COURT OF APPEAL FOR ONTARIO
CITATION: TPG Technology Consulting Ltd. v. Canada (Industry Canada), 2012 ONCA 87
DATE: 20120208
DOCKET: C54240
Sharpe, Blair and Rouleau JJ.A.
BETWEEN
TPG Technology Consulting Ltd. and Donald Powell
Plaintiffs (Appellants)
and
Her Majesty the Queen in Right of Canada as represented by the Minister of Industry Canada and as represented by the Competition Bureau of Canada, John Pecman, Sheridan Scott and Stephen Fitzpatrick
Defendants (Respondents)
Charles Gibson for TPG Technology Consulting Ltd.
Alexandre Kaufman, for the Her Majesty the Queen in Right of Canada
Heard: January 6, 2012
On appeal from the order of Justice Stanley Kershman of the Superior Court of Justice, dated July 28, 2011, with reasons reported at 2011 ONSC 4604, [2011] O.J. No. 3511.
Sharpe J.A.:
[1] The issue on this appeal is whether the motion judge erred by striking out a defamation claim on a rule 21.01(1) pleadings motion on the ground that the allegedly defamatory words are not capable of bearing defamatory meaning.
[2] The appellants’ claim arises out of a bid-rigging investigation and inquiry conducted by the Competition Bureau that led to charges against the appellants and several other parties under the Competition Act, R.S.C. 1985, c. C-34, s. 47. In their amended statement of claim, the appellants allege that the charges, and the manner in which the charges were announced to the public, were part of a deliberate and malicious effort by the respondents to discredit and harm the appellants. The respondents say that they merely reported the fact that the appellants had been charged with bid-rigging and that the statements are not capable of bearing a defamatory meaning.
FACTS
[3] The appellant TPG Technology Consulting Ltd. (“TPG”) specializes in providing professional information technology (“IT”) services to public and private corporations and has been a major supplier of IT services to the federal government. The appellant Powell is the sole shareholder of TPG.
[4] In 2006, the Competition Bureau commenced an inquiry into bid-rigging allegations against fourteen individuals and seven companies, including the appellants. The appellants and others were suspected of coordinating their bids for IT service contracts with the federal government in violation of the Competition Act. On February 17, 2009, at the request of the Competition Bureau, the Attorney General filed criminal charges against the suspected companies and individuals. On that same day, the Bureau announced the charges in a press release on its website. The website provides details regarding the Competition Act and the type of conduct it seeks to deter. Media outlets published a number of articles regarding the Bureau’s inquiry into the appellants’ conduct based on information posted on the Bureau’s website.
[5] In their amended statement of claim, the appellants allege that the Bureau defamed them in two separate ways: (i) in their own internet postings; and (ii) by providing information that formed the basis of various media publications.
[6] The alleged defamatory words that have been disseminated on the Bureau’s website:
As a result of the agreement, the bidders were allegedly able to maximize the rates at which services were to be provided to the various departments.
…
…the Bureau’s best weapons to combat these secret criminal anti-competitive agreements.
…
Some recent studies suggest that in cases where bid- rigging occurs, the price paid for the good or service typically increases by about 20 percent.
…
The Bureau found evidence indicating that several IT services companies in the National Capital Region secretly coordinated their bids in an illegal scheme to defraud the government by winning and dividing contracts, while blocking out honest competitors.
…
Bid-rigging is a criminal offence where bidders secretly agree not to compete or to submit bids that have been pre-arranged among themselves. Their goal is to thwart the competitive tendering process and inflate prices to purchasers.
Bid-rigging charges under s. 47 of the Competition Act. Charges laid against 7 companies and 14 individuals based on allegations that the parties entered into agreements to coordinate their bids in an illegal scheme to defraud the government by winning and dividing contracts for information technology services
[7] Similar statements were published by various media outlets in Ontario, and in other provinces, allegedly as a result of the information provided by the respondents. The media reports stated, inter alia, that:
… bid-rigging is a lot like price-fixing - with the aim of secretly agreeing to get as much money as possible out of each contract. The bureau says it can inflate prices by as much as 20%.
… an illegal scheme to defraud the government by winning and dividing contracts, while blocking out honest competitors.
In a statement, the interim Commissioner of Competition said the alleged infractions increased the final price of the services to the government.
[8] The amended statement of claim also asserts a claim of abuse of public office. The appellants allege that the investigation and bid-rigging charges, and the dissemination of the defamatory statements, were a direct response to a lawsuit commenced by the appellant TPG against Public Works Government Services of Canada. The lawsuit alleges irregularities during a bidding process in which CGI, one of TPG's competitors, was selected as the supplier of services previously supplied by TPG. The appellants further allege that the investigation, charges, and dissemination of the defamatory statements, were an intimidation tactic in response to the appellant Powell’s testimony before a Parliamentary standing committee alleging that the Minister of Public Works was guilty of conflict of interest in relation to the CGI contract.
ISSUES
1. Did the motion judge err in striking out the defamation claim under rule 21.01 on the ground that the impugned statements are not capable of bearing defamatory meaning?
2. Is the defamation claim arising from alleged defamatory statements in Ontario media barred because the appellants failed to give timely notice pursuant to the Libel and Slander Act, s. 5(1)?
ANALYSIS
1. Did the motion judge err in striking out the defamation claim under rule 21.01 on the ground that the impugned statements are not capable of bearing defamatory meaning?
[9] It is well-established that it is only where it is “plain and obvious” that the impugned statement is not capable of bearing defamatory meaning that a motion under rule 21.01 will succeed: Mantini v. Smith Lyons LLP (2003), 64 O.R. (2d) 516 (C.A.).
[10] The motion court judge appropriately characterized the issue, at para. 18 of his reasons, as whether the respondents “went beyond simply stating that the [appellants] had been charged with bid-rigging; specifically, did they imply that the plaintiffs engaged in conduct more serious and blameworthy than bid-rigging.”
[11] A report that someone is under investigation or that they have been arrested for, or charged with, a criminal offence is not considered the “equivalent of saying that the person has committed the crime unless there is something in the language of the report that suggests the plaintiff’s guilt”: Raymond E. Brown, Brown on Defamation, loose-leaf, (Toronto: Carswell, 2011), ch.4 at pp. 4-165 to 4-166; Roger D. McConchie & David A Potts, Canadian Libel and Slander Actions, (Toronto: Irwin Law Inc., 2004) at p. 516. However, reports of arrest or charges will be capable of conveying a defamatory meaning, “where it is stated, either directly or by clear implication, that an offence has been committed, and the qualifications contained in any of the surrounding statements are not sufficient to outweigh or nullify the effect of what appears to be a plain statement of fact”: Shave v. West Australian Newspapers Ltd., [2000] W.A.S.C. 172 (S.C.) at para. 29.
[12] A distinction is drawn “between reports which are thought to do no more than state that a person is under investigation or has been charged with a criminal offence” and reports which assert “directly, or by clear implication, that the plaintiff has been involved in acts amounting to a criminal offence”; the former are generally not considered capable of a defamatory meaning while the latter are: Shave v. West Australian Newspapers Ltd., [2000] W.A.S.C. 172 (S.C.) at para. 28; Raymond E. Brown, Brown on Defamation, ch.4 at 4-168.
[13] The law in this area has been most clearly articulated in the Australian case, Mirror Newspapers Ltd. v. Harrison [1982] HCA 50; (1982) 149 C.L.R. 293, per Mason J. at pp. 300-01:
The ordinary reasonable reader is mindful of the principle that a person charged with a crime is presumed innocent until it is proved that he is guilty. Although he knows that many persons charged with a criminal offence are ultimately convicted, he is also aware that guilt or innocence is a question to be determined by a court, generally be a jury, and that not infrequently the person charged is acquitted.
…
A distinction needs to be drawn between the reader’s understanding of what the newspaper is saying and judgments or conclusions which he may reach as a result of his own beliefs and prejudices. It’s one thing to say that a statement is capable of bearing an imputation of defamatory of the plaintiff because the ordinary reasonable reader would understand it in that sense, drawing on his own knowledge and experience of human affairs in order to reach that result. It is quite another thing to say that a statement is capable of bearing such an imputation merely because it excites in some readers a belief or prejudice from which they proceed to arrive at a conclusion unfavourable to the plaintiff. The defamatory quality of the published material is to be determined by the first, not by the second, proposition.
[14] The question in this case is, therefore, do the statements complained of go beyond simply stating that the appellants have been charged with a criminal offence? For the following reasons, I conclude that when the amended statement of claim is fairly read as a whole, the question of whether the impugned statements are capable of bearing a defamatory meaning raises issues of fact that are not susceptible of being determined on a pleadings motion.
[15] The motion judge appears to have failed to distinguish between the two stages of the process to be followed when determining whether the impugned statements were capable of defamatory meaning. The first stage requires a determination of whether the impugned expression is capable of bearing a defamatory meaning. This is “a question of law and has been referred to as the gatekeeper function’”: see Mantini v. Smith Lyons LLP (2003), 64 O.R. (3d) 516 at para. 11; Laufer v. Bucklaschuk (1999), 181 D.L.R. (4th) 83 (Man. C.A.) at para. 25, leave to appeal to SCC refused (2000), 189 D.L.R. (4th) vii (S.C.C.); Roger D. McConchie & David A Potts, Canadian Libel and Slander Actions, at p. 295.
[16] The question of whether the words actually conveyed those meanings, on the other hand, is a question of fact: see, for example, Young v. Toronto Star Newspapers Ltd. (2005), 259 D.L.R. (4th) 127 (Ont. C. A.) at para. 68; Laufer v. Bucklaschuk (1999), 181 D.L.R. (4th) 83 (Man. C.A.) at para. 25, leave to appeal to SCC refused (2000).
[17] The motion judge did not advert to the two-stage process and appears to me to have conflated the initial threshold legal issue with the second factual issue that properly belonged to the trier of fact. He concluded, at para 23, that the Bureau’s statement that the appellants’ objective was to maximize the rate they would charge for their services “[was] a fair characterization of what the plaintiffs sought to achieve by engaging in bid-rigging.” Similarly, at para. 24, the motion judge found that statements to the effect that the appellants “had secretly’ coordinated their bids to illegally defraud the government” was a “fair characterization of the charges to which [sic] the plaintiffs were accused.”
[18] In my view, in the context of this case, the question whether the statements made by the respondents were a “fair characterization” of the charges against the appellants involved issues of fact and belongs to the second stage of the two-stage analysis. It was not appropriate for the motion judge to make those findings on the material before him on a rule 21.01(1) motion.
[19] It is common ground that to establish bid-rigging, the Crown does not have to prove that prices were inflated or that anyone was defrauded. While avoidance of inflated prices and fraud are undoubtedly the underlying rationale for the creation of the offence of bid-rigging, they are not ingredients or elements of the offence.
[20] In the amended statement of claim, the appellants specifically deny that prices were inflated or that the government was defrauded. The appellants also allege that the respondents made these statements “despite their knowledge that these allegations are unfounded” and that “[t]he purpose of the defamatory statements was to discredit and attack the credibility of the [appellants] and to damage the [appellants’] ongoing business with the Government of Canada.”
[21] Moreover, it would appear that at the appellants’ upcoming trial, neither fraud nor inflated prices will form any part of the Crown’s case. The reasons of the preliminary inquiry judge committing the appellants for trial quote the theory advanced by the Crown:
The theory of the Crown is that the accused decided to unify their efforts to win all the contracts from various RFPs. To achieve that result, they would participate in numerous meetings, communicate (orally and in writing), share information about technical requirements and pricing of bids, delegate to each other a role in the preparation of the bids, maintain a “tracking list” which identifies the parties, the winning RFPs, their resources, the prices, the contracts awarded, and acted collectively in responding to the authorities or in dealing with the contracts awarded.
[22] It is also important to read the statement of claim as a whole. The defamation claim is closely linked to the abuse of public office claim. The appellants allege that the statements supporting the defamation claim were part and parcel of a deliberate and malicious attempt to discredit them and to intimidate them so that they would not continue their lawsuit alleging that the government and the Minister of Public Works acted in conflict of interest.
[23] We are, then, left with this. It is at least arguable that the impugned statements suggest that the appellants were guilty of fraud and price inflation. These allegations need not be proven as elements of the offences charged, nor did they form any part of the case that the Crown led at the preliminary inquiry. They are also strenuously denied by the appellants, who plead that they are part of a deliberate and malicious attempt to discredit and harm the appellants.
[24] When that entire context is taken into account, it is my view that it cannot be said that it is plain and obvious that the impugned statements are not capable of bearing a defamatory meaning. The determination of that issue is better left to trial on a full factual record.
[25] I hardly need add that I make no comment as to whether there is any basis in fact for these very serious allegations. What I will say, however, is that at this stage of the proceedings when we only have before us the appellants’ version of the facts, these are not matters that can be resolved on a pleadings motion and that the best and fairest course is to allow the entire matter to proceed to trial.
2. Is the defamation claim arising from alleged defamatory statements in Ontario media barred because the appellants failed to give timely notice pursuant to the Libel and Slander Act, s. 5(1)?
[26] As I have already noted, the amended statement of claim alleges that the respondents provided the media with false and defamatory information about them which formed the basis of several media articles. Several of the publications in which the allegedly defamatory statements appeared are Ontario publications. In response to a request to admit, the appellants admitted that they did not provide notice of their claim pursuant to s. 5 (1) of the Libel and Slander Act, R.S.O. 1990, c. L-12, which states:
Notice of action
(1) No action for libel in a newspaper or in a broadcast lies unless the plaintiff has, within six weeks after the alleged libel has come to the plaintiff’s knowledge, given to the defendant notice in writing, specifying the matter complained of, which shall be served in the same manner as a statement of claim or by delivering it to a grown-up person at the chief office of the defendant.
[27] As the motion judge struck the entire defamation claim, he did not deal with this issue.
[28] The appellants argue that no notice was required on the ground that their claim is for slander for transmitting words to the media rather than for the publication of the words by the media.
[29] I am unable to accept that submission.
[30] In my view, it is clear from the amended statement of claim that the appellants did not plead a claim for slander. That claim would necessarily be limited to damages flowing from the communication and not include damages flowing from the publications that followed. Rather, the appellants are alleging that the respondents were the source of the allegedly defamatory information that was published by the media and which, they say, caused damage to their reputation. As framed, the claim for defamation is based on the fact that the information was published “in a newspaper or in a broadcast” and the notice requirement imposed by s. 5(1) therefore applies.
[31] As explained by Brown on Defamation, at pp. 7-30 to 7-31, a person who communicates a defamatory remark to a newspaper will be held responsible for libel, rather than slander, as though he or she published it him- or herself:
Thus, it has been said by the Supreme Court of Canada that a person who communicates a defamatory remark to a newspaper reporter will be deemed to have authorized that reporter to publish the remark in the newspaper and will be held responsible as though he published it himself. […] If the defamation is published in the newspaper, the liability will sound in libel rather than slander even if the defendant communicated it orally to the reporter
[32] The rationale behind s. 5(1) “is to give a defendant an opportunity to correct, retract, justify, apologize for, or otherwise consider what mitigating steps are appropriate” : Siddiqui v. Canadian Broadcasting Corporation (2000), 50 O.R. (3d) 607 (C.A.) at para. 16. The section and the rationale have been applied to non-media defendants by several decisions of this court: Janssen-Ortho Inc. v. Amgen Inc. (2005), 256 D.L.R. (4th) 407 (Ont. C.A.); Watson v. Southam Inc. (2000), 189 D.L.R. (4th) 695 (Ont. C.A.); DeHeus v. Niagara Regional Police Services Board [2001] O.J. No. 4201 (C.A.); Weiss v. Sawyer (2002), 61 O.R. (3d) 526 (C.A.). In Watson v. Southam Inc., Weiler J.A. noted that the application of the section to non-media defendants had been criticized, but concluded that the parties had not made out a case for overruling it. The same observation applies to this case.
[33] Accordingly, I conclude that to the extent the claim for defamation rests upon allegedly defamatory statements published or broadcast by media in Ontario, it should be struck out on the ground that the appellants failed to give the notice required by s. 5(1).
DISPOSITION
[34] Accordingly, I would allow the appeal, set aside the order dismissing the claim for defamation and in its place, substitute an order striking only those paragraphs of the amended statement of claim resting on defamatory statements published or broadcast by media in Ontario.
[35] In view of the divided success, I would award the appellants costs fixed in the amount of $7,500 inclusive of disbursements and HST.
“Robert J. Sharpe J.A.”
“I agree R.A. Blair J.A.”
“I agree Paul Rouleau J.A.”
Released: February 8, 2012