relief, there is no dispute that the Plaintiff is also entitled to general and special damages. 52.As to quantum of general damages, I have been shown several authorities, including:-
53.It was held that an award of general damages in libel is compensatory in nature. It is also expounded therein that the sum of the award must compensate the Plaintiff for the damage to its reputation, vindicate its good name and take account of the distress, hurt and humiliation. The damages awarded under this head are said to be at “at large” as the exercise of assessment necessarily involves a substantial degree of subjectivity. In carrying out the assessment exercise, the Court has to take into account of all the circumstances. 54.According to the above authorities, the following factors were generally considered to have bearing on the assessment of damages, namely :-
55.Mr Lo submits and I agree that the determining circumstances of each and every case could be very different, previous court’s decisions might not provide useful points of reference for deciding the quantum of general damage, the Court of Appeal in Blakeney-Williams v Cathy Pacific Airways Ltd. [2011] 1 HKLRD 901 (CA) nonetheless held that referring to the foregoing awards allowed by the courts was permissible so long the trial judge recognized the variety of circumstances and facts attaching to such cases are relied upon. 56.First of all, I agree that the gravity of the libel in the Defendants Statements is very serious and they were aimed at the business ethics of the Plaintiff. In my judgment, it would definitely cause serious adverse impact on the reputation of the Plaintiff. 57.Secondly, I also agree that the publication was quite extensive. More than 30 letters containing the libel were sent out to the 1st Defendant’s customers using Getinge’s products. Although the libel was not published to the public at large but a reasonable person could have anticipated that the customers’ impression must have been adversely affected and this would have a negative impact on the business prospects of the Plaintiff. 58.Thirdly, the Defendants have all long insisted, up to the conclusion of the trial, that the libel published by them is true and never offered any retraction or apology. On the contrary, the only reaction of the Defendants to the Plaintiff’s compliant was to file a counterclaim to pressurize the Plaintiff in settling the action, according to the 2nd Defendant’s testimony. 59.Fourthly, I accept the Plaintiff’s submissions that Ming Keen Manufactory Ltd. v Man Shing Electrical Manufactory Ltd., [1992] 2 HKLR 357 is a relevant authority because the surrounding circumstances of the case are strikingly similar to those of the present one. In that case, the plaintiff and defendant were competitors. The defendant sent defamatory letters to the customers of both the plaintiff and the defendant. The award of general damages by the court in 1992 was HK$50,000. 60.Taking the entire circumstances into consideration, particularly the factors mentioned above, and the award in Ming Keen Manufactory Ltd. (supra) decided in 1992 with similar facts, in my judgment, a fair and just sum for general damages for libel in the present case is HK$150,000. 61.For special damages, I accept Mr Lo’s submission that although the Plaintiff is unable to quantify the extra resources spent and incurred in monetary terms because of the libel, there is evidence to show that some disruption was caused to the Plaintiff’s business. I therefore award a nominal sum of HK$1,000 as special damages for the Plaintiff as compensation for the disruption. 62.I therefore, in additional to the injunctive relief, order that the Defendants do pay the Plaintiff damages for a sum of HK$151,000 with the usual post judgment interest at judgment rate from today until full payment. Costs 63.As to costs, after considering the submissions from parties, parties agree that costs should follow event but I do not think that this case is an exceptional one which I should exercise my discretion to award costs in a higher scale as suggested by the Plaintiff. Although the 1st Defendant fails in its counterclaim, I am of the view that it is not a vexatious claim. I therefore award the usual costs on, party and party basis, to the Plaintiff, with Certificate for Counsel, to be taxed if not agreed. 64.Lastly, I would like to thank Counsel, Mr Lo and Mr Law, for their invaluable assistance.
Mr Anthony Lo, instructed by Philip K Y Lee & Co, for the Plaintiff Mr Lawrence Law, instructed by Raymond Chan, Kenneth Yuen & Co, for the 1st to 4th Defendants |