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Singapore – EnDorsey-ing Exposures: The Appeal Decision In “World Sport Group Pte Ltd v Dorsey James Michael”.

11 February, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

 

Introduction


In the case of World Sport Group Pte Ltd v Dorsey James Michael [2013] 3 SLR 180, the Singapore High Court had ordered a local blogger to reveal the names of sources of information which he had posted in articles on his football related blogsite. These articles referred to a report which exposed certain alleged corrupt practices and deals negotiated at the Asian Football Confederation (“AFC”) during the presidency of Mohammed Bin Hammam. It had been earlier suggested that any appeal on that decision would involve a consideration of the balance to be struck by the Singapore court between protection of confidential information and the public interest in exposing corruption.


The Court of Appeal has now overturned the High Court’s decision, and while making clear that it was not determining any allegations of corruption in the circumstances before it, stated that “[i]t would be grotesque for a party implicated in corrupt activities to assert that the courts ought to defer to contractual arrangements importing confidence if those arrangements are infected by sordid criminality”.


The decision of the Court of Appeal places a public interest test at the centre of future decisions involving similar factual circumstances. The Court also took a welcome opportunity to clarify the law on the use of pre-action discovery and interrogatories in Singapore.


The Decision In The High Court


To recap, World Sport Group (“WSG”) – a Singapore based sports marketing and event management company – had filed an application in the High Court for pre-trial interrogatories against Mr James Michael Dorsey, a Senior Fellow at Nanyang Technological University’s S Rajaratnam School of International Studies. The application requested firstly, that Mr Dorsey provide the names and addresses of persons whom he had described on his “mideastsoccer” blogsite as “sources close to the AFC”, and the nature of such persons’ relationship with the AFC; and secondly, that Mr Dorsey confirm whether these persons had provided him with copies of any agreements between WSG and AFC, and the circumstances under which this had occurred. For more details of the case, please refer to our Client Update of April 2013.


In granting the application, Justice Judith Prakash adopted the principles set out in the English case of Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 122 (“Norwich Pharmacal”), and found on the facts that the comments contained in the articles were prima facie defamatory of WSG. The Court also held that there was a possible claim for breach of confidence against the “sources close to the AFC”, and that given the need to encourage persons bound by obligations of confidentiality to abide by the same, it would not be right for the court to protect against such breaches. Accordingly, Mr Dorsey was ordered to reveal his sources.


It was observed in our Client Update of April 2013 that the High Court leaned heavily in favour of upholding a duty of confidentiality rather than the potential public interest in the disclosure of wrongdoing, and that such an approach by the courts could have the undesirable effect of exposing whistleblowers and allowing wrongdoings to go unexposed. In overturning the High Court, the Court of Appeal has now swung the pendulum the other way to ensure that the public interest in exposing potential wrongdoing is an important factor which must be taken into account in deciding whether or not to order pre-trial interrogatories.


The Court Of Appeal Decision


Factors To Consider In The Grant Of Pre-Action Interrogatories


In delivering the judgment of the Court Appeal, Justice of Appeal VK Rajah noted that the pre-action interrogatory procedure is a unique procedural tool for the discovery of facts and evidence that is peculiar to Singapore. While pre-action discovery is commonplace in many common law jurisdictions, pre-action interrogatories were introduced in Singapore in 1993 vide Order 26A of the Rules of Court, and then extended in 1999 to apply to non- parties to proceedings. Order 26A was intended to codify the discovery order made in the Norwich Pharmacal case. JA Rajah also observed that there has hitherto been little guidance in the case law on the kinds of situations which would warrant pre-action interrogatories. The Court of Appeal therefore took the opportunity in this case to consider the relevant case law and to distil the factors which the court should consider before granting pre- action interrogatory orders. These factors are as follows:

 

1) Facilitation Of Wrongdoing


The person possessing the information must have been involved in the wrongdoing. This presupposes some degree of actual involvement, even if the involvement is completely innocent. However, the person with the information need not have caused the wrongdoing or have knowledge of it, so long as they have featured in the facilitation.


2) Requirement Of “real interest” In Ascertaining A “source”


In British Steel Corp v Granada Television Ltd [1980] 3WLR 774 (“British Steel”), it was declared by Lord Wilberforce that in compelling the disclosure of sources, “it is only exceptionally that the aggrieved person would have and could demonstrate a real interest in suing the source”. In that case, British Steel Corp successfully commenced an action against Granada Television for the disclosure of the name of the British Steel employee who passed confidential information to the television company. British Steel had already obtained a partial return of documents from Granada, and was intending to pursue a claim against the unidentified employee who leaked the documents. The House of Lords stated:


“… To succeed in proceedings aimed at compelling disclosure, the plaintiff will always have to satisfy the court that he has a real grievance, even after suing the newspaper, which, in the interest of justice, he ought to be allowed to pursue, and that this ought, in the particular case to outweigh whatever public interest there may be in preserving the confidence. It is possible that, if the plaintiff succeeds here, fewer “leaks” will occur, though that must be speculation. But I do not think that judicially we are able to place a value on this. “Leaks” may vary all the way from mere gossip or scandal to matters of national or international importance. A general proposition that leaks should be encouraged, or at least not discouraged, cannot be made without weighing the detriments in loss of mutual confidence and cooperation which they involve. The public interest involved in individual leaks can be taken account of and weighed by the court in deciding whether to grant the remedy in a particular case.”


This same passage was cited by Justice Prakash in her decision, but the learned Judge took the view that on the facts before her, the free flow of information would not be adversely affected by granting the orders sought, while the obligations of confidentiality should be protected by the law. The Court of Appeal disagreed however, and suggested that the following factors may be relevant in the assessment of where the balance lies:

 

a) the public interest in allowing the applicants to vindicate their legal rights;

b) the strength of a possible cause of action contemplated by the applicant;

c) whether the granting of the order is a “necessary and proportionate response in

all circumstances”;

d) whether the information could be obtained from another source; e) the degree of confidentiality of the information sought; and

f) whether the granting of the order will deter similar wrongdoing.

With regard to the question of how clear or obvious it must be that the ‘source’ itself has committed some wrong, the court determined that it is not necessary for the claimant to establish that a wrong had in fact been committed, as long as there is some reasonable basis or a good arguable case that some wrongdoing has taken place.


3) Necessary, Just And Convenient


A critical requirement for obtaining a pre-action interrogatory is that the claimant must show that the disclosure sought is necessary to enable him to take action, or at least that it is just and convenient in the interests of justice to make the order sought. In other words, the information must be shown to be necessary for the purposes of the claimant asserting his legal rights. The procedure should not be “overstretched to allow claimants to sniff around for potential causes of action which are still at an amorphous, undefined stage”.


The Court of Appeal also made it clear that the procedure cannot be used for “collateral reasons”. The clearer the cause of action put before the court, the easier it will be to determine the relevance and necessity of the pre-action interrogatories to the proceedings.


The court also listed other facets of necessity which should be taken into consideration, such as proportionality, the availability of alternative avenues to obtain the information, and the degree of intrusiveness of the interrogatories sought. Significantly, if the claimant already has a complete cause of action against the identified party, then the orders “should not be made with alacrity, as pre-action disclosure is not then necessary.


Finally, the court made it clear that pre-action discovery or interrogatories is not the norm, and a court should not make the order if it has not been provided with sufficient information to adequately assess the necessity of the disclosure. Reasons must be given as to why it is neither convenient nor just for information to be sought after proceedings have commenced against an already identifiable party.

 

Reasons Against The Granting Of WSG’s Application


Having regard to the circumstances of the case, the Court of Appeal concluded that the information sought by WSG was simply not necessary for the following reasons:


a) the claims set out by WSG against the “sources close to AFC” were unclear;

b) the information which Dorsey published on his blog was already in the public domain;

c) if it was WSG’s intention to claim that their reputation had been damaged by the articles on the blog, the correct cause of action then was to sue Dorsey for defamation. Yet, WSG had inexplicably chosen not to pursue this claim;

d) WSG had also failed to explain why, despite the information being leaked to many other media outlets, Dorsey alone was the subject of their legal action;

e) while not going as far as to suggest that the only reason for seeking the interrogatories was to flush out and punish the sources, the Court of Appeal failed to be persuaded by WSG of any necessity to grant the information for their potential proceedings against Dorsey; and

f) there was uncertainty as to whether the wrongdoing of the sources had even occurred in Singapore, as there was no evidence to suggest that this was indeed the case.


Exposure Of Corruption


In concluding, the Court of Appeal took pains to emphasise that the public interest in exposing corruption should weigh heavily when considering if the interests of confidentiality ought to be upheld in the circumstances of the case. Justice Prakash found, on balance, that there was no public interest which weighed against the fact that the “sources close to the AFC” had prima facie breached their duties of confidentiality. In granting the orders, the learned judge held that it would not be correct to protect such breaches and that the source would be able to defend its actions once its identity was known. The Court of Appeal firmly disagreed with this approach.


“We think it would be fanciful to argue against the proposition that the exposure of flagrant corruption (as in the present case where allegations of such a nature were made) is in the public interest anywhere. Serious wrongdoing of such a nature should be laid bare in the public interest.”


Public interest was not limited to government or other public bodies, as the court specifically recognised that sports governing bodies were also subject to public scrutiny:

 

“While senior officials in international organisations, such as sports bodies may not be public officials in the traditional sense of the that term, similar public interest considerations of accountability equally apply in ferreting out, exposing and publishing wrong doing by them. These individuals have critical decision making roles which have profound implications across borders that impact many facets of public and private activities in the political, commercial and social spheres. Corruption anywhere raises serious concerns as it inevitable undermines good governance. If occurring in international organisations, it would not only undermine good governance but also distort international competitiveness and subvert fair play. Certainly, corrupt practices in international football organisations ought not to be permitted to be spuriously cloaked by arid claims of confidentiality. It would be grotesque for a party implicated in corrupt activities to assert that the courts ought to defer to contractual arrangements importing confidence if those very arrangements are infected by sordid criminality. To adapt a well-known dictum, sunlight is the best disinfectant for corruption.”


The Court found that the fact that assertions of corrupt practice were made by a reputable professional services entity (PWC) in the Report meant that the “iniquity rule” exception should apply. This exception was referred to in the British Steel case and allows for the court to decide whether the confidential information discloses such iniquity as to justify publication. If it finds that it does, then the court would be justified in allowing the identity of the source to remain protected.


Concluding Words


The decision by the Court of Appeal is a welcome clarification to the law relating to pre- action interrogatories and discovery. It firmly establishes the “iniquity rule” in Singapore law, and endorses the view that the public interest in the exposure of possible corruption ought to outweigh any contractual obligations of confidentiality. It is also a clear indication to sports governing bodies that while they may not have the same duties as public bodies, they have a responsibility to uphold the same levels of governance and be subject to the same standards of accountability in order to ensure that any corrupt practices are exposed and stamped out.


Rajah & Tann

 

For further information, please contact:

 

Lau Kok Keng, Partner, Rajah & Tann

kok.keng.lau@rajahtann.com


Nicholas Lauw, Partner, Rajah & Tann

nicholas.lauw@rajahtann.com

 

Darren King, Rajah & Tann

darren.king@rajahtann.com

 

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