SMU Office of Research & Tech Transfer – It was a case of a dramatic, bitter legal feud between two former friends and business partners, dragging on for over six years and ending in a pay-out of more than 132 million dollars in damages.
In the Singapore Court of Appeal case of Low Tuck Kwong v Sukamto Sia, Singapore businessman Sukamto Sia had accused Indonesian coal magnate Low Tuck Kwong of reneging on an oral agreement to give him shares in his coal-mining company, PT Bayan Resources, if Mr. Sia would loan him S$3 million to start the said company.
In response, Mr. Low sued for both defamation and malicious falsehood. After a long, drawn-out legal battle, he finally won the case in November 2013. “It was proven that the statement was false and made maliciously,” says Gary Chan, Associate Professor and Lee Kong Chian fellow at the Singapore Management University (SMU) School of Law.
“The Court of Appeal allowed damages to be claimed, but towards the end of the judgment, they had to deal with one legal issue raised by the counsel for Mr. Low: could a declaration of falsity have been granted?”
Professor Chan addresses this question in his paper, “The Right to a Good (Business) Reputation and Truth: Re-examining the Declaration of Falsity”. He presented his findings at the Protecting Business and Economic Interests: Contemporary Issues in Tort Law conference, held at the Supreme Court of Singapore on 18-19 August 2016.
The case of “he said this, he said that”
As Professor Chan explains, a declaration of falsity is an official statement by the court that what the defendant had said about the plaintiff was in fact false. As mentioned, Mr. Low had sought a declaration of falsity, among other remedies, in respect of his claim in malicious falsehood. The declaration was meant to make it clear that the respondent, Mr. Sia, did not in fact give him the money for the purpose of investment, and that the respondent was therefore not entitled to the company shares.
“What the respondent alleged didn’t happen. According to the court, there was no such understanding between the two of them. But that’s what [Mr. Sia] said, that ‘I have an understanding with you, you promised me the shares but you didn't give them to me’. That’s defamatory,” says Professor Chan.
However, the Court of Appeal rejected Mr. Low’s application for the declaration of falsity in malicious falsehood. The judicial decision that it is not an appropriate alternative remedy was based in part on a previous English case, Loutchansky v Times Newspapers Ltd. Dr. Grigori Loutchansky, a businessman born in Tashkent and subsequently based in Latvia, attempted to sue a newspaper for libel as it had published articles that claimed he was involved in criminal activities.
Dr. Loutchansky’s application for a declaration of falsity was rejected due to four reasons, according to Professor Chan. There is no existing legal right to a good reputation, for one. Secondly, the grant of a declaration of falsity would subvert the defence of qualified privilege, which permits persons in positions of authority or trust to make, relay or report statements that would be considered slander and libel if made by anyone else.
There is also a ‘floodgates’ problem associated with the granting of declarations of falsity, which adds to the costs of defending defamation claims. “According to this objection, there is the fear that for every defamation claim, a declaration of falsity will be a tag-on. This might invite more claims by potential plaintiffs,” he says.
In this regard, Professor Chan proposes that the individual plaintiff elect either a declaration of falsity or general damages in defamation claims (but not both remedies) for the purpose of vindicating reputation and as a consolation for hurt feelings.
Finally, the declaration of falsity cannot be granted without full evidence to show that the statement is false, which would include gathering evidence from witnesses and so on, Professor Chan adds.
A legal right to a good reputation
While Professor Chan agrees with the Low Tuck Kwong decision not to grant a declaration on the particular facts, this general ‘all or nothing’ approach in the claim alone for monetary damages might be too rigid, he wrote in his paper. As he pointed out, the four objections are not persuasive enough reasons for rejecting, as a matter of general principle, the potential remedy of a declaration of falsity.
“I think that there is a right to a good legal reputation. Will anyone argue that they have a right to a bad reputation?” he muses, referencing the first objection. “A good reputation is, in a sense, implied, in the right to reputation.”
During his presentation, he outlined some of his arguments for a declaration of falsity to be granted. For one, it is useful when the primary purpose is for the appellant to vindicate his reputation, notes Professor Chan. “In some of these cases, a declaration of falsity might be appropriate where the plaintiff just wants to clear his name,” he says. “He may not be really after the money.” Furthermore, there will be times when defendants are bankrupt and cannot pay for damages anyway, he says.
As Professor Chan noted during his presentation, reputation and truth are connected. Most importantly, when the court makes a declaration, it carries authoritative weight. “A declaration of falsity offers a more direct link to protecting one’s reputation. Because you’ve said something false about me, I can ask for a declaration from the court that the statement was false,” he explains.
By Nurfilzah Rohaidi