ORIENTAL PRESS GROUP LTD v. APPLE DAILY LTD

IN THE COURT OF APPEAL

1997, No. 104
(Civil)

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Coram : Hon. Godfrey, J.A., Wong and Pang, JJ. in court

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J U D G M E N T

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Godfrey, J.A. (giving the judgment of the court) :

1. By section 22 of the Hong Kong Court of Final Appeal Ordinance, Cap. 484, it is provided that an appeal shall lie to the Court of Final Appeal, in any civil cause or matter, at the discretion of this court, or the Court of Final Appeal, against a judgment of this court, if in the opinion of this court, or of the Court of Final Appeal, the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

2. In this case, in which this court gave judgment in favour of the respondent on 19 September 1997, the appellants now invite this court to certify as fit for hearing by the Court of Final Appeal the following question : How should infringement of copyright damages be assessed where one paper copies another's exclusive photograph knowing that that other paper would not grant it a licence to do so?

3. A question framed in this broad way is not, in the opinion of this court, one which is fit to be certified for hearing by the Court of Final Appeal, which is not an academic forum but a practical tribunal set up to consider questions of great general or public importance. The appellants' real grievance in the present case is that the damages awarded by the judge were in the words of counsel for the appellants, "inordinately low". That is not a matter which, in the opinion of this court, gives to a question of great general or public importance or which is otherwise suitable for consideration by the Court of Final Appeal. It will of course be open to the appellants to renew their application to that court, which, if it takes a different view of the matter from this court, will no doubt then decide to entertain the appellants' appeal.

4. We should add that counsel for the appellants suggested that a further question arises as to what are called "conversion" damages; but this is not a live issue for future cases, since the law allowing such damages has now been changed. There is no evidence before us of any substantial number of cases pending before the change in which the point would arise for decision. This subsidiary point also is therefore not fit for certification. So we must do what is right in our opinion and refuse this application; though to do so (to borrow the famous words of Lord Mansfield in Rex v. Wilkes 4 Burr. 2527, at p.2562) "should draw on us the whole artillery of libels".

5. The application will therefore be dismissed, with costs.

Representation:

Mr. Peter Garland, S.C. & Miss Winnie Tam (M/s. Iu, Lai & Li) for the Appellants/Plaintiffs (Applicants)

Mr. Andrew Liao, S.C. & Mr. Colin Andrew Shipp (M/s. T.S. Tong & Co.) for the Respondent/Defendant (Respondent)

IN THE COURT OF APPEAL

1997, No. 104
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. On 19 September 1997, this court gave judgment on an appeal from Rogers, J., who, in actions for breach of copyright, had awarded the plaintiffs, Oriental Press Group Limited and Oriental Sunday Publisher Limited, damages against the defendant, Apple Daily Limited. The damages fell far short of the amount to which the plaintiffs considered themselves entitled. The plaintiffs appealed, asking this court to substitute, for the order made by the judge, a much more substantial award in their favour.

2. This court dismissed the plaintiff's appeal on the point to which I have referred; but did not then resolve the plaintiffs' appeal against the judge's order as to the costs of the proceedings before him, which was an order that the plaintiffs should pay the defendant's costs of the action.

3. We now have to decide whether or not to interfere with the judge's order as to the costs below.

The background

4. For present purposes, the background may be very shortly stated. The defendant reproduced in a layout a photograph, or part of a photograph, copyright in which was claimed by the plaintiffs.

5. On 16 October 1996, before any proceedings had been instituted, the defendant's solicitors wrote to the plaintiffs' solicitors in the following term :

"On an entirely without prejudice basis, we are instructed to advise that our client wishes to resolve the matter with your client expeditiously and without recourse to legal proceedings. In this connection, our client is willing to offer the following terms in full and final settlement of all the claims of [the plaintiffs] in respect of the alleged infringement of the copyrights subsisting in the Photograph and the Layout.

1. our client agrees not to publish, print, sell or otherwise arrange for the publication and reproduction of the Photograph and the Layout.

2. our client agrees to pay your client a sum of HK$10,000.00 as an agreed compensation; and

3. our client agrees to pay your clients a sum of HK$10,000.00 as an agreed contribution to their legal costs incurred herein.

You are kindly requested to take instructions from your clients in respect of the above and revert to us as soon as practicable. It is hoped that an amicable settlement can be arrived at between our respective clients.

Meanwhile, we put it on record that we hereby reserve our right to produce this letter to the court when the costs of this matter shall fall to be decided."

6. That letter was written in response to a letter before action from the plaintiffs' solicitors, asking for an acknowledgement of the plaintiffs' copyright, damages and costs. As to costs, the plaintiffs demanded $100,000; on the face of it, an extravagant sum at so early a stage in the dispute. But, be that as it may, the plaintiffs rejected the defendant's offer; they instituted proceedings, on 23 October 1996, in order to establish their copyright, and to obtain damages for the defendant's infringement of that copyright.

7. On the day the writ was issued (but before it had been served) the defendant's solicitors wrote again to the plaintiffs' solicitors, repeating their offer, and asking for a breakdown of the sum of $100,000 demanded by the plaintiffs for their costs. The defendant's solicitors maintained that the compensation offered to the plaintiffs, in the sum of $10,000, was reasonable and adequate compensation to the plaintiffs for their loss and damage, if any, which was denied. But this offer, too, led to nothing. And so, when in due course the plaintiffs' actions came on for hearing before the judge, the state of play was that the defendant was not admitting any infringement of any copyright claimed by the plaintiffs, and it went into battle on that issue. But it lost. The plaintiffs succeeded on the question of liability.

8. So far as the question of damages is concerned, the matter is a little more complicated. Although the plaintiffs did recover damages from the judge in an award which this court has affirmed, it recovered only $8,001, less than the $10,000 which the defendant had offered in its letter of 10 October 1996 (an offer repeated in the letter of 23 October 1996).

The plaintiffs' case

9. The plaintiffs say that the judge, when he ordered that in these circumstances the plaintiffs should pay the defendant's costs, erred in principle. The plaintiffs say that a plaintiff who has succeeded in establishing the defendant's liability in an action for infringement of copyright and has recovered substantial (as distinct from nominal) damages, although damages falling far short of the amount to which he considered himself entitled, has succeeded in his action, and ought not to be made to pay his opponent's costs.

10. In Gupta v. Klito, only reported, so far as this court is aware, in "The Times" for 23 November 1989, and to which this court drew the attention of counsel, the Court of Appeal in England and Wales held that a successful plaintiff who recovers more than nominal damages against the defendant should in normal circumstances have an order for his costs against the defendant. The court said that it was an error of principle for a trial judge who wished to reflect his disapproval of the way in which such a plaintiff had conducted the litigation to do so by ordering him to pay the defendant's costs. Mustill, L.J. said that, although costs were in the discretion of the trial judge, it was very unusual for a plaintiff who had succeeded on the issue of liability and who had recovered more than nominal damages to be ordered to bear not only his own costs but also those of the unsuccessful defendant. So, the Court of Appeal reversed the judge. It concluded that justice could be done by making no order as to the costs of the action.

11. The plaintiffs cited in this court the decision of Neville, J. in E.W. Savory, Limited v. The World of Golf, Limited, [1914] 2 Ch 566, a case which was not drawn to the attention of Rogers, J. below.

12. In that case, as in this, offers of settlement had been made by a defendant who had infringed the plaintiffs' copyright. The judge said (at p.571) :

"..... When a complaint was made by the plaintiffs' solicitors to the defendants' solicitors, a suggestion was made that out of Court satisfactory terms could be made, and an offer was suggested on the part of the solicitors for the defendants, which, it is argued, would have given, had it been accepted, the plaintiffs all that they were entitled to, and that, if that were so, then the writ was improperly issued and the action improperly brought and ought to be dismissed with costs. The writ was issued and the action proceeded to trial. The defendants in their defence denied the rights of the plaintiffs, but also set up this offer before action and suggested that on that ground the action should be dismissed. There were certain other offers made during pendency of the action, which in my opinion were not all that the plaintiffs were entitled to demand, and therefore cannot come into consideration in the determination of the case at the present time. Nor do I think that the offer made before action can come into consideration either under the circumstances. In my view, where a right of this kind has been infringed by a defendant, the plaintiff is entitled to an order and is not debarred from exercising his right to sue by a suggestion on the other side that they will promise not to do it again and will pay such damages as may be agreed between them. I am not going to consider it, and it is not necessary from the point of view I take, but supposing that the plaintiffs had been offered all that they were entitled to except an order, and that then the writ was issued and the defendants had repeated the offer that they made before action, enlarging their offer by including the costs of the action up to date, and then the plaintiffs had persisted with the action, I think the whole of the subsequent costs, from the time of their offer to submit to an order, would be cast upon the plaintiffs, but that in my opinion is the only way in which, where a wrong has been done, the defendant can escape from the liability of having the rights which have been infringed asserted in a Court of law and a proper order obtained. ....."

13. Founding themselves on this, the plaintiffs say that, as a matter of principle, a plaintiff whose copyright is infringed has a right to an order of the court restraining the infringement, and is not prevented from the exercise of this right by an offer by the infringer before action brought not to do it again.

14. So the plaintiffs say, the judge here erred in principle. This court should reverse his decision as to costs of these proceedings below and should exercise its own discretion as to how those costs ought to be dealt with.

The defendant's case

15. The defendant supports the judge's order as to the costs below. The defendant says that the offer made in the letter of 16 October 1996 should be construed as having a continuing effect, despite its rejection and the subsequent issue of proceedings. It was not expressed to be limited as to time, and the plaintiffs, and the judge, ought to have proceeded on the footing that it was open for acceptance at all times. Since the offer was one with continuing effect, and since the sum awarded fell short of $10,000, the judge was right, says the defendant, to make an order for the plaintiffs to pay the defendant's costs, and to equate (as he did) the offer made in the letter of 16 October 1996 with a payment into court. He might (though he did not) also have equated it to an offer of a formal character such as is contemplated by O. 22 r.14 of the Rules of the High Court, which enables the judge to give effect to a written offer on any question of costs similar to that of a payment into court. The defendant accepted that the judge was not bound to consider the letter of 16 October 1996 as an offer made under O.22 r.14 (which is concerned with offers made after the commencement of the action) but argued that that did not disentitle him from doing so. The judge had a discretion as to the order to costs which he should make, and he was entitled to take this letter into account in exercising that discretion. The defendant suggested the case before Neville, J., having been decided before the more recent developments as to costs such as the introduction of O.22 r.14, had had its authority weakened by those developments. I note, however, that the editors of the Supreme Court Practice 1997 do not, in citing the case at 62/9/5, suggest that its authority is in any way lessened because of such recent developments. Indeed, it is cited for the propositions on which the plaintiffs rely, that is to say, that the owner of a copyright is entitled to an order; an infringer to escape trial at his cost must wait till a writ is issued and then submit to a proper order with costs.

Conclusion

16. For my part, I find it impossible to construe the letter of 16 October 1996 as having the continuing effect after action brought which the defendant suggests. I think that its effect was spent when the plaintiffs rejected it and issued proceedings. In order to protect itself, the defendant ought to have admitted liability and renewed its offer of $10,000 compensation.

17. The defendant says the plaintiffs' case was in disorder; it had never really sorted out precisely what its case was in relation to this photograph. But there is nothing relevant in this point, which the plaintiffs anyway do not accept. Nor do I.

18. So I conclude that the plaintiffs are right. The judge here did err in principle. As I have already indicated, an order that a plaintiff who succeeds on liability and succeeds in obtaining substantial, that is to say, more than nominal damages, should be made to pay the defendant's costs, is a most unusual order to make. I appreciate that the offer made in the letter of 16 October 1996 was something which the judge was entitled to take into account in the exercise of his discretion as to costs. But, in my judgment, to use this limited offer to support an order that the plaintiffs bear the defendant's costs of the action is to put much too much weight on it. That result may sometimes achieved by a payment into court, or by an offer made after action brought under O.22 r.14 of the Rules of the High Court. Perhaps, in very rare circumstances, it might be achieved in other ways; but I do not think it has been achieved here. The plaintiffs succeeded in establishing liability, which the defendant had always denied, and the plaintiffs recovered damages, although not as much as they had hoped (indeed, the plaintiffs' claim for damages was even more extravagant than their claim for costs). But the fact is that the judge made an order as to liability, and for damages, in favour of the plaintiffs; and this court has sustained that order.

Result

19. So now it falls to this court to exercise its own discretion in the matter. Taking into account all the circumstances to which I have referred, I would, for my part, substitute, for the judge's order, no order as to costs. I propose that the judge's order for costs be set aside, and that this court in substitution therefor should make no order as to the costs of the proceedings below.

Wong, J. :

20. I agree.

Pang, J. :

21. I also agree.

Representation:

Mr. Peter Garland, S.C. & Miss Winnie Tam (M/s. Lovell White Durrant) for the Appellants/Plaintiffs

Mr. Andrew Liao, S.C. & Mr. Colin Andrew Shipp (M/s. T.S. Tong & Co.) for the Respondent/Defendant

Appeal by the Plaintiff to Court of Final Appeal. Appeal allowed. Please refer to the appeal judgment of FACV6/1998.

IN THE COURT OF APPEAL

1997, No. 104
(Civil)

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J U D G M E N T

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Godfrey, J.A. (giving the judgment of the court) :

Introduction

1. This is an appeal from Mr. Justice Rogers, who in actions for breach of copyright has awarded the plaintiffs Oriental Press Group Limited and Oriental Sunday Publisher Limited damages against the defendant Apple Daily Limited falling far short of the amount to which the plaintiffs consider themselves entitled. They accordingly now appeal, asking the court to substitute for the awards made by the judge much more substantial awards in their favour.

2. For present purposes no distinction need be drawn between the plaintiffs, to whom we shall refer hereafter in the singular.

Background

3. The plaintiff is the publisher of a Chinese weekly magazine ("Oriental Sunday"). The defendant is the publisher of a Chinese daily newspaper ("Apple Daily"). The bone of contention between them is, in substance, a photograph of a popular local entertainer named Huang Fei, or Faye Wong. This lady's private life is, or so it is said, of interest to those who read these two publications. In October 1996, such readers were, apparently, particularly interested in the truth or otherwise of rumours concerning her pregnancy. The photograph in question, taken without the subject's consent in the baggage claim area of the airport in Beijing, is said to confirm the rumours. The judge has held the plaintiff entitled to copyright in this photograph; the defendant does not now contend otherwise.

4. The plaintiff published this photograph on the front cover of the 6 October 1996 issue of the "Oriental Sunday" (an issue in fact released on 5 October 1996).

5. The defendant re-published this photograph in the 6 October 1996 issue of the "Apple Daily". It did so by reproducing, on the cover page of the entertainment section of its own paper, with acknowledgement, the cover of the 6 October 1996 issue of the "Oriental Sunday". But the defendant had not sought the consent of the plaintiff for this reproduction; and indeed the plaintiff would not have licensed the defendant to reproduce the photograph if it had been asked to do so. The plaintiff says it was thus robbed of its "scoop". Hence these proceedings.

The judgment

6. The judge, coming to assess damages, reviewed all the evidence presented to him. He remarked that there was no evidence before him of any loss to the plaintiff caused by the defendant's breach of copyright. He dealt separately with "infringement" damages and "conversion" damages. So far as "infringement" damages were concerned, he accepted the plaintiff's contention that these should be assessed on the footing of a proper royalty for the use of the photograph. He was provided with evidence in the form of alleged comparables, all of which he considered and rejected. For example, he was pressed by the plaintiff with evidence of what would, apparently, have been an appropriate royalty for the use of a death-bed photograph of Deng Xiao Ping. He rejected this as a "wholly unreal comparison". He was further presented with evidence from the plaintiff of what would have been an appropriate royalty for a set of four (as he said ) "highly valuable" pictures of the unfortunate Diana, Princess of Wales, in the company of one Major Hewitt. He thought this series of photographs, for which a proper royalty would have been 1,000, could be expected to arouse far greater interest "than a photograph of a pop singer in Beijing airport waiting for her baggage". He said "using this instance as some kind of measure", he would estimate the value of the photograph in the present case at HK$5,000.

7. As to "conversion" damages, the approach the judge adopted was that favoured in John Lane, The Bodley Head Ltd v. Associated Newspapers [1936] 1 KB 715 and Ash v. Dickie [1936] 1 Ch 655 (see also Caxton Publishing Co. Ltd v. Sutherland Publishing Limited [1939] AC 178 and Ravenscroft v. Herbert [1980] RPC 193). (This approach requires one to calculate the value of the infringing publication, taking an "appropriate proportion" of that value, and multiplying that proportion by the number of copies sold. There is a difficulty with the "appropriate proportion" concept however; for that proportion cannot be arrived at by any exact method of calculation. Sometimes, the feature in question may be of major importance, however little space it occupies. If, then the proportion of the publication which the space taken up by the feature bears to the whole publication is, say, 4%, the value of that 4% may be more than 4% the total value of the publication (see, for example, the case last cited, at p.210, where the judge assessed the appropriate proportion at 15%). The judge has to do the best he can, using his common sense; he has to do rough justice by fixing an appropriate value, starting with the proportion which the feature bears to the whole publication in terms of the space occupied, but with a margin of appreciation which allows an adjustment upwards or downwards to reflect the feature's relative importance.) The judge in the present case assessed the conversion damages at $3,000. He reasoned as follows :

"I have calculated damages in this respect as being $3,000.00. In doing so I regard this as being very generous to the Plaintiff. I have done it on a rough basis. I have compared the size of the photograph with the part of the paper that is not regarded as advertisement, on the Plaintiff's calculation that is 38.5 pages. The size of the total area of the paper therefore which is not devoted to advertisements works out, on my calculation, 360mm x 535mm x 38.5 pages. I find that comes to a figure of 7,415,100. I then took half the size of the article which is more than the size of the photograph but which, in my view, gives the sort of prominence that is given in relation to this article and photograph. I come to a figure of approximately 497 that is 1/497th part of the newspaper not containing advertisements. And I divide the total price of the newspaper $5.00 x its circulation by 497, and I come to a figure of approximately $3,000.00 rounding the figure of 497 up to 500."

The function of the Court of Appeal

8. It is necessary, once again, to point out that it is not the function of this court to provide a disappointed litigant with a chance to have a second bite at the cherry. This court is not entitled to interfere with a judge's assessment of damages merely because it would, or might, have attached greater weight, or lesser weight, than did the judge to one aspect or another of the evidence. It can interfere only if it is satisfied that the judge has fallen into some error of principle (by, for example, failing to take into account some matter which he was bound to take into account; or by wrongly taking into account some matter which he was not entitled to take into account); or, short of this, that the amount awarded was so inordinately low or so inordinately high that it must have been a wholly erroneous estimate of the damage. (For an example of the application of these well-settled principles in the field of infringement of copyright, see the Privy Council case of Khawam v. K. Chellaram & Sons [1964] 1 WLR 711.)

The plaintiff's argument

9. The plaintiff's argument on the appeal is set out in the Notice of Appeal as follows :

"Infringement Damages

1. In assessing the notional royalty for the use of the photograph on the front cover of the Oriental Sunday Magazine ("the Photograph"), the learned Judge erred in that he :

a) Failed to give any or due weight to the evidence that the Photograph had great "scoop" and exclusivity value, being the first photograph (and the only one available in evidence) to confirm the rumoured pregnancy of Huang Fei, a prominent Hong Kong pop star who avoided publicity.

b) Failed to give any or due weight to the evidence that a licence fee for a non-exclusive "once only" right to publish a photograph of the dying Deng Xiao Ping (which had already been published in Hong Kong) would have cost in the region of US$6,000 and failed to hold that, in the context of a Hong Kong newspaper such as the Apple Daily, this figure was an appropriate yardstick for assessing a notional royalty in the present case.

c) Failed to give any or due weight to the evidence that the Defendants would not have been given a licence to reproduce the Photograph.

d) Failed to give any or due weight to the evidence that the minimum penalty charged in the industry to infringers was 3 times the normal licence fee.

e) Misinterpreted the last sentence in Exhibit "LHC-6" to the 2nd Affirmation of Lee Hong Chuen in failing to appreciate and disregarding the evidence that the Photograph was being cited as one in which the writer's company would be interested and was not being cited as an example of a normal everyday photograph.

f) Failed to give any or due weight to the evidence that the set of frames from a film purportedly taken of Lady Diana, a foreign celebrity, during an affair which had long been openly admitted by both parties concerned would not attract as much interest in Hong Kong as a photograph proving for the first time the pregnancy of a Hong Kong pop star.

g) Held without any, and contrary to, the evidence that photographs of Lady Diana would arouse more interest than a photograph of a local pop singer.

h) Wrongly used the aforesaid purported photographs of Lady Diana as a measure for assessing the notional royalty.

Conversion Damages

2. In assessing the value of the copy in relation to the whole of the Defendant's newspaper, the learned Judge erred in that he:

a) Wrongly held that no prominence was given to the Photograph or the accompanying article in the Entertainment Section of the Defendant's newspaper, notwithstanding that they appeared on the front cover of that section and constituted one of only three news features on that page.

b) Wrongly assessed the value of the copy by reference to area, by taking half the area of the article of which the copy formed part and comparing this with the area of the news sections of the Defendant's newspaper. The value of the copy assessed by this method amounted to 0.2 per cent of the value of the Defendant's newspaper.

c) Wrongly failed to attach any or due weight to the evidence that the photograph in the copy had great "scoop" and exclusivity value for the reasons in 1(a) above and had a value substantially larger than that arrived at merely by measuring its size."

10. These so-called "grounds of appeal" consist, as they all too often do, entirely of complaints that the judge gave too little or too much weight to various features of the evidence urged on him by one party or the other. The whole argument is misconceived; and it must be rejected.

11. The judge considered all the matters mentioned in the "grounds of appeal". The weight to be given to any and all of them was entirely a matter for him. The one matter of fact which, in our view, does need some further consideration is the complaint made by the plaintiff as to the judge's assessment of the area of the defendant's newspaper occupied by the infringing feature. Copies of the 6 October 1996 issue of the "Apple Daily" were not originally supplied for our use (as of course they should have been) but at our request we were eventually supplied with one copy. It comprises 6 sections, as follows :

12. The judge may have made a minor miscalculation as to the proportion which the infringing feature bears to the whole publication; but not, in our judgment, a miscalculation of such significance as would require or entitle us to interfere with his assessment of the conversion damages: indeed, properly evaluated, the miscalculation favoured the plaintiff.

Conclusion

13. We dismiss the appeal. We do so without reluctance. The photograph of this lady was taken, as we have noted, without her consent. It is, perhaps, a nice irony that, if asked for her consent, she would clearly have indignantly refused it, just as the plaintiff says it would have refused its consent to the reproduction of the photograph by the defendant. The taking of photographs of public figures on public occasions (for example, when emerging from limousines on first nights) is and must remain legitimate. But the taking of photographs of public figures on private occasions without their consent is quite another matter. It has been held, on public policy grounds, that no copyright can subsist in matter which is morally offensive : see, for example, Stockdale v. Ownlyn (1826) 5 B & C 173; although, nowadays, the work would have to be considered as having a grossly immoral tendency before it would be excluded from copyright protection : see Stephen v. Avery [1988] Ch. 449. The point is that the law should, and can, reflect public sentiment. Public sentiment has turned, or seems to be turning, against those who are guilty of invasion of the privacy of public figures by taking their photographs on private occasions without their consent and then selling those photographs for large sums which reflect the cupidity of the publishers and the prurience of their readers. The time may come when, if the legislature does not step in first, the court may have to intervene in this field (as Lord Bingham of Cornhill, LCJ, has recently suggested in England); for example, by holding that the protection of copyright will not be extended to photographs of public figures taken on private occasions without their consent. (No newspaper or periodical would pay a large sum for a photograph which its rivals could re-publish without fee; and that consideration would go some way to reduce the incidence of the sort of conduct which is exemplified by the conduct of the photographer in the present case, who, knowing that the subject did not want to be photographed, nevertheless proceeded surreptitiously to photograph her.)

14. We will appoint a date and time for hearing submissions as to the costs below, and as to the costs of this appeal, after the parties have had an opportunity of considering this judgment.

Representation:

Mr. John Griffiths, S.C. and Miss Winnie Tam (M/s. Lovell White Durrant) for Appellants/Plaintiffs

Mr. Andrew Liao, S.C. and Mr. Colin Andrew Shipp (M/s. T.S. Tong & Co.) for Respondent/Defendant