A three-member bench, chaired by Tengku Maimun Tuan Mat, also ordered that the fresh trial be conducted before a new High Cout judge.
A case management would be held on March 6.
Tengku Maimun said Justice Hue Siew Kheng was wrong in striking out Hasan’s defence on Dec 16, 2016 over a mistake.
“There was no wilful misconduct by the appellant in following instructions. Therefore, we allow the appeal and set aside the striking out of the defence,” she said in ruling in favour of Hasan.
As a result, Tengku Maimun said the finding of liability and award of damages were also quashed.
On Jan 27, last year, Hue had ordered Hasan to pay RM200,000 in damages for allegedly defaming Khalid in 2012 and another RM35,000 in costs.
Hue said Khalid had proved his case against Hasan on the balance of probabilities.
“Religion is a highly sensitive issue and to accuse someone of being anti-Islam or a traitor to the religion carries extremely dire consequences for the victim,” Hue had said.
The judge said Hasan’s baseless allegation had exposed Khalid to public odium and as a result had lowered his reputation in the eyes of the public.
The issue, dating back to 2012, pertained to sale of liquor, gaming centres and massage parlours in Selangor.
Hasan did not make any submission when his counsel withdrew after the politician was disallowed from filing his defence.
The former PAS member had also not been able to engage a new counsel.
Lawyer Hasnal Rezua Merican, representing Hasan, today said the trial judge had misdirected herself in stopping his client from filing his defence.
“She gave him (Hasan) an order to file the witness list but later took exception as the witness statement was not filed on time,” he said.
On Jan 3, Khalid’s three witnesses, including himself, ended their testimonies by reading out their witness statements while Hasan chose not to testify.
In 2015, Khalid, who is now Amanah communications chief, filed the lawsuit alleging that Hasan had made disparaging remarks against him in a speech at Dewan Rukun Tetangga in Shah Alam.
Hasan accused Khalid of encouraging the sale of liquor and the mushrooming of massage parlours, and that the people should not vote for him in the 13th general election.
Khalid claimed a video containing the speech was edited and uploaded on YouTube, to be freely accessed by the masses.
Khalid, who was then a member of PAS’ central committee, alleged that Hasan’s remarks were baseless, false and maliciously intended to tarnish his reputation, image and good name.