Legal spat between Bayan founder and Sukamto Sia ends in stalemate

SINGAPORE - A bitter legal fight between Low Tuck Kwong, founder of PT Bayan Resources, and Singapore businessman Sukamto Sia ended in a stalemate when the High Court found that neither party had proved their claims.

While Mr Low may have failed in his defamation claim, he succeeded in preventing Mr Sia from getting a 50 per cent share of Bayan.

In a 49-page ruling made public last Monday, High Court Justice Philip Pillai dismissed Mr Low's claim that he had been defamed by Mr Sia in letters he had sent to an Indonesian regulator, the Jakarta stock exchange, among others.

The letters, which appeared one month before Bayan's initial public offering in August 2008, claimed that Mr Low had reneged on a 1995 oral agreement to give Mr Sia a 50 per cent share of Bayan in return for $3 million to set up the coal-mining business.

Justice Pillai also dismissed Mr Sia's counterclaim, saying that the businessman had not been able to prove that the oral agreement existed.

"(Sia), by not being able to prove the common understanding (oral agreement), is unable to establish his counterclaims in breach of contract, proprietary estoppel, constructive trust, breach of fiduciary duty and money had and received," Justice Pillai found.

In seeking 2.175 trillion rupiah (S$283 million) in damages, Mr Low said that his reputation was hurt and he also gave up selling 375 million of his shares in Bayan to allow the IPO to go ahead, losing the opportunity to reinvest during the financial crisis that followed Lehman Brothers' collapse.

In ruling that Mr Low's claim in defamation cannot succeed, Justice Pillai found that "the defence of qualified privilege" extends to the letters, and that he has been "unable to prove malice that would defeat the defence of qualified privilege".

Accordingly, Mr Low's claim in malicious falsehood has not been made out, he found.

Qualified privilege is a common law principle that refers to whether a party has a legitimate interest in informing recipients of certain documents and whether recipients have a legitimate interest to know.

Even though the letters were defamatory, the High Court found that Mr Sia had legitimate interest in informing the recipients.

Justice Pillai noted that Mr Low himself had acknowledged that Bayan and the IPO advisers had a legal duty to disclose Mr Sia's claim to the Indonesian stock exchange and the investing public through IPO documents and the media, and that the parties had an interest to receive information about the claim.

In finding that Mr Low has been unable to prove malice, Justice Pillai wrote: "I am unable to accept that stopping Bayan Resources' IPO and preventing (Mr Low) from selling his shares in the IPO are outcomes which could not have been of any legitimate consequence to (Mr Sia). Since his claim is for 50 per cent of Bayan Resources' shares, he had every reason to want to preserve the status quo until his claims were resolved by agreement or by the courts."

"Further, while (Mr Sia) has not been able to adduce evidence in this court to prove the common understanding, this alone cannot warrant any adverse inference that he knew that the Indonesian Publications contained false claims. That the claims in the Indonesian Publications were false have to be independently provided in this court and they have not been proven," said Justice Pillai.

He called this "a case of one party's evidence and recollection of events in 1995 pitted against the other party's contrary evidence and recollection of the same events relating to whether there was, and if so, what was the common understanding".

In finding that Mr Sia did not have malicious motive, Justice Pillai said Mr Sia's actions in "instructing his Singapore and Indonesian lawyers and acting on the latter's advice to make the Indonesian Publications show that he believed that he had a claim against (Low) and that his claims in the Indonesian Publications were true".

Further, he found that Mr Sia's "conduct and demeanour under cross-examination in this court further reflected his continued belief. That being my finding, the Indonesian Publications were made in order to protect what the defendant believed to be his business interests".

"In this case, (Mr Low) has not proved on the evidence that the claims in the Indonesian Publications (letters) are false, just as (Mr Sia) has not proven on the evidence that they are true."

Since neither party succeeded in proving their claims, no damages are assessed.

Justice Pillai also ordered that legal costs are to "follow the event", meaning where the parties succeeded, they will get costs. In Mr Low's case, he will get costs because he succeeded in defending against the counterclaim, while Mr Sia will get costs for fending off the defamation suit.