Clifford Chance

The SGHC grants $50,000 in defamation damages to victim of malicious whistle-blower.

An angry boss. A resentful employee. A company's whistle-blowing policy misused out of malice. The cost? $50,000, and a judgment that sounds as a warning to employees who make unmeritorious complaints.

On 12 January 2022, the Singapore High Court in Lee Kok Choy v Leong Keng Woo ordered an ex-employee to pay $50,000 in defamation damages for baselessly blowing the whistle on his executive director at the time.

The judgment highlights that while whistle-blowing policies are important tools for protecting individuals who report suspected illegal activity, there can be consequences for employees who bring allegations which are dishonest or made with improper motives.

Facts of Lee Kok Choy v Leong Keng Woo

In August 2011, the defendant, Leong, sent two emails to the CEO of his company alleging that the plaintiff, Lee, at the time the executive director of the company, had engaged in cheating, abuse, criminal breach of trust and multiple instances of corruption over some years. This claim prompted an internal investigation involving the company's board of directors and audit committee. No further action was taken against the director as there was no proof to support the allegations, and he remained in the dark as to the allegations against him and the identity of the whistle-blower.

The director finally discovered the identity of the whistle-blower six years later in 2017 in intriguing circumstances. Returning to his old apartment to check on a leaking water pipe at the request of an ex-neighbour, he found copies of the employee's emails placed in his old mailbox. The director learned that he had been the subject of the whistle-blowing allegations, and that the whistle-blower had been one of his subordinates.

The director brought an action against the employee for libel. He argued that the statements in the emails were defamatory and that the employee's dominant motive in whistle-blowing was to injure him. The director claimed damages on account of injury to his personal and professional reputation and resulting distress, embarrassment and hurt.

Findings

The court was satisfied that the employee's whistle-blowing emails were defamatory and motivated by malice and ordered him to pay a total of S$50,000 in damages.

The analysis involved four main issues:

1. Time-bar: The director's claim was not time-barred because the director only came to know of the factual essence of his claim and the identity of the defendant on 25 November 2017 (i.e. the day he discovered the emails in his mailbox). The writ, filed 4 July 2019, fell within the time limit of 3 years prescribed under section 24A(3)(b) of the Limitation Act.
2. Prima facie case of defamation: The director established a prima facie case of defamation because the emails (i) contained allegations of multiple transgressions amounting to crimes and were therefore plainly defamatory in their ordinary meaning, (ii) clearly referred to the director; and (iii) were clearly published by being emailed to the CEO.
3. Qualified privilege: The employee sought to rely on the defence of qualified privilege, which applies when the defendant to a defamatory suit has an interest or duty to communicate the allegedly defamatory information, and the recipient has a corresponding interest or duty to receive it:
   • The Court found that the employee did indeed have a moral duty to communicate transgressions within the company to the CEO, who correspondingly wielded the power to investigate the issue.
   • However, this defence was defeated because the employee made the allegations maliciously. Viewing the employee's conduct in totality, the court found that the employee had no honest belief in the truth of the statements, and had simply "plucked [them] out of thin air". There was no credible evidence supporting his claim that he had investigated and gathered evidence of the director's supposed unlawful conduct. In fact, the court found some of his claims unbelievable—for example, the fact that he had personally witnessed the director collecting bags of money.
4. Damages: The court considered that the emails "cast serious imputations on the plaintiff as a director of a public listed company" but balanced this against the limited circulation of emails to a limited number of people within the company. Considering these factors, the court ordered the employee to pay S$45,000 in damages with an additional S$5000 in aggravated damages due to his malice and obvious "lack of contrition".

Implications

Whistle-blowing policies have an important role in promoting ethical conduct. At the same time, it can be frustrating for companies to spend time and resources investigating whistle-blowing complaints which are ultimately baseless or even malicious.

While companies themselves may be unlikely to bring a claim against malicious whistle-blower employees, this case shows that a personal claim in defamation could, in certain circumstances, be brought by the victim of whistle-blowing.

That said, a claim in defamation may be hard to make out in many whistle-blowing cases. Such a claim is premised on the victim of the malicious complaint discovering the identity of the whistle-blower and the material facts of the complaint.

However, it can be difficult to discover a whistle-blower's identity, because whistle-blowing policies usually provide for anonymity in order to encourage employees to make reports without worrying about reprisals. It would not be possible to bring a claim in defamation against an unidentified defendant.

Moreover, even if the whistle-blower is not anonymous, the target of a complaint himself will likely not be privy to the identity of the whistle-blower. In fact, especially where the preliminary investigation yields no proof of wrongdoing, he might never even know allegations had been made against him. It was only in the intriguing circumstances of this case, where the director discovered the employee's emails in the mailbox of his old apartment, that he obtained the requisite information to bring a claim in defamation.

In any case, the decision in Lee Kok Choy v Leong Keng Woo shows that the courts are alive to the potential harm that can be perpetrated by baseless whistle-blowing reports. Malicious whistle-blowers may think twice before submitting unsubstantiated allegations against their colleagues.