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Submitted by // B Ho, Partner; D Che, Partner
07 March 2017


Howse Williams Bowers ("HWB"), a leading Hong Kong independent law firm, advised Able Engineering Holdings ("Able"), as the Hong Kong legal counsel, on its HK$550 million share offering, which was a spin-off from Hong Kong listed company, Vantage International (Holdings) Limited ("Vantage"). Ample Capital acted as the sole sponsor while Ample Orient, Convoy Investment Services, First Shanghai Securities and Guoyuan Capital (Hong Kong) acted as joint bookrunners and lead managers. The shares commenced trading on The Stock Exchange of Hong Kong Limited on 20 February 2017.

Able is a well established construction company in Hong Kong that is principally engaged as a contractor in building construction and RMAA works in Hong Kong. This transaction was the second spin-off that HWB has completed for Vantage and one of the many IPOs that HWB has completed for companies in the construction industry.

The HWB team was led by partners, Brian Ho and Denise Che. The team had lead responsibility for legal documentation, corporate and regulatory issues, communication with the regulators and general transaction management.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; intellectual property; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 
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Submitted by // K Bowers, Partner / Solicitor Advocate
17 February 2017

Defamation or Journalistic License?

Overview

Welcome to Howse Williams Bowers February 2017 Dispute Resolution Law Alert. In this edition, we discuss the recent case of Chim Pui Chung v Apple Daily Ltd and Ors [2017] HKCU 283.

If you require further information regarding any of the issues covered in this Alert, please do not hesitate to contact us.

 

Introduction

"If a man in jest conveys a serious imputation, he jests at his peril"

As indicated by the lengthy Judgment of the Court of First Instance in Chim Pui Chung v Apple Daily Ltd and Ors [2017] HKCU 283, libel claims are not always as straight-forward as they first appear. In assessing defamatory statements, the Hong Kong Courts will read into the "tenor", "imputation", and "effect" of the alleged defamatory publication. Even where a publication has been established to be defamatory, there is a repertoire of defences available to the defendant. In Chim Pui Chung, the defences of 'justification', 'honest comment', and 'qualified privilege' were raised against a libel claim. Whilst all three defences failed before the Court in this case, the Judgment set out precisely why the respective defences were unsuccessful. Importantly, the Judgment sheds light on how the Hong Kong Courts construe the legal principles underlying the tort of defamation.

Facts

In Chim Pui Chung, a businessman and known financial/investment adviser ("Plaintiff"), brought a libel claim in respect of a news article published in Apple Daily ("Newspaper"), against the Newspaper, the Newspaper's Chief Editor, and the author of the defamatory news article in question ("Defendants").

The news article made reference to the Plaintiff's appearance in a talk show programme during which the Plaintiff proclaimed to have a "sure win" gambling formula ("Formula") for the 2014 World Cup. The Formula required punters always to bet on "draw". If the punter loses his first bet, he should double up his wager in his second bet and if he loses again, he should double up his wager on his third bet and so on. In dispute were the following words in the news article ("Words"), which the Plaintiff claimed were defamatory of him:-

(translated from Chinese to English): "… Chim Pui Chung was the guest in a show… he even taught people how to win money betting (on football) ((he) talked about this in a (channel) which gets almost zero rating!). When it was spoken out, all of us will definitely tease at (him)... that fool is Chim Pui Chung, it is deadly even if you believe onetenth of (the words said by) him… if you had placed (bets) following (the strategy suggested by) this stupid guy, you would already hung yourselves before the round of 16."

Were the Words defamatory of the Plaintiff?

Meaning of the Words

In determining whether the Words were defamatory, the Court first considered what an "ordinary, reasonable and fairminded reader" (who understands Chinese and local Chinese expressions) would ascertain to be the "natural and ordinary meaning" of the Words.

The Defendants argued that because the meaning of the Words must be gauged by reading the news article as a whole, the Words in their proper context (being words published in a commentary column focusing on football matches and results) should be understood as a critique of the Formula rather than a comment on the personality or character of the Plaintiff. The Court rejected the Defendants' argument to find that "the tenor of the Article goes far beyond a mere critique of the Formula. It carries with it negative connotations against the plaintiff".

The Defendants also argued that because any "bane and antidote" in the news article should be taken together, the sting of the Words was negated by a subsequent paragraph in the news article, which stated that punters may consider betting on "draw" on football matches starting from the quarter-final stage. Again, the Court rejected the Defendants' argument, this time on the basis that nothing in the subsequent paragraph "waters down the imputation of the Words".

Are the Words meant to be serious?

In order for a defamatory imputation to be actionable, it must meet a threshold of seriousness. Consequently, the Court considered whether the imputation of the Words would be understood by a reasonable reader to be made in jest. Upon inspecting the actual wording in the news article against considerations such as the "nature and inherent gravity of the allegation", the Court rejected the Defendants' argument that the Words were "chaff and banter that no one would take to be meant seriously". Instead, the Court found that the message contained in the news article "goes beyond an absurd joke, or an attempt to poke fun at the plaintiff".

Are the Words defamatory?

In Oriental Press Group Ltd v Inmediahk.net Ltd [2012] 2 HKLRD 1004, it was held that a defamatory imputation is one "to the claimant's discredit, or which tends to lower him in the estimate of others, or causes him to be shunned or avoided, or exposes him to hatred, contempt or ridicule". To this end, the Court dismissed the Defendants' argument that the Words were merely "a heartless attempt at poking fun at the plaintiff for promoting the Formula" and found, on the facts, that the Words had the effect of "disparaging the plaintiff and holding him up to ridicule or contempt".

Defences: justification, honest comment and qualified privilege

Defence of justification

To raise the defence of justification, a defendant must prove that the defamatory words were true and that their alleged meanings are sufficient to meet the libellous sting conveyed by the defamatory words. In Chim Pui Chung, the Defendants pleaded that the Words were justified because the meanings of the Words were that: (1) a person claiming to have a close to 100% win betting formulae should not be taken seriously; (2) a person claiming to have a close to 100% win betting formulae must be a joker and/or thoughtless; and (3) punters who follow the Formula might get into financial trouble. The Court rejected this defence by finding that the Words did not bear (or were not understood to bear) the alleged meanings pleaded by the Defendants. For instance, in respect of the 3rd meaning, the Court held that the wording in the news article clearly conveyed the message that punters would (as opposed to might) be ruined financially had they followed the Formula before the round of the last 16.

The Court added that even if the Words bore the alleged meanings pleaded by the Defendants, the defence of justification would still have failed. In particular, the Defendants' evidence failed to support their case on the non-viability of the Formula and therefore, also failed to show the truth of the pleaded "financial trouble". Indeed, both the author and the Plaintiff agreed that the Formula theoretically works provided that a punter follows it strictly and has sufficient financial resources to carry on betting until there is a "draw" result.

Defence of honest comment

The Defendants argued that the defence of honest comment applied because the news article made or contained honest comments on a matter of public interest. Whilst the Court accepted the Defendants' argument that warning the public of the risks associated with gambling is a matter of public interest, it found that the comments made or contained in the Words failed to meet the other legal requirements under the defence. For instance, the Court held that the pleaded comments did not go to the libellous sting of the Words against the Plaintiff, did not correlate with (or in fact went beyond) the public interest relied upon by the Defendants, and/or were not supported by facts which are proven to be true.

Defence of qualified privilege

In support of their defence on qualified privilege, the Defendants pleaded that the Words were published on an occasion of qualified privilege because the news article "concerns matter of great public and general concern and interest…" and thus the Defendants "had a moral and/or social duty to publish… the Article and the public… had a corresponding legitimate interest in receiving the information…". The Court rejected this argument on the basis that the mere existence of a public interest did not mean that the Defendants were under any moral and/or social duty to publish the news article.

The Court further added that even if the Defendants had any moral and/or social duty to warn the public of the risks associated with gambling according to the Formula, it would clearly exceed the scope of such duty to make remarks carrying a defamatory imputation against the Plaintiff himself.

Takeaways

Despite the myriad of available defences to a libel claim, defendants should not expect to successfully rely on these options with ease. As shown in Chim Pui Chung, Hong Kong Courts will scrutinise the essential ingredients of the raised defences to assess their applicability on a case-by-case basis. Notably, the Hong Kong Courts have stressed that the defences of 'justification' and 'honest comment' must be properly pleaded in order to succeed.

It is often difficult to pinpoint the line between defamation and journalistic license. Whether statements are defamatory is determined through the lens of a hypothetical 'reasonable person', and this determination may turn on numerous factors depending on the specific facts and circumstances surrounding any particular case. In view of this, content providers should be cautious in publishing commentaries or opinion pieces which straddle the boundaries of libel law.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 

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Submitted by // K Bowers, Partner; M Withington, Partner
14 February 2017


No duty for the insured to provide "rolling assessment" of the situation when giving notice of a claim to an insurer "as soon as possible"

Introduction

This case provides guidance on the interpretation of two common phrases in insurance contracts. The Court held that an event is 'likely to give rise to a claim' when there is at least a 50% chance that the claim would eventuate. It also held that a duty of the insured to 'notify as soon as possible' does not create a proactive duty of inquiry.

Facts

During 22 September 2011, a construction worker ("Mr K") suffered a serious eye injury whilst using a Spanex gun to attach wire caging, resulting in the loss of sight in one eye. Mr K sued his employer, which then sued the company that provided the Spanex gun under hire, Maccaferri Limited ("Maccaferri"). Maccaferri was insured by Zurich Insurance Plc ("Zurich").

Maccaferri was made aware of the incident on 28 September 2011, but no details of the accident were provided. Maccaferri was also not informed that there had been serious personal injury. On 12 January 2012, Maccaferri was made aware that there was an injury, but not of any allegation that the gun was faulty. During July 2012, Mr K issued proceedings against the employer. Maccaferri received a solicitors' letter dated 18 July 2013 (almost two years after the incident) stating that it had been joined as a defendant in the proceedings. On 22 July 2013, Maccaferri notified Zurich, which refused to indemnify Maccaferri on the grounds that Maccaferri had failed to comply with the following condition precedent concerning notification:

The insured shall give notice in writing to the Insurer as soon as possible after the occurrence of any event likely to give rise to a claim with full particulars thereof.

Zurich argued that for the notice to have been given 'as soon as possible', Maccaferri should have notified by October 2011 (shortly after the accident), or as soon as Maccaferri became aware (or ought to have become aware) of an event that was likely to give rise to a claim.

First Instance Decision

Knowles J rejected Zurich's argument and found that there had been no failure by Maccaferri in complying with the condition precedent. Knowles J confirmed that the words "likely give rise to a claim" meant an event with at least a 50% chance that a claim against the policy holder would eventuate. On the facts known to the insured, it was not at least 50% likely that there would be a claim. Zurich was therefore obliged to indemnify Maccaferri under its public and product liability policy.

Court of Appeal Decision

In the Court of Appeal, Zurich sought to stretch the scope of the condition precedent so that the wording of the policy 'as soon as possible' created an obligation on the insured to use "reasonable diligence" in making inquiries to discover an event which would likely give rise to a claim, which would create a positive obligation on the insured.

Black LJ and Christopher Clarke LJ upheld the decision of Knowles J at First Instance and dismissed Zurich's appeal. Clark LJ views were that this interpretation was "strained…erroneous and far from clear."

Clark LJ explained that 'if Zurich had wished to exclude liability it was for it to ensure that clear wording was used to secure that result…given the nature of the clauses the ambiguity had to be resolved in favour of Maccaferri' Clark LJ further added that 'Zurich's construction had imposed an obligation to carry out something of a rolling assessment as to whether a past event was likely to give rise to a claim (and possibly as to whether an event had happened at all) as circumstances developed...but they were not in that form. If that was what had been intended, the insurers could be expected to have spelt it out.'

Comment

The obligation to notify promptly is a frequent source of dispute between insurers and their insured. By holding that an event is 'likely to give rise to a claim' when the likelihood of a claim is higher than 50%, the Court provided some assistance to parties to insurance contracts in ascertaining when the obligation arises (although this will always ultimately turn on the policy wording). Some insurers may regard this as a relatively high threshold for notifying.

On the policy wording "as soon as possible", there is no ongoing obligation to perform a rolling assessment as to whether a past event is likely to give rise to a claim. If an insurer wishes to impose this level of pro-activity, it will need to ensure that the policy wording is clear and unambiguous.

As a matter of practice, insureds should pay close attention to the notification wording (in addition to any other exclusionary wording) when negotiating policies. Insureds should also evaluate whether their notification procedures are in accordance with any specific obligation under the policy.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; intellectual property; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.


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Submitted by // K Bowers, Partner / Solicitor Advocate
09 February 2017


Data Privacy Protection: "So Call Me Maybe"

Introduction

In this Law Alert, we summarize the Court of First Instance's judgment in a recent appeal case1 involving a company (as data user) acting in contravention of a request by its customer (as data subject) to cease using his personal data for direct marketing, in breach of section 35G of the Personal Data (Privacy) Ordinance (Cap. 486) ("PDPO").

Definitions

Data user (資料使用者), in relation to personal data, means a person who, either alone or jointly or in common with other persons, controls the collection, holding, processing or use of the data.

Data subject (資料當事人), in relation to personal data, means the individual who is the subject of the data.

Direct marketing (直接促銷) means (a) the offering, or advertising of the availability, of goods, facilities or services; or (b) the solicitation of donations or contributions for charitable, cultural, philanthropic, recreational, political or other purposes, through direct marketing means.

Direct marketing means (直接促銷方法) means (a) sending information or goods, addressed to specific persons by name, by mail, fax, electronic mail or other means of communication; or (b) making telephone calls to specific persons.

New purpose (新目的), in relation to the use of personal data, means any purpose other than (a) the purpose of which the data was to be used at the time of the collection of the data; or (b) a purpose directly related to the purpose referred to in paragraph (a).

Personal data (個人資料) means any data (a) relating directly or indirectly to a living individual; (b) from which it is practicable for the identity of the individual to be directly or indirectly ascertained; and (c) in a form in which access to or processing of the data is practicable.

Summary

The appellant in the case is one of the largest residential broadband and telecommunications service providers in Hong Kong ("Company"). It was found to have acted in contravention of a request by its customer ("Mr. Chan") to stop using his personal data for direct marketing.

Mr. Chan began using the services of the Company from mid-December 2011, for a contract term of 24 months ("Contract").  In April 2013, Mr. Chan sent an email asking the Company to stop using his personal data in direct marketing ("Request"), which was in accordance with Mr. Chan's opt-out right (as data subject) under section 35G(1) of the PDPO, which stipulates "a data subject may, at any time, require a data user to cease to use the data subject's personal data in direct marketing". The Company subsequently sent an email confirmation to Mr. Chan acknowledging his Request.  

In May 2013, one of the Company's telesales representatives left a voicemail message ("Message") on Mr. Chan's mobile phone (as Mr. Chan did not pick up) informing Mr. Chan (amongst other things) that his Contract would expire soon and that the Company had a renewal offer for him. In the lower Court, the prosecution alleged that the content of the Message constituted direct marketing in contravention of Mr. Chan's Request.

Pursuant to section 35G(3) of the PDPO, "a data user who receives a requirement from a data subject under subsection (1) must, without charge to the data subject, comply with the requirement." Seeing as Mr. Chan has specifically indicated that he did not agree to his personal data being used in direct marketing, the Company must comply with the Request. The Magistrate pointed out that the Company, in asking its employees to contact Mr. Chan long before (i.e. more than 6 months before) the expiry of his Contract through different means, was in essence offering and advertising the availability of its services to Mr. Chan, hoping that he would renew his Contract, which amounted to "direct marketing". The Magistrate refused to accept that the sole purpose of the Message was to remind Mr. Chan of his soon-expiring Contract, nor did the Magistrate agree that renewing a contract did not constitute a "new purpose" (Note: Personal data shall not, without the prescribed consent of the data subject, be used for a new purpose). Furthermore, the Magistrate concluded that not only did the Company fail to take all reasonable precautions or exercise all due diligence to prevent contravention, even more so, the Company had completely disregarded the express wishes of Mr. Chan (and other existing customers).

Appeal

The Defence argued that the Company was simply reminding clients of their expiring contracts as a matter of good customer service so that they could avoid paying higher service charges afterwards (the Prosecution must prove that the Company had the mens rea / intention to engage in direct marketing activities).

However, the Appellant Judge was of the view that the offence in question is of a regulatory nature, legislated specifically against breaches in relation to personal data privacy, and that it was crucial to consider the legislative intent. In doing so, the Appellant Judge concluded that the prosecution does not need to prove mens rea - this best reflects the purpose of the legislation and also enhances compliance by the general public.

The Defence went on to argue that the matter concerned the renewal of contract, which is an extension of contract matter and not a "new purpose" as stipulated in the legislation. It was argued that the telesales representative who left the Message for Mr. Chan was part of a team which is responsible for "after-sales service and contract reminder", and has nothing to do with "direct marketing". 

Pursuant to Principle 3(1) of the data protection principle, "personal data shall not, without the prescribed consent of the Data Subject, be used for a new purpose." Upon a thorough examination of the content of the Message, the Appellant Judge agreed with the Magistrate's finding and was of the view that the Company went beyond a simple act of reminding Mr. Chan of his soon-expiring Contract, and found that the purpose of the telephone call / Message was to inform Mr. Chan of the renewal offer, which constitutes a "new purpose" and direct marketing.

Having been satisfied that all elements of the offence had been established beyond a reasonable doubt, namely (1) the data subject asked the data user to stop using his / her personal data in direct marketing, (2) the data user received the data subject's request and (3) the data user did not comply with the request, the Appellant Judge went on to consider whether the Company was able to rely on the defence under section 35G(5) of the PDPO, in that it (1) took all reasonable precautions and (2) exercised all due diligence to avoid the commission of the offence. The Appellant Judge was of the view that it had not (despite having such responsibility) and rejected the appeal.

Comment

Awareness of data privacy rights is becoming increasingly high, and complaints about mis-use of personal data are not uncommon in Hong Kong. In its Annual Report 2015-2016, the Office of the Privacy Commissioner for Personal Data2 reported that 2,022 complaint cases were received in that year and a record high 20% increase from that of the previous year.

With data privacy issues on the rise, data subjects should better understand their rights. On the other hand, data users must exercise caution when ensuring compliance with the legislation in order to avoid future complaints / litigation (which, in the case of organisations, may entail having adequate policies and procedures in place and providing regular training to employees on the handling of personal data, etc.). In the event of a breach, data users should demonstrate that they have taken "all reasonable precautions and exercised all due diligence to avoid the commission of the offence".

________________________________________________________________________________________________________________________

1 香港特別行政區 訴 香港寬頻網絡有限公司 [2017] HKCFI 116; HCMA 624/2015

 

2 an independent statutory body which oversees compliance with the requirements of the PDPO

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 

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