SCMP Saturday, August 5, 2000

Blow for tycoon in libel battle
ANGEL LAU

Tycoon Li Ka-shing's flagship company Cheung Kong (Holdings) yesterday lost the first round of a legal battle against a politician who alleged it received preferential treatment from the Government.

Mr Justice William Waung Sik-ying rejected Cheung Kong's attempt to strike out part of Democrat Albert Chan Wai-yip's defence against a defamation suit brought by the company. The judge ordered Cheung Kong to bear 90 per cent of Mr Chan's costs in fighting its application.

The flagship of Mr Li's business empire is suing Mr Chan, a former legislator, over public statements he made about its dealings with the Government.

The legal action has not yet gone to trial in the Court of First Instance. Cheung Kong made the application to prevent Mr Chan from pleading various aspects of his defence.

"It seems to me that the plaintiff is demanding too much and is thereby taking away the role which ought to be properly played by the jury in a defamation case," Mr Justice Waung said in a written judgment.

He said this stage of proceedings was not the place to say whether a particular allegation was incapable of being proved.

In June 1998, Mr Chan made statements to the effect that the Government had favoured Mr Li and Cheung Kong, Mr Justice Waung said. Mr Chan accused Cheung Kong and the Government of acting to advance Cheung Kong's interests, he said.

Mr Chan wanted to use eight transactions involving Cheung Kong to justify his allegations. In yesterday's judgment, Mr Justice Waung said seven of the transactions "relate in one way or another" to Mr Chan's defence.

One involved the Maywood Court, Kingswood Villa, development in Tin Shui Wai. Maywood Court, developed by a Cheung Kong subsidiary, was put on the market for pre-sale from March 1997 - before the property market went into a serious decline in late 1997. Some buyers approached Cheung Kong to discuss financial difficulties as a result of which the developer offered them a second mortgage at prime rate plus three per cent for five to eight years. Mr Chan had alleged at the time that the offer was like Mr Li "taking money from beggars".

As part of his defence, Mr Chan referred to a public statement by Financial Secretary Donald Tsang Yam-kuen on June 17, 1998, in which he commented on buyers suffering because of the market slump. Cheung Kong argued in a closed hearing in March that bringing Mr Tsang into the argument was "vexatious" since he was not part of the proceedings. But Mr Justice Waung ruled that Mr Chan's claim "must not be read out of context or read alone" as it formed part of his overall case.