Hady Hartanto v Yee Kit Hong

• Jurisdiction: Singapore
• Judgment Date: 04 March 2014
• Date: 04 March 2014
• Docket Number: Suit No 679 of 2011
• Court: High Court (Singapore)

Hady Hartanto

Plaintiff

and

Yee Kit Hong and others

Defendant

[2014] SGHC 40

Woo Bih Li J

Suit No 679 of 2011

High Court

Tort—Defamation—Justification—The principle of justification—Approach to pleading justification and qualified privilege—Whether publications were justified

Tort—Defamation—Publication—Defamatory statements—Construction of natural and ordinary meaning of words where one document was published as annexure of other—Approach to finding whether words were defamatory of plaintiff—Whether stings could be submitted as variation and summary of pleaded meanings—Whether there was any prejudice to defendant

Tort—Defamation—Qualified privilege—Malice—Principle of qualified privilege—Whether defendants had duty under Catalist Rules to publish on SGXNET—Whether investing public had corresponding duty to receive publications—Whether SGXNET was proportionate forum for publication—Whether excessive or exaggerated material took publication out of scope of privilege—Whether malice was proven to defeat qualified privilege

The plaintiff, Hady Hartanto (‘Hady’), was from 15 March 2011 to 25 October 2011 a director of Scorpio East Holdings (‘SEH’) which traded on the Catalist platform of the SGX-ST. The defendants were also directors of SEH at the material time. SEH's subsidiaries included Scorpio East Pictures Pte Ltd, Scorpio East Entertainment Pte Ltd, and Scorpio East Production Pte Ltd (collectively, the ‘Scorpio Group’). Hady had acquired an indirect interest in 29.56% of SEH's shares from one John Ho and his family members. John Ho was then the chief executive officer and executive director of SEH, but stepped down on 15 March 2011.

Between 15 March and 21 March 2011, the Scorpio Group engaged in various steps in respect of four transactions central to this case. These were:

1. (a) The Scorpio Contracts: Prior to Hady's appointment as a director, the Scorpio Group had entered into nine contracts for the production of Chinese language motion pictures and serials as well as some concerts and paid S$4.1 m to various producers in relation to the Scorpio Contracts, ie, the Scorpio Contracts. The contracts were terminated at a cost of 15% of the deposits paid to the producers.

2. (b) The Alpha Contracts: Hady executed contracts, on behalf of Scorpio East Pictures Pte Ltd, with Alpha Entertainment Group Pte Ltd (‘Alpha’) for the production of motion pictures and concerts, ie, the Alpha Contracts. These contracts were dated 17 March 2011 and totalled S$6.2 m.

3. (c) The ‘round-tripping’ transactions: Between 17 and 21 March 2011, a total sum of S$3.2 m was paid by the Scorpio Group to Alpha in respect of the Alpha Contracts. However, in the same period, Alpha then deposited sums totalling S$2.86 m (from the S$3.2 m) in cash into the bank accounts of companies in the Scorpio Group.

4. (d) The Proposed Investment: On 21 March 2011, one Low Shiong Jin (‘Shiong Jin’) sent an e-mail to, inter alia, Hady proposing that: S$3 m be transferred from the Scorpio Group to a client account at a specified law firm for unspecified purposes, and S$300,000 be transferred to one Liu Woon San and one Jung Jin in equal proportions, in respect of a proposed investment in Alpha, ie,the Proposed Investment. Hady replied to Shiong Jin's e-mail approving the proposal with instructions to proceed with the proposed transfer of S$3.3 m.

The defendants were notified of these transactions and a meeting by the board of SEH (‘the Board’) was convened on 22 March 2011. Hady informed the defendants about the transactions during the meeting. Thereafter on 23 March 2011, the audit committee of SEH, which comprised the defendants, recommended the appointment of Stone Forest Corporate Advisory Pte Ltd (‘SFCA’) as a special auditor to investigate the steps and the four transactions as they were concerned about the transactions. SFCA was formally appointed on 25 March 2011. After its investigation, SFCA produced a report (‘the SFCA Report’), which included an executive summary (‘the Executive Summary’), highlighting SFCA's concerns on these steps and the four transactions with recommendations for SEH. On 5 September 2011, the defendants, in their capacity as members of the audit committee, met with representatives of SGX. The defendants were informed that in accordance with the Catalist Rules, SEH was required to announce SFCA's findings by disclosing the Executive Summary and the steps SEH proposed to take in relation to the matter.

A Board meeting was held on 6 September 2011 at 2.30 pm. Hady was given a copy of the Executive Summary (at about 2.00 pm) but not of the SFCA Report. At 11.53 pm, an e-mail containing a draft announcement was circulated to the members of the Board, including Hady and the defendants. The final announcement was broadcast on 7 September 2011 at about 7.11 pm on SGXNET (‘the Announcement’). The Announcement had annexed a copy of the Executive Summary.

In this action, Hady sued the defendants for publishing defamatory words (‘the disputed words’) in the Announcement and the Executive Summary. He also claimed that the defendants had published the documents maliciously. Aside from the non-admission of the meaning of the disputed words, the defendants relied on justification, qualified privilege and consent or leave and licence. In respect of qualified privilege, the defendant had pleaded that SEH was required to publish the Executive Summary under r 703 of the Catalist Rules.

Held, dismissing the claim:

[Editorial note: The paragraphs indicated in parentheses in holdings (1) to (6), (10) and (18) to (21) are not reported. They can be found in the unreported version of the judgment ([2014] SGHC 40) on Law Net.]

(1) The meanings of the disputed words had to be read within the context of the publication as a whole. In the present circumstances, context required both the Announcement and the Executive Summary to be read and considered together (at [74] and [75]).

(2) As the defendants did not admit to the meanings pleaded by Hady, they were obliged to justify those meanings and could not put forward lower meanings of the disputed words in their closing submissions (at [77] and [78]).

(3) The approach by the court in establishing the defamatory meanings of the disputed words was to first consider the meanings of the disputed words, followed by a comparison with the meanings pleaded. This was then concluded with the findings of what was defamatory of Hady (at [79]).

(4) Hady's counsel submitted various stings of the disputed words which were not only summaries but also variations to the meanings pleaded in his statement of claim. As a case progressed, it was not unforeseeable that certain pleadings might be dropped or a lesser meaning was eventually relied upon. What was important was that the pleaded case did not change substantially and prejudice the defendant. The court was not bound to find that the submitted stings were correct. However, the stings submitted were an indication of what Hady considered to be defamatory of him (at [106] to [109]).

(5) While the defendants had submitted on individual meanings in their defence of justification, the defendants were not prejudiced by the court's use of the stings as the point of comparison rather than the specific pleadings. As a sting was meant to summarise the meanings of the words, a fortiori, proving each pleading would go to show that the sting had also been proven. Furthermore, the defendants only had to justify the stings and not all the disputed words (at [110] to [118] and [130]).

(6) The stings that were defamatory of Hady were (at [124]).

First sting: Hady failed to inform the Board about the Alpha Contracts when he was a director of the Board, in breach of his duties to SEH.

Second sting: Hady, motivated by his financial interest, had a role in terminating the Scorpio Contracts and had entered into the Alpha Contracts. The latter were of dubious veracity. The transactions were not in the interest of the Scorpio Group. Hady failed to conduct any form of due diligence on Alpha and signed the Alpha Contracts hastily. Hady failed to inform the Board about the Alpha Contracts when he was a director of the Board, which consequently meant a failure of SEH to disclose the Alpha Contracts.

Third sting: Hady had acted dishonestly in the ‘round-tripping’ transactions which resulted in the falsification of accounting entries and which were intended to mislead the external auditors that the Group had received the Scorpio Deposits so that they would not recommend impairment provisions.

Fourth sting: Hady had approved of the Proposed Investment without referring the proposal to the Board. The Proposed Investment was not in the interest of the Scorpio Group and the omission to get the Board's approval was in breach of his duties to SEH.

Fifth sting: Hady's role in relation to the Scorpio Contracts and the Alpha Contracts resulted in specified losses and unspecified potential losses for the Scorpio Group that might imperil its financial viability.

(7) The principle of the plea of justification was that something that was substantially true could not be used by the claimant to recover damages. Furthermore, the publication of the truth was not a wrongful one...