By CHEW XIANG

The High Court yesterday dismissed a defamation lawsuit taken by ex-remisier king Peter Lim against the current owners of Raffles Town Club.

In a 113-page judgement, Justice Chan Seng Onn ruled that the defendants, Lin Jian Wei and Margaret Tung, had defamed Mr Lim and had been 'economical with the truth', but found that insufficient to dent their defence of qualified privilege.

But he ticked off the two for 'unabashedly and systematically' bleeding the company dry since they took control in 2001. They had declared $55.1 million in dividends to themselves, plus a further $70 million to two former directors, who had sold them ownership of the club, effectively procuring the shares for free, Justice Chan said.

Moreover, the club had paid out $7.7 million for consultancy services, but did not provide any evidence that it was a genuine arms-length transaction. It had also paid $8.75 million for two antique Qilin figurines, which were later sold to Ms Tung at 35 per cent of the cost. These 'questionable transactions' helped to deplete most of the club's assets, which had amounted to $206 million in 2001.

By 2005, this had dwindled to the extent that the club could not pay damages it owed to club members after it lost a lawsuit for recruiting too many members. It offered instead a scheme of payment involving a mix of cash and vouchers.

In an explanatory statement accompanying the scheme sent out late in 2005, Mr Lin and Ms Tung suggested that the club's financial difficulties were due to mismanagement by the original directors and management, one of whom was Mr Lim.

The statement revealed that dividends totalling $124 million had been paid out 'since its inception' but did not disclose that a large chunk of money had been paid out to Mr Lin and Ms Tung.

Mr Lim then sued the two, saying that they had made it seem as if he was to blame for the company's dire financial straits.

Yesterday, Justice Chan agreed with the plaintiff's lawyers that Mr Lim had been defamed, as the defendants had deflected blame to former directors and Mr Lim so that members would not be angered to vote against the scheme.

'If the (statement) were to set out the defendants' full involvement, there could be a fiasco,' Justice Chan said. 'It seems to me that the defendants were bent on draining out as much of the available current assets in the (club) as they could.'

However, the judge found that the purpose of the explanatory statement was not to defame Mr Lim. 'I find that the predominant motive in their conduct was to ensure the success of the scheme and not so much as to injure the reputation (of Mr Lim),' he said. There was no express malice and they 'had no reason to be spiteful or vindictive' to him, the judge said, and ruled that their defence of qualified privilege applied.

Mr Lim said yesterday: 'I've cleared my name. The judge agreed that when I left RTC, it had more than $200 million for the members' benefit, but afterwards Tung and Lin asset stripped RTC, deceived members and blamed me.'

The club has separately sued Mr Lim, as well as other former shareholders Dennis Foo, Lawrence Ang and William Tan, for breaching their fiduciary duties to the club, misapplying the club's property and conspiring in relation to the launch of the club when they were still club shareholders and directors.

This article was first published in The Business Times on February 11, 2009.