DEFAMATION - A SHORT REFRESHER
In Continental Steel Pte Ltd v Nippon Steel & Sumitomo Metal Southeast Asia Pte Ltd and another [2022] SGHC 292, Dedar Singh Gill J was faced with a dispute between two trade rivals in the steel and construction industry in an action for defamation. We take a look at some of the key points raised.
Facts. At the expense of oversimplification, we summarise the salient facts below.
The plaintiff, Continental Steel Pte Ltd (“CS”), had debuted a new steel column in the Singapore market in 2014, the HISTAR 460 (“the Product”) (at [1]).
The first defendant, Nippon Steel & Sumitomo Metal Southeast Asia Pte Ltd (“Nippon Steel Singapore”), is a wholly-owned subsidiary of the second defendant, Nippon Steel & Sumitomo Metal Corporation (“Nippon Steel Japan”) (at [3]). Collectively, we will refer to them as the “Defendants”.
The alleged defamatory publication (“the Publication”) and words (“the Words”) (collectively the “Alleged Defamatory Material”) were primarily created and disseminated by one Mr Yoshimitsu Murahashi (“Mr Murahashi”) who joined Nippon Steel Singapore from Nippon Steel Japan in late 2011 (at [4]).
It was CS’s case that the Product is of superior quality to other steel grades on the market (“Superior steel grade” or “Superior grade”), including S460M (a grade of steel column) (at [5] – [7]). CS also claimed that the Product has dual-specifications, in that it meets the specifications of both the S460M grade and Superior grade (at [14]). Pursuant to the issuance of the European Technical Approval (“ETA”) 10-0156, the Product has an enhanced design strength (“Catalogue Design Strength”) as compared to the design strength of S460M steel for the same flange thickness.
CS claimed that if an ETA is granted in respect of a construction product, that product is in full compliance with the Eurocode 3 (at [11]), and consequently, BC1:2012 issued by the Building and Construction Authority of Singapore (“BCA”), which only applies to “alternative steel materials” (steels that are not covered and compliant with British or European standards), would not apply to that product (at [12]).
CS was therefore aggrieved by the suggestion of the Alleged Defamatory Material that the Product fails to comply with BC1:2012, containing design standards under an industry guideline promulgated by the BCA (at [1]).
In this action, CS brought two claims against the Defendants.
Firstly, CS claimed that the Defendants are liable for defamation, as the natural and ordinary meaning of the Alleged Defamatory Material is that (among others) CS is selling the Product for use in accordance with its Catalogue Design Strength in contravention of the relevant standards in Singapore (“the Second Meaning”) (at [69(b)]).
Further and/or in the alternative, CS argued that the Publication and/or Words are defamatory by innuendo (at [71]).
Secondly, CS claimed that the Defendants are liable for malicious falsehood.
The law. With this background, we will highlight a few points about the position in law for a claim in defamation.
What is defamatory? In law, a distinction is drawn between a statement which reflects adversely on a product as opposed to its manufacturer or distributor (at [79]).
This distinction affects the cause of action available to the claimant.
“… If the words complained of only malign a product, the plaintiff’s cause of action lies in malicious falsehood … In order for words to be defamatory of a person’s reputation in business, … the words must impute “at least incompetence on the part of the trader or manufacturer in the way in which he runs his business” [emphasis added].”
An example of how this works is set out in Lord Esher’s statement in South Hetton Coal Company Limited v North-Eastern News Association Limited [1894] 1 QB 133, which was cited with approval at [79]. We set out the salient excerpt below:
“It may be published of a man in business that he conducts his business in a manner which shews him to be a foolish or incapable man of business. That would be a libel on him in the way of his business, as it is called – that is to say, with regard to his conduct of his business. If what is stated relates to the goods in which he deals, the jury would have to consider whether the statement is such as to import a statement as to his conduct in business. Suppose the plaintiff was a merchant who dealt in wine, and it was stated that wine which he had for sale of a particular vintage was not good wine; that might be so stated as only to import that the wine of the particular year was not good in whosesoever hands it was, but not to imply any reflection on his conduct of his business. In that case the statement would be with regard to his goods only, and there would be no libel, although such a statement, if it were false and were made maliciously, with intention to injure him, and it did injure him, might be made the subject of an action on the case. On the other hand, if the statement were so made as to import that his judgment in the selection of wine was bad, it might import a reflection on his conduct of his business, and shew that he was an inefficient man of business. If so, it would be a libel. In such a case a jury would have to say which sense the libel really bore; if they thought it related to the goods only, they ought to find that it was not a libel; but, if they thought that it related to the man's conduct of business, they ought to find that it was a libel. With regard to a firm or a company, it is impossible to lay down an exhaustive rule as to what would be a libel on them. But the same rule is applicable to a statement made with regard to them. Statements may be made with regard to their mode of carrying on business, such as to lead people of ordinary sense to the opinion that they conduct their business badly and inefficiently. If so, the law will be the same in their case as in that of an individual, and the statement will be libellous.”
(emphasis added by the Court)
So, when a claimant company wishes to start an action in defamation on the basis that the defendant had defamed the company, it is important to ask what the alleged defamatory publication says: does it only impugn the claimant company’s product, or does it go further to impugn how the claimant company conducts its business? Depending on the answer, the cause of action may not be in defamation, but rather under malicious falsehood.
Ordinary vs innuendo meaning. Next, there is a difference between defamation arising from the natural and ordinary meaning of the words, as opposed to a meaning that arises by innuendo (at [81]). The former is that which is conveyed to an ordinary reasonable person (at [82]), while the latter is one that is apparent only to those possessed of special knowledge or extrinsic facts unknown to the ordinary person (at [83]).
On the facts, the Court found that the natural and ordinary meaning of the Publication and the Words reflects adversely on the Product, and not on the propriety of CS’s business (at [91]). So, there was no defamation arising from the natural and ordinary meaning of the Publication and the Words without any extrinsic facts (at [92] – [95]).
However, the analysis reached a different result with the “extrinsic fact” that CS has been marketing the Product for use in accordance with its Catalogue Design Strength (“the 2nd Extrinsic Fact”) (at [102]). In other words, we are now looking at defamation by innuendo (at [101]).
This is because (at [107] – [111]:
“107 … By CS touting the Product’s Catalogue Design Strength even though, according to the Publication and Words, a lower design strength under the BC1:2012 ought to apply, a reasonable person in the construction industry would infer that CS is dishonest in selling the Product in this manner. …
…
110 … What is pertinent in the present case is that CS did promote the very characteristic of the Product that the Publication and/or Words suggest is untrue. Namely, CS marketed – to some customers at least – the Product under its Catalogue Design Strength. As such, the substance of the defendants’ statements that the Catalogue Design Strength is superseded by lower design strengths in the BC1:2012, to my mind, undoubtedly impugns the honesty of CS as a distributor of the Product in Singapore.
111 In conclusion, if a publishee knows that CS is marketing the Product under its Catalogue Design Strength, the Publication and/or Words would convey the defamatory imputation as described in the Second Meaning. …”
(emphasis in original)
Claimants should bear this distinction in mind. Defamation by innuendo is (in a sense) “wider” than defamation arising from the ordinary and natural meaning of the words, as depending on the facts, certain words that are not in and of themselves defamatory may become defamatory when coupled with extrinsic facts.
Defence of justification. It is a complete defence to a claim for defamation if the defamatory statement is true in substance and in fact: this is the defence of justification (at [137]). In other words, if the alleged defamatory statement is true, there is no defamation.
However, “… justification has to be specifically pleaded in such a way so as to inform the plaintiff and the court precisely what meaning or meanings the defendant seeks to justify…” (at [138]).
In the present case, the Defendants had disavowed the defence of defamation, such that “… their only defence under defamation is that no defamatory sting arises and [the Defendants’ counsel confirmed that] there was no need to run the defence of justification.” (at [139]; emphasis in original).
What this means is that the Defendants did not argue that the Defamatory Material was true: their defence was simply that the Defamatory Material had no “defamatory sting” (at [139]). In other words, the Defendants were saying that the Defamatory Material relates to the Product and did not impugn CS’s “reputation in its trade and business”, so CS can only sue for slander of goods under malicious falsehood (at [139]).
Given the Defendants’ position, since “... truth [was] not pleaded, evidence of justification is inadmissible in relation to the issue of liability for defamation…” (at [140]; emphasis in original).
Of course, as noted by the Court, the Defendants (rightfully) did not argue that the defamatory words were justified (at [141]).
However, this raises an important point. If you want to say that there was no defamation because the said statement was true, it must be pleaded. If this was not done, you cannot subsequently turn around and say this.
This issue matters because, liability aside, O. 78, r. 7 of the Rules of Court (2014 Rev Ed) provides that if a defendant intends to raise mitigation or reduction of damages as part of his defence to damages for defamation, then this point must be pleaded together with relevant particulars. This provision is substantively similar to O. 43, r. 6 of the Rules of Court 2021.
As such, if you failed to say that there was no defamation because the defamatory statement was true, you cannot subsequently say that even if there was defamation, the amount of damages to be awarded should be reduced because the defamatory statement was true.
This was what happened in the present case. The Court held that as Nippon Steel Singapore failed to satisfy O. 78, r. 7 of the Rules of Court (2014 Rev Ed) (at [160]), this meant that Nippon Steel Singapore could not lead evidence (of the directly relevant background context of the circumstances in which the publication came to be made) under the Burstein rule (at [156] – [158]) in mitigation of damages. Hence, “even if there is merit to Nippon Steel Singapore’s submission that the BC1:2012 does apply to the Product, this does not affect the quantification of damages for defamation.” (at [161]; emphasis in original)
Significance. When we talk about defamation, we usually talk about defamation by a natural person against another natural person. However, it must be borne in mind that, in law, it is possible for a company to defame another company. Nonetheless, as illustrated in the present case, while this is possible in law, there are certain important points to bear in mind when we are looking at a case of defamation to a company.
And as an aside, for a defendant, when defending against a defamation action, it is important to bear in mind if the alleged defamatory statement is true in substance and in fact. If so, then the defendant should ask: “Have I raised the defence of justification? Have I sought to rely on the truth of the statement in mitigation? If not, why not?”
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.