Kelly Cheng Kit Yin v. David John Kennedy and Another

cacv 364/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 364 of 2004

(on appeal from HCA NO. 4460 of 2003)

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BETWEEN

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Before: Hon Rogers VP and Lam J in Court

Date of Hearing: 5 July 2005

Date of Judgment: 5 July 2005

Date of Handing Down Reasons for Judgment: 12 July 2005

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.This was an appeal from a judgment of Yam J given on 9 November 2004.  The matter before the judge was an appeal from the master.  The judge ordered that paragraphs 22, 23, 44, 54, 58, 62, 63 and 64 of the defence be struck out.  The defendants appealed against that order.  At the conclusion of the hearing of this appeal this court dismissed the appeal with reasons to be given in writing.

Background

2.The plaintiff was previously a director of Wing Fai Construction Company Ltd (“Wing Fai”), which is now in liquidation.  The plaintiff’s complaint in this case relates to an alleged libel contained in a letter dated 24 November 2003 sent by the 1^stdefendant, who is the liquidator of Wing Fai, to the plaintiff.  It is said that in the course of that being sent both by fax and by post it was seen by persons other than the plaintiff.

3.The substance of the allegation of libel is pleaded in paragraphs 10 to 12 of the statement of claim.  The complaints arise out of statements made in the letter which in part, at least, cite what was said at the examination of the plaintiff which took place on 24 November 2003 pursuant to section 221 of the Companies Ordinance, Cap. 32.  The complaints are that the letter alleges that the plaintiff has given untruthful evidence on oath and was guilty of perjury as well as of dishonestly altering documents and intending to steal money from the creditors of the Wing Fai.  As the judge below pointed out, there can be no libel by reason of publication of the statements complained of to the plaintiff herself.  The subject of complaint is the publication of the matters of which complaint is made to three other persons. 

4.Apart from denying publication to the three persons and making pleas which amount to the publication being the fault of the plaintiff herself, the defence raised three major issues.  Firstly there was the plea of justification, secondly there is a plea of fair comment and thirdly there is a plea of qualified privilege.  It would seem that the major defence of the defendant is a plea of justification.  If and in so far as that was not made out, it may be the defendant’s intention to rely upon a defence of incidental publication.  Although there are some pleaded facts which have been argued are directed to that, no such plea has in fact been made.  Be that is it may, the individual paragraphs which the judge has ordered to be struck out will be examined below.

Paragraphs 22, 23, 44, 54 and 58

5.The defence itself is, in my view, prolix.  It runs to 46 pages.  Paragraphs 22, 23, 44, 54 and 58 comprise lengthy quotations from the transcript of the section 221 examination.  They are not in a pleading form.  The quotations from the transcript can amount to no more than evidence.  The allegations as to what is derived from those quotations are, apparently, set out at the beginning of each paragraph and, indeed, the place in the transcripts is noted in the relevant paragraphs.  In my view the citations from the transcript should not be contained in the pleading.  The pleading should be confined to concise statements of fact.  It should not contain the evidence by which it is intended to prove those facts.

6.The judge exercised his discretion to order that the relevant paragraphs be struck out.  In my view he was correct to do so and I do not see it would be correct to overrule the exercise of his discretion in that regard.  It was suggested that the judge took into account the fact that the pleadings might be open to public inspection.  Even on that basis, that was only an observation and not the basis for the judge coming to the conclusion that the offending paragraphs should be removed.  In my view it would be wrong for this court to interfere with the decision which the judge came to on a case management basis, quite apart from the fact that, if at first instance, I would have had no hesitation in saying that the pleading should not be in that form.

Paragraph 62 and 63

7.These paragraphs are headed “Fair/Honest Comment”.  It is said on behalf of the defendants that insolvent liquidation is a matter of public interest and therefore the liquidator was entitled to make the statements contained in the letter, even to third parties, on the basis that he was making an honest comment on a matter of public interest.  The judge below came to the conclusion that the defence of fair comment could not be employed in the way that the defendants sought to do.  In my view the judge was correct in his approach. 

8.Rule 62(2) of the Companies (Winding up) Rules provides as follows:

“

(2)

The notes of the depositions of a person examined under section 221 of the Ordinance, or under any order of the court before the court, or before any officer of the court, or person appointed to take such an examination (other than the notes of the depositions of a person examined at a public examination under section 222 of the Ordinance) shall not be filed, or be open to the inspection of any creditor, contributory, or other person, except the Official Receiver or liquidator, or any provisional liquidator other than the Official Receiver, while he is acting as provisional liquidator, unless and until the court shall so direct, and the court may from time to time give such general or special directions as it shall think expedient as to the custody and inspection of such notes and the furnishing of copies of or extracts therefrom.”

9.As Lord Browne-Wilkinson said in the case of Hamilton and Others v Naviede [1995] 2 AC 75 at pages 101-4, when considering the equivalent provisions in the United Kingdom legislation, what is obtained by the liquidators as a result of carrying out their duties and, in particular examination under the equivalent of section 221, is held by them to the order of the court.  As the judge below pointed out, if the submission on the part of the defendants were correct, then publication of the material complained of could have been made in magazines and newspapers.  Clearly the defendants were not entitled to make use of the transcripts of the evidence obtained under the provisions of section 221 other than in carrying out their duties.  Publishing their views to all and sundry was not part of carrying out their duties irrespective of whether they could use the transcript without the consent of the court for other purposes as part of their duties.

Paragraph 64

10.This paragraph is headed “Qualified Privilege”.  It is difficult to see how the way the matter is pleaded can have any relevance in the case.  A plea of qualified privilege relies upon the existence of a duty or interest on the part of the publisher to publish the material and an interest on the part of the receiver to receive the particular material.  The only allegation in this paragraph is an allegation in respect of the plaintiff having an interest to receive the letter.  As already explained the plaintiff’s position is irrelevant since there can be no libel in respect of a publication to the plaintiff herself.  There is no plea in respect of any interest or duty on the part of anybody else to receive the information contained in the letter of which complaint is made.  Hence, the plea is on its face clearly bad.

11.As already indicated if, and in so far, as the defendants wish to plead a case of incidental publication that is a different matter and that should be done in the appropriate way.  In so saying I am not indicating whether or not any such plea would be sustainable in this case.

Hon Lam J:

12.I agree.  On the submissions before us, the real defence that the defendants intended to run seems to be incidental publication which, as the Vice President observed, had not been pleaded properly.  Instead, the defendants chose to plead fair comment and qualified privilege without any reference to incidental publication.  In other words, the defendants said they had the right to publish the matters to the world at large on those grounds.  For the reasons given by my Lord the Vice President, those defences could not be sustained in the present circumstances.  

Mr Robert Whitehead SC, instructed by Messrs Barlow Lyde & Gilbert, for the Plaintiff/Respondent

Mr Rimsky Yuen SC, instructed by Messrs Richards Butler, for the 1^st and 2^nd Defendants/Appellants