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2023 MarsdenLR 954
HIGH COURT MALAYA PENANG
SPROUTYPOD INC & ANOR – Appellant
Versus
DANIEL PAUL SCHURER – Respondent
[Civil Suit No: PA-22NCVC-81-05-2022]
The defense of justification is valid in defamation claims when statements are proven true, and qualified privilege protects communications made in good faith in the discharge of a legal duty.
Headnote:(A) Defamation Act, 1957 - Sections on Defamation and Justification - Unlawful interference with trade - Plaintiffs' claim for defamation dismissed as the impugned statements were justified and not defamatory. The defendant's communications were in discharge of his duties as a director and protected by qualified privilege. (Paras 20, 24, 86, 106)
(B) Legal Principles - The burden of proof lies with the plaintiffs to establish that the impugned words carry defamatory imputations. The context of the statements must be considered. Justification is a complete defense if the statements are true. (Paras 21, 24)
(C) Findings of Court - The defendant successfully proved his defense of justification, showing that the statements made were substantially true and in good faith. The plaintiffs failed to demonstrate that the defendant's actions unlawfully interfered with their business. (Paras 20, 106)
(D) Issues - The court addressed whether the statements made by the defendant were defamatory and whether the defense of justification applied. It also considered the claim of unlawful interference with trade. (Paras 106) (E) Ratio Decidendi - The court held that the defendant's statements were true and made in good faith while fulfilling his duties as a director, thus not defamatory. The plaintiffs' claims for unlawful interference were also dismissed. (Paras 20, 106) (F) Result - Plaintiffs' claims dismissed, and they ordered to pay costs to the defendant. (Paras 106, 107)
| Table of Content |
|---|
| 1. introduction of defamation and unlawful interference case. (Para 1 , 2) |
| 2. background of plaintiffs and project details. (Para 3 , 4 , 5 , 6) |
| 3. events leading to withdrawal of funds. (Para 7 , 8 , 9 , 10) |
| 4. communication and updates regarding funds. (Para 11 , 12 , 13 , 14 , 15) |
| 5. d's publication regarding team dissolution. (Para 16) |
| 6. plaintiffs' claims of libel and economic interference. (Para 17 , 18 , 19) |
| 7. court's findings on defamation. (Para 20 , 21 , 22 , 23 , 24) |
| 8. justification as a defense in defamation. (Para 25 , 26 , 27 , 28 , 29) |
| 9. legality of fund withdrawal and loan agreements. (Para 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39) |
| 10. authorization for fund withdrawal. (Para 40 , 41 , 42 , 43 , 44) |
| 11. impact of p2's actions on company. (Para 45 , 46 , 47 , 48 , 49) |
| 12. assessment of p2's withdrawals. (Para 50 , 51 , 52 , 53 , 54) |
| 13. moneylenders act applicability. (Para 55 , 56 , 57 , 58 , 59) |
| 14. nature of loan agreements. (Para 60 , 61 , 62 , 63 , 64) |
| 15. analysis of the second publication. (Para 65 , 66 , 67 , 68 , 69) |
| 16. qualified privilege defense. (Para 70 , 71 , 72 , 73 , 74) |
| 17. conditions for qualified privilege. (Para 75 , 76 , 77 , 78 , 79) |
| 18. no malice in d's publications. (Para 80 , 81 , 82 , 83) |
| 19. unlawful interference with trade claim. (Para 84 , 85 , 86) |
| 20. plaintiffs' failure to prove interference. (Para 87 , 88 , 89 , 90) |
| 21. court's reasoning on damages. (Para 91 , 92 , 93) |
| 22. considerations for damages assessment. (Para 94 , 95 , 96 , 97 , 98 , 99 , 100 , 101 , 102 , 103) |
| 23. final ruling on defamation claims. (Para 104 , 105) |
| 24. conclusion and order of dismissal. (Para 106) |
Introduction
[1] This is an action by the plaintiffs against the defendant ("D") for defamation and unlawful interference with trade. After a full trial, I dismissed the plaintiffs' claim. Here are the grounds of my judgment.
The Trial
[2] The trial took place over 3 days on 3 April 2023, 5 April 2023 and 13 April 2023. The witnesses who testified at the trial were:
Background Facts
[3] The 1st plaintiff ("company") is a foreign company incorporated in the State of Delaware in the United States of America. The 2nd plaintiff ("P2") is a Danish citizen who lives in Penang, Malaysia, on a visa issued under the Malaysia "My Second Home Programme". P2 is a Director and the Chief Executive Officer ("CEO") of the company. D was a Director of the company.
[4] P2 and D entered into a Collaborative Project Letter of Intent on 27 July 2020. It was agreed that P2 would be responsible for the funding, execution of marketing strategy, and general management of the SproutyPod project. D would be responsible for designing the SproutyPod product, accessories, and its packaging. They agreed to share profits in the proportion of 70% to P2 and 30% to D. P2 and D formed the company on 6 October 2020 as the vehicle in executing the SproutyPod project.
[5] P2 and D were joined by Ms Jessica Fradono ("Jessica") on 10 December 2020. Jessica held the position of Chief Brand Officer in the company. Together they were business partners ("Founders") that developed the business to manufacture, market and sell units of SproutyPod. SproutyPod is a glass container designed by D for sustainable food production. It allows seedlings or sprouts to be grown conveniently in an aesthetically pleasing container in the comfort of one's home.
[6] SproutyPod was launched on the platform of Kickstarter to obtain funds through crowdfunding to start mass production of units of SproutyPod. The Founders had promised, via Kickstarter, that donors to the project ("backers") who gave US$59.00 or more would be given units of SproutyPod. To-date, the mass production of SproutyPod units has yet to begin. When the crowdfunding campaign on Kickstarter ended, the Founders started another crowdfunding campaign on Indiegogo.
Events Leading To The Filing Of The Instant Suit
[7] On 22 December 2021, D discovered that P2 had withdrawn the sums of US$100,000.00 an
