On debt recovery, defamation, and damages: part 2.¹

To recap:
(a) at Mr Chan's request, Ms Tang loaned $120,000;
(b) the loans were not repaid. Ms Tang engaged a debt collection company, which paid visits to and left letters at various locations; and
(c) Mr Chan sued Ms Tang and the debt collection company for defamation - successfully.

What were the consequences of Mr Chan's successful lawsuit?

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The District Court ("DC") awarded Mr Chan damages of $10,000.²

Some of you will think that this is too much. After all:
(a) the defamatory statements were only published to 5 individuals: an employee of Mr Chan's companies, Mr Chan's domestic helper, Mr Chan's daughter, and 2 of Mr Chan's daughter's colleagues; and
(b) Ms Tang would now be liable for up to $10,000 on top of the unpaid loan of $120,000, and the debt collection company would now be liable for up to $10,000 even though it probably did not earn any or much fees from this job.³

Some of you will think that this is too little. After all:
(a) Mr Chan would have had to incur costs to bring a claim for defamation. In all likelihood, damages of $10,000 would be insufficient to cover the difference between the costs he was awarded and the costs actually incurred.⁴ If so, he would have suffered a financial loss despite succeeding in his defamation claim; and
(b) the DC proceedings lasted over 3 years.⁵ For all the time, energy, and effort expended (and putting aside costs), $10,000 feels a little, well, pathetic.

So here's an exercise to test your sense of judgment. If you were the Judge hearing this matter, and decided that Mr Chan had been defamed, would you have awarded Mr Chan:
(a) more than $10,000;
(b) $10,000;
(c) less than $10,000; or
(d) $1?

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For those of you who said $1...

...congratulations! You think like a High Court judge.

Because after the DC handed down its decision:
(a) Mr Chan appealed, asking for more damages; and
(b) Ms Tang also appealed - against the whole of the DC's decision - and argued in particular that Mr Chan should only be awarded damages of $1.

The appeals were heard by the High Court. Without getting too technical, the High Court held that Mr Chan, being the person in control of the companies, had caused the companies to take loans from Ms Tang but not repay them despite Ms Tang's requests. His actions had destroyed this particular area of his reputation such that he could not be said to have any reputation, concerning his willingness to pay his debts and fulfil contractual obligations, to be worthy of legal protection.

In other words, the High Court awarded Mr Chan damages of $1 because even though he had been defamed, he did not have any reputation of credit-worthiness that was worth protecting.

I cannot imagine that Mr Chan would be happy with this outcome.

In part 3, I'll discuss the practical outcome of the litigation.