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

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.

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.

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

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

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

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

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

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.

17. The second defendant’s first line of defence is that the words complained of were not 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” is a good starting point.

20. The defence denied that each of the email “bore or were understood to bear or were capable of the meanings pleaded” without elaboration. The closing submissions merely repeated that the second defendant “denies that the words used bored the meanings pleaded by the Plaintiffs”. More detailed consideration should be given to the statements.

21. When I did that, I found some of the statements were indeed not defamatory. The cited passages of each email were read individually and collectively to ascertain their meaning and effect. I will explain why I do not find some of the statements defamatory, and note those which are defamatory. It is not necessary to explain why the latter statements are defamatory, as that is evident on the face of the statements. For ease of identification the defamatory statements are indicated by the underlining of the paragraph numbers in paras 6, 9 and 12.

22. The first email.

23. The second email.

24. The third email.

25. The second defendant asserted that the plaintiff’s contracts are illegal because they have a minimum contractual period of one year which infringes subsection 7.4.1 of the IDA’s Code of Practice for Competition in the Provision of Telecommunication Services[2] that

26. He admitted that he made the statement that fixed term contracts were illegal under that provision without checking with the IDA or other parties,[3] and he did not produce any support for his assertion even at the trial.

27. Para 2. The thrust of this passage is that the plaintiff cannot offer a proper level of service because it is a makeshift operation relying on a personal computer. In the closing submissions, it was contended that the comments are substantially true in substance and in fact.[4]

28. This was asserted although there was no evidence that the plaintiff was a makeshift operation or that it was operating through a personal computer in October 2002. In the further and better particulars to his defence, the second defendant disclosed that “one Abraham working for the Plaintiffs … said that the Plaintiffs do not use a switch as the Plaintiffs are linked to a SingTel partition.” He deposed in his affidavit of evidence-in-chief that this was disclosed to Lloyds TSB Bank on or before March 2002. In cross-examination, he admitted that he did not know how many switches the plaintiff had at that time.[5] He did not disclose Abraham’s full name or identify the Lloyds TSB Bank officer Abraham spoke to, and no attempt was made to establish that what he was alleged to have said was true.

29. The plaintiff’s evidence that it had installed its own switch in October 2001 was not disputed.

30. Para 5 was entirely hearsay. No analysis report or any other evidence was produced. When pressed, the second defendant said he had obtained the information from SingTel sales staff, but he did not name them, much less call them as witnesses.

31. Para 6. The second defendant had no evidence to support his claim that the plaintiff was a failure. The plaintiff’s managing director’s evidence that the plaintiff has been successful in Singapore with about 500 corporate clients was not challenged.

32. Paras 8, 10 and 11. The persons who were the alleged sources of the information were not called as witnesses either to confirm that they had made the statements or that the statements were factually correct.

without any explanation as to how that could substantiate the charge that the plaintiff lied to its clients.

34. He called two witnesses who gave evidence that the plaintiff’s employees misrepresented the services it offered. Neither of them had been referred to in his emails. The first witness was Tricia Ong of Rockwell Collins South East Asia Pte Ltd. She deposed that an employee of the plaintiff, Patrick Scaramozzino misrepresented to her that the plaintiff sold SingTel 001 service. Under cross-examination, she conceded that Scaramozzino had not spoken to her before the agreement was entered into, and that another person Yolanda Tay had spoken to her.[7] She could not explain why she had named Scaramozzino in her affidavit and did not refer to Yolanda Tay.

36. In her evidence in court, she changed that, and said Anna Hu did not approach her and make the representation, and that another person, Claire Kwan did.

37. Neither witness offered any reason for changing her sworn evidence, nor gave any indication of the changes before she went to the witness stand. Their evidence that they had been lied to by Yolanda Tay or Claire Kwan cannot in these circumstances carry any weight, and do not provide justification for any allegation of lying by the plaintiff or its employees.

38. The defence of justification failed in respect of each of the statements.

40. A review of the defamatory statements show that they were assertions of fact, e.g., the licences are illegal, the plaintiff is a makeshift operator relying on a personal computer, and it lies to its clients.

41. The defence of fair comment does not stand if there is malice. The discussion on malice in the defence of qualified privilege also applies to this defence, with the same result.

and continues at para 14.3 that

and at para 14.5 that

43. The first question is whether the three emails were published on occasions of qualified privilege. As accounts manager the second defendant has to seek out potential clients, including the clients of the plaintiff, and inform about the services offered by his principals, and compare them with those provided by its competitors. In so doing it may be relevant and proper to refer to the financial standing and stability of the competitors where that may affect their operations. There is a mutuality of interest between the second defendant and the recipients of the emails in these matters.

44. Malice defeats the defences of qualified privilege and fair comment. The defence will stand only if a statement is made honestly. As Lord Diplock explained in Horrocks v Lowe [1975] AC 135 at 150

45. There are standards for the belief to meet. Gatley points out at para 16.15 that the defence will not hold when there is knowledge that the statement is untrue or knowing indifference to whether it is true or false, and goes on to state at para 16.16 that

46. When the second defendant asserted that the plaintiff’s minimum term contracts are illegal, he did not take the simple step of checking with the IDA. He insisted that he came to that belief on the basis of subsection 7.4.1 of the IDA Code, although it does not refer to the length of contracts. Likewise, he claimed that he believed that the plaintiff had no switches because an employee of the plaintiff had admitted to that that sometime before March 2002. Although that information did not come to him directly, he took no steps to ascertain the full name of that person, whether he made the admission, and whether conditions had changed when he sent his second email in October 2002.

47. Similarly, while he repeated the complaints he claimed were made by the customers of the plaintiff namely Wilson Hoe, Winnie Lee, Tina Cheam, Russell Tang, he did not call them as witnesses, or explain why they were not called. He claimed that he had spoken with each of them and had made notes of the conversations. If he had the notes, he did not produce them during discovery, and did not offer to produce them at the trial.

48. The crucial question is whether he can be believed when he said he honestly believed that the statements were true. If he had the honest belief, his defence will succeed, but it would not succeed just because he says that he had the belief. He has to persuade the court that he truly held the belief.

49. He is not a simple person. He is a qualified accountant, and has held responsible positions in a merchant bank and stockbrokers in which care must be taken in coming to a decision or conclusion. He must know that it is necessary to record and verify loose undocumented information received before accepting and disseminating it as the truth, and cause injury to a third party.

50. The second defendant’s account of the basis on which he made the statements did not persuade me that he honestly believed in the truth of the statements when he made them, and his defence of qualified privilege fails.

51. As his defences have failed, judgment will be entered for the plaintiff against him with costs, and damages to be assessed by the Registrar.

53. Counsel for the plaintiff submitted that aggravated damages be awarded against the second defendant. It complained that even after the action was commenced, he visited Lucent Technologies on 1 April 2003 and spoke to its officers. He asked them to check on the plaintiff’s financial status and health on its website, and told them that it was being sued by SingTel. Subsequently Lucent Technologies invited five operators including the plaintiff to tender for the provision of telecommunication services, and did not renew its contract with the plaintiff when it ran out in June 2003.

54. There was nothing objectionable about the second defendant visiting Lucent Technologies per se, he was not restrained from doing that. What he told the officers during the visit was also unobjectionable, the first part being a proper suggestion, the second part being a true statement of fact. The visit could not be said to have caused the plaintiff’s loss of the Lucent contract or to justify an award of aggravated damages.

55. There was more substance in the plaintiff’s complaint over the manner in which the second defendant conducted his defence. He showed himself to be unyielding and defiant throughout. He condemned the plaintiff’s minimum-term contracts as illegal without checking with the IDA, and maintained that position at the trial, even after acknowledging that other operators also incorporated minimum-period terms in their contracts. He continued to stand by his allegation in the email of 16 October 2002 that the plaintiff could not afford to operate a switch, despite admitting he did not know how many switches the plaintiff had at that time, and even after the plaintiff has stated that it had installed its own switch in October 2001.[8]

56. He stuck by all his statements and raised every defence available to him, regardless of the shortcomings in his case, the evidence the plaintiff presented, and with the knowledge that he was not going to call the persons who were vital witnesses for his defence. He was not prepared to consider that he may have wronged the plaintiff in any way, and would not make the smallest retraction or concession.

57. I find that his conduct justified an order for aggravated damages against him.

58. The plaintiff sought an order that the second defendant be restrained from publishing the same or similar defamatory statements of the plaintiff.

60. The first defendant’s claim was founded on the terms of appointment of the second defendant as its agent. The parties agreed inter alia

61. The second defendant admitted that those conditions applied to their relationship and restricted his defence to a bare denial of liability.

and was not cross-examined by the counsel for the second defendant.

63. The second defendant did not refer to the first defendant’s claim in his affidavit of evidence-in-chief or evidence in court.

64. Instead his counsel submitted that the settlement between the first defendant and the plaintiff extinguished the first defendant’s entitlement to indemnity. This point was taken without reference to any authority, or to the express words of clause 8.1 of the agreement which refer to claims and do not exclude settlements.

65. It was also argued that the first defendant was estopped by its defence that the second defendant was an independent contractor for whose actions no vicarious liability attached to the first defendant. There is no basis for the assertion that a party is estopped from changing any position taken in its pleadings. The second defendant was entitled to question the first defendant’s and the plaintiff’s witnesses on the change of position and the settlement, if necessary, by recalling them, but he did not.

66. On the basis of the foregoing, I order that the second defendant indemnifies the first defendant against the plaintiff’s claim. The claim was settled for a lump sum $250,000 inclusive of costs. The plaintiff sued the first defendant on the basis that the second defendant was its “agent and/or employee and/or representative.” In view of the fact that he was appointed and named as an agent, and that he canvassed business for the first defendant and not for himself, the first defendant’s decision to accept a settlement was not unreasonable. There was also no reason for doubting that the first defendant acted in good faith and in the protection of its interests in arriving at the settlement at that sum, as it had to make payment to the plaintiff, and face the uncertain prospect of recovering it from him.

67. I also order that the second defendant pays the first defendant costs on its claim against him. The costs are to be taxed on the High Court scale as the claim was properly made before the High Court following the plaintiff’s claim.

[1] Plaintiffs’ Closing Submissions para 46

[2] Notes of Evidence page 132

[3] Notes of Evidence page 133

[4] Second Defendant’s Closing Submissions para 35

[5] Notes of Evidence pages 142-3

[6] Second Defendant’s Closing Submissions para 44

[7] Notes of Evidence page 128

[8] Notes of Evidence pages 142-3