Fan Chak Wah Edmond and Another v. Lam Wai Keung and Others
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HCA1318/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1318 OF 2007 -------------------------- BETWEEN
---------------------- Before : Hon Burrell J in Court Date of Hearing : 14-15 and 18-20 May 2009 Date of Judgment : 26 June 2009 -------------------------- J U D G M E N T ------------------------ 1.Each of the 18 District Councils in Hong Kong are represented by its football team playing in the 3rd Division Districts League of the Hong Kong Football Association (“HKFA”). In order to be registered as a team in that Division the football team requires the endorsement of its District Council. Provided it has that endorsement and all other application procedures have been properly complied with the HKFA will register the team in that Division. 2.In the seasons commencing 2003 and 2004, the team representing the Islands District was the Islands District Sports Association (“IDSA”). Unfortunately they finished bottom of the league in 2003/4 which led to there being no team representing the Islands District in the season commencing 2005. 3.For the season commencing 2006, a new team emerged, the Island District Football Club (“IDFC”) which became registered for that season. The matches for the 2006/7 season ended in March 2007. 4.In June 2007, events occurred which resulted in these proceedings in which the President and Chairman of IDFC (Mr Fan and Mr Yam) are suing on their own behalf and on behalf of IDFC the Chairman of the Island District Council (“IDC”), Mr Lam Wai Keung for, inter alia, a declaration that three letters written by Mr Lam on 14, 18 and 19 June were maliciously published and false. 5.The onus is on the plaintiffs to prove that the statements were false, that they were published with malice and that the plaintiffs suffered financial loss as a result. 6.Before focusing on the allegedly false and maliciously published statements I shall outline the background, as I find it to be having heard the evidence. The plaintiffs both gave evidence, as did Mr Lam, the 1st defendant. For HKFA, who had been joined by the plaintiffs as a “necessary” party, Mr Pui Kwan Kay, a Vice-Chairman, gave evidence. 7.The annual general meeting (“AGM”) of HKFA was due to take place on 25 June 2007. HKFA has a board of eight directors. There was to be an election at the AGM, by secret ballot, for five vacancies as directors. One of those five vacancies was for the directorship representing the 3rd Division Districts League. There were two candidates contesting that particular directorship. One of them, the eventual winner, was Mr Kenneth Ng. Mr Ng has played no part in these proceedings. 8.On or about 10 June 2007, Mr Ng approached Mr Fan, who had recently become President of IDFC, and asked him who IDFC would be casting their votes for at the forthcoming AGM. Mr Ng was clearly lobbying for votes. Mr Fan, at that stage, did not know who IDFC would be voting for and in any event felt he was not obliged to provide the answer. Being new to the post of President, he suggested a meeting be held with himself, Mr Ng and Mr Yam. Such a meeting took place on 12 June at the Mandarin Hotel. At the meeting Mr Yam gave the same response, namely that IDFC had not yet decided who to vote for and in any event was not obliged to tell Mr Ng. 9.Mr Lam comes into the picture in this way. On 9 June 2007, he had telephoned Mr Yam to enquire how IDFC would vote at the AGM. The call was made on his mobile phone whilst in the street. Mr Lam’s evidence was that when asked who IDFC would be voting for, Mr Yam answered to the effect that “Whoever comes up with more money would get his vote.” Mr Yam’s version of the phone call was that he said that the voting was a matter to be decided by IDFC in due course. He did not say the words alleged by Mr Lam. 10.I am satisfied that Mr Lam has not invented that there was a reference to money by Mr Yam. Mr Yam may have forgotten saying it as, in any event, it was an inconsequential remark. Voting for a candidate who might provide better sponsorship for the team would have been a natural and sensible thing to do. Mr Yam’s main message to Mr Lam, which he clearly remembers, was that IDFC’s choice of candidate was a matter for IDFC and not a matter for IDC or its Chairman. 11.In my judgment, Mr Lam has placed undue weight on the remark about money. I reject totally any suggestion, veiled or otherwise, that money might have changed hands for purposes “other than football” as Mr Lam put it. I have no doubt that Mr Yam is an honourable and honest man and Mr Lam’s so called “concerns” about money being involved, insofar as it amounts to an attack on Mr Yam’s character, does him little credit. 12.I accept that Mr Lam felt that Mr Yam’s response had been somewhat abrupt. As a result of the short mobile phone conversation, Mr Lam felt that his authority over the council’s football team was being taken away. He felt that the District Council had the right to choose who to vote for and IDFC had no right to keep him in the dark about their choice. The irony is that Mr Yam himself was not bothered who the football club decided to vote for. His prime motivation was playing football not politics. His true interest was the development of youth football in Hong Kong not board room power struggles. 13.Mr Lam also gave evidence that, on 12 June, he met Kenneth Ng and Martin Hong (the latter being the leading light in one of the two opposing “camps” who were fighting the elections for the five vacancies on 25 June). Arising out of that meeting Mr Lam learnt two more things. The truth or otherwise of those two things does not matter. The relevance of them is that they entered his mind and thereby caused him to write the letters which are at the heart of this case. 14.Firstly, he learnt of the existence of a company owned by Mr Yam called “Progoal Ltd”. Mr Yam and Mr Fan were two of the three directors of Progoal. Evidence revealed that Progoal was Mr Yam’s company under which all his footballing interests were managed and which supplied secretarial support. IDFC was just one of many sporting organisations with which Mr Yam was directly involved which came under the management of Progoal. IDFC letters, written by Mr Yam, were on Progoal stationery. This led Mr Lam to suspect that the management of IDFC was being taken away from IDC and towards Progoal, a company about which he knew nothing. Moreover, he was concerned that Mr Yam had never recorded or reported Progoal’s interest with IDC. 15.Secondly, Mr Lam said that he learnt for the first time, on 12 June, that he was no longer the President of IDFC. He had been President for the previous season. Mr Fan had now taken his place. Mr Yam’s evidence was that early in the year Mr Lam had asked to step down as President due to an excess of commitments. Mr Lam denied having said this. 16.This particular conflict of evidence is difficult to resolve. I do not think very much turns on it. I do not think however that the election of Mr Fan as the new President was done for any ulterior or sinister motive. Some earlier conversation about Mr Lam’s busy work schedule may have been misunderstood. In any event, Mr Lam has added this factor to the reasons for writing the letters of 14, 18 and 19 June, to which I now turn. THE CORRESPONDENCE 17.It should first be noted that the deadline for submitting the necessary forms for a team to register for the 2007/8 season was 1 June 2007. IDFC had duly submitted its application within time and HKFA confirmed in evidence that, but for this litigation, IDFC would have been enrolled as the team representing the Islands District in the 2007/8 season. 18.The day after he met Mr Ng and Mr Hong, Mr Lam wrote, on 13 June, to HKFA in his capacity as Chairman of IDF in these terms :
19.Thus, Mr Lam had unilaterally decided to inform HKFA that he regarded IDFC’s role to be no more than playing football matches. Impliedly, everything else (which necessarily includes the right to choose who to vote for at the AGM) were matters for IDC. 20.The next day, 14 June, HKFA replied as follows :
21.The meaning of this letter is clear. HKFA regards the football team as its member not IDC. How a team and its own council arrange administrative matters between themselves is not of any concern to HKFA. 22.Ms Yanky Lam, counsel for HKFA at the hearing, informed the court that unless informed otherwise it considered the voting rights at the AGM to be with the football club not the District Council. 23.Mr Lam replied the same day to HKFA. This letter of 14 June is the first statement which the plaintiffs allege to be false and maliciously published. It reads :
24.The falsity alleged is that the letter gives the impression that the disqualification was a decision of IDC properly made at a meeting at which all necessary rules had been followed. It is common ground, however that no IDC meeting took place prior to this letter. 25.On 15 June, HKFA replied informing Mr Lam that the registration procedure for IDFC had already been completed and requesting “the relevant resolution of meeting to our association for record purpose”. 26.On 16 June, IDFC wrote to HKFA informing them that they had not been notified by IDC that they had been disqualified and that neither had there ever been any objection to IDFC representing IDC for the forthcoming season. They expressed their surprise at recent events and reiterated their wish to participate in the 2007/8 season. 27.On 18 June, the 2nd statement, said to be false and malicious, was sent by Mr Lam to HKFA as follows :
28.To complete the saga it is necessary to recite two more letters. Firstly, HKFA’s reply to Mr Lam of 18 June which reads :
29.Secondly, Mr Lam’s response dated 19 June which constitutes the final publication said to be false and malicious. It was an extract from the IDC meeting on 18 June. It included a list of names of persons present at the meeting (which contained some minor errors which are of no consequence) and a section headed “The Relevant Resolutions” which were reported in the letter in the following terms :
30.The complaint about the first statement (Lam’s letter of 18 June) is that :
31.The complaint about the letter of the 19th is that the “relevant resolutions” in the letter were not the same as the words which appear in the official transcript of the minutes of the meeting under the heading of “Other Matters”. That extract is as follows :
32.Again, the minute does not refer to Mr Wong or Mr Li being appointed to attend and vote at the AGM. It merely suggests that they should “represent IDC and take part in the work of administration and of socializing with the Football Association”. The final difference is that Mr Lam’s letter concludes “All councillors present concurred to the above resolutions” whereas the minutes record that “the councilors did not raise objection to the Chairman’s suggestion.” 33.At the next meeting of IDC in August 2007 the minutes of the June meeting were formally adopted, although one councillor did question their validity. The basis of the questioning was the same as the plaintiffs complaints about that meeting, namely that the issue was only raised under “any other business”, at the very end of the meeting, without any prior notice being given. It was passed after only a few minutes’ discussion when some of those at the meeting had already left. 34.There is no doubt that all proper formalities were not complied with at the meeting. Certain standing orders were ignored. However, the standing orders for District Council meetings are flexible so as to deal with urgent matters. Mr Lam said in evidence that this was such a matter. Whether or not the standing orders were strictly complied with does not determine whether the letters were false and malicious. The issue does however reflect on Mr Lam’s autocratic approach to the entire issue. I have no doubt that he believed that IDC had the ultimate say in who IDFC should vote for. He had lost trust in Mr Yam for a combination of reasons already referred to and he had decided to replace IDFC with IDSA so that the football team would be under his authority whereas it seemed that IDFC plainly did not want to be. 35.Such was his autocratic approach that he even had the letter of 18 June typed up before the meeting. The meeting ended at 17:20 hours and the letter was faxed at 17:24 hours. He may have had time to sign it in those four minutes but little else. It does not go to his credit that in evidence he was not willing to admit that a draft of the letter must have been prepared in advance. 36.In my judgment the single explanation for the entire episode is that Mr Lam felt IDFC had behaved curtly towards him. The way in which he had ceased to be the President had not been done properly, he felt he should have been told about Progoal and he felt IDC had the right to be informed of IDFC’s voting intentions at the AGM. He believed he had the authority to act in the way he did. He decided to use his position as Chairman to replace IDFC with IDSA. 37.Criticism may justly be made that he overreacted, behaved autocratically and used his position to IDFC’s disadvantage but as will be seen hereafter I do not think that the plaintiffs have shown the letters to be false and maliciously published thereby causing loss so that this court should make a declaration to that effect. In general terms the facts are in the plaintiffs’ favour but the standard of proof of the tort alleged has not been met. The facts favour the plaintiffs, the law favours the defence. LAW 38.The ingredients of the tort are simple to state. The plaintiffs must prove that the words used were false, that they were published to third parties, that they were published maliciously and that special damage has resulted from the publication. The falsity of a statement is to be determined by what the words would convey of the ordinary reader. 39.What constitutes malice is more difficult. A false statement is not a malicious one if it was made in the careless belief that it was true. To determine malice there must be a finding of the maker’s motive in publishing the words. Malice or improper motive cannot be inferred from the mere absence of bona fides. 40.Finally the plaintiffs must allege and prove special damage :
41.The damage must be a pecuniary loss. Merely seeking compensation as a result of a malicious falsehood which caused no actual loss will not suffice. APPLICATION OF THE LEGAL PRINCIPLES TO THE FACT OF THIS CASE (a) Mr Lam’s letter of 14 June 2007 42.The use of the word “we” on two occasions indicates that the letter was written by the 1st defendant on behalf of himself as Chairman and the Council, the 2nd defendant. The high water mark of the falsehood therein is that the Council is informing HKFA that IDFC “has been disqualified”. The rest of the letter is factually accurate. 43.The letter implies that the Council had disqualified IDFC. In fact Mr Lam had disqualified them unilaterally which he had no authority to do. There had been no meeting, no discussion, no decision of the Council. Mr Albert Yau, counsel for the 1st and 2nd defendants, quickly points out that the letter does not say there had been any meeting or resolution. 44.However, a court is entitled to look at more than the mere words in black and white. The ordinary reader would assume that the “disqualification” had resulted from some sort of formal procedure involving at least two people (because of the word “we”). I am satisfied that the ingredient of “falsity” is made out in the letter of 14 June. 45.However, I am not satisfied that malice has been established. His motive was to replace IDFC with IDSA. This motive was founded on a number of factors including his belief that the Council should have a say in who the football club votes for at the AGM and his belief that Progoal might be usurping the Council’s authority. 46.I accept that these beliefs were genuinely held by Mr Lam. I accept also that he honestly believed that he had the right, as Chairman, to do what he did. The fact that a more democratically minded or fairer Chairman might have believed differently is of no consequence. I do not accept that he was intending to deceive HKFA. I accept that he believed he acted within his authority when writing the letter and believed that it was true. 47.Before considering the second and third letters it should be stated that the first letter resulted in no pecuniary loss to IDFC. Had that letter been the end of the matter IDFC would have lost its status in Division III. No evidence has been adduced to show that being in Division III brings with it financial gain. There is no evidence of any loss of sponsorship. The only loss is the loss of a modest government subsidy designed to pay for certain expenses arising from playing football in that Division. Ironically, Mr Yam explained that some of the team expenses had been met from his own pocket. Such generosity and enthusiasm for youth football is entirely to his credit but it means that as far as he was concerned he was better off rather than worse off as a result of IDFC not participating in Division III. (b) Mr Lam’s letters of 18 and 19 June 48.It is the plaintiffs’ case that these letters contain the following falsehoods :
49.A perusal of the actual minutes of the meeting held on 18 June does reveal inconsistencies and inaccuracies. However, I consider such inaccuracies fall short of proof of falsehoods. I do not think there was an intention to lie or deceive. The fact of the matter is that the resolution as recorded in the minutes is consistent with Mr Li and Mr Wong being able to attend the AGM and being authorized to vote as the IDSA representatives of IDC. That the IDC “might have assigned” the proxy forms was a speculative belief genuinely held. I acknowledge that the paragraph is strongly worded in that it commences “it is to our knowledge …”, however Mr Lam is saved by the later use of the words “might have …” and that an investigation would be conducted. The fact that Mr Lam had attached sinister motives to the involvement of Progoal which were not merited does not convert the belief from a genuine one into a reckless one. 50.Finally, it is arguable that the difference between “all present concurring” and “no councillors objecting” is, in the overall context, although technically different, a difference without any real meaning. The ordinary reader would not be deceived into thinking that any adverse opinions had been voiced at the meeting. The former is “unanimous”, the latter is “nem con”. They are different but the difference, on the evidence, does not, in my judgment, amount to a falsehood for purpose of these proceedings. ANY MALICE ESTABLISHED BY THE 18/19 JUNE LETTERS? 51.Had these letters contained actionable falsehoods it would have been necessary to go on to consider the ingredient of malice. Again, had it been necessary to do so, I would have found the evidence fell short of proof of malice. 52.Mr Lam’s motive for conducting this business in the way he did is no different on 18/19 June than it was on 14 June. 53.The fact is that he held firm opinions about the authority of the IDC over IDFC and his own authority over IDFC and about the truth of how he may have been deposed as President and about the true role of Progoal. These opinions, when examined, were plainly suspect. However, it cannot be said, in my judgment, that they were recklessly held. Neither can it be said that because he felt affronted and reacted autocratically that his method of dealing with the matter constituted the tort of malicious falsehood. 54.The key factual matters, which are in the plaintiffs’ favour, are that :
55.In short, I consider the evidence to reveal in Mr Lam’s mind a determination to restore what he believed to be his authority and IDC’s authority over their football team at a time when he believed, albeit wrongly, that it was being threatened; however, it does not reveal malice for the purpose of this action. PECUNIARY LOSS? 56.The evidence does not support the contention that IDFC would have suffered pecuniary loss as a result of the issuance of the two letters of 18 and 19 June. THE POSITION OF THE HKFA 57.The stance taken by the HKFA in this dispute has been commendable throughout. It correctly pointed out that IDC does not have any power to vote at the HKFA AGM; that power is vested in its chosen football team. The HKFA correctly refrained from becoming involved in any disputes between a District Council and its football team. Administrative matters between a council and a team are matters for them, not for the HKFA. 58.The HKFA, by their letter of 15 June, was right to question Mr Lam’s first letter which purported to disqualify IDFC from participating in the forthcoming season. Their response, on 18 June, to Mr Lam’s second letter (also of 18 June) was also measured and correct. The HKFA did not interfere with the votes cast at the AGM by IDSA in accordance with a court injunction which had been granted restraining them from so doing. 59.HKFA has always stated that it will abide by the adjudication of the court. Moreover it, helpfully, stated during the trial that it would entertain late applications for participation in the 2009/10 season from either team. It is willing to assist where possible to ensure that the Island District is represented in Division III next season. This can be seen from the “understanding” reached between the parties in the course of the trial to the following effect :
60.As a result of this decision it will remain IDC’s decision as to which team truly merits their endorsement and therefore which team should make the application for the HKFA’s consideration. CONCLUSION AND COSTS 61.As will be seen the court has not been slow to critize the conduct of Mr Lam. An element of falsity was established with regard to the first letter but that apart, no falsehoods or malicious publications have been established. The 1st defendant’s approach to the entire saga was unattractive but not unlawful. 62.I decline to make the declarations sought but am confident that the proper and just award as to costs between the plaintiffs and the 1st and 2nd defendants is that there be no order as to costs. Such an order, in my judgment and in my discretion, meets the justice of the case. 63.Equally, it seems entirely proper to me to award HKFA their costs so that they are fully compensated for their expenses. I order that HKFA’s costs are paid on an indemnity basis 50% by the plaintiffs and 50% by the 1st and 2nd defendants. All costs orders shall be on a nisi basis.
Mr B.K. Ho, instructed by Messrs Chiu, Szeto & Cheng, for the Plaintiffs Mr Albert K.C. Yau, instructed by Messrs Lau, Chan & Ko, for the 1st and 2nd Defendants Miss Yanky Lam, instructed by Messrs Lau & Ngan, for the 3rd Defendant |