International Tutors Ltd v. Ad Excellentiam Ltd and Others

DCCJ 2715/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.2715 OF 2015

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ASSESSMENT OF DAMAGES

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1.This is an assessment of damages payable by 2^nd and 3^rd defendants (by counterclaim) (D2 and D3 respectively)[1] to 4^th plaintiff (by counterclaim) (P) on P’s counterclaim (the counterclaim). The subject matter of the counterclaim relates to 3 libels D2 had committed against P with the complicity of D3, for which both are jointly and severally liable to P.

2.On 16 Jun 2015, the original action as against, inter alia, P was commenced. In the original action, P was sued as 6^th defendant by the plaintiff company therein, which is 1^st defendant (by counterclaim) (D1). D2 and D3 are respectively majority shareholder and managing director of, and minority shareholder, co-director and secretary of D1, which had transferred its business to 4^th defendant (by counterclaim) (D4), another company in which D2 and D3 are also its majority shareholder and managing director, and minority shareholder, co-director and secretary respectively.

3.It was alleged in the counterclaim that D2 was in control of D1 and D4, both were corporate vehicles employed by D2 and D3 to evade their personal liability.

4.On 3 May 2016, the original action as against P was dismissed with costs without trial.

5.With leave given by court on 24 May 2016, P filed the counterclaim on 7 Jun 2016[2]. In default of defence filed, interlocutory judgment was, pursuant to an unless order dated 30 Aug 2016, entered for P on 1 Nov 2016 against, inter alia, D2 and D3 for damages to be assessed.

6.P appeared in person in the counterclaim all along. He also appeared in person at this assessment.

7.But P, I accept his evidence, is a solicitor called to the High Court of Hong Kong in 1988. He has engaged in full-time private legal practice. He became an associate professor at, and taught postgraduate courses, at the City University of Hong Kong from 1997 to 2000, when he resumed private legal practice. He became a lecturer at, and taught degree courses, at the University of Hong Kong from Jan 2012 to Jan 2015. He now engages in private tuition. And he plans to commence pupillage in Sep 2017 to become a barrister.

8.Between Nov 2014 and 19 Jan 2015, P, I find, worked as in-house legal counsel by way of chief legal officer with D1 and was also its part-time tutor.

9.D2 and D3 are also unrepresented in the counterclaim. They did not turn up at this assessment. Having read affidavit of service filed by P on 26 May 2017 and upon his undertaking to file supplementary affidavit of service, I decided to proceed with this assessment in the absence of D2 and D3 as requested by P.

10.After making his opening, P called his only factual witness i.e. himself to the box.  He adopted his witness statement dated 27 Feb 2017[3] as his evidence-in-chief and was given leave by this court to amplify on his background, those of D2 and D3, and on the 3 pleaded libels by reference to their copies produced in the assessment bundles (the bundles).

P’s claims

11.P then made his closing submissions. In his oral address, he seeks to recover from D2 and D3 jointly and severally: -

1) $100,000 by way of general damages for the 1^st pleaded libel;

2) $100,000 by way of general damages and another $100,000 by way of aggravated damages for the 2^nd  pleaded libel; and

3) $200,000 by way of general damages and another $500,000 by way of exemplary damages for the 3^rd pleaded libel.

Analysis

12.This court has fully and carefully considered all evidence, submissions and authorities advanced by P at this assessment.

13.This court shall consider and assess P’s evidence below, and make such necessary findings of facts on each of 3 pleaded libels in turn before arriving at the award(s) for them at the end.

Applicable principles

14.Before that, a reminder of the applicable legal principles is, I think, pertinent.They are distilled from the judgment of the Court of Final Appeal in Oriental Daily Publisher Ltd v Ming Pao Holdings Ltd (2012) 15 HKCFAR 299, 314-6, 325, 334, 339, and that of the Court of Appeal in Allan v Ng & Co [2012] 2 HKLRD 160, 178, 179, 184, 186, 187, both helpfully drawn to my attention by P[4].

15.An award of general damages in libel is compensatory in nature.  It has 3 functions. It must compensate the plaintiff for the damage to his reputation, vindicate his good name, and take account of the distress, hurt and humiliation which the defamatory publication has caused. Such damages are “at large” since the assessment necessarily involves a substantial degree of subjectivity.

16.In performing the assessment, the court must take into account all the circumstances of the case relevant to determining what would be an appropriate compensatory sum.

17.It is not possible to list exhaustively all the circumstances. The most important factor is the gravity of the libel, the extent of its publication and the conduct of the defendant in defending the plaintiff’s action. Relevant factors include the following:

(1)The objective features of the libel itself, such as its gravity, its prominence, the circulation of the medium in which it was published, and any repetition;

(2) The subjective effect on the plaintiff's feelings (usually categorized as aggravating features) not only from the publication itself, but also from the defendant's conduct thereafter both up to and including the trial itself; (3) Matters tending to mitigate damages, such as the publication of an apology;

(4) Matters tending to reduce damages, e.g. evidence of the plaintiff's bad reputation, or evidence given at the trial which the jury are entitled to take into account;

(5) Special damages; and

(6) Vindication of the plaintiff's reputation past and future.

18.The poor credibility of the defendant is also relevant to assessing general damages.

19.Aggravated damages are part of the compensatory award and may be granted to compensate for additional injury caused to the plaintiff's feelings by the defendant's conduct of the action, as when the defendant persists in an unfounded assertion that the publication was true, or refuses to apologise, or cross-examines the plaintiff in a wounding or insulting way.

20.Examples of aggravating conduct are any kind of high-handed, oppressive, insulting or contumelious behaviour by the defendant which increases the mental pain and suffering caused by the defamation and may constitute injury to the plaintiff's pride and self-confidence.The conduct must be of a kind that rubs salt into the wound.

21.As a matter of practice, aclaim for aggravated damages and the facts relied upon to supportsuch a claim should be pleaded.

22.There is no basis for presuming that a plaintiff has suffered aggravated mental pain and suffering in any particular case.  That must be a matter of evidence, depending on the circumstances, such as the robustness or vulnerabilities of the plaintiffs in question.

23.Even where aggravated damages are also awarded on top of general damages, the total figure of such award is intended to reflect what is considered to be fair compensation of plaintiff’s injury or loss.

24.The rationale for exemplary damages is not to compensate, but to punish. They are additional to an award which is intended to compensate a plaintiff fully for the loss he has suffered, both pecuniary and non-pecuniary. Their general objectives may be stated as being punishment, deterrenceand denunciation.

25.Exemplary damages are thus a remedy of last resort. The question the court should ask is whether the remedies available to it are inadequate to punish and deter the defendant. It is only if the available remedies are inadequate to punish and deter the defendant for his conduct that exemplary damages should be considered.

26.Awards of exemplary damages are governed by principle of moderation and restraint. Awards of exemplary damages should, in principle, be moderate. They are analogous to criminal penalty so that they should never exceed the minimum sum necessary to meet the public purpose underlying such damages, that of punishing the defendant, showing that tort does not pay and deterring others.

27.As a matter of procedure, a claim for exemplary damagesmust be specifically pleaded together with the facts on which theparty pleading such a claim relies[5].

General observations

28.Before I proceed to consider each of the 3 libels, I would observe that P has not properly pleaded their defamatory meaning in the counterclaim.

29.Such facts, if any, relied upon by P in support of his claim of aggravated damages against D2 on the 2^nd libel[6] and his claim of exemplary damages against D2 for the 3^rd libel[7] are not pleaded in the counterclaim.

30.In the circumstances, this court could only make the best from the pleadings and P’s evidence to ascertain what defamatory meaning P has attributed to the 3 libels, and to consider if P is entitled to any aggravated and/or exemplary damages and, if so, the appropriate amounts thereof.

First libel

31.The 1^st libel[8] is an email dated 17 Jan 2015 sent from P’s email account in D1 (the email)[9] to a tutor called Andrew Ngai (Ngai). The email was sent in P’s name in the capacity of D1’s chief legal officer but, I accept from P, it was not written by P nor made with his knowledge or consent. It was rather sent by D2 accessing P’s email account without P’s authorization.

32.The email reads:

“We are expecting you to take the lesson with Oliver tomorrow. If you do not take the lesson with Oliver as discussed previously, the CSA[10] will be deemed to be void and all outstanding payment will be forfeit”.

33.The email, I accept from P, was an unfounded threat to Ngai to dismiss him without paying what was lawfully due to him. Ngai was later dismissed by D1 based on the contents of the email.

34.P, I find, came to know of the email when he returned to D1’s office for work on 19 Jan 2015.

35.About 5 months later, on 12 Jun 2015, Messrs. David Ravenscroft & Co., on P’s instructions, sent a letter before action to D1 regarding the email and demanded an apology from D1 (the demand letter)[11].

36.In assessing general damages for this 1^st libel, I have borne in mind the followings:

1) It was, I agree with the demand letter, defamatory of the professionalism of P;

2) But it was an isolated short email sent to one single recipient; there was no evidence of repetition or distribution to other parties, let alone P’s peers in the legal profession or judicial officers; there was no evidence that it was otherwise spread on the internet;

3) An apology was only sought by P about 6 months later and none was tendered;

4) According to P and I accept from him, he later met Ngai (who took D1 to Labour Tribunal for unpaid wages and D2 settled it in full) and explained the truth to Ngai (so P’s name was cleared as far as Ngai was concerned); and

5) Despite P was, I accept, “embarrassed and taken aback” when he discovered the email at first, he was strong enough to tender resignation for this on 19 Jan 2015 and to have instructed the sending of the demand letter to D1 on 12 June 2015.

Second libel

37.The 2^nd libel[12] is D2’s statement (as managing director of D1) dated 27 Apr 2015 (D2’s LT statement)[13] made in Labour Tribunal proceedings Nos.339/2015 and 591/2015 (the LT proceedings). In the LT proceedings, the claimants are P and 3 others[14] (the co-claimants), and the defendant is D1. The co-claimants, like P, are also former staff of D1 and they took out the LT proceedings, I accept P’s evidence, to recover unpaid wages etc from D1.

38.D2’s LT statement is a long one and it also involves allegations against the co-claimants. The focus of P’s complaint is at para 81 thereof[15] where D2 wrote, inter alia:

“In making this false statement, EC[16] is committing perjury. The Tribunal should be in no doubt about this. Further, a fortiori since it is likely EC has made similar allegations to the LD[17], this is a deliberate attempt to pervert the course of justice by influencing the LD to take out criminal proceedings against ITL[18]. ITL has reported this matter to the police and intends to raise it further to the complaint already submitted to the Chief Justice His Honour Geoffrey Ma in relation to the conduct of EC and his disrespect and abuse of the laws and legal processes of the Hong Kong Special Administrative Region (Exhibit J)”.

39.Exhibit I (not exhibit J) exhibited to D2’s LT statement is D1’s letter to Senior Labour Officer (Prosecution Division) also dated 27 Apr 2015 headed “Re: Employee Compensation Insurance Complaint by Travis Paterson[19]” (“D1’s letter to LD”) [20].

40.Material parts of D1’s letter to LD reads:

“… we wish to make it clear that at no point were we informed by our then Chief Legal Officer [P] that ECI[21] was compulsory. Indeed, [P] has stated in documents filed in court that…. In a subsequent witness statement, which contradict the first, [P] has perjured himself by claiming…. Any information from [P] to the LD to the contrary is an attempt to pervert the course of justice and ITL requests that any such information be reported to the department of justice and the relevant authorities for investigation given that it is a matter of public interest that a lawyer of Hong Kong, who was bound to ITL by a duty of client attorney privilege, has perjured himself in order to support a personal vendetta…. If Paterson or [P] are relied upon as prosecution witnesses it will become apparent to the court that these individuals are only using LD as a vehicle for their personal motives. Indeed, ITL believes it has a good case to seek civil damages against [P] for any fine it receives from the LD”.

41.The background against the above statement and letter, I accept from P, was that Mr Travis Paterson, one of the co-claimants, had reported to Labour Department that D1 had not purchased employee compensation insurance and P was thus invited by Labour Department to give his statement to corroborate that.

42.At the end, D1, I accept from P, was prosecuted for failing to take out employee compensation insurance at magistracy. D1 pleaded guilty and was fined by the magistrate.

43.In assessing damages for this 2^nd libel, I have taken into account the followings:

1) D2 and D1 attacked, I gather, P’s professional integrity as a lawyer by accusing him of perjury, perverting the course of justice, disrespect of the law and abusing the legal process for advancing ulterior personal motive of revenge;

2) The defamatory D2’s LT statement and D1’s letter to LD were, I accept, likely read by presiding and tribunal officers of the Labour Tribunal, co-claimants in the LT proceedings and labour officers of the prosecution division of Labour Department; D1’s letter to LD was a repetition of similar allegations made by D2 against P in D2’s LT statement; save for aforesaid, there was no distribution to other parties, let alone to members of the legal profession;

3) D2’s LT statement and D1’s letter to LD were written respectively for defendant and likely defendant in existing labour tribunal proceedings and contemplated criminal prosecution;

4) Presiding and tribunal officers of Labour Tribunal, and labour officers of Labour Department are, I think, accustomed to party or defendant accusing other party or witness not telling the truth or making contradicting statements in labour tribunal proceedings or criminal prosecution and unlikely to accept such accusations at face value without having them tested at trial or otherwise;

5) The co-claimants in the LT proceedings, all former staff of D1 like P suing the same defendant (and one of them being the informant Travis Paterson) would, I think, be most unlikely to believe in such accusations made by D2 against P in D2’s LT statement (there was no evidence they received D1’s letter to LD);

6) The LT proceedings was finally settled in or about Nov 2015 without D1and/or D2 pursuing the accusations further against P at trial at Labour Tribunal;

7) The criminal prosecution against D1 also came to an end without D1 and/or D2 having any chance to cross-examine P challenging his version of events or credibility at trial;

8) No apology was sought or tendered; and

9) It was second libel against P in 3 months’ time, but on different subject matter.

Third libel

44.The 3^rd libel[22] is a document by D1 dated 11 Jun 2015 and headed “Application to subpoena P” (the SCT subpoena application)[23] filed with the Registry of the Small Claims Tribunal in Small Claims Tribunal proceedings No.1818/2015 brought by D1 as the claimant against Messrs. Stephenson Harwood (the Firm) as the defendant (the SCT proceedings).

45.According to P, he received the SCT subpoena application by post and I accept that.

46.Among others, the SCT subpoena application reads:

“2. [P] was engaged by the Claimant as its Chief Legal Officer on a contractor basis from about 27 Nov 2014 to 19 Jan 2015 when he abruptly walked out on the Claimant abandoning his responsibilities…

5. [P] stated that the Claimant could not charge a rate in excess of HK$3,000/hour under Law Society rules…

6. [D2] made clear to [P] that he was very unhappy with the quality of the advice received from SH[24] which he regarded as meaningless regardless of the applicable Law Society rules of which he had no knowledge. However, [D2] told [P] that he did not know if the Claimant would be able to convince a court of the poor advice received and therefore had not complained to SH to date. The Witness should testify to this.

7. Notwithstanding para 5 [P] was adamant that the Claimant should pursue SH on costs grounds. Since [P] was chief legal officer [D2] agreed to let handle the matter himself as long as he followed through with any potential action so as not to waste his time. The Witness should testify to this…

8. [P] proceeded to send a letter to Malcolm Kemp (“MK”) the partner of SH… This letter alleged overcharging and demanded a refund. It made no mention of the complaint re quality of service.

10. [P] said he knew MK and used derogatory language to describe him (consistent with comments re Gordon Oldham and Melville Boase). The Witness should testify to this….

17. Further, the Claimant had agreed to provide a bonus based on 50% recovery of SH fee to [P]. This was intended purely as a way to compensate [P] given that he was receiving a much lower consultant compensation of HK$1,000 than a lawyer would normally receive…

18. The Claimant wishes to ask [P] to confirm all the above facts on record. The Claimant is aware that [P] is a hostile witness. However, these matters relate to facts….

19. Should the Claimant lose at trial because the matter is adjudged to be a matter of taxation or a matter for the Law Society rather than SCT, [P] would be held primarily responsible. Unless the Defendant is willing to withdraw para 34-37 of ZF witness statement it is essential that [P] testifies…

20. The Claimant requests that the Tribunal exercises it power under Small Claims Ordinance section 16(2) to summons [P] as a witness. (italics are untrue matters emphasized at particulars pleaded at para 29 of the counterclaim)”.

47.I accept from P that the Firm gave advice to D1 regarding enforceability of certain agreement and D1 paid for them prior to P joining D1. After P joined D1, D2 instructed him to recover the fee paid from the Firm in the SCT proceedings on the ground that such advice given was meaningless.

48.Matters that I took into consideration in assessing damages for this 3^rd libel include:

1) D1 in the SCT subpoena application accused P, I gather, of unprofessionalism and acting contrary to the law in entering champertous agreement; P felt embarrassing and it discredited his reputation as a lawyer;

2) The SCT subpoena application was made against the background of a civil dispute between D1 and the Firm at the Small Claims Tribunal;

3) The SCT subpoena application was, I think, likely read by presiding and tribunal officers of the Small Claims Tribunal alone, and not by members of the Firm[25], or, if by the Firm at all, not by other members of the legal profession; there was no evidence of distribution to others or any repetition;

4) Presiding and tribunal officers of Small Claims Tribunal are, I think, accustomed to read conflicting statements from parties and/or witnesses and unlikely to accept version of one side at face value without having them tested at trial or otherwise;

5) If ever the SCT subpoena application was read by the Firm at all, members of the Firm would, I think, in view of P being referred therein as a “hostile witness” and the application itself, likely question if P was willing to testify for D1 and/or would come up to proof of matters attributed to P therein;

6) No subpoena was issued and served at P to attend the Small Claims Tribunal as a witness to the SCT proceedings;

7) The SCT proceedings were discontinued by D1 at the end;

8) P was thus saved from being called or ridiculed as a witness to the SCT proceedings by D2 and/or D1;

9) No apology was sought or tendered; and

10) It was third libel against P in a period of around 6 months, but the subject matter of each was unrelated.

General damages for all 3 libels

49.In arriving at awards of general damages for all 3 libels, there are certain common matters which this court has also taken into account.

50.First, in so far it was alleged by P in the counterclaim and in his witness statement that D2 and D3 were “serial vexatious litigants”, I do not think they carries much credibility at all. That same is, I think, equally true with their 3 libels.

51.Secondly, P was at the material times of the 3 libels not in private legal practice and did not enjoy any considerable or substantial reputation in the legal field. There is also no complaint of any pecuniary loss, loss of earnings or ill health suffered by P as a result of the 3 libels. Neither is there any evidence that P’s prospect in the legal field has been adversely affected by the 3 libels.

52.Comparing all the circumstances of the 3 libels, I take the view that the 2^nd libel is the most serious of all while the 1^st libel is the least defamatory.

53.All circumstances having been considered, I award $1,000 for the 1^st libel, $10,000 for the 3^rd libel, and $20,000 for the 2^nd libel by way of general damages i.e. a total of $31,000.

Aggravated damages for the 2^nd libel

54.So far as the 2^nd libel is solely concerned, looking at para 43 above, there was, I think, no post-publication conduct by D2 and/or D3 which aggravated or increased injury to P’s feelings.

55.In so far P relied on the original action commenced by D1 against, inter alia, P, this court notices that, save for para 31 to 35 thereof, the bulk of para 25 to 41 of the Statement of Claim therein concerning P raised allegations different from those in the 2^nd libel.

56.In any event, such limited allegations similar to the 2^nd libel repeated in the original action never persisted or proceed to trial as the original action against P was successfully dismissed later without trial.

57.Furthermore, P gave, I note, no evidence of suffering aggravated mental pain and suffering due to the original action repeating similar allegations to the 2^nd libel. Considering P’s legal background, his resignation for the 1^st libel on 19 Jan 2015, his bringing of the LT proceedings against D1, his bringing of the counterclaim and having observed him giving evidence before me, I do not find him such a vulnerable person as one may think.

58.For the above reasons, I decline to grant any aggravated   damages for the 2^nd libel.

Exemplary damages for the 3^rd libel

59.It was pleaded at para 29(vii) of the counterclaim that D2 through D1 took out the SCT subpoena application after P’s solicitors sent the demand letter thus showing D2’s abuse of process and contempt of the court.

60.Looking at the dates of the documents concerned, I do not accept such assertion. The SCT subpoena application was dated 11 Jun 2015 and, according to the chop thereon, it was filed with the Registry of the Small Claims Tribunal on the same date. The demand letter was dated 12 Jun 2015 i.e. it was dated one day after the SCT subpoena application was filed.

61.It was further pleaded at para 26 and 29(vi) of the counterclaim that the SCT subpoena application served no legal purpose but with the motive to defame P and to oppress P’s legitimate claim in the LT proceedings and to influence the mind of the judicial officer assigned to hear the case.

62.P also claimed in the box that D2 took out the application to upset him while the LT proceedings was underway and it was done in the form of “subpoena application” in order to obtain protection from being sued in future.

63.I do not accept such assertion or evidence either. While the SCT subpoena application was taken out in Jun 2015 before the settlement of the LT proceedings in about Nov 2015, there were, at that time, the SCT proceedings for which the application could serve its legal purpose of calling a witness. The “filing” of and the “contents” of the SCT subpoena application was, in my view, supportive of such possibility in light of the issues of this civil dispute.

64.The suggestion that the SCT subpoena application was made to influence the mind of the judicial officer assigned to hear the case is, in my view, implausible in so far it is sought to influence the outcome of the SCT proceedings in D1’s favour. Nowhere do its contents attempt to do so. If ever a subpoena was issued and P was called as a witness to the SCT proceedings, there was, one thinks, every chance of his evidence not supporting D1 but in favour of the Firm.

65.Again, P gave, I note, no evidence of D2 and/or D3 referring the SCT subpoena application as oppression on P to put pressure on him on the LT proceedings and/or as bargaining chip to be withdrawn in any settlement of the LT proceedings.

66.There was no evidence of D1, D2 and/or D3 making profit in any way from the SCT subpoena application. In fact, the contrary is, I think, likely the case as D1 may be required to pay court fee to issue a subpoena if the application is approved.

67.In closing submission, P again relied on the original action to seek exemplary damages for the 3^rd libel and asserted that it was an abuse of the process of the court. Save for a brief reference in para 37 thereof, the allegations in the original action contained in its Statement of Claim had nothing to do with the 3^rd libel.

68.And whether the original action making divers allegations against P and many others is an abuse of process is, in my view, neither here nor there, and I do not decide. In any event, the original action against P has been dismissed with costs without any trial and the LT proceedings and the SCT proceedings have also come to an end without escalating to trial.

69.What this court has to ask is whether the remedies available to it are inadequate to punish and deter D2 & D3 for the 3^rd libel. It is only if they are inadequate to punish and deter D2 & D3 for their conducts that exemplary damages should be considered.

70.All things considered, this court does not consider that this last resort remedy of exemplary damages should be deployed against D2 and D3 for the 3^rd libel.

Disposition

71.Accordingly, I give final judgment in the total sum of $31,000 on the counterclaim in P’s favour against D2 and D3 jointly and severally.

72.P makes no claim for interest in his closing address. In any event, I do not see fit to award any interest for the pre-assessment period in the circumstances of this case.

Costs

73.And I make a costs order nisi that D2 and D3 shall jointly and severally pay P’s costs of the assessment of the counterclaim, including this assessment, such costs are to be taxed if not agreed. Such order will become absolute if none applies within 14 days hereof to vary the same.

74.Finally, I thank P for all his assistance at this assessment.

The 4^th plaintiff by counterclaim was not represented and appeared in person

The 2^nd & 3^rd defendants by counterclaim were not represented and did not appear