Jeyasegaram David (alias David Gerald Jeyasegaram) v Ban Song Long David

CourtCourt of Appeal (Singapore)
JudgeChao Hick Tin JA
Judgment Date04 April 2005
Neutral Citation[2005] SGCA 18
Citation[2005] SGCA 18
Defendant CounselDavinder Singh SC, Adrian Tan and Chelsia Wong (Drew and Napier)
Plaintiff CounselSteven Chong SC, Lee Eng Beng and Chan Hoe (Rajah and Tann)
Published date04 April 2005
Docket NumberCivil Appeal No 96 of 2004
Date04 April 2005
Subject MatterWhether respondent entitled to rely on all relevant facts to justify statement,Justification,Respondent accusing appellant of "playing to the gallery",Tort,Whether respondent entitled to respond by making allegedly defamatory statement,Qualified privilege,Defamatory statements,Test for determining natural and ordinary meaning of words,Whether defence of justification made out,Test for determining whether statement comment or assertion of fact,Appellant attacking respondent's character and conduct publicly,Whether fair-minded person could honestly make same comment on facts,Malice,Whether respondent's statement comment or assertion of fact,Fair comment,Whether statement defamatory in natural and ordinary meaning,Whether sufficient factual basis for respondent's statement,Defamation,Whether respondent actuated by malice in making statement

4 April 2005

Yong Pung How CJ (delivering the judgment of the court):

1 This was an appeal against the decision of Tay Yong Kwang J, who dismissed the appellant’s defamation suit against the respondent (see Jeyasegaram David v Ban Song Long David [2005] 1 SLR 1). The appellant had commenced his action after the respondent accused him of “playing to the gallery” in a newspaper article on the much-publicised NatSteel takeover battle. We agreed with the judge below that the appellant’s action could not be sustained and dismissed the appeal accordingly. We now give our reasons.

Background facts

2 The appellant is the president and chief executive officer of the Securities Investors Association (Singapore) (“SIAS”), an association formed to protect investor rights and promote corporate governance in Singapore. The respondent is a shareholder and director of 98 Holdings Pte Ltd (“98 Holdings”).

3 In early October 2002, 98 Holdings launched a takeover bid for NatSteel, a Singapore-incorporated company listed on the Singapore Exchange (“SGX”). Soon after 98 Holdings announced its bid for all NatSteel shares at $1.93 a share, Sanion Pte Ltd (“Sanion”), a company controlled by prominent businessman Oei Hong Leong, began actively acquiring NatSteel shares as well. As 98 Holdings and Sanion jostled for control of NatSteel, the former was forced to increase its offer price four times (to $2.06) and extend the closing date of its offer an unprecedented six times. 98 Holdings finally emerged as the winner of the face-off when it managed to acquire 51.23% of the total shares by the final closing date of its offer. On its part, Sanion acquired a total of 29.99% of the shares, making it NatSteel’s largest minority shareholder.

4 Four nominees of 98 Holdings, including the respondent, were appointed to NatSteel’s board of directors. On 16 March 2003, the board announced its decision to recommend a total dividend payment of $1.00 per share, comprising a final dividend of $0.55 per share for 2002 and an interim payment of $0.45 per share for 2003. A circular to shareholders was subsequently issued to convene an extraordinary general meeting (“EGM”) on 28 May 2003 for the purpose of passing a number of resolutions, both ordinary and special. The following proposed resolutions were relevant to this appeal:

(a) Special Resolution 1: Approval for amendments to the memorandum and articles of association (“the M&A resolution”) to provide for the payment of future dividends in scrip instead of cash, subject to and contingent upon the passing of Ordinary Resolution 3 (see sub-para (b) below) and another resolution relating to financial assistance;

(b) Ordinary Resolution 3: The payment of a special dividend of $0.55 per share (“the Special Dividend resolution”), subject to and contingent upon the passing of the M&A resolution and the resolution relating to financial assistance; and

(c) Ordinary Resolution 4: Approval of a scrip dividend scheme under which shareholders may elect to receive future dividends in scrip instead of cash (“the Scrip Dividend resolution”), contingent upon the passing of the M&A resolution.

5 The linkage of the resolutions caused a maelstrom of controversy. While 98 Holdings could single-handedly carry the Special Dividend and Scrip Dividend resolutions since they were ordinary resolutions that could be passed by a simple majority, the M&A resolution was a special resolution that required at least 75% of the shareholders’ votes. Sanion, with 29.99% of the shares in NatSteel, was therefore in a position to scuttle the M&A resolution. Market observers suspected that the NatSteel board had linked the Special Dividend resolution with the M&A resolution to pressure Sanion into voting in favour of the latter, in order to receive the promised dividends.

6 After widespread speculation and formal queries from SGX and the SIAS, NatSteel finally issued a public announcement on 19 May 2003 to justify its actions. According to the NatSteel board, the M&A resolution was necessary for the company to retain cash to fund its continuing businesses, and to give it flexibility to raise capital efficiently. The appellant was less than satisfied with the board’s response. In a press statement issued on behalf of the SIAS, he commented, “The Board has not answered the vital question; what is the necessity for the tie-up?” [emphasis in original].

7 Sanion issued its own press release on 22 May 2003 to explain why it intended to vote against the Scrip Dividend resolution and, by necessity, the M&A resolution. Since it already held 29.99% of the shares in NatSteel, it could not opt to receive future scrip dividends without potentially crossing the 30% threshold and incurring an obligation to effect a general takeover of the company. However, if other shareholders were to opt for scrip instead of cash, Sanion’s percentage shareholding in NatSteel would effectively be diluted. In fact, Oei Hong Leong expressed his concern that the linkage was designed to dilute Sanion’s shareholding to below 25%, at which level it would not be able to veto any future special resolutions.

8 To allay Sanion’s suspicions, 98 Holdings proposed a whitewash resolution on the evening of 27 May 2003, just one day before the EGM. Essentially, this was aimed at waiving Sanion’s obligation to make a takeover bid in the event that it crossed the 30% threshold by electing to receive its dividends in scrip, subject, of course, to the required approval from the Securities Industry Council.

The EGM

9 With the approval of the NatSteel board, the appellant attended the EGM on 28 May 2003 as an observer. After Sanion’s representative requested for more time to review the last-minute whitewash proposal, the other shareholders began to express their frustration with the linkage of the resolutions. As the proceedings became increasingly chaotic, the appellant rose to speak with the permission of the chairman, Dr Cham Tao Soon. As we found the appellant’s conduct at the EGM to be highly relevant to the allegedly defamatory remarks made by the respondent about him, we shall refer to the transcript of the EGM in some detail.

10 Addressing the minority shareholders, the appellant said:

David Gerald: … Let me first inform the shareholders that the Board has, under the rules governing under the conduct of the board as they complied with the request of any shareholders, alright, that’s fine. So we should not be questioning them as to why they are putting in these proposals. What should concern you is whether or not you should be voting on the special resolutions as requested by the majority shareholder to the Board. If you think that you want to support the resolution, you vote for it. If you think that you will not want to vote for the amendments to the resolution requiring the amendment to the M&A, which again, the scrip dividend resolution, then you vote against them, bearing in mind that they are given you the reasons as to why they are doing this, bearing in mind the reasons advanced by SIAS will be hung, alright, whether or not Sanion is going to win here or Ong Beng Seng is going to win here, does not matter. We are small investors, and we want dividends, alright?

Whether or not they have an agenda, Sanion has an agenda or whether the other party has an agenda, should not concern us as small investors. SIAS took objection to creating a precedent that payment of the dividend is to be subject to the resolution. This is the first time I think this is done. But there are reasons.

(applause)

We objected to it but if you want the board to give you understand, the board here is not doing it. It is the minority shareholders versus, you see, when 2 elephants fighting, we are under their feet.

(laughter from shareholders)

We small fellows, we want the money. You want to give the money. You say give us the money, but there are some complications here, alright?

You should not be blaming the Board. You should be asking yourselves whether you want to vote on the resolutions in the manner in which it is presented. So do not complicate the issues. Do you or do you not want the shares? I mean the cash or dividends.

A shareholder: We want the cash!

David Gerald: You don’t want shares, you want cash, therefore you have the right to vote.

50:18 mins

(laughter from shareholders)

[?? ]: that’s why I said cannot vote! (inaudible)

David Gerald: Conduct yourself in the (inaudible) because it is difficult for them to carry on with the meeting if everybody shouts.

[A]s far as its special dividend, it should not be linked with any the amendment or any other resolutions.

Lim Su-Ling: Yes … but …

David Gerald: they can stand independent. There is no law that requires you in linking. That is what they are angry about. Is that correct?

AUDIENCE: Yes!

(loud clapping from audience)

[emphasis added in bold italics]

11 While the appellant did make apparent attempts to restore order when the proceedings threatened to get out of hand, it was clear to us that much of his speech was in fact directed at eliciting a strong response from the crowd of disgruntled shareholders. This was confirmed by his conduct near the end of the EGM, when the board had decided to adjourn the meeting to give Sanion time to consider the whitewash resolution. Even as the board was simply discussing the appropriate time to hold the next meeting, the appellant interjected frequently with his own superfluous comments:

Dr Cham: ok, if 2 days not enough, how much time do you want?

David Gerald: (interrupting) I think, Mr Chairman, if Sanion is going to vote against, the members of Small Investors Association will be wasting time and money coming back again. So whether you expressly say that you are going to come back and vote against (inaudible)

Dilhan Pillay: Mr Chairman, as I understand it, I understand Sanion’s concern that they have no time to consult their lawyers as to the amendments that we are proposing … I welcome...

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