Hong Kong Far Infrared Rays Association Ltd v. Lam Hong Nam and Another

HCA 1963/2014

[2021] HKCFI 3884

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1963 OF 2014

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JUDGMENT

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INTRODUCTION

1.This is the trial of a defamation claim by the plaintiff (“P”) against the two defendants (respectively “D1” and “D2” and collectively “Ds”).

2.P’s allegation is that a letter jointly published by Ds on 6 August 2014 (“Letter”) contained defamatory remarks which had purportedly injured P’s reputation, caused P to be shunned and avoided, and/or were calculated to disparage P in its business.  P claims damages including aggravated damages against Ds.

3.There is no dispute that Ds had jointly published the Letter containing the alleged defamatory statements (“Statements”). Ds have relied on the defences of justification, qualified privileged and fair comment in their respective Amended Defence[1] but no submissions were made in relation to fair comment in Ds’ respective Closing Submissions[2].  It is also Ds’ case that the natural and ordinary meaning of the Letter (containing the Statements) can only be taken to mean that P was unlawful or had an unlawful status as it was in breach of the law including sections 111 and 122 of the former Companies Ordinance, Cap 32 (“Predecessor Ordinance”)[3].

4.Counsel Mr Anthony PW Cheung and Mr Yan Ye Clark appeared for P at the trial, Mr Hylas Chung appeared for D1 and Mr Alvin Hor appeared for D2.

BACKGROUND

5.P was incorporated on 11 August 2006 under the Predecessor Ordinance as a company limited by guarantee.  It was founded by (1) Aoyagi RMZ Limited (“Aoyagi”) through Mizhuo Tanaka (“Mizhuo Tanaka”), (2) Mr Chan Kwok Yiu (“Crimson Chan”) and (3) Mr Cheung Wing Keung (“Angelo Cheung”), and the three of them, namely Aoygai, Crimson Chan, and Angelo Cheung were named the first subscribers of P in P’s Memorandum of Association (“M/A”) and Articles of Association (“A/A”).

6.Mizhuo Tanaka was the Chairman and CEO of the Aoyagi group of companies, Crimson Chan its Executive Director, and Angelo Cheung was the Assistant General Manager of Aoyagi (Hong Kong) Limited.

7.The objects of P in the M/A include (a) to carry out the mandate of activities by raising public awareness of the technology of using Far Infrared Rays (“FIR”) in different aspects of life and (b) to educate the public of the benefits of using FIR in different aspects of life, and for the purposes of (a) and (b), to establish, maintain, operate, manage and carry on non-profit making training center(s) or laboratory and testing services center(s) to set up to assist the research of FIR directly and indirectly[4].  P had applied for and received public funding for the advancement of its objectives. 

8.Under the A/A, P’s “Governing Body” is the Council of Management (“CM”) and members of the CM are called councillors (“Councillors”), who, under the A/A, are deemed to be directors of P for the purposes of the Predecessor Ordinance.   

9.According to Article 4 of the A/A, P’s membership is divided into voting members (“Voting Members”) and associate members (“Associate Members”) or such other categories as the CM may from time to time determine[5].

10.The 3 subscribers were the first Voting Members of P pursuant to Article 5 of the A/A.  At the 1^st CM meeting on 21 August 2006 (“1^st CM Meeting”)[6], Crimson Chan presided as Chairman.  Mizhuo Tanako was “admitted” in his personal capacity as a Voting Member, making a total of 4 Voting Members (“4 Voting Members”).  At the 1^st CM Meeting, 3 Councillors were appointed, namely Crimson Chan, Mizhuo Tanaka and Angelo Cheung and they were appointed for a term of two years with effect from that meeting, namely until 21 August 2008 (“1^st 3 Councillors”). 

11.Under the A/A, Article 14 provides that the 1^st annual general meeting shall be held within 18 months after the incorporation of P, and P shall hold, in each subsequent year, a general meeting as its annual general meeting (“AGM”).  Further, under Article 42, the Councillors shall be elected at an AGM by the CM, and the CM shall have the power to appoint a Voting Member to fill any casual vacancy, and every Councillor shall hold office for the term of two years only but shall be eligible for re-election at the expiration thereof.

12.Thus, the 1^st AGM should have been held before 11 February 2008.  It was Ds’ case that up until the date of the Letter and for reasons set out later, no or no valid AGMs had been held for the years 2008, 2009, 2010, 2011, 2012 and 2013.

13.There were no definitions in the A/A of an “executive committee (“EC”).  There was no provision in the A/A as to who would be eligible to become a “committee executive” or a member of the EC (“Committee Executive”) and/or what rights such Committee Executive had.  What was not disputed was that there had been regular meetings held by the EC and attended by the Committee Executives to discuss and to resolve P’s affairs (“EC Meetings”). 

14.The 1^st of the EC Meetings was held on 23 January 2007 (“1^st EC Meeting”) although according to the minutes, it was simply referred to as a “gathering” at the time[7].  This was attended by 8 participants including Crimson Chan, D1, Edward Chan Kwok Man (“Edward Chan”), Samson Tam (“Samson Tam”), Chiu Kwok Po, Alex (“Alex Chiu”), Sammy Ho Chi Kin (“Sam Ho”) and Angelo Cheung.   

15.In the minutes of the 1^st EC Meeting, D1 was described to be an Associate Professor of the Department of Mechanical Engineering of Hong Kong University (“HKU”).  Edward Chan was described to be the Managing Director of German Pool (Hong Kong) Limited (“German Pool”). Samson Tam was described to be the Chairman of Group Sense (International) Ltd, and Alex Chiu, a Chartered Public Accountant, was described to be the Director of Finance of Simatelex Manufactory Co Ltd (“Simatelex”).  Sam Ho was described as the Director of Asian Sourcing of NT Enterprises Ltd.

16.At the 1^st EC Meeting, Edward Chan was appointed as Chairman, Samson Tam and Crimson Chan were appointed respectively the Vice Chairman and Alex Chiu as the Treasurer of P.  It was further resolved at this meeting that Samson Tam was to lead the establishment of P’s office at Hong Kong Productivity Council (“HKPC”) and Crimson Chan was to liaise with the Japan FIR Association (“JIRA”), and Alex Chiu was to review the M/A and A/A.  Further, as seen in the minutes, secretarial support was to be provided by Edward Chan’s secretary.  There was also a professional firm HK Managers & Secretaries Ltd which was appointed the “Secretary” or the company secretary (“Company Secretary”) to whom an annual fee of HKD 3,500 was payable for their services, and Crimson Chan and Angelo Cheung were the authorised persons to give instructions to the Company Secretary.

17.At the 2^nd EC Meeting held on 9 February 2007, a solicitor, Mr Benny Kong (“Benny Kong”) attended the meeting as the “Honorary Solicitor”[8].

18.It was not quite clear how or when Benny Kong was appointed in that capacity.  Benny Kong is a solicitor and partner of the solicitors firm Messsrs Benny Kong & Yeung (“BKY”). 

19.According to D2, he was invited by Sam Ho to attend the 3^rd EC Meeting on 2 March 2007 during which he was appointed as the “Honorary Secretary” (“Honorary Secretary”) with Mr Francis Tu appointed as the “Honorary Assistant Secretary”.  That was the first time D2 met Edward Chan, Crimson Chan, Angelo Cheung, Benny Kong, D1 and a Ken Fung, the Director & Vice President of Technology & Design of German Pool and according to D2, the son-in law of Edward Chan[9] (“Ken Fung”). 

20.By the time of the 4^th EC Meeting held on 13 April 2007, there appeared to be a total of 14 Committee Executives, with Edward Chan being the Chairman, Crimson Chan and Samson Tam both being the Deputy Chairman, D2 being the Secretary[10]. Alex Chiu remained the Treasurer.

21.As recorded in the minutes of the 4^th EC Meeting that under the agenda item “FIR standard & certification center…”, it was resolved that P should aim to be positioned as the pioneer in FIR and to establish FIR standard as soon as practicable and under the agenda item “Funding”, D1 had stated that since certification centre would benefit the industry in Hong Kong at large, obtaining matching fund would be easier[11].  There were discussions for the website and that it was resolved that as soon as the website was ready, “honourable members” would be invited and new members were to be recruited. 

22.Hong Kong Manager & Secretaries Limited later resigned on 11 August 2007 as the Company Secretary, although the Notification to the Companies Registry was only filed on 19 June 2008[12].  According to D2, at about end of July 2007, he was approached by Crimson Chan and invited to act as the Company Secretary from 11 August 2007 onwards to save the costs, but that he was told that it would be Alex Chiu who would be handling all matters pertaining to the dealings with the Companies Registry (“CR”) and to discharge all Company Secretary duties[13].

23.3 representatives from HKPC attended the 8^th EC Meeting on 20 August 2007, and as seen in the minutes thereof, there were discussions on how the SME funding application should be proceeded with and also how HKPC and P could further cooperate on (i) funding applications; (ii) application development; (iii) seminars; (iv) oversea study missions.  Thereafter, representatives of HKPC started to attend the EC Meetings and, but they were only stated in the minutes to be from HKPC, and not as Committee Executives. 

24.The formal public announcement of the formation of P took place on 13 September 2007, which coincided with the 25^th year anniversary of German Pool. 

25.It was resolved, amongst other things, during the 11^th EC Meeting held on 19 November 2007 that P was to be provided secretariat service by HKPC at a fee of HKD 10,000 per month and for P to apply for funding from the SME Development Fund provided by the Trade and Industry Department (“TID”)[14].

26.Since about January 2008, the EC Meetings were mostly held in a meeting/conference room of HKPC at the HKPC Building in Kowloon Tong and secretarial service was provided to P by HKPC (“Secretariat”), and representative/s from HKPC would attend the EC Meetings.

27.It would appear from the 12^th EC Meeting on 17 December 2007, that P had applied apply for funding from the SME Development Fund and the requested amount would be about HKD 1.8m[15].

28.D1 was appointed the “Testing Technology Director” during the 14^th EC Meeting on 27 February 2008 and a sub-committee was formed on this matter[16]. According to D1’s RAD, he became the Chairman of P’s “Standardisation and Certification Committee” (“SCC”) since around 2009. 

29.In the meantime, according to D2’s RAD, in around January 2008, Angelo Cheung and Mizuho Tanaka served a written notice to P of their intention to resign as P’s Councillors with effect from 21 August 2008, and that since around 3 April 2009, Edward Chan, Ken Fung, Alex Chiu, D1 and D2 were purportedly appointed Councillors (“5 Purported Councillors”).

30.Setting up of the FIR certification guidelines took quite some time.  As seen in the minutes of the 34^th EC Meeting held on 8 February 2010, Edward Chan had urged D1 to “fix the guideline” for certification panel, mark as soon as possible as the certification would help to create a “huge income source” for P[17].

31.During the 35^th EC Meeting on 26 April 2010, D1 and D2 had explained the “FIR certification and Radiation message” to members and they suggested that the message should be distributed to all P’s members as soon as possible.  It was resolved that Crimson Chan would obtain the “radiation safety guidelines” of JIRA as a reference for P’s interim standard.  Edward Chan and Crimson Chan had also urged D1 to meet the Chief Officer of Custom Department and Health Department to discuss “radioactive safety standard issues” as soon as possible[18].

32.According to Ds, after enormous and collective efforts of the SCC members and EC members, lengthy consultations with various government departments, it was agreed unanimously and resolved at the 41^st EC Meeting on 27 September 2010, that (1) not more than 1Bq/g for ionizing radiation; and (2) not less than 77% for FIR emissivity were to be adopted as the standards for products emitting FIR radiation[19].  D2 had explained in his witness statement that the “1Bq/g” criterion was meant to safeguard the public from exposing to excess and harmful ionizing radiation emitted from inferior FIR produces, and that P was to issue a certificate of compliance (“Compliance Certificate”) to qualified products from applicants which complied with the above two criteria[20].

33.The agreement and resolution can be seen in the minutes of the 41^st EC Meeting, which was attended by Edward Chan, Crimson Chan, Benny Kong and others including D1 and D2[21].

34.It was not disputed that on 13 October 2010, a widely publicized press conference attended by some high ranking government officials was held to announce the launch of the new certification service by P for compliance testing of FIR products.

35.The testing and certification fees were discussed during the 43^rd EC Meeting on 25 November 2010.  The proposed fee structure had consisted of a “FIR testing fee”, a “radiation testing fee”, and a “FIR Certificate fee” and the proposed total “testing and certification fee” was HKD 15,000 for corporate members and HKD 22,000 for associate corporate members[22].  It was stated amongst other things under “Remarks” that radiation test would be arranged by P/HKPC.  The members also discussed the design of the Compliance Certificate.

36.The certification procedure was eventually agreed (“Certification Procedure”).  According to a pamphlet printed by P, there appeared to be 2 parts of the pamphlet, namely Part (1) Application for FIR Certification, and Part (2) Guidelines on Application for FIR Certification[23].  It was stated in Part (1) that P was very concerned about the radiation safety of FIR products, and that the prerequisite was that the radioactivity must first be determined in Bq/g.  Under Part (2), there are 7 steps in the application, and as set out therein, it would be after completion and passing of the “radiation safety test” (“Radiation Requirement”), that the Secretariat would arrange to send 1 set of the sample for FIR emission measurements, ie the “FIR emission test” (“FIR Requirement”) and then after passing of the FIR Requirement the Compliance Certificate would be issued. This 7 step guidelines were confirmed by D1 at trial.

37.The certification service then commenced.  As seen in the minutes of 48^th EC Meeting on 26 May 2011, two Compliance Certificates had been issued by P[24].

38.Further, as seen in the minutes of the 50^th EC Meeting on 27 July 2011, it was recorded that there had been an enquiry about skipping one of the steps of the FIR testing service procedure but Edward Chan had stressed that the approved procedures had to be followed without skipping[25].  As further seen in the minutes, a representative of HKPC had reported that a “Grand Opening” on FIR testing was to be launched on 26 September 2011.  

39.In the EC Meetings which followed after the 50^th EC Meetings, there were discussions in relation to an application for further funding from the government.

40.Subsequently, on about 31 July 2012, P made an application to TID for funding from the “Fund on Branding, Upgrading and Domestic Sales” (“BUD Funding”), and D1 was named a consultant in the “project team” in P’s application form to advise on “standard setting” (“BUD Application”)[26].  The other two persons named in the “project team” were Edward Chan and Crimson Chan. 

41.As seen in the minutes of the 62^nd EC Meeting on 22 August 2012[27], Raymond Chiu of HKPC reported that the BUD Application was submitted to TID on 31 July 2012 and the title of the project for funding was “Certified FIR” (“BUD Project”) and the BUD Funding applied for was HKD 4,753,000 with the project duration for 3 years.  The objectives included (i) full Validation and Accreditation of the Test Laboratory with the Test Method validated and (ii) to formalize the Certification Process (“Project Objectives”).  The BUD Project “deliverables” included (i) establishment of an “Accredited FIR Test Laboratory”, (ii) establishment of a formal “Certification Process”, (iii) establishment of “Test Methods”, and (iv) a FIR Certification Guideline providing procedure guidance for Hong Kong SME in obtaining their product certification (“Project Deliverables”)  

42.There was to be an interview of P’s representatives by the vetting committee of TID in September 2012 for the BUD Application.

43.It was reported during the 64^th EC Meeting on 22 October 2012 that TID had formally approved of the BUD Application for the amount of HKD 4,489,200 for 36 months for the BUD Project, and that HKPC would prepare the revised proposal, version control sheet and cash flow to TID[28].  At the 65^th EC Meeting on 28 November 2012, which was attended by Edward Chan, Crimson Chan, D1 and D2 and others, Fanny Tang of HKPC had briefed those present of the start date of the BUD Project to be 1 January 2013 and to set up two BUD committees including “Technical Committee” and “Marketing Committee”[29].

44.Thus, up until the 65^th EC Meeting, there was nothing in the minutes of the EC Meeting to indicate that there had been any issues in relation to the standard or criteria for the FIR test and certification which was agreed to follow the Certification Procedure set out earlier, or any discord in the relationship between Ds and Edward Chan or the rest of the Committee Executives of the EC.

45.What can be seen in the agenda for the 66^th EC Meeting (“66^th Agenda”), item 9 was in relation to the FIR test and certification and thereunder, there were 2 sub-items (i) request to call for FIR certification subcommittee meeting – to provide supporting and review current 1 Bq/g and 77% criteria and to study to add new criteria of radiation dose exposure limit in SV and (ii) presentation by Mr SY Yip (the Laboratory Safety Officer (Radiation) of HKCU)(“SY Yip”)[30].

46.SY Yip was invited to attend the 66^th EC Meeting.  There were 8 Committee Executives of EC present, namely Edward Chan, Crimson Chan, D2, Alex Chiu (represented by another), Ken Fung, Ricky Yeung, Peter Chiu and Charlie Leung.  There were also 3 representatives of HKPC.

47.The 66^th EC Meeting was held on 19 December 2012.  D1 was not able to attend this meeting as he was an supervising examiner at the HKU that evening.  According to the minutes (“66^th Minutes”)[31], SY Yip explained the radiation standard in accordance with the Radiation Ordination, Cap 303.

48.Thereafter, there was a motion proposed by Edward Chan to cancel the requirement of passing the ionizing radiation safety level of not more than 1 Bq/g, in other words cancelling the Radiation Requirement in relation to P’s FIR test and certification (“Cancellation Motion”). The reasons set out in the minutes were (1) the Radiation Requirement, if made mandatory, would deter applications for P’s FIR test and certification; (2) to simplify the Certification Procedure so that more companies could take part in the FIR test and certification; (3) SY Yip had explained that (i) if less than 1 Bq/g, the product would comply with the Radiation Requirement ; (ii) if between 1 Bq/g to 75 Bq/g, the manufacturer /producer would need to apply a relevant declaration and measure; (iii) if greater than 75 Bq/g, this would be illegal.

49.Edward Chan called upon those present to vote immediately on the Cancellation Motion.  According to the 66^th Minutes, 5 out of the 8 Committee Executives present including Edward Chan himself voted for the Motion, 2 against, namely Crimson Chan (who had apparently left early and was contacted by telephone by Edward Chan) and D2, and one (who was the stand-in for Alex Chiu the Treasurer) was neutral. The Cancellation Motion was passed.

50.It was D2’s evidence that Edward Chan proposed the Cancellation Motion only at about 8 pm in the 66^th EC Meeting under “Any Other Business”.  D2 objected and informed those present that D1 had expressed that anyone who wanted to propose any amendments to the Certification Procedure should do so by submitting a written explanation.  Notwithstanding D2’s objection, Edward Chan called for immediate voting on the Cancellation Motion without prior notification to EC Committee Executives and D1, who was the Chairman of SCC[32].  According to D2, the other 4 Committee Executives who voted for the Motion were connected to Edward Chan, namely Ken Fung (Edward Chan’s son-in law), Charlie Leung (Edward Chan’s close relative), Ricky Yeung of Sharpwell Technology Limited (“Sharpwell”) (Edward Chan’s business partner) and Peter Chiu (Edward Chan’s business partner).

51.According to the 66^th Minutes, Edward Chan voted for the Cancellation Motion but according to D2’s own record, after the other 4 Committee Executives had voted for the Cancellation Motion, Edward Chan had abstained.

52.On 24 December 2021, D2 sent a letter to all the EC Committee Executives to set out what happened at the 66^th EC Meeting according to his record and his queries as to why such an important matter was raised without any written explanations/submissions and declarations of conflict of interest and was rushed through without proper discussion.  D2 had set out in his letter his own record of what happened during the 66^th EC Meeting (“24.12.12 Email”)[33].  

53.It was Ds’ case that Edward Chan had proposed the Cancellation Motion without first disclosing his and/or German Pool’s interest in the Motion, namely that a product submitted by German Pool had earlier exceeded the exempt radioactivity concentration of 1 Bq/g and failed the Radiation Requirement. 

54.On 18 January 2013, Ds received the agenda for the 67^th EC Meeting and item 4 was to discuss Ds request for the withdrawal of the resolution to cancel the Radiation Requirement for the Certification Procedure (“Item 4”).    Ds jointly  issued an email to the EC members reiterating their concern over Edward Chan’s conflict of interest in relation to this item, and that Edward Chan should not be present during the 67^th EC Meeting[34].  The draft 66^th Minutes were only circulated at 9:17 pm on 22 January 2012.  In the morning of 23 January 2013, 10:12am, D2 circulated an email setting out again his concerns over the passing of the Cancellation Motion in the 66^th EC Meeting and his various amendments in relation to the draft 66^th Minutes[35] (“23.01.13 Email”).

55.The 67^th EC meeting took place later on 23 January 2013.  There were 12 persons from P present including Edward Chan. According to the minutes[36], Benny Kong advised that according to the M/A, only the 7 Councillors (as defined later) had the right to vote.  Mizuho Tanaka was absent.  Benny Kong then proposed a motion to confirm all minutes of the EC Meetings for past 6 years (ie since 2007 and including the 66^th Minutes) (“Confirmation Motion”).  The Confirmation Motion was passed by 6 Councillors (Crimison Chan and the 5 Purported Councillors) with 3 voted for, 2 against and 1 neutral.  Thus, notwithstanding the 24.12.12 Email and the 23.01.13 Email and D2’s proposed amendments to the 66^th Minutes, the 66^th Minutes were not revised.  Benny Kong had further proposed that all EC Committee Executives to retain their status/authority until the next CM meeting.  There was no discussion in relation to Item 4.

56.On 24 January 2013, D1 sent an email to D2 putting on record that he had proposed amendments to the above Confirmation Motion but this proposal was not put to vote, as Benny Kong had confirmed that it was proper to vote on the Confirmation Motion rather than the proposed amendment first, but D1 later found out that this was a procedural mistake[37].  Upon receipt of D1’s email, D2 sent an email on 5 February 2013 to members of P stating that due to the procedural issue, he proposed with the endorsement of D1 that P should until further notice continue to process new FIR certification applications according to the then existing arrangement (ie the Certification Procedure) notwithstanding the purported passing of the Cancellation Motion[38].

57.Benny Kong’s response was that D2’s suggestion if done would be ultra vires and that the suggested act would go beyond the doctrine in the law of corporation and that P must not act illegally[39].  Benny Kong later sent a further email containing his advice[40].

58.In the meantime, on 31 January 2013, TID sent an invitation by email to P’s representatives, including D2, to attend a meeting to discuss amongst other things the BUD Project[41]. The meeting was later confirmed by TID to take place on 7 February 2013.  D2 replied to TID on 4 February 2013 to indicate he would be available and further confirmed to TID on 5 February 2013 that he would attend the meeting.  However, the same day, TID was notified that the Chairman and Vice-Chairman of P had decided that the 4 representatives from P who would attend the meeting, namely Edward Chan, Crimson Chan, Alex Chiu and Benny Kong, which did not include D2[42]. 

59.On 6 February 2013, BKY, acting on behalf of Edward Chan in his personal capacity issued a letter to D2 stating that D2, together with D1, had openly and jointly published allegedly defamatory statements in (i) the 23.01.13 Email and (ii) 24.12.12 Email and D2 had been “making slander” (sic) since 24 January 2013, and threatening to issue legal proceedings against D2 unless certain steps were taken by D2 as demanded in the said letter [43].  On the same day, 6 February 2013, Edward Chan as the Chairman of P sent a letter to D2 suspending D2’s role as “Secretary” of P effective immediately and D2 was barred from attending the meeting as P’s representative[44]. 

60.On 7 February 2013, BKY, acting on behalf of Edward Chan in his personal capacity, sent a similar letter to D1 over allegedly defamatory statements in the 23.01.13 Email and threatening legal proceedings[45].

61.In the end, TID decided to cancel the meeting on 7 February 2013.

62.The letters from BKY to Ds threatening legal proceedings led to Ds seeking their own legal advice from solicitors Gary Lau & Partners (“GLP”). 

63.GLP responded to BKY on 28 February 2013, denying Edward Chan’s allegations and stating that the statements were true and accurate and in any event not defamatory, and further that Ds would be protected by the doctrine of qualified privilege[46].

64.According to Ds, they were also advised by GLP that no valid AGMs had been held by P for a number of years, namely from 2008 to 2013.

65.Thus, according to Ds, the 5 Purported Councillors were all appointed “unlawfully” as Articles 6 and 42 of A/A had not been complied with, as amongst other things the 5 Purported Councillors were not elected at an AGM, nor were they appointed by Voting Members to fill any casual vacancy in the CM.  Ds then made a complaint to TID.

66.On 8 February 2013, the Secretariat sent an email to Edward Chan, Alex Chiu, Crimson Chan, Benny Kong, Ken Fung, and Ds , notifying them a special CM Meeting would be held on 22 February 2013[47].

67.On 22 February 2013, an agenda was circulated by the Secretariat at 11:09 am for the CM meeting to be held at 6 pm that day[48].  The agenda items concerned the suspension of D2 as “Secretary”, and the holding of an AGM, the appointment of the Councillors and related matters of the EC.  As seen in the minutes, the suspension of D2 as “Secretary” was continued until the AGM.

68.The 68^th EC Meeting was held on 28 March 2013[49]. Both D1 and D2 were present.  D1 had again raised that as there was no decision on the Cancellation and/or the Confirmation Motion, there should not be any discussion in relation to the revised Certification Procedure and reduction of testing fees.  D1 also raised the matter of the suspension of D2 being the “Secretary”.  However, Ds were in the minority.   

69.At the 68^th EC Meeting, when discussing the BUD Project, the question of payment of consultancy fee (“Consultancy Fee”) to D1 or to HKU was brought up.  D1 had pointed out that he participated in P’s activities in his personal capacity and that there should not have been any mention of HKU in the proposal for the BUD Application.  D1 had said he did not read the proposal for the BUD Application before the 68^th EC meeting.  Raymond Chiu and Fanny Tang of the Secretariat/HKPC said they did send the contents of proposal for the BUD Application to D1.  D1 had explained during the trial that he did receive the 1^st draft of the proposal the BUD Application[50] and made certain amendments which P accepted, and that he did not read the final version until the 68^th EC Meeting.  Anyway, D1 had said in the meeting he had no knowledge or understanding on how to carry out the FIR research on glass based material and fabric which was to be undertaken in the BUD Project.  Further, as there could be conflict of interest on his part, he decided to withdraw from the research work of the BUD Project.  As a result thereof, Edward Chan indicated that due to D1’s withdrawal, the part of the application for the funding for the research work “on glass based material and fabric” in the BUD Application had to be withdrawn.  

70.An AGM was purportedly held on 8 April 2013 (“2013 AGM”).  At the 2013 AGM, the audited Financial Statements and Directors Report for the year ended 31 December 2010 and 31 December 2011 were adopted and auditors were re-appointed[51].  It was resolved that the retirement of the then existing Councillors was approved and 10 new Councillors (directors) were appointed with effect from 8 April 2013.  Neither D1 nor D2 was re-appointed as a Councillor.

71.On 10 April 2013, Ds met with Ms Angela Liu, the Principal Trade Officer of TID to lodge a “complaint of misconducts” against Edward Chan, Benny Kong, and Raymond Chiu and the “Unlawful Standing” of P. This was followed up by a letter dated 28 May 2013[52].

72.This was further followed by Ds lodging various other complaints including:

(1)     to the Hong Kong Police Force (“HKPF”), accusing P of using false instrument;

(2)     to the Independent Commission Against Corruption (“ICAC”), accusing persons involved in P’s affairs of engaging in corruption;

(3)     the Companies Registry (“CR”) alleging P’s breach of the Companies Ordinance (Cap 622) (“Cap 622”).

73.It was in about January 2014 that Ds complained to the CR that P had failed to hold any or any valid AGMs for the years 2010, 2011 and 2012.  By a further letter dated 21 February 2014[53], Ds informed CR that P had also failed to hold any AGMs for the years 2008, 2009 and 2013. 

74.It was Ds’ complaint that the 2013 AGM was defective due to the inadequacy of the notice given for the holding of the AGM.  Further, although P purportedly held the 2013 AGM, P withheld the minutes of the meeting from Ds and it was only on 24 June 2014 that Benny Kong sent them an email with a copy of the minutes attached (“2013 AGM Minutes”).  Ds sent Benny Kong a reply email querying why the 2013 AGM Minutes were only sent to them after more than 14 months after the 2013 AGM.    There was no response from Benny Kong to this email.  As a result, D wrote to Benny Kong a letter on 14 July 2014 copied to Edward Chan demanding a reply.  Again there was no reply. 

75.It was under the above circumstances that Ds then sent the Letter to Benny Kong, copied to all parties concerned (“Recipients”) about the unlawful status of P[54]. This was on 6 August 2014.

76.In light of Ds’ complaints to the CR, German Pool, as applicant, issued an originating summons in the High Court under sections 431 and 610 of Cap 622, against P as the respondent (“Originating Summons”), to seek various orders to rectify P’s defaults in failing to hold an AGM for the years of 2010, 2011 and 2012 and failing to lay P’s accounts at its AGM for the years ended 31 December 2009 – 31 December 2011 (HCMP 1894/2014)[55].  On 26 November 2014, Harris J granted an order that a general meeting held on or before 28 February 2015 was to be deemed to be the AGM for the years of 2011 and 2012 and that the period for laying the accounts for the years 2010 and 2011 be extended until 28 February 2015[56] (“Rectification Order”).

77.As said earlier, it was P’s allegation that the Letter contained the Statements which were false and defamatory, as a result of which P suffered loss and damage.

78.P issued the writ herein on 6 October 2014, initially against D1 only.  The writ and statement of claim were later amended on 13 July 2017 to include amongst other things, naming D2 as the 2^nd defendant.

79.Ds’ respective defences were filed and later amended respectively on 15 September 2017 and 20 October 2017.  P then filed it reply/amended reply thereafter.

80.Edward Chan was the only one who provided a witness statement and attended the trial to give oral evidence on behalf of P. P called no other witnesses.

81.D1 had filed a witness statement and attended trial to give oral evidence.  D2 filed altogether 3 witness statements and attended trial to give oral evidence.  They called no other witnesses. 

THE STATEMENTS

82.The Statements pleaded by P in the ASOC were as follows[57]:

(a.)     “It is deplorable that you have totally ignored our e-mail of 27 June 2014 and our subsequent registered letter of 14 July 2014 as attached regarding the unlawful status of the Hong Kong Far Infrared Rays Association (HKFIRA) by not responding at all to our enquires and requests.”;

(b.)     “In view of the serious nature of this unlawful status, we consider that all Honorary Chairmen, Honorary Consultants and Honorary of HKFIRA must be kept informed”

(c.)     “Companies Registry (CR)

CR should check with HKFIRA to ensure that timely application to the court for orders is made by HKFIRA to rectify the defaults which have rendered the company unlawful according to the respective requirements stipulated in the Companies Ordinance, Cap. 622.”

(d.)     “Trade and Industry Department (TID)

TID had funded HKFIRA ..... and thus should investigate the matter and find out why they funded an unlawful company with public money and what actions they should take to rectify the situation, including recovery of equipment purchased using the funding. The equipment purchased under the SME Development Fund will be transferred to HKFIRA at the end of the project period which is end of August 2014, It is the responsibility of TID to stop this equipment transfer to an unlawful company. In addition, the onus is on TID to explain why they decided to continue to fund HKFIRA through the new BUD funding …… with full knowledge 0f HKFIRA being an unlawful company.”

(e.)     “Innovation and Technology Commission (ITC)

ITC had funded HKFIRA ...... and thus should likewise investigate the matter and find out why they funded an unlawful company with public money and what actions they should take to rectify the situation.”

(f.)     “Hong Kong Productivity Council (HKPC)

HKPC is the Secretariat and Project Implementation Agent of HKFIRA and thus should explain why they as a public servant: served an unlawful company and continue to serve it after being fully informed about its unlawful status.

The public officers of HKPC should be obliged to investigate the matter and check with the Chairman of HKPC why HKPC continues to serve an unlawful company,”

(g.)     “The Professional Validation Council of Hong Kong Industries (PVCHK)

HKFIRA is cm Executive Committee member of PVCHK. It is important that PVCHK is duly informed about the unlawful status of HKFIRA so as to safeguard the interests of other member trade associations and companies as well as individual members.”

(h.)     “It is absolutely clear that the unlawful status of HKFIRA must not be allowed to drag on without any positive actions being taken by appropriate bodies.  We consider that all the above-mentioned bodies have due responsibilities not only to review their existing practices and procedures which allowed an unlawful company to conduct its business without being discovered for years but also to effect rectifications expeditiously after being informed about the unlawful status of HKFIRA.  This is the only way to uphold and safeguard the most important core value for Hong Kong: The rule of law.  Additionally, for the government and public bodies concerned, the issue of “due diligence” and “public good” must also be taken into consideration in justifying why an unlawful company was funded by the government with public money since HKFIRA has received a very substantial amount of funding from the government ...... and is expecting to receive new BUD funding …… from the government through TID.”

83.The above paragraphs in the Letter will be referred to collectively as the “Passages” and respectively, as Passage (a) to (h). 

Ds’ APPLICATIONS TO RE-AMEND DEFENCE

84.On 9 July 2021, Ds each issued a summons to seek leave to re-amend respectively their amended defences, essentially to plead that the Statements meant that P “was unlawful or had an unlawful status in that it was in breach of the law, including section 111 and section 122 of the Companies Ordinance, Cap 32” which were true in substance and in fact, and “justified by reasons of the matters pleaded hereinbelow”.

85.The underlined italicised words above were in fact not in Ds’ 1^st version of their proposed draft re-amendments and were added only on the 1^st day of trial when this Court heard submissions from Counsel in relation to the proposed re-amendments. 

86.Sections 111 and 122 of the Predecessor Ordinance provide as follows:

“111. Annual general meeting

(1) Every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it; and not more than 15 months, or such longer period as the Registrar may in any particular case authorize in writing, shall elapse between the date of one annual general meeting of the company and the next:

Provided that, so long as the company holds its first annual general meeting within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.

(2) If default is made in holding a meeting of the company in accordance with subsection (1), the court may, on the application of any member of the company, call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as the court thinks expedient, including directions modifying or supplementing, in relation to the calling, holding and conducting of the meeting, the operation of the company’s articles, and including a direction that 1 member of the company present in person or by proxy shall be deemed to constitute a meeting.

(3) A general meeting held in pursuance of subsection (2) shall, subject to any directions of the court, be deemed to be an annual general meeting of the company; but, where a meeting so held is not held in the year in which the default in holding the company’s annual general meeting occurred, the meeting so held shall not be treated as the annual general meeting for the year in which it is held unless at that meeting the company resolves that it shall be so treated.

(4) Where a company resolves that a meeting shall be so treated, a copy of the resolution shall, within 15 days after the passing thereof, be forwarded to the Registrar and recorded by him.

(5) If default is made in holding a meeting of the company in accordance with subsection (1), or in complying with any direction under subsection (2), the company and every officer of the company who is in default shall be liable to a fine; and if default is made in complying with subsection (4), the company and every officer of the company who is in default shall be liable to a fine and, for continued default, to a daily default fine.

(6) A company is not required to hold a meeting in accordance with subsection (1) if—

(a) everything that is required or intended to be done at the meeting (by resolution or otherwise) is done by a resolution or resolutions in accordance with section 116B; and

(b) a copy of each document (including any accounts or records) which under this Ordinance would be required to be laid before the company at the meeting or otherwise produced at the meeting is provided to each member of the company—

(i) by whom or on whose behalf the resolution or resolutions, as the case may be, is or are required to be signed under that section; and

(ii) before or at the same time as the resolution or resolutions, as the case may be, is or are provided to the member.

……

122.     Profit and loss account and balance sheet

(1)     Subject to subsection (1B), the directors of every company shall lay before the company at its annual general meeting a profit and loss account or, in the case of a company not trading for profit, an income and expenditure account for the period, in the case of the first account, since the incorporation of the company, and, in any other case, since the preceding accounts.

(1A)     The accounts referred to in subsection (1) shall be made up to a date falling not more than 6 months, or, in the case of a private company (other than a private company which at any time during the period to which the said accounts relate was a member of a group of companies of which a company other than a private company was a member) and a company limited by guarantee not more than 9 months, before the date of the meeting.

(1B)     The court, if for any reason it thinks fit so to do, may in the case of any company and with respect to any year—

(a)  substitute for the requirement in subsection (1) to lay a profit and loss account or (as the case may be) an income and expenditure account before the company at its annual general meeting a requirement to lay such account before the company at such other general meeting of the company as the court may specify; and

(b)  extend the periods of 6 and 9 months referred to in subsection (1A).

(2)     The directors shall cause to be made out in every calendar year, and to be laid before the company at its annual general meeting or at such other general meeting of the company as may be specified by the court under subsection (1B), a balance sheet as at the date to which the profit and loss account, or the income and expenditure account, as the case may be, is made up.

(3)     If any person being a director of a company fails to take all reasonable steps to comply with the provisions of this section he shall, in respect of each offence, be liable to imprisonment and a fine:

Provided that—

(a)  in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that he had reasonable ground to believe and did believe that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty; and

(b)  a person shall not be sentenced to imprisonment for such an offence unless, in the opinion of the court dealing with the case, the offence was committed wilfully.”

87.Ds’ summonses were taken out after P’s Opening Submissions were lodged on 6 July 2021 in which P had submitted that Ds’ case on the meanings of the Statements was pleaded in a convoluted fashion and that instead of distinctly spelling out what the Statements allegedly meant, Ds intertwined their alleged “meanings” into their plea of justification, and further Ds had failed to identify with aspects of the Statements had conveyed what parts of their alleged “meanings”.

88.Mr Cheung had referred this Court to what was held by Mr Justice Ribeiro PJ in Mak Shiu Tong v Yue Kwok Ying (2004) 7 HKCFAR 228, in particular in paragraph 23 of his judgment and quoting a passage from May LJ in Morrell v International Thomson Publishing Ltd [1989] 3 All ER 733[58], namely that where a defendant seeks to rely on justification, the defendant must do so in such a way as quite clearly, without circumlocution or obfuscation to inform the plaintiff and the court of precisely what meaning or meanings the defendant may seek to justify.

89.As seen in the quoted passage, May LJ had gone on to say:

“Although this may be done in the particulars of justification, there is then a substantial risk that the precise meaning will be lost in words. I see no reason why the meaning or meanings should not be set out directly, briefly and at the start of the plea. That, in my opinion, is the result of the authorities referred to and should be the practice followed in the future.”

90.In the amended defences, Ds seemed to have done what May LJ had opined should not be the practice, which was to plead in the particulars of justification the meaning or meanings of the Statements Ds were seeking to justify.  Even though the original pleadings were somewhat convoluted, the meanings Ds sought to justify were however set out in the particulars of justification pleaded.  In my view, Ds’ proposed amendments did not raise a new defence.  There was no prejudice to P.  For these reasons, and having heard Counsel’s respective submissions, I granted leave to Ds to each file a re-amended defence, which they did on the 1^st day of trial (“RAD”). I see no reason as to why Ds should not pay costs of their summonses and I order them to pay P’s costs of and incidental to their respective amendment summons.

WHAT LED TO THE DISPUTE BETWEEN DS AND EDWARD CHAN AND/OR P

91.As stated earlier, up until the 65^th EC Meeting, there was nothing in the minutes of the EC Meetings to indicate that there had been any issues in relation to the standard or criteria for the FIR test and certification, or any discord in the relationship between Ds and Edward Chan or the rest of the Committee Executives of the EC.

92.Edward Chan’s evidence in his witness statement was that the dispute between D1 and him (and/or P) arose in a director’s meeting on or about 5 March 2013 over the Consultancy Fee, namely whether the Consultancy Fee should be given to D1 directly or to the HKU first as a matter of procedure[59]. The Consultancy Fee was subsequently paid by P to University of Hong Kong.  It was Edward Chan’s evidence that as a result of this dispute, the relationship between D1 and P’s other members deteriorated.

93.There was no directors or CM Meeting on 5 March 2013.  In any event, according to D1, the dispute in fact arose over a product submitted by German Pool which failed to pass the Radiation Requirement.  On around 13 October 2012, German Pool wanted a product (silicon rubber), which was produced by Sharpwell[60] to be sent to Japan as soon as possible for test result after completing a pre test.[61] As seen in an email on 17 October 2012, a consultant at HKPC, WF Tang informed Edward Chan and Ricky of Sharpwell in writing that the test-sample were to re-run the FIR test and of the steps involved[62].  On 30 November 2012, the Secretariat at HKPC sent an email to Emily Cheng of German Pool copied to Edward Chan, D2, Ricky of Sharpwell and WF Tang and informed German Pool to send a cheque for the testing fee in Japan[63].  However, in an email of 10 December 2012, SY Yip informed the Secretariat that there was radioactive material in the sample which exceeded the safety standard[64], and this was reflected in his radioactivity test report issued on 10 December 2012 (“Test Report”)[65].

94.D1 duly informed the Secretariat that the test sample failed the Radiation Requirement and that the Certification Procedure should be terminated.  Thereafter, there was an email dated 12 December 2012 from Emily Cheng, the Executive Secretary of Edward Chan/German Pool copied to Edward Chan, D2 and WF Tang notifying the Secretariat that as the samples did not pass the Chinese University radiation test, the samples would not need to be sent to Japan for testing and therefore payment cheque for the testing in Japan would be withheld by German Pool[66]. Ricky of Sharpwell then sent an email on 13 December 2012 to the Secretariat to question the Radiation Requirement of 1 Bq/g and the reason for linking the Radiation Requirement to the FIR test, demanding an expeditious reply[67].  This email was copied to a staff at German Pool.  The Secretariat had forwarded Ricky’s email to D1 who then explained that the Radiation Requirement was adopted by P after consultation with the Health Department of HKSAR to ensure that any certified FIR materials would be safe to use without the radiation hazards[68].

95.Thereafter, there was an email sent out by D2 to various members with the subject matter on “Ionization Radiation – Urgent” stating that Edward Chan wanted to call for an urgent panel meeting of the Certification Procedure subcommittee 30 minutes before the 66^th EC Meeting and that the meeting would be to discuss and resolve current Certification Procedure and that Edward Chan wanted to resolve this matter in the forthcoming meeting and that those who would be absent would give up their rights, but on the other hand, Crimson Chan stated he wanted to add certain items to the agenda of the 66^th EC Meeting for the panel to prepare and provide support of the current Radiation Requirement for subsequent discussions and review , and that SY Yip had been invited to attend the 66^th EC Meeting to explain matters[69].

96.As indicated in his email, D2 had pointed out that what Edward Chan wanted to do and what Crimson Chan liked to add in the agenda were in contradiction.  Further D2 had queried in his email as to whether enough time was provided to notify panel members in relation to the panel meeting.

97.When asked under cross examination, Edward Chan claimed he never saw the product submitted or mentioned in the Test Report and that it was not surprising as many products needed to be tested.  When it was put to him that the Test Report was sent to German Pool after 10 December 2012 and it was upon receipt of the Test Report that he called the urgent panel meeting and/or the 66^th EC Meeting, Edward Chan then claimed he could not recall.  Edward Chan had also said he could not recall the agenda item in the agenda for the 66^th EC Meeting.  When asked about the Cancellation Motion, Edward Chan then said he seemed to have some recollection but he could not quite remember.  He further said he had no right to remove the Radiation Requirement and that the motion was passed by those present unanimously.

98.During cross examination, Edward Chan’s frequent answers were vague and that he could not recall. I accept that by the time of the trial, it was some 9 years after the relevant events.  However, one would have thought Edward Chan would at least review the minutes/documents produced by P before giving his evidence.  In any event, Edward Chan was clearly wrong about that Cancellation Motion being passed unanimously, since there was no unanimous vote and Crimson Chan and D2 had opposed the Cancellation Motion.  When this was pointed out to him, Edward Chan then defended himself by saying the Cancellation Motion was not proposed for his product only but for all products.  He then claimed that the Radiation Requirement of 1Bq/g gave rise to many problems for P.  Anyway, he maintained he proposed the Cancellation Motion without knowing about one of the products submitted by German Pool had failed the test.  The Test Report was sent to German Pool.  The emails mentioned earlier indicated that his Executive Secretary Emily Cheng had copied Edward Chan in her emails and I find whether Edward Chan had seen the product or not, he should be fully aware of the Test Report of the product.  Otherwise, there was no reason as to why SY Yip would be suddenly invited to the 66^th Meeting.  I do not find it probable that Edward Chan was not aware of the Test Report.

99.Edward Chan had admitted that he proposed the Cancellation Motion knowing that D1 was absent, and when asked why he proposed such an important matter when the Chairman of SCC was absent, Edward Chan’s reply was that it was not really that important and that it did not concern D1’s expertise.  When asked why he did not consult D1, Edward Chan had first said he did consult D1 orally and when it was put to him he did not, he then changed his evidence and claimed that he did not know that D1 would be absent from the 66^th EC Meeting.  However, D1’s evidence was that he had informed P in advance he was not able to attend the 66^th Meeting as he had to invigilate at a students’ examination and the Cancellation Motion was not one of the agenda items and that Edward Chan had proposed the Cancellation Motion knowing D1 was absent.

100.I find D1 a credible witness and have to say I do not find the evidence of Edward Chan satisfactory.  Whether there was any dispute over the payee of the Consultancy Fee or not, it was quite clear that the discord/dispute between Ds and Edward Chan and the rest of the EC Committee Executives first arose after the passing of the Cancellation Motion in the 66^th EC Meeting and was caused by the passing of the Cancellation Motion.  Having considered all the evidence, I accept Ds’ evidence that it was as a result of the failure of the product submitted by German Pool to pass the Radiation Requirement that led to Edward Chan proposing the Cancellation Motion at the 66^th EC Meeting in the absence of D1.  I also accept that Edward Chan should have disclosed his and/or German Pool’s interest in this matter in light of the Test Report, when proposing the Cancellation Motion at the 66^th EC Meeting and Edward Chan should have abstained from voting if he did vote.  In fact Ricky of Sharpwell should also disclose his interest in the Test Report and should have abstained from voting.

THE SCOTT SCHEDULE

101.The parties agreed to a Scott schedule of disputed issues (“Scott Schedule”).  There were 9 disputed issues stated therein. 

102.Although it was not admitted by D1 in his pleadings, it was not really disputed that the Statements referred to P.  Further, it was not disputed that D1 and D2 had jointly published the 06.08.14 Letter containing the Statements.  As said earlier, in their respective written Closing Submissions, Ds had made no submissions regarding fair comment.

103.Thus, after the 6 days’ trial, the main areas of dispute concern only the following:

(1)     What were the meanings of the Statements and whether the Statements were defamatory and/or false (“Issue (1)”);

(2)     Whether D1 and/or D2 could rely on the defence of justification (“Issue (2)”);

(3)     Whether D1 and/or D2 could rely on the defence of qualified privilege (“Issue (3)”);

(4)     Whether D1 and/or D2 published the Statements maliciously (“Issue (4)”);

(5)     What relief would be appropriate (“Issue (5)”).

ISSUE (1) – THE MEANINGS OF THE STATEMENTS

P’s pleaded meanings and Ds’ pleaded meanings

104.According to P’s pleaded case, the Statements meant:-

(i)     P’s existence as a body corporate is against the law;

(ii)     P does not have a lawful corporate status of receiving funding and P is committing fraud;

(iii)     P is not a trustworthy company; and

(iv)     P is dishonest and was acting in bad faith in the course of its business.

(collectively “P’s Pleaded Meanings”)

105.In their RAD, Ds’ case was that Statements meant that P “was unlawful or had an unlawful status in that it was in breach of the law, including Section 111 and Section 122 of the [Predecessor Ordinance]” (“Ds’ Pleaded Meanings”).

106.As summarised by Mr Cheung, the main difference on the parties’ respective meanings of the Statements are essentially:

(1)     P says the Statements carried the imputations to the effect that the very existence or status of P as a body corporate is unlawful, such that P’s receipt of government funding amounted to a fraud, rendering P an untrustworthy and dishonest company that was acting in bad faith in the course of its business;

(2)     On the other hand, Ds say that the Statements did not carry those imputations, but instead only accused P of being in breach of Sections 111 and 122 of the Predecessor Ordinance such that it was unlawful or had an unlawful status.

The relevant legal principles

107.As Lok J has summarised in Multi- Winner Investment Ltd v Lau Ming Yee [2017]1HKLRD 128, HCA 880/2011(22/11/16):

“(i) Words in an article are normally construed according to their natural and ordinary meaning, ie the meaning in which reasonable people of ordinary intelligence, with the ordinary person’s general knowledge and experience of world affairs, would be likely to understand them;

(ii) The natural and ordinary meanings include implied, inferred and indirect meanings;

(iii) Although the same words in an article may bear different meanings to different readers (because of their temperament, knowledge or experience etc), for the purpose of defamation litigation, the words have only one single meaning, and the court has to determine what that single meaning is;

(iv) For the purpose of ascertaining the single meaning, the court puts itself in the position of a fictitious ordinary reader;

(v) The fictitious ‘ordinary reader’ is described as one with the following characteristics:

He is a sort of half-way house between the unusually suspicious and the unusually naïve. 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 ...

(vi) The hypothetical reader is taken to be the representative of those who would read the publication in question;

(vii) In delimiting the range of permissible defamatory meanings, the court should rule out any meaning which ‘can only emerge as the produce of some strained, or forced, or utterly unreasonable interpretation’;

(viii) The context and circumstances of the words in an article must be taken into consideration, and the article must be taken as a whole;

(ix) Where the alleged libel is contained in a letter, the whole of the correspondence would form part of the context, for it may be assumed that the other party to the correspondence is aware of its contents;

(x)     Where there is disagreement as to what should count as context, it has been suggested that the test is what, having regard to all the circumstances, a reasonable person would be regarded as having read or seen.”

108.There was no dispute to the above general legal principles.

The natural and ordinary meanings

109.As seen earlier in the quoted passages of Lok J in Multi-Winner, the context and circumstances of the words in an article must be taken into consideration, and the article must be taken as a whole.

110.The Statements referred to the “unlawful status” of P in the opening Passages (a) and (b).  Ds had also explained in Passage (b) why they considered that various officers of P must be kept informed and also the “following parties” (ie those mentioned thereunder) should be duly informed so that appropriate action could be taken to put things right.

111.The “following parties” included CR, TID, ITC, HKPC and PVCHK.  In Passage (c) under CR, Ds stated that CR should check with P “to ensure that timely application to the court for orders is made by [P] to rectify the defaults which have rendered [P] unlawful according to the respective requirements stipulated in the Companies Ordinance, Cap 622”.

112.Mr Cheung submitted that without reference to any specific statutory provision and particulars of the alleged “defaults”, an ordinary reader would hardly take the Statements to mean mere non-compliance with P’s A/A that is short of a “serious nature”, but would be prone to assume much more serious contravention of the [Companies Ordinance] warranting even criminal sanction.

113.Mr Cheung also pointed out that the Statements made an unequivocal yet general reference to Cap 622, and thus they could not possibly be understood by an ordinary person to refer to the Predecessor Ordinance, or sections 111 and 122 thereof.

114.In Paragraph (c), the reference or mention was of “Companies Ordinance, Cap 622”.  In my view, an ordinary person would not know whether “Cap 622” refers to the chapter number of the Predecessor Ordinance or the current version.  Further, an ordinary reader would not know what sections 111 and 122 of the Predecessor Ordinance even if these sections were stated in Passage (c).

115.On plain reading of Passage (c), P was rendered “unlawful” due to its defaults in complying with the requirements in the Companies Ordinance.  In other words, an ordinary reader would have understood those words in Passage (c) to simply mean that P was an unlawful company because it had not complied with the requirements stipulated in the Companies Ordinance.

116.In Passage (c), Ds had called upon CR to check with P to ensure timely application was made by P to the court for orders to rectify the defaults.  On reading that, an ordinary reader would have understood that P could make an application to the court to rectify its defaults, but at the time of the letter there had been no progress made by P in that connection.  In light of the words “serious nature” being used, I accept that an ordinary reader would have understood that such defaults were serious and would carry sanctions, but the ordinary reader would also have understood that the defaults were capable of being rectified by the court.   

117.In my view, the reference to P’s “unlawful status” or P being an “unlawful company” should be read in the context of Passage (c), namely that P had failed to comply with statutory requirements, and had further failed to make any progress at that time to rectify the defaults.  

118.Mr Cheung submitted that in Passages (d) and (e) of the Statements, as Ds had queried why the TID and ITC provided funding to P, and urged them to investigate the matter and rectify the situation by “recovery of equipment purchased using the funding” and “stop this equipment transfer”, an ordinary reader would thus understand those words to mean that P does not have a lawful corporate status of receiving funding and “is committing fraud on TID and ITC on account of its receipt of a ‘very substantial amount of funding from the government’”.

119.Mr Cheung further submitted that under Passage (f), Ds had questioned why HKPC “served an unlawful company”.  Then in Passage (h), Ds had pressed for the review of certain public and private bodies’ then practices and procedures which allowed “an unlawful company” to conduct its business without being discovered for years, so as to uphold and safeguard the rule of law.

120.In Passage (d), Ds had referred to the funding provided to P by TID.  What Ds had asked TID to do was (1) to investigate the matter, (2) to find out why public funding was provided by them to an unlawful company, (3) what actions they should take to rectify the situation.  They also pointed out to TID that the onus was on TID to explain why TID decided to continue to fund P through the new BUD Application with full knowledge that P was an unlawful company.  In Paragraph (e), Ds had referred to the funding from ITC to P and Ds had equally asked ITC to do (1), (2) and (3) as with TID.

121.In the context and in light of the word “including”, the recovery of equipment and stopping the equipment transfer were, properly understood by an ordinary person to be among “actions” put forward to TID to consider, and that it would be for TID to decide as to what actions to take to rectify the situation of P’s unlawful status or being an unlawful company.  

122.There was no mention of fraud or dishonesty in the Letter.  Although the words “deplorable”, “serious nature of this unlawful status”, and “The rule of law” were used, those words could not, in my view, include any implied, inferred and/or indirect meaning that “[P] is committing fraud on TID and ITC on account of its receipt of a ‘very substantial amount of funding from the government’”.  I am of the view that an ordinary reader could not have understood the Statements to be alleging fraud, bad faith and/or dishonesty.  

123.Having considered all the above, I am of the view that the natural and ordinary meanings of the Statements are that P was unlawful or had an unlawful status as it was in breach of the law including breach of certain statutory provisions in relation to companies. 

124.I thus accept Ds’ Pleaded Meanings and reject P’s Pleaded Meanings.  

Whether the Statements were defamatory and/or true

125.Lok J has summarized in Multi-Winner at paragraph 43:-

“The matters published are defamatory if they expose the claimant to contempt and ridicule by others and cause others to shun him. The matters would also be defamatory if they lower the claimant’s estimation in the eyes of right-thinking members of society and adversely affect his reputation.”

126.Mr Cheung had also referred to what was observed by Tugendhat J in Thornton v Telegraph Media Group Ltd. [2010] E.M.L.R. 25 at paragraph 34, that:

“i) There are two main varieties of each of the torts of libel and slander: (A) personal defamation, where there are imputations as to the character or attributes of an individual and (B) business or professional defamation, where the imputation is as to an attribute of an individual, a corporation, a trade union, a charity, or similar body, and that imputation is as to the way the profession or business is conducted. …

iii)  Business or professional defamation also comes in a number of sub-varieties. … b) Imputations upon a person, firm or body which may deter other people from providing any financial support that may be needed, or from accepting employment, or otherwise dealing with them.  In these cases there may be more of a role for the opinion or attitude of right-thinking members of society.”

(emphasis added)

127.It was further submitted by Mr Cheung that where the words denigrate a plaintiff’s business or professional capacity, they may be defamatory even though they in no way reflect on the character of the plaintiff: Gatley on Libel and Slander (12 Ed), at paragraph 2.3 (p 36).

128.It was Mr Cheung’s argument that the Statements were plainly defamatory, citing Gatley on the following:

(1)     The imputation of a criminal offence would usually be defamatory, and the issue does not turn solely on the penalty: eg to say that someone had wilfully failed to obtain a television licence would reflect on his honesty and might be defamatory: Gatley, at paragraph 2.28 pages 67-68; 

(2)     Any imputation which may tend to injure a person’s reputation in a business, employment, trade, profession, calling or office carried on or held by him is defamatory, provided that such imputation meets the necessary threshold of seriousness: Gatley, at paragraph 2.35 at page 78

129.Ds’ case as set out in the Scott Schedule was that the Statements were not defamatory in the sense of P’s Pleaded Meanings, but were defamatory in the sense of the meaning pleaded in respectively paragraph 10 of D1’s RAD and paragraph 13 of D2’s RAD.  This Court has earlier accepted Ds’ Pleaded Meanings, and find the Statements were defamatory in the sense as pleaded by Ds.

ISSUE (2) – JUSTIFICATION

The legal principles

130.Mr Cheung referred the Court to the principles as summarised by Lok J in Bawang International (Group) Holding Limited v Next Magazine Publishing Limited (unreported, HCA 1109/2010, 23.5.2016) as follows:-

“78. ... In considering the defence of justification, the court then has to determine:

(i)     whether Words bear the Lucas-Box meanings as contended for by the Defendant; (ii) if so, whether as a matter of fact that any of all of the Lucas-Box meanings is true; and (iii) whether the proved meanings are sufficient to meet the libellous stings conveyed by the Words in the Article.  It is only when each of the stings is properly met with true facts that the defence of justification succeeds.”

(emphasis added)

131.Mr Chung on the other hand referred the Court to those principles relating to the defence of justification summarised by Madam Recorder Teresa Cheng SC in paragraphs 106-107 of United Muslim Association of Hong Kong v Yusuf Yu and Ors v Yusuf Yu and Ors, HCA 640/2012, unrep, 14.05.15 that:

“106. In establishing the defence of justification, only the substantial truth of the imputation needs to be proven by the defendants. In other words, the defendants have to prove that ‘the main charge, or gist of the libel’ is true (Sutherland v Stopes [1925] AC 47 (HL)) (emphasis added)

107.  A defence of justification would still succeed even if the publication was inaccurate in some minor respects provided that it is not one of material inaccuracy. Slight inaccuracy therefore would not defeat the defendants’ reliance on the defence of truth.” 

132.What seems clear from the above is that Ds only need to prove the substantial truth of P’s Pleaded Meanings of the Statements. This can also be seen in section 26 of the Defamation Ordinance, Cap 21 which provides as follows:

“26. Justification

In an action for libel or slander in respect of words containing 2 or more distinct charges against the plaintiff, a defence of justification shall not fail by reason only that the truth of every charge is not proved if the words not proved to be true do not materially injure the plaintiff’s reputation having regard to the truth of the remaining charges.”

Particulars of justification

133.In their respective RADs, Ds pleaded that P was unlawful or had an unlawful status in that P was in breach of the law including Sections 111 and 122 of the Predecessor Ordinance and the particulars of justification pleaded by Ds included the following:

(i)     The 5 Purported Councillors, namely Edward Chan, Ken Fung, Alex Chiu, D1 and D2 were appointed on around 3 April 2009 unlawfully and not in compliance with Articles 6 and 42 of the A/A;

(ii)     If which was denied, any of the above 5 Purported Councillors were appointed lawfully and complied with the A/A, then they had not been re-elected at an AGM thereafter after the term of 2 years;

(iii)     All resolutions and minutes decided in all subsequent general meetings if any, and/or CM Meetings if any, and/or EC Meetings if any, were not in compliance with the A/A and unlawful;

(iv)     Since the inception of P in 2006 until the date of the publication of the Statements on 6 August 2014, P failed to hold or any valid AGMs and P and/or its CM had not been authorised to apply for and receive grants and/or funding from various governmental bodies or institutions;

(v)     Further, by reasons of the above, the annual returns (“AR”) and financial statements (“Financial Statements”) had not been adopted, approved and/or accepted by a sufficient quorum of at least 3 Voting Members pursuant to Article 21 of the A/A;

(vi)     Further, if the necessary general meetings or CM Meetings were held, D1 averred that the purported meetings were inquorate pursuant to Article 21 or Article 48 of the A/A, as at all material times, only one Voting Member/one Councillor, namely Crimson Chan was recorded to have attended all of the purported AGMs and CM Meetings after 21 August 2006 held by P;

(vii)     P had been approved and/or granted funds of a total HKD 7,234,450[70] and all performance of the duties and functions of P including but not limited to the acceptance of the funds and/or grants were unlawful because the purported CM and the Councillors were appointed unlawfully and that thus they lacked at all material times capacity and authority to officiate and perform the functions and duties in accordance with the A/A.

134.As set out above, Ds’ defence of justification was essentially based on P’s failure to hold AGMs (being an offence under Section 111 of the Predecessor Ordinance) and failure to comply with various provisions of the A/A.

The failure to hold AGMs

135.As said earlier, the 1^st AGM should be held within 18 months of P’s incorporation, namely before 11 February 2008.

136.As early as 31 July 2007, Angelo Cheung had sent an email to Crimson Chan, seeking advice on the appointment of auditors and stating clearly that the due date for the AGM must be on or before 10 February 2008 with presentation of the 1^st audited report for year ended 31 March 2007[71].

137.On 7 September 2007, Angelo Cheung sent another email to Crimson Chan to remind him again of the AGM and filing due in time[72].  Crimson Chan then forwarded that email to D2 and D2 had replied to say that the issues raised would be in the agenda for the next meeting[73].  No such agenda was drawn to this Court’s attention and there was no mention of holding any AGM or preparation of audited accounts in the minutes of the following EC Meeting, in so far as the Court can see.

138.It was D2’s evidence that he was informed by email from a Sophia Law (the assistant of a EC member) on 19 December 2007 that she had learnt from Edward Chan that on 18 December 2007 an AGM had been held in the week of 10 December 2007[74].  D2 responded that he was not aware of any AGM and that he had checked with a couple of EC members who were also not aware of any AGM having been held.

139.What can be seen from the email sent by a Ms Annie Lam (“Annie”), the assistant of Alex Chiu on 8 April 2009 @3.11pm is that Mizuho Tanaka and Angelo Cheung had wanted to resign and that Annie had prepared minutes of a revised AGM and two resignation letters and had said that as the effective day for resignation and re-appointment of Councillors would be 21 August 2008 (ie two years after the 1^st appointment), the date of 31 January 2008 in the 1^st  AR of would not be affected and that she would file the 1^st AR the following day as usual and then file the notification for change of directors (Form D2A) afterwards.  D2 responded at 6:55pm to inform Annie it was resolved at the EC Meeting that Mizuho Tanaka was to remain as a Councillor, thus totalling 7 Councillors[75].  The 7 Councillors were Crimson Chan, Mizhuo Tanaka and the 5 Purported Councillors (“7 Councillors”).  There was then no immediate response from Annie. Annie later sent an email to D2 on 16 April 2009 @6:17pm attaching a revised AGM (minutes) and also the Form D2A and asked D2 to help to arrange the resignation letter to be signed[76].  What was attached was a copy of the minutes of what was purported to be the 1^st AGM held on 31 January 2008 and which was to be signed by Crimson Chan (“2008 AGM Minutes”). 

140.In the 2008 AGM Minutes, there were 3 agenda items, namely (i) noting that the audited accounts and directors’ report for the period from 11 August 2006 to 31 December 2007 had not been finalized; (ii) resolving that the 7 Councillors were to be re-appointed for two years with effect from 21 August 2008; and (iii) resolving that the auditors were to be appointed[77].  D2 then sent the 2008 AGM Minutes and also the resignation letter of Angelo Cheung to Crimson Chan on 20 April 2009 for Crimson Chan to arrange for signature by himself and by Angelo Cheung respectively[78]. 

141.There was no evidence that there had been notice given to P’s members of the purported AGM under Article 17, or under Articles 68, 69 and 70 of A/A, and there was no evidence that any AGM had taken place on 31 January 2008.  It was not stated in the 2008 AGM Minutes as to which of P’s members were present at the purported AGM, and there was only one Voting Member, Crimson Chan, who was to sign.  There was no evidence that Article 21 of the A/A had been complied with.  There was no evidence that there was a sufficient quorum for the passing of those resolutions in the 2008 AGM Minutes, including the resolution for the purported appointment/re-appointment of the 7 Councillors.

142.The 2008 AGM Minutes were made up only in April 2009 and was a non-contemporaneous document compiled by Annie and/or Alex Chiu.  I am of the view that there was no or no valid 2008 AGM held, and no valid written resolution passed in lieu of the AGM

143.As for the purported AGM held on 30 April 2009, Annie had attached in her email to Jennie Kwok of the Secretariat at HKPC (“Jennie”) and to D2 on 29 April 2010 @ 11:02[79] (i) a copy of the notice for what was stated to be the 1^st AGM[80], (ii) a copy of the AR1 as at 30 April 2009[81], and a copy of the 1^st AGM minutes (“2009 AGM Minutes”)[82], asking them to ask Crimson Chan to sign and to remind them that the AGM for 2010 should be held not later than 31 July 2010 and that there had to be re-election of the Councillors[83].  Jennie then forwarded the email from Annie with all attached documents to Crimson Chan copied to D2[84].  D2 replied to Jennie to say he had signed 2 of the documents (ie the notice for the AGM and the AR1 from)[85] and asked Jennie to check with Annie as to whether those were in order, and also whether Crimson Chan had to sign the 2009 AGM Minutes[86].  Annie had replied that the 2009 AGM Minutes had to be signed by Crimson Chan.

144.It would appear that Crimson Chan did sign on the 2009 AGM Minutes and returned the same to Jennie on 30 April 2010[87].

145.Although the 2009 AGM Minutes were signed by Crimson Chan, this was signed only on about 30 April 2010, a year after the purported AGM.  There was also no sufficient evidence that the notice of the 2009 AGM was sent out to members in accordance with Article 17 and/or other provisions of A/A.  It was however clear that no AGM had been held on 30 April 2009, and that the 2009 AGM Minutes were not a contemporaneous document.  There was also no evidence that there was a sufficient quorum pursuant to Article 21 of the A/A for the passing of the resolutions stated in the 2009 AGM Minutes.  I find there was no or no valid 2009 AGM held and no valid written resolution passed in lieu of the AGM.

146.As for the 2010 AGM, the purported notice for the AGM to be held on 28 October 2010 was signed by D2 but dated the same date of the purported AGM[88]. According to D2, he was only notified by Jennie by phone to attend the meeting on 28 October 2010 and the meeting was only attended by 3 persons D2, Jennie and Crimson Chan.  Minutes for the purported AGM were signed by Crimson Chan on 28 October 2010 (“2010 AGM Minutes”)[89].  It was however admitted by Edward Chan during the trial that no AGM was held in 2010.  There was no evidence that there had been sufficient notice given to the members for the AGM pursuant to Article 17 of the A/A, or that there was sufficient quorum pursuant to Article 21.  Further, P’s correspondences with the CR set out below and the Originating Summons indicated that no AGM was held in 2010.

147.As said earlier, in about January 2014, Ds had lodged a complaint against P to the CR.  On 28 January 2014, CR sent a letter to P[90], setting out the various complaints received by CR including (i) P’s filing of a Form D2A to report the resignation of D1 and D2 as the director and secretary of P respectively was unlawful; (ii) P’s failure to hold an AGM for the years of 2010, 2011 and 2012 respectively; (iii) P’s filing of the ARs for the years of 2010, 2011 and 2012 were improper; and (iv) two members of P were not able to inspect minutes of meetings and reasons for cessation of their positions as director and secretary of P.  In the letter, P was reminded that complaints in connection with any breach of the [Predecessory Ordinance] would be “seriously investigated” by CR and that P was reminded that it and its officers were duty bound to strictly comply with the requirements under the [Predecessor Ordinance].  P was further required to provide information and documents for the investigation by CR within the time stipulated.

148.P sent a reply to the CR’s above letter on 14 February 2014 to seek extension of time to respond.  In the meantime, as mentioned earlier, Ds had sent a further letter to inform the CR that P had not held any or any valid AGMs for 2008, 2009 and 2013.  Eventually, P sent a reply to CR on 25 March 2014 and amongst other things, admitting that P had not held any AGMs for the years of 2010, 2011 and 2012 and that the 1^st AGM was held on 8 April 2013 although P alleged such was due to D2’s oversight[91].  Thereafter, CR sent a letter on 14 April 2014[92] seeking further information, in particular asking P to confirm whether P held any AGMs for the years of 2010, 2011 and 2012, and if not, asking P to confirm whether the date of the AR stated in each of the ARs filed for the years 2010, 2011 and 2012 was incorrect , as no AGM had been held or written resolution passed in lieu of AGM, and if so, asking for an explanation for reporting the incorrect information.

149.In P’s response of 28 April 2014, P confirmed that P did not physically hold any AGMs for the years 2010, 2011 and 2012 and offered an explanation as to why an incorrect date was stated in each of those ARs blaming D2 for the same[93].

150.CR responded on 23 May 2014, noting P’s failure to hold any AGM for 2010, 2011, and 2012 and that it was only at the 2013 AGM, ie 8 April 2013 that it was resolved that the audited Financial Statements together with the report of the Councillors for the years ended 31 December 2010 and 31 December 2011 were received and adopted.

151.CR then drew P’s attention to section 111(1), sections 122(1) and 111(2) of the Predecessor Ordinance and asked P to let CR know whether P would take out applications for orders pursuant to sections 111(2) and 122(1B) to rectify the defaults, failing which the CR would take prosecution action against P and/or its directors.  CR demanded a reply within 10 days, and further expressly reserved all rights of prosecution against P and/or its directors for breach of the [Predecessor Ordinance][94].  CR further drew P’s attention to sections 120(1) and 120(2) of the Predecessor Ordinance and reminded P that minutes of proceedings of any general meeting had to be open to inspection by any member without charge.

152.There appeared to be no response from P to CR’s above letter at all.

153.Having received no response from P, CR sent a further letter on 10 June 2014, giving P a further 5 days and with still no response, CR sent another letter of 20 June 2014, giving P another 5 days to respond[95].

154.In the meantime, on 3 March 2014, the new Companies Ordinance Cap 622 came into force.

155.It was only on last day of the deadline imposed by CR, ie 25 June 2014, that P finally replied to the CR, and among other things, confirmed that they had on 24 June 2014 sent a copy of the minutes of the 2013 AGM to Ds, and that P would take out application to rectify its defaults[96].

156.As pointed out by Ds, there was no explanation by P at all as to why a copy of the minutes of the 2013 AGM was only sent to Ds on 24 June 2014, some 14 months after the 2013 AGM.

157.In so far as the 2013 AGM was concerned, Ds’ complaint was that P had failed to issue any notice under Articles 6, 68, 69 and 70 of the Articles of Association.  It was D2’s evidence that although on 15 March 2013, the Secretariat sent an email in relation to the holding of 2013 AGM on 8 April 2013[97], this was only sent to the EC members and some related parties and not to all the members of P[98]. Subsequently, the notice of the AGM was sent by email to members of P on around 26 March 2013, but there was no sufficient evidence that the mode of giving notice prescribed in Articles 68, 69 and 70 of A/A had been complied with.

158.It was also Ds’ complaint that P had also not made available the 2013 AGM Minutes to all members of P, and Ds only received those minutes on around 24 June 2014.  Ds pointed out that as proper notice of the 2013 AGM had not been given to all P’s ordinary members, Article 19 of the A/A would not assist P, since the whole class of ordinary members had not been given the required notice of a minimum of 21 days.  Ds also pointed out only one Voting Member, ie Crimson Chan, had attended in the form of proxy to Alex Chiu and there was no sufficient quorum at the meeting.  There was no sufficient evidence from P to contradict Ds’ evidence.

159.The 2014 AGM was held on 3 April 2014 but it appeared that notice was only given by email again and only one Voting Member, Crimson Chan had attended in form of a proxy given to Alex Chiu. Ds made the same complaint about the 2014 AGM as with the 2013 AGM.  Thus both the 2013 AGM and the 2014 AGM were not valid AGMs as there had been no proper notice given.

160.In any event, notwithstanding P’s letter of 25 June 2014 to CR, by 9 July 2014, no application had been taken out by P, and CR sent a further letter to P imposing a deadline of 14 days for them to do so[99].

161.There was no explanation by P of its delay.

162.During the trial, Edward Chan had expressly admitted during cross examination that there were no AGMs or valid AGMs from 2008 to 2012 and also 2013. 

163.Having considered all the above, I find that up to the time when Ds sent the Letter containing the Statements on 6 August 2014, there had been failure on the part of P to hold any or any valid AGMs since its incorporation in 2006 and there had not yet been any rectification of its defaults. 

P’s application for rectification

164.The Originating Summons was eventually issued by German Pool, as a member of P.  There was some confusion as to the date when the Originating Summons was issued.  According to the entry on the court filing record, the Originating Summons was filed on 1 August 2014.  However, a filing date of 7 August 2014 and time of 1140 was written on the backpage of the Originating Summons and 7 August 2014 was also stated by P’s solicitors to be the filing date[100].  Further, in the Rectification Order, the Originating Summons was stated to be filed on 7 August 2014 and the supporting affirmation of Edward Chan was only filed on 27 August 2014.  In any event, Edward Chan had to file a 2^nd affirmation on 24 November 2014.  It was only on 26 November 2014 that Harris J granted the Rectification Order.  As seen in the Rectification Order, the failure of holding an AGM for the year of 2010 was not rectified and the defaults for 2011 and 2012 referred to in the order would only be rectified at a general meeting to be held by P on or before 28 February 2015.

165.In short, the defaults had not been rectified at the time of Ds sending out the Letter, nor was there any sufficient evidence that Ds were aware that an application had been made by German Pool against P for rectification of P’s defaults. 

The ARs

166.On the 2008 AR presented by Simatelex on 9 April 2009[101], the date to which the return was made up was stated to be 31 January 2008, and D2 was reported to be the Secretary, and the directors were reported to be the 1^st 3 Councillors.  As found earlier, there was no evidence that any AGM was held on 31 January 2008 nor was there any written resolution signed on that date.

167.The 2009 AR was presented by Simatelex on 16 July 2010[102], and the date to which the return was made up was stated to be 30 April 2009, and the directors were reported to be the 7 Councillors (2 out of the 1^st 3 Councillors plus the 5 Purported Councillors, and Angelo Cheung appeared to have ceased to be a Councillor, but Mizuho Tanaka had remained one).  As set out earlier, there was no AGM held on 30 April 2009 or was there any written resolution signed on that date.

168.The next 2010 AR was presented by Simatelex on 1 December 2010[103] and the date to which the return was made up was stated to be 28 October 2010 and that the same 7 Councillors were reported to be the directors.  As said earlier, it was admitted by Edward Chan that no AGM was held on that date and there was also no sufficient evidence of any sufficient quorum for the passing of written resolution on that date.

169.The 2011 AR and the 2012 AR were presented by Simatelex respectively on 19 June 2013 and 17 June 2013 and the dates to which the AR were made up were stated to be respectively 28 December 2011 and 28 November 2012[104]. The 2013 AR and 2014 AR were only presented by Simatelex on 19 May 2014 (which was after the 2013 AGM) and the dates to which the AR were made up were respectively stated to be 8 April 2013 and 3 April 2014.

170.In any event, in P’s letters with CR, P had admitted that the dates to which the returns were made up as stated on the ARs for the years 2010, 2011, and 2012 were incorrect.

Appointment of the Councillors

171.There was no dispute that the 1^st 3 Councillors were validly appointed, but their term would have expired by 21 August 2008.  As found earlier, there had not been any or any valid 2008 AGM or 2009 AGM.  As for the appointment of the 5 Purported Councillors, even if they were duly appointed on 30 April 2009, the date of the purported 2009 AGM, then their term would have expired on or before 30 April 2011.  

172.P’s case was that the Councillors were validly and lawfully appointed under Articles 6 and 42 of the A/A.  According to P’s pleaded case in its reply to Ds’ respective amended defence, upon appointment of the 1^st 3 Councillors, there was a “casual vacancy” of 7 seats under Article 40 of the A/A and that the CM appointed the other Councillors pursuant to Article 42 of the A/A[105].

173.Article 42 of the A/A only provides that the number of Councillors shall not be more than 10 and not less than 3.  In the present case, at the 1^st CM Meeting, only the 1^st 3 Councillors were appointed.  There was no “casual vacancy” until one of those 1^st 3 Councillors ceased to be a Councillor.  When the 5 Purported Councillors were purportedly appointed, there were at least 2 out of the 1^st 3 Councillors still being Councillors.  There was no evidence, nor could it be said that the 5 Purported Councillors were appointed to fill any “casual vacancies”.  In any event, apart from the 1^st CM Meeting, there was no evidence of any further CM Meeting until 22 February 2013 (“2^nd CM Meeting”), which was attended by Edward Chan, Crimson Chan, D2, Alex Chiu , Ken Fung and Benny Kong (who was not a Councillor)[106].  D1 and Mizuho Tanaka were absent.  This was the CM Meeting during which Edward Chan had proposed a motion to suspend D2’s duties temporary until the next AGM, and the motion was passed.  It was only during the 2^nd CM Meeting that it was resolved that there would be 7 Councillors in total and that the nomination and voting procedures were resolved, in that P’s members could nominate and select 7 Councillors whose term would be for 2 years. 

174.Even if the CM had purported to exercise its power under Article 42 to appoint a Voting Member to fill such “casual vacancy” the Councillor/Voting Member so appointed had to retire at the next AGM, ie the 2013 AGM on 8 April 2013.

175.However, as found earlier, the 2013 AGM was not validly held due to the lack of proper notice to all members of P.  As a result, any resolutions passed by at any general meetings and/or CM Meetings and/or EC Meetings would not been validly passed in compliance with the provisions of the A/A. 

176.P had relied on the “deeming provision” of Article 53 of the A/A, namely that if there was some defect in the appointment of any Councillors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Councillor.  However, this provision only applied to acts done at a CM Meeting and not at AGMs.

The audited Financial Statements

177.The audited Financial Statements for the year ended 31 December 2009 were chopped with the date of 12 August 2010[107] but they were only sent by Annie to Jennie on 3 November 2010[108].  Thus, it would appear that they could not have been laid before the members of the purported 2010 AGM.  The copies of the audited Financial Statements of P for the years ended 31 December 2010 and 31 December 2011 produced by P during the trial[109] were only dated 8 April 2013 and approved by the CM and signed by the Chairman/ 2 Councillors on 8 April 2013 namely the date of the 2013 AGM.  Those for the years ended 31 December 2012 and 31 December 2013[110] were only dated and approved on 3 April 2014, and those for the year ended 31 December 2014[111] were dated and approved on 21 August 2015.  In light of the AGMs were either not held or not held validly, there would not be valid approval of the Financial Statements by members.

178.There was also no sufficient evidence that the above Financial Statements had been adopted, approved and/or accepted by a sufficient quorum of at least 3 Voting Members pursuant to Article 21 of the A/A.

Whether “unlawful” or “unlawful status”

179.To summarise, P had failed to hold any physical AGMs after its incorporation in 2006 and the 2013 AGM was the first purported physical AGM.  There were also no valid written resolutions passed in lieu of the AGMs.  As for the 2013 and 2014 AGMs, the notice requirements to members had not been complied with.  Further, the 2013 and 2014 AGMs were attended by only one Voting Member, namely Crimson Chan who attended only by way of proxy.  There was no sufficient evidence that pursuant to Article 21 or Article 48 of the A/A, there was a sufficient quorum for those meetings or passing of resolutions therein.  As a consequence, the audited Financial Statements had not been properly laid before the members or approved by members at an AGM, nor were the Councillors validly appointed or re-appointed.  As said earlier, P had also failed to file ARs with correct dates to which the respective returns were made up. 

180.As for the CM Meetings, after its incorporation and up until 22 February 2013, there were only 2 CM Meetings, the 2^nd one being on 22 February 2013.  There was no sufficient evidence that there had been any CM Meetings held for the approval and/or receipt of the government funding of HKD 7,234,450.

181.Mr Cheung submitted that the failure in holding AGMs under section 111(1) of the Predecessor Ordinance would only attract a fine under section 111 (5), and that there was no statutory provision that such a company would become an “unlawful” organisation or in “unlawful status”.  Further, failure to lay the Financial Statements at an AGM under section 122 (1) would only render the director liable to be fined, and only in case of wilful default, to imprisonment under section 122 (3), but not the company, ie P.  Nor would P become “unlawful” for its director’s failure to lay accounts at AGMs.  Mr Cheung submitted that so far as section 122 of the Predecessor Ordinance was concerned, the liability was solely on the Councillors, and even if there was such a default, P could not be said to be “unlawful” for the alleged default on the part of the Councillors.  

182.Mr Cheung had referred to what was observed by Anthony Chan J in Re Belgravia Properties Ltd [2013] 5 HKLRD 337, that once default had been established, the court should normally exercise its discretion in favour of having a meeting which will have the effect of remedying the default save in exceptional cases and exceptional cases must be established with cogent evidence[112].

183.In Ta Yang Group Limited and Ta Yang Silicone Rubber Industrial Company Limited, HCMP 446/2007 (unrep) 27.03.07, the directors of the companies in question sought relief because they wished to comply with the law.  S Kwan J, as she then was, accepted amongst other things there was no wilful default and that the companies had relied on professional advice and that the directors had promised to comply with statutory requirements in future.  Similarly, in Re Artini International Company Limited, HCMP 2065/2007, (unrep) 16.11.07, S Kwan J, as she then was, accepted amongst other things that the applicants in those cases had relied on professional advice and there was no wilful default and that the shareholder and directors genuinely wished to comply with the law.

184.Mr Cheung argued that it could not be right that all those companies (and their directors) in default in the above cases could be “publicly named and shamed as “unlawful companies” or in “unlawful status” by any one without fear of any legal consequences under defamation law”.

185.On the other hand, Mr Chung had referred the Court to United Muslim Association of Hong Kong and Ors v Yusuf Yu and Ors, HCA 640/2012, unrep, 14.05.15 where it was held that the failure to hold an AGM or the holding of an invalid AGM could be described as “illegal”. Mr Cheung however pointed out that in that case, the plaintiffs were not members of the Association or of its Council, and thus did not have legitimate right to call any meeting and that they were trying to illegally hold such a meeting and that the plaintiffs were not the legitimate personnel were therefore factually true[113]. Mr Cheung however submitted that notwithstanding that, the lawful status of the Association stayed intact.

186.Further, Mr Cheung pointed out that in the Hong Kong Racing Pigeon Association Limited v Lam Koon Nam [2002] 3 HKLRD 133 cited in the United Muslim case and relied on by Ds, the meeting convened by the defendants therein, as opposed to the defendants themselves or the Association, was unlawful and the resolutions passed therein invalid.

187.As was pointed out by Anthony Chan J in Re Belgravia Properties, under Section 111, members of a company have a right to have a meeting every year and this is an important right and sanction has been prescribed for the failure to give effect thereto[114].

188.In the Ta Yang case, as well as the Artini case, S Kwan J, as she then was, was satisfied that the applications were made because the shareholders/directors of the companies concerned had wished to comply with the law.  In other words, it was accepted by the applicants/companies that they had not complied with the law and that was why the applications were made.

189.Breach of Section 111 of the Predecessor Ordinance could attract a fine of HKD 50,000 for the company and every officer while a breach of Section 122 could attract a fine of HKD 300,000 and imprisonment of up to 12 months.  Although there was no prosecution by the CR in the end and/or such prosecution had been time-barred, the breaches were drawn to P’s attention latest by the CR on 23 May 2014.  Notwithstanding the deadlines imposed by the CR, there was no application made by P to the Court to rectify its defaults until August 2014 and it was not until 26 November 2014 that P obtained the Rectification Order, and even then, as mentioned earlier, there was no order granted for the rectification of all P’s defaults, such as failure to hold an AGM for 2010, or prior thereto, and further the defaults could only be rectified at an AGM to be held on or before 28 February 2015.  

190.Ds had sent a letter on 5 September 2014 to P, upon finding out about the Originating Summons and Ds had complained amongst other things that such application was made without members’ knowledge or consent[115]. Suffice to say, at the time of Ds sending the Letter, there was no evidence that Ds had knowledge of P having issued the Originating Summons despite P having being informed of their defaults, and further P ignored the deadlines imposed by the CR.  P had also ignored Ds’ emails and letters as set out earlier.

191.In relation to the meaning of an “unlawful company”, at the oral hearing for Closing Submissions, Mr Chung submitted to the Court the definitions of “unlawful”, “illegal”, and “illicit” by Oxford Dictionary on Lexico.com.  In particular, “unlawful” is defined as “Not conforming to, permitted by, or recognized by law or rules” and on the difference between “unlawful” and “illegal” under “Usage”, one is referred to “illegal”.

192.“Illegal” is defined to be “contrary to or forbidden by law, especially criminal law”, and under “Usage”, it is stated:

“Illegal and unlawful have slightly different meanings, although they are often used interchangeably. Something that is illegal is against the law, whereas an unlawful act merely contravenes the rules that apply in a particular context. Thus handball in soccer is unlawful, but it is not illegal. A third word with….”

193.The above definitions show that un unlawful act may not necessarily be an act which is “against the law”.  Hence, it was submitted by Mr Chung that an “unlawful status” may not be an “illegal status” and an “unlawful company” may not be an “illegal company”.

194.Mr Cheung referred the Court to Stocker v Stocker [2019] UKSC 17 where it was held amongst other things that the trial judge in that case had fallen into legal error by relying on the dictionary definition of the verb “to strangle” as dictating the meaning of the defendant’s Facebook post, as a consequence of which he had failed to conduct a realistic exploration of how the ordinary reader of the post would have understood it.   

195.In the present case, Mr Cheung referred to the dictionary meanings to distinguish between “unlawful” and “illegal” in order to justify Ds’ use of the word “unlawful” or “unlawful status”, and not “illegal” or “illegal status”, when P was in breach of the A/A and statutory provisions.

196.I accept Mr Chung’s submissions that describing a company an “unlawful company” or having an “unlawful status” does not necessarily mean the company is an “illegal company” or has an “illegal status”.

197.In any event, having considered all the above, I have come to the view that Ds have satisfied this Court that the Statements were substantially true and were justified.

ISSUE (3) – QUALIFIED PRIVILEGE

The legal principles

198.Mr Chung had referred this Court to DHCJ To’s judgment in Jonathan Lu v Paul Chan Mo-Po HCA370/2012, unrep 07.10.15[116]. As seen in his judgment, the learned judge had summarized the principles as follows[117]:

“11. First, the burden of proving that the publication of defamatory material was made on an occasion of qualified privilege is on the defendant…

12. Second, whether this burden is discharged can only be answered by examining the pleaded defence.  The defendant must plead the facts and circumstances which render the occasion of publication an occasion of qualified privilege……

13. Third, the burden of proving a pleaded defence can only be discharged by way of evidence………The burden is on the Defendants to prove the facts and circumstances necessary for the existence of the privilege: Gatley[118]. It shall then be for the judge to rule whether the occasion is privileged: Gatley[119].

14. Fourth, the question whether the occasion is privileged is a question of law solely for the judge and not for the jury………

15. Fifth, at common law privileged occasions can be classified into two categories: firstly, where the maker of the statement has a duty, whether legal, social or moral, to make the statement and the recipient has a corresponding interest to receive it; or secondly, where the maker is acting in pursuance of an interest of his and the recipient has such a corresponding interest or duty in relation to the statement, or where he is acting in a matter in which he has a common interest with the recipient: Adam v Ward[120]; Gatley[121]; and Duncan & Neill[122]. The duty or interest may be common to both the maker and the recipient of the statement, but this is not essential: Carter-Ruck[123]; and Gatley[124].

16. Sixth, in determining whether the defamatory matter was published on an occasion of privilege, the court shall take into account every circumstance associated with the origin and publication of the defamatory matter, in order to ascertain whether the necessary conditions are satisfied by which alone protection can be obtained: London Association for Protection of Trade v Greenlands[125] and Watts v Times Newspapers Ltd[126]; and Gatley[127].  It must make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication: Bashford v Information Australia (Newsletters) Pty Ltd[128].

17. Seventh, as a matter of general principle, the question of privilege is to be judged by reference to the circumstances known at the time the statement was made and the defendant cannot rely on information which subsequently comes to his attention to establish privilege: Gatley[129].”

199.The above case went all the way to the Court of Final Appeal, namely FACV 13/2017, [2018] HKCFA 11, reported in (2018) 21HKCFAR 94, but as pointed out by Mr Chung, the final appeal was concerned with the concept of malice as it is understood in the law of defamation in the context of qualified privilege.

D’s pleaded particulars

200.In paragraph 11 of the D1’s RAD, D1 had pleaded that:

“Further or alternatively, the [Statements] complained of were published on an occasion of qualified privilege:

PARTICULARS

(a) The 1st Defendant was a Councillor and the Chairman of the Plaintiff’s Standardisation and Certification Committee and [D2] was a Councillor and the Secretary of the Plaintiff. In this regard, paragraph 6 above is repeated.

(b) In publishing the said Statement, the 1st Defendant relied on the information on the Minutes of Meetings and other documents related to the meeting records and notices of the Plaintiff during the entire period, as the 1st Defendant reasonably believed that they were true and accurate, provided by [D2] in the capacity of the Secretary and Councillor of the Plaintiff at the material time. In this regard, paragraph 7 above is repeated.

(c) The said Statements and words were written to notify the said Recipients who had business transactions and/ or dealings with and or providing funds to the Plaintiff and thereby under a sense of duty and without malice towards the Plaintiff and in honest belief that the said Statements therein made were true.

(d) By a Complaint Form dated 19th December 2013, the 1st Defendant and [D2] complained to the Companies Registry that the Plaintiff had failed to hold or to hold valid General Annual Meetings for the years of 2010, 2011 and 2012. By a further letter dated 21st February 2014, the 1st and [D2] informed the Companies Registry that the Plaintiff had failed to hold or to hold valid General Annual Meetings for the years 2008,2009 and 2013.

(e) Subsequently, the Plaintiff attempted to rectify or remedy its failure to hold or to hold valid General Annual Meetings referred to in the preceding sub-paragraph by the purported Minutes of the purported Annual General Meeting held on 8th April 2013, namely the purported 2013 AGM.

(f) By an email message dated 27th June 2014 addressed to Benny Kwong, the legal representative and advisor for the Plaintiff, the 1st and[D2] stated that since the Plaintiff had not held any or any valid AGMs for the years of 2008, 2009, 2010, 2011, 2012 and 2013, they considered that the Plaintiff was an unlawful company.

(g) Since there was no reply from either Benny Kwong or the Plaintiff, the 1st Defendant subsequently sent to the Plaintiff another letter stating their serious concerns about the 1st Defendant's and [D2’s] potential liabilities, in particular, the lack of approval and authority of the Plaintiff itself in respect of the applications and uses of funds on account of the various Government funding awards already received and to be received by the Plaintiff.

(h) As the Plaintiff has failed and/ or refused to give a constructive reply or any at all to answer the 1st Defendant's and [D2’s] complaints, the 1st Defendant and [D2] had no other alternative, but to send the letter containing the said Statements dated 6 August 2014 to the Recipients with a view to bringing the matter to their attention.

(i)  In the premises, the 1st Defendant and [D2] and the Recipients had a common and corresponding interest in the subject matters and publication of the said Statements and/or the 1st Defendant and [D2] were under an official, social and/or moral duty to publish the said Statements to the Recipients who had a like duty and/ or interest to receive the said Statements and understand the matters raised.”

The Recipients

201.The Recipients consisted of 4 “Honorary Chairmen”, 2 “Honorary Consultants”, 2 “Honorary Committee Members”, and Professor Kok Wai CHEAH, Chair of Testing & Certification of P, 4 Government Officials (Registrar of CR; Director-General of TID, Commissioner of Innovation and Technology Commission, Permanent Secretary of Commerce and Economic Development Bureau, the latter three being Public Officers of HKPC), the Secretariat of HKPC (for the attention of the Chairman of HKPC), Mr Bernard Lau, the Chairman of the Professional Validation Council of Hong Kong Industries Ltd (“Validation Council”), and lastly Edward Chan, the Chairman.   

Whether Ds had a legal, social and/or moral duty to make the Statements

Generally

202.As set out earlier, common law privileged occasions can be classified into two categories, namely the “Duty-Interest Category” and the “Common Interest Category”.

203.Whether, for the purposes of qualified privilege in the “Duty-Interest Category”, a duty on the part of the maker to make the publications exists is for the court to determine[130].

204.In D1’s Closing Submissions, D1 appeared to be relying on the “Duty-Interest Category” only. D2 was in total agreement with D1 and adopted the circumstances leading to the publication of the Letter as relied on by D1 in substantiating privilege. 

Whether Ds had any duty

205.According to D1’s case in his RAD and his witness statement, alleged duty arose as D1 had been a member of P since October 2008, the Chairman of P’s SCC since 2009 and a Councillor (director) since April 2009 until 8 April 2013, and he also served as a Technical Advisor of P.  Similarly, D2’s case and evidence was that the duty was said to arise as he was appointed as a Councillor (director) om April 2009, a Secretary on 2 March 2007 and the Company Secretary on 11 August 2007 until 6 February 2013.  Thus, Ds’ case was that they were under a legal or official duty to publish the Letter and to inform the Recipients of the unlawful status or unlawfulness of P by reason of their former positions in P.

206.On the other hand, Mr Cheung submitted that any alleged legal duty was owed by Ds to P, and that Ds had no duty to inform the Recipients of P’s internal affairs. 

207.D’s evidence was that a company which did not follow the law should not receive public funding and that Ds had a citizen’s duty in publishing the Letter.

208.As said earlier, at the time of the publication of the Letter, there was no evidence that P had replied to the CR’s letters, nor was the deadline imposed by CR met, nor was there any evidence that P had made known to Ds that they had filed the Originating Summons on 1 August 2014.  P’s directors may be liable under Section 122 of the Predecessor Ordinance to prosecution.  As there had not been valid directors’ and/or members’ meetings, there was no proper approval by the directors and/or members of the public funding applied for and/or received by P.  

209.Having considered the above, I find being former members, directors and/or Company Secretary of P, in particular being directors during the period when P did not comply with the provisions in the Predecessor Ordinance, Ds did have a legal or official duty to inform other honorary members, directors (Councillors), Company Secretary and CR and members of the government organisations which provided or would potentially provide the funding, of P’s failures in complying with the Predecessor Ordinance and the provisions of the A/A and failure in rectifying its defaults.

210.As for the social or moral duty to publish the Letter, Ds’ case was mainly based on circumstances leading to publication of the Letter, and in this respect, they relied on particularly the events leading up to the adoption of the Radiation Requirement of 1 Bq/g and its removal, P’s philosophies and objectives, the application for the BUD Funding, the Project Objectives and the Project Deliverables, the invitation from TID to discuss the BUD Project and the sudden suspension of D2 as the Company Secretary.  Ds’ case was that it was under such circumstances that they were under a duty, whether legal, moral or social, to publish the Letter to the Recipients informing them of the unlawful status of P, a public body and/or a company whose operations had a direct or indirect effect on the public, that had been or would be in receipt of public funds.

211.Mr Cheung submitted that Ds were “at pains to weave” (i) FIR certification standard and (ii) Radiation Requirement into their case on qualified privilege, and that these unpleaded issues were not open to Ds.

212.Mr Cheung referred the Court to Adam v Ward [1917] AC 309[131]:

(a)     Privilege extends only to a communication upon the subject with respect to which privilege exists, but does not extend to a communication upon any other extraneous matter which the defendant may have made at the same time;

(b)     Anything that is not relevant and pertinent to the discharge of the duty or the exercise of right or the safeguard of the interest which creates the privilege will not be protected; and

(c)     The Court has to consider the nature of the duty or right or interest and to rule whether or not the defendant has published something beyond what was germane and reasonably appropriate to the occasion, or has given to it a publicity incommensurate to the occasion.

213.Although in determining whether the defamatory matter was published on an occasion of privilege, every circumstance associated with the origin and publication of the defamatory statement should be taken into account in order to ascertain whether the necessary conditions are satisfied by which alone the protection can be obtained, the Court of Appeal had stated in the Jonathan Lu case, CACV 251/2015, unrep, 23.12.16:

“The purpose of pleadings and importance are well known… They need no repetition here. In the case of defamation, a defendant who wishes to rely on the defence of qualified privilege must specifically plead the defence and that he should allege and prove the facts and circumstances which he claims bring him within the protection of the privilege: Gatley…”

214.Under the “Particulars” for qualified privilege, Ds did plead that they would rely on the information in the minutes of meetings and other documents related to the meeting records and notices of P during the entire period[132]. However, Ds did not plead specifically that they were relying on the FIR certification standard and the Radiation Requirement or its removal as part of the circumstances which gave rise to a social/moral duty in publishing the Statements.

215.Having considered Ds’ respective RAD, I do find what was pleaded was deficient and I accept Mr Cheung’s submission that it was not open to Ds to rely on unpleaded matters in their Closing Submissions, including the FIR certification standard and the cancellation of the Radiation Requirement. Having said this, P had been granted public funding and as such P should ensure there was proper corporate governance on its part, including Financial Statements properly approved by its members.  When this was not done and no evidence of any rectification steps being taken at the time of the Letter, I accept Ds had a social or moral duty as well as legal in publishing the Letter.

Whether the Recipients had a corresponding duty and/or interest to receive the Letter

216.Ds’ case was that despite Ds’ letters/emails, none of the members or purported directors of P, including the Legal Advisor and the Chairman saw fit to rectify any of the defaults, and Ds were therefore left with no other option but to publish the Letter to notify all the Recipients regarding the unlawful status of P in hope that the breaches and irregularities could be rectified.

217.Mr Cheung pointed out that none of the above were voiced out to the members of P at the EC Meetings, and that even if Ds saw fit to communicate such matters to the Recipients, apart from the CR, none of the Recipients had any duty or legitimate interest in receiving the Statements concerning P’s internal affairs.

218.I accept Ds’ evidence that P’s failure to hold AGMs and failure to approve audited Financial Statements by members was a major concern for Ds and they had sent letters notifying the relevant authorities about those issues.  CR did respond and had clearly indicated that complaints in connection with any breach of the Predecessor Ordinance would be seriously investigated.  Ds had said TID was waiting for the investigation to be carried out by the CR first.  As seen earlier, Ds did send an email to Edward Chan and Benny Kong on 27 June 2014 after receipt of the 2013 AGM Minutes and in this email Ds had sought clarification with regard to P’s failure to hold AGMs and non-compliance with the A/A, but neither Edward Chan nor Benny Kong replied. Thereafter, Ds’ further letter of 14 July 2014 to Edward Chan, Benny Kong and the Secretariat was again ignored. 

219.Edward Chan was asked about the function of an “Honorary Chairman” during the trial.  He had said they were well known figures in society to support the association and they might not have anything to do with FIR, but they would attend functions and they would donate some funding to P.  Edward Chan was evasive when asked whether the “Honorary Chairmen” would be interested in P’s ongoing operation, his answer was “not necessarily” and they would not be interested in P’s daily operations.  Edward Chan was not able to explain how the “Honorary Chairmen” or “Honorary Consultants” or “Honorary Committee Members” were appointed, save that they were not appointed as “Honorary Advisers” pursuant to Article 57 of the A/A as “Honorary Advisers” appointed thereunder would be lawyers and accountants.  However, he seemed to agree that those other persons holding those “Honorary” titles could attend P’s meetings.

220.When asked whether Professor Cheah had the right and/or interest to know that P had held no AGMs, Edward Chan responded that the failure was rectified in 2014.  However, as seen earlier in the Rectification Order, the rectification was for the failure to hold 2011 and 2012 AGMs only. When put to Edward Chan that Professor Cheah had a corresponding interest in knowing that there was failure to hold AGM, Edward Chan’s reply was he did not know and that he never indicated to him.

221.It was put to Edward Chan that those Recipients who were Government Officials had a corresponding interest, Edward Chan had said he did not know and that those officials had been transferred elsewhere.  He gave the same response for the Secretariat and HKPC.

222.There was no sufficient evidence that the Recipients with the government and/or government related authorities had retired at the time of Ds sending out the Letter as alleged by Edward Chan.  Ds’ evidence that the Honorary Chairmen, Honorary Consultants, Honorary Committee Members and the Chair of Testing & Certification being members of P would have a common and corresponding interest in the unlawful status of P as they no doubt supported the objectives and philosophies of P.  I accept this.  As for the other officers of public bodies, I also accept Ds’ evidence that they would be interested in the unlawful status of P as they had dealings and/or projects with P and had provided or would potentially provide funding to P.

Conclusion on Issue (3)

223.To summarise, in light of all said above, I find Ds had a duty to inform the Recipients of P’s failure to hold AGMs (as a result, P’s failure to lay its audited Financial Statements) before the members of P and there had not been proper appointment of Councillors, nor had there been a CM Meeting after the 1^st one until 22 February 2013.  As found, the Recipients had a common and/or corresponding interest to receive the information.  It is my finding that the Statements were published on an occasion of qualified privilege. 

ISSUE (4) - MALICE 

224.Lord Reed had set out the following in relation to “malice” in the context of qualified privilege in the Jonathan Lu case, FACV 13/2017:

“16. Its meaning in the context of qualified privilege is straightforward. It was succinctly explained by Lord Nicholls of Birkenhead NPJ (with whose judgment the other members of the Court agreed) in Cheng & Another v Tse Wai Chun (2000) 3 HKCFAR 339, 355:

“Express malice is to be equated with use of a privileged occasion for some purpose other than that for which the privilege is accorded by the law.”

That is consistent with Lord Diplock’s analysis in Horrocks v Lowe [1975] AC 135, 149, described in Reynolds at p 194 as “the classic exposition of malice in this context”:

“For in all cases of qualified privilege there is some special reason of public policy why the law accords immunity from suit – the existence of some public or private duty, whether legal or moral, on the part of the maker of the defamatory statement which justifies his communicating it or of some interest of his own which he is entitled to protect by doing so. If he uses the occasion for some other reason he loses the protection of the privilege.”

That has been the approach of the law for well over a century. In Clark v Molyneux (1877) 3 QBD 237, Brett LJ stated at p 246:

“If the occasion is privileged it is so for some reason, and the defendant is only entitled to the protection of the privilege if he uses the occasion for that reason.”

Similarly, in Royal Aquarium and Summer and Winter Garden Society Ltd v Parkinson [1892] 1 QB 431, 454, Lopes LJ stated:

“The defendant is only entitled to the protection of the privilege if he uses the occasion in accordance with the purpose for which the occasion arose.”

17. In order to decide whether a communication was published maliciously, for the purpose of rebutting a defence of qualified privilege, it is therefore necessary to decide two questions, which arise sequentially.  First, was the occasion privileged, and if so, for what purpose?  Secondly, was that the defendant’s purpose when he published the communication in question?  The first of these is a question of law for the judge.  The second is a question of fact, to be determined by the jury, where the action is tried with a jury.  It is important to keep these basic principles clearly in view.  Much confusion can be generated if they are lost sight of.

18. The motive with which the defendant made the communication in question is therefore of crucial importance: see Horrocks v Lowe at p 149.  A person may have more than one reason, motive, or purpose (the terms can in this context be used interchangeably) for making a communication.  The critical question is whether the dominant purpose for which he made the communication was one other than the purpose for which the occasion was privileged.  As Lord Diplock stated in Horrocks v Lowe at p 149, “he is entitled to be protected by the privilege unless some other dominant and improper motive on his part is proved”.  In practice, as Lord Diplock also said at p 149, the plaintiff generally sets out to prove that a desire to injure him was the defendant’s dominant motive.  But Lord Diplock went on to explain that “qualified privilege would be illusory, and the public interest that it is meant to serve defeated, if the protection which it affords were lost merely because a person, although acting in compliance with a duty or in protection of a legitimate interest, disliked the person whom he defamed or was indignant at what he believed to be that person’s conduct and welcomed the opportunity of exposing it” (p 151).  Accordingly, in a case where a person has published what he believes to be true, “it is only where his desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives … that ‘express malice’ can properly be found” (ibid).

19. How, then, is the jury to go about deciding what was the defendant’s dominant purpose in publishing the communication complained of?  As Lord Diplock stated in Horrocks v Lowe at p 149, “the motive with which a person published defamatory matter can only be inferred from what he did or said or knew”.  The jury therefore have to consider all the evidence from which such an inference might be drawn, and decide what inference as to the defendant’s dominant purpose should properly be drawn from it.  Such evidence will include, crucially, the circumstances surrounding the making of the relevant communication.  As Jordan CJ said in Mowlds v Fergusson (1939) 40 SR (NSW) 311, 319:

“In order to make a proper approach to the question whether there was any evidence that the defendant was animated by ‘express malice’ in making his first report, it is necessary to have a correct understanding of the circumstances in which the report came to be made, and the purposes for which it was asked and presented.”

20. Issues concerning the defendant’s state of mind in relation to the truth or falsity of what is communicated have sometimes caused particular difficulty in practice.  In relation to such issues, it is important in the first place to understand that evidence bearing on the defendant’s knowledge or belief as to the truth or falsity of what is communicated is only relevant in so far as it affects the jury’s answer to the critical question which it has to decide, namely whether the defendant used the occasion for a purpose other than that for which the privilege was accorded.

21. It is also necessary to understand that a particular conclusion on malice does not automatically follow in every case from the jury’s view of the defendant’s knowledge or belief as to the truth or falsity of what is communicated.  Even a defendant who knows or believes that the matter communicated is false will nevertheless be protected by privilege in circumstances where the purpose for which the privilege exists is consistent with the communication of a matter which is known or believed to be false, and the matter is communicated for that purpose.  As Lord Diplock noted in Horrocks v Lowe at p 150, even telling deliberate and injurious falsehoods can be justified in cases where a person may be under a duty to pass on, without endorsing, defamatory reports made by some other person.  Equally, a defendant who believes that the matter is true will not be protected by privilege if he communicates it for a purpose other than that for which the privilege was accorded.  The critical question for the jury is always whether the dominant purpose for which the communication was made was the same as the purpose for which the privilege was accorded.  The defendant’s knowledge or belief as to the truth or falsity of the matter communicated is significant only in so far as it is evidence from which an inference can be drawn as to the answer to that question.  As stated earlier, it is important to consider all the evidence surrounding the making of the statement in question.”

225.Mr Cheung’s submissions on Ds published the Statements maliciously were based on the circumstances after the Cancellation Motion and that Ds were upset and angry about the passing of the Cancellation Motion during the 66^th EC Meeting and that Ds had relentlessly tried every means to cancel it and restore the Radiation Requirement.  Later, upon the Confirmation Motion being passed during the 67^th EC Meeting, Ds realized they were in the minority in the EC.  This was followed by the dispute in the 68^th EC Meeting in relation to the payment of the Consultancy Fee, and then Ds were not re-appointed the Councillors.  P’s case was that the Letter was to achieve 2 purposes namely (i) to curb the funding to P and (ii) to recall the funding to P.  When this was put to D1, D1 had said Ds’ logical thinking was if a company was unlawful, there should not be and/or should not have been any public funding and therefore the government should not provide any funding and/or to recover funding and equipment purchase.  D1 maintained that a company which did not follow the law and further disregarded the health and welfare should not receive any public funding and that this was not fair to Hong Kong citizens.  D2 also maintained he was only doing his citizen’s duty in publishing the Letter. 

226.Ds had explained why they thought it was their duty to publish the Letter.  They had also said they sent the Letter as they had received no response to their earlier email and/or letter to Benny Kong and Edward Chan and/or P.  I am not satisfied that there was malice on their part.

ISSUE (5) – APPROPRIATE RELIEF

227.In light of all above said, Ds have succeeded in their defence of justification and qualified privilege.  I am of the view P fails in its case and P is not entitled to any relief. 

ORDER

228.In the circumstance, I dismiss P’s claim against Ds.

229.Ds are the successful parties in this action and they should be entitled to their costs be taxed if not agreed on party and party basis.  They have however abandoned their defence of fair comment in their Closing Submissions.  In the circumstances, I am of the view that they should be only entitled to 80% of their costs.  This is an order nisi which will be made final after 21 days.

Mr Anthony P W Cheung and Mr Yan Ye Clark, instructed by Benny Kong & Tsai, for the Plaintiff

Mr Hylas Chung, instructed by Gary Lau & Partners, for the 1^st Defendant

Mr Alvin Hor, instructed by K Y Woo & Co, for the 2^nd Defendant