GROUNDS OF JUDGMENT

[Y.A. DATO' K.N. SEGARA, JUDGE]

The plaintiff's cause of action in defamation arises from certain statements appearing in a police report made on 1/9/93 by the defendant. The defendant is a director and shareholder of Sey Hoe Sdn. Bhd. The collective equity ownership of the defendant, together with his brothers and Alor Janggus Soon Seng Sdn. Bhd., in Sey Hoe Sdn. Bhd. is 43.75% (according to the report).

The 1st plaintiff is an advocate & solicitor practising under the name of Hoe & Ahmad Zaki, in partnership with the 2nd plaintiff. [2]

The 1st plaintiff is furious over the police report because the defendant has made groundless allegations that the 1st plaintiff has parted with 682,500 original share certificates in MGR Corporation, belonging to Sey Hoe Sdn. Bhd., to Lim Chin Teik, the managing director of Sey Hoe Sdn. Bhd.

Lim Chin Teik is a friend of the 1st plaintiff. The 1st plaintiff was acting as the solicitor for the vendor, Sey Hoe Sdn. Bhd., and prepared the sale and purchase agreement of the shares set out in the agreement dated 1/9/92 (page 1, Bundle B) and the supplemental agreement dated 1/11/92 (page 5, Bundle B). The 1st plaintiff only took instructions from Lim Chin Teik.

On 1/4/93, the defendant had obtained an exparte injunction in the Penang High Court Civil Suit No. 22-109-93 to restrain Sey Hoe Sdn. Bhd. from transferring the shares referred to in the sale and purchase agreement dated 1/9/92. The injunction was set aside on 2/4/93 but reinstated by the Supreme Court in Supreme Court Civil Appeal No.02-569-93 on 5/5/94, and an early trial ordered.

The 1st plaintiff knew a police report had been lodged by the defendant when one D.S.P. Lim Cha Boh asked him to go to the Alor Setar police H.Q. because [3] he wanted to record a statement from him. In the course of giving the police statement in October 1993, the police report was referred to him and he read the whole report. The 1st plaintiff agreed in cross-examination that most of the particulars of fraud in the report referred to Lim Chin Teik. It is a 6 page report (page 2, Bundle A).

The 2nd plaintiff was informed by the 1st plaintiff, his partner, that a police report had been lodged against the 1st plaintiff and the firm. The 2nd plaintiff was aware that there were police investigations over the report as he was informed about it by the 1st plaintiff. The 2nd plaintiff said that he had read the report. He assumed that the report had been applied for by the 1st plaintiff. He testified there were 21 paragraphs and the majority of the paragraphs dealt with allegations of fraud by the managing director, Lim Chin Teik. In respect of the specific allegations against his partner and the firm, he testified the allegations were false.

The defendant testified he lodged the police report on 1/9/93 at Bukit Aman, K.L. He said his report was basically against the managing director of Sey Hoe Sdn. Bhd. and the particulars of fraud and criminal breach of trust were made against Lim Chin Teik. He believed the facts stated in the report were true at the [4] time he lodged the report. DSP Lim Cha Boh interviewed him and took a statement from him. The defendant did not show the report to any third party. When he lodged the report he did not intend to defame anybody. Under cross-examination, he confirmed the particulars in the report were extracts from his affidavit in the two civil suits in the Penang High Court, C.S. No:22-109-93 and C.S. No:22-169-93. He testified that when he lodged the report in September 1993, he had evidence that the vendor had lodged the original certificates with the 1st plaintiff, as required under clause 5 of the sale and purchase agreement. He further testified that when he lodged the report in September 1993, he still did not believe what Mr. Hoe (the 1st plaintiff) had told him on 17th March 1993 -- i.e. that the original shares had not been lodged with him by the vendor. When he lodged the report he honestly believed the