In a recent judgment CHANG WA SHAN v ESTHER CHAN PUI KWAN (CACV 240/2015, 8 September 2017), the Court of Appeal examined a novel situation in Hong Kong: whether absolute privilege should cover a person who is not a potential witness, but provides relevant information for possible use in civil proceedings. The Court of Appeal unanimously held that it should not.

It was the Plaintiff’s appeal from a judgment which upheld the Defendant’s primary defence on the ground of absolute privilege and dismissed the Plaintiff’s claim for slander and malicious falsehood (the action).

The action arose out of the high profile probate trial in 2009 in which Tony Chan sought to establish that he was the sole beneficiary of Nina Wang’s estate under a later will (ultimately held to be a forgery) in place of Chinachem Charitable Foundation Limited (Chinachem) under an earlier will (the probate action).

Background facts in the probate action

Tony Chan was represented by Haldanes in the probate action, with Mr Jonathan Midgley as his solicitor and Mr Ian Mill QC as his leading counsel.

At the trial of the probate action (the probate trial), Gilbert Leung gave evidence for Chinachem on the relationship between Tony Chan and Nina Wang. Tony Chan’s legal team sought to demonstrate that Gilbert Leung’s evidence was biased because two months after providing his witness statement to Chinachem, Gilbert Leung’s company acquired a piece of land from Chinachem for $1.01 million, which was then valued at $10 million.

The Defendant in the action (Gilbert Leung’s former assistant and girlfriend) had on behalf of a third party produced to Tony Chan’s legal team a Chinese document (an investment proposal by Gilbert Leung for development of the land with projected gross revenue from such development of $360 million at a construction cost of $10 million) (the Document), and mentioned that the third party expected to be paid $10 million for providing the Document. Mr Mill advised Tony Chan against paying such sum and the matter was shelved. Subsequently, the Defendant informed Tony Chan’s legal team that the third party had had a change of heart and authorized her to allow Tony Chan’s lawyers to use the Document, without payment.

In a telephone conversation with Mr Midgley and Mr Mill, the Defendant said that the Document came from “Edmund Tsang” (i.e. the Plaintiff in the action) and confirmed that Mr Mill could reveal the name Edmund Tsang to the court. This formed the subject publication sued on by the Plaintiff for slander and malicious falsehood. There was no dispute that the identification of the Plaintiff as the provider of the Document was false. The judge also found that the Defendant knew that her answer “Edmund Tsang” was false.

Mr Mill sought to produce the Document in court with a view to questioning Gilbert Leung on it to impeach his credibility. This was widely reported in the local media (the republications). The media reported that the Plaintiff had tipped off or disclosed secret information to Tony Chan’s camp and provided them with an investment proposal, which would appear to have the effect of discrediting Gilbert Leung’s evidence.

The Plaintiff instructed his solicitors to take such steps as necessary to protect his reputation. He had to obtain a Norwich Pharmacal order against Tony Chan for disclosure of the identity of the person who had provided information about the Document, pursuant to which Mr Midgley disclosed that the Defendant, acting as representative of a third party, had provided the Document and the Plaintiff’s name. The Plaintiff incurred some $5.3 million in legal and PR firm fees and took out the action against the Defendant for recovery of the same as well as other damages.

Court of Appeal Judgment

The Court of Appeal held that:-

No Absolute Privilege

(1) Absolute immunity is granted to (i) witnesses, (ii) the parties, (iii) their advocates, (iv) jurors and (v) the judge for things said or done by them in the ordinary course of any proceeding in a court of justice.

(2) The Defendant’s role was not that of a member of the legal team, but a middleman between the legal team and an informant. For civil proceedings, absolute immunity has not been extended beyond the above five recognised groups of persons. Potential harm which may result from absolute privilege and concerns for abuse would be addressed by safeguards such as the comprehensive control exercised by the trial judge whose action is reviewable on appeal, including the power to expunge or strike out irrelevant defamatory matters from pleadings and the evidence and to punish for contempt and prosecute for perjury. These safeguards would not be available where the publication is made by a mere informer who is not a potential witness or the middleman of an informer, who remains hidden and anonymous. So, the Court would be wary of extending the immunity outside the recognised classes in the absence of cogent justification.

(3) There are two competing public interests involved. The public interest in the proper administration of justice should be balanced against the public interest in the plaintiff being able to vindicate his reputation in bringing a claim in defamation. Applying the proportionality analysis, the abrogation of the fundamental rights in granting an absolute privilege could not be said to be no more than is necessary to accomplish the legitimate aim of securing the proper administration of justice. Qualified privilege would be sufficient to achieve that legitimate aim.

Slander

(4) By a majority (Kwan JA and Macrae JA), the second pleaded innuendo meaning (i.e. “the Plaintiff had secretly and covertly sought to assist Tony Chan and his unmeritorious challenge to Nina Wang’s will in order to try to get his hands on her fortune”) had been established, but this was not defamatory because the hypothetical reasonable person in Hong Kong would not have lowered his estimation of the Plaintiff regarding what the Plaintiff was alleged to have done in assisting Tony Chan by providing relevant information to Tony Chan’s legal team which might potentially expose a witness as a biased witness or a perjurer.

Yuen JA (dissenting) held that the extrinsic facts pleaded did not support this innuendo meaning.

(5) By a majority (Kwan JA and Macrae JA), the third pleaded innuendo meaning (i.e. “the Plaintiff had acted as set out [in the second innuendo meaning] in order to obtain a personal advantage, possibly money from Tony Chan”) had been established, and this was defamatory because a reasonable hypothetical person, having the special knowledge of Mr Midgley and Mr Mill (i.e. the informant having initially asked for $10 million as remuneration for providing the Document and then allowing the Document to be used to cross-examine Gilbert Leung on the understanding that if Tony Chan won the case, monetary compensation would be paid, in an amount at Tony Chan’s discretion), would have understood from the publication that the Plaintiff had sought to assist Tony Chan in his distasteful venture in return for some personal gain, joining Tony Chan in putting his nose in the trough of Mrs Wang’s fortune.

Yuen JA (dissenting) held that as the second innuendo meaning had not been established, the third innuendo meaning would also fail. In addition, the payment terms were not pleaded as the extrinsic facts in support of the third innuendo meaning - they were pleaded in aid of the claim of slander on the basis of natural and ordinary meaning, and not the claim of slander on the basis of innuendo meanings. It is essential in a complex area of the law such as defamation where all parties and the tribunal have to be acutely aware of the exact case(s) being advanced and for which adjudication is sought.

Malicious falsehood

(6) The judge below had found the first three of the four elements of a cause of action in malicious falsehood as set out below:

i. the Defendant had communicated to a third party words which were false;

ii. the words referred to the Plaintiff;

iii. the words were communicated maliciously; and

iv. special damage had followed as a direct and natural result of the communication of the words.

(7) There was no cross-appeal from those findings. So, the only issue remaining was (iv), i.e. whether special damage had followed as a direct and natural result of the publication of the words.

Damages

(8) By a majority (Kwan JA and Macrae JA), the special damages of $5.3 million consequential upon republication in court and the media reports should not be recoverable in view of the absolute privilege that protects the republication in judicial proceedings. Otherwise, there would be a real risk that it would impose a practical restraint on participants in judicial or parliamentary proceedings in their testimony or communications, thereby undermining the integrity of absolute privilege, which is considered necessary for the proper administration of justice or proper functioning of a parliamentary institution.

(9) The Plaintiff would be awarded HK$30,000 as general damages taking into account (i) the gravity of the slander (it touched upon the Plaintiff’s personal integrity and would adversely affect his business reputation); and (ii) extent of the publication: the slander was published to two people, neither of whom knew the Plaintiff, and the publication was transient.

Yuen JA (dissenting) held that the appeal should be allowed in relation to the claim for damages for malicious falsehood (including losses suffered due to republications) on the bases that (i) there is no reason why a defendant should be absolved from responsibility for losses when it was reasonably foreseeable that he would cause such losses by his publication of a malicious falsehood, at least when he had intended (and indeed in the present case, expressly authorised) the republication, (ii) there is no reason as a matter of policy why a person, who had intentionally authorized the further promotion of a statement which he knew to be false, should be able to shield behind the fact that the republication is on an occasion of absolute privilege and (iii) the general rule at common law is that where there is a wrong there should be a remedy.

This judgment has shed light on the judicial attitude regarding the extension of absolute privilege and the award of damages where losses are suffered as a result of republication by a third party protected by absolute privilege.