Defamatory statements require proof of truth; mere assumptions do not suffice for justification or qualified privilege.

KC Vohrah J:

A police report made by the 1st defendant (the 1st appellant) on behalf of the 2nd defendant company (the 2nd appellant) on 4 July 1990 at a Petaling Jaya Police Station, inter alia, referred to the plaintiff, Peter Chua Swee Lai, in the following terms:

Kami yakin yang Peter Chua Swee Lai NRIC 4531444 semasa beliau menjadi Pengarah Urusan di syarikat ini telah memecah amanah. (the company believes or is convinced that Peter Chua Swee Lai NRIC No. 4531444 committed breach of trust when he was the Managing Director in the Defendant Company)

The plaintiff sued for defamation on the police report in the Kuala Lumpur Sessions Court.

The judge of the Sessions Court found the words complained of to be defamatory.

The judge found, and it was not disputed, that the 1st defendant was the agent of the 2nd defendant and that he had acted on the instruction of the 2nd defendant when he made the police report.

She found that the defamatory words positively referred to or identified the plaintiff and that is quite clear from the evidence.

She also found that there was publication of the defamatory words to third parties, to police constables and others. I do not think that that finding can be disputed as the police report was given in a police station to a police officer and an investigation officer investigated the allegation in the report resulting in the plaintiff being arrested though subsequently he was freed with no criminal charges preferred against him.

The defences raised by the defendants were the defences of qualified privilege, justification and fair comment.

The judge rejected all three defences.

The plaintiff and his family members were the original owners and managers of the 2nd defendant company.

The plaintiff was the managing director and his relatives were the managers in charge of accounts, production and sale.

The defendant company under the management of the plaintiff incurred losses and owed money to its creditors.

The major creditor was Kee Hup Berhad.

As the defendant company was unable to pay its debts, the plaintiff offered to Kee Hup Berhad and Kee Hup Berhad accepted the option to take over the entire paid up capital of the defendant company in lieu of payment of the said debt.

One of the debtors of the defendant company listed in the option agreement was South Star Air Conditioning Engineering Sdn Bhd ("South Star"). South Star owed the defendant company RM7,497.49. Kee Hup Berhad in exercising the option in the option agreement took over the defendant company on 30 March 1990.

The plaintiff resigned on 22 March 1990 and the new management then stepped in.

Evidence was adduced that an inquiry into the accounts was done by the new management of the defendant company and after attempting to collect the debts from the debtors as listed in the option agreement, including from South Star, it was found that an undated receipt signed by the plaintiff had been issued to South Star acknowledging receipt of RM7,000 in cash from South Star.

The defendant company had difficulty in getting in touch with the plaintiff or his brother Melvin Chua for an explanation with regard to the receipt and the unaccounted sum of RM7,000.

The Board of Directors of the defendant company then resolved to report the matter to the police to seek their assistance to conduct investigations.

The 1st defendant stated that the receipt had the plaintiff's signature and the company assumed the money was collected by the plaintiff.

He said that the company "decided the police would be of assistance and therefore we lodged the police report." On the instruction of the defendant company, the 1st defendant, as an officer of the defendant company, lodged the report on 4 July 1990.

In this appeal the defendants have brought up several issues relating to malicious prosecution, justification and privilege. Malicious Prosecution

In this ground of appeal the 1st and 2nd defendants contend that the cause of action, if any, should have bee