A Hong Kong herbal products chain is seeking more than HK$130 million (US$16.7 million) from a former shareholder for defamation following a news report that purportedly showed staff washing mould-covered turtle jelly for sale.
Lawyers for Hoi Tin Tong accused Choy Kwok-keung of coordinating and staging an Apple Daily report in 2013 to injure the company famous for its turtle jelly, causing “huge” losses that led to the multimillion dollar suit, which opened in the High Court on Tuesday.
A video in the article identified Choy as the whistle-blower who led the reporter to a local store, where a woman was seen rinsing multiple tubs of black jelly in tap water with a net-covered sponge, while explaining how mould could be washed away or hidden from customers.
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“We say it’s false,” the plaintiff’s counsel Osmond Lam Kwok-fai said. “None of the staff in our branches were instructed to wash [jelly]. In fact, they were instructed to destroy.”
Lam said the company had clear standing instructions to get rid of spoiled products and report to the factory when investigations were called for.
The counsel also observed that Choy had never voiced any complaints about product quality or the alleged practice during the company’s regular meetings, and submitted that he knew the allegations were false when they were published by Apple Daily, Oriental Daily News and the now-defunct Sun.
He further argued that Choy had set out to “burn” the brand and destroy its reputation after leaving the company in June 2013 to open 18 rival stores that summer.
“[Choy] demonstrated an intention to destroy our brand, and he carried it out,” Lam said.
Founder Ng Yiu-ming testified that Choy used to help with advertising after they met in about 1998 – seven years after Hoi Tin Tong opened its first Hong Kong store – and began cooperating as partners to open new stores in mainland China from 2004, splitting profits as the chain expanded.
By 2013, Choy was earning 600,000 to 700,000 yuan a month in bonuses, according to Ng.
Meanwhile, the company boasted 88 stores across the city and more than 100 on the mainland, with no fewer than 300 staff members selling its signature jelly, which was produced at a rate of 40,000 to 50,000 tubs a day in its Huizhou factory in Guangdong province.
Ng said the jelly would be refrigerated during transport to Hong Kong as it contained no preservatives and could spoil at room temperature.
He also agreed with a suggestion from Choy’s defence counsel Paul Lam Ting-kwok SC that mouldy jelly was “a common problem” before 2013.
But Ng admitted that the delivery vans in Hong Kong were not equipped with cold storage, so the jelly would be exposed for a “very short” period during distribution from the company warehouse in Fanling to the various outlets in the city.
“Now all of them are equipped,” he added.
“Because of this incident,” Mr Justice David Lok Kai-hong observed.
The witness agreed.
The 11-day trial continues on Wednesday.