Macquarie Corporate Telecommunications Pte Ltd v Phoenix Communications Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 30 December 2003
• Neutral Citation: [2003] SGHC 314
• Docket Number: Suit No 1515 of 2002
• Date: 30 December 2003
• Year: 2003
• Published date: 10 January 2004
• Plaintiff Counsel: VK Rajah SC, Lionel Tan and Tan Min-Liang (Rajah and Tann)
• Citation: [2003] SGHC 314
• Defendant Counsel: Lee Hong (Ng Cher Yeow and Partners),Philip Lam (Foo Liew and Philip Lam)
• Court: High Court (Singapore)
• Subject Matter: Tort,Qualified privilege,Whether first defendant's settlement with plaintiff disentitled it to indemnity,Whether statements made in e-mails from second defendant to plaintiff's customers defamatory,Indemnity,Whether order for aggravated damages appropriate on the facts,Damages,Defamatory statements,Contract,Whether first defendant's defence that second defendant was the independent contractor estopped it from claiming indemnity,Justification,Contractual terms,Whether defence of justification made out,Fair comment,Whether defeated by malice,Defamation

Judgment reserved

1. The plaintiff, Macquarie Corporate Telecommunications Pte Ltd is a Service-Based Operator licensed by the Info-Communications Development Authority of Singapore (“the IDA”) to provide telecommunications services. It is a wholly-owned subsidiary of Macquarie Corporate Telecommunications Holdings Ltd of Australia.

2. The first defendant, Phoenix Communications Pte Ltd is incorporated in Singapore and is also a Service-Based Operator, and is a competitor of the plaintiff.

3. The second defendant was an Accounts Manager with the first defendant. In the agreement between him and the first defendant he was referred as an agent. He received commissions for business he brought to the first defendant and was one of its top accounts managers. He is a qualified accountant and has previously worked in a succession of jobs as investment analyst, securities dealer, fund manager, treasury manager and financial controller.

The action

4. The plaintiff sued the defendants for defaming it in three emails sent by the second defendant to customers of the plaintiff. The plaintiff identified the passages of each email it complained of.

Email dated 1 March 2002 (the first email)

5. This email was sent by the second defendant to Lucent Technologies Singapore Pte Ltd.

6. The plaintiff took objection from three passages in the email -

(Para 2)

Phoenix is the only service provider which has two 64E1 switches located at Comcentre with SingTel which can cater to high volume IDD traffic. It is offering premium quality IDD service unlike most of the other independent service providers which use VOIP and pass it round as premium service.

(Para 3)

For your information, Macquarie Corporate Communications (MCC) is a very small operator with one switch in Singapore. Its parent in Australia is a loss maker and had just reported A$17 million loss and its share price has collapsed from A$3.20 to A$0.10, reflecting its dire straits.

(Para 7)

In any case, you might be interested to know that MCC’s one year contract is not legal under the SBO licence issued by Infocomm Authority of S’pore.

7. The plaintiff claimed that

In their natural and ordinary meaning, the above statements in the 1 March 2002 Email meant and/or would be understood to mean that the Plaintiffs:-

(a) Do no offer and/or are not capable of offering quality, premium IDD services to their customers;

(b) Provide Voice-over-IP (“VOIP”) services to their customers instead of providing quality, premium IDD services and that they misrepresent or pass off such VOIP services to these customers as being IDD services;

(c) Run a crude and/or temporary operation devoid of any substance in Singapore, with only one switch in Singapore, that being a small number as compared to other telecommunications operators; and/or

(d) Are, as a result of their contractual arrangements or otherwise, operating in breach of the SBO licence issued and/or regulations enforced by IDA;

Email of 16 October 2002 (the second email)

8. This was sent to another of the plaintiff’s customers, Citibank.

9. The plaintiff complained that 11 passages of the email are defamatory:

(Para 2)

With two switches, this will offer stability and also be a better guard against system breakdown, unlike Macquarie which cannot afford to spend millions of dollars on switches as it is a makeshift operation and thus only a PC located at its offices. PC cannot handle high volume traffic and is unstable. Because of its small size, Macquarie cannot afford to offer you quality service at low rates. Among the SBOs, Macquarie’s pricing is the highest.

(Para 3)

Compared to Macquarie’s pricing of 50% discount on SingTel 001 rates … (but offering inferior quality under 1591 dialling code), Phoenix IDD service will enable your company to shave off 40% over Macquarie’s billings.

(Para 4)

BTW, Macquarie contract is not enforceable under IDA regulations.

(Para 5)

According to SingTel’s internal analysis, they do not expect Macquarie to survive very long as their cashflow is under strain. SingTel will have no hesitation cutting off all their lines the moment Macquarie do not pay their bills on time. This means your whole office will suffer a blackout for overseas calls. SingTel has no obligations to your company since you have signed up with Macquarie. According to SingTel, Macquarie has asked for additional grace period for paying their arrears.

(Para 6)

For your information, Singapore is Macquarie’s first and only overseas testbed and it’s a failure.

(Para 8)

Wilson Hoe, telecom manager of JP Morgan Chase told me his bank is not that foolish and that Macquarie are a bunch of liars who go round quoting his bank as a customer.

(Para 10)

Winnie Lee of Daimler Chrysler South East Asia said that through her company’s independent checks on Macquarie, they found them not to be truthful.

(Para 11)

The regional logistics manager of Siemens Advanced Engineering, Tina Cheam told me that they have received a written letter from SingTel questioning Macquarie’s honesty. According to her, the negative language used by SingTel is very direct and strong, leaving no doubt about Macquarie’s unscrupulous sales methods all the way from Macquarie’s CEO in Australia down to the bottom sales staff in Singapore.

(Para 14)

According to the general manager of Evergreen Marine, the service quality of Macquarie is no good and there is no savings.

(Para 15)

Russell Tang (tel: 6486 3037), the regional telecom manager for Motorola would like to hear separately from you if Macquarie sales staff has been quoting Motorola’s name because Macquarie has been repeatedly warned that Motorola do not want to be embarrassed by association.

10. The plaintiff pleaded that

In their natural and ordinary meaning, the above statements in the 16 October 2002 Email, meant and/or would be understood to mean that the Plaintiffs: -

(a) Do not offer and/or are not capable of offering quality, premium IDD services to their customers;

(b) Run a crude and/or temporary operation devoid of any substance in Singapore;

(c) Are incompetent as their operations and/or business in Singapore have failed;

(d) Are facing such serious financial difficulties that their prospect of continuing business as a going concern is not certain;

(e) Are facing such serious financial difficulties that they may be unable to pay the bills of their supplier;

(f) Do not operate switches in Singapore but use personal computers, which are unable to handle high volume traffic and are unstable;

(g) Are not a reliable service provider and that any customer who signs up with them will face disastrous consequences should SingTel decide to stop services to Macquarie for non-payment of their bills;

(h) Do not provide a service which will enable their customers to save any money;

(i) Do not possess equipment which is located in specifically designed, secure and controlled environments;

(j) Are liars and make false statements to their customers about their capabilities; and/or

(k) Engage in unscrupulous and dishonest business practices and behaviour.

Email dated 18 October 2002 (the third email)

11. This email was also sent by the second defendant to Citibank.

12. The plaintiff claimed that it was defamed in two passages of the email which stated

(Para 2)

Phoenix corporate philosophy is the opposite of Macquarie’s and the management strongly emphasise underselling its service unlike Macquarie which oversells. Whenever a client discovers its lies, Macquarie has superb damage control in place to pacify and convince the clients to stay. Macquarie has perfected the art of damage control post-sales for all its lies. Phoenix has a long term strategy as the biggest SBO to uphold its reputation and do not have carefully thought-out lies to entice clients like Macquarie.

(Para 3)

BTW, Macquarie has been aggressively using your bank’s name in their pitch to potential clients.

13. The plaintiff pleaded that

In their natural and ordinary meaning, the above statements in the 18 October 2002 Email meant and/or would be understood to mean that the Plaintiffs:-

(a) Deliberately and/or dishonestly sell more telecommunications capacity than they can provide;

(b) Would be unable to efficiently service their customers due to the alleged overselling of their services;

(c) Conduct their business in a deceitful and/or fraudulent manner;

(d) Fabricate facts and generate lies in their dealings with customers;

(e) Are untrustworthy and should be avoided at all costs;

(f) Employ underhand tactics in acquiring customers; and/or

(g) Have no regard whatsoever for their customers’ confidentiality.

14. The plaintiff claimed damages against the defendants and an injunction to restrain them from making the same or similar statements against it.

The first defendant’s defence

15. The first defendant denied that the emails were defamatory and also denied that it was liable for the statements made by the second defendant. In the course of the hearing, the first defendant abandoned the position and arrived at a settlement with the plaintiff.

16. However it made a claim against the second defendant for an indemnity and costs from him in respect of any sum that the plaintiff may recover from it.

The second defendant’s defence

17. The second defendant’s first line of defence is that the words complained of were not defamatory.

18. The other defences raised are

(i) the statements were true in substance and fact (the defence of justification);

(ii) the statements were fair comments on matters of public interest, and

(iii) the statements were published on occasions of qualified privilege.

Whether the statements are defamatory

19. Each of the statements that the plaintiff alleged to be defamatory must be considered to establish whether it is defamatory. For that purpose the test set by Lord Atkin in Sim v Stretch [1936] 3 All ER 1237, “would the words tend to lower the plaintiff in the estimation of right-thinking members of society generally”...