COURT FILE NO.: 20/09
DATE: 20090325
SUPERIOR COURT OF JUSTICE - ONTARIO
(DIVISIONAL COURT)
RE: 1522491 ONTARIO INC.
Plaintiff (Respondent)
- and-
STEWART, ESTEN PROFESSIONAL CORPORATION, WILLIAM J. LESLIE, and VESPRA COUNTRY ESTATES LILMITED
Defendants (Applicants)
BEFORE: Karakatsanis J.
COUNSEL: Sandra Secord and S. Thom, for the Applicants
Melvyn L. Solmon and Matthew Valitutti, for the Respondent
HEARD AT TORONTO: February 27, 2009
[1] This is a motion for leave to appeal the decision of Justice Pitts of December 3, 2008, dismissing the applicant’s motion to strike the Statement of Claim under Rule 21 on the basis that the claim discloses no reasonable cause of action. The claim is in defamation only and the applicants maintain that absolute privilege applies to the communications.
[2] The communications at issue are contained in a letter and the attached draft Statement of Claim that was issued the following day. The dispute was between two real estate developers about a parcel of land. The letter was addressed to a town planner who later that day swore an affidavit that was used to obtain a Certificate of Pending Litigation with respect to land in dispute between the parties. The letter attached the draft pleadings and reads in its entirety: “Enclosed find a copy of a Statement of Claim which we intend to issue tomorrow on behalf of our client, the plaintiff. You will see that the claim alleges that the defendant Bravakis and his company breached an agreement to assume full responsibility for all costs necessary to improve county road no. 22 and Fox Farm Road. If I can assist you further, please advise.”
[3] Leave to appeal under Rule 62.02 (4) will not be granted unless either a) there is a conflicting decision by another judge or court in Ontario or elsewhere; or b) there is good reason to doubt the correctness of the decision. In either case, the applicant must also show that the issues are of importance beyond the interests of the parties, such that it is desirable that leave be granted.
[4] A Rule 21 motion is made on the pleadings and for the purposes of the motion the judge must assume the truth of all the statements in the pleadings unless they are patently ridiculous or incapable of proof.
[5] It is undisputed from the pleadings that the Statement of Claim was issued the next day; the letter was sent with the purpose of obtaining evidence from that person; the recipient swore an affidavit later that day in support of a motion connected to the action. The pleadings also assert that the letter was not sent for the purpose of obtaining information from a potential witness, nor was it a step that initiated judicial proceedings. While the pleadings allege that the communication was not necessary or properly incidental or preparatory to litigation and specifically plead that the communication was not made for that purpose, they also assert that the defendants knew the witness would not have first hand information and the purpose of the letter was to provide inaccurate and incomplete information to the recipient to mislead him and garner his assistance in swearing a false affidavit.
[6] The applicants submitted that by stating that the purpose was to mislead and persuade a witness to swear an affidavit in an action based upon facts of which he had no personal knowledge, the pleadings establish that the purpose was necessary, preliminary or incidental to the litigation.
[7] There is no dispute that whether the communication is made with malice or with bad faith is irrelevant to an occasion where absolute privilege exists. This is an important difference between absolute privilege made in the course of, or for the purpose of, judicial proceedings and qualified privilege which can be negated by proof of malice or bad faith. Furthermore, it is well accepted that absolute privilege may arise before the commencement of the proceedings. In Lincoln v Daniels, absolute privilege was first extended to the taking of witness statements by a solicitor i.e. “where it is strictly necessary to do so in order to protect those who are to participate in the proceedings from a flank attack.”
[8] In Ontario, absolute privilege may be extended to occasions that are ‘preparatory’, ‘preliminary’, ‘intimately connected’, ‘necessary or incidental to the institution of proceedings’ provided the communications on such occasions are intimately connected to the litigation.
[9] In Sussman v Eagles, [1986] O.J. No.317, the Ontario Court of Appeal held a letter of complaint to the Royal College of Dental surgeons “incidental to the initiation of quasi judicial discipline proceedings” was subject to absolute privilege. (The same letter sent to the professional association did not attract the privilege.) In Fabian v Margulies, [1984] O.J. No. 1023 (H.C.J.), aff’d 53 O.R.(2d) 380, leave to appeal to the Supreme Court of Canada denied (1986), 21 O.A.C. 78n, absolute privilege attached to the preparation of a pre-litigation medical-legal report by a psychiatrist who was subsequently called to testify in a motor vehicle action.
[10] Ontario courts have applied absolute privilege to occasions where communications were made ‘preparatory’ or ‘preliminary’ or ‘investigatory’ with a view to litigation. In Dingwall v Lax, [1988] O.J. N0.61 at para. 16, Potts J. found it applied when a lawyer wrote a letter attaching a Statement of Claim and advising that it would be issued on a certain date if the dispute had not been resolved. Potts J. found the letter and the draft Statement of Claim were preparatory steps and intimately connected to a judicial proceeding. In G.W.E. Consulting Group v Schwartz et al, [1990] O.J. No. 208 at para. 17, the solicitor was communicating with a person from whom he anticipated obtaining potentially relevant information, after the decision to litigate had been made and the Statement of Claim had been drafted.
[11] In Moseley-Williams v Hansler Industries Ltd., [2004] O.J. No. 5253, Cullity J. analyzed Ontario cases and concluded that the principles in Sussman still apply in Ontario and subsequent cases have further developed where to draw the line. He held that in order to determine whether or not a particular occasion is one of absolute privilege, all the facts, including the purpose of the communication, must be considered to determine whether an impugned communication was “for the purpose of, or preparatory to, the commencement of judicial proceedings”. The approach of the Ontario courts is consistent with the often cited passage from the text Fleming on Torts:
The privilege is not confined to statements made in court, but extends to all preparatory steps taken with a view to judicial proceedings….but the statement or document must be directly concerned with actual contemplated proceedings; not just remotely so, like a factual report containing allegations which merely might provide a ground for future prosecution.
The privilege attaches to any utterance reasonably related to the subject of the judicial inquiry…
[12] In Moseley, Cullity refused to grant summary judgment on the basis of absolute privilege in an action of libel; an action was never commenced and it was not clear that litigation had been contemplated. Cullity J. found that the letter was written for the purpose of asserting legal rights, but not for the purpose of or preparatory to, the commencement of proceedings. He distinguished other Ontario cases in part on the basis that a draft Statement of Claim had already been prepared and subsequently issued.
[13] In this case, Pitt J. cited the Moseley case, for the proposition that whether absolute privilege applies to statements made prior to litigation, some inquiry into the purpose of their publication would appear to be unavoidable. He also noted that no case was brought to his attention in which absolute privilege was applied in a factual matrix similar to the facts in this case.
[14] The motions judge held that the closeness in time of the communication with the issuance of the Statement of Claim and the identity of the person as an important witness who that day swore an affidavit used in connection with the action, by themselves were not dispositive of the issue of absolute privilege. In reviewing the law relating to absolute privilege, the motions judge stated that it may be necessary to prove that the communications are part of a recognized step in the judicial proceeding and/or are truly connected or reasonably related to the judicial proceeding. He set out the legal test, citing Fleming on Torts and then stated:
By contrast, a communication made prior to the issuance of the Statement of Claim that contained gratuitously defamatory material that was clearly irrelevant to the issues in the law suit, might not attract protection grounded on absolute privilege. Nor is absolute protection afforded to a communication the objective of which was to induce or facilitate perjured or merely factually false testimony (para.14).
[15] The applicants submit that there is reason to doubt the correctness of the motions judge’s decision because he undertook no analysis and made no finding as to whether the impugned communications were for the purpose of, or preparatory to, judicial proceedings; he erred in considering the motivation or the intention behind the communication rather than the function or use of the communication and thereby applying the test for qualified rather than absolute privilege.
[16] While it may well be that the decision was correct based upon the pleadings in this case, the statement of the law in para. 14 appears to depart from and conflict with the principle that if the occasion is one of absolute privilege, it cannot give rise to an action in defamation regardless of malice or knowledge that the statements were themselves false. It appears to confuse the considerations relevant to occasions of absolute privilege with those relevant to qualified privilege and opens the correctness of the decision to serious debate.
[17] While an inquiry into the purpose of the statements must be made to determine whether the statements were ‘for the purpose of, or preparatory to, the commencement of judicial proceedings’, motivation, bad faith or malice behind the communication is irrelevant to absolute privilege provided it was intimately connected with the litigation. In this case, the basis of the action on the pleadings is that the applicants provided the draft Statement of Claim for the purpose of obtaining false evidence in support of the litigation.
[18] Further, because the decision casts uncertainty upon the application of absolute privilege in Ontario to communications made by a solicitor prior to the formal commencement of judicial proceedings, it is desirable that an appellate court decision be made on the issue. The public policy rationale behind absolute privilege is to permit access to justice. I agree that the issue transcends the interests of the parties and it would be desirable that leave be granted.
[19] For these reasons, leave to appeal is granted. The parties agreed that if leave were granted, costs should be left to the panel hearing the appeal.
KARAKATSANIS J.