1522491 Ontario Inc. v. Stewart, Esten Professional Corporation et al. [Indexed as: 1522491 Ontario Inc. v. Stewart, Esten Professional Corp.]

100 O.R. (3d) 596

2010 ONSC 727

Ontario Superior Court of Justice,

Divisional Court,

Ferrier, Swinton and Sachs JJ.

February 16, 2010

Torts -- Defamation -- Privilege -- Absolute privilege -- Motion judge erring in finding that absolute privilege did not attach to letter which was sent with draft statement of claim because letter contained defamatory material which was clearly irrelevant to issues in lawsuit and which was intended to induce false testimony -- Privilege belonging to occasion and not to communication -- Motion judge erroneously focusing on nature of conduct rather than occasion -- Communication made preparatory for and with view to judicial proceedings -- Communication made on occasion of absolute privilege.

The appellant lawyers acted for a real estate developer in an action against another developer, the respondent. The day before the statement of claim in that action was issued, the appellants sent a draft statement of claim to a town planner with a cover letter containing false statements. The letter was intended to mislead the town planner and induce him to swear an affidavit for use by the appellants on a motion for a certificate of pending litigation. The respondent sued the appellants for damages for defamation. The appellants moved to strike out the statement of claim and dismiss the action pursuant to rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The motion judge held that a communication made prior to the issuance of a statement of claim that contains gratuitously defamatory material that is clearly irrelevant to the issues in the lawsuit may not attract protection grounded on absolute privilege, and that absolute protection is not afforded to a communication the objective of which is to induce or facilitate perjured or factually false testimony. The motion was dismissed. The appellants appealed.

Held, the appeal should be allowed.

Absolute privilege applies even though counsel, in communicating the words, may have been guilty of malice or misconduct, or had an ulterior motive. The privilege applies even though the statements were made falsely. Absolute privilege may extend to communications by a party's solicitor made before the actual commencement of proceedings if the communication was made for the purpose of, or preparatory to, the commencement of judicial proceedings. It is the occasion, not the communication, that is privileged. The motion judge erred in focusing on the nature of the appellants' conduct rather than the occasion. On the facts as pleaded, the communication was clearly made preparatory for and with a view to judicial proceedings. It was made on an occasion of absolute privilege.

APPEAL from the order dismissing the motion to strike out the statement of claim and dismiss the action.

Cases referred to 1522491 Ontario Inc. v. Stewart, Esten Professional Corp., [2008] O.J. No. 4872 (S.C.J.), supp. reasons [2009] O.J. No. 53 (S.C.J.) [Leave to appeal granted [2009] O.J. No. 1413, 2009 15656 (Div. Ct.)]; Big Pond Communications 2000 Inc. v. Kennedy (2004), 2004 18758 (ON SC), 70 O.R. (3d) 115, [2004] O.J. No. 820, 236 D.L.R. (4th) 727, [2004] O.T.C. 213, 22 C.C.L.T. (3d) 315, 129 A.C.W.S. (3d) 289 (S.C.J.); [page597] Dechant v. Stevens, [2001] A.J. No. 172, 2001 ABCA 39, [2001] 5 W.W.R. 405, 89 Alta. L.R. (3d) 246, 281 A.R. 1, 103 A.C.W.S. (3d) 633; Dingwall v. Lax (1988), 1988 4716 (ON SC), 63 O.R. (2d) 336, [1988] O.J. No. 61, 47 D.L.R. (4th) 604, 8 A.C.W.S. (3d) 95 (H.C.J.); Elliott v. Insurance Crime Prevention Bureau, [2005] N.S.J. No. 323, 2005 NSCA 115, 256 D.L.R. (4th) 674, 236 N.S.R. (2d) 104, 26 C.C.L.I. (4th) 1, 141 A.C.W.S. (3d) 878; Fuss v. Fidelity Electronics of Canada Ltd., [1996] O.J. No. 161, 60 A.C.W.S. (3d) 635 (Gen. Div.); G.W.E. Consulting Group Ltd. v . Schwartz (1990), 1990 6831 (ON SC), 72 O.R. (2d) 133, [1990] O.J. No. 208, 66 D.L.R. (4th) 348, 19 A.C.W.S. (3d) 777 (H.C.J.); Hall v. Baxter, [1922] O.J. No. 525, 22 O.W.N. 207 (S.C. (H.C. Div.)); Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, 74 D.L.R. (4th) 321, 117 N.R. 321, [1990] 6 W.W.R. 385, J.E. 90-1436, 49 B.C.L.R. (2d) 273, 4 C.C.L.T. (2d) 1, 43 C.P.C. (2d) 105, 23 A.C.W.S. (3d) 101; Lincoln v. Daniels, [1962] 1 Q.B. 237, [1961] 3 All E.R. 740, [1961] 3 W.L.R. 866 (C.A.); Lubarevich v. Nurgitz, [1996] O.J. No. 1457, 1 O.T.C. 360, 62 A.C.W.S. (3d) 1091 (Gen. Div.); Moseley- Williams v. Hansler Industries Ltd., 2004 66313 (ON SC), [2004] O.J. No. 5253, 38 C.C.E.L. (3d) 111, 32 C.C.L.T. (3d) 266 (S.C.J.); Munster v. Lamb (1883), 11 Q.B.D. 588 (Eng. C.A.); Nash v. Ontario (1995), 1995 2934 (ON CA), 27 O.R. (3d) 1, [1995] O.J. No. 4043, 59 A.C.W.S. (3d) 1083 (C.A.); Sussman v. Eales, [1986] O.J. No. 317, 25 C.P.C. (2d) 7 (C.A.); Web Offset Publicat ions Ltd. v. Vickery (1999), 1999 4462 (ON CA), 43 O.R. (3d) 802, [1999] O.J. No. 2760, 123 O.A.C. 235, 89 A.C.W.S. (3d) 1315 (C.A.), affg (1998), 1998 14858 (ON SC), 40 O.R. (3d) 526, [1998] O.J. No. 6478 (Gen. Div.) [Leave to appeal to S.C.C. refused [1999] S.C.C.A. No. 460] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 20 [as am.], 21.01(1)(b) Authorities referred to Brown, Raymond E., The Law of Defamation in Canada, 2nd ed., looseleaf (Toronto: Carswell, 1999) Fleming, John G., The Law of Torts, 5th ed. (Sydney: Law Book Company, 1977) Fleming, John G., The Law of Torts, 9th ed. (Sydney: LBC Information Services, 1998)

Melvyn Solmon and Matthew Valitutti, for respondent. Sandra Secord and Stewart D. Thom, for appellants Stewart, Esten Professional Corporation and William J. Leslie.

The judgment of the court was delivered by

FERRIER J.: -- Introduction

[1] In this action, 1522491 Ontario Inc. ("152") claims damages for defamation. The defendants Stewart, Esten Professional Corporation and William J. Leslie (the "appellants") moved to strike out the statement of claim and dismiss the action pursuant to rule 21.01(1)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]. By order dated January 9, 2009, Pitt J. dismissed [page598] the motion [see [2008] O.J. No. 4872 (S.C.J.), supp. reasons at [2009] O.J. No. 53 (S.C.J.)]. The appellants appeal that order, leave having been granted by order of Karakatsanis J. dated March 25, 2009 [[2009] O.J. No. 1413, 2009 15656 (Div. Ct.)].

[2] The central issue on this appeal is whether the alleged defamatory statement was communicated on an occasion of absolute privilege, entitling the appellants to have the statement of claim struck out and the action dismissed.

Background Facts

[3] Both the defendant Vespra Country Estates Limited ("Vespra") and the plaintiff, 152, are developers. 152 carries on business as Pine Hill Estates. As noted by the motion judge, "the Statement of Claim recites a long convoluted series of events that relate to an existing lawsuit in a bitter feud between real estate developers".

[4] Vespra owned a parcel of land, part of which it sold to 152. The parties then proceeded with their plans to develop their respective parcels. The "existing lawsuit" is one in which Vespra is suing 152 for breach of an alleged agreement that 152 would be responsible for the payment of municipally mandated road improvements to adjacent public roads (the "Vespra action"). In that action, Vespra claims specific performance, damages and a declaration that the lands in the development held by 152 are subject to a resulting trust in favour of Vespra.

[5] The appellants are the law firm and lawyer, respectively, who have acted for Vespra in connection with the development and in connection with a series of agreements between Vespra, 152, the County of Simcoe ("County") and the Township of Springwater ("Township"). The appellants also act for Vespra in the Vespra action. A resolution of the Vespra action will involve an exploration of the negotiations, communications and understandings reached among the aforementioned four entities.

[6] Darren Vella, the recipient of the alleged defamatory communication, was the planner for the Township at the material times.

Facts as Pleaded in the Defamation Action

[7] The following facts are pleaded.

[8] The Vespra action was commenced by the issuance of a statement of claim on April 20, 2004.

[9] By the day before, April 19, 2004, the appellants had prepared a draft statement of claim in form identical to that issued the following day. As well, in preparation for obtaining a [page599] Certificate of Pending Litigation ("CPL") over the property, the appellants had prepared materials for use on a CPL motion.

[10] On the same day, April 19, 2004, the appellants provided the draft claim and enclosing letter to Vella. The letter reads as follows:

April 19, 2004

Darren Vella, Planner Township of Springwater 1110 Hwy 26 Midhurst, Ontario L0L 1X0

Dear Sir:

Re: Vespra Country Estates v. Bravakis et al.

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 Pine Hill Estates 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.

Yours very truly,

STEWART, ESTEN

WILLIAM J. LESLIE, Q.C. WJL/gk Encl.

[11] On April 19, 2004, Vella swore an affidavit for use on the CPL motion, which motion was granted on April 27, 2004.

[12] The appellants knew that Vella was not a witness who could testify as to the fact of an agreement to assume the costs of the road improvements or a breach thereof.

[13] Despite that, the appellants approached Vella to swear an affidavit which they prepared for the CPL motion and misled Vella as to the alleged agreement because Vella had no knowledge of the agreements or negotiations with the County.

[14] Before Vella swore the affidavit, the above-noted letter and enclosure was provided and published to Vella.

[15] The letter was provided maliciously and in bad faith.

[16] The purpose of the letter was not to obtain information from a potential witness -- rather, it was to mislead him and garner his assistance. The publication of the letter was not necessary or properly incidental to the institution of the Vespra claim.

[17] The purpose of the letter was not to ask Vella to comment on the draft claim, nor was he asked if it was accurate. [page600]

[18] The appellants knew that the letter was, in the ordinary course of business, likely to be opened and read by the Township and would likely be brought to the attention of the County.

[19] False and defamatory statements were contained in the draft claim.

[20] Vella swore a second affidavit on June 8, 2004, prepared by the Township solicitors, in support of a motion by 152 to vacate the CPL. The second Vella affidavit notes incorrect statements that were sworn to in the first affidavit. The second affidavit was quite different from the first. Vella was cross-examined on both affidavits.

[21] The CPL was discharged by order of Keenan J. on July 15, 2004 due to material non-disclosure.

[22] The purpose of the publication was to obtain and use the Vella affidavit to obtain the CPL; in this way, Vespra could obtain leverage to force 152 to pay the road-work costs.

Decision of the Motion Judge

[23] The learned motion judge correctly outlined the law covering motions under rule 21.01(1)(b), which I summarize here: the "plain and obvious" test; the facts in the claim are taken as proven unless patently ridiculous or incapable of proof; the court should not dispose of matters of law that are not fully settled in the jurisprudence; and the threshold for sustaining a pleading under rule 21.01(1)(b) is not a high one: see Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93; Nash v. Ontario (1995), 1995 2934 (ON CA), 27 O.R. (3d) 1, [1995] O.J. No. 4043 (C.A.); Web Offset Publications Ltd. v. Vickery (1999), 1999 4462 (ON CA), 43 O.R. (3d) 802, [1999] O.J. No. 2760 (C.A.).

[24] The motion judge reviewed several cases dealing with the absolute privilege that applies to proceedings in or before a judicial tribunal. He made reference to the oft-quoted passage from Lincoln v. Daniels, [1962] 1 Q.B. 237, [1961] 3 All E.R. 740 (C.A.), at pp. 257-58 Q.B., concerning the three categories in which the privilege applies:

The absolute privilege which covers proceedings in or before a court of justice can be divided into three categories. The first category covers all matters that are done coram judice. This extends to everything that is said in the course of proceedings by judges, parties, counsel and witnesses, and includes the contents of documents put in as evidence. The second covers everything that is done from the inception of the proceedings onwards and extends to all pleadings and other documents brought into existence for the purpose of the proceedings and starting with the writ or other document which institutes the proceedings. The third category is the most difficult of the three to define. It is based on the authority of Watson v. McEwan, in which the House of Lords held that the privilege attaching to evidence which a witness gave coram judice extended to the precognition or proof of [page601] that evidence taken by a solicitor. It is immaterial whether the proof is or is not tak en in the course of proceedings.

[25] The motion judge also referred to the following passage from Fleming, The Law of Torts, 5th ed. (Sydney: Law Book Company, 1977), which was quoted with approval in Dingwall v. Lax (1988), 1988 4716 (ON SC), 63 O.R. (2d) 336, [1988] O.J. No. 61 (H.C.J.) [at para. 9]:

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 or contemplated proceedings . . .

The privilege attaches to any utterance reasonably related to the subject of the judicial inquiry . . .

The motion judge [[2008] O.J. No. 4872 (S.C.J.)] was "not satisfied that the closeness in time of the impugned communication with the issuance of the Statement of Claim and the identity of the third party as a witness, by themselves, are dispositive of the issue of absolute privilege" (para. 13).

[26] Following his reference to Fleming, supra, and Dingwall, supra, he said this, in para. 14 of his reasons:

By contrast, a communication made prior to the issuance of the Statement of Claim that contains gratuitously defamatory material that is clearly irrelevant to the issue or issues in the law suit, may not attract protection grounded on absolute privilege. Nor is absolute protection afforded to a communication the objective of which is to induce or facilitate perjured or merely factually false testimony.

The learned motion judge cites no authority for those propositions. However, he went on to reference Moseley-Williams v. Hansler Industries Ltd., 2004 66313 (ON SC), [2004] O.J. No. 5253, 38 C.C.E.L. (3d) 111 (S.C.J.), a decision in which Cullity J. reviews many of the Canadian cases on the issue of when and whether absolute privilege will apply to communications made prior to the commencement of a proceeding.

[27] The motion judge referred to the following excerpts from Cullity J.'s reasons [at para. 15]:

. . . some inquiry into the purpose of the publication of the statements would appear to be unavoidable. [para. 22]

While, as I will indicate, I believe Ms. Roberts was correct in her submission that recent decisions in Ontario illustrate developments that do not appear to be reflected in the authorities that were cited from other jurisdictions, the developments are essentially concerned with the line-drawing exercise I have mentioned and do not, in my opinion involve a departure from the principle, as formulated, and applied, in Sussman [Sussman v. Eales, [1986] O.J. No. 317 (C.A.)].

[para. 36] [page602] . . . . .

In my judgment, Mr. Eastwood's letter was written in the course, and for the purpose, of asserting Hansler's rights, but not for the purpose of, or preparatory to, the commencement of proceedings by Hansler. To adapt the words of the Court of Appeal in Sussman, publication of the statements "was not necessary or properly incidental to the institution of" a judicial proceeding. In consequence, I find that the statements in the letter were not made on an occasion of absolute privilege.

[para. 60] (Emphasis by the motion judge)

[28] In dismissing the motion, the motion judge noted [at para. 17] that he was referred to no case "in which absolute privilege was applied in a factual matrix similar to the facts in this case".

Reasons on the Motion for Leave to Appeal

[29] After reviewing the facts and the relevant case law, in granting leave Karakatsanis J. held [2009 15656 (ON SCDC), [2009] O.J. No. 1413 (Div. Ct.), at paras. 16-18]:

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.

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.

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.

Analysis

Standard of review

[30] Whether absolute privilege applies in this case is a question of law. The standard of review is correctness. [page603]

Principles relevant to rule 21.01(1)(b) motions

[31] The motion judge correctly outlined the applicable principles under rule 21.01(1)(b) as noted above; they need not be repeated here.

The law of absolute privilege in Ontario

[32] The rationale for the rule of absolute privilege has been expressed in many cases over the years. The following passage from Raymond E. Brown, The Law of Defamation in Canada, 2nd ed., looseleaf (Toronto: Carswell, 1999) at 12-64, correctly states the rationale:

Absolute privilege has been conceded on obvious grounds of public policy to insure freedom of speech where it is essential that freedom of speech should exist. It is essential to the ends of justice that all persons participating in judicial proceedings should enjoy freedom of speech in the discharge of their public duties or in pursuing their rights, without fear of consequences. The purpose of the law is, not to protect malice and malevolence, but to guard persons acting honestly in the discharge of a public function, or in the defense of their rights, from being harassed by actions imputing to them dishonesty and malice. Freedom from vexatious litigation for honest participants is so important that the law will not take the risk of subjecting them to such danger in order that a malicious participant may be mulcted in damages. The true doctrine of absolute immunity is that, in the public interest, it is not desirable to inquire whether utterances on certain occasions are malicious or not. It is not that t here is privilege to be malicious, but that, so far as it is a privilege of the individual, the privilege is to be exempt from all inquiry as to malice; the reason being that it is desirable that persons who occupy certain positions, as judges, jurors, advocates, or litigants, should be perfectly free and independent, and that to secure their independence, their utterances should not be brought before civil tribunals for inquiry on the mere allegation that they are malicious. The rule exists, not because the malicious conduct of such persons ought not to be actionable, but because, if their conduct were actionable, actions would be brought against them in cases in which they had not spoken falsely and maliciously: it is not a desire to prevent actions from being brought in cases where they ought to be maintained, but the fear that if the rule were otherwise, numerous actions would be brought against persons who were acting honestly in the discharge of duty. (emphasis added)

See, also, Dechant v. Stevens, [2001] A.J. No. 172, 2001 ABCA 39, per Conrad J.A., at para. 33.

[33] Absolute privilege applies even though counsel, in communicating the words, has been guilty of malice or misconduct, or had an indirect motive: Munster v. Lamb (1883), 11 Q.B.D. 588 (Eng. C.A.), per Brett, M.R. at pp. 602-603. The privilege applies even though the statements were made falsely: Hall v. Baxter, [1922] O.J. No. 525, 22 O.W.N. 207 (S.C. (H.C. Div.)), per Orde J., at para. 10. [page604]

[34] Absolute privilege applies to false or malicious statements in pleadings and factums: Big Pond Communications 2000 Inc. v. Kennedy (2004), 2004 18758 (ON SC), 70 O.R. (3d) 115, [2004] O.J. No. 820 (S.C.J.); Web Offset Publications Ltd. v. Vickery (1998), 1998 14858 (ON SC), 40 O.R. (3d) 526, [1998] O.J. No. 6478 (Gen. Div.), affd (1999), 1999 4462 (ON CA), 43 O.R. (3d) 802, [1999] O.J. No. 2760 (C.A.), leave to appeal to S.C.C. refused [1999] S.C.C.A. No. 460.

[35] It makes no difference that the words may be totally and knowingly false and spoken mala fides and with actual malice and without justification or excuse: Brown, supra, at 12-36 to 12-37; Web Offset, supra, per Kruzick J. (Gen. Div.), at paras. 38-39.

[36] By comparison, where only a qualified privilege attaches to the occasion, proof of malice or knowledge of the falsity of the statement will defeat a defence of qualified privilege.

The application of absolute privilege to statements made prior to proceedings being commenced

[37] In Ontario, absolute privilege may extend to communications by a party's solicitor made before the actual commencement of proceedings: Dingwall v. Lax, supra, at para. 16; Moseley-Williams, supra, at para. 19; John G. Fleming, The Law of Torts, 9th ed. (Sydney, Australia: LBC Information Services, 1998), at pp. 618-19.

[38] As Cullity J. noted in Moseley-Williams, supra, Ontario has adopted a broader application of the rule than some other jurisdictions such as England, Alberta and British Columbia. In Ontario, the privilege applies to preparatory steps taken towards litigation: Moseley-Williams, supra, at para. 54.

[39] As Cullity J. points out in Moseley-Williams, supra, at para. 28, the following statement from Fleming has been referred to with approval in Ontario decisions:

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. . .

See Fleming, 9th ed., supra, at p. 618; Dingwall, supra, at para. 16; G.W.E. Consulting Group Ltd. v. Schwartz (1990), 1990 6831 (ON SC), 72 O.R. (2d) 133, [1990] O.J. No. 208 (H.C.J.), at para. 17.

[40] However, Cullity J. also found that the authorities do not appear to support an extension of the privilege to all occasions when the possibility of litigation is contemplated, or even when a threat of litigation is made, or when a lawyer is endeavouring to assert and protect a client's rights: Moseley-Williams, supra, at para. 56. [page605]

[41] Thus, when a defendant in these circumstances moves to dismiss the claim on the ground of absolute privilege, the decision the court has to make is whether the communication was made "for the purpose of, or preparatory to, the commencement of [judicial] proceedings": Moseley-Williams, supra, at paras. 59-60.

[42] Something more than merely a contemplation of the possibility of litigation is required. The court must decide whether the occasion is "incidental" or "preparatory" or "intimately connected" to judicial proceedings and not one that is too remote: see Moseley-Williams, supra, at paras. 46, 50 and 56.

[43] It is in this sense that Cullity J. accepted that ". . . some inquiry into the purpose of their publication would appear to be unavoidable": Moseley-Williams, supra, at para. 22. That case dealt with a motion for judgment under Rule 20. On a rule 21.01(1)(b) motion, the "inquiry" is made on the assumed truth of the facts pleaded in the statement of claim.

[44] It must be stressed that "it is the occasion, not the communication, that is privileged. The privilege belongs to the occasion by reason of the setting": see Brown, supra, 12-37 (emphasis added).

[45] Cromwell J.A. (as he then was) for the Nova Scotia Court of Appeal put it this way in Elliott v. Insurance Crime Prevention Bureau, [2005] N.S.J. No. 323, 2005 NSCA 115, at para. 114:

The immunity applies to words said or conduct performed on a protected occasion, the protected occasion being a judicial or a quasi-judicial proceeding: Brown at para.12.4(2). Thus, publishing defamatory words is not actionable if done in the course of judicial or quasi-judicial proceedings. It is critical to understand that it is not the nature of the conduct or the words which is the focus of the immunity, but the occasion on which the words are said or the conduct is performed. Saying exactly the same words will be either actionable or not depending on the occasion on which they are said. This is true whether the immunity is advanced as a defence in a defamation case or in other types of actions. The immunity applies only to a protected occasion. (Emphasis added)

[46] Cromwell J.A. also observed, at para. 117, that

The immunity, of course, does not exist to protect wrongdoers, but it will sometimes do so.

[47] It is in the context of "the occasion" that the endorsement of the Ontario Court of Appeal in Sussman v. Eales, [1986] O.J. No. 317, 25 C.P.C. (2d) 7 (C.A.) should be read. In that case, the defendant wrote a letter of complaint to the Royal College of Dental Surgeons. The defendant sent a copy of the letter to the president of the Waterloo-Wellington Dental Society. [page606]

[48] The college had disciplinary powers, and the letter was incidental to quasi-judicial proceedings. But sending the copy elsewhere "constituted a publication which was not necessary or properly incidental to the initiation of the quasi-judicial proceeding" (at p. 2 (QL)).

[49] In the statement of claim in this proceeding, it is alleged that "the publication of the letter was not necessary or properly incidental to the institution of a claim by Vespra against [152]".

[50] That allegation is not one that is assumed to be true on a motion under rule 21.01(1)(b), because it asserts a conclusion of law or mixed fact and law on the very question before the court.

Was the publication of the draft claim and enclosing letter to Vella made on an occasion of absolute privilege?

[51] Against the background of the law referred to above, the appellants in their factum note that Ontario cases have identified several circumstances or factors which may support a finding that the occasion upon which the communication was made will be one of absolute privilege. They are where: (i) Steps had been taken to prepare for litigation when the communication was delivered: Moseley-Williams, supra, at para. 44. (ii) The decision to litigate had already been made: Moseley- Williams, supra, at para. 44. (iii) The defendant commenced legal action shortly after the publication of the alleged libellous statements: Moseley- Williams, supra, at para. 44; G.W.E., supra, at para. 35. (iv) The defamatory statements were made for the purpose of obtaining evidence: Moseley-Williams, supra, at paras. 43-44; G.W.E., supra, at para. 33. (v) The communications were made in the course of a solicitor's investigation of a client's case with a view to litigation and were directed to a limited audience from whom the solicitor anticipates obtaining relevant or potentially relevant information: Moseley-Williams, supra, at para. 48; G.W.E., supra, at para. 33; Dingwall, supra, at para. 26; Fuss v. Fidelity Electronics of Canada Ltd., [1996] O.J. No. 161, 60 A.C.W.S. (3d) 635 (Gen. Div.), per MacKinnon J., at para. 7; Lubarevich v. Nurgitz, [1996] O.J. No. 1457, 1 O.T.C. 360 (Gen. Div.), per G.D. Lane J., at para. 22. [page607]

[52] The appellant argues that all of the foregoing circumstances exist here.

[53] The first three circumstances do exist here. A decision to litigate had been made. Steps were underway to immediately proceed to litigation. A draft claim had been prepared and it was issued in identical form the day following the publication of the alleged libellous statements.

[54] Concerning the fourth circumstance listed above, the respondent argues that the defamatory statements were not made for the purpose of obtaining evidence. As put by the respondent, in para. 23 of the statement of claim:

This was known to the Defendants. The Letter was provided by the Esten Firm and Vespra maliciously and in bad faith. The purpose of the Letter was not to obtain information from a potential witness, nor was it a step that initiated judicial proceedings. . . . The purpose of the Letter was to provide inaccurate and incomplete information to Darren Vella to mislead him and garner his assistance. The Defendants knew that Darren Vella did not have knowledge of any of the matters that were material in the Unissued Claim. As a result, the purpose of the Letter was not to ask Darren Vella to comment on the contents of the Unissued Claim nor was he asked if it was accurate. Further, or in the alternative, the purpose of the Letter was to allegedly protect the purported rights of Vespra, which rights the Defendants knew did not exist, as told to Darren Vella.

[55] These allegations go to motive, malice, bad faith and improper conduct, which are irrelevant to a determination of the issue of whether the occasion was one of absolute privilege. Furthermore, it cannot be disputed that when the publication occurred, it was to a witness -- one who immediately swore an affidavit for use as evidence in the proceedings.

[56] Finally, concerning the fifth consideration noted above, the respondent submits that the appellants' communication was not made in the course of an investigation towards litigation, nor was it made to obtain relevant evidence. In support of this submission, the respondent points to the enclosure letter and the above para. 23 of the claim. The letter simply encloses the claim, refers to the alleged breach of the agreement and closes with: "If I can assist you further, please advise."

[57] This argument, however, ignores the sequence of events. The letter and enclosures were provided to Vella shortly before he swore his first affidavit. The action, including the claim for a CPL, was launched the next day.

[58] In my view, as argued by the appellants in their factor, all of the aforementioned circumstances exist here.

[59] With great respect to the learned motion judge, the above-referenced passage from para. 14 of his reasons is wrong in law. In his concluding reasons, he appears to have focused "on the [page608] nature of the conduct" rather than "the occasion on which" the conduct was performed: see Elliott, supra. In doing so, he erred in law.

Conclusion

[60] On the fact as pleaded, the communication was clearly made preparatory for and with a view to judicial proceedings. In the circumstances referred to above, the communication was made on an occasion of absolute privilege.

[61] Accordingly, the appeal is allowed. The order of the motion judge is set aside, the statement of claim against these appellants is struck out and the action against them is dismissed.

Costs

[62] Counsel made submissions on costs at the conclusion of the oral argument, each filing costs outlines for the leave motion and the appeal, which I have considered.

[63] The costs before the motion judge were fixed by him at $6,700, including disbursements and GST, and were paid by the appellants. Those costs, in that amount, should now be repaid by the respondent to the appellants.

[64] The costs on the leave motion were reserved to the panel. I fix those costs at $5,000, including disbursements and GST.

[65] On the appeal, I fix the costs at $15,000, including disbursements and GST.

Appeal allowed.