Lim Eng Hock Peter v Lin Jian Wei and Another

• Court: High Court (Singapore)
• Judge: Chan Seng Onn J
• Judgment Date: 10 February 2009
• Neutral Citation: [2009] SGHC 31
• Citation: [2009] SGHC 31
• Defendant Counsel: Ang Cheng Hock, William Ong, Ramesh Selvaraj, Kristy Tan, Lim Dao Kai and Tay Yong Seng (Allen and Gledhill LLP)
• Plaintiff Counsel: Alvin Yeo SC, Chan Hock Keng, Koh Swee Yen, Suegene Ang and Reina Chua (Wong Partnership LLP)
• Published date: 13 February 2009
• Docket Number: Suit No 514 of 2007
• Date: 10 February 2009
• Subject Matter: Tort,Passages in explanatory statement explaining current financial difficulties of company,Publication of defamatory statements in explanatory statement,Passages published in explanatory statement to explain scheme of arrangement and compromise under s 211 Companies Act (Cap 50, 1994 Rev Ed),Qualified privilege,Justification,Burden of proof,Whether defence of qualified privilege favoured defendants,Legal implications following submission of no case to answer,Principles,Absolute privilege,No case to answer,Whether allegedly defamatory words defaming plaintiff by innuendo,Defamatory statements,Occasions of absolute privilege,Whether defence available,Whether allegedly defamatory statements in explanatory statement referring to plaintiff,Whether publication of explanatory statement made on occasion of absolute privilege,Whether allegedly defamatory words defaming plaintiff,Evidence,Whether defendants acted with malice against plaintiff,Defendants published passages in explanatory statement alleging that plaintiff responsible for current financial difficulties of company,Malice,Whether defendants entitled to rely on defences of justification, absolute privilege and qualified privilege,Publication of explanatory statement in the context of member litigants' request for greater disclosure of information,Defamation

10 February 2009 Judgment reserved

Chan Seng Onn J:

1 In this action, the plaintiff, Mr Peter Lim Eng Hock (“Mr Lim”), a businessman, seeks damages in respect of certain allegedly defamatory passages in an Explanatory Statement (“ES”) dated 2 November 2005, issued by Raffles Town Club Pte Ltd (“the Company”) purportedly to explain the Scheme of Arrangement and Compromise (“Scheme”) that the Company was proposing to its members.

2 The plaintiff is by no means a stranger to the chain of litigation that has dogged the Company since early 2000 and this action marks yet another chapter in this protracted saga. The plaintiff claims that he was a former “consultant” to the Company which owns a proprietary club known as the Raffles Town Club (“the Club”), situated at 1 Plymouth Avenue and had assisted Europa Holdings Pte Ltd (“Europa Holdings”) and the Company to raise monies to complete the construction of the Club.

3 The first defendant, Mr Lin Jian Wei, and the second defendant, Ms Margaret Tung Yu-Lien, are presently the directors and shareholders of the Company and were also the directors and shareholders of the Company at the time the ES was published. The plaintiff alleges that the defamatory statements in the ES were either made or authorised by the defendants.

Background to the present proceedings

4 In Lim Eng Hock Peter v Lin Jian Wei and Another [2008] SGHC 108, the defendants had applied to strike out the plaintiff’s action and sought a determination under O 14 r 12 of the Rules of Court (Cap 332, R5, 2006 Rev Ed) that the allegedly defamatory words referred to in the statement of claim were not defamatory in nature.

5 This application was heard before Tan Lee Meng J and he dismissed the application and held that it was not a case where there ought to be a preliminary ruling under O 14 r 12. The background to this action was set out comprehensively by Tan J (at [3] to [20] of his Grounds of Decision (“GD”)). By way of a prelude to the discussion below, the background to this action can be dealt within a brief compass.

6 At the inception of the Company, the only shareholders and directors were Mr Lawrence Ang Yee Lim (“Mr Ang”), Mr William Tan Leong Ko (“Mr Tan”) and Mr Dennis Foo Jong Long (“Mr Foo”). Sometime in March 1996, bids were invited for a plot of land at Plymouth Avenue. The highest bid of $100 million (and more than twice the next highest offer) for a 30-year lease of the land came from Europa Holdings. In May 1996, the plaintiff was approached to assist Europa Holdings in meeting its substantial payment obligations to the Urban Redevelopment Authority for payment of the purchase price. He agreed to do so and on 11 July 1996, the Company was incorporated as a wholly-owned subsidiary of Europa Holdings. The Company decided to venture into setting up Singapore’s first prestigious private proprietary club at the site.

7 In August 1996, an alleged oral agreement was reached between Mr Ang, Mr Tan, Mr Foo and the plaintiff whereby in return for his assistance to Europa Holdings in raising monies to complete the construction of the Club, the plaintiff would receive a 40% stake in Europa Holdings upon its successful opening. He would also stand to receive “consultancy fees” for other services he rendered to the Club from 1996 to 2000.

8 In November 1996, the Company invited selected members of the public to join the Club at a discounted price of $28,000. These founding members were baited by promises of joining one of the most prestigious and lavish city clubs in Singapore. Over 24,000 applications were received and about 5,000 of these applications were rejected.

9 In March 2000, the Club began its operations and it was then that its members started to realise that there was overcrowding at the premises and its various facilities. In actual fact, the directors and shareholders of the Company did not reveal to the members that their prestigious club had taken on more than 19,000 members in total. The successful membership launch meant that the Company would be receiving a considerable amount of cash amounting to over $500 million to be collected from the members over 4 years, viz, the period allowed for the instalment plan for payment of their membership entrance fees, quite apart from the monthly subscription fees that would have to be paid by them after the Club opened.

10 Disputes arose between the plaintiff and the then shareholders of the Company sometime in September 2000 and the plaintiff was “embroiled in the following suits” ([4] supra, see [6] of GD):

(a) In the first suit, [the plaintiff] sued the former shareholders of the Company (Mr Ang, Mr Tan and Mr Foo) for specific performance of [the] oral agreement, under which he was entitled to 40% of the shares in the Company;

(b) In the second suit, the Company sued Mr Ang for advances of more than $51m that had been made out to him. Mr Ang joined the plaintiff as a third party, claiming that $26.6m had been handed over to the latter;

(c) In the third suit, the Company sued Mr Tan for advances of almost $6m that had been made out to him; and

(d) In the fourth suit, Mr Ang and Mr Tan sued [the plaintiff] and Mr Foo, alleging that the latter two had wrongly converted to their own use certain bearer share certificates.

11 In April 2001, these suits were settled by the parties. Under the terms of the deed of settlement dated 19 April 2001, Mr Foo’s shares in the Company were to vest in Mr Ang and Mr Tan, who then entered into a ‘back to back’ sale of 50% of the shares in the Company to the defendants. This settlement was facilitated by the defendants who provided financial assistance to Mr Ang and Mr Tan. Further, the defendants also agreed that the loans granted by the Company to Mr Ang and Mr Tan did not need to be repaid to the Company and that such loans were to be set off against dividends. The Company therefore discontinued their actions against Mr Ang and Mr Tan for the return of such loans ([10], (b) and (c) above).

12 What emerged from the proceedings, however, was the revelation to the public that the Club in fact, had taken on 19,000 members. Given the Club’s promises of providing an exclusive membership, this sent ripples through the Club’s members, who were understandably not happy that their prestigious private city club was not so exclusive after all.

13 Between April to June 2001, there was a change in management of the Company. In fact, the 2^nd defendant was appointed as an executive director of the Company on 30 April 2001. It was admitted by the 2^nd defendant (through her lawyers' correspondence with M/s Harry Elias Partnership and the Securities Industry Council) that this was because she wanted to familiarise herself with the operations of the Company. On 30 April 2001, the 2^nd defendant had even signed off on various directors' resolutions, including approving the transfer of Mr Foo's shares in the Company to Mr Ang, this being one of the terms of the deed of settlement dated 19 April 2001.

14 The defendants’ and the first defendant’s wife’s acquisition of all the shares in the Company from the former shareholders was effected through:

(a) The 1^st Exchange Facility Agreement (“1^st EFA”) between Mr Ang and the defendants, dated 23 April 2001, for the sale and purchase of 50% shares in the Company[note: 1];

(b) The 2^nd Exchange Facility Agreement (“2^nd EFA”) between Mr Ang and the defendants, dated 11 May 2001, which superseded the 1^st Exchange Facility Agreement[note: 2];

(c) An Agreement in respect of the Sale and Purchase of Shares in the Company (“S & P for [the Company]”) between Mr Ang, Mr Tan and the defendants, dated 6 June 2001, for the sale and purchase of the remaining 50% shares in the Company[note: 3].

15 As at April 2001, it must be noted the Company had current assets of $206 million, consisting of cash reserves of $114 million (in fixed deposits and cash and bank balances), short-term investments of $27 million and receivables of $65 million in directors’ and/or shareholders’ loans. This was what was available as current assets in the Company just before the plaintiff exited the Company and just before the defendants became involved with the Company commencing on 30 April 2001. This strong financial position of the Company in April 2001 is undisputed and has not been challenged by counsel for the defendants during the cross-examination of the plaintiff. It is also not disputed that this strong financial position was principally due to a certain deferred tax and accounting policy (“Deferred Accounting Policy”) (see [16] below) that was put in place while the plaintiff was still involved in the Company.

The plaintiff institutionalised the “Deferred Accounting Policy” for the Company

16 That it was the plaintiff who put in place the “Deferred Accounting Policy” for the Company is not seriously disputed by the defendants. I will now set out the submissions of the plaintiff detailing the evidence on this issue which I have no reason not to accept:

Taking into account that the land upon which the Club stood could only be used for that purpose, and that members had bought memberships which entitled them to use the Club up to the expiry of the lease in 2026, Peter Lim sought to put in place a tax and accounting policy on the following basis:

a. [The Company] would start to pay tax on the entrance fees only upon the Club being opened;

b. [The Company] would be entitled to deduct for tax purposes, the costs of the land, construction costs and expenses of launching, setting up and opening the Club; and

c. The surplus of the entrance fees (after deducting expenses) should be amortised over the period from the opening of the Club up to the expiry of the lease in 2026, and [the Company] would pay tax only on the amount amortised each year.

The result would be that [the Company] would enjoy large tax savings.

In about June 1998, before [the Company] filed its accounts for its first financial year, Peter...