Chin Bay Ching v Merchant Ventures Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 17 May 2005
• Neutral Citation: [2005] SGCA 29
• Docket Number: Civil Appeal No 86 of 2004
• Date: 17 May 2005
• Year: 2005
• Published date: 24 May 2005
• Plaintiff Counsel: Ang Cheng Hock and Eugene Thuraisingam (Allen and Gledhill)
• Citation: [2005] SGCA 29
• Defendant Counsel: Kenny Khoo Ming Siang and Leong Why Kong (Ascentsia Law Corporation)
• Court: Court of Appeal (Singapore)
• Subject Matter: Injunction,Mandatory and prohibitory injunctions,Interlocutory injunctions,Tort,Defamation,Prohibitory injunction restraining future publication of allegedly defamatory statements,Whether court having power to grant such injunctions,Mandatory injunction requiring retraction of allegedly defamatory statements,Applicable principles for granting interlocutory injunctions in defamation actions

17 May 2005

Chao Hick Tin JA (delivering the judgment of the court):

1 This was an appeal against a mandatory injunction and a prohibitory injunction granted by the High Court (see [2005] 1 SLR 328) in an action instituted by the respondent, Merchant Ventures Pte Ltd (“MVP”) against the appellant, Chin Bay Ching (“Chin”) for defamation and malicious falsehood. We heard the appeal on 24 March 2005 and discharged both the injunctions. We now give our reasons.

The background

2 MVP is a Singapore company incorporated by Chin. Initially, it had two shareholders, with Chin holding one share and his brother, Chin Bay Fah, the other share. The brothers were also the first directors of MVP.

3 Sometime in 1997, MVP entered into a joint venture with a Chinese company, Zhuhai City Jin Xing Industry & Commerce Company (“Jin Xing”) to develop a golf course, a country club and several bungalow homes (collectively, “the project”) in Zhuhai, the People’s Republic of China. For this joint venture, the parties decided to use the vehicle known as the Zhuhai Pearl Golf and Country Club (“the Club”) to carry out the project.

4 Pursuant to the joint venture agreement, MVP invested $4.2m in the Club whilst Jin Xing secured the land usage right grant (“the Grant”) in favour of the Club from the Zhuhai authorities. Of the $4.2m invested in the Club by MVP, at least $1.9m came by way of a shareholder loan from Chin to MVP. The remainder had apparently come from one Tan Siak Meng (“Tan”), but this was disputed by Chin.

5 For reasons which were not entirely clear, the execution of the project was delayed. It was put on “hold” by the Zhuhai authorities. In October 2001, Chin discussed with Tan who claimed that he could work on the Zhuhai authorities to revive the project. Following further negotiations, where a third person, Ong Sooi Eng (“Ong”), was also involved, it was agreed (“the 2001 Agreement”) that Tan would purchase Chin’s entire shareholding in MVP for the sum of $2.6m, plus one of the to-be-completed bungalows and two golf memberships in the proposed country club. It was also a part of the understanding that Chin would ensure that MVP would issue to Tan (or his nominee) seven new shares in MVP. Earlier, for his efforts in helping to reinstate the project, Ong had been issued with one share in MVP.

6 Some months later, in February 2002, the parties varied the 2001 Agreement and, under this new agreement (“the 2002 Agreement), the one share meant for Ong would be transferred to Tan and the seven new shares for Tan would be transferred to Anchorage Capital Pte Ltd (“Anchorage”), a private exempt company effectively owned by Tan. In order to ensure that Tan carried out his part of the bargain and as a safeguard to Chin, Tan and Anchorage also agreed to deposit blank pre-signed share transfer forms with a neutral party, Tan Sook Kiat (“TSK”).

7 Pursuant to the 2001 and 2002 Agreements, all the shares which Chin held in MVP, less one share, were duly transferred to Tan and Anchorage. MVP had thus come under the control of Tan. However, Tan failed to carry out his promise of executing and delivering the blank transfer forms to the stakeholder, TSK. Neither did Tan pay up the whole of the $2.6m to Chin. In fact, he paid only a part. As a result, on 8 November 2002, Chin instructed his solicitors to write a letter to the Zhuhai authorities (“first letter of complaint”), the substantive part of which reads:

We wish to inform you that owing to the legal dispute over the shareholding among the members of [MVP], we would like to request the authorities concerned through your Honour to temporarily cease all consultations in respect of the use of land and other matters pertaining to [the project].

8 Eleven days later, on 19 November 2002, Chin’s solicitors instituted an action in Suit No 1395 of 2002 (“the first action”) against Tan and Anchorage, claiming for the return of the shares in MVP on account of their breach of the 2001 Agreement as modified by the 2002 Agreement. At that point, Tan owned 10% of the shares in MVP and Anchorage owned another 80%, with Chin holding only 10% of the shares.

9 In January 2003, the Zhuhai authorities, presumably pursuant to the first letter of complaint, revoked the grant of the land made to the Club. In June 2003, the parties reached an agreement to settle the first action, under which Tan and Anchorage agreed to pay Chin $1.95m by equal monthly instalments of $155,000 each and one final instalment of $400,000, with the first instalment due on 1 August 2003 (“the Settlement Agreement”). The first action was to be withdrawn by Chin upon the receipt of full payment. It was alleged by MVP that under the terms of the settlement, Chin was to appoint a Chinese legal representative for the Club and, within seven days of such appointment, Chin was to withdraw the first letter of complaint made to the Zhuhai authorities. There was some uncertainty as to whether Chin had, in fact, assumed the obligation to appoint a legal representative. This would, no doubt, be a point of fact to be determined at trial.

10 Tan paid only the first instalment under the Settlement Agreement and defaulted on the second instalment due on 1 September 2003. Thus, on 16 September 2003, Chin’s then solicitors, M/s Vijay & Co, wrote a letter to the Zhuhai authorities (“the second letter of complaint”), the substance of which reads:

We act for [Chin] … In this Suit No 1395/2002/E, Chin had sued [Tan] and [Anchorage] for the return of shares in [MVP] that belonged to him because Tan and Anchorage had breached agreed conditions.

…

In these circumstances, we would like to put you on Notice that you may want to avoid any dealings with [Tan], Anchorage and [MVP] or any party other than Chin concerning compensation until the matter is resolved.

11 This second letter of complaint was the subject of MVP’s present action for defamation and malicious falsehood which was instituted on 5 February 2004.

12 In the meantime, on 1 October 2003, Chin assigned the benefits under the Settlement Agreement to one Mr Chuah Chong Eu (“Chuah”) for a mere $300,000 as Chin was in urgent need of funds. On 31 October 2003, Chuah instituted Suit No 1070 of 2003 (“the second action”) against Tan and Anchorage for breach of the Settlement Agreement. On 24 February 2004, Chuah obtained summary judgment against Tan and Anchorage for damages of $1,795,000, plus interest and costs.

The pleadings

13 In the present action against Chin, MVP pleaded in its Statement of Claim that the second letter of complaint contained the following defamatory meanings:

(a) Tan and Anchorage are not trustworthy in business and/or are liable to dishonour their contractual obligations;

(b) Tan and Anchorage are financially lacking and/or wholly incapable of completing the project;

(c) Consequently, [MVP is] by virtue of the association with Tan and Anchorage untrustworthy in business, liable to dishonour agreements, lacking in financial means and/or skills to complete the project.

In the alternative, MVP sued for malicious falsehood.

14 In the action, the reliefs prayed for by MVP included, besides the sum of $4.2m and damages, the following:

An injunction requiring [Chin] to retract the first and second letter[s] [of complaint], acknowledging that he had no bases [sic] whatsoever for making the allegations and that the same are unfounded.

15 In his Defence, Chin pleaded justification and qualified privilege. For justification, Chin relied, inter alia, on the fact that Chuah had obtained a final judgment against Tan and Anchorage. Chin averred that qualified privilege applied because both he and the Zhuhai authorities had a common or corresponding interest in the matter which was the subject of the first and second letters of complaint. The letters were written to protect Chin’s own interests. Chin said that there was no malice on his part.

16 On 14 June 2004, MVP applied for an interim injunction to require Chin to retract the first and the second letters of complaint in terms of a draft attached thereto and a prohibitory injunction to restrain Chin from further writing to the Zhuhai authorities on the project. On 27 August 2004, the High Court granted the two injunctions prayed for.

The decision below

17 The judge below, in granting the two injunctions, applied the test laid down by this court in two cases, ie, Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729 (“Chuan Hong”) and Singapore Press Holdings Ltd v Brown Noel Trading Pte Ltd [1994] 3 SLR 151 (“Brown Noel”) which adopted the balance of convenience test propounded in the case of American Cyanamid v Ethicon [1975] AC 396 (“American Cyanamid”), which was later referred to in Chuan Hong,as the “balance of the risk of doing injustice” test ie, at 743, [88]:

[T]he court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been wrong at trial in the sense of granting relief to a party who fails to establish his rights at the trial, or of failing to grant relief to a party who succeeds at the trial.

18 The judge noted that Chin no longer had any real interest in the project at the time the present action was instituted, other than one share in MVP. She stated that Chin’s interest was a monetary one which was to be paid by Tan in accordance with the terms of the Settlement Agreement, and even that interest or right had been extinguished by his assignment to Chuah. Thus, Chin would suffer no prejudice from the retraction of the two letters. In contrast, unless the letters were retracted, and this appeared clearly from a letter of 10 May 2004 from the Club to MVP, the Club would not be able to re-commence negotiations with the Zhuhai authorities. Its loss would be difficult to compute.

Mandatory injunction

19 Before us, counsel for Chin contended that the judge erred in granting the two injunctions. We will first examine the...