Coopers & Lybrand v Singapore Society of Accountants and Others

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JC
• Judgment Date: 08 July 1988
• Neutral Citation: [1988] SGHC 53
• Date: 08 July 1988
• Subject Matter: Use of documents obtained by process of court,Application for disclosure of entire report relating to audited accounts of company and subsidiaries,Defamation action,Civil Procedure,Tort,O 24 rr 10 & 13(1) Rules of the Supreme Court 1970,Relevancy,Whether production of full report necessary for disposing fairly of case,Whether parts of report not relating to subsidiaries within appellant's audit need to be disclosed by defendant,Absolute privilege,Discovery of documents,Defamation,Inspection of documents
• Docket Number: Suit No 1241 of 1987
• Published date: 19 September 2003
• Defendant Counsel: KS Chang and Susan Leong (Chung & Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: Loh Boon Huat (Godwin & Co)

Cur Adv Vult

This is an appeal by the plaintiffs against the decision of the assistant registrar given on 28 August 1987 making no order on the application of the plaintiffs under O 24 r 10 of the Rules of the Supreme Court 1970 for the production by the defendants of a certain report referred to in the defence filed.

In this suit, the plaintiffs, a professional firm of accountants, sues for, inter alia, damages for libel. The first defendant is a statutory corporation established under s 3 of the Accountants Act (Cap 2) (the Act) and the second and third defendants are the president and registrar respectively of the first defendant.

Sometime on or about 27 November 1986, the first defendant appointed two of its members, J Medora and KB Lee (hereinafter called `the investigators`), to investigate the accounts of the Pan Electric Group of Companies. As a result of the report of the investigators, the defendants on or about 21 April 1987 issued or caused to be issued a press statement, the full text of which reads as follows:

Two members of the Singapore Society of Accountants were appointed to investigate the accounts of the Pan Electric Group of Companies. They have completed their report and it has been submitted to the Singapore Society of Accountants. It was a massive exercise as there were about 68 subsidiaries and associate companies belonging to the group. It has taken the two investigating accountants more than five months to complete their task.

The investigating accountants have concluded, inter alia, that the accounts for the year 1984 cannot be stated to be `true and fair`. There is evidence to suggest that the group`s profits could be overstated by about $15m.

The report also states that there were abnormally large payments and receipts in the accounts of the group during the last few days of the years 1983 and 1984 and the first few days of the following years for no apparent reason. It also appears that this flow of moneys was effected through a bank account opened only for this purpose. Most of these payments and receipts were from or on behalf of other group companies and a stock broking firm, Associated Asian Securities (Pte) Ltd, with whom most of the companies had no apparent dealings. There is no evidence that the auditors investigated into this state of affairs fully.

The group accounts also show that some 25% of the profits in 1984 were derived from trading in shares. The annual report does not sufficiently disclose this information to the shareholders.

Notwithstanding evidence before them, the auditors failed to carry out adequate audit procedures and exercise appropriate professional judgment.

The Registrar of the Society is presently studying the report and will be taking legal advice on the appropriate action against the auditors involved.

The plaintiffs allege in their statement of claim that it was a matter of public knowledge that the above statement referred and was understood to refer to them as they were involved in auditing the accounts of the Pan Electric Group as a whole and a large number of its subsidiary companies, The plaintiffs aver that the statement was defamatory of them in the way of their profession and in relation to their conduct therein.

On or about 23 April 1987, the defendants issued or caused to be issued a further press statement along similar lines as the first statement save that:

(i) the figure in the second paragraph thereof was $10m, not $15m;

(ii) the final sentence in the third paragraph of the first statement was deleted; and

(iii) the penultimate paragraph of the first statement was deleted.

In the statement of claim, the plaintiffs also question the propriety of the appointment of Messrs Medora and Lee by the first defendant to investigate the accounts of the Pan Electric Group of Companies. As this point does not concern us here, I do not propose to say anything more about it.

In the defence filed on 6 June 1987, the defendants admitted that the investigators submitted a report of their investigation (the report) to the third defendant who received it on behalf of the first defendant. The report was referred to in paras 3(1)(e), 3(5) and 3(6) of the defence.

In response to the plaintiffs` claim based on libel on account of the two statements issued, the defendants pleaded that the words are not defamatory of the plaintiffs and, in the alternative, that the words are true in substance and in fact and furnished the following particulars in para 6 of the defence in justification:

Particulars of justification

The defendants will rely on the facts and matters stated in that part of the report of Messrs Medora and Lee which is annexed hereto and served herewith.

By a written notice to produce documents referred to in pleadings dated 13 June 1987, the plaintiffs, pursuant to O 24 r 10(1), required the defendants to produce for inspection the complete report of the investigators. There having been no compliance by the defendants, the plaintiffs on 22 June 1987 applied by summons-in-chambers for, inter alia, the production of the report and for an order that the plaintiffs be at liberty to inspect and peruse the documents so produced and to make notes of...