WBG Network (Singapore) Pte Ltd v Meridian Life International Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 17 July 2008
• Neutral Citation: [2008] SGHC 114
• Date: 17 July 2008
• Subject Matter: Whether malice proved,Whether statements published,Malicious falsehood,Civil Procedure,Defamation,Section 6(1)(b) Defamation Act (Cap 75, 1985 Rev Ed),Meaning of "calculated" in s 5 Defamation Act (Cap 75, 1985 Rev Ed),Pleadings,Tort,Allegations not fully traversed,Whether statements likely to produce pecuniary damage in respect of business carried on at time of publication,Whether defences of justification and fair comment established,Effect of lack of traversal
• Docket Number: Suit No 466 of 2006
• Published date: 20 August 2008
• Defendant Counsel: Michael Loh and Montague Choy (Clifford Law Corporation)
• Court: High Court (Singapore)
• Plaintiff Counsel: Gabriel Peter and Peter Calista Marella (Gabriel Law Corporation)

17 July 2008 Judgment reserved.

Andrew Ang J:

1 The plaintiff, WBG Network (Singapore) Pte Ltd (“WBG”), and the first defendant, Meridian Life International Pte Ltd (“Meridian Life”), are multi-level marketing (“MLM”) companies competing in the business of selling, inter alia, algae health products. WBG was established in 1997 and is now said to have an annual turnover of about $45m. Meridian Life is a relative newcomer established in 2004. In this suit, WBG alleges that the second defendant, Lim Jit Shyan (“Shyan”), and the third defendant, Tan Siong Woei (“Ivan”), both employees of Meridian Life, had spoken words that constituted slander and malicious falsehood and is seeking a substantial sum of $12m in special damages.

Facts

2 Prior to joining Meridian Life, Shyan and Ivan were involved in the distribution of WBG’s star health products known as the Hunza range, which comprised, inter alia, Fibre Plus, Vitality Plus and Indinine Formula. Those products contained an alga called “Cryptomonodales” (hereinafter referred to as “CM”). The products had been distributed in Singapore since 1997 by WBG under licence from a Taiwanese manufacturer, a Professor Wang Shun Te (“Prof Wang”) and his company, International Chlorella Co Ltd. CM is actually a trade name owned by Prof Wang or his company. The scientific name of the alga is Chlorella Sorokiniana (“CS”), which is a sub-species within the Chlorella family of algae.

3 According to WBG’s marketing brochures at the material time, CM is an oval-shaped unicellular alga plant which reproduces itself by cell division from one to four or even 16 full-grown algae plants within 24 hours. This “life force”, when translated into the human body, helps to rejuvenate human cells. Indinine is a complex that is extracted from the nucleus of CM and its medicinal properties reputedly include enhancing tissue repair, detoxification at the cellular level, improvement of bowel functions and stimulation of the immune system.

4 For many years, WBG trumpeted CM as the star ingredient and did not disclose to its consumers or distributors that CM was actually a trade name for CS. In fact, in its brochures, WBG extolled the health properties of CM and sought to distinguish CM as being of a “different breed” superior to Chlorella and Spirulina, two other kinds of algae products in the market. WBG’s distributors, including Shyan and Ivan, were also taught that Prof Wang was the only supplier of CM and that he supplied CM only to WBG. CM was thus exclusive to WBG.

5 Shyan and Ivan left WBG in late 2003. In July 2005, WBG lost the licence to distribute Prof Wang’s products and to use the trade name CM. This licence was subsequently granted by Prof Wang to Meridian Life. In November 2005, Shyan and Ivan were employed by Meridian Life and began to distribute Meridian Life’s algae health product “Crypto+” which was similarly marketed as containing the wonder ingredient CM. The distributors usually referred to CM by a shorter name “Crypto”. Around that time, Shyan and Ivan discovered that CM was actually a trade name and that CS was the scientific name of the alga.

6 WBG had anticipated the breakdown of its relationship with Prof Wang and, beginning from late 2004, it had updated its Hunza range to consist of, inter alia, two new products called Indinine3000 and Vplus ExV. These were new formulations and the packaging of the products now showed CS as the main ingredient. For example, Indinine3000, which was introduced in December 2004 as a product upgrade for Indinine, contains CS mixed with an algae-sourced organic DHA (also known as “Crypthecodinium Cohnii”). WBG had managed to obtain the CS from another Taiwanese manufacturer. Shyan and Ivan were aware that the new packaging showed CS as the main ingredient.

7 The alleged defamatory statements were made on two occasions at Meridian Life’s premises. WBG alleged that the first occasion was on 30 March 2006 when the following statements were allegedly made by Shyan and/or Ivan during a sales presentation to a Mr Bruce Cai Qing (“Bruce”) and his wife Mrs Doreen Soon Bee Yun (“Doreen”):

(a) The “no CS statement” –

The products sold by WBG no longer contains Cryptomonodales (ie, Chlorella Sorokiniana).

(b) The “third party website statement” –

If WBG was doing true business practices, WBG would not refer to a third party website for their products.

(c) The “misrepresentation statement” –

WBG labelling their products as containing Chlorella Sorokiniana amounted to a misrepresentation.

(d) The “circuitous route statement” –

WBG had obtained Chlorella Sorokiniana from a Professor Wang Shun Te by way of a circuitous route from the United States of America.

(e) The “lack of transparency statement” – (attributed to Shyan)

I had quit from WBG because I had to be true to my conscience, and I had joined WBG because WBG was very transparent in its business dealings and would produce black and white documents for clarification when so required.

(f) The “change of name to avoid misrepresentation statement” – (attributed to Shyan)

WBG had changed the name of a product from Indinine to Indinine3000 to avoid being liable for misrepresentation. This was despite me (Lim Jit Shyan) knowing that Indinine is a trademark belonging to WBG.

This group of statements will be collectively referred to as “the six main statements”.

8 The second occasion was on 1 April 2006 when, according to WBG, the same six main statements were made again by Shyan and/or Ivan during a sales presentation to Bruce, a Ms Sharon Ong (“Sharon”) and a Mr Tan Chye Soon (“Tan”).

9 In addition, WBG alleged that on this occasion, the following other statements were made by Shyan and/or Ivan:

(a) The “mixture statement” –

The products sold by WBG is [sic] “no longer Crypto” and that “it must be a mixture of something else”.

(b) The “change of name statement” –

The reason for WBG changing their product name from Indinine to Indinine3000 was because they no longer have the Crypto supply.

(c) A statement essentially the same as the “no CS statement” at [7] above –

The products sold by WBG does not [sic] contain Chlorella Sorokiniana.

These three statements will be collectively referred to as “the three additional statements”.

10 WBG pleaded that all the statements contain the following meanings and innuendoes:

(a) The products sold by WBG do not contain CS at all.

(b) WBG had misrepresented that its products contain CS.

(c) WBG had misrepresented its products generally.

(d) WBG was selling covertly obtained CS which was cultivated by Prof Wang.

(e) WBG’s products do not live up to the expectations as stated in the third party website, and that is why WBG does not have on its own website, assertions similar to those on the third party website.

(f) WBG was and continues to be dishonest in the conduct of its business and business practice.

(g) WBG was and is not transparent in its business dealings.

11 WBG further contended that all the statements amount to malicious falsehood. WBG argued that the references are false in that:

(a) WBG’s products did and do at all times contain CS; and

(b) Shyan had not quit from WBG but was in fact terminated by WBG for failing to adhere to WBG’s code of conduct in that he had deliberately poached downlines from others.

WBG further argued that the references were malicious in that Shyan and/or Ivan knew the falsity of the references but nevertheless made such references.

12 At this juncture, I set out the two occasions when the alleged defamatory statements were said to have been made. On the first occasion, on 30 March 2006, Doreen was invited to Meridian Life’s premises by Shyan’s wife (then his girlfriend), Jaslyn, to find out more about Meridian Life’s product “Crypto+”.

13 Bruce accompanied Doreen to this sales presentation. Bruce has been an active distributor of WBG since August 2002. He is currently at the fourth out of seven levels in the hierarchy of distributors, with a downline of approximately 3,000 members. In MLM terminology, one’s downline refers to the entire downward chain of customers whose ultimate supply of products comes from that person. Doreen is also at the fourth level of the hierarchy but her involvement with WBG took a back seat after she had a child in late 2003.

14 At this first sales presentation, Bruce and Doreen were ushered into a presentation hall. They were seated around a table for a sales pitch by Shyan and Ivan. The alleged defamatory statements comprising the six main statements were made in the course of the sales pitch. Bruce and Doreen were then shown a video presentation which featured Prof Wang giving a talk to Meridian Life’s distributors on “Crypto+”.

15 Bruce was startled to discover that Prof Wang was now supplying Meridian Life’s with the star ingredient, CM. Immediately after this sales presentation, Bruce’s testimony was that he met with a Dr George Lim (“George”) at WBG’s premises. George is the founder of WBG. Bruce told George about the sales presentation he had attended and informed him that Prof Wang was supplying Meridian Life with CM.

16 In swift response, George engaged the services of a private investigation team, comprising Sharon and Tan. The plan concocted by George was for Bruce to bring Sharon and Tan to attend a sales presentation by Meridian Life. Sharon was to pose as a sister of Bruce’s customer from WBG who had recovered from certain illnesses after taking WBG’s products.

17 At this second sales presentation a mere two days later on 1 April 2006, the private investigation team, as one would expect, brought a pin-hole camera with them. Interestingly, no video or aural evidence from the camera was tendered in court. Sharon’s testimony was that a customer service officer at the reception counter grew suspicious of her when she walked into Meridian Life’s premises. According to Bruce, Ivan then questioned him why they had brought along a pin-hole camera but eventually nothing came of...