"The loss of business reputation and goodwill does not arise at all as a company winding up has no reputation to defend and hence is not entitled to receive damages.” — lawyer Datuk Dr Cyrus Das.
PUTRAJAYA (Dec 1): A company in the midst of being wound up can still receive damages for defamation as vindication of its reputation and to avoid further disrespect which it may have suffered due to defamatory words published, a senior lawyer told the Federal Court today.
Tan Sri Cecil Abraham, who appeared for Raub Australian Gold Mine Sdn Bhd (RAGM), said in the two questions of law posed by Malaysiakini in its appeal to set aside payment of RM200,000 in damages, the news portal had stated that the cause of action in the suit was filed before the company was wound up.
“Goodwill is capable of existing in an insolvent company. Further damages for loss of goodwill can be awarded to it. This is so because the goodwill of the company holds its value and is transferable still in the face of the creditors voluntary winding-up,” he argued.
For these reasons, Cecil said the appellate court's decision in ordering Malaysiakini to pay RM200,000 in damages for defamation should stand, adding that it was "very much in the range of award of damages in defamation claims in Malaysia".
RAGM filed the action in 2012, following the publication of three articles while the company was still in operation, which it claimed were defamatory.
Cecil added that there were two out of nine questions of law regarding this which should be answered in the affirmative, namely:
- Whether it is proper to award general damages for loss of goodwill and vindication of reputation to a plaintiff company that has independently been subjected to a voluntary winding-up by its creditors, and
- Whether loss of goodwill can be recovered as a component of defamatory damages by a plaintiff company that has gone into insolvency.
Company facing liquidation has no reputation
Meanwhile, Datuk Dr Cyrus Das, appearing for Malaysiakini, its editor-in-chief, Steven Gan and several of its journalists and editors said a company facing liquidation is insolvent.
“This has nothing to do with libel. The loss of business reputation and goodwill does not arise at all as a company winding up has no reputation to defend and hence is not entitled to receive damages,” the senior lawyer added.
Cyrus answered the abovementioned two questions in the negative as the appellate court had failed to distinguish between a personal claimant and a corporate claimant, as RAGM is now placed under the Insolvency Department.
He added that RAGM had also failed to show how the purported defamation had resulted in the company's loss of income and hence, the apex court should set aside the award.
“In the absence of its pleadings or evidence that the alleged defamation caused the winding up of RAGM, the award of general damages for loss of goodwill and reputation is arbitrary and unsustainable in law,” the senior lawyer said.
RAGM sued the news portal for defamation in relation to three articles and two videos featuring residents of Bukit Koman in Raub, Pahang, who had formed an action group against the gold mine's use of sodium cyanide, which they claimed had affected their health.
The High Court dismissed the claim by RAGM, but a three-member Court of Appeal bench overturned the decision and ordered Malaysiakini to pay the damages after ruling that the news portal had defamed the company
Defence of reportage argued
Both senior lawyers also debated the defence of reportage, which Malaysiakini argued is available to them.
A total of seven questions of law have been posed before the Federal Court for consideration and to be decided for the first time in Malaysia.
Cyrus, who appeared with James Khong, argued that the defence of reportage is available to the portal, as it was part of the Reynold's defence of qualified privilege and that his client was entitled to it as it practised responsible journalism.
He said the articles raised a question of public interest and furthermore, the portal had contacted RAGM's owner Datuk Seri Andrew Kam, who refused to comment on the issue.
“This follows the existence of yellow flakes around the houses on top of the car as a result of the gold mine activity and this raises the concern of the Bukit Koman residents who feared for their health,” the senior lawyer added.
Cyrus added that with the defence of reportage, verification is not needed from the respondents due to the public interest element in the matter.
Meanwhile, Cecil argued that Malaysiakini had not initially pleaded the defence of reportage when the matter was on trial at the High Court and hence, it should not be applicable here.
Even if the defence of reportage is accepted, he said the Court of Appeal judgment concurred that the 10 points of citing such defence was not followed, and hence the articles should be considered defamatory.
“The articles are the worst kind of irresponsible journalism there is,” the top lawyer added.
Following this, the defence of reportage should not be accepted by this court, Cecil said.
Federal Court judge Justice Datuk Vernon Ong, who led the five-member bench, reserved judgment in delivering the decision on the matter.
The other judges are Justices Datuk Abdul Rahman Sebli, Puan Sri Zaleha Yusof, Datuk Hasanah Mohamed Hashim and Datuk Harmindar Singh Dhaliwal.