Date: 19990209 Docket: CA 145621
NOVA SCOTIA COURT OF APPEAL
Cite as: Nova Scotia (Attorney General) v. Hiltz and Seamone Company,
1999 NSCA 22
Freeman, Hart and Pugsley, JJ.A.
BETWEEN:
ATTORNEY GENERAL OF NOVA ) David Coles and Alison Scott
SCOTIA and SHARON VERVAET ) for Ms. Vervaet
Appellants )
) Alexander Cameron ) and Jennifer MacLellan ) for Attorney General of Nova Scotia
)
- and - )
)
) George W. MacDonald, Q.C.
) and Aidon Meade ) for the Respondent
)
HILTZ and SEAMONE COMPANY )
LIMITED )
Respondent )
)
) Appeal Heard:
) November 13, 1998
)
) Judgment Delivered:
) February 09, 1999
)
)
)
THE COURT: The appeal is allowed with respect to the issue of pre-judgment interest. The appeal, with respect to all other issues, is dismissed. The cross-appeal is also dismissed, per reasons for judgment of Pugsley, J.A.; Hart and Freeman, JJ.A., concurring.
PUGSLEY, J.A.:
The Attorney General of Nova Scotia, acting through the Department of Environment (DOE), and Sharon Vervaet, an employee of DOE, appeal from the judgment of Stewart, J. of the Supreme Court of Nova Scotia, sitting without a jury, allowing an action for libel instituted by the respondent Hiltz & Seamone Limited (H&S).
Justice Stewart fixed general damages at Two Hundred Thousand Dollars ($200,000) awarded "as against both" appellants. The Attorney General was also ordered to pay punitive damages of One Hundred Thousand Dollars ($100,000).
The action arose out of a letter of May 28th, 1993, signed by Ms. Vervaet, (the Letter) and directed to James Inch, a consulting engineer of Sydney, with copies to other individuals.
Justice Stewart concluded the Letter defamed H&S, and was published on four occasions, each of which were adjudged to be privileged occasions.
Justice Stewart, however, rejected the defences of qualified privilege, fair comment, and justification:
- the defence of qualified privilege was not available to the appellants as both Ms. Vervaet and DOE, through the actions of its manager Bruce Pettipas, knew the information in the Letter was not reasonably appropriate to the legitimate purpose of the occasion. In addition, Ms. Vervaet and Mr. Pettipas were found to have acted with malice in publishing the Letter;
- the defence of fair comment was not available to the appellants, as the statements complained in the Letter were statements of fact, and, in addition, were made with malice;
- the appellants failed to adduce evidence to justify any of the defamatory statements in the Letter.
I would summarize the grounds of appeal as alleging the following errors by the trial judge:
- she failed to dismiss the action at the close of the respondent's case, or alternatively, failed to dismiss the action after all the evidence was concluded, on the basis of one, or more, of the defences raised;
- she made erroneous decisions respecting procedure and evidence during the course of the trial;
- she awarded damages in an excessive amount, and erred in awarding punitive damages and pre-judgment interest.
H&S has filed a cross-appeal, submitting Justice Stewart erred in failing to award aggravated damages.
This Court is also asked to increase damages as a result of the appellants’ reliance, throughout this appeal, on the defence of justification.
Factual Background:
H&S commenced operations in 1959 in the Town of Kentville. The firm specialized in waste water treatment and acted as municipal engineers for many towns and villages in the Annapolis Valley. It designed most of the lagoon type of sewage treatment plants (STP) in the Province.
In 1974, the firm designed an STP for the County of Annapolis to serve approximately 200 private homes in the Nictaux area. Raw sewage was collected through a series of pipes from each residence and transmitted to a nearby lagoon, where it was treated in two large ponds, or cells. After treatment, it was discharged into the Nictaux River.
As a result of the growth of the community in the 1980's, the County determined to add a third cell to handle sewage from an additional 220 additional homes. At about that time, DOE instituted a policy requiring any Municipality seeking funding from the Province to forward a pre-design report for review by DOE.
The County retained H&S to provide the design for the expanded STP. Alexander Dewar, a senior partner of H&S, prepared the specifications and drawings. Prior to joining the firm as a senior civil engineer in 1990, he had worked as a contractor for the construction of a sewage treatment plant near the Town of Amherst. That STP had been designed by the Halifax consulting firm of Porter Dillon, a firm, according to the evidence, with a reputation for competence. Mr. Dewar used the specifications from the Amherst STP as the basis for the specifications for the expansion of the Nictaux STP.
The Municipality, employing the H&S design, then applied to DOE, and the Nova Scotia Department of Health (DOH), for a Joint Certificate of Approval (JCA).
A JCA was required prior to construction, or operation, of any sewage system in the Province.
The plans and specifications were reviewed, and approved, by Ron Giffin (of DOE) and Bob Rowe (of DOH), both professional engineers. Acting on their recommendation, the Province issued the JCA in July of 1991. Construction of the Nictaux STP was completed in the summer of 1992.
Ms. Vervaet, a professional engineer, joined the Municipal Waste Recovery Department of DOE in June of 1992. Her geographical area of responsibility included the Annapolis Valley. She reported directly to Bruce Pettipas, the manager of the Department. Mr. Pettipas was not an engineer nor did he have any experience in the design or construction of STPs.
Later, in the month of June, Ms. Vervaet made a tour of the various sewage treatment facilities in her area. In reviewing the Nictaux STP, she was critical of the work of H&S and concluded that she would not have issued the JCA for the Nictaux expansion.
As a result of concerns from local residents, the Municipality hired Whitman Benn, a firm of engineering consultants, in December 1992, "to determine if the Nictaux STP expansion was properly designed and constructed". James Inch of that firm prepared the terms of reference for the review.
On May 10th, 1993, Mr. Inch met with the County’s Public Works Committee to present his draft report. He was directed to share the draft with DOE for comments prior to the completion of his final report.
He, accordingly, delivered a copy of his draft report to Mr. Pettipas and Ms. Vervaet on May 11th. Ms. Vervaet forwarded an outline of her comments to Mr. Pettipas for his subsequent review. On May 28th, 1993, Mr. Pettipas, after a second meeting with Mr. Inch, instructed Ms. Vervaet to add some additional remarks to her review of the Inch draft report. She incorporated his directions. The Letter, signed by Ms. Vervaet, was sent out later that day to Inch. Copies were forwarded to Mr. Rowe (DOH), David Darrow, Executive Director of the Department of Municipal Affairs, P. Mitchell, Director of Professional Practice of the Association of Professional Engineers of Nova Scotia (APENS), as well as two members of DOE:
The critical parts of the Letter read as follows:
Department of Environment
P. O. Box 2107
Halifax, Nova Scotia
B3J 3B7
Our File No:12-91-0057
May 28, 1993
Whitman Benn Campbell
350 Charlotte Street
Sydney, Nova Scotia
B1P 1C8
Attention: Mr. James R. Inch, P. Eng.
Senior Vice President, General Manager
Dear Mr. Inch:
Re: Nictaux Sewage Treatment Plant
The Department has reviewed your April 1993, report prepared by the Municipality of Annapolis concerning the evaluation of the above mentioned facility. The following paragraphs summarize our comments and concerns. We recognize that many of our concerns may not have been included in the terms of reference of your study, but we have supplied them to provide both you and the Municipality a clearer global picture of events, roles and responsibilities.
GENERAL COMMENTS
The provisions of tertiary treatment was not a provincial requirement for the Nictaux Sewage Treatment Plant Expansion. Tertiary treatment is used primarily to provide for nutrient removal in cases where eutrophication is a concern. In this case, the consultant decided to use tertiary treatment to reduce the suspended solids concentrations on the effluent so that ultraviolet disinfection could be used and not to meet provincial effluent requirements. It was the conscious decision of the consultant to use ultraviolet disinfection technology which made the use of some form of tertiary treatment necessary (see attached minutes of June 26, 1990 meeting). The consultant could have satisfied the 30/30 effluent discharge requirement and disinfection requirement without the tertiary filter or ultraviolet units.
- 2 -
Six tasks were not included in the Whitman Benn examination which are essential if the Municipality is to have a clear picture of respective roles, responsibilities and liabilities concerning the project.
* Review of the pre-February Design Briefs
The original Design Brief had a host of both major and minor design flaws. Please refer to memorandum dated August 31, 1990 from Mr. Clive Oldrieve, P. Eng. to Mr. Doug Seamone, P. Eng. (attached).
* Review of the comprehensive lists of stipulations attached to the Joint Certificate of Approval Application
Typically, a permit will not contain a detailed list of design/construction requirements which are considered industry standards. These requirements were placed on this permit (#91-56) for one of two reasons:
(1) the necessary level of detail was not provided in the consultant's predesign report, plans or specifications, and
(2) our concern as to whether the consultant understood the importance of the individual requirements.
NOTE: If the regulatory agencies had not identified the major and minor deficiencies in the original Design Report and required their correction, the number of deficiencies in the final plans and specifications would have been considerable.
* The letter of certification
The consultant has certified that the project was completed in accordance with approved plans and specifications. This has not been the case (i.e. installation of the flow monitoring equipment, lagoon outside slopes, and location of components such as the outfall).
* Compliance with permit stipulations
The consultant has not complied with a number of the permit stipulations (i.e. prior approval of the flow equipment, and construction of buildings around the disinfection unit and the tertiary drum filter chamber without applying for an amendment to the permit).
- 3 -
* Tertiary drum filter blinding
The consultant was notified of our concern with regards the use of fabric filters on lagoon effluent (i.e. blinding of filter). The consultant reported visiting Europe and having viewed successful applications of the filter on similar facilities. The consultant was aware that if the fabric filters/ultraviolet disinfection units did not meet performance requirements, they must be replaced with alternate technology.
* Similar pattern of activity on other projects
The lack of adequate technical detail in Design Briefs, plans and specifications for Nictaux is typical of the lack of technical detail the Department has identified on other projects handled by this consultant (i.e. Berwick, Waterville, and Lawrencetown).
NOTE: Perhaps this is something best handled by APENS; however, with respect to other recent projects commenced or completed by the consultant for the Municipality this point should be noted (i.e. Granville Ferry Chlorination Building).
Inch forwarded his report with the Letter annexed to the Municipality. The Municipality made the Inch report and the Letter available to the public. The report and Letter were subsequently placed in DOE’s library where both were made available to the general public.
The business of H&S has declined since the publication of the Letter.
H&S commenced action on March 15th, 1994, claiming special and general damages, exemplary and punitive damages, pre-judgment interest and costs.
Section 10 of the Statement of Claim provided:
10. The Plaintiff says that the Letter refers to, and was understood to refer to, or was capable of referring to the Plaintiff, and the Letter’s words and their natural and ordinary meaning meant and were understood to mean that the Plaintiff lacked professional competence, failed to comply with contract and regulatory requirements, was negligent and made untrue statements. In the alternative, the Plaintiff says that by way of innuendo, the words “something best handled by APENS” in the Letter were meant to, and were understood to, mean that the Plaintiff lacked professional competence or was negligent. The words “The consultant has certified that the project was completed in accordance with approved plans and specifications. This has not been the case” in the Letter were meant to and were understood to mean that the Plaintiff was dishonest or negligent.
In the fall of 1996, DOE, approved the demolition of the three cell lagoon at the Nictaux STP to be replaced by a sewage treatment facility using a different type of treatment technique.
At the opening of the trial on November 4, 1996, H&S was granted an amendment to add a claim for aggravated damages. It arose out of comments in a letter of April 1st, 1996, from David Darrow, to the County of Annapolis.
Paragraph 13 of the Amended Statement of Claim sets out the additional complaint arising from the letter of April 1st:
The Plaintiff says that the Defendant, the Attorney General of Nova Scotia, operating through DMA continued and aggravated the harm caused by the publication of the defamatory Letter when it wrote the Municipality of Annapolis County stating that:
(1) a considerable body of evidence exists which indicates that the upgrading work carried out at the Nictaux Sewage Treatment was substandard;
(2) the chances of recovering costs from the project consultant and/or the construction contractor, through appropriate legal action, appear to be reasonably good;
(3) to proceed with further capital improvements to the treatment facility without pursuing costs recovery from the consultant and contractor would be fiscally irresponsible;
(4) any further commitment of senior government funding towards the proposed upgrade of the Nictaux Sewage Treatment Plant under the Canada/Nova Scotia Infrastructure Works Program will carry with it the condition that, (1) the Municipality agreed to pursue, to the fullest extent of the law, recovery of costs from the previous consultant and contractor and, that, (2) the net proceeds from such legal action will be used to offset the cost of the proposed upgrade; and
(5) the Province of Nova Scotia is not in a position to assist financially with the cost of legal action.
Counsel for H&S closed their case after the viva voce evidence of Mr. Dewar, and after tendering portions of the oral examination on discovery of Ms. Vervaet and Mr. Pettipas.
A motion for non-suit on behalf of the appellants was then made.
It was dismissed by the trial judge.
Eight witnesses, including Ms. Vervaet, were called on behalf of the appellants. Mr. Pettipas, Mr. Inch, Mr. Giffin, and Mr. Rowe were not called to give evidence. Four witnesses, including Mr. Dewar, were called in rebuttal.
Analysis:
A trial judge is in a privileged position respecting all conclusions arising from fact, and in particular, on issues of credibility. This Court should be reluctant to interfere with the conclusions of fact, even if we take a different view of the evidence. (See the comments of Hallett, J.A., on behalf of the Court in MacPhail et al. v. Desrosiers et al. (1998), N.S.J. No. 353, September 10, 1998.)
In this case, Justice Stewart has reached critical conclusions, expressed in forceful language, that Ms. Vervaet and Mr. Pettipas acted with malice in the “drafting, execution, and distribution” of the Letter. She found both individuals acted with reckless disregard for the truth, and in the case of Mr. Pettipas, concluded he “deliberately lied” respecting some of the comments included in the Letter.
These findings were reached, notwithstanding the contention by counsel for Ms. Vervaet, that she was
. . .honestly and sincerely motivated throughout and there is no evidence to indicate any improper motivation in making the statements. She was a forthright and competent young woman who identified problems and responded to them, made decisions and followed through with them. She was an employee prepared to do her job and not shirk responsibility.
The trial judge rejected this submission. She did so after reviewing “all the circumstances under which the statements were made by the defendants, including their conduct and demeanour”.
The review, outlined in the course of a written decision of approximately 68 pages, was thorough, and cogent.
In the case of Ms. Vervaet the review was, as noted, based, in part, on her demeanour. In these circumstances, the burden on the appellant to convince this Court to overturn Justice Stewart's conclusion is, indeed, a heavy one.
It was described by Lord Kingsdown in these words:
They, who require this Board, under such circumstances, to reverse a decision of the Court below, upon a point of this description, undertake a task of great and almost insuperable difficulty . . . We must, in order to reverse, not merely entertain doubts whether the decision below is right, but be convinced that it is wrong. [The Julia (1860) 14 Moo. P.C. 210, 235]
Justice Stewart was required to reach her conclusion respecting Mr. Pettipas on a somewhat different basis. She was denied the opportunity to assess his demeanour. Her negative assessment of him was, to a significant degree, based on answers he gave on pre-trial discovery first employed by H&S counsel in the cross-examination of Ms. Vervaet, and, subsequently, introduced as part of H&S’s evidence in rebuttal. This evidence convinced the trial judge that Mr. Pettipas had “deliberately lied” when he crafted the language he directed Ms. Vervaet to include in the Letter. As the trial judge’s conclusion was not based on her observation of Mr. Pettipas, it is important to consider her review of his actions, and his words, to determine whether her conclusions are supported in the evidence.
It is relevant to bear in mind that, in addition to Mr. Pettipas, three other witnesses, who one might reasonably conclude would have provided important evidence for the appellant on significant issues, were not called at trial.
I refer to:
- Mr. Inch, recipient of instructions from the County concerning the nature and extent of the review of his report to be conducted by DOE;
- Mr. Giffin of DOE, and Mr. Rowe of DOH, who recommended the Province should issue a JCA based upon the design prepared by H&S.
All of these individuals, but for Inch, were employed by the Province.
The failure of the appellants to adduce evidence from these four individuals, in the absence of any explanation, left the trial judge in a position where she could interpret the record on these issues in a manner adverse to the appellants. (On this issue see H. W. Liebig Co. v. Leading Investments Ltd., [1986] 1 S.C.R. 70, per Estey, J., with whom McIntyre and Chouinard, JJ. concurred, dissenting, at 98.)
With these general comments in mind, I will now proceed to review the specific errors alleged by the appellants.
The Non-Suit:
The appellants made a motion, pursuant to Civil Procedure Rule 30.08, for non-suit at the close of the case for H&S.
The Rule provides:
At the close of the plaintiff’s case, the defendant may, without being called upon to elect whether he will call evidence, move for dismissal of the proceeding on the ground that upon the facts and the law no case has been made out.
The question as to whether the plaintiff has established a prima facie case is a question of law and, as such, is reviewable by this Court (Herman v. Woodworth (1998), 166 N.S.R. (2d) 174).
The authors of The Law of Evidence in Canada (Sopinka, Lederman & Bryant, Butterworth’s, 1992) write at p. 130:
If a plaintiff fails to lead any material evidence, the plaintiff may be faced with a defendant’s non-suit motion at the close of his or her case. If such a motion is launched, it is the trial judge’s function to determine whether any facts have been established by the plaintiff from which liability, if it is in issue, may be inferred. [emphasis added]
And at p. 131:
The judge is not ruling upon whether he or she is satisfied to a balance of probabilities or upon the believability of the evidence since these issues are questions for the trier of fact. If the plaintiff has failed to adduce any evidence in his or her case in chief and the defendant brings a successful non-suit motion, then the plaintiff’s action will be dismissed. [emphasis added]
Justice Stewart, in dismissing the non-suit motion, said in part:
In order to maintain an action for defamation, it is essential that the plaintiff prove the words complained of refer to the plaintiff and not someone else, the words complained of were published or communicated by the defendant to a third party, and that the words complained of were defamatory of the plaintiff ....
She concluded that H&S had satisfied the evidentiary burden on the three issues and that there was:
. . . enough, in my opinion, to satisfy the test of sufficiency of any evidence to go to the jury
...
I remind myself the motion before me is a non-suit motion, whether there is any evidence left uncontradicted to satisfy a reasonable person.
These reasons, based on the evidence introduced prior to the motion for non-suit, were sufficient to dispose of the motion.
The appellants, however, direct our attention to Professor Brown’s, The Law of Defamation in Canada, 2nd Edition, Volume 3, page 22-6, and the following comment:
If the plaintiff in his or her case in chief submits evidence that establishes a qualified privilege on the part of the defendant, he or she must introduce evidence of actual or express malice, otherwise the action may be subject to a non-suit. (Citing Cribbs v. Montgomery Ward & Co., 272 Pacific Reporter 2d series, 978 (1954)).
The appellants had apparently requested Justice Stewart on the non-suit motion to find that a qualified privilege existed with respect to publication to Mr. Inch, as well as to APENS. Without making any determination that qualified privilege had been established, Justice Stewart went on to say that “assuming there is a privileged occasion”, it can be defeated " if the dominant motive for publishing is actual, or express malice, or if the limits of the duty have been exceeded." (emphasis added).
Justice Stewart referred to the third sentence in the first paragraph of the Letter ("We recognize that many of our concerns may not have been included in the terms of reference of your study, but we have supplied them to provide both you and the Municipality a clearer global picture of events, roles and responsibilities.") and concluded:
Without commenting on whether or not a response of malice by the plaintiff is before me, I am, however, satisfied there is some evidence addressing the communication of information by Ms. Vervaet and Mr. Inch which was not reasonably appropriate to the legitimate purpose of the occasion. (emphasis added)
The appellants seize on the use of the phrase "some evidence" and submit that the test in law is not whether there is "some evidence", but rather whether there is sufficient evidence, assuming no further evidence is to be adduced, upon which the trier of fact may decide in favour of the plaintiff, if the evidence is believed."
I reject the appellants' submission on this issue for the following reasons:
- The evidence of Mr. Dewar, as well as the discovery evidence of Ms. Vervaet and Mr. Pettipas, introduced by H&S, did not establish that the publication of the Letter occurred on occasions of qualified privilege. This should be contrasted with the fact situation in Cribbs. In that case, in order to establish the publication of the defamation, the evidence of the only witness called on behalf of Ms. Cribbs necessarily included evidence respecting the occasion on which the defamatory words were expressed.
- On the non-suit motion, Justice Stewart had not made a determination that qualified privilege existed. She said only that "assuming there was a privileged occasion" it was defeated because the limits of the duty had been exceeded when the appellants included the third sentence in the first paragraph of the Letter. The inclusion of that sentence in the Letter was sufficient, in my opinion, to establish that the limits of the occasion had been exceeded. The third sentence not only constituted "some evidence", it satisfied the test of some evidence which, if believed, would allow a finding for the respondent.
In conclusion, on this issue, Justice Stewart was correct in dismissing the non-suit motion as H&S had met the evidentiary burden on the three critical issues.
Qualified Privilege:
Justice Stewart determined, after all the evidence had been concluded, that DOE, as a governmental regulatory and funding agency, and Vervaet as an employee of DOE, were charged with an obligation to oversee the protection of the environment and were, therefore, under a duty to communicate the Letter to Inch, the Municipality and the public. These recipients had a duty to receive the Letter. Justice Stewart also determined there was a duty on Ms. Vervaet to convey the Letter to APENS, arising from a provision in the Code of Ethics adopted by the Professional Engineers in this Province which required a member of the Association to "advise the Discipline Committee of any practice by another member of his profession which he believes to be contrary to this Code of Ethics." APENS had a corresponding duty to receive the Letter.
The publications, therefore, took place on occasions of conditional, or qualified, privilege.
This conclusion is not contested by H&S.
The trial judge noted that qualified privilege may be defeated in two ways. She relied upon Justice Cory’s comments, on behalf of the Court, in Botiuk v. Toronto Free Press Publications Ltd., [1995] 3 S.C.R. 1, at p. 29:
Where an occasion is shown to be privileged, the bona fides of the defendant is presumed and the defendant is free to publish remarks which may be defamatory and untrue about the plaintiff. However, the privilege is not absolute. It may be defeated in two ways.The first arises if the dominant motive for publishing is actual or express malice.Malice is commonly understood as ill will towards someone, but also relates to any indirect motive which conflicts with the sense of duty created by the occasion. Malice may be established by showing that the defendant either knew that he was not telling the truth, or was reckless in that regard.
Second, qualified privilege may be defeated if the limits of the duty or interest have been exceeded.
In the course of concluding that the appellants' privilege was defeated in both of these ways, Justice Stewart said, in part:
I accept Inch’s mandate was clear. It was not, and had not become, an all- encompassing investigation, without restrictions, on him or on the DOE in responding to his draft report, in any form of capacity, i.e., information provider, consultant, criticizer, adviser, etc. In publishing the Letter, the defendants, DOE and Vervaet both knew the information was not reasonably appropriate to the legitimate purpose of the occasion.
The appellants submit the trial judge erred when she failed to consider that there was a compelling public interest “in uninhibited communications” between the Municipality and DOE, and that all the statements in the Letter were relevant to the regulatory concerns of the Department.
Support for this position, it is submitted, is to be found in the evidence of Peter Terauds, who served as councillor from 1992 to 1994 for the district in which the sewage lagoon was located, and since 1994 as warden for the entire County.
Mr. Terauds testified that there was no restrictions placed on Mr. Inch respecting the solicitation of comments from DOE, and further, that all the issues addressed in the Letter were matters of concern to the County.
The problem for the appellants is that the trial judge did not accept this evidence as “an accurate reflection or understanding” of the mandate the Municipality gave Mr. Inch.
Justice Stewart’s finding of fact on this issue is based, in part, on the written proposal approved by the Public Works Committee of the County in December, 1992, which specifically set forth the scope of the consultations to be undertaken by Mr. Inch with DOE.
It provided that Mr. Inch was to:
...obtain opinions with respect to the design of the facility, ever bearing in mind that technical correctness of the design is the goal.
The limitations placed on Mr. Inch’s consultation with the Municipality were obviously conveyed to DOE. According to the evidence of Ms. Vervaet, it was Mr. Pettipas who added the third sentence in paragraph one of the Letter:
We recognize that many of our concerns may not have been included in the Terms of Reference of your study, but we have supplied them to provide both you and the Municipality a clearer global picture of events, roles and responsibilities.
The trial judge noted that Ms. Vervaet accepted the inclusion of these words from Mr. Pettipas without objection.
The conclusion reached by Justice Stewart that the qualified privilege was defeated because the limits of the duty or interest, were exceeded when the Letter was forwarded to Mr. Inch, finds ample support in the evidence.
Justice Stewart went on to determine that the privilege was also defeated because the dominant motive for publishing was actual, or express, malice. This finding is also relevant in considering the defence of fair comment. Justice Stewart concluded that both Mr. Pettipas and Ms. Vervaet:
...during the course of the preparation and various publications of the impugned Letter, acted with malice.
The Defence of Fair Comment
Professor Brown in The Law of Defamation in Canada, 2nd edition, Volume 2, writes at 15-2:
Every one is entitled to comment fairly on matters of public interest. Such comments are protected by a qualified privilege if they are found to be comments and not statements of fact, and are made honestly, and in good faith, about facts which are true on a matter of public interest. ... The protection may be lost if it is shown that the comment was made maliciously, in the sense that it originated from some improper or indirect motive, .... [emphasis added]
The trial judge concluded that the statements expressed in the Letter were expressed as “statements of fact”, but even if considered to be statements of opinion, she determined that they were made:
. . . with malice and are also defamatory, having been made in order to disparage the plaintiff and outside the realm of any reasonable debate on matters of public interest
...
I have reached this conclusion both in respect to the position of DOE and of Vervaet.
A finding of no truth to any of the statements or assertions, in response to the defence of justification, also disposes of the defence of fair comment, since fair comment can stand only upon the foundation of a true statement of the facts upon which the comments are made.
Whether a defendant was actuated by malice is a question of fact. (Gatley on Libel and Slander (9th edition (1998), p. 863).
The issue before us, therefore, is whether there was any evidence from which Justice Stewart could reasonably infer malice on the part of Pettipas, and Ms. Vervaet.
On the second page of the Letter, Ms. Vervaet had written:
Six tasks were not included in the Whitman Benn examination which are essential if the Municipality is to have a clear picture of respective roles, responsibilities and liabilities concerning the project ...
Review of the comprehensive list of stipulations attached to the Joint Certificate of Approval Application. (emphasis added)
Mr. Pettipas then directed Ms. Vervaet to include the following comments:
Typically, a permit will not contain a detailed list of design/construction requirements which are considered industry standards. These requirements were placed on this permit (#91-56) for one of two reasons:
(1) the necessary level of detail was not provided in the consultant’s design report, plans or specifications, and
(2) our concern as to whether the consultant understood the importance of the individual requirements.
The appellants submit that since Mr. Pettipas did not give evidence at trial, Justice Stewart had no opportunity to observe his demeanour and should not have made a negative assessment of his credibility.
It is important to bear in mind, however, that malice in the legal sense means a wrongful act, done intentionally, without just cause or excuse (Bromage v. Prosser, [1825] 107 E.R. 1051 at 1054) and is not just confined to a finding that the defendant personally harboured ill will against a person.
Justice Stewart’s condemnation of Mr. Pettipas, was based to a large extent, on evidence he gave on discovery. It was introduced on behalf of H&S in rebuttal.
The critical questions and answers read as follows:
Q. Well, you drafted the stipulation?
A. I drafted a - I was asked to draft a - what we call standard status stipulations for all the lagoons, so something that would be similar for the lagoons that were being built at the time ...
Q. So the list of stipulations that you were preparing were only really for use with Hiltz & Seamone projects ...
A. It turned out that way, that’s true.
Q. But the intent was that they would have been used with any lagoon project?
A. That was the intent, yeah. (emphasis added)
The trial judge was obviously impressed by the contrast between these answers, and the statements in the Letter, that stipulations were attached to the JCA because of the deficiencies of H&S alone. The comments in the Letter, she found, constituted a “clear and blatant falsity calculated to create a false impression of incompetence”.
It will be recalled that Mr. Pettipas was not called to give evidence at trial. But counsel for the appellants submits that this was:
... a case of the Trial Judge rejecting an interpretation of Mr. Pettipas’ discovery evidence which is plausible, consistent with other evidence, and supports his bona fides in favour of a construct unsupported by, and inconsistent with other evidence, without a proper foundation.
It is helpful, in considering this submission, to appreciate that before counsel for H&S tendered the questions and answers arising from the discovery evidence of Mr. Pettipas, as part of its case on rebuttal, the same questions and answers of Mr. Pettipas were placed before Ms. Vervaet during her cross-examination.
She testified that the stipulations attached to the JCA issued to the Municipality contained the same stipulation annexed to other municipal projects. The following exchange then occurred:
Q. Did Mr. Pettipas not tell you that he drafted the stipulations and they were to be standard and they were to be attached to every lagoon project?
A. No. I saw the facts in the file that indicated that Bruce [Pettipas] had faxed them down to Ron [Giffin] for attaching.
Q. Did Mr. Pettipas tell you that he drafted the stipulations? They were to be standard, to be attached to every lagoon project?
A. No.
Q. He did not tell you that?
A. No.
Q. If he had told you that, would it have made any difference to you?
A. Sure.
Q. Would you still have agreed to that second bullet?
A. If they were standard and they were going to be applied to everybody I wouldn’t. (emphasis added)
The failure of the appellants to call Mr. Pettipas as a witness, in the absence of any explanation for his absence, in the light of his critical answers on discovery and Ms. Vervaet's answers at trial, justified the trial judge in drawing the inference that Mr. Pettipas was primarily motivated by malice.
The trial judge also concluded that malice on the part of Ms. Vervaet had been established, and that she used the occasion of privilege to publish, both to Inch and APENS, for an indirect motive.
Justice Stewart stated:
However, having regard to the history between the parties, i.e., evidence suggesting dislike of the plaintiff, frustration with the plaintiff, even a desire to protect her own position by way of a complaint against the plaintiff and in the information she supplied to Inch and to the extent it exceeded her mandate in responding to Inch, her dominant purpose was clearly to provide this additional information about questionable competence, honesty and integrity not as a response but in order to encourage or incite Inch to make a complaint or, through his report, provide further particulars to APENS for its use in filing a complaint.
...
Accordingly, she was acting out of a dominant motive other than honest fulfilment of a duty to communicate information to Inch with respect to his study concerning the proper design and functioning of the Nictaux facility for environmental and safety reasons. The occasion was abused to such an extent as to warrant a finding of malice and the loss of the privilege.
I do not consider it necessary to review the evidence which I find supports these conclusions.
It is perhaps sufficient on this issue to point out that neither Ms. Vervaet, nor Mr. Pettipas, made any attempt to review the Letter with Mr. Giffin, or Mr. Rowe, prior to publication.
The importance of the involvement of Messrs. Giffin and Rowe is highlighted in the evidence of Clyde Oldrieve, Manager of the Municipal Waste Resource Recovery Section of DOE at the relevant time.
Mr. Giffin and Mr. Pettipas, among others, reported to Mr. Oldrieve. He was asked to describe the process for an application for a JCA.
His evidence is illuminating:
A. In the case of the Valley, Mr. Giffin and Bob Rowe, who would be from Health, would be the engineers that would be responsible for putting together the joint certificate of approval and reviewing the information that’s being submitted. ...
Q. And Mr. Pettipas, what was his role in relation to Mr. Rowe and Mr. Giffin?
A. Okay. He was available for advice either from myself or for the engineers. So at various times the engineers, including (Giffin) might ask him to review and provide comments on submissions that they had received.
Q. So Mr. Pettipas had no primary responsibility? He would have to be asked by either you or Mr. Giffin to come in and .
A. That’s right.
Q. ... look at the project.
A. That’s right. He had no area or responsibility in that regard. He was at request.
Later in cross-examination Mr. Oldrieve was asked:
Q. But you were satisfied that each design of Hiltz & Seamone that is under question was reviewed in detail by a professional engineer?
A. Uh-huh.
Q. What professional engineer?
A. Ron Giffin and Bob Rowe.
Justice Stewart determined that anyone who had access to the Letter would be left with "the lasting impression that Hiltz and Seamone is both incompetent, dishonest and lacks integrity."
The failure of both Ms. Vervaet, and Mr. Pettipas, to review the contents of the Letter with the two engineers who had expressly approved the respondent's design work, is evidence on which Justice Stewart could rely in concluding that both appellants had acted with malice.
The Defence of Justification:
The trial judge rejected the defence of justification. She determined that:
The plaintiff, in response to the defence of justification, has analyzed each of the defamatory statements, having regard to the evidence and says the defendants have not, in respect to any of them, provided sufficient evidence that would support any of these statements as true.
In addition, the trial judge determined that the appellants omitted significant facts which she concluded would have created an entirely different impression of competence of H&S.
Her language was emphatic:
In this respect, the fact that DOE intended to attach the eighteen stipulations to all lagoon projects was the most blatant omission.
I agree with this finding. There was a sound evidentiary and legal basis supporting the conclusion that the defence of justification had not been established.
I conclude, on this ground of appeal, that the appellants have not established that the trial judge erred when she determined that they were not protected by the application of the doctrines of justification and fair comment. I am further satisfied that the defence of qualified privilege did not serve to protect the appellants. It has not been shown that Justice Stewart erred when she concluded the statements in issue exceeded the legitimate purposes of the occasion, or that she erred when she concluded that the statements were predominantly motivated by malice.
Procedural and Evidentiary Issues
1. The trial judge erred in considering malice was a live issue.
2. The trial judge erred in concluding the respondent's statement of claim raised the conduct of Pettipas.
3. The trial judge erred in finding the appellants responsible for publication and/or republication of the alleged defamation.
4. The trial judge erred in considering that evidence admitted for the sole purpose of damages, established liability.
1. The trial judge erred in considering malice was a live issue.
The appellants submit that the trial judge erred when she rejected their submission that malice was not an issue since H&S had not specifically pleaded malice in order to defeat the defences of fair comment and qualified privilege.
The statement of claim did not allege that the appellants acted with malice. The initial relief claimed was for special and general damages, as well as exemplary and punitive damages. At the opening of trial on November 4, 1996, an amendment to advance a claim for aggravated damages was sought by H&S, and granted.
The relevant sections of the defence on this issue are as follows:
13. The Defendants state that insofar as the words alleged to be defamatory by the Plaintiff are statements of fact, that they are true, and insofar as they are expressions of opinion, that they are fair comment, made in good faith, without malice, on a matter of public interest (the construction and improvement of sewer and water facilities), in that the Plaintiff had submitted work to the Defendant on this and other projects which lacked sufficient detail, the specifics of which are set out in the Letter, in that the Plaintiff did fail to comply with stipulations to the Joint Certificate and did thereby fail to meet regulatory requirements, particulars of which are set out in detail in the Letter; and in that the Plaintiff did certify to the D.O.E. that the project relating to the Plant had been completed in accordance with approved plans when in fact this was not true, the particulars of which are set out in detail in the Letter. (emphasis added)
The words "made in good faith and without malice upon a matter of public interest" that appear in paragraph 13 of the Amended Defence, customarily appear in pleadings which set up a plea of fair comment as a defence. (Ritchie, J. on behalf of the majority in McLoughlin v. Kutasy, [1979] 2 S.C.R. 311 at 320).
On October 31, 1996, the appellants amended their defence to plead "justification" in regard to the entirety of the Letter" claiming the words in the Letter were true.
For many years the law has implied malice when a defamatory statement has been published. (See comments of Justice Cory, as a member of the Ontario High Court, in Church of Scientology v. Globe and Mail (1978) 84 D.L.R. (3d) 239.)
In most jurisdictions, however, the law is clear that if the plaintiff wishes to negate a defence of qualified privilege then a reply should be filed, placing the defence in issue by alleging malice unless the statement of claim, through an over cautious draftsman, had in fact alleged malice.
In these jurisdictions, the Rules of civil procedure specifically provide for the filing of a reply.
Rule 25.08(1) of the Rules of Civil Procedure of Ontario, for example, provides:
A party who intends to prove a version of the facts different from that pleaded in the opposite party's defence shall deliver a reply setting out the different version, unless it has already been pleaded in the claim.
Order 82 of the Supreme Court Practice of the U.K., specifically addresses pleadings in actions of libel or slander. Rule 3(3) of that Order provides:
Where in an action for libel or slander the plaintiff alleges that the defendant maliciously published the words or matters complained of, he need not in the statement of claim give particulars of the facts on which he relies in support of the allegation of malice, but if the defendant pleads that any of those words or matters are fair comment on a matter of public interest or were published upon a privileged occasion and the plaintiff intends to allege that the defendant was actuated by express malice, he must serve a reply giving particulars of the fact and matters from which the malice is to be inferred.
The appellants point out that adequate disclosure in defamation pleadings play a greater importance than in other actions.
They find support in Civil Procedure Rule 14.12(1) which provides in part:
Subject to paragraph (2) every pleading shall contain the necessary particulars of any claim, defence or other matters pleaded, including . . .
(b) where a party pleading alleges any condition of the mind of any person, including any disorder or disability of mind or any malice, or fraudulent intention, or other condition of mind except knowledge, particulars of the facts on which the party relies.
The former Rules of the Supreme Court of Nova Scotia contained provisions for a reply and the pleading was often employed. Those Rules contained a specific provision that if a party did not deliver a reply within the period allowed, all of the material statements of fact in the pleading last delivered "shall be deemed to have been denied and put in issue". (Order XXVII, Rule 12).
A similar provision is contained in the English Rules, as well as in Rule 25.08(4) of the Rules of Civil Procedure of Ontario.
Since 1972, the Civil Procedure Rules of this Province provide:
14.22(1) No pleading subsequent to a defence, or a defence to a counterclaim or third party notice, shall be filed or served without the written consent of the parties or the leave of the court.
Civil Procedure Rule 14.23(1) goes on to provide:
Unless the court otherwise orders, pleadings are deemed to be closed upon the filing and service of the defence or the defence to the counterclaim, and thereupon all material statements of fact in the pleading last delivered shall be deemed to have been denied and put in issue.
Justice Stewart resolved the matter in these words:
The issue is addressed by Professor Raymond E. Brown in The Law of Defamation in Canada, 1st ed. (Scarborough: Carswell, 1987), at page 857:
Originally the law imposed strict liability for the publication of a defamatory remark, and it was not necessary to plead or prove the existence of malice on the part of the defendant. Gradually, however, the requirement arose that the plaintiff plead and prove that the defendant was moved by some malicious motive. By the end of the first quarter of the 19th century, a plea of malice became a mere formality since it was held that malice could be implied from the mere publication of a defamatory remark. Technically the plaintiff need not enter a plea of malice to sustain a cause of action in libel and slander, but the practice of doing so has continued. It may even be convenient to insert such a plea in the statement of claim, since it may obviate the need for a reply where the defendant asserts a defence of fair comment or qualified privilege in his statement of defence.
There is no requirement for the plaintiff to plead malice in order to rely upon it to defeat specific defences and there is no convenience in Nova Scotia for pleading it, as there is no provision in the Civil Procedure Rules for a reply.
The appellants submit on this appeal, however, that express malice in order to defeat a defence of qualified privilege must be squarely before the Court. Counsel submits that Justice Stewart overlooked the following passage from Brown, Vol. 1, p. 1047:
The malice required to defeat a qualified privilege is distinct from the malice implied by law in all defamatory statements. Where it is alleged and shown that a defamatory remark was published on an occasion that was privileged, the fictitious "legal malice" presumed by the defamatory publication disappears, and the bona fide and honest belief of the defendant is presumed. It then falls upon the plaintiff to allege and prove that the defendant was motivated by actual or express malice or malice in fact, or what is sometimes referred to as ill-intent. This form of malice is never presumed but must always be proved.
The appellants direct our attention to the comments of Justice Southin in Baumann v. Turner et al (1993), 105 DLR (4th) 37 (BCCA) at p. 38:
. . . I infer that the draftsman of the statement of claim understood a plea of "falsely and maliciously publishing to be a plea of that express malice which will defeat a plea of qualified privilege". It is not.
Counsel for the appellants points out that although these comments have been criticized:
... the passage from the judgment serves to reiterate that whether it ought to be pleaded generally or specifically, the plaintiff in the defamation suit must plead malice should he wish to raise it in a claim of qualified privilege. Where the Rules of Court have, as in Nova Scotia, been simplified to eliminate the reply, the pleading must take the form of an amendment to the statement of claim. Otherwise, the good faith of the defendant who establishes a qualified privilege is presumed and unassailable.
Justice Southin's decision was a dissenting opinion in part. The issue of the sufficiency of the pleadings was not considered by the majority.
In addition, the comments to which we are directed are preceded by the following words:
Not the least of the problems in this appeal is that the pleadings are incomplete, the appellant not having delivered a reply, although he relies on express malice to defeat a defence of publication upon occasions of privilege.
From this submission, I infer that the draftsman of the statement of claim understood a plea of "falsely and maliciously publishing" to be a plea of that express malice which will defeat a plea of qualified privilege. It is not. (emphasis added)
Justice Southin's conclusion respecting the pleadings presumably arose from Rule 19(15) of the Supreme Court Rules of British Columbia which provided:
In the pleading subsequent to a statement of claim a party shall plead specifically any matter of fact or point of law that:
(a) the party alleges makes a claim or defence of the opposite party not maintainable;
As previously indicated, no such provision appears in the Civil Procedure Rules of this province. I would not consider, therefore, that Justice Southin's comments have any relevance to the Nova Scotia practice.
I would add the following reasons to those stipulated by Justice Stewart, in support of her determination that malice was a live issue.
Counsel for H&S point out that the appellants have raised the issue of express malice in paragraph 13 of the amended defence and, as a consequence, that "material statement of fact" is "deemed to have been denied and put in issue" by virtue of the provisions of C.P.R. 14.23(1).
It is further stressed that in view of the claim for punitive damages advanced in the statement of claim, the motive of the appellants was directly placed in issue.
Justice Cromwell, on behalf of this Court, in Elia v. Chater (1998), 167 N.S.R. (2d) 166 stated at 181:
However, in the case of punitive damages, the motive of the wrongdoer is relevant and so evidence, which reveals that motive, such as that relating to the landlord's whole course of conduct before and after Al-Farkh's bankruptcy, is properly considered. (emphasis added)
In McCrea v. Canada Newspapers Co. et al (1993), 126 N.S.R. (2d) 213, the plaintiff had not pleaded actual malice but had claimed punitive damages. The defendants pleaded, inter alia, that the words were published on an occasion of privilege and that they also represented fair and accurate statements.
Plaintiffs' counsel sought to question the author of the article by asking what was meant or intended by the words in the article. On appeal, Hallett, J.A., on behalf of this court, determined at p. 214:
. . . her evidence as to what she meant could be relevant to the punitive damage claim which is founded on the assertion that the appellants bore malice toward the respondent and could be relevant to the defence of fair comment. (emphasis added)
For the foregoing reasons, I conclude that Justice Stewart was correct in concluding that malice was a live issue between the parties.
Further, I do not consider that there would be any injustice to the appellants in such a resolution.
The respondent only adduced viva voce evidence from Mr. Dewar, in their case-in-chief. They did not purport to deal with any of the defences advanced on behalf of the appellants at that time. It was clear from the direction of the Court, as well as the concurrence of the parties, that Mr. Dewar would not be cross-examined respecting any of the issues raised by the defence at that stage. At the conclusion of the appellants' evidence, Mr. Dewar was called in rebuttal, and those issues were addressed in cross-examination by counsel for the appellants at that time.
The appellants called Mr. Oldrieve as their first witness. During the course of examination-in-chief of Mr. Oldrieve, counsel for the appellants stated:
We've pled qualified privilege. One of the things that gives rise to qualified -- or tends to feed qualified privilege is a lack of honest belief on the part of the individuals who make the statement.
And, in this case, the - my friend is attributing the letter in its entirety to the Crown. So I am attempting to lay the foundation of honest belief in terms of the statements . . .
So it goes to the issue of defence, ultimately of what we anticipate will be a challenge to qualified privilege. (emphasis added)
As noted, the defence of qualified privilege may be defeated in two ways, one of which is evidence of express malice on the part of the author and publisher of the defamation.
I would dismiss this ground of appeal.
2. The trial judge erred in concluding the respondent's statement of claim raised the conduct of Pettipas.
The appellants' submission on this issue is set out in their factum as follows:
The evidence revealed that Mr. Pettipas drafted the "bullets" complained of in this case and provided the same to Ms. Vervaet for her consideration. Ms. Vervaet considered Mr. Pettipas' comments and incorporated them in her correspondence for her own reasons. It is trite law that each publication of defamatory material gives rise to a separate cause of action. The respondent in this proceeding did not sue in respect to the publication by Pettipas of the "bullets" to Vervaet. The pleadings are clear that the publication complained of is restricted to the publication of Ms. Vervaet's letter of May 28, 1993.
And further:
. . . upon a true reading of the statement of claim, and the amended statement of claim, it is not at all clear that the respondent was claiming relief on any basis other than as set out in paragraph 12. . . . To find liability as against the Crown based upon the actions of Pettipas, Pettipas should have been named in the statement of claim and his actions giving rise to liability set forth.
The trial judge rejected this submission and, in my opinion, she was correct in so doing.
Justice Stewart found:
To the extent Pettipas committed a defamation, his conduct and motivation results in liability on the Crown because of his position as an operating mind of the Crown rather than as the result of any vicarious liability.
The evidence supports this conclusion.
Mr. Pettipas' discovery evidence introduced by counsel for H&S at the end of his client's case established that:
- at the relevant time, Pettipas was the manager of the Waste and Resource Recovery Section of DOE;
- Ms. Vervaet reported to Pettipas;
- Mr. Pettipas encouraged Ms. Vervaet to "go to APENS to look at and determine objectively the competence of H&S designs and specs";
- Mr. Pettipas read, and approved, the letter before it was sent to Inch.
The discovery evidence of Mr. Pettipas is admissible against the Crown. (Section 11 of the Proceedings Against the Crown Act, R.S.N.S. 1989, c-360, and C.P.R. 18.14(1)(b)).
Paragraphs 7, 8 and 11 of the statement of claim are pertinent.
They provide:
7. The Evaluation Report with the Letter as addendum, was distributed to members of Council of the Owner, various municipal officials and committees, and other individuals, all with the knowledge and consent, express or implied, of Vervaet and the Department. (emphasis added)
8. The contents of the Letter were subsequently republished in newspapers and in Frank Magazine, a publication published in Halifax, and such republications were and are with the knowledge and consent, express or implied, of Vervaet and the Department.
11. By reason of the various publications of the defamatory Letter by the Defendants, and as a result of the natural and ordinary meaning of the words contained in the Letter, and by way of innuendo, the Plaintiff has been injured and brought into hatred, ridicule and contempt and has thereby suffered damages. (emphasis added)
The reference to "the Department" (defined in the statement of claim as the Provincial Department of the Environment) in paragraphs 7, 8 and 11 leaves no doubt that the actions of Pettipas were a live issue at trial.
If the appellant Crown had any doubt on the issue, as was suggested, that doubt could, and should, have been resolved by resort to the pre-trial procedures available pursuant to the Civil Procedure Rules.
3. The trial judge erred in finding the appellants responsible for publication and/or republication of the alleged defamation.
Justice Stewart found that the letter had been published on four occasions:
1. When it was sent to James Inch, the author of The Inch Report, and by blind carbon copy to Peter Mitchell, the Director of Professional Practice of the regulatory body for the engineering profession, APENS;
2. When Inch forwarded his report, appending the Letter without attachments to the Municipality;
3. When the Inch Report was placed in the DOE library, which is open to the public;
4. When the Inch Report was made available to the public by the Municipality.
The appellants admit the first occasion of publication but stress that Ms. Vervaet did not contemplate that the Letter would be attached as an appendix to the final Inch Report.
Justice Stewart, however, concluded that the appellants expected, and intended, that the contents of the Letter would be conveyed to the Municipality. This intention was expressed in the Letter itself ("to provide both you and the Municipality a clearer global picture of events, roles and responsibilities").
With respect to the third and fourth occasions of publication, the appellants submit that the evidence does not establish that any person actually read or received a copy of the Inch Report, nor is there any evidence from any member of the public that he or she had obtained a copy of the report.
We are referred by both counsel to the case of Vizetelly v. Mudie's Select Library Limited (1900), 2 Q.B. 170, where the Court of Appeal concluded that when a book is located in a lending library, publication to library subscribers is presumed. The appellants submit the Vizetelly case should be distinguished as there was no evidence that the DOE library was "a lending library and no evidence of subscribers", and further, that "if a book is on reserve and is not circulated, there must be evidence that someone requested and saw it".
The evidence, however, does establish that the DOE library was open to the public and the Letter was made available to the public.
Justice Stewart referred in particular to the following evidence:
Furthermore, both Clive Oldrieve, Assistant Director of DOE, on cross, and Pettipas, in discovery, testified to all reports being placed in the DOE library with Pettipas noting them to be available "to anyone anyhow" and Oldrieve noting the library to be available to the public. No evidence of limitation or qualification on the use or location of the reports other than being placed in a public DOE library was suggested. It was a publication over which the defendants had control, as were the earlier publications.
The conclusions of the trial judge on this issue were on a sound legal and evidentiary basis.
4. The trial judge erred in considering that evidence admitted for the sole purpose of damages, established liability.
Prior to concluding their case-in-chief, counsel for the respondent tendered portions of the discovery evidence of Ms. Vervaet and Mr. Pettipas to establish that both were aware, at the time of the publication of the Letter, that DOE had approved the design of the project, and that DOE had paid its share of the cost of the project to the Municipality.
The appellants then sought to introduce additional questions and answers elicited from Ms. Vervaet and Mr. Pettipas on discovery, in support of their non-suit motion. Counsel for the appellants urged the trial judge to receive these additional questions and answers as part of the case for the respondent, in order to "clarify" the discovery evidence already introduced on behalf of H&S.
The motion was presumably made pursuant to the provision of CPR 18.14(2) which provides:
If only part of a deposition is offered in evidence by a party, an adverse party may require the introduction of any other part which is relevant to the part introduced, and the other party may introduce any further part.
The trial judge rejected the appellant's motion on the ground that she did not require the additional questions and answers as "further clarification".
Counsel for the appellants, as I understand their submission, make two points:
1. In refusing to grant the non-suit motion, Justice Stewart relied upon a sentence in the Letter ("We recognize that many of our concerns may not have been included in the terms of reference of your study . . ." ) which was admitted for the limited purpose of supporting the claim for aggravated damages.
2. Justice Stewart erred in not permitting the appellants to read in discovery relevant and admissible to Mr. Inch's mandate "insofar as such evidence would be relevant in her consideration as to whether there was sufficient evidence for the trier of fact to consider that the qualified privilege may have been exceeded, such that the respondent should not be non-suited".
I see no merit in either of these submissions.
Firstly, the Letter, which was introduced during the examination-in-chief of Mr. Dewar, was not introduced for the limited purpose of establishing aggravated damages, but was introduced, without restriction, as an integral part of the case for H&S. The Letter
established that the words complained of referred to H&S, the words complained of were communicated by the appellants to a third party, and the words complained of were defamatory of H&S. No objection was raised by counsel for the appellants to the introduction of the Letter in evidence. In fact, counsel stated:
Now it seems to me that it is open to my friend, Mr. MacDonald, to put the letter before you, to put the attachments before you, and to put it into context of that which the reader would have had before him at the time .
Counsel for the appellants, in addition, used the Letter as the basis for his cross-examination of Mr. Dewar in the case-in-chief.
Finally, it should be borne in mind that the trial judge had already determined, quite properly as I find, that H&S had satisfied the evidentiary burden on the three issues in order to defeat the non-suit motion. It was only as a consequence of counsel for the appellants asking the trial judge to assume there was a privileged occasion, that the issue ever arose.
On the second issue, the additional questions and answers that appellants' counsel wished to have the trial judge include as part of H&S's case, as "further clarification" of the discovery evidence of Vervaet and Pettipas tendered on behalf of H&S, were not so inextricably wound up with those introduced as to require the additional questions and answers to be accepted pursuant to the provisions of CPR 18.14(2). I am not satisfied the trial judge erred in the exercise of her discretion.
I would dismiss this ground of appeal.
Damage and Interest Issues
Excessive Damages
Justice Stewart, in the course of ordering general damages of Two Hundred Thousand Dollars ($200,000) against both appellants, and One Hundred Thousand Dollars ($100,000) punitive damages, against the Crown appellant, stated in part:
Professional organizations survive on the confidence and trust generated in those that deal with them and the integrity and the character of the work they provide to their clients. Defamatory statements, such as in the present case, strike at the foundation of the reputation and erode the confidence of the public in the defamed party, no less when it's a corporation than when it's an individual.
The appellants submit that the award of general damages is excessive, and cannot be supported by existing case law, or the evidence.
Care, however, must be taken in attempting to equate awards in defamation cases.
As the Ontario Court of Appeal stated in Hill v. Church of Scientology (1994) 18 O.R. (3d) 385 at 431:
Our next observation is that each libel case is unique and it is virtually impossible to categorize or compare them. The personality and character of the defamed person, the nature of the libel and the circumstances surrounding its publication, the motivation and persistence of the person who defames, and the effect of the defamation upon the injured person depend upon many variables which are rarely duplicated. No two cases are the same, indeed, they rarely resemble one another. An award in one case is rarely, if ever, a useful guide in another.
See also the comments of Justice Cory on behalf of the court in Botiuk v. Toronto Free Press Publications Ltd., [1995] 3 S.C.R. 3 at 37).
In my opinion, there is evidence supporting the trial judge's conclusion with respect to the award of general damages and further, she committed no error in that assessment. In these circumstances, it is not appropriate for this Court to substitute our view for hers (Watkins v. Olafson et al, [1989] 2 S.C.R. 750 per McLachlin, J. at 591).
With respect to the award of punitive damages, the appellants submit that:
- It was based largely upon Justice Stewart's assessment of the conduct of Mr. Pettipas, whose malice was found to be "express". Malice, the appellants submit, was not alleged by H&S and was therefore not an issue that should have been considered by Justice Stewart. For the reasons already expressed above, I consider that malice was a live issue at trial;
- There was no evidence that H&S was prevented from working, or any evidence connecting the defamatory statements to any particular loss of contract. In addition, it is submitted the publication of the letter was to an exceptionally small class of people.
Justice Stewart was quite properly influenced by the significant role played by the Crown in awarding directly, as well as influencing indirectly, a large percentage of engineering work developed in this Province.
She said:
I have also considered the plaintiff's submission that the Crown sets the system for the selection for consulting engineers retained by municipalities throughout the province; dominates the steering committies; controls the funding made available to municipalities for civil work; is the regulatory authority; has the financial muscle to ensure that any consultant it does not like is prevented from pursuing his or her professional career and by an award of punitive damages against it, the Crown will be deterred from destroying the reputation and career of other engineering professionals in the Province who are, to a large degree, dependant for their livelihood on being treated in good faith.
I conclude that it has not been established that Justice Stewart misdirected herself on any applicable principle of law or that the exercise of her discretion in awarding punitive damages was so clearly wrong as to amount to an injustice. (See comments of Iacobucci, J., on behalf of the Court in Air Canada v. Ontario (Liquor Control Board), [1997] 2 S.C.R. 581, at 615.)
I would therefore dismiss both appeals from the award of general damages and punitive damages.
Pre-judgment Interest
On April 20, 1998, after receiving submissions from counsel on several issues, Justice Stewart stated in part:
Recognizing my determination was based on valuing the loss and making the resulting award as of the date of my decision, the principles enunciated by the Nova Scotia Court of Appeal in Bush v. Air Canada (1992), 109 N.S.R. (2d) 91 (A.D.) in respect to pre-judgment interest may very well be applicable and a 2.5% interest rate appropriate. In view of the fact neither counsel have raised the application of Bush principles in their summations, I am not prepared to apply them in the present circumstances. I, therefore, award pre-judgment interest, recoverable only on the general damage award of $200,000.00 for the period of May 23, 1993 to date of this supplementary decision on costs, at the average of the Royal Bank's prime rate, as noted by plaintiff's counsel.
Justice Stewart, understandably, concluded that neither counsel considered Bush to be applicable to the issues before her in view of their respective failure to raise the principle. The issue was raised by the appellant for the first time on this appeal.
The principle was expressed by Justice Chipman, on behalf of the Court, in Bush in these words, at p. 105:
A double recovery should be avoided in the exercise of a trial judge's discretion under ss. 41(i) and (k) of the Judicature Act, supra. The conclusion must be that to the extent that inflation was taken into account for the period between the accrual of the cause of action and the trial, the judge should then adjust the interest rate so that it is not taken into account for a second time. This exercise should be carried out in fixing the rate and requires an examination of the award to determine whether inflation from the date the cause of action arose has been taken into account. . . . In many cases, a judge may not be able to say with any degree of certainty that an inflation factor has been built into the award. In these cases when the second step is taken, a commercial rate of interest would generally be appropriate. Where, however, a judge is satisfied that inflation has been built in, a rate such as the discount rate of 21/2 % per annum is appropriate. If the trial judge does not do this, a double recovery results to the plaintiff.
The appellants submit that Justice Stewart's words that her "determination was based on valuing the loss and making the resulting award as of the date of my decision" clearly indicate that inflation was included in her assessment. A further award of pre-judgment interest at commercial rates for the stipulated period would amount, in their contention, to double compensation.
The respondent makes two arguments in reply:
1. Justice Stewart did not take into account the inflationary factors, despite the generality of her comments, and her reference to Bush;
2. In any event, the opinion of the Supreme Court of Canada in Botiuk, a defamation case, constitutes an implied reversal of the opinion of this Court in Bush.
In support of the first ground, the respondent points out that Justice Stewart referred to the sum of Three Hundred Thousand Dollars ($300,000) general damages awarded by the jury on October 3, 1991, in Hill v. Church of Scientology, which was subsequently affirmed by the Supreme Court of Canada. That award, it is argued, was the basis, with appropriate modifications, for the award of Two Hundred Thousand Dollars ($200,000) made to the respondent in this case.
Justice Stewart, however, also referred to an award of Fifty Thousand Dollars ($50,000) general damages made by Justice Hood, of the Supreme Court of British Columbia, sitting alone on May 4, 1995, in favour of a former corporate president who had been defamed, in front of shareholders, at the company's annual meeting. (Deildal v. Tod Mountain Development Ltd. (1995), 10 C.C.E.L. (2d) 202).
It is readily apparent from Justice Stewart's reference to these two disparate awards, that she did not attempt to base her assessment of general damages on either one of them. In fact, she specifically referred to the comments of Justice Cory in Hill v. Scientology, ([1995] 2 S.C.R. 1130 at 1205) where he stressed that there is "little to be gained from a detailed comparison of libel awards". There is, in short, nothing to suggest that Justice Stewart's assessment was tied into awards made in 1991, or 1995. This was not the same situation, as in Bush, where Justice Chipman concluded that the assessment by the trial judge in April, 1991, “does not look unlike a 1987 or earlier award” (at 106). I am satisfied to the degree of certainty referred to by Justice Chipman in Bush that the words used by Justice Stewart clearly reflect that she took inflation into account for the period between the accrual of the cause of action and the date of her decision.
With respect to the second argument that Bush has been impliedly overruled by Botiuk, it is important to recognize that Justice Chipman considered two competing lines of authority, one emanating from British Columbia, which he followed, the other from Ontario, which he rejected. The Supreme Court of Canada in Botiuk did not consider either the cases from British Columbia or the decision of this Court in Bush, nor were they requested by counsel to do so.
The Ontario position was articulated by Justice Barr of the High Court of Justice in Borland v. Muttersbach (1985), 49 O.R. (2d) 165, upheld by the Ontario Court of Appeal (1986), 53 O.R. (2d) 129.
In Borland, Justice Barr, in September, 1984, awarded non-pecuniary damages of One Hundred Seventy Thousand Dollars ($170,000) to the plaintiff Shelly Borland for catastrophic injuries sustained in a motor vehicle accident that occurred in early 1981. The parties agreed that computation of pre-judgment interest would commence at the time notice of action was given to the defendants in March, 1981.
Justice Barr pointed out that One Hundred Seventy Thousand Dollars ($170,000) was agreed by the parties to be the "amount in 1984 dollars which is equivalent to One Hundred Thousand Dollars ($100,000) in 1978 when the trilogy was decided" (at p. 187).
It is, in my opinion, critical to appreciate that s. 36 of the Judicature Act of Ontario then in force (Chap. 223, R.S.O., 1980) was materially different from s. 41 of the Judicature Act of Nova Scotia, R.S.N.S. 1989, C- 240.
Section 36 provided in part:
(1) In this section, "prime rate" means the lowest rate of interest quoted by chartered banks to the most credit-worthy borrowers for prime business loans, as determined and published by the Bank of Canada.
. . .
(3) Subject to subsection (6), a person who is entitled to a judgment for the payment of money is entitled to claim and have included in the judgment an award of interest thereon,
(a) at the prime rate existing for the month preceding the month in which the action was commenced; and
(b) calculated,
. . .
(ii) where the judgment is given upon an unliquidated claim, from the date the person entitled gave notice in writing of his claim to the person liable therefor to the date of the judgment.
. . .
(6) The judge may, where he considers it to be just to do so in all the circumstances,
. . .
(b) fix a rate of interest higher or lower than the prime rate;
(c) allow interest under this section for a period other than that provided,
in respect of the whole or any part of the amount for which judgment is given.
(emphasis added.)
Section 41 of the Nova Scotia Act reads:
Rules of Law
41. In every proceeding commenced in the Court, law and equity shall be administered therein according to the following provisions:
. . .
(i) in any proceeding for the recovery of any debt or damages, the Court shall include in the sum for which judgment is to be given interest thereon at such rate as it thinks fit for the period between the date when the cause of action arose and the date of judgment after trial or after any subsequent appeal;
. . .
(k) the Court in its discretion may decline to award interest under clause (i) or may reduce the rate of interest or the period for which it is awarded if
(i ) interest is payable as of right by virtue of an agreement or otherwise by law,
(ii) the claimant has not during the whole of the pre-judgment period been deprived of the use of money now being awarded, or
(iii) the claimant has been responsible for undue delay in the litigation. (emphasis added)
In rejecting defence counsel's submission that only a nominal award of interest on non-pecuniary damages should be applied since the assessment of One Hundred Seventy Thousand Dollars ($170,000) reflected a growth due to inflation of Seventy Thousand Dollars ($70,000) over six years since the "trilogy", Justice Barr focused on the provisions of s. 36(3)(a) of the Judicature Act of Ontario.
He said, at p. 187:
$170,000 is agreed to be the amount in 1984 dollars which is the equivalent to $100,000 in l978 when the Trilogy was decided. The award of $170,000 will purchase no more goods and services than $100,000 in 1978. The plaintiff receiving $170,000 in 1984 is receiving the same compensation as the plaintiff receiving $100,000 in 1978 although expressed in different dollars. Whatever the award, the statute gives the plaintiff the prima facie right to receive prejudgment interest on it at the prime rate prevailing in the month before it was issued. (emphasis added)
The point was re-emphasized, at p. 188:
I conclude that the fact of inflation is not a proper ground to deprive the plaintiffs of their prima facie right to receive prejudgment interest at the prime rate. (emphasis added)
Justice Barr determined in accordance with s. 36(3)(a) the average of the prime rate over the period from the giving of notice to the defendant to the date of judgment, and then increased it to reflect the evidence that plaintiffs had to borrow "fairly substantial amounts of money due to the accident and people under those circumstances will have to pay substantially more than prime rates" (at p. 189). The increase was justified under s. 36(6) of the Judicature Act of Ontario.
Justice Barr said at p. 187:
A defendant who is prepared to forego investment income may reduce or extinguish the plaintiff's claim for prejudgment interest by making an advance payment or payments. An insurer who wishes to invest the money at current high rates should not profit by having the benefit of such rates while being required only to pay a nominal rate of interest to the plaintiff. In my view, this would discourage advance payments, thereby adding to the distress of the victims and would be contrary to the policy reflected by s. 36. (emphasis added)
In rejecting the Borland approach, Justice Chipman, on behalf of this Court, said in Bush, at p. 104:
At the outset, I express my disapproval of testing the justice of the issue by inquiring as to what the defendant or its insurer might be able to make by investing "the money" during the time between the accrual of the cause of action and the judgment. The purpose of prejudgment interest is to compensate the plaintiff for being without the money represented by the award of damages. It is not designed to penalize the defendant or to deprive the defendant of an undue windfall and being able to enjoy the money during the intervening period. Should the defendant or its insurers be able to demonstrate that a loss occurred on its investments during the period, would interest be withheld or reduced? That would appear to be the corollary of such reasoning. Plaintiffs should, I think, be appalled that such a consideration would be entertained. To state the proposition demonstrates its lack of merit.
. . .
Turning to the example referred to by the trial judge in Borland, supra, if the plaintiff receives $170,000 in l984 for an injury sustained in 1978 which would in that year have attracted an award of $100,000, a premium for inflation of $70,000 has been added. To then add interest at a commercial rate hands out an additional premium for inflation. Fairness would either dictate an award of $100,000 with interest at the full commercial rate or $170,000 with interest at the real rate of return.
At the time Botiuk was decided by Justice Carruthers, of the Ontario Court of Justice, (General Division) in November, 1990, the Courts of Justice Act, S.O. 1984, Chap. 11, had replaced the Judicature Act of Ontario.
Between 1984, and 1990, significant amendments were made in the Courts of Justice Act respecting the manner in which pre-judgment interest was to be determined.
For example:
- The rate of interest on damages for non-pecuniary loss in an action for personal injury was determined to be the discount rate determined by the Rules of Civil Procedure (S.138(1)(a) of the Courts of Justice Act (1989), C-67, s.6(1)) - The later Nova Scotia position, as determined by Bush respecting pre-judgment interest on non-pecuniary damages is roughly equivalent. (The Rule in Ontario has since changed to the rate determined by the Civil Rules Committee (s.128(2) and clause 66(2)(w), 1994, C-12, s.44));
- Interest on past pecuniary loss was to be calculated on the "total past pecuniary loss at the end of each six-month period and at the date of the order" (s.138(2) at the time of Botiuk, now 128(3)).
The only issue relating to pre-judgment interest before the Supreme Court of Canada in Botiuk, would appear to be an extremely narrow one. Justice Carruthers at trial, determined that pre-judgment interest on the loss of income sustained by Botiuk (which he termed "special damages") should be awarded for a period of 121/2 years, ((1991) O.J. No. 1617).
The Ontario Court of Appeal ((1993), O.J. No. 239) reduced the length of the award of pre-judgment interest from 121/2 to 10 years.
On further appeal, the Supreme Court of Canada restored the trial judge's determination.
Despite what appears from the record to be a very narrow point, the appellants apparently took a much broader approach when advancing the appeal before the Supreme Court.
It is summarized by Justice Cory in these words at p. 39:
The appellants contend that in fixing Botiuk's general damages, the trial judge explicitly and the Court of Appeal implicitly took into account the effects of inflation. It is argued that the addition of the prejudgment rate of 13 percent amounts to a double recovery. The appellants contend that Borland v. Muttersbach ... was wrongly applied or alternatively, that it was wrongly decided.
Justice Cory, on behalf of the Court, concluded at p. 40:
In my view, the decision in Borland is correct and the reasoning should be applied to the award made to Botiuk.
I would interpret these words to mean that the decision in Borland was correct, in light of the provisions of the Ontario Judicature Act then in force, and that the reasoning should apply to the fact situation in Botiuk, which was determined pursuant to the provisions of the Ontario Courts of Justice Act.
It is clear from the decision of Justice Barr, in Borland, that the prima facie right of a plaintiff in Ontario to receive pre-judgment interest on non-pecuniary damages at prime rates was the critical issue.
The following passage from Justice Cory's decision, at p. 40, illustrates the point:
The trial judge in Borland had observed that the award adjusted for inflation buys no more than the original figure did in 1978. He went on to determine that whatever the award, the statute gives the plaintiff the prima facie right to receive prejudgment interest on it at the prevailing prime rate. In the absence of such a guarantee, there would be no incentive for defendants to make advance payments, thereby foregoing investment income. He concluded that the fact of inflation is not a proper ground for depriving plaintiffs of their prima facie right to receive prejudgment interest. (emphasis added)
The reference to Justice Barr's conclusion would appear to be taken from comments Justice Barr made, at the top of p. 188, which included the phrase "at the prime rate".
I set them out:
I conclude that the fact of inflation is not proper ground to deprive the plaintiffs of their prima facie right to receive pre-judgment interest at the prime rate.
The Judicature Act of Nova Scotia, unlike the Judicature Act of Ontario in force at the time of Borland, did not "guarantee" to a plaintiff the right to receive pre-judgment interest at the prime rate.
Accordingly, I conclude that the decision in Botiuk has not impliedly reversed the decision of this Court in Bush.
In other jurisdictions, Courts have viewed pre-judgment interest as a means of attempting to influence the process of litigation, or to encourage settlement. Some writers suggest that double recovery by awarding pre-judgment interest at full rates from the date the cause of action arose, on an award assessed at the date of trial, is fair, as the limits established by the trilogy do not result in sufficient compensation when applied to less serious injuries. (See articles cited by Professor Waldron, The Law of Interest in Canada, Carswell, 1992, at footnote 160.)
Professor Waldron, in 1992, prior to the decision of the Supreme Court in Botiuk, wrote at p. 152:
As noted, this argument has not succeeded in Ontario and Alberta where the problem has been addressed by legislation. Elsewhere, as well, the trend of the case law is overwhelmingly in favour of reducing interest rates on these damages to something approaching the "real" investment rate.
Nor have these arguments found favour in this province. The purpose of pre-judgment interest was stated, by this Court, to
. . . compensate the Plaintiff for being without the money represented by the award of damages. It is not designed to penalize the Defendant or to deprive the Defendant of an undue windfall in being able to enjoy the money during the intervening period. (Chipman, J.A., in Bush at 104).
I would reaffirm the principles in Bush, and conclude, with respect, that Justice Stewart erred when she failed to apply Bush in the circumstances of this case.
The appeal on this issue is from the exercise of the discretionary power granted the trial judge under s. 41 of the Judicature Act of Nova Scotia. I conclude that Justice Stewart erred when she failed to apply the principle in Bush in view of her express determination to base her valuation and make the resulting award as of the date of her decision.
I would allow the appeal, on this issue, and set aside that part of the supplementary decision of Justice Stewart of April 20, 1998, wherein she awarded pre-judgment interest on the general damage award of Two Hundred Thousand Dollars ($200,000) for the period of May 23, 1993, to April 20, 1998, at the average of the Royal Bank's prime rate, and substitute therefor, an interest rate of 2.5%.
Cross-Appeal
The only issue on the cross-appeal is whether Justice Stewart erred in declining to award aggravated damages to H&S.
She declined to make the award because she concluded this head of damages was not available to a corporate plaintiff. In support of this conclusion, she relied on the comments of Robins, J.A., on behalf of the Ontario Court of Appeal in Walker et al v. CFTO Limited et al (1987), 59 O.R. (2d) 104.
In my respectful opinion, Justice Stewart extracted the principle from Walker in somewhat broader terms than the words of the opinion justify.
As I read Justice Robins' decision, it goes no further than stipulating that a company is not entitled to compensation "for injury to hurt feelings or, it follows, to compensation by way of aggravated damages for a loss of this nature" (at 233) (emphasis added).
After summarizing the appellants' counsel submission in Walker, Justice Robins stated at p. 235:
Furthermore, the submission overlooks the fact that the plaintiff is a corporation and is not entitled to damages for injured feelings or to the aggravated damages which a natural person is entitled to when the damage to his or her feelings is increased by the wrongdoer's bad conduct. (emphasis added)
And finally, at p. 236,
As a general proposition, it can be fairly stated that where a defendant has engaged in some form of reprehensible conduct the scale of damages appropriate to the case of a defamed individual can reasonably be expected to be higher than the scale appropriate to the case of a defamed company. In the latter case, there can be no question of compensation for injured feelings or compensation by way of aggravated damages for increased injury to such feelings, both patently important elements in an individual's general damage claim. (emphasis added)
Counsel for H&S, however, stress that aggravated damages may be awarded not only for injured feelings, but on a more expansive scale to take into account the conduct of the person responsible for the defamation.
In Hill, Justice Cory stated at p. 184:
If aggravated damages are to be awarded, there must be a finding that the defendant was motivated by actual malice, which increased the injury to the plaintiff, either by spreading further afield the damage to the reputation of the plaintiff, or by increasing the mental distress and humiliation of the plaintiff. (emphasis added)
Later on the same page, Justice Cory gives a number of examples of factors that a jury may properly take into account in assessing aggravated damages.
Professor Brown writes in the third edition at p. 25-14.2:
A court may award aggravated damages. These are damages that take into consideration the increased mental distress, humiliation, anxiety, indignation, grief and fear suffered by a plaintiff as a result of the outrageous and malicious conduct of the defendant. The better view is that they are confined to that component of the award relating to injury to feelings.
Professor Brown cites as authority for this proposition the case of Bogusz v. Thomson and Truth Newspapers PTY Limited (1989), 95 F.L.R. 167.
In that case, Chief Justice Miles of the Supreme Court of the Australian Capital Territory, said at p. 25:
The plaintiff claimed compensatory damages on the one hand and punitive or exemplary damages on the other hand. In respect of compensatory damages, she claimed damages for loss of reputation and for injury to feelings. In respect of compensatory damages, she also alleged that there were circumstances of aggravation which entitled her to an award of increased or aggravated damages. The better view appears to be that aggravated damages can be awarded only in respect of that component which relates to the injury to feelings. However, it is conceivable that there are rare cases in which aggravated damages may be awarded for loss of reputation. (emphasis added)
Like the comments of Justice Cory in Hill v. Scientology, the comments of Chief Justice Miles did not, of course, contemplate a claim by a corporate plaintiff.
Counsel for H&S point to conduct by the appellants outside the court, as well as their conduct at trial, which had formed the basis for an award of aggravated damages.
In my opinion, conduct of that kind may be the basis for a claim of aggravated damages on behalf of a corporate plaintiff.
The conduct outside of court to which the respondent refers, occurred on two occasions:
- the demolition and replacement of the Nictaux STP by the Municipality in the fall of 1996, encouraged by the Crown appellant who made its funding conditional upon the Municipality taking legal action against H&S. Such action, it is submitted, essentially foreclosed any possibility that H&S would be retained by the Municipality for any engineering work;
- conduct of Ms. Vervaet when she "meddled" in an engineering audit into the Nictaux STP carried out in 1996.
The short answer to the respondent's cross-appeal on this issue is that both items of conduct were considered by Justice Stewart, and formed a part of the general damage award of Two Hundred Thousand Dollars ($200,000).
With respect to conduct at trial, the respondent raised the following points:
- the appellants amended their defence shortly before trial to raise a plea of justification which was rejected by the trial judge;
- the appellants attempted to impugn Mr. Dewar's design by suggesting in cross-examination that it was plagiarised by him from a design prepared by Halifax engineering firm (Porter Dillon) from a design for an STP at Amherst, the construction of which was supervised by Mr. Dewar;
- the appellants adduced evidence from David Wigmore, DOE's regional manager for Nova Scotia, who testified that H&S had prepared a defective design of an STP at Lawrencetown. The trial judge rejected the criticism.
I am satisfied, after reviewing the decision of Justice Stewart, that all these issues were matters taken into account by her in determining general damages.
They apparently played a part, as well, in the decision to award increased costs of Twenty-five Thousand Dollars ($25,000) lump sum. After receiving memoranda on the point post-trial, Justice Stewart stated she considered a number of circumstances justifying the lump-sum award, including:
...the length of the trial, the complexity of the issues arising out of the proceedings, which involved expert witnesses and was added to by the plaintiff having to address some aspects of the defendants' justification evidence, including, by way of example, concepts of design and construction and misguided comments about other sewage treatment projects . . .
Finally, the respondent submits that reliance by the appellants on the defence of justification throughout this appeal should result in an award of aggravated damages in itself and request that this Court assess those damages.
The issue is commonly raised before a trial judge.
Indeed, in their text on Canadian Libel Practice, 1986, Butterworth's, Julien Porter, Q.C., and David Potts, write at p. 59:
The plea of justification is a potentially dangerous plea since if it fails, the plea may have the effect of aggravating damages. Consequently, before such a plea is placed on the record, the solicitor for the defendant should ensure that there is evidence available to sustain such a plea. Moreover, it may be wise to warn the defendant of the potential dangers of pleading justification and obtain written instructions before raising this defence.
The issue was expressed concisely by Lord Justice Neill, on behalf of the English Court of Appeal, in Rantzen v. Mirror Group Newspapers (1986) Ltd. (1994) Q.B.D. 670, at 683, in these words:
It has often been said that the fact that a defendant persists in a plea of justification or fair comment is no evidence whatever of malice unless the plea has been put forward mala fide. It has also been said that the persistence in such a plea should not be taken into account in aggravation of damages. It may merely show that the defendant, though mistaken, has a firm and honest belief in the strength of his case. On the other hand, if one looks at the matter not from the point of view of the state of mind of the defendant, but for the purpose of assessing the injury to the plaintiff's feelings, it is easy to see that a contest which involves justification or fair comment may increase the injury and add greatly to the anxiety caused by the proceedings which the plaintiff has had to bring to clear his name.
In Rantzen, the trial judge apparently directed the jury that they could take account "of the fact that the defendants had persisted in a plea of justification".
Lord Justice Neill concluded at p. 684:
In our judgment there was no misdirection of any significance in this case. In any event, even if one assumes that there may be some merit in some of the individual complaints, we are quite satisfied that there is no possibility that any misdirections led to the risk of injustice or any "substantial wrong or miscarriage".
In Hill v. Scientology, Justice Cory considered post-trial conduct of the defendant as justification for the award of aggravated damages made at trial. He did not comment on whether the Ontario Court of Appeal was entitled to consider any increase in the award of aggravated damages made by the jury, resulting from the continuation of the plea of justification up until the time of the commencement of the appeal. Neither was the issue considered by the Ontario Court of Appeal.
Justice Cory had this to say at p. 1207:
It is, as well, appropriate for an appellate court to consider the post-trial actions of the defendant. It will be recalled that Scientology, immediately after the verdict of the jury, repeated the libel, thus forcing the plaintiff to seek and obtain an injunction restraining Scientology from repeating the libel. It did not withdraw its plea of justification until the hearing of the appeal. All this indicates that the award of aggravated damages was strongly supported by the subsequent actions of Scientology.
There is nothing before this Court to suggest that the continuation of the plea of justification by the appellants throughout the course of this appeal was anything other than a bona fide attempt by the appellants to take issue with the finding of the trial judge.
Professor Brown notes (2nd Ed., Vol 3, p. 25-42):
Some courts take the position that where a plea of justification is made in good faith, it will not serve to aggravate the damages. It is argued by these courts that a persistence in a bona fide defence cannot be used to aggravate damages.
To the same effect is Prosser and Keaton, Law of Torts, 5th Ed., 1984, at p. 842, where the authors state:
The modern cases, however, have tended quite properly to recognize that the defendant is entitled to present an honest defense without being penalized, and have limited such aggravation to cases where it appears that the defense was entered in bad faith without evidence to support it.
In considering the factors that a jury properly may take into account in assessing aggravated damages, Justice Cory included a plea of justification "which the defendant knew was bound to fail" (p. 1206).
There is no basis to suggest that the appellants were motivated by bad faith in persisting with the plea of justification before this Court. The issue of whether an award of aggravated damages should be considered by a court of appeal when an appellant, mala fide, persists in a plea of justification before that Court, is therefore a threshold issue which need not be considered.
For the reasons set out above, I would dismiss the cross-appeal.
Conclusions
I would allow the appeal with respect to the issue of pre-judgment interest and substitute a rate of interest of two and one-half per cent (21/2%) in place of the average of the Royal Bank's prime rate, over the period determined by the trial judge.
I would dismiss the balance of the appeal, as well as the cross-appeal. In view of the overall success of the respondent, I would award costs to the respondent in the amount of Five Thousand Dollars ($5,000.00), together with disbursements.
Pugsley, J.A.
Concurred in:
Hart, J.A.
Freeman, J.A.
C.A. No.145621
NOVA SCOTIA COURT OF APPEAL
BETWEEN:
ATTORNEY GENERAL OF )
NOVA SCOTIA and SHARON )
VERVAET )
)
Appellants )
- and - )
)
HILTZ and SEAMONE )
COMPANY LIMITED ) ) REASONS FOR
) JUDGMENT BY:
Respondent )
) PUGSLEY, J.A.
)
)